Fund Overview
Davis Real Estate Fund


The Davis Real Estate Fund is designed to provide total return through a combination of growth and income by investing in real estate-related securities. Real estate is a separate and significant asset class — in addition to stocks, bonds and cash. It is an asset class that we believe investors should not ignore because it can help to diversify and anchor a well-balanced portfolio. 1

The Davis Real Estate Fund can be an excellent choice for investors seeking to enhance portfolio diversification and benefit from the long-term growth potential of real estate. The Fund may also appeal to investors who want the opportunity for capital appreciation and the option to receive income paid on a quarterly basis. 2

Investment Philosophy
A Research-Driven Approach
5 Reasons to Invest in the Real Estate Asset Class
Key Potential Benefits of the Davis Real Estate Fund
 Fund Factsheet
 Prospectus

WHAT IS THE FUND'S INVESTMENT PHILOSOPHY?

A Long-Term Approach To Wealth-Building
Consistent with the signature Davis investment discipline, the Fund seeks companies with first-class management teams who view real estate as a means of producing steadily increasing income and strong returns on capital. 3

Focused On REITS
Real estate investment trusts (REITs) are the major component of the Fund's portfolio. A REIT is a company that owns, manages or develops properties, such as shopping malls, apartment complexes, hotels, and industrial and commercial properties. REITs are interest-rate sensitive, similar to bonds.

Increasing Opportunities
The $3-trillion commercial real estate market is larger than the stock market and the U.S. government securities market but, to date, only about $400 billion of that real estate has been securitized in the form of REITs and other publicly traded companies. We estimate the amount of securitized real estate could total up to $1 trillion. 4

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A RESEARCH-DRIVEN APPROACH
Andrew Davis and Chandler Spears carefully select investments company by company. They concentrate heavily on valuation— looking for companies selling at a discount to their expected cash flow growth rate over the next several years. The Fund is focusing on finding attractive companies in many different real estate sectors.

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5 REASONS TO INVEST IN THE REAL ESTATE ASSET CLASS
Substantial structural changes in the industry make a compelling case for investing in the real estate asset class. Among the most important changes are these: 5

Stricter Capital Requirements
Capital is no longer as freely available to developers for more speculative projects —largely because banks, savings and loans and other lenders are now subject to stringent regulations and capital requirements.

Increased Disclosure
Wall Street analysts have compelled REITs to disclose far more information than before.

Management Ownership
Managements now own considerable stock in their own REITs, which aligns their interests with shareholders' interests.

Seasoned Management
Because managements are more experienced now, they tend to ask our favorite question —namely, how much might they lose —before asking how much they might make.

Improved Valuation Methods
Most important of all, real estate today is valued based on the cash flow the property generates, similar to the way non-real-estate companies are valued, not based on subjective property appraisals.

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KEY POTENTIAL BENEFITS OF THE DAVIS REAL ESTATE FUND

Growth Potential With Portfolio Diversification
 The Fund offers the opportunity to create a better balanced portfolio and participate in the long-term growth potential of real estate with the benefits of professional management, convenience and liquidity.

Income Potential
By law, REITs must distribute at least 90% of REIT-taxable earnings to shareholders in order to benefit from a special tax structure. As a result, REITs tend to pay high dividends. Furthermore, a REIT offers the opportunity for increasing dividends if underlying rental income increases, although a decline in rental income could result in a dividend decrease.

Inflation Hedge Potential
REITs may increase in value during times of inflation and economic strength, as underlying property values, occupancy levels and rental rates rise.

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1 Because Davis Real Estate Fund concentrates its investments in the real estate sector it may be subject to greater risks than a fund that does not concentrate its investments. The Fund’s investment performance, both good and bad, is expected to reflect the economic performance of the real estate sector much more than a fund that does not concentrate its portfolio.
2 Davis Real Estate Fund’s investment objective is total return through a combination of growth and income. There can be no guarantee that the Fund will achieve its objective or that an investor will earn a profit.
3 There can be no guarantee that Davis Real Estate Fund will successfully identify such real estate companies or that an investment in such companies would be profitable.
4 The estimated sizes of the real estate market, stock market and U.S. Government securities market as well as the amount of real estate that has been securitized and the growth potential in securitized real estate markets are all based upon research compiled by Davis Advisors.
5 Because Davis Real Estate Fund invests primarily in the real estate industry, it is subject to risks associated with the direct ownership of real estate. These risks include declines in the value of real estate, risks related to general and local economic conditions, over building or condemnation losses, fluctuations in rental income, changes in neighborhood values, the appeal of properties to tenants and increases in the interest rates.

Because the Fund is allowed to focus its investments in fewer companies it may be subject to greater risks than a more diversified fund, which is not allowed to focus its investments in a few companies. As of December 31, 2007, Davis Real Estate Fund had approximately 6.3% of assets invested in foreign companies. Companies operating, incorporated, or principally traded in foreign countries may have more fluctuation as foreign economies may not be as strong or 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. See the prospectus for a complete listing of the principal risks.

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 the S&P 500®  Index.

Past performance is not a guarantee of future results. There can be no guarantee that the Fund will achieve its investment objective or continue to deliver consistent investment performance. The market prices of REITs are volatile, Davis Real Estate Fund’s net asset value per share will fluctuate, and an investor’s shares, when redeemed, may be worth more or less than their original cost.

Shares of the Davis Funds are not deposits or obligation 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.