The Davis Funds

FOR VARIABLE ANNUITY INVESTORS WHO ARE LOOKING FOR GROWTH AND INCOME

INVESTMENT APPROACH
Consistent with the signature Davis investment discipline, the Portfolio seeks companies with first-class management teams who view real estate as a means of producing steadily increasing income and strong returns on capital. Portfolio Managers Andrew Davis and Chandler Spears view real estate as a significant and growing asset class, and currently see significant opportunities in REITs because they believe they have:

attractive valuations
historically lower price volatility than stocks
strong balance sheets

The Portfolio may provide investors with a good way to increase the diversification of their investments. Real estate securities have shown a lower sensitivity to price movements (beta) than the broad stock market averages, and real estate returns over the long term are comparable to those of equities, but are not correlated with them (low R-squared).

TOP TEN HOLDINGS

Centerpoint Properties Trust

Chelsea Property Group

Alexandria Real Estate Equities

Developers Diversified

ProLogis

Vornado Realty Trust

General Growth Properties

Plum Creek Timber Company

Liberty Property Trust

Simon Property Group

7.1%

4.9%

3.9%

3.8%

3.7%

3.6%

3.4%

3.3%

REIT/REOC ALLOCATION

REIT 84.8%

REOC 2.2%

Authorized for distribution only when accompanied or preceded by a current prospectus of Davis Real Estate Portfolio, which contains more information about risks, fees and expenses. Please read the prospectus carefully before investing or sending money.

Because Davis Real Estate Portfolio 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.

“Beta” is a measure of the Portfolio’s sensitivity to market movements. The stock market as a whole has a Beta of 1.00. While no single measurement can predict the future, a Beta of greater than 1.00 predicts greater volatility and a Beta of less than 1.00 predicts less volatility than the stock market as a whole.

“R-Squared” is a measure of the percentage of a portfolio’s change in net asset value that is explained by movements in a benchmark index. An R-squared of 100 indicates that all of the change in a portfolio’s asset value is completely explained by movements in the index.

An investment in the Portfolio is not a deposit of any bank and is not insured or guaranteed by any bank, the Federal Deposit Insurance Corporation or any other government agency.