An Update from

Christopher C. Davis and Kenneth C. Feinberg

Portfolio Managers
The table below summarizes the results of the
Davis New York Venture Fund compared with
the S&P 500® Index against which my co-man-
ager Ken Charles Feinberg, our colleagues and
I judge ourselves. Our objective is to outperform
this Index after fees over the long term as we
have done in every rolling 10 year period since
our inception in 1969.1 While we achieved this
objective over the last 10 year period, we do not
consider the Fund’s absolute return of 1.2% per
year much to celebrate despite its advantage
over the 1.4% per year decline of the S&P 500®
Index.2 As for results over shorter time periods,
we will not mince words. They are poor on both
an absolute and relative basis.
In the pages that follow, we will provide more
perspective to put these results in context but
we will not try to excuse them.You have a right
to expect more from us. The first part of the
report will be a review of the past year, covering
the market and economy in general and our
Portfolio in particular. As always, this review
will include an accounting of our biggest mis-
takes. The second part will be forward-looking
and explain why an environment characterized
by fear and uncertainty creates enormous
opportunity for long-term investors. By outlin-
ing this opportunity, our goal is to provide data
that will help investors stay the course at a time
when many feel like giving up. This feeling is
understandable considering that investors have
suffered through the second worst decade for
stocks on record–a record that includes the
Crash of 1929 as well as the Great Depression.
In fact, even if the market produces satisfactory
returns for 2009 (and it is certainly not off to a
good start), it is highly likely that the 10 year
period ending this coming December will prove
to be the worst decade ever, as it will no longer

Annualized Total Returns 1 5 7 10 15 20 25 30 35 Inception

as of December 31, 2008 Year Years Years Years Years Years Years Years Years (2/17/69)
DNYVF Class A
without a sales charge -40.03% -2.05% -0.17% 1.24% 7.66% 10.41% 11.51% 13.74% 12.93% 11.42%
with a maximum
4.75% sales charge -42.88 -3.00 -0.86 0.75 7.31 10.14 11.29 13.55 12.77 11.28
S&P 500 Index
®
-37.00 -2.19 -1.53 -1.38 6.46 8.43 9.77 11.00 10.02 9.05
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 0.85%. 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 per-
formance quoted. For most recent month-end performance, visit davisfunds.com or call 800-279-0279.
1
Class A shares, not including a sales charge. Returns are from 2/17/69–12/31/08. Returns would be lower in some periods if a sales
charge were included. See endnotes for a description of our rolling 10 year performance and a definition of the S&P 500® Index. Past
performance is not a guarantee of future results. 2Class A shares, not including a sales charge. Past performance is not a guar-
antee of future results.
1
include the 21% return of 1999. Given that the
market has lost 3.6% per year for the last nine
years versus the 1.7% annual loss suffered
between 1928–1938, currently the worst decade
on record, this is not a bold prediction.
So why should such data give investors confi-
dence? The answer is that low prices may
increase future returns.3 Because investors are
buyers, they should welcome the opportunity
to buy the same businesses at lower prices, as
doing so raises their returns. Consider a busi-
ness that generates $100,000 of income. In good
times, such a business might be priced at more
than $2 million, leaving the buyer with only a
5% return on investment. But if the price falls
by half, the return doubles to 10%. This same
math applies at the level of the stock market,
which is after all simply a collection of busi-
nesses, the majority of which will be earning
more money 10 years from now than they do
today. The data shows that it has always been
profitable to invest in the stock market after a
decade of poor returns.3 Specifically, there pre-
viously have been ten rolling 10 year periods
since 1928 when the S&P 500® Index (and before
that the Dow Jones Industrial Average) returned
less than 5% per year. In every case, the 10 years
that followed produced satisfactory returns aver-
aging approximately 13% per year and ranging
from a low of 7% per year to a high of 18% per
year.3 While we cannot know for sure what the
next decade holds, it is highly likely to be far
better than what we have suffered through in
the last 10 years as we are starting at much more
attractive valuations. We are hopeful that our
shareholders who have endured these hard
times will be there with us for the rebound.
The Year 20084
While capital market downturns are nothing new,
the dislocation and panic that swept through
the markets in 2008 were unique in scale, sever-
ity and pace. The vast majority of major financial
institutions collapsed, were taken over, raised
dilutive capital, and/or required some sort of
government intervention. The combined market
capitalization of the top 25 financial institutions
in the United States (excluding Berkshire Hath-
away, which we do not consider a pure financial
institution) fell 75% during the last two years
from $2 trillion to less than $500 billion (as of
January 22, 2009). The loss to shareholders has
been even greater than these numbers indicate
as most of these companies now have meaning-
fully more shares outstanding, including war-
rants held by the U.S. government.
The amount of direct investments, pledges and
guarantees announced by the federal government
now approaches $5 trillion. To put this sum in
perspective, previously the most expensive
financial debacle in U.S. history, the savings and
loan (S&L) crisis, cost the government about
$185 billion in today’s dollars, about 1/27th
as much. The long-term consequences of the
government’s ownership interest in private
businesses are unlikely to be positive and the
extension of such vast amounts of credit must
almost certainly lead to higher inflation.
Turning to the economy, as is often the case,
the capital markets have been leading indica-
tors. What began as a financial crisis tied to
falling real estate prices is swiftly becoming
a broad-based economic crisis. Consumer and
corporate spending are in a free fall. Auto sales,

3
There is no guarantee that low priced securities will appreciate. Equity markets are volatile and an investor may lose money. Past per-
formance is not a guarantee of future results. 4Individual securities are discussed in this piece. While we believe we have a reason-
able basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate. The
return of a security to a portfolio will vary based on weighting and timing of purchase. This is not a recommendation to buy or sell any
specific security. Past performance is not a guarantee of future results.
2
 for example, fell a staggering 35% in the fourth
quarter alone. Unemployment is increasing
sharply as are virtually all other negative indi-
cators. As these metrics deteriorate, however,
it is worth remembering that the front side of
a recession is always the scariest. To understand
why, consider this simple example. Suppose a
distributor who normally sells 10 widgets per
month sells only eight in a given month. When
it is time to reorder, the distributor needs to
order only six widgets as there are two left in
inventory from the previous month. Thus, a 20%
decline in sales leads to a 40% decline in orders.
This inventory effect is a painful magnifier that
things are slowing but is not permanent and
will reverse when sales stabilize.
Another unsettling aspect of 2008 was that
many fundamental tenets of sound investing did
not help. For example, it is generally (and rightly)
believed that diversification among different
asset classes should reduce the volatility of an
investor’s returns, as often one type of invest-
ment goes up while others are going down.
However, this did not hold true in 2008. As one
exasperated institutional investor put it, “All
correlations have gone to one.” In other words,
virtually every asset class except government
bonds performed badly: domestic stocks, foreign
stocks, commodities, hedge funds, private equity,
corporate bonds, real estate, and so on. Only
6% of the stocks in the S&P 500® Index were up
last year, the lowest percentage on record.5
In addition, many so-called value investors
(a category in which we are generally included)
have fared poorly at a time when they would
have been expected to do far better than the
Source: Davis Advisors. Percentage is from 1/1/2008–12/31/08.
5
3
average. The reason for this expectation is that
value investors tend to focus their investments
in companies whose businesses are not con-
sidered highly speculative in nature and whose
valuations relative to current earnings and share-
holders’ equity are comparatively low. As a result,
their stock prices tend to hold up better in times
of trouble compared to more speculative compa-
nies whose prospects are less secure. For example,
in the bear market that began in March 2000 and
continued through 2002, when the stock market
fell almost 50%, many value investors outper-
formed dramatically as speculative tech and
telecom companies collapsed, while companies
in mundane sectors such as raw materials, utili-
ties, retail, and banking held up relatively well.
In the last couple of years, though, many of these
well-regarded managers, including us, have
underperformed. Some portion of this under-
performance can be attributed to the managers’
mistaken appraisals and declines in the value
of the underlying businesses they owned. We
had our share of such mistakes, which we will
discuss later in this report. However, another
portion of this underperformance is simply
attributable to the unpredictability and vagaries
of short-term results. It is the nature of markets
that value and price can diverge for long periods
of time. In euphoric times, such as during the
Internet bubble, the stock prices of many com-
panies exceed their value. In times of panic
and dislocation, the value of many companies
exceeds their prices. In such periods, poor
reported results may indicate deferred returns
rather than permanent losses. For example, a
company purchased at $10 per share that has
an intrinsic value of $20 is a good investment
 Even the Best Managers Underperform at Times
Percentage of Top Quartile Large Cap Equity Managers Whose Performance Fell
Into the Bottom Half, Quartile or Decile for at Least One Three Year Period
100%
97%
80%
77%
60%

40% 44%

20%

0%
Bottom Half Bottom Quartile Bottom Decile

Source: Davis Advisors. 163 managers from eVestment Alliance’s large cap universe whose 10 year average annualized performance
ranked in the top quartile from January 1, 1999–December 31, 2008. Past performance is no guarantee of future results.

even if its price falls to $5 for some period of
time. While this seems obvious at the level of
an individual company, it is also true for whole
portfolios. For example, the vast majority of top-
performing managers over a long period of time
will still experience multiyear stretches of poor
performance. Specifically, as the accompanying
chart shows, 97% of all of the managers whose
results over the last 10 years placed them in the
top performance quartile still underperformed
for at least a three year stretch during that decade
of excellent relative results. More important, in
almost half of these cases (44% to be precise),
the three year stretches were bad enough to
place them in the bottom decile relative to
their peers.
Such periods can be doubly costly for clients.
After all, as portfolio managers, we can focus on
the value of the underlying businesses, but clients
can only see the prices. As a result, clients often
lose confidence and get out after they have already
suffered through the period of bad performance
but before benefiting from the recovery. In these
inevitable periods of underperformance, it is often
helpful to remember that poor results may not
reflect a flawed investment discipline but rather
the fact that prices and values can irrationally
diverge for relatively long periods of time.
Before turning to the reasons that such diver-
gences can create real opportunities, we must
also recognize the cases in which falling stock
prices reflect substantial declines in the value
of the underlying business. In these cases, we
were mistaken in our business appraisals.
Mistakes
By far our largest mistake over the last five years
was our investment in American International
Group (AIG), which cumulatively detracted
roughly 6% from our returns, almost three times
as much as any other mistake. In essence, this
mistake resulted from our incorrectly assessing
three factors: the financial sophistication of
management, the leverage of derivatives and
the danger of collateral requirements tied to
mark-to-market accounting.
Starting with management, the chief executive
officer of a complex financial institution also
serves as the de facto chief risk officer. He or
she must understand the nature and extent of
the risks being taken and must have the courage
4
 to forgo profits if the risks, however remote,
could prove catastrophic. At AIG, the need for
a highly capable CEO was accentuated by the
diverse business models and risk profiles of its
semiautonomous divisions. Unfortunately, the
abrupt ouster of its longtime CEO and the pro-
motion of a far less able successor came at the
worst possible time. Although this successor
had deep experience in the field of property
and casualty insurance, the company’s financial
operations and risks went far beyond this sector
into areas in which new management had vir-
tually no expertise.
The second factor that we–and this new man-
agement team–grossly underestimated lay in
a relatively small division of AIG called AIG
Financial Products. This unit contributed about
5% of total profits, only a small portion of
which came from selling a type of highly com-
plex and highly leveraged derivative known as
a credit default swap, or CDS. At its heart, a
CDS is a type of financial insurance in which
a buyer would pay AIG a tiny premium in
exchange for coverage against a highly unlikely
financial event, such as the default of a triple-A
security. In some cases, the premium could be
as low as $1 for $1,000 worth of coverage.
Unfortunately, many of the triple-A securities
that AIG insured were tied to mortgages and
presumed that residential real estate prices
would never go down substantially. To make
matters worse, unlike normal insurance con-
tracts, credit default swaps are marked-to-
market, meaning that they are priced not for
what the actual losses are today but for what
the market estimates the losses will be in the
future. This mark-to-market accounting brings
us to the third aspect of our mistake.
As the estimated losses on the contracts went
up, AIG was required to post cash collateral for
the buyers of the swaps. Worse still, the amount
5
of cash collateral was also tied to AIG’s own
credit rating. As is now apparent, all the factors
were in place for a spiral. Because these contracts
assumed virtually no losses, small increases in
loss estimates led to huge losses. As these losses
mounted, rating agencies became concerned
and downgraded the company. Thus, AIG was
required to post more collateral for both higher
estimated losses and its lower credit rating.
Adding to these liquidity demands, the company
engaged in a massive securities lending program
in which it lent out many of its investments.
These loans were themselves collateralized with
cash. Unfortunately, rather than simply hold this
cash in short-term liquid instruments, the com-
pany invested much of it in illiquid, often mort-
gage-related securities. As nervous customers
returned borrowed securities and immediately
demanded their cash back, AIG was forced to
try to sell these illiquid securities at a time when
there were no buyers. In just a matter of months,
these liquidity demands exceeded AIG’s available
resources. Facing default, AIG asked for govern-
ment intervention. In exchange for providing
the necessary liquidity and guaranteeing or
assuming responsibility for a number of assets
and liabilities, the government took equity war-
rants for approximately 80% of the company.
All of the above analysis begs the question:
“Why did we continue to hold the shares even
as the situation got worse and worse?” The
answer is twofold. First, we remained focused
on the fact that the company had close to $100
billion of tangible equity, more than $1 trillion
in investments and more than $20 billion of pre-
tax earnings from global insurance, leasing and
asset management operations. Furthermore, in
contrast to a bank, it is difficult to have a run on
an insurance company, as policyholders, unlike
depositors, generally cannot suddenly take back
their premiums. Thus, we thought the company’s
powerful diversified earnings, tangible equity
and assets would more than cover the losses
over time. This thinking ignored three important
facts. First, because of the collateral requirements
discussed above, the company did not have the
luxury of time but needed to come up with the
cash immediately. Second, because there had
been inadequate disclosure about the massive
securities lending operation, the scale and imme-
diacy of the cash requirements were far greater
than anyone had imagined. Finally, although the
company’s financial statements showed a huge
amount of liquid assets, most were held in the
company’s insurance subsidiaries. As regulated
entities, these subsidiaries were not permitted to
release the assets to the parent company in order
for AIG to meet these collateral calls. As a result,
even if these mark-to-market losses proved
temporary rather than permanent (as they still
could), even if the company’s net worth remained
substantial, or even if the company could have
earned enough in the next five years to pay the
losses as they came due, it still faced bankruptcy
as a result of defaulting on the collateral calls.
We will end this discussion with an example
of the dangers of this sort of collateral posting
requirement. Imagine a homeowner has a
$400,000 home with a $300,000 mortgage. Now
imagine he earns $100,000 per year of which he
uses $50,000 for living expenses, leaving $50,000
to service the mortgage. If we add to this exam-
ple as a given that this person will never move
and will never lose his job, it would seem that
the mortgage is virtually risk free. But if we
change one feature that on its face seems minor,
we completely alter the risk profile. Specifically,
imagine that the mortgage requires that if the
estimated price at which the house could be
sold on any given day falls below $300,000, the
homeowner must put the shortfall in an escrow
account or face eviction. Now, even if the home-
owner could service this mortgage forever and
even pay it down completely over time with no
risk to the bank, he could still be bankrupted by
having to mark his house to market and post
collateral. It was this type of liquidity risk that,
in a matter of months, brought down what had
been the most profitable and highly valued
insurance company in the world.
The other mistake that deserves mention reached
its conclusion in our fourth quarter sale of virtu-
ally all our Merrill Lynch at a substantial loss.
Although our first purchase was at $48 per share,
we added to our investment at lower prices giving
us an average cost of $35 for all shares acquired.
As has been widely reported, on September 15th
Bank of America offered $29 per share to acquire
Merrill Lynch. We sold the shares in the weeks
following the announcement at prices ranging
from $13–$29 per share. We acknowledge that
this investment was a mistake, though we remain
convinced that Merrill’s powerful network of
financial advisors combined with decisive man-
agement reduced our downside and prevented
the sort of catastrophic loss we experienced
in AIG and others experienced in firms like
Lehman Brothers and Bear Stearns.
As always, the only value of mistakes lies in
the lessons learned. Looking back at the crisis
of 2008, the lessons can be reduced to a single
word: liquidity. In a nutshell, we learned that
while the answer to the question, How much
long-term debt is appropriate for a given company?
varies by industry and business, the answer to,
How much short-term debt is appropriate for a
given company? should almost always be zero.
In 2008, even companies with plenty of earnings
and equity relative to their debt found themselves
shut out of the credit markets. In the best cases,
they were required to fund themselves at very
high rates. In the worst, they were forced to sell
valuable assets at pawn shop prices, auction off
the entire company or face bankruptcy. Compa-
nies like Countrywide, Lehman, Bear Stearns,
6
 and even Fannie Mae and Freddie Mac (none of
which we owned) all were financed with short-
term funds or required constant access to new
capital. In virtually all these cases, managements
put companies at risk by trying to save a few
percentage points of interest costs. Such a strat-
egy has accurately been likened to picking up
pennies in front of a fast-moving steam roller.
Looking Ahead
This long dissertation on economic turmoil
and uncertainty, as well as the recounting of
our biggest mistakes, raises the question: Why
are we almost fully invested and confident that
today’s prices should be viewed as an enormous
long-term opportunity? Before answering, we
should provide one caveat. In making the case
for equities today, we are not predicting that the
market has reached bottom. Although stocks
could be substantially higher six months from
now, they could also be 30% lower. We simply
do not know–and no one else does either. With
this caveat out of the way, we will now turn to
the subject of opportunity.
When I first started investing, my grandfather
gave me a card on which was written,“You make
most of your money in a bear market, you just
don’t realize it at the time.”Although at first
blush this saying sounds counterintuitive–after
all, in a bear market prices are going down–
it makes sense when you recognize that as
investors we are buyers and thus should welcome
lower prices for the simple reason that lower
prices may increase future returns. In bear mar-
kets, prices are driven down by fear and forced
selling. Sellers are not asking what a business is
worth but taking whatever they can get. Such
irrational selling allows investors with patience
to buy great businesses at distressed prices.
These low prices may increase future returns.
Over the years, my father and grandfather used
to tell me about the opportunities they had to
7
buy great growth companies at 10 to 12 times
earnings with 3% dividend yields or leading
financial companies at five times earnings with
5% dividends and so on. Great records devel-
oped from the depths of these bear markets as
steady-handed investors purchased stalwart
companies with decent dividends at low price-
earnings multiples and simply held on, letting
compounding and gradually improving confi-
dence take care of the rest.
Imagine, for example, a high-quality company
that can grow its earnings on average at 10%
per year over a decade. In a bull market, such
a company might sell at 20 times earnings and
have a negligible dividend yield. As a result,
buyers of that company would be lucky to have
returns even in line with the earnings growth
rate. In fact, should the multiple contract to the
long-term market average of 15 times earnings
over a decade, the company’s 10% growth rate
would shrink to a 6.9% return for investors.
However, in a bear market, this math is reversed.
Imagine the same company now trading at 10
times earnings and carrying a 3% dividend yield.
The buyer of this company now can reasonably
expect to make returns in line with the earnings
growth rate of 10% plus dividends of 3% for a
total return of 13%. While this in itself is a satis-
factory return, it can even be enhanced should
confidence return and the multiple rise to the
long-term average of 15 times earnings. If
this happens over a decade, the company’s
10% growth rate would expand to an 18%
return for investors.
Because a bear market presents the opportunity
to benefit from earnings growth, dividend yield
and multiple expansion, I had always been a
bit jealous of the opportunities that my father
and grandfather were given in the terrible
bear markets of the last 60 years. Now that our
generation has finally been given the same
opportunity, I recognize the wisdom of the say-
ing, “Be careful what you wish for.” In a time of
fear and panic, investments will never seem as
straightforward as the example given above.
More important, even if investors can recognize
such opportunities with their heads, their
stomachs often have other ideas. As legendary
manager Peter Lynch observed, “The key organ
(for investment success) is your stomach. Every-
one has the brainpower, but not everyone has
the stomach for it.” In today’s bear market,
investors are racing for the exits. Cash is pour-
ing into “riskless” securities like short-term
U.S. Treasuries with virtually no yield. Although
such a choice feels good, it is, given the near
certainty of inflation, likely to prove very costly.
Meanwhile, investments in high grade common
stocks, which feel like a terrible choice, are likely
to prove very profitable and are almost certain
to outperform cash over the next decade.6
Before turning to the Portfolio itself, we would
remind you of the old saying that investing
is the art of the specific and warn that general
discussions tend to oversimplify the rationale
behind our investment decisions. Nevertheless,
in today’s environment, we are looking for oppor-
tunities that roughly fall into four categories.
The first most closely resembles the hypothetical
high-quality company discussed above and would
include companies such as Procter & Gamble,
Johnson & Johnson, Costco, Shering-Plough,
and Philip Morris International. These compa-
nies are characterized by healthy balance sheets,
strong competitive positions and durable busi-
ness models. They are generally (but not always)
global leaders with relatively strong pricing power
and the ability to pass through cost increases.
Because such businesses produce excess cash,
6
Equity markets are volatile and an investor may lose money. 7While we research companies subject to such contingencies, we cannot
be correct every time, and a company’s stock may never recover.
they are self-funding and have no need to
regularly replenish capital. This self-sufficiency
has led some wags to refer to such companies
as “camels.”
A second, much smaller category is made up of
companies whose business model and manage-
ment mindset put them in a position to take
advantage of the chaos in the capital markets.
Such opportunistic companies may use distressed
prices to make investments or acquisitions or
even to buy in their own shares. Although many
companies have the balance sheet strength to
fall into this category, few have the temperament.
Instead, most companies that were only too
happy to buy in shares and do deals when prices
were high have reduced or eliminated such
activities in response to the current uncertain
environment, forgetting that the environment is
never certain. While savvy holding companies
such as Loews and disciplined share repurchasers
such as Dun & Bradstreet and Comcast fall into
this opportunistic category, by far the best
example is Berkshire Hathaway, which spent
much of the last decade building up cash and
warning about the dangers of derivatives. It is
now routine to read about the enormous invest-
ments that Berkshire is making at a time when
others seem paralyzed. Of note, we recently
joined with Berkshire to invest in senior securi-
ties of two companies whose common stock we
already own, Sealed Air and Harley-Davidson.
These investments were made at yields of 12%
and 15%, respectively.
The third category comprises investments made
where the headlines are the worst7–specifically
in selected financial companies. While we rec-
ognize there are many fundamental uncertain-
ties, we believe that some positives are being
8
 overlooked in the midst of the turmoil. First,
although aspects of the insurance, asset man-
agement, and retail, commercial and investment
banking businesses are changing, their under-
lying business models are unlikely to become
obsolete. Furthermore, those companies that get
through this storm will face far less competition.
In retail and commercial banking, for example,
there is an astounding flight to quality. Incre-
dibly, in the fourth quarter alone, Wells Fargo’s
deposits, which pay extremely low interest,
grew at a staggering 31% annualized rate. For
investment banks, although leveraged propri-
etary trading will never be the same (which is a
positive), services like mergers and acquisitions
advice and equity and debt underwriting will
always be in demand. To be clear, we know that
there are still many risks in this sector, including
the fact that nonperforming assets will continue
to rise. While we are selectively adding, we are
not “swinging for the fences.”
The final category focuses on what we con-
sider to be the inexorable growth of the middle
class in massive economies such as China’s.
We continue to expect that the Chinese econ-
omy will grow faster than average for decades
to come, putting strain on China’s infrastruc-
ture and increasing demand for most natural
resources. A number of Portfolio companies
are positioned to benefit from these trends
including our direct Asian holdings and our
investments in energy, commodity and agri-
cultural companies.
Concluding Thoughts
In mid-October Warren Buffett wrote an
unusual and important editorial for The New
York Times. Just as we were coming through
8
Buffett, Warren, “Buy American. I Am.” The New York Times, October 17, 2008. 9There is no guarantee that low priced securities will
appreciate. Equity markets are volatile and an investor may lose money.
9
one of the worst years and worst decades ever
for stock investors, he noted, “The financial
world is a mess, both in the United States and
abroad. Its problems, moreover, have been
leaking into the general economy, and the leaks
are now turning into a gusher. In the near term,
unemployment will rise, business activity will
falter and headlines will be scary. So . . . I’ve
been buying American stocks.” He continues,
“Over the long term, the stock market news will
be good. In the 20th century, the United States
endured two world wars and other traumatic
and expensive military conflicts; the Depression;
a dozen or so recessions and financial panics;
oil shocks; a flu epidemic; and the resignation
of a disgraced president.Yet the Dow rose
from 66 to 11,497.” 8 To view this article, visit
www.davisfunds.com/invedu.html.
Although such a powerful statistic makes it
hard to believe that stock investors could have
lost money during a century marked by such
an extraordinary gain, Mr. Buffett goes on to
caution that “some investors did. The hapless
ones bought stocks only when they felt comfort
in doing so and then proceeded to sell when the
headlines made them queasy.” While the dire
headlines we read day after day make “queasy”
an understatement, they should be welcomed
by long-term investors for their role in creating
bargain prices. While we cannot predict the
direction of the market over the next month
or the next year, we do know that it will move
higher long before the economy or the head-
lines are more reassuring.9 If investors wait until
things seem better, they will pay much higher
prices. In our experience, today’s prices reflect
some of the most attractive valuations we have
seen in decades.
This optimism about the future does not
minimize the fact that together we have gone
through one of the worst periods in market
history. We are disappointed with our short-
term results and humbled by our mistakes. But
most important, we are grateful for the patience
you have shown us during this difficult time.
We never forget the trust you have placed in our
firm. We wholeheartedly look forward to the
years ahead when we should be able to report
that today’s low prices became tomorrow’s
high returns.10 Thank you for staying the course
with us. ■

Davis Investor Education

The Wisdom of Great Investors

Investing for the long term necessarily involves investing through periods of dislocation. Staying
the course in such times can be difficult for investors. For this reason we have collected some
useful lessons and insights from investors who managed successfully through challenging times
in the past in The Wisdom of Great Investors:
■ Avoid Self-Destructive Investor Behavior
■ Understand That Crises Are Inevitable
■ Understand While Painful, Crisis Creates Opportunity
■ Don’t Attempt to Time the Market
■ Don’t Let Emotions Guide Your Investment Decisions
■ Recognize That Short-Term Underperformance Is Inevitable
■ Disregard Short-Term Forecasts and Predictions

For a copy of this brochure please contact your Davis Regional Representative at
800-717-3477 or visit www.davisfunds.com/invedu_grtinv.html
There is no guarantee that low priced securities will appreciate. Equity markets are volatile and an investor may lose money.
10

10
This report is authorized for use by existing shareholders. A current Davis New York Venture Fund prospectus must accompany or precede this
piece if it is distributed to prospective shareholders. You should carefully consider the Fund’s investment objectives, risks, charges, and expenses
before investing. Read the prospectus carefully before you invest or send money.
This report includes candid statements and observations regarding investment strategies, individual securities, economic and market
conditions; however, there is no guarantee that these statements, opinions or forecasts will prove to be correct. These comments may
also include the expression of opinions that are speculative in nature and should not be relied on as statements of fact.
Davis New York Venture Fund’s investment objective is long-term growth of capital. There can be no assurance that the Fund will achieve
its objective. Davis New York Venture Fund invests primarily in equity securities issued by large companies with market capitalizations of
at least $10 billion. 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; financial services risk: investing a significant portion of assets in the financial services sector may cause a fund to be
more volatile as securities within the financial services sector are more prone to regulatory action in the financial services industry, more
sensitive to interest rate fluctuations and are the target of increased competition; and foreign country risk: companies operating, incor-
porated 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. As of December 31, 2008, Davis New York Venture Fund had approximately 11.7% of assets invested in foreign companies. See the
prospectus for a complete listing of the principal risks.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors
benefit from understanding our investment philosophy and approach. Our views and opinions regarding the investment prospects of
our portfolio holdings include “forward looking statements” which may or may not be accurate over the long term. While we believe we
have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we
anticipate. These opinions are current as of the date of this piece but are subject to change. Market values will vary so that an investor
may experience a gain or a loss. The information provided in this report should not be considered a recommendation to buy, sell or hold
any particular security. As of December 31, 2008, Davis New York Venture Fund had invested the following percentages of its assets in the
companies listed: AIG, 0.18%; Berkshire Hathaway, 4.16%; Comcast, 2.24%; Costco Wholesale, 4.34%; Dun & Bradstreet, 1.37%; Harley-
Davidson, 0.56%; Johnson & Johnson, 0.63%; Loews, 2.24%; Merrill Lynch, 0.17%; Microsoft, 1.81%; Phillip Morris International, 3.47%;
Procter & Gamble, 1.92%; Schering-Plough, 1.24%; Sealed Air, 1.43%; Wells Fargo, 4.30%.
Davis Funds has adopted a Portfolio Holdings Disclosure policy that governs the release of non-public portfolio holding information.
This policy is described in detail in the prospectus. Visit davisfunds.com or call 800-279-0279 for the most current public portfolio hold-
ings information.
Rolling 10 Year Performance. Davis New York Venture Fund’s average annual total returns for Class A shares were compared against
the returns earned by the S&P 500® Index as of December 31 of each year for all 10 year time periods from 1969 through 2008. The
Fund’s returns assume an investment in Class A shares on January 1 of each year with all dividends and capital gain distributions rein-
vested for a 10 year period. The figures are not adjusted for any sales charge that may be imposed. If a sales charge were imposed, the
reported figures would be lower. The figures shown reflect past results; past performance is not a guarantee of future results. There can
be no guarantee that the Fund will continue to deliver consistent investment performance. The performance presented includes periods
of bear markets when performance was negative. Equity markets are volatile and an investor may lose money. Returns for other share
classes will vary.
Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing con-
tinuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commis-
sions; 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 representa-
tives 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.
Over the last five years, the high and low turnover ratio for Davis New York Venture Fund was 16% and 3%, respectively.
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. The Dow Jones Industrial Average is a price-weighted average of 30 actively
traded blue chip stocks. The Dow Jones is calculated by adding the closing prices of the component stocks and using a divisor that is
adjusted for splits and stock dividends equal to 10% or more of the market value of an issue as well as substitutions and mergers. The
average is quoted in points, not in dollars. Investments cannot be made directly in an index.
After April 30, 2009, this material must be accompanied by a supplement containing performance data for the most recent quarter end.
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.
The information provided in this commentary, unless otherwise indicated, is as of the date that this commentary was written (January 2009).

Item #4772 12/08 Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800-279-0279, davisfunds.com