Investor Return

Investor Behavior

InvestmentResults= X

Investors andFinancial Professionals

InvestmentManagers

12/31/81 – 12/31/02

Davis Large Cap Composite 15.73% 19.34% 3.53% 12.02% 13.66%

Past performance is not a guarantee of future results. Davis Large Cap Composite returns are net of hypothetical 3% maximum wrap fee. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.

Source: John C. Bogle speech “Back to the Future,” January 14, 2003. The Stock Market is represented by the S&P 500® Index. “Fund Return” is the average equity fund. “Return is for the period 12/31/81 – 12/31/02.

13.1%

10.0%

2.0% $1.50

$6.70

$11.50100%

75%

50%

25%

0%

MARKET RETURN

AVERAGE FUND RETURN

INVESTOR RETURN

DAVIS LARGE CAPCOMPOSITE COMPOUNDED

AT 16.25%

THE TIMING AND SELECTION THE TIMING AND SELECTIONPENALTY PENALTY

As of September 30, 2005 1 Year 3 Years 5 Years 10 Years Inception (1969)

Hypothetical Value of $10,000 Invested in the S&P 500® from 12/31/25 – 12/31/04

Source: Ibbotson. As of 12/31/04. For illustrative purposes only. The graphs and charts in this presentation are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. See endnotes for definitions of S&P 500®. Treasury Bills are backed by the U.S. Government and as such are considered a riskless investment.

In Millions $30

$25

$20

$15

$10

$5

$0

$25,330,000

$177,500 $178,700

S&P 500® S&P 500® minus Treasury Bills best 40 months

.

For illustrative purposes only. This is neither a graph of actual performance nor a guarantee of future price appreciation.

“APPREHENSION”

FEAR”

“PANIC”

“EXCITEMENT”

“EXHILIRATION”

“EUPHORIA”

SELL HERE

BUY HERE

“ Pessimism is the most common cause of low prices. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces.

It’s optimism that is the enemy of the rational buyer.”

WARREN BUFFETT The Essential Buffett

RANGE BOUND MARKET HIGH ENERGY PRICES

ECONOMIC UNCERTAINTY TENSION IN THE MIDDLE EAST

RANGE BOUND MARKET HIGH ENERGY PRICES

ECONOMIC UNCERTAINTY TENSION IN THE MIDDLE EAST

1975 +37.20 1976 +23.80 1977 -7.20 1978 +6.60 1979 +18.40 1980 +32.40

Source: MorningstarThese years were chosen to show an example of an increasing market during uncertain times. Past performance is not a guarantee of future results. See the endnotes for a definition of the S&P 500® Index.

1975 - 1980

2000 -9.10 2001 -11.08 2002 -22.09 2003 +28.70 2004 +10.90

2000 - 2004

Source: MorningstarPast performance is not a guarantee of future results. See the endnotes for a definition of the S&P 500® Index.

2500

2000

1500

1000

500

0

$25,000

20,000

15,000

10,000

5,000

01972 1973 1974 1975 1976 1977 1978 1979 1980 1981

DJIAindex

Dollarvalue

11/14/72 10/12/82

*Dow Jones Industrial Average is a price-weighted average of 30 actively traded industrial and service-oriented blue chip stocks.

ICA vs. the Dow*A $10,000 investment in a “flat” stock market (Nov 14, 1972 – Oct 12,

1982)

The Dow at 1003

The Dow at 1004

The Dow withDividendsreinvested

Investment in ICA(dividend Reinvested)

$23,273

= Profits for

$ $ $ $ ≠ Profits for Viewers

= Emotional Investor

NASDAQ 1971-2000 PercentIntra-Day Price

Change

Average DailyHousehold

Viewership of CNBC(In Thousands)

2.5

2.0

1.5

1.0

0.5

0.0

350

300

250

200

150

100

50

0

1971 1975 1980 1985 1990 1995 2000

Source: Union Bank of Switzerland. This was a “one-time” study conducted for the period from 1971 – 2000.

AVERAGE DAILYVOLATILIY

1971 – 2000 = 0.67%

AVERAGE DAILYHOUSEHOLD

VIEWERSHIP OF CNBC

“Crawford’s accuracy has remained amazingly consistent. From May 1977 to early 1981, he was correct on Buy and Sell points 9 times out of 10” – Chicago Tribune, 1981

Crawford Perspectives is a financial markets advisory service utilizing technical analysis and planetary cycles research to determine effective market-timing strategy. Since 1977, its founder, Arch Crawford, has edited Crawford Perspectives, a comprehensive market-timing monthly newsletter for subscribers that has earned praise from investors around the world.

“…a financialmarkets advisory service utilizing technical analysis and planetary cycles to determineeffective market-timing strategy.”

COMPANYJULY 1, 2000

PRICEDEC 31, 2004

PRICE % RETURN

Broadcom $ 218.94 $ 32.28 -85%

Charles Schwab $ 33.63 $ 11.96 -64%

ENRON $ 64.50 - -100%

Genentech $ 42.97 $ 54.44 +26%

Morgan Stanley $ 83.25 $ 55.52 -28%

Nokia $ 50.50 $ 15.67 -67%

Nortel Networks $ 68.23 $ 3.49 -95%

Oracle $ 42.03 $ 13.72 -64%

Univision $ 51.77 $ 29.27 -74%

Viacom $ 68.38 $ 36.39 -53%

TOTAL INVESTMENT $ 100,000 $ 43,179

-57%

Fortune’s Year 2000 Guide to Retiring Rich

The slide should not be considered a recommendation to buy, sell or hold any of the securities mentioned. Past performance is not a guarantee of future results.

Average Forecasted DJIA Close vs. Actual DJIA Close: 1999 – 2003*

-20

-15

-10

-5

0

5

10

15

20

25

30

Forecasted Close

Actual Close

1999 2000 2001 2002 2003

“…An economic forecaster is like a cross-eyed javelin thrower: they don’t win many accuracy contests, but they keep the crowd’s attention.”

ANONYMOUS

*Source: Barron’s Online.

DON’T FALL IN LOVE

My Company Stock☺$500,000

GE: Down 19% (11/00~ 12/05)$405,000

(GE was down 51% from 11/00 ~ 1/03)

General Motors & Amerigroup: Down 51%$245,000

Charles Schwab: Down 57% (9/00 ~ 12/05)$215,000

Ford: Down 69% (5/99 ~ 12/05)$155,000

Tyco: Down 83%(11/01~3/02)

$85,000

Worldcom: Down 100%$0

$500,000 @4% = $1667/moA loss of 19% = $1350/moA loss of 51% = $816/moA loss of 57% = $716/moA loss of 69% = $517/moA loss of 83% = $283/moWorldcom = Back to work @ Age 65