Can you bel-elve it?

Yesterday Mark decided to introduce Tully to Lord of the Rings. I started explaining that it was a made up story, hobbits aren't real, wizards aren't real, elves aren't real etc. She stopped me there and said "Mummy, what do you mean? Of course elves are real. What about Father Christmas' elves?!". Hmmm, good point well made. I did some backtracking...