Davis Large Cap Value Portfolio

    Overview

    Investment Strategy

    The goal of the Davis Large Cap Value Portfolio is to provide investors access to attractive investment opportunities among large cap, durable, well-managed businesses. We seek to purchase these businesses at value prices and hold them for the long term. This approach makes the Davis Large Cap Value Portfolio an ideal foundation for an investor’s portfolio.

    Using our signature Davis Investment Discipline, the Portfolio has generated consistent long-term outperformance versus the S&P 500® Index.1 Click here to learn more about our historical record of attractive long-term returns.

    Why Invest in the Davis Large Cap Value Portfolio

    Sixty Years of Experience

    The Davis family has compounded wealth for investors over six decades and three generations.

    Long-Term Investment Results

    The Davis Large Cap Value Portfolio has a unique record of consistent long-term outperformance versus the S&P 500® Index.1  See the illustrations below for additional detail.

    Aligned with Shareholders

    With more than $2 billion invested side by side with fellow shareholders, we experience the same risks and reap the same rewards.2

     

    Performance as of 3/31/17

    1) Compounding Wealth - To be one of the very best over the long term does not mean you have to be number one every year.

    As the chart below illustrates, from 1/1/79–3/31/17 Davis Large Cap Value delivered an average annualized return of 14.3%—remarkably outperforming the S&P 500® Index and the Russell 1000® Value Index by an average of 2.3% per year.3

    A hypothetical $100,000 investment in Davis Large Cap Value in 1979 has compounded to $16,488,741, while the S&P 500® Index compounded into only $7,132,978 and the Russell 1000® Value Index to only $8,155,943 over that same time period. (Gross of fees. See below for net of fee returns.)

    We have been able to create superior long-term investment results, despite the inevitable and expected fact that other investments may have outperformed the Portfolio in any particular year.

    Year Davis Large Cap
    Value SMA Composite
    (gross of fees)
    S&P 500® Index Russell 1000®
    Value Index
    1979 40.3% 18.6% 20.6%
    1980 45.4% 32.5% 24.4%
    1981 2.2% -4.9% 1.3%
    1982 26.6% 21.6% 20.0%
    1983 24.3% 22.6% 28.3%
    1984 5.9% 6.3% 10.1%
    1985 38.9% 31.7% 31.5%
    1986 23.1% 18.7% 20.0%
    1987 -0.6% 5.3% 0.5%
    1988 22.5% 16.6% 23.2%
    1989 35.9% 31.6% 25.2%
    1990 -2.0% -3.1% -8.1%
    1991 41.8% 30.4% 24.6%
    1992 13.1% 7.6% 13.6%
    1993 15.6% 10.1% 18.1%
    1994 -1.4% 1.3% -2.0%
    1995 40.9% 37.5% 38.4%
    1996 28.4% 22.9% 21.6%
    1997 35.6% 33.4% 35.2%
    1998 15.9% 28.6% 15.6%
    1999 18.9% 21.0% 7.4%
    2000 10.7% -9.1% 7.0%
    2001 -10.7% -11.9% -5.6%
    2002 -16.7% -22.1% -15.5%
    2003 30.9% 28.7% 30.0%
    2004 12.6% 10.9% 16.5%
    2005 10.0% 4.9% 7.1%
    2006 14.2% 15.8% 22.3%
    2007 2.9% 5.5% -0.2%
    2008 -36.1% -37.0% -36.9%
    2009 27.9% 26.5% 19.7%
    2010 11.3% 15.1% 15.5%
    2011 0.3% 2.1% 1.0%
    2012 12.6% 16.0% 17.5%
    2013 32.7% 32.4% 32.5%
    2014 7.9% 13.7% 13.5%
    2015 2.1% 1.4% -3.8%
    2016 6.3% 3.8% 6.7%
    3/31/2017 3.8% 6.1% 3.3%
    Cumulative Total Return 16389% 7033% 8055.94
    Average Annual Rate of Return 14.3% 11.8% 12.19
    Value of a Hypothetical $100,000 Initial Investment $16,488,741 $7,132,978 $8,155,943

    Average Annual
    Total Returns
    as of March 31, 2017
    Large Cap Value Portfolio
    YTD* 1
    Year
    3
    Years
    5
    Years
    7
    Years
    10
    Years
    15
    Years
    20
    Years
    25
    Years
    30
    Years
    35
    Years
    40
    Years
    gross 3.75% 21.77% 8.41% 11.79% 10.95% 6.22% 7.14% 8.44% 10.72% 11.16% 13.57% 14.44%
    with a 3% maximum
    wrap fee
    2.99% 18.23% 5.22% 8.51% 7.69% 3.09% 4.59% 6.35% 8.88% 9.49% 11.99% 12.95%

    * YTD is not annualized.

    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 account may be worth more or less than their original cost. Current performance may be higher or lower. Total return updates are available quarterly. Please ask your financial advisor to contact Davis Advisors.

    2) Patience is a Virtue - By steadfastly adhering to our investment discipline through ever-changing market and economic environments, the Davis Large Cap Value Portfolio has generated an uncommon record of consistent long-term outperformance versus the S&P 500® Index.

    The chart below shows the percentage of time since 1970 the Portfolio has outperformed the S&P 500® Index over various time periods.  Patient investors outperformed the S&P500 in 71% of all 5 year periods. As investor holding periods increased, the likelihood of outperforming the index increased.

    This track record covers periods of inflation, deflation, high interest rates, low interest rates, political crisis, wars, and more.


    Percent of Time the Davis Large Cap Value Portfolio Has Outperformed the Market (1/1/70–3/31/17)4

    Source: Thomson Financial, Lipper, Bloomberg, and Davis Advisors. Past performance is not a guarantee of future results.

    Portfolio Characteristics as of 3/31/17

    Portfolio Composition

    Davis Large Cap
    Value Portfolio
    S&P 500®
    Index
    Forecast P/E Ratio 19.1 18.3
    P/B Ratio 3.1 3.7
    Weighted Average Market Cap ($bn) 166.6 159.5
    Beta (3 year) 1.1 1.0
    Standard Deviation (5 year) 11.0 8.2
    Number of Holdings 37 505
    Turnover 16.1 4.7

    Top 10 Holdings

    AAlphabet Inc 6.5%
    Amazon.com, Inc. 6.0%
    Wells Fargo & Co 6.0%
    JPMorgan Chase & Co 5.7%
    Berkshire Hathaway Inc 5.5%
    Apache Corp 5.1%
    Bank of NY Mellon Corp. 4.8%
    American Express Co 4.5%
    United Technologies Corp 4.0%
    Costco Wholesale Corp 3.4%

    Click here for quarter-end holdings  

    Top Industries

    Diversified Financials 18.6%
    Technology 14.0%
    Banks 12.3%
    Energy 12.0%
    Retail 9.7%
    Captial Goods 7.0%
    Materials 6.8%
    Pharmaceuticals & HealthCare 6.1%
    Automobiles & Components 4.2%
    Food & Staples Retailing 3.6%
    Insurance 2.1%
    Media 1.8%
    Transportation 1.8%

    Literature

    Insights into the Portfolio
    Quarterly Review Book: Large Cap Value and All-Cap Portfolios Download

    A comprehensive quarterly update on the two Portfolios, including commentary on investment strategy, performance and Portfolio statistics, and holdings.

    Fact Sheet Download Goals of the Portfolio, top holdings, characteristics and Portfolio attributes.
    A History of Long-Term Outperformance Download

    Discusses the Davis Large Cap Portfolio's growing success in beating the S&P500® as the holding period increased (ultimately reaching 100%).

    Portfolio Commentaries
    Portfolio Commentary -
    Spring Update 2017
    Download View

    A quarterly discussion of the market environment, Portfolio performance, major positions, and investment opportunities.

    Insights into Successful Investing
    Fortune Magazine – Warren Buffett: “Why stocks beat gold and bonds” Download Warren Buffett on the real danger of investments commonly thought of as “safe”, and why “productive assets” like equities offer a much better chance of maintaining purchasing power (compounding wealth after taxes and inflation).

    This material may be shared with existing and potential clients to provide information concerning market conditions and the investment strategies and techniques used by Davis Advisors to manage its client accounts. Please refer to Davis Advisors  Form ADV Part 2 for more information regarding investment strategies, risks, fees, and expenses. Clients should also review other relevant material, including a schedule of investments listing securities held in their account.

    The Davis Large Cap Value Portfolio is represented by Davis Advisors’ Large Cap Value SMA Composite. See Performance disclosure for a description of the Composite.


    1Gross of fees. Returns discussed are from the first full year after inception of the Large Cap Value Composite (4/1/69) through 3/31/17. Past performance is not a guarantee of future results.

    2As of December 31, 2016.

    3Gross of fees. This chart starts in 1979 because that is when the Russell 1000® Value Index was first calculated. Both Davis Large Cap Value Composite and the S&P 500® Index have longer histories.

    4The performance shown does not include fees and the percent of time the portfolio has outperformed the market would be lower if fees were included.


    Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756