Davis Appreciation and Income Fund
Overview
Investment Strategy
The goal of the Davis Appreciation and Income Fund is to provide long-term growth of capital through a combination of convertible securities, stocks, bonds and preferred stocks.
The Fund seeks to deliver much of the market’s upside performance while helping to mitigate some of its downside risk. Its goal is to do so over complete market cycles, though the Fund may not achieve these results in every calendar year.
Why Invest in the Davis Appreciation and Income Fund
Long-Term Investment Results
Through up-market years since 1992, the Fund has delivered an average annual return of 14.90% vs 16.95% for the S&P 500® Index. Through down market years since 1992, the Fund has delivered an average annual return of -12.79% vs. -20.02% for the S&P 500® Index.1
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
Our Culture of Shareholder Stewardship
Morningstar has recognized Davis Advisors commitment to shareholders by awarding the Fund its highest overall Stewardship Grade of A, a level achieved by less than 14% of the funds Morningstar grades.3
Lower than Average Expense Ratio4
Davis Appreciation and Income Fund A: 0.95%; Lipper category average, 1.37%
Lower than Average Turnover Rate4
Davis Appreciation and Income Fund, 11%; Lipper category average, 65%
Performance as of 3/31/13
By focusing intensely on risk management and carefully considering how much we might lose on a new investment before we consider how much we might earn, the Davis Appreciation and Income Fund has historically delivered much of the market’s upside performance while helping to mitigate some of its downside risk.5
1) Returns through up and down years:
Through up-market years since 1992, the Fund has delivered an average annual return of 14.90% vs. 16.95% for the S&P 500® Index.
Through down-market years since 1992, the Fund has delivered an average annual return of -12.79% vs. -20.02% for the S&P 500® Index.
2) Returns
since inception
By avoiding much of the downside risk during the market’s most difficult years, the Fund has delivered attractive long-term results for investors (Returns through 3/31/13).
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 0.95%. 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 performance quoted. For most recent month-end performance, click here or call 800.279.0279.
Portfolio Characteristics as of 3/31/13
Portfolio Allocation
| Common Stock | 61.7% | |
| Convertible Bonds | 23.2% | |
| Convertible Preferred | 6.4% | |
| Foreign Stocks | 3.4% | |
| Cash & Equivalents | 2.9% | |
| Bonds | 2.3% |
Portfolio Composition
| Appreciation and Income Fund |
S&P 500® Index |
|
|---|---|---|
| Forecast P/E Ratio | 14.5 | 14.2 |
| P/B Ratio | 1.9 | 3.0 |
| Weighted Average Market Cap ($bn) | 38.7 | 106.3 |
| Beta (3 year) | 1.0 | 1.0 |
| Standard Deviation (5 year, A Shares) | 22.3 | 18.9 |
| R-Squared | 0.9 | 1.0 |
Turnover and Expenses
| Appreciation and Income Fund |
Lipper Category Average | |
|---|---|---|
| Turnover Rate4 | 11% | 65% |
| Expense Ratio4 (A Shares) | 0.95% | 1.37% |
Top 10 Holdings
| Tyson Foods, Conv. Sr. Notes, 3.25%, 10/15/13 | 5.1% |
| Universal Health Services, Inc. | 4.4% |
| Intel, Conv. Jr. Sub. Deb., 3.25%, 8/1/39 | 4.0% |
| Kohls Corp. | 4.0% |
| Citigroup Inc. | 4.0% |
| United Rental, Conv. Sr. Notes, 4.00%, 11/15/15 | 3.9% |
| Quanta Services, Inc. | 3.9% |
| Devon Energy Corp. | 3.8% |
| Transocean Ltd. | 3.7% |
| Forest City Enterprises, Conv. Sr. Notes, 3.625%, 10/15/14 | 3.6% |
Literature
| Fact Sheets | ||
|---|---|---|
| Fund Fact Sheet | Download Share | Goals of the Fund, types of companies commonly in the Portfolio, top holdings, Portfolio characteristics and historical performance. |
| Important Facts | Download Share | Pursuing the unique goals of the Fund through stocks, bonds and convertible securities; our historical long-term performance; our below-average expenses; and more. |
| Portfolio Manager Commentary | ||
| Manager Commentary - Annual Review 2013 | Download View Share | Portfolio Managers Andrew Davis and Keith Sabol discuss the Fund’s investment strategy, the market environment, Portfolio companies, and recent performance. |
This material must be accompanied or preceded by a current Davis Appreciation and Income Fund Prospectus. You should carefully consider the Fund’s investment objective, risks, charges, and expenses before investing. The prospectus contains this and other information and can be obtained by clicking here or calling 800.279.0279. Read the prospectus carefully before you invest or send money.
1Class A, not including a sales charge. Returns are from inception (5/1/92) through 12/31/12. Past performance is not a guarantee of future results.
2As of December 31, 2012.
3As of December 31, 2012.
4See Expense ratio/Turnover link below.
5While we seek to structure a portfolio that will increase in value when the S&P 500 Index increases and that will provide downside protection when the S&P 500® Index declines in value there can be no assurance that the portfolio will perform in line with our expectations. Past performance is not a guarantee of future results.
(28) Read here for objective/risk disclosures
(29) Read here for Morningstar disclosures
(30) Read here for Expense ratio/Turnover disclosures
(12) Read here for Index definition
(9) Read here for additional disclosures
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756