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The Case for International Investing



The International Opportunity

Vast Opportunities Exist Outside U.S. Borders1




Global Middle Class is Growing2





Global Middle Class Spending is Rising3




Foreign Stocks Have Lagged4

The Global Investment Landscape

United States

  • Favorable conditions: low inflation, low interest rates, relatively full employment, moderate growth.
  • Current valuations and margins favor investing selectively.
  • Opportunities include both wide-moat businesses with room for margin expansion and earnings growth and select out-of-favor businesses with strong prospects.

Europe

  • Continues towards recovery from the financial crisis.
  • Opportunities include premier multinational leaders with strong, long-term global growth prospects.
  • Avoid companies with tepid growth tied solely to the European region.

Emerging Markets

  • Attractively valued, but opportunities and risks vary widely by country.
  • Opportunities include companies increasing market share in enormous and fast growing economies such as China and India and industry-dominating businesses in Brazil.
Investment Themes

Rise of the Online Consumer Worldwide

  • The number of internet users has doubled since 2010 to 3.5 billion and is growing at 10% per year.5
  • A vast opportunity exists in the years ahead: Global online purchases are growing at 17% per year, yet account for only 7% of total retail sales worldwide.6
  • Many of the best opportunities for investing in this theme are international, as 75% of online purchases occur outside the U.S.7
  • Beneficiaries include Amazon, JD.com, Naspers and Alibaba.

Expansion of Global Transportation

  • The movement of people and products worldwide is accelerating because of the expansion of world trade, the emerging global middle class, and the proliferation of the Internet worldwide.
  • The world's transportation infrastructure has not kept pace with rising demand. For example in India, there are currently fewer than 500 commercial passenger aircraft for 1.2 billion people.8
  • Beneficiaries include InterGlobe Aviation, ZTO Express and Safran.

Boom in College-Prep Education in Asia

  • College admissions in Asia is hyper-competitive, with large numbers of students competing at early ages for a finite number of spots.
  • In China, 200 million students in grades K-12 will compete for admission to top universities, with only a 3% acceptance rate versus 28% in the U.S.9
  • Beneficiaries include: New Oriental Education & Technology, and Tarena International.
Putting These Ideas to Work

Davis Select International ETF (DINT):

High-conviction, best ideas portfolio Non-U.S. companies in both developed and emerging markets
Benchmark Agnostic Seeks to outperform the index, not mirror it
Low expected turnover and a strategic, long term time horizon Our long-term focus allows investments to compound
Traditional benefits of ETFs: Low cost, tax efficient, intra-day liquidity and transparent

Factsheet
Fund Overview
Video

Davis Select Worldwide ETF (DWLD):

High-conviction, best ideas portfolio Invests in the US and abroad, in both developed and emerging markets
Benchmark Agnostic Seeks to outperform the index, not mirror it
Low expected turnover and a strategic, long term time horizon Our long-term focus allows investments to compound
Traditional benefits of ETFs: Low cost, tax efficient, intra-day liquidity and transparent

Factsheet
Fund Overview
Video

See important legal disclosure: click here.



Disclaimer

1. Source: World Bank as of 12/31/17. 2. Source: UN & OECD 12/31/17. 3. Source: ©OECD, The Emerging Middle Class in Developing Countries, January 2010. 4. Source: Davis Advisors. The first bar shows the average of the 10-year average annual returns of the MSCI ACWI ex US gross of foreign withholding taxes; the first period is from 1/1/1988 to 12/31/1997 and the last period is from 1/1/2008 to 12/31/2017. Recent Return shows the average annual return from 1/1/2008 to 12/31/2017. Past performance is not a guarantee of future results. 5. Source: Mary Meeker “Internet Trends 2017 Report.” 6. Source: Mary Meeker “Internet Trends 2017 Report.” 7. Sources: Statista “Number of Digital Shoppers in the United States and Worldwide” https://www.statista.com/statistics/183755/number-of-us-internet-shoppers-since-2009/ and https://www.statista.com/statistics/251666/number-of-digital-buyers-worldwide/. 8. Sources: Statista “India: Total Population” https://www.statista.com/statistics/263766/total-population-of-india/and Know India “Indian Airline Fleet Data”http://www.knowindia.net/aviation7.html. 9. Sources: Nation Master “China and United States Compared: Education Stats” http://www.nationmaster.com/country-info/compare/China/United-States/Education, Education Corner “Top 100 – Colleges with Lowest Acceptance Rates” https://www.educationcorner.com/colleges-with-lowest-acceptance-rates.html, Statista “Number of Elementary School Students in China” https://www.statista.com/statistics/232239/number-of-elementary-school-students-in-china-by-region/, and National Bureau of Statistics of China http://www.stats.gov.cn/tjsj/ndsj/2016/html/2107EN.jpg, http://www.stats.gov.cn/tjsj/ndsj/2016/html/2128EN.jpg

This report is authorized for use by existing shareholders. A current Davis ETF Trust prospectus must accompany or precede this material if it is distributed to prospective shareholders. You should carefully consider the Fund’s investment objective, 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, and 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.

Objective and Risks.The investment objective of Davis Select Worldwide ETF and Davis Select International ETF is long-term growth of capital. There can be no assurance that the Fund will achieve its objective. Some important risks of an investment in the Fund are: authorized participant concentration risk: to the extent that Authorized Participants exit the business or are unable or unwilling to proceed with creation and/or redemption orders with respect to the Fund and no other Authorized Participant is able to step forward to create or redeem Creation Units, Fund shares may trade at a discount to NAV and could face delisting; common stock risk; cybersecurity risk; depositary receipts risk: depositary receipts involve higher expenses and may trade at a discount (or premium) to the underlying security; emerging market risk: securities of issuers in emerging and developing markets may present risks not found in more mature markets; exchange-traded fund risk: the Fund is subject to the risks of owning the underlying securities as well as the risks of owning an exchange-traded fund generally; fees and expenses risk; foreign country risk; foreign currency risk; foreign market risk; headline risk; intraday indicative value risk: the Fund’s INAV agent intends to disseminate the approximate per share value of the Fund’s published basket of portfolio securities every 15 seconds. The IIV should not be viewed as a ‘‘real-time’’ update of the NAV per share of the Fund because the IIV may not be calculated in the same manner as the NAV, the calculation of NAV may be subject to fair valuation at different prices, the IIV does not take into account Fund expenses, and the IIV calculations are based on local market prices and may not reflect events that occur subsequent to the local market’s close; large-capitalization companies risk; manager risk; market trading risk: includes the possibility of an inactive market for Fund shares, losses from trading in secondary markets, periods of high volatility, and disruptions in the creation/redemption process. ONE OR MORE OF THESE FACTORS, AMONG OTHERS, COULD LEAD TO THE FUND’S SHARES TRADING AT A PREMIUM OR DISCOUNT TO NAV; mid- and small-capitalization companies risk; and stock market risk. See the prospectus for a complete description 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 include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. 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.

The information provided in this material should not be considered a recommendation to buy, sell or hold any particular security.

As of March 31, 2018, the top ten holdings of Davis Select Worldwide ETF were: Alphabet Inc., Class C 6.42%; Amazon.com, Inc. 6.13%; Alibaba Group Holding Ltd., ADR 6.02%; Naspers Ltd. – N 5.26%; Hollysys Automation Technologies Ltd. 4.47%; Berkshire Hathaway Inc., Class B 4.21%; Wells Fargo & Co. 3.73%; JD.com Inc., Class A, ADR 3.61%; Encana Corp. 3.55%; Apache Corp. 3.37%;

As of March 31, 2018, the top ten holdings of Davis Select International ETF were: Alibaba Group Holding Ltd., ADR6.58%; Naspers Ltd. – N 5.91%; Hollysys Automation Technologies Ltd. 5.77%; Ferguson PLC 4.91%; New Oriental Edu & Tech ADR 4.44%; Safran S.A. 4.43%; JD.com Inc., Class A, ADR 3.97%; Schneider Electric SE 3.94%; Tarena International, Inc.,Class A, AD 3.76%; Encana Corp. 3.66%

Davis Select International ETF began operations on March 1, 2018. For current fund holdings go to davisetfs.com.

Davis Fundamental ETF Trust has adopted a Portfolio Holdings Disclosure policy that governs the release of non-public portfolio holding information. This policy is described in the prospectus. Holding percentages are subject to change. Visit davisfunds.com or call 800 279 0279 for the most current public portfolio holdings information.

Shares of the Davis Fundamental ETF Trust 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.

Distributor, Foreside Fund Services, LLC, 800-279-0279, davisetfs.com