Davis Variable Account Fund NCSR Certified annual shareholder report (management investment company)

Davis Variable Account Fund N-CSRCertified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-09293

DAVIS VARIABLE ACCOUNT FUND, INC.

(Exact name of registrant as specified in charter)

2949 East Elvira Road, Suite 101

Tucson, AZ 85756

(Address of principal executive offices)

Thomas D. Tays

Davis Selected Advisers, L.P.

2949 East Elvira Road, Suite 101

Tucson, AZ 85756

(Name and address of agent for service)

Registrant’s telephone number, including area code: 520-806-7600

Date of fiscal year end: December 31, 2012

Date of reporting period: December 31, 2012

____________________

ITEM 1. REPORT TO STOCKHOLDERS

DAVIS VARIABLE ACCOUNT FUND, INC.

Table of Contents

Management’s Discussion of Fund Performance:
Davis Value Portfolio	2
Davis Financial Portfolio	4
Davis Real Estate Portfolio ��	6

Fund Overview:
Davis Value Portfolio	8
Davis Financial Portfolio	10
Davis Real Estate Portfolio	11

Expense Example	13

Schedule of Investments:
Davis Value Portfolio	14
Davis Financial Portfolio	18
Davis Real Estate Portfolio	20

Statements of Assets and Liabilities	23

Statements of Operations	24

Statements of Changes in Net Assets	25

Notes to Financial Statements	27

Federal Income Tax Information	34

Financial Highlights:
Davis Value Portfolio	35
Davis Financial Portfolio	36
Davis Real Estate Portfolio	37

Report of Independent Registered Public Accounting Firm	38

Directors and Officers	39

This Annual Report is authorized for use by existing shareholders. Prospective shareholders must receive a current Davis Variable Account Fund, Inc. prospectus, which contains more information about investment strategies, risks, charges, and expenses. Please read the prospectus carefully before investing or sending money.

Shares of the Davis Variable Account Funds 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.

Portfolio Proxy Voting Policies and Procedures

The Funds have adopted Portfolio Proxy Voting Policies and Procedures under which the Funds vote proxies relating to securities held by the Funds. A description of the Funds’ Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Funds toll-free at 1-800-279-0279, (ii) on the Funds’ website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

In addition, the Funds are required to file Form N-PX, with their complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Funds’ Form N-PX filing is available (i) without charge, upon request, by calling the Funds toll-free at 1-800-279-0279, (ii) on the Funds’ website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

Form N-Q

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Form N-Q is available without charge, upon request, by calling 1-800-279-0279, on the Funds’ website at www.davisfunds.com, and on the SEC’s website at www.sec.gov. The Funds’ Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS VALUE PORTFOLIO

Performance Overview

Davis Value Portfolio delivered a total return on net asset value of 13.08% for the year ended December 31, 2012. Over the same time period, the Standard & Poor’s 500® Index (“Index”) returned 16.00%. The sectors1 within the Index that turned in the strongest performance over the year were Financials and Consumer Discretionary. The sectors within the Index that turned in the weakest performance (but still positive) were Utilities and Energy.

Factors Impacting the Portfolio’s Performance

Energy companies were the most important detractor2 from the Portfolio’s performance. The Portfolio’s Energy companies under-performed the corresponding sector within the Index and had a slightly lower relative average weighting in this weaker performing sector. EOG Resources3 was among the most important contributors to performance. Canadian Natural Resources, Occidental Petroleum, OGX Petroleo e Gas Participacoes, Devon Energy, and China Coal Energy were among the most important detractors from performance. The Portfolio no longer owns OGX Petroleo e Gas Participacoes or China Coal Energy.

Consumer Discretionary companies contributed to the Portfolio’s absolute performance, but detracted from its performance relative to the Index. The Portfolio’s Consumer Discretionary companies under-performed the corresponding sector within the Index and had a lower relative average weighting in this stronger performing sector. Walt Disney was among the most important contributors to performance. Bed Bath & Beyond and Groupon were among the most important detractors from performance.

Financial companies were the most important contributor to the Portfolio’s absolute performance. The Portfolio’s Financial companies under-performed the corresponding sector within the Index, but benefited from a higher relative average weighting in this stronger performing sector. Wells Fargo, Bank of New York Mellon, and American Express were among the most important contributors to performance. Julius Baer Group and Fairfax Financial Holdings were among the most important detractors from performance.

Consumer Staple companies were also an important contributor to the Portfolio’s performance. The Portfolio’s Consumer Staple companies out-performed the corresponding sector within the Index and had a higher relative average weighting. Costco Wholesale, CVS Caremark, and Diageo were among the most important contributors to performance.

The Portfolio had approximately 17% of its net assets invested in foreign companies at December 31, 2012. As a whole, those companies under-performed the domestic companies held by the Portfolio.

Davis Value Portfolio’s investment objective is long-term growth of capital. There can be no assurance that the Portfolio will achieve its objective. Davis Value Portfolio’s principal risks are: stock market risk, manager risk, common stock risk, financial services risk, foreign country risk, emerging market risk, foreign currency risk, trading markets and depositary receipts risk, headline risk, and fees and expenses risk. See the prospectus for a full description of each risk.

1 The companies included in the Standard & Poor’s 500® Index are divided into ten sectors. One or more industry groups make up a sector.

2 A company’s or sector’s contribution to or detraction from the Portfolio’s performance is a product both of its appreciation or depreciation and its weighting within the Portfolio. For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%.

3 This Management Discussion of Fund Performance discusses a number of individual companies. The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. The Schedule of Investments lists the Portfolio’s holdings of each company discussed.

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS VALUE PORTFOLIO - (CONTINUED)

Comparison of a $10,000 investment in Davis Value Portfolio versus the Standard & Poor’s 500® Index

over 10 years for an investment made on December 31, 2002

Average Annual Total Return for periods ended December 31, 2012

Fund & Benchmark Index	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Value Portfolio	13.08%	(0.89)%	6.26%	3.27%	0.64%	0.64%
Standard & Poor’s 500® Index	16.00%	1.66%	7.10%	2.11%

The Standard & Poor’s 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalizations, and represents approximately two-thirds of the total market value of all domestic common stocks. Investments cannot be made directly in the Index.

The performance data for Davis Value Portfolio contained in this report represents past performance, assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Portfolio today. The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed. Portfolio performance changes over time and current performance may be higher or lower than stated. The operating expense ratio may vary in future years. For more current information please call Davis Funds Investor Services at 1-800-279-0279.

Portfolio performance numbers are net of all Portfolio operating expenses, but do not include any insurance charges imposed by your insurance company’s separate account. If performance included the effect of these additional charges, the return would be lower.

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS FINANCIAL PORTFOLIO

Performance Overview

Davis Financial Portfolio delivered a total return on net asset value of 18.83% for the year ended December 31, 2012. Over the same time period, the Standard & Poor’s 500® Index (“Index”) returned 16.00%.

Factors Impacting the Portfolio’s Performance

The Portfolio’s Financial sector holdings under-performed the corresponding sector1 within the Index, but out-performed the Index as a whole. The Financial sector was the strongest performing sector of the Index. The Portfolio also had a limited amount of assets invested in other sectors, which contributed2 to overall performance.

Diversified Financial companies were the largest contributor to the Portfolio’s performance. The Portfolio’s Diversified Financial companies under-performed the corresponding industry group within the Index. American Express3, Visa, Bank of New York Mellon, Brookfield Asset Management, and Goldman Sachs Group were among the most important contributors to performance. Julius Baer Group and First Marblehead were among the most important detractors from performance.

Insurance companies were the second largest contributor to the Portfolio’s performance. The Portfolio’s Insurance companies under-performed the corresponding industry group within the Index. Transatlantic Holdings, Everest Re Group, and Alleghany were among the most important contributors to performance. Transatlantic Holdings was acquired by Alleghany in March of 2012.

Banking companies were the third largest contributor to the Portfolio’s performance. The Portfolio’s Banking companies out-performed the corresponding industry group within the Index. Wells Fargo and State Bank of India were among the most important contributors to performance.

Canadian Natural Resources was the single most important detractor from the Portfolio’s performance during the year. Sino-Forest and Bed Bath & Beyond were also among the most important detractors from the Portfolio’s performance. The Portfolio no longer owns Sino-Forest.

The Portfolio had approximately 23% of its net assets invested in foreign companies at December 31, 2012. As a whole, those companies under-performed the domestic companies held by the Portfolio.

Davis Financial Portfolio’s investment objective is long-term growth of capital. There can be no assurance that the Portfolio will achieve its objective. Davis Financial Portfolio’s principal risks are: stock market risk, manager risk, common stock risk, concentrated portfolio risk, financial services risk, focused portfolio risk, foreign country risk, emerging market risk, foreign currency risk, trading markets and depositary receipts risk, under $10 billion market capitalization risk, interest rate sensitivity risk, credit risk, headline risk, and fees and expenses risk. See the prospectus for a full description of each risk.

Davis Financial Portfolio concentrates its investments in the financial sector, and it may be subject to greater risks than a portfolio that does not concentrate its investments in a particular sector. The Portfolio’s investment performance, both good and bad, is expected to reflect the economic performance of the financial sector more than a portfolio that does not concentrate its investments.

1 The companies included in the Standard & Poor’s 500® Index are divided into ten sectors. One or more industry groups make up a sector.

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS FINANCIAL PORTFOLIO - (CONTINUED)

Comparison of a $10,000 investment in Davis Financial Portfolio versus the Standard & Poor’s 500® Index

over 10 years for an investment made on December 31, 2002

Average Annual Total Return for periods ended December 31, 2012

Fund & Benchmark Index	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Financial Portfolio	18.83%	(1.65)%	4.93%	2.88%	0.69%	0.69%
Standard & Poor’s 500® Index	16.00%	1.66%	7.10%	2.11%

The performance data for Davis Financial Portfolio contained in this report represents past performance, assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Portfolio today. The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed. Portfolio performance changes over time and current performance may be higher or lower than stated. The operating expense ratio may vary in future years. For more current information please call Davis Funds Investor Services at 1-800-279-0279.

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS REAL ESTATE PORTFOLIO

Performance Overview

Davis Real Estate Portfolio delivered a total return on net asset value of 17.15% for the year ended December 31, 2012. Over the same time period, the Wilshire U.S. Real Estate Securities Index (“Index”) returned 17.55%. Every sub-industry1 within the Index delivered positive returns. Industrial REITs and Retail REITs turned in the strongest performances while Hotels, Resorts & Cruise Lines and Residential REITs turned in the weakest (but still positive) performances over the year.

Factors Impacting the Portfolio’s Performance

Retail REITs were the most important contributor2 to the Portfolio’s absolute performance. The Portfolio’s Retail REITs performed in-line with the corresponding sub-industry within the Index, but a lower relative average weighting in this stronger performing sub-industry detracted from performance relative to the Index. Simon Property Group3, CBL & Associates Properties, and DDR were among the most important contributors to performance. Taubman Centers was among the weakest performers, turning in a small positive performance.

The Portfolio had more invested in Office REITs than in any other sub-industry and they were another important contributor to the Portfolio’s absolute performance. The Portfolio’s Office REITs out-performed the corresponding sub-industry within the Index, but a higher relative average weighting compared to the Index detracted from relative performance. Coresite Realty and Brandywine Realty Trust were among the most important contributors to performance. DuPont Fabros Technology was among the most important detractors from performance. The Portfolio no longer owns Coresite Realty.

Other important contributors to the Portfolio’s performance were Forest City Enterprises, Weyerhaeuser, and DCT Industrial Trust. LaSalle Hotel Properties and HCP detracted from the Portfolio’s performance. The Portfolio’s bond holdings also contributed to the Portfolio’s performance lagging the Index. The Portfolio no longer owns Weyerhaeuser.

Davis Real Estate Portfolio’s investment objective is total return through a combination of growth and income. There can be no assurance that the Portfolio will achieve its objective. Davis Real Estate Portfolio’s principal risks are: stock market risk, manager risk, common stock risk, concentrated portfolio risk, real estate risk, focused portfolio risk, foreign country risk, under $10 billion market capitalization risk, variable current income risk, headline risk, and fees and expenses risk. See the prospectus for a full description of each risk.

Davis Real Estate Portfolio concentrates its investments in the real estate sector, and it may be subject to greater risks than a portfolio that does not concentrate its investments in a particular sector. The Portfolio’s investment performance, both good and bad, is expected to reflect the economic performance of the real estate sector much more than a portfolio that does not concentrate its investments.

Davis Real Estate Portfolio is allowed to focus its investments in fewer companies, and it may be subject to greater risks than a more diversified portfolio that is not allowed to focus its investments in a few companies. Should the portfolio manager determine that it is prudent to focus the Portfolio’s investments in a few companies, the Portfolio’s investment performance, both good and bad, is expected to reflect the economic performance of its more focused portfolio.

1 The companies included in the Wilshire U.S. Real Estate Securities Index are divided into eight sub-industries.

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS REAL ESTATE PORTFOLIO - (CONTINUED)

Comparison of a $10,000 investment in Davis Real Estate Portfolio versus the

Standard & Poor’s 500® Index and the Wilshire U.S. Real Estate Securities Index

over 10 years for an investment made on December 31, 2002

Average Annual Total Return for periods ended December 31, 2012

Fund & Benchmark Indices	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Real Estate Portfolio	17.15%	1.32%	9.61%	8.67%	0.77%	0.77%
Standard & Poor’s 500® Index	16.00%	1.66%	7.10%	2.11%
Wilshire U.S. Real Estate Securities Index	17.55%	5.08%	11.65%	10.91%

The Wilshire U.S. Real Estate Securities Index is a broad measure of the performance of publicly traded real estate securities. It reflects no deduction for fees or expenses. Investments cannot be made directly in the Index.

The performance data for Davis Real Estate Portfolio contained in this report represents past performance, assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Portfolio today. The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed. Portfolio performance changes over time and current performance may be higher or lower than stated. The operating expense ratio may vary in future years. For more current information please call Davis Funds Investor Services at 1-800-279-0279.

DAVIS VARIABLE ACCOUNT FUND, INC.	Fund Overview
DAVIS VALUE PORTFOLIO	December 31, 2012

Portfolio Composition		Industry Weightings
(% of Fund’s 12/31/12 Net Assets)		(% of 12/31/12 Long-Term Portfolio)

				Fund	S&P 500®
Common Stock (U.S.)	78.19%	Diversified Financials	18.12%			6.45%
Common Stock (Foreign)	17.32%	Insurance	12.43%			3.99%
Convertible Bonds (Foreign)	0.03%	Food & Staples Retailing	11.59%			2.35%
Short-Term Investments	4.19%	Energy	9.85%			10.94%
Other Assets & Liabilities	0.27%	Information Technology	9.08%			18.96%
	100.00%	Materials	7.27%			3.61%
		Food, Beverage & Tobacco	6.21%			5.91%
		Banks	6.10%			2.84%
		Retailing	5.46%			4.13%
		Health Care	3.01%			12.38%
		Transportation	2.92%			1.62%
		Media	2.65%			3.54%
		Other	2.65%			14.81%
		Capital Goods	1.35%			7.80%
		Commercial & Professional Services	1.31%			0.67%
			100.00%			100.00%

Top 10 Long-Term Holdings

(% of Fund’s 12/31/12 Net Assets)


CVS Caremark Corp.	Food & Staples Retailing	6.42%
Wells Fargo & Co.	Commercial Banks	5.83%
American Express Co.	Consumer Finance	5.68%
Bank of New York Mellon Corp.	Capital Markets	5.07%
Costco Wholesale Corp.	Food & Staples Retailing	4.37%
Google Inc., Class A	Software & Services	4.01%
Loews Corp.	Multi-line Insurance	2.87%
Berkshire Hathaway Inc., Class A	Property & Casualty Insurance	2.83%
EOG Resources, Inc.	Energy	2.78%
Bed Bath & Beyond Inc.	Retailing	2.68%

DAVIS VARIABLE ACCOUNT FUND, INC.	Fund Overview
DAVIS VALUE PORTFOLIO - (CONTINUED)	December 31, 2012

New Positions Added (01/01/12-12/31/12)

(Highlighted positions are those greater than 0.30% of the Fund’s 12/31/12 net assets)

Security	Industry	Date of 1st Purchase	% of Fund’s 12/31/12 Net Assets
Emerson Electric Co.	Capital Goods	05/02/12		0.40%
Groupon, Inc.	Retailing	03/14/12		0.16%
International Business Machines Corp.	Software & Services	11/07/12		0.32%
Laboratory Corp. of America Holdings	Health Care Equipment & Services	10/25/12		0.12%
Sysco Corp.	Food & Staples Retailing	03/06/12		0.28%
Tiffany & Co.	Retailing	01/23/12		0.30%
Walgreen Co.	Food & Staples Retailing	01/24/12		–

Positions Closed (01/01/12-12/31/12)

(Gains and losses greater than $1,000,000 are highlighted)

Security	Industry	Date of Final Sale		Realized Gain(Loss)
Baxter International Inc.	Health Care Equipment & Services	07/13/12	$	215,253
Becton, Dickinson and Co.	Health Care Equipment & Services	06/15/12		227,854
China Coal Energy Co., Ltd. - H	Energy	10/11/12		557,642
China Shipping Development Co., Ltd. - H	Transportation	10/16/12		(1,850,329)
Expedia, Inc.	Retailing	11/20/12		1,258,653
Johnson & Johnson	Pharmaceuticals, Biotechnology &
	Life Sciences	07/03/12		1,021,280
Kraft Foods Inc., Class A	Food, Beverage & Tobacco	06/18/12		548,737
Li & Fung Ltd.	Retailing	08/10/12		125,432
LLX Logistica S.A.	Transportation	06/15/12		(43,343)
Lockheed Martin Corp.	Capital Goods	07/18/12		568,964
Merck & Co., Inc.	Pharmaceuticals, Biotechnology &
	Life Sciences	07/09/12		4,672,686
MMX Mineracao e Metalicos S.A., Pfd.	Materials	02/02/12		11,603
OGX Petroleo e Gas Participacoes S.A.	Energy	12/28/12		(893,356)
Roche Holding AG - Genusschein	Pharmaceuticals, Biotechnology &
	Life Sciences	07/20/12		808,892
Sealed Air Corp.	Materials	11/13/12		383,887
Sino-Forest Corp.	Materials	07/10/12		(4,503,143)
Sino-Forest Corp., Restricted	Materials	07/10/12		(141,083)
Transatlantic Holdings, Inc.	Reinsurance	03/06/12		96,317
TripAdvisor Inc.	Retailing	04/17/12		330,578
Walgreen Co.	Food & Staples Retailing	11/20/12		31,860

DAVIS VARIABLE ACCOUNT FUND, INC.	Fund Overview
DAVIS FINANCIAL PORTFOLIO	December 31, 2012

Portfolio Composition		Industry Weightings
(% of Fund’s 12/31/12 Net Assets)		(% of 12/31/12 Stock Holdings)

				Fund	S&P 500®
Common Stock (U.S.)	75.41%	Diversified Financials	39.08%		6.45%
Common Stock (Foreign)	23.41%	Insurance	31.80%		3.99%
Short-Term Investments	1.36%	Banks	19.50%		2.84%
Other Assets & Liabilities	(0.18)%	Energy	2.99%		10.94%
	100.00%	Food & Staples Retailing	2.94%		2.35%
		Information Technology	2.35%		18.96%
		Retailing	1.34%		4.13%
		Health Care	–		12.38%
		Capital Goods	–		7.80%
		Food, Beverage & Tobacco	–		5.91%
		Other	–		24.25%
			100.00%		100.00%

Top 10 Long-Term Holdings

(% of Fund’s 12/31/12 Net Assets)


American Express Co.	Consumer Finance	10.61%
Wells Fargo & Co.	Commercial Banks	8.89%
State Bank of India Ltd., GDR	Commercial Banks	6.12%
Bank of New York Mellon Corp.	Capital Markets	5.85%
Markel Corp.	Property & Casualty Insurance	5.60%
Loews Corp.	Multi-line Insurance	5.51%
Julius Baer Group Ltd.	Capital Markets	4.91%
Alleghany Corp.	Reinsurance	4.82%
American International Group, Inc.	Multi-line Insurance	4.65%
Brookfield Asset Management Inc., Class A	Capital Markets	4.53%

New Positions Added (01/01/12-12/31/12)

(Highlighted positions are those greater than 4.00% of the Fund’s 12/31/12 net assets)

Security	Industry	Date of 1st Purchase	% of Fund’s 12/31/12 Net Assets
ACE Ltd.	Property & Casualty Insurance	04/02/12	2.55%
American International Group, Inc.	Multi-line Insurance	10/24/12	4.65%
Google Inc., Class A	Software & Services	04/16/12	2.32%
PNC Financial Services Group, Inc.	Commercial Banks	01/18/12	–
Toronto-Dominion Bank	Commercial Banks	04/02/12	2.61%

Positions Closed (01/01/12-12/31/12)

(Gains and losses greater than $500,000 are highlighted)

Security	Industry	Date of Final Sale		Realized Gain(Loss)
Banco Santander Brasil S.A., ADS	Commercial Banks	02/22/12	$	(56,657)
PNC Financial Services Group, Inc.	Commercial Banks	02/22/12		18,658
RHJ International	Diversified Financial Services	02/28/12		(853,941)
Sino-Forest Corp.	Materials	07/10/12		(1,287,807)
T. Rowe Price Group Inc.	Capital Markets	02/24/12		156,681
Transatlantic Holdings, Inc.	Reinsurance	03/06/12		81,870

DAVIS VARIABLE ACCOUNT FUND, INC.	Fund Overview
DAVIS REAL ESTATE PORTFOLIO	December 31, 2012

Portfolio Composition		Industry Weightings
(% of Fund’s 12/31/12 Net Assets)		(% of 12/31/12 Long-Term Portfolio)

					Wilshire U.S. Real Estate Securities Index
Common Stock	84.41%
Preferred Stock	6.59%			Fund
Convertible Bonds	2.47%	Office REITs	29.13%			14.55%
Short-Term Investments	6.22%	Residential REITs	21.97%			18.31%
Other Assets & Liabilities	0.31%	Specialized REITs	18.11%			27.82%
	100.00%	Retail REITs	16.97%			25.72%
		Industrial REITs	6.60%			5.04%
		Real Estate Operating Companies	3.90%			1.55%
		Diversified REITs	3.32%			6.65%
		Hotels, Resorts & Cruise Lines	–			0.36%
			100.00%			100.00%

Top 10 Long-Term Holdings

(% of Fund’s 12/31/12 Net Assets)


American Campus Communities, Inc.	Residential REITs	5.19%
Simon Property Group, Inc.	Retail REITs	4.97%
Digital Realty Trust, Inc.	Office REITs	4.41%
Alexandria Real Estate Equities, Inc.	Office REITs	4.41%
Rayonier Inc.	Specialized REITs	3.44%
Forest City Enterprises, Inc., Class A	Real Estate Operating Companies	3.25%
Alexandria Real Estate Equities, Inc., 7.00%, Series D, Cum. Conv. Pfd.	Office REITs	3.15%
Vornado Realty Trust	Diversified REITs	3.11%
AvalonBay Communities, Inc.	Residential REITs	2.95%
Ventas, Inc.	Specialized REITs	2.81%

DAVIS VARIABLE ACCOUNT FUND, INC.	Fund Overview
DAVIS REAL ESTATE PORTFOLIO - (CONTINUED)	December 31, 2012

New Positions Added (01/01/12-12/31/12)

(Highlighted positions are those greater than 1.50% of the Fund’s 12/31/12 net assets)

Security	Industry	Date of 1st Purchase	% of Fund’s 12/31/12 Net Assets
American Tower Corp.	Specialized REITs	01/05/12		1.69%
BRE Properties, Inc.	Residential REITs	11/01/12		2.57%
DuPont Fabros Technology Inc.,
7.625%, Series B, Pfd.	Office REITs	01/13/12		0.41%
Home Properties, Inc.	Residential REITs	04/23/12		0.96%
Host Hotels & Resorts Inc.	Specialized REITs	01/13/12		2.48%
LaSalle Hotel Properties	Specialized REITs	07/20/12		1.63%
Potlatch Corp.	Specialized REITs	04/27/12		–
Sunstone Hotel Investors, Inc.	Specialized REITs	01/13/12		–
Taubman Centers, Inc.	Retail REITs	06/25/12		1.03%
Taubman Centers, Inc., 6.50%, Series J, Pfd.	Retail REITs	08/03/12		0.36%
Weyerhaeuser Co.	Specialized REITs	04/27/12		–

Positions Closed (01/01/12-12/31/12)

(Gains and losses greater than $100,000 are highlighted)

Security	Industry	Date of Final Sale		Realized Gain (Loss)
Coresite Realty Corp.	Office REITs	10/15/12	$	352,542
CubeSmart	Specialized REITs	06/29/12		19,439
Plum Creek Timber Co., Inc.	Specialized REITs	06/27/12		(174)
Potlatch Corp.	Specialized REITs	09/17/12		32,959
SL Green Operating Partnership L.P., 144A
Conv. Sr. Notes, 3.00%, 03/30/27	Office REITs	03/30/12		1,359
Sunstone Hotel Investors, Inc.	Specialized REITs	06/08/12		33,042
Weyerhaeuser Co.	Specialized REITs	10/03/12		198,305

DAVIS VARIABLE ACCOUNT FUND, INC.

Expense Example

Example

As a shareholder of each Fund, you incur ongoing costs only, including advisory and administrative fees and other Fund expenses. The Expense Example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for each Fund is for the six-month period ended December 31, 2012. Please note that the Expense Example is general and does not reflect charges imposed by your insurance company’s separate account or account specific costs, which may increase your total costs of investing in the Fund. If these charges or account specific costs were included in the Expense Example, the expenses would have been higher.

Actual Expenses

The information represented in the row entitled “Actual” provides information about actual account values and actual expenses. You may use the information in this row, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The information represented in the row entitled “Hypothetical” provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the information in the row entitled “Hypothetical” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value	Ending Account Value	Expenses Paid During Period*
	(07/01/12)	(12/31/12)	(07/01/12-12/31/12)

Davis Value Portfolio
(annualized expense ratio 0.64%**)
Actual	$1,000.00	$1,059.94	$3.31
Hypothetical	$1,000.00	$1,021.92	$3.25

Davis Financial Portfolio
(annualized expense ratio 0.68%**)
Actual	$1,000.00	$1,068.39	$3.54
Hypothetical	$1,000.00	$1,021.72	$3.46

Davis Real Estate Portfolio
(annualized expense ratio 0.76%**)
Actual	$1,000.00	$1,023.10	$3.86
Hypothetical	$1,000.00	$1,021.32	$3.86

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS VALUE PORTFOLIO	December 31, 2012

			Shares		Value (Note 1)
COMMON STOCK – (95.51%)
CONSUMER DISCRETIONARY – (8.81%)
	Automobiles & Components – (0.67%)
		Harley-Davidson, Inc.		47,540	$	2,321,854
	Consumer Durables & Apparel – (0.39%)
		Compagnie Financiere Richemont S.A., Bearer Shares, Unit A (Switzerland)		8,900		698,610
		Hunter Douglas N.V. (Netherlands)		16,499		644,848
						1,343,458
	Media – (2.53%)
		Grupo Televisa S.A.B., ADR (Mexico)		34,200		909,036
		Walt Disney Co.		157,550		7,844,415
						8,753,451
	Retailing – (5.22%)
		Bed Bath & Beyond Inc. *		165,555		9,253,697
		CarMax, Inc. *		57,240		2,148,790
		Groupon, Inc. *		112,240		547,170
		Liberty Interactive Corp., Series A *		96,334		1,896,816
		Liberty Ventures, Series A *		6,479		439,244
		Netflix Inc. *		29,290		2,716,940
		Tiffany & Co.		17,980		1,030,973
						18,033,630
Total Consumer Discretionary						30,452,393
CONSUMER STAPLES – (17.23%)
	Food & Staples Retailing – (11.07%)
		Costco Wholesale Corp.		152,900		15,110,342
		CVS Caremark Corp.		458,388		22,163,060
		Sysco Corp.		30,810		975,445
						38,248,847
	Food, Beverage & Tobacco – (5.93%)
		Coca-Cola Co.		126,760��		4,595,050
		Diageo PLC, ADR (United Kingdom)		63,733		7,429,993
		Heineken Holding N.V. (Netherlands)		66,921		3,684,847
		Nestle S.A. (Switzerland)		5,130		334,699
		Philip Morris International Inc.		40,060		3,350,619
		Unilever N.V., NY Shares (Netherlands)		29,170		1,117,211
						20,512,419
	Household & Personal Products – (0.23%)
		Natura Cosmeticos S.A. (Brazil)		27,500		787,594
Total Consumer Staples						59,548,860
ENERGY – (9.41%)
		Canadian Natural Resources Ltd. (Canada)		303,920		8,774,170
		Devon Energy Corp.		56,740		2,952,750
		EOG Resources, Inc.		79,550		9,608,845
		Occidental Petroleum Corp.		91,630		7,019,774
		Schlumberger Ltd.		30,400		2,106,416
		Transocean Ltd.		46,104		2,058,544
Total Energy						32,520,499

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS VALUE PORTFOLIO - (CONTINUED)	December 31, 2012

				Shares		Value (Note 1)
COMMON STOCK – (CONTINUED)
FINANCIALS – (36.09%)
	Banks – (5.83%)
		Commercial Banks – (5.83%)
			Wells Fargo & Co.		589,394	$	20,145,487
	Diversified Financials – (17.31%)
		Capital Markets – (9.97%)
			Ameriprise Financial, Inc.		26,370		1,651,553
			Bank of New York Mellon Corp.		681,400		17,511,980
			Brookfield Asset Management Inc., Class A (Canada)		112,010		4,105,166
			Charles Schwab Corp.		127,770		1,834,777
			Goldman Sachs Group, Inc.		13,610		1,736,092
			Julius Baer Group Ltd. (Switzerland)		213,361		7,596,249
							34,435,817
		Consumer Finance – (5.68%)
			American Express Co.		341,619		19,636,260
		Diversified Financial Services – (1.66%)
			CME Group Inc.		12,600		638,883
			JPMorgan Chase & Co.		52,918		2,326,805
			Visa Inc., Class A		18,240		2,764,819
							5,730,507
							59,802,584
	Insurance – (11.88%)
		Insurance Brokers – (0.18%)
			Aon PLC		11,020		612,712
		Multi-line Insurance – (3.57%)
			Fairfax Financial Holdings Ltd. (Canada)		4,230		1,520,473
			Fairfax Financial Holdings Ltd., 144A (Canada)(a)		2,490		897,547
			Loews Corp.		243,080		9,905,510
							12,323,530
		Property & Casualty Insurance – (6.44%)
			ACE Ltd.		36,920		2,946,216
			Berkshire Hathaway Inc., Class A *		73		9,786,380
			Markel Corp. *		1,290		559,112
			Progressive Corp.		424,370		8,954,207
							22,245,915
		Reinsurance – (1.69%)
			Alleghany Corp. *		15,571		5,222,825
			Everest Re Group, Ltd.		5,740		631,113
							5,853,938
							41,036,095
	Real Estate – (1.07%)
			Hang Lung Group Ltd. (Hong Kong)		643,000		3,703,391
Total Financials							124,687,557
HEALTH CARE – (2.88%)
	Health Care Equipment & Services – (2.24%)
			Express Scripts Holding Co. *		135,700		7,326,443
			Laboratory Corp. of America Holdings *		4,630		401,050
							7,727,493

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS VALUE PORTFOLIO - (CONTINUED)	December 31, 2012

				Shares		Value (Note 1)
COMMON STOCK – (CONTINUED)
HEALTH CARE – (CONTINUED)
	Pharmaceuticals, Biotechnology & Life Sciences – (0.64%)
		Agilent Technologies, Inc.			30,970	$	1,267,912
		Pfizer Inc.			37,850		949,278
							2,217,190
Total Health Care							9,944,683
INDUSTRIALS – (5.33%)
	Capital Goods – (1.29%)
		Emerson Electric Co.			26,200		1,387,552
		PACCAR Inc.			67,620		3,056,086
							4,443,638
	Commercial & Professional Services – (1.25%)
		Iron Mountain Inc.			139,674		4,336,878
	Transportation – (2.79%)
		China Merchants Holdings International Co., Ltd. (China)			1,673,048		5,452,746
		Kuehne & Nagel International AG (Switzerland)			34,733		4,187,379
							9,640,125
Total Industrials							18,420,641
INFORMATION TECHNOLOGY – (8.68%)
	Semiconductors & Semiconductor Equipment – (1.76%)
		Intel Corp.			39,980		824,987
		Texas Instruments Inc.			169,120		5,235,110
							6,060,097
	Software & Services – (6.63%)
		Activision Blizzard, Inc.			182,970		1,945,886
		Google Inc., Class A *			19,520		13,845,829
		International Business Machines Corp.			5,700		1,091,835
		Microsoft Corp.			105,400		2,816,815
		Oracle Corp.			96,550		3,218,011
							22,918,376
	Technology Hardware & Equipment – (0.29%)
		Hewlett-Packard Co.			70,131		999,367
Total Information Technology							29,977,840
MATERIALS – (6.91%)
		Air Products and Chemicals, Inc.			61,800		5,192,436
		BHP Billiton PLC (United Kingdom)			74,430		2,625,405
		Ecolab Inc.			42,700		3,070,130
		Martin Marietta Materials, Inc.			9,110		858,891
		Monsanto Co.			61,700		5,839,905
		Potash Corp. of Saskatchewan Inc. (Canada)			59,662		2,427,647
		Praxair, Inc.			13,670		1,496,181
		Rio Tinto PLC (United Kingdom)			40,505		2,362,479
Total Materials							23,873,074
TELECOMMUNICATION SERVICES – (0.17%)
		America Movil S.A.B. de C.V., Series L, ADR (Mexico)			25,680		594,235
Total Telecommunication Services							594,235
			TOTAL COMMON STOCK – (Identified cost $204,173,084)				330,019,782

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS VALUE PORTFOLIO - (CONTINUED)	December 31, 2012

				Principal			Value (Note 1)
CONVERTIBLE BONDS – (0.03%)
MATERIALS – (0.03%)
	Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13 (Canada) (b)(c)				$	736,000	$	109,940
			TOTAL CONVERTIBLE BONDS – (Identified cost $736,000)					109,940
SHORT-TERM INVESTMENTS – (4.19%)
	Banc of America Securities LLC Joint Repurchase Agreement, 0.18%, 01/02/13, dated 12/31/12, repurchase value of $6,290,063 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.50%-4.50%, 04/01/42-11/01/42, total market value $6,415,800)					6,290,000		6,290,000
	Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.27%, 01/02/13, dated 12/31/12, repurchase value of $8,187,123 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 4.00%, 09/20/40-10/15/40, total market value $8,350,740)					8,187,000		8,187,000
			TOTAL SHORT-TERM INVESTMENTS – (Identified cost $14,477,000)					14,477,000
		Total Investments – (99.73%) – (Identified cost $219,386,084) – (d)						344,606,722
		Other Assets Less Liabilities – (0.27%)						949,155
Net Assets – (100.00%)							$	345,555,877

	ADR: American Depositary Receipt

	*	Non-Income producing security.

	(a)	This security is subject to Rule 144A. The Board of Directors of the Fund has determined that there is sufficient liquidity in this security to realize current valuations. This security amounted to $897,547 or 0.26% of the Fund's net assets as of December 31, 2012.

	(b)	Restricted Security – See Note 7 of the Notes to Financial Statements.

	(c)	This security is in default. See Note 1 of the Notes to Financial Statements.

	(d)	Aggregate cost for federal income tax purposes is $220,972,911. At December 31, 2012 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:

Unrealized appreciation		$	126,395,998
Unrealized depreciation			(2,762,187)
	Net unrealized appreciation	$	123,633,811

See Notes to Financial Statements

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS FINANCIAL PORTFOLIO	December 31, 2012

				Shares/Units		Value (Note 1)
COMMON STOCK – (98.82%)
CONSUMER DISCRETIONARY – (1.32%)
	Retailing – (1.32%)
			Bed Bath & Beyond Inc. *		15,900	$	888,731
Total Consumer Discretionary							888,731
CONSUMER STAPLES – (2.91%)
	Food & Staples Retailing – (2.91%)
			CVS Caremark Corp.		40,480		1,957,208
Total Consumer Staples							1,957,208
ENERGY – (2.96%)
			Canadian Natural Resources Ltd. (Canada)		68,790		1,985,967
Total Energy							1,985,967
FINANCIALS – (89.31%)
	Banks – (19.27%)
		Commercial Banks – (19.27%)
			ICICI Bank Ltd., ADR (India)		15,750		686,858
			State Bank of India Ltd., GDR (India)		45,148		4,117,334
			Toronto-Dominion Bank (Canada)		20,800		1,754,064
			U.S. Bancorp		13,150		420,011
			Wells Fargo & Co.		174,940		5,979,449
							12,957,716
	Diversified Financials – (38.62%)
		Capital Markets – (22.09%)
			Ameriprise Financial, Inc.		14,740		923,166
			Bank of New York Mellon Corp.		153,130		3,935,441
			Brookfield Asset Management Inc., Class A (Canada)		83,100		3,045,615
			Charles Schwab Corp.		13,000		186,680
			Goldman Sachs Group, Inc.		16,890		2,154,489
			Julius Baer Group Ltd. (Switzerland)		92,754		3,302,302
			Oaktree Capital Group LLC, Class A		28,700		1,305,563
							14,853,256
		Consumer Finance – (10.83%)
			American Express Co.		124,110		7,133,842
			First Marblehead Corp. *		194,994		151,491
							7,285,333
		Diversified Financial Services – (5.70%)
			Bank of America Corp.		14,486		168,037
			Cielo S.A. (Brazil)		30,600		851,719
			Visa Inc., Class A		18,560		2,813,325
							3,833,081
							25,971,670
	Insurance – (31.42%)
		Multi-line Insurance – (10.16%)
			American International Group, Inc. *		88,600		3,127,580
			Loews Corp.		91,010		3,708,658
							6,836,238
		Property & Casualty Insurance – (12.35%)
			ACE Ltd.		21,500		1,715,700
			Markel Corp. *		8,695		3,768,587

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS FINANCIAL PORTFOLIO - (CONTINUED)	December 31, 2012

						Shares/Principal		Value (Note 1)
COMMON STOCK – (CONTINUED)
FINANCIALS – (CONTINUED)
	Insurance – (Continued)
		Property & Casualty Insurance – (Continued)
			Progressive Corp.				133,655	$	2,820,120
									8,304,407
		Reinsurance – (8.91%)
			Alleghany Corp. *				9,663		3,241,163
			Everest Re Group, Ltd.				25,040		2,753,148
									5,994,311
									21,134,956
				Total Financials					60,064,342
INFORMATION TECHNOLOGY – (2.32%)
	Software & Services – (2.32%)
			Google Inc., Class A *				2,200		1,560,493
				Total Information Technology					1,560,493
					TOTAL COMMON STOCK – (Identified cost $49,949,605)				66,456,741

SHORT-TERM INVESTMENTS – (1.36%)
			Banc of America Securities LLC Joint Repurchase Agreement, 0.18%, 01/02/13, dated 12/31/12, repurchase value of $398,004 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.50%-4.50%, 04/01/42-11/01/42, total market value $405,960)			$	398,000		398,000
			Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.27%, 01/02/13, dated 12/31/12, repurchase value of $519,008 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 4.00%, 09/20/40-10/15/40, total market value $529,380)				519,000		519,000
					TOTAL SHORT-TERM INVESTMENTS – (Identified cost $917,000)				917,000

Total Investments – (100.18%) – (Identified cost $50,866,605) – (a)			67,373,741
Liabilities Less Other Assets – (0.18%)			(119,167)
	Net Assets – (100.00%)	$	67,254,574

ADR: American Depositary Receipt

GDR: Global Depositary Receipt

* Non-Income producing security.

(a)

Aggregate cost for federal income tax purposes is $51,219,863. At December 31, 2012 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:

Unrealized appreciation		$	20,455,073
Unrealized depreciation			(4,301,195)
	Net unrealized appreciation	$	16,153,878

See Notes to Financial Statements

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS REAL ESTATE PORTFOLIO	December 31, 2012

					Shares		Value (Note 1)
COMMON STOCK – (84.41%)
	FINANCIALS – (84.41%)
		Real Estate – (84.41%)
			Real Estate Investment Trusts (REITs) – (81.16%)
				Diversified REITs – (3.11%)
				Vornado Realty Trust		10,890	$	872,071
				Industrial REITs – (5.10%)
				DCT Industrial Trust Inc.		92,140		597,989
				EastGroup Properties, Inc.		11,980		644,644
				Prologis, Inc.		5,190		189,383
								1,432,016
				Office REITs – (20.73%)
				Alexandria Real Estate Equities, Inc.		17,870		1,238,748
				BioMed Realty Trust, Inc.		40,570		784,218
				Boston Properties, Inc.		7,130		754,425
				Brandywine Realty Trust		16,080		196,015
				Corporate Office Properties Trust		17,730		442,895
				Digital Realty Trust, Inc.		18,250		1,238,993
				DuPont Fabros Technology Inc.		28,000		676,480
				SL Green Realty Corp.		6,330		485,195
								5,816,969
				Residential REITs – (20.54%)
				American Campus Communities, Inc.		31,600		1,457,708
				AvalonBay Communities, Inc.		6,110		828,455
				BRE Properties, Inc.		14,200		721,786
				Education Realty Trust, Inc.		58,390		621,270
				Equity Residential		10,220		579,167
				Essex Property Trust, Inc.		4,140		607,131
				Home Properties, Inc.		4,410		270,377
				Post Properties, Inc.		13,570		677,822
								5,763,716
				Retail REITs – (14.76%)
				CBL & Associates Properties, Inc.		23,230		492,708
				DDR Corp.		41,990		657,563
				Federal Realty Investment Trust		4,300		447,286
				Kimco Realty Corp.		30,130		582,112
				Macerich Co.		4,820		281,006
				Simon Property Group, Inc.		8,822		1,394,670
				Taubman Centers, Inc.		3,660		288,115
								4,143,460
				Specialized REITs – (16.92%)
				American Tower Corp.		6,150		475,211
				EPR Properties		8,010		369,341
				HCP, Inc.		6,130		276,953
				Host Hotels & Resorts Inc.		44,450		696,531
				LaSalle Hotel Properties		18,020		457,528
				Public Storage		4,980		721,901
				Rayonier Inc.		18,610		964,556

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS REAL ESTATE PORTFOLIO - (CONTINUED)	December 31, 2012

					Shares/Principal			Value (Note 1)
COMMON STOCK – (CONTINUED)
FINANCIALS – (CONTINUED)
	Real Estate – (Continued)
		Real Estate Investment Trusts (REITs) – (Continued)
			Specialized REITs – (Continued)
			Ventas, Inc.				12,180	$	788,290
									4,750,311
									22,778,543
		Real Estate Management & Development – (3.25%)
			Real Estate Operating Companies – (3.25%)
			Forest City Enterprises, Inc., Class A *				56,550		913,282
Total Financials									23,691,825
				TOTAL COMMON STOCK – (Identified cost $21,158,641)					23,691,825
PREFERRED STOCK – (6.59%)
FINANCIALS – (6.59%)
	Real Estate – (6.59%)
		Real Estate Investment Trusts (REITs) – (6.59%)
			Industrial REITs – (1.07%)
			Prologis, Inc., 6.75%, Series M				11,900		299,107
			Office REITs – (4.42%)
			Alexandria Real Estate Equities, Inc., 7.00%, Series D, Cum. Conv. Pfd.				33,272		883,787
			Digital Realty Trust, Inc., 5.50%, Series D, Cum. Conv. Pfd.				5,700		243,497
			DuPont Fabros Technology Inc., 7.625%, Series B				4,300		114,488
									1,241,772
			Retail REITs – (1.10%)
			CBL & Associates Properties, Inc., 7.375%, Series D				8,280		208,263
			Taubman Centers, Inc., 6.50%, Series J				3,890		99,681
									307,944
Total Financials									1,848,823
				TOTAL PREFERRED STOCK – (Identified cost $932,240)					1,848,823
CONVERTIBLE BONDS – (2.47%)
FINANCIALS – (2.47%)
	Real Estate – (2.47%)
		Real Estate Investment Trusts (REITs) – (2.08%)
			Office REITs – (2.08%)
			Digital Realty Trust, L.P., 144A Conv. Sr. Notes, 5.50%, 04/15/29 (a)			$	344,000		583,295
		Real Estate Management & Development – (0.39%)
			Real Estate Operating Companies – (0.39%)
			Forest City Enterprises, Inc., Conv. Sr. Notes, 5.00%, 10/15/16				80,000		110,250
Total Financials									693,545
				TOTAL CONVERTIBLE BONDS – (Identified cost $424,000)					693,545

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS REAL ESTATE PORTFOLIO - (CONTINUED)	December 31, 2012

				Principal		Value (Note 1)
SHORT-TERM INVESTMENTS – (6.22%)
	Banc of America Securities LLC Joint Repurchase Agreement, 0.18%, 01/02/13, dated 12/31/12, repurchase value of $759,008 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.50%-4.50%, 04/01/42-11/01/42, total market value $774,180)			$	759,000	$	759,000
	Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.27%, 01/02/13, dated 12/31/12, repurchase value of $987,015 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 4.00%, 09/20/40-10/15/40, total market value $1,006,740)				987,000		987,000
			TOTAL SHORT-TERM INVESTMENTS – (Identified cost $1,746,000)				1,746,000
		Total Investments – (99.69%) – (Identified cost $24,260,881) – (b)					27,980,193
		Other Assets Less Liabilities – (0.31%)					88,120
		Net Assets – (100.00%)				$	28,068,313

	*	Non-Income producing security.

	(a)	This security is subject to Rule 144A. The Board of Directors of the Fund has determined that there is sufficient liquidity in this security to realize current valuations. This security amounted to $583,295 or 2.08% of the Fund's net assets as of December 31, 2012.

	(b)	Aggregate cost for federal income tax purposes is $24,337,068. At December 31, 2012 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:

	Unrealized appreciation	$	3,849,186
	Unrealized depreciation		(206,061)
	Net unrealized appreciation	$	3,643,125

See Notes to Financial Statements

DAVIS VARIABLE ACCOUNT FUND, INC.	Statements of Assets and Liabilities
	At December 31, 2012

			Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio
ASSETS:
Investments in securities at value* (see accompanying Schedules of Investments)		$	344,606,722	$	67,373,741	$	27,980,193
Cash			1,960		1,077		1,603
Receivables:
	Capital stock sold		18,182		494		4,626
	Dividends and interest		281,005		8,742		137,933
	Investment securities sold		1,028,377		–		–
Prepaid expenses			7,205		1,311		625
Total assets			345,943,451		67,385,365		28,124,980
LIABILITIES:
Payables:
	Capital stock redeemed		172,700		72,671		18,380
Accrued audit fees			14,080		12,280		12,280
Accrued custodian fees			21,323		6,700		4,700
Accrued management fees			165,000		32,043		15,149
Other accrued expenses			14,471		7,097		6,158
Total liabilities			387,574		130,791		56,667
NET ASSETS		$	345,555,877	$	67,254,574	$	28,068,313
SHARES OUTSTANDING			31,621,397		5,823,353		2,591,099
NET ASSET VALUE, offering, and redemption price per share (Net assets ÷ Shares outstanding)		$	10.93	$	11.55	$	10.83
NET ASSETS CONSIST OF:
Par value of shares of capital stock		$	31,621	$	5,823	$	2,591
Additional paid-in capital			218,206,370		53,268,962		32,887,218
Undistributed (overdistributed) net investment income			270,037		(8,925)		179,150
Accumulated net realized gains (losses) from investments			1,827,193		(2,518,362)		(8,719,958)
Net unrealized appreciation on investments and foreign currency transactions			125,220,656		16,507,076		3,719,312
Net Assets		$	345,555,877	$	67,254,574	$	28,068,313

*Including:
	Cost of investments	$	219,386,084	$	50,866,605	$	24,260,881


See Notes to Financial Statements

DAVIS VARIABLE ACCOUNT FUND, INC.	Statements of Operations
	For the year ended December 31, 2012

			Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio
INVESTMENT INCOME:
Income:
Dividends*		$	8,014,208	$	1,093,909	$	604,862
Interest			35,713		7,713		26,887
	Total income		8,049,921		1,101,622		631,749

Expenses:
Management fees (Note 3)			1,951,591		362,657		149,763
Custodian fees			97,088		24,691		16,416
Transfer agent fees			20,862		9,133		5,817
Audit fees			20,640		18,240		18,240
Legal fees			9,500		1,765		735
Accounting fees (Note 3)			6,000		2,004		2,004
Reports to shareholders			47,444		8,450		570
Directors’ fees and expenses			86,722		18,460		9,299
Registration and filing fees			300		55		22
Miscellaneous			15,500		8,765		7,803
Total expenses			2,255,647		454,220		210,669
Expenses paid indirectly (Note 4)			(11)		(6)		(4)
	Net expenses		2,255,636		454,214		210,665
Net investment income			5,794,285		647,408		421,084

REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
	Investment transactions		12,134,644		(277,384)		3,153,765
	Foreign currency transactions		(7,084)		374		(316)
Net realized gain (loss)			12,127,560		(277,010)		3,153,449
Net increase in unrealized appreciation			25,803,494		10,754,760		616,385
	Net realized and unrealized gain on investments and foreign currency transactions		37,931,054		10,477,750		3,769,834
Net increase in net assets resulting from operations		$	43,725,339	$	11,125,158	$	4,190,918

*Net of foreign taxes withheld as follows		$	110,276	$	16,241	$	–

See Notes to Financial Statements

DAVIS VARIABLE ACCOUNT FUND, INC.	Statements of Changes in Net Assets
	For the year ended December 31, 2012

			Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio

OPERATIONS:
Net investment income		$	5,794,285	$	647,408	$	421,084
Net realized gain (loss) from investments and foreign currency transactions			12,127,560		(277,010)		3,153,449
Net increase in unrealized appreciation on investments and foreign currency transactions			25,803,494		10,754,760		616,385
	Net increase in net assets resulting from operations		43,725,339		11,125,158		4,190,918

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income			(5,672,379)		(1,319,573)		(285,310)
Realized gains from investment transactions			(20,797,749)		(7,861)		–
Return of capital			–		(411,358)		–

CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets resulting from capital share transactions (Note 5)			(23,067,869)		(2,965,665)		(62,833)
	Total increase (decrease) in net assets		(5,812,658)		6,420,701		3,842,775

NET ASSETS:
Beginning of year			351,368,535		60,833,873		24,225,538
End of year*		$	345,555,877	$	67,254,574	$	28,068,313

*Including undistributed (overdistributed) net investment income of		$	270,037	$	(8,925)	$	179,150

See Notes to Financial Statements

DAVIS VARIABLE ACCOUNT FUND, INC.	Statements of Changes in Net Assets
	For the year ended December 31, 2011

			Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio

OPERATIONS:
Net investment income		$	4,593,836	$	713,290	$	377,173
Net realized gain from investments and foreign currency transactions			48,575,205		10,106,393		3,630,195
Net decrease in unrealized appreciation on investments and foreign currency transactions			(68,379,428)		(16,489,959)		(1,898,899)
	Net increase (decrease) in net assets resulting from operations		(15,210,387)		(5,670,276)		2,108,469

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income			(3,162,493)		(872,599)		(332,205)

Realized gains from investment transactions			(27,598,703)		–		–

CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets resulting from capital share transactions (Note 5)			(75,394,092)		(15,025,823)		(2,820,012)
	Total decrease in net assets		(121,365,675)		(21,568,698)		(1,043,748)

NET ASSETS:
Beginning of year			472,734,210		82,402,571		25,269,286
End of year*		$	351,368,535	$	60,833,873	$	24,225,538

*Including undistributed net investment income of		$	117,705	$	528,054	$	43,692

See Notes to Financial Statements

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Davis Variable Account Fund, Inc. (a Maryland corporation), consists of three series of funds, Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio (collectively “Funds”). Davis Value Portfolio and Davis Financial Portfolio are registered under the Investment Company Act of 1940 (“40 Act”), as amended, as diversified, open-end management investment companies. Davis Real Estate Portfolio is registered under the 40 Act, as amended, as a non-diversified, open-end management investment company. Only insurance companies, for the purpose of funding variable annuity or variable life insurance contracts, may purchase shares of the Funds. The Funds account separately for the assets, liabilities, and operations of each series. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements.

Security Valuation - The Funds calculate the net asset value of their shares as of the close of the New York Stock Exchange (“Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Securities listed on the Exchange (and other national exchanges) are valued at the last reported sales price on the day of valuation. Securities traded in the over-the-counter market (e.g. NASDAQ) and listed securities for which no sale was reported on that date are stated at the average of closing bid and asked prices. Securities traded on foreign exchanges are valued based upon the last sales price on the principal exchange on which the security is traded prior to the time when the Funds’ assets are valued. Fixed income securities with more than 60 days to maturity are generally valued using evaluated prices or matrix pricing methods determined by an independent pricing service which takes into consideration factors such as yield, maturity, liquidity, ratings, and traded prices in identical or similar securities. Securities (including restricted securities) for which market quotations are not readily available or securities whose values have been materially affected by what Davis Selected Advisers, L.P. (“Davis Advisors” or “Adviser”), the Funds’ investment adviser, identifies as a significant event occurring before the Funds’ assets are valued, but after the close of their respective exchanges will be fair valued using a standardized fair valuation methodology applicable to the security type or the significant event as previously approved by the Funds’ Pricing Committee and Board of Directors. The Pricing Committee considers all facts it deems relevant that are reasonably available, through either public information or information available to the Adviser’s portfolio management team, when determining the fair value of a security. To assess the continuing appropriateness of security valuations, the Adviser may compare prior day prices, prices of comparable securities, and sale prices to the prior or current day prices and challenge those prices exceeding certain tolerance levels with the third-party pricing service or broker source. Fair value determinations are subject to review, approval, and ratification by the Funds’ Board of Directors at its next regularly scheduled meeting covering the period in which the fair valuation was determined.

Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value.

The Funds’ valuation procedures are reviewed and subject to approval by the Board of Directors. There have been no significant changes to the fair valuation procedures during the period.

Value Measurements - Fair value is defined as the price that the Funds would receive upon selling an investment in an orderly transaction to an independent buyer in the principal market for the investment. Various inputs are used to determine the fair value of the Funds’ investments. These inputs are summarized in the three broad levels listed below.

Level 1 –	quoted prices in active markets for identical securities
Level 2 –	other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
Level 3 –	significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities nor can it be assured that the Funds can obtain the fair value assigned to a security if they were to sell the security.

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Value Measurements - (Continued)

The following is a summary of the inputs used as of December 31, 2012 in valuing each Fund’s investments carried at value:

	Investments in Securities at Value

	Davis Value		Davis Financial		Davis Real Estate
	Portfolio		Portfolio		Portfolio
Valuation inputs
Level 1 – Quoted Prices:
Equity securities:
Consumer discretionary	$	29,108,935	$	888,731	$	–
Consumer staples		55,529,314		1,957,208		–
Energy		32,520,499		1,985,967		–
Financials		113,387,917		52,644,706		25,297,151
Health care		9,944,683		–		–
Industrials		8,780,516		–		–
Information technology		29,977,840		1,560,493		–
Materials		18,885,190		–		–
Telecommunication services		594,235		–		–
Total Level 1		298,729,129		59,037,105		25,297,151

Level 2 – Other Significant Observable Inputs:
Convertible debt securities		109,940		–		693,545
Equity securities*:
Consumer discretionary		1,343,458		–		–
Consumer staples		4,019,546		–		–
Financials		11,299,640		7,419,636		243,497
Industrials		9,640,125		–		–
Materials		4,987,884		–		–
Short-term securities		14,477,000		917,000		1,746,000
Total Level 2		45,877,593		8,336,636		2,683,042

Level 3 – Significant Unobservable Inputs:
Total Level 3		–		–		–
Total Investments	$	344,606,722	$	67,373,741	$	27,980,193


Level 1 to Level 2 Transfers**:
Consumer discretionary	$	1,343,458	$	–	$	–
Consumer staples		4,019,546		–		–
Financials		11,299,640		7,419,636		–
Industrials		9,640,125		–		–
Materials		4,987,884		–		–
Total	$	31,290,653	$	7,419,636	$	–


Level 2 to Level 1 Transfers**:
Financials	$	–	$	1,305,563	$	–

*Includes certain securities trading primarily outside the U.S. whose value the Fund adjusted as a result of significant market movements following the close of local trading.

**Application of fair value procedures for securities traded on foreign exchanges and the initial public offering of an investment triggered the transfers of investments between Level 1 and Level 2 of the fair value hierarchy during the year ended December 31, 2012.

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Value Measurements - (Continued)

The following table reconciles the valuation of assets in which significant unobservable inputs (Level 3) were used in determining fair value during the year ended December 31, 2012:

	Davis Value Portfolio		Davis Financial Portfolio
Investment Securities:
Beginning balance	$	208,691	$	136,620
Net realized loss		(4,644,226)		(1,287,807)
Decrease in unrealized depreciation		4,435,535		1,151,187
Ending balance	$	–	$	–

There were no transfers of investments into or out of Level 3 of the fair value hierarchy during the period. Realized and unrealized gains (losses) are included in the related amounts on investments in the Statements of Operations.

Master Repurchase Agreements - The Funds, along with other affiliated funds, may transfer uninvested cash balances into one or more master repurchase agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. Government securities. A custodian bank holds securities pledged as collateral for repurchase agreements until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

Currency Translation - The market values of all assets and liabilities denominated in foreign currencies are recorded in the financial statements after translation to the U.S. Dollar based upon the mean between the bid and offered quotations of the currencies against U.S. Dollars on the date of valuation. The cost basis of such assets and liabilities is determined based upon historical exchange rates. Income and expenses are translated at average exchange rates in effect as accrued or incurred.

Foreign Currency - The Funds may enter into forward purchases or sales of foreign currencies to hedge certain foreign currency denominated assets and liabilities against declines in market value relative to the U.S. Dollar. Forward currency contracts are marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss. When the forward currency contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the forward currency contract at the time it was opened and value at the time it was closed. Investments in forward currency contracts may expose the Funds to risks resulting from unanticipated movements in foreign currency exchange rates or failure of the counter-party to the agreement to perform in accordance with the terms of the contract.

Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds’ books, and the U.S. Dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. The Funds include foreign currency gains and losses realized on the sales of investments together with market gains and losses on such investments in the Statements of Operations.

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Federal Income Taxes - It is each Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute substantially all of its taxable income, including any net realized gains on investments not offset by loss carryovers, to shareholders. Therefore, no provision for federal income or excise tax is required. The Adviser has analyzed the Funds’ tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of December 31, 2012, no provision for income tax is required in the Funds’ financial statements related to these tax positions. The Funds’ federal and state (Arizona) income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue. The earliest tax year that remains subject to examination by these jurisdictions is 2009.

The Regulated Investment Company Modernization Act of 2010 requires that capital loss carryforwards with no expiration, if any, be utilized before capital loss carryforwards with expiration dates. At December 31, 2012, the Funds had available for federal income tax purposes unused capital loss carryforwards as follows.

	Capital Loss Carryforwards
	Davis Financial		Davis Real Estate
	Portfolio		Portfolio
Pre-Enactment
Expiring
12/31/2017	$	1,935,000	$	8,644,000

Post-Enactment
No Expiration
Short-term		–		–
Long-term		230,000		–
	$	2,165,000	$	8,644,000

Utilized in 2012

–

2,040,000

Securities Transactions and Related Investment Income - Securities transactions are accounted for on the trade date (date the order to buy or sell is executed) with realized gain or loss on the sale of securities being determined based upon identified cost. Dividend income is recorded on the ex-dividend date. Dividend income from REIT securities may include return of capital. Upon notification from the issuer, the amount of the return of capital is reclassified to adjust dividend income, reduce the cost basis, and/or adjust realized gain/loss. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned.

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Dividends and Distributions to Shareholders - Dividends and distributions to shareholders are recorded on the ex-dividend date. Net investment income (loss), net realized gains (losses), and net unrealized appreciation (depreciation) on investments may differ for financial statement and tax purposes primarily due to differing treatments of wash sales, foreign currency transactions, passive foreign investment company shares, and partnership income. The character of dividends and distributions made during the fiscal year from net investment income and net realized securities gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which income or realized gain was recorded by the Funds. The Funds adjust certain components of capital to reflect permanent differences between financial statement amounts and net income and realized gains/losses determined in accordance with income tax rules. Accordingly, during the year ended December 31, 2012, for Davis Value Portfolio, amounts have been reclassified to reflect an increase in undistributed net investment income of $30,426 and a corresponding decrease in accumulated net realized gains from investments and foreign currency transactions; for Davis Financial Portfolio, amounts have been reclassified to reflect a decrease in overdistributed net investment income of $135,186, a decrease in accumulated net realized losses from investments and foreign currency transactions of $276,172, and a decrease in additional paid in capital of $411,358; for Davis Real Estate Portfolio, amounts have been reclassified to reflect a decrease in undistributed net investment income of $316 and a corresponding decrease in accumulated net realized losses from investments and foreign currency transactions. The Funds’ net assets have not been affected by these reclassifications.

The tax character of distributions paid during the years ended December 31, 2012 and 2011 was as follows:

	Ordinary Income		Long-Term Capital Gain		Return of Capital		Total
Davis Value Portfolio
2012	$	6,508,617	$	19,961,511	$	–	$	26,470,128
2011		3,162,493		27,598,703		–		30,761,196
Davis Financial Portfolio
2012	$	1,327,434	$	–	$	411,358	$	1,738,792
2011		872,599		–		–		872,599
Davis Real Estate Portfolio
2012	$	285,310	$	–	$	–	$	285,310
2011		332,205		–		–		332,205

As of December 31, 2012, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

		Davis Value Portfolio	Davis Financial Portfolio		Davis Real Estate Portfolio
Undistributed net investment income		$ 320,559	$	–	$	182,194
Accumulated net realized losses from investments and foreign currency transactions	–			(2,165,105)		(8,643,771)
Undistributed long-term capital gains	3,414,009			–		–
Net unrealized appreciation on investments		123,633,830		16,153,819		3,643,125
Total		$ 127,368,398	$	13,988,714	$	(4,818,452)

Indemnification - Under the Funds’ organizational documents, their officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, some of the Funds’ contracts with their service providers contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Funds cannot be determined and the Funds have no historical basis for predicting the likelihood of any such claims.

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Use of Estimates in Financial Statements - In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of income and expenses during the reporting period. Actual results may differ from these estimates.

Directors Fees and Expenses - The Funds set up a Rabbi Trust to provide for the deferred compensation plan for Independent Directors that enables them to elect to defer receipt of all or a portion of annual fees they are entitled to receive. The value of an eligible Director’s account is based upon years of service and fees paid to each Director during the years of service. The amount paid to the Director by the Trust under the plan will be determined based upon the performance of the Davis Funds in which the amounts are invested.

Defaulted Securities - The Funds may hold securities in default and are not obligated to dispose of securities whose issuers or underlying obligors subsequently default. As of December 31, 2012, the value of defaulted securities in Davis Value Portfolio amounted to $109,940 (cost: $736,000) or 0.03% of the Fund’s net assets.

NOTE 2 - PURCHASES AND SALES OF SECURITIES

The cost of purchases and proceeds from sales of investment securities (excluding short-term securities) during the year ended December 31, 2012 were as follows:

	Davis Value		Davis Financial		Davis Real Estate
	Portfolio		Portfolio		Portfolio
Cost of purchases	$	33,981,672	$	9,547,530	$	13,079,218
Proceeds from sales		72,061,606		16,903,110		13,669,230

NOTE 3 - FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Davis Selected Advisers-NY, Inc. (“DSA-NY”), a wholly-owned subsidiary of the Adviser, acts as sub-adviser to the Funds. DSA-NY performs research and portfolio management services for the Funds under a Sub-Advisory Agreement with the Adviser. The Funds pay no fees directly to DSA-NY.

Certain directors and officers of the Funds are also directors and officers of the general partner of the Adviser.

During the year ended December 31, 2011, Davis Financial Portfolio transferred securities valued at $395,726 to another registered investment company managed by the Adviser. Davis Financial Portfolio realized a loss of $213,085.

Investment Advisory Fees - Advisory fees are paid monthly to the Adviser. The annual rate for each Fund is 0.55% of the average net assets.

Accounting Fees - State Street Bank and Trust Company (“State Street Bank”) is the Funds’ primary accounting provider. Fees for accounting services are included in the custodian fees as State Street Bank also serves as the Funds’ custodian. The Adviser is also paid for certain accounting services. The fee paid to the Adviser for these services during the year ended December 31, 2012 for Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio amounted to $6,000, $2,004, and $2,004, respectively.

NOTE 4 - EXPENSES PAID INDIRECTLY

Under an agreement with State Street Bank, custodian fees are reduced for earnings on cash balances maintained at the custodian by the Funds. Such reductions amounted to $11, $6, and $4 for Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio, respectively, during the year ended December 31, 2012.

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 5 - CAPITAL STOCK

At December 31, 2012, there were 5 billion shares of capital stock ($0.001 par value per share) authorized. Transactions in capital stock were as follows:

		Year ended December 31, 2012
			Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio
Shares sold			1,326,778		467,120		541,162
Shares issued in reinvestment of distributions			2,432,916		151,992		26,978
			3,759,694		619,112		568,140
Shares redeemed			(5,700,620)		(894,192)		(571,811)
	Net decrease		(1,940,926)		(275,080)		(3,671)

Proceeds from shares sold		$	14,903,812	$	5,235,219	$	5,635,306
Proceeds from shares issued in reinvestment of distributions			26,470,128		1,738,792		285,310
			41,373,940		6,974,011		5,920,616
Cost of shares redeemed			(64,441,809)		(9,939,676)		(5,983,449)
	Net decrease	$	(23,067,869)	$	(2,965,665)	$	(62,833)

		Year ended December 31, 2011
			Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio
Shares sold			1,910,661		430,782		202,983
Shares issued in reinvestment of distributions			2,936,883		87,173		36,208
			4,847,544		517,955		239,191
Shares redeemed			(10,782,869)		(1,908,509)		(552,730)
	Net decrease		(5,935,325)		(1,390,554)		(313,539)

Proceeds from shares sold		$	22,596,570	$	4,640,929	$	1,859,395
Proceeds from shares issued in reinvestment of distributions			30,761,196		872,599		332,205
			53,357,766		5,513,528		2,191,600
Cost of shares redeemed			(128,751,858)		(20,539,351)		(5,011,612)
	Net decrease	$	(75,394,092)	$	(15,025,823)	$	(2,820,012)

NOTE 6 - BANK BORROWINGS

Each Fund may borrow up to 5% of its assets from a bank to purchase portfolio securities, or for temporary and emergency purposes. The purchase of securities with borrowed funds creates leverage in the Fund. Each Fund has entered into an agreement, which enables it to participate with certain other funds managed by the Adviser in an unsecured line of credit with a bank, which permits borrowings up to $50 million, collectively. Interest is charged based on its borrowings, at a rate equal to the higher of the Federal Funds Rate or the Overnight Libor Rate, plus 1.25%. The Funds had no borrowings during the year ended December 31, 2012.

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 7 - RESTRICTED SECURITIES

Restricted securities are not registered under the Securities Act of 1933 and may have contractual restrictions on resale. They are valued under methods approved by the Board of Directors as reflecting fair value. The aggregate value of restricted securities in Davis Value Portfolio amounted to $109,940 or 0.03% of the Fund’s net assets as of December 31, 2012.

Information regarding restricted securities is as follows:

Fund

Security

Acquisition

Date

Principal

Units

Cost per

Unit

Valuation per

Unit as of

December 31, 2012

Davis Value

Portfolio

Sino-Forest Corp.,

Conv. Sr. Notes,

5.00%, 08/01/13

07/17/08

$ 736,000

7,360

100.00

14.94

FEDERAL INCOME TAX INFORMATION (UNAUDITED)

Each Fund designates the following amounts distributed during the calendar year ended December 31, 2012, as dividends eligible for the corporate dividends-received deduction and long-term capital gain distributions.

		Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio

Income dividends	$	6,508,617	$	1,327,434	$	285,310
Income qualifying for corporate dividends-received deduction	$	6,262,153 96%	$	1,259,697 95%	$	829 –%*
Long-term capital gain distributions	$	19,961,511	$	–	$	–

* Less than 0.50%.

DAVIS VARIABLE ACCOUNT FUND, INC.	Financial Highlights
DAVIS VALUE PORTFOLIO

The following financial information represents selected data for each share of capital stock outstanding throughout each period:

		Year ended December 31,
		2012			2011			2010			2009			2008
Net Asset Value, Beginning of Period		$	10.47		$	11.97		$	10.75		$	8.26		$	14.48

Income (Loss) from Investment Operations:
Net Investment Income		0.20			0.13			0.11			0.08			0.13
Net Realized and Unrealized Gains (Losses)		1.16			(0.63)			1.26			2.49			(6.00)
	Total from Investment Operations	1.36			(0.50)			1.37			2.57			(5.87)

Dividends and Distributions:
Dividends from Net Investment Income		(0.19)			(0.10)			(0.15)			(0.08)			(0.12)
Distributions from Realized Gains		(0.71)			(0.90)			–			–			(0.23)
	Total Dividends and Distributions	(0.90)			(1.00)			(0.15)			(0.08)			(0.35)
Net Asset Value, End of Period		$	10.93		$	10.47		$	11.97		$	10.75		$	8.26

Total Returna		13.08		%	(4.18)		%	12.76		%	31.16		%	(40.32)		%

Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)		$	345,556		$	351,369		$	472,734		$	519,404		$	333,152
Ratio of Expenses to Average Net Assets:
	Gross	0.64		%	0.63		%	0.63		%	0.71		%	0.82		%
	Netb	0.64		%	0.63		%	0.63		%	0.71		%	0.82		%
Ratio of Net Investment Income to Average Net Assets		1.63		%	1.15		%	1.03		%	0.97		%	0.98		%
Portfolio Turnover Ratec		10		%	13		%	21		%	20		%	17		%

Assumes hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns do not reflect charges attributable to your insurance company’s separate account. Inclusion of these charges would reduce the total returns shown.

The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.

The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation.

See Notes to Financial Statements

DAVIS VARIABLE ACCOUNT FUND, INC.	Financial Highlights – (Continued)
DAVIS FINANCIAL PORTFOLIO

The following financial information represents selected data for each share of capital stock outstanding throughout each period:

		Year ended December 31,
		2012			2011			2010			2009			2008
Net Asset Value, Beginning of Period		$	9.98		$	11.00		$	9.98		$	7.12		$	14.27

Income (Loss) from Investment Operations:
Net Investment Income		0.12			0.14			0.12			0.05			0.08
Net Realized and Unrealized Gains (Losses)		1.75			(1.01)			0.99			2.88			(6.76)
	Total from Investment Operations	1.87			(0.87)			1.11			2.93			(6.68)

Dividends and Distributions:
Dividends from Net Investment Income		(0.23)			(0.15)			(0.09)			(0.07)			–
Distributions from Realized Gains		– a			–			–			–			(0.47)
Return of Capital		(0.07)			–			–			–			–
	Total Dividends and Distributions	(0.30)			(0.15)			(0.09)			(0.07)			(0.47)
Net Asset Value, End of Period		$	11.55		$	9.98		$	11.00		$	9.98		$	7.12

Total Returnb		18.83		%	(7.96)		%	11.10		%	41.18		%c	(46.36)		%

Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)		$	67,255		$	60,834		$	82,403		$	87,837		$	57,321
Ratio of Expenses to Average Net Assets:
	Gross	0.69		%	0.69		%	0.69		%	0.78		%	0.88		%
	Netd	0.69		%	0.69		%	0.69		%	0.78		%	0.88		%
Ratio of Net Investment Income to Average Net Assets		0.98		%	0.99		%	0.99		%	0.67		%	0.73		%
Portfolio Turnover Ratee		16		%	11		%	2		%	10		%	16		%

Less than $0.005 per share.

Davis Financial Portfolio received a favorable class action settlement from a company that it no longer owns. This settlement had an approximate impact of 0.4% on the investment performance of the Fund in 2009. This was a one-time event that is unlikely to be repeated.

The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.

See Notes to Financial Statements

DAVIS VARIABLE ACCOUNT FUND, INC.	Financial Highlights – (Continued)
DAVIS REAL ESTATE PORTFOLIO

The following financial information represents selected data for each share of capital stock outstanding throughout each period:

		Year ended December 31,
		2012			2011			2010			2009			2008
Net Asset Value, Beginning of Period		$	9.34		$	8.69		$	7.40		$	5.80		$	11.45

Income (Loss) from Investment Operations:
Net Investment Income		0.16			0.14			0.13			0.16			0.19
Net Realized and Unrealized Gains (Losses)		1.44			0.63			1.31			1.60			(5.50)
	Total from Investment Operations	1.60			0.77			1.44			1.76			(5.31)

Dividends and Distributions:
Dividends from Net Investment Income		(0.11)			(0.12)			(0.15)			(0.16)			(0.22)
Distributions from Realized Gains		–			–			–			–			(0.11)
Return of Capital		–			–			–			–			(0.01)
	Total Dividends and Distributions	(0.11)			(0.12)			(0.15)			(0.16)			(0.34)
Net Asset Value, End of Period		$	10.83		$	9.34		$	8.69		$	7.40		$	5.80

Total Returna		17.15		%	8.89		%	19.70		%	31.73		%	(46.91)		%

Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)		$	28,068		$	24,226		$	25,269		$	23,566		$	19,331
Ratio of Expenses to Average Net Assets:
	Gross	0.77		%	0.81		%	0.81		%	0.98		%	0.98		%
	Netb	0.77		%	0.81		%	0.81		%	0.98		%	0.98		%
Ratio of Net Investment Income to Average Net Assets		1.55		%	1.50		%	1.58		%	2.81		%	1.84		%
Portfolio Turnover Ratec		51		%	75		%	43		%	70		%	41		%

The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.

See Notes to Financial Statements

DAVIS VARIABLE ACCOUNT FUND, INC.

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors

Davis Variable Account Fund, Inc.:

We have audited the accompanying statements of assets and liabilities of Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio (each a series of Davis Variable Account Fund, Inc.), including the schedules of investments, as of December 31, 2012, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2012, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio as of December 31, 2012, the results of their operations for the year then ended, the changes in their net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

KPMG LLP

Denver, Colorado

February 11, 2013

DAVIS VARIABLE ACCOUNT FUND, INC.

Directors and Officers

For the purposes of their service as directors to the Davis Funds, the business address for each of the directors is 2949 E. Elvira Road, Suite 101, Tucson, AZ 85756. Each Director serves until their retirement, resignation, death, or removal. Subject to exceptions and exemptions, which may be granted by the Independent Directors, Directors must retire at the close of business on the last day of the calendar year in which the Director attains age seventy-four (74).

Name (birthdate)	Position(s) Held With Fund	Term of Office and Length of Time Served	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director

Independent Directors


Marc P. Blum (09/09/42)	Director	Director since 1986	Chief Executive Officer, World Total Return Fund, LLLP; of Counsel to Gordon Feinblatt LLC (law firm).	13	Director, Legg Mason Investment Counsel & Trust Company, N.A. (asset management company) and Rodney Trust Company (Delaware).

John S. Gates, Jr. (08/02/53)	Director	Director since 2007	Chairman and Chief Executive Officer of PortaeCo LLC, a private investment company (beginning in 2006); Co-founder of CenterPoint Properties Trust (REIT); Co-chairman and Chief Executive Officer for 22 years (until 2006).	13	Director, DCT Industrial Trust (REIT); Chairman, Regional Transportation Authority of Chicago.

Thomas S. Gayner (12/16/61)	Director/ Chairman	Director since 2004	President and Chief Investment Officer, Markel Corp. (diversified financial holding company).	13	Director, Washington Post Co. (publishing company); Director, Colfax Corp. (engineering and manufacturer of pumps and fluid handling equipment).

Samuel H. Iapalucci (07/19/52)	Director	Director since 2006	Former Executive Vice President and Chief Financial Officer, CH2M-HILL Companies, Ltd. (engineering).	13	Director, Trow Global Holdings Inc. (engineering & consulting).

Robert P. Morgenthau (03/22/57)	Director	Director since 2002	Principal, Spears Abacus Advisors, LLC (investment management firm) since August 2011; former Chairman, NorthRoad Capital Management, LLC (investment management firm).	13	none

Marsha Williams (03/28/51)	Director	Director since 1999	Retired; former Senior Vice President and Chief Financial Officer, Orbitz Worldwide, Inc. (travel-services provider) 2007-2010; former Executive Vice President and Chief Financial Officer, Equity Office Properties Trust (REIT) 2002-2007.	13	Director, Modine Manufacturing, Inc. (heat transfer technology); Director, Chicago Bridge & Iron Co., N.V. (industrial construction and engineering); Director, Fifth Third Bancorp (diversified financial services).

DAVIS VARIABLE ACCOUNT FUND, INC.

Directors and Officers – (Continued)

Name (birthdate)	Position(s) Held With Fund	Term of Office and Length of Time Served	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director

Inside Directors*


Andrew A. Davis (06/25/63)	Director	Director since 1997	President or Vice President of each Davis Fund and Selected Fund; President, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.	16	Director, Selected Funds (consisting of three portfolios) since 1998.

Christopher C. Davis (07/13/65)	Director	Director since 1997	President or Vice President of each Davis Fund, Selected Fund, and Clipper Fund; Chairman, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser, including sole member of the Adviser’s general partner, Davis Investments, LLC; Employee of Shelby Cullom Davis & Co. (registered broker/dealer).	16	Director, Selected Funds (consisting of three portfolios) since 1998; Director, Washington Post Co. (publishing company).

* Andrew A. Davis and Christopher C. Davis own partnership units (directly, indirectly, or both) of the Adviser and are considered to be “interested persons” of the Funds as defined in the Investment Company Act of 1940. Andrew A. Davis and Christopher C. Davis are brothers.

Officers

Andrew A. Davis (born 06/25/63, Davis Funds officer since 1997). See description in the section on Inside Directors.

Christopher C. Davis (born 07/13/65, Davis Funds officer since 1997). See description in the section on Inside Directors.

Kenneth C. Eich (born 08/14/53, Davis Funds officer since 1997). Executive Vice President and Principal Executive Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Chief Operating Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Douglas A. Haines (born 03/04/71, Davis Funds officer since 2004). Vice President, Treasurer, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President and Director of Fund Accounting, Davis Selected Advisers, L.P.

Sharra L. Haynes (born 09/25/66, Davis Funds officer since 1997). Vice President and Chief Compliance Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President and Chief Compliance Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Thomas D. Tays (born 03/07/57, Davis Funds officer since 1997). Vice President and Secretary of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President, Chief Legal Officer, and Secretary, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Arthur Don (born 09/24/53, Davis Funds officer since 1991). Assistant Secretary (for clerical purposes only) of each of the Davis Funds and Selected Funds; Shareholder, Greenberg Traurig, LLP (law firm); counsel to the Independent Directors and the Davis Funds.

DAVIS VARIABLE ACCOUNT FUND INC.

Investment Adviser
Davis Selected Advisers, L.P. (Doing business as “Davis Advisors”)
2949 East Elvira Road, Suite 101
Tucson, Arizona 85756
(800) 279-0279

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

Transfer Agent
Boston Financial Data Services, Inc.
c/o The Davis Funds
P.O. Box 8406
Boston, Massachusetts 02266-8406

Custodian
State Street Bank and Trust Co.
One Lincoln Street
Boston, Massachusetts 02111

Counsel
Greenberg Traurig, LLP
77 West Wacker Drive, Suite 3100
Chicago, Illinois 60601

Independent Registered Public Accounting Firm
KPMG LLP
1225 Seventeenth Street, Suite 800
Denver, Colorado 80202

For more information about Davis Variable Account Fund, Inc., including management fee, charges, and expenses, see the current prospectus, which must precede or accompany this report. The Funds’ Statement of Additional Information contains additional information about the Funds’ Directors and is available without charge, upon request, by calling 1-800-279-0279 and on the Funds’ website at www.davisfunds.com. Quarterly Fact Sheets are available on the Funds’ website at www.davisfunds.com.

DAVIS VALUE PORTFOLIO

Table of Contents

Management's Discussion of Fund Performance	2

Fund Overview	4

Expense Example	6

Schedule of Investments	7

Statement of Assets and Liabilities	11

Statement of Operations	12

Statements of Changes in Net Assets	13

Notes to Financial Statements	14

Federal Income Tax Information	19

Financial Highlights	20

Report of Independent Registered Public Accounting Firm	21

Directors and Officers	22

This Annual Report is authorized for use by existing shareholders. Prospective shareholders must receive a current Davis Value Portfolio prospectus, which contains more information about investment strategies, risks, charges, and expenses. Please read the prospectus carefully before investing or sending money.

Shares of the Davis Value Portfolio 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.

Portfolio Proxy Voting Policies and Procedures

The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities held by the Fund. A description of the Fund’s Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1-800-279-0279, (ii) on the Fund’s website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

In addition, the Fund is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Fund’s Form N-PX filing is available (i) without charge, upon request, by calling the Fund toll-free at 1-800-279-0279, (ii) on the Fund’s website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

Form N-Q

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available without charge, upon request, by calling 1-800-279-0279, on the Fund’s website at www.davisfunds.com, and on the SEC’s website at www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

DAVIS VALUE PORTFOLIO

Management’s Discussion of Fund Performance

Performance Overview

Factors Impacting the Portfolio’s Performance

The Portfolio had approximately 17% of its net assets invested in foreign companies at December 31, 2012. As a whole, those companies under-performed the domestic companies held by the Portfolio.

1 The companies included in the Standard & Poor’s 500® Index are divided into ten sectors. One or more industry groups make up a sector.

DAVIS VALUE PORTFOLIO

Management’s Discussion of Fund Performance – (Continued)

Comparison of a $10,000 investment in Davis Value Portfolio versus the Standard & Poor’s 500® Index over 10 years for an investment made on December 31, 2002

Average Annual Total Return for periods ended December 31, 2012

Fund & Benchmark Index	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Value Portfolio	13.08%	(0.89)%	6.26%	3.27%	0.64%	0.64%
Standard & Poor’s 500® Index	16.00%	1.66%	7.10%	2.11%

DAVIS VALUE PORTFOLIO	Fund Overview
	December 31, 2012

Portfolio Composition		Industry Weightings
(% of Fund’s 12/31/12 Net Assets)		(% of 12/31/12 Long-Term Portfolio)

			Fund	S&P 500®
Common Stock (U.S.)	78.19%	Diversified Financials	18.12%	6.45%
Common Stock (Foreign)	17.32%	Insurance	12.43%	3.99%
Convertible Bonds (Foreign)	0.03%	Food & Staples Retailing	11.59%	2.35%
Short-Term Investments	4.19%	Energy	9.85%	10.94%
Other Assets & Liabilities	0.27%	Information Technology	9.08%	18.96%
	100.00%	Materials	7.27%	3.61%
		Food, Beverage & Tobacco	6.21%	5.91%
		Banks	6.10%	2.84%
		Retailing	5.46%	4.13%
		Health Care	3.01%	12.38%
		Transportation	2.92%	1.62%
		Media	2.65%	3.54%
		Other	2.65%	14.81%
		Capital Goods	1.35%	7.80%
		Commercial & Professional Services	1.31%	0.67%
			100.00%	100.00%

Top 10 Long-Term Holdings

(% of Fund’s 12/31/12 Net Assets)

CVS Caremark Corp.	Food & Staples Retailing	6.42%
Wells Fargo & Co.	Commercial Banks	5.83%
American Express Co.	Consumer Finance	5.68%
Bank of New York Mellon Corp.	Capital Markets	5.07%
Costco Wholesale Corp.	Food & Staples Retailing	4.37%
Google Inc., Class A	Software & Services	4.01%
Loews Corp.	Multi-line Insurance	2.87%
Berkshire Hathaway Inc., Class A	Property & Casualty Insurance	2.83%
EOG Resources, Inc.	Energy	2.78%
Bed Bath & Beyond Inc.	Retailing	2.68%

DAVIS VALUE PORTFOLIO	Fund Overview – (Continued)
	December 31, 2012

New Positions Added (01/01/12-12/31/12)

(Highlighted positions are those greater than 0.30% of the Fund’s 12/31/12 net assets)

Security	Industry	Date of 1st Purchase	% of Fund’s 12/31/12 Net Assets
Emerson Electric Co.	Capital Goods	05/02/12	0.40%
Groupon, Inc.	Retailing	03/14/12	0.16%
International Business Machines Corp.	Software & Services	11/07/12	0.32%
Laboratory Corp. of America Holdings	Health Care Equipment & Services	10/25/12	0.12%
Sysco Corp.	Food & Staples Retailing	03/06/12	0.28%
Tiffany & Co.	Retailing	01/23/12	0.30%
Walgreen Co.	Food & Staples Retailing	01/24/12	–

Positions Closed (01/01/12-12/31/12)

(Gains and losses greater than $1,000,000 are highlighted)

Security	Industry	Date of Final Sale	Realized Gain(Loss)
Baxter International Inc.	Health Care Equipment & Services	07/13/12		$	215,253
Becton, Dickinson and Co.	Health Care Equipment & Services	06/15/12			227,854
China Coal Energy Co., Ltd. - H	Energy	10/11/12			557,642
China Shipping Development Co., Ltd. - H	Transportation	10/16/12			(1,850,329)
Expedia, Inc.	Retailing	11/20/12			1,258,653
Johnson & Johnson	Pharmaceuticals, Biotechnology &
	Life Sciences	07/03/12			1,021,280
Kraft Foods Inc., Class A	Food, Beverage & Tobacco	06/18/12			548,737
Li & Fung Ltd.	Retailing	08/10/12			125,432
LLX Logistica S.A.	Transportation	06/15/12			(43,343)
Lockheed Martin Corp.	Capital Goods	07/18/12			568,964
Merck & Co., Inc.	Pharmaceuticals, Biotechnology &
	Life Sciences	07/09/12			4,672,686
MMX Mineracao e Metalicos S.A., Pfd.	Materials	02/02/12			11,603
OGX Petroleo e Gas Participacoes S.A.	Energy	12/28/12			(893,356)
Roche Holding AG - Genusschein	Pharmaceuticals, Biotechnology &
	Life Sciences	07/20/12			808,892
Sealed Air Corp.	Materials	11/13/12			383,887
Sino-Forest Corp.	Materials	07/10/12			(4,503,143)
Sino-Forest Corp., Restricted	Materials	07/10/12			(141,083)
Transatlantic Holdings, Inc.	Reinsurance	03/06/12			96,317
TripAdvisor Inc.	Retailing	04/17/12			330,578
Walgreen Co.	Food & Staples Retailing	11/20/12			31,860

DAVIS VALUE PORTFOLIO

Expense Example

Example

As a shareholder of the Fund, you incur ongoing costs only, including advisory and administrative fees and other Fund expenses. The Expense Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for the Fund is for the six-month period ended December 31, 2012. Please note that the Expense Example is general and does not reflect charges imposed by your insurance company’s separate account or account specific costs, which may increase your total costs of investing in the Fund. If these charges or account specific costs were included in the Expense Example, the expenses would have been higher.

Actual Expenses

Hypothetical Example for Comparison Purposes

The information represented in the row entitled “Hypothetical” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

	Beginning Account Value (07/01/12)	Ending Account Value (12/31/12)	Expenses Paid During Period* (07/01/12-12/31/12)
Actual	$1,000.00	$1,059.94	$3.31
Hypothetical	$1,000.00	$1,021.92	$3.25

Hypothetical assumes 5% annual return before expenses.

* Expenses are equal to the Fund’s annualized operating expense ratio (0.64%)**, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).

** The expense ratio reflects the impact, if any, of certain reimbursements from the Adviser.

DAVIS VALUE PORTFOLIO	Schedule of Investments
	December 31, 2012

			Shares		Value (Note 1)
COMMON STOCK – (95.51%)
CONSUMER DISCRETIONARY – (8.81%)
	Automobiles & Components – (0.67%)
		Harley-Davidson, Inc.		47,540	$	2,321,854
	Consumer Durables & Apparel – (0.39%)
		Compagnie Financiere Richemont S.A., Bearer Shares, Unit A (Switzerland)		8,900		698,610
		Hunter Douglas N.V. (Netherlands)		16,499		644,848
						1,343,458
	Media – (2.53%)
		Grupo Televisa S.A.B., ADR (Mexico)		34,200		909,036
		Walt Disney Co.		157,550		7,844,415
						8,753,451
	Retailing – (5.22%)
		Bed Bath & Beyond Inc. *		165,555		9,253,697
		CarMax, Inc. *		57,240		2,148,790
		Groupon, Inc. *		112,240		547,170
		Liberty Interactive Corp., Series A *		96,334		1,896,816
		Liberty Ventures, Series A *		6,479		439,244
		Netflix Inc. *		29,290		2,716,940
		Tiffany & Co.		17,980		1,030,973
						18,033,630
Total Consumer Discretionary						30,452,393
CONSUMER STAPLES – (17.23%)
	Food & Staples Retailing – (11.07%)
		Costco Wholesale Corp.		152,900		15,110,342
		CVS Caremark Corp.		458,388		22,163,060
		Sysco Corp.		30,810		975,445
						38,248,847
	Food, Beverage & Tobacco – (5.93%)
		Coca-Cola Co.		126,760		4,595,050
		Diageo PLC, ADR (United Kingdom)		63,733		7,429,993
		Heineken Holding N.V. (Netherlands)		66,921		3,684,847
		Nestle S.A. (Switzerland)		5,130		334,699
		Philip Morris International Inc.		40,060		3,350,619
		Unilever N.V., NY Shares (Netherlands)		29,170		1,117,211
						20,512,419
	Household & Personal Products – (0.23%)
		Natura Cosmeticos S.A. (Brazil)		27,500		787,594
Total Consumer Staples						59,548,860
ENERGY – (9.41%)
		Canadian Natural Resources Ltd. (Canada)		303,920		8,774,170
		Devon Energy Corp.		56,740		2,952,750
		EOG Resources, Inc.		79,550		9,608,845
		Occidental Petroleum Corp.		91,630		7,019,774
		Schlumberger Ltd.		30,400		2,106,416
		Transocean Ltd.		46,104		2,058,544
Total Energy						32,520,499

DAVIS VALUE PORTFOLIO	Schedule of Investments – (Continued)
	December 31, 2012

				Shares		Value (Note 1)
COMMON STOCK – (CONTINUED)
FINANCIALS – (36.09%)
	Banks – (5.83%)
		Commercial Banks – (5.83%)
			Wells Fargo & Co.		589,394	$	20,145,487
	Diversified Financials – (17.31%)
		Capital Markets – (9.97%)
			Ameriprise Financial, Inc.		26,370		1,651,553
			Bank of New York Mellon Corp.		681,400		17,511,980
			Brookfield Asset Management Inc., Class A (Canada)		112,010		4,105,166
			Charles Schwab Corp.		127,770		1,834,777
			Goldman Sachs Group, Inc.		13,610		1,736,092
			Julius Baer Group Ltd. (Switzerland)		213,361		7,596,249
							34,435,817
		Consumer Finance – (5.68%)
			American Express Co.		341,619		19,636,260
		Diversified Financial Services – (1.66%)
			CME Group Inc.		12,600		638,883
			JPMorgan Chase & Co.		52,918		2,326,805
			Visa Inc., Class A		18,240		2,764,819
							5,730,507
							59,802,584
	Insurance – (11.88%)
		Insurance Brokers – (0.18%)
			Aon PLC		11,020		612,712
		Multi-line Insurance – (3.57%)
			Fairfax Financial Holdings Ltd. (Canada)		4,230		1,520,473
			Fairfax Financial Holdings Ltd., 144A (Canada)(a)		2,490		897,547
			Loews Corp.		243,080		9,905,510
							12,323,530
		Property & Casualty Insurance – (6.44%)
			ACE Ltd.		36,920		2,946,216
			Berkshire Hathaway Inc., Class A *		73		9,786,380
			Markel Corp. *		1,290		559,112
			Progressive Corp.		424,370		8,954,207
							22,245,915
		Reinsurance – (1.69%)
			Alleghany Corp. *		15,571		5,222,825
			Everest Re Group, Ltd.		5,740		631,113
							5,853,938
							41,036,095
	Real Estate – (1.07%)
			Hang Lung Group Ltd. (Hong Kong)		643,000		3,703,391
Total Financials							124,687,557
HEALTH CARE – (2.88%)
	Health Care Equipment & Services – (2.24%)
			Express Scripts Holding Co. *		135,700		7,326,443
			Laboratory Corp. of America Holdings *		4,630		401,050
							7,727,493

DAVIS VALUE PORTFOLIO	Schedule of Investments – (Continued)
	December 31, 2012

					Shares		Value (Note 1)
COMMON STOCK – (CONTINUED)
HEALTH CARE – (CONTINUED)
	Pharmaceuticals, Biotechnology & Life Sciences – (0.64%)
		Agilent Technologies, Inc.				30,970	$	1,267,912
		Pfizer Inc.				37,850		949,278
								2,217,190
Total Health Care								9,944,683
INDUSTRIALS – (5.33%)
	Capital Goods – (1.29%)
		Emerson Electric Co.				26,200		1,387,552
		PACCAR Inc.				67,620		3,056,086
								4,443,638
	Commercial & Professional Services – (1.25%)
		Iron Mountain Inc.				139,674		4,336,878
	Transportation – (2.79%)
		China Merchants Holdings International Co., Ltd. (China)				1,673,048		5,452,746
		Kuehne & Nagel International AG (Switzerland)				34,733		4,187,379
								9,640,125
Total Industrials								18,420,641
INFORMATION TECHNOLOGY – (8.68%)
	Semiconductors & Semiconductor Equipment – (1.76%)
		Intel Corp.				39,980		824,987
		Texas Instruments Inc.				169,120		5,235,110
								6,060,097
	Software & Services – (6.63%)
		Activision Blizzard, Inc.				182,970		1,945,886
		Google Inc., Class A *				19,520		13,845,829
		International Business Machines Corp.				5,700		1,091,835
		Microsoft Corp.				105,400		2,816,815
		Oracle Corp.				96,550		3,218,011
								22,918,376
	Technology Hardware & Equipment – (0.29%)
		Hewlett-Packard Co.				70,131		999,367
Total Information Technology								29,977,840
MATERIALS – (6.91%)
		Air Products and Chemicals, Inc.				61,800		5,192,436
		BHP Billiton PLC (United Kingdom)				74,430		2,625,405
		Ecolab Inc.				42,700		3,070,130
		Martin Marietta Materials, Inc.				9,110		858,891
		Monsanto Co.				61,700		5,839,905
		Potash Corp. of Saskatchewan Inc. (Canada)				59,662		2,427,647
		Praxair, Inc.				13,670		1,496,181
		Rio Tinto PLC (United Kingdom)				40,505		2,362,479
				Total Materials				23,873,074
TELECOMMUNICATION SERVICES – (0.17%)
		America Movil S.A.B. de C.V., Series L, ADR (Mexico)				25,680		594,235
Total Telecommunication Services								594,235
			TOTAL COMMON STOCK – (Identified cost $204,173,084)					330,019,782

DAVIS VALUE PORTFOLIO	Schedule of Investments – (Continued)
	December 31, 2012

				Principal			Value (Note 1)
CONVERTIBLE BONDS – (0.03%)
MATERIALS – (0.03%)
	Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13 (Canada) (b)(c)				$	736,000	$	109,940
		TOTAL CONVERTIBLE BONDS – (Identified cost $736,000)						109,940
SHORT-TERM INVESTMENTS – (4.19%)
	Banc of America Securities LLC Joint Repurchase Agreement, 0.18%, 01/02/13, dated 12/31/12, repurchase value of $6,290,063 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.50%-4.50%, 04/01/42-11/01/42, total market value $6,415,800)					6,290,000		6,290,000
	Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.27%, 01/02/13, dated 12/31/12, repurchase value of $8,187,123 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 4.00%, 09/20/40-10/15/40, total market value $8,350,740)					8,187,000		8,187,000
		TOTAL SHORT-TERM INVESTMENTS – (Identified cost $14,477,000)						14,477,000
	Total Investments – (99.73%) – (Identified cost $219,386,084) – (d)							344,606,722
	Other Assets Less Liabilities – (0.27%)							949,155
			Net Assets – (100.00%)				$	345,555,877

ADR: American Depositary Receipt

*	Non-Income producing security.

(a)	This security is subject to Rule 144A. The Board of Directors of the Fund has determined that there is sufficient liquidity in this security to realize current valuations. This security amounted to $897,547 or 0.26% of the Fund's net assets as of December 31, 2012.

(b)	Restricted Security – See Note 7 of the Notes to Financial Statements.

(c)	This security is in default. See Note 1 of the Notes to Financial Statements.

(d)	Aggregate cost for federal income tax purposes is $220,972,911. At December 31, 2012 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:

Unrealized appreciation		$	126,395,998
Unrealized depreciation			(2,762,187)
	Net unrealized appreciation	$	123,633,811

See Notes to Financial Statements

DAVIS VALUE PORTFOLIO	Statement of Assets and Liabilities
	At December 31, 2012

ASSETS:
Investments in securities at value* (see accompanying Schedule of Investments)			$	344,606,722
Cash				1,960
Receivables:
	Capital stock sold			18,182
	Dividends and interest			281,005
	Investment securities sold			1,028,377
Prepaid expenses				7,205
		Total assets		345,943,451
LIABILITIES:
Payables:
	Capital stock redeemed			172,700
Accrued custodian fees				21,323
Accrued management fees				165,000
Other accrued expenses				28,551
		Total liabilities		387,574
NET ASSETS			$	345,555,877
SHARES OUTSTANDING				31,621,397
NET ASSET VALUE, offering, and redemption price per share (Net assets ÷ Shares outstanding)			$	10.93
NET ASSETS CONSIST OF:
Par value of shares of capital stock			$	31,621
Additional paid-in capital				218,206,370
Undistributed net investment income				270,037
Accumulated net realized gains from investments				1,827,193
Net unrealized appreciation on investments and foreign currency transactions				125,220,656
		Net Assets	$	345,555,877

*Including:
	Cost of Investments		$	219,386,084

See Notes to Financial Statements

DAVIS VALUE PORTFOLIO	Statement of Operations
	For the year ended December 31, 2012

INVESTMENT INCOME:
Income:
Dividends*					$	8,014,208
Interest						35,713
		Total income				8,049,921

Expenses:
Management fees (Note 3)			$	1,951,591
Custodian fees				97,088
Transfer agent fees				20,862
Audit fees				20,640
Legal fees				9,500
Accounting fees (Note 3)				6,000
Reports to shareholders				47,444
Directors’ fees and expenses				86,722
Registration and filing fees				300
Miscellaneous				15,500
Total expenses						2,255,647
Expenses paid indirectly (Note 4)						(11)
		Net expenses				2,255,636
Net investment income						5,794,285

REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
	Investment transactions					12,134,644
	Foreign currency transactions					(7,084)
Net realized gain						12,127,560
Net increase in unrealized appreciation						25,803,494
		Net realized and unrealized gain on investments and foreign currency transactions				37,931,054
Net increase in net assets resulting from operations					$	43,725,339

*Net of foreign taxes withheld as follows					$	110,276

See Notes to Financial Statements

DAVIS VALUE PORTFOLIO

Statements of Changes in Net Assets

		Year ended December 31,
		2012		2011
OPERATIONS:
Net investment income		$	5,794,285	$	4,593,836
Net realized gain from investments and foreign currency transactions			12,127,560		48,575,205
Net increase (decrease) in unrealized appreciation on investments and foreign currency transactions			25,803,494		(68,379,428)
	Net increase (decrease) in net assets resulting from operations		43,725,339		(15,210,387)

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income			(5,672,379)		(3,162,493)
Realized gains from investment transactions			(20,797,749)		(27,598,703)

CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets resulting from capital share transactions (Note 5)			(23,067,869)		(75,394,092)
	Total decrease in net assets		(5,812,658)		(121,365,675)

NET ASSETS:
Beginning of year			351,368,535		472,734,210
End of year*		$	345,555,877	$	351,368,535

*Including undistributed net investment income of		$	270,037	$	117,705

See Notes to Financial Statements

DAVIS VALUE PORTFOLIO	Notes to Financial Statements
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Fund is a separate series of Davis Variable Account Fund, Inc. (a Maryland corporation), which is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. Only insurance companies, for the purpose of funding variable annuity or variable life insurance contracts, may purchase shares of the Fund. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

Security Valuation - The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (“Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Securities listed on the Exchange (and other national exchanges) are valued at the last reported sales price on the day of valuation. Securities traded in the over-the-counter market (e.g. NASDAQ) and listed securities for which no sale was reported on that date are stated at the average of closing bid and asked prices. Securities traded on foreign exchanges are valued based upon the last sales price on the principal exchange on which the security is traded prior to the time when the Fund’s assets are valued. Fixed income securities with more than 60 days to maturity are generally valued using evaluated prices or matrix pricing methods determined by an independent pricing service which takes into consideration factors such as yield, maturity, liquidity, ratings, and traded prices in identical or similar securities. Securities (including restricted securities) for which market quotations are not readily available or securities whose values have been materially affected by what Davis Selected Advisers, L.P. (“Davis Advisors” or “Adviser”), the Fund’s investment adviser, identifies as a significant event occurring before the Fund’s assets are valued, but after the close of their respective exchanges will be fair valued using a standardized fair valuation methodology applicable to the security type or the significant event as previously approved by the Fund’s Pricing Committee and Board of Directors. The Pricing Committee considers all facts it deems relevant that are reasonably available, through either public information or information available to the Adviser’s portfolio management team, when determining the fair value of a security. To assess the continuing appropriateness of security valuations, the Adviser may compare prior day prices, prices of comparable securities, and sale prices to the prior or current day prices and challenge those prices exceeding certain tolerance levels with the third-party pricing service or broker source. Fair value determinations are subject to review, approval, and ratification by the Fund’s Board of Directors at its next regularly scheduled meeting covering the period in which the fair valuation was determined.

Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value.

The Fund’s valuation procedures are reviewed and subject to approval by the Board of Directors. There have been no significant changes to the fair valuation procedures during the period.

Value Measurements - Fair value is defined as the price that the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal market for the investment. Various inputs are used to determine the fair value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

Level 1 –	quoted prices in active markets for identical securities
Level 2 –	other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
Level 3 –	significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities nor can it be assured that the Fund can obtain the fair value assigned to a security if they were to sell the security.

DAVIS VALUE PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Value Measurements - (Continued)

The following is a summary of the inputs used as of December 31, 2012 in valuing the Fund’s investments carried at value:

	Investments in Securities at Value
	Valuation Inputs
			Level 2:		Level 3:
			Other Significant		Significant
	Level 1:		Observable		Unobservable
	Quoted Prices		Inputs*		Inputs		Total
Equity securities:
Consumer discretionary	$	29,108,935	$	1,343,458	$	–	$	30,452,393
Consumer staples		55,529,314		4,019,546		–		59,548,860
Energy		32,520,499		–		–		32,520,499
Financials		113,387,917		11,299,640		–		124,687,557
Health care		9,944,683		–		–		9,944,683
Industrials		8,780,516		9,640,125		–		18,420,641
Information technology		29,977,840		–		–		29,977,840
Materials		18,885,190		4,987,884		–		23,873,074
Telecommunication services		594,235		–		–		594,235
Convertible debt securities		–		109,940		–		109,940
Short-term securities		–		14,477,000		–		14,477,000
Total Investments	$	298,729,129	$	45,877,593	$	–	$	344,606,722


Level 1 to Level 2 Transfers**:
Consumer discretionary	$	1,343,458
Consumer staples		4,019,546
Financials		11,299,640
Industrials		9,640,125
Materials		4,987,884
Total	$	31,290,653

*Includes certain securities trading primarily outside the U.S. whose value the Fund adjusted as a result of significant market movements following the close of local trading.

**Application of fair value procedures for securities traded on foreign exchanges triggered the transfers of investments between Level 1 and Level 2 of the fair value hierarchy during the year ended December 31, 2012.

The following table reconciles the valuation of assets in which significant unobservable inputs (Level 3) were used in determining fair value during the year ended December 31, 2012:

Investment Securities:
Beginning balance	$	208,691
Net realized loss		(4,644,226)
Decrease in unrealized depreciation		4,435,535
Ending balance	$	–

DAVIS VALUE PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Master Repurchase Agreements - The Fund, along with other affiliated funds, may transfer uninvested cash balances into one or more master repurchase agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. Government securities. A custodian bank holds securities pledged as collateral for repurchase agreements until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

Foreign Currency - The Fund may enter into forward purchases or sales of foreign currencies to hedge certain foreign currency denominated assets and liabilities against declines in market value relative to the U.S. Dollar. Forward currency contracts are marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the forward currency contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the forward currency contract at the time it was opened and value at the time it was closed. Investments in forward currency contracts may expose the Fund to risks resulting from unanticipated movements in foreign currency exchange rates or failure of the counter-party to the agreement to perform in accordance with the terms of the contract.

Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books, and the U.S. Dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. The Fund includes foreign currency gains and losses realized on the sales of investments together with market gains and losses on such investments in the Statement of Operations.

Federal Income Taxes - It is the Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute substantially all of its taxable income, including any net realized gains on investments not offset by loss carryovers, to shareholders. Therefore, no provision for federal income or excise tax is required. The Adviser has analyzed the Fund’s tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of December 31, 2012, no provision for income tax is required in the Fund’s financial statements related to these tax positions. The Fund’s federal and state (Arizona) income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue. The earliest tax year that remains subject to examination by these jurisdictions is 2009.

DAVIS VALUE PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

The tax character of distributions paid during the years ended December 31, 2012 and 2011 was as follows:

	2012		2011
Ordinary income	$	6,508,617	$	3,162,493
Long-term capital gain		19,961,511		27,598,703
Total	$	26,470,128	$	30,761,196

As of December 31, 2012, the components of distributable earnings on a tax basis were as follows:

Undistributed net investment income	$	320,559
Undistributed long-term capital gains		3,414,009
Net unrealized appreciation on investments		123,633,830
Total	$	127,368,398

Indemnification - Under the Fund’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, some of the Fund’s contracts with its service providers contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims.

Directors Fees and Expenses - The Fund set up a Rabbi Trust to provide for the deferred compensation plan for Independent Directors that enables them to elect to defer receipt of all or a portion of annual fees they are entitled to receive. The value of an eligible Director’s account is based upon years of service and fees paid to each Director during the years of service. The amount paid to the Director by the Trust under the plan will be determined based upon the performance of the Davis Funds in which the amounts are invested.

Defaulted Securities - The Fund may hold securities in default and is not obligated to dispose of securities whose issuers or underlying obligors subsequently default. As of December 31, 2012, the value of defaulted securities amounted to $109,940 (cost: $736,000) or 0.03% of the Fund’s net assets.

DAVIS VALUE PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 2 - PURCHASES AND SALES OF SECURITIES

The cost of purchases and proceeds from sales of investment securities (excluding short-term securities) during the year ended December 31, 2012 were $33,981,672 and $72,061,606, respectively.

NOTE 3 - FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Davis Selected Advisers-NY, Inc. (“DSA-NY”), a wholly-owned subsidiary of the Adviser, acts as sub-adviser to the Fund. DSA-NY performs research and portfolio management services for the Fund under a Sub-Advisory Agreement with the Adviser. The Fund pays no fees directly to DSA-NY.

Certain directors and officers of the Fund are also directors and officers of the general partner of the Adviser.

Investment Advisory Fees - Advisory fees are paid monthly to the Adviser at an annual rate of 0.55% of the Fund’s average net assets.

Accounting Fees - State Street Bank and Trust Company (“State Street Bank”) is the Fund’s primary accounting provider. Fees for accounting services are included in the custodian fees as State Street Bank also serves as the Fund’s custodian. The Adviser is also paid for certain accounting services. The fee paid to the Adviser for these services during the year ended December 31, 2012 amounted to $6,000.

NOTE 4 - EXPENSES PAID INDIRECTLY

Under an agreement with State Street Bank, custodian fees are reduced for earnings on cash balances maintained at the custodian by the Fund. Such reductions amounted to $11 during the year ended December 31, 2012.

NOTE 5 - CAPITAL STOCK

At December 31, 2012, there were 500 million shares of capital stock ($0.001 par value per share) authorized. Transactions in capital stock were as follows:

		Year ended			Year ended
		December 31, 2012			December 31, 2011
		Shares	Amount		Shares	Amount
Shares sold		1,326,778	$	14,903,812	1,910,661	$	22,596,570
Shares issued in reinvestment of distributions		2,432,916		26,470,128	2,936,883		30,761,196
		3,759,694		41,373,940	4,847,544		53,357,766
Shares redeemed		(5,700,620)		(64,441,809)	(10,782,869)		(128,751,858)
	Net decrease	(1,940,926)	$	(23,067,869)	(5,935,325)	$	(75,394,092)

NOTE 6 - BANK BORROWINGS

The Fund may borrow up to 5% of its assets from a bank to purchase portfolio securities, or for temporary and emergency purposes. The purchase of securities with borrowed funds creates leverage in the Fund. The Fund has entered into an agreement, which enables it to participate with certain other funds managed by the Adviser in an unsecured line of credit with a bank, which permits borrowings up to $50 million, collectively. Interest is charged based on its borrowings, at a rate equal to the higher of the Federal Funds Rate or the Overnight Libor Rate, plus 1.25%. The Fund had no borrowings during the year ended December 31, 2012.

DAVIS VALUE PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 7 - RESTRICTED SECURITIES

Restricted securities are not registered under the Securities Act of 1933 and may have contractual restrictions on resale. They are valued under methods approved by the Board of Directors as reflecting fair value. The aggregate value of restricted securities amounted to $109,940 or 0.03% of the Fund’s net assets as of December 31, 2012.

Information regarding restricted securities is as follows:

Security	Acquisition Date	Principal	Units	Cost per Unit		Valuation per Unit as of December 31, 2012

Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13	07/17/08	$ 736,000	7,360	$	100.00	$	14.94

FEDERAL INCOME TAX INFORMATION (UNAUDITED)

During the calendar year ended December 31, 2012, the Fund declared and paid long-term capital gain distributions in the amount of $19,961,511.

During the calendar year ended December 31, 2012, $6,508,617 of dividends paid by the Fund constituted income dividends for federal income tax purposes. The Fund designates $6,262,153 or 96% as income qualifying for the corporate dividends-received deduction.

DAVIS VALUE PORTFOLIO

Financial Highlights

The following financial information represents selected data for each share of capital stock outstanding throughout each period:

		Year ended December 31,
		2012			2011			2010			2009			2008
Net Asset Value, Beginning of Period		$	10.47		$	11.97		$	10.75		$	8.26		$	14.48

Income (Loss) from Investment Operations:
Net Investment Income		0.20			0.13			0.11			0.08			0.13
Net Realized and Unrealized Gains (Losses)		1.16			(0.63)			1.26			2.49			(6.00)
	Total from Investment Operations	1.36			(0.50)			1.37			2.57			(5.87)

Dividends and Distributions:
Dividends from Net Investment Income		(0.19)			(0.10)			(0.15)			(0.08)			(0.12)
Distributions from Realized Gains		(0.71)			(0.90)			–			–			(0.23)
	Total Dividends and Distributions	(0.90)			(1.00)			(0.15)			(0.08)			(0.35)
Net Asset Value, End of Period		$	10.93		$	10.47		$	11.97		$	10.75		$	8.26

Total Returna		13.08		%	(4.18)		%	12.76		%	31.16		%	(40.32)		%

Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)		$	345,556		$	351,369		$	472,734		$	519,404		$	333,152
Ratio of Expenses to Average Net Assets:
	Gross	0.64		%	0.63		%	0.63		%	0.71		%	0.82		%
	Netb	0.64		%	0.63		%	0.63		%	0.71		%	0.82		%
Ratio of Net Investment Income to Average Net Assets		1.63		%	1.15		%	1.03		%	0.97		%	0.98		%
Portfolio Turnover Ratec		10		%	13		%	21		%	20		%	17		%

The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.

See Notes to Financial Statements

DAVIS VALUE PORTFOLIO

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors

Davis Variable Account Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of Davis Value Portfolio (a separate series of Davis Variable Account Fund, Inc.), including the schedule of investments, as of December 31, 2012, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Davis Value Portfolio as of December 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

KPMG LLP

Denver, Colorado

February 11, 2013

DAVIS VALUE PORTFOLIO

Directors and Officers

Name (birthdate)	Position(s) Held With Fund	Term of Office and Length of Time Served	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director

Independent Directors


Marc P. Blum (09/09/42)	Director	Director since 1986	Chief Executive Officer, World Total Return Fund, LLLP; of Counsel to Gordon Feinblatt LLC (law firm).	13	Director, Legg Mason Investment Counsel & Trust Company, N.A. (asset management company) and Rodney Trust Company (Delaware).

John S. Gates, Jr. (08/02/53)	Director	Director since 2007	Chairman and Chief Executive Officer of PortaeCo LLC, a private investment company (beginning in 2006); Co-founder of CenterPoint Properties Trust (REIT); Co-chairman and Chief Executive Officer for 22 years (until 2006).	13	Director, DCT Industrial Trust (REIT); Chairman, Regional Transportation Authority of Chicago.

Thomas S. Gayner (12/16/61)	Director/ Chairman	Director since 2004	President and Chief Investment Officer, Markel Corp. (diversified financial holding company).	13	Director, Washington Post Co. (publishing company); Director, Colfax Corp. (engineering and manufacturer of pumps and fluid handling equipment).

Samuel H. Iapalucci (07/19/52)	Director	Director since 2006	Former Executive Vice President and Chief Financial Officer, CH2M-HILL Companies, Ltd. (engineering).	13	Director, Trow Global Holdings Inc. (engineering & consulting).

Robert P. Morgenthau (03/22/57)	Director	Director since 2002	Principal, Spears Abacus Advisors, LLC (investment management firm) since August 2011; former Chairman, NorthRoad Capital Management, LLC (investment management firm).	13	none

Marsha Williams (03/28/51)	Director	Director since 1999	Retired; former Senior Vice President and Chief Financial Officer, Orbitz Worldwide, Inc. (travel-services provider) 2007-2010; former Executive Vice President and Chief Financial Officer, Equity Office Properties Trust (REIT) 2002-2007.	13	Director, Modine Manufacturing, Inc. (heat transfer technology); Director, Chicago Bridge & Iron Co., N.V. (industrial construction and engineering); Director, Fifth Third Bancorp (diversified financial services).

DAVIS VALUE PORTFOLIO

Directors and Officers – (Continued)

Name (birthdate)	Position(s) Held With Fund	Term of Office and Length of Time Served	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director

Inside Directors*


Andrew A. Davis (06/25/63)	Director	Director since 1997	President or Vice President of each Davis Fund and Selected Fund; President, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.	16	Director, Selected Funds (consisting of three portfolios) since 1998.

Christopher C. Davis (07/13/65)	Director	Director since 1997	President or Vice President of each Davis Fund, Selected Fund, and Clipper Fund; Chairman, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser, including sole member of the Adviser’s general partner, Davis Investments, LLC; Employee of Shelby Cullom Davis & Co. (registered broker/dealer).	16	Director, Selected Funds (consisting of three portfolios) since 1998; Director, Washington Post Co. (publishing company).

Officers

Andrew A. Davis (born 06/25/63, Davis Funds officer since 1997). See description in the section on Inside Directors.

Christopher C. Davis (born 07/13/65, Davis Funds officer since 1997). See description in the section on Inside Directors.

DAVIS VALUE PORTFOLIO

Investment Adviser
Davis Selected Advisers, L.P. (Doing business as “Davis Advisors”)
2949 East Elvira Road, Suite 101
Tucson, Arizona 85756
(800) 279-0279

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

Transfer Agent
Boston Financial Data Services, Inc.
c/o The Davis Funds
P.O. Box 8406
Boston, Massachusetts 02266-8406

Custodian
State Street Bank and Trust Co.
One Lincoln Street
Boston, Massachusetts 02111

Counsel
Greenberg Traurig, LLP
77 West Wacker Drive, Suite 3100
Chicago, Illinois 60601

Independent Registered Public Accounting Firm
KPMG LLP
1225 Seventeenth Street, Suite 800
Denver, Colorado 80202

For more information about Davis Value Portfolio, including management fee, charges, and expenses, see the current prospectus, which must precede or accompany this report. The Fund’s Statement of Additional Information contains additional information about the Fund’s Directors and is available without charge, upon request, by calling 1-800-279-0279 and on the Fund’s website at www.davisfunds.com. Quarterly Fact Sheets are available on the Fund’s website at www.davisfunds.com.

DAVIS FINANCIAL PORTFOLIO

Table of Contents

Management’s Discussion of Fund Performance	2

Fund Overview	4

Expense Example	5

Schedule of Investments	6

Statement of Assets and Liabilities	8

Statement of Operations	9

Statements of Changes in Net Assets	10

Notes to Financial Statements	11

Federal Income Tax Information	15

Financial Highlights	16

Report of Independent Registered Public Accounting Firm	17

Directors and Officers	18

This Annual Report is authorized for use by existing shareholders. Prospective shareholders must receive a current Davis Financial Portfolio prospectus, which contains more information about investment strategies, risks, charges, and expenses. Please read the prospectus carefully before investing or sending money.

Shares of the Davis Financial Portfolio 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.

Portfolio Proxy Voting Policies and Procedures

Form N-Q

DAVIS FINANCIAL PORTFOLIO

Management’s Discussion of Fund Performance

Performance Overview

Factors Impacting the Portfolio’s Performance

The Portfolio had approximately 23% of its net assets invested in foreign companies at December 31, 2012. As a whole, those companies under-performed the domestic companies held by the Portfolio.

1 The companies included in the Standard & Poor’s 500® Index are divided into ten sectors. One or more industry groups make up a sector.

DAVIS FINANCIAL PORTFOLIO

Management’s Discussion of Fund Performance – (Continued)

Comparison of a $10,000 investment in Davis Financial Portfolio versus the Standard & Poor’s 500® Index over 10 years for an investment made on December 31, 2002

Average Annual Total Return for periods ended December 31, 2012

Fund & Benchmark Index	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Financial Portfolio	18.83%	(1.65)%	4.93%	2.88%	0.69%	0.69%
Standard & Poor’s 500® Index	16.00%	1.66%	7.10%	2.11%

DAVIS FINANCIAL PORTFOLIO	Fund Overview
	December 31, 2012

Portfolio Composition		Industry Weightings
(% of Fund’s 12/31/12 Net Assets)		(% of 12/31/12 Stock Holdings)

			Fund	S&P 500®
Common Stock (U.S.)	75.41%	Diversified Financials	39.08%	6.45%
Common Stock (Foreign)	23.41%	Insurance	31.80%	3.99%
Short-Term Investments	1.36%	Banks	19.50%	2.84%
Other Assets & Liabilities	(0.18)%	Energy	2.99%	10.94%
	100.00%	Food & Staples Retailing	2.94%	2.35%
		Information Technology	2.35%	18.96%
		Retailing	1.34%	4.13%
		Health Care	–	12.38%
		Capital Goods	–	7.80%
		Food, Beverage & Tobacco	–	5.91%
		Other	–	24.25%
			100.00%	100.00%

Top 10 Long-Term Holdings

(% of Fund’s 12/31/12 Net Assets)

American Express Co.	Consumer Finance	10.61%
Wells Fargo & Co.	Commercial Banks	8.89%
State Bank of India Ltd., GDR	Commercial Banks	6.12%
Bank of New York Mellon Corp.	Capital Markets	5.85%
Markel Corp.	Property & Casualty Insurance	5.60%
Loews Corp.	Multi-line Insurance	5.51%
Julius Baer Group Ltd.	Capital Markets	4.91%
Alleghany Corp.	Reinsurance	4.82%
American International Group, Inc.	Multi-line Insurance	4.65%
Brookfield Asset Management Inc., Class A	Capital Markets	4.53%

New Positions Added (01/01/12-12/31/12)

(Highlighted positions are those greater than 4.00% of the Fund’s 12/31/12 net assets)

Security	Industry	Date of 1st Purchase	% of Fund’s 12/31/12 Net Assets
ACE Ltd.	Property & Casualty Insurance	04/02/12	2.55%
American International Group, Inc.	Multi-line Insurance	10/24/12	4.65%
Google Inc., Class A	Software & Services	04/16/12	2.32%
PNC Financial Services Group, Inc.	Commercial Banks	01/18/12	–
Toronto-Dominion Bank	Commercial Banks	04/02/12	2.61%

Positions Closed (01/01/12-12/31/12)

(Gains and losses greater than $500,000 are highlighted)

Security	Industry	Date of Final Sale		Realized Gain(Loss)
Banco Santander Brasil S.A., ADS	Commercial Banks	02/22/12	$	(56,657)
PNC Financial Services Group, Inc.	Commercial Banks	02/22/12		18,658
RHJ International	Diversified Financial Services	02/28/12		(853,941)
Sino-Forest Corp.	Materials	07/10/12		(1,287,807)
T. Rowe Price Group Inc.	Capital Markets	02/24/12		156,681
Transatlantic Holdings, Inc.	Reinsurance	03/06/12		81,870

DAVIS FINANCIAL PORTFOLIO

Expense Example

Example

Actual Expenses

Hypothetical Example for Comparison Purposes

	Beginning Account Value (07/01/12)	Ending Account Value (12/31/12)	Expenses Paid During Period* (07/01/12-12/31/12)
Actual	$1,000.00	$1,068.39	$3.54
Hypothetical	$1,000.00	$1,021.72	$3.46

Hypothetical assumes 5% annual return before expenses.

* Expenses are equal to the Fund’s annualized operating expense ratio (0.68%)**, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).

** The expense ratio reflects the impact, if any, of certain reimbursements from the Adviser.

DAVIS FINANCIAL PORTFOLIO	Schedule of Investments
	December 31, 2012

					Shares/Units		Value (Note 1)
COMMON STOCK – (98.82%)
CONSUMER DISCRETIONARY – (1.32%)
	Retailing – (1.32%)
			Bed Bath & Beyond Inc. *			15,900	$	888,731
				Total Consumer Discretionary				888,731
CONSUMER STAPLES – (2.91%)
	Food & Staples Retailing – (2.91%)
			CVS Caremark Corp.			40,480		1,957,208
				Total Consumer Staples				1,957,208
ENERGY – (2.96%)
			Canadian Natural Resources Ltd. (Canada)			68,790		1,985,967
				Total Energy				1,985,967
FINANCIALS – (89.31%)
	Banks – (19.27%)
		Commercial Banks – (19.27%)
			ICICI Bank Ltd., ADR (India)			15,750		686,858
			State Bank of India Ltd., GDR (India)			45,148		4,117,334
			Toronto-Dominion Bank (Canada)			20,800		1,754,064
			U.S. Bancorp			13,150		420,011
			Wells Fargo & Co.			174,940		5,979,449
								12,957,716
	Diversified Financials – (38.62%)
		Capital Markets – (22.09%)
			Ameriprise Financial, Inc.			14,740		923,166
			Bank of New York Mellon Corp.			153,130		3,935,441
			Brookfield Asset Management Inc., Class A (Canada)			83,100		3,045,615
			Charles Schwab Corp.			13,000		186,680
			Goldman Sachs Group, Inc.			16,890		2,154,489
			Julius Baer Group Ltd. (Switzerland)			92,754		3,302,302
			Oaktree Capital Group LLC, Class A			28,700		1,305,563
								14,853,256
		Consumer Finance – (10.83%)
			American Express Co.			124,110		7,133,842
			First Marblehead Corp. *			194,994		151,491
								7,285,333
		Diversified Financial Services – (5.70%)
			Bank of America Corp.			14,486		168,037
			Cielo S.A. (Brazil)			30,600		851,719
			Visa Inc., Class A			18,560		2,813,325
								3,833,081
								25,971,670
	Insurance – (31.42%)
		Multi-line Insurance – (10.16%)
			American International Group, Inc. *			88,600		3,127,580
			Loews Corp.			91,010		3,708,658
								6,836,238
		Property & Casualty Insurance – (12.35%)
			ACE Ltd.			21,500		1,715,700
			Markel Corp. *			8,695		3,768,587

DAVIS FINANCIAL PORTFOLIO	Schedule of Investments - (Continued)
	December 31, 2012

					Shares/Principal			Value (Note 1)
COMMON STOCK – (CONTINUED)
FINANCIALS – (CONTINUED)
	Insurance – (Continued)
		Property & Casualty Insurance – (Continued)
			Progressive Corp.				133,655	$	2,820,120
									8,304,407
		Reinsurance – (8.91%)
			Alleghany Corp. *				9,663		3,241,163
			Everest Re Group, Ltd.				25,040		2,753,148
									5,994,311
									21,134,956
Total Financials									60,064,342
INFORMATION TECHNOLOGY – (2.32%)
	Software & Services – (2.32%)
			Google Inc., Class A *				2,200		1,560,493
Total Information Technology									1,560,493
				TOTAL COMMON STOCK – (Identified cost $49,949,605)					66,456,741
SHORT-TERM INVESTMENTS – (1.36%)
			Banc of America Securities LLC Joint Repurchase Agreement, 0.18%, 01/02/13, dated 12/31/12, repurchase value of $398,004 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.50%-4.50%, 04/01/42-11/01/42, total market value $405,960)			$	398,000		398,000
			Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.27%, 01/02/13, dated 12/31/12, repurchase value of $519,008 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 4.00%, 09/20/40-10/15/40, total market value $529,380)				519,000		519,000
				TOTAL SHORT-TERM INVESTMENTS – (Identified cost $917,000)					917,000

Total Investments – (100.18%) – (Identified cost $50,866,605) – (a)			67,373,741
Liabilities Less Other Assets – (0.18%)			(119,167)
	Net Assets – (100.00%)	$	67,254,574

ADR: American Depositary Receipt

GDR: Global Depositary Receipt

* Non-Income producing security.

(a)

Aggregate cost for federal income tax purposes is $51,219,863. At December 31, 2012 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:

Unrealized appreciation		$	20,455,073
Unrealized depreciation			(4,301,195)
	Net unrealized appreciation	$	16,153,878

See Notes to Financial Statements

DAVIS FINANCIAL PORTFOLIO	Statement of Assets and Liabilities
	At December 31, 2012

ASSETS:
Investments in securities at value* (see accompanying Schedule of Investments)			$	67,373,741
Cash				1,077
Receivables:
	Capital stock sold			494
	Dividends and interest			8,742
Prepaid expenses				1,311
		Total assets		67,385,365
LIABILITIES:
Payables:
	Capital stock redeemed			72,671
Accrued audit fees				12,280
Accrued custodian fees				6,700
Accrued management fee				32,043
Other accrued expenses				7,097
		Total liabilities		130,791
NET ASSETS			$	67,254,574
SHARES OUTSTANDING				5,823,353
NET ASSET VALUE, offering, and redemption price per share (Net assets ÷ Shares outstanding)			$	11.55

NET ASSETS CONSIST OF:
Par value of shares of capital stock			$	5,823
Additional paid-in capital				53,268,962
Overdistributed net investment income				(8,925)
Accumulated net realized losses from investments				(2,518,362)
Net unrealized appreciation on investments and foreign currency transactions				16,507,076
		Net Assets	$	67,254,574

*Including:
	Cost of Investments		$	50,866,605

See Notes to Financial Statements

DAVIS FINANCIAL PORTFOLIO	Statement of Operations
	For the year ended December 31, 2012

INVESTMENT INCOME:
Income:
Dividends*					$	1,093,909
Interest						7,713
		Total income				1,101,622

Expenses:
Management fees (Note 3)			$	362,657
Custodian fees				24,691
Transfer agent fees				9,133
Audit fees				18,240
Legal fees				1,765
Accounting fees (Note 3)				2,004
Reports to shareholders				8,450
Directors’ fees and expenses				18,460
Registration and filing fees				55
Miscellaneous				8,765
Total expenses						454,220
Expenses paid indirectly (Note 4)						(6)
		Net expenses				454,214
Net investment income						647,408

REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
	Investment transactions					(277,384)
	Foreign currency transactions					374
Net realized loss						(277,010)
Net increase in unrealized appreciation						10,754,760
		Net realized and unrealized gain on investments and foreign currency transactions				10,477,750
Net increase in net assets resulting from operations					$	11,125,158

*Net of foreign taxes withheld as follows					$	16,241

See Notes to Financial Statements

DAVIS FINANCIAL PORTFOLIO

Statements of Changes in Net Assets

		Year ended December 31,
		2012		2011

OPERATIONS:
Net investment income		$	647,408	$	713,290
Net realized gain (loss) from investments and foreign currency transactions			(277,010)		10,106,393
Net increase (decrease) in unrealized appreciation on investments and foreign currency transactions			10,754,760		(16,489,959)
	Net increase (decrease) in net assets resulting from operations		11,125,158		(5,670,276)

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income			(1,319,573)		(872,599)
Realized gains from investment transactions			(7,861)		–
Return of capital			(411,358)		–

CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets resulting from capital share transactions (Note 5)			(2,965,665)		(15,025,823)
	Total increase (decrease) in net assets		6,420,701		(21,568,698)

NET ASSETS:
Beginning of year			60,833,873		82,402,571
End of year*		$	67,254,574	$	60,833,873

*Including undistributed (overdistributed) net investment income of		$	(8,925)	$	528,054

See Notes to Financial Statements

DAVIS FINANCIAL PORTFOLIO	Notes to Financial Statements
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Security Valuation - The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (“Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Securities listed on the Exchange (and other national exchanges) are valued at the last reported sales price on the day of valuation. Securities traded in the over-the-counter market (e.g. NASDAQ) and listed securities for which no sale was reported on that date are stated at the average of closing bid and asked prices. Securities traded on foreign exchanges are valued based upon the last sales price on the principal exchange on which the security is traded prior to the time when the Fund’s assets are valued. Securities (including restricted securities) for which market quotations are not readily available or securities whose values have been materially affected by what Davis Selected Advisers, L.P. (“Davis Advisors” or “Adviser”), the Fund’s investment adviser, identifies as a significant event occurring before the Fund’s assets are valued, but after the close of their respective exchanges will be fair valued using a standardized fair valuation methodology applicable to the security type or the significant event as previously approved by the Fund’s Pricing Committee and Board of Directors. The Pricing Committee considers all facts it deems relevant that are reasonably available, through either public information or information available to the Adviser’s portfolio management team, when determining the fair value of a security. To assess the continuing appropriateness of security valuations, the Adviser may compare prior day prices, prices of comparable securities, and sale prices to the prior or current day prices and challenge those prices exceeding certain tolerance levels with the third-party pricing service or broker source. Fair value determinations are subject to review, approval, and ratification by the Fund’s Board of Directors at its next regularly scheduled meeting covering the period in which the fair valuation was determined.

Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value.

The Fund’s valuation procedures are reviewed and subject to approval by the Board of Directors. There have been no significant changes to the fair valuation procedures during the period.

Level 1 –	quoted prices in active markets for identical securities
Level 2 –	other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
Level 3 –	significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities nor can it be assured that the Fund can obtain the fair value assigned to a security if it were to sell the security.

DAVIS FINANCIAL PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Value Measurements - (Continued)

The following is a summary of the inputs used as of December 31, 2012 in valuing the Fund’s investments carried at value:

	Investments in Securities at Value
	Valuation Inputs
			Level 2:		Level 3:
			Other Significant		Significant
	Level 1:		Observable		Unobservable
	Quoted Prices		Inputs*		Inputs		Total
Equity securities:
Consumer discretionary	$	888,731	$	–	$	–	$	888,731
Consumer staples		1,957,208		–		–		1,957,208
Energy		1,985,967		–		–		1,985,967
Financials		52,644,706		7,419,636		–		60,064,342
Information technology		1,560,493		–		–		1,560,493
Short-term securities		–		917,000		–		917,000
Total Investments	$	59,037,105	$	8,336,636	$	–	$	67,373,741

Level 1 to Level 2 Transfers**:
Financials	$	7,419,636

Level 2 to Level 1 Transfers**:
Financials	$	1,305,563

*Includes certain securities trading primarily outside the U.S. whose value the Fund adjusted as a result of significant market movements following the close of local trading.

**Application of fair value procedures for securities traded on foreign exchanges and the initial public offering of an investment triggered transfers of investments between Level 1 and Level 2 of the fair value hierarchy during the year ended December 31, 2012.

The following table reconciles the valuation of assets in which significant unobservable inputs (Level 3) were used in determining fair value during the year ended December 31, 2012:

Investment Securities:
Beginning balance	$	136,620
Net realized loss		(1,287,807)
Decrease in unrealized depreciation		1,151,187
Ending balance	$	–

DAVIS FINANCIAL PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books, and the U.S. Dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. The Fund includes foreign currency gains and losses realized on the sales of investments together with market gains and losses on such investments in the Statement of Operations.

The Regulated Investment Company Modernization Act of 2010 requires that capital loss carryforwards with no expiration, if any, be utilized before capital loss carryforwards with expiration dates. At December 31, 2012, the Fund had available for federal income tax purposes unused capital loss carryforwards as follows.

	Capital Loss Carryforwards
Pre-Enactment
Expiring
12/31/2017	$	1,935,000
Post-Enactment
No Expiration
Short-term		–
Long-term		230,000
	$	2,165,000

DAVIS FINANCIAL PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Dividends and Distributions to Shareholders - Dividends and distributions to shareholders are recorded on the ex-dividend date. Net investment income (loss), net realized gains (losses), and net unrealized appreciation (depreciation) on investments may differ for financial statement and tax purposes primarily due to differing treatments of wash sales, foreign currency transactions, and partnership income. The character of dividends and distributions made during the fiscal year from net investment income and net realized securities gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which income or realized gain was recorded by the Fund. The Fund adjusts certain components of capital to reflect permanent differences between financial statement amounts and net income and realized gains/losses determined in accordance with income tax rules. Accordingly, during the year ended December 31, 2012, amounts have been reclassified to reflect a decrease in overdistributed net investment income of $135,186, a decrease in accumulated net realized losses from investments and foreign currency transactions of $276,172, and a decrease in additional paid in capital of $411,358. The Fund’s net assets have not been affected by this reclassification.

The tax character of distributions paid during the years ended December 31, 2012 and 2011 was as follows:

	2012		2011
Ordinary income	$	1,327,434	$	872,599
Return of capital		411,358		–
Total	$	1,738,792	$	872,599

As of December 31, 2012, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

Accumulated net realized losses from investments and
foreign currency transactions	$	(2,165,105)
Net unrealized appreciation on investments		16,153,819
Total	$	13,988,714

NOTE 2 - PURCHASES AND SALES OF SECURITIES

The cost of purchases and proceeds from sales of investment securities (excluding short-term securities) during the year ended December 31, 2012 were $9,547,530 and $16,903,110, respectively.

DAVIS FINANCIAL PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 3 - FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Certain directors and officers of the Fund are also directors and officers of the general partner of the Adviser.

During the year ended December 31, 2011, the Fund transferred securities valued at $395,726 to another registered investment company managed by the Adviser. The Fund realized a loss of $213,085.

Investment Advisory Fees - Advisory fees are paid monthly to the Adviser at an annual rate of 0.55% of the Fund’s average net assets.

NOTE 4 - EXPENSES PAID INDIRECTLY

Under an agreement with State Street Bank, custodian fees are reduced for earnings on cash balances maintained at the custodian by the Fund. Such reductions amounted to $6 during the year ended December 31, 2012.

NOTE 5 - CAPITAL STOCK

At December 31, 2012, there were 500 million shares of capital stock ($0.001 par value per share) authorized. Transactions in capital stock were as follows:

		Year ended			Year ended
		December 31, 2012			December 31, 2011
		Shares	Amount		Shares	Amount
Shares sold		467,120	$	5,235,219	430,782	$	4,640,929
Shares issued in reinvestment of distributions		151,992		1,738,792	87,173		872,599
		619,112		6,974,011	517,955		5,513,528
Shares redeemed		(894,192)		(9,939,676)	(1,908,509)		(20,539,351)
	Net decrease	(275,080)	$	(2,965,665)	(1,390,554)	$	(15,025,823)

NOTE 6 - BANK BORROWINGS

FEDERAL INCOME TAX INFORMATION (UNAUDITED)

During the calendar year ended December 31, 2012, $1,327,434 of dividends paid by the Fund constituted income dividends for federal income tax purposes. The Fund designates $1,259,697 or 95% as income qualifying for the corporate dividends-received deduction.

DAVIS FINANCIAL PORTFOLIO

Financial Highlights

The following financial information represents selected data for each share of capital stock outstanding throughout each period:

		Year ended December 31,
		2012			2011			2010			2009			2008
Net Asset Value, Beginning of Period		$	9.98		$	11.00		$	9.98		$	7.12		$	14.27

Income (Loss) from Investment Operations:
Net Investment Income		0.12			0.14			0.12			0.05			0.08
Net Realized and Unrealized Gains (Losses)		1.75			(1.01)			0.99			2.88			(6.76)
	Total from Investment Operations	1.87			(0.87)			1.11			2.93			(6.68)

Dividends and Distributions:
Dividends from Net Investment Income		(0.23)			(0.15)			(0.09)			(0.07)			–
Distributions from Realized Gains		– a			–			–			–			(0.47)
Return of Capital		(0.07)			–			–			–			–
	Total Dividends and Distributions	(0.30)			(0.15)			(0.09)			(0.07)			(0.47)
Net Asset Value, End of Period		$	11.55		$	9.98		$	11.00		$	9.98		$	7.12

Total Returnb		18.83		%	(7.96)		%	11.10		%	41.18		%c	(46.36)		%

Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)		$	67,255		$	60,834		$	82,403		$	87,837		$	57,321
Ratio of Expenses to Average Net Assets:
	Gross	0.69		%	0.69		%	0.69		%	0.78		%	0.88		%
	Netd	0.69		%	0.69		%	0.69		%	0.78		%	0.88		%
Ratio of Net Investment Income to Average Net Assets		0.98		%	0.99		%	0.99		%	0.67		%	0.73		%
Portfolio Turnover Ratee		16		%	11		%	2		%	10		%	16		%

a	Less than $0.005 per share.

b	Assumes hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns do not reflect charges attributable to your insurance company’s separate account. Inclusion of these charges would reduce the total returns shown.

c	Davis Financial Portfolio received a favorable class action settlement from a company that it no longer owns. This settlement had an approximate impact of 0.4% on the investment performance of the Fund in 2009. This was a one-time event that is unlikely to be repeated.

d	The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.

e	The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation.

See Notes to Financial Statements

DAVIS FINANCIAL PORTFOLIO

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors

Davis Variable Account Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of Davis Financial Portfolio (a separate series of Davis Variable Account Fund, Inc.), including the schedule of investments, as of December 31, 2012, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Davis Financial Portfolio as of December 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

KPMG LLP

Denver, Colorado

February 11, 2013

DAVIS FINANCIAL PORTFOLIO

Directors and Officers

Name (birthdate)	Position(s) Held With Fund	Term of Office and Length of Time Served	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director

Independent Directors


Marc P. Blum (09/09/42)	Director	Director since 1986	Chief Executive Officer, World Total Return Fund, LLLP; of Counsel to Gordon Feinblatt LLC (law firm).	13	Director, Legg Mason Investment Counsel & Trust Company, N.A. (asset management company) and Rodney Trust Company (Delaware).

John S. Gates, Jr. (08/02/53)	Director	Director since 2007	Chairman and Chief Executive Officer of PortaeCo LLC, a private investment company (beginning in 2006); Co-founder of CenterPoint Properties Trust (REIT); Co-chairman and Chief Executive Officer for 22 years (until 2006).	13	Director, DCT Industrial Trust (REIT); Chairman, Regional Transportation Authority of Chicago.

Thomas S. Gayner (12/16/61)	Director/ Chairman	Director since 2004	President and Chief Investment Officer, Markel Corp. (diversified financial holding company).	13	Director, Washington Post Co. (publishing company); Director, Colfax Corp. (engineering and manufacturer of pumps and fluid handling equipment).

Samuel H. Iapalucci (07/19/52)	Director	Director since 2006	Former Executive Vice President and Chief Financial Officer, CH2M-HILL Companies, Ltd. (engineering).	13	Director, Trow Global Holdings Inc. (engineering & consulting).

Robert P. Morgenthau (03/22/57)	Director	Director since 2002	Principal, Spears Abacus Advisors, LLC (investment management firm) since August 2011; former Chairman, NorthRoad Capital Management, LLC (investment management firm).	13	none

Marsha Williams (03/28/51)	Director	Director since 1999	Retired; former Senior Vice President and Chief Financial Officer, Orbitz Worldwide, Inc. (travel-services provider) 2007-2010; former Executive Vice President and Chief Financial Officer, Equity Office Properties Trust (REIT) 2002-2007.	13	Director, Modine Manufacturing, Inc. (heat transfer technology); Director, Chicago Bridge & Iron Co., N.V. (industrial construction and engineering); Director, Fifth Third Bancorp (diversified financial services).

DAVIS FINANCIAL PORTFOLIO

Directors and Officers – (Continued)

Name (birthdate)	Position(s) Held With Fund	Term of Office and Length of Time Served	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director

Inside Directors*


Andrew A. Davis (06/25/63)	Director	Director since 1997	President or Vice President of each Davis Fund and Selected Fund; President, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.	16	Director, Selected Funds (consisting of three portfolios) since 1998.

Christopher C. Davis (07/13/65)	Director	Director since 1997	President or Vice President of each Davis Fund, Selected Fund, and Clipper Fund; Chairman, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser, including sole member of the Adviser’s general partner, Davis Investments, LLC; Employee of Shelby Cullom Davis & Co. (registered broker/dealer).	16	Director, Selected Funds (consisting of three portfolios) since 1998; Director, Washington Post Co. (publishing company).

Officers

Andrew A. Davis (born 06/25/63, Davis Funds officer since 1997). See description in the section on Inside Directors.

Christopher C. Davis (born 07/13/65, Davis Funds officer since 1997). See description in the section on Inside Directors.

DAVIS FINANCIAL PORTFOLIO

Investment Adviser
Davis Selected Advisers, L.P. (Doing business as “Davis Advisors”)
2949 East Elvira Road, Suite 101
Tucson, Arizona 85756
(800) 279-0279

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

Transfer Agent
Boston Financial Data Services, Inc.
c/o The Davis Funds
P.O. Box 8406
Boston, Massachusetts 02266-8406

Custodian
State Street Bank and Trust Co.
One Lincoln Street
Boston, Massachusetts 02111

Counsel
Greenberg Traurig, LLP
77 West Wacker Drive, Suite 3100
Chicago, Illinois 60601

Independent Registered Public Accounting Firm
KPMG LLP
1225 Seventeenth Street, Suite 800
Denver, Colorado 80202

For more information about Davis Financial Portfolio, including management fee, charges, and expenses, see the current prospectus, which must precede or accompany this report. The Fund’s Statement of Additional Information contains additional information about the Fund’s Directors and is available without charge, upon request, by calling 1-800-279-0279 and on the Fund’s website at www.davisfunds.com. Quarterly Fact Sheets are available on the Fund’s website at www.davisfunds.com.

DAVIS REAL ESTATE PORTFOLIO

Table of Contents

Management’s Discussion of Fund Performance	2

Fund Overview	4

Expense Example	6

Schedule of Investments	7

Statement of Assets and Liabilities	10

Statement of Operations	11

Statements of Changes in Net Assets	12

Notes to Financial Statements	13

Federal Income Tax Information	17

Financial Highlights	18

Report of Independent Registered Public Accounting Firm	19

Directors and Officers	20

This Annual Report is authorized for use by existing shareholders. Prospective shareholders must receive a current Davis Real Estate Portfolio prospectus, which contains more information about investment strategies, risks, charges, and expenses. Please read the prospectus carefully before investing or sending money.

Shares of the Davis Real Estate Portfolio 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.

Portfolio Proxy Voting Policies and Procedures

Form N-Q

DAVIS REAL ESTATE PORTFOLIO

Management’s Discussion of Fund Performance

Performance Overview

Factors Impacting the Portfolio’s Performance

The Portfolio had more invested in Office REITs than in any other sub-industry and they were another important contributor to the Portfolio’s absolute performance. The Portfolio’s Office REITs out-performed the corresponding sub-industry within the Index, but a higher relative average weighting compared to the Index detracted from relative performance. Coresite Realty and Brandywine Realty were among the most important contributors to performance. DuPont Fabros Technology was among the most important detractors from performance. The Portfolio no longer owns Coresite Realty.

1 The companies included in the Wilshire U.S. Real Estate Securities Index are divided into eight sub-industries.

DAVIS REAL ESTATE PORTFOLIO

Management’s Discussion of Fund Performance – (Continued)

Comparison of a $10,000 investment in Davis Real Estate Portfolio versus the

Standard & Poor’s 500® Index and the Wilshire U.S. Real Estate Securities Index

over 10 years for an investment made on December 31, 2002

Average Annual Total Return for periods ended December 31, 2012

Fund & Benchmark Indices	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Real Estate Portfolio	17.15%	1.32%	9.61%	8.67%	0.77%	0.77%
Standard & Poor’s 500® Index	16.00%	1.66%	7.10%	2.11%
Wilshire U.S. Real Estate Securities Index	17.55%	5.08%	11.65%	10.91%

DAVIS REAL ESTATE PORTFOLIO	Fund Overview
	December 31, 2012

Portfolio Composition		Industry Weightings
(% of Fund’s 12/31/12 Net Assets)		(% of 12/31/12 Long-Term Portfolio)

				Wilshire U.S. Real Estate Securities Index
Common Stock	84.41%
Preferred Stock	6.59%		Fund
Convertible Bonds	2.47%	Office REITs	29.13%	14.55%
Short-Term Investments	6.22%	Residential REITs	21.97%	18.31%
Other Assets & Liabilities	0.31%	Specialized REITs	18.11%	27.82%
	100.00%	Retail REITs	16.97%	25.72%
		Industrial REITs	6.60%	5.04%
		Real Estate Operating Companies	3.90%	1.55%
		Diversified REITs	3.32%	6.65%
		Hotels, Resorts & Cruise Lines	–	0.36%
			100.00%	100.00%

Top 10 Long-Term Holdings

(% of Fund’s 12/31/12 Net Assets)

American Campus Communities, Inc.	Residential REITs	5.19%
Simon Property Group, Inc.	Retail REITs	4.97%
Digital Realty Trust, Inc.	Office REITs	4.41%
Alexandria Real Estate Equities, Inc.	Office REITs	4.41%
Rayonier Inc.	Specialized REITs	3.44%
Forest City Enterprises, Inc., Class A	Real Estate Operating Companies	3.25%
Alexandria Real Estate Equities, Inc., 7.00%, Series D, Cum. Conv. Pfd.	Office REITs	3.15%
Vornado Realty Trust	Diversified REITs	3.11%
AvalonBay Communities, Inc.	Residential REITs	2.95%
Ventas, Inc.	Specialized REITs	2.81%

DAVIS REAL ESTATE PORTFOLIO	Fund Overview – (Continued)
	December 31, 2012

New Positions Added (01/01/12-12/31/12)

(Highlighted positions are those greater than 1.50% of the Fund’s 12/31/12 net assets)

Security	Industry	Date of 1st Purchase	% of Fund’s 12/31/12 Net Assets
American Tower Corp.	Specialized REITs	01/05/12	1.69%
BRE Properties, Inc.	Residential REITs	11/01/12	2.57%
DuPont Fabros Technology Inc.,
7.625%, Series B, Pfd.	Office REITs	01/13/12	0.41%
Home Properties, Inc.	Residential REITs	04/23/12	0.96%
Host Hotels & Resorts Inc.	Specialized REITs	01/13/12	2.48%
LaSalle Hotel Properties	Specialized REITs	07/20/12	1.63%
Potlatch Corp.	Specialized REITs	04/27/12	–
Sunstone Hotel Investors, Inc.	Specialized REITs	01/13/12	–
Taubman Centers, Inc.	Retail REITs	06/25/12	1.03%
Taubman Centers, Inc., 6.50%, Series J, Pfd.	Retail REITs	08/03/12	0.36%
Weyerhaeuser Co.	Specialized REITs	04/27/12	–

Positions Closed (01/01/12-12/31/12)

(Gains and losses greater than $100,000 are highlighted)

Security	Industry	Date of Final Sale		Realized Gain (Loss)
Coresite Realty Corp.	Office REITs	10/15/12	$	352,542
CubeSmart	Specialized REITs	06/29/12		19,439
Plum Creek Timber Co., Inc.	Specialized REITs	06/27/12		(174)
Potlatch Corp.	Specialized REITs	09/17/12		32,959
SL Green Operating Partnership L.P., 144A
Conv. Sr. Notes, 3.00%, 03/30/27	Office REITs	03/30/12		1,359
Sunstone Hotel Investors, Inc.	Specialized REITs	06/08/12		33,042
Weyerhaeuser Co.	Specialized REITs	10/03/12		198,305

DAVIS REAL ESTATE PORTFOLIO

Expense Example

Example

Actual Expenses

Hypothetical Example for Comparison Purposes

	Beginning Account Value (07/01/12)	Ending Account Value (12/31/12)	Expenses Paid During Period* (07/01/12-12/31/12)
Actual	$1,000.00	$1,023.10	$3.86
Hypothetical	$1,000.00	$1,021.32	$3.86

Hypothetical assumes 5% annual return before expenses.

* Expenses are equal to the Fund’s annualized operating expense ratio (0.76%)**, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).

** The expense ratio reflects the impact, if any, of certain reimbursements from the Adviser.

DAVIS REAL ESTATE PORTFOLIO	Schedule of Investments
	December 31, 2012

					Shares		Value (Note 1)
COMMON STOCK – (84.41%)
	FINANCIALS – (84.41%)
		Real Estate – (84.41%)
			Real Estate Investment Trusts (REITs) – (81.16%)
				Diversified REITs – (3.11%)
				Vornado Realty Trust		10,890	$	872,071
				Industrial REITs – (5.10%)
				DCT Industrial Trust Inc.		92,140		597,989
				EastGroup Properties, Inc.		11,980		644,644
				Prologis, Inc.		5,190		189,383
								1,432,016
				Office REITs – (20.73%)
				Alexandria Real Estate Equities, Inc.		17,870		1,238,748
				BioMed Realty Trust, Inc.		40,570		784,218
				Boston Properties, Inc.		7,130		754,425
				Brandywine Realty Trust		16,080		196,015
				Corporate Office Properties Trust		17,730		442,895
				Digital Realty Trust, Inc.		18,250		1,238,993
				DuPont Fabros Technology Inc.		28,000		676,480
				SL Green Realty Corp.		6,330		485,195
								5,816,969
				Residential REITs – (20.54%)
				American Campus Communities, Inc.		31,600		1,457,708
				AvalonBay Communities, Inc.		6,110		828,455
				BRE Properties, Inc.		14,200		721,786
				Education Realty Trust, Inc.		58,390		621,270
				Equity Residential		10,220		579,167
				Essex Property Trust, Inc.		4,140		607,131
				Home Properties, Inc.		4,410		270,377
				Post Properties, Inc.		13,570		677,822
								5,763,716
				Retail REITs – (14.76%)
				CBL & Associates Properties, Inc.		23,230		492,708
				DDR Corp.		41,990		657,563
				Federal Realty Investment Trust		4,300		447,286
				Kimco Realty Corp.		30,130		582,112
				Macerich Co.		4,820		281,006
				Simon Property Group, Inc.		8,822		1,394,670
				Taubman Centers, Inc.		3,660		288,115
								4,143,460
				Specialized REITs – (16.92%)
				American Tower Corp.		6,150		475,211
				EPR Properties		8,010		369,341
				HCP, Inc.		6,130		276,953
				Host Hotels & Resorts Inc.		44,450		696,531
				LaSalle Hotel Properties		18,020		457,528
				Public Storage		4,980		721,901
				Rayonier Inc.		18,610		964,556

DAVIS REAL ESTATE PORTFOLIO	Schedule of Investments – (Continued)
	December 31, 2012

					Shares/Principal			Value (Note 1)
COMMON STOCK – (CONTINUED)
FINANCIALS – (CONTINUED)
	Real Estate – (Continued)
		Real Estate Investment Trusts (REITs) – (Continued)
			Specialized REITs – (Continued)
			Ventas, Inc.				12,180	$	788,290
									4,750,311
									22,778,543
		Real Estate Management & Development – (3.25%)
			Real Estate Operating Companies – (3.25%)
			Forest City Enterprises, Inc., Class A *				56,550		913,282
Total Financials									23,691,825
				TOTAL COMMON STOCK – (Identified cost $21,158,641)					23,691,825
PREFERRED STOCK – (6.59%)
FINANCIALS – (6.59%)
	Real Estate – (6.59%)
		Real Estate Investment Trusts (REITs) – (6.59%)
			Industrial REITs – (1.07%)
			Prologis, Inc., 6.75%, Series M				11,900		299,107
			Office REITs – (4.42%)
			Alexandria Real Estate Equities, Inc., 7.00%, Series D, Cum. Conv. Pfd.				33,272		883,787
			Digital Realty Trust, Inc., 5.50%, Series D, Cum. Conv. Pfd.				5,700		243,497
			DuPont Fabros Technology Inc., 7.625%, Series B				4,300		114,488
									1,241,772
			Retail REITs – (1.10%)
			CBL & Associates Properties, Inc., 7.375%, Series D				8,280		208,263
			Taubman Centers, Inc., 6.50%, Series J				3,890		99,681
									307,944
Total Financials									1,848,823
				TOTAL PREFERRED STOCK – (Identified cost $932,240)					1,848,823
CONVERTIBLE BONDS – (2.47%)
FINANCIALS – (2.47%)
	Real Estate – (2.47%)
		Real Estate Investment Trusts (REITs) – (2.08%)
			Office REITs – (2.08%)
			Digital Realty Trust, L.P., 144A Conv. Sr. Notes, 5.50%, 04/15/29 (a)			$	344,000		583,295
		Real Estate Management & Development – (0.39%)
			Real Estate Operating Companies – (0.39%)
			Forest City Enterprises, Inc., Conv. Sr. Notes, 5.00%, 10/15/16				80,000		110,250
Total Financials									693,545
				TOTAL CONVERTIBLE BONDS – (Identified cost $424,000)					693,545

DAVIS REAL ESTATE PORTFOLIO	Schedule of Investments – (Continued)
	December 31, 2012

			Principal			Value (Note 1)
SHORT-TERM INVESTMENTS – (6.22%)
	Banc of America Securities LLC Joint Repurchase Agreement, 0.18%, 01/02/13, dated 12/31/12, repurchase value of $759,008 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.50%-4.50%, 04/01/42-11/01/42, total market value $774,180)			$	759,000	$	759,000
	Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.27%, 01/02/13, dated 12/31/12, repurchase value of $987,015 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 4.00%, 09/20/40-10/15/40, total market value $1,006,740)				987,000		987,000
		TOTAL SHORT-TERM INVESTMENTS – (Identified cost $1,746,000)					1,746,000

Total Investments – (99.69%) – (Identified cost $24,260,881) – (b)			27,980,193
Other Assets Less Liabilities – (0.31%)			88,120
	Net Assets – (100.00%)	$	28,068,313

	*	Non-Income producing security.

	(a)	This security is subject to Rule 144A. The Board of Directors of the Fund has determined that there is sufficient liquidity in this security to realize current valuations. This security amounted to $583,295 or 2.08% of the Fund's net assets as of December 31, 2012.

	(b)	Aggregate cost for federal income tax purposes is $24,337,068. At December 31, 2012 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:

Unrealized appreciation		$	3,849,186
Unrealized depreciation			(206,061)
	Net unrealized appreciation	$	3,643,125

See Notes to Financial Statements

DAVIS REAL ESTATE PORTFOLIO	Statement of Assets and Liabilities
	At December 31, 2012

ASSETS:
Investments in securities at value* (see accompanying Schedule of Investments)			$	27,980,193
Cash				1,603
Receivables:
	Capital stock sold			4,626
	Dividends and interest			137,933
Prepaid expenses				625
		Total assets		28,124,980
LIABILITIES:
Payables:
	Capital stock redeemed			18,380
Accrued audit fees				12,280
Accrued custodian fees				4,700
Accrued management fee				15,149
Other accrued expenses				6,158
		Total liabilities		56,667
NET ASSETS			$	28,068,313
SHARES OUTSTANDING				2,591,099
NET ASSET VALUE, offering, and redemption price per share (Net assets ÷ Shares outstanding)			$	10.83
NET ASSETS CONSIST OF:
Par value of shares of capital stock			$	2,591
Additional paid-in capital				32,887,218
Undistributed net investment income				179,150
Accumulated net realized losses from investments				(8,719,958)
Net unrealized appreciation on investments and foreign currency transactions				3,719,312
		Net Assets	$	28,068,313

*Including:
	Cost of Investments		$	24,260,881

See Notes to Financial Statements

DAVIS REAL ESTATE PORTFOLIO	Statement of Operations
	For the year ended December 31, 2012

INVESTMENT INCOME:
Income:
Dividends					$	604,862
Interest						26,887
		Total income				631,749

Expenses:
Management fees (Note 3)			$	149,763
Custodian fees				16,416
Transfer agent fees				5,817
Audit fees				18,240
Legal fees				735
Accounting fees (Note 3)				2,004
Reports to shareholders				570
Directors’ fees and expenses				9,299
Registration and filing fees				22
Miscellaneous				7,803
Total expenses						210,669
Expenses paid indirectly (Note 4)						(4)
		Net expenses				210,665
Net investment income						421,084

REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
	Investment transactions					3,153,765
	Foreign currency transactions					(316)
Net realized gain						3,153,449
Net increase in unrealized appreciation						616,385
		Net realized and unrealized gain on investments and foreign currency transactions				3,769,834
Net increase in net assets resulting from operations					$	4,190,918

See Notes to Financial Statements

DAVIS REAL ESTATE PORTFOLIO

Statements of Changes in Net Assets

		Year ended December 31,
		2012		2011

OPERATIONS:
Net investment income		$	421,084	$	377,173
Net realized gain from investments and foreign currency transactions			3,153,449		3,630,195
Net increase (decrease) in unrealized appreciation on investments and foreign currency transactions			616,385		(1,898,899)
	Net increase in net assets resulting from operations		4,190,918		2,108,469

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income			(285,310)		(332,205)

CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets resulting from capital share transactions (Note 5)			(62,833)		(2,820,012)
	Total increase (decrease) in net assets		3,842,775		(1,043,748)

NET ASSETS:
Beginning of year			24,225,538		25,269,286
End of year*		$	28,068,313	$	24,225,538

*Including undistributed net investment income of		$	179,150	$	43,692

See Notes to Financial Statements

DAVIS REAL ESTATE PORTFOLIO	Notes to Financial Statements
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Fund is a separate series of Davis Variable Account Fund, Inc. (a Maryland corporation), which is registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management investment company. Only insurance companies, for the purpose of funding variable annuity or variable life insurance contracts, may purchase shares of the Fund. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value.

The Fund’s valuation procedures are reviewed and subject to approval by the Board of Directors. There have been no significant changes to the fair valuation procedures during the period.

Level 1 –	quoted prices in active markets for identical securities
Level 2 –	other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
Level 3 –	significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities nor can it be assured that the Fund can obtain the fair value assigned to a security if it were to sell the security.

DAVIS REAL ESTATE PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Value Measurements - (Continued)

The following is a summary of the inputs used as of December 31, 2012 in valuing the Fund’s investments carried at value:

	Investments in Securities at Value
	Valuation Inputs
			Level 2:		Level 3:
			Other Significant		Significant
	Level 1:		Observable		Unobservable
	Quoted Prices		Inputs		Inputs		Total
Equity securities:
Financials	$	25,297,151	$	243,497	$	–	$	25,540,648
Convertible debt securities		–		693,545		–		693,545
Short-term securities		–		1,746,000		–		1,746,000
Total Investments	$	25,297,151	$	2,683,042	$	–	$	27,980,193

There were no transfers of investments between Level 1 and Level 2 of the fair value hierarchy during the year ended December 31, 2012.

Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books, and the U.S. Dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. The Fund includes foreign currency gains and losses realized on the sales of investments together with market gains and losses on such investments in the Statement of Operations.

DAVIS REAL ESTATE PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

The Regulated Investment Company Modernization Act of 2010 requires that capital loss carryforwards with no expiration, if any, be utilized before capital loss carryforwards with expiration dates. At December 31, 2012, the Fund had available for federal income tax purposes unused capital loss carryforwards as follows.

	Capital Loss Carryforwards
Pre-Enactment
Expiring
12/31/2017	$	8,644,000

Utilized in 2012	$	2,040,000

The tax character of distributions paid during the years ended December 31, 2012 and 2011 was as follows:

	2012			2011
Ordinary income	$	285,310		$	332,205

As of December 31, 2012, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

Undistributed net investment income	$	182,194
Accumulated net realized losses from investments and
foreign currency transactions		(8,643,771)
Net unrealized appreciation on investments		3,643,125
Total	$	(4,818,452)

DAVIS REAL ESTATE PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

NOTE 2 - PURCHASES AND SALES OF SECURITIES

The cost of purchases and proceeds from sales of investment securities (excluding short-term securities) during the year ended December 31, 2012 were $13,079,218 and $13,669,230, respectively.

NOTE 3 - FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Certain directors and officers of the Fund are also directors and officers of the general partner of the Adviser.

Investment Advisory Fees - Advisory fees are paid monthly to the Adviser at an annual rate of 0.55% of the Fund’s average net assets.

NOTE 4 - EXPENSES PAID INDIRECTLY

Under an agreement with State Street Bank, custodian fees are reduced for earnings on cash balances maintained at the custodian by the Fund. Such reductions amounted to $4 during the year ended December 31, 2012.

DAVIS REAL ESTATE PORTFOLIO	Notes to Financial Statements – (Continued)
	December 31, 2012

NOTE 5 - CAPITAL STOCK

At December 31, 2012, there were 500 million shares of capital stock ($0.001 par value per share) authorized. Transactions in capital stock were as follows:

		Year ended			Year ended
		December 31, 2012			December 31, 2011
		Shares	Amount		Shares	Amount
Shares sold		541,162	$	5,635,306	202,983	$	1,859,395
Shares issued in reinvestment of distributions		26,978		285,310	36,208		332,205
		568,140		5,920,616	239,191		2,191,600
Shares redeemed		(571,811)		(5,983,449)	(552,730)		(5,011,612)
	Net decrease	(3,671)	$	(62,833)	(313,539)	$	(2,820,012)

NOTE 6 - BANK BORROWINGS

FEDERAL INCOME TAX INFORMATION (UNAUDITED)

During the calendar year ended December 31, 2012, $285,310 of dividend paid by the Fund constituted income dividends for federal income tax purposes. The Fund designates $829 or less than 0.50% as income qualifying for the corporate dividends-received deduction.

DAVIS REAL ESTATE PORTFOLIO

Financial Highlights

The following financial information represents selected data for each share of capital stock outstanding throughout each period:

		Year ended December 31,
		2012			2011			2010			2009			2008
Net Asset Value, Beginning of Period		$	9.34		$	8.69		$	7.40		$	5.80		$	11.45

Income (Loss) from Investment Operations:
Net Investment Income		0.16			0.14			0.13			0.16			0.19
Net Realized and Unrealized Gains (Losses)		1.44			0.63			1.31			1.60			(5.50)
	Total from Investment Operations	1.60			0.77			1.44			1.76			(5.31)

Dividends and Distributions:
Dividends from Net Investment Income		(0.11)			(0.12)			(0.15)			(0.16)			(0.22)
Distributions from Realized Gains		–			–			–			–			(0.11)
Return of Capital		–			–			–			–			(0.01)
	Total Dividends and Distributions	(0.11)			(0.12)			(0.15)			(0.16)			(0.34)
Net Asset Value, End of Period		$	10.83		$	9.34		$	8.69		$	7.40		$	5.80

Total Returna		17.15		%	8.89		%	19.70		%	31.73		%	(46.91)		%

Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)		$	28,068		$	24,226		$	25,269		$	23,566		$	19,331
Ratio of Expenses to Average Net Assets:
	Gross	0.77		%	0.81		%	0.81		%	0.98		%	0.98		%
	Netb	0.77		%	0.81		%	0.81		%	0.98		%	0.98		%
Ratio of Net Investment Income to Average Net Assets		1.55		%	1.50		%	1.58		%	2.81		%	1.84		%
Portfolio Turnover Ratec		51		%	75		%	43		%	70		%	41		%

a	Assumes hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns do not reflect charges attributable to your insurance company’s separate account. Inclusion of these charges would reduce the total returns shown.

b	The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.

c	The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation.

See Notes to Financial Statements

DAVIS REAL ESTATE PORTFOLIO

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors

Davis Variable Account Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of Davis Real Estate Portfolio (a separate series of Davis Variable Account Fund, Inc.), including the schedule of investments, as of December 31, 2012, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Davis Real Estate Portfolio as of December 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

KPMG LLP

Denver, Colorado

February 11, 2013

DAVIS REAL ESTATE PORTFOLIO

Directors and Officers

Name (birthdate)	Position(s) Held With Fund	Term of Office and Length of Time Served	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director

Independent Directors


Marc P. Blum (09/09/42)	Director	Director since 1986	Chief Executive Officer, World Total Return Fund, LLLP; of Counsel to Gordon Feinblatt LLC (law firm).	13	Director, Legg Mason Investment Counsel & Trust Company, N.A. (asset management company) and Rodney Trust Company (Delaware).

John S. Gates, Jr. (08/02/53)	Director	Director since 2007	Chairman and Chief Executive Officer of PortaeCo LLC, a private investment company (beginning in 2006); Co-founder of CenterPoint Properties Trust (REIT); Co-chairman and Chief Executive Officer for 22 years (until 2006).	13	Director, DCT Industrial Trust (REIT); Chairman, Regional Transportation Authority of Chicago.

Thomas S. Gayner (12/16/61)	Director/ Chairman	Director since 2004	President and Chief Investment Officer, Markel Corp. (diversified financial holding company).	13	Director, Washington Post Co. (publishing company); Director, Colfax Corp. (engineering and manufacturer of pumps and fluid handling equipment).

Samuel H. Iapalucci (07/19/52)	Director	Director since 2006	Former Executive Vice President and Chief Financial Officer, CH2M-HILL Companies, Ltd. (engineering).	13	Director, Trow Global Holdings Inc. (engineering & consulting).

Robert P. Morgenthau (03/22/57)	Director	Director since 2002	Principal, Spears Abacus Advisors, LLC (investment management firm) since August 2011; former Chairman, NorthRoad Capital Management, LLC (investment management firm).	13	none

Marsha Williams (03/28/51)	Director	Director since 1999	Retired; former Senior Vice President and Chief Financial Officer, Orbitz Worldwide, Inc. (travel-services provider) 2007-2010; former Executive Vice President and Chief Financial Officer, Equity Office Properties Trust (REIT) 2002-2007.	13	Director, Modine Manufacturing, Inc. (heat transfer technology); Director, Chicago Bridge & Iron Co., N.V. (industrial construction and engineering); Director, Fifth Third Bancorp (diversified financial services).

DAVIS REAL ESTATE PORTFOLIO

Directors and Officers – (Continued)

Name (birthdate)	Position(s) Held With Fund	Term of Office and Length of Time Served	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director

Inside Directors*


Andrew A. Davis (06/25/63)	Director	Director since 1997	President or Vice President of each Davis Fund and Selected Fund; President, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.	16	Director, Selected Funds (consisting of three portfolios) since 1998.

Christopher C. Davis (07/13/65)	Director	Director since 1997	President or Vice President of each Davis Fund, Selected Fund, and Clipper Fund; Chairman, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser, including sole member of the Adviser’s general partner, Davis Investments, LLC; Employee of Shelby Cullom Davis & Co. (registered broker/dealer).	16	Director, Selected Funds (consisting of three portfolios) since 1998; Director, Washington Post Co. (publishing company).

Officers

Andrew A. Davis (born 06/25/63, Davis Funds officer since 1997). See description in the section on Inside Directors.

Christopher C. Davis (born 07/13/65, Davis Funds officer since 1997). See description in the section on Inside Directors.

DAVIS REAL ESTATE PORTFOLIO

Investment Adviser
Davis Selected Advisers, L.P. (Doing business as “Davis Advisors”)
2949 East Elvira Road, Suite 101
Tucson, Arizona 85756
(800) 279-0279

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

Transfer Agent
Boston Financial Data Services, Inc.
c/o The Davis Funds
P.O. Box 8406
Boston, Massachusetts 02266-8406

Custodian
State Street Bank and Trust Co.
One Lincoln Street
Boston, Massachusetts 02111

Counsel
Greenberg Traurig, LLP
77 West Wacker Drive, Suite 3100
Chicago, Illinois 60601

Independent Registered Public Accounting Firm
KPMG LLP
1225 Seventeenth Street, Suite 800
Denver, Colorado 80202

For more information about Davis Real Estate Portfolio, including management fee, charges, and expenses, see the current prospectus, which must precede or accompany this report. The Fund’s Statement of Additional Information contains additional information about the Fund’s Directors and is available without charge, upon request, by calling 1-800-279-0279 and on the Fund’s website at www.davisfunds.com. Quarterly Fact Sheets are available on the Fund’s website at www.davisfunds.com.

ITEM 2. CODE OF ETHICS

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

A copy of the code of ethics is filed as an exhibit to this form N-CSR.

No waivers were granted to this code of ethics during the period covered by this report.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

The registrant’s board of directors has determined that independent trustee Marsha Williams qualifies as the “audit committee financial expert”, as defined in Item 3 of form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

(a)

Audit Fees. The aggregate Audit Fees billed by KPMP LLP (“KPMG”) for professional services rendered for the audits of the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for the fiscal year ends December 31, 2012 and December 31, 2011 were $57,120 and $56,400, respectively.

(b)

Audit-Related Fees. The aggregate Audit-Related Fees billed by KPMG for services rendered for assurance and related services that are not reasonably related to the performance of the audit or review of the fund financial statements, but not reported as Audit Fees fore fiscal year ends December 31, 2012 and December 31, 2011 were $0 and $0, respectively.

(c)	Tax Fees. The aggregate Tax Fees billed by KPMG for professional services rendered for tax compliance, tax advise and tax planning for the fiscal year ends December 31, 2012 and December 31, 2011 were $19,580 and $18,975, respectively.

Fees included in the Tax Fee category comprise all services performed by professional staff in the independent accountant’s tax division except those services related to the audit. These services include preparation of tax returns, tax advice related to mergers and a review of the fund income and capital gain distributions.

(d)	All Other Fees. The aggregate Other Fees billed by KPMG for all other non-audit services rendered to the fund for the fiscal year ends December 31, 2012 and December 31, 2011 were $403 and $0, respectively.

(e)(1) Audit Committee Pre-Approval Policies and Procedures.

The fund Audit Committee must pre-approve all audit and non-audit services provided by the independent accountant relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.

The fund Audit Committee has adopted a policy whereby audit and non-audit services performed by the fund independent accountant require pre-approval in advance at regularly scheduled Audit Committee meetings. If such a service is required between regularly scheduled Audit Committee meetings, pre-approval may be authorized by the Audit Committee Chairperson with ratification at the next scheduled audit committee meeting.

(2)	No services included in (b) – (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X

(f) Not applicable

(g)	The Funds’ independent accountant did not provide any services to the investment advisor or any affiliate for the fiscal years ended December 31, 2012 and December 31, 2011. The fund has not paid any fees for non-audit not previously disclosed in items 4 (b) – (d).

(h)

The registrant’s audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. No such services were rendered.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS

Not Applicable

ITEM 6. SCHEDULE OF INVESTMENTS

Not Applicable. The complete Schedule of Investments is included in Item 1 of this for N-CSR

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not Applicable

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not Applicable

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS

Not Applicable

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There have been no changes to the procedure by which shareholders may recommend nominees to the registrant’s Board of Trustees.

ITEM 11. CONTROLS AND PROCUDURES

(a)

The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3 (c) under the Investment Company Act of 1940, as amended) are effective as of a date within 90 days of the filing date of this report.

(b)	There have been no significant changes in the registrant’s internal controls or in other factors that could significantly affect these controls.

ITEM 12. EXHIBITS

(a)(1) The registrant’s code of ethics pursuant to Item 2 of Form N-CSR is filed as an exhibit to this form N-CSR.

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached.

(a)(3) Not applicable

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DAVIS VARIABLE ACCOUNT FUND, INC.

By /s/ Kenneth C. Eich

Kenneth C. Eich

Principal Executive Officer

Date: February 25, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By /s/ Kenneth C. Eich

Kenneth C. Eich

Principal Executive Officer

Date: February

By /s/ Douglas A. Haines

Douglas A. Haines

Principal Financial Officer

Date: February 25, 2013

Hypothetical assumes 5% annual return before expenses.

*Expenses are equal to the Fund’s annualized operating expense ratio, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).

**The expense ratios reflect the impact, if any, of certain reimbursements from the Adviser.