UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-01701
Davis New York Venture Fund, Inc.
(Exact name of registrant as specified in charter)
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
(Address of principal executive offices)
Thomas D. Tays
Davis Selected Advisers, LP
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
(Name and address of agent for service)
Registrant's telephone number, including area code: (520) 806-7600
Date of fiscal year end: July 31
Date of reporting period: July 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS
DAVIS RESEARCH FUND
PART OF DAVIS NEW YORK VENTURE FUND, INC.
JULY 31, 2003
ANNUAL REPORT
[DAVIS FUNDS LOGO OMITTED]
TABLE OF CONTENTS
Management's Discussion and Analysis........................................2
Fund Performance and Supplementary Information..............................4
Schedule of Investments....................................................10
Statement of Assets and Liabilities........................................12
Statement of Operations....................................................13
Statements of Changes in Net Assets........................................14
Notes to Financial Statements..............................................15
Financial Highlights.......................................................20
Independent Auditors' Report...............................................23
Federal Income Tax Information.............................................24
Directors and Officers.....................................................25
1
DAVIS RESEARCH FUND
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS
MARKET ENVIRONMENT
During the one-year period ended July 31, 2003, the stock market, as measured by
the Standard & Poor's 500(R) Index, returned 10.64%.(1) This performance
included a vigorous rally in the second calendar quarter. The end of major
fighting in Iraq and an improvement in first-quarter earnings paved the way for
a broad-based rally, with many economic sectors posting double-digit gains.
DAVIS RESEARCH FUND
PERFORMANCE OVERVIEW
Davis Research Fund's Class A shares delivered a total return on net asset value
of 21.56% for the one-year period ended July 31, 2003(2), compared with a return
of 10.64% for the Standard & Poor's 500(R) Index.(1) The Fund's investment
strategy is to seek out growing companies that can be purchased at value prices
and held for the long-term. Under normal circumstances the Fund invests the
majority of its assets in equity securities issued by large- and
medium-capitalization companies.
The Fund's largest sector weightings were in retailing and media. The Fund's
retailing holdings outperformed the S&P 500(R) Index, while the Fund's media
holdings roughly matched the S&P 500(R) Index. The Fund maintained a substantial
cash position while searching for attractive investment opportunities. This
reduced relative performance during the strong bull market.
The principal holdings contributing to performance were: Qwest
Communications(3), a telecommunications company, AutoZone, a retailing company,
and McDonald's, a food/beverage and restaurant company. Qwest increased by
278.12% prior to being sold. AutoZone increased by 26.71% and McDonald's
increased by 59.13% since being added to the portfolio.
The principal holdings detracting from performance were: Hershey Foods, a
food/beverage and restaurant company, Kinder Morgan, a pipelines company, and
Altria Group, a consumer products company. Hershey Foods decreased by 16.46% and
Kinder Morgan decreased by 11.77% prior to being sold. Altria Group decreased by
1.70% during the time it was held in the portfolio.
- ---------------------------------------
This Annual Report is authorized for use by existing shareholders. Prospective
shareholders must receive a current Davis Research Fund prospectus, which
contains more information about risks, charges and expenses. Please read the
prospectus carefully before investing or sending money.
Davis Research Fund's investment objective is long-term growth of capital. There
can be no assurance that the Fund will achieve its objective. The primary risks
of an investment in Davis Research Fund are: (1) market risk, (2) company risk,
(3) medium capitalization risk, (4) selection risk and (5) focused portfolio
risk. See the prospectus for a full description of each risk.
2
DAVIS RESEARCH FUND
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
(1) The S&P 500(R) 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.
(2) Total return assumes reinvestment of dividends and capital gain
distributions. Past performance is not a guarantee of future results. Investment
return and principal value will vary so that, when redeemed, an investor's
shares may be worth more or less than when purchased. Below are the average
annual total returns for Davis Research Fund's Class A shares for the periods
ended July 31, 2003. Returns for other classes of shares will vary from the
following returns:
(Without a 4.75% sales charge taken into consideration)
- -------------------------------- -------------- ----------------------
FUND NAME ONE YEAR INCEPTION
- -------------------------------- -------------- ----------------------
Davis Research Fund A 21.56% 0.08% - 10/31/01
- ----------------------------------------------------------------------
(With a 4.75% sales charge taken into consideration)
- -------------------------------- -------------- ----------------------
FUND NAME ONE YEAR INCEPTION
- -------------------------------- -------------- ----------------------
Davis Research Fund A 15.79% (2.67)% - 10/31/01
- ----------------------------------------------------------------------
Fund performance changes over time and current performance may be higher or
lower than stated. For more current information please call Davis Funds
Shareholder Services at 1-800-279-0279.
(3) This Management Discussion and Analysis 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 Fund's holdings of each company discussed.
Shares of the Davis 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.
3
DAVIS RESEARCH FUND
COMPARISON OF DAVIS RESEARCH FUND, CLASS A SHARES AND STANDARD AND POOR'S 500
STOCK INDEX
================================================================================
Average Annual Total Return for the Periods ended July 31, 2003.
--------------------------------------------------------------------------
CLASS A SHARES
(This calculation includes an initial sales charge of 4 3/4%.)
One Year......................................................... 15.79%
Life of the Class (October 31, 2001 through July 31, 2003)....... (2.67)%
--------------------------------------------------------------------------
$10,000 INVESTED AT INCEPTION. Let's say you invested $10,000 in Davis Research
Fund, Class A Shares on October 31, 2001 (commencement of operations) and paid a
4 3/4% sales charge. As the chart shows, by July 31, 2003 the value of your
investment would have been $9,537 - a 4.63% decrease on your initial investment.
For comparison, the S&P 500 Index is also presented on the chart below.
[GRAPHIC OMITTED]
S&P 500.00 DRF Class A
----------------------------------------------
10/31/01 $10,000.00 $10,000.00
7/31/02 $ 8,696.00 $ 7,846.00
7/31/03 $ 9,623.00 $ 9,537.00
Standard & Poor's Stock Index is an unmanaged index and has no specific
investment objective. The index used includes net dividends reinvested, but does
not take into account any sales charge. Investments cannot be made directly into
the index.
The performance data for Davis Research Fund contained in this report represents
past performance and assumes that all distributions were reinvested, and should
not be considered as an indication of future performance from an investment in
the Fund today. The investment return and principal value will fluctuate so that
shares may be worth more or less than their original cost when redeemed.
4
DAVIS RESEARCH FUND
COMPARISON OF DAVIS RESEARCH FUND, CLASS B SHARES AND STANDARD AND POOR'S 500
STOCK INDEX
================================================================================
Average Annual Total Return for the Periods ended July 31, 2003.
-------------------------------------------------------------------------------
CLASS B SHARES
(This calculation includes any applicable contingent deferred sales charge.)
One Year............................................................... 15.83%
Life of the Class (October 31, 2001 through July 31, 2003)............. (2.91)%
-------------------------------------------------------------------------------
$10,000 INVESTED AT INCEPTION. Let's say you invested $10,000 in Davis Research
Fund, Class B Shares on October 31, 2001 (commencement of operations). As the
chart shows, by July 31, 2003 the value of your investment (less a contingent
deferred sales charge) would have been $9,496 - a 5.04% decrease on your initial
investment. For comparison, the S&P 500 Index is also presented on the chart
below.
[GRAPHIC OMITTED]
S&P 500.00 DRF Class B
----------------------------------------------
10/31/01 $10,000.00 $10,000.00
7/31/02 $ 8,696.00 $ 8,170.00
7/31/03 $ 9,623.00 $ 9,496.30
Standard & Poor's Stock Index is an unmanaged index and has no specific
investment objective. The index used includes net dividends reinvested, but does
not take into account any sales charge. Investments cannot be made directly into
the index.
The performance data for Davis Research Fund contained in this report represents
past performance and assumes that all distributions were reinvested, and should
not be considered as an indication of future performance from an investment in
the Fund today. The investment return and principal value will fluctuate so that
shares may be worth more or less than their original cost when redeemed.
5
DAVIS RESEARCH FUND
COMPARISON OF DAVIS RESEARCH FUND, CLASS C SHARES AND STANDARD AND POOR'S 500
STOCK INDEX
================================================================================
Average Annual Total Return for the Periods ended July 31, 2003.
-------------------------------------------------------------------------------
CLASS C SHARES
(This calculation includes any applicable contingent deferred sales charge.)
One Year............................................................... 18.83%
Life of the Class (October 31, 2001 through July 31, 2003)............. (1.21)%
-------------------------------------------------------------------------------
$10,000 INVESTED AT INCEPTION. Let's say you invested $10,000 in Davis Research
Fund, Class C Shares on October 31, 2001 (commencement of operations). As the
chart shows, by July 31, 2003 the value of your investment would have been
$9,790 - a 2.10% decrease on your initial investment. For comparison, the S&P
500 Index is also presented on the chart below.
[GRAPHIC OMITTED]
S&P 500.00 DRF Class C
----------------------------------------------
10/31/01 $10,000.00 $10,000.00
7/31/02 $ 8,696.00 $ 8,170.00
7/31/03 $ 9,623.00 $ 9,790.00
Standard & Poor's Stock Index is an unmanaged index and has no specific
investment objective. The index used includes net dividends reinvested, but does
not take into account any sales charge. Investments cannot be made directly into
the index.
The performance data for Davis Research Fund contained in this report represents
past performance and assumes that all distributions were reinvested, and should
not be considered as an indication of future performance from an investment in
the Fund today. The investment return and principal value will fluctuate so that
shares may be worth more or less than their original cost when redeemed.
6
DAVIS RESEARCH FUND
PORTFOLIO HOLDINGS AS OF JULY 31, 2003
================================================================================
[GRAPHIC OMITTED] [PIE CHARTS]
PORTFOLIO MAKEUP (% OF FUND NET ASSETS)
- ---------------------------------------
Short Term Investments, Other Assets & Liabilities 19.4%
Common Stock 80.6%
SECTOR WEIGHTINGS (% OF LONG TERM PORTFOLIO)
- ---------------------------------------------
Pharmaceutical and Health Care 4.0%
Retailing 36.5%
Property/Casualty Insurance 5.5%
Consumer Products 7.2%
Energy 5.6%
Food/Beverage & Restaurant 3.8%
Manufacturing 10.3%
Diversified 4.8%
Information/Information Processing 4.5%
Media 17.8%
TOP 10 HOLDINGS % OF FUND
SECURITY SECTOR NET ASSETS
- --------------------------------------------------------------------------------
AutoZone, Inc. Retailing 15.38%
Lagardere S.C.A. Media 10.21%
Electrolux AB, Series B Manufacturing 8.30%
Altria Group, Inc. Consumer Products 5.81%
AutoNation, Inc. Retailing 4.93%
Duke Energy Corp. Energy 4.49%
Berkshire Hathaway Inc., Class A Property/Casualty Insurance 4.40%
WPP Group PLC Media 4.17%
Groupe Bruxelles Lambert S.A. Diversified 3.85%
TJX Cos., Inc. Retailing 3.75%
7
DAVIS RESEARCH FUND
PORTFOLIO ACTIVITY AUGUST 1, 2002 THROUGH JULY 31, 2003
================================================================================
NEW POSITIONS ADDED (8/1/02-7/31/03)
(Highlighted positions are those greater than 4.00% of 7/31/03 total net assets)
% OF 7/31/03
DATE OF 1ST FUND
SECURITY SECTOR PURCHASE NET ASSETS
- --------------------------------------------------------------------------------------------------------
Altria Group, Inc. Consumer Products 05/12/03 5.81%
Apple Computer, Inc. Technology 09/30/02 -
Automatic Data Processing, Inc. Information/Information
Processing 06/02/03 3.68%
AutoNation, Inc. Retailing 06/03/03 4.93%
AutoZone, Inc. Retailing 01/22/03 15.38%
Berkshire Hathaway Inc., Class A Property/Casualty Insurance 03/28/03 4.40%
Calpine Corp. Energy 10/11/02 -
Costco Wholesale Corp. Retailing 12/30/02 3.32%
Duke Energy Corp. Energy 04/01/03 4.49%
FedEx Corp. Transportation 10/01/02 -
Heineken Holding NV, Class A Food/Beverage & Restaurant 07/08/03 0.14%
Home Depot, Inc. Retailing 12/10/02 2.05%
McDonald's Corp. Food/Beverage & Restaurant 03/19/03 2.90%
Mirant Corp. Energy 10/11/02 -
Premcor Inc. Energy 08/07/02 -
Rockwell Automation, Inc. Industrial 08/27/02 -
TJX Cos., Inc. Retailing 04/14/03 3.75%
Univision Communications Inc., Class A Media 10/07/02 -
WPP Group PLC Media 02/26/03 4.17%
8
DAVIS RESEARCH FUND
PORTFOLIO ACTIVITY AUGUST 1, 2002 THROUGH JULY 31, 2003
================================================================================
POSITIONS CLOSED (8/1/02-7/31/03)
(Gains and losses greater than $100,000 are highlighted)
DATE OF
SECURITY SECTOR FINAL SALE GAIN/(LOSS)
- ---------------------------------------------------------------------------------------------------------
American Standard Cos. Inc. Building Materials 11/14/02 $ 121,931
Apple Computer, Inc. Technology 11/26/02 27,087
Aramark Corp., Class B Distributors 11/26/02 (24,047)
Calpine Corp. Energy 11/12/02 47,529
Coca-Cola Enterprises Inc. Distributors 11/11/02 244,194
CRH PLC Building Materials 09/12/02 (184,272)
Eli Lilly and Co. Pharmaceutical and Health Care 10/15/02 9,436
EOG Resources, Inc. Energy 11/14/02 44,622
FedEx Corp. Transportation 10/03/02 5,052
Hershey Foods Corp. Food/Beverage & Restaurant 02/11/03 (18,794)
Honeywell International Inc. Diversified Manufacturing 11/08/02 (35,162)
IMS Health Inc. Information/Information
Processing 08/15/02 (121,273)
Kinder Morgan, Inc. Pipelines 10/08/02 (206,108)
Marathon Oil Corp. Energy 11/08/02 (40,446)
Metro-Goldwyn-Mayer Inc. Entertainment 11/21/02 (85,983)
Mirant Corp. Energy 11/12/02 43,937
Panamerican Beverages, Inc., Class A Distributors 10/04/02 (64,553)
Premcor Inc. Energy 11/13/02 95,562
Qwest Communications International Inc. Telecommunications 11/11/02 (883,427)
Rockwell Automation, Inc. Industrial 11/14/02 28,148
Sigma-Aldrich Corp. Chemicals 11/27/02 120,340
Smithfield Foods, Inc. Food/Beverage & Restaurant 11/26/02 (228,499)
Textron Inc. Diversified Manufacturing 11/12/02 (71,789)
United States Steel Corp. Industrial 09/11/02 (37,529)
Univision Communications Inc., Class A Media 05/30/03 185,800
9
DAVIS RESEARCH FUND
SCHEDULE OF INVESTMENTS
July 31, 2003
VALUE
SHARES SECURITY (NOTE 1)
- --------------------------------------------------------------------------------------------------------------
COMMON STOCK - (80.64%)
CONSUMER PRODUCTS - (5.81%)
38,000 Altria Group, Inc. ............................................................ $ 1,520,380
--------------
DIVERSIFIED - (3.85%)
22,500 Groupe Bruxelles Lambert S.A. ................................................. 1,007,090
--------------
ENERGY - (4.49%)
67,000 Duke Energy Corp. ............................................................. 1,175,850
--------------
FOOD/BEVERAGE & RESTAURANT - (3.04%)
1,200 Heineken Holding NV, Class A .................................................. 36,190
33,000 McDonald's Corp. .............................................................. 759,330
--------------
795,520
--------------
INFORMATION/INFORMATION PROCESSING - (3.68%)
26,000 Automatic Data Processing, Inc. ............................................... 964,080
--------------
MANUFACTURING - (8.30%)
105,000 Electrolux AB, Series B........................................................ 2,171,823
--------------
MEDIA - (14.38%)
60,000 Lagardere S.C.A. .............................................................. 2,672,094
122,800 WPP Group PLC.................................................................. 1,090,806
--------------
3,762,900
--------------
PHARMACEUTICAL AND HEALTH CARE - (3.25%)
25,500 Pfizer Inc. ................................................................... 850,680
--------------
PROPERTY/CASUALTY INSURANCE - (4.40%)
16 Berkshire Hathaway Inc., Class A*.............................................. 1,152,160
--------------
RETAILING - (29.44%)
75,000 AutoNation, Inc.*.............................................................. 1,289,250
48,350 AutoZone, Inc.*................................................................ 4,025,621
23,500 Costco Wholesale Corp.*........................................................ 870,087
17,200 Home Depot, Inc. .............................................................. 536,640
50,500 TJX Cos., Inc. ................................................................ 982,225
--------------
7,703,823
--------------
Total Common Stock - (identified cost $18,270,060).................. 21,104,306
--------------
10
DAVIS RESEARCH FUND
SCHEDULE OF INVESTMENTS - Continued
July 31, 2003
VALUE
PRINCIPAL SECURITY (NOTE 1)
- --------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS - (19.93%)
$ 991,000 Goldman, Sachs & Co. Joint Repurchase Agreement, 1.12%,
08/01/03, dated 07/31/03, repurchase value of $991,031
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $1,010,820)............................................. $ 991,000
1,417,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 1.13%,
08/01/03, dated 07/31/03, repurchase value of $1,417,044
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $1,445,340)............................................. 1,417,000
1,765,000 Tyco International Group, SA, 4.95%, 8/1/03.................................... 1,765,000
1,044,000 UBS Financial Services Inc. Joint Repurchase Agreement, 1.12%,
08/01/03, dated 07/31/03, repurchase value of $1,044,032
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $1,064,880)............................................. 1,044,000
--------------
Total Short Term Investments - (identified cost $5,217,000)......... 5,217,000
--------------
Total Investments - (100.57%) - (identified cost $23,487,060) - (a)............ 26,321,306
Liabilities Less Other Assets - (0.57%)........................................ (150,258)
--------------
Net Assets - (100%)................................................. $ 26,171,048
==============
*Non-Income Producing Security.
(a) Aggregate cost for Federal Income Tax purposes is $23,545,450. At July 31,
2003, unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation........................................................ $ 2,938,852
Unrealized depreciation....................................................... (162,996)
--------------
Net unrealized appreciation......................................... $ 2,775,856
==============
11
SEE NOTES TO FINANCIAL STATEMENTS.
DAVIS RESEARCH FUND
STATEMENT OF ASSETS AND LIABILITIES
At July 31, 2003
================================================================================
ASSETS:
Investments in securities, at value (identified cost $23,487,060)(including repurchase
agreements of $3,452,000)(see accompanying Schedule of Investments).............. $ 26,321,306
Cash ................................................................................ 2,305
Receivables:
Dividends and interest receivable................................................ 54,647
Investment securities sold....................................................... 190,765
-----------------
Total assets................................................................ 26,569,023
-----------------
LIABILITIES:
Payables:
Capital stock redeemed........................................................... 360,263
Investment securities purchased.................................................. 3,104
Accrued expenses .................................................................... 34,608
-----------------
Total liabilities........................................................... 397,975
-----------------
NET ASSETS ............................................................................... $ 26,171,048
=================
NET ASSETS CONSIST OF:
Par value of shares of capital stock................................................. $ 131,723
Additional paid-in capital........................................................... 26,155,618
Undistributed net investment income.................................................. 142,968
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currency...................................... 2,834,485
Accumulated net realized losses from investments and foreign currency transactions... (3,093,746)
-----------------
Net assets.................................................................. $ 26,171,048
=================
CLASS A SHARES
Net assets....................................................................... $ 26,169,012
Shares outstanding............................................................... 2,634,249
Net asset value and redemption price per share .................................. $ 9.93
=========
Maximum offering price per share (100/95.25 of $9.93)*........................... $ 10.43
=========
CLASS B SHARES
Net assets....................................................................... $ 1,018
Shares outstanding............................................................... 104
Net asset value, offering and redemption price per share......................... $ 9.79
=========
CLASS C SHARES
Net assets....................................................................... $ 1,018
Shares outstanding............................................................... 104
Net asset value, offering and redemption price per share......................... $ 9.79
=========
* On purchases of $100,000 or more, the offering price is reduced.
12
SEE NOTES TO FINANCIAL STATEMENTS.
DAVIS RESEARCH FUND
STATEMENT OF OPERATIONS
For the year ended July 31, 2003
================================================================================
INVESTMENT INCOME:
Income:
Dividends (Net of foreign withholding taxes of $12,683).......................... $ 181,115
Interest......................................................................... 262,835
-----------------
Total income............................................................. 443,950
Expenses:
Management fees (Note 3)........................................ $ 175,161
Custodian fees.................................................. 32,341
Transfer agent fees
Class A.................................................... 4,269
Class B.................................................... 3
Class C.................................................... 3
Audit fees...................................................... 12,000
Legal fees...................................................... 93
Accounting fees (Note 3)........................................ 6,000
Reports to shareholders ........................................ 739
Directors' fees and expenses ................................... 486
Registration and filing fees ................................... 3,201
Miscellaneous .................................................. 7,062
Payments under distribution plan (Note 4)
Class B.................................................... 7
Class C.................................................... 7
---------------
Total expenses.......................................................... 241,372
Expenses paid indirectly (Note 6)....................................... (94)
-----------------
Net expenses............................................................ 241,278
-----------------
Net investment income .............................................. 202,672
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized loss from:
Investment transactions.......................................................... (912,370)
Foreign currency transactions.................................................... (5,084)
Net change in unrealized appreciation (depreciation) on investments and translation of
assets and liabilities denominated in foreign currency........................... 5,423,121
-----------------
Net realized and unrealized gain on investments and foreign currency............. 4,505,667
-----------------
Net increase in net assets resulting from operations ................... $ 4,708,339
=================
13
SEE NOTES TO FINANCIAL STATEMENTS.
DAVIS RESEARCH FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
OCTOBER 31, 2001
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
JULY 31, JULY 31,
2003 2002
---- ----
OPERATIONS:
Net investment income...................................... $ 202,672 $ 153,646
Net realized loss from investments and
foreign currency transactions...................... (917,454) (2,193,758)
Net change in unrealized appreciation (depreciation) on
investments and translation of assets and liabilities
denominated in foreign currency........................ 5,423,121 (2,588,636)
----------------- ---------------
Net increase (decrease) in net assets
resulting from operations......................... 4,708,339 (4,628,748)
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income:
Class A .............................................. (169,641) (26,243)
CAPITAL SHARE TRANSACTIONS:
Net increase (decrease) in net assets resulting from capital share
transactions (Note 5):
Class A .............................................. 8,007 26,277,250
Class B .............................................. (75) 1,117
Class C .............................................. (75) 1,117
----------------- ---------------
Total increase in net assets........................... 4,546,555 21,624,493
NET ASSETS:
Beginning of period........................................ 21,624,493 -
----------------- ---------------
End of period (including undistributed net investment
income of $142,968 and $115,021, respectively)......... $ 26,171,048 $ 21,624,493
================= ===============
14
SEE NOTES TO FINANCIAL STATEMENTS.
DAVIS RESEARCH FUND
NOTES TO FINANCIAL STATEMENTS
July 31, 2003
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a separate series of Davis New York Venture Fund, Inc., which is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Fund's investment
objective is long term growth of capital. The Fund commenced operations on
October 31, 2001. The Fund offers shares in three classes, Class A, Class B and
Class C. The Class A shares are sold with a front-end sales charge and the Class
B and Class C shares are sold at net asset value and may be subject to a
contingent deferred sales charge upon redemption. Income, expenses (other than
those attributable to a specific class) and gains and losses are allocated daily
to each class of shares based upon the relative proportion of net assets
represented by each class. Operating expenses directly attributable to a
specific class are charged against the operations of that class. All classes
have identical rights with respect to voting (exclusive of each Class's
distribution arrangement), liquidation and distributions. The following is a
summary of significant accounting policies followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION - Portfolio securities listed on national securities
exchanges are valued at the last reported sales price on the day of valuation.
Securities traded in the over the counter market and listed securities for which
no sale was reported on that date are stated at the average of closing bid and
asked prices. Securities for which market quotations are not readily available
are valued at fair value as determined in good faith by the Board of Directors.
Short-term obligations are valued at amortized cost, which approximates fair
value. These valuation procedures are reviewed and subject to approval by the
Board of Directors.
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. Securities pledged as collateral for
repurchase agreements are held by a custodian bank 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 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.
15
DAVIS RESEARCH FUND
NOTES TO FINANCIAL STATEMENTS - Continued
July 31, 2003
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Reported net realized foreign exchange gains or losses arise from sales and
maturities of investments, 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 sale 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. At July 31, 2003, the
Fund had approximately $2,691,000 of capital loss carryforwards available to
offset future capital gains, if any, which expire in 2011. Additionally, the
Fund had approximately $344,000 of post October 2002 losses available to offset
future capital gains, if any, which expire in 2012.
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. Interest
income, which includes accretion of discount and amortization of premium, is
accrued as earned.
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) of
investments may differ for financial statement and tax purposes primarily
because of the recognition of certain foreign currency gains (losses) as
ordinary income (loss) for tax purposes and the tax deferral of losses on "wash
sale" transactions. The character of the 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 the 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 the classification of
distributions to shareholders to reflect the differences between financial
statement amounts and distributions determined in accordance with income tax
regulations. Accordingly, during the year ended July 31, 2003 amounts have been
reclassified to reflect a decrease to undistributed net investment income of
$5,084 and a corresponding decrease to accumulated net realized loss.
The tax character of distributions paid during the year ended July 31, 2003 and
the period ended July 31, 2002 is as follows:
2003 2002
------------ -----------
Ordinary income........................... $ 169,641 $ 26,243
As of July 31, 2003, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
2003
------------
Undistributed net investment income...................... $ 151,657
Accumulated net realized losses from investments
and foreign currency transactions.................... (3,035,355)
Net unrealized appreciation on investments............... 2,775,856
------------
Total................................................ $ (107,842)
16
DAVIS RESEARCH FUND
NOTES TO FINANCIAL STATEMENTS - Continued
July 31, 2003
================================================================================
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.
NOTE 2 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities) for the year ended July 31, 2003, were $18,330,022 and $19,799,304,
respectively.
NOTE 3 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Advisory fees are paid to Davis Advisors (the "Adviser") at the annual rate
of 0.75% of the average net assets for the first $250 million, 0.65% of the
average net assets on the next $250 million and 0.55% of the average net assets
in excess of $500 million. Management fees paid during the year ended July 31,
2003, approximated 0.75% of average net assets.
State Street Bank & Trust Co. ("State Street Bank") is the Fund's primary
transfer agent. The Adviser is also paid for certain transfer agent services.
The fee for these services for the year ended July 31, 2003 amounted to $93.
State Street Bank is the Fund's primary accounting provider. Fees for such
services are included in the custodian fee as State Street Bank also serves as
the Funds' custodian. The Adviser is also paid for certain accounting services.
The fee amounted to $6,000 for the year ended July 31, 2003. Certain directors
and the officers of the Fund are also directors and officers of the general
partner of the Adviser.
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.
NOTE 4 - DISTRIBUTION AND UNDERWRITING FEES
CLASS A SHARES
Class A shares of the Fund are sold at net asset value plus a sales charge
and are redeemed at net asset value.
During the year ended July 31, 2003, Davis Distributors, LLC, the Fund's
Underwriter (the "Underwriter" or "Distributor") received no commissions earned
on sales of Class A shares of the Fund.
The Underwriter is reimbursed for amounts paid to dealers as a service fee
or commissions with respect to Class A shares sold by dealers which remain
outstanding during the period. The service fee is paid at an annual rate up to
1/4 of 1% of the average net assets maintained by the responsible dealers. The
Underwriter is not reimbursed for accounts for which the Underwriter pays no
service fees to other firms. There was no service fee for Class A shares of the
Fund for the year ended July 31, 2003.
CLASS B SHARES
Class B shares of the Fund are sold at net asset value and are redeemed at
net asset value less a contingent deferred sales charge if redeemed within six
years of purchase.
17
DAVIS RESEARCH FUND
NOTES TO FINANCIAL STATEMENTS - Continued
July 31, 2003
================================================================================
NOTE 4 - DISTRIBUTION AND UNDERWRITING FEES - CONTINUED
CLASS B SHARES - CONTINUED
The Fund pays a distribution fee to reimburse Davis Distributors, LLC (the
"Distributor") for commission advances on the sale of the Fund's Class B shares.
Payments under the Class B Distribution Plan are limited to an annual rate of
equal to the lesser of 1.25% of the average daily net asset value of the Class B
shares or the maximum amount provided by applicable rule or regulation of the
National Association of Securities Dealers, Inc., ("NASD"), which currently is
1.00%. Therefore, the effective rate of the Class B Distribution Plan is
currently 1%, of which 0.75% may be used to pay distribution expenses and 0.25%
may be used to pay shareholder service fees. The NASD rule also limits the
aggregate amount the Fund may pay for distribution to 6.25% of gross Fund sales
since inception of the Rule 12b-1 plan, plus interest, at 1% over the prime rate
on unpaid amounts. The Distributor intends to seek full payment (plus interest
at prime plus 1%) of distribution charges that exceed the 1% annual limit in
some future period or periods when the plan limits have not been reached.
During the year ended July 31, 2003, Class B shares of the Fund made
distribution payments of $7. During the year ended July 31, 2003, there were no
payments made for service fees.
There were no commission advances by the Distributor during the year ended
July 31, 2003 on the sale of Class B shares of the Fund.
The Distributor intends to seek payment from Class B shares of the Fund in
the amount of $59, which represents the maximum amount allowed under applicable
NASD rules discussed above. The Fund has no contractual obligation to pay any
such distribution charges and the amount, if any, timing and condition of such
payment are solely within the discretion of the Directors who are not interested
persons of the Fund or the Distributor.
A contingent deferred sales charge is imposed upon redemption of certain
Class B shares of the Fund within six years of the original purchase. The charge
is a declining percentage starting at 4% of the lesser of net asset value of the
shares redeemed or the total cost of such shares. During the year ended July 31,
2003 the Distributor received no contingent deferred sales charges from Class B
shares of the Fund.
CLASS C SHARES
Class C shares of the Fund are sold at net asset value and are redeemed at
net asset value less a contingent deferred sales charge of 1% if redeemed within
one year of purchase. Payments under the Class C Distribution Plan are limited
to an annual rate of equal to the lesser of 1.25% of the average daily net asset
value of the Class C shares or the maximum amount provided by applicable rule or
regulation of the National Association of Securities Dealers, Inc., ("NASD"),
which currently is 1.00%. Therefore, the effective rate of the Class C
Distribution Plan is currently 1%, of which 0.75% may be used to pay
distribution expenses and 0.25% may be used to pay shareholder service fees.
Class C shares are subject to the same 6.25% and 1% limitations applicable to
the Class B Distribution Plan.
During the year ended July 31, 2003, Class C shares of the Fund made
distribution payments of $7. During the year ended July 31, 2003, there were no
payments made for service fees. During the year ended July 31, 2003, the
Distributor received no contingent deferred sales charges from Class C shares of
the Fund.
18
DAVIS RESEARCH FUND
NOTES TO FINANCIAL STATEMENTS - Continued
July 31, 2003
================================================================================
NOTE 5 - CAPITAL STOCK
At July 31, 2003, there were 3,000,000,000 shares of capital stock ($0.05
par value per share) authorized, 500,000,000 of which shares are classified as
Davis Research Fund. Transactions in capital stock were as follows:
CLASS A
- ------- OCTOBER 31, 2001
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
JULY 31, 2003 JULY 31, 2002
------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------- --------------- ------------ --------------
Shares subscribed.............................. 28,494 $ 251,825 2,625,283 $ 26,253,138
Shares issued in reinvestment of distributions. 19,794 169,641 2,585 26,243
------------- --------------- ------------ --------------
48,288 421,466 2,627,868 26,279,381
Shares redeemed................................ (41,694) (413,459) (213) (2,131)
------------- --------------- ------------ --------------
Net increase ............................. 6,594 $ 8,007 2,627,655 $ 26,277,250
============= =============== ============ ==============
CLASS B
- ------- OCTOBER 31, 2001
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
JULY 31, 2003 JULY 31, 2002
------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ --------------
Shares subscribed.............................. - $ - 115 $ 1,150
Shares redeemed................................ (8) (75) (3) (33)
------------ --------------- ------------ --------------
Net increase (decrease)................... (8) (75) 112 1,117
============ =============== ============ ==============
CLASS C
- ------- OCTOBER 31, 2001
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
JULY 31, 2003 JULY 31, 2002
------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ --------------
Shares subscribed.............................. - $ - 115 $ 1,150
Shares redeemed................................ (8) (75) (3) (33)
------------ --------------- ------------ --------------
Net increase (decrease)................... (8) (75) 112 1,117
============ =============== ============ ==============
NOTE 6 - EXPENSES PAID INDIRECTLY
Under an agreement with the custodian bank, custodian fees are reduced for
earnings on cash balances maintained at the custodian by the Fund. Such
reductions amounted to $94 during the year ended July 31, 2003.
19
DAVIS RESEARCH FUND
FINANCIAL HIGHLIGHTS
CLASS A
================================================================================
Financial Highlights for a share of capital stock outstanding throughout the
period.
OCTOBER 31, 2001
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
JULY 31, JULY 31,
2003 2002
---- ----
Net Asset Value, Beginning of Period............. $ 8.23 $ 10.00
------- -------
Income (Loss) From Investment Operations
- ----------------------------------------
Net Investment Income....................... 0.07 0.06
Net Realized and Unrealized Gains (Losses) 1.69 (1.82)
------- -------
Total From Investment Operations.......... 1.76 (1.76)
Dividends and Distributions
- ---------------------------
Dividends from Net Investment Income........ (0.06) (0.01)
------- -------
Net Asset Value, End of Period.................. $ 9.93 $ 8.23
======= =======
Total Return (1)................................. 21.56% (17.62)%
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000 omitted)..... $26,169 $21,623
Ratio of Expenses to Average Net Assets..... 1.03% 1.05%*
Ratio of Net Investment Income to Average
Net Assets................................ 0.87% 0.81%*
Portfolio Turnover Rate (2)................. 119% 45%
(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), 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. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less
than one year.
(2) 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.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS.
20
DAVIS RESEARCH FUND
FINANCIAL HIGHLIGHTS
CLASS B
================================================================================
Financial Highlights for a share of capital stock outstanding throughout the
period.
OCTOBER 31, 2001
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
JULY 31, JULY 31,
2003 2002
---- ----
Net Asset Value, Beginning of Period............. $ 8.17 $ 10.00
------- -------
Income (Loss) From Investment Operations
- ----------------------------------------
Net Investment Loss......................... (0.06) (0.02)
Net Realized and Unrealized Gains (Losses).. 1.68 (1.81)
------- -------
Total From Investment Operations.......... 1.62 (1.83)
Net Asset Value, End of Period.................. $ 9.79 $ 8.17
======= =======
Total Return (1)................................. 19.83% (18.30)%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000 omitted)..... $1 $1
Ratio of Expenses to Average Net Assets..... 2.06% 2.04%*
Ratio of Net Investment Loss to Average
Net Assets................................ (0.16)% (0.18)%*
Portfolio Turnover Rate (2)................. 119% 45%
(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), 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. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less
than one year.
(2) 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.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS.
21
DAVIS RESEARCH FUND
FINANCIAL HIGHLIGHTS
CLASS C
================================================================================
Financial Highlights for a share of capital stock outstanding throughout the
period.
OCTOBER 31, 2001
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
JULY 31, JULY 31,
2003 2002
---- ----
Net Asset Value, Beginning of Period............. $ 8.17 $ 10.00
------- -------
Income (Loss) From Investment Operations
- ----------------------------------------
Net Investment Loss......................... (0.06) (0.02)
Net Realized and Unrealized Gains (Losses).. 1.68 (1.81)
------- -------
Total From Investment Operations.......... 1.62 (1.83)
Net Asset Value, End of Period.................. $ 9.79 $ 8.17
======= =======
Total Return (1)................................. 19.83% (18.30)%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000 omitted)..... $1 $1
Ratio of Expenses to Average Net Assets..... 2.06% 2.04%*
Ratio of Net Investment Loss to Average
Net Assets................................ (0.16)% (0.18)%*
Portfolio Turnover Rate (2)................. 119% 45%
(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), 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. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less
than one year.
(2) 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.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS.
22
DAVIS RESEARCH FUND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF DAVIS NEW YORK VENTURE FUND, INC.:
We have audited the accompanying statement of assets and liabilities of
Davis Research Fund (a series of Davis New York Venture Fund, Inc.), including
the schedule of investments, as of July 31, 2003, and the related statement of
operations for the year then ended, the statement of changes in net assets for
the year then ended and for the period from October 31, 2001 (commencement of
operations) to July 31, 2002, and the financial highlights for the year then
ended and the period from October 31, 2001 (commencement of operations) to July
31, 2002. 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
audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. 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 July 31, 2003, by correspondence with the custodian and
brokers or by the other appropriate auditing procedures where replies from
brokers were not received. 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
audit provides 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 Research Fund as of July 31, 2003, the results of its
operations for the year then ended, the statement of changes in net assets for
the year then ended and for the period from October 31, 2001 (commencement of
operations) to July 31, 2002, and the financial highlights for the year then
ended and the period from October 31, 2001 (commencement of operations) to July
31, 2002, in conformity with accounting principles generally accepted in the
United States of America.
/s/ KPMG LLP
Denver, Colorado
September 5, 2003
23
DAVIS RESEARCH FUND
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
FOR THE YEAR ENDED JULY 31, 2003
- --------------------------------------------------------------------------------
In early 2004, shareholders will receive information regarding all
dividends and distributions paid to them by the Fund during calendar year 2003.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
During the fiscal period ended July 31, 2003, $169,641 of dividends paid
by the Fund constituted net investment income dividends for federal income tax
purposes.
Dividends paid by the Fund during the fiscal period ended July 31, 2003
which are not designated as capital gain distribution should be multiplied by
73% to arrive at the net amount eligible for the corporate dividends-received
deduction.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax adviser for specific
guidance.
24
DAVIS RESEARCH FUND
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS
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
85706. Each Director serves until their retirement, resignation, death or
removal. Directors must retire at the close of business on the last day of the
calendar year in which the Director attains age seventy-two (72), except that
any person who was a Director on July 1, 1994, and at that date was
seventy-three (73) years of age or less shall retire from the Board of Directors
and cease being a Director at the close of business on the last day of the year
in which the Director attains age seventy-four (74).
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE AND PRINCIPAL FUND COMPLEX
POSITION(S) LENGTH OF OCCUPATION(S) DURING OVERSEEN BY OTHER DIRECTORSHIPS HELD BY
NAME AND AGE HELD WITH FUND TIME SERVED PAST FIVE YEARS DIRECTOR DIRECTOR
- ------------------ ---------------- -------------- ------------------------ ---------------- -------------------------------
WESLEY E. Director director President of Bass & 11 none
BASS, JR. since 1990 Associates (financial
(born 8/21/31) consulting); formerly
First Deputy City Treasurer,
City of Chicago; and
Executive Vice President,
Chicago Title and Trust
Company (bank and trust).
MARC P. BLUM Director director Chief Executive 11 Director, Mid-Atlantic Realty
(born 9/9/42) since 1986 Officer, World Total Trust (real estate investment
Return Fund, LLP; Of trust), Legg Mason Trust
Counsel to Gordon, (asset management company)
Feinblatt, Rothman, and Rodney Trust Company
Hoffberger and (Delaware); Trustee, College
Hollander, LLC (law of Notre Dame of Maryland,
firm). McDonogh School and other
public charities, private
foundations and businesses.
JERRY D. GEIST Director director Chairman, Santa Fe 11 Director, CH2M-Hill, Inc.
(born 5/23/34) since 1986 Center Enterprises (engineering); Member,
(energy project Investment Committee for
development); Retired Microgeneration Technology
Chairman and Fund, UTECH Funds.
President, Public
Service Company of New
Mexico.
25
DAVIS RESEARCH FUND
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS - CONTINUED
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE AND PRINCIPAL FUND COMPLEX
POSITION(S) LENGTH OF OCCUPATION(S) DURING OVERSEEN BY OTHER DIRECTORSHIPS HELD BY
NAME AND AGE HELD WITH FUND TIME SERVED PAST FIVE YEARS DIRECTOR DIRECTOR
- ------------------ ---------------- -------------- ------------------------ ---------------- -------------------------------
INDEPENDENT DIRECTORS - CONTINUED
D. JAMES GUZY Director director Chairman, PLX 11 Director, Intel Corp.
(born 3/7/36) since 1982 Technology, Inc. (semi-conductor
(semi-conductor manufacturer), Cirrus Logic
manufacturer). Corp. (semi-conductor
manufacturer), Alliance
Technology Fund (a mutual
fund), Micro Component
Technology, Inc.
(micro-circuit handling and
testing equipment
manufacturer), Novellus
Systems, Inc. (semi-conductor
manufacturer) and
LogicVision, Inc.
(semi-conductor software
company).
G. BERNARD Director director Managing General 11 none
HAMILTON since 1978 Partner, Avanti
(born 3/18/37) Partners, L.P.
(investment
partnership).
ROBERT P. Director director Chairman, Northroad 11 none
MORGENTHAU since 2002 Capital Management (an
(born 3/22/57) investment management
firm) since June 2002;
President of Asset Management
Group of Bank of America (an
investment management firm)
from 2001 until 2002; prior
to that a managing director
and global head of marketing
and distribution for Lazard
Asset Management (an
investment management firm)
for ten years.
THEODORE B. Director director Chairman of John 11 Mayor of the Incorporated
SMITH, JR. since 2001 Hassall, Inc. Village of Mill Neck.
(born 12/23/32) (fastener
manufacturing);
Chairman of Cantrock
Realty.
26
DAVIS RESEARCH FUND
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS - CONTINUED
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE AND PRINCIPAL FUND COMPLEX
POSITION(S) LENGTH OF OCCUPATION(S) DURING OVERSEEN BY OTHER DIRECTORSHIPS HELD BY
NAME AND AGE HELD WITH FUND TIME SERVED PAST FIVE YEARS DIRECTOR DIRECTOR
- ------------------ ---------------- -------------- ------------------------ ---------------- -------------------------------
INDEPENDENT DIRECTORS - CONTINUED
CHRISTIAN R. Director director General Partner of 11 none
SONNE since 1990 Tuxedo Park Associates
(born 5/6/36) (land holding and
development firm);
President and Chief
Executive Officer of
Mulford Securities
Corporation (private
investment fund) until
1990; formerly Vice
President of Goldman
Sachs & Co.
(investment banking).
MARSHA WILLIAMS Director director Executive Vice 15 Director of the Selected
(born 3/28/51) since 1999 President and Chief Funds (consisting of four
Financial Officer of portfolios) since 1996;
Equity Office Director, Modine
Properties Trust (a Manufacturing, Inc. (heat
real estate investment transfer technology);
trust); Former Chief Director, Chicago Bridge &
Administrative Officer Iron Company, N.V.
of Crate & Barrel (industrial construction and
(home furnishings engineering).
retailer); former Vice
President and
Treasurer, Amoco
Corporation (oil & gas
company).
INSIDE DIRECTORS*
JEREMY H. BIGGS Director/ director Vice Chairman, Head of 11 Director of the Van Eck/Chubb
(born 8/16/35) Chairman since 1994 Equity Research, Funds six portfolios (mutual
Chairman of U.S. fund).
Investment Policy
Committee and Member
of the International
Investment Committee,
all for Fiduciary
Trust Company
International (money
management firm)
Consultant to Davis
Selected Advisers,
L.P.
27
DAVIS RESEARCH FUND
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS - CONTINUED
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE AND PRINCIPAL FUND COMPLEX
POSITION(S) LENGTH OF OCCUPATION(S) DURING OVERSEEN BY OTHER DIRECTORSHIPS HELD BY
NAME AND AGE HELD WITH FUND TIME SERVED PAST FIVE YEARS DIRECTOR DIRECTOR
- ------------------ ---------------- -------------- ------------------------ ---------------- -------------------------------
INSIDE DIRECTORS* - CONTINUED
ANDREW A. DAVIS Director director President or Vice 15 Director of the Selected
(born 6/25/63) since 1997 President of each Funds (consisting of four
Davis Fund and portfolios) since 1998.
Selected Fund;
President, Davis
Selected Advisers,
L.P., and also serves
as an executive
officer in certain
companies affiliated
with the Adviser.
CHRISTOPHER C. Director director Chief Executive 15 Director of the Selected
DAVIS since 1997 Officer, President or Funds (consisting of four
(born 7/13/65) Vice President of each portfolios) since 1998.
Davis Fund and Selected Fund;
Chairman and Chief Executive
Officer, 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).
* Jeremy H. Biggs, 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.
28
DAVIS RESEARCH FUND
2949 East Elvira Road, Tucson, Arizona 85706
================================================================================
DIRECTORS OFFICERS
Wesley E. Bass, Jr. Jeremy H. Biggs
Jeremy H. Biggs Chairman
Marc P. Blum Christopher C. Davis
Andrew A. Davis President
Christopher C. Davis Andrew A. Davis
Jerry D. Geist Vice President
D. James Guzy Kenneth C. Eich
G. Bernard Hamilton Executive Vice President &
Robert P. Morgenthau Principal Executive Officer
Theodore B. Smith, Jr. Sharra L. Reed
Christian R. Sonne Vice President, Treasurer
Marsha Williams & Principal Accounting Officer
Thomas D. Tays
Vice President & Secretary
INVESTMENT ADVISER
Davis Selected Advisers, L.P. (doing business as "Davis Advisors")
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
(800) 279-0279
DISTRIBUTOR
Davis Distributors, LLC
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
TRANSFER AGENT & CUSTODIAN
State Street Bank and Trust Company
c/o The Davis Funds
P.O. Box 8406
Boston, Massachusetts 02266-8406
COUNSEL
D'Ancona & Pflaum LLC
111 E. Wacker Drive, Suite 2800
Chicago, Illinois 60601-4205
AUDITORS
KPMG LLP
707 Seventeenth Street
Suite 2700
Denver, Colorado 80202
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FOR MORE INFORMATION ABOUT DAVIS RESEARCH FUND INCLUDING MANAGEMENT FEES,
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. A COPY OF THE FUNDS' PROXY VOTING POLICIES
AND PROCEDURES IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY CALLING
1-800-279-2279 OR ON THE FUNDS WEBSITE AT WWW.DAVISFUNDS.COM OR ON THE SEC
WEBSITE AT WWW.SEC.GOV.
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Item 2. Code of Ethics
(a) 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.
Item 3. Audit Committee Financial Expert
(a) the registrant's board of directors has determined that independant
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 - Not Required
Item 5. Audit Committee of Listed Registrants - Not Required
Item 6. Reserved
Item 7. Disclosure of Proxy Voting Polices and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8. Reserved
Item 9. Controls and Procedures
(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-2(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 10. Exhibits
(a) Code of Ethics is attached as an exhibit hereto.
(b) Sections 302 and 906 certifications of the Sarbanes-Oxley Act of
2002 are attached as exhibits hereto.
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 it behalf by the undersigned, thereunto duly authorized.
DAVIS RESEARCH FUND
By /s/ Kenneth C. Eich
Kenneth C. Eich
Principal Executive Officer
Date: October 08, 2003
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: October 08, 2003
By /s/ Sharra L. Reed
Sharra L. Reed
Principal Financial officer
Date: October 08, 2003