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 811-02679
DAVIS SERIES, 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, 2011
Date of reporting period: December 31, 2011
____________________
ITEM 1. REPORT TO STOCKHOLDERS
DAVIS SERIES, INC. | Table of Contents |
Shareholder Letter | 2 |
Management's Discussion of Fund Performance: | |
Davis Opportunity Fund | 3 |
Davis Government Bond Fund | 5 |
Davis Financial Fund | 7 |
Davis Appreciation & Income Fund | 9 |
Davis Real Estate Fund | 11 |
Fund Overview: | |
Davis Opportunity Fund | 13 |
Davis Government Bond Fund | 16 |
Davis Government Money Market Fund | 17 |
Davis Financial Fund | 18 |
Davis Appreciation & Income Fund | 20 |
Davis Real Estate Fund | 22 |
Expense Example | 24 |
Schedule of Investments: | |
Davis Opportunity Fund | 27 |
Davis Government Bond Fund | 31 |
Davis Government Money Market Fund | 34 |
Davis Financial Fund | 36 |
Davis Appreciation & Income Fund | 38 |
Davis Real Estate Fund | 42 |
Statements of Assets and Liabilities | 45 |
Statements of Operations | 47 |
Statements of Changes in Net Assets | 48 |
Notes to Financial Statements | 50 |
Financial Highlights | 65 |
Report of Independent Registered Public Accounting Firm | 71 |
Fund Information | 72 |
Privacy Notice and Householding | 73 |
Directors and Officers | 74 |
Prospectus Sticker |
This Annual Report is authorized for use by existing shareholders. Prospective shareholders must receive a current Davis Series, 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 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.
DAVIS SERIES, INC. | Shareholder Letter |
Dear Fellow Shareholder,
As stewards of our customers’ savings, the management team and Directors of the Davis Funds recognize the importance of candid, thorough, and regular communication with our shareholders. In our Annual and Semi-Annual Reports we include all of the required quantitative information such as audited financial statements, detailed footnotes, performance reports, fund holdings, and performance attribution. Also included is a list of positions opened and closed.
In addition, we produce a Research Report for certain funds, which is published semi-annually. In this report, we give a more qualitative perspective on fund performance, discuss our thoughts on individual holdings, and share our investment outlook. You may obtain a copy of the current Research Report either on our website, www.davisfunds.com, or by calling 1-800-279-0279.
We thank you for your continued trust. We will do our best to earn it in the years ahead.
Sincerely,
Christopher C. Davis
President
February 1, 2012
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DAVIS SERIES, INC. | Management’s Discussion of Fund Performance |
DAVIS OPPORTUNITY FUND |
Performance Overview
Davis Opportunity Fund’s Class A shares delivered a negative return on net asset value of 3.63% for the year ended December 31, 2011. Over the same time period, the Russell 3000® Index (“Index”) returned 1.03%. While the Index increased little over the year, individual sectors1 within the Index increased by as much as 19% (utilities) or decreased by as much as 13% (financials). The sectors within the Index that turned in the weakest performance over the year were financials, materials, and industrials. The sectors that turned in the strongest performance over the year were utilities, consumer staples, and health care.
Factors Impacting the Fund’s Performance
Material companies were the most important detractor2 from the Fund’s performance on both an absolute basis and relative to the Index. The Fund’s material companies under-performed the corresponding sector within the Index (down 30% versus down 9% for the Index). Relative performance was also harmed by a higher relative average weighting (8% versus 4% for the Index) in this weaker performing sector. Sino-Forest3 was the single most important detractor from performance. The Ontario Securities Commission issued a release on August 26, 2011 halting trading of Sino-Forest on the Toronto Stock Exchange, causing the security to be fair valued by the Fund. Davis Advisors’ portfolio managers continue to monitor and evaluate the situation. As of the date of this report, trading is still halted and the Fund continues to fair value this position.
Energy companies were also an important detractor from both the Fund’s absolute and relative performance. The Fund’s energy companies significantly under-performed the corresponding sector within the Index (down 20% versus up 3% for the Index) and had a lower relative average weighting (5% versus 12% for the Index). Tenaris and Transocean were among the most important detractors from performance. The Fund no longer owns Tenaris or Transocean.
Consumer staple companies made an important contribution to both the Fund’s absolute and relative performance. The Fund’s consumer staple companies under-performed the corresponding sector within the Index (up 12% versus up 14% for the Index), but benefited by having a higher relative average weighting (13% versus 9% for the Index) in this stronger performing sector. CVS Caremark, Kraft Foods, and Coca-Cola were among the most important contributors to performance. The Fund no longer owns Kraft Foods.
Financial companies also made an important contribution to both the Fund’s absolute and relative performance. The Fund’s financial companies out-performed the corresponding sector within the Index (up 2% versus down 13% for the Index). The Fund and the corresponding sector within the Index had about the same relative average weighting (both 15%) in this weaker performing sector. Oaktree was among the most important contributors to performance. Bank of New York Mellon and Charles Schwab were among the most important detractors from performance.
The Fund had more invested in information technology companies than in any other sector over the year. The Fund’s information technology companies under-performed the corresponding sector within the Index (down 1% versus flat for the Index). The Fund had a higher relative average weighting (20% versus 18% for the Index). Google and Bankrate were among the most important contributors to performance. Hewlett-Packard, Youku, and Texas Instruments were among the most important detractors from performance.
The Fund had approximately 10% of its net assets invested in foreign companies at December 31, 2011. As a whole, those companies under-performed the domestic companies held by the Fund.
In 2011 the Fund had a higher than average turnover among its top ten holdings. A new portfolio manager was added, accounting for the one-time increase in the turnover.
Davis Opportunity Fund’s investment objective is long-term growth of capital. There can be no assurance that the Fund will achieve its objective. Davis Opportunity Fund’s principal risks are: stock market risk, manager risk, common stock risk, under $10 billion market capitalization 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 Russell 3000® 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 Fund’s performance is a product both of its appreciation or depreciation and its weighting within the Fund. 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 Fund’s holdings of each company discussed.
3
DAVIS SERIES, INC. | Management’s Discussion of Fund Performance |
DAVIS OPPORTUNITY FUND - (CONTINUED) |
Comparison of a $10,000 investment in Davis Opportunity Fund Class A versus the Russell 3000® Index over 10 years for an investment made on december 31, 2001
Average Annual Total Return for periods ended December 31, 2011
Fund & Benchmark Index | 1-Year | 5-Year | 10-Year | Since Inception | Inception Date | Gross Expense Ratio | Net Expense Ratio |
Class A - without sales charge | (3.63)% | (2.83)% | 4.30% | 9.26% | 12/01/94 | 1.02% | 1.02% |
Class A - with sales charge | (8.22)% | (3.77)% | 3.79% | 8.95% | 12/01/94 | 1.02% | 1.02% |
Class B†, ** | (8.36)% | (4.04)% | 3.72% | 10.58% | 05/01/84 | 1.98% | 1.98% |
Class C** | (5.33)% | (3.58)% | 3.49% | 4.05% | 08/15/97 | 1.82% | 1.82% |
Class Y | (3.38)% | (2.52)% | 4.64% | 4.78% | 09/18/97 | 0.77% | 0.77% |
Russell 3000® Index*** | 1.03% | (0.01)% | 3.51% | 8.32% |
The Russell 3000® Index measures the performance of the 3,000 largest companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. Investments cannot be made directly in the Index.
The performance data for Davis Opportunity 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. Fund performance changes over time and current performance may be higher or lower than stated. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The operating expense ratios may vary in future years. For more current information please call Davis Funds Investor Services at 1-800-279-0279.
In 2010, Davis Opportunity Fund made a favorable investment in an initial public offering (IPO). This investment had a material impact on the investment performance, adding approximately 2% to the Fund's total return in 2010. The rapid appreciation was an unusual occurrence and such performance may not continue in the future.
*Reflects 4.75% front-end sales charge.
†Because Class B shares automatically convert to Class A shares after 7 years, the “10-Year” and “Since Inception” returns for Class B reflect Class A performance for the period after conversion.
**Includes any applicable contingent deferred sales charge.
***Inception return is from 12/01/94.
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DAVIS SERIES, INC. | Management’s Discussion of Fund Performance |
DAVIS GOVERNMENT BOND FUND |
Performance Overview
Davis Government Bond Fund’s Class A shares returned 2.01% on net asset value for the year ended December 31, 2011. Over the same time period, the Citigroup U.S. Treasury/Agency 1-3 Year Index (“Index”) returned 1.52%. The Fund’s investment strategy, under normal circumstances, is to invest exclusively in U.S. Government securities and repurchase agreements, collateralized by U.S. Government securities, with a weighted average maturity of three years or less.
Factors Impacting the Fund’s Performance
Mortgage-backed securities out-performed agencies and under-performed treasuries over the year ended December 31, 2011. The Fund benefited1 by being more heavily invested in mortgage-backed securities than the Index. Mortgage-backed securities yielded more than both treasuries and agencies and also benefited as mortgage prices rallied.
Davis Government Bond Fund’s investment objective is current income. There can be no assurance that the Fund will achieve its objective. Davis Government Bond Fund’s principal risks are: variable current income risk, interest rate sensitivity risk, extension and prepayment risk, changes in debt rating risk, and fees and expenses risk. See the prospectus for a full description of each risk.
1 A contribution to or detraction from the Fund’s performance is a product both of appreciation or depreciation and weighting within the Fund. For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%.
5
DAVIS SERIES, INC. | Management’s Discussion of Fund Performance |
DAVIS GOVERNMENT BOND FUND - (CONTINUED) |
Comparison of a $10,000 investment in Davis Government Bond Fund Class A versus the Citigroup U.S. Treasury/Agency 1-3 Year Index over 10 years for an investment made on December 31, 2001
Average Annual Total Return for periods ended December 31, 2011
Fund & Benchmark Index | 1-Year | 5-Year | 10-Year | Since Inception | Inception Date | Gross Expense Ratio | Net Expense Ratio |
Class A - without sales charge | 2.01% | 3.42% | 3.05% | 4.21% | 12/01/94 | 0.74% | 0.74% |
Class A - with sales charge | (2.83)% | 2.40% | 2.56% | 3.91% | 12/01/94 | 0.74% | 0.74% |
Class B†, ** | (2.90)% | 2.15% | 2.55% | 5.36% | 05/01/84 | 1.66% | 1.66% |
Class C** | 0.16% | 2.60% | 2.27% | 2.83% | 08/19/97 | 1.59% | 1.59% |
Class Y | 2.16% | 3.48% | 3.21% | 3.54% | 09/01/98 | 0.60% | 0.60% |
Citigroup U.S. Treasury/Agency 1-3 Year Index*** | 1.52% | 3.76% | 3.37% | 4.84% |
The Citigroup U.S. Treasury/Agency 1-3 Year Index is a recognized unmanaged index of short-term U.S. Government securities’ performance. Investments cannot be made directly in the Index.
The performance data for Davis Government Bond 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. Fund performance changes over time and current performance may be higher or lower than stated. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The operating expense ratios may vary in future years. For more current information please call Davis Funds Investor Services at 1-800-279-0279.
*Reflects 4.75% front-end sales charge.
†Because Class B shares automatically convert to Class A shares after 7 years, the “10-Year” and “Since Inception” returns for Class B reflect Class A performance for the period after conversion.
**Includes any applicable contingent deferred sales charge.
***Inception return is from 12/01/94.
6
DAVIS SERIES, INC. | Management’s Discussion of Fund Performance |
DAVIS FINANCIAL FUND |
Performance Overview
Davis Financial Fund’s Class A shares delivered a negative return on net asset value of 9.02% for the year ended December 31, 2011. Over the same time period, the Standard & Poor’s 500® Index (“Index”) returned 2.11%. The Fund’s financial sector holdings out-performed the corresponding sector1 within the Index, but under-performed the Index as a whole. The Fund had a limited amount of assets invested in other sectors. Of the non-financial holdings, material and energy companies detracted2 from performance while industrial, consumer discretionary, and consumer staple companies contributed to performance.
Factors Impacting the Fund’s Performance
Insurance companies were an important contributor to the Fund’s performance. The Fund’s insurance companies out-performed the corresponding industry group within the Index (up 2% versus down 8% for the Index). Transatlantic Holdings3 and Markel were among the most important contributors to performance. China Life Insurance was among the most important detractors from performance. The Fund no longer owns China Life Insurance.
Banking companies were the most important detractor from the Fund’s performance. The Fund’s banking companies under-performed the corresponding industry group within the Index (down 28% versus down 11% for the Index). State Bank of India, Wells Fargo, and ICICI Bank were among the most important detractors from performance.
Diversified financial companies also detracted from the Fund’s performance. The Fund’s diversified financial companies out-performed the corresponding industry group within the Index (down 5% versus down 27% for the Index). Oaktree, American Express, Visa, Cielo, and Moody’s were among the most important contributors to performance. Goldman Sachs, Bank of New York Mellon, Julius Baer Group, and Brookfield Asset Management were among the most important detractors from performance. The Fund no longer owns Moody’s.
Another important contributor to the Fund’s performance was Iron Mountain. Other important detractors from the Fund’s performance included Sino-Forest and Canadian Natural Resources. The Ontario Securities Commission issued a release on August 26, 2011 halting trading of Sino-Forest on the Toronto Stock Exchange, causing the security to be fair valued by the Fund. Davis Advisors’ portfolio managers continue to monitor and evaluate the situation. As of the date of this report, trading is still halted and the Fund continues to fair value this position. The Fund no longer owns Iron Mountain.
The Fund had approximately 19% of its net assets invested in foreign companies at December 31, 2011. As a whole, those companies under-performed the Fund’s domestic holdings.
Davis Financial Fund’s investment objective is long-term growth of capital. There can be no assurance that the Fund will achieve its objective. Davis Financial Fund’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 Fund concentrates its investments in the financial sector, and it may be subject to greater risks than a fund that does not concentrate its investments in a particular sector. The Fund’s investment performance, both good and bad, is expected to reflect the economic performance of the financial sector more than a fund that does not concentrate its 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.
2 A company’s or sector’s contribution to or detraction from the Fund’s performance is a product both of its appreciation or depreciation and its weighting within the Fund. 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 Fund’s holdings of each company discussed.
7
DAVIS SERIES, INC. | Management’s Discussion of Fund Performance |
DAVIS FINANCIAL FUND - (CONTINUED) |
Comparison of a $10,000 investment in Davis Financial Fund Class A versus the Standard & Poor’s 500® Index over 10 years for an investment made on December 31, 2001
Average Annual Total Return for periods ended December 31, 2011
Fund & Benchmark Index | 1-Year | 5-Year | 10-Year | Since Inception | Inception Date | Gross Expense Ratio | Net Expense Ratio |
Class A - without sales charge | (9.02)% | (5.32)% | 1.95% | 10.88% | 05/01/91 | 0.91% | 0.91% |
Class A - with sales charge | (13.34)% | (6.23)% | 1.46% | 10.62% | 05/01/91 | 0.91% | 0.91% |
Class B†, ** | (13.37)% | (6.59)% | 1.32% | 9.08% | 12/27/94 | 2.02% | 2.02% |
Class C** | (10.67)% | (6.15)% | 1.06% | 3.32% | 08/12/97 | 1.81% | 1.81% |
Class Y | (8.90)% | (5.20)% | 2.10% | 5.38% | 03/10/97 | 0.75% | 0.75% |
S&P 500® Index*** | 2.11% | (0.25)% | 2.92% | 8.15% |
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 Financial 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. Fund performance changes over time and current performance may be higher or lower than stated. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The operating expense ratios may vary in future years. For more current information please call Davis Funds Investor Services at 1-800-279-0279.
In 2009, Davis Financial Fund received a favorable class action settlement from a company that it no longer owns. This settlement had a material impact on the investment performance of the Fund, adding approximately 1% to the Fund’s total return in 2009. This was a one-time event that is unlikely to be repeated.
*Reflects 4.75% front-end sales charge.
†Because Class B shares automatically convert to Class A shares after 7 years, the “10-Year” and “Since Inception” returns for Class B reflect Class A performance for the period after conversion.
**Includes any applicable contingent deferred sales charge.
***Inception return is from 05/01/91.
8
DAVIS SERIES, INC. | Management’s Discussion of Fund Performance |
DAVIS APPRECIATION & INCOME FUND |
Performance Overview
Davis Appreciation & Income Fund’s Class A shares delivered a negative return on net asset value of 7.45% for the year ended December 31, 2011. Over the same time period, the Standard & Poor’s 500® Index (“Index”) returned 2.11%. While the Index increased little over the year, individual sectors1 within the Index increased by as much as 20% (utilities) or decreased by as much as 16% (financials). The sectors within the Index that turned in the strongest performance over the year were utilities, consumer staples, and health care. The sectors within the Index that turned in the weakest performance over the year were financials, materials, and industrials.
Factors Impacting the Fund’s Performance
Analyzing the Fund’s performance based upon asset classes, common and preferred stocks detracted2 from performance while bonds contributed to the Fund’s performance.
The Fund’s common stock holdings were the most important detractor from both absolute performance and from its performance relative to the Index. The Fund’s common stock holdings under-performed the Index (down 11% versus up 2% for the Index). The Fund’s common stock holdings in Whole Foods Market3, Waste Connections, and News Corp. were among the most important contributors to performance. The Fund’s common stock holdings in Bank of America, School Specialty, and Transocean were among the most important detractors from performance.
The Fund’s preferred stock holdings also detracted from both absolute and relative performance. The Fund’s preferred stock holdings under-performed the Index (down 11% versus up 2% for the Index). The Fund’s preferred stock holding in Citigroup was among the most important detractors from performance.
The Fund’s bond holdings contributed to performance and performed in-line with the Index (both up 2%). The Fund’s bond holdings in Valeant Pharmaceuticals and United Rentals were among the most important contributors to performance.
Analyzing the Fund’s performance based upon market sectors, financial and energy companies were the most important detractors from performance while consumer staple companies were the most important contributors to performance.
Davis Appreciation & Income Fund’s investment objective is total return through a combination of growth and income. There can be no assurance that the Fund will achieve its objective. Davis Appreciation & Income Fund’s principal risks are: stock market risk, manager risk, common stock risk, under $10 billion market capitalization risk, foreign country risk, headline risk, fees and expenses risk, extension and prepayment risk, credit risk, interest rate sensitivity risk, changes in debt rating risk, variable current income risk, overburdened issuers risk, priority risk, and difficult to resell 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 Fund’s performance is a product both of its appreciation or depreciation and its weighting within the Fund. 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 Fund’s holdings of each company discussed.
9
DAVIS SERIES, INC. | Management’s Discussion of Fund Performance |
DAVIS APPRECIATION & INCOME FUND - (CONTINUED) |
Comparison of a $10,000 investment in Davis Appreciation & Income Fund Class A versus the Standard & Poor’s 500® Index over 10 years for an investment made on December 31, 2001
Average Annual Total Return for periods ended December 31, 2011
Fund & Benchmark Index | 1-Year | 5-Year | 10-Year | Since Inception | Inception Date | Gross Expense Ratio | Net Expense Ratio |
Class A - without sales charge | (7.45)% | (0.22)% | 5.56% | 8.01% | 05/01/92 | 0.93% | 0.93% |
Class A - with sales charge | (11.85)% | (1.18)% | 5.04% | 7.74% | 05/01/92 | 0.93% | 0.93% |
Class B†, ** | (11.95)% | (1.45)% | 4.91% | 7.42% | 02/03/95 | 1.84% | 1.84% |
Class C** | (9.12)% | (1.01)% | 4.67% | 3.59% | 08/12/97 | 1.74% | 1.74% |
Class Y | (7.30)% | 0.03% | 5.80% | 6.20% | 11/13/96 | 0.74% | 0.74% |
S&P 500® Index*** | 2.11% | (0.25)% | 2.92% | 7.96% |
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 capitalization, 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 Appreciation & Income 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. Fund performance changes over time and current performance may be higher or lower than stated. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The operating expense ratios may vary in future years. For more current information please call Davis Funds Investor Services at 1-800-279-0279.
*Reflects 4.75% front-end sales charge.
†Because Class B shares automatically convert to Class A shares after 7 years, the “10-Year” and “Since Inception” returns for Class B reflect Class A performance for the period after conversion.
**Includes any applicable contingent deferred sales charge.
***Inception return is from 05/01/92.
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DAVIS SERIES, INC. | Management’s Discussion of Fund Performance |
DAVIS REAL ESTATE FUND |
Performance Overview
Davis Real Estate Fund’s Class A shares delivered a total return on net asset value of 9.69% for the year ended December 31, 2011. Over the same time period, the Wilshire U.S. Real Estate Securities Index (“Index”) returned 8.56%. Four of the eight sub-industries1 within the Index delivered positive returns. Residential REITs, retail REITs, and specialized REITs delivered the strongest performance while hotels, resorts & cruise lines, real estate operating companies, and industrial REITs delivered the weakest performance.
Factors Impacting the Fund’s Performance
Residential REITs were the most important contributor2 to both the Fund’s absolute performance and to its performance relative to the Index. The Fund’s residential REITs out-performed the corresponding sub-industry within the Index (up 25% versus up 15% for the Index). A lower relative average weighting (14% versus 18% for the Index) detracted from relative performance in this stronger performing sub-industry. Essex Property3 and American Campus were among the most important contributors to performance.
The Fund had more invested in office REITs than in any other sub-industry over the year and they were also an important contributor to absolute performance. The Fund’s office REITs out-performed the corresponding sub-industry within the Index (up 7% versus up 4% for the Index). The Fund’s relative performance was harmed by a higher relative average weighting (30% versus 17% for the Index) in this weaker performing sub-industry. Digital Realty, DuPont Fabros Technology, Coresite Realty, and Douglas Emmett were among the most important contributors to performance. Corporate Office Properties and Brandywine Realty were among the most important detractors from performance. The Fund no longer owns Douglas Emmett.
Industrial REITs made important contributions to both the Fund’s absolute and relative performance. The Fund’s industrial REITs substantially out-performed the corresponding sub-industry within the Index (up 7% versus down 7% for the Index). The Fund also had a higher relative average weighting (7% versus 5% for the Index) in this weaker performing sub-industry.
Real estate operating companies were the most important detractor from both the Fund’s absolute and relative performance. The Fund’s real estate operating companies under-performed the corresponding sub-industry within the Index (down 29% versus down 16% for the Index). Relative performance was also harmed by a higher relative average weighting (5% versus 2% for the Index) in this weaker performing sub-industry. Forest City Enterprises was among the most important detractors from performance.
Another important contributor to the Fund’s performance was Simon Property. Other important detractors from the Fund’s performance included LaSalle Hotel Properties and Crown Castle International. The Fund no longer owns LaSalle Hotel Properties or Crown Castle International.
Davis Real Estate Fund’s investment objective is total return through a combination of growth and income. There can be no assurance that the Fund will achieve its objective. Davis Real Estate Fund’s principal risks are: stock market risk, manager risk, common stock risk, concentrated portfolio risk, real estate portfolio 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 Fund concentrates its investments in the real estate sector, and it may be subject to greater risks than a fund that does not concentrate its investments in a particular sector. The Fund’s investment performance, both good and bad, is expected to reflect the economic performance of the real estate sector much more than a fund that does not concentrate its portfolio.
Davis Real Estate Fund is allowed to focus its investments in fewer companies, and it may be subject to greater risks than a more diversified fund that is not allowed to focus its investments in a few companies. Should the portfolio manager determine that it is prudent to focus the Fund’s portfolio in a few companies, the Fund’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.
2 A company’s or sector’s contribution to or detraction from the Fund’s performance is a product both of its appreciation or depreciation and its weighting within the Fund. 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 Fund’s holdings of each company discussed.
11
DAVIS SERIES, INC. | Management’s Discussion of Fund Performance |
DAVIS REAL ESTATE FUND - (CONTINUED) |
Comparison of a $10,000 investment in Davis Real Estate Fund Class A 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, 2001
Average Annual Total Return for periods ended December 31, 2011
Fund & Benchmark Indices | 1-Year | 5-Year | 10-Year | Since Inception | Inception Date | Gross Expense Ratio | Net Expense Ratio |
Class A - without sales charge | 9.69% | (4.74)% | 8.73% | 9.63% | 01/03/94 | 1.08% | 1.08% |
Class A - with sales charge | 4.46% | (5.66)% | 8.20% | 9.34% | 01/03/94 | 1.08% | 1.08% |
Class B†, ** | 4.42% | (5.97)% | 8.14% | 9.36% | 12/27/94 | 2.19% | 2.19% |
Class C** | 7.80% | (5.50)% | 7.90% | 6.23% | 08/13/97 | 1.89% | 1.89% |
Class Y | 9.97% | (4.41)% | 9.13% | 8.76% | 11/08/96 | 0.79% | 0.79% |
S&P 500® Index*** | 2.11% | (0.25)% | 2.92% | 7.71% | |||
Wilshire U.S. Real Estate Securities Index*** | 8.56% | (2.15)% | 10.15% | 10.20% |
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 capitalization, and represents approximately two-thirds of the total market value of all domestic common stocks. Investments cannot be made directly in the Index.
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 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. Fund performance changes over time and current performance may be higher or lower than stated. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The operating expense ratios may vary in future years. For more current information please call Davis Funds Investor Services at 1-800-279-0279.
*Reflects 4.75% front-end sales charge.
†Because Class B shares automatically convert to Class A shares after 7 years, the “10-Year” and “Since Inception” returns for Class B reflect Class A performance for the period after conversion.
**Includes any applicable contingent deferred sales charge.
***Inception return is from 01/03/94.
12
DAVIS SERIES, INC. | Fund Overview |
DAVIS OPPORTUNITY FUND | December 31, 2011 |
Portfolio Composition | Industry Weightings | ||||
(% of Fund’s 12/31/11 Net Assets) | (% of 12/31/11 Stock Holdings) | ||||
Fund | Russell 3000® | ||||
Common Stock (U.S.) | 83.95% | Information Technology | 21.23% | 18.33% | |
Common Stock (Foreign) | 9.85% | Diversified Financials | 10.31% | 4.84% | |
Stock Warrants | 1.09% | Capital Goods | 9.08% | 8.36% | |
Short-Term Investments | 4.83% | Insurance | 8.09% | 3.69% | |
Other Assets & Liabilities | 0.28% | Health Care | 6.13% | 11.83% | |
100.00% | Food, Beverage & Tobacco | 6.11% | 5.63% | ||
Banks | 5.82% | 3.10% | |||
Media | 5.61% | 3.14% | |||
Food & Staples Retailing | 5.46% | 2.08% | |||
Materials | 4.49% | 4.03% | |||
Retailing | 4.15% | 3.90% | |||
Transportation | 3.28% | 1.97% | |||
Commercial & Professional Services | 3.12% | 0.97% | |||
Energy | 3.07% | 11.34% | |||
Consumer Durables & Apparel | 2.53% | 1.29% | |||
Other | 1.52% | 15.50% | |||
100.00% | 100.00% | ||||
Top 10 Long-Term Holdings
(% of Fund’s 12/31/11 Net Assets)
Google Inc., Class A | Software & Services | 7.21% |
Oaktree Capital Group LLC, Class A | Diversified Financial Services | 5.55% |
Walt Disney Co. | Media | 4.24% |
Coca-Cola Co. | Food, Beverage & Tobacco | 3.70% |
CVS Caremark Corp. | Food & Staples Retailing | 3.26% |
Berkshire Hathaway Inc., Class B | Property & Casualty Insurance | 3.19% |
Wells Fargo & Co. | Commercial Banks | 3.02% |
Microsoft Corp. | Software & Services | 2.59% |
Nielsen Holdings NV | Commercial & Professional Services | 2.57% |
Sigma-Aldrich Corp. | Materials | 2.30% |
13
DAVIS SERIES, INC. | Fund Overview |
DAVIS OPPORTUNITY FUND - (CONTINUED) | December 31, 2011 |
New Positions Added (01/01/11-12/31/11)
(Highlighted positions are those greater than 1.20% of the Fund’s 12/31/11 total net assets)
Security | Industry | Date of 1st Purchase | % of Fund’s 12/31/11 Net Assets |
3M Co. | Capital Goods | 10/13/11 | 1.01% |
Air Products and Chemicals, Inc. | Materials | 03/14/11 | – |
Automatic Data Processing, Inc. | Software & Services | 10/13/11 | 0.71% |
Bankrate Inc. | Software & Services | 06/17/11 | 0.83% |
Chubb Corp. | Property & Casualty Insurance | 10/13/11 | 0.85% |
Compagnie Financiere Richemont S.A., | |||
Bearer Shares, Unit A | Consumer Durables & Apparel | 07/14/11 | 1.36% |
Deere & Co. | Capital Goods | 10/13/11 | 0.81% |
Eli Lilly and Co. | Pharmaceuticals, Biotechnology & | ||
Life Sciences | 10/17/11 | 1.09% | |
Emerson Electric Co. | Capital Goods | 10/13/11 | 1.15% |
Expedia, Inc. | Retailing | 03/07/11 | 0.69% |
Exxon Mobil Corp. | Energy | 10/13/11 | 1.77% |
FedEx Corp. | Transportation | 10/13/11 | 0.85% |
Groupon, Inc. | Retailing | 11/03/11 | 1.19% |
Intel Corp. | Semiconductors & Semiconductor | ||
Equipment | 05/17/11 | 1.04% | |
JPMorgan Chase & Co. | Diversified Financial Services | 10/13/11 | 1.09% |
Kellogg Co. | Food, Beverage & Tobacco | 10/13/11 | 0.90% |
Loews Corp. | Multi-line Insurance | 10/13/11 | 0.65% |
Medtronic, Inc. | Health Care Equipment & Services | 10/13/11 | 1.32% |
Netflix Inc. | Retailing | 10/26/11 | 1.46% |
News Corp., Class A | Media | 10/13/11 | 0.69% |
Nielsen Holdings NV | Commercial & Professional Services | 01/26/11 | 2.57% |
Oracle Corp. | Software & Services | 12/21/11 | 0.86% |
PACCAR Inc. | Capital Goods | 10/13/11 | 2.23% |
Pentair, Inc. | Capital Goods | 10/13/11 | 0.62% |
Philip Morris International Inc. | Food, Beverage & Tobacco | 10/17/11 | 0.69% |
Procter & Gamble Co. | Household & Personal Products | 10/13/11 | 1.19% |
RPX Corp. | Commercial & Professional Services | 05/04/11 | 0.39% |
Schindler Holding AG - Participation Certificate | Capital Goods | 08/02/11 | 1.79% |
Schlumberger Ltd. | Energy | 10/13/11 | 1.14% |
Sysco Corp. | Food & Staples Retailing | 10/13/11 | 0.68% |
Techne Corp. | Pharmaceuticals, Biotechnology & | ||
Life Sciences | 02/15/11 | 0.31% | |
Visa Inc., Class A | Diversified Financial Services | 06/24/11 | 0.22% |
Wal-Mart Stores, Inc. | Food & Staples Retailing | 10/13/11 | 1.24% |
Walt Disney Co. | Media | 03/15/11 | 4.24% |
14
DAVIS SERIES, INC. | Fund Overview |
DAVIS OPPORTUNITY FUND - (CONTINUED) | December 31, 2011 |
Positions Closed (01/01/11-12/31/11)
(Gains and losses greater than $2,500,000 are highlighted)
Security | Industry | Date of Final Sale | Realized Gain (Loss) | ||
Activision Blizzard, Inc. | Software & Services | 11/08/11 | $ | 2,562,386 | |
Air Products and Chemicals, Inc. | Materials | 10/11/11 | (287,168) | ||
Altera Corp. | Semiconductors & Semiconductor | ||||
Equipment | 05/23/11 | 2,567,865 | |||
Baxter International Inc. | Health Care Equipment & Services | 11/08/11 | 1,471,104 | ||
Becton, Dickinson and Co. | Health Care Equipment & Services | 11/08/11 | 2,829,389 | ||
Clark Holdings, Inc. | Transportation | 11/04/11 | (7,268,612) | ||
Devon Energy Corp. | Energy | 10/12/11 | (3,658,049) | ||
H&R Block, Inc. | Consumer Services | 06/24/11 | (200,678) | ||
Harris Corp. | Technology Hardware & Equipment | 10/11/11 | 590,897 | ||
Iron Mountain Inc. | Commercial & Professional Services | 07/14/11 | 2,100,775 | ||
Kraft Foods Inc., Class A | Food, Beverage & Tobacco | 11/10/11 | 2,035,135 | ||
Lockheed Martin Corp. | Capital Goods | 11/08/11 | 415,241 | ||
Mead Johnson Nutrition Co. | Food, Beverage & Tobacco | 01/11/11 | 993,589 | ||
Merck & Co., Inc. | Pharmaceuticals, Biotechnology & | ||||
Life Sciences | 11/08/11 | 10,346,302 | |||
Monsanto Co. | Materials | 10/11/11 | 18,061 | ||
Nestle S.A. | Food, Beverage & Tobacco | 11/09/11 | 719,724 | ||
Occidental Petroleum Corp. | Energy | 10/11/11 | 915,714 | ||
Pfizer Inc. | Pharmaceuticals, Biotechnology & | ||||
Life Sciences | 08/17/11 | 1,774,941 | |||
Shaw Group Inc. | Capital Goods | 03/14/11 | (3,984,670) | ||
Tenaris S.A., ADR | Energy | 10/11/11 | 216,960 | ||
Transocean Ltd. | Energy | 10/11/11 | 1,424,458 | ||
Yingde Gases Group Co. Ltd. | Materials | 07/12/11 | (615,341) | ||
Yum! Brands, Inc. | Consumer Services | 10/11/11 | 8,401,839 |
15
DAVIS SERIES, INC. | Fund Overview |
DAVIS GOVERNMENT BOND FUND | December 31, 2011 |
Portfolio Composition | Industry Weightings | ||||
(% of Fund’s 12/31/11 Net Assets) | (% of 12/31/11 Fixed Income) | ||||
Fixed Income | 95.38% | Collateralized Mortgage Obligations | 57.28% | ||
Short-Term Investments | 4.41% | Fannie Mae Mortgage Pools | 33.46% | ||
Other Assets & Liabilities | 0.21% | Freddie Mac Mortgage Pools | 8.33% | ||
100.00% | Government Agency Notes | 0.72% | |||
Other Agencies | 0.21% | ||||
100.00% | |||||
Top 10 Fixed Income Holdings
(% of Fund’s 12/31/11 Net Assets)
Freddie Mac, 5.76%, 10/01/38, Pool No. 1Q1289 | Freddie Mac Mortgage Pools | 3.99% | |
Ginnie Mae, 3.421%, 11/16/35 | Collateralized Mortgage Obligations | 3.67% | |
Ginnie Mae, 3.536%, 09/16/35 | Collateralized Mortgage Obligations | 3.66% | |
Fannie Mae, 4.00%, 04/25/19 | Collateralized Mortgage Obligations | 3.51% | |
Fannie Mae, 5.055%, 11/01/15, Pool No. 387686 | Fannie Mae Mortgage Pools | 3.35% | |
Fannie Mae, 2.458%, 09/01/35, Pool No. AL0510 | Fannie Mae Mortgage Pools | 3.28% | |
Ginnie Mae, 4.00%, 05/20/33 | Collateralized Mortgage Obligations | 3.08% | |
Freddie Mac, 4.00%, 01/15/26 | Collateralized Mortgage Obligations | 3.04% | |
Freddie Mac, 4.50%, 05/15/18 | Collateralized Mortgage Obligations | 2.78% | |
Fannie Mae, 3.228%, 08/01/35, Pool No. AE0866 | Fannie Mae Mortgage Pools | 2.75% |
16
DAVIS SERIES, INC. | Fund Overview |
DAVIS GOVERNMENT MONEY MARKET FUND | December 31, 2011 |
Portfolio Composition | Maturity Diversification | |||
(% of Fund’s 12/31/11 Net Assets) | (% of 12/31/11 Portfolio Holdings) | |||
Repurchase Agreements | 50.79% | 0-30 Days | 87.99% | |
Federal Home Loan Bank | 19.48% | 31-90 Days | 3.80% | |
Fannie Mae | 10.37% | 91-180 Days | 6.33% | |
Federal Farm Credit Bank | 10.27% | 181-397 Days | 1.88% | |
Freddie Mac | 4.09% | 100.00% | ||
Other Agencies | 3.99% | |||
Private Export Funding | 0.42% | |||
Other Assets & Liabilities | 0.59% | |||
100.00% | ||||
The maturity dates of floating rate securities used in the Maturity Diversification chart are considered to be the effective maturities, based on the reset dates of the securities’ variable rates. See the Fund’s Schedule of Investments for a listing of the floating rate securities.
17
DAVIS SERIES, INC. | Fund Overview |
DAVIS FINANCIAL FUND | December 31, 2011 |
Portfolio Composition | Industry Weightings | ||||
(% of Fund’s 12/31/11 Net Assets) | (% of 12/31/11 Stock Holdings) | ||||
Fund | S&P 500® | ||||
Common Stock (U.S.) | 80.87% | Diversified Financials | 44.17% | 5.25% | |
Common Stock (Foreign) | 19.18% | Insurance | 32.91% | 3.58% | |
Other Assets & Liabilities | (0.05)% | Banks | 15.96% | 2.73% | |
100.00% | Food & Staples Retailing | 2.77% | 2.41% | ||
Energy | 2.25% | 12.30% | |||
Retailing | 1.62% | 3.73% | |||
Materials | 0.32% | 3.50% | |||
Information Technology | – | 19.00% | |||
Health Care | – | 11.85% | |||
Capital Goods | – | 8.18% | |||
Other | – | 27.47% | |||
100.00% | 100.00% | ||||
Top 10 Long-Term Holdings
(% of Fund’s 12/31/11 Net Assets)
Transatlantic Holdings, Inc. | Reinsurance | 11.02% |
American Express Co. | Consumer Finance | 9.84% |
Oaktree Capital Group LLC, Class A | Diversified Financial Services | 9.43% |
Wells Fargo & Co. | Commercial Banks | 8.48% |
Markel Corp. | Property & Casualty Insurance | 6.01% |
Loews Corp. | Multi-line Insurance | 5.98% |
Julius Baer Group Ltd. | Capital Markets | 5.52% |
Bank of New York Mellon Corp. | Capital Markets | 5.12% |
State Bank of India Ltd., GDR | Commercial Banks | 4.59% |
Progressive Corp. | Property & Casualty Insurance | 4.38% |
18
DAVIS SERIES, INC. | Fund Overview |
DAVIS FINANCIAL FUND - (CONTINUED) | December 31, 2011 |
New Positions Added (01/01/11-12/31/11)
(Highlighted positions are those greater than 2.00% of the Fund’s 12/31/11 total net assets)
Security | Industry | Date of 1st Purchase | % of Fund’s 12/31/11 Net Assets |
Alleghany Corp. | Property & Casualty Insurance | 11/21/11 | 1.95% |
Bed Bath & Beyond Inc. | Retailing | 03/17/11 | 1.62% |
CVS Caremark Corp. | Food & Staples Retailing | 05/05/11 | 2.77% |
Iron Mountain Inc. | Commercial & Professional Services | 02/04/11 | – |
Sino-Forest Corp. | Materials | 06/06/11 | 0.32% |
Positions Closed (01/01/11-12/31/11)
(Gains greater than $10,000,000 are highlighted)
Security | Industry | Date of Final Sale | Realized Gain | |
ACE Ltd. | Property & Casualty Insurance | 10/04/11 | $ | 1,501,746 |
China Life Insurance Co., Ltd., ADR | Life & Health Insurance | 08/11/11 | 10,725,467 | |
D&B Corp. | Commercial & Professional Services | 06/01/11 | 12,304,288 | |
GAM Holding Ltd. | Capital Markets | 08/10/11 | 4,804,997 | |
Iron Mountain Inc. | Commercial & Professional Services | 12/29/11 | 2,996,208 | |
Moody's Corp. | Diversified Financial Services | 03/17/11 | 6,439,977 |
19
DAVIS SERIES, INC. | Fund Overview |
DAVIS APPRECIATION & INCOME FUND | December 31, 2011 |
Portfolio Composition | Industry Weightings | ||||
(% of Fund’s 12/31/11 Net Assets) | (% of 12/31/11 Long-Term Portfolio) | ||||
Fund | S&P 500® | ||||
Common Stock (U.S.) | 51.34% | Capital Goods | 12.49% | 8.18% | |
Common Stock (Foreign) | 3.10% | Materials | 11.69% | 3.50% | |
Convertible Bonds | 32.96% | Real Estate | 11.39% | 2.07% | |
Preferred Stock | 9.44% | Energy | 9.99% | 12.30% | |
Corporate Bonds | 3.05% | Retailing | 9.56% | 3.73% | |
Other Assets & Liabilities | 0.11% | Diversified Financials | 8.33% | 5.25% | |
100.00% | Information Technology | 7.87% | 19.00% | ||
Food, Beverage & Tobacco | 6.67% | 6.61% | |||
Health Care | 6.19% | 11.85% | |||
Commercial & Professional Services | 5.41% | 0.54% | |||
Utilities | 3.81% | 3.86% | |||
Food & Staples Retailing | 2.77% | 2.41% | |||
Media | 2.70% | 3.11% | |||
Transportation | 1.13% | 1.97% | |||
Other | – | 15.62% | |||
100.00% | 100.00% | ||||
Top 10 Long-Term Holdings
(% of Fund’s 12/31/11 Net Assets)
Tyson Foods, Inc., Conv. Sr. Notes, 3.25%, 10/15/13 | Food, Beverage & Tobacco | 5.53% |
Kohl's Corp. | Retailing | 4.60% |
Quanta Services, Inc. | Capital Goods | 4.20% |
Intel Corp., Conv. Jr. Sub. Deb., 3.25%, 08/01/39 | Semiconductors & Semiconductor Equipment | 3.87% |
Allegheny Technologies, Inc., Conv. Sr. Notes, 4.25%, 06/01/14 | Materials | 3.54% |
Best Buy Co., Inc., Conv. Sub., 2.25%, 01/15/22 | Retailing | 3.32% |
Forest City Enterprises, Inc., Conv. Sr. Notes, 3.625%, 10/15/14 | Real Estate | 3.26% |
Devon Energy Corp. | Energy | 3.25% |
United States Steel Corp., Conv. Sr. Notes, 4.00%, 05/15/14 | Materials | 3.19% |
Valeant Pharmaceuticals International, Inc. | Pharmaceuticals, Biotechnology & Life Sciences | 3.10% |
20
DAVIS SERIES, INC. | Fund Overview |
DAVIS APPRECIATION & INCOME FUND - (CONTINUED) | December 31, 2011 |
New Positions Added (01/01/11-12/31/11)
(Highlighted positions are those greater than 1.00% of the Fund’s 12/31/11 total net assets)
Security | Industry | Date of 1st Purchase | % of Fund’s 12/31/11 Net Assets |
Allegheny Technologies, Inc. | Materials | 09/22/11 | 0.80% |
Best Buy Co., Inc., Conv. Sub., | |||
2.25%, 01/15/22 | Retailing | 04/01/11 | 3.32% |
Forest City Enterprises, Inc., 144A Conv. | |||
Sr. Notes, 4.25%, 08/15/18 | Real Estate | 07/21/11 | 1.79% |
United States Steel Corp. | Materials | 09/22/11 | 0.78% |
Valeant Pharmaceuticals International, Inc., | Pharmaceuticals, Biotechnology & | ||
144A Sr. Notes, 6.75%, 08/15/21 | Life Sciences | 02/03/11 | 0.25% |
Positions Closed (01/01/11-12/31/11)
(Gains and losses greater than $1,000,000 are highlighted)
Security | Industry | Date of Final Sale | Realized Gain (Loss) | ||
Avon Products, Inc. | Household & Personal Products | 08/09/11 | $ | (3,955,351) | |
Eastman Kodak Co., Conv. Sr. Notes, | |||||
7.00%, 04/01/17 | Consumer Durables & Apparel | 09/26/11 | (1,987,990) | ||
General Motors Co., 4.75%, | |||||
Series B, Conv. Pfd. | Automobiles & Components | 09/23/11 | (288,614) | ||
Intel Corp., Conv. Jr. Sub. Deb., | Semiconductors & Semiconductor | ||||
2.95%, 12/15/35 | Equipment | 09/09/11 | 999,640 | ||
Janus Capital Group Inc., Conv. Sr. Notes, | |||||
3.25% 07/15/14 | Capital Markets | 09/14/11 | (4,875) | ||
Toll Brothers, Inc. | Consumer Durables & Apparel | 08/05/11 | 66,030 |
21
DAVIS SERIES, INC. | Fund Overview |
DAVIS REAL ESTATE FUND | December 31, 2011 |
Portfolio Composition | Industry Weightings | |||||
(% of Fund’s 12/31/11 Net Assets) | (% of 12/31/11 Long-Term Portfolio) | |||||
Wilshire U.S. | ||||||
Real Estate | ||||||
Fund | Securities Index | |||||
Common Stock | 84.57% | Office REITs | 35.01% | 16.15% | ||
Preferred Stock | 9.20% | Specialized REITs | 17.62% | 27.26% | ||
Convertible Bonds | 4.52% | Retail REITs | 16.48% | 24.14% | ||
Short-Term Investments | 1.19% | Residential REITs | 15.05% | 19.17% | ||
Other Assets & Liabilities | 0.52% | Industrial REITs | 7.85% | 4.90% | ||
100.00% | Real Estate Operating Companies | 5.51% | 1.59% | |||
Diversified REITs | 2.48% | 6.35% | ||||
Hotels, Resorts & Cruise Lines | – | 0.44% | ||||
100.00% | 100.00% | |||||
Top 10 Long-Term Holdings
(% of Fund’s 12/31/11 Net Assets)
Simon Property Group, Inc. | Retail REITs | 5.74% |
Forest City Enterprises, Inc., Class A | Real Estate Operating Companies | 4.91% |
Alexandria Real Estate Equities, Inc., 7.00%, Series D, Conv. Pfd. | Office REITs | 4.83% |
Alexandria Real Estate Equities, Inc. | Office REITs | 4.81% |
Digital Realty Trust, Inc. | Office REITs | 3.67% |
Digital Realty Trust, L.P., 144A Conv. Sr. Notes, 5.50%, 04/15/29 | Office REITs | 3.47% |
Ventas, Inc. | Specialized REITs | 3.36% |
Plum Creek Timber Co., Inc. | Specialized REITs | 3.36% |
Public Storage | Specialized REITs | 3.24% |
EastGroup Properties, Inc. | Industrial REITs | 3.16% |
22
DAVIS SERIES, INC. | Fund Overview |
DAVIS REAL ESTATE FUND - (CONTINUED) | December 31, 2011 |
New Positions Added (01/01/11-12/31/11)
(Highlighted positions are those greater than 2.50% of the Fund’s 12/31/11 total net assets)
Security | Industry | Date of 1st Purchase | % of Fund’s 12/31/11 Net Assets |
AvalonBay Communities, Inc. | Residential REITs | 08/03/11 | 2.59% |
BioMed Realty Trust, Inc. | Office REITs | 04/07/11 | 2.42% |
Brandywine Realty Trust | Office REITs | 01/21/11 | 2.88% |
CBL & Associates Properties, Inc. | Retail REITs | 05/25/11 | 1.38% |
CubeSmart | Specialized REITs | 04/14/11 | 0.96% |
DDR Corp. | Retail REITs | 09/02/11 | 2.07% |
Education Realty Trust, Inc. | Residential REITs | 05/19/11 | 1.65% |
Equity Residential | Residential REITs | 03/23/11 | 2.56% |
HCP, Inc. | Specialized REITs | 08/03/11 | 2.16% |
Host Hotels & Resorts Inc. | Specialized REITs | 09/22/11 | – |
Kimco Realty Corp. | Retail REITs | 11/02/11 | 2.08% |
Macerich Co. | Retail REITs | 08/31/11 | 2.77% |
Plum Creek Timber Co., Inc. | Specialized REITs | 02/01/11 | 3.36% |
Post Properties, Inc. | Residential REITs | 04/19/11 | 2.54% |
Prologis, Inc., 6.75%, Series M, Pfd. | Industrial REITs | 09/23/11 | 1.79% |
Public Storage | Specialized REITs | 03/25/11 | 3.24% |
Rayonier Inc. | Specialized REITs | 09/02/11 | 2.25% |
SL Green Realty Corp. | Office REITs | 09/02/11 | 1.49% |
Positions Closed (01/01/11-12/31/11)
(Gains and losses greater than $2,000,000 are highlighted)
Security | Industry | Date of Final Sale | Realized Gain (Loss) | |
Alexander & Baldwin, Inc. | Transportation | 04/01/11 | $ | 2,051,048 |
American Tower Corp., Class A | Telecommunication Services | 10/07/11 | 1,725,703 | |
Brookdale Senior Living Inc. | Real Estate Operating Companies | 08/03/11 | 1,083,506 | |
CB Richard Ellis Group, Inc., Class A | Real Estate Services | 08/09/11 | 245,070 | |
Cogdell Spencer, Inc. | Specialized REITs | 09/27/11 | (8,631,328) | |
Crown Castle International Corp. | Telecommunication Services | 03/21/11 | 19,712 | |
Douglas Emmett, Inc. | Office REITs | 07/20/11 | 4,517,766 | |
Highwoods Properties, Inc. | Office REITs | 01/28/11 | 320,220 | |
Host Hotels & Resorts Inc. | Specialized REITs | 10/14/11 | 310,945 | |
LaSalle Hotel Properties | Specialized REITs | 08/09/11 | (200,933) | |
Regency Centers Corp. | Retail REITs | 11/30/11 | 2,512,202 | |
SBA Communications Corp., Class A | Telecommunication Services | 03/16/11 | 1,376,007 | |
SL Green Realty Corp., 7.625%, Series C, | ||||
Pfd. | Office REITs | 01/27/11 | 3,968,098 | |
Taubman Centers, Inc. | Retail REITs | 05/25/11 | 2,499,289 | |
Toll Brothers, Inc. | Homebuilding | 10/18/11 | 1,180,914 | |
UDR, Inc. | Residential REITs | 08/09/11 | 922,845 |
23
DAVIS SERIES, INC. | Expense Example |
Example
As a shareholder of each Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and contingent deferred sales charges on redemptions; and (2) ongoing costs, including advisory and administrative fees, distribution and/or service (12b-1) 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 class is for the six-month period ended December 31, 2011.
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. An annual maintenance fee of $15, charged on retirement plan accounts per Social Security Number, is not included in the Expense Example. This fee will be waived for accounts sharing the same Social Security Number if the accounts total at least $50,000 at Davis Funds. If this fee was included, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower, by this amount.
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. An annual maintenance fee of $15, charged on retirement plan accounts per Social Security Number, is not included in the Expense Example. This fee will be waived for accounts sharing the same Social Security Number if the accounts total at least $50,000 at Davis Funds. If this fee was included, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower, by this amount.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front end or contingent deferred sales charges (loads). 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. In addition, if these transactional costs were included, your costs would have been higher.
24
DAVIS SERIES, INC. | Expense Example – (Continued) |
Beginning Account Value | Ending Account Value | Expenses Paid During Period* | ||||
(07/01/11) | (12/31/11) | (07/01/11-12/31/11) | ||||
Davis Opportunity Fund | ||||||
Class A (annualized expense ratio 1.04%**) | ||||||
Actual | $1,000.00 | $931.91 | $5.06 | |||
Hypothetical | $1,000.00 | $1,019.96 | $5.30 | |||
Class B (annualized expense ratio 2.01%**) | ||||||
Actual | $1,000.00 | $927.06 | $9.76 | |||
Hypothetical | $1,000.00 | $1,015.07 | $10.21 | |||
Class C (annualized expense ratio 1.84%**) | ||||||
Actual | $1,000.00 | $928.20 | $8.94 | |||
Hypothetical | $1,000.00 | $1,015.93 | $9.35 | |||
Class Y (annualized expense ratio 0.80%**) | ||||||
Actual | $1,000.00 | $933.24 | $3.90 | |||
Hypothetical | $1,000.00 | $1,021.07 | $4.08 | |||
Davis Government Bond Fund | ||||||
Class A (annualized expense ratio 0.73%**) | ||||||
Actual | $1,000.00 | $1,009.84 | $3.70 | |||
Hypothetical | $1,000.00 | $1,021.53 | $3.72 | |||
Class B (annualized expense ratio 1.66%**) | ||||||
Actual | $1,000.00 | $1,003.38 | $8.38 | |||
Hypothetical | $1,000.00 | $1,016.84 | $8.44 | |||
Class C (annualized expense ratio 1.59%**) | ||||||
Actual | $1,000.00 | $1,005.52 | $8.04 | |||
Hypothetical | $1,000.00 | $1,017.19 | $8.08 | |||
Class Y (annualized expense ratio 0.58%**) | ||||||
Actual | $1,000.00 | $1,010.59 | $2.94 | |||
Hypothetical | $1,000.00 | $1,022.28 | $2.96 | |||
Davis Government Money Market Fund | ||||||
Class A, B, C, & Y (annualized expense ratio 0.13%**) | ||||||
Actual | $1,000.00 | $1,000.00 | $0.66 | |||
Hypothetical | $1,000.00 | $1,024.55 | $0.66 | |||
Davis Financial Fund | ||||||
Class A (annualized expense ratio 0.93%**) | ||||||
Actual | $1,000.00 | $895.40 | $4.44 | |||
Hypothetical | $1,000.00 | $1,020.52 | $4.74 | |||
Class B (annualized expense ratio 2.07%**) | ||||||
Actual | $1,000.00 | $889.95 | $9.86 | |||
Hypothetical | $1,000.00 | $1,014.77 | $10.51 | |||
Class C (annualized expense ratio 1.84%**) | ||||||
Actual | $1,000.00 | $891.38 | $8.77 | |||
Hypothetical | $1,000.00 | $1,015.93 | $9.35 | |||
Class Y (annualized expense ratio 0.75%**) | ||||||
Actual | $1,000.00 | $896.35 | $3.58 | |||
Hypothetical | $1,000.00 | $1,021.42 | $3.82 |
25
DAVIS SERIES, INC. | Expense Example – (Continued) |
Beginning Account Value | Ending Account Value | Expenses Paid During Period* | ||||
(07/01/11) | (12/31/11) | (07/01/11-12/31/11) | ||||
Davis Appreciation & Income Fund | ||||||
Class A (annualized expense ratio 0.94%**) | ||||||
Actual | $1,000.00 | $880.44 | $4.46 | |||
Hypothetical | $1,000.00 | $1,020.47 | $4.79 | |||
Class B (annualized expense ratio 1.86%**) | ||||||
Actual | $1,000.00 | $876.14 | $8.80 | |||
Hypothetical | $1,000.00 | $1,015.83 | $9.45 | |||
Class C (annualized expense ratio 1.75%**) | ||||||
Actual | $1,000.00 | $876.91 | $8.28 | |||
Hypothetical | $1,000.00 | $1,016.38 | $8.89 | |||
Class Y (annualized expense ratio 0.75%**) | ||||||
Actual | $1,000.00 | $881.05 | $3.56 | |||
Hypothetical | $1,000.00 | $1,021.42 | $3.82 | |||
Davis Real Estate Fund | ||||||
Class A (annualized expense ratio 1.08%**) | ||||||
Actual | $1,000.00 | $996.25 | $5.43 | |||
Hypothetical | $1,000.00 | $1,019.76 | $5.50 | |||
Class B (annualized expense ratio 2.19%**) | ||||||
Actual | $1,000.00 | $989.71 | $10.98 | |||
Hypothetical | $1,000.00 | $1,014.17 | $11.12 | |||
Class C (annualized expense ratio 1.88%**) | ||||||
Actual | $1,000.00 | $991.65 | $9.44 | |||
Hypothetical | $1,000.00 | $1,015.73 | $9.55 | |||
Class Y (annualized expense ratio 0.79%**) | ||||||
Actual | $1,000.00 | $997.34 | $3.98 | |||
Hypothetical | $1,000.00 | $1,021.22 | $4.02 | |||
Hypothetical assumes 5% annual return before expenses. | ||||||
*Expenses are equal to each Class's annualized operating expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). | ||||||
**The expense ratios reflect the impact, if any, of certain reimbursements and/or waivers from the Adviser. |
26
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS OPPORTUNITY FUND | December 31, 2011 |
Shares | Value (Note 1) | ||||||||||||
COMMON STOCK – (93.80%) | |||||||||||||
CONSUMER DISCRETIONARY – (11.66%) | |||||||||||||
Consumer Durables & Apparel – (2.40%) | |||||||||||||
Compagnie Financiere Richemont S.A., Bearer Shares, Unit A (Switzerland) | 136,300 | $ | 6,894,084 | ||||||||||
Hunter Douglas NV (Netherlands) | 140,979 | 5,295,051 | |||||||||||
12,189,135 | |||||||||||||
Media – (5.32%) | |||||||||||||
Grupo Televisa S.A., ADR (Mexico) | 93,160 | 1,961,950 | |||||||||||
News Corp., Class A | 197,100 | 3,517,249 | |||||||||||
Walt Disney Co. | 574,110 | 21,529,125 | |||||||||||
27,008,324 | |||||||||||||
Retailing – (3.94%) | |||||||||||||
Expedia, Inc. | 120,360 | 3,491,042 | |||||||||||
Groupon, Inc. * | 293,800 | 6,044,935 | |||||||||||
Netflix Inc. * | 106,800 | 7,400,706 | |||||||||||
TripAdvisor Inc. * | 120,360 | 3,034,877 | |||||||||||
19,971,560 | |||||||||||||
Total Consumer Discretionary | 59,169,019 | ||||||||||||
CONSUMER STAPLES – (12.17%) | |||||||||||||
Food & Staples Retailing – (5.18%) | |||||||||||||
CVS Caremark Corp. | 405,780 | 16,547,708 | |||||||||||
Sysco Corp. | 117,600 | 3,449,208 | |||||||||||
Wal-Mart Stores, Inc. | 105,000 | 6,274,800 | |||||||||||
26,271,716 | |||||||||||||
Food, Beverage & Tobacco – (5.80%) | |||||||||||||
Coca-Cola Co. | 268,490 | 18,786,245 | |||||||||||
Heineken Holding NV (Netherlands) | 63,065 | 2,580,885 | |||||||||||
Kellogg Co. | 90,000 | 4,551,300 | |||||||||||
Philip Morris International Inc. | 44,700 | 3,508,056 | |||||||||||
29,426,486 | |||||||||||||
Household & Personal Products – (1.19%) | |||||||||||||
Procter & Gamble Co. | 90,800 | 6,057,268 | |||||||||||
Total Consumer Staples | 61,755,470 | ||||||||||||
ENERGY – (2.91%) | |||||||||||||
Exxon Mobil Corp. | 105,900 | 8,976,084 | |||||||||||
Schlumberger Ltd. | 85,000 | 5,806,350 | |||||||||||
Total Energy | 14,782,434 | ||||||||||||
FINANCIALS – (21.90%) | |||||||||||||
Banks – (4.43%) | |||||||||||||
Commercial Banks – (4.43%) | |||||||||||||
Banco Santander Brasil S.A., ADS (Brazil) | 162,040 | 1,319,006 | |||||||||||
U.S. Bancorp | 217,220 | 5,875,801 | |||||||||||
Wells Fargo & Co. | 555,860 | 15,319,501 | |||||||||||
22,514,308 | |||||||||||||
Diversified Financials – (9.79%) | |||||||||||||
Capital Markets – (2.93%) | |||||||||||||
Bank of New York Mellon Corp. | 325,610 | 6,482,895 | |||||||||||
Charles Schwab Corp. | 743,300 | 8,369,558 | |||||||||||
14,852,453 | |||||||||||||
27
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS OPPORTUNITY FUND - (CONTINUED) | December 31, 2011 |
Shares/Units | Value (Note 1) | ||||||||||||
COMMON STOCK – (CONTINUED) | |||||||||||||
FINANCIALS – (CONTINUED) | |||||||||||||
Diversified Financials – (Continued) | |||||||||||||
Diversified Financial Services – (6.86%) | |||||||||||||
JPMorgan Chase & Co. | 166,200 | $ | 5,526,150 | ||||||||||
Oaktree Capital Group LLC, Class A (a) | 626,590 | 28,196,550 | |||||||||||
Visa Inc., Class A | 10,800 | 1,096,524 | |||||||||||
34,819,224 | |||||||||||||
49,671,677 | |||||||||||||
Insurance – (7.68%) | |||||||||||||
Multi-line Insurance – (0.65%) | |||||||||||||
Loews Corp. | 87,900 | 3,309,435 | |||||||||||
Property & Casualty Insurance – (5.93%) | |||||||||||||
Berkshire Hathaway Inc., Class B * | 212,331 | 16,200,856 | |||||||||||
Chubb Corp. | 62,100 | 4,298,562 | |||||||||||
Markel Corp. * | 23,157 | 9,602,513 | |||||||||||
30,101,931 | |||||||||||||
Reinsurance – (1.10%) | |||||||||||||
Transatlantic Holdings, Inc. | 101,645 | 5,563,031 | |||||||||||
38,974,397 | |||||||||||||
Total Financials | 111,160,382 | ||||||||||||
HEALTH CARE – (5.81%) | |||||||||||||
Health Care Equipment & Services – (2.77%) | |||||||||||||
IDEXX Laboratories, Inc. * | 96,010 | 7,388,450 | |||||||||||
Medtronic, Inc. | 175,000 | 6,693,750 | |||||||||||
14,082,200 | |||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences – (3.04%) | |||||||||||||
Agilent Technologies, Inc. * | 55,134 | 1,925,831 | |||||||||||
Eli Lilly and Co. | 133,600 | 5,552,416 | |||||||||||
Johnson & Johnson | 97,300 | 6,380,934 | |||||||||||
Techne Corp. | 22,990 | 1,569,412 | |||||||||||
15,428,593 | |||||||||||||
Total Health Care | 29,510,793 | ||||||||||||
INDUSTRIALS – (14.69%) | |||||||||||||
Capital Goods – (8.62%) | |||||||||||||
3M Co. | 62,800 | 5,132,644 | |||||||||||
ABB Ltd., ADR (Switzerland) | 74,620 | 1,405,095 | |||||||||||
Blount International, Inc. * | 253,378 | 3,679,049 | |||||||||||
Deere & Co. | 53,200 | 4,115,020 | |||||||||||
Emerson Electric Co. | 125,000 | 5,823,750 | |||||||||||
PACCAR Inc. | 302,000 | 11,317,450 | |||||||||||
Pentair, Inc. | 95,000 | 3,162,550 | |||||||||||
Schindler Holding AG - Participation Certificate (Switzerland) | 78,000 | 9,084,637 | |||||||||||
43,720,195 | |||||||||||||
Commercial & Professional Services – (2.96%) | |||||||||||||
Nielsen Holdings NV * | 438,820 | 13,028,565 | |||||||||||
RPX Corp. * | 156,640 | 1,980,713 | |||||||||||
15,009,278 | |||||||||||||
Transportation – (3.11%) | |||||||||||||
FedEx Corp. | 51,800 | 4,325,818 |
28
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS OPPORTUNITY FUND - (CONTINUED) | December 31, 2011 |
Shares/Units | Value (Note 1) | |||||||||||||
COMMON STOCK – (CONTINUED) | ||||||||||||||
INDUSTRIALS – (CONTINUED) | ||||||||||||||
Transportation – (Continued) | ||||||||||||||
Kuehne & Nagel International AG (Switzerland) | 102,176 | $ | 11,476,172 | |||||||||||
15,801,990 | ||||||||||||||
Total Industrials | 74,531,463 | |||||||||||||
INFORMATION TECHNOLOGY – (20.15%) | ||||||||||||||
Semiconductors & Semiconductor Equipment – (3.03%) | ||||||||||||||
Intel Corp. | 218,210 | 5,292,684 | ||||||||||||
Texas Instruments Inc. | 345,930 | 10,070,022 | ||||||||||||
15,362,706 | ||||||||||||||
Software & Services – (14.98%) | ||||||||||||||
Automatic Data Processing, Inc. | 66,300 | 3,579,537 | ||||||||||||
Bankrate Inc. * | 196,760 | 4,230,340 | ||||||||||||
Google Inc., Class A * | 56,683 | 36,610,700 | ||||||||||||
International Business Machines Corp. | 32,914 | 6,052,226 | ||||||||||||
Microsoft Corp. | 505,360 | 13,121,672 | ||||||||||||
Oracle Corp. | 170,000 | 4,357,950 | ||||||||||||
SAP AG, ADR (Germany) | 68,511 | 3,627,658 | ||||||||||||
Youku Inc., ADR (China)* | 282,120 | 4,420,820 | ||||||||||||
76,000,903 | ||||||||||||||
Technology Hardware & Equipment – (2.14%) | ||||||||||||||
Hewlett-Packard Co. | 422,464 | 10,882,672 | ||||||||||||
Total Information Technology | 102,246,281 | |||||||||||||
MATERIALS – (4.26%) | ||||||||||||||
Sherwin-Williams Co. | 104,300 | 9,310,861 | ||||||||||||
Sigma-Aldrich Corp. | 186,500 | 11,651,588 | ||||||||||||
Sino-Forest Corp. (Canada)* | 960,530 | 662,766 | ||||||||||||
Total Materials | 21,625,215 | |||||||||||||
TELECOMMUNICATION SERVICES – (0.25%) | ||||||||||||||
America Movil SAB de C.V., Series L, ADR (Mexico) | 55,540 | 1,255,204 | ||||||||||||
Total Telecommunication Services | 1,255,204 | |||||||||||||
TOTAL COMMON STOCK – (Identified cost $435,116,354) | 476,036,261 | |||||||||||||
STOCK WARRANTS – (1.09%) | ||||||||||||||
FINANCIALS – (1.09%) | ||||||||||||||
Banks – (1.09%) | ||||||||||||||
Commercial Banks – (1.09%) | ||||||||||||||
Wells Fargo & Co., strike price $34.01, expires 10/28/18 * | 642,600 | 5,513,508 | ||||||||||||
TOTAL STOCK WARRANTS – (Identified cost $4,982,367) | 5,513,508 |
29
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS OPPORTUNITY FUND - (CONTINUED) | December 31, 2011 |
Principal | Value (Note 1) | ||||||||||||||||||||||||||
SHORT-TERM INVESTMENTS – (4.83%) | |||||||||||||||||||||||||||
Banc of America Securities LLC Joint Repurchase Agreement, 0.04%, 01/03/12, dated 12/30/11, repurchase value of $6,096,027 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.00%-5.50%, 01/01/27-12/01/41, total market value $6,217,920) | $ | 6,096,000 | $ | 6,096,000 | |||||||||||||||||||||||
Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.05%, 01/03/12, dated 12/30/11, repurchase value of $18,415,102 (collateralized by: U.S. Government agency mortgages and obligations in a pooled cash account, 0.665%-7.00%, 06/30/13-08/01/41, total market value $18,783,300) | 18,415,000 | 18,415,000 | |||||||||||||||||||||||||
TOTAL SHORT-TERM INVESTMENTS – (Identified cost $24,511,000) | 24,511,000 | ||||||||||||||||||||||||||
Total Investments – (99.72%) – (Identified cost $464,609,721) – (b) | 506,060,769 | ||||||||||||||||||||||||||
Other Assets Less Liabilities – (0.28%) | 1,437,079 | ||||||||||||||||||||||||||
Net Assets – (100.00%) | $ | 507,497,848 | |||||||||||||||||||||||||
ADR: American Depositary Receipt | |||||||||||||||||||||||||||
ADS: American Depositary Share | |||||||||||||||||||||||||||
* | Non-Income producing security. | ||||||||||||||||||||||||||
(a) | Restricted Security – See Note 8 of the Notes to Financial Statements. | ||||||||||||||||||||||||||
(b) | Aggregate cost for federal income tax purposes is $472,484,377. At December 31, 2011 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows: | ||||||||||||||||||||||||||
Unrealized appreciation | $ | 70,846,803 | |||||||||||||||||||||||||
Unrealized depreciation | (37,270,411) | ||||||||||||||||||||||||||
Net unrealized appreciation | $ | 33,576,392 | |||||||||||||||||||||||||
Affiliated Company represents ownership of at least 5% of the voting securities of the issuer and is an affiliate, as defined in the Investment Company Act of 1940, at or during the year ended December 31, 2011. The Fund did not hold any affiliated companies as of December 31, 2011. Transactions during the period in which the issuers were affiliates are as follows: | |||||||||||||||||||||||||||
Security | Shares December 31, 2010 | Gross Additions | Gross Reductions | Shares December 31, 2011 | Dividend Income | ||||||||||||||||||||||
Clark Holdings, Inc. (1) | 958,000 | – | 958,000 | – | $ | – | |||||||||||||||||||||
(1) Not an affiliate as of December 31, 2011. | |||||||||||||||||||||||||||
See Notes to Financial Statements |
30
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS GOVERNMENT BOND FUND | December 31, 2011 |
Principal | Value (Note 1) | |||||||||
GOVERNMENT AGENCY NOTES – (0.69%) | ||||||||||
Fannie Mae, 4.00%, 01/28/13 | $ | 400,000 | $ | 416,502 | ||||||
Federal Home Loan Bank, 5.30%, 06/15/12 | 626,032 | 635,631 | ||||||||
TOTAL GOVERNMENT AGENCY NOTES – (Identified cost $1,030,832) | 1,052,133 | |||||||||
MORTGAGES – (94.49%) | ||||||||||
COLLATERALIZED MORTGAGE OBLIGATIONS – (54.63%) | ||||||||||
Fannie Mae, 4.50%, 01/25/14 | 141,301 | 145,536 | ||||||||
Fannie Mae, 4.00%, 09/25/17 | 267,344 | 269,546 | ||||||||
Fannie Mae, 4.00%, 01/25/19 | 928,210 | 972,777 | ||||||||
Fannie Mae, 4.00%, 02/25/19 | 1,800,000 | 1,892,498 | ||||||||
Fannie Mae, 4.00%, 04/25/19 | 5,000,000 | 5,350,380 | ||||||||
Fannie Mae, 4.00%, 07/25/23 | 2,379,180 | 2,479,175 | ||||||||
Fannie Mae, 4.00%, 11/25/23 | 1,803,632 | 1,880,531 | ||||||||
Fannie Mae, 0.4936%, 02/25/37 (a) | 217,172 | 214,371 | ||||||||
Fannie Mae, 0.5436%, 03/25/37 (a) | 1,655,513 | 1,649,769 | ||||||||
Fannie Mae, 0.7936%, 06/25/38 (a) | 841,642 | 845,391 | ||||||||
Freddie Mac, 4.00%, 01/15/17 | 233,235 | 236,036 | ||||||||
Freddie Mac, 3.50%, 01/15/18 | 307,867 | 317,815 | ||||||||
Freddie Mac, 5.00%, 01/15/18 | 128,291 | 129,056 | ||||||||
Freddie Mac, 4.50%, 05/15/18 | 4,000,000 | 4,244,964 | ||||||||
Freddie Mac, 4.00%, 06/15/18 | 759,607 | 768,510 | ||||||||
Freddie Mac, 4.50%, 07/15/18 | 1,251,357 | 1,326,377 | ||||||||
Freddie Mac, 4.00%, 10/15/18 | 2,875,000 | 3,071,152 | ||||||||
Freddie Mac, 5.00%, 05/15/19 | 153,854 | 155,990 | ||||||||
Freddie Mac, 5.00%, 12/15/22 | 125,102 | 125,656 | ||||||||
Freddie Mac, 4.50%, 09/15/23 | 2,207,592 | 2,334,979 | ||||||||
Freddie Mac, 1.3625%, 03/15/24 (a) | 3,061,184 | 3,115,594 | ||||||||
Freddie Mac, 3.50%, 07/15/24 | 2,620,713 | 2,741,127 | ||||||||
Freddie Mac, 4.00%, 01/15/26 | 4,360,715 | 4,633,834 | ||||||||
Freddie Mac, 4.00%, 01/15/28 | 3,930,253 | 4,109,895 | ||||||||
Freddie Mac, 4.50%, 06/15/29 | 820,867 | 824,338 | ||||||||
Freddie Mac, 4.50%, 04/15/32 | 2,500,000 | 2,631,178 | ||||||||
Freddie Mac, 6.00%, 01/15/33 | 393,139 | 403,812 | ||||||||
Freddie Mac, 4.25%, 06/15/33 | 231,823 | 234,744 | ||||||||
Freddie Mac, 5.00%, 01/15/34 | 3,499,473 | 3,610,009 | ||||||||
Freddie Mac, 4.50%, 08/15/36 | 2,637,577 | 2,826,023 | ||||||||
Freddie Mac, 0.6783%, 11/15/37 (a) | 3,677,973 | 3,690,456 | ||||||||
Freddie Mac Reference REMIC, 5.125%, 06/15/18 | 1,291,398 | 1,317,367 | ||||||||
Ginnie Mae, 4.50%, 10/20/20 | 822,594 | 833,663 | ||||||||
Ginnie Mae, 4.00%, 11/20/30 | 2,204,432 | 2,234,955 | ||||||||
Ginnie Mae, 5.00%, 02/16/32 | 1,870,790 | 1,897,674 | ||||||||
Ginnie Mae, 5.00%, 08/20/32 | 203,613 | 204,518 | ||||||||
Ginnie Mae, 4.00%, 05/20/33 | 4,408,324 | 4,697,060 | ||||||||
Ginnie Mae, 3.536%, 09/16/35 | 5,350,441 | 5,577,876 | ||||||||
Ginnie Mae, 3.421%, 11/16/35 | 5,390,864 | 5,601,487 | ||||||||
Ginnie Mae, 6.148%, 04/20/37 (a) | 3,264,022 | 3,708,136 | ||||||||
Total Collateralized Mortgage Obligations | 83,304,255 |
31
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS GOVERNMENT BOND FUND - (CONTINUED) | December 31, 2011 |
Principal | Value (Note 1) | |||||||||
MORTGAGES – (CONTINUED) | ||||||||||
FANNIE MAE POOLS – (31.92%) | ||||||||||
4.563%, 01/01/15, Pool No. 725788 | $ | 1,108,283 | $ | 1,180,526 | ||||||
5.055%, 11/01/15, Pool No. 387686 | 4,613,480 | 5,107,048 | ||||||||
6.00%, 09/01/17, Pool No. 665776 | 1,341,834 | 1,464,445 | ||||||||
5.00%, 03/01/18, Pool No. 357369 | 558,342 | 601,858 | ||||||||
4.50%, 08/01/18, Pool No. 254833 | 1,110,792 | 1,198,199 | ||||||||
4.00%, 01/01/19, Pool No. 976841 | 829,910 | 879,860 | ||||||||
3.50%, 09/01/20, Pool No. MA0521 | 1,903,327 | 2,006,939 | ||||||||
0.715%, 11/01/20, Pool No. 466582 (b) | 4,085,000 | 4,091,373 | ||||||||
3.00%, 12/01/20, Pool No. MA0605 | 3,976,520 | 4,147,929 | ||||||||
4.00%, 07/01/25, Pool No. AD7151 | 2,503,889 | 2,642,855 | ||||||||
6.50%, 07/01/32, Pool No. 635069 | 124,564 | 140,676 | ||||||||
1.85%, 10/01/32, Pool No. 648917 (b) | 1,035,143 | 1,067,523 | ||||||||
4.835%, 05/01/35, Pool No. 826242 (b) | 644,661 | 690,356 | ||||||||
3.228%, 08/01/35, Pool No. AE0866 (b) | 3,960,821 | 4,197,737 | ||||||||
2.458%, 09/01/35, Pool No. AL0510 (b) | 4,686,496 | 5,008,509 | ||||||||
2.893%, 11/01/35, Pool No. AL0130 (b) | 3,403,284 | 3,604,691 | ||||||||
4.945%, 01/01/36, Pool No. 848973 (b) | 692,265 | 743,781 | ||||||||
5.615%, 04/01/36, Pool No. 851605 (b) | 749,750 | 810,127 | ||||||||
2.469%, 11/01/36, Pool No. AE0870 (b) | 1,745,530 | 1,853,699 | ||||||||
6.50%, 09/01/37, Pool No. AA0924 | 1,956,150 | 2,242,569 | ||||||||
2.628%, 03/01/39, Pool No. AE0362 (b) | 2,908,746 | 3,016,026 | ||||||||
2.763%, 01/01/40, Pool No. AD0881 (b) | 1,865,432 | 1,965,611 | ||||||||
Total Fannie Mae Pools | 48,662,337 | |||||||||
FREDDIE MAC POOLS – (7.94%) | ||||||||||
5.00%, 03/01/12, Pool No. M80963 | 295,225 | 296,537 | ||||||||
3.50%, 04/01/12, Pool No. M80974 | 113,447 | 114,093 | ||||||||
5.00%, 05/01/12, Pool No. M80971 | 463,081 | 467,746 | ||||||||
4.00%, 12/01/12, Pool No. M81008 | 283,588 | 289,044 | ||||||||
5.50%, 12/01/18, Pool No. G11684 | 767,793 | 832,192 | ||||||||
5.50%, 06/01/22, Pool No. G12688 | 503,916 | 546,497 | ||||||||
4.00%, 05/01/24, Pool No. J09596 | 2,151,046 | 2,262,900 | ||||||||
2.586%, 12/01/34, Pool No. 1H1238 (b) | 347,229 | 367,253 | ||||||||
2.57%, 04/01/36, Pool No. 848422 (b) | 800,941 | 849,766 | ||||||||
5.76%, 10/01/38, Pool No. 1Q1289 (b) | 5,604,786 | 6,088,057 | ||||||||
Total Freddie Mac Pools | 12,114,085 | |||||||||
TOTAL MORTGAGES – (Identified cost $142,786,070) | 144,080,677 | |||||||||
OTHER AGENCIES – (0.20%) | ||||||||||
Housing Urban Development, 6.00%, 08/01/20 | 300,000 | 308,500 | ||||||||
TOTAL OTHER AGENCIES – (Identified cost $306,909) | 308,500 | |||||||||
SHORT-TERM INVESTMENTS – (4.41%) | ||||||||||
Banc of America Securities LLC Joint Repurchase Agreement, 0.04%, 01/03/12, dated 12/30/11, repurchase value of $1,671,007 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.00%-5.50%, 01/01/27-12/01/41, total market value $1,704,420) | 1,671,000 | 1,671,000 |
32
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS GOVERNMENT BOND FUND - (CONTINUED) | December 31, 2011 |
Principal | Value (Note 1) | |||||||||||||
SHORT-TERM INVESTMENTS – (CONTINUED) | ||||||||||||||
Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.05%, 01/03/12, dated 12/30/11, repurchase value of $5,047,028 (collateralized by: U.S. Government agency mortgages and obligations in a pooled cash account, 0.665%-7.00%, 06/30/13-08/01/41, total market value $5,147,940) | $ | 5,047,000 | $ | 5,047,000 | ||||||||||
TOTAL SHORT-TERM INVESTMENTS – (Identified cost $6,718,000) | 6,718,000 | |||||||||||||
Total Investments – (99.79%) – (Identified cost $150,841,811) – (c) | 152,159,310 | |||||||||||||
Other Assets Less Liabilities – (0.21%) | 314,747 | |||||||||||||
Net Assets – (100.00%) | $ | 152,474,057 | ||||||||||||
(a) | The interest rates on floating rate securities, shown as of December 31, 2011, may change daily or less frequently and are based on indices of market interest rates. For purposes of amortized cost valuation, the maturity dates of these securities are considered to be the effective maturities, based on the reset dates of the securities' variable rates. | |||||||||||||
(b) | The interest rates on adjustable rate securities, shown as of December 31, 2011, may change daily or less frequently and are based on indices of market interest rates. | |||||||||||||
(c) | Aggregate cost for federal income tax purposes is $150,841,811. At December 31, 2011 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows: | |||||||||||||
Unrealized appreciation | $ | 1,804,571 | ||||||||||||
Unrealized depreciation | (487,072) | |||||||||||||
Net unrealized appreciation | $ | 1,317,499 | ||||||||||||
See Notes to Financial Statements |
33
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS GOVERNMENT MONEY MARKET FUND | December 31, 2011 |
Principal | Value (Note 1) | |||||||
FANNIE MAE – (10.37%) | ||||||||
6.125%, 03/15/12 | $ | 4,805,000 | $ | 4,863,310 | ||||
1.00%, 04/04/12 | 4,500,000 | 4,509,421 | ||||||
0.2836%, 07/26/12 (a) | 4,250,000 | 4,250,731 | ||||||
0.27%, 09/13/12 (a) | 9,000,000 | 9,008,289 | ||||||
0.3146%, 10/18/12 (a) | 2,300,000 | 2,302,069 | ||||||
TOTAL FANNIE MAE – (Identified cost $24,933,820) | 24,933,820 | |||||||
FEDERAL FARM CREDIT BANK – (10.27%) | ||||||||
2.00%, 01/17/12 | 500,000 | 500,391 | ||||||
0.1806%, 02/22/12 (a) | 1,140,000 | 1,139,885 | ||||||
0.09%, 04/20/12 (a) | 4,500,000 | 4,500,000 | ||||||
0.28%, 06/21/12 (a) | 750,000 | 750,500 | ||||||
0.125%, 07/27/12 (a) | 9,000,000 | 9,000,000 | ||||||
0.155%, 10/19/12 (a) | 3,800,000 | 3,799,697 | ||||||
0.115%, 01/28/13 (a) | 5,000,000 | 4,994,099 | ||||||
TOTAL FEDERAL FARM CREDIT BANK – (Identified cost $24,684,572) | 24,684,572 | |||||||
FEDERAL HOME LOAN BANK – (19.48%) | ||||||||
2.10%, 01/26/12 | 500,000 | 500,646 | ||||||
0.25%, 02/08/12 | 3,205,000 | 3,205,634 | ||||||
0.19%, 02/28/12 (a) | 6,625,000 | 6,625,996 | ||||||
0.195%, 03/23/12 (a) | 4,500,000 | 4,501,076 | ||||||
0.25%, 06/21/12 | 1,000,000 | 1,000,648 | ||||||
0.09%, 06/22/12 (a) | 13,000,000 | 12,999,040 | ||||||
0.095%, 07/02/12 (a) | 4,500,000 | 4,500,000 | ||||||
0.09%, 07/18/12 (a) | 9,000,000 | 9,000,000 | ||||||
0.30%, 01/11/13 | 4,500,000 | 4,500,000 | ||||||
TOTAL FEDERAL HOME LOAN BANK – (Identified cost $46,833,040) | 46,833,040 | |||||||
FREDDIE MAC – (4.09%) | ||||||||
0.2363%, 02/10/12 (a) | 3,700,000 | 3,700,022 | ||||||
0.2563%, 05/11/12 (a) | 4,500,000 | 4,500,503 | ||||||
0.24%, 01/24/13 (a) | 1,640,000 | 1,641,059 | ||||||
TOTAL FREDDIE MAC – (Identified cost $9,841,584) | 9,841,584 | |||||||
OTHER AGENCIES – (3.99%) | ||||||||
AID - Israel, 0.3489%, 05/15/12 (Israel) (b) | 4,500,000 | 4,494,222 | ||||||
FICO Strip, 0.3247%, 03/26/12 (b) | 1,000,000 | 999,246 | ||||||
Tennessee Valley Authority, 6.79%, 05/23/12 | 4,000,000 | 4,104,042 | ||||||
TOTAL OTHER AGENCIES – (Identified cost $9,597,510) | 9,597,510 | |||||||
PRIVATE EXPORT FUNDING – (0.42%) | ||||||||
5.685%, 05/15/12 | 1,000,000 | 1,020,590 | ||||||
TOTAL PRIVATE EXPORT FUNDING – (Identified cost $1,020,590) | 1,020,590 |
34
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS GOVERNMENT MONEY MARKET FUND - (CONTINUED) | December 31, 2011 |
Principal | Value (Note 1) | ||||||||||||||
REPURCHASE AGREEMENTS – (50.79%) | |||||||||||||||
Banc of America Securities LLC Joint Repurchase Agreement, 0.04%, 01/03/12, dated 12/30/11, repurchase value of $30,367,135 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.00%-5.50%, 01/01/27-12/01/41, total market value $30,974,340) | $ | 30,367,000 | $ | 30,367,000 | |||||||||||
Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.05%, 01/03/12, dated 12/30/11, repurchase value of $91,733,510 (collateralized by: U.S. Government agency mortgages and obligations in a pooled cash account, 0.665%-7.00%, 06/30/13-08/01/41, total market value $93,567,660) | 91,733,000 | 91,733,000 | |||||||||||||
TOTAL REPURCHASE AGREEMENTS – (Identified cost $122,100,000) | 122,100,000 | ||||||||||||||
Total Investments – (99.41%) – (Identified cost $239,011,116) – (c) | 239,011,116 | ||||||||||||||
Other Assets Less Liabilities – (0.59%) | 1,413,107 | ||||||||||||||
Net Assets – (100.00%) | $ | 240,424,223 | |||||||||||||
(a) | The interest rates on floating rate securities, shown as of December 31, 2011, may change daily or less frequently and are based on indices of market interest rates. For purposes of amortized cost valuation, the maturity dates of these securities are considered to be the effective maturities, based on the reset dates of the securities' variable rates. | ||||||||||||||
(b) | Zero coupon bonds reflect the effective yield on the date of purchase. | ||||||||||||||
(c) | Aggregate cost for federal income tax purposes is $239,011,116. | ||||||||||||||
See Notes to Financial Statements |
35
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS FINANCIAL FUND | December 31, 2011 |
Shares/Units | Value (Note 1) | ||||||||||||
COMMON STOCK – (100.05%) | |||||||||||||
CONSUMER DISCRETIONARY – (1.62%) | |||||||||||||
Retailing – (1.62%) | |||||||||||||
Bed Bath & Beyond Inc. * | 130,000 | $ | 7,536,750 | ||||||||||
Total Consumer Discretionary | 7,536,750 | ||||||||||||
CONSUMER STAPLES – (2.77%) | |||||||||||||
Food & Staples Retailing – (2.77%) | |||||||||||||
CVS Caremark Corp. | 315,500 | 12,866,090 | |||||||||||
Total Consumer Staples | 12,866,090 | ||||||||||||
ENERGY – (2.25%) | |||||||||||||
Canadian Natural Resources Ltd. (Canada) | 278,990 | 10,425,856 | |||||||||||
Total Energy | 10,425,856 | ||||||||||||
FINANCIALS – (93.09%) | |||||||||||||
Banks – (15.97%) | |||||||||||||
Commercial Banks – (15.97%) | |||||||||||||
Banco Santander Brasil S.A., ADS (Brazil) | 139,900 | 1,138,786 | |||||||||||
ICICI Bank Ltd., ADR (India) | 121,697 | 3,216,452 | |||||||||||
SKBHC Holdings LLC *(a) | 1,604 | 6,346,136 | |||||||||||
State Bank of India Ltd., GDR (India) | 332,813 | 21,300,032 | |||||||||||
U.S. Bancorp | 101,671 | 2,750,200 | |||||||||||
Wells Fargo & Co. | 1,427,319 | 39,336,912 | |||||||||||
74,088,518 | |||||||||||||
Diversified Financials – (44.19%) | |||||||||||||
Capital Markets – (19.60%) | |||||||||||||
Ameriprise Financial, Inc. | 131,154 | 6,510,485 | |||||||||||
Bank of New York Mellon Corp. | 1,193,374 | 23,760,076 | |||||||||||
Brookfield Asset Management Inc., Class A (Canada) | 680,090 | 18,688,873 | |||||||||||
Charles Schwab Corp. | 125,998 | 1,418,737 | |||||||||||
Goldman Sachs Group, Inc. | 138,492 | 12,523,832 | |||||||||||
Julius Baer Group Ltd. (Switzerland) | 655,068 | 25,622,483 | |||||||||||
T. Rowe Price Group Inc. | 41,530 | 2,364,303 | |||||||||||
90,888,789 | |||||||||||||
Consumer Finance – (10.16%) | |||||||||||||
American Express Co. (b) | 967,182 | 45,621,975 | |||||||||||
First Marblehead Corp. * | 1,305,032 | 1,526,887 | |||||||||||
47,148,862 | |||||||||||||
Diversified Financial Services – (14.43%) | |||||||||||||
Bank of America Corp. | 121,264 | 674,228 | |||||||||||
Cielo S.A. (Brazil) | 196,920 | 5,088,618 | |||||||||||
Oaktree Capital Group LLC, Class A (a) | 972,000 | 43,740,000 | |||||||||||
RHJ International (Belgium)* | 47,264 | 214,712 | |||||||||||
RHJ International, 144A (Belgium)*(a)(c) | 396,550 | 1,806,880 | |||||||||||
Visa Inc., Class A | 151,737 | 15,405,857 | |||||||||||
66,930,295 | |||||||||||||
204,967,946 | |||||||||||||
Insurance – (32.93%) | |||||||||||||
Multi-line Insurance – (5.98%) | |||||||||||||
Loews Corp. (b) | 736,245 | 27,719,624 | |||||||||||
Property & Casualty Insurance – (12.34%) | |||||||||||||
Alleghany Corp. * | 31,700 | 9,043,693 |
36
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS FINANCIAL FUND - (CONTINUED) | December 31, 2011 |
Shares | Value (Note 1) | ||||||||||||||||||
COMMON STOCK – (CONTINUED) | |||||||||||||||||||
FINANCIALS – (CONTINUED) | |||||||||||||||||||
Insurance – (Continued) | |||||||||||||||||||
Property & Casualty Insurance – (Continued) | |||||||||||||||||||
Markel Corp. * | 67,186 | $ | 27,860,019 | ||||||||||||||||
Progressive Corp. | 1,041,565 | 20,320,933 | |||||||||||||||||
57,224,645 | |||||||||||||||||||
Reinsurance – (14.61%) | |||||||||||||||||||
Everest Re Group, Ltd. | 197,972 | 16,647,466 | |||||||||||||||||
Transatlantic Holdings, Inc. | 934,296 | 51,134,020 | |||||||||||||||||
67,781,486 | |||||||||||||||||||
152,725,755 | |||||||||||||||||||
Total Financials | 431,782,219 | ||||||||||||||||||
MATERIALS – (0.32%) | |||||||||||||||||||
Sino-Forest Corp. (Canada)* | 2,123,000 | 1,464,871 | |||||||||||||||||
Total Materials | 1,464,871 | ||||||||||||||||||
TOTAL COMMON STOCK – (Identified cost $372,131,515) | 464,075,786 | ||||||||||||||||||
Total Investments – (100.05%) – (Identified cost $372,131,515) – (d) | 464,075,786 | ||||||||||||||||||
Liabilities Less Other Assets – (0.05%) | (242,710) | ||||||||||||||||||
Net Assets – (100.00%) | $ | 463,833,076 | |||||||||||||||||
ADR: American Depositary Receipt | |||||||||||||||||||
ADS: American Depositary Share | |||||||||||||||||||
GDR: Global Depositary Receipt | |||||||||||||||||||
* | Non-Income producing security. | ||||||||||||||||||
(a) | Restricted Security – See Note 8 of the Notes to Financial Statements. | ||||||||||||||||||
(b) | A portion of these securities is pledged to cover unfunded capital commitments at December 31, 2011. | ||||||||||||||||||
(c) | 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 $1,806,880 or 0.39% of the Fund's net assets as of December 31, 2011. | ||||||||||||||||||
(d) | Aggregate cost for federal income tax purposes is $377,474,268. At December 31, 2011 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows: | ||||||||||||||||||
Unrealized appreciation | $ | 162,618,582 | |||||||||||||||||
Unrealized depreciation | (76,017,064) | ||||||||||||||||||
Net unrealized appreciation | $ | 86,601,518 | |||||||||||||||||
See Notes to Financial Statements |
37
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS APPRECIATION & INCOME FUND | December 31, 2011 |
Shares | Value (Note 1) | ||||||||||||
COMMON STOCK – (54.44%) | |||||||||||||
CONSUMER DISCRETIONARY – (8.18%) | |||||||||||||
Media – (2.70%) | |||||||||||||
News Corp., Class A | 571,300 | $ | 10,194,848 | ||||||||||
Retailing – (5.48%) | |||||||||||||
Amazon.com, Inc. * | 19,113 | 3,309,512 | |||||||||||
Kohl's Corp. | 351,800 | 17,361,330 | |||||||||||
20,670,842 | |||||||||||||
Total Consumer Discretionary | 30,865,690 | ||||||||||||
CONSUMER STAPLES – (3.90%) | |||||||||||||
Food & Staples Retailing – (2.77%) | |||||||||||||
Whole Foods Market, Inc. | 150,000 | 10,437,750 | |||||||||||
Food, Beverage & Tobacco – (1.13%) | |||||||||||||
Tyson Foods, Inc., Class A | 207,200 | 4,276,608 | |||||||||||
Total Consumer Staples | 14,714,358 | ||||||||||||
ENERGY – (8.78%) | |||||||||||||
Devon Energy Corp. | 198,100 | 12,282,200 | |||||||||||
Nabors Industries Ltd. * | 656,900 | 11,390,646 | |||||||||||
Transocean Ltd. | 246,431 | 9,460,486 | |||||||||||
Total Energy | 33,133,332 | ||||||||||||
FINANCIALS – (5.81%) | |||||||||||||
Diversified Financials – (4.45%) | |||||||||||||
Consumer Finance – (2.75%) | |||||||||||||
ADFITECH, Inc. * | 266,000 | 751,450 | |||||||||||
American Express Co. | 204,000 | 9,622,680 | |||||||||||
10,374,130 | |||||||||||||
Diversified Financial Services – (1.70%) | |||||||||||||
Bank of America Corp. | 990,876 | 5,509,270 | |||||||||||
Citigroup Inc. | 35,186 | 925,744 | |||||||||||
6,435,014 | |||||||||||||
16,809,144 | |||||||||||||
Real Estate – (1.36%) | |||||||||||||
Forest City Enterprises, Inc., Class A * | 432,400 | 5,110,968 | |||||||||||
Total Financials | 21,920,112 | ||||||||||||
HEALTH CARE – (5.92%) | |||||||||||||
Health Care Equipment & Services – (2.82%) | |||||||||||||
Universal Health Services, Inc., Class B | 274,500 | 10,667,070 | |||||||||||
Pharmaceuticals, Biotechnology & Life Sciences – (3.10%) | |||||||||||||
Valeant Pharmaceuticals International, Inc. (Canada)* | 250,546 | 11,697,993 | |||||||||||
Total Health Care | 22,365,063 | ||||||||||||
INDUSTRIALS – (11.19%) | |||||||||||||
Capital Goods – (7.88%) | |||||||||||||
General Electric Co. | 465,200 | 8,331,732 | |||||||||||
Masco Corp. | 529,500 | 5,549,160 | |||||||||||
Quanta Services, Inc. * | 735,790 | 15,848,917 | |||||||||||
29,729,809 | |||||||||||||
Commercial & Professional Services – (3.31%) | |||||||||||||
School Specialty, Inc. * | 575,363 | 1,444,161 |
38
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS APPRECIATION & INCOME FUND - (CONTINUED) | December 31, 2011 |
Shares/Principal | Value (Note 1) | |||||||||||||
COMMON STOCK – (CONTINUED) | ||||||||||||||
INDUSTRIALS – (CONTINUED) | ||||||||||||||
Commercial & Professional Services – (Continued) | ||||||||||||||
Waste Connections, Inc. | 333,750 | $ | 11,060,475 | |||||||||||
12,504,636 | ||||||||||||||
Total Industrials | 42,234,445 | |||||||||||||
INFORMATION TECHNOLOGY – (3.98%) | ||||||||||||||
Semiconductors & Semiconductor Equipment – (3.98%) | ||||||||||||||
Fairchild Semiconductor International, Inc. * | 481,897 | 5,802,040 | ||||||||||||
Intel Corp. | 147,300 | 3,572,761 | ||||||||||||
International Rectifier Corp. * | 292,100 | 5,672,582 | ||||||||||||
15,047,383 | ||||||||||||||
Total Information Technology | 15,047,383 | |||||||||||||
MATERIALS – (4.95%) | ||||||||||||||
Allegheny Technologies, Inc. | 63,100 | 3,016,180 | ||||||||||||
Freeport-McMoRan Copper & Gold Inc. | 195,482 | 7,191,783 | ||||||||||||
Sealed Air Corp. | 323,000 | 5,558,830 | ||||||||||||
United States Steel Corp. | 110,700 | 2,929,122 | ||||||||||||
Total Materials | 18,695,915 | |||||||||||||
UTILITIES – (1.73%) | ||||||||||||||
AES Corp. * | 551,700 | 6,532,128 | ||||||||||||
Total Utilities | 6,532,128 | |||||||||||||
TOTAL COMMON STOCK – (Identified cost $227,695,553) | 205,508,426 | |||||||||||||
PREFERRED STOCK – (9.44%) | ||||||||||||||
FINANCIALS – (5.41%) | ||||||||||||||
Diversified Financials – (3.69%) | ||||||||||||||
Diversified Financial Services – (3.69%) | ||||||||||||||
Citigroup Capital XII, 8.50%, TRUPS | 113,800 | 2,873,450 | ||||||||||||
Citigroup Inc., 7.50%, Conv. Pfd., T-DECS | 136,000 | 11,070,400 | ||||||||||||
13,943,850 | ||||||||||||||
Real Estate – (1.72%) | ||||||||||||||
Alexandria Real Estate Equities, Inc., 7.00%, Series D, Conv. Pfd. | 274,010 | 6,490,612 | ||||||||||||
Total Financials | 20,434,462 | |||||||||||||
INDUSTRIALS – (1.96%) | ||||||||||||||
Capital Goods – (0.83%) | ||||||||||||||
United Rentals Trust I, 6.50%, Conv. Pfd. | 65,913 | 3,114,389 | ||||||||||||
Transportation – (1.13%) | ||||||||||||||
Continental Airlines Finance Trust II, 6.00%, Cum. Conv. Pfd. | 153,200 | 4,270,450 | ||||||||||||
Total Industrials | 7,384,839 | |||||||||||||
UTILITIES – (2.07%) | ||||||||||||||
AES Trust III, 6.75%, Conv. Pfd. | 158,738 | 7,827,768 | ||||||||||||
Total Utilities | 7,827,768 | |||||||||||||
TOTAL PREFERRED STOCK – (Identified cost $35,568,907) | 35,647,069 | |||||||||||||
CONVERTIBLE BONDS – (32.96%) | ||||||||||||||
CONSUMER DISCRETIONARY – (3.32%) | ||||||||||||||
Retailing – (3.32%) | ||||||||||||||
Best Buy Co., Inc., Conv. Sub., 2.25%, 01/15/22 | $ | 12,495,000 | 12,526,238 | |||||||||||
Total Consumer Discretionary | 12,526,238 |
39
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS APPRECIATION & INCOME FUND - (CONTINUED) | December 31, 2011 |
Principal | Value (Note 1) | ||||||||||||
CONVERTIBLE BONDS – (CONTINUED) | |||||||||||||
CONSUMER STAPLES – (5.53%) | |||||||||||||
Food, Beverage & Tobacco – (5.53%) | |||||||||||||
Tyson Foods, Inc., Conv. Sr. Notes, 3.25%, 10/15/13 | $ | 15,672,000 | $ | 20,863,350 | |||||||||
Total Consumer Staples | 20,863,350 | ||||||||||||
ENERGY – (1.20%) | |||||||||||||
Transocean Inc., Conv. Sr. Notes, 1.50%, 12/15/37 | 4,575,000 | 4,517,813 | |||||||||||
Total Energy | 4,517,813 | ||||||||||||
FINANCIALS – (7.97%) | |||||||||||||
Real Estate – (7.97%) | |||||||||||||
Digital Realty Trust, L.P., 144A Conv. Sr. Notes, 5.50%, 04/15/29 (a) | 6,650,000 | 11,034,844 | |||||||||||
Forest City Enterprises, Inc., 144A Conv. Sr. Notes, 4.25%, 08/15/18 (a) | 7,720,000 | 6,774,300 | |||||||||||
Forest City Enterprises, Inc., Conv. Sr. Notes, 3.625%, 10/15/14 | 12,130,000 | 12,296,787 | |||||||||||
30,105,931 | |||||||||||||
Total Financials | 30,105,931 | ||||||||||||
INDUSTRIALS – (4.34%) | |||||||||||||
Capital Goods – (2.25%) | |||||||||||||
United Rentals, Inc., Conv. Sr. Notes, 4.00%, 11/15/15 | 3,075,000 | 8,471,625 | |||||||||||
Commercial & Professional Services – (2.09%) | |||||||||||||
School Specialty, Inc., Conv. Sub. Deb., 3.75%, 11/30/26 | 10,900,000 | 7,902,500 | |||||||||||
Total Industrials | 16,374,125 | ||||||||||||
INFORMATION TECHNOLOGY – (3.87%) | |||||||||||||
Semiconductors & Semiconductor Equipment – (3.87%) | |||||||||||||
Intel Corp., Conv. Jr. Sub. Deb., 3.25%, 08/01/39 | 11,635,000 | 14,631,012 | |||||||||||
Total Information Technology | 14,631,012 | ||||||||||||
MATERIALS – (6.73%) | |||||||||||||
Allegheny Technologies, Inc., Conv. Sr. Notes, 4.25%, 06/01/14 | 9,527,000 | 13,373,526 | |||||||||||
United States Steel Corp., Conv. Sr. Notes, 4.00%, 05/15/14 | 10,816,000 | 12,019,280 | |||||||||||
Total Materials | 25,392,806 | ||||||||||||
TOTAL CONVERTIBLE BONDS – (Identified cost $116,262,437) | 124,411,275 | ||||||||||||
CORPORATE BONDS – (3.05%) | |||||||||||||
CONSUMER DISCRETIONARY – (0.76%) | |||||||||||||
Retailing – (0.76%) | |||||||||||||
Kohl's Corp., Sr. Notes, 6.25%, 12/15/17 | 2,400,000 | 2,863,287 | |||||||||||
Total Consumer Discretionary | 2,863,287 | ||||||||||||
FINANCIALS – (0.51%) | |||||||||||||
Diversified Financials – (0.18%) | |||||||||||||
Consumer Finance – (0.18%) | |||||||||||||
ADFITECH, Inc., Sr. Bond, 8.00%, 03/15/20 | 1,040,991 | 663,898 | |||||||||||
Real Estate – (0.33%) | |||||||||||||
Thornburg Mortgage, Inc., Sr. Notes, 8.00%, 05/15/13 (b) | 13,300,000 | 1,250,200 | |||||||||||
Total Financials | 1,914,098 | ||||||||||||
HEALTH CARE – (0.25%) | |||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences – (0.25%) | |||||||||||||
Valeant Pharmaceuticals International, Inc., 144A Sr. Notes, 6.75%, 08/15/21 (a) | 1,000,000 | 970,000 | |||||||||||
Total Health Care | 970,000 |
40
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS APPRECIATION & INCOME FUND - (CONTINUED) | December 31, 2011 |
Principal | Value (Note 1) | ||||||||||||||||
CORPORATE BONDS – (CONTINUED) | |||||||||||||||||
INDUSTRIALS – (1.53%) | |||||||||||||||||
Capital Goods – (1.53%) | |||||||||||||||||
Masco Corp., Sr. Notes, 6.125%, 10/03/16 | $ | 5,615,500 | $ | 5,768,539 | |||||||||||||
Total Industrials | 5,768,539 | ||||||||||||||||
TOTAL CORPORATE BONDS – (Identified cost $19,959,741) | 11,515,924 | ||||||||||||||||
Total Investments – (99.89%) – (Identified cost $399,486,638) – (c) | 377,082,694 | ||||||||||||||||
Other Assets Less Liabilities – (0.11%) | 429,360 | ||||||||||||||||
Net Assets – (100.00%) | $ | 377,512,054 | |||||||||||||||
T-DECS: Tangible Dividend Enhanced Common Stock | |||||||||||||||||
TRUPS: Trust Preferred Securities | |||||||||||||||||
* | Non-Income producing security. | ||||||||||||||||
(a) | These securities are subject to Rule 144A. The Board of Directors of the Fund has determined that there is sufficient liquidity in these securities to realize current valuations. These securities amounted to $18,779,144 or 4.97% of the Fund's net assets as of December 31, 2011. | ||||||||||||||||
(b) | This security is in default. See Note 1 of the Notes to Financial Statements. | ||||||||||||||||
(c) | Aggregate cost for federal income tax purposes is $399,534,617. At December 31, 2011 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows: | ||||||||||||||||
Unrealized appreciation | $ | 57,358,313 | |||||||||||||||
Unrealized depreciation | (79,810,236) | ||||||||||||||||
Net unrealized depreciation | $ | (22,451,923) | |||||||||||||||
See Notes to Financial Statements |
41
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS REAL ESTATE FUND | December 31, 2011 |
Shares | Value (Note 1) | ||||||||||
COMMON STOCK – (84.57%) | |||||||||||
FINANCIALS – (84.57%) | |||||||||||
Real Estate – (84.57%) | |||||||||||
Real Estate Investment Trusts (REITs) – (79.66%) | |||||||||||
Diversified REITs – (2.43%) | |||||||||||
Vornado Realty Trust | 72,814 | $ | 5,596,484 | ||||||||
Industrial REITs – (5.92%) | |||||||||||
DCT Industrial Trust Inc. | 1,238,900 | 6,343,168 | |||||||||
EastGroup Properties, Inc. | 167,300 | 7,274,204 | |||||||||
13,617,372 | |||||||||||
Office REITs – (24.17%) | |||||||||||
Alexandria Real Estate Equities, Inc. | 160,413 | 11,063,685 | |||||||||
BioMed Realty Trust, Inc. | 308,200 | 5,572,256 | |||||||||
Boston Properties, Inc. | 66,400 | 6,613,440 | |||||||||
Brandywine Realty Trust | 697,800 | 6,629,100 | |||||||||
Coresite Realty Corp. | 382,300 | 6,812,586 | |||||||||
Corporate Office Properties Trust | 152,038 | 3,232,328 | |||||||||
Digital Realty Trust, Inc. | 126,500 | 8,433,755 | |||||||||
DuPont Fabros Technology Inc. | 157,500 | 3,814,650 | |||||||||
SL Green Realty Corp. | 51,500 | 3,431,960 | |||||||||
55,603,760 | |||||||||||
Residential REITs – (14.80%) | |||||||||||
American Campus Communities, Inc. | 167,600 | 7,032,496 | |||||||||
AvalonBay Communities, Inc. | 45,700 | 5,968,420 | |||||||||
Education Realty Trust, Inc. | 370,000 | 3,785,100 | |||||||||
Equity Residential | 103,200 | 5,885,496 | |||||||||
Essex Property Trust, Inc. | 39,300 | 5,522,043 | |||||||||
Post Properties, Inc. | 133,600 | 5,840,992 | |||||||||
34,034,547 | |||||||||||
Retail REITs – (15.03%) | |||||||||||
CBL & Associates Properties, Inc. | 202,500 | 3,179,250 | |||||||||
DDR Corp. | 391,000 | 4,758,470 | |||||||||
Federal Realty Investment Trust | 25,000 | 2,268,750 | |||||||||
Kimco Realty Corp. | 294,000 | 4,774,560 | |||||||||
Macerich Co. | 126,000 | 6,375,600 | |||||||||
Simon Property Group, Inc. | 102,482 | 13,214,029 | �� | ||||||||
34,570,659 | |||||||||||
Specialized REITs – (17.31%) | |||||||||||
CubeSmart | 208,500 | 2,218,440 | |||||||||
Entertainment Properties Trust | 104,000 | 4,545,840 | |||||||||
HCP, Inc. | 120,000 | 4,971,600 | |||||||||
Plum Creek Timber Co., Inc. | 211,500 | 7,732,440 | |||||||||
Public Storage | 55,400 | 7,449,084 | |||||||||
Rayonier Inc. | 116,000 | 5,177,080 | |||||||||
Ventas, Inc. | 140,300 | 7,734,739 | |||||||||
39,829,223 | |||||||||||
183,252,045 | |||||||||||
42
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS REAL ESTATE FUND - (CONTINUED) | December 31, 2011 |
Shares/Principal | Value (Note 1) | ||||||||||||
COMMON STOCK – (CONTINUED) | |||||||||||||
FINANCIALS – (CONTINUED) | |||||||||||||
Real Estate – (Continued) | |||||||||||||
Real Estate Management & Development – (4.91%) | |||||||||||||
Real Estate Operating Companies – (4.91%) | |||||||||||||
Forest City Enterprises, Inc., Class A * | 955,154 | $ | 11,289,920 | ||||||||||
Total Financials | 194,541,965 | ||||||||||||
TOTAL COMMON STOCK – (Identified cost $170,557,838) | 194,541,965 | ||||||||||||
PREFERRED STOCK – (9.20%) | |||||||||||||
FINANCIALS – (9.20%) | |||||||||||||
Real Estate – (9.20%) | |||||||||||||
Real Estate Investment Trusts (REITs) – (9.20%) | |||||||||||||
Industrial REITs – (1.79%) | |||||||||||||
Prologis, Inc., 6.75%, Series M | 171,000 | 4,125,375 | |||||||||||
Office REITs – (6.23%) | |||||||||||||
Alexandria Real Estate Equities, Inc., 7.00%, Series D, Conv. Pfd. | 468,943 | 11,108,087 | |||||||||||
Digital Realty Trust, Inc., 5.50%, Series D, Cum. Conv. Pfd. | 79,500 | 3,229,688 | |||||||||||
14,337,775 | |||||||||||||
Retail REITs – (1.18%) | |||||||||||||
CBL & Associates Properties, Inc., 7.375%, Series D | 114,160 | 2,700,169 | |||||||||||
Total Financials | 21,163,319 | ||||||||||||
TOTAL PREFERRED STOCK – (Identified cost $10,254,696) | 21,163,319 | ||||||||||||
CONVERTIBLE BONDS – (4.52%) | |||||||||||||
FINANCIALS – (4.52%) | |||||||||||||
Real Estate – (4.52%) | |||||||||||||
Real Estate Investment Trusts (REITs) – (4.01%) | |||||||||||||
Office REITs – (4.01%) | |||||||||||||
Digital Realty Trust, L.P., 144A Conv. Sr. Notes, 5.50%, 04/15/29 (a) | $ | 4,815,000 | 7,989,891 | ||||||||||
SL Green Operating Partnership L.P., 144A Conv. Sr. Notes, 3.00%, 03/30/27 (a) | 1,230,000 | 1,228,462 | |||||||||||
9,218,353 | |||||||||||||
Real Estate Management & Development – (0.51%) | |||||||||||||
Real Estate Operating Companies – (0.51%) | |||||||||||||
Forest City Enterprises, Inc., Conv. Sr. Notes, 5.00%, 10/15/16 | 1,040,000 | 1,171,300 | |||||||||||
Total Financials | 10,389,653 | ||||||||||||
TOTAL CONVERTIBLE BONDS – (Identified cost $7,068,721) | 10,389,653 | ||||||||||||
SHORT-TERM INVESTMENTS – (1.19%) | |||||||||||||
Banc of America Securities LLC Joint Repurchase Agreement, 0.04%, 01/03/12, dated 12/30/11, repurchase value of $684,003 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.00%-5.50%, 01/01/27-12/01/41, total market value $697,680) | 684,000 | 684,000 | |||||||||||
Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.05%, 01/03/12, dated 12/30/11, repurchase value of $2,065,011 (collateralized by: U.S. Government agency mortgages and obligations in a pooled cash account, 0.665%-7.00%, 06/30/13-08/01/41, total market value $2,106,300) | 2,065,000 | 2,065,000 | |||||||||||
TOTAL SHORT-TERM INVESTMENTS – (Identified cost $2,749,000) | 2,749,000 |
43
DAVIS SERIES, INC. | Schedule of Investments |
DAVIS REAL ESTATE FUND - (CONTINUED) | December 31, 2011 |
Total Investments – (99.48%) – (Identified cost $190,630,255) – (b) | $ | 228,843,937 | |||||||
Other Assets Less Liabilities – (0.52%) | 1,191,006 | ||||||||
Net Assets – (100.00%) | $ | 230,034,943 | |||||||
* | Non-Income producing security. | ||||||||
(a) | These securities are subject to Rule 144A. The Board of Directors of the Fund has determined that there is sufficient liquidity in these securities to realize current valuations. These securities amounted to $9,218,353 or 4.01% of the Fund's net assets as of December 31, 2011. | ||||||||
(b) | Aggregate cost for federal income tax purposes is $203,549,732. At December 31, 2011 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows: | ||||||||
Unrealized appreciation | $ | 36,197,223 | |||||||
Unrealized depreciation | (10,903,018) | ||||||||
Net unrealized appreciation | $ | 25,294,205 | |||||||
See Notes to Financial Statements |
44
DAVIS SERIES, INC. | Statements of Assets and Liabilities |
At December 31, 2011 |
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | ||||||||||||||||
ASSETS: | |||||||||||||||||||||
Investments in securities at value* (see accompanying Schedules of Investments) | $ | 506,060,769 | $ | 152,159,310 | $ | 239,011,116 | $ | 464,075,786 | $ | 377,082,694 | $ | 228,843,937 | |||||||||
Cash | 5,741 | 4,954 | 14,736 | 15,210 | – | 7,007 | |||||||||||||||
Receivables: | |||||||||||||||||||||
Capital stock sold | 4,973,806 | 366,104 | 26,468,362 | 2,531,155 | 1,184,804 | 950,077 | |||||||||||||||
Dividends and interest | 929,572 | 454,437 | 160,808 | 244,046 | 1,173,973 | 1,284,239 | |||||||||||||||
Investment securities sold | 43,646 | – | – | 2,398,039 | 1,010,316 | – | |||||||||||||||
Prepaid expenses | 7,823 | 2,072 | 4,370 | 8,045 | 5,730 | 4,942 | |||||||||||||||
Due from Adviser | – | – | 45,500 | – | – | – | |||||||||||||||
Total assets | 512,021,357 | 152,986,877 | 265,704,892 | 469,272,281 | 380,457,517 | 231,090,202 | |||||||||||||||
LIABILITIES: | |||||||||||||||||||||
Cash overdraft | – | – | – | – | 1,453,010 | – | |||||||||||||||
Payables: | |||||||||||||||||||||
Capital stock redeemed | 2,276,843 | 235,050 | 20,561,627 | 2,411,667 | 949,181 | 603,074 | |||||||||||||||
Distributions payable | – | 54,975 | – | – | – | – | |||||||||||||||
Investment securities purchased | 1,468,931 | – | 4,500,000 | – | – | – | |||||||||||||||
Note payable to bank (Note 6) | – | – | – | 2,361,000 | – | – | |||||||||||||||
Accrued distribution and service plan fees | 199,242 | 88,906 | – | 176,521 | 185,184 | 83,900 | |||||||||||||||
Accrued management fees | 243,715 | 39,887 | 106,991 | 227,620 | 182,314 | 109,239 | |||||||||||||||
Accrued transfer agent fees | �� | 243,660 | 43,494 | 37,935 | 167,755 | 112,350 | 233,805 | ||||||||||||||
Other accrued expenses | 91,118 | 50,508 | 74,116 | 94,642 | 63,424 | 25,241 | |||||||||||||||
Total liabilities | 4,523,509 | 512,820 | 25,280,669 | 5,439,205 | 2,945,463 | 1,055,259 | |||||||||||||||
NET ASSETS | $ | 507,497,848 | $ | 152,474,057 | $ | 240,424,223 | $ | 463,833,076 | $ | 377,512,054 | $ | 230,034,943 | |||||||||
NET ASSETS CONSIST OF: | |||||||||||||||||||||
Par value of shares of capital stock | $ | 243,036 | $ | 272,506 | $ | 2,404,242 | $ | 179,051 | $ | 147,700 | $ | 90,828 | |||||||||
Additional paid-in capital | 569,207,344 | 154,914,784 | 238,019,981 | 368,904,053 | 500,639,101 | 313,244,496 | |||||||||||||||
Undistributed (overdistributed) net investment income | (1,913,920) | – | – | 1,047,865 | (12,730) | 1,583,364 | |||||||||||||||
Accumulated net realized gains (losses) from investments | (101,484,538) | (4,030,732) | – | 1,735,166 | (100,858,073) | (123,092,512) | |||||||||||||||
Net unrealized appreciation (depreciation) on investments and foreign currency transactions | 41,445,926 | 1,317,499 | – | 91,966,941 | (22,403,944) | 38,208,767 | |||||||||||||||
Net Assets | $ | 507,497,848 | $ | 152,474,057 | $ | 240,424,223 | $ | 463,833,076 | $ | 377,512,054 | $ | 230,034,943 | |||||||||
*Including: | |||||||||||||||||||||
Cost of investments | $ | 464,609,721 | $ | 150,841,811 | $ | 239,011,116 | $ | 372,131,515 | $ | 399,486,638 | $ | 190,630,255 | |||||||||
Cost and market value of repurchase agreements (if greater than 10% of net assets) | – | – | 122,100,000 | – | – | – | |||||||||||||||
45
DAVIS SERIES, INC. | Statements of Assets and Liabilities – (Continued) |
At December 31, 2011 |
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||
CLASS A SHARES: | ||||||||||||||||||||
Net assets | $ | 235,742,822 | $ | 108,954,598 | $ | 208,879,025 | $ | 377,884,571 | $ | 269,626,219 | $ | 180,770,400 | ||||||||
Shares outstanding | 11,139,135 | 19,472,414 | 208,879,025 | 14,337,149 | 10,557,466 | 7,143,631 | ||||||||||||||
Net asset value and redemption price per share (Net assets ÷ Shares outstanding) | $ | 21.16 | $ | 5.60 | $ | 1.00 | $ | 26.36 | $ | 25.54 | $ | 25.31 | ||||||||
Maximum offering price per share (100/95.25 of net asset value)† | $ | 22.22 | $ | 5.88 | $ | NA | $ | 27.67 | $ | 26.81 | $ | 26.57 | ||||||||
CLASS B SHARES: | ||||||||||||||||||||
Net assets | $ | 12,227,932 | $ | 10,969,753 | $ | 15,450,686 | $ | 6,482,565 | $ | 13,603,691 | $ | 4,251,877 | ||||||||
Shares outstanding | 674,414 | 1,966,558 | 15,450,686 | 289,999 | 538,425 | 170,179 | ||||||||||||||
Net asset value, offering, and redemption price per share (Net assets ÷ Shares outstanding) | $ | 18.13 | $ | 5.58 | $ | 1.00 | $ | 22.35 | $ | 25.27 | $ | 24.98 | ||||||||
CLASS C SHARES: | ||||||||||||||||||||
Net assets | $ | 87,674,480 | $ | 28,728,522 | $ | 13,596,116 | $ | 52,858,504 | $ | 68,768,044 | $ | 26,407,733 | ||||||||
Shares outstanding | 4,595,067 | 5,133,556 | 13,596,116 | 2,292,346 | 2,679,379 | 1,043,288 | ||||||||||||||
Net asset value, offering, and redemption price per share (Net assets ÷ Shares outstanding) | $ | 19.08 | $ | 5.60 | $ | 1.00 | $ | 23.06 | $ | 25.67 | $ | 25.31 | ||||||||
CLASS Y SHARES: | �� | |||||||||||||||||||
Net assets | $ | 171,852,614 | $ | 3,821,184 | $ | 2,498,396 | $ | 26,607,436 | $ | 25,514,100 | $ | 18,604,933 | ||||||||
Shares outstanding | 7,894,976 | 678,065 | 2,498,396 | 985,608 | 994,765 | 725,673 | ||||||||||||||
Net asset value, offering, and redemption price per share (Net assets ÷ Shares outstanding) | $ | 21.77 | $ | 5.64 | $ | 1.00 | $ | 27.00 | $ | 25.65 | $ | 25.64 | ||||||||
†On purchases of $100,000 or more, the offering price is reduced. | ||||||||||||||||||||
See Notes to Financial Statements |
46
DAVIS SERIES, INC. | Statements of Operations |
For the year ended December 31, 2011 |
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||||
INVESTMENT INCOME: | ||||||||||||||||||||||
Income: | ||||||||||||||||||||||
Dividends* | $ | 11,271,948 | $ | – | $ | – | $ | 9,741,136 | $ | 6,260,900 | $ | 6,006,187 | ||||||||||
Interest | 40,754 | 3,374,849 | 418,025 | 1,129 | 5,032,281 | 375,989 | ||||||||||||||||
Total income | 11,312,702 | 3,374,849 | 418,025 | 9,742,265 | 11,293,181 | 6,382,176 | ||||||||||||||||
Expenses: | ||||||||||||||||||||||
Management fees (Note 3) | 3,244,822 | 454,599 | 1,346,314 | 3,004,025 | 2,447,643 | 1,497,943 | ||||||||||||||||
Custodian fees | 111,862 | 47,439 | 54,240 | 97,551 | 69,823 | 55,959 | ||||||||||||||||
Transfer agent fees: | ||||||||||||||||||||||
Class A | 415,510 | 108,573 | 137,703 | 524,264 | 341,486 | 482,982 | ||||||||||||||||
Class B | 54,323 | 27,562 | 9,324 | 36,703 | 38,952 | 26,746 | ||||||||||||||||
Class C | 189,156 | 48,459 | 7,093 | 121,311 | 93,960 | 65,119 | ||||||||||||||||
Class Y | 287,128 | 6,783 | 1,311 | 33,195 | 36,387 | 25,360 | ||||||||||||||||
Audit fees | 21,600 | 18,000 | 21,600 | 33,600 | 22,800 | 30,000 | ||||||||||||||||
Legal fees | 12,831 | 3,155 | 5,500 | 11,500 | 9,500 | 5,746 | ||||||||||||||||
Accounting fees (Note 3) | 8,250 | 3,000 | 4,500 | 8,496 | 6,750 | 4,500 | ||||||||||||||||
Reports to shareholders | 128,463 | 26,092 | 28,391 | 92,000 | 70,828 | 83,824 | ||||||||||||||||
Directors’ fees and expenses | 69,027 | 19,782 | 31,393 | 63,526 | 52,521 | 32,647 | ||||||||||||||||
Registration and filing fees | 98,003 | 63,597 | 53,000 | 71,000 | 75,000 | 58,495 | ||||||||||||||||
Interest expense | – | – | – | 15,573 | – | – | ||||||||||||||||
Excise tax expense (Note 1) | 35,385 | – | 3,537 | – | – | – | ||||||||||||||||
Miscellaneous | 23,405 | 10,778 | 10,630 | 19,411 | 17,749 | 13,547 | ||||||||||||||||
Payments under distribution plan (Note 7): | ||||||||||||||||||||||
Class A | 599,213 | 227,642 | – | 729,861 | 640,195 | 453,731 | ||||||||||||||||
Class B | 157,136 | 116,944 | – | 89,377 | 174,260 | 49,173 | ||||||||||||||||
Class C | 1,020,002 | 296,164 | – | 654,193 | 806,163 | 277,831 | ||||||||||||||||
Total expenses | 6,476,116 | 1,478,569 | 1,714,536 | 5,605,586 | 4,904,017 | 3,163,603 | ||||||||||||||||
Expenses paid indirectly (Note 4) | (75) | (4) | (6) | (44) | (69) | (25) | ||||||||||||||||
Reimbursement/waiver of expenses by Adviser (Note 3) | – | – | (1,386,812) | – | – | – | ||||||||||||||||
Net expenses | 6,476,041 | 1,478,565 | 327,718 | 5,605,542 | 4,903,948 | 3,163,578 | ||||||||||||||||
Net investment income | 4,836,661 | 1,896,284 | 90,307 | 4,136,723 | 6,389,233 | 3,218,598 | ||||||||||||||||
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: | ||||||||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||||||||
Investment transactions: | ||||||||||||||||||||||
Unaffiliated companies | 61,521,131 | 585,809 | – | 61,535,072 | 20,257,607 | 51,145,544 | ||||||||||||||||
Affiliated companies | (7,268,612) | – | – | – | – | – | ||||||||||||||||
Foreign currency transactions | 47,077 | – | – | (57,162) | – | – | ||||||||||||||||
Net realized gain | 54,299,596 | 585,809 | – | 61,477,910 | 20,257,607 | 51,145,544 | ||||||||||||||||
Net change in unrealized appreciation (depreciation) | (82,093,435) | 73,821 | – | (116,109,422) | (61,472,760) | (31,503,782) | ||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency transactions | (27,793,839) | 659,630 | – | (54,631,512) | (41,215,153) | 19,641,762 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (22,957,178) | $ | 2,555,914 | $ | 90,307 | $ | (50,494,789) | $ | (34,825,920) | $ | 22,860,360 | ||||||||||
*Net of foreign taxes withheld as follows | $ | 223,893 | $ | – | $ | – | $ | 128,192 | $ | – | $ | – | ||||||||||
See Notes to Financial Statements |
47
DAVIS SERIES, INC. | Statements of Changes in Net Assets |
For the year ended December 31, 2011 |
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||||
OPERATIONS: | ||||||||||||||||||||||
Net investment income | $ | 4,836,661 | $ | 1,896,284 | $ | 90,307 | $ | 4,136,723 | $ | 6,389,233 | $ | 3,218,598 | ||||||||||
Net realized gain from investments and foreign currency transactions | 54,299,596 | 585,809 | – | 61,477,910 | 20,257,607 | 51,145,544 | ||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | (82,093,435) | 73,821 | – | (116,109,422) | (61,472,760) | (31,503,782) | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations | (22,957,178) | 2,555,914 | 90,307 | (50,494,789) | (34,825,920) | 22,860,360 | ||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: | ||||||||||||||||||||||
Net investment income: | ||||||||||||||||||||||
Class A | (6,337,054) | (2,491,523) | (81,598) | (6,388,858) | (5,120,289) | (2,748,100) | ||||||||||||||||
Class B | (210,463) | (170,440) | (4,873) | (30,581) | (118,199) | (8,315) | ||||||||||||||||
Class C | (1,644,660) | (449,916) | (3,206) | (365,720) | (658,529) | (134,387) | ||||||||||||||||
Class Y | (5,027,724) | (99,765) | (630) | (475,650) | (548,706) | (287,970) | ||||||||||||||||
Realized gains from investment transactions: | ||||||||||||||||||||||
Class A | – | – | – | (27,473,281) | – | – | ||||||||||||||||
Class B | – | – | – | (550,547) | – | – | ||||||||||||||||
Class C | – | – | – | (4,350,142) | – | – | ||||||||||||||||
Class Y | – | – | – | (1,839,298) | – | – | ||||||||||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||||||||
Net increase (decrease) in net assets resulting from capital share transactions (Note 5): | ||||||||||||||||||||||
Class A | (45,855,705) | (2,713,454) | (80,145,477) | (36,482,593) | (18,194,870) | (81,152,053) | ||||||||||||||||
Class B | (6,588,676) | (3,001,545) | (2,216,668) | (3,175,826) | (3,793,692) | (1,833,313) | ||||||||||||||||
Class C | (22,767,881) | (5,709,648) | 1,728,308 | (6,778,300) | (9,441,628) | (5,823,452) | ||||||||||||||||
Class Y | 2,624,601 | 427,629 | 370,963 | 11,234,734 | (2,265,155) | (1,386,906) | ||||||||||||||||
Total decrease in net assets | (108,764,740) | (11,652,748) | (80,262,874) | (127,170,851) | (74,966,988) | (70,514,136) | ||||||||||||||||
NET ASSETS: | ||||||||||||||||||||||
Beginning of year | 616,262,588 | 164,126,805 | 320,687,097 | 591,003,927 | 452,479,042 | 300,549,079 | ||||||||||||||||
End of year* | $ | 507,497,848 | $ | 152,474,057 | $ | 240,424,223 | $ | 463,833,076 | $ | 377,512,054 | $ | 230,034,943 | ||||||||||
*Including undistributed (overdistributed) net investment income of | $ | (1,913,920) | $ | – | $ | – | $ | 1,047,865 | $ | (12,730) | $ | 1,583,364 | ||||||||||
See Notes to Financial Statements |
48
DAVIS SERIES, INC. | Statements of Changes in Net Assets |
For the year ended December 31, 2010 |
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||||
OPERATIONS: | ||||||||||||||||||||||
Net investment income | $ | 5,562,463 | $ | 2,722,923 | $ | 82,134 | $ | 3,925,573 | $ | 5,773,611 | $ | 3,806,302 | ||||||||||
Net realized gain (loss) from investments and foreign currency transactions | 18,998,033 | 159,577 | – | 62,730,045 | (9,496,103) | 5,309,590 | ||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | 45,968,377 | (553,611) | – | (1,817,667) | 81,342,794 | 44,423,224 | ||||||||||||||||
Net increase in net assets resulting from operations | 70,528,873 | 2,328,889 | 82,134 | 64,837,951 | 77,620,302 | 53,539,116 | ||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: | ||||||||||||||||||||||
Net investment income: | ||||||||||||||||||||||
Class A | (3,786,969) | (2,626,180) | (72,990) | (3,475,871) | (4,498,839) | (3,982,069) | ||||||||||||||||
Class B | (90,218) | (271,442) | (4,924) | – | (125,426) | (35,139) | ||||||||||||||||
Class C | (670,299) | (709,744) | (3,773) | – | (641,290) | (248,560) | ||||||||||||||||
Class Y | (2,178,584) | (99,381) | (447) | (167,814) | (528,827) | (340,772) | ||||||||||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||||||||
Net increase (decrease) in net assets resulting from capital share transactions (Note 5): | ||||||||||||||||||||||
Class A | (55,569,115) | 12,429,430 | 31,629,598 | (148,779,153) | (7,173,917) | (27,677,695) | ||||||||||||||||
Class B | (6,075,493) | (2,180,488) | (6,005,721) | (4,314,420) | (4,084,525) | (2,013,551) | ||||||||||||||||
Class C | (28,269,427) | (6,003,338) | (6,575,538) | (10,062,569) | (16,368,414) | (4,088,011) | ||||||||||||||||
Class Y | 88,769,912 | 405,901 | 1,996,509 | 3,934,801 | (20,783,071) | (10,384,526) | ||||||||||||||||
Total increase (decrease) in net assets | 62,658,680 | 3,273,647 | 21,044,848 | (98,027,075) | 23,415,993 | 4,768,793 | ||||||||||||||||
NET ASSETS: | ||||||||||||||||||||||
Beginning of year | 553,603,908 | 160,853,158 | 299,642,249 | 689,031,002 | 429,063,049 | 295,780,286 | ||||||||||||||||
End of year* | $ | 616,262,588 | $ | 164,126,805 | $ | 320,687,097 | $ | 591,003,927 | $ | 452,479,042 | $ | 300,549,079 | ||||||||||
*Including undistributed net investment income of | $ | 768,483 | $ | – | $ | – | $ | 4,165,218 | $ | 43,760 | $ | 1,543,538 | ||||||||||
See Notes to Financial Statements |
49
DAVIS SERIES, INC. | Notes to Financial Statements |
December 31, 2011 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Davis Series, Inc. (a Maryland corporation) (“Company”), is registered under the Investment Company Act of 1940 (“40 Act”) as amended, as an open-end management investment company. Davis Opportunity Fund, Davis Government Bond Fund, Davis Government Money Market Fund, Davis Financial Fund, and Davis Appreciation & Income Fund are diversified under the 40 Act. Davis Real Estate Fund is non-diversified under the 40 Act. The Company operates as a series issuing shares of common stock in the following six funds (collectively “Funds”):
Davis Opportunity Fund seeks to achieve long-term growth of capital. It invests primarily in common stocks and other equity securities, and may invest in both domestic and foreign issuers.
Davis Government Bond Fund seeks to achieve current income. It invests in debt securities which are obligations of, or which are guaranteed by, the U.S. Government, its agencies or instrumentalities.
Davis Government Money Market Fund seeks to achieve as high a level of current income as is consistent with the principle of preservation of capital and maintenance of liquidity.
The Fund is a money market fund that seeks to preserve the value of your investment at $1.00 per share. There can be no guarantee that the Fund will be successful in maintaining a $1.00 share price.
It invests exclusively in U.S. Treasury securities, U.S. Government agency securities, U.S. Government agency mortgage securities (collectively “U.S. Government Securities”), and repurchase agreements collateralized by U.S. Government Securities. The Fund seeks to maintain liquidity and preserve capital by carefully monitoring the maturity of its investments. The Fund’s portfolio maintains a dollar-weighted average maturity of sixty days or less.
Davis Financial Fund seeks to achieve long-term growth of capital. It invests primarily in common stocks and other equity securities and will concentrate investments in companies principally engaged in the banking, insurance, and financial service industries.
Davis Appreciation & Income Fund seeks to achieve total return through a combination of growth and income. Under normal circumstances, the Fund invests in a diversified portfolio of convertible securities, common and preferred stock, and fixed income securities. It may invest in lower rated bonds commonly known as “junk bonds”. 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, 2011, the value of defaulted securities amounted to $1,250,200 (cost: $9,921,191) or 0.33% of the Fund’s net assets.
Davis Real Estate Fund seeks to achieve total return through a combination of growth and income. It invests primarily in securities of companies principally engaged in or related to the real estate industry or which own significant real estate assets or which primarily invest in real estate financial instruments.
Because of the risk inherent in any investment program, the Company cannot ensure that the investment objective of any of its series will be achieved.
The Company accounts separately for the assets, liabilities, and operations of each Fund. Each Fund offers shares in four classes, Class A, Class B, Class C, and Class Y. Class A shares are sold with a front-end sales charge, except for shares of Davis Government Money Market Fund, which are sold at net asset value. Class B and C shares are sold at net asset value and may be subject to a contingent deferred sales charge upon redemption. Class Y shares are sold at net asset value and are not subject to any contingent deferred sales charge. Class Y shares are only available to certain qualified investors. 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, such as distribution and transfer agent fees, are charged against the operations of that class. All expenses for Davis Government Money Market Fund are allocated evenly across all classes of shares based upon the relative portion of net assets represented by each class. All classes have identical rights with respect to voting (exclusive of each class’ distribution arrangement), liquidation, and distributions. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements.
50
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
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. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value. 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. Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Directors. These procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities at a discount of a last traded price, adjusting the value based on changes in an appropriate securities index and applying liquidity discounts, or valuing securities at the last traded price. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days, are valued at market value. For Davis Government Money Market Fund, in compliance with Rule 2a-7 of the 40 Act, securities are valued at amortized cost, which approximates market value. These 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 or most advantageous 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 methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Money market securities are valued using amortized cost, in accordance with rules under the 40 Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.
51
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
Value Measurements – (Continued)
The following is a summary of the inputs used as of December 31, 2011 in valuing each Fund’s investments carried at value:
Investments in Securities at Value | ||||||||||||||||||
Davis | Davis | |||||||||||||||||
Davis | Davis | Government | Davis | Appreciation | Davis | |||||||||||||
Opportunity | Government | Money Market | Financial | & Income | Real Estate | |||||||||||||
Fund | Bond Fund | Fund | Fund | Fund | Fund | |||||||||||||
Valuation inputs | ||||||||||||||||||
Level 1 – Quoted Prices: | ||||||||||||||||||
Equity securities: | ||||||||||||||||||
Consumer discretionary | $ | 59,169,019 | $ | – | $ | – | $ | 7,536,750 | $ | 30,865,690 | $ | – | ||||||
Consumer staples | 61,755,470 | – | – | 12,866,090 | 14,714,358 | – | ||||||||||||
Energy | 14,782,434 | – | – | 10,425,856 | 33,133,332 | – | ||||||||||||
Financials | 88,477,340 | – | – | 381,696,083 | 41,603,124 | 212,475,596 | ||||||||||||
Health care | 29,510,793 | – | – | – | 22,365,063 | – | ||||||||||||
Industrials | 74,531,463 | – | – | – | 42,234,445 | – | ||||||||||||
Information technology | 102,246,281 | – | – | – | 15,047,383 | – | ||||||||||||
Materials | 20,962,449 | – | – | – | 18,695,915 | – | ||||||||||||
Telecommunication services | 1,255,204 | – | – | – | – | – | ||||||||||||
Utilities | – | – | – | – | 14,359,896 | – | ||||||||||||
Total Level 1 | 452,690,453 | – | – | 412,524,779 | 233,019,206 | 212,475,596 | ||||||||||||
Level 2 – Other Significant | ||||||||||||||||||
Observable Inputs: | ||||||||||||||||||
Debt securities issued by U.S. Treasuries and U.S. Government corporations and agencies: | ||||||||||||||||||
Long-term | – | 145,441,310 | – | – | – | – | ||||||||||||
Short-term | – | – | 116,911,116 | – | – | – | ||||||||||||
Convertible debt securities | – | – | – | – | 124,411,275 | 10,389,653 | ||||||||||||
Corporate debt securities | – | – | – | – | 10,265,724 | – | ||||||||||||
Equity securities: | ||||||||||||||||||
Financials | 28,196,550 | – | – | 43,740,000 | 751,450 | 3,229,688 | ||||||||||||
Industrials | – | – | – | – | 7,384,839 | – | ||||||||||||
Short-term securities | 24,511,000 | 6,718,000 | 122,100,000 | – | – | 2,749,000 | ||||||||||||
Total Level 2 | 52,707,550 | 152,159,310 | 239,011,116 | 43,740,000 | 142,813,288 | 16,368,341 | ||||||||||||
Level 3 – Significant Unobservable | ||||||||||||||||||
Inputs: | ||||||||||||||||||
Corporate debt securities | – | – | – | – | 1,250,200 | – | ||||||||||||
Equity securities: | ||||||||||||||||||
Financials | – | – | – | 6,346,136 | – | – | ||||||||||||
Materials | 662,766 | – | – | 1,464,871 | – | – | ||||||||||||
Total Level 3 | 662,766 | – | – | 7,811,007 | 1,250,200 | – | ||||||||||||
Total Investments | $ | 506,060,769 | $ | 152,159,310 | $ | 239,011,116 | $ | 464,075,786 | $ | 377,082,694 | $ | 228,843,937 | ||||||
52
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
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, 2011:
Davis Opportunity Fund | Davis Financial Fund | Davis Appreciation & Income Fund | |||||||
Investment Securities: | |||||||||
Beginning balance | $ | – | $ | 2,853,406 | $ | – | |||
Change in unrealized appreciation (depreciation) | (21,219,284) | (12,382,183) | 568,575 | ||||||
Cost of purchases | 254,417 | 17,339,784 | – | ||||||
Transfers into Level 3 | 21,627,633 | – | 681,625 | ||||||
Ending balance | $ | 662,766 | $ | 7,811,007 | $ | 1,250,200 | |||
Change in unrealized appreciation (depreciation) during the period on Level 3 securities still held at December 31, 2011 and included in the change in net assets for the year | $ | (21,219,284) | $ | (12,382,183) | $ | 568,575 | |||
Transfers into Level 3 represent the beginning value of any security or instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds from sales may include securities received or delivered through corporate actions or exchanges. 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 sale of investments together with market gains and losses on such investments in the Statements of Operations.
53
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
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 tax is required. Davis Opportunity Fund and Davis Government Money Market Fund incurred a 2010 excise tax liability of $35,385 and $3,537, respectively, during the year ended December 31, 2011. 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, 2011, no provision for income tax is required in the Funds’ financial statements related to these tax positions. The Funds’ federal and state (Arizona and Maryland) 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 2008.
The Regulated Investment Company Modernization Act of 2010 (“Act”) was enacted on December 22, 2010. The Act makes changes to several tax rules impacting the Funds. Although the Act provides several benefits, including the unlimited carryforward of future capital losses, there may be a greater likelihood that all or a portion of each Fund’s pre-enactment capital loss carryforwards may expire without being utilized due to the fact that post-enactment capital losses are required to be utilized before pre-enactment capital loss carryforwards. At December 31, 2011, each Fund had available for federal income tax purposes unused capital loss carryforwards and post October 2011 ordinary and capital losses, which are deferred, as follows:
Capital Loss Carryforwards | |||||||||||||||
Davis | |||||||||||||||
Davis | Davis | Davis | Appreciation | Davis | |||||||||||
Opportunity | Government | Financial | & Income | Real Estate | |||||||||||
Fund | Bond Fund | Fund | Fund | Fund | |||||||||||
Pre-Enactment Expiring | |||||||||||||||
12/31/2012 | $ | – | $ | 1,243,000 | $ | – | $ | – | $ | – | |||||
12/31/2013 | – | 403,000 | – | – | – | ||||||||||
12/31/2014 | – | 304,000 | – | – | �� | – | |||||||||
12/31/2015 | – | 136,000 | – | – | – | ||||||||||
12/31/2016 | 18,020,000 | – | – | – | – | ||||||||||
12/31/2017 | 76,236,000 | 355,000 | – | 69,475,000 | 110,173,000 | ||||||||||
12/31/2018 | – | 625,000 | – | 31,335,000 | – | ||||||||||
Post-Enactment | |||||||||||||||
Short-term | – | 584,000 | – | – | – | ||||||||||
Long-term | – | 128,000 | – | – | – | ||||||||||
Total | $ | 94,256,000 | $ | 3,778,000 | $ | – | $ | 100,810,000 | $ | 110,173,000 | |||||
Utilized in 2011 | $ | 51,702,000 | $ | – | $ | 21,148,000 | $ | 20,258,000 | $ | 51,099,000 | |||||
Post October 2011 Ordinary Losses | Post October 2011 Capital Losses | |||||
Davis Opportunity Fund | $ | 1,244,000 | $ | – | ||
Davis Government Bond Fund | – | 253,000 | ||||
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.
54
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
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, paydowns on fixed income securities, 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, 2011, for Davis Opportunity Fund, amounts have been reclassified to reflect a decrease in overdistributed net investment income of $5,700,837, an increase in accumulated net realized losses from investments and foreign currency transactions of $2,968,014, and a decrease in paid in capital of $2,732,823; for Davis Government Bond Fund, amounts have been reclassified to reflect a decrease in overdistributed net investment income of $1,315,360, a decrease in accumulated net realized losses from investment transactions of $812,834, and a decrease in paid in capital of 2,128,194; for Davis Financial Fund, amounts have been reclassified to reflect an increase in undistributed net investment income of $6,733 and a corresponding decrease in accumulated net realized gains 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, 2011 and 2010 was as follows:
Ordinary Income | Long-Term Capital Gain | Return of Capital | Total | |||||||||
Davis Opportunity Fund | ||||||||||||
2011 | $ | 13,219,901 | $ | – | $ | – | $ | 13,219,901 | ||||
2010 | 6,726,070 | – | – | 6,726,070 | ||||||||
Davis Government Bond Fund | ||||||||||||
2011 | 3,211,644 | – | – | 3,211,644 | ||||||||
2010 | 3,706,747 | – | – | 3,706,747 | ||||||||
Davis Government Money Market Fund | ||||||||||||
2011 | 90,307 | – | – | 90,307 | ||||||||
2010 | 82,134 | – | – | 82,134 | ||||||||
Davis Financial Fund | ||||||||||||
2011 | 7,260,809 | 34,213,268 | – | 41,474,077 | ||||||||
2010 | 3,643,685 | – | – | 3,643,685 | ||||||||
Davis Appreciation & Income Fund | ||||||||||||
2011 | 6,445,723 | – | – | 6,445,723 | ||||||||
2010 | 5,794,382 | – | – | 5,794,382 | ||||||||
Davis Real Estate Fund | ||||||||||||
2011 | 3,178,772 | – | – | 3,178,772 | ||||||||
2010 | 4,606,540 | – | – | 4,606,540 |
As of December 31, 2011, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Davis Opportunity Fund | Davis Government Bond Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | ||||||||||
Undistributed net investment income | $ | – | $ | 6,236 | $ | 1,072,480 | $ | 5,565 | $ | 1,595,793 | ||||
Accumulated net investment loss | (1,243,924) | – | – | – | – | |||||||||
Accumulated net realized losses from investments and foreign currency transactions | (94,255,974) | (4,030,734) | – | (100,810,096) | (110,173,034) | |||||||||
Undistributed long-term capital gain | – | – | 7,077,921 | – | – | |||||||||
Net unrealized appreciation (depreciation) on investments | 33,571,269 | 1,317,499 | 86,624,188 | (22,451,923) | 25,289,290 | |||||||||
Total | $ | (61,928,629) | $ | (2,706,999) | $ | 94,774,589 | $ | (123,256,454) | $ | (83,287,951) | ||||
55
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
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.
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.
Unfunded Capital Commitments - Unfunded capital commitments represent agreements which obligate a fund to meet capital calls in the future. Payment would be made when a capital call is requested. Capital calls can only be made if and when certain requirements have been fulfilled; thus, the timing and the amount of such capital calls cannot readily be determined. Unfunded capital commitments are recorded when capital calls are requested. As of December 31, 2011, unfunded capital commitments in Davis Financial Fund amounted to $7,581,308.
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, 2011 were as follows:
Davis | |||||||||||||||
Davis | Davis | Davis | Appreciation | Davis | |||||||||||
Opportunity | Government | Financial | & Income | Real Estate | |||||||||||
Fund | Bond Fund | Fund | Fund | Fund | |||||||||||
Cost of purchases | $ | 300,232,942 | $ | 71,728,505 | $ | 66,296,176 | $ | 86,045,983 | $ | 175,108,415 | |||||
Proceeds of sales | 360,770,037 | 39,132,685 | 136,832,600 | 113,732,289 | 250,461,338 |
56
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 3 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Advisory fees are paid monthly to the Adviser. The annual rate for Davis Opportunity Fund, Davis Financial Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund is 0.55% of the average net assets for each fund. The annual rate for Davis Government Bond Fund is 0.30% of the average net assets. The annual rate for Davis Government Money Market Fund is 0.50% of the first $250 million of average net assets, 0.45% of the next $250 million, and 0.40% of average net assets in excess of $500 million. The Adviser agrees to waive some or all of its advisory fees and to reimburse expenses to the extent necessary so that Davis Government Money Market Fund’s investment income will not be less than zero until May 1, 2012. During the year ended December 31, 2011, such waivers and reimbursements amounted to $1,386,812. The Adviser may recoup from Davis Government Money Market Fund any of the operating expenses it has reimbursed (but not any of the management fees which it has waived) until the end of the third calendar year after the end of the calendar year in which such reimbursement occurs. The operating expenses which may potentially be reimbursed shall not begin to accrue until July 1, 2012. Any potential recovery is limited to an amount such that (i) net investment income will not be less then zero for any class of shares; and (ii) may not exceed 0.10% of net assets in any calendar year.
Boston Financial Data Services, Inc. (“BFDS”) is the Funds’ primary transfer agent. The Adviser is also paid for certain transfer agent services. The fee paid to the Adviser for these services during the year ended December 31, 2011 for Davis Opportunity Fund, Davis Government Bond Fund, Davis Government Money Market Fund, Davis Financial Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund amounted to $37,449, $12,192, $14,113, $61,111, $46,974, and $35,461, respectively. State Street Bank and Trust Company (“State Street Bank”) is the Funds’ primary accounting provider. Fees for such 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, 2011 for Davis Opportunity Fund, Davis Government Bond Fund, Davis Government Money Market Fund, Davis Financial Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund amounted to $8,250, $3,000, $4,500, $8,496, $6,750, and $4,500, respectively. Certain directors and officers of the Funds 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 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.
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 $75, $4, $6, $44, $69, and $25 for Davis Opportunity Fund, Davis Government Bond Fund, Davis Government Money Market Fund, Davis Financial Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund, respectively, during the year ended December 31, 2011.
57
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 5 - CAPITAL STOCK
At December 31, 2011, there were 10 billion shares of capital stock ($0.01 par value per share) authorized, of which 550 million shares each are designated to Davis Opportunity Fund, Davis Government Bond Fund, Davis Financial Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund, and 4.2 billion shares are designated to Davis Government Money Market Fund. Transactions in capital stock were as follows:
Class A | Year ended December 31, 2011 | |||||||||||||||||||
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||
Shares sold | 1,272,877 | 7,983,882 | 459,559,535 | 1,672,284 | 2,248,636 | 821,956 | ||||||||||||||
Shares issued in reinvestment of distributions | 279,998 | 422,698 | 81,089 | 858,270 | 148,617 | 94,427 | ||||||||||||||
1,552,875 | 8,406,580 | 459,640,624 | 2,530,554 | 2,397,253 | 916,383 | |||||||||||||||
Shares redeemed | (3,564,684) | (8,896,672) | (539,786,101) | (3,555,475) | (3,138,743) | (4,310,475) | ||||||||||||||
Net decrease | (2,011,809) | (490,092) | (80,145,477) | (1,024,921) | (741,490) | (3,394,092) | ||||||||||||||
Proceeds from shares sold | $ | 28,255,228 | $ | 44,825,388 | $ | 459,559,535 | $ | 51,349,444 | $ | 64,008,109 | $ | 20,133,972 | ||||||||
Proceeds from shares issued in reinvestment of distributions | 5,879,961 | 2,372,327 | 81,089 | 22,383,679 | 3,962,511 | 2,310,049 | ||||||||||||||
34,135,189 | 47,197,715 | 459,640,624 | 73,733,123 | 67,970,620 | 22,444,021 | |||||||||||||||
Cost of shares redeemed | (79,990,894) | (49,911,169) | (539,786,101) | (110,215,716) | (86,165,490) | (103,596,074) | ||||||||||||||
Net decrease | $ | (45,855,705) | $ | (2,713,454) | $ | (80,145,477) | $ | (36,482,593) | $ | (18,194,870) | $ | (81,152,053) | ||||||||
Class A | Year ended December 31, 2010 | |||||||||||||||||||
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||
Shares sold | 1,536,876 | 12,274,253 | 493,101,326 | 2,297,399 | 2,385,567 | 1,432,227 | ||||||||||||||
Shares issued in reinvestment of distributions | 167,725 | 431,947 | 71,770 | 77,720 | 133,215 | 157,969 | ||||||||||||||
1,704,601 | 12,706,200 | 493,173,096 | 2,375,119 | 2,518,782 | 1,590,196 | |||||||||||||||
Shares redeemed* | (4,483,484) | (10,516,292) | (461,543,498) | (7,341,103) | (2,840,848) | (2,873,564) | ||||||||||||||
Net increase (decrease) | (2,778,883) | 2,189,908 | 31,629,598 | (4,965,984) | (322,066) | (1,283,368) | ||||||||||||||
Proceeds from shares sold | $ | 31,137,838 | $ | 69,518,698 | $ | 493,101,326 | $ | 68,223,609 | $ | 60,264,692 | $ | 30,834,017 | ||||||||
Proceeds from shares issued in reinvestment of distributions | 3,549,074 | 2,448,085 | 71,770 | 2,388,330 | 3,442,223 | 3,462,309 | ||||||||||||||
34,686,912 | 71,966,783 | 493,173,096 | 70,611,939 | 63,706,915 | 34,296,326 | |||||||||||||||
Cost of shares redeemed* | (90,256,027) | (59,537,353) | (461,543,498) | (219,391,092) | (70,880,832) | (61,974,021) | ||||||||||||||
Net increase (decrease) | $ | (55,569,115) | $ | 12,429,430 | $ | 31,629,598 | $ | (148,779,153) | $ | (7,173,917) | $ | (27,677,695) | ||||||||
* Includes a redemption as a result of an in-kind transfer of securities for Davis Financial Fund (see Note 9 of the Notes to Financial Statements).
58
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 5 - CAPITAL STOCK – (CONTINUED)
Class B | Year ended December 31, 2011 | |||||||||||||||||||
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||
Shares sold | 39,326 | 736,725 | 4,014,015 | 28,244 | 137,843 | 36,744 | ||||||||||||||
Shares issued in reinvestment of distributions | 11,142 | 26,095 | 4,625 | 25,037 | 3,966 | 316 | ||||||||||||||
50,468 | 762,820 | 4,018,640 | 53,281 | 141,809 | 37,060 | |||||||||||||||
Shares redeemed | (389,327) | (1,300,062) | (6,235,308) | (170,423) | (281,995) | (111,459) | ||||||||||||||
Net decrease | (338,859) | (537,242) | (2,216,668) | (117,142) | (140,186) | (74,399) | ||||||||||||||
Proceeds from shares sold | $ | 746,599 | $ | 4,125,563 | $ | 4,014,015 | $ | 771,726 | $ | 3,873,026 | $ | 884,158 | ||||||||
Proceeds from shares issued in reinvestment of distributions | 200,450 | 146,050 | 4,625 | 554,064 | 103,051 | 7,570 | ||||||||||||||
947,049 | 4,271,613 | 4,018,640 | 1,325,790 | 3,976,077 | 891,728 | |||||||||||||||
Cost of shares redeemed | (7,535,725) | (7,273,158) | (6,235,308) | (4,501,616) | (7,769,769) | (2,725,041) | ||||||||||||||
Net decrease | $ | (6,588,676) | $ | (3,001,545) | $ | (2,216,668) | $ | (3,175,826) | $ | (3,793,692) | $ | (1,833,313) | ||||||||
Class B | Year ended December 31, 2010 | |||||||||||||||||||
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||
Shares sold | 62,276 | 1,018,359 | 4,889,548 | 42,243 | 139,161 | 36,478 | ||||||||||||||
Shares issued in reinvestment of distributions | 4,693 | 39,926 | 4,678 | – | 4,308 | 1,462 | ||||||||||||||
66,969 | 1,058,285 | 4,894,226 | 42,243 | 143,469 | 37,940 | |||||||||||||||
Shares redeemed | (420,574) | (1,445,708) | (10,899,947) | (215,943) | (309,443) | (131,822) | ||||||||||||||
Net decrease | (353,605) | (387,423) | (6,005,721) | (173,700) | (165,974) | (93,882) | ||||||||||||||
Proceeds from shares sold | $ | 1,072,598 | $ | 5,756,229 | $ | 4,889,548 | $ | 1,069,703 | $ | 3,512,920 | $ | 792,262 | ||||||||
Proceeds from shares issued in reinvestment of distributions | 85,136 | 225,675 | 4,678 | – | 110,998 | 31,502 | ||||||||||||||
1,157,734 | 5,981,904 | 4,894,226 | 1,069,703 | 3,623,918 | 823,764 | |||||||||||||||
Cost of shares redeemed | (7,233,227) | (8,162,392) | (10,899,947) | (5,384,123) | (7,708,443) | (2,837,315) | ||||||||||||||
Net decrease | $ | (6,075,493) | $ | (2,180,488) | $ | (6,005,721) | $ | (4,314,420) | $ | (4,084,525) | $ | (2,013,551) | ||||||||
59
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 5 - CAPITAL STOCK – (CONTINUED)
Class C | Year ended December 31, 2011 | |||||||||||||||||||
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||
Shares sold | 216,426 | 1,826,413 | 12,133,901 | 342,475 | 392,251 | 90,891 | ||||||||||||||
Shares issued in reinvestment of distributions | 82,522 | 69,236 | 3,010 | 195,375 | 23,017 | 5,318 | ||||||||||||||
298,948 | 1,895,649 | 12,136,911 | 537,850 | 415,268 | 96,209 | |||||||||||||||
Shares redeemed | (1,417,564) | (2,915,948) | (10,408,603) | (774,974) | (763,404) | (337,304) | ||||||||||||||
Net increase (decrease) | (1,118,616) | (1,020,299) | 1,728,308 | (237,124) | (348,136) | (241,095) | ||||||||||||||
Proceeds from shares sold | $ | 4,318,363 | $ | 10,261,979 | $ | 12,133,901 | $ | 9,517,299 | $ | 10,978,346 | $ | 2,238,645 | ||||||||
Proceeds from shares issued in reinvestment of distributions | 1,562,150 | 388,653 | 3,010 | 4,458,451 | 608,181 | 129,366 | ||||||||||||||
5,880,513 | 10,650,632 | 12,136,911 | 13,975,750 | 11,586,527 | 2,368,011 | |||||||||||||||
Cost of shares redeemed | (28,648,394) | (16,360,280) | (10,408,603) | (20,754,050) | (21,028,155) | (8,191,463) | ||||||||||||||
Net increase (decrease) | $ | (22,767,881) | $ | (5,709,648) | $ | 1,728,308 | $ | (6,778,300) | $ | (9,441,628) | $ | (5,823,452) | ||||||||
Class C | Year ended December 31, 2010 | |||||||||||||||||||
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||
Shares sold | 318,727 | 2,832,791 | 7,393,271 | 384,075 | 394,449 | 176,276 | ||||||||||||||
Shares issued in reinvestment of distributions | 33,520 | 108,367 | 3,619 | – | 22,695 | 10,699 | ||||||||||||||
352,247 | 2,941,158 | 7,396,890 | 384,075 | 417,144 | 186,975 | |||||||||||||||
Shares redeemed | (1,928,119) | (4,005,937) | (13,972,428) | (784,085) | (1,074,125) | (378,573) | ||||||||||||||
Net decrease | (1,575,872) | (1,064,779) | (6,575,538) | (400,010) | (656,981) | (191,598) | ||||||||||||||
Proceeds from shares sold | $ | 5,867,026 | $ | 16,070,333 | $ | 7,393,271 | $ | 10,055,476 | $ | 10,051,523 | $ | 3,843,946 | ||||||||
Proceeds from shares issued in reinvestment of distributions | 639,573 | 614,427 | 3,619 | – | 592,560 | 234,328 | ||||||||||||||
6,506,599 | 16,684,760 | 7,396,890 | 10,055,476 | 10,644,083 | 4,078,274 | |||||||||||||||
Cost of shares redeemed | (34,776,026) | (22,688,098) | (13,972,428) | (20,118,045) | (27,012,497) | (8,166,285) | ||||||||||||||
Net decrease | $ | (28,269,427) | $ | (6,003,338) | $ | (6,575,538) | $ | (10,062,569) | $ | (16,368,414) | $ | (4,088,011) | ||||||||
60
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 5 - CAPITAL STOCK – (CONTINUED)
Class Y | Year ended December 31, 2011 | |||||||||||||||||||
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||
Shares sold | 6,361,278 | 907,893 | 1,225,124 | 609,801 | 462,903 | 177,140 | ||||||||||||||
Shares issued in reinvestment of distributions | 225,999 | 16,662 | 630 | 84,297 | 19,011 | 11,384 | ||||||||||||||
6,587,277 | 924,555 | 1,225,754 | 694,098 | 481,914 | 188,524 | |||||||||||||||
Shares redeemed | (6,596,097) | (850,243) | (854,791) | (354,708) | (581,862) | (243,798) | ||||||||||||||
Net increase (decrease) | (8,820) | 74,312 | 370,963 | 339,390 | (99,948) | (55,274) | ||||||||||||||
Proceeds from shares sold | $ | 148,508,858 | $ | 5,137,234 | $ | 1,225,124 | $ | 20,076,520 | $ | 13,481,404 | $ | 4,400,140 | ||||||||
Proceeds from shares issued in reinvestment of distributions | 4,879,322 | 94,181 | 630 | 2,250,738 | 509,190 | 280,218 | ||||||||||||||
153,388,180 | 5,231,415 | 1,225,754 | 22,327,258 | 13,990,594 | 4,680,358 | |||||||||||||||
Cost of shares redeemed | (150,763,579) | (4,803,786) | (854,791) | (11,092,524) | (16,255,749) | (6,067,264) | ||||||||||||||
Net increase (decrease) | $ | 2,624,601 | $ | 427,629 | $ | 370,963 | $ | 11,234,734 | $ | (2,265,155) | $ | (1,386,906) | ||||||||
Class Y | Year ended December 31, 2010 | |||||||||||||||||||
Davis Opportunity Fund | Davis Government Bond Fund | Davis Government Money Market Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||||||||||||
Shares sold | 6,734,815 | 1,177,828 | 2,468,855 | 554,282 | 533,653 | 394,630 | ||||||||||||||
Shares issued in reinvestment of distributions | 95,890 | 16,014 | 447 | 4,859 | 19,052 | 14,942 | ||||||||||||||
6,830,705 | 1,193,842 | 2,469,302 | 559,141 | 552,705 | 409,572 | |||||||||||||||
Shares redeemed* | (2,714,820) | (1,121,822) | (472,793) | (439,318) | (1,395,096) | (922,977) | ||||||||||||||
Net increase (decrease) | 4,115,885 | 72,020 | 1,996,509 | 119,823 | (842,391) | (513,405) | ||||||||||||||
Proceeds from shares sold | $ | 143,906,979 | $ | 6,718,043 | $ | 2,468,855 | $ | 16,501,316 | $ | 13,351,234 | $ | 8,481,571 | ||||||||
Proceeds from shares issued in reinvestment of distributions | 2,087,506 | 91,412 | 447 | 152,674 | 491,768 | 332,033 | ||||||||||||||
145,994,485 | 6,809,455 | 2,469,302 | 16,653,990 | 13,843,002 | 8,813,604 | |||||||||||||||
Cost of shares redeemed* | (57,224,573) | (6,403,554) | (472,793) | (12,719,189) | (34,626,073) | (19,198,130) | ||||||||||||||
Net increase (decrease) | $ | 88,769,912 | $ | 405,901 | $ | 1,996,509 | $ | 3,934,801 | $ | (20,783,071) | $ | (10,384,526) |
* Includes a redemption as a result of an in-kind transfer of securities for Davis Appreciation & Income Fund (see Note 9 of the Notes to Financial Statements).
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%. At December 31, 2011, Davis Financial Fund had borrowings outstanding of $2,361,000. During the year ended December 31, 2011, the average daily loan balance was $1,102,888 at an average interest rate of 1.40%. Davis Financial Fund had gross borrowings of $65,582,000 and gross repayments of $63,221,000 during the year ended December 31, 2011. The maximum amount of borrowings outstanding at any month end was $2,361,000 during the year ended December 31, 2011. Davis Opportunity Fund, Davis Government Bond Fund, Davis Government Money Market Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund had no borrowings during the year ended December 31, 2011.
61
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 7 - DISTRIBUTION AND UNDERWRITING FEES
Class A Shares of Davis Opportunity Fund, Davis Government Bond Fund, Davis Financial Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund - Class A shares of the Funds are sold at net asset value plus a sales charge and are redeemed at net asset value.
Davis Distributors, LLC, the Funds’ Underwriter (“Underwriter” or “Distributor”) received commissions earned on sales of Class A shares of the Funds (other than Davis Government Money Market Fund) of which a portion was retained by the Underwriter and the remaining was re-allowed to investment dealers.
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 the annual rate up to 1/4 of 1.00% of the average net assets maintained by the responsible dealers.
Year ended December 31, 2011 | ||||||||||||||
Davis | ||||||||||||||
Davis | Davis | Davis | Appreciation | Davis | ||||||||||
Opportunity | Government | Financial | & Income | Real Estate | ||||||||||
Fund | Bond Fund | Fund | Fund | Fund | ||||||||||
Commissions retained by Underwriter | $ | 16,940 | $ | 6,233 | $ | 50,912 | $ | 25,035 | $ | 10,337 | ||||
Commissions re-allowed to investment dealers | 93,320 | 39,933 | 198,888 | 133,931 | 62,404 | |||||||||
Total commissions earned on sales of Class A shares | $ | 110,260 | $ | 46,166 | $ | 249,800 | $ | 158,966 | $ | 72,741 | ||||
Class A service fee | $ | 599,213 | $ | 227,642 | $ | 729,861 | $ | 640,195 | $ | 453,731 | ||||
Class B Shares of Davis Opportunity Fund, Davis Government Bond Fund, Davis Financial Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund - Class B shares of the Funds are sold at net asset value and are redeemed at net asset value. A contingent deferred sales charge may be assessed on shares redeemed within six years of purchase.
Each of the Funds (other than Davis Government Money Market Fund) pays the Distributor a distribution fee on Class B shares at an annual rate 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 Financial Industry Regulatory Authority, Inc. (“FINRA”), which currently is 1.00%. The Funds pay the distribution fee on Class B shares in order: (i) to pay the Distributor commissions on Class B shares which have been sold and (ii) to enable the Distributor to pay service fees on Class B shares which have been sold.
Commission advances by the Distributor on the sale of Class B shares are re-allowed to qualified selling dealers.
A contingent deferred sales charge is imposed upon redemption of certain Class B shares of the Funds within six years of the original purchase. The charge is a declining percentage starting at 4.00% of the lesser of net asset value of the shares redeemed or the total cost of such shares.
Year ended December 31, 2011 | ||||||||||||||
Davis | ||||||||||||||
Davis | Davis | Davis | Appreciation | Davis | ||||||||||
Opportunity | Government | Financial | & Income | Real Estate | ||||||||||
Fund | Bond Fund | Fund | Fund | Fund | ||||||||||
Distribution Plan Payments: | ||||||||||||||
Distribution fees | $ | 118,165 | $ | 88,032 | $ | 67,592 | $ | 130,874 | $ | 37,097 | ||||
Service fees | 38,971 | 28,912 | 21,785 | 43,386 | 12,076 | |||||||||
Commission advances by the Distributor | ||||||||||||||
on the sale of Class B shares | 10,081 | 26,565 | 19,836 | 53,825 | 15,132 | |||||||||
Contingent deferred sales charges received by the | ||||||||||||||
Distributor from Class B shares | 30,236 | 40,197 | 27,386 | 55,510 | 6,418 | |||||||||
62
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 7 - DISTRIBUTION AND UNDERWRITING FEES – (CONTINUED)
Class C Shares of Davis Opportunity Fund, Davis Government Bond Fund, Davis Financial Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund - Class C shares of the Funds are sold at net asset value and are redeemed at net asset value. A contingent deferred sales charge may be assessed on shares redeemed within the first year of purchase.
Each of the Funds (other than Davis Government Money Market Fund) pays the Distributor a distribution fee on Class C shares at an annual rate 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 FINRA, which currently is 1.00%. The Funds pay the distribution fee on Class C shares in order: (i) to pay the Distributor commissions on Class C shares which have been sold and (ii) to enable the Distributor to pay service fees on Class C shares which have been sold.
Commission advances by the Distributor on the sale of Class C shares are re-allowed to qualified selling dealers.
A contingent deferred sales charge of 1.00% is imposed upon redemption of certain Class C shares of the Funds within the first year of the original purchase.
Year ended December 31, 2011 |
Davis | ||||||||||||||||||||||||
Davis | Davis | Davis | Appreciation | Davis | ||||||||||||||||||||
Opportunity | Government | Financial | & Income | Real Estate | ||||||||||||||||||||
Fund | Bond Fund | Fund | Fund | Fund | ||||||||||||||||||||
Distribution Plan Payments: | ||||||||||||||||||||||||
Distribution fees | $ | 765,001 | $ | 222,123 | $ | 490,645 | $ | 604,622 | $ | 208,373 | ||||||||||||||
Service fees | 255,001 | 74,041 | 163,548 | 201,541 | 69,458 | |||||||||||||||||||
Commission advances by the Distributor | ||||||||||||||||||||||||
on the sale of Class C shares | 21,141 | 9,021 | 78,418 | 48,184 | 11,991 | |||||||||||||||||||
Contingent deferred sales charges received by the | ||||||||||||||||||||||||
Distributor from Class C shares | 2,324 | 4,882 | 14,339 | 7,219 | 2,818 | |||||||||||||||||||
Davis Government Money Market Fund - All classes of shares of Davis Government Money Market Fund are sold to investors at net asset value. The shareholders of Davis Government Money Market Fund have adopted a Distribution expense plan in accordance with Rule 12b-1, which does not provide for any amounts to be paid directly to the Distributor as either compensation or reimbursement for distributing shares of the Fund, but does authorize the use of the advisory fee to the extent such fee may be considered to be indirectly financing any activity or expense which is primarily intended to result in the sale of Fund shares.
NOTE 8 - 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 Opportunity Fund amounted to $28,196,550 or 5.55% of the Fund’s net assets as of December 31, 2011. The aggregate value of restricted securities in Davis Financial Fund amounted to $51,893,016 or 11.19% of the Fund’s net assets as of December 31, 2011.
Information regarding restricted securities is as follows:
Fund | Security | Acquisition Date | Shares/Units | Cost per Share/Unit | Valuation per Share/Unit as of December 31, 2011 | ||||||
Davis Opportunity | |||||||||||
Fund | Oaktree Capital Group LLC, Class A | 05/21/07 | 626,590 | $ | 25.72 | $ | 45.00 | ||||
Davis Financial | |||||||||||
Fund | Oaktree Capital Group LLC, Class A | 05/21/07 | 972,000 | $ | 21.03 | $ | 45.00 | ||||
Davis Financial | |||||||||||
Fund | RHJ International, 144A | 06/04/07 | 396,550 | $ | 19.64 | $ | 4.56 | ||||
Davis Financial | |||||||||||
Fund | SKBHC Holdings LLC | 11/08/10 | 1,604 | $ | 4,867.13 | $ | 3,957.09 |
63
DAVIS SERIES, INC. | Notes to Financial Statements – (Continued) |
December 31, 2011 |
NOTE 9 - IN-KIND REDEMPTION
During the year ended December 31, 2010, Davis Financial Fund Class A shareholders redeemed 2,565,515 shares in exchange for portfolio securities valued at $80,121,022. Davis Financial Fund realized a gain of $32,752,484.
During the year ended December 31, 2010, Davis Appreciation & Income Fund Class Y shareholders redeemed 863,798 shares in exchange for portfolio securities valued at $21,232,149. Davis Appreciation & Income Fund realized a gain of $2,364,890.
These gains were not taxable to the Funds for federal income tax purposes.
64
DAVIS SERIES, INC. | ||||
The following financial information represents selected data for each share of capital stock outstanding throughout each period: | ||||
Income(Loss) from Investment Operations |
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) | Total from Investment Operations | |
Davis Opportunity Fund Class A: | ||||
Year ended December 31, 2011 | $22.57 | $0.20d | $(1.02) | $(0.82) |
Year ended December 31, 2010 | $20.08 | $0.24d | $2.54 | $2.78 |
Year ended December 31, 2009 | $13.92 | $0.09d | $6.15 | $6.24 |
Year ended December 31, 2008 | $25.19 | $0.09d | $(11.35) | $(11.26) |
Year ended December 31, 2007 | $27.52 | $0.05d | $(0.43) | $(0.38) |
Davis Opportunity Fund Class B: | ||||
Year ended December 31, 2011 | $19.34 | $(0.01)d | $(0.88) | $(0.89) |
Year ended December 31, 2010 | $17.21 | $0.05d | $2.17 | $2.22 |
Year ended December 31, 2009 | $12.00 | $(0.05)d | $5.26 | $5.21 |
Year ended December 31, 2008 | $21.89 | $(0.07)d | $(9.82) | $(9.89) |
Year ended December 31, 2007 | $24.17 | $(0.15)d | $(0.36) | $(0.51) |
Davis Opportunity Fund Class C: | ||||
Year ended December 31, 2011 | $20.34 | $0.02d | $(0.92) | $(0.90) |
Year ended December 31, 2010 | $18.10 | $0.07d | $2.29 | $2.36 |
Year ended December 31, 2009 | $12.60 | $(0.03)d | $5.53 | $5.50 |
Year ended December 31, 2008 | $22.97 | $(0.05)d | $(10.32) | $(10.37) |
Year ended December 31, 2007 | $25.27 | $(0.15)d | $(0.38) | $(0.53) |
Davis Opportunity Fund Class Y: | ||||
Year ended December 31, 2011 | $23.22 | $0.27d | $(1.06) | $(0.79) |
Year ended December 31, 2010 | $20.65 | $0.30d | $2.63 | $2.93 |
Year ended December 31, 2009 | $14.31 | $0.15d | $6.33 | $6.48 |
Year ended December 31, 2008 | $25.94 | $0.17d | $(11.73) | $(11.56) |
Year ended December 31, 2007 | $28.29 | $0.13d | $(0.44) | $(0.31) |
Davis Government Bond Fund Class A: | ||||
Year ended December 31, 2011 | $5.62 | $0.13 | $(0.02) | $0.11 |
Year ended December 31, 2010 | $5.66 | $0.15 | $(0.04) | $0.11 |
Year ended December 31, 2009 | $5.65 | $0.18 | $0.01 | $0.19 |
Year ended December 31, 2008 | $5.60 | $0.19 | $0.05 | $0.24 |
Year ended December 31, 2007 | $5.52 | $0.21 | $0.08 | $0.29 |
Davis Government Bond Fund Class B: | ||||
Year ended December 31, 2011 | $5.60 | $0.08 | $(0.02) | $0.06 |
Year ended December 31, 2010 | $5.65 | $0.10 | $(0.05) | $0.05 |
Year ended December 31, 2009 | $5.64 | $0.13 | $0.01 | $0.14 |
Year ended December 31, 2008 | $5.58 | $0.15 | $0.06 | $0.21 |
Year ended December 31, 2007 | $5.51 | $0.17 | $0.07 | $0.24 |
Davis Government Bond Fund Class C: | ||||
Year ended December 31, 2011 | $5.62 | $0.08 | $(0.02) | $0.06 |
Year ended December 31, 2010 | $5.66 | $0.10 | $(0.04) | $0.06 |
Year ended December 31, 2009 | $5.65 | $0.13 | $0.01 | $0.14 |
Year ended December 31, 2008 | $5.60 | $0.15 | $0.05 | $0.20 |
Year ended December 31, 2007 | $5.52 | $0.17 | $0.08 | $0.25 |
65
Financial Highlights | |||||||||||||||||||||||
Dividends and Distributions | Ratios to Average Net Assets |
Dividends from Net Investment Income | Distributions from Realized Gains | Return of Capital | Total Distributions | Net Asset Value, End of Period | Total Returna | Net Assets, End of Period (in thousands) | Gross Expense Ratio | Net Expense Ratiob | Net Investment Income (Loss) Ratio | Portfolio Turnoverc |
$(0.59) | $– | $– | $(0.59) | $21.16 | (3.63)% | $235,743 | 1.02% | 1.02% | 0.90% | 53% |
$(0.29) | $– | $– | $(0.29) | $22.57 | 13.92%e | $296,880 | 1.05% | 1.05% | 1.18% | 24% |
$(0.08) | $– | $– | $(0.08) | $20.08 | 44.81% | $319,877 | 1.17% | 1.17% | 0.56% | 24% |
$– | $– | $(0.01) | $(0.01) | $13.92 | (44.71)% | $266,525 | 1.15% | 1.15% | 0.47% | 29% |
$(0.18) | $(1.77) | $– | $(1.95) | $25.19 | (1.42)% | $676,995 | 1.06% | 1.06% | 0.16% | 37% |
$(0.32) | $– | $– | $(0.32) | $18.13 | (4.61)% | $12,228 | 1.98% | 1.98% | (0.06)% | 53% |
$(0.09) | $– | $– | $(0.09) | $19.34 | 12.91%e | $19,593 | 1.99% | 1.99% | 0.24% | 24% |
$– | $– | $– | $– | $17.21 | 43.42% | $23,525 | 2.11% | 2.11% | (0.38)% | 24% |
$– | $– | $– | $– | $12.00 | (45.18)% | $21,951 | 2.00% | 2.00% | (0.38)% | 29% |
$– | $(1.77) | $– | $(1.77) | $21.89 | (2.15)% | $60,386 | 1.85% | 1.85% | (0.63)% | 37% |
$(0.36) | $– | $– | $(0.36) | $19.08 | (4.40)% | $87,674 | 1.82% | 1.82% | 0.10% | 53% |
$(0.12) | $– | $– | $(0.12) | $20.34 | 13.06%e | $116,235 | 1.84% | 1.84% | 0.39% | 24% |
$– | $– | $– | $– | $18.10 | 43.65% | $131,972 | 1.96% | 1.96% | (0.23)% | 24% |
$– | $– | $– | $– | $12.60 | (45.15)% | $119,676 | 1.91% | 1.91% | (0.29)% | 29% |
$– | $(1.77) | $– | $(1.77) | $22.97 | (2.14)% | $287,054 | 1.81% | 1.81% | (0.59)% | 37% |
$(0.66) | $– | $– | $(0.66) | $21.77 | (3.38)% | $171,853 | 0.77% | 0.77% | 1.15% | 53% |
$(0.36) | $– | $– | $(0.36) | $23.22 | 14.31%e | $183,554 | 0.75% | 0.75% | 1.48% | 24% |
$(0.14) | $– | $– | $(0.14) | $20.65 | 45.31% | $78,231 | 0.81% | 0.81% | 0.92% | 24% |
$– | $– | $(0.07) | $(0.07) | $14.31 | (44.54)% | $42,119 | 0.85% | 0.85% | 0.77% | 29% |
$(0.27) | $(1.77) | $– | $(2.04) | $25.94 | (1.13)% | $78,537 | 0.78% | 0.78% | 0.44% | 37% |
$(0.13) | $– | $– | $(0.13) | $5.60 | 2.01% | $108,955 | 0.74% | 0.74% | 1.49% | 27% |
$(0.15) | $– | $– | $(0.15) | $5.62 | 1.95% | $112,118 | 0.75% | 0.75% | 2.00% | 33% |
$(0.18) | $– | $– | $(0.18) | $5.66 | 3.37% | $100,617 | 0.72% | 0.72% | 2.78% | 48% |
$(0.19) | $– | $– | $(0.19) | $5.65 | 4.38% | $91,852 | 0.87% | 0.87% | 3.29% | 67% |
$(0.21) | $– | $– | $(0.21) | $5.60 | 5.45% | $27,224 | 1.03% | 1.03% | 3.95% | 60% |
$(0.08) | $– | $– | $(0.08) | $5.58 | 1.09% | $10,970 | 1.66% | 1.66% | 0.57% | 27% |
$(0.10) | $– | $– | $(0.10) | $5.60 | 0.84% | $14,021 | 1.65% | 1.65% | 1.10% | 33% |
$(0.13) | $– | $– | $(0.13) | $5.65 | 2.42% | $16,322 | 1.65% | 1.65% | 1.85% | 48% |
$(0.15) | $– | $– | $(0.15) | $5.64 | 3.77% | $16,442 | 1.69% | 1.69% | 2.47% | 67% |
$(0.17) | $– | $– | $(0.17) | $5.58 | 4.49% | $10,402 | 1.77% | 1.77% | 3.21% | 60% |
$(0.08) | $– | $– | $(0.08) | $5.60 | 1.16% | $28,729 | 1.59% | 1.59% | 0.64% | 27% |
$(0.10) | $– | $– | $(0.10) | $5.62 | 1.10% | $34,572 | 1.56% | 1.56% | 1.19% | 33% |
$(0.13) | $– | $– | $(0.13) | $5.66 | 2.49% | $40,882 | 1.58% | 1.58% | 1.92% | 48% |
$(0.15) | $– | $– | $(0.15) | $5.65 | 3.63% | $39,261 | 1.63% | 1.63% | 2.53% | 67% |
$(0.17) | $– | $– | $(0.17) | $5.60 | 4.66% | $14,754 | 1.75% | 1.75% | 3.23% | 60% |
66
DAVIS SERIES, INC. | ||||
The following financial information represents selected data for each share of capital stock outstanding throughout each period: |
Income (Loss) from Investment Operations |
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) | Total from Investment Operations | |
Davis Government Bond Fund Class Y: | ||||
Year ended December 31, 2011 | $5.66 | $0.14 | $(0.02) | $0.12 |
Year ended December 31, 2010 | $5.70 | $0.16 | $(0.04) | $0.12 |
Year ended December 31, 2009 | $5.69 | $0.18 | $0.01 | $0.19 |
Year ended December 31, 2008 | $5.64 | $0.20 | $0.05 | $0.25 |
Year ended December 31, 2007 | $5.57 | $0.22 | $0.07 | $0.29 |
Davis Government Money Market Fund Class A, B, C, & Y: | ||||
Year ended December 31, 2011 | $1.000 | $–f | $– | $–f |
Year ended December 31, 2010 | $1.000 | $–f | $– | $–f |
Year ended December 31, 2009 | $1.000 | $0.003 | $– | $0.003 |
Year ended December 31, 2008 | $1.000 | $0.022 | $– | $0.022 |
Year ended December 31, 2007 | $1.000 | $0.046 | $– | $0.046 |
Davis Financial Fund Class A: | ||||
Year ended December 31, 2011 | $31.76 | $0.27d | $(3.17) | $(2.90) |
Year ended December 31, 2010 | $28.76 | $0.23d | $3.00 | $3.23 |
Year ended December 31, 2009 | $19.72 | $0.12d | $8.96 | $9.08 |
Year ended December 31, 2008 | $40.71 | $0.16d | $(19.02) | $(18.86) |
Year ended December 31, 2007 | $47.48 | $0.20 | $(2.56) | $(2.36) |
Davis Financial Fund Class B: | ||||
Year ended December 31, 2011 | $27.27 | $(0.06)d | $(2.72) | $(2.78) |
Year ended December 31, 2010 | $24.79 | $(0.08)d | $2.56 | $2.48 |
Year ended December 31, 2009 | $17.17 | $(0.11)d | $7.73 | $7.62 |
Year ended December 31, 2008 | $36.03 | $(0.14)d | $(16.75) | $(16.89) |
Year ended December 31, 2007 | $42.82 | $(0.20)d | $(2.28) | $(2.48) |
Davis Financial Fund Class C: | ||||
Year ended December 31, 2011 | $28.05 | $(0.01)d | $(2.78) | $(2.79) |
Year ended December 31, 2010 | $25.44 | $(0.03)d | $2.64 | $2.61 |
Year ended December 31, 2009 | $17.58 | $(0.08)d | $7.94 | $7.86 |
Year ended December 31, 2008 | $36.77 | $(0.11)d | $(17.11) | $(17.22) |
Year ended December 31, 2007 | $43.58 | $(0.18)d | $(2.32) | $(2.50) |
Davis Financial Fund Class Y: | ||||
Year ended December 31, 2011 | $32.48 | $0.30d | $(3.22) | $(2.92) |
Year ended December 31, 2010 | $29.40 | $0.25d | $3.09 | $3.34 |
Year ended December 31, 2009 | $20.16 | $0.14d | $9.16 | $9.30 |
Year ended December 31, 2008 | $41.57 | $0.20d | $(19.44) | $(19.24) |
Year ended December 31, 2007 | $48.38 | $0.28 | $(2.61) | $(2.33) |
Davis Appreciation & Income Fund Class A: | ||||
Year ended December 31, 2011 | $28.08 | $0.45d | $(2.53) | $(2.08) |
Year ended December 31, 2010 | $23.70 | $0.40d | $4.38 | $4.78 |
Year ended December 31, 2009 | $16.15 | $0.38d | $7.58 | $7.96 |
Year ended December 31, 2008 | $28.21 | $0.54d | $(12.06) | $(11.52) |
Year ended December 31, 2007 | $29.71 | $0.61 | $(0.18) | $0.43 |
67
Financial Highlights – (Continued) | ||||||||||||||||||||||
Dividends and Distributions | Ratios to Average Net Assets |
Dividends from Net Investment Income | Distributions from Realized Gains | Return of Capital | Total Distributions | Net Asset Value, End of Period | Total Returna | Net Assets, End of Period (in thousands) | Gross Expense Ratio | Net Expense Ratiob | Net Investment Income (Loss) Ratio | Portfolio Turnoverc |
$(0.14) | $– | $– | $(0.14) | $5.64 | 2.16% | $3,821 | 0.60% | 0.60% | 1.63% | 27% |
$(0.16) | $– | $– | $(0.16) | $5.66 | 2.11% | $3,416 | 0.58% | 0.58% | 2.17% | 33% |
$(0.18) | $– | $– | $(0.18) | $5.70 | 3.44% | $3,032 | 0.64% | 0.64% | 2.86% | 48% |
$(0.20) | $– | $– | $(0.20) | $5.69 | 4.43% | $1,626 | 0.82% | 0.82% | 3.34% | 67% |
$(0.22) | $– | $– | $(0.22) | $5.64 | 5.32% | $410 | 0.99% | 0.99% | 3.99% | 60% |
$–f | $– | $– | $–f | $1.000 | 0.03% | $240,424 | 0.63% | 0.12% | 0.03% | NA |
$–f | $– | $– | $–f | $1.000 | 0.02% | $320,687 | 0.61% | 0.21% | 0.02% | NA |
$(0.003) | $– | $– | $(0.003) | $1.000 | 0.28% | $299,642 | 0.63% | 0.47% | 0.30% | NA |
$(0.022) | $– | $– | $(0.022) | $1.000 | 2.26% | $395,211 | 0.57% | 0.57% | 2.30% | NA |
$(0.046) | $– | $– | $(0.046) | $1.000 | 4.69% | $596,446 | 0.55% | 0.55% | 4.59% | NA |
$(0.47) | $(2.03) | $– | $(2.50) | $26.36 | (9.02)% | $377,885 | 0.91% | 0.91% | 0.87% | 12% |
$(0.23) | $– | $– | $(0.23) | $31.76 | 11.25% | $487,948 | 0.95% | 0.95% | 0.79% | 2% |
$(0.04) | $– | $– | $(0.04) | $28.76 | 46.02%g | $584,626 | 1.05% | 1.05% | 0.51% | 9% |
$(0.16) | $(1.97) | $– | $(2.13) | $19.72 | (45.62)% | $425,854 | 1.06% | 1.06% | 0.50% | 9% |
$(0.10) | $(4.31) | $– | $(4.41) | $40.71 | (5.31)% | $740,235 | 0.97% | 0.97% | 0.44% | 15% |
$(0.11) | $(2.03) | $– | $(2.14) | $22.35 | (10.09)% | $6,483 | 2.02% | 2.02% | (0.24)% | 12% |
$– | $– | $– | $– | $27.27 | 10.00% | $11,103 | 2.07% | 2.07% | (0.33)% | 2% |
$– | $– | $– | $– | $24.79 | 44.38%g | $14,397 | 2.19% | 2.19% | (0.63)% | 9% |
$– | $(1.97) | $– | $(1.97) | $17.17 | (46.13)% | $14,236 | 2.08% | 2.08% | (0.52)% | 9% |
$– | $(4.31) | $– | $(4.31) | $36.03 | (6.17)% | $50,341 | 1.87% | 1.87% | (0.46)% | 15% |
$(0.17) | $(2.03) | $– | $(2.20) | $23.06 | (9.85)% | $52,859 | 1.81% | 1.81% | (0.03)% | 12% |
$– | $– | $– | $– | $28.05 | 10.26% | $70,964 | 1.86% | 1.86% | (0.12)% | 2% |
$– | $– | $– | $– | $25.44 | 44.71%g | $74,530 | 1.95% | 1.95% | (0.39)% | 9% |
$– | $(1.97) | $– | $(1.97) | $17.58 | (46.09)% | $58,474 | 1.94% | 1.94% | (0.38)% | 9% |
$– | $(4.31) | $– | $(4.31) | $36.77 | (6.10)% | $87,216 | 1.83% | 1.83% | (0.42)% | 15% |
$(0.53) | $(2.03) | $– | $(2.56) | $27.00 | (8.90)% | $26,607 | 0.75% | 0.75% | 1.03% | 12% |
$(0.26) | $– | $– | $(0.26) | $32.48 | 11.37% | $20,989 | 0.86% | 0.86% | 0.88% | 2% |
$(0.06) | $– | $– | $(0.06) | $29.40 | 46.13%g | $15,478 | 0.95% | 0.95% | 0.61% | 9% |
$(0.20) | $(1.97) | $– | $(2.17) | $20.16 | (45.56)% | $8,958 | 0.97% | 0.97% | 0.59% | 9% |
$(0.17) | $(4.31) | $– | $(4.48) | $41.57 | (5.15)% | $8,844 | 0.84% | 0.84% | 0.57% | 15% |
$(0.46) | $– | $– | $(0.46) | $25.54 | (7.45)% | $269,626 | 0.93% | 0.93% | 1.61% | 20% |
$(0.40) | $– | $– | $(0.40) | $28.08 | 20.34% | $317,324 | 0.94% | 0.94% | 1.58% | 20% |
$(0.41) | $– | $– | $(0.41) | $23.70 | 49.68% | $275,411 | 1.06% | 1.06% | 1.98% | 15% |
$(0.54) | $– | $– | $(0.54) | $16.15 | (41.43)% | $227,940 | 1.07% | 1.07% | 2.24% | 28% |
$(0.60) | $(1.33) | $– | $(1.93) | $28.21 | 1.30% | $567,728 | 1.01% | 1.01% | 2.04% | 23% |
68
DAVIS SERIES, INC. | ||||||
The following financial information represents selected data for each share of capital stock outstanding throughout each period: | ||||||
Income (Loss) from Investment Operations |
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) | Total from Investment Operations |
Davis Appreciation & Income Fund Class B: | |||||
Year ended December 31, 2011 | $27.78 | $0.19d | $(2.49) | $(2.30) | |
Year ended December 31, 2010 | $23.44 | $0.16d | $4.35 | $4.51 | |
Year ended December 31, 2009 | $15.98 | $0.20d | $7.49 | $7.69 | |
Year ended December 31, 2008 | $27.90 | $0.33d | $(11.92) | $(11.59) | |
Year ended December 31, 2007 | $29.40 | $0.38d | $(0.21) | $0.17 | |
Davis Appreciation & Income Fund Class C: | |||||
Year ended December 31, 2011 | $28.22 | $0.22d | $(2.53) | $(2.31) | |
Year ended December 31, 2010 | $23.81 | $0.19d | $4.42 | $4.61 | |
Year ended December 31, 2009 | $16.24 | $0.23d | $7.59 | $7.82 | |
Year ended December 31, 2008 | $28.34 | $0.35d | $(12.10) | $(11.75) | |
Year ended December 31, 2007 | $29.84 | $0.38d | $(0.20) | $0.18 | |
Davis Appreciation & Income Fund Class Y: | |||||
Year ended December 31, 2011 | $28.21 | $0.51d | $(2.55) | $(2.04) | |
Year ended December 31, 2010 | $23.80 | $0.44d | $4.43 | $4.87 | |
Year ended December 31, 2009 | $16.22 | $0.44d | $7.60 | $8.04 | |
Year ended December 31, 2008 | $28.33 | $0.61d | $(12.11) | $(11.50) | |
Year ended December 31, 2007 | $29.84 | $0.72d | $(0.22) | $0.50 | |
Davis Real Estate Fund Class A: | |||||
Year ended December 31, 2011 | $23.38 | $0.31d | $1.94 | $2.25 | |
Year ended December 31, 2010 | $19.79 | $0.30d | $3.65 | $3.95 | |
Year ended December 31, 2009 | $15.29 | $0.39d | $4.35 | $4.74 | |
Year ended December 31, 2008 | $30.50 | $0.42d | $(14.70) | $(14.28) | |
Year ended December 31, 2007 | $46.42 | $0.81d | $(7.45) | $(6.64) | |
Davis Real Estate Fund Class B: | |||||
Year ended December 31, 2011 | $23.08 | $0.03d | $1.91 | $1.94 | |
Year ended December 31, 2010 | $19.55 | $0.08d | $3.57 | $3.65 | |
Year ended December 31, 2009 | $15.13 | $0.22d | $4.32 | $4.54 | |
Year ended December 31, 2008 | $30.29 | $0.21d | $(14.63) | $(14.42) | |
Year ended December 31, 2007 | $46.16 | $0.53d | $(7.46) | $(6.93) | |
Davis Real Estate Fund Class C: | |||||
Year ended December 31, 2011 | $23.38 | $0.10d | $1.95 | $2.05 | |
Year ended December 31, 2010 | $19.80 | $0.12d | $3.64 | $3.76 | |
Year ended December 31, 2009 | $15.32 | $0.27d | $4.36 | $4.63 | |
Year ended December 31, 2008 | $30.63 | $0.24d | $(14.79) | $(14.55) | |
Year ended December 31, 2007 | $46.56 | $0.52d | $(7.50) | $(6.98) | |
Davis Real Estate Fund Class Y: | |||||
Year ended December 31, 2011 | $23.69 | $0.36d | $1.98 | $2.34 | |
Year ended December 31, 2010 | $20.05 | $0.33d | $3.75 | $4.08 | |
Year ended December 31, 2009 | $15.46 | $0.46d | $4.41 | $4.87 | |
Year ended December 31, 2008 | $30.82 | $0.50d | $(14.85) | $(14.35) | |
Year ended December 31, 2007 | $46.81 | $0.92d | $(7.47) | $(6.55) | |
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. Sales charges are not reflected in the total returns. | ||||
b | The ratios in this column reflect the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements and/or waivers 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. | ||||
d | Per share calculations were based on average shares outstanding for the period. |
69
Financial Highlights – (Continued) | ||||||||||||||||||||||
Dividends and Distributions | Ratios to Average Net Assets |
Dividends from Net Investment Income | Distributions from Realized Gains | Return of Capital | Total Distributions | Net Asset Value, End of Period | Total Returna | Net Assets, End of Period (in thousands) | Gross Expense Ratio | Net Expense Ratiob | Net Investment Income (Loss) Ratio | Portfolio Turnoverc |
$(0.21) | $– | $– | $(0.21) | $25.27 | (8.31)% | $13,604 | 1.84% | 1.84% | 0.70% | 20% |
$(0.17) | $– | $– | $(0.17) | $27.78 | 19.31% | $18,850 | 1.85% | 1.85% | 0.67% | 20% |
$(0.23) | $– | $– | $(0.23) | $23.44 | 48.28% | $19,801 | 1.99% | 1.99% | 1.05% | 15% |
$(0.33) | $– | $– | $(0.33) | $15.98 | (41.92)% | $16,891 | 1.93% | 1.93% | 1.38% | 28% |
$(0.34) | $(1.33) | $– | $(1.67) | $27.90 | 0.46% | $44,099 | 1.84% | 1.84% | 1.21% | 23% |
$(0.24) | $– | $– | $(0.24) | $25.67 | (8.21)% | $68,768 | 1.74% | 1.74% | 0.80% | 20% |
$(0.20) | $– | $– | $(0.20) | $28.22 | 19.43% | $85,427 | 1.76% | 1.76% | 0.76% | 20% |
$(0.25) | $– | $– | $(0.25) | $23.81 | 48.36% | $87,739 | 1.89% | 1.89% | 1.15% | 15% |
$(0.35) | $– | $– | $(0.35) | $16.24 | (41.85)% | $79,699 | 1.87% | 1.87% | 1.44% | 28% |
$(0.35) | $(1.33) | $– | $(1.68) | $28.34 | 0.50% | $169,456 | 1.80% | 1.80% | 1.25% | 23% |
$(0.52) | $– | $– | $(0.52) | $25.65 | (7.30)% | $25,514 | 0.74% | 0.74% | 1.80% | 20% |
$(0.46) | $– | $– | $(0.46) | $28.21 | 20.66% | $30,878 | 0.73% | 0.73% | 1.79% | 20% |
$(0.46) | $– | $– | $(0.46) | $23.80 | 50.05% | $46,112 | 0.80% | 0.80% | 2.24% | 15% |
$(0.61) | $– | $– | $(0.61) | $16.22 | (41.25)% | $49,314 | 0.79% | 0.79% | 2.52% | 28% |
$(0.68) | $(1.33) | $– | $(2.01) | $28.33 | 1.55% | $105,327 | 0.75% | 0.74% | 2.31% | 23% |
$(0.32) | $– | $– | $(0.32) | $25.31 | 9.69% | $180,770 | 1.08% | 1.08% | 1.26% | 68% |
$(0.36) | $– | $– | $(0.36) | $23.38 | 20.09% | $246,372 | 1.11% | 1.11% | 1.36% | 43% |
$(0.24) | $– | $– | $(0.24) | $19.79 | 31.72% | $233,995 | 1.35% | 1.35% | 2.55% | 64% |
$(0.09) | $(0.51) | $(0.33) | $(0.93) | $15.29 | (46.89)% | $202,878 | 1.23% | 1.23% | 1.62% | 44% |
$(0.58) | $(8.70) | $– | $(9.28) | $30.50 | (14.87)% | $460,644 | 1.08% | 1.08% | 1.84% | 46% |
$(0.04) | $– | $– | $(0.04) | $24.98 | 8.42% | $4,252 | 2.19% | 2.19% | 0.15% | 68% |
$(0.12) | $– | $– | $(0.12) | $23.08 | 18.73% | $5,645 | 2.20% | 2.20% | 0.27% | 43% |
$(0.12) | $– | $– | $(0.12) | $19.55 | 30.38% | $6,616 | 2.46% | 2.46% | 1.44% | 64% |
$(0.05) | $(0.51) | $(0.18) | $(0.74) | $15.13 | (47.41)% | $7,581 | 2.13% | 2.13% | 0.72% | 44% |
$(0.24) | $(8.70) | $– | $(8.94) | $30.29 | (15.52)% | $24,872 | 1.87% | 1.87% | 1.05% | 46% |
$(0.12) | $– | $– | $(0.12) | $25.31 | 8.80% | $26,408 | 1.89% | 1.89% | 0.45% | 68% |
$(0.18) | $– | $– | $(0.18) | $23.38 | 19.07% | $30,034 | 1.92% | 1.92% | 0.55% | 43% |
$(0.15) | $– | $– | $(0.15) | $19.80 | 30.70% | $29,222 | 2.18% | 2.18% | 1.72% | 64% |
$(0.05) | $(0.51) | $(0.20) | $(0.76) | $15.32 | (47.33)% | $28,789 | 2.00% | 2.00% | 0.85% | 44% |
$(0.25) | $(8.70) | $– | $(8.95) | $30.63 | (15.48)% | $73,594 | 1.84% | 1.84% | 1.08% | 46% |
$(0.39) | $– | $– | $(0.39) | $25.64 | 9.97% | $18,605 | 0.79% | 0.79% | 1.55% | 68% |
$(0.44) | $– | $– | $(0.44) | $23.69 | 20.52% | $18,498 | 0.77% | 0.77% | 1.70% | 43% |
$(0.28) | $– | $– | $(0.28) | $20.05 | 32.37% | $25,947 | 0.92% | 0.92% | 2.98% | 64% |
$(0.10) | $(0.51) | $(0.40) | $(1.01) | $15.46 | (46.75)% | $29,282 | 0.89% | 0.89% | 1.96% | 44% |
$(0.74) | $(8.70) | $– | $(9.44) | $30.82 | (14.58)% | $57,995 | 0.75% | 0.75% | 2.17% | 46% |
e | Davis Opportunity Fund made a favorable investment in an initial public offering (IPO), which had a material impact on the investment performance, adding approximately 2% to the Fund's total return in 2010. The rapid appreciation was an unusual occurrence and such performance may not continue in the future. |
f | Less than $0.0005 per share. |
g | Davis Financial Fund received a favorable class action settlement from a company that it no longer owns. This settlement had a material impact on the investment performance, adding approximately 1% to the Fund's total return in 2009. This was a one-time event that is unlikely to be repeated. |
See Notes to Financial Statements |
70
DAVIS SERIES, INC. | Report of Independent Registered Public Accounting Firm |
The Shareholders and Board of Directors
Davis Series, Inc.:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Davis Opportunity Fund, Davis Government Bond Fund, Davis Government Money Market Fund, Davis Financial Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund (each a series of the Davis Series, Inc.), as of December 31, 2011, 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, 2011, by correspondence with the custodian and brokers or by 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 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 Opportunity Fund, Davis Government Bond Fund, Davis Government Money Market Fund, Davis Financial Fund, Davis Appreciation & Income Fund, and Davis Real Estate Fund as of December 31, 2011, 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 23, 2012
71
DAVIS SERIES, INC. | Fund Information |
Federal Income Tax Information (Unaudited)
In early 2012, shareholders will receive information regarding all dividends and distributions paid to them by the Funds during the calendar year 2011. Regulations of the U.S. Treasury Department require the Funds to report this information to the Internal Revenue Service.
The information and distributions reported herein may differ from the information reported as distributions taxable to certain shareholders for the calendar year 2011 with their 2011 Form 1099-DIV.
The information is presented to assist shareholders in reporting distributions received from the Funds to the Internal Revenue Service. Because of the complexity of the federal regulations that may affect your individual tax return and the many variations in state and local regulations, we recommend that you consult your tax adviser for specific guidance.
Each Fund designates the following amounts distributed during the calendar year ended December 31, 2011, as dividends eligible for the corporate dividends-received deduction, qualified dividend income, and long-term capital gain distributions.
Davis Opportunity Fund | Davis Financial Fund | Davis Appreciation & Income Fund | Davis Real Estate Fund | |||||
Income dividends | $ | 13,219,901 | $ | 7,260,809 | $ | 6,445,723 | $ | 3,178,772 |
Income qualifying for corporate dividends-received deduction | $ | 9,591,894 | $ | 7,260,809 | $ | 5,258,878 | $ | 168,881 |
73% | 100% | 82% | 5% | |||||
Qualified dividend income | $ | 12,532,357 | $ | 7,260,809 | $ | 5,696,389 | $ | 191,263 |
95% | 100% | 88% | 6% | |||||
Long-term capital gain distributions | $ | – | $ | 34,213,268 | $ | – | $ | – |
�� |
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 and Form N-MFP
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. In addition, Davis Government Money Market Fund files its complete schedule of portfolio holdings with the SEC for each month end on Form N-MFP. The Funds’ Form N-Q and Davis Government Money Market Fund’s Form N-MFP are available without charge, upon request, by calling 1-800-279-0279, on the Funds’ website at www.davisfunds.com, or 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.
72
DAVIS SERIES, INC. | Privacy Notice and Householding |
Privacy Notice
While you generally will be dealing with a broker-dealer or other financial adviser, we may collect information about you from your account application and other forms that you may deliver to us. We use this information to process your requests and transactions; for example, to provide you with additional information about our Funds, to open an account for you, or to process a transaction. In order to service your account and execute your transactions, we may provide your personal information to firms that assist us in servicing your account, such as our transfer agent. We may also provide your name and address to one of our agents for the purpose of mailing to you your account statement and other information about our products and services. We require these outside firms and agents to protect the confidentiality of your information and to use the information only for the purpose for which the disclosure is made. We do not provide customer names and addresses to outside firms, organizations, or individuals except in furtherance of our business relationship with you or as otherwise allowed by law.
We restrict access to nonpublic personal information about you to those employees who need to know that information to provide products or services to you. We maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your personal information.
Householding
To avoid sending duplicate copies of materials to households, the Funds will mail only one copy of each prospectus, Annual and Semi-Annual Report to shareholders having the same last name and address on the Funds’ records. The consolidation of these mailings, called householding, benefits the Funds through reduced mailing expense. If you do not want the mailing of these documents to be combined with those to other members of your household, please contact the Davis Funds by phone at 1-800-279-0279. Individual copies of current prospectuses and reports will be sent to you within 30 days after the Funds receive your request to stop householding.
73
DAVIS SERIES, 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, Rothman, Hoffberger and Hollander, 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 Corporation (insurance company). | 13 | Director, Washington Post Co. (publishing company); Director, Colfax Corp. (engineering and manufacturer of pumps and fluid handling equipment). |
G. Bernard Hamilton (03/18/37) | Director (Retired 12/31/11) | Director since 1978 | Managing General Partner, Avanti Partners, L.P. (investment partnership), retired 2005. | 13 | none |
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); 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). | 13 | Director, Modine Manufacturing, Inc. (heat transfer technology); Director, Chicago Bridge & Iron Company, N.V. (industrial construction and engineering); Director, Fifth Third Bancorp (diversified financial services). |
74
DAVIS SERIES, 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, 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.
75
Supplement dated March 2, 2012
To
DAVIS SERIES, INC.
Statutory Prospectus
Dated May 1, 2011
As of March 2, 2012 Charles Cavanaugh resigned from Davis Selected Advisers, L.P. Accordingly, Mr. Cavanaugh no longer serves as a portfolio manager of Davis Financial Fund. Kenneth Feinberg will continue to serve as Davis Financial Fund’s portfolio manager.
The section of the statutory prospectus entitled “Portfolio Managers” within the Fund Summary for Davis Financial Fund has been amended and restated as below.
Portfolio Manager
Experience with this Fund | Primary Title with Investment Adviser or Sub-Adviser | |
Kenneth Feinberg | Since May 1997 | Vice President Davis Selected Advisers-NY, Inc. |
The section of the statutory prospectus entitled “Portfolio Managers” relating to Davis Financial Fund has been amended and restated as below.
Portfolio Managers
Davis Financial Fund
· | Kenneth Feinberg has served as a Portfolio Manager of Davis Financial Fund since May 1997, and also manages other equity funds advised by Davis Advisors. Mr. Feinberg started with Davis Advisors as a research analyst in December 1994. |
DAVIS SERIES, 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 | |
Overnight Address: | |
30 Dan Road | |
Canton, Massachusetts 02021-2809 | |
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 | |
707 Seventeenth Street, Suite 2700 | |
Denver, Colorado 80202 |
For more information about Davis Series, 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.
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, 2011 and December 31, 2010 were $147,600 and $147,600, 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, 2011 and December 31, 2010 were $0 and $0, respectively. |
(c) | Tax Fees. The aggregate Tax Fees billed by KPMG for professional services rendered for tax compliance, tax advice and tax planning for the fiscal year ends December 31, 2011 and December 31, 2010 were $38,720 and $37,539, 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, 2011 and December 31, 2010 were $0 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 independentt 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 2-1 of Regulation S-X.
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(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, 2011 and December 31, 2010. 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 SERIES, INC.
By /s/ Kenneth C. Eich
Kenneth C. Eich
Principal Executive Officer
Date: March 9, 2012
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: March 9, 2012
By /s/ Douglas A. Haines
Douglas A. Haines
Principal Financial Officer
Date: March 9, 2012