DAVIS HIGH INCOME FUND
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
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Dear Shareholder:
Davis High Income Fund has continued to perform well. Over the most
recent annual period ending September 30, 1995, Davis High Income's net
asset value total return was 9.04% (1) compared to the 11.76% average
total return of the 108 funds in Lipper Analytical Inc.'s High Current Yield
Category as published in the October 17, 1995 edition of The Wall Street
---------------
Journal.
- -------
Davis High Income continues to be top-ranked based on risk-adjusted
performance over the longer term. It has the second highest Sharpe Ratio
(a risk-adjusted measure developed by Nobel laureate William Sharpe) out
of the 70 funds tracked by Morningstar. Quoting from Morningstar, "The
higher the Sharpe Ratio, the better the fund's historical risk-adjusted
performance." Your Fund's average annual net asset value total return over
the three year period ended September 30, 1995 of 10.34% compared very
favorably to the 9.52% of the 70 funds followed by Morningstar. More
importantly, while besting the absolute averages, Davis High Income had
the lowest volatility (as measured by standard deviation) over that period
out of all 70 funds. Its three year standard deviation of 2.99 was 60% of
that of the category average of 4.98. Using this more intuitive measure of
risk-adjusted performance, Davis High Income's three year average annual
total return per three year standard deviation (volatility or risk measure)
was the highest of the 70 funds tracked (2). Thus, shareholders earned an
extremely good return for the risk that was taken. Morningstar, Inc. gives
Davis High Income its second highest rating of PPPP (four stars) for the
three years ending September 30, 1995, based on its outstanding relative
risk-adjusted total return. Morningstar gives Davis High Income three
stars for its longer term, overall (historical profile) rating (3).
Davis High Income's strong risk-adjusted and absolute performance has
resulted from several factors. Over the longer term, we have used several
methods to try to achieve maximum return per risk, including being
diversified with over 135 positions, concentrating on the upside potential
and downside protection of each individual investment on its own,
avoiding those issues which most likely will not be able to make it
through an entire business cycle, and investing in less followed segments
of the market where better yield per credit quality and risk/reward ratios
can be found.
The high yield market has continued to see a different picture than the
rest of the financial markets. For example, while the equity market has
driven up to new highs, the high yield bond market has seen continuing
credit deterioration in several areas. The best example was the
unexpected bankruptcy of Caldor, a large retailer on the East Coast. The
high yield market has also been concerned about the quality of some of the
recent new issues. Accordingly, yields per credit quality of the weaker
high yield bonds have actually increased while the general bond market
and the equity market's prices have been rising. We think the high yield
market's recent underperformance and the other markets' very high
valuation levels make a diversified portfolio of high yield bonds an
attractive area to invest in to diversify away from the equity and general
bond markets.
Looking forward, we continue to position your Fund by giving up some
upside potential to pick up increased downside protection. Because
economic signals are mixed and we are concerned the economy could slip
into a recession, we believe our cautious positioning is still appropriate.
We are accomplishing this stance by owning discount bonds (bonds with
smaller coupons that trade at much lower than average dollar prices),
highly rated, private label mortgage-backed securities, higher rated
taxable municipal bonds, and cushion bonds (bonds with larger than
average coupons). Holding these types of positions that have fewer
natural buyers has allowed us to keep a fairly high yield even with our
average rating of BB+. To further limit volatility, we continue to own
few positions backed by companies with cyclical profiles. Also, we
continue to hold over 135 positions;
<PAGE>
DAVIS HIGH INCOME FUND
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
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this high level of diversification has also contributed to the low
risk/volatility rankings that your Fund has achieved.
We think the high yield, high risk bond market is an excellent
diversification vehicle because it offers equity-size returns in a separate
investment category. High yield bonds also make a good alternative to
other fixed income markets because their short average lives and high
coupons combined to give them less interest rate risk than most types of
bonds. The high yield bond market has finally lagged the equity market
which it outperformed during 1991, 1992, 1993 and 1994. Right now, the
equity market is still at or near record high levels. We think that those
seeking equity-size returns should consider the high yield bond market as
a diversification vehicle.
In summary, your Fund has continued to perform well especially on a
risk-adjusted basis. We believe that the high yield bond category offers
value especially relative to equities which are at record high levels.
Because we are concerned that the economy could slip into recession, we
will continue to keep your portfolio postured conservatively. We believe
this defensive stance should result in continued strong relative and
absolute performance over the next year.
Sincerely,
Shelby M.C. Davis B. Clark Stamper
President Portfolio Manager
November 3, 1995
(1) Annual average rates of return for Davis High Income Fund, Inc. A
shares, including the maximum front end sales charge of 4.75%, for the
one, five and ten years ending 9/30/95 are 3.77%, 8.56% and 10.07%,
respectively.
(2) Individual fund Sharpe Ratios, total returns, standard deviations were
calculated by Morningstar and published in its Principia for Mutual Funds
diskette software (October 1995, version 1.0). Category average total
return, category average standard deviation, and individual fund total
return/standard deviation statistics were calculated from that published
data.
(3) The Morningstar proprietary ratings reflect historical risk-adjusted
performance as of 9/30/95. The ratings are subject to change every
month. Past performance is no guarantee of future results. Morningstar
ratings are calculated from the fund's three-, five- and ten-year average
annual returns in excess of 90-day Treasury bill returns with appropriate
fee adjustments, and a risk factor that reflects fund performance below
90-day T-bill returns. Davis High Income A received 4, 3 and 2 stars for
the three, five and ten year periods, respectively. The Fund was rated
against 2,271, 1,564 and 715 funds in a combined universe of equity,
fixed-income and hybrid funds for the respective periods. The Fund's
overall rating is three stars. Ten percent of the funds in an investment
category receive five stars, 22.5% receive four stars, 35% receive three
stars, 22.5% receive two stars, and the bottom 10% receive one star. The
ratings listed were earned by the shares listed above only. Star ratings
for the other classes may vary, and are available only for classes with at
least three years of performance history.
<PAGE>
<TABLE>
Davis High Income Fund, Inc.
Schedule of Investments
At September 30, 1995 (Unaudited)
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CORPORATE BONDS AND NOTES - (74.41%)
<CAPTION>
Value
Principal (Note 1)
- --------- ------
<S> <C> <C>
AVIATION - (0.38%)
$ 250,000 Hudson General Corp., Conv. Sub. Deb., 7.00%, 07/15/11................................................ $ 232,500
-------------
BUILDING AND BUILDING PRODUCTS _ (1.17%)
750,000 Waxman Industries, Inc., Sr. Secured Notes, 12.25%, 09/01/98.......................................... 720,000
-------------
CHEMICALS - (0.83%)
500,000 Pioneer Americas Acquisition Corp., Sr. Notes, 13.375%, 04/01/05...................................... 512,500
-------------
COMPUTER PRODUCTS AND SERVICES - (2.17%)
550,000 Data Switch Corp., Conv. Sub. Deb., 8.25%, 06/01/02................................................... 525,250
169,000 San Jacinto Holdings Inc., Sr. Sub. Notes, 8.00%, 12/31/00............................................ 139,256
88,416 San Jacinto Holdings Inc., Sub. Deb., 8.00%, 12/31/00<F1>............................................. 68,301
250,000 Sapiens International N.V., Euro Conv. Notes, 5.00%, 09/20/03......................................... 85,000
500,000 Triad Systems Corp., Sr. Notes, 12.25%, 08/01/99...................................................... 525,000
-------------
1,342,807
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CONSUMER PRODUCTS & MERCHANDISE - (1.68%)
100,000 American Safety Razor Corp., Sr. Notes, Ser. A, 9.875%, 08/01/05...................................... 100,000
1,000,000 International Semi-Tech Microelectronics Inc., Sr. Notes, Zero Cpn.,
08/15/03<F1>........................................................................................ 535,000
100,000 L.A. Gear, Inc., Conv. Sub. Deb., 7.75%, 11/30/02..................................................... 49,375
350,000 MacAndrews & Forbes Holdings, Inc., Sub. Deb., 13.00%, 03/01/99....................................... 353,063
-------------
1,037,438
-------------
DEFENSE CONTRACTORS & PRODUCTS - (3.16%)
1,000,000 AM General Corporation, Sr. Notes, 12.875%,05/01/02................................................... 990,000
200,000 DBA Systems, Inc., Conv. Sub. Deb., 8.25%, 11/01/10................................................... 182,000
750,000 Tracor, Inc., Sr. Sub. Notes, 10.875%, 08/15/01....................................................... 778,125
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1,950,125
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ECOLOGICAL/ENVIRONMENTAL - (2.37%)
700,000 Clean Harbors, Inc., Sr. Sub. Notes, 12.50%, 05/15/01................................................. 630,000
833,000 International Technology Corp., Sr. Notes, 9.375%, 07/01/96........................................... 836,124
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1,466,124
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EDUCATION - (0.52%)
100,000 Herff Jones Co., Sr. Sub. Notes, 11.00%, 08/15/05..................................................... 102,250
250,000 La Petite Holdings Corp., Sr. Secured Notes, 9.625%, 08/01/01......................................... 216,250
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318,500
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ELECTRONICS - (1.73%)
43,000 Andersen Group, Inc., Conv. Sub. Deb., 10.50%,10/15/02................................................ 34,776
250,000 Audiovox Corp., Conv. Sub. Deb., 6.25%, 03/15/01...................................................... 167,500
600,000 Comptronix Corp., Conv. Sub. Deb., 6.75%, 03/01/02.................................................... 420,000
300,000 Diceon Electronics Inc., Conv. Sub. Deb., 5.50%, 03/01/12............................................. 192,000
250,000 Dictaphone Corporation, St. Sub. Notes, 11.75%, 08/01/05.............................................. 251,250
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1,065,526
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<PAGE>
Davis High Income Fund, Inc.
Schedule of Investments - Continued
At September 30, 1995 (Unaudited)
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CORPORATE BONDS AND NOTES - Continued
Value
Principal (Note 1)
- --------- ------
ENERGY - (9.24%)
$ 100,000 Amerigas Partners L.P., Sr. Notes, Ser. B, 10.125%, 04/15/07......................................... $ 105,000
630,000 Empire Gas Corp., Sr. Secured Notes, 7.00%, 07/15/04.................................................. 522,900
500,000 Falcon Drilling Inc., Sr. Notes, Ser. B, 9.75%, 01/15/01.............................................. 492,500
1,000,000 Giant Industries Inc., Gtd. Sr. Sub. Notes, 9.75%, 11/15/03........................................... 990,000
500,000 HS Resources Inc., Sr. Sub. Notes, 9.875%, 12/01/03................................................... 491,875
100,000 Moran Energy Inc., Conv. Sub. Deb., 8.75%, 01/15/08................................................... 73,750
212,000 Moran Energy International N.V., Euro Conv. Sub. Deb., 8.00%, 11/01/95................................ 209,880
1,000,000 Nuevo Energy Co., Sr. Sub. Notes, 12.50%, 06/15/02.................................................... 1,092,500
250,000 Petroleum Heat & Power Co., Inc., Sub. Notes, 10.125%, 04/01/03....................................... 242,500
500,000 Trident NGL Holdings, Inc., Sub. Notes, 10.25%, 04/15/03.............................................. 555,000
500,000 Tuboscope Vetco International Corp., Gtd. Sr. Sub. Notes, 10.75%, 04/15/03............................ 500,000
500<F5> WRT Energy Corp., Sr. Notes, 13.875%, 03/01/02 (Units of $1,000
par value)........................................................................................ 430,000
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5,705,905
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EQUIPMENT LEASING - (0.65%)
670,700 Technical Equipment Leasing Corp., Jr. Sub. Deb. Series A, 18.375%,
04/01/96............................................................................................ 402,420
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EQUIPMENT MANUFACTURING - (0.99%)
750,000 Terex Corp., Sr. Secured Notes, 13.75%, 05/15/02...................................................... 611,250
-------------
FINANCIAL SERVICES AND INSURANCE - (2.90%)
50,000 CII Financial, Inc., Conv. Sub. Deb., 7.50%, 09/15/01................................................. 42,125
640,000 CVD Financial Corp., Variable Rate Bds., 9.00%, 07/31/08.............................................. 358,400
320,000 Employee Benefit Plans Inc., Conv. Sub. Deb., 6.75%, 07/31/06......................................... 314,000
500,000 Home Holdings, Inc., Sr. Notes, 7.875%, 12/15/03...................................................... 405,000
500,000 PennCorp Financial Group, Inc., Sr. Sub. Notes, 9.25%, 12/15/03....................................... 497,500
400,000 Scovill, Inc., Sub. Deb., 16.00%, 08/15/99............................................................ 174,000
-------------
1,791,025
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FOOD SERVICE AND DISTRIBUTION - (11.80%)
500,000 Darling International Inc., 1st Priority Sr. Sub. Notes, 11.00%, 07/15/00............................. 500,000
750,000 Envirodyne Industries, Inc., 1st Priority Sr. Secured Notes, 12.00%, 06/15/00......................... 748,125
1,154,000 Farm Fresh Inc., Conv. Sub. Deb., 7.50%, 03/01/10..................................................... 652,601
500,000 Fresh Del Monte Produce N.V., Series A, Sr. Notes, 10.00%, 05/01/03 <F2>.............................. 422,500
637,000 Grand Union Co., Sr. Notes, 12.00%, 09/01/04.......................................................... 614,705
690,000 Kroger Co., Lease Cert., 6.00%, 04/01/03.............................................................. 565,800
675,000 Kroger Co., Lease Cert., 12.95%, 02/01/09............................................................. 749,250
793,000 New Alamacs Inc. Sr. Sub. Notes, 11.50%, 11/18/04..................................................... 138,775
500,000 Penn Traffic Co., Sr. Notes., 10.375%,10/01/04........................................................ 472,500
1,500,000 PM Holdings Corp., Sub. Disc. Deb., Ser. B, 11.50%, 09/01/05.......................................... 774,375
250,000 Pueblo Xtra International Inc., Sr. Notes, 9.50%, 08/01/03............................................ 236,250
500,000 Safeway Inc., Sr. Secured Deb., 9.30%, 02/01/07....................................................... 547,500
<PAGE>
Davis High Income Fund, Inc.
Schedule of Investments - Continued
At September 30, 1995 (Unaudited)
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- -----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES Continued
Value
Principal (Note 1)
- --------- ------
FOOD SERVICE AND DISTRIBUTION - Continued
$1,000,000 Southland Corporation, Deb., 4.00%, 06/15/04.......................................................... $ 632,500
250,000 Specialty Foods Corp., Sr. Notes, Ser. A, 11.125%, 10/01/02........................................... 240,000
-------------
7,294,881
-------------
HEALTHCARE AND PHARMACEUTICAL - (7.03%)
180,000 Advanced Medical, Inc., Conv. Sub. Deb., 15.00%, 07/15/99............................................. 127,800
2,660,000 American Medical International, N.V., Euro Deb., Zero Cpn., 08/12/97<F1>.............................. 2,312,538
209,000 Comprehensive Care Corp., Conv. Sub. Deb., 7.50%, 04/15/10............................................ 137,940
863,000 Glycomed Inc., Conv. Sub. Deb., 7.50%, 01/01/03....................................................... 703,345
500,000 OrNda HealthCorp., Sr. Sub. Deb., 12.25%, 05/15/02.................................................... 552,500
500,000 Wright Medical Technology, Inc. Sr. Secured Notes, Series B, 10.75%,
07/01/00............................................................................................ 505,000
-------------
4,339,123
-------------
HOTELS, LODGING & GAMING - (0.84%)
500,000 GB Property Funding Corp., 1st Mtg. Notes, 10.875%, 01/15/04.......................................... 422,500
100,000 Station Casinos Inc., Sr. Sub. Notes, 9.625%, 06/01/03................................................ 95,500
-------------
518,000
-------------
LEISURE/ENTERTAINMENT - (1.86%)
1,000,000 Underwater World Mall of America, Sr. Rev. Bds.,13.75%, 03/01/02...................................... 1,000,000
625,000 Wherehouse Entertainment, Inc., Sr. Sub. Notes, Series B, 13.00%,
08/01/02............................................................................................ 146,875
-------------
1,146,875
-------------
MANUFACTURING - (1.78%)
100,000 Atlantis Group Inc., Sr. Notes, 11.00%, 02/15/03...................................................... 93,500
500,000 Carlisle Plastics Inc., Sr. Notes, 10.25%, 06/15/97................................................... 505,000
500,000 Key Plastics, Inc., Sr. Notes, Series B, 14.00%, 11/15/99............................................. 500,000
-------------
1,098,500
-------------
METALS - (2.74%)
1,170,000 Crown Resources Corp., Conv. Sub. Deb., 5.75%, 08/27/01............................................... 947,700
500,000 Florida Steel Corp., Deb., 11.50%, 12/15/00........................................................... 502,500
250,000 Haynes International Inc., Sr. Secured Notes, Ser. A, 11.25%, 06/15/98................................ 243,750
-------------
1,693,950
-------------
PAPER PRODUCTS - (0.74%)
500,000 Grupo Industrial Durango S.A. DE C.V. Notes, 12.00%, 07/15/01......................................... 456,849
-------------
PRECIOUS METALS - (0.56%)
450,000 Canyon Resources Corp., Sub. Notes, 6.00%, 06/01/98................................................... 346,500
-------------
PRINT MEDIA - (1.31%)
500,000 News America Holdings Inc., Sr. Notes, 12.00%, 12/15/01............................................... 560,852
250,000 Sullivan Graphics Inc., Sr. Sub. Notes, 12.75%, 08/01/05.............................................. 250,000
-------------
810,852
-------------
<PAGE>
Davis High Income Fund, Inc.
Schedule of Investments - Continued
At September 30, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - Continued
Value
Principal (Note 1)
- --------- ------
RESTAURANT - (1.58%)
$ 725,000 Foodmaker, Inc., Sr. Sub. Notes, 14.25%, 05/15/98..................................................... $ 739,500
250,000 TPI Enterprises Inc., Conv. Sub. Deb., 8.25%, 07/15/02................................................ 233,750
-------------
973,250
-------------
RETAIL - (0.33%)
420,000 Tops Appliance City Inc., Conv. Sub. Deb., 6.50%, 11/30/03............................................ 203,175
-------------
TELECOMMUNICATIONS - (10.92%)
100,000 CAI Wireless Systems Inc., Sr. Notes, 12.25%, 09/15/02................................................ 103,500
500,000 Comcast Corp., Sr. Sub. Deb., 9.375%, 05/15/05........................................................ 508,750
1,354,100 Comdata Network, Inc., Jr. Notes, 11.00%, 10/15/97.................................................... 1,394,723
500,000 Marcus Cable Operations Co., L.P., Gtd. Sr. Sub. Disc. Notes, 9.50%,
08/01/04............................................................................................ 343,750
135,000 Mastec Inc., Conv. Sub. Deb., 12.00%, 11/15/00........................................................ 133,987
500,000 Metrocall Inc., Sr. Sub. Notes, 10.375%, 10/01/07..................................................... 507,500
1,200,000 Pegasus Media & Communications, Sr. Sub. Notes, 12.50%, 07/01/05...................................... 1,221,000
900,000 Porta Systems Inc., Conv. Sub. Deb., 6.00%, 07/01/02.................................................. 477,000
1,000,000 SFX Broadcasting Inc., Sr. Sub. Notes, 11.375%, 10/01/00.............................................. 1,047,500
250,000 Sinclair Broadcast Group Inc., Sr. Sub. Notes, 10.00%, 09/30/05....................................... 255,625
100,000 Spanish Broadcasting Systems Inc., Sr. Notes, 7.50%, 06/15/02......................................... 98,250
100<F5> Viatel Inc., ($1,000,000 Class A, Sr. Disc. Notes, Zero Cpn., 01/15/05 and
36,100 shares of common stock)<F1>.................................................................. 655,361
-------------
6,746,946
-------------
TRANSPORTATION/SHIPPING - (3.07%)
284,789 Continental Air Lines, Inc., Deferred Rent Notes, 12.00%, 06/30/96 <F2>............................... 284,789
250,000 Moran Transporation Co., 1st Preferred Shipping Mtg. Notes, 11.75%,
07/15/04<F2>........................................................................................ 233,750
444,000 Preston Corp., Conv. Sub. Deb., 7.00%, 05/01/11....................................................... 400,710
596,000 Tiphook Finance Corporation, Sr. Secured Notes, 8.00%, 03/15/00....................................... 470,840
500,000 TNT Transport (Europe) PLC/TNT (USA) Inc., Sr. Notes, 11.50%, 04/15/04................................ 508,125
-------------
1,898,214
-------------
UTILITIES - (2.06%)
750,000 Consolidated Hydro Inc., Sr. Discount Notes, Zero Cpn., 07/15/03<F1>.................................. 363,750
500,000 Midland Funding Corporation II, Sub. Secured Lease, 13.25%, 07/23/06.................................. 551,972
357,000 Southeastern Public Service Co., Sr. Sub. Deb., 11.875%, 02/01/98..................................... 354,769
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1,270,491
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TOTAL CORPORATE BONDS AND NOTES (identified
cost $46,151,841)................................................................................. 45,953,726
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<PAGE>
Davis High Income Fund, Inc.
Schedule of Investments - Continued
At September 30, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Value
Principal (Note 1)
- --------- ------
MORTGAGE BACKED BONDS - (6.00)
$ 237,151 Capstead Securities Corp., IV CMO, Series '92-7 CL Z-1, 8.75%, 05/25/23............................... $ 234,186
560,394 Chase Mortgage Finance Corp., Series '93-G-A1, REMIC, 7.00%, 04/25/01................................. 551,287
348,156 Citicorp Mtg. Securities, Inc., Series '89-16, 6.55%, 04/25/19........................................ 339,452
100,000 Federal Home Loan Mortgage Corporation, CMO, Series '93, CL 1630 E,
6.00%, 09/15/23..................................................................................... 88,576
244,877 Federal Home Loan Mortgage Corporation, CMO, Series ''94, CL 1668 F,
7.78%, 02/15/14..................................................................................... 252,135
569,237 First Nationwide Trust, Series '89-AR4-1, 9.50%, 10/25/19567,500
796,898 Guardian Savings & Loan Association, Mtg. Pass-Through Certificates
Series '88-1 A, 6.52%, 07/25/18731,154
80,277 Kidder, Peabody Mortgage Assets Trust, CMO, Series 21, CL C, Fixed Rate,
8.20%, 11/20/19..................................................................................... 82,752
447,645 Merrill Lynch Mtg. Invst. Inc., Mtg. Pass-Through Certificates, Series A,
CL-A 6.49%, 02/01/18................................................................................ 438,692
179,000 The Prudential Mortgage Securities Company, Mtg. Pass-Through Certificates
Series '92-38, CL A-8, Fixed Rate, 6.95%, 11/25/22.................................................. 166,438
31,938 Resolution Trust Corporation, REMIC, '92-Series M-3 CL A2, 8.625%,
07/25/30............................................................................................ 31,379
191,508 Resolution Trust Corporation, American Res. Mtg. Corp., Servicer, Mtg.
Pass-Through Certificates, Series '92-7 CL A1, 6.83%, 03/25/22...................................... 165,175
50,000 Ryland Acceptance Corporation Four, CMO, Ser. '85, CL 85-D, 9.25%,
04/01/12........................................................................................... 50,970
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TOTAL MORTGAGE BACKED BONDS (identified cost $3,667,178)............................................ 3,699,696
-------------
TAXABLE MUNICIPAL BONDS - (6.35%)
570,000 Adams Cnty., CO, IDR Series A Pool Gtd. - Executive Life, 9.00%,
11/01/96<F3>........................................................................................ 96,900
375,000 Commerce Refuse to Energy Auth., Taxable Ref. Rev. Bds., '90 Series,
10.50%, 07/01/00.................................................................................... 380,625
245,000 Dade Cnty. Educ. Fac. Auth., FL, Exchangeable Rev. Bds, Series '90
(University of Miami Issue), 9.70%, 04/01/10........................................................ 272,273
195,000 El Paso Hsg. Fin. Corp., Multi-Fam. Res. Loan Program, Securitized Mult-Fam.
Hsg. Rev. Bds., Series '86A, 8.88%, 10/15/96<F3>.................................................... 31,200
20,000 Jackson Michigan Osteopathic Hosp., 1st Mtg. Ten Year Extenable Bds.,
9.50%, 12/01/11..................................................................................... 16,066
100,000 Louisiana HFA Multi Fam. Mtg. Rev. Bds., Gtd. Executive Life, 8.61%,
08/01/96<F3>........................................................................................ 22,000
100,000 Louisiana St. Agriculture Fin. Auth., Security Agriculture Rev. Bds., Series A,
Gtd. Executive Life, 8.80%, 10/01/96<F3>............................................................ 21,000
1,845,000 Massachusetts St. HFA Res., Series C, 10.90%, 08/01/20................................................ 1,962,619
<PAGE>
Davis High Income Fund, Inc.
Schedule of Investments - Continued
At September 30, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TAXABLE MUNICIPAL BONDS - Continued
Value
Principal/Shares (Note 1)
- ---------------- ------
$ 210,000 Mayor and City Council of Baltimore, Econ. Dev. Taxable Lease Rev. Bds.
(Arcade Ltd. Partnership Prj.) Ser. '92, 8.50%, 08/01/02............................................ $ 221,025
675,480 Memphis, TN Hlth. Educ. & Hsg. Fac. Brd., Multi Fam. Hsg. Rev.
Securitized, Series '86A, 8.68%, 09/15/96<F3>....................................................... 114,838
120,000 Missouri St., Hsg. Dev. Cmnty.., Multi Fam. Hsg. Rev. Bds., FHA Insured
Mtg. Loans, 9.25%, 12/01/30......................................................................... 126,924
20,000 Nebraska Invst. Fin. Auth., Agriculture Rev. Bds., Series A, Gtd. Executive
Life, 8.34%, 11/01/93<F3>........................................................................... 4,400
440,000 New York St. HFA Rev. Multi Fam. Mtg. Series B, Sonyma Prg. Insurance,
8.875%, 08/15/14.................................................................................... 454,300
807,000 The Southeast TX Hsg. Fin. Corp. Securitized Multi Fam. Hsg. Rev. Bds.
Series '86A, 8.60%, 09/01/96<F3>.................................................................... 137,190
55,000 Utah St. Hsg. Fin. Agy. Sngl. Fam. Mtg., Ser. A, 9.40%, 07/01/99...................................... 56,788
-------------
TOTAL TAXABLE MUNICIPAL BONDS (identified
cost $4,448,860)................................................................................ 3,918,148
-------------
PREFERRED STOCKS - (0.81%)
53,170 Sunshine Mining Holding Co., Cum. Redeemable $1.19 Pfd.<F1>........................................... 438,652
6,200 Westmoreland Coal Co., Dep. Shares Pfd. Conv. Ser. A.................................................. 62,000
-------------
TOTAL PREFERRED STOCK (identified cost $551,803)................................................... 500,652
-------------
COMMON STOCKS - (1.18%)
16,920 Advanced Medical, Inc.<F1>............................................................................ 52,875
360,952 Sunshine Mining Co.<F1>............................................................................... 676,785
-------------
TOTAL COMMON STOCK (identified cost $885,466)...................................................... 729,660
-------------
WARRANTS - (0.19%)
1,632 Casino America Inc., expire 11/15/96<F1>.............................................................. 275
500 Chattem Inc., expire 8/17/99<F1>...................................................................... 1,500
869 Empire Gas Corp., expire 07/15/04<F1>................................................................. 26,070
500 Petro PSC Properties L.P., Petro Fin'l Corp., expire 06/01/97<F1>..................................... 18,000
100 Spanish Broadcasting Systems Inc., expire 06/30/99<F1>................................................ 18,250
21,825 Sunshine Mining Co., expire 03/09/99<F1>.............................................................. 17,051
205 Wright Medical Technology, Inc., expire 06/30/03<F1>.................................................. 33,825
-------------
TOTAL WARRANTS (identified cost $18,291)........................................................... 114,971
-------------
<PAGE>
Davis High Income Fund, Inc.
Schedule of Investments - Continued
At September 30, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Value
(Note 1)
------
REPURCHASE AGREEMENTS - (7.70%)
$4,755,000 State Street Bank and Trust Company Repurchase Agreement, 6.00%,
10/02/95, dated 09/29/95, repurchase value of $3,866,981 (collateralized
by $4,150,000 par value U.S. Treasury Notes, 5.125%, 12/31/98,
market value $3,865,000) (identified cost $4,755,000)............................................... 4,755,000
-------------
TOTAL INVESTMENTS (identified cost $60,478,439) -
(96.64%)<F4>..................................................................................... 59,671,853
OTHER ASSETS LESS LIABILITIES - (3.36%)............................................................ 2,077,547
-------------
NET ASSETS - 100%................................................................................ $61,749,400
-------------
-------------
<FN>
<F3> These securities are in default but have made partial payments.
<F6> These securities are in default and are not currently paying interest.
<F1> Non-income producing security.
<F4> Aggregate cost for Federal income tax purposes is $60,478,439.
<F2> 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.
<F5> Units
At September 30, 1995, unrealized appreciation (depreciation) of
securities for Federal income tax purposes was as follows:
Unrealized appreciation...................................................................................... $ 2,110,439
Unrealized depreciation...................................................................................... (2,917,025)
-------------
Net unrealized depreciation.................................................................................. ($ 806,586)
-------------
-------------
</FN>
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
DAVIS HIGH INCOME FUND
Statement of Assets and Liabilities
At September 30, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities, at value (identified cost $60,478,439) (Note 1)........................... $ 59,671,853
Cash ................................................................................................ 4,775,714
Receivables:
Interest and dividends............................................................................. 1,243,446
Capital stock sold................................................................................. 191,948
Investments sold................................................................................... 3,455,011
Prepaid expenses..................................................................................... 39,973
Other assets......................................................................................... 75,000
-------------
Total assets....................................................................................... 69,452,945
-------------
LIABILITIES:
Payables:
Capital stock reacquired........................................................................... 7,527,633
Investments purchased.............................................................................. 56,093
Accrued expenses................................................................................... 119,819
-------------
Total liabilities................................................................................ 7,703,545
-------------
NET ASSETS (Note 5)................................................................................................ $ 61,749,400
-------------
-------------
CLASS A SHARES
Net assets........................................................................................... $ 56,678,274
Shares outstanding................................................................................... 11,663,294
Net asset value and redemption price per share (net assets/shares outstanding)....................... $ 4.86
--------
--------
Maximum offering price per share (100/95.25 of $4.86)................................................ $ 5.10
--------
--------
CLASS B SHARES
Net assets........................................................................................... $ 5,071,126
Shares outstanding................................................................................... 1,049,276
Net asset value, offering and redemption price per share (net assets/shares outstanding)............. $ 4.83
--------
--------
Net assets consist of:
Deficit in undistributed net investment income....................................................... $ (431,716)
Unrealized depreciation of investments............................................................... (806,586)
Accumulated net realized loss........................................................................ (25,497,307)
Paid-in capital...................................................................................... 88,485,009
-------------
Net assets......................................................................................... $ 61,749,400
-------------
-------------
<FN>
<F1> On purchases of $100,000 or more, the offering price is reduced.
</FN>
</TABLE>
<PAGE>
<TABLE>
DAVIS HIGH INCOME FUND
Statement of Operations
Six months ended September 30, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest...................................................................................................... $ 2,994,715
Dividends..................................................................................................... 3,294
------------
Total income................................................................................................ 2,998,009
------------
Expenses:
Management fees (Note 3)....................................................................... $ 228,116
Custodian fees................................................................................. 45,538
Transfer agent fees (Note 3)................................................................... 44,423
Audit fees..................................................................................... 12,000
Legal fees..................................................................................... 14,592
Accounting fees (Note 3)....................................................................... 7,998
Reports to shareholders........................................................................ 10,961
Directors' fees and expenses................................................................... 11,785
Registration and filing fees................................................................... 21,211
Miscellaneous.................................................................................. 5,456
Commissions paid under distribution plan (Note 3)
Class A...................................................................................... 48,340
Class B...................................................................................... 17,467
------------
Total expenses............................................................................................ 467,887
------------
Net investment income................................................................................... 2,530,122
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from investment transactions................................................................... (326,642)
Net decrease in unrealized depreciation of investments during the period......................................... 713,040
------------
Net realized and unrealized gain (loss) on investments......................................................... 386,398
------------
Net increase in net assets resulting from operations........................................................... $ 2,916,520
------------
------------
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
DAVIS HIGH INCOME FUND
Statement Of Changes in Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months
ended
September 30, Year ended
1995 March 31,
(Unaudited) 1995
--------- ----
<S> <C> <C>
Operations:
Net investment income...................................................................... $ 2,530,122 $ 5,727,589
Net realized gain (loss) from investment transactions...................................... (326,642) (3,505,308)
Net decrease in unrealized depreciation
of investments........................................................................... 713,040 529,763
------------ ------------
Net increase in net assets resulting from operations....................................... 2,916,520 2,752,044
Distributions to shareholders from:
Net investment income
Class A ($0.24 and $0.46 per share, respectively)........................................ (2,805,885) (5,702,988)
Class B ($0.22 and $0.11 per share, respectively)........................................ (155,953) (24,601)
Paid-in capital
Class A ($0.04 per share)................................................................ _ (453,550)
Capital share transactions (Note 5).......................................................... 3,489,399 (2,928,958)
------------ ------------
Total increase (decrease) in net assets................................................ 3,444,081 (6,358,053)
Net Assets:
Beginning of year.......................................................................... 58,305,319 64,663,372
------------ ------------
End of year (including undistributed net income (deficit) of ($431,716)
and $-0-, respectively).................................................................. $61,749,400 $58,305,319
------------ ------------
------------ ------------
See Notes to Financial Statements
</TABLE>
<PAGE>
DAVIS HIGH INCOME FUND
Notes to Financial Statements
(Unaudited)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Note 1 - Summary of Significant Accounting Policies.
The Company is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. Its
primary objective is to achieve a high level of current income. The
Company also seeks capital growth so long as such objective is consistent
with its primary objective. The Company invests primarily in high yield,
high risk, low rated and unrated bonds commonly referred to as "junk
bonds." Such securities are speculative and subject to greater market
fluctuations and risk of loss of income and principal than higher rated
bonds. On December 1, 1994, the Company commenced the offering of
shares in two classes, Class A and Class B. The Class A shares are sold
with a front-end sales charge and the Class B shares are sold at net asset
value and may be subject to a contingent deferred sales charge upon
redemption. All classes have identical rights with respect to voting
(exclusive of each Class's distribution arrangement), liquidation and
distributions. The following is a summary of significant accounting
policies followed by the Company in the preparation of its financial
statements.
Security Valuation.
Fixed income securities may be valued on the basis of prices provided by a
pricing agent when such prices are believed to reflect the fair market
value of such securities. (Pricing agents generally take into account
institutional size trading in similar groups of securities). Securities not
priced in this manner will be priced at the last published sales price if
traded on that day and, if not traded, at the mean between the most recent
quoted bid and asked prices provided by investment dealers. The pricing
service and valuation procedures are reviewed and subject to approval by
the Board of Directors. If no quotations are available, securities will be
valued at fair value as determined in good faith by the Board of Directors.
Short-term obligations are valued at amortized cost, which approximates
value.
Federal Income Taxes.
It is the Company'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 to shareholders.
Therefore, no provision for federal income tax is required. At September
30, 1995, the Fund had approximately $25,171,000 of capital loss
carryovers available to offset future capital gains, if any, of which
$1,608,000, $1,743,000, $4,918,000, $7,606,000, $4,382,000, $1,409,000
and $3,505,000 expire in 1996, 1997, 1998, 1999, 2000, 2001 and 2003,
respectively.
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 gain or loss on the sale of securities being
determined based upon identified cost. Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual basis.
Dividends and Distributions to Shareholders.
Dividends and distributions to shareholders are recorded on the
ex-dividend date.
Note 2 - Purchases and Sales of Securities.
Purchases and sales of investment securities (excluding short term
securities) during the six months ended September 30, 1995, were
$40,883,378 and $41,992,942, respectively.
<PAGE>
DAVIS HIGH INCOME FUND
Notes to Financial Statements, continued
(Unaudited)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Note 3 - Investment Advisory Fees and Other Transactions with Affiliates.
The Company pays advisory fees for investment management and advisory
services under a management agreement with Davis Selected Advisers,
L.P. (formerly, Selected/Venture Advisers, L.P.) (the "Adviser"). The
agreement provides for a monthly fee of .0625 of 1% (equivalent to .75 of
1% per annum) of the first $250 million of average daily net assets of the
Company. Regardless of the above provisions, the Adviser will pay or
refund to the Company any expenses (including the fee under the
agreement but excluding interest, taxes, brokerage fees, payments made
to the Distributor under any Rule 12b-1 Distribution Plan adopted by the
Company and, where permitted, extraordinary expenses) in excess of the
most restrictive applicable expense limitation prescribed by any statute
or regulatory authority of any jurisdiction in which the Company's shares
are qualified for offer and sale. The Adviser believes that the most
restrictive expense limitations presently applicable are 2 1/2% for the
first $30 million of average net assets, 2% for the next $70 million of
average net assets and 1 1/2% for any additional average net assets.
Davis Selected Advisers, L.P. is paid for registering Company shares for
sale in various states. The fee for the six months ended September 30,
1995 amounted to $6,000. Davis Selected Advisers, L.P. is paid for certain
transfer agent services. The fee for the six months ended September 30,
1995 amounted to $2,927. Davis Selected Advisers, L.P. is also paid for
certain accounting services. The fee for the six months ended September
30, 1995 amounted to $7,998. Certain directors and the officers of the
Fund are also directors and officers of the general partner of the Adviser.
Note 4 _ Distribution and Underwriting Fees
Class A Shares
Class A shares of the Company are sold at net asset value plus a
sales charge and are redeemed at net asset value (without a contingent
deferred sales charge).
During the six months ended September 30, 1995, the Company's
Underwriter, Davis Selected Advisers, L.P., received $74,187 from
commissions earned on sales of Class A shares of the Fund of which
$11,438 was retained by the Underwriter and the remaining $62,749 was
reallowed to investment dealers. Davis Selected Advisers, L.P. paid the
costs of prospectuses in excess of those required to be filed as part of the
Company's registration statement, sales literature and other expenses
assumed or incurred by it in connection with such sales.
The Underwriter is reimbursed for amounts paid to dealers as a
maintenance fee with respect to Class A shares sold by dealers and
remaining outstanding during the period. The maintenance fee is paid at
the annual rate of 1/4 of 1% of the average net assets maintained by the
responsible dealers. The Underwriter is not reimbursed for accounts in
which the Underwriter pays no service fees to other firms. The
maintenance fee for Class A shares of the Company for the six months
ended September 30, 1995 was $48,340.
Class B Shares
Class B shares of the Company are sold at net asset value and are
redeemed at net asset value less a contingent deferred sales charge if
redeemed within six years of purchase.
<PAGE>
DAVIS HIGH INCOME FUND
Notes to Financial Statements, continued
(Unaudited)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Class B Shares - Continued
The Company pays the Distributor a 4% commission on the proceeds
from the sale of the Company's Class B shares and the Distributor
reallows 4% to the qualified dealer responsible for the sale of the shares.
A rule implemented by the National Association of Securities Dealers,
Inc., ("NASD") limits the percentage of the Company's annual average net
assets attributable to Class B shares which may be used to reimburse the
Distributor. The limit is 1%, of which 0.75% may be used to pay
distribution expenses and 0.25% may be used to pay shareholder service
fees. The NASD rule also limits the aggregate amount the Company may
pay for distribution to 6.25% of gross sales since inception of the Rule
12b-1 plan plus interest at 1% over the prime rate on unpaid amounts. The
Distributor intends to seek full payment (plus interest at prime plus 1%)
of distribution charges that exceed the 1% annual limit in some future
period or periods when the plan limits have not been reached.
During the six months ended September 30, 1995, Class B shares of
the Company made distribution plan payments which included commissions
of $13,467 and maintenance fees of $4,000.
Commissions earned by the Distributor during the six months ended
September 30, 1995 on the sale of Class B shares of the Company
amounted to $63,488 of which $59,767 was reallowed to qualified selling
dealers.
The Distributor intends to seek payment from Class B shares of the
Company in the amount of $67,659, representing the cumulative
commissions earned by the Distributor on the sale of the Company's Class
B shares reduced by cumulative commissions paid by the Company and
cumulative contingent deferred sales charge paid by redeeming
shareholders. The Company has no contractual obligation to pay any such
distribution charges and the amount, if any, timing and condition of such
payment are solely within the discretion of the Directors who are not
interested persons of the Company or the Distributor.
A contingent deferred sales charge is imposed upon redemption of
certain Class B shares of the Company within six years of the original
purchase. The charge is a declining percentage starting at 4% of the
lesser of net asset value of the shares redeemed or the total cost of such
shares. During the four months ended September 30, 1995 the Distributor
received no contingent deferred sales charges from Class B shares of the
Company.
<PAGE>
<TABLE>
DAVIS HIGH INCOME FUND
Notes to Financial Statements, continued
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Note 5 - Capital Stock.
At September 30, 1995, there were 1,000,000,000 shares of capital stock
($0.05 par value per share) authorized.
Transactions in capital stock were as follows:
<CAPTION>
Class A For the Six Months Ended
September 30, 1995
(Unaudited)
------------------------
Shares Amount
------ ------
<S> <C> <C>
Shares subscribed............................................................................ 730,736 $ 3,558,758
Shares issued to shareholders in connection with reinvestment of
distributions.............................................................................. 351,496 1,704,758
----------- -----------
1,082,232 5,263,516
Shares reacquired............................................................................ (1,019,968) (4,972,916)
----------- -----------
Net increase............................................................................... 62,264 $ 290,600
----------- -----------
----------- -----------
For the Year Ended
March 31, 1995
------------------------
Shares Amount
------ ------
Shares subscribed............................................................................ 2,407,613 $11,798,620
Shares issued to shareholders in connection with reinvestment of
distributions.............................................................................. 784,110 3,839,262
----------- -----------
3,191,723 15,637,882
Shares reacquired............................................................................ (4,183,295) (20,452,967)
----------- -----------
Net decrease............................................................................... (991,572) $(4,815,085)
----------- -----------
----------- -----------
Class B For the Six Months Ended
September 30, 1995
(Unaudited)
------------------------
Shares Amount
------ ------
Shares subscribed............................................................................ 678,417 $ 3,300,684
Shares issued to shareholders in connection with reinvestment of
distributions.............................................................................. 10,888 52,629
----------- -----------
689,305 3,353,313
Shares reacquired............................................................................ (31,842) (154,514)
----------- -----------
Net increase............................................................................... 657,463 $ 3,198,799
----------- -----------
----------- -----------
For the Year Ended
March 31, 1995
------------------------
Shares Amount
------ ------
Shares subscribed............................................................................ 492,336 $ 2,367,751
Shares issued to shareholders in connection with reinvestment of
distributions.............................................................................. 967 4,634
----------- -----------
493,303 2,372,385
Shares reacquired............................................................................ (101,490) (486,258)
----------- -----------
Net increase............................................................................... 391,813 $ 1,886,127
----------- -----------
----------- -----------
</TABLE>
<PAGE>
<TABLE>
DAVIS HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Highlights for a share of capital stock outstanding throughout
each period.
<CAPTION>
--------------------------------------Class A-------------------------------------- -------Class B-------
Six Six
Months Months Four
ended ended Months
September 30, September 30, ended
1995 Year ended March 31, 1995 March 31,
(Unaudited) 1995 1994 1993 1992 1991 (Unaudited) 1995
-------- ---- ---- ---- ---- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period.............. $ 4.86 $ 5.14 $ 5.18 $ 4.92 $ 4.75 $ 6.07 $ 4.85 $ 4.80
------ ------ ------ ------ ------ ------ ------ ------
Income From Investment
- ----------------------
Operations
- ----------
Net Investment
Income............ 0.21 0.46 0.50 0.61 0.53 0.56 0.17 0.11
Net Gains or
Losses on
Securities (both
realized and
unrealized)....... 0.03 (0.24) 0.06 0.25 0.43 (0.85) 0.03 0.05
------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment
Operations.... 0.24 0.22 0.56 0.86 0.96 (0.29) 0.20 0.16
------ ------ ------ ------ ------ ------ ------ ------
Less Distributions
- ------------------
Dividends (from
net investment
income)........... (0.24) (0.46) (0.50) (0.60) (0.53) (0.56) (0.22) (0.11)
Returns of
Capital........... _ (0.04) _ _ (0.26) (0.47) _ _
Distribution in
excess of
realized gains.... _ _ (0.10) _ _ _ _ _
Total
------ ------ ------ ------ ------ ------ ------ ------
Distributions. (0.24) (0.50) (0.60) (0.60) (0.79) (1.03) (0.22) (0.11)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period....... $ 4.86 $ 4.86 $ 5.14 $ 5.18 $ 4.92 $ 4.75 $ 4.83 $ 4.85
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
Total Return <F1>..... 5.05% 4.69% 11.29% 18.81% 22.45% (5.32%) 4.66% 4.28%
- ------------
Ratios/Supplemental
- -------------------
Data
- ----
Net Assets, End of
Period (000
omitted).......... 56,678 56,405 64,663 38,305 24,986 19,386 5,071 1,900
Ratio of Expenses
to Average
Net Assets........ 1.48%<F2> 1.53% 1.48% 1.81% 1.93% 2.09% 2.44%<F2> 2.36%<F2>
Ratio of Net
Income to
Average Net
Assets............ 8.40%<F2> 9.49% 9.31% 11.91% 11.01% 10.43% 7.10%<F2> 8.66%<F2>
Portfolio Turnover
Rate.............. 75.91% 98.94% 98.31% 84.93% 93.78% 76.92% 75.91% 98.94%
<FN>
<F1> Sales charges are not reflected in calculation.
<F2> Annualized
</FN>
</TABLE>
<PAGE>
DAVIS HIGH INCOME
FUND, INC.
124 East Marcy Street Santa Fe, New Mexico 87501
-------------------------------------------------
-------------------------------------------------
Directors Officers
Wesley E. Bass Jeremy H. Biggs
Jeremy H. Biggs Chairman
Marc P. Blum Shelby M.C. Davis
Shelby M.C. Davis President
Eugene M. Feinblatt Carl R. Luff
Jerry D. Geist Vice President, Treasurer
D. James Guzy & Assistant Treasurer
G. Bernard Hamilton Raymond O. Padilla
LeRoy E. Hoffberger Vice President, Secretary
Laurence W. Levine & Assistant Treasurer
Martin H. Proyect Carolyn H. Spolidoro
Christian R. Sonne Vice President
Edwin R. Werner Louis R. Proyect
Vice President
Andrew A. Davis
Vice President
Christopher C. Davis
Vice President
Eileen R. Street
Assistant Treasurer
& Assistant Secretary
Investment Adviser & Distributor
Davis Selected Advisers, L.P.
124 East Marcy Street
Santa Fe, New Mexico 87501
Transfer Agent & Custodian
State Street Bank and Trust Company
c/o The Davis Funds
P.O. Box 8406
Boston, MA 02266-8406
Counsel
D'Ancona & Pflaum
30 North LaSalle Street
Chicago, Illinois 60602
- -------------------------------------
For more information about Davis High
Income Fund including management fee,
charges and expenses, see the current
prospectus which must precede
or accompany this report.
- -------------------------------------
9511-15 VIP70