That is the correct size. Consider that the standard 4:3 SD frame is 720x480. On a real display, you can't get more than 720 horizontally, so once it is stretched to place the black bars (letter box) top and bottom, you get 720x404.
On many quadrupling systems (960p) or HD systems (1080 i or p), you can wind up with 854x480 actual resolution, with the 720 horizontal samples stretched out, with no loss of vertical information (you get the whole 480 lines); On non-anamorphic widescreen DVDs, there are just the 404 (or less, depending on actual aspect ratio), so on regular 4:3 TVs without additional processing, anamorphic or letterbox widescreen are about the same visually; but with processing and widescreen displays, anamorphic DVDs have greater vertical resolution.
Eddie O