Selected International Fund Class D (SLSDX) N-CSR Certified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-01533

SELECTED SPECIAL SHARES, 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, 2009

Date of reporting period: December 31, 2009

____________________

ITEM 1. REPORT TO STOCKHOLDERS

SELECTED FUNDS Table of Contents

Shareholder Letter	2
Management's Discussion of Fund Performance:
Selected American Shares	3
Selected Special Shares	5
Fund Overview:
Selected American Shares	7
Selected Special Shares	9
Selected Daily Government Fund	11
Expense Example	12
Schedule of Investments:
Selected American Shares	14
Selected Special Shares	19
Selected Daily Government Fund	23
Statements of Assets and Liabilities	25
Statements of Operations	27
Statements of Changes in Net Assets	28
Notes to Financial Statements	30
Financial Highlights	39
Report of Independent Registered Public Accounting Firm	41
Fund Information	42
Privacy Notice and Householding	43
Directors and Officers	44

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

Shares of the Selected 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.

SELECTED FUNDS Shareholder Letter

Dear Fellow Shareholder,

As stewards of our customers’ savings, the management team and Directors of the Selected 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, SelectedFunds.com, or by calling 1-800-243-1575.

We thank you for your continued trust. We will do our best to earn it in the years ahead.

Sincerely,

                                                                                                                   

James J. McMonagle	Christopher C. Davis	Kenneth C. Feinberg
Chairman	President & Portfolio Manager	Portfolio Manager

February 5, 2010

2

SELECTED FUNDS Management’s Discussion of Fund Performance

SELECTED AMERICAN SHARES, INC.

Performance

Selected American Shares’ Class S shares delivered a total return on net asset value of 31.64% (Class D shares returned 32.06%) for the year ended December 31, 2009. Over the same time period, the Standard & Poor’s 500® Index(“Index”) returned 26.46%. The sectors1 within the Index that turned in the strongest performance over the year were information technology, materials, and consumer discretionary. The sectors that turned in the weakest (but still positive) performance over the year were telecommunication services, utilities, and energy.

Factors Impacting the Fund’s Performance

The Fund had more invested in financial companies than in any other sector (28% versus 13% for the Index) and they were the most important contributor2 to the Fund’s performance. The Fund’s financial companies out-performed the corresponding sector within the Index (up 24% versus up 17% for the Index). American Express3 was the top contributor to the Fund’s performance. Bank of America, Citigroup, and NIPPONKOA Insurance were among the most important detractors from performance.  The Fund no longer holds Bank of America, Citigroup, or NIPPONKOA Insurance.

Energy companies were the second largest contributor to the Fund’s performance as a result of strong stock selection. The Fund’s energy companies out-performed the corresponding sector within the Index (up 38% versus up 14% for the Index). The Fund also had a higher relative average weighting in this sector (16% versus 13% for the Index). Occidental Petroleum, EOG Resources, and Canadian Natural Resources were among the top contributors to performance. ConocoPhillips was among the most important detractors from performance.

The Fund’s information technology companies out-performed the corresponding sector within the Index (up 63% versus up 62% for the Index) but the Fund’s performance suffered compared to the Index as a result of a lower relative average weighting in this sector (8% versus 18% for the Index). Google, Microsoft, and Texas Instruments were among the most important contributors to performance. Tyco Electronics was among the most important detractors from performance.  The Fund no longer owns Tyco Electronics.

Health care companies also made important contributions to the Fund’s performance. The Fund’s health care companies out-performed the corresponding sector within the Index (up 40% versus up 20% for the Index). Schering-Plough was among the most important contributors to performance. Schering-Plough merged with Merck in November 2009.

Unfortunately, the Fund’s material companies under-performed the corresponding sector within the Index (up 35% versus up 49% for the Index). Vulcan Materials was among the most important detractors from performance.

The Fund had approximately 15% of its net assets invested in foreign companies at December 31, 2009. As a whole these companies out-performed the domestic companies held by the Fund.

Selected American Shares’ investment objective is to achieve both capital growth and income. In the current market environment, we expect that income will be low. There can be no assurance that the Fund will achieve its objective. The primary risks of an investment in Selected American Shares are: (1) market risk, (2) company risk, (3) foreign country risk, (4) financial services risk, (5) headline risk, and (6) selection 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.

3

SELECTED FUNDS Management’s Discussion of Fund Performance

SELECTED AMERICAN SHARES, INC. – (CONTINUED)

Comparison of a $10,000 investment in Selected American Shares Class S versus the STANDARD & POOR’S 500®INDEX over 10 years for an investment made on December 31, 1999

Average Annual Total Return for periods ended December 31, 2009

Fund & Benchmark Index	1-Year	5-Year	10-Year	Since  Class D’s Inception (May 3, 2004)	Gross Expense Ratio	Net Expense Ratio
Class S	31.64%	1.12%	2.24%	N/A	0.94%	0.94%
Class D	32.06%	1.44%	N/A	2.84%	0.61%	0.61%
Standard & Poor’s 500® Index	26.46%	0.42%	(0.95)%	2.04%

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 Selected American Shares 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 Selected Funds Investor Services at 1-800-243-1575.

4

SELECTED FUNDS Management’s Discussion of Fund Performance

SELECTED SPECIAL SHARES, INC.

Performance

Selected Special Shares’ Class S shares delivered a total return on net asset value of 44.21% (Class D shares returned 44.72%) for the year ended December 31, 2009. Over the same time period, the Russell 3000® Index (“Index”) returned 28.34%. The sectors1 within the Index that turned in the strongest performance over the year were information technology, materials, and consumer discretionary. The sectors that turned in the weakest (but still positive) performance over the year were utilities, telecommunication services, and financials.

Factors Impacting the Fund’s Performance

The three sectors that contributed2 the most to the Fund’s performance were information technology, consumer discretionary and health care.

Information technology companies were the most important contributor to the Fund’s performance. The Fund’s information technology companies out-performed the corresponding sector within the Index (up 73% versus up 62% for the Index). The Fund’s performance also benefited from a higher relative average weighting in this strongly performing sector (21% versus 18% for the Index). Google3, Agilent Technologies, Microsoft, and Texas Instruments were among the most important contributors to the Fund’s performance. Google was the top contributor to performance for the Fund as a whole.

The second largest contributor to performance was consumer discretionary companies. The Fund’s consumer discretionary companies out-performed the corresponding sector within the Index (up 49% versus up 47% for the Index). The Fund also benefited from a higher average weighting in this sector (21% versus 10% for the Index). Walt Disney and Hunter Douglas were among the most important contributors to the Fund’s performance.  Comcast and H&R Block were among the most important detractors from performance.

The Fund benefited from strong stock selection in the health care sector as they out-performed the corresponding sector within the Index (up 42% versus up 22% for the Index). Schering-Plough was among the most important contributors to the Fund’s performance and Medtronic was among the most important detractors from performance. Schering-Plough merged with Merck in November 2009. The Fund no longer owns Medtronic.

Other important detractors from performance included Costco Wholesale, Iron Mountain, Ambac Financial, and Everest Re Group. The Fund no longer owns Ambac Financial.

The Fund had approximately 18% of its net assets invested in foreign companies at December 31, 2009. As a whole these companies out-performed the domestic companies held by the Fund.

Selected Special Shares’ investment objective is capital growth. There can be no assurance that the Fund will achieve its objective. The primary risks of an investment in Selected Special Shares are: (1) market risk, (2) company risk, (3) small and medium capitalization risk, (4) foreign country risk, (5) headline risk, and (6) selection 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.

5

SELECTED FUNDS Management’s Discussion of Fund Performance

SELECTED SPECIAL SHARES, INC. – (CONTINUED)

Comparison of a $10,000 investment in Selected Special Shares Class S versus the Russell 3000® Index over 10 years for an investment made on December 31, 1999

Average Annual Total Return for periods ended December 31, 2009

Fund & Benchmark Index	1-Year	5-Year	10-Year	Since  Class D’s Inception (May 3, 2004)	Gross Expense Ratio	Net Expense Ratio
Class S	44.21%	0.10%	0.99%	N/A	1.32%	1.32%
Class D	44.72%	0.51%	N/A	1.98%	0.84%	0.84%
Russell 3000® Index	28.34%	0.76%	(0.20)%	2.51%

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 Selected Special Shares 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 Selected Funds Investor Services at 1-800-243-1575.

6

SELECTED FUNDS	Fund Overview
SELECTED AMERICAN SHARES, INC.	December 31, 2009

Portfolio Composition		Industry Weightings
(% of Fund’s Net Assets)		(% of Long Term Portfolio)
			Fund	S&P 500®
Common Stock (U.S.)	81.60%	Energy	16.40%	11.48%
Common Stock (Foreign)	15.27%	Diversified Financials	13.47%	7.87%
Corporate Bonds	1.01%	Insurance	11.39%	2.41%
Convertible Bonds (U.S.)	0.35%	Health Care	9.05%	12.63%
Convertible Bonds (Foreign)	0.22%	Information Technology	8.48%	19.85%
Short Term Investments	1.42%	Materials	7.04%	3.60%
Other Assets & Liabilities	0.13%	Food & Staples Retailing	6.73%	2.69%
	100.00%	Banks	4.22%	2.86%
		Food, Beverage & Tobacco	4.12%	5.84%
		Media	3.97%	2.90%
		Commercial & Professional Services	2.74%	0.66%
		Retailing	2.69%	3.46%
		Transportation	2.66%	2.09%
		Other	1.94%	10.73%
		Household & Personal Products	1.92%	2.83%
		Automobiles & Components	1.75%	0.61%
		Capital Goods	1.43%	7.49%
			100.00%	100.00%

Top 10 Holdings

(% of Fund’s Net Assets)

Occidental Petroleum Corp.	Energy	4.50%
Berkshire Hathaway Inc., Class A	Property & Casualty Insurance	4.42%
Costco Wholesale Corp.	Food & Staples Retailing	4.24%
Wells Fargo & Co.	Commercial Banks	4.16%
American Express Co.	Consumer Finance	3.94%
EOG Resources, Inc.	Energy	3.48%
Devon Energy Corp.	Energy	3.18%
Loews Corp.	Multi-line Insurance	2.54%
Merck & Co., Inc.	Pharmaceuticals, Biotechnology & Life Sciences	2.43%
JPMorgan Chase & Co.	Diversified Financial Services	2.42%

7

SELECTED FUNDS	Fund Overview
SELECTED AMERICAN SHARES, INC. – (CONTINUED)	December 31, 2009

New Positions Added (01/01/09 - 12/31/09)

(Highlighted positions are those greater than 0.80% of 12/31/09 total net assets)

			% of 12/31/09
		Date of 1st	Fund
Security	Industry	Purchase	Net Assets
Activision Blizzard, Inc.	Software & Services	01/07/09	0.45%
Becton, Dickinson and Co.	Health Care Equipment & Services	03/02/09	0.92%
Coca-Cola Co.	Food, Beverage & Tobacco	06/26/09	0.54%
Fairfax Financial Holdings Ltd.	Multi-line Insurance	09/08/09	0.38%
Harley-Davidson, Inc., Sr. Notes,
15.00%, 02/01/14	Automobiles & Components	02/03/09	0.68%
Laboratory Corp. of America Holdings	Health Care Equipment & Services	03/02/09	0.40%
LLX Logistica S.A.	Transportation	09/22/09	0.07%
Mead Johnson Nutrition Co.	Household & Personal Products	12/14/09	0.32%
Medtronic, Inc.	Health Care Equipment & Services	01/07/09	–
Merck & Co., Inc.	Pharmaceuticals, Biotechnology &
	Life Sciences	03/11/09	2.43%
Natura Cosmeticos S.A.	Household & Personal Products	07/31/09	0.13%
Pfizer Inc.	Pharmaceuticals, Biotechnology &
	Life Sciences	02/25/09	0.87%
Potash Corp. of Saskatchewan Inc.	Materials	05/14/09	0.24%
Sealed Air Corp., Sr. Notes,
12.00%, 02/14/14	Materials	01/26/09	0.33%
Walt Disney Co.	Media	02/05/09	0.84%

Positions Closed (01/01/09 - 12/31/09)

(Gains and losses greater than $20,000,000 are highlighted)

		Date of	Realized
Security	Industry	Final Sale	Gain (Loss)
Altria Group, Inc.	Food, Beverage & Tobacco	01/05/09	$	2,780,858
American International Group, Inc.	Multi-line Insurance	12/18/09		(321,944,447)
Avon Products, Inc.	Household & Personal Products	03/23/09		(12,271,086)
Bank of America Corp.	Diversified Financial Services	03/16/09		(48,288,411)
Cisco Systems, Inc.	Technology Hardware & Equipment	08/20/09		(6,283,450)
Citigroup Inc.	Diversified Financial Services	03/10/09		(10,671,665)
Dell Inc.	Technology Hardware & Equipment	02/27/09		(34,630,279)
Discover Financial Services	Consumer Finance	02/04/09		2,627,104
eBay Inc.	Software & Services	06/03/09		(10,485,733)
E*TRADE Financial Corp.	Capital Markets	03/13/09		(16,195,097)
Lowe's Cos, Inc.	Retailing	02/04/09		(14,314,282)
MBIA Inc.	Property & Casualty Insurance	03/06/09		(15,794,203)
Medtronic, Inc.	Health Care Equipment & Services	04/28/09		(950,661)
Morgan Stanley	Capital Markets	03/16/09		6,170,362
NIPPONKOA Insurance Co., Ltd.	Property & Casualty Insurance	10/23/09		(21,726,466)
Schering-Plough Corp.	Pharmaceuticals, Biotechnology &
	Life Sciences	11/04/09		18,609,593
Sears Holdings Corp.	Retailing	02/27/09		(15,143,411)
Siemens AG, Registered	Capital Goods	03/20/09		(31,958,581)
Sprint Nextel Corp.	Telecommunication Services	03/12/09		(135,201,808)
State Street Corp.	Capital Markets	03/16/09		(2,375,741)
Sun Life Financial Inc.	Life & Health Insurance	12/14/09		7,413,716
Tyco Electronics Ltd.	Technology Hardware & Equipment	03/18/09		(29,153,337)
Whole Foods Market, Inc.	Food & Staples Retailing	01/09/09		(18,133,684)
WPP PLC	Media	01/12/09		(219,710)

8

SELECTED FUNDS	Fund Overview
SELECTED SPECIAL SHARES, INC.	December 31, 2009

Portfolio Composition		Industry Weightings
(% of Fund’s Net Assets)		(% of Long Term Portfolio)
			Fund	Russell 3000®
Common Stock (U.S.)	73.79%	Information Technology	22.65%	19.32%
Common Stock (Foreign)	17.97%	Health Care	18.48%	12.68%
Convertible Bonds	1.30%	Media	10.28%	2.83%
Short Term Investments	7.22%	Diversified Financials	9.08%	6.69%
Other Assets & Liabilities	(0.28)%	Materials	6.96%	4.09%
	100.00%	Energy	6.38%	10.79%
		Insurance	6.30%	2.80%
		Capital Goods	3.62%	7.74%
		Consumer Durables & Apparel	2.78%	1.28%
		Telecommunication Services	2.32%	2.95%
		Consumer Services	2.25%	2.03%
		Transportation	1.94%	2.04%
		Food, Beverage & Tobacco	1.62%	5.22%
		Banks	1.56%	3.15%
		Other	1.54%	12.79%
		Commercial & Professional Services	1.15%	1.06%
		Household & Personal Products	1.09%	2.54%
			100.00%	100.00%

Top 10 Holdings

(% of Fund’s Net Assets)

Google Inc., Class A	Software & Services	5.24%
Merck & Co., Inc.	Pharmaceuticals, Biotechnology & Life Sciences	4.58%
Johnson & Johnson	Pharmaceuticals, Biotechnology & Life Sciences	4.20%
Walt Disney Co.	Media	3.70%
Oaktree Capital Group LLC, Class A	Diversified Financial Services	3.69%
Microsoft Corp.	Software & Services	3.52%
Markel Corp.	Property & Casualty Insurance	3.31%
Texas Instruments Inc.	Semiconductors & Semiconductor Equipment	3.15%
Becton, Dickinson and Co.	Health Care Equipment & Services	2.89%
Agilent Technologies, Inc.	Technology Hardware & Equipment	2.75%

9

SELECTED FUNDS	Fund Overview
SELECTED SPECIAL SHARES, INC. – (CONTINUED)	December 31, 2009

New Positions Added (01/01/09 - 12/31/09)

(Highlighted positions are those greater than 1.00% of 12/31/09 total net assets)

Security	Industry	Date of 1st Purchase	% of 12/31/09 Fund              Net Assets
ABB Ltd., ADR	Capital Goods	04/23/09	0.72%
Activision Blizzard, Inc.	Software & Services	01/07/09	1.27%
America Movil SAB de C.V., Series L, ADR	Telecommunication Services	10/27/09	0.49%
Aon Corp.	Insurance Brokers	12/04/09	0.16%
Banco Santander Brasil S.A., ADS	Commercial Banks	10/07/09	0.48%
Becton, Dickinson and Co.	Health Care Equipment & Services	02/27/09	2.89%
Berkshire Hathaway Inc., Class B	Property & Casualty Insurance	03/02/09	0.99%
CVS Caremark Corp.	Food & Staples Retailing	12/18/09	0.57%
Exelon Corp.	Utilities	09/11/09	0.15%
Harris Corp.	Technology Hardware & Equipment	05/20/09	1.30%
International Business Machines Corp.	Technology Hardware & Equipment	08/11/09	0.46%
Laboratory Corp. of America Holdings	Health Care Equipment & Services	01/21/09	2.15%
Mead Johnson Nutrition Co.	Household & Personal Products	12/14/09	1.02%
Medtronic, Inc.	Health Care Equipment & Services	01/07/09	–
Merck & Co., Inc.	Pharmaceuticals, Biotechnology &
	Life Sciences	04/21/09	4.58%
Millipore Corp.	Pharmaceuticals, Biotechnology &
	Life Sciences	10/21/09	0.30%
NetEase.com Inc., ADR	Software & Services	11/02/09	1.19%
NRG Energy, Inc.	Utilities	01/05/09	–
Pfizer Inc.	Pharmaceuticals, Biotechnology &
	Life Sciences	02/25/09	0.84%
Ryanair Holdings PLC, ADR	Transportation	10/27/09	0.35%
Swedish Match AB	Food, Beverage & Tobacco	09/14/09	–
Wells Fargo & Co.	Commercial Banks	01/16/09	0.97%

Positions Closed (01/01/09 - 12/31/09)

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

		Date of	Realized
Security	Industry	Final Sale	Gain (Loss)
Ambac Financial Group, Inc.	Property & Casualty Insurance	02/27/09	$	(1,201,098)
Cardinal Health, Inc.	Heath Care Equipment & Services	12/18/09		(26,801)
Convera Corp., Class A	Software & Services	04/02/09		(662,727)
MBIA Inc.	Property & Casualty Insurance	11/13/09		(914,337)
Medtronic, Inc.	Heath Care Equipment & Services	04/28/09		(17,307)
Netflix Inc.	Retailing	06/04/09		1,789,918
NRG Energy, Inc.	Utilities	09/11/09		37,036
Power Corp. of Canada	Life & Health Insurance	11/25/09		(32,036)
Redwood Trust, Inc.	Real Estate	02/05/09		(112,311)
Schering-Plough Corp.	Pharmaceuticals, Biotechnology &
	Life Sciences	11/04/09		484,806
Siemens AG, Registered	Capital Goods	11/02/09		(348,157)
Swedish Match AB	Food, Beverage & Tobacco	11/03/09		5,639
Whole Foods Market, Inc.	Food & Staples Retailing	02/27/09		(463,490)
WPP PLC, ADR	Media	01/09/09		3,768
Yahoo! Inc.	Software & Services	06/02/09		(307,603)

10

SELECTED FUNDS	Fund Overview
SELECTED CAPITAL PRESERVATION TRUST -	December 31, 2009
SELECTED DAILY GOVERNMENT FUND

Portfolio Composition		Maturity Diversification
(% of Fund’s Net Assets)		(% of Portfolio Holdings)
Federal Home Loan Bank	39.07%	0-30 Days	59.99%
Repurchase Agreements	17.40%	31-90 Days	15.45%
Federal Farm Credit Bank	16.62%	91-180 Days	16.92%
Fannie Mae	13.85%	181-397 Days	7.64%
Freddie Mac	12.61%		100.00%
Other Assets & Liabilities	0.45%
	100.00%

The maturity dates of floating rate securities used in the Maturity Diversification table 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.

11

SELECTED FUNDS Expense Example

	Beginning	Ending	Expenses Paid
	Account Value	Account Value	During Period*
	(07/01/2009)	(12/31/2009)	(07/01/2009-12/31/2009)
Selected American Shares
Class S
Actual	$1,000.00	$1,246.49	$5.27
Hypothetical	$1,000.00	$1,020.52	$4.74
Class D
Actual	$1,000.00	$1,248.36	$3.40
Hypothetical	$1,000.00	$1,022.18	$3.06
Selected Special Shares
Class S
Actual	$1,000.00	$1,231.95	$6.86
Hypothetical	$1,000.00	$1,019.06	$6.21
Class D
Actual	$1,000.00	$1,235.06	$4.28
Hypothetical	$1,000.00	$1,021.37	$3.87
Selected Daily Government Fund
Class S
Actual	$1,000.00	$1,000.12	$2.02
Hypothetical	$1,000.00	$1,023.19	$2.04
Class D
Actual	$1,000.00	$1,000.12	$2.02
Hypothetical	$1,000.00	$1,023.19	$2.04

Hypothetical assumes 5% annual return before expenses.

*Expenses are equal to each Class’s annualized operating expense ratio, multiplied by the average account valueover the period, multiplied by 184/365 (to reflect the one-half year period). See page 13 for a description of the “Expense Example”.  The annualized operating expense ratios for the six-month period ended December 31, 2009 are as follows:

	Annualized Expense Ratio**
Selected American Shares
Class S	0.93%
Class D	0.60%
Selected Special Shares
Class S	1.22%
Class D	0.76%
Selected Daily Government Fund
Class S	0.40%
Class D	0.40%

**The expense ratios reflect the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.

12

SELECTED FUNDS Expense Example – (Continued)

The following disclosure provides important information regarding each Fund’s Expense Example.  Please refer to this information when reviewing the Expense Example for each Class.

Example

As a shareholder of the Fund, you incur ongoing costs only, 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 the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for each class is for the six-month period ended December 31, 2009.

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 for 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 Selected Funds.  If this fee was included, the estimate of expenses you paid during the period would be higher, and your ending account value 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 the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. 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 Selected Funds.  If this fee was included, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.

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

13

SELECTED FUNDS	Schedule of Investments
SELECTED AMERICAN SHARES, INC.	December 31, 2009

Shares					Security			Value (Note 1)
COMMON STOCK – (96.87%)
	CONSUMER DISCRETIONARY – (8.36%)
		Automobiles & Components – (1.03%)
	3,439,500		Harley-Davidson, Inc.			$	86,675,400
		Consumer Durables & Apparel – (0.19%)
	6,100		Garmin Ltd.				187,087
	328,596		Hunter Douglas NV  (Netherlands)				16,063,922
							16,251,009
		Consumer Services – (0.58%)
	2,152,000		H&R Block, Inc.				48,678,240
		Media – (3.91%)
	3,160,800		Comcast Corp., Special Class A				50,572,800
	1,386,035		DIRECTV, Class A  *				46,210,407
	1,789,000		Grupo Televisa S.A., ADR  (Mexico)				37,139,640
	138,580		Liberty Media - Starz, Series A  *				6,395,467
	8,511,500		News Corp., Class A				116,522,435
	2,199,000		Walt Disney Co.				70,917,750
							327,758,499
		Retailing – (2.65%)
	279,500		Amazon.com, Inc.  *				37,598,340
	2,630,000		Bed Bath & Beyond Inc.  *				101,518,000
	2,675,000		CarMax, Inc.  *				64,868,750
	1,732,250		Liberty Media Corp. - Interactive, Series A  *				18,777,590
							222,762,680
				Total Consumer Discretionary			702,125,828
	CONSUMER STAPLES – (12.57%)
		Food & Staples Retailing – (6.63%)
	6,016,900		Costco Wholesale Corp.				355,658,959
	6,230,445		CVS Caremark Corp.				200,682,633
							556,341,592
		Food, Beverage & Tobacco – (4.05%)
	799,500		Coca-Cola Co.				45,571,500
	6,162,058		Diageo PLC  (United Kingdom)				107,504,183
	2,318,150		Heineken Holding NV  (Netherlands)				96,952,266
	517,300		Hershey Co.				18,514,167
	1,494,167		Philip Morris International Inc.				72,003,908
							340,546,024
		Household & Personal Products – (1.89%)
	622,000		Mead Johnson Nutrition Co.				27,181,400
	515,100		Natura Cosmeticos S.A.  (Brazil)				10,742,838
	1,987,000		Procter & Gamble Co.				120,471,810
							158,396,048
				Total Consumer Staples			1,055,283,664
	ENERGY – (16.15%)
	2,767,700		Canadian Natural Resources Ltd.  (Canada)				199,136,015
	41,208,200		China Coal Energy Co. - H  (China)				74,565,216
	575,230		ConocoPhillips				29,376,996
	3,632,642		Devon Energy Corp.				266,999,187
	3,006,200		EOG Resources, Inc.				292,503,260

14

SELECTED FUNDS	Schedule of Investments
SELECTED AMERICAN SHARES, INC. - (CONTINUED)	December 31, 2009

Shares						Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	ENERGY – (CONTINUED)
	4,640,100			Occidental Petroleum Corp.			$	377,472,135
	4,780,000			OGX Petroleo e Gas Participacoes S.A.  (Brazil)				46,948,880
	831,124			Transocean Ltd.  *				68,817,067
					Total Energy			1,355,818,756
	FINANCIALS – (29.23%)
		Banks – (4.16%)
			Commercial Banks – (4.16%)
	12,932,579			Wells Fargo & Co.				349,050,307
		Diversified Financials – (13.26%)
			Capital Markets – (5.87%)
	1,662,707			Ameriprise Financial, Inc.				64,546,286
	6,088,600			Bank of New York Mellon Corp.				170,298,142
	1,779,350			Brookfield Asset Management Inc., Class A  (Canada)				39,465,983
	3,591,210			GAM Holding Ltd.  (Switzerland)				43,486,184
	289,000			Goldman Sachs Group, Inc.				48,794,760
	3,591,210			Julius Baer Group Ltd.  (Switzerland)				126,297,278
								492,888,633
			Consumer Finance – (3.94%)
	8,160,800			American Express Co.				330,675,616
			Diversified Financial Services – (3.45%)
	4,884,740			JPMorgan Chase & Co.				203,547,116
	2,265,600			Moody's Corp.				60,718,080
	289,500			Visa Inc., Class A				25,319,670
								289,584,866
								1,113,149,115
		Insurance – (11.21%)
			Life & Health Insurance – (0.19%)
	658,000			Principal Financial Group, Inc.				15,818,320
			Multi-line Insurance – (3.35%)
	82,850			Fairfax Financial Holdings Ltd.  (Canada)				32,279,188
	1,531,000			Hartford Financial Services Group, Inc.				35,611,060
	5,874,000			Loews Corp.				213,519,900
								281,410,148
			Property & Casualty Insurance – (6.69%)
	3,740			Berkshire Hathaway Inc., Class A  *				371,008,000
	1,608			Berkshire Hathaway Inc., Class B  *				5,283,888
	21,700			Markel Corp.  *				7,378,000
	9,900,800			Progressive Corp. (Ohio)  *				178,115,392
								561,785,280
			Reinsurance – (0.98%)
	1,578,687			Transatlantic Holdings, Inc.				82,265,380
								941,279,128
		Real Estate – (0.60%)
	10,172,000			Hang Lung Group Ltd.  (Hong Kong)				50,240,741
					Total Financials			2,453,719,291
	HEALTH CARE – (8.91%)
		Health Care Equipment & Services – (3.52%)
	974,400			Becton, Dickinson and Co.				76,841,184

15

SELECTED FUNDS	Schedule of Investments
SELECTED AMERICAN SHARES, INC. - (CONTINUED)	December 31, 2009

Shares					Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	HEALTH CARE – (CONTINUED)
		Health Care Equipment & Services – (Continued)
	1,610,000		Cardinal Health, Inc.			$	51,906,400
	805,000		CareFusion Corp.  *				20,133,050
	1,230,000		Express Scripts, Inc.  *				106,333,500
	444,000		Laboratory Corp. of America Holdings  *				33,228,960
	236,000		UnitedHealth Group Inc.				7,193,280
							295,636,374
		Pharmaceuticals, Biotechnology & Life Sciences – (5.39%)
	2,725,100		Johnson & Johnson				175,523,691
	5,574,673		Merck & Co., Inc.				203,698,551
	4,031,200		Pfizer Inc.				73,327,528
							452,549,770
				Total Health Care			748,186,144
	INDUSTRIALS – (6.72%)
		Capital Goods – (1.40%)
	1,818,000		ABB Ltd., ADR  (Switzerland)				34,723,800
	531,000		PACCAR Inc.				19,264,680
	1,792,283		Tyco International Ltd.				63,948,657
							117,937,137
		Commercial & Professional Services – (2.70%)
	1,241,000		D&B Corp.				104,703,170
	5,363,250		Iron Mountain Inc.  *				122,067,570
							226,770,740
		Transportation – (2.62%)
	24,134,198		China Merchants Holdings International Co., Ltd.  (China)				77,855,365
	17,840,000		China Shipping Development Co. Ltd. - H  (China)				26,623,116
	14,030,743		Cosco Pacific Ltd.  (China)				17,842,182
	502,910		Kuehne & Nagel International AG, Registered  (Switzerland)				48,897,510
	1,053,500		LLX Logistica S.A.  (Brazil)*				6,117,682
	740,500		United Parcel Service, Inc., Class B				42,482,485
							219,818,340
				Total Industrials			564,526,217
	INFORMATION TECHNOLOGY – (8.35%)
		Semiconductors & Semiconductor Equipment – (1.50%)
	4,815,800		Texas Instruments Inc.				125,499,748
		Software & Services – (4.10%)
	3,401,000		Activision Blizzard, Inc.  *				37,785,110
	227,300		Google Inc., Class A  *				140,921,454
	5,443,000		Microsoft Corp.				165,902,640
							344,609,204
		Technology Hardware & Equipment – (2.75%)
	3,239,800		Agilent Technologies, Inc.  *				100,660,586
	2,533,000		Hewlett-Packard Co.				130,474,830
							231,135,416
				Total Information Technology			701,244,368
	MATERIALS – (6.38%)
	1,339,500		BHP Billiton PLC  (United Kingdom)				42,703,282
	930,600		Martin Marietta Materials, Inc.				83,204,946

16

SELECTED FUNDS	Schedule of Investments
SELECTED AMERICAN SHARES, INC. - (CONTINUED)	December 31, 2009

Shares/Principal						Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	MATERIALS – (CONTINUED)
	517,800		Monsanto Co.				$	42,330,150
	186,400		Potash Corp. of Saskatchewan Inc.  (Canada)					20,224,400
	728,187		Rio Tinto PLC  (United Kingdom)					39,319,799
	7,883,400		Sealed Air Corp.					172,331,124
	4,561,630		Sino-Forest Corp.  (Canada)*					84,528,746
	145,700		Sino-Forest Corp., 144A  (Canada)* (a)(b)					2,699,877
	924,100		Vulcan Materials Co.					48,672,347
					Total Materials			536,014,671
	UTILITIES – (0.20%)
	1,241,800		AES Corp.  *					16,528,358
					Total Utilities			16,528,358
			TOTAL COMMON STOCK  – (Identified cost $5,530,593,843)					8,133,447,297
CONVERTIBLE BONDS – (0.57%)
	MATERIALS – (0.22%)
$	15,365,000		Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13   (Canada) (c)					18,159,509
					Total Materials			18,159,509
	TELECOMMUNICATION SERVICES – (0.35%)
	19,200,000		Level 3 Communications, Inc., Conv. Sr. Notes, 10.00%, 05/01/11					19,488,000
	8,000,000		Level 3 Communications, Inc., Conv. Sr. Notes, 15.00%, 01/15/13    (c)					10,000,000
					Total Telecommunication Services			29,488,000
			TOTAL CONVERTIBLE BONDS – (Identified cost $42,565,000)					47,647,509
CORPORATE BONDS – (1.01%)
	CONSUMER DISCRETIONARY – (0.68%)
		Automobiles & Components – (0.68%)
	47,000,000		Harley-Davidson, Inc., Sr. Notes, 15.00%, 02/01/14    (c)					57,574,013
					Total Consumer Discretionary			57,574,013
	MATERIALS – (0.33%)
	25,000,000		Sealed Air Corp., Sr. Notes, 12.00%, 02/14/14    (c)					27,419,375
					Total Materials			27,419,375
			TOTAL CORPORATE BONDS – (Identified cost $72,000,000)					84,993,388
SHORT TERM INVESTMENTS – (1.42%)
	COMMERCIAL PAPER – (1.20%)
	35,163,000		Three Pillars Funding, 0.30%, 01/04/10					35,162,121
	50,000,000		Three Pillars Funding, 0.35%, 01/04/10					49,998,542
	15,000,000		Three Pillars Funding, 0.30%, 01/06/10					14,999,375
					Total Commercial Paper			100,160,038
	REPURCHASE AGREEMENTS – (0.22%)
	6,220,000		Banc of America Securities LLC Joint Repurchase Agreement,
				0.01%, 01/04/10, dated 12/31/09, repurchase value of $6,220,007
				(collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.131%-5.959%, 02/01/35-06/01/38, total market value $6,344,400)				6,220,000

17

SELECTED FUNDS	Schedule of Investments
SELECTED AMERICAN SHARES, INC. - (CONTINUED)	December 31, 2009

Principal								Security			Value (Note 1)
SHORT TERM INVESTMENTS – (CONTINUED)
	REPURCHASE AGREEMENTS – (CONTINUED)
$	12,441,000			Mizuho Securities USA Inc. Joint Repurchase Agreement,
					0.03%, 01/04/10, dated 12/31/09, repurchase value of $12,441,041
					(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.93%-2.625%, 03/30/10-12/31/14, total market value $12,689,820)				$	12,441,000
							Total Repurchase Agreements			18,661,000
				TOTAL SHORT TERM INVESTMENTS – (Identified cost $118,821,038)						118,821,038
			Total Investments – (99.87%) – (Identified cost $5,763,979,881) – (d)							8,384,909,232
			Other Assets Less Liabilities – (0.13%)							11,216,319
						Net Assets – (100.00%)			$	8,396,125,551
	ADR: American Depositary Receipt
	*	Non-Income producing security.
	(a)	This security is subject to Rule 144A. The Board of Directors of the Fund has determined that there is sufficient liquidity in this security to realize current valuations. This security amounted to $2,699,877, or 0.03% of the Fund's net assets, as of December 31, 2009.
	(b)	Restricted Security – See Note 9 of the Notes to Financial Statements.
	(c)	Illiquid Security – See Note 9 of the Notes to Financial Statements.
	(d)	Aggregate cost for federal income tax purposes is $5,774,959,067.  At December 31, 2009 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:
			Unrealized appreciation						$	2,861,352,145
			Unrealized depreciation							(251,401,980)
						Net unrealized appreciation			$	2,609,950,165

See Notes to Financial Statements

18

SELECTED FUNDS	Schedule of Investments
SELECTED SPECIAL SHARES, INC.	December 31, 2009

Shares						Security			Value (Note 1)
COMMON STOCK – (91.76%)
	CONSUMER DISCRETIONARY – (14.92%)
		Automobiles & Components – (0.08%)
	2,680			Johnson Controls, Inc.			$	73,003
		Consumer Durables & Apparel – (2.58%)
	800			Garmin Ltd.				24,536
	45,122			Hunter Douglas NV  (Netherlands)				2,205,859
								2,230,395
		Consumer Services – (2.10%)
	6,040			H&R Block, Inc.				136,625
	47,800			Yum! Brands, Inc.				1,671,566
								1,808,191
		Media – (9.57%)
	56,100			Comcast Corp., Special Class A				897,600
	21,803			DIRECTV, Class A  *				726,912
	60,900			Grupo Televisa S.A., ADR  (Mexico)				1,264,284
	29,300			Lagardere S.C.A.  (France)				1,186,227
	2,180			Liberty Media - Starz, Series A  *				100,607
	65,280			News Corp., Class A				893,683
	98,900			Walt Disney Co.				3,189,525
								8,258,838
		Retailing – (0.59%)
	5,670			CarMax, Inc.  *				137,497
	34,490			Liberty Media Corp. - Interactive, Series A  *				373,872
								511,369
					Total Consumer Discretionary			12,881,796
	CONSUMER STAPLES – (3.13%)
		Food & Staples Retailing – (0.61%)
	630			Costco Wholesale Corp.				37,239
	15,230			CVS Caremark Corp.				490,559
								527,798
		Food, Beverage & Tobacco – (1.50%)
	31,065			Heineken Holding NV  (Netherlands)				1,299,235
		Household & Personal Products – (1.02%)
	20,100			Mead Johnson Nutrition Co.				878,370
					Total Consumer Staples			2,705,403
	ENERGY – (5.93%)
	9,600			Devon Energy Corp.				705,600
	15,500			Occidental Petroleum Corp.				1,260,925
	27,600			Tenaris S.A., ADR  (Argentina)				1,177,140
	23,871			Transocean Ltd.  *				1,976,519
					Total Energy			5,120,184
	FINANCIALS – (15.76%)
		Banks – (1.45%)
			Commercial Banks – (1.45%)
	30,100			Banco Santander Brasil S.A., ADS  (Brazil)				419,594
	30,900			Wells Fargo & Co.				833,991
								1,253,585

19

SELECTED FUNDS	Schedule of Investments
SELECTED SPECIAL SHARES, INC. - (CONTINUED)	December 31, 2009

Shares							Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	FINANCIALS – (CONTINUED)
		Diversified Financials – (8.45%)
			Capital Markets – (3.33%)
	52,790				Bank of New York Mellon Corp.			$	1,476,536
	53,800				Charles Schwab Corp.				1,012,516
	25,552				E*TRADE Financial Corp.  *				44,716
	7,170				GAM Holding Ltd.  (Switzerland)				86,822
	7,170				Julius Baer Group Ltd.  (Switzerland)				252,158
									2,872,748
			Diversified Financial Services – (5.12%)
	295				CME Group Inc.				99,105
	95,000				Oaktree Capital Group LLC, Class A  (a)				3,182,500
	13,053				Pargesa Holdings S.A., Bearer Shares  (Switzerland)				1,135,704
									4,417,309
									7,290,057
		Insurance – (5.86%)
				Insurance Brokers – (0.27%)
	3,600				Aon Corp.				138,024
	5,018				Brown & Brown, Inc.				90,173
									228,197
				Property & Casualty Insurance – (4.30%)
	260				Berkshire Hathaway Inc., Class B  *				854,360
	8,405				Markel Corp.  *				2,857,700
									3,712,060
				Reinsurance – (1.29%)
	1,380				Everest Re Group, Ltd.				118,238
	1,360				RenaissanceRe Holdings Ltd.				72,284
	17,768				Transatlantic Holdings, Inc.				925,891
									1,116,413
									5,056,670
						Total Financials			13,600,312
	HEALTH CARE – (17.20%)
		Health Care Equipment & Services – (7.28%)
	31,605				Becton, Dickinson and Co.				2,492,370
	5,285				CareFusion Corp.  *				132,178
	27,100				IDEXX Laboratories, Inc.  *				1,448,224
	24,800				Laboratory Corp. of America Holdings  *				1,856,032
	11,470				UnitedHealth Group Inc.				349,606
									6,278,410
		Pharmaceuticals, Biotechnology & Life Sciences – (9.92%)
	56,300				Johnson & Johnson				3,626,283
	108,273				Merck & Co., Inc.				3,956,295
	3,600				Millipore Corp.  *				260,460
	39,600				Pfizer Inc.				720,324
									8,563,362
						Total Health Care			14,841,772
	INDUSTRIALS – (6.24%)
		Capital Goods – (3.36%)
	32,450				ABB Ltd., ADR  (Switzerland)				619,795

20

SELECTED FUNDS	Schedule of Investments
SELECTED SPECIAL SHARES, INC. - (CONTINUED)	December 31, 2009

Shares					Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	INDUSTRIALS – (CONTINUED)
		Capital Goods – (Continued)
	97,852		Blount International, Inc.  *			$	988,305
	45,100		Shaw Group Inc.  *				1,296,625
							2,904,725
		Commercial & Professional Services – (1.07%)
	260		D&B Corp.				21,936
	39,536		Iron Mountain Inc.  *				899,840
							921,776
		Transportation – (1.81%)
	118,300		Clark Holdings, Inc.  *				44,954
	12,460		Kuehne & Nagel International AG, Registered  (Switzerland)				1,211,475
	11,300		Ryanair Holdings PLC, ADR  (Ireland)*				303,066
							1,559,495
				Total Industrials			5,385,996
	INFORMATION TECHNOLOGY – (21.08%)
		Semiconductors & Semiconductor Equipment – (3.15%)
	104,400		Texas Instruments Inc.				2,720,664
		Software & Services – (12.39%)
	98,900		Activision Blizzard, Inc.  *				1,098,779
	7,294		Google Inc., Class A  *				4,522,134
	99,650		Microsoft Corp.				3,037,332
	27,400		NetEase.com Inc., ADR  (China)*				1,030,514
	21,500		SAP AG, ADR  (Germany)				1,006,415
							10,695,174
		Technology Hardware & Equipment – (5.54%)
	76,300		Agilent Technologies, Inc.  *				2,370,641
	6,972		Cisco Systems, Inc.  *				166,910
	23,670		Harris Corp.				1,125,508
	14,000		Hewlett-Packard Co.				721,140
	3,000		International Business Machines Corp.				392,700
							4,776,899
				Total Information Technology			18,192,737
	MATERIALS – (6.48%)
	22,600		Monsanto Co.				1,847,550
	36,680		Sigma-Aldrich Corp.				1,853,440
	101,900		Sino-Forest Corp.  (Canada)*				1,888,246
				Total Materials			5,589,236
	TELECOMMUNICATION SERVICES – (0.87%)
	9,000		America Movil SAB de C.V., Series L, ADR  (Mexico)				422,820
	7,518		American Tower Corp., Class A  *				324,853
				Total Telecommunication Services			747,673
	UTILITIES – (0.15%)
	2,700		Exelon Corp.				131,949
				Total Utilities			131,949
			TOTAL COMMON STOCK  – (Identified cost $67,836,744)				79,197,058

21

SELECTED FUNDS	Schedule of Investments
SELECTED SPECIAL SHARES, INC. - (CONTINUED)	December 31, 2009

Principal								Security			Value (Note 1)
CONVERTIBLE BONDS – (1.30%)
	TELECOMMUNICATION SERVICES – (1.30%)
$	1,100,000			Level 3 Communications, Inc., Conv. Sr. Notes, 10.00%, 05/01/11					$	1,116,500
				TOTAL CONVERTIBLE BONDS – (Identified cost $1,100,000)						1,116,500
SHORT TERM INVESTMENTS – (7.22%)
	COMMERCIAL PAPER – (4.05%)
	3,500,000			Three Pillars Funding, 0.30%, 01/04/10						3,499,883
							Total Commercial Paper			3,499,883
	REPURCHASE AGREEMENTS – (3.17%)
	911,000			Banc of America Securities LLC Joint Repurchase Agreement,
					0.01%, 01/04/10, dated 12/31/09, repurchase value of $911,001
					(collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.131%-5.959%, 02/01/35-06/01/38, total market value $929,220)					911,000
	1,822,000			Mizuho Securities USA Inc. Joint Repurchase Agreement,
					0.03%, 01/04/10, dated 12/31/09, repurchase value of $1,822,006
					(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.93%-2.625%, 03/30/10-12/31/14, total market value $1,858,440)					1,822,000
							Total Repurchase Agreements			2,733,000
				TOTAL SHORT TERM INVESTMENTS – (Identified cost $6,232,883)						6,232,883
			Total Investments – (100.28%) – (Identified cost $75,169,627) – (b)							86,546,441
			Liabilities Less Other Assets – (0.28%)							(239,497)
						Net Assets – (100.00%)			$	86,306,944
	ADR: American Depositary Receipt
	ADS: American Depositary Share
	*	Non-Income producing security.
	(a)	Illiquid Security –  See Note 9 of the Notes to Financial Statements.
	(b)	Aggregate cost for federal income tax purposes is $76,031,069.  At December 31, 2009 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:
			Unrealized appreciation						$	15,270,364
			Unrealized depreciation							(4,754,992)
						Net unrealized appreciation			$	10,515,372

See Notes to Financial Statements

22

SELECTED FUNDS	Schedule of Investments
SELECTED CAPITAL PRESERVATION TRUST –	December 31, 2009
SELECTED DAILY GOVERNMENT FUND

Principal			Security			Value (Note 1)
FANNIE MAE – (13.85%)
$	130,000	7.25%, 01/15/10		$	130,324
	200,000	0.25%, 02/01/10  (a)			199,957
	200,000	0.47%, 02/22/10  (a)			199,864
	100,000	4.21%, 02/22/10			100,564
	75,000	4.23%, 02/22/10			75,405
	215,000	4.75%, 04/19/10			217,866
	350,000	5.00%, 04/28/10			355,267
	250,000	0.25%, 05/12/10  (a)			249,773
	125,000	4.125%, 05/12/10			126,723
	160,000	4.625%, 06/01/10			162,867
	300,000	3.40%, 06/10/10			303,444
	297,000	0.21%, 06/23/10  (a)			296,700
	100,000	3.27%, 06/30/10			101,465
	250,000	5.125%, 07/06/10			256,165
	1,000,000	0.1744%, 07/13/10  (b)			999,950
		TOTAL FANNIE MAE – (Identified cost $3,776,334)			3,776,334
FEDERAL FARM CREDIT BANK – (16.62%)
	105,000	5.30%, 01/04/10			105,041
	500,000	0.1313%, 03/29/10  (b)			499,916
	150,000	4.80%, 04/12/10			151,896
	458,000	4.75%, 05/07/10			464,726
	200,000	0.1519%, 06/22/10  (b)			199,952
	1,000,000	0.1219%, 06/24/10  (b)			1,000,000
	300,000	0.2047%, 09/03/10  (b)			300,000
	100,000	2.33%, 09/03/10			101,299
	1,000,000	0.09%, 09/21/10  (b)			999,927
	200,000	4.70%, 10/20/10			206,681
	500,000	0.1563%, 10/26/10  (b)			500,000
		TOTAL FEDERAL FARM CREDIT BANK – (Identified cost $4,529,438)			4,529,438
FEDERAL HOME LOAN BANK – (39.07%)
	500,000	3.75%, 01/08/10			500,320
	3,000,000	0.65%, 01/27/10  (b)			3,000,358
	2,000,000	0.66%, 02/02/10  (b)			2,000,000
	400,000	0.44%, 02/03/10  (a)			399,839
	220,000	5.25%, 02/09/10			221,123
	200,000	0.25%, 02/12/10  (a)			199,942
	410,000	3.875%, 02/12/10			411,627
	100,000	0.23%, 03/05/10  (a)			99,960
	350,000	4.875%, 03/12/10			353,020
	225,000	0.92%, 04/09/10			225,404
	75,000	0.875%, 04/15/10			75,068
	25,000	0.80%, 04/23/10			25,017
	100,000	0.20%, 04/26/10  (a)			99,936
	225,000	7.625%, 05/14/10			231,129
	200,000	0.80%, 05/17/10			200,395
	100,000	4.65%, 05/26/10			101,693
	100,000	5.00%, 05/26/10			101,623

23

SELECTED FUNDS	Schedule of Investments
SELECTED CAPITAL PRESERVATION TRUST –	December 31, 2009
SELECTED DAILY GOVERNMENT FUND - (CONTINUED)

Principal							Security			Value (Note 1)
FEDERAL HOME LOAN BANK – (CONTINUED)
$	100,000			4.25%, 06/11/10				$	101,743
	100,000			4.61%, 06/15/10					101,940
	250,000			5.00%, 06/30/10					255,843
	200,000			0.134%, 07/09/10  (b)					200,151
	200,000			1.30%, 07/30/10					201,148
	200,000			4.125%, 08/13/10					204,685
	325,000			6.875%, 08/13/10					338,097
	1,000,000			0.1425%, 11/17/10  (b)					1,000,000
				TOTAL FEDERAL HOME LOAN BANK – (Identified cost $10,650,061)					10,650,061
FREDDIE MAC – (12.61%)
	100,000			0.18%, 01/20/10  (a)					99,991
	1,175,000			4.875%, 02/09/10					1,180,542
	300,000			0.25%, 03/09/10  (a)					299,860
	200,000			0.25%, 03/23/10  (a)					199,888
	250,000			0.25%, 03/31/10  (a)					249,845
	250,000			4.15%, 04/01/10					252,380
	200,000			0.20%, 04/26/10  (a)					199,872
	240,000			2.875%, 04/30/10					242,039
	300,000			3.55%, 06/18/10					304,568
	300,000			4.125%, 07/12/10					306,052
	100,000			4.75%, 09/22/10					103,052
				TOTAL FREDDIE MAC – (Identified cost $3,438,089)					3,438,089
REPURCHASE AGREEMENTS – (17.40%)
	1,581,000			Banc of America Securities LLC Joint Repurchase Agreement,
					0.01%, 01/04/10, dated 12/31/09, repurchase value of $1,581,002
					(collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.131%-5.959%, 02/01/35-06/01/38, total market value $1,612,620)				1,581,000
	3,163,000			Mizuho Securities USA Inc. Joint Repurchase Agreement,
					0.03%, 01/04/10, dated 12/31/09, repurchase value of $3,163,011
					(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.93%-2.625%, 03/30/10-12/31/14, total market value $3,226,260)				3,163,000
				TOTAL REPURCHASE AGREEMENTS – (Identified cost $4,744,000)					4,744,000
			Total Investments – (99.55%) – (Identified cost $27,137,922) – (c)						27,137,922
			Other Assets Less Liabilities – (0.45%)						122,914
						Net Assets – (100.00%)		$	27,260,836
	(a)	Zero coupon bonds reflect the effective yield on the date of purchase.
	(b)	The interest rates on floating rate securities, shown as of December 31, 2009, 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.
	(c)	Aggregate cost for federal income tax purposes is $27,137,922.

See Notes to Financial Statements

24

SELECTED FUNDS	Statements of Assets and Liabilities
	At December 31, 2009

				Selected American Shares		Selected Special Shares		Selected Daily Government Fund
ASSETS:
Investments in securities at value* (see accompanying Schedule of Investments)			$	8,384,909,232	$	86,546,441	$	27,137,922
Cash				382,303		2,325		3,802
Receivables:
	Capital stock sold			19,119,294		7,339		39,696
	Dividends and interest			10,517,217		136,108		101,831
	Investment securities sold			4,757,699		136,477		–
Prepaid expenses				188,216		3,111		1,912
Due from Adviser				–		–		9,180
		Total assets		8,419,873,961		86,831,801		27,294,343
LIABILITIES:
Payables:
	Investment securities purchased			8,549,257		408,311		–
	Capital stock redeemed			8,909,435		32,680		900
	Distributions payable			–		–		6
Accrued audit fees				20,250		5,900		5,100
Accrued custodian fees				183,191		5,598		2,139
Accrued distribution service fees				1,037,069		4,526		–
Accrued management fees				3,877,060		41,762		7,190
Accrued transfer agent fees				1,116,902		20,460		7,431
Other accrued expenses				55,246		5,620		10,741
		Total liabilities		23,748,410		524,857		33,507
NET ASSETS			$	8,396,125,551	$	86,306,944	$	27,260,836
NET ASSETS CONSIST OF:
Par value of shares of capital stock			$	281,601,249	$	2,204,727	$	2,726,084
Additional paid-in capital				6,710,752,268		88,620,321		24,534,752
Overdistributed net investment income				(3,309,052)		(38,915)		–
Accumulated net realized losses from investments and foreign currency transactions				(1,213,933,473)		(15,856,937)		–
Net unrealized appreciation on investments and foreign currency transactions				2,621,014,559		11,377,748		–
		Net Assets	$	8,396,125,551	$	86,306,944	$	27,260,836
*Including:
	Cost of investments		$	5,763,979,881	$	75,169,627	$	27,137,922
	Cost and market value of repurchase agreements (if greater than 10% of assets)			–		–		4,744,000

25

SELECTED FUNDS	Statement of Assets and Liabilities – (Continued)
	At December 31, 2009

			Selected American Shares		Selected Special Shares		Selected Daily Government Fund
CLASS S SHARES:
	Net assets	$	4,741,863,924	$	19,179,170	$	3,733,451
	Shares outstanding		127,180,786		1,961,322		3,733,451
	Net asset value, offering, and redemption price per share (Net assets ÷ Shares outstanding)	$	37.28	$	9.78	$	1.00
CLASS D SHARES:
	Net assets	$	3,654,261,627	$	67,127,774	$	23,527,385
	Shares outstanding		98,100,213		6,857,586		23,527,385
	Net asset value, offering, and redemption price per share (Net assets ÷ Shares outstanding)	$	37.25	$	9.79	$	1.00
See Notes to Financial Statements

26

SELECTED FUNDS	Statements of Operations
	For the year ended December 31, 2009

								Selected American Shares		Selected Special Shares		Selected Daily Government Fund
INVESTMENT INCOME:
Income:
		Dividends*					$	118,255,044	$	1,111,431	$	–
		Interest						13,386,209		113,927		316,172
		Net lending fees						140,020		–		–
				Total income				131,781,273		1,225,358		316,172
Expenses:
		Management fees (Note 3)						39,547,198		441,954		111,864
		Custodian fees						922,673		31,090		14,191
		Transfer agent fees:
			Class S					4,678,010		48,621		16,108
			Class D					957,005		33,770		12,664
		Audit fees						61,200		20,400		16,800
		Legal fees						90,719		5,176		5,996
		Reports to shareholders						995,708		6,734		2,054
		Directors’ fees and expenses						514,703		7,626		6,195
		Registration and filing fees						110,002		34,721		33,999
		Miscellaneous						269,343		11,982		8,530
		Payments under distribution plan (Note 7):
			Class S					10,761,378		42,136		10,553
				Total expenses				58,907,939		684,210		238,954
				Expenses paid indirectly (Note 4)				(144)		(3)		(2)
				Reimbursement/waiver of expenses by Adviser (Notes 3 and 7)				–		–		(69,969)
					Net expenses			58,907,795		684,207		168,983
						Net investment income		72,873,478		541,151		147,189
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss from:
		Investment transactions						(820,470,273)		(7,192,337)		–
		Foreign currency transactions						(108,543)		(22,402)		–
Net change in unrealized appreciation (depreciation)								2,781,165,680		33,700,405		–
	Net realized and unrealized gain on investments and foreign currency transactions							1,960,586,864		26,485,666		–
		Net increase in net assets resulting from operations					$	2,033,460,342	$	27,026,817	$	147,189
*Net of foreign taxes withheld as follows							$	1,464,396	$	42,134	$	–
See Notes to Financial Statements

27

SELECTED FUNDS	Statements of Changes in Net Assets
	For the year ended December 31, 2009

			Selected American Shares		Selected Special Shares		Selected Daily Government Fund
OPERATIONS:
	Net investment income	$	72,873,478	$	541,151	$	147,189
	Net realized loss from investments and foreign currency transactions		(820,578,816)		(7,214,739)		–
	Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions		2,781,165,680		33,700,405		–
	Net increase in net assets resulting from operations		2,033,460,342		27,026,817		147,189
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
	Net investment income:
Class S			(36,762,782)		(52,579)		(8,866)
Class D			(37,108,020)		(440,887)		(138,323)
CAPITAL SHARE TRANSACTIONS:
	Net decrease in net assets resulting from capital share transactions (Note 5):
Class S			(863,944,809)		(2,611,779)		(510,481)
Class D			(60,905,184)		(1,054,695)		(43,775,612)
Total increase (decrease) in net assets			1,034,739,547		22,866,877		(44,286,093)
NET ASSETS:
	Beginning of year		7,361,386,004		63,440,067		71,546,929
	End of year*	$	8,396,125,551	$	86,306,944	$	27,260,836
*Including overdistributed net investment income of		$	(3,309,052)	$	(38,915)	$	–
See Notes to Financial Statements

28

SELECTED FUNDS	Statements of Changes in Net Assets
	For the year ended December 31, 2008

			Selected American Shares		Selected Special Shares		Selected Daily Government Fund
OPERATIONS:
	Net investment income	$	103,808,560	$	715,538	$	2,602,966
	Net realized loss from investments and foreign currency transactions		(290,862,323)		(7,040,835)		–
	Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions		(4,790,394,567)		(49,785,249)		–
	Net increase (decrease) in net assets resulting from operations		(4,977,448,330)		(56,110,546)		2,602,966
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
	Net investment income:
Class S			(55,442,250)		–		(97,566)
Class D			(47,995,856)		(153,552)		(2,505,400)
	Return of capital:
Class S			(1,177,433)		–		–
Class D			(1,019,293)		(25,788)		–
CAPITAL SHARE TRANSACTIONS:
	Net decrease in net assets resulting from capital share transactions (Note 5):
Class S			(42,931,837)		(10,657,415)		(631,978)
Class D			(134,262,825)		(6,271,172)		(42,883,336)
Total decrease in net assets			(5,260,277,824)		(73,218,473)		(43,515,314)
NET ASSETS:
	Beginning of year		12,621,663,828		136,658,540		115,062,243
	End of year*	$	7,361,386,004	$	63,440,067	$	71,546,929
*Including overdistributed net investment income of		$	(2,203,185)	$	(64,198)	$	–
See Notes to Financial Statements

29

SELECTED FUNDS	Notes to Financial Statements
	December 31, 2009

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Selected Funds (“Funds”) consist of Selected American Shares, Inc. (a Maryland corporation) (“Selected American Shares”), Selected Special Shares, Inc. (a Maryland corporation) (“Selected Special Shares”), and the Selected Capital Preservation Trust (an Ohio corporation) (“Trust”).  The Trust consists of the Selected Daily Government Fund.  The Funds and Trust are registered under the Investment Company Act of 1940 (“40 Act”), as amended, as diversified, open-end management investment companies. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements.

Selected American Shares’ investment objective is to achieve both capital growth and income. The Fund primarily invests in equity securities issued by large companies with market capitalizations of at least $10 billion.

Selected Special Shares’ investment objective is capital growth. The Fund invests in a diversified portfolio of small, mid and large capitalization companies.

Selected Daily Government Fund seeks to provide a high level of current income from short-term money market securities consistent with prudent investment management, preservation of ca­pital and maintenance of liquidity.  It invests in U.S. Government Securities and repurchase agreements in respect thereto.

An investment in any of the Funds, as with any mutual fund, includes risks that vary depending upon the fund's investment objectives and policies.  There is no assurance that the investment objective of any fund will be achieved. A fund's return and net asset value will fluctuate, although Selected Daily Government Fund seeks to maintain a net asset value of $1.00 per share.

The Class S and Class D shares are sold at net asset value.  Income, expenses (other than those attributable to a specific class) and gains and losses are allocated daily to each class of shares based on the relative proportion of net assets represented by each class.  Operating expenses directly attributable to a specific class are charged against the operations of that class.  All classes have identical rights with respect to voting (exclusive of each Class’ distribution arrangement), liquidation and distributions.

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 last quoted bid price.  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. (“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/Trustees.  Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value.  For Selected Daily Government 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/Trustees.

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 Fund’s own assumptions in determining the fair value of investments)

30

SELECTED FUNDS	Notes to Financial Statements – (Continued)
	December 31, 2009

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

Value Measurements – (Continued)

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.

The following is a summary of the inputs used as of December 31, 2009 in valuing each Fund’s investments carried at value:

	Investments in Securities at Value
						Selected
	Selected		Selected			Daily
	American		Special			Government
	Shares		Shares			Fund
Valuation inputs
Level 1 – Quoted prices:
Equity securities:
Consumer discretionary	$	686,061,906	$	9,489,710		$	–
Consumer staples		850,827,215		1,406,168			–
Energy		1,281,253,540		5,120,184			–
Financials		2,359,992,366		9,195,286			–
Health care		748,186,144		14,841,772			–
Industrials		393,308,044		4,174,521			–
Information technology		701,244,368		18,192,737			–
Materials		453,991,590		5,589,236			–
Telecommunication services		–		747,673			–
Utilities		16,528,358		131,949			–
Level 2 – Other Significant Observable Inputs:
Short-term debt securities issued by U.S. Treasuries and U.S. government corporations and agencies		–		–			22,393,922
Convertible debt securities		47,647,509		1,116,500			–
Corporate debt securities		84,993,388		–			–
Equity securities*:
Consumer discretionary		16,063,922		3,392,086			–
Consumer staples		204,456,449		1,299,235			–
Energy		74,565,216		–			–
Financials		93,726,925		4,405,026			–
Industrials		171,218,173		1,211,475			–
Materials		82,023,081		–			–
Short-term securities		118,821,038		6,232,883	��		4,744,000
Level 3 – Significant Unobservable Inputs		–		–			–
Total	$	8,384,909,232	$	86,546,441		$	27,137,922

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

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.

31

SELECTED FUNDS	Notes to Financial Statements – (Continued)
	December 31, 2009

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

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.

Federal Income Taxes- It is each Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute substantially all of its taxable income, including any net realized gains on investments not offset by loss carryovers, to shareholders.  Therefore, no provision for federal income or excise tax is required.  The Adviser has analyzed the Funds’ tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of December 31, 2009, no provision for income tax would be required in the Funds’ financial statements.  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 2006. At December 31, 2009, the Funds had available for federal income tax purposes unused capital loss carryforwards and post October 2009 capital losses as follows:

	Capital Loss Carryforwards
	Selected American Shares		Selected Special Shares
Expiring
12/31/2012	$	29,605,000	$	–
12/31/2013		69,420,000		–
12/31/2014		–		–
12/31/2015		–		–
12/31/2016		291,657,000		4,812,000
12/31/2017		724,236,000		10,332,000
Total	$	1,114,918,000	$	15,144,000

	Post October 2009 Capital Losses (expire December 31, 2018)
Selected American Shares	$	99,039,000

32

SELECTED FUNDS	Notes to Financial Statements – (Continued)
	December 31, 2009

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

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.

Dividends and Distributions to Shareholders - Dividends and distributions to shareholders are recorded on the ex-dividend date.  Net investment income (loss), net realized gains (losses), and net unrealized appreciation (depreciation) on investments may differ for financial statement and tax purposes primarily due to differing treatments of wash sales, foreign currency transactions, net operating losses, 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 the classification of distributions to shareholders to reflect the differences between financial statement amounts and distributions determined in accordance with income tax rules. Accordingly, during the year ended December 31, 2009, for Selected American Shares, amounts have been reclassified to reflect an increase in overdistributed net investment income of $108,543 and a corresponding decrease to accumulated net realized losses from investments and foreign currency transactions; for Selected Special Shares, amounts have been reclassified to reflect an increase in overdistributed net investment income of $22,402, an increase in additional paid in capital of $1,918, and a decrease to accumulated net realized losses from investments and foreign currency transactions of $20,484. The Funds’ net assets have not been affected by these reclassifications.

The tax character of distributions paid during the years ended December 31, 2009 and 2008 was as follows:

	Ordinary Income		Long-Term Capital Gain		Return of Capital		Total
Selected American Shares
2009	$	73,870,802	$	–	$	–	$	73,870,802
2008		103,438,106		–		2,196,726		105,634,832
Selected Special Shares
2009		493,466		–		–		493,466
2008		155,470		–		23,870		179,340
Selected Daily Government Fund
2009		147,189		–		–		147,189
2008		2,602,966		–		–		2,602,966

As of December 31, 2009, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

	Selected American Shares	Selected Special Shares
Undistributed net investment income	$                                                    10,054,882	$	171,650
Accumulated net realized losses from investments and foreign currency transactions	(1,213,956,497)		(15,143,997)
Net unrealized appreciation on investments	2,610,035,37		10,516,306
Total	$                                                1,406,133,76	$	(4,456,041)

33

SELECTED FUNDS	Notes to Financial Statements – (Continued)
	December 31, 2009

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/Trustees Fees and Expenses - The Funds set up a Rabbi Trust to provide for the deferred compensation plan for independent Directors/Trustees 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/Trustee’s account is based upon years of service and fees paid to each Director/Trustee during the years of service. The amount paid to the Director/Trustee by the Trust under the plan will be determined based upon the performance of the Selected Funds.

NOTE 2 - PURCHASES AND SALES OF SECURITIES

Purchases and sales of investment securities (excluding short-term securities) during the year ended December 31, 2009 for Selected American Shares and Selected Special Shares were as follows:

	Selected American Shares		Selected Special Shares
Cost of purchases	$	802,416,733	$	16,971,534
Proceeds of sales		1,642,976,629		25,039,236

NOTE 3 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Advisory fees are paid monthly to the Adviser.  Prior to July 1, 2009, the annual rate for Selected American Shares was 0.65% of the average net assets for the first $500 million, 0.60% on the next $500 million, 0.55% on the next $2 billion, 0.54% on the next $1 billion, 0.53% on the next $1 billion, 0.52% on the next $1 billion, 0.51% on the next $1 billion, 0.50% on the next $3 billion, and 0.485% of the average net assets in excess of $10 billion. The annual rate for Selected Special Shares was 0.70% of the average net assets for the first $50 million, 0.675% on the next $100 million, 0.65% on the next $100 million, and 0.60% of the average net assets in excess of $250 million. Effective July 1, 2009, the Adviser reduced the advisory fee breakpoints above 0.55% for Selected American Shares and Selected Special Shares. As a result, the new annual rate for Selected American Shares is 0.55% of the average net assets for the first $3 billion. For Selected Special Shares the new fixed annual rate is 0.55% of the average net assets. Advisory fees paid during the year ended December 31, 2009 approximated 0.54% and 0.61% of average net assets for Selected American Shares and Selected Special Shares, respectively. The fixed annual rate for the Selected Daily Government Fund is 0.30% of the average net assets. The Adviser is contractually committed to waive fees and/or reimburse Selected Daily Government Fund’s expenses to the extent necessary to cap total annual operating expenses at 0.50% for Class S and D shares (the cap for Class S shares was 0.75% until May 1, 2009). The Adviser also agrees to waive some or all of its advisory fees and to reimburse expenses to the extent necessary so that the Fund’s investment income will not be less than zero until May 1, 2010.  During the year ended December 31, 2009, such waivers and reimbursements amounted to $19,503 and $43,496 for Class S and Class D shares, respectively. After waivers and reimbursements, the net advisory fees paid during the year ended December 31, 2009 approximated 0.13% of average net assets for Selected Daily Government Fund.

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 the year ended December 31, 2009 was $188,552, $8,835, and $2,822 for Selected American Shares, Selected Special Shares, and Selected Daily Government Fund, 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 fee as State Street Bank also serves as the Funds’ custodian.  Certain Directors/Trustees and Officers of the Funds are also Directors/Trustees and Officers of the general partner of the Adviser.

34

SELECTED FUNDS	Notes to Financial Statements – (Continued)
	December 31, 2009

NOTE 3 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES –

(CONTINUED)

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 $144, $3, and $2 for Selected American Shares, Selected Special Shares, and Selected Daily Government Fund, respectively, during the year ended December 31, 2009.

NOTE 5 - CAPITAL STOCK

At December 31, 2009, there were 600 million shares of capital stock of Selected American Shares ($1.25 par value per share) authorized.  At December 31, 2009, there were 50 million shares of capital stock of Selected Special Shares ($0.25 par value per share) authorized.  At December 31, 2009, there were unlimited shares of capital stock of Selected Capital Preservation Trust ($0.10 par value per share) authorized.  Transactions in capital stock were as follows:

Class S	Year ended December 31, 2009
	Selected American		Selected Special		Selected Daily
	Shares		Shares		Government Fund
Shares sold		29,874,792		125,145		2,652,721
Shares issued in reinvestment of distributions		969,609		5,059		9,740
		30,844,401		130,204		2,662,461
Shares redeemed		(60,645,087)		(468,008)		(3,172,942)
Net decrease		(29,800,686)		(337,804)		(510,481)
Proceeds from shares sold	$	893,449,877	$	1,036,529	$	2,652,721
Proceeds from shares issued in reinvestment of
distributions		35,671,925		48,972		9,740
		929,121,802		1,085,501		2,662,461
Cost of shares redeemed		(1,793,066,611)		(3,697,280)		(3,172,942)
Net decrease	$	(863,944,809)	$	(2,611,779)	$	(510,481)

Class S	Year ended December 31, 2008
	Selected American		Selected Special		Selected Daily
	Shares		Shares		Government Fund
Shares sold		52,788,052		205,953		2,911,490
Shares issued in reinvestment of distributions		2,146,603		–		93,798
		54,934,655		205,953		3,005,288
Shares redeemed		(57,050,156)		(1,335,225)		(3,637,266)
Net decrease		(2,115,501)		(1,129,272)		(631,978)
Proceeds from shares sold	$	1,973,690,601	$	1,847,371	$	2,911,490
Proceeds from shares issued in reinvestment of
distributions		55,103,276		–		93,798
		2,028,793,877		1,847,371		3,005,288
Cost of shares redeemed		(2,071,725,714)		(12,504,786)		(3,637,266)
Net decrease	$	(42,931,837)	$	(10,657,415)	$	(631,978)

35

SELECTED FUNDS	Notes to Financial Statements – (Continued)
	December 31, 2009

NOTE 5 - CAPITAL STOCK – (CONTINUED)

Class D	Year ended December 31, 2009
	Selected American		Selected Special		Selected Daily
	Shares		Shares		Government Fund
Shares sold		11,637,523		305,178		6,677,409
Shares issued in reinvestment of distributions		773,829		29,925		175,020
		12,411,352		335,103		6,852,429
Shares redeemed		(15,383,362)		(500,773)		(50,628,041)
Net decrease		(2,972,010)		(165,670)		(43,775,612)
Proceeds from shares sold	$	361,723,094	$	2,609,144	$	6,677,409
Proceeds from shares issued in reinvestment of
distributions		28,431,483		289,689		175,020
		390,154,577		2,898,833		6,852,429
Cost of shares redeemed		(451,059,761)		(3,953,528)		(50,628,041)
Net decrease	$	(60,905,184)	$	(1,054,695)	$	(43,775,612)

Class D	Year ended December 31, 2008
	Selected American		Selected Special		Selected Daily
	Shares		Shares		Government Fund
Shares sold		16,281,582		347,821		13,790,987
Shares issued in reinvestment of distributions		1,377,495		20,267		2,637,462
		17,659,077		368,088		16,428,449
Shares redeemed		(21,633,056)		(1,023,109)		(59,311,785)
Net decrease		(3,973,979)		(655,021)		(42,883,336)
Proceeds from shares sold	$	637,480,859	$	3,086,028	$	13,790,987
Proceeds from shares issued in reinvestment of
distributions		35,291,397		119,775		2,637,462
		672,772,256		3,205,803		16,428,449
Cost of shares redeemed		(807,035,081)		(9,476,975)		(59,311,785)
Net decrease	$	(134,262,825)	$	(6,271,172)	$	(42,883,336)

NOTE 6 - BANK BORROWINGS

Each Fund may borrow up to 5% of its assets from a bank to purchase portfolio securities, or for temporary and emergency purposes.  The purchase of securities with borrowed funds creates leverage in the Fund.  Each Fund has entered into an agreement, which enables it to participate with certain other funds managed by the Adviser in an unsecured line of credit with a bank, which permits borrowings up to $50 million, collectively.  Interest is charged based on its borrowings, at a rate equal to the higher of the Federal Funds Rate or the Overnight Libor Rate, plus 1.25%.  The Funds had no borrowings during the year ended December 31, 2009.

36

SELECTED FUNDS	Notes to Financial Statements – (Continued)
	December 31, 2009

NOTE 7 - DISTRIBUTION SERVICE FEES

For services under the distribution agreement, the Funds’ Class S shares pay an annual fee of 0.25% of average daily net assets.  For the year ended December 31, 2009, Selected American Shares, Selected Special Shares, and Selected Daily Government Fund incurred distribution services fees totaling $10,761,378, $42,136, and $10,553, respectively.

Effective May 1, 2009, Davis Distributors, LLC has entered into an agreement with Selected Daily Government Fund to temporarily eliminate the 0.25% distribution fee on Class S shares until December 31, 2010. During the year ended December 31, 2009, such fee elimination amounted to $6,970.

There are no distribution service fees for the Funds’ Class D shares.

NOTE 8 - SECURITIES LOANED

Selected American Shares (“Fund”) has entered into a securities lending arrangement with State Street Bank. Under the terms of the agreement, the Fund receives fee income from lending transactions; in exchange for such fees, State Street Bank is authorized to loan securities on behalf of the Fund, against receipt of collateral at least equal to the value of the securities loaned. As of December 31, 2009, the Fund did not have any securities on loan. The Fund bears the risk of any deficiency in the amount of the collateral available for return to a borrower due to a loss in an approved investment.

NOTE 9 - ILLIQUID AND RESTRICTED SECURITIES

Securities may be considered illiquid if they lack a readily available market or if valuation has not changed for a certain period of time.  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 illiquid securities in Selected American Shares amounted to $113,152,897 or 1.35% of the Fund’s net assets as of December 31, 2009.The aggregate value of restricted securities in Selected American Shares amounted to $2,699,877 or 0.03% of the Fund’s net assets as of December 31, 2009.The aggregate value of illiquid securities in Selected Special Shares amounted to $3,182,500 or 3.69% of the Fund’s net assets as of December 31, 2009.Information regarding illiquid and restricted securities is as follows:

						Cost per		Valuation per
		Acquisition			Units/	Unit/		Unit/ Share as of
Fund	Security	Date	Principal		Shares	Share		December 31, 2009
Selected
American	Harley-Davidson, Inc., Sr.
Shares	Notes, 15.00%, 02/01/14	02/03/09	$	47,000,000	470,000	$	100.00	$	122.50
Selected	Level 3 Communications,
American	Inc., Conv. Sr. Notes,
Shares	15.00%, 01/15/13	12/23/08	$	8,000,000	80,000	$	100.00	$	125.00
Selected
American	Sealed Air Corp., Sr. Notes,
Shares	12.00%, 02/14/14	01/26/09	$	25,000,000	250,000	$	100.00	$	109.68
Selected
American
Shares	Sino-Forest Corp., 144A	12/11/09		N/A	145,700	$	15.85	$	18.53
Selected
American	Sino-Forest Corp., Conv. Sr.
Shares	Notes, 5.00%, 08/01/13	07/17/08	$	15,365,000	153,650	$	100.00	$	118.19
Selected
Special	Oaktree Capital Group LLC,
Shares	Class A	05/21/07		N/A	95,000	$	27.98	$	33.50

37

SELECTED FUNDS	Notes to Financial Statements – (Continued)
	December 31, 2009

NOTE 10 - SUBSEQUENT EVENTS

Fund management has determined that no material events or transactions occurred subsequent to December 31, 2009 and through February 17, 2010, the date the Funds’ financial statements were issued, which require adjustments and/or additional disclosure in the Funds’ financial statements.

38

SELECTED FUNDS
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
Selected American Shares Class S:
Year ended December 31, 2009	$28.54	$0.27d	$8.76	$9.03
Year ended December 31, 2008	$47.78	$0.34d	$(19.23)	$(18.89)
Year ended December 31, 2007	$46.06	$0.49d	$1.72	$2.21
Year ended December 31, 2006	$40.24	$0.30d	$5.81	$6.11
Year ended December 31, 2005	$36.87	$0.31	$3.34	$3.65
Selected American Shares Class D:
Year ended December 31, 2009	$28.50	$0.36d	$8.77	$9.13
Year ended December 31, 2008	$47.79	$0.48d	$(19.28)	$(18.80)
Year ended December 31, 2007	$46.07	$0.63d	$1.73	$2.36
Year ended December 31, 2006	$40.23	$0.45d	$5.81	$6.26
Year ended December 31, 2005	$36.86	$0.41d	$3.35	$3.76
Selected Special Shares Class S:
Year ended December 31, 2009	$6.80	$0.03d	$2.98	$3.01
Year ended December 31, 2008	$12.30	$0.04d	$(5.54)	$(5.50)
Year ended December 31, 2007	$13.98	$–d,e	$(0.17)	$(0.17)
Year ended December 31, 2006	$12.47	$(0.03)d	$2.22	$2.19
Year ended December 31, 2005	$12.44	$0.02	$1.03	$1.05
Selected Special Shares Class D:
Year ended December 31, 2009	$6.81	$0.07d	$2.98	$3.05
Year ended December 31, 2008	$12.30	$0.08d	$(5.54)	$(5.46)
Year ended December 31, 2007	$13.98	$0.05d	$(0.17)	$(0.12)
Year ended December 31, 2006	$12.46	$0.02d	$2.23	$2.25
Year ended December 31, 2005	$12.42	$0.05d	$1.04	$1.09
Selected Daily Government Fund Class S:
Year ended December 31, 2009	$1.000	$0.002	$–	$0.002
Year ended December 31, 2008	$1.000	$0.020	$–	$0.020
Year ended December 31, 2007	$1.000	$0.044	$–	$0.044
Year ended December 31, 2006	$1.000	$0.043	$–	$0.043
Year ended December 31, 2005	$1.000	$0.025	$–	$0.025
Selected Daily Government Fund Class D:
Year ended December 31, 2009	$1.000	$0.003	$–	$0.003
Year ended December 31, 2008	$1.000	$0.024	$–	$0.024
Year ended December 31, 2007	$1.000	$0.048	$–	$0.048
Year ended December 31, 2006	$1.000	$0.045	$–	$0.045
Year ended December 31, 2005	$1.000	$0.027	$–	$0.027

39

Financial Highlights

Dividends and Distributions                                                                                                                                                      & #160;              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 millions)	Gross Expense Ratio	Net Expense Ratiob	Net Investment Income (Loss) Ratio	Portfolio Turnoverc
	$(0.29)	$–	$–	$(0.29)	$37.28	31.64%	$4,742	0.94%	0.94%	0.86%	11%
	$(0.34)	$–	$(0.01)	$(0.35)	$28.54	(39.44)%	$4,481	0.92%	0.92%	0.86%	18%
	$(0.49)	$–	$–	$(0.49)	$47.78	4.79%	$7,602	0.90%	0.88%	1.01%	8%
	$(0.29)	$–	$–	$(0.29)	$46.06	15.19%	$7,509	0.90%	0.90%	0.72%	9%
	$(0.28)	$–	$–	$(0.28)	$40.24	9.90%	$7,978	0.90%	0.90%	0.81%	4%
	$(0.38)	$–	$–	$(0.38)	$37.25	32.06%	$3,654	0.61%	0.61%	1.19%	11%
	$(0.48)	$–	$(0.01)	$(0.49)	$28.50	(39.24)%	$2,881	0.59%	0.59%	1.19%	18%
	$(0.64)	$–	$–	$(0.64)	$47.79	5.11%	$5,020	0.57%	0.57%	1.32%	8%
	$(0.42)	$–	$–	$(0.42)	$46.07	15.59%	$4,407	0.58%	0.58%	1.04%	9%
	$(0.39)	$–	$–	$(0.39)	$40.23	10.19%	$1,675	0.61%	0.60%	1.11%	4%
	$(0.03)	$–	$–	$(0.03)	$9.78	44.21%	$19	1.32%	1.32%	0.38%	24%
	$–	$–	$–	$–	$6.80	(44.72)%	$16	1.26%	1.26%	0.43%	30%
	$(0.01)	$(1.50)	$–	$(1.51)	$12.30	(1.27)%	$42	1.17%	1.17%	(0.03)%	36%
	$(0.11)	$(0.57)	$–	$(0.68)	$13.98	17.74%	$55	1.16%	1.16%	(0.20)%	41%
	$(0.13)	$(0.89)	$–	$(1.02)	$12.47	8.45%	$68	1.16%	1.12%	0.11%	53%
	$(0.07)	$–	$–	$(0.07)	$9.79	44.72%	$67	0.84%	0.84%	0.86%	24%
	$(0.03)	$–	$–e	$(0.03)	$6.81	(44.40)%	$48	0.86%	0.86%	0.83%	30%
	$(0.06)	$(1.50)	$–	$(1.56)	$12.30	(0.89)%	$94	0.81%	0.81%	0.33%	36%
	$(0.16)	$(0.57)	$–	$(0.73)	$13.98	18.19%	$95	0.83%	0.83%	0.13%	41%
	$(0.16)	$(0.89)	$–	$(1.05)	$12.46	8.83%	$55	0.87%	0.86%	0.37%	53%
	$(0.002)	$–	$–	$(0.002)	$1.000	0.20%	$4	1.17%	0.54%	0.31%	NA
	$(0.020)	$–	$–	$(0.020)	$1.000	2.05%	$4	0.94%	0.75%	2.09%	NA
	$(0.044)	$–	$–	$(0.044)	$1.000	4.50%	$5	0.97%	0.75%	4.41%	NA
	$(0.043)	$–	$–	$(0.043)	$1.000	4.33%	$6	0.67%	0.67%	4.28%	NA
	$(0.025)	$–	$–	$(0.025)	$1.000	2.57%	$100	0.68%	0.67%	2.54%	NA
	$(0.003)	$–	$–	$(0.003)	$1.000	0.29%	$24	0.57%	0.44%	0.41%	NA
	$(0.024)	$–	$–	$(0.024)	$1.000	2.40%	$67	0.40%	0.40%	2.44%	NA
	$(0.048)	$–	$–	$(0.048)	$1.000	4.85%	$110	0.41%	0.41%	4.75%	NA
	$(0.045)	$–	$–	$(0.045)	$1.000	4.61%	$104	0.40%	0.40%	4.55%	NA
	$(0.027)	$–	$–	$(0.027)	$1.000	2.75%	$11	0.50%	0.50%	2.71%	NA

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.
b	The ratios in this column reflect the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.
c	The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period.  Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation.
d	Per share calculations were based on average shares outstanding for the period.
e	Less than $0.005 per share.
See Notes to Financial Statements

40

SELECTED FUNDS Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors/Trustees

of Selected American Shares, Inc., Selected Special Shares, Inc., and Selected Capital Preservation Trust:

We have audited the accompanying statements of assets and liabilities of Selected American Shares, Inc., Selected Special Shares, Inc., and Selected Daily Government Fund (a series of Selected Capital Preservation Trust), including the schedules of investments, as of December 31, 2009, 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, 2009, 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 Selected American Shares, Inc., Selected Special Shares, Inc., and Selected Daily Government Fund as of December 31, 2009, 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 17, 2010

41

SELECTED FUNDS Fund Information

Federal Income Tax Information (Unaudited)

In early 2010, shareholders will receive information regarding all dividends and distributions paid to them by the Funds during the calendar year 2009.  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 2009 with their 2009 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.

Selected American Shares, Inc.

During the calendar year 2009, $73,870,802 of dividends paid by the Fund constituted income dividends for federal income tax purposes. The Fund designates $73,870,802 or 100% as income qualifying for the corporatedividends-received deduction.

For the calendar year 2009, certain dividends paid by the Fund constitute qualified dividend income for federal income tax purposes. The Fund designates $73,870,802 or 100% as qualified dividend income.

Selected Special Shares, Inc.

During the calendar year 2009, $493,466 of dividends paid by the Fund constituted income dividends for federal income tax purposes. The Fund designates $478,368 or 97% as income qualifying for the corporatedividends-received deduction.

For the calendar year 2009, certain dividends paid by the Fund constitute qualified dividend income for federal income tax purposes. The Fund designates $493,466 or 100% as qualified dividend income.

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 1-800-243-1575, (ii) on the Funds’ website at www.selectedfunds.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 1-800-243-1575, (ii) on the Funds’ website at www.selectedfunds.com, and (iii) on the SEC’s website at www.sec.gov.

Form N-Q

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Funds’ Form N-Q is available without charge, upon request, by calling 1-800-243-1575 or on the Funds’ website at www.selectedfunds.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 that information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

42

SELECTED FUNDS 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 your account statement, other information about our products and services to you.  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 Selected Funds by phone at 1-800-243-1575.  Individual copies of current prospectuses and reports will be sent to you within 30 days after the Funds receive your request to stop householding.

43

SELECTED FUNDS Directors and Officers

For the purposes of their service as directors to the Selected Funds, the business address for each of the directors is 2949 E. Elvira Road, Suite 101, Tucson, AZ 85756.  Each Director serves until retirement, resignation, death, or removal.  Directors must retire from the Board of Directors and cease being a Director at the close of business on the last day of the calendar year in which the Director attains age 75.

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

William P. Barr (5/23/50)	Director	Director since 1994	Of Counsel to Kirkland & Ellis LLP (law firm) until July 2009; Executive Vice President and General Counsel, Verizon (a telecommunications company) from 1994 through 2008.	3	Director, Holcim (U.S.) Inc. (supplier of Portland and blended cements); Director, Time Warner, Inc. (media and entertainment company); Director, Dominion Resources (energy company).
Francisco L. Borges (11/17/51)	Director	Director since 2006	Chairman and Managing Partner, Landmark Partners, Inc. (private equity firm) since March 1999.	3	Director, Hartford Foundation for Public Giving; Director, Connecticut Public Broadcasting Networks
Jerome E. Hass (6/1/40)	Director	Director since 1997	Professor of Finance and Business Strategy, Johnson Graduate School of Management, Cornell University since 1985; Consultant, National Economic Research Associates; Co-Owner of B&H Enterprises of Ithaca (dba Ithaca Agway True Value) since 2000.	3	None
Katherine L. MacWilliams (1/19/56)	Director	Director since 1997	Chief Financial Officer, Caridian BCT, Inc. (a medical device company); former Chief Financial Officer, Coors Brewers Limited, a division of Molson Coors Brewing Company.	3	None
James J. McMonagle (10/1/44)	Director/ Chairman	Director since 1990	Chairman of the Selected Funds Board of Directors since 1997; of Counsel to Vorys, Sater, Seymour and Pease LLP (law firm) since 2002.	3	Director of Owens Corning (producer of residential and commercial building materials).
Richard O'Brien (9/12/45)	Director	Director since 1996	Retired Corporate Economist for Hewlett-Packard Company.	3	None

Inside Directors*

Andrew A. Davis (6/25/63)	Director	Director since 1998	President or Vice President of each Selected Fund and Davis Fund; President, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.	9	Director of certain Davis Funds (consisting of 6 portfolios).
Christopher C. Davis (7/13/65)	Director	Director since 1998	President or Vice President of each Selected Fund, Davis Fund and the 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., a registered broker/dealer.	10	Director of certain Davis Funds (consisting of 7 portfolios); Director, Washington Post Co. (newspaper publisher).

*   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.

44

SELECTED FUNDS Directors and Officers – (Continued)

Officers

Christopher C. Davis (born 7/13/65, Selected Funds officer since 1998). See description in the section on Inside Directors.

Andrew A. Davis (born 6/25/63, Selected Funds officer since 1998). See description in the section on Inside Directors.

Kenneth C. Eich (born 8/14/53, Selected 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 3/4/71, Selected 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 9/25/66, Selected 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 3/7/57, Selected 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 9/24/53, Selected Funds officer since 1991). Assistant Secretary (for clerical purposes only) of each of the Davis Funds and Selected Funds; Shareholder, Greenberg Traurig, LLP (a law firm); counsel to the Independent Directors and the Davis Funds.

45

SELECTED FUNDS

Investment Adviser

Davis Selected Advisers, L.P.

2949 East Elvira Road, Suite 101

Tucson, Arizona 85756

Distributor

Davis Distributors, LLC

2949 East Elvira Road, Suite 101

Tucson, Arizona 85756

Custodian

State Street Bank and Trust Company

c/o The Selected Funds

One Lincoln  Street

Boston, Massachusetts 02111

Transfer Agent

Boston Financial Data Services, Inc.

c/o The Selected Funds

P.O. Box 8243

Boston, Massachusetts 02266-8243

Overnight Address:

30 Dan Road

Canton, Massachusetts 02021-2809

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 the Selected Funds 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 1-800-243-1575 or on the Funds’ website at www.selectedfunds.com. Quarterly Fact sheets are available on the Funds’ website at www.selectedfunds.com.

46

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 Katherine MacWilliams 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, 2009 and December 31, 2008 were $20,400 and $20,400, respectively.

(b)   Audit-Related Fees.  The aggregate Audit-Related Fees billed by KPMG for services rendered for assurance and related services that are not reasonably related to the performance of the audit or review of the fund financial statements, but not reported as Audit Fees fore fiscal year ends December 31, 2009 and December 31, 2008 were $0 and $0, respectively.

(c)   Tax Fees.  The aggregate Tax Fees billed by KPMG for professional services rendered for tax compliance, tax advise and tax planning for the fiscal year ends December 31, 2009 and December 31, 2008 were $6,690 and $7,315, 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, 2009 and December 31, 2008 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 independent accountant relating to the operations or financial reporting of the funds.  Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.

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

    (2)  No services included in (b) – (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-1 of Regulation S-X.

(f)   Not applicable

(g)   The Funds’ independent accountant did not provide any services to the investment advisor or any affiliate for the fiscal years ended December 31, 2009 and December 31, 2008.  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 form 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.

SELECTED SPECIAL SHARES, INC.

By           /s/ Kenneth C. Eich

Kenneth C. Eich

Principal Executive Officer

Date:  March 5, 2010

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 5, 2010

By           /s/ Douglas A. Haines

Douglas A. Haines

Principal Financial Officer

Date:  March 5, 2010