Selected International Fund Class S (SLSSX) 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 MANANGEMENT 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, 2008

Date of reporting period: December 31, 2008

____________________

ITEM 1. REPORT TO STOCKHOLDERS

SELECTED FUNDS Table of Contents

Shareholder Letter	2
Management's Discussion and Analysis:
Selected American Shares	3
Selected Special Shares	4
Fund Overview, Portfolio Activity, and Fund Performance:
Selected American Shares	6
Selected Special Shares	10
Selected Daily Government Fund	15
Schedule of Investments:
Selected American Shares	17
Selected Special Shares	22
Selected Daily Government Fund	26
Statements of Assets and Liabilities	29
Statements of Operations	31
Statements of Changes in Net Assets	32
Notes to Financial Statements	34
Financial Highlights	41
Report of Independent Registered Public Accounting Firm	43
Fund Information	44
Directors and Officers	45

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 6, 2009

2

SELECTED FUNDSManagement’s Discussion and Analysis

Selected American Shares

Selected American Shares’ Class S shares delivered a negative return on net asset value of 39.44% (Class D shares returned negative 39.24%) for the year ended December 31, 2008¹. Over the same time period, the Standard & Poor’s 500^® Index² (“Index”) decreased by 37.00%. The decline was widespread as every sector³ within the Index posted substantial declines. The sectors within the Index that turned in the weakest performance over the year were financials, materials, and information technology. The sectors that turned in the strongest (but still negative) performance over the year were consumer staples and health care.

Factors Impacting the Fund’s Performance

The Fund’s financial companies out-performed the corresponding sector within the Index (down 49% versus down 55% for the Index), but were still the largest detractors⁴ from performance. A higher relative average weighting in this sector (32% versus 16% for the Index) detracted from performance. American International Group⁵, American Express, Merrill Lynch, Berkshire Hathaway, Loews, Wachovia, and JPMorgan Chase were among the most important detractors from performance. Visa, Wells Fargo, and Hartford Financial Services were among the most important contributors to the Fund’s performance.

The second largest detractor from performance was energy companies. The Fund’s energy companies under-performed the corresponding sector within the Index (down 36% versus down 35% for the Index) and had a higher relative average weighting (17% versus 14% for the Index). ConocoPhillips was among the most important detractors from performance.

The Fund’s relative performance was helped by having a higher relative average weighting in consumer staple companies (15% versus 11% for the Index). Unfortunately, the Fund’s consumer staple companies under-performed the corresponding sector within the Index (down 25% versus down 16% for the Index). Wal-Mart was among the most important contributors to performance while Costco Wholesale was among the most important detractors. The Fund no longer owns Wal-Mart.

The Fund’s relative performance was harmed by having a lower relative average weighting in health care companies (4% versus 13% for the Index). The Fund’s health care companies under-performed the corresponding sector within the Index (down 29% versus down 23% for the Index). Schering-Plough was among the most important contributors to performance.

H&R Block was the single most important contributor to performance over the year.

The Fund ended the year with approximately 12% of its assets invested in foreign companies. As a whole these companies under-performed the domestic companies held by the Fund.

3

SELECTED FUNDSManagement’s Discussion and Analysis – (Continued)

Selected Special Shares

Selected Special Shares’ Class S shares delivered a negative return on net asset value of 44.72% (Class D shares returned negative 44.40%) for the year ended December 31, 2008¹. Over the same time period, the Russell 3000^® Index² (“Index”) decreased by 37.31%. The decline was widespread as every sector³ within the Index posted substantial declines. The sectors within the Index that turned in the weakest performance over the year were financials, materials, and information technology. The sectors that turned in the strongest (but still negative) performance over the year were consumer staples and health care.

Factors Impacting the Fund’s Performance

Three sectors, consumer discretionary, information technology, and financials, accounted for almost three-quarters of the Fund’s negative return.

The Fund had more invested in consumer discretionary companies than in any other sector and they were the most important detractors⁴ from the Fund’s performance. The Fund’s consumer discretionary companies under-performed the corresponding sector within the Index (down 42% versus down 39% for the Index) and had a higher relative average weighting (32% versus 9% for the Index). Netflix⁵, H&R Block, Lowe’s, and Target were among the most important contributors to the Fund’s performance. Garmin, Tiffany, and Hunter Douglas were among the most important detractors from performance. The Fund no longer owns Lowe’s, Target, and Tiffany.

The second largest detractor from performance was information technology companies. The Fund’s information technology companies under-performed the corresponding sector within the Index (down 51% versus down 43% for the Index) and had a higher relative average weighting (18% versus 16% for the Index). Google, Texas Instruments, Microsoft, and Agilent Technologies were among the most important detractors from performance.

Financial companies were the third largest detractor from performance. The Fund’s financial companies out-performed the corresponding sector within the Index (down 47% versus down 50% for the Index) and had a higher relative average weighting (18% versus 16% for the Index). Discover Financial Services and Charles Schwab were among the most important contributors to performance. Markel and Ambac Financial were among the most important detractors from performance. The Fund no longer owns Discover Financial Services.

The Fund ended the year with approximately 18% of its assets invested in foreign companies. As a whole these companies under-performed the domestic companies held by the Fund.

___________________________________

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.

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.

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.

4

SELECTED FUNDSManagement’s Discussion and Analysis – (Continued)

¹     Total return assumes reinvestment of dividends and capital gain distributions. Past performance is not a guarantee of future results. Investment return and principal value will vary so that, when redeemed, an investor’s shares may be worth more or less than when purchased. The following tables list the average annual total returns for the periods ended December 31, 2008 and the annual operating expense ratios for the year ended December 31, 2008.

Fund Name	1-Year	5-Year	10-Year	Expense Ratio
Selected American Shares S	(39.44)%	(2.10)%	1.33%	0.92%
Selected Special Shares S	(44.72)%	(4.95)%	(1.12)%	1.26%

Fund Name	1-Year	3-Year	Inception (May 3, 2004)	Expense Ratio
Selected American Shares D	(39.24)%	(9.62)%	(2.53)%	0.59%
Selected Special Shares D	(44.40)%	(13.32)%	(5.39)%	0.86%

Benchmark Index	1-Year	3-Year	5-Year	10-Year	Since Class D Inception (May 3, 2004)
Standard & Poor’s 500® Index	(37.00)%	(8.34)%	(2.19)%	(1.38)%	(2.56)%
Russell 3000® Index	(37.31)%	(8.63)%	(1.95)%	(0.80)%	(2.31)%

Fund performance changes over time and current performance may be higher or lower than stated. The operating expense ratios may vary in future years. For more current information please call Selected Funds Investor Services at 1-800-243-1575.

² The definitions of indices quoted in this report appear below. Investments cannot be made directly in the indices.

I.    The Standard & Poor’s 500^® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalization, and represents approximately two-thirds of the total market value of all domestic common stocks.

II.   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.

³     The companies included in the Standard & Poor’s 500^® Index and the Russell 3000^® Index are divided into ten sectors. One or more industry groups make up a sector.

⁴     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%.

⁵     This Management Discussion and Analysis discusses a number of individual companies. The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. The Schedule of Investments lists each Fund’s holdings of each company discussed.

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.

5

SELECTED FUNDSFund Overview

SELECTED AMERICAN SHARES, INC. At December 31, 2008

Portfolio Composition (% of Fund’s Net Assets)		Industry Weightings (% of Long Term Portfolio)
			Fund	S&P 500®
Common Stock (U.S.)	84.72%	Energy	17.75%	13.31%
Common Stock (Foreign)	11.99%	Diversified Financials	13.54%	6.28%
Convertible Bonds (U.S.)	0.26%	Insurance	12.31%	2.67%
Convertible Bonds (Foreign)	0.15%	Information Technology	7.64%	15.30%
Short Term Investments	2.73%	Food & Staples Retailing	7.44%	3.30%
Other Assets & Liabilities	0.15%	Food, Beverage & Tobacco	6.07%	6.22%
	100.00%	Materials	5.45%	2.99%
		Media	5.12%	2.57%
		Banks	4.83%	3.36%
		Health Care	4.56%	14.76%
		Commercial & Professional Services	3.19%	0.71%
		Retailing	2.54%	2.79%
		Other	2.16%	10.30%
		Transportation	2.14%	2.23%
		Household & Personal Products	2.03%	3.34%
		Consumer Services	1.66%	1.75%
		Capital Goods	1.57%	8.12%
			100.00%	100.00%

Top 10 Holdings

(% of Fund’s Net Assets)

Costco Wholesale Corp.	Food & Staples Retailing	5.03%
Berkshire Hathaway Inc., Class A	Property & Casualty Insurance	4.75%
Wells Fargo & Co.	Commercial Banks	4.51%
ConocoPhillips	Energy	4.31%
JPMorgan Chase & Co.	Diversified Financial Services	4.25%
Occidental Petroleum Corp.	Energy	4.14%
Devon Energy Corp.	Energy	3.32%
Philip Morris International Inc.	Food, Beverage & Tobacco	3.26%
EOG Resources, Inc.	Energy	2.87%
Comcast Corp., Special Class A	Media	2.39%

6

SELECTED FUNDSPortfolio Activity

SELECTED AMERICAN SHARES, INC. January 1, 2008 through December 31, 2008

New Positions Added (01/01/08 - 12/31/08)

(Highlighted positions are those greater than 0.50% of 12/31/08 total net assets)

		Date of 1st Purchase	% of 12/31/08 Fund Net Assets
Security	Industry
ABB Ltd., ADR	Capital Goods	09/29/08	0.14%
AES Corp.	Utilities	09/03/08	0.21%
Brookfield Asset Management Inc., Class A	Capital Markets	05/21/08	0.50%
Cisco Systems, Inc.	Technology Hardware & Equipment	02/01/08	0.55%
eBay Inc.	Software & Services	02/01/08	0.19%
Garmin Ltd.	Consumer Durables & Apparel	04/03/08	0.12%
General Electric Co.	Capital Goods	01/16/08	–
Goldman Sachs Group, Inc	Capital Markets	09/24/08	0.33%
Hartford Financial Services Group, Inc.	Multi-line Insurance	12/05/08	0.34%
Johnson & Johnson	Pharmaceuticals, Biotechnology &
	Life Sciences	04/03/08	0.61%
Level 3 Communications, Inc.,
Conv. Sr. Notes, 15.00%, 01/15/13	Telecommunication Services	12/23/08	0.11%
Monsanto Co.	Materials	10/02/08	0.49%
OGX Petroleo e Gas Participacoes S.A.	Energy	06/12/08	0.11%
PACCAR Inc.	Capital Goods	10/30/08	0.32%
Schering-Plough Corp.	Pharmaceuticals, Biotechnology &
	Life Sciences	07/21/08	1.20%
Siemens AG, Registered	Capital Goods	02/04/08	0.46%
Sino Forest Corp., Conv.
Sr. Notes, 5.00%, 08/01/13	Materials	07/17/08	0.15%
Visa Inc., Class A	Diversified Financial Services	03/18/08	0.21%
Whole Foods Market, Inc.	Food & Staples Retailing	01/29/08	0.09%

Positions Closed (01/01/08 - 12/31/08)

(Gains and losses greater than $25,000,000 are highlighted)

		Date of Final Sale	Realized     Gain (Loss)
Security	Industry
Ambac Financial Group, Inc.	Property & Casualty Insurance	10/20/08		(79,226,640)
Aon Corp.	Insurance Brokers	11/24/08		9,605,192
Asciano Group	Transportation	11/12/08		(8,587,209)
Commerce Bancorp, Inc.	Commercial Banks	03/31/08		3,214,030
Covidien Ltd.	Health Care Equipment & Services	11/24/08		24,088,262
General Electric Co.	Capital Goods	08/05/08		(29,782,218)
HSBC Holdings PLC	Commercial Banks	02/13/08		22,000,759
Lagardere S.C.A.	Media	05/02/08		31,334,526
Liberty Media Corp. – Capital, Series A	Media	11/21/08		(2,366,253)
SK Telecom Co., Ltd., ADR	Telecommunication Services	05/07/08		4,229,903
Tokio Marine Holdings, Inc.	Property & Casualty Insurance	12/29/08		(18,591,266)
Toll Holdings Ltd.	Transportation	11/10/08		(10,465,721)
Toronto-Dominion Bank	Commercial Banks	11/13/08		(8,521,101)
Virgin Blue Holdings Ltd.	Transportation	10/24/08		(1,732,181)
Virgin Media Inc.	Media	07/16/08		(19,292,394)
Wal-Mart Stores, Inc.	Food & Staples Retailing	05/12/08		21,917,195

7

SELECTED FUNDSFund Performance

SELECTED AMERICAN SHARES, INC. December 31, 2008

CLASS S

Average Annual Total Return for the periods ended December 31, 2008		Expense Example	Beginning Account Value (07/01/08)	Ending Account Value (12/31/08)	Expenses Paid During Period* (07/01/08-12/31/08)
One-Year	(39.44)%	Actual	$1,000.00	$682.08	$4.02
Five-Year	(2.10)%	Hypothetical (5% return before expenses)	$1,000.00	$1,020.36	$4.82
Ten-Year	1.33%

*Expenses are equal to the Class’s annualized expense ratio (0.95%), multiplied by the average account valueover the period, multiplied by 184/366 (to reflect the one-half year period). The expense ratio reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser. See Notes to Performance on page 16 for a description of the “Expense Example”.

$10,000 invested over ten years. Let’s say you invested $10,000 in Selected American Shares, Class S on December 31, 1998. As the chart shows, by December 31, 2008, the value of your investment would have grown to $11,410 - a 14.10% increase on your initial investment. For comparison, the Standard & Poor’s 500^® Index is also presented on the chart below.

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.

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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

8

SELECTED FUNDSFund Performance – (Continued)

SELECTED AMERICAN SHARES, INC. December 31, 2008

CLASS D

Average Annual Total Return for the periods ended     December 31, 2008		Expense Example	Beginning Account Value (07/01/08)	Ending Account Value (12/31/08)	Expenses Paid During Period* (07/01/08-12/31/08)
One-Year	(39.24)%	Actual	$1,000.00	$683.43	$2.54
Life of Class (May 3, 2004 through December 31, 2008)	(2.53)%	Hypothetical (5% return before expenses)	$1,000.00	$1,022.12	$3.05

*Expenses are equal to the Class’s annualized expense ratio (0.60%), multiplied by the average account valueover the period, multiplied by 184/366 (to reflect the one-half year period). The expense ratio reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser. See Notes to Performance on page 16 for a description of the “Expense Example”.

$10,000 invested at inception. Let’s say you invested $10,000 in Selected American Shares, Class D on May 3, 2004 (inception of class). As the chart shows, by December 31, 2008, the value of your investment would have been $8,873 - a 11.27% decrease on your initial investment. For comparison, the Standard & Poor’s 500^® Index is also presented on the chart below.

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.

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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

9

SELECTED FUNDSFund Overview

SELECTED SPECIAL SHARES, INC. At December 31, 2008

Portfolio Composition		Industry Weightings
(% of Fund’s Net Assets)		(% of Long Term Portfolio)
			Fund	Russell 3000®
Common Stock (U.S.)	78.18%	Information Technology	18.78%	15.41%
Common Stock (Foreign)	18.42%	Media	14.96%	2.55%
Convertible Bonds	1.05%	Health Care	14.11%	14.53%
Short Term Investments	2.09%	Diversified Financials	8.11%	5.53%
Other Assets & Liabilities	0.26%	Insurance	7.45%	3.15%
	100.00%	Retailing	5.82%	2.93%
		Capital Goods	5.71%	8.44%
		Energy	5.28%	12.14%
		Materials	4.74%	3.37%
		Consumer Durables & Apparel	4.02%	1.14%
		Consumer Services	3.28%	2.11%
		Commercial & Professional Services	2.69%	1.11%
		Other	2.46%	21.33%
		Telecommunication Services	1.42%	3.45%
		Food & Staples Retailing	1.17%	2.81%
			100.00%	100.00%

Top 10 Holdings

(% of Fund’s Net Assets)

Google Inc., Class A	Software & Services	6.79%
Johnson & Johnson	Pharmaceuticals, Biotechnology & Life Sciences	5.31%
Comcast Corp., Special Class A	Media	4.55%
Netflix Inc.	Retailing	4.21%
Schering-Plough Corp.	Pharmaceuticals, Biotechnology & Life Sciences	4.16%
Markel Corp.	Property & Casualty Insurance	3.98%
Grupo Televisa S.A., ADR	Media	3.53%
Lagardere S.C.A.	Media	3.36%
Microsoft Corp.	Software & Services	3.05%
Blount International, Inc.	Capital Goods	2.72%

10

SELECTED FUNDSPortfolio Activity

SELECTED SPECIAL SHARES, INC. January 1, 2008 through December 31, 2008

New Positions Added (01/01/08 - 12/31/08)

(Highlighted positions are those greater than 1.25% of 12/31/08 total net assets)

		Date of 1st Purchase	% of 12/31/08 Fund Net Assets
Security	Industry
Bank of New York Mellon Corp.	Capital Markets	09/02/08	2.36%
Charles Schwab Corp.	Capital Markets	12/19/08	1.37%
Cisco Systems, Inc.	Technology Hardware & Equipment	02/15/08	1.37%
Clark Holdings, Inc.	Transportation	01/07/08	0.11%
Compagnie Financiere Richemont S.A., Bearer Shares, Unit A	Consumer Durables & Apparel	06/17/08	–
Devon Energy Corp.	Energy	06/25/08	0.99%
Expeditors International of Washington, Inc.	Transportation	11/20/08	–
Hewlett-Packard Co.	Technology Hardware & Equipment	10/09/08	0.49%
Johnson Controls, Inc.	Automobiles & Components	01/11/08	0.47%
Kuehne & Nagel International AG, Registered	Transportation	02/07/08	0.59%
Liberty Media Corp. - Entertainment, Series A	Media	06/17/08	0.60%
Liberty Media Corp. - Interactive, Series A	Retailing	06/17/08	0.17%
Merrill Lynch & Co., Inc.	Capital Markets	03/06/08	–
Monsanto Co.	Materials	10/22/08	0.91%
Occidental Petroleum Corp.	Energy	06/25/08	1.47%
SAP AG, ADR	Software & Services	10/06/08	1.23%
Schering-Plough Corp.	Pharmaceuticals, Biotechnology &
	Life Sciences	04/25/08	4.16%
Siemens AG, Registered	Capital Goods	06/18/08	1.40%
Yahoo! Inc.	Software & Services	06/13/08	0.95%

11

SELECTED FUNDSPortfolio Activity – (Continued)

SELECTED SPECIAL SHARES, INC. January 1, 2008 through December 31, 2008

Positions Closed (01/01/08 - 12/31/08)

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

		Date of	Realized
Security	Industry	Final Sale	Gain (Loss)
Aflac, Inc.	Life & Health Insurance	11/24/08	$	(2,934)
Bed Bath & Beyond Inc.	Retailing	06/26/08		(187,625)
British American Tobacco PLC	Food, Beverage & Tobacco	11/12/08		3,840
Compagnie Financiere Richemont S.A., Bearer Shares, Unit A	Consumer Durables & Apparel	11/10/08		(195,636)
Covidien Ltd.	Health Care Equipment & Services	03/10/08		449,834
Dell Inc.	Technology Hardware & Equipment	10/16/08		(1,249,123)
Discover Financial Services	Consumer Finance	09/12/08		(745,722)
Expeditors International of Washington, Inc.	Transportation	12/17/08		23,295
Fiserv, Inc.	Software & Services	02/29/08		60,460
Franklin Electric Co., Inc.	Capital Goods	09/23/08		(117,384)
Harley-Davidson, Inc.	Automobiles & Components	02/12/08		(490,815)
Home Depot, Inc.	Retailing	01/22/08		(9,016)
Ingersoll-Rand Co. Ltd., Class A	Capital Goods	07/11/08		(47,072)
Legg Mason, Inc.	Capital Markets	08/11/08		(931,530)
Lincare Holdings Inc.	Health Care Equipment & Services	02/04/08		(202,547)
Lowe’s Cos, Inc.	Retailing	01/23/08		(191,703)
Merrill Lynch & Co., Inc.	Capital Markets	10/09/08		(849,262)
Molex Inc., Class A	Technology Hardware & Equipment	05/15/08		55,760
Nong Shim Holdings Co., Ltd.	Food, Beverage & Tobacco	02/01/08		10,973
Nymex Holdings Inc.	Diversified Financial Services	08/22/08		11,098
Omnicare, Inc.	Health Care Equipment & Services	03/10/08		(754,629)
Reinet Investments SCA	Diversified Financial Services	11/13/08		(329,109)
Sealed Air Corp.	Materials	07/09/08		4,944
SK Telecom Co., Ltd., ADR	Telecommunication Services	05/07/08		47,251
Sprint Nextel Corp.	Telecommunication Services	11/10/08		(1,494,973)
Target Corp.	Retailing	01/22/08		2,123
Tiffany & Co.	Retailing	10/28/08		1,795,873
Trane, Inc.	Capital Goods	06/06/08		1,139,860
Tyco Electronics Ltd.	Technology Hardware & Equipment	03/18/08		308,995
Tyco International Ltd.	Capital Goods	02/25/08		296,014
Virgin Media Inc.	Media	07/16/08		(577,554)
WABCO Holdings Inc.	Automobiles & Components	11/21/08		(243,312)
Wachovia Corp.	Commercial Banks	02/07/08		175,469
Western Union Co.	Software & Services	02/29/08		31,002

12

SELECTED FUNDSFund Performance

SELECTED SPECIAL SHARES, INC. December 31, 2008

CLASS S

Average Annual Total Return for the periods ended December 31, 2008		Expense Example	Beginning Account Value (07/01/08)	Ending Account Value (12/31/08)	Expenses Paid During Period* (07/01/08-12/31/08)
One-Year	(44.72)%	Actual	$1,000.00	$665.36	$5.65
Five-Year	(4.95)%	Hypothetical (5% return before expenses)	$1,000.00	$1,018.35	$6.85
Ten-Year	(1.12)%

*Expenses are equal to the Class’s annualized expense ratio (1.35%), multiplied by the average account valueover the period, multiplied by 184/366 (to reflect the one-half year period). The expense ratio reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser. See Notes to Performance on page 16 for a description of the “Expense Example”.

$10,000 invested over ten years. Let’s say you invested $10,000 in Selected Special Shares, Class S on December 31, 1998. As the chart shows, by December 31, 2008, the value of your investment would have been $8,938 - a 10.62% decrease on your initial investment. For comparison, the Russell 3000^® Index is also presented on the chart below.

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.

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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

13

SELECTED FUNDSFund Performance – (Continued)

SELECTED SPECIAL SHARES, INC. December 31, 2008

CLASS D

Average Annual Total Return for the periods ended December 31, 2008		Expense Example	Beginning Account Value (07/01/08)	Ending Account Value (12/31/08)	Expenses Paid During Period* (07/01/08-12/31/08)
One-Year	(44.40)%	Actual	$1,000.00	$668.56	$3.77
Life of Class (May 3, 2004 through December 31, 2008)	(5.39)%	Hypothetical (5% return before expenses)	$1,000.00	$1,020.61	$4.57

*Expenses are equal to the Class’s annualized expense ratio (0.90%), multiplied by the average account valueover the period, multiplied by 184/366 (to reflect the one-half year period). The expense ratio reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser. See Notes to Performance on page 16 for a description of the “Expense Example”.

$10,000 invested at inception. Let’s say you invested $10,000 in Selected Special Shares, Class D on May 3, 2004 (inception of class). As the chart shows, by December 31, 2008, the value of your investment would have been $7,720 - a 22.80% decrease on your initial investment. For comparison, the Russell 3000^® Index is also presented on the chart below.

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.

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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

14

SELECTED FUNDSFund Overview

SELECTED CAPITAL PRESERVATION TRUST - At December 31, 2008

SELECTED DAILY GOVERNMENT FUND

Portfolio Composition (% of Fund’s Net Assets)		Maturity Diversification (% of Portfolio Holdings)
Federal Home Loan Bank	48.02%	0-30 Days	61.64%
Repurchase Agreements	21.49%	31-90 Days	16.34%
Federal Farm Credit Bank	13.57%	91-180 Days	13.56%
Freddie Mac	6.96%	181-397 Days	8.46%
Fannie Mae	5.25%		100.00%
Mortgages	4.21%
Private Export Funding	0.14%
Other Assets & Liabilities	0.36%
	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.

Expense Example	Beginning Account Value (07/01/08)	Ending Account Value (12/31/08)	Expenses Paid During Period* (07/01/08-12/31/08)
Class S
Actual	$1,000.00	$1,007.67	$3.78
Hypothetical (5% return before expenses)	$1,000.00	$1,021.37	$3.81

Expense Example	Beginning Account Value (07/01/08)	Ending Account Value (12/31/08)	Expenses Paid During Period* (07/01/08-12/31/08)
Class D
Actual	$1,000.00	$1,009.34	$2.12
Hypothetical (5% return before expenses)	$1,000.00	$1,023.03	$2.14

*Expenses are equal to the Class’s annualized expense ratio (0.75% and 0.42% for Class S and D, respectively), multiplied by the average account valueover the period, multiplied by 184/366 (to reflect the one-half year period). The expense ratio reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser. See Notes to Performance on page 16 for a description of the “Expense Example”.

15

SELECTED FUNDSNotes to Performance

The following disclosure provides important information regarding each Fund’s Expense Example, which appears in each Class’s Fund Performance section in this Annual Report. 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 from 07/01/08 to 12/31/08.

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.

16

SELECTED FUNDS Schedule of Investments

SELECTED AMERICAN SHARES, INC. December 31, 2008

Shares					Security			Value             (Note 1)
COMMON STOCK - (96.71%)
	CONSUMER DISCRETIONARY - (10.07%)
		Automobiles & Components – (0.76%)
	3,321,500		Harley-Davidson, Inc.			$	56,365,855
		Consumer Durables & Apparel – (0.26%)
	456,000		Garmin Ltd.				8,732,400
	328,596		Hunter Douglas NV (Netherlands)				10,817,693
							19,550,093
		Consumer Services – (1.61%)
	5,211,000		H&R Block, Inc.				118,393,920
		Media – (4.97%)
	10,935,000		Comcast Corp., Special Class A				176,272,200
	5,179,000		Grupo Televisa S.A., ADR (Mexico)				77,374,260
	1,385,800		Liberty Media Corp. - Entertainment, Series A *				24,182,210
	9,362,500		News Corp., Class A				84,917,875
	514,768		WPP PLC (United Kingdom)				3,010,016
							365,756,561
		Retailing – (2.47%)
	712,500		Amazon.com, Inc. *				36,494,250
	2,630,000		Bed Bath & Beyond Inc. *				66,828,300
	3,631,000		CarMax, Inc. *				28,612,280
	1,732,250		Liberty Media Corp. - Interactive, Series A *				5,387,298
	1,856,000		Lowe's Cos, Inc.				39,941,120
	112,000		Sears Holdings Corp. *				4,345,600
							181,608,848
				TOTAL CONSUMER DISCRETIONARY			741,675,277
	CONSUMER STAPLES - (15.10%)
		Food & Staples Retailing – (7.23%)
	7,065,900		Costco Wholesale Corp.				370,535,796
	5,397,945		CVS Caremark Corp.				155,136,939
	675,900		Whole Foods Market, Inc.				6,380,496
							532,053,231
		Food, Beverage & Tobacco – (5.90%)
	280,167		Altria Group, Inc.				4,219,315
	7,717,958		Diageo PLC (United Kingdom)				108,443,662
	2,232,650		Heineken Holding NV (Netherlands)				63,774,799
	517,300		Hershey Co.				17,971,002
	5,512,500		Philip Morris International Inc.				239,848,875
							434,257,653
		Household & Personal Products – (1.97%)
	919,333		Avon Products, Inc.				22,091,572
	1,987,000		Procter & Gamble Co.				122,836,340
							144,927,912
				TOTAL CONSUMER STAPLES			1,111,238,796
	ENERGY - (17.24%)
	2,767,700		Canadian Natural Resources Ltd. (Canada)				110,652,646
	41,208,200		China Coal Energy Co. - H (China)				33,302,587
	6,129,260		ConocoPhillips				317,495,668
	3,720,842		Devon Energy Corp.				244,496,528

17

SELECTED FUNDSSchedule of Investments

SELECTED AMERICAN SHARES, INC. - (Continued) December 31, 2008

Shares						Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	ENERGY – (CONTINUED)
	3,176,200			EOG Resources, Inc.			$	211,471,396
	5,081,600			Occidental Petroleum Corp.				304,845,184
	34,600			OGX Petroleo e Gas Participacoes S.A. (Brazil)*				7,804,436
	831,124			Transocean Ltd. *				39,270,609
					TOTAL ENERGY			1,269,339,054
	FINANCIALS - (30.23%)
		Banks – (4.69%)
			Commercial Banks – (4.69%)
	2,461,874			Wachovia Corp. (merged into Wells Fargo & Co. on January 2, 2009)				13,638,782
	11,252,420			Wells Fargo & Co.				331,721,342
								345,360,124
		Diversified Financials – (13.16%)
			Capital Markets – (5.41%)
	1,662,707			Ameriprise Financial, Inc.				38,840,835
	4,888,100			Bank of New York Mellon Corp.				138,479,873
	2,400,000			Brookfield Asset Management Inc., Class A (Canada)				36,648,000
	712,500			E*TRADE Financial Corp. *				812,250
	289,000			Goldman Sachs Group, Inc.				24,388,710
	2,861,410			Julius Baer Holding, AG (Switzerland)				110,900,504
	2,735,443			Merrill Lynch & Co., Inc. (merged into Bank of America Corp. on January 2, 2009)				31,840,556
	346,621			Morgan Stanley				5,559,801
	275,000			State Street Corp.				10,815,750
								398,286,279
			Consumer Finance – (2.46%)
	9,485,800			American Express Co.				175,961,590
	518,932			Discover Financial Services				4,945,422
								180,907,012
			Diversified Financial Services – (5.29%)
	2,352,095			Citigroup Inc.				15,782,558
	9,920,740			JPMorgan Chase & Co.				312,800,932
	2,265,600			Moody's Corp.				45,515,904
	289,500			Visa Inc., Class A				15,184,275
								389,283,669
								968,476,960
		Insurance – (11.96%)
			Life & Health Insurance – (0.33%)
	658,000			Principal Financial Group, Inc.				14,851,060
	400,000			Sun Life Financial Inc. (Canada)				9,256,000
								24,107,060
			Multi-line Insurance – (2.77%)
	8,443,925			American International Group, Inc.				13,256,962
	1,531,000			Hartford Financial Services Group, Inc.				25,139,020
	5,874,000			Loews Corp.				165,940,500
								204,336,482
			Property & Casualty Insurance – (7.93%)
	3,620			Berkshire Hathaway Inc., Class A *				349,692,000
	6,366			Berkshire Hathaway Inc., Class B *				20,460,324

18

SELECTED FUNDSSchedule of Investments

SELECTED AMERICAN SHARES, INC. - (Continued) December 31, 2008

Shares						Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	FINANCIALS – (CONTINUED)
		Insurance – (Continued)
			Property & Casualty Insurance – (Continued)
	21,700			Markel Corp. *			$	6,488,300
	584,000			MBIA Inc. *				2,376,880
	6,850,800			NIPPONKOA Insurance Co., Ltd. (Japan)				53,297,865
	10,212,800			Progressive Corp. (Ohio)				151,251,568
								583,566,937
			Reinsurance – (0.93%)
	1,705,787			Transatlantic Holdings, Inc.				68,333,827
								880,344,306
		Real Estate – (0.42%)
	10,172,000			Hang Lung Group Ltd. (Hong Kong)				31,073,882
					TOTAL FINANCIALS			2,225,255,272
	HEALTH CARE - (4.43%)
		Health Care Equipment & Services – (2.62%)
	1,610,000			Cardinal Health, Inc.				55,496,700
	1,230,000			Express Scripts, Inc. *				67,625,400
	2,610,000			UnitedHealth Group Inc.				69,426,000
								192,548,100
		Pharmaceuticals, Biotechnology & Life Sciences – (1.81%)
	756,000			Johnson & Johnson				45,231,480
	5,168,500			Schering-Plough Corp.				88,019,555
								133,251,035
					TOTAL HEALTH CARE			325,799,135
	INDUSTRIALS - (6.70%)
		Capital Goods – (1.52%)
	696,000			ABB Ltd., ADR (Switzerland)				10,446,960
	835,000			PACCAR Inc.				23,872,650
	450,300			Siemens AG, Registered (Germany)				33,900,133
	2,027,783			Tyco International Ltd.				43,800,113
								112,019,856
		Commercial & Professional Services – (3.10%)
	1,241,000			D&B Corp.				95,805,200
	5,363,250			Iron Mountain Inc. *				132,633,172
								228,438,372
		Transportation – (2.08%)
	23,464,601			China Merchants Holdings International Co., Ltd. (China)				45,824,765
	17,840,000			China Shipping Development Co. Ltd. - H (China)				17,977,620
	13,859,500			Cosco Pacific Ltd. (China)				14,249,856
	521,910			Kuehne & Nagel International AG, Registered (Switzerland)				33,803,217
	740,500			United Parcel Service, Inc., Class B				40,845,980
								152,701,438
					TOTAL INDUSTRIALS			493,159,666
	INFORMATION TECHNOLOGY - (7.42%)
		Semiconductors & Semiconductor Equipment – (1.37%)
	6,478,300			Texas Instruments Inc.				100,543,216
		Software & Services – (2.88%)
	1,012,000			eBay Inc. *				14,127,520

19

SELECTED FUNDS Schedule of Investments

SELECTED AMERICAN SHARES, INC. - (Continued) December 31, 2008

Shares/Principal					Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	INFORMATION TECHNOLOGY – (CONTINUED)
		Software & Services – (Continued)
	174,800		Google Inc., Class A *			$	53,728,276
	7,414,000		Microsoft Corp.				144,128,160
							211,983,956
		Technology Hardware & Equipment – (3.17%)
	3,474,300		Agilent Technologies, Inc. *				54,303,309
	2,491,000		Cisco Systems, Inc. *				40,553,480
	2,323,000		Dell Inc. *				23,741,060
	2,261,000		Hewlett-Packard Co.				82,051,690
	2,027,783		Tyco Electronics Ltd.				32,870,363
							233,519,902
				TOTAL INFORMATION TECHNOLOGY			546,047,074
	MATERIALS - (5.14%)
	1,339,500		BHP Billiton PLC (United Kingdom)				25,980,367
	930,600		Martin Marietta Materials, Inc.				90,342,648
	517,800		Monsanto Co.				36,427,230
	477,500		Rio Tinto PLC (United Kingdom)				10,613,179
	7,883,400		Sealed Air Corp.				117,777,996
	4,159,100		Sino-Forest Corp. (Canada)*				33,252,586
	924,100		Vulcan Materials Co.				64,298,878
				TOTAL MATERIALS			378,692,884
	TELECOMMUNICATION SERVICES - (0.17%)
	6,853,000		Sprint Nextel Corp. *				12,540,990
				TOTAL TELECOMMUNICATION SERVICES			12,540,990
	UTILITIES - (0.21%)
	1,895,300		AES Corp. *				15,617,272
				TOTAL UTILITIES			15,617,272
			TOTAL COMMON STOCK – (Identified cost $7,267,458,900)				7,119,365,420
CONVERTIBLE BONDS - (0.41%)
	MATERIALS - (0.15%)
$	15,365,000		Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13 (Canada) (a)				10,909,150
				TOTAL MATERIALS			10,909,150
	TELECOMMUNICATION SERVICES - (0.26%)
	19,200,000		Level 3 Communications, Inc., Conv. Sr. Notes, 10.00%, 05/01/11				11,544,000
	8,000,000		Level 3 Communications, Inc., Conv. Sr. Notes, 15.00%, 01/15/13 (a)				8,030,000
				TOTAL TELECOMMUNICATION SERVICES			19,574,000
			TOTAL CONVERTIBLE BONDS – (Identified cost $42,565,000)				30,483,150
SHORT TERM INVESTMENTS - (2.73%)
	COMMERCIAL PAPER - (1.10%)
	25,000,000		Sanpaolo IMI U.S. Financial Co., 0.47%, 01/02/09				24,999,674
	30,852,000		Toyota Credit Puerto Rico Corp., 0.10%, 01/02/09				30,851,914
	25,000,000		UBS Finance Delaware LLC, 0.92%, 01/12/09				24,992,972
				TOTAL COMMERCIAL PAPER			80,844,560

20

SELECTED FUNDSSchedule of Investments

SELECTED AMERICAN SHARES, INC. - (Continued) December 31, 2008

Principal								Security			Value (Note 1)
SHORT TERM INVESTMENTS – (CONTINUED)
	REPURCHASE AGREEMENTS - (1.63%)
$	59,959,000			Banc of America Securities LLC Joint Repurchase Agreement,
					0.06%, 01/02/09, dated 12/31/08, repurchase value of $59,959,200
					(collateralized by: U.S. Government agency mortgage in a pooled cash account, 6.00%, 10/20/38, total market value $61,158,180)				$	59,959,000
	24,982,000			Goldman, Sachs & Co. Joint Repurchase Agreement,
					0.04%, 01/02/09, dated 12/31/08, repurchase value of $24,982,056
					(collateralized by: US Government agency mortgages in a pooled cash account, 5.00%-5.50%, 05/01/35-05/01/38, total market value $25,481,640)					24,982,000
	34,975,000			UBS Securities LLC Joint Repurchase Agreement,
					0.05%, 01/02/09, dated 12/31/08, repurchase value of $34,975,097
					(collateralized by: U.S. Government agency mortgages in a pooled cash account, 5.00%-6.50%, 06/01/17-02/01/38, total market value $35,674,500)					34,975,000
							TOTAL REPURCHASE AGREEMENTS			119,916,000
				TOTAL SHORT TERM INVESTMENTS – (Identified cost $200,760,560)						200,760,560
			Total Investments – (99.85%) – (Identified cost $7,510,784,460) – (b)							7,350,609,130
			Other Assets Less Liabilities – (0.15%)							10,776,874
						Net Assets – (100.00%)			$	7,361,386,004
	ADR: American Depositary Receipt
	*	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 $7,512,096,610. At December 31, 2008 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:
			Unrealized appreciation						$	1,692,061,643
			Unrealized depreciation							(1,853,549,123)
						Net unrealized depreciation			$	(161,487,480)

See Notes to Financial Statements

21

SELECTED FUNDSSchedule of Investments

SELECTED SPECIAL SHARES, INC. December 31, 2008

Shares						Security			Value (Note 1)
COMMON STOCK - (96.60%)
	CONSUMER DISCRETIONARY - (27.89%)
		Automobiles & Components – (0.47%)
	16,360			Johnson Controls, Inc.			$	297,098
		Consumer Durables & Apparel – (3.92%)
	52,400			Garmin Ltd.				1,003,460
	45,122			Hunter Douglas NV (Netherlands)				1,485,459
								2,488,919
		Consumer Services – (3.21%)
	23,240			H&R Block, Inc.				528,013
	47,800			Yum! Brands, Inc.				1,505,700
								2,033,713
		Media – (14.60%)
	179,100			Comcast Corp., Special Class A				2,887,092
	149,900			Grupo Televisa S.A., ADR (Mexico)				2,239,506
	52,500			Lagardere S.C.A. (France)				2,132,982
	21,800			Liberty Media Corp. - Entertainment, Series A *				380,410
	65,280			News Corp., Class A				592,090
	35,500			Walt Disney Co.				805,495
	7,700			WPP PLC, ADR (United Kingdom)				227,689
								9,265,264
		Retailing – (5.69%)
	104,910			CarMax, Inc. *				826,691
	34,490			Liberty Media Corp. - Interactive, Series A *				107,264
	89,460			Netflix Inc. *				2,673,064
								3,607,019
					TOTAL CONSUMER DISCRETIONARY			17,692,013
	CONSUMER STAPLES - (2.03%)
		Food & Staples Retailing – (1.14%)
	10,460			Costco Wholesale Corp.				548,523
	18,550			Whole Foods Market, Inc.				175,112
								723,635
		Food, Beverage & Tobacco – (0.89%)
	19,665			Heineken Holding NV (Netherlands)				561,723
					TOTAL CONSUMER STAPLES			1,285,358
	ENERGY - (5.15%)
	9,600			Devon Energy Corp.				630,816
	15,500			Occidental Petroleum Corp.				929,845
	27,600			Tenaris S.A., ADR (Argentina)				579,048
	23,871			Transocean Ltd. *				1,127,905
					TOTAL ENERGY			3,267,614
	FINANCIALS - (15.53%)
		Diversified Financials – (7.92%)
			Capital Markets – (4.38%)
	52,790			Bank of New York Mellon Corp.				1,495,541
	53,800			Charles Schwab Corp.				869,408
	117,452			E*TRADE Financial Corp. *				133,895
	7,170			Julius Baer Holding, AG (Switzerland)				277,890
								2,776,734

22

SELECTED FUNDSSchedule of Investments

SELECTED SPECIAL SHARES, INC. - (Continued) December 31, 2008

Shares							Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	FINANCIALS – (CONTINUED)
		Diversified Financials – (Continued)
			Diversified Financial Services – (3.54%)
	295				CME Group Inc.			$	61,280
	65,800				Oaktree Capital Group LLC, Class A (a)				1,250,200
	14,003				Pargesa Holdings S.A., Bearer Shares (Switzerland)				935,845
									2,247,325
									5,024,059
		Insurance – (7.27%)
				Insurance Brokers – (0.16%)
	5,018				Brown & Brown, Inc.				104,876
				Life & Health Insurance – (0.62%)
	21,530				Power Corp. of Canada (Canada)				391,011
				Property & Casualty Insurance – (4.29%)
	102,522				Ambac Financial Group, Inc.				133,278
	8,445				Markel Corp. *				2,525,055
	16,180				MBIA Inc. *				65,853
									2,724,186
				Reinsurance – (2.20%)
	5,200				Everest Re Group, Ltd.				395,928
	5,530				RenaissanceRe Holdings Ltd.				285,127
	17,768				Transatlantic Holdings, Inc.				711,786
									1,392,841
									4,612,914
		Real Estate – (0.34%)
	14,622				Redwood Trust, Inc.				218,014
						TOTAL FINANCIALS			9,854,987
	HEALTH CARE - (13.78%)
		Health Care Equipment & Services – (4.31%)
	10,770				Cardinal Health, Inc.				371,242
	34,100				IDEXX Laboratories, Inc. *				1,224,190
	42,840				UnitedHealth Group Inc.				1,139,544
									2,734,976
		Pharmaceuticals, Biotechnology & Life Sciences – (9.47%)
	56,300				Johnson & Johnson				3,368,429
	154,800				Schering-Plough Corp.				2,636,244
									6,004,673
						TOTAL HEALTH CARE			8,739,649
	INDUSTRIALS - (8.90%)
		Capital Goods – (5.57%)
	181,952				Blount International, Inc. *				1,724,905
	45,100				Shaw Group Inc. *				923,197
	11,800				Siemens AG, Registered (Germany)				888,345
									3,536,447
		Commercial & Professional Services – (2.63%)
	4,430				D&B Corp.				341,996
	53,536				Iron Mountain Inc. *				1,323,945
									1,665,941

23

SELECTED FUNDS Schedule of Investments

SELECTED SPECIAL SHARES, INC. - (Continued) December 31, 2008

Shares/Principal						Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	INDUSTRIALS – (CONTINUED)
		Transportation – (0.70%)
	118,300		Clark Holdings, Inc. *				$	70,980
	5,790		Kuehne & Nagel International AG, Registered (Switzerland)					375,008
								445,988
					TOTAL INDUSTRIALS			5,648,376
	INFORMATION TECHNOLOGY - (18.34%)
		Semiconductors & Semiconductor Equipment – (2.55%)
	104,400		Texas Instruments Inc.					1,620,288
		Software & Services – (12.05%)
	90,617		Convera Corp., Class A *					20,388
	14,024		Google Inc., Class A *					4,310,557
	99,650		Microsoft Corp.					1,937,196
	21,500		SAP AG, ADR (Germany)					778,730
	49,300		Yahoo! Inc. *					599,981
								7,646,852
		Technology Hardware & Equipment – (3.74%)
	76,300		Agilent Technologies, Inc. *					1,192,569
	53,324		Cisco Systems, Inc. *					868,115
	8,500		Hewlett-Packard Co.					308,465
								2,369,149
					TOTAL INFORMATION TECHNOLOGY			11,636,289
	MATERIALS - (4.63%)
	8,200		Monsanto Co.					576,870
	36,680		Sigma-Aldrich Corp.					1,547,529
	101,900		Sino-Forest Corp. (Canada)*					814,705
					TOTAL MATERIALS			2,939,104
	TELECOMMUNICATION SERVICES - (0.35%)
	7,518		American Tower Corp., Class A *					220,428
					TOTAL TELECOMMUNICATION SERVICES			220,428
			TOTAL COMMON STOCK – (Identified cost $83,168,136)					61,283,818
CONVERTIBLE BONDS - (1.05%)
	TELECOMMUNICATION SERVICES - (1.05%)
$	1,100,000		Level 3 Communications, Inc., Conv. Sr. Notes, 10.00%, 05/01/11					661,375
			TOTAL CONVERTIBLE BONDS – (Identified cost $1,100,000)					661,375
SHORT TERM INVESTMENTS - (2.09%)
	664,000		Banc of America Securities LLC Joint Repurchase Agreement,
				0.06%, 01/02/09, dated 12/31/08, repurchase value of $664,002
				(collateralized by: U.S. Government agency mortgage in a pooled cash account, 6.00%, 10/20/38, total market value $677,280)				664,000
	276,000		Goldman, Sachs & Co. Joint Repurchase Agreement,
				0.04%, 01/02/09, dated 12/31/08, repurchase value of $276,001
				(collateralized by: US Government agency mortgages in a pooled cash account, 5.00%-5.50%, 05/01/35-05/01/38, total market value $281,520)				276,000

24

SELECTED FUNDSSchedule of Investments

SELECTED SPECIAL SHARES, INC. - (Continued) December 31, 2008

Principal							Security			Value (Note 1)
SHORT TERM INVESTMENTS – (CONTINUED)
$	387,000			UBS Securities LLC Joint Repurchase Agreement,
					0.05%, 01/02/09, dated 12/31/08, repurchase value of $387,001
					(collateralized by: U.S. Government agency mortgages in a pooled cash account, 5.00%-6.50%, 06/01/17-02/01/38, total market value $394,740)			$	387,000
				TOTAL SHORT TERM INVESTMENTS – (Identified cost $1,327,000)					1,327,000
			Total Investments – (99.74%) – (Identified cost $85,595,136) – (b)						63,272,193
			Other Assets Less Liabilities – (0.26%)						167,874
						Net Assets – (100.00%)		$	63,440,067
	ADR: American Depositary Receipt
	*	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 $86,189,890. At December 31, 2008 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:
			Unrealized appreciation					$	3,818,281
			Unrealized depreciation						(26,735,978)
						Net unrealized depreciation		$	(22,917,697)

See Notes to Financial Statements

25

SELECTED FUNDSSchedule of Investments

SELECTED CAPITAL PRESERVATION TRUST - December 31, 2008

SELECTED DAILY GOVERNMENT FUND

Principal			Security			Value (Note 1)
FANNIE MAE - (5.25%)
$	250,000	5.25%, 01/15/09		$	250,204
	500,000	4.00%, 01/26/09			500,520
	1,500,000	6.0769%, 02/17/09 (a)			1,508,697
	200,000	3.60%, 03/03/09			200,169
	200,000	3.31%, 03/30/09			200,208
	375,000	5.00%, 04/13/09			378,115
	200,000	6.50%, 07/15/09			203,958
	327,000	6.625%, 09/15/09			337,850
	172,000	4.03%, 09/22/09			175,597
		TOTAL FANNIE MAE – (Identified cost $3,755,318)			3,755,318
FEDERAL FARM CREDIT BANK - (13.57%)
	5,000,000	0.861%, 01/02/09 (a)			5,000,000
	500,000	3.875%, 01/12/09			500,246
	400,000	4.55%, 03/27/09			401,784
	800,000	4.875%, 04/13/09			804,961
	3,000,000	1.15%, 06/02/09 (a)			3,004,145
		TOTAL FEDERAL FARM CREDIT BANK – (Identified cost $9,711,136)			9,711,136
FEDERAL HOME LOAN BANK - (48.02%)
	2,000,000	3.20%, 01/05/09 (b)			1,999,289
	1,000,000	3.31%, 01/09/09 (b)			999,265
	1,935,000	3.25%, 01/13/09			1,935,298
	1,000,000	3.25%, 01/14/09			1,000,000
	100,000	5.40%, 01/21/09			100,187
	5,000,000	3.664%, 01/23/09 (a)			5,000,463
	1,000,000	0.20%, 01/27/09 (b)			999,856
	200,000	4.00%, 01/27/09			200,205
	1,000,000	2.60%, 01/28/09			1,000,000
	1,000,000	5.477%, 01/28/09			1,001,929
	1,000,000	3.30%, 02/02/09 (b)			997,067
	1,000,000	2.76%, 02/12/09			1,000,000
	200,000	5.25%, 02/13/09			200,436
	900,000	5.75%, 02/13/09			903,521
	250,000	4.05%, 02/23/09			250,859
	2,000,000	2.50%, 03/17/09			2,000,356
	3,000,000	0.35%, 03/20/09 (a)			3,000,000
	1,000,000	0.39%, 04/03/09 (a)			1,000,000
	800,000	3.24%, 04/03/09			800,132
	1,000,000	0.43%, 04/08/09 (a)			1,000,000
	200,000	3.00%, 04/15/09			200,472
	250,000	5.863%, 04/22/09			253,965
	600,000	3.75%, 04/27/09			602,022
	125,000	5.00%, 04/29/09			126,554
	1,000,000	4.25%, 05/15/09			1,006,336
	500,000	4.00%, 05/26/09			506,472
	2,000,000	3.05%, 06/18/09			1,999,483
	500,000	5.25%, 06/19/09			507,795
	150,000	5.375%, 07/17/09			152,452

26

SELECTED FUNDSSchedule of Investments

SELECTED CAPITAL PRESERVATION TRUST - December 31, 2008

SELECTED DAILY GOVERNMENT FUND - (Continued)

Principal					Security			Value (Note 1)
FEDERAL HOME LOAN BANK – (CONTINUED)
$	250,000	3.25%, 07/28/09				$	250,522
	250,000	2.85%, 08/27/09					253,150
	100,000	5.00%, 09/18/09					101,760
	1,000,000	4.449%, 10/13/09 (a)					1,002,123
	2,000,000	3.50%, 10/14/09					2,004,900
		TOTAL FEDERAL HOME LOAN BANK – (Identified cost $34,356,869)					34,356,869
FREDDIE MAC - (6.96%)
	355,000	5.25%, 01/12/09					355,266
	250,000	4.875%, 02/17/09					251,344
	2,000,000	4.75%, 03/05/09					2,007,161
	100,000	5.75%, 03/15/09					100,621
	500,000	3.375%, 04/15/09					501,672
	310,000	4.25%, 07/15/09					313,539
	400,000	4.375%, 07/30/09					407,860
	1,000,000	6.625%, 09/15/09					1,040,670
		TOTAL FREDDIE MAC – (Identified cost $4,978,133)					4,978,133
MORTGAGES - (4.21%)
	FANNIE MAE POOLS - (0.96%)
	676,442	5.00%, 09/01/09, Pool No. 254468					684,837
				Total Fannie Mae Pools			684,837
	FREDDIE MAC POOLS - (3.25%)
	141,029	4.50%, 01/01/09, Pool No. M90893					141,029
	71,296	5.00%, 01/01/09, Pool No. M80718					71,296
	132,640	5.50%, 02/01/09, Pool No. M80720					132,816
	714,124	3.50%, 04/01/09, Pool No. M90913					714,610
	1,266,014	4.50%, 04/01/09, Pool No. M90914					1,266,293
		Total Freddie Mac Pools					2,326,044
		TOTAL MORTGAGES – (Identified cost $3,010,881)					3,010,881
PRIVATE EXPORT FUNDING - (0.14%)
	100,000	6.67%, 09/15/09					101,577
		TOTAL PRIVATE EXPORT FUNDING – (Identified cost $101,577)					101,577
REPURCHASE AGREEMENTS - (21.49%)
	7,689,000	Banc of America Securities LLC Joint Repurchase Agreement,
			0.06%, 01/02/09, dated 12/31/08, repurchase value of $7,689,026
			(collateralized by: U.S. Government agency mortgage in a pooled cash account, 6.00%, 10/20/38, total market value $7,842,780)				7,689,000
	3,204,000	Goldman, Sachs & Co. Joint Repurchase Agreement,
			0.04%, 01/02/09, dated 12/31/08, repurchase value of $3,204,007
			(collateralized by: US Government agency mortgages in a pooled cash account, 5.00%-5.50%, 05/01/35-05/01/38, total market value $3,268,080)				3,204,000

27

SELECTED FUNDS Schedule of Investments

SELECTED CAPITAL PRESERVATION TRUST - December 31, 2008

SELECTED DAILY GOVERNMENT FUND - (Continued)

Principal							Security			Value (Note 1)
REPURCHASE AGREEMENTS – (CONTINUED)
$	4,486,000			UBS Securities LLC Joint Repurchase Agreement,
					0.05%, 01/02/09, dated 12/31/08, repurchase value of $4,486,012
					(collateralized by: U.S. Government agency mortgages in a pooled cash account, 5.00%-6.50%, 06/01/17-02/01/38, total market value $4,575,720)			$	4,486,000
				TOTAL REPURCHASE AGREEMENTS – (Identified cost $15,379,000)					15,379,000
			Total Investments – (99.64%) – (Identified cost $71,292,914) – (c)						71,292,914
			Other Assets Less Liabilities – (0.36%)						254,015
						Net Assets – (100.00%)		$	71,546,929
	(a)	The interest rates on floating rate securities, shown as of December 31, 2008, may change daily or less frequently and are based on indices of market interest rates. For purposes of amortized cost valuation, the maturity dates of these securities are considered to be the effective maturities, based on the reset dates of the securities' variable rates.
	(b)	Zero coupon bonds reflect the effective yield on the date of purchase.
	(c)	Aggregate cost for Federal Income Tax purposes is $71,292,914.

See Notes to Financial Statements

28

SELECTED FUNDSStatements of Assets and Liabilities

At December 31, 2008

				Selected		Selected			Selected Daily
				American		Special			Government
				Shares		Shares			Fund
ASSETS:
Investments in securities at value* (see accompanying			$	7,350,609,130	$		63,272,193	$	71,292,914
Schedules of Investments)
Cash				91,110		2,183			3,904
Cash - foreign currencies**				–		4,299			–
Receivables:
	Capital stock sold			18,789,804		190,286			570
	Dividends and interest			8,092,540		76,552			404,698
	Investment securities sold			9,363,299		31,477			–
Prepaid expenses				185,670		3,096			3,268
Due from Adviser				–		–			1,165
		Total assets		7,387,131,553		63,580,086			71,706,519
LIABILITIES:
Payables:
	Capital stock redeemed			19,143,638		50,668			45,763
	Distributions payable			–		–			53,662
Accrued custodian fees				249,410		11,258			5,981
Accrued distribution service fees				1,029,437		3,913			1,018
Accrued management fees				3,676,596		40,024			20,023
Accrued transfer agent fees:
Class S				1,327,728		8,214			1,361
Class D				213,523		5,157			1,757
Other accrued expenses				105,217		20,785			30,025
		Total liabilities		25,745,549		140,019			159,590
NET ASSETS			$	7,361,386,004	$	63,440,067		$	71,546,929

NET ASSETS CONSIST OF:
Par value of shares of capital stock			$	322,567,119	$	2,330,596	$	7,154,693
Additional paid-in capital				7,594,636,391		92,159,008		64,392,236
Overdistributed net investment income				(2,203,185)		(64,198)		–
Accumulated net realized losses from investments and foreign currency transactions				(393,463,200)		(8,662,682)		–
Net unrealized depreciation on investments and foreign currency transactions				(160,151,121)		(22,322,657)		–
		Net Assets	$	7,361,386,004	$	63,440,067	$	71,546,929
*Including:
	Cost of investments		$	7,510,784,460	$	85,595,136	$	71,292,914
	Cost and market value of repurchase agreements (if greater			–		–		15,379,000
	than 10% of assets)
**Cost of cash - foreign currencies				–		4,347		–

29

SELECTED FUNDSStatements of Assets and Liabilities – (Continued)

At December 31, 2008

			Selected		Selected		Selected Daily
			American		Special		Government
			Shares		Shares		Fund
CLASS S SHARES:
	Net assets	$	4,480,736,053	$	15,643,569	$	4,243,932
	Shares outstanding		156,981,472		2,299,126		4,243,932
	Net asset value, offering, and redemption price per share (Net	$	28.54	$	6.80	$	1.00
	Assets ÷ Shares Outstanding)
CLASS D SHARES:
	Net assets	$	2,880,649,951	$	47,796,498	$	67,302,997
	Shares outstanding		101,072,223		7,023,256		67,302,997
	Net asset value, offering, and redemption price per share (Net	$	28.50	$	6.81	$	1.00
	Assets ÷ Shares Outstanding)

See Notes to Financial Statements

30

SELECTED FUNDSStatements of Operations

For the year ended December 31, 2008

									Selected				Selected		Selected Daily
									American				Special		Government
									Shares				Shares		Fund
INVESTMENT INCOME:
Income:
		Dividends*					$		180,176,280		$		1,490,630	$	–
		Interest							6,042,810				172,465		3,053,838
		Net lending fees							17,184				–		–
		Other income							26,848				24,373		–
				Total income					186,263,122				1,687,468		3,053,838
Expenses:
		Management fees (Note 2)							55,482,551				688,230		322,556
		Custodian fees							1,166,544				38,603		21,011
		Transfer agent fees:
			Class S						6,731,052				53,926		14,248
			Class D						950,162				29,718		9,618
		Audit fees							61,200				20,400		16,800
		Legal fees							102,227				6,409		6,341
		Reports to shareholders							1,136,588				10,492		6,457
		Directors’ fees and expenses							592,049				8,656		8,738
		Registration and filing fees							150,002				31,500		33,440
		Miscellaneous							268,382				13,255		8,999
		Payments under distribution plan (Note 3):
			Class S						15,816,072				71,228		11,914
				Total expenses					82,456,829				972,417		460,122
				Expenses paid indirectly (Note 6)					(2,267)				(487)		(15)
				Reimbursement of expenses by adviser (Note 2)					–				–		(9,235)
					Net expenses				82,454,562				971,930		450,872
						Net investment income			103,808,560				715,538		2,602,966
REALIZED & UNREALIZED LOSS ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized loss from:
			Investment transactions							(290,237,042)			(7,033,231)		–
			Foreign currency transactions							(625,281)			(7,604)		–
Net change in unrealized appreciation (depreciation)										(4,790,394,567)			(49,785,249)		–
	Net realized and unrealized loss on investments and foreign currency									(5,081,256,890)			(56,826,084)		–
		Net increase (decrease) in net assets resulting from						$		(4,977,448,330)		$	(56,110,546)	$	2,602,966
		operations
*Net of foreign taxes withheld as follows								$		2,052,140		$	55,489	$	–

See Notes to Financial Statements

31

SELECTED FUNDSStatements of Changes in Net Assets

For the year ended December 31, 2008

					Selected			Selected		Selected Daily
					American			Special		Government
					Shares			Shares		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

32

SELECTED FUNDSStatements of Changes in Net Assets

For the year ended December 31, 2007

			Selected		Selected		Selected Daily
			American		Special		Government
			Shares		Shares		Fund
OPERATIONS:
	Net investment income	$	142,810,592	$	307,497	$	5,317,055
	Net realized gain from investments and foreign currency transactions		344,081,842		12,698,029		–
	Net increase (decrease) in unrealized appreciation on investments and foreign currency transactions		114,688,416		(13,973,179)		–
	Net increase (decrease) in net assets resulting from operations		601,580,850		(967,653)		5,317,055
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
	Net investment income:
	Class S		(77,900,811)		(31,093)		(232,293)
	Class D		(65,056,495)		(429,931)		(5,084,762)
	Realized gains from investment transactions:
	Class S		–		(4,661,736)		–
	Class D		–		(10,363,282)		–
CAPITAL SHARE TRANSACTIONS:
	Net increase (decrease) in net assets resulting from capital share transactions (Note 5):
	Class S		(195,201,856)		(7,953,039)		(1,040,098)
	Class D		442,005,167		11,397,530		6,533,082
Total increase (decrease) in net assets			705,426,855		(13,009,204)		5,492,984
NET ASSETS:
	Beginning of year		11,916,236,973		149,667,744		109,569,259
	End of year*	$	12,621,663,828	$	136,658,540	$	115,062,243
*Including overdistributed net investment income of		$	(2,833,082)	$	(996,798)	$	–

See Notes to Financial Statements

33

SELECTED FUNDSNotes to Financial Statements

December 31, 2008

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, 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 financial statements.

Selected American Shares and Selected Special Shares are diversified, professionally managed stock-oriented funds.

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.

A. VALUATION OF SECURITIES – 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 Investment Company Act of 1940, 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.

Fair Value Measurements – The Funds adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”), effective January 1, 2008. In accordance with FAS 157, 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 of the investment. FAS 157 established a three-tier hierarchy for measuring fair value of assets and liabilities. The three-tier hierarchy of inputs is 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)

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 Investment Company Act of 1940. 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.

34

SELECTED FUNDSNotes to Financial Statements – (Continued)

December 31, 2008

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

Fair Value Measurements – (Continued)

The following is a summary of the inputs used as of December 31, 2008 in valuing each Fund’s investments carried at value:

	Investments in Securities at Value
	Selected American			Selected			Selected Daily
	Shares			Special Shares			Government Fund
Valuation inputs
Level 1 – Quoted prices	$	6,522,395,275		$	53,376,366		$	–
Level 2 – Other Significant Observable Inputs		828,213,855	*		9,895,827	*		71,292,914
Level 3 – Significant Unobservable Inputs		–			–			–
Total	$	7,350,609,130		$	63,272,193		$	71,292,914

* 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.

B. 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.

C.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.

D.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 Statement of Operations.

E. 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 income tax returns for all open tax years and has concluded that as of December 31, 2008, 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 2005.

35

SELECTED FUNDSNotes to Financial Statements – (Continued)

December 31, 2008

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

E. FEDERAL INCOME TAXES – (CONTINUED)

At December 31, 2008, each fund had available for federal income tax purposes unused capital loss carryforwards, post October 2008 capital losses, and post October 2008 foreign currency 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		4,823,000
Total	$	390,682,000	$	4,823,000

	Post October 2008 Capital Losses (expire December 31, 2017)		Post October 2008 Foreign Currency Losses (deferred)
Selected American Shares	$	1,469,000	$	83,000
Selected Special Shares		3,277,000		500

F.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.

G.INDEMNIFICATION – Under the Funds’ organizational documents, its 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 its 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.

H.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.

I.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 under the plan will be determined based upon the performance of the Selected Funds.

36

SELECTED FUNDSNotes to Financial Statements – (Continued)

December 31, 2008

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

J. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions to shareholders are recorded on the ex-dividend date. Net investment income (loss), net realized gains (losses), and net unrealized appreciation (depreciation) of investments may differ for financial statement and tax purposes primarily due to differing treatments of wash sales, foreign currency transactions, passive foreign investment company shares, partnership income, and redesignation of distributions. 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 regulations. Accordingly, during the year ended December 31, 2008, for Selected American Shares, amounts have been reclassified to reflect a decrease in paid in capital of $884,724, a decrease in overdistributed net investment income of $259,443, and a decreasein accumulated net realized loss of $625,281; for Selected Special Shares, amounts have been reclassified to reflect a decrease in paid in capital of $15,378, a decrease in overdistributed net investment income of $370,614, and an increasein accumulated net realized loss of $355,236. The Funds’ net assets have not been affected by these reclassifications.

The tax character of distributions paid during the years ended December 31, 2008 and 2007, was as follows:

	ORDINARY INCOME		LONG-TERM CAPITAL GAIN		RETURN OF CAPITAL		TOTAL
Selected American Shares
2008	$	103,438,106	$	–	$	2,196,726	$	105,634,832
2007		142,957,306		–		–		142,957,306
Selected Special Shares
2008		153,552		–		25,788		179,340
2007		1,529,948		13,956,094		–		15,486,042
Selected Daily Government Fund
2008		2,602,966		–		–		2,602,966
2007		5,317,055		–		–		5,317,055

As of December 31, 2008 the components of accumulated losses on a tax basis were as follows:

	SELECTED AMERICAN SHARES		SELECTED SPECIAL SHARES
Accumulated net realized losses from investments and foreign currency transactions	$	(392,234,073)	$	(8,100,009)
Net unrealized depreciation on investments		(161,463,324)		(22,917,411)
Total	$	(553,697,397)	$	(31,017,420)

NOTE 2 – INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Advisory fees are paid monthly to the Adviser. The annual rate for Selected American Shares is 0.65% on the first $500 million of average net assets, 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 average net assets in excess of $10 billion. The annual rate for Selected Special Shares is 0.70% on the first $50 million of average net assets, 0.675% on the next $100 million, 0.65% on the next $100 million, and 0.60% of average net assets in excess of $250 million. Advisory fees paid during the year ended December 31, 2008, approximated 0.53% and 0.69% of average net assets for Selected American Shares and Selected Special Shares, respectively. The annual rate for the Selected Daily Government Fund is 0.30% of average net assets.

37

SELECTED FUNDSNotes to Financial Statements – (Continued)

December 31, 2008

NOTE 2 – INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES –

(CONTINUED)

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, 2008 was $204,442, $9,147 and $2,589 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. 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 0.75% and 0.50% for Class S and Class D shares, respectively. During the year ended December 31, 2008, such reimbursements amounted to $9,235 for Class S shares. Certain Directors/Trustees and Officers of the Funds are also Directors/Trustees and Officers of the general partner of the Adviser.

Davis Selected Advisers – NY, Inc. (“DSA-NY”), a wholly-owned subsidiary of the Adviser, acts as sub-adviser to the Funds. The Funds pay no fees directly to DSA-NY.

NOTE 3 – 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, 2008, Selected American Shares, Selected Special Shares, and Selected Daily Government Fund incurred distribution services fees totaling $15,816,072, $71,228, and $11,914, respectively.

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

NOTE 4 – PURCHASES AND SALES OF SECURITIES

Purchases and sales of investment securities (excluding short-term securities) during the year ended December 31, 2008 were as follows:

	SELECTED AMERICAN SHARES		SELECTED SPECIAL SHARES
Cost of purchases	$	1,876,066,825	$	29,452,216
Proceeds of sales	$	2,135,765,524	$	47,825,733

NOTE 5 – CAPITAL STOCK

At December 31, 2008, there were 600 million shares of capital stock of Selected American Shares ($1.25 par value per share) authorized. At December 31, 2008, there were 50 million shares of capital stock of Selected Special Shares ($0.25 par value per share) authorized. At December 31, 2008, 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, 2008
	SELECTED AMERICAN SHARES		SELECTED SPECIAL SHARES		SELECTED DAILY 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)

38

SELECTED FUNDSNotes to Financial Statements – (Continued)

December 31, 2008

NOTE 5 – CAPITAL STOCK – (CONTINUED)

CLASS S	Year ended December 31, 2007
	SELECTED AMERICAN SHARES		SELECTED SPECIAL SHARES		SELECTED DAILY GOVERNMENT FUND
Shares sold		33,124,919		582,123		2,085,184
Shares issued in reinvestment of distributions		1,568,572		361,672		213,751
		34,693,491		943,795		2,298,935
Shares redeemed		(38,625,009)		(1,451,787)		(3,339,033)
Net decrease		(3,931,518)		(507,992)		(1,040,098)
Proceeds from shares sold	$	1,581,496,343	$	8,295,415	$	2,085,184
Proceeds from shares issued in reinvestment		75,291,387		4,470,268		213,751
of distributions
		1,656,787,730		12,765,683		2,298,935
Cost of shares redeemed		(1,851,989,586)		(20,718,722)		(3,339,033)
Net decrease	$	(195,201,856)	$	(7,953,039)	$	(1,040,098)

CLASS D	Year ended December 31, 2008
	SELECTED AMERICAN SHARES		SELECTED SPECIAL SHARES		SELECTED DAILY 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)

CLASS D	Year ended December 31, 2007
	SELECTED AMERICAN SHARES		SELECTED SPECIAL SHARES		SELECTED DAILY GOVERNMENT FUND
Shares sold		17,162,498		607,975		8,024,258
Shares issued in reinvestment of distributions		1,198,605		839,842		5,084,102
		18,361,103		1,447,817		13,108,360
Shares redeemed		(8,979,476)		(541,032)		(6,575,278)
Net increase		9,381,627		906,785		6,533,082
Proceeds from shares sold	$	817,082,583	$	8,644,057	$	8,024,258
Proceeds from shares issued in reinvestment		57,533,014		10,372,055		5,084,102
of distributions
		874,615,597		19,016,112		13,108,360
Cost of shares redeemed		(432,610,430)		(7,618,582)		(6,575,278)
Net increase	$	442,005,167	$	11,397,530	$	6,533,082

NOTE 6 – EXPENSES PAID INDIRECTLY

Under an agreement with the custodian bank, each Fund’s custodian fees are reduced for earnings on cash balances maintained at the custodian by the Funds. During the year ended December 31, 2008, such reductions amounted to $2,267, $487, and $15 for Selected American Shares, Selected Special Shares, and Selected Daily Government Fund, respectively.

39

SELECTED FUNDSNotes to Financial Statements – (Continued)

December 31, 2008

NOTE 7 – 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, 2008, 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 8 – 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 overnight Federal Funds Rate plus 0.75%. The Funds had no borrowings outstanding for the year ended December 31, 2008.

NOTE 9 – ILLIQUID 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. The aggregate value of illiquid securities in Selected American Shares amounted to $18,939,150 or 0.26% of the Fund’s net assets as of December 31, 2008. The aggregate value of illiquid securities in Selected Special Shares amounted to $1,250,200 or 1.97% of the Fund’s net assets as of December 31, 2008. Securities are as follows:

Fund	Security	Acquisition Date	Principal	Units/ Shares	Cost per Unit/ Share		Valuation per Unit/ Share as of December 31, 2008
Selected American Shares	Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13	07/17/08	15,365,000	153,650		100.0000		71.000
					$		$
Selected American Shares	Level 3 Communications, Inc., Conv. Sr. Notes, 15.00%, 01/15/13	12/23/08	8,000,000	80,000		100.0000		100.375
					$		$
Selected Special Shares	Oaktree Capital Group LLC, Class A	05/21/07	N/A	65,800		34.1658		19.000
					$		$

40

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 12/31/2008		$	47.78	$	0.34	3	$	(19.23)	$	(18.89)
	Year ended 12/31/2007			46.06		0.49	3		1.72		2.21
	Year ended 12/31/2006			40.24		0.30	3		5.81		6.11
	Year ended 12/31/2005			36.87		0.31			3.34		3.65
	Year ended 12/31/2004			33.17		0.26			3.71		3.97
Selected American Shares Class D:
		Year ended 12/31/2008		47.79		0.48	3		(19.28)		(18.80)
		Year ended 12/31/2007		46.07		0.63	3		1.73		2.36
		Year ended 12/31/2006		40.23		0.45	3		5.81		6.26
		Year ended 12/31/2005		36.86		0.41	3		3.35		3.76
		Period from 05/03/20046 to 12/31/2004		34.12		0.18			2.91		3.09
Selected Special Shares Class S:
		Year ended 12/31/2008		12.30		0.04	3		(5.54)		(5.50)
		Year ended 12/31/2007		13.98		–	3,5		(0.17)		(0.17)
		Year ended 12/31/2006		12.47		(0.03)	3		2.22		2.19
		Year ended 12/31/2005		12.44		0.02			1.03		1.05
		Year ended 12/31/2004		11.70		0.05			1.26		1.31
Selected Special Shares Class D:
		Year ended 12/31/2008		12.30		0.08	3		(5.54)		(5.46)
		Year ended 12/31/2007		13.98		0.05	3		(0.17)		(0.12)
		Year ended 12/31/2006		12.46		0.02	3		2.23		2.25
		Year ended 12/31/2005		12.42		0.05	3		1.04		1.09
		Period from 05/03/20046 to 12/31/2004		11.97		0.05			1.00		1.05
Selected Daily Government Fund Class S:
		Year ended 12/31/2008		1.000		0.020			–		0.020
		Year ended 12/31/2007		1.000		0.044			–		0.044
		Year ended 12/31/2006		1.000		0.043			–		0.043
		Year ended 12/31/2005		1.000		0.025			–		0.025
		Year ended 12/31/2004		1.000		0.007			–		0.007
Selected Daily Government Fund Class D:
		Year ended 12/31/2008		1.000		0.024			–		0.024
		Year ended 12/31/2007		1.000		0.048			–		0.048
		Year ended 12/31/2006		1.000		0.045			–		0.045
		Year ended 12/31/2005		1.000		0.027			–		0.027
		Period from 05/03/20046 to 12/31/2004		1.000		0.007			–		0.007

Portfolio Turnover2 (for all classes of shares)	Year ended December 31,
	2008		2007		2006		2005		2004
Selected American Shares	18	%	8	%	9	%	4	%	3	%
Selected Special Shares	30	%	36	%	41	%	53	%	30	%

41

Financial Highlights

Dividends and Distributions
Dividends from Net Investment Income		Distributions from Realized Gains		Distributions in Excess of Net Investment Income		Distributions in Excess of Net Realized Gains		Return of Capital			Total Distributions		Net Asset Value, End of Period		Total Return1		Net Assets, End of Period (000,000 omitted)		Ratio of Expenses To Average Net Assets				Ratio of Net Investment Income (Loss) to Average Net Assets
																			Gross		Net4
$	(0.34)	$	–	$	–	$	–	$	(0.01)		$	(0.35)	$	28.54	(39.44)	%	$	4,481	0.92	%	0.92	%	0.86	%
	(0.49)		–		–		–		–			(0.49)		47.78	4.79			7,602	0.90		0.88		1.01
	(0.29)		–		–		–		–			(0.29)		46.06	15.19			7,509	0.90		0.90		0.72
	(0.28)		–		–		–		–			(0.28)		40.24	9.90			7,978	0.90		0.90		0.81
	(0.26)		–		–		–		(0.01)			(0.27)		36.87	11.97			6,660	0.92		0.92		0.76
	(0.48)		–		–		–		(0.01)			(0.49)		28.50	(39.24)			2,881	0.59		0.59		1.19
	(0.64)		–		–		–		–			(0.64)		47.79	5.11			5,020	0.57		0.57		1.32
	(0.42)		–		–		–		–			(0.42)		46.07	15.59			4,407	0.58		0.58		1.04
	(0.39)		–		–		–		–			(0.39)		40.23	10.19			1,675	0.61		0.60		1.11
	(0.34)		–		–		–		(0.01)			(0.35)		36.86	9.08			681	0.65	7	0.65	7	1.10	7
	–		–		–		–		–			–		6.80	(44.72)			16	1.26		1.26		0.43
	(0.01)		(1.50)		–		–		–			(1.51)		12.30	(1.27)			42	1.17		1.17		(0.03)
	(0.11)		(0.57)		–		–		–			(0.68)		13.98	17.74			55	1.16		1.16		(0.20)
	(0.13)		(0.89)		–		–		–			(1.02)		12.47	8.45			68	1.16		1.12		0.11
	(0.04)		(0.53)		–		–		–			(0.57)		12.44	11.34			91	1.17		1.17		0.37
	(0.03)		–		–		–		–	5		(0.03)		6.81	(44.40)			48	0.86		0.86		0.83
	(0.06)		(1.50)		–		–		–			(1.56)		12.30	(0.89)			94	0.81		0.81		0.33
	(0.16)		(0.57)		–		–		–			(0.73)		13.98	18.19			95	0.83		0.83		0.13
	(0.16)		(0.89)		–		–		–			(1.05)		12.46	8.83			55	0.87		0.86		0.37
	(0.07)		(0.53)		–		–		–			(0.60)		12.42	8.91			20	0.91	7	0.91	7	0.86	7
	(0.020)		–		–		–		–			(0.020)		1.000	2.05			4	0.94		0.75		2.09
	(0.044)		–		–		–		–			(0.044)		1.000	4.50			5	0.97		0.75		4.41
	(0.043)		–		–		–		–			(0.043)		1.000	4.33			6	0.67		0.67		4.28
	(0.025)		–		–		–		–			(0.025)		1.000	2.57			100	0.68		0.67		2.54
	(0.007)		–		–		–		–			(0.007)		1.000	0.73			107	0.68		0.68		0.72
	(0.024)		–		–		–		–			(0.024)		1.000	2.40			67	0.40		0.40		2.44
	(0.048)		–		–		–		–			(0.048)		1.000	4.85			110	0.41		0.41		4.75
	(0.045)		–		–		–		–			(0.045)		1.000	4.61			104	0.40		0.40		4.55
	(0.027)		–		–		–		–			(0.027)		1.000	2.75			11	0.50		0.50		2.71
	(0.007)		–		–		–		–			(0.007)		1.000	0.74			5	0.44	7	0.44	7	1.21	7

¹  Assumes hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns for periods of less than one full year are not annualized.

²  The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation.

³ Per share calculations were based on average shares outstanding for the period.

⁴ The ratios in this column reflect the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.

⁵ Less than $0.005 per share.

⁶ Inception date of class.

⁷ Annualized.

See Notes to Financial Statements

42

SELECTED FUNDSReport of Independent Registered Public Accounting Firm

December 31, 2008

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, 2008, 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, 2008, by correspondence with the custodian. 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, 2008, 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 20, 2009

43

SELECTED FUNDSFund Information

Federal Income Tax Information (Unaudited)

In early 2009, shareholders will receive information regarding all dividends and distributions paid to them by the Funds during calendar year 2008. 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 2008 with their 2008 Form 1099-DIV.

Selected American Shares, Inc.

During the calendar year 2008, $103,438,106 of dividends paid by the Fund constituted income dividends for federal income tax purposes. The Fund designates $103,438,106 or 100% as income qualifying for the corporate dividends-received deduction.

For the calendar year 2008, certain dividends paid by the Fund constitute qualified dividend income for federal income tax purposes. The Fund designates $103,438,106 or 100% as qualified dividend income.

Selected Special Shares, Inc.

During the calendar year 2008, $153,552 of dividends paid by the Fund constituted income dividends for federal income tax purposes. The Fund designates $153,552 or 100% as income qualifying for the corporate dividends-received deduction.

For the calendar year 2008, certain dividends paid by the Fund constitute qualified dividend income for federal income tax purposes. The Fund designates $153,552 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 its complete proxy voting record for the 12 months ended June 30^th, no later than August 31^st 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.

44

SELECTED FUNDSDirectors 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); Former Executive Vice President and General Counsel, Verizon (formerly GTE Corp. before it merged with Bell Atlantic) since July 1994.	3	Director, Holcim (U.S.) Inc. (supplier of Portland and blended cements).
Francisco L. Borges (11/17/51)	Director	Director since 2006	Chairman and Managing Partner, Landmark Partners, Inc. (private equity and real estate investment management) since March 1999; former Managing Director, Financial Guaranty Insurance Company; former Treasurer, State of Connecticut.	3	Director, Hartford Foundation for Public Giving; Director, University of Connecticut Foundation, Inc.
Jerome E. Hass (6/1/40)	Director	Director since 1997	Professor of Finance and Business Strategy, Johnson Graduate School of Management, Cornell University; Consultant, National Economic Research Associates; Chief Financial Officer and Co-Owner of B&H Enterprises of Ithaca (hardware store).	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
Marsha Williams (3/28/51)	Director (resigned January 2009)	Director since 1996	Senior Vice President and Chief Financial Officer, Orbitz Worldwide, Inc. (travel-services provider); former Executive Vice President and Chief Financial Officer, Equity Office Properties Trust (a real estate investment trust).	16	Director of the Davis Funds (consisting of 13 portfolios); Director, Modine Manufacturing, Inc. (heat transfer technology); Director, Chicago Bridge & Iron Company, N.V. (industrial construction and engineering); Director, Fifth Third Bancorp (diversified financial services).

45

SELECTED FUNDSDirectors and Officers – (Continued)

Name (birthdate) Position(s) Held With Fund Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years Number of Portfolios in Fund Complex Overseen by Director Other Directorships Held by Director

Inside Directors*

Andrew A. Davis (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.

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; Partner, Seyfarth Shaw LLP (a law firm); counsel to the Independent Directors and the Davis Funds.

46

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

Seyfarth Shaw LLP

131 South Dearborn Street, Suite 2400

Chicago, Illinois 60603-5577

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.

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, 2008 and December 31, 2007 were $20,400 and $18,000, 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, 2008 and December 31, 2007 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, 2008 and December 31, 2007 were $7,290 and $6,960, 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, 2008 and December 31, 2007 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 2-01 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, 2008 and December 31, 2007. 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 6, 2009

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 6, 2009

By /s/ Douglas A. Haines

Douglas A. Haines

Principal Financial Officer

Date: March 6, 2009