UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-01533
SELECTED INTERNATIONAL FUND, 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, 2012
Date of reporting period: December 31, 2012
____________________
ITEM 1. REPORT TO STOCKHOLDERS
| SELECTED FUNDS | Table of Contents |
| Shareholder Letter | 2 |
| Management’s Discussion of Fund Performance: | |
| Selected American Shares | 3 |
| Selected International Fund | 5 |
| Fund Overview: | |
| Selected American Shares | 7 |
| Selected International Fund | 9 |
| Selected Daily Government Fund | 11 |
| Expense Example | 12 |
| Schedule of Investments: | |
| Selected American Shares | 14 |
| Selected International Fund | 18 |
| Selected Daily Government Fund | 21 |
| Statements of Assets and Liabilities | 23 |
| Statements of Operations | 25 |
| Statements of Changes in Net Assets | 26 |
| Notes to Financial Statements | 28 |
| Financial Highlights | 37 |
| Report of Independent Registered Public Accounting Firm | 39 |
| Federal Income Tax Information | 40 |
| Privacy Notice and Householding | 41 |
| Directors and Officers | 42 |
This Annual Report is authorized for use by existing shareholders. Prospective shareholders must receive a current Selected Funds prospectus, which contains more information about investment strategies, risks, fees, and expenses. Please read the prospectus carefully before investing or sending money.
Shares of the Selected Funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.
Portfolio Proxy Voting Policies and Procedures
The Funds have adopted Portfolio Proxy Voting Policies and Procedures under which the Funds vote proxies relating to securities held by the Funds. A description of the Funds’ Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Funds toll-free at 1-800-243-1575, (ii) on the Funds’ website at www.selectedfunds.com, and (iii) on the SEC’s website at www.sec.gov.
In addition, the Funds are required to file Form N-PX, with their complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Funds’ Form N-PX filing is available (i) without charge, upon request, by calling the Funds toll-free at 1-800-243-1575, (ii) on the Funds’ website at www.selectedfunds.com, and (iii) on the SEC’s website at www.sec.gov.
Form N-Q and Form N-MFP
The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. In addition, Selected Daily Government Fund files its complete schedule of portfolio holdings with the SEC for each month end on Form N-MFP. The Funds’ Form N-Q and Selected Daily Government Fund’s Form N-MFP are available without charge, upon request, by calling 1-800-243-1575, on the Funds’ website at www.selectedfunds.com, and on the SEC’s website at www.sec.gov. The Funds’ Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
| SELECTED FUNDS | Shareholder Letter |
Dear Fellow Shareholder,
As stewards of our customers’ savings, the management team and Directors/Trustees 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 Manager Commentary for certain funds, which is published semi-annually. In this commentary, 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 Manager Commentary either on the Funds’ website at www.selectedfunds.com or by calling 1-800-243-1575.
It is with regret that we inform you that Jerome (Jerry) Hass passed away on January 21, 2013. For more than 15 years, Jerry has zealously and effectively served the Funds and their shareholders as an independent director, for many years serving as Chair of the Trading and Brokerage Committee and as an active member of the Investment Committee. He will be missed.
We thank you for your continued trust. We will do our best to earn it in the years ahead.
Sincerely,
James J. McMonagle Chairman | Christopher C. Davis President & Portfolio Manager | Kenneth C. Feinberg Portfolio Manager |
February 4, 2013
SELECTED FUNDS SELECTED AMERICAN SHARES, INC. | Management’s Discussion of Fund Performance |
Performance Overview
Selected American Shares’ Class S shares delivered a total return on net asset value of 12.82% (Class D shares returned 13.19%) for the year ended December 31, 2012. Over the same time period, the Standard & Poor’s 500® Index (“Index”) returned 16.00%. The Index turned in a strong performance with individual sectors1 within the Index increasing by as much as 30% (Financials) or as little as 1% (Utilities). The sectors within the Index that turned in the strongest performance over the year were Financials and Consumer Discretionary. The sectors within the Index that turned in the weakest (but still positive) performance over the year were Utilities and Energy.
Factors Impacting the Fund’s Performance
Energy companies were the most important detractor2 from the Fund’s performance. The Fund’s Energy companies under-performed the corresponding sector within the Index and had a slightly lower relative average weighting in this weaker performing sector. EOG Resources3 was among the most important contributors to performance. Canadian Natural Resources, Occidental Petroleum, OGX Petroleo e Gas Participacoes, and Devon Energy were among the most important detractors from performance. The Fund no longer owns OGX Petroleo e Gas Participacoes.
Consumer Discretionary companies contributed to the Fund’s absolute performance, but detracted from its performance relative to the Index. The Fund’s Consumer Discretionary companies under-performed the corresponding sector within the Index and had a lower relative average weighting in this stronger performing sector. Walt Disney was among the most important contributors to performance. Groupon and Bed Bath & Beyond were among the most important detractors from performance.
Financial companies were the most important contributor to the Fund’s absolute performance, but detracted from the Fund’s relative performance. The Fund’s Financial companies under-performed the corresponding sector within the Index, but benefited from a higher relative average weighting in this stronger performing sector. Wells Fargo, Bank of New York Mellon, and American Express were among the most important contributors to performance. Julius Baer and Fairfax Financial Holdings were among the most important detractors from performance.
Consumer Staple companies were also important contributors to the Fund’s performance. The Fund’s Consumer Staple companies out-performed the corresponding sector within the Index and had a higher relative average weighting. Costco Wholesale, CVS Caremark, and Diageo were among the most important contributors to performance.
The Fund had approximately 18% of its net assets invested in foreign companies at December 31, 2012. As a whole, those companies under-performed the domestic companies held by the Fund.
Selected American Shares’ investment objective is to achieve both capital growth and income. In the current market environment, we expect that income will be low. There can be no assurance that the Fund will achieve its objective. Selected American Shares’ principal risks are: stock market risk, manager risk, common stock risk, financial services risk, foreign country risk, emerging market risk, foreign currency risk, trading markets and depositary receipts risk, headline risk, and fees and expenses risk. See the prospectus for a full description of each risk.
1 The companies included in the Standard & Poor’s 500® Index are divided into ten sectors. One or more industry groups make up a sector.
2 A company’s or sector’s contribution to or detraction from the Fund’s performance is a product both of its appreciation or depreciation and its weighting within the Fund. For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%.
3 This Management Discussion of Fund Performance discusses a number of individual companies. The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. The Schedule of Investments lists the Fund’s holdings of each company discussed.
SELECTED FUNDS SELECTED AMERICAN SHARES, INC. – (CONTINUED) | Management’s Discussion of Fund Performance |
Comparison of a $10,000 investment in Selected American Shares Class S versus the Standard & Poor’s 500® Index over 10 years for an investment made on December 31, 2002
Average Annual Total Return for periods ended December 31, 2012
| Fund & Benchmark Index | 1-Year | 5-Year | 10-Year | Since Class D’s Inception (May 3, 2004) | Gross Expense Ratio | Net Expense Ratio |
| Class S | 12.82% | (0.65)% | 6.53% | N/A | 0.95% | 0.95% |
| Class D | 13.19% | (0.32)% | N/A | 4.27% | 0.61% | 0.61% |
Standard & Poor’s 500® Index | 16.00% | 1.66% | 7.10% | 5.02% | | |
The Standard & Poor’s 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalizations, and represents approximately two-thirds of the total market value of all domestic common stocks. Investments cannot be made directly in the Index.
The performance data for Selected American Shares contained in this report represents past performance, assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Fund today. The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed. Fund performance changes over time and current performance may be higher or lower than stated. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The operating expense ratios may vary in future years. For more current information please call Selected Funds Investor Services at 1-800-243-1575.
SELECTED FUNDS SELECTED INTERNATIONAL FUND, INC. | Management’s Discussion of Fund Performance |
Performance Overview
Selected International Fund’s Class S shares delivered a total return on net asset value of 18.29% (Class D shares returned 18.90%) for the year ended December 31, 2012. Over the same time period, the Morgan Stanley Capital International All Country World Index ex USA (“Index”) returned 16.83%. The Index turned in a strong performance with individual sectors1 within the Index increasing by as much as 30% (Financials) or as little as 2% (Energy). The sectors within the Index that turned in the strongest performance over the year were Financials and Consumer Discretionary. The sectors within the Index that turned in the weakest (but still positive) performance over the year were Energy and Utilities. As of December 31, 2012, the Fund had approximately 96% of its net assets invested in foreign companies, 3% in U.S. companies, and 1% in other assets and liabilities.
Factors Impacting the Fund’s Performance
Consumer Discretionary companies were the most important contributor2 to the Fund’s performance. The Fund’s Consumer Discretionary companies out-performed the corresponding sector within the Index and had an approximately equal relative average weighting in this stronger performing sector. Compagnie Financiere Richemont3 was among the most important contributors to performance.
Health Care companies were the second most important contributor to the Fund’s performance. The Fund’s Health Care companies out-performed the corresponding sector within the Index and had a higher relative average weighting. Essilor, Roche Holding, Sinovac Biotech, and Sinopharm were among the most important contributors to performance.
Consumer Staple companies were also an important contributor to the Fund’s performance. The Fund’s Consumer Staple companies out-performed the corresponding sector within the Index and had a higher relative average weighting. Heineken and Brazil Pharma were among the most important contributors to performance.
Energy companies were the most important detractor from the Fund’s absolute performance, but contributed to the Fund’s performance relative to the Index. The Fund’s Energy companies under-performed the corresponding sector within the Index, but benefited from a lower relative average weighting in this weaker performing sector. OGX Petroleo e Gas Participacoes was among the most important detractors from performance. The Fund no longer owns OGX Petroleo e Gas Participacoes.
Financial companies made positive contributions to the Fund’s absolute performance, but were the most important detractor from the Fund’s relative performance. The Fund’s Financial companies under-performed the corresponding sector within the Index and had a lower relative average weighting in this stronger performing sector. CETIP, Fairfax Financial Holdings, CNinsure, and Banco Santander were among the most important detractors from performance. The Fund no longer holds Banco Santander.
Other important contributors to the Fund’s performance included Schneider Electric, Greatview Aseptic Packaging, and Schindler Holding. Other important detractors from the Fund’s performance included Sino-Forest, China Shipping, Shanghai Electric Group, NetEase, and LLX Logistica. The Fund no longer holds Sino-Forest, China Shipping, Shanghai Electric Group, or LLX Logistica.
Selected International Fund’s investment objective is capital growth. There can be no assurance that the Fund will achieve its objective. Selected International Fund’s principal risks are: stock market risk, manager risk, common stock risk, foreign country risk, emerging market risk, foreign currency risk, trading markets and depositary receipts risk, under $10 billion market capitalization risk, headline risk, and fees and expenses risk. See the prospectus for a full description of each risk.
1 The companies included in the Morgan Stanley Capital International All Country World Index ex USA are divided into ten sectors. One or more industry groups make up a sector.
2 A company’s or sector’s contribution to or detraction from the Fund’s performance is a product both of its appreciation or depreciation and its weighting within the Fund. For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%.
3 This Management Discussion of Fund Performance discusses a number of individual companies. The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. The Schedule of Investments lists the Fund’s holdings of each company discussed.
SELECTED FUNDS SELECTED INTERNATIONAL FUND, INC. – (CONTINUED) | Management’s Discussion of Fund Performance |
Comparison of a $10,000 investment in Selected International Fund Class S versus the Morgan Stanley Capital International All Country World Index ex USA (MSCI ACWI® ex USA) over 10 years for an investment made on December 31, 2002
Average Annual Total Return for periods ended December 31, 2012
| Fund & Benchmark Index | 1-Year | 5-Year | 10-Year | Since Class D’s Inception (May 3, 2004) | Gross Expense Ratio | Net Expense Ratio |
| Class S | 18.29% | (3.63)% | 5.13% | N/A | 1.52% | 1.52% |
| Class D | 18.90% | (3.14)% | N/A | 1.96% | 0.88% | 0.88% |
MSCI ACWI® ex USA | 16.83% | (2.89)% | 9.74% | 6.82% | | |
On May 1, 2011, the Fund changed its name from Selected Special Shares to Selected International Fund and changed its investment strategy from investing primarily in domestic equity securities to investing primarily in foreign equity securities. Performance prior to that date is unlikely to be relevant to future performance.
The MSCI ACWI® ex USA is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets, excluding the United States. The Index includes reinvestment of dividends, net of foreign withholding taxes. Investments cannot be made directly in the Index.
The performance data for Selected International Fund contained in this report represents past performance, assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Fund today. The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed. Fund performance changes over time and current performance may be higher or lower than stated. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The operating expense ratios may vary in future years. For more current information please call Selected Funds Investor Services at 1-800-243-1575.
SELECTED FUNDS SELECTED AMERICAN SHARES, INC. | Fund Overview December 31, 2012 |
| Portfolio Composition | | Industry Weightings |
| (% of Fund’s 12/31/12 Net Assets) | | (% of 12/31/12 Long-Term Portfolio) |
| | | | | | |
| | | | | Fund | S&P 500® |
| Common Stock (U.S.) | 78.59% | | Diversified Financials | 18.11% | 6.45% |
| Common Stock (Foreign) | 17.73% | | Insurance | 12.71% | 3.99% |
| Convertible Bonds (Foreign) | 0.04% | | Food & Staples Retailing | 11.02% | 2.35% |
| Short-Term Investments | 1.47% | | Energy | 9.75% | 10.94% |
| Other Assets & Liabilities | 2.17% | | Information Technology | 9.45% | 18.96% |
| | 100.00% | | Materials | 7.67% | 3.61% |
| | | | Banks | 5.97% | 2.84% |
| | | | Food, Beverage & Tobacco | 5.96% | 5.91% |
| | | | Retailing | 5.75% | 4.13% |
| | | | Transportation | 3.03% | 1.62% |
| | | | Health Care | 2.84% | 12.38% |
| | | | Media | 2.54% | 3.54% |
| | | | Capital Goods | 1.40% | 7.80% |
| | | | Real Estate | 1.14% | 2.25% |
| | | | Commercial & Professional Services | 1.11% | 0.67% |
| | | | Other | 0.83% | 11.74% |
| | | | Automobiles & Components | 0.72% | 0.82% |
| | | | | 100.00% | 100.00% |
Top 10 Long-Term Holdings
(% of Fund’s 12/31/12 Net Assets)
| | | |
| CVS Caremark Corp. | Food & Staples Retailing | 6.09% |
| Wells Fargo & Co. | Commercial Banks | 5.76% |
| American Express Co. | Consumer Finance | 5.51% |
| Bank of New York Mellon Corp. | Capital Markets | 4.87% |
| Google Inc., Class A | Software & Services | 4.29% |
| Costco Wholesale Corp. | Food & Staples Retailing | 4.22% |
| Berkshire Hathaway Inc., Class A | Property & Casualty Insurance | 3.07% |
| EOG Resources, Inc. | Energy | 2.74% |
| Loews Corp. | Multi-line Insurance | 2.70% |
| Bed Bath & Beyond Inc. | Retailing | 2.69% |
SELECTED FUNDS SELECTED AMERICAN SHARES, INC. – (CONTINUED) | Fund Overview December 31, 2012 |
New Positions Added (01/01/12-12/31/12)
(Highlighted positions are those greater than 0.40% of the Fund’s 12/31/12 net assets)
| Security | Industry | Date of 1st Purchase | % of Fund’s 12/31/12 Net Assets |
Emerson Electric Co. | Capital Goods | 05/02/12 | 0.43% |
Groupon, Inc. | Retailing | 03/14/12 | 0.17% |
International Business Machines Corp. | Software & Services | 11/07/12 | 0.33% |
Laboratory Corp. of America Holdings | Health Care Equipment & Services | 10/25/12 | 0.12% |
Sysco Corp. | Food & Staples Retailing | 03/06/12 | 0.30% |
Tiffany & Co. | Retailing | 01/23/12 | 0.32% |
Walgreen Co. | Food & Staples Retailing | 01/24/12 | – |
Positions Closed (01/01/12-12/31/12)
(Gains and losses greater than $20,000,000 are highlighted)
| | | Date of | | Realized |
| Security | Industry | Final Sale | | Gain (Loss) |
Baxter International Inc. | Health Care Equipment & Services | 07/13/12 | $ | 1,688,650 |
Becton, Dickinson and Co. | Health Care Equipment & Services | 06/15/12 | | 3,516,840 |
China Coal Energy Co., Ltd. - H | Energy | 10/11/12 | | 8,554,274 |
China Shipping Development Co., Ltd. - H | Transportation | 10/16/12 | | (35,648,001) |
Expedia, Inc. | Retailing | 11/20/12 | | 21,516,100 |
Johnson & Johnson | Pharmaceuticals, Biotechnology & Life Sciences | 07/03/12 | | 13,342,259 |
Kraft Foods Inc., Class A | Food, Beverage & Tobacco | 06/18/12 | | 9,284,346 |
Li & Fung Ltd. | Retailing | 08/10/12 | | 2,759,811 |
LLX Logistica S.A. | Transportation | 06/15/12 | | (775,285) |
Lockheed Martin Corp. | Capital Goods | 07/18/12 | | 9,445,858 |
Merck & Co., Inc. | Pharmaceuticals, Biotechnology & Life Sciences | 07/09/12 | | 76,674,183 |
MMX Mineracao e Metalicos S.A., Pfd. | Materials | 02/02/12 | | 203,023 |
OGX Petroleo e Gas Participacoes S.A. | Energy | 12/28/12 | | (15,048,860) |
Roche Holding AG - Genusschein | Pharmaceuticals, Biotechnology & Life Sciences | 07/20/12 | | 12,430,151 |
Sealed Air Corp. | Materials | 11/13/12 | | (4,684,057) |
Sino-Forest Corp. | Materials | 07/10/12 | | (69,107,316) |
Sino-Forest Corp., Restricted | Materials | 07/10/12 | | (2,309,643) |
Transatlantic Holdings, Inc. | Reinsurance | 03/06/12 | | 1,704,545 |
TripAdvisor Inc. | Retailing | 04/17/12 | | 5,685,257 |
Walgreen Co. | Food & Staples Retailing | 11/20/12 | | 536,200 |
SELECTED FUNDS SELECTED INTERNATIONAL FUND, INC. | Fund Overview December 31, 2012 |
| Portfolio Composition | | Industry Weightings |
| (% of Fund’s 12/31/12 Net Assets) | | (% of 12/31/12 Stock Holdings) |
| | | | | | |
| | | | | Fund | MSCI ACWI® ex USA |
| Common Stock (Foreign) | 96.29% | | Health Care | 14.13% | 7.14% |
| Common Stock (U.S.) | 2.84% | | Capital Goods | 12.72% | 7.53% |
| Other Assets & Liabilities | 0.87% | | Food, Beverage & Tobacco | 10.72% | 6.87% |
| | 100.00% | | Materials | 8.37% | 10.97% |
| | | | Transportation | 8.27% | 2.22% |
| | | | Consumer Durables & Apparel | 6.70% | 1.68% |
| | | | Diversified Financials | 5.08% | 2.90% |
| | | | Real Estate | 4.69% | 3.25% |
| | | | Banks | 4.51% | 15.27% |
| | | | Energy | 3.94% | 10.28% |
| | | | Telecommunication Services | 3.80% | 5.44% |
| | | | Food & Staples Retailing | 3.68% | 2.22% |
| | | | Information Technology | 3.34% | 6.36% |
| | | | Commercial & Professional Services | 2.86% | 0.85% |
| | | | Media | 2.63% | 1.29% |
| | | | Consumer Services | 2.37% | 0.96% |
| | | | Other | 2.19% | 14.77% |
| | | | | 100.00% | 100.00% |
| Country Diversification | | Top 10 Long-Term Holdings |
| (% of 12/31/12 Stock Holdings) | | (% of Fund’s 12/31/12 Net Assets) |
| | | | | | | |
| Switzerland | 27.90 % | | Compagnie Financiere Richemont S.A., Bearer Shares, Unit A | 5.85 % |
| China | 22.94 % | | Heineken Holding N.V. | 5.67 % |
| France | 9.15 % | | Kuehne & Nagel International AG | 5.65 % |
| Netherlands | 6.52 % | | Schneider Electric S.A. | 5.18 % |
| Mexico | 6.43 % | | Hang Lung Group Ltd. | 4.65 % |
| Hong Kong | 4.69 % | | Schindler Holding AG - Participation Certificate | 4.53 % |
| Brazil | 4.68 % | | Roche Holding AG - Genusschein | 4.05 % |
| United Kingdom | 4.13 % | | Tenaris S.A., ADR | 3.90 % |
| Italy | 3.94 % | | Essilor International S.A. | 3.89 % |
| Canada | 2.98 % | | America Movil S.A.B. de C.V., Series L, ADR | 3.77 % |
| United States | 2.86 % | | | | |
| Belgium | 2.72 % | | | | |
| Germany | 1.06 % | | | | |
| | 100.00 % | | | | |
SELECTED FUNDS SELECTED INTERNATIONAL FUND, INC. – (CONTINUED) | Fund Overview December 31, 2012 |
New Positions Added (01/01/12-12/31/12)
(Highlighted positions are those greater than 2.00% of the Fund’s 12/31/12 net assets)
| Security | Industry | Date of 1st Purchase | % of Fund’s 12/31/12 Net Assets |
Brenntag AG | Capital Goods | 07/20/12 | 1.05% |
CETIP S.A. - Mercados Organizados | Capital Markets | 02/28/12 | 0.99% |
Ctrip.com International, Ltd., ADR | Consumer Services | 05/30/12 | 2.35% |
Vipshop Holdings Ltd., ADS | Retailing | 03/23/12 | 0.80% |
Positions Closed (01/01/12-12/31/12)
(Losses greater than $1,000,000 are highlighted)
| | | Date of | | | Realized |
| Security | Industry | Final Sale | | | Loss |
| Banco Santander Brasil S.A., ADS | Commercial Banks | 05/16/12 | | $ | (118,992) |
| China Shipping Development Co., Ltd. - H | Transportation | 10/16/12 | | | (412,790) |
| Itau Unibanco Holding S.A., ADR | Commercial Banks | 05/16/12 | | | (1,089) |
| LLX Logistica S.A. | Transportation | 12/17/12 | | | (129,951) |
| MMX Mineracao e Metalicos S.A., Pfd. | Materials | 12/27/12 | | | (3,407) |
| OGX Petroleo e Gas Participacoes S.A. | Energy | 12/28/12 | | | (1,009,099) |
| Shanghai Electric Group Co. Ltd. - H | Capital Goods | 08/02/12 | | | (219,548) |
| Sino-Forest Corp. | Materials | 07/10/12 | | | (4,315,402) |
| Vale S.A., ADR | Materials | 05/04/12 | | | (301,317) |
SELECTED FUNDS SELECTED CAPITAL PRESERVATION TRUST - SELECTED DAILY GOVERNMENT FUND | Fund Overview December 31, 2012 |
| Portfolio Composition | | Maturity Diversification |
| (% of Fund’s 12/31/12 Net Assets) | | (% of 12/31/12 Portfolio Holdings) |
| | | | | |
| Repurchase Agreements | 43.33% | | 0-30 Days | 78.72% |
| Federal Home Loan Bank | 28.09% | | 31-90 Days | 10.73% |
| Federal Farm Credit Bank | 11.76% | | 91-180 Days | 9.10% |
| Freddie Mac | 7.67% | | 181-397 Days | 1.45% |
| Private Export Funding | 3.89% | | | 100.00% |
| Fannie Mae | 3.56% | | | |
| Other Agencies | 0.19% | | | |
| Other Assets & Liabilities | 1.51% | | | |
| | 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.
| SELECTED FUNDS | Expense Example |
Example
As a shareholder of each Fund, you incur ongoing costs, including advisory and administrative fees, distribution and/or service (12b-1) fees, and other Fund expenses. As a shareholder of Selected International Fund, you may also incur transaction costs, which consist of redemption fees, if any. The Expense Example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for each class is for the six-month period ended December 31, 2012.
Actual Expenses
The information represented in the row entitled “Actual” provides information about actual account values and actual expenses. You may use the information in this row, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. An annual maintenance fee of $15, charged on retirement plan accounts per Social Security Number, is not included in the Expense Example. This fee will be waived for accounts sharing the same Social Security Number if the accounts total at least $50,000 at Selected Funds. If this fee was included, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower, by this amount.
Hypothetical Example for Comparison Purposes
The information represented in the row entitled “Hypothetical” provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. An annual maintenance fee of $15, charged on retirement plan accounts per Social Security Number, is not included in the Expense Example. This fee will be waived for accounts sharing the same Social Security Number if the accounts total at least $50,000 at Selected Funds. If this fee was included, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower, by this amount.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the information in the row entitled “Hypothetical” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your cost would have been higher.
| SELECTED FUNDS | Expense Example – (Continued) |
| | Beginning | Ending | Expenses Paid |
| | Account Value | Account Value | During Period* |
| | (07/01/12) | (12/31/12) | (07/01/12-12/31/12) |
| Selected American Shares | | | |
Class S (annualized expense ratio 0.95%**) | | | |
Actual | $1,000.00 | $1,057.22 | $4.91 |
Hypothetical | $1,000.00 | $1,020.36 | $4.82 |
Class D (annualized expense ratio 0.61%**) | | | |
Actual | $1,000.00 | $1,059.17 | $3.16 |
Hypothetical | $1,000.00 | $1,022.07 | $3.10 |
Selected International Fund | | | |
Class S (annualized expense ratio 1.49%**) | | | |
Actual | $1,000.00 | $1,139.57 | $8.01 |
Hypothetical | $1,000.00 | $1,017.65 | $7.56 |
Class D (annualized expense ratio 0.87%**) | | | |
Actual | $1,000.00 | $1,142.88 | $4.69 |
Hypothetical | $1,000.00 | $1,020.76 | $4.42 |
Selected Daily Government Fund | | | |
Class S (annualized expense ratio 0.21%**) | | | |
Actual | $1,000.00 | $1,000.01 | $1.06 |
Hypothetical | $1,000.00 | $1,024.08 | $1.07 |
Class D (annualized expense ratio 0.21%**) | | | |
Actual | $1,000.00 | $1,000.00 | $1.06 |
Hypothetical | $1,000.00 | $1,024.08 | $1.07 |
Hypothetical assumes 5% annual return before expenses.
*Expenses are equal to each Class’s annualized operating expense ratio, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
**The expense ratios reflect the impact, if any, of certain reimbursements and/or waivers from the Adviser and/or Distributor.
SELECTED FUNDS SELECTED AMERICAN SHARES, INC. | Schedule of Investments December 31, 2012 |
| | Shares | | Value (Note 1) |
|
| | CONSUMER DISCRETIONARY – (9.12%) |
| | Automobiles & Components – (0.69%) |
| | | | | | | | |
| | Consumer Durables & Apparel – (0.44%) |
| | Compagnie Financiere Richemont S.A., Bearer Shares, Unit A (Switzerland) | | | | | | |
| | Hunter Douglas N.V. (Netherlands) | | | | | | |
| | | | 23,358,823 |
| | Media – (2.45%) |
| | Grupo Televisa S.A.B., ADR (Mexico) | | | | | | |
| | | | | | | | |
| | | | 130,379,131 |
| | Retailing – (5.54%) |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | Liberty Interactive Corp., Series A * | | | | | | |
| | Liberty Ventures, Series A * | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | 294,542,619 |
| | Total Consumer Discretionary | | | |
| | CONSUMER STAPLES – (16.55%) |
| | Food & Staples Retailing – (10.61%) |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | 564,805,891 |
| | Food, Beverage & Tobacco – (5.75%) |
| | | | | | | | |
| | Diageo PLC (United Kingdom) | | | | | | |
| | Heineken Holding N.V. (Netherlands) | | | | | | |
| | Nestle S.A. (Switzerland) | | | | | | |
| | Philip Morris International Inc. | | | | | | |
| | Unilever NV, NY Shares (Netherlands) | | | | | | |
| | | | 305,714,091 |
| | Household & Personal Products – (0.19%) |
| | Natura Cosmeticos S.A. (Brazil) | | | | | | |
| | | | | |
| | ENERGY – (9.39%) |
| | Canadian Natural Resources Ltd. (Canada) | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | Occidental Petroleum Corp. | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | |
SELECTED FUNDS SELECTED AMERICAN SHARES, INC. - (CONTINUED) | Schedule of Investments December 31, 2012 |
| | Shares | | Value (Note 1) |
COMMON STOCK – (CONTINUED) |
| | FINANCIALS – (36.55%) |
| | Banks – (5.76%) |
| | Commercial Banks – (5.76%) |
| | | | | | | | |
| | Diversified Financials – (17.45%) |
| | Capital Markets – (10.18%) |
| | Ameriprise Financial, Inc. | | | | | | |
| | Bank of New York Mellon Corp. | | | | | | |
| | Brookfield Asset Management Inc., Class A (Canada) | | | | | | |
| | | | | | | | |
| | Goldman Sachs Group, Inc. | | | | | | |
| | Julius Baer Group Ltd. (Switzerland) | | | | | | |
| | | 541,775,997 |
| | Consumer Finance – (5.51%) |
| | | | | | | | |
| | Diversified Financial Services – (1.76%) |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | 93,728,067 |
| | | | 928,414,672 |
| | Insurance – (12.24%) |
| | Insurance Brokers – (0.21%) |
| | | | | | | | |
| | Multi-line Insurance – (3.52%) |
| | Fairfax Financial Holdings Ltd. (Canada) | | | | | | |
| | Fairfax Financial Holdings Ltd., 144A (Canada) (a) | | | | | | |
| | | | | | | | |
| | | 187,465,421 |
| | Property & Casualty Insurance – (6.56%) |
| | | | | | | | |
| | Berkshire Hathaway Inc., Class A * | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | 349,024,914 |
| | Reinsurance – (1.95%) |
| | | | | | | | |
| | | | | | | | |
| | | 103,855,159 |
| | | | 651,354,294 |
| | Real Estate – (1.10%) |
| | Hang Lung Group Ltd. (Hong Kong) | | | | | | |
| | | | | |
| | HEALTH CARE – (2.73%) |
| | Health Care Equipment & Services – (2.03%) |
| | Express Scripts Holding Co. * | | | | | | |
| | Laboratory Corp. of America Holdings * | | | | | | |
| | | | 107,897,930 |
SELECTED FUNDS SELECTED AMERICAN SHARES, INC. - (CONTINUED) | Schedule of Investments December 31, 2012 |
| | Shares | | Value (Note 1) |
COMMON STOCK – (CONTINUED) |
| | HEALTH CARE – (CONTINUED) |
| | Pharmaceuticals, Biotechnology & Life Sciences – (0.70%) |
| | Agilent Technologies, Inc. | | | | | | |
| | | | | | | | |
| | | | 37,495,568 |
| | | | | |
| | INDUSTRIALS – (5.33%) |
| | Capital Goods – (1.35%) |
| | | | | | | | |
| | | | | | | | |
| | | | 71,673,695 |
| | Commercial & Professional Services – (1.07%) |
| | | | | | | | |
| | Transportation – (2.91%) |
| | China Merchants Holdings International Co., Ltd. (China) | | | | | | |
| | Kuehne & Nagel International AG (Switzerland) | | | | | | |
| | | | 155,098,715 |
| | | | | |
| | INFORMATION TECHNOLOGY – (9.11%) |
| | Semiconductors & Semiconductor Equipment – (1.82%) |
| | | | | | | | |
| | | | | | | | |
| | | | 96,710,056 |
| | Software & Services – (6.99%) |
| | Activision Blizzard, Inc. | | | | | | |
| | | | | | | | |
| | International Business Machines Corp. | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | 372,096,324 |
| | Technology Hardware & Equipment – (0.30%) |
| | | | | | | | |
| | Total Information Technology | | | |
| | MATERIALS – (7.35%) |
| | Air Products and Chemicals, Inc. | | | | | | |
| | BHP Billiton PLC (United Kingdom) | | | | | | |
| | | | | | | | |
| | Martin Marietta Materials, Inc. | | | | | | |
| | | | | | | | |
| | Potash Corp. of Saskatchewan Inc. (Canada) | | | | | | |
| | | | | | | | |
| | Rio Tinto PLC (United Kingdom) | | | | | | |
| | | | | |
| | TELECOMMUNICATION SERVICES – (0.19%) |
| | America Movil S.A.B. de C.V., Series L, ADR (Mexico) | | | | | | |
| | Total Telecommunication Services | | | |
| | TOTAL COMMON STOCK – (Identified cost $3,056,323,192) | | | |
SELECTED FUNDS SELECTED AMERICAN SHARES, INC. - (CONTINUED) | Schedule of Investments December 31, 2012 |
| | Principal | | Value (Note 1) |
CONVERTIBLE BONDS – (0.04%) |
| | MATERIALS – (0.04%) |
| | Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13 (Canada) (b)(c) | | | | | | |
| | | TOTAL CONVERTIBLE BONDS – (Identified cost $15,365,000) | | | |
SHORT-TERM INVESTMENTS – (1.47%) |
| | Banc of America Securities LLC Joint Repurchase Agreement, 0.18%, 01/02/13, dated 12/31/12, repurchase value of $34,017,340 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.50%-4.50%, 04/01/42-11/01/42, total market value $34,697,340) | | | | | | |
| | Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.27%, 01/02/13, dated 12/31/12, repurchase value of $44,283,664 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 4.00%, 09/20/40-10/15/40, total market value $45,168,660) | | | | | | |
| | | TOTAL SHORT-TERM INVESTMENTS – (Identified cost $78,300,000) | | | |
| | | | | |
| | Total Investments – (97.83%) – (Identified cost $3,149,988,192) – (d) | | | 5,205,045,909 |
| | Other Assets Less Liabilities – (2.17%) | | | 115,477,417 |
| | Net Assets – (100.00%) | | $ | 5,320,523,326 |
| | | | | |
| | ADR: American Depositary Receipt | |
| | | |
| | * | Non-Income producing security. |
| | | | |
| | (a) | This security is subject to Rule 144A. The Board of Directors of the Fund has determined that there is sufficient liquidity in this security to realize current valuations. This security amounted to $14,137,258 or 0.27% of the Fund’s net assets as of December 31, 2012. |
| | | | |
| | (b) | This security is in default and is not accruing income. The interest rate shown is the original, contractual interest rate. See Note 1 of the Notes to Financial Statements. |
| | | | |
| | (c) | Restricted Security – See Note 8 of the Notes to Financial Statements. |
| | | | |
| | (d) | Aggregate cost for federal income tax purposes is $3,149,991,658. At December 31, 2012 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows: |
| | | | |
| | Unrealized appreciation | | $ | 2,116,950,893 |
| | Unrealized depreciation | | | (61,896,642) |
| | Net unrealized appreciation | | $ | 2,055,054,251 |
| See Notes to Financial Statements |
SELECTED FUNDS SELECTED INTERNATIONAL FUND, INC. | Schedule of Investments December 31, 2012 |
| | Shares | | Value (Note 1) |
|
| | CONSUMER DISCRETIONARY – (12.40%) |
| | Consumer Durables & Apparel – (6.64%) |
| | Compagnie Financiere Richemont S.A., Bearer Shares, Unit A (Switzerland) | | | | | | |
| | Hunter Douglas N.V. (Netherlands) | | | | | | |
| | | | 4,439,144 |
| | Consumer Services – (2.35%) |
| | Ctrip.com International, Ltd., ADR (China)* | | | | | | |
| | Media – (2.61%) |
| | Grupo Televisa S.A.B., ADR (Mexico) | | | | | | |
| | Retailing – (0.80%) |
| | Vipshop Holdings Ltd., ADS (China)* | | | | | | |
| | Total Consumer Discretionary | | | |
| | CONSUMER STAPLES – (14.27%) |
| | Food & Staples Retailing – (3.65%) |
| | Brazil Pharma S.A. (Brazil) | | | | | | |
| | Food, Beverage & Tobacco – (10.62%) |
| | Heineken Holding N.V. (Netherlands) | | | | | | |
| | Lindt & Spruengli AG - Participation Certificate (Switzerland) | | | | | | |
| | Nestle S.A. (Switzerland) | | | | | | |
| | | | 7,100,058 |
| | | | | |
| | ENERGY – (3.90%) |
| | Tenaris S.A., ADR (Italy) | | | | | | |
| | | | | |
| | FINANCIALS – (15.53%) |
| | Banks – (4.47%) |
| | Commercial Banks – (4.47%) |
| | China CITIC Bank Corp. Ltd. - H (China) | | | | | | |
| | China Merchants Bank Co., Ltd. - H (China) | | | | | | |
| | | | 2,988,028 |
| | Diversified Financials – (5.04%) |
| | Capital Markets – (1.56%) |
| | Brookfield Asset Management Inc., Class A (Canada) | | | | | | |
| | CETIP S.A. - Mercados Organizados (Brazil) | | | | | | |
| | | 1,044,603 |
| | Diversified Financial Services – (3.48%) |
| | Groupe Bruxelles Lambert S.A. (Belgium) | | | | | | |
| | Pargesa Holding S.A., Bearer Shares (Switzerland) | | | | | | |
| | RHJ International (Belgium)* | | | | | | |
| | | 2,322,975 |
| | | | 3,367,578 |
| | Insurance – (1.37%) |
| | Insurance Brokers – (0.42%) |
| | CNinsure, Inc., ADR (China)* | | | | | | |
| | Multi-line Insurance – (0.95%) |
| | Fairfax Financial Holdings Ltd. (Canada) | | | | | | |
| | | | 914,248 |
SELECTED FUNDS SELECTED INTERNATIONAL FUND, INC. - (CONTINUED) | Schedule of Investments December 31, 2012 |
| | Shares | | Value (Note 1) |
COMMON STOCK – (CONTINUED) |
| | FINANCIALS – (CONTINUED) |
| | Real Estate – (4.65%) |
| | Hang Lung Group Ltd. (Hong Kong) | | | | | | |
| | | | | |
| | HEALTH CARE – (14.01%) |
| | Health Care Equipment & Services – (7.49%) |
| | Essilor International S.A. (France) | | | | | | |
| | Shandong Weigao Group Medical Polymer Co. Ltd. - H (China) | | | | | | |
| | Sinopharm Group Co. - H (China) | | | | | | |
| | | | 5,007,896 |
| | Pharmaceuticals, Biotechnology & Life Sciences – (6.52%) |
| | Roche Holding AG - Genusschein (Switzerland) | | | | | | |
| | Sinovac Biotech Ltd. (China)* | | | | | | |
| | | | 4,353,614 |
| | | | | |
| | INDUSTRIALS – (23.65%) |
| | Capital Goods – (12.61%) |
| | ABB Ltd., ADR (Switzerland) | | | | | | |
| | | | | | | | |
| | Schindler Holding AG - Participation Certificate (Switzerland) | | | | | | |
| | Schneider Electric S.A. (France) | | | | | | |
| | | | 8,431,518 |
| | Commercial & Professional Services – (2.84%) |
| | | | | | | | |
| | Transportation – (8.20%) |
| | China Merchants Holdings International Co., Ltd. (China) | | | | | | |
| | Kuehne & Nagel International AG (Switzerland) | | | | | | |
| | | | 5,483,100 |
| | | | | |
| | INFORMATION TECHNOLOGY – (3.31%) |
| | Software & Services – (3.31%) |
| | NetEase, Inc., ADR (China)* | | | | | | |
| | Youku Tudou Inc., ADR (China)* | | | | | | |
| | | | 2,214,875 |
| | Total Information Technology | | | |
| | MATERIALS – (8.29%) |
| | BHP Billiton PLC (United Kingdom) | | | | | | |
| | Greatview Aseptic Packaging Co., Ltd. (China) | | | | | | |
| | Potash Corp. of Saskatchewan Inc. (Canada) | | | | | | |
| | Rio Tinto PLC (United Kingdom) | | | | | | |
| | | | | |
| | TELECOMMUNICATION SERVICES – (3.77%) |
| | America Movil S.A.B. de C.V., Series L, ADR (Mexico) | | | | | | |
| | Total Telecommunication Services | | | |
| | TOTAL COMMON STOCK – (Identified cost $65,951,956) | | | |
SELECTED FUNDS SELECTED INTERNATIONAL FUND, INC. - (CONTINUED) | Schedule of Investments December 31, 2012 |
| | Total Investments – (99.13%) – (Identified cost $65,951,956) – (a) | | $ | 66,261,355 |
| | Other Assets Less Liabilities – (0.87%) | | | 580,096 |
| | Net Assets – (100.00%) | | $ | 66,841,451 |
| | | | | |
| | ADR: American Depositary Receipt | |
| | | |
| | ADS: American Depositary Share | |
| | | |
| | * | | Non-Income producing security. |
| | | | |
| | (a) | | Aggregate cost for federal income tax purposes is $67,132,847. At December 31, 2012 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows: |
| | | | | |
| | Unrealized appreciation | | $ | 5,200,499 |
| | Unrealized depreciation | | | (6,071,991) |
| | Net unrealized depreciation | | $ | (871,492) |
| See Notes to Financial Statements |
SELECTED FUNDS SELECTED CAPITAL PRESERVATION TRUST – SELECTED DAILY GOVERNMENT FUND | Schedule of Investments December 31, 2012 |
| | Principal | | Value (Note 1) |
|
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | TOTAL FANNIE MAE – (Identified cost $937,660) | | | |
FEDERAL FARM CREDIT BANK – (11.76%) |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | TOTAL FEDERAL FARM CREDIT BANK – (Identified cost $3,096,155) | | |
FEDERAL HOME LOAN BANK – (28.09%) |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | TOTAL FEDERAL HOME LOAN BANK – (Identified cost $7,395,431) | | | |
|
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | TOTAL FREDDIE MAC – (Identified cost $2,019,098) | | | |
SELECTED FUNDS SELECTED CAPITAL PRESERVATION TRUST – SELECTED DAILY GOVERNMENT FUND | Schedule of Investments December 31, 2012 |
| | Principal | | Value (Note 1) |
|
| | Tennessee Valley Authority, 4.75%, 08/01/13 | | | | | | |
| | | TOTAL OTHER AGENCIES – (Identified cost $51,224) | | | |
PRIVATE EXPORT FUNDING – (3.89%) |
| | Private Export Funding Corp., 3.55%, 04/15/13 | | | | | | |
| | | TOTAL PRIVATE EXPORT FUNDING – (Identified cost $1,024,552) | | | |
REPURCHASE AGREEMENTS – (43.33%) |
| | Banc of America Securities LLC Joint Repurchase Agreement, 0.18%, 01/02/13, dated 12/31/12, repurchase value of $4,957,050 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.50%-4.50%, 04/01/42-11/01/42, total market value $5,056,140) | | | | | | |
| | Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.27%, 01/02/13, dated 12/31/12, repurchase value of $6,453,097 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 4.00%, 09/20/40-10/15/40, total market value $6,582,060) | | | | | | |
| | | TOTAL REPURCHASE AGREEMENTS – (Identified cost $11,410,000) | | | |
| | | | | |
| | Total Investments – (98.49%) – (Identified cost $25,934,120) – (b) | | | 25,934,120 |
| | Other Assets Less Liabilities – (1.51%) | | | 397,277 |
| | Net Assets – (100.00%) | | $ | 26,331,397 |
| | (a) | | The interest rates on floating rate securities, shown as of December 31, 2012, 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) | | Aggregate cost for federal income tax purposes is $25,934,120. |
| | | | |
| See Notes to Financial Statements |
SELECTED FUNDS | Statements of Assets and Liabilities At December 31, 2012 |
| | | | | | | | | | | |
| | | | Selected American Shares | | | Selected International Fund | | | Selected Daily Government Fund |
| ASSETS: | | | | | | | | | |
| Investments in securities at value* (see accompanying Schedules of Investments) | | $ | 5,205,045,909 | | $ | 66,261,355 | | $ | 25,934,120 |
| Cash | | | 1,167 | | | – | | | 1,365 |
| Receivables: | | | | | | | | | |
| | Capital stock sold | | | 8,453,522 | | | 13,003 | | | 471,795 |
| | Dividends and interest | | | 6,416,396 | | | 94,390 | | | 45,847 |
| | Investment securities sold | | | 120,045,435 | | | 889,278 | | | – |
| Prepaid expenses | | | 178,161 | | | 3,040 | | | 1,932 |
| Due from Adviser | | | – | | | – | | | 10,651 |
| | Total assets | | | 5,340,140,590 | | | 67,261,066 | | | 26,465,710 |
LIABILITIES: | | | | | | | | | |
| Cash overdraft | | | – | | | 290,604 | | | – |
| Payables: | | | | | | | | | |
| | Capital stock redeemed | | | 15,678,285 | | | 37,976 | | | 99,483 |
| | Distributions payable | | | – | | | – | | | 4 |
| Accrued distribution service fees | | | 436,916 | | | 2,590 | | | – |
| Accrued management fees | | | 2,588,099 | | | 32,038 | | | 6,600 |
| Accrued transfer agent fees | | | 653,530 | | | 20,019 | | | 7,600 |
| Other accrued expenses | | | 260,434 | | | 36,388 | | | 20,626 |
| | Total liabilities | | | 19,617,264 | | | 419,615 | | | 134,313 |
NET ASSETS | | $ | 5,320,523,326 | | $ | 66,841,451 | | $ | 26,331,397 |
NET ASSETS CONSIST OF: | | | | | | | | | |
| Par value of shares of capital stock | | $ | 159,519,811 | | $ | 1,802,070 | | $ | 2,633,140 |
| Additional paid-in capital | | | 3,003,960,036 | | | 73,932,613 | | | 23,698,257 |
| Undistributed (overdistributed) net investment income | | | 1,652,954 | | | (741,136) | | | – |
| Accumulated net realized gains (losses) from investments | | | 100,003,321 | | | (8,460,925) | | | – |
| Net unrealized appreciation on investments and foreign currency transactions | | | 2,055,387,204 | | | 308,829 | | | – |
| | Net Assets | | $ | 5,320,523,326 | | $ | 66,841,451 | | $ | 26,331,397 |
| | | | | | | | | | | |
| *Including: | | | | | | | | | |
| | Cost of investments | | $ | 3,149,988,192 | | $ | 65,951,956 | | $ | 25,934,120 |
| | Cost and market value of repurchase agreements (if greater than 10% of net assets) | | | – | | | – | | | 11,410,000 |
| | | | | | | | | | | |
| | | | | | | | | | | |
SELECTED FUNDS | Statements of Assets and Liabilities – (Continued) At December 31, 2012 |
| | | | Selected American Shares | | | Selected International Fund | | | Selected Daily Government Fund |
| CLASS S SHARES: | | | | | | | | | |
| Net assets | | $ | 1,949,182,969 | | $ | 10,354,149 | | $ | 3,552,389 |
| Shares outstanding | | | 46,730,981 | | | 1,121,010 | | | 3,552,389 |
| Net asset value, offering, and redemption price per share (Net assets ÷ Shares outstanding) | | $ | 41.71 | | $ | 9.24 | | $ | 1.00 |
CLASS D SHARES: | | | | | | | | | |
| Net assets | | $ | 3,371,340,357 | | $ | 56,487,302 | | $ | 22,779,008 |
| Shares outstanding | | | 80,884,868 | | | 6,087,271 | | | 22,779,008 |
| Net asset value, offering, and redemption price per share (Net assets ÷ Shares outstanding) | | $ | 41.68 | | $ | 9.28 | | $ | 1.00 |
| See Notes to Financial Statements |
SELECTED FUNDS | Statements of Operations For the year ended December 31, 2012 |
| | | | | | | | | | | |
| | | | Selected American Shares | | | Selected International Fund | | | Selected Daily Government Fund |
| INVESTMENT INCOME: | | | | | | | | | |
| Income: | | | | | | | | | |
| Dividends* | | $ | 129,216,084 | | $ | 1,220,983 | | $ | – |
| Interest | | | 641,484 | | | 581 | | | 51,503 |
| Net securities lending fees | | | 448,264 | | | – | | | – |
| | Total income | | | 130,305,832 | | | 1,221,564 | | | 51,503 |
| | | | | | | | | | | |
| Expenses: | | | | | | | | | |
| Management fees (Note 3) | | | 31,529,412 | | | 351,993 | | | 77,181 |
| Custodian fees | | | 858,231 | | | 74,843 | | | 13,704 |
| Transfer agent fees: | | | | | | | | | |
| | Class S | | | 2,747,502 | | | 47,302 | | | 18,246 |
| | Class D | | | 1,208,203 | | | 39,502 | | | 13,195 |
| Audit fees | | | 57,600 | | | 21,000 | | | 17,400 |
| Legal fees | | | 74,251 | | | 4,965 | | | 4,272 |
| Reports to shareholders | | | 346,879 | | | 5,800 | | | 1,242 |
| Directors’ fees and expenses | | | 597,932 | | | 9,166 | | | 5,371 |
| Registration and filing fees | | | 90,005 | | | 38,002 | | | 37,772 |
| Excise tax expense (Note 1) | | | – | | | – | | | 873 |
| Miscellaneous | | | 251,533 | | | 12,889 | | | 7,339 |
| Payments under distribution plan (Note 3): | | | | | | | | | |
| | Class S | | | 5,610,269 | | | 25,945 | | | 9,065 |
| Total expenses | | | 43,371,817 | | | 631,407 | | | 205,660 |
| Expenses paid indirectly (Note 4) | | | (150) | | | (1) | | | (6) |
| Reimbursement/waiver of expenses by Adviser/Distributor (Note 3) | | | – | | | – | | | (173,796) |
| | Net expenses | | | 43,371,667 | | | 631,406 | | | 31,858 |
| Net investment income | | | 86,934,165 | | | 590,158 | | | 19,645 |
| | | | | | | | | | | |
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: | | | | | | | | | |
| Net realized gain (loss) from: | | | | | | | | | |
| | Investment transactions | | | 337,703,404 | | | (7,312,138) | | | – |
| | Foreign currency transactions | | | (154,366) | | | (5,552) | | | – |
| Net realized gain (loss) | | | 337,549,038 | | | (7,317,690) | | | – |
| Net change in unrealized appreciation (depreciation) | | | 299,122,581 | | | 17,811,822 | | | – |
| | Net realized and unrealized gain on investments and foreign currency transactions | | | 636,671,619 | | | 10,494,132 | | | – |
| Net increase in net assets resulting from operations | | $ | 723,605,784 | | $ | 11,084,290 | | $ | 19,645 |
| | | | | | | | | | | |
| *Net of foreign taxes withheld as follows | | $ | 1,804,397 | | $ | 138,068 | | $ | – |
| See Notes to Financial Statements |
SELECTED FUNDS | Statements of Changes in Net Assets For the year ended December 31, 2012 |
| | | | Selected American Shares | | | Selected International Fund | | | Selected Daily Government Fund |
| | | | | | | | | | | |
| OPERATIONS: | | | | | | | | | |
| Net investment income | | $ | 86,934,165 | | $ | 590,158 | | $ | 19,645 |
| Net realized gain (loss) from investments and foreign currency transactions | | | 337,549,038 | | | (7,317,690) | | | – |
| Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | | | 299,122,581 | | | 17,811,822 | | | – |
| | Net increase in net assets resulting from operations | | | 723,605,784 | | | 11,084,290 | | | 19,645 |
| | | | | | | | | | | |
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: | | | | | | | | | |
| Net investment income: | | | | | | | | | |
| | Class S | | | (26,949,997) | | | (103,455) | | | (2,848) |
| | Class D | | | (58,984,487) | | | (888,659) | | | (16,797) |
| | | | | | | | | | | | |
| Realized gains from investment transactions: | | | | | | | | | |
| | Class S | | | (101,100,614) | | | – | | | – |
| | Class D | | | (178,270,031) | | | – | | | – |
| | | | | | | | | | | |
| CAPITAL SHARE TRANSACTIONS: | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions (Note 5): | | | | | | | | | |
| | Class S | | | (586,531,841) | | | (1,877,020) | | | (62,339) |
| | Class D | | | (352,847,056) | | | (2,986,034) | | | 214,768 |
| | Total increase (decrease) in net assets | | | (581,078,242) | | | 5,229,122 | | | 152,429 |
| | | | | | | | | | | |
| NET ASSETS: | | | | | | | | | |
| Beginning of year | | | 5,901,601,568 | | | 61,612,329 | | | 26,178,968 |
End of year* | | $ | 5,320,523,326 | | $ | 66,841,451 | | $ | 26,331,397 |
| | | | | | | | | | | |
| *Including undistributed (overdistributed) net investment income of | | $ | 1,652,954 | | $ | (741,136) | | $ | – |
| See Notes to Financial Statements |
SELECTED FUNDS | Statements of Changes in Net Assets For the year ended December 31, 2011 |
| | | | Selected American Shares | | | Selected International Fund | | | Selected Daily Government Fund |
| | | | | | | | | | | |
| OPERATIONS: | | | | | | | | | |
| Net investment income | | $ | 68,211,087 | | $ | 587,166 | | $ | 22,306 |
| Net realized gain from investments and foreign currency transactions | | | 701,646,189 | | | 17,467,037 | | | – |
| Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | | | (1,049,314,077) | | | (36,117,556) | | | – |
| | Net increase (decrease) in net assets resulting from operations | | | (279,456,801) | | | (18,063,353) | | | 22,306 |
| | | | | | | | | | | |
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: | | | | | | | | | |
| Net investment income: | | | | | | | | | |
| | Class S | | | (10,137,257) | | | (223,736) | | | (3,130) |
| | Class D | | | (26,949,004) | | | (1,141,130) | | | (19,176) |
| | | | | | | | | | | | |
| Realized gains from investment transactions: | | | | | | | | | |
| | Class S | | | – | | | (958,263) | | | – |
| | Class D | | | – | | | (4,281,564) | | | – |
| | | | | | | | | | | |
| CAPITAL SHARE TRANSACTIONS: | | | | | | | | | |
| Net decrease in net assets resulting from capital share transactions (Note 5): | | | | | | | | | |
| | Class S | | | (1,029,354,230) | | | (3,112,113) | | | (30,568) |
| | Class D | | | (235,602,756) | | | (1,951,802) | | | (905,433) |
| | Total decrease in net assets | | | (1,581,500,048) | | | (29,731,961) | | | (936,001) |
| | | | | | | | | | | |
| NET ASSETS: | | | | | | | | | |
| Beginning of year | | | 7,483,101,616 | | | 91,344,290 | | | 27,114,969 |
End of year* | | $ | 5,901,601,568 | | $ | 61,612,329 | | $ | 26,178,968 |
| | | | | | | | | | | |
| *Including undistributed (overdistributed) net investment income of | | $ | 592,195 | | $ | (337,909) | | $ | – |
| See Notes to Financial Statements |
SELECTED FUNDS | Notes to Financial Statements December 31, 2012 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Selected Funds (“Funds”) consist of Selected American Shares, Inc. (a Maryland corporation) (“Selected American Shares”), Selected International Fund, Inc. (a Maryland corporation) (“Selected International Fund”), and Selected Capital Preservation Trust (an Ohio corporation) (“Trust”). The Trust consists of Selected Daily Government Fund. The Funds and Trust are registered under the Investment Company Act of 1940 (“40 Act”), as amended, as diversified, open-end management investment companies.
Selected American Shares’ investment objective is to achieve both capital growth and income. The Fund primarily invests in equity securities issued by large companies with market capitalizations of at least $10 billion. The Fund may hold securities in default, and is not obligated to dispose of securities whose issuers or underlying obligors subsequently default. As of December 31, 2012, the value of defaulted securities amounted to $2,295,147 (cost: $15,365,000) or 0.04% of the Fund’s net assets.
Selected International Fund was formerly known as Selected Special Shares. Effective May 1, 2011, Selected International Fund modified its investment strategy to invest primarily in equity securities issued by foreign companies, including companies in developed or emerging markets. The Fund will continue to invest in large, medium, and small companies without regard to market capitalization and maintain its investment objective of achieving capital growth.
Selected Daily Government Fund’s investment objective is to provide as high a level of current income as possible from the type of short-term investments in which it invests, consistent with prudent investment management, stability of principal, and maintenance of liquidity.
Selected Daily Government Fund invests exclusively in U.S. Treasury securities, U.S. Government agency securities, U.S. Government agency mortgage securities (collectively “U.S. Government Securities”), and repurchase agreements collateralized by U.S. Government Securities. The Fund seeks to maintain liquidity and preserve capital by carefully monitoring the maturity of its investments. The Fund’s portfolio maintains a dollar-weighted average maturity of sixty days or less.
An investment in any of the Funds, as with any mutual fund, includes risks that vary depending upon the Funds’ investment objectives and policies. There is no assurance that the investment objective of any fund will be achieved. The Funds’ return and net asset value will fluctuate, although Selected Daily Government Fund seeks to maintain a net asset value of $1.00 per share.
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. Selected International Fund assesses a 2% fee on the proceeds of Fund shares that are redeemed (either by selling or exchanging to another Selected Fund) within 30 days of their purchase. The fee, which is retained by the Fund, is accounted for as an addition to paid-in capital. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements.
SELECTED FUNDS | Notes to Financial Statements – (Continued) December 31, 2012 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
Security Valuation - The Funds calculate the net asset value of their shares as of the close of the New York Stock Exchange (“Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Securities listed on the Exchange (and other national exchanges) are stated 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. Fixed income securities with more than 60 days to maturity are generally valued using evaluated prices or matrix pricing methods determined by an independent pricing service which takes into consideration factors such as yield, maturity, liquidity, ratings, and traded prices in identical or similar securities. Securities (including restricted securities) for which market quotations are not readily available or 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 using a standardized fair valuation methodology applicable to the security type or the significant event as previously approved by the Funds’ Pricing Committee and Board of Directors. The Pricing Committee considers all facts it deems relevant that are reasonably available, through either public information or information available to the Adviser’s portfolio management team, when determining the fair value of a security. To assess the continuing appropriateness of security valuations, the Adviser may compare prior day prices, prices of comparable securities, and sale prices to the prior or current day prices and challenge those prices exceeding certain tolerance levels with the third-party pricing service or broker source. Fair value determinations are subject to review, approval, and ratification by the Funds’ Board of Directors at its next regularly scheduled meeting covering the calendar quarter in which the fair valuation was determined.
Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. For Selected Daily Government Fund, in compliance with Rule 2a-7 of the 40 Act, securities are valued at amortized cost, which approximates market value.
The Funds’ valuation procedures are reviewed and subject to approval by the Board of Directors. There have been no significant changes to the fair valuation procedures during the period.
Value Measurements - Fair value is defined as the price that the Funds would receive upon selling an investment in an orderly transaction to an independent buyer in the principal market for the investment. Various inputs are used to determine the fair value of the Funds’ investments. These inputs are summarized in the three broad levels listed below.
Level 1 – quoted prices in active markets for identical securities Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities nor can it be assured that the Funds can obtain the fair value assigned to a security if they were to sell the security. Money market securities are valued using amortized cost, in accordance with rules under the 40 Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.
| SELECTED FUNDS | Notes to Financial Statements – (Continued) December 31, 2012 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
Value Measurements - (Continued)
The following is a summary of the inputs used as of December 31, 2012 in valuing each Fund’s investments carried at value:
| | Investments in Securities at Value |
| | Selected | | Selected | | Selected Daily |
| | American | | International | | Government |
| | Shares | | Fund | | Fund |
| Valuation inputs | | | | | | | | |
| Level 1 – Quoted Prices: | | | | | | | | |
Equity securities: | | | | | | | | |
| Consumer discretionary | $ | 461,800,834 | | $ | 3,845,696 | | $ | – |
| Consumer staples | | 714,426,167 | | | 2,438,892 | | | – |
| Energy | | 499,776,663 | | | 2,608,263 | | | – |
| Financials | | 1,755,097,766 | | | 1,958,851 | | | – |
| Health care | | 145,393,498 | | | 1,644,387 | | | – |
| Industrials | | 128,660,101 | | | 3,129,549 | | | – |
| Information technology | | 484,617,895 | | | 2,214,875 | | | – |
| Materials | | 310,512,947 | | | 954,181 | | | – |
| Telecommunication services | | 10,008,976 | | | 2,518,326 | | | – |
Total Level 1 | | 4,510,294,847 | | | 21,313,020 | | | – |
| | | | | | | | | |
| Level 2 – Other Significant Observable Inputs: | | | | | | | | |
Equity securities*: | | | | | | | | |
| Consumer discretionary | | 23,358,823 | | | 4,439,144 | | | – |
| Consumer staples | | 166,040,419 | | | 7,100,058 | | | – |
| Financials | | 189,451,328 | | | 8,421,736 | | | – |
| Health care | | – | | | 7,717,123 | | | – |
| Industrials | | 155,098,715 | | | 12,680,731 | | | – |
| Materials | | 80,206,630 | | | 4,589,543 | | | – |
Short-term debt securities issued by U.S. Treasuries and U.S. Government corporations and agencies | | – | | | – | | | 14,524,120 |
| Convertible debt securities | | 2,295,147 | | | – | | | – |
| Short-term securities | | 78,300,000 | | | – | | | 11,410,000 |
Total Level 2 | | 694,751,062 | | | 44,948,335 | | | 25,934,120 |
| | | | | | | | | |
| Level 3 – Significant Unobservable Inputs: | | – | | | – | | | – |
Total Investments | $ | 5,205,045,909 | | $ | 66,261,355 | | $ | 25,934,120 |
| | | | | | | | | |
| | | | | | | | | |
Level 1 to Level 2 Transfers**: | | | | | | | | |
| Consumer discretionary | $ | 23,358,823 | | $ | 4,439,144 | | $ | – |
| Consumer staples | | 166,040,419 | | | 7,100,058 | | | – |
| Financials | | 189,451,328 | | | 8,421,736 | | | – |
| Health care | | – | | | 7,717,123 | | | – |
| Industrials | | 155,098,715 | | | 11,977,211 | | | – |
| Materials | | 80,206,630 | | | 4,589,543 | | | – |
Total | $ | 614,155,915 | | $ | 44,244,815 | | $ | – |
| | | | | | | | | |
*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.
**Application of fair value procedures for securities traded on foreign exchanges triggered the transfers of investments between Level 1 and Level 2 of the fair value hierarchy during the year ended December 31, 2012.
| SELECTED FUNDS | Notes to Financial Statements – (Continued) December 31, 2012 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
Value Measurements - (Continued)
The following table reconciles the valuation of assets in which significant unobservable inputs (Level 3) were used in determining fair value during the year ended December 31, 2012:
| | | Selected American Shares | | Selected International Fund |
| Investment Securities: | | | | | | |
| Beginning balance | | $ | 3,391,994 | | $ | 148,005 |
| Net realized loss | | | (71,416,959) | | | (4,315,402) |
| Decrease in unrealized depreciation | | | 68,024,965 | | | 4,167,397 |
Ending balance | | $ | – | | $ | – |
| | | | | | | |
There were no transfers of investments into or out of Level 3 of the fair value hierarchy during the period. Realized and unrealized gains (losses) are included in the related amounts on investments in the Statements of Operations.
Master Repurchase Agreements - The Funds, along with other affiliated funds, may transfer uninvested cash balances into one or more master repurchase agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. Government securities. A custodian bank holds securities pledged as collateral for repurchase agreements until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings.
Currency Translation - The market values of all assets and liabilities denominated in foreign currencies are recorded in the financial statements after translation to the U.S. Dollar based upon the mean between the bid and offered quotations of the currencies against U.S. Dollars on the date of valuation. The cost basis of such assets and liabilities is determined based upon historical exchange rates. Income and expenses are translated at average exchange rates in effect as accrued or incurred.
Foreign Currency - The Funds may enter into forward purchases or sales of foreign currencies to hedge certain foreign currency denominated assets and liabilities against declines in market value relative to the U.S. Dollar. Forward currency contracts are marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss. When the forward currency contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the forward currency contract at the time it was opened and value at the time it was closed. Investments in forward currency contracts may expose the Funds to risks resulting from unanticipated movements in foreign currency exchange rates or failure of the counter-party to the agreement to perform in accordance with the terms of the contract.
Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds’ books, and the U.S. Dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. The Funds include foreign currency gains and losses realized on the sales of investments together with market gains and losses on such investments in the Statements of Operations.
| SELECTED FUNDS | Notes to Financial Statements – (Continued) December 31, 2012 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
Federal Income Taxes - It is each Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute substantially all of its taxable income, including any net realized gains on investments not offset by loss carryovers, to shareholders. Therefore, no provision for federal income tax is required. Selected Daily Government Fund incurred a 2011 federal excise tax liability of $873 during the year ended December 31, 2012. The Adviser has analyzed the Funds’ tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of December 31, 2012, no provision for income tax is required in the Funds’ financial statements related to these tax positions. The Funds’ federal and state (Arizona) 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 2009.
At December 31, 2012, Selected International Fund had available for federal income tax purposes unused capital loss carryforwards with no expiration as follows:
| | Capital Loss Carryforwards |
| | | |
| Short-term | $ | 543,000 |
| Long-term | | 7,659,000 |
| Total | $ | 8,202,000 |
Securities Transactions and Related Investment Income - Securities transactions are accounted for on the trade date (date the order to buy or sell is executed) with realized gain or loss on the sale of securities being determined based upon identified cost. Dividend income is recorded on the ex-dividend date. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned.
Dividends and Distributions to Shareholders - Dividends and distributions to shareholders are recorded on the ex-dividend date. Net investment income (loss), net realized gains (losses), and net unrealized appreciation (depreciation) on investments may differ for financial statement and tax purposes primarily due to differing treatments of wash sales, foreign currency transactions, and passive foreign investment company shares. The character of dividends and distributions made during the fiscal year from net investment income and net realized securities gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which income or realized gain was recorded by the Funds. The Funds adjust certain components of capital to reflect permanent differences between financial statement amounts and net income and realized gains/losses determined in accordance with income tax rules. Accordingly, during the year ended December 31, 2012, for Selected American Shares, amounts have been reclassified to reflect an increase in undistributed net investment income of $61,078, a decrease in accumulated net realized gains from investments and foreign currency transactions of $42,293,368, and an increase in additional paid in capital of $42,232,290; for Selected International Fund, amounts have been reclassified to reflect an increase in overdistributed net investment income of $1,271 and a corresponding decrease to accumulated net realized losses from investments and foreign currency transactions. The Funds’ net assets have not been affected by these reclassifications.
The tax character of distributions paid during the years ended December 31, 2012 and 2011 was as follows:
| | | Ordinary Income | | | Long-Term Capital Gain | | | Return of Capital | | | Total |
| Selected American Shares | | | | | | | | | | | |
2012 | $ | 93,691,338 | | $ | 271,613,791 | | $ | – | | $ | 365,305,129 |
2011 | | 37,086,261 | | | – | | | – | | | 37,086,261 |
| | | | | | | | | | | | |
Selected International Fund | | | | | | | | | | | |
2012 | | 992,114 | | | – | | | – | | | 992,114 |
2011 | | 1,384,282 | | | 5,220,411 | | | – | | | 6,604,693 |
| | | | | | | | | | | | |
Selected Daily Government Fund | | | | | | | | | | | |
2012 | | 19,645 | | | – | | | – | | | 19,645 |
2011 | | 22,306 | | | – | | | – | | | 22,306 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| SELECTED FUNDS | Notes to Financial Statements – (Continued) December 31, 2012 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
Dividends and Distributions to Shareholders - (Continued)
As of December 31, 2012, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
| | Selected American Shares | | Selected International Fund |
| Undistributed net investment income | $ | 6,811,494 | | $ | 218,217 |
Undistributed long-term capital gain | | 97,635,178 | | | – |
Accumulated net realized losses from investments and foreign currency transactions | | – | | | (8,201,752) |
Net unrealized appreciation (depreciation) on investments | | 2,055,383,738 | | | (872,062) |
Total | $ | 2,159,830,410 | | $ | (8,855,597) |
| | | | | | |
Indemnification - Under the Funds’ organizational documents, their officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, some of the Funds’ contracts with their service providers contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Funds cannot be determined and the Funds have no historical basis for predicting the likelihood of any such claims.
Use of Estimates in Financial Statements - In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of income and expenses during the reporting period. Actual results may differ from these estimates.
Directors/Trustees Fees and Expenses - The Funds set up a Rabbi Trust to provide for the deferred compensation plan for Independent Directors/Trustees that enables them to elect to defer receipt of all or a portion of annual fees they are entitled to receive. The value of an eligible Director’s/Trustee’s account is based upon years of service and fees paid to each Director/Trustee during the years of service. The amount paid to the Director/Trustee by the Trust under the plan will be determined based upon the performance of the Selected Funds in which the amounts are invested.
NOTE 2 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of investment securities (excluding short-term securities) during the year ended December 31, 2012 were as follows:
| | Selected American Shares | | Selected International Fund |
Cost of purchases | $ | 358,353,383 | | $ | 3,825,020 |
Proceeds from sales | | 1,606,330,149 | | | 10,058,084 |
| SELECTED FUNDS | Notes to Financial Statements – (Continued) December 31, 2012 |
NOTE 3 - FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Davis Selected Advisers-NY, Inc. (“DSA-NY”), a wholly-owned subsidiary of the Adviser, acts as sub-adviser to the Funds. DSA-NY performs research and portfolio management services for the Funds under a Sub-Advisory Agreement with the Adviser. The Funds pay no fees directly to DSA-NY.
Certain Directors/Trustees and Officers of the Funds are also Directors/Trustees and Officers of the general partner of the Adviser.
Investment Advisory Fees and Reimbursement of Expenses - Advisory fees are paid monthly to the Adviser. The annual rate for Selected American Shares is 0.55% of the average net assets for the first $3 billion, 0.54% on the next $1 billion, 0.53% on the next $1 billion, 0.52% on the next $1 billion, 0.51% on the next $1 billion, 0.50% on the next $3 billion, and 0.485% of the average net assets in excess of $10 billion. Advisory fees paid during the year ended December 31, 2012 approximated 0.54% of average net assets for Selected American Shares. The fixed annual rate for Selected International Fund is 0.55% of the average net assets. The fixed annual rate for Selected Daily Government Fund is 0.30% of the average net assets. The Adviser is contractually committed to waive fees and/or reimburse Selected Daily Government Fund’s expenses so that net investment income will not be less than zero until May 1, 2013. During the year ended December 31, 2012, such reimbursements amounted to $37,118 and $127,613 for Class S and Class D shares, respectively. The Adviser may recapture from the assets of Selected Daily Government Fund any of the operating expenses it has reimbursed (but not any of the management fees which it has waived, if any) until the end of the third calendar year after the end of the calendar year in which such reimbursement occurs, subject to certain limitations. This recapture could negatively affect the Fund’s future yield.
Transfer Agent and Accounting Fees - 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 during the year ended December 31, 2012 was $192,914, $13,426, and $4,313 for Selected American Shares, Selected International Fund, 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 fees as State Street Bank also serves as the Funds’ custodian.
Distribution Service Fees and Waivers of Expenses - For services under the distribution agreement, the Funds’ Class S shares pay an annual fee of 0.25% of average daily net assets. During the year ended December 31, 2012, Selected American Shares, Selected International Fund, and Selected Daily Government Fund incurred distribution services fees totaling $5,610,269, $25,945, and $9,065, respectively.
Davis Distributors, LLC, the Funds’ Distributor, entered into an agreement with Selected Daily Government Fund to temporarily eliminate the 0.25% distribution fee on Class S shares until December 31, 2013. During the year ended December 31, 2012, such fee elimination amounted to $9,065.
There are no distribution service fees for the Funds’ Class D shares.
NOTE 4 - EXPENSES PAID INDIRECTLY
Under an agreement with State Street Bank, custodian fees are reduced for earnings on cash balances maintained at the custodian by the Funds. Such reductions amounted to $150, $1, and $6 for Selected American Shares, Selected International Fund, and Selected Daily Government Fund, respectively, during the year ended December 31, 2012.
NOTE 5 - CAPITAL STOCK
At December 31, 2012, there were 600 million shares of capital stock of Selected American Shares ($1.25 par value per share) authorized. At December 31, 2012, there were 50 million shares of capital stock of Selected International Fund ($0.25 par value per share) authorized. At December 31, 2012, there were unlimited shares of capital stock of Selected Capital Preservation Trust ($0.10 par value per share) authorized.
| SELECTED FUNDS | Notes to Financial Statements – (Continued) December 31, 2012 |
NOTE 5 - CAPITAL STOCK – (CONTINUED)
Transactions in capital stock were as follows:
| Class S | | Year ended December 31, 2012 |
| | | | Selected American Shares | | | Selected International Fund | | | Selected Daily Government Fund |
| Shares sold | | | 3,666,000 | | | 22,816 | | | 1,894,756 |
| Shares issued in reinvestment of distributions | | | 2,928,292 | | | 11,007 | | | 2,585 |
| | | | 6,594,292 | | | 33,823 | | | 1,897,341 |
| Shares redeemed | | | (20,276,718) | | | (253,777) | | | (1,959,680) |
| | Net decrease | | | (13,682,426) | | | (219,954) | | | (62,339) |
| | | | | | | | | | | |
| Proceeds from shares sold | | $ | 156,515,581 | | $ | 196,905 | | $ | 1,894,756 |
| Proceeds from shares issued in reinvestment of distributions | | | 123,691,051 | | | 100,486 | | | 2,585 |
| | | | 280,206,632 | | | 297,391 | | | 1,897,341 |
| Cost of shares redeemed* | | | (866,738,473) | | | (2,174,411) | | | (1,959,680) |
| | Net decrease | | $ | (586,531,841) | | $ | (1,877,020) | | $ | (62,339) |
| | | | | | | | | | | |
| * Net of redemption fees as follows | | | NA | | $ | 32 | | | NA |
| | | | | | | | | | | |
| Class S | | Year ended December 31, 2011 |
| | | | Selected American Shares | | | Selected International Fund | | | Selected Daily Government Fund |
| Shares sold | | | 6,302,959 | | | 44,151 | | | 2,197,445 |
| Shares issued in reinvestment of distributions | | | 252,362 | | | 109,974 | | | 3,077 |
| | | | 6,555,321 | | | 154,125 | | | 2,200,522 |
| Shares redeemed | | | (31,775,222) | | | (468,391) | | | (2,231,090) |
| | Net decrease | | | (25,219,901) | | | (314,266) | | | (30,568) |
| | | | | | | | | | | |
| Proceeds from shares sold | | $ | 259,996,166 | | $ | 432,260 | | $ | 2,197,445 |
| Proceeds from shares issued in reinvestment of distributions | | | 9,874,907 | | | 1,132,727 | | | 3,077 |
| | | | 269,871,073 | | | 1,564,987 | | | 2,200,522 |
| Cost of shares redeemed* | | | (1,299,225,303) | | | (4,677,100) | | | (2,231,090) |
| | Net decrease | | $ | (1,029,354,230) | | $ | (3,112,113) | | $ | (30,568) |
| | | | | | | | | | | |
| * Net of redemption fees as follows | | | NA | | $ | 84 | | | NA |
| | | | | | | | | | | |
| Class D | | Year ended December 31, 2012 |
| | | | Selected American Shares | | | Selected International Fund | | | Selected Daily Government Fund |
| Shares sold | | | 4,033,182 | | | 52,742 | | | 6,238,089 |
| Shares issued in reinvestment of distributions | | | 4,143,093 | | | 60,795 | | | 16,596 |
| | | | 8,176,275 | | | 113,537 | | | 6,254,685 |
| Shares redeemed | | | (16,458,149) | | | (464,549) | | | (6,039,917) |
| | Net increase (decrease) | | | (8,281,874) | | | (351,012) | | | 214,768 |
| | | | | | | | | | | |
| Proceeds from shares sold | | $ | 173,137,874 | | $ | 459,981 | | $ | 6,238,089 |
| Proceeds from shares issued in reinvestment of distributions | | | 174,879,975 | | | 557,532 | | | 16,596 |
| | | | 348,017,849 | | | 1,017,513 | | | 6,254,685 |
| Cost of shares redeemed* | | | (700,864,905) | | | (4,003,547) | | | (6,039,917) |
| | Net increase (decrease) | | $ | (352,847,056) | | $ | (2,986,034) | | $ | 214,768 |
| | | | | | | | | | | |
| * Net of redemption fees as follows | | | NA | | $ | 20 | | | NA |
| SELECTED FUNDS | Notes to Financial Statements – (Continued) December 31, 2012 |
NOTE 5 - CAPITAL STOCK – (CONTINUED)
| Class D | | Year ended December 31, 2011 |
| | | | Selected American Shares | | | Selected International Fund | | | Selected Daily Government Fund |
| Shares sold | | | 8,826,521 | | | 126,216 | | | 5,875,603 |
| Shares issued in reinvestment of distributions | | | 508,911 | | | 338,390 | | | 18,944 |
| | | | 9,335,432 | | | 464,606 | | | 5,894,547 |
| Shares redeemed | | | (15,178,697) | | | (666,106) | | | (6,799,980) |
| | Net decrease | | | (5,843,265) | | | (201,500) | | | (905,433) |
| | | | | | | | | | | |
| Proceeds from shares sold | | $ | 359,256,199 | | $ | 1,214,758 | | $ | 5,875,603 |
| Proceeds from shares issued in reinvestment of distributions | | | 19,898,430 | | | 3,469,456 | | | 18,944 |
| | | | 379,154,629 | | | 4,684,214 | | | 5,894,547 |
| Cost of shares redeemed* | | | (614,757,385) | | | (6,636,016) | | | (6,799,980) |
| | Net decrease | | $ | (235,602,756) | | $ | (1,951,802) | | $ | (905,433) |
| | | | | | | | | | | |
| * Net of redemption fees as follows | | | NA | | $ | 548 | | | NA |
NOTE 6 - BANK BORROWINGS
Each Fund may borrow up to 5% of its assets from a bank to purchase portfolio securities, or for temporary and emergency purposes. The purchase of securities with borrowed funds creates leverage in the Fund. Each Fund has entered into an agreement, which enables it to participate with certain other funds managed by the Adviser in an unsecured line of credit with a bank, which permits borrowings up to $50 million, collectively. Interest is charged based on its borrowings, at a rate equal to the higher of the Federal Funds Rate or the Overnight Libor Rate, plus 1.25%. The Funds had no borrowings during the year ended December 31, 2012.
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, 2012, 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 - RESTRICTED SECURITIES
Restricted securities are not registered under the Securities Act of 1933 and may have contractual restrictions on resale. They are valued under methods approved by the Board of Directors as reflecting fair value. The aggregate value of restricted securities in Selected American Shares amounted to $2,295,147 or 0.04% of the Fund’s net assets as of December 31, 2012.
Information regarding restricted securities is as follows:
| Fund | | Security | | Acquisition Date | | | Principal | | Units | | | Cost per Unit | | | Valuation per Unit as of December 31, 2012 |
Selected American Shares | | Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13 | | 07/17/08 | | $ | 15,365,000 | | 153,650 | | $ | 100.00 | | $ | 14.94 |
| | | | | | | | | | | | | | | | |
| |
| The following financial information represents selected data for each share of capital stock outstanding throughout each period: |
| |
| |
| | | Income (Loss) from Investment Operations |
| | | |
| | Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) | Total from Investment Operations |
| Selected American Shares Class S: | | | | |
| Year ended December 31, 2012 | $39.47 | $0.54d | $4.55 | $5.09 |
| Year ended December 31, 2011 | $41.44 | $0.34d | $(2.14) | $(1.80) |
| Year ended December 31, 2010 | $37.28 | $0.30d | $4.35 | $4.65 |
| Year ended December 31, 2009 | $28.54 | $0.27d | $8.76 | $9.03 |
| Year ended December 31, 2008 | $47.78 | $0.34d | $(19.23) | $(18.89) |
| Selected American Shares Class D: | | | | |
| Year ended December 31, 2012 | $39.44 | $0.70d | $4.54 | $5.24 |
| Year ended December 31, 2011 | $41.41 | $0.47d | $(2.14) | $(1.67) |
| Year ended December 31, 2010 | $37.25 | $0.43d | $4.35 | $4.78 |
| Year ended December 31, 2009 | $28.50 | $0.36d | $8.77 | $9.13 |
| Year ended December 31, 2008 | $47.79 | $0.48d | $(19.28) | $(18.80) |
| Selected International Fund Class S: | | | | |
| Year ended December 31, 2012 | $7.89 | $0.03d | $1.41 | $1.44 |
| Year ended December 31, 2011 | $11.00 | $0.03d | $(2.31) | $(2.28) |
| Year ended December 31, 2010 | $9.78 | $0.09d | $1.25 | $1.34 |
| Year ended December 31, 2009 | $6.80 | $0.03d | $2.98 | $3.01 |
| Year ended December 31, 2008 | $12.30 | $0.04d | $(5.54) | $(5.50) |
| Selected International Fund Class D: | | | | |
| Year ended December 31, 2012 | $7.93 | $0.09d | $1.41 | $1.50 |
| Year ended December 31, 2011 | $11.02 | $0.08d | $(2.32) | $(2.24) |
| Year ended December 31, 2010 | $9.79 | $0.14d | $1.25 | $1.39 |
| Year ended December 31, 2009 | $6.81 | $0.07d | $2.98 | $3.05 |
| Year ended December 31, 2008 | $12.30 | $0.08d | $(5.54) | $(5.46) |
| Selected Daily Government Fund Class S: | | | | |
| Year ended December 31, 2012 | $1.000 | $0.001 | $– | $0.001 |
| Year ended December 31, 2011 | $1.000 | $0.001 | $– | $0.001 |
| Year ended December 31, 2010 | $1.000 | $0.001 | $– | $0.001 |
| Year ended December 31, 2009 | $1.000 | $0.002 | $– | $0.002 |
| Year ended December 31, 2008 | $1.000 | $0.020 | $– | $0.020 |
| Selected Daily Government Fund Class D: | | | | |
| Year ended December 31, 2012 | $1.000 | $0.001 | $– | $0.001 |
| Year ended December 31, 2011 | $1.000 | $0.001 | $– | $0.001 |
| Year ended December 31, 2010 | $1.000 | $0.001 | $– | $0.001 |
| Year ended December 31, 2009 | $1.000 | $0.003 | $– | $0.003 |
| Year ended December 31, 2008 | $1.000 | $0.024 | $– | $0.024 |
| a | Assumes hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. |
| | |
| b | The ratios in this column reflect the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements and/or waivers from the Adviser/Distributor. |
| | |
| c | The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. |
| | |
| d | Per share calculations were based on average shares outstanding for the period. |
| Dividends and Distributions | | | | Ratios to Average Net Assets | |
Dividends from Net Investment Income | Distributions from Realized Gains | Return of Capital | Total Distributions | Net Asset Value, End of Period | Total Returna | Net Assets, End of Period (in millions) | Gross Expense Ratio | Net Expense Ratiob | Net Investment Income (Loss) Ratio | Portfolio Turnoverc |
| | | | | | | | | | | |
| $(0.60) | $(2.25) | $– | $(2.85) | $41.71 | 12.82% | $1,949 | 0.95% | 0.95% | 1.28% | 7% |
| $(0.17) | $– | $– | $(0.17) | $39.47 | (4.35)% | $2,385 | 0.94% | 0.94% | 0.81% | 11% |
| $(0.49) | $– | $– | $(0.49) | $41.44 | 12.53% | $3,549 | 0.93% | 0.93% | 0.80% | 9% |
| $(0.29) | $– | $– | $(0.29) | $37.28 | 31.64% | $4,742 | 0.94% | 0.94% | 0.86% | 11% |
| $(0.34) | $– | $(0.01) | $(0.35) | $28.54 | (39.44)% | $4,481 | 0.92% | 0.92% | 0.86% | 18% |
| | | | | | | | | | | |
| $(0.75) | $(2.25) | $– | $(3.00) | $41.68 | 13.19% | $3,371 | 0.61% | 0.61% | 1.62% | 7% |
| $(0.30) | $– | $– | $(0.30) | $39.44 | (4.02)% | $3,517 | 0.61% | 0.61% | 1.14% | 11% |
| $(0.62) | $– | $– | $(0.62) | $41.41 | 12.90% | $3,934 | 0.60% | 0.60% | 1.13% | 9% |
| $(0.38) | $– | $– | $(0.38) | $37.25 | 32.06% | $3,654 | 0.61% | 0.61% | 1.19% | 11% |
| $(0.48) | $– | $(0.01) | $(0.49) | $28.50 | (39.24)% | $2,881 | 0.59% | 0.59% | 1.19% | 18% |
| | | | | | | | | | | |
| $(0.09) | $– | $– | $(0.09) | $9.24 | 18.29% | $10 | 1.52% | 1.52% | 0.39% | 6% |
| $(0.16) | $(0.67) | $– | $(0.83) | $7.89 | (22.49)% | $11 | 1.32% | 1.32% | 0.34% | 110%e |
| $(0.12) | $– | $– | $(0.12) | $11.00 | 13.73%f | $18 | 1.23% | 1.23% | 0.92% | 28% |
| $(0.03) | $– | $– | $(0.03) | $9.78 | 44.21% | $19 | 1.32% | 1.32% | 0.38% | 24% |
| $– | $– | $– | $– | $6.80 | (44.72)% | $16 | 1.26% | 1.26% | 0.43% | 30% |
| | | | | | | | | | | |
| $(0.15) | $– | $– | $(0.15) | $9.28 | 18.90% | $56 | 0.88% | 0.88% | 1.03% | 6% |
| $(0.18) | $(0.67) | $– | $(0.85) | $7.93 | (22.05)% | $51 | 0.81% | 0.81% | 0.85% | 110%e |
| $(0.16) | $– | $– | $(0.16) | $11.02 | 14.30%f | $73 | 0.76% | 0.76% | 1.39% | 28% |
| $(0.07) | $– | $– | $(0.07) | $9.79 | 44.72% | $67 | 0.84% | 0.84% | 0.86% | 24% |
| $(0.03) | $– | $–g | $(0.03) | $6.81 | (44.40)% | $48 | 0.86% | 0.86% | 0.83% | 30% |
| | | | | | | | | | | |
| $(0.001) | $– | $– | $(0.001) | $1.000 | 0.08% | $4 | 1.40% | 0.12% | 0.08% | NA |
| $(0.001) | $– | $– | $(0.001) | $1.000 | 0.08% | $4 | 1.33% | 0.08% | 0.08% | NA |
| $(0.001) | $– | $– | $(0.001) | $1.000 | 0.08% | $4 | 1.29% | 0.22% | 0.08% | NA |
| $(0.002) | $– | $– | $(0.002) | $1.000 | 0.20% | $4 | 1.17% | 0.54% | 0.31% | NA |
| $(0.020) | $– | $– | $(0.020) | $1.000 | 2.05% | $4 | 0.94% | 0.75% | 2.09% | NA |
| | | | | | | | | | | |
| $(0.001) | $– | $– | $(0.001) | $1.000 | 0.08% | $23 | 0.70% | 0.12% | 0.08% | NA |
| $(0.001) | $– | $– | $(0.001) | $1.000 | 0.08% | $23 | 0.67% | 0.08% | 0.08% | NA |
| $(0.001) | $– | $– | $(0.001) | $1.000 | 0.08% | $23 | 0.67% | 0.22% | 0.08% | NA |
| $(0.003) | $– | $– | $(0.003) | $1.000 | 0.29% | $24 | 0.57% | 0.44% | 0.41% | NA |
| $(0.024) | $– | $– | $(0.024) | $1.000 | 2.40% | $67 | 0.40% | 0.40% | 2.44% | NA |
| e | As a result of the change in investment strategy on May 1, 2011, from investing primarily in domestic equity securities to investing primarily in foreign equity securities, portfolio turnover was unusually high. |
| | |
| f | Selected International Fund made a favorable investment in an initial public offering (IPO), which had a material impact on the investment performance, adding approximately 2% to the Fund’s total return in 2010. The IPO was purchased with the intent to benefit from long-term growth of the underlying company and the rapid appreciation was an unusual occurrence. Such performance may not continue in the future. |
| | |
| g | Less than $0.005 per share. |
| | |
| See Notes to Financial Statements |
| SELECTED FUNDS | Report of Independent Registered Public Accounting Firm |
The Shareholders and Board of Directors/Trustees
Selected American Shares, Inc., Selected International Fund, Inc., and Selected Capital Preservation Trust:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Selected American Shares, Inc., Selected International Fund, Inc., and Selected Daily Government Fund (a series of Selected Capital Preservation Trust), as of December 31, 2012, 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, 2012, 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 International Fund, Inc., and Selected Daily Government Fund as of December 31, 2012, 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, 2013
| SELECTED FUNDS | Federal Income Tax Information (Unaudited) |
In early 2013, shareholders will receive information regarding all dividends and distributions paid to them by the Funds during the calendar year 2012. 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 2012 with their 2012 Form 1099-DIV.
The information is presented to assist shareholders in reporting dividends and distributions received from the Funds to the Internal Revenue Service. Because of the complexity of the federal regulations that may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax adviser for specific guidance.
Each Fund designates the following amounts distributed during the calendar year ended December 31, 2012, if any, as dividends eligible for the corporate dividends-received deduction, qualified dividend income, and long-term capital gain distributions.
| | | Selected American Shares | | | Selected International Fund |
| | | | | | |
Income dividends | $ | 93,691,338 | | $ | 992,114 |
Income qualifying for corporate dividends-received deduction | $ | 93,691,338 | | $ | – |
| | 100% | | | – |
Qualified dividend income | $ | 93,691,338 | | $ | 852,382 |
| | 100% | | | 86% |
Long-term capital gain distributions | $ | 271,613,791 | | $ | – |
Pursuant to Section 853 of the Internal Revenue Code, Selected International Fund elected to pass through to its shareholders foreign taxes paid during the year ended December 31, 2012. The Fund did not derive any income from ineligible foreign sources as defined under Section 901(j) of the Internal Revenue Code. Foreign taxes paid for purposes of Section 853 may be less than actual foreign taxes paid for financial statement purposes. Information regarding foreign taxes paid and foreign sourced income is detailed below.
| | | | Selected International Fund | |
| | | | | |
| Foreign taxes paid | | $ | 113,158 | |
| | | | | |
| Foreign sourced income | | $ | 1,361,358 | |
| | | | | |
| % of income dividend derived from foreign sourced income | | | 100% | |
| SELECTED FUNDS | Privacy Notice and Householding |
Privacy Notice
While you generally will be dealing with a broker-dealer or other financial adviser, we may collect information about you from your account application and other forms that you may deliver to us. We use this information to process your requests and transactions; for example, to provide you with additional information about our Funds, to open an account for you, or to process a transaction. In order to service your account and execute your transactions, we may provide your personal information to firms that assist us in servicing your account, such as our transfer agent. We may also provide your name and address to one of our agents for the purpose of mailing to you your account statement and other information about our products and services. We require these outside firms and agents to protect the confidentiality of your information and to use the information only for the purpose for which the disclosure is made. We do not provide customer names and addresses to outside firms, organizations, or individuals except in furtherance of our business relationship with you or as otherwise allowed by law.
We restrict access to nonpublic personal information about you to those employees who need to know that information to provide products or services to you. We maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your personal information.
Householding
To avoid sending duplicate copies of materials to households, the Funds will mail only one copy of each prospectus, Annual and Semi-Annual Report to shareholders having the same last name and address on the Funds’ records. The consolidation of these mailings, called householding, benefits the Funds through reduced mailing expense. If you do not want the mailing of these documents to be combined with those to other members of your household, please contact the Selected Funds by phone at 1-800-243-1575. Individual copies of current prospectuses and reports will be sent to you within 30 days after the Funds receive your request to stop householding.
| SELECTED FUNDS | Directors and Officers |
For the purposes of their service as directors to the Selected Funds, the business address for each of the directors is 2949 E. Elvira Road, Suite 101, Tucson, AZ 85756. Each Director serves until retirement, resignation, death, or removal. Directors must retire from the Board of Directors and cease being a Director at the close of business on the last day of the calendar year in which the Director attains age 75.
Name (birthdate) | Position(s) Held With Fund | Term of Office and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios in Fund Complex Overseen by Director | Other Directorships Held by Director |
Independent Directors
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William P. Barr (05/23/50) | Director | Director since 1994 | Of Counsel to Kirkland & Ellis LLP (law firm) until July 2009; Executive Vice President and General Counsel, Verizon (a telecommunications company) from 1994 through 2008. | 3 | Director, Time Warner, Inc. (media and entertainment company); Director, Dominion Resources (energy company). |
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Francisco L. Borges (11/17/51) | Director | Director since 2006 | Chairman and Managing Partner, Landmark Partners, Inc. (private equity firm) since March 1999. | 3 | Trustee, John S. and James L. Knight Foundation; Trustee, Connecticut Public Broadcasting Network; Director, University of Connecticut Health Center; Director, Assured Guaranty Ltd. |
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Jerome E. Hass (06/01/40) | Director (passed away in January 2013) | Director since 1997 | James B. Rubin Professor of Finance and Business Strategy Emeritus, Johnson Graduate School of Management, Cornell University, since 1967; Consultant, National Economic Research Associates, since 1985. | 3 | None |
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Katherine L. MacWilliams (01/19/56) | Director | Director since 1997 | Retired; former 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 |
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James J. McMonagle (10/01/44) | Director/ Chairman | Director since 1990 | Chairman, Selected Funds Board of Directors since 1997; of Counsel to Vorys, Sater, Seymour and Pease LLP (law firm) since 2002. | 3 | Director, Owens Corning (producer of residential and commercial building materials). |
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Richard O’Brien (09/12/45) | Director | Director since 1996 | Retired Corporate Economist, Hewlett-Packard Company. | 3 | None |
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| SELECTED FUNDS | Directors and Officers – (Continued) |
Name (birthdate) | Position(s) Held With Fund | Term of Office and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios in Fund Complex Overseen by Director | Other Directorships Held by Director |
Inside Directors*| | | | | | |
Andrew A. Davis (06/25/63) | Director | Director since 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 of certain companies affiliated with the Adviser. | 16 | Director, Davis Funds (consisting of 13 portfolios). |
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Christopher C. Davis (07/13/65) | Director | Director since 1998 | President or Vice President of each Selected Fund, Davis Fund, and Clipper Fund; Chairman, Davis Selected Advisers, L.P., and also serves as an executive officer of certain companies affiliated with the Adviser, including sole member of the Adviser’s general partner, Davis Investments, LLC; Employee of Shelby Cullom Davis & Co. (registered broker/dealer). | 16 | Director, Davis Funds (consisting of 13 portfolios); Director, Washington Post Co. (publishing company). |
* Andrew A. Davis and Christopher C. Davis own partnership units (directly, indirectly, or both) of the Adviser and are considered to be “interested persons” of the Funds as defined in the Investment Company Act of 1940. Andrew A. Davis and Christopher C. Davis are brothers.
Officers
Christopher C. Davis (born 07/13/65, Selected Funds officer since 1998). See description in the section on Inside Directors.
Andrew A. Davis (born 06/25/63, Selected Funds officer since 1998). See description in the section on Inside Directors.
Kenneth C. Eich (born 08/14/53, 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 of certain companies affiliated with the Adviser.
Douglas A. Haines (born 03/04/71, 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 09/25/66, Selected Funds officer since 1997). Vice President and 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 of certain companies affiliated with the Adviser.
Thomas D. Tays (born 03/07/57, 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 of certain companies affiliated with the Adviser.
Arthur Don (born 09/24/53, Selected Funds officer since 1991). Assistant Secretary (for clerical purposes only) of each of the Davis Funds and Selected Funds; Shareholder, Greenberg Traurig, LLP (law firm); counsel to the Independent Directors and the Davis Funds.
| Investment Adviser | |
| Davis Selected Advisers, L.P. | |
| 2949 East Elvira Road, Suite 101 | |
| Tucson, Arizona 85756 | |
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| Distributor | |
| Davis Distributors, LLC | |
| 2949 East Elvira Road, Suite 101 | |
| Tucson, Arizona 85756 | |
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| Custodian | |
| State Street Bank and Trust Co. | |
| c/o The Selected Funds | |
| One Lincoln Street | |
| Boston, Massachusetts 02111 | |
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| Transfer Agent | |
| Boston Financial Data Services, Inc. | |
| c/o The Selected Funds | |
| P.O. Box 8243 | |
| Boston, Massachusetts 02266-8243 | |
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| Overnight Address: | |
| 30 Dan Road | |
| Canton, Massachusetts 02021-2809 | |
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| Counsel | |
| Greenberg Traurig, LLP | |
| 77 West Wacker Drive, Suite 3100 | |
| Chicago, Illinois 60601 | |
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| Independent Registered Public Accounting Firm | |
| KPMG LLP | |
| 1225 Seventeenth Street, Suite 800 | |
| Denver, Colorado 80202 | |
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| 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, 2012 and December 31, 2011 were $21,000 and $20,400, respectively. |
| (b) | Audit-Related Fees. The aggregate Audit-Related Fees billed by KPMG for services rendered for assurance and related services that are not reasonably related to the performance of the audit or review of the fund financial statements, but not reported as Audit Fees fore fiscal year ends December 31, 2012 and December 31, 2011 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, 2012 and December 31, 2011 were $6,683 and $6,490, 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, 2012 and December 31, 2011 were $625 and $0, respectively. |
| (e) | (1) Audit Committee Pre-Approval Policies and Procedures. |
The fund Audit Committee must pre-approve all audit and non-audit services provided by the independent accountant relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The fund Audit Committee has adopted a policy whereby audit and non-audit services performed by the fund independent accountant require pre-approval in advance at regularly scheduled Audit Committee meetings. If such a service is required between regularly scheduled Audit Committee meetings, pre-approval may be authorized by the Audit Committee Chairperson with ratification at the next scheduled audit committee meeting.
(2) No services included in (b) – (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-1 of Regulation S-X.
| (g) | The Funds’ independent accountant did not provide any services to the investment advisor or any affiliate for the fiscal years ended December 31, 2012 and December 31, 2011. 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. |
| (b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached. |
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 INTERNATIONAL SHARES, INC.
By /s/ Kenneth C. Eich
Kenneth C. Eich
Principal Executive Officer
Date: March 11, 2013
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 11, 2013
By /s/ Douglas A. Haines
Douglas A. Haines
Principal Financial Officer
Date: March 11, 2013
