| SELECTED FUNDS | Table of Contents |
| 2 |
| | |
| Management's Discussion of Fund Performance: | |
| 3 |
| 5 |
| | |
| Fund Overview: | |
| 7 |
| 9 |
| | |
| 11 |
| | |
| Schedule of Investments: | |
| 12 |
| 16 |
| | |
| 19 |
| | |
| 20 |
| | |
| 21 |
| | |
| 23 |
| | |
| 31 |
| | |
| 33 |
| | |
| 34 |
| | |
| 35 |
| | |
| 36 |
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
The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds' Form N-Q is available without charge, upon request, by calling 1-800-243-1575, 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, D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Dear Fellow Shareholder,
As stewards of our customers' savings, the management team and Directors of the Selected Funds recognize the importance of candid, thorough, and regular communication with our shareholders. In our Annual and Semi-Annual Reports, we include all of the required quantitative information, such as audited financial statements, detailed footnotes, performance reports, fund holdings, and performance attribution. Also included is a list of positions opened and closed.
In addition, we produce a Manager Commentary for each Fund, 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.
We thank you for your continued trust. We will do our best to earn it in the years ahead.
Sincerely,
 |  |  |
| James J. McMonagle | Christopher C. Davis | Danton G. Goei |
| Chairman | President & Portfolio Manager | Portfolio Manager |
| |
| February 1, 2016 |
| SELECTED FUNDS | Management's Discussion of Fund Performance |
| SELECTED AMERICAN SHARES, INC. | |
Performance Overview
Selected American Shares outperformed the Standard & Poor's 500® Index (S&P 500®) for the twelve-month period ended December 31, 2015. The Fund's Class S shares delivered a total return of 3.59% and Class D shares returned 3.96%, versus a 1.38% return for the S&P 500®. The sectors1 within the S&P 500® that reported the strongest performance were Consumer Discretionary (up 10%), Health Care (up 7%), and Consumer Staples (up 7%). The sectors within the S&P 500® that reported the weakest performance were Energy (down 21%), Materials (down 8%), and Utilities (down 5%).
Contributors to Performance
The Fund's holdings in the Information Technology sector made significant contributions2 to performance. The Fund's Information Technology holdings were up about 39%, compared to up 5% for the S&P 500® sector. Alphabet Inc.3 (up 46%), a holding company for Google, Inc., and ASAC II L.P. (up 111%), an investment vehicle whose underlying assets are shares of the video game publisher Activision Blizzard, were strong performers. Alphabet Inc. and ASAC II L.P. were the Fund's second- and third-largest holdings, respectively.
Returns from holdings in the Consumer Discretionary sector also helped performance. The Fund's Consumer Discretionary holdings were up about 23%, compared to up 10% for the S&P 500® sector. The Fund also benefited from a higher average weighting (18%, compared to 13% for the S&P 500® sector) in the strongest performing sector. Amazon (up 118%) was the Fund's overall top contributor and its largest holding.
Additional contributors included UnitedHealth Group (up 18%) from the Health Care sector; Costco (up 19%) and Heineken (up 25%) from the Consumer Staples sector; and Julius Baer (up 24%), JPMorgan Chase (up 8%), and Visa (up 19%) from the Financial sector. The Fund no longer holds Julius Baer.
Detractors from Performance
The Fund's holdings in the Energy sector were the most significant detractor from performance. The Fund's Energy holdings were down about 45%, compared to down 21% for the S&P 500® sector. Leading detractors were Encana (down 62%), Cabot Oil & Gas (down 47%), Ultra Petroleum (down 81%), and EOG Resources (down 23%).
Returns from holdings in the Materials sector also hurt performance. The Fund's Materials holdings were down about 15%, compared to down 8% for the S&P 500® sector. LafargeHolcim (down 34%), an international building materials company, and Praxair, Inc. (down 19%), an industrial gases company, detracted from performance.
The Fund suffered from its heavily weighted position (32%, compared to 17% for the S&P 500® sector) in the weak performing Financials sector. American Express (down 24%), Standard Chartered (down 48%), and Berkshire Hathaway (down 12%) detracted from performance.
Several Consumer Discretionary holdings hindered performance despite the sector, as a whole, producing positive returns for the Fund. Las Vegas Sands (down 21%), CarMax (down 19%), and Liberty Global (down 11%) detracted from results.
The Fund had approximately 13% of its net assets invested in foreign securities. As a whole, the Fund's foreign holdings underperformed its domestic holdings (down 18%, versus up 9%).
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, large-capitalization companies risk, mid- and small-capitalization companies risk, financial services risk, foreign country risk, emerging market risk, foreign currency risk, depositary receipts risk, headline risk, and fees and expenses risk. See the prospectus for a full description of each risk.
Past performance does not guarantee future results, fund prices fluctuate, and the value of an investment may be worth more or less than the purchase price. Data provided in this performance overview is for the period ended December 31, 2015, unless otherwise noted. Return figures for underlying fund positions reflect the return of the security from the beginning of the year or the date of first purchase if subsequent thereto through the end of the year or the date the position is completely liquidated. The actual contribution to the Fund will vary based on a number of factors (e.g. trading activity, weighting). Portfolio holding information is as of the end of the twelve-month period, December 31, 2015, unless otherwise noted.
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, sell, or hold any particular security. The Schedule of Investments lists the Fund's holdings of each company discussed.
| SELECTED FUNDS | Management's Discussion of Fund Performance |
| SELECTED AMERICAN SHARES, INC. – (CONTINUED) | |
Comparison of a $10,000 investment in Selected American Shares Class S versus the
Standard & Poor's 500® Index over 10 years for an investment made on December 31, 2005
Average Annual Total Return for periods ended December 31, 2015
| 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 | 3.59% | 9.47% | 5.46% | N/A | 0.95% | 0.95% |
| Class D | 3.96% | 9.84% | 5.82% | 6.64% | 0.61% | 0.61% |
Standard & Poor's 500® Index | 1.38% | 12.57% | 7.31% | 7.53% | | |
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 | Management's Discussion of Fund Performance |
| SELECTED INTERNATIONAL FUND, INC. | |
Selected International Fund outperformed the Morgan Stanley Capital International All Country World Index ex USA ("MSCI"). The Fund's Class S shares delivered a total return of negative 0.70% and Class D shares returned negative 0.20%, versus a negative 5.66% for the MSCI. The only sectors1 within the MSCI that reported positive performance returns were Health Care (up 7%) and Consumer Staples (up 6%). The sectors within the MSCI that reported the weakest performance were Energy (down 21%), Materials (down 19%), and Utilities (down 9%).
Contributors to Performance
The Fund's holdings in the Information Technology sector made significant contributions2 to performance. The Fund's Information Technology holdings were up about 27%, compared to down 1% for the MSCI sector. NetEase3 (up 53%) was the Fund's top overall contributor. The Fund no longer owns NetEase. Qihoo 360 Technology (up 27%), Youku Tudou (up 52%), and Internet Plus (up 25%) were also strong performers.
Returns from holdings in the Consumer Staples sector helped performance. The Fund's Consumer Staples holdings were up 10%, compared to up 6% for the MSCI sector. The Fund also benefited from a higher average weighting (19%, compared to 10% for the MSCI sector) in a strong performing sector. Leading contributors were Lindt & Spruengli (up 28%), the Fund's largest holding, and Heineken (up 25%).
Additional contributors included JD.com (up 39%) and Ctrip.com (up 104%) from the Consumer Discretionary sector; and from the Industrial sector, CAR, Inc. (up 27%) and Assa Abloy (up 21%), the Fund's second-largest holding.
At the country level, the Fund's Chinese holdings made the largest contribution to performance, followed by holdings from India. The Fund had approximately 31% of its net assets invested in Chinese companies and 10% in Indian securities.
Detractors from Performance
The Fund's holdings in the Energy sector were the most significant detractor from performance. The Fund's Energy holdings were down about 68%, compared to down 21% for the MSCI sector. Encana (down 62%) was the overall top detractor, while Paramount Resources (down 63%) was second.
Returns from holdings in the Materials sector also hurt performance. The Fund's Materials holdings were down about 25%, compared to down 19% for the MSCI sector. LafargeHolcim (down 34%), an international building materials company, was a weak performer.
Performance was also hindered by holdings from the Health Care sector. The Fund's Health Care holdings were down about 13%, compared to up 7% for the MSCI sector. Valeant Pharmaceuticals (down 29%) and Diagnosticos da America (down 39%) lagged.
Additional detractors included Xiabu Xiabu Catering (down 34%), Compagnie Financiere Richemont (down 18%), and Grupo Televisa (down 20%) from the Consumer Discretionary sector; Schneider Electric (down 20%) and Meggitt (down 30%) from the Industrial sector; and Standard Chartered (down 48%) from the Financial sector.
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, depositary receipts risk, large-capitalization companies risk, mid- and small-capitalization companies risk, headline risk, and fees and expenses risk. See the prospectus for a full description of each risk.
Past performance does not guarantee future results, fund prices fluctuate, and the value of an investment may be worth more or less than the purchase price. Data provided in this performance overview is for the period ended December 31, 2015, unless otherwise noted. Return figures for underlying fund positions reflect the return of the security from the beginning of the year or the date of first purchase if subsequent thereto through the end of the year or the date the position is completely liquidated. The actual contribution to the Fund will vary based on a number of factors (e.g. trading activity, weighting). Portfolio holding information is as of the end of the twelve-month period, December 31, 2015, unless otherwise noted.
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, sell, or hold any particular security. The Schedule of Investments lists the Fund's holdings of each company discussed.
| SELECTED FUNDS | Management's Discussion of Fund Performance |
| SELECTED INTERNATIONAL FUND, INC. – (CONTINUED) | |
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, 2005
Average Annual Total Return for periods ended December 31, 2015
| 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 | (0.70)% | 1.95% | 1.50% | N/A | 1.41% | 1.30% |
| Class D | (0.20)% | 2.49% | 1.99% | 3.20% | 0.83% | 0.83% |
MSCI ACWI® ex USA | (5.66)% | 1.06% | 2.92% | 5.42% | | |
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 Fund's performance benefited from IPO purchases in 2010 and 2014. After purchase, the IPOs rapidly increased in value. The Adviser purchases shares intending to benefit from long-term growth of the underlying company; the rapid appreciation of the IPOs were unusual occurrences.
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. | December 31, 2015 |
| Portfolio Composition | | Industry Weightings |
| (% of Fund's 12/31/15 Net Assets) | | (% of 12/31/15 Stock Holdings) |
| | | | | | | |
| | | | | Fund | | S&P 500® |
| Common Stock (U.S.) | 85.98% | | Information Technology | 19.91% | | 20.69% |
| Common Stock (Foreign) | 11.60% | | Diversified Financials | 15.82% | | 4.97% |
| Preferred Stock (Foreign) | 0.96% | | Banks | 11.67% | | 6.04% |
| Short-Term Investments | 2.27% | | Retailing | 11.65% | | 5.52% |
| Other Assets & Liabilities | (0.81)% | | Materials | 8.25% | | 2.76% |
| | 100.00% | | Energy | 7.11% | | 6.50% |
| | | | Health Care | 6.90% | | 15.15% |
| | | | Capital Goods | 4.33% | | 7.25% |
| | | | Insurance | 2.58% | | 2.71% |
| | | | Food, Beverage & Tobacco | 2.53% | | 5.64% |
| | | | Media | 2.20% | | 3.03% |
| | | | Food & Staples Retailing | 2.11% | | 2.36% |
| | | | Consumer Services | 1.59% | | 1.90% |
| | | | Automobiles & Components | 1.59% | | 1.00% |
| | | | Consumer Durables & Apparel | 1.07% | | 1.43% |
| | | | Transportation | 0.69% | | 2.09% |
| | | | Other | – | | 10.96% |
| | | | | 100.00% | | 100.00% |
| Top 10 Long-Term Holdings |
| (% of Fund's 12/31/15 Net Assets) |
| | | | | | |
| Amazon.com, Inc. | | | Retailing | | 7.28% |
| Alphabet Inc.* | | | Software & Services | | 6.87% |
| ASAC II L.P. | | | Software & Services | | 5.78% |
| Wells Fargo & Co. | | | Banks | | 5.42% |
| JPMorgan Chase & Co. | | | Banks | | 4.19% |
| American Express Co. | | | Consumer Finance | | 4.18% |
| Berkshire Hathaway Inc., Class A | | | Diversified Financial Services | | 3.52% |
| United Technologies Corp. | | | Capital Goods | | 3.24% |
| Monsanto Co. | | | Materials | | 3.14% |
| Bank of New York Mellon Corp. | | | Capital Markets | | 3.11% |
*Alphabet Inc. holding includes Class A and Class C.
| SELECTED FUNDS | Fund Overview |
| SELECTED AMERICAN SHARES, INC. – (CONTINUED) | December 31, 2015 |
New Positions Added (01/01/15-12/31/15)
(Highlighted positions are those greater than 2.00% of the Fund's 12/31/15 net assets)
| Security | Industry | Date of 1st Purchase | % of Fund's 12/31/15 Net Assets |
| Advance Auto Parts, Inc. | Retailing | 05/15/15 | 0.44% |
| Apache Corp. | Energy | 10/13/15 | 2.72% |
| Cabot Oil & Gas Corp. | Energy | 04/28/15 | 1.12% |
| Capital One Financial Corp. | Consumer Finance | 07/24/15 | 1.02% |
| Didi Kuaidi Joint Co., Series A-17, Pfd. | Software & Services | 07/27/15 | 0.96% |
| Facebook Inc., Class A | Software & Services | 11/16/15 | 1.09% |
| Johnson Controls, Inc. | Automobiles & Components | 09/11/15 | 1.56% |
| Monsanto Co. | Materials | 08/26/15 | 3.14% |
| Occidental Petroleum Corp. | Energy | 07/24/15 | 1.58% |
| Precision Castparts Corp. | Capital Goods | 04/01/15 | – |
| Standard Chartered PLC | Banks | 06/11/15 | 0.73% |
| United Technologies Corp. | Capital Goods | 07/22/15 | 3.24% |
Positions Closed (01/01/15-12/31/15)
(Gains and losses greater than $20,000,000 are highlighted)
| Security | Industry | Date of Final Sale | | Realized Gain (Loss) |
| Agilent Technologies, Inc. | Pharmaceuticals, Biotechnology & Life Sciences | 05/01/15 | $ | 9,628,531 |
Brookfield Asset Management Inc., Class A | Capital Markets | 05/06/15 | | 23,599,595 |
| Experian PLC | Commercial & Professional Services | 06/08/15 | | 490,815 |
| Fairfax Financial Holdings Ltd., 144A | Multi-line Insurance | 01/15/15 | | 2,391,105 |
| Halliburton Co. | Energy | 04/06/15 | | 7,604,341 |
| Hang Lung Group Ltd. | Real Estate | 03/09/15 | | 3,348,890 |
| Julius Baer Group Ltd. | Capital Markets | 06/03/15 | | 76,928,856 |
| Keysight Technologies, Inc. | Technology Hardware & Equipment | 05/08/15 | | 4,172,664 |
| Netflix Inc. | Retailing | 03/19/15 | | 23,294,058 |
| Precision Castparts Corp. | Capital Goods | 08/13/15 | | 5,146,471 |
| Sysco Corp. | Food & Staples Retailing | 03/24/15 | | 4,860,590 |
| Textron Inc. | Capital Goods | 02/10/15 | | 12,494,132 |
| SELECTED FUNDS | |
| SELECTED INTERNATIONAL FUND, INC. | December 31, 2015 |
| Portfolio Composition | | Industry Weightings |
| (% of Fund's 12/31/15 Net Assets) | | (% of 12/31/15 Stock Holdings) |
| | | | | | | |
| | | | | Fund | | MSCI ACWI® EX USA |
| Common Stock (Foreign) | 92.32% | | Information Technology | 17.40% | | 8.28% |
| Preferred Stock (Foreign) | 6.38% | | Food, Beverage & Tobacco | 12.15% | | 6.59% |
| Short-Term Investments | 1.55% | | Capital Goods | 11.68% | | 7.47% |
| Other Assets & Liabilities | (0.25)% | | Transportation | 8.86% | | 2.75% |
| | 100.00% | | Consumer Durables & Apparel | 7.97% | | 2.41% |
| | | | Retailing | 7.14% | | 1.66% |
| | | | Health Care | 6.10% | | 9.55% |
| | | | Household & Personal Products | 5.73% | | 2.31% |
| | | | Diversified Financials | 4.98% | | 3.21% |
| | | | Energy | 4.67% | | 5.95% |
| | | | Materials | 3.30% | | 6.43% |
| | | | Media | 3.19% | | 2.04% |
| | | | Insurance | 2.25% | | 5.79% |
| | | | Consumer Services | 1.97% | | 1.12% |
| | | | Commercial & Professional Services | 1.90% | | 0.95% |
| | | | Banks | 0.71% | | 14.50% |
| | | | Telecommunication Services | – | | 5.15% |
| | | | Other | – | | 13.84% |
| | | | | 100.00% | | 100.00% |
| Country Diversification | | Top 10 Long-Term Holdings |
| (% of 12/31/15 Stock Holdings) | | (% of Fund's 12/31/15 Net Assets) |
| | | | | |
| China | 31.45% | | Lindt & Spruengli AG - Participation Certificate | 4.77% |
| Switzerland | 14.23% | | Assa Abloy AB, Class B | 3.97% |
| France | 11.92% | | SouFun Holdings Ltd., Class A, ADR | 3.90% |
| India | 10.11% | | JD.com Inc., Class A, ADR | 3.55% |
| United Kingdom | 7.99% | | Kuehne + Nagel International AG | 3.53% |
| Canada | 6.81% | | Didi Kuaidi Joint Co., Series A-17, Pfd. | 3.52% |
| Brazil | 4.47% | | Compagnie Financiere Richemont S.A., Unit A | 3.45% |
| Sweden | 4.02% | | Diageo PLC | 3.45% |
| Netherlands | 3.35% | | Essilor International S.A. | 3.30% |
| Mexico | 1.61% | | Encana Corp. | 3.13% |
| South Africa | 1.58% | | | |
| Germany | 1.45% | | | |
| Belgium | 1.01% | | | |
| | 100.00% | | | |
| SELECTED FUNDS | Fund Overview |
| SELECTED INTERNATIONAL FUND, INC. – (CONTINUED) | December 31, 2015 |
New Positions Added (01/01/15-12/31/15)
(Highlighted positions are those greater than 2.00% of the Fund's 12/31/15 net assets)
| Security | Industry | Date of 1st Purchase | % of Fund's 12/31/15 Net Assets |
| Baidu, Inc., Class A, ADR | Software & Services | 05/05/15 | 1.24% |
| Baoxin Auto Group Ltd. | Retailing | 02/09/15 | – |
| Dabur India Ltd. | Household & Personal Products | 02/05/15 | 2.37% |
| Didi Kuaidi Joint Co., Series A-17, Pfd. | Software & Services | 07/27/15 | 3.52% |
| Havells India Ltd. | Capital Goods | 02/05/15 | 1.92% |
| InterGlobe Aviation Ltd. | Transportation | 10/26/15 | 2.25% |
| Internet Plus Holdings Ltd., Series A-10, Pfd. | Software & Services | 01/29/15 | 2.86% |
| Linde AG | Materials | 01/02/15 | 0.65% |
| Marico Ltd. | Household & Personal Products | 02/05/15 | 1.45% |
| Naspers Ltd. - N | Media | 12/15/15 | 1.56% |
| Noah Holdings Ltd., ADS | Capital Markets | 08/18/15 | 1.90% |
| Paramount Resources Ltd., Class A | Energy | 10/13/15 | 1.48% |
| Regus PLC | Commercial & Professional Services | 07/02/15 | 1.87% |
| Rolls-Royce Holdings PLC | Capital Goods | 09/17/15 | 0.38% |
| Standard Chartered PLC | Banks | 06/11/15 | 0.70% |
| Sul America S.A. | Multi-line Insurance | 05/18/15 | 2.22% |
Positions Closed (01/01/15-12/31/15)
(Gains and losses greater than $500,000 are highlighted)
| Security | Industry | Date of Final Sale | | Realized Gain (Loss) |
| Alibaba Group Holding Ltd., ADR | Software & Services | 05/05/15 | $ | 212,316 |
| Anhui Conch Cement Co. Ltd. - H | Materials | 09/30/15 | | (70,818) |
| Baoxin Auto Group Ltd. | Retailing | 12/17/15 | | (927) |
| Brasil Pharma S.A. | Food & Staples Retailing | 12/08/15 | | (1,746,418) |
| Canadian Natural Resources Ltd. | Energy | 10/14/15 | | (236,842) |
| CETIP S.A. - Mercados Organizados | Capital Markets | 07/13/15 | | (386,526) |
CETIP S.A. - Mercados Organizados, Stock Rights | Capital Markets | 06/11/15 | | 11 |
| Experian PLC | Commercial & Professional Services | 10/23/15 | | 188,906 |
| Nestle S.A. | Food, Beverage & Tobacco | 10/15/15 | | 540,329 |
| NetEase, Inc., ADR | Software & Services | 07/17/15 | | 2,909,856 |
| Roche Holding AG - Genusschein | Pharmaceuticals, Biotechnology & Life Sciences | 09/30/15 | | 524,846 |
| Rolls-Royce Holdings PLC, Class C, Pfd. | Capital Goods | 12/01/15 | | (126) |
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. 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, 2015.
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.
| | Beginning | Ending | Expenses Paid |
| | Account Value | Account Value | During Period* |
| | (07/01/15) | (12/31/15) | (07/01/15-12/31/15) |
| Selected American Shares | | | |
Class S (annualized expense ratio 0.96%**) | | | |
| Actual | $1,000.00 | $1,004.51 | $4.85 |
| Hypothetical | $1,000.00 | $1,020.37 | $4.89 |
Class D (annualized expense ratio 0.62%**) | | | |
| Actual | $1,000.00 | $1,006.44 | $3.14 |
| Hypothetical | $1,000.00 | $1,022.08 | $3.16 |
| Selected International Fund | | | |
Class S (annualized expense ratio 1.30%**) | | | |
| Actual | $1,000.00 | $908.07 | $6.25 |
| Hypothetical | $1,000.00 | $1,018.65 | $6.61 |
Class D (annualized expense ratio 0.84%**) | | | |
| Actual | $1,000.00 | $910.05 | $4.04 |
| Hypothetical | $1,000.00 | $1,020.97 | $4.28 |
| | | | |
| 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 184/365 (to reflect the one-half year period). |
| |
| **The expense ratios reflect the impact, if any, of certain reimbursements from the Adviser. |
| SELECTED FUNDS | |
| SELECTED AMERICAN SHARES, INC. | December 31, 2015 |
| | Shares | | Value
(Note 1) |
| COMMON STOCK – (97.58%) |
| | CONSUMER DISCRETIONARY – (17.83%) |
| | | Automobiles & Components – (1.56%) |
| | | Johnson Controls, Inc. | | | 1,310,294 | | $ | 51,743,510 |
| | Consumer Durables & Apparel – (1.06%) |
| | Compagnie Financiere Richemont S.A., Unit A (Switzerland) | | | 367,720 | | | 26,470,259 |
| | Hunter Douglas N.V. (Netherlands) | | | 215,995 | | | 8,496,144 |
| | | | 34,966,403 |
| | Consumer Services – (1.57%) |
| | Las Vegas Sands Corp. | | | 1,183,935 | | | 51,903,710 |
| | Media – (2.16%) |
| | Liberty Global PLC, LiLAC Class C * | | | 85,392 | | | 3,671,856 |
| | Liberty Global PLC, Series C * | | | 1,668,774 | | | 68,035,916 |
| | | | 71,707,772 |
| | Retailing – (11.48%) |
| | Advance Auto Parts, Inc. | | | 95,968 | | | 14,444,144 |
| | Amazon.com, Inc. * | | | 356,670 | | | 241,069,686 |
| | CarMax, Inc. * | | | 1,065,316 | | | 57,495,105 |
| | Liberty Interactive Corp., Liberty Ventures, Series A * | | | 230,766 | | | 10,409,854 |
| | Liberty Interactive Corp., QVC Group, Series A * | | | 458,393 | | | 12,523,297 |
| | Liberty TripAdvisor Holdings Inc., Series A * | | | 129,937 | | | 3,942,289 |
| | Priceline Group Inc. * | | | 31,610 | | | 40,301,169 |
| | | | 380,185,544 |
| | | | Total Consumer Discretionary | | | 590,506,939 |
| | CONSUMER STAPLES – (4.58%) |
| | Food & Staples Retailing – (2.09%) |
| | Costco Wholesale Corp. | | | 427,561 | | | 69,051,102 |
| | Food, Beverage & Tobacco – (2.49%) |
| | Diageo PLC (United Kingdom) | | | 1,930,834 | | | 52,844,076 |
| | Heineken Holding N.V. (Netherlands) | | | 385,575 | | | 29,750,672 |
| | | | 82,594,748 |
| | Total Consumer Staples | | | 151,645,850 |
| | ENERGY – (7.01%) |
| | Apache Corp. | | | 2,027,190 | | | 90,149,139 |
| | Cabot Oil & Gas Corp. | | | 2,099,222 | | | 37,135,237 |
| | Encana Corp. (Canada) | | | 7,941,499 | | | 40,422,230 |
| | EOG Resources, Inc. | | | 107,686 | | | 7,623,092 |
| | Occidental Petroleum Corp. | | | 772,619 | | | 52,236,771 |
| | Ultra Petroleum Corp. * | | | 1,797,240 | | | 4,493,100 |
| | Total Energy | | | 232,059,569 |
| | FINANCIALS – (29.63%) |
| | Banks – (11.50%) |
| | Citizens Financial Group Inc. | | | 1,472,271 | | | 38,558,778 |
| | JPMorgan Chase & Co. | | | 2,103,096 | | | 138,867,429 |
| | Standard Chartered PLC (United Kingdom) | | | 2,906,386 | | | 24,152,258 |
| | Wells Fargo & Co. | | | 3,299,544 | | | 179,363,212 |
| | | | 380,941,677 |
| SELECTED FUNDS | Schedule of Investments |
| SELECTED AMERICAN SHARES, INC. - (CONTINUED) | December 31, 2015 |
| | Shares | | Value
(Note 1) |
| COMMON STOCK – (CONTINUED) |
| | FINANCIALS – (CONTINUED) |
| | | Diversified Financials – (15.59%) |
| | | Capital Markets – (4.72%) |
| | | Bank of New York Mellon Corp. | | | 2,500,338 | | $ | 103,063,932 |
| | Charles Schwab Corp. | | | 1,616,677 | | | 53,237,174 |
| | | 156,301,106 |
| | Consumer Finance – (5.20%) |
| | American Express Co. | | | 1,991,493 | | | 138,508,338 |
| | Capital One Financial Corp. | | | 468,778 | | | 33,836,396 |
| | | 172,344,734 |
| | Diversified Financial Services – (5.67%) |
| | Berkshire Hathaway Inc., Class A * | | | 589 | | | 116,504,200 |
| | Moody's Corp. | | | 211,942 | | | 21,266,260 |
| | Visa Inc., Class A | | | 645,827 | | | 50,083,884 |
| | | 187,854,344 |
| | | | 516,500,184 |
| | Insurance – (2.54%) |
| | Multi-line Insurance – (1.14%) |
| | Fairfax Financial Holdings Ltd. (Canada) | | | 8,208 | | | 3,865,968 |
| | Loews Corp. | | | 883,611 | | | 33,930,662 |
| | | 37,796,630 |
| | Property & Casualty Insurance – (1.40%) |
| | ACE Ltd. | | | 275,674 | | | 32,212,507 |
| | Markel Corp. * | | | 15,993 | | | 14,127,417 |
| | | 46,339,924 |
| | | | 84,136,554 |
| | | | Total Financials | | | 981,578,415 |
| | HEALTH CARE – (6.79%) |
| | Health Care Equipment & Services – (5.14%) |
| | Express Scripts Holding Co. * | | | 698,092 | | | 61,020,222 |
| | Laboratory Corp. of America Holdings * | | | 212,300 | | | 26,248,772 |
| | Quest Diagnostics Inc. | | | 484,543 | | | 34,470,389 |
| | UnitedHealth Group Inc. | | | 414,307 | | | 48,739,075 |
| | | | 170,478,458 |
| | Pharmaceuticals, Biotechnology & Life Sciences – (1.65%) |
| | Valeant Pharmaceuticals International, Inc. (Canada)* | | | 537,331 | | | 54,619,696 |
| | Total Health Care | | | 225,098,154 |
| | INDUSTRIALS – (4.95%) |
| | Capital Goods – (4.27%) |
| | Orascom Construction Ltd. (United Arab Emirates)* | | | 776,453 | | | 5,435,171 |
| | PACCAR Inc. | | | 381,109 | | | 18,064,566 |
| | Schneider Electric SE (France) | | | 186,240 | | | 10,637,949 |
| | United Technologies Corp. | | | 1,116,157 | | | 107,229,203 |
| | | | 141,366,889 |
| | Transportation – (0.68%) |
| | Kuehne + Nagel International AG (Switzerland) | | | 143,330 | | | 19,719,323 |
| | Wesco Aircraft Holdings, Inc. * | | | 230,435 | | | 2,758,307 |
| | | | 22,477,630 |
| | Total Industrials | | | 163,844,519 |
| SELECTED FUNDS | Schedule of Investments |
| SELECTED AMERICAN SHARES, INC. - (CONTINUED) | December 31, 2015 |
| | Shares/Units/ Principal | | Value
(Note 1) |
| COMMON STOCK – (CONTINUED) |
| | INFORMATION TECHNOLOGY – (18.66%) |
| | | Semiconductors & Semiconductor Equipment – (2.48%) |
| | | Texas Instruments Inc. | | | 1,497,771 | | $ | 82,092,829 |
| | Software & Services – (16.18%) |
| | Alphabet Inc., Class A * | | | 118,308 | | | 92,044,807 |
| | Alphabet Inc., Class C * | | | 178,337 | | | 135,336,383 |
| | ASAC II L.P. *(a) | | | 69,800,000 | | | 191,286,900 |
| | Facebook Inc., Class A * | | | 345,228 | | | 36,131,562 |
| | Microsoft Corp. | | | 596,798 | | | 33,110,353 |
| | Oracle Corp. | | | 610,809 | | | 22,312,853 |
| | Qihoo 360 Technology Co. Ltd., Class A, ADR (China)* | | | 194,804 | | | 14,183,679 |
| | SouFun Holdings Ltd., Class A, ADR (China) | | | 1,558,718 | | | 11,518,926 |
| | | | 535,925,463 |
| | | | Total Information Technology | | | 618,018,292 |
| | MATERIALS – (8.13%) |
| | Ecolab Inc. | | | 289,317 | | | 33,092,079 |
| | LafargeHolcim Ltd. (Switzerland)* | | | 924,121 | | | 46,920,350 |
| | Monsanto Co. | | | 1,056,935 | | | 104,129,236 |
| | OCI N.V. (Netherlands)* | | | 1,419,928 | | | 35,182,828 |
| | Praxair, Inc. | | | 486,776 | | | 49,845,862 |
| | Total Materials | | | 269,170,355 |
| | | TOTAL COMMON STOCK – (Identified cost $2,215,094,867) | | | 3,231,922,093 |
| PREFERRED STOCK – (0.96%) |
| | INFORMATION TECHNOLOGY – (0.96%) |
| | Software & Services – (0.96%) |
| | Didi Kuaidi Joint Co., Series A-17 (China)*(a) | | | 1,141,409 | | | 31,991,982 |
| | TOTAL PREFERRED STOCK – (Identified cost $31,617,557) | | | 31,991,982 |
| SHORT-TERM INVESTMENTS – (2.27%) |
| | Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.27%, 01/04/16, dated 12/31/15, repurchase value of $20,405,612 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.59%-6.50%, 06/01/22-12/01/45, total market value $20,813,100) | | $ | 20,405,000 | | | 20,405,000 |
| | Nomura Securities International, Inc. Joint Repurchase Agreement, 0.34%, 01/04/16, dated 12/31/15, repurchase value of $42,671,612 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 1.972%-6.00%, 06/01/20-07/20/65, total market value $43,523,400) | | | 42,670,000 | | | 42,670,000 |
| | SunTrust Robinson Humphrey, Inc. Joint Repurchase Agreement, 0.45%, 01/04/16, dated 12/31/15, repurchase value of $12,191,610 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 2.445%-5.50%, 11/01/20-04/01/44, total market value $12,434,820) | | | 12,191,000 | | | 12,191,000 |
| | TOTAL SHORT-TERM INVESTMENTS – (Identified cost $75,266,000) | | | 75,266,000 |
| SELECTED FUNDS | Schedule of Investments |
| SELECTED AMERICAN SHARES, INC. - (CONTINUED) | December 31, 2015 |
| | Total Investments – (100.81%) – (Identified cost $2,321,978,424) – (b) | | $ | 3,339,180,075 |
| | Liabilities Less Other Assets – (0.81%) | | | (26,973,475) |
| | Net Assets – (100.00%) | | $ | 3,312,206,600 |
| |
| | ADR: American Depositary Receipt |
| |
| | * | Non-Income producing security. |
| |
| | (a) | Restricted Security – See Note 7 of the Notes to Financial Statements. |
| |
| | (b) | Aggregate cost for federal income tax purposes is $2,325,887,328. At December 31, 2015, unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows: |
| |
| | Unrealized appreciation | | $ | 1,322,964,722 |
| | Unrealized depreciation | | | (309,671,975) |
| | Net unrealized appreciation | | $ | 1,013,292,747 |
| |
| See Notes to Financial Statements |
| SELECTED FUNDS | |
| SELECTED INTERNATIONAL FUND, INC. | December 31, 2015 |
| | Shares | | Value
(Note 1) |
| COMMON STOCK – (92.32%) |
| | CONSUMER DISCRETIONARY – (20.01%) |
| | | Consumer Durables & Apparel – (7.87%) |
| | | | Compagnie Financiere Richemont S.A., Unit A (Switzerland) | | | 39,890 | | $ | 2,871,475 |
| | Hermes International (France) | | | 7,120 | | | 2,412,215 |
| | Hunter Douglas N.V. (Netherlands) | | | 32,111 | | | 1,263,083 |
| | | | 6,546,773 |
| | Consumer Services – (1.94%) |
| | Xiabu Xiabu Catering Management Co., Ltd. (China) | | | 4,087,940 | | | 1,614,066 |
| | Media – (3.15%) |
| | Grupo Televisa S.A.B., ADR (Mexico) | | | 48,490 | | | 1,319,413 |
| | Naspers Ltd. - N (South Africa) | | | 9,480 | | | 1,299,554 |
| | | | 2,618,967 |
| | Retailing – (7.05%) |
| | Ctrip.com International, Ltd., ADR (China)* | | | 30,860 | | | 1,429,744 |
| | JD.com Inc., Class A, ADR (China)* | | | 91,420 | | | 2,949,666 |
| | Jumei International Holding Ltd., Class A, ADR (China)* | | | 5,500 | | | 49,830 |
| | Vipshop Holdings Ltd., Class A, ADR (China)* | | | 94,070 | | | 1,436,449 |
| | | | 5,865,689 |
| | | | Total Consumer Discretionary | | | 16,645,495 |
| | CONSUMER STAPLES – (17.64%) |
| | Food, Beverage & Tobacco – (11.99%) |
| | Diageo PLC (United Kingdom) | | | 104,780 | | | 2,867,674 |
| | Heineken Holding N.V. (Netherlands) | | | 19,255 | | | 1,485,701 |
| | Lindt & Spruengli AG - Participation Certificate (Switzerland) | | | 635 | | | 3,965,580 |
| | United Spirits Ltd. (India)* | | | 36,520 | | | 1,656,383 |
| | | | 9,975,338 |
| | Household & Personal Products – (5.65%) |
| | Dabur India Ltd. (India) | | | 472,000 | | | 1,971,297 |
| | L'Oréal S.A. (France) | | | 9,020 | | | 1,522,325 |
| | Marico Ltd. (India) | | | 354,000 | | | 1,208,784 |
| | | | 4,702,406 |
| | Total Consumer Staples | | | 14,677,744 |
| | ENERGY – (4.61%) |
| | Encana Corp. (Canada) | | | 510,790 | | | 2,599,921 |
| | Paramount Resources Ltd., Class A (Canada)* | | | 279,120 | | | 1,234,527 |
| | Total Energy | | | 3,834,448 |
| | FINANCIALS – (7.84%) |
| | Banks – (0.70%) |
| | Standard Chartered PLC (United Kingdom) | | | 70,306 | | | 584,247 |
| | Diversified Financials – (4.92%) |
| | Capital Markets – (1.90%) |
| | Noah Holdings Ltd., ADS (China)* | | | 56,630 | | | 1,581,676 |
| | Diversified Financial Services – (3.02%) |
| | BM&FBOVESPA S.A. (Brazil) | | | 479,520 | | | 1,319,930 |
| | Groupe Bruxelles Lambert S.A. (Belgium) | | | 9,720 | | | 832,698 |
| | Pargesa Holding S.A., Bearer Shares (Switzerland) | | | 5,600 | | | 355,032 |
| | | 2,507,660 |
| | | | 4,089,336 |
| SELECTED FUNDS | Schedule of Investments |
| SELECTED INTERNATIONAL FUND, INC. - (CONTINUED) | December 31, 2015 |
| | Units/Shares | | Value
(Note 1) |
| COMMON STOCK – (CONTINUED) |
| | FINANCIALS – (CONTINUED) |
| | | Insurance – (2.22%) |
| | | Multi-line Insurance – (2.22%) |
| | Sul America S.A. (Brazil) | | | 392,900 | | $ | 1,848,182 |
| | | | | Total Financials | | | 6,521,765 |
| | HEALTH CARE – (6.02%) |
| | Health Care Equipment & Services – (3.91%) |
| | Diagnosticos da America S.A. (Brazil) | | | 198,350 | | | 506,372 |
| | Essilor International S.A. (France) | | | 21,945 | | | 2,743,796 |
| | | | 3,250,168 |
| | Pharmaceuticals, Biotechnology & Life Sciences – (2.11%) |
| | Valeant Pharmaceuticals International, Inc. (Canada)* | | | 17,280 | | | 1,756,512 |
| | Total Health Care | | | 5,006,680 |
| | INDUSTRIALS – (22.15%) |
| | Capital Goods – (11.53%) |
| | Assa Abloy AB, Class B (Sweden) | | | 156,518 | | | 3,300,405 |
| | Brenntag AG (Germany) | | | 12,450 | | | 653,230 |
| | Havells India Ltd. (India) | | | 346,100 | | | 1,595,362 |
| | IMI PLC (United Kingdom) | | | 19,800 | | | 251,465 |
| | Meggitt PLC (United Kingdom) | | | 177,339 | | | 979,590 |
| | Rolls-Royce Holdings PLC (United Kingdom) | | | 37,500 | | | 317,874 |
| | Schneider Electric SE (France) | | | 43,670 | | | 2,494,412 |
| | | | 9,592,338 |
| | Commercial & Professional Services – (1.87%) |
| | Regus PLC (United Kingdom) | | | 316,900 | | | 1,556,624 |
| | Transportation – (8.75%) |
| | CAR Inc. (China)* | | | 1,491,800 | | | 2,471,560 |
| | InterGlobe Aviation Ltd. (India)* | | | 100,067 | | | 1,871,068 |
| | Kuehne + Nagel International AG (Switzerland) | | | 21,337 | | | 2,935,542 |
| | | | 7,278,170 |
| | Total Industrials | | | 18,427,132 |
| | INFORMATION TECHNOLOGY – (10.79%) |
| | Software & Services – (10.79%) |
| | 58.com Inc., Class A, ADR (China)* | | | 3,180 | | | 209,753 |
| | Baidu, Inc., Class A, ADR (China)* | | | 5,455 | | | 1,031,213 |
| | Qihoo 360 Technology Co. Ltd., Class A, ADR (China)* | | | 25,550 | | | 1,860,295 |
| | SouFun Holdings Ltd., Class A, ADR (China) | | | 438,630 | | | 3,241,476 |
| | Youku Tudou Inc., Class A, ADR (China)* | | | 35,470 | | | 962,301 |
| | YY Inc., Class A, ADR (China)* | | | 26,740 | | | 1,670,448 |
| | Total Information Technology | | | 8,975,486 |
| | MATERIALS – (3.26%) |
| | Air Liquide S.A. (France) | | | 5,480 | | | 617,276 |
| | LafargeHolcim Ltd. (Switzerland)* | | | 30,614 | | | 1,554,363 |
| SELECTED FUNDS | Schedule of Investments |
| SELECTED INTERNATIONAL FUND, INC. - (CONTINUED) | December 31, 2015 |
| | Shares/Principal | | Value
(Note 1) |
| COMMON STOCK – (CONTINUED) |
| | MATERIALS – (CONTINUED) |
| | | | Linde AG (Germany) | | | 3,722 | | $ | 541,610 |
| | | | Total Materials | | | 2,713,249 |
| | TOTAL COMMON STOCK – (Identified cost $74,382,601) | | | 76,801,999 |
| PREFERRED STOCK – (6.38%) |
| | INFORMATION TECHNOLOGY – (6.38%) |
| | | Software & Services – (6.38%) |
| | Didi Kuaidi Joint Co., Series A-17 (China)*(a) | | | 104,575 | | | 2,931,080 |
| | Internet Plus Holdings Ltd., Series A-10 (China)*(a) | | | 616,958 | | | 2,381,890 |
| | Total Information Technology | | | 5,312,970 |
| | | TOTAL PREFERRED STOCK – (Identified cost $4,804,480) | | | 5,312,970 |
| SHORT-TERM INVESTMENTS – (1.55%) |
| | Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.27%, 01/04/16, dated 12/31/15, repurchase value of $349,010 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.59%-6.50%, 06/01/22-12/01/45, total market value $355,980) | | $ | 349,000 | | | 349,000 |
| | Nomura Securities International, Inc. Joint Repurchase Agreement, 0.34%, 01/04/16, dated 12/31/15, repurchase value of $731,028 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 2.345%-7.00%, 06/01/35-10/20/65, total market value $745,620) | | | 731,000 | | | 731,000 |
| | SunTrust Robinson Humphrey, Inc. Joint Repurchase Agreement, 0.45%, 01/04/16, dated 12/31/15, repurchase value of $209,010 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 2.445%-4.50%, 04/01/25-04/01/44, total market value $213,180) | | | 209,000 | | | 209,000 |
| | TOTAL SHORT-TERM INVESTMENTS – (Identified cost $1,289,000) | | | 1,289,000 |
| | | Total Investments – (100.25%) – (Identified cost $80,476,081) – (b) | | | 83,403,969 |
| | Liabilities Less Other Assets – (0.25%) | | | (210,096) |
| | Net Assets – (100.00%) | | $ | 83,193,873 |
| |
| | ADR: American Depositary Receipt |
| |
| | ADS: American Depositary Share |
| |
| | * | Non-Income producing security. |
| |
| | (a) | Restricted Security – See Note 7 of the Notes to Financial Statements. |
| |
| | (b) | Aggregate cost for federal income tax purposes is $82,978,212. At December 31, 2015, unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows: |
| |
| | Unrealized appreciation | | $ | 12,859,442 |
| | Unrealized depreciation | | | (12,433,685) |
| | Net unrealized appreciation | | $ | 425,757 |
| |
| See Notes to Financial Statements |
| SELECTED FUNDS | Statements of Assets and Liabilities |
| | At December 31, 2015 |
| | | | Selected American Shares | | | Selected International Fund |
ASSETS: | | | | | | |
| Investments in securities at value* (see accompanying Schedules of Investments) | | $ | 3,339,180,075 | | $ | 83,403,969 |
| Cash | | | 446,697 | | | 19,692 |
| Receivables: | | | | | | |
| | Capital stock sold | | | 3,413,322 | | | 12,963 |
| | Dividends and interest | | | 3,021,878 | | | 180,564 |
| | Investment securities sold | | | 252,585 | | | 5,233 |
| Prepaid expenses | | | 112,551 | | | 3,047 |
| Due from Adviser | | | – | | | 1,440 |
| | | Total assets | | | 3,346,427,108 | | | 83,626,908 |
LIABILITIES: | | | | | | |
| Payables: | | | | | | |
| | Capital stock redeemed | | | 12,532,948 | | | 117,190 |
| | Deferred foreign taxes | | | – | | | 176,063 |
| | Investment securities purchased | | | 19,206,502 | | | 43,222 |
| Accrued custodian fees | | | 148,328 | | | 23,113 |
| Accrued distribution service fees | | | 267,637 | | | 2,377 |
| Accrued investment advisory fees | | | 1,691,503 | | | 41,292 |
| Other accrued expenses | | | 373,590 | | | 29,778 |
| | Total liabilities | | | 34,220,508 | | | 433,035 |
NET ASSETS | | $ | 3,312,206,600 | | $ | 83,193,873 |
NET ASSETS CONSIST OF: | | | | | | |
| Par value of shares of capital stock | | $ | 112,040,370 | | $ | 1,976,832 |
| Additional paid-in capital | | | 2,055,267,610 | | | 82,777,632 |
| Overdistributed net investment income | | | (2,181,185) | | | (418,874) |
| Accumulated net realized gains (losses) from investments | | | 129,895,772 | | | (3,877,003) |
Net unrealized appreciation on investments and foreign currency transactions** | | | 1,017,184,033 | | | 2,735,286 |
| | Net Assets | | $ | 3,312,206,600 | | $ | 83,193,873 |
CLASS S SHARES: | | | | | | |
| Net assets | | $ | 1,181,082,215 | | $ | 9,095,304 |
| Shares outstanding | | | 31,980,255 | | | 868,103 |
Net asset value, offering, and redemption price per share (Net assets ÷ Shares outstanding) | | $ | 36.93 | | $ | 10.48 |
CLASS D SHARES: | | | | | | |
| Net assets | | $ | 2,131,124,385 | | $ | 74,098,569 |
| Shares outstanding | | | 57,652,041 | | | 7,039,226 |
Net asset value, offering, and redemption price per share (Net assets ÷ Shares outstanding) | | $ | 36.97 | | $ | 10.53 |
| *Including: | | | | | | |
| | Cost of investments | | $ | 2,321,978,424 | | $ | 80,476,081 |
| **Net of deferred foreign taxes of | | | – | | | 176,063 |
See Notes to Financial Statements
| SELECTED FUNDS | |
| | For the year ended December 31, 2015 |
| | | | Selected American Shares | | | Selected International Fund |
INVESTMENT INCOME: | | | | | | |
| Income: | | | | | | |
| Dividends* | | $ | 62,883,259 | | $ | 1,452,324 |
| Interest | | | 85,104 | | | 2,088 |
| Net securities lending fees | | | 209,719 | | | 5,725 |
| | | Total income | | | 63,178,082 | | | 1,460,137 |
Expenses: | | | | | | |
| Investment advisory fees (Note 3) | | | 23,799,419 | | | 506,687 |
| Custodian fees | | | 624,955 | | | 101,882 |
| Transfer agent fees: | | | | | | |
| | Class S | | | 1,600,061 | | | 40,804 |
| | Class D | | | 786,753 | | | 39,935 |
| Audit fees | | | 61,200 | | | 22,200 |
| Legal fees | | | 41,484 | | | 6,915 |
| Reports to shareholders | | | 201,681 | | | 5,853 |
| Directors' fees and expenses | | | 603,948 | | | 15,485 |
| Registration and filing fees | | | 89,913 | | | 46,698 |
| Miscellaneous | | | 148,673 | | | 12,849 |
| Distribution service fees (Note 3): | | | | | | |
| | Class S | | | 3,417,397 | | | 26,569 |
| Total expenses | | | 31,375,484 | | | 825,877 |
| Reimbursement of expenses by Adviser (Note 3) | | | – | | | (12,161) |
| | Net expenses | | | 31,375,484 | | | 813,716 |
| Net investment income | | | 31,802,598 | | | 646,421 |
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: | | | | | | |
| Net realized gain (loss) from: | | | | | | |
| | Investment transactions** | | | 1,309,404,131 | | | 1,899,926 |
| | Foreign currency transactions | | | (46,889) | | | (36,018) |
| Net realized gain | | | 1,309,357,242 | | | 1,863,908 |
| Net decrease in unrealized appreciation*** | | | (1,164,408,890) | | | (2,238,818) |
| | Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 144,948,352 | | | (374,910) |
| Net increase in net assets resulting from operations | | $ | 176,750,950 | | $ | 271,511 |
| | | | | | | | |
| *Net of foreign taxes withheld as follows | | $ | 1,748,102 | | $ | 150,419 |
**Net of foreign taxes of | | | – | | | 26,419 |
***Net of deferred foreign taxes of | | | – | | | 123,658 |
| | | | | | | | |
| See Notes to Financial Statements |
| SELECTED FUNDS | Statements of Changes in Net Assets |
| | For the year ended December 31, 2015 |
| | | | Selected American Shares | | | Selected International Fund |
OPERATIONS: | | | | | | |
| Net investment income | | $ | 31,802,598 | | $ | 646,421 |
Net realized gain from investments and foreign currency transactions | | | 1,309,357,242 | | | 1,863,908 |
Net decrease in unrealized appreciation on investments and foreign currency transactions | | | (1,164,408,890) | | | (2,238,818) |
| | Net increase in net assets resulting from operations | | | 176,750,950 | | | 271,511 |
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: | | | | | | |
| Net investment income: | | | | | | |
| | Class S | | | (8,591,125) | | | (35,593) |
| | Class D | | | (24,272,082) | | | (663,120) |
Realized gains from investment transactions: | | | | | | |
| | Class S | | | (228,257,585) | | | (434,572) |
| | Class D | | | (477,128,438) | | | (3,516,545) |
CAPITAL SHARE TRANSACTIONS: | | | | | | |
| Net decrease in net assets resulting from capital share transactions (Note 4): | | | | | | |
| | Class S | | | (207,146,191) | | | (1,589,479) |
| | Class D | | | (1,164,564,928) | | | (11,342,610) |
| | Total decrease in net assets | | | (1,933,209,399) | | | (17,310,408) |
NET ASSETS: | | | | | | |
| Beginning of year | | | 5,245,415,999 | | | 100,504,281 |
End of year* | | $ | 3,312,206,600 | | $ | 83,193,873 |
*Including overdistributed net investment income of | | $ | (2,181,185) | | $ | (418,874) |
| | | | | | | | |
| See Notes to Financial Statements |
| SELECTED FUNDS | Statements of Changes in Net Assets |
| | For the year ended December 31, 2014 |
| | | | Selected American Shares | | | Selected International Fund |
| OPERATIONS: | | | | | | |
| Net investment income | | $ | 39,895,176 | | $ | 541,251 |
Net realized gain from investments and foreign currency transactions | | | 1,240,861,736 | | | 7,300,705 |
Net decrease in unrealized appreciation on investments and foreign currency transactions | | | (957,171,960) | | | (9,374,581) |
| | Net increase (decrease) in net assets resulting from operations | | | 323,584,952 | | | (1,532,625) |
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: | | | | | | |
| Net investment income: | | | | | | |
| | Class S | | | (8,348,223) | | | (15,793) |
| | Class D | | | (30,025,884) | | | (531,968) |
Realized gains from investment transactions: | | | | | | |
| | Class S | | | (336,362,089) | | | – |
| | Class D | | | (735,566,143) | | | – |
CAPITAL SHARE TRANSACTIONS: | | | | | | |
Net increase (decrease) in net assets resulting from capital share transactions (Note 4): | | | | | | |
| | Class S | | | (250,799,541) | | | 419,011 |
| | Class D | | | 270,231,572 | | | 25,638,720 |
| | Total increase (decrease) in net assets | | | (767,285,356) | | | 23,977,345 |
NET ASSETS: | | | | | | |
| Beginning of year | | | 6,012,701,355 | | | 76,526,936 |
End of year* | | $ | 5,245,415,999 | | $ | 100,504,281 |
*Including overdistributed net investment income of | | $ | (263,509) | | $ | (317,958) |
| See Notes to Financial Statements |
| SELECTED FUNDS | Notes to Financial Statements |
| | December 31, 2015 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Selected Funds ("Funds") consist of Selected American Shares, Inc. (a Maryland corporation) ("Selected American Shares") and Selected International Fund, Inc. (a Maryland corporation) ("Selected International Fund"). The Funds are registered under the Investment Company Act of 1940, as amended, as diversified, open-end management investment companies.
Selected American Shares' investment objective is to achieve both capital growth and income. The Fund principally invests in common stocks issued by large companies with market capitalizations of at least $10 billion.
Selected International Fund was formerly known as Selected Special Shares. Effective May 1, 2011, Selected International Fund modified its investment strategy to invest principally in common stocks issued by foreign companies, including companies in developed or emerging markets. The Fund may invest in large, medium, or small companies without regard to market capitalization and maintains its investment objective to achieve capital growth.
An investment in 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. Each Fund's return and net asset value will fluctuate.
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 into Selected American Shares) 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.
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 including NASDAQ) are valued at the last reported sales price on the day of valuation. Listed securities for which no sale was reported on that date are valued at the last quoted bid price. Securities traded on foreign exchanges are valued based upon the last sales price on the principal exchange on which the security is traded prior to the time when the Funds' assets are valued. Securities (including restricted securities) for which market quotations are not readily available 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 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 appropriateness of security valuations, the Adviser may consider (i) comparing prior day prices and/or prices of comparable securities; (ii) comparing 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; (iii) new rounds of financing; (iv) the performance of the market or the issuer's industry; (v) the liquidity of the security; (vi) the size of the holding in a fund; and/or (vii) any other appropriate information. The determination of a security's fair value price often involves the consideration of a number of subjective factors and is therefore subject to the unavoidable risk that the value assigned to a security may be higher or lower than the security's value would be if a reliable market quotation of the security was readily available. 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. Fair valuation methods used by the Funds may include, but are not limited to, valuing securities initially at cost (excluding commissions) and subsequently adjusting the value due to: additional transactions by the issuer, changes in company specific fundamentals and changes in the value of similar securities. Values may be further adjusted for any discounts related to security-specific resale restrictions. The Funds may price partnerships by calculating the liquidation value of the investment on a daily basis using the closing price of the underlying stock and a waterfall schedule, which apportions the value of the partnership's interests based on the value of the net assets of the investment. A liquidity discount is then applied to the liquidation value.
| SELECTED FUNDS | Notes to Financial Statements – (Continued) |
| | December 31, 2015 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
Security Valuation - (Continued)
Short-term securities purchased within 60 days to maturity 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.
Fair 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.
The following is a summary of the inputs used as of December 31, 2015 in valuing each Fund's investments carried at value:
| | Investments in Securities at Value |
| | Selected | | Selected |
| | American Shares | | International Fund |
Valuation inputs | | | | | |
| Level 1 – Quoted Prices: | | | | | |
Equity securities: | | | | | |
| Consumer Discretionary | $ | 590,506,939 | | $ | 16,645,495 |
| Consumer Staples | | 151,645,850 | | | 14,677,744 |
| Energy | | 232,059,569 | | | 3,834,448 |
| Financials | | 981,578,415 | | | 6,521,765 |
| Health Care | | 225,098,154 | | | 5,006,680 |
| Industrials | | 163,844,519 | | | 18,427,132 |
| Information Technology | | 426,731,392 | | | 8,975,486 |
| Materials | | 269,170,355 | | | 2,713,249 |
| Total Level 1 | | 3,040,635,193 | | | 76,801,999 |
| Level 2 – Other Significant Observable Inputs: | | | | | |
| Short-term securities | | 75,266,000 | | | 1,289,000 |
| Total Level 2 | | 75,266,000 | | | 1,289,000 |
| Level 3 – Significant Unobservable Inputs: | | | | | |
Equity securities: | | | | | |
| Information Technology | | 223,278,882 | | | 5,312,970 |
| Total Level 3 | | 223,278,882 | | | 5,312,970 |
| Total Investments | $ | 3,339,180,075 | | $ | 83,403,969 |
| | | | | | |
Level 2 to Level 1 Transfers*: | | | | | |
| Consumer Discretionary | $ | 34,966,403 | | $ | 6,546,773 |
| Consumer Staples | | 82,594,748 | | | 11,497,663 |
| Financials | | – | | | 2,507,660 |
| Health Care | | – | | | 3,250,168 |
| Industrials | | 30,357,272 | | | 13,086,204 |
| Materials | | 35,182,828 | | | 617,276 |
| Total | $ | 183,101,251 | | $ | 37,505,744 |
*Application of fair value procedures for securities traded on foreign exchanges triggered the majority of transfers of investments between Level 2 and Level 1 of the fair value hierarchy during the year ended December 31, 2015
| SELECTED FUNDS | Notes to Financial Statements – (Continued) |
| | December 31, 2015 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
Fair 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, 2015:
| | | Selected American Shares | | Selected International Fund |
| Investment Securities: | | | | | | |
| Beginning balance | | $ | 90,781,880 | | $ | – |
| Cost of purchases | | | 31,617,557 | | | 4,804,480 |
| Increase in unrealized appreciation | | | 100,879,445 | | | 508,490 |
| Ending balance | | $ | 223,278,882 | | $ | 5,312,970 |
| | | | | | | |
Increase in unrealized appreciation during the period on Level 3 securities still held at December 31, 2015 and included in the change in net assets for the period | | $ | 100,879,445 | | $ | 508,490 |
There were no transfers of investments into or out of Level 3 of the fair value hierarchy during the period. The cost of purchases may include securities received through corporate actions or exchanges. Realized and unrealized gains (losses) are included in the related amounts on investments in the Statements of Operations.
The following table is a summary of those assets in which significant unobservable inputs (Level 3) were used by the Adviser in determining fair value. Note that these amounts exclude any valuations provided by a pricing service or broker.
Assets Table
Fund | | Investments at Value | | Fair Value at December 31, 2015 | | Valuation Technique | | Unobservable Input | | Amount |
Selected American Shares | | Equity securities | | $ | 191,286,900 | | Liquidation proceeds/Waterfall methodology based on underlying investment value, then applying liquidity discount | | Discount Rate | | 7.40% |
| | | | | | | | | | | | |
| | | Equity securities | | | 31,991,982 | | Market Approach | | Transaction Price | | $28.0285 |
| | | | | $ | 223,278,882 | | | | | | |
| | | | | | | | | | | | |
Selected International Fund | | Equity securities | | $ | 2,381,890 | | Market Approach | | Transaction Price | | $3.8607 |
| | | | | | | | | | | | |
| | | Equity securities | | | 2,931,080 | | Market Approach | | Transaction Price | | $28.0285 |
| | | | | $ | 5,312,970 | | | | | | |
The significant unobservable inputs listed in the above table are used in the fair value measurement of equity securities, and if changed, would affect the fair value of the Fund's investment. The transaction price inputs are attributable to private securities and include assumptions made from private transactions. An increase or decrease in these inputs would result in higher or lower fair value measurements.
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.
| SELECTED FUNDS | Notes to Financial Statements – (Continued) |
| | December 31, 2015 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
Currency Translation - The market values of all assets and liabilities denominated in foreign currencies are recorded in the financial statements after translation to the U.S. Dollar based upon the mean between the bid and offered quotations of the currencies against U.S. Dollars on the date of valuation. The cost basis of such assets and liabilities is determined based upon historical exchange rates. Income and expenses are translated at average exchange rates in effect as accrued or incurred.
Foreign Currency - The Funds may enter into forward purchases or sales of foreign currencies to hedge certain foreign currency denominated assets and liabilities against declines in market value relative to the U.S. Dollar. Forward currency contracts are marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss. When the forward currency contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the forward currency contract at the time it was opened and value at the time it was closed. Investments in forward currency contracts may expose the Funds to risks resulting from unanticipated movements in foreign currency exchange rates or failure of the counter-party to the agreement to perform in accordance with the terms of the contract.
Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on security 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 or 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.
Federal Income Taxes - It is each Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute substantially all of its taxable income, including any net realized gains on investments not offset by loss carryovers, to shareholders. Therefore, no provision for federal income or excise tax is required. The Adviser has analyzed the Funds' tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of December 31, 2015, 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 department of revenue. The earliest tax year that remains subject to examination by these jurisdictions is 2012.
Under current tax regulations, capital losses on security transactions realized after October 31 ("Post-October" Losses) may be deferred and treated as occurring on the first business day of the following year. At December 31, 2015, Selected American Shares had short-term Post-October losses in the amount of $14,785,000 and Selected International Fund had long-term Post-October losses in the amount of $1,765,000.
During the year ended December 31, 2015, Selected International Fund utilized $1,572,000 in capital loss carryforwards and thus did not have unused capital loss carryforwards available for federal income tax purposes at the end of the year.
Additionally, based on the Funds' understanding of the tax rules and rates related to income, gains, and transactions for the foreign jurisdictions in which they invest, the Funds will provide for foreign taxes, and where appropriate, deferred foreign taxes.
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.
| SELECTED FUNDS | Notes to Financial Statements – (Continued) |
| | December 31, 2015 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
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, in-kind redemptions, equalization accounting for tax purposes, partnership income, 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, 2015, for Selected American Shares, amounts have been reclassified to reflect an increase in overdistributed net investment income of $857,067, a decrease in accumulated net realized gains from investments and foreign currency transactions of $641,946,315, and an increase in additional paid-in capital of $642,803,382; for Selected International Fund, amounts have been reclassified to reflect an increase in overdistributed net investment income of $48,624 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, 2015 and 2014 was as follows:
| | Ordinary Income | | Long-Term Capital Gain | | Return of Capital | | Total |
Selected American Shares | | | | | | | | | | | |
2015 | $ | 64,509,722 | | $ | 673,739,508 | | $ | – | | $ | 738,249,230 |
2014 | | 38,757,279 | | | 1,071,545,060 | | | – | | | 1,110,302,339 |
Selected International Fund | | | | | | | | | | | |
2015 | $ | 1,483,786 | | $ | 3,166,044 | | $ | – | | $ | 4,649,830 |
2014 | | 547,761 | | | – | | | – | | | 547,761 |
As of December 31, 2015, the components of distributable earnings on a tax basis were as follows:
| | Selected American Shares | | Selected International Fund |
| Undistributed long-term capital gain | $ | 148,589,781 | | $ | – |
| Net unrealized appreciation on investments* | | 1,013,275,130 | | | 233,154 |
| Total | $ | 1,161,864,911 | | $ | 233,154 |
| | | | | | |
| *Net of deferred foreign taxes of | $ | – | | $ | 176,063 |
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.
| SELECTED FUNDS | Notes to Financial Statements – (Continued) |
| | December 31, 2015 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)
Directors Fees and Expenses - The Funds set up a Rabbi Trust to provide for the deferred compensation plan for Independent Directors 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 account is based upon years of service and fees paid to each Director during the years of service. The amount paid to the Director 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, 2015 were as follows:
| | Selected American Shares | | Selected International Fund |
| Cost of purchases | $ | 1,137,667,965 | | $ | 38,421,479 |
| Proceeds from sales | | 3,222,035,127 | | | 49,952,861 |
NOTE 3 - FEES AND OTHER TRANSACTIONS WITH SERVICE PROVIDERS (INCLUDING 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 and officers of the Funds are also directors and officers of the general partner of the Adviser.
As of December 31, 2015, a related shareholder's investment in Selected International Fund represents 28% of outstanding shares. Investment activities of this shareholder could have a material impact on the Fund.
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, 2015 approximated 0.55% of the average net assets for Selected American Shares. The fixed annual rate for Selected International Fund is 0.55% of the average net assets. The Adviser is contractually committed to reimburse Selected International Fund's expenses to the extent necessary to cap total annual Fund operating expenses at 1.30% for Class S shares. During the year ended December 31, 2015, such reimbursements amounted to $12,161 for Class S shares.
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, 2015 was $205,756 and $15,715 for Selected American Shares and Selected International 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 - 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, 2015, Selected American Shares and Selected International Fund incurred distribution service fees totaling $3,417,397 and $26,569, respectively.
There are no distribution service fees for the Funds' Class D shares.
| SELECTED FUNDS | Notes to Financial Statements – (Continued) |
| | December 31, 2015 |
NOTE 4 - CAPITAL STOCK
At December 31, 2015, there were 600 million shares of capital stock of Selected American Shares ($1.25 par value per share) and 50 million shares of capital stock of Selected International Fund ($0.25 par value per share) authorized. Transactions in capital stock were as follows:
| | Year ended December 31, 2015 |
| | | Sold | | | Reinvestment of Distributions | | | Redeemed* | | | Net Decrease |
| Selected American Shares | | | | | | | | | | | |
Shares: Class S | | 1,423,450 | | | 6,011,511 | | | (11,859,986) | | | (4,425,025) |
| Class D | | 2,061,683 | | | 12,423,867 | | | (42,017,234) | † | | (27,531,684) |
Value: Class S | $ | 59,531,934 | | $ | 233,501,518 | | $ | (500,179,643) | | $ | (207,146,191) |
| Class D | | 84,883,420 | | | 484,150,955 | | | (1,733,599,303) | † | | (1,164,564,928) |
| | | | | | | | | | | | |
| Selected International Fund | | | | | | | | | | | |
Shares: Class S | | 147,957 | | | 42,951 | | | (329,830) | | | (138,922) |
| Class D | | 157,796 | | | 383,464 | | | (1,497,906) | | | (956,646) |
Value: Class S | $ | 1,797,186 | | $ | 454,847 | | $ | (3,841,512) | | $ | (1,589,479) |
| Class D | | 1,864,238 | | | 4,076,221 | | | (17,283,069) | | | (11,342,610) |
| | | | | | | | | | | | |
* Selected International Fund: net of redemption fees amounting to $588 and $325 for Class S and Class D, respectively.
† Selected American Shares: includes redemptions as a result of in-kind transfers of securities (see Note 8 of the Notes to Financial Statements).
| | Year ended December 31, 2014 |
| | | Sold | | | Reinvestment of Distributions | | | Redeemed* | | | Net Increase (Decrease) |
| Selected American Shares | | | | | | | | | | | |
Shares: Class S | | 1,921,876 | | | 7,476,144 | | | (14,089,662) | | | (4,691,642) |
| Class D | | 2,310,563 | | | 16,425,353 | | | (12,070,577) | | | 6,665,339 |
Value: Class S | $ | 94,419,436 | | $ | 339,368,717 | | $ | (684,587,694) | | $ | (250,799,541) |
| Class D | | 114,036,516 | | | 742,046,949 | | | (585,851,893) | | | 270,231,572 |
| | | | | | | | | | | | |
| Selected International Fund | | | | | | | | | | | |
Shares: Class S | | 146,434 | | | 1,389 | | | (115,533) | | | 32,290 |
| Class D | | 2,698,453 | | | 46,146 | | | (569,211) | | | 2,175,388 |
Value: Class S | $ | 1,729,398 | | $ | 15,568 | | $ | (1,325,955) | | $ | 419,011 |
| Class D | | 31,793,977 | | | 519,604 | | | (6,674,861) | | | 25,638,720 |
| | | | | | | | | | | | |
* Selected International Fund: net of redemption fees amounting to $72 and $945 for Class S and Class D, respectively.
NOTE 5 - 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 one month LIBOR Rate, plus 1.25%. The Funds had no borrowings during the year ended December 31, 2015.
NOTE 6 - SECURITIES LOANED
The Funds have entered into a securities lending arrangement with State Street Bank. Under the terms of the agreement, the Funds receive fee income from lending transactions; in exchange for such fees, State Street Bank is authorized to loan securities on behalf of the Funds, against receipt of collateral at least equal to the value of the securities loaned. As of December 31, 2015, the Funds did not have any securities on loan. The Funds bear 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.
| SELECTED FUNDS | Notes to Financial Statements – (Continued) |
| | December 31, 2015 |
NOTE 7 - RESTRICTED SECURITIES
Restricted securities are not registered under the Securities Act of 1933 and may have contractual restrictions on resale. They are fair valued under methods approved by the Board of Directors. The aggregate value of restricted securities in Selected American Shares amounted to $223,278,882 or 6.74% of the Fund's net assets as of December 31, 2015. The aggregate value of restricted securities in Selected International Fund amounted to $5,312,970 or 6.38% of the Fund's net assets as of December 31, 2015. Information regarding restricted securities is as follows:
| Fund | | Security | | Acquisition Date | | Units/ Shares | | Cost per Unit/ Share | | Valuation per Unit/ Share as of December 31, 2015 |
| | | | | | | | | | | | | |
| Selected American Shares | | ASAC II L.P. | | 10/10/13 | | 69,800,000 | | $ | 1.00 | | $ | 2.7405 |
| | | | | | | | | | | | | |
| | | Didi Kuaidi Joint Co., Series A-17, Pfd. | | 07/27/15 | | 1,141,409 | | $ | 27.7005 | | $ | 28.0285 |
| | | | | | | | | | | | | |
| Selected International Fund | | Didi Kuaidi Joint Co., Series A-17, Pfd. | | 07/27/15 | | 104,575 | | $ | 27.7005 | | $ | 28.0285 |
| | | | | | | | | | | | | |
| | | Internet Plus Holdings Ltd., Series A-10, Pfd. | | 01/29/15 | | 616,958 | | $ | 3.0921 | | $ | 3.8607 |
NOTE 8 - IN-KIND REDEMPTION
During the year ended December 31, 2015, Selected American Shares' Class D shareholders redeemed 29,093,468 shares in exchange for portfolio securities valued at $1,195,945,410. The Fund realized a gain of $568,568,399.
This gain is not taxable to the Fund for federal income tax purposes.
| 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 Incomea | Net Realized and Unrealized Gains (Losses) | Total from Investment Operations |
| Selected American Shares Class S: | | | | |
| Year ended December 31, 2015 | $43.16 | $0.20 | $1.37 | $1.57 |
| Year ended December 31, 2014 | $50.29 | $0.24 | $2.54 | $2.78 |
| Year ended December 31, 2013 | $41.71 | $0.23 | $13.11 | $13.34 |
| Year ended December 31, 2012 | $39.47 | $0.54 | $4.55 | $5.09 |
| Year ended December 31, 2011 | $41.44 | $0.34 | $(2.14) | $(1.80) |
| Selected American Shares Class D: | | | | |
| Year ended December 31, 2015 | $43.13 | $0.36 | $1.36 | $1.72 |
| Year ended December 31, 2014 | $50.26 | $0.39 | $2.56 | $2.95 |
| Year ended December 31, 2013 | $41.68 | $0.39 | $13.11 | $13.50 |
| Year ended December 31, 2012 | $39.44 | $0.70 | $4.54 | $5.24 |
| Year ended December 31, 2011 | $41.41 | $0.47 | $(2.14) | $(1.67) |
| Selected International Fund Class S: | | | | |
| Year ended December 31, 2015 | $11.12 | $0.04 | $(0.11) | $(0.07) |
| Year ended December 31, 2014 | $11.21 | $0.03 | $(0.10) | $(0.07) |
| Year ended December 31, 2013 | $9.24 | $0.04 | $1.97 | $2.01 |
| Year ended December 31, 2012 | $7.89 | $0.03 | $1.41 | $1.44 |
| Year ended December 31, 2011 | $11.00 | $0.03 | $(2.31) | $(2.28) |
| Selected International Fund Class D: | | | | |
| Year ended December 31, 2015 | $11.17 | $0.09 | $(0.10) | $(0.01) |
| Year ended December 31, 2014 | $11.27 | $0.08 | $(0.11) | $(0.03) |
| Year ended December 31, 2013 | $9.28 | $0.10 | $1.99 | $2.09 |
| Year ended December 31, 2012 | $7.93 | $0.09 | $1.41 | $1.50 |
| Year ended December 31, 2011 | $11.02 | $0.08 | $(2.32) | $(2.24) |
a | Per share calculations were based on average shares outstanding for the period. |
| | |
b | 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. |
| | |
c | The ratios in this column reflect the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser. |
| 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 Returnb | Net Assets, End of Period (in millions) | Gross Expense Ratio | Net Expense Ratioc | Net Investment Income (Loss) Ratio | Portfolio Turnoverd |
| | | | | | | | | | | |
| $(0.28) | $(7.52) | $– | $(7.80) | $36.93 | 3.59% | $1,181 | 0.95% | 0.95% | 0.50% | 27% |
| $(0.23) | $(9.68) | $– | $(9.91) | $43.16 | 5.60% | $1,571 | 0.94% | 0.94% | 0.47% | 26% |
| $(0.27) | $(4.49) | $– | $(4.76) | $50.29 | 33.16% | $2,067 | 0.94% | 0.94% | 0.49% | 12% |
| $(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% |
| | | | | | | | | | | |
| $(0.36) | $(7.52) | $– | $(7.88) | $36.97 | 3.96% | $2,131 | 0.61% | 0.61% | 0.84% | 27% |
| $(0.40) | $(9.68) | $– | $(10.08) | $43.13 | 5.96% | $3,674 | 0.60% | 0.60% | 0.81% | 26% |
| $(0.43) | $(4.49) | $– | $(4.92) | $50.26 | 33.62% | $3,946 | 0.61% | 0.61% | 0.82% | 12% |
| $(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% |
| | | | | | | | | | | |
| $(0.04) | $(0.53) | $– | $(0.57) | $10.48 | (0.70)% | $9 | 1.41% | 1.30% | 0.28% | 43% |
| $(0.02) | $– | $– | $(0.02) | $11.12 | (0.66)%e | $11 | 1.38% | 1.30% | 0.23% | 49% |
| $(0.04) | $– | $– | $(0.04) | $11.21 | 21.78% | $11 | 1.44% | 1.40% | 0.39% | 16% |
| $(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%f |
| | | | | | | | | | | |
| $(0.10) | $(0.53) | $– | $(0.63) | $10.53 | (0.20)% | $74 | 0.83% | 0.83% | 0.75% | 43% |
| $(0.07) | $– | $– | $(0.07) | $11.17 | (0.26)%e | $89 | 0.83% | 0.83% | 0.70% | 49% |
| $(0.10) | $– | $– | $(0.10) | $11.27 | 22.56% | $66 | 0.83% | 0.83% | 0.96% | 16% |
| $(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%f |
d | 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. |
| | |
e | Selected International Fund's performance benefited from IPO purchases in 2014, adding approximately 2% to the Fund's total return. After purchase, the IPOs rapidly increased in value. The Adviser purchases shares intending to benefit from long-term growth of the underlying company; the rapid appreciation of the IPOs were unusual occurrences. Such performance may not continue in the future. |
| | |
f | 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. |
| See Notes to Financial Statements |
| SELECTED FUNDS | Report of Independent Registered Public Accounting Firm |
The Shareholders and Board of Directors
Selected American Shares, Inc. and Selected International Fund, Inc.:
We have audited the accompanying statements of assets and liabilities of Selected American Shares, Inc. and Selected International Fund, Inc., including the schedules of investments, as of December 31, 2015, 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, 2015, by correspondence with the custodian and brokers or by other appropriate auditing procedures. 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. and Selected International Fund, Inc. as of December 31, 2015, 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 19, 2016
| SELECTED FUNDS | Federal Income Tax Information (Unaudited) |
In early 2016, shareholders received information regarding all dividends and distributions paid to them by the Funds during the calendar year 2015. 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 2015 with their 2015 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, 2015, 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 | | $ | 64,509,722 | | $ | 1,483,786 |
| Income qualifying for corporate dividends-received deduction | | $ | 48,177,164 | | $ | – |
| | | 75% | | | – |
| Qualified dividend income | | $ | 64,509,722 | | $ | 1,296,187 |
| | | 100% | | | 87% |
| Long-term capital gain distributions* | | $ | 673,739,508 | | $ | 3,166,044 |
*Selected American Shares designated long-term capital gain distributions in the amount of $747,974,492. The Fund utilized equalization accounting for tax purposes, whereby a portion of redemption payments were treated as distributions of long-term capital gain.
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, 2015. 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 | | $ | 114,859 |
Foreign sourced income | | $ | 1,606,613 |
% 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 may also gather information through the use of "cookies" when you visit our website. These files help us to recognize repeat visitors and allow easy access to and use of the website. 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.
For the purposes of their service as directors to the Selected Funds, the business address for each of the directors is 2949 E. Elvira Road, Suite 101, Tucson, AZ 85756. Each Director serves until retirement, resignation, death, or removal. Directors must retire from the Board of Directors and cease being a Director at the close of business on the last day of the calendar year in which the Director attains age 75.
Name
(birthdate) | Position(s)
Held With
Fund | Term of Office and Length of
Time Served | Principal Occupation(s) During Past Five Years | Number of
Portfolios
in Fund Complex Overseen by Director | Other Directorships
Held by Director |
Independent Directors
| | | | | | |
William P. Barr (05/23/50) | Director | Director since 1994 | Retired; Of Counsel to Kirkland & Ellis LLP (law firm) until July 2009; Executive Vice President and General Counsel, Verizon (telecommunications company) from 1994 through 2008. | 3 | Director, Time Warner, Inc. (media and entertainment company); Director, Dominion Resources (energy company); Trustee, Clipper Funds Trust (consisting of one portfolio). |
| | | | | | |
Francisco L. Borges (11/17/51) | Director | Director since 2006 | Chairman and Managing Partner, Landmark Partners, LLC (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.; Director, Leucadia National Corporation (holding company); Trustee, Millbrook School; Trustee, Clipper Funds Trust (consisting of one portfolio). |
| | | | | | |
Lawrence E. Harris (09/16/56) | Director | Director since 2015 | Fred V. Keenan Chair in Finance of the Marshall School of Business, University of Southern California, Los Angeles, CA. | 3 | Director, Interactive Brokers Group, Inc.; Trustee, Clipper Funds Trust (consisting of one portfolio). |
| | | | | | |
Steven N. Kearsley (09/29/41) | Director | Director since 2015 | Private Investor, Real Estate Development; Owner, Old Peak Tree Farm. | 3 | Trustee, Clipper Funds Trust (consisting of one portfolio). |
| | | | | | |
Katherine L. MacWilliams (01/19/56) | Director | Director since 1997 | Retired; Chief Financial Officer, Caridian BCT, Inc. (medical device company) 2008-2012. | 3 | Trustee, Clipper Funds Trust (consisting of one portfolio). |
| | | | | | |
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); Chairman and Trustee, Clipper Funds Trust (consisting of one portfolio). |
| | | | | | |
Richard O'Brien (09/12/45) | Director | Director since 1996 | Retired; Corporate Economist, Hewlett-Packard Co. | 3 | Trustee, Clipper Funds Trust (consisting of one portfolio). |
| | | | | | |
| 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 |
Interested 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); Trustee, Clipper Funds Trust (consisting of one portfolio). |
| | | | | | |
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); Trustee, Clipper Funds Trust (consisting of one portfolio); Director, Graham Holdings Co. (educational and media 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 Interested Directors.
Andrew A. Davis (born 06/25/63, Selected Funds officer since 1998). See description in the section on Interested 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 two portfolios), and Clipper Funds Trust (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 two portfolios), and Clipper Funds Trust (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 two portfolios), and Clipper Funds Trust (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.
Ryan M. Charles (born 07/25/78, Selected Funds officer since 2014). Vice President and Secretary of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of two portfolios), and Clipper Funds Trust (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.
| Investment Adviser |
| Davis Selected Advisers, L.P. |
| 2949 East Elvira Road, Suite 101 |
| Tucson, Arizona 85756 |
| |
| Distributor |
| Davis Distributors, LLC |
| 2949 East Elvira Road, Suite 101 |
| Tucson, Arizona 85756 |
| |
| Custodian |
| State Street Bank and Trust Co. |
| c/o The Selected Funds |
| One Lincoln Street |
| Boston, Massachusetts 02111 |
| |
| Transfer Agent |
| Boston Financial Data Services, Inc. |
| c/o The Selected Funds |
| P.O. Box 8243 |
| Boston, Massachusetts 02266-8243 |
| |
| Overnight Address: |
| 30 Dan Road |
| Canton, Massachusetts 02021-2809 |
| |
| Counsel |
| Greenberg Traurig, LLP |
| 77 West Wacker Drive, Suite 3100 |
| Chicago, Illinois 60601 |
| |
| Independent Registered Public Accounting Firm |
| KPMG LLP |
| 1225 Seventeenth Street, Suite 800 |
| Denver, Colorado 80202 |
| |
For more information about the Selected Funds including management fee, charges, and expenses, see the current prospectus, which must precede or accompany this report. The Funds' Statement of Additional Information contains additional information about the Funds' Directors and is available without charge upon request by calling 1-800-243-1575 or on the Funds' website at www.selectedfunds.com. Quarterly Fact Sheets are available on the Funds' website at www.selectedfunds.com.
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
A copy of the code of ethics is filed as an exhibit to this form N-CSR.
No waivers were granted to this code of ethics during the period covered by this report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's board of directors has determined that independent trustee Katherine MacWilliams qualifies as the "audit committee financial expert", as defined in Item 3 of form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
| (a) | Audit Fees. The aggregate Audit Fees billed by KPMP LLP ("KPMG") for professional services rendered for the audits of the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for the fiscal year ends December 31, 2015 and December 31, 2014 were $22.200 and $22,200, 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 for fiscal year ends December 31, 2015 and December 31, 2014 were $0 and $0, respectively. |
| | |
| (c) | Tax Fees. The aggregate Tax Fees billed by KPMG for professional services rendered for tax compliance, tax advice and tax planning for the fiscal year ends December 31, 2015 and December 31, 2014 were $8,085 and $6,873, 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, 2015 and December 31, 2014 were $0 and $0, respectively. |
| | |
| (e)(1) | Audit Committee Pre-Approval Policies and Procedures. The fund Audit Committee must pre-approve all audit and non-audit services provided by the independent accountant relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law. The fund Audit Committee has adopted a policy whereby audit and non-audit services performed by the fund independent accountant require pre-approval in advance at regularly scheduled Audit Committee meetings. If such a service is required between regularly scheduled Audit Committee meetings, pre-approval may be authorized by the Audit Committee Chairperson with ratification at the next scheduled audit committee meeting. |
| | |
| (e)(2) | No services included in (b) – (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-1 of Regulation S-X. |
| | |
| (f) | Not applicable |
| | |
| (g) | The Funds' independent accountant did not provide any services to the investment advisor or any affiliate for the fiscal years ended December 31, 2015 and December 31, 2014. The fund has not paid any fees for non-audit not previously disclosed in items 4 (b) – (d). |
| | |
| (h) | The registrant's audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. No such services were rendered. |
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable
ITEM 6. SCHEDULE OF INVESTMENTS
Not Applicable. The complete Schedule of Investments is included in Item 1 of this form N-CSR
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not Applicable
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not Applicable
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS
Not Applicable
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no changes to the procedure by which shareholders may recommend nominees to the registrant's Board of Trustees.
ITEM 11. CONTROLS AND PROCUDURES
| (a) | The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3 (c) under the Investment Company Act of 1940, as amended) are effective as of a date within 90 days of the filing date of this report. |
| | |
| (b) | There have been no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls. |
ITEM 12. EXHIBITS
| (a)(1) | The registrant's code of ethics pursuant to Item 2 of Form N-CSR is filed as an exhibit to this form N-CSR. |
| | |
| (a)(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached. |
| | |
| (a)(3) | Not applicable |
| | |
| (b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SELECTED INTERNATIONAL SHARES, INC.
| By | /s/ Kenneth C. Eich |
| | Kenneth C. Eich |
| | Principal Executive Officer |
| |
| Date: February 19, 2016 |
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: February 19, 2016 |
| By | /s/ Douglas A. Haines |
| | Douglas A. Haines |
| | Principal Financial Officer |
| |
| Date: February 19, 2016 |
