UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-01550
Selected Special Shares, Inc.
(Exact name of registrant as specified in charter)
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
(Address of principal executive offices)
Thomas D. Tays
Davis Selected Advisers, LP
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
(Name and address of agent for service)
Registrant's telephone number, including area code: (520) 806-7600
Date of fiscal year end: December 31
Date of reporting period: June 30, 2004
ITEM 1. REPORTS TO STOCKHOLDERS
Selected Funds
Semi-Annual
Report
June 30, 2004
SELECTING QUALITY COMPANIES FOR THE LONG TERM(TM)
Selected American Shares
Selected Special Shares [SELECTED FUNDS LOGO]
Selected Daily Government Fund
TABLE OF CONTENTS
Shareholder Letter.............................................................2
Management's Discussion and Analysis:
Selected American Shares..................................................3
Selected Special Shares...................................................4
Fund Overview:
Selected American Shares..................................................7
Selected Special Shares...................................................8
Selected Daily Government Fund............................................9
Schedule of Investments:
Selected American Shares.................................................10
Selected Special Shares..................................................15
Selected Daily Government Fund...........................................19
Statements of Assets and Liabilities..........................................21
Statements of Operations......................................................23
Statements of Changes in Net Assets...........................................24
Notes to Financial Statements.................................................26
Financial Highlights:
Selected American Shares.................................................33
Selected Special Shares..................................................35
Selected Daily Government Fund...........................................37
Directors and Officers........................................................39
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
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.
In addition we produce a semi-annual Research Report. In this report, we give a
more qualitative perspective on fund performance, discuss our thoughts on
individual holdings, and share our investment outlook. You may obtain a copy of
the current Research Report either at our website, SelectedFunds.com, or by
calling 1-800-243-1575.
NEW LOWER COST SHARES
As we previously advised you, effective May 1, 2004, the existing shares of each
of the Selected Funds were renamed Class S shares. These shares are appropriate
for all shareholders that have chosen to invest in the Selected Funds through an
intermediary. A new class of shares, called Class D shares, was created and are
appropriate for all shareholders who have chosen to invest directly with
Selected Funds rather than through an intermediary. Class D shares are
substantially identical to Class S shares with one important exception. The
Class D shares' annual expense ratio is lower, as Class D shares do not incur a
12b-1 fee.
Please carefully read the Selected Funds' prospectus, dated May 1, 2004, which
further describes the Class D shares and note that a minimum account balance of
$10,000 in the respective Selected Fund is required to convert from the existing
Class S shares to Class D shares. A conversion from one class to another class
in the same fund will not be a taxable event. If you would like your shares to
be transferred into the lower cost Class D shares, you should call Selected
Funds shareholder services at 1-800-243-1575 Monday through Friday, 9 am to 6 pm
Eastern Time.
Sincerely,
/s/ James J. McMonagle /s/ Christopher C. Davis
James J. McMonagle Christopher C. Davis
Chairman President
August 6, 2004
2
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS
MARKET ENVIRONMENT
During the six-month period ended June 30, 2004, the stock market, as measured
by the Standard & Poor's 500(R) Index(1), returned 3.44%. U.S. economic
activity, as measured by the gross domestic product, continued its positive
trend during the first three months of the period as the economy continued to
improve. Interest rates, as measured by the 10-year Treasury bond, trended
downward over the first three months, but then rose over the final three months
of the period. This combination resulted in an uncertain market in which the S&P
500(R) Index was unable to breakout of a narrow trading range. Davis Selected
Advisers' investment strategy is driven by individual stock selection in which
we attempt to construct an "all-weather" Fund which is not optimized to a single
set of economic conditions.
SELECTED AMERICAN SHARES
PERFORMANCE OVERVIEW
Selected American Shares' Class S shares returned 4.28% for the six-month period
ended June 30, 2004(2), compared with a return of 3.44% for the Standard &
Poor's 500(R) Index(1).
The Fund's large holdings in financial services companies, and their strong
performance through the six-month period, were an important contributor to the
Fund's performance. The Fund's technology holdings which, while representing
only a small portion of the Fund, performed much stronger than other technology
companies included in the benchmark, increasing relative performance. The Fund's
consumer product holdings reduced the Fund's relative performance.
The principal holdings contributing to performance were(3): Tyco
International(4), a diversified manufacturing company, American Express, a
financial services company, and American International Group, a multi-line
insurance company. All three companies are among the Fund's top ten holdings.
Tyco International increased by 25.16%, American Express increased by 6.94%, and
American International Group increased by 7.73% over the six months ended June
30, 2004.
The principal detractors from performance were: Altria Group, a consumer
products company, Comcast, a cable television company, and Julius Baer, an
investment firm. Altria Group is among the Fund's top ten holdings. Altria Group
decreased by 5.59% and Julius Baer decreased by 16.18% over the six months ended
June 30, 2004. Comcast decreased by 20.02% since being purchased in January
2004.
We have built a Fund which is quite different in composition from the S&P 500(R)
Index. The Fund's investment strategy is to perform extensive research to buy
companies with expanding earnings at value prices and hold them for the long
term. We are strong supporters of long-term buy-and-hold investing.
3
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
SELECTED SPECIAL SHARES
PERFORMANCE OVERVIEW
Selected Special Shares' Class S shares returned 2.99% for the six-month period
ended June 30, 2004(2), compared with a return of 3.93% for the Dow Jones
Wilshire 5000 Index(1).
The Fund's largest sector weightings were in retailing, electronics, and energy.
The performance of the Fund's holdings in the retailing and electronic sectors
proved to be disappointing, under-performing the Dow Jones Wilshire 5000 Index
by significant margins. Strong returns in the Fund's medical instrument,
financial services, and diversified companies were not enough to raise the
Fund's investment performance above the Dow Jones Wilshire 5000 Index.
The principal holdings contributing to performance were(3): Premcor(4), an
energy company, Tyco International, a diversified manufacturing company, and
Apogent Technologies, a medical instrument company. Premcor and Tyco
International are among the Fund's top ten holdings. Premcor increased by
44.23%, Tyco International increased by 25.16%, and Apogent Technologies
increased by 38.89% over the six months ended June 30, 2004.
The principal detractors from performance were: Tiffany & Co., a retailing
company, Rentokil Initial, a diversified commercial services company, and
Reynolds & Reynolds, an information processing company. Tiffany & Co. is among
the Fund's top ten holdings. Tiffany & Co., decreased by 18.24% and Reynolds &
Reynolds decreased by 19.76% over the six months ended June 30, 2004. Rentokil
Initial decreased by 22.61% since being purchased in January 2004.
The Fund's investment strategy is to perform extensive research to buy companies
with expanding earnings at value prices and hold them for the long term. We are
strong supporters of long-term buy-and-hold investing.
4
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
This Semi-Annual Report is authorized for use by existing shareholders.
Prospective shareholders must receive a current Selected Funds prospectus, which
contains more information about investment strategies, risks, fees, and
expenses. Please read the prospectus carefully before investing or sending
money.
Selected American Shares' investment objective is to achieve both capital growth
and income. In the current market environment, we expect that income will be
low. There can be no assurance that the Fund will achieve its objective. The
primary risks of an investment in Selected American Shares are: (1) market risk,
(2) company risk, (3) headline risk, and (4) selection risk. See the prospectus
for a full description of each risk.
Selected Special Shares' investment objective is capital growth. There can be no
assurance that the Fund will achieve its objective. The primary risks of an
investment in Selected Special Shares are: (1) market risk, (2) company risk,
(3) small and medium capitalization risk, (4) headline risk, and (5) selection
risk. See the prospectus for a full description of each risk.
(1) The definitions of indices quoted in this report appear below. Investments
cannot be made directly in the indices.
I. The S&P 500(R) 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.
II. The Dow Jones Wilshire 5000 Index measures the performance of all U.S.
headquartered equity securities with readily available price data. Over 6,500
capitalization weighted security returns are used to adjust the index. The Dow
Jones Wilshire 5000 is a broad measure of the entire U.S. stock market.
(2) Total return assumes reinvestment of dividends and capital gain
distributions. Past performance is not a guarantee of future results. Investment
return and principal value will vary so that, when redeemed, an investor's
shares may be worth more or less than when purchased. The following table lists
the average annual total returns for Class S shares for the periods ended June
30, 2004. Returns for other classes of shares will vary from the following
returns.
- ----------------------------------------------------------------------------------------
FUND NAME 6-MONTH* 1 YEAR 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------
Selected American Shares S 4.28% 22.31% 2.65% 14.40%
- ----------------------------------------------------------------------------------------
Selected Special Shares S 2.99% 24.76% 2.17% 11.37%
- ----------------------------------------------------------------------------------------
*Non-annualized
As of May 1, 2004 all of the Funds' outstanding shares were reclassified as
Class S shares and Class D shares were newly issued. See the prospectus for a
description of Class S and Class D shares.
Fund performance changes over time and current performance may be higher or
lower than stated. For more current information please call Selected Funds
Shareholder Services at 1-800-243-1575.
5
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
(3) A company or sector's contribution to the Fund's performance is a product
both of its appreciation or depreciation and it's weighting within the Fund. For
example, a 5% holding that rises 20% has twice as much impact as a 1% holding
that rises 50%.
(4) This Management Discussion & Analysis discusses a number of individual
companies. The information provided in this report does not provide information
reasonably sufficient upon which to base an investment decision and should not
be considered a recommendation to purchase or sell any particular security. The
schedule of investments lists each Fund's holdings of each company discussed.
Shares of the Selected Funds are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the FDIC or any other agency, and
involve investment risks, including possible loss of the principal amount
invested.
6
SELECTED FUNDS
FUND OVERVIEW
SELECTED AMERICAN SHARES, INC.
At June 30, 2004 (Unaudited)
================================================================================
PORTFOLIO MAKEUP SECTOR WEIGHTINGS
(% OF FUND NET ASSETS) (% OF STOCK HOLDINGS)
- ------------------------------------- -------------------------------
[PIE CHART] [PIE CHART]
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
Common Stocks 96.2% Energy 7.4%
Short Term Investments, Food & Restaurants 3.9%
Other Assets & Liabilities 3.8% Banks and Savings
& Loans 16.2%
Industrial 3.2%
Consumer Products 4.9%
Other 8.8%
Cable Television 2.9%
Financial Services 18.5%
Pharmaceutical and
Health Care 3.8%
Retailing 4.0%
Technology 3.4%
Diversified 5.2%
Insurance 17.8%
TOP 10 HOLDINGS
STOCK SECTOR % OF FUND NET ASSETS
- ----------------------------------------------------------------------------------------------------------
American Express Co. Financial Services 6.81%
American International Group, Inc. Multi-Line Insurance 5.29%
Altria Group, Inc. Consumer Products 4.75%
Tyco International Ltd. Diversified Manufacturing 4.55%
Berkshire Hathaway Inc., Class A Property/Casualty Insurance 4.55%
HSBC Holdings PLC Banks and Savings & Loan Associations 3.53%
Bank One Corp.* Banks and Savings & Loan Associations 3.38%
Citigroup Inc. Financial Services 3.29%
Progressive Corp. (Ohio) Property/Casualty Insurance 3.28%
Wells Fargo & Co. Banks and Savings & Loan Associations 3.18%
* Acquired by JPMorgan Chase & Co. effective 07/01/04
7
SELECTED FUNDS
FUND OVERVIEW
SELECTED SPECIAL SHARES, INC.
At June 30, 2004 (Unaudited)
================================================================================
PORTFOLIO MAKEUP SECTOR WEIGHTINGS
(% OF FUND NET ASSETS) (% OF STOCK HOLDINGS)
- --------------------------------------- ---------------------------------
[PIE CHART] [PIE CHART]
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
Common Stocks 99.3% Pharmaceutical and
Short Term Investments, Health Care 6.0%
Other Assets & Liabilities 0.7% Technology 6.0%
Food/Beverage &
Restaurant 4.2%
Distributors 4.7%
Insurance 6.5%
Telecommunications 5.1%
Information/
Information Processing 3.3%
Diversified 8.8%
Media 6.2%
Financial Services/
Banking 7.5%
Energy 7.0%
Other 5.0%
Chemicals 2.6%
Retailing 17.4%
Manufacturing 2.9%
Electronics 6.8%
TOP 10 HOLDINGS
STOCK SECTOR % OF FUND NET ASSETS
- -------------------------------------------------------------------------------------------------------
Lagardere S.C.A. Media 4.14%
Groupe Bruxelles Lambert S.A. Diversified 4.05%
AutoNation, Inc. Retailing 3.79%
AutoZone, Inc. Retailing 3.60%
Tiffany & Co. Retailing 3.60%
Tyco International Ltd. Diversified Manufacturing 3.33%
Golden West Financial Corp. Banks and Savings & Loan Associations 3.17%
Microsoft Corp. Technology 2.68%
Premcor Inc. Energy 2.58%
Sigma-Aldrich Corp. Chemicals 2.54%
8
SELECTED FUNDS
FUND OVERVIEW
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND
At June 30, 2004 (Unaudited)
================================================================================
PORTFOLIO MAKEUP MATURITY DIVERSIFICATION*
(% OF FUND NET ASSETS) (% OF PORTFOLIO'S HOLDINGS)
- ------------------------------------ -------------------------------------
[PIE CHART] [PIE CHART]
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
FANNIE MAE 30.2% 181-397 Days 17.5%
SALLIE MAE 2.0% 91-180 Days 2.9%
FREDDIE MAC 5.0% 31-90 Days 11.4%
Federal Home Loan Bank 31.3% 0-30 Days 68.2%
Federal Farm Credit Bank 1.8%
Repurchase Agreements,
Other Assets & Liabilities 29.7%
*The maturity dates of floating rate securities used in the Maturity
Diversification chart are considered to be the effective maturities, based on
the reset dates of the securities' variable rates. See the Fund's Schedule of
Investments for a listing of the floating rate securities.
9
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC.
JUNE 30, 2004 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
========================================================================================================================
COMMON STOCK - (96.15%)
BANKS AND SAVINGS & LOAN ASSOCIATIONS - (15.55%)
4,407,000 Bank One Corp. (Acquired by JPMorgan Chase & Co. effective 07/01/04)................ $ 224,757,000
1,849,000 Fifth Third Bancorp................................................................. 99,383,750
1,819,800 Golden West Financial Corp. ........................................................ 193,535,730
15,797,179 HSBC Holdings PLC................................................................... 234,837,560
6,871,679 Lloyds TSB Group PLC................................................................ 53,786,016
330,000 State Street Corp. ................................................................. 16,183,200
3,696,560 Wells Fargo & Co. .................................................................. 211,554,129
--------------
1,034,037,385
--------------
BUILDING MATERIALS - (1.28%)
930,600 Martin Marietta Materials, Inc. .................................................... 41,253,498
924,100 Vulcan Materials Co. ............................................................... 43,940,955
--------------
85,194,453
--------------
BUSINESS SERVICES - (1.01%)
1,241,000 D&B Corp.*.......................................................................... 66,902,310
--------------
CABLE TELEVISION - (2.83%)
6,797,000 Comcast Corp., Special Class A*..................................................... 187,937,050
--------------
CONSUMER PRODUCTS - (4.75%)
6,307,500 Altria Group, Inc. ................................................................. 315,690,375
--------------
DIVERSIFIED COMMERCIAL SERVICES - (0.41%)
10,411,500 Rentokil Initial PLC................................................................ 27,274,407
--------------
DIVERSIFIED MANUFACTURING - (4.55%)
9,139,764 Tyco International Ltd. ............................................................ 302,891,779
--------------
ELECTRONICS - (0.13%)
3,658,000 Agere Systems Inc., Class A*........................................................ 8,413,400
--------------
ENERGY - (7.13%)
2,070,080 ConocoPhillips...................................................................... 157,926,403
1,860,421 Devon Energy Corp. ................................................................. 122,787,786
1,588,100 EOG Resources, Inc. ................................................................ 94,825,451
1,325,800 Occidental Petroleum Corp. ......................................................... 64,181,978
1,188,000 Transocean Inc.*.................................................................... 34,380,720
--------------
474,102,338
--------------
FINANCIAL SERVICES - (15.60%)
8,807,800 American Express Co. ............................................................... 452,544,764
4,704,189 Citigroup Inc. ..................................................................... 218,744,789
1,814,000 H&R Block, Inc. .................................................................... 86,491,520
1,958,000 Loews Corp. ........................................................................ 117,401,680
1,132,800 Moody's Corp. ...................................................................... 73,246,848
1,957,400 Providian Financial Corp.* ......................................................... 28,715,058
835,860 Takefuji Corp. (c) ................................................................. 60,465,980
--------------
1,037,610,639
--------------
10
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
JUNE 30, 2004 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - (CONTINUED)
FOOD/BEVERAGE & RESTAURANT - (3.73%)
7,133,402 Diageo PLC.......................................................................... $ 96,150,565
2,036,250 Heineken Holding NV, Class A (c).................................................... 59,726,951
1,304,800 Hershey Foods Corp. ................................................................ 60,373,096
1,000,000 Kraft Foods Inc., Class A........................................................... 31,680,000
--------------
247,930,612
--------------
HOTELS & MOTELS - (0.74%)
988,700 Marriott International, Inc., Class A............................................... 49,316,356
--------------
INDUSTRIAL - (3.03%)
3,786,700 Sealed Air Corp.*................................................................... 201,717,509
--------------
INSURANCE BROKERS - (1.17%)
2,112,700 Aon Corp. .......................................................................... 60,148,569
395,000 Marsh & McLennan Cos, Inc. ......................................................... 17,925,100
--------------
78,073,669
--------------
INVESTMENT FIRMS - (2.14%)
315,099 Julius Baer Holding, Ltd. AG........................................................ 87,464,576
1,039,864 Morgan Stanley...................................................................... 54,873,623
--------------
142,338,199
--------------
LIFE INSURANCE - (0.52%)
658,000 Principal Financial Group, Inc. .................................................... 22,885,240
400,000 Sun Life Financial Inc. ............................................................ 11,576,000
--------------
34,461,240
--------------
MEDIA - (1.55%)
1,282,459 Lagardere S.C.A. ................................................................... 80,217,053
2,235,400 WPP Group PLC....................................................................... 22,694,334
--------------
102,911,387
--------------
MULTI-LINE INSURANCE - (5.29%)
4,939,325 American International Group, Inc. ................................................. 352,075,086
--------------
PHARMACEUTICAL AND HEALTH CARE - (3.64%)
1,180,000 Eli Lilly and Co. .................................................................. 82,493,800
1,341,500 HCA Inc. ........................................................................... 55,792,985
427,600 Merck & Co., Inc. .................................................................. 20,311,000
670,000 Novartis AG, Registered............................................................. 29,569,055
1,569,460 Pfizer Inc. ........................................................................ 53,801,089
--------------
241,967,929
--------------
PROPERTY/CASUALTY INSURANCE - (8.49%)
3,402 Berkshire Hathaway Inc., Class A*................................................... 302,607,900
6,366 Berkshire Hathaway Inc., Class B*................................................... 18,811,530
288,400 Chubb Corp. ........................................................................ 19,663,112
20,000 Markel Corp.*....................................................................... 5,550,000
11
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
JUNE 30, 2004 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - (CONTINUED)
PROPERTY/CASUALTY INSURANCE - (CONTINUED)
2,553,200 Progressive Corp. (Ohio)............................................................ $ 217,787,960
--------------
564,420,502
--------------
PUBLISHING - (0.62%)
483,300 Gannett Co., Inc. .................................................................. 41,008,005
--------------
REAL ESTATE - (1.69%)
1,469,194 Centerpoint Properties Trust (b).................................................... 112,760,639
--------------
REINSURANCE - (1.64%)
1,343,200 Transatlantic Holdings, Inc. ....................................................... 108,785,768
--------------
RETAILING - (3.81%)
690,300 AutoZone, Inc.*..................................................................... 55,293,030
4,817,000 Costco Wholesale Corp. ............................................................. 198,026,870
--------------
253,319,900
--------------
TECHNOLOGY - (3.25%)
1,428,600 Lexmark International, Inc., Class A*............................................... 137,902,758
2,735,000 Microsoft Corp. .................................................................... 78,111,600
--------------
216,014,358
--------------
TELECOMMUNICATIONS - (0.76%)
1,325,000 Nokia Oyj, ADR...................................................................... 19,265,500
1,482,000 SK Telecom Co., Ltd., ADR (c)....................................................... 31,107,180
--------------
50,372,680
--------------
TRANSPORTATION - (0.84%)
740,500 United Parcel Service, Inc., Class B................................................ 55,663,385
--------------
Total Common Stock - (identified cost $4,492,563,598)...................... 6,393,191,360
--------------
12
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
JUNE 30, 2004 (Unaudited)
VALUE
PRINCIPAL SECURITY (NOTE 1)
=======================================================================================================================
REPURCHASE AGREEMENTS - (4.00%)
$ 75,501,000 Morgan Stanley & Co. Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $75,504,251
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $77,011,020)............................................. $ 75,501,000
107,859,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $107,863,644
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $110,016,180)............................................ 107,859,000
82,771,000 UBS Financial Services Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $82,774,564
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $84,426,420)............................................. 82,771,000
----------------
Total Repurchase Agreements - (identified cost $266,131,000)............ 266,131,000
----------------
INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED - (1.74%)
MONEY MARKET INSTRUMENTS - (0.46%)
30,845,659 UBS Private Money Market LLC, 1.198% (identified cost $30,845,659)............... 30,845,659
----------------
REPURCHASE AGREEMENTS - (1.28%)
24,115,000 Morgan Stanley & Co. Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $24,116,038
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $24,597,300)............................................. 24,115,000
34,449,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $34,450,483
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $35,137,980)............................................. 34,449,000
26,436,000 UBS Financial Services Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $26,437,138
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $26,964,720)............................................. 26,436,000
----------------
Total Repurchase Agreements - (identified cost $85,000,000)............. 85,000,000
----------------
Total Investment of Cash Collateral for
Securities Loaned - (identified cost $115,845,659)...................... 115,845,659
----------------
13
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
JUNE 30, 2004 (Unaudited)
========================================================================================================================
Total Investments - (101.89%) - (identified cost $4,874,540,257) - (a)....... $ 6,775,168,019
Liabilities Less Other Assets - (1.89%)...................................... (125,502,327)
----------------
Net Assets - (100%)..................................................... $ 6,649,665,692
================
*Non-Income Producing Security.
(a) Aggregate cost for Federal Income Tax purposes is $4,878,740,674. At June
30, 2004, unrealized appreciation (depreciation) of securities for Federal
Income Tax purposes is as follows:
Unrealized appreciation...................................................... $ 2,034,491,513
Unrealized depreciation...................................................... (138,064,168)
----------------
Net unrealized appreciation ............................................ $ 1,896,427,345
================
(b) Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and is an affiliate, as defined in the Investment
Company Act of 1940, at or during the six months ended June 30, 2004. The
aggregate fair value of the securities of affiliated companies held by the Fund
as of June 30, 2004, amounts to $112,760,639. Transactions during the period in
which the issuers were affiliates are as follows:
Shares Gross Gross Shares Dividend
Security December 31, 2003 Additions Reductions June 30, 2004 Income
- -------- ----------------- --------- ---------- ------------- ----------
Centerpoint Properties
Trust 1,469,194 - - 1,469,194 $2,291,943
(c) Loaned security - See Note 7 of the Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS
14
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC.
JUNE 30, 2004 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - (99.31%)
BANKS AND SAVINGS & LOAN ASSOCIATIONS - (6.25%)
37,500 Bank One Corp. (Acquired by JPMorgan Chase & Co. effective 07/01/04)................ $ 1,912,500
22,700 Commerce Bancorp, Inc. ............................................................. 1,248,727
30,500 Golden West Financial Corp. ........................................................ 3,243,675
-------------
6,404,902
-------------
BUSINESS SERVICES - (0.66%)
12,500 D&B Corp.*.......................................................................... 673,875
-------------
CHEMICALS - (2.54%)
43,600 Sigma-Aldrich Corp. ................................................................ 2,601,612
-------------
CONSUMER PRODUCTS - (1.93%)
39,600 Altria Group, Inc. ................................................................. 1,981,980
-------------
DISTRIBUTORS - (4.62%)
78,700 Aramark Corp., Class B.............................................................. 2,263,412
42,000 Hughes Supply, Inc. ................................................................ 2,475,060
-------------
4,738,472
-------------
DIVERSIFIED - (4.05%)
64,812 Groupe Bruxelles Lambert S.A. ...................................................... 4,148,689
-------------
DIVERSIFIED COMMERCIAL SERVICES - (1.33%)
520,000 Rentokil Initial PLC................................................................ 1,362,214
-------------
DIVERSIFIED MANUFACTURING - (3.33%)
103,000 Tyco International Ltd. ............................................................ 3,413,420
-------------
ELECTRONICS - (6.75%)
144,400 Agere Systems Inc., Class A*........................................................ 332,120
75,300 Agilent Technologies, Inc.*......................................................... 2,204,784
37,300 Applied Materials, Inc.*............................................................ 731,826
51,100 Garmin Ltd.......................................................................... 1,892,744
211,128 Taiwan Semiconductor Manufacturing Co. Ltd., ADR.................................... 1,754,479
-------------
6,915,953
-------------
ENERGY - (6.99%)
89,700 Calpine Corp.*...................................................................... 387,504
22,900 PetroChina Co. Ltd., ADR............................................................ 1,060,270
70,500 Premcor Inc.*....................................................................... 2,643,750
58,700 Sempra Energy....................................................................... 2,021,041
36,100 Transocean Inc.*.................................................................... 1,044,734
-------------
7,157,299
-------------
FINANCIAL SERVICES - (0.88%)
12,400 Takefuji Corp. ..................................................................... 897,014
-------------
FOOD/BEVERAGE & RESTAURANT - (4.14%)
32,125 Heineken Holding NV, Class A........................................................ 942,285
52,100 McDonald's Corp. ................................................................... 1,354,600
15
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - (CONTINUED)
JUNE 30, 2004 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - (CONTINUED)
FOOD/BEVERAGE & RESTAURANT - (CONTINUED)
28,400 Unilever NV, CVA.................................................................... $ 1,940,725
-------------
4,237,610
-------------
HOTELS & MOTELS - (1.02%)
21,000 Marriott International, Inc., Class A............................................... 1,047,480
-------------
INDUSTRIAL - (1.36%)
26,200 Sealed Air Corp.*................................................................... 1,395,674
-------------
INFORMATION/INFORMATION PROCESSING - (3.28%)
36,900 Equifax Inc. ....................................................................... 913,275
105,900 Reynolds & Reynolds Co., Class A.................................................... 2,449,467
-------------
3,362,742
-------------
INSURANCE BROKERS - (0.18%)
4,000 Marsh & McLennan Cos, Inc. ......................................................... 181,520
-------------
INVESTMENT FIRMS - (0.30%)
1,100 Julius Baer Holding, Ltd. AG........................................................ 305,336
-------------
LIFE INSURANCE - (0.93%)
23,300 AFLAC Inc. ......................................................................... 950,873
-------------
MANUFACTURING - (2.86%)
48,000 Hunter Douglas NV................................................................... 2,338,751
8,100 Mohawk Industries, Inc.*............................................................ 593,973
-------------
2,932,724
-------------
MEDIA - (6.16%)
67,800 Lagardere S.C.A. ................................................................... 4,240,850
40,500 WPP Group PLC, ADR.................................................................. 2,072,385
-------------
6,313,235
-------------
MEDICAL INSTRUMENTS - (2.28%)
73,000 Apogent Technologies Inc.*.......................................................... 2,336,000
-------------
PHARMACEUTICAL AND HEALTH CARE - (3.73%)
42,100 AmerisourceBergen Corp. ............................................................ 2,516,738
39,900 Lincare Holdings Inc.*.............................................................. 1,306,725
-------------
3,823,463
-------------
PROPERTY/CASUALTY INSURANCE - (2.44%)
15 Berkshire Hathaway Inc., Class A*................................................... 1,334,250
16,485 Cincinnati Financial Corp. ......................................................... 717,097
1,600 Markel Corp.*....................................................................... 444,000
-------------
2,495,347
-------------
REINSURANCE - (2.91%)
11,000 Everest Re Group, Ltd. ............................................................. 883,960
25,900 Transatlantic Holdings, Inc. ....................................................... 2,097,641
-------------
2,981,601
-------------
16
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - (CONTINUED)
JUNE 30, 2004 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - (CONTINUED)
RETAILING - (17.28%)
31,000 Abercrombie & Fitch Co., Class A.................................................... $ 1,201,250
227,000 AutoNation, Inc.*................................................................... 3,881,700
46,100 AutoZone, Inc.*..................................................................... 3,692,610
62,500 CarMax, Inc.*....................................................................... 1,366,875
33,600 Costco Wholesale Corp. ............................................................. 1,381,296
36,000 Home Depot, Inc. ................................................................... 1,267,200
80,500 99 Cents Only Stores*............................................................... 1,227,625
100,000 Tiffany & Co. ...................................................................... 3,685,000
-------------
17,703,556
-------------
TECHNOLOGY - (6.00%)
102,600 BMC Software, Inc.*................................................................. 1,898,100
519,000 Compal Electronics, Inc. ........................................................... 563,459
9,700 Lexmark International, Inc., Class A*............................................... 936,341
96,100 Microsoft Corp. .................................................................... 2,744,616
-------------
6,142,516
-------------
TELECOMMUNICATIONS - (5.11%)
441,600 Covad Communications Group, Inc.*................................................... 1,055,424
66,700 Motorola, Inc. ..................................................................... 1,217,275
96,000 Nokia Oyj........................................................................... 1,386,880
77,500 Nokia Oyj, ADR...................................................................... 1,126,850
21,600 SK Telecom Co., Ltd., ADR........................................................... 453,384
-------------
5,239,813
-------------
Total Common Stock - (identified cost $80,289,243)........................ 101,744,920
-------------
17
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - (CONTINUED)
JUNE 30, 2004 (Unaudited)
VALUE
PRINCIPAL SECURITY (NOTE 1)
=======================================================================================================================
SHORT TERM INVESTMENTS - (0.41%)
$ 120,000 Morgan Stanley & Co. Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $120,005
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $122,400).................................................... $ 120,000
171,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $171,007
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $174,420).................................................... 171,000
132,000 UBS Financial Services Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $132,006
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $134,640).................................................... 132,000
--------------
Total Short Term Investments - (identified cost $423,000)................ 423,000
--------------
Total Investments - (99.72%) - (identified cost $80,712,243) - (a).............. 102,167,920
Other Assets Less Liabilities - (0.28%)......................................... 287,782
--------------
Net Assets - (100%)...................................................... $ 102,455,702
==============
*Non-Income Producing Security.
(a) Aggregate cost for Federal Income Tax purposes is $81,249,824. At June 30,
2004, unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation......................................................... $ 22,828,228
Unrealized depreciation......................................................... (1,910,132)
--------------
Net unrealized appreciation .............................................. $ 20,918,096
==============
SEE NOTES TO FINANCIAL STATEMENTS
18
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND
JUNE 30, 2004 (Unaudited)
VALUE
PRINCIPAL (NOTE 1)
=======================================================================================================================
FANNIE MAE - (30.22%)
$ 7,600,000 1.05%, 07/07/04..................................................................... $ 7,598,669
500,000 1.511%, 08/13/04 (b)................................................................ 500,018
1,350,000 6.50%, 08/15/04..................................................................... 1,358,633
1,500,000 1.42%, 09/01/04..................................................................... 1,496,332
2,000,000 1.35%, 09/10/04 (b)................................................................. 2,000,000
2,000,000 1.435%, 09/22/04.................................................................... 1,993,383
3,000,000 1.51%, 09/29/04..................................................................... 2,988,675
5,000,000 1.3375%, 12/13/04 (b)............................................................... 4,999,807
1,000,000 1.20%, 02/08/05 (c)................................................................. 1,000,000
5,000,000 1.40%, 02/25/05..................................................................... 5,000,000
3,000,000 1.155%, 04/28/05 (b)................................................................ 2,999,626
2,000,000 1.40%, 05/03/05..................................................................... 2,000,000
--------------
Total FANNIE MAE - (identified cost $33,935,143).................................. 33,935,143
--------------
FEDERAL FARM CREDIT BANK - (1.78%)
2,000,000 1.336%, 06/10/05 (b) (identified cost $2,000,000)................................... 2,000,000
--------------
FEDERAL HOME LOAN BANK - (31.25%)
5,139,000 1.13%, 07/09/04..................................................................... 5,137,710
1,300,000 4.625%, 08/13/04.................................................................... 1,305,318
345,000 4.125%, 11/15/04.................................................................... 348,044
5,000,000 1.471%, 12/17/04 (b)................................................................ 4,999,772
150,000 6.35%, 12/29/04..................................................................... 153,324
2,000,000 1.04%, 01/05/05 (b)................................................................. 1,999,948
5,000,000 1.45%, 03/11/05..................................................................... 5,000,000
1,000,000 1.22%, 04/25/05 (b)................................................................. 999,955
5,000,000 1.30%, 04/27/05..................................................................... 5,000,000
2,000,000 1.55%, 05/06/05..................................................................... 2,000,000
5,000,000 1.23%, 07/26/05 (b)................................................................. 4,998,925
3,150,000 1.029%, 08/02/05 (b)................................................................ 3,149,388
--------------
Total Federal Home Loan Bank - (identified cost $35,092,384)...................... 35,092,384
--------------
FREDDIE MAC - (5.00%)
50,000 3.00%, 07/15/04..................................................................... 50,036
2,055,000 6.25%, 07/15/04..................................................................... 2,059,023
3,500,000 1.04%, 07/20/04..................................................................... 3,498,079
--------------
Total FREDDIE MAC - (identified cost $5,607,138).................................. 5,607,138
--------------
19
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND - (CONTINUED)
JUNE 30, 2004 (Unaudited)
VALUE
PRINCIPAL (NOTE 1)
=======================================================================================================================
SALLIE MAE - (2.03%)
$ 500,000 3.375%, 07/15/04.................................................................... $ 500,438
1,775,000 1.451%, 10/21/04 (b)................................................................ 1,774,947
--------------
Total SALLIE MAE - (identified cost $2,275,385)................................... 2,275,385
--------------
REPURCHASE AGREEMENTS - (32.29%)
10,287,000 Morgan Stanley & Co. Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $10,287,443
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $10,492,740)................................................. 10,287,000
14,695,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $14,695,633
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $14,988,900)................................................. 14,695,000
11,277,000 UBS Financial Services Inc. Joint Repurchase Agreement, 1.55%,
07/01/04, dated 06/30/04, repurchase value of $11,277,486
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $11,502,540)................................................. 11,277,000
--------------
Total Repurchase Agreements - (identified cost $36,259,000)....................... 36,259,000
--------------
Total Investments - (102.57%) - (identified cost $115,169,050) - (a)........... 115,169,050
Liabilities Less Other Assets - (2.57%)........................................ (2,885,795)
--------------
Net Assets - (100%)........................................................ $ 112,283,255
==============
(a) Aggregate cost for Federal Income Tax purposes is $115,169,050.
(b) The interest rates on floating rate securities, shown as of June 30, 2004,
may change daily or less frequently and are based on indices of market rates.
For purposes of amortized cost valuation, the maturity dates of these securities
are considered to be the effective maturities, based on the reset dates of the
securities' variable rates.
(c) The interest rates on variable rate securities represent the current rate as
of June 30, 2004.
SEE NOTES TO FINANCIAL STATEMENTS
20
SELECTED FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
At June 30, 2004 (Unaudited)
================================================================================
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
--------------- -------------- --------------
ASSETS:
Investments in securities, at value * (see accompanying
Schedules of Investments):
Unaffiliated companies................................. $ 6,546,561,721 $ 102,167,920 $ 115,169,050
Affiliated companies................................... 112,760,639 - -
Collateral of securities loaned (Note 7)............... 115,845,659 - -
Cash..................................................... 350,578 7,467 3,265
Receivables:
Dividends and interest................................. 10,096,638 155,776 237,768
Capital stock sold..................................... 12,877,302 107,147 1,756
Investment securities sold............................. - 671,505 -
Prepaid expenses....................................... 193,781 4,763 17,598
--------------- -------------- --------------
Total assets....................................... 6,798,686,318 103,114,578 115,429,437
--------------- -------------- --------------
LIABILITIES:
Return of collateral loaned (Note 7)..................... 115,845,659 - -
Payables:
Capital stock reacquired............................... 8,511,048 64,763 57,339
Investment securities purchased........................ 18,880,939 479,485 2,988,675
Accrued expenses......................................... 2,420,605 49,132 33,567
Accrued management fees.................................. 3,362,375 65,496 31,273
Distributions payable.................................... - - 35,328
--------------- -------------- --------------
Total liabilities.................................. 149,020,626 658,876 3,146,182
--------------- -------------- --------------
NET ASSETS ................................................. $ 6,649,665,692 $ 102,455,702 $ 112,283,255
=============== ============== ==============
NET ASSETS CONSIST OF:
Par value of shares of capital stock..................... $ 240,324,827 $ 2,125,000 $ 11,228,326
Additional paid-in capital............................... 5,038,286,976 75,893,874 101,054,929
Undistributed net investment income...................... 20,994,276 68,601 -
Accumulated net realized gains (losses) from investments
and foreign currency transactions...................... (550,557,105) 2,914,810 -
Net unrealized appreciation on
investments and foreign currency transactions.......... 1,900,616,718 21,453,417 -
--------------- -------------- --------------
$ 6,649,665,692 $ 102,455,702 $ 112,283,255
=============== ============== ==============
* Including cost for Unaffiliated companies and Affiliated companies of
$4,728,599,576 and $30,095,022, respectively for Selected American Shares; and
securities valued at $109,634,638 were on loan from Selected American Shares,
and Collateral received for securities on loan is valued at $115,845,659.
Including cost of $80,712,243 for Selected Special Shares. Including repurchase
agreements and cost of $36,259,000 and $115,169,050, respectively for Selected
Daily Government Fund.
21
SELECTED FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - (Continued)
At June 30, 2004 (Unaudited)
================================================================================
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
--------------- -------------- --------------
CLASS S SHARES:
Net Assets.............................................. $ 6,324,972,776 $ 89,528,495 $ 108,635,316
Shares Outstanding...................................... 182,876,637 7,427,387 108,635,316
Net asset value, offering and redemption price per share
(Net Assets (divided by) Shares Outstanding)......... $ 34.59 $ 12.05 $ 1.00
========== ========== ==========
CLASS D SHARES:
Net Assets.............................................. $ 324,692,916 $ 12,927,207 $ 3,647,939
Shares Outstanding...................................... 9,383,225 1,072,614 3,647,939
Net asset value, offering and redemption price per share
(Net Assets (divided by) Shares Outstanding)......... $ 34.60 $ 12.05 $ 1.00
========== ========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
22
SELECTED FUNDS
STATEMENTS OF OPERATIONS
For the six months ended June 30, 2004 (Unaudited)
================================================================================
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
-------------- -------------- --------------
INVESTMENT INCOME (LOSS):
Income:
Dividends
Unaffiliated companies*................................ $ 47,589,139 $ 668,144 $ -
Affiliated companies................................... 2,291,943 - -
Interest................................................. 1,263,243 10,871 624,456
Security lending fees.................................... 238,022 - -
-------------- -------------- --------------
Total income......................................... 51,382,347 679,015 624,456
-------------- -------------- --------------
Expenses:
Management fees (Note 2)................................. 17,416,212 342,844 167,208
Custodian fees........................................... 626,055 24,788 10,188
Transfer agent fees
Class S................................................ 2,646,041 51,781 19,120
Class D................................................ 3,543 403 335
Audit fees............................................... 22,800 7,200 6,000
Legal fees............................................... 40,896 3,243 1,858
Reports to shareholders.................................. 300,198 4,364 2,629
Directors' fees and expenses............................. 165,278 2,826 3,896
Registration and filing fees............................. 32,444 21,018 14,255
Miscellaneous............................................ 21,285 4,669 972
Payments under distribution plan - Class S (Note 3)...... 7,876,545 123,252 138,770
-------------- -------------- --------------
Total expenses....................................... 29,151,297 586,388 365,231
Expenses paid indirectly (Note 6).................... (63,372) (13) (6)
-------------- -------------- --------------
Net expenses......................................... 29,087,925 586,375 365,225
-------------- -------------- --------------
Net investment income................................ 22,294,422 92,640 259,231
-------------- -------------- --------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investment transactions................................ (33,581,340) 3,633,742 -
Foreign currency transactions.......................... (166,799) (11,147) -
Net increase (decrease) in unrealized appreciation
of investments during the period...................... 269,610,672 (816,764) -
-------------- -------------- --------------
Net realized and unrealized gain on investments
and foreign currency................................... 235,862,533 2,805,831 -
-------------- -------------- --------------
Net increase in net assets resulting from operations... $ 258,156,955 $ 2,898,471 $ 259,231
============== ============== ==============
* Net of foreign taxes withheld as follows............... $ 1,836,359 $ 68,209 -
SEE NOTES TO FINANCIAL STATEMENTS
23
SELECTED FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 2004 (Unaudited)
================================================================================
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
--------------- -------------- --------------
OPERATIONS:
Net investment income................................... $ 22,294,422 $ 92,640 $ 259,231
Net realized gain (loss) from investments and foreign
currency transactions................................. (33,748,139) 3,622,595 -
Net change in unrealized appreciation
of investments........................................ 269,610,672 (816,764) -
--------------- -------------- --------------
Net increase in net assets resulting from operations.... 258,156,955 2,898,471 259,231
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class S............................................... - - (257,456)
Class D............................................... - - (1,775)
CAPITAL SHARE TRANSACTIONS:
Net increase (decrease) in net assets resulting from
Capital share transactions (Note 5)
Class S............................................... 90,968,044 (9,002,638) (4,217,210)
Class D............................................... 322,655,863 12,906,721 3,647,939
--------------- -------------- --------------
Total increase (decrease) in net assets..................... 671,780,862 6,802,554 (569,271)
NET ASSETS:
Beginning of period..................................... 5,977,884,830 95,653,148 112,852,526
--------------- -------------- --------------
End of period*.......................................... $ 6,649,665,692 $ 102,455,702 $ 112,283,255
=============== ============== ==============
*Including undistributed net investment income of..... $ 20,994,276 $ 68,601 -
SEE NOTES TO FINANCIAL STATEMENTS
24
SELECTED FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended December 31, 2003
================================================================================
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
--------------- -------------- --------------
OPERATIONS:
Net investment income (loss)............................ $ 38,972,047 $ (283,799) $ 626,278
Net realized gain (loss) from investments, foreign
currency transactions and payments by affiliates...... (139,108,059) 4,736,622 -
Net increase in unrealized appreciation
of investments........................................ 1,469,948,314 21,631,485 -
--------------- -------------- --------------
Net increase in net assets resulting from operations.... 1,369,812,302 26,084,308 626,278
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income................................... (35,901,174) - (626,278)
Realized gains from investment transactions............. - (3,656,693) -
Return of capital....................................... (2,024,047) - -
CAPITAL SHARE TRANSACTIONS
(NOTE 5)................................................ 300,352,365 13,463,555 (3,333,974)
--------------- -------------- --------------
Total increase (decrease) in net assets..................... 1,632,239,446 35,891,170 (3,333,974)
NET ASSETS:
Beginning of year....................................... 4,345,645,384 59,761,978 116,186,500
--------------- -------------- --------------
End of year*............................................ $ 5,977,884,830 $ 95,653,148 $ 112,852,526
=============== ============== ==============
*Including overdistributed net investment income of... $ (1,300,146) $ (24,039) -
SEE NOTES TO FINANCIAL STATEMENTS
25
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2004 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Selected Funds (the Funds) consist of Selected American Shares, Inc.,
(American Shares, Inc.), Selected Special Shares, Inc., (Special Shares, Inc.),
and the Selected Capital Preservation Trust (the Trust). The Trust consists of
the Daily Government Fund. Selected U.S. Government Income Fund liquidated its
assets on March 16, 2004. The Funds and Trust are registered under the
Investment Company Act of 1940, as amended, as diversified, open-end management
investment companies. The following is a summary of significant accounting
policies followed by the Funds in the preparation of financial statements.
American Shares, Inc. and Special Shares, Inc. are diversified,
professionally managed stock-oriented funds.
Selected Daily Government Fund (Daily Government) seeks to provide a high
level of current income from short-term money market securities consistent with
prudent investment management, preservation of capital and maintenance of
liquidity. It invests in U.S. Government Securities and repurchase agreements in
respect thereto.
An investment in any of the Funds, as with any mutual fund, includes risks
that vary depending upon the fund's investment objectives and policies. There is
no assurance that the investment objective of any fund will be achieved. A
fund's return and net asset value will fluctuate, although Daily Government
seeks to maintain a net asset value of $1.00 per share.
On May 3, 2004 each fund commenced the offering of shares in two classes,
Class S and Class D. The Class S shares and Class D shares are sold at net asset
value. Income, expenses (other than those attributable to a specific class) and
gains and losses are allocated daily to each class of shares based on the
relative proportion of net assets represented by each class. Operating expenses
directly attributable to a specific class are charged against the operations of
that class. All classes have identical rights with respect to voting (exclusive
of each Class' distribution arrangement), liquidation and distributions.
A. VALUATION OF SECURITIES - Securities listed on national securities exchanges
are valued at the last reported sales price on the day of valuation. Securities
traded in the over the counter market and listed securities for which no sale
was reported on that date are stated at the last quoted bid price. Securities
for which market quotations are not readily available, or whose values have been
affected by a significant event occurring after the close of their primary
markets, are valued at fair value as determined in good faith by the Board of
Directors/Trustees. Daily Government uses the amortized cost method of valuing
investment securities, which represents fair value. These valuation procedures
are reviewed and subject to approval by the Board of Directors/Trustees.
B. MASTER REPURCHASE AGREEMENTS - The Funds, along with other affiliated funds,
may transfer uninvested cash balances into one or more master repurchase
agreement accounts. These balances are invested in one or more repurchase
agreements, secured by U.S. government securities. Securities pledged as
collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal; however,
in the event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
C. CURRENCY TRANSLATION - The market values of all assets and liabilities
denominated in foreign currencies are recorded in the financial statements after
translation to the U.S. dollar based upon the mean between the bid and offered
quotations of the currencies against U.S. dollars on the date of valuation. The
cost basis of such assets and liabilities is determined based upon historical
exchange rates. Income and expenses are translated at average exchange rates in
effect as accrued or incurred.
26
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
June 30, 2004 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
D. FOREIGN CURRENCY - The Funds may enter into forward purchases or sales of
foreign currencies to hedge certain foreign currency denominated assets and
liabilities against declines in market value relative to the U.S. dollar.
Forward currency contracts are marked-to-market daily and the change in market
value is recorded by the Funds as an unrealized gain or loss. When the forward
currency contract is closed, the Funds record a realized gain or loss equal to
the difference between the value of the forward currency contract at the time it
was opened and value at the time it was closed. Investments in forward currency
contracts may expose the Funds to risks resulting from unanticipated movements
in foreign currency exchange rates or failure of the counter-party to the
agreement to perform in accordance with the terms of the contract.
Reported net realized foreign exchange gains or losses arise from the sales
and maturities of investments, sales of foreign currencies, currency gains or
losses realized between the trade and settlement dates on securities
transactions, the difference between the amounts of dividends, interest and
foreign withholding taxes recorded on the Funds' books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate. The Funds include foreign currency gains and
losses realized on the sale of investments together with market gains and losses
on such investments in the statement of operations.
E. FEDERAL INCOME TAXES - It is each Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income, including
any net realized gains on investments not offset by loss carryovers, to
shareholders. Therefore, no provision for federal income or excise tax is
required. At June 30, 2004, American Shares, Inc. had post October 2003 losses
of approximately $39,179,000 available to offset future capital gains, if any,
which expire in 2012. Additionally, American Shares, Inc. had $110,000 of post
October 2003 foreign currency losses which were deferred. At June 30, 2004,
Special Shares, Inc. had post October 2003 losses of approximately $170,000
available to offset future capital gains, if any, which expire in 2012.
Additionally, Special Shares, Inc. had $3,000 of post October 2003 foreign
currency losses which were deferred. At June 30, 2004, the Funds had available
for federal income tax purposes unused capital loss carryforwards as follows:
AMERICAN
EXPIRING SHARES, INC.
---------- ---------------
12/31/2009 $ 67,867,000
12/31/2010 296,227,000
12/31/2011 109,428,000
---------------
TOTAL $ 473,522,000
F. USE OF ESTIMATES IN FINANCIAL STATEMENTS - In preparing financial statements
in conformity with accounting principles generally accepted in the United States
of America, management makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, as well as the reported
amounts of income and expenses during the reporting period. Actual results may
differ from these estimates.
27
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
June 30, 2004 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
G. 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.
H. DIRECTORS/TRUSTEES FEES AND EXPENSES - The Funds have adopted a deferred
compensation plan for independent Directors/Trustees that enables
Directors/Trustees to elect to defer receipt of all or a portion of annual fees
they are entitled to receive. The value of an eligible Director's/Trustee's
deferral account is based upon years of service and fees paid to each
Director/Trustee during the years of service. Under the plan, the compensation
deferred is periodically adjusted as though an equivalent amount had been
invested for the Director/Trustee in shares of one or more Selected Funds
selected by the Director/Trustee. The amount paid to the Director/Trustee under
the plan will be determined based upon the performance of the Selected Funds.
Deferral of Directors'/Trustees' fees under the plan will not affect the net
assets of the Funds, and will not materially affect the Fund's assets,
liabilities, or net income per share.
On December 31, 2003, the Funds set up a Rabbi Trust to provide for the
deferred compensation plan. The Funds will make contributions to the Trust to
assist in meeting of the liabilities under the Plan.
I. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions to
shareholders are recorded on the ex-dividend date. Net investment income (loss),
net realized gains (losses), and net unrealized appreciation (depreciation) of
investments may differ for financial statement and tax purposes primarily
because of the recognition of certain foreign currency gains (losses) as
ordinary income (loss) for tax purposes, the tax deferral of losses on "wash
sale" transactions and the tax treatment of paydowns on fixed income securities.
The character of dividends and distributions made during the fiscal year from
net investment income and net realized securities gains may differ from their
ultimate characterization for federal income tax purposes. Also, due to the
timing of dividends and distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which income or realized gain was
recorded by the Funds. The Funds adjust the classification of distributions to
shareholders to reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
28
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
June 30, 2004 (Unaudited)
================================================================================
NOTE 2 - INVESTMENT ADVISORY FEES
Advisory fees are paid monthly to Davis Selected Advisers, L.P. (the
"Adviser"), the Fund's investment adviser. Until May 3, 2004 the rate for
American Shares, Inc. was 0.65% on the first $500 million of average net assets,
0.60% of the average net assets on the next $500 million, 0.55% of the average
net assets on the next $2 billion, 0.54% of the average net assets on the next
$1 billion, 0.53% of the average net assets on the next $1 billion, 0.52% of the
average net assets on the next $1 billion, 0.51% of the average net assets on
the next $1 billion and 0.50% of the average net assets in excess of $7 billion.
Effective May 3, 2004, the Advisory fee was changed from 0.50% of the average
net assets in excess of $7 billion to 0.50% of the average net assets on the
next $3 billion, and 0.485% of the average net assets in excess of $10 billion.
The rate for Special Shares, Inc. is 0.70% on the first $50 million of average
net assets, 0.675% on the next $100 million, 0.65% on the next $100 million, and
0.60% of average net assets in excess of $250 million. Advisory fees paid during
the six months ended June 30, 2004, approximated 0.55% and 0.69% of average net
assets for American Shares, Inc. and Special Shares, Inc., respectively. The
rate for the Daily Government Fund is 0.30% of average net assets.
State Street Bank and Trust Company ("State Street Bank") is the Funds'
primary transfer agent. The Adviser is also paid for certain transfer agent
services. The fee paid to the Adviser for the six months ended June 30, 2004 was
$82,712, $5,030, and $1,576 for American Shares, Inc., Special Shares, Inc., and
Daily Government, respectively. Certain Directors/Trustees and officers of the
Funds are also Directors/Trustees and officers of the general partner of the
Adviser.
Davis Selected Advisers - NY, Inc. ("DSA-NY"), a wholly-owned subsidiary of
the Adviser, acts as sub-adviser to the Funds. The Funds pay no fees directly to
DSA-NY.
NOTE 3 - DISTRIBUTION
For services under the distribution agreement, the Funds' Class S shares
pay a fee of 0.25% of average daily net assets. For the six months ended June
30, 2004, American Shares, Inc., Special Shares, Inc., and Daily Government
incurred distribution services fees totaling $7,876,545, $123,252, and $138,770,
respectively.
There are no distribution service fees for the Funds' Class D shares.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities) during the six months ended June 30, 2004 were as follows:
AMERICAN SPECIAL
SHARES, INC. SHARES, INC.
---------------- ----------------
Cost of purchases.................. $ 567,284,216 $ 20,603,167
Proceeds of sales.................. $ 38,728,573 $ 15,878,091
29
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
June 30, 2004 (Unaudited)
================================================================================
NOTE 5 - CAPITAL STOCK
At June 30, 2004, there were 300 million shares of capital stock of American
Shares, Inc. ($1.25 par value per share) authorized. At June 30, 2004, there
were 50 million shares of capital stock of Special Shares, Inc. ($0.25 par value
per share) authorized. At June 30, 2004, there were unlimited shares of capital
stock of Selected Capital Preservation Trust ($0.10 par value per share)
authorized. Transactions in capital stock were as follows:
CLASS S SIX MONTHS ENDED
JUNE 30, 2004
(UNAUDITED)
----------------------------------------------------
AMERICAN SPECIAL
SHARES SHARES DAILY
INC. INC. GOVERNMENT
-------------- -------------- --------------
Shares sold.......................................... 23,303,965 901,757 4,865,283
Shares issued in reinvestment of distributions....... - - 255,539
-------------- -------------- --------------
23,303,965 901,757 5,120,822
Shares redeemed...................................... (20,631,225) (1,648,651) (9,338,032)
-------------- -------------- --------------
Net increase (decrease)........................ 2,672,740 (746,894) (4,217,210)
============== ============== ==============
Proceeds from shares sold............................ $ 797,203,308 $ 10,894,535 $ 4,865,283
Proceeds from shares issued in
reinvestment of distributions.................... - - 255,539
-------------- -------------- --------------
797,203,308 10,894,535 5,120,822
Cost of shares redeemed.............................. (706,235,264) (19,897,173) (9,338,032)
-------------- -------------- --------------
Net increase (decrease)........................ $ 90,968,044 $ (9,002,638) $ (4,217,210)
============== ============== ==============
YEAR ENDED
DECEMBER 31, 2003
----------------------------------------------------
AMERICAN SPECIAL
SHARES SHARES DAILY
INC. INC. GOVERNMENT
-------------- -------------- --------------
Shares sold.......................................... 34,874,537 2,003,231 10,583,488
Shares issued in reinvestment of distributions....... 1,117,524 298,010 640,691
-------------- -------------- --------------
35,992,061 2,301,241 11,224,179
Shares redeemed...................................... (26,149,475) (1,067,330) (14,558,153)
-------------- -------------- --------------
Net increase (decrease)........................ 9,842,586 1,233,911 (3,333,974)
============== ============== ==============
Proceeds from shares sold............................ $ 985,458,597 $ 20,328,439 $ 10,583,488
Proceeds from shares issued in
reinvestment of distributions.................... 35,661,013 3,439,034 640,691
-------------- -------------- --------------
1,021,119,610 23,767,473 11,224,179
Cost of shares redeemed.............................. (720,767,245) (10,303,918) (14,558,153)
-------------- -------------- --------------
Net increase (decrease)........................ $ 300,352,365 $ 13,463,555 $ (3,333,974)
============== ============== ==============
30
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
June 30, 2004 (Unaudited)
================================================================================
NOTE 5 - CAPITAL STOCK - (CONTINUED)
CLASS D MAY 3, 2004
(INCEPTION OF OFFERING)
THROUGH JUNE 30, 2004
(UNAUDITED)
----------------------------------------------------
AMERICAN SPECIAL
SHARES SHARES DAILY
INC. INC. GOVERNMENT
-------------- -------------- --------------
Shares sold................................................................ 9,416,844 1,075,047 4,030,331
Shares issued in reinvestment of distributions............................. - - 722
-------------- -------------- --------------
9,416,844 1,075,047 4,031,053
Shares redeemed............................................................ (33,619) (2,433) (383,114)
-------------- -------------- --------------
Net increase......................................................... 9,383,225 1,072,614 3,647,939
============== ============== ==============
Proceeds from shares sold.................................................. $ 323,815,440 $ 12,935,890 $ 4,030,331
Proceeds from shares issued in reinvestment of distributions............... - - 722
-------------- -------------- --------------
323,815,440 12,935,890 4,031,053
Cost of shares redeemed.................................................... (1,159,577) (29,169) (383,114)
-------------- -------------- --------------
Net increase......................................................... $ 322,655,863 $ 12,906,721 $ 3,647,939
============== ============== ==============
NOTE 6 - EXPENSES PAID INDIRECTLY
Under an agreement with the custodian bank, each Fund's custodian fees are
reduced for earnings on cash balances maintained at the custodian by the Funds.
During the six months ended June 30, 2004, such reductions amounted to $327,
$13, and $6 for American Shares, Inc., Special Shares, Inc., and Daily
Government, respectively.
American Shares, Inc. has entered into agreements with certain brokers
whereby the Fund's operating expenses are reduced by a portion of the
commissions paid to such brokers. Portfolio transactions are allocated to these
brokers only when the Fund's traders make a good faith determination that such
brokers can achieve best execution, not withstanding the operating expense
reductions. During the six months ended June 30, 2004 the reduction amounted to
$63,045.
NOTE 7 - SECURITIES LOANED
American Shares, Inc. (the "Fund") has entered into a securities lending
arrangement with UBS Financial Services Inc. Under the terms of the agreement,
the Fund receives fee income from lending transactions; in exchange for such
fees, UBS Financial Services Inc. is authorized to loan securities on behalf of
the Fund, against receipt of collateral at least equal to the value of the
securities loaned. As of June 30, 2004, the Fund had on loan securities valued
at $109,634,638; cash of $115,845,659 was received as collateral for the loans,
of which $85,000,000 or 73% and $30,845,659 or 27% of the collateral has been
invested by the Adviser in Repurchase Agreements and Money Market Instruments,
respectively. The Fund bears the risk of any deficiency in the amount of the
collateral available for return to a borrower due to a loss in an approved
investment.
NOTE 8 - BANK BORROWINGS
Each Fund may borrow up to 5% of its assets from a bank to purchase
portfolio securities, or for temporary and emergency purposes. The purchase of
securities with borrowed funds creates leverage in the Fund. Each Fund has
entered into an agreement, which enables it to participate with certain other
funds managed by the Adviser in an unsecured line of credit with a bank, which
permits borrowings up to $50 million, collectively. Interest is charged based on
its borrowings, at a rate equal to the overnight Federal Funds Rate plus 0.75%.
The Funds had no borrowings outstanding for the six months ended June 30, 2004.
31
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
June 30, 2004 (Unaudited)
================================================================================
NOTE 9 - PAYMENTS BY AFFILIATES
Davis Selected Advisers, L.P. reimbursed each fund for commissions paid to
certain broker dealers which received brokerage which was directed for sale of
fund shares from January 1, 2000 to July 31, 2003. The amount paid to Selected
American Shares, Inc. in 2003 was $119,713.
NOTE 10 - LITIGATION MATTERS
On June 2, 2004, a proposed class action lawsuit was filed in the United
States District Court for the Southern District of New York on behalf of
investors in certain mutual funds ("Funds") managed by Davis Selected Advisers
L.P. including the Selected Funds. The plaintiffs claim that Davis Selected
Advisers L.P. and its affiliates, and the individual directors of the Funds
(collectively the "Defendants") used Fund assets to pay brokers to market the
Funds and that the Defendants disguised such payments as brokerage commissions
and further failed to disclose such payments in public filings or elsewhere. The
lawsuit seeks damages of unspecified amounts. Three substantially identical
proposed class action lawsuits were filed against the Defendants later in June
and July 2004 in the United States Court for the Southern District of New York.
Davis Selected Advisers L.P. believes the actions are without merit and the
Defendants intend to vigorously defend the proceedings.
32
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED AMERICAN SHARES, INC.
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
CLASS S SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30,2004 ---------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
------------ --------- --------- --------- --------- ---------
Net Asset Value, Beginning of Period........ $ 33.17 $ 25.51 $ 30.99 $ 35.33 $ 35.80 $ 31.16
------- ------- -------- ------- -------- -------
Income (Loss) From Investment Operations
Net Investment Income...................... .12 .22 .17 .14 .15 .15
Net Realized and Unrealized
Gains (Losses).......................... 1.30 7.65 (5.45) (4.10) 2.98 6.08
------- ------- -------- ------- -------- -------
Total From Investment Operations........ 1.42 7.87 (5.28) (3.96) 3.13 6.23
Dividends and Distributions
Dividends from Net Investment Income....... - (.20) (.17) (.14) (.14) (.15)
Distributions from Realized Gains.......... - - - (.24) (3.46) (1.44)
Dividends in Excess of Net
Investment Income....................... - - - -(4) - -
Return of Capital......................... - (.01) (.03) - - -
------- ------- -------- ------- -------- -------
Total Dividends and Distributions....... - (.21) (.20) (.38) (3.60) (1.59)
------- ------- -------- ------- -------- -------
Net Asset Value, End of Period.............. $ 34.59 $ 33.17 $ 25.51 $ 30.99 $ 35.33 $ 35.80
======= ======= ======== ======= ======== =======
Total Return(1)............................. 4.28% 30.90% (17.06)% (11.17)% 9.33% 20.32%
Ratios/Supplemental Data
Net Assets, End of Period
(000,000 omitted)....................... $6,325 $5,978 $4,346 $5,565 $5,707 $3,704
Ratio of Expenses to Average Net Assets .92%* .94%(3) .94%(3) .94%(3) .92% .93%
Ratio of Net Investment Income to
Average Net Assets...................... .70%* .80% .61% .45% .52% .24%
Portfolio Turnover Rate(2)................ 1% 8% 19% 20% 22% 21%
(1) 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. Total returns are not annualized for periods of less than one full
year.
(2) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
(3) Ratio of expenses to average net assets after the reduction of expenses
paid indirectly .93% for 2003, 2002, and 2001.
(4) Less than $0.005 per share.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
33
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED AMERICAN SHARES, INC.
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
CLASS D MAY 3, 2004
(INCEPTION OF
CLASS) THROUGH
JUNE 30, 2004
(UNAUDITED)
--------------
Net Asset Value, Beginning of Period...... $ 34.12
-------
Income From Investment Operations
Net Investment Income.................... .02
Net Realized and Unrealized Gains........ .46
-------
Total From Investment Operations...... .48
-------
Net Asset Value, End of Period............ $ 34.60
=======
Total Return(1)........................... 1.41%
Ratios/Supplemental Data
Net Assets, End of Period
(000,000 omitted)..................... $325
Ratio of Expenses to Average Net Assets.. .70%*
Ratio of Net Investment Income to
Average Net Assets.................... .93%*
Portfolio Turnover Rate(2)............... 1%
(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Total returns are not annualized
for periods of less than one full year.
(2) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
34
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED SPECIAL SHARES, INC.
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
CLASS S SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2004 --------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
------------- ------- ------- ------- ------- -------
Net Asset Value, Beginning of Period....... $ 11.70 $ 8.61 $ 10.50 $ 13.68 $ 16.17 $ 14.76
------- ------- ------- ------- ------- --------
Income (Loss) From Investment Operations
Net Investment Income (Loss)............. .01 (.04) (.04) (.02) - (.09)
Net Realized and Unrealized
Gains (Losses)......................... .34 3.60 (1.81) (1.95) (.25) 2.47
------- ------- ------- ------- ------- --------
Total From Investment Operations....... .35 3.56 (1.85) (1.97) (.25) 2.38
Dividends and Distributions
Distributions from Realized Gains......... - (0.47) (0.04) (1.21) (2.24) (.97)
Return of Capital......................... - - - - - -(4)
------- ------- ------- ------- ------- --------
Total Dividends and Distributions...... - (0.47) (0.04) (1.21) (2.24) (.97)
------- ------- ------- ------- ------- --------
Net Asset Value, End of Period............. $ 12.05 $ 11.70 $ 8.61 $ 10.50 $ 13.68 $ 16.17
======= ======= ======= ======= ======= ========
Total Return(1)............................ 2.99% 41.40% (17.62)% (14.41)% (1.10)% 16.83%
Net Assets, End of Period (000 omitted)... $89,528 $95,653 $59,762 $73,092 $95,222 $107,592
Ratio of Expenses to Average Net Assets... 1.18%* 1.21% 1.17%(3) 1.15%(3) 1.15% 1.17%
Ratio of Net Investment Income (Loss) to
Average Net Assets..................... 0.18%* (.39)% (.46)% (.20)% (.25)% (.59)%
Portfolio Turnover Rate(2)................ 16% 46% 46% 117% 35% 44%
(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal with all dividends and distributions reinvested in
additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total
returns are not annualized for periods of less than one full year.
(2) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
(3) Had the Adviser not absorbed certain expenses, the ratio of expenses to
average net assets for 2002 and 2001 would have been 1.21% and 1.18%,
respectively.
(4) Less than $0.005 per share.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
35
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED SPECIAL SHARES, INC.
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
CLASS D MAY 3, 2004
(INCEPTION OF
CLASS) THROUGH
JUNE 30, 2004
(UNAUDITED)
--------------
Net Asset Value, Beginning of Period....... $ 11.97
-------
Income From Investment Operations
Net Investment Income.................... -(3)
Net Realized and Unrealized Gains........ .08
-------
Total From Investment Operations....... .08
-------
Net Asset Value, End of Period............. $ 12.05
=======
Total Return(1)............................ 0.67%
Net Assets, End of Period (000 omitted)... $12,927
Ratio of Expenses to Average Net Assets... 0.94%*
Ratio of Net Investment Income to
Average Net Assets..................... 0.63%*
Portfolio Turnover Rate(2)................ 16%
(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Total returns are not annualized
for periods of less than one full year.
(2) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
(3) Less than $0.005 per share.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
36
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DAILY GOVERNMENT FUND
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
CLASS S SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2004 --------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
----------- ------- ------- ------- ------- -------
Net Asset Value, Beginning of Period....... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income..................... .002 .005 .013 .037 .056 .044
Dividends and Distributions
Dividends from Net Investment Income...... (.002) (.005) (.013) (.037) (.056) (.044)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
Total Return(1)............................ 0.23% 0.54% 1.32% 3.73% 5.80% 4.48%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted).. $108,635 $112,853 $116,187 $112,380 $130,126 $131,342
Ratio of Expenses to Average Net Assets.. .66%* .67% .67% .66% .67% .68%
Ratio of Net Investment Income
to Average Net Assets.................. .46%* .54% 1.30% 3.73% 5.68% 4.44%
(1) 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. Total returns are not annualized for periods of less than one full
year.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
37
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DAILY GOVERNMENT FUND
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
CLASS D MAY 3, 2004
(INCEPTION OF
CLASS) THROUGH
JUNE 30, 2004
(UNAUDITED)
--------------
Net Asset Value, Beginning of Period........ $ 1.000
-------
Income From Investment Operations
Net Investment Income...................... .001
Dividends and Distributions
Dividends from Net Investment Income....... (.001)
-------
Net Asset Value, End of Period.............. $ 1.000
=======
Total Return(1)............................. 0.11%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted)... $3,648
Ratio of Expenses to Average Net Assets... .44%*
Ratio of Net Investment Income
to Average Net Assets................... .76%*
(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Total returns are not annualized
for periods of less than one full year.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
38
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS
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 85706. Each Director serves until the age of 75, or until his or her
resignation, death or removal.
NUMBER OF
TERM OF PORTFOLIOS IN
POSITION(S) OFFICE AND FUND COMPLEX OTHER
NAME AND HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
AGE FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- ------------------ --------------- ------------ -------------------------------- --------------- ----------------
INDEPENDENT DIRECTORS
WILLIAM P. BARR Director director Executive Vice President and 3 None
(born 5/23/50) since 1994 General Counsel, Verizon
(formerly GTE Corporation
before it merged with Bell
Atlantic) since July 1994;
Attorney General of the United
States from August 1991 to
January 1993; Deputy Attorney
General from May 1990 to
August 1991; Assistant
Attorney General from April
1989 to May 1990; Partner with
the law firm of Shaw, Pittman,
Potts & Trowbridge from 1984
to April 1989 and January 1993
to August 1994.
FLOYD A. BROWN Director director Retired staff announcer and 3 None
(born 11/5/30) since 1975 program host for WGN Radio and
Television, Chicago, Illinois;
sole proprietor of The Floyd
Brown Co., Elgin, Illinois
(advertising, media production
and mass media marketing).
JEROME E. HASS Director director Professor of Finance and 3 None
(born 6/1/40) since 1997 Business Strategy, Johnson
Graduate School of Management,
Cornell University;
Consultant, National Economic
Research Associates; former
Chief of Division of Economic
Research of the Federal Power
Commission and Special
Assistant to James R.
Schlesinger at the Executive
Office of the President of the
United States.
KATHERINE L. Director director Vice President, International 3 None
MACWILLIAMS since 1997 Finance, Coors Brewing
(born Company; former Treasurer,
1/19/56) Coors Brewing Company and
Adolph Coors Company; former
Vice President of Capital
Markets for UBS Securities in
New York; former member of the
Board of International Swaps and
Derivatives Association, Inc.
39
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS - CONTINUED
NUMBER OF
TERM OF PORTFOLIOS IN
POSITION(S) OFFICE AND FUND COMPLEX OTHER
NAME AND HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
AGE FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- ------------------ --------------- ------------ -------------------------------- --------------- ----------------
INDEPENDENT DIRECTORS - CONTINUED
JAMES J. MCMONAGLE Director/ director Chairman of the Selected Funds 3 None
(born 10/1/44) Chairman since 1990 Board of Directors; Of Counsel
to Vorys, Sater, Seymour and
Pease LLP (law firm); Formerly
Senior Vice President and
General Counsel of University
Hospitals Health System, Inc.
and University Hospitals of
Cleveland from 1990 to 2002;
Judge of the Court of Common
Pleas, Cuyahoga County, Ohio,
from 1976 to 1990.
RICHARD O'BRIEN Director director Retired Corporate Economist 3 Director and past
(born 9/12/45) since 1996 for Hewlett-Packard Company; President, Silicon
former Chairman of the Valley Roundtable;
Economic Advisory Council of former Director,
the California Chamber of National
Commerce. Association of
Business
Economists,
Director, Family
Services Agency of
San Francisco.
MARSHA WILLIAMS Director director Executive Vice President and 14 Director of the
(born 3/28/51) since 1996 Chief Financial Officer of Davis Funds
Equity Office Properties Trust (consisting of 11
(a real estate investment portfolios);
trust); former Chief Director, Modine
Administrative Officer of Manufacturing,
Crate & Barrel (home Inc.(heat transfer
furnishings retailer); former technology);
Vice President and Treasurer, Director, Chicago
Amoco Corporation (oil & gas Bridge & Iron
company). Company, N.V.
(industrial
construction and
engineering)
INSIDE DIRECTORS*
ANDREW A. DAVIS Director director President or Vice President of 14 Director of the Davis
(born 6/25/63) since 1998 each Selected Fund and Davis Funds (consisting of
Fund; President, Davis 11 portfolios).
Selected Advisers, L.P., and
also serves as an executive
officer in certain companies
affiliated with the Adviser.
40
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS - CONTINUED
NUMBER OF
TERM OF PORTFOLIOS IN
POSITION(S) OFFICE AND FUND COMPLEX OTHER
NAME AND HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
AGE FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- ------------------ --------------- ------------ -------------------------------- --------------- ----------------
INSIDE DIRECTORS* - CONTINUED
CHRISTOPHER C. Director director Chief Executive Officer, 14 Director of the
DAVIS since 1998 President or Vice President of Davis Funds
(born 7/13/65) each Selected Fund and Davis (consisting of 11
Fund; Chairman and Chief portfolios).
Executive Officer, Davis
Selected Advisers, L.P., and
also serves as an executive
officer in certain companies
affiliated with the Adviser,
including sole member of the
Adviser's general partner,
Davis Investments, LLC;
Employee of Shelby Cullom
Davis & Co., a registered
broker/dealer.
* 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.
41
SELECTED
FUNDS
2949 East Elvira Road, Tucson, Arizona 85706
================================================================================
DIRECTORS OFFICERS
William P. Barr James J. McMonagle
Floyd A. Brown Chairman
Andrew A. Davis Christopher C. Davis
Christopher C. Davis President
Jerome Hass Andrew A. Davis
James J. McMonagle Vice President
Katherine L. MacWilliams Kenneth C. Eich
Richard O'Brien Executive Vice President &
Marsha Williams Principal Executive Officer
Sharra L. Reed
Vice President &
Chief Compliance Officer
Douglas A. Haines
Vice President &
Principal Accounting Officer
Thomas D. Tays
Vice President
& Secretary
Arthur Don
Assistant Secretary
INVESTMENT ADVISER
Davis Selected Advisers, L.P
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
(800) 243-1575
DISTRIBUTOR
Davis Distributors, LLC
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
TRANSFER AGENT & CUSTODIAN
State Street Bank and Trust Company
c/o Selected Funds
P.O. Box 8243
Boston, Massachusetts 02266-8243
AUDITORS
KPMG LLP
707 Seventeenth Street, Suite 2700
Denver, Colorado 80202
COUNSEL
Seyfarth Shaw LLP
55 East Monroe Street, Suite 4200
Chicago, Illinois 60603-5803
================================================================================
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. QUARTERLY FACT SHEETS ARE AVAILABLE ON THE
FUNDS' WEBSITE AT WWW.SELECTEDFUNDS.COM. A COPY OF THE FUNDS' PROXY VOTING
POLICIES AND PROCEDURES IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY CALLING
1-800-243-1575 OR ON THE FUNDS' WEBSITE AT WWW.SELECTEDFUNDS.COM OR ON THE SEC
WEBSITE AT WWW.SEC.GOV.
================================================================================
INVESTMENT ADVISER
Davis Selected Advisers, L.P
2949 East Elvira Road, Suite 101
Tucson, AZ 85706
DISTRIBUTOR
Davis Distributors, LLC
2949 East Elvira Road, Suite 101
Tucson, AZ 85706
TRANSFER AGENT AND CUSTODIAN
State Street Bank & Trust Company
c/o Selected Funds
P.O. Box 8243
Boston, MA 02266-8243
LEGAL COUNSEL
Seyfarth Shaw LLP
55 East Monroe Street, Suite 4200
Chicago, IL 60603-5083
AUDITORS
KPMG LLP
707 Seventeenth Street, Suite 2700
Denver, CO 80202
800-243-1575
www.selectedfunds.com
ITEM 2. CODE OF ETHICS - Not Applicable
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT - Not Applicable
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - Not Applicable
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS - Not Applicable
ITEM 6. SCHEDULE OF INVESTMENTS - Not Applicable
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES - Not Applicable
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PERSONS - Not Applicable
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees.
ITEM 10. CONTROLS AND PROCEDURES
(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-2(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 11. EXHIBITS
EX-99.CERT - Section 302 Certification
EX-99.906 CERT - Section 906 Certification
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
SELECTED SPECIAL SHARES, INC.
By /s/ Kenneth C. Eich
Kenneth C. Eich
Principal Executive Officer
Date: September 9, 2004
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: September 9, 2004
By /s/ Douglas A. Haines
Douglas A. Haines
Principal Financial officer
Date: September 9, 2004