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 811-01533
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: December 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS
PAGE>
SELECTED FUNDS
ANNUAL REPORT
December 31, 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 Performance and Supplementary Information:
Selected American Shares..................................................7
Selected Special Shares..................................................11
Selected Daily Government Fund...........................................16
Schedule of Investments:
Selected American Shares.................................................18
Selected Special Shares..................................................23
Selected Daily Government Fund...........................................27
Statements of Assets and Liabilities..........................................29
Statements of Operations......................................................31
Statements of Changes in Net Assets...........................................32
Notes to Financial Statements.................................................34
Financial Highlights:
Selected American Shares.................................................43
Selected Special Shares..................................................45
Selected Daily Government Fund...........................................47
Report of Independent Registered Public Accounting Firm.......................49
Fund Information..............................................................50
Directors and Officers........................................................51
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. Also included is a list of positions opened and closed.
In addition, we produce a Research Report, for certain funds, which is published
semi-annually. In this report, we give a more qualitative perspective on fund
performance, discuss our thoughts on individual holdings, and share our
investment outlook. You may obtain a copy of the current Research Report either
at our website, SelectedFunds.com, or by calling 1-800-243-1575.
LOWER COST CLASS D SHARES
As we previously advised you, effective May 3, 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. As anticipated, the Funds' Class D shares performed slightly better
than Class S Shares. Selected American's Class D shares returned 9.08%(1)
(non-annualized) over the eight month period since its inception on May 3, 2004,
compared to 8.85% for Class S shares over the same period. Selected Special's
Class D shares returned 8.91% (non-annualized) over the eight month period since
its inception on May 3, 2004, compared to 8.83% for Class S shares over the same
period.
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
February 4, 2005
2
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS
MARKET ENVIRONMENT
During the year ended December 31, 2004, the stock market, as measured by the
Standard & Poor's 500(R) Index(2), returned 10.88%, the broader Dow Jones
Wilshire 5000 Index returned 12.62%. U.S. economic activity, as measured by the
gross domestic product rose sharply in the first two quarters before falling
sharply in the third quarter of 2004. Interest rates, as measured by the 10-year
Treasury bond, trended downward over the first three months, rose over the next
three months then slowly declined over the last half of the year. After trending
sideways during the first seven months of the year, the S&P 500(R) Index went on
a sustained rally over the last five months of 2004.
SELECTED AMERICAN SHARES
PERFORMANCE OVERVIEW
Selected American Shares' Class S shares returned 11.97% for the year ended
December 31, 2004(1), compared with a return of 10.88% for the Standard & Poor's
500(R) Index(2). The Fund's Class D shares returned 9.08% (non-annualized) over
the eight month period since its inception on May 3, 2004.
The Fund had more invested in financial service companies than in any other
single sector. The financial service companies which the Fund owned
out-performed the S&P 500(R) Index. Contributors(3) to performance included:
American Express(4), Loews, and Moody's. Over the year ended December 31, 2004,
American Express increased by 17.60%, Loews increased by 43.59%, and Moody's
increased by 44.06%.
Energy companies represented one of the Fund's largest sector weightings. As a
group, the energy companies the Fund owned significantly out-performed the S&P
500(R) Index. Over the year ended December 31, 2004, ConocoPhillips increased by
35.60%, Devon Energy increased by 36.78%, and EOG Resources increased by 55.21%.
Property & casualty insurance companies also represented one of the Fund's
largest sector weightings and these companies, as a group, under-performed the
S&P 500(R) Index. Over the year ended December 31, 2004, Berkshire Hathaway,
Class A increased by 4.33% and Progressive increased by 1.63%.
As a group, the health care companies the Fund owned under-performed the S&P
500(R) Index in 2004. The most important contributor in this sector was Cardinal
Health, which increased by 15.95% since being purchased in July 2004. The most
important detractors from performance were Eli Lilly and Pfizer. Eli Lilly
decreased by 17.55% over the year ended December 31, 2004. Pfizer decreased by
25.02% before being sold in December 2004.
3
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
PERFORMANCE OVERVIEW - (CONTINUED)
Other important contributors to performance included: Tyco International, a
diversified manufacturing company, Altria Group, a consumer products company,
and Costco, a discount retailing company. Over the year ended December 31, 2004,
Tyco International increased by 35.41%, Altria Group increased by 18.38%, and
Costco increased by 31.15%. All three companies were among the Fund's ten
largest holdings at the end of the year.
Other important detractors from performance included: Fifth Third Bancorp, a
banking and savings & loan company, H&R Block, a financial services company, and
Marsh & McLennan, an insurance brokerage company. Over the year ended December
31, 2004, Fifth Third Bancorp decreased by 17.93% and H&R Block decreased by
9.99%. Marsh & McLennan decreased by 25.46% since being purchased in June 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.
SELECTED SPECIAL SHARES
PERFORMANCE OVERVIEW
Selected Special Shares' Class S shares returned 11.34% for the year ended
December 31, 2004(1), compared with a return of 12.62% for the Dow Jones
Wilshire 5000 Index(2). The Fund's Class D shares returned 8.91%
(non-annualized) over the eight month period since its inception on May 3, 2004.
The Fund had more invested in health care companies than in any other single
sector. As a group, the health care companies the Fund owned out-performed the
Dow Jones Wilshire 5000 Index in 2004. The most important contributors(3) in
this sector were Lincare Holdings(4), which was up by 48.35% since being
purchased in January 2004, and Cardinal Health, which was up by 10.14% since
being purchased in July 2004.
The Fund also had significant holdings in the automotive sector. Automotive
companies in general under-performed the Dow Jones Wilshire 5000 Index, which
hurt the Fund's short-term performance. Over the year ended December 31, 2004,
AutoZone was up 7.16% and AutoNation was up 4.57%.
Energy companies in general had a productive year in 2004, and the Fund
benefited from over-weighting energy companies in the portfolio, which
out-performed the Dow Jones Wilshire 5000 Index. Over the year ended December
31, 2004, Premcor was up by 62.27%. Transocean was up 54.82% since being
purchased in January 2004.
4
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
PERFORMANCE OVERVIEW - (CONTINUED)
The Fund's portfolio managers have been identifying a number of investment
opportunities in foreign companies. The Fund ended the year with 28.28% of its
portfolio invested in foreign companies. The Fund benefited from these foreign
companies as they accounted for approximately 35% of the Fund's total gross
return in 2004. The foreign companies that contributed the most to performance
were: Groupe Bruxelles Lambert, a diversified company and Lagardere, a media
company. Over the year ended December 31, 2004, Groupe Bruxelles Lambert was up
48.28% and Lagardere was up 26.90%, after adjusting for exchange rates. The most
important detractor from performance was Rentokil Initial, a diversified
commercial services company, which was down 15.27% since being purchased in
January 2004.
Other important contributors to performance included Tyco International, a
diversified manufacturing company, Garmin, an electronics company, and Apogent
Technologies, a medical instruments company. Tyco International was up 35.41%
and Garmin was up 12.48%, over the year ended December 31, 2004. Apogent
Technologies increased 44.84% before being acquired by Fisher Scientific in
August 2004. The Fund held Fisher Scientific at the end of the year. Tyco
International and Garmin were included among the Fund's ten largest holdings at
the end of the year.
Other important detractors from performance included: two retailing companies,
Tiffany & Co. and CarMax, Covad Communications, a telecommunications company,
and BMC Software, a technology company. Over the year ended December 31, 2004,
Tiffany & Co. was down 28.79% and Covad Communications was down 40.28%. CarMax
was down 31.34% while it was held in the portfolio. BMC Software decreased
18.71% before being sold in July 2004. Tiffany & Co. was included among the
Fund's top ten holdings at the end of the year.
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.
- -------------------------------
This Annual Report is authorized for use by existing shareholders. Prospective
shareholders must receive a current Selected Funds prospectus, which contains
more information about investment strategies, risks, fees, and expenses. Please
read the prospectus carefully before investing or sending money.
Selected American Shares' investment objective is to achieve both capital growth
and income. In the current market environment, we expect that income will be
low. There can be no assurance that the Fund will achieve its objective. The
primary risks of an investment in Selected American Shares are: (1) market risk,
(2) company risk, (3) foreign country risk, (4) financial services risk, (5)
headline risk, and (6) selection risk. See the prospectus for a full description
of each risk.
Selected Special Shares' investment objective is capital growth. There can be no
assurance that the Fund will achieve its objective. The primary risks of an
investment in Selected Special Shares are: (1) market risk, (2) company risk,
(3) small and medium capitalization risk, (4) foreign country risk, (4) headline
risk, and (5) selection risk. See the prospectus for a full description of each
risk.
5
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
(1) Total return assumes reinvestment of dividends and capital gain
distributions. Past performance is not a guarantee of future results. Investment
return and principal value will vary so that, when redeemed, an investor's
shares may be worth more or less than when purchased. The following tables list
the average annual total returns for Class S and Class D shares for the periods
ended December 31, 2004.
- --------------------------------------------------------------------------------
FUND NAME 1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Selected American Shares S 11.97% 3.38% 15.13%
- --------------------------------------------------------------------------------
Selected Special Shares S 11.34% 1.89% 11.77%
- --------------------------------------------------------------------------------
--------------------------------------------------
FUND NAME INCEPTION*
--------------------------------------------------
Selected American Shares D 9.08%
--------------------------------------------------
Selected Special Shares D 8.91%
--------------------------------------------------
* As of May 3, 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. Performance for the period has not
been annualized.
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.
(2) 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 capitalization, 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.
(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 December 31, 2004
================================================================================
[PIE CHART OMITTED]
PORTFOLIO MAKEUP SECTOR WEIGHTINGS
(% OF FUND NET ASSETS) (% OF STOCK HOLDINGS)
- ------------------------------------ ------------------------------------
Common Stocks 97.3% Cable Television 3.6%
Short Term Investments, Financial Services 21.6%
Other Assets & Liabilities 2.7% Health Care 4.0%
Retailing 3.3%
Technology 2.7%
Diversified 5.0%
Insurance 16.2%
Energy 8.9%
Food & Restaurants 3.4%
Banks and Savings & Loans 12.5%
Industrial 2.8%
Consumer Products 5.4%
Other 10.6%
TOP 10 HOLDINGS
STOCK SECTOR % OF FUND NET ASSETS
- -----------------------------------------------------------------------------------------------------
American Express Co. Financial Services 6.76%
Altria Group, Inc. Consumer Products 5.25%
Tyco International Ltd. Diversified Manufacturing 4.45%
American International Group, Inc. Multi-Line Insurance 4.42%
Berkshire Hathaway Inc., Class A Property/Casualty Insurance 4.07%
HSBC Holdings PLC Banks and Savings & Loan Associations 3.69%
Comcast Corp., Special Class A Cable Television 3.48%
Costco Wholesale Corp. Discount Retailer 3.18%
Wells Fargo & Co. Banks and Savings & Loan Associations 3.13%
JPMorgan Chase & Co. Financial Services 3.09%
7
SELECTED FUNDS
SELECTED AMERICAN SHARES, INC.
PORTFOLIO ACTIVITY - January 1, 2004 through December 31, 2004
================================================================================
NEW POSITIONS ADDED (1/1/04-12/31/04)
(Highlighted Positions are those greater than 0.50% of Net Assets)
DATE OF 1ST % OF 12/31/04
SECURITY SECTOR PURCHASE FUND NET ASSETS
- -------------------------------------------------------------------------------------------------------
Cardinal Health, Inc. Health Care 07/14/04 1.28%
Comcast Corp., Special Class A Cable Television 01/14/04 3.48%
Hunter Douglas NV Manufacturing 10/18/04 0.02%
IAC/InterActiveCorp E-Commerce/Services 08/04/04 0.54%
Iron Mountain Inc. Business Services 09/21/04 0.93%
Marsh & McLennan Cos, Inc. Insurance Brokers 06/28/04 1.03%
Nokia Oyj, ADR Telecommunications 04/14/04 0.28%
Rentokil Initial PLC Diversified Commercial Services 01/13/04 0.40%
SK Telecom Co., Ltd., ADR Telecommunications 04/14/04 0.47%
Transocean Inc. Energy 01/23/04 0.69%
POSITIONS CLOSED (1/1/04-12/31/04)
(Gains and losses greater than $10 million are highlighted)
SECURITY SECTOR DATE OF FINAL SALE GAIN/(LOSS)
- ------------------------------------------------------------------------------------------------------------
Agere Systems Inc., Class A Electronics 11/17/04 $ (32,098,510)
Janus Capital Group Inc. Investment Firms 04/29/04 (20,556,016)
Kraft Foods Inc., Class A Food/Beverage & Restaurant 08/10/04 (914,476)
Marriott International, Inc., Class A Hotels & Motels 08/30/04 11,380,901
Merck & Co., Inc Health Care 07/29/04 (1,883,526)
Pfizer Inc. Health Care 12/22/04 (5,933,232)
8
SELECTED FUNDS
SELECTED AMERICAN SHARES, INC.
CLASS S FUND PERFORMANCE
================================================================================
- -----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN EXPENSE EXAMPLE
FOR THE PERIODS ENDED DECEMBER 31, 2004
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
(07/01/04) (12/31/04) (07/01/04-12/31/04)
---------- ---------- -------------------
One Year....................... 11.97% Actual.................... $1,000.00 $1,073.77 $4.74
Five Years..................... 3.38% Hypothetical (5% return
Ten Years...................... 15.13% before expenses)........ $1,000.00 $1,020.56 $4.62
- -----------------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio (0.91%), multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period). See Notes to Performance on page 17 for a description
of the "Expense Example".
$10,000 INVESTED OVER TEN YEARS. Let's say you invested $10,000 in Selected
American Shares, Class S on December 31, 1994. As the chart below shows, by
December 31, 2004 the value of your investment would have grown to $40,919 - a
309.19% increase on your initial investment. For comparison, the Standard &
Poor's 500(R) Stock Index is also presented on the chart below.
S&P 500 SAS - S
1994 10,000.00 10,000.00
1995 13,753.00 13,809.00
1996 16,909.00 18,054.00
1997 22,548.00 24,777.00
1998 28,992.00 28,808.00
1999 35,091.00 34,661.00
2000 31,897.00 37,895.00
2001 28,109.00 33,661.00
2002 21,899.00 27,918.00
2003 28,177.00 36,544.00
2004 31,241.00 40,919.00
The Standard & Poor's 500(R) Stock Index is an unmanaged index of 500 selected
common stocks, most of which are listed on the New York Stock Exchange. The
index is adjusted for dividends, weighted towards stocks with large market
capitalization, and represents approximately two-thirds of the total market
value of all domestic common stocks.
The performance data for Selected American Shares contained in this report
represents past performance and assumes that all distributions were reinvested,
and should not be considered as an indication of future performance from an
investment in the Fund today. The investment return and principal value will
fluctuate so that shares may be worth more or less than their original cost when
redeemed. Returns shown do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
9
SELECTED FUNDS
SELECTED AMERICAN SHARES, INC.
CLASS D FUND PERFORMANCE
================================================================================
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN EXPENSE EXAMPLE
FOR THE PERIOD ENDED DECEMBER 31, 2004
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
(07/01/04) (12/31/04) (07/01/04-12/31/04)
---------- ---------- -------------------
Life of Class (May 3, 2004 Actual.................... $1,000.00 $1,075.61 $3.34
through December 31, 2004)....... 9.08% Hypothetical (5% return
before expenses)........ $1,000.00 $1,021.92 $3.25
- -------------------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio (0.64%), multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period). See Notes to Performance on page 17 for a description
of the "Expense Example".
$10,000 INVESTED AT INCEPTION. Let's say you invested $10,000 in Selected
American Shares, Class D Shares on May 3, 2004 (inception of class). As the
chart below shows, by December 31, 2004 the value of your investment would have
grown to $10,908 - a 9.08% increase on your initial investment. For comparison,
the Standard & Poor's 500(R) Stock Index is also presented on the chart below.
S&P 500 SAS - D
5/3/04 10,000.00 10,000.00
12/31/04 10,976.00 10,908.00
The Standard & Poor's 500(R) Stock Index is an unmanaged index of 500 selected
common stocks, most of which are listed on the New York Stock Exchange. The
index is adjusted for dividends, weighted towards stocks with large market
capitalization, and represents approximately two-thirds of the total market
value of all domestic common stocks.
The performance data for Selected American Shares contained in this report
represents past performance and assumes that all distributions were reinvested,
and should not be considered as an indication of future performance from an
investment in the Fund today. The investment return and principal value will
fluctuate so that shares may be worth more or less than their original cost when
redeemed. Returns shown do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
10
SELECTED FUNDS
FUND OVERVIEW
SELECTED SPECIAL SHARES, INC.
At December 31, 2004
================================================================================
[PIE CHART OMITTED]
PORTFOLIO MAKEUP SECTOR WEIGHTINGS
(% OF FUND NET ASSETS) (% OF STOCK HOLDINGS)
- ------------------------------------ ------------------------------------
Common Stocks 98.5% Automotive 7.9%
Short Term Investments, Retailing 7.7%
Other Assets & Liabilities 1.5% Manufacturing 3.2%
Electronics 6.8%
Health Care 8.0%
Technology 3.5%
Food/Beverage & Restaurant 5.4%
Distributors 4.4%
Insurance 7.1%
Telecommunications 6.9%
Information/Information
Processing 2.6%
Diversified 10.0%
Media 6.5%
Financial Services/Banking 6.3%
Energy 7.5%
Other 6.2%
TOP 10 HOLDINGS
STOCK SECTOR % OF FUND NET ASSETS
- --------------------------------------------------------------------------------------------------------------
Groupe Bruxelles Lambert S.A. Diversified 4.78%
Lagardere S.C.A. Media 4.43%
AutoNation, Inc. Automotive 3.96%
AutoZone, Inc. Automotive 3.83%
Tyco International Ltd. Diversified Manufacturing 3.35%
Tiffany & Co. Retailing 2.91%
Garmin Ltd. Electronics 2.82%
Golden West Financial Corp. Banks and Savings & Loan Associations 2.78%
Premcor Inc. Energy 2.70%
Reynolds & Reynolds Co., Class A Information/Information Processing 2.55%
11
SELECTED FUNDS
SELECTED SPECIAL SHARES, INC.
PORTFOLIO ACTIVITY - January 1, 2004 through December 31, 2004
================================================================================
NEW POSITIONS ADDED (1/1/04-12/31/04)
(Highlighted Positions are those greater than 1.25% of Net Assets)
DATE OF 1ST % OF 12/31/04
SECURITY SECTOR PURCHASE FUND NET ASSETS
- ---------------------------------------------------------------------------------------------------
Abercrombie & Fitch Co., Class A Retailing 02/26/04 -
Amorepacific Corp. Consumer Products 07/09/04 0.64%
Brown & Brown, Inc. Insurance Brokers 10/14/04 0.28%
Cardinal Health, Inc. Health Care 07/01/04 1.82%
CarMax, Inc. Retailing 04/23/04 -
EOG Resources, Inc. Energy 05/03/04 -
Hunter Douglas NV Manufacturing 03/25/04 2.53%
IDEXX Laboratories, Inc. Health Care 07/27/04 0.99%
Kmart Holding Corp. Discount Retailer 07/02/04 1.32%
Lincare Holdings Inc. Health Care 01/14/04 1.55%
Lotte Chilsung Beverage Co., Ltd. Food/Beverage & Restaurant 07/09/04 0.76%
Lotte Confectionery Co., Ltd. Food/Beverage & Restaurant 07/09/04 0.84%
Marsh & McLennan Cos, Inc. Insurance Brokers 06/28/04 2.47%
Mohawk Industries, Inc. Manufacturing 05/18/04 0.67%
99 Cents Only Stores Discount Retailer 05/18/04 1.56%
Nong Shim Holdings Co., Ltd. Diversified 07/09/04 0.36%
Rentokil Initial PLC Diversified Commercial Services 01/07/04 1.34%
SK Telecom Co., Ltd., ADR Telecommunications 04/14/04 0.48%
Tae Young Corp. Building & Heavy Construction 07/09/04 0.02%
Telewest Global, Inc. Telecommunications 12/07/04 0.78%
Transocean Inc. Energy 01/28/04 1.39%
Unilever NV, CVA Food/Beverage & Restaurant 01/07/04 1.72%
WH Smith PLC Retailing 09/01/04 0.31%
12
SELECTED FUNDS
SELECTED SPECIAL SHARES, INC.
PORTFOLIO ACTIVITY - January 1, 2004 through December 31, 2004
================================================================================
POSITIONS CLOSED (1/1/04-12/31/04)
(Gains and losses greater than $250,000 are highlighted)
SECURITY SECTOR DATE OF FINAL SALE GAIN/(LOSS)
- --------------------------------------------------------------------------------------------------------------------
Abercrombie & Fitch Co., Class A Retailing 09/28/04 $ 1,862
Agere Systems Inc., Class A Electronics 11/17/04 11,378
Altria Group, Inc. Consumer Products 09/20/04 612,555
AT&T Wireless Services Inc. Telecommunications 02/23/04 383,182
Automatic Data Processing, Inc. Information/Information Processing 06/25/04 145,662
Belo Corp., Class A Media 01/20/04 434,530
Berkshire Hathaway Inc., Class A Property/ Casualty Insurance 09/20/04 308,492
BMC Software, Inc. Technology 07/19/04 (371,472)
CarMax, Inc. Retailing 07/15/04 (338,540)
Diageo PLC, ADR Food/Beverage & Restaurant 01/14/04 94,009
Electrolux AB, Series B Manufacturing 06/28/04 (56,081)
EOG Resources, Inc. Energy 06/02/04 337
Equifax Inc. Information/Information Processing 07/06/04 62,892
Freescale Semiconductor, Inc., Class B Semiconductors 12/08/04 61,854
HSBC Holdings PLC Banks and Savings & Loan Associations 01/21/04 144
Hudson Highland Group, Inc. Employee Staffing 04/26/04 278,859
Marriott International, Inc., Class A Hotels & Motels 10/07/04 95,581
Northern Trust Corp. Financial Services 02/02/04 666,160
Papa John's International, Inc. Food/Beverage & Restaurant 06/02/04 99,754
Sun Microsystems, Inc. Technology 01/14/04 262,751
Takefuji Corp. Financial Services 12/22/04 48,619
13
SELECTED FUNDS
SELECTED SPECIAL SHARES, INC.
CLASS S FUND PERFORMANCE
================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN EXPENSE EXAMPLE
FOR THE PERIODS ENDED DECEMBER 31, 2004
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
(07/01/04) (12/31/04) (07/01/04-12/31/04)
---------- ---------- -------------------
One Year........................... 11.34% Actual................... $1,000.00 $1,081.05 $6.12
Five Years......................... 1.89% Hypothetical (5% return
Ten Years.......................... 11.77% before expenses)....... $1,000.00 $1,019.25 $5.94
- ------------------------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio (1.17%), multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period). See Notes to Performance on page 17 for a description
of the "Expense Example".
$10,000 INVESTED OVER TEN YEARS. Let's say you invested $10,000 in Selected
Special Shares, Class S shares on December 31, 1994. As the chart below shows,
by December 31, 2004 the value of your investment would have grown to $30,435 -
a 204.35% increase on your initial investment. For comparison, the Dow Jones
Wilshire 5000 Stock Index is also presented on the chart below.
DJ Wilshire 5000 SSS - S
1994 10,000.00 10,000.00
1995 13,645.00 13,424.00
1996 16,539.10 15,016.00
1997 21,714.19 19,057.00
1998 26,801.83 23,729.00
1999 33,116.34 27,722.00
2000 29,509.97 27,418.00
2001 26,272.72 23,466.00
2002 20,792.23 19,332.00
2003 27,370.90 27,336.00
2004 30,825.10 30,435.00
The Dow Jones Wilshire 5000 Stock 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.
The performance data for Selected Special Shares contained in this report
represents past performance and assumes that all distributions were reinvested,
and should not be considered as an indication of future performance from an
investment in the Fund today. The investment return and principal value will
fluctuate so that shares may be worth more or less than their original cost when
redeemed. Returns shown do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
14
SELECTED FUNDS
SELECTED SPECIAL SHARES, INC.
CLASS D FUND PERFORMANCE
================================================================================
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN EXPENSE EXAMPLE
FOR THE PERIOD ENDED DECEMBER 31, 2004
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
(07/01/04) (12/31/04) (07/01/04-12/31/04)
---------- ---------- -------------------
Life of Class (May 3, 2004 Actual.................... $1,000.00 $1,081.87 $4.76
through December 31, 2004)........ 8.91% Hypothetical (5% return
before expenses)........ $1,000.00 $1,020.56 $4.62
- ------------------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio (0.91%), multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period). See Notes to Performance on page 17 for a description
of the "Expense Example".
$10,000 INVESTED AT INCEPTION. Let's say you invested $10,000 in Selected
Special Shares, Class D shares on May 3, 2004 (inception of class). As the chart
below shows, by December 31, 2004 the value of your investment would have grown
to $10,891 - an 8.91% increase on your initial investment. For comparison, the
Dow Jones Wilshire 5000 Stock Index is also presented on the chart below.
DJ Wilshire 5000 SSS - D
5/3/04 10,000.00 10,000.00
12/31/04 11,115.00 10,891.00
The Dow Jones Wilshire 5000 Stock 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.
The performance data for Selected Special Shares contained in this report
represents past performance and assumes that all distributions were reinvested,
and should not be considered as an indication of future performance from an
investment in the Fund today. The investment return and principal value will
fluctuate so that shares may be worth more or less than their original cost when
redeemed. Returns shown do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
15
SELECTED FUNDS
FUND OVERVIEW
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND
At December 31, 2004
================================================================================
[PIE CHART OMITTED]
PORTFOLIO MAKEUP MATURITY DIVERSIFICATION*
(% OF FUND NET ASSETS) (% OF PORTFOLIO'S HOLDINGS)
- ------------------------------------ ------------------------------------
FANNIE MAE 30.0% 0-30 Days 64.8%
FREDDIE MAC 4.8% 31-90 Days 21.7%
Federal Home Loan Bank 30.4% 91-180 Days 11.3%
Federal Farm Credit Bank 2.3% 181-397 Days 2.2%
Repurchase Agreements, Other
Assets & Liabilities 32.5%
*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.
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE - CLASS S
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
(07/01/04) (12/31/04) (07/01/04-12/31/04)
---------- ---------- -------------------
Actual.................... $1,000.00 $1,004.98 $3.48
Hypothetical (5% return
before expenses)........ $1,000.00 $1,021.67 $3.51
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE - CLASS D
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
(07/01/04) (12/31/04) (07/01/04-12/31/04)
---------- ---------- -------------------
Actual.................... $1,000.00 $1,006.24 $2.22
Hypothetical (5% return
before expenses)........ $1,000.00 $1,022.92 $2.24
- --------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio (0.69% and 0.44% for
Class S and Class D, respectively), multiplied by the average account value over
the period, multiplied by 184/366 (to reflect the one-half year period). See
Notes to Performance on page 17 for a description of the "Expense Example".
16
SELECTED FUNDS
NOTES TO PERFORMANCE
================================================================================
THE FOLLOWING DISCLOSURE PROVIDES IMPORTANT INFORMATION REGARDING THE FUNDS'
EXPENSE EXAMPLE, WHICH APPEARS IN EACH CLASS'S FUND PERFORMANCE SECTION IN THIS
ANNUAL REPORT. PLEASE REFER TO THIS INFORMATION WHEN REVIEWING THE EXPENSE
EXAMPLE FOR EACH CLASS.
EXAMPLE
As a shareholder of the Fund, you only incur ongoing costs, including advisory
and administrative fees, distribution and/or service (12b-1) fees, and other
Fund expenses. The Expense Example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds. The Expense Example
is based on an investment of $1,000 invested at the beginning of the period and
held for the entire period indicated, which for each class is from 07/01/04 to
12/31/04. Please note that the Expense Example is general and does not reflect
certain account specific costs, which may increase your total costs of investing
in the Fund. If these account specific costs were included in the Expense
Example, the expenses would have been higher.
ACTUAL EXPENSES
The information represented in the row entitled "Actual" provides information
about actual account values and actual expenses. You may use the information in
this row, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number under the heading "Expenses Paid During Period" to estimate
the expenses you paid for on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The information represented in the row entitled "Hypothetical (5% return before
expenses)" provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to estimate
the actual ending account balance or expenses you paid for the period. You may
use this information to compare the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the information in the row entitled "Hypothetical
(5% return before expenses)" is useful in comparing ongoing costs only, and will
not help you determine the relative total costs of owning different funds.
17
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC.
DECEMBER 31, 2004
VALUE
SHARES SECURITY (NOTE 1)
================================================================================
COMMON STOCK - (97.31%)
AUTOMOTIVE - (0.86%)
690,300 AutoZone, Inc.*................................... $ 63,031,293
--------------
BANKS AND SAVINGS & LOAN ASSOCIATIONS - (12.14%)
1,849,000 Fifth Third Bancorp............................... 87,457,700
3,639,600 Golden West Financial Corp. ...................... 223,544,232
16,078,885 HSBC Holdings PLC................................. 270,773,350
7,034,096 Lloyds TSB Group PLC.............................. 63,742,713
330,000 State Street Corp. ............................... 16,209,600
3,696,560 Wells Fargo & Co. ................................ 229,741,204
--------------
891,468,799
--------------
BUILDING MATERIALS - (1.37%)
930,600 Martin Marietta Materials, Inc. .................. 49,935,996
924,100 Vulcan Materials Co. ............................. 50,465,101
--------------
100,401,097
--------------
BUSINESS SERVICES - (1.94%)
1,241,000 D&B Corp.*........................................ 74,025,650
2,244,000 Iron Mountain Inc.*............................... 68,419,560
--------------
142,445,210
--------------
CABLE TELEVISION - (3.48%)
7,773,000 Comcast Corp., Special Class A*................... 255,576,240
--------------
CONSUMER PRODUCTS - (5.25%)
6,307,500 Altria Group, Inc. ............................... 385,388,250
--------------
DISCOUNT RETAILER - (3.18%)
4,817,000 Costco Wholesale Corp. ........................... 233,190,970
--------------
DIVERSIFIED COMMERCIAL SERVICES - (0.40%)
10,411,500 Rentokil Initial PLC.............................. 29,471,477
--------------
DIVERSIFIED MANUFACTURING - (4.45%)
9,139,764 Tyco International Ltd. .......................... 326,655,165
--------------
E-COMMERCE/SERVICES - (0.54%)
1,445,000 IAC/InterActiveCorp*.............................. 39,896,450
--------------
ENERGY - (8.67%)
2,070,080 ConocoPhillips.................................... 179,745,046
3,720,842 Devon Energy Corp. ............................... 144,815,171
1,588,100 EOG Resources, Inc. .............................. 113,326,816
2,540,800 Occidental Petroleum Corp. ....................... 148,281,088
1,188,000 Transocean Inc.*.................................. 50,359,320
--------------
636,527,441
--------------
18
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
DECEMBER 31, 2004
VALUE
SHARES SECURITY (NOTE 1)
================================================================================
COMMON STOCK - (CONTINUED)
FINANCIAL SERVICES - (18.91%)
8,807,800 American Express Co. ........................... $ 496,495,686
4,704,189 Citigroup Inc. ................................. 226,647,826
2,314,000 H&R Block, Inc. ................................ 113,386,000
5,817,240 JPMorgan Chase & Co. ........................... 226,930,532
1,958,000 Loews Corp. .................................... 137,647,400
1,132,800 Moody's Corp. .................................. 98,383,680
1,957,400 Providian Financial Corp.* ..................... 32,238,378
835,860 Takefuji Corp. ................................. 56,385,767
--------------
1,388,115,269
--------------
FOOD/BEVERAGE & RESTAURANT - (3.29%)
7,300,881 Diageo PLC...................................... 103,926,236
2,157,750 Heineken Holding NV, Class A.................... 64,991,093
1,304,800 Hershey Foods Corp. ............................ 72,468,592
--------------
241,385,921
--------------
HEALTH CARE - (3.90%)
1,610,000 Cardinal Health, Inc. .......................... 93,621,500
1,180,000 Eli Lilly and Co. .............................. 66,965,000
2,311,500 HCA Inc. ....................................... 92,367,540
670,000 Novartis AG, Registered......................... 33,646,801
--------------
286,600,841
--------------
INDUSTRIAL - (2.75%)
3,786,700 Sealed Air Corp.*............................... 201,717,509
--------------
INSURANCE BROKERS - (1.72%)
2,112,700 Aon Corp. ...................................... 50,409,022
2,304,000 Marsh & McLennan Cos, Inc. ..................... 75,801,600
--------------
126,210,622
--------------
INVESTMENT FIRMS - (2.07%)
315,099 Julius Baer Holding, Ltd. AG.................... 94,515,892
1,039,864 Morgan Stanley.................................. 57,733,249
--------------
152,249,141
--------------
LIFE INSURANCE - (0.55%)
658,000 Principal Financial Group, Inc. ................ 26,938,520
400,000 Sun Life Financial Inc. ........................ 13,416,000
--------------
40,354,520
--------------
MANUFACTURING - (0.02%)
21,500 Hunter Douglas NV............................... 1,142,354
--------------
MEDIA - (1.59%)
1,282,459 Lagardere S.C.A. ............................... 92,185,052
2,235,400 WPP Group PLC................................... 24,539,798
--------------
116,724,850
--------------
19
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
DECEMBER 31, 2004
VALUE
SHARES SECURITY (NOTE 1)
================================================================================
COMMON STOCK - (CONTINUED)
MULTI-LINE INSURANCE - (4.42%)
4,939,325 American International Group, Inc. ............. $ 324,365,473
--------------
PROPERTY/CASUALTY INSURANCE - (7.68%)
3,402 Berkshire Hathaway Inc., Class A*............... 299,035,800
6,366 Berkshire Hathaway Inc., Class B*............... 18,690,576
288,400 Chubb Corp. .................................... 22,177,960
20,000 Markel Corp.*................................... 7,280,000
2,553,200 Progressive Corp. (Ohio)........................ 216,613,488
--------------
563,797,824
--------------
PUBLISHING - (0.54%)
483,300 Gannett Co., Inc. .............................. 39,485,610
--------------
REAL ESTATE - (1.92%)
2,938,388 Centerpoint Properties Trust (b)................ 140,719,401
--------------
REINSURANCE - (1.41%)
1,679,000 Transatlantic Holdings, Inc. ................... 103,812,570
--------------
TECHNOLOGY - (2.65%)
1,428,600 Lexmark International, Inc., Class A*........... 121,431,000
2,735,000 Microsoft Corp. ................................ 73,051,850
--------------
194,482,850
--------------
TELECOMMUNICATIONS - (0.75%)
1,325,000 Nokia Oyj, ADR.................................. 20,762,750
1,537,000 SK Telecom Co., Ltd., ADR (c)................... 34,198,250
--------------
54,961,000
--------------
TRANSPORTATION - (0.86%)
740,500 United Parcel Service, Inc., Class B............ 63,283,130
--------------
Total Common Stock -
(identified cost $4,747,734,762)............ 7,143,461,277
--------------
20
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
DECEMBER 31, 2004
VALUE
PRINCIPAL SECURITY (NOTE 1)
================================================================================
REPURCHASE AGREEMENTS - (2.55%)
$60,656,000 Goldman, Sachs & Co. Joint Repurchase
Agreement, 2.25%, 01/03/05, dated 12/31/04,
repurchase value of $60,667,373 (collateralized
by: U.S. Government obligations in a pooled
cash account, total market value $61,869,120)... $ 60,656,000
67,396,000 Nomura Securities International, Inc. Joint
Repurchase Agreement, 2.35%, 01/03/05, dated
12/31/04, repurchase value of $67,409,198
(collateralized by: U.S. Government obligations
in a pooled cash account, total market
value $68,743,920)............................... 67,396,000
59,135,000 UBS Financial Services Inc. Joint Repurchase
Agreement, 2.27%, 01/03/05, dated 12/31/04,
repurchase value of $59,146,186 (collateralized
by: U.S. Government obligations in a pooled
cash account, total market value $60,317,700).... 59,135,000
------------
Total Repurchase Agreements -
(identified cost $187,187,000)............... 187,187,000
------------
INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED - (0.42%)
MONEY MARKET INSTRUMENTS - (0.26%)
18,759,892 UBS Private Money Market LLC, 2.144268%
(identified cost $18,759,892).................... 18,759,892
------------
REPURCHASE AGREEMENTS - (0.16%)
3,889,000 Goldman, Sachs & Co. Joint Repurchase Agreement,
2.25%, 01/03/05, dated 12/31/04, repurchase value
of $3,889,729 (collateralized by: U.S. Government
obligations in a pooled cash account, total market
value $3,966,780)................................ 3,889,000
4,321,000 Nomura Securities International, Inc. Joint
Repurchase Agreement, 2.35%, 01/03/05, dated
12/31/04, repurchase value of $4,321,846
(collateralized by: U.S. Government obligations
in a pooled cash account, total market value
$4,407,420)...................................... 4,321,000
3,790,000 UBS Financial Services Inc. Joint Repurchase
Agreement, 2.27%, 01/03/05, dated 12/31/04,
repurchase value of $3,790,717 (collateralized
by: U.S. Government obligations in a pooled
cash account, total market value $3,865,800)..... 3,790,000
------------
Total Repurchase Agreements -
(identified cost $12,000,000)................ 12,000,000
------------
Total Investment of Cash Collateral for
Securities Loaned - (identified cost
$30,759,892)................................... 30,759,892
------------
21
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
DECEMBER 31, 2004
================================================================================
Total Investments - (100.28%) - (identified cost
$4,965,681,654) - (a)........................... $7,361,408,169
Liabilities Less Other Assets - (0.28%)........... (20,432,769)
---------------
Net Assets - (100%)............................. $7,340,975,400
===============
*Non-Income Producing Security.
(a) Aggregate cost for Federal Income Tax purposes is
$4,971,348,915. At December 31, 2004, unrealized appreciation
(depreciation) of securities for Federal Income Tax purposes is
as follows:
Unrealized appreciation........................... $2,516,377,290
Unrealized depreciation........................... (126,318,036)
---------------
Net unrealized appreciation ................... $2,390,059,254
===============
(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 year ended December 31, 2004. The
aggregate fair value of the securities of affiliated companies held by the Fund
as of December 31, 2004, amounts to $140,719,401. Transactions during the period
in which the issuers were affiliates are as follows:
Shares Gross Gross Shares Dividend
Security December 31, 2003 Additions Reductions December 31, 2004 Income
- -------- ----------------- --------- ---------- ----------------- ------
Centerpoint Properties
Trust 1,469,194 1,469,194 - 2,938,388 $ 3,117,042
(c) Loaned security - See Note 7 of the Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS
22
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC.
DECEMBER 31, 2004
VALUE
SHARES SECURITY (NOTE 1)
================================================================================
COMMON STOCK - (98.56%)
AUTOMOTIVE - (7.79%)
227,000 AutoNation, Inc.*................................... $ 4,360,670
46,100 AutoZone, Inc.*..................................... 4,209,391
-----------
8,570,061
-----------
BANKS AND SAVINGS & LOAN ASSOCIATIONS - (4.11%)
22,700 Commerce Bancorp, Inc. ............................. 1,461,880
49,800 Golden West Financial Corp. ........................ 3,058,716
-----------
4,520,596
-----------
BUILDING & HEAVY CONSTRUCTION - (0.02%)
600 Tae Young Corp. .................................... 21,735
-----------
BUILDING PRODUCTS - (1.24%)
32,000 Home Depot, Inc. ................................... 1,367,680
-----------
BUSINESS SERVICES - (0.55%)
10,200 D&B Corp.*.......................................... 608,430
-----------
CHEMICALS - (2.40%)
43,600 Sigma-Aldrich Corp. ................................ 2,636,056
-----------
CONSUMER PRODUCTS - (0.64%)
2,800 Amorepacific Corp. ................................. 701,893
-----------
DISCOUNT RETAILER - (4.35%)
33,600 Costco Wholesale Corp. ............................. 1,626,576
14,700 Kmart Holding Corp.*................................ 1,451,919
106,000 99 Cents Only Stores*............................... 1,712,960
-----------
4,791,455
-----------
DISTRIBUTORS - (4.37%)
78,700 Aramark Corp., Class B.............................. 2,086,337
84,000 Hughes Supply, Inc. ................................ 2,717,400
-----------
4,803,737
-----------
DIVERSIFIED - (5.14%)
64,812 Groupe Bruxelles Lambert S.A. ...................... 5,255,388
6,970 Nong Shim Holdings Co., Ltd. ....................... 395,227
-----------
5,650,615
-----------
DIVERSIFIED COMMERCIAL SERVICES - (1.34%)
520,000 Rentokil Initial PLC................................ 1,471,946
-----------
DIVERSIFIED MANUFACTURING - (3.35%)
103,000 Tyco International Ltd. ............................ 3,681,220
-----------
ELECTRONICS - (6.68%)
75,300 Agilent Technologies, Inc.*......................... 1,814,730
37,300 Applied Materials, Inc.*............................ 637,830
23
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - (CONTINUED)
DECEMBER 31, 2004
VALUE
SHARES SECURITY (NOTE 1)
================================================================================
COMMON STOCK - (CONTINUED)
ELECTRONICS - (CONTINUED)
51,100 Garmin Ltd. ....................................... $ 3,101,770
211,128 Taiwan Semiconductor Manufacturing Co. Ltd., ADR... 1,792,477
------------
7,346,807
------------
ENERGY - (7.41%)
68,000 Calpine Corp.*..................................... 267,920
22,900 PetroChina Co. Ltd., ADR........................... 1,229,501
70,500 Premcor Inc........................................ 2,972,985
58,700 Sempra Energy...................................... 2,153,116
36,100 Transocean Inc.*................................... 1,530,279
------------
8,153,801
------------
FINANCIAL SERVICES - (1.75%)
49,500 JPMorgan Chase & Co. .............................. 1,930,995
------------
FOOD/BEVERAGE & RESTAURANT - (5.37%)
32,125 Heineken Holding NV, Class A....................... 967,600
900 Lotte Chilsung Beverage Co., Ltd. ................. 834,621
1,200 Lotte Confectionery Co., Ltd. ..................... 919,243
40,200 McDonald's Corp. .................................. 1,288,812
28,400 Unilever NV, CVA................................... 1,896,496
------------
5,906,772
------------
HEALTH CARE - (7.87%)
42,100 AmerisourceBergen Corp. ........................... 2,470,428
34,400 Cardinal Health, Inc. ............................. 2,000,360
22,380 Fisher Scientific International Inc.* ............. 1,396,064
20,000 IDEXX Laboratories, Inc.* ......................... 1,090,200
39,900 Lincare Holdings Inc.*............................. 1,701,336
------------
8,658,388
------------
INDUSTRIAL - (1.27%)
26,200 Sealed Air Corp.*.................................. 1,395,674
------------
INFORMATION/INFORMATION PROCESSING - (2.55%)
105,900 Reynolds & Reynolds Co., Class A................... 2,807,409
------------
INSURANCE BROKERS - (2.74%)
7,000 Brown & Brown, Inc. ............................... 304,850
82,500 Marsh & McLennan Cos, Inc. ........................ 2,714,250
------------
3,019,100
INVESTMENT FIRMS - (0.30%)
1,100 Julius Baer Holding, Ltd. AG....................... 329,952
------------
LIFE INSURANCE - (0.73%)
20,300 AFLAC Inc. ........................................ 808,752
------------
24
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - (CONTINUED)
DECEMBER 31, 2004
VALUE
SHARES SECURITY (NOTE 1)
================================================================================
COMMON STOCK - (CONTINUED)
MANUFACTURING - (3.20%)
52,430 Hunter Douglas NV................................ $ 2,785,749
8,100 Mohawk Industries, Inc.*......................... 739,125
------------
3,524,874
------------
MEDIA - (6.44%)
67,800 Lagardere S.C.A. ................................ 4,873,564
40,500 WPP Group PLC, ADR............................... 2,213,730
------------
7,087,294
------------
PROPERTY/CASUALTY INSURANCE - (0.94%)
13,485 Cincinnati Financial Corp. ...................... 596,846
1,200 Markel Corp.*.................................... 436,800
------------
1,033,646
------------
REINSURANCE - (2.55%)
9,000 Everest Re Group, Ltd. .......................... 806,040
32,375 Transatlantic Holdings, Inc. .................... 2,001,746
------------
2,807,786
------------
RETAILING - (3.22%)
100,000 Tiffany & Co. ................................... 3,197,000
57,600 WH Smith PLC..................................... 345,404
------------
3,542,404
------------
TECHNOLOGY - (3.45%)
556,164 Compal Electronics, Inc. ........................ 554,590
8,000 Lexmark International, Inc., Class A*............ 680,000
96,100 Microsoft Corp. ................................. 2,566,831
------------
3,801,421
------------
TELECOMMUNICATIONS - (6.79%)
441,600 Covad Communications Group, Inc.*................ 945,024
66,700 Motorola, Inc. .................................. 1,147,240
96,000 Nokia Oyj........................................ 1,510,080
158,500 Nokia Oyj, ADR................................... 2,483,695
23,500 SK Telecom Co., Ltd., ADR........................ 522,875
49,300 Telewest Global, Inc.*........................... 862,750
------------
7,471,664
------------
Total Common Stock -
(identified cost $80,214,701)................ 108,452,163
------------
25
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - (CONTINUED)
DECEMBER 31, 2004
================================================================================
VALUE
PRINCIPAL SECURITY (NOTE 1)
================================================================================
SHORT TERM INVESTMENTS - (1.59%)
U.S. TREASURY BILLS - (0.44%)
$ 490,000 2.055%, 02/24/05 -
(identified cost $488,490) - (b)............... $ 488,490
-------------
REPURCHASE AGREEMENTS - (1.15%)
408,000 Goldman, Sachs & Co. Joint Repurchase Agreement,
2.25%, 01/03/05, dated 12/31/04, repurchase value
of $408,077 (collateralized by: U.S. Government
obligations in a pooled cash account, total market
value $416,160)................................ 408,000
454,000 Nomura Securities International, Inc. Joint
Repurchase Agreement, 2.35%, 01/03/05, dated
12/31/04, repurchase value of $454,089
(collateralized by: U.S. Government obligations
in a pooled cash account, total market value
$463,080)...................................... 454,000
398,000 UBS Financial Services Inc. Joint Repurchase
Agreement, 2.27%, 01/03/05, dated 12/31/04,
repurchase value of $398,075 (collateralized by:
U.S. Government obligations in a pooled cash
account, total market value $405,960).......... 398,000
-------------
Total Repurchase Agreements -
(identified cost $1,260,000)............... 1,260,000
-------------
Total Short Term Investments -
(identified cost $1,748,490)............... 1,748,490
-------------
Total Investments - (100.15%) -
(identified cost $81,963,191) - (a)........ 110,200,653
Liabilities Less Other Assets - (0.15%)........ (160,070)
-------------
Net Assets - (100%).......................... $110,040,583
=============
*Non-Income Producing Security.
(a) Aggregate cost for Federal Income Tax purposes is $82,448,752. At December
31, 2004, unrealized appreciation (depreciation) of securities for Federal
Income Tax purposes is as follows:
Unrealized appreciation........................ $ 29,274,943
Unrealized depreciation........................ (1,523,042)
-------------
Net unrealized appreciation ................. $ 27,751,901
=============
(b) A sufficient amount of liquid assets has been designated to cover
outstanding written put options, as follows (see Note 8 of the Notes to
Financial Statements):
Contracts Premium
Subject to Put Puts Expiration Date Exercise Price Value Received
- -----------------------------------------------------------------------------------------------
(48) Kmart Holding Corp. 01/20/07 $100.00 $(97,920) $(97,233)
SEE NOTES TO FINANCIAL STATEMENTS
26
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND
DECEMBER 31, 2004
VALUE
PRINCIPAL (NOTE 1)
================================================================================
FANNIE MAE - (30.03%)
$ 800,000 2.06%, 01/12/05...................................... $ 799,496
2,000,000 2.03%, 01/26/05...................................... 1,997,181
1,000,000 1.65%, 02/08/05 (c).................................. 1,000,000
2,000,000 1.50%, 02/14/05 (c).................................. 1,997,873
1,300,000 7.125%, 02/15/05..................................... 1,307,417
6,000,000 2.35%, 02/18/05 (b).................................. 6,000,058
5,000,000 1.40%, 02/25/05...................................... 5,000,000
2,500,000 2.00%, 03/23/05...................................... 2,488,750
375,000 2.46%, 03/23/05 (b).................................. 374,902
50,000 7.375%, 03/28/05..................................... 50,560
3,000,000 2.265%, 04/28/05 (b)................................. 2,999,855
2,000,000 1.40%, 05/03/05...................................... 2,000,000
3,000,000 1.91625%, 07/06/05 (b)............................... 2,999,178
3,000,000 2.25%, 07/26/05 (b).................................. 2,999,658
750,000 2.33%, 12/09/05 (b).................................. 749,395
750,000 2.39%, 12/19/05 (b).................................. 749,353
------------
Total FANNIE MAE - (identified cost $33,513,676)... 33,513,676
------------
FEDERAL FARM CREDIT BANK - (2.24%)
500,000 5.72%, 04/13/05...................................... 504,659
2,000,000 2.269%, 06/10/05 (b)................................. 2,000,000
------------
Total Federal Farm Credit Bank -
(identified cost $2,504,659)..................... 2,504,659
------------
FEDERAL HOME LOAN BANK - (30.40%)
2,000,000 1.958%, 01/05/05 (b)................................. 1,999,999
150,000 4.485%, 01/11/05..................................... 150,103
500,000 2.09%, 01/19/05...................................... 499,478
500,000 2.09%, 01/21/05...................................... 499,419
5,000,000 1.45%, 03/11/05...................................... 5,000,000
1,500,000 2.405%, 03/15/05 (b)................................. 1,499,746
1,000,000 1.625%, 04/15/05..................................... 997,490
1,000,000 2.338%, 04/25/05 (b)................................. 999,983
5,000,000 1.30%, 04/27/05...................................... 5,000,000
2,000,000 1.55%, 05/06/05...................................... 2,000,000
2,000,000 1.625%, 06/15/05..................................... 1,990,713
5,000,000 2.328%, 07/26/05 (b)................................. 4,999,432
3,150,000 2.205%, 08/02/05 (b)................................. 3,149,671
2,055,000 1.50%, 08/19/05...................................... 2,039,321
100,000 6.05%, 09/08/05...................................... 102,285
3,000,000 2.30688%, 09/16/05 (b)............................... 2,999,192
------------
Total Federal Home Loan Bank -
(identified cost $33,926,832).................... 33,926,832
------------
27
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND
DECEMBER 31, 2004
VALUE
PRINCIPAL (NOTE 1)
================================================================================
FREDDIE MAC - (4.81%)
$ 1,000,000 1.875%, 01/15/05....................................$ 999,847
2,000,000 2.085%, 02/01/05.................................... 1,996,409
2,000,000 3.875%, 02/15/05.................................... 2,004,468
100,000 4.25%, 04/11/05..................................... 100,453
250,000 1.50%, 07/29/05..................................... 248,159
25,000 2.01%, 01/27/06..................................... 24,715
------------
Total FREDDIE MAC - (identified cost $5,374,051).. 5,374,051
------------
REPURCHASE AGREEMENTS - (32.40%)
11,716,000 Goldman, Sachs & Co. Joint Repurchase Agreement,
2.25%, 01/03/05, dated 12/31/04, repurchase
value of $11,718,197 (collateralized by:
U.S. Government obligations in a pooled cash
account, total market value $11,950,320).......... 11,716,000
13,018,000 Nomura Securities International, Inc. Joint
Repurchase Agreement, 2.35%, 01/03/05, dated
12/31/04, repurchase value of $13,020,549
(collateralized by: U.S. Government obligations
in a pooled cash account, total market value
$13,278,360)...................................... 13,018,000
11,423,000 UBS Financial Services Inc. Joint Repurchase
Agreement, 2.27%, 01/03/05, dated 12/31/04,
repurchase value of $11,425,161 (collateralized
by: U.S. Government obligations in a pooled cash
account, total market value $11,651,460).......... 11,423,000
------------
Total Repurchase Agreements -
(identified cost $36,157,000)..................... 36,157,000
------------
Total Investments - (99.88%) -
(identified cost $111,476,218) - (a)............ 111,476,218
Other Assets Less Liabilities - (0.12%)........... 130,317
------------
Net Assets - (100%).............................$111,606,535
============
(a) Aggregate cost for Federal Income Tax purposes is $111,476,218.
(b) The interest rates on floating rate securities, shown as of December 31,
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 December 31, 2004.
SEE NOTES TO FINANCIAL STATEMENTS
28
SELECTED FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
At December 31, 2004
================================================================================
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
--------------- -------------- --------------
ASSETS:
Investments in securities, at value *
(see accompanying Schedules of Investments):
Unaffiliated companies................................. $ 7,189,928,876 $ 110,200,653 $ 111,476,218
Affiliated companies................................... 140,719,401 - -
Collateral of securities loaned (Note 7)............... 30,759,892 - -
Cash..................................................... 166,493 2,643 3,372
Receivables:
Dividends and interest................................. 10,834,488 75,520 248,434
Capital stock sold..................................... 15,113,394 18,792 66,731
Prepaid expenses....................................... 61,614 3,453 4,901
--------------- -------------- --------------
Total assets......................................... 7,387,584,158 110,301,061 111,799,656
--------------- -------------- --------------
LIABILITIES:
Return of collateral loaned (Note 7).................... 30,759,892 - -
Payables:
Capital stock reacquired.............................. 9,955,149 38,090 44,432
Accrued expenses........................................ 2,419,306 59,455 39,724
Accrued management fees................................. 3,474,411 65,013 29,318
Options written, at value (premiums received $97,233)
(see accompanying Schedule of Investments)............ - 97,920 -
Distributions payable................................... - - 79,647
--------------- -------------- --------------
Total liabilities.................................. 46,608,758 260,478 193,121
--------------- -------------- --------------
NET ASSETS ................................................ $ 7,340,975,400 $ 110,040,583 $ 111,606,535
=============== ============== ==============
NET ASSETS CONSIST OF:
Par value of shares of capital stock.................... $ 248,874,001 $ 2,212,637 $ 11,160,654
Additional paid-in capital.............................. 5,262,828,003 80,060,765 100,445,881
Overdistributed net investment income................... (2,946,989) (26,300) -
Accumulated net realized losses from investments
and foreign currency transactions..................... (563,510,381) (444,001) -
Net unrealized appreciation on
investments and foreign currency transactions......... 2,395,730,766 28,237,482 -
--------------- -------------- --------------
$ 7,340,975,400 $ 110,040,583 $ 111,606,535
=============== ============== ==============
* Including cost for Unaffiliated companies, Affiliated companies, and
Collateral of securities loaned of $4,906,293,583, $28,628,179, and $30,759,892
respectively for Selected American Shares; and securities valued at $29,728,225
were on loan from Selected American Shares, and Collateral received for
securities on loan is valued at $30,759,892. Including cost of $81,963,191 for
Selected Special Shares. Including repurchase agreements and cost of $36,157,000
and $111,476,218, respectively for Selected Daily Government Fund.
29
SELECTED FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - (Continued)
At December 31, 2004
================================================================================
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
--------------- -------------- --------------
CLASS S SHARES:
Net Assets............................................. $ 6,659,830,282 $ 90,535,595 $ 106,643,435
Shares Outstanding..................................... 180,617,523 7,280,337 106,643,435
Net asset value, offering and redemption price
per share (Net Assets divided by Shares Outstanding). $ 36.87 $ 12.44 $ 1.00
=========== ========== ==========
CLASS D SHARES:
Net Assets............................................. $ 681,145,118 $ 19,504,988 $ 4,963,100
Shares Outstanding..................................... 18,481,678 1,570,209 4,963,100
Net asset value, offering and redemption price
per share (Net Assets divided by Shares Outstanding). $ 36.86 $ 12.42 $ 1.00
=========== ========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
30
SELECTED FUNDS
STATEMENTS OF OPERATIONS
For the year ended December 31, 2004
================================================================================
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
-------------- -------------- --------------
INVESTMENT INCOME (LOSS):
Income:
Dividends
Unaffiliated companies*............................... $ 104,369,164 $ 1,537,743 $ -
Affiliated companies.................................. 3,117,042 - -
Interest................................................ 2,980,651 26,074 1,576,133
Security lending fees................................... 339,361 - -
-------------- -------------- --------------
Total income........................................ 110,806,218 1,563,817 1,576,133
-------------- -------------- --------------
Expenses:
Management fees (Note 2)................................ 36,126,515 690,416 336,876
Custodian fees.......................................... 1,123,448 45,320 19,302
Transfer agent fees
Class S............................................... 5,120,319 99,652 35,364
Class D............................................... 96,640 7,009 2,799
Audit fees.............................................. 45,600 14,400 12,000
Legal fees.............................................. 90,432 6,186 5,427
Reports to shareholders................................. 666,085 9,013 7,458
Directors' fees and expenses............................ 403,633 6,302 10,270
Registration and filing fees............................ 77,107 40,896 45,142
Miscellaneous........................................... 67,769 7,099 3,101
Payments under distribution plan - Class S (Note 3)..... 15,768,451 229,881 274,547
-------------- -------------- --------------
Total expenses...................................... 59,585,999 1,156,174 752,286
Expenses paid indirectly (Note 6)................... (43,326) (68) (15)
-------------- -------------- --------------
Net expenses........................................ 59,542,673 1,156,106 752,271
-------------- -------------- --------------
Net investment income............................... 51,263,545 407,711 823,862
-------------- -------------- --------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investment transactions................................ (46,701,415) 4,741,318 -
Foreign currency transactions.......................... (130,018) (12,424) -
Net increase in unrealized appreciation
of investments during the period...................... 764,724,720 5,967,301 -
-------------- -------------- --------------
Net realized and unrealized gain on investments
and foreign currency................................... 717,893,287 10,696,195 -
-------------- -------------- --------------
Net increase in net assets resulting from operations... $ 769,156,832 $ 11,103,906 $ 823,862
============== ============== ==============
* Net of foreign taxes withheld as follows............... $ 3,003,268 $ 89,669 -
SEE NOTES TO FINANCIAL STATEMENTS
31
SELECTED FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended December 31, 2004
================================================================================
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
--------------- -------------- --------------
OPERATIONS:
Net investment income................................... $ 51,263,545 $ 407,711 $ 823,862
Net realized gain (loss) from investments and foreign
currency transactions................................. (46,831,433) 4,728,894 -
Net increase in unrealized appreciation
of investments........................................ 764,724,720 5,967,301 -
--------------- -------------- --------------
Net increase in net assets resulting from operations.... 769,156,832 11,103,906 823,862
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class S............................................... (46,865,527) (297,243) (793,973)
Class D............................................... (5,914,843) (100,305) (29,889)
Realized gains from investment transactions
Class S............................................... - (3,731,939) -
Class D............................................... - (745,595) -
Return of capital
Class S............................................... (1,832,879) - -
Class D............................................... (231,325) - -
CAPITAL SHARE TRANSACTIONS:
Net increase (decrease) in net assets resulting from
Capital share transactions (Note 5)
Class S............................................... 12,354,275 (10,581,291) (6,209,091)
Class D............................................... 636,424,037 18,739,902 4,963,100
--------------- -------------- --------------
Total increase (decrease) in net assets..................... 1,363,090,570 14,387,435 (1,245,991)
NET ASSETS:
Beginning of year....................................... 5,977,884,830 95,653,148 112,852,526
---------------- --------------- --------------
End of year*............................................ $ 7,340,975,400 $ 110,040,583 $ 111,606,535
================ =============== ==============
*Including overdistributed net investment income of... $ (2,946,989) $ (26,300) -
SEE NOTES TO FINANCIAL STATEMENTS
32
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
33
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
================================================================================
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, previously a
series of the Trust, 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.
Effective May 3, 2004, the existing shares of the Funds were renamed Class
S shares and a new class of shares, Class D shares, commenced operations. 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.
34
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2004
================================================================================
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 December 31, 2004, American Shares, Inc. had post October 2004
losses of approximately $21,992,000 available to offset future capital gains, if
any, which expire in 2013. At December 31, 2004, the Funds had available for
federal income tax purposes unused capital loss carryforwards as follows:
AMERICAN
SHARES, INC.
------------
EXPIRING
--------
12/31/2009 $ 67,867,000
12/31/2010 296,227,000
12/31/2011 109,428,000
12/31/2012 63,796,000
---------------
TOTAL $ 537,318,000
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.
35
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2004
================================================================================
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 set up a Rabbi Trust to
provide for the deferred compensation plan for independent Directors/Trustees
that enables them to elect to defer receipt of all or a portion of annual fees
they are entitled to receive. The value of an eligible Director's/Trustee's
account is based upon years of service and fees paid to each Director/Trustee
during the years of service. The amount paid to the Director/Trustee under the
plan will be determined based upon the performance of the Selected Funds.
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 and the tax deferral of losses on "wash
sale" transactions. The character of dividends and distributions made during the
fiscal year from net investment income and net realized securities gains may
differ from their ultimate characterization for federal income tax purposes.
Also, due to the timing of dividends and distributions, the fiscal year in which
amounts are distributed may differ from the fiscal year in which income or
realized gain was recorded by the Funds. The Funds adjust the classification of
distributions to shareholders to reflect the differences between financial
statement amounts and distributions determined in accordance with income tax
regulations. Accordingly, during the year ended December 31, 2004, for Selected
American Shares, amounts have been reclassified to reflect a decrease in
undistributed net investment loss of $1,934,186, a decrease in accumulated net
realized loss of $130,018, and a decrease in paid in capital of $2,064,204; for
Selected Special Shares, amounts have been reclassified to reflect an increase
in undistributed net investment loss of $12,424 and a corresponding decrease in
accumulated net realized loss of $12,424.
36
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2004
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - (CONTINUED)
The tax character of distributions paid during the years ended December 31, 2004
and 2003, was as follows:
Ordinary Long-Term Return of
Income Capital Gain Capital Total
------ ------------ ------- -----
Selected American Shares
2004........................ $ 52,780,370 $ - $ 2,064,204 $ 54,844,574
2003........................ 35,901,174 - 2,024,047 37,925,221
Selected Special Shares
2004........................ 1,271,257 3,603,825 - 4,875,082
2003........................ 1,898,668 1,758,025 - 3,656,693
Selected Daily Government Fund
2004........................ 823,862 - - 823,862
2003........................ 626,278 - - 626,278
As of December 31, 2004 the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
SELECTED SELECTED
AMERICAN SPECIAL
SHARES SHARES
------ ------
Undistributed net investment income............. $ - $ -
Accumulated net realized losses from
investments and foreign currency
transactions.................................. (559,309,964) -
Undistributed long term capital gain............ - 41,559
Net unrealized appreciation (depreciation)
on investments................................ 2,390,063,505 27,751,922
--------------- --------------
Total...................................... $ 1,830,753,541 $ 27,793,481
=============== ==============
37
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2004
================================================================================
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 year ended December 31, 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 year ended December 31, 2004 was
$192,876, $11,435, and $3,504 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 year ended December 31,
2004, American Shares, Inc., Special Shares, Inc., and Daily Government incurred
distribution services fees totaling $15,768,451, $229,881, and $274,547,
respectively.
There are no distribution service fees for the Funds' Class D shares.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities) during the year ended December 31, 2004 were as follows:
AMERICAN SPECIAL
SHARES, INC. SHARES, INC.
------------ ------------
Cost of purchases............ $ 970,919,639 $ 33,031,448
Proceeds of sales............ $ 178,298,592 $ 29,697,956
38
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2004
================================================================================
NOTE 5 - CAPITAL STOCK
At December 31, 2004, there were 300 million shares of capital stock of American
Shares, Inc. ($1.25 par value per share) authorized. At December 31, 2004, there
were 50 million shares of capital stock of Special Shares, Inc. ($0.25 par value
per share) authorized. At December 31, 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
YEAR ENDED
DECEMBER 31, 2004
----------------------------------------------------
AMERICAN SPECIAL
SHARES SHARES DAILY
INC. INC. GOVERNMENT
-------------- -------------- --------------
Shares sold........................................ 41,612,398 1,251,817 7,244,394
Shares issued in reinvestment of distributions..... 1,266,365 320,624 748,379
-------------- -------------- --------------
42,878,763 1,572,441 7,992,773
Shares redeemed/transferred out.................... (42,465,137) (2,466,385) (14,201,864)
-------------- -------------- --------------
Net increase (decrease)........................ 413,626 (893,944) (6,209,091)
============== ============== ==============
Proceeds from shares sold.......................... $1,433,572,159 $ 14,996,979 $ 7,244,394
Proceeds from shares issued in
reinvestment of distributions.................... 45,994,205 3,879,551 748,379
-------------- -------------- --------------
1,479,566,364 18,876,530 7,992,773
Cost of shares redeemed/transferred out............ (1,467,212,089) (29,457,821) (14,201,864)
-------------- -------------- --------------
Net increase (decrease)........................ $ 12,354,275 $ (10,581,291) $ (6,209,091)
============== ============== ==============
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)
============== ============== ==============
39
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2004
================================================================================
NOTE 5 - CAPITAL STOCK - (CONTINUED)
CLASS D MAY 3, 2004
(INCEPTION OF OFFERING)
THROUGH DECEMBER 31, 2004
----------------------------------------------------
AMERICAN SPECIAL
SHARES SHARES DAILY
INC. INC. GOVERNMENT
-------------- -------------- --------------
Shares sold/transferred in........................... 18,753,501 1,555,774 6,333,859
Shares issued in reinvestment of distributions....... 155,056 64,217 26,236
-------------- -------------- --------------
18,908,557 1,619,991 6,360,095
Shares redeemed...................................... (426,879) (49,782) (1,396,995)
-------------- -------------- --------------
Net increase....................................... 18,481,678 1,570,209 4,963,100
============== ============== ==============
Proceeds from shares sold/transferred in............. $ 645,807,961 $ 18,546,678 $ 6,333,859
Proceeds from shares issued in reinvestment
of distributions................................... 5,626,979 775,744 26,236
-------------- -------------- --------------
651,434,940 19,322,422 6,360,095
Cost of shares redeemed.............................. (15,010,903) (582,520) (1,396,995)
-------------- -------------- --------------
Net increase....................................... $ 636,424,037 $ 18,739,902 $ 4,963,100
============== ============== ==============
NOTE 6 - EXPENSES PAID INDIRECTLY
Under an agreement with the custodian bank, each Fund's custodian fees are
reduced for earnings on cash balances maintained at the custodian by the Funds.
During the year ended December 31, 2004, such reductions amounted to $1,638,
$68, and $15 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 year ended December 31, 2004, the reduction amounted to
$41,688.
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 December 31, 2004, the Fund had on loan securities
valued at $29,728,225; cash of $30,759,892 was received as collateral for the
loans. 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 - OPTION ACTIVITY
Each Fund may purchase or sell options (including "put options") to pursue
its investment objective or for hedging purposes. When selling a put option, the
purchaser receives the right to sell, and the writer (the Fund) the obligation
to buy, the underlying investment at the exercise price during the option
period.
40
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2004
================================================================================
NOTE 8 - OPTION ACTIVITY - (CONTINUED)
When writing a put option on a security, to secure its obligation to pay
for the underlying security, each Fund will deposit, in escrow, liquid assets
with a value equal to or greater than the exercise price of the underlying
securities. Each Fund therefore foregoes the opportunity of investing the
segregated assets. The premium each Fund receives from writing a put option
represents a profit, as long as the price of the underlying investment remains
equal to or above the exercise price of the put. However, each Fund also assumes
the obligation, during the option period, to buy the underlying investment from
the buyer of the put at the exercise price, even if the value of the investment
falls below the exercise price. See the Statement of Additional Information for
more information concerning the Funds' use of options.
Options are valued daily based upon the Funds' valuation procedures (Note
1) and unrealized appreciation or depreciation is recorded. The Funds will
realize a gain or loss upon the expiration or closing of the option transaction.
Put options written are reported as a liability in the Statement of Assets and
Liabilities. Realized and unrealized gains and losses are reported in the
Statement of Operations.
Written put option activity for the year ended December 31, 2004 was as follows:
SELECTED SPECIAL SHARES
------------------------
Number of Amount of
Contracts Premiums
--------- --------
Options outstanding as of December 31, 2003........ - -
Options written................................ 48 $ 97,233
Options closed or expired...................... - -
Options exercised.............................. - -
--------- ---------
Options outstanding as of December 31, 2004........ 48 $ 97,233
========= =========
NOTE 9 - BANK BORROWINGS
Each Fund may borrow up to 5% of its assets from a bank to purchase
portfolio securities, or for temporary and emergency purposes. The purchase of
securities with borrowed funds creates leverage in the Fund. Each Fund has
entered into an agreement, which enables it to participate with certain other
funds managed by the Adviser in an unsecured line of credit with a bank, which
permits borrowings up to $50 million, collectively. Interest is charged based on
its borrowings, at a rate equal to the overnight Federal Funds Rate plus 0.75%.
The Funds had no borrowings outstanding for the year ended December 31, 2004.
NOTE 10 - 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.
41
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2004
================================================================================
NOTE 11 - 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.
All four suits have been consolidated into a single action. Davis Selected
Advisers L.P. believes the actions are without merit and the Defendants intend
to vigorously defend the proceedings. Although no determination can be made at
this time, the Funds do not expect this lawsuit to have a material adverse
effect on the assets or results of the Funds.
42
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
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
2004 2003 2002 2001 2000
---- ---- ---- ---- ----
Net Asset Value, Beginning of Period.... $ 33.17 $ 25.51 $ 30.99 $ 35.33 $ 35.80
------- ------- -------- ------- --------
Income (Loss) From Investment Operations
Net Investment Income.................. .26 .22 .17 .14 .15
Net Realized and Unrealized
Gains (Losses)...................... 3.71 7.65 (5.45) (4.10) 2.98
------- ------- -------- ------- --------
Total From Investment Operations.... 3.97 7.87 (5.28) (3.96) 3.13
Dividends and Distributions
Dividends from Net Investment Income... (.26) (.20) (.17) (.14) (.14)
Distributions from Realized Gains...... - - - (.24) (3.46)
Dividends in Excess of Net
Investment Income................... - - - -(4) -
Return of Capital..................... (.01) (.01) (.03) - -
------- ------- -------- ------- --------
Total Dividends and Distributions... (.27) (.21) (.20) (.38) (3.60)
------- ------- -------- ------- --------
Net Asset Value, End of Period.......... $ 36.87 $ 33.17 $ 25.51 $ 30.99 $ 35.33
======= ======= ======== ======= ========
Total Return(1)......................... 11.97% 30.90% (17.06)% (11.17)% 9.33%
Ratios/Supplemental Data
Net Assets, End of Period
(000,000 omitted)................... $6,660 $5,978 $4,346 $5,565 $5,707
Ratio of Expenses to Average Net Assets .92% .94%(3) .94%(3) .94%(3) .92%
Ratio of Net Investment Income to
Average Net Assets.................. .76% .80% .61% .45% .52%
Portfolio Turnover Rate(2)............. 3% 8% 19% 20% 22%
(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.
(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 was .93% for 2003, 2002, and 2001.
(4) Less than $0.005 per share.
SEE NOTES TO FINANCIAL STATEMENTS
43
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
DECEMBER 31, 2004
-----------------
Net Asset Value, Beginning of Period.... $ 34.12
-------
Income From Investment Operations
Net Investment Income.................. .18
Net Realized and Unrealized Gains...... 2.91
-------
Total From Investment Operations.... 3.09
-------
Dividends and Distributions
Dividends from Net Investment Income... (.34)
Return of Capital..................... (.01)
-------
Total Dividends and Distributions... (.35)
-------
Net Asset Value, End of Period.......... $ 36.86
=======
Total Return(1)........................... 9.08%
Ratios/Supplemental Data
Net Assets, End of Period
(000,000 omitted)................... $681
Ratio of Expenses to Average Net Assets .65%*
Ratio of Net Investment Income to
Average Net Assets.................. 1.10%*
Portfolio Turnover Rate(2)............. 3%
(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
44
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
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2004 2003 2002 2001 2000
---- ---- ---- ---- ----
Net Asset Value, Beginning of Period....... $ 11.70 $ 8.61 $ 10.50 $ 13.68 $ 16.17
------- ------- ------- ------- -------
Income (Loss) From Investment Operations
Net Investment Income (Loss)............. .05 (.04) (.04) (.02) -
Net Realized and Unrealized
Gains (Losses)......................... 1.26 3.60 (1.81) (1.95) (.25)
------- ------- ------- ------- -------
Total From Investment Operations....... 1.31 3.56 (1.85) (1.97) (.25)
Dividends and Distributions
Dividends from Net Investment Income...... (.04) - - - -
Distributions from Realized Gains......... (.53) (.47) (.04) (1.21) (2.24)
------- ------- ------- ------- -------
Total Dividends and Distributions...... (.57) (.47) (.04) (1.21) (2.24)
------- ------- ------- ------- -------
Net Asset Value, End of Period............. $ 12.44 $ 11.70 $ 8.61 $ 10.50 $ 13.68
======= ======= ======= ======= =======
Total Return(1)............................ 11.34% 41.40% (17.62)% (14.41)% (1.10)%
Net Assets, End of Period (000 omitted).. $90,536 $95,653 $59,762 $73,092 $95,222
Ratio of Expenses to Average Net Assets.. 1.17% 1.21% 1.17%(3) 1.15%(3) 1.15%
Ratio of Net Investment Income (Loss) to
Average Net Assets..................... .37% (.39)% (.46)% (.20)% (.25)%
Portfolio Turnover Rate(2)............... 30% 46% 46% 117% 35%
(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.
(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.
SEE NOTES TO FINANCIAL STATEMENTS
45
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
DECEMBER 31, 2004
-----------------
Net Asset Value, Beginning of Period....... $ 11.97
-------
Income From Investment Operations
Net Investment Income.................... .05
Net Realized and Unrealized Gains........ 1.00
-------
Total From Investment Operations....... 1.05
-------
Dividends and Distributions
Dividends from Net Investment Income...... (.07)
Distributions from Realized Gains......... (.53)
-------
Total Dividends and Distributions...... (.60)
-------
Net Asset Value, End of Period............. $ 12.42
=======
Total Return(1)............................ 8.91%
Net Assets, End of Period (000 omitted).. $19,505
Ratio of Expenses to Average Net Assets.. .91%*
Ratio of Net Investment Income to
Average Net Assets..................... .86%*
Portfolio Turnover Rate(2)............... 30%
(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
46
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
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
2004 2003 2002 2001 2000
---- ---- ---- ---- ----
Net Asset Value, Beginning of Period........ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Income From Investment Operations
Net Investment Income..................... .007 .005 .013 .037 .056
Dividends and Distributions
Dividends from Net Investment Income...... (.007) (.005) (.013) (.037) (.056)
------- ------- ------- ------- -------
Net Asset Value, End of Period.............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return(1)............................. 0.73% 0.54% 1.32% 3.73% 5.80%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted) $106,643 $112,853 $116,187 $112,380 $130,126
Ratio of Expenses to Average Net Assets .68% .67% .67% .66% .67%
Ratio of Net Investment Income
to Average Net Assets................... .72% .54% 1.30% 3.73% 5.68%
(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.
SEE NOTES TO FINANCIAL STATEMENTS
47
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
DECEMBER 31, 2004
-----------------
Net Asset Value, Beginning of Period.... $ 1.000
-------
Income From Investment Operations
Net Investment Income.................. .007
Dividends and Distributions
Dividends from Net Investment Income... (.007)
-------
Net Asset Value, End of Period.......... $ 1.000
=======
Total Return(1)......................... 0.74%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted) $4,963
Ratio of Expenses to Average Net Assets .44%*
Ratio of Net Investment Income
to Average Net Assets............... 1.21%*
(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
48
SELECTED FUNDS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Directors/Trustees
of Selected American Shares, Inc., Selected Special Shares, Inc., and Selected
Capital Preservation Trust:
We have audited the accompanying statements of assets and liabilities of
Selected American Shares, Inc., Selected Special Shares, Inc., and Daily
Government Fund (a series of Selected Capital Preservation Trust), including the
schedules of investments, as of December 31, 2004 and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2004, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Selected American Shares, Inc., Selected Special Shares, Inc., and Daily
Government Fund as of December 31, 2004, and the results of their operations for
the year then ended, the changes in their net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
years in the five-year period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/ KPMG LLP
Denver, Colorado
February 4, 2005
49
SELECTED FUNDS
For the Year Ended December 31, 2004 (Unaudited)
================================================================================
FEDERAL INCOME TAX INFORMATION
In early 2005, shareholders will receive information regarding all
dividends and distributions paid to them by the Funds during calendar year 2004.
Regulations of the U.S. Treasury Department require the Funds to report this
information to the Internal Revenue Service.
The information and distributions reported herein may differ from the
information reported as distributions taxable to certain shareholders for the
calendar year ended 2004 with their 2004 Form 1099-DIV.
SELECTED AMERICAN SHARES, INC.
Income dividends paid by the Fund during the calendar year ended 2004
should be multiplied by 100% to arrive at the net amount eligible for the
corporate dividend-received deduction.
For the calendar year ended 2004 certain dividends paid by the Fund
constitute qualified dividend income for Federal Income Tax purposes. The Fund
designates $52,780,370 as qualified dividend income.
SELECTED SPECIAL SHARES, INC.
During the calendar year ended 2004, the Fund declared and paid long-term
capital gain distributions in the amount of $3,603,825.
Dividends paid by the Fund during the calendar year ended 2004, which are
not designated as capital gain distributions, should be multiplied by 100% to
arrive at the net amount eligible for the corporate dividend-received deduction.
For the calendar year ended 2004 certain dividends paid by the Fund
constitute qualified dividend income for Federal Income Tax purposes. The Fund
designates $1,271,257 as qualified dividend income.
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES
The Funds has adopted Portfolio Proxy Voting Policies and Procedures under
which the Funds vote proxies relating to securities held by the Funds. A
description of the Funds' Portfolio Proxy Voting Policies and Procedures is
available (i) without charge, upon request, by calling the Funds toll-free at
1-800-243-1575, (ii) on the Funds' website at www.selectedfunds.com, and (iii)
on the SEC's website at www.sec.gov.
In addition, the Funds are required to file Form N-PX, with its complete
proxy voting record for the 12 months ended June 30th, no later than August 31st
of each year. The Funds' Form N-PX filing is available (i) without charge, upon
request, by calling the Funds toll-free at 1-800-243-1575, (ii) on the Funds'
website at www.selectedfunds.com, and (iii) on the SEC's website at www.sec.gov.
FORM N-Q
The Funds file their complete schedule of portfolio holdings with the SEC
for the first and third quarters of each fiscal year on Form N-Q. The Funds'
Form N-Q is available without charge upon request by calling 1-800-243-1575 or
on the Funds' website at www.selectedfunds.com or on the SEC's website at
www.sec.gov. The Funds' Form N-Q may be reviewed and copied at the SEC's Public
Reference Room in Washington, DC, and that information on the operation of the
Public Reference Room may be obtained by calling 1-800-SEC-0330.
50
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 OTHER
POSITION(S) OFFICE AND FUND COMPLEX DIRECTORSHIPS
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
NAME AND AGE FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR 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 1/19/56) Company; former Treasurer,
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.
51
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS - CONTINUED
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
POSITION(S) OFFICE AND FUND COMPLEX DIRECTORSHIPS
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
NAME AND AGE FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR 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 15 Director of the
(born 3/28/51) since 1996 Chief Financial Officer of Davis Funds
Equity Office Properties Trust (consisting of 12
(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 15 Director of the Davis
(born 6/25/63) since 1998 each Selected Fund and Davis Funds (consisting of
Fund; President, Davis 12 portfolios).
Selected Advisers, L.P., and
also serves as an executive
officer in certain companies
affiliated with the Adviser.
52
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS - CONTINUED
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
POSITION(S) OFFICE AND FUND COMPLEX DIRECTORSHIPS
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
NAME AND AGE FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------------
INSIDE DIRECTORS* - CONTINUED
CHRISTOPHER C. Director director Chief Executive Officer, 15 Director of the
DAVIS since 1998 President or Vice President of Davis Funds
(born 7/13/65) each Selected Fund and Davis (consisting of 12
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.
53
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.
================================================================================
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 60603-5803
AUDITORS
KPMG LLP
707 Seventeenth Street, Suite 2700
Denver, CO 80202
800-243-1575
selectedfunds.com
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similiar functions.
Exhibit A of the code of ethics was amended July 30, 2004 to
reflect Douglas A. Haines as Principal Financial Officer and Principal
Accounting Officer.
A copy of the code of ethics is filed as an exhibit to this form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's board of directors has determined that independant
trustees Katherine MacWilliams and Marsha Williams qualify as "audit
committee financial experts", as defined in Item 3 of form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees. The aggregate Audit Fees billed by KPMG LLP ("KPMG")
for professional services rendered for the audits of the financial
statements, or services that are normally provided in connection
with statutory and regulatory filings or engagements for the fiscal
year ends December 31, 2004 and December 31, 2003 were $14,443 and
$12,957, respectively.
(b) Audit-Related Fees. The aggregate Audit-Related Fees billed by
KPMG for assurance and related services that are reasonably
related to the performance of the audit of the registrant's
financial statements, but not reported as Audit Fees for the
fiscal year ends December 31, 2004 and Decebmer 31, 2003
were $0 and $0, respectively.
(c) Tax Fees. The aggregate Tax Fees billed by KPMG for professional
services rendered for tax compliance, tax advise and tax planning
for the fiscal year ends December 31, 2004 and December 31, 2003
were $2,420 and $5,280, respectively.
Fees included in the Tax Fee category comprise all services
performed by professional staff in the independent accountant's
tax division except those services related to the audit. These
services include preparation of tax returns, tax advice related to
mergers and a review of the fund income and capital gain
distributions.
(d) All Other Fees. The aggregate Other Fees billed by KPMG for all
other non-audit services rendered to the fund for the fiscal year
ends December 31, 2004 and December 31, 2003 were $0 and $0,
respectively.
(e)(1) Audit Committee Pre-Approval Policies and Procedures.
The fund Audit Committee must pre-approve all audit and non-audit
services provided by the independent accountant relating to the
operations or financial reporting of the funds. Prior to the
commencement of any audit or non-audit services to a fund, the
Audit Committee reviews the services to determine whether they are
appropriate and permissible under applicable law.
The fund Audit Committee has adopted a policy whereby audit and
non-audit services performed by the fund independent accountant
require pre-approval in advance at regularly scheduled Audit
Committee meetings. If such a service is required between
regularly scheduled Audit Committee meetings, pre-approval may be
authorized by the Audit Committee Chairperson with ratification at
the next scheduled audit committee meeting.
(2) No services included in (b) - (d) above were approved pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable
(g) The Funds' independent accountant did not provide any services to
the investment advisor or any affiliate for the fiscal years ended
December 31, 2004 and December 31, 2003. The fund has not paid any
fees for non-audit not previously disclosed in items 4 (b)-(d).
(h) The registrant's audit committee of the board of trustees has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the
principal accountant's independence. No such services were
rendered.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS - Not Required
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.CODE ETH - Code of Ethics
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 it behalf by the undersigned, thereunto duly authorized.
SELECTED SPECIAL SHARES, INC.
By /s/ Kenneth C. Eich
Kenneth C. Eich
Principal Executive Officer
Date: March 4, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Kenneth C. Eich
Kenneth C. Eich
Principal Executive Officer
Date: March 4, 2005
By /s/ Douglas A. Haines
Douglas A. Haines
Principal Financial officer
Date: March 4, 2005