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: June 30, 2005
ITEM 1. REPORTS TO STOCKHOLDERS
Selected Funds
Semi-Annual
Report
June 30, 2005
SELECTING QUALITY COMPANIES FOR THE LONG TERM(TM)
Selected American Shares
Selected Special Shares
Selected Daily Government Fund [SELECTED FUNDS LOGO]
TABLE OF CONTENTS
Shareholder Letter.............................................................2
Management's Discussion and Analysis:
Selected American Shares..................................................3
Selected Special Shares...................................................4
Fund Overview:
Selected American Shares..................................................6
Selected Special Shares...................................................7
Selected Daily Government Fund............................................8
Expense Example................................................................9
Schedule of Investments:
Selected American Shares.................................................11
Selected Special Shares..................................................17
Selected Daily Government Fund...........................................21
Statements of Assets and Liabilities..........................................23
Statements of Operations......................................................25
Statements of Changes in Net Assets...........................................26
Notes to Financial Statements.................................................28
Financial Highlights:
Selected American Shares.................................................36
Selected Special Shares..................................................38
Selected Daily Government Fund...........................................40
Fund Information..............................................................42
Director Approval of Advisory Agreements......................................43
Directors and Officers........................................................46
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 financial
statements, detailed footnotes, performance reports, fund holdings, and
performance attribution.
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 1.49%
(non-annualized) over the six-month period ended June 30, 2005, compared to
1.36% for Class S shares over the same period. Selected Special's Class D shares
returned 1.45% (non-annualized) over the six-month period ended June 30, 2005,
compared to 1.21% for Class S shares over the same period.
Please carefully read the Selected Funds' prospectus, dated May 1, 2005, 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.
We thank you for your continued trust. We will do our best to earn it in the
years ahead.
Sincerely,
/s/ James J. McMonagle /s/ Christopher C. Davis
James J. McMonagle Christopher C. Davis
Chairman President
August 5, 2005
2
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS
MARKET ENVIRONMENT
During the six-month period ended June 30, 2005, the stock market, as measured
by the Standard & Poor's 500(R) Index(1), declined by 0.81%. Inflation-adjusted
gross domestic product, the most comprehensive measure of economic activity,
increased 3.4% in the second quarter after increasing 3.8% in the first quarter.
Interest rates, as measured by the 10-year Treasury bond, were stable for the
first two months of the year, rose sharply in March, and then slowly declined
over the second quarter of 2005.
SELECTED AMERICAN SHARES
PERFORMANCE OVERVIEW
Selected American Shares' Class S shares returned 1.36% for the six-month period
ended June 30, 2005(2), compared with a decline of 0.81% for the Standard &
Poor's 500(R) Index(1). The Fund's Class D shares returned 1.49% over same
six-month period.
Energy companies were the most important contributors(3) to the Fund's
performance over the six-month period. Energy companies were also the strongest
performing sector of the S&P 500(R) Index. The Fund benefited both by investing
a larger percentage of its assets in energy companies than did the Index, and as
a group, the individual energy companies that the Fund owned out-performed the
average energy company included in the Index. All of the Fund's energy companies
performed well, with EOG Resources(4), ConocoPhillips, Occidental Petroleum, and
Devon Energy, all among the Fund's top contributors to performance for the
six-month period.
Industrial companies were the most important detractors from the Fund's
performance over the six-month period. Tyco International was among the top
detractors from performance.
The Fund's largest industry group holdings were in diversified financial
companies. Overall, the Fund's diversified financial companies detracted from
performance over the six-month period. American Express and JPMorgan Chase were
both among the top detractors from performance.
The Fund also held significant investments in insurance companies. Insurance
companies turned in a mixed performance over the six-month period, with
Progressive and Loews among the top contributors to performance, and American
International Group and Berkshire Hathaway among the Fund's top detractors from
performance.
Individual companies making important contributions to the Fund's performance
over the period included HCA, a health care equipment and services company;
Altria Group, a food, beverage, and tobacco company; and H&R Block, a consumer
services company.
Individual companies detracting from performance over the period included
Comcast, a media company; and Lexmark International, a technology hardware and
equipment company.
The Fund managers have identified a number of investment opportunities in
foreign companies. The Fund ended the period with approximately 12% of its
portfolio invested in foreign companies. As a group, the foreign companies owned
by the Fund slightly out-performed the S&P 500(R) Index over the six-month
period.
3
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
SELECTED SPECIAL SHARES
PERFORMANCE OVERVIEW
Selected Special Shares' Class S shares returned 1.21% for the six-month period
ended June 30, 2005(2), compared with a return of 0.02% for the Dow Jones
Wilshire 5000 Index(1). The Fund's Class D shares returned 1.45% over the same
six-month period.
Utility companies were the most important contributors(3) to the Fund's
performance over the six-month period. Both Calpine(4) and Sempra Energy were
among the Fund's top contributors to performance for the six-month period.
Industrial companies were the most important detractors from the Fund's
performance over the six-month period. Tyco International, Hughes Supply, and
Robbins & Myers were among the Fund's top detractors from performance.
The Fund did not invest as large a proportion of its assets in energy companies
as did the Dow Jones Wilshire 5000 Index. As energy was the strongest sector of
the Index over the last six-months, this decreased relative performance.
Transocean was among the fund's top contributors to performance.
The Fund's largest industry group holdings were in consumer discretionary
companies. Due to its large weighting and strong performance, Sears Holdings was
the single company that contributed the most to the Fund's performance. The
Fund's other consumer discretionary companies turned in a mixed performance over
the six-month period, with AutoNation, and Advanced Auto Parts among the top
contributors to performance, and Garmin, 99 Cents Only Stores, and Hunter
Douglas among the Fund's top detractors from performance.
Individual companies making important contributions to the Fund's performance
over the period included IDEXX Laboratories, a health care equipment and
services company; and E*TRADE Financial, a capital markets company. Individual
companies detracting from performance over the period included Covad
Communications, a telecommunication services company; and Marsh & McLennan, an
insurance brokerage company.
The Fund's portfolio managers have identified a number of investment
opportunities in foreign companies. The Fund ended the period with approximately
19% of its portfolio invested in foreign companies. As a group the Fund's
investment in foreign companies out-performed the Dow Jones Wilshire 5000 Index.
Groupe Bruxelles was among the Fund's top contributors to performance, while
Hunter Douglas (already mentioned above) was among the Fund's top detractors
from performance.
- -------------------------------------------
This Semi-Annual Report is authorized for use by existing shareholders.
Prospective shareholders must receive a current Selected Funds prospectus, which
contains more information about investment strategies, risks, fees, and
expenses. Please read the prospectus carefully before investing or sending
money.
Selected American Shares' investment objective is to achieve both capital growth
and income. In the current market environment, we expect that income will be
low. There can be no assurance that the Fund will achieve its objective. The
primary risks of an investment in Selected American Shares are: (1) market risk,
(2) company risk, (3) foreign country risk, (4) financial services risk, (5)
headline risk, and (6) selection risk. See the prospectus for a full description
of each risk
4
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
Selected Special Shares' investment objective is capital growth. There can be no
assurance that the Fund will achieve its objective. The primary risks of an
investment in Selected Special Shares are: (1) market risk, (2) company risk,
(3) small and medium capitalization risk, (4) foreign country risk, (5) headline
risk, and (6) selection risk. See the prospectus for a full description of each
risk.
(1) The definitions of indices quoted in this report appear below. Investments
cannot be made directly in the indices.
I. The S&P 500(R) Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is adjusted
for dividends, weighted towards stocks with large market 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 5,000
capitalization weighted security returns are used to adjust the Index. The Dow
Jones Wilshire 5000 is a broad measure of the entire U.S. stock market.
(2) Total return assumes reinvestment of dividends and capital gain
distributions. Past performance is not a guarantee of future results. Investment
return and principal value will vary so that, when redeemed, an investor's
shares may be worth more or less than when purchased. The following tables list
the average annual total returns for Class S and Class D shares for the periods
ended June 30, 2005.
- --------------------------------------------------------------------------------
FUND NAME 1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Selected American Shares S 8.83% 2.33% 13.01%
- --------------------------------------------------------------------------------
Selected Special Shares S 9.41% 1.17% 9.93%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND NAME 1 YEAR INCEPTION*
- --------------------------------------------------------------------------------
Selected American Shares D 9.17% 9.16%
- --------------------------------------------------------------------------------
Selected Special Shares D 9.75% 8.98%
- --------------------------------------------------------------------------------
* 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.
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.
(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.
5
SELECTED FUNDS
FUND OVERVIEW
SELECTED AMERICAN SHARES, INC.
At June 30, 2005 (Unaudited)
================================================================================
[PIE OMITTED]
PORTFOLIO MAKEUP (% OF FUND NET ASSETS)
--------------------------------------
Common Stocks 97.5%
Short Term Investments,
Convertible Bonds, Other
Assets & Liabilities 2.5%
[PIE OMITTED]
SECTOR WEIGHTINGS (% OF LONG TERM PORTFOLIO)
--------------------------------------------
Technology 4.2%
Materials 4.0%
Other 9.4%
Media 5.4%
Food, Beverage, & Tobacco 8.2%
Energy 10.8%
Diversified Financials 17.3%
Capital Goods 4.5%
Food & Staples Retailing 3.8%
Insurance 17.1%
Health Care 4.1%
Banks 11.2%
TOP 10 HOLDINGS
STOCK SECTOR % OF FUND NET ASSETS
- --------------------------------------------------------------------------------------------------------------
American Express Co. Consumer Finance 5.71%
Altria Group, Inc. Food, Beverage, & Tobacco 4.97%
American International Group, Inc. Multi-Line Insurance 4.91%
Tyco International Ltd. Capital Goods 4.41%
JPMorgan Chase & Co. Diversified Financial Services 3.93%
Berkshire Hathaway Inc., Class A Property & Casualty Insurance 3.56%
Comcast Corp., Special Class A Media 3.30%
Golden West Financial Corp. Thrifts & Mortgage Finance 3.28%
Costco Wholesale Corp. Food & Staples Retailing 3.21%
HSBC Holdings PLC Commercial Banks 3.20%
6
SELECTED FUNDS
FUND OVERVIEW
SELECTED SPECIAL SHARES, INC.
At June 30, 2005 (Unaudited)
================================================================================
[PIE OMITTED]
PORTFOLIO MAKEUP (% OF FUND NET ASSETS)
---------------------------------------
Common Stock 92.5%
Short Term Investments,
Convertible Bonds, Other
Assets & Liabilities 7.5%
[PIE OMITTED]
SECTOR WEIGHTINGS (% OF LONG TERM PORTFOLIO)
--------------------------------------------
Materials 3.9%
Utilities 5.6%
Other 7.0%
Consumer Durables & Apparel 5.9%
Media 6.1%
Telecommunications 3.2%
Retailing 18.9%
Automobiles & Components 3.1%
Banks 4.8%
Diversified Financials 7.9%
Insurance 5.7%
Health Care 8.8%
Capital Goods 7.3%
Consumer Services 2.5%
Technology 9.3%
TOP 10 HOLDINGS
STOCK SECTOR % OF FUND NET ASSETS
- --------------------------------------------------------------------------------------------------------------
Groupe Bruxelles Lambert S.A. Diversified Financial Services 4.41%
AutoNation, Inc. Automotive Retail 4.13%
Lagardere S.C.A. Media 4.04%
Sears Holdings Corp. Apparel Retail 3.12%
Molex Inc., Class A Technology Hardware & Equipment 3.06%
AutoZone, Inc. Automotive Retail 3.04%
Calpine Corp. Utilities 2.92%
Tiffany & Co. Specialty Stores 2.91%
Cardinal Health, Inc. Health Care Equipment & Services 2.69%
Robbins & Myers, Inc. Capital Goods 2.60%
7
SELECTED FUNDS
FUND OVERVIEW
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND
At June 30, 2005 (Unaudited)
================================================================================
[PIE OMITTED]
PORTFOLIO MAKEUP (% OF FUND NET ASSETS)
---------------------------------------
FANNIE MAE 16.0%
Repurchase Agreements, Other Assets
& Liabilities 45.6%
Federal Farm Credit Bank 0.8%
Federal Home Loan Bank 29.1%
FREDDIE MAC 8.5%
[PIE OMITTED]
MATURITY DIVERSIFICATION* (% OF PORTFOLIO'S HOLDINGS)
-----------------------------------------------------
181-365 Days 4.4%
0-30 Days 70.2%
31-90 Days 16.6%
91-180 Days 8.8%
* 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.
8
SELECTED FUNDS
EXPENSE EXAMPLE (Unaudited)
================================================================================
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
(01/01/05) (06/30/05) (01/01/05-06/30/05)
---------- ---------- -------------------
SELECTED AMERICAN SHARES
CLASS S
Actual.................................. $1,000.00 $1,013.55 $4.49
Hypothetical............................ $1,000.00 $1,020.33 $4.51
CLASS D
Actual.................................. $1,000.00 $1,014.93 $3.05
Hypothetical............................ $1,000.00 $1,021.77 $3.06
SELECTED SPECIAL SHARES
CLASS S
Actual.................................. $1,000.00 $1,012.06 $5.79
Hypothetical............................ $1,000.00 $1,019.04 $5.81
CLASS D
Actual.................................. $1,000.00 $1,014.49 $4.35
Hypothetical............................ $1,000.00 $1,020.48 $4.36
SELECTED DAILY GOVERNMENT FUND
CLASS S
Actual.................................. $1,000.00 $1,009.85 $3.49
Hypothetical............................ $1,000.00 $1,021.32 $3.51
CLASS D
Actual.................................. $1,000.00 $1,010.92 $2.74
Hypothetical............................ $1,000.00 $1,022.07 $2.76
HYPOTHETICAL ASSUMES 5% ANNUAL RETURN BEFORE EXPENSES.
* Expenses are equal to the Class's annualized expense ratio, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period). See page 10 for a description of the "Expense Example".
The annualized expense ratios for the six-month period ended June 30, 2005 are
as follows:
ANNUALIZED
EXPENSE
RATIO
Selected American Shares
Class S...................................................... 0.90%
Class D...................................................... 0.61%
Selected Special Shares
Class S...................................................... 1.16%
Class D...................................................... 0.87%
Selected Daily Government Fund
Class S...................................................... 0.70%
Class D...................................................... 0.55%
9
SELECTED FUNDS
EXPENSE EXAMPLE (Unaudited) - (Continued)
================================================================================
THE FOLLOWING DISCLOSURE PROVIDES IMPORTANT INFORMATION REGARDING THE FUNDS'
EXPENSE EXAMPLE. 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 01/01/05 to
06/30/05. 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" 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" is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds.
10
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC.
June 30, 2005 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
========================================================================================================================
COMMON STOCK - (97.51%)
AUTOMOBILES & COMPONENTS - (0.73%)
1,205,000 Harley-Davidson, Inc. .............................................................. $ 59,768,000
--------------
AUTOMOTIVE RETAIL - (0.78%)
690,300 AutoZone, Inc.*..................................................................... 63,825,138
--------------
CAPITAL GOODS - (4.41%)
12,397,764 Tyco International Ltd. ............................................................ 362,014,709
--------------
CAPITAL MARKETS - (2.03%)
1,575,495 Julius Baer Holding, Ltd. AG........................................................ 96,386,116
1,039,864 Morgan Stanley...................................................................... 54,561,664
330,000 State Street Corp. ................................................................. 15,922,500
--------------
166,870,280
--------------
COMMERCIAL BANKS - (7.67%)
1,849,000 Fifth Third Bancorp................................................................. 76,123,330
16,477,122 HSBC Holdings PLC................................................................... 262,746,401
7,386,934 Lloyds TSB Group PLC................................................................ 62,602,369
3,696,560 Wells Fargo & Co. .................................................................. 227,634,165
--------------
629,106,265
--------------
COMMERCIAL SERVICES & SUPPLIES - (1.30%)
1,241,000 D&B Corp.*.......................................................................... 76,507,650
10,411,500 Rentokil Initial PLC................................................................ 29,800,228
--------------
106,307,878
--------------
CONSUMER DURABLES & APPAREL - (0.16%)
267,600 Hunter Douglas NV................................................................... 13,384,145
--------------
CONSUMER FINANCE - (6.73%)
8,807,800 American Express Co. ............................................................... 468,839,194
1,522,400 Providian Financial Corp.* ......................................................... 26,839,912
835,860 Takefuji Corp. ..................................................................... 56,522,856
--------------
552,201,962
--------------
CONSUMER SERVICES - (1.85%)
2,605,500 H&R Block, Inc. .................................................................... 152,030,925
--------------
DIVERSIFIED FINANCIAL SERVICES - (8.16%)
4,704,189 Citigroup Inc. ..................................................................... 217,474,658
9,132,740 JPMorgan Chase & Co. ............................................................... 322,568,377
2,265,600 Moody's Corp. ...................................................................... 101,861,376
658,000 Principal Financial Group, Inc. .................................................... 27,570,200
--------------
669,474,611
--------------
ENERGY - (10.56%)
4,140,160 ConocoPhillips...................................................................... 238,017,798
3,720,842 Devon Energy Corp. ................................................................. 188,572,273
3,176,200 EOG Resources, Inc. ................................................................ 180,408,160
11
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
June 30, 2005 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
========================================================================================================================
COMMON STOCK - (CONTINUED)
ENERGY - (CONTINUED)
2,540,800 Occidental Petroleum Corp. ......................................................... $ 195,463,744
1,188,000 Transocean Inc.*.................................................................... 64,116,360
--------------
866,578,335
--------------
FOOD & STAPLES RETAILING - (3.70%)
5,879,500 Costco Wholesale Corp. ............................................................. 262,990,035
845,000 Wal-Mart Stores, Inc. .............................................................. 40,729,000
--------------
303,719,035
--------------
FOOD, BEVERAGE, & TOBACCO - (8.05%)
6,307,500 Altria Group, Inc. ................................................................. 407,842,950
7,406,081 Diageo PLC.......................................................................... 109,207,812
2,232,650 Heineken Holding NV................................................................. 62,412,524
1,304,800 Hershey Co. ........................................................................ 81,028,080
--------------
660,491,366
--------------
HEALTH CARE EQUIPMENT & SERVICES - (2.82%)
1,610,000 Cardinal Health, Inc. .............................................................. 92,703,800
165,000 Caremark Rx, Inc.*.................................................................. 7,345,800
2,311,500 HCA Inc. ........................................................................... 130,992,705
--------------
231,042,305
--------------
HOUSEHOLD & PERSONAL PRODUCTS - (0.25%)
545,000 Avon Products, Inc. ................................................................ 20,628,250
--------------
INSURANCE BROKERS - (1.42%)
2,112,700 Aon Corp. .......................................................................... 52,902,008
2,304,000 Marsh & McLennan Cos, Inc. ......................................................... 63,820,800
--------------
116,722,808
--------------
INTERNET RETAIL - (0.42%)
1,445,000 IAC/InterActiveCorp*................................................................ 34,694,450
--------------
LIFE & HEALTH INSURANCE - (0.16%)
400,000 Sun Life Financial Inc. ............................................................ 13,480,000
--------------
MATERIALS - (3.91%)
930,600 Martin Marietta Materials, Inc. .................................................... 64,323,072
3,941,700 Sealed Air Corp.*................................................................... 196,257,243
924,100 Vulcan Materials Co. ............................................................... 60,057,259
--------------
320,637,574
--------------
MEDIA - (5.22%)
9,048,000 Comcast Corp., Special Class A*..................................................... 270,444,720
483,300 Gannett Co., Inc. .................................................................. 34,377,129
1,282,459 Lagardere S.C.A. (c)................................................................ 95,058,007
71,500 NTL Inc.*........................................................................... 4,884,880
12
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
June 30, 2005 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
========================================================================================================================
COMMON STOCK - (CONTINUED)
MEDIA - (CONTINUED)
2,235,400 WPP Group PLC...................................................................... $ 23,009,686
--------------
427,774,422
MULTI-LINE INSURANCE - (6.76%)
6,929,325 American International Group, Inc. ................................................. 402,593,783
1,958,000 Loews Corp. ........................................................................ 151,745,000
--------------
554,338,783
--------------
PHARMACEUTICALS & BIOTECHNOLOGY - (1.19%)
1,180,000 Eli Lilly and Co. .................................................................. 65,737,800
670,000 Novartis AG, Registered............................................................. 31,918,455
--------------
97,656,255
--------------
PROPERTY & CASUALTY INSURANCE - (7.23%)
3,497 Berkshire Hathaway Inc., Class A*................................................... 291,999,500
6,366 Berkshire Hathaway Inc., Class B*................................................... 17,719,761
288,400 Chubb Corp. ........................................................................ 24,689,924
20,000 Markel Corp.*....................................................................... 6,780,000
2,553,200 Progressive Corp. (Ohio)............................................................ 252,281,692
--------------
593,470,877
--------------
REAL ESTATE - (1.52%)
2,938,388 Centerpoint Properties Trust (b).................................................... 124,293,812
--------------
REINSURANCE - (1.16%)
1,699,900 Transatlantic Holdings, Inc. ....................................................... 94,888,418
--------------
SOFTWARE & SERVICES - (2.18%)
3,575,500 Iron Mountain Inc.*................................................................. 110,912,010
2,735,000 Microsoft Corp. .................................................................... 67,882,700
--------------
178,794,710
--------------
TECHNOLOGY HARDWARE & EQUIPMENT - (1.93%)
1,850,000 Hewlett-Packard Co. ................................................................ 43,493,500
1,428,600 Lexmark International, Inc., Class A*............................................... 92,616,138
1,325,000 Nokia Oyj, ADR...................................................................... 22,048,000
--------------
158,157,638
--------------
TELECOMMUNICATION SERVICES - (0.63%)
1,537,000 SK Telecom Co., Ltd., ADR........................................................... 31,354,800
901,000 Telewest Global, Inc.*.............................................................. 20,497,750
--------------
51,852,550
--------------
THRIFTS & MORTGAGE FINANCE - (3.28%)
4,181,100 Golden West Financial Corp. ........................................................ 269,179,218
--------------
13
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
June 30, 2005 (Unaudited)
VALUE
SHARES/PRINCIPAL SECURITY (NOTE 1)
========================================================================================================================
COMMON STOCK - (CONTINUED)
TRANSPORTATION - (1.30%)
14,010,000 China Merchants Holdings International Co., Ltd. ................................ $ 27,223,137
12,050,000 Cosco Pacific Ltd. .............................................................. 23,414,618
20,500 Kuehne & Nagel International AG, Registered...................................... 4,351,151
740,500 United Parcel Service, Inc., Class B............................................. 51,212,980
----------------
106,201,886
----------------
Total Common Stock - (identified cost $5,514,552,751)........................ 7,999,586,605
----------------
CONVERTIBLE BONDS - (0.21%)
TELECOMMUNICATION SERVICES - (0.21%)
$ 19,200,000 Level 3 Communications, Inc., Conv. Sr. Notes, 10.00%, 05/01/11 (d)
(identified cost $19,200,000)............................................... 17,109,120
----------------
REPURCHASE AGREEMENTS - (2.53%)
68,207,000 Goldman, Sachs & Co., Joint Repurchase Agreement, 3.43%,
07/01/05, dated 06/30/05, repurchase value of $68,213,499
(collateralized by: U.S. Government agency obligations in a pooled cash
account, total market value $69,571,140).................................... 68,207,000
73,045,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 3.44%,
07/01/05, dated 06/30/05, repurchase value of $73,051,980
(collateralized by: U.S. Government agency obligations in a pooled cash
account, total market value $74,505,900).................................... 73,045,000
65,741,000 UBS Financial Services Inc. Joint Repurchase Agreement, 3.43%,
07/01/05, dated 06/30/05, repurchase value of $65,747,264
(collateralized by: U.S. Government agency obligations in a pooled cash
account, total market value $67,055,820).................................... 65,741,000
----------------
Total Repurchase Agreements - (identified cost $206,993,000)............ 206,993,000
----------------
INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED - (1.10%)
MONEY MARKET INSTRUMENTS - (0.25%)
20,391,963 UBS Private Money Market LLC, 3.099816% (identified cost $20,391,963)............ 20,391,963
----------------
14
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
June 30, 2005 (Unaudited)
VALUE
PRINCIPAL SECURITY (NOTE 1)
========================================================================================================================
INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED - (CONTINUED)
REPURCHASE AGREEMENTS - (0.85%)
$ 23,066,000 Goldman, Sachs & Co., Joint Repurchase Agreement, 3.43%,
07/01/05, dated 06/30/05, repurchase value of $23,068,198
(collateralized by: U.S. Government agency obligations in a pooled cash
account, total market value $23,527,320).................................... $ 23,066,000
24,702,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 3.44%,
07/01/05, dated 06/30/05, repurchase value of $24,704,360
(collateralized by: U.S. Government agency obligations in a pooled cash
account, total market value $25,196,040).................................... 24,702,000
22,232,000 UBS Financial Services Inc. Joint Repurchase Agreement, 3.43%,
07/01/05, dated 06/30/05, repurchase value of $22,234,118
(collateralized by: U.S. Government agency obligations in a pooled cash
account, total market value $22,676,640).................................... 22,232,000
----------------
Total Repurchase Agreements - (identified cost $70,000,000)............. 70,000,000
----------------
Total Investment of Cash Collateral for
Securities Loaned - (identified cost $90,391,963)....................... 90,391,963
----------------
Total Investments - (101.35%) - (identified cost $5,831,137,714) - (a)....... 8,314,080,688
Liabilities Less Other Assets - (1.35%)...................................... (110,350,705)
----------------
Net Assets - (100.00%).................................................. $ 8,203,729,983
================
*Non-Income Producing Security.
(a) Aggregate cost for Federal Income Tax purposes is $5,836,804,974. At June
30, 2005, unrealized appreciation (depreciation) of securities for Federal
Income Tax purposes is as follows:
Unrealized appreciation...................................................... $ 2,621,669,633
Unrealized depreciation...................................................... (144,393,919)
----------------
Net unrealized appreciation ............................................ $ 2,477,275,714
================
15
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - (CONTINUED)
June 30, 2005 (Unaudited)
================================================================================
(b) Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and is an affiliate, as defined in the Investment
Company Act of 1940, at or during the six months ended June 30, 2005. The
aggregate fair value of the securities of affiliated companies held by the Fund
as of June 30, 2005, amounts to $124,293,812. Transactions during the period in
which the issuers were affiliates are as follows:
Shares Gross Gross Shares Dividend
Security December 31, 2004 Additions Reductions June 30, 2005 Income
- -------- ----------------- --------- ---------- ------------- ------
Centerpoint Properties
Trust 2,938,388 - - 2,938,388 $2,512,322
(c) Loaned security - See Note 7 of the Notes to Financial Statements.
(d) Illiquid security - See Note 8 of the Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS
16
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC.
June 30, 2005 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
========================================================================================================================
COMMON STOCK - (92.54%)
APPAREL RETAIL - (3.12%)
23,500 Sears Holdings Corp.*............................................................... $ 3,515,600
-------------
AUTOMOBILES & COMPONENTS - (2.88%)
45,100 Autoliv, Inc. ...................................................................... 1,975,380
35,000 Lear Corp. ......................................................................... 1,273,300
-------------
3,248,680
-------------
AUTOMOTIVE RETAIL - (8.48%)
22,700 Advance Auto Parts, Inc.*........................................................... 1,465,285
227,000 AutoNation, Inc.*................................................................... 4,658,040
37,100 AutoZone, Inc.*..................................................................... 3,430,266
-------------
9,553,591
-------------
CAPITAL GOODS - (6.84%)
84,000 Hughes Supply, Inc. ................................................................ 2,360,400
136,100 Robbins & Myers, Inc. .............................................................. 2,927,511
600 Tae Young Corp. .................................................................... 20,039
82,400 Tyco International Ltd. ............................................................ 2,406,080
-------------
7,714,030
-------------
CAPITAL MARKETS - (2.43%)
180,100 E*TRADE Financial Corp.*............................................................ 2,519,599
3,600 Julius Baer Holding, Ltd. AG........................................................ 220,242
-------------
2,739,841
-------------
COMMERCIAL BANKS - (2.02%)
75,200 Commerce Bancorp, Inc. ............................................................. 2,279,312
-------------
COMMERCIAL SERVICES & SUPPLIES - (1.54%)
8,800 D&B Corp.*.......................................................................... 542,520
415,200 Rentokil Initial PLC................................................................ 1,188,403
-------------
1,730,923
-------------
CONSUMER DURABLES & APPAREL - (5.45%)
54,700 Garmin Ltd. ........................................................................ 2,338,425
52,430 Hunter Douglas NV................................................................... 2,622,312
14,300 Mohawk Industries, Inc.*............................................................ 1,179,750
-------------
6,140,487
-------------
CONSUMER SERVICES - (2.35%)
197,300 ServiceMaster Co. .................................................................. 2,643,820
-------------
DIVERSIFIED FINANCIAL SERVICES - (4.98%)
57,412 Groupe Bruxelles Lambert S.A. ...................................................... 4,974,562
6,970 Nong Shim Holdings Co., Ltd. ....................................................... 632,656
-------------
5,607,218
-------------
ENERGY - (1.73%)
36,100 Transocean Inc.*.................................................................... 1,948,317
-------------
17
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC.
June 30, 2005 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
========================================================================================================================
COMMON STOCK - (CONTINUED)
FOOD & STAPLES RETAILING - (0.63%)
15,800 Costco Wholesale Corp. ............................................................. $ 706,734
-------------
FOOD, BEVERAGE, & TOBACCO - (2.02%)
23,625 Heineken Holding NV................................................................. 660,424
900 Lotte Chilsung Beverage Co., Ltd. .................................................. 779,507
1,200 Lotte Confectionery Co., Ltd. ...................................................... 835,186
-------------
2,275,117
-------------
GENERAL MERCHANDISE STORES - (1.27%)
112,600 99 Cents Only Stores*............................................................... 1,431,146
-------------
HEALTH CARE EQUIPMENT & SERVICES - (8.17%)
16,800 AmerisourceBergen Corp. ............................................................ 1,161,720
52,700 Cardinal Health, Inc. .............................................................. 3,034,466
20,380 Fisher Scientific International Inc.*............................................... 1,322,662
35,600 IDEXX Laboratories, Inc.*........................................................... 2,220,016
35,900 Lincare Holdings Inc.*.............................................................. 1,464,720
-------------
9,203,584
-------------
HOUSEHOLD & PERSONAL PRODUCTS - (0.66%)
2,800 Amorepacific Corp. ................................................................. 741,614
-------------
INSURANCE BROKERS - (2.08%)
6,100 Brown & Brown, Inc. ................................................................ 274,134
74,800 Marsh & McLennan Cos, Inc. ......................................................... 2,071,960
-------------
2,346,094
-------------
LIFE & HEALTH INSURANCE - (0.59%)
15,500 AFLAC Inc. ......................................................................... 670,840
-------------
MATERIALS - (3.64%)
60,400 Huntsman Corp.*..................................................................... 1,224,308
18,600 Sealed Air Corp.*................................................................... 926,094
34,800 Sigma-Aldrich Corp. ................................................................ 1,948,452
-------------
4,098,854
-------------
MEDIA - (5.65%)
61,400 Lagardere S.C.A. ................................................................... 4,551,071
35,600 WPP Group PLC, ADR.................................................................. 1,819,872
-------------
6,370,943
-------------
PROPERTY & CASUALTY INSURANCE - (0.73%)
12,359 Cincinnati Financial Corp. ......................................................... 488,922
1,000 Markel Corp.*....................................................................... 339,000
-------------
827,922
-------------
18
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC.
June 30, 2005 (Unaudited)
VALUE
SHARES/PRINCIPAL SECURITY (NOTE 1)
========================================================================================================================
COMMON STOCK - (CONTINUED)
REINSURANCE - (1.90%)
7,800 Everest Re Group, Ltd. ............................................................. $ 725,400
25,275 Transatlantic Holdings, Inc. ....................................................... 1,410,850
-------------
2,136,250
-------------
SOFTWARE & SERVICES - (3.69%)
41,800 Iron Mountain Inc.*................................................................. 1,296,636
105,900 Reynolds & Reynolds Co., Class A.................................................... 2,862,477
-------------
4,159,113
-------------
SPECIALTY STORES - (4.80%)
93,400 Office Depot, Inc.*................................................................. 2,133,256
100,000 Tiffany & Co. ...................................................................... 3,276,000
-------------
5,409,256
-------------
TECHNOLOGY HARDWARE & EQUIPMENT - (5.01%)
75,300 Agilent Technologies, Inc.*......................................................... 1,733,406
7,200 Lexmark International, Inc., Class A*............................................... 466,776
147,100 Molex Inc., Class A................................................................. 3,443,611
-------------
5,643,793
-------------
TELECOMMUNICATION SERVICES - (2.14%)
585,500 Covad Communications Group, Inc.*................................................... 813,845
23,500 SK Telecom Co., Ltd., ADR........................................................... 479,400
49,300 Telewest Global, Inc.*.............................................................. 1,121,575
-------------
2,414,820
-------------
THRIFTS & MORTGAGE FINANCE - (2.49%)
43,600 Golden West Financial Corp. ........................................................ 2,806,968
-------------
UTILITIES - (5.25%)
968,000 Calpine Corp.*...................................................................... 3,291,200
63,700 Sempra Energy....................................................................... 2,631,447
-------------
5,922,647
-------------
Total Common Stock - (identified cost $81,801,956)........................ 104,287,514
-------------
CONVERTIBLE BONDS - (0.87%)
TELECOMMUNICATION SERVICES - (0.87%)
$ 1,100,000 Level 3 Communications, Inc., Conv. Sr. Notes, 10.00%, 05/01/11 (c)
(identified cost $1,100,000)................................................... 980,210
-------------
19
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - (CONTINUED)
June 30, 2005 (Unaudited)
VALUE
PRINCIPAL SECURITY (NOTE 1)
========================================================================================================================
SHORT TERM INVESTMENTS - (6.56%)
FANNIE MAE - (0.43%)
$ 490,000 2.96%, 07/06/05 - (identified cost $489,799) - (b).................................. $ 489,799
--------------
REPURCHASE AGREEMENTS - (6.13%)
2,275,000 Goldman, Sachs & Co., Joint Repurchase Agreement, 3.43%,
07/01/05, dated 06/30/05, repurchase value of $2,275,217
(collateralized by: U.S. Government agency obligations in a pooled cash
account, total market value $2,320,500)........................................ 2,275,000
2,437,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 3.44%,
07/01/05, dated 06/30/05, repurchase value of $2,437,233
(collateralized by: U.S. Government agency obligations in a pooled cash
account, total market value $2,485,740)........................................ 2,437,000
2,193,000 UBS Financial Services Inc. Joint Repurchase Agreement, 3.43%,
07/01/05, dated 06/30/05, repurchase value of $2,193,209
(collateralized by: U.S. Government agency obligations in a pooled cash
account, total market value $2,236,860)........................................ 2,193,000
--------------
Total Repurchase Agreements - (identified cost $6,905,000)............... 6,905,000
--------------
Total Short Term Investments - (identified cost $7,394,799)......... 7,394,799
--------------
Total Investments - (99.97%) - (identified cost $90,296,755) - (a)............. 112,662,523
Other Assets Less Liabilities - (0.03%)......................................... 33,035
--------------
Net Assets - (100.00%)................................................... $ 112,695,558
==============
* Non-Income Producing Security.
(a) Aggregate cost for Federal Income Tax purposes is $90,731,357. At June 30,
2005, unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation......................................................... $ 24,787,305
Unrealized depreciation......................................................... (2,856,139)
--------------
Net unrealized appreciation ............................................. $ 21,931,166
==============
(b) A sufficient amount of liquid assets has been designated to cover
outstanding written put options, as follows (see Note 9 of the Notes to
Financial Statements):
Contracts Premium
Subject to Put Puts Expiration Date Exercise Price Value Received
------------------------------------------------------------------------------------------------------------------
(48) Sears Holdings Corp. 01/20/07 $100.00 $(34,560) $(97,233)
(c) Illiquid security - See Note 8 of the Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS
20
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND
June 30, 2005 (Unaudited)
VALUE
PRINCIPAL (NOTE 1)
========================================================================================================================
FANNIE MAE - (15.99%)
$ 3,000,000 3.005%, 07/06/05 (b)................................................................ $ 2,999,978
1,500,000 1.60%, 07/08/05..................................................................... 1,499,652
3,000,000 3.21%, 07/26/05 (b)................................................................. 2,999,958
875,000 6.55%, 09/12/05..................................................................... 880,813
1,050,000 1.875%, 09/15/05.................................................................... 1,047,333
30,000 2.27%, 11/17/05..................................................................... 29,866
1,000,000 2.17%, 11/25/05..................................................................... 995,221
500,000 1.75%, 11/29/05..................................................................... 496,312
750,000 3.25%, 12/09/05 (b)................................................................. 749,715
1,769,000 6.00%, 12/15/05..................................................................... 1,790,062
750,000 3.31%, 12/19/05 (b)................................................................. 749,686
400,000 2.25%, 02/28/06..................................................................... 396,293
1,000,000 2.35%, 04/29/06..................................................................... 990,091
2,000,000 3.22%, 05/09/06 (b)................................................................. 1,999,661
--------------
Total FANNIE MAE - (identified cost $17,624,641).................................. 17,624,641
--------------
FEDERAL FARM CREDIT BANK - (0.73%)
800,000 5.125%, 10/05/05 - (identified cost $803,866)....................................... 803,866
--------------
FEDERAL HOME LOAN BANK - (29.11%)
5,000,000 3.224%, 07/26/05 (b)................................................................ 4,999,931
3,150,000 3.045%, 08/02/05 (b)................................................................ 3,149,951
3,115,000 3.25%, 08/15/05..................................................................... 3,115,143
500,000 7.029%, 08/17/05 (b)................................................................ 502,260
3,555,000 1.50%, 08/19/05..................................................................... 3,548,517
500,000 4.10%, 08/23/05..................................................................... 500,633
5,000,000 3.17375%, 08/26/05 (b).............................................................. 4,999,300
100,000 6.05%, 09/08/05..................................................................... 100,631
3,000,000 3.13625%, 09/16/05 (b).............................................................. 2,999,759
70,000 5.33%, 09/22/05..................................................................... 70,282
350,000 2.00%, 10/20/05..................................................................... 348,599
2,000,000 2.125%, 11/15/05.................................................................... 1,990,857
1,170,000 4.375%, 11/15/05.................................................................... 1,174,187
800,000 2.00%, 11/21/05..................................................................... 795,716
100,000 6.50%, 11/29/05..................................................................... 101,309
1,000,000 1.75%, 01/12/06..................................................................... 990,847
250,000 3.00%, 01/18/06..................................................................... 249,252
2,000,000 3.25%, 04/25/06 (c)................................................................. 2,000,000
250,000 3.125%, 04/28/06.................................................................... 249,003
200,000 2.03%, 06/30/06..................................................................... 196,487
--------------
Total Federal Home Loan Bank - (identified cost $32,082,664)...................... 32,082,664
--------------
21
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND - (CONTINUED)
June 30, 2005 (Unaudited)
VALUE
PRINCIPAL (NOTE 1)
========================================================================================================================
FREDDIE MAC - (8.53%)
$ 4,000,000 7.00%, 07/15/05..................................................................... $ 4,005,947
530,000 1.50%, 07/29/05..................................................................... 529,388
2,000,000 2.875%, 09/15/05.................................................................... 1,998,349
1,145,000 2.125%, 11/15/05.................................................................... 1,140,036
525,000 2.01%, 01/27/06..................................................................... 520,267
50,000 5.90%, 02/14/06..................................................................... 50,617
150,000 2.15%, 02/17/06..................................................................... 148,613
196,000 2.00%, 02/28/06..................................................................... 193,984
800,000 6.28%, 03/06/06..................................................................... 815,251
--------------
Total FREDDIE MAC - (identified cost $9,402,452).................................. 9,402,452
--------------
REPURCHASE AGREEMENTS - (45.43%)
16,495,000 Goldman, Sachs & Co., Joint Repurchase Agreement, 3.43%,
07/01/05, dated 06/30/05, repurchase value of $16,496,572
(collateralized by: U.S. Government agency obligations in a pooled
cash account, total market value $16,824,900).................................. 16,495,000
17,665,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 3.44%,
07/01/05, dated 06/30/05, repurchase value of $17,666,688
(collateralized by: U.S. Government agency obligations in a pooled
cash account, total market value $18,018,300).................................. 17,665,000
15,898,000 UBS Financial Services Inc. Joint Repurchase Agreement, 3.43%,
07/01/05, dated 06/30/05, repurchase value of $15,899,515
(collateralized by: U.S. Government agency obligations in a pooled
cash account, total market value $16,215,960).................................. 15,898,000
--------------
Total Repurchase Agreements - (identified cost $50,058,000)....................... 50,058,000
--------------
Total Investments - (99.79%) - (identified cost $109,971,623) - (a)............ 109,971,623
Other Assets Less Liabilities - (0.21%)........................................ 228,317
--------------
Net Assets - (100.00%)..................................................... $ 110,199,940
==============
(a) Aggregate cost for Federal Income Tax purposes is $109,971,623.
(b) The interest rates on floating rate securities, shown as of June 30, 2005,
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) Represents a step-up bond: a bond that pays one coupon rate for an initial
period followed by a higher coupon rate.
SEE NOTES TO FINANCIAL STATEMENTS
22
SELECTED FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
At June 30, 2005 (Unaudited)
========================================================================================================================
SELECTED
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
-------- -------- ----------
ASSETS:
Investments in securities, at value * (see accompanying Schedules of
Investments):
Unaffiliated companies................................. $ 8,099,394,913 $ 112,662,523 $ 109,971,623
Affiliated companies................................... 124,293,812 - -
Collateral of securities loaned (Note 7)............... 90,391,963 - -
Cash..................................................... 2,528,771 2,814 3,627
Receivables:
Dividends and interest................................. 13,104,410 114,451 419,949
Capital stock sold..................................... 14,253,876 62,341 3,823
Investments securities sold............................ 5,979,881 - -
Prepaid expenses....................................... 189,373 3,834 1,500
--------------- -------------- --------------
Total assets....................................... 8,350,136,999 112,845,963 110,400,522
--------------- -------------- --------------
LIABILITIES:
Return of collateral loaned (Note 7)..................... 90,391,963 - -
Payables:
Capital stock reacquired............................... 3,767,071 - 4,100
Investment securities purchased........................ 45,979,647 - -
Accrued expenses......................................... 2,528,748 49,941 40,113
Accrued management fees.................................. 3,739,587 65,904 28,137
Options written, at value (premiums received $97,233) (see
accompanying Schedule of Investments).................. - 34,560 -
Distributions payable.................................... - - 128,232
--------------- -------------- --------------
Total liabilities.................................. 146,407,016 150,405 200,582
--------------- -------------- --------------
NET ASSETS ................................................. $ 8,203,729,983 $ 112,695,558 $ 110,199,940
=============== ============== ==============
NET ASSETS CONSIST OF:
Par value of shares of capital stock..................... $ 274,358,388 $ 2,238,203 $ 11,019,994
Additional paid-in capital............................... 5,988,666,461 81,326,150 99,179,946
Undistributed net investment income...................... 34,907,151 24,472 -
Accumulated net realized gains (losses) from investments
and foreign currency transactions...................... (577,136,365) 6,679,136 -
Net unrealized appreciation on
investments and foreign currency transactions.......... 2,482,934,348 22,427,597 -
--------------- -------------- --------------
$ 8,203,729,983 $ 112,695,558 $ 110,199,940
=============== ============== ==============
* Including cost for Unaffiliated companies, Affiliated companies, and
Collateral of securities loaned of $5,712,117,572, $28,628,179, and $90,391,963
respectively for Selected American Shares; and securities valued at $85,536,411
were on loan from Selected American Shares, and Collateral received for
securities on loan is valued at $90,391,963. Including cost of $90,296,755 for
Selected Special Shares. Including repurchase agreements and cost of $50,058,000
and $109,971,623, respectively for Selected Daily Government Fund.
23
SELECTED FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - (Continued)
At June 30, 2005 (Unaudited)
========================================================================================================================
SELECTED
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
-------- -------- ----------
CLASS S SHARES:
Net Assets............................................. $7,231,481,922 $ 91,212,629 $ 105,335,802
Shares Outstanding..................................... 193,499,355 7,247,378 105,335,802
Net asset value, offering and redemption price per share
(Net Assets / Shares Outstanding)................... $ 37.37 $ 12.59 $ 1.00
========== ========== ==========
CLASS D SHARES:
Net Assets............................................. $ 972,248,061 $ 21,482,929 $ 4,864,138
Shares Outstanding..................................... 25,987,355 1,705,433 4,864,138
Net asset value, offering and redemption price per share
(Net Assets / Shares Outstanding)................... $ 37.41 $ 12.60 $ 1.00
========== ========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
24
SELECTED FUNDS
STATEMENTS OF OPERATIONS
For the six months ended June 30, 2005
========================================================================================================================
SELECTED
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
-------- -------- ----------
INVESTMENT INCOME:
Income:
Dividends
Unaffiliated companies*................................ $ 64,355,295 $ 571,410 $ -
Affiliated companies................................... 2,512,322 - -
Interest................................................. 4,272,156 85,152 1,470,130
Security lending fees.................................... 434,832 - -
-------------- -------------- --------------
Total income......................................... 71,574,605 656,562 1,470,130
-------------- -------------- --------------
Expenses:
Management fees (Note 2)................................. 20,902,268 374,603 164,498
Custodian fees........................................... 566,123 22,141 11,145
Transfer agent fees
Class S................................................ 2,731,988 46,652 18,739
Class D................................................ 153,456 6,238 2,934
Audit fees............................................... 27,000 7,200 6,000
Legal fees............................................... 46,089 3,363 3,358
Reports to shareholders.................................. 330,769 4,099 4,454
Directors' fees and expenses............................. 205,220 2,973 5,642
Registration and filing fees............................. 84,995 22,498 26,501
Miscellaneous............................................ 34,358 4,918 5,888
Payments under distribution plan - Class S (Note 3)...... 8,640,230 111,142 131,478
-------------- -------------- --------------
Total expenses....................................... 33,722,496 605,827 380,637
Expenses paid indirectly (Note 6).................... (2,031) (37) (15)
-------------- -------------- --------------
Net expenses......................................... 33,720,465 605,790 380,622
-------------- -------------- --------------
Net investment income................................ 37,854,140 50,772 1,089,508
-------------- -------------- --------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investment transactions................................ (13,517,091) 7,114,632 -
Foreign currency transactions.......................... (108,893) 8,505 -
Net increase (decrease) in unrealized appreciation
of investments during the period....................... 87,203,582 (5,809,885) -
-------------- -------------- --------------
Net realized and unrealized gain on investments
and foreign currency................................... 73,577,598 1,313,252 -
-------------- -------------- --------------
Net increase in net assets resulting from operations... $ 111,431,738 $ 1,364,024 $ 1,089,508
============== ============== ==============
* Net of foreign taxes withheld as follows............... $ 2,431,310 $ 47,625 -
SEE NOTES TO FINANCIAL STATEMENTS
25
SELECTED FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 2005 (Unaudited)
========================================================================================================================
SELECTED
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
-------- -------- ----------
OPERATIONS:
Net investment income................................... $ 37,854,140 $ 50,772 $ 1,089,508
Net realized gain (loss) from investments and foreign
currency transactions................................. (13,625,984) 7,123,137 -
Net increase (decrease) in unrealized appreciation
of investments........................................ 87,203,582 (5,809,885) -
--------------- --------------- --------------
Net increase in net assets resulting from operations.... 111,431,738 1,364,024 1,089,508
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class S............................................... - - (1,040,254)
Class D............................................... - - (49,254)
CAPITAL SHARE TRANSACTIONS:
Net increase (decrease) in net assets resulting from
Capital share transactions (Note 5)
Class S............................................... 474,542,628 (382,798) (1,307,633)
Class D............................................... 276,780,217 1,673,749 (98,962)
---------------- --------------- --------------
Total increase (decrease) in net assets..................... 862,754,583 2,654,975 (1,406,595)
NET ASSETS:
Beginning of period..................................... 7,340,975,400 110,040,583 111,606,535
---------------- --------------- --------------
End of period*.......................................... $ 8,203,729,983 $ 112,695,558 $ 110,199,940
================ =============== ==============
* Including undistributed net investment income of.... $ 34,907,151 $ 24,472 -
SEE NOTES TO FINANCIAL STATEMENTS
26
SELECTED FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended December 31, 2004
========================================================================================================================
SELECTED
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
27
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2005 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Selected Funds (the Funds) consist of Selected American Shares, Inc.,
(Selected American Shares), Selected Special Shares, Inc., (Selected Special
Shares), and the Selected Capital Preservation Trust (the Trust). The Trust
consists of the Selected Daily Government Fund. The Funds and Trust are
registered under the Investment Company Act of 1940, as amended, as diversified,
open-end management investment companies. The following is a summary of
significant accounting policies followed by the Funds in the preparation of
financial statements.
Selected American Shares and Selected Special Shares are diversified,
professionally managed stock-oriented funds.
Selected Daily Government Fund seeks to provide a high level of current
income from short-term money market securities consistent with prudent
investment management, preservation of capital and maintenance of liquidity. It
invests in U.S. Government Securities and repurchase agreements in respect
thereto.
An investment in any of the Funds, as with any mutual fund, includes risks
that vary depending upon the fund's investment objectives and policies. There is
no assurance that the investment objective of any fund will be achieved. A
fund's return and net asset value will fluctuate, although Selected Daily
Government Fund seeks to maintain a net asset value of $1.00 per share.
The Class S 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. Selected Daily Government Fund 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.
28
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2005 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
D. FOREIGN CURRENCY - The Funds may enter into forward purchases or sales of
foreign currencies to hedge certain foreign currency denominated assets and
liabilities against declines in market value relative to the U.S. dollar.
Forward currency contracts are marked-to-market daily and the change in market
value is recorded by the Funds as an unrealized gain or loss. When the forward
currency contract is closed, the Funds record a realized gain or loss equal to
the difference between the value of the forward currency contract at the time it
was opened and value at the time it was closed. Investments in forward currency
contracts may expose the Funds to risks resulting from unanticipated movements
in foreign currency exchange rates or failure of the counter-party to the
agreement to perform in accordance with the terms of the contract.
Reported net realized foreign exchange gains or losses arise from the sales
and maturities of investments, sales of foreign currencies, currency gains or
losses realized between the trade and settlement dates on securities
transactions, the difference between the amounts of dividends, interest and
foreign withholding taxes recorded on the Funds' books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate. The Funds include foreign currency gains and
losses realized on the sale of investments together with market gains and losses
on such investments in the statement of operations.
E. FEDERAL INCOME TAXES - It is each Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income, including
any net realized gains on investments not offset by loss carryovers, to
shareholders. Therefore, no provision for federal income or excise tax is
required. At June 30, 2005, Selected 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 June 30, 2005, the Funds had available for federal
income tax purposes unused capital loss carryforwards as follows:
SELECTED
AMERICAN
SHARES
------
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.
29
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2005 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
G. SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME - Securities
transactions are accounted for on the trade date (date the order to buy or sell
is executed) with realized gain or loss on the sale of securities being
determined based upon identified cost. Dividend income is recorded on the
ex-dividend date. Interest income, which includes accretion of discount and
amortization of premium, is accrued as earned.
H. DIRECTORS/TRUSTEES FEES AND EXPENSES - The Funds 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.
NOTE 2 - INVESTMENT ADVISORY FEES
Advisory fees are paid monthly to Davis Selected Advisers, L.P. (the
"Adviser"), the Fund's investment adviser. The rate for Selected American Shares
is 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,
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 Selected Special
Shares is 0.70% on the first $50 million of average net assets, 0.675% on the
next $100 million, 0.65% on the next $100 million, and 0.60% of average net
assets in excess of $250 million. Advisory fees paid during the six months ended
June 30, 2005, approximated 0.54% and 0.69% of average net assets for Selected
American Shares and Selected Special Shares, respectively. The rate for the
Selected Daily Government Fund is 0.30% of average net assets.
State Street Bank and Trust Company ("State Street Bank") is the Funds'
primary transfer agent. The Adviser is also paid for certain transfer agent
services. The fee paid to the Adviser for the six months ended June 30, 2005 was
$76,861, $4,215, and $1,208 for Selected American Shares, Selected Special
Shares, and Selected Daily Government Fund, 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.
30
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2005 (Unaudited)
================================================================================
NOTE 3 - DISTRIBUTION
For services under the distribution agreement, the Funds' Class S shares
pay a fee of 0.25% of average daily net assets. For the six months ended June
30, 2005, Selected American Shares, Selected Special Shares, and Selected Daily
Government Fund incurred distribution services fees totaling $8,640,230,
$111,142, and $131,478, respectively.
There are no distribution service fees for the Funds' Class D shares.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities) during the six months ended June 30, 2005 were as follows:
SELECTED SELECTED
AMERICAN SPECIAL
SHARES SHARES
------ ------
Cost of purchases.......................... $796,479,942 $ 35,359,223
Proceeds of sales.......................... $ 7,636,384 $ 39,786,590
NOTE 5 - CAPITAL STOCK
At June 30, 2005, there were 300 million shares of capital stock of
Selected American Shares ($1.25 par value per share) authorized. At June 30,
2005, there were 50 million shares of capital stock of Selected Special Shares
($0.25 par value per share) authorized. At June 30, 2005, there were unlimited
shares of capital stock of Selected Capital Preservation Trust ($0.10 par value
per share) authorized. Transactions in capital stock were as follows:
CLASS S
SIX MONTHS ENDED
JUNE 30, 2005
(UNAUDITED)
----------------------------------------------------
SELECTED
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
-------- -------- ----------
Shares sold.......................................... 25,995,526 378,044 1,276,110
Shares issued in reinvestment of distributions....... - - 990,491
-------------- -------------- --------------
25,995,526 378,044 2,266,601
Shares redeemed/transferred out...................... (13,113,694) (411,003) (3,574,234)
-------------- -------------- --------------
Net increase (decrease)........................ 12,881,832 (32,959) (1,307,633)
============== ============== ==============
Proceeds from shares sold............................ $ 956,757,814 $ 4,685,550 $ 1,276,110
Proceeds from shares issued in
reinvestment of distributions.................... - - 990,491
-------------- -------------- --------------
956,757,814 4,685,550 2,266,601
Cost of shares redeemed/transferred out.............. (482,215,186) (5,068,348) (3,574,234)
-------------- -------------- --------------
Net increase (decrease)........................ $ 474,542,628 $ (382,798) $ (1,307,633)
============== ============== ==============
31
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2005 (Unaudited)
================================================================================
NOTE 5 - CAPITAL STOCK - (CONTINUED)
CLASS S - (CONTINUED)
YEAR ENDED
DECEMBER 31, 2004
----------------------------------------------------
SELECTED
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
-------- -------- ----------
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)
============== ============== ==============
CLASS D SIX MONTHS ENDED
JUNE 30, 2005
(UNAUDITED)
----------------------------------------------------
SELECTED
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
-------- -------- ----------
Shares sold/transferred in........................... 8,294,734 178,805 2,005,483
Shares issued in reinvestment of distributions....... - - 46,619
-------------- -------------- --------------
8,294,734 178,805 2,052,102
Shares redeemed...................................... (789,057) (43,581) (2,151,064)
-------------- -------------- --------------
Net increase (decrease)........................ 7,505,677 135,224 (98,962)
============== ============== ==============
Proceeds from shares sold/transferred in............. $ 305,918,740 $ 2,214,644 $ 2,005,483
Proceeds from shares issued in reinvestment of distributions - - 46,619
-------------- -------------- --------------
305,918,740 2,214,644 2,052,102
Cost of shares redeemed.............................. (29,138,523) (540,895) (2,151,064)
-------------- -------------- --------------
Net increase (decrease)........................ $ 276,780,217 $ 1,673,749 $ (98,962)
============== ============== ==============
MAY 3, 2004
(INCEPTION OF OFFERING)
THROUGH DECEMBER 31, 2004
----------------------------------------------------
SELECTED
SELECTED SELECTED DAILY
AMERICAN SPECIAL GOVERNMENT
SHARES SHARES FUND
-------- -------- ----------
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
============== ============== ==============
32
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2005 (Unaudited)
================================================================================
NOTE 6 - EXPENSES PAID INDIRECTLY
Under an agreement with the custodian bank, each Fund's custodian fees are
reduced for earnings on cash balances maintained at the custodian by the Funds.
During the six months ended June 30, 2005, such reductions amounted to $2,031,
$37, and $15 for Selected American Shares, Selected Special Shares, and Selected
Daily Government Fund, respectively.
NOTE 7 - SECURITIES LOANED
Selected American Shares (the "Fund") has entered into a securities lending
arrangement with UBS Financial Services Inc. Under the terms of the agreement,
the Fund receives fee income from lending transactions; in exchange for such
fees, UBS Financial Services Inc. is authorized to loan securities on behalf of
the Fund, against receipt of collateral at least equal to the value of the
securities loaned. As of June 30, 2005, the Fund had on loan securities valued
at $85,536,411; cash of $90,391,963 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 - ILLIQUID SECURITIES
Securities may be considered illiquid if they lack a readily available market or
if valuation has not changed for a certain period of time. The aggregate value
of illiquid securities in Selected American Shares, and Selected Special Shares
amounted to $17,109,120 and $980,210 or 0.21% and 0.87% of the Funds' net
assets, respectively, as of June 30, 2005.
Valuation per Unit
Acquisition Cost per as of June 30,
Funds Security Date Principal Unit 2005
- ----- -------- ------------ --------- ---------- --------------------
Selected Level 3 Communications, Inc.,
American Conv. Sr. Notes, 10.00%,
Shares 05/01/11 4/4/05 19,200,000 $ 100.00 $ 89.11
Selected Level 3 Communications, Inc.,
Special Conv. Sr. Notes, 10.00%,
Shares 05/01/11 4/4/05 1,100,000 $ 100.00 $ 89.11
NOTE 9 - 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.
33
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2005 (Unaudited)
================================================================================
NOTE 9 - 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 six months ended June 30, 2005 was as
follows:
SELECTED SPECIAL SHARES
-----------------------
Number of Amount of
Contracts Premiums
--------- ---------
Options outstanding as of December 31, 2004........... 48 $ 97,233
Options written................................... - -
Options closed or expired......................... - -
Options exercised................................. - -
----- ----------
Options outstanding as of June 30, 2005............... 48 $ 97,233
===== ==========
NOTE 10 - BANK BORROWINGS
Each Fund may borrow up to 5% of its assets from a bank to purchase
portfolio securities, or for temporary and emergency purposes. The purchase of
securities with borrowed funds creates leverage in the Fund. Each Fund has
entered into an agreement, which enables it to participate with certain other
funds managed by the Adviser in an unsecured line of credit with a bank, which
permits borrowings up to $50 million, collectively. Interest is charged based on
its borrowings, at a rate equal to the overnight Federal Funds Rate plus 0.75%.
The Funds had no borrowings outstanding for the six months ended June 30, 2005.
34
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2005 (Unaudited)
================================================================================
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.
35
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED AMERICAN SHARES, INC.
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
CLASS S SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30,2005 ----------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
----------- ---- ---- ---- ---- ----
Net Asset Value, Beginning of Period.... $ 36.87 $ 33.17 $ 25.51 $ 30.99 $ 35.33 $ 35.80
------- ------- ------- -------- ------- --------
Income (Loss) From Investment Operations
Net Investment Income.................. .17 .26 .22 .17 .14 .15
Net Realized and Unrealized
Gains (Losses)...................... .33 3.71 7.65 (5.45) (4.10) 2.98
------- ------- ------- -------- ------- --------
Total From Investment Operations.... .50 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.......... $ 37.37 $ 36.87 $ 33.17 $ 25.51 $ 30.99 $ 35.33
======= ======= ======= ======== ======= ========
Total Return(1)......................... 1.36% 11.97% 30.90% (17.06)% (11.17)% 9.33%
Ratios/Supplemental Data
Net Assets, End of Period
(000,000 omitted)................... $7,231 $6,660 $5,978 $4,346 $5,565 $5,707
Ratio of Expenses to Average Net Assets .90%* .92% .94%(3) .94%(3) .94%(3) .92%
Ratio of Net Investment Income to
Average Net Assets.................. .96%* .76% .80% .61% .45% .52%
Portfolio Turnover Rate(2)............. -(5) 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. Total returns are not annualized for periods of less than one full
year.
(2) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
(3) Ratio of expenses to average net assets after the reduction of expenses
paid indirectly was .93% for 2003, 2002, and 2001.
(4) Less than $0.005 per share.
(5) Less than 1%.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
36
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
SIX MONTHS MAY 3, 2004
ENDED (INCEPTION OF
JUNE 30, 2005 CLASS) THROUGH
(UNAUDITED) DECEMBER 31, 2004
----------- -----------------
Net Asset Value, Beginning of Period................. $ 36.86 $ 34.12
------- -------
Income From Investment Operations
Net Investment Income............................... .23(3) .18
Net Realized and Unrealized Gains................... .32 2.91
------- -------
Total From Investment Operations................. .55 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....................... $ 37.41 $ 36.86
======= =======
Total Return(1)...................................... 1.49% 9.08%
Ratios/Supplemental Data
Net Assets, End of Period
(000,000 omitted)................................ $972 $681
Ratio of Expenses to Average Net Assets............. .61%* .65%*
Ratio of Net Investment Income to
Average Net Assets............................... 1.25%* 1.10%*
Portfolio Turnover Rate(2).......................... -(4) 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.
(3) Per share calculations were based on average shares outstanding for the
period.
(4) Less than 1%.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
37
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED SPECIAL SHARES, INC.
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
CLASS S
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2005 ------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
----------- ---- ---- ---- ---- ----
Net Asset Value, Beginning of Period..... $ 12.44 $ 11.70 $ 8.61 $ 10.50 $ 13.68 $ 16.17
------- ------- ------- ------- ------- -------
Income (Loss) From Investment Operations
Net Investment Income (Loss)........... -(4) .05 (.04) (.04) (.02) -(4)
Net Realized and Unrealized
Gains (Losses)....................... .15 1.26 3.60 (1.81) (1.95) (.25)
------- ------- ------- ------- ------- -------
Total From Investment Operations..... .15 1.31 3.56 (1.85) (1.97) (.25)
Dividends and Distributions
Distributions from Realized Gains....... - (.04) - - - -
Return of Capital....................... - (.53) (.47) (.04) (1.21) (2.24)
------- ------- ------- ------- ------- -------
Total Dividends and Distributions.... - (.57) (.47) (.04) (1.21) (2.24)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period........... $ 12.59 $ 12.44 $ 11.70 $ 8.61 $ 10.50 $ 13.68
======= ======= ======= ======= ======= =======
Total Return(1).......................... 1.21% 11.34% 41.40% (17.62)% (14.41)% (1.10)%
Net Assets, End of Period (000 omitted). $91,213 $90,536 $95,653 $59,762 $73,092 $95,222
Ratio of Expenses to Average Net Assets. 1.16%* 1.17% 1.21% 1.17%(3) 1.15%(3) 1.15%
Ratio of Net Investment Income (Loss) to
Average Net Assets................... .04%* .37% (.39)% (.46)% (.20)% (.25)%
Portfolio Turnover Rate(2).............. 33% 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. Total
returns are not annualized for periods of less than one full year.
(2) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
(3) Had the Adviser not absorbed certain expenses, the ratio of expenses to
average net assets for 2002 and 2001 would have been 1.21% and 1.18%,
respectively.
(4) Less than $0.005 per share.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
38
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
SIX MONTHS MAY 3, 2004
ENDED (INCEPTION OF
JUNE 30, 2005 CLASS) THROUGH
(UNAUDITED) DECEMBER 31, 2004
----------- -----------------
Net Asset Value, Beginning of Period............... $ 12.42 $ 11.97
------- -------
Income From Investment Operations
Net Investment Income............................ .02(3) .05
Net Realized and Unrealized Gains................ .16 1.00
------- -------
Total From Investment Operations............... .18 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..................... $ 12.60 $ 12.42
======= =======
Total Return(1).................................... 1.45% 8.91%
Net Assets, End of Period (000 omitted)........... $21,483 $19,505
Ratio of Expenses to Average Net Assets........... .87%* .91%*
Ratio of Net Investment Income to
Average Net Assets............................. .33%* .86%*
Portfolio Turnover Rate(2)........................ 33% 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.
(3) Per share calculations were based on average shares outstanding for the
period.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
39
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DAILY GOVERNMENT FUND
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
CLASS S
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2005 ------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
----------- ---- ---- ---- ---- ----
Net Asset Value, Beginning of Period.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- -------
Income From Investment Operations
Net Investment Income.................. .010 .007 .005 .013 .037 .056
Dividends and Distributions
Dividends from Net Investment Income... (.010) (.007) (.005) (.013) (.037) (.056)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period.......... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= =======
Total Return(1)......................... 0.99% 0.73% 0.54% 1.32% 3.73% 5.80%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted) $105,336 $106,643 $112,853 $116,187 $112,380 $130,126
Ratio of Expenses to Average Net Assets .70%* .68% .67% .67% .66% .67%
Ratio of Net Investment Income
to Average Net Assets............... 1.98%* .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. Total returns are not annualized for periods of less than one full
year.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
40
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
SIX MONTHS MAY 3, 2004
ENDED (INCEPTION OF
JUNE 30, 2005 CLASS) THROUGH
(UNAUDITED) DECEMBER 31, 2004
----------- -----------------
Net Asset Value, Beginning of Period................. $ 1.000 $ 1.000
------- -------
Income From Investment Operations
Net Investment Income............................... .011 .007
Dividends and Distributions
Dividends from Net Investment Income................ (.011) (.007)
------- -------
Net Asset Value, End of Period....................... $ 1.000 $ 1.000
======= =======
Total Return(1)...................................... 1.09% 0.74%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted)............ $4,864 $4,963
Ratio of Expenses to Average Net Assets............ .55%* .44%*
Ratio of Net Investment Income
to Average Net Assets............................ 2.13%* 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
41
SELECTED FUNDS
FUND INFORMATION
================================================================================
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.
42
SELECTED FUNDS
DIRECTOR APPROVAL OF ADVISORY AGREEMENTS
================================================================================
PROCESS OF ANNUAL REVIEW
The Board of Directors of the Selected Funds oversees the management of each
Selected Fund and, as required by law, determines annually whether to approve
the continuance of each Selected Fund's advisory agreement with Davis Selected
Advisers, L.P. and sub-advisory agreement with Davis Selected Advisers-NY, Inc.
(jointly "Davis Selected Advisers, L.P." and "Advisory Agreements").
As a part of this process the Independent Directors, with the assistance of
counsel for the Independent Directors, prepares questions which it submits to
Davis Selected Advisers, L.P. in anticipation of the annual contract review. In
the April 2005 board meeting, the Independent Directors reviewed and evaluated
all information which they deemed reasonably necessary in the circumstances.
Upon completion of this review, the Independent Directors recommended that the
full Board of Directors approve the continuance of the Advisory Agreements.
REASONS THE INDEPENDENT DIRECTORS APPROVED CONTINUATION OF THE ADVISORY
AGREEMENTS
The Independent Directors determinations were based upon a comprehensive
consideration of all information provided to the Independent Directors and were
not the result of any single factor. The following facts and conclusions were
important, but not exclusive, in the Independent Directors' recommendation to
renew the Advisory Agreements for each of the Selected Funds described below.
The Independent Directors noted the importance of reviewing quantitative
measures, but also recognize that qualitative factors, some of which are
mentioned below, could be equally or more important in assessing whether
Selected Fund shareholders have been, or are likely to be, well served by the
renewal of the management contract. They noted both the value and shortcomings
of purely quantitative measures, including the data provided by independent
service providers, and concluded that while such measures and data can inform,
they should not supersede the judgment of the Independent Directors who take
many factors, including those listed below, into consideration in representing
the shareholders of Selected Funds. In connection with reviewing comparative
performance information, the Independent Directors generally give weight to
longer-term measurements.
The Independent Directors believe that shareholders of Selected Funds should,
and will, expect Davis Selected Advisers, L.P. to employ a disciplined, company
specific, research driven investment philosophy. The Independent Directors
concluded that the willingness of Davis Selected Advisers, L.P. and related
persons to invest a substantial amount of their own money alongside and on the
same terms as other shareholders in the Selected Funds demonstrates a good
alignment of interest between Davis Selected Advisers, L.P. and Selected Fund
shareholders.
The Independent Directors recognized Davis Selected Advisers, L.P.'s (a) efforts
to minimize transaction costs by generally having a long-term time horizon and
low portfolio turnover; (b) focus on tax efficiency; (c) record of generally
producing satisfactory after tax results over the longer-term; (d) efforts
towards fostering healthy investor behavior by, among other things, providing
informative and substantial educational material; and (e) efforts to promote
shareholder interests by actively speaking out on corporate governance issues.
43
SELECTED FUNDS
DIRECTOR APPROVAL OF ADVISORY AGREEMENTS - (Continued)
================================================================================
REASONS THE INDEPENDENT DIRECTORS APPROVED CONTINUATION OF THE ADVISORY
AGREEMENTS - (CONTINUED)
The Independent Directors also noted that Davis Selected Advisers, L.P. provides
a number of services to the Selected Funds in addition to investment management.
Non-investment management services provided by Davis Selected Advisers, L.P. to
the Selected Funds include (a) extensive customer services to Fund shareholders;
(b) responsibility for complying with legal duties and regulatory obligations;
and (c) responsibility for general administrative and business services. Davis
Selected Advisers, L.P. is reimbursed a portion of its costs in providing some,
but not all, of these services.
The Independent Directors reviewed (a) comparative fee and expense information
for competitive funds, as selected and analyzed by a nationally recognized
independent service provider; (b) information regarding fees charged by Davis
Selected Advisers, L.P. to other advisory clients, including funds which it
sub-advises and private accounts, as well as the differences in the services
provided to such other clients; and (c) the fee schedules of the various
Selected Funds, and their two classes of shares, including an assessment of
competitive fee schedules.
The Independent Directors reviewed the profitability of each Selected Fund to
Davis Selected Advisers, L.P. The Independent Directors considered various
potential benefits that Davis Selected Advisers, L.P. may receive in connection
with the services it provides under the Advisory Agreements with each Selected
Fund, including a review of portfolio brokerage practices. The Independent
Directors noted that Davis Selected Advisers, L.P. does not use client
commissions to pay for publications that are available to the general public or
third-party research services.
SELECTED AMERICAN SHARES
- ------------------------
The Independent Directors noted that Selected American Shares out-performed its
benchmark, the Standard & Poor's 500(R) Index, and exceeded the average
performance of its peer group, as determined by an independent service provider,
over the longer-term investment horizons.
The Independent Directors considered the expense ratio for Selected American
Shares and concluded that it is reasonable and competitive with the range of
average expense ratios of its peer group as determined by an independent service
provider.
SELECTED SPECIAL SHARES
- -----------------------
The Independent Directors noted that Selected Special Shares out-performed its
benchmark, the Dow Jones Wilshire 5000 Index, over longer-term investment
horizons, but under-performed the Index over the one-year investment period.
Selected Special Shares exceeded the average performance of its peer group, as
determined by an independent service provider, over the longer-term investment
horizons.
The Independent Directors considered the expense ratio for Selected Special
Shares and concluded that it is reasonable and competitive with the range of
average expense ratios of its peer group as determined by an independent service
provider.
44
SELECTED FUNDS
DIRECTOR APPROVAL OF ADVISORY AGREEMENTS - (Continued)
================================================================================
SELECTED DAILY GOVERNMENT FUND
- ------------------------------
The Independent Directors noted that Selected Daily Government Fund exceeded the
average performance of its peer group, as determined by an independent service
provider, over the shorter-term investment horizons. Selected Daily Government
Fund approximately equaled the average performance of its peer group over the
longer-term investment horizon.
The Independent Directors considered the expense ratio for Selected Daily
Government Fund and concluded that it is reasonable and competitive with the
range of average expense ratios of its peer group as determined by an
independent service provider.
APPROVAL OF ADVISORY AGREEMENTS
- -------------------------------
After their review of all factors, the Independent Directors determined that the
advisory fee for each Selected Fund is reasonable in light of the nature,
quality and extent of the services being provided to each Fund, the costs
incurred by Davis Selected Advisers, L.P. in providing such service, and in
comparison to the range of the average advisory fees of its peer group as
determined by an independent service provider.
The Independent Directors considered the advisory fee schedule for each Selected
Fund and concluded that it represents an appropriate sharing between Fund
shareholders and Davis Selected Advisers, L.P. of such economies of scale as may
exist in the management of each Fund at current asset levels.
The Independent Directors therefore recommended continuation of the advisory
agreements.
45
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 retirement, resignation, death, or
removal. Directors must retire from the Board of Directors and cease being a
Director at the close of business on the last day of the calendar year in which
the Director attains age 75.
TERM OF NUMBER OF
OFFICE AND PORTFOLIOS IN
LENGTH OF FUND COMPLEX OTHER
POSITION(S) TIME PRINCIPAL OCCUPATION(S) OVERSEEN DIRECTORSHIPS
NAME AND AGE HELD WITH FUND SERVED DURING PAST FIVE YEARS BY DIRECTOR HELD BY DIRECTOR
- -----------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
WILLIAM P. BARR Director director Executive Vice President and 3 None
(born 5/23/50) since 1994 General Counsel, Verizon
(formerly GTE Corporation
before it merged with Bell
Atlantic) since July 1994;
Attorney General of the United
States from August 1991 to
January 1993; Deputy Attorney
General from May 1990 to
August 1991; Assistant
Attorney General from April
1989 to May 1990; Partner with
the law firm of Shaw, Pittman,
Potts & Trowbridge from 1984
to April 1989 and January 1993
to August 1994.
FLOYD A. BROWN Director director Retired staff announcer and 3 None
(born 11/5/30) since 1975 program host for WGN Radio and
Television, Chicago, Illinois;
sole proprietor of The Floyd
Brown Co., Elgin, Illinois
(advertising, media production
and mass media marketing).
JEROME E. HASS Director director Professor of Finance and 3 None
(born 6/1/40) since 1997 Business Strategy, Johnson
Graduate School of Management,
Cornell University;
Consultant, National Economic
Research Associates; former
Chief of Division of Economic
Research of the Federal Power
Commission and Special
Assistant to James R.
Schlesinger at the Executive
Office of the President of the
United States.
KATHERINE L. Director director Former Chief Financial 3 None
MACWILLIAMS since 1997 Officer, Coors Brewers
(born 1/19/56) Limited; former Vice
President, International
Finance, Coors Brewing
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.
46
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
==============================================================================
TERM OF NUMBER OF
OFFICE AND PORTFOLIOS IN
LENGTH OF FUND COMPLEX OTHER
POSITION(S) TIME PRINCIPAL OCCUPATION(S) OVERSEEN DIRECTORSHIPS
NAME AND AGE HELD WITH FUND SERVED DURING PAST FIVE YEARS BY DIRECTOR HELD BY DIRECTOR
- ---------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS - CONTINUED
JAMES J. MCMONAGLE Director/ director Chairman of the Selected Funds 3 None
(born 10/1/44) Chairman since 1990 Board of Directors; Of Counsel
to Vorys, Sater, Seymour and
Pease LLP (law firm); Formerly
Senior Vice President and
General Counsel of University
Hospitals Health System, Inc.
and University Hospitals of
Cleveland from 1990 to 2002;
Judge of the Court of Common
Pleas, Cuyahoga County, Ohio,
from 1976 to 1990.
RICHARD O'BRIEN Director director Retired Corporate Economist 3 Director and past
(born 9/12/45) since 1996 for Hewlett-Packard Company; President, Silicon
former Chairman of the Valley Roundtable;
Economic Advisory Council of Director, Family
the California Chamber of Services Agency of
Commerce. 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.
47
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS - (CONTINUED)
TERM OF NUMBER OF
OFFICE AND PORTFOLIOS IN
LENGTH OF FUND COMPLEX OTHER
POSITION(S) TIME PRINCIPAL OCCUPATION(S) OVERSEEN DIRECTORSHIPS
NAME AND AGE HELD WITH FUND SERVED DURING PAST FIVE YEARS BY DIRECTOR HELD BY 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.
48
(This page has been left blank intentionally.)
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 OR ON THE FUNDS' WEBSITE AT
WWW.SELECTEDFUNDS.COM. 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 - Not Applicable
Item 3. Audit Committee Financial Expert - Not Applicable
Item 4. Principal Accountant Fees and Services - Not Applicable
Item 5. Audit Committee of Listed Registrants - Not Applicable
Item 6. Schedule of Investments - Not Applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8. Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9. Purchase of Equity Securities by Closed-End Mangement Investment
Company and Affiliated Purchases - Not Applicable
Item 10. 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 11. 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 12. Exhibits
EX-99.CERT - Section 302 Certification
EX-99.906 CERT - Section 906 Certification
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on it behalf by the undersigned, thereunto duly authorized.
SELECTED SPECIAL SHARES, INC.
By /s/ Kenneth C. Eich
Kenneth C. Eich
Principal Executive Officer
Date: September 7, 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: September 7, 2005
By /s/ Douglas A. Haines
Douglas A. Haines
Principal Financial officer
Date: September 7, 2005