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 811-00051
Selected American 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, 2003
ITEM 1. REPORTS TO STOCKHOLDERS
SELECTED FUNDS
SEMI-ANNUAL
REPORT
June 30, 2003
SELECTING QUALITY COMPANIES FOR THE LONG TERM(TM)
Selected American Shares
Selected Special Shares
SELECTED
Selected U.S. Government Income Fund FUNDS
Selected Daily Government Fund
TABLE OF CONTENTS
Shareholder Letter............................................................2
Management's Discussion and Analysis:
Selected American Shares.................................................3
Selected Special Shares..................................................4
Selected U.S. Government Income Fund.....................................5
Schedule of Investments:
Selected American Shares.................................................7
Selected Special Shares.................................................11
Selected U.S. Government Income Fund....................................14
Selected Daily Government Fund..........................................16
Statements of Assets and Liabilities.........................................19
Statements of Operations.....................................................20
Statements of Changes in Net Assets..........................................21
Notes to Financial Statements................................................23
Financial Highlights:
Selected American Shares................................................28
Selected Special Shares.................................................29
Selected U.S. Government Income Fund....................................30
Selected Daily Government Fund..........................................31
Directors and Officers.......................................................32
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
Dear Fellow Shareholder,
As stewards of our customers' savings, the management team and Directors of the
Selected Funds recognize the importance of candid, thorough and regular
communication with our shareholders. In our annual and semi-annual reports, we
include all of the required quantitative information, such as audited financial
statements, detailed footnotes, performance reports, fund holdings, a list of
each individual purchase or sale and a new section on performance attribution.
In addition we produce a semi-annual Research Report. In this report, we give a
more qualitative perspective on fund performance, discuss our thoughts on
individual holdings, and share our investment outlook. You may obtain a copy of
the current Research Report either at our website, SelectedFunds.com, or by
calling 1-800-243-1575.
Sincerely,
/s/ James J. McMonagle /s/ Christopher C. Davis
- ---------------------- ------------------------
James J. McMonagle Christopher C. Davis
Chairman President
August 7, 2003
2
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS
EQUITY MARKET ENVIRONMENT
During the six months ended June 30, 2003, the stock market, as measured by the
Standard & Poor's 500(R) Index, returned 11.76% and the Wilshire 5000 Index
returned 12.91%.(1) This performance reflected a vigorous rally over the last
three months. In the first three months, stock prices were depressed by investor
apprehension about geopolitical tensions and generally glum economic news.
Although the U.S. military campaign in Iraq was brief and successful, economic
uncertainty remained. Consumer spending stayed strong, but the job market
deteriorated. The broad economy registered anemic growth. In March the market
increased, and it continued in a positive trend through the end of June.
SELECTED AMERICAN SHARES
PERFORMANCE OVERVIEW
Selected American Shares returned 11.60% for the six-month period ended June 30,
2003(2), compared with a return of 11.76% for the Standard & Poor's 500(R)
Index.(1) The Fund's investment strategy is to seek out growing companies that
can be purchased at value prices and held for the long-term. Typically, the Fund
invests the majority of its assets in equity securities issued by large
companies with market capitalizations of at least $10 billion.
The Fund's largest sector weightings were in banks and savings & loans and
financial services. The Fund's financial services holdings outperformed the S&P
500(R) Index, while the Fund's banks and savings & loan holdings underperformed
the S&P 500(R) Index. The Fund's cash position reduced relative performance
during the strong bull market.
The principal holdings contributing to performance were: Progressive
Corporation(3), a property/casualty insurance company, American Express, a
financial services company and Costco, a retailing company. The Fund held
substantial positions in all three companies and all three did well over the
six-month period, Progressive Corporation increased by 47.41%, American Express
by 18.55% and Costco by 30.43%.
The principal detractors from performance were: Kraft Foods, a food/beverage &
restaurants company, Safeway, a retailing company and Tellabs, a
telecommunications company. Over the six-month period, Kraft Foods decreased by
15.55% and Safeway decreased by 12.41%. Tellabs decreased by 15.41% prior to
being sold.
TOP 10 HOLDINGS AS OF JUNE 30, 2003 % OF NET ASSETS
- ----------------------------------- ---------------
American Express Co. 7.52%
Altria Group, Inc. 5.85%
American International Group, Inc. 5.32%
Citigroup Inc. 4.11%
Progressive Corp. (Ohio) 3.81%
Wells Fargo & Co. 3.80%
Sealed Air Corp. 3.69%
Berkshire Hathaway Inc., Class A 3.66%
HSBC Holdings PLC 3.66%
Costco Wholesale Corp. 3.60%
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 returned 16.72% for the six-month period ended June 30,
2003(2), compared with a return of 12.91% for the Wilshire 5000 Index.(1) The
Fund's investment strategy is to seek out growing companies that can be
purchased at value prices and held for the long-term. Under normal
circumstances, the Fund invests the majority of its assets in equity securities
issued by companies with market capitalizations less than $20 billion.
The Fund's largest sector weightings were in retailing, media and electronics.
The Fund's holdings in each of the three sectors outperformed the Wilshire 5000
Index and contributed to the Fund's strong performance.
The principal holdings contributing to performance were: Monster Worldwide(3), a
media company, Tiffany & Co, a retailing company and Applied Materials, an
electronics company. Monster Worldwide increased by 86.19% prior to being sold.
Over the six month period Tiffany & Co. increased by 37.10% and Applied
Materials increased by 21.57%.
The principal detractors from performance were: DST Systems, an
information/information processing company; Duane Reade, a retailing company and
Speedway Motorsports, a race track company. DST Systems decreased by 21.18%,
Duane Reade decreased by 25.41% and Speedway Motorsports decreased by 15.17%
prior to being sold.
TOP 10 HOLDINGS AS OF JUNE 30, 2003 % OF NET ASSETS
- ------------------------------------ ---------------
Tiffany & Co. 4.72%
AutoNation, Inc. 4.70%
Sigma-Aldrich Corp. 3.65%
AutoZone, Inc. 3.54%
BlackRock, Inc. 3.25%
Transatlantic Holdings, Inc. 3.09%
Golden West Financial Corp. 2.97%
Agilent Technologies, Inc. 2.92%
Applied Materials, Inc. 2.90%
Altria Group, Inc. 2.87%
4
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
GOVERNMENT BOND MARKET ENVIRONMENT
Government Bonds rallied in the second quarter amidst lingering questions
regarding the strength of the U.S. economy. First-quarter GDP growth was revised
down to a slower-than-expected 1.4% annualized rate, and the jobless rate hit
6.4% in June (a 9-year high). However, consumer confidence rose sharply during
the second quarter, as major fighting in Iraq ended, and investors began to
anticipate improvements in the economy. In May, Congress approved a $350 billion
tax cut package, which also helped lift sentiment. The Federal Reserve lowered
interest rates in June by 25 basis points, cutting the federal funds rate to
1.00% (the lowest level in 45 years), stating it had yet to see signs of
sustainable economic growth.
SELECTED U.S. GOVERNMENT INCOME FUND
PERFORMANCE OVERVIEW
Selected U.S. Government Income Fund returned 1.74% for the six-month period
ended June 30, 2003(2), compared with a return of 2.39% for the Lehman Brothers
Intermediate Term U.S. Treasury Securities Index.(1) The Fund's investment
strategy, under normal circumstances, is to invest exclusively in U.S.
Government Securities and repurchase agreements collateralized by U.S.
Government Securities.
The Fund's largest sector weighting was in mortgage-backed securities, with
lesser investments in agency bonds and direct treasury bonds. This large
commitment to mortgage-backed securities hurt the Fund's relative performance as
both the agency bond market and direct treasury bond market outperformed the
mortgage-backed securities market over the six month period.
- ----------------------------------------
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 risks, fees and expenses. Please read the
prospectus carefully before investing or sending money.
Selected American Shares' investment objective is to achieve both capital growth
and income. In the current market environment, we expect that income will be
low. There can be no assurance that the Fund will achieve its objective. The
primary risks of an investment in Selected American Shares are: (1) market risk,
(2) company risk, (3) headline risk and (4) selection risk. See the prospectus
for a full description of each risk.
Selected Special Shares' investment objective is capital growth. There can be no
assurance that the Fund will achieve its objective. The primary risks of an
investment in Selected Special Shares are: (1) market risk, (2) company risk,
(3) small and medium capitalization risk, (4) headline risk and (5) selection
risk. See the prospectus for a full description of each risk.
Selected U.S. Government Income Fund's investment objective is to obtain current
income consistent with preservation of capital by investing principally in U.S.
Government Securities. There can be no assurance that the Fund will achieve its
objective. The primary risks of an investment in Selected U.S. Government Income
Fund is interest rate risk, consisting of both: (1) price volatility risk and
(2) extension and prepayment risk. See the prospectus for a full description of
each risk.
5
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
(1) The definitions of indices quoted in this report appear below. Investments
cannot be made directly in the indices.
I. The S&P 500(R) Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The index is adjusted
for dividends, weighted towards stocks with large market capitalizations, and
represents approximately two-thirds of the total market value of all domestic
common stocks.
II. The Wilshire 5000 Index measures the performance of all U.S. headquartered
equity securities with readily available price data. Over 6,500 capitalization
weighted security returns are used to adjust the index. The Wilshire 5000 is a
broad measure of the entire U.S. stock market.
III. The Lehman Brothers Intermediate Term U.S. Treasury Securities Index is a
recognized unmanaged index of U.S. Government Securities performance.
(2) Total return assumes reinvestment of dividends and capital gain
distributions. Past performance is not a guarantee of future results. Investment
return and principal value will vary so that, when redeemed, an investor's
shares may be worth more or less than when purchased. The following table lists
the average annual total returns for the periods ended June 30, 2003.
- ------------------------------------ ------------ ------------- ---------------
FUND NAME 1 YEAR 5 YEARS 10 YEARS
- ------------------------------------ ------------ ------------- ---------------
Selected American Shares 3.59% 2.41% 12.09%
- ------------------------------------ ------------ ------------- ---------------
Selected Special Shares 3.56% (0.07%) 9.02%
- ------------------------------------ ------------ ------------- ---------------
Selected U.S. Government Income 5.62% 5.20% 5.35%
- ------------------------------------ ------------ ------------- ---------------
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) 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 list each Fund's holdings of each company discussed.
Shares of the Selected Funds are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the FDIC or any other agency, and
involve investment risks, including possible loss of the principal amount
invested.
6
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC.
JUNE 30, 2003 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - (94.24%)
BANKS AND SAVINGS & LOAN ASSOCIATIONS - (14.97%)
4,407,000 Bank One Corp. ..................................................................... $ 163,852,260
1,819,800 Golden West Financial Corp. ........................................................ 145,602,198
15,140,767 HSBC Holdings PLC................................................................... 179,187,486
6,353,544 Lloyds TSB Group PLC................................................................ 45,183,899
330,000 State Street Corp. ................................................................. 13,002,000
3,696,560 Wells Fargo & Co. .................................................................. 186,306,624
--------------
733,134,467
--------------
BUILDING MATERIALS - (1.34%)
930,600 Martin Marietta Materials, Inc. .................................................... 31,277,466
924,100 Vulcan Materials Co. ............................................................... 34,256,387
--------------
65,533,853
--------------
BUSINESS SERVICES - (1.04%)
1,241,000 D&B Corp.*.......................................................................... 51,005,100
--------------
CONSUMER PRODUCTS - (5.85%)
6,307,500 Altria Group, Inc. ................................................................. 286,612,800
--------------
DIVERSIFIED MANUFACTURING - (4.53%)
1,606,600 Dover Corp. ........................................................................ 48,133,736
9,139,764 Tyco International Ltd. ............................................................ 173,472,721
--------------
221,606,457
--------------
ELECTRONICS - (0.87%)
10,192,500 Agere Systems Inc., Class A*........................................................ 23,748,525
1,195,000 Applied Materials, Inc.*............................................................ 18,940,750
--------------
42,689,275
--------------
ENERGY - (5.47%)
2,070,080 ConocoPhillips...................................................................... 113,440,384
1,860,421 Devon Energy Corp. ................................................................. 99,346,481
1,313,100 EOG Resources, Inc. ................................................................ 54,940,104
--------------
267,726,969
--------------
FINANCIAL SERVICES - (15.40%)
8,807,800 American Express Co. ............................................................... 368,254,118
4,704,189 Citigroup Inc. ..................................................................... 201,339,289
1,931,000 Loews Corp. ........................................................................ 91,316,990
1,132,800 Moody's Corp. ...................................................................... 59,709,888
1,957,400 Providian Financial Corp.*.......................................................... 18,125,524
296,010 Takefuji Corp. ..................................................................... 15,386,444
--------------
754,132,253
--------------
FOOD/BEVERAGE & RESTAURANT - (3.09%)
6,876,588 Diageo PLC.......................................................................... 73,540,074
652,400 Hershey Foods Corp. ................................................................ 45,446,184
7
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - CONTINUED
JUNE 30, 2003 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - CONTINUED
FOOD/BEVERAGE & RESTAURANT - CONTINUED
1,000,000 Kraft Foods Inc., Class A........................................................... $ 32,550,000
--------------
151,536,258
--------------
HOTELS & MOTELS - (0.78%)
988,700 Marriott International, Inc., Class A............................................... 37,985,854
--------------
INDUSTRIAL - (3.69%)
3,786,700 Sealed Air Corp.*................................................................... 180,474,122
--------------
INSURANCE BROKERS - (1.04%)
2,112,700 Aon Corp. ......................................................................... 50,873,816
---------------
INVESTMENT FIRMS - (3.18%)
890,300 Janus Capital Group Inc. ........................................................... 14,600,920
315,099 Julius Baer Holding Ltd., Class B................................................... 77,399,281
1,489,864 Morgan Stanley...................................................................... 63,691,686
--------------
155,691,887
--------------
LIFE INSURANCE - (0.60%)
658,000 Principal Financial Group, Inc. .................................................... 21,220,500
400,000 Sun Life Financial Services of Canada Inc. ......................................... 8,308,000
--------------
29,528,500
--------------
MEDIA - (1.34%)
1,099,959 Lagardere S.C.A. ................................................................... 47,888,886
2,235,400 WPP Group PLC....................................................................... 17,550,748
--------------
65,439,634
--------------
MULTI-LINE INSURANCE - (5.32%)
4,719,325 American International Group, Inc. ................................................. 260,412,354
--------------
PHARMACEUTICAL AND HEALTH CARE - (3.28%)
1,180,000 Eli Lilly and Co. .................................................................. 81,384,600
427,600 Merck & Co., Inc. .................................................................. 25,891,180
1,569,460 Pfizer Inc. ........................................................................ 53,597,059
--------------
160,872,839
--------------
PROPERTY/CASUALTY INSURANCE - (8.45%)
2,475 Berkshire Hathaway Inc., Class A*................................................... 179,437,500
6,366 Berkshire Hathaway Inc., Class B*................................................... 15,469,380
288,400 Chubb Corp. ........................................................................ 17,304,000
20,000 Markel Corp.*....................................................................... 5,120,000
2,553,200 Progressive Corp. (Ohio)............................................................ 186,638,920
203,241 Travelers Property Casualty Corp., Class A.......................................... 3,231,532
417,570 Travelers Property Casualty Corp., Class B.......................................... 6,585,079
--------------
413,786,411
--------------
PUBLISHING - (0.76%)
483,300 Gannett Co., Inc. .................................................................. 37,122,273
--------------
8
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - CONTINUED
JUNE 30, 2003 (Unaudited)
VALUE
SHARES/PRINCIPAL SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - CONTINUED
REAL ESTATE - (1.97%)
77,000 Avalonbay Communities, Inc. ........................................................ $ 3,283,280
1,521,194 Centerpoint Properties Trust (b).................................................... 93,173,133
--------------
96,456,413
--------------
REINSURANCE - (1.64%)
1,158,300 Transatlantic Holdings, Inc. ....................................................... 80,096,445
--------------
RETAILING - (5.18%)
4,817,000 Costco Wholesale Corp.*............................................................. 176,254,030
1,340,000 RadioShack Corp. ................................................................... 35,255,400
2,063,000 Safeway Inc.*....................................................................... 42,208,980
--------------
253,718,410
--------------
TECHNOLOGY - (3.49%)
1,317,100 BMC Software, Inc.*................................................................. 21,508,243
1,428,600 Lexmark International, Inc.*........................................................ 101,102,022
1,880,000 Microsoft Corp. .................................................................... 48,146,800
--------------
170,757,065
--------------
TRANSPORTATION - (0.96%)
740,500 United Parcel Service, Inc., Class B................................................ 47,169,850
--------------
Total Common Stock - (identified cost $3,865,636,599)...................... 4,614,363,305
--------------
SHORT TERM INVESTMENTS - (5.72%)
$ 62,094,000 Banc of America Securities, LLC Joint Repurchase Agreement, 1.27%,
07/01/03, dated 06/30/03, repurchase value of $62,096,191
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $63,335,880)................................................ 62,094,000
79,334,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 1.27%,
07/01/03, dated 06/30/03, repurchase value of $79,336,799
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $80,920,680)................................................ 79,334,000
30,058,000 Redwood Receivable Corp., 1.32%, 07/01/03........................................... 30,058,000
9
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - CONTINUED
JUNE 30, 2003 (Unaudited)
VALUE
PRINCIPAL SECURITY (NOTE 1)
=======================================================================================================================
SHORT TERM INVESTMENTS - CONTINUED
$ 30,000,000 San Paolo IMI US Financial Co., 0.94%, 07/11/03.................................. $ 29,992,167
30,000,000 UBS Finance Delaware, LLC, 0.96%, 07/02/03....................................... 29,999,200
48,482,000 UBS Financial Services Inc. Joint Repurchase Agreement, 1.18%,
07/01/03, dated 06/30/03, repurchase value of $48,483,589
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $49,451,640)............................................. 48,482,000
----------------
Total Short Term Investments - (identified cost $279,959,367)........... 279,959,367
----------------
Total Investments - (99.96%) - (identified cost $4,145,595,966) - (a)........ 4,894,322,672
Other Assets Less Liabilities - (0.04%)...................................... 2,203,104
----------------
Net Assets - (100%)..................................................... $ 4,896,525,776
================
*Non-Income Producing Security.
(a) Aggregate cost for Federal Income Tax purposes is $4,154,823,432. At
June 30, 2003, unrealized appreciation (depreciation) of securities for Federal
Income Tax purposes is as follows:
Unrealized appreciation...................................................... $ 1,155,356,085
Unrealized depreciation...................................................... (415,856,845)
----------------
Net unrealized appreciation ............................................ $ 739,499,240
================
(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, 2003. The
aggregate fairvalue of the securities of affiliated companies held by the Fund
as of June 30, 2003 amounts to $93,173,133. Transactions during the period in
which the issuers were affiliates are as follows:
Shares Gross Gross Shares Dividend
Security December 31, 2002 Additions Reductions June 30, 2003 Income
- -------- ----------------- --------- ---------- ------------- ------
Centerpoint Properties
Trust 1,521,194 - - 1,521,194 $ 1,848,251
SEE NOTES TO FINANCIAL STATEMENTS
10
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC.
JUNE 30, 2003 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - (91.10%)
BANKS AND SAVINGS & LOAN ASSOCIATIONS - (5.30%)
32,300 Bank One Corp. ..................................................................... $ 1,200,914
25,700 Golden West Financial Corp. ........................................................ 2,056,257
34,775 HSBC Holdings PLC .................................................................. 411,554
-------------
3,668,725
-------------
BUSINESS SERVICES - (1.03%)
17,400 D&B Corp.*.......................................................................... 715,140
-------------
CHEMICALS - (3.65%)
46,700 Sigma-Aldrich Corp. ................................................................ 2,530,206
-------------
CONSUMER PRODUCTS - (2.87%)
43,700 Altria Group, Inc. ................................................................. 1,985,728
-------------
DISTRIBUTORS - (2.75%)
85,000 Aramark Corp., Class B*............................................................. 1,905,700
-------------
DIVERSIFIED - (1.32%)
20,100 Groupe Bruxelles Lambert S.A. ...................................................... 910,929
-------------
DIVERSIFIED MANUFACTURING - (2.37%)
86,400 Tyco International Ltd. ............................................................ 1,639,872
-------------
ELECTRONICS - (9.09%)
227,000 Agere Systems Inc., Class A*........................................................ 528,910
103,500 Agilent Technologies, Inc.*......................................................... 2,023,425
126,800 Applied Materials, Inc.*............................................................ 2,009,780
9,695 Molex Inc., Class A................................................................. 223,082
149,500 Taiwan Semiconductor Manufacturing Co. Ltd., ADR*................................... 1,506,960
-------------
6,292,157
-------------
EMPLOYEE STAFFING - (0.37%)
13,560 Hudson Highland Group, Inc.*........................................................ 255,063
-------------
ENERGY - (5.64%)
80,000 Calpine Corp.*...................................................................... 528,000
23,300 EOG Resources, Inc. ................................................................ 974,872
24,000 PetroChina Co. Ltd., ADR ........................................................... 724,800
78,000 Premcor Inc.*....................................................................... 1,680,900
-------------
3,908,572
-------------
FINANCIAL SERVICES - (5.06%)
50,000 BlackRock, Inc.*.................................................................... 2,252,000
30,000 Northern Trust Corp. ............................................................... 1,251,900
-------------
3,503,900
-------------
FOOD/BEVERAGE & RESTAURANT - (2.95%)
9,400 Diageo PLC, ADR..................................................................... 411,344
45,000 McDonald's Corp. ................................................................... 992,700
22,900 Papa John's International, Inc.*.................................................... 640,513
-------------
2,044,557
-------------
11
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - CONTINUED
JUNE 30, 2003 (Unaudited)
VALUE
SHARES SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - CONTINUED
HOTELS & MOTELS - (1.44%)
26,000 Marriott International, Inc., Class A............................................... $ 998,920
-------------
INDUSTRIAL - (2.48%)
36,000 Sealed Air Corp.*................................................................... 1,715,760
-------------
INFORMATION/INFORMATION PROCESSING - (2.10%)
16,500 Automatic Data Processing, Inc. .................................................... 558,690
34,400 Equifax Inc. ....................................................................... 894,400
-------------
1,453,090
-------------
INVESTMENT FIRMS - (0.18%)
500 Julius Baer Holding Ltd., Class B................................................... 122,818
-------------
LIFE INSURANCE - (0.88%)
19,900 AFLAC Inc. ......................................................................... 611,925
-------------
MEDIA - (6.45%)
49,300 Belo Corp., Class A................................................................. 1,102,348
32,300 Lagardere S.C.A. ................................................................... 1,406,244
13,300 LIN TV Corp., Class A*.............................................................. 313,215
41,200 WPP Group PLC, ADR.................................................................. 1,641,820
-------------
4,463,627
-------------
MEDICAL INSTRUMENTS - (2.22%)
77,000 Apogent Technologies Inc.*.......................................................... 1,540,000
-------------
PROPERTY/CASUALTY INSURANCE - (3.23%)
15 Berkshire Hathaway Inc., Class A*................................................... 1,087,500
22,000 Cincinnati Financial Corp. ......................................................... 815,760
1,300 Markel Corp.*....................................................................... 332,800
-------------
2,236,060
-------------
REINSURANCE - (4.79%)
15,400 Everest Re Group, Ltd. ............................................................. 1,178,100
30,900 Transatlantic Holdings, Inc. ....................................................... 2,136,735
-------------
3,314,835
-------------
RETAILING - (16.45%)
207,000 AutoNation, Inc.*................................................................... 3,254,040
32,300 AutoZone, Inc.*..................................................................... 2,453,831
28,000 Costco Wholesale Corp.*............................................................. 1,024,520
42,000 Home Depot, Inc. ................................................................... 1,391,040
100,000 Tiffany & Co. ...................................................................... 3,268,000
-------------
11,391,431
-------------
TECHNOLOGY - (6.20%)
7,700 Advent Software, Inc.*.............................................................. 130,053
53,000 BMC Software, Inc.*................................................................. 865,490
10,000 Lexmark International, Inc.*........................................................ 707,700
39,800 Microsoft Corp. .................................................................... 1,019,278
12
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - CONTINUED
JUNE 30, 2003 (Unaudited)
VALUE
SHARES/PRINCIPAL SECURITY (NOTE 1)
=======================================================================================================================
COMMON STOCK - CONTINUED
TECHNOLOGY - CONTINUED
15,300 SAP AG, ADR......................................................................... $ 447,066
92,500 Sun Microsystems, Inc.*............................................................. 424,575
16,000 Symantec Corp.*..................................................................... 700,800
-------------
4,294,962
-------------
TELECOMMUNICATIONS - (2.28%)
65,000 AT&T Wireless Services Inc.*........................................................ 533,650
318,000 Covad Communications Group, Inc.*................................................... 318,000
77,000 Motorola, Inc. ..................................................................... 726,110
-------------
1,577,760
-------------
Total Common Stock - (identified cost $53,906,771)........................ 63,081,737
-------------
SHORT TERM INVESTMENTS - (7.01%)
$ 1,587,000 Banc of America Securities, LLC Joint Repurchase Agreement, 1.27%,
07/01/03, dated 06/30/03, repurchase value of $1,587,056
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $1,618,740).................................................. 1,587,000
2,028,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 1.27%,
07/01/03, dated 06/30/03, repurchase value of $2,028,072
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $2,068,560)................................................. 2,028,000
1,239,000 UBS Financial Services Inc. Joint Repurchase Agreement, 1.18%,
07/01/03, dated 06/30/03, repurchase value of $1,239,041
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $1,263,780)................................................. 1,239,000
-------------
Total Short Term Investments - (identified cost $4,854,000).............. 4,854,000
-------------
Total Investments - (98.11%) - (identified cost $58,760,771) - (a)............. 67,935,737
Other Assets Less Liabilities - (1.89%)......................................... 1,308,053
-------------
Net Assets - (100%)...................................................... $ 69,243,790
=============
*Non-Income Producing Security.
(a) Aggregate cost for Federal Income Tax purposes is $58,760,771. At June 30,
2003, unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation......................................................... $ 12,446,231
Unrealized depreciation......................................................... (3,271,265)
-------------
Net unrealized appreciation ............................................. $ 9,174,966
=============
SEE NOTES TO FINANCIAL STATEMENTS
13
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST - SELECTED U.S. GOVERNMENT INCOME FUND
JUNE 30, 2003 (Unaudited)
VALUE
PRINCIPAL SECURITY (NOTE 1)
=======================================================================================================================
MORTGAGES - (55.62%)
FANNIE MAE POOLS - (25.14%)
$ 98,243 6.00%, 10/01/16, Pool No. 615235.................................................... $ 102,603
89,082 5.00%, 10/01/17, Pool No. 668039.................................................... 92,124
173,574 5.00%, 10/01/17, Pool No. 661813.................................................... 179,501
200,000 4.50%, 06/01/18, Pool No. 722795.................................................... 204,388
83,051 6.50%, 05/01/31, Pool No. 578867.................................................... 86,619
144,094 6.50%, 06/01/31, Pool No. 589340.................................................... 150,285
169,148 7.50%, 03/01/32, Pool No. 545546.................................................... 179,798
104,580 6.00%, 10/01/32, Pool No. 667338.................................................... 108,743
240,076 6.00%, 11/01/32, Pool No. 545998.................................................... 249,634
-------------
Total FANNIE MAE - (identified cost $1,337,251).............................. 1,353,695
-------------
FREDDIE MAC POOLS - (20.24%)
118,517 6.00%, 10/01/16, Pool No. E01054.................................................... 123,294
223,376 6.00%, 11/01/16, Pool No. E86208.................................................... 232,380
140,253 5.00%, 10/01/17, Pool No. E91955.................................................... 144,954
167,533 7.00%, 06/01/32, Pool No. C68162.................................................... 175,749
149,599 6.50%, 07/01/32, Pool No. C68657.................................................... 155,652
100,859 6.50%, 08/01/32, Pool No. C69739.................................................... 104,940
148,144 5.50%, 02/01/33, Pool No. C77918.................................................... 153,129
-------------
Total FREDDIE MAC - (identified cost $1,086,114)............................. 1,090,098
-------------
GINNIE MAE POOLS - (10.24%)
2,545 5.75%, 09/20/23, Pool No. 008299 (b)................................................ 2,630
4,282 4.375%, 01/20/24, Pool No. 008360 (b).............................................. 4,447
142,174 5.50%, 11/15/32, Pool No. 589533.................................................... 148,424
228,318 6.00%, 02/15/33, Pool No. 607650.................................................... 239,296
149,548 6.00%, 03/15/33, Pool No. 553126.................................................... 156,738
-------------
Total GINNIE MAE - (identified cost $548,960)................................ 551,535
-------------
Total Mortgages - (identified cost $2,972,325)............................... 2,995,328
-------------
U.S. TREASURY BONDS - (11.67%)
160,000 Interest-Only Strip, 4.42%, 11/15/12 (c)............................................ 112,499
165,000 Principal-Only Strip, 4.18%, 05/15/17 (c)........................................... 89,202
300,000 Principal-Only Strip, 4.43%, 08/15/19 (c)........................................... 140,532
50,000 Principal-Only Strip, 5.40%, 11/15/27 (c)........................................... 14,789
100,000 7.50%, 11/15/16..................................................................... 135,891
15,000 6.00%, 02/15/26..................................................................... 17,944
90,000 6.75%, 08/15/26..................................................................... 117,365
-------------
Total U.S. Treasury Bonds - (identified cost $623,249)....................... 628,222
-------------
14
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED U.S. GOVERNMENT INCOME FUND - CONTINUED
JUNE 30, 2003 (Unaudited)
VALUE
PRINCIPAL SECURITY (NOTE 1)
=======================================================================================================================
U.S. TREASURY NOTES - (14.18%)
$ 200,000 6.875%, 05/15/06.................................................................... $ 229,282
160,000 7.00%, 07/15/06..................................................................... 184,899
80,000 6.50%, 10/15/06..................................................................... 91,925
150,000 4.75%, 11/15/08..................................................................... 166,313
75,000 6.50%, 02/15/10..................................................................... 91,055
-------------
Total U.S. Treasury Notes - (identified cost $752,075)....................... 763,474
-------------
GOVERNMENT AGENCY NOTES - (11.73%)
160,000 Fannie Mae, 4.375%, 10/15/06........................................................ 172,141
150,000 Fannie Mae, 5.00%, 01/20/07......................................................... 152,818
100,000 Fannie Mae, 6.375%, 06/15/09........................................................ 118,116
50,000 Freddie Mac, 3.15%, 09/02/05........................................................ 50,158
135,000 Freddie Mac, 4.375%, 02/04/10....................................................... 138,402
-------------
Total Government Agency Notes - (identified cost $632,192)................... 631,635
-------------
SHORT TERM INVESTMENTS - (7.33%)
129,000 Banc of America Securities, LLC Joint Repurchase Agreement, 1.27%,
07/01/03, dated 06/30/03, repurchase value of $129,005
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $131,580).................................................... 129,000
165,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 1.27%,
07/01/03, dated 06/30/03, repurchase value of $165,006
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $168,300)................................................... 165,000
101,000 UBS Financial Services Inc. Joint Repurchase Agreement, 1.18%,
07/01/03, dated 06/30/03, repurchase value of $101,003
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $103,020)................................................... 101,000
-------------
Total Short Term Investments - (identified cost $395,000).................. 395,000
-------------
Total Investments - (100.53%) - (identified cost $5,374,841) - (a).............. 5,413,659
Liabilities Less Other Assets - (0.53%)......................................... (28,712)
-------------
Net Assets - (100%)........................................................ $ 5,384,947
=============
(a) Aggregate cost for Federal Income Tax purposes is $5,374,841. At June 30,
2003, unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation......................................................... $ 56,728
Unrealized depreciation......................................................... (17,910)
-------------
Net unrealized appreciation................................................ $ 38,818
=============
(b) The interest rates on adjustable rate mortgage securities, shown as of June 30, 2003, may change monthly or less
frequently and are based on indices of market interest rates.
(c) Zero coupon bonds reflect effective yield on the date of purchase.
SEE NOTES TO FINANCIAL STATEMENTS
15
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND
JUNE 30, 2003 (Unaudited)
VALUE
PRINCIPAL (NOTE 1)
=======================================================================================================================
FANNIE MAE - (22.42%)
$ 1,340,000 1.18%, 07/01/03..................................................................... $ 1,340,000
2,000,000 1.18%, 07/07/03..................................................................... 1,999,607
600,000 1.20%, 07/09/03..................................................................... 599,840
4,486,000 1.18%, 07/23/03..................................................................... 4,482,760
2,000,000 4.00%, 08/15/03..................................................................... 2,006,082
1,800,000 1.08%, 08/25/03..................................................................... 1,797,030
1,400,000 1.075%, 09/03/03.................................................................... 1,397,324
16,000 1.22%, 09/09/03..................................................................... 15,962
5,000,000 0.87%, 09/24/03..................................................................... 4,989,729
35,000 5.50%, 09/29/03..................................................................... 35,338
70,000 5.26%, 10/02/03..................................................................... 70,643
25,000 6.84%, 10/15/03..................................................................... 25,345
25,000 4.75%, 11/14/03..................................................................... 25,295
35,000 5.80%, 12/10/03..................................................................... 35,609
10,000 5.41%, 12/15/03..................................................................... 10,140
7,000,000 1.053%, 03/11/04 (b)................................................................ 7,000,268
75,000 5.91%, 03/19/04..................................................................... 77,531
--------------
Total FANNIE MAE - (identified cost $25,908,503) ................................. 25,908,503
--------------
FEDERAL FARM CREDIT BANK - (8.97%)
74,000 1.34%, 08/05/03..................................................................... 73,904
55,000 5.375%, 09/11/03.................................................................... 55,440
125,000 3.125%, 10/01/03.................................................................... 125,587
5,000,000 1.19%, 10/03/03 (b)................................................................. 4,999,549
100,000 4.82%, 10/07/03..................................................................... 100,913
5,000,000 1.126%, 11/12/03 (b)................................................................ 4,999,816
15,000 5.10%, 11/24/03..................................................................... 15,152
--------------
Total Federal Farm Credit Bank - (identified cost $10,370,361).................... 10,370,361
--------------
FEDERAL HOME LOAN BANK - (20.53%)
7,400,000 4.50%, 07/07/03..................................................................... 7,403,892
1,250,000 1.20%, 07/09/03..................................................................... 1,249,667
45,000 5.715%, 07/09/03.................................................................... 45,044
2,000,000 1.14%, 07/30/03..................................................................... 1,998,163
2,000,000 1.14%, 08/06/03..................................................................... 1,997,720
100,000 5.36%, 08/11/03..................................................................... 100,445
400,000 4.125%, 08/15/03.................................................................... 401,385
1,525,000 6.875%, 08/15/03.................................................................... 1,535,673
200,000 5.705%, 08/28/03.................................................................... 201,394
16
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST - SELECTED DAILY GOVERNMENT FUND - CONTINUED
JUNE 30, 2003 (Unaudited)
VALUE
PRINCIPAL (NOTE 1)
=======================================================================================================================
FEDERAL HOME LOAN BANK - CONTINUED
$ 400,000 5.63%, 09/02/03..................................................................... $ 402,574
190,000 1.22%, 09/04/03..................................................................... 189,581
1,815,000 5.125%, 09/15/03.................................................................... 1,827,560
30,000 5.005%, 10/01/03.................................................................... 30,253
25,000 6.00%, 10/07/03..................................................................... 25,310
75,000 5.00%, 10/16/03..................................................................... 75,782
35,000 5.08%, 10/20/03..................................................................... 35,407
25,000 5.04%, 10/27/03..................................................................... 25,240
20,000 5.375%, 10/27/03.................................................................... 20,266
35,000 5.125%, 11/20/03.................................................................... 35,421
20,000 5.125%, 12/01/03.................................................................... 20,241
15,000 3.02%, 12/10/03..................................................................... 15,065
25,000 5.06%, 01/05/04..................................................................... 25,461
25,000 5.195%, 01/29/04.................................................................... 25,540
85,000 5.25%, 01/29/04..................................................................... 86,916
25,000 6.00%, 02/04/04..................................................................... 25,671
5,800,000 1.36%, 03/05/04..................................................................... 5,801,084
70,000 5.485%, 03/23/04.................................................................... 72,185
50,000 6.05%, 03/26/04..................................................................... 51,784
--------------
Total Federal Home Loan Bank - (identified cost $23,724,724)...................... 23,724,724
--------------
FREDDIE MAC - (3.46%)
2,100,000 5.75%, 07/15/03..................................................................... 2,103,697
1,549,000 1.07%, 09/11/03..................................................................... 1,545,684
125,000 1.22%, 09/17/03..................................................................... 124,670
180,000 6.375%, 11/15/03.................................................................... 183,357
25,000 3.50%, 02/20/04..................................................................... 25,327
10,000 6.313%, 02/26/04.................................................................... 10,282
--------------
Total FREDDIE MAC - (identified cost $3,993,017).................................. 3,993,017
--------------
SALLIE MAE - (6.32%)
750,000 1.18%, 08/15/03 (b)................................................................. 750,269
6,550,000 0.89%, 08/21/03 (b)................................................................. 6,549,978
--------------
Total SALLIE MAE - (identified cost $7,300,247)................................... 7,300,247
--------------
17
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST - SELECTED DAILY GOVERNMENT FUND - CONTINUED
JUNE 30, 2003 (Unaudited)
VALUE
PRINCIPAL (NOTE 1)
=======================================================================================================================
REPURCHASE AGREEMENTS - (38.04%)
$ 14,374,000 Banc of America Securities, LLC Joint Repurchase Agreement, 1.27%,
07/01/03, dated 06/30/03, repurchase value of $14,374,507
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $14,661,480)................................................. $ 14,374,000
18,366,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 1.27%,
07/01/03, dated 06/30/03, repurchase value of $18,366,648
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $18,733,320)................................................ 18,366,000
11,224,000 UBS Financial Services Inc. Joint Repurchase Agreement, 1.18%,
07/01/03, dated 06/30/03, repurchase value of $11,224,368
(collateralized by: U.S. Government obligations in a pooled cash account,
total market value $11,448,480)................................................ 11,224,000
--------------
Total Repurchase Agreements - (identified cost $43,964,000)............... 43,964,000
--------------
Total Investments - (99.74%) - (identified cost $115,260,852) - (a)............ 115,260,852
Other Assets Less Liabilities - (0.26%)........................................ 298,252
--------------
Net Assets - (100%)........................................................ $ 115,559,104
==============
(a) Aggregate cost for Federal Income Tax purposes is $115,260,852.
(b) The interest rates on floating rate securities, shown as of June 30, 2003, 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.
SEE NOTES TO FINANCIAL STATEMENTS
18
SELECTED FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
At June 30, 2003 (Unaudited)
===========================================================================================================================
U.S.
SELECTED SELECTED GOVERNMENT DAILY
AMERICAN SPECIAL INCOME GOVERNMENT
SHARES SHARES FUND FUND
--------------- -------------- -------------- --------------
ASSETS:
Investments in securities, at value * (see
accompanying Schedules of Investments)
Unaffiliated companies...................... $ 4,801,149,539 $ 67,935,737 $ 5,413,659 $ 115,260,852
Affiliated companies........................ 93,173,133 - - -
Cash.......................................... 342,636 2,619 2,438 3,753
Receivables:
Dividends and interest...................... 6,528,238 74,212 36,615 423,516
Capital stock sold.......................... 6,284,843 23,079 485 13,284
Investment securities sold.................. - 1,712,133 - -
Due from adviser............................ - - 1,494 -
Prepaid expenses............................. 52,115 6,373 2,140 6,551
--------------- -------------- -------------- --------------
Total assets............................ 4,907,530,504 69,754,153 5,456,831 115,707,956
--------------- -------------- -------------- --------------
LIABILITIES:
Payables:
Capital stock reacquired.................... 5,764,000 7,998 56,266 32,718
Investment securities purchased............. - 401,269 - -
Accrued expenses.............................. 5,240,728 101,096 9,706 81,193
Distributions payable......................... - - 5,912 34,941
--------------- -------------- -------------- --------------
Total liabilities....................... 11,004,728 510,363 71,884 148,852
--------------- -------------- -------------- --------------
NET ASSETS ...................................... $ 4,896,525,776 $ 69,243,790 $ 5,384,947 $ 115,559,104
=============== ============== ============== ==============
SHARES OUTSTANDING (NOTE 5)...................... 171,999,097 6,891,828 593,023 115,559,104
=============== ============== ============== ==============
NET ASSET VALUE, offering and
redemption price per share (Net
Assets (divided by) Shares Outstanding)..... $ 28.47 $ 10.05 $ 9.08 $ 1.00
=========== ========== ========== ==========
NET ASSETS CONSIST OF:
Par value of shares of capital stock.......... $ 214,998,871 $ 1,722,957 $ 59,302 $ 11,555,910
Additional paid-in capital.................... 4,400,607,863 58,665,199 5,249,421 104,003,194
Undistributed net investment income (loss).... 14,878,161 (134,091) (146) -
Accumulated net realized gains (losses)
from investments and foreign currency
transactions............................... (482,722,906) (185,689) 37,552 -
Net unrealized appreciation on investments
and foreign currency transactions............ 748,763,787 9,175,414 38,818 -
--------------- -------------- -------------- --------------
$ 4,896,525,776 $ 69,243,790 $ 5,384,947 $ 115,559,104
=============== ============== ============== ==============
* Including repurchase agreements of $189,910,000, $4,854,000, $395,000 and
$43,964,000 for Selected American Shares, Selected Special Shares, Selected U.S.
Government Income Fund and Selected Daily Government Fund, respectively, and
cost of $58,760,771, $5,374,841 and $115,260,852 for Selected Special Shares,
Selected U.S. Government Income Fund and Selected Daily Government Fund,
respectively. For Selected American Shares, the cost for Unaffiliated and
Affiliated companies is $4,113,886,541 and $31,709,425, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
19
SELECTED FUNDS
STATEMENTS OF OPERATIONS
For the six months ended June 30, 2003 (Unaudited)
===========================================================================================================================
U.S.
SELECTED SELECTED GOVERNMENT DAILY
AMERICAN SPECIAL INCOME GOVERNMENT
SHARES SHARES FUND FUND
--------------- --------------- --------------- ------------
INVESTMENT INCOME (LOSS):
Income:
Dividends
Unaffiliated companies*...................... $ 35,650,462 $ 246,463 $ - $ -
Affiliated companies......................... 1,848,251 - - -
Interest....................................... 2,297,536 13,696 124,703 769,371
Security lending fees.......................... 20,518 - - -
--------------- --------------- --------------- ------------
Total income............................... 39,816,767 260,159 124,703 769,371
--------------- --------------- --------------- ------------
Expenses:
Management fees (Note 2)....................... 12,349,340 210,187 8,243 172,970
Custodian fees................................. 378,838 10,995 6,999 10,720
Transfer agent fees............................ 1,864,856 50,112 7,472 27,320
Audit fees..................................... 22,800 7,200 3,600 6,000
Legal fees..................................... 38,485 2,544 101 2,148
Reports to shareholders........................ 308,220 4,009 1,009 5,612
Directors' fees and expenses................... 274,156 4,304 267 5,696
Registration and filing fees................... 29,245 10,191 6,004 9,672
Miscellaneous.................................. 11,062 4,224 4,813 2,060
Payments under distribution plan (Note 3)...... 5,485,990 75,551 6,870 144,142
--------------- --------------- --------------- ------------
Total expenses............................. 20,762,992 379,317 45,378 386,340
Expenses paid indirectly (Note 6).......... (36,831) (7) (49) (6)
Reimbursement/waiver of expenses by
adviser (Note 2)......................... - - (9,620) -
--------------- --------------- --------------- ------------
Net expenses............................... 20,726,161 379,310 35,709 386,334
--------------- --------------- --------------- ------------
Net investment income (loss)............... 19,090,606 (119,151) 88,994 383,037
--------------- --------------- --------------- ------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investment transactions...................... (104,870,811) 1,375,459 45,235 -
Foreign currency transactions................ 7,386 (694) - -
Net increase (decrease) in unrealized
appreciation of investments
during the period............................ 587,706,055 8,536,718 (43,899) -
--------------- --------------- --------------- ------------
Net realized and unrealized gain on
investments and foreign currency............. 482,842,630 9,911,483 1,336 -
--------------- --------------- --------------- ------------
Net increase in net assets resulting
from operations............................ $ 501,933,236 $ 9,792,332 $ 90,330 $ 383,037
=============== =============== =============== ============
* Net of foreign taxes withheld as follows..... $ 723,144 $ 11,270 - -
SEE NOTES TO FINANCIAL STATEMENTS
20
SELECTED FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 2003
(Unaudited)
========================================================================================================================
U.S.
SELECTED SELECTED GOVERNMENT DAILY
AMERICAN SPECIAL INCOME GOVERNMENT
SHARES SHARES FUND FUND
---------------- --------------- ---------------- ---------------
OPERATIONS:
Net investment income (loss)................ $ 19,090,606 $ (119,151) $ 88,994 $ 383,037
Net realized gain (loss) from
investments and foreign currency
transactions.............................. (104,863,425) 1,374,765 45,235 -
Net increase (decrease) in unrealized
appreciation of investments............... 587,706,055 8,536,718 (43,899) -
---------------- --------------- ---------------- ---------------
Net increase in net
assets resulting from operations.......... 501,933,236 9,792,332 90,330 383,037
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income....................... - - (88,994) (383,037)
CAPITAL SHARE TRANSACTIONS
(NOTE 5).................................... 48,947,156 (310,520) 37,940 (627,396)
---------------- --------------- ---------------- ---------------
Total increase (decrease) in net assets......... 550,880,392 9,481,812 39,276 (627,396)
NET ASSETS:
Beginning of period......................... 4,345,645,384 59,761,978 5,345,671 116,186,500
---------------- --------------- ---------------- ---------------
End of period (including undistributed net
investment income (loss) of $14,878,161,
$(134,091) and $(146) for Selected
American Shares, Selected Special Shares
and Selected U.S. Government Income
Fund, respectively)....................... $ 4,896,525,776 $ 69,243,790 $ 5,384,947 $ 115,559,104
================ =============== ================ ===============
SEE NOTES TO FINANCIAL STATEMENTS
21
SELECTED FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended December 31, 2002
=======================================================================================================================
U.S.
SELECTED SELECTED GOVERNMENT DAILY
AMERICAN SPECIAL INCOME GOVERNMENT
SHARES SHARES FUND FUND
---------------- --------------- ---------------- ---------------
OPERATIONS:
Net investment income (loss).............. $ 29,532,405 $ (309,343) $ 168,632 $ 1,476,610
Net realized gain (loss) from
investments and foreign currency
transactions............................ (308,403,528) (1,567,663) 129,053 -
Net increase (decrease) in unrealized
appreciation of investments............. (658,252,830) (11,458,544) 15,448 -
---------------- --------------- ---------------- ---------------
Net increase (decrease) in net
assets resulting from operations........ (937,123,953) (13,335,550) 313,133 1,476,610
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income..................... (32,858,762) - (168,632) (1,476,610)
Realized gains from investment
transactions ........................... - (301,935) (49,411) -
Return of capital......................... (1,389,403) - - -
CAPITAL SHARE TRANSACTIONS
(NOTE 5).................................. (247,964,073) 307,866 1,273,794 3,806,489
---------------- --------------- ---------------- ---------------
Total increase (decrease) in net assets....... (1,219,336,191) (13,329,619) 1,368,884 3,806,489
NET ASSETS:
Beginning of year......................... 5,564,981,575 73,091,597 3,976,787 112,380,011
---------------- --------------- ---------------- ---------------
End of year (including overdistributed
net investment income of $4,212,445,
$14,940 and $146 for Selected
American Shares, Selected Special
Shares and Selected U.S. Government
Income Fund, respectively).............. $ 4,345,645,384 $ 59,761,978 $ 5,345,671 $ 116,186,500
================ =============== ================ ===============
SEE NOTES TO FINANCIAL STATEMENTS
22
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2003 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Selected Funds (the Funds) consist of Selected American Shares, Inc.,
(American Shares, Inc.), Selected Special Shares, Inc., (Special Shares, Inc.)
and the Selected Capital Preservation Trust (the Trust). The Trust operates as a
series fund, consisting of the U.S. Government Income Fund and 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
Trust accounts separately for the assets, liabilities and operations of each
series. The following is a summary of significant accounting policies followed
by the Funds in the preparation of financial statements.
American Shares, Inc. and Special Shares, Inc. are diversified,
professionally managed stock-oriented funds.
Selected U.S. Government Income Fund (U.S. Government Income) seeks to
obtain current income consistent with preservation of capital by investing
primarily in debt obligations of the U.S. Government, its agencies or
instrumentalities.
Selected Daily Government Fund (Daily Government) seeks to provide a high
level of current income from short-term money market securities consistent with
prudent investment management, preservation of capital and maintenance of
liquidity. It invests in U.S. Government Securities and repurchase agreements in
respect thereto.
An investment in any of the Funds, as with any mutual fund, includes risks
that vary depending upon the fund's investment objectives and policies. There is
no assurance that the investment objective of any fund will be achieved. A
fund's return and net asset value will fluctuate, although Daily Government
seeks to maintain a net asset value of $1.00 per share.
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 are valued at fair value
as determined in good faith by the Board of Directors/Trustees. Daily Government
uses the amortized cost method of valuing investment securities, which
represents fair value. These valuation procedures are reviewed and subject to
approval by the Board of Directors/Trustees.
B. MASTER REPURCHASE AGREEMENTS - The Funds, along with other affiliated funds,
may transfer uninvested cash balances into one or more master repurchase
agreement accounts. These balances are invested in one or more repurchase
agreements, secured by U.S. government securities. Securities pledged as
collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal; however,
in the event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
C. CURRENCY TRANSLATION - The market values of all assets and liabilities
denominated in foreign currencies are recorded in the financial statements after
translation to the U.S. dollar based upon the mean between the bid and offered
quotations of the currencies against U.S. dollars on the date of valuation. The
cost basis of such assets and liabilities is determined based upon historical
exchange rates. Income and expenses are translated at average exchange rates in
effect as accrued or incurred.
23
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2003 (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, 2003, American Shares, Inc., Special Shares, Inc. and U.S.
Government Income had post October 2002 losses of approximately $4,593,000,
$1,130,000 and $7,682, respectively, available to offset future capital gains if
any, which expire in 2011. At June 30, 2003, each Fund had available for federal
income tax purposes unused capital loss carryforwards as follows:
AMERICAN SPECIAL U.S. GOVERNMENT
SHARES, INC. SHARES, INC. INCOME
------------ ------------ ----------------
EXPIRING
--------
12/31/2009 $ 67,867,000 $ - $ -
12/31/2010 296,227,000 430,000 -
--------------- ------------- ----------
TOTAL $ 364,094,000 $ 430,000 $ -
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.
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.
24
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2003 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
H. DIRECTORS/TRUSTEES FEES AND EXPENSES - The Funds have adopted a non-funded
deferred compensation plan for independent Directors/Trustees that enables
Directors/Trustees to elect to defer receipt of all or a portion of annual fees
they are entitled to receive. The value of an eligible Director's/Trustee's
deferral account is based upon years of service and fees paid to each
Director/Trustee during the years of service. Under the plan, the compensation
deferred is periodically adjusted as though an equivalent amount had been
invested for the Director/Trustee in shares of one or more Selected Funds
selected by the Director/Trustee. The amount paid to the Director/Trustee under
the plan will be determined based upon the performance of the Selected Funds.
Deferral of Director/Trustees' fees under the plan will not affect the net
assets of the Funds, and will not materially affect the Fund's assets,
liabilities, or net income per share.
During the six months ended June 30, 2003, for American Shares, Inc.,
Special Shares, Inc., U.S. Government Income and Daily Government credits of
$182,329, $2,839, $40 and $789, respectively were made for these obligations,
resulting in an accumulated liability of $839,731, $16,270, $425 and $7,890,
respectively.
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 American Shares, Inc. 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 and
0.50% of the average net assets in excess of $7 billion. The rate for Special
Shares, Inc. is 0.70% on the first $50 million of average net assets, 0.675% on
the next $100 million, 0.65% on the next $100 million and 0.60% of average net
assets in excess of $250 million. Advisory fees paid during the six months ended
June 30, 2003, approximated 0.56% and 0.70% of average net assets for American
Shares, Inc. and Special Shares, Inc., respectively. The rate for both U.S.
Government Income and Daily Government 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, 2003 was
$85,635, $5,356, $488 and $1,982 for American Shares, Inc., Special Shares,
Inc., U.S. Government Income and Daily Government, respectively. Certain
Directors/Trustees and officers of the Funds are also Directors/Trustees and
officers of the general partner of the Adviser.
25
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2003 (Unaudited)
================================================================================
NOTE 2 - INVESTMENT ADVISORY FEES - (Continued)
The Adviser has voluntarily agreed to waive certain expenses incurred in the
current fiscal year which exceed 1.30% of average net assets for U.S. Government
Income. During the six months ended June 30, 2003, the Adviser voluntarily
agreed to waive $9,620 in expenses for U.S. Government Income. This undertaking
may be amended or withdrawn at any time.
Davis Selected Advisers - NY, Inc. ("DSA-NY"), a wholly-owned subsidiary of the
Adviser, acts as sub-adviser to the Funds. The Funds pay no fees directly to
DSA-NY.
NOTE 3 - DISTRIBUTION
For services under the distribution agreement, the Funds pay a fee of 0.25%
of average daily net assets. For the six months ended June 30, 2003, American
Shares, Inc., Special Shares, Inc., U.S. Government Income and Daily Government
incurred distribution services fees totaling $5,485,990, $75,551, $6,870 and
$144,142, respectively.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities) during the six months ended June 30, 2003 were as follows:
AMERICAN SPECIAL U.S. GOVERNMENT
SHARES, INC. SHARES, INC. INCOME
---------------- --------------- ---------------
Cost of purchases..... $ 267,180,849 $ 15,830,579 $ 5,080,759
Proceeds of sales..... $ 151,015,097 $ 19,919,032 $ 3,516,404
NOTE 5 - CAPITAL STOCK
At June 30, 2003, there were 300 million shares of capital stock of American
Shares, Inc. ($1.25 par value per share) authorized. At June 30, 2003, there
were 50 million shares of capital stock of Special Shares, Inc. ($0.25 par value
per share) authorized. At June 30, 2003, 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:
SIX MONTHS ENDED
JUNE 30, 2003
(UNAUDITED)
-------------------------------------------------------------------------
AMERICAN SPECIAL U.S.
SHARES SHARES GOVERNMENT DAILY
INC. INC. INCOME GOVERNMENT
------------- ------------- ------------- -------------
Shares sold .................................. 16,659,929 549,614 97,154 6,599,328
Shares issued in reinvestment of distributions - - 9,058 397,726
------------- ------------- ------------- -------------
16,659,929 549,614 106,212 6,997,054
Shares redeemed .............................. (15,022,143) (598,156) (102,301) (7,624,450)
------------- ------------- ------------- -------------
Net increase (decrease) ................ 1,637,786 (48,542) 3,911 (627,396)
============= ============= ============= =============
Proceeds from shares sold .................... $ 433,715,336 $ 4,848,448 $ 884,029 $ 6,599,328
Proceeds from shares issued in
reinvestment of distributions ............ - - 82,134 397,726
------------- ------------- ------------- -------------
433,715,336 4,848,448 966,163 6,997,054
Cost of shares redeemed ...................... (384,768,180) (5,158,968) (928,223) (7,624,450)
------------- ------------- ------------- -------------
Net increase (decrease) ................ $ 48,947,156 $ (310,520) $ 37,940 $ (627,396)
============= ============= ============= =============
26
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 2003 (Unaudited)
================================================================================
NOTE 5 - CAPITAL STOCK - (Continued)
YEAR ENDED
DECEMBER 31, 2002
-------------------------------------------------------------------------
AMERICAN SPECIAL U.S.
SHARES SHARES GOVERNMENT DAILY
INC. INC. INCOME GOVERNMENT
--------------- ------------- ------------ ------------
Shares sold .................................. 37,405,530 2,426,855 375,506 14,742,743
Shares issued in reinvestment of distributions 1,234,100 30,503 21,723 1,507,431
--------------- ------------- ------------ ------------
38,639,630 2,457,358 397,229 16,250,174
Shares redeemed .............................. (47,855,930) (2,481,408) (256,805) (12,443,685)
--------------- ------------- ------------ ------------
Net increase (decrease) ................ (9,216,300) (24,050) 140,424 3,806,489
=============== ============= ============ ============
Proceeds from shares sold .................... $ 1,036,812,994 $ 23,340,084 $ 3,375,643 $ 14,742,743
Proceeds from shares issued in
reinvestment of distributions ............ 32,656,579 280,018 195,087 1,507,431
--------------- ------------- ------------ ------------
1,069,469,573 23,620,102 3,570,730 16,250,174
Cost of shares redeemed ...................... (1,317,433,646) (23,312,236) (2,296,936) (12,443,685)
--------------- ------------- ------------ ------------
Net increase (decrease) ................ $ (247,964,073) $ 307,866 $ 1,273,794 $ 3,806,489
=============== ============= ============ ============
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, 2003, such reductions amounted to $160, $7,
$49 and $6 for American Shares, Inc., Special Shares, Inc., U.S. Government
Income and Daily Government, respectively.
American Shares, Inc. has entered into agreements with certain brokers
whereby the Fund's operating expenses are reduced by a portion of the
commissions paid to such brokers. Portfolio transactions are allocated to these
brokers only when the Fund's traders make a good faith determination that such
brokers can achieve best execution, not withstanding the operating expense
reductions. During the six months ended June 30, 2003 the reduction amounted to
$36,671.
NOTE 7 - SECURITIES LOANED
American Shares, Inc. (the "Fund") has entered into a securities lending
arrangement with UBS Financial Services Inc. Under the terms of the agreement,
the Fund receives fee income from lending transactions; in exchange for such
fees, UBS Financial Services Inc. is authorized to loan securities on behalf of
the Fund, against receipt of collateral at least equal to the value of the
securities loaned. Cash collateral is invested by the Adviser in money market
instruments. As of June 30, 2003, the Fund did not have any loaned securities.
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.
27
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:
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2003 ------------------------------------------------------------------
(UNAUDITED) 2002 2001 2000 1999 1998
----------- ---- ---- ---- ---- ----
Net Asset Value, Beginning of Period.... $ 25.51 $ 30.99 $ 35.33 $ 35.80 $ 31.16 $ 27.18
---------- ---------- ---------- ---------- ---------- ----------
Income (Loss) From Investment Operations
Net Investment Income.................. .11 .17 .14 .15 .15 .15
Net Realized and Unrealized
Gains (Losses)...................... 2.85 (5.45) (4.10) 2.98 6.08 4.24
---------- ---------- ---------- ---------- ---------- ----------
Total From Investment Operations.... 2.96 (5.28) (3.96) 3.13 6.23 4.39
Dividends and Distributions
Dividends from Net Investment Income... - (.17) (.14) (.14) (.15) (.15)
Distributions from Realized Gains...... - - (.24) (3.46) (1.44) (.26)
Dividends in Excess of Net
Investment Income................... - - -(4) - - -
Return of Capital..................... - (.03) - - - -
---------- ---------- ---------- ---------- ---------- ----------
Total Dividends and Distributions... - (.20) (.38) (3.60) (1.59) (.41)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period.......... $ 28.47 $ 25.51 $ 30.99 $ 35.33 $ 35.80 $ 31.16
========== ========== ========== ========== ========== ==========
Total Return(1)......................... 11.60% (17.06)% (11.17)% 9.33% 20.32% 16.27%
Ratios/Supplemental Data
Net Assets, End of Period
(000,000 omitted)................... $4,897 $4,346 $5,565 $5,707 $3,704 $2,906
Ratio of Expenses to Average Net Assets .95%*(3) .94%(3) .94%(3) .92% .93% .94%
Ratio of Net Investment Income to
Average Net Assets.................. .87%* .61% .45% .52% .24% .52%
Portfolio Turnover Rate(2)............. 4% 19% 20% 22% 21% 20%
(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 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 .94% for the six months ended June 30, 2003 and .93%
for the years ended December 31, 2002 and 2001.
(4) Less than $0.005 per share.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
28
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:
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2003 ---------------------------------------------------------------
(UNAUDITED) 2002 2001 2000 1999 1998
----------- ---- ---- ---- ---- ----
Net Asset Value, Beginning of Period..... $ 8.61 $ 10.50 $ 13.68 $ 16.17 $ 14.76 $ 13.03
--------- --------- --------- --------- --------- ---------
Income (Loss) From Investment Operations
Net Investment Loss.................... (.02) (.04) (.02) - (.09) (.08)
Net Realized and Unrealized
Gains (Losses)..................... 1.46 (1.81) (1.95) (.25) 2.47 3.14
--------- --------- --------- --------- --------- ---------
Total From Investment Operations..... 1.44 (1.85) (1.97) (.25) 2.38 3.06
Dividends and Distributions
Distributions from Realized Gains....... - (0.04) (1.21) (2.24) (.97) (1.33)
Return of Capital....................... - - - - -(1) -
--------- --------- --------- --------- --------- ---------
Total Dividends and Distributions.... - (0.04) (1.21) (2.24) (.97) (1.33)
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of Period........... $ 10.05 $ 8.61 $ 10.50 $ 13.68 $ 16.17 $ 14.76
========= ========= ========= ========= ========= =========
Total Return(2).......................... 16.72% (17.62)% (14.41)% (1.10)% 16.83% 24.52%
Net Assets, End of Period (000 omitted). $69,244 $59,762 $73,092 $95,222 $107,592 $94,644
Ratio of Expenses to Average Net Assets. 1.26%* 1.17%(4) 1.15%(4) 1.15% 1.17% 1.26%(3)
Ratio of Net Investment Loss to
Average Net Assets .................. (.39)%* (.46)% (.20)% (.25)% (.59)% (.58)%
Portfolio Turnover Rate(5).............. 27% 46% 117% 35% 44% 41%
(1) Less than $0.005 per share.
(2) 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 year.
(3) Ratio of expenses to average net assets after the reduction of expenses
paid indirectly was 1.25% for 1998.
(4) 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.
(5) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
29
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED U.S. GOVERNMENT INCOME FUND
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2003 -------------------------------------------------------------
(UNAUDITED) 2002 2001 2000 1999 1998
----------- ---- ---- ---- ---- ----
Net Asset Value, Beginning of Period.... $ 9.07 $ 8.86 $ 8.77 $ 8.37 $ 9.04 $ 9.01
-------- -------- -------- -------- -------- --------
Income (Loss) From Investment Operations
Net Investment Income................. .15 .34 .40 .44 .45 .47
Net Realized and Unrealized
Gains (Losses).................... .01 .30 .09 .40 (.62) .06
--------- --------- --------- --------- --------- ---------
Total From Investment Operations.... .16 .64 .49 .84 (.17) .53
Dividends and Distributions
Dividends from Net Investment Income... (.15) (.34) (.40) (.44) (.45) (.47)
Distributions from Realized Gains...... - (.09) - - (.05) (.03)
--------- --------- --------- --------- --------- ---------
Total Dividends and Distributions... (.15) (.43) (.40) (.44) (.50) (.50)
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of Period.......... $ 9.08 $ 9.07 $ 8.86 $ 8.77 $ 8.37 $ 9.04
========= ========= ========= ========= ========= =========
Total Return(1)......................... 1.74% 7.32% 5.71% 10.37% (1.97)% 5.90%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted) $5,385 $5,346 $3,977 $3,728 $4,413 $6,237
Ratio of Expenses to Average Net Assets 1.30%*(2) 1.30%(2) 1.30%(2) 1.21%(2) 1.28%(2) 1.52%(2,3)
Ratio of Net Investment Income to
Average Net Assets.................. 3.24%* 3.71% 4.49% 5.21% 5.15% 5.17%
Portfolio Turnover Rate(4)............. 69% 126% 67% 85% 134% 36%
(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 year.
(2) Had the Adviser not absorbed certain expenses, the ratio of expenses to
average net assets for the six months ended June 30, 2003 and the years
ended December 31, 2002, 2001, 2000, 1999, and 1998 would have been 1.65%,
1.67%, 1.84%, 2.04%, 1.61%, and 1.62%, respectively.
(3) Ratio of expenses to average net assets after the reduction of expenses
paid indirectly was 1.50% for 1998.
(4) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
30
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:
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2003 ------------------------------------------------------------------
(UNAUDITED) 2002 2001 2000 1999 1998
----------- ---- ---- ---- ---- ----
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.................. .003 .013 .037 .056 .044 .047
Dividends and Distributions
Dividends from Net Investment Income... (.003) (.013) (.037) (.056) (.044) (.047)
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of Period.......... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========= ========= ========= ========= ========= =========
Total Return(1)......................... 0.33% 1.32% 3.73% 5.80% 4.48% 4.85%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted) $ 115,559 $ 116,187 $ 112,380 $ 130,126 $ 131,342 $ 126,203
Ratio of Expenses to Average Net Assets. .67%* .67% .66% .67% .68% .71%
Ratio of Net Investment Income
to Average Net Assets............... .66%* 1.30% 3.73% 5.68% 4.44% 4.74%
(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 year.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
31
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS
For the purposes of their service as directors to the Selected Funds, the
business address for each of the directors is 2949 E. Elvira Road, Suite 101,
Tucson, AZ 85706. Each Director serves until the age of 75, or until his or her
resignation, death or removal.
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE AND FUND COMPLEX OTHER
POSITION(S) LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
NAME AND AGE HELD WITH FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- -----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
WILLIAM P. BARR Director director Executive Vice President and 4 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 4 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 4 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. MACWILLIAMS Director director Finance Director, Chief 4 None
(born since 1997 Financial Officer and member
1/19/56) of the board of directors for
Coors Brewing Limited (U.K.);
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.
32
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS - CONTINUED
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE AND FUND COMPLEX OTHER
POSITION(S) LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
NAME AND AGE HELD WITH FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS - CONTINUED
JAMES J. MCMONAGLE Director/ director Chairman of the Selected Funds 4 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 4 Director and past
(born 9/12/45) since 1996 for Hewlett-Packard Company; President, Silicon
former Chairman of the Valley Roundtable;
Economic Advisory Council of former Director,
the California Chamber of National
Commerce. Association of
Business Economists.
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 11
(a real estate investment portfolios);
trust); former Chief Director, Modine
Administrative Officer of Manufacturing,
Crate & Barrel (home Inc.(heat transfer
furnishings retailer); former technology);
Vice President and Treasurer, Director, Chicago
Amoco Corporation (oil & gas Bridge & Iron
company). Company, N.V.
(industrial
construction and
engineering)
INSIDE DIRECTORS*
ANDREW A. DAVIS Director director President or Vice President of 15 Director of the Davis
(born 6/25/63) since 1998 each Selected Fund and Davis Funds (consisting of
Fund; President, Davis 11 portfolios).
Selected Advisers, L.P., and
also serves as an executive
officer in certain companies
affiliated with the Adviser.
33
SELECTED FUNDS
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
================================================================================
DIRECTORS - CONTINUED
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE AND FUND COMPLEX OTHER
POSITION(S) LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
NAME AND AGE HELD WITH FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------------
INSIDE DIRECTORS* - CONTINUED
CHRISTOPHER C. DAVIS Director director Chief Executive Officer, 15 Director of the
(born 7/13/65) since 1998 President or Vice President of Davis Funds
each Selected Fund and Davis (consisting of 11
Fund; Chairman and Chief portfolios).
Executive Officer, Davis
Selected Advisers, L.P., and
also serves as an executive
officer in certain companies
affiliated with the Adviser,
including sole member of the
Adviser's general partner,
Davis Investments, LLC;
Employee of Shelby Cullom
Davis & Co., a registered
broker/dealer.
* Andrew A. Davis and Christopher C. Davis own partnership units (directly,
indirectly or both) of the Adviser and are considered to be "interested
persons" of the Funds as defined in the Investment Company Act of 1940.
Andrew A. Davis and Christopher C. Davis are brothers.
34
(This page has been left blank intentionally.)
(This page has been left blank intentionally.)
(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 - Selected American
Jerome Hass Shares & Selected Special
James J. McMonagle Shares, Vice President - Selected
Katherine L. MacWilliams U.S. Government Income Fund
Richard O'Brien & Selected Daily Government
Marsha Williams Fund
Creston A. King
President - Selected U.S.
Government Income Fund &
Selected Daily Government
Fund
Andrew A. Davis
Vice President
Kenneth C. Eich
Executive Vice President &
Principal Executive Officer
Sharra L. Reed
Vice President, Treasurer
& Prinicpal 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
D'Ancona & Pflaum LLC
111 E. Wacker Drive
Chicago, Illinois 60601-4205
================================================================================
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. A COPY OF THE FUNDS' PROXY VOTING POLICIES
AND PROCEDURES IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY CALLING
1-800-243-1575 OR ON THE FUNDS WEBSITE AT WWW.SELECTEDFUNDS.COM OR ON THE SEC
WEBSITE AT WWW.SEC.GOV.
================================================================================
INVESTMENT ADVISER
Davis Selected Advisers, L.P.
2949 East Elvira Road, Suite 101
Tucson, AZ 85706
DISTRIBUTOR
Davis Distributors, LLC
2949 East Elvira Road, Suite 101
Tucson, AZ 85706
TRANSFER AGENT AND CUSTODIAN
State Street Bank & Trust Company
c/o Selected Funds
P.O. Box 8243
Boston, MA 02266-8243
LEGAL COUNSEL
D'Ancona & Pflaum LLC
111 E. Wacker Drive, Suite 2800
Chicago, IL 60601-4205
AUDITORS
KPMG, LLP
707 Seventeenth Street, Suite 2700
Denver, CO 80202
800-243-1575
www.selectedfunds.com
Item 2. Code of Ethics - Not Required
Item 3. Audit Committee Financial Expert - Not Required
Item 4. Principal Accountant Fees and Services - Not Required
Item 5. Audit Committee of Listed Registrants - Not Required
Item 6. Reserved
Item 7. Disclosure of Proxy Voting Polices and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8. Reserved
Item 9. Controls and Procedures
(a) The registrant's principal executive officer and principal financial
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 10. Exhibits
(a) Code of Ethics - Not Required
(b) Sections 302 and 906 certifications of the Sarbanes-Oxley Act of
2002 are attached as exhibits hereto.
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 AMERICAN SHARES, INC.
By /s/ Kenneth C. Eich
Kenneth C. Eich
Principal Executive Officer
Date: August 29, 2003
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: August 29, 2003
By /s/ Sharra L. Reed
Sharra L. Reed
Principal Financial officer
Date: August 29, 2003