N-CSRS/A 1 sas_ncsr0605amend.txt AMENDED SHAREHOLDER REPORT 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, 2005 ITEM 1. REPORTS TO STOCKHOLDERS Selected Funds Semi-Annual Report June 30, 2005 SELECTING QUALITY COMPANIES FOR THE LONG TERM(TM) Selected American Shares Selected Special Shares Selected Daily Government Fund [SELECTED FUNDS LOGO] TABLE OF CONTENTS Shareholder Letter.............................................................2 Management's Discussion and Analysis: Selected American Shares..................................................3 Selected Special Shares...................................................4 Fund Overview: Selected American Shares..................................................6 Selected Special Shares...................................................7 Selected Daily Government Fund............................................8 Expense Example................................................................9 Schedule of Investments: Selected American Shares.................................................11 Selected Special Shares..................................................17 Selected Daily Government Fund...........................................21 Statements of Assets and Liabilities..........................................23 Statements of Operations......................................................25 Statements of Changes in Net Assets...........................................26 Notes to Financial Statements.................................................28 Financial Highlights: Selected American Shares.................................................36 Selected Special Shares..................................................38 Selected Daily Government Fund...........................................40 Fund Information..............................................................42 Director Approval of Advisory Agreements......................................43 Directors and Officers........................................................46 SELECTED FUNDS 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706 ================================================================================ Dear Fellow Shareholder, As stewards of our customers' savings, the management team and Directors of the Selected Funds recognize the importance of candid, thorough, and regular communication with our shareholders. In our annual and semi-annual reports, we include all of the required quantitative information, such as financial statements, detailed footnotes, performance reports, fund holdings, and performance attribution. In addition, we produce a Research Report, for certain funds, which is published semi-annually. In this report, we give a more qualitative perspective on fund performance, discuss our thoughts on individual holdings, and share our investment outlook. You may obtain a copy of the current Research Report either at our website, SelectedFunds.com, or by calling 1-800-243-1575. LOWER COST CLASS D SHARES As we previously advised you, effective May 3, 2004, the existing shares of each of the Selected Funds were renamed Class S shares. These shares are appropriate for all shareholders that have chosen to invest in the Selected Funds through an intermediary. A new class of shares, called Class D shares, was created and are appropriate for all shareholders who have chosen to invest directly with Selected Funds rather than through an intermediary. Class D shares are substantially identical to Class S shares with one important exception. The Class D shares' annual expense ratio is lower, as Class D shares do not incur a 12b-1 fee. As anticipated, the Funds' Class D shares performed slightly better than Class S Shares. Selected American's Class D shares returned 1.49% (non-annualized) over the six-month period ended June 30, 2005, compared to 1.36% for Class S shares over the same period. Selected Special's Class D shares returned 1.45% (non-annualized) over the six-month period ended June 30, 2005, compared to 1.21% for Class S shares over the same period. Please carefully read the Selected Funds' prospectus, dated May 1, 2005, which further describes the Class D shares and note that a minimum account balance of $10,000 in the respective Selected Fund is required to convert from the existing Class S shares to Class D shares. A conversion from one class to another class in the same fund will not be a taxable event. If you would like your shares to be transferred into the lower cost Class D shares, you should call Selected Funds shareholder services at 1-800-243-1575 Monday through Friday, 9 am to 6 pm Eastern Time. We thank you for your continued trust. We will do our best to earn it in the years ahead. Sincerely, /s/ James J. McMonagle /s/ Christopher C. Davis James J. McMonagle Christopher C. Davis Chairman President August 5, 2005 2 SELECTED FUNDS 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706 ================================================================================ MANAGEMENT'S DISCUSSION AND ANALYSIS MARKET ENVIRONMENT During the six-month period ended June 30, 2005, the stock market, as measured by the Standard & Poor's 500(R) Index(1), declined by 0.81%. Inflation-adjusted gross domestic product, the most comprehensive measure of economic activity, increased 3.4% in the second quarter after increasing 3.8% in the first quarter. Interest rates, as measured by the 10-year Treasury bond, were stable for the first two months of the year, rose sharply in March, and then slowly declined over the second quarter of 2005. SELECTED AMERICAN SHARES PERFORMANCE OVERVIEW Selected American Shares' Class S shares returned 1.36% for the six-month period ended June 30, 2005(2), compared with a decline of 0.81% for the Standard & Poor's 500(R) Index(1). The Fund's Class D shares returned 1.49% over same six-month period. Energy companies were the most important contributors(3) to the Fund's performance over the six-month period. Energy companies were also the strongest performing sector of the S&P 500(R) Index. The Fund benefited both by investing a larger percentage of its assets in energy companies than did the Index, and as a group, the individual energy companies that the Fund owned out-performed the average energy company included in the Index. All of the Fund's energy companies performed well, with EOG Resources(4), ConocoPhillips, Occidental Petroleum, and Devon Energy, all among the Fund's top contributors to performance for the six-month period. Industrial companies were the most important detractors from the Fund's performance over the six-month period. Tyco International was among the top detractors from performance. The Fund's largest industry group holdings were in diversified financial companies. Overall, the Fund's diversified financial companies detracted from performance over the six-month period. American Express and JPMorgan Chase were both among the top detractors from performance. The Fund also held significant investments in insurance companies. Insurance companies turned in a mixed performance over the six-month period, with Progressive and Loews among the top contributors to performance, and American International Group and Berkshire Hathaway among the Fund's top detractors from performance. Individual companies making important contributions to the Fund's performance over the period included HCA, a health care equipment and services company; Altria Group, a food, beverage, and tobacco company; and H&R Block, a consumer services company. Individual companies detracting from performance over the period included Comcast, a media company; and Lexmark International, a technology hardware and equipment company. The Fund managers have identified a number of investment opportunities in foreign companies. The Fund ended the period with approximately 12% of its portfolio invested in foreign companies. As a group, the foreign companies owned by the Fund slightly out-performed the S&P 500(R) Index over the six-month period. 3 SELECTED FUNDS 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706 ================================================================================ MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED) SELECTED SPECIAL SHARES PERFORMANCE OVERVIEW Selected Special Shares' Class S shares returned 1.21% for the six-month period ended June 30, 2005(2), compared with a return of 0.02% for the Dow Jones Wilshire 5000 Index(1). The Fund's Class D shares returned 1.45% over the same six-month period. Utility companies were the most important contributors(3) to the Fund's performance over the six-month period. Both Calpine(4) and Sempra Energy were among the Fund's top contributors to performance for the six-month period. Industrial companies were the most important detractors from the Fund's performance over the six-month period. Tyco International, Hughes Supply, and Robbins & Myers were among the Fund's top detractors from performance. The Fund did not invest as large a proportion of its assets in energy companies as did the Dow Jones Wilshire 5000 Index. As energy was the strongest sector of the Index over the last six-months, this decreased relative performance. Transocean was among the fund's top contributors to performance. The Fund's largest industry group holdings were in consumer discretionary companies. Due to its large weighting and strong performance, Sears Holdings was the single company that contributed the most to the Fund's performance. The Fund's other consumer discretionary companies turned in a mixed performance over the six-month period, with AutoNation, and Advanced Auto Parts among the top contributors to performance, and Garmin, 99 Cents Only Stores, and Hunter Douglas among the Fund's top detractors from performance. Individual companies making important contributions to the Fund's performance over the period included IDEXX Laboratories, a health care equipment and services company; and E*TRADE Financial, a capital markets company. Individual companies detracting from performance over the period included Covad Communications, a telecommunication services company; and Marsh & McLennan, an insurance brokerage company. The Fund's portfolio managers have identified a number of investment opportunities in foreign companies. The Fund ended the period with approximately 19% of its portfolio invested in foreign companies. As a group the Fund's investment in foreign companies out-performed the Dow Jones Wilshire 5000 Index. Groupe Bruxelles was among the Fund's top contributors to performance, while Hunter Douglas (already mentioned above) was among the Fund's top detractors from performance. ------------------------------------------- This Semi-Annual Report is authorized for use by existing shareholders. Prospective shareholders must receive a current Selected Funds prospectus, which contains more information about investment strategies, risks, fees, and expenses. Please read the prospectus carefully before investing or sending money. Selected American Shares' investment objective is to achieve both capital growth and income. In the current market environment, we expect that income will be low. There can be no assurance that the Fund will achieve its objective. The primary risks of an investment in Selected American Shares are: (1) market risk, (2) company risk, (3) foreign country risk, (4) financial services risk, (5) headline risk, and (6) selection risk. See the prospectus for a full description of each risk 4 SELECTED FUNDS 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706 ================================================================================ MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED) Selected Special Shares' investment objective is capital growth. There can be no assurance that the Fund will achieve its objective. The primary risks of an investment in Selected Special Shares are: (1) market risk, (2) company risk, (3) small and medium capitalization risk, (4) foreign country risk, (5) headline risk, and (6) selection risk. See the prospectus for a full description of each risk. (1) The definitions of indices quoted in this report appear below. Investments cannot be made directly in the indices. I. The S&P 500(R) Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalization, and represents approximately two-thirds of the total market value of all domestic common stocks. II. The Dow Jones Wilshire 5000 Index measures the performance of all U.S. headquartered equity securities with readily available price data. Over 5,000 capitalization weighted security returns are used to adjust the Index. The Dow Jones Wilshire 5000 is a broad measure of the entire U.S. stock market. (2) Total return assumes reinvestment of dividends and capital gain distributions. Past performance is not a guarantee of future results. Investment return and principal value will vary so that, when redeemed, an investor's shares may be worth more or less than when purchased. The following tables list the average annual total returns for Class S and Class D shares for the periods ended June 30, 2005. -------------------------------------------------------------------------------- FUND NAME 1 YEAR 5 YEARS 10 YEARS -------------------------------------------------------------------------------- Selected American Shares S 8.83% 2.33% 13.01% -------------------------------------------------------------------------------- Selected Special Shares S 9.41% 1.17% 9.93% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FUND NAME 1 YEAR INCEPTION* -------------------------------------------------------------------------------- Selected American Shares D 9.17% 9.16% -------------------------------------------------------------------------------- Selected Special Shares D 9.75% 8.98% -------------------------------------------------------------------------------- * As of May 3, 2004 all of the Funds' outstanding shares were reclassified as Class S shares and Class D shares were newly issued. See the prospectus for a description of Class S and Class D shares. Fund performance changes over time and current performance may be higher or lower than stated. For more current information please call Selected Funds Shareholder Services at 1-800-243-1575. (3) A company or sector's contribution to the Fund's performance is a product both of its appreciation or depreciation and it's weighting within the Fund. For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%. (4) This Management Discussion & Analysis discusses a number of individual companies. The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. The schedule of investments lists each Fund's holdings of each company discussed. Shares of the Selected Funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. 5 SELECTED FUNDS FUND OVERVIEW SELECTED AMERICAN SHARES, INC. At June 30, 2005 (Unaudited) ================================================================================ [PIE OMITTED] PORTFOLIO MAKEUP (% OF FUND NET ASSETS) -------------------------------------- Common Stocks 97.5% Short Term Investments, Convertible Bonds, Other Assets & Liabilities 2.5% [PIE OMITTED] SECTOR WEIGHTINGS (% OF LONG TERM PORTFOLIO) -------------------------------------------- Technology 4.2% Materials 4.0% Other 9.4% Media 5.4% Food, Beverage, & Tobacco 8.2% Energy 10.8% Diversified Financials 17.3% Capital Goods 4.5% Food & Staples Retailing 3.8% Insurance 17.1% Health Care 4.1% Banks 11.2%
TOP 10 HOLDINGS STOCK SECTOR % OF FUND NET ASSETS -------------------------------------------------------------------------------------------------------------- American Express Co. Consumer Finance 5.71% Altria Group, Inc. Food, Beverage, & Tobacco 4.97% American International Group, Inc. Multi-Line Insurance 4.91% Tyco International Ltd. Capital Goods 4.41% JPMorgan Chase & Co. Diversified Financial Services 3.93% Berkshire Hathaway Inc., Class A Property & Casualty Insurance 3.56% Comcast Corp., Special Class A Media 3.30% Golden West Financial Corp. Thrifts & Mortgage Finance 3.28% Costco Wholesale Corp. Food & Staples Retailing 3.21% HSBC Holdings PLC Commercial Banks 3.20%
6 SELECTED FUNDS FUND OVERVIEW SELECTED SPECIAL SHARES, INC. At June 30, 2005 (Unaudited) ================================================================================ [PIE OMITTED] PORTFOLIO MAKEUP (% OF FUND NET ASSETS) --------------------------------------- Common Stock 92.5% Short Term Investments, Convertible Bonds, Other Assets & Liabilities 7.5% [PIE OMITTED] SECTOR WEIGHTINGS (% OF LONG TERM PORTFOLIO) -------------------------------------------- Materials 3.9% Utilities 5.6% Other 7.0% Consumer Durables & Apparel 5.9% Media 6.1% Telecommunications 3.2% Retailing 18.9% Automobiles & Components 3.1% Banks 4.8% Diversified Financials 7.9% Insurance 5.7% Health Care 8.8% Capital Goods 7.3% Consumer Services 2.5% Technology 9.3%
TOP 10 HOLDINGS STOCK SECTOR % OF FUND NET ASSETS -------------------------------------------------------------------------------------------------------------- Groupe Bruxelles Lambert S.A. Diversified Financial Services 4.41% AutoNation, Inc. Automotive Retail 4.13% Lagardere S.C.A. Media 4.04% Sears Holdings Corp. Apparel Retail 3.12% Molex Inc., Class A Technology Hardware & Equipment 3.06% AutoZone, Inc. Automotive Retail 3.04% Calpine Corp. Utilities 2.92% Tiffany & Co. Specialty Stores 2.91% Cardinal Health, Inc. Health Care Equipment & Services 2.69% Robbins & Myers, Inc. Capital Goods 2.60%
7 SELECTED FUNDS FUND OVERVIEW SELECTED CAPITAL PRESERVATION TRUST - SELECTED DAILY GOVERNMENT FUND At June 30, 2005 (Unaudited) ================================================================================ [PIE OMITTED] PORTFOLIO MAKEUP (% OF FUND NET ASSETS) --------------------------------------- FANNIE MAE 16.0% Repurchase Agreements, Other Assets & Liabilities 45.6% Federal Farm Credit Bank 0.8% Federal Home Loan Bank 29.1% FREDDIE MAC 8.5% [PIE OMITTED] MATURITY DIVERSIFICATION* (% OF PORTFOLIO'S HOLDINGS) ----------------------------------------------------- 181-365 Days 4.4% 0-30 Days 70.2% 31-90 Days 16.6% 91-180 Days 8.8% * The maturity dates of floating rate securities used in the Maturity Diversification chart are considered to be the effective maturities, based on the reset dates of the securities' variable rates. See the Fund's Schedule of Investments for a listing of the floating rate securities. 8 SELECTED FUNDS EXPENSE EXAMPLE (Unaudited) ================================================================================
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* (01/01/05) (06/30/05) (01/01/05-06/30/05) ---------- ---------- ------------------- SELECTED AMERICAN SHARES CLASS S Actual.................................. $1,000.00 $1,013.55 $4.49 Hypothetical............................ $1,000.00 $1,020.33 $4.51 CLASS D Actual.................................. $1,000.00 $1,014.93 $3.05 Hypothetical............................ $1,000.00 $1,021.77 $3.06 SELECTED SPECIAL SHARES CLASS S Actual.................................. $1,000.00 $1,012.06 $5.79 Hypothetical............................ $1,000.00 $1,019.04 $5.81 CLASS D Actual.................................. $1,000.00 $1,014.49 $4.35 Hypothetical............................ $1,000.00 $1,020.48 $4.36 SELECTED DAILY GOVERNMENT FUND CLASS S Actual.................................. $1,000.00 $1,009.85 $3.49 Hypothetical............................ $1,000.00 $1,021.32 $3.51 CLASS D Actual.................................. $1,000.00 $1,010.92 $2.74 Hypothetical............................ $1,000.00 $1,022.07 $2.76
HYPOTHETICAL ASSUMES 5% ANNUAL RETURN BEFORE EXPENSES. * Expenses are equal to the Class's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). See page 10 for a description of the "Expense Example". The annualized expense ratios for the six-month period ended June 30, 2005 are as follows: ANNUALIZED EXPENSE RATIO Selected American Shares Class S...................................................... 0.90% Class D...................................................... 0.61% Selected Special Shares Class S...................................................... 1.16% Class D...................................................... 0.87% Selected Daily Government Fund Class S...................................................... 0.70% Class D...................................................... 0.55% 9 SELECTED FUNDS EXPENSE EXAMPLE (Unaudited) - (Continued) ================================================================================ THE FOLLOWING DISCLOSURE PROVIDES IMPORTANT INFORMATION REGARDING THE FUNDS' EXPENSE EXAMPLE. PLEASE REFER TO THIS INFORMATION WHEN REVIEWING THE EXPENSE EXAMPLE FOR EACH CLASS. EXAMPLE As a shareholder of the Fund, you only incur ongoing costs, including advisory and administrative fees, distribution and/or service (12b-1) fees, and other Fund expenses. The Expense Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for each class is from 01/01/05 to 06/30/05. Please note that the Expense Example is general and does not reflect certain account specific costs, which may increase your total costs of investing in the Fund. If these account specific costs were included in the Expense Example, the expenses would have been higher. ACTUAL EXPENSES The information represented in the row entitled "Actual" provides information about actual account values and actual expenses. You may use the information in this row, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid for on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The information represented in the row entitled "Hypothetical" provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the information in the row entitled "Hypothetical" is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. 10 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED AMERICAN SHARES, INC. June 30, 2005 (Unaudited)
VALUE SHARES SECURITY (NOTE 1) ======================================================================================================================== COMMON STOCK - (97.51%) AUTOMOBILES & COMPONENTS - (0.73%) 1,205,000 Harley-Davidson, Inc. .............................................................. $ 59,768,000 -------------- AUTOMOTIVE RETAIL - (0.78%) 690,300 AutoZone, Inc.*..................................................................... 63,825,138 -------------- CAPITAL GOODS - (4.41%) 12,397,764 Tyco International Ltd. ............................................................ 362,014,709 -------------- CAPITAL MARKETS - (2.03%) 1,575,495 Julius Baer Holding, Ltd. AG........................................................ 96,386,116 1,039,864 Morgan Stanley...................................................................... 54,561,664 330,000 State Street Corp. ................................................................. 15,922,500 -------------- 166,870,280 -------------- COMMERCIAL BANKS - (7.67%) 1,849,000 Fifth Third Bancorp................................................................. 76,123,330 16,477,122 HSBC Holdings PLC................................................................... 262,746,401 7,386,934 Lloyds TSB Group PLC................................................................ 62,602,369 3,696,560 Wells Fargo & Co. .................................................................. 227,634,165 -------------- 629,106,265 -------------- COMMERCIAL SERVICES & SUPPLIES - (1.30%) 1,241,000 D&B Corp.*.......................................................................... 76,507,650 10,411,500 Rentokil Initial PLC................................................................ 29,800,228 -------------- 106,307,878 -------------- CONSUMER DURABLES & APPAREL - (0.16%) 267,600 Hunter Douglas NV................................................................... 13,384,145 -------------- CONSUMER FINANCE - (6.73%) 8,807,800 American Express Co. ............................................................... 468,839,194 1,522,400 Providian Financial Corp.* ......................................................... 26,839,912 835,860 Takefuji Corp. ..................................................................... 56,522,856 -------------- 552,201,962 -------------- CONSUMER SERVICES - (1.85%) 2,605,500 H&R Block, Inc. .................................................................... 152,030,925 -------------- DIVERSIFIED FINANCIAL SERVICES - (8.16%) 4,704,189 Citigroup Inc. ..................................................................... 217,474,658 9,132,740 JPMorgan Chase & Co. ............................................................... 322,568,377 2,265,600 Moody's Corp. ...................................................................... 101,861,376 658,000 Principal Financial Group, Inc. .................................................... 27,570,200 -------------- 669,474,611 -------------- ENERGY - (10.56%) 4,140,160 ConocoPhillips...................................................................... 238,017,798 3,720,842 Devon Energy Corp. ................................................................. 188,572,273 3,176,200 EOG Resources, Inc. ................................................................ 180,408,160
11 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED AMERICAN SHARES, INC. - (CONTINUED) June 30, 2005 (Unaudited)
VALUE SHARES SECURITY (NOTE 1) ======================================================================================================================== COMMON STOCK - (CONTINUED) ENERGY - (CONTINUED) 2,540,800 Occidental Petroleum Corp. ......................................................... $ 195,463,744 1,188,000 Transocean Inc.*.................................................................... 64,116,360 -------------- 866,578,335 -------------- FOOD & STAPLES RETAILING - (3.70%) 5,879,500 Costco Wholesale Corp. ............................................................. 262,990,035 845,000 Wal-Mart Stores, Inc. .............................................................. 40,729,000 -------------- 303,719,035 -------------- FOOD, BEVERAGE, & TOBACCO - (8.05%) 6,307,500 Altria Group, Inc. ................................................................. 407,842,950 7,406,081 Diageo PLC.......................................................................... 109,207,812 2,232,650 Heineken Holding NV................................................................. 62,412,524 1,304,800 Hershey Co. ........................................................................ 81,028,080 -------------- 660,491,366 -------------- HEALTH CARE EQUIPMENT & SERVICES - (2.82%) 1,610,000 Cardinal Health, Inc. .............................................................. 92,703,800 165,000 Caremark Rx, Inc.*.................................................................. 7,345,800 2,311,500 HCA Inc. ........................................................................... 130,992,705 -------------- 231,042,305 -------------- HOUSEHOLD & PERSONAL PRODUCTS - (0.25%) 545,000 Avon Products, Inc. ................................................................ 20,628,250 -------------- INSURANCE BROKERS - (1.42%) 2,112,700 Aon Corp. .......................................................................... 52,902,008 2,304,000 Marsh & McLennan Cos, Inc. ......................................................... 63,820,800 -------------- 116,722,808 -------------- INTERNET RETAIL - (0.42%) 1,445,000 IAC/InterActiveCorp*................................................................ 34,694,450 -------------- LIFE & HEALTH INSURANCE - (0.16%) 400,000 Sun Life Financial Inc. ............................................................ 13,480,000 -------------- MATERIALS - (3.91%) 930,600 Martin Marietta Materials, Inc. .................................................... 64,323,072 3,941,700 Sealed Air Corp.*................................................................... 196,257,243 924,100 Vulcan Materials Co. ............................................................... 60,057,259 -------------- 320,637,574 -------------- MEDIA - (5.22%) 9,048,000 Comcast Corp., Special Class A*..................................................... 270,444,720 483,300 Gannett Co., Inc. .................................................................. 34,377,129 1,282,459 Lagardere S.C.A. (c)................................................................ 95,058,007 71,500 NTL Inc.*........................................................................... 4,884,880
12 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED AMERICAN SHARES, INC. - (CONTINUED) June 30, 2005 (Unaudited)
VALUE SHARES SECURITY (NOTE 1) ======================================================================================================================== COMMON STOCK - (CONTINUED) MEDIA - (CONTINUED) 2,235,400 WPP Group PLC...................................................................... $ 23,009,686 -------------- 427,774,422 MULTI-LINE INSURANCE - (6.76%) 6,929,325 American International Group, Inc. ................................................. 402,593,783 1,958,000 Loews Corp. ........................................................................ 151,745,000 -------------- 554,338,783 -------------- PHARMACEUTICALS & BIOTECHNOLOGY - (1.19%) 1,180,000 Eli Lilly and Co. .................................................................. 65,737,800 670,000 Novartis AG, Registered............................................................. 31,918,455 -------------- 97,656,255 -------------- PROPERTY & CASUALTY INSURANCE - (7.23%) 3,497 Berkshire Hathaway Inc., Class A*................................................... 291,999,500 6,366 Berkshire Hathaway Inc., Class B*................................................... 17,719,761 288,400 Chubb Corp. ........................................................................ 24,689,924 20,000 Markel Corp.*....................................................................... 6,780,000 2,553,200 Progressive Corp. (Ohio)............................................................ 252,281,692 -------------- 593,470,877 -------------- REAL ESTATE - (1.52%) 2,938,388 Centerpoint Properties Trust (b).................................................... 124,293,812 -------------- REINSURANCE - (1.16%) 1,699,900 Transatlantic Holdings, Inc. ....................................................... 94,888,418 -------------- SOFTWARE & SERVICES - (2.18%) 3,575,500 Iron Mountain Inc.*................................................................. 110,912,010 2,735,000 Microsoft Corp. .................................................................... 67,882,700 -------------- 178,794,710 -------------- TECHNOLOGY HARDWARE & EQUIPMENT - (1.93%) 1,850,000 Hewlett-Packard Co. ................................................................ 43,493,500 1,428,600 Lexmark International, Inc., Class A*............................................... 92,616,138 1,325,000 Nokia Oyj, ADR...................................................................... 22,048,000 -------------- 158,157,638 -------------- TELECOMMUNICATION SERVICES - (0.63%) 1,537,000 SK Telecom Co., Ltd., ADR........................................................... 31,354,800 901,000 Telewest Global, Inc.*.............................................................. 20,497,750 -------------- 51,852,550 -------------- THRIFTS & MORTGAGE FINANCE - (3.28%) 4,181,100 Golden West Financial Corp. ........................................................ 269,179,218 --------------
13 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED AMERICAN SHARES, INC. - (CONTINUED) June 30, 2005 (Unaudited)
VALUE SHARES/PRINCIPAL SECURITY (NOTE 1) ======================================================================================================================== COMMON STOCK - (CONTINUED) TRANSPORTATION - (1.30%) 14,010,000 China Merchants Holdings International Co., Ltd. ................................ $ 27,223,137 12,050,000 Cosco Pacific Ltd. .............................................................. 23,414,618 20,500 Kuehne & Nagel International AG, Registered...................................... 4,351,151 740,500 United Parcel Service, Inc., Class B............................................. 51,212,980 ---------------- 106,201,886 ---------------- Total Common Stock - (identified cost $5,514,552,751)........................ 7,999,586,605 ---------------- CONVERTIBLE BONDS - (0.21%) TELECOMMUNICATION SERVICES - (0.21%) $ 19,200,000 Level 3 Communications, Inc., Conv. Sr. Notes, 10.00%, 05/01/11 (d) (identified cost $19,200,000)............................................... 17,109,120 ---------------- REPURCHASE AGREEMENTS - (2.53%) 68,207,000 Goldman, Sachs & Co., Joint Repurchase Agreement, 3.43%, 07/01/05, dated 06/30/05, repurchase value of $68,213,499 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $69,571,140).................................... 68,207,000 73,045,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 3.44%, 07/01/05, dated 06/30/05, repurchase value of $73,051,980 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $74,505,900).................................... 73,045,000 65,741,000 UBS Financial Services Inc. Joint Repurchase Agreement, 3.43%, 07/01/05, dated 06/30/05, repurchase value of $65,747,264 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $67,055,820).................................... 65,741,000 ---------------- Total Repurchase Agreements - (identified cost $206,993,000)............ 206,993,000 ---------------- INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED - (1.10%) MONEY MARKET INSTRUMENTS - (0.25%) 20,391,963 UBS Private Money Market LLC, 3.099816% (identified cost $20,391,963)............ 20,391,963 ----------------
14 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED AMERICAN SHARES, INC. - (CONTINUED) June 30, 2005 (Unaudited)
VALUE PRINCIPAL SECURITY (NOTE 1) ======================================================================================================================== INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED - (CONTINUED) REPURCHASE AGREEMENTS - (0.85%) $ 23,066,000 Goldman, Sachs & Co., Joint Repurchase Agreement, 3.43%, 07/01/05, dated 06/30/05, repurchase value of $23,068,198 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $23,527,320).................................... $ 23,066,000 24,702,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 3.44%, 07/01/05, dated 06/30/05, repurchase value of $24,704,360 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $25,196,040).................................... 24,702,000 22,232,000 UBS Financial Services Inc. Joint Repurchase Agreement, 3.43%, 07/01/05, dated 06/30/05, repurchase value of $22,234,118 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $22,676,640).................................... 22,232,000 ---------------- Total Repurchase Agreements - (identified cost $70,000,000)............. 70,000,000 ---------------- Total Investment of Cash Collateral for Securities Loaned - (identified cost $90,391,963)....................... 90,391,963 ---------------- Total Investments - (101.35%) - (identified cost $5,831,137,714) - (a)....... 8,314,080,688 Liabilities Less Other Assets - (1.35%)...................................... (110,350,705) ---------------- Net Assets - (100.00%).................................................. $ 8,203,729,983 ================ *Non-Income Producing Security. (a) Aggregate cost for Federal Income Tax purposes is $5,836,804,974. At June 30, 2005, unrealized appreciation (depreciation) of securities for Federal Income Tax purposes is as follows: Unrealized appreciation...................................................... $ 2,621,669,633 Unrealized depreciation...................................................... (144,393,919) ---------------- Net unrealized appreciation ............................................ $ 2,477,275,714 ================
15 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED AMERICAN SHARES, INC. - (CONTINUED) June 30, 2005 (Unaudited) ================================================================================ (b) Affiliated company. Represents ownership of at least 5% of the voting securities of the issuer and is an affiliate, as defined in the Investment Company Act of 1940, at or during the six months ended June 30, 2005. The aggregate fair value of the securities of affiliated companies held by the Fund as of June 30, 2005, amounts to $124,293,812. Transactions during the period in which the issuers were affiliates are as follows:
Shares Gross Gross Shares Dividend Security December 31, 2004 Additions Reductions June 30, 2005 Income -------- ----------------- --------- ---------- ------------- ------ Centerpoint Properties Trust 2,938,388 - - 2,938,388 $2,512,322
(c) Loaned security - See Note 7 of the Notes to Financial Statements. (d) Illiquid security - See Note 8 of the Notes to Financial Statements. SEE NOTES TO FINANCIAL STATEMENTS 16 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED SPECIAL SHARES, INC. June 30, 2005 (Unaudited)
VALUE SHARES SECURITY (NOTE 1) ======================================================================================================================== COMMON STOCK - (92.54%) APPAREL RETAIL - (3.12%) 23,500 Sears Holdings Corp.*............................................................... $ 3,515,600 ------------- AUTOMOBILES & COMPONENTS - (2.88%) 45,100 Autoliv, Inc. ...................................................................... 1,975,380 35,000 Lear Corp. ......................................................................... 1,273,300 ------------- 3,248,680 ------------- AUTOMOTIVE RETAIL - (8.48%) 22,700 Advance Auto Parts, Inc.*........................................................... 1,465,285 227,000 AutoNation, Inc.*................................................................... 4,658,040 37,100 AutoZone, Inc.*..................................................................... 3,430,266 ------------- 9,553,591 ------------- CAPITAL GOODS - (6.84%) 84,000 Hughes Supply, Inc. ................................................................ 2,360,400 136,100 Robbins & Myers, Inc. .............................................................. 2,927,511 600 Tae Young Corp. .................................................................... 20,039 82,400 Tyco International Ltd. ............................................................ 2,406,080 ------------- 7,714,030 ------------- CAPITAL MARKETS - (2.43%) 180,100 E*TRADE Financial Corp.*............................................................ 2,519,599 3,600 Julius Baer Holding, Ltd. AG........................................................ 220,242 ------------- 2,739,841 ------------- COMMERCIAL BANKS - (2.02%) 75,200 Commerce Bancorp, Inc. ............................................................. 2,279,312 ------------- COMMERCIAL SERVICES & SUPPLIES - (1.54%) 8,800 D&B Corp.*.......................................................................... 542,520 415,200 Rentokil Initial PLC................................................................ 1,188,403 ------------- 1,730,923 ------------- CONSUMER DURABLES & APPAREL - (5.45%) 54,700 Garmin Ltd. ........................................................................ 2,338,425 52,430 Hunter Douglas NV................................................................... 2,622,312 14,300 Mohawk Industries, Inc.*............................................................ 1,179,750 ------------- 6,140,487 ------------- CONSUMER SERVICES - (2.35%) 197,300 ServiceMaster Co. .................................................................. 2,643,820 ------------- DIVERSIFIED FINANCIAL SERVICES - (4.98%) 57,412 Groupe Bruxelles Lambert S.A. ...................................................... 4,974,562 6,970 Nong Shim Holdings Co., Ltd. ....................................................... 632,656 ------------- 5,607,218 ------------- ENERGY - (1.73%) 36,100 Transocean Inc.*.................................................................... 1,948,317 -------------
17 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED SPECIAL SHARES, INC. June 30, 2005 (Unaudited)
VALUE SHARES SECURITY (NOTE 1) ======================================================================================================================== COMMON STOCK - (CONTINUED) FOOD & STAPLES RETAILING - (0.63%) 15,800 Costco Wholesale Corp. ............................................................. $ 706,734 ------------- FOOD, BEVERAGE, & TOBACCO - (2.02%) 23,625 Heineken Holding NV................................................................. 660,424 900 Lotte Chilsung Beverage Co., Ltd. .................................................. 779,507 1,200 Lotte Confectionery Co., Ltd. ...................................................... 835,186 ------------- 2,275,117 ------------- GENERAL MERCHANDISE STORES - (1.27%) 112,600 99 Cents Only Stores*............................................................... 1,431,146 ------------- HEALTH CARE EQUIPMENT & SERVICES - (8.17%) 16,800 AmerisourceBergen Corp. ............................................................ 1,161,720 52,700 Cardinal Health, Inc. .............................................................. 3,034,466 20,380 Fisher Scientific International Inc.*............................................... 1,322,662 35,600 IDEXX Laboratories, Inc.*........................................................... 2,220,016 35,900 Lincare Holdings Inc.*.............................................................. 1,464,720 ------------- 9,203,584 ------------- HOUSEHOLD & PERSONAL PRODUCTS - (0.66%) 2,800 Amorepacific Corp. ................................................................. 741,614 ------------- INSURANCE BROKERS - (2.08%) 6,100 Brown & Brown, Inc. ................................................................ 274,134 74,800 Marsh & McLennan Cos, Inc. ......................................................... 2,071,960 ------------- 2,346,094 ------------- LIFE & HEALTH INSURANCE - (0.59%) 15,500 AFLAC Inc. ......................................................................... 670,840 ------------- MATERIALS - (3.64%) 60,400 Huntsman Corp.*..................................................................... 1,224,308 18,600 Sealed Air Corp.*................................................................... 926,094 34,800 Sigma-Aldrich Corp. ................................................................ 1,948,452 ------------- 4,098,854 ------------- MEDIA - (5.65%) 61,400 Lagardere S.C.A. ................................................................... 4,551,071 35,600 WPP Group PLC, ADR.................................................................. 1,819,872 ------------- 6,370,943 ------------- PROPERTY & CASUALTY INSURANCE - (0.73%) 12,359 Cincinnati Financial Corp. ......................................................... 488,922 1,000 Markel Corp.*....................................................................... 339,000 ------------- 827,922 -------------
18 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED SPECIAL SHARES, INC. June 30, 2005 (Unaudited)
VALUE SHARES/PRINCIPAL SECURITY (NOTE 1) ======================================================================================================================== COMMON STOCK - (CONTINUED) REINSURANCE - (1.90%) 7,800 Everest Re Group, Ltd. ............................................................. $ 725,400 25,275 Transatlantic Holdings, Inc. ....................................................... 1,410,850 ------------- 2,136,250 ------------- SOFTWARE & SERVICES - (3.69%) 41,800 Iron Mountain Inc.*................................................................. 1,296,636 105,900 Reynolds & Reynolds Co., Class A.................................................... 2,862,477 ------------- 4,159,113 ------------- SPECIALTY STORES - (4.80%) 93,400 Office Depot, Inc.*................................................................. 2,133,256 100,000 Tiffany & Co. ...................................................................... 3,276,000 ------------- 5,409,256 ------------- TECHNOLOGY HARDWARE & EQUIPMENT - (5.01%) 75,300 Agilent Technologies, Inc.*......................................................... 1,733,406 7,200 Lexmark International, Inc., Class A*............................................... 466,776 147,100 Molex Inc., Class A................................................................. 3,443,611 ------------- 5,643,793 ------------- TELECOMMUNICATION SERVICES - (2.14%) 585,500 Covad Communications Group, Inc.*................................................... 813,845 23,500 SK Telecom Co., Ltd., ADR........................................................... 479,400 49,300 Telewest Global, Inc.*.............................................................. 1,121,575 ------------- 2,414,820 ------------- THRIFTS & MORTGAGE FINANCE - (2.49%) 43,600 Golden West Financial Corp. ........................................................ 2,806,968 ------------- UTILITIES - (5.25%) 968,000 Calpine Corp.*...................................................................... 3,291,200 63,700 Sempra Energy....................................................................... 2,631,447 ------------- 5,922,647 ------------- Total Common Stock - (identified cost $81,801,956)........................ 104,287,514 ------------- CONVERTIBLE BONDS - (0.87%) TELECOMMUNICATION SERVICES - (0.87%) $ 1,100,000 Level 3 Communications, Inc., Conv. Sr. Notes, 10.00%, 05/01/11 (c) (identified cost $1,100,000)................................................... 980,210 -------------
19 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED SPECIAL SHARES, INC. - (CONTINUED) June 30, 2005 (Unaudited)
VALUE PRINCIPAL SECURITY (NOTE 1) ======================================================================================================================== SHORT TERM INVESTMENTS - (6.56%) FANNIE MAE - (0.43%) $ 490,000 2.96%, 07/06/05 - (identified cost $489,799) - (b).................................. $ 489,799 -------------- REPURCHASE AGREEMENTS - (6.13%) 2,275,000 Goldman, Sachs & Co., Joint Repurchase Agreement, 3.43%, 07/01/05, dated 06/30/05, repurchase value of $2,275,217 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $2,320,500)........................................ 2,275,000 2,437,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 3.44%, 07/01/05, dated 06/30/05, repurchase value of $2,437,233 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $2,485,740)........................................ 2,437,000 2,193,000 UBS Financial Services Inc. Joint Repurchase Agreement, 3.43%, 07/01/05, dated 06/30/05, repurchase value of $2,193,209 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $2,236,860)........................................ 2,193,000 -------------- Total Repurchase Agreements - (identified cost $6,905,000)............... 6,905,000 -------------- Total Short Term Investments - (identified cost $7,394,799)......... 7,394,799 -------------- Total Investments - (99.97%) - (identified cost $90,296,755) - (a)............. 112,662,523 Other Assets Less Liabilities - (0.03%)......................................... 33,035 -------------- Net Assets - (100.00%)................................................... $ 112,695,558 ============== * Non-Income Producing Security. (a) Aggregate cost for Federal Income Tax purposes is $90,731,357. At June 30, 2005, unrealized appreciation (depreciation) of securities for Federal Income Tax purposes is as follows: Unrealized appreciation......................................................... $ 24,787,305 Unrealized depreciation......................................................... (2,856,139) -------------- Net unrealized appreciation ............................................. $ 21,931,166 ============== (b) A sufficient amount of liquid assets has been designated to cover outstanding written put options, as follows (see Note 9 of the Notes to Financial Statements): Contracts Premium Subject to Put Puts Expiration Date Exercise Price Value Received ------------------------------------------------------------------------------------------------------------------ (48) Sears Holdings Corp. 01/20/07 $100.00 $(34,560) $(97,233) (c) Illiquid security - See Note 8 of the Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS 20 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED CAPITAL PRESERVATION TRUST - SELECTED DAILY GOVERNMENT FUND June 30, 2005 (Unaudited)
VALUE PRINCIPAL (NOTE 1) ======================================================================================================================== FANNIE MAE - (15.99%) $ 3,000,000 3.005%, 07/06/05 (b)................................................................ $ 2,999,978 1,500,000 1.60%, 07/08/05..................................................................... 1,499,652 3,000,000 3.21%, 07/26/05 (b)................................................................. 2,999,958 875,000 6.55%, 09/12/05..................................................................... 880,813 1,050,000 1.875%, 09/15/05.................................................................... 1,047,333 30,000 2.27%, 11/17/05..................................................................... 29,866 1,000,000 2.17%, 11/25/05..................................................................... 995,221 500,000 1.75%, 11/29/05..................................................................... 496,312 750,000 3.25%, 12/09/05 (b)................................................................. 749,715 1,769,000 6.00%, 12/15/05..................................................................... 1,790,062 750,000 3.31%, 12/19/05 (b)................................................................. 749,686 400,000 2.25%, 02/28/06..................................................................... 396,293 1,000,000 2.35%, 04/29/06..................................................................... 990,091 2,000,000 3.22%, 05/09/06 (b)................................................................. 1,999,661 -------------- Total FANNIE MAE - (identified cost $17,624,641).................................. 17,624,641 -------------- FEDERAL FARM CREDIT BANK - (0.73%) 800,000 5.125%, 10/05/05 - (identified cost $803,866)....................................... 803,866 -------------- FEDERAL HOME LOAN BANK - (29.11%) 5,000,000 3.224%, 07/26/05 (b)................................................................ 4,999,931 3,150,000 3.045%, 08/02/05 (b)................................................................ 3,149,951 3,115,000 3.25%, 08/15/05..................................................................... 3,115,143 500,000 7.029%, 08/17/05 (b)................................................................ 502,260 3,555,000 1.50%, 08/19/05..................................................................... 3,548,517 500,000 4.10%, 08/23/05..................................................................... 500,633 5,000,000 3.17375%, 08/26/05 (b).............................................................. 4,999,300 100,000 6.05%, 09/08/05..................................................................... 100,631 3,000,000 3.13625%, 09/16/05 (b).............................................................. 2,999,759 70,000 5.33%, 09/22/05..................................................................... 70,282 350,000 2.00%, 10/20/05..................................................................... 348,599 2,000,000 2.125%, 11/15/05.................................................................... 1,990,857 1,170,000 4.375%, 11/15/05.................................................................... 1,174,187 800,000 2.00%, 11/21/05..................................................................... 795,716 100,000 6.50%, 11/29/05..................................................................... 101,309 1,000,000 1.75%, 01/12/06..................................................................... 990,847 250,000 3.00%, 01/18/06..................................................................... 249,252 2,000,000 3.25%, 04/25/06 (c)................................................................. 2,000,000 250,000 3.125%, 04/28/06.................................................................... 249,003 200,000 2.03%, 06/30/06..................................................................... 196,487 -------------- Total Federal Home Loan Bank - (identified cost $32,082,664)...................... 32,082,664 --------------
21 SELECTED FUNDS SCHEDULE OF INVESTMENTS SELECTED CAPITAL PRESERVATION TRUST - SELECTED DAILY GOVERNMENT FUND - (CONTINUED) June 30, 2005 (Unaudited)
VALUE PRINCIPAL (NOTE 1) ======================================================================================================================== FREDDIE MAC - (8.53%) $ 4,000,000 7.00%, 07/15/05..................................................................... $ 4,005,947 530,000 1.50%, 07/29/05..................................................................... 529,388 2,000,000 2.875%, 09/15/05.................................................................... 1,998,349 1,145,000 2.125%, 11/15/05.................................................................... 1,140,036 525,000 2.01%, 01/27/06..................................................................... 520,267 50,000 5.90%, 02/14/06..................................................................... 50,617 150,000 2.15%, 02/17/06..................................................................... 148,613 196,000 2.00%, 02/28/06..................................................................... 193,984 800,000 6.28%, 03/06/06..................................................................... 815,251 -------------- Total FREDDIE MAC - (identified cost $9,402,452).................................. 9,402,452 -------------- REPURCHASE AGREEMENTS - (45.43%) 16,495,000 Goldman, Sachs & Co., Joint Repurchase Agreement, 3.43%, 07/01/05, dated 06/30/05, repurchase value of $16,496,572 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $16,824,900).................................. 16,495,000 17,665,000 Nomura Securities International, Inc. Joint Repurchase Agreement, 3.44%, 07/01/05, dated 06/30/05, repurchase value of $17,666,688 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $18,018,300).................................. 17,665,000 15,898,000 UBS Financial Services Inc. Joint Repurchase Agreement, 3.43%, 07/01/05, dated 06/30/05, repurchase value of $15,899,515 (collateralized by: U.S. Government agency obligations in a pooled cash account, total market value $16,215,960).................................. 15,898,000 -------------- Total Repurchase Agreements - (identified cost $50,058,000)....................... 50,058,000 -------------- Total Investments - (99.79%) - (identified cost $109,971,623) - (a)............ 109,971,623 Other Assets Less Liabilities - (0.21%)........................................ 228,317 -------------- Net Assets - (100.00%)..................................................... $ 110,199,940 ==============
(a) Aggregate cost for Federal Income Tax purposes is $109,971,623. (b) The interest rates on floating rate securities, shown as of June 30, 2005, may change daily or less frequently and are based on indices of market rates. For purposes of amortized cost valuation, the maturity dates of these securities are considered to be the effective maturities, based on the reset dates of the securities' variable rates. (c) Represents a step-up bond: a bond that pays one coupon rate for an initial period followed by a higher coupon rate. SEE NOTES TO FINANCIAL STATEMENTS 22 SELECTED FUNDS STATEMENTS OF ASSETS AND LIABILITIES At June 30, 2005 (Unaudited)
======================================================================================================================== SELECTED SELECTED SELECTED DAILY AMERICAN SPECIAL GOVERNMENT SHARES SHARES FUND -------- -------- ---------- ASSETS: Investments in securities, at value * (see accompanying Schedules of Investments): Unaffiliated companies................................. $ 8,099,394,913 $ 112,662,523 $ 109,971,623 Affiliated companies................................... 124,293,812 - - Collateral of securities loaned (Note 7)............... 90,391,963 - - Cash..................................................... 2,528,771 2,814 3,627 Receivables: Dividends and interest................................. 13,104,410 114,451 419,949 Capital stock sold..................................... 14,253,876 62,341 3,823 Investments securities sold............................ 5,979,881 - - Prepaid expenses....................................... 189,373 3,834 1,500 --------------- -------------- -------------- Total assets....................................... 8,350,136,999 112,845,963 110,400,522 --------------- -------------- -------------- LIABILITIES: Return of collateral loaned (Note 7)..................... 90,391,963 - - Payables: Capital stock reacquired............................... 3,767,071 - 4,100 Investment securities purchased........................ 45,979,647 - - Accrued expenses......................................... 2,528,748 49,941 40,113 Accrued management fees.................................. 3,739,587 65,904 28,137 Options written, at value (premiums received $97,233) (see accompanying Schedule of Investments).................. - 34,560 - Distributions payable.................................... - - 128,232 --------------- -------------- -------------- Total liabilities.................................. 146,407,016 150,405 200,582 --------------- -------------- -------------- NET ASSETS ................................................. $ 8,203,729,983 $ 112,695,558 $ 110,199,940 =============== ============== ============== NET ASSETS CONSIST OF: Par value of shares of capital stock..................... $ 274,358,388 $ 2,238,203 $ 11,019,994 Additional paid-in capital............................... 5,988,666,461 81,326,150 99,179,946 Undistributed net investment income...................... 34,907,151 24,472 - Accumulated net realized gains (losses) from investments and foreign currency transactions...................... (577,136,365) 6,679,136 - Net unrealized appreciation on investments and foreign currency transactions.......... 2,482,934,348 22,427,597 - --------------- -------------- -------------- $ 8,203,729,983 $ 112,695,558 $ 110,199,940 =============== ============== ==============
* Including cost for Unaffiliated companies, Affiliated companies, and Collateral of securities loaned of $5,712,117,572, $28,628,179, and $90,391,963 respectively for Selected American Shares; and securities valued at $85,536,411 were on loan from Selected American Shares, and Collateral received for securities on loan is valued at $90,391,963. Including cost of $90,296,755 for Selected Special Shares. Including repurchase agreements and cost of $50,058,000 and $109,971,623, respectively for Selected Daily Government Fund. 23 SELECTED FUNDS STATEMENTS OF ASSETS AND LIABILITIES - (Continued) At June 30, 2005 (Unaudited)
======================================================================================================================== SELECTED SELECTED SELECTED DAILY AMERICAN SPECIAL GOVERNMENT SHARES SHARES FUND -------- -------- ---------- CLASS S SHARES: Net Assets............................................. $7,231,481,922 $ 91,212,629 $ 105,335,802 Shares Outstanding..................................... 193,499,355 7,247,378 105,335,802 Net asset value, offering and redemption price per share (Net Assets / Shares Outstanding)................... $ 37.37 $ 12.59 $ 1.00 ========== ========== ========== CLASS D SHARES: Net Assets............................................. $ 972,248,061 $ 21,482,929 $ 4,864,138 Shares Outstanding..................................... 25,987,355 1,705,433 4,864,138 Net asset value, offering and redemption price per share (Net Assets / Shares Outstanding)................... $ 37.41 $ 12.60 $ 1.00 ========== ========== ==========
SEE NOTES TO FINANCIAL STATEMENTS 24 SELECTED FUNDS STATEMENTS OF OPERATIONS For the six months ended June 30, 2005
======================================================================================================================== SELECTED SELECTED SELECTED DAILY AMERICAN SPECIAL GOVERNMENT SHARES SHARES FUND -------- -------- ---------- INVESTMENT INCOME: Income: Dividends Unaffiliated companies*................................ $ 64,355,295 $ 571,410 $ - Affiliated companies................................... 2,512,322 - - Interest................................................. 4,272,156 85,152 1,470,130 Security lending fees.................................... 434,832 - - -------------- -------------- -------------- Total income......................................... 71,574,605 656,562 1,470,130 -------------- -------------- -------------- Expenses: Management fees (Note 2)................................. 20,902,268 374,603 164,498 Custodian fees........................................... 566,123 22,141 11,145 Transfer agent fees Class S................................................ 2,731,988 46,652 18,739 Class D................................................ 153,456 6,238 2,934 Audit fees............................................... 27,000 7,200 6,000 Legal fees............................................... 46,089 3,363 3,358 Reports to shareholders.................................. 330,769 4,099 4,454 Directors' fees and expenses............................. 205,220 2,973 5,642 Registration and filing fees............................. 84,995 22,498 26,501 Miscellaneous............................................ 34,358 4,918 5,888 Payments under distribution plan - Class S (Note 3)...... 8,640,230 111,142 131,478 -------------- -------------- -------------- Total expenses....................................... 33,722,496 605,827 380,637 Expenses paid indirectly (Note 6).................... (2,031) (37) (15) -------------- -------------- -------------- Net expenses......................................... 33,720,465 605,790 380,622 -------------- -------------- -------------- Net investment income................................ 37,854,140 50,772 1,089,508 -------------- -------------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from: Investment transactions................................ (13,517,091) 7,114,632 - Foreign currency transactions.......................... (108,893) 8,505 - Net increase (decrease) in unrealized appreciation of investments during the period....................... 87,203,582 (5,809,885) - -------------- -------------- -------------- Net realized and unrealized gain on investments and foreign currency................................... 73,577,598 1,313,252 - -------------- -------------- -------------- Net increase in net assets resulting from operations... $ 111,431,738 $ 1,364,024 $ 1,089,508 ============== ============== ============== * Net of foreign taxes withheld as follows............... $ 2,431,310 $ 47,625 -
SEE NOTES TO FINANCIAL STATEMENTS 25 SELECTED FUNDS STATEMENTS OF CHANGES IN NET ASSETS For the six months ended June 30, 2005 (Unaudited)
======================================================================================================================== SELECTED SELECTED SELECTED DAILY AMERICAN SPECIAL GOVERNMENT SHARES SHARES FUND -------- -------- ---------- OPERATIONS: Net investment income................................... $ 37,854,140 $ 50,772 $ 1,089,508 Net realized gain (loss) from investments and foreign currency transactions................................. (13,625,984) 7,123,137 - Net increase (decrease) in unrealized appreciation of investments........................................ 87,203,582 (5,809,885) - --------------- --------------- -------------- Net increase in net assets resulting from operations.... 111,431,738 1,364,024 1,089,508 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class S............................................... - - (1,040,254) Class D............................................... - - (49,254) CAPITAL SHARE TRANSACTIONS: Net increase (decrease) in net assets resulting from Capital share transactions (Note 5) Class S............................................... 474,542,628 (382,798) (1,307,633) Class D............................................... 276,780,217 1,673,749 (98,962) ---------------- --------------- -------------- Total increase (decrease) in net assets..................... 862,754,583 2,654,975 (1,406,595) NET ASSETS: Beginning of period..................................... 7,340,975,400 110,040,583 111,606,535 ---------------- --------------- -------------- End of period*.......................................... $ 8,203,729,983 $ 112,695,558 $ 110,199,940 ================ =============== ============== * Including undistributed net investment income of.... $ 34,907,151 $ 24,472 -
SEE NOTES TO FINANCIAL STATEMENTS 26 SELECTED FUNDS STATEMENTS OF CHANGES IN NET ASSETS For the year ended December 31, 2004
======================================================================================================================== SELECTED SELECTED SELECTED DAILY AMERICAN SPECIAL GOVERNMENT SHARES SHARES FUND -------- -------- ---------- OPERATIONS: Net investment income................................... $ 51,263,545 $ 407,711 $ 823,862 Net realized gain (loss) from investments and foreign currency transactions................................. (46,831,433) 4,728,894 - Net increase in unrealized appreciation of investments........................................ 764,724,720 5,967,301 - --------------- -------------- -------------- Net increase in net assets resulting from operations.... 769,156,832 11,103,906 823,862 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class S............................................... (46,865,527) (297,243) (793,973) Class D............................................... (5,914,843) (100,305) (29,889) Realized gains from investment transactions Class S............................................... - (3,731,939) - Class D............................................... - (745,595) - Return of capital Class S............................................... (1,832,879) - - Class D............................................... (231,325) - - CAPITAL SHARE TRANSACTIONS: Net increase (decrease) in net assets resulting from Capital share transactions (Note 5) Class S............................................... 12,354,275 (10,581,291) (6,209,091) Class D............................................... 636,424,037 18,739,902 4,963,100 --------------- -------------- -------------- Total increase (decrease) in net assets..................... 1,363,090,570 14,387,435 (1,245,991) NET ASSETS: Beginning of year....................................... 5,977,884,830 95,653,148 112,852,526 -------------- --------------- -------------- End of year*............................................ $ 7,340,975,400 $ 110,040,583 $ 111,606,535 ================ =============== ============== * Including overdistributed net investment income of.. $ (2,946,989) $ (26,300) -
SEE NOTES TO FINANCIAL STATEMENTS 27 SELECTED FUNDS NOTES TO FINANCIAL STATEMENTS June 30, 2005 (Unaudited) ================================================================================ NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Selected Funds (the Funds) consist of Selected American Shares, Inc., (Selected American Shares), Selected Special Shares, Inc., (Selected Special Shares), and the Selected Capital Preservation Trust (the Trust). The Trust consists of the Selected Daily Government Fund. The Funds and Trust are registered under the Investment Company Act of 1940, as amended, as diversified, open-end management investment companies. The following is a summary of significant accounting policies followed by the Funds in the preparation of financial statements. Selected American Shares and Selected Special Shares are diversified, professionally managed stock-oriented funds. Selected Daily Government Fund seeks to provide a high level of current income from short-term money market securities consistent with prudent investment management, preservation of capital and maintenance of liquidity. It invests in U.S. Government Securities and repurchase agreements in respect thereto. An investment in any of the Funds, as with any mutual fund, includes risks that vary depending upon the fund's investment objectives and policies. There is no assurance that the investment objective of any fund will be achieved. A fund's return and net asset value will fluctuate, although Selected Daily Government Fund seeks to maintain a net asset value of $1.00 per share. The Class S shares and Class D shares are sold at net asset value. Income, expenses (other than those attributable to a specific class) and gains and losses are allocated daily to each class of shares based on the relative proportion of net assets represented by each class. Operating expenses directly attributable to a specific class are charged against the operations of that class. All classes have identical rights with respect to voting (exclusive of each Class' distribution arrangement), liquidation and distributions. A. VALUATION OF SECURITIES - Securities listed on national securities exchanges are valued at the last reported sales price on the day of valuation. Securities traded in the over the counter market and listed securities for which no sale was reported on that date are stated at the last quoted bid price. Securities for which market quotations are not readily available, or whose values have been affected by a significant event occurring after the close of their primary markets, are valued at fair value as determined in good faith by the Board of Directors/Trustees. Selected Daily Government Fund uses the amortized cost method of valuing investment securities, which represents fair value. These valuation procedures are reviewed and subject to approval by the Board of Directors/Trustees. B. MASTER REPURCHASE AGREEMENTS - The Funds, along with other affiliated funds, may transfer uninvested cash balances into one or more master repurchase agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. government securities. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. C. CURRENCY TRANSLATION - The market values of all assets and liabilities denominated in foreign currencies are recorded in the financial statements after translation to the U.S. dollar based upon the mean between the bid and offered quotations of the currencies against U.S. dollars on the date of valuation. The cost basis of such assets and liabilities is determined based upon historical exchange rates. Income and expenses are translated at average exchange rates in effect as accrued or incurred. 28 SELECTED FUNDS NOTES TO FINANCIAL STATEMENTS - (Continued) June 30, 2005 (Unaudited) ================================================================================ NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) D. FOREIGN CURRENCY - The Funds may enter into forward purchases or sales of foreign currencies to hedge certain foreign currency denominated assets and liabilities against declines in market value relative to the U.S. dollar. Forward currency contracts are marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss. When the forward currency contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the forward currency contract at the time it was opened and value at the time it was closed. Investments in forward currency contracts may expose the Funds to risks resulting from unanticipated movements in foreign currency exchange rates or failure of the counter-party to the agreement to perform in accordance with the terms of the contract. Reported net realized foreign exchange gains or losses arise from the sales and maturities of investments, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds' books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. The Funds include foreign currency gains and losses realized on the sale of investments together with market gains and losses on such investments in the statement of operations. E. FEDERAL INCOME TAXES - It is each Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income, including any net realized gains on investments not offset by loss carryovers, to shareholders. Therefore, no provision for federal income or excise tax is required. At June 30, 2005, Selected American Shares, Inc. had post October 2004 losses of approximately $21,992,000 available to offset future capital gains, if any, which expire in 2013. At June 30, 2005, the Funds had available for federal income tax purposes unused capital loss carryforwards as follows: SELECTED AMERICAN SHARES ------ EXPIRING -------- 12/31/2009 $ 67,867,000 12/31/2010 296,227,000 12/31/2011 109,428,000 12/31/2012 63,796,000 --------------- TOTAL $ 537,318,000 F. USE OF ESTIMATES IN FINANCIAL STATEMENTS - In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of income and expenses during the reporting period. Actual results may differ from these estimates. 29 SELECTED FUNDS NOTES TO FINANCIAL STATEMENTS - (Continued) June 30, 2005 (Unaudited) ================================================================================ NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) G. SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME - Securities transactions are accounted for on the trade date (date the order to buy or sell is executed) with realized gain or loss on the sale of securities being determined based upon identified cost. Dividend income is recorded on the ex-dividend date. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. H. DIRECTORS/TRUSTEES FEES AND EXPENSES - The Funds set up a Rabbi Trust to provide for the deferred compensation plan for independent Directors/Trustees that enables them to elect to defer receipt of all or a portion of annual fees they are entitled to receive. The value of an eligible Director's/Trustee's account is based upon years of service and fees paid to each Director/Trustee during the years of service. The amount paid to the Director/Trustee under the plan will be determined based upon the performance of the Selected Funds. I. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions to shareholders are recorded on the ex-dividend date. Net investment income (loss), net realized gains (losses), and net unrealized appreciation (depreciation) of investments may differ for financial statement and tax purposes primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes and the tax deferral of losses on "wash sale" transactions. The character of dividends and distributions made during the fiscal year from net investment income and net realized securities gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which income or realized gain was recorded by the Funds. The Funds adjust the classification of distributions to shareholders to reflect the differences between financial statement amounts and distributions determined in accordance with income tax regulations. NOTE 2 - INVESTMENT ADVISORY FEES Advisory fees are paid monthly to Davis Selected Advisers, L.P. (the "Adviser"), the Fund's investment adviser. The rate for Selected American Shares is 0.65% on the first $500 million of average net assets, 0.60% of the average net assets on the next $500 million, 0.55% of the average net assets on the next $2 billion, 0.54% of the average net assets on the next $1 billion, 0.53% of the average net assets on the next $1 billion, 0.52% of the average net assets on the next $1 billion, 0.51% of the average net assets on the next $1 billion, 0.50% of the average net assets on the next $3 billion, and 0.485% of the average net assets in excess of $10 billion. The rate for Selected Special Shares is 0.70% on the first $50 million of average net assets, 0.675% on the next $100 million, 0.65% on the next $100 million, and 0.60% of average net assets in excess of $250 million. Advisory fees paid during the six months ended June 30, 2005, approximated 0.54% and 0.69% of average net assets for Selected American Shares and Selected Special Shares, respectively. The rate for the Selected Daily Government Fund is 0.30% of average net assets. State Street Bank and Trust Company ("State Street Bank") is the Funds' primary transfer agent. The Adviser is also paid for certain transfer agent services. The fee paid to the Adviser for the six months ended June 30, 2005 was $76,861, $4,215, and $1,208 for Selected American Shares, Selected Special Shares, and Selected Daily Government Fund, respectively. Certain Directors/Trustees and officers of the Funds are also Directors/Trustees and officers of the general partner of the Adviser. Davis Selected Advisers - NY, Inc. ("DSA-NY"), a wholly-owned subsidiary of the Adviser, acts as sub-adviser to the Funds. The Funds pay no fees directly to DSA-NY. 30 SELECTED FUNDS NOTES TO FINANCIAL STATEMENTS - (Continued) June 30, 2005 (Unaudited) ================================================================================ NOTE 3 - DISTRIBUTION For services under the distribution agreement, the Funds' Class S shares pay a fee of 0.25% of average daily net assets. For the six months ended June 30, 2005, Selected American Shares, Selected Special Shares, and Selected Daily Government Fund incurred distribution services fees totaling $8,640,230, $111,142, and $131,478, respectively. There are no distribution service fees for the Funds' Class D shares. NOTE 4 - PURCHASES AND SALES OF SECURITIES Purchases and sales of investment securities (excluding short-term securities) during the six months ended June 30, 2005 were as follows: SELECTED SELECTED AMERICAN SPECIAL SHARES SHARES ------ ------ Cost of purchases.......................... $796,479,942 $ 35,359,223 Proceeds of sales.......................... $ 7,636,384 $ 39,786,590 NOTE 5 - CAPITAL STOCK At June 30, 2005, there were 300 million shares of capital stock of Selected American Shares ($1.25 par value per share) authorized. At June 30, 2005, there were 50 million shares of capital stock of Selected Special Shares ($0.25 par value per share) authorized. At June 30, 2005, there were unlimited shares of capital stock of Selected Capital Preservation Trust ($0.10 par value per share) authorized. Transactions in capital stock were as follows: CLASS S
SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) ---------------------------------------------------- SELECTED SELECTED SELECTED DAILY AMERICAN SPECIAL GOVERNMENT SHARES SHARES FUND -------- -------- ---------- Shares sold.......................................... 25,995,526 378,044 1,276,110 Shares issued in reinvestment of distributions....... - - 990,491 -------------- -------------- -------------- 25,995,526 378,044 2,266,601 Shares redeemed/transferred out...................... (13,113,694) (411,003) (3,574,234) -------------- -------------- -------------- Net increase (decrease)........................ 12,881,832 (32,959) (1,307,633) ============== ============== ============== Proceeds from shares sold............................ $ 956,757,814 $ 4,685,550 $ 1,276,110 Proceeds from shares issued in reinvestment of distributions.................... - - 990,491 -------------- -------------- -------------- 956,757,814 4,685,550 2,266,601 Cost of shares redeemed/transferred out.............. (482,215,186) (5,068,348) (3,574,234) -------------- -------------- -------------- Net increase (decrease)........................ $ 474,542,628 $ (382,798) $ (1,307,633) ============== ============== ==============
31 SELECTED FUNDS NOTES TO FINANCIAL STATEMENTS - (Continued) June 30, 2005 (Unaudited) ================================================================================ NOTE 5 - CAPITAL STOCK - (CONTINUED) CLASS S - (CONTINUED)
YEAR ENDED DECEMBER 31, 2004 ---------------------------------------------------- SELECTED SELECTED SELECTED DAILY AMERICAN SPECIAL GOVERNMENT SHARES SHARES FUND -------- -------- ---------- Shares sold.......................................... 41,612,398 1,251,817 7,244,394 Shares issued in reinvestment of distributions....... 1,266,365 320,624 748,379 -------------- -------------- -------------- 42,878,763 1,572,441 7,992,773 Shares redeemed/transferred out...................... (42,465,137) (2,466,385) (14,201,864) -------------- -------------- -------------- Net increase (decrease)........................ 413,626 (893,944) (6,209,091) ============== ============== ============== Proceeds from shares sold............................ $1,433,572,159 $ 14,996,979 $ 7,244,394 Proceeds from shares issued in reinvestment of distributions.................... 45,994,205 3,879,551 748,379 -------------- -------------- -------------- 1,479,566,364 18,876,530 7,992,773 Cost of shares redeemed/transferred out.............. (1,467,212,089) (29,457,821) (14,201,864) -------------- -------------- -------------- Net increase (decrease)........................ $ 12,354,275 $ (10,581,291) $ (6,209,091) ============== ============== ==============
CLASS D SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) ---------------------------------------------------- SELECTED SELECTED SELECTED DAILY AMERICAN SPECIAL GOVERNMENT SHARES SHARES FUND -------- -------- ---------- Shares sold/transferred in........................... 8,294,734 178,805 2,005,483 Shares issued in reinvestment of distributions....... - - 46,619 -------------- -------------- -------------- 8,294,734 178,805 2,052,102 Shares redeemed...................................... (789,057) (43,581) (2,151,064) -------------- -------------- -------------- Net increase (decrease)........................ 7,505,677 135,224 (98,962) ============== ============== ============== Proceeds from shares sold/transferred in............. $ 305,918,740 $ 2,214,644 $ 2,005,483 Proceeds from shares issued in reinvestment of distributions - - 46,619 -------------- -------------- -------------- 305,918,740 2,214,644 2,052,102 Cost of shares redeemed.............................. (29,138,523) (540,895) (2,151,064) -------------- -------------- -------------- Net increase (decrease)........................ $ 276,780,217 $ 1,673,749 $ (98,962) ============== ============== ==============
MAY 3, 2004 (INCEPTION OF OFFERING) THROUGH DECEMBER 31, 2004 ---------------------------------------------------- SELECTED SELECTED SELECTED DAILY AMERICAN SPECIAL GOVERNMENT SHARES SHARES FUND -------- -------- ---------- Shares sold/transferred in........................... 18,753,501 1,555,774 6,333,859 Shares issued in reinvestment of distributions....... 155,056 64,217 26,236 -------------- -------------- -------------- 18,908,557 1,619,991 6,360,095 Shares redeemed...................................... (426,879) (49,782) (1,396,995) -------------- -------------- -------------- Net increase................................... 18,481,678 1,570,209 4,963,100 ============== ============== ============== Proceeds from shares sold/transferred in............. $ 645,807,961 $ 18,546,678 $ 6,333,859 Proceeds from shares issued in reinvestment of distributions 5,626,979 775,744 26,236 -------------- -------------- -------------- 651,434,940 19,322,422 6,360,095 Cost of shares redeemed.............................. (15,010,903) (582,520) (1,396,995) -------------- -------------- -------------- Net increase................................... $ 636,424,037 $ 18,739,902 $ 4,963,100 ============== ============== ==============
32 SELECTED FUNDS NOTES TO FINANCIAL STATEMENTS - (Continued) June 30, 2005 (Unaudited) ================================================================================ NOTE 6 - EXPENSES PAID INDIRECTLY Under an agreement with the custodian bank, each Fund's custodian fees are reduced for earnings on cash balances maintained at the custodian by the Funds. During the six months ended June 30, 2005, such reductions amounted to $2,031, $37, and $15 for Selected American Shares, Selected Special Shares, and Selected Daily Government Fund, respectively. NOTE 7 - SECURITIES LOANED Selected American Shares (the "Fund") has entered into a securities lending arrangement with UBS Financial Services Inc. Under the terms of the agreement, the Fund receives fee income from lending transactions; in exchange for such fees, UBS Financial Services Inc. is authorized to loan securities on behalf of the Fund, against receipt of collateral at least equal to the value of the securities loaned. As of June 30, 2005, the Fund had on loan securities valued at $85,536,411; cash of $90,391,963 was received as collateral for the loans. The Fund bears the risk of any deficiency in the amount of the collateral available for return to a borrower due to a loss in an approved investment. NOTE 8 - ILLIQUID SECURITIES Securities may be considered illiquid if they lack a readily available market or if valuation has not changed for a certain period of time. The aggregate value of illiquid securities in Selected American Shares, and Selected Special Shares amounted to $17,109,120 and $980,210 or 0.21% and 0.87% of the Funds' net assets, respectively, as of June 30, 2005.
Valuation per Unit Acquisition Cost per as of June 30, Funds Security Date Principal Unit 2005 ----- -------- ------------ --------- ---------- -------------------- Selected Level 3 Communications, Inc., American Conv. Sr. Notes, 10.00%, Shares 05/01/11 4/4/05 19,200,000 $ 100.00 $ 89.11 Selected Level 3 Communications, Inc., Special Conv. Sr. Notes, 10.00%, Shares 05/01/11 4/4/05 1,100,000 $ 100.00 $ 89.11
NOTE 9 - OPTION ACTIVITY Each Fund may purchase or sell options (including "put options") to pursue its investment objective or for hedging purposes. When selling a put option, the purchaser receives the right to sell, and the writer (the Fund) the obligation to buy, the underlying investment at the exercise price during the option period. 33 SELECTED FUNDS NOTES TO FINANCIAL STATEMENTS - (Continued) June 30, 2005 (Unaudited) ================================================================================ NOTE 9 - OPTION ACTIVITY - (CONTINUED) When writing a put option on a security, to secure its obligation to pay for the underlying security, each Fund will deposit, in escrow, liquid assets with a value equal to or greater than the exercise price of the underlying securities. Each Fund therefore foregoes the opportunity of investing the segregated assets. The premium each Fund receives from writing a put option represents a profit, as long as the price of the underlying investment remains equal to or above the exercise price of the put. However, each Fund also assumes the obligation, during the option period, to buy the underlying investment from the buyer of the put at the exercise price, even if the value of the investment falls below the exercise price. See the Statement of Additional Information for more information concerning the Funds' use of options. Options are valued daily based upon the Funds' valuation procedures (Note 1) and unrealized appreciation or depreciation is recorded. The Funds will realize a gain or loss upon the expiration or closing of the option transaction. Put options written are reported as a liability in the Statement of Assets and Liabilities. Realized and unrealized gains and losses are reported in the Statement of Operations. Written put option activity for the six months ended June 30, 2005 was as follows: SELECTED SPECIAL SHARES ----------------------- Number of Amount of Contracts Premiums --------- --------- Options outstanding as of December 31, 2004........... 48 $ 97,233 Options written................................... - - Options closed or expired......................... - - Options exercised................................. - - ----- ---------- Options outstanding as of June 30, 2005............... 48 $ 97,233 ===== ========== NOTE 10 - BANK BORROWINGS Each Fund may borrow up to 5% of its assets from a bank to purchase portfolio securities, or for temporary and emergency purposes. The purchase of securities with borrowed funds creates leverage in the Fund. Each Fund has entered into an agreement, which enables it to participate with certain other funds managed by the Adviser in an unsecured line of credit with a bank, which permits borrowings up to $50 million, collectively. Interest is charged based on its borrowings, at a rate equal to the overnight Federal Funds Rate plus 0.75%. The Funds had no borrowings outstanding for the six months ended June 30, 2005. 34 SELECTED FUNDS NOTES TO FINANCIAL STATEMENTS - (Continued) June 30, 2005 (Unaudited) ================================================================================ NOTE 11 - LITIGATION MATTERS On June 2, 2004, a proposed class action lawsuit was filed in the United States District Court for the Southern District of New York on behalf of investors in certain mutual funds ("Funds") managed by Davis Selected Advisers L.P. including the Selected Funds. The plaintiffs claim that Davis Selected Advisers L.P. and its affiliates, and the individual directors of the Funds (collectively the "Defendants") used Fund assets to pay brokers to market the Funds and that the Defendants disguised such payments as brokerage commissions and further failed to disclose such payments in public filings or elsewhere. The lawsuit seeks damages of unspecified amounts. Three substantially identical proposed class action lawsuits were filed against the Defendants later in June and July 2004 in the United States Court for the Southern District of New York. All four suits have been consolidated into a single action. Davis Selected Advisers L.P. believes the actions are without merit and the Defendants intend to vigorously defend the proceedings. Although no determination can be made at this time, the Funds do not expect this lawsuit to have a material adverse effect on the assets or results of the Funds. 35 SELECTED FUNDS FINANCIAL HIGHLIGHTS SELECTED AMERICAN SHARES, INC. ================================================================================ The following financial information represents selected data for each share of capital stock outstanding throughout each period:
CLASS S SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30,2005 ---------------------------------------------------------- (UNAUDITED) 2004 2003 2002 2001 2000 ----------- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period.... $ 36.87 $ 33.17 $ 25.51 $ 30.99 $ 35.33 $ 35.80 ------- ------- ------- -------- ------- -------- Income (Loss) From Investment Operations Net Investment Income.................. .17 .26 .22 .17 .14 .15 Net Realized and Unrealized Gains (Losses)...................... .33 3.71 7.65 (5.45) (4.10) 2.98 ------- ------- ------- -------- ------- -------- Total From Investment Operations.... .50 3.97 7.87 (5.28) (3.96) 3.13 Dividends and Distributions Dividends from Net Investment Income... - (.26) (.20) (.17) (.14) (.14) Distributions from Realized Gains...... - - - - (.24) (3.46) Dividends in Excess of Net Investment Income................... - - - - -(4) - Return of Capital..................... - (.01) (.01) (.03) - - ------- ------- ------- -------- ------- -------- Total Dividends and Distributions... - (.27) (.21) (.20) (.38) (3.60) ------- ------- ------- -------- ------- -------- Net Asset Value, End of Period.......... $ 37.37 $ 36.87 $ 33.17 $ 25.51 $ 30.99 $ 35.33 ======= ======= ======= ======== ======= ======== Total Return(1)......................... 1.36% 11.97% 30.90% (17.06)% (11.17)% 9.33% Ratios/Supplemental Data Net Assets, End of Period (000,000 omitted)................... $7,231 $6,660 $5,978 $4,346 $5,565 $5,707 Ratio of Expenses to Average Net Assets .90%* .92% .94%(3) .94%(3) .94%(3) .92% Ratio of Net Investment Income to Average Net Assets.................. .96%* .76% .80% .61% .45% .52% Portfolio Turnover Rate(2)............. -(5) 3% 8% 19% 20% 22%
(1) Assumes hypothetical initial investment on the business day before the first day of the fiscal period with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. (2) The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. (3) Ratio of expenses to average net assets after the reduction of expenses paid indirectly was .93% for 2003, 2002, and 2001. (4) Less than $0.005 per share. (5) Less than 1%. * Annualized SEE NOTES TO FINANCIAL STATEMENTS 36 SELECTED FUNDS FINANCIAL HIGHLIGHTS SELECTED AMERICAN SHARES, INC. ================================================================================ The following financial information represents selected data for each share of capital stock outstanding throughout each period:
CLASS D SIX MONTHS MAY 3, 2004 ENDED (INCEPTION OF JUNE 30, 2005 CLASS) THROUGH (UNAUDITED) DECEMBER 31, 2004 ----------- ----------------- Net Asset Value, Beginning of Period................. $ 36.86 $ 34.12 ------- ------- Income From Investment Operations Net Investment Income............................... .23(3) .18 Net Realized and Unrealized Gains................... .32 2.91 ------- ------- Total From Investment Operations................. .55 3.09 ------- ------- Dividends and Distributions Dividends from Net Investment Income................ - (.34) Return of Capital.................................. - (.01) ------- ------- Total Dividends and Distributions................ - (.35) ------- ------- Net Asset Value, End of Period....................... $ 37.41 $ 36.86 ======= ======= Total Return(1)...................................... 1.49% 9.08% Ratios/Supplemental Data Net Assets, End of Period (000,000 omitted)................................ $972 $681 Ratio of Expenses to Average Net Assets............. .61%* .65%* Ratio of Net Investment Income to Average Net Assets............................... 1.25%* 1.10%* Portfolio Turnover Rate(2).......................... -(4) 3%
(1) Assumes hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. (2) The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. (3) Per share calculations were based on average shares outstanding for the period. (4) Less than 1%. * Annualized SEE NOTES TO FINANCIAL STATEMENTS 37 SELECTED FUNDS FINANCIAL HIGHLIGHTS SELECTED SPECIAL SHARES, INC. ================================================================================ The following financial information represents selected data for each share of capital stock outstanding throughout each period: CLASS S
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, 2005 ------------------------------------------------------------ (UNAUDITED) 2004 2003 2002 2001 2000 ----------- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period..... $ 12.44 $ 11.70 $ 8.61 $ 10.50 $ 13.68 $ 16.17 ------- ------- ------- ------- ------- ------- Income (Loss) From Investment Operations Net Investment Income (Loss)........... -(4) .05 (.04) (.04) (.02) -(4) Net Realized and Unrealized Gains (Losses)....................... .15 1.26 3.60 (1.81) (1.95) (.25) ------- ------- ------- ------- ------- ------- Total From Investment Operations..... .15 1.31 3.56 (1.85) (1.97) (.25) Dividends and Distributions Dividends from Net Investment Income.... - (.04) - - - - Distributions from Realized Gains....... - (.53) (.47) (.04) (1.21) (2.24) ------- ------- ------- ------- ------- ------- Total Dividends and Distributions.... - (.57) (.47) (.04) (1.21) (2.24) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period........... $ 12.59 $ 12.44 $ 11.70 $ 8.61 $ 10.50 $ 13.68 ======= ======= ======= ======= ======= ======= Total Return(1).......................... 1.21% 11.34% 41.40% (17.62)% (14.41)% (1.10)% Net Assets, End of Period (000 omitted). $91,213 $90,536 $95,653 $59,762 $73,092 $95,222 Ratio of Expenses to Average Net Assets. 1.16%* 1.17% 1.21% 1.17%(3) 1.15%(3) 1.15% Ratio of Net Investment Income (Loss) to Average Net Assets................... .04%* .37% (.39)% (.46)% (.20)% (.25)% Portfolio Turnover Rate(2).............. 33% 30% 46% 46% 117% 35%
(1) Assumes hypothetical initial investment on the business day before the first day of the fiscal with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. (2) The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. (3) Had the Adviser not absorbed certain expenses, the ratio of expenses to average net assets for 2002 and 2001 would have been 1.21% and 1.18%, respectively. (4) Less than $0.005 per share. * Annualized SEE NOTES TO FINANCIAL STATEMENTS 38 SELECTED FUNDS FINANCIAL HIGHLIGHTS SELECTED SPECIAL SHARES, INC. ================================================================================ The following financial information represents selected data for each share of capital stock outstanding throughout each period:
CLASS D SIX MONTHS MAY 3, 2004 ENDED (INCEPTION OF JUNE 30, 2005 CLASS) THROUGH (UNAUDITED) DECEMBER 31, 2004 ----------- ----------------- Net Asset Value, Beginning of Period............... $ 12.42 $ 11.97 ------- ------- Income From Investment Operations Net Investment Income............................ .02(3) .05 Net Realized and Unrealized Gains................ .16 1.00 ------- ------- Total From Investment Operations............... .18 1.05 ------- ------- Dividends and Distributions Dividends from Net Investment Income.............. - (.07) Distributions from Realized Gains................. - (.53) ------- ------- Total Dividends and Distributions.............. - (.60) ------- ------- Net Asset Value, End of Period..................... $ 12.60 $ 12.42 ======= ======= Total Return(1).................................... 1.45% 8.91% Net Assets, End of Period (000 omitted)........... $21,483 $19,505 Ratio of Expenses to Average Net Assets........... .87%* .91%* Ratio of Net Investment Income to Average Net Assets............................. .33%* .86%* Portfolio Turnover Rate(2)........................ 33% 30%
(1) Assumes hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. (2) The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. (3) Per share calculations were based on average shares outstanding for the period. * Annualized SEE NOTES TO FINANCIAL STATEMENTS 39 SELECTED FUNDS FINANCIAL HIGHLIGHTS SELECTED DAILY GOVERNMENT FUND ================================================================================ The following financial information represents selected data for each share of capital stock outstanding throughout each period: CLASS S
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, 2005 ------------------------------------------------------------ (UNAUDITED) 2004 2003 2002 2001 2000 ----------- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income.................. .010 .007 .005 .013 .037 .056 Dividends and Distributions Dividends from Net Investment Income... (.010) (.007) (.005) (.013) (.037) (.056) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period.......... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 ======= ======= ======= ======= ======= ======= Total Return(1)......................... 0.99% 0.73% 0.54% 1.32% 3.73% 5.80% Ratios/Supplemental Data Net Assets, End of Period (000 omitted) $105,336 $106,643 $112,853 $116,187 $112,380 $130,126 Ratio of Expenses to Average Net Assets .70%* .68% .67% .67% .66% .67% Ratio of Net Investment Income to Average Net Assets............... 1.98%* .72% .54% 1.30% 3.73% 5.68%
(1) Assumes hypothetical initial investment on the business day before the first day of the fiscal period with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. * Annualized SEE NOTES TO FINANCIAL STATEMENTS 40 SELECTED FUNDS FINANCIAL HIGHLIGHTS SELECTED DAILY GOVERNMENT FUND ================================================================================ The following financial information represents selected data for each share of capital stock outstanding throughout each period: CLASS D
SIX MONTHS MAY 3, 2004 ENDED (INCEPTION OF JUNE 30, 2005 CLASS) THROUGH (UNAUDITED) DECEMBER 31, 2004 ----------- ----------------- Net Asset Value, Beginning of Period................. $ 1.000 $ 1.000 ------- ------- Income From Investment Operations Net Investment Income............................... .011 .007 Dividends and Distributions Dividends from Net Investment Income................ (.011) (.007) ------- ------- Net Asset Value, End of Period....................... $ 1.000 $ 1.000 ======= ======= Total Return(1)...................................... 1.09% 0.74% Ratios/Supplemental Data Net Assets, End of Period (000 omitted)............ $4,864 $4,963 Ratio of Expenses to Average Net Assets............ .55%* .44%* Ratio of Net Investment Income to Average Net Assets............................ 2.13%* 1.21%*
(1) Assumes hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. * Annualized SEE NOTES TO FINANCIAL STATEMENTS 41 SELECTED FUNDS FUND INFORMATION ================================================================================ PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES The Funds has adopted Portfolio Proxy Voting Policies and Procedures under which the Funds vote proxies relating to securities held by the Funds. A description of the Funds' Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Funds toll-free at 1-800-243-1575, (ii) on the Funds' website at www.selectedfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Funds are required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Funds' Form N-PX filing is available (i) without charge, upon request, by calling the Funds toll-free at 1-800-243-1575, (ii) on the Funds' website at www.selectedfunds.com, and (iii) on the SEC's website at www.sec.gov. FORM N-Q The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds' Form N-Q is available without charge upon request by calling 1-800-243-1575 or on the Funds' website at www.selectedfunds.com or on the SEC's website at www.sec.gov. The Funds' Form N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC, and that information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 42 SELECTED FUNDS DIRECTOR APPROVAL OF ADVISORY AGREEMENTS ================================================================================ PROCESS OF ANNUAL REVIEW The Board of Directors of the Selected Funds oversees the management of each Selected Fund and, as required by law, determines annually whether to approve the continuance of each Selected Fund's advisory agreement with Davis Selected Advisers, L.P. and sub-advisory agreement with Davis Selected Advisers-NY, Inc. (jointly "Davis Selected Advisers, L.P." and "Advisory Agreements"). As a part of this process the Independent Directors, with the assistance of counsel for the Independent Directors, prepares questions which it submits to Davis Selected Advisers, L.P. in anticipation of the annual contract review. In the April 2005 board meeting, the Independent Directors reviewed and evaluated all information which they deemed reasonably necessary in the circumstances. Upon completion of this review, the Independent Directors recommended that the full Board of Directors approve the continuance of the Advisory Agreements. REASONS THE INDEPENDENT DIRECTORS APPROVED CONTINUATION OF THE ADVISORY AGREEMENTS The Independent Directors determinations were based upon a comprehensive consideration of all information provided to the Independent Directors and were not the result of any single factor. The following facts and conclusions were important, but not exclusive, in the Independent Directors' recommendation to renew the Advisory Agreements for each of the Selected Funds described below. The Independent Directors noted the importance of reviewing quantitative measures, but also recognize that qualitative factors, some of which are mentioned below, could be equally or more important in assessing whether Selected Fund shareholders have been, or are likely to be, well served by the renewal of the management contract. They noted both the value and shortcomings of purely quantitative measures, including the data provided by independent service providers, and concluded that while such measures and data can inform, they should not supersede the judgment of the Independent Directors who take many factors, including those listed below, into consideration in representing the shareholders of Selected Funds. In connection with reviewing comparative performance information, the Independent Directors generally give weight to longer-term measurements. The Independent Directors believe that shareholders of Selected Funds should, and will, expect Davis Selected Advisers, L.P. to employ a disciplined, company specific, research driven investment philosophy. The Independent Directors concluded that the willingness of Davis Selected Advisers, L.P. and related persons to invest a substantial amount of their own money alongside and on the same terms as other shareholders in the Selected Funds demonstrates a good alignment of interest between Davis Selected Advisers, L.P. and Selected Fund shareholders. The Independent Directors recognized Davis Selected Advisers, L.P.'s (a) efforts to minimize transaction costs by generally having a long-term time horizon and low portfolio turnover; (b) focus on tax efficiency; (c) record of generally producing satisfactory after tax results over the longer-term; (d) efforts towards fostering healthy investor behavior by, among other things, providing informative and substantial educational material; and (e) efforts to promote shareholder interests by actively speaking out on corporate governance issues. 43 SELECTED FUNDS DIRECTOR APPROVAL OF ADVISORY AGREEMENTS - (Continued) ================================================================================ REASONS THE INDEPENDENT DIRECTORS APPROVED CONTINUATION OF THE ADVISORY AGREEMENTS - (CONTINUED) The Independent Directors also noted that Davis Selected Advisers, L.P. provides a number of services to the Selected Funds in addition to investment management. Non-investment management services provided by Davis Selected Advisers, L.P. to the Selected Funds include (a) extensive customer services to Fund shareholders; (b) responsibility for complying with legal duties and regulatory obligations; and (c) responsibility for general administrative and business services. Davis Selected Advisers, L.P. is reimbursed a portion of its costs in providing some, but not all, of these services. The Independent Directors reviewed (a) comparative fee and expense information for competitive funds, as selected and analyzed by a nationally recognized independent service provider; (b) information regarding fees charged by Davis Selected Advisers, L.P. to other advisory clients, including funds which it sub-advises and private accounts, as well as the differences in the services provided to such other clients; and (c) the fee schedules of the various Selected Funds, and their two classes of shares, including an assessment of competitive fee schedules. The Independent Directors reviewed the profitability of each Selected Fund to Davis Selected Advisers, L.P. The Independent Directors considered various potential benefits that Davis Selected Advisers, L.P. may receive in connection with the services it provides under the Advisory Agreements with each Selected Fund, including a review of portfolio brokerage practices. The Independent Directors noted that Davis Selected Advisers, L.P. does not use client commissions to pay for publications that are available to the general public or third-party research services. SELECTED AMERICAN SHARES ------------------------ The Independent Directors noted that Selected American Shares out-performed its benchmark, the Standard & Poor's 500(R) Index, and exceeded the average performance of its peer group, as determined by an independent service provider, over the longer-term investment horizons. The Independent Directors considered the expense ratio for Selected American Shares and concluded that it is reasonable and competitive with the range of average expense ratios of its peer group as determined by an independent service provider. SELECTED SPECIAL SHARES ----------------------- The Independent Directors noted that Selected Special Shares out-performed its benchmark, the Dow Jones Wilshire 5000 Index, over longer-term investment horizons, but under-performed the Index over the one-year investment period. Selected Special Shares exceeded the average performance of its peer group, as determined by an independent service provider, over the longer-term investment horizons. The Independent Directors considered the expense ratio for Selected Special Shares and concluded that it is reasonable and competitive with the range of average expense ratios of its peer group as determined by an independent service provider. 44 SELECTED FUNDS DIRECTOR APPROVAL OF ADVISORY AGREEMENTS - (Continued) ================================================================================ SELECTED DAILY GOVERNMENT FUND ------------------------------ The Independent Directors noted that Selected Daily Government Fund exceeded the average performance of its peer group, as determined by an independent service provider, over the shorter-term investment horizons. Selected Daily Government Fund approximately equaled the average performance of its peer group over the longer-term investment horizon. The Independent Directors considered the expense ratio for Selected Daily Government Fund and concluded that it is reasonable and competitive with the range of average expense ratios of its peer group as determined by an independent service provider. APPROVAL OF ADVISORY AGREEMENTS ------------------------------- After their review of all factors, the Independent Directors determined that the advisory fee for each Selected Fund is reasonable in light of the nature, quality and extent of the services being provided to each Fund, the costs incurred by Davis Selected Advisers, L.P. in providing such service, and in comparison to the range of the average advisory fees of its peer group as determined by an independent service provider. The Independent Directors considered the advisory fee schedule for each Selected Fund and concluded that it represents an appropriate sharing between Fund shareholders and Davis Selected Advisers, L.P. of such economies of scale as may exist in the management of each Fund at current asset levels. The Independent Directors therefore recommended continuation of the advisory agreements. 45 SELECTED FUNDS 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706 ================================================================================ DIRECTORS For the purposes of their service as directors to the Selected Funds, the business address for each of the directors is 2949 E. Elvira Road, Suite 101, Tucson, AZ 85706. Each Director serves until retirement, resignation, death, or removal. Directors must retire from the Board of Directors and cease being a Director at the close of business on the last day of the calendar year in which the Director attains age 75.
TERM OF NUMBER OF OFFICE AND PORTFOLIOS IN LENGTH OF FUND COMPLEX OTHER POSITION(S) TIME PRINCIPAL OCCUPATION(S) OVERSEEN DIRECTORSHIPS NAME AND AGE HELD WITH FUND SERVED DURING PAST FIVE YEARS BY DIRECTOR HELD BY DIRECTOR ----------------------------------------------------------------------------------------------------------------- INDEPENDENT DIRECTORS WILLIAM P. BARR Director director Executive Vice President and 3 None (born 5/23/50) since 1994 General Counsel, Verizon (formerly GTE Corporation before it merged with Bell Atlantic) since July 1994; Attorney General of the United States from August 1991 to January 1993; Deputy Attorney General from May 1990 to August 1991; Assistant Attorney General from April 1989 to May 1990; Partner with the law firm of Shaw, Pittman, Potts & Trowbridge from 1984 to April 1989 and January 1993 to August 1994. FLOYD A. BROWN Director director Retired staff announcer and 3 None (born 11/5/30) since 1975 program host for WGN Radio and Television, Chicago, Illinois; sole proprietor of The Floyd Brown Co., Elgin, Illinois (advertising, media production and mass media marketing). JEROME E. HASS Director director Professor of Finance and 3 None (born 6/1/40) since 1997 Business Strategy, Johnson Graduate School of Management, Cornell University; Consultant, National Economic Research Associates; former Chief of Division of Economic Research of the Federal Power Commission and Special Assistant to James R. Schlesinger at the Executive Office of the President of the United States. KATHERINE L. Director director Former Chief Financial 3 None MACWILLIAMS since 1997 Officer, Coors Brewers (born 1/19/56) Limited; former Vice President, International Finance, Coors Brewing Company; former Treasurer, Coors Brewing Company and Adolph Coors Company; former Vice President of Capital Markets for UBS Securities in New York; former member of the Board of International Swaps and Derivatives Association, Inc.
46 SELECTED FUNDS 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706 ===============================================================================
TERM OF NUMBER OF OFFICE AND PORTFOLIOS IN LENGTH OF FUND COMPLEX OTHER POSITION(S) TIME PRINCIPAL OCCUPATION(S) OVERSEEN DIRECTORSHIPS NAME AND AGE HELD WITH FUND SERVED DURING PAST FIVE YEARS BY DIRECTOR HELD BY DIRECTOR --------------------------------------------------------------------------------------------------------------------- INDEPENDENT DIRECTORS - CONTINUED JAMES J. MCMONAGLE Director/ director Chairman of the Selected Funds 3 None (born 10/1/44) Chairman since 1990 Board of Directors; Of Counsel to Vorys, Sater, Seymour and Pease LLP (law firm); Formerly Senior Vice President and General Counsel of University Hospitals Health System, Inc. and University Hospitals of Cleveland from 1990 to 2002; Judge of the Court of Common Pleas, Cuyahoga County, Ohio, from 1976 to 1990. RICHARD O'BRIEN Director director Retired Corporate Economist 3 Director and past (born 9/12/45) since 1996 for Hewlett-Packard Company; President, Silicon former Chairman of the Valley Roundtable; Economic Advisory Council of Director, Family the California Chamber of Services Agency of Commerce. San Francisco. MARSHA WILLIAMS Director director Executive Vice President and 15 Director of the (born 3/28/51) since 1996 Chief Financial Officer of Davis Funds Equity Office Properties Trust (consisting of 12 (a real estate investment portfolios); trust); former Chief Director, Modine Administrative Officer of Manufacturing, Crate & Barrel (home Inc.(heat transfer furnishings retailer); former technology); Vice President and Treasurer, Director, Chicago Amoco Corporation (oil & gas Bridge & Iron company). Company, N.V. (industrial construction and engineering) INSIDE DIRECTORS* ANDREW A. DAVIS Director director President or Vice President of 15 Director of the Davis (born 6/25/63) since 1998 each Selected Fund and Davis Funds (consisting of Fund; President, Davis 12 portfolios). Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.
47 SELECTED FUNDS 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706 ================================================================================ DIRECTORS - (CONTINUED)
TERM OF NUMBER OF OFFICE AND PORTFOLIOS IN LENGTH OF FUND COMPLEX OTHER POSITION(S) TIME PRINCIPAL OCCUPATION(S) OVERSEEN DIRECTORSHIPS NAME AND AGE HELD WITH FUND SERVED DURING PAST FIVE YEARS BY DIRECTOR HELD BY DIRECTOR ----------------------------------------------------------------------------------------------------------------- INSIDE DIRECTORS* - CONTINUED CHRISTOPHER C. Director director Chief Executive Officer, 15 Director of the DAVIS since 1998 President or Vice President of Davis Funds (born 7/13/65) each Selected Fund and Davis (consisting of 12 Fund; Chairman and Chief portfolios). Executive Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser, including sole member of the Adviser's general partner, Davis Investments, LLC; Employee of Shelby Cullom Davis & Co., a registered broker/dealer.
* Andrew A. Davis and Christopher C. Davis own partnership units (directly, indirectly or both) of the Adviser and are considered to be "interested persons" of the Funds as defined in the Investment Company Act of 1940. Andrew A. Davis and Christopher C. Davis are brothers. 48 (This page has been left blank intentionally.) SELECTED FUNDS 2949 East Elvira Road, Tucson, Arizona 85706 ================================================================================ DIRECTORS OFFICERS William P. Barr James J. McMonagle Floyd A. Brown Chairman Andrew A. Davis Christopher C. Davis Christopher C. Davis President Jerome Hass Andrew A. Davis James J. McMonagle Vice President Katherine L. MacWilliams Kenneth C. Eich Richard O'Brien Executive Vice President & Marsha Williams Principal Executive Officer Sharra L. Reed Vice President & Chief Compliance Officer Douglas A. Haines Vice President & Principal Accounting Officer Thomas D. Tays Vice President & Secretary Arthur Don Assistant Secretary INVESTMENT ADVISER Davis Selected Advisers, L.P 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706 (800) 243-1575 DISTRIBUTOR Davis Distributors, LLC 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706 TRANSFER AGENT & CUSTODIAN State Street Bank and Trust Company c/o Selected Funds P.O. Box 8243 Boston, Massachusetts 02266-8243 AUDITORS KPMG LLP 707 Seventeenth Street, Suite 2700 Denver, Colorado 80202 COUNSEL Seyfarth Shaw LLP 55 East Monroe Street, Suite 4200 Chicago, Illinois 60603-5803 ================================================================================ FOR MORE INFORMATION ABOUT THE SELECTED FUNDS, INCLUDING MANAGEMENT FEE, CHARGES AND EXPENSES, SEE THE CURRENT PROSPECTUS WHICH MUST PRECEDE OR ACCOMPANY THIS REPORT. THE FUNDS' STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION ABOUT THE FUNDS' DIRECTORS AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY CALLING 1-800-243-1575 OR ON THE FUNDS' WEBSITE AT WWW.SELECTEDFUNDS.COM. QUARTERLY FACT SHEETS ARE AVAILABLE ON THE FUNDS' WEBSITE AT WWW.SELECTEDFUNDS.COM. ================================================================================ INVESTMENT ADVISER Davis Selected Advisers, L.P. 2949 East Elvira Road, Suite 101 Tucson, AZ 85706 DISTRIBUTOR Davis Distributors, LLC 2949 East Elvira Road, Suite 101 Tucson, AZ 85706 TRANSFER AGENT AND CUSTODIAN State Street Bank & Trust Company c/o Selected Funds P.O. Box 8243 Boston, MA 02266-8243 LEGAL COUNSEL Seyfarth Shaw LLP 55 East Monroe Street, Suite 4200 Chicago, IL 60603-5803 AUDITORS KPMG, LLP 707 Seventeenth Street, Suite 2700 Denver, CO 80202 800-243-1575 selectedfunds.com Item 2. Code of Ethics - Not Applicable Item 3. Audit Committee Financial Expert - Not Applicable Item 4. Principal Accountant Fees and Services - Not Applicable Item 5. Audit Committee of Listed Registrants - Not Applicable Item 6. Schedule of Investments - Not Applicable Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies - Not Applicable Item 8. Portfolio Managers of Closed-End Management Investment Companies - Not Applicable Item 9. Purchase of Equity Securities by Closed-End Mangement Investment Company and Affiliated Purchases - Not Applicable Item 10. Submission of Matters to a Vote of Security Holders. There have been no changes to the procedures by which shareholders may recommend nominees to the registrant's Board of Trustees. Item 11. Controls and Procedures. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective as of a date within 90 days of the filing date of this report. (b) There have been no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls. Item 12. Exhibits EX-99.CERT - Section 302 Certification EX-99.906 CERT - Section 906 Certification Signatures Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on it behalf by the undersigned, thereunto duly authorized. SELECTED AMERICAN SHARES, INC. By /s/ Kenneth C. Eich Kenneth C. Eich Principal Executive Officer Date: October 17, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ Kenneth C. Eich Kenneth C. Eich Principal Executive Officer Date: October 17, 2005 By /s/ Douglas A. Haines Douglas A. Haines Principal Financial officer Date: October 17, 2005