<PAGE>
THE
SELECTED FUNDS
SEMI-ANNUAL
REPORT
JUNE 30, 1999
[LOGO]
SELECTED FUNDS
<PAGE>
SELECTED FUNDS
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
Dear Fellow Shareholder,
As investors of your money and ours, we constantly have to strike a rational
balance between blind optimism and fear. On days when the market is advancing,
we inevitably wish we had more money in the stocks that are going up the
fastest. And on days when the market is declining, we become fearful about the
stocks we own that are going down the most.
To help us control these powerful emotions, we have developed a discipline over
the years that focuses on buying growth companies at a value price and holding
them for the long haul. Normally, we do not buy the fastest growing companies,
in spite of our optimism, because of our fear that when markets turn down these
stocks potentially have the farthest to fall. Similarly, we don't buy
"non-growth" value companies just because they are cheap since we always want to
aim for growth in our portfolios.
In effect, we think growth and value are joined at the hip. No one would really
ever want to own a no-growth stock, but everyone wants to buy growth. Our
strategy is a compromise in that we try to buy decent growth at a value price.
In a sense, the world of investing is a world of making choices, and the stock
market is not unlike the supermarket. We know when we go into the supermarket
that we are going to buy something because we need to eat. Our task is to pick
from the wide variety of brands available, those particular food products that
will provide us with the right kind of bodily nourishment. Similarly, when the
stock market opens its doors, we are likely to buy something. Our job is to pick
from the diverse array of stocks available and buy only those that we think will
enhance our financial nourishment. In both instances, we want to stay within our
budget. What we are looking for as investors is growth on sale. Our stock
choices tend to be good quality merchandise offered at a fair price. We are not
interested in buying premium-priced companies or bargain-basement specials.
As we move through the last year of this millennium with the stock market in
uncharted territory, we know that we will encounter numerous crosscurrents and
variables that could affect corporate earnings. These range from uncertainties
regarding the Presidential election in the year 2000 to the possibility of a
worldwide economic recovery that could rekindle inflation. In addition, we live
in an era of rapid technological change, which is reshaping the economic
landscape and creating both new opportunities and risks for a wide variety of
industries and companies.
In such an environment, we recognize that we will continue to be buffeted by the
conflicting emotions driven by blind optimism and fear. But we are not going to
turn our backs on stocks. As long-term investors, we intend to remain true to
our investment discipline of using intensive research to buy well-managed growth
companies at a value price. We are confident that this discipline will guide us
through whatever financial storms may come our way, providing great
opportunities for compounding of wealth over time.(1)
Sincerely,
/s/ James J. McMonagle /s/ Shelby M.C. Davis
James J. McMonagle Shelby M.C. Davis
Chairman Chief Investment Officer
August 16, 1999
<PAGE>
SELECTED FUNDS
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS
SELECTED AMERICAN SHARES, INC.
PERFORMANCE OVERVIEW
o Selected American Shares American shares generated a total return of 16.09%
for the six months ended June 30, 1999,(2) outpacing the average return of
10.93% for the 922 growth and income funds tracked by Lipper Analytical
Services(3) and the 12.38% return for the Standard & Poor's 500 Index.(4)
o The Fund provided a total return of 20.90% for the one-year period ended
June 30, 1999 versus an average return of 14.48% for the 843 growth and
income funds covered by Lipper and a return of 22.76% for the S&P 500.
o From May 1, 1993 through June 30, 1999, the approximate period that Davis
Selected Advisers has managed Selected American Shares, it ranked 10 out of
253 funds in the Lipper category, providing an average annual return of
22.55%.(5)
o The Fund holds Morningstar's highest ***** (five-star) rating overall.(6)
According to Morningstar, "This fund's managers have quietly outmaneuvered
their peers.... By picking good stocks and then letting them ride, they've
trounced most large-value funds.... In short, this fund remains a
keeper." (7)
AN INTERVIEW WITH CHRISTOPHER C. DAVIS AND KENNETH CHARLES FEINBERG, PORTFOLIO
MANAGERS
Q. What opportunities are you finding today?
A. Ken and I are satisfied that the performance of Selected American Shares has
gotten off to a good start so far in 1999, but we are well aware that we have
ground to make up after last year's disappointing results. Both of us are
pleased with the quality of the companies that make up the portfolio and pleased
that we were able to opportunistically add to some of our favorites during the
chaos of the fall of 1998.
The greatest opportunity in investing comes from finding a great business at a
great price. Such misvaluations abound in a bear market but are correspondingly
scarce in a bull market. In the short sell-off of last fall we were able to find
some great companies trading at cheap prices. The most notable example is
American Express, which is currently one of our largest holdings and which we
added to significantly during that period of short-term concern.(8)
The opportunities that we're finding in 1999 do not fall into the wonderful
category of great companies selling at great prices, but instead seem to be in
two less exciting categories. The first is great companies that have come under
a minor cloud, creating perhaps a slight undervaluation, not a tremendously
cheap valuation. For example, although Gillette is undoubtedly a great company
that has declined over 30% from its high, the stock is still not outstandingly
cheap on a valuation basis.
The second category is reasonably good--but not outstanding--businesses that are
under a more severe cloud that makes them very cheap. For example, we added to
our holding of Waste Management when it fell more than 30% from its high. The
stock currently sells at about 12 times earnings--less than half the market
multiple.(8)
We have also made mistakes this year and it is incumbent upon us to mention
these. Most notably, Philip Morris, after suffering its first adverse jury
judgments in its many years of litigation, has declined almost 30% thus far in
1999. We had been optimistic that the large settlements previously negotiated
with the states' attorneys general would help put the most dangerous litigation
behind the company. This has not been the case and, although we expect these
adverse verdicts to be reduced or reversed on appeal, we certainly did not
anticipate them in the first place.
2
<PAGE>
SELECTED FUNDS
P.O. Box 1688, 124 East Marcy
Street Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
AN INTERVIEW WITH CHRISTOPHER C. DAVIS AND KENNETH CHARLES FEINBERG, PORTFOLIO
MANAGERS - CONTINUED
Q. When do you sell great companies?
A. Our portfolio continues to benefit from increasing valuations for all
technology companies--most notably IBM, Hewlett-Packard and Texas Instruments,
which are up, 40%, 60% and almost 70%, respectively, year to date.(8) Yet the
prospects of these companies have also improved dramatically with the growth of
the Internet. Although our valuation discipline prevents us from owning most of
the hot new Internet stocks we all read about, companies such as IBM,
Hewlett-Packard and Texas Instruments benefit greatly from the Internet
revolution by selling the electronic equivalent of picks and shovels to the
prospectors in this new gold rush.
Given the strong performance of many of our companies, particularly in the
technology area, it is always important to consider at what price businesses
should be sold from the portfolio. Unfortunately, this is more of an art than a
science. A by product of a rising market is that all sales look like mistakes
and all purchases look smart.
Our estimate of fair value for many of the securities we own is very broad, as
it should be based on the uncertainties in any operating business. As a result,
there is no predetermined price at which we would sell all of our position in
any given company if the company's underlying fundamentals had not changed.
However, if our companies were to advance to prices that we considered
irrational relative to other investment alternatives, we would increasingly have
to consider sales. Importantly, Ken and I do not think of ourselves as market
timers. Therefore, we must constantly evaluate the owner-earnings and growth
prospects of the companies we own versus both the risk-free rate and the present
value of the earnings and growth prospects of other companies in the market.
Using this criterion, both of us remain comfortable with most of our top
holdings, although we are cognizant of the very high levels of today's
valuations.
Shelby Cullom Davis once said that you make most of your money in bear markets.
You just don't realize it at the time. This is because you are able to buy great
companies at great prices. There is, however, an unspoken corollary that one can
lose a lot of money in a bull market and not realize it at the time by buying
second-rate businesses at high prices. It is this risk that we and all investors
must focus on in these golden times.
SELECTED SPECIAL SHARES
PERFORMANCE OVERVIEW
o Selected Special Shares, which crossed the $100 million asset mark in June,
provided a return of 6.58% for the six months ended June 30, 1999.(2) This
compares with returns of 6.75% for the Wilshire Mid Cap Company Growth Index
(4) and 9.42% for the Lipper Small Company Funds Index.(4)
o Over the latest one, three and five years, the Fund easily outpaced its
benchmarks, generating average annual returns of 11.68%, 20.44% and 21.39%,
respectively. Over the same time periods, the Wilshire Mid Cap Company
Growth Index generated returns of 2.36%, 9.70% and 17.29%, respectively, and
the Lipper Small Company Funds Index produced returns of 1.92%, 7.77% and
15.44%, respectively.
o For the second year in a row, the Fund was featured in an exclusive
Barron's/Value Line listing of the 100 top mutual fund managers dubbed "Best
of the Best." (9)
o According to Morningstar, "Selected Special Shares' long-range vision is
paying off.... Since she [Elizabeth Bramwell] took the reins in 1994...it
has trounced its average rival by better than 300 basis points per year and
posted moderate risk scores for its category." (10)
3
<PAGE>
SELECTED FUNDS
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
AN INTERVIEW WITH ELIZABETH R. BRAMWELL, PORTFOLIO MANAGER
Q. Could you summarize the performance of the Fund so far in 1999?
A. The market began the year with large-cap growth stocks driving the market
higher and began to broaden its advance towards the end of the first half to
encompass small and mid-cap stocks in a wide range of industries--including
contract manufacturing, semiconductor equipment, multimedia, furniture and
retailing. Strong performers in the first six months of 1999 came from many
sectors and included: Charles Schwab, Tiffany, Tandy, Lexmark, Labor Ready,
Kohl's, Kansas City Southern, Ethan Allen, Leggett & Platt and Flextronics.(8)
The Fund's performance was restrained in some ways because, as committed
long-term investors, we do not sell companies that we believe have positive
long-term outlooks due to lagging short-term returns. For example, Computer
Sciences, the Fund's largest holding and one which we have held since January
1996, had a rough first quarter--falling from 64 at the end of December to 55 at
the end of the March. Computer Sciences is an outsourcing firm that provides
information technology services. We like the company because it has expanding
recurring revenues. In addition, with a price/earnings (P/E) multiple of around
22 based on year 2000 estimated earnings, the company is selling at parity with
its projected 22% earnings growth rate and at less than the overall market
multiple. So we did not trade out of the stock despite its first quarter decline
and were rewarded for our conviction when the shares subsequently began to rally
in the second quarter, rising from 55 to 69 by the end of June.(8)
Similarly, two of the Fund's holdings, drug distributor Cardinal Health and drug
store chain CVS, tailed off from February-May because of concerns about proposed
health-care reform, which could possibly place price controls on the
pharmaceutical industry. But these stocks recovered nicely in June and, in our
opinion, continue to have favorable fundamental outlooks.(8)
Another company whose stock price came under pressure during the period is
Robert Half, an outsourcing firm that provides accounting staff, which has
suffered from an intermediate-term shortage of accountants to place. Not all
employee-staffing firms did poorly, however. Labor Ready, which places manual
labor, achieved substantial revenue and earnings gains and the stock rose 69% in
the first half.(8)
We run the Fund for the long term rather than chasing quarterly performance.
This long-term approach also results in relatively low turnover, which promotes
tax efficiency for our shareholders. Our 1998 turnover approximated 40%, which
means an average holding period of more than two years. By way of comparison,
Morningstar reports that the turnover ratio of the average Mid-cap growth fund
is 131%, which means an average holding period of just over 9 months.(11)
Not all holdings will do well in every quarter since stock prices do not move in
straight lines. But we develop conviction about the stocks we hold because we
research the businesses thoroughly before we invest and follow them closely
thereafter. We prefer to ride through the quarters when the companies we own may
be under unwarranted pressure relative to their long-term outlooks, and perhaps
even add to our positions when we believe in their future growth potential.
4
<PAGE>
SELECTED FUNDS
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
AN INTERVIEW WITH ELIZABETH R. BRAMWELL, PORTFOLIO MANAGER - CONTINUED
Q. What are some of your favorite investment themes?
A. It's become much more of a stock picker's market, which we think should work
to our advantage going forward. Industry sectors that we currently find
attractive include communications, media, retailing, outsourcing and electronic
commerce.(8)
We are looking for companies that use the Internet well rather than investing
directly in high-flying Internet stocks where execution and valuation risk are
inherently greater. Overall, the Internet is helping people work smarter and
more effectively. Just think what efficiencies voice mail has brought to both
business and home consumers, and the possibilities for increased efficiency with
the Internet are substantially greater. Examples of companies benefiting from
the Internet include printer manufacturer Lexmark, a company that is getting a
boost from the rapidly expanding use of e-mail, and Paychex, a payroll
processing company. And Charles Schwab, of course, has done a phenomenal job
bringing online investing to the market.(8)
Providing solutions for customers is a major theme that a company like Computer
Sciences is well positioned to capitalize on. In addition, the outsourcing trend
has carried over into manufacturing. That's why we like Flextronics, which we
added to the portfolio in the fourth quarter of 1998, and Jabil Circuit, a new
holding in 1999--both of which are contract manufacturers in the semiconductor
industry. We also added Teradyne, a leader in the business of semiconductor
testing equipment, in the first quarter and Legato, in the data storage field,
in the second quarter.(8)
Asian markets appear to be rebounding, and evidence pointing to a synchronized
global recovery in the year 2000 is beginning to emerge. One Fund holding that
we believe will benefit from renewed growth in Asia is Molex, a component
manufacturer for a variety of electronic products, which derives about 40% of
its sales from Asia.(8)
Q. How has your strategy positioned the Fund to benefit from the current market
environment?
A. We invest on a stock-by-stock basis--looking at such factors as management
strength, consistency of earnings and valuations. The earnings growth rate on
the portfolio has been remarkably consistent and is currently about 23% based on
year 2000 earnings estimates. That is well above the 7%-10% growth rate
projected for the S&P 500. Yet the Fund sells at a lower P/E multiple based on
year 2000 earnings estimates than the S&P's approximate P/E multiple of 25 times
next year's earnings. Stock prices should move at least in line with earnings
growth over time, and with the Fund selling at a discount to the overall market,
there is also the opportunity for the Fund's P/E ratio to expand as well, giving
shareholders an enhanced investment return.(1)
SELECTED U.S. GOVERNMENT INCOME FUND
PERFORMANCE OVERVIEW
o The Selected U.S. Government Income Fund declined 2.02% for the six months
ended June 30, 1999(2) while the 126 funds included in Lipper Analytical
Services' intermediate U.S. government fund category fell 1.82% on
average.(3)
o For the one-year period ending on the same date, the Fund generated a total
return of 1.10% versus an average return of 2.29% for the 123 intermediate
U.S. government funds tracked by Lipper.
5
<PAGE>
SELECTED FUNDS
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
A NEW PORTFOLIO MANAGER EFFECTIVE AUGUST 1, 1999
Effective August 1, 1999, Creston A. King, Chartered Financial Analyst, has been
named the portfolio manager of the Selected U.S. Government Income Fund. Prior
to joining Davis Selected Advisers on June 30, 1999, he was a portfolio manager
for U.S. Global Investors, Inc. where he managed two Morningstar four-star bond
funds and a top-ranked money market fund. We are proud to offer the investment
capabilities of Mr. King to our shareholders.
Carolyn Spolidoro, the previous portfolio manager has retired. We would like to
express our appreciation to her for effectively serving our shareholders since
she joined Davis Selected Advisers in 1985.
AN INTERVIEW WITH CAROLYN SPOLIDORO, PORTFOLIO MANAGER
Q. What key factors influenced the Fund's performance?
A. In the first half of 1999, the bond market was gripped by concerns about
inflation and concerns that the Federal Reserve would tighten the money supply.
Although there were little or no signs of actual inflation, years of strong
economic growth have left a nagging sense among investors that inflation could
surge upward again and that the Fed may look to proactively control growth in
order to mitigate inflationary forces.
In May, the Fed changed its bias toward higher rates and then followed through
at the end of June by raising the target federal funds rate .25% to 5.0% in a
preemptive strike against inflation. The Fed indicated that it must be
particularly vigilant of the emergence or potential emergence of inflationary
pressures. The Fed surprised the market by changing its bias back to neutral
following the announcement of the rate hike--an indication that just one rate
change may be sufficient for now. However, the consensus among investors is that
the Fed's future course of action is not preordained. Signs that the economy is
continuing to power ahead could ultimately lead the Fed to reconsider its bias
and impose a second round of tightening.
Against this backdrop, the yield on 10-year U.S. Treasury bonds increased from
4.60% to 5.80% over the first half of the year while the bonds' total return
fell by more than 5%. The Selected U.S. Government Income Fund outperformed
10-year Treasuries because the Fund owns defensive positions in mortgage-backed
securities, which tend to decline less in an increasing interest rate
environment. At the same time, the Fund under-performed the average intermediate
U.S. government bond fund because it also holds positions in longer term U.S.
government agency securities that cannot be called in or redeemed by the issuer
before maturity. These securities are more sensitive to interest rate changes,
meaning that when interest rates increase and bond prices fall, they tend fall
in line with the market.
Our short-term under-performance was due in part to our fundamental investment
approach of maintaining a balanced portfolio. However, regrettably, in the first
quarter we had maneuvered the Fund to be a little more aggressive by making
changes that increased portfolio duration and decreased its exposure to calls.
This had the effect of increasing the portfolio's sensitivity to interest rate
moves. That turned out to be a mistake. When interest rates went up and bond
prices went down, we participated in that decline. In the second quarter, we
made very few changes in the portfolio because of concerns about further
interest rate hikes. Looking ahead, over the remainder of 1999, we do not
anticipate big changes in the interest rate environment or in the positioning of
the Fund.
6
<PAGE>
SELECTED FUNDS
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
AN INTERVIEW WITH CAROLYN SPOLIDORO, PORTFOLIO MANAGER - CONTINUED
Q. Could you explain the Fund's overall investment approach in a little more
detail?
A. Our strategy is to create a well-diversified portfolio holding many different
types of U.S. government securities with varying features. We try to buy
securities with a range of maturity dates, interest rates and call or prepayment
provisions because different kinds of securities react differently to interest
rate changes. In addition, agency securities tend to offer slightly higher
yields than comparable U.S. Treasury securities.
Currently approximately 47% of the portfolio is invested in mortgage-backed
securities, including pass-through securities and collateralized mortgage
obligations, and approximately 50% in callable and non-callable U.S. government
agency notes. The portfolio's duration is 5.1 years and its average life is 6.9
years.
We believe fixed-income investors should focus on a combination of risk and
return, not just on total return or yield. We hold a laddered portfolio of
securities with a fairly even distribution of maturities over the intermediate
range of the yield curve. This allows us to capture most of the yield and
potential return advantage of long-term bonds with potentially less risk. The
last six months have shown the advantage provided by owning a balanced
intermediate-term bond fund in a declining market as opposed to owning bonds
directly.
- -----------------------
This Semi-Annual Report is authorized for distribution only when accompanied
or preceded by a current prospectus of the Selected Funds which contains more
information about fees and expenses. Please read the prospectus carefully before
investing or sending money.
1 Neither the Davis Investment Discipline nor any investment discipline can
guarantee a profit.
2 Total return assumes reinvestment of dividends and capital gain
distributions. Past performance is not a guarantee of future results. Investment
return and principal value will vary so that, when redeemed, an investor's
shares may be worth more or less than when purchased. The following table lists
the average annual total returns for the periods ended June 30, 1999.
- --------------------------------------------------------------------------------
FUND NAME 1 YEAR 3 YEAR 5 YEAR 10 YEAR
- --------- ------ ------ ------ -------
- --------------------------------------------------------------------------------
Selected American Shares 20.90% 30.58% 27.49% 17.73%
- --------------------------------------------------------------------------------
Selected Special Shares 11.68% 20.44% 21.39% 14.17%
- --------------------------------------------------------------------------------
Selected U.S. Government Income 1.10% 5.18% 5.78% 6.32%
- --------------------------------------------------------------------------------
(3) Lipper Analytical Services' rankings and comparisons are based on total
returns unadjusted for commissions.
7
<PAGE>
SELECTED FUNDS
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
(4) The definitions of indices quoted in this semi-annual report appear below.
Investments cannot be made directly in any of these indices.
I. The S&P 500 Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The index is
adjusted for dividends, weighted towards stocks with large market
capitalizations, and represents approximately two-thirds of the total
market value of all domestic common stocks.
II. The Wilshire Mid Cap Company Growth Index is an unmanaged, market
capitalization-weighted index of companies with market capitalizations
ranging from $826 million to $3.0 billion and with growth characteristics
screened by sales growth, return on equity and dividend payout.
Investments cannot be made directly in the index.
III. The Lipper Small Company Funds Index is comprised of the 30 largest funds
that, by prospectus or portfolio practice, normally invest in companies
with market capitalizations of less than $1 billion at the time of
purchase. Funds in the index are equally weighted, and returns include the
reinvestment of all dividends and are net of expenses. Investments cannot
be made directly in the index.
(5) Lipper Analytical Services rankings are based on total returns without
adjustment for sales charges.
For the one, five and ten-year period ended June 30, 1999, Selected American
Shares was ranked as follows: 157 out of 843 funds, 9 out of 323 funds, and
18 out of 149 funds, respectively, in the Lipper "Growth and Income Funds"
category.
(6) Morningstar proprietary ratings reflect historical risk-adjusted performance
as of June 30, 1999. The ratings are subject to change every month. Morningstar
ratings are calculated from a fund's 3, 5 and 10-year average annual returns
(based on available track records) in excess of 90-day Treasury bill (T-bill)
returns, with appropriate fee adjustments and a risk factor that reflects fund
performance below 90-day T-bill returns. Ten percent of the funds in an
investment category receive five stars, the next 22.5% receive four stars, the
next 35% receive three stars, the next 22.5% receive two stars, and the last 10%
receive one star.
Selected American Shares received 5 stars for the three-year period rated
against 3043 Domestic Equity funds. For the five-year period it received 5
stars when rated against 1878 Domestic Equity funds. For the ten-year period
it received 4 stars when rated against 748 Domestic Equity funds.
(7) Source: Morningstar Mutual Funds, April 22, 1999.
(8) Portfolio holdings and portfolio manager opinions cited in this material are
current as of the date of this report, but are subject to change. See each
Fund's Schedule of Investments for a detailed list of portfolio holdings.
(9) Source: Barron's July 19, 1999. Barron's used Value Line to sort through
their data base of 6,000 equity funds, eliminating funds where the portfolio
manager has been managing a fund for less than three years, or which were
managed by more than two people. Narrow sector funds were also eliminated. Value
Line then identified how much value a manager added by subtracting points for
excess volatility and adding points for stable investment performance. The funds
with the 100 highest scores were listed in the article.
(10) Source: Morningstar Mutual Funds, January 22, 1999.
(11) Source: Morningstar Mutual Funds, July 21, 1999.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
8
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC.
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (NOTE 1)
===================================================================================================
<S> <C> <C>
COMMON STOCK - (97.29%)
ADVERTISING AGENCIES - (0.06%)
220,000 WPP Group PLC....................................................... $ 1,862,529
------------
AGRICULTURAL - (0.26%)
228,900 Monsanto Co......................................................... 9,027,244
------------
BANKS AND SAVINGS & LOAN ASSOCIATIONS - (11.03%)
940,834 Bank of America Corp................................................ 68,974,893
609,444 Bank One Corp....................................................... 36,300,008
153,800 Golden West Financial Corp.......................................... 15,072,400
145,000 UBS AG.............................................................. 43,257,042
1,425,302 U.S. Bancorp........................................................ 48,460,268
3,906,560 Wells Fargo Co...................................................... 167,005,440
------------
379,070,051
------------
BUILDING MATERIALS - (4.18%)
930,600 Martin Marietta Materials, Inc...................................... 54,905,400
2,582,400 Masco Corp.......................................................... 74,566,800
295,700 Vulcan Materials Co................................................. 14,267,525
------------
143,739,725
------------
CONSUMER PRODUCTS - (3.43%)
133,200 Colgate-Palmolive Co................................................ 13,153,500
370,000 Gillette Co......................................................... 15,170,000
2,225,000 Philip Morris Cos., Inc. ........................................... 89,417,188
------------
117,740,688
------------
DIVERSIFIED - (3.52%)
1,754 Berkshire Hathaway, Inc. - CL A*.................................... 120,850,600
16 Berkshire Hathaway, Inc. - CL B*.................................... 35,840
------------
120,886,440
------------
DIVERSIFIED MANUFACTURING - (1.27%)
460,000 Tyco International Ltd.............................................. 43,585,000
------------
ELECTRONICS - (7.60%)
708,000 Applied Materials, Inc.*............................................ 52,303,500
126,960 Koninklikjke Philips Electronics N.V................................ 12,807,090
558,750 Molex Inc........................................................... 20,603,906
1,210,000 Texas Instruments Inc............................................... 175,450,000
------------
261,164,496
------------
ENERGY - (1.71%)
174,900 Cooper Cameron Corp.*............................................... 6,482,231
1,496,200 Dover Corp.......................................................... 52,367,000
------------
58,849,231
------------
FINANCIAL - (15.41%)
1,491,500 American Express Co................................................. 194,081,438
</TABLE>
9
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - CONTINUED
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (NOTE 1)
==================================================================================================
<S> <C> <C>
COMMON STOCK - CONTINUED
FINANCIAL - CONTINUED
3,153,142 Citigroup, Inc...................................................... $149,774,245
1,100,000 Freddie Mac......................................................... 63,800,000
1,703,400 Household International, Inc........................................ 80,683,584
440,000 Providian Financial Corp............................................ 41,140,000
------------
529,479,267
------------
FOOD/BEVERAGE & RESTAURANT - (4.15%)
3,450,000 McDonald's Corp..................................................... 142,528,125
------------
HOTELS & MOTELS - (0.76%)
695,700 Marriott International, Inc......................................... 26,001,788
------------
INDUSTRIAL - (1.24%)
654,000 Sealed Air Corp.*................................................... 42,428,250
------------
INVESTMENT FIRMS - (3.93%)
50,000 Donaldson, Lufkin & Jenrette, Inc................................... 3,012,500
1,287,432 Morgan Stanley, Dean Witter, Discover & Co.......................... 131,961,780
------------
134,974,280
------------
LIFE INSURANCE - (1.39%)
20,000 Provident Companies, Inc............................................ 800,000
859,100 UNUM Corp........................................................... 47,035,725
------------
47,835,725
------------
PHARMACEUTICAL AND HEALTH CARE - (4.47%)
468,600 American Home Products Corp......................................... 26,944,500
166,000 Bristol-Myers Squibb Co............................................. 11,692,625
160,000 Merck & Co., Inc.................................................... 11,840,000
400,000 Pfizer Inc.......................................................... 43,900,000
895,600 SmithKline Beecham PLC - ADR........................................ 59,165,575
------------
153,542,700
------------
PROPERTY/CASUALTY INSURANCE - (10.04%)
1,165,028 The Allstate Corp................................................... 41,795,380
1,302,574 American International Group, Inc. (c).............................. 152,482,569
395,400 Chubb Corp.......................................................... 27,480,300
471,700 Progressive Corp. (Ohio)............................................ 68,396,500
732,200 Transatlantic Holdings, Inc......................................... 54,869,238
------------
345,023,987
------------
PUBLISHING - (2.79%)
173,400 Dow Jones & Co., Inc. (c)........................................... 9,201,038
483,300 Gannett Co., Inc.................................................... 34,495,538
286,000 Harcourt General, Inc............................................... 14,746,875
430,000 Tribune Co.......................................................... 37,463,750
------------
95,907,201
------------
</TABLE>
10
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - CONTINUED
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES/PRINCIPAL SECURITY (NOTE 1)
=============================================================================================================
<S> <C> <C>
COMMON STOCK - CONTINUED
REAL ESTATE - (2.92%)
77,000 Avalonbay Communities, Inc................................................... $ 2,849,000
1,451,194 Centerpoint Properties Corp. (e)............................................. 53,149,980
70,000 Centerpoint Properties Corp. Private (d)(e).................................. 2,499,656
488,000 Crescent Real Estate Equities Co............................................. 11,590,000
165,400 Mack-Cali Realty Corp........................................................ 5,117,063
713,800 Vornado Realty Trust......................................................... 25,206,063
-------------
100,411,762
-------------
TECHNOLOGY - (13.74%)
2,045,975 Hewlett-Packard Co........................................................... 205,620,488
600,000 Intel Corp................................................................... 35,662,500
1,430,000 International Business Machines Corp......................................... 184,827,500
960,000 Oracle Corp.*................................................................ 35,640,000
276,400 SAP AG (c)................................................................... 9,570,350
20,000 Unisys Corp.*................................................................ 778,750
-------------
472,099,588
-------------
TELECOMMUNICATIONS - (1.63%)
430,500 Globalstar Telecommunications Ltd.* (c)...................................... 9,955,313
1,186,200 Loral Space & Communications, Ltd.*.......................................... 21,351,600
260,000 Motorola, Inc................................................................ 24,635,000
-------------
55,941,913
-------------
WASTE MANAGEMENT SERVICES - (1.76%)
1,127,500 Waste Management, Inc........................................................ 60,603,125
-------------
Total Common Stock - (identified cost $1,805,912,298)................... 3,342,703,115
-------------
CONVERTIBLE PREFERRED STOCK - (0.87%)
230,000 Devon Financing Trust, $3.25, Ser. 144A Conv. Pfd. (b)....................... 13,915,000
25,000 Devon Financing Trust, $3.25, Conv. Pfd. (b)................................. 1,512,500
361,400 Rouse Co., $3.00, Conv. Pfd.................................................. 14,501,175
-------------
Total Convertible Preferred Stock - (identified cost $35,075,055)....... 29,928,675
-------------
PREFERRED STOCK - (0.70%)
60,700 SAP AG, Pfd (c) - (identified cost $21,261,639).............................. 24,246,887
-------------
SHORT TERM INVESTMENTS - (1.62%)
$27,785,000 State Street Bank and Trust Company Repurchase Agreement, 4.85%, 07/01/99,
dated 06/30/99, repurchase value $27,788,743 (collateralized by $28,850,000
par value Federal Home Loan Bank, 4.95%, 12/04/00, market value $28,621,277) 27,785,000
</TABLE>
11
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED AMERICAN SHARES, INC. - CONTINUED
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
PRINCIPAL SECURITY (NOTE 1)
=====================================================================================================================
SHORT TERM INVESTMENTS - CONTINUED
<S> <C> <C>
$27,785,000 State Street Bank and Trust Company Repurchase Agreement, 4.85%, 07/01/99,
dated 06/30/99, repurchase value $27,788,743 (collateralized by $28,455,000
par value Fannie Mae MTN, 5.10%, 09/25/00, market value $28,622,287)................. $ 27,785,000
--------------
Total Short Term Investments - (identified cost $55,570,000).................... 55,570,000
--------------
Total Investments - (100.48%) - (identified cost $1,917,818,992) - (a)............... 3,452,448,677
Liabilities Less Other Assets - (0.48%).............................................. (16,535,548)
--------------
Net Assets - (100%)............................................................. $3,435,913,129
==============
*Non-Income Producing Security
(a) Aggregate cost for Federal Income Tax purposes is $1,917,818,992. At June
30, 1999 unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation.............................................................. $1,550,033,768
Unrealized depreciation.............................................................. (15,404,083)
--------------
Net unrealized appreciation .................................................... $1,534,629,685
==============
</TABLE>
(b) These securities are subject to Rule 144A. The Board of Directors of the
Fund has determined that there is sufficient liquidity in these securities to
realize current valuations. These securities amounted to $15,427,500 and 0.45%
of the Fund's net assets as of June 30, 1999.
(c) Loaned security - See Note 7 of Notes to Financial Statements
(d) Restricted security - See Note 8 of Notes to Financial Statements.
(e) 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, 1999. The
aggregate fair value of the securities of affiliated companies held by the Fund
as of June 30, 1999 amounts to $55,649,636. Transactions during the period in
which the issuers were affiliates are as follows:
<TABLE>
<CAPTION>
Shares Gross Gross Shares Dividend
Security December 31, 1998 Additions Reductions June 30, 1999 Income
- -------- ----------------- --------- ---------- ------------- ------
<S> <C> <C> <C> <C> <C>
Centerpoint Properties
Corporation 1,451,194 - - 1,451,194 1,378,634
Centerpoint Properties
Corporation Private 70,000 - - 70,000 66,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC.
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (NOTE 1)
==================================================================================================
<S> <C> <C>
COMMON STOCK - (94.29%)
APPAREL - (0.97%)
60,000 Cutter & Buck, Inc.*................................................ $ 997,500
-----------
AUTOMOTIVE/HEAVY EQUIPMENT - (2.45%)
35,000 Hayes Lemmerz International, Inc.*.................................. 1,028,125
30,000 Lear Corp.*......................................................... 1,492,500
-----------
2,520,625
-----------
CHEMICALS - (2.80%)
22,000 Minerals Technologies, Inc.......................................... 1,227,875
48,000 OM Group, Inc....................................................... 1,656,000
-----------
2,883,875
-----------
COMMUNICATIONS - (2.50%)
10,000 EarthLink Network, Inc.*............................................ 614,375
20,000 MCI Worldcom, Inc.*................................................. 1,720,000
10,000 Penton Media, Inc................................................... 242,500
-----------
2,576,875
-----------
ELECTRONICS - (4.88%)
30,000 Flextronics International Ltd.*..................................... 1,657,500
35,000 Jabil Circuit, Inc.*................................................ 1,579,375
25,000 Teradyne, Inc.*..................................................... 1,793,750
-----------
5,030,625
-----------
EMPLOYEE STAFFING - (9.27%)
30,000 Heidrick & Struggles International, Inc.*........................... 570,000
70,000 Interim Services, Inc.*............................................. 1,443,750
50,200 Keane, Inc.*........................................................ 1,135,775
60,787 Labor Ready, Inc.*.................................................. 1,975,578
70,000 On Assignment, Inc.*................................................ 1,820,000
50,000 Robert Half International, Inc.*.................................... 1,300,000
70,000 The ServiceMaster Co................................................ 1,312,500
-----------
9,557,603
-----------
ENERGY - (1.17%)
20,000 Diamond Offshore Drilling, Inc. .................................... 567,500
10,000 Schlumberger Ltd................................................... 636,875
-----------
1,204,375
-----------
ENTERTAINMENT/LEISURE TIME - (4.68%)
49,000 Cinar Corp., Class B*............................................... 1,194,375
70,000 Imax Corp.*......................................................... 1,575,000
22,000 Premier Parks, Inc.*................................................ 735,000
20,000 Univision Communications, Inc. Class A*............................. 1,320,000
-----------
4,824,375
-----------
</TABLE>
13
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - CONTINUED
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (NOTE 1)
====================================================================================================
<S> <C> <C>
COMMON STOCK - CONTINUED
FINANCIAL SERVICES - (14.66%)
36,000 The Charles Schwab Corp............................................. $ 3,955,500
50,100 Federated Investors, Inc. Class B................................... 898,669
60,000 Firstar Corp........................................................ 1,680,000
20,000 H&R Block, Inc...................................................... 1,000,000
7,000 Knight/Trimark Group, Inc. Class A*................................. 427,000
35,000 North Fork Bancorporation, Inc...................................... 745,938
18,000 Northern Trust Co................................................... 1,746,000
60,000 TCF Financial Corp.................................................. 1,672,500
30,500 Washington Mutual, Inc.............................................. 1,078,938
30,000 Zions Bancorporation................................................ 1,905,000
-----------
15,109,545
-----------
HEALTHCARE - (5.68%)
15,000 Bausch & Lomb, Inc.................................................. 1,147,500
38,000 Cardinal Health, Inc................................................ 2,436,750
30,000 Elan Corp., PLC ADR*................................................ 832,500
30,000 Focal, Inc.*........................................................ 225,000
15,000 Sepracor, Inc.*..................................................... 1,215,000
-----------
5,856,750
-----------
HOME/OFFICE FURNITURE - (4.55%)
45,000 Ethan Allen Interiors, Inc.......................................... 1,698,750
30,000 Furniture Brands International, Inc.*............................... 836,250
77,600 Leggett & Platt, Inc................................................ 2,158,250
-----------
4,693,250
-----------
INDUSTRIAL PRODUCTS - (2.32%)
15,600 Illinois Tool Works, Inc............................................ 1,279,200
35,156 Molex Inc., Class A................................................. 1,114,006
-----------
2,393,206
-----------
INFORMATION PROCESSING - OFFICE EQUIPMENT - (4.58%)
40,000 Dell Computer Corp.*................................................ 1,477,500
49,000 Lexmark International Group, Inc. Class A*.......................... 3,237,063
-----------
4,714,563
-----------
INFORMATION PROCESSING - SERVICES - (12.99%)
70,000 Computer Sciences Corp.*............................................ 4,843,125
16,500 DA Consulting Group, Inc.*.......................................... 99,000
50,000 DST Systems, Inc.*.................................................. 3,143,750
3,000 internet.com LLC *.................................................. 37,500
20,000 Legato Systems, Inc.*............................................... 1,155,000
25,000 OneSource Information Services, Inc.*............................... 210,938
53,625 Paychex, Inc........................................................ 1,702,594
</TABLE>
14
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED SPECIAL SHARES, INC. - CONTINUED
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES/PRINCIPAL SECURITY (NOTE 1)
====================================================================================================
<S> <C> <C>
COMMON STOCK - CONTINUED
INFORMATION PROCESSING - SERVICES - CONTINUED
60,000 Sterling Commerce, Inc.*............................................ $ 2,190,000
------------
13,381,907
------------
REAL ESTATE SERVICES - (1.01%)
35,000 Jones Lang LaSalle, Inc.*........................................... 1,043,438
------------
RETAILING - (17.30%)
10,000 Abercrombie & Fitch Co. Class A*.................................... 480,000
2,000 Amazon.com, Inc.*................................................... 250,125
5,000 Cheap Tickets, Inc.*................................................ 182,188
43,000 CVS Corp............................................................ 2,182,250
30,000 The Home Depot, Inc................................................. 1,933,125
40,400 Kohl's Corp.*....................................................... 3,118,375
105,000 Office Depot, Inc.*................................................. 2,316,563
20,000 Saks Inc.*.......................................................... 577,500
50,000 Tandy Corp.......................................................... 2,443,750
45,000 Tiffany & Co........................................................ 4,342,500
------------
17,826,376
------------
TRANSPORTATION - (2.48%)
40,000 Kansas City Southern Industries, Inc................................ 2,552,495
------------
Total Common Stock - (identified cost $57,940,672)............. 97,167,383
------------
SHORT TERM INVESTMENTS - (4.05%)
$4,167,000 State Street Bank and Trust Co. Repurchase Agreement, 4.85%, 0
7/01/99, dated 06/30/99, repurchase value of $4,167,561 (
collateralized by $4,330,000 par value Federal Farm Credit Bank
MTN, 5.70%, 05/17/02, market value $4,296,334) - (identified
cost $4,167,000).................................................. 4,167,000
------------
Total Investments - (98.34%) - (identified cost $62,107,672) - (a).. 101,334,383
Other Assets Less Liabilities - (1.66%)............................. 1,715,424
------------
Net Assets - (100%).............................................. $103,049,807
============
*Non-Income Producing Security.
(a) Aggregate cost for Federal Income Tax purposes is $62,107,672. At June 30,
1999 unrealized appreciation (depreciation) of securities for Federal Income Tax
purposes is as follows:
Unrealized appreciation............................................. $ 40,793,138
Unrealized depreciation............................................. (1,566,427)
------------
Net unrealized appreciation ..................................... $ 39,226,711
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED U.S. GOVERNMENT INCOME FUND
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
PRINCIPAL SECURITY (NOTE 1)
====================================================================================================
<S> <C> <C>
MORTGAGES - (42.33%)
FANNIE MAE POOLS - (3.35%)
$ 1,873 10.00%, 07/01/05, Pool No. 98835.................................... $ 1,955
7,156 10.00%, 08/01/05, Pool No. 99903...................................... 7,529
5,174 8.50%, 07/01/17, Pool No. 51539...................................... 5,426
5,286 8.50%, 04/01/21, Pool No. 117725..................................... 5,532
154,000 7.50%, 01/01/27, Pool No. 356381..................................... 155,540
-----------
Total Fannie Mae - (identified cost $173,303).................. 175,982
-----------
FREDDIE MAC POOLS - (10.84%)
236,845 6.50%, 01/01/04, Pool No. N97289..................................... 236,168
88,876 8.00%, 09/01/21, Pool No. D2-7906.................................... 91,736
153,150 8.00%, 10/01/21, Pool No. D2-7334.................................... 157,553
81,273 8.00%, 06/01/22, Pool No. D2-0670.................................... 83,711
-----------
Total Freddie Mac - (identified cost $561,952)................. 569,168
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION POOLS - (18.43%)
14,853 10.00%, 09/15/01, Pool No. 265854..................................... 15,407
12,543 6.625%, 09/20/23, Pool No. 008299 (b)................................ 12,698
14,704 6.375%, 01/20/24, Pool No. 008360 (b)................................ 14,902
317,844 6.50%, 02/20/28, Pool No. 002547..................................... 304,434
331,240 6.50%, 04/15/28, Pool No. 780776..................................... 318,507
314,814 6.50%, 11/20/28, Pool No. 002673..................................... 301,532
-----------
Total GNMA - (identified cost $1,003,827)...................... 967,480
-----------
COLLATERALIZED MORTGAGE OBLIGATION - (9.71%)
500,000 United States Department of Veteran Affairs, Mortgage Trust 1992-1,
7.75%, 07/15/17 - (identified cost $481,987)....................... 510,000
-----------
Total Mortgages - (identified cost $2,221,069)................. 2,222,630
-----------
MEDIUM TERM NOTES - (50.00%)
350,000 Fannie Mae, 6.57%, 08/22/07........................................... 350,602
250,000 Fannie Mae, 6.39%, 09/24/07........................................... 247,540
300,000 Fannie Mae, 6.34%, 02/04/08........................................... 289,548
350,000 Fannie Mae, 6.00%, 05/15/08........................................... 339,444
350,000 Federal Farm Credit Bank, 5.79%, 06/23/08............................. 331,842
200,000 Federal Home Loan Bank, 5.40%, 03/01/04............................... 193,312
300,000 Federal Home Loan Bank, 5.805%, 03/23/09.............................. 283,266
250,000 Federal Home Loan Bank, 5.985%, 04/09/09.............................. 240,458
</TABLE>
16
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED U.S. GOVERNMENT INCOME FUND - CONTINUED
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
PRINCIPAL SECURITY (NOTE 1)
==================================================================================================
<S> <C> <C>
MEDIUM TERM NOTES - CONTINUED
$ 350,000 Freddie Mac, 6.51%, 01/08/07.......................................... $ 349,068
-----------
Total Medium Term Notes - (identified cost $2,751,397)......... 2,625,080
-----------
SHORT TERM INVESTMENTS - (6.80%)
357,000 State Street Corporation Repurchase Agreement, 4.85%, 07/01/99,
dated 06/30/99, repurchase value of $357,048 (collateralized by
$370,000 par value Federal Home Loan Bank, 5.29%, 05/17/01,
market value $367,888) - (identified cost $357,000)................. 357,000
-----------
Total Investments - (99.13%) - (identified cost $5,329,466) - (a)..... 5,204,710
Other Assets Less Liabilities- (0.87%)................................ 45,702
-----------
Net Assets - (100%)............................................ $ 5,250,412
===========
(a) Aggregate cost for Federal Income Tax purposes is $5,329,466. At June 30,
1999 unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation............................................... $ 40,987
Unrealized depreciation............................................... (165,743)
-----------
Net unrealized depreciation.................................... $ (124,756)
===========
(b) The interest rates on floating rate securities, shown as of June 30, 1999,
may change monthly or less frequently and are based on indices of market
interest rates.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
PRINCIPAL (NOTE 1)
===================================================================================================
<S> <C> <C>
FANNIE MAE - (29.03%)
$3,720,000 4.75%, 07/06/99 Discount Note......................................... $ 3,717,546
1,985,000 4.86%, 07/15/99 Discount Note......................................... 1,981,248
3,120,000 4.77%, 07/19/99 Discount Note......................................... 3,112,559
3,500,000 4.81%, 07/20/99 Discount Note......................................... 3,491,115
2,225,000 4.84%, 08/04/99 Discount Note......................................... 2,214,829
2,500,000 4.74%, 08/13/99 Discount Note......................................... 2,485,846
4,400,000 4.77%, 08/17/99 Discount Note......................................... 4,372,599
4,020,000 4.81%, 08/20/99 Discount Note......................................... 3,993,144
3,500,000 4.88%, 09/01/99 Discount Note......................................... 3,470,584
1,460,000 4.90%, 09/08/99 Discount Note......................................... 1,446,288
1,295,000 4.74%, 09/16/99 Discount Note......................................... 1,281,871
2,000,000 5.09%, 09/21/99 Discount Note......................................... 1,976,812
3,620,000 4.568%, 09/22/99 Discount Note........................................ 3,581,875
------------
Total Fannie Mae - (identified cost $37,126,316) .................. 37,126,316
------------
FREDDIE MAC - (69.18%)
2,800,000 4.76%, 07/01/99 Discount Note......................................... 2,800,000
2,210,000 4.78%, 07/02/99 Discount Note......................................... 2,209,707
5,570,000 4.775%, 07/09/99 Discount Note........................................ 5,564,090
5,175,000 4.70%, 07/12/99 Discount Note......................................... 5,167,568
4,070,000 4.77%, 07/13/99 Discount Note......................................... 4,063,529
4,295,000 4.75%, 07/14/99 Discount Note......................................... 4,287,633
3,100,000 4.729%, 07/16/99 Discount Note........................................ 3,093,892
3,865,000 4.82%, 07/21/99 Discount Note......................................... 3,854,650
4,010,000 4.75%, 07/23/99 Discount Note......................................... 3,998,360
940,000 4.86%, 07/26/99 Discount Note......................................... 936,828
3,000,000 4.80%, 07/29/99 Discount Note......................................... 2,988,800
3,125,000 4.73%, 08/03/99 Discount Note......................................... 3,111,451
2,480,000 4.74%, 08/05/99 Discount Note......................................... 2,468,571
2,675,000 4.92%, 08/05/99 Discount Note......................................... 2,662,205
4,115,000 4.70%, 08/06/99 Discount Note......................................... 4,095,660
1,500,000 4.86%, 08/10/99 Discount Note......................................... 1,491,900
2,795,000 4.735%, 08/12/99 Discount Note........................................ 2,779,560
3,135,000 4.78%, 08/16/99 Discount Note......................................... 3,115,852
3,450,000 4.85%, 08/19/99 Discount Note......................................... 3,427,225
2,750,000 4.74%, 08/23/99 Discount Note......................................... 2,730,810
3,755,000 4.79%, 08/24/99 Discount Note......................................... 3,728,020
1,235,000 4.74%, 08/26/99 Discount Note......................................... 1,225,894
4,805,000 4.74%, 08/27/99 Discount Note......................................... 4,768,938
3,000,000 5.07%, 09/17/99 Discount Note......................................... 2,967,045
1,995,000 5.07%, 09/23/99 Discount Note......................................... 1,971,399
</TABLE>
18
<PAGE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND - CONTINUED
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
PRINCIPAL (NOTE 1)
===================================================================================================
<S> <C> <C>
FREDDIE MAC - CONTINUED
$4,000,000 5.07%, 09/24/99 Discount Note......................................... $ 3,952,117
5,000,000 7.125%, 07/21/99 Medium Term Note..................................... 5,005,162
------------
Total Freddie Mac - (identified cost $88,466,866).................. 88,466,866
------------
SALLIE MAE - (1.96%)
2,500,000 5.159%, 12/16/99 Floating Rate Note (b)............................... 2,500,000
------------
Total Sallie Mae - (identified cost $2,500,000).................... 2,500,000
------------
Total Investments - (100.17%) - (identified cost $128,093,182) - (a).. 128,093,182
Liabilities Less Other Assets - (0.17%)............................... (215,255)
------------
Net Assets - (100%)............................................ $127,877,927
============
</TABLE>
(a) Aggregate cost for Federal income tax purposes is $128,093,182.
(b) The interest rates on floating rate securities, shown as of June 30, 1999,
may change monthly or less frequently and are based on indices of market
interest rates.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
SELECTED FUNDS
STATEMENT OF ASSETS AND LIABILITIES
At June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
=============================================================================================================================
U.S.
SELECTED SELECTED GOVERNMENT DAILY
AMERICAN SPECIAL INCOME GOVERNMENT
SHARES SHARES FUND FUND
-------- ------- ------ ----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value * (see
accompanying Schedules of Investments)
Unaffiliated companies................................ $3,369,026,453 $101,334,383 $ 5,204,710 $128,093,182
Affiliated companies.................................. 55,649,636 -- -- --
Collateral for securities loaned (Note 7)............... 27,772,588 -- -- --
Prepaid expenses........................................ 272,839 8,119 7,619 13,683
Cash.................................................... 70,621 13,980 4,484 11,920
Receivables:
Dividends and interest................................ 3,761,217 40,417 59,467 163,236
Capital stock sold.................................... 14,333,705 14,400 100 14,515
Investment securities sold............................ -- 1,910,683 -- --
Due from adviser...................................... -- -- 5,000 --
-------------- ------------ ------------ ------------
Total assets............................................ 3,470,887,059 103,321,982 5,281,380 128,296,536
-------------- ------------ ------------ ------------
LIABILITIES:
Return of collateral for securities loaned (Note 7)..... 27,772,588 -- -- --
Payables:
Capital stock reacquired.............................. 2,859,418 35,863 11,759 72,904
Investment securities purchased....................... 1,408,059 101,500 - --
Accrued expenses........................................ 2,933,865 134,812 9,124 115,131
Distributions payable................................... -- -- 10,085 230,574
-------------- ------------ ------------ ------------
Total liabilities................................. 34,973,930 272,175 30,968 418,609
-------------- ------------ ------------ ------------
NET ASSETS ............................................... $3,435,913,129 $103,049,807 $ 5,250,412 $127,877,927
============== ============ ============ ============
SHARES OUTSTANDING (NOTE 5)............................... 95,801,265 6,642,074 607,629 127,877,927
============== ============ ============ ============
NET ASSET VALUE, offering and
redemption price per share (Net
Assets / shares outstanding).......................... $ 35.87 $ 15.51 $ 8.64 $ 1.00
========= ======== ======== ========
NET ASSETS CONSIST OF:
Deficit in undistributed net investment income.......... $ (2,447,845) $ -- $ -- $ --
Paid-in capital......................................... 1,795,099,858 59,173,293 5,303,110 127,877,927
Accumulated net realized gain........................... 108,631,431 4,649,803 72,058 --
Net unrealized appreciation (depreciation) on
investments........................................... 1,534,629,685 39,226,711 (124,756) --
-------------- ------------ ------------ ------------
$3,435,913,129 $103,049,807 $ 5,250,412 $127,877,927
============== ============ ============ ============
</TABLE>
* Including repurchase agreements of $55,570,000, $4,167,000 and $357,000 for
Selected American Shares, Selected Special Shares and Selected U.S. Government
Income Fund, respectively, and cost of $1,917,818,992, $62,107,672, $5,329,466
and $128,093,182 for Selected American Shares, Selected Special Shares, U.S.
Government Income Fund and Daily Government Fund, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
<TABLE>
<CAPTION>
SELECTED FUNDS
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
=============================================================================================================================
U.S.
SELECTED SELECTED GOVERNMENT DAILY
AMERICAN SPECIAL INCOME GOVERNMENT
SHARES SHARES FUND FUND
-------- ------- ------ ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (LOSS):
Income:
Dividends
Unaffiliated companies.................................. $ 18,785,822 $ 201,287 $ -- $ --
Affiliated companies.................................... 1,445,134 -- -- --
Interest.................................................. 744,172 70,608 188,714 3,102,354
Lending fees.............................................. 65,066 -- -- --
------------- ------------- ------------- ----------
Total income.......................................... 21,040,194 271,895 188,714 3,102,354
------------- ------------- ------------- ----------
Expenses:
Management fees (Note 2).................................. 8,806,902 326,358 14,491 190,469
Custodian fees............................................ 210,462 12,865 5,817 11,646
Transfer agent fees....................................... 831,022 69,352 6,816 37,066
Audit fees................................................ 14,428 8,077 4,653 7,743
Legal fees................................................ 54,493 9,122 359 9,774
Reports to shareholders................................... 182,027 7,459 568 13,835
Directors fees and expenses............................... 120,130 4,768 596 8,972
Registration and filing fees.............................. 45,832 18,845 6,617 20,008
Miscellaneous............................................. 10,463 6,309 1,411 5,381
Payments under distribution plan (Note 3)................. 3,836,725 118,578 7,246 158,724
------------- ------------- ------------- ----------
Total expenses........................................ 14,112,484 581,733 48,574 463,618
Expenses paid indirectly (Note 6)..................... (3,548) (482) (91) (148)
Reimbursement of expenses by adviser (Note 2)......... -- -- (5,000) --
------------- ------------- ------------- ----------
Net expenses.......................................... 14,108,936 581,251 43,483 463,470
------------- ------------- ------------- ----------
Net investment income (loss).......................... 6,931,258 (309,356) 145,231 2,638,884
------------- ------------- ------------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain from
investment transactions................................. 108,740,437 4,692,230 44,477 --
Net increase (decrease) in unrealized appreciation of
investments during the period........................... 351,219,822 1,906,116 (305,720) --
------------- ------------- ------------- ----------
Net realized and unrealized gain
(loss) on investments............................... 459,960,259 6,598,346 (261,243) --
------------- ------------- ------------- ----------
Net increase (decrease) in net assets resulting from
operations............................................ $ 466,891,517 $ 6,288,990 $ (116,012) $2,638,884
============= ============= ============= ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
SELECTED FUNDS
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
============================================================================================================
U.S.
SELECTED SELECTED GOVERNMENT DAILY
AMERICAN SPECIAL INCOME GOVERNMENT
SHARES SHARES FUND FUND
-------- ------- ------ ----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)........ $ 6,931,258 $ (309,356) $ 145,231 $ 2,638,884
Net realized gains from 44,477
investment transactions........... 108,740,437 4,692,230 --
Net increase (decrease) in
unrealized appreciation of
investments....................... 351,219,822 1,906,116 (305,720) --
-------------- ------------ ------------- ------------
Net increase (decrease) in net
assets resulting from operations.. 466,891,517 6,288,990 (116,012) 2,638,884
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income............... (9,379,103) -- (145,231) (2,638,884)
Realized gains from investment
transactions...................... (16,701,540) (1,297,062) -- --
CAPITAL SHARE TRANSACTIONS
(NOTE 5)............................ 89,195,429 184,3,413,764 (724,978) 1,675,419
-------------- ------------ ------------- ------------
Total increase (decrease) in net assets 530,006,303 8,405,692 (986,221) 1,675,419
NET ASSETS:
Beginning of period................. 2,905,906,826 94,644,115 6,236,633 126,202,508
-------------- ------------ ------------- ------------
End of period....................... $3,435,913,129 $103,049,807 $ 5,250,412 $127,877,927
============== ============ ============= ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
SELECTED FUNDS
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 1998
<TABLE>
<CAPTION>
====================================================================================================================
U.S.
SELECTED SELECTED GOVERNMENT DAILY
AMERICAN SPECIAL INCOME GOVERNMENT
SHARES SHARES FUND FUND
------ ------ ---- ----
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............. $ 13,186,512 $ (485,392) $ 312,283 $ 5,765,931
Net realized gains from 97,915
investment transactions................. 29,504,571 7,077,136 --
Net increase (decrease) in unrealized
appreciation of investments............. 345,128,542 11,375,084 (62,420) --
-------------- ------------ ------------- ------------
Net increase in net
assets resulting from operations........ 387,819,625 17,966,828 347,778 5,765,931
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income..................... (13,186,512) -- (312,283) (5,765,931)
Realized gains from investment
transactions............................ (23,381,397) (7,866,840) (16,994) --
Dividend in excess of net investment
income.................................. (180,435) -- -- --
CAPITAL SHARE TRANSACTIONS
(NOTE 5).................................. 333,180,761 9,613,669 256,546 8,731,677
-------------- ------------ ------------- ------------
Total increase in net assets................. 684,252,042 19,713,657 275,047 8,731,677
NET ASSETS:
Beginning of period....................... 2,221,654,784 74,930,458 5,961,586 117,470,831
-------------- ------------ ------------- ------------
End of period............................. $2,905,906,826 $ 94,644,115 $ 6,236,633 $126,202,508
============== ============ ============= ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Selected Funds (the Funds) consist of Selected American Shares, Inc.,
(American Shares, Inc.), Selected Special Shares, Inc., (Special Shares, Inc.),
and the Selected Capital Preservation Trust (the Trust). The Trust operates as a
series fund, consisting of the U.S. Government Income Fund and Daily Government
Fund. The Funds and Trust are registered under the Investment Company Act of
1940, as amended, as diversified, open-end management investment companies. The
Trust accounts separately for the assets, liabilities and operations of each
series. The following is a summary of significant accounting policies followed
by the Funds in the preparation of financial statements.
American Shares, Inc. and Special Shares, Inc. are diversified,
professionally managed stock-oriented funds.
Selected U.S. Government Income Fund (U.S. Government Income) seeks to obtain
current income consistent with preservation of capital by investing primarily in
debt obligations of the U.S. Government, its agencies or instrumentalities.
Selected Daily Government Fund (Daily Government) seeks to provide a high
level of current income from short-term money market securities consistent with
prudent investment management, preservation of capital and maintenance of
liquidity. It invests in U.S. Government Securities and repurchase agreements in
respect thereto.
An investment in any of the Funds, as with any mutual fund, includes risks
that vary depending upon the fund's investment objectives and policies. There is
no assurance that the investment objective of any fund will be achieved. A
fund's return and net asset value will fluctuate, although Daily Government
seeks to maintain a net asset value of $1.00 per share.
A. VALUATION OF SECURITIES - Securities listed on national securities exchanges
are valued at the last reported sales price on the day of valuation. Securities
traded in the over the counter market and listed securities for which no sale
was reported on that date are stated at the last quoted bid price. Securities
for which market quotations are not readily available are valued at fair value
as determined by the Boards of Directors/Trustees. The Daily Government Fund
uses the amortized cost method of valuing investment securities which represents
fair value as determined by the Board of Trustees. These valuation procedures
are reviewed and subject to approval by the Board of Directors/Trustees.
B. 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 to
shareholders. Therefore, no provision for federal income or excise tax is
required.
C. USE OF ESTIMATES IN FINANCIAL STATEMENTS - In preparing financial statements
in conformity with generally accepted accounting principles, 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.
24
<PAGE>
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 1999 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
D. 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. Interest income is recorded on the
accrual basis and dividend income is recorded on the ex-dividend date. Discounts
and premiums on debt securities (excluding convertible bonds) purchased are
amortized over the lives of the respective securities in accordance with the
requirements of the Internal Revenue Code.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions to
shareholders are recorded on the ex-dividend date. The character of the
distributions made during the year from net investment income may differ from
its ultimate characterization for federal income tax purposes. Also, due to the
timing of distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which income or 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 the investment adviser. Until January 1,
1999, the rate for American Shares, Inc. was 0.65% on the first $500 million of
average net assets, 0.60% on the next $500 million and 0.55% of average net
assets in excess of $1 billion. Effective January 1, 1999, the management fee
was reduced to 0.65% on the first $500 million of average net assets, 0.60% of
the average net assets on the next $500 million, 0.55% of the average net assets
on the next $2 billion, 0.54% of the average net assets on the next $1 billion,
0.53% of the average net assets on the next $1 billion, 0.52% of the average net
assets on the next $1 billion, 0.51% of the average net assets on the next $1
billion and 0.50% of the average net assets in excess of $7 billion. The rate
for Special Shares, Inc. is 0.70% on the first $50 million of average net
assets, 0.675% on the next $100 million, 0.65% on the next $100 million and
0.60% of average net assets in excess of $250 million. Until August 1, 1999, the
rate for U.S. Government Income Fund was 0.50% of average net assets. Effective
August 1, 1999, the management fee was reduced to 0.30% of average net assets.
The rate for the Daily Government Fund is 0.30% of average net assets.
Boston Financial Data Services is the Funds' primary transfer agent. Davis
Selected Advisers, L.P. (the "Adviser") is also paid for certain transfer agent
services. The fee paid to the Adviser for the six months ended June 30, 1999 was
$60,548, $6,767, $427 and $2,346 for American Shares, Inc., Special Shares,
Inc., U.S. Government Income and Daily Government Funds, respectively. Certain
directors/trustees and officers of the Funds are also directors/trustees and
officers of the general partner of the Adviser.
Until August 1, 1999, the Adviser has agreed to reimburse the U.S. Government
Income Fund for any expenses in excess of 1.50% of average net assets. Effective
August 1, 1999, the Adviser has agreed to increase the reimbursement to 1.30% of
average net assets.
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.
With respect to Special Shares, Inc., Bramwell Capital Management, Inc.
("Bramwell") also acts as sub-adviser and manages the day-to-day investment
operations for the fund. The Fund pays no fees directly to Bramwell, who
receives from the Adviser a percentage of the total annual investment advisory
fees paid by the Fund to the Adviser.
Each fund has adopted procedures to treat Shelby Cullom Davis & Co. ("SCD")
as an affiliate of the Adviser. For American Shares, Inc., SCD received $76,716
in commissions on the purchases/sales of portfolio securities.
25
<PAGE>
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 1999 (Unaudited)
================================================================================
NOTE 3 - DISTRIBUTION
For services under the distribution agreement, the Funds pay a fee of 0.25%
of average daily net assets. For six months ended June 30, 1999, American
Shares, Inc., Special Shares, Inc., U.S. Government Income and Daily Government
Funds, incurred distribution services fees totaling $3,836,725, $118,578, $7,246
and $158,724, respectively.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities) during the six months ended June 30, 1999 were as follows:
AMERICAN SPECIAL U.S. GOVERNMENT
SHARES, INC. SHARES, INC. INCOME
------------ ------------ ------
Cost of purchases.......... $491,184,582 $18,394,474 $ 747,901
Proceeds of sales.......... $301,395,620 $18,994,623 $ 1,346,250
NOTE 5 - CAPITAL STOCK
At June 30, 1999, there were 300 million shares of capital stock of American
Shares, Inc. ($1.25 par value per share) authorized. At June 30, 1999, there
were 50 million shares of capital stock of Special Shares, Inc. ($0.25 par value
per share) authorized. At June 30, 1999, 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:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 (UNAUDITED)
---------------------------------------------------------
AMERICAN SPECIAL U.S.
SHARES SHARES GOVERNMENT DAILY
INC. INC. INCOME GOVERNMENT
---------- --------- ------------- ----------
<S> <C> <C> <C> <C>
Shares sold ....................................... 9,535,763 722,335 40,705 7,896,880
Shares issued in reinvestment of distributions..... 757,737 85,052 13,668 2,645,820
------------- ------------ ----------- -----------
10,293,500 807,387 54,373 10,542,700
Shares redeemed ................................... (7,740,030) (575,442) (136,581) (8,867,281)
------------- ------------ ----------- -----------
Net increase (decrease) ...................... 2,553,470 231,945 (82,208) 1,675,419
============= ============ =========== ===========
Proceeds from shares sold ......................... $ 316,223,986 $ 10,607,804 $ 363,402 $ 7,896,880
Proceeds from shares issued in reinvestment of
distributions .................................. 25,061,911 1,189,889 121,154 2,645,820
------------- ------------ ----------- -----------
341,285,897 11,797,693 484,556 10,542,700
Cost of shares redeemed ........................... (252,090,468) (8,383,929) (1,209,534) (8,867,281)
------------- ------------ ----------- -----------
Net increase (decrease) ...................... $ 89,195,429 $ 3,314,764 $ (724,978) $ 1,675,419
============= ============ =========== ===========
</TABLE>
26
<PAGE>
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - (Continued)
June 30, 1999 (Unaudited)
================================================================================
NOTE 5 - CAPITAL STOCK - (Continued)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------------------------------------------------------
AMERICAN SPECIAL U.S.
SHARES SHARES GOVERNMENT DAILY
INC. INC. INCOME GOVERNMENT
---------- --------- ------------- ----------
<S> <C> <C> <C> <C>
Shares sold....................................... 29,034,922 2,135,219 192,677 24,255,402
Shares issued in reinvestment of distributions.... 1,213,367 527,262 30,016 5,746,130
------------ ----------- ----------- ------------
30,248,289 2,662,481 222,693 30,001,532
Shares redeemed................................... (18,727,709) (2,004,322) (194,758) (21,269,855)
------------ ----------- ----------- ------------
Net increase................................. 11,520,580 658,159 27,935 8,731,677
============ =========== =========== ============
Proceeds from shares sold......................... $829,939,241 $29,840,446 $ 1,747,977 $ 24,255,402
Proceeds from shares issued in
reinvestment of distributions.................. 35,183,278 7,182,421 271,717 5,746,130
------------ ----------- ----------- ------------
865,122,519 37,022,867 2,019,694 30,001,532
Cost of shares redeemed........................... (531,941,758) (27,409,198) (1,763,148) (21,269,855)
------------ ----------- ----------- ------------
Net increase................................. $333,180,761 $ 9,613,669 $ 256,546 $ 8,731,677
============ =========== =========== ============
</TABLE>
NOTE 6 - CUSTODIAN FEES
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.
Such reductions amounted to $3,548, $482, $91 and $148 for American Shares,
Inc., Special Shares, Inc., U.S. Government Income and Daily Government,
respectively.
NOTE 7 - SECURITIES LOANED
American Shares, Inc. (the "Fund") has entered into a securities lending
arrangement with PaineWebber, Inc. Under the terms of the agreement, the Fund
receives fee income from lending transactions; in exchange for such fees,
PaineWebber, Inc. is authorized to loan securities on behalf of the Fund,
against receipt of collateral at least equal to the value of the securities
loaned. Cash collateral is invested by the Adviser in money market instruments.
As of June 30, 1999, the Fund had on loan securities valued at $26,816,309; cash
of $27,772,588 was received as collateral for the loans and has been invested in
approved instruments. 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 - RESTRICTED SECURITIES
Restricted securities are not registered under the Securities Act of 1933 and
may have contractual restrictions on resale. They are valued under methods
approved by the Board of Directors as reflecting fair value. The aggregate value
of restricted securities in American Shares, Inc. was $2,499,656, or 0.07% of
the net assets of June 30, 1999. Information concerning restricted securities is
as follows:
<TABLE>
<CAPTION>
Number of Valuation per Unit as
Fund Security Acquisition Date Shares Cost per Unit of June 30, 1999
- ---- -------- ---------------- ------ ------------- ----------------
<S> <C> <C> <C> <C> <C>
American Centerpoint Properties
Shares, Inc. Corp. Private 04/02/98 70,000 $33.2595 $35.709375
</TABLE>
27
<PAGE>
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:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 ------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 31.16 $ 27.18 $ 21.53 $ 17.68 $ 13.09 $ 14.59
-------- -------- -------- -------- -------- -------
Income From Investment Operations
Net Investment Income .............. .07 .15 .16 .18 .22 .20
Net Realized and Unrealized
Gains (Losses) ................... 4.92 4.24 7.72 5.15 4.74 (.66)
-------- -------- -------- -------- -------- -------
Total From Investment Operations . 4.99 4.39 7.88 5.33 4.96 (.46)
Dividends and Distributions
Dividends from Net Investment Income (.10) (.15) (.17) (.17) (.22) (.20)
Distributions from Realized Gains .. (.18) (.26) (2.05) (1.31) (.15) (.83)
Dividends in Excess of Net
Investment Income ................ -- -- (.01) -- -- (.01)
-------- -------- -------- -------- -------- -------
Total Dividends and Distributions (.28) (.41) (2.23) (1.48) (.37) (1.04)
-------- -------- -------- -------- -------- -------
Net Asset Value, End of Period ...... $ 35.87 $ 31.16 $ 27.18 $ 21.53 $ 17.68 $ 13.09
======== ======== ======== ======== ======== =======
Total Return(1) ..................... 16.09% 16.27% 37.25% 30.74% 38.09% (3.20)%
Ratios/Supplemental Data
Net Assets, End of Period
(000,000 omitted) ................ $ 3,436 $ 2,906 $ 2,222 $ 1,376 $ 926 $ 529
Ratio of Expenses to Average
Net Assets........................ .92%* .94% .96% 1.03% 1.09% 1.26%
Ratio of Net Investment Income to
Average Net Assets ............... .45%* .52% .62% .87% 1.42% 1.42%
Portfolio Turnover Rate(2) ......... 10% 20% 26% 29% 27% 23%
</TABLE>
(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at
the net asset value calculated on the last business day of the fiscal
period. Total returns are not annualized for periods of less than one year.
(2) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
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:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 ----------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994(3)
----------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............ $ 14.76 $ 13.03 $ 10.89 $ 10.80 $ 9.02 $ 10.20
-------- -------- -------- -------- ------- -------
Income From Investment Operations
Net Investment Loss............................ (.05) (.08) (.07) -- -- (.03)
Net Realized and Unrealized Gains (Losses)... 1.00 3.14 2.83 1.27 3.04 (.22)
-------- -------- -------- -------- ------- -------
Total From Investment Operations............. 0.95 3.06 2.76 1.27 3.04 (.25)
Dividends and Distributions
Distributions from Realized Gains.............. (.20) (1.33) (.62) (1.18) (1.26) (.93)
-------- -------- -------- -------- ------- -------
Total Dividends and Distributions............ (.20) (1.33) (.62) (1.18) (1.26) (.93)
-------- -------- -------- -------- ------- -------
Net Asset Value, End of Period.................. $ 15.51 $ 14.76 $ 13.03 $ 10.89 $ 10.80 $ 9.02
======== ======== ======== ======== ======= =======
Total Return(1)................................. 6.58% 24.52% 26.91% 11.86% 34.24% (2.56)%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted)........ $103,050 $ 94,644 $ 74,930 $ 62,435 $58,975 $47,275
Ratio of Expenses to Average Net Assets4....... 1.23%* 1.26%(4) 1.28% 1.33% 1.48% 1.41%(2)
Ratio of Net Investment Loss to Average........
Net Assets................................... (.65)%* (.58)% (.60)% (.66)% (.58)% (.27)%
Portfolio Turnover Rate(5)..................... 20% 41% 51% 98% 127% 99%
</TABLE>
(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) Had the Adviser not absorbed certain expenses, the ratio of expenses for
the year ended December 31, 1994 would have been 1.62%.
(3) Per share data has been restated to give effect to a 2 for 1 stock split to
shareholders of record as of the close of January 4, 1994.
(4) Ratio of expenses to average net assets after the reduction of custodian
fees under a custodian agreement was 1.25% for the period ended December
31, 1998.
(5) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. * Annualized
SEE NOTES TO FINANCIAL STATEMENTS
29
<PAGE>
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SELECTED U.S. GOVERNMENT INCOME FUND
================================================================================
The following financial information represents selected data for each share of
capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 -------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........ $ 9.04 $ 9.01 $ 8.90 $ 9.20 $ 8.45 $ 9.20
-------- -------- ------- ------- ------- -------
Income From Investment Operations
Net Investment Income...................... .22 .47 .51 .53 .54 .50
Net Realized and Unrealized
Gains (Losses)......................... (.40) .06 .11 (.28) .78 (.75)
-------- -------- ------- ------- ------- -------
Total From Investment Operations......... (.18) .53 .62 .25 1.32 (.25)
Dividends and Distributions
Dividends from Net Investment Income....... (.22) (.47) (.51) (.53) (.54) (.50)
Distributions from Realized Gains.......... -- (.03) -- (.02) (.03) --
-------- -------- ------- ------- ------- -------
Total Dividends and Distributions........ (.22) (.50) (.51) (.55) (.57) (.50)
-------- -------- ------- ------- ------- -------
Net Asset Value, End of Period.............. $ 8.64 $ 9.04 $ 9.01 $ 8.90 $ 9.20 $ 8.45
========= ======== ======= ======= ======= =======
Total Return(1)............................. (2.02)% 5.90% 7.32% 2.85% 15.97% (2.71)%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted)... $ 5,250 $ 6,237 $5,962 $ 6,934 $ 7,811 $10,263
Ratio of Expenses to Average Net Assets... 1.50%(2)* 1.52%(2)(3) 1.50%(2) 1.44%(2) 1.44%(2) 1.42%(2)
Ratio of Net Investment Income to
Average Net Assets...................... 5.01%* 5.17% 5.79% 5.96% 6.09% 5.70%
Portfolio Turnover Rate(4)................ 14% 36% 16% 26% 76% 65%
</TABLE>
(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) Had the Adviser not absorbed certain expenses, the ratio of expenses for
the years ended December 31, 1994, 1995, 1996, 1997, 1998 and the six
months ended June 30, 1999 would have been 1.69%, 1.58%, 1.67%, 1.60%,
1.62% and 1.68%, respectively.
(3) Ratio of expenses to average net assets after the reduction of custodian
fees under a custodian agreement was 1.50% for the period ended December
31, 1998.
(4) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. * Annualized
SEE NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
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:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 -------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
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...................... .021 .047 .048 .046 .051 .034
Dividends and Distributions
Dividends from Net Investment Income....... (.021) (.047) (.048) (.046) (.051) (.034)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period.............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
Total Return(1)............................. 2.08% 4.85% 4.91% 4.70% 5.23% 3.51%
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted).... $127,878 $126,203 $117,471 $112,674 $184,603 $121,886
Ratio of Expenses to Average Net Assets.... .73%* .71% .70% .75% .75%(2) .75%(2)
Ratio of Net Investment Income.............
to Average Net Assets.................... 4.16%* 4.74% 4.80% 4.62% 5.13% 3.44%
</TABLE>
(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) Had the Adviser not absorbed certain expenses, the ratio of expenses for
the years ended December 31, 1994 and 1995 would have been, 1.07% and
0.78%, respectively.
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
SELECTED
FUNDS
124 East Marcy Street Santa Fe, New
Mexico 87501
================================================================================
DIRECTORS OFFICERS
William P. Barr James J. McMonagle
Floyd A. Brown Chairman
Andrew A. Davis Shelby M.C. Davis
Christopher C. Davis President
Jerome Hass Kenneth C. Eich
James J. McMonagle Vice President
Katherine L. MacWilliams Sharra L. Reed
Richard O'Brien Vice President, Treasurer
Larry Robinson & Assistant Secretary
Marsha Williams Thomas D. Tays
Vice President
& Secretary
Arthur Don
Assistant Secretary
Sheldon R. Stein
Assistant Secretary
INVESTMENT ADVISER
Davis Selected Advisers, L.P.
124 East Marcy Street
Santa Fe, New Mexico 87501
(800) 243-1575
DISTRIBUTOR
Davis Distributors, LLC
124 East Marcy Street
Santa Fe, New Mexico 87501
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 2300
Denver, CO 80202
COUNSEL
D'Ancona & Pflaum
111 E. Wacker Drive
Chicago, Illinois 60601-4205
=======================================
FOR MORE INFORMATION ABOUT THE
SELECTED FUNDS, INCLUDING MANAGEMENT
FEE, CHARGES AND EXPENSES, SEE THE
CURRENT PROSPECTUS WHICH MUST PRECEDE
OR ACCOMPANY THIS REPORT.
=======================================
<PAGE>
Davis Selected Advisers, L.P.
Group of Funds
Selected American Shares
Selected Special Shares
Selected U.S. Government Income Fund
Selected Daily Government Fund
INVESTMENT ADVISER
Davis Selected Advisers, L.P.
124 E. Marcy Street
Santa Fe, NM 87501
Distributor
Davis Distributors, LLC
124 E. Marcy Street
Santa Fe, NM 87501
Transfer Agent and Custodian
State Street Bank & Trust Company
c/o Selected Funds
P.O. Box 8243
Boston, MA 02266-8243
Legal Counsel
D'Ancona & Pflaum
30 North LaSalle Street
Chicago, IL 60602-2502
Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street, Suite 2300
Denver, CO 80202
