SELECTED FUNDS
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
===============================================================================
Dear Shareholder:
Investors have seen more volatility in the stock and bond markets in the
first half of 1996 compared with the first half of 1995. However, in the
midst of this volatility, we have steadfastly maintained our long-term
investment approach.
Market Volatility Predominated in the First Half
The greater market volatility during the first half of 1996 helps put the
market in perspective. Those who maintained a positive outlook on the
market saw signs that the economy was strong and that corporate
profitability may be safe for the time being. This provided support for
stock prices: despite market fluctuations, the Dow Jones Industrial
Average was hovering near record highs well into the second quarter.
Those who were negative about the market saw in the period's low
unemployment figures and rising commodity prices that the economy may
be too strong and that inflation might heat up.
This widening divergence of opinion over the direction of the economy and
its meaning for the market created the additional volatility we
experienced during the first half of 1996.
Selected American Shares
For the first six months of the year, Selected American Shares, our
large-cap growth-and-income fund, returned 8.78%. Our performance was
in line with a return of 8.67% for the average growth-and-income fund
during this period, according to Lipper Analytical Services, Inc.
Since we began managing Selected American Shares in 1993, we've
repositioned the fund according to our distinctive, long-term investment
style, which the Davis family has successfully applied in "bull" and
"bear" markets during the past 50 years. Over the past 36
months--roughly the length of time we've managed Selected American
Shares--the fund has achieved an average annual return of 14.71%.
As long-term investors, we continue to emphasize four major investment
themes in the fund: financial companies with strong brand names, selling
at a discount to the market; solid growth companies whose stock
volatility creates buying opportunities; high-quality multinationals poised
to benefit from high growth opportunities overseas; and companies which
generate healthy cash flows and put them to work for the benefit of
shareholders.
Our primary investment theme is financial stocks, which we believe have
replaced consumer stocks as the secular investment of the 1990s, given
the growing numbers of "baby boomers" needing to save for retirement.
We emphasize investments in major diversified financial services firms
with strong distribution capabilities, such as SunAmerica, Allstate, and
Morgan Stanley. These stocks performed well in the first half of 1996.
Beyond financial stocks, we also like to buy quality growth stocks with
price swings caused by short-term investors overreacting to current news
events or earnings reports. Intel is one of our key stock picks within this
investment theme. Its price rose more than 29% during the first six
months of the year. Also within this theme, we increased our holdings of
quality energy and natural resource companies such as Schlumberger and
Unocal, as we are intrigued by their recent emergence from a ten-year
slump in energy prices and demand.
The third investment theme we emphasize is undervalued American
multinational companies. We believe companies such as McDonalds,
Kimberly Clark, Gillette, and Coca Cola are poised not only to participate
in international economic growth, but also to capitalize upon the increase
in product demand caused by the fall of the "Iron and Bamboo Curtains."
These stocks were strong contributors to our performance through the
first half of 1996.
Finally, we look for investments in companies that earn healthy cash
flows and put them to productive uses, like buying back their company's
stock or undertaking sensible expansion or restructuring. Harcourt
General is one such investment that performed well during the first six
months of the year.
Within our four themes, we added new investments to our portfolio during
the first half of 1996, including Merck, Boeing, Guinness, and State Street
Boston Corp., and we closed out losing positions in Union Camp and
Weyerhauser.
As seasoned investors, we will continue to manage Selected American
Shares as an "all-weather" fund, designed to perform in all kinds of
market conditions.
Selected Special Shares
Selected Special Shares, our diversified small-cap growth fund, returned
7.84% for the first six months of 1996. This compares to the 8.34% return
for the same period posted by the S&P 400 Stock Index, which we use to
track our fund's performance because of its similar median market
capitalization.
Small company growth fund indexes include many small company funds
that achieve short-term performance by being undiversified and
aggressively "loading up" in hot sectors like technology. Although this
may have the advantage of boosting return in the short-run, it creates
more risk of "the Big Loss" which we try to avoid. This strategy is not
the focus of Selected Special Shares.
We've positioned Selected Special as a growth fund designed to achieve
long-term performance according to our proven, signature investment
approach. We've had great success with this approach through all kinds of
market conditions over the past 50 years. Our conviction that Selected
Special is now moving in the right direction to build long-term wealth for
our shareholders is reinforced by its three-year performance ended June
30: an average annual return of 15.02%.
As a core strategy, Selected Special Shares seeks to invest in some of
America's most dynamic, steadily-growing small companies which are
developing exciting new technologies and products. We target
small-company stocks with sustainable annual earnings growth rates of
15%-25% that are trading at a discount to their growth rates.
During the first half of 1996, the fund emphasized investments in key
themes: retailers; hotels; consumer products; financial data outsourcing;
and temporary personnel services. Stocks in these areas which
contributed to the fund's performance during the first half of the year
included Tiffany's, Red Lion Hotels, Regal Cinemas, Interim Services and
Robert Half International.
During the first six months of the year, Selected Special Shares added
investments in stocks including ADP, Continuum (since acquired by
Computer Science), Diamond Offshore Drilling, MFS Communications,
Neurex, Thermolase and U.S. Satellite. It closed out such profitable
positions as Fritz Cos., PairGain Technologies, Healthsource, Applied
Materials, and Infinity Broadcasting, while taking losses in three
semiconductor equipment and capacitor stocks: AVX Corp., KLA
Instruments and Tencor Instruments.
Although small companies are more volatile than large companies because
they are less established, we have positioned Selected Special Shares as
an "all-weather" growth fund designed to perform in all kinds of market
conditions. We will continue to apply our proven investment approach in
managing this small company fund, regardless of the "weather."
Selected U.S. Government Income Fund
The first six months of 1996 continued to be a tough market for bonds.
The Lehman Government Bond Index, comprised of U.S. government
securities, posted a negative 1.79% return. In line with this performance,
Selected U.S. Government Income Fund generated a negative 1.60% return
over this period.
Consistent with our distinctive long-term equity investment approach, we
actively manage Selected U.S. Government Income to produce long-term
risk-adjusted returns. The fund seeks to achieve higher returns through
concentrated investments in U.S. government agency-backed mortgage
securities, and spreads risk over a range of maturities, mostly in the
intermediate range. We emphasize investments in the intermediate range
of the maturity spectrum in order to capture most of the yield and
potential return advantage of long-term bonds, with substantially less
risk.
As a result, Selected U.S. Government Income is designed to outperform in
poor bond markets while generating competitive returns in up markets.
The fund's average annual return over the last three years ending June 30
is a positive 4.27%.
In accordance with our investment approach, we will continue to position
Selected U.S. Government Income going forward to have low interest rate
risk and high credit quality.
Our Outlook
As experienced, long-term investors, we do not react to short-term
market conditions. However, we do have an opinion on the overall market.
We believe that the economy is fundamentally sound, as interest rates are
currently stable, unemployment is relatively low, and earnings are in line
with expectations.
However, as experienced investors, we know a 10%-20% market correction
can occur at any time, in any market environment. After we took over
management of the Selected Funds in 1993, we repositioned both Selected
American and Selected Special Shares to perform in all kinds of market
conditions. This is one of the fundamental tenets of our signature
investment approach.
We believe Selected American will continue to perform well due to its
emphasis on significant long-term, secular investment themes, especially
its focus on brand-name, diversified financial stocks. Baby-boomers are
being driven by demographics to save more for retirement and their
children's educations.
We believe Selected Special Shares will benefit from the recent stock
market pullback -- particularly among growth and small- and mid-cap
stocks. Market declines are potential buying opportunities for this
value-oriented, small-cap growth fund.
We appreciate your support, and look forward with confidence to working
together through the months and years ahead to build our financial future.
Sincerely,
/s/ Robert J. Greenebaum /s/ Shelby M.C. Davis
Robert J. Greenebaum Shelby M.C. Davis
Chairman President
<TABLE>
Average Annual Total Returns
(All periods through 6/30/96)
<CAPTION>
Since 11/24/87
(inception of
U.S.
Government
Fund 1996 One Year Three Years Five Years Ten Years Income)
- ---- ---- ------- ----------- ----------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Selected American
Shares 8.78% 23.00% 14.71% 13.91% 12.48% -
Selected Special
Shares 7.84% 21.09% 15.02% 12.82% 11.30% -
Selected U.S.
Government Income -1.60% 3.65% 4.27% 6.99% - 6.67%
</TABLE>
Total returns include all capital gains and losses, as well as the
reinvestment of all dividends and capital gains distributions. Past
performance is not a guarantee of future performance. Prices of shares
will fluctuate, so that an investment, when redeemed, may be worth more
or less than originally invested.
The Selected Funds are managed by Davis Selected Advisers, L.P., which
assumed management of the funds on May 1, 1993.
<TABLE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
SELECTED AMERICAN SHARES, INC.
<CAPTION>
VALUE
SHARES (NOTE 1)
================================================================================================================================
COMMON STOCK - ( 95.13%)
AEROSPACE - (0.57%)
<S> <C> <C>
70,000 Boeing Co...................................................................................... $ 6,098,750
--------------
AGRICULTURE - (0.18%)
100,000 Archer-Daniels-Midland Co...................................................................... 1,912,500
--------------
AUTOMOBILES - (2.19%)
445,000 General Motors Corp............................................................................ 23,306,875
--------------
BANKS AND SAVING AND LOAN ASSOCIATIONS - (11.10%)
467,500 Banc One Corp.................................................................................. 15,895,000
94,340 Barnett Banks, Inc............................................................................. 5,754,740
305,465 Citicorp....................................................................................... 25,239,046
402,154 First Bank Systems, Inc........................................................................ 23,324,932
183,800 Golden West Financial Corp..................................................................... 10,292,800
129,700 State Street Boston Corp..6,614,700
130,000 Wells Fargo & Co............................................................................... 31,053,750
--------------
118,174,968
--------------
CONSUMER PRODUCTS - (1.57%)
200,000 The Gillette Co................................................................................ 12,475,000
127,000 The Seagram Co. Ltd............................................................................ 4,270,375
--------------
16,745,375
--------------
ENERGY - (5.65%)
280,000 Amerada Hess Corp.............................................................................. 15,015,000
505,000 Burlington Resources, Inc...................................................................... 21,715,000
93,700 Noble Affiliates, Inc.......................................................................... 3,537,175
375,000 Noble Drilling Corp.<F1>....................................................................... 5,203,125
250,000 PanEnergy Corp...8,218,750
60,000 Schlumberger Ltd............................................................................... 5,055,000
40,000 Unocal Corp.................................................................................... 1,350,000
--------------
60,094,050
--------------
ENTERTAINMENT - (1.03%)
175,000 The Walt Disney Co............................................................................. 11,003,125
--------------
FINANCIAL - (15.75%)
825,000 American Express Co............................................................................ 36,815,625
329,831 Dean Witter, Discover & Co..................................................................... 18,882,825
390,700 Donaldson, Lufkin & Jenrette, Inc.............................................................. 12,111,700
275,000 Federal Home Loan Mortgage Corp................................................................ 23,512,500
235,000 J.P. Morgan & Co., Inc......................................................................... 19,886,875
585,800 Morgan Stanley Group Inc....................................................................... 28,777,425
604,999 Travelers Group Inc............................................................................ 27,603,079
--------------
167,590,029
--------------
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
SELECTED AMERICAN SHARES, INC. - Continued
VALUE
SHARES (NOTE1)
==============================================================================================================================
COMMON STOCK - Continued
FOOD/BEVERAGE & RESTAURANT - (5.90%)
500,000 Coca-Cola Company.............................................................................. $ 24,437,500
480,000 Guinness PLC ORD............................................................................... 3,486,668
565,000 McDonald's Corp................................................................................ 26,413,750
310,000 Tyson Foods, Inc., Class A..................................................................... 8,486,250
--------------
62,824,168
--------------
INSURANCE - (18.40%)
582,515 The Allstate Corp.............................................................................. 26,577,274
225,000 American International Group, Inc.............................................................. 22,190,625
348,000 W.R. Berkley Corp.............................................................................. 14,529,000
450,400 Chubb Corp..................................................................................... 22,463,700
921,000 Equitable Companies Inc........................................................................ 22,909,875
170,200 General Re Corp................................................................................ 25,912,950
20,000 NAC Re Corp.................................................................................... 670,000
300,000 National Re Corp............................................................................... 11,325,000
225,000 Progressive Corp. (Ohio)....................................................................... 10,406,250
380,000 Risk Capital Holdings, Inc.<F1>................................................................ 7,457,500
469,952 SunAmerica, Inc................................................................................ 26,552,288
2,016 Transport Holdings, Inc., ClassA<F1>........................................................... 92,736
75,600 UNUM Corp...................................................................................... 4,706,100
--------------
195,793,298
--------------
PAPER PRODUCTS - (1.66%)
415,200 Fort Howard Corp.<F1>.......................................................................... 8,252,100
367,000 Jefferson Smurfit Corporation<F1>.............................................................. 3,991,125
70,000 Kimberly-Clark Corp............................................................................ 5,407,500
--------------
17,650,725
--------------
PHARMACEUTICAL AND HEALTH CARE - (3.77%)
300,000 Johnson & Johnson.............................................................................. 14,850,000
60,000 Merck & Co., Inc............................................................................... 3,877,500
300,000 Pfizer Inc..................................................................................... 21,412,500
--------------
40,140,000
--------------
PHOTOGRAPHIC - (1.48%)
202,000 Eastman Kodak Co............................................................................... 15,705,500
--------------
PUBLISHING - (3.28%)
236,200 Gannett Co., Inc............................................................................... 16,711,150
250,000 Tribune Co..................................................................................... 18,156,250
--------------
34,867,400
--------------
RAILROAD - (1.53%)
500,400 Illinois Central Corp.......................................................................... 14,198,850
30,000 Union Pacific Corp............................................................................. 2,096,250
--------------
16,295,100
--------------
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
SELECTED AMERICAN SHARES, INC. - Continued
VALUE
SHARES (NOTE1)
==============================================================================================================================
COMMON STOCK - Continued
REAL ESTATE - (8.64%)
94,100 Avalon Properties, Inc......................................................................... $ 2,046,675
32,000 Bay Apartment Communities, Inc................................................................. 828,000
75,000 Capstead Mortgage Corp......................................................................... 2,090,625
1,051,194 Centerpoint Properties Corporation............................................................. 25,491,455
91,500 Federal Realty Investment Trust 2,058,750
969,300 Host Marriott Corp.<F1>........................................................................ 12,722,063
150,000 Kimco Realty Corp.............................................................................. 4,237,500
75,000 Mid-America Apartment Communities,Inc.......................................................... 1,903,125
157,500 Public Storage, Inc............................................................................ 3,248,438
272,500 Saul Centers, Inc.............................................................................. 3,780,938
270,500 Sizeler Property Investors Inc................................................................. 2,366,875
35,000 Sovran Self Storage Inc........................................................................ 927,500
75,000 Storage USA, Inc............................................................................... 2,418,750
406,900 Vornado Realty Trust........................................................................... 16,632,034
287,300 Weingarten Realty Investors.................................................................... 11,132,875
--------------
91,885,603
--------------
RETAIL - (1.42%)
205,000 Harcourt General, Inc.......................................................................... 10,250,000
90,000 Home Depot, Inc................................................................................ 4,860,000
--------------
15,110,000
--------------
TECHNOLOGY - (8.96%)
250,100 Adobe Systems, Inc............................................................................. 8,972,338
310,000 Applied Materials, Inc.<F1>.................................................................... 9,455,000
239,000 Hewlett-Packard Co............................................................................. 23,810,375
630,000 Intel Corp..................................................................................... 46,265,625
190,000 Novellus Systems, Inc.<F1>..................................................................... 6,840,000
--------------
95,343,338
--------------
TELECOMMUNICATIONS - (1.97%)
381,000 AirTouch Communications,Inc.<F1>............................................................... 10,763,250
400,000 MCI Communications Corp........................................................................ 10,250,000
--------------
21,013,250
--------------
UTILITIES - (0.08%)
50,000 NUI Corp....................................................................................... 893,750
--------------
Total Common Stock - (identified cost $731,709,132)....................................... 1,012,447,804
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996
(UNAUDITED)
SELECTED AMERICAN SHARES, INC. - Continued
VALUE
SHARES (NOTE1)
==============================================================================================================================
CONVERTIBLE PREFERRED STOCK - (3.60%)
50,000 Banc One Pfd., $3.50, Ser. C Conv. Pfd......................................................... $ 3,337,500
89,000 Delta Air Lines, Inc., Depository Shares, $3.50, Ser. C Conv. Pfd.............................. 5,607,000
50,000 First Bank Systems, Inc., $3.5625, Ser. 1991-A Conv. Pfd....................................... 4,950,000
899,000 The News Corp. Ltd., Sponsored ADR Pfd......................................................... 18,092,375
62,300 Security Capital Industrial Trust, 7.00%, Ser. B Cum. Conv. Pfd................................ 1,440,688
22,500 Travelers Group Inc., 5.50%, Ser. B Conv. Pfd.................................................. 2,070,000
50,000 Unocal Corp., 3.50%, Conv. Pfd................................................................. 2,818,750
--------------
Total Convertible Preferred Stock _ (identified cost $30,377,131)......................... 38,316,313
--------------
CONVERTIBLE BONDS - (1.05%)
$ 4,000,000 Chevron Corp., Exchangeable Sr. Deb., 6.50%, 01/15/03.......................................... 5,760,000
3,000,000 Equitable Companies Inc., 6.125%, 12/15/24..................................................... 3,390,000
850,000 Mitsubishi Bank Ltd., 3.00%, 11/30/02.......................................................... 988,125
1,000,000 Noble Affiliates, Inc., Conv. Sub. Note, 4.25%, 11/01/03....................................... 1,090,000
--------------
Total Convertible Bonds - (identified cost $9,981,236)..................................... 11,228,125
--------------
SHORT TERM - (0.70%)
7,460,000 Federal Farm Credit Bank Discount Note, 5.25%, 07/01/96
- (identified cost $7,460,000)............................................................... 7,460,000
--------------
TOTAL INVESTMENTS - (100.48%) - (identified cost $779,527,499) - <F2>...................... 1,069,452,242
LIABILITIES LESS OTHER ASSETS - (0.48%).................................................... (5,132,793)
--------------
NET ASSETS - (100%)................................................................... $1,064,319,449
==============
<FN>
<F1> Non-Income Producing Security
<F2> Aggregate cost for Federal Income Tax purposes is $779,527,499. At June 30, 1996
unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation.................................................................... $ 297,765,339
Unrealized depreciation.................................................................... (7,840,596)
--------------
Net unrealized appreciation........................................................... $ 289,924,743
==============
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
SELECTED SPECIAL SHARES, INC.
<CAPTION>
VALUE
SHARES (NOTE 1)
=============================================================================================================================
COMMON STOCK - (94.05%)
APPAREL - (4.53%)
<S> <C> <C>
25,000 Cutter & Buck, Inc.<F1>........................................................................ $ 303,125
29,000 Oakley, Inc.<F1>............................................................................... 1,319,500
41,400 Sola International, Inc.<F1>................................................................... 1,190,250
-------------
2,812,875
-------------
COMMUNICATIONS - (6.27%)
25,000 MFS Communications Company, Inc.<F1>........................................................... 940,625
25,000 OzEmail Ltd. <F1> - ADS........................................................................ 321,875
33,000 U.S. Satellite Broadcasting Company<F1>........................................................ 1,245,750
25,000 WorldCom, Inc. <F1>............................................................................ 1,384,375
-------------
3,892,625
-------------
ENERGY - (1.32%)
10,000 Carbo Ceramics, Inc. <F1>...................................................................... 220,000
10,500 Diamond Offshore Drilling, Inc.<F1>............................................................ 601,125
-------------
821,125
-------------
ENTERTAINMENT - (8.75%)
20,000 Cinar Films, Inc., Class B<F1>................................................................. 435,000
52,547 Gaylord Entertainment Company.................................................................. 1,484,453
15,000 Harman International Industries................................................................ 738,750
25,000 Pixar, Inc.<F1>................................................................................ 487,500
50,000 Regal Cinemas, Inc.<F1>........................................................................ 2,287,500
-------------
5,433,203
-------------
FINANCIAL SERVICES - (9.04%)
40,000 The Charles Schwab Corporation................................................................. 980,000
25,000 Collective Bancorp, Inc........................................................................ 590,625
15,000 MSB Bancorp, Inc............................................................................... 258,750
25,000 Northern Trust Company......................................................................... 1,443,750
30,000 TCF Financial Corporation...................................................................... 997,500
45,000 Washington Mutual, Inc......................................................................... 1,344,375
-------------
5,615,000
-------------
HEALTHCARE - (2.77%)
30,000 Ballard Medical Products....................................................................... 573,750
10,000 BioChem Pharmacuticals, Inc.-ADR <F1>.......................................................... 375,000
29,500 Neurex Corporation <F1>........................................................................ 645,313
10,000 UroCor, Inc. <F1>.............................................................................. 122,500
-------------
1,716,563
-------------
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
SELECTED SPECIAL SHARES, INC. - Continued
VALUE
SHARES (NOTE 1)
===============================================================================================================================
COMMON STOCK - Continued
INDUSTRIAL PRODUCTS - (6.39%)
15,000 C.P. Clare Corporation<F1>..................................................................... $ 386,250
10,300 Illinois Tool Works, Inc....................................................................... 696,537
30,000 Kennametal, Inc................................................................................ 1,020,000
34,500 Methode Electronics, Inc. - A.................................................................. 586,500
25,500 Molex Inc., Class A............................................................................ 749,062
35,000 X-Rite, Inc.................................................................................... 533,750
-------------
3,972,099
-------------
INFORMATION PROCESSING - SERVICES - (5.05%)
25,000 Automatic Data Processing Inc.................................................................. 965,625
25,000 Continuum Company, Inc. <F1>................................................................... 1,450,000
18,000 DST Systems, Inc. <F1>......................................................................... 576,000
3,000 Paychex, Inc................................................................................... 144,375
-------------
3,136,000
-------------
INSURANCE - (3.33%)
30,500 W.R. Berkley Corporation....................................................................... 1,273,375
25,000 Horace Mann EducatorsCorporation............................................................... 793,750
-------------
2,067,125
-------------
LODGING - (4.94%)
42,000 Micros Systems, Inc.<F1>....................................................................... 1,170,750
90,300 Red Lion Hotels, Inc.<F1>...................................................................... 1,896,300
-------------
3,067,050
-------------
METALS - (2.21%)
35,000O M Group, Inc................................................................................... 1,373,750
-------------
PACKAGING - (2.33%)
15,000 Sealed Air Corporation<F1>..................................................................... 504,375
33,250 Sonoco Products Company........................................................................ 943,469
-------------
1,447,844
-------------
RESTAURANTS - (2.81%)
10,000 Landry's Seafood Restaurants, Inc.<F1>......................................................... 247,500
38,000 Lone Star Steakhouse and Saloon, Inc.<F1>...................................................... 1,434,500
2,000 Quality Dining, Inc. <F1>...................................................................... 65,500
-------------
1,747,500
-------------
RETAILING - (13.72%)
120,000 Eckerd Corporation <F1>........................................................................ 2,715,000
29,000 Just For Feet, Inc.<F1>........................................................................ 1,533,375
20,200 Kohl's Corporation<F1>......................................................................... 739,825
35,000 Office Max, Inc.<F1>........................................................................... 835,625
3,000 PETsMart, Inc. <F1>............................................................................ 143,250
30,000 Sunglass Hut International<F1>................................................................. 731,250
25,000 Tiffany & Co................................................................................... 1,825,000
-------------
8,523,325
-------------
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
SELECTED SPECIAL SHARES, INC. - Continued
VALUE
SHARES (NOTE 1)
===============================================================================================================================
COMMON STOCK - Continued
TECHNOLOGY - (8.62%)
20,000 Affinity Technology Group, Inc.<F1>............................................................ $ 170,000
10,500 C-Cube Microsystems, Inc. <F1>................................................................ 346,500
15,000 Conductus, Inc. <F1>........................................................................... 159,375
25,000 Fusion Systems Corporation<F1>................................................................. 618,750
38,000 Loral Space & Communicaiotns Ltd.<F1>.......................................................... 517,750
35,450 Thermo Electron Corporation<F1>................................................................ 1,475,606
25,000 ThermoLase Corporation <F1>.................................................................... 681,250
35,700 ThermoQuest Corporation <F1>................................................................... 495,338
27,000 Waters Corporation............................................................................. 891,000
-------------
5,355,569
-------------
TEMPORARY HELP - SERVICES - (9.63%)
45,000 Interim Services, Inc.<F1>..................................................................... 1,935,000
18,900 Labor Ready, Inc. <F1>......................................................................... 529,200
40,500 On Assignment, Inc.<F1>........................................................................ 1,508,625
2,000 The Registry, Inc. <F1>........................................................................ 58,500
70,000 Robert Half International, Inc.<F1>............................................................ 1,951,250
-------------
5,982,575
-------------
TRANSPORTATION - (2.34%)
40,000 Bombardier, Inc. Class B5...................................................................... 98,240
20,000 Kansas City Southern Industries, Inc........................................................... 857,500
-------------
1,455,740
-------------
Total Common Stock -(identified cost $45,340,570).......................................... 58,419,968
SHORT TERM - (6.42%)
$ 3,985,000 State Street Bank and Trust Company Repurchase Agreement, 5.10%, 07/01/96 dated
06/28/96, repurchased value of $3,986,694 (collateralized by $3,975,000 par value
U.S. Treasury Notes, 5.875%, 07/31/97, market value $4,066,869) -
(identified cost $3,985,000)............................................................ 3,985,000
-------------
TOTAL INVESTMENTS -(100.47%) - (identified cost $49,325,570) - (a)............................. 62,404,968
LIABILITIES LESS OTHER ASSETS - (0.47%)....................................................... (289,508)
-------------
NET ASSETS - (100%)........................................................................ $ 62,115,460
=============
<FN>
<F1> Non-Income Producing Security.
<F2> Aggregate cost for Federal Income Tax purposes is $49,325,570. At June 30, 1996
unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation.................................................................... $ 14,524,721
Unrealized depreciation.................................................................... (1,445,323)
-------------
Net unrealized appreciation........................................................... $ 13,079,398
=============
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED U.S. GOVERNMENT INCOME FUND
<CAPTION>
VALUE
PRINCIPAL (NOTE 1)
==============================================================================================================================
ADJUSTABLE RATE MORTGAGES - (1.13%)
<S> <C> <C>
$ 25,021 Government National Mortgage Association, Pool No. 008901, 7.00%, 01/20/22..................... $ 25,470
27,198 Government National Mortgage Association, Pool No. 008299, 7.25%, 09/20/23..................... 27,620
28,572 Government National Mortgage Association, Pool No. 008360, 6.50%, 01/20/24..................... 28,760
-------------
Total ARM - (identified cost $74,440)...................................................... 81,850
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION - (9.67%)
222,542 8.00%, 09/01/21, Pool No. D2-7906.............................................................. 225,462
288,402 8.00%, 10/01/21, Pool No. D2-7334.............................................................. 292,186
183,087 8.00%, 06/01/22, Pool No. D2-0670.............................................................. 185,490
-------------
Total FHLMC - (identified cost $698,445)................................................... 703,138
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - (0.66%)
4,000 10.00%, 07/01/05, Pool No. 98835................................................................ 4,232
16,950 10.00%, 08/01/05, Pool No. 9990................................................................. 317,935
15,262 8.50%, 07/01/17, Pool No. 51539................................................................ 15,782
9,912 8.50%, 04/01/21, Pool No. 117725............................................................... 10,210
-------------
Total FNMA - (identified cost $47,379)..................................................... 48,159
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - (16.02%)
61,605 10.00%, 09/15/01, Pool No. 265854............................................................... 64,989
68,421 9.00%, 04/15/16, Pool No. 147297............................................................... 72,411
71,439 9.00%, 05/15/16, Pool No. 161091............................................................... 75,570
207,964 9.00%, 06/15/16, Pool No. 157698............................................................... 219,987
11,208 9.00%, 07/15/16, Pool No. 162087............................................................... 11,857
123,312 9.00%, 07/15/16, Pool No. 162605............................................................... 130,503
120,077 9.00%, 11/15/16, Pool No. 179412............................................................... 127,019
81,546 9.00%, 08/15/17, Pool No. 209243............................................................... 86,192
32,328 9.00%, 05/15/18, Pool No. 235263............................................................... 34,144
87,174 9.00%, 08/15/18, Pool No. 258776............................................................... 92,069
228,366 9.00%, 08/15/19, Pool No. 227430............................................................... 240,998
8,377 8.50%, 10/15/19, Pool No. 277446............................................................... 8,679
-------------
Total GNMA - (identified cost $1,102,912).................................................. 1,164,418
-------------
MEDIUM TERM NOTES - (22.65%)
500,000 Federal Home Loan Mortgage Corporation, 6.615%, 03/03/04....................................... 479,375
500,000 Federal National Mortgage Association, 6.42%, 12/01/08......................................... 472,710
200,000 Federal Home Loan Bank, 7.24%, 11/09/10........................................................ 190,880
500,000 Federal Home Loan Mortgage Corporation, 8.00%, 06/20/11........................................ 503,929
-------------
Total Medium Term Notes - (identified cost $1,652,115)..................................... 1,646,894
-------------
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996, (UNAUDITED)
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED U.S. GOVERNMENT INCOME FUND - Continued
VALUE
PRINCIPAL (NOTE 1)
==============================================================================================================================
COLLATERALIZED MORTGAGE OBLIGATIONS & REAL ESTATE MORTGAGE
INVESTMENT CONDUITS - (42.25%)
$ 400,000 Federal Home Loan Mortgage Corporation, FHG-32 E, 7.50%, 03/25/05.............................. $ 405,016
500,000 Federal Home Loan Mortgage Corporation, 1992 - 1340 H, 7.50%, 08/15/07......................... 505,000
500,000 Federal National Mortgage Association, 1992 - 152 M, 7.75%, 08/25/07........................... 512,500
500,000 Federal National Mortgage Association, 1993 - 11 O, 7.35%, 02/25/08............................ 492,340
513,689 Federal National Mortgage Association, 1996 - 1 EZ, 6.50%, 03/25/09............................ 449,317
500,000 United States Department of Veteran Affairs, Mortgage Trust 1992-1, 7.75%, 07/15/1748.......... 8,435
107,993 Federal Home Loan Mortgage Corporation, 1403 0A, 6.00%, 11/15/21............................... 107,352
118,041 Federal Home Loan Mortgage Corporation, 1487 H, 6.00%, 03/15/231............................... 12,065
-------------
Total CMO'S & REMIC'S - (identified cost $3,070,412)....................................... 3,072,025
-------------
SHORT TERM - (3.99%)
290,000 State Street Bank and Trust Company Repurchase Agreement, 5.10%, 07/03/96
dated 06/28/96, repurchased value of $290,205 (collateralized by $285,000
par value U.S. Treasury Notes, 7.50%, 01/31/97, market value $296,644)
(identified cost $290,000 ).................................................................. 290,000
-------------
TOTAL INVESTMENTS - (96.37%) - (identified cost $6,935,703) - <F1>........................ 7,006,484
OTHER ASSETS LESS LIABILITIES - (3.63%).................................................... 264,021
-------------
NET ASSETS - (100%)................................................................... $ 7,270,505
=============
<FN>
<F1> Aggregate cost for Federal Income Tax purposes is $6,935,703. At June 30, 1996
unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation.................................................................... $ 149,147
Unrealized depreciation.................................................................... (78,366)
-------------
Net unrealized appreciation........................................................... $ 70,781
=============
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND - Continued
<CAPTION>
VALUE
PRINCIPAL (NOTE 1)
==============================================================================================================================
FEDERAL FARM CREDIT BANK - (8.90%)
<S> <C> <C>
$ 300,000 5.25%, 07/02/96 Discount Note.................................................................. $ 299,956
7,175,000 5.17%, 07/12/96 Discount Note.................................................................. 7,163,665
5,085,000 4.89%, 08/19/96 Discount Note.................................................................. 5,051,155
-------------
Total Federal Farm Credit Bank - (identified cost $12,514,776)............................. 12,514,776
-------------
FEDERAL HOME LOAN BANK - (20.00%)
5,255,000 5.25%, 07/05/96 Discount Note.................................................................. 5,251,935
5,130,000 5.26%, 07/08/96 Discount Note.................................................................. 5,124,753
5,850,000 5.22%, 07/15/96 Discount Note.................................................................. 5,838,125
1,645,000 5.24%, 07/22/96 Discount Note.................................................................. 1,639,972
4,915,000 5.28%, 08/12/96 Discount Note.................................................................. 4,884,724
5,440,000 4.87%, 08/28/96 Discount Note.................................................................. 5,397,318
-------------
Total Federal Home Loan Bank - (identified cost $28,136,827)............................... 28,136,827
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION - (34.50%)
5,355,000 5.21%, 07/01/96 Discount Note.................................................................. 5,355,000
5,300,000 5.27%, 07/03/96 Discount Note.................................................................. 5,298,448
7,280,000 5.25%, 07/10/96 Discount Note.................................................................. 7,270,445
3,925,000 5.25%, 07/18/96 Discount Note.................................................................. 3,915,269
1,590,000 5.25%, 08/05/96 Discount Note.................................................................. 1,581,884
1,490,000 5.20%, 08/21/96 Discount Note.................................................................. 1,479,024
15,505,000 5.24%, 09/03/96 Discount Note.................................................................. 15,360,562
5,050,000 5.335%, 09/09/96 Discount Note................................................................. 4,997,613
3,305,000 5.34%, 09/16/96 Discount Note.................................................................. 3,267,251
-------------
Total Federal Home Loan Mortgage Corporation - (identified cost $48,525,496)............... 48,525,496
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - (35.67%)
10,185,000 4.87%, 07/09/96 Discount Note.................................................................. 10,173,978
195,000 5.22%, 07/12/96 Discount Note.................................................................. 194,689
8,855,000 5.27%, 07/19/96 Discount Note.................................................................. 8,831,667
4,130,000 5.24%, 08/06/96 Discount Note.................................................................. 4,108,359
2,365,000 5.29%, 08/13/96 Discount Note.................................................................. 2,350,056
1,840,000 5.30%, 08/20/96 Discount Note.................................................................. 1,826,456
1,090,000 5.21%, 08/22/96 Discount Note.................................................................. 1,081,797
10,560,000 5.14%, 08/29/96 Discount Note.................................................................. 10,471,044
6,160,000 5.33%, 09/10/96 Discount Note.................................................................. 6,095,246
5,100,000 5.345%, 09/12/96 Discount Note................................................................. 5,044,724
-------------
Total Federal National Mortgage Association - (identified cost $50,178,016)................ 50,178,016
-------------
SELECTED FUNDS
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
SELECTED CAPITAL PRESERVATION TRUST -
SELECTED DAILY GOVERNMENT FUND - Continued
VALUE
PRINCIPAL (NOTE 1)
===============================================================================================================================
TENNESSEE VALLEY AUTHORITY _ (1.23%)
$ 1,740,000 5.26%, 07/22/96 Discount Note - (identified cost $1,734,661)................................... $ 1,734,661
-------------
TOTAL INVESTMENTS - (100.30%) - (identified cost $141,089,776) - <F1>...................... 141,089,776
LIABILITIES LESS OTHER ASSETS - (0.30%).................................................... (421,719)
-------------
NET ASSETS - (100%)................................................................... $ 140,668,057
=============
<FN>
<F1> Aggregate cost for Federal income tax purposes is $141,089,776.
</FN
</TABLE>
See Notes to Financial Statements.
<TABLE>
SELECTED FUNDS
STATEMENT OF ASSETS AND LIABILITIES
At June 30, 1996 (Unaudited)
==============================================================================================================================
<CAPTION>
U.S.
AMERICAN SPECIAL GOVERNMENT DAILY
SHARES SHARES, INCOME GOVERNMENT
INC. INC. FUND Fund
________ _______ ___________ ___________
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value
(see schedules of investments).............. $1,069,452,242 $ 62,404,968 $ 7,006,484 $ 141,089,776
Cash.......................................... 46,836 4,699 48,264 3,732
Receivables:
Dividends and interest...................... 1,887,470 23,542 50,894 -
Capital stock sold.......................... 624,843 22,820 100 4,130
Investment securities sold.................. 2,433,640 989,951 171,481 _
Due from adviser............................ _ - 10,462 _
Prepaid expenses.............................. 79,498 23,674 12,071 20,304
______________ ____________ ___________ _____________
Total assets.............................. 1,074,524,529 63,469,654 7,299,756 141,117,942
______________ ____________ ___________ _____________
LIABILITIES:
Payables:
Capital stock reacquired.................... 246,777 27,151 3,000 37,459
Investment securities purchased............. 9,014,625 1,240,337 _ _
Accrued expenses.............................. 943,678 86,706 11,539 97,695
Payable to adviser............................ _ _ _ 73,348
Distributions payable......................... _ _ 14,712 241,383
______________ ____________ ___________ _____________
Total liabilities......................... 10,205,080 1,354,194 29,251 449,885
______________ ____________ ___________ _____________
NET ASSETS:..................................... $1,064,319,449 $ 62,115,460 $ 7,270,505 $ 140,668,057
============== ============ =========== =============
SHARES OUTSTANDING (NOTE 5)..................... 56,612,185 5,498,020 828,569 140,668,057
============== ============ =========== =============
NET ASSET VALUE, offering and
redemption price per share (Net
assets / shares outstanding)................ $ 18.80 $ 11.30 $ 8.77 $ 1.00
========== ========== ========= ==========
NET ASSETS CONSIST OF:
Paid-in capital............................... $ 761,454,1323 $ 44,561,872 $ 7,251,963 $ 140,668,057
Deficit accumulated net investment income .... (1,251,460) _ _ _
Accumulated net realized
gain (loss)................................. 14,191,033 4,474,190 (52,239) _
Unrealized appreciation
on investments.............................. 289,924,743 13,079,398 70,781 _
______________ ____________ ___________ _____________
$1,064,319,449 $ 62,115,460 $ 7,270,505 $ 140,668,057
============== ============ =========== =============
</TABLE>
See Notes to Financial Statements.
<TABLE>
SELECTED FUNDS
STATEMENT OF OPERATIONS
For the six months ended June 30, 1996 (Unaudited)
=================================================================================================================================
<CAPTION>
U.S.
AMERICAN SPECIAL GOVERNMENT DAILY
SHARES SHARES INCOME GOVERNMENT
INC. INC. FUND FUND
________ ________ __________ __________
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Dividends.................................. $ 9,944,778 $ 163,406 $ _ $ _
Interest................................... 440,004 71,282 276,770 4,599,150
____________ __________ ___________ _____________
Totalincome............................ 10,384,782 234,688 276,770 4,599,150
____________ __________ ___________ _____________
Expenses:
Management fees (Note 2)................... 3,093,668 211,471 18,511 257,586
Custodian fees 159,889 19,778 15,033 36,196
Transfer agent fees........................ 379,710 53,973 6,505 46,565
Audit fees................................. 13,100 6,006 3,501 6,020
Legal fees................................. 66,344 8,483 716 12,465
Reports to shareholders.................... 49,135 8,496 1,080 4,072
Directors fees and expenses................ 137,679 11,552 1,203 24,777
Registration and filing fees............... 53,493 14,441 7,921 36,925
Miscellaneous.............................. 43,888 1,320 208 6,602
Commissions paid under
distribution plan (Note 3)............... 1,237,100 76,026 9,255 214,655
____________ __________ ___________ _____________
Total expenses......................... 5,234,006 411,546 63,933 645,863
Reimbursement of expenses by
adviser (Note 2)......................... _ _ (10,462) -
____________ __________ ___________ _____________
Net expenses........................... 5,234,006 411,546 53,471 645,863
____________ __________ ___________ _____________
Net investment income (loss)........... 5,150,776 (176,858) 223,299 3,953,287
____________ __________ ___________ _____________
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from
investment transactions.................. 14,477,572 4,514,997 (52,225) _
Net increase in unrealized
appreciation of investments
during the period........................ 63,158,144 190,476 (291,219) _
____________ __________ ___________ _____________
Net realized and unrealized
gain (loss) on investments........... 77,635,716 4,705,473 (343,444) _
____________ __________ ___________ _____________
Net increase in net
assets resulting from
operations............................. $ 82,786,492 $4,528,615 $ (120,145) $ 3,953,287
============ ========== =========== =============
</TABLE>
See Notes to Financial Statements
See Notes to Financial Statements
<TABLE>
SELECTED FUNDS
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited)
<CAPTION>
AMERICAN SPECIAL GOVERNMENT DAILY
SHARES SHARES INCOME GOVERNMENT
INC. INC. FUND FUND
________ _______ __________ __________
<S> <C> <C> <C> <C>
OPERATIONS:
Investment income (loss)-net................... $ 5,150,776 $ (176,858) $ 223,299 $ 3,953,287
Net realized gain (loss) from
investment transactions...................... 14,477,572 4,514,997 (52,225) _
Net increase (decrease)in unrealized
appreciation of investments.................. 63,158,144 190,476 (291,219) _
______________ ___________ ___________ ____________
Net increase (decrease) in net
assets resulting from operations............. 82,786,492 4,528,615 (120,145) 3,953,287
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income.......................... (6,551,373) _ (223,299) (3,953,287)
Realized gains from investment
transactions................................. (15,895,646) 1,834,216 (13,354) _
CAPITAL SHARE
TRANSACTIONS
(NOTE 5)....................................... 78,468,276 446,277 (183,749) (43,935,120)
______________ ___________ ___________ ____________
Total increase (decrease)
in net assets.............................. 138,807,749 3,140,676 (540,547) (43,935,120)
NET ASSETS:
Beginning of period............................ 925,511,700 58,974,784 7,811,052 184,603,177
______________ ___________ ___________ ____________
End of period (including
accumulated deficit in net
investment income for
American Shares of $(285,937)................ $1,064,319,449 $62,115,460 $ 7,270,505 $140,668,057
============== =========== =========== ============
</TABLE>
See Notes to Financial Statements.
<TABLE>
SELECTED FUNDS
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 1995
===============================================================================
U.S.
AMERICAN SPECIAL GOVERNMENT DAILY
SHARES SHARES INCOME GOVERNMENT
INC. INC. FUND FUND
_________ ________ __________ ___________
<S> <C> <C> <C> <C>
OPERATIONS:
Investment income (loss)-net................ $ 10,611,177 $ (314,216) $ 485,202 $ 6,765,755
Net realized gain from
investment transactions................... 23,827,346 7,761,984 22,157 _
Net increase in unrealized
appreciation of investments............... 195,166,050 8,178,588 707,952 _
_____________ ___________ ___________ ____________
Net increase in net assets resulting
from operations........................... 229,604,573 15,626,311 1,215,311 6,765,755
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income....................... (10,461,040) _ (485,202) (6,765,755)
Realized gains from investment transactions. (7,784,550) (6,343,274) (28,252) _
CAPITAL SHARE
TRANSACTIONS
(NOTE 5).................................... 184,748,738 2,417,083 (3,153,715) 62,717,354
_____________ ___________ ___________ ____________
Total increase (decrease)
in net assets........................... 396,107,721 11,700,120 (2,451,858) 62,717,354
NET ASSETS:
Beginning of period......................... 529,403,979 47,274,664 10,262,910 121,885,823
_____________ ___________ ___________ ____________
End of period (including
accumulated net
investment income for
American Shares of $150,136).............. $ 925,511,700 $ 58,974,784 $ 7,811,052 $184,603,177
============= =========== =========== ============
</TABLE>
See Notes to Financial Statements.
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 (Unaudited)
=============================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Selected Funds consist of Selected American Shares, Inc.,
Selected Special Shares, Inc. and the Selected Capital Preservation Trust.
The Companies and Trust are registered under the Investment Company Act
of 1940, as amended, as diversified, open-end management investment
companies. The Selected Capital Preservation Trust operates as a series
fund, consisting of the U.S. Government Income Fund and Daily Government
Fund. The Trust accounts separately for the assets, liabilities and
operations of each series. Davis Selected Advisers, L.P. (formerly,
Selected/Venture Advisers, L.P.) became investment adviser effective May
1, 1993. Prior to May 1, 1993, Selected Financial Services, Inc. was the
investment manager. The following is a summary of significant
accounting policies followed by the Funds in the preparation of financial
statements.
Selected American Shares, Inc. and Selected Special Shares, Inc. are
diversified, professionally managed stock-oriented funds.
Selected U.S. Government Income Fund 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 seeks to provide a high level of
current income from short-term money market securities consistent with
prudent investment management, preservation of ca-pital and maintenance
of liquidity. It invests in U.S. Government Securities and repurchase
agreements in respect thereto.
An investment in any of the Funds, as with any mutual fund, includes
risks that vary depending upon the Fund's investment objectives and
policies. There is no assurance that the investment objective of any Fund
will be achieved. A Fund's return and net asset value will fluctuate,
although Selected Daily Government 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.
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 income to
shareholders.
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 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.
D. OTHER - Securities transactions are accounted for on the trade date
(date the order to buy or sell is executed) with gain or loss on the sale of
securities being determined based upon identified cost. Interest income is
recorded on the accrual basis. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - Continued
June 30, 1996 (Unaudited)
=============================================================================
NOTE 2 - INVESTMENT ADVISORY FEES
Advisory fees are paid monthly to the investment adviser. The rate
for American Shares, Inc. is .65% on the first $500 million of average
daily net assets, .60% on the next $500 million and .55% of average daily
net assets in excess of $1 billion. The rate for Special Shares, Inc. is .70%
on the first $50 million of average daily net assets, .675% on the next
$100 million, .65% on the next $100 million and .60% of average daily net
assets in excess of $250 million. The rate for the U.S. Government Income
Fund is .50% of 1% of average daily net assets. The rate for the Daily
Government Fund is based upon daily net assets at an annual rate of .30%.
The Adviser will reimburse each Fund for any expenses (including the fee
under the agreement but excluding interest, taxes, brokerage fees,
payments made to the Distributor under any Rule 12b-1 Distribution Plan
and, where permitted, extraordinary expenses) in excess of the most
restrictive applicable expense limitation prescribed by any statute or
regulatory authority of any jurisdiction in which each Fund's shares are
qualified for offer and sale. The Adviser believes that the most
restrictive expense limitations presently applicable are 2 1/2% for the
first $30 million of average net assets, 2% for the next $70 million of
average net assets and 1 1/2% for any additional average net assets. The
Adviser has voluntarily agreed to reimburse the U.S. Government Income
Fund and the Daily Fund for any expenses in excess of 1.44% and .75%,
respectively, of average net assets.
NOTE 3 - DISTRIBUTION
For services under the distribution agreement, the Funds pay a fee of
.25% of average daily net assets. For the six months ended June 30, 1996,
for American Shares, Special Shares, U.S. Government Income and Daily
Government Funds, the Funds incurred distribution services fees totaling
$1,237,100, $76,026, $9,255, and $214,655, 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, 1996 for American
Shares, Special Shares and U.S. Government Income Fund were as follows:
<TABLE>
<CAPTION>
AMERICAN SPECIAL U.S. GOVERNMENT
SHARES, INC. SHARES, INC. INCOME FUND
____________ ____________ _______________
<S> <C> <C> <C>
Cost of purchases................. $ 1205,216,398 $ 27,641,720 $ 1,374,766
Proceeds of sales................. $ 106,894,945 $ 32,728,934 $ 1,723,224
</TABLE>
NOTE 5 - CAPITAL STOCK
At June 30, 1996, there were 100 million shares of capital stock of
Selected American Shares ($1.25 par value per share) authorized. At June
30, 1996, there were 100 million shares of capital stock of Selected
Special Shares ($0.25 par value per share) authorized. At June 30, 1996,
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>
SELECTED FUNDS
NOTES TO FINANCIAL STATEMENTS - Continued
June 30, 1996 (Unaudited)
============================================================================================================================
NOTE 5 - CAPITAL STOCK - Continued
Six months ended
June 30, 1996 (Unaudited)
------------------------------------------------------------------------------------
<CAPTION>
U.S.
AMERICAN SPECIAL GOVERNMENT DAILY
SHARES SHARES INCOME GOVERNMENT
INC. INC. FUND FUND
________ _______ __________ ___________
<S> <C> <C> <C> <C>
Shares sold........................... 6,484,774 316,588 11,390 17,792,356
Shares issued in reinvestment
of distributions.................... 1,144,915 154,162 22,231 4,027,322
____________ ___________ ___________ ____________
7,629,689 470,750 33,621 21,819,678
Shares redeemed....................... (3,362,600) (432,717) (54,135) (65,754,798)
____________ ___________ ___________ ____________
Net increase (decrease)............. 4,267,089 (38,033) (20,514) 43,935,120
============ =========== =========== ============
Proceeds from shares sold............. $119,047,854 $ 3,512,855 $ 101,156 $ 17,792,356
Proceeds from shares issued in
reinvestment of distributions....... 20,971,379 1,708,119 197,692 4,027,322
____________ ___________ ___________ ____________
140,019,233 5,220,974 298,848 21,819,678
Cost of shares redeemed............... (61,550,957) (4,774,697) (482,597) (65,754,798)
____________ ___________ ___________ _____________
Net increase (decrease)............. $ 78,468,276 $ (446,277) $ (183,749) $(43,935,120)
============ =========== =========== ============
</TABLE>
<TABLE>
Year ended
December 31, 1995
-----------------------------------------------------------------------------
<CAPTION>
U.S.
AMERICAN SPECIAL GOVERNMENT DAILY
SHARES SHARES INCOME GOVERNMENT
INC. INC. FUND FUND
________ _______ __________ ___________
<S> <C> <C> <C> <C>
Shares sold........................... 16,050,736 652,908 57,950 176,384,445
Shares issued in reinvestment
of distributions.................... 1,007,620 552,945 47,783 6,595,015
____________ ___________ ____________ ____________
17,058,356 1,205,853 105,733 182,979,460
Shares redeemed....................... (5,166,217) (988,505) (471,173) (120,262,106)
____________ ___________ ____________ ____________
Net increase (decrease)............. 11,892,139 217,348 (365,440) 62,717,354
============ =========== ============ ============
Proceeds from shares sold............. $284,521,260 $ 7,243,689 $ 519,478 $176,384,445
Proceeds from shares issued in
reinvestment of distributions....... 16,843,614 5,824,570 424,317 6,595,015
____________ ___________ ____________ ____________
265,364,874 13,068,259 943,795 182,979,460
Cost of shares redeemed............... (80,616,136) (10,651,176) (4,097,510) (120,262,106)
____________ ___________ ____________ ____________
Net increase (decrease)............. $184,748,738 $ 2,417,083 $ (3,153,715) $ 62,717,354
============ =========== ============ ============
</TABLE>
<TABLE>
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
AMERICAN SHARES, INC.
The following financial information represents selected data for
each share of capital stock outstanding throughout each period:
<CAPTION>
Six
Months
Ended
June 30,
1996 Year ended December 31,
-----------------------------------------------------------------------
(Unaudited) 1995 1994 1993<F2> 1992 1991
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $17.68 $ 13.09 $ 14.59 $ 17.13 $ 18.43 $ 12.79
Income From Investment Operations
- ---------------------------------
Net Investment Income.................. .10 .22 .20 .24 .19 .23
Net Gains or Losses on Securities
(both realized and unrealized)....... 1.44 4.74 (.66) .70 .89 5.65
------ ------- ------- ------- ------- -------
Total From Investment Operations..... 1.54 4.96 (.46) .94 1.08 5.88
Less Distributions
- ------------------
Dividends (from net investment
income).............................. (.12) (.22) (.20) (.24) (.19) (.23)
Distributions (from capital gains)..... (.30) (.15) (.83) (3.24) (2.19) -
Distributions in Excess of Net
Investment Income.................... _ - (.01) _ - (.01)
------ ------- ------- ------- ------- -------
Total Distributions.................. (.42) (.37) (1.04) (3.48) (2.38) (.24)
------ ------- ------- ------- ------- -------
Net Asset Value, End of Period........... $18.80 $ 17.68 $ 13.09 $ 14.59 $ 17.13 $ 18.43
====== ======= ======= ======= ======= =======
Total Return............................. 8.78% 38.09% (3.20)% 5.42% 5.78% 46.37%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted)........................ 1,064,319 925,512 529,404 451,392 580,889 711,905
Ratio of Expenses to Average
Net Assets........................... 1.06%<F3> 1.09% 1.26% 1.01%<F1> 1.17% 1.19%
Ratio of Net Income to Average
Net Assets........................... 1.04%<F3> 1.42% 1.42% 1.37% .95% 1.41%
Portfolio Turnover Rate................ 11% 27% 23% 79% 50% 21%
<FN>
<F1> Had the Adviser not absorbed certain expenses, the ratio of expenses
for the year ended December 31, 1993 would have been 1.22%.
<F2> Effective May 1, 1993, Selected/Venture Advisers, L.P. became the
investment adviser. Until May 1, 1993, Selected Financial Services, Inc.
was the investment adviser.
<F3>Annualized
</FN>
</TABLE>
<TABLE>
SELECTED FUNDS
FINANCIAL HIGHLIGHTS
SPECIAL SHARES, INC.
The following financial information represents selected data for
each share of capital stock outstanding throughout each period:
<CAPTION>
Six Months
Ended
June 30,
1996 Year ended December 31,
--------------------------------------------------------
(Unaudited) 1995 1994 1993 1992 1991
--------- ---- ---- <F2><F3> <F3> <F3>
----- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period................................ $10.80 $9.02 $10.20 $ 10.40 $ 10.16 $9.04
Income From Investment
- ----------------------
Operations
- ----------
Net Investment Income (Loss)........ _ _ (.03) _ .07 .12
Net Gains or Losses on
Securities (both realized and
unrealized)....................... .84 3.04 (.22) 1.10 .78 2.11
------- ------- ------ ------- ------- -------
Total From Investment
Operations.................... .84 3.04 (.25) 1.10 .85 2.23
Less Distributions
- ------------------
Dividends (from net investment
income)........................... _ _ _ _ (.07) (.13)
Distributions (from capital
gains)............................ (.34) (1.26) (.93) (1.30) (.54) (.98)
------- ------- ------ ------- ------- -------
Total Distributions............. (.34) (1.26) (.93) (1.30) (.61) (1.11)
------- ------- ------ ------- ------- -------
Net Asset Value, End of Period........ $ 11.30 $ 10.80 $ 9.02 $ 10.20 $ 10.40 $ 10.16
======= ======= ====== ======= ======= =======
Total Return.......................... 7.84% 34.24% (2.56)% 10.81% 8.43% 25.53%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted)..................... 62,115 58,975 47,275 53,257 57,605 60,216
Ratio of Expenses to Average
Net Assets........................ 1.35% 1.48% 1.41% 1.24% 11.41% 1.39%
<F4> <F1> <F1>
Ratio of Net Income to Average
Net Assets........................ (.58)% (.58)% (.27)% (.07)% .56% 1.11%
<F4>
Portfolio Turnover Rate............. 47% 127% 99% 100% 41% 74%
<FN>
<F1> Had the former manager not absorbed certain expenses, the ratio of
expenses for the year ended December 31, 1992 would have been 1.47%.
Had the Adviser not absorbed certain expenses, the ratio of expenses for
the years ended December 31, 1993 and December 31, 1994 would have
been 1.51% and 1.62%, respectively.
<F2> Effective May 1, 1993, Selected/Venture Advisers, L.P. became the
investment adviser. Until May 1, 1993, Selected Financial Services, Inc.
was the investment adviser.
<F3> 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.
<F4> Annualized
</FN>
</TABLE>
<TABLE>
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:
<CAPTION>
Six
Months
Ended
June 30,
1996 Year ended December 31,
--------------------------------------------------------------
(Unaudited) 1995 1994 1993<F2> 1992 1991
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 9.20 $ 8.45 $ 9.20 $ 9.31 $ 9.70 $ 9.22
Income From Investment Operations
- ---------------------------------
Net Investment Income.................. .27 .54 .56 .61 .60
Net Gains or Losses on Securities
(both realized and unrealized)....... (.41) .78 (.75) .21 (.13) .58
------ ------ ------ ------ ------ ------
Total From Investment Operations..... (.14) 1.32 (.25) .77 .48 1.18
Less Distributions
- ------------------
Dividends (from net investment
income).............................. (.27) (.54) (.50) (.56) (.61) (.60)
Distributions (from capital gains)..... (.02) (.03) _ (.32) (.26) _
Distributions in Excess of Net
Investment Income.................... _ - _ _ _ (.10)
------ ------ ------ ------ ------ ------
Total Distributions.................. (.29) (.57) (.50) (.88) (.87) (.70)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period........... $ 8.77 $ 9.20 $ 8.45 $ 9.20 $ 9.31 $ 9.70
====== ====== ====== ====== ====== ======
Total Return............................. (1.60)% 15.97% (2.71)% 7.99% 5.11% 13.46%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted)........................ 7,271 7,781 10,263 10,336 13,945 22,019
Ratio of Expenses to Averag
Net Assets........................... 1.44% 1.44% 1.42% 1.34% 1.44% 1.41%
<F1><F3> <F1><F3> <F1> <F1> <F1>
Ratio of Net Income to Average
Net Assets........................... 6.03% 6.09% 5.70% 5.85% 6.26%<F1> 6.51%
<F3> <F3>
Portfolio Turnover Rate................ 19% 76% 65% 29% 53% 36%
<FN>
<F1> Had the former manager not absorbed certain expenses, the ratio of
expenses would have been 1.72% for the year ended December 31, 1992.
Had the Adviser not absorbed certain expenses, the ratio of expenses for
the years ended December 31, 1993, 1994 and December 31, 1995 would
have been 1.88%, 1.69% and 1.58%, respectively. Had the Adviser not
absorbed certain expenses, the ratio of expenses for the six months ended
June 30, 1995 would have been 1.73%.
<F2> Effective May 1, 1993, Selected/Venture Advisers, L.P. became the
investment adviser. Until May 1, 1993, Selected Financial Services, Inc.
was the investment adviser.
<F3> Annualized
</FN>
</TABLE>
<TABLE>
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:
<CAPTION>
Six
Months
Ended
June 30,
1996 Year ended December 31,
-------------------------------------------------------------------------
(Unaudited) 1995 1994 1993<F2> 1992 1991
--------- ---- ---- ---- ---- ----
<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................ .023 .051 .034 .023 .030 .054
Less Distributions
- ------------------
Dividends (from net
investment income)................. (.023) (.051) (.034) (.023) (.030) (.054)
------ ------- ------- ------- ------- -------
Net Asset Value, End of Period......... $1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====== ======= ======= ======= ======= =======
Total Return........................... 2.31% 5.23% 3.51% 2.34% 3.07% 5.51%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted)...................... 140,668 184,603 121,886 8,732 6,626 30,706
Ratio of Expenses to Average
Net Assets......................... .75% .75% .75% .75% .75% .68%
<F3> <F1> <F1> <F1> <F1>
Ratio of Net Income to Average
Net Assets......................... 4.61% 5.13% 3.44% 2.31% 3.02% 5.37%
<F3> <F1>
<FN>
<F1> Had the former manager not absorbed certain expenses, the ratio of
expenses for the year ended December 31, 1992 would have been 1.23%.
Had the Adviser not absorbed certain expenses, the ratio of expenses for
the years ended December 31, 1993, 1994 and 1995 would have been
2.29%, 1.07% and 0.78%, respectively.
<F2> Effective May 1, 1993, Selected/Venture Advisers, L.P. became the
investment adviser. Until May 1, 1993, Selected Financial Services, Inc.
was the investment adviser.
<F3> Annualized
</FN>
</TABLE>
SELECTED
FUNDS
124 East Marcy Street Santa Fe,
New Mexico 87501
========================================================
Directors Officers
William P. Barr Robert J. Greenebaum
Floyd A. Brown Chairman
William G. Cole Shelby M.C. Davis
Shelby M.C. Davis President
Robert J. Greenebaum Carl R. Luff
Walter E. Hoadley Vice President,
James J. McMonagle Treasurer
Martin H. Proyect & Assistant Secretary
Larry Robinson Raymond O. Padilla
Marsha Williams Vice President
& Secretary
Eileen R. Street
Assistant Treasurer
& Assistant Secretary
Investment Adviser & Distributor
Davis Selected Advisers, L.P.
124 East Marcy Street
Santa Fe, New Mexico 87501
Transfer Agent & Custodian
Investors Fiduciary Trust Company
P.O. Box 419782
Kansas City, MO 64141-6782
Counsel
D'Ancona & Pflaum
30 North LaSalle Street
Chicago, Illinois 60602
======================================
For more information about the
Selected Funds, including management
fee, charges and expenses, see the
current prospectus which must precede
oraccompany this report.
======================================
9608-60 SF70
