<PAGE>
CLIPPER FUND/TM/
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 15, 1996
To Our Shareholders:
The Annual Meeting of Shareholders of Clipper Fund/TM/ will be held on
Friday, March 15, 1996 at 9:30 a.m., at the Peninsula Hotel, Magnolia Room, 9882
Santa Monica Blvd., Beverly Hills, California. The purpose of the Annual Meeting
is to consider and vote upon the following matters, which are more fully
described in the accompanying Proxy Statement, which is incorporated into this
notice by reference:
1. Election of a Board of Directors;
2. Ratification of the selection by the Board of Directors of Ernst & Young
LLP as independent auditors for the Fund for the year ending December 31,
1996; and
3. Such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on January 31, 1996
as the record date for the determination of shareholders entitled to vote at the
Annual Meeting and to receive notice thereof.
By Order of the Board of Directors
/s/
James Gipson
Chairman & President
FEBRUARY 16, 1996
IMPORTANT
SHAREHOLDERS ARE REQUESTED TO DATE, FILL IN, SIGN AND RETURN THE ENCLOSED PROXY
IN THE ENCLOSED ENVELOPE. NO POSTAGE NEED BE AFFIXED IF MAILED WITHIN THE UNITED
STATES.
<PAGE>
CLIPPER FUND/TM/
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 15, 1996
This Proxy Statement is furnished in connection with a solicitation of proxies
by the Board of Directors of Clipper Fund/TM/ (the "Fund") for use at the Annual
Meeting of Shareholders of the Fund, to be held on Friday, March 15, 1996 at
9:30 a.m. at the Peninsula Hotel, Magnolia Room, 9882 Santa Monica Blvd.,
Beverly Hills, California, for the purposes set forth in the accompanying Notice
of Annual Meeting of Shareholders. Shareholders of record at the close of
business on January 31, 1996 will be entitled to receive notice of and to vote
at the meeting. This proxy statement will be mailed to shareholders on or about
February 16, 1996.
Each share of capital stock is entitled to one vote, except that
shareholders are entitled to cumulate votes for the election of directors. Thus,
each shareholder entitled to vote for directors will be able to give one
candidate that number of votes which is equal to six (the number of directors to
be elected) multiplied by the number of shares that the shareholder holds, or be
able to distribute that number of votes among two or more candidates in such
manner as the shareholder sees fit. Cumulative voting will be provided to all
shareholders only if a shareholder at the meeting and prior to the election of
directors gives notice of his intention to cumulate votes.
The required quorum for the transaction of business at the Meeting is the
presence in person or by proxy of a majority of the shares entitled to vote at
the meeting of shareholders.
Shares represented by executed and unrevoked proxies will be voted in
accordance with the specifications made thereon, or, if no specification is
made, according to the recommendations of the Board of Directors in this Proxy
Statement. If the enclosed form of proxy is executed and returned, it
nevertheless may be revoked by giving another proxy or by a writing delivered to
the Fund. This revocation must show the shareholder's name and account number
and must be received prior to the voting at the meeting to be effective. In
addition, a shareholder attending the meeting in person, who wishes to do so,
may vote by ballot at the meeting, thereby canceling any proxy previously given.
The Fund had 6,857,636 shares of capital stock outstanding as of January 31,
1996.
Proxy materials will be mailed to shareholders of record on or about
February 16, 1996. Copies of the Fund's most recent Annual and/or Semi-Annual
report may be obtained from the Fund at no charge by writing or telephoning the
Fund at its principal executive offices at Suite 800, 9601 Wilshire Boulevard,
Beverly Hills, CA 90210, telephone (800) 776-5033 Attention: Ted Bradpiece.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following is information about persons known to the Fund to own beneficially
five percent or more of the outstanding shares of the capital stock of the Fund
as of January 31, 1996:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OWNED PERCENT
NAME AND ADDRESS OF RECORD OF CLASS
<S> <C> <C>
Charles Schwab & Co. Inc. (1) 836,654 12.2%
Attention: Mutual Fund Department
101 Montgomery Street
San Francisco, California 94104
Hewitt Associates (2) 607,925 8.9%
100 Half Day Road
Lincolnshire, Illinois 60069
Long Term Investment Pool 464,843 6.8%
State University of Iowa Foundation
Alumni Center
P.O. Box 4550
Iowa City, Iowa 52244-4550
FMC Corporation (3) 455,851 6.7%
Attn: Elaine P. Stallworth
200 East Randolph Street, 51st Floor
Chicago, IL 60601
</TABLE>
(1) Charles Schwab & Co. Inc. is the nominee account for many individual
shareholder accounts; the Fund is not aware of the size or identity of any
of the individual accounts.
(2) Hewitt Associates is the trustee for four company sponsored retirement
plans. The plans are: Hewitt Associates Money Purchase Plan, Deferred
Compensation Trust, HR10 Trust and Pension Plan. All four plans have the
same address.
(3) FMC Corporation is the trustee for four company sponsored retirement plans.
The plans are: Thrift & Stock Purchase Plan, Employee Services Corp.
Benefit Trust, Master Retirement Trust Defense Retiree Medical 401 (h) -
Salaried and Service Corporation Defense Retired Medical Trust-Hourly. All
four plans have the same address.
<PAGE>
PROPOSAL 1. ELECTION OF BOARD OF DIRECTORS
It is proposed that a Board of six (6) directors be elected, each director to
hold office indefinitely or until the next annual meeting of shareholders and
until his or her successor is elected and qualified. It is the intention of the
proxy holders named in the accompanyig form of proxy to vote such proxy for the
election of the persons listed below unless shareholders specifically indicated
in their proxies their desire to withhold authority to vote for such persons.
Unless otherwise specified, proxy holders (or their substitutes) may cast an
equal number of votes for each nominee for director or accumulate such votes and
distribute them among the nominees at the discretion of said proxy holders. The
Board of Directors does not contemplate that any nominee will be unable to serve
as a director for any reason, but if that should occur prior to the meeting, the
proxy holders reserve the right to substitute another person or persons of their
choice as nominee or nominees.
Each nominee who is deemed an "interested person" of the Fund, as defined
in the 1940 Act, is indicated by an asterisk. Mr. Gipson and Mr. Sandler are
each deemed an "interested person" of the Fund because each is an officer of
Pacific Financial Research, Inc. ("PFR" or the "Investment Adviser") and is an
officer of the Fund. Each person listed below has consented to being named in
this Proxy Statement and has indicated a willingness to serve as a director if
elected.
<TABLE>
<CAPTION>
SHARES OF CAPITAL STOCK
OF THE FUND TOTAL 1995
BENEFICIALLY OWNED COMPENSATION
DIRECTLY OR AGGREGATE FROM FUND
INDIRECTLY ON PERCENT 1995 AND
POSITION(S) POSITION(S) JANUARY 31, OF COMPENSATION FUND
NOMINEE NAME WITH FUND HELD SINCE AGE 1996 CLASS FROM FUND COMPLEX(5)
<S> <C> <C> <C> <C> <C> <C> <C>
James H. Director, 1983 54 124,222 (1) 1.8% $ -0- $ -0-
Gipson* Chairman
and President
Michael C. Director 1991 41 1,616 (1) (2) $ -0- $ -0-
Sandler * and
Vice President
Susan M. Director 1984 40 2,928 (2) $5,000 $10,000
Bernfeld
Norman B. Director 1984 64 12,256 (2) $5,000 $10,000
Williamson
Lawrence P. Director 1984 61 6,652 (3) (2) $5,000 $10,000
McNamee
F. Otis Director 1984 72 41,723 (4) (2) $5,000 $10,000
Booth, Jr.
</TABLE>
<PAGE>
(1) Of the 124,222 shares attributed to Mr. Gipson, 69,142 are held by the
Pacific Financial Research, Inc. Money Purchase Plan and Trust (the
"Plan"), 3,260 are held by the Pacific Financial Research Employees Savings
Plan (the "ESP"), 51,820 are held by Mr. Gipson of which 2,525 shares are
held in an IRA account and 2,545 are held by Mrs. Gipson in an IRA. The
69,142 shares held by the Plan include 8,749 shares in which Mr. Sandler
has a vested interest, 37,975 shares in which Mr. Gipson has a vested
interest and 1,217 shares in which Michael Kromm has a vested interest. The
3,260 shares held by the ESP include 376 shares in which Mr. Sandler has a
vested interest, 300 shares in which Mr. Gipson has a vested interest and
429 shares in which Mr. Kromm has a vested interest.
(2) The percentage of class is less than 1%.
(3) The shares attributed to Mr. McNamee are held, jointly and individually, by
Mr. and Mrs. Lawrence P. McNamee.
(4) The shares attributed to Mr. Booth are held, individually, by Mr. and Mrs.
F. Otis Booth, Jr. and in trusts for their children, Ashley Brittingham and
Scott Brittingham. Both Mr. and Mrs. Booth are trustees of these trusts.
(5) Total 1995 Compensation From Fund and Fund Complex consists of compensation
and fees paid to directors and trustees by all of the Pacific Financial
Research Funds: Clipper Fund, Inc. and Schooner Fund/(R)/.
Mr. Gipson has been President of PFR, an investment management firm, since
he founded it in 1980, and holds a similar position with and is a Trustee of the
Schooner Fund/(R)/, a registered investment company. Prior to 1980, he was a
portfolio manager with Batterymarch Financial Company and with other investment
management firms. Mr. Gipson holds 45,692 shares of the Schooner Fund/(R)/.
Mr. Sandler has been with PFR since 1984. He currently serves as Vice
President and Portfolio Manager of PFR. Prior to that, he was a Vice President
with Enterprise Systems and a Manager of Asset Redeployment for International
Harvester. Mr. Sandler holds no shares in the Schooner Fund/(R)/.
Ms. Bernfeld was in charge of operations for PFR from 1981 to 1994. She is
a Trustee of the Schooner Fund/(R)/, a registered investment company. Prior to
that, she was an accountant with Kendall and Warner, independent certified
public accountants. Ms. Bernfeld holds 14,352 shares of the Schooner Fund/(R)/
in an IRA account.
Mr. Williamson had been a Vice President and Portfolio Manager with PFR
since 1983 prior to his retirement December 31, 1990. From 1980 to 1983, he was
self-employed as an investment manager. Prior to that, he was Assistant
Treasurer and Manager of Pension Trust Administration for FMC Corporation. He is
also a Trustee of the Schooner Fund/(R)/, a registered investment company. Mr.
Williamson holds no shares in the Schooner Fund/(R)/.
<PAGE>
Professor McNamee has been a Professor of Computer Science at UCLA since
1966. He is also a Trustee of the Schooner Fund/(R)/, a registered investment
company. Professor McNamee holds no shares in the Schooner Fund/(R)/.
Mr. Booth has been a private investor and rancher from 1973 to the present.
He is also a Trustee of the Schooner Fund/(R)/, a registered investment company.
Mr. Booth holds 4,505 shares of the Schooner Fund/(R)/.
Over the last two years no nominee for director has had any material
interest in a material transaction, or a proposed material transaction, to which
PFR or the Fund was or is to be a party. During the last two years no nominee
has been indebted to the Fund. No nominee has been a party adverse to the Fund
in any material pending legal proceedings. In addition, no nominee has been the
subject of any adverse securities-related judgments or orders.
The Fund's Board of Directors has no standing audit, nominating or
compensation committee or any committee performing similar functions. The
Directors who are not "interested persons" of PFR serve as a de facto audit
committee.
Mr. Gipson has been a director and executive officer of the Fund since its
organization, in March 1993. Mr. Sandler was initially elected as a director of
the Fund in 1991. Messrs. McNamee and Booth have been directors of Fund since
its commencement of operations on February 19, 1984. Mr. Williamson was a
director and executive officer of the Fund since its organization prior to his
retirement from PFR on December 30, 1990. He currently serves as a director to
the Fund. Ms. Bernfeld was a director and executive officer of the Fund since
its organization prior to her retirement from PFR on September 30, 1994. She
currently serves as a director of the Fund. Mr. Gipson, Mr. Sandler and Mr.
Kromm/1/, Secretary/Treasurer, the Fund's executive officers, are elected
annually by the Board of Directors, and serve at the Board's pleasure.
All directors and officers of the Fund as a group (7 persons) owned
beneficially 190,966 shares of the Capital stock on January 31, 1996,
approximately 2.8% of the outstanding shares. That number consists of an
aggregate of 69,142 shares held by the Pacific Financial Research, Inc. Money
Purchase Plan and Trust, 3,260 shares held by the Pacific Financial Research
Employees Savings Plan, 41,723 shares held by Mr. and Mrs. F. Otis Booth, Jr.,
as described in the footnote to the table above, 51,820 shares held by Mr.
Gipson, as described in the footnote to the table above, 2,928 shares held by
Ms. Bernfeld in an IRA plan, 1,615 shares held by Mr. & Mrs. Sandler in IRA
plans, 12,256 shares held by Mr. Williamson in an IRA plan, 1,570 shares held by
Mr. Kromm, of which 1,298 are held in an IRA plan and 6,652 shares held by Mr.
McNamee, of which 3,776 shares are held in IRA plans, 2,001 shares are held in
trust with Mrs. McNamee and 875 shares are held in IRA plans for Mrs. McNamee.
/1/Mr. Kromm, age 50, has been with PFR since 1990 and is presently its
Operations Manager. He has been Secretary since 1992 and Treasurer since 1994.
<PAGE>
REMUNERATION OF DIRECTORS, OFFICERS AND OTHERS
Officers and directors of the Fund who are also officers, directors,
shareholders, employees or otherwise "interested persons" of the Investment
Adviser receive no remuneration from the Fund. Each other Director receives an
annual fee of $5,000. During the Fund's last fiscal year, three of the four
Directors who were not "interested persons" of the Investment Adviser received
combined fees and no expenses totalling $20,000. There were four Board of
Directors meetings held in calendar year 1995. Each of the Directors attended
100% of those meetings with the exception of Mr. Booth who attended 75% of those
meetings. The Fund has no bonus, profit-sharing, pension or retirement plan.
RECOMMENDATION AND REQUIRED VOTE
THE BOARD OF DIRECTORS, INCLUDING ALL "NON-INTERESTED" DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" ELECTION OF THE NOMINEES AS DIRECTORS OF THE FUND.
In the election of directors, the nominees receiving the highest number of
votes, up to the number of directors to be elected, will be elected directors.
THE INVESTMENT ADVISER
The Investment Adviser, located at 9601 Wilshire Boulevard, Beverly Hills,
California 90210, currently serves as investment adviser to the Fund under the
terms of the Investment Advisory Contract entered into as of April 1, 1990 (the
"Contract").
PROPOSAL 2. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The 1940 Act requires that the Fund's independent auditors be selected by a
majority of those directors who are not "interested persons" (as defined in the
1940 Act) of the Fund or the Investment Adviser; that such selection be
submitted for ratification or rejection at the Annual Meeting of Shareholders;
and that the employment of such independent auditors be conditioned on the right
of the Fund, by vote of a majority of its outstanding securities at any meeting
called for that purpose, to terminate such employment forthwith without penalty.
The Board of Directors of the Fund, including those directors who are not
"interested persons" of the Fund or the Investment Adviser, have approved the
selection of Ernst & Young LLP as independent auditors for the calendar year
ending December 31, 1996.
Accordingly, such selection of Ernst & Young LLP as independent auditors of
the Fund is submitted to shareholders for ratification or rejection. To the
knowledge of the Fund and the Investment Adviser, apart from its fees received
as independent auditors, neither the firm of Ernst & Young LLP nor any of its
partners has a direct, or material indirect, financial interest in the Fund or
the Investment Adviser or affiliates of the Investment Adviser.
A representative of Ernst & Young LLP is expected to be present at the
meeting, will have the opportunity to make a statement, and will be available to
respond to appropriate questions.
<PAGE>
RECOMMENDATION AND REQUIRED VOTE
THE BOARD OF DIRECTORS, INCLUDING ALL "NON-INTERESTED" DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" RATIFICATION OF THE SELECTION OF ERNST & YOUNG
LLP AS INDEPENDENT AUDITORS OF THE FUND.
In order to ratify the selection of Auditors, the affirmative vote of the
holders of a majority of the aggregate shares of the Fund represented and
entitled to vote at the meeting is required.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come before
the meeting. However, should any such matters properly come before the meeting,
it is the intention of the proxy holders named in the accompanying form of proxy
to vote the proxy in accordance with their judgment on such matters. Votes
withheld from any nominee for director are counted for purposes of determining
the presence or absence of a quorum for the transaction of business, but have no
other legal effect in the election of directors under California law.
Abstentions and broker non-votes will also be counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
The Fund will bear the cost of soliciting proxies. In addition to the use
of the mails, proxies may be solicited personally by telephone and the Fund may
pay persons holding shares of the Fund in their names or those of their nominees
for their expenses in sending soliciting material to their principals.
Proposals of shareholders intended to be presented at the next annual
meeting of the Fund must be received by the Fund for inclusion in the Fund's
proxy statement relating to that meeting at the principal executive offices of
the Fund at 9601 Wilshire Boulevard, Beverly Hills, California 90210, not later
than December 31, 1996.
NOTICE TO BANKS, BROKERS/DEALERS AND VOTING
TRUSTEES AND THEIR NOMINEES
Please advise the Fund, in care of National Financial Data Services, Inc., P.O.
Box 5229, Kansas City, Missouri 64120, whether other persons are the beneficial
owners of the shares for which proxies are being solicited from you and, if so,
the number of copies of the Proxy Statement, other soliciting material and
Annual Report you wish to receive in order to supply copies to the beneficial
owners of shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. ALL SHAREHOLDERS ARE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE PROXY BALLOT IN THE ENCLOSED STAMPED
ENVELOPE. IF YOU PLAN TO ATTEND THE MEETING, YOU MAY CHANGE YOUR VOTE, IF
DESIRED, AT THAT TIME.
FEBRUARY 16, 1996
