----

----

----

| CLIPPER FUNDSM |   |
|----------------|--------|

| The Fund managers will discuss the investment approach and Portfolio. A question-and-answer session will follow. |
|------------------------------------------------------------------------------------------------------------------|
|                                                                                                             |   |
| Location:                                                                                                        | The Peninsula Hotel Beverly Hills |
|                                                                                                             | 9882 South Santa Monica Boulevard |
|                                                                                                             | Beverly Hills, CA 90212 |
|                                                                                                             | Magnolia Room |
|                                                                                                             |   |
| Time:                                                                                                            | 9:30 A.M. – 11:00 A.M. (PDT) |
|                                                                                                             |   |
| Attendees:                                                                                                       | Clipper Fund shareholders, consultants, and other interested parties. |

----

| CLIPPER FUNDSM | Table of Contents |
|----------------|-------------------|

| Shareholder Letter                                                                                                                                                             | 2      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Management’s Discussion of Fund Performance                                                                                                                              | 8      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Fund Overview                                                                                                                                                                  | 10     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Expense Example                                                                                                                                                                | 11     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Schedule of Investments                                                                                                                                                        | 12     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Statement of Assets and Liabilities                                                                                                                                            | 14     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Statement of Operations                                                                                                                                                        | 15     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Statements of Changes in Net Assets                                                                                                                                            | 16     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Notes to Financial Statements                                                                                                                                                  | 17     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Financial Highlights                                                                                                                                                           | 22     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Report of Independent Registered Public Accounting Firm                                                                                                                        | 23     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Federal Income Tax Information                                                                                                                                                 | 24     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Privacy Notice and Householding                                                                                                                                                | 25     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Directors and Officers                                                                                                                                                         | 26     |

----

| CLIPPER FUNDSM | Shareholder Letter |
|----------------|--------------------|

| Average Annual Total Returns as of December 31, 2013 |
|------------------------------------------------------|
|                                                 | 1 Year | 3 Years | 5 Years | 10 Years | Since Davis assumed management (1/1/06) | Since Inception(2/29/84) |
| Clipper Fund                                         | 34.22% | 15.53% | 19.48% | 4.10% | 4.45% | 11.89% |
| S&P 500® Index                              | 32.39% | 16.18% | 17.94% | 7.41% | 7.29% | 11.31% |

----

| CLIPPER FUNDSM | Shareholder Letter – (Continued) |
|----------------|----------------------------------------|

  

----

| CLIPPER FUNDSM | Shareholder Letter – (Continued) |
|----------------|----------------------------------------|

 

----

| CLIPPER FUNDSM | Shareholder Letter – (Continued) |
|----------------|----------------------------------------|

|                                   |
|-----------------------------------|
| Christopher C. Davis              |
| President & Portfolio Manager |
|                              |
| February 3, 2014                  |

----

| CLIPPER FUNDSM | Shareholder Letter – (Continued) |
|----------------|----------------------------------------|

| American Express Co.                 | 14.97% |
|--------------------------------------|--------|
| Berkshire Hathaway Inc., Class A     | 10.06% |
| CVS Caremark Corp.                   | 9.79%  |
| Costco Wholesale Corp.               | 8.70%  |
| Bank of New York Mellon Corp.        | 7.21%  |
| Canadian Natural Resources Ltd.      | 6.53%  |
| Google Inc., Class A                 | 5.36%  |
| Alleghany Corp.                      | 4.59%  |
| Loews Corp.                          | 4.32%  |
| Laboratory Corp. of America Holdings | 3.01%  |

----

| CLIPPER FUNDSM | Shareholder Letter – (Continued) |
|----------------|----------------------------------------|

----

| CLIPPER FUNDSM | Management’s Discussion of Fund Performance |
|----------------|---------------------------------------------------|

----

----

| CLIPPER FUNDSM | Management’s Discussion of Fund Performance – (Continued) |
|----------------|-----------------------------------------------------------------------|

|    Fund & Benchmark Index      | 1-Year | 5-Year | 10-Year | Since  Fund’s Inception(02/29/84) | GrossExpenseRatio | NetExpenseRatio |
|---------------------------------------------------|--------|--------|---------|---------------------------------------------------|-------------------|-----------------|
|  Clipper Fund                                | 34.22% | 19.48% | 4.10%   | 11.89%                                            | 0.74%             | 0.74%           |
|  Standard & Poor’s 500® Index | 32.39% | 17.94% | 7.41%   | 11.31%                                            |              |            |

----

| CLIPPER FUNDSM | Fund Overview           |
|----------------|-------------------------|
|           |  December 31, 2013 |

| Portfolio Composition                   |    | Industry Weightings            |
|-----------------------------------------|---------|--------------------------------|
| (% of Fund’s 12/31/13 Net Assets) |    | (% of 12/31/13 Stock Holdings) |
|                                    |    |                           |   |   |   |
|                                    |    |                           |   | Fund | S&P 500® |
| Common Stock (U.S.)                     | 89.42%  |                           | Diversified Financials | 40.06%   | 8.44%   |
| Common Stock (Foreign)                  | 10.47%  |                           | Food & Staples Retailing | 18.76%   | 2.34%   |
| Short-Term Investments                  | 0.24%   |                           | Insurance | 11.89%   | 3.01%   |
| Other Assets & Liabilities          | (0.13)% |                           | Information Technology | 11.36%   | 18.63%   |
|                                    | 100.00% |                           | Energy | 6.53%   | 10.28%   |
|                                    |    |                           | Health Care | 4.90%   | 12.95%   |
|                                    |    |                           | Banks | 3.65%   | 2.85%   |
|                                    |    |                           | Retailing | 1.68%   | 4.48%   |
|                                    |    |                           | Food, Beverage & Tobacco | 1.17%   | 5.26%   |
|                                    |    |                           | Capital Goods | – ­   | 8.29%   |
|                                    |    |                           | Media | – ­   | 3.71%   |
|                                    |    |                           | Materials | – ­   | 3.50%   |
|                                    |    |                           | Utilities | – ­   | 2.92%   |
|                                    |    |                           | Other | – ­   | 13.34%   |
|                                    |    |                           |   | 100.00%   | 100.00%   |

|                                 |                                 |   |
|--------------------------------------|--------------------------------------|--------|
| American Express Co.                 | Consumer Finance                     | 14.97% |
| Berkshire Hathaway Inc., Class A     | Diversified Financial Services       | 10.06% |
| CVS Caremark Corp.                   | Food & Staples Retailing         | 9.79%  |
| Costco Wholesale Corp.               | Food & Staples Retailing         | 8.70%  |
| Bank of New York Mellon Corp.        | Capital Markets                      | 7.21%  |
| Canadian Natural Resources Ltd.      | Energy                               | 6.53%  |
| Google Inc., Class A                 | Software & Services              | 5.36%  |
| Alleghany Corp.                      | Reinsurance                          | 4.59%  |
| Loews Corp.                          | Multi-line Insurance                 | 4.32%  |
| Laboratory Corp. of America Holdings | Health Care Equipment & Services | 3.01%  |

|                                 |                                 |  Date of 1st    | % of Fund’s 12/31/13 |
|--------------------------------------|--------------------------------------|----------------------|----------------------------|
| Security                             | Industry                             | Purchase             | Net Assets                 |
|                                 |                                 |                 |
| ASAC II L.P., Private Placement      | Software & Services              | 10/10/13   | 2.18%            |
| Interpublic Group of Cos, Inc.       | Media                                | 05/08/13   | – ­   |
| Laboratory Corp. of America Holdings | Health Care Equipment & Services | 05/17/13   | 3.01%            |
| UnitedHealth Group Inc.              | Health Care Equipment & Services | 05/17/13   | 1.89%            |

|                           |                         | Date of    | Realized    |
|--------------------------------|------------------------------|------------|-------------|
| Security                       | Industry                     | Final Sale | Gain (Loss) |
|                           |                         |       |
| Goldman Sachs Group, Inc.      | Capital Markets              | 07/17/13   |        | $ | 4,937,430 |
| Harley-Davidson, Inc.          | Automobiles & Components | 02/14/13   |        | (27,747) |
| Interpublic Group of Cos, Inc. | Media                        | 05/17/13   |        | 2,123,527 |

----

| CLIPPER FUNDSM | Expense Example |
|----------------|-----------------|

|         | Beginning     |   | Ending                            |   | Expenses Paid       |
|--------------|---------------|--------|-----------------------------------|--------|---------------------|
|         | Account Value |   | Account Value                     |   | During Period*      |
|         | (07/01/13)    |   | (12/31/13)                        |   | (07/01/13-12/31/13) |
|         |          |   |                              |   |                |
| Actual       | $1,000.00     |   |     $1,150.99 |   | $3.96               |
| Hypothetical | $1,000.00     |   |     $1,021.53 |   | $3.72               |

----

| CLIPPER FUNDSM | Schedule of Investments |
|----------------|-------------------------|
|           | December 31, 2013       |

|                          | Shares/Units                                        |                      | Value(Note 1)                           |
|-------------------------------|-----------------------------------------------------|---------------------------|-----------------------------------------|
| COMMON STOCK – (99.89%) |
|                          | CONSUMER DISCRETIONARY – (1.68%)              |
|                          |                                                | Retailing – (1.68%) |
|                          |                                                |                      | Bed Bath & Beyond Inc.  * |   |   | 262,500 |   | $ | 21,076,125 |
|                          |                                                |                      |                                    | Total Consumer Discretionary |   |   | 21,076,125 |
|                          | CONSUMER STAPLES – (19.90%)                   |
|                          | Food & Staples Retailing – (18.74%)       |
|                          | Brasil Pharma S.A.  (Brazil)*             |                      |                                    | 1,100,000 |   |   | 3,151,849 |
|                          | Costco Wholesale Corp.                              |                      |                                    | 916,391 |   |   | 109,050,529 |
|                          | CVS Caremark Corp.                                  |                      |                                    | 1,715,900 |   |   | 122,806,963 |
|                          |                                                |                      | 235,009,341                             |
|                          | Food, Beverage & Tobacco – (1.16%)        |
|                          | Diageo PLC  (United Kingdom)              |                      |                                    | 440,742 |   |   | 14,596,934 |
|                          | Total Consumer Staples                              |                      |                                    | 249,606,275 |
|                          | ENERGY – (6.53%)                              |
|                          | Canadian Natural Resources Ltd.  (Canada) |                      |                                    | 2,418,674 |   |   | 81,847,928 |
|                          | Total Energy                                        |                      |                                    | 81,847,928 |
|                          | FINANCIALS – (55.53%)                         |
|                          | Banks – (3.65%)                               |
|                          | Commercial Banks – (3.65%)                    |
|                          | SKBHC Holdings LLC  *(a)                  |                      |                                    | 2,076 |   |   | 8,856,740 |
|                          | Wells Fargo & Co.                               |                      |                                    | 811,300 |   |   | 36,833,020 |
|                          |                                                |                      | 45,689,760                              |
|                          | Diversified Financials – (40.01%)             |
|                          | Capital Markets – (14.34%)                    |
|                          | Ameriprise Financial, Inc.                          |                      |                                    | 255,169 |   |   | 29,357,193 |
|                          | Bank of New York Mellon Corp.                       |                      |                                    | 2,585,889 |   |   | 90,350,962 |
|                          | Julius Baer Group Ltd.  (Switzerland)     |                      |                                    | 349,130 |   |   | 16,766,694 |
|                          | Oaktree Capital Group LLC, Class A                  |                      |                                    | 618,609 |   |   | 36,398,953 |
|                          | RHJ International  (Belgium)*             |                      |                                    | 1,360,720 |   |   | 6,907,465 |
|                          |                                                | 179,781,267               |
|                          | Consumer Finance – (14.97%)                   |
|                          | American Express Co.                                |                      |                                    | 2,069,633 |   |   | 187,777,802 |
|                          | Diversified Financial Services – (10.70%)     |
|                          | Berkshire Hathaway Inc., Class A  *       |                      |                                    | 709 |   |   | 126,131,100 |
|                          | Cielo S.A.  (Brazil)                      |                      |                                    | 287,958 |   |   | 8,012,904 |
|                          |                                                | 134,144,004               |
|                          |                                                |                      | 501,703,073                             |
|                          | Insurance – (11.87%)                          |
|                          | Multi-line Insurance – (4.32%)                |
|                          | Loews Corp.                                         |                      |                                    | 1,122,500 |   |   | 54,149,400 |
|                          | Property & Casualty Insurance – (1.55%)   |
|                          | Markel Corp.  *                           |                      |                                    | 33,520 |   |   | 19,453,332 |
|                          | Reinsurance – (6.00%)                         |
|                          | Alleghany Corp.  *                        |                      |                                    | 143,971 |   |   | 57,582,641 |
|                          | Everest Re Group, Ltd.                              |                      |                                    | 113,500 |   |   | 17,691,245 |
|                          |                                                | 75,273,886                |
|                          |                                                |                      | 148,876,618                             |
|                          | Total Financials                                    |                      |                                    | 696,269,451 |

----

| CLIPPER FUNDSM | Schedule of Investments – (Continued) |
|----------------|---------------------------------------------|
|           | December 31, 2013                           |

|                                   | Shares/Units/Principal                                                                                                                                                                                                                                                          |                                                 | Value(Note 1)                                     |
|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|---------------------------------------------------|
| COMMON STOCK – (CONTINUED)       |
|                                   | HEALTH CARE – (4.90%)                                                                                                                                                                                                                                                     |
|                                   |                                                                                                                                                                                                                                                                            | Health Care Equipment & Services – (4.90%) |
|                                   |                                                                                                                                                                                                                                                                            |                                                 | Laboratory Corp. of America Holdings  * |   |   | 413,380 |   | $ | 37,770,531 |
|                                   | UnitedHealth Group Inc.                                                                                                                                                                                                                                                         |                                                 |                                              | 313,760 |   |   | 23,626,128 |
|                                   |                                                                                                                                                                                                                                                                            |                                                 |                                              | 61,396,659 |
|                                   |                                                                                                                                                                                                                                                                            |   Total Health Care                             |                                              |   |   | 61,396,659 |
|                                   | INFORMATION TECHNOLOGY – (11.35%)                                                                                                                                                                                                                                         |
|                                   | Semiconductors & Semiconductor Equipment – (1.70%)                                                                                                                                                                                                                    |
|                                   | Texas Instruments Inc.                                                                                                                                                                                                                                                          |                                                 |                                              | 485,300 |   |   | 21,304,670 |
|                                   | Software & Services – (8.50%)                                                                                                                                                                                                                                         |
|                                   | ASAC II L.P., Private Placement  *(a)                                                                                                                                                                                                                                 |                                                 |                                              | 24,200,000 |   |   | 27,290,340 |
|                                   | Google Inc., Class A  *                                                                                                                                                                                                                                               |                                                 |                                              | 60,000 |   |   | 67,197,600 |
|                                   | Microsoft Corp.                                                                                                                                                                                                                                                                 |                                                 |                                              | 322,729 |   |   | 12,076,519 |
|                                   |                                                                                                                                                                                                                                                                            |                                                 | 106,564,459                                       |
|                                   | Technology Hardware & Equipment – (1.15%)                                                                                                                                                                                                                             |
|                                   | Hewlett-Packard Co.                                                                                                                                                                                                                                                             |                                                 |                                              | 514,900 |   |   | 14,406,902 |
|                                   |                                                                                                                                                                                                                                                                            |                                                 |   Total Information Technology               |   |   |   | 142,276,031 |
|                                   |                                                                                                                                                                                                                                                                            |                                                 |                                              |  TOTAL COMMON STOCK – (Identified cost $767,162,715)  |   |   | 1,252,472,469 |
| SHORT-TERM INVESTMENTS – (0.24%) |
|                                   | Mizuho Securities USA Inc. Joint Repurchase Agreement, 0.01%, 01/02/14, dated 12/31/13, repurchase value of $1,195,001 (collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-2.25%, 05/29/14-05/31/14, total market value $1,218,900)          |                                                 | $                                                 | 1,195,000 |   |   | 1,195,000 |
|                                   | Nomura Securities International, Inc. Joint Repurchase Agreement, 0.02%, 01/02/14, dated 12/31/13, repurchase value of $1,861,002 (collateralized by: U.S. Government agency mortgages in a pooled cash account, 3.00%-3.50%, 02/01/26-06/01/43, total market value $1,898,220) |                                                 |                                              | 1,861,000 |   |   | 1,861,000 |
|                                   |  TOTAL SHORT-TERM INVESTMENTS – (Identified cost $3,056,000)                                                                                                                                                                                                    |                                                 |                                              | 3,056,000 |
|                                   | Total Investments – (100.13%) – (Identified cost $770,218,715) – (b)                                                                                                                                                                                          |                                                 |                                              | 1,255,528,469 |
|                                   | Liabilities Less Other Assets – (0.13%)                                                                                                                                                                                                                                   |                                                 |                                              | (1,614,992) |
|                                   | Net Assets – (100.00%)                                                                                                                                                                                                                                                    |                                                 | $                                                 | 1,253,913,477 |

|   | *      | Non-Income producing security.                                                                                                                                                           |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                     |
|   | (a)    | Restricted Security – See Note 5 of the Notes to Financial Statements.                                                                                                             |
|   |   |                                                                                                                                                                                     |
|   | (b)    | Aggregate cost for federal income tax purposes is $776,575,325. At December 31, 2013 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows: |

|   | Unrealized appreciation     |   | $      | 520,389,159  |
|--------|-----------------------------|--------|--------|--------------|
|   | Unrealized depreciation     |   |   | (41,436,015) |
|   | Net unrealized appreciation |   | $      | 478,953,144  |

| See Notes to Financial Statements |
|-----------------------------------|

----

| CLIPPER FUNDSM | Statement of Assets and Liabilities |
|----------------|-------------------------------------|
|           | At December 31, 2013                |

|                                                                                                   |   |   |          |          |   |
|--------------------------------------------------------------------------------------------------------|--------|--------|---------------|---------------|--------|
| ASSETS:                                                                                                |   |   |          |          |   |   |
| Investments in securities at value* (see accompanying Schedule of Investments)                         |   | $      | 1,255,528,469 |          |
| Cash                                                                                                   |   |   | 1,995         |          |
| Receivables:                                                                                           |   |   |          |          |
|    Capital stock sold                                                                        |   |   | 434,202       |          |
|    Dividends and interest                                                                    |   |   | 562,466       |          |
| Prepaid expenses                                                                                       |   |   | 62,669        |          |
|     Total assets                                                                   |   |   |          | 1,256,589,801 |   |
|  LIABILITIES:                                                                                     |   |   |          |          |
| Payables:                                                                                              |   |   |          |          |
|    Capital stock redeemed                                                                    |   |   | 1,679,112     |          |
| Accrued investment advisory fee                                                                        |   |   | 610,619       |          |
| Accrued transfer agent fees                                                                            |   |   | 284,076       |          |
| Other accrued expenses                                                                                 |   |   | 102,517       |          |
|     Total liabilities                                                              |   |   |          | 2,676,324     |   |
|  NET ASSETS                                                                                       |   | $      | 1,253,913,477 |          |
|  SHARES OUTSTANDING                                                                               |   |   | 13,618,759    |          |
|  NET ASSET VALUE, offering, and redemption price per share (Net assets ÷ Shares outstanding) |   | $      |  92.07   |          |
|  NET ASSETS CONSIST OF:                                                                           |   |   |          |          |
| Paid in capital                                                                                        |   | $      | 1,122,483,379 |          |
| Undistributed net investment income                                                                    |   |   | 79,303        |          |
| Accumulated net realized losses from investments                                                       |   |   | (353,960,335) |          |
| Net unrealized appreciation on investments and foreign currency transactions                           |   |   | 485,311,130   |          |
|     Net Assets                                                                     |   |   | $             | 1,253,913,477 |   |
|                                                                                                   |   |   |          |          |   |
| *Including:                                                                                            |   |   |          |          |
|    Cost of Investments                                                                       |   | $      | 770,218,715   |          |
|                                                                                                   |   |   |          |          |   |
| See Notes to Financial Statements                                                                      |

----

| CLIPPER FUNDSM | Statement of Operations              |
|----------------|--------------------------------------|
|           | For the year ended December 31, 2013 |

| INVESTMENT INCOME:                                                                      |                                                                              |         |        |       |        |       |   |
|-----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|--------------|-------------|------------|-------------|------------|--------|
| Income:                                                                                 |                                                                              |         |        |       |
| Dividends*                                                                              |                                                                              | $            | 15,096,615  |       |
| Interest                                                                                |                                                                              |         | 67,084      |       |
|                                                                                    |                                                                              | Total income |        |       |        | 15,163,699 |   |
|                                                                                    |                                                                              |         |        |       |        |       |   |   |   |
| Expenses:                                                                               |                                                                              |         |        |       |
| Investment advisory fees (Note 3)                                                       |                                                                              | $            | 6,347,862   |       |        |       |   |
| Custodian fees                                                                          |                                                                              |         | 168,476     |       |        |       |   |
| Transfer agent fees                                                                     |                                                                              |         | 1,465,255   |       |        |       |   |
| Audit fees                                                                              |                                                                              |         | 48,600      |       |        |       |   |
| Legal fees                                                                              |                                                                              |         | 52,151      |       |        |       |   |
| Reports to shareholders                                                                 |                                                                              |         | 133,982     |       |        |       |   |
| Directors’ fees and expenses                                                      |                                                                              |         | 105,990     |       |        |       |   |
| Registration and filing fees                                                            |                                                                              |         | 45,157      |       |        |       |   |
| Miscellaneous                                                                           |                                                                              |         | 117,886     |       |        |       |   |
|                                                                                    | Total expenses                                                                    |         |        |       | 8,485,359   |       |
| Net investment income                                                                   |                                                                              |         | 6,678,340   |       |
|                                                                                    |                                                                              |         |        |       |        |       |   |   |   |
| REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: |                                                                              |         |        |       |        |       |   |
| Net realized gain (loss) from:                                                          |                                                                              |         |        |       |
|                                                                                    | Investment transactions                                                           |         |        | 16,123,519 |        |
|                                                                                    | Foreign currency transactions                                                     |         |        | (629)      |        |
| Net realized gain                                                                       |                                                                              |         | 16,122,890  |       |
| Net increase in unrealized appreciation                                                 |                                                                              |         | 311,808,329 |       |
|                                                                                    | Net realized and unrealized gain on investments and foreign currency transactions |         |        |       | 327,931,219 |       |
| Net increase in net assets resulting from operations                                    |                                                                              | $            | 334,609,559 |       |
|                                                                                    |                                                                              |         |        |       |        |       |   |   |   |
| *Net of foreign taxes withheld as follows                                               |                                                                              | $            | 203,199     |       |
|                                                                                    |                                                                              |         |        |       |        |       |   |   |   |
| See Notes to Financial Statements                                                       |

----

| CLIPPER FUNDSM | Statements of Changes in Net Assets |
|----------------|-------------------------------------|

|                                                                                     |                                                 | Year ended December 31, |
|------------------------------------------------------------------------------------------|------------------------------------------------------|-------------------------|
|                                                                                     |                                                 | 2013                    |   | 2012 |
|                                                                                     |                                                 |                    |   |   |   |   |   |
| OPERATIONS:                                                                              |                                                 |                    |   |   |   |   |
| Net investment income                                                                    |                                                 | $                       | 6,678,340 |   | $ | 18,195,824 |
| Net realized gain from investments and foreign currency transactions                     |                                                 |                    | 16,122,890 |   |   | 53,408,602 |
| Net increase in unrealized appreciation on investments and foreign currency transactions |                                                 |                    | 311,808,329 |   |   | 48,989,970 |
|                                                                                     | Net increase in net assets resulting from operations |                    |   | 334,609,559 |   |   | 120,594,396 |
|                                                                                     |                                                 |                    |   |   |   |   |   |
| DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:                                        |                                                 |                    |   |   |   |   |
| Net investment income                                                                    |                                                 |                    | (4,700,198) |   |   | (19,704,424) |
|                                                                                     |                                                 |                    |   |   |   |   |   |
| CAPITAL SHARE TRANSACTIONS:                                                              |                                                 |                    |   |   |   |   |
| Net decrease in net assets resulting from capital share transactions (Note 4)            |                                                 |                    | (90,626,027) |   |   | (119,690,308) |
|                                                                                     |  Total increase (decrease) in net assets        |                    |   | 239,283,334 |   |   | (18,800,336) |
|                                                                                     |                                                 |                    |   |   |   |   |   |
| NET ASSETS:                                                                              |                                                 |                    |   |   |   |   |
| Beginning of year                                                                        |                                                 |                    | 1,014,630,143 |   |   | 1,033,430,479 |
| End of year*                                                                             |                                                 | $                       | 1,253,913,477 |   | $ | 1,014,630,143 |
|                                                                                     |                                                 |                    |   |   |   |   |   |
| *Including undistributed net investment income of                                        |                                                 | $                       | 79,303 |   | $ | 171,972 |
|                                                                                     |                                                 |                    |   |   |   |   |   |
| See Notes to Financial Statements                                                        |

----

| CLIPPER FUNDSM | Notes to Financial Statements |
|----------------|-------------------------------|
|           | December 31, 2013             |

| Level 1 –  | quoted prices in active markets for identical securities                                                                                    |
|-----------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| Level 2 –  | other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| Level 3 –  | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)                   |

----

| CLIPPER FUNDSM | Notes to Financial Statements – (Continued) |
|----------------|---------------------------------------------------|
|           | December 31, 2013                                 |

|                   |  Investments in Securities at Value |
|------------------------|------------------------------------------|
|                   |  Valuation Inputs                   |
|                   |                                     |   | Level 2: |   | Level 3: |   |   |
|                   |                                     |   | Other Significant |   | Significant |   |   |
|                   | Level 1:                                 |   | Observable |   | Unobservable |   |   |
|                   | Quoted Prices                            |   | Inputs |   | Inputs |   | Total |
| Equity securities:     |                                     |   |   |   |   |   |   |   |   |   |   |
| Consumer Discretionary | $                                        | 21,076,125 |   | $ | – |   | $ | – |   | $ | 21,076,125 |
| Consumer Staples       |                                     | 249,606,275 |   |   | – |   |   | – |   |   | 249,606,275 |
| Energy                 |                                     | 81,847,928 |   |   | – |   |   | – |   |   | 81,847,928 |
| Financials             |                                     | 687,412,711 |   |   | – |   |   | 8,856,740 |   |   | 696,269,451 |
| Health Care            |                                     | 61,396,659 |   |   | – |   |   | – |   |   | 61,396,659 |
| Information Technology |                                     | 114,985,691 |   |   | – |   |   | 27,290,340 |   |   | 142,276,031 |
| Short-term securities  |                                     | – |   |   | 3,056,000 |   |   | – |   |   | 3,056,000 |
| Total Investments      | $                                        | 1,216,325,389 |   | $ | 3,056,000 |   | $ | 36,147,080 |   | $ | 1,255,528,469 |

| Level 2 to Level 1 Transfers*: |   |       |
|--------------------------------|--------|------------|
| Consumer Staples               |   | 14,596,934 |
| Financials                     |   | 23,674,159 |
| Total                          | $      | 38,271,093 |

| Investment Securities:                                                                                                                                                         |   |   |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|
| Beginning balance                                                                                                                                                              |   | $      | 6,910,781  |
| Cost of purchases                                                                                                                                                              |   |   | 25,892,256 |
| Change in unrealized appreciation (depreciation)                                                                                                                               |   |   | 3,344,043  |
| Ending balance                                                                                                                                                                 |   | $      | 36,147,080 |
|                                                                                                                                                                           |   |   |       |
| Change in unrealized appreciation (depreciation) during the period on Level 3 securities still held at December 31, 2013 and included in the change in net assets for the year |   | $      | 3,344,043  |

| Assets Table         |              |
|----------------------|-------------------|
|                 | Fair Value at     |   | Valuation |   | Unobservable |   |   |   |
| Investments at Value | December 31, 2013 |   | Technique |   | Input |   | Amount |   |
| Equity securities    | $                 | 8,856,740 |   | Index-based value adjustment with liquidity discount |   | Discount rate |   |   | 25% |   |
|                 |              |   |   |   |   |   |   |   |   |   |
|                 |              | 27,290,340 |   | Liquidation proceeds/waterfall methodology based on underlying investment value, then applying liquidity discount |   | Discount rate |   |   | 15% |   |

----

| CLIPPER FUNDSM | Notes to Financial Statements – (Continued) |
|----------------|---------------------------------------------------|
|           | December 31, 2013                                 |

|             | Capital Loss Carryforwards |
|------------------|----------------------------|
| Expiring         |                       |   |
| 12/31/2017       | $                          | 342,120,000 |
| 12/31/2018       |                       | 5,484,000 |
| Total            | $                          | 347,604,000 |
|             |                       |   |
| Utilized in 2013 |                       | 11,085,000 |

----

| CLIPPER FUNDSM | Notes to Financial Statements – (Continued) |
|----------------|---------------------------------------------------|
|           | December 31, 2013                                 |

|                   | 2013   |                  | 2012          |
|------------------------|--------|-----------------------|---------------|
| Ordinary income        | $      | 4,700,198   |          | $ | 19,704,424   |
| Long-term capital gain |   | –     |          |   | –   |
| Return of capital      |   | –     |          |   | –   |
| Total                  | $      | 4,700,198   |     | $ | 19,704,424   |

| Undistributed net investment income                  | $      | 79,303        |
|------------------------------------------------------|--------|---------------|
| Accumulated net realized losses from investments and |   |          |
| foreign currency transactions                        |   | (347,603,725) |
| Net unrealized appreciation on investments           |   | 478,954,520   |
| Total                                                | $      | 131,430,098   |

----

| CLIPPER FUNDSM | Notes to Financial Statements – (Continued) |
|----------------|---------------------------------------------------|
|           | December 31, 2013                                 |

|   |  Year ended December 31, 2013 |
|--------|------------------------------------|
|   |                               | Sold |   |   | Reinvestment of Distributions |   |   | Redeemed |   |   | Net Decrease |
|   |                               |   |   |   |   |   |   |   |   |   |   |
| Shares |                               | 1,529,328 |   |   | 49,523 |   |   | (2,695,148) |   |   | (1,116,297) |
| Value  | $                                  | 123,307,176 |   | $ | 4,441,261 |   | $ | (218,374,464) |   | $ | (90,626,027) |
|   |                               |   |   |   |   |   |   |   |   |   |   |
|   |

|   |  Year ended December 31, 2012 |
|--------|------------------------------------|
|   |                               | Sold |   |   | Reinvestment of Distributions |   |   | Redeemed |   |   | Net Decrease |
|   |                               |   |   |   |   |   |   |   |   |   |   |
| Shares |                               | 1,328,945 |   |   | 268,156 |   |   | (3,396,310) |   |   | (1,799,209) |
| Value  | $                                  | 88,777,969 |   | $ | 18,610,015 |   | $ | (227,078,292) |   | $ | (119,690,308) |
|   |                               |   |   |   |   |   |   |   |   |   |   |
|   |

| Security                        |   | AcquisitionDate |   |  Units |   | Cost perUnit |     |   | Valuation per Unit asof December 31, 2013 |
|---------------------------------|--------|-----------------|--------|-------------|--------|--------------|----------|--------|-------------------------------------------|
|                            |   |            |   |        |   |         |     |   |                                      |   |   |
| ASAC II L.P., Private Placement |   | 10/10/13        |   | 24,200,000  |   | $            | 1.00     |   |                                      | $ | 1.1277 |
| SKBHC Holdings LLC              |   | 11/08/10        |   | 2,076       |   |         | 5,000.00 |   |                                      |   | 4,266.60 |

----

| CLIPPER FUNDSM | Financial Highlights |
|----------------|----------------------|

| The following financial information represents selected data for each share of capital stock outstanding throughout each period: |
|----------------------------------------------------------------------------------------------------------------------------------|

|                                                 | Year ended  December 31, |
|------------------------------------------------------|------------------------------------|
|                                                 |                               |   | 2013 |   | 2012 |   | 2011 |   | 2010 |   | 2009 |
|  Net Asset Value, Beginning of Period           |                               | $ | 68.86    |   | $ | 62.50    |   | $ | 61.96    |   | $ | 54.56    |   | $ | 39.98    |
|                                                 |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from Investment Operations:                   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Investment Income                                |                               | 0.47a    |   | 1.16a    |   | 0.66a    |   | 0.55a    |   | 0.46    |
| Net Realized and Unrealized Gains                    |                               | 23.09    |   | 6.54 |   | 0.75    |   | 7.48    |   | 14.58    |
|                                                 | Total from Investment Operations   |   | 23.56    |   | 7.70    |   | 1.41    |   | 8.03    |   | 15.04    |
|                                                 |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends and Distributions:                         |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends from Net Investment Income                 |                               | (0.35)    |   | (1.34)    |   | (0.87)    |   | (0.63)    |   | (0.46)    |
|                                                 | Total Dividends and Distributions  |   | (0.35)    |   | (1.34)    |   | (0.87)    |   | (0.63)    |   | (0.46)    |
|  Net Asset Value, End of Period                 |                               | $ | 92.07    |   | $ | 68.86    |   | $ | 62.50    |   | $ | 61.96    |   | $ | 54.56    |
|                                                 |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Returnb                                        |                               | 34.22%    |   | 12.31%    |   | 2.29%    |   | 14.77%    |   | 37.60%c    |
|                                                 |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratios/Supplemental Data:                            |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Assets, End of Period (in millions)              |                               | $ | 1,254    |   | $ | 1,015    |   | $ | 1,033    |   | $ | 1,153    |   | $ | 1,162    |
| Ratio of Expenses to Average Net Assets:             |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 | Gross                              |   | 0.74%    |   | 0.75%    |   | 0.75%    |   | 0.76%    |   | 0.80%    |
|                                                 | Netd                               |   | 0.74%    |   | 0.75%    |   | 0.75%    |   | 0.76%    |   | 0.80%    |
| Ratio of Net Investment Income to Average Net Assets |                               | 0.58%    |   | 1.74%    |   | 1.04%    |   | 0.96%    |   | 0.96%    |
| Portfolio Turnover Ratee                             |                               | 8%    |   |     6%    |   | 15%    |   | 3%    |   | 15%    |

| a                                 | Per share calculations were based on average shares outstanding for the period.                                                                                                                                                                                                                            |
|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |                                                                                                                                                                                                                                                                                                       |
| b                                 | Assumes hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period.      |
|                              |                                                                                                                                                                                                                                                                                                       |
| c                                 | Clipper Fund received favorable class action settlements from companies that it no longer owns. These settlements contributed approximately 5% to the Fund's total return in 2009. This was a one-time event that is unlikely to be repeated.                                                              |
|                              |                                                                                                                                                                                                                                                                                                       |
| d                                 | The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.                                                                                                                                  |
|                              |                                                                                                                                                                                                                                                                                                       |
| e                                 | The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. |
|                              |                                                                                                                                                                                                                                                                                                       |
| See Notes to Financial Statements |

----

| CLIPPER FUNDSM | Report of Independent Registered Public Accounting Firm |
|----------------|---------------------------------------------------------|

----

| CLIPPER FUNDSM | Federal Income Tax Information (Unaudited) |
|----------------|--------------------------------------------|

----

| CLIPPER FUNDSM | Privacy Notice and Householding |
|----------------|---------------------------------|

----

| CLIPPER FUNDSM | Directors and Officers |
|----------------|------------------------|

| Name(birthdate)               | Position(s)Held withFund | Term of Officeand Length ofTime Served | PrincipalOccupation(s)During Past5 Years                                                                               | Number ofPortfoliosOverseen inFund Complex | OtherDirectorshipsHeld                                                                         |
|-------------------------------|--------------------------|----------------------------------------|------------------------------------------------------------------------------------------------------------------------|--------------------------------------------|------------------------------------------------------------------------------------------------|
|                          |                     |                                   |                                                                                                                   |                                       |                                                                                           |
| Independent Directors         |                     |                                   |                                                                                                                   |                                       |                                                                                           |
|                          |                     |                                   |                                                                                                                   |                                       |                                                                                           |
| Lawrence E. Harris(09/16/56)  | Director/Chairman        | Indefiniteand sinceApril 2006          | Fred V. Keenan Chair in Finance of the Marshall School of Business, University of Southern California, Los Angeles, CA | 1                           | Interactive Brokers Group, Inc.; Trustee, RS Investment Trust & RS Variable Products Trust |
|                          |                     |                                   |                                                                                                                   |                                       |                                                                                           |
| Steven N. Kearsley(09/29/41)  | Director                 | Indefiniteand sinceApril 2006          | Private Investor, Real Estate Development                                                                              | 1                           | None                                                                                           |
|                          |                     |                                   |                                                                                                                   |                                       |                                                                                           |
| Lawrence P. McNamee(09/12/34) | Director                 | Indefinite andsince inception          | Retired Educator                                                                                                       | 1                           | None                                                                                           |

----

| CLIPPER FUNDSM |   |
|----------------|--------|

| Investment Adviser                                                             |   |
|--------------------------------------------------------------------------------|--------|
| Davis Selected Advisers, L.P. (Doing business as “Davis Advisors”) |   |
| 2949 East Elvira Road, Suite 101                                               |   |
| Tucson, Arizona 85756                                                          |   |
| (800) 432-2504                                                                 |   |
|                                                                           |   |
| Distributor                                                                    |   |
| Davis Distributors, LLC                                                        |   |
| 2949 East Elvira Road, Suite 101                                               |   |
| Tucson, Arizona 85756                                                          |   |
|                                                                           |   |
| Transfer Agent                                                                 |   |
| Boston Financial Data Services, Inc.                                           |   |
| P.O. Box 55468                                                                 |   |
| Boston, Massachusetts 02205-5468                                               |   |
|                                                                           |   |
| Custodian                                                                      |   |
| State Street Bank and Trust Co.                                                |   |
| One Lincoln Street                                                             |   |
| Boston, Massachusetts 02111                                                    |   |
|                                                                           |   |
| Counsel                                                                        |   |
| Bingham McCutchen LLP                                                          |   |
| 355 South Grand Avenue, Suite 4400                                             |   |
| Los Angeles, CA 90071-3106                                                     |   |
|                                                                           |   |
| Independent Registered Public Accounting Firm                                  |   |
| KPMG LLP                                                                       |   |
| 1225 Seventeenth Street, Suite 800                                             |   |
| Denver, Colorado 80202                                                         |   |

----

----

----

| (a)   | Audit Fees.  The aggregate Audit Fees billed by KPMP LLP (“KPMG”) for professional services rendered for the audits of the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for the fiscal year ends December 31, 2013 and December 31, 2012 were $48,600 and $46,800, respectively. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Audit-Related Fees.  The aggregate Audit-Related Fees billed by KPMG for services rendered for assurance and related services that are not reasonably related to the performance of the audit or review of the fund financial statements, but not reported as Audit Fees fore fiscal year ends December 31, 2013 and December 31, 2012 were $0 and $0, respectively. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Tax Fees.  The aggregate Tax Fees billed by KPMG for professional services rendered for tax compliance, tax advice and tax planning for the fiscal year ends December 31, 2013 and December 31, 2012 were $7,700 and $7,150, respectively. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | All Other Fees.  The aggregate Other Fees billed by KPMG for all other non-audit services rendered to the fund for the fiscal year ends December 31, 2013 and December 31, 2012 were $0 and $6,459, respectively. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | No services included in (b) – (d) above were approved pursuant to paragraph (c)(7)(i)(C) of |
|-----------------|---------------------------------------------------------------------------------------------------|

| (g)   | The Funds’ independent accountant did not provide any services to the investment advisor or any affiliate for the fiscal years ended December 31, 2013 and December 31, 2012.  The fund has not paid any fees for non-audit not previously disclosed in items 4 (b) – (d). |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | The registrant’s audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.  No such services were rendered. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3 (c) under the Investment Company Act of 1940, as amended) are effective as of a date within 90 days of the filing date of this report. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | There have been no significant changes in the registrant’s internal controls or in other factors that could significantly affect these controls. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a)(1)  The registrant’s code of ethics pursuant to Item 2 of Form N-CSR is filed as an exhibit to this form N-CSR. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | (a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached. |
|--------|-----------------------------------------------------------------------------------------------|

|   | (a)(3)  Not applicable |
|--------|----------------------------------|

|   | (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached. |
|--------|--------------------------------------------------------------------------------------------|

|   | SIGNATURES |
|--------|------------|

----

----