DODGE
& COX FUNDS®
May 1, 2019
Prospectus
Stock Fund (DODGX)
ESTABLISHED 1965
Global Stock Fund (DODWX)
ESTABLISHED 2008
International Stock Fund (DODFX)
ESTABLISHED 2001
Balanced Fund (DODBX)
ESTABLISHED 1931
Income Fund (DODIX)
ESTABLISHED 1989
Global Bond Fund (DODLX)
ESTABLISHED 2014
The
Securities and Exchange Commission (“SEC”) has not approved or disapproved these
securities or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
Beginning
on January 1, 2021, we intend to discontinue mailing paper copies of the
Funds’ shareholder reports as permitted by new regulations adopted by the SEC,
unless you specifically request paper copies from Dodge & Cox Funds or
from your financial intermediary, such as a broker-dealer or bank. The reports
will remain available to you on the Dodge & Cox Funds website
(dodgeandcox.com), and you will be notified by mail each time a report is posted
and provided with a link to access the report.
If
you have already elected to receive shareholder reports electronically, you will
not be affected by this change and do not need to take any action. If you have
not done so already, you may elect to receive shareholder reports and other
communications electronically by enrolling in e-delivery on the Funds website,
or, if you are invested through a financial intermediary, by updating your
mailing preferences through the intermediary.
If
you wish to continue receiving paper copies of all future shareholder reports,
please contact us at (800) 621-3979. Reports will be provided to you free
of charge. If you are invested through a financial intermediary, you may contact
your financial intermediary to request to receive paper copies. Your election to
receive reports in paper form will apply to all funds held with Dodge &
Cox Funds or through your financial intermediary, as applicable.
05/19
PR
Printed on recycled
paper
TABLE OF CONTENTS
Mutual
fund shares are not deposits or obligations of, or guaranteed by, any depository
institution. Shares are not insured by the FDIC, Federal Reserve, or any other
government agency, and are subject to investment risks, including possible loss
of your investment.
DODGE & COX STOCK FUND
INVESTMENT OBJECTIVES
The
Fund seeks long-term growth of principal and income. A secondary objective is to
achieve a reasonable current income.
FEES AND EXPENSES
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. The table and example below do not reflect any transaction
fees that may be charged by financial intermediaries or commissions that a
shareholder may be required to pay directly to its financial intermediary when
buying or selling shares.
|
|
|
|
|
SHAREHOLDER FEES
(fees
paid directly from your investment) |
|
|
|
Sales
charge (load) imposed on purchases |
|
|
None |
|
Deferred
sales charge (load) |
|
|
None |
|
Sales
charge (load) imposed on reinvested distributions |
|
|
None |
|
Redemption
fee |
|
|
None |
|
Exchange
fee |
|
|
None |
|
|
|
|
|
|
ANNUAL FUND OPERATING EXPENSES
(expenses
that you pay each year as a percentage of the value of
your investment) |
|
|
|
Management
fees |
|
|
0.50 |
% |
Distribution
and/or service (12b-1) fees |
|
|
None |
|
Other
expenses (transfer agent, custody, accounting, legal, etc.) |
|
|
0.02 |
% |
|
|
|
|
|
Total
Annual Fund Operating Expenses |
|
|
0.52 |
% |
Example: This example is intended to help you
compare the cost of investing in the Fund with the cost of investing in other
mutual funds.
The
example assumes that:
∎ |
|
You invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
time periods; |
∎ |
|
Your investment has a 5% return each year; and
|
∎ |
|
The Fund’s operating expenses remain the same.
|
Transaction
fees or commissions that may be charged by financial intermediaries on purchases
and sales of shares of the Fund are not reflected in the example.
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
$ |
53 |
|
|
$ |
167 |
|
|
$ |
291 |
|
|
$ |
653 |
|
PORTFOLIO TURNOVER
The
Fund incurs transaction costs, such as commissions, when Dodge & Cox
buys and sells securities (or “turns over” the portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund shares are held in a taxable account. These transaction costs,
which are not reflected in annual Fund operating expenses or in the example,
affect the Fund’s performance. During the most recent
fiscal
year, the Fund’s portfolio turnover rate was 20% of the average value of
its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The
Fund invests primarily in a diversified portfolio of equity securities. Under
normal circumstances, the Fund will invest at least 80% of its total assets in
equity securities, including common stocks, depositary receipts evidencing
ownership of common stocks, preferred stocks, securities convertible into common
stocks, and securities that carry the right to buy common stocks (e.g., rights
and warrants). The Fund may invest up to 20% of its total assets in U.S.
dollar-denominated securities of non-U.S. issuers traded in the
United States that are not in the S&P 500 Index.
The
Fund typically invests in medium-to-large well-established companies based on
standards of the applicable market. In selecting investments, the Fund typically
invests in companies that, in Dodge & Cox’s opinion, appear to be
temporarily undervalued by the stock market but have a favorable outlook for
long-term growth. The Fund focuses on the underlying financial condition and
prospects of individual companies, including future earnings, cash flow, and
dividends. Various other factors, including financial strength, economic
condition, competitive advantage, quality of the business franchise, and the
reputation, experience, and competence of a company’s management are weighed
against valuation in selecting individual securities. The Fund also considers
the economic and political stability of the country where the issuer is located
and the protections provided to shareholders.
PRINCIPAL RISKS OF INVESTING
You
could lose money by investing in the Fund, and the Fund could underperform other
investments. You should expect the Fund’s share price and total return to
fluctuate within a wide range. The Fund’s performance could be hurt by:
∎ |
|
Manager risk. Dodge & Cox’s
opinion about the intrinsic worth or creditworthiness of a company or
security may be incorrect or the market may continue to undervalue the
company or security. Dodge & Cox may not make timely purchases or
sales of securities for the Fund. |
∎ |
|
Equity risk. Equity securities can be
volatile and may decline in value because of changes in the actual or
perceived financial condition of their issuers or other events affecting
their issuers. |
∎ |
|
Market risk. Investment prices may
increase or decrease, sometimes suddenly and unpredictably, due to general
market conditions. |
∎ |
|
Liquidity risk. The Fund may not be able
to purchase or sell a security in a timely manner or at desired prices or
achieve its desired weighting in a security. |
∎ |
|
Derivatives risk. Investing with derivatives, such as
equity index futures, involves risks additional to and possibly greater
than those associated with investing directly in securities. The value of
a derivative may not correlate to the value of the underlying instrument
to the extent expected. Derivative transactions may be volatile, and can
create leverage, which could cause the Fund to lose more than the amount
of assets initially contributed to the transaction, if any. The Fund may
not be able to close a derivatives position at an advantageous time or
price. For over-the-counter derivatives transactions, the counterparty may
be |
DODGE & COX FUNDS ∎
PAGE 1
|
|
unable
or unwilling to make required payments and deliveries, especially during
times of financial market distress. Changes in regulation relating to a
mutual fund’s use of derivatives and related instruments may make
derivatives more costly, limit the availability of derivatives, or
otherwise adversely affect the value or performance of derivatives and the
Fund. |
∎ |
|
Non-U.S. investment risk. Securities of
non-U.S. issuers (including ADRs and other securities that represent
interests in a non-U.S. issuer’s securities) may be more volatile, harder
to value, and have lower overall liquidity than U.S. securities. Non-U.S.
issuers may be subject to political, economic, or market instability, or
unfavorable government action in their local jurisdictions or economic
sanctions or other restrictions imposed by U.S. or foreign regulators.
There may be less information publicly available about non-U.S. issuers
and their securities and those issuers may be subject to lower levels of
government regulation and oversight. These risks may be higher when
investing in emerging market issuers. Certain of these elevated risks may
also apply to securities of U.S. issuers with significant non-U.S.
operations. |
∎ |
|
Non-U.S. currency risk. Non-U.S.
currencies may decline relative to the U.S. dollar, which reduces the
unhedged value of securities denominated in or otherwise exposed to those
currencies. Dodge & Cox may not hedge or may not be successful in
hedging the Fund’s currency exposure. Dodge & Cox may not be able
to determine accurately the extent to which a security or its issuer is
exposed to currency risk. |
An
investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
PERFORMANCE INFORMATION
The
following bar chart and table are intended to help you understand the risks of
investing in the Fund. The bar chart shows changes in the Fund’s returns from
year to year. The table shows how the Fund’s average annual total returns for
one, five, and ten years compare to those of a broad measure of market
performance.
The
Fund’s past performance (before and after taxes) does not necessarily indicate
how the Fund will perform in the future. Visit the Fund’s website at
dodgeandcox.com or call 800-621-3979 for current performance figures.
Highest/Lowest
quarterly results during the time period were:
Highest:
23.10% (quarter ended June 30, 2009)
Lowest:
–18.83% (quarter ended September 30, 2011)
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Dodge &
Cox
Stock
Fund |
|
1 Year |
|
|
5 Years |
|
|
10 Years |
|
Return
before taxes |
|
|
–7.08 |
% |
|
|
7.05 |
% |
|
|
13.17 |
% |
Return
after taxes on distributions |
|
|
–9.03 |
|
|
|
5.47 |
|
|
|
12.19 |
|
Return
after taxes on distributions and sale of Fund shares |
|
|
–2.77 |
|
|
|
5.42 |
|
|
|
10.99 |
|
S&P
500 Index (reflects no deduction for expenses
or taxes) |
|
|
–4.38 |
|
|
|
8.49 |
|
|
|
13.12 |
|
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates, but do not reflect the impact of state or local taxes. Actual
after-tax returns may differ depending on your individual circumstances.
After-tax return figures do not apply to you if you hold your Fund shares
through a tax-deferred arrangement such as a 401(k) plan or an individual
retirement account.
PAGE
2 ∎ DODGE & COX FUNDS
FUND MANAGEMENT
Dodge &
Cox serves as investment manager to the Stock Fund. The Fund is managed by
Dodge & Cox’s U.S. Equity Investment Committee (“USEIC”), which
consists of the following ten members:
|
|
|
|
|
Committee Member |
|
Primary Titles with Investment Manager |
|
Years managing the
Fund/ Years with Dodge & Cox |
Charles F. Pohl |
|
Chairman, Director, Chief Investment Officer, and member of
Global Equity Investment Committee (“GEIC”), and International Equity
Investment Committee (“IEIC”) |
|
27/35 |
C. Bryan Cameron |
|
Senior Vice President, Director of Research, and member of
IEIC |
|
27/36 |
Diana S. Strandberg |
|
Senior Vice President, Director, Director of International
Equity, and member of GEIC and IEIC |
|
14/31 |
David C. Hoeft |
|
Senior Vice President, Director, Associate Chief Investment
Officer, and member of GEIC |
|
17/26 |
Wendell W. Birkhofer |
|
Senior Vice President, Client Portfolio Manager, and Client
Portfolio Counselor |
|
17/32 |
Steven C. Voorhis |
|
Vice President, Associate Director of Research, and member of
GEIC |
|
13/23 |
Philippe Barret, Jr. |
|
Vice President and Research Analyst |
|
6/15 |
Kathleen G. McCarthy |
|
Vice President and Research Analyst |
|
3/12 |
Karol Marcin |
|
Vice President, Research Analyst, and member of GEIC |
|
1/19 |
Benjamin V. Garosi |
|
Vice President and Research Analyst |
|
*/10 |
* |
|
Mr. Garosi was appointed to the USEIC
effective January 2019. |
OTHER IMPORTANT INFORMATION ABOUT FUND SHARES
For
important information about purchase and sale of Fund shares, tax information,
and payments to financial intermediaries please turn to the “Summary of Other
Important Information About Fund Shares” section on page 21 of this prospectus.
DODGE & COX FUNDS ∎
PAGE 3
DODGE & COX GLOBAL STOCK FUND
INVESTMENT OBJECTIVE
The
Fund seeks long-term growth of principal and income.
FEES AND EXPENSES
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. The table and example below do not reflect any transaction
fees that may be charged by financial intermediaries or commissions that a
shareholder may be required to pay directly to its financial intermediary when
buying or selling shares.
|
|
|
|
|
SHAREHOLDER FEES
(fees paid directly from your investment) |
|
|
|
Sales
charge (load) imposed on purchases |
|
|
None |
|
Deferred
sales charge (load) |
|
|
None |
|
Sales
charge (load) imposed on reinvested distributions |
|
|
None |
|
Redemption
fee |
|
|
None |
|
Exchange
fee |
|
|
None |
|
|
|
|
|
|
ANNUAL FUND OPERATING EXPENSES
(expenses
that you pay each year as a percentage of the value of
your investment) |
|
|
|
Management
fees |
|
|
0.60 |
% |
Distribution
and/or service (12b-1) fees |
|
|
None |
|
Other
expenses (transfer agent, custody, accounting, legal, etc.) |
|
|
0.02 |
% |
|
|
|
|
|
Total
Annual Fund Operating Expenses |
|
|
0.62 |
% |
Example: This example is intended to help you
compare the cost of investing in the Fund with the cost of investing in other
mutual funds.
The
example assumes that:
∎ |
|
You invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
time periods; |
∎ |
|
Your investment has a 5% return each year; and
|
∎ |
|
The Fund’s operating expenses remain the same.
|
Transaction
fees or commissions that may be charged by financial intermediaries on purchases
and sales of shares of the Fund are not reflected in the example.
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
$ |
63 |
|
|
$ |
199 |
|
|
$ |
346 |
|
|
$ |
774 |
|
PORTFOLIO TURNOVER
The
Fund incurs transaction costs, such as commissions, when Dodge & Cox
buys and sells securities (or “turns over” the portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund shares are held in a taxable account. These transaction costs,
which are not reflected in annual Fund operating expenses or in the example,
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 31% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The
Fund invests primarily in a diversified portfolio of equity securities issued by
companies from at least three different countries, which may include emerging
market countries. The Fund is not required to allocate its investments in set
percentages in particular countries and may invest in emerging markets without
limit. Under normal circumstances, the Fund will invest at least 40% of its
total assets in securities of non-U.S. companies and at least 80% of its total
assets in equity securities, including common stocks, depositary receipts
evidencing ownership of common stocks, preferred stocks, securities convertible
into common stocks, and securities that carry the right to buy common stocks
(e.g., rights and warrants). The Fund may enter into currency forward contracts,
currency swaps, or currency futures contracts to hedge direct and/or indirect
foreign currency exposure.
The
Fund typically invests in medium-to-large well-established companies based on
standards of the applicable market. In selecting investments, the Fund typically
invests in companies that, in Dodge & Cox’s opinion, appear to be
temporarily undervalued by the stock market but have a favorable outlook for
long-term growth. The Fund also focuses on the underlying financial condition
and prospects of individual companies, including future earnings, cash flow, and
dividends. Various other factors, including financial strength, economic
condition, competitive advantage, quality of the business franchise, and the
reputation, experience, and competence of a company’s management are weighed
against valuation in selecting individual securities. The Fund also considers
the economic and political stability of the country where the issuer is located
and the protections provided to shareholders.
PRINCIPAL RISKS OF INVESTING
You
could lose money by investing in the Fund, and the Fund could underperform other
investments. You should expect the Fund’s share price and total return to
fluctuate within a wide range. The Fund’s performance could be hurt by:
∎ |
|
Manager risk. Dodge & Cox’s
opinion about the intrinsic worth or creditworthiness of a company or
security may be incorrect or the market may continue to undervalue the
company or security. Dodge & Cox may not make timely purchases or
sales of securities for the Fund. |
∎ |
|
Equity risk. Equity securities can be
volatile and may decline in value because of changes in the actual or
perceived financial condition of their issuers or other events affecting
their issuers. |
∎ |
|
Market risk. Investment prices may
increase or decrease, sometimes suddenly and unpredictably, due to general
market conditions. |
∎ |
|
Liquidity risk. The Fund may not be able
to purchase or sell a security in a timely manner or at desired prices or
achieve its desired weighting in a security. |
∎ |
|
Non-U.S. investment risk. Securities of non-U.S. issuers
(including ADRs and other securities that represent interests in a
non-U.S. issuer’s securities) may be more volatile, harder to value, and
have lower overall liquidity than U.S. securities. Non-U.S. issuers may be
subject to political, economic, or market instability or unfavorable
government action in their |
PAGE
4 ∎ DODGE & COX FUNDS
|
|
local
jurisdictions or economic sanctions or other restrictions imposed by U.S.
or foreign regulators. There may be less information publicly available
about non-U.S. issuers and their securities, and those issuers may be
subject to lower levels of government regulation and oversight. Non-U.S.
stock markets may decline due to conditions specific to an individual
country, including unfavorable economic conditions relative to the United
States. There may be increased risk of delayed transaction settlement.
These risks may be higher when investing in emerging market issuers.
Certain of these elevated risks may also apply to securities of U.S.
issuers with significant non-U.S. operations. |
∎ |
|
Non-U.S. currency risk. Non-U.S.
currencies may decline relative to the U.S. dollar, which reduces the
unhedged value of securities denominated in or otherwise exposed to those
currencies. Dodge & Cox may not hedge or may not be successful in
hedging the Fund’s currency exposure. Dodge & Cox may not be able
to determine accurately the extent to which a security or its issuer is
exposed to currency risk. |
∎ |
|
Emerging markets risk. Emerging market
securities may present issuer, market, currency, liquidity, volatility,
valuation, legal, political, and other risks different from, and
potentially greater than, the risks of investing in securities of issuers
in more developed markets. |
∎ |
|
Derivatives risk. Investing with
derivatives, such as currency forward contracts, currency swaps, and
equity index futures, involves risks additional to and possibly greater
than those associated with investing directly in securities. The value of
a derivative may not correlate to the value of the underlying instrument
to the extent expected. Derivative transactions may be volatile, and can
create leverage, which could cause the Fund to lose more than the amount
of assets initially contributed to the transaction, if any. The Fund may
not be able to close a derivatives position at an advantageous time or
price. For over-the-counter derivatives transactions, the counterparty may
be unable or unwilling to make required payments and deliveries,
especially during times of financial market distress. Changes in
regulation relating to a mutual fund’s use of derivatives and related
instruments may make derivatives more costly, limit the availability of
derivatives, or otherwise adversely affect the value or performance of
derivatives and the Fund. |
An
investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
PERFORMANCE INFORMATION
The
following bar chart and table are intended to help you understand the risks of
investing in the Fund. The bar chart shows changes in the Fund’s returns from
year to year. The table shows how the Fund’s average annual total returns for
one year, five years, and since inception compare to those of a broad measure of
market performance.
The
Fund’s past performance (before and after taxes) does not necessarily indicate
how the Fund will perform in the future. Visit the Fund’s website at
dodgeandcox.com or call 800-621-3979 for current performance figures.
Highest/Lowest
quarterly results during the time period were:
Highest:
33.48% (quarter ended June 30, 2009)
Lowest:
–20.56% (quarter ended September 30, 2011)
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Dodge &
Cox
Global
Stock Fund |
|
1 Year |
|
|
5 Years |
|
|
10 Years |
|
Return
before taxes |
|
|
–12.65 |
% |
|
|
4.10 |
% |
|
|
11.45 |
% |
Return
after taxes on distributions |
|
|
–14.40 |
|
|
|
3.02 |
|
|
|
10.70 |
|
Return
after taxes on distributions and sale of Fund shares |
|
|
–6.06 |
|
|
|
3.23 |
|
|
|
9.63 |
|
MSCI
World Index (Net)* (reflects no deduction for
expenses or taxes) |
|
|
–8.71 |
|
|
|
4.56 |
|
|
|
9.67 |
|
* |
|
MSCI Index (Net) returns are calculated applying
dividend withholding rates applicable to non-resident persons who do not
benefit from double taxation treaties. Withholding rates applicable to the
Fund may be lower. |
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates, but do not reflect the impact of state or local taxes. Actual
after-tax returns may differ depending on your individual circumstances.
After-tax return figures do not apply to you if you hold your Fund shares
through a tax-deferred arrangement such as a 401(k) plan or an individual
retirement account.
DODGE & COX FUNDS ∎
PAGE 5
FUND MANAGEMENT
Dodge &
Cox serves as investment manager to the Global Stock Fund. The Fund is managed
by Dodge & Cox’s Global Equity Investment Committee (“GEIC”),
which consists of the following seven members:
|
|
|
|
|
Committee Member |
|
Primary Titles with Investment Manager |
|
Years managing the
Fund/ Years with Dodge & Cox |
Charles F. Pohl |
|
Chairman, Director, Chief Investment Officer, and member of
U.S. Equity Investment Committee (“USEIC”), and International Equity
Investment Committee (“IEIC”) |
|
11/35 |
Diana S. Strandberg |
|
Senior Vice President, Director, Director of International
Equity, and member of USEIC and IEIC |
|
11/31 |
David C. Hoeft |
|
Senior Vice President, Director, Associate Chief Investment
Officer, and member of USEIC |
|
3/26 |
Roger G. Kuo |
|
Senior Vice President, Director, Research Analyst, and member
of IEIC |
|
9/21 |
Steven C. Voorhis |
|
Vice President, Associate Director of Research, and member of
USEIC |
|
11/23 |
Karol Marcin |
|
Vice President, Research Analyst, and member of USEIC |
|
11/19 |
Lily S. Beischer |
|
Vice President and Research Analyst |
|
11/18 |
OTHER IMPORTANT INFORMATION ABOUT FUND SHARES
For
important information about purchase and sale of Fund shares, tax information,
and payments to financial intermediaries please turn to the “Summary of Other
Important Information About Fund Shares” section on page 21 of this prospectus.
PAGE
6 ∎ DODGE & COX FUNDS
DODGE & COX INTERNATIONAL
STOCK FUND
INVESTMENT OBJECTIVE
The
Fund seeks long-term growth of principal and income.
FEES AND EXPENSES
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. The table and example below do not reflect any transaction
fees that may be charged by financial intermediaries or commissions that a
shareholder may be required to pay directly to its financial intermediary when
buying or selling shares.
|
|
|
|
|
SHAREHOLDER FEES
(fees
paid directly from your investment) |
|
|
|
Sales
charge (load) imposed on purchases |
|
|
None |
|
Deferred
sales charge (load) |
|
|
None |
|
Sales
charge (load) imposed on reinvested distributions |
|
|
None |
|
Redemption
fee |
|
|
None |
|
Exchange
fee |
|
|
None |
|
|
|
|
|
|
ANNUAL FUND OPERATING EXPENSES
(expenses
that you pay each year as a percentage of the value of
your investment) |
|
|
|
Management
fees |
|
|
0.60 |
% |
Distribution
and/or service (12b-1) fees |
|
|
None |
|
Other
expenses (transfer agent, custody, accounting, legal, etc.) |
|
|
0.03 |
% |
|
|
|
|
|
Total
Annual Fund Operating Expenses |
|
|
0.63 |
% |
Example: This example is intended to help you
compare the cost of investing in the Fund with the cost of investing in other
mutual funds.
The
example assumes that:
∎ |
|
You invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
time periods; |
∎ |
|
Your investment has a 5% return each year; and
|
∎ |
|
The Fund’s operating expenses remain the same.
|
Transaction
fees or commissions that may be charged by financial intermediaries on purchases
and sales of shares of the Fund are not reflected in the example.
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
$ |
64 |
|
|
$ |
202 |
|
|
$ |
351 |
|
|
$ |
786 |
|
PORTFOLIO TURNOVER
The
Fund incurs transaction costs, such as commissions, when Dodge & Cox
buys and sells securities (or “turns over” the portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund shares are held in a taxable account. These transaction costs,
which are not reflected in annual Fund operating expenses or in the example,
affect the Fund’s performance. During the most recent fiscal year,
the
Fund’s portfolio turnover rate was 17% of the average value of
its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The
Fund invests primarily in a diversified portfolio of equity securities issued by
non-U.S. companies from at least three different countries, which may include
emerging market countries. The Fund is not required to allocate its investments
in set percentages in particular countries and may invest in emerging markets
without limit. Under normal circumstances, the Fund will invest at least 80% of
its total assets in equity securities of non-U.S. companies, including common
stocks, depositary receipts evidencing ownership of common stocks, preferred
stocks, securities convertible into common stocks, and securities that carry the
right to buy common stocks (e.g., rights and warrants). The Fund may enter into
currency forward contracts, currency swaps, or currency futures contracts to
hedge direct and/or indirect foreign currency exposure.
The
Fund typically invests in medium-to-large well-established companies based on
standards of the applicable market. In selecting investments, the Fund typically
invests in companies that, in Dodge & Cox’s opinion, appear to be
temporarily undervalued by the stock market but have a favorable outlook for
long-term growth. The Fund also focuses on the underlying financial condition
and prospects of individual companies, including future earnings, cash flow, and
dividends. Various other factors, including financial strength, economic
condition, competitive advantage, quality of the business franchise, and the
reputation, experience, and competence of a company’s management are weighed
against valuation in selecting individual securities. The Fund also considers
the economic and political stability of the country where the issuer is located
and the protections provided to shareholders.
PRINCIPAL RISKS OF INVESTING
You
could lose money by investing in the Fund, and the Fund could underperform other
investments. You should expect the Fund’s share price and total return to
fluctuate within a wide range. The Fund’s performance could be hurt by:
∎ |
|
Manager risk. Dodge & Cox’s
opinion about the intrinsic worth or creditworthiness of a company or
security may be incorrect or the market may continue to undervalue the
company or security. Dodge & Cox may not make timely purchases or
sales of securities for the Fund. |
∎ |
|
Equity risk. Equity securities can be
volatile and may decline in value because of changes in the actual or
perceived financial condition of their issuers or other events affecting
their issuers. |
∎ |
|
Market risk. Investment prices may
increase or decrease, sometimes suddenly and unpredictably, due to general
market conditions. |
∎ |
|
Liquidity risk. The Fund may not be able
to purchase or sell a security in a timely manner or at desired prices or
achieve its desired weighting in a security. |
∎ |
|
Non-U.S. currency risk. Non-U.S. currencies may decline
relative to the U.S. dollar, which reduces the unhedged value of
securities denominated in or otherwise exposed to those currencies.
Dodge & Cox may not hedge or may not be successful in hedging
|
DODGE & COX FUNDS ∎
PAGE 7
|
|
the
Fund’s currency exposure. Dodge & Cox may not be able to
determine accurately the extent to which a security or its issuer is
exposed to currency risk. |
∎ |
|
Non-U.S. investment risk. Securities of
non-U.S. issuers (including ADRs and other securities that represent
interests in a non-U.S. issuer’s securities) may be more volatile, harder
to value, and have lower overall liquidity than U.S. securities. Non-U.S.
issuers may be subject to political, economic, or market instability, or
unfavorable government action in their local jurisdictions or economic
sanctions or other restrictions imposed by U.S. or foreign regulators.
There may be less information publicly available about non-U.S. issuers
and their securities, and those issuers may be subject to lower levels of
government regulation and oversight. Non-U.S. stock markets may decline
due to conditions specific to an individual country, including unfavorable
economic conditions relative to the United States. There may be increased
risk of delayed transaction settlement. These risks may be higher when
investing in emerging market issuers. Certain of these elevated risks may
also apply to securities of U.S. issuers with significant non-U.S.
operations. |
∎ |
|
Emerging markets risk. Emerging market
securities may present issuer, market, currency, liquidity, volatility,
valuation, legal, political, and other risks different from, and
potentially greater than, the risks of investing in securities of issuers
in more developed markets. |
∎ |
|
Derivatives risk. Investing with
derivatives, such as currency forward contracts, currency swaps, and
equity index futures, involves risks additional to and possibly greater
than those associated with investing directly in securities. The value of
a derivative may not correlate to the value of the underlying instrument
to the extent expected. Derivative transactions may be volatile, and can
create leverage, which could cause the Fund to lose more than the amount
of assets initially contributed to the transaction, if any. The Fund may
not be able to close a derivatives position at an advantageous time or
price. For over-the-counter derivatives transactions, the counterparty may
be unable or unwilling to make required payments and deliveries,
especially during times of financial market distress. Changes in
regulation relating to a mutual fund’s use of derivatives and related
instruments may make derivatives more costly, limit the availability of
derivatives, or otherwise adversely affect the value or performance of
derivatives and the Fund. |
An
investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
PERFORMANCE INFORMATION
The
following bar chart and table are intended to help you understand the risks of
investing in the Fund. The bar chart shows changes in the Fund’s returns from
year to year. The table shows how the Fund’s average annual total returns for
one, five, and ten years compare to those of a broad measure of market
performance.
The
Fund’s past performance (before and after taxes) does not necessarily indicate
how the Fund will perform in the future. Visit the Fund’s website at
dodgeandcox.com or call 800-621-3979 for current performance figures.
Highest/Lowest
quarterly results during the time period were:
Highest:
33.37% (quarter ended June 30, 2009)
Lowest:
–21.72% (quarter ended September 30, 2011)
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Dodge & Cox
International
Stock Fund |
|
1 Year |
|
|
5 Years |
|
|
10 Years |
|
Return
before taxes |
|
|
–17.98 |
% |
|
|
–0.48 |
% |
|
|
7.72 |
% |
Return
after taxes on distributions |
|
|
–18.33 |
|
|
|
–0.93 |
|
|
|
7.40 |
|
Return
after taxes on distributions and sale of Fund shares |
|
|
–10.04 |
|
|
|
–0.21 |
|
|
|
6.51 |
|
MSCI
EAFE (Europe, Australasia, Far East) Index (Net)* (reflects no deduction for expenses or
taxes) |
|
|
–13.79 |
|
|
|
0.53 |
|
|
|
6.32 |
|
* |
|
MSCI Index (Net) returns are calculated applying
dividend withholding rates applicable to non-resident persons who do not
benefit from double taxation treaties. Withholding rates applicable to the
Fund may be lower. |
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates, but do not reflect the impact of state or local taxes. Actual
after-tax returns may differ depending on your individual circumstances.
After-tax return figures do not apply to you if you hold your Fund shares
through a tax-deferred arrangement such as a 401(k) plan or an individual
retirement account.
PAGE
8 ∎ DODGE & COX FUNDS
FUND MANAGEMENT
Dodge &
Cox serves as investment manager to the International Stock Fund. The Fund is
managed by Dodge & Cox’s International Equity Investment Committee
(“IEIC”), which consists of the following nine members:
|
|
|
|
|
Committee Member |
|
Primary Titles with Investment Manager |
|
Years managing the
Fund/ Years with Dodge & Cox |
Charles F. Pohl |
|
Chairman, Director, Chief Investment Officer, and member of
U.S. Equity Investment Committee (“USEIC”), and Global Equity Investment
Committee (“GEIC”) |
|
12/35 |
Diana S. Strandberg |
|
Senior Vice President, Director, Director of International
Equity, and member of USEIC and GEIC |
|
18/31 |
C. Bryan Cameron |
|
Senior Vice President, Director of Research, and member of
USEIC |
|
18/36 |
Roger G. Kuo |
|
Senior Vice President, Director, Research Analyst, and member
of GEIC |
|
13/21 |
Mario C. DiPrisco |
|
Vice President and Research Analyst |
|
15/21 |
Keiko Horkan |
|
Vice President and Research Analyst |
|
12/19 |
Richard T. Callister |
|
Vice President and Research Analyst |
|
7/17 |
Englebert T. Bangayan |
|
Vice President and Research Analyst |
|
4/17 |
Raymond J. Mertens |
|
Vice President and Research Analyst |
|
1/16 |
OTHER IMPORTANT INFORMATION ABOUT FUND SHARES
For
important information about purchase and sale of Fund shares, tax information,
and payments to financial intermediaries please turn to the “Summary of Other
Important Information About Fund Shares” section on page 21 of this prospectus.
DODGE & COX FUNDS ∎
PAGE 9
DODGE & COX BALANCED FUND
INVESTMENT OBJECTIVES
The
Fund seeks regular income, conservation of principal, and an opportunity for
long-term growth of principal and income.
FEES AND EXPENSES
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. The table and example below do not reflect any transaction
fees that may be charged by financial intermediaries or commissions that a
shareholder may be required to pay directly to its financial intermediary when
buying or selling shares.
|
|
|
|
|
SHAREHOLDER FEES
(fees
paid directly from your investment) |
|
Sales
charge (load) imposed on purchases |
|
|
None |
|
Deferred
sales charge (load) |
|
|
None |
|
Sales
charge (load) imposed on reinvested distributions |
|
|
None |
|
Redemption
fee |
|
|
None |
|
Exchange
fee |
|
|
None |
|
|
|
|
|
|
ANNUAL FUND OPERATING EXPENSES
(expenses
that you pay each year as a percentage of the value of
your investment) |
|
|
|
Management
fees |
|
|
0.50 |
% |
Distribution
and/or service (12b-1) fees |
|
|
None |
|
Other
expenses (transfer agent, custody, accounting, legal, etc.) |
|
|
0.03 |
% |
|
|
|
|
|
Total
Annual Fund Operating Expenses |
|
|
0.53 |
% |
Example: This example is intended to help you
compare the cost of investing in the Fund with the cost of investing in other
mutual funds.
The
example assumes that:
∎ |
|
You invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
time periods; |
∎ |
|
Your investment has a 5% return each year; and
|
∎ |
|
The Fund’s operating expenses remain the same.
|
Transaction
fees or commissions that may be charged by financial intermediaries on purchases
and sales of shares of the Fund are not reflected in the example.
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
$ |
54 |
|
|
$ |
170 |
|
|
$ |
296 |
|
|
$ |
665 |
|
PORTFOLIO TURNOVER
The
Fund incurs transaction costs, such as commissions, when Dodge & Cox
buys and sells securities (or “turns over” the portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund shares are held in a taxable account. These transaction costs,
which are not reflected in annual Fund operating expenses or in the example,
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 24% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The
Fund invests in a diversified portfolio of equity securities and debt
securities. Under normal circumstances no less than 25% and no more than 75% of
the Fund’s total assets will be invested in equity securities. The Fund may
invest up to 20% of its total assets in U.S. dollar-denominated equity or debt
securities of non-U.S. issuers traded in the United States that are not in the
S&P 500 Index. Asset allocation between equity and debt securities is based
on the Fund’s assessment of the potential risks and returns for each asset class
over a three- to five-year horizon. Factors used to estimate the range of
potential returns include: future earnings growth, the outlook for the economy,
inflation and interest rate trends, and current valuations relative to
historical ranges.
Equity
securities in which the Fund may invest include common stocks, depositary
receipts evidencing ownership of common stocks, preferred stocks, securities
convertible into common stocks, and securities that carry the right to buy
common stocks (e.g., rights and warrants). The Fund’s equity investments are
typically in medium-to-large well-established companies based on standards of
the applicable market. In selecting equity investments, the Fund typically
invests in companies that, in Dodge & Cox’s opinion, appear to be
temporarily undervalued by the stock market but have a favorable outlook for
long-term growth. The Fund focuses on the underlying financial condition and
prospects of individual companies, including future earnings, cash flow, and
dividends. Various other factors, including financial strength, economic
condition, competitive advantage, quality of the business franchise, and the
reputation, experience, and competence of a company’s management are weighed
against valuation in selecting individual securities. The Fund also considers
the economic and political stability of the country where the issuer is located
and the protections provided to shareholders.
Debt
securities in which the Fund may invest include government and
government-related obligations, mortgage- and asset-backed securities, corporate
and municipal bonds, and may include other fixed and floating rate instruments.
The proportion of Fund assets invested in various classes of debt securities is
determined based on Dodge & Cox’s appraisal of the economy, the
relative yields of securities in the various market sectors, the investment
prospects for issuers, and other factors. In selecting debt securities,
Dodge & Cox considers many factors, including yield, credit ratings,
liquidity, call risk, duration, structure, and capital appreciation potential. A
maximum of 20% of the debt portion of the Fund may be invested in debt
securities rated below investment grade, commonly referred to as high-yield or
“junk” bonds; provided no more than 5% of the debt portion of the Fund may be
invested in securities rated below B3 or B- by Moody’s, S&P, or Fitch.
“Investment-grade” means (i) securities rated Baa3 or higher by Moody’s
Investors Service (“Moody’s”), or BBB- or higher by Standard & Poor’s
Global Ratings (“S&P”) or Fitch Ratings (“Fitch”), or equivalently rated by
any nationally recognized statistical rating organization (“NRSRO”), including
U.S. dollar-denominated foreign issues and issues of supranational agencies, or
(ii) unrated securities if deemed to be of investment-grade quality by
Dodge & Cox.
PAGE
10 ∎ DODGE & COX FUNDS
The
Fund invests in hybrid securities, which may be classified as equity or debt
depending on the specific structure and features of each security.
The
Fund may purchase put options referencing stock indices, such as the S&P 500
Index, to hedge against a general downturn in the equity markets. The Fund may
also invest in interest rate derivatives such as U.S. Treasury futures and swap
agreements for a variety of purposes, including, but not limited to, managing
the Fund’s duration or adjusting the Fund’s exposure to debt securities with
different maturities.
PRINCIPAL RISKS OF INVESTING
You
could lose money by investing in the Fund, and the Fund could underperform other
investments. You should expect the Fund’s share price and total return to
fluctuate within a wide range. The Fund’s performance could be hurt by:
∎ |
|
Manager risk. Dodge & Cox’s
opinion about the intrinsic worth or creditworthiness of a company or
security may be incorrect or the market may continue to undervalue the
company or security. Dodge & Cox may not make timely purchases or
sales of securities for the Fund. |
∎ |
|
Asset allocation risk. The assumptions
and theses on which Dodge & Cox bases its allocation of assets
may be wrong. The Fund’s balance between equity and debt securities limits
its potential for capital appreciation relative to an all-stock fund and
contributes to greater volatility relative to an all-bond fund.
|
∎ |
|
Equity risk. Equity securities can be
volatile and may decline in value because of changes in the actual or
perceived financial condition of their issuers or other events affecting
their issuers. |
∎ |
|
Market risk. Investment prices may
increase or decrease, sometimes suddenly and unpredictably, due to general
market conditions. |
∎ |
|
Interest rate risk. Debt security prices
may decline due to rising interest rates. The price of debt securities
with longer maturities is typically affected more by rising interest rates
than the price of debt securities with shorter maturities.
|
∎ |
|
Credit risk. An issuer or guarantor of a
debt security may be unable or unwilling to make scheduled payments of
interest and principal. Actual or perceived deterioration in an issuer’s
or guarantor’s financial condition may affect a security’s value.
|
∎ |
|
Below investment-grade securities risk.
Debt securities rated below investment-grade, also known as high-yield
or “junk” bonds generally have greater credit risk, more price volatility,
and less liquidity than investment-grade securities. |
∎ |
|
Call risk. If interest rates fall,
issuers of callable bonds may repay securities with higher interest rates
before maturity. This could cause the Fund to lose potential price
appreciation and reinvest the proceeds in securities with lower interest
rates or more credit risk. |
∎ |
|
Liquidity risk. The Fund may not be able
to purchase or sell a security in a timely manner or at desired prices or
achieve its desired weighting in a security. Liquidity risk may result
from the lack of an active market or a reduced number and capacity of
traditional market participants to make a market in fixed income
securities, and may be magnified under circumstances that cause increased
supply in the market due to unusually high selling activity.
|
∎ |
|
Derivatives risk. Investing with
derivatives, such as interest rate swaps and futures, involves risks
additional to and possibly greater than those associated with investing
directly in securities. The value of a derivative may not correlate to the
value of the underlying instrument to the extent expected. Derivative
transactions may be volatile, and can create leverage, which could cause
the Fund to lose more than the amount of assets initially contributed to
the transaction, if any. The Fund may not be able to close a derivatives
position at an advantageous time or price. For over-the-counter
derivatives transactions, the counterparty may be unable or unwilling to
make required payments and deliveries, especially during times of
financial market distress. Changes in regulation relating to a mutual
fund’s use of derivatives and related instruments may make derivatives
more costly, limit the availability of derivatives, or otherwise adversely
affect the value or performance of derivatives and the Fund.
|
∎ |
|
Mortgage- and asset-backed securities risk.
Mortgage- and certain asset-backed securities permit early repayment
of principal based on prepayment of the underlying assets; changes in the
rate of repayment affect the price and volatility of an investment. If
prepayments occur more quickly than expected, the Fund receives lower
interest payments than it expects. If prepayments occur more slowly than
expected, it delays the return of principal to the Fund. Securities issued
by certain U.S. government sponsored entities (“GSEs”) are not issued or
guaranteed by the U.S. Treasury; there is no assurance the U.S. government
will provide support in the event a GSE issuer cannot meet its
obligations. |
∎ |
|
Non-U.S. investment risk. Securities of
non-U.S. issuers (including ADRs and other securities that represent
interests in a non-U.S. issuer’s securities) may be more volatile, harder
to value, and have lower overall liquidity than U.S. securities. Non-U.S.
issuers may be subject to political, economic, or market instability or
unfavorable government action in their local jurisdictions or economic
sanctions or other restrictions imposed by U.S. or foreign regulators.
There may be less information publicly available about non-U.S. issuers
and their securities, and those issuers may be subject to lower levels of
government regulation and oversight. These risks may be higher when
investing in emerging market issuers. Certain of these elevated risks may
also apply to securities of U.S. issuers with significant non-U.S.
operations. |
∎ |
|
Non-U.S. currency risk. Non-U.S.
currencies may decline relative to the U.S. dollar, which reduces the
unhedged value of securities denominated in or otherwise exposed to those
currencies. Dodge & Cox may not hedge or may not be successful in
hedging the Fund’s currency exposure. Dodge & Cox may not be able
to determine accurately the extent to which a security or its issuer is
exposed to currency risk. |
∎ |
|
Sovereign and government-related debt
risk. An issuer of sovereign debt or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay
principal or interest when due. In the event of a default by a
governmental entity on a sovereign debt obligation, there may be few or no
effective legal remedies for collecting on such debt.
|
DODGE & COX FUNDS ∎
PAGE 11
An
investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
PERFORMANCE INFORMATION
The
following bar chart and table are intended to help you understand the risks of
investing in the Fund. The bar chart shows changes in the Fund’s returns from
year to year. The table shows how the Fund’s average annual total returns for
one, five, and ten years compare with different broad measures of market
performance.
The
Fund’s past performance (before and after taxes) does not necessarily indicate
how the Fund will perform in the future. Visit the Fund’s website at
dodgeandcox.com or call 800-621-3979 for current performance figures.
Highest/Lowest
quarterly results during the time period were:
Highest:
18.94% (quarter ended June 30, 2009)
Lowest:
–14.14% (quarter ended September 30, 2011)
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Dodge &
Cox
Balanced
Fund |
|
1 Year |
|
|
5 Years |
|
|
10 Years |
|
Return
before taxes |
|
|
–4.61 |
% |
|
|
5.77 |
% |
|
|
11.04 |
% |
Return
after taxes on distributions |
|
|
–6.68 |
|
|
|
3.97 |
|
|
|
9.79 |
|
Return
after taxes on distributions and sale of Fund shares |
|
|
–1.36 |
|
|
|
4.26 |
|
|
|
8.91 |
|
S&P
500 Index (reflects no deduction for expenses
or taxes) |
|
|
–4.38 |
|
|
|
8.49 |
|
|
|
13.12 |
|
Bloomberg
Barclays U.S. Aggregate Bond Index (reflects
no deduction for expenses or taxes) |
|
|
0.01 |
|
|
|
2.52 |
|
|
|
3.48 |
|
Combined
Index* (60% S&P 500 & 40% Bloomberg Barclays U.S. Aggregate
Bond Index) (reflects no deduction for
expenses or taxes) |
|
|
–2.35 |
|
|
|
6.25 |
|
|
|
9.43 |
|
* |
|
The Combined Index is a composite blend of 60%
of the S&P 500 Index and 40% of the Bloomberg Barclays U.S. Aggregate
Bond Index and represents a broad measure of the U.S. stock and bond
markets, including market sectors in which the Fund may invest.
|
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates, but do not reflect the impact of state or local taxes. Actual
after-tax returns may differ depending on your individual circumstances.
After-tax return figures do not apply to you if you hold your Fund shares
through a tax-deferred arrangement such as a 401(k) plan or an individual
retirement account.
PAGE
12 ∎ DODGE & COX FUNDS
FUND MANAGEMENT
Dodge &
Cox serves as investment manager to the Balanced Fund. The equity portion of the
Balanced Fund is managed by Dodge & Cox’s U.S. Equity Investment
Committee (“USEIC”), which is also responsible (in consultation with
Dodge & Cox’s U.S. Fixed Income Investment Committee (“USFIIC”))
for determining the asset allocation of the Balanced Fund. The debt portion of
the Balanced Fund is managed by the USFIIC. USEIC consists of the following ten
members:
|
|
|
|
|
Committee Member |
|
Primary Titles with Investment Manager |
|
Years managing the Fund/ Years with Dodge & Cox |
Charles F. Pohl |
|
Chairman, Director, Chief Investment Officer, and member of
Global Equity Investment Committee (“GEIC”), and International Equity
Investment Committee (“IEIC”) |
|
27/35 |
C. Bryan Cameron |
|
Senior Vice President, Director of Research, and member of
IEIC |
|
27/36 |
Diana S. Strandberg |
|
Senior Vice President, Director, Director of International
Equity, and member of GEIC and IEIC |
|
14/31 |
David C. Hoeft |
|
Senior Vice President, Director, Associate Chief Investment
Officer, and member of GEIC |
|
17/26 |
Wendell W. Birkhofer |
|
Senior Vice President, Client Portfolio Manager, and Client
Portfolio Counselor |
|
17/32 |
Steven C. Voorhis |
|
Vice President, Associate Director of Research, and member of
GEIC |
|
13/23 |
Philippe Barret, Jr. |
|
Vice President and Research Analyst |
|
6/15 |
Kathleen G. McCarthy |
|
Vice President and Research Analyst |
|
3/12 |
Karol Marcin |
|
Vice President, Research Analyst, and member of GEIC |
|
1/19 |
Benjamin V. Garosi |
|
Vice President and Research Analyst |
|
*/10 |
* |
|
Mr. Garosi was appointed to the USEIC
effective January 2019. |
USFIIC
consists of the following nine members:
|
|
|
|
|
Committee Member |
|
Primary Titles with Investment Manager |
|
Years managing the Fund/ Years with Dodge & Cox |
Dana M. Emery |
|
Chief Executive Officer, President, Director, Co-Director of
Fixed Income, and member of Global Fixed Income Investment Committee
(“GFIIC”) |
|
33/36 |
Thomas S. Dugan |
|
Senior Vice President, Director, Co-Director of Fixed Income,
and member of GFIIC |
|
25/25 |
Larissa K. Roesch |
|
Vice President, Client Portfolio Manager, and Client Portfolio
Counselor |
|
21/22 |
James H. Dignan |
|
Vice President, Client Portfolio Manager, Research Analyst, and
member of GFIIC |
|
17/20 |
Anthony J. Brekke |
|
Vice President, Client Portfolio Manager, and Research
Analyst |
|
11/16 |
Adam S. Rubinson |
|
Vice President, Client Portfolio Manager, Research Analyst, and
member of GFIIC |
|
9/17 |
Lucinda I. Johns |
|
Vice President, Research Analyst, and member of GFIIC |
|
7/17 |
Nils M. Reuter |
|
Vice President, Research Analyst, and Trader |
|
1/16 |
Michael Kiedel |
|
Vice President and Research Analyst |
|
1/11 |
OTHER IMPORTANT INFORMATION ABOUT FUND SHARES
For
important information about purchase and sale of Fund shares, tax information,
and payments to financial intermediaries please turn to the “Summary of Other
Important Information About Fund Shares” section on page 21 of this prospectus.
DODGE & COX FUNDS ∎
PAGE 13
DODGE & COX INCOME FUND
INVESTMENT OBJECTIVES
The
Fund seeks a high and stable rate of current income, consistent with long-term
preservation of capital. A secondary objective is to take advantage of
opportunities to realize capital appreciation.
FEES AND EXPENSES
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. The table and example below do not reflect any transaction
fees that may be charged by financial intermediaries or commissions that a
shareholder may be required to pay directly to its financial intermediary when
buying or selling shares.
|
|
|
|
|
SHAREHOLDER FEES
(fees
paid directly from your investment) |
|
|
|
Sales
charge (load) imposed on purchases |
|
|
None |
|
Deferred
sales charge (load) |
|
|
None |
|
Sales
charge (load) imposed on reinvested distributions |
|
|
None |
|
Redemption
fee |
|
|
None |
|
Exchange
fee |
|
|
None |
|
|
|
|
|
|
ANNUAL FUND OPERATING EXPENSES
(expenses
that you pay each year as a percentage of the value of
your investment) |
|
|
|
Management
fees |
|
|
0.40 |
% |
Distribution
and/or service (12b-1) fees |
|
|
None |
|
Other
expenses (transfer agent, custody, accounting, legal, etc.) |
|
|
0.02 |
% |
|
|
|
|
|
Total
Annual Fund Operating Expenses |
|
|
0.42 |
% |
Example: This example is intended to help you
compare the cost of investing in the Fund with the cost of investing in other
mutual funds.
The
example assumes that:
∎ |
|
You invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
time periods; |
∎ |
|
Your investment has a 5% return each year; and
|
∎ |
|
The Fund’s operating expenses remain the same.
|
Transaction
fees or commissions that may be charged by financial intermediaries on purchases
and sales of shares of the Fund are not reflected in the example.
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
$ |
43 |
|
|
$ |
135 |
|
|
$ |
235 |
|
|
$ |
530 |
|
PORTFOLIO TURNOVER
The
Fund incurs transaction costs when Dodge & Cox buys and sells
securities (or “turns over” the portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in annual Fund operating expenses or in the example, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 37% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The
Fund invests in a diversified portfolio of bonds and other debt securities.
Under normal circumstances, the Fund will invest at least 80% of its total
assets in (1) investment-grade debt securities and (2) cash
equivalents. “Investment grade” means (i) securities rated Baa3 or higher
by Moody’s Investors Service (“Moody’s”), or BBB- or higher by
Standard & Poor’s Global Ratings (“S&P”) or Fitch Ratings
(“Fitch”), or equivalently rated by any nationally recognized statistical rating
organization (“NRSRO”), or, (ii) if unrated, deemed to be of similar
quality by Dodge & Cox. The Fund may invest up to 25% of its total
assets in U.S. dollar-denominated securities of non-U.S. issuers, including
emerging market issuers.
Debt
securities in which the Fund invests include obligations issued or guaranteed by
the U.S. government, its agencies or government sponsored entities (“GSEs”),
mortgage- and asset-backed securities, corporate and municipal bonds, and may
include other fixed and floating rate instruments. The Fund may invest up to 20%
of its total assets in debt securities rated below investment grade, commonly
referred to as high-yield or “junk” bonds; provided no more than 5% of the
Fund’s total assets may be invested in securities rated below B3 or B- by
Moody’s, S&P, or Fitch. The Fund may also invest in interest rate
derivatives, such as U.S. Treasury futures contracts and swap agreements for a
variety of purposes, including, but not limited to, managing the Fund’s duration
or adjusting the Fund’s exposure to debt securities with different maturities.
The
proportions of Fund assets invested in various classes of debt securities will
be revised in light of Dodge & Cox’s appraisal of the economy, the
relative yields of securities in the various market sectors, the investment
prospects for issuers, and other factors. In selecting securities,
Dodge & Cox considers many factors, including yield, credit ratings,
liquidity, covenants, call risk, duration, structure, and capital appreciation
potential.
PRINCIPAL RISKS OF INVESTING
You
could lose money by investing in the Fund, and the Fund could underperform other
investments. You should expect the Fund’s share price and total return to
fluctuate. The Fund’s performance could be hurt by:
∎ |
|
Manager risk. Dodge & Cox’s
opinion about the intrinsic worth or creditworthiness of a company or
security may be incorrect or the market may continue to undervalue a
company or security. Dodge & Cox may not make timely purchases or
sales of securities for the Fund. |
∎ |
|
Interest rate risk. Debt security prices
may decline due to rising interest rates. The price of debt securities
with longer maturities is typically affected more by rising interest rates
than the price of debt securities with shorter maturities.
|
∎ |
|
Credit risk. An issuer or guarantor of a
debt security may be unable or unwilling to make scheduled payments of
interest and principal. Actual or perceived deterioration in an issuer’s
or guarantor’s financial condition may affect a security’s value.
|
∎ |
|
Below investment-grade securities risk.
Debt securities rated below investment-grade, also known as high-yield or
“junk” bonds, generally have greater credit risk, more price volatility,
and less liquidity than investment-grade securities.
|
PAGE
14 ∎ DODGE & COX FUNDS
∎ |
|
Call risk. If interest rates fall,
issuers of callable bonds may repay securities with higher interest rates
before maturity. This could cause the Fund to lose potential price
appreciation and reinvest the proceeds in securities with lower interest
rates or more credit risk. |
∎ |
|
Derivatives risk. Investing with
derivatives, such as interest rate swaps and futures, involves risks
additional to and possibly greater than those associated with investing
directly in securities. The value of a derivative may not correlate to the
value of the underlying instrument to the extent expected. Derivative
transactions may be volatile, and can create leverage, which could cause
the Fund to lose more than the amount of assets initially contributed to
the transaction, if any. The Fund may not be able to close a derivatives
position at an advantageous time or price. For over-the-counter
derivatives transactions, the counterparty may be unable or unwilling to
make required payments and deliveries, especially during times of
financial market distress. Changes in regulation relating to a mutual
fund’s use of derivatives and related instruments may make derivatives
more costly, limit the availability of derivatives, or otherwise adversely
affect the value or performance of derivatives and the Fund.
|
∎ |
|
Liquidity risk. The Fund may not be able
to purchase or sell a security in a timely manner or at desired prices or
achieve its desired weighting in a security. Liquidity risk may result
from the lack of an active market or a reduced number and capacity of
traditional market participants to make a market in fixed income
securities, and may be magnified under circumstances that cause increased
supply in the market due to unusually high selling activity.
|
∎ |
|
Mortgage- and asset-backed securities
risk. Mortgage- and certain asset-backed securities permit early
repayment of principal based on prepayment of the underlying assets;
changes in the rate of repayment affect the price and volatility of an
investment. If prepayments occur more quickly than expected, the Fund
receives lower interest payments than it expects. If prepayments occur
more slowly than expected, it delays the return of principal to the Fund.
Securities issued by certain GSEs are not issued or guaranteed by the U.S.
Treasury; there is no assurance the U.S. government will provide support
in the event a GSE issuer cannot meet its obligations.
|
∎ |
|
Non-U.S. investment risk. Securities of
non-U.S. issuers may be more volatile, harder to value, and have lower
overall liquidity than U.S. securities. Non-U.S. issuers may be subject to
political, economic, or market instability, or unfavorable government
action in their local jurisdictions or economic sanctions or other
restrictions imposed by U.S. or foreign regulators. There may be less
information publicly available about non-U.S. issuers and their
securities, and those issuers may be subject to lower levels of government
regulation and oversight. Non-U.S. securities may decline in value due to
conditions specific to an individual country, including unfavorable
economic conditions relative to the United States. There may be increased
risk of delayed transaction settlement. These risks may be higher when
investing in emerging market issuers. Certain of these elevated risks may
also apply to securities of U.S. issuers with significant non-U.S.
operations. |
∎ |
|
Emerging markets risk. Emerging market
securities present issuer, market, currency, liquidity, volatility,
valuation, legal, political, and other risks different from, and
potentially greater than, the risks of investing in securities of issuers
in more developed markets. |
∎ |
|
Sovereign and government-related debt
risk. An issuer of sovereign debt or the governmental authorities that
control the repayment |
|
|
of
the debt may be unable or unwilling to repay principal or interest when
due. In the event of a default by a governmental entity on a sovereign
debt obligation, there may be few or no effective legal remedies for
collecting on such debt. |
An
investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
PERFORMANCE INFORMATION
The
following bar chart and table are intended to help you understand the risks of
investing in the Fund. The bar chart shows changes in the Fund’s returns from
year to year. The table shows how the Fund’s average annual total returns for
one, five, and ten years compare to those of a broad measure of market
performance.
The
Fund’s past performance (before and after taxes) does not necessarily indicate
how the Fund will perform in the future. Visit the Fund’s website at
dodgeandcox.com or call 800-621-3979 for current performance figures.
Highest/Lowest
quarterly results during the time period were:
Highest:
7.48% (quarter ended June 30, 2009)
Lowest:
–1.84% (quarter ended June 30, 2013)
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Dodge &
Cox
Income
Fund |
|
1 Year |
|
|
5 Years |
|
|
10 Years |
|
Return
before taxes |
|
|
–0.31 |
% |
|
|
2.87 |
% |
|
|
5.01 |
% |
Return
after taxes on distributions |
|
|
–1.60 |
|
|
|
1.52 |
|
|
|
3.53 |
|
Return
after taxes on distributions and sale of Fund shares |
|
|
–0.12 |
|
|
|
1.62 |
|
|
|
3.32 |
|
Bloomberg
Barclays U.S. Aggregate Bond Index (reflects
no deduction for expenses or taxes) |
|
|
0.01 |
|
|
|
2.52 |
|
|
|
3.48 |
|
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates, but do not reflect the impact of state or local taxes. Actual
after-tax returns may differ depending on your individual circumstances.
After-tax return figures do not apply to you if you hold your Fund shares
through a tax-deferred arrangement such as a 401(k) plan or an individual
retirement account.
DODGE & COX FUNDS ∎
PAGE 15
FUND MANAGEMENT
Dodge &
Cox serves as investment manager to the Income Fund. The Fund is managed by
Dodge & Cox’s U.S. Fixed Income Investment Committee (“USFIIC”),
which consists of the following nine members:
|
|
|
|
|
Committee Member |
|
Primary Title with Investment Manager |
|
Years managing the
Fund/ Years with Dodge & Cox |
Dana M. Emery |
|
Chief Executive Officer, President, Director, Co-Director of
Fixed Income, and member of Global Fixed Income Investment Committee
(“GFIIC”) |
|
33/36 |
Thomas S. Dugan |
|
Senior Vice President, Director, Co-Director of Fixed Income,
and member of GFIIC |
|
25/25 |
Larissa K. Roesch |
|
Vice President, Client Portfolio Manager, and Client Portfolio
Counselor |
|
21/22 |
James H. Dignan |
|
Vice President, Client Portfolio Manager, Research Analyst, and
member of GFIIC |
|
17/20 |
Anthony J. Brekke |
|
Vice President, Client Portfolio Manager, and Research
Analyst |
|
11/16 |
Adam S. Rubinson |
|
Vice President, Client Portfolio Manager, Research Analyst, and
member of GFIIC |
|
9/17 |
Lucinda I. Johns |
|
Vice President, Research Analyst, and member of GFIIC |
|
7/17 |
Nils M. Reuter |
|
Vice President, Research Analyst, and Trader |
|
1/16 |
Michael Kiedel |
|
Vice President and Research Analyst |
|
1/11 |
OTHER IMPORTANT INFORMATION ABOUT FUND SHARES
For
important information about purchase and sale of Fund shares, tax information,
and payments to financial intermediaries please turn to the “Summary of Other
Important Information About Fund Shares” section on page 21 of this
prospectus.
PAGE
16 ∎ DODGE & COX FUNDS
DODGE & COX GLOBAL BOND FUND
INVESTMENT OBJECTIVES
The
Fund seeks a high rate of total return consistent with long-term preservation of
capital.
FEES AND EXPENSES
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. The table and example below do not reflect any transaction
fees that may be charged by financial intermediaries or commissions that a
shareholder may be required to pay directly to its financial intermediary when
buying or selling shares.
|
|
|
|
|
SHAREHOLDER FEES
(fees
paid directly from your investment) |
|
|
|
Sales
charge (load) imposed on purchases |
|
|
None |
|
Deferred
sales charge (load) |
|
|
None |
|
Sales
charge (load) imposed on reinvested distributions |
|
|
None |
|
Redemption
fee |
|
|
None |
|
Exchange
fee |
|
|
None |
|
|
|
|
|
|
ANNUAL FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of
your investment) |
|
|
|
Management
fees |
|
|
0.50 |
% |
Distribution
and/or service (12b-1) fees |
|
|
None |
|
Other
expenses (transfer agent, custody, accounting, legal, etc.) |
|
|
0.42 |
% |
|
|
|
|
|
Total
Annual Fund Operating Expenses |
|
|
0.92 |
% |
Expense
Reimbursement |
|
|
0.47 |
%* |
|
|
|
|
|
Net
Expenses |
|
|
0.45 |
%* |
* |
|
Dodge & Cox has contractually agreed to
reimburse the Fund for all ordinary expenses to the extent necessary to
maintain Total Annual Fund Operating expenses at 0.45% through
April 30, 2020. The term of the agreement renews annually unless
terminated with 30 days’ written notice by either party prior to the end
of the term. |
Example: This example is intended to help you
compare the cost of investing in the Fund with the cost of investing in other
mutual funds.
The
example assumes that:
∎ |
|
You invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
time periods; |
∎ |
|
Your investment has a 5% return each year; and
|
∎ |
|
The Fund’s operating expenses remain the same
but Dodge & Cox or the Fund terminates the expense
reimbursement agreement as of April 30, 2020. |
Transaction
fees or commissions that may be charged by financial intermediaries on purchases
and sales of shares of the Fund are not reflected in the example.
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
$ |
46 |
|
|
$ |
246 |
|
|
$ |
463 |
|
|
$ |
1,088 |
|
PORTFOLIO TURNOVER
The
Fund incurs transaction costs when Dodge & Cox buys and sells
securities (or “turns over” the portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in annual Fund operating expenses or in the example, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 55% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The
Fund invests in a diversified portfolio of bonds and other debt instruments of
issuers from at least three different countries, which may include emerging
market countries. The Fund is not required to allocate its investments in set
percentages to particular countries and may invest in emerging markets without
limit. Under normal circumstances, the Fund invests at least 40% of its total
assets in securities of non-U.S. issuers and at least 80% of its total assets in
debt instruments, which may, in each case, be represented by derivatives such as
forward contracts, futures contracts, or swap agreements. Debt instruments in
which the Fund may invest include, but are not limited to, government and
government-related obligations, mortgage- and asset-backed securities, corporate
and municipal bonds, and other fixed and floating rate instruments. The Fund
invests in both U.S. dollar-denominated and non-U.S. dollar-denominated debt
instruments.
The
Fund invests primarily in investment-grade debt instruments (instruments rated
Baa3 or higher by Moody’s Investors Service (“Moody’s”), BBB- or higher by
Standard & Poor’s Global Ratings (“S&P”) or Fitch Ratings
(“Fitch”), or equivalently rated by any nationally recognized statistical rating
organization (“NRSRO”), or, if unrated, deemed to be of investment-grade quality
by Dodge & Cox). Up to 20% of the Fund’s total assets may be invested
in debt securities rated below investment grade, commonly referred to as
high-yield or “junk” bonds.
The
Fund may buy or sell non-U.S. currencies and may enter into various currency or
interest rate-related transactions involving derivative instruments, including
forward contracts, futures contracts, and swap agreements. The Fund may use
derivatives to seek to minimize the impact of losses to one or more of its
investments (as a “hedging technique”) or to implement its investment strategy.
For example, the Fund may invest in derivative instruments that create exposure
to a specific security or market sector as a substitute for a direct investment
in the security or sector itself or to benefit from changes in the relative
values of selected currencies. The Fund may use interest rate derivatives for a
variety of purposes, including, but not limited to, managing the Fund’s duration
or adjusting the Fund’s exposure to debt securities with different maturities.
In
selecting securities, Dodge & Cox considers many factors,
including, without limitation, yield, structure, covenants, credit quality,
liquidity, call risk, duration, and capital appreciation potential. For all
securities that are denominated in a foreign currency, Dodge & Cox
analyzes whether to accept or hedge the
DODGE & COX FUNDS ∎
PAGE 17
associated
interest rate and currency risks. Dodge & Cox considers, among
other things, a country’s economic outlook and political stability, the
protections provided to foreign investors, relative interest rates, exchange
rates, a country’s monetary and fiscal policies, its debt stock, and its ability
to meet its funding needs.
The
Fund may purchase or sell holdings for a variety of reasons such as to alter
sector, geographic, or currency exposure or to shift the overall portfolio’s
risk profile. The proportions of the Fund’s assets held in various debt
instruments will be revised in light of Dodge & Cox’s appraisal of
the global economy, the relative yields of securities in the various market
sectors and countries, the potential for a currency’s appreciation, the
investment prospects for issuers, the countries’ domestic and political
conditions, and other factors.
PRINCIPAL RISKS OF INVESTING
You
could lose money by investing in the Fund, and the Fund could underperform other
investments. You should expect the Fund’s share price and total return to
fluctuate within a wide range. The Fund’s performance could be hurt by:
∎ |
|
Manager risk. Dodge & Cox’s
opinion about the intrinsic worth or creditworthiness of a company or
security may be incorrect or the market may continue to undervalue the
company or security. Dodge & Cox may not make timely purchases or
sales of securities for the Fund. |
∎ |
|
Interest rate risk. Debt security prices
may decline due to rising interest rates. The price of debt securities
with longer maturities is typically affected more by rising interest rates
than the price of debt securities with shorter maturities.
|
∎ |
|
Credit risk. An issuer or guarantor of a
debt security may be unable or unwilling to make scheduled payments of
interest and principal. Actual or perceived deterioration in an issuer’s
or guarantor’s financial condition may affect a security’s value.
|
∎ |
|
Below investment-grade securities risk.
Debt securities rated below investment grade, also known as high-yield or
“junk” bonds generally have greater credit risk, more price volatility,
and less liquidity than investment-grade securities. |
∎ |
|
Call risk. If interest rates fall,
issuers of callable bonds may repay securities with higher interest rates
before maturity. This could cause the Fund to lose potential price
appreciation and reinvest the proceeds in securities with lower interest
rates or more credit risk. |
∎ |
|
Liquidity risk. The Fund may not be able
to purchase or sell a security in a timely manner or at desired prices or
achieve its desired weighting in a security. Liquidity risk may result
from the lack of an active market or a reduced number and capacity of
traditional market participants to make a market in fixed income
securities and may be magnified under circumstances that cause increased
supply in the market due to unusually high selling activity.
|
∎ |
|
Mortgage- and asset-backed securities
risk. Mortgage- and certain asset-backed securities permit early
repayment of principal based on prepayment of the underlying assets;
changes in the rate of repayment affect the price and volatility of an
investment. If prepayments occur more quickly than expected, the Fund
receives lower interest payments than it expects. If prepayments
|
|
|
occur
more slowly than expected, it delays the return of principal to the Fund.
Securities issued by certain U.S. government-sponsored entities (“GSEs”)
are not issued or guaranteed by the U.S. Treasury; there is no assurance
the U.S. government will provide support in the event a GSE issuer cannot
meet its obligations. |
∎ |
|
Non-U.S. investment risk. Securities of
non-U.S. issuers may be more volatile, harder to value, and have lower
overall liquidity than U.S. securities. Non-U.S. issuers may be subject to
political, economic, or market instability, or unfavorable government
action in their local jurisdictions or economic sanctions or other
restrictions imposed by U.S. or foreign regulators. There may be less
information publicly available about non-U.S. issuers and their securities
and those issuers may be subject to lower levels of government regulation
and oversight. Non-U.S. securities may decline in value due to conditions
specific to an individual country, including unfavorable economic
conditions relative to the United States. There may be increased risk of
delayed transaction settlement. These risks may be higher when investing
in emerging market issuers. Certain of these elevated risks may also apply
to securities of U.S. issuers with significant non-U.S. operations.
|
∎ |
|
Emerging markets risk. Emerging market
securities may present issuer, market, currency, liquidity, volatility,
valuation, legal, political, and other risks different from, and
potentially greater than, the risks of investing in securities of issuers
in more developed markets. |
∎ |
|
Non-U.S. currency risk. Non-U.S.
currencies may decline relative to the U.S. dollar, which reduces the
unhedged value of investments denominated in or otherwise exposed to those
currencies. Dodge & Cox may not hedge or may not be successful in
hedging the Fund’s currency exposure. Dodge & Cox may not be able
to determine accurately the extent to which a security or its issuer is
exposed to currency risk. |
∎ |
|
Derivatives risk. Investing with
derivatives, such as currency forward contracts, interest rate swaps, and
futures contracts involves risks additional to and possibly greater than
those associated with investing directly in securities. The value of a
derivative may not correlate to the value of the underlying instrument to
the extent expected. Derivative transactions may be volatile, and can
create leverage, which could cause the Fund to lose more than the amount
of assets initially contributed to the transaction, if any. The Fund may
not be able to close a derivatives position at an advantageous time or
price. For over-the-counter derivatives transactions, the counterparty may
be unable or unwilling to make required payments and deliveries,
especially during times of financial market distress. Changes in
regulation relating to a mutual fund’s use of derivatives and related
instruments may make derivatives more costly, limit the availability of
derivatives, or otherwise adversely affect the value or performance of
derivatives and the Fund. |
∎ |
|
Sovereign and government-related debt risk. An issuer of
sovereign debt or the governmental authorities that control the repayment
of the debt may be unable or unwilling to repay principal or interest when
due. In the event of a default by a governmental
|
PAGE
18 ∎ DODGE & COX FUNDS
|
|
entity
on a sovereign debt obligation, there may be few or no effective legal
remedies for collecting on such debt. |
An
investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
PERFORMANCE INFORMATION
The
following bar chart and table are intended to help you understand the risks of
investing in the Fund. The bar chart shows changes in the Fund’s returns from
year to year. The table shows how the Fund’s average annual total returns
compare to those of a broad measure of market performance. The Fund has
benefited since its inception from an expense reimbursement agreement. Without
the expense reimbursement, Fund returns would have been lower.
Dodge & Cox
Global Bond Fund, L.L.C., a private fund managed and funded by
Dodge & Cox (the “Private Fund”), was reorganized into the Fund
and the Fund commenced operations on May 1, 2014. The Private Fund was
organized as Delaware limited liability company and was treated as a disregarded
entity under the Internal Revenue Code of 1986, as amended (the “Code”). The
Private Fund commenced operations on December 5, 2012, and had an
investment objective, policies, and strategies that were, in all material
respects, the same as those of the Fund, and was managed in a manner that, in
all material respects, complied with the investment guidelines and restrictions
of the Fund. However, the Private Fund was not registered as an investment
company under the Investment Company Act of 1940 (the “1940 Act”), and therefore
was not subject to certain investment limitations, diversification requirements,
liquidity requirements, and other restrictions imposed by the 1940 Act and the
Code, which, if applicable, may have adversely affected its performance. The
Fund’s performance for periods prior to the commencement of operations on
May 1, 2014, is that of the Private Fund. The performance of the Private
Fund has not been restated because the net total operating expense ratio of the
Private Fund and the Fund (after the application of the expense reimbursement
agreement) are the same. The 2012 and 2013 audited financial statements of the
Private Fund are available from the Electronic Data Gathering, Analysis, and
Retrieval (EDGAR) database on the SEC’s website (sec.gov), or by calling the
Fund at 800-621-3979.
The
Fund’s past performance (before and after taxes) does not necessarily indicate
how the Fund will perform in the future. Visit the Fund’s website at
dodgeandcox.com or call 800-621-3979 for current performance figures.
Highest/Lowest
quarterly results during the time period were:
Highest:
3.49% (quarter ended March 31, 2017)
Lowest:
–4.16% (quarter ended September 30, 2015)
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Dodge &
Cox
Global
Bond Fund |
|
1 Year |
|
|
5 Years |
|
|
Since Inception (12/5/2012) |
|
Return
before taxes |
|
|
–1.45 |
% |
|
|
2.03 |
% |
|
|
2.13 |
% |
Return
after taxes on distributions |
|
|
–3.36 |
|
|
|
1.15 |
|
|
|
1.41 |
|
Return
after taxes on distributions and sale of Fund shares |
|
|
–0.77 |
|
|
|
1.18 |
|
|
|
1.33 |
|
Bloomberg
Barclays Global Aggregate Bond Index (reflects no deduction for expenses or
taxes) |
|
|
–1.20 |
|
|
|
1.08 |
|
|
|
0.33 |
|
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates, but do not reflect the impact of state or local taxes. Actual
after-tax returns may differ depending on your individual circumstances.
After-tax return figures do not apply to you if you hold your Fund shares
through a tax-deferred arrangement such as a 401(k) plan or an individual
retirement account.
DODGE & COX FUNDS ∎
PAGE 19
FUND MANAGEMENT
Dodge &
Cox serves as investment manager to the Global Bond Fund. The Fund is managed by
Dodge & Cox’s Global Fixed Income Investment Committee
(“GFIIC”), which consists of the following six members:
|
|
|
|
|
Committee Member |
|
Primary Titles with Investment Manager |
|
Years managing the
Fund/ Years with Dodge & Cox |
Dana M. Emery |
|
Chief Executive Officer, President, Director, Co-Director of
Fixed Income, and member of U.S. Fixed Income Investment Committee
(“USFIIC”) |
|
5/36 |
Thomas S. Dugan |
|
Senior Vice President, Director, Co-Director of Fixed Income,
and member of USFIIC |
|
5/25 |
James H. Dignan |
|
Vice President, Client Portfolio Manager, Research Analyst, and
member of USFIIC |
|
5/20 |
Adam S. Rubinson |
|
Vice President, Client Portfolio Manager, Research Analyst, and
member of USFIIC |
|
5/17 |
Lucinda I. Johns |
|
Vice President, Research Analyst, and member of USFIIC |
|
5/17 |
Matthew B. Schefer |
|
Vice President and Research Analyst |
|
1/11 |
OTHER IMPORTANT INFORMATION ABOUT FUND SHARES
For
important information about purchase and sale of Fund shares, tax information,
and payments to financial intermediaries please turn to the “Summary of Other
Important Information About Fund Shares” section on page 21 of this
prospectus.
PAGE
20 ∎ DODGE & COX FUNDS
SUMMARY OF OTHER IMPORTANT INFORMATION
ABOUT FUND SHARES
PURCHASE AND SALE OF FUND SHARES
The
minimum initial investment for shares of a Fund is $2,500 ($1,000 for Individual
Retirement Accounts (“IRAs”)) and the minimum subsequent investment is
$100. The Funds reserve the right to waive minimum investment amounts for
certain financial intermediaries that use the Funds as part of an asset
allocation program, certain retirement plans, and accounts that hold the Funds
in omnibus name. Financial intermediaries may impose their own minimum
investment amounts.
You
may withdraw (redeem) any part of your account by selling shares. The sale price
of your shares will be the Fund’s next-determined net asset value after DST
Asset Manager Solutions, Inc. (the “Transfer Agent”) or an authorized agent or
sub-agent receives all required documents in good order. You may sell shares as
described below:
∎ |
|
Online: Visit the Dodge & Cox Funds’
website at dodgeandcox.com, click on “Account Access” to log into your
account and submit your request online. |
∎ |
|
Mail: Visit Dodge & Cox Funds’ website
at dodgeandcox.com and click on “Forms & Guides.” Download and
complete the Redemption Request Form for a non-IRA and/or the IRA
Distribution Request Form for an IRA. Mail the completed form(s) to
“Dodge & Cox Funds, c/o DST Asset Manager Solutions, Inc., P.O.
Box 219502, Kansas City, MO 64121-9502” to process your request(s).
|
∎ |
|
Phone: You may call Client Services at
800-621-3979 during business hours to place redemption or distribution
requests for either a non-IRA or an IRA. |
TAX INFORMATION
Each
Fund will distribute substantially all of its income and capital gains to its
shareholders every year. You will be taxed on dividends you receive from a Fund
as ordinary income and/or capital gains unless you hold your Fund shares in a
tax-deferred retirement account, such as an IRA, or are otherwise tax exempt in
which case you will generally be taxed only upon withdrawal of monies from the
retirement account.
PAYMENTS TO FINANCIAL INTERMEDIARIES
If
you purchase a Fund through an employee benefit plan, Dodge & Cox
may make payments to the recordkeeper, broker/dealer, bank, or other financial
institution or organization (each a “Financial Intermediary”) that provides
shareholder recordkeeping or other administrative services to the plan as
compensation for those services. These payments may create a conflict of
interest by influencing your Financial Intermediary to make available a Fund
over other mutual funds or investments. You should ask your Financial
Intermediary about differing and divergent interests and how it is compensated
for administering your Fund investment.
DODGE & COX FUNDS ∎
PAGE 21
INVESTMENT OBJECTIVES, PRINCIPAL
INVESTMENT STRATEGIES, RELATED RISKS, AND DISCLOSURE OF PORTFOLIO HOLDINGS
This
section takes a closer look at the investment objectives and certain risks of
investing in the Dodge & Cox Funds (each a “Fund” and, collectively,
the “Funds”). This section also provides information regarding the Funds’
disclosure of portfolio holdings.
DODGE & COX INVESTMENT MANAGEMENT APPROACH
Fundamental
bottom-up research, a long-term investment horizon, and rigorous valuation
discipline are central to Dodge & Cox’s investment philosophy.
Investment decisions are made by a team of seasoned investment professionals
based on key fundamental factors that we believe determine investment value over
the long term. Our investment analysts operate from a single location to foster
communication and collaboration, and each investment idea is subject to
committee review for both its merits as a specific investment and its role in
the overall portfolio. Our approach stresses an evaluation of risk relative to
opportunity and we seek investments that we believe are undervalued by
the market.
EQUITY INVESTING
Dodge &
Cox’s equity investment strategy is to build a portfolio of individual
securities that we believe are undervalued given their long-term prospects.
Individual company research drives the selection of equity securities for the
Funds’ portfolios. Our team of global research analysts, organized by industry,
conducts detailed primary research, which provides us the necessary perspective
about industry dynamics to assess company fundamentals and compare valuations.
We identify investment opportunities by analyzing the long-term fundamentals of
a business, including prospective earnings, cash flow, and dividends over a
three-to-five year period. We focus our research efforts on factors — such as
franchise strength, competitive dynamics, growth opportunities, and management
quality — that we believe ultimately determine business success. When evaluating
investment opportunities, Dodge & Cox may also consider whether
environmental, social and/or corporate governance factors are likely to have a
material impact on a company’s risk/reward profile. The Funds typically invest
in medium-to-large well-established companies. It is the general practice of the
Funds to invest in equity securities that have liquid secondary markets.
Particularly when investing in securities of non-U.S. issuers, Dodge &
Cox considers the economic and political stability of the country where the
issuer is located and the protections provided to shareholders. We consider the
sale of a holding when we believe the price of a company’s equity securities
reflects more optimistic expectations about the company’s prospects than our own
expectations, when our assessment of a company’s long-term fundamentals grows
negative or when we identify more attractive opportunities elsewhere.
FIXED INCOME INVESTING
Dodge &
Cox’s fixed income investment strategy is to construct and manage a high average
quality portfolio of securities selected
through
bottom-up fundamental analysis and with an emphasis on valuation. By combining
fundamental research with a long-term investment horizon, we seek to uncover and
act upon inefficiencies in the relative valuations of individual securities. Our
credit research focuses on the factors that can influence an individual issuer’s
creditworthiness and any downside protection that exists. At the security level,
our analysis emphasizes the terms and conditions and structural characteristics
of each instrument. We also consider economic trends and special circumstances
that may affect an industry or a specific issuer or issue. While considering
factors such as yield, credit quality, liquidity, call risk, duration,
structure, covenants, and capital appreciation potential, we seek to construct a
fixed income portfolio that will generate a relatively high, sustainable income
stream without assuming undue levels of risk.
Particularly
when investing outside the United States, Dodge & Cox considers a
country’s financial strength and the rights of foreign creditors. In particular,
we evaluate a country’s economic outlook and political stability, its monetary
and fiscal policies, its debt stock, its regulatory framework, including its
insolvency regime, and its ability to meet its funding needs. For securities
denominated in or otherwise exposed to foreign currency, we consider relative
interest rates and exchange rates in deciding whether to accept or hedge those
risks.
Dodge &
Cox normally invests in an array of debt securities with short, intermediate,
and long maturities in varying proportions. The average maturity at any given
time of the debt securities in the Funds depends, in part, on
Dodge & Cox’s assessment of the factors described above and
Dodge & Cox’s expectation regarding the future level of inflation
and interest rates.
Yields
on a debt security depend on a variety of factors, including the general
conditions of the money and debt securities markets, the size of a particular
offering, the terms and conditions of the obligation (e.g., maturity, coupon,
and call features), and the credit rating of the issue. Debt securities with
longer maturities or lower credit ratings tend to have higher yields and are
generally subject to greater price volatility due to their higher interest rate
and credit risks. No specific yield on shares of a Fund can be guaranteed.
DODGE & COX STOCK FUND (“SF”)
Investment
Objective: The Fund seeks long-term growth of principal and income. A
secondary objective is to achieve a reasonable current income. The Fund’s
investment objective may not be changed without shareholder approval.
The
Fund seeks to achieve its objective by investing primarily in a diversified
portfolio of equity securities. Under normal circumstances, the Fund will invest
at least 80% of its total assets in equity securities, including common stocks,
depositary receipts evidencing ownership of common stocks, preferred stocks, and
securities convertible into common stocks, and securities that carry
PAGE
22 ∎ DODGE & COX FUNDS
the
right to buy common stocks (e.g., rights and warrants). The Fund may invest up
to 20% of its total assets in U.S. dollar-denominated securities of non-U.S.
issuers traded in the United States that are not in the S&P 500 Index. The
investment policies of the Fund as described above may be changed without
shareholder approval; however, these investment policies will not be changed
without 60 days’ prior notice to shareholders.
The
Fund may enter into currency forward contracts, currency swaps, or currency
futures contracts to hedge direct and/or indirect foreign currency exposure. The
Fund may, in certain circumstances, purchase put options referencing stock
indices, such as the S&P 500 Index, or utilize equity index futures to hedge
against a decline in the value of the referenced index.
While
the Fund’s long-term intent is to maintain a fully invested equity fund, the
Fund may hold moderate reserves in cash and/or short-term debt securities as
Dodge & Cox deems advisable. The Fund may purchase equity index futures
contracts, such as S&P 500 futures, to equitize, or create equity market
exposure approximately equal to, some or all of its non-equity assets, such as
cash, cash equivalents, unrealized gains on derivatives, and receivables. For
temporary, defensive purposes, the Fund may invest, without limitation, in U.S.
dollar-denominated short-term debt instruments. As a result of taking such a
defensive position, the Fund may not achieve its investment objectives.
In
an attempt to minimize unforeseen risks in holding the securities of any single
issuer, the Fund seeks to provide investment diversification. Although there is
no restriction on the number of changes in the Fund’s security holdings,
purchases generally are made with a view to holding for the long term and not
for short-term trading purposes. (The Fund’s portfolio turnover rates for the
fiscal years ended December 31, 2018, 2017, and 2016 were 20%, 13%, and
16%, respectively.) However, during rapidly changing economic, market, and
political conditions, portfolio turnover may be higher than in a more stable
period. A higher turnover rate might result in increased transaction expenses
and the realization of capital gains and losses, some of which may be short-term
capital gains taxed as ordinary income (see Federal Income Taxes).
Further
information about specific investments is provided under Additional
Information on Investments.
DODGE & COX GLOBAL STOCK FUND (“GSF”)
Investment
Objective: The Fund seeks long-term growth of principal and income. The
Fund’s investment objective may not be changed without shareholder approval.
The
Fund seeks to achieve its objective by investing primarily in a diversified
portfolio of equity securities from at least three different countries, which
may include emerging market countries. The Fund is not required to allocate its
investments in set percentages in particular countries and may invest in
emerging markets without limit. Under normal circumstances, the Fund will invest
at least 40% of its total assets in securities of non-U.S. companies and at
least 80% of its total assets in equity securities, including common stocks,
depositary receipts evidencing ownership of common stocks, preferred stocks,
securities
convertible
into common stocks, and securities that carry the right to buy common stocks
(e.g., rights and warrants). The investment policies of the Fund as described
above may be changed without shareholder approval; however, these investment
policies will not be changed without 60 days’ prior notice to shareholders.
The
Fund may enter into currency forward contracts, currency swaps, or currency
futures contracts to hedge direct and/or indirect foreign currency exposure. The
Fund may, in certain circumstances, purchase put options referencing U.S. and/or
non-U.S. stock indices or utilize equity index futures to hedge against a
decline in the value of the referenced index.
While
the Fund’s long-term intent is to maintain a fully invested equity fund, the
Fund may hold moderate reserves in cash or short-term debt securities as
Dodge & Cox deems advisable. The Fund may purchase equity index futures
contracts, referencing U.S. and/or non-U.S. stock indices, to equitize, or
create equity market exposure approximately equal to, some or all of its
non-equity assets, such as cash, cash equivalents, unrealized gains on
derivatives, and receivables. For temporary, defensive purposes, the Fund may
invest, without limitation, in U.S. dollar-denominated short-term debt
instruments. As a result of taking such a defensive position, the Fund may not
achieve its investment objectives.
In
an attempt to minimize unforeseen risks in holding the securities of any single
issuer, the Fund seeks to provide investment diversification. Although there is
no restriction on the number of changes in the Fund’s security holdings,
purchases generally are made with a view to holding for the long term and not
for short-term trading purposes. (The Fund’s portfolio turnover rates for the
fiscal years ended December 31, 2018, 2017, and 2016 were 31%, 18%, and
25%, respectively.) However, during rapidly changing economic, market, and
political conditions, portfolio turnover may be higher than in a more stable
period. A higher turnover rate might result in increased transaction expenses
and the realization of capital gains and losses, some of which may be short-term
capital gains taxed as ordinary income (see Federal Income Taxes).
Further
information about specific investments is provided under Additional
Information on Investments.
DODGE & COX INTERNATIONAL STOCK FUND (“ISF”)
Investment
Objective: The Fund seeks long-term growth of principal and income. The
Fund’s investment objective may not be changed without shareholder approval.
The
Fund seeks to achieve its objective by investing primarily in a diversified
portfolio of equity securities issued by non-U.S. companies from at least three
different countries, which may include emerging market countries. The Fund is
not required to allocate its investments in set percentages in particular
countries and may invest in emerging markets without limit. Under normal
circumstances, the Fund will invest at least 80% of its total assets in equity
securities of non-U.S. companies, including common stocks, depositary receipts
evidencing ownership of common stocks, preferred stocks, securities convertible
into common stocks, and securities that carry the right to buy common stocks
(e.g.,
DODGE & COX FUNDS ∎
PAGE 23
rights
and warrants). The investment policies of the Fund as described above may be
changed without shareholder approval; however, these investment policies will
not be changed without 60 days’ prior notice to shareholders.
The
Fund may enter into currency forward contracts, currency swaps, or currency
futures contracts to hedge direct and/or indirect foreign currency exposure. The
Fund may, in certain circumstances, purchase put options referencing U.S. and/or
non-U.S. stock indices or utilize equity index futures to hedge against a
decline in the value of the referenced index.
While
the Fund’s long-term intent is to maintain a fully invested equity fund, the
Fund may hold moderate reserves in cash or short-term debt securities as
Dodge & Cox deems advisable. The Fund may purchase equity index futures
contracts, referencing U.S. and/or non-U.S. stock indices, to equitize, or
create equity market exposure approximately equal to, some or all of its
non-equity assets, such as cash, cash equivalents, unrealized gains on
derivatives, and receivables. For temporary, defensive purposes, the Fund may
invest, without limitation, in U.S. dollar-denominated short-term debt
instruments.
In
an attempt to minimize unforeseen risks in holding the securities of any single
issuer, the Fund seeks to provide investment diversification. Although there is
no restriction on the number of changes in security holdings, purchases
generally are made with a view to holding for the long term and not for
short-term trading purposes. (The Fund’s portfolio turnover rates for the fiscal
years ended December 31, 2018, 2017, and 2016 were 17%, 17%, and 17%,
respectively.) However, during rapidly changing economic, market, and political
conditions, portfolio turnover may be higher than in a more stable period.
A
higher turnover rate might result in increased transaction expenses and the
realization of capital gains and losses, some of which may be short-term capital
gains taxed as ordinary income (see Federal Income Taxes).
Further
information about specific investments is provided under Additional
Information on Investments.
DODGE & COX BALANCED FUND (“BF”)
Investment
Objective: The Fund seeks regular income, conservation of principal, and an
opportunity for long-term growth of principal and income. The Fund’s investment
objective may not be changed without shareholder approval.
The
Fund invests in a diversified portfolio of equity securities and debt
securities. Under normal circumstances, the Fund will invest no less than 25%
and no more than 75% of its total assets in equity securities. Reasonable
appreciation in favorable periods and conservation of principal in adverse times
are objectives that require flexibility in managing the assets of the Fund under
constantly changing investment conditions. Asset allocation between equity and
debt securities is based on the Fund’s assessment of the potential risks and
returns for each asset class over a three- to five-year horizon. Factors used to
estimate the range of potential returns include: future earnings growth, the
outlook for the economy, inflation and interest rate trends, and
current
valuations relative to historical ranges. The Fund may invest up to 20% of its
total assets in U.S. dollar-denominated equity or debt securities of non-U.S.
issuers traded in the United States that are not in the S&P 500 Index. The
investment policies of the Fund as described above may be changed without
shareholder approval; however, these investment policies will not be changed
without 60 days’ prior notice to shareholders.
Equity
securities in which the Fund may invest include common stocks, depositary
receipts evidencing ownership of common stocks, preferred stocks, securities
convertible into common stocks, and securities that carry the right to buy
common stocks (e.g., rights and warrants). The Fund may, in certain
circumstances, purchase put options referencing stock indices, such as the
S&P 500 Index, or utilize equity index futures to hedge against a general
downturn in the equity markets. The Fund may purchase equity index futures
contracts, such as S&P 500 futures, to equitize, or create equity market
exposure approximately equal to, some or all of its available non-equity assets,
such as cash, cash equivalents, unrealized gains on derivatives, and
receivables.
The
Fund invests the debt portion of its assets primarily in debt securities issued
or guaranteed by the U.S. government, its agencies or GSEs, and other
investment-grade debt securities (securities rated Baa3 or higher by Moody’s,
BBB- or higher by S&P or Fitch, or equivalently rated by any NRSRO or, if
unrated, are deemed to be of investment-grade quality by Dodge & Cox).
A maximum of 20% of the debt portion of the Fund may be invested in debt
securities rated below investment grade, commonly referred to as high-yield or
“junk” bonds; provided no more than 5% of the debt portion of the Fund may be
invested in securities rated below B3 or B- by Moody’s, S&P, or Fitch. In
addition, up to 5% of the debt portion of the Fund may be invested in non-U.S.
dollar-denominated securities. The Fund may invest in exchange-traded funds as a
means to temporarily gain exposure to a portion of the bond market in the debt
portion of the Fund while awaiting the purchase of securities or to more
efficiently gain exposure to a particular asset class. Such investment will be
considered an investment in debt securities by the Fund.
The
Fund invests in hybrid securities, including preferred stock and capital
securities such as contingent convertible bonds. These securities may be
classified as equity or debt depending on the specific structure and features of
each security.
The
Fund may enter into currency forward contracts, currency swaps, or currency
futures contracts to hedge direct and/or indirect foreign currency exposure. The
Fund may invest in interest rate derivatives such as U.S. Treasury futures and
swap agreements for a variety of purposes, including, but not limited to,
managing the Fund’s duration or adjusting the Fund’s exposure to debt securities
with different maturities. In addition, the Fund may invest in credit default
swaps to increase or decrease credit exposure to a particular issuer, group of
issuers, or index.
In
seeking to achieve the objectives of the Fund, Dodge & Cox may
purchase securities on a when-issued basis and purchase or sell securities for
delayed delivery. The Fund may hold moderate reserves in cash or short-term debt
securities and for temporary, defensive purposes, may invest without limitation
in U.S. dollar-denominated short-term debt instruments.
PAGE
24 ∎ DODGE & COX FUNDS
In
an attempt to minimize unforeseen risks in holding the securities of any single
issuer, the Fund seeks to provide investment diversification. Although there is
no restriction on the number of changes in the Fund’s security holdings,
purchases generally are made with a view to holding for the long term and not
for short-term trading purposes. (The Fund’s portfolio turnover rates for the
fiscal years ended December 31, 2018, 2017, and 2016 were 24%, 19%, and
24%, respectively.) However, during rapidly changing economic, market, and
political conditions, portfolio turnover may be higher than in a more stable
period. A higher turnover rate might result in increased transaction expenses
and the realization of capital gains and losses, some of which may be short-term
capital gains taxed as ordinary income (see Federal Income Taxes).
Further
information about specific investments is provided under Additional
Information on Investments.
DODGE & COX INCOME FUND (“IF”)
Investment
Objective: The Fund seeks a high and stable rate of current income,
consistent with long-term preservation of capital. A secondary objective is to
take advantage of opportunities to realize capital appreciation. The Fund’s
investment objective may not be changed without shareholder approval.
The
Fund seeks to achieve its objectives by investing in a diversified portfolio of
debt securities. Under normal circumstances, the Fund will invest at least 80%
of its total assets in (1) investment-grade debt securities and
(2) cash equivalents. “Investment grade” means (i) securities rated
Baa3 or higher by Moody’s, or BBB- or higher by S&P or Fitch, or
equivalently rated by any NRSRO, or, (ii) if unrated, deemed to be of
similar quality by Dodge & Cox. Debt securities in which the Fund may
invest include, but are not limited to, obligations issued or guaranteed by the
U.S. government, its agencies, or GSEs, mortgage- and asset-backed securities,
corporate and municipal bonds, and may include other fixed and floating rate
instruments. The Fund may invest up to 25% of its total assets in U.S.
dollar-denominated securities of non-U.S. issuers, including emerging market
issuers. The investment policies of the Fund as described above may be changed
without shareholder approval; however, these investment policies will not be
changed without 60 days’ prior notice to shareholders.
The
Fund may also invest in securities not mentioned above, including hybrid
securities such as preferred stocks and convertible securities. Up to 20% of the
Fund’s total assets may be invested in debt securities rated below investment
grade, commonly referred to as high-yield or “junk” bonds; provided no more than
5% of the Fund’s total assets may be invested in securities rated below B3 or B-
by Moody’s, S&P, or Fitch. In addition, up to 5% of the Fund’s total assets
may be invested in non-U.S. dollar-denominated securities. The Fund may invest
in exchange-traded funds as a means to temporarily gain exposure to a portion of
the bond market while awaiting the purchase of securities or to more efficiently
gain exposure to a particular asset class. Such investment will be considered an
investment in debt securities by the Fund.
The
Fund seeks relative price appreciation by selecting securities Dodge &
Cox believes to be undervalued based on research and fundamental analysis and by
making gradual adjustments in the average duration of the Fund’s portfolio.
The
Fund may invest in interest rate derivatives, such as U.S. Treasury futures
contracts and swap agreements, for a variety of purposes, including, but not
limited to, managing the Fund’s duration or adjusting the Fund’s exposure to
debt securities with different maturities. Under normal circumstances, the Fund
intends to hedge the direct currency exposure of its non-U.S. dollar-denominated
investments with currency derivatives, such as forward contracts, futures
contracts, and swap contracts. In addition, the Fund may invest in credit
default swaps to increase or decrease credit exposure to a particular issuer,
group of issuers, or index.
In
seeking to achieve the objectives of the Fund, Dodge & Cox may
purchase securities on a when-issued basis and purchase or sell securities for
delayed delivery. The Fund may hold moderate reserves in cash or short-term debt
securities and, for temporary, defensive purposes, may invest without limitation
in U.S. dollar-denominated short-term debt instruments.
Although
there is no restriction on the number of changes in the Fund’s security
holdings, purchases generally are made with a view to holding for the long term
and not for short-term trading purposes. (The Fund’s portfolio turnover rates
for the fiscal years ended December 31, 2018, 2017, and 2016 were 37%, 19%,
and 27%, respectively.) However, during rapidly changing economic, market, and
political conditions, portfolio turnover may be higher than in a more stable
period. A higher turnover rate might result in increased transaction expenses
and the realization of capital gains and losses (see Federal Income
Taxes).
Further
information about specific investments is provided under Additional
Information on Investments.
DODGE & COX GLOBAL BOND FUND (“GBF”)
Investment
Objective: The Fund seeks a high rate of total return consistent with
long-term preservation of capital.
The
Fund seeks to achieve its investment objective by investing in a diversified
portfolio of bonds and other debt instruments of issuers from at least three
different countries, which may include emerging market countries. The Fund is
not required to allocate its investments in set percentages to particular
countries and may invest in emerging markets without limit. Under normal
circumstances, the Fund invests at least 40% of its total assets in securities
of non-U.S. issuers and at least 80% of its total assets in debt instruments,
which may, in each case, be represented by derivatives such as forwards
contracts, futures contracts, or swap agreements. The investment policies of the
Fund as described above may be changed without shareholder approval; however,
these investment policies will not be changed without 60 days’ prior notice
to shareholders.
Debt
instruments in which the Fund may invest include, but are not limited to,
government and government-related obligations, mortgage- and asset-backed
securities, corporate and municipal bonds, collateralized mortgage obligations,
and other
DODGE & COX FUNDS ∎
PAGE 25
fixed
and floating rate instruments. The Fund invests in both U.S. dollar-denominated
and non-U.S. dollar-denominated debt instruments across all sectors. The Fund
invests primarily in investment-grade debt instruments (instruments rated Baa3
or higher by Moody’s, BBB- or higher by S&P or Fitch, or equivalently rated
by any NRSRO, or, if unrated, deemed to be of investment-grade quality by
Dodge & Cox). Up to 20% of the Fund’s total assets may be invested in
below investment-grade debt securities, commonly referred to as high-yield or
“junk” bonds. The Fund may invest in exchange-traded funds as a means to
temporarily gain exposure to a portion of the bond market while awaiting the
purchase of securities or to more efficiently gain exposure to a particular
asset class. Such investment will be considered an investment in debt securities
by the Fund.
The
Fund may purchase or sell holdings for a variety of reasons, such as to alter
sector, geographic, or currency exposure or to shift the overall portfolio’s
risk profile. In seeking to achieve the objective of the Fund, Dodge &
Cox may purchase securities on a when-issued basis and purchase or sell
securities for delayed delivery. The Fund may hold moderate reserves in cash or
short-term debt securities and for temporary, defensive purposes, may invest
without limitation in U.S. dollar-denominated short-term debt instruments.
The
Fund may buy or sell foreign currencies and enter into various currency- or
interest rate-related transactions involving derivative instruments, including
forwards, futures, swaps, and options. The Fund may use derivatives either to
hedge or seek to reduce risks relating to other investments or to create
exposure to interest rates, securities, or currencies as a substitute for direct
investment. The Fund may use interest rate derivatives for a variety of
purposes, including, but not limited to, managing the Fund’s duration or
adjusting the Fund’s exposure to debt securities with different maturities. In
addition, the Fund may invest in credit default swaps to increase or decrease
credit exposure to an issuer, group of issuers, or index. The Fund’s use of
derivatives is related to the implementation of its overall primary investment
strategy. The Fund does not invest primarily in derivatives and is not intended
to be a vehicle through which shareholders can invest in, or otherwise seek
exposure to, derivatives.
Although
there is no restriction on the number of changes in the Fund’s security
holdings, purchases generally are made with a view to holding for the long term
and not for short-term trading purposes. (The Fund’s portfolio turnover rates
for the fiscal years ended December 31, 2018, 2017, and 2016 were 55%, 46%,
and 73%, respectively.) However, during rapidly changing economic, market, and
political conditions, portfolio turnover may be higher than in a more stable
period. A higher turnover rate might result in increased transaction expenses
and the realization of capital gains and losses (see Federal
Income Taxes).
Further
information about specific investments is provided under Additional
Information on Investments.
INVESTMENT RESTRICTIONS
The
Funds are subject to additional investment restrictions which are described in
the SAI.
The
percentage limitations included in this prospectus and SAI apply at the time of
purchase of a security. So, for example, if a Fund exceeds a limit as a result
of market fluctuations or the sale of other securities, it will not be required
to dispose of any securities.
DISCLOSURE OF PORTFOLIO HOLDINGS
A
complete description of the Funds’ policies and procedures with respect to the
disclosure of the Funds’ portfolio securities is available in the Statement of
Additional Information (“SAI”).
The
Funds provide a complete list of their holdings on a quarterly basis by filing
the lists with the SEC on Form N-CSR (as of the end of the second and fourth
quarters) and on Part F of Form N-PORT (as of the end of the first
and third quarters). Shareholders may view the Funds’ Form N-CSR and Part F of
Form N-PORT on the SEC’s website at sec.gov. A list of the Funds’ quarter-end
holdings is also available at dodgeandcox.com on or about the 15th day
following each quarter end and remains available on the website until the
list is updated for the subsequent quarter.
PAGE
26 ∎ DODGE & COX FUNDS
ADDITIONAL INFORMATION
ON INVESTMENTS
The
following table identifies investments and investment practices that are likely
to be used by the Funds in seeking to achieve their objectives. The table
highlights the differences and similarities among the Funds in their use of
these techniques and other investment practices and investment instruments. This
is not a complete list of every investment type that a Fund may use and a Fund
may use an investment type even if it is not marked below. Information about
these investments is provided below; more information about these and other
investments and investment practices that the Funds may use is provided in the
SAI.
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment or Practice |
|
SF |
|
GSF |
|
ISF |
|
BF |
|
IF |
|
GBF |
Asset-Backed Securities |
|
|
|
|
|
|
|
X |
|
X |
|
X |
Cash Equivalents |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Corporate Bonds |
|
|
|
|
|
|
|
X |
|
X |
|
X |
Depositary Receipts |
|
X |
|
X |
|
X |
|
X |
|
|
|
X |
Derivatives |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Credit
Derivatives |
|
|
|
|
|
|
|
X |
|
X |
|
X |
Currency
Derivatives |
|
X |
|
X |
|
X |
|
X |
|
|
|
X |
Currency
Forwards, Swaps, and Futures |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Cross-Currency
Swaps |
|
|
|
|
|
|
|
|
|
|
|
X |
Currency
Options |
|
|
|
|
|
|
|
|
|
|
|
X |
Equity
Derivatives |
|
X |
|
X |
|
X |
|
X |
|
|
|
|
Equity
Index Futures |
|
X |
|
X |
|
X |
|
X |
|
|
|
|
Equity
Index Put Options |
|
X |
|
X |
|
X |
|
X |
|
|
|
|
Total
Return Swaps |
|
|
|
X |
|
X |
|
|
|
|
|
|
Interest
Rate Derivatives |
|
|
|
|
|
|
|
X |
|
X |
|
X |
Equity Securities |
|
X |
|
X |
|
X |
|
X |
|
|
|
|
Common
Stocks |
|
X |
|
X |
|
X |
|
X |
|
|
|
|
Standby
Commitment Agreements |
|
X |
|
X |
|
X |
|
X |
|
|
|
|
Exchange-Traded Funds |
|
|
|
|
|
|
|
X |
|
X |
|
X |
Hybrid Securities |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Mortgage-Backed Securities |
|
|
|
|
|
|
|
X |
|
X |
|
X |
Collateralized
Mortgage Obligations |
|
|
|
|
|
|
|
X |
|
X |
|
X |
Mortgage
Pass-Through Securities |
|
|
|
|
|
|
|
X |
|
X |
|
X |
Municipal Bonds |
|
|
|
|
|
|
|
X |
|
X |
|
X |
Non-U.S. Securities |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Private Placement Securities |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Sovereign and Government-Related Debt |
|
|
|
|
|
|
|
X |
|
X |
|
X |
U.S. Government Obligations |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
When-Issued Securities |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Asset-Backed
Securities.
Asset-backed securities (“ABS”) are bonds issued through special purpose
vehicles and backed by pools of loans or other receivables. ABS are created from
many types of assets, including home equity loans, auto loans, student loans,
and credit card receivables. The credit quality of an ABS security depends on
the quality and performance of its underlying assets and/or the level of any
credit support provided to its structure.
Cash
Equivalents. Cash
equivalents are short-dated instruments that are readily convertible into cash.
They may include bank obligations, commercial paper, and repurchase agreements.
Bank obligations include certificates of deposit and bankers’ acceptances.
Commercial paper is a short-term promissory note issued by a corporation, which
may have a floating or variable rate. Repurchase agreements are transactions
under which a Fund purchases a security from a bank or securities dealer and
agrees to
resell
the security to that bank or securities dealer on a specified future date at the
same price, plus a specified interest rate.
Corporate
Bonds. Corporate bonds
are debt securities issued by corporations and similar entities, including real
estate investment trusts or limited partnerships. Corporate bonds pay a
specified amount of interest, usually at regular intervals, and repay the amount
of their principal investment, usually at maturity.
Depositary
Receipts. Depositary
receipts, including American Depositary Receipts, Global Depositary Receipts,
European Depositary Receipts, Global Depositary Notes, and similar instruments
are certificates evidencing ownership of securities of a foreign issuer. The
certificates are issued by depositary banks and the underlying securities are
held in trust by a custodian bank or similar institution. Depositary receipts
may be purchased on securities exchanges or directly from dealers.
DODGE & COX FUNDS ∎
PAGE 27
Derivatives.
Credit
Derivatives. Credit
derivatives can be used to manage the credit risk associated with an investment
or to increase credit exposure without investing directly in the underlying
security or securities. Credit derivatives are swap agreements based on the
credit risk of one or more referenced issuers of debt. In a single-name credit
default swap, one party (the “buyer” of credit protection) pays the other party
(the “seller” of credit protection) an upfront amount and/or a periodic stream
of payments over the term of the contract or until the occurrence of a “credit
event,” such as the bankruptcy of an issuer referenced in the contract. If a
credit event occurs, the seller pays the buyer the “par value” (full notional
value) of the credit default swap in exchange for an equal face amount of the
referenced issuer’s debt securities. If the credit default swap is cash settled,
the seller is required to make a payment equal to the difference between the par
value and the market value of such securities. An index credit default swap
refers to a published list of issuers, each representing a pro-rata portion of
the total notional amount. If a credit event occurs with respect to any issuer,
the parties settle only the portion of the trade related to that issuer, and the
trade continues with respect to the remaining names.
Currency
Derivatives. Currency
derivatives can be used to manage non-U.S. currency exposure, to hedge non-U.S.
interest rate risk, or to take long or short positions with respect to
currencies or non-U.S. interest rates. A Fund may use currency derivatives to
lock in the U.S. dollar purchase price of a non-U.S. dollar-denominated security
or to hedge other types of exposure to non-U.S. currencies. A Fund may hedge a
currency by entering into a transaction in an instrument that is denominated in
a currency other than the currency being hedged (a “cross-hedge”) if
Dodge & Cox believes that there is a correlation between the currency
in which the cross-hedge is denominated and the currency being hedged. Currency
derivatives may be used in anticipation of an increase or decrease of the value
of one currency relative to another. The Funds may also exchange currencies on a
“spot” basis. The Global Bond Fund may take long or short positions in
currencies regardless of whether those positions are intended to hedge exposure
created by other investments.
Currency Forwards,
Swaps and Futures.
Currency forward contracts (or “FX forwards”) are agreements under which one
party agrees to make, and the other party agrees to accept, delivery of a
specified currency amount at a specified future time and price. FX forwards are
individually negotiated and privately traded. Although some FX forwards by their
terms call for actual delivery or acceptance of currency, in many cases the
contracts are settled with a cash payment representing the difference in value
between two amounts of different currencies. A currency swap (or “FX swap”) is a
transaction under which the parties agree to buy and sell identical amounts of
two currencies on two different dates. This is typically arranged as a spot
currency
transaction
(or short-dated currency forward contract) that will be reversed at a set future
date through an offsetting currency forward transaction.
Currency
futures contracts are agreements that are economically similar to currency
forward contracts, but are standardized, traded through a national (or foreign)
exchange, and cleared through an affiliate of the exchange.
Cross-Currency
Swaps. A
cross-currency swap is an interest rate swap in which each party makes payments
in a different currency. Typically, upon initiation of a cross-currency swap,
the two parties exchange principal amounts of the specified currencies. During
the life of the swap, each party makes payments to the other in a specified
currency based on applying a specified rate to the principal amount. At the
maturity of the swap, the parties reverse the initial exchange of the principal
amounts in the two currencies.
Currency
Options. Currency
options provide the holder the right to buy or sell a currency at a fixed price
on a future date. The buyer of a put option on a currency has the right to sell
the currency at the exercise price, while the buyer of a call option on a
currency has the right to purchase the currency at the exercise price. Currency
options may be traded over-the-counter, with negotiated strike prices,
expiration dates, and other terms, or on exchanges, subject to standardized
terms. Currency options are influenced by all of the risk factors inherent in
currency and foreign exchange investments generally, and may be more volatile
than their underlying currencies.
Equity
Derivatives.
Equity Index
Futures. Equity index
futures contracts can be used to create exposure to a stock index such as the
S&P 500, and short positions in equity index futures can be used to hedge
the equity exposure of a Fund’s portfolio with regard to market risk. The
purchaser of an equity index future buys the right to receive a payment
corresponding to any increase in the value of referenced index as of a specified
future date and incurs the obligation to make a payment corresponding to any
decrease in the value of referenced index as of such date. By establishing a
short position in an equity index futures contract, a Fund may seek to protect
the value of its portfolio against an overall decline in the market. Futures
contracts are standardized, traded through a national (or foreign) exchange, and
cleared through an affiliate of the exchange.
Equity Index Put
Options. The buyer of
an equity index put option receives the right to a payment equal to the
difference between the strike price and the price of the referenced index upon
exercise. If the value of the referenced index increases, the put option has no
value, but the buyer is not obligated to make payments. Equity index put options
may be used to hedge against a general downturn in the equity markets.
PAGE
28 ∎ DODGE & COX FUNDS
Total Return
Swaps. An equity total
return swap is a contract that can create long or short economic exposure to an
underlying equity security, or to a basket or index of securities. Under such a
contract, one party agrees to make payments to another based on the total return
of a notional amount of the security or securities underlying such contract
(including dividends and changes in market value) during a specified period, in
return for periodic payments based on the application of a fixed or variable
interest rate to the same notional amount.
Interest Rate
Derivatives: Interest Rate Futures and Interest Rate Swaps. Interest rate futures contracts include
agreements under which one party agrees to make, and the other party agrees to
accept, delivery of a specified interest-bearing security, at a specified future
time and price. Interest rate derivatives also include futures contracts that
relate to a particular referenced interest rate (e.g., LIBOR or EURIBOR) and
futures contracts on U.S. or non-U.S. government debt (e.g., Treasury or Bund
futures contracts). Interest rate futures are standardized, traded through a
national (or foreign) exchange and cleared through an affiliate of the exchange.
Interest rate swaps are transactions under which each party agrees to make
payments to the other based on applying a different interest rate to the same
notional amount. One of the rates may be fixed and the other floating, or both
rates may be floating. Some interest rate swaps are traded on swap execution
facilities, while others are traded directly with dealer counterparties. Some
interest rate swaps are cleared through central counterparties. A Fund may enter
into interest rate futures or swaps for a variety of purposes in connection with
the management of the interest rate exposure of its portfolio, including
adjusting portfolio duration, hedging against possible increases or decreases in
rates, or increasing or decreasing exposure to interest rates.
Equity
Securities. Equity
securities represent ownership shares in a company, and include securities that
convey an interest in, may be converted into or give holders a right to purchase
or otherwise acquire such ownership shares in a company.
Common
Stocks. Common stocks
represent shares of ownership in a company. After other company obligations are
satisfied, common stock holders participate in company profits on a pro-rata
basis; profits may be paid out in dividends or reinvested in the company to help
it grow. Increases and decreases in earnings are usually reflected in a
company’s stock price, so common stocks generally have the greatest appreciation
and depreciation potential of all corporate securities. Ownership of common
stock of a non-U.S. company may be represented by depositary receipts (which
represent an interest in non-U.S. securities held by a custodian bank).
Standby Commitment
Agreements. A standby
commitment agreement obligates one party, for a set period of time, to purchase
a certain amount of a security that may be issued and sold to that party at a
predetermined price at the option of the issuer or its underwriter. The
purchasing party
receives
a commitment fee in exchange for its promise to purchase the security, whether
or not it is eventually required to purchase the security. The value of the
securities when they are issued may be more or less than the predetermined
price.
Exchange-Traded
Funds. An
exchange-traded fund (“ETF”) is a fund that is comprised of a basket of
securities that is traded on an exchange. Investing in an ETF is subject to the
same primary risks as investing directly in the underlying securities in the
basket. In addition, ETFs are subject to certain unique risks including, but not
limited to, the risk that: (i) the market price of the ETF’s shares may
trade at a discount or premium to their net asset value; (ii) an active
trading market for an ETF’s shares may not develop or be maintained; and
(iii) trading of an ETF’s shares may be halted by the listing exchange.
Shareholders of a Fund that invests in ETFs will bear indirectly expenses of the
ETF because such expenses impact the net asset value of the shares of the ETFs,
which impacts the net asset value of the Fund.
Hybrid
Securities. Hybrid
securities have characteristics that differ from both common stocks and senior
debt securities, typically ranking senior to common stock and subordinate to
senior debt in an issuer’s capital structure. Hybrid securities may have
features such as deferrable and/or non-cumulative interest payments, long-dated
maturity or no maturity, reduced or no acceleration rights, and may be subject
to principal reduction without default under certain circumstances. Types of
hybrid securities include, without limitation, preferred stocks, warrants,
capital securities, convertible securities, and contingent convertible bonds.
For a fund that invests in both equity and debt securities, such as the
Dodge & Cox Balanced Fund, hybrid securities will be classified as
equity or debt based on their specific structures and features.
Preferred
Stock. Preferred stock
is usually subordinated to an issuer’s senior debt, but senior to the issuer’s
common stock. Typically, preferred stock is structured as a long-dated or
perpetual bond that distributes income on a regular basis. Issuers are permitted
to skip (“non-cumulative” preferred stock) or defer (“cumulative” preferred
stock) distributions. Preferred stock may be convertible into common stock and
may contain call or maturity extension features.
Warrants. Warrants permit a holder to buy a stated
number of shares of common stock at a specified price anytime during the life of
the warrants (generally two or more years). They can be highly volatile and may
have no voting rights, pay no dividends, and have no rights with respect to the
assets of the entity issuing them.
Capital
Securities. Capital
securities may be issued in the form of preferred securities or subordinated
debt securities. Capital securities may be long-dated or perpetual (i.e., have
no maturity) and typically distribute income on a monthly, quarterly or
semi-annual basis. Issuers are permitted to defer income payments (which may or
may not accumulate for future payment). Capital securities may contain call or
maturity extension features.
DODGE & COX FUNDS ∎
PAGE 29
Convertible
Securities.
Convertible securities are preferred stock or debt securities that are
convertible into common stock at a specified price during a specified period of
time or upon the occurrence of a specified event. Traditionally, convertible
securities have paid dividends or interest at rates higher than common stock
dividend rates but lower than nonconvertible securities. They generally
participate in the appreciation or depreciation of the underlying stock into
which they are convertible, but to a lesser degree.
Contingent Convertible
Bonds. Contingent
convertible bonds are deeply subordinated debt securities issued by non-U.S.
financial institutions for the purpose of meeting regulatory capital
requirements. These bonds are typically perpetual and have discretionary,
non-cumulative interest payments. Interest payments may be suspended at the
discretion of management, at the direction of the issuer’s regulator or as a
result of falling below certain capital thresholds. In addition, contingent
convertible bonds may be converted to equity securities or be written down in
principal value if the issuer falls below prescribed capital levels.
Mortgage-Backed
Securities.
Mortgage-backed securities (“MBS”) are a type of ABS secured by
mortgage loans.
Collateralized Mortgage
Obligations.
Collateralized mortgage obligations (“CMOs”) are a type of MBS backed by U.S.
government agency- or GSE-guaranteed mortgage pass-through securities. They may
be issued by U.S. government agencies, GSEs, or private issuers. CMOs are
typically issued in multiple classes, or “tranches,” of bonds, each with a
different level of seniority and credit risk. Each tranche is traded and valued
separately. Payments of interest and principal rely on payments made in respect
of the underlying mortgage pass-through securities. Typically, all payments
received are applied first to pay interest on the various tranches, starting
with the most senior, and then to pay down principal on the various tranches,
again starting with the most senior. No principal payments are made on a tranche
until the entire principal of the more senior tranches has been repaid.
Mortgage Pass-Through
Securities. Mortgage
pass-through securities represent ownership in “pools” of mortgage loans and are
called “pass-throughs” because principal and interest payments are passed
through to security holders monthly. These securities may be issued and
guaranteed by an agency of the U.S. government or GSE, or by a private entity.
Security holders receive payments based on scheduled payments of interest and
principal and unscheduled prepayments of principal on the underlying mortgage
loans. The market value of these securities depends, in part, on expectations
about the rate at which the underlying loans will be prepaid or default.
Municipal
Bonds. Municipal bonds
are debt obligations issued by states, municipalities, and other political
subdivisions, agencies, authorities, and instrumentalities of states and
multi-state agencies or authorities, the interest on which may be exempt
from
federal and/or state income tax. Municipal bonds include securities from a
variety of sectors.
Non-U.S.
Securities. Each Fund
may invest in U.S. dollar-denominated securities of non-U.S. issuers traded in
the United States. Some Funds may also invest in foreign currency-denominated
securities of non-U.S. issuers. For purposes of this prospectus, non-U.S. (or
foreign) issuers are generally non-U.S. governments or companies organized
outside the United States, but the Funds may make a different designation in
certain circumstances.
Private Placement
Securities. The Funds
may invest in securities issued in private placements, including 144A
securities. Such securities are subject to legal or contractual restrictions on
resale and may include equity or debt securities of U.S. and non-U.S. issuers
that are issued without registration with the SEC, including offerings outside
the United States. Private placement or restricted securities often have lower
overall liquidity than registered securities traded on established secondary
markets and may be considered illiquid.
Sovereign and
Government-Related Debt. Sovereign debt includes securities issued
or guaranteed by a foreign sovereign government or its agencies, authorities, or
political subdivisions. Government-related debt includes securities issued by
non-U.S. regional or local governmental entities or government-controlled
entities. In the event an issuer of sovereign debt or government-related debt is
unable or unwilling to make scheduled payments of interest or principal, holders
may be asked to participate in a restructuring of the debt and to extend further
credit to the issuer.
U.S. Government
Obligations. A portion
of each Fund may be invested in obligations issued or guaranteed by the U.S.
government, its agencies, or GSEs. Some obligations purchased by the Funds are
backed by the full faith and credit of the U.S. government and are guaranteed as
to both principal and interest by the U.S. Treasury. Examples of these
include direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds, and indirect obligations of the U.S. Treasury, such as
obligations of Government National Mortgage Association, the Small Business
Administration, the Maritime Administration, the Farmers Home Administration,
and the Department of Veterans Affairs.
While
the obligations of many of the agencies of the U.S. government are not direct
obligations of the U.S. Treasury, they are generally backed indirectly by the
U.S. government. Some of the agencies are indirectly backed by their right to
borrow from the U.S. government, such as the Federal Financing Bank and the U.S.
Postal Service. Other agencies and GSEs have historically been supported solely
by the credit of the agency or GSE itself, but are given additional support due
to the U.S. Treasury’s authority to purchase their outstanding debt obligations.
GSEs include, among others, the Federal National Mortgage Association (“Fannie
Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”), the Federal Home
Loan Banks, and the Federal Farm Credit Banks.
In
September 2008, the U.S. Treasury placed Fannie Mae and Freddie Mac into
conservatorship and has since increased its support of these two GSEs through
substantial capital
PAGE
30 ∎ DODGE & COX FUNDS
commitments
and enhanced liquidity measures, which include a line of credit. The U.S.
Treasury also extended a line of credit to the Federal Home Loan Banks. No
assurance can be given that the U.S. government will provide continued support
to GSEs, and these entities’ securities are neither issued nor guaranteed by the
U.S. Treasury. Fannie Mae and Freddie Mac have entered into a joint venture to
develop and operate a common securitization platform that will support their
single-family mortgage securitization activities, including the issuance of a
common, single mortgage-backed security (“Single Security Initiative”). If the
Single Security Initiative is implemented, the effects on the market for MBS are
uncertain.
When-Issued Securities.
When-issued securities
are securities that have been authorized, but not yet issued. When-issued
securities are purchased at a specific price for settlement on a future date in
order to secure what is considered an advantageous price or yield at the time of
entering into the transaction. A fund that purchases a when-issued security
assumes all the rights and risks of ownership, including the risks of price and
yield fluctuations and the risk that the security will not be issued
as anticipated.
INVESTMENT RISKS
Investors
should recognize that investing in securities presents certain risks that cannot
be avoided. There is no assurance that the investment objectives of any Fund
will be achieved. The following table summarizes some of the risks involved in
investing in each of the Funds and highlights certain differences and
similarities among the Funds in their exposure to various types of risks.
The
table below is not a complete list of every risk involved in investing in the
Funds and a Fund may have exposure to a risk factor even if it is not marked
below. Investing in securities creates indirect exposure to the various business
risks to which their issuers are subject, which may include sector-, industry-,
or region-specific risks. Investments in equity securities may create indirect
exposure to interest rate, credit, and currency risk. Securities of non-U.S.
issuers are exposed to currency risk, even if they are denominated in U.S.
dollars. Debt and equity investments in commodity-related issuers create
exposure to commodity risks, which may include unpredictable changes in value,
supply and demand, and government regulation. There is more information about
these and other risks in the SAI.
|
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Risk |
|
SF |
|
GSF |
|
ISF |
|
BF |
|
IF |
|
GBF |
Asset Allocation Risk |
|
|
|
|
|
|
|
X |
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Below Investment-Grade Securities Risk |
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|
X |
|
X |
|
X |
Call Risk |
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|
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|
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|
|
X |
|
X |
|
X |
Counterparty Risk |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Credit Risk |
|
|
|
|
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|
|
X |
|
X |
|
X |
Derivatives Risk |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Emerging Markets Risk |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Equity Risk |
|
X |
|
X |
|
X |
|
X |
|
|
|
|
Hybrid Securities Risk |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Interest Rate Risk |
|
|
|
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|
X |
|
X |
|
X |
Liquidity Risk |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Manager Risk |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Market Risk |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Mortgage- and Asset-Backed Securities Risk |
|
|
|
|
|
|
|
X |
|
X |
|
X |
Non-U.S. Currency Risk |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Non-U.S. Investment Risk |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Regulatory Risk |
|
X |
|
X |
|
X |
|
X |
|
X |
|
X |
Sovereign and Government-Related Debt Risk |
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|
X |
|
X |
|
X |
U.S. Municipal Bond Risk |
|
|
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|
|
X |
|
X |
|
X |
Asset Allocation Risk.
Dodge & Cox’s
determination of a Fund’s broad asset allocation mix will affect that Fund’s
performance. Dodge & Cox’s evaluations and assumptions regarding
asset classes may not successfully achieve the Fund’s investment objective
in view of actual market movements. A Fund’s balance between equity and debt
securities could limit its potential for capital appreciation relative to an
all-stock fund and contributes to greater volatility relative to an all-bond
fund.
Below Investment-Grade
Securities Risk. Debt
securities rated below investment grade, also known as “high-yield” or “junk”
bonds, have speculative characteristics and may be more volatile than
investment-grade debt securities. Below investment-grade securities are often
issued by smaller, less creditworthy companies or by highly levered (indebted)
companies, which are generally less able than more financially stable companies
to make scheduled payments of interest and principal. These securities typically
yield
DODGE & COX FUNDS ∎
PAGE 31
a
higher level of current income than higher-rated securities, but generally have
greater credit and call risk, more price volatility, and less liquidity. An
economic downturn, rising interest rates, or negative developments with respect
to an issuer may affect the price and/or liquidity of a below investment-grade
security more than an investment-grade security, and may reduce a Fund’s ability
to sell these securities at an advantageous time or price. A security downgraded
below investment-grade may lose significant market value even if no default
occurs.
A
Fund’s high yield bonds may include distressed bonds, which may present a high
risk of default or be in default at the time they are purchased. Distressed
securities are speculative and involve even greater risks than other high-yield
bonds, including the risk that interest payments may not be made on a current
basis, or that principal will not be repaid in full. A Fund could incur
significant expenses to the extent it is required to negotiate new terms with
the issuer of a distressed bond or seek recovery upon a default in respect of a
distressed bond. In any reorganization or liquidation proceeding related to a
defaulted security, a Fund could lose its entire investment or could be required
to accept cash or securities with a value substantially less than its original
investment.
The
below investment-grade securities in which a Fund invests are not typically
listed on any exchange and the secondary market (if any) for such securities may
have lower overall liquidity than other securities, which may cause transactions
in below investment-grade securities to be more costly. A lack of publicly
available information, irregular trading activity, and wide bid-ask spreads,
among other factors, may make these securities more difficult to sell at an
advantageous time or price than other types of investments. These factors may
affect the value a Fund may realize in selling below investment-grade
securities, which could result in losses to a Fund.
An
explanation of Moody’s, Fitch’s, and S&P’s rating categories is included in
Appendix A to the SAI.
Call Risk.
Issuers of callable
bonds are permitted to redeem them before their full maturities. Buying a
callable bond exposes a Fund to economic risks similar to selling call options.
Issuers may call outstanding securities before their maturity for a number of
reasons, including decreases in prevailing interest rates or improvements to the
issuer’s credit profile. If an issuer calls a security in which a Fund is
invested, that Fund could lose potential price appreciation and be forced to
reinvest the proceeds in securities that bear a lower interest rate or more
credit risk.
Counterparty Risk.
Non-cleared
derivatives, such as currency forward contracts and currency swaps, and other
principal (i.e., non-exchange traded) transactions are subject to the risk that
a counterparty may not make payments or deliveries when required to do so.
Deterioration in the actual or perceived creditworthiness of a counterparty may
affect the value of a derivative or other transaction with that counterparty. A
number of broker-dealers and other financial institutions have experienced
extreme financial difficulty in the past, sometimes resulting in bankruptcy.
Counterparties may become subject to special resolution regimes in the United
States and other jurisdictions, which may affect a fund’s ability to terminate
and exercise remedies in respect of
derivative
positions. Although we monitor the creditworthiness of our counterparties, there
can be no assurance that a Fund’s derivative counterparties will not experience
financial difficulties, possibly resulting in losses to that Fund.
Credit Risk.
The value of a debt
security may decline if the market believes it is less likely that the issuer
will make all payments of interest and principal as required. This could occur
because of actual or perceived deterioration in the issuer’s or a guarantor’s
financial condition, or in the case of asset-backed securities, the likelihood
that the loans backing a security will be repaid in full. A Fund could lose
money if the issuer or guarantor of a debt security becomes bankrupt or subject
to a special resolution regime, or is otherwise unable or unwilling to make
timely interest and/or principal payments, or honor its obligations. Securities
are subject to varying degrees of credit risk, which may be reflected by their
ratings; however, such ratings may overestimate or underestimate the likelihood
of default and may not accurately reflect the true credit risk of a security.
The credit risk associated with corporate debt securities may change as the
result of an event such as a large dividend payment, leveraged buyout, debt
restructuring, merger, or recapitalization; such events are unpredictable and
may benefit shareholders or new creditors at the expense of existing debt
holders. Credit risk is likely to increase during periods of economic
uncertainty or downturns. Credit risk associated with non-U.S. dollar
denominated securities may increase if the value of an issuer’s home currency
declines relative to the U.S. dollar. If a debt security owned by a Fund ceases
to be rated or is downgraded below a permitted threshold, the Fund may (but is
not required to) sell the security.
Derivatives Risk.
Derivatives are
financial instruments, including futures contracts, forwards contracts and swap
agreements, the values of which are based on the value of one or more underlying
assets, such as stocks, bonds, currencies, interest rates, and market indexes.
Derivatives involve risks different from, and possibly greater than, the risks
associated with investing directly in the underlying assets and other more
traditional investments. The market value of derivatives may be more volatile
than that of other investments and can be affected by changes in interest rate
or other market developments. The use of derivatives may accelerate the velocity
of possible losses. Each type of derivative instrument may have its own special
risks, including the risk of mispricing or improper valuation and the
possibility that a derivative may not correlate perfectly or as expected with
its underlying asset, rate, or index. For example, cross-hedging transactions
involve the risk of imperfect correlation between changes in the values of the
currencies to which such transactions relate and changes in the value of the
currency or other asset or liability which is subject to the hedge. Derivatives
create leverage because the upfront payment required to enter into a derivative
is often much smaller than the potential for loss (which may in theory be
unlimited). A derivative may be subject to liquidity risk, especially during
times of financial market distress; certain types of derivatives may be
terminated or modified only with the consent of their counterparties.
Derivatives may require a Fund to post collateral to secure outstanding
exposure, which may cause the
PAGE
32 ∎ DODGE & COX FUNDS
Fund
to forego other investment opportunities. Derivatives are subject to
Counterparty Risk, as described above. The use of derivatives may cause a Fund’s
investment returns to be impacted by the performance of securities the Fund does
not own.
Derivatives
are specialized instruments that may require investment techniques and risk
analyses different from those associated with stocks and bonds. Although the use
of derivatives is intended to enhance a Fund’s performance, it may instead
reduce returns and increase volatility, or have a different effect than
Dodge & Cox anticipates, especially in unusual or extreme market
conditions. Suitable derivatives transactions may not be available in all
circumstances and there can be no assurance that a particular derivative
position will be available or used by Dodge & Cox or that, if
used, such strategies will be successful. Regulations may require a Fund to
segregate certain of its assets or buy or sell a security at a disadvantageous
time or price to maintain offsetting positions or asset coverage in connection
with certain derivatives transactions. Use of derivatives may increase the
amount and change the timing of taxes payable by shareholders.
When
a derivative is used for hedging purposes, gains generated by the derivative
will generally be substantially offset by losses on the hedged investment and
vice versa. Hedging can reduce or eliminate gains.
The
U.S. government and other foreign governments are in the process of adopting and
implementing regulations governing derivatives markets, including clearing,
execution, margin, reporting, and registration requirements. The ultimate impact
of the regulations remains unclear, and additional future regulation of
derivatives and related instruments may make derivatives more costly, may limit
the availability of derivatives, or may otherwise adversely affect the value or
performance of derivatives and a Fund.
Emerging Markets Risk.
Non-U.S. Investment
Risk (described below) may be particularly high to the extent a Fund invests in
emerging market securities. Emerging market securities may present issuer,
market, currency, liquidity, legal, political, and other risks different from,
and potentially greater than, the risks of investing in securities and
instruments tied to U.S. or developed non-U.S. issuers. Emerging markets may
have less established legal and accounting systems than those in more developed
markets. Governments in emerging markets may be less stable and more likely to
take extra-legal action with respect to companies, industries, assets, or
foreign ownership than those in more developed markets.
The
economies of emerging markets may be dependent on relatively few industries and
thus affected more severely by local or global changes. Emerging market
securities may also be more volatile, more difficult to value, and have lower
overall liquidity than securities economically tied to U.S. or developed
non-U.S. issuers.
Equity
Risk. Equity
securities represent an ownership interest in an issuer rather than a right to
receive a specified future payment. This makes equity securities more sensitive
than debt securities to changes in an issuer’s earnings and overall financial
condition; as a result, equity securities are generally more volatile than debt
securities. Equity securities may lose value as a result of
changes
relating to the issuers of those securities, such as management performance,
financial leverage, or changes in the actual or anticipated earnings of a
company, or as a result of actual or perceived market conditions that are not
specific to an issuer. Even when the securities markets are generally performing
strongly, there can be no assurance that equity securities held by a Fund will
increase in value. Because the rights of all of a company’s creditors are senior
to those of holders of equity securities, shareholders are least likely to
receive any value if an issuer files for bankruptcy.
Hybrid Securities
Risk. Hybrid
securities are typically subordinated to an issuer’s senior debt instruments;
therefore, they are subject to greater credit risk than those senior debt
instruments. Many hybrid securities are subject to provisions permitting their
issuers to skip or defer distributions under specified circumstances. Hybrid
securities may have limited or no voting rights and may have substantially lower
overall liquidity than many other securities. Certain types of hybrid
securities, such as non-cumulative perpetual preferred stock, are issued
predominantly by companies in the financial services industry and thus may
present increased risk during times of financial upheaval, which may affect
financial services companies more than other types of issuers.
Interest Rate
Risk. Debt securities
that pay interest based on a fixed rate are subject to the risk that they will
decline in value if interest rates rise. Interest rate changes may occur
suddenly and unexpectedly, and may be caused by a wide variety of factors
including central bank monetary policy, inflation rates, and general economic
conditions. A Fund may lose money as a result of such movements. The longer the
remaining maturity of a debt security, the more its value is likely to be
affected by changes in interest rates. Debt securities with longer durations
tend to be more sensitive to changes in interest rates, usually making them more
volatile than securities with shorter durations. The values of equity and other
non-debt securities may also decline due to fluctuations in interest rates. A
Fund may choose not to or be unable to hedge itself fully against changes in
interest rates. If a Fund uses derivatives to hedge against changes in interest
rates, those hedges may not work as intended and may decrease in value if
interest rates move differently than anticipated. Interest rates are currently
at or near historically low levels in many developed countries, including the
United States, which increases the risk that interest rates will rise. In the
United States, the Federal Reserve has raised, and may continue, to raise
interest rates.
Non-fixed
rate instruments (i.e., variable and floating rate securities) generally are
less sensitive to interest rate changes but may decline in value if their
interest rates do not rise as much or as quickly as interest rates in general.
Conversely, non-fixed-rate instruments will not generally increase in value if
interest rates decline. If a Fund holds variable or floating rate securities, a
decrease in market interest rates may adversely affect the income received from
such securities.
Liquidity
Risk. Liquidity risk
is the risk that a Fund may not be able to buy or sell an investment at an
advantageous time or price, which could force a Fund to hold a security that is
declining
DODGE & COX FUNDS ∎
PAGE 33
in
value or forego other investment opportunities. An illiquid instrument is harder
to value because there may be little or no market data available based on
purchases or sales of the instrument.
Liquidity
risk may result from the lack of an active market or a reduced number and
capacity of traditional market participants to make a market in fixed income
securities. A Fund may also experience liquidity risk to the extent it invests
in private placement securities, securities of issuers with smaller market
capitalizations, or securities with substantial market and/or credit risk. The
liquidity of an issuer’s securities may decrease if its credit rating falls, it
experiences sudden unexpected cash outflows, or some other event causes
counterparties to avoid trading with or lending to the issuer. Liquidity risk is
greater for below investment-grade securities and restricted securities,
especially in difficult market conditions. Over the past three decades, bond
markets have grown more quickly than dealer capacity to engage in fixed income
trading. In addition, recent regulatory changes applicable to financial
intermediaries that make markets in debt securities have restricted or made it
less desirable for those financial intermediaries to hold large inventories of
debt securities with lower overall liquidity. Because market makers provide
stability to a market through their intermediary services, a reduction in dealer
inventory may lead to decreased liquidity and increased volatility in the fixed
income markets. Additional legislative or regulatory actions to address
perceived liquidity or other issues in the debt securities markets could alter
or impair a Fund’s ability to pursue its investment objectives or use certain
investment strategies and techniques. Liquidity risk may intensify during
periods of economic uncertainty. Debt securities with longer durations may face
heightened liquidity risk.
Unusually
high redemption requests or other unusual market conditions may make it
difficult for a Fund to honor redemption requests within the permitted period.
Meeting such requests could require a Fund to sell securities at reduced prices
or under unfavorable conditions which could result in significant dilution of
remaining shareholders’ interests in the Fund. Other market participants may be
attempting to liquidate holdings at the same time as a Fund, which could
increase supply in the market and contribute to liquidity risk.
Manager
Risk. Dodge &
Cox’s opinion about the intrinsic worth or creditworthiness of a company,
security, or other investment may be incorrect or the market may continue to
undervalue the company, security, or other investment; Dodge & Cox may
not make timely purchases or sales of securities for a Fund; and a Fund’s
investment objective may not be achieved. A Fund’s performance could differ
significantly from its comparative index, or other funds with similar objectives
and investment strategies.
Dodge & Cox
applies investment ideas, including target allocations, to all eligible client
portfolios within a particular strategy, including funds and separately managed
account clients. This means Dodge & Cox may seek to buy or sell very
large amounts of particular securities. As a result, certain investment
opportunities that might be available to a smaller fund may not be available to
the Funds. A Fund may not be able to take significant positions in limited
investment opportunities or add significantly to existing positions. In
addition, a Fund may not be able to quickly dispose of certain securities
holdings.
The
Funds are subject to various operational risks, including risks associated with
the calculation of net asset value. In particular, errors or systems failures
and other technological issues may adversely impact a Fund’s calculation of its
net asset value, and such net asset value calculation issues could result in
inaccurately calculated net asset values, delays in net asset value calculation
and/or the inability to calculate net asset value for some period. The Funds may
be unable to recover any losses associated with such failures.
Market
Risk. The market price
of a security or other investment may increase or decrease, sometimes suddenly
and unpredictably. Investments may decline in value because of factors affecting
markets generally, such as real or perceived challenges to the economy, national
or international political events, natural disasters, changes in interest or
currency rates, adverse changes to credit markets, or general adverse investment
sentiment. The prices of investments may reflect factors affecting one or more
industries, such as the price of specific commodities or consumer trends, or
factors affecting particular issuers. During a general downturn in the markets,
multiple asset classes may decline in value simultaneously. Market disruptions
may prevent a Fund from implementing investment decisions in a timely manner.
Fluctuations in the value of the Fund’s investments will cause that Fund’s share
price to fluctuate. An investment in a Fund, therefore, may be more suitable for
long-term investors who can bear the risk of short- and long-term fluctuations
in a Fund’s share price.
Although
it is not a principal investment strategy of any Fund to focus on a specific
sector, Dodge & Cox’s research-oriented, bottom-up approach towards security
selection may at times result in significant exposure to one or more sectors,
such as financials or health care, potentially in excess of 25% of the Fund’s
total assets. To the extent that a Fund has significant exposure to a particular
sector, its share value may fluctuate in response to events disproportionately
affecting that sector. Examples of such events include, but are not limited to,
changes in economic or business conditions, new government regulations, and the
availability of basic resources or supplies.
Mortgage- and
Asset-Backed Securities Risk. Mortgage- and other asset-backed
securities are subject to various risks, including prepayment risk, extension
risk, interest rate risk, and credit risk. Prepayment risk is the risk that
principal will be repaid earlier than expected, which means the security will
pay less interest over its life. A Fund may have to reinvest early repayments of
principal in securities that bear a lower rate of interest or more credit risk.
Prepayments are more likely at times when interest rates decline. Extension risk
is the risk that principal will be repaid later than expected, which delays the
return of principal to a Fund and may prevent a Fund from investing in
securities that bear a higher rate of interest or less credit risk. Delayed
repayment of principal may increase the duration and volatility of a security.
Extension risk is more likely at times when interest rates rise. Mortgage- and
other asset-backed securities can be highly sensitive to rising interest rates,
such that even small movements can cause a Fund to lose value. Mortgage- and
other asset-backed securities are subject to credit risk (as described above).
Credit risk is greater for mortgage- and other asset-backed securities that are
not directly or indirectly
PAGE
34 ∎ DODGE & COX FUNDS
guaranteed
by a U.S. government-sponsored enterprise (“GSE”) (such as Fannie Mae,
Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks).
However, GSEs are not guaranteed by the U.S. Treasury and in the event that a
GSE cannot meet its obligations, there can be no assurance that the U.S.
government will provide support. Certain purchases of agency or GSE-guaranteed
mortgage-backed securities are forward transactions (called “to-be-announced” or
“TBA” transactions) that can settle a month or more after the trade date. If the
counterparty to a TBA transaction does not perform its obligation to deliver the
specified mortgage-backed securities, a Fund could be required to replace those
securities at a higher price.
Non-U.S. Currency
Risk. Non-U.S.
currencies may decline relative to the U.S. dollar and affect a Fund’s
investments in non-U.S. currencies, in securities that are denominated in
non-U.S. currencies, in securities of issuers that are exposed to non-U.S.
currencies, or in derivatives that provide exposure to non-U.S. currencies. When
a given currency depreciates against the U.S. dollar, the value of securities
denominated in that currency typically declines. A U.S. dollar-denominated
depositary receipt is exposed to currency risk if the security underlying it is
denominated in a non-U.S. currency. Currency depreciation may affect the value
of U.S. securities if their issuers have exposure to non-U.S. currencies and
non-U.S. issuers may similarly be exposed to currencies other than those in
which their securities are denominated and the country in which they are
domiciled. Dodge & Cox may not be able to accurately estimate an
issuer’s non-U.S. currency exposure. Dodge & Cox may not hedge or
may not be successful in hedging a Fund’s currency exposure. A Fund bears
transaction charges for currency exchange and currency hedging activities.
Non-U.S. Investment
Risk. Non-U.S.
securities (including ADRs and other securities that represent interests in
non-U.S. issuer’s securities) involve some special risks such as exposure to
potentially adverse foreign political and economic developments; market
instability; nationalization and exchange controls; potentially lower liquidity
and higher volatility; possible problems arising from accounting, disclosure,
settlement, and regulatory practices that differ from U.S. standards; foreign
taxes that could reduce returns; higher transaction costs and foreign brokerage
and custodian fees; inability to vote proxies, exercise shareholder or
bondholder rights, pursue legal remedies, and obtain judgments with respect to
foreign investments in foreign courts; possible insolvency of a sub-custodian or
securities depository; and fluctuations in foreign exchange rates that decrease
the investment’s value (although favorable changes can increase its value).
Non-U.S. stock markets may decline due to conditions unique to an individual
country or within a region, including unfavorable economic conditions relative
to the United States or political and social instability or unrest. Non-U.S.
investments may become subject to economic sanctions or other government
restrictions by domestic or foreign regulators, which could negatively impact
the value or liquidity of those investments. There may be increased risk of
delayed settlement of portfolio transactions or loss of certificates of
portfolio securities.
Governments
in certain foreign countries participate to a significant degree, through
ownership or regulation, in their respective economies. Action by such a
government could have a significant effect on the market price of securities
issued in its country. These risks may be higher when investing in emerging
market issuers. Certain of these risks also apply to securities of U.S. issuers
with significant non-U.S. operations. Global economies and financial markets are
becoming increasingly interconnected, which increases the possibilities that
conditions in one country or region may adversely affect issuers in a different
country or region.
Regulatory
Risk. New laws and
regulations promulgated by governments and regulatory authorities may affect the
value of securities issued by specific companies, in specific industries or
sectors, or in all securities issued in the affected country. In times of
political or economic stress or market turmoil, governments and regulators may
intervene directly in markets and take actions that may adversely affect certain
industries, securities, or specific companies. Government and/or regulatory
intervention may reduce the value of debt and equity securities issued by
affected companies and may also severely limit a Fund’s ability to trade those
securities.
Sovereign and
Government-Related Debt Risk. An investment in sovereign or other
government-related debt involves risk, including special risks not present in
other types of debt obligations. The issuer of the sovereign debt or the
governmental authorities that control the repayment of the debt may be unable or
unwilling to repay principal or interest when due. This may result from
political or social factors, the general economic environment of a country,
levels of foreign debt, or foreign currency exchange rates. Holders of sovereign
or other government-related debt may be asked to participate in the rescheduling
of such debt and to extend further loans to governmental or government-related
entities. To the extent a Fund invests in sovereign or other government-related
debt, that Fund may be exposed to the direct or indirect consequences of
political, social, and economic changes in various countries, as well as to
changes in local tax, insolvency, or other regulatory regimes. A Fund may have
limited legal recourse in the event of a default with respect to certain
sovereign debt obligations. For example, bankruptcy, moratorium, and other
similar laws applicable to issuers of sovereign debt may be substantially
different from those applicable to corporate debt issuers.
U.S. Municipal Bond
Risk. Like other
bonds, U.S. municipal bonds are subject to credit risk, interest rate risk,
liquidity risk, and call risk. However, the obligations of some municipal
issuers may not be enforceable through the exercise of traditional creditors’
rights. The reorganization under federal bankruptcy laws of a municipal bond
issuer may result in the bonds being cancelled without payment or repaid only in
part, or in delays in collecting principal and interest. In the event of a
default in the payment of interest and/or repayment of principal, a Fund may
enforce its rights by taking possession of, and managing, the assets securing
the issuer’s obligations on such securities. These actions may increase a Fund’s
operating expenses. In addition, lawmakers may seek to extend the time for
payment of principal or interest, or
DODGE & COX FUNDS ∎
PAGE 35
both,
or to impose other constraints upon enforcement of such obligations. State or
federal regulation with respect to a specific sector could impact the revenue
stream for a given subset of the market. U.S. municipal bonds may have lower
overall liquidity than other types of bonds, and there may be less publicly
available and timely information about the financial condition of municipal
issuers than for issuers of other securities. Therefore, the investment
performance of a Fund investing in U.S. municipal bonds may be more dependent on
the analytical abilities of Dodge & Cox than if the Fund held other
types of investments, such as stocks or other types of bonds. The market
for U.S. municipal bonds also tends to be less well-developed or liquid than
many other securities markets, which may adversely affect a Fund’s ability to
value U.S. municipal bonds or sell such bonds at attractive prices.
Some
U.S. municipal bonds are tax-exempt, which means that income from those bonds is
non-taxable. A significant restructuring of U.S. federal income tax rates or
even serious discussion on the topic in Congress could cause municipal bond
prices to fall. The demand for tax-exempt municipal bonds is strongly influenced
by the value of tax-exempt income to investors. Lower income tax rates could
reduce the advantage of owning tax-exempt municipal bonds. In the case of a
default enforcement action where a Fund gains ownership of an income-producing
asset, any income derived from the Fund’s ownership or operation of such an
asset may not be tax-exempt.
PAGE
36 ∎ DODGE & COX FUNDS
HOW TO PURCHASE SHARES
If
the Fund’s transfer agent, DST Asset Manager Solutions, Inc. (the “Transfer
Agent”), or an authorized agent or sub-agent, receives your request in good
order before the time as of which the Fund’s shares are priced (normally at the
scheduled close of trading on the NYSE, generally 4 p.m. Eastern Time
(“ET”), your transactions will be priced at that day’s net asset value
per share (“NAV”). If your request is received after that time, it will
be priced at the next business day’s NAV. Please note that requests delivered to
a post office box or reported as delivered by an expedited shipping service are
not deemed received until they are received and scanned by the processing team
at the Transfer Agent’s office. The Funds are offered on a no-load basis. You do
not pay sales charges or 12b-1 distribution fees.
|
|
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|
|
|
|
|
|
|
|
TO OPEN AND MAINTAIN
AN ACCOUNT |
|
TO ADD TO AN
ACCOUNT |
|
|
|
|
Minimum
Investment*
$2,500
(regular account)
$1,000
(IRA) |
|
Minimum
Investment*
$100 |
BY INTERNET
dodgeandcox.com |
|
|
|
Current
shareholders can visit the Funds’ website and log in to “Account Access”
to open additional accounts or to exchange shares from an existing
Dodge & Cox Fund account to a new account with the same
registration. You can also roll assets over or transfer a lump sum from a
non-Dodge & Cox Funds traditional or Roth IRA, or a qualified
pension or profit-sharing plan.
New
shareholders should visit “Invest with Us” to open an account. |
|
Current shareholders can visit the Funds’ website and log in to
“Account Access” to make subsequent investments directly from your pre-
established bank account or exchange from another Dodge & Cox
Fund account with the same registration. |
BY MAIL
Regular
Mail:
Dodge &
Cox Funds
c/o
DST Asset Manager Solutions, Inc.
P.O.
Box 219502
Kansas
City, MO 64121-9502
Express,
Certified or Registered Mail:
Dodge &
Cox Funds
c/o
DST Asset Manager Solutions, Inc.
430
W 7th Street Suite
219502
Kansas
City, MO 64105-1407 |
|
|
|
Complete
and sign the Account Application or IRA Application with a check for
investment. To transfer or rollover from another eligible retirement plan,
use the IRA Transfer of Assets Form.
Call
800-621-3979 or visit the Funds’ website at dodgeandcox.com to obtain the
appropriate forms. |
|
Mail your check with an Invest-By-Mail form detached from your
quarterly statement. |
|
|
|
Make
your check payable to Dodge & Cox Funds. All checks must
be made in U.S. dollars and drawn on U.S. banks.
Important
note: The Funds will not accept third party checks (checks not made
payable to Dodge & Cox Funds), traveler’s checks, starter checks,
or money orders. |
Important
note: If you buy Fund shares through a registered broker/dealer, financial
institution, or investment adviser, the broker/dealer, financial institution, or
adviser may charge you a service fee.
* |
|
The Funds reserve the right to waive minimum
investment amounts for certain financial intermediaries that use the Funds
as part of an asset allocation program, certain retirement plans, and
accounts that hold the Funds in omnibus name. Financial intermediaries may
impose their own minimum investment amounts. |
DODGE & COX FUNDS ∎
PAGE 37
HOW TO PURCHASE SHARES (continued)
Important
note: Only bank accounts held at domestic financial institutions that are
Automated Clearing House (“ACH”) members may be used for telephone
or internet transactions. This option will become effective approximately 15
business days after the Account Application or Account Options form is received
by the Transfer Agent. The price paid for shares of a Fund will be the next
determined NAV after the Transfer Agent receives your investment instructions in
good order. Your order may be canceled if payment is not received by the third
business day after your order is placed.
|
|
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|
|
|
|
|
|
|
TO OPEN AND MAINTAIN
AN ACCOUNT |
|
TO ADD TO AN
ACCOUNT |
BY TELEPHONE
800-621-3979 |
|
|
|
Current
shareholders may call Client Services to open an additional account from a
pre-established bank account or by exchanging shares from an existing
Dodge & Cox Fund account into a new account with the
same registration.
New
shareholders may not open an account by telephone at this time.
Current
shareholders may call the automated system to open an additional account
from a pre-established bank account or by exchanging shares from an
existing Dodge & Cox Fund account to a new account with the same
registration
New
shareholders may not open an account by the automated system at this
time. |
|
Current
shareholders may call Client Services to make subsequent investments
directly from a pre-established bank account or to exchange from another
Dodge & Cox Fund account with the same registration.
Current
shareholders may call the automated system to make subsequent investments
directly from a pre-established bank account or to exchange shares from
another Dodge & Cox Fund account with the same
registration. |
Client
Services
Monday–Friday
8 a.m.–8 p.m. ET
Automated System
7
days a week
24
hours a day |
|
|
BY WIRE
Wire
to:
State
Street Bank
and
Trust Company
Boston,
MA
ABA
0110 0002 8
Deposit DDA 9905-351-4
FFC
Dodge & Cox
(Fund
Name) Fund
Fund
# / Account #
Account
Registration |
|
|
|
Prior to making an
initial investment by wire, a completed Account Application or IRA
Application must have been received by the Fund. Once an account number
has been assigned, call 800-621-3979 to notify the Fund of your incoming
wire transaction. |
|
Call Client Services
at 800-621-3979 during business hours to notify the Funds of your incoming
wire transaction. |
AUTOMATICALLY
|
|
|
|
The Funds offer ways to invest automatically. Call
Client Services at 800-621-3979 or visit the Funds’ website at
dodgeandcox.com to initiate automatic trading. You may also download the
Account Options Form or IRA Options Form to establish this service. See
Automatic Investment Plan. |
Telephone
conversations may be recorded or monitored for verification, recordkeeping, and
quality-assurance purposes.
Certain
institutional investors may be eligible to establish pre-authorized fax
transaction privileges.
Important Information
About Purchases. To
help the government prevent the funding of terrorism and money laundering
activities, federal law requires all financial institutions, including the
Funds, to obtain, verify, and record information that identifies each person who
opens an account, and to determine whether such person’s name appears on
government lists of known or suspected terrorists and terrorist organizations.
For your account to be in good order, the Funds must obtain the
following information:
∎ |
|
Date of birth (for individuals);
|
∎ |
|
Physical residential address (post office boxes
are still permitted for mailing); and |
∎ |
|
Social Security Number, Taxpayer Identification
Number, or other identifying number. |
Following
receipt of your information, the Funds are required to verify your identity. You
may be asked to provide certain other documentation (such as a copy of a
driver’s license or a passport) in order to verify your identity. Additional
information may be required to open accounts for corporations and other
non-natural persons. Additional information regarding beneficial ownership
and control persons must be provided for certain types of legal entities.
PAGE
38 ∎ DODGE & COX FUNDS
The
USA PATRIOT Act prohibits the Funds and other financial institutions from
opening accounts unless the minimum identifying information listed above is
received and the Funds can verify your identity. If the Funds are unable to
verify your identity, the Funds are required to not open your account, close
your account, or take other steps the Funds deem reasonable.
All
purchases are subject to acceptance by a Fund, and the price of the shares will
be the NAV which is next computed after receipt by the Transfer Agent, or other
authorized agent or sub-agent, of the purchase in proper form (see Pricing of
Fund Shares). If your payment is not received or you pay with a check or ACH
transfer that does not clear, your purchase will be canceled. You will be
responsible for any losses or expenses (including a $20 fee) incurred by a Fund
or the Transfer Agent, and a Fund can redeem shares you own in this or another
identically registered Dodge & Cox Fund account as reimbursement.
The Funds and their agents have the right to reject or cancel any purchase,
exchange, or redemption due to nonpayment. All purchases will be invested in
full and fractional shares, and you will receive a confirmation statement.
If
you fail to furnish a Fund with your correct and certified Social Security or
Taxpayer Identification Number, the Fund may be required to withhold federal
income tax (backup withholding) from dividends, capital gain distributions, and
redemptions.
The
Funds and their agents reserve the right to accept initial purchases by
telephone; to cancel or rescind any purchase or exchange (for example, if an
account has been restricted due to excessive trading or fraud); to freeze any
account and temporarily suspend services on the account when notice has been
received of a dispute between the registered or beneficial account owners or
there is reason to believe a fraudulent transaction may have occurred; to
otherwise modify the conditions of purchase and any services at any time; or to
act on instructions believed to be genuine.
Notice
to Non-U.S. Individual Shareholders: The Funds and their shares are only
registered in the United States. Regulations outside of the United States may
restrict the sale of shares to certain non-U.S. residents or subject certain
shareholder accounts to additional regulatory requirements. As a result,
individuals resident in a Member State of the European Union are not eligible to
invest in the Funds. The Funds reserve the right, however, to sell shares to
certain other non-U.S. investors in compliance with applicable law. If a current
shareholder of a Fund provides a non-U.S. address, this will be deemed a
representation and warranty from such investor that he/she is not a U.S.
resident and will continue to be a non-U.S. resident unless and until the Fund
is notified of a change in the investor’s resident status. Any current
shareholder that has a resident address outside of the United States may be
restricted from purchasing additional Shares.
HOW TO REDEEM OR EXCHANGE SHARES
You
may withdraw any part of your account by selling shares. The sale price of your
shares will be the Fund’s next-determined NAV after the Transfer Agent or an
authorized agent or sub-agent receives all required documents in good order.
Good
order means that the request includes:
∎ |
|
Fund name and account number; |
∎ |
|
Amount of the transaction in dollars or shares; (if redemption
is requested by internet or mail, the amount of the transaction may be
stated in percentage terms); |
∎ |
|
Signatures of all owners exactly as registered on the account
(for written requests); |
∎ |
|
Medallion Signature Guarantee, if required (see Medallion
Signature Guarantees); |
∎ |
|
Any certificates you are holding for the account; and
|
∎ |
|
Any supporting legal documentation that may be required.
|
∎ |
|
Note: for corporate/institutional accounts only, the required
signature(s) must be either (1) Medallion-guaranteed and clearly
indicate the capacity of the signer to act for the corporation or
institution or (2) that of an authorized signatory named on a
certified corporate resolution dated within the last six months (or a
certified corporate resolution and letter of indemnity) that accompanies
the request or is on file with the Transfer Agent.
|
Sale
or exchange requests received after the time as of which the Fund’s shares are
priced (normally at the scheduled close of trading on the NYSE, generally
4 p.m. ET) are processed at the next business day’s NAV. No interest
will accrue on amounts represented by uncashed redemption checks.
The
Funds reserve the right to redeem shares in any account, including those in the
name of an intermediary, and send the proceeds to the registered owner if the
account value falls below the minimum initial investment amount. The Fund or its
agent may, but is not required to, make reasonable efforts to notify the
registered owner if the account falls below the minimum to provide the owner the
option to contribute additional funds to meet the required minimum.
DODGE & COX FUNDS ∎
PAGE 39
|
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|
|
|
|
ACCOUNT
TYPE |
BY INTERNET
dodgeandcox.com |
|
|
|
All
Accounts (Except retirement plans, corporate, and certain institutional
accounts)
Visit
the Funds’ website at dodgeandcox.com and log in to “Account Access” to
place a sell order.
You
may exchange shares from a Fund to open an account in another Fund or to
add to an existing account with an identical registration. |
BY MAIL
Regular
Mail:
Dodge &
Cox Funds
c/o
DST Asset Manager Solutions, Inc.
P.O.
Box 219502
Kansas
City, MO 64121-9502
Express,
Certified or Registered Mail:
Dodge &
Cox Funds
c/o
DST Asset Manager Solutions, Inc.
430
W 7th Street Suite
219502
Kansas
City, MO 64105-1407 |
|
|
|
All
Accounts
Visit
the Funds’ website at dodgeandcox.com and download, complete, and mail in
the Redemption Request Form for a taxable account or an IRA Distribution
Request Form for an IRA to sell shares. These forms can also be obtained
by calling Client Services at 800-621-3979.
Current
shareholders may exchange shares into a new account with the same
registration by providing written instructions. To exchange shares into an
account with a different registration (including a different name,
address, or taxpayer identification number, you must provide the Transfer
Agent with written instructions that include the Medallion guaranteed
signature of all current account owners. See Medallion Signature
Guarantees and Change in Account Registration and Transfer of
Shares. |
|
|
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|
|
|
|
BY TELEPHONE
800-621-3979
Client
Services
Monday–Friday
8
a.m.–8 p.m. ET
Automated
System
7
days a week
24
hours a day |
|
|
|
All
Accounts
You
may call Client Services during business hours to sell or exchange shares.
You can exchange shares from a Fund to open an account in another Fund or
to add to an existing account with an identical registration.
All
Accounts (except IRAs, retirement plans, corporate, and certain
institutional accounts)
You
may call the automated system at any time to place a sell order.
All
Accounts Including IRAs (except certain retirement plans, corporate, and
certain institutional accounts)
You
may exchange shares from a Fund to open an account in another Fund or to
add to an existing account with identical
registration. |
Telephone
conversations may be recorded or monitored for verification, recordkeeping, and
quality-assurance purposes.
|
|
|
|
|
|
|
AUTOMATICALLY
|
|
|
|
The Funds offer ways to sell shares automatically.
Call Client Services at 800-621-3979 or visit the Funds’ website at
dodgeandcox.com to initiate automatic trading. You may also request or
download the Account Options Form or IRA Distribution Request Form to
establish this service. See Automatic Redemption
Plan. |
REDEMPTION PAYMENTS MAY BE MADE BY CHECK, WIRE, OR ACH
By
Check Checks will be
made payable to you and will be sent to your address of record. If the proceeds
of the redemption are requested to be sent to other than the address of record
or if the address of record has been changed within 15 days of the redemption
request, the request must be in writing with your signature(s) Medallion
guaranteed.
By
Wire The Fund will
wire redemption proceeds only to the bank account designated on the Account
Application or in written instructions—with Medallion signature
guarantee—received with the redemption order.
By
ACH Redemption
proceeds can be sent to your bank account by ACH transfer. You can elect this
option by completing the appropriate section of the Account Application. There
is a $100 minimum per ACH transfer.
PAGE
40 ∎ DODGE & COX FUNDS
Medallion Signature
Guarantees You will
need to have your signature Medallion guaranteed in certain situations,
such as:
∎ |
|
Sending redemption proceeds to any person,
address, or bank account not on record; or |
∎ |
|
Transferring redemption proceeds to a
Dodge & Cox Fund account with a different registration
(name/ownership) from yours. |
A
Medallion Signature Guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency, savings association, or other
financial institution which participates in a Medallion program recognized by
the Securities Transfer Association. Signature guarantees from financial
institutions which do not participate in a Medallion program will not be
accepted. A notary public cannot provide Medallion Signature Guarantees.
Redemptions-in-kind The Funds reserve the right, if conditions
exist which make cash payments undesirable, to honor any request for redemption
by making payment in whole or in part in readily marketable securities chosen by
a Fund and valued as they are for purposes of computing a Fund’s NAV (a
“redemption in kind”). Such conditions may include, but are not limited to,
circumstances under which raising cash to meet a redemption could dilute the
interests of the Fund’s remaining shareholders or compromise the Fund’s ability
to raise enough cash to meet foreseeable redemption requests by other
shareholders. If payment is made in securities, a shareholder may incur
transaction expenses in converting these securities to cash. In addition, if a
Fund effects a redemption in kind, the redeeming shareholder will bear market,
liquidity, and other risks associated with such securities. Some shareholders
may be paid in whole or in part in securities (which may differ among
shareholders), while other shareholders may be paid entirely in cash, even with
respect to redemptions on the same date. There may be practical limitations on a
Fund’s ability to effectuate redemptions in-kind, and it may not be possible for
a Fund to exercise its right to redeem shares in-kind under certain
circumstances.
The
Funds have elected to be governed by Rule 18f-1 under the Investment Company
Act, as a result of which a Fund is obligated to redeem shares, with respect to
any one shareholder of record during any 90-day period, solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
the period.
IRAs Redemption requests for Traditional IRAs
must include instructions regarding federal income tax withholding. Unless you
have elected otherwise, your redemptions will be subject to income tax
withholding. State withholding may also apply.
Important Information
About Redemptions
Under certain circumstances, the Transfer Agent may require additional
documents, including stock powers with signatures Medallion guaranteed, trust
instruments, death certificates, appointments as executor, and certificates of
corporate authority. If certificates have been issued for any of the shares to
be redeemed, such certificates must be delivered to the Transfer Agent. For any
questions regarding documentation or signature requirements for trusts, estates,
corporations, etc., please call Client Services (800-621-3979).
The
redemption price will be the NAV which is next computed after receipt of a
redemption request in good order (see Pricing of Shares) by the Transfer
Agent or other authorized agent or sub-agent. The redemption price may be more
or less than your cost, depending upon the market value of a Fund’s investments
at the time of redemption.
If,
subsequent to placing a redemption order, market fluctuations cause the value of
your account to fall below the requested redemption amount, your entire account
will be redeemed.
Redemption
payments are made as soon as practicable, generally within two business days,
but under normal circumstances no later than the seventh day after the effective
date for redemption, or within such shorter period as may legally be required.
If shares are redeemed within two weeks of purchase, a Fund may delay payment of
the redemption proceeds until your purchase check or ACH purchase has cleared,
which may take up to 15 days. Any redemption where payment has not cleared by
the 15th day will be
cancelled.
There
is no such delay when shares being redeemed were purchased by wiring Federal
funds. The Funds may suspend your redemption right or postpone payment at times
when the NYSE is closed, trading on the NYSE is restricted, or under any
emergency or other circumstances as determined by the SEC.
Under
normal conditions, the Funds typically expect to meet shareholder redemptions by
monitoring each Fund’s portfolio and redemption activities and by regularly
holding a reserve of highly liquid assets, such as cash or cash equivalents. In
periods of unusually high redemptions, during stressed market conditions or for
other temporary or emergency purposes, a Fund may be required to use additional
methods to meet shareholder redemptions. These methods include, but are not
limited to, selling securities or otherwise liquidating investments, drawing on
a credit facility to fund redemption requests, participating in an interfund
lending facility, and making payment with Fund securities or other Fund assets
rather than in cash (as discussed under “Redemptions-in-kind” above).
The
Transfer Agent, acting on behalf of a Fund, may place a temporary hold on a
pending transaction in a shareholder account, if the Transfer Agent reasonably
believes that such transaction is the result of fraudulent activity or that
financial exploitation of a Specified Adult (as defined below) has occurred, is
occurring, has been attempted, or will be attempted. For purposes of this
paragraph, the term “Specified Adult” refers to an individual who is a natural
person (a) age 65 and older, or (b) age 18 and older and whom the Transfer Agent
reasonably believes has a mental or physical impairment that renders the
individual unable to protect his or her own interests.
Exchanging
Shares. An exchange is
treated as a redemption and a purchase; therefore, you may realize a taxable
gain or loss. You should read the current prospectus of the Fund into which the
exchange is being made.
There
is a $1,000 minimum for all exchanges. If a new account is being opened by
exchange, the minimum investment requirements must be met. After the exchange,
the account from which the exchange is made must have a remaining balance of at
least $2,500 ($1,000 for an IRA) in order to remain open. The
DODGE & COX FUNDS ∎
PAGE 41
Funds
reserve the right to terminate or materially modify the exchange privilege upon
60 days’ advance notice to shareholders.
Telephone and Internet
Transactions. By using
telephone or internet purchase, redemption, and/or exchange options, you agree
to hold the Funds, Dodge & Cox, the Transfer Agent, and each of
their respective directors, trustees, officers, employees, and agents harmless
from any losses, expenses, costs, or liability (including attorney fees) which
may be incurred in connection with the exercise of these privileges. Generally,
all shareholders are automatically eligible to use these options. However, you
may elect to decline these options. By permitting telephone or internet
redemptions for your account, you may be giving up a measure of security that
you might have if you were to redeem your shares in writing. In addition,
interruptions in service may mean that you will be unable to effect a redemption
by telephone or internet when desired. For any questions regarding telephone
or Internet transactions please call Client Services (800-621-3979). If a
Fund does not employ reasonable procedures to confirm that the instructions
received from any person with appropriate account information are genuine, the
Fund may be liable for losses due to unauthorized or fraudulent instructions.
If
you are unable to reach a Fund by telephone or via the internet because of
technical difficulties, market conditions, or a natural disaster, you should
make purchase, redemption, and exchange requests by regular or express mail. You
may experience delays in exercising telephone redemption privileges, including
during periods of abnormal market activity. During periods of volatile economic
or market conditions, you may want to consider transmitting redemption orders by
internet or overnight courier.
If
an account has multiple owners, a Fund may rely on the instructions of any one
account owner. You should note that purchase and sales orders will not be
canceled or modified once received in good order.
TRANSACTIONS THROUGH FINANCIAL
INTERMEDIARIES
You
may purchase or sell Fund shares through a financial intermediary, which may
charge you a fee for this service and may require different minimum initial and
subsequent investments than the Funds. Financial intermediaries may also impose
other charges or restrictions different from those applicable to shareholders
who invest in the Funds directly. In addition, a broker may charge a commission
to its customers on transactions in Fund shares, provided the broker acts solely
on an agency basis for its customer and does not receive any
distribution-related payment in connection with the transaction. Shareholders
who are customers of financial intermediaries or participants in programs
serviced by them should contact the financial intermediaries for additional
information. A financial intermediary may be the shareholder of record of your
shares. The Funds, Dodge & Cox, the Transfer Agent, and each of
their respective directors, trustees, officers, employees, and agents are not
responsible for the failure of any Financial Intermediary to carry out its
obligations to its customers.
Payments to Certain
Employee Benefit Plan Financial Intermediaries Dodge & Cox, at its
expense without additional cost to the Funds or their shareholders, may
provide additional compensation to certain employee benefit plan financial
intermediaries with respect to the Funds. These payments may be made, at the
discretion of Dodge & Cox, for shareholder recordkeeping or other
administrative services provided to eligible defined contribution employee
benefit plans holding the Funds. The level of payments made to such a qualifying
employee benefit plan financial intermediary in any given year will equal
approximately 0.10% of the market value of the Stock, Global Stock,
International Stock, and Balanced Fund accounts and 0.08% of the market value of
the Income and Global Bond Fund accounts serviced by the financial
intermediary. A number of factors will be considered in determining whether
compensation should be paid to a financial intermediary, including the
qualifying financial intermediary’s willingness to enter into an Administrative
Service Agreement (or equivalent), the recordkeeping, reporting, or other
services to be provided, and the quality of the relationship with such Funds.
Dodge & Cox makes these payments to help defray the costs incurred
by qualifying financial intermediaries in connection with efforts to maintain
employee benefit plan accounts for participants in a cost-efficient manner;
however, Dodge & Cox does not audit the financial intermediaries
to verify the extent or nature of services provided. Dodge & Cox
will, on a periodic basis, determine the advisability of continuing these
payments. These payments may be more or less than the payments received by
financial intermediaries with respect to other mutual funds and may influence
your financial intermediary to make available a Fund over other mutual funds.
You should ask your financial intermediary about these differing and divergent
interests and how it is compensated for administering your Fund investment.
EXCESSIVE TRADING LIMITATIONS
The
Funds are intended for long-term investment purposes and not for market timing
or excessive short-term trading (“excessive trading”). The Funds’ Board
of Trustees has approved policies and procedures designed to detect and deter
excessive trading in the Funds.
Although
there is no generally applied standard in the marketplace as to what level of
trading activity is excessive, a Fund may consider that you have violated the
excessive trading policy if it determines:
∎ |
|
You sell or exchange shares within a short
period of time after the shares were purchased; |
∎ |
|
You enter into a series of transactions that is
indicative of an excessive trading pattern or strategy; or
|
∎ |
|
The Fund reasonably believes that you have
engaged in such practices in connection with other mutual funds.
|
The
following transactions are exempt from the excessive trading policy:
∎ |
|
Shares purchased through reinvested
distributions (dividends and capital gains); |
PAGE
42 ∎ DODGE & COX FUNDS
∎ |
|
Shares purchased through an automatic investment
plan; |
∎ |
|
Shares sold through an automatic redemption
plan; |
∎ |
|
Scheduled retirement plan contributions;
|
∎ |
|
Required distributions from individual
retirement accounts (IRA), pension or other retirement plans, and
charitable organizations or endowments; |
∎ |
|
IRA transfers of assets, Roth IRA conversions,
or IRA recharacterizations; |
∎ |
|
Shares purchased or sold through certain “fund
of funds” and asset allocation programs; and |
∎ |
|
Certain transactions initiated by a trustee or
adviser to a donor-advised charitable gift fund. |
A
Fund may also waive the application of excessive trading policies and procedures
when it is determined that enforcement of such policies and procedures is not
necessary to protect the Fund from the effects of short-term trading.
Excessive
trading may present risks to you and to a Fund in which you are a shareholder,
including negative impact on the Fund’s performance, dilution in the value of
its shares, interference with the efficient management of the Fund’s portfolio,
losses on the sale of investments if securities are sold at unfavorable prices,
increased taxable gains to remaining shareholders resulting from the need to
sell securities to meet redemption requests, and increased brokerage and
administrative costs. These risks may be greater to the extent a Fund invests in
non-U.S. securities, which are believed to be more susceptible to pricing
inefficiencies and time zone arbitrage. Time zone arbitrage may occur because of
time zone differences between the foreign markets on which the Funds’ non-U.S.
portfolio securities trade and the time as of which the Funds’ NAV is
calculated. For example, traders engaging in time zone arbitrage may seek to
exploit changes in the value of the Funds’ portfolio securities that result from
events occurring after foreign market prices are established, but before
calculation of the Funds’ NAV. Arbitrageurs who are successful may dilute the
interests of other shareholders by trading shares at prices that do not fully
reflect their fair value. The Funds have pricing and valuation procedures that
are intended to reduce the potential for dilution and other adverse effects that
can result from pricing inefficiencies. Although the Funds’ excessive trading
policy and pricing and valuation procedures are designed to prevent time zone
arbitrage, there can be no assurances that such policies and procedures will be
completely effective. See Pricing of Fund Shares.
Trade Activity
Monitoring The Funds monitor selected trades on a daily basis.
Trade activity monitoring may include: reviewing accounts where a purchase and
sale occurs within a short period of time; reviewing transaction amount
thresholds; and making comparisons against the Funds’ “known offenders”
database, which contains information about investors who have violated the
excessive trading policy in the past. If the Funds determine that an
investor has engaged in excessive trading, the Funds may temporarily or
permanently restrict the account from subsequent purchases (including purchases
by exchange). In determining whether to take such actions, the Funds seek to act
in a manner that is consistent with the best interests of Fund shareholders. The
Funds may consider the trading history of accounts under common
ownership
or control for the purpose of enforcing the excessive trading policy. If a Fund
believes that trading activity that appears excessive may be for legitimate
purposes, the Fund may permit the investor to justify the activity. Transactions
placed through the same financial intermediary on an omnibus basis may be deemed
part of a group for the purpose of this policy and may be rejected in whole or
in part by a Fund.
The
Funds or an authorized agent or sub-agent may reject any purchase order
(including exchange purchases) by any investor or group of investors
indefinitely, with or without prior notice to the investor, for any reason,
including, in particular, purchases that they believe are attributable to
excessive traders or are otherwise excessive or potentially disruptive to a
Fund. Such purchase orders may be revoked or cancelled by a Fund on the next
business day after receipt of the order.
The
application of the Funds’ excessive trading policy involves judgments that are
inherently subjective and involve some selectivity in their application. The
Funds, however, seek to make judgments that are consistent with the interests of
the Funds’ shareholders. No matter how the Funds define excessive trading, other
purchases and sales of Fund shares may have adverse effects on the management of
a Fund’s portfolio and its performance. Additionally, due to the complexity and
subjectivity involved in identifying excessive trading and the volume of Fund
shareholder transactions, there can be no guarantee that the Funds will be able
to identify violations of the excessive trading policy or to reduce or eliminate
all detrimental effects of excessive trading.
Financial
Intermediaries In general, it is the Funds’ expectation that each
financial intermediary will enforce either the Funds’ or its own excessive
trading policy. As a general matter, the Funds do not directly monitor the
trading activity of beneficial owners of the Funds’ shares who hold those shares
through third-party 401(k) and other group retirement plans and other omnibus
arrangements maintained by financial intermediaries. Although the Funds have
entered into information sharing agreements with financial intermediaries, which
give the Funds the ability to request information regarding the trading activity
of beneficial owners and to prohibit further purchases by beneficial owners who
violate the Funds’ excessive trading policy, the ability of the Funds to
monitor, detect, and curtail excessive trading through financial intermediaries’
accounts may be limited, and there is no guarantee that the Funds will be able
to identify shareholders who may have violated the Funds’ excessive trading
policy. Depending on the portion of Fund shares held through such financial
intermediaries, excessive trading through financial intermediaries could
adversely affect Fund shareholders. Fund shareholders who invest through
Financial Intermediaries should contact the financial intermediary regarding its
excessive trading policies, which may impose different standards and
consequences for excessive trading.
OTHER TRANSACTION INFORMATION
Change in Account
Registration and Transfer of Shares Changes in account
registrations, such as changing the name(s) on your account or transferring
shares to another person or legal entity,
DODGE & COX FUNDS ∎
PAGE 43
must
be submitted in writing and may require a Medallion signature guarantee. If,
subsequent to making a transfer request, market fluctuations cause the value of
your account to fall below the requested transfer amount, your entire account
will be transferred. Please call Client Services at 800-621-3979 or visit the
Funds’ website at dodgeandcox.com and request or download the Change of
Registration Form, the Gift of Shares Form, or the Inheritance Form to effect
this change.
ESCHEATMENT OF ABANDONED PROPERTY
A
Fund may be required to escheat (transfer to the state) your assets if they are
deemed abandoned under a state’s unclaimed or abandoned property law. The
following section provides a general summary of U.S. states’ unclaimed or
abandoned property information.
Abandoned Property
State unclaimed or abandoned property laws generally apply to
both:
∎ |
|
Unclaimed securities, including shares of the
Fund; and |
∎ |
|
Uncashed dividends or other distributions from
the Fund. |
In
the event that uncashed dividends or other distributions are deemed abandoned,
the amounts of such dividends or distributions will be required to be reported
and remitted to the applicable state. The state is required to hold such amounts
until reclaimed by the owner, but will generally not pay interest on any amounts
that are reclaimed.
In
the event that your shares of a Fund are deemed abandoned, the Fund will be
required to escheat or deliver the shares to the applicable state. The state is
then typically permitted to sell or liquidate the shares at the prevailing
market price. In the event that you seek to reclaim the escheated shares after
they have been liquidated by the state, you will generally be able to recover
only the amount that the state received when it sold the shares, and not any
appreciation that may otherwise have been realized had the shares not been
liquidated. The escheatment of shares to the state may also result in tax
penalties to you if the shares were held in a tax-deferred account such as an
IRA. You should consult your tax adviser for advice about the particular tax
consequences associated with the escheatment of your shares.
The
rules for determining when a security or security distribution is required to be
reported and delivered to the state vary considerably by state and may depend on
the type of account in which the security is held. Some states require
escheatment if you have had no contact with the Fund within a specified time
period (generally, three or five years). Other states require escheatment only
if mailings sent to you are returned as undeliverable by the United States
Postal Service. Other states may apply different rules.
Please
check your state’s unclaimed or abandoned property department website for
specific information.
Escheatment Prevention
In order to prevent
your assets from being deemed abandoned and escheated to a state, we recommend
that you maintain contact with the Fund in a manner that demonstrates activity
under the relevant state’s laws. These laws can typically be found on your State
Treasurer’s website. It is
recommended
that you maintain direct contact with the Funds at least annually. You may
initiate contact in writing, by accessing your account through the Funds’ secure
website at dodgeandcox.com, by calling into Client Services at 800-621-3979 and
completing the automated security verification process or by speaking to a
Client Service representative. Additionally, please notify us of any name or
address changes immediately and cash dividend and redemption checks from your
account(s) promptly. The Funds may attempt to notify you by mail if you are at
risk of escheatment due to inactivity. Please open all correspondence from the
Funds and respond, if requested.
PRICING OF FUND SHARES
The
share price (net asset value per share or NAV) for a Fund is normally calculated
as of the scheduled close of trading on the New York Stock Exchange (“NYSE”),
generally 4 p.m. ET, each day that the NYSE is open for business. The NAV
is calculated by dividing Fund net assets (i.e. total assets minus total
liabilities) by the number of shares outstanding. For purposes of determining
the NAV, security transactions are normally recorded one business day after the
trade date. If the NYSE is unexpectedly closed due to weather or other
extenuating circumstances on a day it would normally be open for business, or if
the NYSE has an unscheduled early closing, the Funds reserve the right to accept
purchase and redemption orders and calculate their share price as of the
normally scheduled close of regular trading on the NYSE for that day.
If
a Fund, or its authorized agent or sub-agent, receives your request in good
order before the time as of which a Fund prices its shares (normally at the
scheduled close of trading on the NYSE, generally 4 p.m. ET), your
transactions will be priced at that day’s NAV. If your request is received after
such time, it will be priced at the next business day’s NAV.
A
Fund cannot accept orders that request a particular day or price for your
transaction or any other special conditions. The time at which transactions and
shares are priced and the time until which orders are accepted may be changed in
case of an emergency or if the NYSE closes at a time other than the normally
scheduled close of trading.
Some
securities may be listed on foreign exchanges that are open on days (such as
U.S. holidays) when the Funds do not calculate their NAVs. This could cause the
value of a Fund’s portfolio investments to be affected by trading on days when
you cannot buy or sell shares.
For
purposes of calculating the NAV, portfolio holdings for which market quotations
are readily available are valued at market value. Listed securities, for
example, are generally valued using the official quoted close price or the last
sale on the exchange that is determined to be the primary market for the
security. Other portfolio holdings, such as debt securities, certain preferred
stocks, structured investments, and derivatives traded over-the-counter, are
valued using prices received from independent pricing services which utilize
dealer quotes, recent transaction data, pricing models, and other inputs to
arrive at market-based valuations. Pricing models may
PAGE
44 ∎ DODGE & COX FUNDS
consider
quoted prices for similar investments, interest rates, cash flows (including
prepayment speeds), and credit risk. Exchange-traded derivatives are generally
valued at the settlement price determined by the relevant exchange and centrally
cleared derivatives are generally valued at the price determined by the relevant
clearing house. Short-term securities with less than 60 days to maturity may be
valued at amortized cost if amortized cost approximates current value. Mutual
funds are valued at their respective net asset values. Security values are not
discounted based on the size of the Fund’s position and may differ from the
value a Fund receives upon the sale of the securities.
If
market quotations are not readily available or if normal valuation procedures
produce valuations that are deemed unreliable or inappropriate under the
circumstances existing at the time, the investment will be valued at fair value
as determined in good faith by or under the direction of the Funds’ Board of
Trustees. The Board of Trustees has appointed Dodge & Cox, the Funds’
investment manager, to make fair value determinations in accordance with the
Dodge & Cox Funds Valuation Policies (“Valuation Policies”), subject to
Board oversight. Dodge & Cox has established a Pricing Committee that
is comprised of representatives from Treasury, Legal, Compliance, and
Operations. The Pricing Committee is responsible for implementing the Valuation
Policies, including determining the fair value of securities and other
investments when necessary. The Pricing Committee considers relevant indications
of value that are reasonably available to it in determining the fair value
assigned to a particular security, such as the value of similar financial
instruments, trading volumes, contractual restrictions on disposition, related
corporate actions, and changes in economic conditions. In doing so, the Pricing
Committee employs various methods for calibrating fair valuation approaches,
including a regular review of key inputs and assumptions, back-testing, and
review of any related market activity.
As
trading in securities on most foreign exchanges is normally completed before the
close of the NYSE, the value of non-U.S. securities can change by the time the
Fund calculates its NAV. To address these changes, the Fund may utilize
adjustment factors provided by an independent pricing service to systematically
value non-U.S. securities at fair value. These adjustment factors are based on
statistical analyses of subsequent movements and changes in U.S. markets and
financial instruments trading in U.S. markets that represent foreign securities
or baskets of securities.
Valuing
securities through a fair value determination involves greater reliance on
judgment than valuation of securities based on readily available market
quotations. In some instances, lack of information and uncertainty as to the
significance of information may lead to a conclusion that a prior valuation is
the best indication of a security’s value. When fair value pricing is employed,
the prices of securities used by a Fund to calculate its NAV may differ from
quoted or published prices for the same securities.
INCOME DIVIDENDS AND CAPITAL
GAIN DISTRIBUTIONS
Income
dividends and capital gain distributions are reinvested in additional Fund
shares in your account unless you elect another
option.
The advantage of reinvesting arises from compounding; that is, you receive
income dividends and capital gain distributions on an increasing number
of shares. Income dividends and capital gains distributions not reinvested
are paid by check or transmitted to your bank account electronically using the
ACH network.
Important
tax note: A Fund’s income dividends and capital gains distributions, whether
received in cash or reinvested in additional shares of the Fund, may be subject
to federal and state income tax.
Income
Dividends
Dodge & Cox Stock, Balanced, Income, and Global Bond Funds normally pay
dividends of substantially all of its income (if any) quarterly in March,
June, September, and December, but may pay less frequently. Dodge & Cox
Global Stock Fund and International Stock Fund normally pay dividends (if any)
annually in December.
Capital Gain
Distributions If a
Fund has net capital gains for the period January through October, those gains
are generally paid in December. If a Fund has additional net capital gains for
the period November through December, those additional gains are generally paid
in March (for the Stock, Balanced, Income, and Global Bond Funds) or December
(for the International Stock and Global Stock Funds) of the following year.
A Fund may make more frequent distributions, if necessary, to comply with
Internal Revenue Code provisions.
Buying
a Distribution: Unless you are investing through a tax-deferred retirement
account (such as an IRA or 401(k) plan), it may not be to your advantage to buy
shares of a Fund shortly before the Fund makes a distribution. This is known as
“buying a distribution.” Buying a distribution can cost you money in taxes as
you will receive, in the form of a taxable distribution, a portion of the money
you just invested. To avoid buying a distribution, check the Fund’s distribution
schedule (which can be found at dodgeandcox.com or by calling 800-621-3979)
before you invest.
FEDERAL INCOME TAXES
The
following information is meant as a general summary for U.S. taxpayers. Please
see the SAI for additional information. You should consult your own tax adviser
for advice about the particular federal, state, and local or foreign tax
consequences to you of investing in a Fund.
Taxes and Income
Dividends and Capital Gains Distributions Each Fund will distribute substantially
all of its income and capital gains to its shareholders every year.
In
general, if your Fund shares are held in a taxable account, you will be taxed on
dividends you receive from a Fund, regardless of whether they are paid to you in
cash or reinvested in additional Fund shares. If a Fund declares a dividend in
October, November, or December but pays it in January, you may be taxed on the
dividend as if you received it in the previous year.
Under
current law, a portion of the income dividends paid to you by a Fund may be
qualified dividends subject to a maximum tax rate of either 15% or 20%,
depending on whether your income exceeds certain threshold amounts. In general,
income dividends
DODGE & COX FUNDS ∎
PAGE 45
from
domestic corporations and qualified foreign corporations will be permitted this
favored federal tax treatment. Income dividends from interest earned by a Fund
on debt securities and dividends received from unqualified foreign corporations
will continue to be taxed at the higher ordinary income tax rates. Distributions
of qualified dividends will be eligible for these reduced rates of taxation only
if you own your shares for at least 61 days during the 121-day period beginning
60 days before the ex-dividend date of any dividend.
Fund
distributions of short-term capital gains are taxable to you as ordinary income.
Fund distributions of long-term capital gains are taxable as long-term capital
gains no matter how long you have owned your shares. Long-term capital gain
distributions are currently generally taxed at a maximum rate of either 15% or
20%, depending on whether your income exceeds certain threshold amounts.
An
additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from a
Fund and net gains from redemptions or other taxable dispositions of Fund
shares) of U.S. individuals, estates, and trusts to the extent that such
person’s “modified adjusted gross income” (in the case of an individual) or
“adjusted gross income” (in the case of an estate or trust) exceeds certain
threshold amounts.
If
you hold your Fund shares in a tax-deferred retirement account, such as an IRA,
you generally will not have to pay tax on dividends until they are distributed
from the account. These accounts are subject to complex tax rules, and you
should consult your tax adviser about investment through a tax-deferred account.
Each
Fund you invest in will send you a tax report each year. The report will tell
you which dividends must be treated as taxable ordinary income, qualified
dividends, or long-term capital gains.
Part
of Dodge & Cox Stock, Global Stock, International Stock, and
Balanced Funds’ income dividends may be eligible for the 50% deduction for
dividends received by corporations. Foreign taxes paid by Dodge & Cox
Global Stock Fund and International Stock Fund, on its investments may, subject
to certain limitations, be passed through to you as a foreign tax credit,
assuming the Fund satisfies certain requirements. State taxation of
distributions to shareholders varies from state to state.
As
with all mutual funds, a Fund may be required to withhold U.S. federal income
tax (currently at a rate of 24%) on all taxable distributions payable to you if
you fail to provide a Fund with your correct taxpayer identification number or
to make required certifications, or if you or a Fund have been notified by the
IRS that you are subject to backup withholding. Backup withholding is not an
additional tax, but is a method by which the IRS ensures that it will collect
taxes otherwise due. Any amounts withheld may be credited against your U.S.
federal income tax liability.
Cost Basis and Taxes on
Sales (Redemptions) and Exchanges If your shares are held in a taxable
account, you will generally have a taxable capital gain or loss if you sell your
Fund shares or exchange them for shares of a different Fund. The amount of the
gain or loss and the rate of tax will depend primarily upon how much you paid
for the shares (your “cost basis”), how much you sold them for, and how long you
held them.
Your
total cost basis is generally the original amount paid for Fund shares, plus the
value of reinvested dividends and capital
gains
distributions. If you acquire Fund shares on or after January 1, 2012,
generally referred to as “covered shares,” and subsequently sell or exchange
those shares, the Fund is required to report cost basis information to you and
to the IRS. Unless you specify an alternate cost basis method, the Funds will
default to the average cost method when calculating cost basis. If you hold Fund
shares in an account held by a broker/dealer, financial institution, or
investment adviser, that firm may select a different default method. In those
cases, please contact the firm holding your account to obtain information with
respect to the cost basis calculation methods available for your account.
Additional
information about cost basis reporting is available at dodgeandcox.com/cost
basis.
Foreign
Shareholders
Shareholders other than U.S. persons may be subject to a different U.S. federal
income tax treatment, including withholding tax at the rate of 30% on amounts
treated as ordinary dividends from a Fund, as discussed in more detail in the
SAI.
FUND ORGANIZATION AND
MANAGEMENT
Fund
Organization
Dodge & Cox Funds, a Delaware statutory trust (the “Trust”), is a
family of six no-load mutual funds. Dodge & Cox Balanced Fund was
established in 1931; Dodge & Cox Stock Fund in 1965;
Dodge & Cox Income Fund in 1989; Dodge & Cox International
Stock Fund in 2001; Dodge & Cox Global Stock Fund in 2008; and
Dodge & Cox Global Bond Fund in 2014.
Investment
Manager
Dodge & Cox, a California corporation, has served as investment manager
to the Funds and their predecessors since inception. Dodge & Cox
is one of the oldest professional investment management firms in the United
States, having acted continuously as investment managers since 1930.
Dodge & Cox is located at 555 California Street, 40th Floor,
San Francisco, California 94104.
Dodge &
Cox’s activities are devoted to investment research and the supervision of
investment accounts for individuals and institutions. Dodge & Cox Stock
Fund, Dodge & Cox Balanced Fund, and Dodge & Cox Global Bond
Fund each pay Dodge & Cox a management fee which is payable
monthly at the annual rate of 0.50% of the average daily net asset value of the
Fund. Dodge & Cox Global Stock Fund and Dodge & Cox
International Stock Fund each pay Dodge & Cox a management fee
which is payable monthly at the annual rate of 0.60% of the average daily net
asset value of the Fund. Dodge & Cox Income Fund pays
Dodge & Cox a management fee which is payable monthly at the
annual rate of 0.50% of the average daily net asset value of the Fund up to
$100 million and 0.40% of the average daily net asset value of the Fund in
excess of $100 million. Until April 30, 2020,
Dodge & Cox has contractually agreed to reimburse the
Dodge & Cox Global Bond Fund for all ordinary expenses to the
extent necessary to maintain the ratio of total operating expenses to average
net assets at 0.45%. The agreement is renewable annually thereafter and is
subject to termination upon
PAGE
46 ∎ DODGE & COX FUNDS
30
days’ written notice by either party prior to the end of the term. An expense
reimbursement agreement has been in effect since the Global Bond Fund’s
inception, without which returns for the Fund would have been lower.
A
discussion regarding the basis for the Board of Trustees approving the Funds’
Investment Management Agreements is available in each Fund’s Annual Report,
which covers the 12-month period ending
December 31 each year.
The
Board of Trustees’ primary responsibility is oversight of the management of each
Fund for the benefit of its shareholders, not day-to-day management. The Board
authorizes the Trust to enter into service agreements with Dodge & Cox
and other service providers in order to provide necessary or desirable services
on behalf of the Trust and the Funds. Shareholders are not parties to or
third-party beneficiaries of such service agreements. Neither this
prospectus nor a Fund’s summary prospectus, the SAI, any documents filed as
exhibits to the Trust’s registration statement, nor any other communications,
disclosure documents or regulatory filings from or on behalf of the Trust or a
Fund creates a contract between or among any shareholder of a Fund, on the one
hand, and the Trust, a Fund, a service provider to the Trust or a Fund, and/or
the Trustees or officers of the Trust, on the other hand. The Board of
Trustees (or the Trust and its officers, service providers or other delegates
acting under authority of the Board) may amend or use a new prospectus, summary
prospectus, or SAI with respect to a Fund or the Trust, and/or amend, file
and/or issue any other communications, disclosure documents, or regulatory
filings, and may amend or enter into any contracts to which the Trust or a
Fund
is a party, and interpret or amend the investment objective(s), policies,
restrictions, and contractual provisions applicable to any Fund, without
shareholder input or approval, except in circumstances in which shareholder
approval is specifically required by law (such as changes to fundamental
investment restrictions) or where a shareholder approval requirement is
specifically disclosed in the Trust’s then-current prospectus or SAI.
Wholly-Owned
Subsidiaries The
Dodge & Cox Global Stock Fund, Dodge & Cox
International Stock Fund, and Dodge & Cox Global Bond Fund may invest
in the Dodge & Cox Global Stock Fund Cayman, Ltd.,
Dodge & Cox International Stock Fund Cayman, Ltd., and
Dodge & Cox Global Bond Fund Cayman, Ltd., respectively, each of which
is a wholly owned subsidiary of the respective Fund organized under the laws of
the Cayman Islands (each a “Cayman Subsidiary”). Each Fund may invest in its
Cayman Subsidiary to gain exposure to non-U.S. registered securities. Each
Cayman Subsidiary has entered into a separate Investment Management Agreement
with Dodge & Cox for the management and administration of the
Cayman Subsidiary’s portfolio. Dodge & Cox is not compensated by a
Cayman Subsidiary for the services it provides to the Cayman Subsidiary. As
described above, Dodge & Cox receives a management fee from each
Fund based on the average daily net assets of the Fund, which includes any
amounts invested in a Cayman Subsidiary. The Dodge & Cox Global
Stock Fund, Dodge & Cox International Stock Fund, and
Dodge & Cox Global Bond Fund each bear the operating expenses of
the relevant Cayman Subsidiary.
DODGE & COX FUNDS ∎
PAGE 47
INVESTMENT COMMITTEES
U.S. EQUITY INVESTMENT COMMITTEE
The
Dodge & Cox Stock Fund’s investments and the stock portion of the
Dodge & Cox Balanced Fund are managed by Dodge & Cox’s U.S.
Equity Investment Committee (“USEIC”), and in general no single USEIC
member is primarily responsible for making investment recommendations for the
Stock and Balanced Funds. USEIC is also responsible for determining the asset
allocation of the Dodge & Cox Balanced Fund. USEIC consists of the
following ten members:
|
|
|
|
|
|
|
Committee Member |
|
Position(s) with Funds |
|
Business Experience During the Past Five Years |
|
Years with Dodge & Cox |
Charles F. Pohl |
|
Chairman and Trustee |
|
Chairman and Director of Dodge & Cox; Chief
Investment Officer and member of USEIC, GEIC, and IEIC; member of USFIIC
(until January 2019) |
|
35 |
Diana S. Strandberg |
|
Senior Vice President |
|
Senior Vice President and Director of Dodge & Cox;
Director of International Equity and member of USEIC, GEIC, and IEIC;
member of GFIIC (2014- 2018)) |
|
31 |
C. Bryan Cameron |
|
Vice President |
|
Senior Vice President of Dodge & Cox; Director of
Research and member of USEIC and IEIC |
|
36 |
David C. Hoeft |
|
Vice President |
|
Senior Vice President and Director of Dodge & Cox;
Associate Chief Investment Officer (since January 2019), Associate
Director of Research (until January 2019), and member of USEIC and GEIC
(since 2016) |
|
26 |
Wendell W. Birkhofer |
|
Vice President |
|
Senior Vice President (since 2016) and Vice President (until
2016) of Dodge & Cox; Client Portfolio Manager, Client
Portfolio Counselor, and member of USEIC |
|
32 |
Steven C. Voorhis |
|
Vice President |
|
Vice President of Dodge & Cox; Associate Director of
Research (since January 2019), Research Analyst, and member of USEIC
and GEIC |
|
23 |
Philippe Barret, Jr. |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of USEIC |
|
15 |
Kathleen G. McCarthy |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of USEIC (since 2016) |
|
12 |
Karol Marcin |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of USEIC (since 2018) and GEIC |
|
19 |
Benjamin V. Garosi |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of USEIC (since January 2019) |
|
10 |
PAGE
48 ∎ DODGE & COX FUNDS
GLOBAL EQUITY INVESTMENT COMMITTEE
The
Dodge & Cox Global Stock Fund’s investments are managed by
Dodge & Cox’s Global Equity Investment Committee (“GEIC”), and
in general no single GEIC member is primarily responsible for making investment
recommendations for the Fund. GEIC consists of the following seven members:
|
|
|
|
|
|
|
Committee Member |
|
Position(s) with Funds |
|
Business Experience During the Past Five Years |
|
Years with Dodge & Cox |
Charles F. Pohl |
|
Chairman and Trustee |
|
Chairman and Director of Dodge & Cox; Chief
Investment Officer and member of USEIC, GEIC, and IEIC; member of USFIIC
(until January 2019) |
|
35 |
Diana S. Strandberg |
|
Senior Vice President |
|
Senior Vice President and Director of Dodge & Cox;
Director of International Equity and member of USEIC, GEIC, and IEIC;
member of GFIIC (2014-2018) |
|
31 |
David C. Hoeft |
|
Vice President |
|
Senior Vice President and Director of Dodge & Cox;
Associate Chief Investment Officer (since January 2019), Associate
Director of Research (until January 2019), and member of USEIC and GEIC
(since 2016) |
|
26 |
Roger G. Kuo |
|
Vice President |
|
Senior Vice President and Director (since 2016) of
Dodge & Cox; Research Analyst and member of GEIC and IEIC |
|
21 |
Steven C. Voorhis |
|
Vice President |
|
Vice President of Dodge & Cox; Associate Director of
Research (since January 2019), Research Analyst, and member of USEIC
and GEIC |
|
23 |
Karol Marcin |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of USEIC (since 2018) and GEIC |
|
19 |
Lily S. Beischer |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of GEIC |
|
18 |
DODGE & COX FUNDS ∎
PAGE 49
INTERNATIONAL EQUITY INVESTMENT COMMITTEE
The
Dodge & Cox International Stock Fund’s investments are managed by
Dodge & Cox’s International Equity Investment Committee
(“IEIC”), and in general no single IEIC member is primarily responsible
for making investment recommendations for the Fund. IEIC consists of the
following nine members:
|
|
|
|
|
|
|
Committee Member |
|
Position(s) with Funds |
|
Business Experience During the Past Five Years |
|
Years with Dodge & Cox |
Charles F. Pohl |
|
Chairman and Trustee |
|
Chairman and Director of Dodge & Cox; Chief
Investment Officer and member of USEIC, GEIC, and IEIC; member of USFIIC
(until January 2019) |
|
35 |
Diana S. Strandberg |
|
Senior Vice President |
|
Senior Vice President and Director of Dodge & Cox;
Director of International Equity and member of USEIC, GEIC, and IEIC;
member of GFIIC (2014-2018) |
|
31 |
C. Bryan Cameron |
|
Vice President |
|
Senior Vice President of Dodge & Cox; Director of
Research and member of USEIC and IEIC |
|
36 |
Roger G. Kuo |
|
Vice President |
|
Senior Vice President and Director (since 2016) of
Dodge & Cox; Research Analyst and member of GEIC and IEIC |
|
21 |
Mario C. DiPrisco |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of IEIC |
|
21 |
Keiko Horkan |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of IEIC |
|
19 |
Richard T. Callister |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of IEIC |
|
17 |
Englebert T. Bangayan |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of IEIC (since 2015) |
|
17 |
Raymond J. Mertens |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of IEIC (since 2018); member of GEIC (2014-2018) |
|
16 |
PAGE
50 ∎ DODGE & COX FUNDS
U.S. FIXED INCOME INVESTMENT COMMITTEE
The
Dodge & Cox Income Fund’s investments and the debt portion of the
Dodge & Cox Balanced Fund are managed by Dodge & Cox’s U.S.
Fixed Income Investment Committee (“USFIIC”), and in general no single
USFIIC member is primarily responsible for making investment recommendations for
the Balanced and Income Funds. USFIIC consists of the following nine members:
|
|
|
|
|
|
|
Committee Member |
|
Position(s) with Funds |
|
Business Experience During the Past Five Years |
|
Years with Dodge & Cox |
Dana M. Emery |
|
President and Trustee |
|
Chief Executive Officer, President, and Director of
Dodge & Cox; Co-Director of Fixed Income and member of
USFIIC and GFIIC (since 2014) |
|
36 |
Thomas S. Dugan |
|
Vice President |
|
Senior Vice President and Director of Dodge & Cox;
Co-Director of Fixed Income (since January 2019), Associate Director of
Fixed Income (until January 2019), and member of USFIIC and GFIIC
(since 2014) |
|
25 |
Larissa K. Roesch |
|
Vice President |
|
Vice President of Dodge & Cox; Client Portfolio
Manager, Client Portfolio Counselor, and member of USFIIC |
|
22 |
James H. Dignan |
|
Vice President |
|
Vice President of Dodge & Cox; Client Portfolio
Manager, Research Analyst, and member of USFIIC and GFIIC (since 2014) |
|
20 |
Anthony J. Brekke |
|
Vice President |
|
Vice President of Dodge & Cox; Client Portfolio
Manager, Research Analyst, and member of USFIIC |
|
16 |
Adam S. Rubinson |
|
Vice President |
|
Vice President of Dodge & Cox; Client Portfolio
Manager, Research Analyst, and member of USFIIC and GFIIC (since 2014) |
|
17 |
Lucinda I. Johns |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of USFIIC and GFIIC (since 2014) |
|
17 |
Nils M. Reuter |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst,
Trader, and member of USFIIC (since 2018) |
|
16 |
Michael Kiedel |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of USFIIC (since 2018) |
|
11 |
DODGE & COX FUNDS ∎
PAGE 51
GLOBAL FIXED INCOME INVESTMENT COMMITTEE
The
Dodge & Cox Global Bond Fund’s investments are managed by
Dodge & Cox’s Global Fixed Income Investment Committee
(“GFIIC”), and in general no single GFIIC member is primarily responsible
for making investment recommendations for the Fund. The GFIIC consists of the
following six members:
|
|
|
|
|
|
|
Committee Member |
|
Position(s) with Funds |
|
Business Experience During the Past Five Years |
|
Years with Dodge & Cox |
Dana M. Emery |
|
President and Trustee |
|
Chief Executive Officer, President, and Director of
Dodge & Cox; Co-Director of Fixed Income and member of
USFIIC and GFIIC (since 2014) |
|
36 |
Thomas S. Dugan |
|
Vice President |
|
Senior Vice President and Director of Dodge & Cox;
Co-Director of Fixed Income (since January 2019), Associate Director of
Fixed Income (until January 2019), and member of USFIIC and GFIIC
(since 2014) |
|
25 |
James H. Dignan |
|
Vice President |
|
Vice President of Dodge & Cox; Client Portfolio
Manager, Research Analyst, and member of USFIIC and GFIIC (since 2014) |
|
20 |
Adam S. Rubinson |
|
Vice President |
|
Vice President of Dodge & Cox; Client Portfolio
Manager, Research Analyst, and member of USFIIC and GFIIC
(since 2014) |
|
17 |
Lucinda I. Johns |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst and
member of USFIIC and GFIIC (since 2014) |
|
17 |
Matthew B. Schefer |
|
Vice President |
|
Vice President of Dodge & Cox; Research Analyst, and
member of GFIIC (since 2018) |
|
11 |
The
SAI provides additional information about the Dodge & Cox investment
committee members’ compensation, other accounts managed by the members, and the
members’ ownership of securities in the Funds.
PAGE
52 ∎ DODGE & COX FUNDS
INVESTMENT INFORMATION AND SHAREHOLDER
SERVICES
|
|
|
STATEMENTS AND REPORTS |
|
As a
shareholder of the Fund you will receive the following statements and
reports: |
Confirmation
Statement |
|
Sent each time you
buy, sell, or exchange shares; confirms the trade date and the amount of
your transaction, except purchases through the Automatic Investment Plan
and dividend and capital gain distributions, which will be confirmed only
on your account statement. |
Account
Statement |
|
Mailed quarterly;
shows the market value of your account at the close of the statement
period, as well as distributions, purchases, sales, and exchanges for the
current calendar year. You should contact Client Services immediately
regarding any errors or discrepancies on the statement confirming your
transaction(s). The statement will be deemed correct if we do not hear
from you within 90 days. |
Fund Financial
Reports |
|
Mailed in February
and August. |
Tax
Statements |
|
Generally mailed
by January 31st; reports previous year’s dividend distributions, proceeds
from the sale of shares, and distributions from IRAs. |
The
Funds offer you the following services: (call Client Services at 800-621-3979,
write, or visit the Funds’ website at dodgeandcox.com for forms and additional
information.)
Electronic Delivery of
Reports and Prospectus Your Fund reports and the Funds’ prospectus
can be delivered to you electronically, if you prefer. If you are a registered
user of dodgeandcox.com, you can consent to the electronic delivery of Fund
reports by logging on and changing your preferences. You can revoke your
electronic consent at any time, and we will send paper copies of Fund reports
within 30 days of receiving your notice.
Web
Access Information on
the Funds is available at dodgeandcox.com.
On
the site you can:
∎ |
|
View your account balances and recent
transactions; |
∎ |
|
View or download your account statements,
confirmation statements, and tax forms; |
∎ |
|
Purchase, redeem, and exchange Fund shares;
|
∎ |
|
Learn more about Dodge & Cox’s approach
to investing; |
∎ |
|
Review the objectives, strategies,
characteristics, and risks of the Funds; |
∎ |
|
Review the Funds’ daily NAVs and performance;
|
∎ |
|
Download or order the Funds’ prospectus and
Account Applications, shareholder reports, IRA information, and other
forms; and |
∎ |
|
Sign up for electronic delivery of the Funds’
prospectus, shareholder reports, proxy materials, account statements, and
tax forms. |
Telephone
Services The Funds
provide toll-free access (800-621-3979)
to Fund and account information 24 hours a day, 7 days a week. The system
provides total returns, share prices, and price changes for the Funds and gives
your account balances and history (e.g., last transaction, latest dividend
distribution). For certain account types, you can purchase, redeem, and exchange
Fund shares.
Automatic Investment
Plan You may make
regular monthly, quarterly, semi-annual, or annual investments of $100 or more
through automatic deductions from your bank account.
Automatic Redemption
Plan If you own
$10,000 or more of a Fund’s shares, you may receive regular monthly, quarterly,
semi-annual, or annual payments of $50 or more. Shares will be redeemed
automatically at NAV to make the withdrawal payments.
Individual Retirement
Account (IRA) If you
have earned income or are entitled to certain distributions from eligible
retirement plans, you may make or authorize contributions to your own Individual
Retirement Account. The Funds have traditional IRA and Roth IRA Plans available
for shareholders of the Funds.
Important
Note: The services described may not be available through some retirement plans
or accounts held by Financial Intermediaries. If you are investing in
such a manner, you should contact your plan administrator/trustee or
Financial Intermediaries about what services are available and with questions
about your account.
DODGE & COX FUNDS ∎
PAGE 53
FINANCIAL HIGHLIGHTS
The
financial highlights table is intended to help you understand each Fund’s
financial performance for the past five years (or, if shorter, the period of the
Fund’s operations). Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Fund (before taxes, and
assuming reinvestment of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, whose report, along with each Fund’s
financial statements, are included in the Annual Report, which is available upon
request and on the Funds’ web site at dodgeandcox.com.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DODGE & COX STOCK FUND |
|
Year Ended December 31, |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
Net
asset value, beginning of year |
|
|
$203.61 |
|
|
|
$184.30 |
|
|
|
$162.77 |
|
|
|
$180.94 |
|
|
|
$168.87 |
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
2.90 |
|
|
|
3.09 |
|
|
|
3.05 |
|
|
|
2.42 |
|
|
|
2.83 |
|
Net
realized and unrealized gain (loss) |
|
|
(16.96 |
) |
|
|
30.03 |
|
|
|
30.56 |
|
|
|
(10.55 |
) |
|
|
14.60 |
|
|
|
|
|
|
Total
from investment operations |
|
|
(14.06 |
) |
|
|
33.12 |
|
|
|
33.61 |
|
|
|
(8.13 |
) |
|
|
17.43 |
|
|
|
|
|
|
Distributions
to shareholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
(2.90 |
) |
|
|
(3.11 |
) |
|
|
(3.03 |
) |
|
|
(2.46 |
) |
|
|
(2.80 |
) |
Net
realized gain |
|
|
(13.84 |
) |
|
|
(10.70 |
) |
|
|
(9.05 |
) |
|
|
(7.58 |
) |
|
|
(2.56 |
) |
|
|
|
|
|
Total
distributions |
|
|
(16.74 |
) |
|
|
(13.81 |
) |
|
|
(12.08 |
) |
|
|
(10.04 |
) |
|
|
(5.36 |
) |
|
|
|
|
|
Net
asset value, end of year |
|
|
$172.81 |
|
|
|
$203.61 |
|
|
|
$184.30 |
|
|
|
$162.77 |
|
|
|
$180.94 |
|
|
|
|
|
|
Total
return |
|
|
(7.08 |
)% |
|
|
18.32 |
% |
|
|
21.27 |
% |
|
|
(4.47 |
)% |
|
|
10.43 |
% |
Ratios/supplemental
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (millions) |
|
|
$63,005 |
|
|
|
$70,901 |
|
|
|
$61,600 |
|
|
|
$54,845 |
|
|
|
$60,260 |
|
Ratio
of expenses to average net assets |
|
|
0.52 |
% |
|
|
0.52 |
% |
|
|
0.52 |
% |
|
|
0.52 |
% |
|
|
0.52 |
% |
Ratio
of net investment income to average net assets |
|
|
1.41 |
% |
|
|
1.58 |
% |
|
|
1.83 |
% |
|
|
1.36 |
% |
|
|
1.62 |
% |
Portfolio
turnover rate |
|
|
20 |
% |
|
|
13 |
% |
|
|
16 |
% |
|
|
15 |
% |
|
|
17 |
% |
|
|
DODGE & COX GLOBAL STOCK FUND |
|
Year Ended December 31, |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
Net
asset value, beginning of year |
|
|
$13.86 |
|
|
|
$11.91 |
|
|
|
$10.46 |
|
|
|
$11.83 |
|
|
|
$11.48 |
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
0.21 |
|
|
|
0.13 |
|
|
|
0.14 |
|
|
|
0.16 |
|
|
|
0.16 |
|
Net
realized and unrealized gain (loss) |
|
|
(1.96 |
) |
|
|
2.42 |
|
|
|
1.65 |
|
|
|
(1.11 |
) |
|
|
0.64 |
|
|
|
|
|
|
Total
from investment operations |
|
|
(1.75 |
) |
|
|
2.55 |
|
|
|
1.79 |
|
|
|
(0.95 |
) |
|
|
0.80 |
|
|
|
|
|
|
Distributions
to shareholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
(0.25 |
) |
|
|
(0.13 |
) |
|
|
(0.14 |
) |
|
|
(0.19 |
) |
|
|
(0.15 |
) |
Net
realized gain |
|
|
(0.83 |
) |
|
|
(0.47 |
) |
|
|
(0.20 |
) |
|
|
(0.23 |
) |
|
|
(0.30 |
) |
|
|
|
|
|
Total
distributions |
|
|
(1.08 |
) |
|
|
(0.60 |
) |
|
|
(0.34 |
) |
|
|
(0.42 |
) |
|
|
(0.45 |
) |
|
|
|
|
|
Net
asset value, end of year |
|
|
$11.03 |
|
|
|
$13.86 |
|
|
|
$11.91 |
|
|
|
$10.46 |
|
|
|
$11.83 |
|
|
|
|
|
|
Total
return |
|
|
(12.65 |
)% |
|
|
21.51 |
% |
|
|
17.09 |
% |
|
|
(8.05 |
)% |
|
|
6.95 |
% |
Ratios/supplemental
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (millions) |
|
|
$8,614 |
|
|
|
$9,911 |
|
|
|
$7,101 |
|
|
|
$5,708 |
|
|
|
$5,895 |
|
Ratio
of expenses to average net assets |
|
|
0.62 |
% |
|
|
0.63 |
% |
|
|
0.63 |
% |
|
|
0.63 |
% |
|
|
0.65 |
% |
Ratio
of net investment income to average net assets |
|
|
1.52 |
% |
|
|
1.02 |
% |
|
|
1.36 |
% |
|
|
1.39 |
% |
|
|
1.42 |
% |
Portfolio
turnover rate |
|
|
31 |
% |
|
|
18 |
% |
|
|
25 |
% |
|
|
20 |
% |
|
|
17 |
% |
|
|
DODGE & COX INTERNATIONAL STOCK
FUND |
|
Year Ended December 31, |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
Net
asset value, beginning of year |
|
|
$46.32 |
|
|
|
$38.10 |
|
|
|
$36.48 |
|
|
|
$42.11 |
|
|
|
$43.04 |
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
1.01 |
|
|
|
0.70 |
|
|
|
0.82 |
|
|
|
0.79 |
|
|
|
0.98 |
|
Net
realized and unrealized gain (loss) |
|
|
(9.34 |
) |
|
|
8.41 |
|
|
|
2.19 |
|
|
|
(5.58 |
) |
|
|
(0.94 |
) |
|
|
|
|
|
Total
from investment operations |
|
|
(8.33 |
) |
|
|
9.11 |
|
|
|
3.01 |
|
|
|
(4.79 |
) |
|
|
0.04 |
|
|
|
|
|
|
Distributions
to shareholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
(1.08 |
) |
|
|
(0.89 |
) |
|
|
(0.85 |
) |
|
|
(0.84 |
) |
|
|
(0.97 |
) |
Net
realized gain |
|
|
— |
|
|
|
— |
|
|
|
(0.54 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Total
distributions |
|
|
(1.08 |
) |
|
|
(0.89 |
) |
|
|
(1.39 |
) |
|
|
(0.84 |
) |
|
|
(0.97 |
) |
|
|
|
|
|
Net
asset value, end of year |
|
|
$36.91 |
|
|
|
$46.32 |
|
|
|
$38.10 |
|
|
|
$36.48 |
|
|
|
$42.11 |
|
|
|
|
|
|
Total
return |
|
|
(17.98 |
)% |
|
|
23.94 |
% |
|
|
8.26 |
% |
|
|
(11.35 |
)% |
|
|
0.07 |
% |
Ratios/supplemental
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (millions) |
|
|
$48,108 |
|
|
|
$65,670 |
|
|
|
$54,187 |
|
|
|
$57,029 |
|
|
|
$64,040 |
|
Ratio
of expenses to average net assets |
|
|
0.63 |
% |
|
|
0.63 |
% |
|
|
0.64 |
% |
|
|
0.64 |
% |
|
|
0.64 |
% |
Ratio
of net investment income to average net assets |
|
|
2.17 |
% |
|
|
1.57 |
% |
|
|
2.12 |
% |
|
|
1.86 |
% |
|
|
2.39 |
% |
Portfolio
turnover rate |
|
|
17 |
% |
|
|
17 |
% |
|
|
17 |
% |
|
|
18 |
% |
|
|
12 |
% |
PAGE
54 ∎ DODGE & COX FUNDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DODGE & COX BALANCED FUND |
|
Year Ended December 31, |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
Net
asset value, beginning of year |
|
|
$107.00 |
|
|
|
$103.35 |
|
|
|
$94.42 |
|
|
|
$102.48 |
|
|
|
$98.30 |
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
2.20 |
|
|
|
2.28 |
|
|
|
2.34 |
|
|
|
2.06 |
|
|
|
2.03 |
|
Net
realized and unrealized gain (loss) |
|
|
(7.00 |
) |
|
|
10.45 |
|
|
|
12.89 |
|
|
|
(4.99 |
) |
|
|
6.59 |
|
|
|
|
|
|
Total
from investment operations |
|
|
(4.80 |
) |
|
|
12.73 |
|
|
|
15.23 |
|
|
|
(2.93 |
) |
|
|
8.62 |
|
|
|
|
|
|
Distributions
to shareholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
(2.01 |
) |
|
|
(2.29 |
) |
|
|
(2.34 |
) |
|
|
(2.06 |
) |
|
|
(2.03 |
) |
Net
realized gain |
|
|
(6.92 |
) |
|
|
(6.79 |
) |
|
|
(3.96 |
) |
|
|
(3.07 |
) |
|
|
(2.41 |
) |
|
|
|
|
|
Total
distributions |
|
|
(8.93 |
) |
|
|
(9.08 |
) |
|
|
(6.30 |
) |
|
|
(5.13 |
) |
|
|
(4.44 |
) |
|
|
|
|
|
Net
asset value, end of year |
|
|
$93.27 |
|
|
|
$107.00 |
|
|
|
$103.35 |
|
|
|
$94.42 |
|
|
|
$102.48 |
|
|
|
|
|
|
Total
return |
|
|
(4.61 |
)% |
|
|
12.59 |
% |
|
|
16.55 |
% |
|
|
(2.88 |
)% |
|
|
8.85 |
% |
Ratios/supplemental
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (millions) |
|
|
$14,181 |
|
|
|
$16,387 |
|
|
|
$15,382 |
|
|
|
$14,269 |
|
|
|
$15,465 |
|
Ratio
of expenses to average net assets |
|
|
0.53 |
% |
|
|
0.53 |
% |
|
|
0.53 |
% |
|
|
0.53 |
% |
|
|
0.53 |
% |
Ratio
of net investment income to average net assets |
|
|
2.06 |
% |
|
|
2.12 |
% |
|
|
2.41 |
% |
|
|
2.03 |
% |
|
|
2.00 |
% |
Portfolio
turnover rate |
|
|
24 |
% |
|
|
19 |
% |
|
|
24 |
% |
|
|
20 |
% |
|
|
23 |
% |
|
|
DODGE & COX INCOME FUND |
|
Year Ended December 31, |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
Net
asset value, beginning of year |
|
|
$13.76 |
|
|
|
$13.59 |
|
|
|
$13.29 |
|
|
|
$13.78 |
|
|
|
$13.53 |
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
0.41 |
|
|
|
0.38 |
|
|
|
0.42 |
|
|
|
0.40 |
|
|
|
0.39 |
|
Net
realized and unrealized gain (loss) |
|
|
(0.45 |
) |
|
|
0.21 |
|
|
|
0.32 |
|
|
|
(0.48 |
) |
|
|
0.35 |
|
|
|
|
|
|
Total
from investment operations |
|
|
(0.04 |
) |
|
|
0.59 |
|
|
|
0.74 |
|
|
|
(0.08 |
) |
|
|
0.74 |
|
|
|
|
|
|
Distributions
to shareholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
(0.40 |
) |
|
|
(0.38 |
) |
|
|
(0.42 |
) |
|
|
(0.40 |
) |
|
|
(0.39 |
) |
Net
realized gain |
|
|
(0.06 |
) |
|
|
(0.04 |
) |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
(0.10 |
) |
|
|
|
|
|
Total
distributions |
|
|
(0.46 |
) |
|
|
(0.42 |
) |
|
|
(0.44 |
) |
|
|
(0.41 |
) |
|
|
(0.49 |
) |
|
|
|
|
|
Net
asset value, end of year |
|
|
$13.26 |
|
|
|
$13.76 |
|
|
|
$13.59 |
|
|
|
$13.29 |
|
|
|
$13.78 |
|
|
|
|
|
|
Total
return |
|
|
(0.31 |
)% |
|
|
4.36 |
% |
|
|
5.62 |
% |
|
|
(0.59 |
)% |
|
|
5.48 |
% |
Ratios/supplemental
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (millions) |
|
|
$54,314 |
|
|
|
$54,287 |
|
|
|
$46,632 |
|
|
|
$43,125 |
|
|
|
$39,128 |
|
Ratio
of expenses to average net assets |
|
|
0.42 |
% |
|
|
0.43 |
% |
|
|
0.43 |
% |
|
|
0.43 |
% |
|
|
0.44 |
% |
Ratio
of net investment income to average net assets |
|
|
3.02 |
% |
|
|
2.80 |
% |
|
|
3.11 |
% |
|
|
2.97 |
% |
|
|
2.89 |
% |
Portfolio
turnover rate |
|
|
37 |
% |
|
|
19 |
% |
|
|
27 |
% |
|
|
24 |
% |
|
|
27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DODGE & COX GLOBAL BOND FUND |
|
Year Ended December 31, |
|
|
Period from May 1, 2014 (commencement of Fund operations) to
December 31, 2014 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
Net
asset value, beginning of period |
|
|
$10.92 |
|
|
|
$10.33 |
|
|
|
$9.67 |
|
|
|
$10.31 |
|
|
|
$10.73 |
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
0.40 |
|
|
|
0.37 |
|
|
|
0.30 |
|
|
|
0.34 |
|
|
|
0.16 |
|
Net
realized and unrealized gain (loss) |
|
|
(0.56 |
) |
|
|
0.49 |
|
|
|
0.54 |
|
|
|
(0.98 |
) |
|
|
(0.44 |
) |
|
|
|
|
|
Total
from investment operations |
|
|
(0.16 |
) |
|
|
0.86 |
|
|
|
0.84 |
|
|
|
(0.64 |
) |
|
|
(0.28 |
) |
|
|
|
|
|
Distributions
to shareholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
(0.43 |
) |
|
|
(0.26 |
) |
|
|
(0.18 |
) |
|
|
— |
|
|
|
(0.14 |
) |
Net
realized gain |
|
|
(0.10 |
) |
|
|
(0.01 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Total
distributions |
|
|
(0.53 |
) |
|
|
(0.27 |
) |
|
|
(0.18 |
) |
|
|
— |
|
|
|
(0.14 |
) |
|
|
|
|
|
Net
asset value, end of period |
|
|
$10.23 |
|
|
|
$10.92 |
|
|
|
$10.33 |
|
|
|
$9.67 |
|
|
|
$10.31 |
|
|
|
|
|
|
Total
return |
|
|
(1.45 |
)% |
|
|
8.31 |
% |
|
|
8.64 |
% |
|
|
(6.21 |
)% |
|
|
(2.59 |
)% |
Ratios/supplemental
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of period (millions) |
|
|
$226 |
|
|
|
$156 |
|
|
|
$110 |
|
|
|
$68 |
|
|
|
$65 |
|
Ratio
of expenses to average net assets |
|
|
0.45 |
% |
|
|
0.49 |
% |
|
|
0.60 |
% |
|
|
0.60 |
% |
|
|
0.60 |
%(a) |
Ratio
of expenses to average net assets, before reimbursement by investment
manager |
|
|
0.92 |
% |
|
|
1.06 |
% |
|
|
1.33 |
% |
|
|
1.41 |
% |
|
|
2.18 |
%(a) |
Ratio
of net investment income to average net assets |
|
|
4.15 |
% |
|
|
3.51 |
% |
|
|
3.77 |
% |
|
|
3.39 |
% |
|
|
2.83 |
%(a) |
Portfolio
turnover rate |
|
|
55 |
% |
|
|
46 |
% |
|
|
73 |
% |
|
|
55 |
% |
|
|
36 |
% |
DODGE & COX FUNDS ∎
PAGE 55
NOTES
PAGE
56 ∎ DODGE & COX FUNDS
NOTES
DODGE & COX FUNDS ∎
PAGE 57
DODGE & COX FUNDS®
FOR MORE INFORMATION
For
investors who want more information about the Funds, the
following documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
Additional
information about the Funds’ investments is available in the Funds’ annual and
semi-annual reports to shareholders. In each Fund’s annual report, you will find
a discussion of the market conditions and investment strategies that
significantly affected the Fund’s performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The
SAI provides more detailed information about the Funds and is incorporated by
reference into (and thus is legally a part of) this prospectus.
You
can get free copies of a Fund’s annual and semi-annual reports and the SAI,
request other information, and discuss your questions about the Funds by
contacting the Funds at:
Dodge &
Cox Funds
c/o
DST Asset Manager Solutions, Inc.
P.O.
Box 219502
Kansas
City, MO 64121-9502
Telephone:
800-621-3979
Internet:
dodgeandcox.com
Reports
and other information about the Funds (including the SAI) are available in the
EDGAR database on the SEC’s website at www.sec.gov. You can also receive copies
of this information, for a duplicating fee, by electronic request at the
following e-mail address: [email protected].
Funds’
Investment Company Act file no. 811-173