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:
- Issuer risk. Securities held by the Fund may decline in value because of changes in the financial condition of, or other events affecting, the issuers of these securities.
- Management risk. Dodge & Cox's opinion about the intrinsic worth or creditworthiness of a company or security may be incorrect, Dodge & Cox may not make timely purchases or sales of securities for the Fund, the Fund's investment objective may not be achieved, and the market may continue to undervalue the Fund's securities.
- Interest rate risk. Debt security prices may decline due to
rising interest rates. Furthermore, interest rate derivatives
can be used to benefit from anticipated increases or
decreases in interest rates, but may decrease in value if
interest rates move in a manner different than that
anticipated. Debt instruments with longer maturities are
generally subject to potentially greater price volatility
than investments with shorter maturities.
- Credit risk. A security’s price may decline due to
deterioration in the issuer’s or a guarantor’s financial
condition. The Fund could lose money if the issuer or
guarantor of a debt security, or the counterparty to a
derivative instrument or other transaction is unable or
unwilling to make timely principal and/or interest
payments, or to otherwise honor its obligations. If an
issuer defaults, or if the credit quality of an investment
deteriorates or is perceived to deteriorate, the value of
the investment could decline.
- Below investment grade securities risk. Debt securities
rated below investment grade, also known as “high yield”
or “junk” securities, have speculative
characteristics. These securities may yield a higher level
of current income than higher-rated securities, but
generally have greater credit risk, more price volatility,
and less liquidity.
- Call risk. During periods of falling interest rates, 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 at lower interest rates.
- 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.
- Nondiversification risk. As a non-diversified fund, the
Fund has the ability to invest a larger percentage of its
assets in securities of a smaller number of issuers than a
diversified fund. As a result, the performance of a single
issuer could affect Fund performance more than if the
Fund were invested in a larger number of issuers.
- Mortgage and asset-backed securities risk. Early repayment
of principal (e.g., prepayment of principal due to sale of
the underlying property, refinancing, or foreclosure) of
mortgage-related or asset-backed securities (or other
callable securities) exposes the Fund to a potential loss
on any premium to face value paid and to a lower rate
of return upon reinvestment of principal. During
periods of rising interest rates, prepayment rates may
decline below what was anticipated, delaying the return
of principal to the Fund and affecting its ability to
reinvest at higher yields. In addition, changes in the
rate of prepayment also affect the price and price
volatility of a mortgage-related or asset-backed security.
Securities issued by certain U.S. government sponsored
enterprises (GSEs) (such as Fannie Mae, Freddie Mac,
the Federal Home Loan Banks, and the Federal Farm
Credit Banks) are not issued or guaranteed by the U.S.
Treasury. In the event that these GSEs cannot meet
their obligations, there can be no assurance that the
U.S. government will continue to provide support, and
the Fund’s performance could be adversely impacted.
- Non-U.S. issuer risk. Securities may decline in value
because of political, economic, or market instability;
the absence of accurate information about the issuers;
risks of internal and external conflicts; or unfavorable
government actions, including expropriation and nationalization. These same factors may also cause a
decline in the value of foreign currency, interest rate or
credit derivative instruments. Non-U.S. securities are
sometimes less liquid, more volatile, and harder to value
than securities of U.S. issuers. Lack of uniform
accounting, auditing, and financial reporting standards,
with less governmental regulation and oversight than
U.S. companies, may increase risk. Some countries also
may have different legal systems that may make it
difficult for the Fund to exercise creditor rights and
pursue legal remedies with respect to investments.
Certain of these risks may also apply to securities of
U.S. companies with significant non-U.S. operations.
Furthermore, the issuer of non-U.S. sovereign debt or
the governmental authorities that control the
repayment of debt may be unable or unwilling to repay
the principal or interest when due. This may result from
political or social factors, the general economic
environment of a country or levels of foreign debt or
foreign currency exchange rates.
- Emerging markets risk. Non-U.S. issuer risk may be
particularly high to the extent the 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 developed non-U.S. issuers.
Emerging market securities may also be more volatile,
less liquid and more difficult to value than securities
economically tied to developed non-U.S. issuers.
- Non-U.S. currency risk. Non-U.S. currencies may decline
relative to the U.S. dollar and affect the Fund’s
investments in non-U.S. currencies, in securities that
trade or receive revenues in non-U.S. currencies, or in
derivatives that provide exposure to non-U.S. currencies.
Dodge & Cox may not hedge or may not be successful in
hedging the Fund’s currency exposure. The Fund also
bears transaction charges for currency exchange.
- Derivatives risk. The Fund’s use of derivatives such as
currency and interest rate derivatives and credit default
swaps involves risks different from, and possibly greater
than, the risks associated with investing directly in
securities and other more traditional investments.
Derivatives are subject to potential changes in value in response to exchange rate changes, interest rate
changes, or other market developments, or the risk that
a derivative transaction may not have the effect Dodge
& Cox anticipated. Credit default swaps are subject to
credit risk relating to the issuer or issuers of the
reference obligations. Derivatives also involve the risk
of mispricing or improper valuation and poor
correlation between changes in the value of a derivative
and the underlying asset. Derivative transactions may
be highly volatile, and can create investment leverage,
which could cause the Fund to lose more than the
amount of assets initially contributed to the
transaction, if any. There is also the risk that the Fund
may be unable to close out a derivative position at an
advantageous time or price, or that a counterparty may
be unable or unwilling to honor its contractual
obligations, especially during times of financial market
- Leveraging risk. Certain Fund transactions, such as
derivatives, may give rise to a form of leverage and may
expose the Fund to greater risk of loss. Leverage tends
to magnify the effect of any decrease or increase in the
value of the Fund’s portfolio securities, and therefore
may cause the Fund’s performance to be more volatile.
The use of leverage may cause the Fund to liquidate
portfolio positions when it would not be advantageous
to do so in order to satisfy its obligations.
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.
There are further risk factors described elsewhere in the prospectus and in the SAI.
The following bar chart is 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.
A private fund managed and funded by Dodge & Cox was reorganized into the Fund and the Fund commenced operations on May 1, 2014. This private fund commenced operations on December 5, 2012, and had an investment objective 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 Internal Revenue Code of 1986, 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 are the same. The Fund's past performance (before and after taxes) does not necessarily indicate how the Fund will perform in the future. Average annual total returns can be viewed on the Performance & Prices page of this website.
|Highest/Lowest quarterly results during the time period were:
Highest: 2.96% (quarter ended September 30, 2013)
Lowest: —2.35% (quarter ended September 30, 2014)
Expense reimbursements have been in effect for the Fund since its inception. Without the expense reimbursements, returns for the Fund would have been lower.