5
Morningstar FundInvestor
August 2
014
Morningstar Analyst Rating
07-22-14
Œ
Morningstar Pillars
Process
Performance
People
Parent
Price
Positive
Positive
Positive
Positive
Positive
Morningstar Analyst Rating
Morningstar evaluates mutual funds based on five key pillars, which
its analysts believe lead to funds that are more likely to outperform
over the long term on a risk-adjusted basis.
Analyst Rating Spectrum
Œ „ ´ˇ ¨
Pillar Spectrum
Positive
§
Negative
¶
Neutral
NAV
13.86
13.53
13.86
13.30
13.23
12.96
11.79
12.51
12.57
12.54
12.84
12.92
Total Return %
4.33
0.64
7.94
4.76
7.17
16.05
-0.29
4.68
5.30
1.98
3.64
5.97
+/-BC Agg Bnd
3.99
2.66
3.73
-3.08
0.63
10.12
-5.53
-2.29
0.97
-0.45
-0.70
1.87
+/-BC Agg Bnd
3.99
2.66
3.73
-3.08
0.63
10.12
-5.53
-2.29
0.97
-0.45
-0.70
1.87
Income Return %
1.56
3.03
3.69
4.23
5.07
5.86
5.51
5.15
5.00
4.35
4.25
4.78
Capital Return %
2.77
-2.39
4.25
0.53
2.10
10.19
-5.80
-0.47
0.30
-2.37
-0.61
1.19
Total Rtn % Rank Cat
29
8
33
81
57
30
35
63
11
41
61
25
Income $
0.21
0.42
0.48
0.55
0.65
0.68
0.68
0.64
0.62
0.55
0.54
0.60
Capital Gains $
0.04
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Expense Ratio %
.
0.43
0.43
0.43
0.43
0.43
0.43
0.44
0.44
0.44
0.44
0.45
Income Ratio %
.
3.00
3.52
4.12
4.26
5.29
5.40
5.07
4.77
3.99
3.61
4.81
Turnover Rate %
.
38
26
27
28
20
24
27
30
24
. .
Net Assets $mil
28,422
24,654
26,539
24,051
22,381
19,240
13,796
15,895
11,972
9,610
7,870
5,697
Performance
07-31-14
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Total
2010
2011
2012
2013
2014
2.24 1.99
2.58 0.19
7.17
1.36 1.77
0.19 1.37
4.76
2.97 1.29
2.50 0.97
7.94
0.54 -1.84
0.81 1.15
0.64
2.31 2.19
. . .
Trailing
Total
+/- BC
+/- BC %Rank Growth of
Return% Agg Bnd Agg Bnd
Cat
$10,000
3 Mo
6 Mo
1 Yr
3 Yr Avg
5 Yr Avg
10 Yr Avg
15 Yr Avg
1.09 0.94
0.94
36 10,109
2.96 2.67
2.67
24 10,296
5.84 5.28
5.28
18 10,584
4.39 3.84
3.84
22 11,376
5.89 5.15
5.15
35 13,313
5.50 3.23
3.23
18 17,081
6.24 3.42
3.42
13 24,793
Tax Analysis
Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated)
5 Yr (estimated)
10 Yr (estimated)
3.00
16
1.33
60
4.37
31
1.44
62
4.14
9
1.29
24
Potential Capital Gain Exposure: 7% of assets
Rating and Risk
Time Load-Adj
Morningstar
Morningstar
Morningstar
Period Return % Rtn vs Cat
Risk vs Cat
Risk-Adj Rating
1 Yr
5.84
3 Yr
4.39
+Avg
Avg
5 Yr
5.89
+Avg
-Avg
10 Yr
5.50
+Avg
Avg
Incept
7.32
Other Measures
Standard Index
Best Fit Index
BC Agg Bnd
BC US Credit
Alpha
2.3
1.3
Beta
0.68
0.61
R-Squared
44
84
Standard Deviation
2.75
Mean
4.39
Sharpe Ratio
1.56
Morningstar’s Take
by Cara Esser 07-22-14
For Dodge & Cox Income, patience pays off.
With a three- to five-year investment time horizon,
this fund’s managers have an eye for the long term.
This approach leads to low turnover (typically about a
third of the portfolio each year), and the team is willing
to be patient with its picks. For example, the fund
bought Build America Bonds (taxable municipal bonds)
from the struggling state of California in 2009 and
2010. Those positions began to pay off as the state
turned around its finances and have been top
performers for a few years running.
Patience also positioned the fund well for 2013’s
rocky bond markets. A longtime stance of
shorter-than-average duration helped the fund hold up
better than most as yields spiked in the aftermath of
the spring’s "taper talk." The fund entered 2013 with a
duration of about 75% of Barclays US Aggregate Bond
Index. Managers increased that duration to about 80%
of the index’s in the fall of 2013 but brought duration
back to about 75% of the Index s as of June 30, 2014.
A focus on income as a component of total returns
is apparent in the fund’s generally
higher-than-average yield (2.5% as of June 30) and its
long-standing overweighting to corporates, including a
sometimes 10%-plus weighting to junk bonds. As of
June 30, the fund held about 10% in junk corporate
bonds, but its overall allocation to corporates has
dropped over the past year by about 5 percentage
points. Within corporates, managers have favored
financial names. The fund’s typically high corporate
stake can hurt the fund in rough credit markets. For
example, in 2011, this fund underperformed the index
and 80% of its peers.
Over the long haul, though, managers have been
more right than wrong. During the trailing 10-year
period ended July 15, 2013, the fund’s average annual
gain of 5.5% topped the index by 68 basis points per
year and beat 80% of its intermediate-term bond
peers . Add in a veteran and well-resourced
management team and low expenses and this fund is
a keeper. The fund earned an Analyst Rating of Gold.
Address:
Dodge & Cox Funds
San Francisco, CA 94104
800-621-3979
Web Address:
Inception:
01-03-89
Advisor:
Dodge & Cox
Subadvisor:
None
NTF Plans:
N/A
Minimum Purchase:
$2500
Add: $100 IRA: $1000
Min Auto Inv Plan:
$2500
Add: $100
Sales Fees:
No-load
Management Fee:
0.50% mx./0.40% mn., 0.08%A
Actual Fees:
Mgt:0.40% Dist:
.
Expense Projections:
3Yr:$138
5Yr:$241 10Yr:$542
Income Distribution:
Quarterly
Data through July 31, 2014
Dodge & Cox Income
Ticker Status Yield SEC Yield Total Assets Mstar Category
DODIX Open 3.1%
.
$27,835 mil
Intermediate-Term Bond
14
23
17
20
11
17
18
24
41
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 07-14
Historical Profile
Return
Risk
Rating
Above Avg
Average
Above Avg
Investment Style
Fixed Income
Income Rtn %Rank Cat
Manager Change
Partial Manager Change
Growth of $10,000
Investment Values of
Fund
Investment Values of
BC Agg Bnd
Performance Quartile
(within Category)
History
10.0
12.0
14.0
16.0
18.0
Portfolio Analysis
06-30-14
Date of
Amount
Value % Net
Total Fixed-Income:692
Maturity
$000
$000 Assets
US Treasury Note 1.5%
08-31-18 500,000 502,539 1.81
US Treasury Note 1.5%
02-28-19 496,995 496,063 1.78
US Treasury Note 0.625%
02-15-17 450,000 448,875 1.61
Verizon Comms 6.55%
09-15-43 314,350 394,940 1.42
FNMA 4.5%
08-01-31 341,801 373,617 1.34
US Treasury Note 1.5%
07-31-16 350,000 357,246 1.28
US Treasury Note 0.75%
03-15-17 350,000 349,945 1.26
FHLMC FRN
05-01-44 287,385 298,160 1.07
Time Warner Cable 8.25% 04-01-19 221,583 280,737 1.01
Petrobras Intl Fin 5.375
01-27-21 266,770 278,036 1.00
Rio Oil Fin Tr 144A 6.25
07-06-24 260,750 273,760 0.98
California St Go Bds 7.5
04-01-39 180,880 271,921 0.98
Bac Cap Tr Xi 6.625%
05-23-36 240,328 271,462 0.98
Chase Issuance Tr 2012-8
10-16-17 262,460 262,653 0.94
Hca 6.5%
02-15-16 235,325 253,269 0.91
US Treasury Note 0.875%
05-15-17 250,000 250,313 0.90
Bk Amer Fdg 7.625%
06-01-19 199,782 246,733 0.89
Citigroup Cap Xiii Pfd
220,333 243,423 0.87
FHLMC CMO
12-15-43 209,429 236,344 0.85
Aol Time Warner 7.625%
04-15-31 162,843 223,481 0.80
Current Investment Style
1
1
Avg Eff Duration
4.3 Yrs
Avg Eff Maturity
7.0 Yrs
Avg Credit Quality
A
Avg Wtd Coupon
5.01%
Avg Wtd Price
112.24% of par
figure provided
by fund
Duration
Ltd Mod Ext
Quality
High
Med Low
Special Securities
Restricted/Illiquid Secs
7
Exotic Mortgage-Backed
0
Emerging-Markets Secs
Trace
Options/Futures/Warrants
No
Credit Analysis
% bonds 06-30-14
AAA
51
AA
7
A
14
BBB
23
BB
6
B
0
Below B 0
NR/NA 0
Sector Breakdown
% of assets
US Treasury
13
Non US Government
2
Government Related
1
Corporate
36
Agency MBS Pass-Through 27
Agency MBS ARM
1
Agency MBS CMO
6
Non-Agency Residential MBS 0
Commercial MBS
0
Asset-Backed
3
Municipal
5
Cash & Equivalents
5
Other
0
Composition - Net
Cash
5.4
Bonds 93.3
Stocks 0.0
Other
1.3
Coupon Range
% of Bonds Rel Cat
1.00=Category Average
0% PIK
0.6 0.2
0% to 6%
63.9 0.8
6% to 8%
30.7 2.5
8% to 10%
4.8 1.5
More than 10%
0.0 0.0
©
2014Morningstar, Inc.All rights reserved. The information herein isnot representedorwarranted tobe accurate, correct, completeor
timely.Pastperformance isnoguaranteeof future results.Accessupdated reports at
To order reprints, call 312-696-6100.
mfb.morningstar.com.
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