5
Morningstar FundInvestor
November
2013
Morningstar Analyst Rating
10-28-13
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
13.64
13.86
13.30
13.23
12.96
11.79
12.51
12.57
12.54
12.84
12.92
12.77
Total Return %
0.60
7.94
4.76
7.17
16.05
-0.29
4.68
5.30
1.98
3.64
5.97
10.75
+/-BC Agg Bnd
1.70
3.73
-3.08
0.63
10.12
-5.53
-2.29
0.97
-0.45
-0.70
1.87
0.49
+/-BC Agg Bnd
1.70
3.73
-3.08
0.63
10.12
-5.53
-2.29
0.97
-0.45
-0.70
1.87
0.49
Income Return %
2.18
3.69
4.23
5.07
5.86
5.51
5.15
5.00
4.35
4.25
4.78
5.52
Capital Return %
-1.58
4.25
0.53
2.10
10.19
-5.80
-0.47
0.30
-2.37
-0.61
1.19
5.23
Total Rtn % Rank Cat
10
33
81
57
30
35
63
11
41
61
25
5
Income $
0.30
0.48
0.55
0.65
0.68
0.68
0.64
0.62
0.55
0.54
0.60
0.66
Capital Gains $
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.05
Expense Ratio %
.
0.43
0.43
0.43
0.43
0.43
0.44
0.44
0.44
0.44
0.45
0.45
Income Ratio %
.
3.52
4.12
4.26
5.29
5.40
5.07
4.77
3.99
3.61
4.81
5.67
Turnover Rate %
.
26
27
28
20
24
27
30
24
30
41
31
Net Assets $mil
25,714
26,539
24,051
22,381
19,240
13,796
15,895
11,972
9,610
7,870
5,697
3,405
Performance
10-31-13
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Total
2009
2010
2011
2012
2013
0.26 7.48
5.84 1.76 16.05
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
. .
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
1.41 0.17
0.17
44 10,141
-0.73 1.24
1.24
7 9,927
0.71 1.79
1.79
15 10,071
4.25 1.23
1.23
19 11,330
8.56 2.47
2.47
21 15,078
5.27 0.49
0.49
22 16,713
5.95 0.59
0.59
14 23,797
Tax Analysis
Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated)
5 Yr (estimated)
10 Yr (estimated)
2.85
14
1.34
56
6.90
16
1.53
65
3.95
10
1.25
17
Potential Capital Gain Exposure: 6% of assets
Rating and Risk
Time Load-Adj
Morningstar
Morningstar
Morningstar
Period Return % Rtn vs Cat
Risk vs Cat
Risk-Adj Rating
1 Yr
0.71
3 Yr
4.25
+Avg
-Avg
5 Yr
8.56
+Avg
+Avg
10 Yr
5.27
+Avg
Avg
Incept
7.36
Other Measures
Standard Index
Best Fit Index
BC Agg Bnd
BC US Credit
Alpha
2.2
1.5
Beta
0.65
0.58
R-Squared
44
84
Standard Deviation
2.78
Mean
4.25
Sharpe Ratio
1.49
Morningstar’s Take
by Sarah Bush 10-28-13
Dodge & Cox Income plays the long game.
This fund’s managers work off a three- to five-year
investment horizon, an approach that is evident in both
the portfolio’s super-low turnover ratio and the team’s
patience with its picks. During the third quarter of
2013, for example, the team added to the fund’s stake
in Petrobras PBR, the partially state-owned Brazilian oil
company. Despite recent weakness in these bonds, the
managers remained confident in their investment
thesis, citing the company’s strategic importance to
Brazil and substantial oil reserves.
The fund’s patience with a number of long-term
themes positioned the fund well for 2013’s rocky bond
markets. For starters, in recent years, the managers
have run the portfolio with a relatively muted
interest-rate profile and the fund came into the year
with a 3.7 year duration, well short of its Barclays
Aggregate US Bond benchmark and category norms.
That caution helped when long-term Treasury yields
spiked in mid-2013 following Fed Chairman Ben
Bernanke’s suggestion that the Fed would soon start to
taper its purchases of bonds. Other positives have
included the fund’s long-standing and substantial
overweighting to corporates (50% as of September
2013) and, in particular, its preference for financial
names. The fund wasn’t able to completely sidestep
2013’s troubles, but it held up better than 90% of its
peers with a 0.5% loss for the year to date through
September 2013.
As 2013 shows, this fund is not invincible, and,
even with the recent spike in rates, it’s still operating
in a historically low-yield environment. Its large
corporate stake--including a sizable position in BBBs
(31%) and high-yield bonds (11%)--and minimal
Treasury exposure also leave it vulnerable to
underperformance when credit markets sell off and
were behind the fund’s relatively weak showing in
2011. Over the long haul, however, the fund has
delivered; its 5.2% annualized 10-year returns bests
75% of peers’.
Add in a veteran and well-resourced management
team and low expenses and this fund is a keeper.
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.
Actual Fees:
Mgt:0.40% Dist:
.
Expense Projections:
3Yr:$138
5Yr:$241 10Yr:$542
Income Distribution:
Quarterly
Data through October 31, 2013
Dodge & Cox Income
Ticker Status Yield SEC Yield Total Assets Mstar Category
DODIX Open 3.0% 2.23% $25,714 mil
Intermediate-Term Bond
27
14
22
17
19
11
17
18
35
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 10-13
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
09-30-13
Date of
Amount
Value % Net
Total Fixed-Income:671
Maturity
$000
$000 Assets
Fannie Mae
398,759 431,408 1.69
Verizon Comms 6.55%
09-15-43 333,130 376,083 1.47
California St Go Bds 7.5
04-01-39 259,265 337,433 1.32
Petrobras Intl Fin 5.375
01-27-21 288,355 289,677 1.13
Bk Amer Fdg 7.625%
06-01-19 219,362 268,996 1.05
Ford Motor Credit Co 5.7
02-01-21 237,506 262,439 1.03
Chase Issuance Tr 2012-8
10-16-17 262,360 261,773 1.02
Bac Cap Tr Xi 6.625%
05-23-36 240,193 258,231 1.01
Time Warner Cable 8.25% 04-01-19 221,533 256,447 1.00
Hca 6.5%
02-15-16 235,225 254,925 1.00
Citigroup Cap Xiii Pfd
219,068 240,186 0.94
FHLMC 4%
10-01-26 225,817 239,103 0.94
Aol Time Warner 7.625%
04-15-31 181,683 226,130 0.88
New Jersey St Tpk Auth 7
01-01-41 171,503 216,730 0.85
FNMA CMO
02-25-43 211,432 210,044 0.82
FNMA 7%
04-01-37 187,754 208,554 0.82
At&T 8%
11-15-31 151,477 206,491 0.81
Illinois St Go Bds 5.365
03-01-17 186,160 201,524 0.79
General Elec Cap Corp Mt
01-08-20 176,845 200,431 0.78
US Treasury Note 0.25%
10-31-14 200,000 200,234 0.78
Current Investment Style
1
1
Avg Eff Duration
4.4 Yrs
Avg Eff Maturity
7.6 Yrs
Avg Credit Quality
BBB
Avg Wtd Coupon
5.55%
Avg Wtd Price
110.29% of par
figure provided
by fund
Duration
Ltd Mod Ext
Quality
High
Med Low
Special Securities
Restricted/Illiquid Secs
6
Exotic Mortgage-Backed
0
Emerging-Markets Secs
Trace
Options/Futures/Warrants
No
Credit Analysis
% bonds 09-30-13
AAA
39
AA
3
A
15
BBB
31
BB
7
B
4
Below B 0
NR/NA 2
Sector Breakdown
% of assets
US Treasury
1
Non US Government
1
Government Related
1
Corporate
48
Agency MBS Pass-Through 28
Agency MBS ARM
1
Agency MBS CMO
5
Non-Agency Residential MBS 0
Commercial MBS
0
Asset-Backed
3
Municipal
6
Cash & Equivalents
7
Other
0
Composition - Net
Cash
6.5
Bonds 90.3
Stocks 0.0
Other
3.2
Coupon Range
% of Bonds Rel Cat
1.00=Category Average
0% PIK
0.0 0.0
0% to 6%
60.2 0.7
6% to 8%
33.6 2.8
8% to 10%
6.2 2.0
More than 10%
0.0 0.0
©
2013Morningstar, Inc.All rights reserved.The informationherein is not represented orwarranted tobeaccurate, correct, completeor
timely.Past performance is no guarantee of future results.Access updated reportsat
Toorder reprints, call312-696-6100.
mfb.morningstar.com.
Mutual Funds
ß
®
FI
