<PAGE>
DODGE & COX
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Balanced Fund
Established 1931
Quarterly Report
March 31, 1995
1995
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DODGE & COX
Balanced Fund
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Dodge & Cox
Investment Managers
35th Floor
One Sansome Street
San Francisco
California 94104
(415) 981-1710
For Fund literature and
information, please call:
(800) 621-3979
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Dodge & Cox
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Balanced Fund
<TABLE>
<CAPTION>
Portfolio of Investments March 31, 1995
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SHARES MARKET VALUE
<C> <C> <S> <C>
COMMON FINANCE: 11.8%
STOCKS: 391,000 American Express Co. ............................................... $ 13,636,125
56.0% 77,000 American International Group, Inc. ................................. 8,027,250
200,000 Bank of Boston Corp. ............................................... 5,950,000
210,000 BankAmerica Corp. .................................................. 10,132,500
125,000 Barnett Banks, Inc. ................................................ 5,687,500
98,000 Chubb Corp. ........................................................ 7,742,000
68,000 CIGNA Corp. ........................................................ 5,083,000
262,000 Citicorp ........................................................... 11,135,000
55,000 General Re Corp. ................................................... 7,260,000
278,500 Golden West Financial Corp. ........................................ 10,652,625
56,000 ITT Corp. .......................................................... 5,747,000
62,600 Lehman Brothers Holdings, Inc. ..................................... 1,126,800
149,000 Morgan (J.P.) & Co. ................................................ 9,089,000
263,000 Norwest Corp. ...................................................... 6,673,625
120,000 The St. Paul Cos., Inc. ............................................ 6,000,000
------------
113,942,425
CONSUMER: 11.1%
15,513 Cox Communications, Inc. Class A ................................... 259,843
215,000 Dayton-Hudson Corp. ................................................ 15,372,500
222,000 Dillard Department Stores, Inc. Class A ............................ 6,132,750
168,000 Fleming Cos., Inc. ................................................. 3,801,000
244,000 Fruit of the Loom, Inc. ............................................ 6,405,000
340,000 General Motors Corp. ............................................... 15,045,000
540,000 Kmart Corp. ........................................................ 7,425,000
450,000 Masco Corp. ........................................................ 12,431,250
288,000 Melville Corp. ..................................................... 10,728,000
220,000 Nordstrom, Inc. .................................................... 8,910,000
166,000 Procter & Gamble Co. ............................................... 10,997,500
180,078 Times Mirror Co. Series A .......................................... 3,466,502
120,000 Whirlpool Corp. .................................................... 6,570,000
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107,544,345
ELECTRONICS AND COMPUTERS: 6.1%
313,000 Digital Equipment Corp. ............................................ 11,854,875
74,000 Hewlett-Packard Co. ................................................ 8,907,750
173,000 International Business Machines Corp. .............................. 14,164,375
92,800 Motorola, Inc. ..................................................... 5,069,200
100,000 Sun Microsystems, Inc. ............................................. 3,462,500
249,200 Tandem Computers, Inc. ............................................. 3,862,600
130,000 Texas Instruments, Inc. ............................................ 11,505,000
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58,826,300
BASIC INDUSTRY: 5.8%
269,000 Aluminum Co. of America ............................................ 11,129,875
50,000 Boise Cascade Corp. ................................................ 1,737,500
137,000 Dow Chemical Co. ................................................... 10,001,000
125,000 International Paper Co. ............................................ 9,390,625
325,000 James River Corp. of Virginia ...................................... 8,450,000
139,700 Nalco Chemical Co. ................................................. 4,697,413
267,000 Weyerhaeuser Co. ................................................... 10,379,625
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55,786,038
</TABLE>
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Balanced Fund
<TABLE>
<CAPTION>
Portfolio of Investments March 31, 1995
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SHARES MARKET VALUE
<C> <C> <S> <C>
COMMON ENERGY: 4.9%
STOCKS 180,000 Amerada Hess Corp. ................................................. $ 8,887,500
(Continued) 125,000 Amoco Corp. ........................................................ 7,953,125
20,000 Exxon Corp. ........................................................ 1,335,000
214,000 Halliburton Co. .................................................... 7,784,250
20,000 Mobil Corp. ........................................................ 1,852,500
275,000 Phillips Petroleum Co. ............................................. 10,071,875
75,000 Royal Dutch Petroleum Co. .......................................... 9,000,000
------------
46,884,250
CAPITAL EQUIPMENT: 4.2%
224,000 Caterpillar, Inc. .................................................. 12,460,000
134,000 Deere & Co. ........................................................ 10,887,500
157,000 General Electric Co. ............................................... 8,497,625
32,000 Honeywell, Inc. .................................................... 1,196,000
90,000 Parker-Hannifin Corp. .............................................. 3,982,500
68,000 Sundstrand Corp. ................................................... 3,425,500
------------
40,449,125
BUSINESS PRODUCTS AND SERVICES: 3.1%
305,000 Donnelley (R.R.) & Sons Co. ........................................ 10,484,375
172,000 Federal Express Corp. .............................................. 11,631,500
72,000 Xerox Corp. ........................................................ 8,451,000
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30,566,875
PUBLIC UTILITIES: 3.0%
165,000 Ameritech Corp. .................................................... 6,806,250
172,000 Central & South West Corp. ......................................... 4,171,000
45,000 Consolidated Natural Gas Co. ....................................... 1,738,125
32,000 Duke Power Co. ..................................................... 1,232,000
64,000 FPL Group, Inc. .................................................... 2,328,000
205,000 Pacific Gas & Electric Co. ......................................... 5,099,375
186,000 Texas Utilities Co. ................................................ 5,905,500
80,000 Unicom Corp. ....................................................... 1,900,000
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29,180,250
PHARMACEUTICAL AND HEALTH: 2.0%
70,000 Pfizer, Inc. ....................................................... 6,002,500
205,000 SmithKline Beecham plc ADR ......................................... 7,687,500
168,000 Upjohn Co. ......................................................... 6,006,000
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19,696,000
TRANSPORTATION: 2.0%
605,000 Canadian Pacific Ltd. .............................................. 9,075,000
185,000 Union Pacific Corp. ................................................ 10,175,000
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19,250,000
DIVERSIFIED TECHNOLOGY: 2.0%
140,000 Grace (W.R.) & Co. ................................................. 7,455,000
96,000 Minnesota Mining & Manufacturing Co. ............................... 5,580,000
148,400 Raychem Corp. ...................................................... 6,028,750
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19,063,750
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TOTAL COMMON STOCKS (cost $432,729,006) .................... 541,189,358
------------
PREFERRED CONSUMER: 0.2%
STOCKS: 76,922 Times Mirror Co. Conversion Preferred Series B ..................... 1,653,823
0.2% ------------
TOTAL PREFERRED STOCKS (cost $1,659,843) ................... 1,653,823
------------
</TABLE>
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Balanced Fund
<TABLE>
<CAPTION>
Portfolio of Investments March 31, 1995
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PAR VALUE MARKET VALUE
<C> <C> <S> <C>
BONDS: U.S. GOVERNMENT: 9.9%
36.7% $14,000,000 U.S. Treasury Notes, 3 7/8%, 1995 .................................. $ 13,975,920
9,100,000 U.S. Treasury Notes, 4 1/4%, 1995 .................................. 9,047,402
19,500,000 U.S. Treasury Notes, 7 7/8%, 1996 .................................. 19,801,665
10,000,000 U.S. Treasury Notes, 6%, 1997 ...................................... 9,776,600
9,900,000 U.S. Treasury Notes, 9 1/8%, 1999 .................................. 10,630,125
14,000,000 U.S. Treasury Notes, 8 3/4%, 2000 .................................. 15,010,660
250,000 U.S. Treasury Bonds, 13 1/8%, 2001 ................................. 322,813
11,500,000 U.S. Treasury Bonds, 14%, 2011, Callable 2006 ...................... 17,330,845
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95,896,030
FEDERAL AGENCY: 0.6%
5,000,000 Arkansas Dev. Fin. Auth. GNMA Guaranteed Bonds 9 3/4%, 2014 ........ 5,737,500
FEDERAL AGENCY MORTGAGE PASS-THROUGH: 12.2%
1,256,053 Federal Home Loan Mtge. Corp. Group 25-6637, 8%, 2002 .............. 1,257,623
2,400,329 Federal Home Loan Mtge. Corp. Group D26241, 6 1/2%, 2006 ........... 2,349,322
531,518 Federal Home Loan Mtge. Corp. Group 18-0233, 7%, 2006 .............. 521,552
450,064 Federal Home Loan Mtge. Corp. Group 18-5719, 7 1/4%, 2008 .......... 443,205
985,241 Federal Home Loan Mtge. Corp. Group 27-2784, 7 1/4%, 2008 .......... 970,226
502,407 Federal Home Loan Mtge. Corp. Group 25-3827, 7 1/2%, 2008 .......... 496,127
1,858,011 Federal Home Loan Mtge. Corp. Group 18-0468, 8%, 2008 .............. 1,855,688
1,961,467 Federal Home Loan Mtge. Corp. Group 30-9878, 8 3/4%, 2010 .......... 2,005,600
645,261 Federal Home Loan Mtge. Corp. Group 27-3014, 8 1/4%, 2011 .......... 650,100
789,867 Federal Home Loan Mtge. Corp. Group 27-2785, 7 3/4%, 2012 .......... 788,027
2,196,690 Federal Home Loan Mtge. Corp. Group 55-5098, 8 1/4%, 2017 .......... 2,213,165
10,000,000 Federal Home Loan Mtge. Corp. Multi PC Series 1216-GA, 7%, 2006..... 9,562,500
5,934,000 Federal Home Loan Mtge. Corp. Multi PC Series 1203-H, 6%, 2007...... 5,271,944
10,000,000 Federal Home Loan Mtge. Corp. Multi PC Series 1628-PJ, 6 1/2%, 2022. 8,856,200
1,336,277 Federal Natl. Mtge. Assn. MBS Pool 55690, 8 1/2%, 2002 ............. 1,359,662
1,785,381 Federal Natl. Mtge. Assn. MBS Pool 22354, 6 1/2%, 2004 ............. 1,736,283
9,417,179 Federal Natl. Mtge. Assn. MBS Pool 70255, 7 1/2%, 2007 ............. 9,299,464
6,633,612 Federal Natl. Mtge. Assn. MBS Pool 224484, 7 1/2%, 2011 ............ 6,542,400
5,706,996 Federal Natl. Mtge. Assn. PC 1993-234-PA, 5%, 2004 ................. 5,400,245
9,000,000 Federal Natl. Mtge. Assn. PC 1992-164-PH, 6 1/2%, 2006 ............. 8,437,500
12,300,000 Federal Natl. Mtge. Assn. PC 1994-33-H, 6%, 2009 ................... 10,758,564
18,000,000 Federal Natl. Mtge. Assn. PC 1993-185-PE, 6 1/2%, 2023 ............. 15,890,580
13,635,251 Federal Natl. Mtge. Assn. SMBS L-1, 5%, 2006 ....................... 12,322,858
1,882,118 Federal Natl. Mtge. Assn. SMBS I-1, 6 1/2%, 2009 ................... 1,785,659
8,460,389 Veterans Affairs Vendee Mtge. Trust 1995-1A1PT WAPT, 7.21%, 2025.... 7,794,133
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118,568,627
COLLATERALIZED MORTGAGE OBLIGATION: 0.0%
110,109 FSF Finance Corp. 1985-1-D, 9 1/4%, 2016 ........................... 111,623
INDUSTRIAL: 5.0%
3,500,000 Caterpillar, Inc., Debentures 8%, 2023 ............................. 3,447,640
3,025,000 Dayton-Hudson Corp. Debentures 9%, 2021 ............................ 3,236,175
7,600,000 Dayton-Hudson Corp. MTN 9.35%, 2020, Putable 1997 .................. 8,445,500
9,175,000 Ford Holdings, Inc. Debentures 9 3/8%, 2020 ........................ 10,195,719
1,200,000 Time Warner Entertainment Senior Debentures 8 3/8%, 2023 ........... 1,063,884
8,800,000 Time Warner Entertainment Senior Debentures 8 3/8%, 2033 ........... 7,729,920
1,750,000 Union Camp Corp. Debentures 9 1/4%, 2011 ........................... 1,929,375
</TABLE>
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Balanced Fund
<TABLE>
<CAPTION>
Portfolio of Investments March 31, 1995
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PAR VALUE MARKET VALUE
<C> <C> <S> <C>
BONDS INDUSTRIAL (Continued)
(Continued) $ 2,150,000 Union Oil California Senior Notes 9 5/8%, 1995 ..................... $ 2,155,805
10,000,000 Weyerhaeuser Co. Debentures 7.95%, 2025 ............................ 9,807,100
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48,011,118
FINANCE: 4.1%
5,500,000 Bank of Boston Subordinated Notes 6 5/8%, 2004 ..................... 4,962,045
2,000,000 North American Capital Corp. Notes 9 3/4%, 2021, Callable 2001...... 2,192,500
1,800,000 CIGNA Corp. Debentures 7.65%, 2023 ................................. 1,478,250
2,000,000 CIGNA Corp. Notes 8.30%, 2023 ...................................... 1,770,000
3,100,000 First Nationwide Bank Subordinated Debentures 10%, 2006 ............ 3,204,625
1,750,000 General Electric Capital Put Notes 8 1/2%, 2008, Putable 1995....... 1,864,503
4,500,000 GMAC Put Bonds 8 7/8%, 2010, Putable 1995/2000/2005 ................ 4,876,875
3,000,000 Golden West Financial Subordinated Notes 7 1/4%, 2002 .............. 2,868,540
7,825,000 Golden West Financial Subordinated Notes 6%, 2003 .................. 6,891,243
5,500,000 ITT Hartford Group Notes 8.30%, 2001 ............................... 5,615,500
5,150,000 Norwest Corp. Subordinated Debentures 6.65%, 2023 .................. 4,243,703
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39,967,784
INTERNATIONAL AGENCY: 1.8%
7,200,000 European Investment Bank Bonds 10 1/8%, 2000 ....................... 8,073,000
10,000,000 Inter-American Development Bank Debentures 7 1/8%, 2023,
Callable 2003....................................................... 8,990,000
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17,063,000
TRANSPORTATION: 1.6%
3,900,000 AMR Corp. Debentures 9.88%, 2020 ................................... 4,060,875
4,800,000 AMR Corp. Debentures 9 3/4%, 2021 .................................. 4,946,544
5,375,000 Consolidated Rail Corp. Debentures 9 3/4%, 2020 .................... 6,239,515
1,000 Missouri Pacific Railroad Equipment Trust Certificate 10.35%, 1999.. 1,004
------------
15,247,938
CANADIAN: 1.4%
8,000,000 Canadian Pacific Ltd. Debentures 9.45%, 2021 ....................... 8,930,000
4,500,000 Hydro-Quebec Debentures 8.40%, 2022 ................................ 4,415,895
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13,345,895
PUBLIC UTILITIES: 0.1%
750,000 Idaho Power Co. 1st Mortgage Bonds 9 1/2%, 2021, Callable 2001 ..... 815,625
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TOTAL BONDS (cost $359,456,392) ............................ 354,765,140
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SHORT-TERM 7,719,547 General Mills, Inc., Variable Demand Note 5.73%, 1995 .............. 7,719,547
INVESTMENTS: 16,928,617 Pitney Bowes Credit Corp., Variable Demand Note 5.73%, 1995 ........ 16,928,617
4.7% 13,985,819 Southwestern Bell Telephone Co., Variable Demand Note 5.71%, 1995... 13,985,819
7,118,544 Wisconsin Electric Power Corp., Variable Demand Note 5.77%, 1995.... 7,118,544
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TOTAL SHORT-TERM INVESTMENTS (cost $45,752,527) ............ 45,752,527
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TOTAL INVESTMENTS (cost $839,597,768) .............. 97.6% 943,360,848
OTHER ASSETS LESS LIABILITIES ...................... 2.4 23,185,682
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TOTAL NET ASSETS ................................... 100.0% $966,546,530
======== ============
Beneficial shares outstanding 20,034,862 NET ASSET VALUE PER SHARE $48.24
(par value $1.00 each)
</TABLE>
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Dodge & Cox
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Balanced Fund
<TABLE>
<CAPTION>
Condensed Statement of Operations
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For the Three Months Ended March 31, 1995
<S> <C>
Investment income................................................................. $ 9,837,938
Expenses.......................................................................... 1,235,067
-----------
Net investment income............................................................. $ 8,602,871
===========
Net realized gain from security transactions (based on identified cost)........... $ 707,998
Change in unrealized appreciation of investments.................................. 54,533,691
-----------
Net realized and unrealized gain on investments................................... $55,241,689
===========
</TABLE>
<TABLE>
<CAPTION>
Condensed Financial Information
-------------------------------------------------------------------------------------------------
Net Asset Value Per Share Distributions Per Share
------------------------- -----------------------
Year Ended Capital
December 31 Net Assets Actual Adjusted* Income Gains
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1985 $ 24,516,464 $31.93 $32.38 $ 1.70 $ .37
1986 27,516,246 32.62 36.70 1.62 3.55
1987 34,376,651 30.72 37.54 1.70 2.67
1988 39,031,819 32.09 39.76 1.68 .46
1989 50,950,919 36.85 46.54 1.76 .71
1990 82,596,374 35.03 44.66 1.81 .33
1991 179,392,902 40.09 51.52 1.76 .29
1992 268,768,015 42.44 54.62 1.72 .08
1993 486,830,358 46.40 61.06 1.66 1.07
1994 725,271,607 45.21 59.95 1.76 .36
1995 (3/31) 966,546,530 48.24 64.06 .45** .06**
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$17.62 $9.95
====== =====
</TABLE>
* Adjusted for assumed reinvestment of capital gains
distributions.
** Distributions of $.45 per share from net investment
income and $.06 per share from net capital gains
were paid March 20, 1995 to shareholders of record
March 15, 1995.
<TABLE>
<CAPTION>
Average annual total return for periods ended March 31, 1995 1 Year 5 Years 10 Years 20 Years
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dodge & Cox Balanced Fund 11.40% 11.72% 14.08% 13.16%
S&P 500 Index 15.56 11.41 14.44 13.92
Lehman Bros. Aggregate Bond Index 4.99 8.90 10.26 9.85
</TABLE>
The Fund invests its assets in common stocks and
bonds; the S&P 500 is comprised solely of common
stocks. The Fund's investment in common stocks over
the past 20 years has ranged from 54% to 74% of the
total portfolio.
The average annual total return figures include
reinvestment of dividend and capital gain
distributions. These results represent past
performance; past performance is no guarantee of
future results. Investment return and share price
will vary, and shares may be worth more or less at
redemption than at original purchase.
* * *
The financial information has been taken from the
records of the Fund and has not been audited by our
independent accountants who do not express an opinion
thereon. The financial statements of the Fund will be
subject to audit by our independent accountants as of
the close of the calendar year.
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Dodge & Cox
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Balanced Fund
Officers and Trustees
-----------------------------------------------------
Harry R. Hagey, Chairman and Trustee
Chairman & CEO, Dodge & Cox
A. Horton Shapiro, Vice-Chairman and Trustee
Senior Vice-President, Dodge & Cox
Kenneth E. Olivier, Assistant Secretary and Trustee
Senior Vice-President, Dodge & Cox
Peter Avenali, Trustee
Retired Officer, Dodge & Cox
Max Gutierrez, Jr., Trustee
Partner, Brobeck, Phleger & Harrison, Attorneys
Robert C. Harris, Trustee
Of Counsel to Heller, Ehrman, White & McAuliffe,
Attorneys
Frank H. Roberts, Trustee
Retired Partner, Pillsbury, Madison & Sutro,
Attorneys
John B. Taylor, Trustee
Professor of Economics, Stanford University
Will C. Wood, Trustee
Principal, Kentwood Associates, Financial Advisers
W. Timothy Ryan, Secretary
Senior Vice-President, Dodge & Cox
E. Morris Cox, Honorary Trustee
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MANAGERS
Dodge & Cox
One Sansome Street, 35th Floor
San Francisco, California 94104
Telephone (415) 981-1710
CUSTODIAN & TRANSFER AGENT
Firstar Trust Company
P. O. Box 701
Milwaukee, Wisconsin 53201-0701
Telephone (800) 621-3979
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
San Francisco, California
LEGAL COUNSEL
Heller, Ehrman, White & McAuliffe
San Francisco, California
-----------------------------------------------------
This report is submitted for the general information
of the shareholders of the Fund. The report is not
authorized for distribution to prospective investors
in the Fund unless it is accompanied by an effective
prospectus.
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Dodge & Cox
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Balanced Fund
General Information
-----------------------------------------------------
DODGE & COX The Fund enables investors to obtain the benefits
BALANCED FUND of experienced and continuous investment supervision.
Shares of the Fund represent a well-balanced,
diversified investment designed to provide a complete
long-term investment program in one convenient
holding. The portfolio of the Fund is balanced
between common stocks, which provide an opportunity
for long-term growth of principal and income, and
fixed-income securities, which provide a higher level
of income and stability of principal.
INVESTMENT Since 1930, Dodge & Cox has been providing
COUNSEL professional investment management for individuals,
MANAGEMENT trustees, corporations, pension and profit-sharing
funds, and charitable institutions. In addition,
Dodge & Cox manages the Dodge & Cox Stock Fund and
the Dodge & Cox Income Fund. Dodge & Cox is not
engaged in the brokerage business nor in the business
of dealing in or selling securities.
NO SALES CHARGE There are no commissions on the purchase or
redemption of shares of the Fund.
GIFTS Dodge & Cox Balanced Fund shares provide a
convenient method for making gifts to children and to
other family members. Fund shares may be held by an
adult custodian for the benefit of a minor under a
Uniform Gifts/Transfers to Minors Act. Trustees and
guardians may also hold shares for a minor's benefit.
REINVESTMENT Shareholders may direct that dividend and capital
PLAN gains distributions be reinvested in additional Fund
shares.
AUTOMATIC Shareholders may make regular monthly or quarterly
INVESTMENT PLAN investments of $100 or more through automatic
deductions from their bank accounts.
WITHDRAWAL PLAN Shareholders owning $10,000 or more of the Fund's
shares may elect to receive periodic monthly or
quarterly payments of at least $50. Under the plan,
all dividend distributions are automatically
reinvested at net asset value with the periodic
payments made from the proceeds of the redemption of
sufficient shares.
The above plans are completely voluntary and involve
no service charge of any kind.
IRA PLAN The Fund has available an Individual Retirement
plan (IRA) for shareholders of the Fund.
Fund literature and details on all of these plans
are available from the Fund upon request.
DODGE & COX BALANCED FUND
c/o Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Telephone (800) 621-3979
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