<PAGE>
D O D G E & C O X
Stock Fund
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
- --------------------------------------------------------------------------------
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.
Printed on recycled paper.
D O D G E & C O X
Stock Fund
Established 1965
Semi-Annual Report
June 30, 1997
1997
<PAGE>
D O D G E & C O X
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Stock Fund
To Our Shareholders
- --------------------------------------------------------------------------------
During the second quarter, the Dodge & Cox Stock Fund achieved a total return of
15.4%, compared to 17.4% for the Standard & Poor's 500 Index (S&P 500) of common
stocks. Year to date, the Fund returned 18.3%, compared to 20.6% for the S&P
500. Average annual returns for longer time periods are listed on page three of
this report.
- --------------------------------------------------------------------------------
Mutual Fund Management at Dodge & Cox
Dodge & Cox began managing its first mutual fund in 1931, decades before the
explosive growth of the fund business experienced during the last ten years.
Our Balanced Fund has one of the longest track records in the industry--over
sixty five years. We introduced the Stock Fund in 1965 and, more recently, the
Income Fund in 1989.
Our business approach in mutual funds remains quite simple. We maintain low
operating expenses and focus on what we do best--independent fundamental
research and prudent investment of equity and fixed income assets with a long-
term time horizon. We purposely do not offer a multitude of services or niche
funds. We believe that our consistent investment philosophy and proven results
will appeal to a variety of investors.
- --------------------------------------------------------------------------------
Performance Overview
Holdings which performed well relative to the market during the quarter included
the Fund's investments in finance, electronics/computer, consumer products
(nondurables) and capital equipment stocks. Weak relative performers during the
quarter included a number of the Fund's holdings in the electric/gas utilities
and energy sectors.
As of June 30, the Fund's total net assets were approximately $3.3 billion. The
cash position was 12% on that date, up from 7% at the end of the first quarter.
Although we had raised cash levels slightly, a large subscription which took
place on the last day of the second quarter exaggerated the quarter-end cash
position of the Fund. We have since moved to invest this money.
High Valuations in the S&P 500
At year end we closed our letter with a word of caution that the high stock
returns of the recent past were unlikely to be repeated. With the ink barely
dry, the total return for our Stock Fund and the S&P 500 was 18.3% and 20.6%,
respectively, during the first six months of 1997. Humility is important in the
investment business. As we consider the potential for investment returns going
forward, however, our caution flag continues to wave.
Attractive values in equities are harder to find. The S&P 500, a broad-based,
unmanaged measure of common stocks, currently sells at over 20 times the last 12
months' earnings, which is a historically high level. A subset of the companies
in the index, primarily those with the largest market capitalizations, are at
extremely high valuations, in our opinion. The market values of these companies
compared to their revenues are near historic highs. Consequently, their stock
prices incorporate expectations of continued rapid revenue growth and sustained
high profitability. Perhaps their strong performance will continue. However, we
believe that, given their current valuations, these companies will have to
experience extraordinary growth in order to produce even a modest return for
their investors. We have chosen not to invest in these high valuation companies,
such as Intel, Microsoft, Coca Cola, and many of the large pharmaceutical
companies, whose prices reflect their past success. Consequently, your Stock
Fund portfolio has begun to diverge further from the S&P 500 over the past year
and a half. So far in 1997, the returns of the high valuation, large
capitalization companies have been a major factor in the strong S&P 500 returns,
and our decision not to invest in these companies has caused our investment
performance to lag the S&P 500 over this short time period. We have chosen to
look elsewhere for value. In the rest of this letter we will briefly describe
our rationale for our increased investment in three areas: the industrial
sector, non-U.S. companies, and electric utilities.
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1
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D O D G E & C O X
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Stock Fund
- --------------------------------------------------------------------------------
Opportunities Elsewhere
Approximately thirty percent of our equities are in the industrial area. Many
of these companies have historically depressed valuations, based on some
traditional valuation measures, due to uncertainties about continued U.S.
economic expansion. Although they are in cyclical businesses, the companies are
well financed, and their managements are pursuing strategies which we believe
are in the interests of the long-term shareholder.
In the past few years, our search for value has taken us beyond U.S. borders.
We have established positions in three Canadian companies. We have also bought
shares in two major Japanese multinationals, whose valuations were well below
those of comparable U.S. companies and remain so today. The non-U.S. portion of
our portfolio has grown over the past two years and is now 9% of the total.
Recently, we have increased our holdings in electric utilities. These
companies' investment performance in the past year and a half has trailed the
S&P 500 by a wide margin. Partly as a result, dividend yields in electric
utilities are high compared to the general market. As these companies adjust to
the realities of competition in electric power generation, we believe they
represent an attractive area in which to look for investment value.
Closing Note
In conclusion, we are always actively looking for attractive investments. The
prospects for long-term growth in the U.S. and the world economy, and for low
inflation, remain bright. However, stock prices in many areas are quite high,
and we will continue to avoid those areas that we believe are overvalued. In
doing so, we may forgo some short term gains in pursuit of our objective of
providing attractive relative long term results. Thank you for your continued
confidence in the Dodge & Cox Stock Fund. As always, we welcome your comments
and questions.
For the Board of Directors,
/s/ John A. Gunn
July 31, 1997 John A. Gunn, President
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2
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D O D G E & C O X
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Stock Fund
Objective The Fund's primary objective is to provide shareholders with an
opportunity for long-term growth of principal and income. A
secondary objective is to achieve a reasonable current income.
Strategy The Fund seeks to achieve these objectives by remaining fully
invested in well-established companies which, in the view of Dodge
& Cox, have positive earnings prospects not reflected in the
current price. Dodge & Cox makes a conscious effort to maintain
representation in major economic sectors and areas with strong
long-term profit potential. The strategy is based on a long-term
investment horizon and, as a result, portfolio turnover tends to
be low.
<TABLE>
<CAPTION>
20 Years of Investment Performance through June 30, 1997
- --------------------------------------------------------------------------------
Comparison of change in value of a $10,000 investment in the
Dodge & Cox Stock Fund and the S&P 500 Index
[LINE GRAPH APPEARS HERE]
Dodge & Cox S & P 500
Date Stock Fund Index
<S> <C> <C>
7/1/77 $10,000 $10,000
6/30/78 10,326 9,999
6/30/79 11,899 11,374
6/30/80 13,684 13,319
6/30/81 17,230 16,041
6/30/82 15,656 14,166
6/30/83 25,003 22,839
6/30/84 24,442 21,777
6/30/85 31,876 28,528
6/30/86 43,603 38,760
6/30/87 56,612 48,514
6/30/88 55,887 45,170
6/30/89 63,338 54,438
6/30/90 73,194 63,412
6/30/91 76,474 68,098
6/30/92 84,454 77,236
6/30/93 102,957 87,755
6/30/94 107,760 88,991
6/30/95 134,905 112,178
6/30/96 165,912 141,338
6/30/97 218,623 190,334
</TABLE>
<TABLE>
<CAPTION>
Average annual total return for
periods ended June 30, 1997 1 Year 5 Years 10 Years 20 Years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dodge & Cox Stock Fund 31.74% 20.94% 14.46% 16.68%
S&P 500 Index 34.67 19.77 14.65 15.87
</TABLE>
The chart covers the period from July 1, 1977 to June 30, 1997. It compares a
$10,000 investment made in the Dodge & Cox Stock Fund to a $10,000 investment
made in the Standard & Poor's 500 Stock (S&P 500) Index. The Fund's total
returns include the reinvestment of dividend and capital gain distributions. The
S&P 500 Index is a broad based, unmanaged measure of common stocks. Index
returns include dividends and, unlike Fund returns, do not reflect fees and
expenses. Past performance does not guarantee future results. Investment return
and share price will fluctuate with market conditions, and investors may have a
gain or a loss when shares are sold.
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3
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D O D G E & C O X
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Stock Fund
Fund Information June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
General Information
- --------------------------------------------------------------------------------
<S> <C>
Net Asset Value Per Share $93.14
Total Net Assets (millions) $3,326
1996 Expense Ratio 0.59%
1996 Portfolio Turnover 10%
Foreign Stocks* (as percentage of Fund) 9%
Quarterly Distribution To Shareholders
of Record 6/25/97 (per share): $0.34 Dividend
Fund Inception Date 1965
Investment Manager: Dodge & Cox, San Francisco. Managed by eight member
Investment Policy Committee, with members' average tenure at Dodge & Cox of 19
years.
</TABLE>
<TABLE>
<CAPTION>
Asset Allocation
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<S> <C>
Stocks 87.9%
Short-Term Investments 12.1%
</TABLE>
<TABLE>
<CAPTION>
Stock Characteristics
- --------------------------------------------------------------------------------
<S> <C>
Number of Stocks 75
Median Market Capitalization $10.2 billion
Price to Earnings Ratio (trailing twelve months) 20.3x
Price to Book Value (trailing twelve months) 3.0x
</TABLE>
<TABLE>
<CAPTION>
Ten Largest Stock Holdings % of Fund
- --------------------------------------------------------------------------------
<S> <C>
General Motors 2.8
Citicorp 2.3
American Express 2.2
Digital Equipment 2.2
International Business Machines 2.1
R.R. Donnelley & Sons 2.1
Union Pacific 2.0
Dow Chemical 1.9
Federal Express 1.9
Aluminum Co. of America 1.9
</TABLE>
<TABLE>
<CAPTION>
Ten Largest Sectors % of Fund
- --------------------------------------------------------------------------------
<S> <C>
Banking 9.0
Electronics & Computer 8.7
Energy 8.7
Consumer Durables 7.1
Retail & Distribution 6.8
Insurance & Financial Services 6.5
Consumer Products 6.5
Electric & Gas Utilities 5.5
Transportation 5.1
Paper & Forest Products 5.1
</TABLE>
* All U.S. Dollar Denominated.
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4
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D O D G E & C O X
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Stock Fund
<TABLE>
<CAPTION>
Portfolio of Investments June 30, 1997
------------------------------------------------------------------
SHARES MARKET VALUE
<C> <C> <S> <C>
COMMON CONSUMER: 23.9%
STOCKS: CONSUMER DURABLES: 7.1%
87.8% 1,663,000 General Motors Corp............... $ 92,608,313
1,380,000 Ford Motor Co..................... 52,095,000
896,300 Whirlpool Corp.................... 48,904,369
1,028,700 Masco Corp........................ 42,948,225
----------------
236,555,907
RETAIL AND DISTRIBUTION: 6.8%
1,166,100 Dayton Hudson Corp................ 62,021,944
4,630,000 Kmart Corp. +..................... 56,717,500
960,000 Nordstrom, Inc.................... 47,100,000
1,050,000 Dillard's, Inc. Class A........... 36,356,250
534,750 Genuine Parts Co.................. 18,114,656
320,000 Fleming Cos., Inc................. 5,760,000
----------------
226,070,350
CONSUMER PRODUCTS: 6.5%
545,000 Sony Corp. ADR.................... 47,960,000
188,000 Unilever NV....................... 40,984,000
157,200 Matsushita Electric, Inc. ADR..... 32,147,400
675,000 Bausch & Lomb, Inc................ 31,809,375
346,200 VF Corp........................... 29,340,450
675,000 James River Corp. of Virginia..... 24,975,000
174,500 Dole Food Co., Inc................ 7,459,875
----------------
214,676,100
MEDIA, PRINTING AND ENTERTAINMENT: 3.5%
1,875,000 R.R. Donnelley & Sons Co.......... 68,671,875
612,200 Dow Jones & Co.................... 24,602,787
478,000 Time Warner, Inc.................. 23,063,500
----------------
116,338,162
----------------
793,640,519
FINANCE: 15.5%
BANKING: 9.0%
642,000 Citicorp.......................... 77,401,125
748,400 Golden West Financial Corp........ 52,388,000
776,000 BankAmerica Corp.................. 50,100,500
440,000 Republic New York Corp............ 47,300,000
650,000 Norwest Corp...................... 36,562,500
690,000 Barnett Banks, Inc................ 36,225,000
----------------
299,977,125
INSURANCE AND FINANCIAL SERVICES: 6.5%
1,000,000 American Express Co............... 74,500,000
548,000 The St. Paul Cos., Inc............ 41,785,000
620,000 Chubb Corp........................ 41,462,500
158,000 General Re Corp................... 28,756,000
286,600 Loews Corp........................ 28,695,825
----------------
215,199,325
----------------
515,176,450
</TABLE>
See accompanying Notes to Financial Statements
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5
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D O D G E & C O X
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Stock Fund
<TABLE>
<CAPTION>
Portfolio of Investments June 30, 1997
------------------------------------------------------------------
SHARES MARKET VALUE
<C> <C> <S> <C>
COMMON BASIC INDUSTRY: 10.0%
STOCKS PAPER AND FOREST PRODUCTS: 5.1%
(Continued) 1,016,000 Weyerhaeuser Co................... $ 52,832,000
943,000 Champion International Corp....... 52,100,750
871,000 International Paper Co............ 42,297,937
620,000 Boise Cascade Corp................ 21,893,750
---------------
169,124,437
CHEMICALS: 3.0%
724,000 Dow Chemical Co................... 63,078,500
544,000 Nalco Chemical Co................. 21,012,000
370,000 Lubrizol Corp..................... 15,516,875
---------------
99,607,375
METALS AND MINING: 1.9%
830,000 Aluminum Co. of America........... 62,561,250
---------------
331,293,062
ELECTRONICS AND COMPUTER: 8.7%
2,052,000 Digital Equipment Corp. +......... 72,717,750
792,000 International Business Machines Corp. 71,428,500
761,400 Motorola, Inc..................... 57,866,400
813,000 Hewlett-Packard Co................ 45,528,000
358,000 Texas Instruments, Inc............ 30,094,375
908,400 Sybase, Inc. +.................... 13,455,675
---------------
291,090,700
ENERGY: 8.7%
1,060,700 Amerada Hess Corp................. 58,935,144
2,145,024 Union Pacific Resources Group, Inc. 53,357,472
1,016,000 Phillips Petroleum Co............. 44,450,000
684,000 Royal Dutch Petroleum Co.......... 37,192,500
453,000 Chevron Corp...................... 33,493,687
451,200 Western Atlas, Inc. +............. 33,050,400
491,300 Occidental Petroleum Corp......... 12,313,206
126,000 Mobil Corp........................ 8,804,250
116,000 Exxon Corp........................ 7,134,000
---------------
288,730,659
UTILITIES: 6.5%
ELECTRIC AND GAS UTILITIES: 5.5%
1,150,000 Texas Utilities Co................ 39,603,125
1,551,500 Central & South West Corp......... 32,969,375
711,900 FPL Group, Inc.................... 32,791,894
1,390,100 TransCanada PipeLines Ltd......... 27,975,763
709,600 Pacific Enterprises............... 23,860,300
869,000 Edison International.............. 21,616,375
131,400 Wisconsin Energy Corp............. 3,268,575
---------------
182,085,407
TELEPHONE: 1.0%
1,203,000 BCE, Inc.......................... 33,684,000
---------------
215,769,407
</TABLE>
See accompanying Notes to Financial Statements
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6
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D O D G E & C O X
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Stock Fund
<TABLE>
<CAPTION>
Portfolio of Investments June 30, 1997
------------------------------------------------------------------
SHARES MARKET VALUE
<C> <C> <S> <C>
COMMON TRANSPORTATION: 5.1%
STOCKS 964,900 Union Pacific Corp................ $ 68,025,450
(Continued) 1,083,600 Federal Express Corp.+............ 62,577,900
1,440,000 Canadian Pacific Ltd.............. 40,950,000
----------------
171,553,350
HEALTHCARE AND PHARMACEUTICAL: 3.0%
1,485,100 Pharmacia & Upjohn, Inc........... 51,607,225
300,000 SmithKline Beecham plc ADR........ 27,487,500
375,000 HealthCare COMPARE Corp.+......... 19,664,063
----------------
98,758,788
CAPITAL EQUIPMENT: 2.9%
953,900 Deere & Co........................ 52,345,262
418,000 Caterpillar, Inc.................. 44,882,750
----------------
97,228,012
DIVERSIFIED TECHNOLOGY: 2.5%
625,000 Corning, Inc...................... 34,765,625
390,000 Xerox Corp........................ 30,761,250
251,100 Raychem Corp...................... 18,675,562
----------------
84,202,437
MISCELLANEOUS: 1.0%
REAL ESTATE INVESTMENT TRUST: 1.0%
814,800 Meditrust......................... 32,490,150
----------------
Total Common Stocks
(cost $2,050,538,747)....... 2,919,933,534
----------------
PREFERRED CONSUMER: 0.1%
STOCKS: 64,100 Kmart Financing I, 7 3/4% Trust
0.1% Convertible Preferred........... 3,517,488
Total Preferred Stocks (cost ----------------
$3,205,000)................. 3,517,488
----------------
PAR VALUE
SHORT-
TERM $ 1,300,000 American Express Credit Corp.,
INVEST- Commercial Paper 5.50%,
MENTS: 7/1/1997........................ 1,300,000
8.6% 1,500,509 Eli Lilly & Co., Variable Demand
Note 5.09%...................... 1,500,509
10,903,927 General Mills, Inc., Variable
Demand Note 5.24%............... 10,903,927
10,088,572 Pitney Bowes Credit Corp.,
Variable Demand Note 5.25%...... 10,088,572
1,169,959 Portico Institutional
Money Market Fund............... 1,169,959
1,600,000 Sara Lee Corp., Variable Demand
Note 5.23%...................... 1,600,000
35,084,907 Warner Lambert Co., Variable
Demand Note 5.22%............... 35,084,907
2,080,258 Wisconsin Electric Power Corp.,
Variable Demand Note 5.29%...... 2,080,258
98,000,000 U.S. Treasury Bills 8/28/1997..... 97,235,431
30,000,000 U.S. Treasury Bills 9/25/1997..... 29,640,950
98,000,000 U.S. Treasury Bills 11/20/1997.... 96,009,002
----------------
Total Short-Term Investments
(cost $286,613,515)......... 286,613,515
----------------
TOTAL INVESTMENTS (cost $2,340,357,262).. 96.5% 3,210,064,537
OTHER ASSETS LESS LIABILITIES............ 3.5% 115,824,443
------ ----------------
TOTAL NET ASSETS......................... 100.0% $ 3,325,888,980
====== ================
</TABLE>
+ Non-income producing
See accompanying Notes to Financial Statements
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7
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D O D G E & C O X
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Stock Fund
<TABLE>
<CAPTION>
Statement of Assets and Liabilities June 30, 1997
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at market value (identified cost $2,340,357,262).... $3,210,064,537
Cash............................................................. 196,609,966
Dividends and interest receivable................................ 4,684,726
Receivable for investments sold.................................. 2,124,755
Prepaid expenses................................................. 128,245
--------------
3,413,612,229
--------------
LIABILITIES:
Payable for investments purchased................................ 78,718,548
Payable for Fund shares redeemed................................. 7,473,184
Management fees payable.......................................... 1,261,517
Accounts payable................................................. 270,000
--------------
87,723,249
--------------
NET ASSETS................................................... $3,325,888,980
==============
NET ASSETS CONSIST OF:
Paid in capital.................................................. $2,337,189,404
Accumulated undistributed net investment income.................. 919,796
Accumulated undistributed net realized gain on investments....... 118,072,505
Net unrealized appreciation on investments....................... 869,707,275
--------------
$3,325,888,980
==============
</TABLE>
Net asset value per share $93.14
Capital shares outstanding 35,707,514 (par value $1.00 each, authorized shares
50,000,000)
See accompanying Notes to Financial Statements
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8
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D O D G E & C O X
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Stock Fund
<TABLE>
<CAPTION>
Statement of Operations Six Months Ended June 30, 1997
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends.......................................................... $ 23,291,334
Interest........................................................... 5,673,664
------------
28,964,998
------------
EXPENSES:
Management fees (Note 2)........................................... 6,635,745
Custodian fees..................................................... 128,720
Transfer agent fees................................................ 492,396
Accounting and audit fees.......................................... 62,334
Legal fees......................................................... 1,083
Shareholder reports................................................ 134,842
S.E.C. and state registration fees................................. 202,551
Directors' fees.................................................... 7,000
Miscellaneous...................................................... 32,356
------------
7,697,027
------------
NET INVESTMENT INCOME.............................................. 21,267,971
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments................................. 118,072,505
Change in unrealized appreciation of investments................. 319,908,666
------------
Net realized and unrealized gain on investments............... 437,981,171
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $459,249,142
============
</TABLE>
See accompanying Notes to Financial Statements
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9
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D O D G E & C O X
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Stock Fund
<TABLE>
<CAPTION>
Statement of Changes in Net Assets Six Months Ended June 30,
- --------------------------------------------------------------------------------
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 21,267,971 $ 13,198,644
Net realized gain............................... 118,072,505 17,563,712
Net change in unrealized appreciation........... 319,908,666 99,188,336
-------------- --------------
Net increase in net assets from operations...... 459,249,142 129,950,692
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................... (20,560,861) (13,216,218)
Net realized gain............................... (15,393,103) (2,985,072)
-------------- --------------
Total distributions............................. (35,953,964) (16,201,290)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Amounts received from sale of shares............ 839,600,793 446,680,589
Net asset value of shares issued in reinvestment
of distributions.............................. 33,155,786 14,953,030
Amounts paid for shares redeemed................ (222,209,371) (109,345,117)
-------------- --------------
Net increase from capital share transactions.... 650,547,208 352,288,502
-------------- --------------
Total increase in net assets.................... 1,073,842,386 466,037,904
NET ASSETS:
Beginning of period............................. 2,252,046,594 1,227,927,343
-------------- --------------
End of period (including undistributed net
investment income of $919,796 and $340,583,
respectively)................................. $3,325,888,980 $1,693,965,247
============== ==============
Shares sold..................................... 9,733,209 6,221,180
Shares issued in reinvestment of distributions.. 389,010 205,370
Shares redeemed................................. (2,632,615) (1,536,811)
-------------- --------------
Net increase in shares outstanding.............. 7,489,604 4,889,739
============== ==============
</TABLE>
See accompanying Notes to Financial Statements
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D O D G E & C O X
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Stock Fund
Notes to Financial Statements
------------------------------------------------------------------
1 The Fund is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end investment company. The Fund
consistently follows accounting policies which are in conformity
with generally accepted accounting principles for investment
companies. Significant accounting policies are as follows: (a)
Security valuation: stocks are valued at the latest quoted sales
prices as of the close of the New York Stock Exchange or, if no
sale, then a representative price within the limits of the bid and
ask prices for the day; a security which is listed or traded on
more than one exchange is valued at the quotation on the exchange
determined to be the primary market for such security; securities
for which market quotations are not readily available are valued at
fair value as determined in good faith by or at the direction of
the Board of Directors; short-term securities are valued at
amortized cost or original cost plus accrued interest, both of
which approximate current value; all securities held by the Fund
are denominated in U.S. Dollars. (b) Security transactions are
accounted for on the trade date in the financial statements. (c)
Gains and losses on securities sold are determined on the basis of
identified cost. (d) Dividend income is recorded on the ex-dividend
date and interest income is recorded on the accrual basis. (e)
Distributions to shareholders of income and capital gains are
reflected in the net asset value per share computation on the ex-
dividend date. (f) No provision for Federal income taxes has been
included in the accompanying financial statements since the Fund
intends to distribute all of its taxable income and otherwise
continue to comply with requirements for regulated investment
companies.
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements.
Actual results could differ from those estimates.
2 Under a written agreement, the Fund pays an annual management fee
of 1/2 of 1% of the Fund's average daily net asset value to Dodge &
Cox, investment manager of the Fund. The agreement further provides
that Dodge & Cox shall waive its fee to the extent that such fee
plus all other expenses of the Fund exceed 3/4 of 1% of the average
daily net asset value for the year. All officers and four of the
directors of the Fund are officers and employees of Dodge & Cox.
Those directors who are not affiliated with Dodge & Cox receive
from the Fund an annual fee of $1,000 and an attendance fee of $500
for each Board or Committee meeting attended. The Fund does not pay
any other remuneration to its officers or directors.
3 For the six months ended June 30, 1997, purchases and sales of
securities, other than short-term securities, aggregated
$650,469,350 and $238,111,015, respectively. At June 30, 1997, the
cost of investments for Federal income tax purposes was equal to
the cost for financial reporting purposes. Net unrealized
appreciation aggregated $869,707,275, of which $880,010,492
represented appreciated securities and $10,303,217 represented
depreciated securities.
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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11
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D O D G E & C O X
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Stock Fund
<TABLE>
<CAPTION>
Financial Highlights
- --------------------------------------------------------------------------------
SELECTED DATA AND RATIOS (for a share outstanding throughout each period)
Six Months Ended
June 30, Year Ended December 31,
---------------- ------------------------------------------
1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $ 79.81 $67.83 $53.94 $53.23 $48.37 $44.85
Income from investment operations:
Net investment income ................................ .66 1.28 1.27 1.15 1.04 1.11
Net realized and unrealized gain ..................... 13.80 13.67 16.54 1.60 7.70 3.68
------- ------ ------ ------ ------ ------
Total from investment operations ..................... 14.46 14.95 17.81 2.75 8.74 4.79
------- ------ ------ ------ ------ ------
Distributions to shareholders from:
Net investment income ................................ (.64) (1.29) (1.26) (1.15) (1.04) (1.11)
Net realized gain .................................... (.49) (1.68) (2.66) (.89) (2.84) (.16)
------- ------ ------ ------ ------ ------
Total distributions .................................. (1.13) (2.97) (3.92) (2.04) (3.88) (1.27)
------- ------ ------ ------ ------ ------
Net asset value, end of period ....................... $ 93.14 $79.81 $67.83 $53.94 $53.23 $48.37
======= ====== ====== ====== ====== ======
Total return.......................................... 18.26% 22.26% 33.38% 5.16% 18.31% 10.82%
Ratios/supplemental data
Net assets, end of period (millions).................. $ 3,326 $2,252 $1,228 $ 543 $ 436 $ 336
Ratio of expenses to average net assets............... .58%* .59% .60% .61% .62% .64%
Ratio of net investment income to average net assets.. 1.60%* 1.79% 2.07% 2.16% 1.95% 2.43%
Portfolio turnover rate .............................. 10% 10% 13% 7% 15% 7%
Average commission rate paid ** ...................... $ .0492 $.0506
</TABLE>
* Annualized
** Represents average commission rate paid per share on securities transactions
for which commissions were charged. Disclosure is required by the S.E.C.
beginning in 1996.
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D O D G E & C O X
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Stock Fund
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D O D G E & C O X
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Stock Fund
General Information
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Investment Since 1930, Dodge & Cox has been providing professional
Manager investment management for individuals, Manager trustees,
corporations, pension and profit-sharing funds, and charitable
institutions. Dodge & Cox manages the Dodge & Cox Stock Fund,
the Dodge & Cox Balanced Fund and the Dodge & Cox Income Fund.
No-Load Fund Shares of the Fund are purchased and redeemed at net asset
value. There are no sales, redemption or Rule 12b-1 plan
distribution charges.
Gifts Fund shares provide a convenient method for making gifts to
children and to other family members. 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.
Automatic Shareholders may make regular monthly or quarterly investments
Investment Plan 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.
Reinvestment Shareholders may direct that dividend and capital gains
Plan distributions be reinvested in additional Fund shares.
The above plans are completely voluntary and involve no service
charge of any kind.
IRA Plan The Fund has an Individual Retirement Plan (IRA) available for
shareholders of the Fund.
Shareholder Fund literature and details on all of these Plans are available
Inquiries from the Fund upon request.
Dodge & Cox Stock Fund
c/o Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
(800) 621-3979
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