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DODGE & COX
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Income Fund
Established 1989
Quarterly Report
March 31, 1995
1995
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DODGE & COX
Income 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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Income 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: 19.5%
97.4% $14,000,000 U.S. Treasury Notes, 4 1/4%, 1995................................... $ 13,919,080
2,500,000 U.S. Treasury Notes, 6 1/2%, 1996................................... 2,492,175
8,200,000 U.S. Treasury Notes, 7 7/8%, 1996................................... 8,326,854
6,000,000 U.S. Treasury Notes, 9 1/8%, 1999................................... 6,442,500
3,650,000 U.S. Treasury Bonds, 14%, 2011, Callable 2006....................... 5,500,660
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36,681,269
FEDERAL AGENCY: 0.3%
645,000 Patriot II Shipping-Leo U.S. Govt. Gtd. Title XI, 8%, 2003.......... 653,869
FEDERAL AGENCY MORTGAGE PASS-THROUGH: 38.2%
196,246 Federal Home Loan Mtge. Corp. Group 54-1078, 6%, 2003............... 192,076
225,275 Federal Home Loan Mtge. Corp. Group 25-5222, 7%, 2003............... 221,871
3,456,035 Federal Home Loan Mtge. Corp. Group 25-6654, 8%, 2003............... 3,443,109
563,846 Federal Home Loan Mtge. Corp. Group 18-0233, 7%, 2006............... 553,274
390,374 Federal Home Loan Mtge. Corp. Group 26-0478, 7%, 2006............... 384,518
1,097,201 Federal Home Loan Mtge. Corp. Group 27-2784, 7 1/4%, 2008........... 1,080,480
304,321 Federal Home Loan Mtge. Corp. Group 53-0142, 7 1/2%, 2008........... 298,995
740,882 Federal Home Loan Mtge. Corp. Group 18-8028, 8%, 2008............... 741,808
631,386 Federal Home Loan Mtge. Corp. Group 18-9269, 8%, 2008............... 632,175
566,212 Federal Home Loan Mtge. Corp. Group 29-0537, 8%, 2009............... 565,504
1,198,903 Federal Home Loan Mtge. Corp. Group 29-2668, 8%, 2009............... 1,197,404
486,144 Federal Home Loan Mtge. Corp. Group 26-0671, 8 1/4%, 2009........... 489,182
478,143 Federal Home Loan Mtge. Corp. Group 53-4727, 6 1/2%, 2012........... 467,385
10,000,000 Federal Home Loan Mtge. Corp. Multi PC Series G-37 I, 6%, 2022...... 8,262,500
5,360,041 Federal Natl. Mtge. Assn. MBS Pool 57358, 6 1/4%, 2007.............. 5,131,596
10,469,018 Federal Natl. Mtge. Assn. MBS Pool 70255, 7 1/2%, 2007.............. 10,338,155
1,418,217 Federal Natl. Mtge. Assn. MBS Pool 478, 7 1/2%, 2011................ 1,404,035
2,822,513 Federal Natl. Mtge. Assn. MBS Pool 151777, 8%, 2012................. 2,826,041
897,031 Federal Natl. Mtge. Assn. MBS Pool 83014, 6 1/2%, 2013.............. 870,120
4,083,999 Federal Natl. Mtge. Assn. MBS Pool 260892, 8%, 2022................. 4,089,104
3,000,000 Federal Natl. Mtge. Assn. PC 1992-109-J, 7%, 2007................... 2,831,250
9,000,000 Federal Natl. Mtge. Assn. PC 1994-72-J, 6%, 2023 ................... 7,537,500
10,000,000 Veterans Affairs Vendee Mtge. Trust 1994-2-3F, 6 1/2%, 2015......... 8,700,000
10,000,000 Veterans Affairs Vendee Mtge. Trust 1995-1C 3E, 8%, 2018............ 9,850,000
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72,108,082
COLLATERALIZED MORTGAGE OBLIGATION: 0.6%
1,165,939 FBC Mtge. Sec. Trust IV-A2, 8.30%, 2009............................. 1,171,034
</TABLE>
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<CAPTION>
Portfolio of Investments March 31, 1995
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PAR VALUE MARKET VALUE
<C> <C> <S> <C>
BONDS FINANCE: 10.7%
(Continued) $ 2,207,211 Banamex Export Funding Corp. Coll. Notes Series K, 5.74%, 1997...... $ 2,168,585
3,960,000 Bank of Boston Subordinated Notes 6 5/8%, 2004...................... 3,572,672
1,450,000 Barclays North American Capital Corp. Notes 9 3/4%, 2021,
Callable 2001....................................................... 1,589,563
1,000,000 CIGNA Corp. Debentures 7.65%, 2023.................................. 821,250
750,000 Export Finance Corp. Coll. MTN Series I, 8.16%, 1996 ............... 756,563
1,955,000 First Nationwide Bank Subordinated Debentures 10%, 2006 ............ 2,020,981
4,300,000 GMAC Put Bonds 8 7/8%, 2010, Putable 1995/2000/2005................. 4,660,125
4,500,000 ITT Hartford Group Notes 8.30%, 2001................................ 4,594,500
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20,184,239
INDUSTRIAL: 10.1%
2,000,000 Caterpillar, Inc. Debentures 8%, 2023............................... 1,970,080
2,650,000 Dayton-Hudson Corp. Debentures 9%, 2021............................. 2,834,997
2,850,000 Dayton-Hudson Corp. Debentures 8 7/8%, 2022 ........................ 3,008,831
3,000,000 Ford Holdings, Inc. Debentures 9 3/8%, 2020......................... 3,333,750
4,500,000 Time Warner Entertainment Senior Debentures 8 3/8%, 2033............ 3,952,800
2,500,000 Union Camp Corp. Debentures 9 1/4%, 2011............................ 2,756,250
1,250,000 Union Oil California Senior Notes 9 5/8%, 1995...................... 1,253,375
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19,110,083
INTERNATIONAL AGENCY: 6.0%
3,250,000 European Investment Bank Bonds 10 1/8%, 2000........................ 3,644,063
2,050,000 European Investment Bank Bonds 9 1/8%, 2002......................... 2,237,063
6,000,000 Inter-American Development Bank
Debentures 7 1/8%, 2023, Callable 2003............................. 5,394,000
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11,275,126
TRANSPORTATION: 5.8%
2,590,000 AMR Corp. Debentures 9.88%, 2020.................................... 2,696,838
3,650,000 AMR Corp. Debentures 9 3/4%, 2021................................... 3,761,435
2,500,000 Consolidated Rail Corp. Debentures 9 3/4%, 2020..................... 2,902,100
400,000 Norfolk & Western Railroad Equipment Trust Certificate
10 1/8%, 2000...................................................... 442,252
1,000,000 Seaboard Coast Line Railroad Equipment Trust Certificate
11 1/4%, 1999...................................................... 1,123,750
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10,926,375
CANADIAN: 5.3%
4,100,000 Canadian Pacific Ltd. Debentures 9.45%, 2021........................ 4,576,625
5,000,000 Hydro-Quebec Debentures 9 1/2%, 2030................................ 5,463,750
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10,040,375
PUBLIC UTILITIES: 0.9%
1,500,000 Idaho Power Co. 1st Mortgage Bonds 9 1/2%, 2021, Callable 2001...... 1,631,250
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TOTAL BONDS (cost $183,652,714)............................. 183,781,702
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</TABLE>
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<TABLE>
<CAPTION>
Portfolio of Investments March 31, 1995
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PAR VALUE MARKET VALUE
<C> <C> <S> <C>
SHORT-TERM $ 685,851 Barclays American, Variable Demand Note 5.73%, 1995................ $ 685,851
INVESTMENTS: 1,056,254 Pitney Bowes Credit Corp., Variable Demand Note 5.73%, 1995........ 1,056,254
0.9% ------------
TOTAL SHORT-TERM INVESTMENTS (cost $1,742,105)............. 1,742,105
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TOTAL INVESTMENTS (cost $185,394,819)................. 98.3% 185,523,807
OTHER ASSETS LESS LIABILITIES......................... 1.7 3,216,601
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TOTAL NET ASSETS...................................... 100.0% $188,740,408
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Capital shares outstanding 16,956,074 NET ASSET VALUE PER SHARE $11.13
(par value $.01 each)
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Income Fund
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Condensed Statement of Operations
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For the Three Months Ended March 31, 1995
<S> <C>
Investment income................................................................... $3,830,766
Expenses............................................................................ 266,856
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Net investment income............................................................... $3,563,910
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Net realized loss from security transactions (based on identified cost)............. $ (890,149)
Change in unrealized appreciation (depreciation) of investments..................... 7,977,914
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Net realized and unrealized gain (loss) on investments.............................. $7,087,765
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30 day yield for the period ended March 31, 1995.............. 7.35%
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<CAPTION>
Condensed Financial Information
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Net Asset Value Per Share Distributions Per Share
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Year Ended Capital
December 31 Net Assets Actual Adjusted* Income Gains
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<S> <C> <C> <C> <C> <C>
1989 $ 32,762,573 $10.68 $10.69 $ .69 $.01
1990 52,086,033 10.61 10.63 .81 .01
1991 96,219,763 11.59 11.65 .82 .03
1992 136,261,902 11.55 11.70 .82 .09
1993 180,032,487 11.89 12.21 .78 .17
1994 195,373,985 10.74 11.07 .76 .05
1995 (3/31) 188,740,408 11.13 11.48 .20** --
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$4.88 $.36
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* Adjusted for assumed reinvestment of capital gains
distributions.
** A distribution of $.20 per share from net investment
income was paid March 20, 1995 to shareholders of
record March 15, 1995.
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<CAPTION>
6.25 Years
Average annual total return for periods ended March 31, 1995 1 Year 5 Years (Since inception)
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<S> <C> <C> <C>
Dodge & Cox Income Fund 4.94% 9.60% 9.64%
Lehman Bros. Aggregate Bond Index 4.99 8.90 9.27
</TABLE>
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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Income Fund
Officers and Directors
----------------------------------------------
A. Horton Shapiro, President and Director
Senior Vice-President, Dodge & Cox
John A. Gunn, Vice President and Director
President, Dodge & Cox
W. Timothy Ryan, Secretary-Treasurer
and Director
Senior Vice-President, Dodge & Cox
Dana M. Emery, Assistant
Secretary-Treasurer and Director
Vice-President, Dodge & Cox
Max Gutierrez, Jr., Director
Partner, Brobeck, Phleger & Harrison,
Attorneys
Robert C. Harris, Director
Of Counsel to Heller, Ehrman, White &
McAuliffe, Attorneys
Frank H. Roberts, Director
Retired Partner, Pillsbury, Madison & Sutro,
Attorneys
John B. Taylor, Director
Professor of Economics, Stanford University
Will C. Wood, Director
Principal, Kentwood Associates, Financial
Advisers
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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
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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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Income Fund
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Income Fund
General Information
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DODGE & COX The Fund enables investors to obtain the benefits
INCOME FUND of experienced and continuous investment supervision.
The Fund is invested in a diversified portfolio of
fixed-income securities with the primary objective of
providing shareholders with a high and stable rate of
current income consistent with long-term preservation
of capital.
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 Balanced Fund and
the Dodge & Cox Stock 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 Income 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 INCOME FUND
c/o Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Telephone (800) 621-3979
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