You could lose money by investing in the Fund, and the Fund could underperform other investments. You should expect the Fund's share price and total return to fluctuate within a wide range. The Funds's performance could be hurt by:
- Equity risk. Equity securities can be volatile and may decline in
value because of changes in the actual or perceived financial
condition of their issuers or other events affecting their issuers.
- Market risk. Investment prices may increase or decrease,
sometimes suddenly and unpredictably, due to general market
conditions. Local, regional or global events such as war, acts of
terrorism, the spread of infectious illness or other public health
issue, recessions, or other events could also have a significant
impact on the Fund and its investments and potentially increase
the risks described herein.
- Manager risk. Dodge & Cox’s opinion about the intrinsic worth or
creditworthiness of a company or security may be incorrect or the
market may continue to undervalue the company or security.
Depending on market conditions, Dodge & Cox’s investing style
may perform better or worse than portfolios with a different
investment style. Dodge & Cox may not make timely purchases or
sales of securities for the Fund. The Fund may underperform the
broad markets, relevant indices, or other funds with similar
objectives and investment strategies. Financial models used by
the Fund to help identify potential investments may not
adequately account for all relevant factors, may rely on inaccurate
data inputs or assumptions or may contain design flaws which
could negatively impact the Fund’s performance.
- Emerging markets risk. Emerging market securities may present
issuer, market, currency, liquidity, volatility, valuation, legal,
political, and other risks different from, and potentially greater
than, the risks of investing in securities of issuers in more
developed markets. Emerging markets may have less established
legal, accounting and financial reporting systems than those in
more developed markets, which may reduce the scope or quality
of financial information available to investors. Governments in
emerging market countries may be less stable and more likely to
take extra-legal action with respect to companies, industries,
assets, or foreign ownership than those in more developed
markets. Moreover, it may be more difficult for shareholders to
bring derivative litigation or for U.S. regulators to bring
enforcement actions against issuers in emerging markets.
Because the Fund focuses its investments in emerging market
securities, it may have a limited ability to mitigate losses in an
environment that is adverse to emerging market securities in
general. Emerging market securities may also be more volatile,
more difficult to value, and have lower overall liquidity than
securities economically tied to U.S. or developed non-U.S.
issuers.
- Frontier market risk. Frontier markets generally have smaller
economies and less mature capital markets than emerging
markets. As a result, the risks associated with investing in
emerging market countries are magnified in frontier markets.
Frontier markets are more susceptible to abrupt changes in
currency values, have less mature settlement practices, and can
have lower trading volumes that can lead to more price volatility
and lower liquidity.
- Non-U.S. investment risk. Securities of non-U.S. issuers
(including ADRs, ADSs, GDRs and other securities that represent
interests in a non-U.S. issuer’s securities) may be more volatile,
harder to value, and have lower overall liquidity than U.S.
securities. Non-U.S. issuers may be subject to political,
economic, or market instability, or unfavorable government action
in their local jurisdictions or economic sanctions or other
restrictions imposed by U.S. or foreign regulators. There may be
less information publicly available about non-U.S. issuers and
their securities, and those issuers may be subject to lower levels
of government regulation and oversight. Non-U.S. stock markets
may decline due to conditions specific to an individual country,
including unfavorable economic conditions relative to the United
States. The Fund generally holds non-U.S. securities and cash in
foreign banks and securities depositories, which may be recently
organized or new to the foreign custody business and may be
subject to only limited or no regulatory oversight. There may be
increased risk of delayed transaction settlement. These risks may
be higher when investing in emerging and frontier markets.
Certain of these elevated risks may also apply to securities of
U.S. issuers with significant non-U.S. operations.
- Non-U.S. currency risk. Non-U.S. currencies may decline relative
to the U.S. dollar, which reduces the unhedged value of securities
denominated in or otherwise exposed to those currencies.
Dodge & Cox may not hedge or may not be successful in hedging
the Fund’s currency exposure. Dodge & Cox may not be able to
determine accurately the extent to which a security or its issuer is
exposed to currency risk. Emerging and frontier market
currencies may be more volatile than currencies of more
developed countries.
- China investment risk. Investments in Chinese securities may be
more vulnerable to political and economic risks than investments
in securities from other countries. The Chinese government has
historically exercised substantial control over China’s economy
and financial markets. Although economic reforms have recently
liberalized trade policy and reduced government control, changes
in these policies could adversely affect Chinese companies or
investments in those companies. Changes in government policy
could also substantially affect the value of China’s currency
relative to the U.S. dollar. The Chinese economy is highly
dependent on exporting products and services and could
experience a significant slowdown if there is a reduction in global
demand for Chinese exports or as the result of trade tensions
with the United States or other key trading partners.
- Geographic risk. From time to time the Fund may invest a
substantial amount of its assets in issuers located in a single
country or a limited number of countries. If the Fund focuses its
investments in this manner, risks relating to economic, political
and social conditions in those countries will have a significant
impact on its investment performance. The Fund’s investment
performance may be more volatile if it focuses its investments in
certain countries, especially emerging market or frontier market
countries.
- Liquidity risk. The Fund may not be able to purchase or sell a
security in a timely manner or at desired prices or achieve its
desired weighting in a security. Liquidity risk may be greater in
emerging and frontier markets than in more developed markets.
- Small-Cap Securities Risk. Small cap companies may be more
volatile and subject to greater short term risk than larger, more
established companies. They are likely to be less liquid than
companies with larger market capitalizations, which could affect
the overall liquidity of the Fund’s portfolio. In addition, smaller
companies may have limited product lines or markets, be less
financially secure, and depend on a more limited management group than larger companies. It may also be difficult to evaluate
the potential for long-term growth of smaller companies.
- Derivatives risk. Investing with derivatives, such as equity futures,
options and swaps; and currency forwards, swaps, and futures, involves risks additional to and possibly greater than those
associated with investing directly in securities. The Fund’s use of derivatives may result in losses to the Fund, a reduction in the
Fund’s returns and/or increased volatility. Derivative transactions can create leverage, which means adverse changes in the value
of the underlying asset or indicator could cause the Fund to lose substantially more than the amount of assets initially invested in
the derivative itself. The value of a derivative may not correlate to the value of the underlying asset or indicator to the extent expected. Derivatives can be difficult to value. The Fund may not
be able to close a derivatives position at an advantageous time or price. For over-the-counter derivatives transactions, the counterparty may be unable or unwilling to make required
payments and deliveries, especially during times of financial market distress. Derivative positions may create margin requirements, and if the Fund has insufficient cash on hand to meet such requirements, it may have to sell securities from its portfolio at a time when it may be disadvantageous to do so. The treatment of derivatives under securities and tax laws may be less certain than it is for other types of investments. Changes in regulation relating to the use of derivatives may make derivatives
more costly, limit the availability of derivatives, or otherwise adversely affect the value or performance of derivatives and the Fund.
- Large investor transaction risk. Ownership of shares of the Fund
may be concentrated in one or a few large investors. Such
investors may redeem shares in large quantities or on a frequent
basis. Redemptions by a large investor may affect the
performance of the Fund, may increase realized capital gains,
may accelerate the realization of taxable income to shareholders
and may increase transaction costs. These transactions
potentially limit the use of any capital loss carryforwards and
certain other losses to offset future realized capital gains (if any).
Such transactions may also increase the Fund’s expenses. In
addition, the Fund may be delayed in investing new cash after a
large shareholder purchase, and under such circumstances may
be required to maintain a larger cash position than it ordinarily
would.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
There are further risk factors described elsewhere in the prospectus and in the SAI.
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