The Fund invests in a diversified portfolio of bonds and other debt
instruments of issuers from at least three different countries, which
may include emerging market countries. The Fund is not required to
allocate its investments in set percentages to particular countries
and may invest in emerging markets without limit. Under normal
circumstances, the Fund invests at least 40% of its total assets in
securities of non-U.S. issuers and at least 80% of its total assets in
debt instruments, which may, in each case, be represented by
derivatives such as forward contracts, futures contracts, or swap
agreements. Debt instruments in which the Fund may invest
include, but are not limited to, government and government-related
obligations, mortgage- and asset-backed securities, corporate and
municipal bonds, and other fixed and floating rate instruments. The
Fund invests in both U.S. dollar-denominated and non-U.S. dollardenominated
debt instruments.
The Fund invests primarily in investment-grade debt instruments
(instruments rated Baa3 or higher by Moody's Investors Service
("Moody's"), BBB- or higher by Standard & Poor's Global Ratings
(“S&P”) or Fitch Ratings ("Fitch"), or equivalently rated by any
nationally recognized statistical rating organization ("NRSRO"), or, if
unrated, deemed to be of investment-grade quality by Dodge & Cox).
Up to 20% of the Fund's total assets may be invested in debt
securities rated below investment grade, commonly referred to as
high-yield or "junk" bonds.
The Fund may buy or sell non-U.S. currencies and may enter
into various currency or interest rate-related transactions involving
derivative instruments, including forward contracts, futures
contracts, and swap agreements. The Fund may use derivatives to
seek to minimize the impact of losses to one or more of its
investments (as a "hedging technique") or to implement its
investment strategy. For example, the Fund may invest in derivative
instruments that create exposure to a specific security or market
sector as a substitute for a direct investment in the security or
sector itself or to benefit from changes in the relative values of
selected currencies. The Fund may use interest rate derivatives for
a variety of purposes, including, but not limited to, managing the
Fund's duration or adjusting the Fund';s exposure to debt securities
with different maturities.
In selecting securities, Dodge & Cox considers many factors,
including, without limitation, yield, structure, covenants, credit
quality, liquidity, call risk, duration, and capital appreciation
potential. For all securities that are denominated in a foreign
currency, Dodge & Cox analyzes whether to accept or hedge the
associated interest rate and currency risks. Dodge & Cox considers,
among other things, a country's economic outlook and political
stability, the protections provided to foreign investors, relative
interest rates, exchange rates, a country's monetary and fiscal
policies, its debt stock, and its ability to meet its funding needs.
The Fund may purchase or sell holdings for a variety of reasons
such as to alter sector, geographic, or currency exposure or to shift
the overall portfolio's risk profile. The proportions of the Fund's assets held in various debt instruments will be revised in light of
Dodge & Cox's appraisal of the global economy, the relative yields of
securities in the various market sectors and countries, the potential
for a currency’s appreciation, the investment prospects for issuers,
the countries’ domestic and political conditions, and other factors.