Dodge & Cox has
established a Pricing Committee that is comprised of representatives from Treasury, Legal, Compliance, and Operations. The Pricing Committee is responsible for implementing the Valuation Policies, including determining the fair value of securities and other investments when necessary. In doing so, the Pricing Committee employs various methods for calibrating fair valuation approaches, including a regular review of key inputs and assumptions, back-testing, and review of any related market activity.

What are the rights you will receive when you buy the preferred stock?

Preferred stock usually carries no voting rights, but may carry a dividend and may have priority over common stock in the payment of dividends and upon liquidation. Terms of the preferred stock are stated in a "Certificate of Designation".

Through preferred stock, financial institutions are able to gain leverage while receiving Tier 1 equity credit. Emerging market issuers include those located in emerging market countries and those determined by Dodge & Cox to have significant economic exposure to emerging market countries. For purposes of its 80% investment policy, Dodge & Cox will consider all countries that are not part of the MSCI Developed Market Indexes (including both emerging markets and frontier markets countries) to be emerging market countries. The Fund may use derivatives, such as futures, options, and swaps either to create exposure to equity securities or to hedge against exposure created by its other investments. The Fund may gain exposure to emerging market issuers by investing in exchange-traded funds (“ETFs”).

Statement of Additional Information (SAI)

Preferred stock dividend payments are not fixed and can change or be stopped. However, these payments are often taxed at a lower rate than bond interest. In addition, bonds often have a term that mature after a certain amount of time. Secondly, preferred stock typically do not share in the price appreciation (or depreciation) to the same degree as common stock. The inherent value of preferred stock is the ongoing cash proceeds investors received.

However, during rapidly changing economic, market, and political conditions, portfolio turnover may be higher than in a more stable period. The Fund will distribute substantially all of its income and capital gains to its shareholders every year. You will be taxed on dividends you receive from the Fund as ordinary income and/or capital gains unless you hold your Fund shares in a tax-deferred retirement account, such as an IRA, or are otherwise tax exempt in which case you will generally be taxed only upon withdrawal of monies from the retirement account.

Other features or rights

An illiquid instrument is harder to value because there may be little or no market data available based on purchases or sales of the instrument. Depositary receipts, including American Depositary Receipts, Global Depositary Receipts, European Depositary Receipts, and similar instruments are certificates evidencing ownership of securities of a foreign issuer. The certificates are issued by depositary banks and the underlying securities are held in trust by a custodian bank or similar institution.

when preferred stock carries a redemption privilege the shareholders may

The redemption feature allows an issuer to eliminate excessively expensive equity, which reduces its cost of capital. The feature may also be beneficial to investors, if the issuer must pay a call premium when it buys back stock. The above list (which includes several customary rights) is not comprehensive; preferred shares (like other legal arrangements) may specify nearly any right conceivable. Preferred shares in the U.S. normally carry a call provision,[9] enabling the issuing corporation to repurchase the share at its (usually limited) discretion. The holder of the equity shares are the real owners of the company, i.e. the amount of shares held by them is the portion of their ownership in the company.

Investment Information and Shareholder Services

Financial Intermediaries In general, it is the Fund’s expectation that each financial intermediary will enforce either the Fund’s or its own excessive trading policy. As a general matter, the Fund does not directly monitor the trading activity of beneficial owners of the Fund’s shares who hold those shares through third- party 401(k) and other group retirement plans and other omnibus arrangements maintained by financial intermediaries. Depending on the portion of Fund shares held through such financial intermediaries, excessive trading through financial intermediaries could adversely affect Fund shareholders. Fund shareholders who invest through Financial Intermediaries should contact the financial intermediary regarding its excessive trading policies, which may impose different standards and consequences for excessive trading. Under normal conditions, the Fund typically expects to meet shareholder redemptions by monitoring the Fund’s portfolio and redemption activities and by regularly holding a reserve of highly liquid assets, such as cash or cash equivalents.

when preferred stock carries a redemption privilege the shareholders may

Some corporations contain provisions in their charters authorizing the issuance of preferred stock whose terms and conditions may be determined by the board of directors when issued. These “blank checks” are often used as a takeover defense; they may be assigned very high liquidation value (which must be redeemed in the event of a change of control), or may have great super-voting powers. Preference shares, also known as preferred shares, are a type of security that offers characteristics similar to both common shares and a fixed-income security. The holders of preference shares are typically given priority when it comes to any dividends that the company pays. In exchange, preference shares often do not enjoy the same level of voting rights or upside participation as common shares.

Preferred shares usually do not carry voting rights, although under some agreements these rights may revert to shareholders that have not received their dividend. Preference Shares, as its name suggests, gets precedence over equity shares on the matters like distribution of dividend at a fixed rate and repayment of capital in the event of liquidation of the company. Most stocks you hear about are common stocks, which represent partial ownership in a company and include voting rights. Foreign Shareholders Shareholders other than U.S. persons may be subject to a different U.S. federal income tax treatment, including withholding tax at the rate of 30% on amounts treated as ordinary dividends from the Fund, as discussed in more detail in the SAI. Some securities may be listed on foreign exchanges that are open on days (such as U.S. holidays) when the Fund does not calculate their NAVs.

when preferred stock carries a redemption privilege the shareholders may