Offhand, this seems to be a no-nonsense report. The contingencies inherent in connections with other service-providers are not whitewashed, but are left to the reader to estimate. I especially liked this sentence:

"We have also implemented a universal date routine that will correctly perform all calculations for dates from 1/1/1583 to 12/31/9999." [italics mine] Taking the long view, they are.

From DODGE & COX PREPARES FOR THE YEAR 2000

As of February 12, 1999

This information is in response to shareholder questions about how Dodge & Cox is working to ensure that our computer systems and those of our service providers will continue to operate in the year 2000.

What is the "Year 2000" issue?

Computers use dates in calculations. Many software programs were written using two digits for the year (e.g. 98), rather than four digits (e.g. 1998). Previously, these systems have automatically assumed that the first two digits of a year are "19." Unchanged systems would now assume an infant born on January 2, 2000 to be 100 years old at birth, and a credit card bill due on the same day 100 years overdue.

Known as "Y2K" or the "millennium bug," this problem is inherent in billions of lines of computer programming. The software and hardware of systems spanning all industries could be potentially affected. Global financial institutions, air traffic systems, defense networks and life support equipment are just some of the areas this problem could disrupt. The Y2K challenge is particularly complex for the financial services industry, which is heavily dependent on technology for operations that rely on date-sensitive calculations. Automatic deposits, retirement benefits, stock trade settlements and other financial transactions are all affected.

How have the Dodge & Cox Funds prepared for the Year 2000?

Dodge & Cox shares your concern about Year 2000 and recognizes the seriousness and importance of this issue. The Year 2000 effort is coordinated through the Dodge & Cox Operations Committee, including periodic reports to the Dodge & Cox Management Committee and to the Board of Trustees of the Dodge & Cox Funds. The day-to-day operations of the Dodge & Cox Funds are dependent on three key service providers: Dodge & Cox, the Funds' investment manager; Boston Financial Data Services Inc., the transfer agent; and State Street Bank and Trust Company, the custodian and Fund accountant.

Dodge & Cox. As of January 1999, all of the necessary updates and testing to our Portfolio Accounting System have been completed. There are several methods of addressing the Year 2000 problem. Dodge & Cox has chosen to change all programs and data base files to conform to the ISO standard format (YYYYMMDD). We have also implemented a universal date routine that will correctly perform all calculations for dates from 1/1/1583 to 12/31/9999. This project proved to be less problematic than might have been expected, as Dodge & Cox has held bonds with 30-year and longer maturities for years, and, as a result, a significant portion of our system was already Year 2000 compliant.

We are also reviewing and upgrading as appropriate the infrastructure that supports our organization. This includes all building services (HVAC, elevators and life support systems), and network and communications services.

Dodge & Cox is also dependent upon other institutions within the financial services industry. Dodge & Cox will continue to validate its systems as other organizations bring their applications into compliance and set up testing facilities. We are monitoring progress/certifications of third parties that provide data and applications to Dodge & Cox, and are now formulating contingency plans should any of our vendors fail in their Y2K efforts.

As investment managers, we review information on the Y2K progress of the companies whose securities are owned by the Funds. There is widespread awareness of the issue and it appears that the companies are attempting to resolve the problem. At this time, no companies have admitted to any significant Year 2000 problems. However, as companies are not providing investors with detailed information regarding this problem, it is nearly impossible to discern which companies are furthest along in resolving Year 2000 issues.

In addition to Dodge & Cox, the Dodge & Cox Funds are dependent on the following service providers. Each of these organizations has reported that they have substantially completed Year 2000 readiness remediation of their systems and will continue testing throughout 1999. We will continue to closely monitor the Y2K status of the service providers. You may find more detailed information on their efforts by clicking the highlighted names below.

Boston Financial Data Services (BFDS) is the Dodge & Cox Funds' transfer agent. As the Funds' transfer agent, BFDS is responsible for maintaining shareholder records, processing shareholder transactions and issuing shareholder account statements.

State Street Bank and Trust Company is the custodian and fund accountant for the Dodge & Cox Funds. As the Funds' custodian, State Street Bank and Trust Company keeps custody of the various stocks and fixed-income securities held in the Dodge & Cox Funds. As the Funds' accountant, State Street Bank and Trust Company is responsible for calculating the net asset value for each of the Funds.

-- Tom Carey (tomcarey@mindspring.com), March 01, 1999

Answers

Formatting off.

-- Tom Carey (tomcarey@mindspring.com), March 01, 1999.

Tom,

It is this paragraph:

"As investment managers, we review information on the Y2K progress of the companies whose securities are owned by the Funds. There is widespread awareness of the issue and it appears that the companies are attempting to resolve the problem. At this time, no companies have admitted to any significant Year 2000 problems. However, as companies are not providing investors with detailed information regarding this problem, it is nearly impossible to discern which companies are furthest along in resolving Year 2000 issues."

that made me get out of the stock market while it was high last spring!

-- mutuals free (no more@stocks.com), March 02, 1999.

I heard that. But at least this bunch is up front on what they don't know.

-- Tom Carey (tomcarey@mindspring.com), March 02, 1999.