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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. _____
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Post-Effective Amendment No. 33 File No. 2-73948 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 34 File No. 811-3258 X
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DFA INVESTMENT DIMENSIONS GROUP INC.
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(Exact Name of Registrant as Specified in Charter)
1299 Ocean Avenue, 11th Floor, Santa Monica CA 90401
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(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code (310) 395-8005
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Irene R. Diamant, Vice President and Secretary, DFA Investment
Dimensions Group Inc.,
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401
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(Name and Address of Agent for Service)
Copies of communications to Stephen W. Kline, Esquire, Stradley, Ronon,
Stevens & Young, Great Valley Corporate Center, 30 Valley Stream Parkway,
Malvern, PA 19355, (215) 640-5801.
It is proposed that this filing will become effective
(check appropriate box):
_____ Immediately upon filing pursuant to paragraph (b)
_____ On (date) pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ On (date) pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
X On September 7, 1995 pursuant to paragraph (a)(2) of
----- Rule 485.
This Registrant has registered an indefinite number of shares of common
stock under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940. On January 26, 1995, Registrant filed a
Rule 24f-2 Notice for Registrant's most recent fiscal year which ended
November 30, 1994.
<PAGE>
FORM N-1A
CROSS REFERENCE SHEET
(as required by Rule 404)
FORM N-1A PART A ITEM NO. PROSPECTUS LOCATION
Item 1. Cover Page......................... Cover Page
Item 2. Synopsis........................... Highlights
Item 3. Condensed Financial Information.... Not Applicable
Item 4. General Description of Registrant.. Cover Page;
Highlights; General
Information
Item 5. Management of the Fund............. Highlights;
Management of the
Fund
Item 6. Capital Stock and Other Securities. Highlights;
Dividends, Capital
Gains Distributions
and Taxes; General
Information
Item 7. Purchase of Securities Being
Offered............................ Purchase and
Redemption of
Shares
Item 8. Redemption or Repurchase........... Purchase and
Redemption of
Shares
Item 9. Pending Legal Proceedings.......... Not Applicable
FORM N-1A PART B ITEM NO. LOCATION IN
STATEMENT OF
ADDITIONAL
INFORMATION
Item 10. Cover Page......................... Cover Page
Item 11. Table of Contents.................. Table of Contents
Item 12. General Information and History.... Other Information
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Item 13. Investment Objectives and Policies. Portfolio
Characteristics and
Policies;
Investment
Limitations;
Futures Contracts
Item 14. Management of the Fund.............. Directors and
Officers
Item 15. Control Persons and Principal
Holders of Securities.............. Principal Holders
of Securities
Item 16. Investment Advisory and Other
Services........................... Directors and
Officers;
Administrative
Services; Other
Information
Item 17. Brokerage Allocation and Other
Practices.......................... Brokerage
Transactions
Item 18. Capital Stock and Other Securities. Other Information
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered........ Purchase and
Redemption of
Shares
Item 20. Tax Status......................... Federal Tax
Treatment of
Futures Contracts
Item 21. Underwriters....................... Not Applicable
Item 22. Calculation of Performance Data.... Calculation of
Performance Data
Item 23. Financial Statements............... Not Applicable
FORM N-1A PART C ITEM NO. LOCATION IN PART C
Item 24. Financial Statements and Exhibits.. Exhibits
Item 25. Persons Controlled by or Under
Common Control with Registrant..... Persons Controlled
by or Under Common
Control with
Registrant
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Item 26. Number of Holders of Securities.... Number of Holders
of Securities
Item 27. Indemnification.................... Indemnification
Item 28. Business and Other Connections of
Investment Advisor................. Business and
Connections of
Investment Advisor
and Subadvisors
Item 29. Principal Underwriters............. Principal
Underwriters
Item 30. Location of Accounts and Records... Location of
Accounts and
Records
Item 31. Management Services................ Management Services
Item 32. Undertakings....................... Undertakings
<PAGE>
This Post-Effective Amendment No. 33 under the Securities Act of 1933
includes a prospectus and statement of additional information that do not
relate to the prospectus and statement of additional information filed
with Post-Effective Amendment No. 32 on March 9, 1995 with the Commission.
<PAGE>
PROSPECTUS
SEPTEMBER __, 1995
DFA INVESTMENT DIMENSIONS GROUP INC.
DFA INVESTMENT DIMENSIONS GROUP INC. (the "Fund"), 1299 Ocean Avenue,
11th Floor, Santa Monica, California 90401, (310) 395-8005, is an
open-end management investment company.
The Fund issues twenty-four series of shares, each of which
represents a separate class of the Fund's common stock, having its own
investment objective and policies. This prospectus describes only VA
Small Value Portfolio, VA Large Value Portfolio, VA International Value
Portfolio, VA International Small Portfolio, VA Short-Term Fixed Portfolio
and VA Global Bond Portfolio (individually, a "Portfolio" and
collectively, the "Portfolios"). Shares of the Portfolios are offered
only to separate accounts of insurance companies to fund variable annuity
contracts.
The investment objective of each of the Domestic Equity and
International Equity Portfolios is to achieve long-term capital
appreciation. The investment objectives of the Fixed Income Portfolios
are: VA Short-Term Fixed Portfolio, to achieve stable real value of
capital with a minimum of risk by investing in high quality obligations;
and VA Global Bond Portfolio, to provide a market rate of return for a
global fixed income portfolio with low relative volatility of returns.
DOMESTIC EQUITY PORTFOLIOS
VA SMALL VALUE PORTFOLIO VA LARGE VALUE PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIOS
VA INTERNATIONAL VALUE PORTFOLIO VA INTERNATIONAL SMALL PORTFOLIO
FIXED INCOME PORTFOLIOS
VA SHORT-TERM FIXED PORTFOLIO VA GLOBAL BOND PORTFOLIO
This prospectus sets forth concisely information about the Portfolios
that prospective investors should know before investing and should be read
carefully and retained for future reference. You should read this
prospectus in conjunction with the prospectus describing the related
insurance company separate account. A statement of additional information
about the Portfolios, dated September __, 1995, which is incorporated
herein by reference, has been filed with the Securities and Exchange
Commission and is available upon request, without charge, by writing or
calling the Fund at the above address or telephone number.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
HIGHLIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
DOMESTIC EQUITY PORTFOLIOS. . . . . . . . . . . . . . . . . . . . . . . .4
Portfolio Characteristics and Policies . . . . . . . . . . . . . . .4
Portfolio Structure. . . . . . . . . . . . . . . . . . . . . . . . .5
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . .5
INTERNATIONAL EQUITY PORTFOLIOS . . . . . . . . . . . . . . . . . . . . .6
VA INTERNATIONAL VALUE PORTFOLIO. . . . . . . . . . . . . . . . . . . . .6
Investment Objective and Policies. . . . . . . . . . . . . . . . . .6
Portfolio Structure. . . . . . . . . . . . . . . . . . . . . . . . .7
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . .7
VA INTERNATIONAL SMALL PORTFOLIO. . . . . . . . . . . . . . . . . . . . .8
Investment Objective and Policies. . . . . . . . . . . . . . . . . .8
Portfolio Structure. . . . . . . . . . . . . . . . . . . . . . . . .9
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . 11
SECURITIES LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FIXED INCOME PORTFOLIOS -
INVESTMENT OBJECTIVES AND POLICIES. . . . . . . . . . . . . . . . . . . 11
VA Short-Term Fixed Portfolio. . . . . . . . . . . . . . . . . . . 11
VA Global Bond Portfolio . . . . . . . . . . . . . . . . . . . . . 12
Description of Investments . . . . . . . . . . . . . . . . . . . . 12
Investments in the Banking Industry. . . . . . . . . . . . . . . . 13
Portfolio Strategy . . . . . . . . . . . . . . . . . . . . . . . . 13
RISK FACTORS - ALL PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . 14
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . . . . . . . 16
Investment Services - VA International Small Portfolio . . . . . . 17
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . 17
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES. . . . . . . . . . . . 17
PURCHASE AND REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . 18
VALUATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 18
DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
HIGHLIGHTS
PAGE
THE PORTFOLIOS
Each Portfolio, in effect, represents a separate mutual fund with its
own investment objective and policies. The investment objective of each
Portfolio is a fundamental policy and may not be changed without the
affirmative vote of a majority of its outstanding securities. Shares of
the Portfolios are sold only to separate accounts of insurance companies.
Proceeds from the sale of shares of a Portfolio will be invested in
accordance with that Portfolio's investment objective and policies. A
Portfolio will pay its shareholders all dividends and distributions
arising from the assets of the Portfolio.
INVESTMENT OBJECTIVES - DOMESTIC EQUITY PORTFOLIOS 4
The investment objective of both the VA Small Value Portfolio and VA
Large Value Portfolio (collectively the "Domestic Equity Portfolios") is
to achieve long-term capital appreciation. The VA Small Value Portfolio
and the VA Large Value Portfolio will invest in common stocks of U.S.
companies that have a high book value in relation to their market value.
The Domestic Equity Portfolios operate as diversified investment
companies.
INVESTMENT OBJECTIVE - VA INTERNATIONAL VALUE PORTFOLIO 6
The investment objective of the VA International Value Portfolio is
to achieve long-term capital appreciation. The Portfolio seeks to achieve
its objective by investing in the stocks of large non-U.S. companies that
have a high book value in relation to their market value. The VA
International Value Portfolio operates as a diversified investment
company.
INVESTMENT OBJECTIVE - VA INTERNATIONAL SMALL PORTFOLIO 8
The investment objective of the VA International Small Portfolio is
to achieve long-term capital appreciation by investing in marketable
stocks of small non-U.S. companies. The Portfolio will be structured by
generally basing the amount of each security purchased on the issuer's
relative market capitalization, applied on a basis of descending values,
with a view to achieving a reasonable reflection of the relative market
capitalization of its portfolio companies. The Portfolio operates as a
diversified investment company.
INVESTMENT OBJECTIVES - FIXED INCOME PORTFOLIOS 11
The investment objective of VA Short-Term Fixed Portfolio is to
achieve stable real value of capital with a minimum of risk. Generally,
the Portfolio will acquire high quality obligations which mature within
one year from the date of settlement; however, when greater returns are
available substantial investments may be made in securities maturing
within two years from the date of settlement as well. The VA Short-Term
Fixed Portfolio operates as a diversified investment company. The
Portfolio intends to concentrate investments in the banking industry under
certain circumstances. (See "FIXED INCOME PORTFOLIOS - INVESTMENT
OBJECTIVES AND POLICIES" and "Investments in the Banking Industry.")
The investment objective of VA Global Bond Portfolio is to provide a
market rate of return for a fixed income portfolio with low relative
volatility of returns. The Portfolio invests in obligations issued or
guaranteed by the U.S. and foreign governments and their agencies,
obligations of other foreign issuers rated AA or better and supranational
organizations. The VA Global Bond Portfolio operates as a non-diversified
investment company. (See "FIXED INCOME PORTFOLIOS - INVESTMENT OBJECTIVES
AND POLICIES" and "Portfolio Strategy.")
2
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RISK FACTORS 14
VA International Small Portfolio and VA International Value Portfolio
(collectively, the "International Equity Portfolios") and VA Global Bond
Portfolio invest in foreign securities which are traded abroad. VA Short-
Term Fixed Portfolio is authorized to invest in dollar-denominated
obligations of U.S. subsidiaries and branches of foreign banks and
dollar-denominated obligations of foreign issuers traded in the U.S. and
also is authorized to concentrate investments in the banking industry in
certain circumstances. The Domestic Equity Portfolios and the VA
International Value Portfolio may purchase and sell index futures
contracts and options thereon. All of the Portfolios are authorized to
invest in repurchase agreements. All of the above described policies
involve certain risks. (See "RISK FACTORS - ALL PORTFOLIOS.")
MANAGEMENT OF THE FUND 16
Dimensional Fund Advisors Inc. (the "Advisor") serves as investment
advisor to each Portfolio. Dimensional Fund Advisors Ltd. and DFA
Australia Pty Limited each serve as a sub-advisor to VA International
Small Portfolio. (See "MANAGEMENT OF THE FUND.")
DIVIDEND POLICY 17
The International Equity and Domestic Equity Portfolios, except for
VA Large Value Portfolio, each distribute substantially all of their net
investment income in November and December of each year. VA Large Value
Portfolio and VA Global Bond Portfolio distribute dividends from their net
investment income quarterly. VA Short-Term Fixed Portfolio distributes
dividends from its net investment income monthly. The Portfolios will
make any distributions from realized net capital gains on an annual basis.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
PURCHASE, VALUATION AND REDEMPTION OF SHARES 18
Shares of the Portfolios are sold only to separate accounts of
insurance companies to fund variable life and variable annuity insurance
contracts. Purchases and redemptions are made at net asset value. To
purchase shares of a Portfolio, please see the prospectus of the insurance
company's separate account for variable annuity insurance contracts.
The value of the shares issued by the Portfolios will fluctuate in
relation to their own investment experience. Unlike money market funds,
the shares of VA Short-Term Fixed Portfolio will tend to reflect
fluctuations in interest rates because the Portfolio does not seek to
stabilize the price of its shares by use of the "amortized cost" method of
securities valuation. (See "PURCHASE AND REDEMPTION OF SHARES" and
"VALUATION OF SHARES.")
3
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<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES MANAGEMEMENT OTHER TOTAL
(AS PERCENTAGE OF AVERAGE NET ASSETS FEE EXPENSES OPERATING EXPENSES
------------ -------- -----------------
<S> <C> <C> <C>
VA Small Value 0.50% 0.70% 1.20%
VA Large Value 0.25% 0.70% .95%
VA International Value 0.40% 0.93% 1.33%
VA International Small 0.50% 0.91% 1.41%
VA Short-Term Fixed 0.25% 0.59% 0.84%
VA Global Bond 0.25% 0.28% 0.53%
</TABLE>
EXAMPLE
You would pay the following transaction and annual operating expenses
on a $1,000 investment in each Portfolio, assuming a 5% annual return over
each of the following time periods and redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
VA Small Value $12 $38
VA Large Value 10 30
VA International Value 14 42
VA International Small 16 49
VA Short-Term Fixed 9 27
VA Global Bond 5 17
</TABLE>
The purpose of the above expense table and example is to assist
investors in understanding the various costs and expenses that an investor
in the Portfolios will bear directly or indirectly. The sales charges and
expenses of the separate account are not shown above and should be
considered before investing. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER
OR LESSER THAN THOSE SHOWN.
The Portfolios are new and, therefore, the expenses of the Portfolios
included in the table are the estimated annualized expenses that are
expected to be incurred through their fiscal periods ending November 30,
1995, and the above example is based on estimated expenses for the current
and next two fiscal years and does not extend those estimates over five
and ten year periods.
DOMESTIC EQUITY PORTFOLIOS
PORTFOLIO CHARACTERISTICS AND POLICIES
The investment objective of each of the Domestic Equity Portfolios is
to achieve long-term capital appreciation. VA Large Value Portfolio and
VA Small Value Portfolio will invest in common stocks of U.S. companies
with shares that have a high book value in relation to their market value
(a "book to market ratio"). A
4
<PAGE>
company's shares will be considered to have a high book to market ratio if
the ratio equals or exceeds the ratios of any of the 30% of companies with
the highest positive book to market ratios whose shares are listed on the
New York Stock Exchange ("NYSE") and, except as described under "Portfolio
Structure," will be considered eligible for investment. VA Large Value
Portfolio will purchase common stocks of companies whose market
capitalizations equal or exceed that of the company having the median
market capitalization of companies whose shares are listed on the NYSE,
and the VA Small Value Portfolio will purchase common stocks of companies
whose market capitalizations are smaller than such company.
PORTFOLIO STRUCTURE
Each Domestic Equity Portfolio will operate as a "diversified"
investment company. Further, neither Portfolio will invest more than 25%
of its total assets in securities of companies in a single industry.
Ordinarily, at least 80% of the assets of each Portfolio will be invested
in a broad and diverse group of readily marketable common stocks of U.S.
companies with high book to market ratios, as described above. The
Portfolios may invest a portion of their assets, ordinarily not more than
20%, in high quality, highly liquid fixed income securities such as money
market instruments, including short-term repurchase agreements. The
Portfolios will purchase securities that are listed on the principal U.S.
national securities exchanges and traded in the over-the-counter market
("OTC").
Each Domestic Equity Portfolio will be structured on a market
capitalization basis, by generally basing the amount of each security
purchased on the issuer's relative market capitalization, with a view to
creating in each Portfolio a reasonable reflection of the relative market
capitalizations of its portfolio companies. However, the Advisor may
exclude the securities of a company that otherwise meets the applicable
criteria described above if the Advisor determines in its best judgment
that other conditions exist that make the inclusion of such security
inappropriate.
Deviation from strict market capitalization weighting will also occur
in the Domestic Equity Portfolios because they intend to purchase round
lots only. In order to retain sufficient liquidity, the relative amount
of any security held by a Portfolio may be reduced, from time to time,
from the level which strict adherence to market capitalization weighting
would otherwise require. A portion, but generally not in excess of 20%,
of a Portfolio's assets may be invested in interest-bearing obligations,
as described above, thereby causing further deviation from strict market
capitalization weighting. The Portfolios may make block purchases of
eligible securities at opportune prices even though such purchases exceed
the number of shares which, at the time of purchase, strict adherence to
the policy of market capitalization weighting would otherwise require. In
addition, the Portfolios may acquire eligible securities in exchange for
the issuance of their shares. While such purchases and acquisitions might
cause a temporary deviation from market capitalization weighting, they
would ordinarily be made in anticipation of further growth of the assets
of a Portfolio.
On not less than a semi-annual basis, for each Portfolio the Advisor
will calculate the book to market ratio necessary to determine those
companies whose stocks are eligible for investment.
PORTFOLIO TRANSACTIONS
The Domestic Equity Portfolios do not intend to purchase or sell
securities based on the prospects for the economy, the securities markets
or the individual issuers whose shares are eligible for purchase. As
described under "Portfolio Structure," investments will be made in
virtually all eligible securities on a market capitalization weighted
basis. This is a passive approach to investment management that does not
entail taking steps to reduce risk by replacing portfolio equity
securities with other securities that appear to have the potential to
provide better investment performance.
Generally, securities will be purchased with the expectation that
they will be held for longer than one year. VA Large Value Portfolio may
sell portfolio securities when the issuer's market capitalization falls
substantially
5
<PAGE>
below that of the issuer with the minimum market capitalization which is
then eligible for purchase by the Portfolio, and VA Small Value Portfolio
may sell portfolio securities when the issuer's market capitalization
increases to a level that substantially exceeds that of the issuer with
the largest market capitalization which is then eligible for investment by
the Portfolio. However, securities may be sold at any time when, in the
Advisor's judgment, circumstances warrant their sale.
In addition, VA Large Value Portfolio may sell portfolio securities
when their book to market ratio falls substantially below that of the
security with the lowest such ratio that is then eligible for purchase by
the Portfolio. VA Small Value Portfolio may also sell portfolio
securities in the same circumstances; however, that Portfolio anticipates
generally to retain securities of issuers with relatively smaller market
capitalizations for longer periods, despite any decrease in the issuer's
book to market ratio.
INTERNATIONAL EQUITY PORTFOLIOS
VA INTERNATIONAL VALUE PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of VA International Value Portfolio is to
achieve long-term capital appreciation. The Portfolio operates as a
diversified investment company and seeks to achieve its investment
objective by investing in the stocks of large non-U.S. companies that have
a high book to market ratio. A company's shares will be considered
eligible for investment if such shares (i) first, have a book to market
ratio that equals or exceeds the ratios of any of the 30% of companies in
that country with the highest positive book to market ratios and (ii)
second, are shares of a company having a market capitalization of at least
$500 million and are listed on a major exchange in such country. The
Portfolio will be approximately market capitalization weighted. Although
it does not presently intend to do so, the Portfolio reserves the right to
invest in companies that have market capitalizations of less than $500
million.
Under normal market conditions, the Portfolio will invest at least
65% of the value of its assets in issuers organized or having a majority
of their assets in or deriving a majority of their operating income in at
least three non-U.S. countries. The Portfolio will not invest more than
25% of its total assets in securities of companies in a single industry.
The Portfolio reserves the right to invest in index futures contracts
to commit funds awaiting investment or to maintain liquidity. The
Portfolio will not purchase futures contracts if as a result more than 5%
of its total assets would then consist of initial and variation margin
deposits on such contracts. Such investments entail certain risks. (see
"RISK FACTORS - ALL PORTFOLIOS.")
A portion, but generally not in excess of 20% of the Portfolio's
assets, may be invested in the nine categories of interest-bearing
obligations described in "FIXED INCOME PORTFOLIOS - INVESTMENT OBJECTIVES
AND POLICIES - Description of Investments."
The Portfolio intends to invest in the stocks of large companies in
countries with developed markets. Initially, the Portfolio will invest in
the stocks of large companies in Japan, the United Kingdom, Germany,
France, Switzerland, Italy, Belgium, Spain, the Netherlands, Sweden, Hong
Kong, Singapore and Australia. As the Portfolio's growth permits, it may
invest in the stocks of large companies in other developed markets.
In determining market capitalization weights, the Advisor, using its
best judgment, will seek to eliminate the effect of cross holdings on the
individual country weights. As a result, the weighting of certain
companies in the Portfolio may vary from their weighting in international
indices such as those published by The Financial Times,
6
<PAGE>
Morgan Stanley Capital International or Salomon/Russell. The Advisor,
however, will not attempt to account for cross holding within the same
country. The Advisor may exclude the stock of a company that otherwise
meets the applicable criteria if the Advisor determines in its best
judgment that other conditions exist that make the purchase of stock for
the Portfolio inappropriate.
Changes in the composition and relative ranking (in terms of market
capitalization and book to market ratio) of the stocks which are eligible
for purchase by the Portfolio take place with every trade when the
securities markets are open for trading due, primarily, to price
fluctuations of such securities. On at least a semi-annual basis, the
Advisor will prepare lists of non-U.S. large companies (those with market
capitalizations of $500 million or more) with high book to market ratios.
Only common stocks whose market capitalizations are not less than the
minimum on such list will be purchased by the Portfolio. Additional
investments will not be made in securities which have depreciated in value
to such an extent that they are not then considered by the Advisor to be
large companies. This may result in deviation from market capitalization
weighting and such deviation could be substantial if a significant amount
of the Portfolio's holdings decrease in value sufficiently to be excluded
from the then current market capitalization requirement for eligible
securities, but not by a sufficient amount to warrant their sale.
PORTFOLIO STRUCTURE
The Advisor may exclude the securities of a company that otherwise
meets the criteria described above if the Advisor determines in its best
judgment that other conditions exist that make the inclusion of such
security inappropriate. This will result in some deviation from strict
market capitalization weighting. Deviation from strict market
capitalization weighting will also occur in the Portfolio because it
intends to purchase round lots only. In order to retain sufficient
liquidity, the relative amount of any security held by the Portfolio may
be reduced, from time to time, from the level which strict adherence to
market capitalization weighting would otherwise require. Any portion of
the Portfolio's assets invested in interest-bearing obligations would
cause a further deviation from strict market capitalization weighting.
The Portfolio may make block purchases of eligible securities at opportune
prices even though such purchases exceed the number of shares which, at
the time of purchase, strict adherence to the policy of market
capitalization weighting would otherwise require. In addition, the
Portfolio may acquire eligible securities in exchange for the issuance of
its shares. While such purchases might cause a temporary deviation from
market capitalization weighting, they would ordinarily be made in
anticipation of further growth of the assets of the Portfolio. If
securities must be sold in order to obtain funds to make redemption
payments, such securities may be repurchased by the Portfolio as
additional cash becomes available to it. However, the Portfolio has
retained the right to borrow to make redemption payments and is also
authorized to redeem its shares in kind.
It is management's belief that the stocks of large companies with
high book to market ratios offer, over a long term, a prudent opportunity
for capital appreciation, but, at the same time, selecting a limited
number of such issues for inclusion in the Portfolio involves greater risk
than including a large number of them. The Advisor does not anticipate
that a significant number of securities which meet the market
capitalization criteria will be selectively excluded from the Portfolio.
The Portfolio does not seek current income as an investment objective
and investments will not be based upon an issuer's dividend payment policy
or record. However, many of the companies whose securities will be
included in the Portfolio do pay dividends. It is anticipated, therefore,
that the Portfolio will receive dividend income.
PORTFOLIO TRANSACTIONS
The Portfolio does not intend to purchase or sell a security based on
the prospects for an individual country's economy, the securities markets
in that country or the individual issuer whose shares are eligible for
purchase. As described above, investments will be made in virtually all
eligible securities on a market capitalization weighted basis. This is a
passive approach to investment management that does not entail taking
steps to reduce risk by replacing portfolio equity securities with other
securities that appear to have the potential to provide better
7
<PAGE>
investment performance. The Portfolio may sell securities when the
issuer's market capitalization falls substantially below that of the
issuer with the minimum market capitalization which is then eligible for
purchase by the Portfolio. In addition, the Portfolio may sell portfolio
securities when their book to market ratio falls substantially below that
of the security with the lowest such ratio that is then eligible for
purchase by the Portfolio. Generally, securities will be purchased with
the expectation that they will be held for longer than one year.
VA INTERNATIONAL SMALL PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
VA International Small Portfolio operates as a diversified investment
company whose investment objective is to achieve long-term capital
appreciation and provides investors with access to securities portfolios
consisting of small Japanese, United Kingdom, Continental and Pacific Rim
companies. The VA International Small Portfolio will seek to achieve its
investment objective by investing its assets in a broad and diverse group
of marketable stocks of (1) Japanese small companies which are traded in
the Japanese securities markets; (2) United Kingdom small companies which
are traded principally on the International Stock Exchange of the United
Kingdom and the Republic of Ireland ("ISE"); (3) small companies organized
under the laws of certain European countries; and (4) small companies
located in Australia, New Zealand and Asian countries whose shares are
traded principally on the securities markets located in those countries.
The Advisor will determine the initial allocation of assets among the four
segments of VA International Small Portfolio and will periodically review
and adjust such allocation, all in its sole discretion.
Company size will be determined for purposes of this Portfolio solely
on the basis of a company's market capitalization. "Market capitalization"
will be calculated by multiplying the price of a company's stock by the
number of its shares of that stock outstanding. Each segment of VA
International Small Portfolio will be structured to reflect reasonably the
relative market capitalizations of the portfolio companies in that
segment. The Advisor believes that over the long term the investment
performance of small companies in developed countries is superior to large
companies, and that investment in the Portfolio is an effective way to
improve global diversification.
JAPANESE SMALL COMPANY SEGMENT
Reference in this prospectus to the term "Japanese small company"
means a company located in Japan whose market capitalization is not larger
than the largest of those in the smaller one-half (deciles 6 through 10)
of companies whose securities are listed on the First Section of the Tokyo
Stock Exchange ("TSE"). While the Portfolio will invest primarily in the
stocks of small companies which are listed on the TSE, it may acquire the
stocks of Japanese small companies which are traded in other Japanese
securities markets as well.
UNITED KINGDOM SMALL COMPANY SEGMENT
Reference in this prospectus to a "United Kingdom small company"
means a company organized in the United Kingdom, with shares listed on the
ISE whose market capitalization is not larger than the largest of those in
the smaller one-half (deciles 6 through 10) of companies included in the
Financial Times-Actuaries All Share Index ("FTA").
The FTA is an index of stocks traded on the ISE, which is similar to
the Standard & Poor's 500 Composite Stock Index ("S&P 500 Index"), and is
used by investment professionals in the United Kingdom for the same
purposes as investment professionals in the U.S. use the S&P 500 Index.
While the FTA will be used by the Portfolio to determine the maximum
market capitalization of any company whose stock the Portfolio will
purchase, Portfolio acquisitions will not be limited to stocks which are
included in the FTA. The Portfolio will not, however, purchase shares of
any investment trust or of any company whose market capitalization is less
than $5,000,000.
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CONTINENTAL SMALL COMPANY SEGMENT
The Portfolio is authorized to invest in readily marketable stocks of
a broad and diverse group of small companies organized under the laws of
certain European countries; specifically, France, Germany, Italy,
Switzerland, the Netherlands, Sweden, Belgium, Norway, Spain, Austria,
Finland and Denmark, whose shares are traded principally in securities
markets located in those countries. Company size will be determined by
the Advisor in a manner that will compare the market capitalizations of
companies in all countries of this segment in which the Portfolio invests
(i.e., on a European basis). The Advisor will use the appropriate country
indices of the Financial Times-Actuaries World Index ("FTW") converted to
a common currency, the United States dollar, and aggregated to define
"small companies." The FTW consists of a series of country indices which
contain generally the largest companies in the major industry sectors in
proportion to their market capitalization whose shares are available for
purchase by non-resident investors. Its constituents represent about 70%
of the total market capitalization of the respective markets. Companies
with publicly traded stock whose market capitalizations are not greater
than the largest of those in the smallest 20% (9th and 10th deciles) of
companies listed in the FTW as combined for the countries in this segment
will be considered to be "Continental small companies" and will be
eligible for purchase by the Portfolio.
While the Advisor will use the aggregated FTW indices to determine
the maximum size of eligible portfolio companies, portfolio acquisitions
will not be limited to stocks listed on the FTW for any country. The
Portfolio does not intend, however, to purchase shares of any company
whose market capitalization is less than the equivalent of $5,000,000.
The Advisor may in its discretion either limit further investments in a
particular country or divest the Portfolio of holdings in a particular
country. (See "Portfolio Structure.")
PACIFIC RIM SMALL COMPANY SEGMENT
The Portfolio is authorized to invest in stocks of small companies
located in Australia, New Zealand and Asian countries whose shares are
traded principally on the securities markets located in those countries.
Company size will be determined by the Advisor in a manner that will
compare the market capitalizations of the companies in all countries of
this segment in which the Portfolio invests (i.e., on a Pacific Rim
basis). The Advisor will use the appropriate country indices of the FTW
converted to a common currency and aggregated to define "small
companies." Companies with publicly traded stock whose market
capitalizations are not greater than the largest of those in the smallest
30% (8th, 9th and 10th deciles) of companies listed in the FTW as combined
for the countries in this segment will be considered to be "Pacific Rim
small companies" and will be eligible for purchase by the Portfolio.
While the Advisor will use the aggregated FTW indices to determine
the maximum size of eligible portfolio companies, portfolio acquisitions
will not be limited to stocks listed on the FTW for any country. The
Portfolio does not intend to purchase shares of any company whose market
capitalization is less than $5,000,000. The Advisor may in its discretion
either limit further investments in a particular country or divest the
Portfolio of holdings in a particular country.
PORTFOLIO STRUCTURE
With respect to each segment, VA International Small Portfolio
intends to acquire a portion of the stock of each eligible company on a
market capitalization basis. The Portfolio also may invest up to 5% of
its assets in convertible debentures issued by Japanese, United Kingdom,
Continental and Pacific Rim small companies.
VA International Small Portfolio is structured by generally basing
the amount of each security purchased in each segment on the issuer's
relative market capitalization within that segment with a view to creating
in the Portfolio a reasonable reflection of the relative market
capitalizations of the portfolio companies segment by
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segment. The decision to include or exclude the shares of an issuer will
be made on the basis of such issuer's relative market capitalization
determined by reference to other companies located in the same country,
except with respect to Continental and Pacific Rim small companies, such
determination shall be made by reference to other companies located in all
countries in the respective segment. Company size is measured in terms of
local currencies in order to eliminate the effect of variations in
currency exchange rates, except with respect to Continental and Pacific
Rim small company segments, in which segments company size will be
measured in terms of a common currency. Even though a company's stock may
meet the applicable market capitalization criterion, it may not be
purchased if, (i) in the Advisor's judgment, the issuer is in extreme
financial difficulty, (ii) the issuer is involved in a merger or
consolidation or is the subject of an acquisition or (iii) a significant
portion of the issuer's securities are closely held. Further, securities
of real estate investment trusts will not be acquired (except as a part of
a merger, consolidation or acquisition of assets). In addition, the
Advisor may exclude the stock of a company that otherwise meets applicable
market capitalization criterion if the Advisor determines in its best
judgment that other conditions exist that make the purchase of such stock
inappropriate.
When, in the judgment of the Advisor, the indices described herein
are no longer appropriate benchmarks for determining company size or
eligibility, the Advisor may, in its sole discretion, utilize other
indices that it considers appropriate.
Deviation from strict market capitalization weighting will also occur
because the Advisor intends to purchase round lots only. In order to
retain sufficient liquidity, the relative amount of any security held may
be reduced from time to time from the level which strict adherence to
market capitalization weighting would otherwise require. A portion, but
generally not in excess of 20%, of the Portfolio's assets may be invested
in interest-bearing obligations, such as money-market instruments for this
purpose, thereby causing further deviation from strict market
capitalization weighting.
Block purchases of eligible securities may be made at opportune
prices even though such purchases exceed the number of shares which, at
the time of purchase, strict adherence to the policy of market
capitalization weighting would otherwise require. In addition, eligible
securities may be acquired in exchange for the issuance of shares. While
such purchases and acquisitions might cause a temporary deviation from
market capitalization weighting, they would ordinarily be made in
anticipation of further growth of assets.
If securities must be sold in order to obtain funds to make
redemption payments, they may be repurchased as additional cash becomes
available. In most instances, however, management would anticipate
selling securities which had appreciated sufficiently to be eligible for
sale and, therefore, would not need to repurchase such securities. (See
"Portfolio Transactions.")
Changes in the composition and relative ranking (in terms of market
capitalization) of the stocks which are eligible for purchase take place
with every trade when the securities markets are open for trading due,
primarily, to price fluctuations of such securities. On a not less than
semi-annual basis, the Advisor will determine the market capitalization of
the largest small company eligible for investment in each segment.
Common stocks whose market capitalizations are not greater than such
company will be purchased. Additional investments generally will not be
made in securities which have appreciated in value sufficiently to be
excluded from the Advisor's then current market capitalization limit for
eligible portfolio securities. This may result in further deviation from
strict market capitalization weighting and such deviation could be
substantial if a significant amount of holdings increase in value
sufficiently to be excluded from the limit for eligible securities, but
not by a sufficient amount to warrant their sale. (See "Portfolio
Transactions.") A further deviation from market capitalization weighting
may occur if the Portfolio invests a portion of its assets in convertible
debentures.
It is management's belief that the stocks of small companies offer,
over a long term, a prudent opportunity for capital appreciation but, at
the same time, selecting a limited number of such issues for investment
involves greater risk than investing in a large number of them. The
Portfolio intends to invest at least 80% of its assets in equity
securities of Japanese, United Kingdom, Continental and Pacific Rim small
companies.
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Generally, current income is not sought as an investment objective
and investments will not be based upon an issuer's dividend payment policy
or record. However, many of the companies whose securities will be
selected for investment do pay dividends. It is anticipated, therefore,
that dividend income will be received.
PORTFOLIO TRANSACTIONS
On a periodic basis, the Advisor will review each Portfolio's
holdings and determine which, at the time of such review, are no longer
considered small Japanese, United Kingdom, Continental or Pacific Rim
companies. The present policy of the Advisor is to consider portfolio
securities for sale when they have appreciated sufficiently to rank, on a
market capitalization basis, more than one full decile higher than the
company with the largest market capitalization that is eligible for
purchase by the Portfolio as determined periodically by the Advisor. The
Advisor may, from time to time, revise that policy if, in the opinion of
the Advisor, such revision is necessary to maintain appropriate market
capitalization weighting.
Securities which have depreciated in value since their acquisition
will not be sold solely because prospects for the issuer are not
considered attractive, or due to an expected or realized decline in
securities prices in general. Securities may be disposed of, however, at
any time when, in the Advisor's judgment, circumstances, such as (but not
limited to) tender offers, mergers and similar transactions, or bids made
for block purchases at opportune prices, warrant their sale. Generally,
securities will not be sold to realize short-term profits, but when
circumstances warrant, they may be sold without regard to the length of
time held. Generally, securities will be purchased with the expectation
that they will be held for longer than one year and will be held until
such time as they are no longer considered an appropriate holding in light
of the policy of maintaining portfolios of companies with small market
capitalizations.
SECURITIES LOANS
All of the Portfolios are authorized to lend securities to qualified
brokers, dealers, banks and other financial institutions for the purpose
of earning additional income. While a Portfolio may earn additional
income from lending securities, such activity is incidental to the
investment objective of a Portfolio. The value of securities loaned may
not exceed 33 1/3% of the value of a Portfolio's total assets. In
connection with such loans, a Portfolio will receive collateral consisting
of cash or U.S. Government securities, which will be maintained at all
times in an amount equal to at least 100% of the current market value of
the loaned securities. In addition, the Portfolios will be able to
terminate the loan at any time, will receive reasonable compensation on
the loan, as well as amounts equal to any dividends, interest or other
distributions on the loaned securities. In the event of the bankruptcy of
the borrower, the Fund could experience delay in recovering the loaned
securities. Management believes that this risk can be controlled through
careful monitoring procedures.
FIXED INCOME PORTFOLIOS - INVESTMENT OBJECTIVES AND POLICIES
VA SHORT-TERM FIXED PORTFOLIO
The investment objective of VA Short-Term Fixed Portfolio is to
achieve a stable real value (i.e., a return in excess of the rate of
inflation) of invested capital with a minimum of risk. The Portfolio will
invest in U.S. government obligations, U.S. government agency obligations,
dollar denominated obligations of foreign issuers issued in the U.S., bank
obligations, including U.S. subsidiaries and branches of foreign banks,
corporate obligations, commercial paper, repurchase agreements and
obligations of supranational organizations. Generally, the Portfolio will
acquire obligations which mature within one year from the date of
settlement, but substantial investments may be made in obligations
maturing within two years from the date of settlement when greater returns
are available. It is the Portfolio's policy that the weighted average
length of maturity of investments will not exceed
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one year. The Portfolio principally invests in certificates of deposit,
commercial paper, bankers' acceptances, notes and bonds. The Portfolio
will invest more than 25% of its total assets in obligations of U.S.
and/or foreign banks and bank holding companies when the yield to maturity
on these instruments exceeds the yield to maturity on all other eligible
portfolio investments of similar quality for a period of five consecutive
days when the NYSE is open for trading. (See "Investments in the Banking
Industry.")
VA GLOBAL BOND PORTFOLIO
The investment objective of VA Global Bond Portfolio is to provide a
market rate of return for a fixed income portfolio with low relative
volatility of returns. The Portfolio will invest primarily in obligations
issued or guaranteed by the U.S. and foreign governments, their agencies
and instrumentalities, obligations of other foreign issuers rated AA or
better and supranational organizations, such as the World Bank, the
European Investment Bank, European Economic Community, and European Coal
and Steel Community and corporate debt obligations. At the present time,
the Advisor expects that most investments will be made in the obligations
of issuers which are developed countries, such as those countries which
are members of the Organization of Economic Cooperation and Development
(OECD). However, in the future, the Advisor anticipates investing in
issuers located in other countries as well. Under normal market
conditions, the Portfolio will invest at least 65% of the value of its
assets in issuers organized or having a majority of their assets in, or
deriving a majority of their operating income in, at least three different
countries, one of which may be the United States. The Portfolio will
acquire obligations which mature within ten years from the date of
settlement. Because many of the Portfolio's investments will be
denominated in foreign currencies, the Portfolio will also enter into
forward foreign currency contracts solely for the purpose of hedging
against fluctuations in currency exchange rates. Inasmuch as VA Global
Bond Portfolio intends to continually hedge against the risk of variations
in currency exchange rates, the Advisor believes that the variation of the
Portfolio's investment performance in relation to fluctuations in currency
exchange rates will be minimized.
DESCRIPTION OF INVESTMENTS
The following is a description of the categories of investments which
may be acquired by the Fixed Income Portfolios. VA Short-Term Fixed
Portfolio may invest in all of the securities and obligations listed in
categories 1-6 and 8 and VA Global Bond Portfolio may invest in the
securities and obligations listed in categories 1-3 and 6-9.
1. U.S. GOVERNMENT OBLIGATIONS - Debt securities issued by the U.S.
Treasury which are direct obligations of the U.S. government, including
bills, notes and bonds.
2. U.S. GOVERNMENT AGENCY OBLIGATIONS - Issued or guaranteed by
U.S. government-sponsored instrumentalities and federal agencies,
including the Federal National Mortgage Association, Federal Home Loan
Bank and the Federal Housing Administration.
3. CORPORATE DEBT OBLIGATIONS - Non-convertible corporate debt
securities (e.g., bonds and debentures) which are issued by companies
whose commercial paper is rated Prime-1 by Moody's Investors Services,
Inc. ("Moody's") or A-1 by Standard & Poor's Corporation ("S&P") and
dollar-denominated obligations of foreign issuers issued in the U.S. If
the issuer's commercial paper is unrated, then the debt security would
have to be rated at least AA by S&P or Aa2 by Moody's. If there is
neither a commercial paper rating nor a rating of the debt security, then
the Advisor must determine that the debt security is of comparable quality
to equivalent issues of the same issuer rated at least AA or Aa2.
4. BANK OBLIGATIONS - Obligations of U.S. banks and savings and
loan associations and dollar-denominated obligations of U.S. subsidiaries
and branches of foreign banks, such as certificates of deposit
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(including marketable variable rate certificates of deposit) and bankers'
acceptances. Bank certificates of deposit will only be acquired from
banks with assets in excess of $1,000,000,000.
5. COMMERCIAL PAPER - Rated, at the time of purchase, A-1 or better
by S&P or Prime-1 by Moody's, or, if not rated, issued by a corporation
having an outstanding unsecured debt issue rated Aaa by Moody's or AAA by
S&P, and having a maximum maturity of nine months.
6. REPURCHASE AGREEMENTS - Instruments through which the Portfolios
purchase securities ("underlying securities") from a bank, or a registered
U.S. government securities dealer, with an agreement by the seller to
repurchase the security at an agreed price, plus interest at a specified
rate. The underlying securities will be limited to U.S. government and
agency obligations described in (1) and (2) above. The Portfolios will
not enter into a repurchase agreement with a duration of more than seven
days if, as a result, more than 10% of the value of the Portfolio's total
assets would be so invested. The Portfolios will also only invest in
repurchase agreements with a bank if the bank has at least $1,000,000,000
in assets and has a credit rating of not less than A as determined by
Moody's or S&P. The Advisor will monitor the market value of the
securities plus any accrued interest thereon so that they will at least
equal the repurchase price.
7. FOREIGN GOVERNMENT AND AGENCY OBLIGATIONS - Bills, notes, bonds
and other debt securities issued or guaranteed by foreign governments, or
their agencies and instrumentalities.
8. SUPRANATIONAL ORGANIZATION OBLIGATIONS - Debt securities of
supranational organizations such as the European Coal and Steel Community,
the European Economic Community and the World Bank, which are chartered to
promote economic development.
9. FOREIGN ISSUER OBLIGATIONS - Debt securities of non- U.S.
issuers rated AA or better by S&P and Aa2 or better by Moody's.
INVESTMENTS IN THE BANKING INDUSTRY
VA Short-Term Fixed Portfolio will invest more than 25% of its total
assets in obligations of U.S. and/or foreign banks and bank holding
companies when the yield to maturity on these investments exceeds the
yield to maturity on all other eligible portfolio investments for a period
of five consecutive days when the NYSE is open for trading. For the
purpose of this policy, which is a fundamental policy of the Portfolio,
which can only be changed by a vote of shareholders of the Portfolio,
banks and bank holding companies are considered to constitute a single
industry, the banking industry. When investment in such obligations
exceeds 25% of the total net assets of the Portfolio, the Portfolio will
be considered to be concentrating its investments in the banking industry.
The types of bank and bank holding company obligations in which VA
Short-Term Fixed Portfolio may invest include: dollar-denominated
certificates of deposit, bankers' acceptances, commercial paper and other
debt obligations issued in the United States and which mature within two
years of the date of settlement, provided such obligations meet the
Portfolio's established credit rating criteria as stated under
"Description of Investments." In addition, the Portfolio is authorized to
invest more than 25% of its total assets in U.S. Treasury bonds, bills and
notes and obligations of federal agencies and instrumentalities.
PORTFOLIO STRATEGY
VA Short-Term Fixed Portfolio will be managed with a view to
capturing credit risk premiums and term or maturity premiums. As used
herein, the term "credit risk premium" means the anticipated incremental
return on investment for holding obligations considered to have greater
credit risk than direct obligations of the U.S. Treasury, and "maturity
risk premium" means the anticipated incremental return for holding
securities having maturities of longer than one month compared to
securities having a maturity of one month. The Advisor believes
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that credit risk premiums are available largely through investment in high
grade commercial paper, certificates of deposit and corporate obligations.
The holding period for assets of the Portfolio will be chosen with a view
to maximizing anticipated monthly returns, net of trading costs.
VA Global Bond Portfolio will be managed with a view to capturing
maturity risk premiums. Ordinarily the Portfolio will invest primarily in
obligations issued or guaranteed by foreign governments and their agencies
and instrumentalities, obligations of other foreign issuers rated AA or
better and supranational organizations. Supranational issuers include
the European Economic Community, the European Coal and Steel Community,
the Nordic Investment Bank, the World Bank and the Japanese Development
Bank. The Portfolio will own obligations issued or guaranteed by the U.S.
government and its agencies and instrumentalities also. At times when, in
the Advisor's judgment, eligible foreign securities do not offer maturity
risk premiums that compare favorably with those offered by eligible U.S.
securities, the Portfolio will be invested primarily in the latter
securities.
VA Global Bond Portfolio is "non-diversified," as defined in the
Investment Company Act of 1940, which means that, as to 75% of its total
assets, more than 5% may be invested in the securities of a single issuer.
However, for purposes of the Internal Revenue Code, the Portfolio is
"diversified" because as to 50% of its total assets, no more than 5% may
be invested in the securities of a single issuer, and the Portfolio
intends to invest no more than 55% of the value of its total assets in
cash, cash items, government securities and other regulated investment
companies. The Portfolio will not invest more than 25% of its assets in
securities of companies in any one industry. Management does not consider
securities which are issued by the U.S. government or its agencies or
instrumentalities to be investments in an "industry." However, management
currently considers securities issued by a foreign government to be
subject to the 25% limitation, with the effect that not more than 25% of
the Portfolio's total assets will be invested in securities issued by any
one foreign government. The Portfolio will not invest more than 25% of
its total assets in obligations of supranational organizations. Finally,
the Portfolio might invest in certain securities issued by companies, such
as Caisse Nationale des Telecommunication, a communications company, whose
obligations are guaranteed by a foreign government. Management considers
such a company to be within a particular industry (in this case, the
communications industry) and, therefore, the Portfolio will invest in the
securities of such a company only if it can do so under the Portfolio's
policy of not being concentrated in any single industry.
VA Short-Term Fixed Portfolio is expected to have a high portfolio
turnover rate due to the relatively short maturities of the securities to
be acquired. It is anticipated that the annual turnover rate of VA Short-
Term Fixed Portfolio could be 0% to 200%. The annual portfolio turnover
rate of VA Global Bond Portfolio is not expected to exceed 100%. The rate
of portfolio turnover will depend upon market and other conditions; it
will not be a limiting factor when management believes that portfolio
changes are appropriate. While the Fixed Income Portfolios acquire
securities in principal transactions and, therefore, do not pay brokerage
commissions, the spread between the bid and asked prices of a security may
be considered to be a "cost" of trading. Such costs ordinarily increase
with trading activity. However, as stated above, securities ordinarily
will be sold when, in the Advisor's judgment, the monthly return of a
Portfolio will be increased as a result of portfolio transactions after
taking into account the cost of trading. It is anticipated that
securities will be acquired in the secondary markets for short term
instruments. However, as the size of each Portfolio increases, it is
possible that transactions also may be effected directly with the issuers
of securities acquired for the Portfolios.
RISK FACTORS - ALL PORTFOLIOS
Typically, securities of small companies are less liquid than
securities of large companies. Recognizing this factor, VA International
Small Portfolio and VA Small Value Portfolio will endeavor to effect
securities transactions in a manner to avoid causing significant price
fluctuations in the market for these securities.
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The International Equity Portfolios and Fixed Income Portfolios
invest in foreign issuers. Such investments involve risks that are not
associated with investments in U.S. public companies. Such risks may
include legal, political and or diplomatic actions of foreign governments,
such as imposition of withholding taxes on interest and dividend income
payable on the securities held, possible seizure or nationalization of
foreign deposits, establishment of exchange controls or the adoption of
other foreign governmental restrictions which might adversely affect the
value of the assets held by the Portfolios. Further, foreign issuers are
not generally subject to uniform accounting, auditing and financial
reporting standards comparable to those of U.S. public companies and there
may be less publicly available information about such companies than
comparable U.S. companies. Certain of the foreign markets in which the
Portfolios may invest have recently transitioned from or are in the
process of transitioning from centrally controlled economies. There can
be no assurance that such transitions will be successful. The Fixed
Income Portfolios may invest in obligations of supranational
organizations. The value of the obligations of these organizations may be
adversely affected if one or more of their supporting governments
discontinue their support. Also, there can be no assurance that any of
the Portfolios will achieve its investment objective.
Investments of the International Equity Portfolios and VA Global Bond
Portfolio will be denominated in foreign currencies. Changes in the
relative values of foreign currencies and the U.S. dollar, therefore, will
affect the value of investments of these Portfolios. These Portfolios may
purchase foreign currency futures contracts and options in order to hedge
against changes in the level of foreign currency exchange rates, provided
not more than 5% of each Portfolio's assets are then invested as initial
or variation margin deposits on such contracts or options. Such contracts
involve an agreement to purchase or sell a specific currency at a future
date at a price set in the contract and enable the Portfolios to protect
against losses resulting from adverse changes in the relationship between
the U.S. dollar and foreign currencies occurring between the trade and
settlement dates of Portfolio securities transactions, but they also tend
to limit the potential gains that might result from a positive change in
such currency relationships.
Each Portfolio, except VA Short-Term Fixed Portfolio, has reserved
the right to borrow amounts not exceeding 33% of its net assets for the
purposes of making redemption payments. When advantageous opportunities
to do so exist, each Portfolio may also purchase securities when
borrowings exceed 5% of the value of its net assets. Such purchases can
be considered to be "leveraging" and, in such circumstances, the net asset
value of the Portfolio may increase or decrease at a greater rate than
would be the case if the Portfolio had not leveraged. The interest
payable on the amount borrowed would increase the Portfolio's expenses
and, if the appreciation and income produced by the investments purchased
when the Portfolio has borrowed are less than the cost of borrowing, the
investment performance of the Portfolio will be reduced as a result of
leveraging.
The method employed by the Advisor to manage the Domestic Equity and
International Equity Portfolios will differ from the process employed by
many other investment advisors in that the Advisor will rely on
fundamental analysis of the investment merits of securities to a limited
extent to eliminate potential portfolio acquisitions rather than rely on
this technique to select securities. Further, because securities
generally will be held long-term and will not be eliminated based on
short-term price fluctuations, the Advisor generally will not act upon
general market movements or short-term price fluctuations of securities to
as great an extent as many other investment advisors.
The Domestic Equity Portfolios and VA International Value Portfolio
may invest in index futures contracts and index options. These
investments entail the risk that an imperfect correlation may exist
between changes in the market value of the stocks owned by the Portfolio
and the prices of such futures contracts and options and, at times, the
market for such contracts and options might lack liquidity, thereby
inhibiting a Portfolio's ability to close a position in such investments.
Concentrating in obligations of the banking industry may involve
additional risk by foregoing the safety of investing in a variety of
industries. Changes in the market's perception of the riskiness of banks
relative to non-banks could cause more fluctuations in the net asset value
of VA Short-Term Fixed Portfolio than might occur in less concentrated
portfolios.
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In addition, all of the Portfolios may invest in repurchase
agreements. In the event of the bankruptcy of the other party to a
repurchase agreement, the Fund could experience delay in recovering the
securities underlying such agreements. Management believes that this risk
can be controlled through stringent security selection criteria and
careful monitoring procedures.
MANAGEMENT OF THE FUND
Dimensional Fund Advisors Inc. (the "Advisor") serves as investment
advisor to each of the Portfolios. As such, the Advisor is responsible
for the management of their respective assets. Investment decisions for
all Portfolios of the Fund are made by the Investment Committee of the
Advisor which meets on a regular basis and also as needed to consider
investment issues. The Investment Committee is composed of certain
officers and directors of the Advisor who are elected annually. The
Advisor provides the Portfolios with a trading department and selects
brokers and dealers to effect securities transactions. Portfolio
securities transactions are placed with a view to obtaining best price and
execution and, subject to this goal, may be placed with brokers which have
assisted in the sale of the Portfolios' shares. Brokerage transactions
may be placed with securities firms that are affiliated with an affiliate
of the Advisor.
On an annual basis, the investment advisory fee payable by each
Portfolio to the Advisor is set forth below:
<TABLE>
<CAPTION>
<S> <C>
VA Small Value Portfolio 0.50%
VA Large Value Portfolio 0.25%
VA International Value Portfolio 0.40%
VA International Small Portfolio 0.50%
VA Short-Term Fixed Portfolio 0.25%
VA Global Bond Portfolio 0.25%
</TABLE>
The Fund bears all of its own costs and expenses, including:
services of its independent accountants, legal counsel, brokerage fees,
commissions and transfer taxes in connection with the acquisition and
disposition of portfolio securities, taxes, insurance premiums, costs
incidental to meetings of its shareholders and directors, the cost of
filing its registration statements under federal and state securities
laws, reports to shareholders, and transfer and dividend disbursing
agency, administrative services and custodian fees. Expenses allocable to
a particular Portfolio are so allocated and expenses which are not
allocable to a particular Portfolio are borne by each Portfolio on the
basis of the fees paid by the Fund to PFPC Inc., the accounting services,
dividend disbursing and transfer agent for each Portfolio.
The Advisor was organized in May 1981 and is engaged in the business
of providing investment management services to institutional investors.
Assets under management total approximately $11 billion. David G. Booth
and Rex A. Sinquefield, directors and officers of both the Fund and the
Advisor, together own approximately 55% of the Advisor's outstanding stock
and may be deemed controlling persons of the Advisor. The Advisor owns
100% of the outstanding shares of Dimensional Fund Advisors Ltd. ("DFAL")
and DFA Australia Pty Limited ("DFA Australia") (see "Investment Services -
VA International Small Portfolio).
16
<PAGE>
Investment Services - VA International Small Portfolio
Pursuant to Sub-Advisory Agreements with the Advisor, DFAL, 14
Berkeley Street, London, W1X 5AD, England, a company that is organized
under the laws of England, has the authority and responsibility to select
brokers or dealers to execute securities transactions for the United
Kingdom and Continental small company segments of VA International Small
Portfolio. Pursuant to Sub-Advisory Agreements with the Advisor, DFA
Australia, Suite 4403 Gateway, 1 MacQuarie Place, Sydney, New South Wales
2000, Australia, the successor to Dimensional Fund Advisors Asia Inc., has
the authority and responsibility to select brokers and dealers to execute
securities transactions for the Japanese and Pacific Rim small company
segments of VA International Small Portfolio. The duties of DFAL with
respect to the United Kingdom and Continental small company segments of
the Portfolio and DFA Australia with respect to the Japanese and Pacific
Rim small company segments of the Portfolio include the maintenance of a
trading desk for the Portfolio and the determination of the best and most
efficient means of executing securities transactions. The Advisor is
responsible for determining those securities which are eligible for
purchase and sale by the Portfolio and may delegate this task, subject to
its own review, to DFAL and DFA Australia. On at least a semi-annual
basis, the Advisor reviews the holdings of United Kingdom, Continental,
Japanese and Pacific Rim small company segments and reviews the trading
process and the execution of securities transactions.
DFAL maintains and furnishes to the Advisor information and reports
on United Kingdom and Continental small companies, including its
recommendations of securities to be added to the securities in those
segments that are eligible for purchase by the Portfolio. The Advisor
pays DFAL quarterly fees of 25,000 pounds sterling total for services to
the Portfolio and other portfolios for which DFAL serves as sub-advisor.
DFAL is a member of the Investment Management Regulatory Organization
Limited ("IMRO"), a self regulatory organization for investment managers
operating under the laws of England. If a shareholder of VA International
Small Portfolio wishes to register a complaint against DFAL, that
shareholder may either make the complaint in writing to the Compliance
Officer of DFAL or may complain directly to IMRO.
DFA Australia maintains and furnishes to the Advisor information and
reports on Japanese and Pacific Rim small companies, including its
recommendations of securities to be added to the securities in those
segments that are eligible for purchase by the Portfolio. The Advisor
pays DFA Australia quarterly fees of 50,000 Hong Kong dollars total for
services to VA International Small Portfolio and other portfolios for
which DFA Australia serves as sub-advisor.
DIRECTORS AND OFFICERS
The Board of Directors is responsible for establishing Fund policies
and for overseeing the management of the Fund. Information as to the
Directors and Officers of the Fund is set forth in the Statement of
Additional Information under "DIRECTORS AND OFFICERS."
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
Each Portfolio intends to qualify each year as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code"),
so that it will not be liable for federal income taxes to the extent that
its net investment income and net realized capital gains are distributed.
The policy of VA Small Value and the International Equity Portfolios is to
distribute substantially all of their net investment income together with
any net realized capital gains in November and December of each year.
Dividends from net investment income of VA Large Value Portfolio are
distributed quarterly and any net realized capital gains are distributed
annually after November 30. Net investment income, which is accrued
daily, will be distributed monthly (except for January) by VA Short-Term
Fixed Portfolio and quarterly by VA Global Bond Portfolio. Any net
realized capital gains of the
17
<PAGE>
Fixed Income Portfolios will be distributed annually after the end of the
fiscal year. Each Portfolio is treated as a separate corporation for
federal tax purposes.
Dividends which are declared in October, November or December to
shareholders of record in such a month but which, for operational reasons
may not be paid to the shareholders until the following January, will be
treated for tax purposes as if paid by a Portfolio and received by the
shareholder on December 31 of the calendar year in which they are
declared.
If a Portfolio purchases shares in certain foreign investment
entities, called "passive foreign investment companies" ("PFIC"), such
Portfolio may be subject to U.S. federal income tax and a related interest
charge on a portion of any "excess distribution" or gain from the
disposition of such shares even if such income is distributed as a taxable
dividend by the Portfolio to its shareholders.
Also, dividends and interest received on investments made by the
Portfolios may be subject to foreign withholding taxes on income from
certain of their foreign securities.
Shareholders of the Portfolios will automatically receive all income
dividends and capital gains distributions in additional shares of the
Portfolio whose shares they hold at net asset value (as of the business
date following the dividend record date). Shareholders are notified
annually by the Fund as to the federal tax status of dividends and
distributions paid by the Portfolio whose shares they own.
Shares of the Portfolio must be purchased through variable annuity
contracts. As a result, it is anticipated that any dividend or capital
gains distributions from a Portfolio of the Fund will be exempt from
current taxation if left to accumulate within a variable annuity contract.
Withdrawals from such contracts may be subject to ordinary income tax plus
a 10% penalty tax if made before age 59 1/2.
The tax status of your investment in the Portfolios depends upon the
features of your variable annuity contract. For further information,
please refer to the prospectus of the insurance company separate account
that offers your contract.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Portfolios are sold only to insurance company separate
accounts. Purchases and redemptions of shares of each Portfolio by a
separate account will be effected at the net asset value per share.
Confirm (See "VALUATION OF SHARES.") Contract owners do not deal directly
with the Fund with respect to the acquisition or redemption of shares of
the Portfolios. Please see the prospectus of the insurance company
separate account for information regarding the purchase and redemption of
shares of the Portfolios.
VALUATION OF SHARES
The net asset value per share of each Portfolio is calculated as of
the close of the NYSE by dividing the total market value of the
Portfolio's investments and other assets, less any liabilities, by the
total outstanding shares of the stock of the Portfolio. The value of the
shares of each Portfolio will fluctuate in relation to its own investment
experience. Securities held by the Domestic Equity and International
Equity Portfolios which are listed on the securities exchange and for
which market quotations are available are valued at the last quoted sale
price of the day or, if there is no such reported sale, such securities
are valued at the mean between the most recent quoted bid and asked
prices. Price information on listed securities is taken from the exchange
where the security is primarily traded. Unlisted securities for which
market quotations are readily available are valued at the mean between the
most recent bid and asked prices. The value of other assets and
securities for which no quotations are
18
<PAGE>
readily available (including restricted securities) are determined in good
faith at fair value in accordance with procedures adopted by the Board of
Directors. The net asset values per share of the International Equity
Portfolios and VA Global Bond Portfolio are expressed in U.S. dollars by
translating the net assets of each Portfolio using the bid price for the
dollar as quoted by generally recognized reliable sources.
The value of the shares of the Fixed Income Portfolios will tend to
fluctuate with interest rates because, unlike money market funds, these
Portfolios do not seek to stabilize the value of their respective shares
by use of the "amortized cost" method of asset valuation. Net asset value
includes interest on fixed income securities which is accrued daily.
Securities which are traded OTC and on a stock exchange will be valued
according to the broadest and most representative market, and it is
expected that for bonds and other fixed-income securities this ordinarily
will be the OTC market. Securities held by the Fixed Income Portfolios
may be valued on the basis of prices provided by a pricing service when
such prices are believed to reflect the current market value of such
securities. Other assets and securities for which quotations are not
readily available will be valued in good faith at fair value using methods
determined by the Board of Directors.
Generally, trading in foreign securities markets is completed each
day at various times prior to the close of the NYSE. The values of
foreign securities held by the International Equity Portfolios and VA
Global Bond Portfolio are determined as of such times for the purpose of
computing the net asset values of these Portfolios. If events which
materially affect the value of the investments of a Portfolio occur
subsequent to the close of the securities market on which such securities
are primarily traded, the investments affected thereby will be valued at
"fair value" as described above.
DISTRIBUTION
The Fund acts as distributor of each series of its own shares of
stock. It has, however, entered into an agreement with DFA Securities
Inc., a wholly owned subsidiary of the Advisor, pursuant to which DFA
Securities Inc. is responsible for supervising the sale of each series of
shares. No compensation is paid by the Fund to DFA Securities Inc. under
this agreement.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on June 15, 1981. Until
June 1983, the Fund was named DFA Small Company Fund Inc. Until September
__, 1995, VA Large Value Portfolio was named DFA Global Value Portfolio
and VA Global Bond Portfolio was named DFA Global Bond Portfolio. The
shares of each Portfolio, when issued and paid for in accordance with the
Fund's prospectus, will be fully paid and non-assessable shares, with
equal, non-cumulative voting rights and no preferences as to conversion,
exchange, dividends, redemption or any other feature.
The Portfolios may disseminate reports of their investment
performance from time to time. Investment performance is calculated on a
total return basis; that is by including all net investment income and any
realized and unrealized net capital gains or losses during the period for
which investment performance is reported. If dividends or capital gains
distributions have been paid during the relevant period the calculation of
investment performance will include such dividends and capital gains
distributions as though reinvested in shares of the Portfolio. Standard
quotations of total return, which include deductions of any applicable
reimbursement fees, are computed in accordance with Securities and
Exchange Commission ("SEC") Guidelines and are presented whenever any
non-standard quotations are disseminated to provide comparability to other
investment companies. Non-standardized total return quotations may differ
from the SEC Guideline computations by covering different time periods,
excluding deduction of reimbursement fees charged to investors and paid to
the Portfolios which would otherwise reduce returns quotations, and
linking actual Portfolio return with simulated data for periods prior to a
Portfolio's
19
<PAGE>
inception. In all cases, disclosures are made when performance quotations
differ from the SEC Guidelines which were established effective May 1,
1988. Performance data is based on historical earnings and is not
intended to indicate future performance. Rates of return expressed on an
annual basis will usually not equal the sum of returns expressed for
consecutive interim periods due to the compounding of the interim yields.
With respect to the International Equity Portfolios and VA Global
Bond Portfolio, rates of return expressed as a percentage of U.S. dollars
will reflect applicable currency exchange rates at the beginning and
ending dates of the investment periods presented. The return expressed in
terms of U.S. dollars is the return one would achieve by investing dollars
in the Portfolio at the beginning of the period and liquidating the
investment in dollars at the end of the period. Hence, the return
expressed as a percentage of U.S. dollars combines the investment
performance of the Portfolio as well as the performance of the local
currency or currencies of the Portfolio.
Pursuant to an exemptive order from the SEC, shares of the Portfolios
may be sold to registered separate accounts of various insurance companies
offering variable annuity and variable life products. At present, the
Board of Directors of the Fund does not foresee any disadvantage arising
from the fact that each Portfolio may offer its shares to separate
accounts of various insurance companies to serve as an investment vehicle
for their variable separate accounts. However, a material conflict could
arise between the interest of the different participating separate
accounts. The Fund's Board of Directors would monitor events in order to
identify any material irreconcilable conflicts that may possibly arise and
to determine what action, if any, should be taken in response to such
conflicts of interest. If such conflicts were to occur, one or more
insurance companies' separate accounts might be required to withdraw its
investments in one or more Portfolios, or shares of another Portfolio may
be substituted by the Fund. As a result, a Portfolio might be forced to
sell a portion of its securities at a disadvantageous price. In the event
of such a material conflict, the affected insurance companies agree to
take any necessary steps, including removing its separate account from the
Portfolio if required by law, to resolve the matter.
As of May 31, 1995, the following persons owned more than 25% of the
voting securities of the following Portfolios:
VA LARGE VALUE PORTFOLIO**
<TABLE>
<CAPTION>
<S> <C>
(formerly National Home Life) Providian Life and Health Separate Account* 70.48%
400 West Market Street
P.O. Box 32830
Louisville, KY 40232
(formerly National Home Life) Providian Life and Health General Account* 29.52%
400 West Market Street
P.O. Box 32830
Louisville, KY 40232]
20
<PAGE>
VA GLOBAL BOND PORTFOLIO
(formerly National Home Life) Providian Life and Health Separate Account* 78.09%
400 West Market Street
P.O. Box 32830
Louisville, KY 40232
<FN>
- ----------------------
* Owner of record only.
** As of May 31, 1995, the name of VA Large Value Portfolio was DFA Global
Value Portfolio.
</TABLE>
Shareholder inquiries may be made by writing or calling the Fund at
the address or telephone number appearing on the cover of this prospectus.
21
<PAGE>
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
DFA INVESTMENT DIMENSIONS GROUP INC.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Tel. No. (310) 395-8005
INVESTMENT ADVISOR
DIMENSIONAL FUND ADVISORS INC.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Tel. No. (310) 395-8005
SUB-ADVISORS
DIMENSIONAL FUND ADVISORS LTD.
14 Berkeley Street
London, W1X 5AD
England
Tel. No. (171) 495-2343
DFA AUSTRALIA PTY LIMITED
Suite 4403 Gateway
1 MacQuarie Place
Sydney, New South Wales 2000
Australia
Tel No. (61) 2-247-7822
CUSTODIAN - INTERNATIONAL
BOSTON SAFE DEPOSIT AND TRUST COMPANY
Princess House
1 Suffolk Lane
London EC4R 0AN
England
CUSTODIAN - DOMESTIC
PNC BANK, N.A.
200 Stevens Drive, Airport Business Center
Lester, PA 19113
TRANSFER AND DIVIDEND DISBURSING AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG
2600 One Commerce Square
Philadelphia, PA 19103-7098
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
<PAGE>
DFA INVESTMENT DIMENSIONS GROUP INC.
1299 OCEAN AVENUE, 11TH FLOOR, SANTA MONICA, CALIFORNIA 90401
TELEPHONE: (310) 395-8005
STATEMENT OF ADDITIONAL INFORMATION
September __, 1995
DFA Investment Dimensions Group Inc. (the "Fund") offers twenty-four
series of shares. This statement of additional information describes six
of those series: VA SMALL VALUE PORTFOLIO, VA LARGE VALUE PORTFOLIO, VA
INTERNATIONAL VALUE PORTFOLIO, VA INTERNATIONAL SMALL PORTFOLIO, VA SHORT-
TERM FIXED PORTFOLIO and VA GLOBAL BOND PORTFOLIO (individually, a
"Portfolio" and collectively, the "Portfolios"). The shares of the
Portfolios are sold only to separate accounts of insurance companies in
conjunction with variable annuity contracts. This statement of additional
information is not a prospectus but should be read in conjunction with the
Portfolios' prospectus dated September __, 1995, which can be obtained
from the Fund by writing to the Fund at the above address or by calling
the above telephone number.
TABLE OF CONTENTS
PAGE
PORTFOLIO CHARACTERISTICS AND POLICIES. . . . . . . . . . . . . . . . 1
BROKERAGE TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . . 3
FUTURES CONTRACTS.. . . . . . . . . . . . . . . . . . . . . . . . . . 4
FEDERAL TAX TREATMENT OF FUTURES CONTRACTS. . . . . . . . . . . . . . 5
DIRECTORS AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . 5
ADMINISTRATIVE SERVICES . . . . . . . . . . . . . . . . . . . . . . . 7
OTHER INFORMATION.. . . . . . . . . . . . . . . . . . . . . . . . . . 8
PRINCIPAL HOLDERS OF SECURITIES.. . . . . . . . . . . . . . . . . . . 9
PURCHASE AND REDEMPTION OF SHARES.. . . . . . . . . . . . . . . . . . 10
CALCULATION OF PERFORMANCE DATA.. . . . . . . . . . . . . . . . . . . 10
<PAGE>
PORTFOLIO CHARACTERISTICS AND POLICIES
The following information supplements the information set forth in the
prospectus under the captions "DOMESTIC EQUITY PORTFOLIOS," "VA
INTERNATIONAL VALUE PORTFOLIO," "VA INTERNATIONAL SMALL PORTFOLIO," and
"FIXED INCOME PORTFOLIOS - INVESTMENT OBJECTIVES AND POLICIES." The
following information applies to all the Portfolios.
Because the structure of the Domestic Equity and International Equity
Portfolios is based on the relative market capitalizations of eligible
holdings, it is possible that the Portfolios might include at least 5% of
the outstanding voting securities of one or more issuers. In such
circumstances, the Fund and the issuer would be deemed "affiliated
persons" under the Investment Company Act of 1940 and certain requirements
of the Act regulating dealings between affiliates might become applicable.
However, based on the present capitalizations of the groups of companies
eligible for inclusion in the Portfolios and the anticipated amount of a
Portfolio's assets intended to be invested in such securities, management
does not anticipate that a Portfolio will include as much as 5% of the
voting securities of any issuer.
VA International Small Portfolio may invest up to 5% of its assets
in convertible debentures issued by non-U.S. companies. Convertible
debentures include corporate bonds and notes that may be converted into or
exchanged for common stock. These securities are generally convertible
either at a stated price or a stated rate (that is, for a specific number
of shares of common stock or other security). As with other fixed income
securities, the price of a convertible debenture to some extent varies
inversely with interest rates. While providing a fixed-income stream
(generally higher in yield than the income derived from a common stock but
lower than that afforded by a non-convertible debenture), a convertible
debenture also affords the investor an opportunity, through its conversion
feature, to participate in the capital appreciation of the common stock
into which it is convertible. As the market price of the underlying
common stock declines, convertible debentures tend to trade increasingly
on a yield basis and so may not experience market value declines to the
same extent as the underlying common stock. When the market price of the
underlying common stock increases, the price of a convertible debenture
tends to rise as a reflection of the value of the underlying common stock.
To obtain such a higher yield, the Portfolio may be required to pay for a
convertible debenture an amount in excess of the value of the underlying
common stock. Common stock acquired by the Portfolio upon conversion of a
convertible debenture will generally be held for so long as the Advisor
anticipates such stock will provide the Portfolio with opportunities which
are consistent with the Portfolio's investment objective and policies.
The annual portfolio turnover rates of VA Small Value and VA Large Value
Portfolios are expected to be 15% and 20%, respectively. The annual
portfolio turnover rate of the VA International Value Portfolio is not
expected to exceed 20%. Because the relative market capitalizations of
small companies compared with larger companies generally do not change
substantially over short periods of time, the portfolio turnover rate of
VA International Small Portfolio ordinarily is anticipated to be low and
is not expected to exceed 25% per year. Generally, securities will be
purchased with the expectation that they will be held for longer than one
year. Generally, securities will be held until such time as, in the
Advisor's judgment, they are no longer considered an appropriate holding
in light of the policy of maintaining portfolios of companies with small
market capitalization.
BROKERAGE TRANSACTIONS
The Fixed Income Portfolios acquire and sell securities on a net basis
with dealers which are major market markers in such securities. The
Investment Committee of the Advisor selects dealers on the basis of their
size, market making and credit analysis ability. When executing portfolio
transactions, the Advisor
1
<PAGE>
seeks to obtain the most favorable price for the securities being traded
among the dealers with whom the Fixed Income Portfolios effect
transactions.
Portfolio transactions will be placed with a view to receiving the best
price and execution. The Portfolios will seek to acquire and dispose of
securities in a manner which would cause as little fluctuation in the
market prices of stocks being purchased or sold as possible in light of
the size of the transactions being effected, and brokers will be selected
with this goal in view. The Advisor monitors the performance of brokers
which effect transactions for the Portfolios to determine the effect that
their trading has on the market prices of the securities in which they
invest. The Advisor also checks the rate of commission being paid by the
Portfolios to their brokers to ascertain that they are competitive with
those charged by other brokers for similar services. Transactions also
may be placed with brokers who provide the Advisor with investment
research, such as reports concerning individual issuers, industries and
general economic and financial trends and other research services.
Brokerage transactions may be placed with securities firms that are
affiliated with an affiliate of the Advisor. Commission paid on such
transactions would be commensurate with the rate of commissions paid on
similar transactions to brokers that are not so affiliated.
The over-the-counter market ("OTC") companies eligible for purchase by
VA Small Value Portfolio are thinly traded securities. Therefore, the
Advisor believes it needs maximum flexibility to effect OTC trades on a
best execution basis. To that end, the Advisor places buy and sell orders
with market makers, third market brokers, Instinet and with brokers on an
agency basis when the Advisor determines that the securities may not be
available from other sources at a more favorable price. Third market
brokers enable the Advisor to trade with other institutional holders
directly on a net basis. This allows the Advisor to sometimes trade
larger blocks than would be possible by going through a single market
maker.
Instinet is an electronic information and communication network whose
subscribers include most market makers as well as many institutions.
Instinet charges a commission for each trade executed on its system. On
any given trade, the Domestic Equity Portfolios, by trading through
Instinet, would pay a spread to a dealer on the other side of the trade
plus a commission to Instinet. However, placing a buy (or sell) order on
Instinet communicates to many (potentially all) market makers and
institutions at once. This can create a more complete picture of the
market and thus increase the likelihood that the Portfolios can effect
transactions at the best available prices.
The investment advisory agreements permit the Advisor knowingly to pay
commissions on securities transactions which are greater than another
broker might charge if the Advisor, in good faith, determines that the
commissions paid are reasonable in relation to the research or brokerage
services provided by the broker or dealer when viewed in terms of either a
particular transaction or the Advisor's overall responsibilities to the
Fund. Research services furnished by brokers through whom securities
transactions are effected may be used by the Advisor in servicing all of
its accounts and not all such services may be used by the Advisor with
respect to the Fund.
Brokerage commissions for transactions in securities listed on the TSE
and other Japanese securities exchanges are fixed. Under the current
regulations of the TSE and the Japanese Ministry of Finance, member and
non-member firms of Japanese exchanges are required to charge full
commissions to all customers other than banks and certain financial
institutions, but members and licensed non-member firms may confirm
transactions to banks and financial institution affiliates located outside
Japan with institutional discounts on brokerage commissions. The
International Equity Portfolios expect to be able to avail themselves of
institutional discounts. The Portfolios' ability to effect transactions
at a discount from fixed commission rates depends on a number of factors,
including the size of the transaction, the relation between the cost to
the member or the licensed non-member firm of effecting such transaction
and the commission receivable, and the law, regulation and practice
discussed above. There can be no assurance that the Portfolios will be
able to realize the benefit of discounts from fixed commissions.
2
<PAGE>
INVESTMENT LIMITATIONS
Each of the Portfolios has adopted certain limitations which may not be
changed with respect to any Portfolio without the approval of a majority
of the outstanding voting securities of the Portfolio. A "majority" is
defined as the lesser of: (1) at least 67% of the voting securities of the
Portfolio (to be affected by the proposed change) present at a meeting if
the holders of more than 50% of the outstanding voting securities of the
Portfolio are present or represented by proxy, or (2) more than 50% of the
outstanding voting securities of such Portfolio.
The Portfolios will not:
(1) invest in commodities or real estate, including limited partnership
interests therein, although they may purchase and sell securities of
companies which deal in real estate and securities which are secured by
interests in real estate, and all Portfolios, may purchase or sell
financial futures contracts and options thereon;
(2) make loans of cash, except through the acquisition of repurchase
agreements and obligations customarily purchased by institutional
investors;
(3) as to 75% of the total assets of a Portfolio, invest in the securities
of any issuer (except obligations of the U.S. Government and its
instrumentalities) if, as a result, more than 5% of the Portfolio's total
assets, at market, would be invested in the securities of such issuer;
provided that the VA Global Bond Portfolio is not subject to this
limitation;
(4) purchase or retain securities of an issuer if those officers and
directors of the Fund or the Advisor owning more than 1/2 of 1% of such
securities together own more than 5% of such securities;
(5) borrow, except that each Portfolio may borrow, for temporary or
emergency purposes, amounts not exceeding 33% of their net assets from
banks and pledge not more than 33% of such assets to secure such loans;
(6) pledge, mortgage, or hypothecate any of its assets to an extent
greater than 10% of its total assets at fair market value, except as
described in (5) above;
(7) invest more than 15% of the value of the Portfolio's total assets in
illiquid securities which include certain restricted securities,
repurchase agreements with maturities of greater than seven days, and
other illiquid investments;
(8) engage in the business of underwriting securities issued by others;
(9) invest for the purpose of exercising control over management of any
company;
(10) invest its assets in securities of any investment company, except in
connection with a merger, acquisition of assets, consolidation or
reorganization;
(11) acquire any securities of companies within one industry if, as a
result of such acquisition, more than 25% of the value of the Portfolio's
total assets would be invested in securities of companies within such
industry; except VA Short-Term Fixed Portfolio shall invest more than 25%
of its total assets in obligations of banks and bank holding companies in
the circumstances described in the prospectus under "Investments in the
Banking Industry" and as otherwise described under "Portfolio Strategy";
3
<PAGE>
(12) write or acquire options (except as described in (1) above) or
interests in oil, gas or other mineral exploration, leases or development
programs;
(13) purchase warrants, however, the Portfolios may acquire warrants as a
result of corporate actions involving holdings of other securities;
(14) purchase securities on margin or sell short; or
(15) acquire more than 10% of the voting securities of any issuer and
provided that this limitation applies only to 75% of the assets of the
Domestic Equity Portfolios and VA International Value Portfolio.
For purposes of (1) above, each Portfolio that may purchase or sell
financial futures contracts and options thereon may not deposit as initial
or variation margin deposits more than 5% of its net assets.
Although (2) above prohibits cash loans, the Portfolios are authorized
to lend portfolio securities.
For the purposes of (7) above, VA Short-Term Fixed Portfolio may invest
in commercial paper that is exempt from the registration requirements of
the Securities Act of 1933 (the "1933 Act") subject to the requirements
regarding credit ratings stated in the prospectus under "Description of
Investments." Further, pursuant to Rule 144A under the 1933 Act, the
Portfolios may purchase certain unregistered (i.e., restricted) securities
upon a determination that a liquid institutional market exists for the
securities. If it is decided that a liquid market does exist, the
securities will not be subject to the 15% limitation on holdings of
illiquid securities stated in (7) above. While maintaining oversight, the
Board of Directors has delegated the day-to-day function of making
liquidity determinations to the Advisor. For 144A securities to be
considered liquid, there must be at least two dealers making a market in
such securities. After purchase, the Board of Directors and the Advisor
will continue to monitor the liquidity of Rule 144A securities.
For the purposes of (11) above, utility companies will be divided
according to their services; e.g., gas, gas transmission, electric and
gas, electric, water and telephone will each be considered a separate
industry.
The International Equity Portfolios and VA Global Bond Portfolio may
acquire and sell forward foreign currency exchange contracts in order to
hedge against changes in the level of future currency rates. Such
contracts involve an obligation to purchase or sell a specific currency at
a future date at a price set in the contract. While each Domestic Equity
Portfolio and VA International Value Portfolio have retained authority to
buy and sell financial futures contracts and options thereon, they have no
present intention to do so.
FUTURES CONTRACTS
All Portfolios may enter into futures contracts and options on futures
contracts for the purpose of remaining fully invested and to maintain
liquidity to pay redemptions. Futures contracts provide for the future
sale by one party and purchase by another party of a specified amount of
defined securities at a specified future time and at a specified price.
Futures contracts which are standardized as to maturity date and
underlying financial instrument are traded on national futures exchanges.
The Portfolios will be required to make a margin deposit in cash or
government securities with a broker or custodian to initiate and maintain
positions in futures contracts. Minimal initial margin requirements are
established by the futures exchange and brokers may establish margin
requirements which are higher than the exchange requirements. After a
futures contract position is opened, the value of the contract is marked
to market daily. If the futures contract price changes to the extent that
the margin on deposit does not satisfy margin requirements, payment of
4
<PAGE>
additional "variation" margin will be required. Conversely, reduction in
the contract value may reduce the required margin resulting in a repayment
of excess margin to the Portfolio. Variation margin payments are made to
and from the futures broker for as long as the contract remains open. The
Portfolios expect to earn income on their margin deposits. A Portfolio
will not enter into futures contract transactions if, immediately
thereafter, the sum of its initial and variation margin deposits on open
contracts exceeds 5% of the market value of its total assets.
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market. However, there can be no assurance
that a liquid secondary market will exist for any particular futures
contract at any specific time. Therefore, it might not be possible to
close a futures position and, in the event of adverse price movements, the
Portfolio would continue to be required to continue to make variation
margin deposits. In such circumstances, if the Portfolio has insufficient
cash, it might have to sell portfolio securities to meet daily margin
requirements at a time when it might be disadvantageous to do so.
Management intends to minimize the possibility that it will be unable to
close out a futures contract by only entering into futures which are
traded on national futures exchanges and for which there appears to be a
liquid secondary market.
FEDERAL TAX TREATMENT OF FUTURES CONTRACTS
Except for transactions a Portfolio has identified as hedging
transactions, the Portfolio is required for federal income tax purposes to
recognize as income for each taxable year its net unrealized gains and
losses on certain futures contracts as of the end of the year as well as
those actually realized during the year. In most cases, any gain or loss
recognized with respect to a futures contract is considered to be 60%
long-term gain or loss and 40% short-term capital gain or loss, without
regard to the holding period of the contract. Furthermore, sales of
futures contracts which are intended to hedge against a change in the
value of securities held by the Portfolio may affect the holding period of
such securities and, consequently, the nature of the gain or loss on such
securities upon disposition.
In order for a Portfolio to continue to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross
income for a taxable year must be derived from qualifying income; i.e.,
dividends, interest, income derived from loans of securities, gains from
the sale of securities and other income derived with respect to the
Portfolio's business of investing in securities. In addition, gains
realized on the sale or other disposition of securities held for less than
three months must be limited to less than 30% of the Portfolio's annual
gross income. It is anticipated that any net gain realized from closing
futures contracts will be considered gain from the sale of securities and,
therefore, constitute qualifying income for purposes of the 90%
requirement. In order to avoid realizing excessive gains on securities
held less than three months, the Portfolio may be required to defer the
closing out of futures contracts beyond the time when it would otherwise
be advantageous to do so. It is anticipated that unrealized gains on
futures contracts which have been open for less than three months as of
the end of the Portfolio's fiscal year and which are recognized for tax
purposes, will not be considered gains on sales of securities held less
than three months for the purpose of the 30% test. The Portfolios will
distribute to shareholders annually any net capital gains which have been
recognized for federal income tax purposes (including unrealized gains at
the end of each Portfolio's fiscal year) on futures transactions. Such
distributions will be combined with distributions of capital gains
realized on each Portfolio's other investments.
DIRECTORS AND OFFICERS
The names, addresses and ages of the directors and officers of the Fund
and a brief statement of their present positions and principal occupations
during the past five years is set forth below.
5
<PAGE>
DIRECTORS
David G. Booth*, 48, Director, President and Chairman-Chief Executive
Officer, Santa Monica, CA. President, Chairman-Chief Executive Officer
and Director, Dimensional Fund Advisors Inc., DFA Securities Inc., DFA
Australia Pty Limited, Dimensional Investment Group Inc. (registered
investment company) and Dimensional Emerging Markets Fund Inc. (registered
investment company). Trustee, President and Chairman-Chief Executive
Officer of The DFA Investment Trust Company. Chairman and Director,
Dimensional Fund Advisors Ltd.
George M. Constantinides, 47, Director, Chicago, IL. Leon Carroll
Marshall Professor of Finance, Graduate School of Business, University of
Chicago. Trustee, The DFA Investment Trust Company. Director,
Dimensional Investment Group Inc. and Dimensional Emerging Markets Fund
Inc. Academic Advisory Council Member, Merrill Lynch & Co.
John P. Gould, 56, Director, Chicago, IL. Distinguished Service
Professor of Economics, Graduate School of Business, University of
Chicago. Trustee, The DFA Investment Trust Company and First Prairie
Funds (registered investment company). Director, Dimensional Investment
Group Inc., Dimensional Emerging Markets Fund Inc. and Harbor Investment
Advisors.
Roger G. Ibbotson, 52, Director, New Haven, CT. Professor in Practice
of Finance, Yale School of Management. Trustee, The DFA Investment Trust
Company. Director, Dimensional Investment Group Inc., Dimensional
Emerging Markets Fund Inc., Hospital Fund, Inc. (investment management
services) and BIRR Portfolio Analysis, Inc. (software products).
Chairman, Institute Study of Security Markets. Chairman and President,
Ibbotson Associates, Inc., Chicago, IL (software, data, publishing and
consulting).
Merton H. Miller, 72, Director, Chicago, IL. Robert R. McCormick
Distinguished Service Professor Emeritus, Graduate School of Business,
University of Chicago. Trustee, The DFA Investment Trust Company.
Director, Dimensional Investment Group Inc. and Dimensional Emerging
Markets Fund Inc.
Myron S. Scholes, 54, Director, Greenwich, CT. Frank E. Buck Professor
of Finance, Graduate School of Business and Professor of Law, Law School,
Senior Research Fellow, Hoover Institution, (all) Stanford University.
Trustee, The DFA Investment Trust Company. Director, Dimensional
Investment Group Inc., Dimensional Emerging Markets Fund Inc., Benham
Capital Management Group of Investment Companies and Smith Breedon Group
of Investment Companies. Limited Partner, Long-Term Capital Management
L.P. (money manager).
Rex A. Sinquefield*, 50, Director, Chairman and Chief Investment
Officer, Santa Monica, CA. Chairman-Chief Investment Officer and
Director, Dimensional Fund Advisors Inc., DFA Securities Inc., DFA
Australia Pty Limited, Dimensional Investment Group Inc. and Dimensional
Emerging Markets Fund Inc. Trustee, Chairman-Chief Investment Officer of
The DFA Investment Trust Company. Chairman, Chief Executive Officer and
Director, Dimensional Fund Advisors Ltd.
* Interested Director of the Fund.
OFFICERS
Each of the officers listed below hold the same office in the following
entities: Dimensional Fund Advisors Inc., DFA Securities Inc., DFA
Australia Pty Limited, Dimensional Investment Group Inc., The DFA
Investment Trust Company, Dimensional Fund Advisors Ltd., and Dimensional
Emerging Markets Fund Inc.
6
<PAGE>
Arthur Barlow, 39, Vice President, Santa Monica, CA.
Maureen Connors, 58, Vice President, Santa Monica, CA.
Robert Deere, 37, Vice President, Santa Monica, CA.
Irene R. Diamant, 45, Vice President and Secretary, Santa Monica, CA.
Associate attorney, Cahill Gordon & Reindel, from 1987 to 1991.
Eugene Fama, Jr., 34, Vice President, Santa Monica, CA.
David Plecha, 33, Vice President, Santa Monica, CA.
George Sands, 39, Vice President, Santa Monica, CA. Managing Director,
Asset Strategy Consulting, Los Angeles, CA from 1991 to 1992 and
previously Vice President of Wilshire Associates, Santa Monica, CA.
Michael T. Scardina, 39, Vice President, Chief Financial Officer,
Controller and Treasurer, Santa Monica, CA.
Cem Severoglu, 32, Vice President, Santa Monica, CA.
Jeanne C. Sinquefield, Ph.D., 48, Executive Vice President, Santa
Monica, CA.
Rex A. Sinquefield and Jeanne C. Sinquefield are husband and wife.
Directors and officers as a group own less than 1% of the Fund's
outstanding stock.
Set forth below is a table listing, for each director entitled to
receive compensation, the compensation received from the Fund during the
fiscal year ended November 30, 1994, and the total compensation received
from all four registered investment companies for which the Advisor serves
as investment advisor during that same fiscal year.
<TABLE>
<CAPTION>
Aggregate Total Compensation from
Compensation Fund
Director from Fund and Fund Complex
- -------- ------------------ ------------------------
<S> <C> <C>
George M. Constantinides $ 15,375 $ 30,750
John P. Gould $ 15,375 $ 30,750
Roger G. Ibbotson $ 15,375 $ 30,750
Merton H. Miller $ 15,000 $ 30,000
Myron S. Scholes $ 12,000 $ 24,000
</TABLE>
ADMINISTRATIVE SERVICES
PFPC Inc. ("PFPC") serves as the accounting services, dividend
disbursing and transfer agent for each Portfolio. The services provided
by PFPC are subject to supervision by the executive officers and the Board
of Directors of the Fund, and include day-to-day keeping and maintenance
of certain records, calculation of the offering price of the shares,
preparation of reports, liaison with its custodians, and transfer
7
<PAGE>
and dividend disbursing agency services. For its services, each Portfolio
pays PFPC fees at the annual rates set forth in the following table:
DOMESTIC EQUITY PORTFOLIOS
.1025% of the first $300 million of net assets
.0769% of the next $300 million of net assets
.0513% of the next $250 million of net assets
.0205% of the net assets over $850 million
INTERNATIONAL EQUITY PORTFOLIOS
.1230% of the first $300 million of net assets
.0615% of the next $300 million of net assets
.0410% of the next $250 million of net assets
.0205% of net assets over $850 million
VA SHORT-TERM FIXED PORTFOLIO
.0513% of the first $100 million of net assets
.0308% of the next $100 million of net assets
.0205% of the next $200 million of net assets
VA GLOBAL BOND PORTFOLIO
.1230% of the first $150 million of net assets
.0820% of net assets between $150 million and $300 million
.0615% of net assets between $300 million and $600 million
.0410% of net assets between $600 million and $850 million
.0205% of net assets over $850 million
PFPC also charges minimum fees at the rates of $54,000 per year for the
Fixed Income Portfolios and $75,000 per year for the Domestic and
International Equity Portfolios. The minimums are phased in on a pro rata
basis during each Portfolio's first 12-14 months of operation.
OTHER INFORMATION
For the services it provides as investment advisor to each Portfolio,
the Advisor is paid a monthly fee calculated as a percentage of average
net assets of the Portfolio.
Because of current federal securities law requirements, the Fund
expects that its life insurance company shareholders will offer their
contract owners the opportunity to instruct them as to how Portfolio
shares allocable to their variable contracts will be voted with respect to
certain matters, such as approval of investment advisory agreements.
Generally, an insurance company will vote all Portfolio shares held in a
separate account in the same proportion as it receives instructions from
contract owners in that separate account. Under certain circumstances
described in the insurance company separate account prospectus, the
insurance company may not vote in accordance with the contract owner's
instructions.
With respect to matters which require shareholder approval,
shareholders are entitled to vote only with respect to matters which
affect the interest of the class of shares (Portfolio) which they hold,
except as otherwise required by applicable law. If liquidation of the
Fund should occur, shareholders would be entitled to receive on a per
class basis the assets of the particular Portfolio whose shares they own,
as well as a proportionate share of Fund assets not attributable to any
particular class. Ordinarily, the Fund does not
8
<PAGE>
intend to hold annual meetings of shareholders, except as required by the
Investment Company Act of 1940 or other applicable law. The Fund's by-
laws provide that special meetings of shareholders shall be called at the
written request of at least 10% of the votes entitled to be cast at such
meeting. Such meeting may be called to consider any matter, including the
removal of one or more directors. Shareholders will receive shareholder
communications with respect to such matters as required by the Investment
Company Act of 1940, including semi-annual and annual financial statements
of the Fund, the latter being audited at least once each year.
Boston Safe Deposit and Trust Company serves as the custodian for the
International Equity Portfolios and VA Global Bond Portfolio. PNC Bank,
N.A. serves as custodian for the Domestic Equity Portfolios and VA Short-
Term Fixed Portfolio. The custodians maintain a separate account or
accounts for the Portfolios; receive, hold and release portfolio
securities on account of the Portfolios; make receipts and disbursements
of money on behalf of the Portfolios; and collect and receive income and
other payments and distributions on account of the Portfolios' portfolio
securities.
Coopers & Lybrand L.L.P., the Fund's independent accountants, audit
the Fund's financial statements.
PRINCIPAL HOLDERS OF SECURITIES
As of May 31, 1995, the following stockholders owned at least 5% of
the outstanding stock of the Portfolios, as set forth below.
<TABLE>
<CAPTION>
VA LARGE VALUE PORTFOLIO
<S> <C>
(formerly National Home Life) Providian Life and Health Separate Account* 70.48%
400 West Market Street
P.O. Box 32830
Louisville, KY 40232
(formerly National Home Life) Providian Life and Health General Account* 29.52%
400 West Market Street
P.O. Box 32830
Louisville, KY 40232]
VA GLOBAL BOND PORTFOLIO
(formerly National Home Life) Providian Life and Health Separate Account* 21.91%
400 West Market Street
P.O. Box 32830
Louisville, KY 40232
(formerly National Home Life) Providian Life and Health Separate Account* 78.09%
400 West Market Street
P.O. Box 32830
Louisville, KY 40232
<FN>
- --------------------------
*Owner of record only.
</TABLE>
9
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
The following information supplements the information set forth in
the prospectus under the caption "PURCHASE AND REDEMPTION OF SHARES."
The Fund will accept purchase and redemption orders on each day that
the New York Stock Exchange ("NYSE") is open for business, regardless of
whether the Federal Reserve System is closed. However, no purchases by
wire may be made on any day that the Federal Reserve System is closed.
The Fund will generally be closed on days that the NYSE is closed. The
New York Stock Exchange is scheduled to be open Monday through Friday
throughout the year except for days closed to recognize New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day. The Federal Reserve System is closed on
the same days as the NYSE, except that is open on Good Friday and closed
on Martin Luther King, Jr. Day, Columbus Day and Veterans' Day. Orders
for redemptions and purchases will not be processed if the Fund is closed.
The TSE is closed on the following days in 1995: January 2-3 and 16,
February 11, March 21, April 29, May 3-5, September 15, September 23,
October 10, November 3, November 23 and December 23 and 29.
Management believes that any dilutive effect of the cost of investing
the proceeds of the sale of the shares of the Portfolios is minimal and,
therefore, the shares of the Portfolios are currently sold at net asset
value, without imposition of a reimbursement fee. Reimbursement fees may
be charged prospectively from time to time based upon the future
experience of the Portfolios. Any such charges will be described in the
prospectus.
The Fund reserves the right, in its sole discretion, to suspend the
offering of shares of any or all Portfolios or reject purchase orders
when, in the judgment of management, such suspension or rejection is in
the best interest of the Fund or a Portfolio.
The Fund may suspend redemption privileges or postpone the date of
payment: (1) during any period when the NYSE is closed, or trading on the
NYSE is restricted as determined by the Securities and Exchange Commission
(the "Commission"), (2) during any period when an emergency exists as
defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it,
or fairly to determine the value of its assets and (3) for such other
periods as the Commission may permit.
If the Board of Directors determines that it would be detrimental to
the best interests of the remaining shareholders of any Portfolio to make
payment wholly or partly in cash, any Portfolio may pay the redemption
price in whole or in part by a distribution of portfolio securities from
the Portfolio of the shares being redeemed in lieu of cash. Any such
redemption by a Portfolio would be in accordance with Rule 18f-1 under the
Investment Company Act of 1940. Investors may incur brokerage charges and
other transaction costs selling securities that were received in payment
of redemptions. The International Equity Portfolios and the VA Global
Bond Portfolio reserve the right to redeem their shares in the currencies
in which their investments are denominated. Investors may incur charges
in converting such securities to dollars and the value of the securities
may be affected by currency exchange fluctuations.
CALCULATION OF PERFORMANCE DATA
Each Portfolio determines its average annual total return by finding
the average annual compounded rates of return over the stated time period
that would equate a hypothetical initial purchase order of $1,000 to its
redeemable value (including capital appreciation/depreciation and
dividends and distributions paid and
10
<PAGE>
reinvested less any fees charged to a shareholder account) at the end of
the stated time period. The calculation assumes that all dividends and
distributions are reinvested at the public offering price on the
reinvestment dates during the period. The quotation assumes the account
was completely redeemed at the end of each period and the deduction of all
applicable charges and fees. According to the Commission formula:
P(1 + T)(n) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the one-, five-, and ten-year periods at the end of the
one-, five-, and ten-year periods (or fractional portion thereof).
In addition to the standardized method required by the Commission, the
Portfolios may disseminate other performance data. Non-standardized
return data may be presented over time periods which extend prior to the
initial investment in the Portfolios by using simulated data for the
investment strategies of the Portfolios for that portion of the period
prior to the initial investment dates. The simulated data excludes the
deduction of Portfolio expenses which would otherwise reduce the returns
quotations.
11
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
None.
(b) Exhibits:
(1) Articles of Incorporation**
(i) Articles Supplementary to Charter*
(2) By-Laws, as amended*
(3) None
(4) (i) Specimen Security of The Japanese Small Company
Portfolio**
(ii) Specimen Security of The United Kingdom Small Company
Portfolio**
(iii) Specimen Security of The U.S. 9-10 Small Company
Portfolio**
(iv) Specimen Security of The DFA Five-Year Government
Portfolio**
(v) Specimen Security of The Continental Small Company
Portfolio**
(vi) Specimen Security of The U.S. Large Company
Portfolio**
(vii) Specimen Security of The DFA Global Bond Portfolio**
(viii) Specimen Security of The DFA Intermediate Government
Bond Portfolio**
(ix) Specimen Security of The Pacific Rim Small Company
Portfolio (formerly, The Asia-Australia Small Company
Portfolio)**
(x) Specimen Security of The Large Company International
Portfolio**
(xi) Specimen Security of The U.S. 6-10 Small Company
Portfolio**
(xii) Specimen Security of The DFA Real Estate Securities
Portfolio**
(xiii) Specimen Security of The U.S. Large Cap High Book to
Market Portfolio**
(xiv) Specimen Security of The U.S. Small Cap High Book to
Market Portfolio**
(xv) Specimen Security of the DFA International High Book
to Market Portfolio (formerly, the Reinhardt Werba
Bowen International Large Stock Portfolio)**
C-1
<PAGE>
(xvi) Specimen Security of the Emerging Markets Portfolio**
(xvii) Specimen Security of the DFA Global Value Portfolio**
(xviii) Specimen Security of the DFA Global Bond Portfolio**
(xix) Specimen Security of the DFA International Small Cap
Value Portfolio**
(xx) Specimen Security of the VA Small Value Portfolio
(xxi) Specimen Security of the VA International Value
Portfolio
(xxii) Specimen Security of the VA International Small
Portfolio
(xxiii) Specimen Security of the VA Short-Term Fixed Portfolio
(5) (i) Investment Advisory Agreement re: The U.S. 9-10 Small
Company Portfolio**
(ii) Investment Advisory Agreement re: The Japanese Small
Company Portfolio**
(iii) Sub-Advisory Agreement re: The Japanese Small Company
Portfolio**
(iv) Investment Advisory Agreement re: The United Kingdom
Portfolio**
(v) Investment Advisory Agreement re: The DFA Five-Year
Government Portfolio**
(vi) Investment Advisory Agreement re: The Continental
Small Company Portfolio**
(vii) Form of Investment Advisory Agreement re: The U.S.
Large Company Portfolio**
(viii) Form of Investment Advisory Agreement re: The DFA
Global Bond Portfolio**
(ix) Form of Investment Advisory Agreement re: The DFA
Intermediate Government Bond Portfolio**
(x) Form of Investment Advisory Agreement re: The Pacific
Rim Small Company Portfolio (formerly, The Asia-
Australia Small Company Portfolio)**
(xi) Form of Investment Advisory Agreement re: The Large
Cap International Portfolio**
(xii) Form of Investment Advisory Agreement re: The U.S. 6-
10 Small Company Portfolio**
(xiii) Form of Sub-Advisory Agreement re: The Continental
Small Company Portfolio**
(xiv) Form of Sub-Advisory Agreement re: The United Kingdom
Small Company Portfolio**
(xv) Form of Investment Advisory Agreement re: The U.S.
Large Cap High Book to Market Portfolio**
C-2
<PAGE>
(xvi) Form of Investment Advisory Agreement re: The U.S.
Small Cap High Book to Market Portfolio**
(xvii) Form of Investment Advisory Agreement re: The DFA/AEW
Real Estate Securities Portfolio**
(xviii) Form of Sub-Advisory Agreement with Aldrich, Eastman &
Waltch L.P., re: The DFA/AEW Real Estate Securities
Portfolio**
(xix) Form of Investment Advisory Agreement re: the DFA
International High Book to Market Portfolio (formerly,
the Reinhardt Werba Bowen International Large Stock
Portfolio)**
(xx) Form of Sub-Advisory Agreement with Dimensional Fund
Advisors Asia Inc. re: The Japanese Small Company
Portfolio**
(xxi) Form of Sub-Advisory Agreement with Dimensional Fund
Advisors Asia Inc. re: The Pacific Rim Small Company
Portfolio**
(xxii) Form of Investment Advisory Agreement re: VA Large
Value Portfolio (formerly DFA Global Value Portfolio)
(xxiii) Form of Investment Advisory Agreement re: DFA Global
Bond Portfolio**
(xxiv) Form of Investment Advisory Agreement re: DFA
International Small Cap Value Portfolio**
(xxv) Form of Investment Advisory Agreement re: VA Small
Value Portfolio
(xxvi) Form of Investment Advisory Agreement re: VA
International Value Portfolio
(xxvii) Form of Investment Advisory Agreement re: VA
International Small Portfolio
(xxviii) Form of Investment Advisory Agreement re: VA Short-
Term Fixed Portfolio
(xxix) Form of Sub-Advisory Agreement with DFA Australia Pty
Limited re: VA International Small Portfolio (Pacific
Rim Small Company Stocks)
(xxx) Form of Sub-Advisory Agreement with DFA Australia Pty
Limited re: VA International Small Portfolio (Japanese
Small Company Stocks)
(xxxi) Form of Sub-Advisory Agreement with Dimensional Fund
Advisors Ltd. re: VA International Small Portfolio
(Continental Small Company Stocks)
(xxxii) Form of Sub-Advisory Agreement with Dimensional Fund
Advisors Ltd. re: VA International Small Portfolio
(United Kingdom Small Company Stocks)
(6) Agreement with DFA Securities Inc.**
C-3
<PAGE>
(7) None.
(8) (i) Custody Agreement between DFA Investment Dimensions
Group Inc. and Boston Safe Deposit and Trust Company
(a) Amendment to Custody Agreement with Mellon Trust
(i.e, Boston Safe Deposit and Trust Company) re:
DFA International High Book to Market Portfolio
(b) Amendment to Custody Agreement with Mellon Trust
(formerly Boston Safe Deposit and Trust Company)
re: DFA International Small Cap Value Portfolio
(c) Form of Amendment to Custody Agreement with
Boston Safe Deposit and Trust Company re: VA
International Small Portfolio and VA
International Value Portfolio
(ii) Form of Custodian Agreement between DFA Investment
Dimensions Group Inc. and Provident National Bank for
The U.S. 9-10 Small Company Portfolio, The U.S. Large
Company Portfolio, The DFA One-Year Fixed Income
Portfolio, The DFA Intermediate Government Bond
Portfolio, and The DFA Five-Year Government
Portfolio**
(a) Amendment Number One**
(b) Amendment Number Two**
(c) Form of Amendment Number Three**
(d) Form of Amendment Number Four**
(e) Form of Amendment Number Five
(9) (i) Transfer Agency Agreement with Provident Financial
Processing Corporation**
(a) Amendment Number One**
(b) Amendment Number Two**
(c) Form of Amendment Number Three**
(d) Form of Amendment Number Four**
(e) Form of Amendment Number Five**
(f) Form of Amendment Number Six*
(g) Form of Amendment Number Seven*
(h) Form of Amendment Number Eight*
(i) Form of Amendment Number Nine*
(j) Form of Amendment Number Ten
(ii) Administration and Accounting Services Agreement with
Provident Financial Processing Corporation**
(a) Amendment Number One**
(b) Amendment Number Two**
(c) Form of Amendment Number Three**
(d) Form of Amendment Number Four**
(e) Form of Amendment Number Five**
C-4
<PAGE>
(f) Form of Amendment Number Six*
(g) Form of Amendment Number Seven*
(h) Form of Amendment Number Eight*
(i) Form of Amendment Number Nine*
(j) Form of Amendment Number Ten
(iii) Form of Administration Agreement re: The U.S. 6-10
Small Company Portfolio**
(iv) Form of Administration Agreement re: The U.S. Large
Company Portfolio**
(v) Form of Administration Agreement re: The DFA One-Year
Fixed Income Portfolio**
(vi) Form of Administration Agreement re: The U.S. Large
Cap High Book to Market Portfolio**
(vii) Form of Administration Agreement re: The U.S. Small
Cap High Book to Market Portfolio**
(viii) Form of Administration Agreement re: The Pacific Rim
Small Company Portfolio (formerly, Asia-Australia
Small Company Portfolio)**
(ix) Form of Client Service Agent Agreement re: DFA
International High Book to Market Portfolio (formerly
Reinhardt Werba Bowen International Large Stock
Portfolio)**
(x) Form of Administration Agreement re: The DFA
International High Book to Market Portfolio**
(xi) Form of Administration Agreement re: the Emerging
Markets Portfolio**
(xii) Marketing Agreement with National Home Life Assurance
Company
(xiii) Participation Agreement with National Home Life
Assurance Company
(xiv) Form of Administration Agreement re: DFA Five-Year
Government Portfolio**
(10) Opinion of counsel - filed with Rule 24f-2 Notice on
approximately January 26, 1995
(11) Not applicable
(12) Not applicable
(13) Subscription Agreement under Section 14(a)(3) of the
Investment Company Act of 1940**
(14) Not applicable
(15) Amended Distribution Plan**
(i) Amended compensation agreement**
(16) Not applicable
(17) Not applicable
C-5
<PAGE>
(18) Power of Attorney and certified resolution relating
thereto**
* To be filed by amendment.
** Previously filed with this registration statement and incorporated
herein by reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
Number of
Record Holders
Title of Class as of
---------------- May 31, 1995
(Par Value $.01) ---------------
U.S. 9-10 Small Company Portfolio 189
U.S. 6-10 Small Company Portfolio 28
U.S. Large Company Portfolio 52
U.S. Small Cap Value Portfolio 124
U.S. Large Cap Value Portfolio 95
DFA/AEW Real Estate Securities Portfolio 22
Japanese Small Company Portfolio 104
Pacific Rim Small Company Portfolio 80
United Kingdom Small Company Portfolio 85
Emerging Markets Portfolio 49
Continental Small Company Portfolio 119
Large Cap International Portfolio 42
DFA International High Book to Market
Portfolio 3
DFA International Small Cap Value
Portfolio 15
DFA One-Year Fixed Income Portfolio 214
DFA Five-Year Government Portfolio 53
DFA Global Fixed Income Portfolio 39
DFA Intermediate Government Fixed Income
Portfolio 13
VA Global Value Portfolio 2
VA Global Bond Portfolio 2
C-6
<PAGE>
ITEM 27. INDEMNIFICATION
Section 1 of Article XI of the Registrant's By-Laws provides for
indemnification, as set forth below.
With respect to the indemnification of the Officers and
Directors of the corporation:
(a) the Corporation shall indemnify each Officer and Director made
party to a proceeding, by reason of service in such capacity, to
the fullest extent, and in the manner provided under Section 2-
418 of the Maryland General Corporation Law: (i) unless it is
proved that the person seeking indemnification did not meet the
standard of conduct set forth in subsection (b)(1) of such
section; and (ii) provided, that the Corporation shall not
indemnify any Officer or Director for any liability to the
Corporation or its security holders arising from the willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such person's office.
(b) The provisions of clause (i) of paragraph (a) herein
notwithstanding, the Corporation shall indemnify each Officer
and Director against reasonable expenses incurred in connection
with the successful defense of any proceeding to which such
Officer or Director is a party by reason of service in such
capacity.
(c) The Corporation, in the manner and to the extent provided by
applicable law, shall advance to each Officer and Director who
is made party to a proceeding by reason of service in such
capacity the reasonable expenses incurred by such person in
connection therewith.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
Registrant's Investment Advisor, Dimensional Fund Advisors Inc. (the
"Advisor"), was organized in May, 1981. The principal place of
business of the Advisor is 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401. The Advisor is engaged in the business of
providing investment advice primarily to institutional investors.
The Sub-Advisor for the VA International Small Portfolio of the
Registrant, The Continental Small Company Portfolio and The United
Kingdom Small Company Portfolio of DFA Investment Dimensions Group
Inc. ("DFAIDG"), Dimensional Fund Advisors Ltd. ("DFAL"), was
organized under the laws of England in
C-7
<PAGE>
1990. The principal place of business of DFAL is 14 Berkeley Street,
London W1X 5AD, England.
The Sub-Advisor for the VA International Small Portfolio of the
Registrant, The Japanese and Pacific Rim Small Company Portfolios of
DFAIDG, DFA Australia Pty Limited ("DFA Australia"), was organized
under the laws of Delaware in 1993. The principal place of business
of DFA Australia Pty Limited is Suite 4403 Gateway, 1 MacQuarie
Place, Sydney, New South Wales 2000, Australia.
Aldrich, Eastman & Waltch L.P. ("AEW"), the sub-advisor to The
DFA/AEW Real Estate Securities Portfolio, is a Massachusetts limited
partnership founded in 1981. The principal place of business of AEW
is 225 Franklin Street, Boston, MA 02110-2803.
The business, profession, vocation or employment of a substantial
nature in which each director and officer of the Advisor, DFAL, DFAA
and AEW is or has been, during the past two fiscal years, engaged for
his own account in the capacity of director, officer, employee,
partner or trustee is as follows:
David G. Booth is Chairman - Chief Executive Officer, President and a
Director of the Advisor and the Registrant and is President, Chairman
- Chief Executive Officer and a Trustee of The DFA Investment Trust
Company (the Trust"). Mr. Booth is also Chairman - Chief Executive
Officer and a Director of DFA Securities Inc., Dimensional Emerging
Markets Fund Inc. (registered investment company), Dimensional
Investment Group Inc. (registered investment company) and DFA
Australia. He is Chairman and Director of DFAL.
Rex A. Sinquefield is Chairman - Chief Investment Officer and a
Director of the Advisor and the Registrant. He is also Chairman -
Chief Investment Officer and a Director of DFA Securities Inc.,
Dimensional Emerging Markets Fund Inc., Dimensional Investment Group
Inc. and DFA Australia, Trustee and Chairman - Chief Investment
Officer of the Trust, and Chairman, Chief Executive Officer and
Director of DFAL.
Eugene Francis Fama, a Director of the Advisor, is the Theodore O.
Yntema Distinguished Service Professor of Finance, and has been
engaged in teaching and research in finance and economics at the
Graduate School of Business, University of Chicago, Chicago, Illinois
since September, 1963. Mr. Fama also is a Director of DFA Securities
Inc.
John Andrew McQuown, a Director of the Advisor, has been self
employed since 1974 as an entrepreneur, financier and
C-8
<PAGE>
consultant to major financial institutions. He is also a Director of
Chalone Wine Group, Inc., Mortgage Information Corporation, KMV
Corporation and Microsource, Inc.
Lloyd Stockel, a Director of the Advisor, is the Chairman of Sand
County Ventures, Inc. and a Trustee of Muir Investment Trust.
David Salisbury, a Director of the Advisor, is Chief Executive
Officer of Schroder Capital Management International Inc.
Arthur Barlow is a Vice President of Registrant, the Advisor, the
Trust, DFA Securities Inc., Dimensional Emerging Markets Fund Inc.,
Dimensional Investment Group Inc., DFA Australia and DFAL.
Maureen Connors is a Vice President of Registrant, the Advisor, the
Trust, DFA Securities Inc., Dimensional Emerging Markets Fund Inc.,
Dimensional Investment Group Inc., DFA Australia and DFAL.
Robert Deere is a Vice President of Registrant, the Advisor, the
Trust, DFA Securities Inc., Dimensional Emerging Markets Fund Inc.,
Dimensional Investment Group Inc., DFA Australia and DFAL.
Irene R. Diamant is a Vice President and Secretary of Registrant, the
Advisor, DFA Australia, DFA Securities Inc., the Trust, Dimensional
Emerging Markets Fund Inc. and Dimensional Investment Group Inc. Ms.
Diamant is also a Vice President of DFAL and was an associate
attorney with Cahill, Gordon and Reindel in New York, NY from 1987 to
1991.
Eugene Fama, Jr. is a Vice President of Registrant, the Advisor, the
Trust, DFA Securities Inc., Dimensional Emerging Markets Fund Inc.,
Dimensional Investment Group Inc., DFA Australia and DFAL.
David Plecha is a Vice President of Registrant, the Advisor, the
Trust DFA Securities Inc., Dimensional Emerging Markets Fund Inc.,
Dimensional Investment Group Inc., DFA Australia and DFAL.
George Sands is a Vice President of Registrant, the Adviser, DFA
Securities Inc., the Trust, Dimensional Emerging Markets Fund Inc.,
Dimensional Investment Group Inc., DFA Australia and DFAL. Mr. Sands
was a Managing Director of Asset Strategy Consulting in Los Angeles,
CA from March 1991 to August 1992 and a Vice President of Wilshire
Associates in Santa Monica, CA from 1985 to February 1991.
C-9
<PAGE>
Michael T. Scardina is a Vice President, Chief Financial Officer,
Controller and Treasurer of the Registrant, the Advisor, the Trust,
DFA Securities Inc., Dimensional Emerging Markets Fund Inc.,
Dimensional Investment Group Inc., DFA Australia and DFAL.
Cem Severoglu is a Vice President of Registrant, the Advisor, the
Trust, DFA Securities Inc., Dimensional Emerging Markets Fund Inc.,
Dimensional Investment Group Inc., DFA Australia and DFAL.
Jeanne C. Sinquefield is Executive Vice President of the Registrant,
the Advisor, DFA Securities Inc., the Trust, Dimensional Emerging
Markets Fund Inc., Dimensional Investment Group Inc., DFA Australia
and DFAL.
Peter C. Aldrich is Executive Director and Co-Chairman of AEW. He is
also Executive Director and Co-Chairman of Aldrich, Eastman & Waltch,
Inc. ("AEW, Inc.").
Thomas G. Eastman is Executive Director and Co-Chairman of AEW and
AEW, Inc.
Joseph F. Azrack is President and Executive Director of AEW and AEW,
Inc.
Steven D. Corkin is a Director of AEW and a Vice President of AEW,
Inc.
Marvin M. Franklin is a Director of AEW and a Vice President of AEW,
Inc.
Kenneth G. Lewis is a Director of AEW.
J. Grant Monahon is a Director, General Counsel and Secretary of AEW.
He is also Vice President and Clerk of AEW, Inc.
Thomas K. Albert is a Director of AEW.
Adam S. Berger is a Director of AEW.
Doreen M. Biebusch is Chief Financial Officer, Treasurer and a
Director of AEW. She is also Treasurer of AEW, Inc.
Elizabeth A. Briones is a Vice President of AEW.
Glenn L. Burdick is a Senior Vice President of AEW.
Lori D. Campana is a Senior Vice President of AEW.
Daniel M. Cashdan is a Vice President of AEW.
C-10
<PAGE>
Edward F. Cassidy, Jr. is a Senior Vice President of AEW.
Gerd A. Cross is an Asset Controller and Vice President of AEW and a
Vice President and Assistant Clerk of AEW, Inc.
Gregg O. Dawley is a Senior Vice President of AEW.
Robert G. Gifford is a Director of AEW.
James S. Keagy is a Senior Vice President of AEW.
Kevin McCall is a Director of AEW. Before joining AEW in 1990, Mr.
McCall was self-employed.
H. Rennyson Merritt, III is Chief Operating Officer and a Director of
AEW and a Vice President of AEW, Inc.
Sarah Bankson Newton is a Vice President of AEW.
Thomas H. Nolan is a Director of AEW.
Randy J. Parker is a Vice President of AEW.
Douglas M. Poutasse is a Vice President of AEW. Prior to joining AEW
in 1991, Mr. Poutasse directed Real Estate and Construction
Forecasting at F. W. Dodge (marketing and research company).
Gregory P. Shay is a Vice President of AEW. Prior to joining AEW in
1993, Mr. Shay was a consultant with Colonial Capital, Inc. from
December 1992 through July 1993.
Clifford M. Brown is a Vice President of AEW. Prior to joining AEW
in 1993, Mr. Brown was a director of Salomon Brothers, Inc.
Sylvia Ferrell-Jones is a Senior Vice President of AEW. Prior to
joining AEW in September of 1993, Ms. Ferrell-Jones was the senior
investment officer for real estate at the State of Connecticut Trust
Funds.
Patrick J. Sullivan is a Senior Vice President of AEW.
Martha J. Thurber is a Vice President of AEW.
Henry G. Vickers, Jr. is a Vice President of AEW.
Charles F. Wu is a Director of AEW.
C-11
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) None.
(b) Registrant distributes its own shares. It has entered into an
agreement, filed as Exhibit No. 6 to the Registration Statement,
which provides that DFA Securities Inc., 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401, will supervise the sale
of Registrant's shares. This agreement is subject to the
requirements of Section 15(b) of the Investment Company Act of
1940.
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records are maintained by PFPC Inc., 400
Bellevue Parkway, Wilmington, DE 19809.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) The Registrant undertakes to file a post-effective amendment
using uncertified financial statements within four to six months
from the effective date of VA Small Value Portfolio, VA Large
Value Portfolio, VA International Small Portfolio, and VA Short-
Term Fixed Portfolio.
(c) Not applicable.
C-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Amendment No. 33 to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Santa Monica
and State of California on the 15th day of June, 1995.
DFA INVESTMENT DIMENSIONS GROUP INC.
By: David G. Booth*
-------------------------------
David G. Booth
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 33 to the Registration Statement has been
signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
Director and
David G. Booth* Chairman-Chief June 15, 1995
- -------------------------- Executive Officer
David G. Booth
Director and
Rex A. Sinquefield* Chairman-Chief June 15, 1995
- -------------------------- Investment Officer
Rex A. Sinquefield
Chief Financial
Michael T. Scardina* Officer, Treasurer June 15, 1995
- -------------------------- and Vice President
Michael T. Scardina
George M. Constantinides* Director June 15, 1995
- --------------------------
George M. Constantinides
John P. Gould* Director June 15, 1995
- --------------------------
John P. Gould
Roger G. Ibbotson* Director June 15, 1995
- --------------------------
Roger G. Ibbotson
Merton H. Miller* Director June 15, 1995
- --------------------------
Merton H. Miller
Myron S. Scholes* Director June 15, 1995
- --------------------------
Myron S. Scholes
*By: Irene R. Diamant
--------------------------
Irene R. Diamant
Attorney-in-Fact
(Pursuant to Power of Attorney previously filed.)
C-13
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
99.B4 (xx) Specimen Security - VA Small Value Portfolio
99.B4 (xxi) Specimen Security - VA International Value
Portfolio
99.B4 (xxii) Specimen Security - VA International Small
Portfolio
99.B4 (xxiii) Specimen Security - VA Short-Term Fixed
Portfolio
99.B5 (xxii) Form of Investment Advisory Agreement re: VA Large
Value
Portfolio
99.B5 (xxv) Form of Investment Advisory Agreement
re: VA Small Value Portfolio
99.B5 (xxvi) Form of Investment Advisory Agreement
re: VA International Value Portfolio
99.B5 (xxvii) Form of Investment Advisory Agreement
re: VA International Small Portfolio
99.B5 (xxviii) Form of Investment Advisory Agreement
re: VA Short-Term Fixed Portfolio
99.B5 (xxix) Form of Sub-Advisory Agreement with DFA Australia Pty
Limited re: VA International Small Portfolio (Pacific
Rim Small Company Stocks)
99.B5 (xxx) Form of Sub-Advisory Agreement with DFA Australia Pty
Limited re: VA International Small Portfolio (Japanese
Small Company Stocks)
99.B5 (xxxi) Form of Sub-Advisory Agreement with Dimensional Fund
Advisors Ltd. re: VA International Small Portfolio
(Continental Small Company Stocks)
99.B5 (xxxii) Form of Sub-Advisory Agreement with Dimensional Fund
Advisors Ltd. re: VA International Small Portfolio
(United Kingdom Small Company Stocks)
99.B8 (i) Custody Agreement between DFA
C-14
<PAGE>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
Investment Dimensions Group Inc. and
Boston Safe Deposit and Trust Company
99.B8 (i)(a) Amendment to Custody Agreement with
Mellon Trust re: DFA International High
Book to Market Portfolio
99.B8 (i)(b) Amendment to Custody Agreement with
Mellon Trust re: DFA International Small
Cap Value Portfolio
99.B8 (i)(c) Form of Amendment to Custody Agreement with
Boston Safe Deposit and Trust Company re: VA
International Small Portfolio and VA International
Value Portfolio
99.B8 (ii)(e) Form of Amendment Number Five to
Custodian Agreement between DFA
Investment Dimensions Group Inc. and
PNC Bank, N.A.
99.B9 (i)(j) Form of Amendment Number Ten to
Transfer Agency Agreement with PFPC Inc.
99.B9 (ii)(j) Form of Amendment Number Ten to
Administration and Accounting Services
Agreement with PFPC Inc.
99.B9 (xii) Marketing Agreement with National Home
Life Assurance Company
99.B9 (xiii) Participation Agreement with National
Home Life Assurance Company
C-15
<PAGE>
Exhibit No. 99.B4(xx)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VA SMALL VALUE PORTFOLIO
------ ------
------ ------
Number Shares
----------------------- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DFA INVESTMENT DIMENSIONS GROUP INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEE REVERSE SIDE FOR -----------------
CERTAIN DEFINITIONS CUSIP
-----------------
-----------
-----------
VOID
-----------
-----------
THIS CERTIFIES THAT __________________________________________ IS THE OWNER OF
__________________________________________________________________________ FULLY
PAID AND NON-ASSESSABLE SHARES OF THE ABOVE CORPORATION BY THE HOLDER HEREOF IN
PERSON OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE
PROPERLY ENDORSED. THE CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE
TRANSFER AGENT. WITNESS THE SEAL OF THE CORPORATION AND THE SIGNATURES OF ITS
DULY AUTHORIZED OFFICERS.
COUNTERSIGNED:
PROVIDENT FINANCIAL PROCESSING CORPORATION
------------------------------------------
TRANSFER AGENT
DATED: BY
------------------------------------------
AUTHORIZED SIGNATURE
Rex A. Sinquefield David G. Booth
- --------------------------- ------------------------------------------
TREASURER PRESIDENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the entireties ---------------
JT TEN - as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants under Uniform Gifts to Minors
in common Act . . . . . . . . . .
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, ____________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
__________________________________________________________________________SHARES
OF BENEFICIAL INTEREST REPRESENTED BY THE WITHIN CERTIFICATE AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
________________________________________________________________________ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN-NAMED CORPORATION AND FULL
POWER OF SUBSTITUTION IN THE PREMISES.
DATED:_________________ 19__ SIGNED:
---------------------------
----------------------------------
(BOTH MUST SIGN IF JOINT TENANCY)
SIGNATURE(S)
GUARANTEED
-------------------------
FIRM OR BANK
BY
-----------------------------------
OFFICER
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
Exhibit No. 99.B4(xxi)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VA INTERNATIONAL VALUE PORTFOLIO
------ ------
------ ------
Number Shares
----------------------- -----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DFA INVESTMENT DIMENSIONS GROUP INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEE REVERSE SIDE FOR -----------------
CERTAIN DEFINITIONS CUSIP
-----------------
-----------
-----------
VOID
-----------
-----------
THIS CERTIFIES THAT __________________________________________ IS THE OWNER OF
__________________________________________________________________________ FULLY
PAID AND NON-ASSESSABLE SHARES OF THE ABOVE CORPORATION BY THE HOLDER HEREOF IN
PERSON OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE
PROPERLY ENDORSED. THE CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE
TRANSFER AGENT. WITNESS THE SEAL OF THE CORPORATION AND THE SIGNATURES OF ITS
DULY AUTHORIZED OFFICERS.
COUNTERSIGNED:
PROVIDENT FINANCIAL PROCESSING CORPORATION
------------------------------------------
TRANSFER AGENT
DATED: BY
----------------------------------------
AUTHORIZED SIGNATURE
Rex A. Sinquefield David G. Booth
- --------------------------- ------------------------------------------
TREASURER PRESIDENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the entireties ---------------
JT TEN - as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants under Uniform Gifts to Minors
in common Act . . . . . . . . . .
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, ____________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
__________________________________________________________________________SHARES
OF BENEFICIAL INTEREST REPRESENTED BY THE WITHIN CERTIFICATE AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
________________________________________________________________________ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN-NAMED CORPORATION AND FULL
POWER OF SUBSTITUTION IN THE PREMISES.
DATED:_________________ 19__ SIGNED:
----------------------------
----------------------------------
(BOTH MUST SIGN IF JOINT TENANCY)
SIGNATURE(S)
GUARANTEED
-------------------------
FIRM OR BANK
BY
----------------------------------
OFFICER
128173.1
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
Exhibit No. 99.B4(xxii)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VA INTERNATIONAL SMALL PORTFOLIO
------ ------
------ ------
Number Shares
----------------------- -----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DFA INVESTMENT DIMENSIONS GROUP INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEE REVERSE SIDE FOR -----------------
CERTAIN DEFINITIONS CUSIP
-----------------
-----------
-----------
VOID
-----------
-----------
THIS CERTIFIES THAT __________________________________________ IS THE OWNER OF
__________________________________________________________________________ FULLY
PAID AND NON-ASSESSABLE SHARES OF THE ABOVE CORPORATION BY THE HOLDER HEREOF IN
PERSON OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE
PROPERLY ENDORSED. THE CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE
TRANSFER AGENT. WITNESS THE SEAL OF THE CORPORATION AND THE SIGNATURES OF ITS
DULY AUTHORIZED OFFICERS.
COUNTERSIGNED:
PROVIDENT FINANCIAL PROCESSING CORPORATION
------------------------------------------
TRANSFER AGENT
DATED: BY
----------------------------------------
AUTHORIZED SIGNATURE
Rex A. Sinquefield David G. Booth
- --------------------------- ------------------------------------------
TREASURER PRESIDENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the entireties ---------------
JT TEN - as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants under Uniform Gifts to Minors
in common Act . . . . . . . . . .
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, ____________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
__________________________________________________________________________SHARES
OF BENEFICIAL INTEREST REPRESENTED BY THE WITHIN CERTIFICATE AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
________________________________________________________________________ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN-NAMED CORPORATION AND FULL
POWER OF SUBSTITUTION IN THE PREMISES.
DATED:_________________ 19__ SIGNED:
----------------------------
-----------------------------------
(BOTH MUST SIGN IF JOINT TENANCY)
SIGNATURE(S)
GUARANTEED
-------------------------
FIRM OR BANK
BY
--------------------------------
OFFICER
128173.1
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
Exhibit No. 99.B4(xxiii)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VA SHORT-TERM FIXED PORTFOLIO
------ ------
------ ------
Number Shares
----------------------- -----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DFA INVESTMENT DIMENSIONS GROUP INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEE REVERSE SIDE FOR -----------------
CERTAIN DEFINITIONS CUSIP
-----------------
-----------
-----------
VOID
-----------
-----------
THIS CERTIFIES THAT __________________________________________ IS THE OWNER OF
__________________________________________________________________________ FULLY
PAID AND NON-ASSESSABLE SHARES OF THE ABOVE CORPORATION BY THE HOLDER HEREOF IN
PERSON OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE
PROPERLY ENDORSED. THE CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE
TRANSFER AGENT. WITNESS THE SEAL OF THE CORPORATION AND THE SIGNATURES OF ITS
DULY AUTHORIZED OFFICERS.
COUNTERSIGNED:
PROVIDENT FINANCIAL PROCESSING CORPORATION
------------------------------------------
TRANSFER AGENT
DATED: BY
----------------------------------------
AUTHORIZED SIGNATURE
Rex A. Sinquefield David G. Booth
- --------------------------- ------------------------------------------
TREASURER PRESIDENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the entireties ---------------
JT TEN - as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants under Uniform Gifts to Minors
in common Act . . . . . . . . . .
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ____________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
__________________________________________________________________________SHARES
OF BENEFICIAL INTEREST REPRESENTED BY THE WITHIN CERTIFICATE AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
________________________________________________________________________ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN-NAMED CORPORATION AND FULL
POWER OF SUBSTITUTION IN THE PREMISES.
DATED:_________________ 19__ SIGNED:
----------------------------
-----------------------------------
(BOTH MUST SIGN IF JOINT TENANCY)
SIGNATURE(S)
GUARANTEED
-------------------------
FIRM OR BANK
BY
-----------------------------------
OFFICER
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
Exhibit No. 99.B5(xxii)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 8th day of September, 1995, by and between DFA
INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the "Fund") and
DIMENSIONAL FUND ADVISORS INC., a Delaware corporation (the "Advisor").
Duties of Advisor
The Fund hereby employs the Advisor to manage the investment and
reinvestment of the assets of VA Large Value Portfolio (the "Portfolio"), to
continuously review, supervise and administer the Portfolio's investment
program, to determine in its discretion the securities to be purchased or sold
and the portion of the Portfolio's assets to be uninvested, to provide the Fund
with records concerning the Advisor's activities which the Fund is required to
maintain, and to render regular reports to the Fund's officers and the Board of
Directors of the Fund, all in compliance with the objectives, policies and
limitations set forth in the Fund's prospectus and applicable laws and
regulations. The Advisor accepts such employment and agrees to provide, at its
own expense, the office space, furnishings and equipment and the personnel
required by it to perform the services described herein on the terms and for the
compensation provided herein.
Portfolio Transactions
The Advisor is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Portfolio and is
directed to use its best efforts to obtain the best available price and most
favorable execution, except as prescribed herein. It is understood that the
Advisor will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Fund or in respect of the Portfolio, or be in breach of
any obligation owing to the Fund or in respect of the Portfolio under this
Agreement, or otherwise, solely by reason of its having caused the Portfolio to
pay a member of a securities exchange, a broker or a dealer a commission for
effecting a securities transaction for the Portfolio in excess of the amount of
commission another member of an exchange, broker or dealer would have charged if
the Advisor determines in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Advisor's
overall responsibilities with respect to its accounts, including the Fund, as to
which it
<PAGE>
exercises investment discretion. The Advisor will promptly communicate to the
officers and directors of the Fund such information relating to transactions for
the Portfolio as they may reasonably request.
Compensation of the Advisor
For the services to be rendered by the Advisor as provided in Section
1 of this Agreement, the Fund shall pay to the Advisor, at the end of each
month, a fee equal to one-twelfth of .25 percent of the net assets of the
Portfolio. In the event that this Agreement is terminated at other than a
month-end, the fee for such month shall be prorated.
Other Services
At the request of the Fund, the Advisor, in its discretion, may make
available to the Fund office facilities, equipment, personnel and other
services. Such office facilities, equipment, personnel and service shall be
provided for or rendered by the Advisor and billed to the Fund at the Advisor's
cost and, where applicable, the cost thereof shall be apportioned among the
several Portfolios of the Fund proportionate to their respective utilization
thereof.
Reports
The Fund and the Advisor agree to furnish to each other information
with regard to their respective affairs as each may reasonably request.
Status of the Advisor
The services of the Advisor to the Fund or in respect of the
Portfolio, are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others as long as its services to the Fund or in
respect of the Portfolio, are not impaired thereby. The Advisor shall be deemed
to be an independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
Liability of Advisor
No provision of this Agreement shall be deemed to protect the Advisor
against any liability to the Fund or its shareholders to which it might
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations under this Agreement.
-2-
<PAGE>
Permissible Interests
Subject to and in accordance with the charters of the Fund and the
Advisor, respectively, directors, officers, and shareholders of the Fund are or
may be interested in the Advisor (or any successor thereof) as directors,
officers or shareholders, or otherwise; directors, officers, agents and
shareholders of the Advisor are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Advisor (or any successor) is or
may be interested in the Fund as a shareholder or otherwise and the effect of
any such interrelationships shall be governed by said charters and the
provisions of the Investment Company Act of 1940.
Duration and Termination
This Agreement shall become effective on September __, 1995 (the
"Effective Date") and shall continue in effect until December 31, 1996, and
thereafter, only if such continuance is approved at least annually by a vote of
the Fund's Board of Directors, including the vote of a majority of the directors
who are not parties to this Agreement or interested persons of any such party,
cast in person, at a meeting called for the purpose of voting such approval. In
addition, the question of continuance of this Agreement may be presented to the
shareholders of the Fund; in such event, such continuance shall be effected only
if approved by the affirmative vote of the holders of a majority of the
outstanding voting securities of the Portfolio.
This Agreement may at any time be terminated without payment of any
penalty either by vote of the Board of Directors of the Fund or by vote of the
holders of a majority of the outstanding voting securities of the Portfolio, on
sixty days written notice to the Advisor,
This Agreement shall automatically terminate in the event of its
assignment, and
This Agreement may be terminated by the Advisor after ninety days
written notice to the Fund.
Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at any office of such
party.
As used in this section, the terms "assignment," "interested persons,"
and a "vote of the holders of a majority of the outstanding securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19),
Section 2(a)(42) of the Investment Company Act of 1940 and Rule l8f-2
thereunder.
-3-
<PAGE>
Severability
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed this ____ day of September, 1995.
DIMENSIONAL FUND DFA INVESTMENT
ADVISORS INC. DIMENSIONS GROUP INC.
By: By:
------------------------- ---------------------------
Chairman-Chief President
Investment Officer
-4-
<PAGE>
Exhibit No. 99.B5(xxv)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 8th day of September, 1995, by and between DFA
INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the "Fund") and
DIMENSIONAL FUND ADVISORS INC., a Delaware corporation (the "Advisor").
Duties of Advisor
The Fund hereby employs the Advisor to manage the investment and
reinvestment of the assets of VA Small Value Portfolio (the "Portfolio"), to
continuously review, supervise and administer the Portfolio's investment
program, to determine in its discretion the securities to be purchased or sold
and the portion of the Portfolio's assets to be uninvested, to provide the Fund
with records concerning the Advisor's activities which the Fund is required to
maintain, and to render regular reports to the Fund's officers and the Board of
Directors of the Fund, all in compliance with the objectives, policies and
limitations set forth in the Fund's prospectus and applicable laws and
regulations. The Advisor accepts such employment and agrees to provide, at its
own expense, the office space, furnishings and equipment and the personnel
required by it to perform the services described herein on the terms and for the
compensation provided herein.
Portfolio Transactions
The Advisor is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Portfolio and is
directed to use its best efforts to obtain the best available price and most
favorable execution, except as prescribed herein. It is understood that the
Advisor will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Fund or in respect of the Portfolio, or be in breach of
any obligation owing to the Fund or in respect of the Portfolio under this
Agreement, or otherwise, solely by reason of its having caused the Portfolio to
pay a member of a securities exchange, a broker or a dealer a commission for
effecting a securities transaction for the Portfolio in excess of the amount of
commission another member of an exchange, broker or dealer would have charged if
the Advisor determines in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Advisor's
overall responsibilities with respect to its accounts, including the Fund, as to
which it
<PAGE>
exercises investment discretion. The Advisor will promptly communicate to the
officers and directors of the Fund such information relating to transactions for
the Portfolio as they may reasonably request.
Compensation of the Advisor
For the services to be rendered by the Advisor as provided in Section
1 of this Agreement, the Fund shall pay to the Advisor, at the end of each
month, a fee equal to one-twelfth of .50 percent of the net assets of the
Portfolio. In the event that this Agreement is terminated at other than a
month-end, the fee for such month shall be prorated.
Other Services
At the request of the Fund, the Advisor, in its discretion, may make
available to the Fund office facilities, equipment, personnel and other
services. Such office facilities, equipment, personnel and service shall be
provided for or rendered by the Advisor and billed to the Fund at the Advisor's
cost and, where applicable, the cost thereof shall be apportioned among the
several Portfolios of the Fund proportionate to their respective utilization
thereof.
Reports
The Fund and the Advisor agree to furnish to each other information
with regard to their respective affairs as each may reasonably request.
Status of the Advisor
The services of the Advisor to the Fund or in respect of the
Portfolio, are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others as long as its services to the Fund or in
respect of the Portfolio, are not impaired thereby. The Advisor shall be deemed
to be an independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
Liability of Advisor
No provision of this Agreement shall be deemed to protect the Advisor
against any liability to the Fund or its shareholders to which it might
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations under this Agreement.
-2-
<PAGE>
Permissible Interests
Subject to and in accordance with the charters of the Fund and the
Advisor, respectively, directors, officers, and shareholders of the Fund are or
may be interested in the Advisor (or any successor thereof) as directors,
officers or shareholders, or otherwise; directors, officers, agents and
shareholders of the Advisor are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Advisor (or any successor) is or
may be interested in the Fund as a shareholder or otherwise and the effect of
any such interrelationships shall be governed by said charters and the
provisions of the Investment Company Act of 1940.
Duration and Termination
This Agreement shall become effective on September __, 1995 (the
"Effective Date") and shall continue in effect until December 31, 1996, and
thereafter, only if such continuance is approved at least annually by a vote of
the Fund's Board of Directors, including the vote of a majority of the directors
who are not parties to this Agreement or interested persons of any such party,
cast in person, at a meeting called for the purpose of voting such approval. In
addition, the question of continuance of this Agreement may be presented to the
shareholders of the Fund; in such event, such continuance shall be effected only
if approved by the affirmative vote of the holders of a majority of the
outstanding voting securities of the Portfolio.
This Agreement may at any time be terminated without payment of any
penalty either by vote of the Board of Directors of the Fund or by vote of the
holders of a majority of the outstanding voting securities of the Portfolio, on
sixty days written notice to the Advisor,
This Agreement shall automatically terminate in the event of its
assignment, and
This Agreement may be terminated by the Advisor after ninety days
written notice to the Fund.
Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at any office of such
party.
As used in this section, the terms "assignment," "interested persons,"
and a "vote of the holders of a majority of the outstanding securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19),
Section 2(a)(42) of the Investment Company Act of 1940 and Rule l8f-2
thereunder.
-3-
<PAGE>
Severability
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed this ____ day of September, 1995.
DIMENSIONAL FUND DFA INVESTMENT
ADVISORS INC. DIMENSIONS GROUP INC.
By: By:
--------------------------- --------------------------
Chairman-Chief President
Investment Officer
-4-
<PAGE>
Exhibit No. 99.B5(xxvi)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 8th day of September, 1995, by and between DFA
INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the "Fund") and
DIMENSIONAL FUND ADVISORS INC., a Delaware corporation (the "Advisor").
Duties of Advisor
The Fund hereby employs the Advisor to manage the investment and
reinvestment of the assets of VA International Value Portfolio (the
"Portfolio"), to continuously review, supervise and administer the Portfolio's
investment program, to determine in its discretion the securities to be
purchased or sold and the portion of the Portfolio's assets to be uninvested, to
provide the Fund with records concerning the Advisor's activities which the Fund
is required to maintain, and to render regular reports to the Fund's officers
and the Board of Directors of the Fund, all in compliance with the objectives,
policies and limitations set forth in the Fund's prospectus and applicable laws
and regulations. The Advisor accepts such employment and agrees to provide, at
its own expense, the office space, furnishings and equipment and the personnel
required by it to perform the services described herein on the terms and for the
compensation provided herein.
Portfolio Transactions
The Advisor is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Portfolio and is
directed to use its best efforts to obtain the best available price and most
favorable execution, except as prescribed herein. It is understood that the
Advisor will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Fund or in respect of the Portfolio, or be in breach of
any obligation owing to the Fund or in respect of the Portfolio under this
Agreement, or otherwise, solely by reason of its having caused the Portfolio to
pay a member of a securities exchange, a broker or a dealer a commission for
effecting a securities transaction for the Portfolio in excess of the amount of
commission another member of an exchange, broker or dealer would have charged if
the Advisor determines in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Advisor's
overall responsibilities with respect to its accounts, including the Fund, as to
which it
<PAGE>
exercises investment discretion. The Advisor will promptly communicate to the
officers and directors of the Fund such information relating to transactions for
the Portfolio as they may reasonably request.
Compensation of the Advisor
For the services to be rendered by the Advisor as provided in Section
1 of this Agreement, the Fund shall pay to the Advisor, at the end of each
month, a fee equal to one-twelfth of .40 percent of the net assets of the
Portfolio. In the event that this Agreement is terminated at other than a
month-end, the fee for such month shall be prorated.
Other Services
At the request of the Fund, the Advisor, in its discretion, may make
available to the Fund office facilities, equipment, personnel and other
services. Such office facilities, equipment, personnel and service shall be
provided for or rendered by the Advisor and billed to the Fund at the Advisor's
cost and, where applicable, the cost thereof shall be apportioned among the
several Portfolios of the Fund proportionate to their respective utilization
thereof.
Reports
The Fund and the Advisor agree to furnish to each other information
with regard to their respective affairs as each may reasonably request.
Status of the Advisor
The services of the Advisor to the Fund or in respect of the
Portfolio, are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others as long as its services to the Fund or in
respect of the Portfolio, are not impaired thereby. The Advisor shall be deemed
to be an independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
Liability of Advisor
No provision of this Agreement shall be deemed to protect the Advisor
against any liability to the Fund or its shareholders to which it might
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations under this Agreement.
-2-
<PAGE>
Permissible Interests
Subject to and in accordance with the charters of the Fund and the
Advisor, respectively, directors, officers, and shareholders of the Fund are or
may be interested in the Advisor (or any successor thereof) as directors,
officers or shareholders, or otherwise; directors, officers, agents and
shareholders of the Advisor are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Advisor (or any successor) is or
may be interested in the Fund as a shareholder or otherwise and the effect of
any such interrelationships shall be governed by said charters and the
provisions of the Investment Company Act of 1940.
Duration and Termination
This Agreement shall become effective on September __, 1995 (the
"Effective Date") and shall continue in effect until December 31, 1996, and
thereafter, only if such continuance is approved at least annually by a vote of
the Fund's Board of Directors, including the vote of a majority of the directors
who are not parties to this Agreement or interested persons of any such party,
cast in person, at a meeting called for the purpose of voting such approval. In
addition, the question of continuance of this Agreement may be presented to the
shareholders of the Fund; in such event, such continuance shall be effected only
if approved by the affirmative vote of the holders of a majority of the
outstanding voting securities of the Portfolio.
This Agreement may at any time be terminated without payment of any
penalty either by vote of the Board of Directors of the Fund or by vote of the
holders of a majority of the outstanding voting securities of the Portfolio, on
sixty days written notice to the Advisor,
This Agreement shall automatically terminate in the event of its
assignment, and
This Agreement may be terminated by the Advisor after ninety days
written notice to the Fund.
Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at any office of such
party.
As used in this section, the terms "assignment," "interested persons,"
and a "vote of the holders of a majority of the outstanding securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19),
Section 2(a)(42) of the Investment Company Act of 1940 and Rule l8f-2
thereunder.
-3-
<PAGE>
Severability
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed this ____ day of September, 1995.
DIMENSIONAL FUND DFA INVESTMENT
ADVISORS INC. DIMENSIONS GROUP INC.
By: By:
------------------------- --------------------------
Chairman-Chief President
Investment Officer
-4-
<PAGE>
Exhibit No. 99.B5(xxvii)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 8th day of September, 1995, by and between DFA
INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the "Fund") and
DIMENSIONAL FUND ADVISORS INC., a Delaware corporation (the "Advisor").
Duties of Advisor
The Fund hereby employs the Advisor to manage the investment and
reinvestment of the assets of VA International Small Portfolio (the
"Portfolio"), to continuously review, supervise and administer the Portfolio's
investment program, to determine in its discretion the securities to be
purchased or sold and the portion of the Portfolio's assets to be uninvested, to
provide the Fund with records concerning the Advisor's activities which the Fund
is required to maintain, and to render regular reports to the Fund's officers
and the Board of Directors of the Fund, all in compliance with the objectives,
policies and limitations set forth in the Fund's prospectus and applicable laws
and regulations. The Advisor accepts such employment and agrees to provide, at
its own expense, the office space, furnishings and equipment and the personnel
required by it to perform the services described herein on the terms and for the
compensation provided herein.
Portfolio Transactions
The Advisor is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Portfolio and is
directed to use its best efforts to obtain the best available price and most
favorable execution, except as prescribed herein. It is understood that the
Advisor will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Fund or in respect of the Portfolio, or be in breach of
any obligation owing to the Fund or in respect of the Portfolio under this
Agreement, or otherwise, solely by reason of its having caused the Portfolio to
pay a member of a securities exchange, a broker or a dealer a commission for
effecting a securities transaction for the Portfolio in excess of the amount of
commission another member of an exchange, broker or dealer would have charged if
the Advisor determines in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Advisor's
overall responsibilities with respect to its accounts, including the Fund, as to
which it
<PAGE>
exercises investment discretion. The Advisor will promptly communicate to the
officers and directors of the Fund such information relating to transactions for
the Portfolio as they may reasonably request.
Compensation of the Advisor
For the services to be rendered by the Advisor as provided in Section
1 of this Agreement, the Fund shall pay to the Advisor, at the end of each
month, a fee equal to one-twelfth of .50 percent of the net assets of the
Portfolio. In the event that this Agreement is terminated at other than a
month-end, the fee for such month shall be prorated.
Other Services
At the request of the Fund, the Advisor, in its discretion, may make
available to the Fund office facilities, equipment, personnel and other
services. Such office facilities, equipment, personnel and service shall be
provided for or rendered by the Advisor and billed to the Fund at the Advisor's
cost and, where applicable, the cost thereof shall be apportioned among the
several Portfolios of the Fund proportionate to their respective utilization
thereof.
Reports
The Fund and the Advisor agree to furnish to each other information
with regard to their respective affairs as each may reasonably request.
Status of the Advisor
The services of the Advisor to the Fund or in respect of the
Portfolio, are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others as long as its services to the Fund or in
respect of the Portfolio, are not impaired thereby. The Advisor shall be deemed
to be an independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
Liability of Advisor
No provision of this Agreement shall be deemed to protect the Advisor
against any liability to the Fund or its shareholders to which it might
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations under this Agreement.
-2-
<PAGE>
Permissible Interests
Subject to and in accordance with the charters of the Fund and the
Advisor, respectively, directors, officers, and shareholders of the Fund are or
may be interested in the Advisor (or any successor thereof) as directors,
officers or shareholders, or otherwise; directors, officers, agents and
shareholders of the Advisor are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Advisor (or any successor) is or
may be interested in the Fund as a shareholder or otherwise and the effect of
any such interrelationships shall be governed by said charters and the
provisions of the Investment Company Act of 1940.
Duration and Termination
This Agreement shall become effective on September __, 1995 (the
"Effective Date") and shall continue in effect until December 31, 1996, and
thereafter, only if such continuance is approved at least annually by a vote of
the Fund's Board of Directors, including the vote of a majority of the directors
who are not parties to this Agreement or interested persons of any such party,
cast in person, at a meeting called for the purpose of voting such approval. In
addition, the question of continuance of this Agreement may be presented to the
shareholders of the Fund; in such event, such continuance shall be effected only
if approved by the affirmative vote of the holders of a majority of the
outstanding voting securities of the Portfolio.
This Agreement may at any time be terminated without payment of any
penalty either by vote of the Board of Directors of the Fund or by vote of the
holders of a majority of the outstanding voting securities of the Portfolio, on
sixty days written notice to the Advisor,
This Agreement shall automatically terminate in the event of its
assignment, and
This Agreement may be terminated by the Advisor after ninety days
written notice to the Fund.
Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at any office of such
party.
As used in this section, the terms "assignment," "interested persons,"
and a "vote of the holders of a majority of the outstanding securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19),
Section 2(a)(42) of the Investment Company Act of 1940 and Rule l8f-2
thereunder.
-3-
<PAGE>
Severability
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed this ____ day of September, 1995.
DIMENSIONAL FUND DFA INVESTMENT
ADVISORS INC. DIMENSIONS GROUP INC.
By: By:
---------------------- -----------------------
Chairman-Chief President
Investment Officer
-4-
<PAGE>
Exhibit No. 99.B5(xxviii)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 8th day of September, 1995, by and between DFA
INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the "Fund") and
DIMENSIONAL FUND ADVISORS INC., a Delaware corporation (the "Advisor").
Duties of Advisor
The Fund hereby employs the Advisor to manage the investment and
reinvestment of the assets of VA Short-Term Fixed Portfolio (the "Portfolio"),
to continuously review, supervise and administer the Portfolio's investment
program, to determine in its discretion the securities to be purchased or sold
and the portion of the Portfolio's assets to be uninvested, to provide the Fund
with records concerning the Advisor's activities which the Fund is required to
maintain, and to render regular reports to the Fund's officers and the Board of
Directors of the Fund, all in compliance with the objectives, policies and
limitations set forth in the Fund's prospectus and applicable laws and
regulations. The Advisor accepts such employment and agrees to provide, at its
own expense, the office space, furnishings and equipment and the personnel
required by it to perform the services described herein on the terms and for the
compensation provided herein.
Portfolio Transactions
The Advisor is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Portfolio and is
directed to use its best efforts to obtain the best available price and most
favorable execution, except as prescribed herein. It is understood that the
Advisor will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Fund or in respect of the Portfolio, or be in breach of
any obligation owing to the Fund or in respect of the Portfolio under this
Agreement, or otherwise, solely by reason of its having caused the Portfolio to
pay a member of a securities exchange, a broker or a dealer a commission for
effecting a securities transaction for the Portfolio in excess of the amount of
commission another member of an exchange, broker or dealer would have charged if
the Advisor determines in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Advisor's
overall responsibilities with respect to its accounts, including the Fund, as to
which it
<PAGE>
exercises investment discretion. The Advisor will promptly communicate to the
officers and directors of the Fund such information relating to transactions for
the Portfolio as they may reasonably request.
Compensation of the Advisor
For the services to be rendered by the Advisor as provided in Section
1 of this Agreement, the Fund shall pay to the Advisor, at the end of each
month, a fee equal to one-twelfth of .25 percent of the net assets of the
Portfolio. In the event that this Agreement is terminated at other than a
month-end, the fee for such month shall be prorated.
Other Services
At the request of the Fund, the Advisor, in its discretion, may make
available to the Fund office facilities, equipment, personnel and other
services. Such office facilities, equipment, personnel and service shall be
provided for or rendered by the Advisor and billed to the Fund at the Advisor's
cost and, where applicable, the cost thereof shall be apportioned among the
several Portfolios of the Fund proportionate to their respective utilization
thereof.
Reports
The Fund and the Advisor agree to furnish to each other information
with regard to their respective affairs as each may reasonably request.
Status of the Advisor
The services of the Advisor to the Fund or in respect of the
Portfolio, are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others as long as its services to the Fund or in
respect of the Portfolio, are not impaired thereby. The Advisor shall be deemed
to be an independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
Liability of Advisor
No provision of this Agreement shall be deemed to protect the Advisor
against any liability to the Fund or its shareholders to which it might
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations under this Agreement.
-2-
<PAGE>
Permissible Interests
Subject to and in accordance with the charters of the Fund and the
Advisor, respectively, directors, officers, and shareholders of the Fund are or
may be interested in the Advisor (or any successor thereof) as directors,
officers or shareholders, or otherwise; directors, officers, agents and
shareholders of the Advisor are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Advisor (or any successor) is or
may be interested in the Fund as a shareholder or otherwise and the effect of
any such interrelationships shall be governed by said charters and the
provisions of the Investment Company Act of 1940.
Duration and Termination
This Agreement shall become effective on September __, 1995 (the
"Effective Date") and shall continue in effect until December 31, 1996, and
thereafter, only if such continuance is approved at least annually by a vote of
the Fund's Board of Directors, including the vote of a majority of the directors
who are not parties to this Agreement or interested persons of any such party,
cast in person, at a meeting called for the purpose of voting such approval. In
addition, the question of continuance of this Agreement may be presented to the
shareholders of the Fund; in such event, such continuance shall be effected only
if approved by the affirmative vote of the holders of a majority of the
outstanding voting securities of the Portfolio.
This Agreement may at any time be terminated without payment of any
penalty either by vote of the Board of Directors of the Fund or by vote of the
holders of a majority of the outstanding voting securities of the Portfolio, on
sixty days written notice to the Advisor,
This Agreement shall automatically terminate in the event of its
assignment, and
This Agreement may be terminated by the Advisor after ninety days
written notice to the Fund.
Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at any office of such
party.
As used in this section, the terms "assignment," "interested persons,"
and a "vote of the holders of a majority of the outstanding securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19),
Section 2(a)(42) of the Investment Company Act of 1940 and Rule l8f-2
thereunder.
-3-
<PAGE>
Severability
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed this ____ day of September, 1995.
DIMENSIONAL FUND DFA INVESTMENT
ADVISORS INC. DIMENSIONS GROUP INC.
By: By:
----------------------- -------------------------
Chairman-Chief President
Investment Officer
-4-
<PAGE>
Exhibit No. 99.B5(xxix)
AMENDED AND RESTATED
SUB-ADVISORY AGREEMENT
AGREEMENT dated this ______ day of September, 1995 among DFA
INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the "Fund"),
DIMENSIONAL FUND ADVISORS INC., a Delaware corporation ("DFA") and DFA Australia
Pty Limited, a corporation organized under the laws of New South Wales ("DFA
Australia").
WHEREAS, DFA is the investment advisor to all the Portfolios of the
Fund, including The Pacific Rim Small Company Portfolio and VA International
Small Portfolio (the "Portfolios"); and
WHEREAS, the Portfolios invest in "Pacific Rim Small Company Stocks"
as categorized, defined and limited in accordance with the Fund's registration
statement; and
WHEREAS, DFA Australia personnel have expertise in certain business
areas pertinent to the business operations of the Portfolios and the selection
of brokers of dealers and the execution of trades with respect to Pacific Rim
Small Company Stocks; and
WHEREAS, DFA wishes to retain DFA Australia also as sub-advisor with
respect to the VA International Small Portfolio, and DFA Australia wishes to act
as sub-advisor, and both DFA and DFA Australia wish to amend and restate the
original Supplement to Sub-Advisory Agreements as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and conditions contained herein, the parties hereto agree as follows:
1. This Agreement supercedes the Supplement to Sub-Advisory Agreements
among DFA, DFA Australia and the Fund dated November 1, 1994.
2. SERVICES TO BE PERFORMED. DFA hereby employs subject to approval by
the Board of Directors of the Fund and supervision by DFA, DFA Australia to
furnish, at DFA Australia's expense, the services described below with respect
to the Portfolios:
a. DFA Australia shall have the authority and responsibility to select
brokers or dealers to execute purchases and sales of eligible securities
for the Portfolios. Such authority and responsibility shall include,
without limitation, (i) providing investment and ancillary services for the
Advisor and determining the best and most efficient means of purchasing and
selling such portfolio securities in order to receive best price and
execution; and (ii) allocating trades among brokers and dealers, including
any affiliate of the Fund or of any investment advisor or affiliate
thereof, subject to Section 17 of the Investment Company Act of 1940. In
carrying out its obligations hereunder, DFA Australia will act with a view
to the Portfolios' objectives as set forth in the Fund's registration
statement and otherwise communicated to DFA Australia by DFA, including the
objectives of receiving best price and execution for portfolio transactions
and of causing as little price fluctuation as possible. DFA Australia
shall not receive any commission or rebate from any broker or dealer to
whom it allocates trades nor shall it receive any commission from DFA based
upon the allocation of trades. DFA will advise DFA Australia of changes in
the Fund's Articles of Incorporation, bylaws, and registration statement
and any objectives not appearing therein as they may be relevant to DFA
Australia's performance under this Agreement. DFA will furnish to DFA
Australia reports on cash available for investment and needed
for redemption payments. DFA shall be responsible to the Board of
Directors of the Fund for the preparation of schedules of securities
eligible for purchase and sale by the Portfolios ("execution
<PAGE>
schedules"), and shall prepare such schedules on at least a semi-annual
basis, it being understood that DFA may consult with DFA Australia in
connection therewith, and may delegate to DFA Australia the preparation of
such schedules. On at least a semi-annual basis DFA will review the
Portfolios' holdings, make, itself or in consultation with DFA Australia,
any necessary adjustments to the execution schedules and review the
securities trading process and executions. DFA Australia is authorized to
have orders executed for more or fewer shares than set forth on the
execution schedules when market conditions and other factors permit or
require, provided that such variances from the execution schedules are
within the parameters agreed to by DFA from time to time or in specific
cases. DFA Australia shall report the results of all trading activities
and all such other information relating to portfolio transactions for the
Portfolios as DFA may reasonably request, on a daily basis to DFA and any
other entity designated by DFA, including without limitation the custodian
of the Portfolios. DFA Australia shall review and coordinate its agency
trading and execution strategies, practices and results with DFA as
frequently as reasonably requested.
b. DFA Australia shall maintain, and periodically review with DFA and the
Fund, policies and procedures necessary to ensure the effectiveness of on-
line communications systems between DFA Australia, DFA and the Fund.
c. DFA Australia shall periodically provide DFA with data concerning the
Pacific Rim equity markets; and it shall maintain and provide to DFA
current financial information with respect to specific Pacific Rim stocks
on the execution schedules. DFA Australia shall also furnish DFA with
advice and information regarding securities of Pacific Rim small companies
and shall provide DFA with such recommendations in connection with the
investment therein by the Portfolios as DFA Australia shall deem necessary
and advisable in light of the investment objective and policies of the
Portfolios.
3. COMPENSATION. For the services provided by DFA Australia hereunder
DFA shall pay DFA Australia a fee equal to 100,000 Hong Kong dollars per year,
to be paid on a quarterly basis. In the event that this Agreement is terminated
at other than a quarter-end, the fee for such quarter shall be prorated.
4. LIABILITY OF DFA AUSTRALIA. Except as provided by the next sentence,
DFA Australia shall not be liable for any error of judgment or of law or for any
loss suffered by the Fund in connection with the matters to which this Agreement
relates, except loss resulting from willful misfeasance, bad faith or gross
negligence on the part of DFA Australia in the performance of its obligations
and duties or by reason of its reckless disregard of its obligations and duties
under this Agreement. The foregoing sentence does not apply to any liability
which DFA Australia or any affiliate thereof may have arising out of the
execution by it of portfolio transaction for the Fund.
5. TERM. This Agreement shall become effective on September 8, 1995 and
shall remain in effect until December 22, 1995, unless sooner terminated as
hereinafter provided and shall continue in effect from year to year thereafter,
but only so long as such continuance is specifically approved, at least
annually, by (a) the vote of a majority of the Fund's directors, or (b) the vote
of a majority of the outstanding voting securities of each of the Portfolios and
(c) the vote of a majority of those directors who are not parties to this
Agreement or interested persons of any such party (except as directors of the
Fund) cast in person at a meeting called for the purpose of voting on such
approval. The terms "interested persons" and "vote of a majority of the
outstanding voting securities" shall have the meanings respectively set forth in
Section 2(a)(19) and Section 2(a)(42) of the Investment Company Act of 1940. If
the continuance of this Agreement is specifically approved by a majority of the
outstanding voting securities of one Portfolio but not the other, this Agreement
will terminate only with respect to the latter Portfolio.
This Agreement may be terminated by DFA or by DFA Australia at any
time without penalty on ninety (90) days' written notice to the other party
hereto, and may also be terminated at any time without penalty by the Board of
Directors of the Fund or by vote of the holders of a majority of the
outstanding voting
2
<PAGE>
securities of either of the Portfolios on sixty (60) days' written
notice to DFA Australia by the Fund. If terminated by a vote of the holders of
a majority of the outstanding voting securities of one Portfolio but not the
other, this Agreement shall remain in effect with respect to the remaining
Portfolio.
This Agreement shall automatically terminate in the event of its
assignment. The term "assignment" for this purpose shall have the meaning set
forth in Section 2(a)(4) of the Investment Company Act of 1940.
This Agreement shall automatically terminate with respect to a
Portfolio in the event that the Investment Advisory Agreement for that Portfolio
between DFA and the Fund with respect to the Portfolios is terminated, assigned
or not renewed.
6. DFA Australia will promptly notify DFA and the Fund of any change in
the composition of its Board of Directors.
7. This Agreement is governed by and subject to the laws of the State of
California.
8. NOTICE. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notices.
IN WITNESS WHEREOF, DFA, DFA Australia and the Fund have caused this
Agreement to be executed as of the day and year above written.
DIMENSIONAL FUND ADVISORS INC.
By:
----------------------------
President
DFA AUSTRALIA PTY LIMITED
By:
----------------------------
Co-Chairman/CIO
DFA INVESTMENT DIMENSIONS GROUP INC.
By:___________________________
President
3
<PAGE>
Exhibit No. 99.B5(xxx)
AMENDED AND RESTATED
SUB-ADVISORY AGREEMENT
AGREEMENT dated this ______ day of September, 1995 among DFA
INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the "Fund"),
DIMENSIONAL FUND ADVISORS INC., a Delaware corporation ("DFA") and DFA Australia
Pty Limited, a corporation organized under the laws of New South Wales ("DFA
Australia").
WHEREAS, DFA is the investment advisor to all the portfolios of the
Fund, including The Japanese Small Company Portfolio and VA International Small
Portfolio (the "Portfolios"); and
WHEREAS, the Portfolios will invest in "Japanese Small Company Stocks"
as categorized, defined and limited in accordance with the Fund's registration
statement; and
WHEREAS, DFA Australia personnel have expertise in certain business
areas pertinent to the business operations of the Portfolios and the selection
of brokers of dealers and the execution of trades with respect to Japanese Small
Company Stocks; and
WHEREAS, DFA Australia has been acting as sub-advisor to the Japanese
Small Company Portfolio pursuant to a Supplement to Sub-Advisory Agreements
dated November 1, 1994; and
WHEREAS, DFA wishes to retain DFA Australia also as sub-advisor with
respect to the VA International Small Portfolio, and DFA Australia wishes to act
as sub-advisor, upon the terms and and both DFA and DFA Australia wish to amend
and restate the original Supplement to Sub-Advisory Agreements as hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and conditions contained herein, the parties hereto agree as follows:
1. This Agreement supercedes the Supplement to Sub-Advisory Agreements
among DFA, DFA Australia and the Fund dated November 1, 1994.
2. SERVICES TO BE PERFORMED. DFA hereby employs subject to approval by
the Board of Directors of the Fund and supervision by DFA, DFA Australia to
furnish, at DFA Australia's expense, the services described below with respect
to the Portfolios:
a. DFA Australia shall have the authority and responsibility to select
brokers or dealers to execute purchases and sales of eligible securities
for the Portfolios. Such authority and responsibility shall include,
without limitation, (i) providing investment and ancillary services for the
Advisor and determining the best and most efficient means of purchasing and
selling such portfolio securities in order to receive best price and
execution; and (ii) allocating trades among brokers and dealers, including
any affiliate of the Fund or of any investment advisor or affiliate
thereof, subject to Section 17 of the Investment Company Act of 1940. In
carrying out its obligations hereunder, DFA Australia will act with a view
to the Portfolios' objectives as set forth in the Fund's registration
statement and otherwise communicated to DFA Australia by DFA, including the
objectives of receiving best price and execution for portfolio transactions
and of causing as little price fluctuation as possible. DFA Australia
shall not receive any commission or rebate from any broker or dealer to
whom it allocates trades nor shall it receive any commission from DFA based
upon the allocation of trades. DFA will advise DFA Australia of changes in
the Fund's Articles of Incorporation, bylaws, and registration statement
and any objectives not appearing therein as they may be relevant to DFA
Australia's performance under this Agreement. DFA will furnish to DFA
Australia reports on cash available for investment and needed
<PAGE>
for redemption payments. DFA shall be responsible to the Board of
Directors of the Fund for the preparation of schedules of securities
eligible for purchase and sale by the Portfolios ("execution schedules"),
and shall prepare such schedules on at least a semi-annual basis, it being
understood that DFA may consult with DFA Australia in connection therewith,
and may delegate to DFA Australia the preparation of such schedules. On at
least a semi-annual basis DFA will review the Portfolios' holdings, make,
itself or in consultation with DFA Australia, any necessary adjustments to
the execution schedules and review the securities trading process and
executions. DFA Australia is authorized to have orders executed for more
or fewer shares than set forth on the execution schedules when market
conditions and other factors permit or require, provided that such
variances from the execution schedules are within the parameters agreed to
by DFA from time to time or in specific cases. DFA Australia shall report
the results of all trading activities and all such other information
relating to portfolio transactions for the Portfolios as DFA may reasonably
request, on a daily basis to DFA and any other entity designated by DFA,
including without limitation the custodian of the Portfolios. DFA
Australia shall review and coordinate its agency trading and execution
strategies, practices and results with DFA as frequently as reasonably
requested.
b. DFA Australia shall maintain, and periodically review with DFA and the
Fund, policies and procedures necessary to ensure the effectiveness of on-
line communications systems between DFA Australia, DFA and the Fund.
c. DFA Australia shall periodically provide DFA with data concerning the
Japanese equity market; and it shall maintain and provide to DFA current
financial information with respect to specific Japanese stocks on the
execution schedules. DFA Australia shall also furnish DFA with advice and
information regarding securities of Japanese small companies and shall
provide DFA with such recommendations in connection with the investment
therein by the Portfolios as DFA Australia shall deem necessary and
advisable in light of the investment objective and policies of the
Portfolios.
3. COMPENSATION. For the services provided by DFA Australia hereunder
DFA shall pay DFA Australia a fee equal to 100,000 Hong Kong dollars per year,
to be paid on a quarterly basis. In the event that this Agreement is terminated
at other than a quarter-end, the fee for such quarter shall be prorated.
4. LIABILITY OF DFA AUSTRALIA. Except as provided by the next sentence,
DFA Australia shall not be liable for any error of judgment or of law or for any
loss suffered by the Fund in connection with the matters to which this Agreement
relates, except loss resulting from willful misfeasance, bad faith or gross
negligence on the part of DFA Australia in the performance of its obligations
and duties or by reason of its reckless disregard of its obligations and duties
under this Agreement. The foregoing sentence does not apply to any liability
which DFA Australia or any affiliate thereof may have arising out of the
execution by it of portfolio transaction for the Fund.
5. TERM. This Agreement shall become effective on September 8, 1995 and
shall remain in effect until December 22, 1995, unless sooner terminated as
hereinafter provided and shall continue in effect from year to year thereafter,
but only so long as such continuance is specifically approved, at least
annually, by (a) the vote of a majority of the Fund's directors, or (b) the vote
of a majority of the outstanding voting securities of each of the Portfolios and
(c) the vote of a majority of those directors who are not parties to this
Agreement or interested persons of any such party (except as directors of the
Fund) cast in person at a meeting called for the purpose of voting on such
approval. The terms "interested persons" and "vote of a majority of the
outstanding voting securities" shall have the meanings respectively set forth in
Section 2(a)(19) and Section 2(a)(42) of the Investment Company Act of 1940. If
the continuance of this Agreement is specifically approved by a majority of the
outstanding voting securities of one Portfolio but not the other, this Agreement
will terminate only with respect to the latter Portfolio.
This Agreement may be terminated by DFA or by DFA Australia at any
time without penalty on ninety (90) days' written notice to the other party
hereto, and may also be terminated at any time without
2
<PAGE>
penalty by the Board of Directors of the Fund or by vote of the holders of a
majority of the outstanding voting securities of either of the Portfolios on
sixty (60) days' written notice to DFA Australia by the Fund. If terminated by
a vote of the holders of a majority of the outstanding voting securities of one
Portfolio but not the other, this agreement shall remain in effect with respect
to the remaining Portfolio.
This Agreement shall automatically terminate in the event of its
assignment. The term "assignment" for this purpose shall have the meaning set
forth in Section 2(a)(4) of the Investment Company Act of 1940.
This Agreement shall automatically terminate with respect to a
Portfolio in the event that the Investment Advisory Agreement for that Portfolio
between DFA and the Fund with respect to the Portfolios is terminated, assigned
or not renewed.
6. DFA Australia will promptly notify DFA and the Fund of any change in
the composition of its Board of Directors.
7. This Agreement is governed by and subject to the laws of the State of
California.
8. NOTICE. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notices.
IN WITNESS WHEREOF, DFA, DFA Australia and the Fund have caused this
Agreement to be executed as of the day and year above written.
DIMENSIONAL FUND ADVISORS INC.
By:_______________________________
President
DFA AUSTRALIA PTY LIMITED
By:
-------------------------------
Co-Chairman/CIO
DFA INVESTMENT DIMENSIONS GROUP INC.
By:
--------------------------------
President
3
<PAGE>
Exhibit No. 99.B5(xxxi)
AMENDED AND RESTATED
SUB-ADVISORY AGREEMENT
AGREEMENT dated this ________ day of September, 1995 among DFA
INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the "Fund"),
DIMENSIONAL FUND ADVISORS INC., a Delaware corporation ("DFA") and DIMENSIONAL
FUND ADVISORS LTD., a company organized under the laws of England ("DFAL").
WHEREAS, DFA is the investment advisor to all the portfolios of the
Fund, including The Continental Small Company Portfolio and VA International
Small Portfolio (the "Portfolios"); and
WHEREAS, the Portfolios will primarily be invested in "Continental
Small Company Stocks" as categorized, defined and limited in accordance with the
Fund's prospectus; and
WHEREAS, DFAL personnel have expertise in certain business areas
pertinent to the business operations of the Portfolios and the selection of
brokers or dealers and the execution of trades with respect to Continental Small
Company Stocks; and
WHEREAS, DFAL has been acting as sub-advisor to the Continental Small
Company Portfolio pursuant to a Sub-Advisory Agreement dated January 31, 1992;
and
WHEREAS, DFA wishes to retain DFAL also as sub-advisor with respect to
the VA International Small Portfolio, and DFAL wishes to act as sub-advisor, and
both DFA and DFAL with to amend and restate the original Sub-Advisory Agreement
as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and conditions contained herein, the parties hereto agree as follows:
1. This Agreement supercedes the Sub-Advisory Agreement among DFA, DFAL
and the Fund dated January 31, 1992.
2. SERVICES TO BE PERFORMED. DFA hereby employs subject to approval by
the Board of Directors of the Fund and supervision by DFA, DFAL to furnish, at
DFAL's expense, the services described below with respect to the Portfolios:
a. DFAL shall have the authority and responsibility to select brokers or
dealers to execute purchases and sales of eligible securities for the
Portfolios. Such authority and responsibility shall include, without
limitation, the maintenance of a trading desk for the Portfolios; the
determination of the best and most efficient means of purchasing and
selling such portfolio securities in order to achieve best price and
execution; and the allocation of trades among brokers and dealers,
including any affiliate of the Fund or of any investment advisor or
affiliate thereof, subject to Section 17 of the Investment Company Act of
1940. In carrying out its obligations hereunder, DFAL will act with a view
to the Portfolios' objectives as set forth in the Fund's prospectus and
otherwise communicated to DFAL by DFA, including the objectives of
receiving best price and execution for portfolio transactions and of
causing as little price fluctuation in the market prices of stocks being
purchased or sold as possible in light of the size of the transaction being
effected. DFA will advise DFAL of changes in the Fund's Articles of
Incorporation, bylaws, and prospectus and any objectives not appearing
therein as they may be relevant to DFAL's performance under this Agreement.
DFA will furnish to DFAL reports on cash available for investment and
needed for redemption payments. DFA shall be responsible to the Fund for
the preparation of schedules of securities eligible for purchase and sale
by the Portfolios ("execution schedules"), and shall
<PAGE>
prepare such schedules on at least a semi-annual basis, it being understood
that DFA may consult with DFAL in connection therewith, and may delegate to
DFAL the preparation of such schedules. On at least a semi-annual basis
DFA will review the Portfolios' holdings, make, itself or in consultation
with DFAL, any necessary adjustments to the execution schedules and review
the securities trading process and executions. DFAL is authorized to have
orders executed for more or fewer shares than set forth on the execution
schedules when market conditions and other factors permit or require,
provided that such variances from the execution schedules are within the
parameters agreed to by DFA from time to time or in specific cases. DFAL
shall report the results of all trading activities and all such other
information relating to portfolio transactions for the Portfolios as DFA
may reasonably request, on a daily basis to DFA and any other entity
designated by DFA, including without limitation the custodian of the Fund.
DFAL shall review and coordinate its agency trading and execution
strategies, practices and results with DFA as frequently as reasonably
requested.
b. DFAL shall maintain, and periodically review with DFA and the Fund,
policies and procedures necessary to ensure the effectiveness of on-line
communications systems between DFAL, DFA and the Fund.
c. DFAL shall periodically provide DFA with data concerning the European
equity market; and it shall maintain and provide to DFA current financial
information with respect to specific European stocks on the execution
schedules. DFAL shall also furnish DFA with advice and information
regarding securities of European small companies and shall provide DFA with
such recommendations in connection with the investment therein by the
Portfolios as DFAL shall deem necessary and advisable in light of the
investment objective and policies of the Portfolios.
3. COMPENSATION. For the services provided by DFAL hereunder DFA shall
pay DFAL a fee equal to L 50,000 per year, to be paid on a quarterly basis. In
the event that this Agreement is terminated at other than a quarter-end, the fee
for such quarter shall be prorated.
4. LIABILITY OF DFAL. Except as provided by the next sentence, DFAL
shall not be liable for any error of judgment or of law or for any loss suffered
by the Fund in connection with the matters to which this Agreement relates,
except loss resulting from willful misfeasance, bad faith or gross negligence on
the part of DFAL in the performance of its obligations and duties or by reason
of its reckless disregard of its obligations and duties under this Agreement.
The foregoing sentence does not apply to any liability which DFAL or any
affiliate thereof may have arising out of the execution by it of portfolio
transaction for the Fund.
5. TERM. This Agreement shall become effective on September 8, 1995, and
shall remain in effect until December 22, 1995, unless sooner terminated as
hereinafter provided and shall continue in effect from year to year thereafter,
but only so long as such continuance is specifically approved, at least
annually, by (a) the vote of a majority of the Fund's directors, or (b) the vote
of a majority of the outstanding voting securities of each of the Portfolios and
(c) the vote of a majority of those directors who are not parties to this
Agreement or interested persons of any such party (except as directors of the
Fund) cast in person at a meeting called for the purpose of voting on such
approval. The terms "interested persons" and "vote of a majority of the
outstanding voting securities" shall have the meanings respectively set forth in
Section 2(a)(19) and Section 2(a)(42) of the Investment Company Act of 1940. If
the continuance of this Agreement is specifically approved by a majority of the
outstanding voting securities of one Portfolio, but not the other, this
Agreement will terminate only with respect to the latter Portfolio.
This Agreement may be terminated by DFA or by DFAL at any time without
penalty on ninety (90) days' written notice to the other party hereto, and may
also be terminated at any time without penalty by the Board of Directors of the
Fund or by vote of the holders of a majority of the outstanding voting
securities of either of the Portfolios on sixty (60) days' written notice to
DFAL by the Fund. If terminated by a vote of the holders of a majority of the
outstanding voting securities of one Portfolio but not the other, this Agreement
shall remain
2
<PAGE>
in effect with respect to the remaining Portfolio.
This Agreement shall automatically terminate in the event of its
assignment. The term "assignment" for this purpose shall have the meaning set
forth in Section 2(a)(4) of the Investment Company of 1940.
This Agreement shall automatically terminate with respect to a
Portfolio in the event that the Investment Advisory Agreement for that Portfolio
between DFA and the Fund is terminated, assigned or not renewed.
6. NOTICE. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notices.
IN WITNESS WHEREOF, DFA, DFAL and the Fund have caused this Agreement
to be executed as of the day and year above written.
DIMENSIONAL FUND ADVISORS INC.
By:
---------------------------
President
DIMENSIONAL FUND ADVISORS LTD.
By:
---------------------------
Vice President
DFA INVESTMENT DIMENSIONS GROUP INC.
By:
---------------------------
Chairman
<PAGE>
Exhibit No. 99.B5(xxxii)
AMENDED AND RESTATED
SUB-ADVISORY AGREEMENT
AGREEMENT dated this ____ day of September, 1995 among DFA INVESTMENT
DIMENSIONS GROUP INC., a Maryland corporation (the "Fund"), DIMENSIONAL FUND
ADVISORS INC., a Delaware corporation ("DFA") and DIMENSIONAL FUND ADVISORS
LTD., a company organized under the laws of England ("DFAL").
WHEREAS, DFA is the investment advisor to all the portfolios of the
Fund, including United Kingdom Small Company Portfolio and VA International
Small Portfolio (the "Portfolios"); and
WHEREAS, the Portfolios invest in "United Kingdom Small Company
Stocks" as categorized, defined and limited in accordance with the Fund's
prospectus; and
WHEREAS, DFAL personnel have expertise in certain business areas
pertinent to the business operations of the Portfolios and the selection of
brokers or dealers and the execution of trades with respect to United Kingdom
Small Company Stocks; and
WHEREAS, DFAL has been acting as sub-advisor to the United Kingdom
Small Company Portfolio pursuant to a Sub-Advisory Agreement dated January 31,
1992; and
WHEREAS, DFA wishes to retain DFAL also as sub-advisor with respect to
the VA International Small Portfolio, and DFAL wishes to act as sub-advisor, and
both DFA and DFAL wish to amend and restate the original Sub-Advisory Agreement
as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and conditions contained herein, the parties hereto agree as follows:
1. This Agreement supercedes the Sub-Advisory Agreement among DFA, DFAL
and the Fund dated January 31, 1992.
2. SERVICES TO BE PERFORMED. DFA hereby employs subject to approval by
the Board of Directors of the Fund and supervision by DFA, DFAL to furnish, at
DFAL's expense, the services described below with respect to the Portfolios:
a. DFAL shall have the authority and responsibility to select brokers or
dealers to execute purchases and sales of eligible securities for the
Portfolios. Such authority and responsibility shall include, without
limitation, the maintenance of a trading desk for the Portfolios; the
determination of the best and most efficient means of purchasing and
selling such portfolio securities in order to achieve best price and
execution; and the allocation of trades among brokers and dealers,
including any affiliate of the Fund or of any investment advisor or
affiliate thereof, subject to Section 17 of the Investment Company Act of
1940. In carrying out its obligations hereunder, DFAL will act with a view
to the Portfolios' objectives as set forth in the Fund's prospectus and
otherwise communicated to DFAL by DFA, including the objectives of
receiving best price and execution for portfolio transactions and of
causing as little price fluctuation in the market prices of stocks being
purchased or sold as possible in light of the size of the transaction being
executed. DFA will advise DFAL of changes in the Fund's Articles of
Incorporation, bylaws, and prospectus and any objectives not appearing
therein as they may be relevant to DFAL's performance under this Agreement.
DFA will furnish to DFAL reports on cash available for investment and
needed for redemption payments. DFA shall be responsible to the Fund for
the preparation of schedules of securities eligible for purchase and sale
by the Portfolios ("execution schedules"), and shall prepare such schedules
on at least a semi-annual basis, it being understood that DFA may consult
with
<PAGE>
DFAL in connection therewith, and may delegate to DFAL the preparation of
such schedules. On at least a semi-annual basis DFA will review the
Portfolios' holdings, make, itself or in consultation with DFAL, any
necessary adjustments to the execution schedules and review the securities
trading process and executions. DFAL is authorized to have orders executed
for more or fewer shares than set forth on the execution schedules when
market conditions and other factors permit or require, provided that such
variances from the execution schedules are within the parameters agreed to
by DFA from time to time or in specific cases. DFAL shall report the
results of all trading activities and all such other information relating
to portfolio transactions for the Portfolios as DFA may reasonably request,
on a daily basis to DFA and any other entity designated by DFA, including
without limitation the custodian of the Fund. DFAL shall review and
coordinate its agency trading and execution strategies, practices and
results with DFA as frequently as reasonably requested.
b. DFAL shall maintain, and periodically review with DFA and the Fund,
policies and procedures necessary to ensure the effectiveness of on-line
communications systems between DFAL, DFA and the Fund.
c. DFAL shall periodically provide DFA with data concerning the United
Kingdom equity market; and it shall maintain and provide to DFA current
financial information with respect to specific United Kingdom stocks on the
execution schedules. DFAL shall also furnish DFA with advice and
information regarding securities of United Kingdom small companies and
shall provide DFA with such recommendations in connection with the
investment therein by the Portfolios as DFAL shall deem necessary and
advisable in light of the investment objective and policies of the
Portfolios.
3. COMPENSATION. For the services provided by DFAL hereunder DFA shall
pay DFAL a fee equal to L 50,000 per year, to be paid on a quarterly basis. In
the event that this Agreement is terminated at other than quarter-end, the fee
for such quarter shall be prorated.
4. LIABILITY OF DFAL. Except as provided by the next sentence, DFAL
shall not be liable for any error of judgment or of law or for any loss suffered
by the Fund in connection with the matters to which this Agreement relates,
except loss resulting from willful misfeasance, bad faith or gross negligence on
the part of DFAL in the performance of its obligations and duties or by reason
of its reckless disregard of its obligations and duties under this Agreement.
The foregoing sentence does not apply to any liability which DFAL or any
affiliate thereof may have arising out of the execution by it of portfolio
transaction for the Fund.
5. TERM. This Agreement shall become effective on September 8, 1995 and
shall remain in effect until December 22, 1995, unless sooner terminated as
hereinafter provided and shall continue in effect from year to year thereafter,
but only so long as such continuance is specifically approved, at least
annually, by (a) the vote of a majority of the Fund's directors, or (b) the vote
of a majority of the outstanding voting securities of each of the Portfolios and
(c) the vote of a majority of those directors who are not parties to this
Agreement or interested persons of any such party (except as directors of the
Fund) cast in person at a meeting called for the purpose of voting on such
approval. The terms "interested persons" and "vote of a majority of the
outstanding voting securities" shall have the meanings respectively set forth in
Section 2(a)(19) and Section 2(a)(42) of the Investment Company Act of 1940. If
the continuance of this Agreement is specifically approved by a majority of the
outstanding voting securities of one Portfolio but not the other, this Agreement
will terminate only with respect to the latter Portfolio.
This Agreement may be terminated by DFA or by DFAL at any time without
penalty on ninety (90) days' written notice to the other party hereto, and may
also be terminated at any time without penalty by the Board of Directors of the
Fund or by vote of the holders of a majority of the outstanding voting
securities of either of the Portfolios on sixty (60) days' written notice to
DFAL by the Fund. If terminated by a vote of the holders of a majority of the
outstanding voting securities of one Portfolio but not the other, this Agreement
shall remain in effect with respect to the remaining Portfolio.
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This Agreement shall automatically terminate in the event of its
assignment. The term "assignment" for this purpose shall have the meaning set
forth in Section 2(a)(4) of the Investment Company of 1940.
This Agreement shall automatically terminate with respect to a
Portfolio in the event that the Investment Advisory Agreement for that Portfolio
between DFA and the Fund is terminated, assigned or not renewed.
6. NOTICE. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notices.
IN WITNESS WHEREOF, DFA, DFAL and the Fund have caused this Agreement
to be executed as of the day and year above written.
DIMENSIONAL FUND ADVISORS INC.
By:
---------------------------
President
DIMENSIONAL FUND ADVISORS LTD.
By:
----------------------------------------
Vice President
DFA INVESTMENT DIMENSIONS GROUP INC.
By:
----------------------------------------
Chairman
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Exhibit No. 99.B8 (i)
CUSTODY AGREEMENT
AGREEMENT dated as of July 22, 1991, between DFA Investment Dimensions
Group Inc. (the "Client"), a Maryland Corporation, having its principal office
and place of business at 1299 Ocean Avenue, 11th floor, Santa Monica, California
90401, and BOSTON SAFE DEPOSIT AND TRUST COMPANY (the "Custodian"), a
Massachusetts trust company with its principal place of business at One Boston
Place, Boston, Massachusetts 02108.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set forth,
the Client and the Custodian agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires,
shall have the following meanings:
(a) "Authorized Person" shall be deemed to include the President, and any
Vice President, the Secretary, any Assistant Secretary, the Treasurer, any
Assistant Treasurer, or any other person, whether or not any such person is
an officer or employee of the Client, duly authorized by the Board of
Directors of the Client to give Oral Instructions and Written Instructions
on behalf of the Client and listed in the certification annexed hereto as
Appendix A or such other certification as may be received by the Custodian
on behalf of the Client from time to time;
(b) "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and Federal agency Securities, its successor or
successors and its nominee or nominees;
(c) "Certificate" shall mean any notice, instruction or other instrument
in writing, authorized or required by this Agreement, other than Written
Instructions, to be given to the Custodian, which is actually received by
the Custodian and signed on behalf of the Client by an officer of the
Client;
(d) "Articles of Incorporation" shall mean the Articles of Incorporation
of the Client filed June 15, 1981 as the same have been and may be amended
from time to time;
(e) "Depository" shall mean The Depository Trust Company ("DTC") or any
clearing agency registered with the Securities and Exchange Commission
under Section 17(a) of the Securities
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Exchange Act of 1934, as amended, any successor or successors and its
nominee or nominees, in which the Custodian is hereby specifically
authorized to make deposits. The term "Depository" shall further mean and
include any other person to be named in a Certificate authorized to act as
a depository or clearing agency under the 1940 Act, including pursuant to
rule 17f-5 thereunder, its successor or successors and its nominee or
nominees;
(f) "Money Market Security" shall be deemed to include, without
limitation, short-term debt obligations issued or guaranteed as to interest
and principal by the government of the United States or agencies or
instrumentalities thereof, commercial paper, bank certificates of deposit,
bankers' acceptances and short-term corporate obligations, where the
purchase or sale of such securities normally requires settlement in federal
funds on the same day as such purchase or sale, and repurchase and reverse
repurchase agreements with respect to any of the foregoing types of
securities;
(g) "Oral Instructions" shall mean any instructions, other than Written
Instructions, actually received by the Custodian from an Authorized Person
or a person reasonably believed by the Custodian to be an Authorized
Person;
(h) "Prospectus" shall mean the Client's current prospectus and statement
of additional information relating to the registration of the Client's
Shares under the Securities Act of 1933, as amended;
(i) "Portfolio" refers to the Client's Portfolios listed in Appendix C
hereto, and any such other separate and distinct Portfolio as may from time
to time be created and designated by the Client in accordance with the
provisions of the Articles of Incorporation and which becomes subject to
this Agreement by the mutual consent of the Client and the Custodian;
(j) "Put Bond" shall mean a bond, the terms of which provide that, under
certain circumstances and during certain time period, the holder of the
bond has the option to sell the bond to the issuer at a mutually agreeable
price;
(k) "Shares" refers to the shares of beneficial interest of each Portfolio
of the Client;
(l) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities and investments, including Money Market Securities, from time to
time owned by each Portfolio;
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(m) "Transfer Agent" shall mean the person that performs the transfer
agent, dividend disbursing agent and shareholder servicing agent functions
for the Client;
(n) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person via any system, including
transmissions via personal computer and/or any other electronic means as
agreed by the parties, whereby the receiver of such communication is able
to verify through codes or otherwise with a reasonable degree of certainty
the authenticity of the sender of such communication; and
(o) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time.
2. APPOINTMENT OF CUSTODIAN.
(a) The Client hereby constitutes and appoints the Custodian as custodian
of all the Securities and moneys at the time owned by or in the possession
of the Portfolios during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian for each
Portfolio and agrees to perform the duties thereof as hereinafter set
forth.
3. COMPENSATION.
(a) The Client will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in the Fee
Schedule annexed hereto as Schedule A and incorporated herein for the
existing Portfolios.
(b) The parties hereto will agree upon the compensation for acting as
custodian for any Portfolio hereafter established and designated, and at
the time that the Custodian commences serving as such for said Portfolio,
such agreement shall be reflected in a Fee Schedule for that Portfolio,
dated and signed by an officer of each party hereto, which shall be
attached to Schedule A of this Agreement.
(c) Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule A of this Agreement a revised Fee Schedule, dated
and signed by a duly authorized officer of the Client and a duly authorized
officer of the Custodian.
(d) The Custodian will bill the Client for each Portfolio as soon as
practicable after the end of each calendar month, and
3
<PAGE>
said billings will be detailed in accordance with the Fee Schedule for each
Portfolio.
(e) The Custodian may charge against any moneys held on behalf of the
Client its compensation pursuant to this Agreement. The Custodian shall
also be entitled to charge against moneys held by it the amount of any
loss, damage, liability or expenses incurred, including reasonable counsel
fees, for which it shall be entitled to reimbursement under the provisions
of this Agreement.
4. CUSTODY OF CASH AND SECURITIES.
(a) RECEIPT AND HOLDING OF ASSETS. The Client will deliver or cause to be
delivered to the Custodian all Securities and moneys owned by the Portfolios at
any time during the period of this Agreement and shall specify the Portfolio to
which the Securities and moneys are to be specifically allocated. The Custodian
will not be responsible for such Securities and moneys until actually received
by it. The Client shall instruct the Custodian from time to time in its sole
discretion, by means of Written Instructions, or, in connection with the
purchase or sale of Money Market Securities, by means of Oral Instructions or
Written Instructions, as to what amounts Securities and moneys of a Portfolio
are to be specifically allocated on the books of the Custodian to such
Portfolio; provided, however, that prior to the deposit of Securities of a
Portfolio in the Book-Entry System or the Depository, including a deposit in
connection with the settlement of a purchase or sale, the custodian shall have
received a Certificate specifically approving such deposits by the Custodian in
the Book-Entry System or the Depository.
(b) ACCOUNTS AND DISBURSEMENTS. The Custodian shall establish and maintain a
separate account for each Portfolio and shall credit to the separate account of
each Portfolio all moneys received by it for the account of such Portfolio and
shall disburse the same only;
1. In payment for Securities purchased for such Portfolio, as provided in
Section 5 hereof;
2. In payment of dividends or distributions with respect to the Shares of
such Portfolio, as provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect to the Shares
of such Portfolio, as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by such Portfolio, as
provided in Section 8 hereof;
5. Pursuant to Written Instructions, or with respect to Money Market
Securities, Oral Instructions or Written
4
<PAGE>
Instructions, setting forth the name of such Portfolio, the name and
address of the person to whom the payment is to be made, the amount to be
paid and the purpose for which payment is to be made;
6. In payment of fees and in reimbursement of the expenses and
liabilities of the custodian attributable to such Portfolio, as provided in
Section 11(h) hereof; and
7. Upon the receipt of authorized instructions, for the payment of any
expense or liability incurred by the Client or any Portfolio, including,
but not limited to, the following payments for the account of the Client or
any Portfolio:
interest, taxes, management, accounting, transfer agent and legal fees
and operating expenses of the Client or any Portfolio, whether or not
such expenses are, in whole or in part, to be capitalized or treated
as deferred expenses.
(c) CONFIRMATION AND STATEMENTS. Promptly after the close of business on each
day, the Custodian shall furnish the Client or its duly delegated agent with
confirmations and a summary of all transfers to or from the account of each
Portfolio during said day, such confirmations or accompanying documentation
shall identify the entity, i.e. the Custodian, Subcustodian, or Depository that
has physical possession of such Securities and money of the portfolios. In
addition, the Custodian shall notify the Client on a timely basis of any fails
with respect to Securities that have occurred during the day. When securities
purchased by a Portfolio are in a fungible bulk of securities registered in the
name of the Custodian (or its nominee) or shown on the custodian's account on
the books of the Depository or the Book-Entry System, the Custodian shall by
book entry or otherwise identify on its own books of account the quantity of
those securities belonging to such Portfolio. At least monthly, the custodian
shall furnish the Client with a detailed statement of the Securities and moneys
held for each Portfolio under this Agreement. The Custodian shall furnish the
Client with such other daily and periodic reports as may be agreed to by the
parties.
(d) REGISTRATION OF SECURITIES AND PHYSICAL SEPARATION.
All Securities held for a Portfolio which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry System, shall
be held by the Custodian in that form; all other Securities held for a Portfolio
may be registered in the name of that Portfolio, in the name of any duly
appointed registered nominee of the Custodian as the Custodian may from time to
time determine, or in the name of the Book-Entry System or the Depository or
their successor or successors, or their nominee or nominees. The Client
reserves the right to instruct the Custodian as to the method of registration
and safekeeping of the Securities of each Portfolio. The Client agrees to
furnish to the Custodian
5
<PAGE>
appropriate instruments to enable the Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee or in
the name of the Book-Entry System or the Depository, any Securities which it may
hold for the account of a Portfolio and which may from time to time be
registered in the name of a Portfolio. Securities of a Portfolio that are kept
by the Custodian in an account with a Depository or the Book-Entry System shall
be kept in accounts that hold only assets belonging to customers of the
Custodian and not in any proprietary account of the Custodian. The Custodian
shall hold all such Securities specifically allocated to a Portfolio which are
not held in the Book-Entry System or the Depository in a separate account for
such Portfolio in the name of such Portfolio physically segregated at all times
from those of any other person or persons.
(e) COLLECTION OF INCOME AND OTHER MATTERS AFFECTING SECURITIES. Unless
otherwise instructed to the contrary by Written Instructions, the Custodian by
itself, or through the use of the Book-Entry System or the Depository with
respect to Securities therein deposited, shall with respect to all Securities
held for a Portfolio in accordance with this Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon all Securities
which may mature or be called, redeemed or retired, or otherwise become
payable. Notwithstanding the foregoing, the Custodian shall have no
responsibility to the Client or the Portfolio for monitoring or
ascertaining any call, redemption or retirement dates with respect to Put
Bonds which are owned by the Client or the Portfolio and held by the
Custodian or its nominees. Nor shall the Custodian have any responsibility
or liability to the Client or the Portfolio for any loss by the Client or
the Portfolio for any missed payments or other defaults resulting
therefrom; unless the Custodian received timely notification from the
Client specifying the time, place and manner for the presentment of any
such Put Bond owned by the Client or the Portfolio and held by the
Custodian or its nominee. The Custodian shall not be responsible and
assumes no liability to the Client or the Portfolio for the accuracy or
completeness of any notification the Custodian may furnish to the Client
with respect to Put Bonds;
3. Surrender Securities in temporary form for definitive Securities;
4. Execute any necessary declarations or certificates of ownership under
the Federal income tax laws or the laws or regulations of any other taxing
authority now or hereafter in effect including filing such documents as may
be necessary to reclaim foreign withholding taxes paid by the Portfolios;
and
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5. Hold directly, or through the Book-Entry System or the Depository with
respect to Securities therein deposited, for the account of each Portfolio
all rights and similar Securities issued with respect to any Securities
held by the Custodian hereunder for each Portfolio.
(f) DELIVERY OF SECURITIES AND EVIDENCE OF AUTHORITY. Upon receipt of Written
Instructions and not otherwise, except for actions required by subparagraphs 5,
6, 7, and 8 upon Written Instructions or Oral Instructions confirmed by Written
Instructions, the Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
1. Execute and deliver or cause to be executed and delivered to such
persons as may be designated in such Written Instruction proxies, consents,
authorizations, and any other instruments whereby the authority of the
Client as owner of any Securities may be exercised. The Custodian shall
promptly forward to the Client or its duly delegated agent any and all
proxies, proxy statements and similar documents received by the Custodian
which documents relate to Securities held by any Portfolio of the Client
pursuant to written operating procedures between the parties;
2. Deliver or cause to be delivered any Securities held for a Portfolio
in exchange for other Securities or cash issued or paid in connection with
the liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
3. Deliver or cause to be delivered any Securities held for a Portfolio
to any protective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and receive and hold
under the terms of this Agreement in the separate account for each
Portfolio such certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the assets
specifically allocated to the separate account of a Portfolio and take such
other steps as shall be stated in said Written Instruction to be for the
purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Client;
5. Deliver Securities owned by any Portfolio upon sale of such Securities
for the account of such Portfolio pursuant to Section 5;
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6. Deliver Securities owned by any Portfolio upon the receipt of payment
in connection with any repurchase agreement related to such Securities
entered into by such Portfolio;
7. Deliver Securities owned by any Portfolio to the issuer thereof or its
agent when such Securities are called, redeemed, retired or otherwise
become payable; provided, however, that in any such case the cash or other
consideration is to be delivered to the Custodian. Notwithstanding the
foregoing, the Custodian shall have no responsibility to the Client or the
Portfolio for monitoring or ascertaining any call, redemption or retirement
dates with respect to the put bonds which are owned by the Client or the
Portfolio and held by the Custodian or its nominee. Nor shall the
Custodian have any responsibility or liability to the Client or the
Portfolio for any loss by the Client or the Portfolio for any missed
payment or other default resulting therefrom; unless the Custodian received
timely notification from the Client specifying the time, place and manner
for the presentment of any such put bond owned by the Client or the
Portfolio and held by the Custodian or its nominee. The Custodian shall
not be responsible and assumes no liability to the Client or the Portfolio
for the accuracy or completeness of any notification the Custodian may
furnish to the Client with respect to Put Bonds;
8. Deliver Securities owned by any Portfolio in connection with any loans
of securities made by such Portfolio but only against receipt of adequate
collateral as determined from time to time by the Client which may be in
the form of cash or obligations issued by or guaranteed the United States
government, its agencies or instrumentalities, or an irrevocable letter of
credit from a bank;
9. Deliver Securities owned by an Portfolio as security in connection
with any borrowings by such Portfolio requiring a pledge of Portfolio
assets, but only against receipt of amounts borrowed;
10. Deliver Securities owned by any Portfolio upon receipt of instructions
from such Portfolio to the Transfer Agent or to the holders of Shares in
connection with distributions in kind, as may be described from time to
time in the Client's Prospectus, in satisfaction of requests by holders of
Shares for repurchase or redemption; and
11. Deliver Securities owned by any Portfolio for any other proper
business purpose, but only upon receipt of, in addition to Written
Instructions, a certified copy of a resolution of the Board of Directors
signed by an Authorized Person and certified by the Secretary of the
Client, specifying the Securities to be delivered, setting forth the
purpose for
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which such delivery is to be made, declaring such purpose to be a proper
business purpose, and naming the person or persons to whom delivery of such
Securities shall be made.
(g) ENDORSEMENT AND COLLECTION OF CHECKS, ETC. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders for the
payment of money received by the Custodian for the account of a Portfolio.
5. PURCHASE AND SALE OF INVESTMENT OF THE PORTFOLIO.
(a) Promptly after each purchase of Securities for a Portfolio, the Client
shall deliver to the custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, Written Instruction, and (ii) with
respect to each purchase of Money Market Securities, either a Written or Oral
Instruction, in either case specifying with respect to each purchase: (1) the
name of the Portfolio to which such Securities are to be specifically allocated;
(2) the name of the issuer and the title of the Securities; (3) the number of
shares or the principal amount purchased and accrued interest, if any; (4) the
date of purchase and settlement; (5) the purchase price per unit; (6) the total
amount payable upon such purchase; and (7) the name of the person from whom or
the broker through whom the purchase was made, if any. The Custodian shall
receive all Securities purchased by or for a Portfolio and upon receipt of such
Securities shall pay out of the moneys held for the account of such Portfolio
the total amount payable upon such purchase, provided that the same conforms to
the total amount payable as set forth in such Written or Oral Instruction.
(b) Promptly after each sale of Securities of a Portfolio, the Client shall
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, Written Instruction, and (ii) with respect to each
sale of Money Market Securities, either Written or Oral Instruction, in either
case specifying with respect to such sale: (1) the name of the Portfolio to
which the Securities sold were specifically allocated; (2) the name of the
issuer and the title of the Securities; (3) the number of shares or principal
amount sold, and accrued interest, if any; (4) the date of sale; (5) the sale
price per unit; (6) the total amount payable to the Portfolio upon such sale;
and (7) the name of the broker through whom or the person to whom the sale was
made. The Custodian shall deliver or cause to be delivered the Securities to
the broker or other person designated by the Client upon receipt of the total
amount payable to such Portfolio upon such sale, provided that the same conforms
to the total amount payable to such Portfolio as set forth in such Written or
Oral Instruction. Subject to the foregoing, the Custodian may accept payment in
such form as shall be satisfactory to it, and may deliver Securities and arrange
for payment in accordance with the customs prevailing among dealers in
Securities.
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6. LENDING OF SECURITIES.
If a Portfolio is permitted to lend Securities specifically allocated to
that Portfolio, within 24 hours after each loan of Securities, the Client shall
deliver to the Custodian Written Instructions specifying with respect to each
such loan: (1) the Portfolio to which the loaned Securities are specifically
allocated; (2) the name of the issuer and the title of the Securities; (3) the
number of shares or the principal amount loaned; (4) the date of loan and
delivery; (5) the total amount to be delivered to the Custodian, and
specifically allocated to such Portfolio against the loan of the Securities,
including the amount of cash collateral and the premium, if any, separately
identified; and (6) the name of the broker, dealer or financial institution to
which the loan was made. It is understood that in connection with loans of
Securities the Client may appoint an agent to effect such loans pursuant to a
written agreement, as to which the Custodian might be a party, providing, inter
alia for marking collateral to market, the call of such loans and such other
terms as may be agreed upon.
Promptly after each termination of a loan of Securities specifically
allocated to a Portfolio, the Client shall deliver to the Custodian Written
Instruction specifying with respect to each such loan termination and return of
Securities: (1) the name of the Portfolio to which such loaned Securities are
specifically allocated; (2) the name of the issuer and the title of the
Securities to be returned; (3) the number of shares or the principal amount to
be returned; (4) the date of termination; (5) the total amount to be delivered
by the custodian (including the cash collateral for such Securities minus any
offsetting credits as described in said Written Instructions); and (6) the name
of the broker, dealer or financial institution from which the Securities will be
returned. The Custodian shall receive all Securities returned from the broker,
dealer or financial institution to which such Securities were loaned and upon
receipt thereof shall pay, out of the moneys specifically allocated to such
Portfolio, the total amount payable upon such return of Securities as set forth
in such Written Instruction. Securities returned to the Custodian shall be held
as they were prior to such loan.
7. PAYMENT OF DIVIDENDS OR DISTRIBUTIONS.
(a) The Client shall furnish to the Custodian the resolution of the Board of
Directors of the Client certified by the Secretary or Assistant Secretary (i)
authorizing the declaration of dividends with respect to a Portfolio on a
specified periodic basis and authorizing the Custodian to rely on Oral or
Written Instructions specifying the date of the declaration of such dividend or
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of the
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record date and the total amount payable to the Transfer Agent on the payment
date, or (ii) setting forth the date of declaration of any dividend or
distribution by a Portfolio, the date of payment thereof, the record date as of
which shareholders entitled to payment shall be determined, the amount payable
per share to the shareholders of record as of the record date and the total
amount payable to the Transfer Agent on the payment date.
(b) Upon the payment date specified in such resolution, Oral Instruction, or
Written Instruction, as the case may be, the Custodian shall pay out the moneys
specifically allocated to and held for the account of the appropriate Portfolio
or Portfolios to the Transfer Agent of the Client.
8. SALE AND REDEMPTION OF SHARES OF THE PORTFOLIO.
(a) Whenever the Client shall sell any shares of a Portfolio, the Client shall
deliver or cause to be delivered to the Custodian Written Instruction duly
specifying:
1. The name of the Portfolio whose Shares were sold;
2. The number of Shares sold, trade date, and price; and
3. The amount of money and/or Securities to be received by the Custodian
for the sale of such Shares and specifically allocated to such Portfolio.
(b) Upon receipt of such money and/or Securities from the Transfer Agent, the
Custodian shall credit such money and/or Securities to the separate account of
the Portfolio specified in the Written Instruction specified in subparagraph (1)
of paragraph (a) of this Section 8.
(c) Upon issuance of any Shares of a Portfolio in accordance with the foregoing
provisions of this Section 8, the Custodian shall pay, out of the moneys
specifically allocated and held for the account of such Portfolio, all original
issue or other taxes required to be paid in connection with such issuance upon
the receipt of Written Instruction specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares of a Portfolio are
redeemed, the Client shall cause the Transfer Agent to promptly furnish to the
Custodian written notice, specifying:
1. The name of the Portfolio whose Shares were redeemed,
and if Securities are to be paid, the Client shall specify
which Securities are to be delivered in redemption of such
Shares;
2. The number of Shares redeemed; and
11
<PAGE>
3. The amount in cash and/or Securities to be paid for the Shares
redeemed.
(e) Upon receipt from the Transfer Agent of written notice setting forth the
number of Shares of a Portfolio received by the Transfer Agent for redemption
and that such Shares are valid and in good form for redemption, the Custodian
shall make payment and/or deliver to the Transfer Agent out of the moneys and/or
Securities specifically allocated to and held for the account of the Portfolio
specified in subparagraph (1) of paragraph (d) of this Section 8 of the total
amount specified in the Written Instruction issued pursuant to paragraph (d) of
this Section 8.
(f) Notwithstanding the above provisions regarding the redemption of Shares,
whenever such Shares are redeemed pursuant to any check redemption privilege
which may from time to time be offered by the Client, the Custodian, unless
otherwise instructed by a Written Instruction shall, upon receipt of advice from
the Client or its agent stating that the redemption is in good form for
redemption in accordance with the check redemption procedure, honor the check
presented as part of such check redemption privilege out of the moneys
specifically allocated to the Portfolio in such advice for such purpose.
9. INDEBTEDNESS.
(a) The Client will cause to be delivered to the Custodian by any bank from
which the Client borrows money for temporary or emergency or other purposes
using Securities as collateral for such borrowings, a notice or undertaking in
the form currently employed by an such bank setting forth the amount which such
bank will loan to the Client against delivery of a stated amount of collateral.
The Client shall promptly deliver to the Custodian Written Instruction stating
with respect to each such borrowing: (1) the name of the Portfolio for which the
borrowing is to be made; (2) the name of the bank; (3) the amount and terms of
the borrowing, which may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Client, or other loan agreement; (4) the
time and date, if known, on which the loan is to be entered into (the "Borrowing
Date"); (5) the date on which the loan becomes due and payable; (6) the total
amount payable to the Client for the separate account of the Portfolio on the
Borrowing Date; (7) the market value of Securities to be delivered as collateral
for such loan, including the name of the issuer, the title and the number of
shares or the principal amount of any particular Securities; and (8) a statement
that such loan is in conformance with the 1940 Act and the Client's Prospectus.
(b) Upon receipt of the Written Instruction referred to in subparagraph (a)
above, the Custodian shall deliver on the Borrowing Date the specified
collateral and the executed promissory note, if any, against delivery by the
lending bank of the total amount of the loan payable, provided that the same
conforms to the
12
<PAGE>
total amount payable as set forth in the Written Instruction. The Custodian
may, at the option of the lending bank, keep such collateral in its possession,
but such collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. The Custodian shall
deliver as additional collateral in the manner directed by the Client from time
to time such Securities specifically allocated to such Portfolio as may be
specified in the Written Instruction to collateralize further any transaction
described in this Section 9. The Client shall cause all Securities released
from collateral status to be returned directly to the Custodian, and the
Custodian shall receive from time to time such return of collateral as may be
tendered to it. In the event that the Client fails to specify in Written
Instruction all of the information required by this Section 9, the Custodian
shall not be under any obligation to deliver any Securities. Collateral
returned to the Custodian shall be held hereunder as it was prior to being used
as collateral.
10. PERSONS HAVING ACCESS TO ASSETS OF THE CLIENT.
(a) No Trustee, officer, employee or agent of the Client, and no officer,
director, employee or agent of the Client's investment adviser, shall have
physical access to the assets of the Client held by the Custodian or be
authorized or permitted to withdraw any investments of the Client, nor shall the
Custodian deliver any assets of the Client to any such person. No officer,
director, employee or agent of the Custodian who holds any similar position with
the Client or the investment adviser shall have physical access to the assets of
the Client.
(b) Nothing in this Section 10 shall prohibit any officer, employee or agent of
the Client, or any officer, director, employee or agent of the investment
adviser or sub-adviser to a Portfolio, from giving Oral Instructions or Written
Instructions to the Custodian or executing a Certificate so long as it does not
result in delivery of or access to assets of the Client prohibited by paragraph
(a) of this Section 10.
(c) A list of the individual employees of the Custodian duly authorized by the
Custodian to have access to the assets of the Client will be supplied to the
client from time to time. The Custodian shall advise the Client of any change
in the individuals authorized to have access to the assets of the Client by
written notice to the Client.
11. CONCERNING THE CUSTODIAN.
(a) STANDARD OF CONDUCT. Except as otherwise provided herein, neither the
Custodian nor its nominee shall be liable for any loss or damage, including
reasonable counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own negligence
or willful misconduct. The Custodian may, with respect to questions of law,
apply for and
13
<PAGE>
obtain the advice and opinion of counsel to the Client at the expense of the
Client, and shall be fully protected with respect to anything done or omitted by
it in good faith in conformity with such advice or opinion. The Custodian shall
be liable to the Client for any loss or damage resulting from the use of the
Book-Entry System or the Depository arising by reason of any negligence,
misfeasance or misconduct on the part of the Custodian or any of its employees
or agents.
(b) LIMIT OF DUTIES. Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire into, and shall not be
liable for:
1. The validity of the issue of any Securities purchased by any
Portfolio, the legality of the purchase thereof, or the propriety of the
amount paid therefor;
2. The legality of the sale of any Securities by any Portfolio, or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the sufficiency of
the amount to be received therefor;
4. The legality of the redemption of any Shares, or the propriety of the
amount to be paid therefor;
5. The legality of the declaration or payment of any dividend or other
distribution of any Portfolio;
6. The legality of any borrowing for temporary or emergency or other
purposes.
(c) NO LIABILITY UNTIL RECEIPT. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not represented by any
check, draft, or other instrument for the payment of money, received by it on
behalf of any Portfolio until the Custodian actually receives and collects such
money directly or by the final crediting of the account representing the
Client's interest in the Book-Entry System or the Depository. The Custodian
shall exercise diligence consistent with industry practice in pursuing payment
on any such instrument, or any dividend, interest or other receivable of the
Client.
(d) AMOUNTS DUE FROM TRANSFER AGENT. Unless the Custodian and the Dividend
and Transfer Agent shall be the same person or an affiliated person of each
other as defined in the 1940 Act, action to effect collection of any amount due
to any Portfolio from the Transfer Agent nor to take any action to effect
payment or distribution by the Transfer Agent of any amount paid by the
Custodian to the Transfer Agent in accordance with this Agreement.
14
<PAGE>
(e) COLLECTION WHERE PAYMENT REFUSED. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount, if the
Securities upon which such amount is payable are in default, or if payment is
refused after due demand or presentation, unless and until (a) it shall be
directed to take such action by a Certificate and (b) it shall be assured to its
satisfaction of reimbursement of its costs and expenses in connection with any
such action. The Custodian shall promptly notify the Client in the event of any
such default.
(f) APPOINTMENT OF AGENTS AND SUB-CUSTODIANS. The Custodian may appoint one
or more banking institutions, including but not limited to banking or other
qualified institutions located in foreign countries, to act as Depository or
Depositories or as Sub-Custodian or as Sub-Custodians of Securities and moneys
at any time owned by any Portfolio, upon terms and conditions specified in a
Certificate; provided that any such appointment shall have been approved by a
vote of the Board of Directors of the Client. The Custodian shall use
reasonable care in selecting a Depository and/or Sub-Custodian located in a
country other than the United States ("Foreign Sub-Custodian"), and shall
oversee the maintenance of any Securities or moneys of a Portfolio by any
Foreign Sub-Custodian. The Custodian shall be liable to the Client for any loss
or damage to the Client resulting from the negligence or willful misconduct of
any foreign Sub-Custodian to the same extent that the Custodian would be liable
to the Client if the Custodian were holding such Securities or money in the
Commonwealth of Massachusetts. Notwithstanding, the Custodian herein agrees to
pursue at the expense of the Client, any claim which the Custodian may assert
against any Foreign Sub-Custodian to recover any loss or damage arising under
such arrangement. The Client shall have, at its election, the right to enforce
Custodian's rights against any Sub-Custodian, agent or Depository for loss,
damage or expenses caused the Client or any Portfolio by such Sub-Custodian,
agent or Depository and shall be entitled to be subrogated to the rights of
Custodian with respect to any claim against such Sub-Custodian, agent or
Depository which Custodian may have as a consequence of any such loss, damage or
expenses if and to the extent that the Client or a Portfolio has not been made
whole for any such loss or damage. Any selection of and form of contract with a
Foreign Custodian shall be subject to approval by the Client that such selection
and contract are consistent with the requirements of Rule 17f-5 (and Rule 17f-4,
if applicable) under the 1940 Act, and the Custodian warrants that such
arrangement shall, among other things, provide that:
(i) the Client will be adequately indemnified and its assets adequately
insured in the event of loss;
(ii) the Client's assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the eligible Foreign
Custodian or Sub-Custodian or its
15
<PAGE>
creditors except for a claim of payment for their safe custody or
administration;
(iii) beneficial ownership of the Client's assets will be freely
transferable without the payment or value other than for safe custody or
administration;
(iv) adequate records will be maintained identifying the assets as
belonging to the Client;
(v) the Client's independent public accountants will be given access to
those records or confirmation of the contents of those records;
(vi) the Client will receive periodic reports with respect to the
safekeeping of its assets, including, but not necessarily limited to,
notification of any transfer to or from the Client's account; and
(vii) Only foreign securities within the meaning of Rule 17f-5 shall be
held by a Foreign Sub-Custodian.
(g) The Custodian shall use its best efforts to provide the Client with
information described in the "NOTES" to Rule 17f-5 and such other similar
information as the Client may reasonably request to assist its Board of
Directors to satisfy their obligations under such Rule. In addition, the
Custodian shall use its best efforts to provide the Client with prompt notice of
any material change in information previously provided to the Client pursuant to
this paragraph (g) or any material changes in the facts or circumstances upon
which such information is based.
(h) NO DUTY TO ASCERTAIN AUTHORITY. The Custodian shall not be under any
duty or obligation to ascertain whether any Securities at any time delivered to
or held by it for the Client and specifically allocated to a Portfolio are such
as may properly be held by the Client and specifically allocated to such
Portfolio under the provisions of the Articles of Incorporation and the
Prospectus.
(i) RELIANCE ON CERTIFICATES AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any Certificate, notice or other instrument in writing
received by the Custodian and reasonably believed by the Custodian to be
genuine. The Custodian shall be entitled to rely upon any Written Instructions
or Oral Instructions actually received by the Custodian pursuant to the
applicable Sections of this Agreement and reasonably believed by the Custodian
to be genuine and to be given by an Authorized Person. The Client agrees to
forward to the Custodian Written Instructions from an Authorized Person
confirming such Oral Instructions in such manner so that such Written
Instructions are received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business on the same day that such Oral Instructions
are given to the Custodian. The Client agrees that the fact that such
16
<PAGE>
confirming instructions are not received by the Custodian shall in no way affect
the validity of the transactions or enforceability of the transactions hereby
authorized by the Client. The Client agrees that the Custodian shall incur no
liability to the Client in acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions provided such instructions reasonably
appear to have been received from an Authorized Person.
(j) INSPECTION OF BOOKS AND RECORDS. The Custodian shall create and maintain
all records relating to its activities and obligations under this Agreement in
such manner as will meet the obligations of the Client under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Client. All such records shall be
the property of the Client and shall be open to inspection and audit at
reasonable times by officers and auditors employed by the Client and by
employees of the Securities and Exchange Commission.
The Custodian shall promptly provide the Client with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with copies of any report issued by any regulatory
agency concerning its own operations insofar as such report relates to the
performance of its duties as Custodian to the Client and will promptly furnish
the Client with copies of any report prepared by an independent accountant
regarding its system of internal accounting control or that of any Subcustodian
or Depository insofar as such report relates to the performance of its duties as
Custodian to the Client and any similar reports regarding the Custodian, any
Subcustodian or Depository as the Client may reasonably request.
(k) The Custodian agrees to maintain adequate insurance and fidelity bond
coverage for its operation located in New York City, New York.
12. TERM AND TERMINATION.
(a) This Agreement shall become effective after approval by the Client's Board
of Directors and shall continue in effect from year to year thereafter subject
to the provisions of section 12(b).
(b) Either of the parties hereto may terminate this Agreement with respect to
any Portfolio by giving to the other party a notice in writing specifying the
date of such termination. In the event such notice is given by the Custodian,
the date of termination shall be not less than 120 days after the date of
receipt of such notice by the Client. In the event such notice is given by the
Client, the date of termination shall be not less than 30 days after the date of
receipt of such notice by the Custodian. In the event such notice is given by
the Client, it shall be accompanied by a
17
<PAGE>
certified resolution of the Board of Directors of the Client, electing to
terminate this Agreement with respect to any Portfolio and designating a
successor custodian or custodians, which shall be a person qualified to so act
under the 1940 Act. In the event such notice is given by the Custodian, the
Client shall, on or before the termination date, deliver to the Custodian a
certified resolution of the Board of Directors of the Client, designating a
successor custodian or custodians. In the absence of such designation by the
Client, the Custodian may designate a successor custodian, which shall be a
person qualified to so act under the 1940 Act. If the Client fails to designate
a successor custodian for any Portfolio, the Client shall upon the date
specified in the notice of termination of this Agreement and upon delivery by
the Custodian of all Securities (other than Securities held in the Book-Entry
System which cannot be delivered to the Client) and money and then owned by such
Portfolio be deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry System which
cannot be delivered to the Client.
(c) Upon the date set forth in such notice under paragraph (b) of this Section
12, this Agreement shall terminate to the extent specified in such notice, and
the Custodian shall upon receipt of a notice of acceptance by the successor
custodian on that date deliver directly to the successor custodian all
Securities and moneys then held by the Custodian and specifically allocated to
the Portfolio specified, after deducting all fees and other amounts for the
payment or reimbursement of which it shall then be entitled with respect to the
Portfolio and otherwise cooperate in the transfer of its duties and
responsibilities hereunder.
(d) In the event that the Custodian terminates this Agreement the Custodian
shall not charge Transaction Fees (as described in Schedule A) to the Client in
connection with the transfer of assets to a successor custodian. In the event
that the Client terminates this Agreement for a reason other than a breach of
the Custodian's covenants under this agreement, including its fees as set forth
in Schedule A, the Client shall pay the Transaction Fees imposed on a transfer
of assets to a successor custodian.
13. MISCELLANEOUS.
(a) Annexed hereto as Appendix A is a certification signed by the Secretary of
the Client setting forth the names and the signatures of the present Authorized
Persons. The Client agrees to furnish to the Custodian a new certification in
similar form in the event that any such present Authorized Person ceases to be
such an Authorized Person. Until such new certification shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement upon Oral Instructions or signatures of the present Authorized Persons
as set forth in the last delivered certification.
18
<PAGE>
(b) Annexed hereto as Appendix B is a certification signed by the Secretary of
the Client setting forth the names and the signatures of the present officers of
the Client. The Client agrees to furnish to the Custodian a new certification
in similar form in the event any such present officer ceases to be an officer of
the Client. Until such new certification shall be received, the Custodian shall
be fully protected in acting under the provisions of this Agreement upon the
signature of the officers as set forth in the last delivered certification.
(c) Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, shall be sufficiently given if addressed
to the Custodian and mailed or delivered to it at its offices at Princess House,
Bush Lane, London, EC4R OAN, England, Attn: Paul Sarosy, or at such other place
as the Custodian may from time to time designate in writing.
(d) Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Client, shall be sufficiently given if addressed to
the Chief Administrative Officer of the Client and mailed or delivered to it at
its offices at 1299 Ocean Avenue, 11th floor, Santa Monica, California 90401 or
at such other place as the Client may from time to time designate in writing.
(e) Notwithstanding any provision of this Agreement to the contrary, as long as
the Custodian and the Dividend and Transfer Agent shall be the same person or
affiliated persons of each other as defined in the 1940 Act, then nothing
contained in this Agreement shall cause the Client to be liable to the Custodian
for any loss or damage occasioned by information supplied by the Client to the
Custodian if such information was furnished to the Client or based upon
information furnished to the Client by the Dividend and Transfer Agent.
(f) This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties.
(g) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Client without the written consent
of the Custodian, or by the Custodian without the written consent of the Client
authorized or approved by a resolution of the Board of Directors of the Client,
and any attempted assignment without such written consent shall be null and
void.
(h) This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
(i) The captions of the Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
effect their construction or effect.
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<PAGE>
(j) This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunder duly authorized as of the day and year
first above written.
DFA INVESTMENT DIMENSIONS GROUP INC.
By:
-----------------------------------
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
------------------------------------
20
<PAGE>
SCHEDULE A - FEE SCHEDULE
Following is the total fee schedule of Boston Safe Deposit and Trust
Company ("Boston Safe") for global custody services for the Portfolios of DFA
Investment Dimensions Group Inc. (the "Fund") listed in Appendix C to the
Custody Agreement between Boston Safe and the Fund. The fee schedule will be
capped at these levels for a two year period beginning with the date that Boston
Safe first earns a fee from the portfolios under this schedule. The fees may be
decreased by Boston Safe. After the first two years, the transaction based fees
will not increase more than 10% in total over the subsequent two year period.
The asset based fees will not increase in the first four years. Fees for any
additional portfolios are to be negotiated, but should not exceed the rates in
this schedule for assets similar in type and domicile.
Upon termination of the agreement for services, Boston Safe will waive
the Transaction Fees, as listed in the table below, for the transfer of assets
to a successor custodian, if Boston Safe declines to renew the terms of the
agreement or if the agreement is terminated because Boston Safe is seeking an
increase in Transaction Fees in excess of a total of 10% over a two year period.
The fees are all inclusive. They include, but are not limited to the
following services: all costs associated with on-line communication
services to the administrative agent for the portfolios, costs associated with
maintenance of demand deposit accounts associated with the portfolios, all
dividend and income collection, trade affirmation services, tax reclaims, sub-
custodian processing charges such as corporation action, reporting, settlements
and custody charges or other out-of-pocket expenses.
Boston Safe agrees to use the services of the
sub-custodians presently used by the portfolios in the United Kingdom, Spain and
Italy to preclude the necessity of incurring costs of transferring and
reregistering the securities in those countries.
<TABLE>
<CAPTION>
Transaction Fee Asset Fee
Country (per buy/sell) (basis pts./yr)
- ------------------------- -------------- ---------------
<S> <C> <C>
UNITED KINGDOM SMALL COMPANY
PORTFOLIO
United Kingdom L20 4
JAPANESE SMALL COMPANY PORTFOLIO
Japan L20 5
21
<PAGE>
<CAPTION>
Transaction Fee Asset Fee
Country (per buy/sell) (basis pts./yr)
- ------------------------- -------------- ---------------
<S> <C> <C>
CONTINENTAL SMALL COMPANY
PORTFOLIO
Belgium $75 9
France $35 9
Germany $40 9
Italy $200 9
Netherlands $15 9
Spain * *
Switzerland $65 9
Austria $45 9
Denmark $60 15
Finland $80 20
Norway $80 9
Sweden $40 9
*based on charges by Morgan (Madrid) as sub-custodian
ASIA-AUSTRALIA SMALL COMPANY
PORTFOLIO
Australia $100 15
Hong Kong $100 15
Singapore/Malaysia $100 15
DFA GLOBAL BOND PORTFOLIO
France $0 3
Germany $0 3
Japan $0 3
United Kingdom $0 3
United States $0 3
LARGE CAP INTERNATIONAL PORTFOLIO
All countries L25 5
</TABLE>
22
<PAGE>
APPENDIX C - PORTFOLIOS
I, Deborah J. Ferris, Secretary of DFA Investment Dimensions Group Inc., a
Maryland corporation (the "Client"), do hereby certify that:
The following Portfolios of the Client are subject to this Agreement:
The Japanese Small Company Portfolio
The Asia-Australia Small Company Portfolio
The United Kingdom Small Company Portfolio
The Continental Small Company Portfolio
The Large Cap International Portfolio
The DFA Global Bond Portfolio
Deborah J. Ferris
---------------------------
Secretary
27
<PAGE>
Exhibit No. 99.B8(i)(a)
DFA INVESTMENT DIMENSIONS GROUP INC.
May 26, 1993
Mr. Keith Bryan
Boston Safe Deposit and
Trust Company
Princess House
Bush Lane
London EC4R OAN
ENGLAND
Re: CUSTODY AGREEMENT BETWEEN DFA INVESTMENT
DIMENSIONS GROUP INC. AND BOSTON SAFE
DEPOSIT AND TRUST COMPANY
----------------------------------------
Dear Mr. Bryan:
DFA Investment Dimensions Group Inc., a Maryland corporation and an
open-end management investment company registered under the Investment Company
Act of 1940 (the "1940 Act") (the "Client"), has retained Boston Safe Deposit
and Trust Company, a Massachusetts trust company (the "Custodian"), to provide
certain custodial services pursuant to a Custody Agreement between the Client
and the Custodian dated as of July 22, 1991 (the "Agreement"). The Custodian
presently provides such services to the Six Portfolios of the Client listed in
Appendix C to the Agreement (the "Covered Portfolios").
The Client has since organized one new Portfolio, designated the "DFA
International High Book to Market Portfolio" (the "New Portfolio") and the
Client and the Custodian hereto desire that the Custodian provide the New
Portfolio with the same services that the Custodian provides the Covered
Portfolios pursuant to the Agreement. Section 1(i) of the Agreement provides
that any new Portfolio created and designated by the Client may become subject
to the Agreement by the mutual consent of the Client and the Custodian.
The Client and the Custodian hereby consent to and agree to the
Custodian providing custodial services to the New Portfolio pursuant to the
Agreement. Pursuant to Section 3(b) of the Agreement, the parties have agreed
upon the compensation for the Custodian acting as custodian for the New
Portfolio reflected in the attached Fee Schedule, dated and signed by an officer
of each party. The attached Fee Schedule shall be attached to Schedule A of the
Agreement.
<PAGE>
In all other respects, the Agreement shall remain unchanged and in
full force and effect.
Sincerely,
DFA INVESTMENT DIMENSIONS GROUP INC.
By: Irene R. Diamant
-------------------------------------
Title: Vice President
----------------------------------
ACCEPTED AND AGREED
this 16th day of
June, 1993:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
---------------------------------
Title: Vice President
-------------------------------
<PAGE>
FEE SCHEDULE
SAFE CUSTODY FEE
COUNTRY TRANSACTION CHARGE (U.S. $) (BASIS POINTS/YEAR)
- ------- --------------------------- -------------------
Australia 100 6
Belgium 75 9
France 55 5
Germany 45 5
Hong Kong 120 10
Italy 75 5
Japan 45 5
Netherlands 25 6
Singapore 150 15
Spain 40 5
Switzerland 75 6
United Kingdom 45 5
Transaction Repair $25
Funds Transfer $25
DFA INVESTMENT DIMENSIONS BOSTON SAFE DEPOSIT AND
GROUP INC. TRUST COMPANY
By: Irene R. Diamant By:
---------------------------- ----------------------------
Date: May 26, 1993 Date: 16th June, 1993
<PAGE>
Exhibit No. 99.B8(i)(b)
DFA INVESTMENT DIMENSIONS GROUP INC.
December 20, 1994
Mr. Valentine Feerick
Mellon Trust
Princess House
1 Suffolk Lane
London EC4R OAN
ENGLAND
Re: CUSTODY AGREEMENT BETWEEN DFA INVESTMENT
DIMENSIONS GROUP INC. AND MELLON TRUST (FORMERLY
BOSTON SAFE DEPOSIT AND TRUST COMPANY)
------------------------------------------------
Dear Mr. Ferrick:
DFA Investment Dimensions Group Inc., a Maryland corporation and an
open-end management investment company registered under the Investment Company
Act of 1940 (the "1940 Act") (the "Client"), has retained Mellon Trust (formerly
Boston Safe Deposit and Trust Company) (the "Custodian") to provide certain
custodial services pursuant to a Custody Agreement between the Client and the
Custodian dated as of July 22, 1991 (the "Agreement"). The Custodian presently
provides such services to several Portfolios of the Client (the "Covered
Portfolios").
The Client has recently organized one new Portfolio, designated the
"DFA International Small Cap Value Portfolio" (the "New Portfolio") and the
Client and the Custodian hereto desire that the Custodian provide the New
Portfolio with the same services that the Custodian provides the Covered
Portfolios pursuant to the Agreement. Section 1(i) of the Agreement provides
that any new Portfolio created and designated by the Client may become subject
to the Agreement by the mutual consent of the Client and the Custodian.
The Client and the Custodian hereby consent to and agree to the
Custodian providing custodial services to the New Portfolio pursuant to the
Agreement. Pursuant to Section 3(b) of the Agreement, the parties have agreed
upon the compensation for the Custodian acting as custodian for the New
Portfolio reflected in the attached Fee Schedule, dated and signed by an officer
of each party. The attached Fee Schedule shall be attached to Schedule A of the
Agreement.
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401
(301)395-8005 Telex: 371-6841
<PAGE>
Mr. Feerick
Page 2
In all other respects, the Agreement shall remain unchanged and in
full force and effect.
Sincerely,
DFA INVESTMENT DIMENSIONS GROUP INC.
By: Michael T. Scardina
------------------------------------
Title: VP & CFO
---------------------------------
ACCEPTED AND AGREED
this 6 day of
January, 1995:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
---------------------------------
Title:
------------------------------
<PAGE>
FEE SCHEDULE
SAFE CUSTODY FEE
COUNTRY TRANSACTION CHARGE (U.S. $) (BASIS POINTS/YEAR)
- ------- --------------------------- -------------------
Australia 100 6
Belgium 75 9
France 55 5
Germany 45 5
Hong Kong 120 10
Italy 75 5
Japan 45 5
Netherlands 25 6
Singapore 150 15
Spain 40 5
Sweden 50 7
Switzerland 75 6
United Kingdom 45 5
Transaction Repair $25
Funds Transfer $25
DFA INVESTMENT DIMENSIONS BOSTON SAFE DEPOSIT AND TRUST
GROUP INC. COMPANY
By: Michael T. Scardina By:
---------------------------- ----------------------------
Date: Jan. 6, 1994 Date: 6/1, 1995
<PAGE>
Exhibit 99.B8(i)(c)
(DFA INVESTMENT DIMENSIONS GROUP INC. LETTERHEAD)
September __, 1995
Mr. Valentine Ferrick
Mellon Trust
Princess House
Bush Lane
London EC4R OAN
ENGLAND
Re: CUSTODY AGREEMENT BETWEEN DFA INVESTMENT
DIMENSIONS GROUP INC. AND BOSTON SAFE
DEPOSIT AND TRUST COMPANY
----------------------------------------
Dear Mr. Ferrick:
DFA Investment Dimensions Group Inc., a Maryland corporation and an
open-end management investment company registered under the Investment Company
Act of 1940 (the "1940 Act") (the "Client"), has retained Boston Safe Deposit
and Trust Company (the "Custodian") to provide certain custodial services
pursuant to a Custody Agreement between the Client and the Custodian dated as of
July 22, 1991 (the "Agreement"). The Custodian presently provides such services
to several Portfolios of the Client (the "Covered Portfolios").
The Client has recently organized two new Portfolios, designated "VA
International Value Portfolio" and "VA International Small Portfolio" (the "New
Portfolios") and the Client and the Custodian hereto desire that the Custodian
provide the New Portfolios with the same services that the Custodian provides
the Covered Portfolios pursuant to the Agreement. Section 1(i) of the Agreement
provides that any new Portfolio created and designated by the Client may become
subject to the Agreement by the mutual consent of the Client and the Custodian.
The Client and the Custodian hereby consent to and agree to the
Custodian providing custodial services to the New Portfolios pursuant to the
Agreement. Pursuant to Section 3(b) of the Agreement, the parties have agreed
upon the compensation for the Custodian acting as custodian for the New
Portfolios reflected in the attached Fee Schedule, dated and signed by an
officer of each party. The attached Fee Schedule shall be attached to Schedule
A of the Agreement.
<PAGE>
In all other respects, the Agreement shall remain unchanged and in
full force and effect.
Sincerely,
DFA INVESTMENT DIMENSIONS GROUP INC.
By:
-------------------------------------
Title:
----------------------------------
ACCEPTED AND AGREED
this ____ day of
__________, 1995:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
---------------------------------
Title:
------------------------------
<PAGE>
FEE SCHEDULE
SAFE CUSTODY FEE
COUNTRY TRANSACTION CHARGE (U.S. $) (BASIS POINTS/YEAR)
- ------- --------------------------- -------------------
Australia 100.00 5
Austria 45.00 9
Belgium 75.00 9
Canada 30.00 3
Cedel 30.00 3
Denmark 60.00 15
Euroclear 35.00 3
Finland 80.00 20
France 45.00 5
Germany 45.00 5
Hong Kong 120.00 10
India 150.00 60
Italy 90.00 5
Japan 45.00 5
Korea 40.00 15
Malaysia 90.00 15
Netherlands 25.00 6
New Zealand 100.00 15
Norway 80.00 9
Singapore 150.00 15
Spain 40.00 5
Switzerland 65.00 9
Sweden 50.00 7
Taiwan 45.00 20
United Kingdom 22.00 4
USA 30.00 2
Transaction Repair $25
Funds Transfer $25
DFA INVESTMENT DIMENSIONS BOSTON SAFE DEPOSIT AND
GROUP INC. TRUST COMPANY
By: By:
---------------------------- ----------------------------
Date:__________, 1995 Date:__________, 1995
<PAGE>
Exhibit No. 99.B8(ii)(e)
CUSTODIAN SERVICES AGREEMENT
AMENDMENT NUMBER FIVE
THIS AGREEMENT is made as of the 8th day of September, 1995 by and
between DFA INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the
"Fund"), and PNC BANK, N.A., formerly "Provident National Bank" ("PNC").
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and
WHEREAS, the Fund has retained PNC to provide certain custodian
services pursuant to a Custodian Services Agreement dated as of June 19, 1989
and amended on February 26, 1990, September 24, 1990, March 6, 1992 and
September __, 1992 (the "Agreement") which as of the date hereof, is in full
force and effect; and
WHEREAS, PNC presently provides such services to three of the four
Portfolios of the Fund that were in existence on June 19, 1989, and the
Portfolios added on February 26, 1990, September 24, 1990, March 6, 1992 and
September __, 1992, which are defined in Section 1 of the Agreement as the
"Covered Portfolios"; and
<PAGE>
WHEREAS, the Fund has since organized three new Portfolios, designated
"VA Small Value Portfolio," "VA Large Value Portfolio" and "VA Short-Term Fixed
Portfolio" (collectively, the "New Portfolios"), and the parties hereto desire
that PNC shall provide the New Portfolios with the same services that PNC
provides to the nine Portfolios of the Fund pursuant to the Agreement; and
WHEREAS, Section 1 of the Agreement provides that PNC shall provide
such services to any Portfolio organized by the Fund after the date of the
Agreement as agreed to in writing by PNC and the Fund.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound, the parties hereto agree as
follows:
1. The Fund has delivered to PNC copies of:
(a) Post-Effective Amendment Number 33 to the registration
statement of the Fund, as effective with the U.S. Securities and Exchange
Commission on September 8, 1995, wherein the New Portfolios are described;
(b) The exhibits to such post-effective amendment including the
forms of investment advisory agreements and specimen stock certificates, all of
which pertain to the New Portfolios; and
(c) Amendment Number Ten dated September 8, 1995 of each of the
following agreements:
-2-
<PAGE>
(i) the Transfer Agency Agreement between the Fund and PFPC
Inc., formerly "Provident Financial Processing Corporation" ("PFPC"), dated as
of June 19, 1989; and
(ii) the Administration and Accounting Services Agreement
between the Fund and PFPC dated as of June 19, 1989.
2. The Agreement hereby is amended effective September 8, 1995 by:
(a) adding the following words "and effective September 8, 1995,
VA Small Value Portfolio, VA Large Value Portfolio and VA Short-Term Fixed
Portfolio" immediately after the words, "The U.S. Small Cap High Book to Market
Portfolio," in the first sentence of Section 1;
(b) adding the following words, "and as amended September 8,
1995" after the words, "as amended September __, 1992" in Section 2(j);
(c) deleting the following words, "September __, 1992," and
inserting in lieu thereof the words, "March 9, 1995 and September 8, 1995" in
Section 5(a)(v); and
(d) adding a new sentence immediately following the sixth
sentence of Section 25 as follows: "The foregoing provisions of this Section 25
notwithstanding, this Agreement with respect to VA Small Value Portfolio, VA
Large Value Portfolio and VA Short-Term Fixed Portfolio may be terminated by
-3-
<PAGE>
either party upon not less than 180 days prior written notice to the other
party."
3. The Fee Schedules of PNC applicable to the New Portfolios shall
be as agreed in writing from time to time.
4. In all other respects to Agreement shall remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Number Five to the Agreement to be executed by their duly authorized officers
designated below on the day and year first above written.
DFA INVESTMENT DIMENSIONS GROUP INC.
By:
-------------------------------------
PNC BANK, N.A.
By:
-------------------------------------
-4-
<PAGE>
Exhibit No. 99.B9(i)(j)
TRANSFER AGENCY AGREEMENT
AMENDMENT NUMBER TEN
THIS AGREEMENT is made as of the 8th day of September, 1995, by and
between DFA INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the
"Fund"), and PFPC INC., formerly "Provident Financial Processing Corporation"
("PFPC"), a Delaware corporation, which is an indirect wholly-owned subsidiary
of PNC Financial Corp.
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund has retained PFPC to provide certain transfer agency
services pursuant to a Transfer Agency Agreement dated as of June 19, 1989 and
as amended (the "Agreement") which, as of the date hereof, is in full force and
effect; and
WHEREAS, PFPC presently provides such services to the twenty existing
Portfolios of the Fund; and
WHEREAS, the Fund has since organized four new Portfolios, designated
the "VA Small Value Portfolio," "VA International Value Portfolio," "VA
International Small
<PAGE>
Portfolio" and "VA Short-Term Fixed Portfolio" (the "New Portfolios"), and the
parties hereto desire that PFPC shall provide the New Portfolios with the same
services that PFPC provides to the other twenty Portfolios of the Fund pursuant
to the Agreement; and
WHEREAS, Section 1 of the Agreement provides that PFPC shall provide
such services to any Portfolio organized by the Fund after the date of the
Agreement as agreed to in writing by PFPC and the Fund.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound, the parties hereto agree as
follows:
1. The Fund has delivered to PFPC copies of:
(a) Post-Effective Amendment Number 33 to the registration
statement of the Fund, as effective with the U.S. Securities and Exchange
Commission on September 8, 1995, wherein the New Portfolios are described;
(b) The exhibits to such post-effective amendment, including the
forms of investment advisory agreements and specimen stock certificates with
respect to the New Portfolios; and
(c) Amendment Number Ten dated September 8, 1995 of the
Administration and Accounting Services Agreement between the parties dated as of
June 19, 1989.
-2-
<PAGE>
2. The Agreement hereby is amended effective September 8, 1995
by:
(a) adding the following sentence immediately after the eleventh
sentence of Section 1 therein, "As of September 8, 1995, the Fund delivered to
PFPC a Prospectus dated September 8, 1995 wherein four new classes of Fund
shares designated the "VA Small Value Portfolio," "VA International Value
Portfolio," VA International Small Portfolio" and "VA Short-Term Fixed
Portfolio" are described and the parties agree that the terms of this Agreement
shall apply to the Portfolios described in such Prospectus.";
(b) adding a new sentence immediately following the eleventh
sentence of Section 19 as follows: "The foregoing provisions of this Section 19
notwithstanding, this Agreement with respect to the VA Small Value Portfolio, VA
International Value Portfolio, VA International Small Portfolio and VA Short-
Term Fixed Portfolio may be terminated by either party upon not less than 180
days prior written notice to the other party."
3. The Fee Schedules of PFPC applicable to the New Portfolios
shall be as agreed in writing from time to time.
4. In all other respects the Agreement shall remain unchanged
and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused
-3-
<PAGE>
this Amendment Number Ten to the Agreement to be executed by their duly
authorized officers designated below on the day and year first above written.
DFA INVESTMENT DIMENSIONS GROUP INC.
By:
---------------------------------
PFPC INC.
By:
----------------------------------
-4-
<PAGE>
Exhibit No. 99.B9(ii)(j)
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
AMENDMENT NUMBER TEN
THIS AGREEMENT is made as of the 8th day of September, 1995 by and
between DFA INVESTMENT DIMENSIONS GROUP INC., a Maryland corporation (the
"Fund"), and PFPC INC., formerly "Provident Financial Processing Corporation"
("PFPC"), a Delaware corporation, which is an indirect wholly-owned subsidiary
of PNC Financial Corp.
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund has retained PFPC to provide certain administration
and accounting services pursuant to an Administration and Accounting Services
Agreement dated as of June 19, 1989 and as amended (the "Agreement") which, as
of the date hereof, is in full force and effect; and
WHEREAS, PFPC presently provides such services to the twenty existing
Portfolios of the Fund; and
<PAGE>
WHEREAS, the Fund has since organized four new Portfolios, designated
the "VA Small Value Portfolio," "VA International Value Portfolio," "VA
International Small Portfolio" and "VA Short-Term Fixed Portfolio" (the "New
Portfolios"), and the parties hereto desire that PFPC shall provide the New
Portfolios with the same services that PFPC provides to the other twenty
Portfolios of the Fund pursuant to the Agreement; and
WHEREAS, Section 1 of the Agreement provides that PFPC shall provide
such services to any Portfolio organized by the Fund after the date of the
Agreement as agreed to in writing by PFPC and the Fund.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound, the parties hereto agree to
follows:
1. The Fund has delivered to PFPC copies of:
(a) Post-Effective Amendment Number 33 to the registration
statement of the Fund, as effective with the U.S. Securities and Exchange
Commission on September 8, 1995 wherein the New Portfolios are described;
(b) The exhibits to such post-effective amendment, including the
forms of investment advisory agreements
-2-
<PAGE>
and specimen stock certificates with respect to the New Portfolios; and
(c) Amendment Number Ten dated September 8, 1995 of the Transfer
Agency Agreement between the parties dated as of June 19, 1989.
2. The Agreement hereby is amended effective September 8, 1995 by:
(a) adding the following sentence immediately after the eleventh
sentence of Section 1 therein, "As of September 8, 1995, the Fund delivered to
PFPC a Prospectus dated September 8, 1995 wherein four new classes of shares
designated the "VA Small Value Portfolio," "VA International Value Portfolio,"
"VA International Small Portfolio" and "VA Short-Term Fixed Portfolio" are
described and the parties agree that the terms of this Agreement shall apply to
the Portfolios described in such Prospectus.";
(b) adding a new sentence immediately following the eleventh
sentence of Section 15 as follows: "The foregoing provisions of this Section 15
notwithstanding, this Agreement with respect to the VA Small Value Portfolio, VA
International Value Portfolio, VA International Small Portfolio and VA Short-
Term Fixed Portfolio may be terminated by either party upon not less than 180
days prior written notice to the other party."
-3-
<PAGE>
3. The Fee Schedules of PFPC applicable to the New Portfolios shall
be as agreed in writing from time to time.
4. In all other respects the Agreement shall remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Number Ten to the Agreement to be executed by their duly authorized officers
designated below on the day and year first above written.
DFA INVESTMENT DIMENSIONS GROUP INC.
By:
----------------------------------
PFPC INC.
By:
----------------------------------
-4-
<PAGE>
Exhibit No. 99.B9 (xii)
MARKETING AGREEMENT
BETWEEN
DFA SECURITIES, INC.
AND
NATIONAL HOME LIFE ASSURANCE COMPANY
<PAGE>
Table of Contents
Section Description Page
- ------- ----------- ----
1 Sales of the Contract. . . . . . . . . . . . . . . . . . . 1
2 Representations and Warranties . . . . . . . . . . . . . . 3
3 Contracts, Sales Material and
Information. . . . . . . . . . . . . . . . . . . . . . . . 4
4 Indemnification. . . . . . . . . . . . . . . . . . . . . . 7
5 Term and Termination . . . . . . . . . . . . . . . . . . .13
6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . .14
7 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . .14
<PAGE>
THIS AGREEMENT, made and entered into this 29th day of June, 1994, by and
between National Home Life Assurance Company ("Company"), on its own behalf and
on behalf of National Home Life Assurance Company Separate Account V, a
segregated asset account of the Company ("Account), and DFA Securities Inc.
("DFAS") (collectively, "Parties").
Company and DFAS intending to be legally bound, hereby agree as follows:
1. SALES OF THE CONTRACTS
1.1 Company and DFAS hereby agree to perform the duties and assume the
responsibilities set forth herein in connection with the offering of certain
mutually agreed upon variable annuity contracts ("Contracts") in substantially
the forms appearing at Schedule 1.1 hereto. Company shall establish and maintain
subdivisions of the Account as required by law to perform Company's obligations
under the Contracts, including the obligation to establish a subdivision for
each portfolio offered by DFA Investment Dimensions Group Inc. ("Fund") and
accepted by Company for investment under the Contract.
1.2 DFAS will assist, or through one or more independent contractors will
have assistance provided to, Company in developing a marketing program for the
Contracts. Either DFAS or its independent contractors will be available at
reasonable times to assist Company and investment advisors whose clients
purchase the Contracts in understanding the Fund and its investment
<PAGE>
strategies and to provide information regarding the Fund. DFAS' assistance will
not involve the handling of monies and/or securities of the Contracts.
1.3 Neither DFAS nor any of its affiliates or independent contractors
shall have any authority as the Company's agent or otherwise to, and DFAS shall
not (a) make any promise or incur any debt on behalf of Company; (b) hold itself
out as an employee of Company; (c) misrepresent, add, alter, waive, discharge,
or omit any material provision(s) of the Contracts or the then current
prospectuses for the Contracts or confirmation statements or any other Company
materials; (d) engage in exchanges of Contracts for other deferred annuity
contracts; (e) pay or allow to be paid to any owner of a Contract ("Owner") or
potential purchaser any rebate or other inducement not specified in the
Contracts; (f) give or offer to give any specific advice or opinion regarding
any specific tax or estate planning result for any individual or entity in
connection with the purchase of any Contract; or (g)take any other action beyond
the scope of the authority granted under this Agreement.
1.4 Except as required by law or regulation, DFAS and the Company each
agree that all information communicated to it by the other, including, without
limitation, the names and addresses of Owners, shall be received in strict
confidence, shall be used by the recipient party only for the purposes of this
Agreement or the Participation Agreement of even date herewith among Fund, DFAS,
Dimensional Fund Advisors Inc. and Company and that no such
-2-
<PAGE>
information shall be disclosed by the recipient party, its agents or employees
without the prior written consent of the other party; provided, however, that
this Paragraph 1.4 shall not prohibit persistency programs with respect to the
Contracts.
1.5 To the extent required by applicable law, including the
administrative requirements of regulatory authorities, or as mutually agreed
between Company and DFAS, Company reserves the right to modify any of the
Contracts in any respect whatsoever. Company reserves the right in its sole
discretion to suspend the sale of any of the Contracts, in whole or in part, or
to accept or reject any application for the sale of a Contract. Company agrees
to notify DFAS upon the occurrence of any event Company believes might
necessitate a material modification or suspension. Company and DFAS further
agree to provide prompt notice to each other of any communications received from
any regulatory authority with respect to the sale of the Contracts.
1.6 DFAS and Company agree that the Contracts will only be accepted from
agents with whom the Company has executed a General Agent Contract. DFAS
reserves the right to reject contracts submitted by agents whom DFAS has
determined to be market timers.
2. REPRESENTATIONS AND WARRANTIES
2.1 Company represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established the Account prior to any issuance or sale thereof as a
segregated asset account under Section 376.309 of the Missouri Insurance
-3-
<PAGE>
Code and that it has and will maintain the capacity to issue all Contracts that
may be sold; and that it is properly licensed, qualified and in good standing to
sell the Contracts in all the jurisdictions listed on Schedule 2.1 hereto.
2.2 Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act").
2.3 Company represents and warrants that it has or will have registered
the Account as a unit investment trust in accordance with the provisions of the
Investment Company Act of 1940 (the "1940 Act") to serve as a segregated
investment account for the Contracts.
2.4 Company represents that the Contracts are currently treated as
annuity contracts, under applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and that it will maintain such treatment and that
it will notify DFAS promptly upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so treated
in the future.
2.5 DFAS represents and warrants that it is lawfully established and
validly existing under the laws of the State of Delaware.
2.6 DFAS does not charge any fees or expenses in connection with its
obligations under this Agreement.
-4-
<PAGE>
2.7 DFAS represents and warrants that it is and will be a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and is
and will be registered as a broker Dealer with the Securities and Exchange
Commission ("SEC"). DFAS further represents that it and any independent
contractor acting on behalf of DFAS under this Agreement will perform its
obligations hereunder in accordance with all applicable state and federal laws
and regulations, including without limitation the Securities Exchange Act of
1934 (the "1934 Act"), the 1940 Act and state insurance laws of which it is
aware, provided DFAS shall haven no obligation to conduct an independent
investigation, or of which Company has made it aware by providing DFAS with
written advice.
2.8 DFAS represents and warrants that it is and will remain duly
registered and licensed in all material respects under all applicable federal
and state securities laws.
3. CONTRACTS, SALES MATERIAL AND INFORMATION
3.1 Company shall file the Contracts in all jurisdictions in which it is
licensed (the "States") and use its best efforts to secure approval for sale of
the Contracts in the States, and Company further agrees to maintain such
approvals. A list of those States where the Company has received approval to
market and sell the Contracts is attached hereto as Schedule 3.1.
3.2 In the event Company and DFAS agree that DFAS will prepare sales
literature or other promotional material for the Contracts pursuant to Section
3.4 below, all such sales material
-5-
<PAGE>
prepared by DFAS will be filed by Company with the appropriate state regulatory
authorities as required in the States and Company will use its best efforts to
effect prompt review of such material in the States and to provide DFAS with
such assistance as DFAS may reasonably require in order to develop sales
literature in compliance with the laws and regulations of the States. Company
shall be responsible for filing all such material in compliance with the federal
securities law and the rules of the NASD.
3.3 Company shall promptly inform DFAS as to the status of all such sales
literature filings and shall promptly notify DFAS of all approvals or
disapprovals of sales literature filings in the States. Except for internal
correspondence, inquiries, meetings and discussions, DFAS shall promptly provide
Company with copies of correspondence and written reports of inquiries, meetings
and discussions concerning the Contracts and Owner complaints respecting the
Contracts.
3.4 DFAS shall not, unless otherwise agreed to by Company, create any
sales literature or other promotional material for the Contracts. In the event
Company and DFAS agree that DFAS will prepare sales literature or other
promotional material for the Contracts, DFAS shall furnish to Company each piece
of such literature or material at the earliest practical stage of its
development, and Company commits to comment upon, approve or disapprove all
proposed advertising within five (5) business days of receipt from DFAS. No
such material shall be used if Company
-6-
<PAGE>
reasonably objects to such use after receipt of such material. Each Party agrees
to cooperate with the other to facilitate the other's ongoing efforts to comply
with all applicable laws and regulations.
3.5 Except with Company's consent, DFAS shall not give any material
information or make any material representations on behalf of Company or
concerning Company, the Account, or the Contracts other than the information or
representations contained in: (a) a registration statement or prospectus for the
Contracts, as amended or supplemented from time to time; (b)published reports
for the Account which are in the public domain or approved by Company for
distribution to Contract Owners; or (c) sales literature or other promotional
material approved by Company.
3.6 No Party shall use the other Party's names, logos, trademarks or
service marks, whether registered or unregistered, without the prior written
consent of such Party.
3.7 DFAS will provide to Company at least one complete copy of all
requests for no action letters, and all amendments thereto that relate to the
Company, the Account or the Contracts, (a) in draft form prior to the filing of
such document with the SEC or other regulatory authorities with reasonable time
allowed for Company to provide DFAS with its comments, and (b) in final form as
filed.
3.8 Company will provide to DFAS at least one complete copy of all
registration statements, prospectuses, Statements of
-7-
<PAGE>
Additional Information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters and all amendments to any of the above, that
relate to the Contracts, (a) in draft form prior to the filing of such document
with the SEC, with reasonable time allowed for DFAS to provide Company with its
comments and (b) in final form as filed.
3.9 For purposes of this Section 3, the phrase "sales literature or other
promotional material" shall be construed in accordance with all applicable
securities laws and regulations.
3.10 The Parties agree to review the Contracts during the last calendar
quarter of each year for possible changes and will make their personnel
reasonably available for this purpose.
4. INDEMNIFICATION
4.1 INDEMNIFICATION BY COMPANY
4.1(a) Company agrees to indemnify and hold harmless DFAS and its
directors and officers, and each person, if any, who controls it within the
meaning of Section 15 of the 1933 Act (the "Indemnified Party" for purposes of
this Section 4.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Company) or
litigation (including legal and other expenses), to which the Indemnified Party
may become subject under any statute, regulation, at common law or otherwise,
and:
-8-
<PAGE>
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement, prospectus or sales literature for the
Contracts or contained in the Contracts or any sales literature for
the Fund created by Company or agents of the Company (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this section
4.1(a) shall not apply as to the Indemnified Party if such statement
or omission or such alleged statement or omission was made in
reliance upon and in conformity with written information furnished to
Company or agents of Company by or on behalf of DFAS for use in the
registration statement or prospectus for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts; or
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of Company or persons under its
control, with
-9-
<PAGE>
respect to the sale or distribution of the Contracts; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or
prospectus covering the Fund, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading, if such a statement or omission
was made in reliance upon written information furnished to DFAS by or
on behalf of Company; or
(iv) arise out of, or as a result of, any failure by Company or
persons under its control to provide the services and furnish the
materials contemplated under the terms of this Agreement; or
(v) arise out of, or result from, any material breach of any
representation and/or warranty made by Company or persons under its
control in this Agreement or arise out of or result from any other
material breach of this Agreement by Company or persons under its
control; or
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(vi) arise out of or are based upon noncompliance by DFAS or its
independent contractors with applicable state insurance laws in
connection with DFAS' obligations under this Agreement unless DFAS
was aware of such law or Company made DFAS aware of such law by
providing DFAS with written advice;
as limited by and in accordance with the provisions of sections
4.1(b) and 4.1(c) hereof.
4.1(b) Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
the Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to the
Company, the Account or the Contracts, whichever is applicable, or to the extent
of such Indemnified Party's negligence.
4.1(c) Company shall not be liable under this indemnification provision
with respect to any claim made against the Indemnified Party unless such
Indemnified Party shall have notified Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice
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of such service on any designated agent), but failure to notify Company of any
such claim shall not relieve Company from any liability which it may have to the
Indemnified Party otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Party, Company shall
be entitled to participate, at its own expense, in the defense of such action
provided that it gives written notice of such intention to the Indemnified
Parties. Company also shall be entitled to assume and to control the defense
thereof. After notice from Company to such Party of Company's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and Company will not be
liable to such Party under this Agreement for any legal or other expenses
subsequently incurred by such Party independently in connection with the defense
thereof other than reasonable costs of investigation.
4.1(d) The Indemnified Party will promptly notify Company of the
commencement of any litigation or proceedings against it in connection with the
issuance or sale of the Contracts or the subject matter of this Agreement.
4.2 INDEMNIFICATION BY DFAS
4.2(a) DFAS agrees to indemnify and hold harmless Company and each of
its directors and officers and each person, if any, who controls Company within
the meaning of Section 15 of the 1933 Act (the "Indemnified Party" for purposes
of this Section 4.2) against any and all losses, claims, damages,
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liabilities (including amounts paid in settlement with the written consent of
DFAS) or litigation (including legal and other expenses) to which the
Indemnified Party may become subject under any statute, at common law or
otherwise, and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or sales literature for the
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this section 4.2(a) shall not apply as to the Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with written information
furnished to DFAS by or on behalf of Company for use in the
registration statement or prospectus for the Fund (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts; or
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of DFAS or persons under its
control, with respect
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to the sale or distribution of the Contracts (it is understood that the
persons who are involved in the sale or distribution of the Contracts
are not under the control of DFAS); or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon written
information furnished to Company by or on behalf of DFAS; or
(iv) arise out of, or as a result of, any failure by DFAS or
persons under its control to provide the services and furnish the
materials contemplated under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by DFAS or persons under its
control in this Agreement or arise out of or result from any other
material breach of this Agreement by DFAS or persons under its control;
as limited by and in
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accordance with the provisions of Sections 4.2(b) and 4.2(c) hereof.
4.2(b) DFAS shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
the Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement, or to the
extent of such Indemnified Party's negligence.
4.2(c) DFAS shall not be liable under this indemnification provision
with respect to any claim made against the Indemnified Party unless such
Indemnified Party shall have notified DFAS in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify DFAS of any such claim shall not relieve DFAS from
any liability which it may have to the Indemnified Party otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, DFAS will be entitled to participate, at its
own expense, in the defense thereof provided that it gives written notice of
such intention to the Indemnified Parties. DFAS also shall be entitled to
assume and to control
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the defense thereof. After notice from DFAS to such Party of DFAS's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and DFAS will not be liable
to such party under this Agreement for any legal or other expenses subsequently
incurred by such Party independently in connection with the defense thereof
other than reasonable costs of investigation.
4.2(d) The Indemnified Party will promptly notify DFAS of the
commencement of any litigation or proceedings against it in connection with the
issuance or sale of the Contracts or the subject matter of this Agreement.
5. TERM AND TERMINATION
5.1 The initial term of this Agreement shall be from June 29, 1994
through June 28, 1997. This Agreement shall thereafter automatically renew from
year to year, provided that either Party may terminate this Agreement without
cause upon sixty (60) days advance written notice to the other.
5.2 Notwithstanding any other provision of this Agreement, DFAS may
terminate this Agreement for cause on not less than thirty (30) days' prior
written notice to the Company, unless Company has cured such cause within thirty
(30) days of receiving such notice, for any material breach by Company of any
representation, warranty, covenant or obligation hereunder.
5.3 Notwithstanding any other provision of this Agreement, Company
may terminate this Agreement for cause on not less than thirty (30) days' prior
written notice to DFAS, unless DFAS has
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cured such cause within thirty (30) days of receiving such notice, for any
material breach by DFAS of any representation, warranty, covenant or obligation
under the Contracts or hereunder.
5.4 This Agreement shall automatically terminate at such time as
there are no subdivisions of the Account funding the Contracts that are invested
in the Fund.
5.5 Notwithstanding the termination of this Agreement, each Party
shall continue for so long as any Contracts remain outstanding to perform such
of its duties hereunder as are necessary to ensure the continued tax deferred
status thereof and the payment of benefits thereunder.
6. NOTICES
Any notice shall be deemed sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to DFAS:
Irene R. Diamant
Vice President
DFA Securities Inc.
1299 Ocean Avenue, 11th Fl.
Santa Monica, California 90401
If to Company:
Dale E. Cooper
Providian Corporation
400 West Market Street
P.O. Box 32830
Louisville, Kentucky 40202
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With a copy to:
Pamela H. Godwin
President
National Home Life Assurance Company
Valley Forge, Pennsylvania 19493
7. MISCELLANEOUS
7.1 The captions in this Agreement are included for convenience of
reference only and in no way affect the construction or effect of any provisions
hereof.
7.2 If any portion of this Agreement shall be held or made invalid by
a court decision; statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
7.3 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
7.4 Each Party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance and securities regulators) and shall permit such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement.
7.5 Each party hereto grants to the other the right to audit its
records relating to the terms and conditions of this Agreement upon reasonable
notice during reasonable business hours in order to compliance with this
Agreement.
7.6 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all
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rights, remedies and obligations, at law or in equity, which the parties hereto
are entitled to under state and federal laws.
7.7 This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of the other
party hereto.
7.8 In any dispute arising hereunder, each party waives its right to
demand a trial by Jury and hereby consents to a bench trial of all such
disputes.
7.9 The terms of this Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of Kentucky; provided,
however, that all performances rendered hereunder shall be subject to compliance
with all applicable state and federal laws and regulations.
7.10 Sections 1.2 (excluding the first sentence), 1.3, 1.4, 1.5, 2,
3.6, 3.7, 3.8, 3.9, 4, 5.5, 6 and 7 hereof shall survive termination of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has
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caused this Agreement to be duly executed as of the date first set forth above.
NATIONAL HOME LIFE ASSURANCE COMPANY
By:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
DFA SECURITIES INC.
By:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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SCHEDULE 1.1
CAPITAL HOLDING
A MISSOURI STOCK COMPANY * HOME OFFICE: JEFFERSON CITY, MISSOURI 65101
ANNUITY ADMINISTRATIVE OFFICE: LOUISVILLE, KENTUCKY 40202
1-800-866-6007
We, National Home Life Assurance Company, have issued this Contract on the life
of the Annuitant in consideration of your application and the receipt of your
Initial Purchase Payment.
This plan provides a monthly Annuity Payment for the life of the Annuitant.
Payments start on the Annuity Date.
BENEFITS UNDER THIS CONTRACT WHEN BASED ON THE INVESTMENT EXPERIENCE OF A
SEPARATE ACCOUNT ARE VARIABLE AND ARE NOT
GUARANTEED AS TO AMOUNT.
FREE LOOK PERIOD - RIGHT TO CANCEL CONTRACT
If for any reason you are not satisfied with this Contract, you may return it to
us within 10 days (20 days if this Contract is replacing a previously existing
life insurance or annuity contract) of the date you received it. You may return
it by delivering or mailing it to your agent or to our Annuity Administrative
Office, P.O. Box 32700, Louisville, Kentucky 40232. If returned, the Contract
shall be void from the Contract Date. We will refund the Purchase Payment(s) you
paid or, if greater, the Accumulated Value.
The policy is a legal contract between you and us. READ THE CONTRACT CAREFULLY.
We have caused this Contract to be signed by our President and Secretary.
Ronald L. Souders Pamela H. Godwin
Secretary President
Flexible Premium Multi-Funded Variable Annuity Contract
The Details Of The Variable Provision Begin On Page 6
Nonparticipating
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INDEX Page
Right to Cancel Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Contract Schedule Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exchanging Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Partial or Full Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Dollar Cost Averaging. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Accumulated Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Death Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Ownership, Assignment and Beneficiary. . . . . . . . . . . . . . . . . . . . . 9
Required Distribution Pursuant to IRC Section 72(s). . . . . . . . . . . . . . 9
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Annuity Payment Options. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Annuity Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
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CONTRACT SCHEDULE PAGE
Please address all correspondence to National Home Life Assurance Company,
Annuity Administrative Office, P.O. Box 32700, Louisville, Kentucky 40232.
Include the Contract Number on all correspondence in order to facilitate the
processing of the request.
CONTRACT SCHEDULE
Contract Owner: CLINT BLACK Contract Number: DFA0009A
Joint Owner: N/A Contract Date: 11/01/1992
Annuitant: CLINT BLACK Annuity Date: 12/01/2033
Annuitant's Beneficiary: BLACK, SHIRLEY Initial Purchase Payment:$495,000.00
Each Subaccount of the National Home Life Assurance Company Separate Account V
offered in this Contract invests in a corresponding portfolio of the National
Home Life The Advisor's Edge Fund (the "Fund"). These portfolios are listed
below. The allocation of the initial Net Purchase Payment that you chose is also
shown below. Your initial Net Purchase Payment will be invested in the Federated
Prime Money Fund (the "money market portfolio") until the end of the Free Look
Period, at which time it will be invested and shown below.
SEPARATE ACCOUNT ALLOCATIONS
DFA Global Bond Portfolio 10%
Federated Prime Money Funds 15%
DFA Global Value Portfolio 10%
Federated US Government Bond Fund 10%
Federated Equity Growth and Income Fund 10%
Federated Corporate Bond Fund l0%
Federated Utility Fund 35%
CONTRACT CHARGES:
Daily charge corresponding to an annual charge of .15% of the value of the
Subaccounts, plus a $30 annual fee to cover the cost of administering the
Contract
Daily charge corresponding to an annual charge of .50% of the value of the
Subaccounts per year for mortality and expense risk.
DEFINITIONS
Whenever used in this Contract, the following shall mean:
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ADJUSTED DEATH BENEFIT
During the first six Contract Years, the Adjusted Death Benefit will be equal to
the sum of all Net Purchase Payments made less any partial withdrawals. During
each subsequent six-year period, the Adjusted Death Benefit will be equal to the
Death Benefit on the last day of the previous six-year period plus any Net
Purchase Payments made, less any partial withdrawals made during the current
six-year period. For any six-year period after the six-year period in which the
Annuitant attains age 75, the Adjusted Death Benefit will be equal to the Death
Benefit on the last day of the six-year period before age 75 occurs plus any Net
Purchase Payments subsequently made, less any partial withdrawals subsequently
taken.
ANNUITANT
The person whose life is used to determine the duration of any Annuity Payments
and upon whose death, prior to the Annuity Date, benefits under this Contract
are paid.
ANNUITANT'S BENEFICIARY
The person or persons to whom any benefits are due upon the Annuitant's death.
ANNUITY DATE
The date on which Annuity Payments begin. The Annuity Date is always the first
day of a month.
ANNUITY PAYMENT
One of a series of payments made under an Annuity Payment Option. Annuity
Payments are based on the lifetime or life expectancy of the Annuitant unless an
Annuity Income option which pays only for a Period Certain is elected.
ANNUITY PAYMENT OPTION
One of several ways in which the Accumulated Value of this Contract can be paid.
Under a Fixed Annuity Option, the dollar amount of each Annuity Payment does not
change over time. Under a Variable Annuity Option, the dollar amount of each
Annuity Payment may change over time, depending upon the investment experience
of the underlying portfolio or portfolios you choose. Annuity Payments are based
On the Contract's Accumulated Value as of 10 Business Days prior to the Annuity
Date.
ANNUITY UNIT
Unit of measure used to calculate Variable Annuity Payments.
BUSINESS DAY
A day when the New York Stock Exchange is open for trading.
CONTRACT ANNIVERSARY
Any anniversary of the Contract Date.
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CONTRACT DATE
The date of issue of this Contract.
CONTRACT YEAR
A period of 12 months starting with the Contract Date or any Contract
Anniversary.
DEATH BENEFIT
The Contract's Accumulated Value on the date we receive proof of the Annuitant's
death or, if greater, the Adjusted Death Benefit.
EXCHANGE
One Exchange will be deemed to occur with each voluntary transfer from any
Subaccount.
INITIAL PURCHASE PAYMENT
The first payment you make to purchase this Contract. The Initial Purchase
Payment must be at least $5,000 for Non-Qualified Contracts and $2,000 (or $50
if payments are to be made by monthly payroll deduction) for Qualified
Contracts. In no event, however, can the Initial Purchase Payment be greater
than $1,000,000 without our consent. The Initial Purchase Payment less any sales
load and applicable Premium Tax, if any, will be credited to your Accumulated
Value within two Business Days after our acceptance of the application and the
Initial Purchase Payment.
NET PURCHASE PAYMENT
Any Purchase Payment less the applicable sales load and Premium Tax, if any.
NON-QUALIFIED CONTRACT
Any contract other than those described under the Qualified Contract definition
in this Definitions section.
OWNER'S DESIGNATED BENEFICIARY
The person you designated on your application to receive your interest in this
Contract if you die before the entire interest in the Contract is distributed,
as explained in the Required Distribution Pursuant to IRC Section 72(s)
provision.
PAYEE
You, the Annuitant, the Beneficiary, or any other person, estate, or legal
entity to whom benefits are to be paid.
PREMIUM TAX
A regulatory tax that may be assessed by your state on the Purchase Payments you
make in this Contract. The amount which we must pay as Premium Tax will be
deducted from each Purchase Payment or from your Accumulated Value as it is
incurred by us.
PROOF OF DEATH
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A certified death certificate; a certified decree from a court of competent
jurisdiction as to the finding of death; a written statement by a medical doctor
who attended the deceased; or any other proof satisfactory to us.
PURCHASE PAYMENT
An amount you invest in this Contract. Purchase Payments after the Initial
Purchase Payment may be made at any time prior to the Annuity Date as long as
the Annuitant is living. Each Purchase Payment after the initial Purchase
Payment must be at least $1,000 for Non-Qualified contracts or $50 for Qualified
Contracts. The total of all Purchase Payments may not exceed $1,000,000 without
our consent. Net Purchase Payments received prior to the close of the New York
Stock Exchange will be credited to your Accumulated Value at the close of
business that same day. Net Purchase Payments received after the close of the
New York Stock Exchange will be credited the following Business Day.
QUALIFIED CONTRACT
An annuity contract as defined under Section 401(a), 403(b) and 408 of the
Internal Revenue Code of 1986, as amended (the "Code").
SEC
The Securities and Exchange Commission.
SEPARATE ACCOUNT
The National Home Life Assurance Company Separate Account V. The Separate
Account consists of assets that are segregated by us and invested in the Fund as
shown on the Schedule Page. The investment performance of the Separate Account
is independent of the performance of the general assets of the Company.
SUBACCOUNT
That portion of the Separate Account which invests in shares of the Fund's
portfolios. Each Subaccount will invest only in a single portfolio. The
investment performance of each Subaccount is linked directly to the investment
performance of the underlying portfolio of the Fund.
WE, US, OURS
"We" means National Home Life Assurance Company. "Us," "our" and "ours" also
refer to National Home Life Assurance Company.
WRITTEN REQUEST (OR WRITTEN NOTICE)
Any notice or request in writing by you to us. It is how you let us know any
requests you have or changes you want to make to this Contract. Such request
must be in a format and content acceptable to us. A Signature Guarantee may be
required for your protection.
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YOU, YOUR, YOURS
"You" refers to the person or persons designated as the Owner in the application
for this Contact. The term shall also include any person named as JOINT OWNER.
A Joint Owner shares ownership in all respects with the Owner. The Owner has
the right to assign ownership to a person or party other than himself. "YOUR"
and "YOURS" also refer to the Owner and the Joint Owner.
THE SEPARATE ACCOUNT
NATURE OF THE SEPARATE ACCOUNT
The Separate Account is registered with the SEC under the Investment Company Act
of 1940 as a Unit Investment Trust type of investment company. It is also
subject to the laws of Missouri. We established the Separate Account to support
variable annuity contracts. We own the assets of the Separate Account and keep
them separate from the assets of our general investment account.
We use the assets of the Separate Account to buy shares in the Fund. The
Separate Account has Subaccounts which are invested in corresponding specific
portfolios of the Fund. Income and realized and unrealized gains and losses from
assets in each Subaccount are credited to, or charged against, the Subaccount
without regard to income, gains or losses in our other investment accounts.
We will determine the value of the assets in the Separate Account at the end of
each Business Day. In order to determine the value of an asset on a day that is
not a Business Day, we will use the value of that asset as of the end of the
next Business Day on which trading takes place.
We will always keep assets in the Separate Account with a value at least equal
to the total investment amount under contracts similar to this one. To the
extent those assets do not exceed this total, we use them to support only those
contracts and do not use those assets to support any other business. We may use
any excess over this amount in any way we choose.
SUBACCOUNTS
The Separate Account has several Subaccounts. Each Subaccount invests in a
corresponding portfolio of the Fund. The portfolios available on the Contract
Date are listed on the Contract Schedule Page.
ALLOCATIONS TO THE SUBACCOUNTS
You determine, using whole percentages, what portion of the initial Net Purchase
Payment will be allocated among the Subaccounts at the end of the Free Look
Period. The Contract Schedule Page will show your initial allocation
percentages. You may choose to allocate nothing to a particular Subaccount. The
minimum balance per Subaccount must be at least $1,000.
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You may change the allocation percentages for additional Net Purchase Payments
at any time. The change will take effect on the date we receive Written Notice.
EXCHANGES AND WITHDRAWALS
If you make a partial or full withdrawal or a exchange from one Subaccount to
any of the other Subaccounts at any time prior to the Annuity Date we will
reduce the value of that Subaccount by the amount withdrawn or exchanged.
As a result, you will receive a withdrawal amount equal to the amount withdrawn.
EXCHANGING UNITS
EXCHANGES
You may make as many exchanges among Subaccounts during a Contract Year as you
wish, provided you maintain a minimum balance of $1,000 in any Subaccount to
which you have allocated Net Purchase Payments. The first 12 exchanges during
each Contract Year will be without charge. However, there will be a $15 charge
for any exchange after the first 12 in any Contract Year.
Exchanges may be made by phone or in writing.
PARTIAL OR FULL WITHDRAWALS
You may make a partial or full withdrawal of your Accumulated Value at or before
the Annuity Date. You may not make a partial or full withdrawal after the
Annuity Date. You may elect to have the withdrawal amount paid in a lump sum, or
you may elect to have it all paid out under an Annuity Payment Option.
On the date we receive your Written Request for a partial withdrawal, the
Accumulated Value will be reduced by an amount equal to the withdrawal amount,
subject to the following:
1. Partial withdrawals will be deducted as directed by you in your Written
Request for partial withdrawal. In the absence of specific direction from
you, we will make deductions from the Subaccounts to which you have
allocated Net Purchase Payments on a pro rata basis.
2. The minimum partial withdrawal is $500.
3. If a partial withdrawal or exchange would reduce the value in a Subaccount
to less than $1,000, the remaining balance in that subaccount will be
transferred to the other Subaccounts in which the Contract's Accumulated
value is then allocated on a pro rata basis. If the balance under
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this Contract is less than $1,000, we reserve the right to liquidate the
account. You will be notified if your balance is below the minimum, and
will be given 60 days in which to make an additional Purchase Payment.
On the date we receive your Written Request for full withdrawal, the amount
payable is the Accumulated Value.
DOLLAR COST AVERAGING
If you have at least $5,000 of Accumulated Value in the money market portfolio,
you may elect to have a specified dollar amount transferred from that Subaccount
to other Subaccounts on a monthly basis.
The minimum amount you may transfer each month is $250 for each Subaccount. The
maximum amount you may transfer is equal to the value of the money market
portfolio when you make your election, divided by 12. You may change the amount
to be transferred once each Contract Year provided we receive Written Notice at
least seven days prior to the next transfer date.
We will make this transfer on the same date each month as the Contract Date.
The dollar amount will be allocated to the Subaccounts in the proportions
specified on your application or election form. If, on any transfer date, the
value in the money market portfolio is equal to or less than the amount you
elected to have transferred, we will transfer the entire amount and this option
will no longer be in effect.
You may cancel this option at any time provided we receive Written Notice at
least seven days prior to the next transfer date.
ACCUMULATED VALUE
ACCUMULATED VALUE
On the Contract Date, the Accumulated Value is equal to your initial Net
Purchase Payment. On any Business Day after the Contract Date, the Accumulated
Value is equal to the Accumulated Value from the previous Business Day
PLUS:
1. Any Additional Net Purchase Payments received; and
2. Any increase in the value of the Subaccount(s), due to investment results,
to which the Accumulated Value is allocated;
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LESS:
1. Any decrease in the value of the Subaccount(s), due to investment results,
to which the Accumulated Value is allocated;
2. A charge, as described on the Contract Schedule Page, for mortality and
expense risks assumed by us;
3. A charge, as described on the Contract Schedule Page, to cover our costs
in administering the Contract;
4. A charge of $15 for any exchange made after the first 12 in any Contract
Year; and
5. Any withdrawals.
DEATH BENEFIT
DEATH BENEFIT PRIOR TO THE ANNUITY DATE
We will pay the Death Benefit to the Annuitant's Beneficiary when we receive
proof that the Annuitant died prior to the Annuity Date. The Death Benefit may
be paid as a lump sum cash benefit or an annuity payment benefit. If you and the
Annuitant are the same person and the Annuitant's Beneficiary is your surviving
spouse, then the Annuitant's Beneficiary may elect to be treated as the Owner's
Designated Beneficiary pursuant to the Required Distribution Pursuant to IRC
72(s) provision.
OWNERSHIP, ASSIGNMENT AND BENEFICIARY
OWNERSHIP OF THE CONTRACT
The Annuitant is the Owner unless you have designated another person as Owner on
the application. You may specify a new Owner by Written Notice at any time alter
the Contract Date. During the Annuitant's lifetime, all rights and privileges
under this Contract may be exercised solely by you. From time to time, we may
require proof that the Annuitant is still living.
ASSIGNMENT OF THE CONTRACT
We are not responsible for the validity or effect of any assignment. No
assignment will be recognized until we receive Written Notice. The interest of
any Annuitant's Beneficiary which the assignor has the right to change shall be
subordinate to the interest of an assignee. Any amount paid to the assignee
shall be paid in one sum, notwithstanding any settlement agreement in effect at
the time the assignment was executed. We shall not be liable as to any payment
or other settlement made by us before we acknowledged the notice.
-10-
<PAGE>
ANNUITANT'S BENEFICIARY
You may name a beneficiary on the application. You may make this designation
irrevocable by a Written Notice filed and approved by us. An irrevocable
Annuitant's Beneficiary may be changed only with his own written consent.
Changes in Annuitant's Beneficiary must be made by Written Notice to us. The
change will take effect on the date the notice is signed. We will acknowledge in
writing receipt of the notice. The change will not affect any payment made or
other action taken before we acknowledged the notice.
ANNUITANT'S DEATH PRIOR TO ANNUITY DATE
If the Annuitant dies prior to the Annuity Date, the following will apply unless
you have made other provisions:
1. If there is more than one Annuitant's Beneficiary, each will share
equally.
2. If one of two or more Annuitant's Beneficiaries has already died, that
share of the death benefit will be paid equally to the survivor(s).
3. If no Annuitant's Beneficiary is living, the proceeds will be paid to you,
your legal representatives or assigns.
4. If an Annuitant's Beneficiary dies at the same time as the Annuitant, the
proceeds will be paid as though the Annuitant's Beneficiary had died
first.
5. If an Annuitant's Beneficiary dies within 15 days after the Annuitant's
death and before we receive due proof of the Annuitant's death, proceeds
will be paid as though the Annuitant's Beneficiary had died first.
The Annuitant's Beneficiary may choose a Payment Option available under the
Contract.
ANNUITANT'S DEATH AFTER ANNUITY DATE
If the Annuitant dies on or after the Annuity Date, any unpaid Payments Certain
will be paid to the Annuitant's Beneficiary.
DEATH OF ANNUITANT'S BENEFICIARY
If an Annuitant's Beneficiary who is currently receiving Annuity Payments dies,
any remaining Payments Certain will be paid to that Annuitant's Beneficiary's
named beneficiary as they come due.
REQUIRED DISTRIBUTION PURSUANT TO IRC SECTION 72(s)
If you die before the entire interest in the Contract is distributed:
-11-
<PAGE>
1. The following applies:
(a) If you die on or after the Annuity Date, the remaining portion of
such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of death; and
(b) If you die before the Annuity Date, the entire interest in this
Contract will be distributed within five years after the date of
death.
2. There is an exception to (1) above if the person to whom ownership of this
Contract passes by reason of your death (the "Owner's Designated
Beneficiary") chooses to take any portion of his interest in this Contract
as an Annuity to be paid to himself or for his benefit, then such portion
shall be treated as distributed on the date distributions begin, provided:
(a) such distributions begin no later than one year after your death or
such later date as may be prescribed by federal regulations; and (b) such
portion will be distributed, in accordance with regulations, either over
the lifetime of the Owner's Designated Beneficiary, or over a period not
extending beyond his life expectancy.
3. Special rule where surviving spouse is the Owner's Designated Beneficiary:
If the Owner's Designated Beneficiary is your surviving spouse, then
paragraphs (1) and (2) above shall be applied by treating your spouse as
the original Contract Owner. The surviving spouse may elect to become the
owner under the contract and to treat the contract as his or her own.
GENERAL PROVISIONS
ENTIRE CONTRACT
The entire contract consists of this Contract, including riders or endorsements,
and the written application. Changes to this Contract are not valid unless we
make them in writing. They must be signed by one of our Executive Officers. No
agent has the authority to change this Contract or to waive any of its
provisions.
INCONTESTABILITY
This Contract is incontestable from the Contract Date, subject to the
Misstatement of Age or Sex provision.
NONPARTICIPATING
This Contract is nonparticipating. This means we do not pay dividends on it.
The Contract will not share in our profits or surplus.
-12-
<PAGE>
PROTECTION OF PROCEEDS AND PAYMENTS
To the extent permitted by law, neither the proceeds nor any payments under this
Contract shall be subject to the claims of creditors or legal process.
ANNUAL STATEMENT
You will receive an annual statement once each year. It will show such things
as the value of the Subaccount(s), as well as any Additional Purchase Payments,
withdrawals, exchanges or charges for the year that apply to this Contract. The
statement may contain other information required by law or regulation.
MISSTATEMENT OF AGE OR SEX
If the Annuitant's age or sex has been misstated, payments will be adjusted to
the amount which would have been provided for the correct age or sex. If
payments have already commenced and the misstatement has caused an underpayment,
the full amount due will be paid with the next scheduled payment. If the
misstatement has caused an overpayment,the amount due will be deducted from one
or more future payments.
DEFERMENT OF PAYMENT
If a lump sum or cash withdrawal is to be paid from the Separate Account,
payment will be made within seven calendar days from the date the election
become effective.
We may defer payment in cases where the New York Stock Exchange is closed or
trading has been restricted by the SEC, or when the SEC allows use to defer
payments in order to protect its Contract Owners.
CONTRACT AMENDMENT
We will amend this Contract from time to time, subject to your prior approval,
in cases where we are acting to comply with the United States Internal Revenue
Code and/or regulations of the United States Treasury Department, or are acting
to maintain the tax-deferred status of this Contract, pursuant to those
provisions or regulations.
RIGHTS RESERVED BY THE COMPANY
Subject to any required approval by the SEC, the Missouri Department of
Insurance, and any other regulatory authority, we reserve the right to take
certain actions. These include:
1. To deregister the Separate Account under the Investment Company
Act of 1940;
2 To combine any two or more separate accounts;
3. To operate the Separate Account as a management investment
company or any other form permitted by law;
-13-
<PAGE>
4. To substitute shares of another fund or units of a trust if
shares of the Fund are not available, or if, in our judgment, further
investment in such shares is no longer appropriate; and
5. To add or delete funds (including the Fund), portfolios and
corresponding Subaccount.
ANNUITY PAYMENT OPTIONS
You may elect that Annuity Payments be received on a fixed basis, a variable
basis, or some combination of both.
PROCEEDS
The Normal Annuity Date is the first day of the month following the Annuitant's
85th birthday. However, you may choose to advance or defer the Annuity Date. You
must make this request in writing at least 30 days prior to the requested
Annuity Date and during the Annuitant's lifetime. On the Annuity Date the
proceeds to be applied under a Payment Option will be cell to the Contract's
Accumulated Value 10 Business Days prior to the Annuity Date less any applicable
Premium Tax.
ANNUITY PAYMENTS
Annuity Payments are made monthly starting on the Annuity Date. The Annuity
Payments are guaranteed to be no less than the amount provided by the Annuity
Tables. The minimum payment is $100. The number of payments made in a year may
be adjusted to maintain this minimum. If the Accumulated Value is less than
$5,000, we have the right to pay that amount in a lump sum. We may require proof
of the Annuitant's age before making payments. From time to time, we may require
proof that the Annuitant is living.
PAYMENT OPTIONS
l. Life Annuity - We will make monthly Annuity Payments for the life
of the Annuitant, ceasing with the last payment due prior to his
death.
2. Life Annuity with 120,180 or 240 Monthly Payments Certain - We
will make monthly Annuity Payments for the life of the Annuitant, or
if the Annuitant dies for 120,180 or 240 months as elected. If, at
any given age, the same amount would be payable for different periods
certain, we will deem an election to have been made for the longest
period certain which could have been elected at such age for such
amount.
3. Installment or Unit Refund Life Annuity - We will make monthly
Annuity Payments for the life of an Annuitant, with a Period Certain
determined by dividing the Accumulated Value by the first Annuity
Payment.
-14-
<PAGE>
4. Joint and Last Survivor Annuity - We will make monthly Annuity
Payments for the life of two Annuitants and thereafter for the life
of the Survivor, ceasing with the last payment due prior to the
Survivor's death.
5. Designated Period Annuity - We will make monthly Annuity Payments
for a Period Certain which may be from 10 to 30 years, as elected.
This option is available on a fixed basis only.
ANNUITY TABLES
The Annuity Tables show the guaranteed minimum amount of monthly Annuity Payment
for each $1,000 of Accumulated Value for each Fixed Annuity option. The amount
of each Annuity Payment will depend on the Annuitant's sex and age on the
birthday nearest to the date the first Annuity Payment is due.
We base the tables for the first four Options on the 1983 Table "A" Mortality
Table projected for mortality improvement to the year 2000 using Projection
Scale G and an interest rate of 4% a year. The table for Option 5 is based on
an interest rate of 4% a year. On request we will furnish the amount of monthly
Annuity Payment per $1,000 applied for any ages not shown. We will treat any
Payee who is over age 85 at the date Annuity Payments begin as being age 85 on
that date.
FIXED PAYMENT AMOUNTS
With respect to a Fixed Payment Option, the amounts shown on the tables
represent the guaranteed minimum for each Annuity Payment.
VARIABLE PAYMENT AMOUNTS
With respect to a Variable Payment Option, the amounts shown on the tables
represent the first Annuity Payment, based on the assumed interest rate of 4%.
The amount of each Annuity Payment after the first is determined by means of
Annuity Units.
The number of Annuity Units is determined by dividing the first Annuity Payment
by the Annuity Unit value for the selected Subaccount 10 Business Days prior to
the Annuity Date. The number of Annuity Units for the subaccount then remains
fixed, unless an exchange of Annuity Units is made. After the first Annuity
Payment, the dollar amount of each subsequent Annuity Payments equal to the
number of annuity units multiplied by the Annuity Unit value for the Subaccount
10 Business Days before the due date of the Annuity Payment.
The Annuity Unit Value for each Subaccount was established at $10. The Annuity
Unit Value for any subsequent Business Day is equal to (a) times (b) times (c),
where:
-15-
<PAGE>
(a) is the Annuity Unit Value on the immediately preceding Business Day;
(b) is the Net Investment factor for the day;
(c) is the Investment Result Adjustment Factor (.99989255 per day), which
recognizes an assumed interest rate of 4% per year used in determining the
Annuity Payment Accounts.
The Net Investment Factor is a factor applied to a Subaccount that reflects
daily changes in the value of the Subaccount due to:
(a) Any increase or decrease in the value of the subaccount due to investment
results.
(b) A charge, as described on the Contract Schedule Page, for mortality and
expense risks assumed by us.
(c) A charge, as described on the Contract Schedule Page, to cover the cost of
administering the account.
When annuity payments begin, neither expenses actually incurred other than taxes
on the investment return, nor mortality actually experienced, shall adversely
affect the dollar amount of variable annuity payments.
ALTERNATE FIXED ANNUITY PAYMENT OPTION RATES
We may, at the time of election of an Annuity Payment Option, offer more
favorable rates in lieu of the guaranteed rates shown in the Annuity Tables.
This option will in no event be less favorable than that of any individual
immediate annuity then being sold by us.
-16-
<PAGE>
ANNUITY TABLES
GUARANTEED MINIMUM
OPTIONS ONE AMOUNT OF MONTHLY PAYMENT
TWO AND THREE FOR EACH $1,000 APPLIED
<TABLE>
<CAPTION>
MALE SINGLE LIFE ANNUITIES
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Monthly Payments Certain Monthly Payments Certain
Payments Certain ---------------------------- Install- ---------------------------- Install-
Age of ---------------- Age of ment Age of ment
Payee 120 240 Payee None 120 180 240 Refund Payee None 120 180 240 Refund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 3.73 3.72 43 4.29 4.27 4.25 4.22 4.22 65 6.28 6.05 5.77 5.41 5.84
21 3.74 3.73 44 4.34 4.32 4.29 4.26 4.26 66 6.45 6.18 5.86 5.47 5.97
22 3.75 3.74 45 4.39 4.36 4.34 4.30 4.31 67 6.63 6.32 5.96 5.53 6.10
23 3.76 3.75 46 4.44 4.42 4.38 4.34 4.35 68 6.83 6.47 6.06 5.58 6.25
24 3.77 3.76 47 4.49 4.47 4.43 4.38 4.40 69 7.04 6.62 6.16 5.63 6.40
25 3.78 3.77 48 4.55 4.52 4.48 4.43 4.45 70 7.27 6.78 6.26 5.68 6.56
26 3.80 3.78 49 4.61 4.58 4.54 4.48 4.50 71 7.51 6.94 6.35 5.72 6.72
27 3.81 3.80 50 4.68 4.64 4.59 4.53 4.56 72 7.76 7.10 6.44 5.76 6.90
28 3.83 3.81 51 4.75 4.70 4.65 4.58 4.62 73 8.03 7.27 6.53 5.80 7.09
29 3.84 3.83 52 4.82 4.77 4.71 4.63 4.68 74 8.32 7.44 6.62 5.83 7.28
30 3.86 3.85 53 4.89 4.84 4.78 4.69 4.74 75 8.63 7.61 6.70 5.86 7.49
31 3.88 3.87 54 4.97 4.92 4.84 4.74 4.81 76 8.97 7.78 6.78 5.89 7.71
32 3.91 3.89 55 5.06 4.99 4.91 4.80 4.88 77 9.32 7.96 6.85 5.91 7.95
33 3.93 3.91 56 5.15 5.08 4.99 4.86 4.96 78 9.71 8.13 6.92 5.93 8.20
34 3.95 3.93 57 5.24 5.16 5.06 4.92 5.03 79 10.12 8.30 6.98 5.95 8.46
35 3.98 3.96 58 5.34 5.25 5.14 4.98 5.12 80 10.56 8.46 7.04 5.96 8.74
36 4.01 3.99 59 5.45 5.35 5.22 5.04 5.20 81 11.02 8.62 7.09 5.98 9.04
37 4.04 4.01 60 5.57 5.45 5.31 5.10 5.30 82 11.53 8.77 7.14 5.99 9.36
38 4.08 4.04 61 5.69 5.56 5.39 5.17 5.39 83 12.06 8.92 7.18 5.99 9.69
39 4.11 4.07 62 5.82 5.67 5.48 5.23 5.50 84 12.63 9.06 7.21 6.00 10.04
40 4.15 4.11 63 5.96 5.79 5.58 5.29 5.60 85 &
41 4.19 4.14 64 6.11 5.92 5.67 5.35 5.72 Over 13.23 9.19 7.24 6.00 10.42
42 4.23 4.18
<CAPTION>
FEMALE
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Monthly Payments Certain Monthly Payments Certain
Payments Certain ---------------------------- Install- ---------------------------- Install-
Age of ---------------- Age of ment Age of ment
Payee 120 240 Payee None 120 180 240 Refund Payee None 120 180 240 Refund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 3.67 3.67 43 4.05 4.05 4.04 4.02 4.02 65 5.60 5.49 5.36 5.16 5.36
21 3.68 3.67 44 4.09 4.08 4.07 4.06 4.06 66 5.73 5.61 5.46 5.23 5.46
22 3.68 3.68 45 4.13 4.12 4.11 4.09 4.09 67 5.87 5.73 5.56 5.30 5.58
23 3.69 3.68 46 4.17 4.16 4.15 4.13 4.13 68 6.02 5.86 5.66 5.37 5.70
24 3.69 3.69 47 4.21 4.20 4.19 4.17 4.17 69 6.18 6.00 5.76 5.43 5.83
25 3.70 3.70 48 4.26 4.24 4.23 4.20 4.21 70 6.36 6.15 5.87 5.50 5.96
26 3.71 3.70 49 4.30 4.29 4.27 4.25 4.25 71 6.55 6.30 5.98 5.56 6.11
27 3.72 3.71 50 4.35 4.34 4.32 4.29 4.30 72 6.76 6.46 6.09 5.62 6.26
28 3.73 3.72 51 4.41 4.39 4.37 4.33 4.34 73 6.98 6.63 6.20 5.67 6.43
29 3.74 3.73 52 4.46 4.44 4.42 4.38 4.39 74 7.22 6.80 6.31 5.72 6.61
30 3.75 3.75 53 4.52 4.50 4.47 4.43 4.45 75 7.49 6.98 6.41 5.77 6.79
31 3.77 3.76 54 4.59 4.56 4.53 4.48 4.50 76 7.77 7.17 6.52 5.81 6.99
32 3.78 3.77 55 4.65 4.63 4.59 4.53 4.56 77 8.07 7.36 6.61 5.84 7.21
33 3.80 3.79 56 4.72 4.69 4.65 4.59 4.62 78 8.40 7.55 6.71 5.87 7.43
34 3.81 3.80 57 4.80 4.76 4.72 4.65 4.69 79 8.75 7.75 6.79 5.90 7.68
35 3.83 3.82 58 4.88 4.84 4.78 4.71 4.75 80 9.14 7.95 6.87 5.92 7.93
36 3.85 3.84 59 4.96 4.92 4.86 4.77 4.83 81 9.55 8.14 6.95 5.94 8.21
37 3.88 3.86 60 5.05 5.00 4.93 4.83 4.90 82 10.00 8.33 7.01 5.96 8.51
38 3.90 3.89 61 5.15 5.09 5.01 4.89 4.98 83 10.49 8.51 7.07 5.97 8.82
39 3.93 3.91 62 5.25 5.18 5.09 4.96 5.07 84 11.02 8.69 7.12 5.98 9.16
40 3.95 3.94 63 5.36 5.28 5.18 5.03 5.16 85 &
41 3.98 3.96 64 5.47 5.38 5.27 5.10 5.26 Over 11.59 8.86 7.17 5.99 9.51
42 4.01 3.99
</TABLE>
-17-
<PAGE>
GUARANTEED MINIMUM
OPTION AMOUNT OF MONTHY PAYMENT
FOUR FOR EACH $1,000 APPLIED (CONT'D)
<TABLE>
<CAPTION>
JOINT AND LAST SURVIVOR ANNUITY
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Female Payee
Age of Age of
Male Male
Payee 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 Payee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 4.21 4.23 4.25 4.28 4.30 4.32 4.34 4.36 4.38 4.40 4.42 4.43 4.45 4.47 4.48 4.50 4.51 4.52 4.54 4.55 4.56 50
51 4.23 4.25 4.28 4.30 4.33 4.35 4.37 4.39 4.42 4.44 4.46 4.48 4.49 4.51 4.53 4.54 4.56 4.58 4.59 4.60 4.61 51
52 4.25 4.28 4.30 4.33 4.36 4.38 4.40 4.43 4.45 4.47 4.50 4.52 4.54 4.56 4.58 4.59 4.61 4.63 4.64 4.66 4.67 52
53 4.27 4.30 4.33 4.36 4.38 4.41 4.44 4.46 4.49 4.51 4.54 4.56 4.58 4.60 4.62 4.64 4.66 4.68 4.70 4.71 4.73 53
54 4.29 4.32 4.35 4.38 4.41 4.44 4.47 4.50 4.53 4.55 4.58 4.60 4.63 4.65 4.67 4.70 4.72 4.74 4.76 4.77 4.79 54
55 4.31 4.35 4.38 4.41 4.44 4.47 4.50 4.53 4.56 4.59 4.62 4.65 4.67 4.70 4.72 4.75 4.77 4.79 4.82 4.84 4.85 55
56 4.33 4.37 4.40 4.43 4.47 4.50 4.53 4.57 4.60 4.63 4.66 4.69 4.72 4.75 4.78 4.80 4.83 4.85 4.88 4.90 4.92 56
57 4.35 4.39 4.42 4.46 4.50 4.53 4.57 4.60 4.64 4.67 4.70 4.74 4.77 4.80 4.83 4.86 4.89 4.91 4.94 4.96 4.99 57
58 4.37 4.41 4.45 4.48 4.52 4.56 4.60 4.64 4.67 4.71 4.75 4.78 4.82 4.85 4.88 4.91 4.95 4.97 5.00 5.03 5.06 58
59 4.39 4.43 4.47 4.51 4.55 4.59 4.63 4.67 4.71 4.75 4.79 4.83 4.86 4.90 4.94 4.97 5.01 5.04 5.07 5.10 5.13 59
60 4.41 4.45 4.49 4.53 4.57 4.62 4.66 4.70 4.74 4.79 4.83 4.87 4.91 4.95 4.99 5.03 5.07 5.10 5.14 5.17 5.20 60
61 4.43 4.47 4.51 4.55 4.60 4.64 4.69 4.73 4.78 4.83 4.87 4.92 4.96 5.00 5.05 5.09 5.13 5.17 5.21 5.24 4.28 61
62 4.44 4.49 4.53 4.58 4.62 4.67 4.72 4.77 4.81 4.86 4.91 4.96 5.01 5.05 5.10 5.15 5.19 5.24 5.28 5.32 5.36 62
63 4.46 4.50 4.55 4.60 4.65 4.70 4.75 4.80 4.85 4.90 4.95 5.00 5.05 5.11 5.16 5.21 5.25 5.30 5.35 5.39 5.44 63
64 4.47 4.52 4.57 4.62 4.67 4.72 4.77 4.83 4.88 4.94 4.99 5.05 5.10 5.16 5.21 5.26 5.32 5.37 5.42 5.47 5.52 64
65 4.48 4.53 4.58 4.64 4.69 4.74 4.80 4.86 4.91 4.97 5.03 5.09 5.15 5.21 5.27 5.32 5.38 5.44 5.49 5.55 5.60 65
66 4.50 4.55 4.60 4.65 4.71 4.77 4.82 4.88 4.94 5.01 5.07 5.13 5.19 5.26 5.32 5.38 5.44 5.51 5.57 5.63 5.69 66
67 4.51 4.56 4.62 4.67 4.73 4.79 4.85 4.91 4.97 5.04 5.10 5.17 5.24 5.30 5.37 5.44 5.51 5.57 5.64 5.71 5.77 67
68 4.52 4.57 4.63 4.69 4.75 4.81 4.87 4.94 5.00 5.07 5.14 5.21 5.28 5.35 5.42 5.50 5.57 5.64 5.71 5.79 5.85 68
69 4.53 4.59 4.64 4.70 4.76 4.83 4.89 4.96 5.03 5.10 5.17 5.25 5.32 5.40 5.47 5.55 5.63 5.71 5.79 5.86 5.94 69
70 4.54 4.60 4.66 4.72 4.78 4.85 4.91 4.98 5.05 5.13 5.20 5.28 5.36 5.44 5.52 5.60 5.69 5.77 5.86 5.94 6.02 70
71 4.55 4.61 4.67 4.73 4.80 4.86 4.93 5.00 5.08 5.16 5.23 5.31 5.40 5.48 5.57 5.66 5.75 5.84 5.93 6.02 6.11 71
72 4.56 4.62 4.68 4.74 4.81 4.88 4.95 5.02 5.10 5.18 5.26 5.35 5.43 5.52 5.61 5.71 5.80 5.90 5.99 6.09 6.19 72
73 4.57 4.63 4.69 4.75 4.82 4.89 4.97 5.04 5.12 5.20 5.29 5.38 5.47 5.56 5.66 5.76 5.86 5.96 6.06 6.16 6.27 73
74 4.58 4.64 4.70 4.77 4.83 4.91 4.98 5.06 5.14 5.23 5.32 5.41 5.50 5.60 5.70 5.80 5.91 6.02 6.12 6.24 6.35 74
75 4.58 4.64 4.71 4.78 4.85 4.92 5.00 5.08 5.16 5.25 5.34 5.43 5.53 5.63 5.74 5.85 5.96 6.07 6.19 6.30 6.42 75
76 4.59 4.65 4.72 4.78 4.86 4.93 5.01 5.09 5.18 5.27 5.36 5.46 5.56 5.67 5.77 5.89 6.00 6.12 6.25 6.37 6.50 76
77 4.59 4.66 4.72 4.79 4.87 4.94 5.02 5.11 5.19 5.29 5.38 5.48 5.59 5.70 5.81 5.93 6.05 6.17 6.30 6.44 6.57 77
78 4.60 4.66 4.73 4.80 4.87 4.95 5.03 5.12 5.21 5.30 5.40 5.51 5.61 5.73 5.84 5.96 6.09 6.22 6.36 6.50 6.64 78
79 4.61 4.67 4.74 4.81 4.88 4.96 5.04 5.13 5.22 5.32 5.42 5.53 5.64 5.75 5.87 6.00 6.13 6.27 6.41 6.56 6.71 79
80 4.61 4.67 4.74 4.81 4.89 4.97 5.05 5.14 5.24 5.33 5.44 5.55 5.66 5.78 5.90 6.03 6.17 6.31 6.46 6.61 6.77 80
</TABLE>
Monthly payment for ages not shown will be furnished by the Company on
request.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
OPTION
FIVE PAYMENT FOR A DESIGNATED PERIOD
- -------------------------------------------------------------------------------------------------------------------------------
YEARS OF AMOUNT OF YEARS OF AMOUNT OF YEARS OF AMOUNT OF
PAYMENTS MONTHY PAYMENT PAYMENTS MONTHLY PAYMENT PAYMENTS MONTHY PAYMENT
<S> <C> <C> <C> <C> <C>
10 $10.06 17 $6.71 24 $5.35
11 9.31 18 6.44 25 5.22
12 8.69 19 6.21 26 5.10
13 8.17 20 6.00 27 5.00
14 7.72 21 5.81 28 4.90
15 7.34 22 5.64 29 4.80
16 7.00 23 5.49 30 4.72
</TABLE>
-18-
<PAGE>
Washington Amendatory Rider
This rider has been made a permanent part of your policy. It amends your policy
as follows:
l. The "Death Benefit" section of your policy is changed by the addition
of the following provision:
INTEREST ON DEATH PROCEEDS
We will pay interest on the death proceeds from the date proof of
Death of the Annuitant is received by us to the date of settlement at
an interest rate of 8% or not less than that required by law.
This rider becomes effective at the same time your policy does. It will
terminate when your policy terminates.
National Home Life Assurance Company
Ronald L. Souders
Secretary
-19-
<PAGE>
FLEXIBLE PREMIUM MULTI-FUNDED VARIABLE ANNUITY CONTRACT
Details Of The Variable Provisions Begin On Page 6
NONPARTICIPATING
National Home Life Assurance Company
A Missouri Stock Company
Annuity Administrative Offices:
Louisville, Kentucky 40232
-20-
<PAGE>
Schedule 2.1
Alabama Alaska
Arizona Arkansas
California Colorado
Connecticut Delaware
District of Columbia Florida
Georgia Hawaii
Idaho Illinois
Indiana Iowa
Kansas Kentucky
Louisiana Maine
Maryland Massachusetts
Michigan Minnesota
Mississippi Missouri
Montana Nebraska
Nevada New Hampshire
New Jersey New Mexico
New York (reinsurance) North Carolina
North Dakota Ohio
Oklahoma Oregon
Pennsylvania Rhode Island
South Carolina South Dakota
Tennessee Texas
Utah Vermont
Virginia Washington
West Virginia Wisconsin
Wyoming Puerto Rico
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<PAGE>
Schedule 3.1
State Availability for The Advisor's Edge
As of July 18,1994
Alabama Mississippi
Alaska Missouri
Arizona Montana
Arkansas Nebraska
California Nevada
Colorado New Hampshire
Connecticut New Mexico
District of Columbia North Carolina
Delaware North Dakota
Florida Ohio
Georgia Oklahoma
Hawaii Oregon
Indiana Rhode Island
Iowa South Carolina
Kansas Tennessee
Kentucky Utah
Louisiana Vermont
Maine Virginia
Maryland Washington
Massachusetts West Virginia
Michigan Wisconsin
Minnesota Wyoming
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<PAGE>
Exhibit No. 99.B9 (xiii)
PARTICIPATION AGREEMENT
among
DFA INVESTMENT DIMENSIONS GROUP INC.,
DIMENSIONAL FUND ADVISORS INC.,
DFA SECURITIES INC.
And
NATIONAL HOME LIFE ASSURANCE COMPANY
<PAGE>
TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
1. Sales of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Proxy Solicitations and Voting. . . . . . . . . . . . . . . . . . . . . 5
3. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . 6
4. Sales Material and Information. . . . . . . . . . . . . . . . . . . . . 10
5. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7. Potential Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8. Term and Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 28
9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
<PAGE>
THIS AGREEMENT, made and entered into this 29th day of June, 1994, by and
among National Home Life Assurance Company ("Company"), on its own behalf and on
behalf of National Home Life Assurance Company Separate Account V, a segregated
asset account of the Company ("Account"), DFA Investment Dimensions Group Inc.
("Fund"), the Fund's investment adviser, Dimensional Fund Advisors Inc.
("Adviser") and DFA Securities Inc. ("DFAS") (collectively, "Parties").
Company, Fund, Adviser and DFAS intending to be legally bound, hereby agree
as follows:
1. SALES OF FUND SHARES
1.1 Fund shares shall be sold by the respective portfolios of Fund listed
on Schedule 1.1 hereto, as amended from time to time by the Parties
("Portfolios"), and purchased by Company for the appropriate subaccount of
Account at the net asset value next computed after receipt by Fund or its
designee of each order of the Account, in accordance with the provisions of this
Agreement, the then current prospectuses of the Fund that describe the
Portfolios and the variable annuity contract that uses the portfolios as an
underlying investment medium (the "Contracts"). For purposes of this Section
1.1, Company shall be the designee of Fund for receipt of such orders from
Account and receipt by such designee shall constitute receipt by Fund; provided
that Company receives the order by 4:00 p.m. Louisville (Eastern) time and Fund
receives notice from Company by telephone or facsimile (or by such other means
as Fund and Company may agree to in writing) of such order no
<PAGE>
later than 10:30 a.m. Louisville (Eastern) time on the next following Business
Day, provided that Company shall use its best efforts to communicate such order
to Fund by 10:00 a.m. Louisville (Eastern) time. Fund will cause its transfer
agent to send confirmation to Company and Fund by 10:30 a.m. Louisville
(Eastern) time on the same Business Day that Company communicates the orders to
Fund. "Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which Fund calculates its net asset value pursuant to
the rules of the Securities and Exchange Commission (the "SEC"). Company may
purchase Portfolio shares for its own account subject to (a) receipt of prior
written approval by Adviser; and (b) such purchases being in accordance with the
then current prospectuses of the Fund that describe the Portfolios and the
Contracts. Wire orders for payment for shares purchased will be sent to Fund
prior to 3:00 p.m. Louisville (Eastern) time on the same Business Day that
Company communicates the orders to Fund in accordance with written instructions
provided by Fund to Company.
1.2 Fund will redeem the shares when requested on behalf of the Company or
the corresponding subaccount of the Account at the net asset value next computed
after receipt by Fund or its designee of each request for redemption, in
accordance with the provisions of this Agreement, the then current prospectuses
of the Fund that describe the Portfolios and the Contracts. For purposes of
this Section 1.2, Company shall be designee of Fund for receipt of requests for
redemption from Account and receipt by such designee
2
<PAGE>
shall constitute receipt by Fund; provided that Company receives the request for
redemption by 4:00 p.m. Louisville (Eastern) time and Fund receives notice from
Company by telephone or facsimile (or by such other means as Fund and Company
may agree to in writing) of such request for redemption no later than 10:30 a.m.
Louisville (Eastern) time on the next following Business Day, provided that
Company shall use its best efforts to communicate such request to Fund by 10:00
a.m. Louisville (Eastern) time. Fund will use its best efforts to transmit to
Company the proceeds of all redemption orders placed by Company by 4:00 p.m.
Louisville (Eastern) time on the same Business Day that Company communicates the
requests to Fund by wire transfer in accordance with written instructions
provided by Company to Fund. In no event shall payment be delayed for a greater
period than permitted by the Investment Company Act of 1940 or the rules, orders
or regulations thereunder (the "1940 Act"). The Board of Directors of Fund
("Directors") may refuse to sell shares of any Portfolio to any person,
including Account, or suspend or terminate the offering of shares of any
particular Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is deemed, by the Directors, acting in good
faith and in light of the Directors' duties under applicable law, necessary in
the best interests of the shareholders of any Portfolio.
1.3 Company agrees to purchase and redeem the shares of each Portfolio in
accordance with the provisions of this Agreement, of the Contracts and of the
then current prospectuses for the
3
<PAGE>
Contracts and Fund that describe the Portfolios. Except as necessary to
implement Owner initiated transactions, or as otherwise required by state and/or
federal laws or regulations, Company shall not redeem Portfolio shares
attributable to the Contracts.
1.4 Issuance and transfer of Fund shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Shares
ordered from Fund will be recorded in appropriate book entry titles for the
Account by Fund or its designee.
1.5 Fund shall furnish prompt notice followed by written confirmation to
Company of any income, dividends or capital gain distributions payable on the
Portfolios' shares. Company hereby elects to receive all such dividends and
distributions as are payable on shares of a Portfolio in additional shares of
that Portfolio. Fund shall notify Company or its delegates of the number of
shares so issued as payment of such dividends and distributions.
1.6 Fund shall make the net asset value per share for each Portfolio
available to Company or its delegates on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:00
p.m. Louisville (Eastern) time) and shall use its best efforts to make such net
asset value per share available by 7:00 p.m. Louisville (Eastern) time on each
Business Day.
4
<PAGE>
2. PROXY SOLICITATIONS AND VOTING
2.1 Fund agrees that the terms on which the Portfolios are offered to the
Account will not be materially altered without at least sixty (60) days prior
written notice to Company during any period in which Portfolio shares are held
by the Account.
2.2 If and to the extent required by law the Company shall:
(i) solicit voting instructions from the purchasers of the Contracts
("Owners");
(ii) vote the Portfolio shares in accordance with instructions
received from Owners; and
(iii) vote Portfolio shares for which no instructions have been
received in the same proportion as Portfolio shares of such
Portfolio for which instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for various contract owners. The Company
reserves the right to vote Portfolio shares held in any segregated asset account
in its own right, to the extent permitted by law. Company will calculate voting
privileges in a manner consistent with other separate accounts investing in the
Portfolio and in accordance with applicable law.
2.3 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders and, in particular, the Fund, at its option, will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act as well
as with Sections 16(a) and, if and when applicable, 16(b) and the rules
thereunder. Further,
5
<PAGE>
the Fund will act in accordance with the SEC's interpretation of the
requirements of Section 16(a) with respect to periodic elections of Directors
and with whatever rules the SEC may promulgate with respect thereto.
3. REPRESENTATIONS AND WARRANTIES
3.1 Company represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established the Account prior to any issuance or sale thereof as a
segregated asset account under Section 376.309 of the Missouri Insurance Code
and that it has and will maintain the capacity to issue all Contracts that may
be sold; and that it is properly licensed, qualified and in good standing to
sell the Contracts in all the jurisdictions listed on Schedule 3.1 hereto.
Company represents and warrants that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws.
3.2 Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act").
3.3 Company represents and warrants that it has or will have registered
the Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
3.4 Company represents that the Contracts are currently treated as annuity
contracts, under applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and that it
6
<PAGE>
will maintain such treatment and that it will notify Adviser and Fund promptly
upon having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
3.5 Fund represents and warrants that it is lawfully established and
validly existing under the laws of the State of Maryland.
3.6 Fund represents and warrants that Portfolio shares sold pursuant to
this Agreement are registered under the 1933 Act and duly authorized for
issuance; that Fund shall amend the registration statement for the Portfolios
under the 1933 Act and the 1940 Act, from time to time, as required in order to
effect the continuous offering of its shares; that Fund will sell such shares in
compliance with all applicable federal and state laws; and that Fund is and will
remain registered under and complies and will comply in all material respects
with the 1940 Act. Fund shall register and qualify the shares of the Portfolios
for sale in accordance with the laws of the various states only if, and to the
extent, deemed advisable by Fund.
3.7 Fund represents and warrants that it will invest money from the sale
of Portfolio shares in such a manner as to ensure that the Contracts will be
treated as variable annuity contracts under the Code and the regulations issued
thereunder, and that Fund will comply with Section 817(h) of the Code as amended
from time to time and with all applicable regulations promulgated thereunder.
Fund agrees to notify Company upon having a reasonable basis for
7
<PAGE>
believing that any Portfolio has ceased to comply with Section 817(h) of the
Code and to take all reasonable steps to diversify such Portfolio so as to
achieve compliance within the grace period afforded by Treasury Regulation
Section 1.817-5.
3.8 Fund represents and warrants that the Portfolios are currently
qualified as Regulated Investment Companies under Subchapter M of the Code, and
that it will make every effort to maintain such qualification (under Subchapter
M or any successor or similar provision) and that it will promptly notify
Company upon having a reasonable basis for believing that a Portfolio has ceased
to so qualify or that it might not so qualify in the future.
3.9 Fund represents and warrants that each Portfolio's investment
policies, fees and expenses are and shall at all times remain in compliance with
Missouri law regarding separate accounts of domestic insurers and with any other
applicable state insurance laws of which it is aware, provided the Portfolios
shall have no obligation to conduct an independent investigation. Company shall
inform a Portfolio in writing if Company determines that such Portfolio is not
in compliance with applicable insurance laws, but this provision shall not be
construed to limit or qualify Fund's representation and warranty given in the
immediately preceding sentence. Fund further represents that its operations are
and shall at all times remain in material compliance with the laws of the State
of Maryland to the extent required to perform this Agreement.
8
<PAGE>
3.10 DFAS represents and warrants that it is and will be a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
is and will be registered as a broker-dealer with the SEC. DFAS represents that
its operations are and shall at all times remain in material compliance with the
laws of the State of Delaware to the extent required to perform this Agreement.
3.11 DFAS represents and warrants that it is and will remain duly
registered in all material respects under all applicable federal and state
securities laws and shall perform its obligations hereunder in compliance in all
material respects with any such applicable state and federal laws.
3.12 All parties hereto represent and warrant to each other that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of Fund are and
shall continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of Fund in an amount not less than the amount required
by the applicable rules of the NASD and the federal securities laws. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. All parties hereto agree to make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and each agrees to notify promptly the other
parties hereto in the event that such coverage no longer applies.
9
<PAGE>
4. SALES MATERIAL AND INFORMATION
4.1 Company shall promptly inform DFAS as to the status of all such sales
literature filings and shall promptly notify DFAS of all approvals or
disapprovals of sales literature filings in the states. DFAS and Fund shall
promptly provide Company with copies of any correspondence and reports of
inquiries, meetings and discussions concerning regulation of the Contracts and
any Owner complaints respecting the Contracts. Company shall promptly provide
Fund with copies of any Owner complaints respecting the Contracts.
4.2 Except with the written consent of Adviser, Fund or DFAS, as
appropriate, Company shall not make any material representations concerning the
Adviser, DFAS, or the Fund other than the information or representations
contained in: (a) a registration statement or prospectus for the Fund, as
amended or supplemented from time to time; (b) published reports or statements
of the Fund which are in the public domain or are approved by Fund; or (c) sales
literature or other promotional material of the Fund.
4.3 Except with the written consent of Company, Adviser, DFAS, or the Fund
shall not make any material representations concerning Company other than the
information or representations contained in: (a) a registration statement or
prospectus for the Contracts, as amended or supplemented from time to time; (b)
published reports or statements of the Contracts or the Account which are in the
public domain or are approved by Company; or (c) sales literature or other
promotional material of the Company.
10
<PAGE>
4.4 No Party shall use any other Party's names, logos, trademarks or
service marks, whether registered or unregistered, without the prior written
consent of such Party.
4.5 Fund will provide to Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of the above, that
relate to Fund or its shares, (a) in draft form prior to the filing of such
document with the SEC or other regulatory authorities with reasonable time
allowed for Company to provide Fund with its comments and (b) in final form as
filed. If requested by Company, Fund shall provide such documentation
(including a final copy of the new prospectus of the portfolios as set in type
(including an 8 1/2 X 11 size camera ready stat) at Fund's expense) and other
assistance as is reasonably necessary in order for Company once each year (or
more frequently if the prospectus for Company is amended) to have, at Company's
expense, the prospectus for the Contracts and Portfolios' prospectus printed
together in one document.
4.6 Company will provide to Fund at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters and all
11
<PAGE>
amendments to any of the above, that relate to the Fund and the Contracts, (a)
in draft form prior to the filing of such document with the SEC, with reasonable
time allowed for Fund to provide Company with its comments and (b) in final form
as filed.
4.7 For purposes of this Section 4, the phrase "sales literature or other
promotional material" shall be construed in accordance with all applicable
securities laws and regulations.
4.8 To the extent required by applicable law, including the administrative
requirements of regulatory authorities, or as mutually agreed between Company
and DFAS, Company reserves the right to modify any of the Contracts in any
respect whatsoever. Company reserves the right in its sole discretion to
suspend the sale of any of the Contracts, in whole or in part, or to accept or
reject any application for the sale of a Contract. Company agrees to notify the
other Parties promptly upon the occurrence of any event Company believes might
necessitate a material modification or suspension.
4.9 The Parties agree to review the arrangements set forth herein during
the last calendar quarter of each year for possible changes and will make their
personnel reasonably available for this purpose.
5. FEES AND EXPENSES
5.1 Fund shall bear the cost of registration and qualification of Fund's
shares; preparation and filing of Fund's prospectus and registration statement,
proxy materials and reports including postage; preparation of all other
statements and notices
12
<PAGE>
relating to Fund required by any federal or state law; payment of all applicable
fees, including, without limitation, all fees due under Rule 24f-2 relating to
Fund; all taxes on the issuance or transfer of Fund's shares.
5.2 Company shall see to it that the Contracts are registered under the
1933 Act, and that the Account is registered as a unit investment trust in
accordance with the 1940 Act. Company shall bear the expenses for the costs of
preparation and filing of Company's prospectus and registration statement with
respect to the Contracts; preparation of all other statements and notices
relating to the Account or the Contracts required by any federal or state law;
expenses for the solicitation and sale of the Contracts, including all costs of
printing and distributing all copies of advertisements, prospectuses, Statements
of Additional Information, proxy materials, and reports to Owners or potential
purchasers of the Contracts as required by applicable state and federal law;
payment of all applicable fees, including, without limitation, all fees due
under Rule 24f-2 relating to the Contracts; all costs of drafting, filing and
obtaining approvals of the Contracts in the various states under applicable
insurance laws; filing of annual reports on form N-SAR, and all other costs
associated with ongoing compliance with all such laws and its obligations
hereunder.
6. INDEMNIFICATION
6.1 INDEMNIFICATION BY COMPANY
6.1(a) Company agrees to indemnify and hold harmless Fund, DFAS and
Adviser and each of their directors and officers,
13
<PAGE>
and each person, if any, who controls any of them within the meaning of Section
15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 6.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise, and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement, prospectus or sales literature for the
Contracts or contained in the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this paragraph 6.1(a) shall not
apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to Company by or on behalf of
Fund for use in the registration statement or prospectus for the
Contracts or in the Contracts (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
14
<PAGE>
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of Company or persons under its
control, with respect to the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering the Fund or any amendment
thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, if such a
statement or omission was made in reliance upon information furnished
to Fund by or on behalf of Company; or
(iv) arise out of, or as a result of, any failure by Company or
persons under its control to provide the services and furnish the
materials contemplated under the terms of this Agreement; or
(v) arise out of, or result from, any material breach of any
representation and/or warranty made by Company or persons under its
control in this Agreement or arise out of or result from any other
material breach of this Agreement by Company or persons under its
control;
as limited by and in accordance with the provisions of sections 6.1(b) and
6.1(c) hereof.
15
<PAGE>
6.1(b) Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
Fund, whichever is applicable, or to the extent of such Indemnified Party's
negligence.
6.1(c) Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify Company of any such
claim shall not relieve Company from any liability which it may have to the
Indemnified Party otherwise than on account of this indemnification provision.
In case any such action is brought against the indemnified Parties, Company
shall be entitled to participate, at its own expense, in the defense of such
action provided that it gives written notice of such intention to the
Indemnified Parties. Company also shall be entitled to assume and to control
the defense thereof. After notice from Company to such Party of Company's
election to assume the defense thereof, the
16
<PAGE>
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and Company will not be liable to such Party under this
Agreement for any legal or other expenses subsequently incurred by such Party
independently in connection with the defense thereof other than reasonable costs
of investigation.
6.1(d) The Indemnified Parties will promptly notify Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of Fund shares or the Contracts or the operation of Fund.
6.2 INDEMNIFICATION BY DFAS
6.2(a) DFAS agrees to indemnify and hold harmless Company and each
of its directors and officers and each person, if any, who controls Company
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 6.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of DFAS) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of Fund (or
any amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to
17
<PAGE>
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this section 6.2(a) shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
Fund by or on behalf of Company for use in the registration statement
or prospectus for Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of DFAS or Fund or persons under
their control, with respect to the sale or distribution of the
Contracts or Fund shares (it is understood that the persons who are
involved in the sale or distribution of the Contracts are not under
the control of DFAS, Adviser or Fund); or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading,
if such statement or omission was made in
18
<PAGE>
reliance upon information furnished to Company by or on behalf of
Fund; or
(iv) arise out of, or as a result of, any failure by DFAS, Fund
or persons under their control to provide the services and furnish the
materials contemplated under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by DFAS, Fund or persons under
their control in this Agreement or arise out of or result from any
other material breach of this Agreement by DFAS, Fund or persons under
their control;
as limited by and in accordance with the provisions of Sections 6.2(b) and
6.2(c) hereof.
6.2(b) DFAS shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
Company or the Account, whichever is applicable, or to the extent of such
Indemnified Party's negligence.
6.2(c) DFAS shall not be liable under this indemnification
provision with respect to any claim made against an
19
<PAGE>
Indemnified Party unless such Indemnified Party shall have notified DFAS in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify DFAS of any such
claim shall not relieve DFAS from any liability which it may have to the
Indemnified Party otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Parties, DFAS will be
entitled to participate, at its own expense, in the defense thereof provided
that it gives written notice of such intention to the Indemnified Parties. DFAS
also shall be entitled to assume and to control the defense thereof. After
notice from DFAS to such Party of DFAS's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and DFAS will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such Party
independently in connection with the defense thereof other than reasonable costs
of investigation.
6.2(d) The Indemnified Parties will promptly notify DFAS of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Contracts or the operation of the Account.
6.3 INDEMNIFICATION BY ADVISER
20
<PAGE>
6.3(a) Adviser agrees to indemnify and hold harmless Company and
each of its directors and officers and each person, if any, who controls Company
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 6.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of Fund or Adviser) or litigation (including legal and other expenses)
to which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of Fund (or
any amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this section
6.3(a) shall not apply as to any Indemnified Party if such statement
or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to Fund or Adviser
by or on behalf of Company for use in the registration statement or
prospectus for Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
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(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of DFAS, Fund or Adviser or
persons under their control, with respect to the sale or distribution
of the Contracts or Fund shares (it is understood that the persons who
are involved in the sale or distribution of the Contracts are not
under the control of DFAS, Adviser or Fund); or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading,
if such statement or omission was made in reliance upon information
furnished to Company by or on behalf of Fund or Adviser;
(iv) arise out of, or as a result of, any failure by DFAS,
Adviser, Fund or persons under their control to provide the services
and furnish the materials contemplated under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by DFAS, Fund, Adviser or persons
under their control in this Agreement or arise out of or result from
any other
22
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material breach of this Agreement by DFAS, Adviser, Fund or persons
under their control;
as limited by and in accordance with the provisions of Sections 6.3(b) and
6.3(c) hereof.
6.3(b) Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
Company or the Account, whichever is applicable, or to the extent of such
Indemnified Party's negligence.
6.3(c) Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified Fund or Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify Fund or Adviser of
any such claim shall not relieve Adviser from any liability which it may have to
the Indemnified Party otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
Adviser
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will be entitled to participate, at its own expense, in the defense thereof
provided that it gives written notice of such intention to the Indemnified
Parties. Adviser also shall be entitled to assume and to control the defense
thereof. After notice from Adviser to such Party of Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and Adviser will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such Party independently in connection with the defense
thereof other than reasonable costs of investigation.
6.3(d) The Indemnified Parties will promptly notify Fund or Adviser
of the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Contracts or the operation of the Account.
7. POTENTIAL CONFLICTS
7.1 The Directors will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretive letter, or any similar action by
insurance, tax or securities regulatory authorities; (c) an administrative or
judicial decision in any
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relevant proceeding; (d) the manner in which the investments of any portfolio
are being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (f) a decision
by an insurer to disregard the voting instructions of contract owners. The
Directors shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof and, on an
annual basis, shall provide Company with written notification that the Directors
are not aware of any conflict, if such is the case.
7.2 The Company will report any potential or existing conflicts of which
it is aware to the Directors and, on an annual basis, shall provide Fund with
written notification that Company is not aware of any conflict, if such is the
case. The Company will assist the Directors in carrying out their
responsibilities under any applicable provisions of the federal securities laws
and/or any exemptive orders granted by the Securities & Exchange Commission
("Exemptive Order"), by providing the Directors with all information reasonably
necessary for the Directors to consider any issues raised. This includes, but
is not limited to, an obligation by the Company to inform the Directors whenever
Owner voting instructions are disregarded.
7.3 If it is determined by a majority of the Directors, or a majority of
disinterested Directors, that a material irreconcilable conflict exists, the
Company shall, at its expense and to the extent reasonably practicable (as
determined by a majority of
25
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disinterested Directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (l),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Owners and, as appropriate, segregating the assets of any
appropriate group that votes in favor of such segregation, or offering to the
affected Owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six (6) months after the Directors inform the
Company in writing that they have determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Directors. Until the end of the foregoing six (6) month period, DFAS and Fund
shall continue to accept and implement orders by the Company for the purchase
(and redemption) of shares of the Fund.
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7.5 For purposes of Sections 7.3 through 7.5 of this Agreement, a
majority of the disinterested Directors shall determine whether any proposed
action adequately remedies any irreconcilable material conflict. The Company
shall not be required by Section 7.3 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority of Owners
materially adversely affected by the irreconcilable material conflict. In the
event that the DirectorS determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six (6)
months after the Directors inform the Company in writing of the foregoing
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict.
7.6 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in any Exemptive Order) on terms and conditions materially different
from those contained in any Exemptive Order, then (a) the Fund and/or the
Company, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 7.1, 7.2, 7.3 and 7.4 of this
Agreement shall continue in effect only to the extent that terms and conditions
27
<PAGE>
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
8. TERM AND TERMINATION
8.1 The initial term of this Agreement shall be from June 29 1994 through
June 28 1997. Unless terminated upon thirty (30) days' prior written notice to
the other Party, this Agreement shall thereafter automatically renew from year
to year, provided that any Party may terminate this Agreement without cause
following the initial term upon sixty (60) days advance written notice to the
other.
8.2 Notwithstanding any other provision of this Agreement, DFAS, Adviser
or the Fund may terminate this Agreement for cause on not less than thirty (30)
days' prior written notice to the Company, unless Company has cured such cause
within thirty (30) days of receiving such notice, for any material breach by
Company of any representation, warranty, covenant or obligation hereunder.
8.3 Notwithstanding any other provision of this Agreement, Company may
terminate this Agreement for cause on not less than thirty (30) days' prior
written notice to DFAS, Adviser and Fund unless DFAS, Adviser or Fund, as
appropriate, has cured such cause within thirty (30) days of receiving such
notice, for any material breach by DFAS, Adviser or Fund of any representation,
warranty, covenant or obligation hereunder.
8.4 Notwithstanding any other provision of this Agreement, Company may
terminate this Agreement by written notice to the Fund and the DFAS with respect
to any Portfolio based upon the Company's
28
<PAGE>
determination that shares of such Portfolio are not reasonably available to meet
the requirements of the Contracts.
8.5 Notwithstanding any other provision of this Agreement, Company may
terminate this Agreement by written notice to the Fund, Adviser and the DFAS
with respect to any Portfolio in the event any of the Portfolio's shares are not
registered, issued or sold in accordance with applicable state and/or federal
law or such law precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the Company.
8.6 Notwithstanding any other provision of this Agreement, Company may
terminate this Agreement by written notice to the Fund, Adviser and the DFAS
with respect to any Portfolio in the event that such Portfolio ceases to qualify
as a Regulated Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably believes that the
Fund may fail to so qualify.
8.7 Notwithstanding any other provision of this Agreement, Company may
terminate this Agreement by written notice to the Fund, Adviser and the DFAS
with respect to any Portfolio in the event that such Portfolio fails to meet the
diversification requirements specified in Paragraph 3.7.
8.8 Notwithstanding any other provision of this Agreement, Fund, Adviser
or DFAS may terminate this Agreement by written notice to the Company, if any
one or all shall determine, in their sole judgment, exercised in good faith,
that the Company has suffered a material adverse change in its business,
operations,
29
<PAGE>
financial condition or prospects since the date of this Agreement or is the
subject of material adverse publicity.
8.9 Notwithstanding any other provision of this Agreement, Company may
terminate this Agreement by written notice to the Fund, Adviser and DFAS, if the
Company shall determine, in its sole judgment, exercised in good faith, that any
of the Fund, Adviser or DFAS has suffered a material adverse change in its
business, operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity.
8.10 Notwithstanding any other provision of this Agreement, any Party may
terminate this Agreement for cause on not less than sixty (60) days' prior
written notice to all other Parties, unless any of the other Parties has cured
such cause within sixty (60) days of receiving such notice, for any one of the
following reasons:
(a) change in control of any Party or such Party's ultimate
controlling person; however, a change in the name of a Party will not
constitute a change in control;
(b) a material change in, or other material revision to the
Contracts or the prospectuses of Fund that describe the Portfolios, which
material change or revision is not acceptable to any of the other Parties;
or
(c) any action taken by federal or state regulatory
authorities of competent jurisdiction which, in the reasonable judgment of
any of the Parties, either (i) materially and adversely alters the terms,
advantages and/or
30
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benefits of the Contracts to current or prospective purchasers; or (ii)
materially or adversely alters the terms or conditions of such Party's
participation in the subject matter of this Agreement.
8.11 Notwithstanding the termination of this Agreement, each Party shall
continue for so long as any Contracts remain outstanding to perform such of its
duties hereunder as are necessary to ensure the continued tax deferred status
thereof and the payment of benefits thereunder.
9. NOTICES
Any notice shall be deemed sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to Fund:
Irene R. Diamant
Vice President
DFA Investment Dimensions Group Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
If to Adviser:
Irene R. Diamant
Vice President
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
If to DFAS:
Irene R. Diamant
Vice President
DFA Securities Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
31
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If to Company:
Dale E. Cooper
Providian Corporation
400 West Market Street
P.O. Box 32830
Louisville, Kentucky 40202
With a copy to:
Pamela H. Godwin
President
National Home Life Assurance Company
Valley Forge, Pennsylvania 19493
10. MISCELLANEOUS
10.1 The captions in this Agreement are included for convenience of
reference only and in no way affect the construction or effect of any provisions
hereof.
10.2 If any portion of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
10.3 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.4 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD and
state insurance and securities regulators) and shall permit such authorities
reasonable access to its books and records as required by applicable law in
connection with any investigation or inquiry relating to this Agreement.
10.5 Each Party hereto grants to the other the right to audit its records
relating to the terms and conditions of this Agreement
32
<PAGE>
upon reasonable notice during reasonable business hours in order to confirm
compliance with this Agreement.
10.6 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
10.7 Subject to the requirements of legal process and regulatory authority,
the Fund, Adviser and DFAS shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by the Company hereto and, except as permitted by this
Agreement, shall not disclose, disseminate or utilize such names and addresses
and other confidential information without the express written consent of the
Company until such time as it may come into the public domain.
10.8 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
10.9 In any dispute arising hereunder, each party waives its right to
demand a trial by jury and hereby consents to a bench trial of all such
disputes.
10.10 The terms of this Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of Kentucky; provided,
however, that all performances rendered hereunder shall be subject to compliance
with all applicable state and federal laws and regulations.
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10.11 Notwithstanding any termination of this Agreement, Fund shall, at
the option of Company, continue to make available additional shares of the
Portfolios pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, the owners of
the Existing Contracts shall be permitted to reallocate investments in the
Portfolios, redeem investments in the Portfolios and/or invest in the Portfolios
upon the making of additional purchase payments under the Existing Contracts.
IN WITNESS WHEREOF, each of the parties hereto has caused this
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<PAGE>
Agreement to be duly executed as of the date first set forth above.
COMPANY:
NATIONAL HOME LIFE ASSURANCE COMPANY
By:
---------------------------------
FUND:
DFA INVESTMENT DIMENSIONS GROUP INC.
By:
---------------------------------
DFAS:
DFA SECURITIES INC.
By:
---------------------------------
FUND ADVISER:
DIMENSIONAL FUND ADVISORS INC.
By:
---------------------------------
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SCHEDULE 3.1
Company is properly licensed, qualified and in good standing in the following
jurisdictions (it is understood that the Contract has not yet been approved in
any of such jurisdictions):
Alabama Alaska
Arizona Arkansas
California Colorado
Connecticut Delaware
District of Columbia Florida
Georgia Hawaii
Idaho Illinois
Indiana Iowa
Kansas Kentucky
Louisiana Maine
Maryland Massachusetts
Michigan Minnesota
Mississippi Missouri
Montana Nebraska
Nevada New Hampshire
New Jersey New Mexico
New York (reinsurance) North Carolina
North Dakota Ohio
Oklahoma Oregon
Pennsylvania Rhode Island
South Carolina South Dakota
Tennessee Texas
Utah Vermont
Virginia Washington
West Virginia Wisconsin
Wyoming Puerto Rico
