DFA INVESTMENT DIMENSIONS GROUP INC, 485BPOS, 1995-06-30

DFA INVESTMENT DIMENSIONS GROUP INC
485BPOS, 1995-06-30

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----

Pre-Effective Amendment No. _____
-----

Post-Effective Amendment No. 34 File No. 2-73948 X
-- -----

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----

Amendment No. 35 File No. 811-3258 X
-- -----

DFA INVESTMENT DIMENSIONS GROUP INC.
------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

1299 Ocean Avenue, 11th Floor, Santa Monica CA 90401
---------------------------------------------- ----------
(Address of Principal Executive Office) (Zip Code)

Registrant's Telephone Number, including Area Code (310) 395-8005
--------------

Irene R. Diamant, Vice President and Secretary, DFA Investment Dimensions
Group Inc.,
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401
--------------------------------------------------------------
(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):

X Immediately upon filing pursuant to paragraph (b)
-----
On ____________, ____ pursuant to paragraph (b)
-----
60 days after filing pursuant to paragraph (a)
-----
On ____________, ____ pursuant to paragraph (a) 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.

The Trustees and principal officers of The DFA Investment Trust Company also
have executed this registration statement.

<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.... Condensed Financial
Information

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 of Shares

Item 8. Redemption or Repurchase........... Redemption of Shares;
Exchange 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

<PAGE>

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........................... Management of the Fund;
Administrative Services;
Other Information

Item 17. Brokerage Allocation and Other
Practices.......................... Brokerage Commissions

Item 18. Capital Stock and Other Securities. Other Information

Item 19. Purchase, Redemption and Pricing
of Securities Being Offered........ Purchase of Shares;
Redemption and Transfer
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............... Financial Statements

FORM N-1A PART C ITEM NO. LOCATION IN PART C
- ------------------------- ------------------
Item 24. Financial Statements and Exhibits.. Financial Statements and
Exhibits

Item 25. Persons Controlled by or Under
Common Control with Registrant..... Persons Controlled by or
Under Common Control with
Registrant

<PAGE>

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>

JUNE 30, 1995

SUPPLEMENT TO THE PROSPECTUS
OF
DFA INVESTMENT DIMENSIONS GROUP INC.

The following supplements the prospectus of DFA Investment Dimensions Group
Inc. (the "Fund") dated March 9, 1995 (the "Prospectus").

The date of the Prospectus is June 30, 1995 and the date of the Statement
of Additional Information of the Fund to which this Prospectus relates is also
dated June 30, 1995. Such Statement of Additional Information is incorporated
herein by reference.

CONDENSED FINANCIAL INFORMATION

With respect to DFA International Small Cap Value Portfolio, the data set
forth under the heading "Financial Highlights" in the unaudited financial
statements contained in the report to shareholders of the Portfolio, dated May
31, 1995, is incorporated herein by reference. A shareholder of DFA
International Small Cap Value Portfolio may obtain a copy of the report, upon
request and without charge, by contacting the Fund at the address or telephone
number appearing on the cover of the Prospectus.

REIMBURSEMENT FEE

Effective June 30, 1995, the amount of the reimbursement fee is reduced
with respect to Continental Small Company, Pacific Rim Small Company, Japanese
Small Company, Emerging Markets and DFA International Small Cap Value
Portfolios, and eliminated with respect to the United Kingdom Small Company
Portfolio. The reimbursement fee for each Portfolio, expressed as a percentage
of the net asset value of the shares of the Portfolios, is as follows:
Continental Small Company and Pacific Rim Small Company Portfolios - 1.00%;
Japanese Small Company and Emerging Markets Portfolios - .50%; and DFA
International Small Cap Value Portfolio - .70%. See "Shareholder Transaction
Expenses" and "VALUATION OF SHARES - Public Offering Price" in the Prospectus.
The Example table set forth in the Prospectus is modified to reflect the
reduction or elimination, as relevant, of the reimbursement fee as follows:

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.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Japanese Small Company $13 $29 $47 $ 99

Pacific Rim Small Company 20 40 62 125

United Kingdom Small Company 8 24 41 92

Emerging Markets 18 44 n/a n/a

Continental Small Company 18 34 52 104

DFA International Small Cap Value 18 40 n/a n/a
</TABLE>

<PAGE>

PROSPECTUS
MARCH 9, 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 whose shares are offered, without a sales charge,
generally to institutional investors and clients of registered investment
advisers.

The Fund issues twenty series of shares, each of which represents a
separate class ("Portfolio") of the Fund's common stock, having its own
investment objective and policies. The investment objective of each of the
Domestic and International Equity Portfolios, except U.S. Large Company
Portfolio, is to achieve long-term capital appreciation. The investment
objective of U.S. Large Company Portfolio is to approximate the investment
performance of the Standard & Poor's 500 Composite Stock Index. The investment
objectives of the Fixed Income Portfolios are: DFA One-Year Fixed Income
Portfolio, to achieve stable real value of capital with a minimum of risk by
investing in high quality obligations; DFA Five-Year Government Portfolio, to
maximize total returns available from the universe of U.S. Government and U.S.
Government Agency obligations which mature within five years from the date of
settlement; DFA Intermediate Government Fixed Income Portfolio, to earn current
income consistent with preservation of capital; and DFA Global Fixed Income
Portfolio, to provide a market rate of return for a global fixed income
portfolio with low relative volatility of returns.

DOMESTIC EQUITY PORTFOLIOS

U.S. 9-10 SMALL COMPANY PORTFOLIO U.S. SMALL CAP VALUE PORTFOLIO
U.S. 6-10 SMALL COMPANY PORTFOLIO U.S. LARGE CAP VALUE PORTFOLIO
U.S. LARGE COMPANY PORTFOLIO DFA/AEW REAL ESTATE SECURITIES
PORTFOLIO

INTERNATIONAL EQUITY PORTFOLIOS

JAPANESE SMALL COMPANY PORTFOLIO CONTINENTAL SMALL COMPANY PORTFOLIO
PACIFIC RIM SMALL COMPANY PORTFOLIO LARGECAP INTERNATIONAL PORTFOLIO
UNITED KINGDOM SMALL COMPANY PORTFOLIO DFA INTERNATIONAL HIGH BOOK TO MARKET
EMERGING MARKETS PORTFOLIO PORTFOLIO
DFA INTERNATIONAL SMALL CAP VALUE
PORTFOLIO

FIXED INCOME PORTFOLIOS

DFA ONE-YEAR FIXED INCOME PORTFOLIO
DFA FIVE-YEAR GOVERNMENT PORTFOLIO
DFA GLOBAL FIXED INCOME PORTFOLIO
DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO

THE U.S. 6-10 SMALL COMPANY, U.S. LARGE COMPANY, DFA ONE-YEAR FIXED INCOME,
U.S. SMALL CAP VALUE, U.S. LARGE CAP VALUE, DFA INTERNATIONAL HIGH BOOK TO
MARKET AND EMERGING MARKETS PORTFOLIOS (COLLECTIVELY THE "FEEDER PORTFOLIOS"),
UNLIKE MANY OTHER INVESTMENT COMPANIES WHICH DIRECTLY ACQUIRE AND MANAGE THEIR
OWN PORTFOLIO OF SECURITIES, EACH SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY
INVESTING ALL OF ITS INVESTABLE ASSETS IN A CORRESPONDING SERIES OF SHARES OF
THE DFA INVESTMENT TRUST COMPANY (THE "TRUST"), AN OPEN-END, MANAGEMENT
INVESTMENT COMPANY THAT ISSUES SERIES HAVING THE SAME INVESTMENT OBJECTIVE,
POLICIES AND LIMITATIONS AS EACH OF THOSE PORTFOLIOS. THE INVESTMENT EXPERIENCE
OF EACH FEEDER PORTFOLIO WILL CORRESPOND DIRECTLY WITH THE INVESTMENT EXPERIENCE
OF ITS CORRESPONDING SERIES. INVESTORS SHOULD CAREFULLY CONSIDER THIS
INVESTMENT APPROACH. FOR ADDITIONAL INFORMATION, SEE "THE FEEDER PORTFOLIOS".

This prospectus sets forth concisely information about the Fund that
prospective investors should know before investing and should be read carefully
and retained for future reference. A statement of additional information about
the Fund, dated March 9, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

CONDENSED FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . .6

THE FEEDER PORTFOLIOS. . . . . . . . . . . . . . . . . . . . . . . . . . .7

SMALL COMPANY PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . .8
Investment Objective and Policies . . . . . . . . . . . . . . . . . .8

PORTFOLIO CHARACTERISTICS AND POLICIES -
SMALL COMPANY PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . .8
U.S. 6-10 Small Company Portfolio . . . . . . . . . . . . . . . . . .8
U.S. 9-10 Small Company Portfolio . . . . . . . . . . . . . . . . . .9
Japanese Small Company Portfolio. . . . . . . . . . . . . . . . . . .9
United Kingdom Small Company Portfolio . . . . . . . . . . . . . . .9
Continental Small Company Portfolio . . . . . . . . . . . . . . . . .9
Pacific Rim Small Company Portfolio. . . . . . . . . . . . . . . . 10
Portfolio Structure. . . . . . . . . . . . . . . . . . . . . . . . 10
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . 12

U.S. LARGE COMPANY PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . 12
Investment Objective and Policies . . . . . . . . . . . . . . . . . 12

LARGE CAP INTERNATIONAL PORTFOLIO. . . . . . . . . . . . . . . . . . . . 13
Investment Objective and Policies . . . . . . . . . . . . . . . . . 13

DFA/AEW REAL ESTATE SECURITIES PORTFOLIO . . . . . . . . . . . . . . . . 14
Portfolio Characteristics and Policies. . . . . . . . . . . . . . . 14
Portfolio Structure. . . . . . . . . . . . . . . . . . . . . . . . 15
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . 16

VALUE PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Portfolio Characteristics and Policies. . . . . . . . . . . . . . . 16
Portfolio Structure . . . . . . . . . . . . . . . . . . . . . . . . 16
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . 17

DFA INTERNATIONAL HIGH BOOK TO MARKET
PORTFOLIO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Investment Objective and Policies . . . . . . . . . . . . . . . . . 17

DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO. . . . . . . . . . . . . . . 19
Investment Objective and Policies . . . . . . . . . . . . . . . . . 19

EMERGING MARKETS PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . 20
Investment Objective and Policies . . . . . . . . . . . . . . . . . 20
Portfolio Structure . . . . . . . . . . . . . . . . . . . . . . . . 21

SECURITIES LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

INVESTMENT OBJECTIVES AND POLICIES -
THE FIXED INCOME PORTFOLIOS. . . . . . . . . . . . . . . . . . . . . . . 22
DFA One-Year Fixed Income Portfolio . . . . . . . . . . . . . . . . 22
DFA Global Fixed Income Portfolio . . . . . . . . . . . . . . . . . 23
DFA Five-Year Government Portfolio. . . . . . . . . . . . . . . . . 23
DFA Intermediate Government Fixed Income Portfolio. . . . . . . . . 23

<PAGE>

Description of Investments. . . . . . . . . . . . . . . . . . . . . 24
Investments in the Banking Industry . . . . . . . . . . . . . . . . 25
Portfolio Strategy. . . . . . . . . . . . . . . . . . . . . . . . . 25

RISK FACTORS - ALL PORTFOLIOS. . . . . . . . . . . . . . . . . . . . . . 26

MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . 28
Investment Services - United Kingdom and Continental Small
Company Portfolios . . . . . . . . . . . . . . . . . . . . . . . 30
Investment Services - Japanese and Pacific Rim
Small Company Portfolios. . . . . . . . . . . . . . . . . . . . . 30
Investment Services - DFA/AEW Real Estate Securities Portfolio. . . 31
Administrative Services - The Feeder Portfolios . . . . . . . . . . 31
Client Service Agent - DFA International High Book to
Market Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . 31
Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . 32

DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES . . . . . . . . . . . . 32

PURCHASE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
In Kind Purchases . . . . . . . . . . . . . . . . . . . . . . . . . 34

VALUATION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Public Offering Price . . . . . . . . . . . . . . . . . . . . . . . 36

DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 37

GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 38

<PAGE>

HIGHLIGHTS

PAGE
THE FUND

The Fund offers twenty separate 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. Investors may choose to invest in one or more of the
Portfolios. Proceeds from the sale of shares of a Portfolio will be invested in
accordance with that Portfolio's investment objective and policies. A
shareholder will be entitled to a pro rata share of all dividends and
distributions arising from the assets of the Portfolio in which he invests.
Upon redeeming shares a shareholder will receive the current net asset value per
share of the Portfolio represented by the redeemed shares.

INVESTMENT OBJECTIVES - SMALL COMPANY PORTFOLIOS 8

The investment objective of each of these Portfolios: U.S. 9-10 Small
Company Portfolio, U.S. 6-10 Small Company Portfolio, Japanese Small Company
Portfolio, United Kingdom Small Company Portfolio, Continental Small Company
Portfolio and Pacific Rim Small Company Portfolio (the "Small Company
Portfolios") is to achieve long-term capital appreciation by investing in
marketable stocks of small companies. The size of a company will be measured by
its relative market capitalization. Each of these Portfolios (U.S. 6-10 Small
Company Portfolio indirectly through ownership of the corresponding Trust
Series) 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 capitalizations of its portfolio companies. (See "PORTFOLIO
CHARACTERISTICS AND POLICIES - THE SMALL COMPANY PORTFOLIOS".)

INVESTMENT OBJECTIVE - U.S. LARGE COMPANY PORTFOLIO 12

The investment objective of U.S. Large Company Portfolio is to approximate
the investment performance of Standard & Poor's 500 Composite Stock Index (the
"S&P 500 Index"). The Portfolio invests all of its assets in U.S. Large Company
Series of the Trust, which in turn invests in the stocks which comprise the S&P
500 Index in approximately the same proportions as they are represented in the
S&P 500 Index.

INVESTMENT OBJECTIVE - LARGE CAP INTERNATIONAL PORTFOLIO 13

The investment objective of Large Cap International Portfolio is to achieve
long-term capital appreciation. The Portfolio will invest in a market-weighted
portfolio of the stocks of large non-U.S. companies.

INVESTMENT OBJECTIVE - DFA/AEW REAL ESTATE SECURITIES PORTFOLIO 14

The investment objective of DFA/AEW Real Estate Securities Portfolio is to
achieve long-term capital appreciation. The Portfolio will invest in readily
marketable equity securities of companies whose principal business is in the
real estate industry.

INVESTMENT OBJECTIVES - VALUE PORTFOLIOS 16

The investment objective of both U.S. Large Cap Value Portfolio and U.S.
Small Cap Value Portfolio (collectively the "Value Portfolios") is to achieve
long-term capital appreciation. U.S. Large Cap Value Portfolio and U.S. Small
Cap Value Portfolio will invest all of their assets in U.S. Large Cap Value
Series and U.S. Small Cap Value Series (collectively the "Value Series") of the
Trust, respectively, which in turn will invest in common stocks of U.S.
companies that have a high book value in relation to their market value.

<PAGE>

INVESTMENT OBJECTIVE - DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO 17

The investment objective of the DFA International High Book to Market
Portfolio is to achieve long-term capital appreciation. The Portfolio will
invest all of its assets in The DFA International Value Series of the Trust,
which in turn will invest in the stocks of large non-U.S. companies that have a
high book value in relation to their market value.

INVESTMENT OBJECTIVE - DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO 19

The investment objective of the Portfolio is to achieve long-term capital
appreciation. The Portfolio will invest in the stocks of small non-U.S.
companies that have a high book value in relation to their market value.

INVESTMENT OBJECTIVE - EMERGING MARKETS PORTFOLIO 20

The investment objective of the Emerging Markets Portfolio is to achieve
long-term capital appreciation. The Portfolio will invest all of its assets in
the Emerging Market Series of the Trust, which in turn invests in the equity
securities of companies in emerging markets.

INVESTMENT OBJECTIVES - FIXED INCOME PORTFOLIOS 22

The investment objective of DFA One-Year Fixed Income Portfolio is to
achieve stable real value of capital with a minimum of risk. The Portfolio
invests all of its assets in DFA One-Year Fixed Income Series of the Trust.
Generally, the Series 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. In addition, the Series intends to
concentrate investments in the banking industry under certain circumstances.
(See "INVESTMENT OBJECTIVES AND POLICIES - THE FIXED INCOME PORTFOLIOS" and
"Investments in the Banking Industry".)

The investment objective of DFA Five-Year Government Portfolio is to
maximize total returns available from the universe of high quality debt
obligations. The Portfolio will invest only in obligations of the U.S.
Government and U.S. Government Agencies which mature within five years from the
date of settlement and repurchase agreements.

The investment objective of DFA Intermediate Government Fixed Income
Portfolio is to earn current income consistent with preservation of capital.
The Portfolio will invest in non-callable obligations of the U.S. Government and
U.S. Government Agencies, AAA-rated dollar-denominated obligations of foreign
governments and supranational organizations, and futures contracts on U.S.
Treasury securities.

RISK FACTORS 26

Japanese Small Company Portfolio, United Kingdom Small Company Portfolio,
Continental Small Company Portfolio, Pacific Rim Small Company Portfolio, Large
Cap International Portfolio, the DFA International Small Cap Value Portfolio,
the DFA International High Book to Market Portfolio and the Emerging Markets
Portfolio (the last two Portfolios indirectly through their investment in the
corresponding Series of the Trust) (collectively, the "International Equity
Portfolios") and DFA Global Fixed Income Portfolio invest in foreign securities
which are traded abroad. DFA One-Year Fixed Income Series of the Trust, in
which the corresponding Fund Portfolio invests, 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. DFA/AEW Real Estate Securities Portfolio will
concentrate its investments in the real estate industry. DFA Intermediate
Government Fixed Income Portfolio may invest in futures contracts on obligations
of the U.S. Government. Large Cap International Portfolio, the DFA
International High

<PAGE>

Book to Market Portfolio and DFA/AEW Real Estate Securities Portfolio may invest
in stock index futures contracts and options thereon and the U.S. Large Company
and the Value Series of the Trust, in which the corresponding Portfolios invest,
also may purchase and sell index futures and options thereon. All of the
Portfolios are authorized to invest in repurchase agreements. All of the above
described policies involve certain risks. The policy of the Feeder Portfolios
to invest in the shares of corresponding Series of the Trust also involves
certain risks. (See "RISK FACTORS - ALL PORTFOLIOS" and "THE FEEDER
PORTFOLIOS".)

MANAGEMENT AND ADMINISTRATIVE SERVICES 28

Dimensional Fund Advisors Inc. (the "Advisor") serves as investment advisor
to each of the Portfolios, except the Feeder Portfolios, and to each Series of
the Trust. Dimensional Fund Advisors Ltd. serves as sub-advisor of United
Kingdom and Continental Small Company Portfolios. DFA Australia Pty Limited
serves as sub-advisor of Japanese and Pacific Rim Small Company Portfolios.
Aldrich, Eastman & Waltch L.P. ("AEW") serves as sub-advisor of DFA/AEW Real
Estate Securities Portfolio. The Advisor provides each Feeder Portfolio with
certain administrative services. Reinhardt Werba Bowen Advisory Services serves
as client service agent to the DFA International High Book to Market Portfolio.
(See "MANAGEMENT OF THE FUND".)

DIVIDEND POLICY 32

The Domestic and International Equity Portfolios, except for U.S. Large
Company Portfolio and U.S. Large Cap Value Portfolio, each distribute
substantially all of their own net investment income in November and December of
each year. U.S. Large Company Portfolio, U.S. Large Cap Value Portfolio, DFA
Intermediate Government Fixed Income Portfolio and DFA Global Fixed Income
Portfolio distribute dividends from their net investment income quarterly. DFA
One-Year Fixed Income Portfolio distributes dividends from its net investment
income monthly. DFA Five-Year Government Portfolio distributes dividends from
net investment income semi-annually. 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 35

Shares of the International Equity Portfolios, except Large Cap
International Portfolio and the DFA International High Book to Market Portfolio,
may be purchased at a public offering price, which is equal to the net asset
value of their shares, plus a reimbursement fee, equal to 1% of such value of
the shares of Japanese Small Company Portfolio and DFA International Small Cap
Value Portfolio and 1.5% of the net asset value of the shares of Continental,
United Kingdom and Pacific Rim Small Company Portfolios and the Emerging Markets
Portfolio. The reimbursement fee is paid to the Portfolio whose shares are
purchased and used to defray the costs associated with investment of the
proceeds from the sale of its shares. The shares of the remaining Portfolios
are sold at net asset value. The redemption price of the shares of all of the
Portfolios is equal to the net asset value of their shares.

The value of the shares issued by a Feeder Portfolio will fluctuate in
relation to the investment experience of its corresponding Series. The value of
the shares issued by all other Portfolios will fluctuate in relation to their
own investment experience. Unlike money market funds, the shares of DFA
One-Year Fixed Income Portfolio will tend to reflect fluctuations in interest
rates because the corresponding Series of the Trust in which the Portfolio
invests does not seek to stabilize the price of its shares by use of the
"amortized cost" method of securities valuation. (See "PURCHASE OF SHARES,"
"VALUATION OF SHARES" and "REDEMPTION OF SHARES".)

<PAGE>

SHAREHOLDER TRANSACTION EXPENSES

Reimbursement Fees (as percentage of original purchase price)(1)
Japanese Small Company Portfolio 1.00%
United Kingdom Small Company Portfolio 1.50%
Continental Small Company Portfolio 1.50%
Pacific Rim Small Company Portfolio 1.50%
Emerging Markets Portfolio 1.50%
DFA International Small Cap Value Portfolio 1.00%
_____________________________________
(1) Reimbursement fees are charged to purchasers of shares and paid to these
Portfolios. They serve to offset costs incurred by a Portfolio when investing
the proceeds from the sale of its shares, and therefore stabilize the return of
the Portfolio for all existing shareholders. (See "VALUATION OF SHARES - Public
Offering Price" for a more complete description of reimbursement fees.)

With the exception of the Emerging Markets Portfolio and the DFA
International Small Cap Value Portfolio, the expenses in the expense table below
are based on those incurred by the Portfolios and Series for the fiscal year
ended November 30, 1994.
<TABLE>
<CAPTION>

ANNUAL FUND OPERATING EXPENSES MANAGEMENT ADMINISTRATION OTHER TOTAL OPERATING
(AS A PERCENTAGE OF AVERAGE NET ASSETS) FEE FEE EXPENSES EXPENSES
---------- --------- -------- --------
<S> <C> <C> <C> <C>
U.S. 9-10 Small Company 0.50% 0.15% 0.65%

U.S. 6-10 Small Company 0.03% 0.32% 0.18% 0.53%

U.S. Large Company* 0.025% 0.215% 0.00% 0.24%

U.S. Small Cap Value* 0.20% 0.30% 0.16% 0.66%

U.S. Large Cap Value* 0.10% 0.15% 0.19% 0.44%

DFA/AEW Real Estate Securities 0.50% 0.40% 0.90%

Japanese Small Company 0.50% 0.26% 0.76%

Pacific Rim Small Company 0.50% 0.45% 0.95%

United Kingdom Small Company 0.50% 0.24% 0.74%

Emerging Markets* 0.10% 0.40% 0.75% 1.25%

Continental Small Company 0.50% 0.27% 0.77%

Large Cap International 0.25% 0.41% 0.66%
<FN>

- ----------------------------
* Feeder Portfolio.
</TABLE>

MANAGEMENT ADMINISTRATION OTHER TOTAL OPERATING
FEE FEE EXPENSES EXPENSES
---------- --------- -------- --------
<S> <C> <C> <C> <C>
DFA International High Book to Market* 0.17% 0.19% 0.33% 0.69%

DFA International Small Cap Value 0.65% 0.39% 1.04%

DFA One-Year Fixed Income* 0.05% 0.10% 0.06% 0.21%

DFA Five-Year Government 0.20% 0.11% 0.31%

DFA Global Fixed Income 0.25% 0.24% 0.49%

DFA Intermediate Government Fixed Income 0.15% 0.14% 0.29%

<FN>
______________________________
* Feeder Portfolio
</TABLE>

EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
U.S. 9-10 Small Company $ 7 $ 21 $ 36 $ 81

U.S. 6-10 Small Company 5 17 30 66

U.S. Large Company 2 8 14 31

U.S. Small Cap Value 7 21 37 82

U.S. Large Cap Value 5 14 25 55

DFA/AEW Real Estate Securities 9 29 50 111

Japanese Small Company 18 34 52 103

Pacific Rim Small Company 25 45 67 130

United Kingdom Small Company 22 38 56 105

Emerging Markets 28 54 n/a n/a

Continental Small Company 23 39 57 109

Large Cap International 7 21 37 82

DFA International High Book to
Market 7 22 38 86

DFA International Small Cap Value 20 43 n/a n/a

<FN>

- -----------------------------
* Feeder Portfolio.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
DFA One-Year Fixed Income 2 7 12 27
DFA Five-Year Government 3 10 17 39
DFA Global Fixed Income 5 16 27 62
DFA Intermediate Government Fixed Income 3 9 16 37
</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. With respect to the Feeder
Portfolios, the table summarizes the aggregate estimated annual operating
expenses of both the Portfolios and the corresponding Trust Series. (See
"MANAGEMENT OF THE FUND" for a description of Portfolio and Series expenses.)
The Board of Directors of the Fund has considered whether such expenses will be
more or less than they would have been if the Feeder Portfolios were to have
invested directly in the securities held by the Trust Series. The aggregate
amount of expenses for a Feeder Portfolio and the corresponding Trust Series may
be greater than it would have been if the Portfolio were to invest directly in
the securities held by the corresponding Trust Series. However, the total
expense ratios for the Feeder Portfolios and the Trust Series are expected to be
less over time than such ratios would have been if the Portfolios had continued
to invest directly in the underlying securities. This is because this
arrangement enables various institutional investors, including the Feeder
Portfolios, to pool their assets, which may be expected to result in economies
by spreading certain fixed costs over a larger asset base. Each shareholder in
a Trust Series, including a Feeder Portfolio, will pay its proportionate share
of the expenses of that Trust Series.

The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown. The
Emerging Markets Portfolio and its Trust Series and the DFA International Small
Cap Value Portfolio are new and, therefore, the expenses of those Portfolios and
Series included in the table are the estimated annualized expenses that are
expected to be incurred through the fiscal year 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.

The Advisor has agreed to bear all of the ordinary operating expenses of
U.S. Large Company Portfolio and its corresponding Series, except the investment
advisory fee of the Series and the administration fee of the Portfolio. These
expenses are not subject to reimbursement by the Series and the Portfolio.
Absent this arrangement, the annualized ratio of expenses to average net assets
for U.S. Large Company Portfolio for the fiscal year ended November 30, 1994
would have been .66%. Beginning December 1, 1993, the Advisor agreed to waive
its fee under the Investment Management Agreement with respect to the DFA
International Value Series to the extent necessary to keep the cumulative annual
expenses of the Series to not more than 0.45% of average net assets of the
Series on an annualized basis. Through February 15, 1994, the Advisor waived
its fee under the Investment Management Agreement with respect to the DFA
International High Book to Market Portfolio to the extent necessary to keep the
cumulative annual expenses of the Portfolio to not more than 0.65% of average
net assets of the Portfolio on an annualized basis. Absent the waivers, the
annualized ratio of expenses to average net assets for the DFA International
High Book to Market Portfolio for the fiscal year ended November 30, 1994 would
have been 0.73%.

For the year ended November 30, 1994, Japanese Small Company Portfolio
received net revenue from a securities lending program which equalled $800,000,
which was .27% of average daily net assets of the Portfolio. The other
International Equity Portfolios also implemented lending programs during the
year. The income generated in the other portfolios for the fiscal year ended
November 30, 1994 is not representative of the income that would be earned over
a full year because of seasonality of the foreign securities markets.

<PAGE>

CONDENSED FINANCIAL INFORMATION

The data set forth under the heading "Financial Highlights" in the Fund's
audited annual report to stockholders for the fiscal year ended November 30,
1994 is incorporated herein by reference. The data in the Fund's audited annual
report is covered by the Report of Independent Accountants which is contained
therein and may be obtained by shareholders upon request. Information regarding
the DFA International Small Cap Value Portfolio has not been provided in the
Fund's audited annual report because that Portfolio had not commenced operations
as of November 30, 1994.

THE FEEDER PORTFOLIOS

Each of the seven Feeder Portfolios, unlike many other investment companies
which directly acquire and manage their own portfolio of securities, seeks to
achieve its investment objective by investing all of its investable assets in a
corresponding Series of the Trust, an open-end, management investment company,
registered under the Investment Company Act of 1940, that issues Series having
the same investment objective as each of those Portfolios. The investment
objective of a Feeder Portfolio may not be changed without the approval of its
shareholders and the investment objective of a Series of the Trust may not be
changed without approval of the shareholders of that Series. Shareholders of a
Feeder Portfolio will receive written notice thirty days prior to the effective
date of any change in the investment objective of its corresponding Trust
Series.

This prospectus describes the investment objective, policies and
restrictions of each Feeder Portfolio and its corresponding Series. (See
"PORTFOLIO CHARACTERISTICS AND POLICIES - THE SMALL COMPANY PORTFOLIOS - U.S. 6-
10 Small Company Portfolio"; "U.S. LARGE COMPANY PORTFOLIO - Investment
Objective and Policies"; "THE VALUE PORTFOLIOS - Portfolio Characteristics and
Policies"; "INVESTMENT OBJECTIVES AND POLICIES - THE FIXED INCOME PORTFOLIOS -
The DFA One-Year Fixed Income Portfolio"; "DFA INTERNATIONAL HIGH BOOK TO MARKET
PORTFOLIO - Investment Objective and Policies"; and "EMERGING MARKETS PORTFOLIO
- - Investment Objective and Policies"). In addition, an investor should read
"MANAGEMENT OF THE FUND" for a description of the management and other expenses
associated with the Feeder Portfolios' investment in the Trust. Other
institutional investors, including other mutual funds, may invest in each Series
and the expenses of such other funds and, correspondingly, their returns may
differ from those of the Feeder Portfolios. Please contact the Trust at 1299
Ocean Avenue, 11th Floor, Santa Monica, CA 90401, (310) 395-8005 for
information about the availability of investing in a Series of the Trust other
than through a Feeder Portfolio.

The shares of the Trust Series will be offered to institutional investors
for the purpose of increasing the funds available for investment, to reduce
expenses as a percentage of total assets and to achieve other economies that
might be available at higher asset levels. While investment in a Series by
other institutional investors offers potential benefits to the Series and,
through their investment in the Series, the Feeder Portfolios also,
institutional investment in the Series also entails the risk that economies and
expense reductions might not be achieved and additional investment
opportunities, such as increased diversification, might not be available if
other institutions do not invest in the Series. Also, if an institutional
investor were to redeem its interest in a Series, the remaining investors in
that Series could experience higher pro rata operating expenses, thereby
producing lower returns, and the Series' security holdings may become less
diverse, resulting in increased risk. Institutional investors that have a
greater pro rata ownership interest in a Series than the corresponding Feeder
Portfolio could have effective voting control over the operation of the Series.

Further, if a Series changes its investment objective in a manner which is
inconsistent with the investment objective of a corresponding Feeder Portfolio
and the shareholders of the Portfolio fail to approve a similar change in the
investment objective of the Portfolio, the Portfolio would be forced to withdraw
its investment in the Series and either seek to invest its assets in another
registered investment company with the same investment objective as the
Portfolio, which might not be possible, or retain an investment advisor to
manage the Portfolio's assets in accordance with its own investment objective,
possibly at increased cost. A withdrawal by a Feeder Portfolio of its
investment in the corresponding Series could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) to the Portfolio.
Should such a distribution occur, the Portfolio could incur brokerage fees or
other transaction costs in converting such securities to cash in order to pay
redemptions. In addition, a

<PAGE>

distribution in kind to the Portfolio could result in a less diversified
portfolio of investments and could affect adversely the liquidity of the
Portfolio.

Finally, the Feeder Portfolios investment in the shares of a registered
investment company such as the Trust is relatively new and results in certain
operational and other complexities. However, management believes that the
benefits to be gained by shareholders outweigh the additional complexities and
that the risks attendant to such investment are not inherently different from
the risks of direct investment in securities of the type in which the Trust
Series invest.

SMALL COMPANY PORTFOLIOS

INVESTMENT OBJECTIVE AND POLICIES

Each Small Company Portfolio and U.S. 6-10 Small Company Series of the
Trust (the "6-10 Series"), operates as a diversified investment company whose
investment objective is to achieve long-term capital appreciation. The Small
Company Portfolios provide investors with access to securities portfolios
consisting of small U.S., Japanese, United Kingdom, European and Pacific Rim
companies. Company size will be determined for purposes of these Portfolios and
the 6-10 Series of the Trust solely on the basis of a company's market
capitalization. "Market capitalization" will be calculated with respect to
domestic securities, by multiplying the price of a company's stock by the number
of its shares of common stock, or with respect to foreign securities similar
stocks which are outstanding.

Each of these Portfolios (U.S. 6-10 Small Company Portfolio indirectly
through ownership of the corresponding Trust Series) will be structured to
reflect reasonably the relative market capitalizations of its portfolio
companies. The Advisor believes that over the long term the investment
performance of small companies is superior to large companies, not only in the
U.S. but in other developed countries as well, and that investment in the
Portfolios is an effective way to improve global diversification. Institutional
investors which, for a variety of reasons, may choose not to make substantial,
or any, direct investment in companies whose securities will be held by the
Portfolios, may participate indirectly in the investment performance of these
companies through ownership of a Portfolio's stock.

PORTFOLIO CHARACTERISTICS AND POLICIES-
SMALL COMPANY PORTFOLIOS

U.S. 6-10 SMALL COMPANY PORTFOLIO

U.S. 6-10 Small Company Portfolio pursues its investment objective by
investing all of its assets in the 6-10 Series, which has the same investment
objective and policies as the Portfolio. U.S. 6-10 Series will invest in a
broad and diverse group of small U.S. companies having readily marketable
securities. References in this prospectus to a "small U.S. company" means a
company whose securities are traded in the U.S. securities markets and whose
market capitalization is not larger than the largest of those in the smaller one
half (deciles 6 through 10) of companies listed on the New York Stock Exchange
("NYSE"). The 6-10 Series will purchase common stocks of companies whose shares
are listed on the NYSE, the American Stock Exchange (the "AMEX") and traded in
the over-the-counter market ("OTC"). The 6-10 Series may invest in securities
of foreign issuers which are traded in the U.S. securities markets, but such
investments may not exceed 5% of the gross assets of the Series. It is the
intention of the 6-10 Series to acquire a portion of the common stock of each
eligible NYSE, AMEX and OTC company on a market capitalization weighted basis.
(See "PORTFOLIO CHARACTERISTICS AND POLICIES - THE SMALL COMPANY PORTFOLIOS -
Portfolio Structure".) In the future, the 6-10 Series may purchase common
stocks of small U.S. companies which are listed on other U.S. securities
exchanges. In addition, the 6-10 Series is authorized to invest in private
placements of interest-bearing debentures that are convertible into common stock
("privately placed convertible debentures"). Such investments are considered
illiquid and the value thereof together with the value of all other illiquid
investments may not exceed 15% of the value of the Series' total assets at the
time of purchase.

<PAGE>

U.S. 9-10 SMALL COMPANY PORTFOLIO

U.S. 9-10 Small Company Portfolio will invest in a broad and diverse
segment of small U.S. companies having readily marketable stocks, and whose
market capitalization is not larger than the largest of those in the quintile of
companies listed on the NYSE having the smallest market capitalizations
(smallest 20%). The Portfolio will purchase stocks of companies whose shares
are listed on the NYSE, AMEX and traded OTC. The Portfolio may invest in
securities of foreign issuers which are traded in the U.S. securities markets,
but such investments may not exceed 5% of the gross assets of the Portfolio.
There is some overlap in the companies in which U.S. 9-10 Small Company
Portfolio and the U.S. 6-10 Series invest. It is the intention of U.S. 9-10
Small Company Portfolio to acquire a portion of the stock of each eligible NYSE,
AMEX and OTC company on a market capitalization weighted basis. (See "PORTFOLIO
CHARACTERISTICS AND POLICIES - SMALL COMPANY PORTFOLIOS - Portfolio Structure".)
In the future, U.S. 9-10 Small Company Portfolio may include stocks of small
U.S. companies which are listed on other U.S. securities exchanges. The
Portfolio is authorized to invest in privately placed convertible debentures and
the value thereof together with the value of all other illiquid investments may
not exceed 10% of the value of the Portfolio's total assets at the time of
purchase.

JAPANESE SMALL COMPANY PORTFOLIO

Japanese Small Company Portfolio will invest in a broad and diverse group
of readily marketable stocks of Japanese small companies which are traded in the
Japanese securities markets. 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. It is
the intention of Japanese Small Company Portfolio to acquire a portion of the
stock of each of these companies on a market capitalization weighted basis. The
Portfolio also may invest up to 5% of its assets in convertible debentures
issued by Japanese small companies. (See "PORTFOLIO CHARACTERISTICS AND
POLICIES - SMALL COMPANY PORTFOLIOS - Portfolio Structure".)

UNITED KINGDOM SMALL COMPANY PORTFOLIO

United Kingdom Small Company Portfolio will seek to achieve its investment
objective by investing its assets in a broad and diverse group of readily
marketable stocks of United Kingdom small companies which are traded principally
on the International Stock Exchange of the United Kingdom and the Republic of
Ireland ("ISE"). Any 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
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.
United Kingdom Small Company Portfolio will not, however, purchase shares of any
investment trust or of any company whose market capitalization is less than
$5,000,000.

It is the intention of United Kingdom Small Company Portfolio 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 United Kingdom small companies. (See "PORTFOLIO CHARACTERISTICS AND
POLICIES - SMALL COMPANY PORTFOLIOS - Portfolio Structure".)

CONTINENTAL SMALL COMPANY PORTFOLIO

Continental Small Company 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,

<PAGE>

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 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 which the
Portfolio invests will be considered to be "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 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 European small companies. The Portfolio has acquired the stocks of
small companies located in France, Germany, Italy, Switzerland, the Netherlands,
Belgium, Sweden and Spain. When the Advisor determines that the investments of
the Portfolio in the stocks of small companies in those countries are
sufficiently diverse, the stocks of small companies located in other European
countries may be acquired on a country-by-country basis. In addition, 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 CHARACTERISTICS AND POLICIES - SMALL COMPANY PORTFOLIOS - Portfolio
Structure".)

PACIFIC RIM SMALL COMPANY PORTFOLIO

Pacific Rim Small Company Portfolio is authorized to invest in stocks of a
broad and diverse group of small companies located in Australia, New Zealand and
Asian countries whose shares are traded principally on the securities markets
located in those countries. The Portfolio presently invests in small companies
located in Singapore, Hong Kong, Australia, Malaysia and Korea. In the future,
the Advisor may add small companies located in New Zealand and other Asian
countries as securities markets in these countries become accessible. In
addition, the Advisor may in its discretion either limit further investments in
a particular country or divest the Portfolio of holdings in a particular
country.

Company size will be determined by the Advisor in a manner that will
compare the market capitalizations of the companies in all countries 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% of companies (8th, 9th and 10th deciles) listed in the FTW as
combined for the countries in which the Portfolio invests will be considered to
be "small companies" and will be eligible for purchase by the Portfolio.

PORTFOLIO STRUCTURE

Each of the Small Company Portfolios, including U.S. 6-10 Small Company
Portfolio indirectly through its investment in the 6-10 Series, is structured 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

<PAGE>

capitalizations of its portfolio companies. The following discussion applies to
the investment policies of the 6-10 Series and the Small Company Portfolios with
the exception of U.S. 6-10 Small Company Portfolio.

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 Company Portfolios, such determination shall
be made by reference to other companies located in all countries in which the
Portfolios invest. Company size is measured in terms of local currencies in
order to eliminate the effect of variations in currency exchange rates, except
that Continental and Pacific Rim Small Company Portfolios each will measure
company size 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.

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 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. (See "In Kind Purchases".) 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 CHARACTERISTICS AND POLICIES -
SMALL COMPANY PORTFOLIOS - 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. 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 CHARACTERISTICS AND
POLICIES - SMALL COMPANY PORTFOLIOS - Portfolio Transactions".) A further
deviation from market capitalization weighting may occur if a 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 Portfolios intend to invest
at least 80% of their assets in equity securities of U.S., Japanese, United
Kingdom, European and Pacific Rim small companies.

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.

<PAGE>

PORTFOLIO TRANSACTIONS

As described under "U.S. 6-10 Small Company Portfolio," that Portfolio
invests in the shares of the 6-10 Series. Therefore, references to "Portfolios"
under "Portfolio Transactions" do not include U.S. 6-10 Small Company Portfolio.

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
U.S., Japanese, United Kingdom, European or Pacific Rim companies. The Advisor
will make a similar review and determination with respect to the 6-10 Series.
The present policy of the Advisor (except with respect to the 6-10 Series) 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 particular 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.

U.S. LARGE COMPANY PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

U.S. Large Company Portfolio seeks, as its investment objective, to
approximate the investment performance of the S&P 500 Index, both in terms of
the price of the Portfolio's shares and its total investment return. The
Portfolio pursues its investment objective by investing all of its assets in
U.S. Large Company Series of the Trust (the "U.S. Large Company Series"), which
has the same investment objective and policies as the Portfolio. U.S. Large
Company Series intends to invest in all of the stocks that comprise the S&P 500
Index in approximately the same proportions as they are represented in the
Index. The amount of each stock purchased for the U.S. Large Company Series,
therefore, will be based on its respective market capitalization. The S&P 500
Index is comprised of a broad and diverse group of stocks most of which are
traded on the NYSE. Generally, these are the U.S. stocks with the largest
market capitalizations and, as a group, they represent approximately 70% of the
total market capitalization of all publicly traded U.S. stocks.

Under normal market conditions, at least 95% of the U.S. Large Company
Series' assets will be invested in the stocks that comprise the S&P 500 Index.
A portion, however, generally not more than 5% of net assets, may be invested in
the same types of short-term fixed income obligations as may be acquired by the
DFA One-Year Fixed Income Portfolio, in order to maintain liquidity or to invest
temporarily uncommitted cash balances. (See "THE FIXED INCOME PORTFOLIOS -
Description of Securities and Obligations").

U.S. Large Company Series may also acquire index futures contracts and
options thereon in order to commit funds awaiting investment in stocks or
maintain cash liquidity. However, the Series will not purchase index futures
contracts or options if as a result more than 5% of its total assets would then
consist of initial and variation margin deposits on such contracts or options.
Such investments entail certain risks. (See "RISK FACTORS - ALL PORTFOLIOS".)

Ordinarily, portfolio securities will not be sold except to reflect
additions or deletions of the stocks that comprise the S&P 500 Index, including
mergers, reorganizations and similar transactions and, to the extent necessary,
to provide cash to pay redemptions of the U.S. Large Company Series' shares.
U.S. Large Company Series may lend

<PAGE>

securities to qualified brokers, dealers, banks and other financial institutions
for the purpose of earning additional income.

Neither the U.S. Large Company Series nor the Portfolio is sponsored,
endorsed, sold or promoted by Standard & Poor's Corporation ("S&P"). S&P makes
no representation or warranty, express or implied, to the owners of the
Portfolio or the Series or any member of the public regarding the advisability
of investing in securities generally or in the Portfolio or the Series
particularly or the ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to the Portfolio or the Series is the
licensing of certain trademarks and trade names of S&P and of the S&P 500 Index
which is determined, composed and calculated by S&P without regard to the
Portfolio or the Series. S&P has no obligation to take the needs of the
Portfolio, the Series or their respective owners into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not responsible
for and has not participated in the determination of the timing of, prices at,
or quantities of the Portfolio or the Series to be issued or in the
determination or calculation of the equation by which the Portfolio or the
Series is to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing or trading of the Portfolio or the
Series.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN
IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY OTHER USE. S&P
MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

LARGE CAP INTERNATIONAL PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of Large Cap International Portfolio is to achieve
long-term capital appreciation by investing in the stocks of non-U.S. large
companies. The investment objective of the Portfolio may not be changed without
the approval of the holders of a majority of its outstanding shares. The
Portfolio intends to invest in the stocks of large companies in Europe,
Australia and the Far East. Initially, the Portfolio will invest in the stocks
of large companies in Japan, the United Kingdom, Germany, France, Switzerland,
Italy, Sweden, Hong Kong and Australia. As the Portfolio's asset growth
permits, it may invest in the stocks of large companies in Spain,
Singapore/Malaysia, the Netherlands, Belgium, Austria, Denmark, Finland,
Ireland, Norway and New Zealand.

Under normal market conditions, at least 65% of the Portfolio's assets will
be invested in companies 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 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".) The Portfolio also may invest up to 5% of its assets in
convertible debentures issued by large non-U.S. companies.

The Portfolio will be approximately market capitalization weighted. 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 countries in the Portfolio may
vary from their weighting in international indices such as those published by
The Financial Times, Morgan Stanley Capital International or Salomon/Russell.
The Advisor, however, will not attempt to account for cross holdings within the
same country. Generally, the companies whose stocks will be selected by the
Advisor for the Portfolio will be in the largest 50% in terms of market
capitalization for each country. The Advisor, however, may exclude the stock of
such a company

<PAGE>

if the Advisor determines in its best judgment that other conditions exist that
make the purchase of such stock for a Portfolio inappropriate.

Deviation from market capitalization weighting will occur because the
Portfolio 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 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, thereby causing further deviation
from market capitalization weighting. A further deviation from market
capitalization weighting may occur if the Portfolio invests a portion of its
assets in convertible debentures.

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, 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. (See "In Kind Purchases".) While
such transactions 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.

Changes in the composition and relative ranking (in terms of market
capitalization) 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 a periodic basis,
the Advisor will prepare lists of eligible large companies that will be revised
not less than semi-annually. Only common stocks whose market capitalizations
are not less than such minimum 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 further 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.

It is management's belief that the stocks of large 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 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.

Securities which have depreciated in value since their acquisition will not
be sold by the Portfolio 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 warrant their sale, such as tender offers,
mergers and similar transactions, or bids made for block purchases at opportune
prices. 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 a portfolio of companies with large market capitalizations.

DFA/AEW REAL ESTATE SECURITIES PORTFOLIO

PORTFOLIO CHARACTERISTICS AND POLICIES

The investment objective of DFA/AEW Real Estate Securities Portfolio is to
achieve long-term capital appreciation. The investment objective of the
Portfolio may not be changed without the affirmative vote of a majority of the
outstanding securities of the Portfolio. The Portfolio will concentrate
investments in readily marketable equity securities of companies whose principal
activities include development, ownership, construction,

<PAGE>

management, or sale of residential, commercial or industrial real estate.
Initially, investments will include, principally, equity securities of companies
in the following sectors of the real estate industry: certain real estate
investment trusts and companies engaged in residential construction and firms,
except partnerships, whose principal business is to develop commercial property.
In the future, the Advisor may determine to include companies in other sectors
of the real estate industry in the Portfolio.

The Portfolio will invest in shares of real estate investment trusts
("REITS"). REITS pool investors' funds for investment primarily in income
producing real estate or real estate related loans or interests. A REIT is not
taxed on income distributed to shareholders if it complies with several
requirements relating to its organization, ownership, assets, and income and a
requirement that it distribute to its shareholders at least 95% of its taxable
income (other than net capital gains) for each taxable year. REITS can
generally be classified as Equity REITS, Mortgage REITS and Hybrid REITS.
Equity REITS invest the majority of their assets directly in real property and
derive their income primarily from rents. Equity REITS can also realize capital
gains by selling properties that have appreciated in value. Mortgage REITS
invest the majority of their assets in real estate mortgages and derive their
income primarily from interest payments. Hybrid REITS combine the
characteristics of both Equity REITS and Mortgage REITS. At the present time,
the Portfolio intends to invest only in Hybrid REITS and Equity REITS.

It is anticipated that, ordinarily, at least 80% of the net value of the
Portfolio will be invested in securities of companies in the U.S. real estate
industry. The Portfolio may invest a portion of its 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 Portfolio
will make equity investments only in securities traded in the U.S. securities
markets, principally on the NYSE, AMEX and OTC. In addition, the Portfolio is
authorized to lend its portfolio securities (see "SECURITIES LOANS"), and to
purchase and sell financial futures contracts and options thereon. The
Portfolio will not purchase future contracts or options, if as a result an
amount in excess of 5% of the net assets of the Portfolio would be deposited as
initial or variation margin for such contracts.

PORTFOLIO STRUCTURE

The Portfolio will operate as a "diversified" investment company. The
Advisor has prepared and will maintain a schedule of eligible investments
consisting of equity securities of all companies in the sectors of the real
estate industry described above as being presently eligible for investment. It
is the intention of the Portfolio to purchase a portion of the equity securities
of all of these companies on a market capitalization weighted basis.

The Portfolio will be structured by generally basing the amount of each
security purchased on the issuer's relative market capitalization in relation to
other eligible issuers in the real estate industry. However, even though a
company's stock may meet the applicable criteria described above, it will not be
purchased by the Portfolio if, at the time of purchase, in the judgment of the
Advisor or sub-advisor, the issuer is in extreme financial difficulty or is
involved in a merger or consolidation or is the subject of an acquisition which
could result in the company no longer being considered principally engaged in
the real estate business. In addition, 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 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. A portion, but
generally not in excess of 20%, of the Portfolio's assets may be invested in
interest-bearing obligations, as described above, thereby causing 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. (See "In Kind
Purchases".) 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 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.
(See "REDEMPTION OF SHARES".) Further, because the securities of certain
companies whose shares are eligible

<PAGE>

for purchase are thinly traded, the Portfolio might not be able to purchase the
number of shares that strict adherence to market capitalization weighting might
require. On not less than a semi-annual basis, the Advisor will prepare a
schedule of eligible portfolio companies. Only equity securities appearing on
the then current schedule will be purchased for the Portfolio.

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. Periodically, the Advisor may expand the
Portfolio's schedule of eligible investments to include equity securities of
companies in sectors of the real estate industry in addition to those described
above as eligible for investment as of the date of this prospectus.

PORTFOLIO TRANSACTIONS

The Portfolio does not intend to purchase or sell securities based on the
prospects for the economy, the securities markets or, generally, 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 the risk of loss 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. However, securities may be sold at any time
when, in the Advisor's judgment, circumstances 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.

VALUE PORTFOLIOS

PORTFOLIO CHARACTERISTICS AND POLICIES

The investment objective of each of these Portfolios is to achieve long-
term capital appreciation. U.S. Large Cap Value Portfolio and U.S. Small Cap
Value Portfolio will pursue their investment objectives by investing all of
their assets in U.S. Large Cap Value Series (the "Large Cap Value Series") and
U.S. Small Cap Value Series (the "Small Cap Value Series") of the Trust,
respectively. Each Value Series has the same investment objective and policies
as the corresponding Value Portfolio. Each of the Series 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 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 NYSE and, except as described under
"Portfolio Structure", will be considered eligible for investment. Large Cap
Value Series 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 Small
Cap Value Series will purchase common stocks of companies whose market
capitalizations are smaller than such company.

PORTFOLIO STRUCTURE

Each Series will operate as a "diversified" investment company. Further,
neither Series 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
Series 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 Series 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 Series will
purchase securities that are listed on the principal U.S. national securities
exchanges and traded OTC.

Each of the Value Series 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 Series 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

<PAGE>

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 Series because they intend to purchase round lots only. In order to retain
sufficient liquidity, the relative amount of any security held by a Series 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 Series' assets may be invested in interest-bearing
obligations, as described above, thereby causing further deviation from strict
market capitalization weighting. The Series 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
Series and the Portfolios may acquire eligible securities in exchange for the
issuance of their shares. (See "In Kind Purchases".) 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 Series.

On not less than a semi-annual basis, for each Series the Advisor will
calculate the book to market ratio necessary to determine those companies whose
stocks are eligible for investment.

PORTFOLIO TRANSACTIONS

The Series 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. Large Cap Value Series may sell portfolio
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 Series, and Small Cap Value Series 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 Series. However, securities may be
sold at any time when, in the Advisor's judgment, circumstances warrant their
sale.

In addition, Large Cap Value Series 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 Series. Small
Cap Value Series may also sell portfolio securities in the same circumstances,
however, that Series 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.

DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of DFA International High Book to Market Portfolio
is to achieve long-term capital appreciation. The Portfolio pursues its
objective by investing all of its assets in The DFA International Value Series
of the Trust (the "International Value Series"), which has the same investment
objective and policies as the Portfolio. The International Value Series
operates as a diversified investment company and 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 (a "book to market ratio"). The shares
of a company in any given country 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 in that country with the highest positive book to market ratios whose
shares are listed on a major exchange, and, except as described below, will be
considered eligible for investment. The International Value Series intends to
invest in the stocks of large companies in countries with developed markets.
Initially, the International Value Series 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 Series' asset growth permits, it may invest in the stocks of large companies
in other developed markets.

<PAGE>

Under normal market conditions, at least 65% of the International Value
Series' assets will be invested in companies 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 and no more than 40% of the Series' assets will be
invested in such companies in any one country. The International Value Series
reserves the right to invest in index futures contracts to commit funds awaiting
investment or to maintain liquidity. The International Value Series 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".) The
International Value Series also may invest up to 5% of its assets in convertible
debentures issued by large non-U.S. companies.

The International Value Series intends to invest in companies having at
least $500 million of market capitalization and the Series will be approximately
market capitalization weighted. 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 countries in the International Value Series may vary from their
weighting in international indices such as those published by The Financial
Times, 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 such stock for the International
Value Series inappropriate.

Deviation from market capitalization weighting will occur because the
International Value Series intends to purchase round lots only. In order to
retain sufficient liquidity, the relative amount of any security held by the
International Value Series may be reduced from time to time from the level which
adherence to market capitalization weighting would otherwise require. A
portion, but generally not in excess of 20%, of the International Value Series'
assets may be invested in interest-bearing obligations, such as money-market
instruments, thereby causing further deviation from market capitalization
weighting. Such investments would be made on a temporary basis pending
investment in equity securities pursuant to the International Value Series
investment objective. A further deviation from market capitalization weighting
may occur if the International Value Series invests a portion of its assets in
convertible debentures.

The International Value Series 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, adherence to the policy of market
capitalization weighting would otherwise require. In addition, the
International Value Series may acquire eligible securities in exchange for the
issuance of its shares. (See "In Kind Purchases".) While such transactions
might cause a temporary deviation from market capitalization weighting, they
would ordinarily be made in anticipation of further growth of the assets of the
International Value Series.

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 International Value Series take place with every trade when the
securities markets are open for trading due, primarily, to price fluctuations of
such securities. On a periodic basis, the Advisor will prepare lists of
eligible large companies with high book to market ratios whose stock are
eligible for investment; such list will be revised not less than semi-annually.
Only common stocks whose market capitalizations are not less than the minimum on
such list will be purchased by the International Value Series. 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 further deviation from market capitalization
weighting and such deviation could be substantial if a significant amount of the
International Value Series' 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.

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 International Value Series 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 International Value Series.

The International Value Series 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 International Value Series do pay dividends. It is
anticipated, therefore, that the International Value Series will receive
dividend income.

<PAGE>

Securities which have depreciated in value since their acquisition will not
be sold by the International Value Series 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 warrant their sale, such as
tender offers, mergers and similar transactions, or bids made for block
purchases at opportune prices. 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 a portfolio of companies with
large market capitalizations and high book to market ratios.

DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the DFA International Small Cap Value Portfolio
is to achieve long-term capital appreciation. The Portfolio pursues its
objective by investing in the stocks of small non-U.S. companies that have a
high book to market ratio. The Investment Committee of the Advisor will
initially set the standards for determining whether the shares of a company in
any given country will be considered to have a high book to market ratio. Such
shares will be considered eligible for investment. The Investment Committee
will periodically review its standards for determining high book to market value
and will adjust the standards accordingly. The Portfolio intends to invest in
the stocks of small companies in countries with developed markets. Initially,
the Portfolio will invest in the stocks of small companies in Japan, the United
Kingdom, Germany, France, Switzerland, Italy, Belgium, Spain, the Netherlands,
Sweden, Hong Kong, Singapore and Australia. As the Portfolio's asset growth
permits, it may invest in the stocks of small companies in other developed
markets.

Under normal market conditions, at least 65% of the Portfolio's assets will
be invested in companies 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 and no more than 40% of the Portfolio's assets will be invested in
such companies in any one country. 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. The Portfolio also may invest up to 5% of
its assets in convertible debentures issued by small non-U.S. companies.

The Portfolio intends to invest in companies having no more than $500
million of market capitalization. The Advisor believes that such maximum amount
accounts for variations in company size among countries and provides a
sufficient universe of eligible companies. The Portfolio will be approximately
market capitalization weighted. 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 countries in the Portfolio may vary from their weighting in
international indices such as those published by The Financial Times, 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 such stock for the Portfolio inappropriate.

Deviation from market capitalization weighting will occur because the
Portfolio 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 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, thereby causing further deviation
from market capitalization weighting. Such investments would be made on a
temporary basis pending investment in equity securities pursuant to the
Portfolio's investment objective. A further deviation from market
capitalization weighting may occur if the Portfolio invests a portion of its
assets in convertible debentures.

<PAGE>

issuance of its shares. (See "In Kind Purchases".) While such transactions
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.

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 a periodic basis, the Advisor will prepare a list of eligible
small companies with high book to market ratios whose stock are eligible for
investment; such list will be revised not less than semi-annually. Only commons
stocks whose market capitalizations are not greater than the maximum on such
list will be purchased by the Portfolio. Additional investments will not be
made in securities which have appreciated in value to such an extent that they
are not then considered by the Advisor to be small companies. This may result
in further deviation from market capitalization weighting and such deviation
could be substantial if a significant amount of the Portfolio's holdings
increase 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.

It is management's belief that the stocks of small 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 intend to purchase or sell securities based on the
prospects for the economy, the securities market or the individual issues whose
shares are eligible for purchase. Securities may be disposed of, however, at
any time when, in the Advisor's judgment, circumstances warrant their sale, such
as tender offers, mergers and similar transactions, or bids made for block
purchases at opportune prices. 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 a portfolio of companies with
small market capitalizations and high book to market ratios. The annual
portfolio turnover rate of the Portfolio is not expected to exceed 20%.

EMERGING MARKETS PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Emerging Markets Portfolio is to achieve
long-term capital appreciation. The Portfolio pursues its objective by
investing all of its assets in the Emerging Markets Series of the Trust (the
"Emerging Markets Series"), which has the same investment objective and policies
as the Portfolio. The Emerging Markets Series operates as a diversified
investment company and seeks to achieve its investment objective by investing in
emerging markets designated by the Trust's Board of Trustees in consultation
with the Advisor ("Approved Markets"). The Emerging Markets Series invests its
assets primarily in Approved Market equity securities listed on bona fide
securities exchanges or actively traded on OTC markets. These exchanges or OTC
markets may be either within or outside the issuer's domicile country, and the
securities may be listed or traded in the form of International Depository
Receipts ("IDRs") or American Depository Receipts ("ADRs").

Under normal market conditions, the Emerging Markets Series will invest at
least 65% of its assets in Approved Market securities. Approved Market
securities are defined to be (a) securities of companies organized in a country
in an Approved Market or for which the principal trading market is in an
Approved Market, (b) securities issued or guaranteed by the government of an
Approved Market country, its agencies or instrumentalities, or the central bank
of such country, (c) securities denominated in an Approved Market currency
issued by companies to finance operations in Approved Markets, (d) securities of
companies that derive at least 50% of their revenues primarily

<PAGE>

from either goods or services produced in Approved Markets or sales made in
Approved Markets and (e) Approved Markets equity securities in the form of
depositary shares. Securities of Approved Markets may include securities of
companies that have characteristics and business relationships common to
companies in other countries. As a result, the value of the securities of such
companies may reflect economic and market forces in such other countries as well
as in the Approved Markets. The Advisor, however, will select only those
companies which, in its view, have sufficiently strong exposure to economic and
market forces in Approved Markets such that their value will tend to reflect
developments in Approved Markets to a greater extent than developments in other
regions. For example, the Advisor may invest in companies organized and located
in the United States or other countries outside of Approved Markets, including
companies having their entire production facilities outside of Approved Markets,
when such companies meet the definition of Approved Markets securities so long
as the Advisor believes at the time of investment that the value of the
company's securities will reflect principally conditions in Approved Markets.

The Advisor defines the term "emerging market" to mean a country which is
considered to be an emerging market by the International Finance Corporation.
Approved emerging markets may not include all such emerging markets. In
determining whether to approve markets for investment, the Board of Trustees
will take into account, among other things, market liquidity, investor
information, government regulation, including fiscal and foreign exchange
repatriation rules and the availability of other access to these markets by the
investors of the Emerging Markets Series.

The following countries are currently designated as Approved Markets:
Argentina, Brazil, Chile, Indonesia, Malaysia, Mexico, Portugal, Thailand, and
Turkey. Countries that may be approved in the future include but are not
limited to Republic of China (Taiwan), which is effectively closed to foreign
investors at present, and Colombia, Greece, India, Jordan, Nigeria, Pakistan,
Philippines, Venezuela and Zimbabwe.

The Emerging Markets Series may invest up to 35% of its assets in
securities of issuers that are not Approved Markets securities, but whose
issuers the Advisor believes derive a substantial proportion, but less than 50%,
of their total revenues from either goods and services produced in, or sales
made in, Approved Markets.

Pending the investment of new capital in Approved Market equity securities,
the Emerging Markets Series will typically invest in money market instruments or
other highly liquid debt instruments denominated in U.S. dollars (including,
without limitation, repurchase agreements). In addition, the Emerging Markets
Series may, for liquidity, or for temporary defensive purposes during periods in
which market or economic or political conditions warrant, purchase highly liquid
debt instruments or hold freely convertible currencies, although the Series does
not expect the aggregate of all such amounts to exceed 10% of its net assets
under normal circumstances.

The Emerging Markets Series also may invest in shares of other investment
companies that invest in one or more Approved Markets, although it intends to do
so only where access to those markets is otherwise significantly limited. The
Emerging Markets Series may also invest in money market mutual funds for
temporary cash management purposes. The Investment Company Act of 1940 limits
investment by the Series in shares of other investment companies to no more than
10% of the value of the Series' total assets. If The Emerging Markets Series
invests in another investment company, the Series' shareholders will bear not
only their proportionate share of expenses of the Series (including operating
expenses and the fees of the Advisor), but also will bear indirectly similar
expenses of the underlying investment company. In some Approved Markets it will
be necessary or advisable for the Emerging Markets Series to establish a wholly-
owned subsidiary or a trust for the purpose of investing in the local markets.
The Emerging Markets Series also may invest up to 5% of its assets in
convertible debentures issued by companies organized in Approved Markets.

PORTFOLIO STRUCTURE

The Emerging Market Series will seek a broad market coverage of larger
companies within each Approved Market. The Series will attempt to own shares of
companies whose aggregate overall share of the Approved Market's total public
market capitalization is at least the upper 40% of such capitalization, and can
be as large as 75%. The Series may not invest in all such companies or achieve
approximate market weights, due to constraints imposed within Approved Markets
(E.G., restrictions on purchases by foreigners), or by the Series' policy not to
invest more than 25% of its assets in any one industry. The Series may also
further limit the market coverage in the smaller emerging markets in order to
limit purchases of small market capitalization companies.

<PAGE>

The policy of seeking broad market diversification means that the Advisor
will not utilize "fundamental" securities research techniques in identifying
securities selections. The decision to include or exclude the shares of an
issuer will be made primarily on the basis of such issuer's relative market
capitalization determined by reference to other companies located in the same
country. Company size is measured in terms of reference to other companies
located in the same country and in terms of local currencies in order to
eliminate the effect of variations in currency exchange rates. Even though a
company's stock may meet the applicable market capitalization criterion, it may
not be included in the Series for one or more of a number of reasons. For
example, in the Advisor's judgment, the issuer may be considered in extreme
financial difficulty, a material portion of its securities may be closely held
and not likely available to support market liquidity, or the issuer may be a
"passive foreign investment company" (as defined in the Internal Revenue Code of
1986, as amended). To this extent, there will be the exercise of discretion and
consideration by the Advisor which would not be present in the management of a
portfolio seeking to represent an established index of broadly traded domestic
securities (such as the S&P 500 Index). The Advisor will also exercise
discretion in determining the allocation of capital as between Approved Markets.

It is management's belief that equity investments 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 Series involves greater
risk than including a large number of them.

The Series 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
Series do pay dividends. It is anticipated, therefore, that the Series will
receive dividend income.

Generally, securities will be purchased with the expectation that they will
be held for longer than one year. However, securities may be disposed of at any
time when, in the Advisor's judgment, circumstances warrant their sale.

For the purpose of converting U.S. dollars to another currency, or vice
versa, or converting one foreign currency to another foreign currency, the
Emerging Markets Series may enter into forward foreign exchange contracts. In
addition, to hedge against changes in the relative value of foreign currencies,
the Series may purchase foreign currency futures contracts. The Series will
only enter into such a futures contract if it is expected that the Series will
be able readily to close out such contract. There can, however, be no assurance
that it will be able in any particular case to do so, in which case the Series
may suffer a loss.

SECURITIES LOANS

All of the Portfolios and the corresponding Series of the Trust are
authorized to lend securities to qualified brokers, dealers, banks and other
financial institutions for the purpose of earning additional income, although
inasmuch as the Feeder Portfolios will only hold shares of a corresponding
Series, these Portfolios do not intend to lend those shares. While a Portfolio
or Series may earn additional income from lending securities, such activity is
incidental to the investment objective of a Portfolio or Series. The value of
securities loaned may not exceed 33 1/3% of the value of a Portfolio's or
Series' total assets. In connection with such loans, a Portfolio or Series 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 and Series
will be able to terminate the loan at any time, will receive reasonable interest
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 or the Trust could experience delay in recovering the loaned
securities. Management believes that this risk can be controlled through
careful monitoring procedures.

INVESTMENT OBJECTIVES AND POLICIES - FIXED INCOME PORTFOLIOS

DFA ONE-YEAR FIXED INCOME PORTFOLIO

The investment objective of DFA One-Year Fixed Income 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. This objective will be pursued by
investing the assets of the Portfolio in DFA One-Year Fixed Income Series of the
Trust (the "One-Year Fixed

<PAGE>

Income Series"), which has the same investment objective and policies as the
Portfolio. The One-Year Fixed Income Series 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 Series 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 Series' policy that the weighted average length of
maturity of investments will not exceed one year. The Series principally
invests in certificates of deposit, commercial paper, bankers' acceptances,
notes and bonds. The Series 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".)

DFA GLOBAL FIXED INCOME PORTFOLIO

The investment objective of DFA Global Fixed Income 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. 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.

DFA FIVE-YEAR GOVERNMENT PORTFOLIO

The investment objective of DFA Five-Year Government Portfolio is to
maximize total returns available from the universe of debt obligations of the
U.S. government and U.S. government agencies. Generally, the Portfolio will
acquire U.S. government obligations and U.S. government agency obligations that
mature within five years from the date of settlement. The Portfolio will also
acquire repurchase agreements.

DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO

The investment objective of DFA Intermediate Government Fixed Income
Portfolio is to earn current income consistent with preservation of capital.
The Portfolio will invest in non-callable obligations issued or guaranteed by
the U.S. government and U.S. government agencies, AAA-rated dollar denominated
obligations of foreign governments, obligations of supranational organizations,
and futures contracts on U.S. Treasury securities. Since government guaranteed
mortgage-backed securities are considered callable, such securities will not be
included in the Portfolio.

Generally, the Portfolio will hold securities with maturities of between
five and fifteen years. The Portfolio will not shift the maturity of its
investments in anticipation of interest rate movements and ordinarily will have
an average weighted maturity of between seven to ten years. One of the benefits
of the Portfolio is expected to be that in a period of steeply falling interest
rates, the Portfolio should perform well because of its average weighted
maturity and the high quality and non-callable nature of its investments. The
Portfolio is expected to match or exceed the returns of the Lehman Brothers
Treasury Index, without exceeding the volatility of that Index.

The Portfolio may invest more than 5% of its assets in the obligations of
foreign governments. Those obligations at the time of purchase must be either
rated in the highest rating category of a nationally recognized statistical
rating organization or, in the case of any obligation that is unrated, of
comparable quality. The Portfolio also may invest in futures contracts on U.S.
Treasury securities or options on such contracts for the purposes of remaining
fully

<PAGE>

invested and maintaining liquidity to pay redemptions. However, the Portfolio
will not purchase futures contracts or options thereon if as a result more than
5% of its total assets would then consist of initial and variation margin
deposits on such contracts or options. Such investments entail certain risks.
(See "RISK FACTORS - ALL PORTFOLIOS".)

DESCRIPTION OF INVESTMENTS

The following is a description of the categories of investments which may
be acquired by the Fixed Income Portfolios and the One-Year Fixed Income Series.
While DFA One-Year Fixed Income Portfolio will only invest in the shares of the
One-Year Fixed Income Series, the One-Year Fixed Income Series may invest in all
of the securities and obligations listed in categories 1-6 and 8, DFA
Intermediate Government Fixed Income Portfolio may invest only in the securities
and obligations listed in categories 1, 2, 6, 7 and 8, and DFA Five-Year
Government Portfolio may invest only in the securities and obligations listed in
categories 1, 2 and 6. DFA Global Fixed Income Portfolio may invest only in
the securities and obligations listed in categories 1, 2, 6, 7, 8 and 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
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 (including marketable
variable rate certificates of deposit) and bankers' acceptances. Bank
certificates of deposit will only be acquired if the bank has 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.

<PAGE>

INVESTMENTS IN THE BANKING INDUSTRY

The One-Year Fixed Income Series 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 Series, which can only be changed by a vote of
shareholders of the Series, banks and bank holding companies are considered to
constitute a single industry, the banking industry. The DFA One-Year Fixed
Income Portfolio has the same fundamental policy, which can only be changed by a
vote of the Portfolio's shareholders, except that the Portfolio's policy does
not apply to the extent that all or substantially all of its assets are invested
in the Series. When investment in such obligations exceeds 25% of the total net
assets of the Series, the Series will be considered to be concentrating its
investments in the banking industry. As of the date of this prospectus, the
Series is concentrating its investment in this industry.

The types of bank and bank holding company obligations in which the
One-Year Fixed Income Series 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 Series' established
credit rating criteria as stated under "Description of Securities and
Obligations". In addition, the Series is authorized to invest more than 25% of
its total assets in Treasury bonds, bills and notes and obligations of federal
agencies and instrumentalities.

PORTFOLIO STRATEGY

The One-Year Fixed Income Series 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 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 Series will be chosen with a
view to maximizing anticipated monthly returns, net of trading costs.

The One-Year Fixed Income Series and DFA Five-Year Government Portfolio are
expected to have high portfolio turnover rates due to the relatively short
maturities of the securities to be acquired. 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. It is
anticipated that the annual turnover rate of the One-Year Fixed Income Series
could be 0% to 200%, DFA Five-Year Government Portfolio could be 100% to 500%,
and DFA Intermediate Government Fixed Income Portfolio will be no more than 25%.
While the Fixed Income Portfolios and the One-Year Fixed Income Series 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 or the One-
Year Fixed Income Series 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 or the One-Year Fixed Income Series
increases, it is possible that transactions also may be effected directly with
the issuers of securities acquired for the Portfolios or Series.

The DFA Global Fixed Income 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
judgement, 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.

<PAGE>

The DFA Global Fixed Income 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. 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.

RISK FACTORS - ALL PORTFOLIOS

Typically, securities of small companies are less liquid than securities of
large companies. Recognizing this factor, the Small Company Portfolios, the
6-10 Series and the Small Cap Value Series will endeavor to effect securities
transactions in a manner to avoid causing significant price fluctuations in the
market for these securities.

The International Equity Portfolios, the International Value Series, DFA
Global Fixed Income Portfolio and DFA One-Year Fixed Income Series 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 and
the Series. 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. The One-Year Fixed Income Series
and the Intermediate Government Fixed Income and Global 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.

The investments of the Emerging Markets Series involve risks in addition to
the usual risks of investing in developed foreign markets. A number of emerging
securities markets restrict, to varying degrees, foreign investment in stocks.
Repatriation of investment income, capital and the proceeds of sales by foreign
investors may require governmental registration and/or approval in some emerging
countries. In some jurisdictions, such restrictions and the imposition of taxes
are intended to discourage shorter rather than longer-term holdings. While the
Emerging Markets Series will invest only in markets where these restrictions are
considered acceptable to the Advisor, new or additional repatriation
restrictions might be imposed subsequent to the Series' investment. If such
restrictions were imposed subsequent to investment in the securities of a
particular country, the Series might, among other things, discontinue the
purchasing of securities in that country. Such restrictions will be considered
in relation to the Series' liquidity needs and other factors and may make it
particularly difficult to establish the fair market value of particular
securities from time to time. The valuation of securities held by the Emerging
Markets Series is the responsibility of the Trust's Board of Trustees, acting in
good faith and with advice from the Advisor. (See "VALUATION OF SHARES.")
Further, some attractive equity securities may not be available to the Series
because foreign shareholders hold the maximum amount permissible under current
laws.

Relative to the U.S. and to larger non-U.S. markets, many of the emerging
securities markets in which the Emerging Markets Series may invest are
relatively small, have low trading volumes, suffer periods of illiquidity and
are characterized by significant price volatility. Such factors may be even
more pronounced in jurisdictions where securities ownership is divided into
separate classes for domestic and non-domestic owners.

<PAGE>

In addition, many emerging markets, including most Latin American
countries, have experienced substantial, and, in some periods, extremely high,
rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain countries. In an attempt to control
inflation, wage and price controls have been imposed at times in certain
countries. Certain emerging markets have recently transitioned, or are in the
process of transitioning, from centrally controlled economies. There can be no
assurance that such transitions will be successful.

Brokerage commissions, custodial services and other costs relating to
investment in foreign markets generally are more expensive than in the United
States; this is particularly true with respect to emerging markets. Such
markets have different settlement and clearance procedures. In certain markets
there have been times when settlements have been unable to keep pace with the
volume of securities transactions, making it difficult to conduct such
transactions. The inability of the Emerging Markets Series to make intended
securities purchases due to settlement problems could cause the Series to miss
investment opportunities. Inability to dispose of a portfolio security caused
by settlement problems could result either in losses to the Series due to
subsequent declines in value of the portfolio security or, if the Series has
entered into a contract to sell the security, could result in possible liability
to the purchaser.

The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Emerging Markets Series' portfolio
securities in such markets may not be readily available. The Series' portfolio
securities in the affected markets will be valued at fair value determined in
good faith by or under the direction of the Board of Trustees.

Government involvement in the private sector varies in degrees among the
emerging securities markets contemplated for investment by the Emerging Markets
Series. Such involvement may, in some cases, include government ownership of
companies in certain commercial business sectors, wage and price controls or
imposition of trade barriers and other protectionist measures. With respect to
any developing country, there is no guarantee that some future economic or
political crisis will not lead to price controls, forced mergers of companies,
expropriation, the creation of government monopolies, or other measures which
could be detrimental to the investments of the Emerging Markets Series.

Taxation of dividends and capital gains received by non-residents varies
among countries with emerging markets and, in some cases, is high in relation to
comparable U.S. rates. Particular tax structures may have the intended or
incidental effect of encouraging long holding periods for particular securities
and/or the reinvestment of earnings and sales proceeds in the same jurisdiction.
In addition, emerging market jurisdictions typically have less well-defined tax
laws and procedures than is the case in the United States, and such laws may
permit retroactive taxation so that the Emerging Markets Series could in the
future become subject to local tax liability that it had not reasonably
anticipated in conducting its investment activities or valuing its assets.

Investments of the International Equity Portfolios, the International Value
Series and DFA Global Fixed Income 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 and
Series. These Portfolios and Series 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 or
Series' 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 and Series 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 and Series securities
transactions, but they also tend to limit the potential gains that might result
from a positive change in such currency relationships.

Each Portfolio and each corresponding Series of the Trust, except U.S. 9-10
and Japanese Small Company Portfolios, DFA One-Year Fixed Income Portfolio, DFA
Five-Year Government Portfolio and DFA Intermediate Government Fixed Income
Portfolio, have 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 and each Series 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 or Series may increase or decrease at a greater
rate than would be the case if the Portfolio or Series had not leveraged. The
interest payable on the amount borrowed would increase the Portfolio's or
Series' expenses and, if the

<PAGE>

appreciation and income produced by the investments purchased when the Portfolio
or Series 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 and International
Equity Portfolios (except U.S. Large Company Portfolio) and, in respect of those
that are Feeder Portfolios, the corresponding Series of the Trust 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. U.S. Large Company Series will operate as an index
fund and, therefore, represents a passive method of investing in all stocks that
comprise the S&P 500 Index which does not entail selection of securities based
on the individual investment merits of their issuers. The investment
performance of the U.S. Large Company Series and the corresponding Portfolio is
expected to approximate the investment performance of the S&P 500 Index, which
tends to be cyclical in nature, reflecting periods when stock prices generally
rise or fall.

U.S. Large Company Series, Large Cap International Portfolio, the Value
Series, DFA/AEW Real Estate Securities Portfolio, the International Value
Series, the Emerging Markets Series and the DFA International Small Cap 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 or Series 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 or Series' 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 the One-Year Fixed Income
Series (and, thus, DFA One-Year Fixed Income Portfolio) than might occur in less
concentrated portfolios.

The DFA/AEW Real Estate Securities Portfolio intends to concentrate its
investments in the real estate industry. Concentrating investments in the real
estate industry involves the risk of foregoing the safety of investing in a
variety of industries. Further, while the Portfolio will not invest in real
estate directly, but only in securities issued by real estate companies, the
Portfolio may be subject to certain risks that are similar to those associated
with the direct ownership of real estate in addition to securities markets
risks. These include declines in the value of real estate, risks related to
general and local economic conditions, heavy cash flow dependency, possible lack
of availability of mortgage funds, overbuilding, extended periods of high
vacancy rates, increases in property taxes and operating expenses, changes in
zoning laws, losses due to costs resulting from the clean-up of environmental
hazards, liability to third parties for damages resulting from environmental
hazards, casualty or condemnation losses, limitations on rents, and changes in
neighborhood values, interest rates and the credit quality of tenants. Also, in
deciding whether to purchase securities of a particular real estate company,
including REITS, the Advisor does not consider the geographic location within
the United States of the underlying assets of such company. Therefore, to the
extent that the Portfolio may become substantially invested in real estate
companies, including REITS, whose underlying assets are located in one
particular region of the United States and subsequently a decline in real estate
values occurs in that region, the value of such real estate companies may be
adversely affected and the Portfolio's net asset value may in turn be similarly
affected.

In addition, all of the Portfolios and the Series of the Trust may invest
in repurchase agreements. In the event of the bankruptcy of the other party to
a repurchase agreement, the Fund or the Trust 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, except the Feeder Portfolios, and each Series of the
Trust. As such, the Advisor is responsible for the management of their
respective assets. Investment decisions for all Portfolios of the Fund and all
Series of the Trust are made by the Investment Committee of the Advisor which
meets on a regular basis and also as needed to consider investment

<PAGE>

issues. The Investment Committee is composed of certain officers and directors
of the Advisor who are elected annually. The Advisor provides the Portfolios
(except the Feeder Portfolios) and the Series 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.

For the fiscal year ended November 30, 1994, (i) the Advisor received a fee
for its services which, on an annual basis, equaled the following percentage of
the average net assets of each Portfolio or, in the case of a Feeder Portfolio,
the average net assets of its corresponding Trust Series and (ii) the total
expenses of each Portfolio were the following percentages of respective average
net assets:

Portfolio Management Fee Total Expenses
--------- -------------- --------------
<S> <C> <C>
U.S. 9-10 Small Company 0.50% 0.65%

U.S. 6-10 Small Company 0.03% 0.53%

U.S. Large Company 0.025% 0.24%

U.S. Small Cap Value 0.20% 0.66%

U.S. Large Cap Value 0.10% 0.44%

DFA/AEW Real Estate Securities 0.50% 0.90%

Japanese Small Company 0.50% 0.76%

Pacific Rim Small Company 0.50% 0.95%

United Kingdom Small Company 0.50% 0.74%

Continental Small Company 0.50% 0.77%

Large Cap International 0.25% 0.66%

DFA International High Book to Market 0.17% 0.69%

DFA One-Year Fixed Income 0.05% 0.21%

DFA Five-Year Government 0.20% 0.31%

DFA Global Fixed Income 0.25% 0.49%

DFA Intermediate Government Fixed Income 0.15% 0.29%
</TABLE>

The investment advisory fees applicable to the Emerging Markets Portfolio,
which commenced operations in April, 1994, and the DFA International Small Cap
Value Portfolio, which commenced operations after November 30, 1994, are equal
to .10% and .65%, respectively, of the average net assets of each Portfolio on
an annual basis.

In February, 1994, the DFA International High Book to Market Portfolio
invested its assets in the corresponding Series of the Trust and the existing
investment advisory agreement with respect to that Portfolio was terminated. At
that time, an administration agreement with respect to the DFA International
High Book to Market Portfolio took effect. (See "Administrative Services - All
Portfolios".)

Beginning with the effective date of the Investment Management Agreement
with respect to the DFA International Value Series, the Advisor has agreed to
waive its fee under that Agreement to the extent necessary to keep the

<PAGE>

cumulative annual expenses of the Series to not more than .45% of average net
assets of the Series on an annualized basis. (See "Client Service Agent - DFA
International High Book to Market Portfolio.") Through February 15, 1994, the
Advisor waived its fee under the Investment Management Agreement with respect to
the DFA International High Book to Market Portfolio to the extent necessary to
keep the cumulative annual expenses of the Portfolio to not more than 0.65% of
average net assets of the Portfolio on an annualized basis. Absent the waivers,
the annualized ratio of expenses to average net assets for the DFA International
High Book to Market Portfolio for the fiscal year ended November 30, 1994 would
have been 0.73%.

The Advisor has agreed to bear all of the ordinary operating expenses of
U.S. Large Company Portfolio and its corresponding Series, except the investment
advisory fee of the Series and the administration fee of the Portfolio. Absent
this arrangement, the annualized ratio of expenses to average net assets for
U.S. Large Company Portfolio for the fiscal year ended November 30, 1994 would
have been .66%.

The Fund and the Trust each 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 or trustees, 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, except the Advisor will pay the ordinary operating
expenses (other than the advisory fee) of U.S. Large Company Series. Expenses
of U.S. Large Company Series, which are determined by the Board of Trustees to
be extraordinary, would be borne by that Series. Expenses allocable to a
particular Portfolio or Series are so allocated and expenses which are not
allocable to a particular Portfolio or Series are borne by each Portfolio or
Series on the basis of the fees paid by the Fund or Trust to PFPC.

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 $10.4 billion. David G. Booth and Rex A.
Sinquefield, directors and officers of both the Fund and the Advisor and
trustees and officers of the Trust, 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") (see "Investment Services - United Kingdom and
Continental Small Company Portfolios") and DFA Australia Pty Limited ("DFA
Australia") (see "Investment Services - Japanese and Pacific Rim Small Company
Portfolios").

INVESTMENT SERVICES - UNITED KINGDOM AND CONTINENTAL SMALL COMPANY PORTFOLIOS

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 United Kingdom and Continental Small Company
Portfolios. DFAL's duties include the maintenance of a trading desk for the
Portfolios and the determination of the best and most efficient means of
executing securities transactions. On at least a semi-annual basis the Advisor
reviews the holdings of United Kingdom and Continental Small Company Portfolios
and reviews the trading process and the execution of securities transactions.
The Advisor is responsible to determine those securities which are eligible for
purchase and sale by these Portfolios and may delegate this task, subject to its
own review, to DFAL. DFAL maintains and furnishes to the Advisor information
and reports on United Kingdom and European small companies, including its
recommendations of securities to be added to the securities that are eligible
for purchase by the Portfolios. The Advisor pays DFAL quarterly fees of 12,500
pounds sterling for services to each Portfolio. 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 United Kingdom Small Company Portfolio or
Continental Small Company 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.

INVESTMENT SERVICES - JAPANESE AND PACIFIC RIM SMALL COMPANY PORTFOLIOS

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 Japanese and Pacific Rim Small Company Portfolios. DFA Australia's duties
include the maintenance of a trading desk for each Portfolio and the
determination of the best and most efficient means of executing securities
transactions. On at least a semi-

<PAGE>

annual basis, the Advisor reviews the holdings of Japanese and Pacific Rim Small
Company Portfolios and reviews the trading process and the execution of
securities transactions. The Advisor is responsible to determine those
securities which are eligible for purchase and sale by these Portfolios and may
delegate this task, subject to its own review, to DFA Australia. 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 that are eligible for purchase by each Portfolio. The
Advisor pays DFA Australia quarterly fees of 25,000 Hong Kong dollars for
services to each Portfolio.

INVESTMENT SERVICES - DFA/AEW REAL ESTATE SECURITIES PORTFOLIO

Pursuant to a Sub-Advisory Agreement with the Fund, Aldrich, Eastman &
Waltch L.P., Boston, MA ("AEW"), provides the Advisor with real estate
expertise and advice regarding investments of the Portfolio. For its services
the Portfolio pays AEW a fee which, on an annual basis, equals .175% of the
average net assets of the Portfolio. AEW is a Massachusetts limited partnership
founded in 1981 that currently manages approximately $4.1 billion for its
institutional clients. The general partner of AEW is AEW Holdings, L.P., whose
general partner is Aldrich, Eastman & Waltch, Inc. ("AEW, Inc."), a registered
investment advisor. Peter C. Aldrich and Thomas G. Eastman each own 28.7% of
the voting securities of AEW, Inc. While AEW has not previously served as an
investment advisor to a registered investment company, the firm has substantial
experience in providing institutional investors with advice regarding investment
in real estate.

ADMINISTRATIVE SERVICES - THE FEEDER PORTFOLIOS

The Fund has entered into an administration agreement with the Advisor, on
behalf of each Feeder Portfolio. Pursuant to each administration agreement, the
Advisor performs various services, including: supervision of the services
provided by the Portfolio's custodian and transfer and dividend disbursing agent
and others who provide services to the Fund for the benefit of the Portfolio;
providing shareholders with information about the Portfolio and their
investments as they or the Fund may request; assisting the Portfolio in
conducting meetings of shareholders; furnishing information as the Board of
Directors may require regarding the corresponding Series; and any other
administrative services for the benefit of the Portfolio as the Board of
Directors may reasonably request. For its administrative services, the Feeder
Portfolios pay the Advisor a monthly fee equal to one-twelfth of the
percentages listed below:

<TABLE>
<CAPTION>
<S> <C>
U.S. 6-10 Small Company .32%

U.S. Large Company .215%

U.S. Small Cap Value .10%

U.S. Large Cap Value .20%

DFA International High Book to Market .20%*

Emerging Markets .40%

DFA One-Year Fixed Income .10%

<FN>
__________________________
* The administration fee of .20% will be applied to the first $40
million of average net assets of the Portfolio, but not to amounts in
excess of $40 million.
</TABLE>

CLIENT SERVICE AGENT - DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO

Pursuant to a Client Service Agent Agreement, Reinhardt Werba Bowen
Advisory Services, San Jose, CA ("RWBAS"), performs various services for the DFA
International High Book to Market Portfolio, including: establishment of a
toll-free telephone number for shareholders of the Portfolio to use to obtain or
receive up-to-date account information; providing to shareholders quarterly
reports with respect to the performance of the Portfolio;

<PAGE>

and providing shareholders with such information regarding the operation and
affairs of the Portfolio, and their investment in its shares, as the
shareholders or the Board of Directors may reasonably request. For its
services, the Portfolio pays RWBAS a monthly fee which, on an annual basis,
equals .20% of the average daily net assets of the Portfolio in excess of $40
million. RWBAS has agreed to waive its fee under certain circumstances. (See
"MANAGEMENT OF THE FUND".)

DIRECTORS AND OFFICERS

The Board of Directors is responsible for establishing Fund policies and
for overseeing the management of the Fund. Each of the Directors and officers
of the Fund is also a Trustee and officer of the Trust. The Directors of the
Fund, including all of the disinterested directors, have adopted written
procedures to monitor potential conflicts of interest that might develop between
the Feeder Portfolios and the Trust. Information as to the Directors and
Officers of the Fund and the Trust is set forth in the Statement of Additional
Information under "Directors and Officers."

DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES

Each Portfolio of the Fund 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 the Domestic and International Equity Portfolios, except U.S.
Large Company Portfolio and the U.S. Large Cap Value Portfolio, 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 U.S. Large Company Portfolio and the U.S. Large Cap 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 DFA One-Year Fixed
Income Portfolio, quarterly by DFA Intermediate Government Fixed Income, DFA
Global Fixed Income and DFA Global Bond Portfolios, and semi-annually by DFA
Five-Year Government Portfolio. Any net realized capital gains of Fixed Income
Portfolios will be distributed annually after the end of the fiscal year. Each
Portfolio of the Fund is treated as a separate corporation for Federal tax
purposes.

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), unless as to U.S. 9-10 Small Company Portfolio, U.S. 6-10
Small Company Portfolio, the Fixed Income Portfolios, DFA/AEW Real Estate
Securities Portfolio, U.S. Large Company Portfolio and the Value Portfolios upon
written notice to the Transfer Agent, the shareholder selects one of the
following options:

Income Option - to receive income dividends in cash and capital
gains distributions in additional shares at net
asset value.

Capital Gains Option - to receive capital gains distributions in cash and
income dividends in additional shares at net asset
value.

Cash Option - to receive both income dividends and capital gains
distributions in cash.

As noted above, U.S. 6-10 Small Company, U.S. Large Company, DFA One-Year
Fixed Income, U.S. Small Cap Value, U.S. Large Cap Value, DFA International High
Book to Market Portfolios (collectively the "Corporate Feeder Portfolios") seek
to achieve their investment objectives by investing all of their investable
assets in a corresponding series of shares of the Trust (collectively the
"Corporate Series"). The Corporate Series intend to qualify each year as
regulated investment companies under the Code.

A Corporate Feeder Portfolio receives income in the form of income
dividends paid by the corresponding Corporate Series. This income, less the
expenses incurred in operations, is a Corporate Feeder Portfolio's net
investment income from which income dividends are distributed as described
above. A Corporate Feeder Portfolio also may receive capital gains
distributions from the corresponding Corporate Series and may realize capital
gains upon the redemption of the shares of the corresponding Corporate Series.
Any net realized capital gains of a Corporate Feeder Portfolio will be
distributed as described above.

<PAGE>

Emerging Markets Portfolio seeks its investment objective by investing all
of its investable assets in Emerging Markets Series of the Trust. Emerging
Markets Series has obtained a ruling from the Internal Revenue Service ("IRS")
holding, in part, that Emerging Markets Series is taxable as a partnership and
that the Emerging Markets Portfolio is deemed to own a proportionate share of
the assets of the Emerging Markets Series for purposes of satisfying the
requirements of Section 853 of the Code, which permits flow through treatment
for foreign tax credits. (As described below, certain dividends from
investments made by Emerging Markets Series in foreign countries may be subject
to withholding taxes. Foreign tax credits for such taxes may be available to
shareholders of the Emerging Markets Portfolio.) If the requirements of Section
853 of the Code are satisfied, the Emerging Markets Portfolio will be eligible
to pass through the foreign tax credits of Emerging Markets Series to the
Emerging Markets Portfolio's shareholders.

If a Portfolio, except for the Feeder Portfolios, 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. In the case of a Feeder
Portfolio, except for the Emerging Markets Portfolio, if the corresponding
Series purchases shares in PFICs, such Series 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 Series to the Feeder Portfolio. In the
case of the Emerging Markets Portfolio, if Emerging Markets Series purchases
shares in PFICs, the Emerging Markets 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.

Dividends received on investments made by the Portfolios (or in the case of
a Feeder Portfolio, the corresponding Series) may be subject to foreign
withholding taxes on income from certain of their foreign securities.

Since virtually all the net investment income from the Fixed Income
Portfolios is expected to arise from earned interest, it is not expected that
any of those Portfolios' distributions will be eligible for the dividends
received deduction for corporations.

Whether paid in cash or additional shares and regardless of the length of
time a Portfolio's shares have been owned by shareholders who are subject to
federal income taxes, distributions from long-term capital gains are taxable as
such. Dividends from net investment income or net short-term capital gains will
be taxable as ordinary income, whether received in cash or in additional shares.
For those investors subject to tax, if purchases of shares of a Portfolio are
made shortly before the record date for a dividend or capital gains
distribution, a portion of the investment will be returned as a taxable
distribution. 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.

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 shareholder until the following January, will be treated for
tax purposes as if paid by the Portfolio and received by the shareholder on
December 31 of the calendar year in which they are declared.

The sale of shares of a Portfolio is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may
be realized from an ordinary redemption of shares or an exchange of shares
between two Portfolios of the Fund. Any loss incurred on sale or exchange of a
Portfolio's shares, held for six months or less, will be treated as a long-term
capital loss to the extent of capital gain dividends received with respect to
such shares.

In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital
gains realized from certain types of U.S. government securities may be exempt
from state personal income taxes.

The tax discussion set forth above is included for general information
only. Prospective investors should consult their own tax advisers concerning
the federal, state, local or foreign tax consequences of an investment in a
Portfolio.

<PAGE>

PURCHASE OF SHARES

Investors may purchase shares of any Portfolio by first contacting the
Advisor at (310) 395-8005 to notify the Advisor of the proposed investment. All
investments are subject to approval of the Advisor and all investors must
complete and submit the necessary account registration forms. The Fund reserves
the right to reject any initial or additional investment and to suspend the
offering of shares of any Portfolio.

Only clients of RWBAS are eligible to purchase shares of the DFA
International High Book to Market Portfolio, and any such person should first
contact RWBAS at (800) 366-7266, ext. 124, to notify RWBAS of the proposed
investment.

Investors having an account with a bank that is a member or a correspondent
of a member of the Federal Reserve System may purchase shares by first calling
the Advisor at (310) 395-8005 to notify the Advisor of the proposed investment,
then requesting the bank to transmit immediately available funds (Federal Funds)
by wire to the appropriate Custodian, for the Account of DFA Investment
Dimensions Group Inc. (specify Portfolio). Additional investments also may be
made through the wire procedure by first notifying the Advisor. Investors who
wish to purchase shares of any Portfolio by check should send their check to DFA
Investment Dimensions Group Inc., c/o PFPC Inc., 400 Bellevue Parkway,
Wilmington, Delaware 19809. Chase Manhattan Bank, N.A. serves as custodian for
Emerging Markets Portfolio. Mellon Trust serves as custodian for the
International Equity Portfolios, except for Emerging Markets Portfolio, and DFA
Global Fixed Income Portfolio. PNC Bank, N.A. serves as custodian for all other
Portfolios.

Shares may also be purchased and sold by individuals through securities
firms which may charge a service fee or commission for such transactions. No
such fee or commission is charged on shares which are purchased or redeemed
directly from the Fund. Investors who are clients of investment advisory
organizations may also be subject to investment advisory fees under their own
arrangements with such organizations.

IN KIND PURCHASES

If accepted by the Fund, shares of the Portfolios may be purchased in
exchange for securities which are eligible for acquisition by the Portfolios (or
their corresponding Series) as described in this prospectus or in exchange for
local currencies in which eligible securities of the International Equity
Portfolios, the International Value Series and DFA Global Fixed Income Portfolio
are denominated. Purchases in exchange for securities will not be subject to a
reimbursement fee. Securities and local currencies to be exchanged which are
accepted by the Fund and Fund shares to be issued therefore will be valued as
set forth under "VALUATION OF SHARES" at the time of the next determination of
net asset value after such acceptance. All dividends, interest, subscription,
or other rights pertaining to such securities shall become the property of the
Portfolio whose shares are being acquired and must be delivered to the Fund by
the investor upon receipt from the issuer. Investors who desire to purchase
shares of the International Equity Portfolios or DFA Global Fixed Income
Portfolio with local currencies should first contact the Advisor for wire
instructions.

The Fund will not accept securities in exchange for shares of a Portfolio
unless: (1) such securities are, at the time of the exchange, eligible to be
included in the Portfolio whose shares are to be issued (or in its corresponding
Series) and current market quotations are readily available for such securities;
(2) the investor represents and agrees that all securities offered to be
exchanged are not subject to any restrictions upon their sale by the Portfolio
under the Securities Act of 1933 or under the laws of the country in which the
principal market for such securities exists, or otherwise; and (3) at the
discretion of the Fund, the value of any such security (except U.S. Government
Securities) being exchanged together with other securities of the same issuer
owned by the Portfolio or Series may not exceed 5% of the net assets of the
Portfolio or Series immediately after the transaction, however, this last
limitation does not apply to DFA Global Fixed Income Portfolio. The Fund will
accept such securities for investment and not for resale.

A gain or loss for federal income tax purposes will be realized by
investors who are subject to federal taxation upon the exchange depending upon
the cost of the securities or local currency exchanged. Investors interested in
such exchanges should contact the Advisor. Purchases of shares will be made in
full and fractional shares calculated to three decimal places. In the interest
of economy and convenience, certificates for shares will not be

<PAGE>

issued except at the written request of the stockholder. Certificates for
fractional shares, however, will not be issued.

VALUATION OF SHARES

The net asset value per share of each Portfolio and corresponding Series 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 or Series. The value of the
shares of each Portfolio will fluctuate in relation to its own investment
experience. Securities held by the Portfolios and corresponding Series 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, U.S. 9-10 Small Company Portfolio, the 6-10 Series, the U.S.
Large Company Series, DFA/AEW Real Estate Securities Portfolio, the Value Series
and Emerging Markets Series value such securities 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 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, the International Value Series and
DFA Global Fixed Income Portfolio are expressed in U.S. dollars by translating
the net assets of each Portfolio or Series using the bid price for the dollar as
quoted by generally recognized reliable sources.

Provided that the Transfer Agent has received the investor's Account
Registration Form in good order and the Custodian has received the investor's
payment, shares of the Portfolio selected will be priced at the public offering
price calculated next after receipt of the investor's funds by the Custodian.
The Transfer Agent or the Fund may from time to time appoint a sub-transfer
agent for the receipt of purchase orders and funds from certain investors. With
respect to such investors, the shares of the Portfolio selected will be priced
at the public offering price calculated after receipt of the purchase order by
the sub-transfer agent. The only difference between a normal purchase and a
purchase through a sub-transfer agent is that if the investor buys shares
through a sub-transfer agent, the purchase price will be the public offering
price next calculated after the sub-transfer agent receives the order, rather
than on the day the Custodian receives the investor's payment (provided that the
Transfer Agent has received the investor's purchase order in good order). "Good
order" with respect to the purchase of shares means that (1) a fully completed
and properly signed Account Registration Form and any additional supporting
legal documentation required by the Advisor has been received in legible form
and (2) the Advisor has been notified of the purchase by telephone and, if the
Advisor so requests, also in writing, no later than the close of regular trading
on the NYSE (ordinarily 1:00 p.m. PST) on the day of the purchase. If an order
to purchase shares must be canceled due to non-payment, the purchaser will be
responsible for any loss incurred by the Fund arising out of such cancellation.
To recover any such loss, the Fund reserves the right to redeem shares owned by
any purchaser whose order is canceled, and such purchaser may be prohibited or
restricted in the manner of placing further orders.

The value of the shares of The Fixed Income Portfolios and the One-Year
Fixed Income Series will tend to fluctuate with interest rates because, unlike
money market funds, these Portfolios and the Series 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 and the One-
Year Fixed Income Series 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, the International Value Series and
DFA Global Fixed Income Portfolio are determined as of such times for the
purpose of computing the net asset values of these Portfolios or Series. If
events which materially affect the value of the investments of a Portfolio or
Series 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.

<PAGE>

Certain of the securities holdings of the Emerging Markets Series in
Approved Markets may be subject to tax, investment and currency repatriation
regulations of the Approved Markets that could have a material effect on the
valuation of the securities. For example, the Series might be subject to
different levels of taxation on current income and realized gains depending upon
the holding period of the securities. In general, a longer holding period
(E.G., 5 years) may result in the imposition of lower tax rates than a shorter
holding period (E.G., 1 year). The Series may also be subject to certain
contractual arrangements with investment authorities in an Approved Market which
require the Series to maintain minimum holding periods or to limit the extent of
repatriation of income and realized gains. As a result, the valuation of
particular securities at any one time may depend materially upon the assumptions
that the Series makes at that time concerning the anticipated holding period for
the securities. Absent special circumstances as determined by the Board of
Trustees of the Trust, it is presently intended that the valuation of such
securities will be based upon the assumption that they will be held for at least
the amount of time necessary to avoid higher tax rates or penalties and currency
repatriation restrictions. However, the use of such valuation standards will
not prevent the Series from selling such securities in a shorter period of time
if the Advisor considers the earlier sale to be a more prudent course of action.
Revision in valuation of those securities will be made at the time of the
transaction to reflect the actual sales proceeds inuring to the Series.

PUBLIC OFFERING PRICE

It is management's belief that payment of a reimbursement fee by each
investor, which is used to defray significant costs associated with investing
proceeds of the sale of their shares to such investors, will eliminate a
dilutive effect such costs would otherwise have on the net asset value of shares
held by previous investors. Therefore, the shares of the Emerging Markets
Series and the International Equity Portfolios, with the exception of Large Cap
International Portfolio and the DFA International High Book to Market Portfolio,
are sold at an offering price which is equal to the current net asset value of
such shares plus a reimbursement fee. The amount of the reimbursement fee
represents management's estimate of the costs reasonably anticipated to be
associated with the purchase of securities by those Portfolios and the Emerging
Markets Series and is paid to the Portfolios and Series and used by them to
defray such costs. Such costs include brokerage commissions on listed
securities, imputed commissions on OTC securities and a .5% Stamp Duty imposed
on the purchase of stocks on the ISE. The reimbursement fees for the
International Equity Portfolios, expressed as a percentage of the net asset
value of the shares of each Portfolio, are: Japanese Small Company Portfolio
and DFA International Small Cap Value Portfolio-1%; United Kingdom Small Company
Portfolio, Continental Small Company Portfolio, Pacific Rim Small Company
Portfolio and the Emerging Markets Portfolio-1.5%. Reinvestments of dividends
and capital gains distributions paid by the Portfolios and in-kind investments
are not subject to a reimbursement fee. (See "In-Kind Purchases" and
"DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES".)

The public offering price of shares of the Domestic Equity Portfolios,
Large Cap International Portfolio, DFA International High Book to Market
Portfolio and the Fixed Income Portfolios is the net asset value thereof next
determined after the receipt of the investor's funds by the Custodian, provided
that an Account Registration Form in good order has been received by the
Transfer Agent; no sales charge or reimbursement fee is imposed.

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.

<PAGE>

EXCHANGE OF SHARES

Investors may exchange shares of one Portfolio for those of another
Portfolio by first contacting the Advisor at (310) 395-8005 to notify the
Advisor of the proposed exchange and then completing an Exchange Form and
mailing it to:

DFA Investment Dimensions Group Inc.
Attn: Client Operations
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401

The minimum amount for an exchange is $100,000. Exchanges are not accepted
into or from the International Equity Portfolios, except Large Cap International
Portfolio.

Investors in any Portfolio eligible for the exchange privilege also may
exchange all or part of their Portfolio shares into a portfolio of Dimensional
Investment Group Inc., an open-end, management investment company, subject to
the minimum purchase requirement set forth in that fund's prospectus. Investors
may contact the Advisor at the above-listed phone number for more information on
such exchanges and to request a copy of the prospectus of Dimensional Investment
Group Inc.

The exchange privilege is not intended to afford shareholders a way to
speculate on short-term movements in the markets. Accordingly, in order to
prevent excessive use of the exchange privilege that may potentially disrupt the
management of the Portfolios or otherwise adversely affect the Fund, any
proposed exchange will be subject to the approval of the Advisor. Such approval
will depend on: (i) the size of the proposed exchange; (ii) the prior number of
exchanges by that shareholder; (iii) the nature of the underlying securities and
the cash position of the Portfolios involved in the proposed exchange; (iv) the
transaction costs involved in processing the exchange; and (v) the total number
of redemptions by exchange already made out of a Portfolio.

The redemption and purchase prices of shares redeemed and purchased by
exchange, respectively, are the net asset values next determined after the
Advisor has received an Exchange Form in good order. "Good order" means a
completed Exchange Form specifying the dollar amount to be exchanged, signed by
all registered owners of the shares; and if the Fund does not have on file the
authorized signatures for the account, a guarantee of the signature of each
registered owner by an "eligible guarantor institution." Such institutions
generally include national or state banks, savings associations, savings and
loan associations, trust companies, savings banks, credit unions and members of
a recognized stock exchange. Exchanges will be accepted only if the
registrations of the two accounts are identical, stock certificates have not
been issued and the shares of the Portfolio being acquired are registered in the
investor's state of residence.

There is no fee imposed on an exchange. However, the Fund reserves the
right to impose an administrative fee in order to cover the costs incurred in
processing an exchange. Any such fee will be disclosed in the prospectus. An
exchange is treated as a redemption and a purchase. Therefore, an investor
could realize a taxable gain or a loss on the transaction. The Fund reserves
the right to revise or terminate the exchange privilege, waive the minimum
amount requirement, limit the amount of or reject any exchange, as deemed
necessary, at any time.

REDEMPTION OF SHARES

Investors who desire to redeem shares of a Portfolio must first contact the
Advisor at the telephone number shown under "PURCHASE OF SHARES." Each
Portfolio will redeem shares at the net asset value of such shares next
determined, either: (1) where stock certificates have not been issued, after
receipt of a written request for redemption in good order, by the Fund's
Transfer Agent or (2) if stock certificates have been issued, after receipt of
the stock certificates in good order at the office of the Transfer Agent. "Good
order" means that the request to redeem shares must include all necessary
documentation, to be received in writing by the Advisor no later than the close
of regular trading on the NYSE (ordinarily 1:00 p.m. PST), including: the stock
certificate(s), if issued; a letter of instruction or a stock assignment
specifying the number of shares or dollar amount to be redeemed, signed by all
registered owners (or authorized representatives thereof) of the shares; and, if
the Fund does not have on file

<PAGE>

the authorized signatures for the account, a guarantee of the signature of each
registered owner by an eligible guarantor institution; and any other required
supporting legal documents.

Shareholders redeeming shares for which certificates have not been issued,
who have authorized redemption payment by wire on an authorization form filed
with the Fund, may request that redemption proceeds be paid in federal funds
wired to the bank they have designated on the authorization form. If the
proceeds are wired to the shareholder's account at a bank which is not a member
of the Federal Reserve System, there could be a delay in crediting the funds to
the shareholder's bank account. The Fund reserves the right at any time to
suspend or terminate the redemption by wire procedure after prior notification
to shareholders. No charge is made by the Fund for redemptions. The redemption
of all shares in an account will result in the account being closed. A new
Account Registration Form will be required for future investments. (See
"PURCHASE OF SHARES".)

Although the redemption payments will ordinarily be made within seven days
after receipt, payment to investors redeeming shares which were purchased by
check will not be made until the Fund can verify that the payments for the
purchase have been, or will be, collected, which may take up to fifteen days or
more. Investors may avoid this delay by submitting a certified check along with
the purchase order.

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. 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 DFA Investment Trust Company was organized as a Delaware business trust
on October 27, 1992. The Trust offers shares of its Series only to
institutional investors in private offerings. The Fund may withdraw the
investment of a Feeder Portfolio in a Series of the Trust at any time, if the
Board of Directors of the Fund determines that it is in the best interests of
the Portfolio to do so. Upon any such withdrawal, the Board of Directors of the
Fund would consider what action might be taken, including the investment of all
of the assets of the Portfolio in another pooled investment entity having the
same investment objective as the Portfolio or the hiring of an investment
advisor to manage the Portfolio's assets in accordance with the investment
policies described above.

Whenever a Feeder Portfolio, as an investor in its corresponding Trust
Series, is asked to vote on a proposal, the Fund will hold a special meeting of
the Feeder Portfolio's shareholders to solicit their votes with respect to the
proposal. The Directors of the Fund will then vote the Feeder Portfolio's
shares in the Series in accordance with the voting instructions received from
the Feeder Portfolio's shareholders. The Directors of the Fund will vote shares
of the Feeder Portfolio for which they receive no voting instructions in the
same proportion as the shares for which they receive voting instructions. If a
shareholder of Emerging Markets Series redeems its entire interest in the
Series, a majority in interest of the remaining shareholders in the Series must
vote to approve the continuing existence of the Series or the Series will be
liquidated. That issue will be voted upon only by the direct holders of Series
shares and will not be voted upon by the shareholders of the Emerging Markets
Portfolio.

The Portfolios and the Series 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 or Series. Standard quotations of
total return, which include deductions of any applicable reimbursement fees, are
computed in accordance with 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 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

<PAGE>

interim periods due to the compounding of the interim yields. The Fund's annual
report to shareholders for the fiscal year ended November 30, 1994 contains
additional performance information. A copy of the annual report is available
upon request and without charge.

With respect to the International Equity Portfolios and DFA Global Fixed
Income 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. Inasmuch as DFA Global
Fixed Income 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.

As of January 31, 1995, the following persons beneficially own more than
25% of the voting securities of the following Portfolios:

U.S. 6-10 SMALL COMPANY PORTFOLIO

Washington University 35.18%
Endowment Fund
P. O. Box 1047
St. Louis, Missouri 63139

U.S. LARGE COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 56.49%
101 Montgomery Street
San Francisco, CA 94104

U.S. SMALL CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 28.74%
101 Montgomery Street
San Francisco, CA 94104

U.S. LARGE CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 60.77%
101 Montgomery Street
San Francisco, CA 94104

DFA/AEW REAL ESTATE SECURITIES PORTFOLIO
Owens-Illinois 46.64%
Master Retirement Trust
34 Exchange Place
Jersey City, NJ 07302

Charles Schwab & Company, Inc. - REIN* 40.05%
101 Montgomery Street
San Francisco, CA 94104

JAPANESE SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust 34.24%
1155 Peachtree Street, N.E.
Atlanta, GA 30367

- ------------------
* Owner of record only.

<PAGE>

PACIFIC RIM SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust 66.57%
1155 Peachtree Street, N.E.
Atlanta, GA 30367

UNITED KINGDOM SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust 52.09%
1155 Peachtree Street, N.E.
Atlanta, GA 30367
EMERGING MARKETS PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 68.06%
101 Montgomery Street
San Francisco, CA 94104

CONTINENTAL SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust 33.75%
1155 Peachtree Street, N.E.
Atlanta, GA 30367-6000

LARGE CAP INTERNATIONAL PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 88.78%
101 Montgomery Street
San Francisco, CA 94104

DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 96.73%
101 Montgomery Street
San Francisco, CA 94104

DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 96.15%
101 Montgomery Street
San Francisco, CA 94104

DFA FIVE-YEAR GOVERNMENT PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 73.76%
101 Montgomery Street
San Francisco, CA 94104

DFA GLOBAL FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 72.09%
101 Montgomery Street
San Francisco, CA 94104

- ---------------
* Owner of record only.

<PAGE>

DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - CAP* 58.88%
101 Montgomery Street
San Francisco, CA 94104

Charles Schwab & Company, Inc. - REIN* 31.02%
101 Montgomery Street
San Francisco, CA 94104

Shareholder inquiries may be made by writing or calling the Fund at the
address or telephone number appearing on the cover of this prospectus. Only
those individuals whose signatures are on file for the account in question may
receive specific account information or make changes in the account
registration.

- ---------------
* Owner of record only.

<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. (071) 495-2343

DFA AUSTRALIA PTY LIMITED
Suite 4403 Gateway
1 MacQuarie Place
Sydney, New South Wales 2000
Australia

ALDRICH, EASTMAN & WALTCH L.P.
225 Franklin Street, 25th Floor
Boston, MA 02110
Tel. No. (617) 261-9506

CUSTODIANS - INTERNATIONAL
MELLON TRUST
Princess House
1 Suffolk Lane
London EC4R 0AN
England

CHASE MANHATTAN BANK, N.A.
4 Chase Metrotech Center
Brooklyn, NY 11245

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>

JUNE 30, 1995

SUPPLEMENT TO THE
STATEMENT OF ADDITIONAL INFORMATION
OF
DFA INVESTMENT DIMENSIONS GROUP INC.

The following supplements the statement of additional information of
DFA Investment Dimensions Group Inc. (the "Fund") dated March 9, 1995 (the
"Statement of Additional Information").

The date of the Statement of Additional Information is June 30, 1995
and the date of the Prospectus of the Fund to which this Statement of Additional
Information relates is also dated June 30, 1995.

CALCULATION OF PERFORMANCE DATA

Effective June 30, 1995, the amount of the reimbursement fee is
reduced with respect to Continental Small Company, Pacific Rim Small Company,
Japanese Small Company, Emerging Markets and DFA International Small Cap Value
Portfolios, and eliminated with respect to the United Kingdom Small Company
Portfolio. The reimbursement fee for each Portfolio, expressed as a percentage
of the net asset value of the shares of the Portfolios, is as follows:
Continental Small Company and Pacific Rim Small Company Portfolios - 1.00%;
Japanese Small Company and Emerging Markets Portfolios - .50%; and DFA
International Small Cap Value Portfolio - .70%.

With respect to DFA International Small Cap Value Portfolio, the
annualized percentage of total return for the period from December 30, 1994
(date of initial investment) through May 31, 1995, using the standardized method
of calculation required by the SEC was 1.65%. The standardized method of
calculation is net of the cost of any current reimbursement fees charged to
investors and paid to the Portfolio. A reimbursement fee of 1% was in effect
since the inception of DFA International Small Cap Value Portfolio until June
30, 1995.

The annualized total return for the period from December 30, 1994
through May 31, 1995 of DFA International Small Cap Value Portfolio using a non-
standardized method of calculation, which is described in the Statement of
Additional Information, was 4.13%.

FINANCIAL STATEMENTS

With respect to DFA International Small Cap Value Portfolio, the
unaudited financial statements contained in the report to shareholders of the
Portfolio, dated May 31, 1995, are incorporated herein by reference. A
shareholder of DFA International Small Cap Value Portfolio may obtain a copy of
the report, upon request and without charge, by contacting the Fund at the
address or telephone number appearing on the cover of the Statement of
Additional Information.

<PAGE>

DFA INVESTMENT DIMENSIONS GROUP INC.

1299 OCEAN AVENUE, 11TH FLOOR, SANTA MONICA, CALIFORNIA 90401
TELEPHONE: (310) 395-8005

STATEMENT OF ADDITIONAL INFORMATION

March 9, 1995

DFA Investment Dimensions Group Inc. (the "Fund") offers twenty series of
shares. This statement of additional information relates to eighteen of those
series: U.S. 9-10 SMALL COMPANY PORTFOLIO, U.S. 6-10 SMALL COMPANY PORTFOLIO,
U.S. LARGE COMPANY PORTFOLIO, U.S. SMALL CAP VALUE PORTFOLIO, U.S. LARGE CAP
VALUE PORTFOLIO, DFA/AEW REAL ESTATE SECURITIES PORTFOLIO, JAPANESE SMALL
COMPANY PORTFOLIO, PACIFIC RIM SMALL COMPANY PORTFOLIO, UNITED KINGDOM SMALL
COMPANY PORTFOLIO, EMERGING MARKETS PORTFOLIO, CONTINENTAL SMALL COMPANY
PORTFOLIO, LARGE CAP INTERNATIONAL PORTFOLIO, DFA INTERNATIONAL HIGH BOOK TO
MARKET PORTFOLIO, DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO, DFA ONE-YEAR
FIXED INCOME PORTFOLIO, DFA FIVE-YEAR GOVERNMENT PORTFOLIO, DFA GLOBAL FIXED
INCOME PORTFOLIO AND DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO
(collectively, the "Portfolios"). This statement of additional information is
not a prospectus but should be read in conjunction with the Portfolios'
prospectus dated March 9, 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 COMMISSIONS .. . . . . . . . . . . . . . . . . . . . . . . . . 2

INVESTMENT LIMITATIONS.. . . . . . . . . . . . . . . . . . . . . . . . . 4

FUTURES CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

FEDERAL TAX TREATMENT OF FUTURES CONTRACTS.. . . . . . . . . . . . . . . 8

MANAGEMENT OF THE FUND.. . . . . . . . . . . . . . . . . . . . . . . . . 8

DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . 8

ADMINISTRATIVE SERVICES. . . . . . . . . . . . . . . . . . . . . . . . .10

OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .12

PRINCIPAL HOLDERS OF SECURITIES. . . . . . . . . . . . . . . . . . . . .13

PURCHASE OF SHARES.. . . . . . . . . . . . . . . . . . . . . . . . . . .19

REDEMPTION AND TRANSFER OF SHARES. . . . . . . . . . . . . . . . . . . .20

CALCULATION OF PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . .20

FINANCIAL STATEMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . .24

<PAGE>

PORTFOLIO CHARACTERISTICS AND POLICIES

The following information supplements the information set forth in the
prospectus under the captions "PORTFOLIO CHARACTERISTICS AND POLICIES - SMALL
COMPANY PORTFOLIOS", "U.S. LARGE COMPANY PORTFOLIO - Investment Objective and
Policies", "LARGE CAP INTERNATIONAL PORTFOLIO - Investment Objective and
Policies", "INVESTMENT OBJECTIVES AND POLICIES - FIXED INCOME PORTFOLIOS",
"DFA/AEW REAL ESTATE SECURITIES PORTFOLIO", "VALUE PORTFOLIOS - Portfolio
Characteristics and Policies", "DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO
- - Investment Objective and Policies", "EMERGING MARKETS PORTFOLIO - Investment
Objective and Policies" and "DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO -
Investment Objective and Policies". The following information applies to all
the Portfolios, except the Feeder Portfolios, and also to the Trust Series.

Because the structure of the Domestic 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.

Each of the International Equity Portfolios 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, a 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 a Portfolio upon conversion of a convertible
debenture will generally be held for so long as the Adviser anticipates such
stock will provide the Portfolio with opportunities which are consistent with
the Portfolio's investment objective and policies.

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 rates of the Small Company Portfolios ordinarily
are anticipated to be low and are 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. Because The DFA/AEW Real Estate Securities Portfolio
generally will hold securities for the long term, its turnover rate ordinarily
is anticipated to be low and is not expected to exceed 10% per year. Generally,
securities will be purchased with the expectation that they will be held for
longer than one year.

<PAGE>

BROKERAGE COMMISSIONS

The following table depicts brokerage commissions paid by the Fund
Portfolios. For Feeder Portfolios, the amounts include commissions paid by the
corresponding Series.

BROKERAGE COMMISSIONS
FISCAL YEARS ENDED NOVEMBER 30, 1994, 1993 AND 1992

1994 1993 1992
<S> <C> <C> <C>
U.S. 9-10 Small Company $1,431,640 $732,528 $602,144

U.S. 6-10 Small Company 398,610 301,156 148,550

U.S. Large Company 10,643 58,218 12,234

Japanese Small Company 807,580 724,038 295,692

United Kingdom Small Company 138,025 97,468 89,254

Continental Small Company 343,484 343,850 216,531

Large Cap International 153,475 110,610 ---

U.S. Small Cap Value 1,860,712 328,869 ---

U.S. Large Cap Value 367,810 134,312 ---

DFA/AEW Real Estate Securities 83,979 63,997 ---

Pacific Rim Small Company 529,025 871,257 ---

DFA International High Book to
Market 623,031 233,355 ---

Emerging Markets 79,105 --- ---
---------- ----------
TOTAL $6,827,119 $3,999,658 $1,364,405
</TABLE>

The substantial increases or decreases in the amount of brokerage
commissions paid by certain Portfolios from year to year indicated in the
foregoing table resulted from increases or decreases in the amount of securities
that were bought and sold by those Portfolios. During the fiscal year 1993, The
U.S. 6-10 Small Company Portfolio and Series and The U.S. 9-10 Small Company
Portfolio paid total commissions of $29,934 to Kemper Capital Markets, Inc., a
securities firm which has been succeeded by Kemper Securities, Inc., an
affiliate of Kemper Financial Services, Inc., which owns approximately 15.6% of
the Advisor's outstanding stock. Such commissions represented .652% of the
total commissions paid by the Fund for such year and the total value of
transactions as to which such commissions relate were $4,551,431 or .482% of the
Fund's total value of transactions involving payment of commissions during
fiscal year ended November 30, 1993. No commissions were paid to affiliates or
affiliates of affiliates during fiscal year 1994.

Please note that while the following discussion relates to the policies of
certain Portfolios with respect to brokerage commissions, it should be
understood that with respect to a Feeder Portfolio, the discussion applies to
the Series of the Trust in which the Feeder Portfolio invests all of its assets.

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 seeks to obtain the most favorable price for the securities being traded
among the dealers with whom the Fixed Income Portfolios effect transactions.

<PAGE>

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.
Dimensional Fund Advisors Ltd. performs these services for The United Kingdom
and Continental Small Company Portfolios and DFA Australia Pty Ltd. performs
these services for The Japanese and Pacific Rim Small Company Portfolios.
Transactions also may be placed with brokers who provide the Advisor or the sub-
advisors 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 OTC companies eligible for purchase by The U.S. 9-10 Small Company
Portfolio, The U.S. 6-10 Small Company Portfolio, The U.S. Small Cap Value
Portfolio, and The DFA/AEW Real Estate Securities 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 U.S. 9-10 Small Company Portfolio, The U.S. 6-10 Small Company Portfolio,
the Value Portfolios and The DFA/AEW Real Estate Securities Portfolio, 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.

During the fiscal year 1994, the Portfolios paid commissions for securities
transactions to brokers which provided market price monitoring services, market
studies and research services to the Portfolios as follows:

VALUE OF BROKERAGE
SECURITIES TRANSACTIONS COMMISSIONS
<S> <C> <C>
U.S. 9-10 Small Company $ 17,936,416 $ 67,904
U.S. 6-10 Small Company 20,974,849 125,985
U.S. Small Cap Value 129,688,743 732,945
U.S. Large Cap Value 113,847,315 177,095
DFA/AEW Real Estate Securities 641,539 1,626
U.S. Large Company 18,339,260 9,999
DFA International High Book to Market 106,853,325 256,448
------------ ----------
TOTAL: $408,281,447 $1,372,002
------------ ----------
------------ ----------
</TABLE>

The investment advisory agreements permit the Advisor knowingly to pay
commissions on these transactions which are greater than another broker might
charge if the Advisor, in good faith, determines that the commissions paid

<PAGE>

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 Japanese Small Company Portfolio has been able to avail itself
of institutional discounts. The Portfolio's 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 Portfolio will continue to be able to realize the benefit
of discounts from fixed commissions.

A Feeder Portfolio will not incur any brokerage or other costs in
connection with its purchase or redemption of shares of the corresponding Series
of the Trust.

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, except The DFA/AEW Real Estate Securities Portfolio, 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
except The U.S. 9-10 and 6-10 Small Company Portfolios, The DFA One-Year Fixed
Income Portfolio and The DFA Five-Year Government Portfolio 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 this limitation
applies to 100% of the total assets of The U.S. 9-10 Small Company Portfolio
and The DFA Global Fixed Income 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 from banks and as a temporary measure for extraordinary or
emergency purposes and then, in no event, in excess of 5% of a Portfolio's gross
assets valued at the lower of market or cost; provided that The United Kingdom,
Pacific Rim and Continental Small Company Portfolios, The Large Cap
International Portfolio, The DFA Global Fixed Income Portfolio, The U.S. Large
Company Portfolio, The DFA/AEW Real Estate Securities Portfolio, the Value
Portfolios, the DFA International High Book to Market Portfolio, The U.S. 6-10
Small

<PAGE>

Company Portfolio, the Emerging Markets Portfolio and the DFA International
Small Cap Value Portfolio may borrow 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 10% 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 provided that The DFA/AEW Real Estate Securities Portfolio, the
Value Portfolios, the DFA International High Book to Market Portfolio, The U.S.
6-10 Small Company Portfolio, the Emerging Markets Portfolio and the DFA
International Small Cap Value Portfolio may invest not more than 15% of their
total assets in illiquid securities;

(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, provided that The DFA/AEW Real Estate Securities Portfolio may
invest in a REIT that is registered as an investment company;

(11) invest more than 5% of its total assets in securities of companies which
have (with predecessors) a record of less than three years' continuous
operation, except this limitation does not apply to The DFA/AEW Real Estate
Securities Portfolio;

(12) 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 The
DFA One-Year Fixed Income 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"; and except The DFA/AEW Real
Estate Securities Portfolio shall invest more than 25% of its total assets in
securities of companies in the real estate industry;

(13) write or acquire options (except as described in (1) above) or interests in
oil, gas or other mineral exploration, leases or development programs;

(14) purchase warrants, however, the Domestic and International Equity
Portfolios may acquire warrants as a result of corporate actions involving their
holdings of other equity securities;

(15) purchase securities on margin or sell short; or

(16) acquire more than 10% of the voting securities of any issuer and The U.S.
9-10 Small Company Portfolio will not acquire more than 10% of any class of
securities of any issuer, and provided that this limitation applies only to 75%
of the assets of The DFA/AEW Real Estate Securities Portfolio, the Value
Portfolios, the Emerging Markets Portfolio and the DFA International Small Cap
Value Portfolio.

The investment limitations described in (3), (7), (9), (10), (11), (12) and
(16) above do not prohibit each Feeder Portfolio from investing all or
substantially all of its assets in the shares of another registered open-end
investment company, such as a Series of the Trust. The investment limitations
of each Series are the same as those of the corresponding Feeder 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.

<PAGE>

For purposes of (5) above, the Emerging Markets Portfolio (indirectly
through its investment in the Emerging Markets Series) may borrow in connection
with a foreign currency transaction or the settlement of a portfolio trade. The
only type of borrowing contemplated thereby is the use of a letter of credit
issued on the Emerging Markets Series' behalf in lieu of depositing initial
margin in connection with currency futures contracts, and the Series has no
present intent to engage in any other types of borrowing transactions under this
authority.

Although (2) above prohibits cash loans, the Portfolios are authorized to
lend portfolio securities. Inasmuch as the Feeder Portfolios will only hold
shares of a corresponding Series, these Portfolios do not intend to lend those
shares.

For the purposes of (7) above, The DFA One-Year Fixed Income Portfolio
(indirectly through the One-Year Fixed Income Series) 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 10% or 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 (12) 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.

Although not a fundamental policy subject to shareholder approval, The
Large Cap International and the Small Company Portfolios, including The U.S. 6-
10 Small Company Portfolio indirectly through its investment in the 6-10 Series,
do not intend to purchase interests in any real estate investment trust.

The International Equity Portfolios (including the DFA International High
Book to Market Portfolio indirectly through its investment in the corresponding
Series) and The DFA Global Fixed Income 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 Value Portfolio and the DFA International High Book to
Market Portfolio (indirectly through their investment in the corresponding
Series), as well as The DFA/AEW Real Estate Securities Portfolio, have retained
authority to buy and sell financial futures contracts and options thereon, they
have no present intention to do so.

Notwithstanding any of the above investment restrictions, the Emerging
Markets Series may establish subsidiaries or other similar vehicles for the
purpose of conducting its investment operations in Approved Markets, if such
subsidiaries or vehicles are required by local laws or regulations governing
foreign investors such as the Series or whose use is otherwise considered by the
Series to be advisable. The Emerging Markets Series would "look through" any
such vehicle to determine compliance with its investment restrictions.

FUTURES CONTRACTS

Please note that while the following discussion relates to the policies of
certain Portfolios with respect to futures contracts, it should be understood
that with respect to a Feeder Portfolio, the discussion applies to the Series of
the Trust in which the Feeder Portfolio invests all of its assets.

All Portfolios, except The U.S. 9-10 and 6-10 Small Company Portfolios, The
DFA One-Year Fixed Income Portfolio and The DFA Five-Year Government Portfolio,
may enter into futures contracts and options on futures

<PAGE>

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 or Series 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 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 or Series. Variation margin
payments are made to and from the futures broker for as long as the contract
remains open. The Portfolios or Series expect to earn income on their margin
deposits. A Portfolio or Series 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 or Series would continue to
be required to continue to make variation margin deposits. In such
circumstances, if the Portfolio or Series 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.

<PAGE>

MANAGEMENT OF THE FUND

The Advisor has undertaken to reimburse each Portfolio to the extent
necessary to satisfy the most restrictive expense ratio required by any state in
which the particular Portfolio's shares are qualified for sale. Presently, the
most restrictive expense limitation is 2.5% on the first $30,000,000 of average
annual net assets of the Portfolio, 2.0% of the next $70,000,000 of such assets,
and 1.5% of any excess.

DIRECTORS AND OFFICERS

The names and addresses 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.

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.

<PAGE>

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.

Arthur Barlow, 39, Vice President, Santa Monica, CA.

Maureen Connors, 58, Vice President, Santa Monica, CA.

Irene R. Diamant, 44, 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, 31, 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.

Aggregate Compensation Total Compensation from 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

<FN>
* With respect to the Feeder Portfolios, the amount represents the compensation
paid to the directors for their service to the Fund and the Trust.
</TABLE>
ADMINISTRATIVE SERVICES

PFPC Inc. ("PFPC") serves as the accounting services, dividend disbursing
and transfer agent for all Fund Portfolios and Series of the Trust. 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,

<PAGE>

calculation of the offering price of the shares, preparation of reports, liaison
with its custodians, and transfer and dividend disbursing agency services. For
its services, each Portfolio pays PFPC annual fees which are set forth in the
following table:

U.S. 9-10 SMALL COMPANY PORTFOLIO
.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
PFPC has agreed that it may from time to time limit the fee rates for this
Portfolio.

DFA/AEW REAL ESTATE SECURITIES PORTFOLIO
.10% of the first $200 million of net assets
.075% of the next $200 million of net assets
.05% of the next $200 million of net assets
.03% of the next $200 million of net assets
.02% of net assets over $800 million
The DFA/AEW Real Estate Securities Portfolio is subject to a $4,900 per month
minimum fee.

JAPANESE SMALL COMPANY PORTFOLIO
PACIFIC RIM SMALL COMPANY PORTFOLIO
UNITED KINGDOM SMALL COMPANY PORTFOLIO
CONTINENTAL SMALL COMPANY PORTFOLIO
LARGE CAP INTERNATIONAL PORTFOLIO
DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO
Charges for each Portfolio:
.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 the net assets over $850 million
The Pacific Rim Small Company Portfolio is subject to a minimum fee of $100,000.
The Large Cap International Portfolio and the DFA International Small Cap Value
Portfolio are each subject to $75,000 per year minimum fees.

DFA FIVE-YEAR GOVERNMENT PORTFOLIO
DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO
Charges for each Portfolio:
.0513% of the first $100 million of net assets
.0308% of the next $100 million of net assets
.0205% of net assets over $200 million

DFA GLOBAL FIXED INCOME PORTFOLIO
.1230% of the first $150 million of net assets
.0820% of the next $150 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
The DFA Global Fixed Income Portfolio is subject to a $75,000 per year minimum
fee.

PFPC also charges each Feeder Portfolio a monthly fee of $1,000, except for the
Emerging Markets Portfolio which pays $2,600 monthly.

<PAGE>

OTHER INFORMATION

For the services it provides as investment advisor to each Portfolio of the
Fund (or, with respect to each Feeder Portfolio, the corresponding Series of the
Trust), the Advisor is paid a monthly fee calculated as a percentage of average
net assets of the Portfolio (or, with respect to each Feeder Portfolio, the
corresponding Series of the Trust). For the fiscal years ending November 30,
1992, 1993 and 1994, the Portfolios only paid advisory fees as set forth in the
following table:

1992 1993 1994
(000) (000) (000)
<S> <C> <C> <C>
U.S. 9-10 Small Company Portfolio $3,550 $3,149 $3,337

U.S. 6-10 Small Company Portfolio March 20 $ 87 n/a
to
November
30, 1992
--------
$ 191

U.S. Large Company Portfolio $31 $ 19 n/a
($36 waived)

DFA/AEW Real Estate Securities n/a $ 75 $ 138
Portfolios

Japanese Small Company Portfolio $ 712 $1,127 $1,500

Pacific Rim Small Company Portfolio n/a $ 425 $ 962

United Kingdom Small Company $ 728 $ 826 $1,044
Portfolio
Continental Small Company Portfolio $1,109 $1,149 $1,627

Large Cap International Portfolio waived $ 132 $ 148
($ 35)

DFA International High Book to n/a $ 105 $ 156
Market Portfolio
DFA One-Year Fixed Income Portfolio $ 757 $ 147 n/a

DFA Five-Year Government Portfolio $ 129 $ 256 $ 427

DFA Global Fixed Income Portfolio $ 107 $ 192 $ 311

DFA Intermediate Government Fixed $ 53 $ 72 $ 88
Income Portfolio
</TABLE>

The Fund commenced offering shares of The U.S. 6-10 Small Company Portfolio
in March 1992; The DFA/AEW Real Estate Securities, The U.S. Large Cap Value and
The U.S. Small Cap Value Portfolios in September 1992; the DFA International
High Book to Market Portfolio in May 1993; the Emerging Markets Portfolio in
April 1994; the DFA Global Bond and DFA Global Value Portfolios in August 1994;
and the DFA International Small Cap Value Portfolio in December 1994. Until
March 1992, The DFA Intermediate Fixed Income Portfolio and The DFA Global Fixed
Income Portfolio were named The DFA Intermediate Government Bond Portfolio and
The DFA Global Bond Portfolio, respectively. Until February 1993, The Pacific
Rim Small Company Portfolio was named The Asia-Australia Small Company
Portfolio. Until May 1993, The DFA/AEW Real Estate Securities Portfolio, The
U.S. Large Cap Value Portfolio and The U.S. Small Cap Value Portfolio were named
The DFA Real Estate Securities Portfolio, The U.S. Large Cap High Book to Market
Portfolio and The U.S. Small Cap High Book to Market

<PAGE>

Portfolio, respectively. The Fund's Amended and Restated Articles of
Incorporation continue to designate the shares of (i) The DFA Intermediate
Government Fixed Income Portfolio as "The DFA Intermediate Government Bond
Portfolio Shares", (ii) The DFA Global Fixed Income Portfolio as "The DFA Global
Bond Portfolio Shares", (iii) The Pacific Rim Small Company Portfolio as "The
Asia-Australia Small Company Portfolio Shares", (iv) The DFA/AEW Real Estate
Securities Portfolio as "The DFA Real Estate Securities Portfolio Shares", (v)
The U.S. Large Cap Value Portfolio as "The U.S. Large Cap High Book to Market
Portfolio Shares" and (vi) The U.S. Small Cap Value Portfolio as "The U.S. Small
Cap High Book to Market Portfolio Shares".

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 intend to
hold annual meetings of shareholders, except as required by the Investment
Company Act of 1940 or other applicable law. The Fund's bylaws 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.

PRINCIPAL HOLDERS OF SECURITIES

As of January 31, 1995, the following stockholders own beneficially at
least 5% of the outstanding stock of the Portfolios, as set forth below.

THE U.S. 9-10 SMALL COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 14.11%
101 Montgomery Street
San Francisco, CA 94104

Pepsico Inc. Master Trust 12.02%
The Northern Trust Company Trustee
P.O. Box 92956
801 South Canal
Chicago, IL 60675

State Farm Insurance Companies 11.56%
One State Farm Plaza
Bloomington, IL 61710

Amoco Corporation Master Trust 10.16%
Employee Pension Plan P94304
P.O. Box 87703
Chicago, IL 60680

- ---------------
* Owner of record only.

<PAGE>

Owens-Illinois 6.94%
Master Retirement Trust
34 Exchange Place
Jersey City, NJ 07302

Board of Trustees, NEBF 5.65%
Pension Benefit Trust Fund
1125 15th Street, N.W.
Washington, D.C. 20005

THE U.S. 6-10 SMALL COMPANY PORTFOLIO

Washington University 35.18%
Endowment Fund
P. O. Box 1047
St. Louis, Missouri 63139

The Charles A. Dana Foundation 24.42%
150 East 52nd Street, 23rd Floor
New York, NY 10022

Salvation Army - ETHQ 14.76%
440 W. Nyack Road
West Nyack, NY 10994

Claude Worthington Benedum Foundation 7.01%
1400 Benedum-Trees Building
Pittsburgh, PA 15222

John B. Stetson University 5.93%
Campus Box 8318
De Land, FL 32720

Charles Schwab & Company, Inc. - REIN* 5.64%
101 Montgomery Street
San Francisco, CA 94104

THE JAPANESE SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust 34.24%
1155 Peachtree Street, N.E.
Atlanta, GA 30367

Charles Schwab & Company, Inc. - REIN* 22.69%
101 Montgomery Street
San Francisco, CA 94104

- ---------------
* Owner of record only.

<PAGE>

Bost & Co.* 12.79%
1 Cabot Road, AIM 028-0038
Medford, MA 02155

San Diego County Employees 6.43%
1600 Pacific Highway
San Diego, CA 92101

THE UNITED KINGDOM SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust 52.09%
1155 Peachtree Street, N.E.
Atlanta, GA 30367

Charles Schwab & Company, Inc.-REIN* 19.32%
101 Montgomery Street
San Francisco, CA 94104

Bost & Co.* 9.33%
1 Cabot Road, AIM 028-0038
Medford, MA 02155

THE CONTINENTAL SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust 35.75%
1155 Peachtree Street, N.E.
Atlanta, GA 30367-6000

Charles Schwab & Company, Inc. - REIN* 21.44%
101 Montgomery Street
San Francisco, CA 94104

Bost & Co.* 13.00%
1 Cabot Road, AIM 028-0038
Medford, MA 02155

Pacific Telesis 6.63%
130 Kearny Street
San Francisco, CA 94188

San Diego County Employees 6.04%
1600 Pacific Highway
San Diego, CA 92101

THE LARGE CAP INTERNATIONAL PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 88.78%
101 Montgomery Street
San Francisco, CA 94104

- ---------------
* Owner of record only.

<PAGE>

THE U.S. LARGE COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 56.49%
101 Montgomery Street
San Francisco, CA 94104

Flensing & Co.* 13.17%
c/o State Street Bank & Trust Co.
Master Trust Services/Public Funds
P.O. Box 1992
Boston, MA 02105

Donaldson Lufkin & Jenrette Securities Corp.* 6.66%
P.O. Box 2052
Jersey City, NJ 07303

Charles Schwab & Company, Inc. - CASH* 5.36%
101 Montgomery Street
San Francisco, CA 94104

THE DFA ONE-YEAR FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 19.47%
101 Montgomery Street
San Francisco, CA 94104

Charles Schwab & Company, Inc. - CASH* 17.94%
101 Montgomery Street
San Francisco, CA 94104

Peoples Energy Corporation Pension Trust 9.41%
122 South Michigan Avenue
Chicago, IL 60603

Buoy & Co.* 5.30%
c/o Fleet Services
One East Avenue
Rochester, NY 14638

THE DFA FIVE-YEAR GOVERNMENT PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 73.36%
101 Montgomery Street
San Francisco, CA 94104

Charles Schwab & Company, Inc. - CASH* 6.22%
101 Montgomery Street
San Francisco, CA 94104

- ---------------
* Owner of record only.

<PAGE>

THE DFA GLOBAL FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 72.09%
101 Montgomery Street
San Francisco, CA 94104

Charles Schwab & Company, Inc. - CAP* 15.02%
101 Montgomery Street
San Francisco, CA 94104

THE DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - CAP* 58.88%
101 Montgomery Street
San Francisco, CA 94104

Charles Schwab & Company, Inc. - REIN* 31.02%
101 Montgomery Street
San Francisco, CA 94104

PACIFIC RIM SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust 66.57%
1155 Peachtree Street, N.E.
Atlanta, GA 30367

Charles Schwab & Company, Inc. - REIN* 11.93%
101 Montgomery Street
San Francisco, CA 94104

Bost & Co.* 9.03%
1 Cabot Road, AIM 028-0038
Medford, MA 02155

U.S. LARGE CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 60.77%
101 Montgomery Street
San Francisco, CA 94104

Mac & Co. #504-378* 7.70%
P.O. Box 320
Pittsburgh, PA 15230

Mac & Co. #863-228* 6.83%
P.O. Box 320
Pittsburgh, PA 15230

- ---------------
* Owner of record only.

<PAGE>

Charles Schwab & Company, Inc. - CAP* 6.01%
101 Montgomery Street
San Francisco, CA 94104

DFA/AEW REAL ESTATE SECURITIES PORTFOLIO

Owens-Illinois 46.64%
Master Retirement Trust
34 Exchange Place
Jersey City, NJ 07302

Charles Schwab & Company, Inc. - REIN* 40.05%
101 Montgomery Street
San Francisco, CA 94104

Charles Schwab & Company, Inc. - CASH* 5.40%
101 Montgomery Street
San Francisco, CA 94104

U.S. SMALL CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 28.74%
101 Montgomery Street
San Francisco, CA 94104

Mac & Co. #853-271* 24.77%
P.O. Box 320
Pittsburgh, PA 15230

Leland Stanford Junior University 7.77%
Stanford Management Company
2770 Sand Hill Road
Menlo Park, CA 94025

Premark RSP 5.47%
c/o Bankers Trust Co.
34 Exchange Place
Jersey City, NJ 07302

California Institute of Technology 5.21%
Mail Code 212-31
Pasadena, CA 91125

DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 96.73%
101 Montgomery Street
San Francisco, CA 94104

- ---------------
* Owner of record only.

<PAGE>

EMERGING MARKETS PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 68.06%
101 Montgomery Street
San Francisco, CA 94104

U.S. Trust Co. of California* 5.65%
555 S. Flower Street
Los Angeles, CA 90071

DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 96.15%
101 Montgomery Street
San Francisco, CA 94104

PURCHASE OF SHARES

The following information supplements the information set forth in the
prospectus under the caption "PURCHASE 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. Orders for the
purchase and redemption of shares of The Japanese Small Company Portfolio
received on those days will be priced as of the close of the NYSE on the next
day that the TSE is open for trading.

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 judgement of management, such suspension or rejection is in the best
interest of the Fund or a Portfolio. Securities accepted in exchange for shares
of a Portfolio will be acquired for investment purposes and will be considered
for sale under the same circumstances as other securities in the Portfolio.

Based on the experience of The U.S. 9-10 Small Company Portfolio,
management believes that any dilutive effect of the cost of investing the
proceeds of the sale of the shares of that Portfolio is minimal and, therefore,
the shares of that Portfolio 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 U.S. 9-
10 Small Company Portfolio and other Portfolios. Any such charges will be
described in the prospectus.

- ---------------
* Owner of record only.

<PAGE>

REDEMPTION AND TRANSFER OF SHARES

The following information supplements the information set forth in the
prospectus under the caption "REDEMPTION OF SHARES".

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 Exchange 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 (except for a Feeder 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.
Upon such a determination by both the Board of Directors of the Fund and the
Board of Trustees of the Trust, a Feeder Portfolio may pay the redemption price,
in lieu of cash, by a distribution of portfolio securities that the Portfolio
receives from the Series to satisfy the Portfolio's redemption request. Any
such redemption by the Series and/or the 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
DFA Global Fixed Income 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.

Shareholders may transfer shares of any Portfolio to another person by
making a written request therefore to the Advisor who will transmit the request
to the Fund's Transfer Agent. The request should clearly identify the account
and number of shares to be transferred, and include the signature of all
registered owners and all stock certificates, if any, which are subject to the
transfer. The signature on the letter of request, the stock certificate or any
stock power must be guaranteed in the same manner as described in the prospectus
under "REDEMPTION OF SHARES". As with redemptions, the written request must be
received in good order before any transfer can be made.

CALCULATION OF PERFORMANCE DATA

Following are quotations of the annualized percentage total returns for the
one-, five-, and ten-year periods ended November 30, 1994 (as applicable) using
the standardized method of calculation required by the Securities and Exchange
Commission ("SEC") which is net of the cost of any current reimbursement fees
charged to investors and paid to the Portfolios. Reimbursement fees of 1%, 1.5%
and 1.5% have been in effect since the inception of the Japanese, United Kingdom
and Continental Small Company Portfolios, respectively. A reimbursement fee of
1% was charged to investors in The U.S. 9-10 Small Company Portfolio from
December 9, 1986 through June 17, 1988. A reimbursement fee of 0.75% was
charged to investors in The Large Cap International Portfolio from the date of
its inception until March 5, 1992. In addition, for those Portfolios in effect
for less than one, five, or ten years, the time periods during which the
Portfolios have been active have been substituted for the periods stated (which
in no case extends prior to the effective dates of the Portfolios' registration
statements).

ONE YEAR FIVE YEARS TEN YEARS
-------- ---------- ---------
<S> <C> <C> <C>
U.S. 9-10 Small Company Portfolio 5.08 11.48 11.12

U.S. 6-10 Small Company Portfolio .22 33 MONTHS n/a
6.53

U.S. Large Company Portfolio 1.05 47 MONTHS n/a
11.42

U.S. Small Cap Value Portfolio 2.17 21 MONTHS n/a
7.67

U.S. Large Cap Value Portfolio -3.27 22 MONTHS n/a
2.21

DFA/AEW Real Estate Securities -11.75 23 MONTHS n/a
Portfolio -1.03

Japanese Small Company Portfolio 28.29 -4.87 106 MONTHS
15.60

Pacific Rim Small Company Portfolio 2.71 23 MONTHS n/a
31.97

United Kingdom Small Company 10.17 5.51 105 MONTHS
Portfolio 9.89

Emerging Markets Portfolio 7 MONTHS n/a n/a
20.16

Continental Small Company Portfolio 16.42 1.69 79 MONTHS
9.00

Large Cap International Portfolio 10.75 40 MONTHS n/a
6.66

DFA One-Year Fixed Income Portfolio 2.49 6.02 7.31

DFA Five-Year Government Portfolio -3.12 7.47 90 MONTHS
7.61

DFA Global Fixed Income Portfolio -2.91 48 MONTHS n/a
6.72

DFA Intermediate Government Fixed -4.71 49 MONTHS n/a
Income Portfolio 8.43
</TABLE>

As the following formula indicates, the average annual total return is
determined 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

<PAGE>

paid and 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 SEC formula:

n
P(1 + T) = 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).

Following are quotations of the annualized total returns for the one-,
five-, and ten-year periods ended November 30, 1994 using a non-standardized
method of calculation which is used in communicating performance data in
addition to the standardized method required by the SEC. The non-standardized
quotations differ from the standardized in that they are calculated without
deduction of any reimbursement fees charged to investors and paid to the
Portfolios which would otherwise reduce return quotations for the Portfolios
with such fees. Additionally, the non-standardized quotations are presented
over time periods which extend prior to the initial investment in the Portfolios
(except for The Continental Small Company and Large Cap International
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. Non-standardized quotations are also
presented for the United Kingdom and Japanese Small Company Portfolios
calculated assuming the local currencies of the Portfolios are invested and
redeemed at the beginning and ending dates of the period. The local currency
calculations ignore the effect of foreign exchange rates on the investment and
only express the returns of the underlying securities of the Portfolios.

ONE YEAR FIVE YEARS TEN YEARS
-------- ---------- ---------
<S> <C> <C> <C>
U.S. 9-10 Small Company Portfolio 5.08 11.48 11.23
(effective and initial investment on
December 22, 1981)

U.S. 6-10 Small Company Portfolio .22 9.25 10.99
(effective March 6, 1992 and initial
investment on March 20, 1992)

U.S. Large Company Portfolio 1.05 8.65 14.40
(effective February 26, 1990 and
initial investment on December 31,
1990)

U.S. Small Cap Value Portfolio 2.17 12.69 15.43
(effective September 18, 1992 and
initial investment on March 1, 1993)

<PAGE>

U.S. Large Cap Value Portfolio -3.27 9.54 14.91
(effective September 18, 1992 and
initial investment on
February 18, 1993)

DFA/AEW Real Estate Securities -11.75 4.35 5.79
Portfolio (effective September 18,
1992 and initial investment on
January 5, 1993)

Japanese Small Company Portfolio
(effective January 14, 1986, and
initial investment on January 31,
1986)
Dollar return 29.59 -4.68 20.87
Local currency return 17.62 -11.43 10.34

Pacific Rim Small Company Portfolio 4.27 23 MONTHS n/a
(effective April 2, 1991 and initial 33.02
investment on January 4, 1993)

United Kingdom Small Company
Portfolio (effective January 14,
1986, and initial investment on
March 4, 1986)
Dollar return 11.85 5.83 15.48
Local currency return 6.03 5.84 12.42

Emerging Markets Portfolio (effective 7 MONTHS n/a n/a
April 1, 1994 and initial investment 23.31
on April 22, 1994)

Continental Small Company Portfolio 18.19 2.00 79.5
(effective and initial investment on MONTHS
April 15, 1988) 9.19
Dollar return

Large Cap International Portfolio 10.75 40 MONTHS n/a
(effective April 2, 1991 and initial 6.66
investment on July 18, 1991)

DFA One-Year Fixed Income Portfolio 2.49 6.02 7.31
(effective June 5, 1983, and initial
investment on July 27, 1983)

DFA Five-Year Government Portfolio -3.12 7.47 9.66
(effective and initial investment on
May 13, 1987)

DFA Global Fixed Income Portfolio -2.91 48 MONTHS n/a
(effective September 24, 1990 and 6.72
initial investment on
November 6, 1990)

<PAGE>

DFA Intermediate Government Fixed -4.71 49 MONTHS n/a
Income Portfolio (effective 8.43
September 24, 1990 and initial
investment on October 22, 1990)
</TABLE>

FINANCIAL STATEMENTS

The audited financial statements and financial highlights of the Fund for
its fiscal year ended November 30, 1994, as set forth in the Fund's annual
report to stockholders, and the report thereon of Coopers & Lybrand L.L.P.,
independent accountants, also appearing therein, are incorporated herein by
reference. The audited annual report does not contain any data regarding the
DFA International Small Cap Value Portfolio because that Portfolio had not
commenced operations as of November 30, 1994.

23
<PAGE>
PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) FINANCIAL STATEMENTS:

PART A: Financial Highlights+

PART B:

(1) Statement of Net Assets+
(2) Statement of Operations+
(3) Statement of Changes in Net Assets+
(4) Financial Highlights+
(5) Report of Coopers & Lybrand L.L.P., independent accountants,
dated January 23, 1995+
(6) Notes to Financial Statements+

(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**

C-1
<PAGE>

(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)**
(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 VA Small Value Portfolio
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xxi) Specimen Security of VA International Value Portfolio
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xxii) Specimen Security of VA International Small Portfolio
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xxiii) Specimen Security of VA Short-Term Fixed Portfolio
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995

(5) (i) Investment Advisory Agreement re: The U.S. 9-10 Small
Company Portfolio**

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<PAGE>

(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**
(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)

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<PAGE>

INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(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
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xxvi) Form of Investment Advisory Agreement re: VA International
Value Portfolio
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xxvii) Form of Investment Advisory Agreement re: VA International
Small Portfolio
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xxviii) Form of Investment Advisory Agreement re: VA Short-Term
Fixed Portfolio
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xxix) Form of Sub-Advisory Agreement with DFA Australia Pty
Limited re: VA International Small Portfolio (Pacific Rim
Small Company Stocks)
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995

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<PAGE>

(xxx) Form of Sub-Advisory Agreement with DFA Australia Pty
Limited re: VA International Small Portfolio (Japanese Small
Company Stocks)
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xxxi) Form of Sub-Advisory Agreement with Dimensional Fund
Advisors Ltd. re: VA International Small Portfolio
(Continental Small Company Stocks)
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xxxii) Form of Sub-Advisory Agreement with Dimensional Fund
Advisors Ltd. re: VA International Small Portfolio (United
Kingdom Small Company Stocks)
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995

(6) Agreement with DFA Securities Inc.**

(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
EACH OF THE ABOVE IS INCORPORATED HEREIN BY

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<PAGE>

REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(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
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of
Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995

(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
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No.
33 to the Registration Statement of Registrant on
Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(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**

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<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
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No.
33 to the Registration Statement of
Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(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
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xiii) Participation Agreement with National Home Life Assurance
Company
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33 to the
Registration Statement of Registrant on Form N-1A
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995
(xiv) Form of Administration Agreement re: DFA Five-Year
Government Portfolio**

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<PAGE>

(10) Opinion of counsel - filed with Rule 24f-2 Notice on
approximately January 26, 1995

(11) Consent of Independent Accountants

(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) Schedule of Performance Quotations

(17) Financial Data Schedules

(18) Not Applicable

+ For all series of shares of the Registrant except DFA International Small
Cap Value, DFA Global Value and DFA Global Bond Portfolios, the financial
statements were filed on January 28, 1995 with the Securities and Exchange
Commission ("SEC") as DFA INVESTMENT DIMENSIONS GROUP INC. Annual Report to
Shareholders for the period ended November 30, 1994 ("Annual Report")
pursuant to Rule 30b2-1 under the Investment Company Act of 1940 ("1940
Act") and are incorporated by reference into the Statement of Additional
Information and, with respect to the Financial Highlights, incorporated by
reference into the Prospectus. A confirming copy of the Annual Report was
submitted electronically via the EDGAR system to the SEC on June 26, 1995.

With respect to DFA International Small Cap Value Portfolio, the unaudited
financial statements contained in the report to shareholders of the
Portfolio, dated May 31, 1995, were filed electronically via the EDGAR
system with the SEC on June 28, 1995, pursuant to Rule 30b2-1 under the
1940 Act and are incorporated by reference into the Statement of Additional
Information and, with respect to the Financial Highlights, into the
Prospectus.

* To be filed by amendment.

** Previously filed with this registration statement and incorporated herein
by reference.

C-8
<PAGE>

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) (2) --------------

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
DFA Global Value Portfolio 2
DFA Global Bond Portfolio 2

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

C-9
<PAGE>

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 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.

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<PAGE>

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 Robert R.
McCormick 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 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.

C-11
<PAGE>

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.

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.

C-12
<PAGE>

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.

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.

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<PAGE>

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.

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.

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<PAGE>

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) Not applicable.

(c) The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.

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<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Amendment No.
34 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 29th 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. 34 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 29, 1995
- ------------------------- Executive Officer
David G. Booth

Director and
Rex A. Sinquefield* Chairman-Chief June 29, 1995
- ------------------------- Investment Officer
Rex A. Sinquefield
Chief Financial
Michael T. Scardina* Officer, Treasurer June 29, 1995
- ------------------------- and Vice President
Michael T. Scardina

George M. Constantinides* Director June 29, 1995
- -------------------------
George M. Constantinides

John P. Gould* Director June 29, 1995
- -------------------------
John P. Gould

Roger G. Ibbotson* Director June 29, 1995
- -------------------------
Roger G. Ibbotson

Merton H. Miller* Director June 29, 1995
- -------------------------
Merton H. Miller

Myron S. Scholes* Director June 29, 1995
- -------------------------
Myron S. Scholes

*By: Irene R. Diamant
-------------------------
Irene R. Diamant
Attorney-in-Fact
(Pursuant to Power of Attorney previously filed on October 3, 1994, with the SEC
as Exhibit 17 to Post-Effective Amendment No. 31 to the Registration Statement
of DFA Investment Dimensions Group Inc. (File No. 2-73948)).

C-16

<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 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 29th day
of June, 1995.

THE DFA INVESTMENT TRUST COMPANY

By: David G. Booth*
-------------------------------
David G. Booth
President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

Trustee and
David G. Booth* Chairman-Chief June 29, 1995
- ------------------------- Executive Officer
David G. Booth

Trustee and
Rex A. Sinquefield* Chairman-Chief June 29, 1995
- ------------------------- Investment Officer
Rex A. Sinquefeld

Chief Financial
Michael T. Scardina* Officer, Treasurer June 29, 1995
- ------------------------- and Vice President
Michael T. Scardina

George M. Constantinides* Trustee June 29, 1995
- -------------------------
George M. Constantinides

John P. Gould* Trustee June 29, 1995
- -------------------------
John P. Gould

Roger G. Ibbotson* Trustee June 29, 1995
- -------------------------
Roger G. Ibbotson

Merton H. Miller* Trustee June 29, 1995
- -------------------------
Merton H. Miller

Myron S. Scholes* Trustee June 29, 1995
- -------------------------
Myron S. Scholes

*By: Irene R. Diamant
-------------------------
Irene R. Diamant
Attorney-in-Fact

(Pursuant to Power of Attorney filed on August 2, 1994 with the SEC as Exhibit
17(ii) to the Registration Statement of Dimensional Investment Group Inc. (File
No. 33-33980).)

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<PAGE>

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION

24(b)(11) Consent of Coopers & Lybrand L.L.P., independent accountants

24(b)(16) Schedule of Performance Quotations for DFA International Small
Cap Value Portfolio

24(b)(17) Financial Data Schedules

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<PAGE>

Exhibit 24(b)(11)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this Post-Effective Amendment
No. 34 to the Registration Statement on Form N-1A (File No. 2-73948) under the
Securities Act of 1933 of DFA Investment Dimensions Group Inc. of our reports
dated January 23, 1995 on our audits of the financial statements and financial
highlights of DFA Investment Dimensions Group Inc. and The DFA Investment Trust
Company as of November 30, 1994 and for the respective periods then ended.

We also consent to the reference to our Firm under the caption "Financial
Statements" in the Statement of Additional Information.

Coopers & Lybrand L.L.P.
- ----------------------------
COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, PA 19103
June 20, 1995

C-19

<PAGE>

Exhibit 24(b)(16)

SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS

DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO

STANDARDIZED COMPUTATION OF TOTAL RETURN

TOTAL RETURN: P (1 + T)(n) = ERV

Date of Initial Investment through May 31, 1995

P = $1,000

T = 1.64%

n = 5 months = 5/12 year

ERV = $1,006.83

NON-STANDARDIZED COMPUTATION OF TOTAL RETURN

TOTAL RETURN: P (1 + T)(n) = ERV

Date of Initial Investment through May 31, 1995

P = $1,000

T = 4.13%

n = 5 months = 5/12 year

ERV = $1,017.00

C-20

<PAGE>
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<NUMBER> 01
<NAME> EMERGING MARKETS PORTFOLIO

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<PAGE>
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<NAME> INTERNATIONAL SMALL CAP VALUE

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