<PAGE>
SUPPLEMENT TO THE AUGUST 8, 1994 PROSPECTUS
OF
DFA INVESTMENT DIMENSIONS GROUP INC.
The following supplements the prospectus of DFA Investment Dimensions Group
Inc. (the "Fund") dated August 8, 1994, which describes DFA Global Value
Portfolio and DFA Global Bond Portfolio of the Fund.
At a meeting held on August 7, 1995, the Board of Directors of the Fund
approved a change in the policy of DFA Global Value Portfolio ("Value
Portfolio") providing for investment of substantially all of the Value
Portfolio's assets in the stocks of U.S. companies that have a high book to
market ratio. Consistent with this change in policy, the Board of Directors
also approved the sale of the Value Portfolio's foreign securities to another
Portfolio of the Fund. Shareholders of the Value Portfolio will be asked to
approve this change in policy at a Special Meeting scheduled to be held on
September 15, 1995. If the shareholders approve this change in policy, it is
anticipated that sale of the Portfolio's securities will occur on or about
September 15, 1995.
The date of this supplement is August 7, 1995.
<PAGE>
PROSPECTUS
AUGUST 8, 1994
DFA INVESTMENT DIMENSIONS GROUP INC.
DFA GLOBAL BOND PORTFOLIO
DFA GLOBAL VALUE PORTFOLIO
_________________
DFA INVESTMENT DIMENSIONS GROUP INC. (the "Fund"), 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401, (310) 395-8005, is an open-end
management investment company.
The Fund issues nineteen series of shares, each of which represents a
separate class of the Fund's common stock, having its own investment objective
and policies. This prospectus describes only the DFA Global Bond Portfolio and
the DFA Global Value Portfolio of the Fund (the "Portfolios"). Shares of the
Portfolios are offered only to separate accounts of insurance companies to fund
variable annuity contracts.
The investment objective of the DFA GLOBAL BOND PORTFOLIO is to provide a
market rate of return for a global fixed income portfolio with low relative
volatility of returns. The investment objective of the DFA GLOBAL VALUE
PORTFOLIO is to achieve long-term capital appreciation.
This prospectus sets forth information about the Portfolios that
prospective investors should know before investing and should be read carefully
and retained for future reference. You should read this prospectus in
conjunction with the prospectus describing the related insurance company
separate account. A statement of additional information about the Fund, dated
August 8, 1994, 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
DFA GLOBAL BOND PORTFOLIO. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . 2
Description of Investments. . . . . . . . . . . . . . . . . . . . . . . . 3
Portfolio Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DFA GLOBAL VALUE PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . 4
International Segment . . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S. Segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Portfolio Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECURITIES LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . 8
DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . .10
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . .11
VALUATION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
<PAGE>
HIGHLIGHTS
PAGE
THE PORTFOLIOS
Each Portfolio, in effect, represents a separate mutual fund with its own
investment objective and policies. The investment objective of each Portfolio
is a fundamental policy and may not be changed without the affirmative vote of a
majority of its outstanding securities. Shares of the Portfolios presently are
sold only to a separate account of National Home Life Assurance Company.
Proceeds from the sale of shares of a Portfolio will be invested in accordance
with that Portfolio's investment objective and policies. A Portfolio will pay
its shareholders all dividends and distributions arising from the assets of the
Portfolio.
INVESTMENT OBJECTIVES - DFA GLOBAL BOND PORTFOLIO 2
The investment objective of the DFA Global Bond Portfolio is to provide a
market rate of return for a fixed income portfolio with low relative volatility
of returns. The Portfolio invests in the obligations issued or guaranteed by
the U.S. and foreign governments and their agencies, obligations of other
foreign issuers rated AA or better and supranational organizations.
INVESTMENT OBJECTIVES - DFA GLOBAL VALUE PORTFOLIO 4
The investment objective of the DFA Global Value Portfolio is to achieve
long-term capital appreciation. The Portfolio seeks to achieve its investment
objective by investing approximately 50% of its total assets 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") and approximately 50% of its total assets in
stocks of U.S. companies that have a high book to market ratio.
RISK FACTORS 7
The DFA Global Bond Portfolio and the DFA Global Value Portfolio invest in
foreign securities and repurchase agreements. These policies involve certain
risks. (See "RISK FACTORS".)
MANAGEMENT AND ADMINISTRATIVE SERVICES 8
Dimensional Fund Advisors Inc. (the "Advisor") serves as investment advisor
to each Portfolio.
DIVIDEND POLICY 10
The DFA Global Value Portfolio will distribute substantially all of its net
investment income together with any net realized capital gains in November and
December of each year. The DFA Global Bond Portfolio will distribute dividends
from its net investment income quarterly and any realized net capital gains
annually after the end of the fiscal year. (See "DIVIDENDS, CAPITAL GAINS
DISTRIBUTIONS AND TAXES".)
PURCHASE, VALUATION AND REDEMPTION OF SHARES 11
The shares of the Portfolios presently are sold only to a separate account
of National Home Life Assurance Company to fund certain of its variable annuity
contracts. The Portfolios are intended exclusively as investments for variable
life and variable annuity insurance contracts and in the future may be offered
to separate accounts of other insurance companies to fund variable life and
variable annuity contracts issued by such companies. Purchases and redemptions
are made at net asset value. To purchase shares of a Portfolio, please see the
prospectus of the National Home Life Assurance Company separate account for
variable annuity insurance contracts.
The value of the shares issued by the Portfolios will fluctuate in relation
to their own investment experience. (See "PURCHASE AND REDEMPTION OF SHARES"
and "VALUATION OF SHARES".)
1
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
<S> <C>
DFA Global Bond Portfolio
Management Fee 0.25%
Other Expenses 0.28%
Total Portfolio Operating Expenses 0.53%
DFA Global Value Portfolio
Management Fee 0.35%
Other Expenses 0.23%
Total Portfolio Operating Expenses 0.58%
</TABLE>
EXAMPLE
You would pay the following transaction and annual operating expenses on a
$1,000 investment in each Portfolio, assuming a 5% annual return over each of
the following time periods and redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
DFA Global Bond 5 17 n/a n/a
DFA Global Value 6 19 n/a n/a
</TABLE>
The purpose of the above expense table and Example is to assist investors
in understanding the various costs and expenses that an investor in the
Portfolios will bear directly or indirectly.
The sales charges and expenses of the separate account are not shown above
and should be considered before investing. The example should not be considered
a representation of past or future expenses. Actual expenses may be greater or
lesser than those shown. The Portfolios are new and, therefore, the expenses of
the Portfolios included in the table are the estimated annualized expenses that
are expected to be incurred through their fiscal periods ending November 30,
1994 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.
DFA GLOBAL BOND PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of The DFA Global Bond Portfolio is to provide a
market rate of return for a fixed income portfolio with low relative volatility
of returns. The investment objective of the Portfolio may not be changed
without the approval of a majority of its outstanding shares. The Portfolio
will invest primarily in obligations issued or guaranteed by the U.S. and
foreign governments, their agencies and instrumentalities, obligations of other
foreign issuers rated AA or better and supranational organizations, such as the
World Bank, the European Investment Bank, European Economic Community, and
European Coal and Steel Community and corporate debt obligations. At the
present time, the Advisor expects that most investments will be made in the
obligations of issuers which are developed countries, such as those countries
which are members of the Organization of Economic Cooperation and Development
(OECD). However, in the future the Advisor anticipates investing in issuers
located in other countries as well. Under normal market conditions, the
Portfolio will invest at least 65% of the value of its assets in issuers
organized or having a majority of their assets in, or deriving a majority of
their operating income in, at least three different countries, one of which may
be the United States. The Portfolio will acquire obligations which mature
within ten years from the date of settlement. Because many of the Portfolio's
investments will be denominated in foreign currencies, the Portfolio will also
enter into forward foreign currency contracts solely for the purpose of hedging
against fluctuations in currency exchange rates.
2
<PAGE>
DESCRIPTION OF INVESTMENTS
The following is a description of the categories of investments which may
be acquired by the Portfolio.
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. 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 Investors Services, Inc. ("Moody's") or Standard & Poor's
Corporation ("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.
4. FOREIGN GOVERNMENT AND AGENCY OBLIGATIONS - Bills, notes, bonds and
other debt securities issued or guaranteed by foreign governments, or their
agencies and instrumentalities.
5. 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.
6. FOREIGN ISSUER OBLIGATIONS - Debt securities of non U.S. issuers rated
AA or better by S&P and Aa2 or better by Moody's.
7. 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 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 of
Aa2.
PORTFOLIO STRATEGY
The DFA Global Bond Portfolio will be managed with a view to capturing
maturity risk premiums. As used herein, "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.
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.
While the DFA Global Bond Portfolio acquires securities in principal
transactions and, therefore, does 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,
securities ordinarily
3
<PAGE>
will be sold when, in the Advisor's judgment, the monthly return of the
Portfolio will be increased as a result of portfolio transactions after taking
into account the cost of trading. It is anticipated that securities will be
acquired in the secondary markets for short term instruments. As the size of
the Portfolio increases, it is possible that transactions also may be effected
directly with the issuers of securities acquired for the Portfolio. The annual
portfolio turnover rate of the Portfolio is not expected to exceed 100%.
The DFA Global Bond Portfolio is "non-diversified", as defined in the
Investment Company Act of 1940, which means that as to 75% of its total assets,
more than 5% may be invested in the securities of a single issuer. However, for
purposes of the Internal Revenue Code, the Portfolio will be "diversified"
because as to 50% of its total assets, no more than 5% may be invested in the
securities of a single issuer and the Portfolio intends to invest no more than
55% of the value of its total assets in cash, cash items, government securities
and other regulated investment companies. The Portfolio will not invest more
than 25% of its assets in securities of companies in any 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". Currently,
management 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. Further, 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.
DFA GLOBAL VALUE PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the DFA Global Value Portfolio is to achieve
long-term capital appreciation. 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 operates as a diversified investment company
and seeks to achieve its investment objective by investing approximately 50% of
its total assets in the stocks of large non-U.S. companies (the "International
Segment") that have a high book value in relation to their market value (a "book
to market ratio") and approximately 50% of its total assets in stocks of U.S.
companies that have a high book to market ratio (the "U.S. Segment"). With
respect to the International Segment, a company's shares will be considered
eligible for investment if such shares (i) first, have a book to market ratio
that equals or exceeds the ratios of any of the 30% of companies in that country
with the highest positive book to market ratios and (ii) second, are shares of a
company having a market capitalization of at least $500 million and are listed
on a major exchange in such country. The International Segment will be
approximately market capitalization weighted. With respect to the U.S. Segment,
the Portfolio will purchase common stocks of companies whose shares (i) first,
have a book to market ratio that equals or exceeds the ratios of any of the 30%
of companies in the U.S. with the highest positive book to market ratios and
(ii) second, are shares of a company whose market capitalization equals or
exceeds that of the company having the median market capitalization of companies
whose shares are listed on the NYSE. The U.S. Segment also will be
approximately market capitalization weighted. Although it does not presently
intend to do so, the Portfolio reserves the right to invest in companies in the
International Segment that have market capitalizations of less than $500 million
and companies in the U.S. Segment whose market capitalizations are less than
that of the company having the median market capitalization of companies whose
shares are listed on the NYSE.
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 will be the United States. The Portfolio will
not invest more than 25% of its total assets in securities of companies in a
single industry.
The Portfolio reserves the right to invest in index futures contracts to
commit funds awaiting investment or to maintain liquidity. The Portfolio will
not purchase futures contracts if as a result more than
4
<PAGE>
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".)
A portion, but generally not in excess of 20% of the Portfolio's assets,
may be invested in the following interest-bearing obligations: (i) the seven
categories of investments described in "DFA GLOBAL VALUE PORTFOLIO - Description
of Investments"; (ii) 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; and (iii) 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.
INTERNATIONAL SEGMENT
The Portfolio intends to invest in the stocks of large companies in
countries with developed markets. Initially, the Portfolio will invest in the
stocks of large companies in Japan, the United Kingdom, Germany, France,
Switzerland, Italy, Belgium, Spain, the Netherlands, Sweden, Hong Kong,
Singapore and Australia. As the Portfolio's growth permits, it may invest in
the stocks of large companies in other developed markets.
In determining market capitalization weights, the Advisor, using its best
judgment, will seek to eliminate the effect of cross holdings on the individual
country weights. As a result, the weighting of certain 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 stock for
the Portfolio inappropriate.
Changes in the composition and relative ranking (in terms of market
capitalization and book to market ratio) of the stocks which are eligible for
purchase by the Portfolio take place with every trade when the securities
markets are open for trading due, primarily, to price fluctuations of such
securities. On at least a semi-annual basis, the Advisor will prepare lists of
non-U.S. large companies (those with market capitalizations of $500 million or
more) with high book to market ratios. Only common stocks whose market
capitalizations are not less than the minimum on such list will be purchased by
the Portfolio. Additional investments will not be made in securities which have
depreciated in value to such an extent that they are not then considered by the
Advisor to be large companies. This may result in deviation from market
capitalization weighting and such deviation could be substantial if a
significant amount of the Portfolio's holdings decrease in value sufficiently to
be excluded from the then current market capitalization requirement for eligible
securities, but not by a sufficient amount to warrant their sale.
U.S. SEGMENT
The U.S. Segment 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 a reasonable reflection of the
relative market capitalizations of its portfolio companies. The Portfolio will
purchase securities that are listed on the principal U.S. national securities
exchanges and traded OTC. On a not less than a semi-annual basis, the Advisor
will calculate the book to market ratio and market capitalizations necessary to
determine those companies whose stocks are eligible for investment.
PORTFOLIO STRUCTURE
The Advisor may exclude the securities of a company that otherwise meets
the applicable criteria of either segment described above if the Advisor
determines in its best judgment that other conditions exist that make the
inclusion of such security inappropriate. This will result in some deviation
from strict market capitalization weighting. Deviation from strict market
capitalization weighting will also occur in the Portfolio because it intends to
purchase round lots only. In order to retain sufficient liquidity, the relative
amount of any security held by the Portfolio may be reduced, from time to time,
from the level which strict adherence to market capitalization weighting would
otherwise require. Any portion of the Portfolio's assets invested
5
<PAGE>
in interest-bearing obligations would cause a further deviation from strict
market capitalization weighting. The Portfolio may make block purchases of
eligible securities at opportune prices even though such purchases exceed the
number of shares which, at the time of purchase, strict adherence to the policy
of market capitalization weighting would otherwise require. In addition, the
Portfolio may acquire eligible securities in exchange for the issuance of its
shares. While such purchases might cause a temporary deviation from market
capitalization weighting, they would ordinarily be made in anticipation of
further growth of the assets of the Portfolio. If securities must be sold in
order to obtain funds to make redemption payments, such securities may be
repurchased by the Portfolio as additional cash becomes available to it.
However, the Portfolio has retained the right to borrow to make redemption
payments and is also authorized to redeem its shares in kind. (See "PURCHASE
AND REDEMPTION OF SHARES".)
It is management's belief that the stocks of large companies with high book
to market ratios offer, over a long term, a prudent opportunity for capital
appreciation, but, at the same time, selecting a limited number of such issues
for inclusion in the Portfolio involves greater risk than including a large
number of them. The Advisor does not anticipate that a significant number of
securities which meet the market capitalization criteria will be selectively
excluded from the Portfolio.
The Portfolio does not seek current income as an investment objective and
investments will not be based upon an issuer's dividend payment policy or
record. However, many of the companies whose securities will be included in the
Portfolio do pay dividends. It is anticipated, therefore, that the Portfolio
will receive dividend income.
Under normal market conditions, the Portfolio's total assets will be
approximately evenly divided between the U.S. and International Segments.
Market fluctuations in the International Segment and the U.S. Segment may cause
this allocation to vary from time to time. Generally, when such deviation
occurs, the Advisor will use new investments in the Portfolio to re-establish
the target allocation to the extent practicable.
PORTFOLIO TRANSACTIONS
The Portfolio does not intend to purchase or sell a security based on the
prospects for an individual country's economy, the securities markets in that
country or the individual issuer whose shares are eligible for purchase. As
described above, investments will be made in virtually all eligible securities
on a market capitalization weighted basis. This is a passive approach to
investment management that does not entail taking steps to reduce risk by
replacing portfolio equity securities with other securities that appear to have
the potential to provide better investment performance. The Portfolio may sell
securities when the issuer's market capitalization falls substantially below
that of the issuer with the minimum market capitalization which is then eligible
for purchase by the Portfolio. In addition, the Portfolio may sell portfolio
securities when their book to market ratio falls substantially below that of the
security with the lowest such ratio that is then eligible for purchase by the
Portfolio. Generally, securities will be purchased with the expectation that
they will be held for longer than one year. The annual portfolio turnover rate
of the Portfolio is not expected to exceed 20%.
SECURITIES LOANS
Each Portfolio is authorized to lend securities to qualified brokers,
dealers, banks and other financial institutions for the purpose of earning
additional income. While a Portfolio may earn additional income from lending
securities, such activity is incidental to the investment objective of a
Portfolio. The value of securities loaned may not exceed 33 1/3% of the value
of a Portfolio's total assets. In connection with such loans, a Portfolio will
receive collateral consisting of cash or U.S. Government securities, which will
be maintained at all times in an amount equal to at least 105% of the current
market value of the loaned securities. In addition, the Portfolios will be able
to terminate the loan at any time, will receive reasonable 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
could experience delay in recovering the loaned securities. Management believes
that this risk can be controlled through careful monitoring procedures.
6
<PAGE>
RISK FACTORS
The Portfolios invest in foreign issuers. Such investments involve risks
that are not associated with investments in U.S. public companies. Such risks
may include legal, political and or diplomatic actions of foreign governments,
such as imposition of withholding taxes on interest and dividend income payable
on the securities held, possible seizure or nationalization of foreign deposits,
establishment of exchange controls or the adoption of other foreign governmental
restrictions which might adversely affect the value of the assets held by the
Portfolios. Further, foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards comparable to those of
U.S. public companies and there may be less publicly available information about
such companies than comparable U.S. companies. Certain of the foreign markets
in which the Portfolios may invest have recently transitioned from or are in the
process of transitioning from centrally controlled economies. There can be no
assurance that such transitions will be successful. The DFA Global Bond
Portfolio 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 either of the Portfolios will achieve its investment
objective.
Investments of each Portfolio in foreign securities may 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 the
Portfolio. These Portfolios may purchase foreign currency futures contracts and
options in order to hedge against changes in the level of foreign currency
exchange rates, provided not more than 5% of each Portfolio's assets are then
invested as initial or variation margin deposits on such contracts or options.
Such contracts involve an agreement to purchase or sell a specific currency at a
future date at a price set in the contract and enable the Portfolios to protect
against losses resulting from adverse changes in the relationship between the
U.S. dollar and foreign currencies occurring between the trade and settlement
dates of Portfolio securities transactions, but they also tend to limit the
potential gains that might result from a positive change in such currency
relationships.
Each Portfolio has reserved the right to borrow amounts not exceeding 33%
of its net assets for the purposes of making redemption payments. When
advantageous opportunities to do so exist, each Portfolio may also purchase
securities when borrowings exceed 5% of the value of its net assets. Such
purchases can be considered to be "leveraging", and in such circumstances, the
net asset value of the Portfolio may increase or decrease at a greater rate than
would be the case if the Portfolio had not leveraged. The interest payable on
the amount borrowed would increase the Portfolio's expenses and if the
appreciation and income produced by the investments purchased when the Portfolio
has borrowed are less than the cost of borrowing, the investment performance of
the Portfolio will be reduced as a result of leveraging.
The method employed by the Advisor to manage the DFA Global Value Portfolio
will differ from the process employed by many other investment advisors in that
the Advisor will rely on fundamental analysis of the investment merits of
securities to a limited extent to eliminate potential portfolio acquisitions
rather than rely on this technique to select securities. Further, because
securities generally will be held long-term and will not be eliminated based on
short-term price fluctuations, the Advisor generally will not act upon general
market movements or short-term price fluctuations of securities to as great an
extent as many other investment advisors.
The DFA Global Value Portfolio may invest in index futures contracts and
index options. These investments entail the risk that an imperfect correlation
may exist between changes in the market value of the stocks owned by the
Portfolio and the prices of such futures contracts and options and at times the
market for such contracts and options might lack liquidity, thereby inhibiting
the Portfolio's ability to close a position in such investments.
In addition, each Portfolio may invest in repurchase agreements. In the
event of the bankruptcy of the other party to a repurchase agreement, the Fund
could experience delay in recovering the securities underlying such agreements.
Management believes that this risk can be controlled through stringent security
selection criteria and careful monitoring procedures.
7
<PAGE>
MANAGEMENT OF THE FUND
Dimensional Fund Advisors Inc. (the "Advisor") serves as investment advisor
to each of the Portfolios. As such, the Advisor is responsible for the
management of their respective assets. Investment decisions for all Portfolios
of the Fund are made by the Investment Committee of the Advisor which meets on a
regular basis and also as needed to consider investment issues. The Investment
Committee is composed of certain officers and directors of the Advisor who are
elected annually. The Advisor provides the Portfolios with a trading department
and selects brokers and dealers to effect securities transactions. Portfolio
securities transactions are placed with a view to obtaining best price and
execution and, subject to this goal, may be placed with brokers which have
assisted in the sale of a Portfolio's shares. On an annual basis, the
investment advisory fee payable by the DFA Global Bond Portfolio is .25% of
average net assets of the Portfolio up to $100 million and .20% of average net
assets in excess of that amount, while the investment advisory fee of the DFA
Global Value Portfolio is .35% of average net assets up to $100 million and .30%
on average net assets in excess of $100 million.
The Fund bears all of its own costs and expenses, including: services of
its independent accountants, legal counsel, brokerage fees, commissions and
transfer taxes in connection with the acquisition and disposition of portfolio
securities, taxes, insurance premiums, costs incidental to meetings of its
shareholders and directors 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. Expenses allocable to a particular Portfolio are so allocated and
expenses which are not allocable to a particular Portfolio are borne by each
Portfolio on the basis of the fees paid by the Fund to PFPC.
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 billion. David G. Booth and Rex A.
Sinquefield, directors and officers of both the Fund and the Advisor, together
own approximately 55% of the Advisor's outstanding stock and may be deemed
controlling persons of the Advisor.
ADMINISTRATIVE SERVICES
PFPC Inc. ("PFPC") serves as the accounting services, dividend disbursing
and transfer agent for each Portfolio. The services provided by PFPC are
subject to supervision by the executive officers and the Board of Directors of
the Fund, and include day-to-day keeping and maintenance of certain records,
calculation of the offering price of the shares, preparation of reports, liaison
with its custodians, and transfer and dividend disbursing agency services. The
DFA Global Bond Portfolio pays PFPC a fee at the annual rate of .123% of its net
assets not in excess of $150 million; .082% of net assets between $150 million
and $300 million; .0615% of net assets between $300 million and $600 million;
.041% of net assets between $600 million and $850 million and .0205% of such net
assets in excess of $850 million. The DFA Global Value Portfolio pays PFPC a
fee at the annual rate of .11275% of its net assets not in excess of $300
million; .0692% of net assets between $300 million and $600 million; .04615% of
net assets between $600 million and $850 million and .0205% of such net assets
in excess of $850 million. PFPC charges a minimum fee at the rate of $54,000
per year to each Portfolio, which will be phased in on a pro rata basis during
each Portfolio's first 16 months of operation.
Boston Safe Deposit and Trust Company serves as the custodian for the DFA
Global Bond Portfolio and for the International Segment of the DFA Global Value
Portfolio. PNC Bank, N.A. serves as custodian for the U.S. Segment of the DFA
Global Value Portfolio.
DIRECTORS AND OFFICERS
The Board of Directors is responsible for establishing Fund policies and
for overseeing the management of the Fund. 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.
8
<PAGE>
DIRECTORS
David G. Booth*, Director, President and Chairman-Chief Executive Officer, Santa
Monica, CA. President, Chairman-Chief Executive Officer and Director,
Dimensional Fund Advisors Inc., DFA Securities Inc., Dimensional Fund Advisors
Asia Inc., 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. Director,
The Charles Schwab Family of Funds (registered investment company).
George M. Constantinides, Director, Chicago, IL. Director, Dimensional
Investment Group Inc. and Dimensional Emerging Markets Fund Inc. Trustee, The
DFA Investment Trust Company. Leon Carroll Marshall Professor of Finance,
Graduate School of Business, University of Chicago.
John P. Gould, Director, Chicago, IL. Distinguished Service Professor of
Economics, Graduate School of Business, University of Chicago. Director,
Dimensional Investment Group Inc. and Dimensional Emerging Markets Fund Inc.
Trustee, The DFA Investment Trust Company and First Prairie Funds (registered
investment company). Director, Vulcan Industrial Materials, Inc. and Arch
Development Corporation.
Roger G. Ibbotson, Director, New Haven, CT. Professor in Practice of Finance,
Yale School of Management. Director, Dimensional Investment Group Inc. and
Dimensional Emerging Markets Fund Inc. Trustee, The DFA Investment Trust
Company. Director, Hospital Fund, Inc. (investment management services) and
BIRR Portfolio Analysis, Inc. (software products). Chairman, Institute Study of
Security Markets, Memphis, TN. Chairman and President, Ibbotson Associates,
Inc. (software, data, publishing and consulting).
Merton H. Miller, Director, Chicago, IL. Robert R. McCormick Distinguished
Service Professor Emeritus of Finance, Graduate School of Business, University
of Chicago. Director, Dimensional Investment Group Inc. and Dimensional
Emerging Markets Fund Inc. Trustee, The DFA Investment Trust Company.
Director, Chicago Mercantile Exchange.
Myron S. Scholes, Director, New York, NY. Frank E. Buck Professor of Finance,
Graduate School of Business and Professor of Law, Law School, Senior Research
Fellow, Hoover Institution, (all) Stanford University. Director, Dimensional
Investment Group Inc. and Dimensional Emerging Markets Fund Inc. Trustee, The
DFA Investment Trust Company. Director, 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*, Director, Chairman and Chief Investment Officer, Santa
Monica, CA. Chairman-Chief Investment Officer and Director, Dimensional Fund
Advisors Inc., DFA Securities Inc., Dimensional Fund Advisors Asia Inc.,
Dimensional Investment Group Inc. and Dimensional Emerging Markets Fund Inc.
Trustee, Chairman-Chief Investment Officer of The DFA Investment Trust Company.
Chairman, Chief Executive Officer and Director, Dimensional Fund Advisors Ltd.
* Interested Director of the Fund.
OFFICERS
Each of the officers listed below holds the same office in the following
entities: Dimensional Fund Advisors Inc., DFA Securities Inc., Dimensional Fund
Advisors Asia Inc., Dimensional Investment Group Inc., The DFA Investment Trust
Company, Dimensional Fund Advisors Ltd. and Dimensional Emerging Markets Fund
Inc.
Arthur Barlow, Vice President, Santa Monica, CA.
Ramakrishnan Chandrasekar, Vice President, Santa Monica, CA. On leave of
absence.
Maureen Connors, Vice President, Santa Monica, CA.
9
<PAGE>
Irene R. Diamant, Vice President and Secretary, Santa Monica, CA.
Associate attorney, Cahill, Gordon & Reindel, from 1987 to 1991.
Eugene Fama, Jr., Vice President, Santa Monica, CA.
David Plecha, Vice President, Santa Monica, CA. Assistant Vice President,
Leland O'Brien Rubenstein Associates, Los Angeles, CA from 1987 to 1989.
George Sands, Vice President, Santa Monica, CA. Managing Director, Asset
Strategy Consulting, Los Angeles, CA from 1991 to 1992 and previously Vice
President, Wilshire Associates, Santa Monica, CA.
Michael T. Scardina, Vice President, Chief Financial Officer, Controller
and Treasurer, Santa Monica, CA.
Cem Severoglu, Vice President, Santa Monica, CA.
Jeanne C. Sinquefield, Ph.D., 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. During the fiscal year ended November 30, 1993, the directors as a group
received fees in the amount of $87,000. Directors' fees are allocated on a pro
rata basis to each of the nineteen series of shares.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
Each Portfolio intends to qualify each year as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code"), so
that it will not be liable for federal income taxes to the extent that its net
investment income and net realized capital gains are distributed. The policy of
the DFA Global Value Portfolio is to distribute substantially all of its net
investment income together with any net realized capital gains in November and
December of each year. Net investment income, which is accrued daily, will be
distributed quarterly by the DFA Global Bond Portfolio. Any net realized
capital gains of DFA Global Bond Portfolio will be distributed annually after
the end of the fiscal year. Each Portfolio is treated as a separate corporation
for Federal tax purposes.
If a Portfolio purchases shares in certain foreign investment entities,
called "passive foreign investment companies" ("PFIC"), such Portfolio may be
subject to U.S. federal income tax and a related interest charge on a portion of
any "excess distribution" or gain from the disposition of such shares even if
such income is distributed as a taxable dividend by the Portfolio to its
shareholders. Also, the Portfolios may be subject to foreign withholding taxes
on income from certain of their foreign securities.
Shareholders of the Portfolios will automatically receive all income
dividends and capital gains distributions in additional shares of the Portfolio
whose shares they hold at net asset value (as of the business date following the
dividend record date). Shareholders are notified annually by the Fund as to the
federal tax status of dividends and distributions paid by the Portfolio whose
shares they own.
Shares of the Portfolios must be purchased through variable annuity
contracts. As a result, it is anticipated that any dividend or capital gains
distributions from Portfolio of the Fund will be exempt from current taxation if
left to accumulate within a variable annuity contract. Withdrawals from such
contracts may be subject to ordinary income tax plus a 10% penalty tax if made
before age 59 1/2.
The tax status of your investment in the Portfolios depends upon the
features of your variable annuity contract. For further information, please
refer to the prospectus of the insurance company separate account that offers
your contract.
10
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
Initially, shares of the Portfolios will be sold only to a separate account
of National Home Life Assurance Company at net asset value. (See "VALUATION OF
SHARES".) Shares of the Portfolios may be sold to other insurance company
separate accounts pursuant to SEC exemptive relief. Redemptions will be
effected by the separate account at net asset value. Contract owners do not
deal directly with the Fund with respect to the acquisition or redemption of
shares of the Portfolios. Please see the prospectus of National Home Life
Assurance Company Separate Account for information regarding the purchase and
redemption of shares of the Portfolios.
VALUATION OF SHARES
The net asset value per share of each Portfolio is calculated as of the
close of the NYSE by dividing the total market value of the Portfolio's
investments and other assets, less any liabilities, by the total outstanding
shares of the stock of the Portfolio. The value of the shares of each Portfolio
will fluctuate in relation to its own investment experience. Securities held by
the DFA Global Value Portfolio 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, 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 Portfolios are expressed in U.S. dollars by translating the net
assets of each Portfolio using the bid price for the dollar as quoted by
generally recognized reliable sources.
The value of the shares of DFA Global Bond Portfolio will tend to fluctuate
with interest rates because, unlike money market funds, this Portfolio does not
seek to stabilize the value of its 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 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, at the mean between the most recent quoted bid and asked
prices. Securities held by DFA Global Bond Portfolio 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 Portfolios are determined as of such times for the purpose of
computing the net asset values of the Portfolios. If events which materially
affect the value of the investments of a Portfolio occur subsequent to the close
of the securities market on which such securities are primarily traded, the
investments affected thereby will be valued at "fair value" as described above.
DISTRIBUTION
The Fund acts as distributor of each series of its own shares of stock. It
has, however, entered into an agreement with DFA Securities Inc., a wholly owned
subsidiary of the Advisor, pursuant to which DFA Securities Inc. is responsible
for supervising the sale of each series of shares. No compensation is paid by
the Fund to DFA Securities Inc. under this agreement.
11
<PAGE>
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 Portfolios may
disseminate reports of their investment performance from time to time.
Investment performance is calculated on a total return basis; that is by
including all net investment income and any realized and unrealized net capital
gains or losses during the period for which investment performance is reported.
If dividends or capital gains distributions have been paid during the relevant
period the calculation of investment performance will include such dividends and
capital gains distributions as though reinvested in shares of the Portfolio.
Standard quotations of total return, which include deductions of any applicable
reimbursement fees, are computed in accordance with 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 interim
periods due to the compounding of the interim yields.
With respect to each 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 the DFA Global Bond Portfolio intends to continually hedge against the risk
of variations in currency exchange rates, the Advisor believes that the
variation of the Portfolio's investment performance in relation to fluctuations
in currency exchange rates will be minimized.
Subject to obtaining an exemptive order from the SEC, shares of the
Portfolios may be sold to registered separate accounts of insurance companies,
in addition to National Home Life Assurance Company, offering variable annuity
and variable life products. At present, the Board of Directors of the Fund does
not foresee any disadvantage arising from the fact that each Portfolio may offer
its shares to separate accounts of various insurance companies to serve as an
investment vehicle for their variable separate accounts. However, a material
conflict could arise between the interest of the different participating
separate accounts. The Fund's Board of Directors would monitor events in order
to identify any material irreconcilable conflicts that may possibly arise and to
determine what action, if any, should be taken in response to such conflicts of
interest. If such conflicts were to occur, one or more insurance companies'
separate accounts might be required to withdraw its investments in one or both
Portfolios, or shares of another Portfolio may be substituted by the Fund. As a
result, a Portfolio might be forced to sell a portion of its securities at a
disadvantageous price. In the event of such a material conflict, the affected
insurance companies agree to take any necessary steps, including removing its
separate account from the Portfolio if required by law, to resolve the matter.
Shareholder inquiries may be made by writing or calling the Fund at the
address or telephone number appearing on the cover of this prospectus.
12
<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
Custodian - International
-------------------------
BOSTON SAFE DEPOSIT AND TRUST COMPANY
Princess House
Bush Lane
London EC4R 0AN
England
Custodian - Domestic
--------------------
PNC Bank, N.A.
17th and Chestnut Streets
Philadelphia, PA 19103
Transfer and Dividend Disbursing Agent
--------------------------------------
PFPC Inc.
P. O. Box 8950
Wilmington, DE 19885-9628
Legal Counsel
-------------
STRADLEY, RONON, STEVENS & YOUNG
2600 One Commerce Square
Philadelphia, PA 19103-7098
Independent Accountants
-----------------------
COOPERS & LYBRAND
2400 Eleven Penn Center
Philadelphia, PA 19103
