DFA INVESTMENT DIMENSIONS GROUP INC, 485BPOS, 1997-03-28

DFA INVESTMENT DIMENSIONS GROUP INC
485BPOS, 1997-03-28

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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. 45 File No. 2-73948 X
-- -----

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

Amendment No. 46 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, LLP, Great Valley Corporate Center, 30 Valley Stream Parkway, Malvern,
PA 19355, (610) 640-5801.

It is proposed that this filing will become effective
(check appropriate box):

/X/ Immediately upon filing pursuant to paragraph (b)
/ / On (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

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 24, 1997, Registrant filed a Rule 24f-2 Notice
for Registrant's most recent fiscal year, which ended November 30, 1996.

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

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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 and Redemption
of Shares

Item 8. Redemption or Repurchase........... Purchase and Redemption
of Shares

Item 9. Pending Legal Proceedings.......... Not Applicable

FORM N-1A PART B ITEM NO. LOCATION IN STATEMENT OF
- ------------------------- ADDITIONAL INFORMATION
------------------------
Item 10. Cover Page......................... Cover Page

Item 11. Table of Contents.................. Table of Contents

Item 12. General Information and History.... Other Information

<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........................... Directors and Officers;
Administrative Services;
Other Information

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

Item 18. Capital Stock and Other Securities. Other Information

Item 19. Purchase, Redemption and Pricing
of Securities Being Offered........ Purchase and Redemption
of Shares
Item 20. Tax Status......................... Federal Tax Treatment of
Futures Contracts

Item 21. Underwriters....................... Not Applicable

Item 22. Calculation of Performance Data.... Calculation of
Performance Data

Item 23. Financial Statements............... Financial Statements

FORM N-1A PART C ITEM NO. LOCATION IN PART C
- ------------------------- ------------------

Item 24. Financial Statements and Exhibits.. Exhibits

Item 25. Persons Controlled by or Under
Common Control with Registrant..... Persons Controlled by or
Under Common Control with
Registrant
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Item 26. Number of Holders of Securities.... Number of Holders of
Securities

Item 27. Indemnification.................... Indemnification

Item 28. Business and Other Connections of
Investment Advisor................. Business and Connections
of Investment Advisor and
Subadvisors

Item 29. Principal Underwriters............. Principal Underwriters

Item 30. Location of Accounts and Records... Location of Accounts and
Records

Item 31. Management Services................ Management Services

Item 32. Undertakings....................... Undertakings
<PAGE>

PROSPECTUS

MARCH 28, 1997

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.

DOMESTIC EQUITY PORTFOLIOS

<TABLE>
<S> <C>
U.S. 9-10 SMALL COMPANY PORTFOLIO U.S. SMALL CAP VALUE PORTFOLIO (FEEDER)
U.S. 6-10 SMALL COMPANY PORTFOLIO (FEEDER) U.S. LARGE CAP VALUE PORTFOLIO (FEEDER)
U.S. LARGE COMPANY PORTFOLIO (FEEDER) DFA REAL ESTATE SECURITIES PORTFOLIO
ENHANCED U.S. LARGE COMPANY PORTFOLIO (FEEDER)

INTERNATIONAL EQUITY PORTFOLIOS

JAPANESE SMALL COMPANY PORTFOLIO (FEEDER) EMERGING MARKETS SMALL CAP PORTFOLIO (FEEDER)
PACIFIC RIM SMALL COMPANY PORTFOLIO (FEEDER) CONTINENTAL SMALL COMPANY PORTFOLIO (FEEDER)
UNITED KINGDOM SMALL COMPANY PORTFOLIO (FEEDER) LARGE CAP INTERNATIONAL PORTFOLIO
EMERGING MARKETS PORTFOLIO (FEEDER) DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO
RWB/DFA INTERNATIONAL HIGH BOOK TO INTERNATIONAL SMALL COMPANY PORTFOLIO
MARKET PORTFOLIO (FEEDER)

FIXED INCOME PORTFOLIOS

DFA ONE-YEAR FIXED INCOME PORTFOLIO (FEEDER) DFA TWO-YEAR GOVERNMENT PORTFOLIO (FEEDER)
DFA TWO-YEAR CORPORATE FIXED INCOME PORTFOLIO (FEEDER) DFA FIVE-YEAR GOVERNMENT PORTFOLIO
DFA TWO-YEAR GLOBAL FIXED INCOME PORTFOLIO (FEEDER) DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO
DFA GLOBAL FIXED INCOME PORTFOLIO
</TABLE>

EACH OF THE "FEEDER" PORTFOLIOS INDICATED ABOVE (COLLECTIVELY, THE "FEEDER
PORTFOLIOS") 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 (INDIVIDUALLY AND COLLECTIVELY, THE "SERIES") HAVING THE SAME
INVESTMENT OBJECTIVE, POLICIES AND LIMITATIONS AS EACH OF THE FEEDER PORTFOLIOS.
THE INTERNATIONAL SMALL COMPANY PORTFOLIO SEEKS TO ACHIEVE ITS INVESTMENT
OBJECTIVE BY INVESTING IN FOUR SERIES OF THE TRUST. THIS INVESTMENT ACTIVITY IS
UNLIKE MANY OTHER INVESTMENT COMPANIES THAT DIRECTLY ACQUIRE AND MANAGE THEIR
OWN PORTFOLIO OF SECURITIES. 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 28, 1997, as amended from time to time is incorporated
herein by reference. Such statement of additional information 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. . . . . . . . . . . . . . . . . . . . . . 9

THE FEEDER PORTFOLIOS. . . . . . . . . . . . . . . . . . . . . . . . . . . 24

SMALL COMPANY PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . . 25
Investment Objective and Policies . . . . . . . . . . . . . . . . . 25

PORTFOLIO CHARACTERISTICS AND POLICIES -
SMALL COMPANY PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . . 25
U.S. 6-10 Small Company Portfolio . . . . . . . . . . . . . . . . . 25
U.S. 9-10 Small Company Portfolio . . . . . . . . . . . . . . . . . 26
Japanese Small Company Portfolio. . . . . . . . . . . . . . . . . . 26
United Kingdom Small Company Portfolio. . . . . . . . . . . . . . . 26
Continental Small Company Portfolio . . . . . . . . . . . . . . . . 27
Pacific Rim Small Company Portfolio. . . . . . . . . . . . . . . . 27
International Small Company Portfolio . . . . . . . . . . . . . . . 28
Portfolio Structure. . . . . . . . . . . . . . . . . . . . . . . . 28
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . 30

U.S. LARGE COMPANY PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . 30
Investment Objective and Policies . . . . . . . . . . . . . . . . . 30

ENHANCED U.S. LARGE COMPANY PORTFOLIO. . . . . . . . . . . . . . . . . . . 31
Investment Objective and Policies . . . . . . . . . . . . . . . . . 31

STANDARD & POOR'S - INFORMATION AND DISCLAIMERS. . . . . . . . . . . . . . 32

LARGE CAP INTERNATIONAL PORTFOLIO. . . . . . . . . . . . . . . . . . . . . 32
Investment Objective and Policies . . . . . . . . . . . . . . . . . 32

DFA REAL ESTATE SECURITIES PORTFOLIO . . . . . . . . . . . . . . . . . . . 34
Portfolio Characteristics and Policies. . . . . . . . . . . . . . . 34
Portfolio Structure. . . . . . . . . . . . . . . . . . . . . . . . 34
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . 35

VALUE PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Portfolio Characteristics and Policies. . . . . . . . . . . . . . . 35
Portfolio Structure . . . . . . . . . . . . . . . . . . . . . . . . 36
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . 36

RWB/DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO. . . . . . . . . . . . 37
Investment Objective and Policies . . . . . . . . . . . . . . . . . 37

DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO. . . . . . . . . . . . . . . . 38
Investment Objective and Policies . . . . . . . . . . . . . . . . . 38

EMERGING MARKETS PORTFOLIO AND EMERGING MARKETS SMALL CAP PORTFOLIO. . . . 40
Investment Objective and Policies . . . . . . . . . . . . . . . . . 40
Series' Characteristics and Policies. . . . . . . . . . . . . . . . 40

Portfolio structure . . . . . . . . . . . . . . . . . . . . . . . . 42

SECURITIES LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

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INVESTMENT OBJECTIVES AND POLICIES -
FIXED INCOME PORTFOLIOS. . . . . . . . . . . . . . . . . . . . . . . . . . 43
DFA One-Year Fixed Income Portfolio . . . . . . . . . . . . . . . . 43
DFA Two-Year Corporate Fixed Income Portfolio . . . . . . . . . . . 43
DFA Two-Year Global Fixed Income Portfolio. . . . . . . . . . . . . 43
DFA Global Fixed Income Portfolio . . . . . . . . . . . . . . . . . 44
DFA Two-Year Government Portfolio . . . . . . . . . . . . . . . . . 44
DFA Five-Year Government Portfolio. . . . . . . . . . . . . . . . . 44
DFA Intermediate Government Fixed Income Portfolio. . . . . . . . . 44
Description of Investments. . . . . . . . . . . . . . . . . . . . . 45
Investments in the Banking Industry . . . . . . . . . . . . . . . . 46
Portfolio Strategy. . . . . . . . . . . . . . . . . . . . . . . . . 47

RISK FACTORS - ALL PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . 48
Small Company Securities . . . . . . . . . . . . . . . . . . . . . 48
Foreign Securities . . . . . . . . . . . . . . . . . . . . . . . . 48
Investing in Emerging Markets . . . . . . . . . . . . . . . . . . . 48
Foreign Currencies and Related Transactions . . . . . . . . . . . . 49
Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Portfolio Strategies . . . . . . . . . . . . . . . . . . . . . . . 50
Futures Contracts and Options on Futures. . . . . . . . . . . . . . 50
Options on Stock Indices. . . . . . . . . . . . . . . . . . . . . . 50
Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Banking Industry and Real Estate Concentrations . . . . . . . . . . 51
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . 52

MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Investment Services - United Kingdom and Continental
Small Company Series. . . . . . . . . . . . . . . . . . . . . . . 55
Investment Services - Japanese and Pacific Rim Small
Company Series. . . . . . . . . . . . . . . . . . . . . . . . . . 55
Administrative Services - The Feeder Portfolios and
International Small Company Portfolio. . . . . . . . . . . . . . . 55
Client Service Agent - RWB/DFA International High Book to
Market Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . 56
Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . 56

DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . 56

PURCHASE OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
In Kind Purchases . . . . . . . . . . . . . . . . . . . . . . . . . 59

VALUATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Public Offering Price . . . . . . . . . . . . . . . . . . . . . . . 61

DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

<PAGE>

HIGHLIGHTS

PAGE
THE FUND

This prospectus relates to twenty-four separate Portfolios of the Fund.
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 25

The investment objective of each of The following Portfolios (the "Small
Company Portfolios") is to achieve long-term capital appreciation by investing
in marketable stocks of small companies:

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 Pacific Rim Small Company Portfolio
International Small Company Portfolio

The size of a company will be measured by its relative market capitalization.
Each Portfolio, except the U.S. 9-10 Small Company and International Small
Company Portfolios, invests all of its assets in a corresponding Series of the
Trust. The International Small Company Portfolio invests all of its assets in
four Series of the Trust: Japanese Small Company, Pacific Rim Small Company,
United Kingdom Small Company and Continental Small Company Series (collectively,
the "Underlying Series"). Each corresponding Series of the Trust and U.S. 9-10
Small Company Portfolio will be structured by generally basing the amount of
each security purchased on the issuer's relative market capitalization, applied
on a basis of descending values, with a view to achieving a reasonable
reflection of the relative market capitalizations of its portfolio companies.
(See "PORTFOLIO CHARACTERISTICS AND POLICIES - THE SMALL COMPANY PORTFOLIOS.")

INVESTMENT OBJECTIVE - U.S. LARGE COMPANY PORTFOLIO 30

The investment objective of U.S. Large Company Portfolio is to approximate
the investment performance of 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 OBJECTIVES - ENHANCED U.S. LARGE COMPANY PORTFOLIO 31

The investment objective of the Enhanced U.S. Large Company Portfolio is to
achieve a total return which exceeds the total return performance of the S&P 500
Index. The Portfolio will invest all of its assets in the Enhanced U.S. Large
Company Series of the Trust. The Series may invest in all of the stocks
represented in the S&P 500 Index, options on stock indices, stock index futures
and options thereon, swap agreements on stock indices, shares of investment
companies that invest in stock indices and short-term fixed income obligations.

INVESTMENT OBJECTIVE - LARGE CAP INTERNATIONAL PORTFOLIO 32

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.

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INVESTMENT OBJECTIVE - DFA REAL ESTATE SECURITIES PORTFOLIO 34

The investment objective of DFA 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 35

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.

INVESTMENT OBJECTIVE - RWB/DFA INTERNATIONAL HIGH
BOOK TO MARKET PORTFOLIO 37

The investment objective of the RWB/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 38

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 OBJECTIVES - EMERGING MARKETS PORTFOLIO AND EMERGING MARKETS
SMALL CAP PORTFOLIO 40

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

INVESTMENT OBJECTIVES - FIXED INCOME PORTFOLIOS 42

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 Two-Year Corporate Fixed Income Portfolio
is to maximize total returns consistent with the preservation of capital. The
Portfolio will invest all of its assets in DFA Two-Year Corporate Fixed Income
Series of the Trust. Generally, the Series will acquire high quality
obligations which mature within two years from the date of settlement. 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 Two-Year Global Fixed Income Portfolio is
to maximize total returns consistent with preservation of capital. The
Portfolio will invest all of its assets in DFA Two-Year Global Fixed Income
Series of the Trust. The Series will invest in obligations issued or guaranteed
by the U.S. and foreign governments, their agencies and instrumentalities,
corporate debt obligations, bank obligations, commercial paper,

2
<PAGE>

and obligations of other foreign issuers and supranational organizations which
mature within two years from the date of settlement. 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 Two-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 and consistent with preservation of
capital. The Portfolio will invest all of its assets in DFA Two-Year Government
Series of the Trust. Generally, the Series will acquire U.S. Government
obligations and U.S. Government agency obligations that mature within two years
from the date of settlement and repurchase agreements.

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 48

Japanese Small Company Portfolio, United Kingdom Small Company Portfolio,
Continental Small Company Portfolio, Pacific Rim Small Company Portfolio,
International Small Company Portfolio, Large Cap International Portfolio, DFA
International Small Cap Value Portfolio, RWB/DFA International High Book to
Market Portfolio, Emerging Markets Portfolio and Emerging Markets Small Cap
Portfolio (collectively, the "International Equity Portfolios"), DFA Two-Year
Global Fixed Income Portfolio, Enhanced U.S. Large Company Portfolio and DFA
Global Fixed Income Portfolio (directly or indirectly through their investment
in the Trust Series) invest in foreign securities which are traded abroad.

DFA One-Year Fixed Income Series, DFA Two-Year Corporate Fixed Income
Series and DFA Two-Year Global Fixed Income Series and Enhanced U.S. Large
Company Series of the Trust, in which the corresponding Feeder Portfolios
invest, are 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. The DFA One-Year Fixed Income Series, DFA
Two-Year Corporate Fixed Income Series and DFA Two-Year Global Fixed Income
Series also are authorized to concentrate investments in the banking industry in
certain circumstances. DFA 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 RWB/DFA International High Book to Market Portfolio and DFA Real
Estate Securities Portfolio may invest in stock index futures contracts and
options thereon and the U.S. Large Company, the Value and Enhanced U.S. Large
Company Series of the Trust, in which the corresponding Portfolios invest, also
may purchase and sell index futures and options thereon. The Enhanced U.S.
Large Company Series and its corresponding Feeder Portfolio also may invest in
options on stock indices and swap agreements on stock indices.

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.")

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MANAGEMENT AND ADMINISTRATIVE SERVICES 52

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 Series of the Trust. DFA Australia Ltd.
serves as sub-advisor of Japanese and Pacific Rim Small Company Series of the
Trust. The Advisor provides each Feeder Portfolio and International Small
Company Portfolio with certain administrative services. Reinhardt Werba Bowen
Advisory Services serves as client service agent to the RWB/DFA International
High Book to Market Portfolio. (See "MANAGEMENT OF THE FUND.")

DIVIDEND POLICY 56

The Domestic and International Equity Portfolios, except for U.S. Large
Company, Enhanced U.S. Large Company and U.S. Large Cap Value Portfolios, each
distribute substantially all of their own net investment income in December of
each year. U.S. Large Company, Enhanced U.S. Large Company, U.S. Large Cap
Value, DFA Two-Year Corporate Fixed Income, DFA Two-Year Government, DFA
Intermediate Government Fixed Income, DFA Two-Year Global Fixed Income and DFA
Global Fixed Income Portfolios 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 59

Shares of the International Equity Portfolios (except United Kingdom Small
Company, Large Cap International and RWB/DFA International High Book to Market
Portfolios) 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 Continental and Pacific Rim Small Company Portfolios and
the Emerging Markets Small Cap Portfolio; 0.50% of the net asset value of the
shares of Japanese Small Company Portfolio and Emerging Markets Portfolio; and
0.70% of the net asset value of the shares of DFA International Small Cap Value
Portfolio. The reimbursement fee for the International Small Company Portfolio
is based on the current target investment allocations among the Underlying
Series. The reimbursement fee for the International Small Company Portfolio
will change from time to time if the portfolio changes the target investment
allocation in the Underlying Series. As of the date of this Prospectus, the
reimbursement fee for the Portfolio equals 0.70% of the net asset value of the
shares of International Small Company 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. No reimbursement fee is assessed in connection with any
purchase of shares by exchange between International Small Company Portfolio and
any of the Feeder Portfolios which invest in the Underlying Series. 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 each Feeder Portfolio and International
Small Company Portfolio will fluctuate in relation to the investment experience
of the Series of the Trust in which such Portfolios invest. The value of the
shares issued by all other Portfolios will fluctuate in relation to their own
investment experience. Unlike shares of 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.")

4
<PAGE>

SHAREHOLDER TRANSACTION EXPENSES

REIMBURSEMENT FEES (as percentage of original purchase price)(1)
Japanese Small Company Portfolio 0.50%
Continental Small Company Portfolio 1.00%
Pacific Rim Small Company Portfolio 1.00%
Emerging Markets Portfolio 0.50%
Emerging Markets Small Cap Portfolio 1.00%
DFA International Small Cap Value Portfolio 0.70%
International Small Company Portfolio 0.70%

______________________________
1 Reimbursement fees are charged to purchasers of shares and paid to these
Portfolios, except in the case of certain purchases permitted to be made by
exchange (see "EXCHANGE OF SHARES"). 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.) The Japanese Small Company, Continental
Small Company, Pacific Rim Small Company, Emerging Markets and Emerging Markets
Small Cap Series of the Trust charge a reimbursement fee to purchasers of
shares, including International Small Company Portfolio, equal to the
reimbursement fee charged by its corresponding Feeder Portfolio as set forth
above.

Except as indicated below, the expenses in the following table are based
on those incurred by the Portfolios and Series for the fiscal year ended
November 30, 1996.

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% -- 0.11% 0.61%

U.S. 6-10 Small Company(1) 0.03% 0.32% 0.13% 0.48%

U.S. Large Company(1)(2)
(after waivers and assumptions) 0.025% 0.125% -- 0.15%

Enhanced U.S. Large Company(1)(3) 0.05% 0.15% 0.52% 0.72%
</TABLE>

____________________________
(1) Feeder Portfolio
(2) Beginning August 9, 1996, the Advisor has agreed to waive .09% of the fee
payable under the administration agreement. The above figures have been
restated to reflect operating expenses as though that waiver had been in
effect throughout the fiscal year ended November 30, 1996.
(3) "Other Expenses" are annualized estimates based on anticipated fees and
expenses through the fiscal year ending November 30, 1997. With respect to
International Small Company Portfolio, the amount set forth under
"Management Fee" reflects the indirect payment of a portion of the
management fee of each Underlying Series, which is equal to 0.10% of the
average net assets of such Series on an annual basis; the amounts set forth
under "Other Expenses" and "Total Operating Expenses" also reflect the
indirect payment of a portion of the expenses of the Underlying Series.

5
<PAGE>

U.S. Large Cap Value(1) 0.10% 0.15% 0.11% 0.36%
</TABLE>

<PAGE>

Japanese Small Company(1)(5) 0.10% 0.40% 0.24% 0.74%

Pacific Rim Small Company(1)(5) 0.10% 0.40% 0.36% 0.86%

United Kingdom Small Company(1)(5) 0.10% 0.40% 0.26% 0.76%

Emerging Markets(1) 0.10% 0.40% 0.65% 1.15%

Emerging Markets Small Cap(1)(2) 0.20% 0 .45% 0.95% 1.60%

Continental Small Company(1)(5) 0.10% 0 .40% 0.25% 0.75%

International Small Company(2) 0.10% 0 .40% 0.27% 0.77%

Large Cap International 0.25% 0.33% 0.58%

RWB/DFA International High Book to Market(1) 0.20% 0.20% 0.14% 0.54%

DFA International Small Cap Value 0.65% 0.34% 0.99%

DFA One-Year Fixed Income(1) 0.05% 0.10% 0.06% 0.21%

DFA Two-Year Corporate Fixed Income(1)(2) 0.15% 0.05% 0.35% 0.55%

DFA Two-Year Global Fixed Income(1)(2) 0.05% 0.10% 0.18% 0.33%

DFA Global Fixed Income 0.25% 0.21% 0.46%

DFA Two-Year Government(1)(2) 0.15% 0.05% 0.39% 0.59%

DFA Five-Year Government 0.20% 0.10% 0.30%
</TABLE>

7
<PAGE>

________________________________
(1) Feeder Portfolio

(2) "Other Expenses" are annualized estimates based on anticipated fees and
expenses through the fiscal year ending November 30, 1997. With respect
to International Small Company Portfolio, the amount set forth under
"Management Fee" reflects the indirect payment of a portion of the
management fee of each Underlying Series, which is equal to 0.10% of the
average net assets of such Series on an annual basis; the amounts set forth
under "Other Expenses" and "Total Operating Expenses" also reflect the
indirect payment of a portion of the expenses of the Underlying Series.

* 1 moved from here; text not shown

(4) Effective December 20, 1996, the investment advisory fee payable by
the Fund on behalf of the DFA Real Estate Securities Portfolio to the
Adviser was reduced from .325% of the Portfolio's average net assets
on an annual basis to .30% of the Portfolio's average net assets on an
annual basis. Effective December 11, 1996, the sub-advisory agreement
between the Fund, on behalf of the Portfolio, and Aldrich, Eastman and
Waltch L.P. ("AEW") terminated; pursuant to the terms of the sub-
advisory agreement previously in effect, the Portfolio paid AEW a fee
equal to .175% of its average net assets on an annual basis. The
above figures have been restated to reflect the reduction in the
advisory fee and termination of the sub-advisory agreement as though
they were both in effect throughout the fiscal year ended November
30, 1996. See "Management of the Fund."

** 1 (5) Prior to August 9, 1996, the Feeder Portfolio invested its assets
directly in the stocks of small companies. The above figures have
been restated to reflect estimated aggregate annualized operating
expenses of the Feeder Portfolio and its corresponding Series as
though the Feeder Portfolio's assets had been invested in the Series
throughout the fiscal year ended November 30, 1996.

8
<PAGE>

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>
U.S. 9-10 Small Company 6 20 34 76
U.S. 6-10 Small Company 5 15 27 60
U.S. Large Company 2 5 8 19
Enhanced U.S. Large Company 7 23 n/a n/a
U.S. Small Cap Value 6 20 34 76
U.S. Large Cap Value 4 12 20 46
DFA Real Estate Securities 5 16 29 64
Japanese Small Company 13 29 46 96
Pacific Rim Small Company 19 37 57 115
United Kingdom Small Company 8 24 42 94
Emerging Markets 17 41 68 144
Emerging Markets Small Cap 26 60 n/a n/a
Continental Small Company 18 34 51 102
International Small Company 15 31 n/a n/a
Large Cap International 6 19 32 73
RWB/DFA International High Book to Market 6 17 30 68
DFA International Small Cap Value 17 38 61 127
DFA One-Year Fixed Income 2 7 12 27
DFA Two-Year Corporate Fixed Income 6 18 n/a n/a
DFA Two-Year Global Fixed Income 3 11 n/a n/a
DFA Global Fixed Income 5 15 26 58
DFA Two-Year Government 6 19 n/a n/a
DFA Five-Year Government 3 10 17 38
DFA Intermediate Government Fixed Income 3 8 15 33

</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 EXAMPLE SHOULD NOT BE

9
<PAGE>

CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN.

10
<PAGE>

With respect to the Feeder Portfolios and International Small Company
Portfolio, the table summarizes the aggregate annual operating expenses of both
the Portfolios and the Series of the Trust in which the Portfolios invest. (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 be if the Feeder Portfolios were to invest 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 be 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 be if the Portfolios were 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. By
investing in shares of the Underlying Series, International Small Company
Portfolio will indirectly bear its pro rata share of the operating expenses,
management expenses and brokerage costs of such Series, as well as the expense
of operating the Portfolio.

The Enhanced U.S. Large Company, DFA Two-Year Corporate Fixed Income, DFA
Two-Year Global Fixed Income, DFA Two-Year Government, Emerging Markets Small
Cap (and their corresponding Trust Series) and International Small Company
Portfolios are new and, therefore, the above example is based on estimated
expenses for the current fiscal year and does not extend over five and ten-year
periods.

During the fiscal year ended November 30, 1996, pursuant to the terms of
the current administration agreement with respect to the U.S. Large Company
Portfolio, the Advisor agreed to waive its fees and/or assume the expenses of
the Portfolio to the extent (1) necessary to pay the ordinary operating expenses
of the Portfolio (except the administration fee); and (2) that the indirect
expenses the Portfolio bears as a shareholder of the Series, on an annual basis,
exceed 0.025% of the Portfolio's average net assets. Beginning August 9, 1996,
in addition to the waiver/assumption effective on December 1, 1995, the Adviser
agreed to assume expenses or waive the fee payable by the U.S. Large Company
Portfolio under the administration agreement by an additional .09% of average
assets on an annual basis. Such expenses were not subject to reimbursement by
the series and the U.S. Large Company Portfolio. Absent this arrangement, the
annualized ratio of total operating expenses to average net assets for U.S.
Large Company Portfolio for the fiscal year ended November 30, 1996, would have
been 0.45%.

From December 1, 1993 through August 8, 1996, the Advisor agreed to waive
its fee under the Investment Management Agreement with respect to 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. For the fiscal year ended November 30, 1996,
the Advisor was not required to waive any portion of its fee pursuant to such
agreement.

Effective August 9, 1996, the Advisor agreed to waive its administrative
fee and assume the direct expenses of the Japanese Small Company, United Kingdom
Small Company, Continental Small Company and Pacific Rim Small Company
Portfolios to the extent necessary to keep the direct annual expenses of each
Portfolio to not more than 0.47% of average net assets of the Portfolio on an
annualized basis; this arrangement does not extend to the fees and expenses of
the Trust Series.

The Advisor has agreed to waive its administration fee and assume the
direct expenses of the International Small Company Portfolio to the extent
necessary to keep the administration fee and direct annual expenses of the
Portfolio to not more than 0.45% of average net assets of the Portfolio on an
annualized basis; this arrangement does not extend to the fees and expenses of
the Underlying Series. Absent this arrangement, the annualized ratio of total
operating expenses to average net assets for International Small Company
portfolio for the fiscal year ended November 30, 1996, would have been 0.54%.

11
<PAGE>

For purposes of waivers and/or expense assumptions, the annual expenses are
those expenses incurred in any period consisting of twelve consecutive months.
The Advisor retains the right in its sole discretion to modify or eliminate the
waiver of a portion of its fees or assumption of expenses in the future.

For the fiscal year ended November 30, 1996, the following equity
Portfolios or Series set forth below received the following net revenue from a
securities lending program which constituted a percentage of the average daily
net assets of the Portfolio or Series:

PORTFOLIO/SERIES NET REVENUE PERCENTAGE OF ASSETS
---------------- ----------- --------------------
<S> <C> <C>
Japanese Small Company Portfolio(1) $756,984 0.20%
Pacific Rim Small Company Portfolio(1) $ 46,649 0.02%
Continental Small Company Portfolio(1) $105,835 0.03%
Large Cap International Portfolio $ 14,829 0.02%
U.S. 9-10 Small Company Portfolio $392,926 0.04%
DFA International Small Cap Value Portfolio $112,184 0.04%
U.S. 6-10 Small Company Series $114,441 0.04%
U.S. Large Company Series $ 6,622 0.00%
U.S. Small Cap Value Series $241,687 0.03%
U.S. Large Cap Value Series $ 18,310 0.00%
Japanese Small Company Series(2) $412,942 0.12%
DFA International Value Series (2) $814,965 0.08%
Pacific Rim Small Company Series (2) $ 30,183 0.01%
Continental Small Company Series (2) $ 33,043 0.01%
</TABLE>

(1) Represents net revenue from securities lending for the period December 1,
1995 to August 9, 1996, at which date the Portfolio became a feeder
portfolio.
(2) Represents net revenue from securities lending for the period August 10,
1996 to November 30, 1996, which is the period from inception for such
Series.

CONDENSED FINANCIAL INFORMATION

The following financial highlights are part of the financial statements of
each Portfolio of the Fund other than the DFA Two-Year Corporate Fixed Income,
DFA Two-Year Government and Emerging Markets Small Cap Portfolios, which had not
commenced operations by November 30, 1996. The information for each of the past
fiscal years has been audited by independent auditors. The financial
statements, related notes, and the report of the independent auditors covering
such financial information and financial highlights for the Fund's most recent
fiscal year ended November 30, 1996, are incorporated by reference into the
Statement of Additional Information from the Fund's Annual Report to
shareholders for the year ended November 30, 1996. Further information about
each Portfolio's performance (other than the DFA Two-Year Corporate Fixed
Income, DFA Two-Year Government and Emerging Markets Small Cap Portfolios) is
contained in the Fund's Annual Report to shareholders for the year ended
November 30, 1996. A copy of the Annual Report (including the report of the

12
<PAGE>

independent auditors) may be obtained from the Fund upon request at no charge.
The "Transfer" transaction referred to below in the Financial Highlights refers
to the transaction which took place on August 9, 1996, in which the four
portfolios of the Fund, the Japanese Small Company Portfolio, the Pacific Rim
Small Company Portfolio, the United Kingdom Small Company Portfolio, and the
Continental Small Company Portfolio, respectively, each transferred their
investable assets in exchange for shares with equal values of a corresponding
Series of the Trust.

13
<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

THE U.S. 9-10 SMALL COMPANY PORTFOLIO
Year Year Year Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.03 $8.49 $ 8.69 $7.75 $6.33 $5.34 $7.74 $7.66 $7.50 $8.94

INCOME FROM INVESTMENT
OPERATIONS

Net Investment Income 0.03 0.05 0.01 0.03 0.04 0.04 0.07 0.07 0.10 0.09
Net Gains (Losses) on
Securities (Realized
and Unrealized) 1.85 2.61 0.40 1.67 1.53 1.64 (1.77) 0.98 1.48 (1.53)

Total From Investment
Operations 1.88 2.66 0.41 1.70 1.57 1.68 (1.70) 1.05 1.58 (1.44)
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS

Net Investment Income (0.01) (0.04) (0.03) (0.05) (0.05) (0.07) (0.08) (0.09) (0.11) -

Net Realized Gains (0.76) (0.08) (0.58) (0.71) (0.10) (0.62) (0.62) (0.88) (1 .31) -

Total Distributions (0.77) (0.12) (0.61) (0.76) (0.15) (0.69) (0 .70) (0.97) (1.42) -
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End
of Period $12.14 $11.03 $8.49 $8.69 $7.75 $6.33 $5.34 $7.74 $7.66 $7.50
- ----------------------------------------------------------------------------------------------------------------------------------

Total Return 18.05% 31.37% 5.06% 23.91% 25.24% 39.08% (24.09)% 16.09% 24 .36% (16 .04)%
- ----------------------------------------------------------------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL
DATA

Net Assets, End of $1,181,804 $925,474 $659,221 $630,918 $651,313 $722,289 $561,102 $949,291 $912,518 $788,821
Period (thousands)

Ratio of Expenses to
Average Net Assets 0.61% 0.62% 0.65% 0.70% 0.68% 0.64% 0.62% 0.62% 0.62% 0.61%
</TABLE>

14
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of Net
Investment
Income to Average 0.22% 0.45% 0.16% 0.26% 0.53% 0.75% 0.99% 0.86% 1.19% 0.92%
Net Assets

Portfolio Turnover 23.68% 24.65% 16.56% 9.87% 9.72% 10 .13% 3.79% 7.86% 25 .98% 23.05%
Rate

Average Commission
Rate(1) $0.0604 N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.

15
<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
THE U.S. 6-10 SMALL COMPANY PORTFOLIO THE U.S. LARGE COMPANY PORTFOLIO
Year Year Year Year March 20 Year Year Year Year Year Dec. 31
Ended Ended Ended Ended To Ended Ended Ended Ended Ended 1990 To
Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1992 1996 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $12.64 $11.08 $11.43 $10.35 $10.00 $18.12 $13.58 $13.91 $13.12 $11.44 $10.00

INCOME FROM
INVESTMENT OPERATIONS

Net Investment 0.11 0.09 0.09 0.08 0.04 0.41 0.35 0.37 0.36 0.36 0.34
Income

Net Gains (Losses)
on Securities 2.20 2.81 (0.07) 1.43 0.31 4.52 4.57 (0.22) 0.87 1.69 1.34
(Realized
and Unrealized)
Total From
Investment 2.31 2.90 0.02 1.51 0.35 4.93 4.92 0.15 1.23 2.05 1.68
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS

Net Investment
Income (0.02) (0.14) (0.09) (0.11) - (0.31) (0.36) (0.37) (0.44) (0.37) (0.24)
Net Realized Gains (0.40) (1.20) (0.28) (0.32) - (0.01) (0.02) (0.11) - - -

Total Distributions (0.42) (1.34) (0.37) (0.43) - (0.32) (0.38) (0.48) (0.44) (0.37) (0.24)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End
of $14.53 $12.64 $11.08 $11.43 $10.35 $22.73 $18.12 $13.58 $13.91 $13.12 $11.44
Period
- -----------------------------------------------------------------------------------------------------------------------------------

Total Return 18.73% 28.75% 0.22% 14.72% 6.70%# 27.49% 36.54% 1.04% 9.48% 18.23% 16.80%#
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA

Net Assets, End of
Period (thousands) $234,194 $186,644 $112,137 $136,863 $134,418 $187,757 $97,111 $48,638 $37,830 $34,908 $22,279

Ratio of Expenses
to Average Net 0.48% 0.49% 0.53% 0.58% 0.48%* 0.21%(a)0.24%(a) 0.24%(a) 0.24%(a) 0.11%(a)0.00%*(a)
Assets**
Ratio of Net
Investment
Income to Average 0.75% 0.83% 0.72% 0.70% 0.96%* 2.10%(a)2.29%(a) 2.75%(a) 2.48%(a) 2.86%(a)3.42%*(a)
Net Assets

Portfolio Turnover N/A*** N/A*** N/A*** 1.81%*(b) 3.41%* N/A*** N/A*** N/A*** 27.67%(b) 3.56% 0.97%*
Rate
</TABLE>

16
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Commission
Rate N/A*** N/A N/A N/A N/A N/A*** N/A N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized
** Represents the combined ratio for the respective portfolio and its
respective pro-rata share of its Master Fund Series for the year ended
November 30, 1993 and subsequent periods.
*** Refer to the respective Master Fund Series.
# Non-Annualized

(a) Had certain waivers and reimbursements not been in effect, the ratios of
expenses to average net assets for the periods ended November 30, 1996,
1995, 1994, 1993, 1992 and 1991 would have been 0.45%, 0.46%, 0.66%,
0.79%, 0.53% and 0.52%, respectively, and the ratios of net investment
income to average net assets for the periods ended November 30, 1996,
1995, 1994, 1993, 1992, and 1991 would have been 1.85%, 2.23%, 2.64%,
2.28%, 2.44% and 2.90%, respectively.

(b) Portfolio turnover calculated for the periods December 1, 1992 to February
2, 1993 and December 1, 1992 to February 7, 1993, respectively (through
date of Exchange transaction, see respective Master Fund Series for rate
subsequent to Exchange transaction).

17
<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
THE U.S. SMALL CAP VALUE PORTFOLIO THE U.S. LARGE CAP VALUE PORTFOLIO
Year Year Year March 2 Year Year Year Feb. 19
Ended Ended Ended to Ended Ended Ended to
Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $14.03 $11.13 $11.04 $10.00 $13.29 $9.91 $10.60 $10.00

INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.11 0.10 0 .14 0 .11 0.30 0.29 0.32 0.18

Net Gains (Losses) on
Securities (Realized
and Unrealized) 2.93 3.06 0.10 1.03 2.62 3.55 (0.68) 0.59
Total From Investment
Operations 3.04 3.16 0.24 1.14 2.92 3.84 (0.36) 0.77
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS

Net Investment Income (0.02) (0.10) (0.15) (0.10) (0.23) (0.29) (0.33) (0.17)
Net Realized Gains (0.05) (0.16) - - - (0.17) - -
Total Distributions (0.07) (0.26) (0.15) (0 .10) (0.23) (0.46) (0.33) (0.17)

Net Asset Value, End of
Period $17.00 $14.03 $11.13 $11.04 $15.98 $13.29 $9.91 $10.60
Total Return 21.70% 28.41% 2.19% 11.39%# 22.20% 39.13% (3.27)% 7.59%#
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

Net Assets, End of
Period (thousands) $1,207,298 $609,950 $344,148 $95,682 $541,149 $280,915 $197,566 $90,288

Ratio of Expenses to
Average Net Assets** 0.61% 0.64% 0.66% 0.70%* 0.36% 0.42% 0.44% 0.47%*
Ratio of Net Investment
Income to Average
Net Assets 0.78% 0.85% 1.69% 1.97%* 2.17% 2.49% 3.50% 3.38%*

Portfolio Turnover Rate N/A*** N/A*** N/A*** N/A*** N/A*** N/A*** N/A*** N/A***
Average Commission Rate N/A*** N/A N/A N/A N/A*** N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized
** Represents the respective combined ratio for The U.S. Small Cap Value
Portfolio and The U.S. Large Cap Value Portfolio and their pro-rata shares
of their respective Master Fund Series.
*** Refer to the respective Master Fund Series.
# Non-annualized

18
<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
The DFA Real Estate Securities Portfolio THE ENHANCED U.S. LARGE
COMPANY PORTFOLIO
Year Year Year Jan 5 Period from
Ended Ended Ended to July 3, 1996
Nov. 30 Nov. 30 Nov. 30 Nov. 30 TO November 30, 1996
1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.00 $9.28 $10.92 $10.00 $10.00
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.71 0.61 0.37 0.20 0.12

Net Gains (Losses) on
Securities (Realized
and Unrealized) 2.08 0.68 (1.65) 0.91 1.71
Total From Investment
Operations 2.79 1.29 (1.28) 1.11 1.83
- ----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS

Net Investment Income (0.14) (0.46) (0.28) (0.19) -
Net Realized Gains - - - - -
Tax Return of Capital - (0.11) (0 .08) - -
Total Distributions (0.14) (0.57) (0.36) (0.19) -
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $12.65 $10.00 $9.28 $10.92 $11.83
- ----------------------------------------------------------------------------------------------------------------------------

Total Return 28.24% 14.00% (11.76)% 11.08%# 18.30% #
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of
Period (thousands) $64,390 $43,435 $30,456 $22,106 29,236
Ratio of Expenses to
Average Net Assets** 0.71% 0.82% 0.90% 0.88%* 0.65%*(2)

Ratio of Net Investment
Income to Average
Net Assets 7.08% 6.76% 3.90% 2.63%* 3.44%*(2)
Portfolio Turnover Rate 11.25% 0.66% 28.87% 0.55%* N/A***
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

19
<PAGE>

<TABLE>
<S> <C> <C> <C> <C> <C>
Average Commission
Rate(1) $0.0455 N/A N/A N/A N/A***
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized

** Represents the combined ratios for the Enhanced U.S. Large Company
Portfolio and its pro-rata share of its Master Fund Series.
*** Refer to Master Fund Series.

# Non-annualized
(1) Computed by dividing the total amount of brokerage commissions paid by
the total shares of investment securities purchased and sold during the
period for which commissions were charged, as required by the SEC for
fiscal years beginning after September 1, 1995.
(2) Because of commencement of operations and related preliminary transaction
costs, these ratios are not necessarily indicative of future ratios.
N/A Refer to the respective Master Fund Series.

20
<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
THE PACIFIC RIM SMALL COMPANY PORTFOLIO THE INTERNATIONAL SMALL
---------------------------------------------------- COMPANY PORTFOLIO
-----------------------
YEAR Year Year Jan. 5 OCT. 1
Ended Ended Ended to TO
NOV. 30 Nov. 30 Nov. 30 Nov. 30 NOV. 30
1996 1995 1994 1993 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

Net Asset Value,
Beginning of Period $14.38 $15.98 $16.45 $10.00 10.00
Income from Investment
Operations
Net Investment Income 0.27 0 .34 0.23 0.11 0.01

Net Gains (Losses) on
Securities (Realized
and Unrealized) 2.40 (1.33) 0.47 6.46 (0.05)
Total From Investment
Operations 2.67 (0.99) 0.70 6.57 (0.04)
- ----------------------------------------------------------------------------------------------------------------------------
Less Distributions

Net Investment Income (0.02) (0.34) (0.23) (0.09) -
Net Realized Gains (0.40) (0.27) (0.94) (0.03) -
Total Distributions (0.42) (0.61) (1.17) (0.12) _
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $16.63 $14.38 $15.98 $16.45 $9.96
============================================================================================================================
Total Return 19.06% (6.27)% 4.26% 65.71%# (0.40)%#
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Period (thousands) $215,542 $193,137 $212,953 $164,623 $104,118
Ratio of Expenses to
Average Net Assets** 0.84% 0.83% 0.95% 1.16%* 0.70%*(b)
Ratio of Net Investment
Income to Average
Net Assets 1.70% 2.22% 1.47% 1.27%* 0.54%*(b)

Portfolio Turnover Rate 7.05%*(a) 5.95% 26.05% 2.77%* N/A***

Average Commission N/A***
Rate(1) $0.0094(a) N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------

</TABLE>

* Annualized

<PAGE>

** REPRESENTS THE COMBINED RATIOS FOR THE RESPECTIVE PORTFOLIO AND ITS
RESPECTIVE PRO-RATA SHARE OF ITS MASTER FUND SERIES FOR THE
YEAR ENDED NOVEMBER 30, 1996.
*** REFER TO MASTER FUND SERIES.
# Non-annualized
(A) PORTFOLIO TURNOVER AND AVERAGE COMMISSION CALCULATED FOR THE PERIOD
DECEMBER 1, 1995, TO AUGUST 9, 1996 (THROUGH DATE OF TRANSFER
TRANSACTION, SEE MASTER FUND SERIES FOR RATES SUBSEQUENT TO TRANSFER
TRANSACTION).
(B) BECAUSE OF COMMENCEMENT OF OPERATIONS AND RELATED PRELIMINARY TRANSACTION
COSTS, THESE RATIOS ARE NOT NECESSARILY INDICATIVE OF FUTURE RATIOS.
ADDITIONALLY, HAD CERTAIN WAIVERS NOT BEEN IN EFFECT, THE RATIO OF
EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 0.79% AND THE RATIO OF
NET INVESTMENT INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 0.45%.

(1) Computed by dividing the total amount of brokerage commissions paid by
the total shares of investment securities purchased and sold during the
period for which commissions were charged, as required by the SEC for
fiscal years beginning after September 1, 1995.

<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

THE JAPANESE SMALL COMPANY PORTFOLIO
------------------------------------------------------------------------------------------------------
Year Year Year Year Year Year Year Year Year YEAR
Ended Ended Ended Ended Ended Ended Ended Ended Ended ENDED
Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $22.78 $25.06 $19.96 $18.92 $25.05 $26.27 $38.33 $31.03 $24.87 $14.39
Income from Investment
Operations
Net Investment Income 0.07 0.06 0.05 0.04 0.04 (0.01) (0.03) (0.09) (0.05) (0.01)
(Loss)
Net Gains (Losses)
on
Securities (Realized (1.45) (1.65) 5.76 1.75 (5.69) 0.51 (10.74) 9.09 10.42 10.53
and Unrealized)

Total From Investment
Operations (1.38) (1.59) 5.81 1.79 (5.65) 0.50 (10.77) 9.00 10.37 10.52
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions

Net Investment Income (0.01) (0.06) (0.04) (0.05) - - - - - -

-
Net Realized Gains (0.36) (0.63) (0.67) (0.70) (0.48) (1.72) (1.29) (1.70) (4.21) (0.04)

Total Distributions (0.37) (0.69) (0.71) (0.75) (0.48) (1.72) (1.29) (1.70) (4.21) (0.04)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End
of $21.03 $22.78 $25.06 $19.96 $18.92 $25.05 $26.27 $38.33 $31.03 $24.87
Period
==================================================================================================================================
Total Return (6.28)% (6.54)% 29.59% 9.52% (23.01)% 1.68% (29.12)% 30.63% 47.62% 73.09%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data

$294,120 $371,113 $330,674 $209,244 $139,892 $159,475 $149,100 $168,820 $107,863 $60,450
Net Assets, End of
Period (thousands)
Ratio of Expenses
to 0.72% 0.74% 0.76% 0.82% 0.78% 0.78% 0.83% 0.76% 0.76% 0.78%
Average Net
Assets**

<PAGE>

Ratio of Net
Investment
Income to Average 0.24% 0.25% 0.10% 0.06% 0.10% (0.11)% (0.22)% (0.34)% (0.23)% (0.08)%
Net Assets

Portfolio Turnover 18.52%*(a) 7.79% 10.51% 9.36% 5.00% 2.71% 10.26% 5.76% 9.14% 0.07%
Rate
Average Commission
Rate(1) $0.0458(a) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized

** REPRESENTS THE COMBINED RATIOS OF THE PORTFOLIO AND ITS PRO-RATA SHARE OF
ITS MASTER FUND SERIES FOR THE YEAR ENDED NOVEMBER 30, 1996.
(a) PORTFOLIO TURNOVER AND AVERAGE COMMISSION CALCULATED FOR THE PERIOD
DECEMBER 1, 1995, TO AUGUST 9, 1996 (THROUGH DATE OF TRANSFER TRANSACTION,
SEE MASTER FUND SERIES FOR RATES SUBSEQUENT TO TRANSFER TRANSACTION).

<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
THE UNITED KINGDOM SMALL COMPANY PORTFOLIO
----------------------------------------------------------------------------------------------------
Year Year Year Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
NOV. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $24.09 $23.20 $21.22 $16.38 $21.37 $20.41 $22.55 $28.29 $23.41 $16.29
Income from Investment
Operations
Net Investment Income 0.72 0.84 0.48 0.45 0.64 0.69 0.92 0.52 0.61 0.17

Net Gains (Losses) on
Securities (Realized
and Unrealized) 5.31 1.12 2.03 5.34 (4.98) 1.71 (1.34) (4.75) 5.18 7.35
Total From Investment
Operations 6.03 1.96 2.51 5.79 (4.34) 2.40 (0.42) (4.23) 5.79 7.52
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions

Net Investment Income (0.06) (0.76) (0.53) (0.95) (0.65) (0.90) (0.75) (0.54) (0.28) (0.36)

Net Realized Gains (1.59) (0.31) - - - (0.54) (0.97) (0.97) (0.63) (0.04)
Total Distributions (1.65) (1.07) (0.53) (0.95) (0.65) (1.44) (1.72) (1.51) (0.91) (0.40)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End
of Period $28.47 $24.09 $23.20 $21.22 $16.38 $21.37 $20.41 $22.55 $28.29 $23.41
==================================================================================================================================
Total Return 26.76% 8.39% 11.85% 36.42% (20.93)% 12.55% (2.22)% (15.40)% 23.66% 47.44%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets, End of
Period (thousands) $166,789 $167,730 $214,113 $181,789 $121,086 $146,873 $127,137 $119,385 $121,337 $82,197

Ratio of Expenses to
Average Net Assets** 0.73% 0.72% 0.74% 0.78% 0.76% 0.84% 0.83% 0.70% 0.71% 0.85%
Ratio of Net
Investment
Income to Average 2.49% 2.51% 1.95% 2.22% 3.19% 3.44% 4.34% 2.24% 2.58% 1.92%
Net Assets

Portfolio Turnover 3.72%*(a)7.82% 10.75% 8.21% 4.41% 4.50% 10.86% 11.38% 12.55% 9.50%
Rate

<PAGE>

Average Commission
Rate(1) $0.0103(a) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

* Annualized
** REPRESENTS THE COMBINED RATIO OF THE PORTFOLIO AND ITS PRO-RATA SHARE OF
ITS MASTER FUND SERIES FOR THE YEAR ENDED NOVEMBER 30, 1996.

(a) PORTFOLIO TURNOVER AND AVERAGE COMMISSION CALCULATED FOR THE PERIOD
DECEMBER 1, 1995, TO AUGUST 9, 1996 (THROUGH DATE OF TRANSFER TRANSACTION,
SEE MASTER FUND SERIES FOR RATES SUBSEQUENT TO TRANSFER TRANSACTION).

26
<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
THE CONTINENTAL SMALL COMPANY PORTFOLIO
------------------------------------------------------------------------------------------------
Year Year Year Year Year Year Year Year April 15
Ended Ended Ended Ended Ended Ended Ended Ended to
NOV. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1992 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $14.13 $14.63 $12.62 $11.39 $14.18 $16.24 $16.15 $12.02 $10.00
Income from Investment
Operations
Net Investment Income 0.30 0.29 0.18 0.23 0.28 0.27 0.25 0.12 0.17

Net Gains (Losses) on
Securities (Realized
and Unrealized) 1.58 (0.48) 2.10 1.46 (2.11) (1.66) 0.31 4.10 1.85
Total From Investment
Operations 1.88 (0.19) 2.28 1.69 (1.83) (1.39) 0.56 4.22 2.02
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions

Net Investment Income (0.02) (0.29) (0.19) (0.44) (0.26) (0.29) (0.20) (0.09) -
Net Realized Gains (0.73) (0.02) (0.07) (0.02) (0.70) (0.38) (0.27) - -
Tax Return of Capital - - (0.01) - - - - - -

Total Distributions (0.75) (0.31) (0.27) (0.46) (0.96) (0.67) (0.47) (0.09) -
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $15.26 $14.13 $14.63 $12.62 $11.39 $14.18 $16.24 $16.15 $12.02
==================================================================================================================================
Total Return 13.96% (1.33)% 18.19% 15.27% (13.85)% (9.11)% 3.50% 35.62% 20.01%#
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Period (thousands) $299,325 $314,116 $340,992 $266,175 $196,845 $214,054 $245,465 $199,065 $78,689

Ratio of Expenses to
Average Net Assets** 0.73% 0.74% 0.77% 0.83% 0.90% 0.86% 0.89% 0.82% 1.05%*

Ratio of Net Investment
Income to Average
Net Assets 1.81% 1.69% 1.21% 1.61% 2.11% 1.68% 1.63% 1.41% 3.27%*
Portfolio Turnover Rate 3.67%*(a) 9.79% 10.22% 8.99% 6.35% 7.69% 6.24% 5.70% 0.26%*
Average Commission Rate(1) $0.1030(a) N/A N/A N/A N/A N/A N/A N/A N/A

- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized
** REPRESENTS THE COMBINED RATIOS OF THE PORTFOLIO AND ITS PRO-RATA SHARE OF
ITS MASTER FUND SERIES FOR THE YEAR ENDED NOVEMBER 30, 1996.

# Non-annualized

<PAGE>

28
<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
The RWB/DFA International
The Large Cap International Portfolio High Book to Market Portfolio
---------------------------------------------------------- ---------------------------------------
YEAR Year Year Year Year July 15 YEAR Year Year June 10
Ended Ended Ended Ended Ended 1991 to Ended Ended Ended to
NOV. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 NOV. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1992 1991 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $12.60 $11.91 $11.26 $9.63 $10.64 $10.00 $12.02 $11.44 $9.92 $10.00
Income from Investment
Operations
Net Investment Income 0.21 0.15 0.09 0.15 0.11 0.06 0.22 0.19 0.14 0.06

Net Gains (Losses) on
Securities (Realized
and Unrealized) 1.39 0.95 1.11 1.72 (1.04) 0.58 1.53 0.60 1.52 (0.11)
Total From Investment
Operations 1.60 1.10 1.20 1.87 (0.93) 0.64 1.75 0.79 1.66 (0.05)
Less Distributions
- ----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (0.02) (0.18) (0.09) (0.24) (0.07) - (0.01) (0.19) (0.14) (0.03)
Net Realized Gains - (0.23) (0.46) - (0.01) - - (0.02) - -
Total Distributions (0.02) (0.41) (0.55) (0.24) (0.08) - (0.01) (0.21) (0.14) (0.03)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $14.18 $12.60 $11.91 $11.26 $9.63 $10.64 $13.76 $12.02 $11.44 $9.92
==================================================================================================================================
Total Return 12.68% 9.37% 10.74% 19.55% (9.00)% 2.88%# 14.61% 6.95% 16.71% (0.50)%#
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data

Net Assets, End of
Period (thousands) $79,322 $67,940 $55,635 $78,472 $26,041 $4,360 $257,371 $172,017 $112,952 $63,235
Ratio of Expenses to
Average Net Assets** 0.58% 0.57% 0.66% 0.55%(a) 0.50%(a) 0.50%*(a) 0.54% 0.68% 0.69%(b) 0.65%*(b)
Ratio of Net
Investment
Income to Average 1.57% 1.84% 1.18% 1.94%(a) 1.75%(a) 1.96%*(a) 1.88% 1.85% 1.39%(b) 1.40%*(b)
Net Assets

Portfolio Turnover 17.65% 24.44% 33.15% 0.28% 0.20% 2.38%* N/A*** N/A*** 0.15%*(c) 0.41%*
Rate
Average Commission
Rate(1) $0.0160 N/A N/A N/A N/A N/A N/A*** N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized

** Represents the combined RATIOS for The RWB/DFA International High Book to
Market Portfolio and its pro-rata share of its Master Fund Series for the
year ended November 30, 1994 and subsequent periods.

*** Refer to the Master Fund Series.
# Non-annualized

29
<PAGE>

(a) Had certain fees and expenses not been waived or reimbursed, the ratios of
expenses to average net assets for the periods ended November 30, 1993,
1992 and 1991 would have been 0.66%, 1.35% and 2.31%, respectively, and
the ratios of net investment income to average net assets for the periods
ended November 30, 1993, 1992 and 1991 would have been 1.83%, 0.90% and
0.15%, respectively.
(b) Had certain waivers not been in effect, the ratios of expenses to average
net assets for the periods ended November 30, 1994 and 1993 would have
been 0.73% and 0.82%, respectively, and the ratios of net investment income
to average net assets for the periods ended November 30, 1994 and 1993
would have been 1.38% and 1.23%, respectively.
(c) Portfolio turnover calculated for the period December 1, 1993 to February
15, 1994 (through date of Exchange transaction, see Master Fund Series for
rate subsequent to Exchange transaction).
(1) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.

<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
THE DFA
INTERNATIONAL SMALL
THE EMERGING MARKETS PORTFOLIO CAP VALUE PORTFOLIO
------------------------------ -------------------
Year Year April 25 Year Dec. 30
Ended Ended to Ended 1994 to
Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.35 $11.30 $10.00 $9.68 $10.00
-------- -------- -------- -------- --------
Income from Investment
Operations
Net Investment Income
(Loss) 0.09 0.06 (0.02) 0.11 0.05

Net Gains (Losses) on
Securities (Realized
and Unrealized) 1.27 (0.96) 1.32 0.66 (0.32)
-------- -------- -------- -------- --------
Total From Investment
Operations 1.36 (0.90) 1.30 0.77 (0.27)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Net Investment Income - (0.05) - - (0.04)
Net Realized Gains - - - - (0.01)
-------- -------- -------- -------- --------
Total Distributions - (0.05) - - (0.05)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period $11.71 $10.35 $11.30 $10.45 $9.68
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total Return 13.18% (7.96)% 13.00%# 8.01% (2.73)%#
-------- -------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of
Period (thousands) $162,025 $49,337 $15,731 $375,488 $147,125

Ratio of Expenses to
Average Net Assets** 1.15% 1.58% 2.43%* 0.99% 1.23%*

Ratio of Net Investment
Income to Average
Net Assets 1.14% 0.98% (0.44)%* 1.38% 1.43%*

Portfolio Turnover Rate N/A*** N/A*** N/A*** 14.52% 1.62%*
Average Commission Rate(1) N/A*** N/A*** N/A*** $0.0092 N/A
-------- -------- -------- -------- --------
</TABLE>

* Annualized

** Represents the combined ratios for The Emerging Markets Portfolio and its
pro-rata share of its Master Fund Series.

31
<PAGE>

*** Refer to the Master Fund Series.

# Non-annualized

32
<PAGE>
FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
THE DFA ONE-YEAR FIXED INCOME PORTFOLIO
--------------------------------------------------------------------------------------------------------
YEAR Year Year Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.21 $10.05 $10.28 $10.35 $10.33 $10.19 $10.16 $10.12 $10.12 $10.27
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.56 0.60 0.46 0.35 0.43 0.68 0.83 0.82 0.78 0 .69

Net Gains (Losses)
on Securities (Realized
and Unrealized) 0.03 0.17 (0.21) 0.11 0.06 0.16 0.04 0.03 (0.04) (0.08)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Total From Investment
Operations 0.59 0.77 0.25 0.46 0.49 0.84 0.87 0.85 0.74 0.61
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
LESS DISTRIBUTIONS
Net Investment Income (0.56) (0.60) (0.46) (0.38) (0.44) (0.70) (0.84) (0.81) (0.74) (0.68)
Net Realized Gains - (0.01) (0.02) (0.15) (0.03) - - - - (0.08)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Total Distributions (0.56) (0.61) (0.48) (0.53) (0.47) (0.70) (0.84) (0.81) (0.74) (0.76)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Net Asset Value, End
of Period $10.24 $10.21 $10.05 $10.28 $10.35 $10.33 $10.19 $10.16 $10.12 $10.12
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Total Return 5.94% 7.80% 2.48% 4.62% 5.64% 8.61% 8.88% 9.53% 7.61% 6.14%
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Ratio/Supplemental Data
Net Assets, End of
Period (thousands) $854,521 $704,950 $592,226 $608,400 $561,879 $469,276 $412,907 $360,146 $341,551 $342,436
Ratio of Expenses to
Average Net Assets** 0.21% 0.20% 0.21% 0.21% 0.21% 0.21% 0.21% 0.22% 0.22% 0.22%
Ratio of Net Investment
Income to Average
Net Assets 5.39% 5.86% 4.47% 3.38% 4.81% 6.75% 8.27% 8.77% 7.70% 6.82%
</TABLE>

33
<PAGE>

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio Turnover
Rate N/A*** N/A*** N/A*** 61.95%(a) 125.56% 82.26% 96.30% 0 .00% 80 .74% 162.18%
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
</TABLE>

1) RESTATED to reflect a 900% stock dividend as of January 2, 1996)

** Represents the combined ratios for the portfolio and its pro-rata share
of its Master Fund Series for the period ended November 30, 1993 and
subsequent periods.

*** Refer to the Master Fund Series.

(a) Portfolio turnover calculated for period December 1, 1992 to February 7,
1993 (through date of Exchange transaction, see respective Master Fund
Series for rate subsequent to Exchange transaction).

34
<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
THE DFA FIVE-YEAR GOVERNMENT PORTFOLIO(1)
---------------------------------------------------------------------------------------------------------
Year Year Year Year Year Year Year Year Year May 31
Ended Ended Ended Ended Ended Ended Ended Ended Ended to
Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.05 $9.75 $10.55 $10.88 $11.25 $10.64 $10.46 $10.42 $10.33 $10.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations
Net Investment Income 0.65 0.59 0 .48 0.47 0.57 0.81 0.76 0.85 0.62 0.38
Net Gains (Losses) on
Securities (Realized
and Unrealized) 0.09 0.30 (0.80) 0.49 0.31 0.54 0.20 0.05 0.09 (0.05)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total From Investment
Operations 0.74 0.89 (0.32) 0.96 0.88 1.35 0.96 0.90 0.71 0.33
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions
Net Investment Income (0.37) (0.59) (0.48) (0.73) (0.76) (0.74) (0.78) (0.86) (0.58) -
Net Realized Gains - - - (0.56) (0.49) - - - (0.04) -
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions (0.37) (0.59) (0 .48) (1.29) (1.25) (0.74) (0.78) (0.86) (0.62) -
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period $10.42 $10.05 $9.75 $10.55 $10.88 $11.25 $10.64 $10.46 $10.42 $10.33
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Return 7.51% 9.35% (3.13)% 9.46% 8.59% 13.44% 9.72% 9.33% 7.13% 3.26%#
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Ratios/Supplemental Data
Net Assets, End of
Period (thousands) $174,386 $300,921 $235,554 $164,504 $83,543 $56,971 $52,260 $53,039 $4,863 $4,258
Ratio of Expenses to
Average Net Assets 0.30% 0.28% 0.31% 0.31% 0.31% 0.30% 0.30% 0.30% 0.28% 0.27%*
Ratio of Net
Investment
Income to Average 5.63% 6.14% 5.08% 4.75% 5.82% 7.16% 7.91% 8.49% 7.97% 7.50%*
Net Assets
Portfolio Turnover Rate 211.97% 398.09% 52.39% 152.10% 218.60% 223.18% 165.50% 312.59% 253.31% 100.85%*
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>

1) Restated to reflect a 900% stock dividend as of January 2, 1996)

* Annualized
# Non-annualized

35
<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
The DFA
Two-Year
Global Fixed
Income
THE DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO Portfolio
---------------------------------------------------------------------------- ---------
Year Year Year Year Year Year Oct. 22 Feb. 9
Ended Ended Ended Ended Ended Ended to 1996 to
Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1992 1991 1990 1996
------- ------- ------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.24 $10.22 $11.59 $11.20 $11.02 $10.27 $10.00 $10.00
Income from Investment
Operations
Net Investment Income 0.65 0.70 0 .69 0.55 0 .76 0.84 0.09 0.24
Net Gains (Losses) on
Securities (Realized
and Unrealized) (0.13) 1.11 (1.22) 0.66 0.26 0.63 0.18 0.35
------- ------- ------- ------- ------- ------- ------- ------------
Total From Investment
Operations 0.52 1.81 (0.53) 1.21 1.02 1.47 0.27 0.59
------- ------- ------- ------- ------- ------- ------- ------------
Less Distributions
Net Investment Income (0.50) (0.70) (0.68) (0.73) (0.78) (0.72) - (0.22)
Net Realized Gains (0.04) (0.09) (0.16) (0.09) (0.06) - - -
------- ------- ------- ------- ------- ------- ------- ------------
Total Distributions (0 .54) (0.79) (0.84) (0.82) (0.84) (0.72) - (0.22)
------- ------- ------- ------- ------- ------- ------- ------------
Net Asset Value, End of
Period $11.22 $11.24 $10.22 $11.59 $11.20 $11.02 $10.27 $10.37
------- ------- ------- ------- ------- ------- ------- ------------
------- ------- ------- ------- ------- ------- ------- ------------
Total Return 4.98% 18.04% (4.72)% 12.84% 9.70% 14.94% 2.63%# 6.01%#
------- ------- ------- ------- ------- ------- ------- ------------
Ratios/Supplemental Data
Net Assets, End of
Period (thousands) $107,944 $78,087 $60,827 $53,051 $40,160 $29,393 $25,567 $319,343
Ratio of Expenses to
Average Net Assets 0.26% 0.27% 0.29% 0.32% 0.29% 0.28% 0.23%* 0.33%*(a)
Ratio of Net Investment
Income to Average
Net Assets 6.22% 6.44% 6.45% 6.41% 7.05% 7.86% 8.73%* 3.10%*(a)

Portfolio Turnover Rate 30.84% 40.79% 27.15% 16 .91% 17.91% 19.72% 0.00%* N/A***
</TABLE>

36
<PAGE>

1) RESTATED TO REFLECT A 900% STOCK DIVIDEND AS OF JANUARY 2, 1996)

* Annualized
** Represents the combined ratio for The DFA Two-Year Global Fixed Income
Portfolio and its pro-rata share of its Master Fund Series.

*** Refer to the Master Fund Series.

# Non-annualized

(a) Because of commencement of operations and related preliminary transaction
costs, these ratios are not necessarily indicative of future ratios.

37
<PAGE>

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
THE DFA GLOBAL FIXED INCOME PORTFOLIO
----------------------------------------------------------------------------
Year Year Year Year Year Year Nov. 6
Ended Ended Ended Ended Ended Ended to
Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30 Nov. 30
1996 1995 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.51 $9.81 $10.56 $10.36 $10.47 $10.02 $10.00
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income
(Loss) 0.50 0.39 0.35 0.40 0.54 0.66 0.04
Net Gains (Losses) on
Securities (Realized
and Unrealized) 0.61 1.08 (0.65) 0.73 0.26 0.26 (0.02)
------- ------- ------- ------- ------- ------- -------
Total From Investment
Operations 1.11 1.47 (0.30) 1.13 0.80 0.92 0.02
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Net Investment Income (0.58) (0.77) (0.44) (0.45) (0.64) (0.47) -
Net Realized Gains - - (0.01) (0.48) (0.27) - -
------- ------- ------- ------- ------- ------- -------
Total Distributions (0.58) (0.77) (0.45) (0.93) (0.91) (0.47) -
------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period $11.04 $10.51 $9.81 $10.56 $10.36 $10.47 $10.02
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Total Return 11.13% 15.23% (2.91)% 11.42% 8.00% 11.00% 0.22%#
------- ------- ------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of
Period (thousands) $165,772 $208,166 $135,529 $101,528 $54,607 $31,647 $8,474
Ratio of Expenses to
Average Net Assets 0.46% 0.46% 0.49% 0.52% 0.58% 0.67% 0.51%*
Ratio of Net Investment
Income to Average
Net Assets 4.88% 5.80% 5.75% 5.09% 5.52% 6.74% 6.92%*
Portfolio Turnover Rate 97.78% 130.41% 113.55% 139.57% 210.39% 194.25% 0.00%*
------- ------- ------- ------- ------- ------- -------
</TABLE>

1) RESTATED TO REFLECT A 900% STOCK DIVIDEND AS OF JANUARY 2, 1996)

* Annualized

# Non-annualized

38
<PAGE>

THE FEEDER PORTFOLIOS

Each of the sixteen 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. 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 - SMALL COMPANY PORTFOLIOS - 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"; "ENHANCED U.S. LARGE COMPANY PORTFOLIO -
Investment Objective and Policies"; "U.S. LARGE COMPANY PORTFOLIO -
Investment Objective and Policies"; "THE VALUE PORTFOLIOS - Portfolio
Characteristics and Policies"; "INVESTMENT OBJECTIVES AND POLICIES - FIXED
INCOME PORTFOLIOS - DFA One-Year Fixed Income Portfolio; DFA Two-Year
Corporate Fixed Income Portfolio; DFA Two-Year Global Fixed Income Portfolio;
and DFA Two-Year Government Portfolio"; "RWB/DFA INTERNATIONAL HIGH BOOK TO
MARKET PORTFOLIO - Investment Objective and Policies"; and "EMERGING MARKETS
PORTFOLIO AND EMERGING MARKETS SMALL CAP PORTFOLIO - Investment Objectives
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 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. 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. However, such
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 distribution in kind to the Portfolio could result
in a less diversified portfolio of investments and could affect adversely the
liquidity of the Portfolio. Moreover, a distribution in kind by the Series
corresponding to the U.S. 6-10 Small Company, Enhanced U.S. Large Company, DFA
One-Year Fixed Income, DFA Two-Year Corporate Fixed Income, DFA Two-Year Global
Fixed Income, U.S. Small Cap Value, U.S. Large Cap Value, and RWB/DFA
International High Book to Market Portfolios may constitute a taxable exchange
for federal income tax purposes resulting in gain or loss to such Portfolios.
Any net capital gains so realized will be

<PAGE>

distributed to such a Portfolio's shareholders as described in "DIVIDENDS,
CAPITAL GAINS DISTRIBUTIONS AND TAXES" below.

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 Series
invest.

SMALL COMPANY PORTFOLIOS

INVESTMENT OBJECTIVE AND POLICIES

Each Small Company Portfolio and the U.S. 6-10 Small Company, Japanese
Small Company, Pacific Rim Small Company, United Kingdom Small Company and
Continental Small Company Series of the Trust (the "Small Company 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 Series solely on the basis
of a company's market capitalization. "Market capitalization" for domestic
securities will be calculated by multiplying the price of a company's stock by
the number of its shares of outstanding common stock. "market capitalization"
for foreign securities will be calculated using the number of outstanding stocks
of the company that are similar to domestic common stocks.

The U.S. 9-10 Small Company Portfolio and the Small Company 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.
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 U.S.
9-10 Small Company Portfolio or Small Company Series, may participate 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 U.S. 6-10 Small Company Series of the Trust
(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 or AMEX or 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 pursues its investment objective by
investing all of its assets in the Japanese Small Company Series of the Trust
(the "Japanese Series"), which has the same investment objective and policies as
the Portfolio. The Japanese Series will invest in a broad and diverse group of
readily marketable stocks of Japanese small companies which are traded in the
Japanese securities markets. Generally, 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 Japanese Series 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 the Japanese Series to acquire a portion of the stock of
each of these companies on a market capitalization weighted basis. The Japanese
Series 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 pursues its investment objective by
investing all of its assets in the United Kingdom Small Company Series of the
Trust (the "United Kingdom Series"), which has the same investment objective and
policies as the Portfolio. The United Kingdom Series will invest 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"). GENERALLY, 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 typically will be used by the United Kingdom Series to determine
the maximum market capitalization of any company whose stock the Series will
purchase, acquisitions by the United Kingdom Series will not be limited to
stocks which are included in the FTA. The United Kingdom Series 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 Series to acquire a portion of the
stock of each eligible company on a market capitalization basis. The United
Kingdom Series also may invest up to 5% of its assets in convertible

<PAGE>

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 pursues its investment objective by
investing all of its assets in the Continental Small Company Series of the Trust
(the "Continental Series"), which has the same investment objective and policies
as the Portfolio. The Continental Series 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. AS OF THE DATE OF THIS
PROSPECTUS, THE CONTINENTAL SERIES MAY INVEST IN SMALL COMPANIES LOCATED IN
AUSTRIA, BELGIUM, DENMARK, FINLAND, FRANCE, GERMANY, IRELAND, ITALY, THE
NETHERLANDS, NORWAY, SPAIN, SWEDEN, AND SWITZERLAND, 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 Continental Series
invests (i.e., on a European basis). The Advisor typically 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. Generally, 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 Continental Series invests
will be considered to be "small companies" and will be eligible for purchase by
the Continental Series.

While the Advisor typically 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 Continental Series does not intend, however, to purchase shares of any
company whose market capitalization is less than the equivalent of $5,000,000.
The Continental Series intends to acquire a portion of the stock of each
eligible company on a market capitalization basis. The Continental Series also
may invest up to 5% of its assets in convertible debentures issued by European
small companies. The Continental Series has acquired the stocks of small
companies located in Belgium, France, Germany, Italy, the Netherlands, Spain,
Sweden and Switzerland. When the Advisor determines that the investments of
the Continental Series 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 Continental Series 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 pursues its investment objective by
investing all of its assets in the Pacific Rim Small Company Series of the Trust
(the "Pacific Rim Series"), which has the same investment objective and policies
as the Portfolio. The Pacific Rim Series 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. As of the date of this prospectus, the Pacific Rim
Series may invest in small companies located in Australia, Hong Kong, Korea,
Malaysia, New Zealand and Singapore. In the future, the Advisor may add small
companies located in other Asian countries as securities markets in these
countries become accessible.

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 Pacific Rim Series invests (i.e., on a Pacific Rim basis). The Advisor
typically will use the appropriate country indices of the FTW converted to a
common currency and aggregated, to define "small companies." Generally,
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
Pacific Rim Series invests will be considered to be "small companies" and will
be eligible for purchase by the Pacific Rim Series.

<PAGE>

INTERNATIONAL SMALL COMPANY PORTFOLIO

The International Small Company Portfolio seeks to achieve its investment
objective by investing virtually all of its assets in all four Underlying Series
in such relative portions as determined by the Advisor from time to time. A
small portion of the assets of International Small Company Portfolio may be
invested in short-term, high-quality, fixed-income obligations pending
investment in shares of the Underlying Series and/or pending payment of
redemptions of its own shares for cash. For a complete description of the
investment objectives and policies, portfolio structure and transactions for
each Underlying Series, see "PORTFOLIO CHARACTERISTICS AND POLICIES - SMALL
COMPANY PORTFOLIOS." The International Small Company Portfolio is designed for
investors who wish to achieve their investment objective of capital appreciation
by participating in the investment performance of a broad range of equity
securities of Japanese, United Kingdom, European and Pacific Rim small
companies.

As of the date of this prospectus, the Small Company Portfolio invests in
the shares of the Underlying Series within the following percentage ranges:

Underlying Series Investment Range

Japanese Small Company 27.5 - 42.5%
United Kingdom Small Company 7.5 - 22.5%
Continental Small Company 27.5 - 42.5%
Pacific Rim Small Company 7.5 - 22.5%

The allocation of the assets of International Small Company Portfolio to be
invested in the Underlying Series will be determined by the Advisor on at least
a semi-annual basis. In setting the target allocation, the Advisor will first
consider the market capitalizations of all eligible companies in each of the
Underlying Series. The Advisor will calculate the market capitalizations for
each Underlying Series in the manner described under "PORTFOLIO CHARACTERISTICS
AND POLICIES - SMALL COMPANY PORTFOLIOS." In determining the target
allocations, the Advisor, using its best judgment, will seek to eliminate the
effect of cross holdings between companies on a Series by Series basis and may
take into account the existence of substantial private or government ownership
of the shares of a company. The Advisor may also consider such other factors as
it deems appropriate with respect to determining the target allocations. Target
allocations will remain in effect until the next semi-annual re-calculation.
The Advisor expects to change the relative weights ascribed to each Underlying
Series, based on its updated market capitalization calculations, when it
determines that fundamental changes in the relative values ascribed by market
forces to each relevant geographic area have occurred. To maintain target
weights during the period, adjustments may be made by applying future purchases
by International Small Company Portfolio in proportion necessary to rebalance
the investment portfolio of the Portfolio. As of the date of this prospectus,
the target allocations for investment by the Portfolio in the Underlying Series
are: Japanese Small Company Series - 30%; United Kingdom Small Company
Series - 15%; Continental Small Company Series - 35%; and Pacific Rim Small
Company Series - 20%.

<PAGE>

PORTFOLIO STRUCTURE

The U.S. 9-10 Small Company Portfolio and each Small Company 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 the Portfolio
and each Series a reasonable reflection of the relative market capitalizations
of its portfolio companies. The following discussion applies to the investment
policies of the U.S. 9-10 Small Company Portfolio and the Small Company Series.

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 that with
respect to Continental and Pacific Rim Series, such determination shall be made
by reference to other companies located in all countries in which the Series
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 Series 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. Furthermore, 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, the U.S. 9-10 Small Company Portfolio and
each Small Company Series may, in exchange for the issuance of shares, acquire
securities eligible for purchase or otherwise represented in their portfolios at
the time of the exchange. (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 privately placed 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

<PAGE>

risk than investing in a large number of them. The U.S. 9-10 Small Company
Portfolio and each Small Company Series intend to invest at least 80% of their
assets in equity securities of U.S., Japanese, United Kingdom, European and
Pacific Rim small companies, respectively.

Generally, current income is not sought as an investment objective and
investments will not be based upon an issuer's dividend payment policy or
record. However, many of the companies whose securities will be selected for
investment do pay dividends. It is anticipated, therefore, that dividend income
will be received.

PORTFOLIO TRANSACTIONS

On a periodic basis, the Advisor will review the holdings of each of the
U.S. 9-10 Small Company Portfolio and Small Company Series 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 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 U.S. 9-10
Small Company Portfolio or particular Small Company Series 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 the issuer's 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 stock index futures contracts
and options thereon in order to commit funds awaiting investment in stocks or
maintain cash liquidity. To the extent that the Series invests in stock index
futures contracts and options thereon for other than bona fide hedging purposes,
the Series will not purchase such futures contracts or options if as a result
more than 5% of its total assets would then consist of initial margin

<PAGE>

deposits and premiums required to establish such contracts or options. Such
investments entail certain risks. (See "RISK FACTORS - ALL PORTFOLIOS.")

<PAGE>

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 securities to qualified brokers, dealers,
banks and other financial institutions for the purpose of earning additional
income. For information concerning Standard & Poor's Rating Group, a Division
of the McGraw-Hill Companies ("S&P"), and disclaimers of S&P with respect to the
U.S. Large Company Portfolio and the U.S. Large Company Series, see "STANDARD &
POOR'S -INFORMATION AND DISCLAIMERS."

ENHANCED U.S. LARGE COMPANY PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

Enhanced U.S. Large Company Portfolio seeks, as its investment objective,
to achieve a total return which exceeds the total return performance of the S&P
500 Index. The Portfolio pursues its investment objective by investing all of
its assets in Enhanced U.S. Large Company Series of the Trust (the "Enhanced
U.S. Large Company Series"). The Enhanced U.S. Large Company Series will have
the same investment objective and policies as the Portfolio. Enhanced U.S.
Large Company Series may invest in all of the stocks represented in the S&P 500
Index, options on stock indices, stock index futures, options on stock index
futures, swap agreements on stock indices and, to the extent permissible
pursuant to the Investment Company Act of 1940, shares of investment companies
that invest in stock indices. 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.

The Enhanced U.S. Large Company Series may, from time to time, also invest
in options on stock indices, stock index futures, options on stock index futures
and swap agreements based on indices other than, but similar to, the S&P 500
Index (such instruments whether or not based on the S&P 500 Index hereinafter
collectively referred to as "Index Derivatives"). The Enhanced U.S. Large
Company Series may invest all of its assets in Index Derivatives. Certain of
these Index Derivatives are speculative and may subject the Portfolio to
additional risks (See "RISK FACTORS - ALL PORTFOLIOS"). Assets of the Enhanced
U.S. Large Company Series not invested in S&P 500 stocks or Index Derivatives
may be invested in the same types of short-term fixed income obligations as may
be acquired by DFA Two-Year Global Fixed Income Series and, to the extent
allowed by the Investment Company Act of 1940, shares of money market mutual
funds (collectively, "Fixed Income Investments") (See "INVESTMENT OBJECTIVES
AND POLICIES - FIXED INCOME PORTFOLIOS - Description of Investments"). The
Series' investments in the securities of other investment companies may involve
duplication of certain fees and expenses.

The percentage of assets of the Enhanced U.S. Large Company Series that
will be invested at any one time in S&P 500 Index stocks, Index Derivatives and
Fixed Income Investments may vary from time to time, within the discretion of
the Advisor and according to restraints imposed by the Investment Company Act of
1940. The Enhanced U.S. Large Company Series will maintain a segregated account
consisting of liquid assets (or, as permitted by applicable regulation, enter
into offsetting positions) to cover its open positions in Index Derivatives to
avoid leveraging of the Series.

The Enhanced U.S. Large Company Series will enter into positions in futures
and options on futures only to the extent such positions are permissible with
respect to applicable rules of the Commodity Futures Trading Commission without
registering the Series or the Trust as a commodities pool operator. In
addition, the Enhanced U.S. Large Company Series may not be able to utilize
Index Derivatives to the extent otherwise permissible or desirable because of
constraints imposed by the Internal Revenue Code or by unanticipated illiquidity
in the marketplace for such instruments. For more information about Index
Derivatives, see "RISK FACTORS - ALL PORTFOLIOS."

It is the position of the Securities and Exchange Commission that
over-the-counter options are illiquid. Accordingly, the Enhanced U.S. Large
Company Series will invest in such options only to the extent consistent with
its 15% limit on investment in illiquid securities.

<PAGE>

STANDARD & POOR'S - INFORMATION AND DISCLAIMERS

Neither the U.S. Large Company Portfolio or the Enhanced U.S. Large Company
Portfolio (the "Large Company Portfolios"), nor the U.S. Large Company Series or
the Enhanced U.S. Large Company Series (the "Large Company Series") are
sponsored, endorsed, sold or promoted by S&P. S&P makes no representation or
warranty, express or implied, to the owners of the Large Company Portfolios or
the Large Company Series or any member of the public regarding the advisability
of investing in securities generally or in the Large Company Portfolios or the
Large Company Series particularly or the ability of the S&P 500 Index to track
general stock market performance. S&P's only relationship to the Large Company
Portfolios or the Large Company 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 Large Company Portfolios or the
Large Company Series. S&P has no obligation to take the needs of the Large
Company Portfolios, the Large Company 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
prices and amount of the Large Company Portfolios or the Large Company Series or
the issuance or sale of the Large Company Portfolios or the Large Company Series
or in the determination or calculation of the equation by which the Large
Company Portfolios or the Large Company Series is to be converted into cash.
S&P has no obligation or liability in connection with the administration,
marketing or trading of the Large Company Portfolios or the Large Company
Series.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS 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. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND 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. As of the date of this prospectus, the Portfolio
may invest in the stocks of large companies in Australia, France, Germany,
Italy, Hong Kong, Japan, the Netherlands, Spain, Sweden, Switzerland and the
United Kingdom. As the Portfolio's asset growth permits, it may invest in the
stocks of large companies in Austria, Belgium, Denmark, Finland, Ireland,
Malaysia, New Zealand, Norway, and Singapore.

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. To the
extent that the Portfolio invests in index futures contracts for other than bona
fide hedging purposes, the Portfolio will not purchase futures contracts if as a
result more than 5% of its total assets would then consist of initial 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.

<PAGE>

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 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. Furthermore, 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 securities eligible
for purchase at the time of the exchange or otherwise represented in the
portfolio 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.

<PAGE>

DFA REAL ESTATE SECURITIES PORTFOLIO

PORTFOLIO CHARACTERISTICS AND POLICIES

The investment objective of DFA 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, management, or sale of
residential, commercial or industrial real estate. 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. To the
extent that the Portfolio invests in futures contracts or options for other than
bona fide hedging purposes, 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 margin deposits and premiums required to
establish such contracts or options.

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, 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.

<PAGE>

Deviation from strict market capitalization weighting will also occur in
the Portfolio because it intends to purchase round lots only. Furthermore, 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 securities
eligible for purchase or otherwise represented in the portfolio at the time of
the exchange 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 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 which the Advisor
believes to be value stocks at the time of purchase. Securities are
considered value stocks primarily because a company's shares have a high book
value in relation to their market value (a "book to market ratio").
Generally, 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

<PAGE>

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. In measuring value, the
Advisor may consider additional factors such as cash flow, economic
conditions and developments in the issuer's industry.

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 and 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
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 securities eligible for purchase at the
time of the exchange or otherwise represented in their portfolios 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 may be 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.

<PAGE>

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.

RWB/DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of RWB/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 the
Advisor believes to be value stocks at the time of purchase. Securities are
considered value stocks primarily because a company's shares have a high book
value in relation to their market value (a "book to market ratio"). In
measuring value, the Advisor may consider additional factors such as cash flow,
economic conditions and developments in the issuer's industry. Generally, 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.
As of the date of this prospectus, the International Value Series may invest
in the stocks of large companies in Australia, Belgium, France, Germany, Hong
Kong, Italy, Japan, the Netherlands, Singapore, Spain, Sweden, Switzerland and
the United Kingdom. As the Series' asset growth permits, it may invest in the
stocks of large companies in other developed markets, including Austria,
Denmark, Finland, Ireland, Malaysia, New Zealand, and Norway.

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. To the extent that the International Value
Series invests in futures contracts for other than bona fide hedging purposes,
the Series will not purchase futures contracts if as a result more than 5% of
its total assets would then consist of initial 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.

As of the date of this Prospectus, the International Value Series intends
to invest in companies having at least $800 million of market capitalization,
and the Series will be approximately market capitalization weighted. The Advisor
may reset such floor from time to time to reflect changing market conditions.
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 also will occur because the
International Value Series intends to purchase round lots only. Furthermore, 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

<PAGE>

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 privately placed 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 securities eligible for purchase at the
time of the exchange or otherwise represented in its portfolio 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.

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 be value stocks at the time of purchase.
Securities are considered value stocks primarily because a company's shares have
a high book

<PAGE>

to market ratio. Generally, such shares will be considered eligible for
investment. In measuring value, the Advisor may consider additional factors
such as cash flow, economic conditions and developments in the issuer's
industry. 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. As of the date of this prospectus, the
Portfolio may invest in the stocks of small companies in Australia,
Belgium, France, Germany, Hong Kong, Italy, Japan, the Netherlands,
Singapore, Spain, Sweden, Switzerland and the United Kingdom. As the
Portfolio's asset growth permits, it may invest in the stocks of small
companies in other developed markets, including Austria, Denmark, Finland,
Ireland, Malaysia, New Zealand and Norway.

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. To the extent that the Portfolio invests in futures contracts for
other than bona fide hedging transactions, the Portfolio will not purchase
futures contracts if as a result more than 5% of its total assets would then
consist of initial 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.

As of the date of this Prospectus, the Portfolio intends to invest in
companies having no more than $800 million of market capitalization. The
Advisor may reset such ceiling from time to time to reflect changing market
conditions. 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 also will occur because the
Portfolio intends to purchase round lots only. Furthermore, 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.

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 common
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

<PAGE>

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 issuers 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.

EMERGING MARKETS PORTFOLIO AND
EMERGING MARKETS SMALL CAP PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

The investment objective of both the Emerging Markets Portfolio and the
Emerging Markets Small Cap Portfolio is to achieve long-term capital
appreciation. The Emerging Markets 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 Small Cap Portfolio pursues its objective by
investing all of its assets in the Emerging Markets Small Cap Series of the
Trust (the "Emerging Markets Small Cap Series"), which has the same investment
objective and policies as the Portfolio. Each Series operates as a diversified
investment company and seeks to achieve its investment objective by investing in
emerging markets designated by the Investment Committee of the Advisor
("Approved Markets"). Each 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").

SERIES' CHARACTERISTICS AND POLICIES

The Emerging Markets Series will seek a broad market coverage of larger
companies within each Approved Market. This Series will attempt to own shares
of companies whose aggregate overall share of the Approved Market's total public
market capitalization is at least in the upper 40% of such capitalization, and
can be as large as 75%. The Emerging Markets Series may limit the market
coverage in the smaller emerging markets in order to limit purchases of small
market capitalization companies.

The Emerging Markets Small Cap Series will seek a broad market coverage of
smaller companies within each Approved Market. This Series will attempt to own
shares of companies whose market capitalization is less than $1.5 billion. On a
periodic basis, the Advisor will review the holdings of the Emerging Markets
Small Cap Series and determine which, at the time of such review, are no longer
considered small emerging market companies. The present policy is to consider
portfolio securities for sale when they have appreciated sufficiently to rank,
on a

<PAGE>

market capitalization basis, 100% larger than the largest market
capitalization that is eligible for purchase as set by the Advisor for that
Approved Market.

Each Series may not invest in all such companies or Approved Markets
described above or achieve approximate market weights, for reasons which include
constraints imposed within Approved Markets (e.g., restrictions on purchases by
foreigners), and each Series' policy not to invest more than 25% of its assets
in any one industry.

Under normal market conditions, the Emerging Markets Series will invest at
least 65% of its assets in Approved Market securities, and the Emerging Markets
Small Cap Series will invest at least 65% of its assets in small company (as
defined above) 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 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 each of the Emerging Markets Series and the Emerging Markets Small
Cap Series.

As of the date of this Prospectus, the following countries are designated
as Approved Markets: Argentina, Brazil, Chile, Indonesia, ISRAEL, Malaysia,
Mexico, Philippines, Portugal, South Korea, Thailand and Turkey. Countries that
may be approved in the future include but are not limited to Colombia, Czech
Republic, Greece, Hungary, India, Jordan, Nigeria, Pakistan, Poland, Republic of
China (Taiwan), Venezuela and Zimbabwe.

Each 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,
each 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, each 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 neither Series
expects the aggregate of all such amounts to exceed 10% of its net assets under
normal circumstances.

Both Series also may invest in shares of other investment companies that
invest in one or more Approved Markets, although they intend to do so only
where access to those markets is otherwise significantly limited. The Series
may also invest in money market mutual funds for temporary cash management
purposes. The Investment Company Act of 1940 limits investment by a Series
in shares of other investment companies to no more than 10% of the value of a
Series' total assets. If a Series invests in another investment company, the
Series' shareholders

<PAGE>

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 a Series to
establish a wholly-owned subsidiary or a trust for the purpose of investing
in the local markets. Each Series also may invest up to 5% of its assets in
convertible debentures issued by companies organized in Approved Markets.

PORTFOLIO STRUCTURE

Each Series' 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 a 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 a Series involves greater risk
than including a large number of them.

Neither Series seeks 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 a
Series do pay dividends. It is anticipated, therefore, that both 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.
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. The portfolio turnover rate of the Emerging Markets Small Cap Series
ordinarily is anticipated to be low, and is not expected to exceed 20% per year.

For the purpose of converting U.S. dollars to another currency, or vice
versa, or converting one foreign currency to another foreign currency, each
Series may enter into forward foreign exchange contracts. In addition, to hedge
against changes in the relative value of foreign currencies, each Series may
purchase foreign currency futures contracts. A 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 and will receive reasonable
interest on the loan,

<PAGE>

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.

<PAGE>

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 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 TWO-YEAR CORPORATE FIXED INCOME PORTFOLIO

The investment objective of DFA Two-Year Corporate Fixed Income Portfolio
is to maximize total returns consistent with the preservation of capital.
This objective will be pursued by investing the assets of the Portfolio in
DFA Two-Year Corporate Fixed Income Series of the Trust (the "Two-Year
Corporate Fixed Income Series"). The Two-Year Corporate Fixed Income Series
will have the same investment objective and policies as the Portfolio. The
Two-Year Corporate 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. It is the Series' policy to acquire obligations
which mature within two years from the date of settlement. 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 TWO-YEAR GLOBAL FIXED INCOME PORTFOLIO

The investment objective of DFA Two-Year Global Fixed Income Portfolio is
to maximize total returns consistent with preservation of capital. This
objective will be pursued by investing the assets of the Portfolio in DFA
Two-Year Global Fixed Income Series of the Trust (the "Two-Year Global Fixed
Income Series"). The Two-Year Global Fixed Income Series will have the same
investment objective and policies as the Portfolio. The Two-Year Global
Fixed Income Series will invest in obligations issued or guaranteed by the
U.S. and foreign governments, their agencies and instrumentalities, corporate
debt obligations, bank obligations, commercial paper, repurchase agreements,
obligations of other domestic and foreign issuers having quality ratings
meeting the minimum standards described in "Description of Investments,"
securities of domestic or foreign issuers denominated in U.S. dollars but not
trading in the United States, and obligations of 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 in developed countries, such as those countries which are
members of the Organization of Economic Cooperations and Development
("OECD"). However, in the future, the Advisor anticipates investing in
issuers located in other countries as well. Under normal market conditions,
the Series 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.

<PAGE>

The Series will acquire obligations which mature within two years from the
date of settlement. Because many of the Series' investments will be denominated
in foreign currencies, the Series will also enter into forward foreign currency
contracts solely for the purpose of hedging against fluctuations in currency
exchange rates. 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 "Investment 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,
corporate debt obligations, bank obligations, commercial paper rated as set
forth in "Description of Investments" 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 five 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 TWO-YEAR GOVERNMENT PORTFOLIO

The investment objective of DFA Two-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 and consistent with the
preservation of capital. This objective will be pursued by investing the
assets of the Portfolio in the DFA Two-Year Government Series of the Trust
(the "Two-Year Government Series"). The Two-Year Government Series will have
the same investment objective and policies as the Portfolio. Generally, the
Two-Year Government Series will acquire U.S. government obligations and U.S.
government agency obligations that mature within two years from the date of
settlement. The Series will also acquire repurchase agreements.

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

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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 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,
Two-Year Corporate Fixed Income, Two-Year Government and Two-Year Global
Fixed Income Series.

Permissible
Categories:
-----------
DFA One-Year Fixed Income Series 1-6, 8
DFA Two-Year Corporate Fixed Income Series 1-6, 8
DFA Two-Year Government Series 1, 2, 6
DFA Five-Year Government Portfolio 1, 2, 6
DFA Two-Year Global Fixed Income Series 1-10
DFA Global Fixed Income Portfolio 1-10
DFA Intermediate Government
Fixed Income Portfolio 1, 2, 6, 7, 8

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 from banks having 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.

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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 is approved
by the Investment Committee of the Advisor. 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.

10. EURODOLLAR OBLIGATIONS - Debt securities of domestic or foreign
issuers denominated in U.S. dollars but not trading in the United States.

Investors should be aware that the net asset values of the Fixed Income
Portfolios may change as general levels of interest rates fluctuate. When
interest rates increase, the value of a portfolio of fixed-income securities can
be expected to decline. Conversely, when interest rates decline, the value of a
portfolio of fixed-income securities can be expected to increase.

The categories of investments that may be acquired by each of the Fixed
Income Portfolios (other than DFA Intermediate Government Fixed Income
Portfolio) and the One-Year Fixed Income, Two-Year Corporate Fixed Income,
Two-Year Government and Two-Year Global Fixed Income Series may include both
fixed and floating rate securities. Floating rate securities bear interest
at rates that vary with prevailing market rates. Interest rate adjustments
are made periodically (e.g., every six months), usually based on a money
market index such as the London Interbank Offered Rate (LIBOR) or the
Treasury bill rate.

INVESTMENTS IN THE BANKING INDUSTRY

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

The types of bank and bank holding company obligations in which the
One-Year Fixed Income Series, Two-Year Corporate Fixed Income Series and DFA
Two-Year Global 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 each Series' established
credit rating criteria as stated under "Description of Investments." In
addition, all three Series are authorized to invest more than 25% of their total
assets in Treasury bonds, bills and notes and obligations of federal agencies
and instrumentalities.

<PAGE>

PORTFOLIO STRATEGY

The One-Year Fixed Income Series, Two-Year Corporate Fixed Income Series
and Two-Year Global 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 on investment 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, Two-Year Corporate Fixed Income Series,
Two-Year Government Series, Two-Year Global 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 Two-Year Corporate Fixed Income Series and Two-Year
Global Fixed Income Series, respectively, could be 0% to 200% and Two-Year
Government Series could be 100% to 500%. While the Fixed Income Portfolios,
the One-Year Fixed Income Series, Two-Year Corporate Fixed Income Series,
Two-Year Global Fixed Income Series and Two-Year Government 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, the
One-Year Fixed Income Series, Two-Year Corporate Fixed Income Series,
Two-Year Government Series or the Two-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.

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.

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.

<PAGE>

RISK FACTORS - ALL PORTFOLIOS

SMALL COMPANY SECURITIES

Typically, securities of small companies are less liquid than securities of
large companies. Recognizing this factor, management will endeavor to effect
securities transactions in a manner to avoid causing significant price
fluctuations in the market for these securities.

FOREIGN SECURITIES

The International Equity Portfolios, International Value Series, DFA Global
Fixed Income Portfolio, One-Year Fixed Income Series, Two-Year Corporate Fixed
Income Series, Two-Year Global Fixed Income Series and Enhanced U.S. Large
Company Series (directly or indirectly through their investment in the Trust
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, Two-Year Corporate Fixed Income Series, Two-Year Global
Fixed Income Series, Enhanced U.S. Large Company 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.

INVESTING IN EMERGING MARKETS

The investments of the Emerging Markets Series and the Emerging Markets
Small Cap 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 and the Emerging Markets Small Cap 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 a Series'
investment. If such restrictions were imposed subsequent to investment in the
securities of a particular country, a 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 a
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 and the Emerging
Markets Small Cap 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. These risks are heightened for investments in small
company emerging markets securities.

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

<PAGE>
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 to market-based 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 do not keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of a 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 a 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 a 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 each 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 a 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 and the Emerging
Markets Small Cap 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.

FOREIGN CURRENCIES AND RELATED TRANSACTIONS

Investments of the International Equity Portfolios (directly or indirectly
through their investment in the Trust Series) and DFA Global Fixed Income
Portfolio, many of the investments of the Two-Year Global Fixed Income Series
and, to a lesser extent, the investment in the Enhanced U.S. Large Company
Series, 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 thereon in
order to hedge against changes in the level of foreign currency exchange rates.
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. Gains and losses on investments in futures and
options thereon depend on the direction of interest rates and other economic
factors.

BORROWING

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 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

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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
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.

PORTFOLIO STRATEGIES

The method employed by the Advisor to manage the Domestic and International
Equity Portfolios (except U.S. Large Company Portfolio and Enhanced U.S. Large
Company Portfolio and their corresponding Series) 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.

FUTURES CONTRACTS AND OPTIONS ON FUTURES

U.S. Large Company Series, Enhanced U.S. Large Company Series, Large Cap
International Portfolio, the Value Series, DFA Real Estate Securities Portfolio,
the International Value Series, the Emerging Markets Series, the Emerging
Markets Small Cap Series and the DFA International Small Cap Value Portfolio may
invest in index futures contracts and options on index futures. To the extent
that such Series or Portfolios invest in futures contracts and options thereon
for other than bona fide hedging purposes, no Series or Portfolio will enter
into such transactions if, immediately thereafter, the sum of the amount of
initial margin deposits and premiums paid for open futures options would exceed
5% of the Series' or Portfolio's total assets, after taking into account
unrealized profits and unrealized losses on such contracts it has entered into;
provided, however, that, in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the 5%.
Certain index futures contracts and options on index futures may be considered
to be derivative securities.

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. Gains
or losses on investments in options and futures depend on the direction of
securities prices, interest rates and other economic factors, and the loss from
investing in futures transactions is potentially unlimited. Certain
restrictions imposed by the Internal Revenue Code may limit the ability of a
Portfolio or Series to invest in futures contracts and options on futures
contracts.

OPTIONS ON STOCK INDICES

The Enhanced U.S. Large Company Series may purchase put and call options
and write put and call options on stock indices and stock index futures listed
on national securities exchanges or traded in the over-the-counter market. The
Enhanced U.S. Large Company Series may use these techniques to hedge against
changes in securities prices or as part of its overall investment strategy. An
option on an index is a contract that gives the holder of the option, in return
for a premium, the right to buy from (in the case of a call) or sell to (in the
case of a put) the writer of the option the cash value of the index at a
specified exercise price at any time during the term of the option. Upon
exercise, the writer of an option on an index is obligated to pay the difference
between the cash value of the index and the exercise price multiplied by the
specified multiplier for the index option. (An index is designed to reflect
specified facets of a particular financial or securities market, a specific
group of financial instruments or securities, or certain economic indicators.)
A stock index fluctuates with changes in the market values of the stocks
included in the index. Certain put and call options on stock indices and stock
index futures may be considered to be derivative securities.

<PAGE>

With respect to the writing of options, the writer has no control over the
time when it may be required to fulfill its obligation. Prior to exercise or
expiration, an option may be closed out by an offsetting purchase or sale of an
option on the same series. There can be no assurance, however, that a closing
purchase or sale transaction can be effected when the Enhanced U.S. Large
Company Series desires.

The Enhanced U.S. Large Company Series may write covered straddles
consisting of a combination of a call and a put written on the same index. A
straddle will be covered when sufficient assets are deposited to meet the
Enhanced U.S. Large Company Series' immediate obligations. The Series may use
the same liquid assets to cover both the call and put options where the exercise
price of the call and the put are the same or the exercise price of the call is
higher than that of the put. In such cases, the Series will also segregate
liquid assets equivalent to the amount, if any, by which the put is "in the
money."

The effectiveness of purchasing stock index options will depend upon the
extent to which price movements in the Enhanced U.S. Large Company Series'
portfolio correlate with price movements of the stock index selected. Because
the value of an index option depends upon movements in the level of the index
rather than the price of a particular stock, whether the Series will realize a
gain or loss from the purchase of options on an index depends upon movements in
the level of stock prices in the stock market generally or, in the case of
certain indices, in an industry or market segment, rather than movements in the
price of a particular stock. If the Enhanced U.S. Large Company Series takes
positions in options instruments contrary to prevailing market trends, the
Series could be exposed to the risk of a loss. Certain restrictions imposed on
the Enhanced U.S. Large Company Series by the Internal Revenue Code may limit
the ability of such Series to invest in options.

SWAPS

The Enhanced U.S. Large Company Series may enter into equity index swap
agreements for purposes of attempting to obtain a particular desired return at a
lower cost to the Series than if the Series had invested directly in an
instrument that yielded that desired return. Swap agreements are two-party
contracts entered into primarily by institutional investors for periods ranging
from a few weeks to more than one year. In a standard "swap" transaction, two
parties agree to exchange the returns (or differentials in rates of return)
earned or realized on particular predetermined investments or instruments. The
gross returns to be exchanged or "swapped" between the parties are generally
calculated with respect to a "notional amount," i.e., the return on or increase
in value of a particular dollar amount invested a group of securities
representing a particular index. Swap agreements are considered to be
derivative securities.

The "notional amount" of the swap agreement is only a fictive basis on
which to calculate the obligations which the parties to a swap agreement have
agreed to exchange. Most swap agreements entered into by the Enhanced U.S.
Large Company Series would calculate the obligations of the parties to the
agreement on a "net basis." Consequently, the Series' current obligations (or
rights) under a swap agreement will generally be equal only to the net amount to
be paid or received under the agreement based on the relative values of the
positions held by each party to the agreement (the "net amount"). The Enhanced
U.S. Large Company Series' current obligations under a swap agreement will be
accrued daily (offset against amounts owed to the Series) and any accrued but
unpaid net amounts owed to a swap counterparty will be covered by the
maintenance of a segregated account consisting of liquid assets to avoid any
potential leveraging of the Series' portfolio. The Enhanced U.S. Large Company
Series will not enter into a swap agreement with any single party if the net
amount owed or to be received under existing contracts with that party would
exceed 5% of the Series' assets.

Because they are two-party contracts and because they may have terms of
greater than seven days, swap agreements may be considered to be illiquid and,
therefore, swap agreements entered into by the Enhanced U.S. Large Company
Series and other illiquid securities will be limited to 15% of the net assets of
the Series. Moreover, the Enhanced U.S. Large Company Series bears the risk of
loss of the amount expected to be received under a swap agreement in the event
of the default or bankruptcy of a swap agreement counterparty. The Advisor will
cause the Enhanced U.S. Large Company Series to enter into swap agreements only
with counterparties that the Investment Committee of the Advisor has approved.
Certain restrictions imposed on the Enhanced U.S. Large Company Series by the
Internal Revenue Code may limit the Series' ability to use swap agreements. The
swap market is a relatively new market and is largely unregulated. It is
possible that developments in the swaps market, including potential government
regulation, could adversely affect the Enhanced U.S. Large Company Series'
ability to terminate existing swap agreements or to realize amounts to be
received under such agreements.

<PAGE>

BANKING INDUSTRY AND REAL ESTATE CONCENTRATIONS

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, Two-Year Corporate Fixed Income Series and Two-Year Global Fixed Income
Series (and, thus, DFA One-Year Fixed Income Portfolio, DFA Two-Year Corporate
Fixed Income Portfolio and DFA Two-Year Global Fixed Income Portfolio) than
might occur in less concentrated portfolios.

The DFA 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.

REPURCHASE AGREEMENTS

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 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 International Small Company Portfolio) 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.

<PAGE>

For the fiscal year ended November 30, 1996, (i) the Advisor (including a
sub-advisor in respect of DFA Real Estate Securities Portfolio) received a fee
for its services from the Fund or the Trust 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
--------- -------------- --------------

U.S. 9-10 Small Company 0.50% 0.61%

U.S. 6-10 Small Company 0.03% 0.48%

U.S. Large Company 0.025% 0.21%

Enhanced U.S. Large Company 0.05% 0.65%

U.S. Small Cap Value 0.20% 0.61%

U.S. Large Cap Value 0.10% 0.36%

DFA Real Estate Securities(1) 0.50% 0.71%

Japanese Small Company(2) 0.50% 0.72%

Pacific Rim Small Company(2) 0.50% 0.84%

United Kingdom Small Company(2) 0.50% 0.73%

Continental Small Company(2) 0.50% 0.73%
The International Small Company 0.10% 0.70%

Emerging Markets 0.10% 1.15%

Large Cap International 0.25% 0.58%

RWB/DFA International High Book to Market 0.20% 0.54%

DFA International Small Cap Value 0.65% 0.99%

DFA One-Year Fixed Income 0.05% 0.21%

DFA Five-Year Government 0.20% 0.30%

DFA Global Fixed Income 0.25% 0.46%

DFA Intermediate Government Fixed Income 0.15% 0.26%

DFA Two-Year Global Fixed Income 0.05% 0.33%

(1) Effective December 20, 1996, the investment advisory fee payable by the
Fund on behalf of the DFA Real Estate Securities Portfolio to the Advisor
was reduced from .325% to .30% of the average net assets of the Portfolio
on an annual basis. Effective December 11, 1996, the sub-advisory agreement
between the Fund, on behalf of the Portfolio, and AEW terminated; pursuant
to the terms of the sub-advisory agreement, the Portfolio paid AEW a fee
equal to .175% of its average net assets on an annual basis.

(2) Prior to August 9, 1996, the Fund, on behalf of the Portfolio, had an
investment management agreement with the Advisor; the management fee
represents the total dollar amount of management fees paid by the Portfolio
to the Advisor for the fiscal year ended November 30, 1996.

For the new Trust Series, the investment management fees, calculated as a
percentage of the average net assets of the Series on an annual basis, are:
Enhanced U.S. Large Company Series - .05%; Two-Year Global Fixed Income
Series - .05%; Two-Year Corporate Fixed Income Series - .15%; Two-Year
Government Series - .15%; and Emerging Markets Small Cap Series - .20%.

<PAGE>

The Advisor provides asset allocation advice with respect to the Underlying
Series to the International Small Company Portfolio without charge pursuant to a
written agreement. The investment management fees applicable to each Underlying
Series are equal to 0.10% of the average net assets of the Series on an annual
basis. The International Small Company Portfolio, as a shareholder of each
Underlying Series, benefits from the investment management services provided by
the Advisor to each of the Underlying Series, and indirectly bears its
proportionate share of the investment management fees paid by such Series.

For the fiscal year ended November 30, 1996, pursuant to the terms of the
current administration agreement between U.S. Large Company Portfolio and the
Advisor, the Advisor agreed to waive a portion of its administration fee
and/or assume the expenses of the Portfolio to the extent (1) necessary to pay
the ordinary operating expenses of the Portfolio (except the administration
fee); and (2) that the indirect expenses the Portfolio bears as a shareholder of
the Series, on an annual basis, exceed 0.025% of the Portfolio's average net
assets. Beginning August 9, 1996, in addition to the waiver/assumption
effective on December 1, 1995, the Advisor agreed to assume expenses or waive
the fee payable by the U.S. Large Company Portfolio under the administration
agreement by an additional .09% of average assets on an annual basis. Absent
this arrangement, the annualized ratio of total operating expenses to average
net assets for u.s. large company portfolio for the fiscal year ended November
30, 1996, would have been 0.45%.

Effective August 9, 1996, the Advisor agreed to waive its administration
fee and assume the direct expenses of the Japanese Small Company, United Kingdom
Small Company, Continental Small Company and Pacific Rim Small Company
Portfolios to the extent necessary to keep the direct annual expenses of each
Portfolio to not more than 0.47% of average net assets of the Portfolio on an
annualized basis; this arrangement does not extend to the fees and expenses of
the Trust Series.

The Advisor has agreed to waive its administration fee and assume the
direct expenses of the International Small Company Portfolio to the extent
necessary to keep the administration fee and direct annual expenses of the
Portfolio to not more than 0.45% of average net assets of the Portfolio on an
annualized basis; this arrangement does not extend to the fees and expenses of
the Underlying Series. Absent this arrangement, the annualized ratio of total
operating expenses to average net assets for international small company
portfolio for the fiscal year ended November 30, 1996, would have been 0.54%.

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 the federal securities laws and the cost of
any filings required under state securities laws, reports to shareholders, and
transfer and dividend disbursing agency, administrative services and custodian
fees, except as described above with respect to the U.S. Large Company
Portfolio. 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 Inc., the accounting services, dividend disbursing and
transfer agent for all Fund Portfolios and the Series of the Trust.

71
<PAGE>

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 $20.7 billion. David G. Booth and Rex A.
Sinquefield, directors and officers of both the Fund and the Advisor , trustees
and officers of the Trust, and shareholders of the Advisor's outstanding stock,
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 Series") and
beneficially owns 100% of DFA Australia Ltd. ("DFA Australia") (see
"Investment Services - Japanese and Pacific Rim Small Company Series").

INVESTMENT SERVICES - UNITED KINGDOM AND CONTINENTAL SMALL COMPANY SERIES

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
Series. DFAL's duties include the maintenance of a trading desk for the Series
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 Series and reviews
the trading process and the execution of securities transactions. The Advisor
is responsible for determining those securities which are eligible for purchase
and sale by these Series 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
Series. The Advisor pays DFAL quarterly fees of 12,500 pounds sterling for
services to each Series. 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.

INVESTMENT SERVICES - JAPANESE AND PACIFIC RIM SMALL COMPANY SERIES

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 Series. DFA Australia's duties
include the maintenance of a trading desk for each Series 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 Japanese and
Pacific Rim Small Company Series and reviews the trading process and the
execution of securities transactions. The Advisor is responsible for
determining those securities which are eligible for purchase and sale by these
Series 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
Series. The Advisor pays DFA Australia quarterly fees of 25,000 Hong Kong
dollars for services to each Series.

ADMINISTRATIVE SERVICES - THE FEEDER PORTFOLIOS AND INTERNATIONAL SMALL COMPANY
PORTFOLIO

The Fund has entered into an administration agreement with the Advisor, on
behalf of each Feeder Portfolio and International Small Company 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 and International Small Company
Portfolio pay the Advisor a monthly fee equal to one-twelfth of the percentages
listed below:

U.S. 6-10 Small Company .32%

U.S. Large Company .125%*

Enhanced U.S. Large Company .15%

72
<PAGE>

U.S. Small Cap Value .30%

U.S. Large Cap Value .15%

RWB/DFA International High Book to Market .01%

Japanese Small Company .40%**

Pacific Rim Small Company .40%**

United Kingdom Small Company .40%**

Continental Small Company .40%**

International Small Company .40%***

Emerging Markets .40%

Emerging Markets Small Cap .45%

DFA One-Year Fixed Income .10%

DFA Two-Year Corporate Fixed Income .05%

DFA Two-Year Global Fixed Income .10%

DFA Two-Year Government .05%

* Pursuant to the terms of the administration agreement between U.S.
Large Company Portfolio and the Advisor, the Advisor has agreed to
waive a portion of its administration fee and/or assume the expenses
of the Portfolio to the extent (1) necessary to pay the ordinary
operating expenses of the Portfolio (except the administration fee);
and (2) that the direct expenses the Portfolio bears as a shareholder
of the Series, on an annual basis, exceeds 0.025% of the Portfolio's
average net assets. Beginning August 9, 1996, in addition to the
waiver/assumption effective on December 1, 1995, the Advisor has
agreed to assume expenses or waive the fee payable by the U.S. Large
Company Portfolio under the administration agreement by an additional
.09% of average assets on an annual basis. The above fees reflect
that waiver.
** Effective August 9, 1996, the Advisor has agreed to waive its
administration fee and assume the direct expenses of the Japanese
Small Company, United Kingdom Small Company, Continental Small Company
and Pacific Rim Small Company Portfolios to the extent necessary to
keep the direct annual expenses of each Portfolio to not more than
0.47% of average net assets of the Portfolio on an annualized basis;
this arrangement does not extend to the fees and expenses of the Trust
Series.
*** The Advisor has agreed to waive its administration fee and assume the
direct expenses of the International Small Company Portfolio to the
extent necessary to keep the administration fee and direct annual
expenses of the Portfolio to not more than 0.45% of average net assets
of the Portfolio on an annualized basis.

CLIENT SERVICE AGENT - RWB/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
RWB/DFA International High Book to Market Portfolio, includin g: 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; 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. Effective February 8, 1996, for its
services, the Portfolio pays RWBAS a monthly fee which, on an annual basis,
equals .13% of the average daily net assets of the Portfolio.

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 Trustees and Officers of the Trust is set forth in
the Statement of Additional Information under "Directors and Officers."

<PAGE>

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 U.S. 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, Enhanced U.S. Large Company Portfolio and
U.S. Large Cap Value Portfolio, is to distribute substantially all of their net
investment income together with any net realized capital gains in December of
each year. Dividends from net investment income of U.S. Large Company
Portfolio, Enhanced U.S. Large Company Portfolio and 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
Two-Year Global Fixed Income, DFA Two-Year Corporate Fixed Income, DFA Two-Year
Government and DFA Global Fixed Income 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 U.S federal tax
purposes.

Shareholders of each 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
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 options listed below. While shareholders of the Enhanced U.S. Large
Company Portfolio will automatically receive all capital gains distributions in
additional shares of the Portfolio, upon written notice to the Transfer Agent,
they may receive all income dividends in cash.

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.

U.S. 6-10 Small Company, Enhanced U.S. Large Company, DFA One-Year Fixed
Income, DFA Two-Year Corporate Fixed Income, DFA Two-Year Global Fixed Income,
U.S. Small Cap Value, U.S. Large Cap Value, RWB/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.

The U.S. Large Company, Emerging Markets, Emerging Markets Small Cap, DFA
Two-Year Government, Japanese Small Company, Pacific Rim Small Company, United
Kingdom Small Company, Continental Small Company and International Small Company
Portfolios ("Partnership Feeder Portfolios"), seek to achieve their investment
objectives by investing all of their investable assets in a corresponding Series
of shares of the Trust or, in the case of International Small Company Portfolio,
the Underlying Series (collectively, the "Partnership Series"). Each
Partnership Series is classified as a partnership for U.S. federal income tax
purposes. A Partnership Portfolio is allocated its proportionate share of the
income and realized and unrealized gains and losses of its corresponding
Partnership Series.

<PAGE>

If a Portfolio, except for the Corporate and Partneship 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 Corporate Feeder 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 Corporate Feeder Portfolio. In the case of a
Partnership Feeder Portfolio, if the corresponding Series purchases shares in
PFICs, the Partnership Feeder 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.

The Portfolios (or, in the case of a Corporate or Partnership Feeder
Portfolio or International Small Company Portfolio, the corresponding Series)
may be subject to foreign withholding taxes on income from certain of their
foreign securities. If more than 50% in value of the total assets of a
Portfolio, or in the case of a Partnership Feeder Portfolio (but not a Corporate
Feeder Portfolio) its corresponding Series, are invested in securities of
foreign corporations, such Portfolio may elect to pass-through to its
shareholders their pro rata share of foreign income taxes paid by such
Portfolio. If this election is made, shareholders will be required to include
in their gross income their pro rata share of foreign taxes paid by the
Portfolio. However, shareholders will be entitled to either deduct (as an
itemized deduction in the case of individuals) their share of such foreign taxes
in computing their taxable income or to claim a credit for such taxes against
their U.S. federal income tax, subject to certain limitations under the Code.

The Enhanced U.S. Large Company Series' investment in index derivatives are
subject to complex tax rules which may have the effect of accelerating income or
converting, in part, what otherwise would have been long-term capital gain into
short-term capital gain. These rules may effect the amount, character and
timing of income distributed to shareholders of the Enhanced U.S. Large Company
Portfolio.

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. Similarly, it is anticipated that either
none or only a small portion of the distributions made by the International
Equity Portfolios will qualify for the corporate dividends received deduction
because of such Portfolios' investment in foreign equity securities. In the
case of the other Portfolios, dividends from net investment income will
generally qualify in part for the corporate dividends received deduction, but
the portion of dividends so qualified depends on the aggregate qualifying
dividend income received by the Portfolio from domestic (U.S.) sources.

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
U.S. 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 U.S.
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
U.S. federal income 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.

<PAGE>

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.

A Portfolio is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on the account registration form your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.

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.

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 RWB/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. The Chase Manhattan Bank serves as custodian for
each of the Emerging Markets Series and Portfolio and Emerging Markets Small Cap
Series and Portfolio. Boston Safe Deposit and Trust Company serves as custodian
for the following Portfolios and Series: DFA International Small Cap Value
Portfolio, Large Cap International Portfolio, DFA Global Fixed Income Portfolio,
DFA International Value Series, the Japanese Small Company Portfolio and Series,
the Pacific Rim Small Company Portfolio and Series, the U.K. Small Company
Portfolio and Series, the Continental Small Company Portfolio and Series, the
RWB/DFA International High Book To Market Portfolio, International Small Company
Portfolio, DFA Two-Year Global Fixed Income Series, and Enhanced U.S. Large
Company Series (co-custodian with PNC Bank, N.A.). PNC Bank, N.A. serves as
custodian for all other Portfolios and Series.

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) or otherwise represented in their portfolios as
described in this prospectus or in exchange for local currencies in which such
securities of the International Equity Portfolios, the International Value
Series, Enhanced U.S. Large Company Series, DFA Two-Year Global Fixed Income
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,

<PAGE>
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, DFA Two-Year Global
Fixed Income Portfolio 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, or otherwise represented, 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 or the International Small Company Portfolio. The Fund will accept
such securities for investment and not for resale.

A gain or loss for federal income tax purposes will generally 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
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. The value of the shares of the Feeder Portfolios and International
Small Company Portfolio will fluctuate in relation to the investment experience
of the Trust Series in which such Portfolios invest. Securities held by the
Portfolios and Series which are listed on a 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 Real Estate Securities
Portfolio, the Value Series, Emerging Markets Series and Emerging Markets Small
Cap 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. Securities issued by open-end
investment companies, such as the Series, are valued using their respective net
asset values for purchase orders placed at the close of the NYSE. 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 (in respect of those Portfolios
that are Feeder Portfolios and International Small Company Portfolio, the Trust
Series), the International Value Series, Two-Year Global Fixed Income 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

77
<PAGE>

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, the One-Year Fixed
Income Series, Two-Year Corporate Fixed Income Series, Two-Year Government
Series and Two-Year Global 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, the One-Year Fixed Income Series, Two-Year
Corporate Fixed Income Series, Two-Year Government Series and Two-Year Global
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 those Portfolios and Series that invest in such securities are
determined as of such times for the purpose of computing the net asset values of
the Portfolios and 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.

Certain of the securities holdings of the Emerging Markets Series and
Emerging Markets Small Cap 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,
such 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 a 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 a 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.

Futures contracts are valued using the settlement price established each
day on the exchange on which they are traded. The value of such futures
contracts held by a Portfolio or Series are determined each day as of such
close.

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 certain Portfolios 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 Series and is paid to the
Portfolios and Series and used by them to defray such costs. Such costs include
brokerage

<PAGE>

commissions on listed securities, imputed commissions on OTC securities and a
.5% Stamp Duty imposed on the purchase of stocks on the ISE. 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 table below
lists the Portfolios whose shares are sold at an offering price which is
equal to the current net asset value of such shares plus a reimbursement fee.
The reimbursement fee is expressed as a percentage of the net asset value of
the shares of each Portfolio.

<PAGE>

PORTFOLIO REIMBURSEMENT FEE

Japanese Small Company Portfolio(1) 0.50%
Continental Small Company Portfolio(1) 1.00%
Pacific Rim Small Company Portfolio(1) 1.00%
Emerging Markets Portfolio(1) 0.50%
Emerging Markets Small Cap Portfolio(1) 1.00%
DFA International Small Cap Value 0.70%
Portfolio

International Small Company Portfolio(2) 0.70%

____________________
(1) The Series in which the Portfolio invests also charges a reimbursement
fee equal to that charged by the Portfolio.
(2) The reimbursement fee is equal to a blended rate of the reimbursement
fees of the Underlying Series. The blended rate is determined on a
quarterly basis and is based upon the target allocation in effect at
the end of each quarter. The blended rate will be calculated by
multiplying the rate of reimbursement fee of each Underlying Series by
a fraction equal to the portion of the assets of the Portfolio which,
at such time, is being allocated to each Underlying Series and adding
the results thereof. If there is a change to the reimbursement fee of
an Underlying Series during a quarter, the blended rate will be
re-calculated to reflect such change in the Underlying Series'
reimbursement fee.

The public offering price of shares of the Domestic Equity Portfolios,
United Kingdom Small Company Portfolio, Large Cap International Portfolio,
RWB/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.

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 accepted
into or from the International Equity Portfolios only with respect to: (1) Large
Cap International Portfolio; (2) a Feeder Portfolio and another open-end
investment company advised or administered by the Advisor, provided that the
Feeder Portfolio and investment company both invest substantially all of their
assets in the same series of shares of the Trust; and (3) International Small
Company Portfolio and any of the Feeder Portfolios which invest in the
Underlying Series.

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

<PAGE>

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. Exchanges with respect to
International Small Company Portfolio and any of the Feeder Portfolios which
invest in the Underlying Series are not subject to a reimbursement fee. "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 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. The Fund
reserves the right to send redemption proceeds by check in its discretion; a
shareholder may request overnight delivery of such check at the shareholder's
own expense. 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

<PAGE>

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.

With respect to each Portfolio, the Fund reserves the right to redeem a
shareholder's account if the value of the shares in a specific portfolio is $500
or less, whether because of redemptions, a decline in the portfolio's net asset
value per share or any other reason. Before the Fund involuntarily redeems
shares from such an account and sends the proceeds to the stockholder, the Fund
will give written notice of the redemption to the stockholder at least sixty
days in advance of the redemption date. The stockholder will then have sixty
days from the date of the notice to make an additional investment in the Fund in
order to bring the value of the shares in the account for a specific portfolio
to more than $500 and avoid such involuntary redemption. The redemption price
to be paid to a stockholder for shares redeemed by the Fund under this right
will be the aggregate net asset value of the shares in the account at the close
of business on the redemption date.

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.

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.

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 shareholder proposal, the Fund will solicit voting
instructions from the Feeder Portfolio's shareholders 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
accordance with their best judgment. If a majority shareholder of a Partnership
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.

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

<PAGE>

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. The Fund's Annual Report to shareholders for the fiscal year
ended November 30, 1996 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 February 28, 1997, the following persons beneficially owned more
than 25% of the voting securities of the following Portfolios:

U.S. LARGE COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - REIN* 64.17%

101 Montgomery Street, San Francisco, CA 94104

U.S. LARGE CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 48.93%

DFA REAL ESTATE SECURITIES PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 44.59%

Owens-Illinois Master Retirement Trust 28.13%

34 Exchange Place, Jersey City, NJ 07302

JAPANESE SMALL COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 38.86%

BellSouth Corporation Master Pension TRUST 35.00%

1155 Peachtree Street, N.E., Atlanta, GA 30367

PACIFIC RIM SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust (see above address) 61.53%

UNITED KINGDOM SMALL COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 41.87%

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

<PAGE>

BellSouth Corporation Master Pension Trust (see above address) 39.90%

DFA ONE-YEAR FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 28.94%

EMERGING MARKETS PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 63.17%

CONTINENTAL SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust (see above address) 39.81%

Charles Schwab & Company, Inc. - REIN* (see above address) 36.20%

LARGE CAP INTERNATIONAL PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 75.60%

RWB/DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 90.60%

DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 57.95%

BellSouth Corporation Master Pension Trust (see above address) 28.17%

DFA FIVE-YEAR GOVERNMENT PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 62.83%

DFA GLOBAL FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 48.25%

DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - CAP* (see above address) 72.53%

DFA TWO-YEAR GLOBAL FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - CAP* (see above address) 50.76%

Charles Schwab & Company, Inc. - REIN* (see above address) 45.37%

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

84
<PAGE>

ENHANCED U.S. LARGE COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - CAP* (see above address) 72.24%

DFA TWO-YEAR CORPORATE FIXED INCOME PORTFOLIO
Dimensional Fund Advisors Inc. 100%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401

DFA TWO-YEAR GOVERNMENT PORTFOLIO

Dimensional Fund Advisors INC. (see above address) 100%

INTERNATIONAL SMALL COMPANY PORTFOLIO

San Diego County Employees Retirement Association 61.51%

1495 Pacific Highway
San Diego, CA 92101

U.S. SMALL CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 26.01%

U.S. 9-10 SMALL COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see above address) 25.44%

U.S. 6-10 SMALL COMPANY PORTFOLIO
McKinsey & Company Master Retirement Trust 26.43%
55 E. 52ND Street

New York, NY 10055

EMERGING MARKETS SMALL CAP PORTFOLIO
DIMENSIONAL FUND ADVISORS INC. (see above address) 100%

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>

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<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 LTD.

Suite 4403 Gateway
1 MacQuarie Place
Sydney, New South Wales 2000
Australia

Custodians - International
BOSTON SAFE DEPOSIT AND TRUST COMPANY
Princess House
1 Suffolk Lane
London EC4R 0AN
England

THE CHASE MANHATTAN BANK
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, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098

Independent Accountants
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103

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DFA INVESTMENT DIMENSIONS GROUP INC.

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

STATEMENT OF ADDITIONAL INFORMATION

March 28, 1997

DFA Investment Dimensions Group Inc. (the "Fund") offers thirty series of
shares. This statement of additional information relates to twenty-four of
those series (collectively, the "Portfolios"):

U.S. 9-10 Small Company Portfolio Continental Small Company Portfolio
U.S. 6-10 Small Company Portfolio Large Cap International Portfolio
Enhanced U.S. Large Company Portfolio U.S. Large Company Portfolio
U.S. Small Cap Value Portfolio DFA International Small Cap Value
Portfolio
U.S. Large Cap Value Portfolio International Small Company Portfolio
DFA Real Estate Securities Portfolio DFA One-Year Fixed Income Portfolio
Japanese Small Company Portfolio DFA Two-Year Corporate Fixed Income
Portfolio
Pacific Rim Small Company Portfolio DFA Two-Year Global Fixed Income
Portfolio
United Kingdom Small Company Portfolio DFA Two-Year Government Portfolio
Emerging Markets Portfolio DFA Five-Year Government Portfolio
Emerging Markets Small Cap Portfolio DFA Global Fixed Income Portfolio
DFA Intermediate Government RWB/DFA International High Book
Fixed Income Portfolio to Market Portfolio

This statement of additional information is not a prospectus but should be read
in conjunction with the Portfolios' prospectus dated March 28, 1997, as amended
from time to time, 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

OPTIONS ON STOCK INDICES.. . . . . . . . . . . . . . . . . . . . . . . . . . .7

FUTURES CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

FEDERAL TAX TREATMENT OF OPTIONS, FUTURES CONTRACTS AND SIMILAR
POSITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ADMINISTRATIVE SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . . 12

OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PRINCIPAL HOLDERS OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . 15

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

REDEMPTION AND TRANSFER OF SHARES. . . . . . . . . . . . . . . . . . . . . . 19

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

FINANCIAL TATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

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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," "INTERNATIONAL SMALL COMPANY PORTFOLIO - Investment
Objectives and Policies," "U.S. LARGE COMPANY PORTFOLIO - Investment Objective
and Policies," "ENHANCED 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
REAL ESTATE SECURITIES PORTFOLIO," "VALUE PORTFOLIOS - Portfolio Characteristics
and Policies," "RWB/DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO -Investment
Objective and Policies," "EMERGING MARKETS PORTFOLIO AND EMERGING MARKETS SMALL
CAP PORTFOLIO - Investment Objectives and Policies" and "DFA INTERNATIONAL SMALL
CAP VALUE PORTFOLIO - Investment Objective and Policies." The following
information applies to all of 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 Advisor 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. The turnover rate for the International Small
Company Portfolio is not expected to exceed 25% per year. Generally, securities
will be purchased with the expectation that they will be held for longer than
one year. Generally, securities will be held until such time as, in the
Advisor's judgment, they are no longer considered an appropriate holding in
light of the policy of maintaining portfolios of companies with small market
capitalization. Because The DFA Real Estate Securities Portfolio generally will
hold securities for the long term, its turnover rate ordinarily is anticipated
to be low. Generally, securities will be purchased with the expectation that
they will be held for longer than one year.

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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, 1996, 1995 and 1994

1996 1995 1994

U.S. 9-10 Small Company $1,704,251 $1,120,450 $1,431,640

U.S. 6-10 Small Company 473,887 361,784 398,610

U.S. Large Company 72,262 15,289 10,643

Japanese Small Company 466,795 768,765 807,580

United Kingdom Small Company 86,854 236,754 138,025

Continental Small Company 214,631 244,705 343,484

Large Cap International 42,633 61,048 153,475

U.S. Small Cap Value 2,754,009 1,027,015 1,860,712

U.S. Large Cap Value 934,452 410,503 367,810

DFA Real Estate Securities 39,007 26,084 83,979

Pacific Rim Small Company 181,812 142,227 529,025

RWB/DFA International High
Book to Market 1,251,242 542,306 623,031

Emerging Markets 437,088 166,601 79,105

DFA International Small Cap Value 1,472,685 745,562 ---

Enhanced U.S. Large Company 1,650 --- ---
----------- ---------- ----------
TOTAL $10,133,258 $5,869,093 $6,827,119

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.

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 and International Small
Company Portfolio, the discussion applies to the Series of the Trust in which
the Feeder Portfolio invests all of its assets and the Underlying Series,
respectively.

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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.

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 Series and DFA Australia td. performs these
services for the Japanese and Pacific Rim Small Company Series. 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.

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 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 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 1996, the Portfolios or, in the case of a Feeder
Portfolio, its corresponding Series, paid commissions for securities
transactions to brokers which provided market price monitoring services, market
studies and research services to the Portfolios or Series as follows:

VALUE OF BROKERAGE
SECURITIES TRANSACTIONS COMMISSIONS

U.S. 9-10 Small Company $144,214,656 $ 629,486
U.S. 6-10 Small Company 95,690,766 271,641
U.S. Small Cap Value 237,755,736 1,074,452
U.S. Large Cap Value 211,163,255 313,601
DFA Real Estate Securities 13,175,700 24,415

<PAGE>

RWB/DFA International High Book to Market 13,031,549 78,952
DFA International Small Cap Value 52,274,767 360,493
Japanese Small Company Portfolio 34,098,002 191,550

TOTAL: $801,404,431 $2,944,590

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 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 Tokyo
Stock Exchange ("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
Series 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 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; and the Enhanced U.S. Large
Company Portfolio may purchase, sell and enter into indices-related futures
contracts, options on such futures contracts, securities-related swap agreements
and other derivative instruments;

<PAGE>

(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 each Portfolio,
other than the U.S. 9-10 Small Company, Japanese Small Company, DFA One-Year
Fixed Income, DFA Intermediate Government Fixed Income and DFA Five-Year
Government Portfolios, 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 Enhanced U.S. Large Company, DFA Two-Year
Corporate Fixed Income, DFA Two-Year Government, DFA Two-Year Global Fixed
Income, International Small Company and Emerging Markets Small Cap Portfolios
are not subject to this limitation and The DFA Real Estate Securities Portfolio,
the Value Portfolios, the RWB/DFA International High Book to Market Portfolio,
The U.S. 6-10 Small Company Portfolio, the Emerging Markets Portfolio and 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 Real Estate Securities Portfolio may
invest in a REIT that is registered as an investment company; and provided that
each of the Enhanced U.S. Large Company, Emerging Markets, Emerging Markets
Small Cap and International Small Company Portfolios may invest its assets in
securities of investment companies and units of such companies such as, but not
limited to, S&P Depositary Receipts;

(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 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

<PAGE>

industry; except that (a) DFA One-Year Fixed Income, DFA Two-Year Corporate
Fixed Income and DFA Two-Year Global Fixed Income Portfolios 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 (b)
The DFA 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, except
that the Enhanced U.S. Large Company Portfolio may write or acquire options;

(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;

(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; provided that this limitation applies only to 75% of
the assets of The DFA Real Estate Securities Portfolio, the Value Portfolios,
the Emerging Markets Portfolio, the Emerging Markets Small Cap 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 and International Small Company
Portfolio from investing all or substantially all of its assets in the shares of
another registered, open-end investment company, such as the Series of the
Trust. The investment limitations of each Series are the same as those of the
corresponding Feeder Portfolio.

The investment limitations described in (1) and (15) above do not prohibit
each Portfolio that may purchase or sell financial futures contracts and options
thereon from making margin deposits to the extent permitted under applicable
regulations; and the investment limitations described in (1), (13) and (15)
above do not prohibit the Enhanced U.S. Large Company Portfolio from (i) making
margin deposits in connection with transactions in options; and (ii) maintaining
a short position, or purchasing, writing or selling puts, calls, straddles,
spreads or combinations thereof in connection with transactions in options,
futures, and options on futures and transactions arising under swap agreements
or other derivative instruments;

For purposes of (5) above, the Emerging Markets Portfolio and the Emerging
Markets Small Cap Portfolio (indirectly through their investment in the
corresponding Series of the Trust) 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 such
Series' behalf in lieu of depositing initial margin in connection with currency
futures contracts, and the Series have 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 and International
Small Company Portfolio will only hold shares of certain Series of the Trust,
these Portfolios do not intend to lend those shares.

For the purposes of (7) above, DFA One-Year Fixed Income Portfolio, DFA
Two-Year Corporate Fixed Income Portfolio, DFA Two-Year Global Fixed Income
Portfolio (indirectly through their investment in the corresponding Series) and
DFA Global Fixed Income Portfolio may invest in commercial paper that is exempt
from the registration requirements of the Securities Act of 1933 (the "1933
Act") subject to the requirements regarding credit ratings stated in the
prospectus under "Description of Investments." Further, pursuant to Rule 144A
under the 1933 Act, the Portfolios may purchase certain unregistered (i.e.
restricted) securities upon a determination that a liquid institutional market
exists for the securities. If it is decided that a liquid market does exist,
the securities will not be subject to the 10% or 15% limitation on holdings of
illiquid securities stated in (7) above. While maintaining oversight, the Board
of Directors

<PAGE>

has delegated the day-to-day function of making liquidity determinations to the
Advisor. For Rule 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: (1) The
Large Cap International and Small Company Portfolios, including The U.S. 6-10
Small Company, Japanese Small Company, Pacific Rim Small Company, United Kingdom
Small Company and Continental Small Company Portfolios indirectly through their
investment in the corresponding Series of the Trust, do not intend to purchase
interests in any real estate investment trust; and (2) the Enhanced U.S. Large
Company, DFA Two-Year Corporate Fixed Income, DFA Two-Year Government, DFA
Two-Year Global Fixed Income, International Small Company and Emerging Markets
Small Cap Portfolios (indirectly through their investment in the Trust Series)
do not intend to invest more than 15% of their total assets in illiquid
securities.

The International Equity, DFA Two-Year Global Fixed Income and DFA Global
Fixed Income Portfolios (directly or indirectly through their investment in the
Trust Series) 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, the
RWB/DFA International High Book to Market Portfolio, and The DFA Real Estate
Securities Portfolio (directly or indirectly through their investment in the
Trust Series), 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 and the Emerging Markets Small Cap Series may establish
subsidiaries or other similar vehicles for the purpose of conducting their
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. Each
Series would "look through" any such vehicle to determine compliance with their
investment restrictions.

Unless otherwise indicated, all limitations applicable to the Portfolios'
and Series' investments apply only at the time that a transaction is undertaken.
Any subsequent change in a rating assigned by any rating service to a security
or change in the percentage of a Portfolio's or Series' assets invested in
certain securities or other instruments resulting from market fluctuations or
other changes in a Portfolio's or Series' total assets will not require a
Portfolio or Series to dispose of an investment until the Advisor determines
that it is practicable to sell or closeout the investment without undue market
or tax consequences. In the event that ratings services assign different
ratings to the same security, the Advisor will determine which rating it
believes best reflects the security's quality and risk at that time, which may
be the higher of the several assigned ratings.

OPTIONS ON STOCK INDICES

The Enhanced U.S. Large Company Series may purchase and sell options on
stock indices. With respect to the sale of call options on stock indices,
pursuant to published positions of the Securities and Exchange Commission
("SEC"), the Enhanced U.S. Large Company Series will either (1) maintain with
its custodian liquid assets equal to the contract value (less any margin
deposits); (2) hold a portfolio of stocks substantially replicating the movement
of the index underlying the call option; or (3) hold a separate call on the same
index as the call written where the exercise price of the call held is (a) equal
to or less than the exercise price of the call written, or (b) greater than the
exercise price of the call written, provided the difference is maintained by the
Series in liquid assets in a segregated account with its custodian. With

<PAGE>

respect to the sale of put options on stock indices, pursuant to published SEC
positions, the Enhanced U.S. Large Company Series will either (1) maintain
liquid assets equal to the exercise price (less any margin deposits) in a
segregated account with its custodian; or (2) hold a put on the same index as
the put written where the exercise price of the put held is (a) equal to or
greater than the exercise price of the put written, or (b) less than the
exercise price of the put written, provided an amount equal to the difference is
maintained by the Series in liquid assets in a segregated account with its
custodian.

Prior to the earlier of exercise or expiration, an option may be closed out
by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying index, exercise price, and expiration). There can be no
assurance, however, that a closing purchase or sale transaction can be effected
when the Enhanced U.S. Large Company Series desires.

The Enhanced U.S. Large Company Series will realize a gain from a closing
purchase transaction if the cost of the closing option is less than the premium
received from writing the option, or, if it is more, the Series will realize a
loss. The principal factors affecting the market value of a put or a call
option include supply and demand, interest rates, the current market price of
the underlying index in relation to the exercise price of the option, the
volatility of the underlying index, and the time remaining until the expiration
date.

If an option written by the Enhanced U.S. Large Company Series expires, the
Series realizes a gain equal to the premium received at the time the option was
written. If an option purchased by the Enhanced U.S. Large Company Series
expires unexercised, the Series realizes a loss equal to the premium paid.

The premium paid for a put or call option purchased by the Enhanced U.S.
Large Company Series is an asset of the Series. The premium received for an
option written by the Series is recorded as a deferred credit. The value of an
option purchased or written is marked to market daily and is valued at the
closing price on the exchange on which it is traded or, if not traded on an
exchange or no closing price is available, at the mean between the last bid and
asked prices.

RISKS ASSOCIATED WITH OPTIONS ON INDICES

There are several risks associated with transactions in options on indices.
For example, there are significant differences between the securities and
options markets that could result in an imperfect correlation between these
markets, causing a given transaction not to achieve its objectives. The value
of an option position will reflect, among other things, the current market price
of the underlying index, the time remaining until expiration, the relationship
of the exercise price, the term structure of interest rates, estimated price
volatility of the underlying index and general market conditions. A decision as
to whether, when and how to use options involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events.

Options normally have expiration dates of up to 90 days. The exercise
price of the options may be below, equal to or above the current market value of
the underlying index. Purchased options that expire unexercised have no value.
Unless an option purchased by the Enhanced U.S. Large Company Series is
exercised or unless a closing transaction is effected with respect to that
position, the Enhanced U.S. Large Company Series will realize a loss in the
amount of the premium paid and any transaction costs.

A position in an exchange-listed option may be closed out only on an
exchange that provides a secondary market for identical options. Although the
Enhanced U.S. Large Company Series intends to purchase or write only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market will exist for any particular option at
any specific time. Closing transactions may be effected with respect to options
traded in the over-the-counter markets only by negotiating directly with the
other party to the option contract, or in a secondary market for the option if
such a market exists. There can be no assurance that the Enhanced U.S. Large
Company Series will be able to liquidate an over-the-counter option at a
favorable price at any time prior to expiration. In the event of insolvency of
the counter-party, the Series may be unable to liquidate an over-the-counter
option. Accordingly, it may not be possible to effect closing transactions with
respect to certain options, with the

8
<PAGE>

result that the Enhanced U.S. Large Company Series would have to exercise those
options which they have purchased in order to realize any profit. With respect
to options written by the Enhanced U.S. Large Company Series, the inability to
enter into a closing transaction may result in material losses to the Series.

Index prices may be distorted if trading of a substantial number of
securities included in the index is interrupted causing the trading of options
on that index to be halted. If a trading halt occurred, the Enhanced U.S. Large
Company Series would not be able to close out options which it had purchased and
may incur losses if the underlying index moved adversely before trading resumed.
If a trading halt occurred and restrictions prohibiting the exercise of options
were imposed through the close of trading on the last day before expiration,
exercises on that day would be settled on the basis of a closing index value
that may not reflect current price information for securities representing a
substantial portion of the value of the index.

The Enhanced U.S. Large Company Series' activities in the options markets
may result in higher fund turnover rates and additional brokerage costs;
however, the Series may also save on commissions by using options as a hedge
rather than buying or selling individual securities in anticipation or as a
result of market movements.

INVESTMENT LIMITATIONS ON OPTIONS TRANSACTIONS

The ability of the Enhanced U.S. Large Company Series to engage in options
transactions is subject to certain limitations. The Enhanced U.S. Large Company
Series will only invest in over-the-counter options to the extent consistent
with the 15% limit on investments in illiquid securities.

<PAGE>

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 contracts. Such
Portfolios (with the exception of Enhanced U.S. Large Company Portfolio and its
corresponding Series) may enter into futures contracts and options on future
contracts only for the purpose of remaining fully invested and to maintain
liquidity to pay redemptions. The Enhanced U.S. Large Company Portfolio may use
futures contracts and options thereon to hedge against securities prices or as
part of its overall investment strategy.

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. To the extent that a Series or Portfolio
invests in futures contracts and options thereon for other than bona fide
hedging purposes, no Series or Portfolio will enter into such transactions if,
immediately thereafter, the sum of the amount of initial margin deposits and
premiums paid for open futures options would exceed 5% of the Series' or
Portfolio's total assets, after taking into account unrealized profits and
unrealized losses on such contracts it has entered into; provided, however,
that, in the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5%. Pursuant to
published positions of the SEC, the Portfolios or Series may be required to
maintain segregated accounts consisting of liquid assets, (or, as permitted
under applicable regulation, enter into offsetting positions) in connection with
its futures contract transactions in order to cover its obligations with respect
to such contracts.

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 OPTIONS,
FUTURES CONTRACTS AND SIMILAR POSITIONS

The investment by a Portfolio (or in the case of a Feeder Portfolio, by a
corresponding Series) in options, futures contracts and options on futures
contracts is subject to many complex and special tax rules. For example,
options on stock and on narrow-based stock indexes will generally produce
long-term or short-term capital gain or loss upon the exercise, lapse, or
closing out of the option or sale of the underlying stock or security. By
contrast, the treatment by a Portfolio or Series of certain other options,

<PAGE>

futures and forward contracts is generally governed by Section 1256 of the Code.
These "Section 1256" positions generally include listed options on debt
securities, options on broad-based stock indexes, options on futures contracts,
regulated futures contracts and certain foreign currency contracts and options
thereon.

Absent a tax election to the contrary, each such Section 1256 position held
by a Portfolio or Series will be marked-to-market (i.e., treated as if it were
sold for fair market value) on the last business day of a Portfolio's or Series'
fiscal year, and all gain or loss associated with fiscal year transactions and
marked-to-market positions at fiscal year end (except certain currency gain or
loss covered by Section 988 of the Code) will generally be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss. The
effect of Section 1256 marked-to-market rules may be to accelerate income or to
convert what otherwise would have been long-term capital gains into short-term
capital gains or short-term capital losses into long-term capital losses within
a Portfolio or Series. The acceleration of income on Section 1256 positions may
require a Portfolio or Series to accrue taxable income without the corresponding
receipt of cash. In order to generate cash to satisfy the distribution
requirements of the Code, a Portfolio or Series may be required to dispose of
portfolio securities that it otherwise would have continued to hold or to use
cash flows from other sources such as the sale of a Portfolio's or Series'
shares. In these ways, any or all of these rules may affect both the amount,
character and timing of income distributed to shareholders by a Portfolio.

When a Portfolio (or in the case of a Feeder Portfolio, the corresponding
Series) holds an option or contract which substantially diminishes a Portfolio's
or Series' risk of loss with respect to another position of a Portfolio or
Series (as might occur in some hedging transactions), this combination of
positions could be treated as a "straddle" for tax purposes, resulting in
possible deferral of losses, adjustments in the holding periods of a Portfolio's
or Series' securities and conversion of short-term capital losses into long-term
capital losses. Certain tax elections exist for mixed straddles (i.e.,
straddles comprised of at least one Section 1256 position and at least one
non-Section 1256 position) which may reduce or eliminate the operation of these
straddle rules.

The Portfolios and those Series taxable as regulated investment
companies are also subject to the requirement that less than 30% of their
annual gross income be derived from the sale or other disposition of
securities and certain other investments held for less than three months
("short-short income"). This requirement may limit a Portfolio's (or in the
case of a Feeder Portfolio, the corresponding Series') ability to engage in
options, straddles, hedging transactions and forward or futures contracts
because these transactions are often consummated in less than three months,
may require the sale of portfolio securities held less than three months and
may, as in the case of short sales of portfolio securities, reduce the
holding periods of certain securities within a Portfolio or Series, resulting
in additional short-short income for a Portfolio or Series.

A Portfolio (or in the case of a Feeder Portfolio, the corresponding
Series) will monitor its transactions in such options and contracts and may make
certain other tax elections in order to mitigate the effect of the above rules
and to prevent disqualification of a Portfolio or Series as a regulated
investment company under Subchapter M of the Code.

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*, 50, 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
Ltd., 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.

11
<PAGE>

George M. Constantinides, 49, Director, Chicago, IL. Leo Melamed 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.

John P. Gould, 58, Director, Chicago, IL. Steven G. Rothmeier
Distinguished Service Professor of Economics, Graduate School of Business,
University of Chicago. Trustee, The DFA Investment Trust Company and First
Prairie Funds (registered investment companies). Director, Dimensional
Investment Group Inc., Dimensional Emerging Markets Fund Inc. and Harbor
Investment Advisors. Executive Vice President, Lexecon Inc. (economics, law,
strategy and finance consulting).

Roger G. Ibbotson, 53, 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 and President, Ibbotson
Associates, Inc., Chicago, IL (software, data, publishing and consulting).

Merton H. Miller, 73, 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.
Public Director, Chicago Mercantile Exchange.

Myron S. Scholes, 55, Director, Greenwich, CT. Limited Partner, Long-Term
Capital Management L.P. (money manager). Frank E. Buck Professor of Finance,
Graduate School of Business and Professor of Law, Law School, Senior Research
Fellow, Hoover Institution, (all) Stanford University (on leave).
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.

Rex A. Sinquefield*, 52, Director, Chairman and Chief Investment Officer,
Santa Monica, CA. Chairman-Chief Investment Officer and Director, Dimensional
Fund Advisors Inc., DFA Securities Inc., DFA Australia Ltd., Dimensional
Investment Group Inc. and Dimensional Emerging Markets Fund Inc. Trustee,
Chairman-Chief Investment Officer of The DFA Investment Trust Company.
Chairman, Chief Executive Officer and Director, Dimensional Fund Advisors Ltd.

* Interested Director of the Fund.

OFFICERS

Each of the officers listed below hold the same office in the following
entities: Dimensional Fund Advisors Inc., DFA Securities Inc., DFA Australia
Ltd., Dimensional Investment Group Inc., The DFA Investment Trust Company,
Dimensional Fund Advisors Ltd., and Dimensional Emerging Markets Fund Inc.

Arthur Barlow, 41, Vice President, Santa Monica, CA.

Maureen Connors, 60, Vice President, Santa Monica, CA.

Truman Clark, 55, Vice President, Santa Monica, CA. Consultant until
October 1995 and Principal and Manager of Product Development, Wells Fargo Nikko
Investment Advisors, San Francisco, CA from 1990-1994.

Robert Deere, 39, Vice President, Santa Monica, CA.

Irene R. Diamant, 46, Vice President and Secretary (for all entities other
than Dimensional Fund Advisors Ltd.), Santa Monica, CA.

Margaret East, 56, Secretary, Dimensional Fund Advisors Ltd.

<PAGE>

Eugene Fama, Jr., 36, Vice President, Santa Monica, CA.

David Plecha, 35, Vice President, Santa Monica, CA.

George Sands, 41, Vice President, Santa Monica, CA. Managing Director,
Asset Strategy Consulting, Los Angeles, CA from 1991 to 1992.

Michael T. Scardina, 41, Vice President, Chief Financial Officer,
Controller and Treasurer, Santa Monica, CA.

Jeanne C. Sinquefield, Ph.D., 50, Executive Vice President, Santa Monica,
CA.

Weston Wellington, 46, Vice President, Santa Monica, CA. Director of
Research, LPL Financial Services, Inc., Boston, MA from 1987 to 1994.

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, 1996 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 Total Compensation from
Director Compensation Fund
- -------- from Fund and Fund Complex
---------------- ------------------------

George M. Constantinides $ 15,000 $ 30,000
John P. Gould $ 15,000 $ 30,000
Roger G. Ibbotson $ 15,000 $ 30,000
Merton H. Miller $ 15,000 $ 30,000
Myron S. Scholes $ 15,000 $ 30,000

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, 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 of the Portfolios listed
below 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 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

13
<PAGE>

.03% of the next $200 million of net assets
.02% of net assets over $800 million
The DFA Real Estate Securities Portfolio is subject to a $4,900 per month
minimum fee. PFPC has agreed to limit the minimum fee for this Portfolio from
time to time.

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 Large Cap International Portfolio and the DFA International Small Cap Value
Portfolio are each subject to a $75,000 per year minimum fee. PFPC has agreed
to limit the minimum fee for these Portfolios from time to time.

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 has agreed to limit the minimum fee for this Portfolio from time to
time.

ONE-YEAR FIXED INCOME PORTFOLIO
U.S. 6-10 SMALL COMPANY PORTFOLIO
U.S. LARGE CAP VALUE PORTFOLIO
U.S. SMALL CAP VALUE PORTFOLIO
RWB/DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO
ENHANCED U.S. LARGE COMPANY PORTFOLIO
DFA TWO-YEAR GLOBAL FIXED INCOME PORTFOLIO
DFA TWO-YEAR CORPORATE FIXED INCOME PORTFOLIO
Charges for each Portfolio:
$1,000 per month (includes custodian fees)

JAPANESE SMALL COMPANY PORTFOLIO
PACIFIC RIM SMALL COMPANY PORTFOLIO
UNITED KINGDOM SMALL COMPANY PORTFOLIO
CONTINENTAL SMALL COMPANY PORTFOLIO
EMERGING MARKETS PORTFOLIO
EMERGING MARKETS SMALL CAP PORTFOLIO
DFA TWO-YEAR GOVERNMENT PORTFOLIO
U.S. LARGE COMPANY PORTFOLIO
Charges for each Portfolio:
$2,600 per month (includes custodian fees)

INTERNATIONAL SMALL COMPANY PORTFOLIO
$2,000 per month (includes custodian fees)

<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 ended November 30,
1994, 1995 and 1996, the Portfolios (or their corresponding Series) paid
management fees as set forth in the following table:

1994 1995 1996
(000) (000) (000)
U.S. 9-10 Small Company Portfolio $3,337 $4,045 $ 5,511

U.S. 6-10 Small Company Portfolio $ 46* $ 57* $ 81*

U.S. Large Company Portfolio $ 11 $ 19 $ 62

U.S. Small Cap Value Portfolio $ 459* $ 976* $1,933*

U.S. Large Cap Value Portfolio $ 143* $ 306* $ 699*

DFA Real Estate Securities Portfolio $ 138 $ 183 $ 251

Japanese Small Company Portfolio** $1,500 $1,704 $ 1,483

Pacific Rim Small Company Portfolio** $ 962 $1,020 $ 772

United Kingdom Small Company Portfolio** $1,044 $1,096 $ 636

Emerging Markets Portfolio $ 6* $ 30* $ 111*

Continental Small Company Portfolio** $1,627 $1,781 $ 1,258

Large Cap International Portfolio $ 148 $ 147 $ 183

DFA International Small Cap Value Portfolio n/a $ 299 $ 1,877

RWB/DFA International High Book to Market
Portfolio $ 105 $ 536* $2,124*

DFA One-Year Fixed Income Portfolio $ 388 $ 311 $ 386*

DFA Five-Year Government Portfolio $ 256 $ 427 $ 402

DFA Global Fixed Income Portfolio $ 192 $ 311 $ 377

<PAGE>

DFA Intermediate Government Fixed Income
Portfolio $ 72 $ 88 $ 131

Enhanced U.S. Large Company Portfolio n/a n/a $ 4*

DFA Two-Year Global Fixed Income Portfolio n/a n/a $ 108

International Small Company Portfolio n/a n/a $178***

- -------------------------------------
* The Series has more than one Feeder Portfolio; the dollar amount
represents the total dollar amount of management fees paid by the Series to the
Advisor.

** Prior to August 9, 1996, the Fund on behalf of the Portfolio had an
investment management agreement with the Advisor; the dollar amount represents
the dollar amount of investment management fees paid to the Advisor by the
Portfolio for fiscal years 1994 and 1995 and by the Portfolio and its
corresponding Series for fiscal year 1996.

*** Each of the four Underlying Series in which the Portfolio invests its
assets has more than one Feeder Portfolio (which are also included elsewhere in
this table); the dollar amount represents the total dollar amount of management
fees paid by each Underlying Series to the Advisor for the period October 1,
(the Portfolio's commencement of operations) to November 30, 1996.

<PAGE>

The Fund commenced offering shares of Emerging Markets Portfolio in
April, 1994; DFA International Small Cap Value Portfolio in December, 1994;
DFA Two-Year Global Fixed Income Portfolio in February, 1996; Enhanced U.S.
Large Company Portfolio in July, 1996; and International Small Company
Portfolio in October, 1996. The DFA Two-Year Corporate Fixed Income, DFA
Two-Year Government and Emerging Markets Small Cap Portfolios had not
commenced operations as of November 30, 1996.

Until September, 1995, The DFA Intermediate Government Fixed Income
Portfolio was named The DFA Intermediate Government Bond Portfolio, The DFA
Global Fixed Income Portfolio was named The DFA Global Bond Portfolio, The
Pacific Rim Small Company Portfolio was named The Asia-Australia Small Company
Portfolio, The U.S. Large Cap Value Portfolio was named The U.S. Large Cap High
Book to Market Portfolio, The U.S. Small Cap Value Portfolio was named The U.S.
Small Cap High Book to Market Portfolio, The U.S. 9-10 Small Company Portfolio
was named the Small Company Shares, The DFA One-Year Fixed Income Portfolio was
named The DFA Fixed Income Shares, and The Continental Small Company Portfolio
was named the Continental European Portfolio. Until February, 1996, RWB/DFA
International High Book to Market Portfolio was named DFA International High
Book to Market Portfolio. From September, 1995 until December, 1996, The DFA
Real Estate Securities Portfolio was named DFA/AEW Real Estate Securities
Portfolio.

PRINCIPAL HOLDERS OF SECURITIES

As of February 28, 1997, the following stockholders owned 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* 25.44%
101 Montgomery Street
San Francisco, CA 94104

State Farm Insurance Companies 10.76%
One State Farm Plaza
Bloomington, IL 61710

Pepsico Inc. Master Trust 8.87%
The Northern Trust Company Trustee
P.O. Box 92956
801 South Canal
Chicago, IL 60675

Charles Schwab & Company, Inc. - REIN* (see address above) 5.97%

<PAGE>

Owens-Illinois 5.48%
Master Retirement Trust
34 Exchange Place
Jersey City, NJ 07302

National Electrical Benefit Fund 5.26%
1125 15th Street NW
Washington, DC 20005

THE U.S. 6-10 SMALL COMPANY PORTFOLIO

McKinsey & Company Master Retirement Trust 26.43%
55 E. 52nd Street
New York, NY 10055

The Charles A. Dana Foundation 17.40%
745 5th Avenue, Suite 700
New York, NY 10151

Charles Schwab & Company, Inc. - REIN* (see address above) 13.57%

Salvation Army - ETHQ 7.65%
440 W. Nyack Road
West Nyack, NY 10994

Salvation Army Central Territory 5.66%
10 W. Algonquin Road
Des Plaines, IL 60016

Northern Telecom Inc. 5.38%
Bankers Trust Co., Trustee
34 Exchange Place
Jersey City, NJ 07302

THE JAPANESE SMALL COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 38.86%

BellSouth Corporation Master Pension Trust 35.00%
1155 Peachtree Street, N.E.
Atlanta, GA 30367

THE UNITED KINGDOM SMALL COMPANY PORTFOLIO

Charles Schwab & Company, Inc.-REIN* (see address above) 41.87%

BellSouth Corporation Master Pension Trust (see address above) 39.90%

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

<PAGE>

John Deere Pension Fund 5.20%
John Deere Road
Moline, IL 61265

THE CONTINENTAL SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust (see address above) 39.81%

Charles Schwab & Company, Inc. - REIN* (see address above) 36.20%

John Deere Pension Fund 6.04%
John Deere Road
Moline, IL 61265

W.R. Grace and Company 5.03%
1 Town Center Road
Boca Raton, FL 33486

THE LARGE CAP INTERNATIONAL PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 75.60%

THE U.S. LARGE COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 64.17%

Charles Schwab & Company, Inc. - CASH* (see address above) 10.57%

Donaldson Lufkin & Jenrette Securities Corp.* 7.40%
P.O. Box 2052
Jersey City, NJ 07303

Trust Company of America FBO Matrix* 5.08%
P.O. Box 6675
Englewood, CO 80155

THE DFA ONE-YEAR FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 28.94%

Charles Schwab & Company, Inc. - CASH* (see address above) 8.87%

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

<PAGE>

Peoples Energy Corporation Pension Trust 6.47%
130 E. Randolph Dr., 24th Floor
Chicago, IL 60601

THE DFA FIVE-YEAR GOVERNMENT PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 62.83%

Charles Schwab & Company, Inc. - CASH* (see address above) 12.89%

THE DFA GLOBAL FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 48.25%

Charles Schwab & Company, Inc. - CAP* (see address above) 22.08%

Charles Schwab & Company, Inc. - CASH* (see address above) 11.15%

THE DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - CAP* (see address above) 72.53%

Charles Schwab & Company, Inc. - REIN* (see address above) 16.92%

Charles Schwab & Company, Inc. - CASH* (see address above) 5.49%

PACIFIC RIM SMALL COMPANY PORTFOLIO

BellSouth Corporation Master Pension Trust (see address above) 61.53%

Charles Schwab & Company, Inc. - REIN* (see address above) 18.24%

U.S. LARGE CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 48.93%

Charles Schwab & Company, Inc. - CASH* (see address above) 10.25%

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

<PAGE>

Charles Schwab & Company, Inc. - CAP* (see address above) 8.26%

Donaldson Lufkin & Jenrette Securities Corp.* (see address above) 5.73%

DFA REAL ESTATE SECURITIES PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 44.59%

Owens-Illinois Master Retirement Trust (see address above) 28.13%

Charles Schwab & Company, Inc. - CASH* (see address above) 12.41%

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

<PAGE>

U.S. SMALL CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 26.01%

Mac & Co. * 10.31%
P.O. Box 320
Pittsburgh, PA 15230

Charles Schwab & Company, Inc. - CAP* (see address above) 8.85%

RWB/DFA INTERNATIONAL HIGH BOOK TO MARKET PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 90.60%

Donaldson Lufkin & Jenrette Securities Corp.* 8.79%
P.O. Box 2052
Jersey City, NJ 07303

EMERGING MARKETS PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 63.17%

California Institute of Technology 6.43%
Mail Code 212-31
Pasadena, CA 91125

DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO

Charles Schwab & Company, Inc. - REIN* (see address above) 57.95%

BellSouth Corporation Master Pension Trust (see address above) 28.17%

DFA TWO-YEAR GLOBAL FIXED INCOME PORTFOLIO

Charles Schwab & Company, Inc. - CAP* (see address above) 50.76%

Charles Schwab & Company, Inc. - REIN* (see address above) 45.37%

ENHANCED U.S. LARGE COMPANY PORTFOLIO

Charles Schwab & Company, Inc. - CAP* (see address above) 72.24%

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

<PAGE>

Charles Schwab & Company, Inc. - REIN* (see address above) 15.98%

DFA TWO-YEAR CORPORATE FIXED INCOME PORTFOLIO
Dimensional Fund Advisors Inc. 100%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401

DFA TWO-YEAR GOVERNMENT PORTFOLIO

Dimensional Fund Advisors Inc. (see address above) 100%

INTERNATIONAL SMALL COMPANY PORTFOLIO

San Diego County Employees Retirement Association 61.51%
1495 Pacific Highway
San Diego, CA 92101

Charles Schwab & Company, Inc. - REIN* (see address above) 21.09%

CUNA Individual Account Master Plan 8.14%
Credit Union Benefit Services
P.O. Box 2978
Madison, WI 53701

EMERGING MARKETS SMALL CAP PORTFOLIO
Dimensional Fund Advisors Inc. (see address above) 100%

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

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 1997: January
1, 2, 3 and 15, February 11, March 20, April 29, May 5, July 21, September 5 and
23, October 10, November 3 and 24 and December 23 and 31. 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

<PAGE>

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.

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 NYSE is
restricted as determined by the SEC, (2) during any period when an emergency
exists as defined by the rules of the SEC 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 SEC 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, DFA Two-Year
Global Fixed Income and The DFA Global Fixed Income Portfolios reserve the right
to redeem their shares in the currencies in which their investments (and, in
respect of the Feeder Portfolios and International Small Company Portfolio, the
currencies in which the corresponding Series' 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.

<PAGE>

CALCULATION OF PERFORMANCE DATA

Following are quotations of the annualized percentage total returns for the
one-, five-, and ten-year periods ended November 30, 1996 (as applicable) using
the standardized method of calculation required by the SEC, which is net of the
cost of any current reimbursement fees charged to investors and paid to the
Portfolios. Also included is a quotation of the annualized percentage total
return for the DFA Two-Year Global Fixed Income Portfolio (for the period from
February 9, 1996, the date of commencement of operations), the Enhanced U.S.
Large Company Portfolio (for the period from July 3, 1996, the date of
commencement of operations) and the International Small Company Portfolio (for
the period from October 1, 1996, the date of commencement of operations) to
November 30, 1996 using the standardized method of calculation required by the
SEC. Reimbursement fees of 1%, 1.5% and 1.5% were in effect from the inception
of the Japanese, United Kingdom and Continental Small Company Portfolios,
respectively, until June 30, 1995. A reimbursement fee of 1% was in effect from
the inception of DFA International Small Cap Value Portfolio until June 30,
1995. Effective June 30, 1995, the amount of the reimbursement fee was 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 current 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, Pacific Rim Small Company and Emerging
Markets Small Cap Portfolios - 1.00%; Japanese Small Company and Emerging
Markets Portfolios - .50%; DFA International Small Cap Value Portfolio - .70%;
and International Small Company Portfolio - .70%.

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).

<TABLE>
<CAPTION>
One Year Five Years Ten Years
-------- ---------- ---------
<S> <C> <C> <C>
U.S. 9-10 Small Company Portfolio 18.03 20.38 12.35

U.S. 6-10 Small Company Portfolio 18.73 57 Months n/a
13.42

U.S. Large Company Portfolio 27.48 17.88 71 Months
17.97

U.S. Small Cap Value Portfolio 21.77 45 Months n/a
16.61

U.S. Large Cap Value Portfolio 22.26 46 Months n/a
16.04

Enhanced U.S. Large Company
Portfolio 4 Months n/a n/a
73.24

DFA Real Estate Securities Portfolio 28.24 47 Months n/a
9.63

Japanese Small Company Portfolio -6.74 -1.07 8.58

<PAGE>

Pacific Rim Small Company Portfolio 17.87 47 Months n/a
18.01

United Kingdom Small Company
Portfolio 26.74 10.30 10.73

Emerging Markets Portfolio 12.61 31 Months n/a
5.89

Continental Small Company Portfolio 12.83 5.39 103.5 Months
8.31

Large Cap International Portfolio 12.68 64 Months n/a
8.27

RWB/DFA International High Book to
Market Portfolio 14.60 42 Months n/a
10.62

DFA One-Year Fixed Income Portfolio 5 .91 5.28 6.70

DFA Five-Year Government Portfolio 7.54 6.25 114 Months
7.79

DFA Global Fixed Income Portfolio 11.13 8.40 72 Months
8.83

DFA Intermediate Government Fixed
Income Portfolio 4.98 7.89 73 Months
9.37

DFA International Small Cap Value
Portfolio 7.24 23 Months n/a
2.08

DFA Two-Year Global Fixed Income
Portfolio 10 Months n/a n/a
7.14

International Small Company Portfolio 2 Months
-0.40
</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 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:

P(1 + T)n = ERV

where:

<PAGE>

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, 1996 (as applicable) using a
non-standardized method of calculation which is used in communicating
performance data in addition to the standardized method required by the SEC.
Also included is a quotation of the annualized percentage total return for the
DFA Two-Year Global Fixed Income Portfolio (for the period from February 9,
1996, the date of commencement of operations), the Enhanced U.S. Large Company
Portfolio (for the period from July 3, 1996, the date of commencement of
operations) and the International Small Company Portfolio (for the period from
October 1, 1996, the date of commencement of operations) to November 30, 1996
using a non-standardized method of calculation. 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 corresponding Series 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 Series.

<TABLE>
<CAPTION>
EFFECTIVE DATE/
INITIAL INVESTMENT ONE YEAR FIVE YEARS TEN YEARS
------------------ -------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. 9-10 SMALL COMPANY PORTFOLIO 12/22/81 18.03 20.38 12.46
12/22/81

U.S. 6-10 SMALL COMPANY PORTFOLIO 03/06/92 18.73 17.00 11.57
03/20/92

U.S. LARGE COMPANY PORTFOLIO 02/26/90 27.48 17.88 15.02
12/31/90

U.S. SMALL CAP VALUE PORTFOLIO 09/18/92 21.77 22.14 14.88
03/01/93

U.S. LARGE CAP VALUE PORTFOLIO 09/18/92 22.26 20.47 15.32
02/18/93

ENHANCED U.S. LARGE COMPANY PORTFOLIO 02/08/96 27.54 N/A N/A
07/03/96

DFA REAL ESTATE SECURITIES PORTFOLIO 09/18/92 28.24 16.67 6.53
01/05/93
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EFFECTIVE DATE/
INITIAL INVESTMENT ONE YEAR FIVE YEARS TEN YEARS
------------------ -------- ---------- ---------
<S> <C> <C> <C> <C>

JAPANESE SMALL COMPANY PORTFOLIO
Dollar return 01/14/86 6.28 -.87 8.69
Local currency return 01/31/86 5.08 -3.48 4.93

PACIFIC RIM SMALL COMPANY PORTFOLIO 04/02/91 19.06 15.89 84 Months
01/04/93 13.04

UNITED KINGDOM SMALL COMPANY PORTFOLIO
Dollar return 01/14/86 26.74 10.63 10.90
Local currency return 03/04/86 15.30 11.64 9.16

EMERGING MARKETS PORTFOLIO 04/01/94 13.18 16.55 96 Months
04/22/94 29.81

CONTINENTAL SMALL COMPANY PORTFOLIO
Dollar return 04/15/88 13.97 5.71 96 Months
04/15/88 6.73

LARGE CAP INTERNATIONAL PORTFOLIO 04/02/91 12.68 8.23 8.78
07/18/91

RWB/DFA INTERNATIONAL HIGH BOOK TO
MARKET PORTFOLIO 05/14/93 14.60 14.63 15.16
06/10/93

DFA ONE-YEAR FIXED INCOME 06/05/83 5.91 5.28 6.70
PORTFOLIO 07/27/83
</TABLE>

28
<PAGE>

<TABLE>
<CAPTION>
EFFECTIVE DATE/
INITIAL INVESTMENT ONE YEAR FIVE YEARS TEN YEARS
------------------ -------- ---------- ---------
<S> <C> <C> <C> <C>

DFA FIVE-YEAR GOVERNMENT 05/13/87 7.54 6.25 7.29
PORTFOLIO 05/13/87

DFA GLOBAL FIXED INCOME PORTFOLIO 09/24/90 11.13 8.40 108 Mos.
11/06/90 8.05

DFA INTERMEDIATE GOVERNMENT 09/24/90 4.98 7.89 72 Mos.
FIXED INCOME PORTFOLIO 10/22/90 9.04

DFA INTERNATIONAL SMALL CAP VALUE 12/20/94 8.00 n/a n/a
PORTFOLIO 12/30/94

DFA TWO-YEAR GLOBAL FIXED INCOME 02/08/96 7.27 5.70 6.85
PORTFOLIO 02/09/96

International Small Company Portfolio 08/09/96 9.43 6.22 12.85
10/01/96
</TABLE>

The Portfolios may compare their investment performance to appropriate
market and mutual fund indices and investments for which reliable performance
data is available. Such indices are generally unmanaged and are prepared by
entities and organizations which track the performance of investment companies
or investment advisors. Unmanaged indices often do not reflect deductions for
administrative and management costs and expenses. The performance of the
Portfolios may also be compared in publications to averages, performance
rankings, or other information prepared by recognized mutual fund statistical
services. Any performance information, whether related to the Portfolios or to
the Advisor, should be considered in light of a Portfolio's investment
objectives and policies, characteristics and the quality of the portfolio and
market conditions during the time period indicated and should not be considered
to be representative of what may be achieved in the future.

FINANCIAL STATEMENTS

The audited financial statements and financial highlights of the Fund for
its fiscal year ended November 30, 1996, 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 DFA
Two-Year Corporate Fixed Income, DFA Two-Year Government, and Emerging Markets
Small Cap Portfolios because such Portfolios had not commenced operations as of
November 30, 1996.

The audited financial statements of U.S. 6-10 Small Company, U.S. Large
Company, Enhanced U.S. Large Company, DFA One-Year Fixed Income, DFA Two-Year
Global Fixed Income, U.S. Small Cap Value, U.S. Large Cap Value, DFA
International Value, Japanese Small Company, United Kingdom Small Company,
Pacific Rim Small Company,

<PAGE>

Continental Small Company, and Emerging Markets Series of the Trust for the
fiscal year ended November 30, 1996, as set forth in the Trust's Annual Report
to shareholders of Coopers & Lybrand L.L.P., independent accountants, are
incorporated herein by reference.

A shareholder may obtain a copy of the reports, 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>

31
<PAGE>

PROSPECTUS

MARCH 28, 1997

DFA INVESTMENT DIMENSIONS GROUP INC.

DFA INVESTMENT DIMENSIONS GROUP INC. (the "Fund"), 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401, (310) 395-8005, is an open-end
management investment company.

The Fund issues thirty series of shares, each of which represents a
separate class of the Fund's common stock, having its own investment objective
and policies. This prospectus describes only VA Small Value Portfolio, VA Large
Value Portfolio, VA International Value Portfolio, VA International Small
Portfolio, VA Short-Term Fixed Portfolio and VA Global Bond Portfolio
(individually, a "Portfolio" and collectively, the "Portfolios"). Shares of the
Portfolios are offered only to separate accounts of insurance companies to fund
variable life and variable annuity contracts.

The investment objective of each of the Domestic Equity and International
Equity Portfolios is to achieve long-term capital appreciation. The investment
objectives of the Fixed Income Portfolios are: VA Short-Term Fixed Portfolio,
to achieve stable real value of capital with a minimum of risk by investing in
high quality obligations; and VA Global Bond Portfolio, to provide a market rate
of return for a global fixed income portfolio with low relative volatility of
returns.

DOMESTIC EQUITY PORTFOLIOS

VA SMALL VALUE PORTFOLIO VA LARGE VALUE PORTFOLIO

INTERNATIONAL EQUITY PORTFOLIOS

VA INTERNATIONAL VALUE PORTFOLIO VA INTERNATIONAL SMALL PORTFOLIO

FIXED INCOME PORTFOLIOS

VA SHORT-TERM FIXED PORTFOLIO VA GLOBAL BOND PORTFOLIO

This prospectus sets forth concisely information about the Portfolios that
prospective investors should know before investing and should be read carefully
and retained for future reference. You should read this prospectus in
conjunction with the prospectus describing the related insurance company
separate account. A statement of additional information about the Portfolios,
dated March 28, 1997, which is incorporated herein by reference, has been filed
with the Securities and Exchange Commission and is available upon request,
without charge, by writing or calling the Fund at the above address or telephone
number.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

TABLE OF CONTENTS
PAGE
----

HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

CONDENSED FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 4

DOMESTIC EQUITY PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Portfolio Characteristics and Policies. . . . . . . . . . . . . . . . . . 8
Portfolio Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . 9

INTERNATIONAL EQUITY PORTFOLIOS. . . . . . . . . . . . . . . . . . . . . . . . 9

VA INTERNATIONAL VALUE PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . 9
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . 9
Portfolio Structure . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . . .11

VA INTERNATIONAL SMALL PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . .11
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . .11
Portfolio Structure . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . . .14

SECURITIES LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

FIXED INCOME PORTFOLIOS -
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . .14
VA Short-Term Fixed Portfolio . . . . . . . . . . . . . . . . . . . . . .14
VA Global Bond Portfolio. . . . . . . . . . . . . . . . . . . . . . . . .15
Description of Investments. . . . . . . . . . . . . . . . . . . . . . . .15
Investments in the Banking Industry . . . . . . . . . . . . . . . . . . .16
Portfolio Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . .16

RISK FACTORS - ALL PORTFOLIOS. . . . . . . . . . . . . . . . . . . . . . . . .17
Small Company Securities. . . . . . . . . . . . . . . . . . . . . . . . .17
Foreign Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Foreign Currencies and Related Transactions . . . . . . . . . . . . . . 18
Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Portfolio Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . .18
Futures Contracts and Options on Futures. . . . . . . . . . . . . . . . .18
Banking Industry Concentrations . . . . . . . . . . . . . . . . . . . . .19
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . .19

MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Investment Services - VA International Small Portfolio. . . . . . . . . .20
Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . .20

DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . .21

PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . .21

VALUATION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

<PAGE>

HIGHLIGHTS

PAGE
THE PORTFOLIOS

Each Portfolio, in effect, represents a separate mutual fund with its own
investment objective and policies. The investment objective of each Portfolio
is a fundamental policy and may not be changed without the affirmative vote of a
majority of its outstanding securities. Shares of the Portfolios are sold only
to separate accounts of insurance companies. Proceeds from the sale of shares
of a Portfolio will be invested in accordance with that Portfolio's investment
objective and policies. A Portfolio will pay its shareholders all dividends and
distributions arising from the assets of the Portfolio.

INVESTMENT OBJECTIVES - DOMESTIC EQUITY PORTFOLIOS 8

The investment objective of both the VA Small Value Portfolio and VA Large
Value Portfolio (collectively the "Domestic Equity Portfolios") is to achieve
long-term capital appreciation. The VA Small Value Portfolio and the VA Large
Value Portfolio will invest in common stocks of U.S. companies that are value
stocks, primarily because they have a high book value in relation to their
market value. The Domestic Equity Portfolios operate as diversified investment
companies.

INVESTMENT OBJECTIVE - VA INTERNATIONAL VALUE PORTFOLIO 9

The investment objective of the VA International Value Portfolio is to
achieve long-term capital appreciation. The Portfolio seeks to achieve its
objective by investing in the stocks of large non-U.S. companies thatare value
stocks, primarily because they have a high book value in relation to their
market value. The VA International Value Portfolio operates as a diversified
investment company.

INVESTMENT OBJECTIVE - VA INTERNATIONAL SMALL PORTFOLIO 11

The investment objective of the VA International Small Portfolio is to
achieve long-term capital appreciation by investing in marketable stocks of
small non-U.S. companies. The Portfolio will be structured by generally basing
the amount of each security purchased on the issuer's relative market
capitalization, applied on a basis of descending values, with a view to
achieving a reasonable reflection of the relative market capitalization of its
portfolio companies. The Portfolio operates as a diversified investment
company.

INVESTMENT OBJECTIVES - FIXED INCOME PORTFOLIOS 14

The investment objective of VA Short-Term Fixed Portfolio is to achieve
stable real value of capital with a minimum of risk. Generally, the Portfolio
will acquire high quality obligations which mature within one year from the date
of settlement; however, when greater returns are available substantial
investments may be made in securities maturing within two years from the date of
settlement as well. The VA Short-Term Fixed Portfolio operates as a diversified
investment company. The Portfolio intends to concentrate investments in the
banking industry under certain circumstances. (See "FIXED INCOME PORTFOLIOS -
INVESTMENT OBJECTIVES AND POLICIES" and "Investments in the Banking Industry.")

The investment objective of VA Global Bond Portfolio is to provide a market
rate of return for a fixed income portfolio with low relative volatility of
returns. The Portfolio invests in obligations issued or guaranteed by the U.S.
and foreign governments and their agencies, obligations of other foreign issuers
rated AA or better and supranational organizations. The VA Global Bond
Portfolio operates as a non-diversified investment company. (See "FIXED INCOME
PORTFOLIOS - INVESTMENT OBJECTIVES AND POLICIES" and "Portfolio Strategy.")

RISK FACTORS 17

VA International Small Portfolio and VA International Value Portfolio
(collectively, the "International Equity Portfolios") and VA Global Bond
Portfolio invest in foreign securities which are traded abroad. VA

2
<PAGE>

Short-Term Fixed Portfolio is authorized to invest in dollar-denominated
obligations of U.S. subsidiaries and branches of foreign banks and
dollar-denominated obligations of foreign issuers traded in the U.S. and also is
authorized to concentrate investments in the banking industry in certain
circumstances. The Domestic Equity Portfolios and the VA International Value
Portfolio may purchase and sell index futures contracts and options thereon.
All of the Portfolios are authorized to invest in repurchase agreements. All of
the above described policies involve certain risks. (See "RISK FACTORS - ALL
PORTFOLIOS.")

MANAGEMENT OF THE FUND 19

Dimensional Fund Advisors Inc. (the "Advisor") serves as investment advisor
to each Portfolio. Dimensional Fund Advisors Ltd. and DFA Australia Ltd. each
serve as a sub-advisor to VA International Small Portfolio. (See "MANAGEMENT OF
THE FUND.")

DIVIDEND POLICY 21

The International Equity and Domestic Equity Portfolios, except for VA
Large Value Portfolio, each distribute substantially all of their net
investment income in November and December of each year. VA Large Value
Portfolio and VA Global Bond Portfolio distribute dividends from their net
investment income quarterly. VA Short-Term Fixed Portfolio distributes
dividends from its net investment income monthly. The Portfolios will make any
distributions from realized net capital gains on an annual basis. (See
"DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")

PURCHASE, VALUATION AND REDEMPTION OF SHARES 21

Shares of the Portfolios are sold only to separate accounts of insurance
companies to fund variable life and variable annuity insurance contracts.
Purchases and redemptions are made at net asset value. To invest in a
Portfolio, please see the prospectus of the insurance company's separate account
which offers variable life and variable annuity insurance contracts to
investors.

The value of the shares issued by the Portfolios will fluctuate in relation
to their own investment experience. Unlike money market funds, the shares of VA
Short-Term Fixed Portfolio will tend to reflect fluctuations in interest rates
because the Portfolio does not seek to stabilize the price of its shares by use
of the "amortized cost" method of securities valuation. (See "PURCHASE AND
REDEMPTION OF SHARES" and "VALUATION OF SHARES.")

3
<PAGE>

The expenses in the following table are based on expenses incurred by the
Portfolios for the fiscal year ended November 30, 1996.

ANNUAL FUND OPERATING EXPENSES MANAGEMENT OTHER TOTAL
(as a percentage of average FEE EXPENSES OPERATING EXPENSES
net assets) ---------- -------- ------------------

VA Small Value 0.50% 0.55% 1.05%

VA Large Value 0.25% 0.78% 1.03%

VA International Value 0.40% 0.77% 1.17%

VA International Small 0.50% 0.77% 1.27%

VA Short-Term Fixed 0.25% 0.45% 0.70%

VA Global Bond 0.25% 1.48% 1.73%

EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
VA Small Value $11 $33 $58 $128

VA Large Value 11 33 57 126

VA International Value 12 37 64 142

VA International Small 13 40 70 153

VA Short-Term Fixed 7 22 39 87

VA Global Bond 18 54 94 204

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.

4
<PAGE>

For the fiscal year ended November 30, 1996, the following equity
Portfolios set forth below received the following net revenue from a securities
lending program which constituted a percentage of the average daily net assets
of the Portfolio:

PORTFOLIO NET REVENUE PERCENTAGE OF ASSETS
--------- ----------- --------------------
VA International Value Portfolio $2,071 0.03%

VA International Small Portfolio $2,788 0.05%

CONDENSED FINANCIAL INFORMATION

The following financial highlights are part of the Portfolios' audited
financial statements for the fiscal periods ended November 30, 1996 and 1995,
respectively. The financial statements, related notes, and the report of the
independent auditors covering such financial information and financial
highlights for the Portfolios' fiscal year ended November 30, 1996, are
incorporated by reference into the Portfolios' Statement of Additional
Information. Further information about the Portfolios' performance is contained
in the Fund's Annual Report to shareholders relating to the Portfolios for the
year ended November 30, 1996. A copy of the Annual Report (including the report
of the independent auditors) may be obtained from the Fund upon request at no
charge.

5
<PAGE>

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

VA SMALL VA LARGE
VALUE PORTFOLIO VALUE PORTFOLIO
--------------- ---------------
YEAR OCT.3, YEAR JAN. 13,
ENDED TO ENDED TO
NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>

Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . $ 9.69 $ 10.00 $ 11.29 $ 10.00
------ ------- ------- -------
Income from Investment Operations
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . 0.03 0.01 0.17 0.19

Net Gains (Losses) on Securities (Realized and Unrealized). . . . . 2.05 (0.31) 2.12 1.85
------ ------- ------- -------
Total from Investment Operations. . . . . . . . . . . . . . . . . 2.08 (0.30) 2.29 2.04

Less Distributions
- ------------------

Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . (0.02) (0.01) (0.12) (0.16)

Net Realized Gains. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- (0.59)
------ ------- ------- -------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . (0.02) (0.01) (0.12) (0.75)

Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . $ 11.75 $ 9.69 $ 13.46 $11.29

Total Return. . . . . . . . . . . . . . . . . . . . . . . . . . . 21.47% (3.04)%# 20.45% 20.41%#

Net Assets, End of Period (thousands) . . . . . . . . . . . . . . . $ 8,058 $ 4,848 $ 13,570 $ 6,562

Ratio of Expenses to Average Net Assets . . . . . . . . . . . . . . 1.05% 0.99%* 1.03% 1.20%*

Ratio of Net Investment Income to Average Net Assets. . . . . . . . 0.34% 0.91%* 1.59% 2.03%*

Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . 5.19% 0.00%* 18.54% 65.38%*

Average Commission Rate (1) . . . . . . . . . . . . . . . . . . . . $ 0.0678 N/A $0.0484 N/A

</TABLE>

- -------------------------
*Annualized
#Non-Annualized

6
<PAGE>

7
<PAGE>

FINANCIAL HIGHLIGHTS

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

VA INTERNATIONAL VA INTERNATIONAL
VALUE PORTFOLIO SMALL PORTFOLIO
Year Oct. 3, Year Oct. 3,
Ended to Ended to
Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>

Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . $ 10.03 $10.00 $9.71 $10.00
------ ------- ------- -------
Income from Investment Operations
- ---------------------------------

Net Investment Income (Loss). . . . . . . . . . . . . . . . . . . 0.11 --- 0.06 (0.01)

Net Gains (Losses) on Securities (Realized and Unrealized). . . . 1.29 0.03 0.71 (0.28)
------ ------- ------- -------
Total from Investment Operations . . . . . . . . . . . . . . . 1.40 0.03 0.77 (0.29)

Less Distributions
------------------

Net Realized Gains. . . . . . . . . . . . . . . . . . . . . . . . (0.02) --- --- ---

Net Asset Value, End of Period . . . . . . . . . . . . . . . . . $11.41 $10.03 $10.48 $9.71

Total Return . . . . . . . . . . . . . . . . . . . . . . . . . 13.92% 0.30%# 7.93% (2.90)%#

Net Assets, End of Period (thousands) . . . . . . . . . . . . . . $10,517 $5,014 $6,007 $4,856

Ratio of Expenses to Average Net Assets . . . . . . . . . . . . . 1.17% 1.32%* 1.27% 2.52%*

Ratio of Net Investment Income to Average Net Assets. . . . . . . 1.29% (0.20)%* 0.63% (0.39)%*

Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . 4.14% 0.00%* 6.40% 0.00%

Average Commission Rate (1) . . . . . . . . . . . . . . . . . . . $0.0080 N/A $0.0200 N/A

</TABLE>

- ----------------------
*Annualized
#Non-Annualized

(1) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased

8
<PAGE>

and sold during the period for which commissions were charged, as required by
the SEC for fiscal years beginning after September 1, 1995.

9
<PAGE>

[FINANCIAL HIGHLIGHTS

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

VA SHORT-TERM VA GLOBAL
FIXED PORTFOLIO BOND PORTFOLIO
--------------------- ----------------------
Year OCT. 3, Year Jan. 13,
Ended to Ended to
Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>

Net Asset Value, Beginning of Period . . . . . . . . . . . . . . $10.04 $10.00 $10.61 $10.00
------ ------ ------ ------

Income from Investment Operations

Net Investment Income. . . . . . . . . . . . . . . . . . . . . . 0.48 0.08 0.37 0.48

Net Gains on Securities (Realized and Unrealized). . . . . . . . 0.04 --- 0.57 0.81
------ ------ ------ ------

Total from Investment Operations . . . . . . . . . . . . . . 0.52 0.08 0.94 1.29

Less Distributions

Net Investment Income. . . . . . . . . . . . . . . . . . . . . . (0.48) (0.04) (0.41) (0.57)

Net Realized Gains . . . . . . . . . . . . . . . . . . . . . . . --- --- --- (0.11)
------ ------ ------ ------

Total Distributions . . . . . . . . . . . . . . . . . . . . . (0.48) (0.04) (0.41) (0.68)

Net Asset Value, End of Period . . . . . . . . . . . . . . . . . $10.08 $10.04 $11.14 $10.61

Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . 5.34% 0.81%# 9.16% 13.09%#

10
<PAGE>

Net Assets, End of Period (thousands) . . . . . . . . . . . . . $7,789 $5,041 $3,703 $3,393

Ratio of Expenses to Average Net Assets . . . . . . . . . . . . . 0.70% 0.63%* 1.73% 1.31%*

Ratio of Net Investment Income to Average Net Assets . . . . . . 4.93% 5.11%* 3.43% 5.08%*

Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 29.27% 0.00%* 88.93% 60.09%*

</TABLE>

(Restated to reflect a 900% stock dividend as of January 2, 1996.)

*Annualized
#Non-Annualized

11
<PAGE>

The total return information shown in the Financial Highlights tables does
not reflect the expenses that apply to a separate account or the related
insurance policies, and inclusion of these charges would reduce the total return
figures for all periods shown. Until October 1995, VA Large Value Portfolio
invested approximately 50% of its total assets in the stocks of large non-U.S.
companies and approximately 50% of its total assets in the stocks of U.S.
companies. The total return information presented in the Financial Highlights
table for VA Large Value Portfolio for the fiscal year ended November 30, 1995,
reflects the performance of the Portfolio when it invested in the stocks of both
U.S. and non-U.S. companies. The total return information of VA Large Value
Portfolio for the period ended November 30, 1995 should not be considered
indicative of its future performance.

DOMESTIC EQUITY PORTFOLIOS

PORTFOLIO CHARACTERISTICS AND POLICIES

The investment objective of each of the Domestic Equity Portfolios is to
achieve long-term capital appreciation. VA Large Value Portfolio and VA Small
Value Portfolio will invest in common stocks of U.S. companies which the Advisor
believes to be value stocks at the time of purchase. Securities are considered
value stocks primarily because a company's shares have a high book value in
relation to their market value (a "book to market ratio"). Generally, 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 New York
Stock Exchange ("NYSE") and, except as described under "Portfolio Structure,"
will be considered eligible for investment. VA Large Value Portfolio will
purchase common stocks of companies whose market capitalizations equal or exceed
that of the company having the median market capitalization of companies whose
shares are listed on the NYSE, and the VA Small Value Portfolio will purchase
common stocks of companies whose market capitalizations are smaller than such
company. In measuring value, the Advisor may consider additional factors such as
cash flow, economic conditions and developments in the issuer's industry.

PORTFOLIO STRUCTURE

Each Domestic Equity Portfolio will operate as a "diversified" investment
company. Further, neither Portfolio will invest more than 25% of its total
assets in securities of companies in a single industry. Ordinarily, at least
80% of the assets of each Portfolio will be invested in a broad and diverse
group of readily marketable common stocks of U.S. companies with high book to
market ratios, as described above. The Portfolios may invest a portion of their
assets, ordinarily not more than 20%, in high quality, highly liquid fixed
income securities such as money market instruments, including short-term
repurchase agreements. The Portfolios also may invest in index futures
contracts and options on index futures contracts. To the extent that a
Portfolio invests in index futures contracts and options thereon for other than
bona fide hedging purposes, the Portfolio will not purchase such futures
contracts or options if as a result more than 5% of its total assets would then
consist of initial margin deposits and premiums required to establish such
contracts or options. The Portfolios will purchase securities that are listed
on the principal U.S. national securities exchanges and traded in the over-the-
counter market ("OTC").

Each Domestic Equity Portfolio will be structured on a market
capitalization basis, by generally basing the amount of each security purchased
on the issuer's relative market capitalization, with a view to creating in each
Portfolio a reasonable reflection of the relative market capitalizations of its
portfolio companies. However, the Advisor may exclude the securities of a
company that otherwise meets the applicable criteria described above if the
Advisor determines in its best judgment that other conditions exist that make
the inclusion of such security inappropriate.

Deviation from strict market capitalization weighting will also occur in
the Domestic Equity Portfolios because they intend to purchase round lots only.
Furthermore, in order to retain sufficient liquidity, the relative amount of any
security held by a Portfolio may be reduced, from time to time, from the level
which strict

<PAGE>

adherence to market capitalization weighting would otherwise require. A
portion, but generally not in excess of 20%, of a Portfolio's assets may be
invested in interest-bearing obligations, as described above, thereby causing
further deviation from strict market capitalization weighting. The Portfolios
may make block purchases of eligible securities at opportune prices even though
such purchases exceed the number of shares which, at the time of purchase,
strict adherence to the policy of market capitalization weighting would
otherwise require. In addition, the Portfolios may acquire securities eligible
for purchase or otherwise represented in the Portfolios at the time of the
exchange in exchange for the issuance of their shares. While such purchases and
acquisitions might cause a temporary deviation from market capitalization
weighting, they would ordinarily be made in anticipation of further growth of
the assets of a Portfolio.

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

PORTFOLIO TRANSACTIONS

The Domestic Equity Portfolios do not intend to purchase or sell securities
based on the prospects for the economy, the securities markets or the individual
issuers whose shares are eligible for purchase. As described under "Portfolio
Structure," investments will be made in virtually all eligible securities on a
market capitalization weighted basis. This is a passive approach to investment
management that does not entail taking steps to reduce risk by replacing
portfolio equity securities with other securities that appear to have the
potential to provide better investment performance.

Generally, securities will be purchased with the expectation that they will
be held for longer than one year. VA Large Value Portfolio may sell portfolio
securities when the issuer's market capitalization falls substantially below
that of the issuer with the minimum market capitalization which is then eligible
for purchase by the Portfolio. VA Small Value Portfolio may sell portfolio
securities when the issuer's market capitalization increases to a level that
substantially exceeds that of the issuer with the largest market capitalization
which is then eligible for investment by the Portfolio. However, securities may
be sold at any time when, in the Advisor's judgment, circumstances warrant their
sale.

In addition, VA Large Value Portfolio may sell portfolio securities when
their book to market ratio falls substantially below that of the security with
the lowest such ratio that is then eligible for purchase by the Portfolio. VA
Small Value Portfolio may also sell portfolio securities in the same
circumstances; however, that Portfolio anticipates generally to retain
securities of issuers with relatively smaller market capitalizations for longer
periods, despite any decrease in the issuer's book to market ratio.

INTERNATIONAL EQUITY PORTFOLIOS

VA INTERNATIONAL VALUE PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of VA International Value Portfolio is to achieve
long-term capital appreciation. The Portfolio operates as a diversified
investment company and seeks to achieve its investment objective by investing in
the value stocks of large non-U.S. companies. A company's shares will be
considered eligible for investment if the Advisor believes such shares are value
stocks at the time of purchase. Securities are considered value stocks
primarily because a company's shares 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. In measuring value, the Advisor may
consider additional factors such as cash flow, economic conditions and
developments in the issuer's industry. As of the date of this Prospectus, the
VA International Value Portfolio intends to invest in companies which have a
market capitalization of at least $800 million and are listed on a major
exchange in such country. The Advisor may reset such floor from time to time to
reflect changing

13
<PAGE>

market conditions. The Portfolio will be approximately market capitalization
weighted. Although it does not presently intend to do so, the Portfolio
reserves the right to invest in companies that have market capitalizations of
less than $800 million.

<PAGE>

Under normal market conditions, the Portfolio will invest at least 65% of
the value of its assets in issuers organized or having a majority of their
assets in or deriving a majority of their operating income in at least three
non-U.S. countries. The Portfolio will not invest more than 25% of its total
assets in securities of companies in a single industry.

The Portfolio reserves the right to invest in index futures contracts
and options on index futures contracts to commit funds awaiting investment or
to maintain liquidity. To the extent that the Portfolio invests in index
futures contracts and options thereon for other than bona fide hedging
purposes, the Portfolio will not purchase such futures contracts or options
if as a result more than 5% of its total assets would then consist of initial
margin deposits and premiums required to establish such contracts or options.
Such investments entail certain risks. (See "RISK FACTORS - ALL
PORTFOLIOS.")

A portion, but generally not in excess of 20% of the Portfolio's assets,
may be invested in the nine categories of interest-bearing obligations described
in "FIXED INCOME PORTFOLIOS - INVESTMENT OBJECTIVES AND POLICIES - Description
of Investments."

The Portfolio intends to invest in the stocks of large companies in
countries with developed markets. As of the date of this prospectus, the
Portfolio may invest in the stocks of large companies in Australia, Belgium,
France, Germany, Hong Kong, Italy, Japan, the Netherlands, Singapore, Spain,
Sweden, Switzerland and the United Kingdom. As the Portfolio's growth permits,
it may invest in the stocks of large companies in other developed markets,
including Austria, Denmark, Finland, Ireland, Malaysia, New Zealand and Norway.

In determining market capitalization weights, the Advisor, using its best
judgment, will seek to eliminate the effect of cross holdings on the individual
country weights. As a result, the weighting of certain companies in the
Portfolio may vary from their weighting in international indices such as those
published by The Financial Times, 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 with high book to market ratios whose shares may be
eligible for investment. Additional investments will not be made in securities
which have depreciated in value to such an extent that they are not then
considered by the Advisor to be large companies. This may result in deviation
from market capitalization weighting, and such deviation could be substantial if
a significant amount of the Portfolio's holdings decrease in value sufficiently
to be excluded from the then current market capitalization requirement for
eligible securities, but not by a sufficient amount to warrant their sale.

PORTFOLIO STRUCTURE

The Advisor may exclude the securities of a company that otherwise meets
the criteria described above if the Advisor determines in its best judgment that
other conditions exist that make the inclusion of such security inappropriate.
This will result in some deviation from strict market capitalization weighting.
Deviation from strict market capitalization weighting will also occur in the
Portfolio because it intends to purchase round lots only. Furthermore, in order
to retain sufficient liquidity, the relative amount of any security held by the
Portfolio may be reduced, from time to time, from the level which strict
adherence to market capitalization weighting would otherwise require. Any
portion of the Portfolio's assets invested in interest-bearing obligations would
cause a further deviation from strict market capitalization weighting. The
Portfolio may make block purchases of eligible securities at opportune prices
even though such purchases exceed the number of shares which, at the time of
purchase, strict adherence to the policy of market capitalization weighting
would otherwise require. In addition, the Portfolio may acquire securities
eligible for purchase or otherwise represented in the Portfolio at

<PAGE>

the time of the exchange in exchange for the issuance of its shares. While such
purchases might cause a temporary deviation from market capitalization
weighting, they would ordinarily be made in anticipation of further growth of
the assets of the Portfolio. If securities must be sold in order to obtain
funds to make redemption payments, such securities may be repurchased by the
Portfolio as additional cash becomes available to it. However, the Portfolio
has retained the right to borrow to make redemption payments and is also
authorized to redeem its shares in kind.

It is management's belief that the value 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.

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.

VA INTERNATIONAL SMALL PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

VA International Small Portfolio operates as a diversified investment
company whose investment objective is to achieve long-term capital appreciation
and provides investors with access to securities portfolios consisting of small
Japanese, United Kingdom, Continental and Pacific Rim companies. The VA
International Small Portfolio will seek to achieve its investment objective by
investing its assets in a broad and diverse group of marketable stocks of (1)
Japanese small companies which are traded in the Japanese securities markets;
(2) United Kingdom small companies which are traded principally on the
International Stock Exchange of the United Kingdom and the Republic of Ireland
("ISE"); (3) small companies organized under the laws of certain European
countries; and (4) small companies located in Australia, New Zealand and Asian
countries whose shares are traded principally on the securities markets located
in those countries. The Advisor will determine the initial allocation of assets
among the four segments of VA International Small Portfolio and will
periodically review and adjust such allocation, all in its sole discretion.

Company size will be determined for purposes of this Portfolio solely on
the basis of a company's market capitalization. "Market capitalization" will be
calculated by multiplying the price of a company's stock by the number of its
shares of that stock outstanding. Each segment of VA International Small
Portfolio will be structured to reflect reasonably the relative market
capitalizations of the portfolio companies in that segment. The Advisor
believes that over the long term the investment performance of small companies
in developed countries is superior to large companies, and that investment in
the Portfolio is an effective way to improve global diversification.

<PAGE>

JAPANESE SMALL COMPANY SEGMENT

Generally, reference in this prospectus to the term "Japanese small
company" means a company located in Japan whose market capitalization is not
larger than the largest of those in the smaller one-half (deciles 6 through 10)
of companies whose securities are listed on the First Section of the Tokyo Stock
Exchange ("TSE"). While the Portfolio will invest primarily in the stocks of
small companies which are listed on the TSE, it may acquire the stocks of
Japanese small companies which are traded in other Japanese securities markets
as well.

UNITED KINGDOM SMALL COMPANY SEGMENT

Generally, reference in this prospectus to a "United Kingdom small company"
means a company organized in the United Kingdom, with shares listed on the ISE
whose market capitalization is not larger than the largest of those in the
smaller one-half (deciles 6 through 10) of companies included in the Financial
Times-Actuaries All Share Index ("FTA").

The FTA is an index of stocks traded on the ISE, which is similar to the
Standard & Poor's 500 Composite Stock Index ("S&P 500 Index"), and is used by
investment professionals in the United Kingdom for the same purposes as
investment professionals in the U.S. use the S&P 500 Index. While the
FTA typically will be used by the Portfolio to determine the maximum market
capitalization of any company whose stock the Portfolio will purchase, Portfolio
acquisitions will not be limited to stocks which are included in the FTA. The
Portfolio will not, however, purchase shares of any investment trust or of any
company whose market capitalization is less than $5,000,000.

CONTINENTAL SMALL COMPANY SEGMENT

The Portfolio is authorized to invest in readily marketable stocks of a
broad and diverse group of small companies organized under the laws of certain
European countries. As of the date of this Prospectus, the Portfolio may
invest in small companies located in Austria, Belgium, Denmark, Finland, France,
Germany, Ireland, Italy, the Netherlands, Norway, Spain, Sweden and Switzerland,
whose shares are traded principally in securities markets located in those
countries. Company size will be determined by the Advisor in a manner that will
compare the market capitalizations of companies in all countries of this segment
in which the Portfolio invests (i.e., on a European basis). The
Advisor typically 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. Generally, companies with publicly traded stock whose market
capitalizations are not greater than the largest of those in the smallest 20%
(9th and 10th deciles) of companies listed in the FTW as combined for the
countries in this segment will be considered to be "Continental small companies"
and will be eligible for purchase by the Portfolio.

PACIFIC RIM SMALL COMPANY SEGMENT

The Portfolio is authorized to invest in stocks of small companies
located in Australia, New Zealand and Asian countries whose shares are traded
principally on the securities markets located in those countries. Company
size will be determined by the Advisor in a manner that will compare the
market capitalizations of the companies in all countries of this segment in
which the Portfolio invests (i.e., on a Pacific Rim basis). The Advisor
typically will use the appropriate country indices of the FTW converted to a
common currency and aggregated to define "small companies." Generally,
companies with publicly traded stock whose market capitalizations are not
greater than the largest of those in the smallest 30% (8th, 9th and 10th
deciles)

17
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of companies listed in the FTW as combined for the countries in this segment
will be considered to be "Pacific Rim small companies" and will be eligible for
purchase by the Portfolio. As of the date of this prospectus, the Portfolio
invests in the Pacific Rim small companies in Australia, Hong Kong, Korea,
Malaysia, New Zealand and Singapore. In the future, the Advisor may add small
companies located in other Asian countries as securities markets in these
countries become accessible.

PORTFOLIO STRUCTURE

With respect to each segment, VA International Small Portfolio intends to
acquire a portion of the stock of each eligible company on a market
capitalization basis. The Portfolio also may invest up to 5% of its assets in
convertible debentures issued by Japanese, United Kingdom, Continental and
Pacific Rim small companies.

VA International Small Portfolio is structured by generally basing the
amount of each security purchased in each segment on the issuer's relative
market capitalization within that segment with a view to creating in the
Portfolio a reasonable reflection of the relative market capitalizations of the
portfolio companies segment by segment. The decision to include or exclude the
shares of an issuer will be made on the basis of such issuer's relative market
capitalization determined by reference to other companies located in the same
country, except with respect to Continental and Pacific Rim small companies,
such determination shall be made by reference to other companies located in all
countries in the respective segment. Company size is measured in terms of local
currencies in order to eliminate the effect of variations in currency exchange
rates, except with respect to Continental and Pacific Rim small company
segments, in which segments company size will be measured in terms of a common
currency. Even though a company's stock may meet the applicable market
capitalization criterion, it may not be purchased if (i) in the Advisor's
judgment, the issuer is in extreme financial difficulty, (ii) the issuer is
involved in a merger or consolidation or is the subject of an acquisition or
(iii) a significant portion of the issuer's securities are closely held.
Further, securities of real estate investment trusts will not be acquired
(except as a part of a merger, consolidation or acquisition of assets). In
addition, the Advisor may exclude the stock of a company that otherwise meets
applicable market capitalization criterion if the Advisor determines in its best
judgment that other conditions exist that make the purchase of such stock
inappropriate.

Deviation from strict market capitalization weighting will also occur
because the Advisor intends to purchase round lots only. Furthermore, in order
to retain sufficient liquidity, the relative amount of any security held may be
reduced from time to time from the level which strict adherence to market
capitalization weighting would otherwise require. A portion, but generally not
in excess of 20%, of the Portfolio's assets may be invested in interest-bearing
obligations, such as money-market instruments for this purpose, thereby causing
further deviation from strict market capitalization weighting.

Block purchases of eligible securities may be made at opportune prices even
though such purchases exceed the number of shares which, at the time of
purchase, strict adherence to the policy of market capitalization weighting
would otherwise require. In addition, the Portfolio may acquire securities
eligible for purchase or otherwise represented in the Portfolio at the time of
the exchange in exchange for the issuance of shares. While such purchases and
acquisitions might cause a temporary deviation from market capitalization
weighting, they would ordinarily be made in anticipation of further growth of
assets.

If securities must be sold in order to obtain funds to make redemption
payments, they may be repurchased as additional cash becomes available. In most
instances, however, management would anticipate

<PAGE>

selling securities which had appreciated sufficiently to be eligible for sale
and, therefore, would not need to repurchase such securities. (See "Portfolio
Transactions.")

Changes in the composition and relative ranking (in terms of market
capitalization) of the stocks which are eligible for purchase take place with
every trade when the securities markets are open for trading due, primarily, to
price fluctuations of such securities. On at least a semi-annual basis, the
Advisor will determine the market capitalization of the largest small company
eligible for investment in each segment. Common stocks whose market
capitalizations are not greater than such company will be purchased. Additional
investments generally will not be made in securities which have appreciated in
value sufficiently to be excluded from the Advisor's then current market
capitalization limit for eligible portfolio securities. This may result in
further deviation from strict market capitalization weighting, and such
deviation could be substantial if a significant amount of holdings increase in
value sufficiently to be excluded from the limit for eligible securities, but
not by a sufficient amount to warrant their sale. (See "Portfolio
Transactions.") A further deviation from market capitalization weighting may
occur if the Portfolio invests a portion of its assets in convertible
debentures.

It is management's belief that the stocks of small companies offer, over a
long term, a prudent opportunity for capital appreciation but, at the same time,
selecting a limited number of such issues for investment involves greater risk
than investing in a large number of them. The Portfolio intends to invest at
least 80% of its assets in equity securities of Japanese, United Kingdom,
Continental and Pacific Rim small companies.

PORTFOLIO TRANSACTIONS

On a periodic basis, the Advisor will review each Portfolio's holdings and
determine which, at the time of such review, are no longer considered small
Japanese, United Kingdom, Continental or Pacific Rim companies. The present
policy of the Advisor is to consider portfolio securities for sale when they
have appreciated sufficiently to rank, on a market capitalization basis, more
than one full decile higher than the company with the largest market
capitalization that is eligible for purchase by the Portfolio as determined
periodically by the Advisor. The Advisor may, from time to time, revise that
policy if, in the opinion of the Advisor, such revision is necessary to maintain
appropriate market capitalization weighting.

Securities which have depreciated in value since their acquisition will not
be sold solely because prospects for the issuer are not considered attractive
or due to an expected or realized decline in securities prices in general.
Securities may be disposed of, however, at any time when, in the Advisor's
judgment, circumstances, such as (but not limited to) tender offers, mergers and
similar transactions, or bids made for block purchases at opportune prices,
warrant their sale. Generally, securities will not be sold to realize
short-term profits, but when circumstances warrant, they may be sold without
regard to the length of time held. Generally, securities will be purchased with
the expectation that they will be held for longer than one year and will be held
until such time as they are no longer considered an appropriate holding in light
of the policy of maintaining portfolios of companies with small market
capitalizations.

SECURITIES LOANS

All of the Portfolios are authorized to lend securities to qualified
brokers, dealers, banks and other financial institutions for the purpose of
earning additional income. While a Portfolio may earn additional income from
lending securities, such activity is incidental to the investment objective of a
Portfolio. The value of securities loaned may not exceed 33 1/3% of the value
of a Portfolio's total assets. In connection with such loans, a Portfolio will
receive collateral consisting of cash or U.S. Government securities, which will
be maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. In addition, the Portfolios will be able
to terminate the loan at any time, will receive reasonable compensation on the
loan, as well as amounts equal to any dividends, interest or other distributions
on the loaned securities.

19
<PAGE>

In the event of the bankruptcy of the borrower, the Fund could experience delay
in recovering the loaned securities. Management believes that this risk can be
controlled through careful monitoring procedures.

FIXED INCOME PORTFOLIOS - INVESTMENT OBJECTIVES AND POLICIES

VA SHORT-TERM FIXED PORTFOLIO

The investment objective of VA Short-Term Fixed Portfolio is to achieve a
stable real value (i.e., a return in excess of the rate of inflation) of
invested capital with a minimum of risk. The Portfolio will invest in U.S.
government obligations, U.S. government agency obligations, dollar-denominated
obligations of foreign issuers issued in the U.S., bank obligations, including
U.S. subsidiaries and branches of foreign banks, corporate obligations,
commercial paper, repurchase agreements and obligations of supranational
organizations. Generally, the Portfolio will acquire obligations which mature
within one year from the date of settlement, but substantial investments may be
made in obligations maturing within two years from the date of settlement when
greater returns are available. It is the Portfolio's policy that the weighted
average length of maturity of investments will not exceed one year. The
Portfolio principally invests in certificates of deposit, commercial paper,
bankers' acceptances, notes and bonds. The Portfolio will invest more than 25%
of its total assets in obligations of U.S. and/or foreign banks and bank holding
companies when the yield to maturity on these instruments exceeds the yield to
maturity on all other eligible portfolio investments of similar quality for a
period of five consecutive days when the NYSE is open for trading. (See
"Investments in the Banking Industry.")

VA GLOBAL BOND PORTFOLIO

The investment objective of VA Global Bond Portfolio is to provide a market
rate of return for a fixed income portfolio with low relative volatility of
returns. The Portfolio will invest primarily in obligations issued or
guaranteed by the U.S. and foreign governments, their agencies and
instrumentalities, obligations of other foreign issuers rated AA or better and
supranational organizations, such as the World Bank, the European Investment
Bank, European Economic Community, and European Coal and Steel Community and
corporate debt obligations. At the present time, the Advisor expects that most
investments will be made in the obligations of issuers which are developed
countries, such as those countries which are members of the Organization of
Economic Cooperation and Development (OECD). However, in the future, the
Advisor anticipates investing in issuers located in other countries as well.
Under normal market conditions, the Portfolio will invest at least 65% of the
value of its assets in issuers organized or having a majority of their assets
in, or deriving a majority of their operating income in, at least three
different countries, one of which may be the United States. The Portfolio will
acquire obligations which mature within ten years from the date of settlement.
Because many of the Portfolio's investments will be denominated in foreign
currencies, the Portfolio will also enter into forward foreign currency
contracts solely for the purpose of hedging against fluctuations in currency
exchange rates. Inasmuch as VA Global Bond Portfolio intends to continually
hedge against the risk of variations in currency exchange rates, the Advisor
believes that the variation of the Portfolio's investment performance in
relation to fluctuations in currency exchange rates will be minimized.

DESCRIPTION OF INVESTMENTS

The following is a description of the categories of investments which may
be acquired by the Fixed Income Portfolios. VA Short-Term Fixed Portfolio may
invest in all of the securities and obligations listed in categories 1-6 and 8,
and VA Global Bond Portfolio may invest in the securities and obligations listed
in categories 1-3 and 6-9.

1. U.S. GOVERNMENT OBLIGATIONS - Debt securities issued by the U.S.
Treasury which are direct obligations of the U.S. government, including bills,
notes and bonds.

<PAGE>

3. CORPORATE DEBT OBLIGATIONS - Non-convertible corporate debt securities
(e.g., bonds and debentures) which are issued by companies whose commercial
paper is rated Prime-1 by Moody's Investors Services, Inc. ("Moody's") or A-1 by
Standard & Poor's Rating Group, a Division of The McGraw-Hill Companies ("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.

<PAGE>

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 is approved by the Investment Committee of the
Advisor. 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.

The categories of investments that may be acquired by the Fixed Income
Portfolios may include both fixed and floating rate securities. Floating rate
securities bear interest at rates that vary with prevailing market rates.
Interest rate adjustments are made periodically (e.g., every six months),
usually based on a money market index such as the London Interbank Offered Rate
(LIBOR) or the Treasury bill rate.

INVESTMENTS IN THE BANKING INDUSTRY

VA Short-Term Fixed Portfolio will invest more than 25% of its total
assets in obligations of U.S. and/or foreign banks and bank holding companies
when the yield to maturity on these investments exceeds the yield to maturity
on all other eligible portfolio investments for a period of five consecutive
days when the NYSE is open for trading. For the purpose of this policy,
which is a fundamental policy of the Portfolio that can only be changed by a
vote of shareholders of the Portfolio, banks and bank holding companies are
considered to constitute a single industry, the banking industry. When
investment in such obligations exceeds 25% of the total net assets of the
Portfolio, the Portfolio will be considered to be concentrating its
investments in the banking industry.As of the date of this prospectus, the
Portfolio is not concentrating its investments in this industry.

The types of bank and bank holding company obligations in which VA
Short-Term Fixed Portfolio may invest include: dollar-denominated
certificates of deposit, bankers' acceptances, commercial paper and other
debt obligations issued in the United States and which mature within two
years of the date of settlement, provided such obligations meet the
Portfolio's established credit rating criteria as stated under "Description
of Investments." In addition, the Portfolio is authorized to invest more
than 25% of its total assets in U.S. Treasury bonds, bills and notes and
obligations of federal agencies and instrumentalities.

PORTFOLIO STRATEGY

VA Short-Term Fixed Portfolio will be managed with a view to capturing
credit risk premiums and term or maturity premiums. As used herein, the term
"credit risk premium" means the anticipated incremental return on investment for
holding obligations considered to have greater credit risk than direct
obligations of the U.S. Treasury, and "maturity risk premium" means the
anticipated incremental returnon investment for holding securities having
maturities of longer than one month compared to securities having a maturity of
one month.

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<PAGE>

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 Portfolio will be chosen with
a view to maximizing anticipated monthly returns, net of trading costs.

VA Global Bond Portfolio will be managed with a view to capturing maturity
risk premiums. Ordinarily the Portfolio will invest primarily in obligations
issued or guaranteed by foreign governments and their agencies and
instrumentalities, obligations of other foreign issuers rated AA or better and
supranational organizations. Supranational issuers include the European
Economic Community, the European Coal and Steel Community, the Nordic Investment
Bank, the World Bank and the Japanese Development Bank. The Portfolio will own
obligations issued or guaranteed by the U.S. government and its agencies and
instrumentalities also. At times when, in the Advisor's judgment, eligible
foreign securities do not offer maturity risk premiums that compare favorably
with those offered by eligible U.S. securities, the Portfolio will be invested
primarily in the latter securities.

VA Global Bond Portfolio is "non-diversified," as defined in the Investment
Company Act of 1940, which means that, as to 75% of its total assets, more than
5% may be invested in the securities of a single issuer. However, for purposes
of the Internal Revenue Code, the Portfolio is "diversified" because as to 50%
of its total assets, no more than 5% may be invested in the securities of a
single issuer, and the Portfolio intends to invest no more than 55% of the value
of its total assets in cash, cash items, government securities and other
regulated investment companies. The Portfolio will not invest more than 25% of
its assets in securities of companies in any one industry. Management does not
consider securities which are issued by the U.S. government or its agencies or
instrumentalities to be investments in an "industry." However, management
currently considers securities issued by a foreign government to be subject to
the 25% limitation, with the effect that not more than 25% of the Portfolio's
total assets will be invested in securities issued by any one foreign
government. The Portfolio will not invest more than 25% of its total assets in
obligations of supranational organizations. Finally, the Portfolio might invest
in certain securities issued by companies, such as Caisse Nationale des
Telecommunication, a communications company, whose obligations are guaranteed by
a foreign government. Management considers such a company to be within a
particular industry (in this case, the communications industry) and, therefore,
the Portfolio will invest in the securities of such a company only if it can do
so under the Portfolio's policy of not being concentrated in any single
industry.

VA Short-Term Fixed Portfolio is expected to have a high portfolio turnover
rate due to the relatively short maturities of the securities to be acquired.
It is anticipated that the annual rate of VA Short-Term Fixed Portfolio could be
0% to 200%. The annual portfolio turnover rate of VA Global Bond Portfolio is
not expected to exceed 100%. The rate of portfolio turnover will depend upon
market and other conditions; it will not be a limiting factor when management
believes that portfolio changes are appropriate. While the Fixed Income
Portfolios acquire securities in principal transactions and, therefore, do not
pay brokerage commissions, the spread between the bid and asked prices of a
security may be considered to be a "cost" of trading. Such costs ordinarily
increase with trading activity. However, as stated above, securities ordinarily
will be sold when, in the Advisor's judgment, the monthly return of a Portfolio
will be increased as a result of portfolio transactions after taking into
account the cost of trading. It is anticipated that securities will be acquired
in the secondary markets for short term instruments.

RISK FACTORS - ALL PORTFOLIOS

SMALL COMPANY SECURITIES

Typically, securities of small companies are less liquid than securities of
large companies. Recognizing this factor, VA International Small Portfolio and
VA Small Value Portfolio will endeavor to effect securities transactions in a
manner to avoid causing significant price fluctuations in the market for these
securities.

<PAGE>

FOREIGN SECURITIES

The International Equity Portfolios and Fixed Income Portfolios invest in
foreign issuers. Such investments involve risks that are not associated with
investments in U.S. public companies. Such risks may include legal, political
and or diplomatic actions of foreign governments, such as imposition of
withholding taxes on interest and dividend income payable on the securities
held, possible seizure or nationalization of foreign deposits, establishment of
exchange controls or the adoption of other foreign governmental restrictions
which might adversely affect the value of the assets held by the Portfolios.
Further, foreign issuers are not generally subject to uniform accounting,
auditing and financial reporting standards comparable to those of U.S. public
companies and there may be less publicly available information about such
companies than comparable U.S. companies. Certain of the foreign markets in
which the Portfolios may invest have recently transitioned from or are in the
process of transitioning from centrally controlled to market-based economies.
There can be no assurance that such transitions will be successful. The Fixed
Income Portfolios may invest in obligations of supranational organizations. The
value of the obligations of these organizations may be adversely affected if one
or more of their supporting governments discontinue their support. Also, there
can be no assurance that any of the Portfolios will achieve its investment
objective.

FOREIGN CURRENCIES AND RELATED TRANSACTIONS

Investments of the International Equity Portfolios and VA Global Bond
Portfolio will be denominated in foreign currencies. Changes in the relative
values of foreign currencies and the U.S. dollar, therefore, will affect the
value of investments of these Portfolios. These Portfolios may purchase foreign
currency futures contracts and options in order to hedge against changes in the
level of foreign currency exchange rates. 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.

BORROWING

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.

PORTFOLIO STRATEGIES

The method employed by the Advisor to manage the Domestic Equity and
International Equity Portfolios will differ from the process employed by many
other investment advisors in that the Advisor will rely on fundamental analysis
of the investment merits of securities to a limited extent to eliminate
potential portfolio acquisitions rather than rely on this technique to select
securities. Further, because securities generally will be held long-term and
will not be eliminated based on short-term price fluctuations, the Advisor
generally will not act upon general market movements or short-term price
fluctuations of securities to as great an extent as many other investment
advisors.

FUTURES CONTRACTS AND OPTIONS ON FUTURES

The Domestic Equity Portfolios and VA International Value Portfolio may
invest in index futures contracts and options on index futures contracts.

24
<PAGE>

To the extent that a Portfolio invests in futures contracts and options thereon
for other than bona fide hedging purposes, no Portfolio will enter into such
transactions if, immediately thereafter, the sum of the amount of initial margin
deposits and premiums paid for open futures options would exceed 5% of the
Portfolio's total assets, after taking into account unrealized profits and
unrealized losses on such contracts it has entered into; provided, however,
that, in the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5%. These investments
entail the risk that an imperfect correlation may exist between changes in the
market value of the stocks owned by the Portfolios, and the prices of such
futures contracts and options, and, at times, the market for such contracts and
options might lack liquidity, thereby inhibiting a Portfolio's ability to close
a position in such investments. Gains or losses on investments in options and
futures depend on the direction of securities prices, interest rates and other
economic factors, and the loss from investing in futures contracts is
potentially unlimited. Certain restrictions imposed by the Internal Revenue
Code may limit the ability of a Portfolio to invest in futures contracts and
options on futures contracts.

BANKING INDUSTRY CONCENTRATIONS

REPURCHASE AGREEMENTS

In addition, all of the Portfolios may invest in repurchase agreements. In
the event of the bankruptcy of the other party to a repurchase agreement, the
Fund could experience delay in recovering the securities underlying such
agreements. Management believes that this risk can be controlled through
stringent security selection criteria and careful monitoring procedures.

MANAGEMENT OF THE FUND

Dimensional Fund Advisors Inc. (the "Advisor") serves as investment advisor
to each of the Portfolios. As such, the Advisor is responsible for the
management of their respective assets. Investment decisions for all Portfolios
of the Fund are made by the Investment Committee of the Advisor which meets on a
regular basis and also as needed to consider investment issues. The Investment
Committee is composed of certain officers and directors of the Advisor who are
elected annually. The Advisor provides the Portfolios with a trading department
and selects brokers and dealers to effect securities transactions. Portfolio
securities transactions are placed with a view to obtaining best price and
execution and, subject to this goal, may be placed with brokers which have
assisted in the sale of the Portfolios' shares.

For the fiscal year ended November 30, 1996, (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 and (ii) the total expenses of each
Portfolio were the following percentages of respective average net assets:

Management Fee Annualized Total Expenses
-------------- -------------------------

VA Small Value Portfolio 0.50% 1.05%
VA Large Value Portfolio 0.25% 1.03%
VA International Value Portfolio 0.40% 1.17%
VA International Small Portfolio 0.50% 1.27%
VA Short-Term Fixed Portfolio 0.25% 0.70%
VA Global Bond Portfolio 0.25% 1.73%

<PAGE>

The Fund bears all of its own costs and expenses, including: services of
its independent accountants, legal counsel, brokerage fees, commissions and
transfer taxes in connection with the acquisition and disposition of portfolio
securities, taxes, insurance premiums, costs incidental to meetings of its
shareholders and directors, the cost of filing its registration statements under
federal and state securities laws, reports to shareholders, and transfer and
dividend disbursing agency, administrative services and custodian fees.
Expenses allocable to a particular Portfolio are so allocated and expenses which
are not allocable to a particular Portfolio are borne by each Portfolio on the
basis of the fees paid by the Fund to PFPC Inc., the accounting services,
dividend disbursing and transfer agent for each Portfolio.

The Advisor was organized in May 1981 and is engaged in the business of
providing investment management services to institutional investors. Assets
under management total approximately $20.7 billion. David G. Booth and Rex A.
Sinquefield,shareholders of the Advisor and directors and officers of both the
Fund and the Advisor, may be deemed controlling persons of the Advisor. The
Advisor owns 100% of the outstanding shares of Dimensional Fund Advisors Ltd.
("DFAL") and beneficially owns 100% of DFA Australia Ltd. ("DFA Australia") (see
"Investment Services - VA International Small Portfolio).

INVESTMENT SERVICES - VA INTERNATIONAL SMALL PORTFOLIO

Pursuant to a Sub-Advisory Agreement with the Advisor, DFAL, 14 Berkeley
Street, London, W1X 5AD, England, a company that is organized under the laws of
England, has the authority and responsibility to select brokers or dealers to
execute securities transactions for the United Kingdom and Continental small
company segments of VA International Small Portfolio. Pursuant to a Sub-
Advisory Agreement with the Advisor, DFA Australia, Suite 4403 Gateway, 1
MacQuarie Place, Sydney, New South Wales 2000, Australia, the successor to
Dimensional Fund Advisors Asia Inc., has the authority and responsibility to
select brokers and dealers to execute securities transactions for the Japanese
and Pacific Rim small company segments of VA International Small Portfolio. The
duties of DFAL with respect to the United Kingdom and Continental small company
segments of the Portfolio and DFA Australia with respect to the Japanese and
Pacific Rim small company segments of the Portfolio include the maintenance of a
trading desk for the Portfolio and the determination of the best and most
efficient means of executing securities transactions. The Advisor is
responsible for determining those securities which are eligible for purchase and
sale by the Portfolio and may delegate this task, subject to its own review, to
DFAL and DFA Australia. On at least a semi-annual basis, the Advisor reviews
the holdings of United Kingdom, Continental, Japanese and Pacific Rim small
company segments and reviews the trading process and the execution of securities
transactions.

DFAL maintains and furnishes to the Advisor information and reports on
United Kingdom and Continental small companies, including its recommendations
of securities to be added to the securities in those segments that are eligible
for purchase by the Portfolio. The Advisor pays DFAL a fee equal to 50,000
pounds sterling total per year, payable on a quarterly basis, for services to
the 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.

DFA Australia maintains and furnishes to the Advisor information and
reports on Japanese and Pacific Rim small companies, including its
recommendations of securities to be added to the securities in those segments
that are eligible for purchase by the Portfolio. The Advisor pays DFA Australia
a fee equal to 100,000 Hong Kong dollars total per year, payable on a quarterly
basis, for services to VA International Small Portfolio.

DIRECTORS AND OFFICERS

The Board of Directors is responsible for establishing Fund policies and
for overseeing the management of the Fund. Information as to the Directors and
Officers of the Fund is set forth in the Statement of Additional Information
under "DIRECTORS AND OFFICERS."

<PAGE>

DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES

Each Portfolio intends to qualify each year as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code"), so
that it will not be liable for federal income taxes to the extent that its net
investment income and net realized capital gains are distributed. The policy of
VA Small Value and the International Equity Portfolios is to distribute
substantially all of their net investment income together with any net realized
capital gains in November and December of each year. Dividends from net
investment income of VA Large Value Portfolio are distributed quarterly and any
net realized capital gains are distributed in November and December of each
year. Net investment income, which is accrued daily, will be distributed
monthly (except for January) by VA Short-Term Fixed Portfolio and quarterly by
VA Global Bond Portfolio. Any net realized capital gains of the Fixed Income
Portfolios will be distributed in November and December of each year.

If a Portfolio purchases shares in certain foreign investment entities,
called "passive foreign investment companies" ("PFIC"), such Portfolio may be
subject to U.S. federal income tax and a related interest charge on a portion of
any "excess distribution" or gain from the disposition of such shares even if
such income is distributed as a taxable dividend by the Portfolio to its
shareholders.

Also, dividends and interest received on investments made by the Portfolios
may be subject to foreign withholding taxes on income from certain of their
foreign securities.

Shareholders of the Portfolios will automatically receive all income
dividends and capital gains distributions in additional shares of the Portfolio
whose shares they hold at net asset value (as of the business date following the
dividend record date). Shareholders are notified annually by the Fund as to the
federal tax status of dividends and distributions paid by the Portfolio whose
shares they own.

Shares of the Portfolio must be purchased through variable annuity
contracts. As a result, it is anticipated that any dividend or capital gains
distributions from a Portfolio of the Fund will be exempt from current taxation
if left to accumulate within a variable annuity contract. Withdrawals from such
contracts may be subject to ordinary income tax plus a 10% penalty tax if made
before age 59 1/2.

The tax status of your investment in the Portfolios depends upon the
features of your variable life or variable annuity contract. For further
information, please refer to the prospectus of the insurance company separate
account that offers your contract.

PURCHASE AND REDEMPTION OF SHARES

Shares of the Portfolios are sold only to insurance company separate
accounts. Purchases and redemptions of shares of each Portfolio by a separate
account will be effected at the net asset value per share. (See "VALUATION OF
SHARES.") Contract owners do not deal directly with the Fund with respect to
the acquisition or redemption of shares of the Portfolios. Please see the
prospectus of the insurance company separate account for information regarding
the purchase and redemption of shares of the Portfolios.

VALUATION OF SHARES

The net asset value per share of each Portfolio is calculated as of the
close of the NYSE by dividing the total market value of the Portfolio's
investments and other assets, less any liabilities, by the total outstanding
shares of the stock of the Portfolio. The value of the shares of each Portfolio
will fluctuate in relation to its own investment experience. Securities held by
the Domestic Equity and International Equity Portfolios which are listed on a
securities exchange and for which market quotations are available are valued at
the last quoted

27
<PAGE>

sale price of the day or, if there is no such reported sale, such securities are
valued at the mean between the most recent quoted bid and asked prices. Price
information on listed securities is taken from the exchange where the security
is primarily traded. Unlisted securities for which market quotations are
readily available are valued at the mean between the most recent bid and asked
prices. The value of other assets and securities for which no quotations are
readily available (including restricted securities) are determined in good faith
at fair value in accordance with procedures adopted by the Board of Directors.
The net asset values per share of the International Equity Portfolios and VA
Global Bond Portfolio are expressed in U.S. dollars by translating the net
assets of each Portfolio using the bid price for the dollar as quoted by
generally recognized reliable sources.

The value of the shares of the Fixed Income Portfolios will tend to
fluctuate with interest rates because, unlike money market funds, these
Portfolios do not seek to stabilize the value of their respective shares by use
of the "amortized cost" method of asset valuation. Net asset value includes
interest on fixed income securities which is accrued daily. Securities which
are traded OTC and on a stock exchange will be valued according to the broadest
and most representative market; it is expected that for bonds and other
fixed-income securities this ordinarily will be the OTC market. Securities held
by the Fixed Income Portfolios may be valued on the basis of prices provided by
a pricing service when such prices are believed to reflect the current market
value of such securities. Other assets and securities for which quotations are
not readily available will be valued in good faith at fair value using methods
determined by the Board of Directors.

Generally, trading in foreign securities markets is completed each day at
various times prior to the close of the NYSE. The values of foreign securities
held by the International Equity Portfolios and VA Global Bond Portfolio are
determined as of such times for the purpose of computing the net asset values of
these Portfolios. If events which materially affect the value of the
investments of a Portfolio occur subsequent to the close of the securities
market on which such securities are primarily traded, the investments affected
thereby will be valued at "fair value" as described above.

DISTRIBUTION

GENERAL INFORMATION

The Fund was incorporated under Maryland law on June 15, 1981. Until June
1983, the Fund was named DFA Small Company Fund Inc. Until September 18, 1995,
VA Large Value Portfolio was named DFA Global Value Portfolio and VA Global Bond
Portfolio was named DFA Global Bond Portfolio. The shares of each Portfolio,
when issued and paid for in accordance with the Fund's prospectus, will be fully
paid and non-assessable shares, with equal, non-cumulative voting rights and no
preferences as to conversion, exchange, dividends, redemption or any other
feature.

The Portfolios may disseminate reports of their investment performance from
time to time. Investment performance is calculated on a total return basis;
that is by including all net investment income and any realized and unrealized
net capital gains or losses during the period for which investment performance
is reported. If dividends or capital gains distributions have been paid during
the relevant period, the calculation of investment performance will include such
dividends and capital gains distributions as though reinvested in shares of the
Portfolio. Standard quotations of total return, which include deductions of any
applicable reimbursement fees, are computed in accordance with Securities and
Exchange Commission ("SEC") Guidelines and are presented whenever any
non-standard quotations are disseminated to provide comparability to other
investment companies. Non-standardized total return quotations may differ from
the SEC Guideline computations by covering different time periods, excluding
deduction of reimbursement fees charged to investors and paid to the Portfolios
which

<PAGE>

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. The Fund's Annual Report to shareholders relating to the Portfolios for
the fiscal periods ended November 30, 1996 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 VA Global Bond
Portfolio, rates of return expressed as a percentage of U.S. dollars will
reflect applicable currency exchange rates at the beginning and ending dates of
the investment periods presented. The return expressed in terms of U.S. dollars
is the return one would achieve by investing dollars in the Portfolio at the
beginning of the period and liquidating the investment in dollars at the end of
the period. Hence, the return expressed as a percentage of U.S. dollars
combines the investment performance of the Portfolio as well as the performance
of the local currency or currencies of the Portfolio.

Pursuant to an exemptive order from the SEC, shares of the Portfolios may
be sold to registered separate accounts of various insurance companies offering
variable annuity and variable life products. At present, the Board of Directors
of the Fund does not foresee any disadvantage arising from the fact that each
Portfolio may offer its shares to separate accounts of various insurance
companies to serve as an investment vehicle for their variable separate
accounts. However, a material conflict could arise between the interest of the
different participating separate accounts. The Fund's Board of Directors would
monitor events in order to identify any material irreconcilable conflicts that
may possibly arise and to determine what action, if any, should be taken in
response to such conflicts of interest. If such conflicts were to occur, one or
more insurance companies' separate accounts might be required to withdraw its
investments in one or more Portfolios, or shares of another Portfolio may be
substituted by the Fund. As a result, a Portfolio might be forced to sell a
portion of its securities at a disadvantageous price. In the event of such a
material conflict, the affected insurance companies agree to take any necessary
steps, including removing its separate account from the Portfolio if required by
law, to resolve the matter.

As of February 28, 1997, the following persons owned more than 25% of the
voting securities of the following Portfolios:

VA LARGE VALUE PORTFOLIO
(formerly National Home Life) Providian Life and Health Separate
Account* 99.77%
400 West Market Street
P.O. Box 32830
Louisville, KY 40232

VA GLOBAL BOND PORTFOLIO
(formerly National Home Life) Providian Life and Health Separate
Account* 98.93%
(see above address)

VA SMALL VALUE PORTFOLIO
(formerly National Home Life) Providian Life and Health Separate
Account* 99.77%
(see above address)

<PAGE>

VA INTERNATIONAL VALUE PORTFOLIO
(formerly National Home Life) Providian Life and Health Separate
Account* 99.74%
(see above address)

VA INTERNATIONAL SMALL PORTFOLIO
(formerly National Home Life) Providian Life and Health Separate
Account* 99.72%
(see above address)

VA SHORT-TERM FIXED PORTFOLIO
(formerly National Home Life) Providian Life and Health Separate
Account* 97.53%
(see above address)

____________________
* Owner of record only.

Shareholder inquiries may be made by writing or calling the Fund at the
address or telephone number appearing on the cover of this prospectus.

<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

DFA INVESTMENT DIMENSIONS GROUP INC.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Tel. No. (310) 395-8005

INVESTMENT ADVISOR
DIMENSIONAL FUND ADVISORS INC.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Tel. No. (310) 395-8005

SUB-ADVISORS
DIMENSIONAL FUND ADVISORS LTD.
14 Berkeley Street
London, W1X 5AD
England
Tel. No. (171) 495-2343

DFA AUSTRALIA LTD.
Suite 4403 Gateway
1 MacQuarie Place
Sydney, New South Wales 2000
Australia
Tel No. (61) 2-247-7822

CUSTODIAN - INTERNATIONAL
BOSTON SAFE DEPOSIT AND TRUST COMPANY
Princess House
1 Suffolk Lane
London EC4R 0AN
England

CUSTODIAN - DOMESTIC
PNC BANK, National Association
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, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098

INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103

<PAGE>

DFA INVESTMENT DIMENSIONS GROUP INC.

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

STATEMENT OF ADDITIONAL INFORMATION

March 28, 1997

DFA Investment Dimensions Group Inc. (the "Fund") offers thirty
series of shares. This statement of additional information describes six of
those series:

VA SMALL VALUE PORTFOLIO VA INTERNATIONAL SMALL PORTFOLIO
VA LARGE VALUE PORTFOLIO VA SHORT-TERM FIXED PORTFOLIO
VA INTERNATIONAL VALUE PORTFOLIO VA GLOBAL BOND PORTFOLIO

(individually, a "Portfolio" and collectively, the "Portfolios"). The shares
of the Portfolios are sold only to separate accounts of insurance companies
in conjunction with variable life and variable annuity contracts. This
statement of additional information is not a prospectus but should be read in
conjunction with the Portfolios' prospectus dated March 28, 1997, which can
be obtained from the Fund by writing to the Fund at the above address or by
calling the above telephone number.

TABLE OF CONTENTS
PAGE

PORTFOLIO CHARACTERISTICS AND POLICIES...................................... 1

BROKERAGE TRANSACTIONS...................................................... 2

INVESTMENT LIMITATIONS...................................................... 3

FUTURES CONTRACTS........................................................... 5

FEDERAL TAX TREATMENT OF FUTURES CONTRACTS.................................. 6

DIRECTORS AND OFFICERS..................................................... 6

ADMINISTRATIVE SERVICES..................................................... 9

OTHER INFORMATION........................................................... 9

PRINCIPAL HOLDERS OF SECURITIES............................................. 10

PURCHASE AND REDEMPTION OF SHARES.......................................... 11

CALCULATION OF PERFORMANCE DATA............................................ 12

FINANCIAL STATEMENTS....................................................... 13

<PAGE>

PORTFOLIO CHARACTERISTICS AND POLICIES

The following information supplements the information set forth in the
prospectus under the captions "DOMESTIC EQUITY PORTFOLIOS," "VA INTERNATIONAL
VALUE PORTFOLIO," "VA INTERNATIONAL SMALL PORTFOLIO," and "FIXED INCOME
PORTFOLIOS - INVESTMENT OBJECTIVES AND POLICIES." The following information
applies to all of the Portfolios.

Because the structure of the Domestic Equity and International Equity
Portfolios is based on the relative market capitalizations of eligible
holdings, it is possible that the Portfolios might include at least 5% of the
outstanding voting securities of one or more issuers. In such circumstances,
the Fund and the issuer would be deemed "affiliated persons" under the
Investment Company Act of 1940 (the "1940 Act") and certain requirements of
the Act regulating dealings between affiliates might become applicable.
However, based on the present capitalizations of the groups of companies
eligible for inclusion in the Portfolios and the anticipated amount of a
Portfolio's assets intended to be invested in such securities, management
does not anticipate that a Portfolio will include as much as 5% of the voting
securities of any issuer.

VA International Small Portfolio may invest up to 5% of its assets in
convertible debentures issued by non-U.S. companies. Convertible debentures
include corporate bonds and notes that may be converted into or exchanged for
common stock. These securities are generally convertible either at a stated
price or a stated rate (that is, for a specific number of shares of common
stock or other security). As with other fixed income securities, the price
of a convertible debenture to some extent varies inversely with interest
rates. While providing a fixed-income stream (generally higher in yield than
the income derived from a common stock but lower than that afforded by a
non-convertible debenture), a convertible debenture also affords the investor
an opportunity, through its conversion feature, to participate in the capital
appreciation of the common stock into which it is convertible. As the market
price of the underlying common stock declines, convertible debentures tend to
trade increasingly on a yield basis and so may not experience market value
declines to the same extent as the underlying common stock. When the market
price of the underlying common stock increases, the price of a convertible
debenture tends to rise as a reflection of the value of the underlying common
stock. To obtain such a higher yield, the Portfolio may be required to pay
for a convertible debenture an amount in excess of the value of the
underlying common stock. Common stock acquired by the Portfolio upon
conversion of a convertible debenture will generally be held for so long as
the Advisor anticipates such stock will provide the Portfolio with
opportunities which are consistent with the Portfolio's investment objective
and policies.

The annual portfolio turnover rates of VA Small Value and VA Large Value
Portfolios are expected to be approximately 15% and 20%, respectively. The
annual portfolio turnover rate of the VA International Value Portfolio is not
expected to exceed 20%. Because the relative market capitalizations of small
companies compared with larger companies generally do not change
substantially over short periods of time, the portfolio turnover rate of VA
International Small Portfolio ordinarily is anticipated to be low and is not
expected to exceed 25% per year. Generally, securities will be purchased with
the expectation that they will be held for longer than one year. Generally,
securities will be held until such time as, in the Advisor's judgment, they
are no longer considered an appropriate holding in light of the policy of
maintaining portfolios of companies with small market capitalization.

1
<PAGE>
BROKERAGE TRANSACTIONS

The following table depicts brokerage commissions paid by the Portfolios
during the fiscal years ended November 30, 1996 and 1995.

BROKERAGE COMMISSIONS
FISCAL YEARS ENDED NOVEMBER 30, 1996 AND 1995

1996 1995
VA Small Value $12,570 $ 30,388
VA Large Value $11,204 $ 7,138
VA International Value $ 4,863 $ 8,171
VA International Small $ 9,362 $ 53,043
VA Short-Term Fixed $ 0 $ 0
VA Global Bond $ 0 $ 0

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.

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 segments of VA
International Small Portfolio and DFA Australia Ltd. performs these services
for the Japanese and Pacific Small Company segments of VA International Small
Portfolio. Transactions also may be placed with brokers who provide the
Advisor with investment research, such as reports concerning individual
issuers, industries and general economic and financial trends and other
research services.

The over-the-counter market ("OTC") companies eligible for purchase by
VA Small Value Portfolio are thinly traded securities. Therefore, the
Advisor believes it needs maximum flexibility to effect OTC trades on a best
execution basis. To that end, the Advisor places buy and sell orders with
market makers, third market brokers, Instinet and with brokers on an agency
basis when the Advisor determines that the securities may not be available
from other sources at a more favorable price. Third market brokers enable
the Advisor to trade with other institutional holders directly on a net
basis. This allows the Advisor to sometimes trade larger blocks than would
be possible by going through a single market maker.

<PAGE>

Instinet is an electronic information and communication network whose
subscribers include most market makers as well as many institutions.
Instinet charges a commission for each trade executed on its system. On any
given trade, the Domestic Equity Portfolios, by trading through Instinet,
would pay a spread to a dealer on the other side of the trade plus a
commission to Instinet. However, placing a buy (or sell) order on Instinet
communicates to many (potentially all) market makers and institutions at
once. This can create a more complete picture of the market and thus increase
the likelihood that the Portfolios can effect transactions at the best
available prices.

During the fiscal year ended November 30, 1996, the Portfolios paid
commissions for securities transactions to brokers which provided market
price monitoring services, market studies and research services to the
Portfolios as set forth in the following table:

Value of Brokerage
Securities Transactions Commissions
----------------------- -----------

VA Small Value $ 1,380,569 $ 7,572
VA Large Value $ 5,546,032 $ 7,766
VA International Value $ 0 $ 0
VA International Small $ 0 $ 0
VA Short-Term Fixed $ 0 $ 0
VA Global Bond $ 0 $ 0

The investment advisory agreements permit the Advisor knowingly to pay
commissions on securities transactions which are greater than another broker
might charge if the Advisor, in good faith, determines that the commissions
paid are reasonable in relation to the research or brokerage services
provided by the broker or dealer when viewed in terms of either a particular
transaction or the Advisor's overall responsibilities to the Fund. Research
services furnished by brokers through whom securities transactions are
effected may be used by the Advisor in servicing all of its accounts and not
all such services may be used by the Advisor with respect to the Fund.

Brokerage commissions for transactions in securities listed on the Tokyo
Stock Exchange ("TSE") and other Japanese securities exchanges are fixed.
Under the current regulations of the TSE and the Japanese Ministry of
Finance, member and non-member firms of Japanese exchanges are required to
charge full commissions to all customers other than banks and certain
financial institutions, but members and licensed non-member firms may confirm
transactions to banks and financial institution affiliates located outside
Japan with institutional discounts on brokerage commissions. The
International Equity Portfolios expect to be able to avail themselves of
institutional discounts. The Portfolios' ability to effect transactions at a
discount from fixed commission rates depends on a number of factors,
including the size of the transaction, the relation between the cost to the
member or the licensed non-member firm of effecting such transaction and the
commission receivable, and the law, regulation and practice discussed above.
There can be no assurance that the Portfolios will be able to realize the
benefit of discounts from fixed commissions.

INVESTMENT LIMITATIONS

<PAGE>

Each of the Portfolios has adopted certain limitations which may not be
changed with respect to any Portfolio without the approval of a majority of
the outstanding voting securities of the Portfolio. A "majority" is defined
as the lesser of: (1) at least 67% of the voting securities of the Portfolio
(to be affected by the proposed change) present at a meeting, if the
holders of more than 50% of the outstanding voting securities of the
Portfolio are present or represented by proxy, or (2) more than 50% of the
outstanding voting securities of such Portfolio.

The Portfolios will not:

(1) invest in commodities or real estate, including limited partnership
interests therein, although they may purchase and sell securities of
companies which deal in real estate and securities which are secured by
interests in real estate, and all Portfolios may purchase or sell financial
futures contracts and options thereon;

(2) make loans of cash, except through the acquisition of repurchase
agreements and obligations customarily purchased by institutional investors;

(3) as to 75% of the total assets of a Portfolio, invest in the securities of
any issuer (except obligations of the U.S. Government and its
instrumentalities) if, as a result, more than 5% of the Portfolio's total
assets, at market, would be invested in the securities of such issuer;
provided that the VA Global Bond Portfolio is not subject to this limitation;

(4) purchase or retain securities of an issuer if those officers and
directors of the Fund or the Advisor owning more than 1/2 of 1% of such
securities together own more than 5% of such securities;

(5) borrow, except that each Portfolio may borrow, for temporary or emergency
purposes, amounts not exceeding 33% of their net assets from banks and pledge
not more than 33% of such assets to secure such loans;

(6) pledge, mortgage, or hypothecate any of its assets to an extent greater
than 10% of its total assets at fair market value, except as described in (5)
above;

(7) invest more than 15% of the value of the Portfolio's total assets in
illiquid securities, which include certain restricted securities,
repurchase agreements with maturities of greater than seven days, and other
illiquid investments;

(8) engage in the business of underwriting securities issued by others;

(9) invest for the purpose of exercising control over management of any
company;

(10) invest its assets in securities of any investment company, except in
connection with a merger, acquisition of assets, consolidation or
reorganization;

(11) acquire any securities of companies within one industry if, as a result
of such acquisition, more than 25% of the value of the Portfolio's total
assets would be invested in securities of companies within such industry;
except VA Short-Term Fixed Portfolio shall invest more than 25% of its total
assets in obligations of banks and bank holding companies in the
circumstances described in the prospectus under "Investments in the Banking
Industry" and as otherwise described under "Portfolio Strategy";

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

<PAGE>

(13) purchase warrants, however, the Portfolios may acquire warrants as a
result of corporate actions involving holdings of other securities;

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

(15) acquire more than 10% of the voting securities of any issuer and
provided that this limitation applies only to 75% of the assets of the
Domestic Equity Portfolios and VA International Value Portfolio.

The investment limitation described in (1) above, does not prohibit the
Portfolios from making margin deposits in connection with the purchase or
sale of financial futures contracts and options thereon to the extent
permitted under applicable regulations.

Although (2) above prohibits cash loans, the Portfolios are authorized
to lend portfolio securities.

For the purposes of (7) above, VA Short-Term Fixed Portfolio may invest
in commercial paper that is exempt from the registration requirements of the
Securities Act of 1933 (the "1933 Act") subject to the requirements regarding
credit ratings stated in the prospectus under "Description of Investments."
Further, pursuant to Rule 144A under the 1933 Act, the Portfolios may
purchase certain unregistered (i.e., restricted) securities upon a
determination that a liquid institutional market exists for the securities.
If it is decided that a liquid market does exist, the securities will not be
subject to the 15% limitation on holdings of illiquid securities stated in
(7) above. While maintaining oversight, the Board of Directors has delegated
the day-to-day function of making liquidity determinations to the Advisor.
For rule 144A securities to be considered liquid, there must be at least
two dealers making a market in such securities. After purchase, the Board of
Directors and the Advisor will continue to monitor the liquidity of Rule 144A
securities.

For the purposes of (11) above, utility companies will be divided
according to their services; e.g., gas, gas transmission, electric and gas,
electric, water and telephone will each be considered a separate industry.

The International Equity Portfolios and VA Global Bond Portfolio may
acquire and sell forward foreign currency exchange contracts in order to
hedge against changes in the level of future currency rates. Such contracts
involve an obligation to purchase or sell a specific currency at a future
date at a price set in the contract. While each Domestic Equity Portfolio
and VA International Value Portfolio have retained authority to buy and sell
financial futures contracts and options thereon, they have no present
intention to do so.

Unless otherwise indicated, all limitations applicable to the
Portfolios' investments apply only at the time that a transaction is
undertaken. Any subsequent change in a rating assigned by any rating service
to a security or change in the percentage of a Portfolio's assets invested in
certain securities or other instruments resulting from market fluctuations or
other changes in a Portfolio's total assets will not require a Portfolio to
dispose of an investment until the Advisor determines that it is practicable
to sell or close out the investment without undue market or tax consequences.
In the event that ratings services assign different ratings to the same
security, the Advisor will determine which rating it believes best reflects
the security's quality and risk at that time, which may be the higher of the
several assigned ratings.

FUTURES CONTRACTS

All Portfolios may enter into futures contracts and options on futures
contracts for the purpose of remaining fully invested and to maintain
liquidity to pay redemptions. Futures contracts provide for the future sale
by one party and purchase by another party of a specified amount of defined
securities at a specified future time and at a specified price. Futures
contracts which are standardized as to maturity date

<PAGE>

and underlying financial instrument are traded on national futures exchanges.
The Portfolios will be required to make a margin deposit in cash or
government securities with a broker or custodian to initiate and maintain
positions in futures contracts. Minimal initial margin requirements are
established by the futures exchange, and brokers may establish margin
requirements which are higher than the exchange requirements. After a
futures contract position is opened, the value of the contract is marked to
market daily. If the futures contract price changes to the extent that the
margin on deposit does not satisfy margin requirements, payment of additional
"variation" margin will be required. Conversely, reduction in the contract
value may reduce the required margin resulting in a repayment of excess
margin to the Portfolio. Variation margin payments are made to and from the
futures broker for as long as the contract remains open. The Portfolios
expect to earn income on their margin deposits. To the extent that a
Portfolio invests in futures contracts and options thereon for other than
bona fide hedging purposes, the Portfolio will not enter into such
transaction if, immediately thereafter, the sum of the amount of initial
margin deposits and premiums paid for open futures options would exceed 5% of
the Portfolio's total assets, after taking into account unrealized profits
and unrealized losses on such contracts it has entered into; provided,
however, that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%.
Pursuant to published positions of the SEC, the Portfolios may be required to
maintain segregated accounts consisting of liquid assets such as cash, U.S.
government securities, or other high grade debt obligations (or, as permitted
under applicable regulation, enter into offsetting positions) in connection
with its futures contract transactions in order to cover its obligations with
respect to such contracts.

Positions in futures contracts may be closed out only on an exchange
which provides a secondary market. However, there can be no assurance that a
liquid secondary market will exist for any particular futures contract at any
specific time. Therefore, it might not be possible to close a futures
position and, in the event of adverse price movements, the Portfolio would
continue to be required to continue to make variation margin deposits. In
such circumstances, if the Portfolio has insufficient cash, it might have to
sell portfolio securities to meet daily margin requirements at a time when it
might be disadvantageous to do so. Management intends to minimize the
possibility that it will be unable to close out a futures contract by only
entering into futures which are traded on national futures exchanges and for
which there appears to be a liquid secondary market.

FEDERAL TAX TREATMENT OF FUTURES CONTRACTS

Except for transactions a Portfolio has identified as hedging
transactions, the Portfolio is required for federal income tax purposes to
recognize as income for each taxable year its net unrealized gains and losses
on certain futures contracts as of the end of the year as well as those
actually realized during the year. In most cases, any gain or loss
recognized with respect to a futures contract is considered to be 60%
long-term gain or loss and 40% short-term capital gain or loss, without
regard to the holding period of the contract. Furthermore, sales of futures
contracts which are intended to hedge against a change in the value of
securities held by the Portfolio may affect the holding period of such
securities and, consequently, the nature of the gain or loss on such
securities upon disposition.

In order for a Portfolio to continue to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, gains from the sale of
securities and other income derived with respect to the Portfolio's business
of investing in securities. In addition, gains realized on the sale or other
disposition of securities held for less than three months must be limited to
less than 30% of the Portfolio's annual gross income. It is anticipated that
any net gain realized from closing futures contracts will be considered gain
from the sale of securities and, therefore, constitute qualifying income for
purposes of the 90% requirement. In order to avoid realizing excessive gains
on

<PAGE>

securities held less than three months, the Portfolio may be required to
defer the closing out of futures contracts beyond the time when it would
otherwise be advantageous to do so. It is anticipated that unrealized gains
on futures contracts which have been open for less than three months as of
the end of the Portfolio's fiscal year and which are recognized for tax
purposes, will not be considered gains on sales of securities held less than
three months for the purpose of the 30% test. The Portfolios will distribute
to shareholders annually any net capital gains which have been recognized for
federal income tax purposes (including unrealized gains at the end of each
Portfolio's fiscal year) on futures transactions. Such distributions will be
combined with distributions of capital gains realized on each Portfolio's
other investments.

DIRECTORS AND OFFICERS

The names, addresses and ages of the directors and officers of the Fund
and a brief statement of their present positions and principal occupations
during the past five years is set forth below.

DIRECTORS

David G. Booth, Director*, 50, President and Chairman-Chief Executive
Officer, Santa Monica, CA. President, Chairman-Chief Executive Officer and
Director, of the following companies: Dimensional Fund Advisors Inc., DFA
Securities Inc., DFA Australia Ltd., 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 (registered investment
company). Chairman and Director, Dimensional Fund Advisors Ltd.

George M. Constantinides, 49, Director, Chicago, IL. Leo Melamed
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.

John P. Gould, 58, Director, Chicago, IL. Steven G. Rothmeier
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. Executive Vice President, Lexecon Inc. (economics, law,
strategy and finance consulting).

Roger G. Ibbotson, 53, 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
and President, Ibbotson Associates, Inc. (software, data, publishing and
consulting).

Merton H. Miller, 73, Director, Chicago, IL. Robert R. McCormick
Distinguished Service Professor, Graduate School of Business, University of
Chicago. Trustee, The DFA Investment Trust Company. Director, Dimensional
Investment Group Inc., Dimensional Emerging Markets Fund Inc. and Public
Director, Chicago Mercantile Exchange.

Myron S. Scholes, 55, Director, Greenwich, CT. Limited Partner,
Long-Term Capital Management L.P. (money manager). Frank E. Buck Professor
of Finance, Graduate School of Business and Professor of Law, Law School,
Senior Research Fellow, Hoover Institution, (all) Stanford University (on
leave). Trustee, The DFA Investment Trust Company. Director, Dimensional
Investment

7
<PAGE>

Group Inc., Dimensional Emerging Markets Fund Inc., Benham Capital Management
Group of Investment Companies and Smith Breedon Group of Investment Companies.

Rex A. Sinquefield, 52, Director*, Chairman-Chief Investment Officer,
Santa Monica, CA. Chairman-Chief Investment Officer and Director,
Dimensional Fund Advisors Inc., DFA Securities Inc., DFA Australia
Ltd., 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
Ltd., Dimensional Investment Group Inc., The DFA Investment Trust
Company, Dimensional Fund Advisors Ltd., and Dimensional Emerging Markets
Fund Inc.

Arthur Barlow, 41, Vice President, Santa Monica, CA.

Truman Clark, 55, Vice President, Santa Monica, CA. Consultant until
October 1995 and Principal and Manager of Product Development, Wells Fargo
Nikko Investment Advisors, San Francisco, CA from 1990-1994.

Maureen Connors, 60, Vice President, Santa Monica, CA.

Robert Deere, 39, Vice President, Santa Monica, CA.

Irene R. Diamant, 46, Vice President and Secretary, Santa Monica, CA.

Eugene Fama, Jr., 36, Vice President, Santa Monica, CA.

David Plecha, 35, Vice President, Santa Monica, CA.

George Sands, 41, Vice President, Santa Monica, CA. Managing Director,
Asset Strategy Consulting, Los Angeles, CA from 1991 to 1992.

Michael T. Scardina, 41, Vice President, Chief Financial Officer,
Controller and Treasurer, Santa Monica, CA.

Jeanne C. Sinquefield, Ph.D., 50, Executive Vice President, Santa Monica,
CA.

Weston Wellington, 46, Vice President, Santa Monica, CA. Vice President,
Director of Research, LPL Financial Services, Inc., Boston, MA from 1987 to
1994.

Rex A. Sinquefield and Jeanne C. Sinquefield are husband and wife.

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, 1996, 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 Total Compensation from
Compensation Fund
Director from Fund and Fund Complex
- -------- ------------ ------------------------

George M. Constantinides $15,000 $30,000
John P. Gould $15,000 $30,000
Roger G. Ibbotson $15,000 $30,000
Merton H. Miller $15,000 $30,000
Myron S. Scholes $15,000 $30,000

<PAGE>

10
<PAGE>

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. For its services, each Portfolio pays PFPC fees at the
annual rates set forth in the following table:

DOMESTIC EQUITY PORTFOLIOS
.1025% of the first $300 million of net assets
.0769% of the next $300 million of net assets
.0513% of the next $250 million of net assets
.0205% of the net assets over $850 million

INTERNATIONAL EQUITY PORTFOLIOS
.1230% of the first $300 million of net assets
.0615% of the next $300 million of net assets
.0410% of the next $250 million of net assets
.0205% of net assets over $850 million

VA SHORT-TERM FIXED PORTFOLIO
.0513% of the first $100 million of net assets
.0308% of the next $100 million of net assets
.0205% of the next $200 million of net assets

VA GLOBAL BOND PORTFOLIO
.1230% of the first $150 million of net assets
.0820% of net assets between $150 million and $300 million
.0615% of net assets between $300 million and $600 million
.0410% of net assets between $600 million and $850 million
.0205% of net assets over $850 million

PFPC also charges minimum fees at the rates of $54,000 per year for VA Large
Value and the Fixed Income Portfolios and $75,000 per year for VA Small Value
and the International Equity Portfolios. PFPC has agreed to limit the minimum
fee for these Portfolios from time to time.

OTHER INFORMATION

For the services it provides as investment advisor to
each Portfolio, the Advisor is paid a monthly fee calculated
as a percentage of average net assets of the Portfolio. For
the fiscal periods ended November 30, 1995 and 1996, the
Portfolios paid advisory fees as set forth in the following
table:

1996 1995
(000) (000)
----- -----

VA Small Value $ 28 $ 4
VA Large Value $ 20 $ 18
VA International Value $ 28 $ 3
VA International Small $ 27 $ 4
VA Short-Term Fixed $ 14 $ 2
VA Global Bond $ 9 $ 7

<PAGE>

Because of current federal securities law requirements, the Fund expects
that its life insurance company shareholders will offer their contract owners
the opportunity to instruct them as to how Portfolio shares allocable to
their variable contracts will be voted with respect to certain matters, such
as approval of investment advisory agreements. Generally, an insurance
company will vote all Portfolio shares held in a separate account in the same
proportion as it receives instructions from contract owners in that separate
account. Under certain circumstances described in the insurance company
separate account prospectus, the insurance company may not vote in accordance
with the contract owner's instructions.

With respect to matters which require shareholder approval, shareholders
are entitled to vote only with respect to matters which affect the interest
of the class of shares (Portfolio) which they hold, except as otherwise
required by applicable law. If liquidation of the Fund should occur,
shareholders would be entitled to receive on a per class basis the assets of
the particular Portfolio whose shares they own, as well as a proportionate
share of Fund assets not attributable to any particular class. Ordinarily,
the Fund does not intend to hold annual meetings of shareholders, except as
required by the 1940 Act or other applicable law. The Fund's by-laws provide
that special meetings of shareholders shall be called at the written request
of at least 10% of the votes entitled to be cast at such meeting. Such
meeting may be called to consider any matter, including the removal of one or
more directors. Shareholders will receive shareholder communications with
respect to such matters as required by the 1940 Act, including semi-annual
and annual financial statements of the Fund, the latter being audited at
least once each year.

Boston Safe Deposit and Trust Company serves as the custodian for the
International Equity Portfolios and VA Global Bond Portfolio. PNC Bank,
National Association serves as custodian for the Domestic Equity Portfolios
and VA Short-Term Fixed Portfolio. The custodians maintain a separate
account or accounts for the Portfolios; receive, hold and release portfolio
securities on account of the Portfolios; make receipts and disbursements of
money on behalf of the Portfolios; and collect and receive income and other
payments and distributions on account of the Portfolios' portfolio securities.

Coopers & Lybrand L.L.P., the Fund's independent accountants, audits the
Fund's financial statements.

PRINCIPAL HOLDERS OF SECURITIES

As of February 28, 1996, the following stockholders owned at least 5%
of the outstanding stock of the Portfolios, as set forth below.

VA LARGE VALUE PORTFOLIO

Providian Life and Health Separate Account* (formerly National Home Life)
99.77%

400 West Market Street
P.O. Box 32830
Louisville, KY 40232

VA GLOBAL BOND PORTFOLIO

Providian Life and Health Separate Account*

<PAGE>

(formerly National Home Life) 98.93%
(see address above)

VA SMALL VALUE PORTFOLIO

Providian Life and Health Separate Account* (formerly National
Home Life) 99.77%
(see address above)

VA INTERNATIONAL VALUE PORTFOLIO

Providian Life and Health Separate Account* (formerly National
Home Life) 99.77%
(see address above)

VA INTERNATIONAL SMALL PORTFOLIO

Providian Life and Health Separate Account* (formerly National
Home Life) 99.72%
(see address above)

VA SHORT-TERM FIXED PORTFOLIO

Providian Life and Health Separate Account* (formerly National
Home Life) 97.53%
(see address above)

________________________

<PAGE>

*Owner of record only.

PURCHASE AND REDEMPTION OF SHARES

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

Management believes that any dilutive effect of the cost of investing
the proceeds of the sale of the shares of the Portfolios is minimal and,
therefore, the shares of the Portfolios are currently sold at net asset
value, without imposition of a reimbursement fee. Reimbursement fees may be
charged prospectively from time to time based upon the future experience of
the Portfolios. Any such charges will be described in the prospectus.

The Fund reserves the right, in its sole discretion, to suspend the
offering of shares of any or all Portfolios or reject purchase orders when,
in the judgment of management, such suspension or rejection is in the best
interest of the Fund or a Portfolio.

The Fund may suspend redemption privileges or postpone the date of
payment: (1) during any period when the NYSE is closed, or trading on the
NYSE is restricted as determined by the Securities and Exchange Commission
(the "Commission"), (2) during any period when an emergency exists as defined
by the rules of the Commission as a result of which it is not reasonably
practicable for the Fund to dispose of securities owned by it, or fairly to
determine the value of its assets and (3) for such other periods as the
Commission may permit.

CALCULATION OF PERFORMANCE DATA

Following are quotations of the Portfolios' annualized percentage total
returns for the one-year period ended November 30, 1996 and from the
Portfolios' date of initial investment, as indicated below, through November
30, 1996, using the standardized method of calculation required by the
Commission:

<PAGE>

From Initial
One Year Investment
-------- ------------

VA Small Value Portfolio 21.47% 15.05%*
VA Large Value Portfolio 20.43% 23.21%**
VA International Value Portfolio 13.93% 12.11%*
VA International Small Portfolio 7.94% 4.11%*
VA Short-Term Fixed Portfolio 5.35% 5.29%*
VA Global Bond Portfolio 9.15% 10.99%***

* For the period from October 3, 1995 (date of initial investment) to
November 30, 1996.

** For the period from January 13, 1995 (date of initial investment) to
November 30, 1996. Until October 1995, VA Large Value Portfolio
invested approximately 50% of its total assets in the stocks of large
non-U.S. companies and approximately 50% of its total assets in the
stocks of U.S. companies. The total return information for VA Large
Value Portfolio reflects the performance of the Portfolio when it
invested in the stocks of both U.S. and non-U.S. companies. The total
return of the Portfolio for the period ended November 30, 1995 should
not be considered indicative of its future performance.

*** For the period January 13, 1995 (date of initial investment) to
November 30, 1996.

Each Portfolio determines its average annual total return by finding the
average annual compounded rates of return over the stated time period that
would equate a hypothetical initial purchase order of $1,000 to its
redeemable value (including capital appreciation/depreciation and dividends
and distributions paid and reinvested less any fees charged to a shareholder
account) at the end of the stated time period. The calculation assumes that
all dividends and distributions are reinvested at the public offering price
on the reinvestment dates during the period. The quotation assumes the
account was completely redeemed at the end of each period and the deduction
of all applicable charges and fees. According to the Commission's 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).

The Portfolios may compare their investment performance to appropriate
market and mutual fund indices.

<PAGE>

FINANCIAL STATEMENTS

The audited financial statements and financial highlights of the
Portfolios for the fiscal year ended November 30, 1996, as set forth in
the Fund's Annual Report to stockholders relating to the Portfolios, and the
report thereon of Coopers & Lybrand L.L.P., independent accountants, also
appearing therein, are incorporated herein by reference.

An investor may obtain a copy of the Annual 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>

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) FINANCIAL STATEMENTS.
Audited financial statements dated November 30, 1996 for each series
of the Registrant were filed on January 24, 1997 via the U.S.
Securities and Exchange Commission's EDGAR System in the Annual Report
to Shareholders of DFA INVESTMENT DIMENSIONS GROUP INC. pursuant to
Rule 30b2-1 under the Investment Company Act of 1940 ("1940 Act").
Such financial statements are incorporated into the Statement of
Additional Information of DFA INVESTMENT DIMENSIONS GROUP INC. dated
March 28, 1997.

(b) EXHIBITS.
(1) CHARTER, AS NOW IN EFFECT.
(a) Articles of Restatement dated August 8, 1995.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 43/44 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: October 4, 1996.

(b) Articles of Amendment dated December 21, 1995.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 39/40 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: January 30, 1996.

(c) Articles Supplementary dated December 21, 1995.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 39/40 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: January 30, 1996.

(d) Articles Supplementary dated May 14, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

<PAGE>

(e) Articles Supplementary dated October 18, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 44/45 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: December 19, 1996.
(f) Articles of Amendment dated December 20, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 44/45 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: December 19, 1996.

(2) EXISTING BY-LAWS.
By-Laws of the Registrant, as approved through October 17, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 44/45 to the Registration
Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: December 19, 1996.

(3) VOTING TRUST AGREEMENT.
None.

(4) INSTRUMENTS DEFINING RIGHTS OF HOLDERS OF SECURITIES BEING
REGISTERED.

(a) See Articles Fifth, Sixth, Eighth and Thirteenth of the
Registrant's Articles of Restatement dated August 8, 1995.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 43/44 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: October 4, 1996.

(b) Specimen Securities of the Registrant on behalf of the:
(1) U.S. 9-10 Small Company Portfolio (formerly The Small
Company Shares)**.

(2) DFA One-Year Fixed Income Portfolio (formerly the
Inflation Hedge Portfolio A).

(3) Japanese Small Company Portfolio**.

-2-

<PAGE>

(4) United Kingdom Small Company Portfolio**.

(5) DFA Five-Year Government Portfolio**.

(6) Continental Small Company Portfolio (formerly The
Continental European Shares)**.

(7) U.S. Large Company Portfolio**.

(8) DFA Global Fixed Income Portfolio (formerly the DFA
Global Bond Portfolio)**.

(9) DFA Intermediate Government Fixed Income Portfolio
(formerly the DFA Intermediate Government Bond
Portfolio)**.

(10) Large Cap International Portfolio (formerly the Large
Company International Portfolio)**.

(11) Pacific Rim Small Company Portfolio (formerly the Asia-
Australia Small Company Portfolio)**.

(12) U.S. 6-10 Small Company Portfolio**.

(13) U.S. Large Cap Value Portfolio (formerly the U.S. Large
Cap High Book to Market Portfolio)**.

(14) U.S. Small Cap Value Portfolio (formerly the U.S. Small
Cap High Book to Market Portfolio)**.

(15) DFA Real Estate Securities Portfolio (formerly the
DFA/AEW Real Estate Securities Portfolio)**.

(16) RWB/DFA International High Book to Market Portfolio
(formerly the DFA International High Book to Market
Portfolio and the Reinhardt Werba Bowen International
Large Stock Portfolio)**.

(17) Emerging Markets Portfolio**.

(18) DFA International Small Cap Value Portfolio**.

-3-

<PAGE>

(19) VA Global Bond Portfolio (formerly known as the DFA
Global Bond Portfolio)**.

(20) VA Large Value Portfolio (formerly the DFA Global Value
Portfolio)**.

(21) VA Small Value Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(22) VA International Value Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258
Filing Date: June 19, 1995.

(23) VA International Small Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(24) VA Short-Term Fixed Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(25) Enhanced U.S. Large Company Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(26) DFA Two-Year Corporate Fixed Income Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.

-4-

<PAGE>

File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(27) DFA Two-Year Global Fixed Income Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(28) DFA Two-Year Government Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(29) International Small Company Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

(5) (a) Investment Advisory Contracts:
(1) Between the Registrant and Dimensional Fund Advisors
Inc. ("DFA") dated December 22, 1981 on behalf of the
U.S. 9-10 Small Company Portfolio (formerly The Small
Company Shares)**.

(2) Between The DFA Investment Trust Company ("DFA/ITC")
and DFA dated January 6, 1993 re: the DFA One-Year
Fixed Income Series (formerly The DFA Fixed Income
Shares (the "Series")). The Series became a feeder
of the DFA Investment Trust Company ("DFA/ITC") on
January 15, 1993.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Initial Registration Statement of DFA/ITC on
Form N-1A.
File Nos.: 811-7436.
Filing Date: JANUARY 15, 1993.

(3) Between DFA/ITC and DFA dated August 7, 1996 re: the
Japanese Small Company Series (the "Series"). The
Series became a feeder portfolio of DFA/ITC on August

-5-

<PAGE>

8, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 7 to the
Registration Statement of DFA/ITC on Form N-1A.
File Nos.: 811-7436.
Filing Date: AUGUST 7, 1996.

(4) Between DFA/ITC and DFA dated August 7, 1996 re: the
United Kingdom Small Company Series (the "Series").
The Series become a feeder portfolio of DFA/ITC on
August 8, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 7 to the
Registration Statement of DFA/ITC on Form N-1A.
File Nos.: 811-7436.
Filing Date: AUGUST 7, 1996.

(5) Between the Registrant and DFA dated May 13, 1987 on
behalf of the DFA Five-Year Government Portfolio**.

(6) Between DFA/ITC and DFA dated August 7, 1996 re: the
Continental Small Company Series (formerly the
Continental European Shares) (the "Series"). The
Series became a feeder portfolio of DFA/ITC on
August 9, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 7 to the
Registration Statement of DFA/ITC on Form N-1A.
File Nos.: 811-7436.
Filing Date: AUGUST 7, 1996.

(7) Form of between DFA/ITC and DFA dated January 6, 1993
re: the U.S. Large Company Series (the "Series"). The
Series become a feeder portfolio of DFA/ITC on January
15, 1993.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 5 to the
Registration Statement of DFA/ITC on Form N-1A.
File Nos.: 811-7436.
Filing Date: DECEMBER 1, 1995.

-6-

<PAGE>

(8) Between the Registrant and DFA dated April 26, 1994 re:
the DFA Global Fixed Income Portfolio (formerly the DFA
Global Bond Portfolio)**.

(9) Form of between the Registrant and DFA dated December
24, 1990 on behalf of the DFA Intermediate Government
Fixed Income Portfolio (formerly the DFA Intermediate
Government Bond Portfolio)**.

(10) Form of between the Registrant and DFA dated April 2,
1991 on behalf of the Large Cap International
Portfolio**.

(11) Form of between DFA/ITC and DFA dated August 7, 1996
re: the Pacific Rim Small Company Series (formerly the
Asia-Australia Small Company Portfolio) (the "Series").
The Series became a feeder portfolio of DFA/ITC on
August 9, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 7 to the
Registration Statement of DFA/ITC on Form N-1A.
File Nos.: 811-7436.
Filing Date: AUGUST 7, 1996.

(12) Form of between DFA/ITC and DFA dated January 15, 1993
re: the U.S. 6-10 Small Company Series (the "Series").
The Series become a feeder portfolio of DFA/ITC on
January 15, 1993.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Initial Registration Statement of DFA/ITC on
Form N-1A.
File Nos.: 811-7436.
Filing Date: JANUARY 15, 1993.

(13) Form of between DFA/ITC and DFA re: the U.S. Large Cap
Value Series (formerly the U.S. Large Cap High Book to
Market Portfolio) (the "Series") dated January 6, 1993.
The Series become a feeder portfolio of DFA/ITC on
January 15, 1993.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Initial Registration Statement of DFA/ITC on
Form N-1A.
File Nos.: 811-7436.
Filing Date: JANUARY 15, 1993.

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<PAGE>

(14) Form of between DFA/ITC and DFA re: the U.S. Small Cap
Value Series formerly the High Book to Market
Portfolio) (the "Series") dated January 6, 1993. The
Series become a feeder portfolio of DFA/ITC on January
15, 1993.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Initial Registration Statement of DFA/ITC on
Form N-1A.
File Nos.: 811-7436.
Filing Date: JANUARY 15, 1993.

(15) Form of between the Registrant and DFA dated December
21, 1992, as amended re: the DFA Real Estate Securities
Portfolio (formerly the DFA/AEW Real Estate Securities
Portfolio)**.

(16) Form of between DFA/ITC and DFA re: the RWB/DFA
International High Book to Market Portfolio (formerly
the DFA International High Book to Market Portfolio;
formerly the Reinhardt Werba Bowen International Large
Stock Portfolio) (the "Series"). The Series become a
feeder portfolio of DFA/ITC on May 14, 1993**.

(17) Between DFA/ITC and DFA dated January 11, 1994 on
behalf of the Emerging Markets Series (the "Series").
The Series become a feeder of DFA/ITC on January 11,
1994.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 2 to the
Registration Statement of DFA/ITC on Form N-1A.
File Nos.: 811-7436.
Filing Date: JANUARY 11, 1994.

(18) Form of between the Registrant and DFA dated December
20, 1994 on behalf of the DFA International Small Cap
Value Portfolio**.

(19) Form of between the Registrant and DFA dated April 26,
1994 on behalf of the VA Global Bond Portfolio
(formerly known as the DFA Global Bond Portfolio)**.

(20) Form of between the Registrant and DFA dated
September 8, 1995 on behalf of the VA Large Value
Portfolio (formerly known as the DFA Global Value
Portfolio).

-8-

<PAGE>

INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(21) Form of between the Registrant and DFA dated
September 8, 1995 on behalf of the VA Small Value
Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(22) Form of between the Registrant and DFA dated
September 8, 1995 on behalf of the VA International
Value Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(23) Form of between the Registrant and DFA dated
September 8, 1995 on behalf of the VA International
Small Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(24) Form of between the Registrant and DFA dated
September 8, 1995 on behalf of the VA Short-Term Fixed
Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(25) Between DFA/ITC and DFA dated February 8, 1996 re: the
Enhanced U.S. Large Company Series (the "Series"). The
Series became a feeder portfolio of DFA/ITC on 2/8/96.
INCORPORATED HEREIN BY REFERENCE TO:

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<PAGE>

Filing: Post-Effective Amendment No. 6 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 811-7436.
Filing Date: FEBRUARY 7, 1996.

(26) Between DFA/ITC and DFA dated February 8, 1996 re: the
Two-Year Corporate Fixed Income Series (the "Series").
The Series became a feeder portfolio of DFA/ITC on
2/8/96.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 6 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 811-7436.
Filing Date: FEBRUARY 7, 1996.

(27) Between DFA/ITC and DFA dated February 8, 1996 re: the
DFA Two-Year Global Fixed Income Series (the "Series").
The Series became a feeder portfolio of DFA/ITC on
2/8/96.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 6 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 811-7436.
Filing Date: FEBRUARY 7, 1996.

(28) Between DFA/ITC and DFA dated February 8, 1996 re: the
DFA Two-Year Government Series (the "Series"). The
Series became a feeder portfolio of DFA/ITC on 2/8/96.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 6 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 811-7436.
Filing Date: FEBRUARY 7, 1996.

(29) Form of between the Registrant and DFA dated August 8,
1996 re: the International Small Company Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: MAY 24, 1996.

-10-

<PAGE>

(30) Between DFA/ITC and DFA dated October 18, 1996 re: the
Emerging Market Small Cap Series (the "Series"). The
Series became a feeder portfolio of DFA/ITC on
12/20/96.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 9 to the
Registration Statement of DFA/ITC on Form N-1A.
File Nos.: 811-7436.
Filing Date: February 24, 1997.

(b) Sub-Advisory Contracts:
(1) Between DFA/ITC, DFA and DFA Australia Ltd. (formerly
DFA Australia Pty Limited) ("DFALtd") dated August 7,
1996 re: the Japanese Small Company Series (the
"Series"). The Series become a feeder of DFA/ITC on
August 9, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 7 to the
Registration Statement of DFA/ITC on Form N-1A.
File Nos.: 811-7436.
Filing Date: AUGUST 7, 1996.

(2) Between DFA/ITC, DFA and Dimensional Fund Advisors Ltd.
("DFAL") dated August 7, 1996 re: the Continental Small
Company Series (the "Series"). The Series become a
feeder of DFA/ITC on August 9, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 7 to the
Registration Statement of DFA/ITC on Form N-1A.
File Nos.: 811-7436.
Filing Date: AUGUST 7, 1996.

(3) Form of between the Registrant, DFA and DFALtd dated
September 21, 1995 re: the United Kingdom Small Company
Series (the "Series"). The Series become a feeder of
DFA/ITC on August 9, 1996.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 7 to the
Registration Statement of DFA/ITC on Form N-1A.
File Nos.: 811-7436.
Filing Date: AUGUST 7, 1996.

(4) Form of supplement between the Registrant, DFA and
Dimensional Fund

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<PAGE>

Advisors Asia Inc. dated November 1, 1994 re: the
Pacific Rim Small Company Portfolio and the Japanese
Small Company Portfolio*.

(5) Between the Registrant, DFA and DFA Ltd. dated
September 21, 1995 re: the VA International Small
Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(6) (Amended and Restated) Form of between the Registrant,
DFA and DFALtd. re: the Pacific Rim Small Company
Portfolio and VA International Small Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(7) (Amended and Restated) Form of between the Registrant,
DFA and DFALtd. dated September __, 1995 re: the
Japanese Small Company Portfolio and the VA
International Small Company Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(8) (Amended and Restated) Form of between the Registrant,
DFA and DFALtd. dated September __, 1995 re: the
Continental Small Company Portfolio and VA
International Small Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(9) (Amended and Restated) Form of between the Registrant,
DFA and DFALtd. dated

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<PAGE>

September __, 1995 re: the United Kingdom Small Company
Portfolio and the VA International Small Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(6) (a) UNDERWRITING DISTRIBUTION CONTRACT BETWEEN THE REGISTRANT
AND A PRINCIPAL UNDERWRITER.
(1) Between the Registrant and DFA Securities Inc. dated
March 31, 1989.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Initial Registration Statement of DFA/ITC on
Form N-1A.
File Nos.: 811-7436
Filing Date: January 15, 1993.

(b) AGREEMENTS BETWEEN PRINCIPAL UNDERWRITERS AND DEALERS.
(1) None.

(7) None.

(8) CUSTODY AGREEMENTS.
(a) Between the Registrant and Boston Safe Deposit and Trust
Company dated July 22, 1991 on behalf of the Japanese Small
Company Portfolio, Pacific Rim Small Company Portfolio
(formerly the Asia-Australia Small Company Portfolio),
United Kingdom Small Company Portfolio, Continental Small
Company Portfolio, Large Cap International Portfolio and DFA
Global Bond Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 the Registration
Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(1) Amendment to Custody Agreement dated July 22, 1991
between the Registrant and the Boston Safe Deposit and
Trust Company dated May 26, 1993.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 of the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.

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<PAGE>

Filing Date: June 19, 1995.

(2) Amendment to Custody Agreement dated July 22, 1991
between the Registrant and Mellon Trust dated December
20, 1994 on behalf of the Japanese Small Company
Portfolio, Pacific Rim Small Company Portfolio (Asia-
Australia Small Company Portfolio), United Kingdom
Small Company Portfolio, Continental Small Company
Portfolio, Large Cap International Portfolio and DFA
Global Bond Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(3) Form of Amendment to Custody Agreement dated July 22,
1991 between the Registrant and Boston Safe Deposit and
Trust Company dated September ___, 1995 on behalf of
the Small Value Portfolio, VA Large Value Portfolio and
VA Short-Term Fixed Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(4) Form of Amendment to Custody Agreement dated July 22,
1991 between the Registrant and Boston Safe Deposit and
Trust Company dated February ___, 1996 re: the DFA Two-
Year Global Fixed Income Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: No. 37/38 to the Registration Statement of the
Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(5) Form of Amendment to Custody Agreement dated July 22,
1991 between the Registrant and Boston Safe Deposit and
Trust Company dated August 8, 1996 re: the
International Small Company Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:

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<PAGE>

Filing: Post-Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

(b) Form of Custodian Services Agreement between the Registrant
and PNC Bank, N.A. (formerly Provident National Bank) dated
February 8, 1996 re: the Enhanced U.S. Large Company, DFA
Two-Year Corporate Fixed Income and DFA Two-Year Government
Portfolios.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to Registration
Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(c) Form of Custody Agreement re: the Emerging Markets Small Cap
Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 44/45 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: December 19, 1996.

(d) Form of Custodian Agreement between the Registrant and PNC
Bank, N.A. (formerly Provident National Bank) re: 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 Fixed Income Portfolio (formerly
known as the DFA Intermediate Government Bond Portfolio, and
the DFA Five-Year Government Portfolio**.

(1) Amendment Number One**.
(2) Amendment Number Two**.
(3) Form of Amendment Number Three**.
(4) Form of Amendment Number Four**.
(5) Form of Amendment Number Five.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(6) Form of Amendment Number Six.

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<PAGE>

INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(9) (a) Transfer Agency Agreement between the Registrant and PFPC
Inc. (formerly Provident Financial Processing Corporation)**
(the "Transfer Agency Agreement").
(1) Amendment Number One**.
(2) Amendment Number Two**.
(3) Form of Amendment Number Three**.
(4) Form of Amendment Number Four**.
(5) Form of Amendment Number Five**.
(6) Form of Amendment Number Six*.
(7) Form of Amendment Number Seven*.
(8) Form of Amendment Number Eight*.
(9) Form of Amendment Number Nine*.

(10) Form of Amendment Number Ten dated September 8, 1995 to
the Transfer Agency Agreement re: the addition of the
VA Small Value Portfolio, VA International Value
Portfolio, VA Short-Term Fixed Portfolio and VA
International Small Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(11) Form of Amendment Number Eleven dated February 8, 1996
to the Transfer Agency Agreement re: the addition of
the Enhanced U.S. Large Company Portfolio, DFA Two-Year
Corporate Fixed Income Portfolio, DFA Two-Year Global
Fixed Income Portfolio and DFA Two-Year Government
Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(12) Form of Amendment Number Twelve dated August 8, 1996 to
the Transfer Agency

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<PAGE>

Agreement re: the addition of the International Small
Company Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
Filing Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

(13) Amendment Number Thirteen dated December 19, 1996 re:
the addition of the Emerging Markets Small Cap
Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post Effective Amendment No. 44/45 to the
Registration Statement of the Registrant on Form N-1A.
Filing Nos.: 2-73948 and 811-3258.
Filing Date: December 19, 1996.

(b) Administration and Accounting Services Agreement between the
Registrant and PFPC Inc. (formerly Provident Financial
Processing Corporation)** (the "Accounting Agreement").
(1) Amendment Number One**.
(2) Amendment Number Two**.
(3) Form of Amendment Number Three**.
(4) Form of Amendment Number Four**.
(5) Form of Amendment Number Five**.
(6) Form of Amendment Number Six*.
(7) Form of Amendment Number Seven*.
(8) Form of Amendment Number Eight*.
(9) Form of Amendment Number Nine*.

(10) Form of Amendment Number Ten dated September 8, 1995 to
the Accounting Agreement re: the addition of the VA
Portfolios.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(11) Form of Amendment Number Eleven dated February 8, 1996
to the Accounting Agreement re: the addition of the
Enhanced U.S. Large Company Portfolio, DFA Two-Year
Corporate Fixed Income Portfolio, DFA Two-Year Global
Fixed Income Portfolio and DFA Two-Year Government
Portfolio.

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<PAGE>

(12) Form of Amendment Number Twelve to the Accounting
Agreement re: the addition of the International Small
Company Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
Filing Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

(13) Amendment Number Thirteen dated December 19, 1996 to
the Accounting Agreement re: the addition of Emerging
Markets Small Cap Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post Effective Amendment No. 44/45 to the
Registration Statement of the Registrant on Form N-1A.
Filing Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

(2) Form of between the Registrant and DFA dated January 6,
1993 on behalf of the DFA One-Year Fixed Income
Portfolio (formerly The DFA Fixed Income Shares)**.

(3) Form of between the Registrant and DFA dated August 8,
1996 on behalf of the Japanese Small Company Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

(4) Form of between the Registrant and DFA dated August 8,
1996 on behalf of the United Kingdom Small Company
Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:

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<PAGE>

Filing: Post-Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

(5) Form of Administration Agreement re: DFA Five-Year
Government Portfolio**.

(6) Form of between the Registrant and DFA dated August 8,
1996 on behalf of the Continental Small Company
Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

(7) Form of between the Registrant and DFA dated December
1, 1995 on behalf of the U.S. Large Company Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(8) Re: DFA Global Fixed Income Portfolio (formerly known
as DFA Global Bond Portfolio)*.

(9) Re: DFA Intermediate Government Fixed Income Portfolio
(formerly known as DFA Intermediate Government Bond
Portfolio)*.

(10) Re: Large Cap International Portfolio*.

(11) Form of between the Registrant and DFA dated August 8,
1996 on behalf of the Pacific Rim Small Company
Portfolio. The Series became a feeder portfolio of
DFA/ITC on January 15, 1993.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

(12) Form of between the Registrant and DFA

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<PAGE>

dated January 6, 1993 re: the U.S. 6-10 Small Company
Portfolio (the "Series). The Series became a feeder
portfolio of DFA/ITC on January 15, 1993**.

(13) Form of between the Registrant and DFA dated January 6,
1993 re: the U.S. Large Cap Value Portfolio (formerly
the U.S. Large Cap High Book to Market Portfolio) (the
"Series"). The Series became a feeder portfolio of
DFA/ITC on January 15, 1993**.

(14) Form of between the Registrant and DFA dated January 6,
1993 re: the U.S. Small Cap Value Portfolio (formerly
the U.S. Small Cap High Book to Market Portfolio)(the
"Series")**.

(15) Re: DFA Real Estate Securities Portfolio (formerly the
DFA/AEW Real Estate Securities Portfolio)*.

(16) Form of between the Registrant and DFA dated February
8, 1996 on behalf of the RWB/DFA International High
Book to Market Portfolio (formerly DFA International
High Book to Market Portfolio; formerly the Reinhardt
Werba Bowen International Large Stock Portfolio).
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(17) Form of between the Registrant and DFA dated March 30,
1994 re: the Emerging Markets Portfolio (the "Series").
The Series became a feeder portfolio of DFA/ITC on
January 11, 1994**.

(18) Re: the DFA International Small Cap Value Portfolio is
attached hereto as Exhibit 24(b)(9)(c)(19).

(19) Re: the VA Global Bond Portfolio (formerly known as the
DFA Global Bond Portfolio) is attached hereto as
Exhibit 24(b)(9)(c)(20).

-20-

<PAGE>

(20) Re: the VA Large Value Portfolio (formerly known as the
DFA Global Value Portfolio) is attached hereto as
Exhibit 24(b)(9)(c)(21).

(21) Re: the VA Small Value Portfolio is attached hereto as
Exhibit 24(b)(9)(c)(22).

(22) Re: the VA International Value Portfolio is attached
hereto as Exhibit 24(b)(9)(c)(23).

(23) Re: the VA International Small Portfolio is attached
hereto as Exhibit 24(b)(9)(c)(24).

(24) Re: the VA Short-Term Fixed Portfolio is attached
hereto as Exhibit 24(b)(9)(c)(25).

(25) Form of between the Registrant and DFA dated February
8, 1996 on behalf of the Enhanced U.S. Large Company
Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(26) Form of between the Registrant and DFA dated
February 8, 1996 on behalf of the DFA Two-Year
Corporate Fixed Income Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(27) Form of between the Registrant and DFA dated
February 8, 1996 on behalf of the DFA Two-Year Global
Fixed Income Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

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<PAGE>

(28) Form of between the Registrant and DFA dated
February 8, 1996 on behalf of the DFA Two-Year
Government Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(29) Form of between the Registrant and DFA dated August 8,
1996 on behalf of the International Small Company
Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 41/42 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: May 24, 1996.

(30) Between the Registrant and DFA dated December 19, 1996
on behalf of the Emerging Markets Small Cap Portfolio.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 44/45 to the
Registration Statement of the Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: December 19, 1996.

(d) Other.
(1) Marketing Agreement dated June 29, 1994 between DFA and
National Home Life Assurance Company.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

(2) Participation Agreement between DFA Investment
Dimensions Group, Inc., DFA, DFA Securities, Inc. and
National Home Life Assurance Company.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 33/34 to the
Registration Statement of Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: June 19, 1995.

-22-

<PAGE>

(3) Form of Client Service Agent Agreement re: the RWB/DFA
International High Book to Market Portfolio (formerly
the DFA International High Book to Market Portfolio and
Reinhardt Werba Bowen International Large Stock
Portfolio).
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 37/38 to The
Registration Statement of Registrant on Form N-1A.
File Nos.: 2-73948 and 811-3258.
Filing Date: November 22, 1995.

(10) OPINION OF COUNSEL.
Opinion of counsel was filed on January 24, 1997 with the
Registrant's Rule 24f-2 Notice.

(11) CONSENTS.
Consent of Coopers & Lybrand, L.L.P. is attached hereto as
Exhibit 24(b)(11).

(12) FINANCIAL STATEMENTS OMITTED FROM ITEM 23.
Not applicable.

(13) AGREEMENTS OF UNDERSTANDINGS MADE IN CONSIDERATION FOR PROVIDING
INITIAL CAPITAL.
(a) Subscription Agreement under Section 14(a)(3) of the
Investment Company Act of 1940**.

(14) MODEL PLAN USED IN THE ESTABLISHMENT OF ANY RETIREMENT PLAN.
Not applicable.

(15) (a) PLANS ENTERED INTO PURSUANT TO RULE 12b-1.
(1) Amended Distribution Plan**.

(b) AGREEMENTS RELATING TO IMPLEMENTATION WITH PLAN.
(1) Amended compensation agreement**.

(16) PERFORMANCE CALCULATIONS.
Schedule for Computation of Performance Data relating to the:

(a) International Small Company Portfolio is attached hereto as
Exhibit 24(b)(16)(a).

(17) FINANCIAL DATA SCHEDULES.
Financial Data Schedule dated November 30, 1996 relating to the:

-23-

<PAGE>

(a) U.S. 9-10 Small Company Portfolio is attached hereto as
Exhibit 24(b)(17)(a).

(b) DFA One-Year Fixed Income Portfolio is attached hereto as
Exhibit 24(b)(17)(b).

(d) United Kingdom Small Company Portfolio is attached hereto as
Exhibit 24(b)(17)(d).

(e) DFA Five-Year Government Portfolio is attached hereto as
Exhibit 24(b)(17)(e).

(f) Continental Small Company Portfolio is attached hereto as
Exhibit 24(b)(17)(f).

(g) U.S. Large Company Portfolio is attached hereto as Exhibit
24(b)(17)(g).

(h) DFA Global Fixed Income Portfolio is attached hereto as
Exhibit 24(b)(17)(h).

(i) DFA Intermediate Government Fixed Income Portfolio is
attached hereto as Exhibit 24(b)(17)(i).

(j) Large Cap International Portfolio is attached hereto as
Exhibit 24(b)(17)(j).

(k) Pacific Rim Small Company Portfolio is attached hereto as
Exhibit 24(b)(17)(k).

(l) U.S. 6-10 Small Company Portfolio is attached hereto as
Exhibit 24(b)(17)(l).

(m) U.S. Large Cap Value Portfolio is attached hereto as Exhibit
24(b)(17)(m).

(n) U.S. Small Cap Value Portfolio is attached hereto as Exhibit
24(b)(17)(n).

(o) DFA Real Estate Securities Portfolio is attached hereto as
Exhibit 24(b)(17)(o).

(p) RWB/DFA International High Book-to-Market Portfolio is
attached hereto as Exhibit 24(b)(17)(p).

(q) Emerging Markets Portfolio is attached hereto as Exhibit
24(b)(17)(q).

-24-

<PAGE>

(r) DFA International Small Cap Value Portfolio is attached
hereto as Exhibit 24(b)(17)(r).

(s) VA Global Bond Portfolio is attached hereto as Exhibit
24(b)(17)(s).

(t) VA Large Value Portfolio is attached hereto as Exhibit
24(b)(17)(t).

(u) VA Small Value Portfolio is attached hereto as Exhibit
24(b)(17)(u).

(v) VA International Value Portfolio is attached hereto as
Exhibit 24(b)(17)(v).

(w) VA International Small Portfolio is attached hereto as
Exhibit 24(b)(17)(w).

(x) VA Short-Term Fixed Portfolio is attached hereto as Exhibit
24(b)(17)(x).

(y) Enhanced U.S. Large Company Portfolio is attached hereto as
Exhibit 24(b)(17)(y).

(z) DFA Two-Year Corporate Fixed Income Portfolio is attached
hereto as Exhibit 24(b)(17)(z).

(aa) DFA Two-Year Global Fixed Income Portfolio is attached
hereto as Exhibit 24(b)(17)(aa).

(bb) DFA Two-Year Government Portfolio is attached hereto as
Exhibit 24(b)(17)(bb).

(cc) International Small Company Portfolio is attached hereto as
Exhibit 24(b)(17)(cc).

(dd) Emerging Markets Small Cap Portfolio is attached hereto as
Exhibit 24(b)(17)(dd).

(18) PLANS PURSUANT TO RULE 18f-3.
Not Applicable.

(19) POWERS-OF-ATTORNEY.
(a) Power-of-Attorney appointing David G. Booth, Rex A.
Sinquefield, Michael T. Scardina, Irene R. Diamant and
Stephen W. Kline, Esq. as attorney-in-fact for the
Registrant and certified resolution relating thereto on
behalf of the Registrant.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 31/32 to the
Registration Statement of the Registrant

-25-

<PAGE>

on Form N-1A.
Filing Nos.: 2-73948 and 811-3258.
Filing Date: October 3, 1994.

(b) Power-of-Attorney appointing David G. Booth, Rex A.
Sinquefield, Michael T. Scardina, Irene R. Diamant and
Stephen W. Kline, Esq. as attorney-in-fact for DFA/ITC and
certified resolution relating thereto on behalf of DFA/ITC.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Post-Effective Amendment No. 13/14 to the
Registration Statement of the Registrant on Form N-1A.
Filing Nos.: 33-33980 and 811-6067.
Filing Date: March 21, 1996.

- ----------
* To be filed by amendment.

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

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

(1) (2)
Number of Record
Holders as of
Title of Class February 28, 1997
-------------- -----------------
(Par Value $.01)
U.S. 9-10 Small Company Portfolio 198
DFA One-Year Fixed Income Portfolio 193
Japanese Small Company Portfolio 87
United Kingdom Small Company Portfolio 63
DFA Five-Year Government Portfolio 52
Continental Small Company Portfolio 82
U.S. Large Company Portfolio 75
DFA Global Fixed Income Portfolio 53
DFA Intermediate Government
Fixed Income Portfolio 16
Large Cap International Portfolio 47
Pacific Rim Small Company Portfolio 70
U.S. 6-10 Small Company Portfolio 44
U.S. Large Cap Value Portfolio 127
U.S. Small Cap Value Portfolio 182
DFA Real Estate Securities Portfolio 35
RWB/DFA International High
Book-to-Market Portfolio 4

-26-

<PAGE>

Emerging Markets Portfolio 87
DFA International Small Cap Value Portfolio 58
VA Global Bond Portfolio 2
VA Large Value Portfolio 2
VA Small Value Portfolio 2
VA International Value Portfolio 2
VA International Small Portfolio 2
VA Short-Term Fixed Portfolio 2
Enhanced U.S. Large Company Portfolio 13
DFA Two-Year Corporate Fixed Income Portfolio 1
DFA Two-Year Global Fixed Income Portfolio 12
DFA Two-Year Government Portfolio 1
International Small Company Portfolio 31
Emerging Markets Small Cap Portfolio 1

ITEM 27. INDEMNIFICATION.
Section 1 of Article XI of the Registrant's By-Laws, as Approved
through 10/17/96) provides for indemnification, as set forth below.

With respect to the indemnification of the Officers and Directors of
the corporation:

(a) The Corporation shall indemnify each officer and Director made
party to a proceeding, by reason of service in such capacity, to
the fullest extent, and in the manner provided, under Section
2-418 of the Maryland General Corporation Law: (i) unless it is
proved that the person seeking indemnification did not meet the
standard of conduct set forth in subsection (b)(1) of such
section; and (ii) provided, that the Corporation shall not
indemnify any officer or Director for any liability to the
Corporation or its security holders arising from the willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such person's office.

(b) The provisions of clause (i) of paragraph (a) herein
notwithstanding, the Corporation shall indemnify each Officer and
Director against reasonable expenses incurred in connection with
the successful defense of any proceeding to which such officer or
Director is a party by reason of service in such capacity.

-27-

<PAGE>

(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.
(a) 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, CA 90401. The Advisor is engaged in the business
of providing investment advice primarily to institutional
investors.

(b) The Sub-Advisor for the VA International Small Portfolio, the
Continental Small Company Portfolio and the United Kingdom Small
Company Portfolio of the Registrant is Dimensional Fund Advisors
Ltd. ("DFAL"). DFAL was organized under the laws of England in
1990; its principal place of business of DFAL is 14 Berkeley
Street, London W1X 5AD, England.

(c) The Sub-Advisor for the VA International Small Portfolio, the
Japanese Small Company Portfolio, and the Pacific Rim Small
Company Portfolio of the Registrant is DFA Australia Ltd. ("DFA
Australia"). DFA Australia was organized under the laws of
Delaware in 1993; its principal place of business is Suite 4403
Gateway, 1 MacQuarie Place, Sydney, New South Wales 2000,
Australia.

-28-

<PAGE>

(d) Information as to any other business, vocation or employment of a
substantial nature in which each director or officer of the
Registrant, DFAL or DFA Australia has been engaged for his own
account or in the capacity of director, officer, employee,
partner or trustee is as follows:

(1) David G. Booth.
Chairman, Chief Executive Officer and Director of the
following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

(2) Rex A. Sinquefield.
Chairman, Chief Investment Officer and Director of the
following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

(3) Eugene Francis Fama.
Vice-President of the following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

(4) John Andrew McQuown.
Director of the following:
Advisor.

Other: Mr. McQuown has been self-employed since 1974 as an
entrepreneur, financier and consultant to major financial
institutions. He is also a Director of the following:

Mortgage Information Corporation.
KMV Corporation
Microsource, Inc.

(5) Lloyd Stockel.
Director of the Advisor.

Other: Mr. Stockel is a private investor and a retired
general partner of Goldman Sachs & Co.

(6) Arthur Barlow.
Vice-President of the following:

-29-

<PAGE>

Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

(7) Truman Clark.
Vice-President of the following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

Other: Mr. Clark was a Consultant until October 1995;
formerly thereto, he was a Principal and Manager of Product
Development, Wells Fargo Nikko Investment Advisors, San
Francisco, CA (1990-1994).

(8) Maureen Connors.
Vice-President of the following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

(9) Robert Deere.
Vice-President of the following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

(10) Irene R. Diamant.
Vice-President and Secretary of the following:
Registrant, DFA Securities Inc., DFAL, DFA Australia,
Dimensional Investment Group Inc., Dimensional Emerging
Markets Inc. and DFA Investment Trust Company.

(11) Eugene Fama, Jr.
Vice-President of the following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

(12) David Plecha.
Vice-President of the following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc.

-30-

<PAGE>

and DFA Investment Trust Company.

(13) George Sands.
Vice-President of the following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

Other: Mr. Sands was a Managing Director of Asset Strategy
Consulting in Los Angeles, CA from March, 1991 to August,
1992; formerly thereto, he was a Vice President of Wilshire
Associates in Santa Monica, CA (1985 to February, 1991).

(14) Michael T. Scardina.
Vice President, Chief Financial Officer, Controller and
Treasurer of the following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

(15) Weston Wellington.
Vice President of the following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

(16) Jeanne C. Sinquefield.
Executive Vice President of the following:
Registrant, Advisor, DFA Securities Inc., DFAL, DFA
Australia, Dimensional Investment Group Inc., Dimensional
Emerging Markets Inc. and DFA Investment Trust Company.

(16) Daniel Wheeler.
Marketing Officer of the Advisor.

(17) David Schneider.
Marketing Officer of the Advisor.

(18) Lawrence Spieth.
Marketing Officer of the Advisor.

ITEM 29. PRINCIPAL UNDERWRITERS.
(a) NAMES OF INVESTMENT COMPANIES FOR WHICH THE REGISTRANT'S
PRINCIPAL UNDERWRITER ALSO ACTS AS PRINCIPAL UNDERWRITER.
Not Applicable.

-31-

<PAGE>

Registrant distributes its own shares. It has entered into an
agreement with DFA Securities Inc. dated March 31, 1989 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 was previously filed as
Exhibit No. 6 to Registrant's Registration Statement on Form N-1A
and is subject to the requirements of Section 15(b) of the
Investment Company Act of 1940.

COMMISSIONS AND OTHER COMPENSATION RECEIVED BY EACH PRINCIPAL
UNDERWRITER WHO IS NOT AN AFFILIATED PERSON OF THE REGISTRANT.
Not applicable.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts and records are maintained by PFPC Inc., 400 Bellevue
Parkway, Wilmington, DE 19809.

ITEM 31. MANAGEMENT SERVICES.
None.

ITEM 32. UNDERTAKINGS.
Not applicable.

(1) Registrant undertakes to file a post-effective amendment, using
financial statements of the DFA Two-Year Corporate Fixed Income
Portfolio and the DFA Two-Year Government Portfolio, which need
not be certified, within four to six months from the effective
date of the Registration Statement which includes the DFA Two-
Year Corporate Fixed Income Portfolio and DFA Two-Year Government
Portfolio.

(2) Registrant undertakes to file a post-effective amendment, using
financial statements of the Emerging Markets Small Cap Portfolio,
which need not be certified, within four to six months from the
effective date of the Registration Statement which includes the
Emerging Markets Small Cap Portfolio.

(3) 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.

-32-

<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 of the
requirements for effectiveness of this Amendment No. 45/46 to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment No. 45/46 to the Registration Statement to be singed on
its behalf by the undersigned, thereunto duly authorized, in the City of Santa
Monica and State of California on the 28th day of March, 1997.

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. 45/46 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 March 28, 1997
- ------------------------- Executive Officer
David G. Booth

Director and
Rex A. Sinquefield* Chairman-Chief March 28, 1997
- ------------------------- Investment Officer
Rex A. Sinquefield

Chief Financial
Michael T. Scardina Officer, Treasurer March 28, 1997
- ------------------------- and Vice President
Michael T. Scardina

George M. Constantinides* Director March 28, 1997
- -------------------------
George M. Constantinides

John P. Gould* Director March 28, 1997
- -------------------------
John P. Gould

Roger G. Ibbotson* Director March 28, 1997
- -------------------------
Roger G. Ibbotson

Merton H. Miller* Director March 28, 1997
- -------------------------
Merton H. Miller

Myron S. Scholes* Director March 28, 1997
- -------------------------
Myron S. Scholes

* By: Michael T. Scardina
-------------------
Michael T. Scardina, attorney-in-fact pursuant to power-of-attorney.

<PAGE>

SIGNATURES

The DFA Investment Trust Company consents to the filing of this Amendment to the
Registration Statement of DFA Investment Dimensions Group Inc. which is signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Santa Monica and State of California on the 28th day of March, 1997.

THE DFA INVESTMENT TRUST COMPANY

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

The undersigned Trustees and principal officers of The DFA Investment Trust
Company consent to the filing of this Amendment to the Registration Statement of
DFA Investment Dimensions Group Inc. on the dates indicated.

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

Trustee and
David G. Booth* Chairman-Chief March 28, 1997
- ------------------------- Executive Officer
David G. Booth

Trustee and
Rex A. Sinquefield* Chairman-Chief March 28, 1997
- ------------------------- Investment Officer
Rex A. Sinquefield

Chief Financial
Michael T. Scardina Officer, Treasurer March 28, 1997
- ------------------------- and Vice President
Michael T. Scardina

George M. Constantinides* Trustee March 28, 1997
- -------------------------
George M. Constantinides

John P. Gould* Trustee March 28, 1997
- -------------------------
John P. Gould

Roger G. Ibbotson* Trustee March 28, 1997
- -------------------------
Roger G. Ibbotson

Merton H. Miller* Trustee March 28, 1997
- -------------------------
Merton H. Miller

Myron S. Scholes* Trustee March 28, 1997
- -------------------------
Myron S. Scholes

* By: Michael T. Scardina
-------------------
Michael T. Scardina, attorney-in-fact pursuant to power-of-attorney.

<PAGE>

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION
- ----------- -----------

99(b)(9)(c) Administration Agreement relating to the:
(19) International Small Cap Value Portfolio.
(20) VA Global Bond Portfolio.
(21) VA Large Value Portfolio.
(22) VA Small Value Portfolio.
(23) VA International Value Portfolio.
(24) VA International Small Portfolio.
(25) VA Short-Term Fixed Portfolio.

99(b)(11) Consent of Coopers & Lybrand, L.L.P.

99(b)(16) Performance calculations on behalf of the International
Small Company Portfolio.

99(b)(17) Financial Data Schedule dated November 30, 1996 relating to
the:
(a) U.S. 9-10 Small Company Portfolio.
(b) DFA One-Year Fixed Income Portfolio.
(c) Japanese Small Company Portfolio.
(d) United Kingdom Small Company Portfolio.
(e) DFA Five-Year Government Portfolio.
(f) Continental Small Company Portfolio.
(g) U.S. Large Company Portfolio.
(h) DFA Global Fixed Income Portfolio.
(i) DFA Intermediate Government Fixed Income Portfolio.
(j) Large Cap International Portfolio.
(k) Pacific Rim Small Company Portfolio.
(l) U.S. 6-10 Small Company Portfolio.
(m) U.S. Large Cap Value Portfolio.
(n) U.S. Small Cap Value Portfolio.
(o) DFA Real Estate Securities Portfolio.
(p) RWB/DFA International High Book-to-Market Portfolio.
(q) Emerging Markets Portfolio.
(r) DFA International Small Cap Value Portfolio.
(s) VA Global Bond Portfolio.
(t) VA Large Value Portfolio.
(u) VA Small Value Portfolio.
(v) VA International Value Portfolio.
(w) VA International Small Portfolio.
(x) VA Short-Term Fixed Portfolio.
(y) Enhanced U.S. Large Company Portfolio.
(z) DFA Two-Year Corporate Fixed Income Portfolio.
(aa) DFA Two-Year Global Fixed Income Portfolio.
(bb) DFA Two-Year Government Portfolio.
(cc) International Small Company Portfolio.
(dd) Emerging Markets Small Cap Portfolio.

<PAGE>

Exhibit 99 (b)(11)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this Post-Effective Amendment
No. 45 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 17, 1997 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, 1996 and for the respective periods then ended, which
reports are included in the Annual Report to Shareholders.

We also consent to the reference to our Firm under the captions "Other
Information" and "Financial Statements" in the Statements of Additional
Information.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 28, 1997

<PAGE>

Exhibit 99 (b) (16)

SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

STANDARDIZED COMPUTATIONS OF TOTAL RETURN

A. INTERNATIONAL SMALL COMPANY PORTFOLIO:
n
TOTAL RETURN: P (1 + T) = ERV

Date of Initial Investment through November 30, 1996

P = $1,000

T = -6.24%

n = .167 years

ERV = 989.32

<PAGE>
<ARTICLE> 6
<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
<SERIES>
<NUMBER> 01
<NAME> U.S. 9-10 SMALL COMPANY PORTFOLIO

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
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<INVESTMENTS-AT-VALUE> 1191350684
<RECEIVABLES> 2390106
<ASSETS-OTHER> 43907
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1193784697
<PAYABLE-FOR-SECURITIES> 11302641
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<OTHER-ITEMS-LIABILITIES> 678292
<TOTAL-LIABILITIES> 11980933
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<PAID-IN-CAPITAL-COMMON> 784801590
<SHARES-COMMON-STOCK> 97378438
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<ACCUM-APPREC-OR-DEPREC> 259255480
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<DIVIDEND-INCOME> 7253717
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<OTHER-INCOME> 392926
<EXPENSES-NET> 6694783
<NET-INVESTMENT-INCOME> 2408454
<REALIZED-GAINS-CURRENT> 112061722
<APPREC-INCREASE-CURRENT> 61134065
<NET-CHANGE-FROM-OPS> 175604241
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 504847
<DISTRIBUTIONS-OF-GAINS> 63526600
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21310206
<NUMBER-OF-SHARES-REDEEMED> 13545975
<SHARES-REINVESTED> 5684625
<NET-CHANGE-IN-ASSETS> 256329426
<ACCUMULATED-NII-PRIOR> (375480)
<ACCUMULATED-GAINS-PRIOR> 87683445
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5510672
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6694783
<AVERAGE-NET-ASSETS> 1102134649
<PER-SHARE-NAV-BEGIN> 11.03
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 1.85
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> .76
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.14
<EXPENSE-RATIO> .61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
<SERIES>
<NUMBER> 02
<NAME> THE DFA ONE YEAR FIXED INCOME PORTFOLIO

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 845719665
<INVESTMENTS-AT-VALUE> 854572687
<RECEIVABLES> 616335
<ASSETS-OTHER> 31063
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 855220085
<PAYABLE-FOR-SECURITIES> 238689
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 460840
<TOTAL-LIABILITIES> 699529
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 849258988
<SHARES-COMMON-STOCK> 83412070
<SHARES-COMMON-PRIOR> 69056810
<ACCUMULATED-NII-CURRENT> 27304
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3618758)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8853022
<NET-ASSETS> 854520556
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 42386390
<OTHER-INCOME> 0
<EXPENSES-NET> 859987
<NET-INVESTMENT-INCOME> 41526403
<REALIZED-GAINS-CURRENT> (278463)
<APPREC-INCREASE-CURRENT> 4048829
<NET-CHANGE-FROM-OPS> 45296769
<EQUALIZATION> 0
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<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NAME> THE JAPANESE SMALL COMPANY PORTFOLIO

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<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<PAGE>
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<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NAME> DFA FIVE YEAR GOVERNMENT PORTFOLIO

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<PAGE>
<ARTICLE> 6
<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NAME> THE CONTINENTAL SMALL COMPANY PORTFOLIO

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<PAGE>
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<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NUMBER> 09
<NAME> THE U.S. LARGE COMPANY PORTFOLIO

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<PAGE>
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<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NAME> THE DFA INTERMEDIATE GOVERNMENT FIXED INCOME PORTFOLIO

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<PAGE>
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<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NUMBER> 11
<NAME> DFA GLOBAL FIXED INCOME PORTFOLIO

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<PAGE>
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<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NUMBER> 12
<NAME> THE PACIFIC RIM SMALL COMPANY PORTFOLIO

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<PAGE>
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<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NUMBER> 13
<NAME> THE LAREG CAP INTERNATIONAL PORTFOLIO

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<PAGE>
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<NAME> VA SHORT-TERM FIXED PORTFOLIO

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<PAGE>
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<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<PAGE>
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<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<PAGE>
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<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NAME> ENHANCED U.S. LARGE COMPANY PORTFOLIO

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<PAGE>
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<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
<SERIES>
<NUMBER> 28
<NAME> DFA TWO-YEAR GLOBAL FIXED INCOME PORTFOLIO

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<PAGE>
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<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NUMBER> 29
<NAME> DFA TWO-YEAR CORPORATE FIXED INCOME PORTFOLIO

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<PAGE>
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<CIK> 0000355437
<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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<NAME> DFA TWO-YEAR GOVERNMENT PORTFOLIO

</TABLE>

<PAGE>
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<NAME> DFA INVESTMENT DIMENSIONS GROUP, INC.
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