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File No. 811-7436
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (x)
Amendment No. 5 (x)
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THE DFA INVESTMENT TRUST COMPANY
(Exact Name of Registrant as Specified in Charter)
1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401
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(Address of Principal Executive Offices (Zip Code)
Registrant's Telephone Number, Including Area Code (310) 395-8005
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Irene R. Diamant, 1299 Ocean Avenue, 11th Floor, Santa Monica CA 90401
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(Name and Address of Agent for Service of Process)
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Please Send Copy of Communications to:
Stephen W. Kline, Esq.
Stradley, Ronon, Stevens & Young
Great Valley Corporate Center
30 Valley Stream Parkway
Malvern, Pennsylvania 19355
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THE DFA INVESTMENT TRUST COMPANY
The U.S. 6-10 Small Company Series
The U.S. Large Company Series
The DFA One-Year Fixed Income Series
The U.S. Small Cap Value Series
The U.S. Large Cap Value Series
The DFA International Value Series
The Emerging Markets Series
FORM N-1A, Part A:
Responses to Items 1 through 3 have been omitted pursuant to paragraph 4
of Instruction F of the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT
(a)(i) The DFA Investment Trust Company (the "Trust") is an open-end
management investment company organized as a Delaware business trust on October
27, 1992 and registered under the Investment Company Act of 1940. The Trust
issues seven series, each of which operates as a diversified investment company
and represents a separate class ("Series") of the Trust's shares of beneficial
interest: The U.S. 6-10 Small Company Series, The U.S. Large Company Series,
The DFA One-Year Fixed Income Series, The U.S. Small Cap Value Series, The U.S.
Large Cap Value Series, The DFA International Value Series and The Emerging
Markets Series. Dimensional Fund Advisors Inc. (the "Advisor") serves as
investment advisor to each of the Series.
The investment objectives, policies and investment limitations of each Series
are set forth below. The investment objective of a Series may not be changed
without the affirmative vote of a majority of the outstanding voting securities
of that Series. The Trust sells its shares to institutional investors only.
Shares of each Series may be issued for cash and/or securities in which a Series
is authorized to invest. In addition, when acquiring securities from an
institutional investor in consideration of the issuance of its shares, a Series
may accept securities from the transferor which it would not otherwise purchase
pursuant to its investment policies, as described below. Any such acquisition
would be very small in relation to the then total current value of the assets
acquired by a Series in any such transaction.
(a)(ii)
THE U.S. 6-10 SMALL COMPANY SERIES
The investment objective of The U.S. 6-10 Small Company Series is to achieve
long-term capital appreciation.
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The Series will invest in a broad and diverse group of small U.S. companies
having readily marketable securities. References in this registration statement
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 Series will purchase common
stocks of companies whose shares are listed on the NYSE, the American Stock
Exchange ("AMEX") and traded in the over-the-counter market ("OTC"). It is the
intention of The U.S. 6-10 Small Company Series to acquire a portion of the
common stock of each eligible NYSE, AMEX and OTC company on a market
capitalization weighted basis. In the future, The U.S. 6-10 Small Company
Series may purchase common stocks of small U.S. companies which are listed on
other U.S. securities exchanges. In addition, the Series is authorized to
invest in private placements of interest-bearing debentures that are convertible
into common stock. 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' assets at the time of purchase.
SERIES STRUCTURE. The 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 Series a reasonable reflection of the relative market
capitalizations of its portfolio companies. 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
U.S. Even though a company's stock may meet the applicable market
capitalization criterion, it may not be included in the Series 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 for
the Series inappropriate.
Deviation from strict market capitalization weighting will also occur in the
Series because it intends to purchase round lots only. In order to retain
sufficient liquidity, the relative amount of any security held by the 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 the Series' assets may be invested in interest-bearing
obligations, such as money-market
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instruments for this purpose, 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 may acquire eligible
securities in exchange for the issuance of its 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 the Series.
If securities must be sold in order to obtain funds to make redemption payments,
they may be repurchased by the Series as additional cash becomes available to
it. 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.
Changes in the composition and relative ranking (in terms of market
capitalization) of the stocks which are eligible for purchase by the Series 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 in which the Series may invest. Common stocks whose
market capitalizations are not greater than such company will be purchased for
the Series. Additional investments will generally 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 the Series'
holdings increase in value sufficiently to be excluded from the limit for
eligible securities, but not by a sufficient amount to warrant their sale. A
further deviation from market capitalization weighting may occur if the Series
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 inclusion in the Series involves
greater risk than including a large number of them. The Series intends to
invest at least 80% of its assets in equity securities of U.S. small companies
as described above.
Generally, the Series does not seek current income as an investment objective
and investments will not be based upon an issuer's dividend payment policy or
record. However, many of the
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companies whose securities will be included in the Series do pay dividends. It
is anticipated, therefore, that the Series will receive dividend income. Also,
the Series may lend securities to qualified brokers, dealers, banks and other
financial institutions for the purpose of realizing additional income. (See
"Securities Loans" under Item 4(a)(ii).)
PORTFOLIO TRANSACTIONS. On a periodic basis, the Advisor will review the
Series' holdings and determine which, at the time of such review, are no longer
considered small U.S. companies. As of the date of this registration statement,
the Advisor has established the following standard: securities held by the
Series which have appreciated in value will be considered for sale when the
market capitalization of the issuer has increased sufficiently to rank it in the
largest 45% (deciles 4.5 through 1) based on market capitalization of securities
listed on the NYSE.
The Advisor may, from time to time, revise such standard 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 by the 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, 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.
THE U.S. LARGE COMPANY SERIES
The U.S. Large Company Series seeks, as its investment objective, to approximate
the investment performance of the Standard & Poor's 500 Composite Stock Index
(the "S&P 500 Index"), both in terms of the price of the Series' shares and its
total investment return. The 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 Series,
therefore, will be based on its respective market capitalization. The S&P 500
Index is comprised of a broad and diverse group of stocks most of which are
traded on the NYSE. Generally, these are the U.S. stocks with the largest
market capitalizations and, as a group, they represent
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approximately 70% of the total market capitalization of all publicly traded U.S.
stocks. Under normal market conditions, at least 95% of the Series' assets will
be invested in the stocks that comprise the S&P 500 Index.
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 Series' shares. The Series may lend
securities to qualified brokers, dealers, banks and other financial institutions
for the purpose of earning additional income.
The Series is not sponsored, endorsed, sold or promoted by Standard & Poor's
Corporation ("S&P"). S&P makes no representation or warranty, express or
implied, to the owners of the Series or any member of the public regarding the
advisability of investing in securities generally or in the Series particularly
or the ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to the 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 Series. S&P has no obligation to take
the needs of the Series or the owners of the Series into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not responsible
for and has not participated in the determination of the timing of, prices at,
or quantities of the Series to be issued or in the determination or calculation
of the equation by which the Portfolio is to be converted into cash. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Series.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX
OR ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR ANY OTHER PERSON
OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN IN
CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY OTHER USE. S&P MAKES
NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO
THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES.
THE DFA ONE-YEAR FIXED INCOME SERIES
The investment objective of The DFA One-Year Fixed Income Series is to achieve
a stable real value (i.e. a return in excess of the
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rate of inflation) of invested capital with a minimum of risk. The Series will
pursue its objective by investing the assets of the Series 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" in Item 4(a)(ii).)
The following is a description of the categories of securities and obligations
which may be acquired by the Series.
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
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certificates of deposit) and bankers' acceptances. Bank certificates of deposit
will only be acquired if the bank has assets in excess of $1,000,000,000.
5. COMMERCIAL PAPER - Rated, at the time of purchase, A-1 or better
by S&P or Prime-1 by Moody's, or, if not rated, issued by a corporation having
an outstanding unsecured debt issue rated Aaa by Moody's or AAA by S&P, and
having a maximum maturity of nine months.
6. REPURCHASE AGREEMENTS - Instruments through which the Series
purchases 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 Series 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 Series' total assets would be so invested. The Series 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. 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.
INVESTMENTS IN THE BANKING INDUSTRY. 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 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 which can only be changed by a vote of
shareholders, 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 Series, the Series will be considered
to be concentrating its investments in the banking industry.
The types of bank and bank holding company obligations in which the Series may
invest include: dollar-denominated certificates of deposit, bankers'
acceptances, commercial paper and other debt obligations issued in the United
States and which mature within two years of the date of settlement, provided
such obligations meet the Series' established credit rating criteria as stated
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above. In addition, the Series is authorized to invest more than 25% of its
total assets in Treasury bonds, bills and notes and obligations of federal
agencies and instrumentalities.
PORTFOLIO STRATEGY. The Series will be managed with a view to capturing
credit risk premiums and term or maturity premiums. As used herein, the term
"credit risk premium" means the anticipated incremental return on investment for
holding obligations considered to have greater credit risk than direct
obligations of the U.S. Treasury, and "maturity risk premium" means the
anticipated incremental return for holding securities having maturities of
longer than one month compared to securities having a maturity of one month.
The Advisor believes that credit risk premiums are available largely through
investment in high grade commercial paper, certificates of deposit and corporate
obligations. The holding period for assets of the Series will be chosen with a
view to maximizing anticipated monthly returns, net of trading costs.
While the Series acquires securities in principal transactions and, therefore,
does not pay brokerage commissions, the spread between the bid and asked prices
of a security may be considered to be a "cost" of trading. Such costs
ordinarily increase with trading activity. However, as stated above, securities
ordinarily will be sold when, in the Advisor's judgment, the monthly return of
the Series will be increased as a result of portfolio transactions after taking
into account the cost of trading. It is anticipated that securities will be
acquired in the secondary markets for short term instruments. However, as the
size of the Series increases, it is possible that Series transactions also may
be effected directly with the issuers of securities acquired for the Series.
THE U.S. LARGE CAP VALUE SERIES AND THE U.S. SMALL CAP VALUE SERIES
The investment objective of both The U.S. Large Cap Value Series (the "Large Cap
Value Series") and The U.S. Small Cap Value Series (the "Small Cap Value
Series") (collectively the "U.S. Value Series") is to achieve long-term capital
appreciation. The Series will invest in common stocks of U.S. companies with
shares that have a high book value in relation to their market value (a "book to
market ratio"). A company's shares will be considered to have a high book to
market ratio if the ratio equals or exceeds the ratios of any of the 30% of
companies with the highest positive book to market ratios whose shares are
listed on the NYSE and, except as described below under "Portfolio Structure",
will be considered eligible for investment. The 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
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purchase common stocks of companies whose market capitalizations are smaller
than such company.
PORTFOLIO STRUCTURE. Each Series will operate as a "diversified" investment
company. Further, neither Series will invest more than 25% of its total assets
in securities of companies in a single industry. Ordinarily, at least 80% of
each Series' assets will be invested in a broad and diverse group of readily
marketable common stocks of U.S. companies with high book to market ratios, as
described above. The Series may invest a portion of their assets, ordinarily
not more than 20%, in high quality, highly liquid fixed income securities such
as money market instruments, including short-term repurchase agreements. The
Series will purchase securities that are listed on the principal U.S. national
securities exchanges and traded OTC.
Each of the U.S. 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 may acquire eligible securities in exchange for the issuance of their
shares. (See "In Kind Purchases" in Item 7(a).) While such purchases and
acquisitions might cause a temporary deviation from market capitalization
weighting, they would ordinarily be made in anticipation of further growth of
the assets of a Series. On not less than a semi-annual basis, for each Series
the Advisor will calculate the book to market ratio necessary to determine those
companies whose stocks are eligible for investment.
PORTFOLIO TRANSACTIONS. The Series do not intend to purchase or sell
securities based on the prospects for the economy, the
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securities markets or the individual issuers whose shares are eligible for
purchase. As described above 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. The 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 the Small Cap Value Series may sell portfolio
securities when the issuer's market capitalization increases to a level that
substantially exceeds that of the issuer with the largest market capitalization
which is then eligible for investment by the Series. However, securities may be
sold at any time when, in the Advisor's judgment, circumstances warrant their
sale.
In addition, the 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. The 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.
THE DFA INTERNATIONAL VALUE SERIES
The investment objective of The DFA International Value Series is to achieve
long-term capital appreciation. The Series operates as a diversified investment
company and seeks to achieve its objective by investing in the stocks of large
non-U.S. companies that have a high book to market ratio. The shares of a
company in any given country will be considered to have a high book to market
ratio if the ratio equals or exceeds the ratios of any of the 30% of companies
in that country with the highest positive book to market ratios whose shares are
listed on a major exchange, and, except as described below, will be considered
eligible for investment. The Series intends to invest in the stocks of large
companies in countries with developed markets. Initially, the Series will
invest in the stocks of large companies in Japan, the United Kingdom, Germany,
France, Switzerland, Italy, Belgium, Spain, the Netherlands, Hong Kong,
Singapore, Australia and Sweden. As the Series' asset growth permits, it may
invest in the stocks of large companies in other developed markets.
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Under normal market conditions, at least 65% of the 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 Series reserves the right to invest in index
futures contracts to commit funds awaiting investment or to maintain liquidity.
The Series will not purchase futures contracts if as a result more than 5% of
its total assets would then consist of initial and variation margin deposits on
such contracts. Such investments entail certain risks. (See Item 4(c).)
The Series intends to invest in companies having at least $500 million of market
capitalization and the Series will be approximately market capitalization
weighted. In determining market capitalization weights, the Advisor, using its
best judgment, will seek to eliminate the effect of cross holdings on the
individual country weights. As a result, the weighting of certain countries in
the 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 Series inappropriate.
Deviation from market capitalization weighting will occur because the Series
intends to purchase round lots only. In order to retain sufficient liquidity,
the relative amount of any security held by the 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
Series' assets may be invested in interest-bearing obligations, such as
money-market instruments, thereby causing further deviation from market
capitalization weighting. Such investments would be made on a temporary basis
pending investment in equity securities pursuant to the Series' investment
objective.
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, adherence to the policy of market capitalization weighting would
otherwise require. In addition, the Series may acquire eligible securities in
exchange for the issuance of its shares. (See "In Kind Purchases" in Item
7(a).) 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 Series.
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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 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 a list 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 such minimum will be purchased by the
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 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 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 Series.
The Series does not seek current income as an investment objective and
investments will not be based upon an issuer's dividend payment policy or
record. However, many of the companies whose securities will be included in the
Series do pay dividends. It is anticipated, therefore, that the Series will
receive dividend income. The Series may lend securities to qualified brokers,
dealers, banks and other financial institutions for the purpose of realizing
additional income. (See "Securities Loans" below.)
Securities which have depreciated in value since their acquisition will not be
sold by the 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
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appropriate holding in light of the policy of maintaining a portfolio of
companies with large market capitalizations and high book to market ratios. The
annual portfolio turnover rate of the Series is not expected to exceed 20%.
In addition to the policies discussed in response to this Item 4(a), investment
limitations have been adopted by each Series and are noted in response to Item
13(b) of Part B.
THE EMERGING MARKETS SERIES
The investment objective of The Emerging Markets Series is to achieve long-term
capital appreciation. The Series operates as a diversified investment company
and seeks to achieve its investment objective by investing in emerging markets
designated by the Board of Trustees in consultation with the Advisor ("Approved
Markets"). The 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 ("IDR's") or American Depository
Receipts ("ADR's").
Under normal market conditions, the Series will invest at least 65% of its
assets in Approved Market securities. Approved Market securities include (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
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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, in its
opinion is generally considered to be an emerging market by the international
financial community, including the International Finance Corporation. Approved
emerging markets may not include all such emerging markets. In determining
whether to approve markets for investment, the Board of Trustees will take into
account, among other things, market liquidity, investor information, government
regulation, including fiscal and foreign exchange repatriation rules and the
availability of other access to these markets by the investors of the Series.
The following countries are currently designated as Approved Markets:
Argentina, Brazil, Indonesia, Malaysia, Mexico, Portugal, Thailand, Turkey and
Israel. Countries that may be approved in the future include but are not
limited to Republic of China (Taiwan), which is effectively closed to foreign
investors at present, and Colombia, Greece, India, Jordan, Nigeria, Pakistan,
Philippines, Venezuela and Zimbabwe.
The Series may invest up to 35% of its assets in securities of issuers that are
not Approved Markets securities, but whose issuers the Advisor believes derive a
substantial proportion, but less than 50%, of their total revenues from either
goods and services produced in, or sales made in, Approved Markets.
Pending the investment of new capital in Approved Market equity securities, the
Series will typically invest in money market instruments or other highly liquid
debt instruments denominated in U.S. dollars (including, without limitation,
repurchase agreements). In addition, the Series may, for liquidity, or for
temporary defensive purposes during periods in which market or economic or
political conditions warrant, purchase highly liquid debt instruments or hold
freely convertible currencies, although the Series does not expect the aggregate
of all such amounts to exceed 10% of its net assets under normal circumstances.
The Series also may invest in shares of other investment companies that invest
in one or more Approved Markets, although it intends to do so only where access
to those markets is otherwise significantly limited. The Series may also invest
in money-market mutual funds for temporary cash management purposes. The
Investment Company Act of 1940 limits investment by the Series in shares of
other investment companies as follows: (1) no more than 10% of the value of the
Series' total assets may be invested in shares of other investment companies;
(2) the Series may not own securities issued by an investment company having an
aggregate value in excess of 5% of the value of the total assets of the Series;
and (3) the Series may not own more than 3% of the
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total outstanding voting stock of an investment company. If the Series invests
in another investment company, the Series' shareholders will bear not only their
proportionate share of expenses of the Series (including operating expenses and
the fees of the Advisor), but also will bear indirectly similar expenses of the
underlying investment company. In some Approved Markets it will be necessary or
advisable for the Series to establish a wholly-owned subsidiary or a trust for
the purpose of investing in the local markets.
PORTFOLIO STRUCTURE. The Series will seek a broad market coverage of larger
companies within each Approved Market. The Series will attempt to own shares of
companies whose aggregate overall share of the Approved Market's total public
market capitalization is at least the upper 40% of such capitalization, and can
be as large as 75%. The Series may not invest in all such companies or achieve
approximate market weights, due to constraints imposed within Approved Markets
(E.G., restrictions on purchases by foreigners), or by the Series' policy not
to invest more than 25% of its assets in any one industry. The Series may also
further limit the market coverage in the smaller emerging markets in order to
limit purchases of small market capitalization companies.
The policy of seeking broad market diversification means that the Advisor will
not utilize "fundamental" securities research techniques in identifying
securities selections. The decision to include or exclude the shares of an
issuer will be made primarily on the basis of such issuer's relative market
capitalization determined by reference to other companies located in the same
country. Company size is measured in terms of reference to other companies
located in the same country and in terms of local currencies in order to
eliminate the effect of variations in currency exchange rates. Even though a
company's stock may meet the applicable market capitalization criterion, it may
not be included in the Series for one or more of a number of reasons. For
example, in the Advisor's judgment, the issuer may be considered in extreme
financial difficulty, a material portion of its securities may be closely held
and not likely available to support market liquidity, or the issuer may be a
"passive foreign investment company" (as defined in the Internal Revenue Code of
1986, as amended). To this extent, there will be the exercise of discretion and
consideration by the Advisor which would not be present in the management of a
portfolio seeking to represent an established index of broadly traded domestic
securities (such as the S&P 500 Index). The Advisor will also exercise
discretion in determining the allocation of capital as between Approved Markets.
It is the 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
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inclusion in the Series involves greater risk than including a large number of
them.
The Series does not seek current income as an investment objective and
investments will not be based upon an issuer's dividend payment policy or
record. However, many of the companies whose securities will be included in the
Series do pay dividends. It is anticipated, therefore, that the Series will
receive dividend income.
Generally, securities will be purchased with the expectation that they will be
held for longer than one year. However, securities may be disposed of at any
time when, in the Advisor's judgment, circumstances warrant their sale. For the
purpose of converting U.S. dollars to another currency, or vice versa, or
converting one foreign currency to another foreign currency, the Series may
enter into forward foreign exchange contracts. In addition, to hedge against
changes in the relative value of foreign currencies, the Series may purchase
foreign currency futures contracts. The Series will only enter into such a
futures contract if it is expected that the Series will be able readily to close
out such contract. There can, however, be no assurance that it will be able in
any particular case to do so, in which case the Series may suffer a loss.
SECURITIES LOANS
Each Series of the Trust may lend securities to qualified brokers, dealers,
banks and other financial institutions for the purpose of earning additional
income. While a Series may earn additional income from lending securities, such
activity is incidental to the investment objective of a Series. The value of
securities loaned may not exceed 33 1/3% of the value of a Series' total assets.
In connection with such loans, a 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 Series will be able to terminate the loan at any
time, will receive reasonable interest on the loan, as well as amounts equal to
any dividends, interest or other distributions on the loaned securities. In the
event of the bankruptcy of the borrower, the Trust could experience delay in
recovering the loaned securities. Management believes that this risk can be
controlled through careful monitoring procedures.
ITEM 4(b)
The U.S. 6-10 Small Company Series may invest in securities of foreign issuers
that are traded in the U.S. securities markets, but such investments may not
exceed 5% of the gross assets of the Series.
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The U.S. Large Company Series may invest generally not more than 5% of its net
assets in the same types of short-term fixed income obligations as may be
acquired by The DFA One-Year Fixed Income Series, in order to maintain liquidity
or to invest temporarily uncommitted cash balances. (See "The DFA One-Year
Fixed Income Series" in Item 4(a)(ii).)
The U.S. Large Company Series, the U.S. Value Series and The DFA International
Value Series may acquire index futures contracts and options thereon in order to
commit funds awaiting investment in stocks or maintain cash liquidity. However,
each Series will not purchase index futures contracts or options if as a result
more than 5% of its total assets would then consist of initial and variation
margin deposits on such contracts or options. Such investments entail certain
risks. (See "Risk Factors - All Series" in Item 4(c).)
ITEM 4(c) RISK FACTORS - ALL SERIES
Typically, securities of small companies are less liquid than securities of
large companies. Recognizing this factor, The U.S. 6-10 Small Company Series
and The U.S. Small Cap Value Series will endeavor to effect securities
transactions in a manner to avoid causing significant price fluctuations in the
market for these securities.
The DFA One-Year Fixed Income Series, The DFA International Value Series and The
Emerging Markets 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 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 DFA
One-Year Fixed Income Series also 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 Series will
achieve its investment objective.
The investments of the Emerging Markets Series involve risks in addition to the
usual risks of investing in developed foreign markets. A number of emerging
securities markets restrict, to varying degrees, foreign investment in stocks.
Repatriation of
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investment income, capital and the proceeds of sales by foreign investors may
require governmental registration and/or approval in some emerging countries.
In some jurisdictions, such restrictions and the imposition of taxes are
intended to discourage shorter- rather than longer-term holdings. While the
Emerging Markets Series will invest only in markets where these restrictions are
considered acceptable to the Advisor, new or additional repatriation
restrictions might be imposed subsequent to the Series' investment. If such
restrictions were imposed subsequent to investment in the securities of a
particular country, the Series might, among other things, discontinue the
purchasing of securities in that country. Such restrictions will be considered
in relation to the Series' liquidity needs and other factors and may make it
particularly difficult to establish the fair market value of particular
securities from time to time. The valuation of securities held by the Series is
the responsibility of the Board of Trustees, acting in good faith and with
advice from the Advisor. (See Item 7(b).) Further, some attractive equity
securities may not be available to the Series because foreign shareholders hold
the maximum amount permissible under current laws.
Relative to the U.S. and to larger non-U.S. markets, many of the emerging
securities markets in which the Emerging Markets Series may invest are
relatively small, have low trading volumes, suffer periods of illiquidity and
are characterized by significant price volatility. Such factors may be even
more pronounced in jurisdictions where securities ownership is divided into
separate classes for domestic and non-domestic owners.
In addition, many emerging markets, including most Latin American countries,
have experienced substantial, and, in some periods, extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates
have had and may continue to have very negative effects on the economies and
securities markets of certain countries. In an attempt to control inflation,
wage and price controls have been imposed at times in certain countries.
Certain emerging markets have recently transitioned, or are in the process of
transitioning, from centrally controlled economies. There can be no assurance
that such transitions will be successful.
Brokerage commissions, custodial services and other costs relating to investment
in foreign markets generally are more expensive than in the United States; this
is particularly true with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Emerging Markets Series to make intended securities purchases
due to settlement problems could cause the Series to miss investment
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opportunities. Inability to dispose of a portfolio security caused by
settlement problems could result either in losses to the Series due to
subsequent declines in value of the portfolio security or, if the Series has
entered into a contract to sell the security, could result in possible liability
to the purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Emerging Markets Series' portfolio
securities in such markets may not be readily available. The Series' portfolio
securities in the affected markets will be valued at fair value determined in
good faith by or under the direction of the Board of Trustees.
Government involvement in the private sector varies in degrees among the
emerging securities markets contemplated for investment by the Emerging Markets
Series. Such involvement may, in some cases, include government ownership of
companies in certain commercial business sectors, wage and price controls or
imposition of trade barriers and other protectionist measures. With respect to
any developing country, there is no guarantee that some future economic or
political crisis will not lead to price controls, forced mergers of companies,
expropriation, the creation of government monopolies, or other measures which
could be detrimental to the investments of the Emerging Markets Series.
Taxation of dividends and capital gains received by non-residents varies among
countries with emerging markets and, in some cases, is high in relation to
comparable U.S. rates. Particular tax structures may have the intended or
incidental effect of encouraging long holding periods for particular securities
and/or the reinvestment of earnings and sales proceeds in the same jurisdiction.
In addition, emerging market jurisdictions typically have less well-defined tax
laws and procedures than is the case in the United States, and such laws may
permit retroactive taxation so that the Emerging Markets Series could in the
future become subject to local tax liability that it had not reasonably
anticipated in conducting its investment activities or valuing its assets.
Investments of The DFA International Value Series and The Emerging Markets
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 the Series. The Series may purchase foreign currency
futures contracts and options in order to hedge against changes in the level of
foreign currency exchange rates, provided not more than 5% of the Series' assets
are then invested as initial or variation margin deposits on such contracts or
options. Such contracts involve an agreement to purchase or sell
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a specific currency at a future date at a price set in the contract and enable
the 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 Series securities transactions, but they also
tend to limit the potential gains that might result from a positive change in
such currency relationships.
Each Series, except The U.S. Large Company Series and The DFA One-Year Fixed
Income Series, 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, the Series may also purchase securities when
borrowings exceed 5% of the value of the Series' net assets. Such purchases can
be considered to be "leveraging", and in such circumstances, the net asset value
of the Series may increase or decrease at a greater rate than would be the case
if the Series had not leveraged. The interest payable on the amount borrowed
would increase the Series' expenses and if the appreciation and income produced
by the investments purchased when the Series has borrowed are less than the cost
of borrowing, the investment performance of the Series will be reduced as a
result of leveraging.
The method employed by the Advisor to manage each Series, except The U.S. Large
Company Series and The DFA One-Year Fixed Income Series, will differ from the
process employed by many other investment advisors in that the Advisor will rely
on fundamental analysis of the investment merits of securities to a limited
extent to eliminate potential portfolio acquisitions rather than rely on this
technique to select securities. Further, because securities generally will be
held long-term and will not be eliminated based on short-term price
fluctuations, the Advisor generally will not act upon general market movements
or short-term price fluctuations of securities to as great an extent as many
other investment advisors. The 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 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.
The U.S. Large Company Series, the U.S. Value Series, The DFA International
Value Series and The Emerging Markets Series may invest in index futures
contracts and index options. These investments entail the risk that an
imperfect correlation may exist between changes in the market value of the
stocks owned by the Series and the prices of such futures contracts and options
and at times the market for such contracts and options might lack
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liquidity, thereby inhibiting a Series' ability to close a position in such
investments.
Concentrating in obligations of the banking industry may involve additional risk
by foregoing the safety of investing in a variety of industries. Changes in the
market's perception of the riskiness of banks relative to non-banks could cause
more fluctuations in the net asset value of The DFA One-Year Fixed Income Series
than might occur in less concentrated portfolios.
In addition, all of the Series may invest in repurchase agreements. In the
event of the bankruptcy of the other party to a repurchase agreement, 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.
ITEM 5. MANAGEMENT OF THE TRUST
(a) The Trust has a Board of Trustees, which is responsible for establishing
Trust policies and for overseeing the management of the Trust.
(b)(i) Dimensional Fund Advisors Inc. (the "Advisor"), 1299 Ocean Avenue,
11th Floor, Santa Monica, California 90401, serves as investment advisor to each
of the Series. The Advisor was organized in May 1981 and is engaged in the
business of providing investment management services to institutional investors.
Assets under management total approximately $11 billion. David G. Booth and Rex
A. Sinquefield, directors and officers of the Advisor and trustees and officers
of the Trust, together own approximately 61% of the Advisor's outstanding stock
and may be deemed controlling persons of the Advisor.
(b)(ii) Pursuant to an investment management agreement with the Trust with
respect to each Series, the Advisor manages the investment and reinvestment of
their assets. The Advisor also provides the Trust with records concerning the
Advisor's activities which the Trust is required to maintain and renders regular
reports to the Trust's officers and the Board of Trustees. The Advisor also
provides all of the Series with a trading department and selects brokers and
dealers to effect securities transactions.
(b)(iii) For the fiscal year ended November 30, 1994, (i) the Advisor
received a fee for its services which, on an annual basis, equaled the following
percentage of the average net assets of each Series and (ii) the total expenses
of each Series were the following percentages of respective average net assets:
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<TABLE>
<CAPTION>
Series Management Fee Total Expenses
------ -------------- --------------
<S> <C> <C>
U.S. 6-10 Small Company 0.03% 0.17%
U.S. Large Company 0.025% 0.025%
U.S. Small Cap Value 0.20% 0.32%
U.S. Large Cap Value 0.10% 0.22%
DFA One-Year Fixed Income 0.05% 0.10%
</TABLE>
The investment advisory fees applicable to The DFA International Value Series
and The Emerging Markets Series, which commenced operations after November 30,
1993, are equal to .20% and .10%, respectively, of the average net assets of
each Series on an annual basis. Beginning December 1, 1993, the Advisor agreed
to waive its fee under the Investment Management Agreement with respect to The
DFA International Value Series to the extent necessary to keep the cumulative
annual expenses of the Series to not more than .45% of average net assets of the
Series on an annualized basis. The Advisor may eliminate this waiver at any
time in its discretion.
Pursuant to the terms of the investment management agreement relating to The
U.S. Large Company Series, for the fiscal years ended November 30, 1994 and
1995, the Advisor agreed to bear all of the ordinary operating expenses of the
Series, except the investment advisory fee; such expenses were not subject to
reimbursement. Effective December 1, 1995, pursuant to the terms of the current
investment management agreement between the Trust on behalf of The U.S. Large
Company Series and the Advisor, the Series is obligated to bear all of its
operating expenses, including its investment management fee.
(c) Investment decisions for all Series 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.
(d) AND (e) PFPC Inc. ("PFPC"), 400 Bellevue Parkway , Wilmington,
Delaware 19809, serves as the administrative services, dividend disbursing and
transfer agent for all Trust Series. The services provided by PFPC are subject
to supervision by the executive officers and the Board of Trustees of the Trust,
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
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and dividend disbursing agency services. For its services, each Series pays
PFPC annual fees which are set forth in the following table:
U.S. 6-10 SMALL COMPANY SERIES
U.S. SMALL CAP VALUE SERIES
U.S. LARGE CAP VALUE SERIES
CHARGES FOR EACH SERIES:
.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 net assets over $850 million
Except for a minimum fee of $58,800 per year that PFPC charges to each of the
Large Cap Value and Small Cap Value Series, PFPC has agreed that it may from
time to time limit the fee rates for these Series.
DFA INTERNATIONAL VALUE SERIES
EMERGING MARKETS SERIES
CHARGES FOR EACH SERIES:
.123% 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
Each Series is subject to a minimum fee of $75,000 per year.
DFA ONE-YEAR FIXED INCOME SERIES
.0513% of the first $100 million of net assets
.0308% of net assets
.0205% of net assets over $200 million
U.S. LARGE COMPANY SERIES
.05% of the first $250 million of net assets
.03% of the next $250 million of net assets
.02% of the next $250 million of net assets
.01% of the next $250 million of net assets
.005% of the next $1 billion of net assets
.001% of net assets over $2 billion
The Series is subject to a minimum fee of $75,000 per year.
(f) The Trust 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 trustees, the cost of filing its registration statement under
federal securities law, reports to shareholders, and transfer and dividend
disbursing agency, administrative services and custodian fees.
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Expenses allocable to a particular Series are so allocated and expenses which
are not allocable to a particular Series are borne by each Series on the
basis of the fees of the Trust's administrative agent.
(g) The Advisor places portfolio securities transactions with a view to
obtaining best price and execution. Subject to that goal, transactions may
be placed with securities firms that are affiliated with an affiliate of the
Advisor.
Response to Item 5A has been omitted pursuant to paragraph 4 of Instruction F of
the General Instructions to Form N-1A.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES
(a) All seven Series issue shares of beneficial interest with a par value of
$.01 per share without a sales load. The shares of each Series, when issued and
paid for in accordance with this registration statement, will be fully paid and
nonassessable shares, with equal, non-cumulative voting rights, except as
described below, and no preferences as to conversion, exchange, dividends,
redemptions or any other feature. Shareholders shall have the right to vote
only (i) for removal of Trustees, (ii) with respect to such additional matters
relating to the Trust as may be required by the applicable provisions of the
1940 Act, including Section 16(a) thereof, and (iii) on such other matters as
the Trustees may consider necessary or desirable. In addition, the shareholders
of each Series will be asked to vote on any proposal to change a fundamental
investment policy (i.e. a policy that may be changed only with the approval of
shareholders) of that Series. If a majority shareholder of The Emerging Markets
Series redeems its entire interest in the Series, a majority in interest of the
remaining shareholders in the Series must vote to approve the continuing
existence of the Series or the Series will be liquidated. All shares of the
Trust entitled to vote on a matter shall vote without differentiation between
the separate Series on a one-vote-per-share basis; provided however, if a matter
to be voted on affects only the interests of not all Series, then only the
shareholders of such affected Series shall be entitled to vote on the matter.
If liquidation of the Trust should occur, shareholders would be entitled to
receive on a per class basis the assets of the particular Series whose shares
they own, as well as a proportionate share of Trust assets not attributable to
any particular class. Ordinarily, the Trust does not intend to hold annual
meetings of shareholders, except as required by the Investment Company Act of
1940 or other applicable law. The Trust's by-laws provide that meetings of
shareholders shall be called for the purpose of voting upon the question of
removal of
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one or more Trustees upon the written request of the holders of not less than
10% of the outstanding shares.
(b) As of October 31, 1995, the following persons beneficially owned more than
25% of the voting securities of the following Series:
<TABLE>
<S> <C>
THE U.S. 6-10 SMALL COMPANY SERIES
DFA Investment Dimensions Group Inc. -
The U.S. 6-10 Small Company Portfolio 81.94%
THE U.S. LARGE COMPANY SERIES
DFA Investment Dimensions Group Inc. -
The U.S. Large Company Portfolio 100.00%
THE DFA ONE-YEAR FIXED INCOME SERIES
DFA Investment Dimensions Group Inc. -
The DFA One-Year Fixed Income Portfolio 99.93%
THE U.S. SMALL CAP VALUE SERIES
DFA Investment Dimensions Group Inc. -
The U.S. Small Cap Value Portfolio 97.49%
THE U.S. LARGE CAP VALUE SERIES
DFA Investment Dimensions Group Inc. -
The U.S. Large Cap Value Portfolio 66.82%
Dimensional Investment Group Inc. -
U.S. Large Cap Value Portfolio III 31.77%
THE DFA INTERNATIONAL VALUE SERIES
Dimensional Investment Group Inc. -
DFA International Value Portfolio 40.51%
DFA Investment Dimensions Group Inc. -
DFA International High Book to Market Portfolio 28.33%
</TABLE>
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<TABLE>
<S> <C>
THE EMERGING MARKETS SERIES
DFA Investment Dimensions Group Inc. -
Emerging Markets Portfolio 99.98%
</TABLE>
Each of those Portfolios of DFA Investment Dimensions Group Inc. ("DFA
IDG") and Dimensional Investment Group Inc. ("DIG") are deemed to control the
corresponding Series, as "control" is defined in the Investment Company Act of
1940. DFA IDG and DIG are both Maryland corporations and are located at the
same address as the Trust.
(c) Not applicable.
(d) Not applicable.
(e) Shareholder inquiries may be made by writing or calling the Trust at 1299
Ocean Avenue, 11th Floor, Santa Monica, California 90401 or (310) 395-8005.
(f) The Trust's policy is to distribute substantially all net investment
income from each Series, except The U.S. Large Company Series and The DFA
One-Year Fixed Income Series, together with any net realized capital gains in
November and December of each year. Dividends from investment income of The
U.S. Large Company Series are distributed quarterly and any net capital gains
are distributed annually after November 30. Net investment income, which is
accrued daily, will be distributed monthly (except January) by The DFA One-Year
Fixed Income Series and any net realized capital gains of will be distributed
annually after the end of the fiscal year. Shareholders of the Trust will
automatically receive all income dividends and capital gains distributions in
additional shares of the Series whose shares they hold at net asset value (as of
the business date following the dividend record date), unless as to The U.S.
6-10 Small Company Series, The DFA One-Year Fixed Income Series, The U.S. Large
Company Series and the U.S. Value Series upon written notice to PFPC, the
shareholder selects one of the following options: (i) Income Option -- to
receive income dividends in cash and capital gains distributions in additional
shares at net asset value; (ii) Capital Gains Option -- to receive capital gains
distributions in cash and income dividends in additional shares at net asset
value; or (iii) Cash Option -- to receive both income dividends and capital
gains distributions in cash.
(g) Each Series of the Trust, other than The Emerging Markets Series, is a
separate corporation for federal income tax purposes (hereinafter the Series
other than The Emerging Markets Series are collectively referred to as the
"Corporate Series").
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Each Corporate Series intends to qualify each year as a regulated investment
company under Subchapter M of 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.
If a Series of the Trust, including The Emerging Markets Series, purchases
shares in certain foreign investment entities, called "passive foreign
investment companies" ("PFIC"), the Series (and in the case of The Emerging
Markets Series, its investors) 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 Corporate Series to its shareholders or, in the case of The
Emerging Markets Series, even if such income is distributed to its investors
(which may or may not be taxable). (See below for a more detailed discussion of
The Emerging Markets Series).
The Series of the Trust, including The Emerging Markets 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 Corporate Series at the end
of its fiscal year are invested in securities of foreign corporations, the
Corporate Series may elect to pass-through to its shareholders the pro rata
share of foreign income taxes paid by the Corporate Series. If this election is
made, shareholders will be (i) required to include in their gross income their
pro rata share of foreign source income (including any foreign taxes paid by the
Corporate Series), and (ii) entitled to either deduct their share of such
foreign taxes in computing their taxable income or to claim a credit for such
taxes against their U.S. income tax, subject to certain limitations under the
Code. Shareholders will be informed by the Corporate Series at the end of each
calendar year regarding the shareholder's proportionate share of taxes paid to
any foreign country or possession of the United States, and gross income derived
from sources within any foreign country or possession of the United States.
For the Corporate Series with the principal investment policy of investing in
foreign equity securities and non-equity domestic investments, it is anticipated
that only a small portion of such Corporate Series' dividends will qualify for
the corporate dividends received deduction. To the extent that such Corporate
Series pay dividends which qualify for this deduction, the availability of the
deduction is subject to certain holding period and debt financing restrictions
imposed under the Code on the corporation claiming the deduction. Since
virtually all the net investment income from The DFA One-Year Fixed Income
Series is expected to arise from earned interest, it is not expected that any of
that Series' distributions will be eligible for the dividends received deduction
for corporations.
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For federal income tax purposes, any income dividends which the shareholder
receives from a Corporate Series, as well as any distributions derived from the
excess of net short-term capital gain over net long-term capital loss, are
treated as ordinary income whether the shareholder has elected to receive them
in cash or in additional shares. Shareholders of Corporate Series are notified
annually by the Trust as to the federal tax status of dividends and
distributions paid by the Corporate Series whose shares they own.
Dividends which are declared by a Corporate Series in October, November or
December but which, for operational reasons, may not be paid to the shareholder
until the following January, will be treated for tax purposes as if paid by a
Corporate Series and received by the shareholder on December 31 of the calendar
year in which they are declared.
The sale of shares of a Corporate Series by redemption is a taxable event and
may result in a capital gain or loss. Any loss incurred on sale or exchange of
shares of the Corporate Series, 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.
The Trust may accept securities or local currencies in exchange for shares of a
Series. A gain or loss for federal income tax purposes will be realized by
investors in a Corporate Series who are subject to federal taxation upon the
exchange depending upon the cost of the securities or local currency exchanged.
(See "In Kind Purchases" in Item 7.)
The Corporate Series may be required to report to the Internal Revenue Service
("IRS") any taxable dividend or other reportable payment (including share
redemption proceeds) and withhold 20% of any such payments made to individuals
and other non-exempt shareholders who have not provided a correct taxpayer
identification number and made certain required certifications that appear in
the Shareholder Application form. A shareholder may also be subject to backup
withholding if the IRS or a broker notifies the Corporate Series that the number
furnished by the shareholder is incorrect or that the shareholder is subject to
backup withholding for previous under-reporting of interest or dividend income.
Shareholders of the Corporate Series who are not U.S. persons for purposes of
federal income taxation, should consult with their financial or tax advisors
regarding the applicability of U.S. withholding and other taxes to distributions
received by them from the Corporate Series and the application of foreign tax
laws to these distributions.
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Shareholders should also consult their tax advisors with respect to the
applicability of any state and local intangible property or income taxes to
their shares of the Corporate Series and distributions and redemption proceeds
received from the Corporate Series.
The Emerging Markets Series has obtained a ruling from the Internal Revenue
Service ("IRS") holding, in part, that it is taxable as a partnership. The
Emerging Markets Series is a series of a trust organized under Delaware law.
Under the anticipated method of operation of The Emerging Markets Series as a
partnership, it will not be subject to any income tax. However, each investor
in The Emerging Markets Series will be taxable on its share (as determined in
accordance with the governing instruments of The Emerging Markets Series) of The
Emerging Markets Series' ordinary income and capital gain in determining its
income tax liability. The determination of such
share will be made in accordance with the Code and regulations promulgated
thereunder.
The Emerging Markets Series' taxable year-end will be November 30. Although, as
described above, The Emerging Markets Series will not be subject to federal
income tax, it will file appropriate income tax returns.
The Emerging Markets Series' assets, income and distributions will be managed in
such a way that an investor in the Series will be able to satisfy the
requirements of Subchapter M of the Code, assuming that the investor invested
all of its assets in The Emerging Markets Series.
There are certain tax issues that will be relevant to only certain of the
investors; specifically, investors that are segregated asset accounts and
investors who contribute assets rather than cash to The Emerging Markets Series.
It is intended that contributions of assets will not be taxable provided certain
requirements are met. Such investors are advised to consult their own tax
advisors as to the tax consequences of an investment in The Emerging Markets
Series.
The Emerging Markets Series will inform investors of the source of dividends and
distributions at the time they are paid and will promptly after the close of
each fiscal year advise investors of the tax status for federal income tax
purposes of such dividends and distributions.
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED
(a) The Trust's shares have not been registered under the Securities Act of
1933, which means that its shares may not be sold publicly. However, the Trust
may sell its shares through
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private placements pursuant to available exemptions from registration under
that Act.
Shares of the Trust are sold only to other investment companies and certain
institutional investors. Shares of The Emerging Markets Series are sold at a
price which is equal to the net asset value of such shares plus a reimbursement
fee. (SEE Item 8(b).) Shares of the other Series are sold at net asset value
without a sales charge. Shares are purchased at the net asset value next
determined after the Trust receives the order in proper form. All investments
are credited to the shareholder's account in the form of full and fractional
shares of the Series calculated to three decimal places. In the interest of
economy and convenience, certificates for shares will not be issued.
The Trust distributes its own shares. 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 shares of each Series. No compensation is paid by the Trust to DFA
Securities Inc. under this agreement.
IN KIND PURCHASES
If accepted by the Trust, shares of the Series may be purchased in exchange for
securities which are eligible for acquisition by the Series as described in this
registration statement or in exchange for local currencies in which eligible
securities of The DFA International Value Series and The Emerging Markets Series
are denominated. Securities and local currencies to be exchanged which are
accepted by the Trust and Trust shares to be issued therefore will be valued, as
set forth under "Valuation of Shares" in Item 7(b), at the time of the next
determination of net asset value after such acceptance. All dividends,
interest, subscription, or other rights pertaining to such securities shall
become the property of the Series whose shares are being acquired and must be
delivered to the Trust by the investor upon receipt from the issuer. Investors
who desire to purchase shares of The DFA International Value Series with local
currencies should first contact the Adviser for wire instructions.
The Trust will not accept securities in exchange for shares of a Series unless:
(1) 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 Series 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 Series, the value of any such security (except U.S. Government Securities)
being exchanged together with other securities of the same issuer owned by the
Series will not exceed 5% of the net assets of the Series
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immediately after the transaction. In addition, nearly all of the securities
accepted in an exchange will be, at the time of the exchange, eligible to be
included in the Series whose shares are issued. (See Item 4(a)(i).)
Investors interested in such exchanges should contact the Advisor.
(b) VALUATION OF SHARES
The net asset value per share of each Series is calculated as of the close of
the NYSE by dividing the total market value of the Series' investments and
other assets, less any liabilities, by the total outstanding shares of the
stock of the Series. The value of the shares of each Series will fluctuate
in relation to its own investment experience. Securities held by the Series
which are listed on the securities exchange and for which market quotations
are available are valued at the last quoted sale price of the day or, if
there is no such reported sale, The U.S. 6-10 Small Company, The U.S. Large
Company, The DFA International Value, the U.S. Value Series and The Emerging
Markets Series value such securities at the mean between the most recent
quoted bid and asked prices. Price information on listed securities is taken
from the exchange where the security is primarily traded. Unlisted
securities for which market quotations are readily available are valued at
the mean between the most recent bid and asked prices. The value of other
assets and securities for which no quotations are readily available
(including restricted securities) are determined in good faith at fair value
in accordance with procedures adopted by the Board of Trustees. The net
asset values per share of The DFA International Value Series and The Emerging
Markets Series are expressed in U.S. dollars by translating the net assets of
each Series using the bid price for the dollar as quoted by generally
recognized reliable sources.
The value of the shares of The DFA One-Year Fixed Income Series will tend to
fluctuate with interest rates because, unlike money-market funds, this Series
does not seek to stabilize the value of its shares by use of the "amortized
cost" method of asset valuation. Net asset value includes interest on fixed
income securities which is accrued daily. Securities which are traded OTC and
on a stock exchange will be valued according to the broadest and most
representative market, and it is expected that for bonds and other fixed-income
securities this ordinarily will be the OTC market. Securities held by The DFA
One-Year Fixed Income Series may be valued on the basis of prices provided by a
pricing service when such prices are believed to reflect the current market
value of such securities. Other assets and securities for which quotations are
not readily available will be valued in good faith at fair value using methods
determined by the Board of Trustees.
Generally, trading in foreign securities markets is completed each day at
various times prior to the close of the NYSE. The
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values of foreign securities held by The DFA International Value Series and
The Emerging Markets Series are determined as of such times for the purpose
of computing the net asset value of the Series. If events which materially
affect the value of the investments of the 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 in Approved
Markets may be subject to tax, investment and currency repatriation
regulations of the Approved Markets that could have a material effect on the
valuation of the securities. For example, the Series might be subject to
different levels of taxation on current income and realized gains depending
upon the holding period of the securities. In general, a longer holding
period (E.G., 5 years) may result in the imposition of lower tax rates than a
shorter holding period (E.G., 1 year). The Series may also be subject to
certain contractual arrangements with investment authorities in an Approved
Market which require the Series to maintain minimum holding periods or to
limit the extent of repatriation of income and realized gains. As a result,
the valuation of particular securities at any one time may depend materially
upon the assumptions that the Series makes at that time concerning the
anticipated holding period for the securities. Absent special circumstances
as determined by the Board of Trustees, 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.
It is management's belief that payment of a reimbursement fee by each investor,
which is used to defray significant costs associated with investing proceeds of
the sale of their shares to such investors, will eliminate a dilutive effect
such costs would otherwise have on the net asset value of shares held by
previous investors. Therefore, the shares of The Emerging Markets Series 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 that Series, and is paid to the Series and used by
it to defray such costs. Such costs include brokerage commissions on listed
securities and imputed commissions on OTC securities. The reimbursement fee for
The Emerging Markets Series, expressed as a percentage of the net asset value of
its
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shares, is .50%. Reinvestments of dividends and capital gains distributions
paid by the Series and in-kind investments are not subject to a reimbursement
fee.
The offering price of shares of each Series, except for The Emerging Markets
Series, is the net asset value thereof next determined after the receipt of the
investor's funds by the Custodian, provided that the purchase order in good
order has been received by the Transfer Agent; no sales charge or reimbursement
fee is imposed.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
ITEM 8. REDEMPTION OR REPURCHASE
(a) As stated above in response to Item 7(a), "Purchase of Securities Being
Offered," the Trust's shares have not been registered under the Securities Act
of 1933, which means that its shares are restricted securities which may not be
sold unless registered or pursuant to an available exemption from that Act.
Investors who desire to redeem shares of a Series must first contact the Advisor
at (310) 395-8005. Redemptions are processed on any day on which the Trust is
open for business and are effected at the Series' net asset value next
determined after the Series receives a redemption request in good form.
Redemption payments in cash will ordinarily be made within seven days after
receipt of the redemption request in good form. However, the right of
redemption may be suspended or the date of payment postponed in accordance with
the 1940 Act. The amount received upon redemption may be more or less than the
amount paid for the shares depending upon the fluctuations in the market value
of the assets owned by the Series.
If the Board of Trustees determines that it would be detrimental to the best
interests of the remaining shareholders of any Series to make payment wholly or
partly in cash, a Series may pay the redemption price in whole or in part by a
distribution of portfolio securities from the Series of the shares being
redeemed in lieu of cash 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.
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For additional information about redemption of Trust shares, see Items 19(a) and
(b) in Part B.
(b) Not applicable.
(c) Not applicable.
(d) 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 Trust can verify that the payments for the
purchase have been, or will be, collected, which may take up to fifteen days or
more. Investors may avoid this delay by submitting a certified check along with
the purchase order.
ITEM 9. PENDING LEGAL PROCEEDINGS
Not applicable.
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Part B:
ITEM 10. COVER PAGE
Not applicable.
ITEM 11. TABLE OF CONTENTS
Not applicable.
ITEM 12. GENERAL INFORMATION AND HISTORY
Not applicable.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES
(a) SEE Item 4(a)(ii) of Part A for a discussion of the investment policies
of each Series of the Trust.
(b) In addition to the policies stated in response to Item 4(a)(ii) of Part A,
each of the Series has adopted certain limitations which may not be changed with
respect to any Series without the approval of a majority of the outstanding
voting securities of the Series. A "majority" is defined as the lesser of: (1)
at least 67% of the voting securities of the Series (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 Series are present or represented by proxy,
or (2) more than 50% of the outstanding voting securities of such Series.
The Series 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 Series except The U.S. 6-10 Small Company Series and The DFA
One-Year Fixed Income Series 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 Series, 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 Series' total assets, at market, would be
invested in the securities of such issuer;
(4) purchase or retain securities of an issuer if those officers and trustees of
the Trust or officers and directors of the
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Advisor owning more than 1/2 of 1% of such securities together own more than
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 Series' gross
assets valued at the lower of market or cost; provided that each Series, except
The DFA One-Year Fixed Income Series and The U.S. 6-10 Small Company Series, 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 Series' total assets in illiquid
securities which include certain restricted securities, repurchase agreements
with maturities of greater than seven days, and other illiquid investments,
provided that The DFA International Value Series, the U.S. Value Series and The
Emerging Markets Series 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 Emerging Markets Series is not subject to this
limitation;
(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;
(12) acquire any securities of companies within one industry if, as a result of
such acquisition, more than 25% of the value of the Series' total assets would
be invested in securities of companies within such industry, except The DFA
One-Year Fixed Income Series shall invest more than 25% of its total assets in
obligations of banks and bank holding companies in the circumstances described
in this registration statement in "Investments in the Banking Industry" under
Item 4(a)(ii) of Part A;
(13) write or acquire options (except as described in (1) above) or interests in
oil, gas or other mineral exploration, leases or development programs;
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(14) purchase warrants; however, each Series, except The DFA One-Year Fixed
Income Series, may acquire warrants as a result of corporate actions involving
its holdings of other equity securities;
(15) purchase securities on margin or sell short; or
(16) acquire more than 10% of the voting securities of any issuer, provided that
this limitation applies only to 75% of the assets of the U.S. Value Series and
The Emerging Markets Series.
Although (2) above prohibits cash loans, the Series are authorized to lend
portfolio securities. (See "Securities Loans" in Item 4(a)(ii) of Part A.)
For the purposes of (7) above, The DFA One-Year Fixed Income Series may invest
in commercial paper that is exempt from the registration requirements of the
Securities Act of 1933 (the "1933 Act") subject to the requirements regarding
credit ratings stated in this registration statement under Item 4. Further,
pursuant to Rule 144A under the 1933 Act, the Series 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 Trustees has delegated the day-to-day
function of making liquidity determinations to the Advisor. For 144A securities
to be considered liquid, there must be at least two dealers making a market in
such securities. After purchase, the Board of Trustees 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.
Because the structure of each Series, except The DFA One-Year Fixed Income
Series, is based on the relative market capitalizations of eligible holdings, it
is possible that the Series might include at least 5% of the outstanding voting
securities of one or more issuers. In such circumstances, the Trust 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.
Notwithstanding any of the above investment restrictions, The Emerging Markets
Series may establish subsidiaries or other similar vehicles for the purpose of
conducting its investment operations in Approved Markets, if such subsidiaries
or vehicles
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are required by local laws or regulations governing foreign investors such as
the Series or whose use is otherwise considered by the Series to be advisable.
The Emerging Markets Series would "look through" any such vehicle to determine
compliance with its investment restrictions.
(c) Although not a fundamental policy subject to shareholder approval, The
U.S. 6-10 Small Company Series will not purchase interests in any real estate
investment trust.
The DFA International Value Series and The Emerging Markets 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 the U.S. Value Series and The DFA International
Value Series have retained authority to buy and sell financial futures contracts
and options thereon, they have no present intention to do so.
FUTURES CONTRACTS
All Series except The U.S. 6-10 Small Company Series and The DFA One-Year Fixed
Income Series may enter into financial futures contracts and options on
financial futures contracts for the purpose of remaining fully invested and to
maintain liquidity to pay redemptions. Futures contracts provide for the future
sale by one party and purchase by another party of a specified amount of defined
securities at a specified future time and at a specified price. Futures
contracts which are standardized as to maturity date and underlying financial
instrument are traded on national futures exchanges. The 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 Series. Variation margin payments are made to
and from the futures broker for as long as the contract remains open. The
Series expect to earn income on their margin deposits. A Series will not enter
into futures contract transactions if immediately thereafter, the sum of its
initial and variation margin deposits on open contracts exceeds 5% of the market
value of the Series' total assets.
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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 Series would continue to be required
to continue to make variation margin deposits. In such circumstances, if the
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.
(d) 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 The U.S. 6-10 Small Company Series
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.
Ordinarily, portfolio securities in The U.S. Large Company Series 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 Series'
shares.
The DFA One-Year Fixed Income Series is expected to have a high portfolio
turnover rate 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 Series could be 0% to 200%.
The U.S. 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. The U.S. 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. The annual portfolio turnover
rates of The U.S. Large Cap
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Value Series and The U.S. Small Cap Value Series are not expected to exceed 15%
and 10%, respectively.
Securities which have depreciated in value since their acquisition will not be
sold by The DFA 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. The annual
portfolio turnover rate of the Series is not expected to exceed 20%.
Securities will be held by The Emerging Markets Series until such time as they
are no longer considered an appropriate holding in light of the investment
objective and policies of the Series. 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
Series ordinarily is anticipated to be low, and not expected to exceed 20% per
year.
ITEM 14. MANAGEMENT OF THE REGISTRANT
(a) AND (b) TRUSTEES AND OFFICERS
The names, ages and addresses of the trustees and officers of the Trust and a
brief statement or their present positions and principal occupations during the
past five years is set forth below. As used below, "DFA Entities" refers to the
following: Dimensional Fund Advisors Inc., Dimensional Fund Advisors Ltd., DFA
Australia Pty. Limited, DFA Investment Dimensions Group Inc. (Registered
Investment Company), Dimensional Emerging Markets Fund Inc. (Registered
Investment Company), Dimensional Investment Group Inc. (Registered Investment
Company) and DFA Securities Inc.
-40-
<PAGE>
Trustees
David G. Booth*, 48, Trustee, President and Chairman-Chief Executive Officer,
Santa Monica, CA. President, Chairman-Chief Executive Officer and Director of
all DFA Entities, except Dimensional Fund Advisors Ltd., of which he is Chairman
and Director.
George M. Constantinides, 47, Trustee, Chicago, IL. Leon Carroll Marshall
Professor of Finance, Graduate School of Business, University of Chicago.
Director, DFA Investment Dimensions Group Inc., Dimensional Investment Group
Inc. and Dimensional Emerging Markets Fund Inc.
John P. Gould, 56, Trustee, Chicago, IL. Distinguished Service Professor of
Economics, Graduate School of Business, University of Chicago. Trustee, First
Prairie Funds (Registered Investment Company). Director, DFA Investment
Dimensions Group Inc., Dimensional Investment Group Inc., Dimensional Emerging
Markets Fund Inc. and Harbor Investment Advisors.
Roger G. Ibbotson, 52, Trustee, New Haven, CT. Professor in Practice of
Finance, Yale School of Management. Director, DFA Investment Dimensions Group
Inc., Dimensional Investment Group Inc., Dimensional Emerging Markets Fund Inc.,
Hospital Fund, Inc. (investment management services) and Birr Portfolio
Analysis, Inc. (software products). Chairman, Institute Study of Securities
Markets. Chairman and President, Ibbotson Associates, Inc., Chicago, IL
(software, data, publishing and consulting).
Merton H. Miller, 72, Trustee, Chicago, IL. Robert R. McCormick Distinguished
Service Professor Emeritus, Graduate School of Business, University of Chicago.
Director, DFA Investment Dimensions Group Inc., Dimensional Investment Group
Inc. and Dimensional Emerging Markets Fund Inc.
Myron S. Scholes, 54, Trustee, Greenwich, CT. Frank E. Buck Professor of
Finance, Graduate School of Business and Professor of Law, Law School, Senior
Research Fellow, Hoover Institution, (all) Stanford University. Director, DFA
Investment Dimensions Group Inc., Dimensional Investment Group Inc., Dimensional
Emerging Markets Fund Inc., Benham Capital Management Group of Investment
Companies and Smith Breedon Group of Investment Companies. Limited Partner,
Long-Term Capital Management L.P. (money manager).
Rex A. Sinquefield*, 50, Trustee, Chairman and Chief Investment Officer, Santa
Monica, CA. Chairman-Chief Investment Officer and Director of all DFA Entities,
except Dimensional Fund Advisors Ltd., of which he is Chairman, Chief Executive
Officer and Director.
-41-
<PAGE>
* Interested Trustee of the Trust.
Officers
Arthur Barlow, 39, Vice President, Santa Monica, CA. Vice President of all DFA
Entities.
Maureen Connors, 58, Vice President, Santa Monica, CA. Vice President of all
DFA Entities.
Robert Deere, 37, Vice President, Santa Monica, CA. Vice President of all DFA
Entities.
Irene R. Diamant, 45, Vice President and Secretary, Santa Monica, CA. Vice
President and Secretary of all DFA Entities. Associate attorney, Cahill Gordon
& Reindel, from 1987 to 1991.
Eugene Fama, Jr., 34, Vice President, Santa Monica, CA. Vice President of all
DFA Entities.
David Plecha, 33, Vice President, Santa Monica, CA. Vice President of all DFA
Entities.
George Sands, 39, Vice President, Santa Monica, CA. Vice President of all DFA
Entities. Managing Director, Assets Strategy Consulting, Los Angeles, CA from
1991 to 1992 and previously Vice President of Wilshire Associates, Santa Monica,
CA.
Michael T. Scardina, 40, Vice President, Chief Financial Officer, Controller and
Treasurer, Santa Monica, CA. Vice President, Chief Financial Officer,
Controller and Treasurer of all DFA Entities.
Cem Severoglu, 32, Vice President, Santa Monica, CA. Vice President of all DFA
Entities.
Jeanne C. Sinquefield, Ph.D., 48, Executive Vice President, Santa Monica, CA.
Executive Vice President of all DFA Entities.
Rex A. Sinquefield, Trustee, Chairman and Chief Investment Officer of the Trust,
and Jeanne C. Sinquefield, Executive Vice President of the Trust, are husband
and wife.
(c) Set forth below is a table listing, for each Trustee entitled to receive
compensation, the compensation received from the Trust during the fiscal year
ended November 30, 1994 and the total compensation received from all four
registered investment companies for which the Advisor serves as investment
advisor during that same fiscal year.
-42-
<PAGE>
<TABLE>
<CAPTION>
Aggregate Total Compensation
Compensation from Trust and
Trustee from Trust Fund Complex
- ------- ------------ ------------------
<S> <C> <C>
George M. Constantinides $ 5,125 $ 30,750
John P. Gould $ 5,125 $ 30,750
Roger G. Ibbotson $ 5,125 $ 30,750
Merton H. Miller $ 5,000 $ 30,000
Myron S. Scholes $ 4,000 $ 24,000
</TABLE>
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
(a) See Item 6(b).
(b) As of October 31, 1995, the following stockholders own beneficially at
least 5% of the outstanding shares of the Series, as set forth below. Unless
otherwise indicated, the address of each stockholder is 1299 Ocean Avenue, 11th
Floor, Santa Monica, CA 90401
<TABLE>
<S> <C>
THE U.S. 6-10 SMALL COMPANY SERIES
DFA Investment Dimensions Group Inc. -
The U.S. 6-10 Small Company Portfolio 81.94%
Dimensional Investment Group Inc. -
U.S. 6-10 Institutional Portfolio 9.44%
The California Wellness Foundation 8.62%
6320 Canoga Avenue, Suite 1700
Woodland Hills, CA 91367
THE U.S. LARGE COMPANY SERIES
DFA Investment Dimensions Group Inc. -
The U.S. Large Company Portfolio 100.00%
THE DFA ONE-YEAR FIXED INCOME SERIES
DFA Investment Dimensions Group Inc. -
The DFA One-Year Fixed Income Portfolio 99.93%
THE U.S. SMALL CAP VALUE SERIES
</TABLE>
-43-
<PAGE>
<TABLE>
<S> <C>
DFA Investment Dimensions Group Inc. -
The U.S. Small Cap Value Portfolio 97.49%
THE U.S. LARGE CAP VALUE SERIES
DFA Investment Dimensions Group Inc. -
The U.S. Large Cap Value Portfolio 66.82%
Dimensional Investment Group Inc. -
U.S. Large Cap Value Portfolio III 31.77%
THE DFA INTERNATIONAL VALUE SERIES
Dimensional Investment Group Inc. -
DFA International Value Portfolio 40.51%
DFA Investment Dimensions Group Inc. -
DFA International High Book to Market Portfolio 28.33%
DFA International Value Portfolio III 23.49%
MAC & Co #853-273*
Mellon Bank N.A.
P.O. Box 320
Pittsburgh, PA 15230 5.40%
THE EMERGING MARKETS SERIES
DFA Investment Dimensions Group Inc. -
Emerging Markets Portfolio 99.98%
</TABLE>
(c) Trustees and officers as a group own less than 1% of the Trust's
outstanding stock.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES
(a) The information provided in response to this item is in addition to the
information provided in response to Item 5(b) in Part A.
David G. Booth and Rex A. Sinquefield together own 61% of the Advisor's
outstanding voting stock and may be considered controlling persons of the
Advisor.
-44-
<PAGE>
For the services its provides as investment advisor to each Series of the Trust,
the Advisor is paid a monthly fee calculated as a percentage of average net
assets of the Series. For the fiscal years ending November 30, 1993 and 1994,
the Portfolios paid advisory fees as set forth in the following table:
<TABLE>
<CAPTION>
1993 1994
(000) (000)
<S> <C> <C>
U.S. 6-10 Small Company $ 40,083 $ 46,313
U.S. Large Company $ 7,231 $ 10,833
DFA One-Year Fixed Income $240,817 $310,614
U.S. Small Cap Value $ 93,745 $458,698
U.S. Large Cap Value $ 45,346 $142,564
DFA International Value n/a $379,620
Emerging Markets n/a $ 5,771
</TABLE>
(b) The information provided in response to this item is in addition to the
information provided in response to Item 5(a) of Part A.
The investment management agreement with respect to each Series is in effect for
a period of two years. Thereafter, each agreement may continue in effect for
successive annual periods, provided such continuance is specifically approved at
least annually by a vote of the Trust's Board of Trustees or, by a vote of the
holders of a majority of the Series' outstanding voting securities, and in
either event by a majority of the trustees who are not parties to the agreement
or interested persons of any such party (other than as trustees of the Trust),
cast in person at a meeting called for that purpose. An investment management
agreement may be terminated without penalty at any time by the Series or by the
Advisor on 60 days' written notice and will automatically terminate in the event
of its assignment as defined in the 1940 Act.
(c) Beginning with the effective date of the Investment Management Agreement
with respect to The DFA International Value Series, the Advisor has agreed to
waive its fee under that
- -----------
*Owner of record only
-45-
<PAGE>
Agreement to the extent necessary to keep the cumulative annual expenses of
the Series to not more than .45% of average net assets of the Series on an
annualized basis. The Advisor may eliminate its waiver at any time in its
discretion.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) Boston Safe Deposit and Trust Company, Princess House, 1 Suffolk Lane,
London EC4R 0AN, England, serves as custodian for The DFA International Value
Series. Chase Manhattan Bank, N.A., 4 Chase Metrotech Center, Brooklyn, NY
11245, serves as custodian for The Emerging Markets Series. PNC Bank, N.A., 200
Stevens Drive, Airport Business Center, Lester, PA 19113, acts as custodian for
all other Series. The custodians do not participate in decisions relating to
the purchase and sale of portfolio securities.
Coopers & Lybrand L.L.P., 2400 Eleven Penn Center, Philadelphia, Pennsylvania
19103, is the Trust's independent accountant.
(i) Not applicable.
-46-
<PAGE>
ITEM 17. BROKERAGE ALLOCATION
(a) The following table depicts brokerage commissions paid by the following
Series:
BROKERAGE COMMISSIONS
FISCAL YEARS ENDED NOVEMBER 30, 1993 AND 1994
<TABLE>
<CAPTION>
1993 1994
<S> <C> <C>
U.S. 6-10 Small Company $274,151 $ 247,096
U.S. Large Company $ 41,393 $ 10,610
U.S. Small Cap Value $328,869 $1,471,320
U.S. Large Cap Value $134,312 $ 361,154
DFA International Value n/a $ 623,031
Emerging Markets n/a $ 79,105
</TABLE>
The substantial increases or decreases in the amount of brokerage commissions
paid by certain Series from 1993 to 1994 indicated in the foregoing table
resulted from increases or decreases in the amount of securities bought and sold
by those Series.
During fiscal year 1993, The U.S. 6-10 Small Company Series paid commissions of
$9,793 to Kemper Capital Markets, Inc., a securities firm which has been
succeeded by Kemper Securities, Inc., an affiliate of Kemper Financial Services,
Inc., which owned approximately 15.6% of the Advisor's outstanding stock. Such
commissions represented .0126% of the total commissions paid by the Trust for
1993 and the total value of transactions as to which such commissions relate
were $1,381,561 or .0071% of the Fund's total value of transactions involving
payment of commissions during the fiscal year ended November 30, 1993. No
commissions were paid to affiliates or affiliates of affiliates during fiscal
year 1994.
The DFA One-Year Fixed Income Series acquires and sells 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 such Series effects
transactions.
Portfolio transactions will be placed with a view to receiving the best price
and execution.
-47-
<PAGE>
The OTC companies eligible for purchase by The U.S. 6-10 Small Company Series
and The U.S. Small Cap Value Series 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. 6-10 Small Company Series and the U.S. Value Series, 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 Series can effect transactions at the best available prices.
(b) Not applicable.
(c) The Series 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 Series to
determine the effect that the Series' 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 Series to their brokers to ascertain that they are competitive
with those charged by other brokers for similar services. Transactions also may
be placed with brokers who provide the Advisor with investment research, such as
reports concerning individual issuers, industries and general economic and
financial trends and other research services. The Investment Management
Agreements permit the Advisor knowingly to pay commissions on such 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 Trust. Brokerage transactions may be placed with
securities firms that are affiliated with an affiliate of the Advisor.
Commission paid on such transactions
-48-
<PAGE>
would be commensurate with the rate of commissions paid on similar transactions
to brokers that are not so affiliated.
(d) Not applicable.
(e) Not applicable.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES
(a) The information provided in response to this item is in addition to the
information provided in response to Item 6(a) in Part A.
The Trust does not intend to hold annual meetings; it may, however, hold a
meeting for such purposes as changing fundamental investment limitations,
approving a new investment management agreement or any other matters which are
required to be acted on by shareholders under the 1940 Act. Shareholders may
receive assistance in communicating with other shareholders in connection with
the election or removal of Trustees similar to the provisions contained in
Section 16(c) of the 1940 Act.
(b) Not applicable.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
The information provided in response to this item is in addition to the
information provided in response to Items 7 and 8 in Part A.
(a) AND (b) The Trust will accept purchase and redemption orders on each
day that the 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 Trust will generally be closed
on days that the NYSE is closed. The NYSE 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 it 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 Trust is closed.
The Trust reserves the right, in its sole discretion, to suspend the offering of
shares of any or all Series or reject purchase orders when, in the judgement of
management, such suspension or rejection is in the best interest of the Trust or
a Series. Securities accepted in exchange for shares of a Series will be
acquired for investment purposes and will be considered for sale
-49-
<PAGE>
under the same circumstances as other securities in the Portfolio.
The Trust may suspend redemption privileges or postpone the date of payment:
(1) during any period when the NYSE is closed, or trading on the Exchange is
restricted as determined by the Securities and Exchange Commission (the
"Commission"), (2) during any period when an emergency exists as defined by the
rules of the Commission as a result of which it is not reasonably practicable
for the Trust 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.
(c) The Trust has filed a notice of election pursuant to Rule 18f-1 under the
1940 Act. (SEE Item 8(a) of Part A.)
ITEM 20. TAX STATUS
The information provided in response to this item is in addition to the
information provided in response to Item 6 in Part A.
FEDERAL TAX TREATMENT OF FUTURES CONTRACTS
Except for transactions a Series has identified as hedging transactions, the
Series 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 Series 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 Series 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 Series' 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 Series'
annual gross income. It is anticipated that any net gain realized from closing
futures contracts will be considered gain from the sale of securities and,
therefore, constitute qualifying income for purposes of the 90% requirement. In
order to avoid realizing excessive gains on securities held less than three
months, the Series may be required to defer the closing out of futures contracts
beyond the
-50-
<PAGE>
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 Series' 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 Series 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
Series' fiscal year) on futures transactions. Such distributions will be
combined with distributions of capital gains realized on each Series' other
investments.
ITEM 21. UNDERWRITERS
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
ITEM 22. CALCULATION OF PERFORMANCE DATA
(a) Not applicable.
(b) Following are quotations of the annualized percentage total returns for
the one-, five-, and ten-year periods ended May 31, 1995 (as applicable) using
the standardized method of calculation required by the SEC. For those Series in
effect for less than one, five or ten years, the time periods during which the
Series have been active have been substituted for the periods stated (which in
no case extends prior to the effective date of the registration statement
relating to a particular Series).
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS
-------- ---------- ---------
<S> <C> <C> <C>
The U.S. 6-10 Small Company Series .59 20 months n/a
---------
4.63
The U.S. Large Company Series 1.30 20 months n/a
---------
3.18
The DFA One-Year Fixed Income Series 2.59 20 months n/a
---------
3.11
The U.S. Small Cap Value Series 2.53 20 months n/a
---------
9.00
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<PAGE>
The U.S. Large Cap Value Series -3.15 20 months n/a
---------
1.22
The DFA International Value Series 9 n/a n/a
months
------
1.33
The Emerging Markets Series 7 n/a n/a
months
------
24.63
</TABLE>
As the following formula indicates, the annualized total return is
determined by finding the annualized total 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 Securities and Exchange
Commission formula:
P(1 + T)(n) = ERV
where:
P = a hypothetical initial payment of $1,000
T = annualized compound rate of 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).
ITEM 23. FINANCIAL STATEMENTS
The audited financial statements and financial highlights of the Trust for its
fiscal year ended November 30, 1994, as set forth in the Trust's annual report
to stockholders, and the report therein of Coopers & Lybrand L.L.P., independent
accountants, also appearing therein, are incorporated herein by reference. The
unaudited financial statements and financial highlights of the Trust for the
period ended May 31, 1995, as set forth in the Trust's semi-annual report to
stockholders, are incorporated herein by reference.
-52-
<PAGE>
THE DFA INVESTMENT TRUST COMPANY
FORM N-1A
PART C: OTHER INFORMATION
- --------------------------
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements**
(b) Exhibits:
The following exhibits are attached hereto, except as
otherwise noted:
(1) (i) Agreement and Declaration of Trust
(ii) Certificate of Trust*
(iii) Certificate of Amendment of Certificate of Trust*
(2) By-Laws*
(3) None
(4) Not applicable
(5) (i) Investment Management Agreement re The U.S. 6-10
Small Company Series*
(ii) Investment Management Agreement re The U.S. Large
Company Series
(iii) Investment Management Agreement re The DFA
One-Year Fixed Income Series*
(iv) Investment Management Agreement re The U.S. Large
Cap High Book to Market Series*
(v) Investment Management Agreement re The U.S. Small
Cap High Book to Market Series*
(vi) Investment Management Agreement re The DFA
International Value Series***
(vii) Investment Management Agreement re The Emerging
Markets Series****
(6) Agreement with DFA Securities Inc.*
(7) None
-53-
<PAGE>
(8) (i) Form of Custodian Agreement between Registrant and
Provident National Bank*
(ii) Form of Custodian Agreement between Registrant and
Boston Safe Deposit and Trust Company***
(iii) Form of Custodian Agreement between Registrant and
Chase Manhattan Bank, N.A.****
(9) (i) Form of Transfer Agency Agreement with Provident
Financial Processing Corporation*
(ii) Form of Administration and Accounting Services
Agreement with Provident Financial Processing
Corporation*
(10) Not applicable
(11) Not applicable
(12) Not applicable
(13) Not applicable
(14) Not applicable
(15) Not applicable
(16) Not applicable
(17) Financial Data Schedules
(18) Inapplicable
_________________________
* Filed with initial registration statement on January 15, 1993.
** Filed on February 3, 1995 as the Fund's annual report to stockholders for
the fiscal year ending November 30, 1994, and filed electronically via the
EDGAR system on August 4, 1995 as the Fund's semi-annual report to
stockholders for the period ended May 31, 1995, pursuant to Rule 30b2-1
under the 1940 Act and incorporated in Part B by reference. A confirming
copy of the November 30, 1994 annual report was submitted electronically
via the EDGAR system to the Securities and Exchange Commission on June 26,
1995.
*** Filed with Amendment Number 1 to the registration statement on December 1,
1993.
**** Filed with Amendment Number 2 to the registration statement on January 11,
1994.
-54-
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.
As disclosed in Items 6(b) and 15(b), as of October 31, 1995, each Series
is each controlled by one or more corresponding Portfolios of DFA IDG and DIG,
each a Maryland corporation registered under the Investment Company Act of 1940.
If a person beneficially owns more than 25% of the outstanding voting securities
of a DFA IDG or DIG Portfolio that invests all of its investable assets in a
corresponding Series of the Trust, then that Portfolio and the Series in which
it invests may be deemed to be under common control by such person. As of
October 31, 1995, the following beneficially owned more than 25% of the
outstanding voting securities of DFA IDG or DIG:
<TABLE>
<S> <C>
DFAIDG
6-10 SMALL COMPANY PORTFOLIO
Washington University Endowment Fund
7425 Forsyth Boulevard
St. Louis, MO 63105-2103 33.03%
DIG
6-10 INSTITUTIONAL PORTFOLIO
Washington University Endowment Fund
7425 Forsyth Boulevard
St. Louis, MO 63105-2103 70.50%
NI-GAS Trust
P.O. Box 190
Aurora, IL 60507 29.50%
INTERNATIONAL VALUE PORTFOLIO
BellSouth Corp. Master Pension Trust
1155 Peachtree Street NE
Atlanta, GA 30367 43.97%
ONE-YEAR FIXED INCOME II PORTFOLIO
Sisters of Charity
2600 N. Loop West
Houston, TX 77092 54.63%
</TABLE>
-55-
<PAGE>
<TABLE>
<S> <C>
Hewitt Services LLC
100 Half Day Road
Lincolnshire, IL 60069 39.21%
</TABLE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
Title of Class
- -------------------------------
(Shares of Beneficial Interest, Number of Record Holders
Par Value $.01) as of October 31, 1995
------------------------
<S> <C>
The U.S. 6-10 Small Company Series 3
The U.S. Large Company Series 1
The DFA One-Year Fixed Income Series 2
The U.S. Small Cap Value Series 2
The U.S. Large Cap Value Series 3
The DFA International Value Series 5
The Emerging Markets Series 2
</TABLE>
ITEM 27. INDEMNIFICATION.
Reference is made to Article VII of the Registrant's Agreement and
Declaration of Trust (Exhibit 24(b)(1)(i)) and to Article X of the Registrant's
By-Laws (Exhibit 24(b)(2)), which are incorporated herein by reference.
Pursuant to Rule 484 under the Securities Act of 1933, as amended, the
Registrant furnishes the following undertaking:
"Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue."
-56-
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Registrant's Investment Advisor (the "Advisor") was organized in May, 1981. The
principal place of business of the Advisor is 1299 Ocean Avenue, 11th Floor,
Santa Monica, California 90401. The Advisor is engaged in the business of
providing investment advice primarily to institutional investors.
The business, profession, vocation or employment of a substantial nature in
which each director and officer of the Advisor and DFAL is or has been, during
the past two fiscal years, engaged for his own account in the capacity of
director, officer, employee, partner or trustee is set forth below. As used
below, "DFA Entities" refers to the following: Dimensional Fund Advisors Inc.,
Dimensional Fund Advisors Ltd., DFA Australia Pty Limited, DFA Investment
Dimensions Group Inc. (Registered Investment Company), Dimensional Emerging
Markets Fund Inc. (Registered Investment Company), Dimensional Investment Group
Inc. (Registered Investment Company) and DFA Securities Inc.
David G. Booth is Chairman - Chief Executive Officer, President and a Director
of the Advisor and DFA Investment Dimensions Group Inc. Mr. Booth is President,
Chairman - Chief Executive Officer and a Trustee of the Registrant. Mr. Booth
is also Chairman - Chief Executive Officer and a Director of Dimensional
Investment Group Inc., Dimensional Emerging Markets Fund Inc., DFA Securities
Inc. and DFA Australia Pty Limited ("DFA Australia"). He is Chairman and
Director of Dimensional Fund Advisors Ltd. ("DFAL").
Rex A. Sinquefield is Chairman - Chief Investment Officer and a Director of the
Advisor and Chairman - Chief Investment Officer and a Trustee of the Registrant.
He is also Chairman - Chief Investment Officer and a Director of DFA Investment
Dimensions Group Inc., Dimensional Investment Group Inc., Dimensional Emerging
Markets Fund, Inc., DFA Securities Inc. and DFA Australia and Chairman, Chief
Executive Officer and Director of DFAL.
Eugene Francis Fama, a Director of the Advisor, is the Theodore O. Yntema
Distinguished Service Professor of Finance, and has been engaged in teaching and
research in finance and economics at the Graduate School of Business, University
of Chicago, Chicago, Illinois since September, 1963. Mr. Fama also is a
Director of DFA Securities Inc.
John Andrew McQuown, a Director of the Advisor, has been self employed since
1974 as an entrepreneur, financier and consultant to major financial
institutions. He is also a Director of Chalone Wine Group, Inc., Mortgage
Information Corporation, KMV Corporation, Microsource, Inc. and DFA Securities
Inc.
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<PAGE>
Lloyd Stockel, a Director of the Advisor, is the Chairman of Sand County
Ventures, Inc., a Trustee of Muir Investment Trust and a Director of DFA
Securities Inc.
David Salisbury, a Director of the Advisor, is Chief Executive Officer of
Schroder Capital Management International Inc. and a Director of DFA Securities
Inc.
Arthur Barlow is a Vice President of Registrant and all DFA Entities.
Maureen Connors is a Vice President of Registrant and all DFA Entities.
Robert Deere is a Vice President of the Registrant and all DFA Entities.
Irene R. Diamant is a Vice President and Secretary of Registrant and all DFA
Entities. Ms. Diamant was an associate attorney with Cahill, Gordon and Reindel
in New York, NY from 1987 to 1991.
Eugene Fama, Jr. is a Vice President of Registrant and all DFA Entities.
David Plecha is a Vice President of Registrant and all DFA Entities.
George Sands is a Vice President of Registrant and DFA Entities. Mr. Sands was
a Managing Director of Asset Strategy Consulting in Los Angeles, CA from March
1991 to August 1992 and a Vice President of Wilshire Associates in Santa Monica,
CA from 1985 to February 1991.
Michael T. Scardina is a Vice President, Chief Financial Officer, Controller and
Treasurer of the Registrant and all DFA Entities.
Cem Severoglu is a Vice President of Registrant and all DFA Entities.
Jeanne C. Sinquefield is Executive Vice President of the Registrant and all DFA
Entities.
Daniel Wheeler is a Marketing Officer of the Advisor.
David Schneider is a Marketing Officer of the Advisor.
Lawrence Spieth is a Marketing Officer of the Advisor.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not applicable
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<PAGE>
(b) Registrant distributes its own shares. It has entered
into an agreement, filed as Exhibit No. 6 to the Registration
Statement, which provides that DFA Securities Inc., 1299 Ocean
Avenue, 11th Floor, Santa Monica, California 90401, will supervise
the sale of Registrant's shares.
(c) Not applicable
ITEM 30. LOCATIONS OF ACCOUNTS AND RECORDS.
All accounts and records are maintained by PFPC Inc., 400 Bellevue
Parkway, Wilmington, DE 19809.
ITEM 31. MANAGEMENT SERVICES.
There are no management-related service contracts not discussed in Part A
or Part B.
ITEM 32. UNDERTAKING.
(a) Not applicable
(b) Not applicable
(c) The Registrant undertakes to furnish each person to whom this
Post-Effective Amendment is delivered a copy of its latest annual report to
shareholders, upon request and without charge.
(d) The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of removal of any
trustee or trustees when requested in writing to do so by the record holders of
not less than 10 per centum of the Registrant's outstanding shares and to assist
its shareholders in accordance with the requirements of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder communications.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940,
as amended, the Registrant has duly caused this amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Monica, the State of California, on the 29th
day of November, 1995.
THE DFA INVESTMENT TRUST COMPANY
By: /s/ DAVID G. BOOTH
---------------------------------
David G. Booth
President
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<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
99(b)(1)(i) Agreement and Declaration of Trust effective as of
December 27, 1993
99(b)(5) Investment Management Agreement re: The U.S. Large
Company Series
27(b)(17) Financial Data Schedules
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<PAGE>
Exhibit No. 99(b)(1)(i)
Effective as of
December 27, 1993
AGREEMENT AND DECLARATION OF TRUST
of
THE DFA INVESTMENT TRUST COMPANY
a Delaware Business Trust
Principal Place of Business:
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Name and Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Name. . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Definitions . . . . . . . . . . . . . . . . . . . 1
(a) Trust . . . . . . . . . . . . . . . . 1
(b) Trust Property. . . . . . . . . . . . 1
(c) Trustees. . . . . . . . . . . . . . . 1
(d) Shares. . . . . . . . . . . . . . . . 2
(e) Holder. . . . . . . . . . . . . . . . 2
(f) Person. . . . . . . . . . . . . . . . 2
(g) 1940 Act. . . . . . . . . . . . . . . 2
(h) Commission and Principal
Underwriter . . . . . . . . . . . . . 2
(i) Declaration of Trust. . . . . . . . . 2
(j) By-Laws . . . . . . . . . . . . . . . 2
(k) Interested Person . . . . . . . . . . 2
(l) Investment Manager. . . . . . . . . . 2
(m) Series. . . . . . . . . . . . . . . . 2
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Purpose of Trust . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1. Division of Beneficial Interest . . . . . . . . . 3
Section 2. Ownership of Shares . . . . . . . . . . . . . . . 4
Section 3. Investments in the Trust. . . . . . . . . . . . . 4
Section 4. Status of Shares and Limitation of
Personal Liability. . . . . . . . . . . . . . . . 4
Section 5. Power of Board of Trustees to Change
Provisions Relating to Shares . . . . . . . . . . 4
Section 6. Establishment and Designation of
Shares. . . . . . . . . . . . . . . . . . . . . . 5
(a) Assets Held with Respect to a
Particular Series . . . . . . . . . . . . . . . . . 5
(b) Liabilities Held with Respect to a
Particular Series . . . . . . . . . . . . . . . 6
(c) Dividends, Distributions,
Redemptions, and Repurchases. . . . . . . . . . . . 6
(d) Voting . . . . . . . . . . . . . . . . . . . . 7
(e) Equality . . . . . . . . . . . . . . . . . . . 7
(f) Fractions. . . . . . . . . . . . . . . . . . . 7
(g) Exchange Privilege . . . . . . . . . . . . . . 7
(h) Combination of Series. . . . . . . . . . . . . 7
(i) Elimination of Series. . . . . . . . . . . . . 7
(j) Transferability. . . . . . . . . . . . . . . . . 7
(k) Termination of a Series. . . . . . . . . . . . . 7
(l) Series Established as a Partnership. . . . . . . 8
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i)
<PAGE>
PAGE
The Board of Trustees. . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. Number, Election and Tenure . . . . . . . . . . . 8
Section 2. Effect of Death, Resignation, etc. of
a Trustee . . . . . . . . . . . . . . . . . . . . 9
Section 3. Powers. . . . . . . . . . . . . . . . . . . . . . 9
Section 4. Payment of Expenses by the Trust. . . . . . . . . 12
Section 5. Ownership of Assets of the Trust. . . . . . . . . 13
Section 6. Service Contracts . . . . . . . . . . . . . . . . 13
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Holders' Voting Powers and Meetings. . . . . . . . . . . . . . . . 14
Section 1. Voting Powers . . . . . . . . . . . . . . . . . . 14
Section 2. Voting Power and Meetings . . . . . . . . . . . . 15
Section 3. Quorum and Required Vote. . . . . . . . . . . . . 15
Section 4. Action by Written Consent . . . . . . . . . . . . 15
Section 5. Record Dates. . . . . . . . . . . . . . . . . . . 15
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Net Asset Value, Distributions, and Redemptions. . . . . . . . . . 16
Section 1. Determination of Net Asset Value, Net
Income, and Distributions . . . . . . . . . . . . 16
Section 2. Redemptions and Repurchases . . . . . . . . . . . 16
Section 3. Redemptions at the Option of the
Trust . . . . . . . . . . . . . . . . . . . . . . 17
Section 4. Transfer of Shares. . . . . . . . . . . . . . . . 17
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Compensation and Limitation of Liability . . . . . . . . . . . . . 17
Section 1. Compensation of Trustees. . . . . . . . . . . . . 17
Section 2. Indemnification and Limitation of
Liability . . . . . . . . . . . . . . . . . . . . 17
Section 3. Trustee's Good Faith Action, Expert
Advice, No Bond or Surety . . . . . . . . . . . . 18
Section 4. Insurance . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1. Liability of Third Persons Dealing
with Trustees . . . . . . . . . . . . . . . . . . 18
Section 2. Termination of Trust or Series. . . . . . . . . . 19
Section 3. Merger and Consolidation. . . . . . . . . . . . . 19
Section 4. Amendments. . . . . . . . . . . . . . . . . . . . 19
Section 5. Filing of Copies, References, . .
Headings. . . . . . . . . . . . . . . . . . . . . 20
Section 6. Applicable Law. . . . . . . . . . . . . . . . . . 20
Section 7. Provisions in Conflict with Law or
Regulations . . . . . . . . . . . . . . . . . . . 20
Section 8. Business Trust Only . . . . . . . . . . . . . . . 21
Section 9. Use of the Name "DFA" . . . . . . . . . . . . . . 21
(ii)
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
THE DFA INVESTMENT TRUST COMPANY
WHEREAS, this AGREEMENT AND DECLARATION OF TRUST is made and entered
into as of the date set forth below by the Trustees named hereunder for the
purpose of forming a Delaware business trust in accordance with the provisions
hereinafter set forth,
NOW, THEREFORE, the Trustees hereby direct that a Certificate of Trust
be filed with the Office of the Secretary of State of the State of Delaware and
do hereby declare that the Trustees will hold IN TRUST all cash, securities and
other assets which the Trust now possesses or may hereafter acquire from time to
time in any manner and manage and dispose of the same upon the following terms
and conditions for the pro rata benefit of the holders of Shares in this Trust.
ARTICLE I.
Name and Definitions
SECTION 1. NAME. This trust shall be known as "THE DFA INVESTMENT
TRUST COMPANY" and the Trustees shall conduct the business of the Trust under
that name or any other name as they may from time to time determine.
SECTION 2. DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Delaware business trust established by
this Agreement and Declaration of Trust, as amended from time to time;
(b) The "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the account
of the Trust;
(c) "Trustees" refers to the persons who have signed this Agreement
and Declaration of Trust, so long as they continue in office in accordance with
the terms hereof, and all other persons who may from time to time be duly
elected or appointed to serve on the Board of Trustees in accordance with the
provisions hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in their capacity as trustees hereunder;
<PAGE>
(d) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and includes
fractions of Shares as well as whole Shares;
(e) "Holder" means a record owner of outstanding Shares;
(f) "Person" means and includes individuals, corporations,
partnerships, trusts, foundations, plans, associations, joint ventures, estates
and other entities, whether or not legal entities, and governments and agencies
and political subdivisions thereof, whether domestic or foreign;
(g) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time.
References herein to specific sections of the 1940 Act shall be deemed to
include such Rules and Regulations as are applicable to such sections as
determined by the Trustees or their designees;
(h) The terms "Commission" and "Principal Underwriter" shall have the
respective meanings given them in Section 2(a)(7) and Section (2)(a)(29) of the
1940 Act;
(i) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust, as amended or restated from time to time;
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time;
(k) The term "Interested Person" has the meaning given it in Section
2(a)(19) of the 1940 Act;
(l) "Investment Manager" or "Manager" means a party furnishing
services to the Trust pursuant to any contract described in Article IV, Section
7(a) hereof;
(m) "Series" refers to each Series of Shares established and
designated under or in accordance with the provisions of Article III.
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<PAGE>
ARTICLE II.
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the
business of a management investment company registered under the 1940 Act
through one or more Series investing primarily in securities.
ARTICLE III.
Shares
SECTION 1. DIVISION OF BENEFICIAL INTEREST. The beneficial interest
in the Trust shall at all times be divided into an unlimited number of Shares,
with a par value of $ .01 per Share provided that the Shares of Series that are
established by the Trustees to be taxable as a separate partnership for federal
income tax purposes shall have no par value. The Trustees may authorize the
division of Shares into separate Series and the division of Series into separate
classes of Shares. The different Series shall be established and designated,
and the variations in the relative rights and preferences as between the
different Series shall be fixed and determined, by the Trustees. If only one
Series shall be established, the Shares shall have the rights and preferences
provided for herein and in Article III, Section 6 hereof to the extent relevant
and not otherwise provided for herein.
Subject to the provisions of Section 6 of this Article III, each Share
shall have voting rights as provided in Article V hereof, and Holders of the
Shares of any Series shall be entitled to receive dividends and distributions,
when, if and as declared with respect thereto in the manner provided in Article
VI, Section 1 hereof. No Share shall have any priority or preference over any
other Share of the same Series with respect to dividends or distributions of the
Trust or otherwise. All dividends and distributions shall be made ratably among
all Holders of a Series from the assets held with respect to such Series
according to the number of Shares of such Series held of record by such Holders
on the record date for any dividend or distribution or on the date of
termination of the Trust, as the case may be. Holders shall have no preemptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust or any Series. The Trustees may from time to time divide or
combine the Shares of a Series into a greater or lesser number of Shares of such
Series without thereby materially changing the proportionate beneficial interest
of such Shares in the assets held with respect to that Series or materially
affecting the rights of Shares of any other Series.
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<PAGE>
SECTION 2. OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series. No
certificates evidencing the ownership of Shares shall be issued except as the
Board of Trustees may otherwise determine from time to time. The Trustees may
make such rules as they consider appropriate for the transfer of Shares of each
Series and similar matters and, by resolution, may restrict the transfer of
Shares of a Series. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to the
identity of the Holders of each Series and as to the number of Shares of each
Series held from time to time by each Holder.
SECTION 3. INVESTMENTS IN THE TRUST. Investments may be accepted by
the Trust from such Persons, at such times, on such terms, and for such
consideration as the Trustees from time to time may authorize. Each investment
shall be credited to the Holder's account in the form of full and fractional
Shares of the Trust, in such Series as the purchaser shall select, at the net
asset value per Share next determined for such Series after receipt of the
investment; provided, however, that the Trustees may, in their sole discretion,
impose a reimbursement fee upon investments in the Trust.
SECTION 4. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument, the By-Laws of the Trust and the resolutions of the Board of
Trustees. Every Holder by virtue of having become a Holder shall be held to
have expressly assented and agreed to the terms thereof. The death of a Holder
during the existence of the Trust shall not operate to terminate the Trust, nor
entitle the representative of any deceased Holder to an accounting or to take
any action in court or elsewhere against the Trust or the Trustees, but shall
entitle such representative only to the rights of said deceased Holder under
this Declaration of Trust. Ownership of Shares shall not entitle a Holder to
any title in or to the whole or any part of the Trust Property or right to call
for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Holders as partners or joint venturers except
as specifically provided for pursuant to Article III, Section 6 herein or by
resolution of the Board of Trustees. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Holder, or to call upon any Holder for the payment of any sum of
money or assessment whatsoever other than such as the Holder may at any time
agree to pay.
SECTION 5. POWER OF BOARD OF TRUSTEES TO CHANGE PROVISIONS RELATING
TO SHARES. Notwithstanding any other provision of this Declaration of Trust to
the contrary, and
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<PAGE>
without limiting the power of the Board of Trustees to amend the Declaration of
Trust as provided elsewhere herein, the Board of Trustees shall have the power
to amend this Declaration of Trust, at any time and from time to time, in such
manner as the Board of Trustees may determine in their sole discretion, without
the need for action by any Holder, so as to add to, delete, replace or otherwise
modify any provisions relating to the Shares contained in this Declaration of
Trust, provided that before adopting any such amendment without approval of the
Holders the Board of Trustees shall determine that it is consistent with the
fair and equitable treatment of all Holders or that approval of the Holders is
not required by the 1940 Act or other applicable law. If Shares have been
issued, approval of the Holders shall be required to adopt any amendments to
this Declaration of Trust which would adversely affect to a material degree the
rights and preferences of the Shares of any Series or to increase or decrease
the par value of the Shares of any Series.
SECTION 6. ESTABLISHMENT AND DESIGNATION OF SHARES. The
establishment and designation of any Series of Shares shall be effective upon
the adoption by a majority of the Trustees, of a resolution which sets forth
such establishment and designation and the relative rights and preferences of
such Series. Each such resolution shall be incorporated herein by reference
(and shall be deemed a part of Section 6 of Article III of this Declaration of
Trust) upon adoption. Any inconsistencies or conflict between the terms of any
such resolution and this Declaration of Trust shall be resolved in favor of such
resolution.
Shares of each Series established pursuant to this Section 6, unless
otherwise provided in the resolution establishing such Series, shall have the
following relative rights and preferences:
(a) ASSETS HELD WITH RESPECT TO A PARTICULAR SERIES. All
consideration received by the Trust for the issue or sale of Shares of a Series,
including dividends and distributions paid by, and reinvested in, such Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof from whatever source
derived, including, without limitation, any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably be held with respect to that Series for all purposes, subject only
to the rights of creditors, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings, profits and
proceeds thereof, from whatever source derived, including, without limitation,
any proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds, in
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<PAGE>
whatever form the same may be, are herein referred to as "assets held with
respect to" that Series. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are not readily
identifiable as assets held with respect to any particular Series (collectively
"General Assets"), the Trustees shall allocate such General Assets to, between
or among any one or more of the Series in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable, and any General
Asset so allocated to a particular Series shall be held with respect to that
Series. Each such allocation by the Trustees shall be conclusive and binding
upon the Holders of all Series for all purposes in absence of manifest error.
(b) LIABILITIES HELD WITH RESPECT TO A PARTICULAR SERIES. The assets
of the Trust held with respect to each Series shall be charged with the
liabilities of the Trust with respect to such Series and all expenses, costs,
charges and reserves attributable to such Series, and any general liabilities of
the Trust which are not readily identifiable as being held in respect of a
Series shall be allocated and charged by the Trustees to and among any one or
more Series in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. The liabilities, expenses, costs, charges,
and reserves so charged to a Series are herein referred to as "liabilities held
with respect to" that Series. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and binding upon the
holders of all Series for all purposes in absence of manifest error. All
Persons who have extended credit which has been allocated to a particular
Series, or who have a claim or contract which has been allocated to a Series,
shall look exclusively to the assets held with respect to such Series for
payment of such credit, claim, or contract. In the absence of an express
agreement so limiting the claims of such creditors, claimants and contracting
parties, each creditor, claimant and contracting party shall be deemed
nevertheless to have agreed to such limitation unless an express provision to
the contrary has been incorporated in the written contract or other document
establishing the contractual relationship.
(c) DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS, AND REPURCHASES. No
dividend or distribution including, without limitation, any distribution paid
upon termination of the Trust or of any Series with respect to, or any
redemption or repurchase of, the Shares of any Series shall be effected by the
Trust other than from the assets held with respect to such Series, nor shall any
Holder of any Series otherwise have any right or claim against the assets held
with respect to any other Series except to the extent that such Holder has such
a right or claim hereunder as a Holder of such other Series. The Trustees shall
have full discretion to determine which items shall be treated as income and
which items as capital; and each such determination
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<PAGE>
and allocation shall be conclusive and binding upon the Holders in absence of
manifest error.
(d) VOTING. All Shares of the Trust entitled to vote on a matter
shall vote without differentiation between the separate Series on a
one-vote-per-Share basis; provided however, if a matter to be voted on affects
only the interests of not all Series, then only the Holders of such affected
Series shall be entitled to vote on the matter.
(e) EQUALITY. All the Shares of each Series shall represent an equal
proportionate undivided interest in the assets held with respect to such Series
(subject to the liabilities of such Series and such rights and preferences as
may have been established and designated with respect to classes of Shares
within such Series), and each Share of a Series shall be equal to each other
Share of such Series.
(f) FRACTIONS. Any fractional Share of a Series shall have
proportionately all the rights and obligations of a whole share of such Series,
including rights with respect to voting, receipt of dividends and distributions
and redemption of Shares.
(g) EXCHANGE PRIVILEGE. The Trustees shall have the authority to
provide that the holders of Shares of any Series shall have the right to
exchange such Shares for Shares of one or more other Series in accordance with
such requirements and procedures as may be established by the Trustees.
(h) COMBINATION OF SERIES. The Trustees shall have the authority,
without the approval of the Holders of any Series unless otherwise required by
applicable law, to combine the assets and liabilities held with respect to any
two or more Series into assets and liabilities held with respect to a single
Series.
(i) ELIMINATION OF SERIES. At any time that there are no Shares
outstanding of a Series, the Trustees may abolish such Series.
(j) TRANSFERABILITY. The Trustees shall have the authority to
provide that the shares of a Series are non-transferable.
(k) TERMINATION OF A SERIES. The Trustees shall have the authority
to provide that upon the bankruptcy or insolvency of a Holder or in the case of
the redemption of the entire interest of a Holder in a Series, that such Series
will be terminated unless a majority in interest of the remaining Holders in the
Series approve the continuing existence of the Series.
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<PAGE>
(l) SERIES ESTABLISHED AS A PARTNERSHIP. The Trustees shall have the
authority to create Series intended to be classified as a Partnership for
federal income tax purposes. Pursuant to such authority, the Trustees may
provide that (i) Book Capital Accounts (as defined in any resolution
establishing and designating such Series) are to be determined and maintained
for each Holder in accordance with Section 704(b) of the Internal Revenue Code
of 1986, as amended (the "Code") (and any successor provision thereto) and the
Treasury Regulations promulgated thereunder; (ii) upon liquidation of a Series
(or any Holder's interest therein), liquidating distributions shall be made in
accordance with the positive Book Capital Account balances of the Holders; and,
(iii) if any Holder in such Series has a deficit balance in his Book Capital
Account following the liquidation of his interest in the Series, such Holder is
unconditionally required to restore the amount of such deficit balance to the
Series, or in lieu thereof, the resolution establishing the Series contain a
"qualified income offset" within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(d).
ARTICLE IV.
The Board of Trustees
SECTION 1. NUMBER, ELECTION AND TENURE. The number of Trustees
constituting the Board of Trustees shall be fixed from time to time by a written
instrument signed, or by resolution approved at a duly constituted meeting, by a
majority of the Board of Trustees, provided, however, that the number of
Trustees shall in no event be less than one (1) nor more than fifteen (15).
Subject to the requirements of Section 16(a) of the 1940 Act, the Board of
Trustees, by action of a majority of the then Trustees at a duly constituted
meeting, may fill vacancies in the Board of Trustees and remove Trustees with or
without cause. Each Trustee shall serve during the continued lifetime of the
Trust until he or she dies, resigns, is declared bankrupt or incompetent by a
court of competent jurisdiction, or is removed. Any Trustee may resign at any
time by written instrument signed by him and delivered to any officer of the
Trust or to a meeting of the Trustees. Such resignation shall be effective upon
receipt unless specified to be effective at some other time. Except to the
extent expressly provided in a written agreement with the Trust, no Trustee
resigning and no Trustee removed shall have any right to any compensation for
any period following his or her resignation or removal, or any right to damages
or other payment on account of such removal. Any Trustee may be removed at any
meeting of Holders by a vote of two-thirds of the outstanding Shares of the
Trust. A meeting of Holders for the purpose of electing or removing one or more
Trustees may be called (i) by the Trustees upon their own vote, or (ii) upon the
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demand of Holders owning 10% or more of the Shares of the Trust in the
aggregate.
SECTION 2. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The
death, declination, resignation, retirement, removal, or incapacity of one or
more Trustees, or all of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of Trust.
Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is
filled as provided in Article IV, Section 1, the Trustees in office, regardless
of their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration of Trust.
SECTION 3. POWERS. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Board of Trustees, and
such Board shall have all powers necessary or convenient to carry out that
responsibility including the power to engage in transactions of all kinds on
behalf of the Trust. Trustees, in all instances, shall act as principals and
are and shall be free from the control of the Holders. The Trustees shall have
full power and authority to do any and all acts and to make and execute any and
all contracts, documents and instruments that they may consider desirable,
necessary or appropriate in connection with the administration of the Trust.
Without limiting the foregoing, the Trustees may: adopt, amend and repeal
By-Laws not inconsistent with this Declaration of Trust providing for the
regulation and management of the affairs of the Trust; elect and remove such
officers and appoint and terminate such agents as they consider appropriate;
appoint from their own number and establish and terminate one or more committees
consisting of two or more Trustees who may exercise the powers and authority of
the Board of Trustees to the extent that the Trustees determine; employ one or
more custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a system
or systems for the central handling of securities or with a Federal Reserve
Bank, retain a transfer agent or a shareholder servicing agent, or both; provide
for the issuance and distribution of Shares by the Trust directly or through one
or more Principal Underwriters or otherwise; redeem, repurchase and transfer
Shares pursuant to applicable law; set record dates for the determination of
Holders with respect to various matters; declare and pay dividends and
distributions to Holders of each Series from the assets of such Series;
establish from time to time, in accordance with the provisions of Article III,
Section 6 hereof, any Series of Shares, each such Series to operate as a
separate and distinct investment medium and with separately defined investment
objectives and policies and distinct investment purpose; and in general delegate
such authority as they consider desirable to any officer of the Trust,
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to any committee of the Trustees and to any agent or employee of the Trust or to
any such custodian, transfer or servicing agents, Investment Manager or
Principal Underwriter. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration of Trust, the presumption shall be in favor of a
grant of power to the Trustees and unless otherwise specified herein or required
by the 1940 Act or other applicable law, any action by the Board of Trustees
shall be deemed effective if approved or taken by a majority of the Trustees
then in office or a majority of any duly constituted committee of Trustees. Any
action required or permitted to be taken at any meeting of the Board of
Trustees, or any committee thereof, may be taken without a meeting if all
members of the Board of Trustees or committee (as the case may be) consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of the Board of Trustees, or committee, except as otherwise
provided in the 1940 Act.
Without limiting the foregoing, the Trust shall have power and
authority:
(a) To invest and reinvest cash and cash items, to hold cash
uninvested, and to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, write
options on, lend or otherwise deal in or dispose of contracts for the future
acquisition or delivery of all types of securities,futures contracts and options
thereon, and forward currency contracts of every nature and kind, including,
without limitation, all types of bonds, debentures, stocks, preferred stocks,
negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed, or sponsored by any and all Persons, including,
without limitation, states, territories, and possessions of the United States
and the District of Columbia and any political subdivision, agency, or
instrumentality thereof, any foreign government or any political subdivision of
the U.S. Government or any foreign government, or any international
instrumentality or organization, or by any bank or savings institution, or by
any corporation or organization organized under the laws of the United States or
of any state, territory, or possession thereof, or by any corporation or
organization organized under any foreign law, or in "when issued" contracts for
any such securities, futures contracts and options thereon, and forward currency
contracts, to change the investments of the assets of the Trust; and to exercise
any and all rights, powers, and privileges of ownership or interest in respect
of any and all such investments of every kind and description, including,
without limitation, the right to consent and otherwise act with respect thereto,
with power to designate
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one or more Persons, to exercise any of said rights, powers, and privileges in
respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options with respect to or otherwise deal in any property rights relating
to any or all of the assets of the Trust or any Series;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and right of subscription or otherwise which
in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating that it
is trust property, whether in bearer, unregistered or other negotiable form, or
in its own name or in the name of a custodian or subcustodian or a nominee or
nominees or otherwise or to authorize the custodian or a subcustodian or a
nominee or nominees to deposit the same in a securities depository, subject in
each case to the applicable provisions of the 1940 Act;
(f) To consent to, or participate in, any plan for the
reorganization, consolidation or merger of any corporation or issuer of any
security which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer; and to pay
calls or subscriptions with respect to any security held in the Trust;
(g) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
(h) To litigate, compromise, arbitrate, settle or otherwise adjust
claims in favor of or against the Trust or a Series, or any matter in
controversy, including but not limited to claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
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(j) To borrow funds or other property in the name of the Trust or
Series exclusively for Trust purposes;
(k) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof;
(l) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary, desirable or appropriate for the
conduct of the business, including, without limitation, insurance policies
insuring the assets of the Trust or payment of distributions and principal on
its portfolio investments, and insurance policies insuring the Holders,
Trustees, officers, employees, agents, Investment Manager, principal
underwriters, or independent contractors of the Trust, individually against all
claims and liabilities of every nature arising by reason of holding Shares,
holding, being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such Person as Trustee,
officer, employee, agent, Investment Manager, Principal Underwriter, or
independent contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such Person against liability; and
(m) To adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust.
The Trust shall not be limited to investing in obligations maturing
before the possible termination of the Trust or one or more of its Series. The
Trust shall not in any way be bound or limited by any present or future law or
custom in regard to investment by fiduciaries. The Trust shall not be required
to obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
SECTION 4. PAYMENT OF EXPENSES BY THE TRUST. Subject to the
provisions of Article III, Section 6(b), the Trustees are authorized to pay or
cause to be paid out of the principal or income of the Trust or Series, or
partly out of the principal and partly out of income, and to charge or allocate
the same to, between or among such one or more of the Series that may be
established or designated pursuant to Article III, Section 6, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
Trust or Series, or in connection with the management thereof, including, but
not limited to, the Trustees' compensation and such expenses and charges for the
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services of the Trust's officers, employees, Investment Managers, Principal
Underwriter, auditors, counsel, custodian, transfer agent, servicing agents, and
such other agents or independent contractors and such other expenses and charges
as the Trustees may deem necessary or proper to incur.
SECTION 5. OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trust,
except that the Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the Trustees, or in the
name of the Trust, or in the name of any other Person as nominee, on such terms
as the Trustees may determine. Upon the resignation, incompetency, bankruptcy,
removal, or death of a Trustee he or she shall automatically cease to have any
such title in any of the Trust Property, and the title of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered. The Trustees may determine that the Trust or
the Trustees, acting for and on behalf of the Trust, shall be deemed to hold
beneficial ownership of any income earned on the securities owned by the Trust,
whether domestic or foreign.
SECTION 6. SERVICE CONTRACTS.
(a) The Trustees may, at any time and from time to time, contract for
exclusive or nonexclusive advisory, management and/or administrative services
for the Trust or for any Series with any Person; and any such contract may
contain such other terms as the Trustees may determine, including without
limitation, authority for the Investment Manager to determine from time to time
without prior consultation with the Trustees what investments shall be
purchased, held, sold or exchanged and what portion, if any, of the assets of
the Trust shall be held uninvested and to make changes in the Trust's
investments, and such other responsibilities as may specifically be delegated to
such Person.
(b) The Trustees may also, at any time and from time to time,
contract with any Persons, appointing such Persons exclusive or nonexclusive
distributor or Principal Underwriter for the Shares of one or more of the Series
or other securities to be issued by the Trust. Every such contract may contain
such other terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time to
time, to contract with any Persons, appointing such Person(s) to serve as
custodian(s), transfer agent and/or shareholder servicing agent for the Trust or
one or more of its Series. Every such contract shall comply with such terms as
may be required by the Trustees.
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(d) The Trustees are further empowered, at any time and from time to
time, to contract with any Persons to provide such other services to the Trust
or one or more of the Series, as the Trustees determine to be in the best
interests of the Trust and the applicable Series.
(e) The fact that:
(i) any of the Holders, Trustees, or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, Manager,
adviser, Principal Underwriter, distributor, or affiliate or agent of
or for any Person with which an advisory, management or administration
contract, or Principal Underwriter's or distributor's contract, or
transfer, shareholder servicing or other type of service contract may
be made, or that
(ii) any Person with which an advisory, management or
administration contract or Principal Underwriter's or distributor's
contract, or transfer, shareholder servicing or other type of service
contract may be made also has an advisory, management or
administration contract, or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other service
contract, or has other business or interests with any other Person,
shall not affect the validity of any such contract or disqualify any Holder,
Trustee or officer of the Trust from voting upon or executing the same, or
create any liability or accountability to the Trust or its Holders, provided
approval of each such contract is made pursuant to the applicable requirements
of the 1940 Act.
ARTICLE V.
Holders' Voting Powers and Meetings
SECTION 1. VOTING POWERS. Subject to the provisions of Article III,
Sections 5 and 6(d), the Holders shall have right to vote only (i) for removal
of Trustees as provided in Article IV, Section 1, and (ii) with respect to such
additional matters relating to the Trust as may be required by the applicable
provisions of the 1940 Act, including Section 16(a) thereof, and (iii) on such
other matters as the Trustees may consider necessary or desirable. Each whole
Share shall be entitled to one vote as to any matter on which it is entitled to
vote and each fractional Share shall be entitled to a proportionate fractional
vote. There shall be no cumulative voting in the election of Trustees. Shares
may be voted in person or by proxy. A proxy purporting to be executed by or on
behalf of a Holder shall be deemed valid unless challenged at or prior to its
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exercise and the burden of proving invalidity shall rest on the challenger.
SECTION 2. VOTING POWER AND MEETINGS. Meetings of the Holders may be
called by the Trustees for the purposes described in Section 1 of this Article
V. A meeting of Holders may be held at any place designated by the Trustees.
Written notice of any meeting of Holders shall be given or caused to be given by
the Trustees by delivering personally or mailing such notice at least seven (7)
days before such meeting, postage prepaid, stating the time and place of the
meeting, to each Holder at the Holder's address as it appears on the records of
the Trust. Whenever notice of a meeting is required to be given to a Holder
under this Declaration of Trust, a written waiver thereof, executed before or
after the meeting by such Holder or his or her attorney thereunto authorized and
filed with the records of the meeting, or actual attendance at the meeting of
Holders in person or by proxy, shall be deemed equivalent to such notice.
SECTION 3. QUORUM AND REQUIRED VOTE. Except when a larger quorum is
required by the applicable provisions of the 1940 Act, forty percent (40%) of
the Shares entitled to vote on a matter shall constitute a quorum at a meeting
of the Holders. Any meeting of Holders may be adjourned from time to time by a
majority of the votes properly cast upon the question of adjourning a meeting to
another date and time, whether or not a quorum is present, and the meeting may
be held as adjourned within a reasonable time after the date set for the
original meeting without further notice. Subject to the provisions of Article
III, Section 6(d) and the applicable provisions of the 1940 Act, when a quorum
is present at any meeting, a majority of the Shares voted shall decide any
questions except only a plurality vote shall be necessary to elect Trustees.
SECTION 4. ACTION BY WRITTEN CONSENT. Any action taken by Holders
may be taken without a meeting if all the holders of Shares entitled to vote on
the matter are provided with not less than 7 days written notice thereof and
written consent to the action is filed with the records of the meetings of
Holders by the holders of the number of Shares that would be required to approve
the matter as provided in Article V, Section 3. Such consent shall be treated
for all purposes as a vote taken at a meeting of Holders.
SECTION 5. RECORD DATES. For the purpose of determining the Holders
who are entitled to vote or act at any meeting or any adjournment thereof, the
Trustees may fix a time, which shall be not more than ninety (90) days before
the date of any meeting of Holders, as the record date for determining the
Holders having the right to notice of and to vote at such meeting and any
adjournment thereof, and in such case only Holders of record on such record date
shall have such right, notwithstanding
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any transfer of shares on the books of the Trust after the record date. For the
purpose of determining the Holders who are entitled to receive payment of any
dividend or of any other distribution, the Trustees may fix a date, which shall
be before the date for the payment of such dividend or distribution, as the
record date for determining the Holders having the right to receive such
dividend or distribution. Nothing in this Section shall be construed as
precluding the Trustees from setting different record dates for different
Series.
ARTICLE VI.
Net Asset Value, Distributions, and Redemptions
SECTION 1. DETERMINATION OF NET ASSET VALUE, NET INCOME, AND
DISTRIBUTIONS. Subject to Article III, Section 6 hereof, the Trustees, in their
absolute discretion, may prescribe and shall set forth in the By-laws or in a
duly adopted resolution of the Trustees such bases and time for determining the
per Share net asset value of the Shares of any Series and the declaration and
payment of dividends and distributions on the Shares of any Series, as they may
deem necessary or desirable.
SECTION 2. REDEMPTIONS AND REPURCHASES. The Trust shall purchase
such Shares as are offered by any Holder for redemption, upon receipt by the
Trust or a Person designated by the Trust that the Trust redeem such Shares or
in accordance with such procedures for redemption as the Trustees may from time
to time authorize; and the Trust will pay therefor the net asset value thereof,
in accordance with the By-Laws, the applicable provisions of the 1940 Act or as
further provided by resolution of the Trustees. Payment for said Shares shall
be made by the Trust to the Holder within seven days after the date on which the
request for redemption is received in proper form. The obligation set forth in
this Section 2 is subject to the provision that in the event that any time the
New York Stock Exchange (the "Exchange") is closed for other than weekends or
holidays, or if permitted by the Rules of the Commission during periods when
trading on the Exchange is restricted or during any emergency which makes it
impracticable for the Trust to dispose of the investments of the applicable
Series or to determine fairly the value of the net assets held with respect to
such Series or during any other period permitted by order of the Commission for
the protection of investors, such obligations may be suspended or postponed by
the Trustees.
The redemption price may in any case or cases be paid in cash or
wholly or partly in kind in accordance with Rule 18f-1 under the 1940 Act if the
Trustees determine that such payment is advisable in the interest of the
remaining Holders of the Series of which the Shares are being redeemed. Subject
to the foregoing, the selection and quantity of securities or other
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property so paid or delivered as all or part of the redemption price shall be
determined by or under authority of the Trustees. In no case shall the Trust be
liable for any delay of any corporation or other Person in transferring
securities selected for delivery as all or part of any payment in kind.
SECTION 3. REDEMPTIONS AT THE OPTION OF THE TRUST. The Trust shall
have the right, at its option, upon 60 days notice to the affected Holder at any
time to redeem Shares of such Holder at the net asset value thereof as described
in Section 1 of this Article VI or as further provided by resolution of
Trustees: (i) if at such time such Holder owns Shares of any Series having an
aggregate net asset value of less than a minimum value determined from time to
time by the Trustees; or (ii) to the extent that such Holder owns Shares of a
Series equal to or in excess of a maximum percentage of the outstanding Shares
of such Series determined from time to time by the Trustees; or (iii) to the
extent that such Holder owns Shares equal to or in excess of a maximum
percentage, determined from time to time by the Trustees, of the outstanding
Shares of the Trust.
SECTION 4. TRANSFER OF SHARES. Except as otherwise provided by
resolution of the Trustees, the Trust shall transfer shares held of record by
any Person to any other Person upon receipt by the Trust or a Person designated
by the Trust of a written request therefore in such form and pursuant to such
procedures as may be approved by the Trustees.
ARTICLE VII.
Compensation and Limitation of Liability
SECTION 1. COMPENSATION OF TRUSTEES. The Trustees as such shall be
entitled to reasonable compensation from the Trust, and they may fix the amount
of such compensation from time to time. Nothing herein shall in any way prevent
the employment of any Trustee to provide advisory, management, legal,
accounting, investment banking or other services to the Trust and to be
specially compensated for such services by the Trust.
SECTION 2. INDEMNIFICATION AND LIMITATION OF LIABILITY. The Trustees
shall not be responsible or liable in any event for any neglect or wrong-doing
of any officer, agent, employee, Manager or Principal Underwriter of the Trust,
nor shall any Trustee be responsible for the act or omission of any other
Trustee, and, subject to the provisions of the Bylaws, the Trust out of its
assets may indemnify and hold harmless each and every Trustee and officer of the
Trust from and against any and all claims, demands, costs, losses, expenses, and
damages whatsoever arising out of or related to such Trustee's performance of
his or her duties as a Trustee or officer of the Trust; provided that nothing
herein contained shall indemnify,
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hold harmless or protect any Trustee or officer from or against any liability to
the Trust or any Holder to which he or she would otherwise be subject by reason
of wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been issued, executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
SECTION 3. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers hereunder shall be binding
upon everyone interested in or dealing with the Trust. A Trustee shall be
liable to the Trust and to any Holder solely for his or her own wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust, and shall be under no liability for any act or omission in
accordance with such advice nor for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
required.
SECTION 4. INSURANCE. The Trustees shall be entitled and empowered
to the fullest extent permitted by law to purchase with Trust assets insurance
for liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee or officer in connection with any claim, action, suit or
proceeding in which he or she becomes involved by virtue of his or her capacity
or former capacity with the Trust, whether or not the Trust would have the power
to indemnify him or her against such liability under the provisions of this
Article.
ARTICLE VIII.
Miscellaneous
SECTION 1. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No
Person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.
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SECTION 2. TERMINATION OF TRUST OR SERIES. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by the Trustees upon 60 days prior written notice
to the Holders. Any Series may be terminated at any time by the Trustees upon
60 days prior written notice to the Holders of that Series.
Upon termination of the Trust (or any Series, as the case may be),
after paying or otherwise providing for all charges, taxes, expenses and
liabilities held, severally, with respect to each Series (or the applicable
Series, as the case may be), whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets held,
severally, with respect to each Series (or the applicable Series, as the case
may be), to distributable form in cash or shares or other securities, and any
combination thereof, and distribute the proceeds held with respect to each
Series (or the applicable Series, as the case may be), to the Holders of that
Series, as a Series, ratably according to the number of Shares of that Series
held by the several Holders on the date of termination.
SECTION 3. MERGER AND CONSOLIDATION. The Trustees may cause (i) the
Trust or one or more of its Series to the extent consistent with applicable law
to be merged into or consolidated with another Trust, series or Person, (ii) the
Shares of the Trust or any Series to be converted into beneficial interests in
another business trust (or series thereof), (iii) the Shares to be exchanged for
assets or property under or pursuant to any state or federal statute to the
extent permitted by law or (iv) a sale of assets of the Trust or one or more of
its Series. Such merger or consolidation, Share conversion, Share exchange or
sale of assets must be authorized by vote as provided in Article V, Section 3
herein; provided that in all respects not governed by statute or applicable law,
the Trustees shall have power to prescribe the procedure necessary or
appropriate to accomplish a sale of assets, Share exchange, merger or
consolidation including the power to create one or more separate business trusts
to which all or any part of the assets, liabilities, profits or losses of the
Trust may be transferred and to provide for the conversion of Shares of the
Trust or any Series into beneficial interests in such separate business trust or
trusts (or series thereof).
SECTION 4. AMENDMENTS. This Declaration of Trust may be restated
and/or amended at any time by an instrument in writing signed by a majority of
the Trustees then holding office. Any such restatement and/or amendment hereto
shall be effective immediately upon execution and approval. The Certificate of
Trust of the Trust may be restated and/or amended by a similar procedure, and
any such restatement and/or amendment shall be effective immediately upon filing
with the Office of the
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Secretary of State of the State of Delaware or upon such future date as may be
stated therein.
SECTION 5. FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this instrument and of each restatement and/or amendment hereto shall be
kept at the office of the Trust where it may be inspected by any Holder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or amendments have been made and as
to any matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such restatements and/or
amendments. In this instrument and in any such restatements and/or amendment,
references to this instrument, and all expressions like "herein," "hereof" and
"hereunder," shall be deemed to refer to this instrument as amended or affected
by any such restatements and/or amendments. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this instrument. Whenever the
singular number is used herein, the same shall include the plural; and the
neuter, masculine and feminine genders shall include each other, as applicable.
This instrument may be executed in any number of counterparts each of which
shall be deemed an original.
SECTION 6. APPLICABLE LAW. This Agreement and Declaration of Trust
is created under and is to be governed by and construed and administered
according to the laws of the State of Delaware and the Delaware Business Trust
Act, as amended from time to time (the "Act"). The Trust shall be a Delaware
business trust pursuant to such Act, and without limiting the provisions hereof,
the Trust may exercise all powers which are ordinarily exercised by such a
business trust.
SECTION 7. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of the Declaration of Trust are severable, and if
the Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of the Declaration of Trust; provided, however, that such determination
shall not affect any of the remaining provisions of the Declaration of Trust or
render invalid or improper any action taken or omitted prior to such
determination.
(b) If any provision of the Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such
-20-
<PAGE>
invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in any other
jurisdiction or any other provision of the Declaration of Trust in any
jurisdiction.
SECTION 8. BUSINESS TRUST ONLY. It is the intention of the Trustees
to create a business trust pursuant to the Act, and thereby to create only the
relationship of trustee and beneficial owners within the meaning of such Act
between the Trustees and each Holder. Except to the extent provided by
resolution of the Trustees establishing a Series intended to be classified as a
partnership for federal income tax purposes, it is not the intention of the
Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment, joint venture, or any form of legal
relationship other than a business trust pursuant to such Act, and except as so
provided in such resolution, nothing in this Declaration of Trust shall be
construed to make the Holders, either by themselves or with the Trustees,
partners or members of a joint stock association.
SECTION 9. USE OF THE NAME "DFA ". The name "DFA" and all rights to
the use of the name "DFA" belongs to Dimensional Fund Advisors Inc. ("DFA"), the
Manager of the Trust. DFA has consented to the use by the Trust of the
identifying word "DFA" and has granted to the Trust a non-exclusive license to
use the name "DFA" as part of the name of the Trust and the name of any Series
of Shares. In the event DFA or an affiliate of DFA is not appointed as Manager
or ceases to be the Manager of the Trust or of any Series using such names, the
non-exclusive license granted herein may be revoked by DFA and the Trust
promptly shall cease using the name "DFA" as part of its name or the name of any
Series of Shares, upon receipt of the written request therefore by DFA or any
successor to its interests in such name.
-21-
<PAGE>
IN WITNESS WHEREOF, the Trustees named below do hereby make and enter
into this Declaration of Trust of DFA Investment Trust Company as of this 27th
day of December, 1993.
/S/David G. Booth /S/Rex A. Sinquefield
- ---------------------------- ------------------------------
David G. Booth Rex A. Sinquefield
1299 Ocean Avenue, 11th Floor 1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 Santa Monica, CA 90401
/S/George M. Constantinides /S/John P. Gould
- ---------------------------- ------------------------------
George M. Constantinides John P. Gould
1101 East 58th Street 1101 East 58th Street
Chicago, IL 60637 Chicago, IL 60637
/S/Roger G. Ibbotson /S/Merton H. Miller
- ---------------------------- ------------------------------
Roger G. Ibbotson Merton H. Miller
135 Prospect Street 1101 East 58th Street
New Haven, CT 06250 Chicago, IL 60637
/S/Myron S. Scholes
- ----------------------------
Myron S. Scholes
220 East 65th St.
New York, NY 10021
THE PRINCIPAL PLACE OF BUSINESS OF THE TRUST IS
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
-22-
<PAGE>
Exhibit No. 99(b)(5)
AMENDED AND RESTATED
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this day of , 1995, by and between THE DFA
INVESTMENT TRUST COMPANY, a Delaware business trust (the "Trust") and
DIMENSIONAL FUND ADVISORS INC., a Delaware corporation (the "Manager").
1. DUTIES OF ADVISOR
The Trust hereby employs the Manager to manage the investment and
reinvestment of the assets of THE U.S. LARGE COMPANY SERIES of the Trust (the
"Series"), to continuously review, supervise and administer the Series'
investment program, to determine in its discretion the securities to be
purchased or sold and the portion of the Series' assets to be uninvested, to
provide the Trust with records concerning the Manager's activities which the
Trust is required to maintain, and to render regular reports to the Trust's
officers and the Board of Trustees of the Trust, all in compliance with the
objectives, policies and limitations set forth in the Trust's registration
statement and applicable laws and regulations. The Manager accepts such
employment and agrees to provide, at its own expense, the office space,
furnishings and equipment and the personnel required by it to perform the
services described herein on the terms and for the compensation provided herein.
2. PORTFOLIO TRANSACTIONS
The Manager is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Series and is
directed to use its best efforts to obtain the best available price and most
favorable execution, except as prescribed herein. It is understood that the
Manager will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Trust or in respect of the Series, or be in breach of any
obligation owing to the Trust or in respect of the Series under this Agreement,
or otherwise, solely by reason of its having caused the Series to pay a member
of a securities exchange, a broker or a dealer a commission for effecting a
securities transaction for the Series in excess of the amount of commission
another member of an exchange, broker or dealer would have charged if the
Manager determines in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Manager's
overall responsibilities with respect to its accounts, including
<PAGE>
the Trust, as to which it exercises investment discretion. The Manager will
promptly communicate to the officers and directors of the Trust such information
relating to transactions for the Series as they may reasonably request.
3. COMPENSATION OF THE MANAGER
For the services to be rendered by the Manager as provided in Section
1 of this Agreement, the Trust shall pay to the Manager, at the end of each
month, a fee equal to one-twelfth of .025 percent of the net assets of the
Series. In the event that this Agreement is terminated at other than a
month-end, the fee for such month shall be prorated.
4. OTHER SERVICES
At the request of the Trust, the Manager, in its discretion, may make
available to the Trust office facilities, equipment, personnel and other
services. Such office facilities, equipment, personnel and service shall be
provided for or rendered by the Manager and billed to the Trust at the Manager's
cost and, where applicable, the cost thereof shall be apportioned among the
several Series of the Trust proportionate to their respective utilization
thereof.
5. REPORTS
The Trust and the Manager agree to furnish to each other information
with regard to their respective affairs as each may reasonably request.
6. STATUS OF THE MANAGER
The services of the Manager to the Trust or in respect of the Series,
are not to be deemed exclusive, and the Manager shall be free to render similar
services to others as long as its services to the Trust or in respect of the
Series, are not impaired thereby. The Manager shall be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
7. LIABILITY OF MANAGER
No provision of this Agreement shall be deemed to protect the Manager
against any liability to the Trust or its shareholders to which it might
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations under this Agreement.
-2-
<PAGE>
8. PERMISSIBLE INTERESTS
Subject to and in accordance with the agreement and declaration of
trust of the Trust and the charter of the Manager, trustees, officers, and
shareholders of the Trust are or may be interested in the Manager (or any
successor thereof) as directors, officers or shareholders, or otherwise;
directors, officers, agents and shareholders of the Manager are or may be
interested in the Trust as trustees, officers, shareholders or otherwise; and
the Manager (or any successor) is or may be interested in the Trust as a
shareholder or otherwise and the effect of any such interrelationships shall be
governed by said agreement and declaration of trust and charter and the
provisions of the Investment Company Act of 1940.
9. DURATION AND TERMINATION
This Agreement shall become effective on , 1995 (the
"Effective Date") and shall continue in effect until December 31, 1996, and
thereafter, only if such continuance is approved at least annually by a vote of
the Trust's Board of Trustees, including the vote of a majority of the trustees
who are not parties to this Agreement or interested persons of any such party,
cast in person, at a meeting called for the purpose of voting such approval. In
addition, the question of continuance of this Agreement may be presented to the
shareholders of the Trust; in such event, such continuance shall be effected
only if approved by the affirmative vote of the holders of a majority of the
outstanding voting securities of the Series.
This Agreement may at any time be terminated without payment of any
penalty either by vote of the Board of Trustees of the Trust or by vote of the
holders of a majority of the outstanding voting securities of the Series, on
sixty days written notice to the Manager.
This Agreement shall automatically terminate in the event of its
assignment.
This Agreement may be terminated by the Manager after ninety days
written notice to the Trust.
Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at any office of such
party.
As used in this Section 9, the terms "assignment," "interested
persons," and a "vote of the holders of a majority of the outstanding
securities" shall have the respective meanings set forth in Section 2(a)(4),
Section 2(a)(19), Section 2(a)(42) of the Investment Company Act of 1940 and
Rule l8f-2 thereunder.
-3-
<PAGE>
10. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed this day of , 1995.
DIMENSIONAL FUND THE DFA INVESTMENT TRUST
ADVISORS INC. COMPANY
By: By:
-------------------------- ---------------------------
Chairman-Chief President
Investment Officer
-4-
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