Investment Company Act of 1940 File No. 811-7440
Securities And Exchange Commission
Washington, D.C. 20549
Form N-1A
Registration Statement Under The Investment Company Act Of 1940 /X/
Amendment No. 8
Dimensional Emerging Markets Fund Inc.
(Exact Name of Registrant as Specified in Charter)
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
(Address of Principal Executive Offices)
(310) 395-8005
(Registrant's Telephone Number, including Area Code)
Irene R. Diamant
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
(Name and Address of Agent for Service)
Please Send Copies of Communications to:
Stephen W. Kline, Esq.
Stradley, Ronon, Stevens & Young, LLP
Great Valley Corporate Center
30 Valley Stream Parkway
Malvern, PA 19355
(610) 640-5801
<PAGE>
DIMENSIONAL EMERGING MARKETS FUND INC.
Part A
September 18, 1998
Introduction
DIMENSIONAL EMERGING MARKETS FUND INC. (the "Fund"), 1299 Ocean
Avenue, 11th Floor, Santa Monica, California 90401, (310) 395-8005, is
an open-end management investment company whose shares are offered to
other investment companies and institutional investors. The investment
objective of the Fund is to seek long-term capital growth through
investment in "emerging market" equity securities. The investment
objective of the Fund is a fundamental policy and may not be changed
without the affirmative vote of a majority of the Fund's outstanding
securities.
Shares of the Fund are issued solely in private placements
pursuant to available exemptions from registration under the Securities
Act of 1933, as amended ("Securities Act"). This Part A of the Fund's
registration statement ("Part A") does not constitute an offer to sell,
or the solicitation of an offer to buy, any "security" to the public
within the meaning of the Securities Act.
<PAGE>
TABLE OF CONTENTS
Page
DIMENSIONAL EMERGING MARKETS FUND INC.................................3
Investment Objective and Policies................................3
Fund Characteristics and Policies................................3
Portfolio Structure..............................................5
SECURITIES LOANS......................................................6
RISK FACTORS..........................................................6
Foreign Securities...............................................6
Investing in Emerging Markets....................................7
Foreign Currencies and Related Transactions......................8
Borrowing........................................................9
Portfolio Strategies.............................................9
Futures Contracts and Options on Futures.........................9
Repurchase Agreements...........................................10
MANAGEMENT OF THE FUND...............................................10
Consulting Services.............................................11
Administrative Services.........................................11
Directors and Officers..........................................11
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.....................11
PURCHASE OF SHARES...................................................13
In-Kind Purchases........................................14
VALUATION OF SHARES..................................................14
Public Offering Price....................................16
DISTRIBUTION.........................................................16
EXCHANGE OF SHARES...................................................17
REDEMPTION OF SHARES.................................................17
GENERAL INFORMATION..................................................18
<PAGE>
DIMENSIONAL EMERGING MARKETS FUND INC.
Investment Objective and Policies
The investment objective of the Fund is to achieve long-term capital
growth by investing primarily in emerging market equity securities. The Fund
operates as a diversified investment company and seeks to achieve its
investment objective by investing in emerging markets designated by the
Investment Committee of Dimensional Fund Advisors Inc. (the "Advisor")
("Approved Markets"). The Fund invests its assets primarily in Approved
Market equity securities listed on bona fide securities exchanges or
actively traded on over-the-counter ("OTC") markets. These exchanges or OTC
markets may be either within or outside the issuer's domicile country, and
the securities may be listed or traded in the form of International
Depository Receipts ("IDRs") or American Depository Receipts ("ADRs").
The Fund seeks to achieve its objective by investing in emerging
market equity securities which are deemed by the Advisor to be value stocks
at the time of purchase. Securities are considered value stocks primarily
because they have a high book value in relation to their market value (a
"high book to market ratio"). In measuring value, the Advisor may consider
additional factors such as cash flow, economic conditions and developments
in the issuer's industry. No assurance can be given that the Fund's
investment objective will be achieved.
Fund Characteristics and Policies
The Fund may not invest in all such companies or Approved Markets
described above for reasons which include constraints imposed within
Approved Markets (e.g., restrictions on purchases by foreigners), and the
Fund's policy not to invest more than 25% of its assets in any one industry.
Under normal market conditions, the Fund will invest at least 65% of
its assets in Approved Market equity securities that are deemed by the
Advisor to be value stocks at the time of purchase. Approved Market
securities are defined to be (a) securities of companies organized in a
country in an Approved Market or for which the principal trading market is
in an Approved Market, (b) securities issued or guaranteed by the government
of an Approved Market country, its agencies or instrumentalities, or the
central bank of such country, (c) securities denominated in an Approved
Market currency issued by companies to finance operations in Approved
Markets, (d) securities of companies that derive at least 50% of their
revenues primarily from either goods or services produced in Approved
Markets or sales made in Approved Markets and (e) Approved Markets equity
securities in the form of depositary shares. Securities of Approved Markets
may include securities of companies that have characteristics and business
relationships common to companies in other countries. As a result, the value
of the securities of such companies may reflect economic and market forces
in such other countries as well as in the Approved Markets. The Advisor,
however, will select only those companies which, in its view, have
sufficiently strong exposure to economic and market forces in Approved
Markets such that their value will tend to reflect developments in Approved
Markets to a greater extent than developments in other regions. For example,
the Advisor may invest in companies organized and located in the United
States or other countries outside of Approved Markets, including companies
having their entire production facilities outside of Approved Markets, when
such companies meet the definition of Approved Markets securities so long as
the Advisor believes at the time of investment that the value of the
company's securities will reflect principally conditions in Approved
Markets.
<PAGE>
In determining what countries have emerging markets, the Fund will
consider among other things, the data, analysis and classification of
countries published or disseminated by the International Bank for
Reconstruction (commonly known as the World Bank) and the International
Finance Corporation, in addition to the criteria described above. In
determining whether to approve markets for investment, the Advisor 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 Fund. Approved emerging markets may not include all such
emerging markets.
As of the date of this Part A, the following countries are designated
as Approved Markets: Argentina, Brazil, Chile, Indonesia, Israel, Mexico,
Philippines, Portugal, South Korea, Thailand and Turkey. Countries that may
be approved in the future include but are not limited to Colombia, Czech
Republic, Greece, Hungary, India, Jordan, Nigeria, Pakistan, Poland,
Republic of China (Taiwan), Republic of South Africa, Venezuela and
Zimbabwe.
The Fund 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 Fund 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 Fund 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 Fund
does not expect the aggregate of all such amounts to exceed 10% of its net
assets under normal circumstances.
The Fund 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 Fund
may also invest in money market mutual funds for temporary cash management
purposes. The Investment Company Act of 1940 limits investment by the Fund
in shares of other investment companies to no more than 10% of the value of
the Fund's total assets. If the Fund invests in another investment company,
the Fund's shareholders will bear not only their proportionate share of
expenses of the Fund (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 Fund to establish a wholly-owned subsidiary or a trust for
the purpose of investing in the local markets. The Fund also may invest up
to 5% of its assets in convertible debentures issued by companies organized
in Approved Markets.
<PAGE>
Portfolio Structure
Even though a company's stock may meet the Fund's criterion for
investment, it may not be included in the Fund 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 also will exercise discretion in
determining the allocation of capital as between Approved Markets.
Changes in the composition and relative ranking (in terms of book to
market ratio) of the stocks which are eligible for purchase by the Fund take
place with every trade when the securities markets are open for trading due
primarily to price fluctuations of such securities. On a periodic basis, the
Advisor will prepare lists of eligible value stocks which are eligible for
investment. Such list will be revised no less than semi-annually.
It is management's belief that equity investments offer, over a long
term, a prudent opportunity for capital appreciation, but, at the same time,
selecting a limited number of such issues for inclusion in the Fund involves
greater risk than including a large number of them.
The Fund 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 Fund do pay dividends. It is anticipated, therefore, that the Fund will
receive dividend income.
Generally, securities will be purchased with the expectation that they
will be held for longer than one year. However, securities may be disposed
of at any time when, in the Advisor's judgment, circumstances warrant their
sale. Generally, securities will not be sold to realize short-term profits,
but when circumstances warrant, they may be sold without regard to the
length of time held.
For the purpose of converting U.S. dollars to another currency, or
vice versa, or converting one foreign currency to another foreign currency,
the Fund may enter into forward foreign exchange contracts. In addition, to
hedge against changes in the relative value of foreign currencies, the Fund
may purchase foreign currency futures contracts. The Fund will only enter
into such a futures contract if it is expected that the Fund will be able
readily to close out such contract. However, there can be no assurance that
it will be able in any particular case to do so, in which case the Fund may
suffer a loss.
<PAGE>
SECURITIES LOANS
The Fund is authorized to lend securities to qualified brokers,
dealers, banks and other financial institutions for the purpose of earning
additional income. While the Fund may earn additional income from lending
securities, such activity is incidental to the investment objective of the
Fund. The value of securities loaned may not exceed 331/3% of the value of
the Fund's total assets. In connection with such loans, the Fund 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 Fund will be
able to terminate the loan at any time and will receive reasonable interest
on the loan, as well as amounts equal to any dividends, interest or other
distributions on the loaned securities. In the event of the bankruptcy of
the borrower, the Fund could experience delay in recovering the loaned
securities. Management believes that this risk can be controlled through
careful monitoring procedures.
RISK FACTORS
Foreign Securities
The Fund invests 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 Fund. 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. Also, there can be no assurance that the
Fund will achieve its investment objective.
The economies of many countries in which the Fund invests are not as
diverse or resilient as the U.S. economy, and have significantly less
financial resources. Some countries are more heavily dependent on
international trade and may be affected to a greater extent by protectionist
measures of their governments, or dependent upon a relatively limited number
of commodities and, thus, sensitive to changes in world prices for these
commodities.
In many foreign countries, stock markets are more variable than U.S.
markets for two reasons. Contemporaneous declines in both (i) foreign
securities prices in local currencies and (ii) the value of local currencies
in relation to the U.S. dollar can have a significant negative impact on the
net asset value of the Fund. The net asset value of the Fund is denominated
in U.S. dollars, and, therefore, declines in market price of both the
foreign securities held by the Fund and the foreign currency in which those
securities are denominated will be reflected in the net asset value of the
Fund's shares.
<PAGE>
Investing in Emerging Markets
The investments of the Fund involve risks in addition to the usual
risks of investing in developed foreign markets. A number of emerging
securities markets restrict, to varying degrees, foreign investment in
stocks. Repatriation of investment income, capital and the proceeds of sales
by foreign investors may require governmental registration and/or approval
in some emerging countries. In some jurisdictions, such restrictions and the
imposition of taxes are intended to discourage shorter rather than
longer-term holdings. While the Fund 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 Fund's
investment. If such restrictions were imposed subsequent to investment in
the securities of a particular country, the Fund, among other things, might
discontinue the purchasing of securities in that country. Such restrictions
will be considered in relation to the Fund's 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 Fund is the responsibility of the Fund's Board of
Directors, acting in good faith and with advice from the Advisor. (See
"VALUATION OF SHARES.") Further, some attractive equity securities may not
be available to the Fund 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 Fund may invest are relatively
small, have low trading volumes, suffer periods of illiquidity and are
characterized by significant price volatility. Such factors may be even more
pronounced in jurisdictions where securities ownership is divided into
separate classes for domestic and non-domestic owners. These risks are
heightened for investments in small company emerging markets securities.
In addition, many emerging markets, including most Latin American
countries, have experienced substantial, and, in some periods, extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on
the economies and securities markets of certain countries. In an attempt to
control inflation, wage and price controls have been imposed at times in
certain countries. Certain emerging markets have recently transitioned, or
are in the process of transitioning, from centrally controlled to
market-based economies. There can be no assurance that such transitions will
be successful.
Brokerage commissions, custodial services and other costs relating to
investment in foreign markets generally are more expensive than in the
United States; this is particularly true with respect to emerging markets.
Such markets have different settlement and clearance procedures. In certain
markets there have been times when settlements do not keep pace with the
volume of securities transactions, making it difficult to conduct such
transactions. The inability of the Fund to make intended securities
purchases due to settlement problems could cause the Fund to miss investment
opportunities. Inability to dispose of a portfolio security caused by
settlement problems could result either in losses to the Fund due to
subsequent declines in value of the portfolio security or, if the Fund has
entered into a contract to sell the security, could result in possible
liability to the purchaser.
<PAGE>
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 Fund's portfolio
securities in such markets may not be readily available. The Fund's
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
Directors.
Government involvement in the private sector varies in degree among
the emerging securities markets contemplated for investment by the Fund.
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 Fund.
On September 1, 1998, the Malaysian government announced a series of
capital and foreign exchange controls on the Malaysian currency, the
ringgit, and on transactions on the Kuala Lampur Stock Exchange, that
operate to severely constrain or prohibit foreign investors, including the
Fund, from repatriating assets. While there is some confusion in the market
concerning the interpretations of these changes, it appears that the Fund
will not be permitted to convert the proceeds of the sale of its Malaysian
investments into U.S. dollars prior to September 1, 1999.
As a consequence of these developments, the Fund has stopped trading
securities in Malaysia. With respect to the current Malaysian investments
owned by the Fund, the Fund is presently valuing the securities in good
faith at fair value by discounting the current market prices of the
Malaysian securities and discounting the U.S. dollar-ringgit currency
exchange rate. Pending further clarification from Malaysian regulatory
authorities regarding the controls identified above, the Fund will treat its
investments in Malaysian securities as illiquid. As of the date of this Part
A, Malaysian securities constitute approximately 6.09% of the Fund's net
asset value.
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
Fund 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.
<PAGE>
Foreign Currencies and Related Transactions
Investments of the Fund 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 Fund. The Fund may
purchase foreign currency futures contracts and options thereon in order to
hedge against changes in the level of foreign currency exchange rates. Such
contracts involve an agreement to purchase or sell a specific currency at a
future date at a price set in the contract and enable the Fund 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 the Fund's securities transactions, but they also tend
to limit the potential gains that might result from a positive change in
such currency relationships. Gains and losses on investments in futures and
options thereon depend on the direction of interest rates and other economic
factors.
Borrowing
The Fund has reserved the right to borrow amounts not exceeding 33% of
its net assets for the purpose of making redemption payments. When
advantageous opportunities to do so exist, the Fund may purchase securities
when borrowings exceed 5% of the value of its net assets. Such purchases can
be considered to be "leveraging" and, in such circumstances, the net asset
value of the Fund may increase or decrease at a greater rate than would be
the case if the Fund had not leveraged. The interest payable on the amount
borrowed would increase the Fund's expenses and, if the appreciation and
income produced by the investments purchased when the Fund has borrowed are
less than the cost of borrowing, the investment performance of the Fund will
be reduced as a result of leveraging.
Portfolio Strategies
The method employed by the Advisor to manage the Fund will differ from
the process employed by many other investment advisors in that the Advisor
will rely on fundamental analysis of the investment merits of securities to
a limited extent to eliminate potential portfolio acquisitions rather than
rely on this technique to select securities. Further, because securities
generally will be held long-term and will not be eliminated based on
short-term price fluctuations, the Advisor generally will not act upon
general market movements or short-term price fluctuations of securities to
as great an extent as many other investment advisors.
Futures Contracts and Options on Futures
The Fund may invest in index futures contracts and options on index
futures. To the extent that the Fund invests in futures contracts and
options thereon for other than bona fide hedging purposes, the Fund will not
enter into such transactions if, immediately thereafter, the sum of the
amount of initial margin deposits and premiums paid for open futures options
would exceed 5% of the Fund's total assets, after taking into account
unrealized profits and unrealized losses on such contracts it has entered
into; provided, however, that, in the case of an option that is in-the-money
at the time of purchase, the in-the-money amount may be excluded in
calculating the 5%. Certain index futures contracts and options on index
futures may be considered to be derivative securities.
These investments entail the risk that an imperfect correlation may
exist between changes in the market value of the stocks owned by the Fund
and the prices of such futures contracts and options, and, at times, the
market for such contracts and options might lack liquidity, thereby
inhibiting the Fund's ability to close a position in such investments. Gains
or losses on investments in options and futures depend on the direction of
securities prices, interest rates and other economic factors, and the loss
from investing in futures transactions is potentially unlimited. Certain
restrictions imposed by the Internal Revenue Code may limit the ability of
the Fund to invest in futures contracts and options on futures contracts.
Repurchase Agreements
In addition, the Fund may invest in repurchase agreements. In the
event of the bankruptcy of the other party to a repurchase agreement, the
Fund could experience delay in recovering the securities underlying such
agreements. Management believes that this risk can be controlled through
stringent security selection criteria and careful monitoring procedures.
<PAGE>
MANAGEMENT OF THE FUND
Dimensional Fund Advisors Inc. (the "Advisor") serves as investment
advisor to the Fund. As such, the Advisor is responsible for the management
of its assets. Investment decisions for the Fund are made by the Investment
Committee of the Advisor which meets on a regular basis and also as needed
to consider investment issues. The Investment Committee is composed of
certain officers and directors of the Advisor who are elected annually. The
Advisor provides the Fund with a trading department and selects brokers and
dealers to effect securities transactions. Portfolio securities transactions
are placed with a view to obtaining best price and execution and, subject to
this goal, may be placed with brokers which have assisted in the sale of the
Fund's shares.
For the fiscal year ended November 30, 1997, (i) the Advisor received
a fee for its services from the Fund which, on an annual basis, equaled
0.10% of the average net assets of the Fund; and (ii) the total expenses of
the Fund were 0.62% of the Fund's average net assets.
For its services, the Advisor is entitled to receive from the Fund a
fee, payable monthly, at the annual rate of 0.10% of the aggregate net
assets of the Fund.
The Fund bears all of its own costs and expenses, including: services
of its independent accountants, legal counsel, brokerage fees, commissions
and transfer taxes in connection with the acquisition and disposition of
portfolio securities, taxes, insurance premiums, costs incidental to
meetings of its shareholders and directors, the cost of filing its
registration statements under the federal securities laws and the cost of
any filings required under state securities laws, reports to shareholders,
and transfer and dividend disbursing agency, administrative services and
custodian fees.
The Fund may, as is deemed necessary or appropriate, employ
administrators in other countries in which it invests. Certain emerging
market countries require a local entity to provide administrative services
for all direct investments by foreigners. Where required by local law, the
Fund intends to retain a local entity to provide such administrative
services. The local administrator will be paid a fee by the Fund for its
services. Generally, such services will be contracted for through the
custodian, or through a foreign sub-custodian located in the particular
country.
<PAGE>
The Advisor was organized in May 1981 and is engaged in the business
of providing investment management services to institutional investors.
Assets under management total approximately $27 billion. David G. Booth and
Rex A. Sinquefield, directors and officers of both the Fund and the Advisor,
and shareholders of the Advisor's outstanding stock, may be deemed
controlling persons of the Advisor. The Advisor owns 100% of the outstanding
shares of Dimensional Fund Advisors Ltd. ("DFAL") and beneficially owns 100%
of DFA Australia Limited. ("DFA Australia") (see "Consulting Services").
Consulting Services
The Advisor has entered into a Consulting Services Agreement with DFAL
and DFA Australia, respectively. Pursuant to the terms of each Consulting
Services Agreement, DFAL and DFA Australia provide certain trading and
administrative services to the Advisor with respect to the Fund.
Administrative Services
PFPC Inc. ("PFPC") serves as the administrative and accounting
services, dividend disbursing and transfer agent for the Fund. The services
provided by PFPC are subject to supervision by the executive officers and
the Board of Directors of the Fund and include administrative services such
as day-to-day keeping and maintenance of certain records, calculation of the
offering price of the shares, preparation of reports, liaison with its
custodian, and transfer and dividend disbursing agency services.
Directors and Officers
The Board of Directors is responsible for establishing Fund policies
and for overseeing the management of the Fund. Information as to the
Directors and officers of the Fund is set forth in Part B of the Fund's
Registration Statement, the statement of additional information, under
"Directors and Officers."
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
The Fund intends to qualify each year as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code") so
that it will not be liable for U.S. federal income taxes to the extent that
its net investment income and net realized capital gains are distributed.
The policy of the Fund is to distribute substantially all of its net
investment income together with any net realized capital gains in December
of each year. In addition, the Fund will distribute all net investment
income earned through the end of November each year in the month of
November.
Special tax rules may apply in determining the income and gains that
the Fund earns on its investments. These rules may affect the amount of
distributions that the Fund pays to its shareholders.
<PAGE>
Shareholders of the Fund will automatically receive all income
dividends and capital gains distributions in additional shares of the Fund
at net asset value (as of the business date following the dividend record
date).
The Fund may be subject to foreign withholding taxes on income and
gains from certain of their foreign securities. These taxes will, in turn,
reduce the amount of distributions the Fund pays to shareholders. If the
Fund purchases shares in certain foreign investment entities, called
"passive foreign investment companies" ("PFIC"), the Fund 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 Fund to its
shareholders. If possible, the Fund will adopt strategies to avoid PFIC
taxes and interest charges.
If more than 50% in value of the total assets of the Fund are invested
in securities of foreign corporations, the Fund may elect to pass through to
its shareholders their pro rata share of foreign income taxes paid by the
Fund. If this election is made, shareholders will be required to include in
their gross income their pro rata share of foreign taxes paid by the Fund.
However, shareholders will be entitled to either deduct (as an itemized
deduction in the case of individuals) their share of such foreign taxes in
computing their taxable income or to claim a credit for such taxes against
their U.S. federal income tax, subject to certain limitations under the
Code.
It is anticipated that either none or only a small portion of the
distributions made by the Fund will qualify for the corporate
dividends-received deduction because of the Fund's investment in foreign
equity securities.
Whether paid in cash or additional shares and regardless of the length
of time the Fund's shares have been owned by shareholders who are subject to
U.S. federal income taxes, distributions from long-term capital gains are
taxable as such. Dividends from net investment income or net short-term
capital gains will be taxable as ordinary income, whether received in cash
or in additional shares. Dividends and distributions to a 401(k) plan
accumulate free of federal income taxes. For those investors subject to tax,
if purchases of shares of the Fund are made shortly before the record date
for a dividend or capital gains distribution, a portion of the investment
will be returned as a taxable distribution. Shareholders are notified
annually by the Fund as to the U.S. federal tax status of dividends and
distributions paid by the Fund.
Dividends which are declared in October, November or December to
shareholders of record in such a month, but which, for operational reasons,
may not be paid to the shareholder until the following January, will be
treated for U.S. federal income tax purposes as if paid by the Fund and
received by the shareholder on December 31 of the calendar year in which
they are declared.
The sale of shares of the Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss
may be realized from an ordinary redemption of shares. Any loss incurred on
the sale of the Fund's shares, held for six months or less, will be treated
as a long-term capital loss to the extent of capital gain dividends received
with respect to such shares.
<PAGE>
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions from the Fund and on gains arising on
redemption or exchange of the Fund's shares.
The Fund is required to withhold 31% of taxable dividends, capital
gains distributions, and redemptions paid to shareholders who have not
complied with IRS taxpayer identification regulations. You may avoid this
withholding requirement by certifying on the account registration form your
proper Taxpayer Identification Number and by certifying that you are not
subject to backup withholding.
The tax discussion set forth above is included for general information
only. Prospective investors should consult their own tax advisers concerning
the federal, state, local or foreign tax consequences of an investment in
the Fund.
PURCHASE OF SHARES
Shares issued by the Fund are not registered under the Securities Act,
which means that the Fund's shares may not be sold publicly. However, the
Fund may sell its shares through private placements pursuant to available
exemptions from registration under the Securities Act. Shares of the Fund
are sold only to other investment companies and certain institutional
investors.
Investors may purchase shares of the Fund by first contacting the
Advisor at (310) 395-8005 to notify the Advisor of the proposed investment.
All investments are subject to approval of the Advisor, and all investors
must complete and submit the necessary account registration forms. The Fund
reserves the right to reject any initial or additional investment and to
suspend the offering of shares of the Fund.
Investors having an account with a bank that is a member or a
correspondent of a member of the Federal Reserve System may purchase shares
by first calling the Advisor at (310) 395-8005 to notify the Advisor of the
proposed investment, then requesting the bank to transmit immediately
available funds (Federal Funds) by wire to the custodian, for the Account of
Dimensional Emerging Markets Fund Inc. Additional investments also may be
made through the wire procedure by first notifying the Advisor. Investors
who wish to purchase shares of the Fund by check should send their check to
Dimensional Emerging Markets Fund Inc., c/o PFPC Inc., 400 Bellevue Parkway,
Wilmington, Delaware 19809. The Chase Manhattan Bank serves as custodian for
the Fund.
Under certain circumstances, shares also may be purchased and sold by
investors through securities firms which may charge a service fee or
commission for such transactions. No such fee or commission is charged on
shares which are purchased or redeemed directly from the Fund.
<PAGE>
Purchases of shares will be made in full and fractional shares
calculated to three decimal places. In the interest of economy and
convenience, certificates for shares will not be issued.
In-Kind Purchases
If accepted by the Fund, shares may be purchased in exchange for
securities which are eligible for acquisition by the Fund or otherwise
represented in its portfolio as described in this Part A or in exchange for
local currencies in which such securities of the Fund are denominated.
Purchases in exchange for securities will not be subject to a reimbursement
fee. Securities and local currencies to be exchanged which are accepted by
the Fund and Fund shares to be issued therefore will be valued as set forth
under "VALUATION OF SHARES" at the time of the next determination of net
asset value after such acceptance. All dividends, interest, subscription, or
other rights pertaining to such securities shall become the property of the
Fund and must be delivered to the Fund by the investor upon receipt from the
issuer. Investors who desire to purchase shares of the Fund with local
currencies should first contact the Advisor for wire instructions.
The Fund will not accept securities in exchange for shares of the Fund
unless: (1) such securities are, at the time of the exchange, eligible to be
included, or otherwise represented, in the Fund and current market
quotations are readily available for such securities; (2) the investor
represents and agrees that all securities offered to be exchanged are not
subject to any restrictions upon their sale by the Fund under the Securities
Act or under the laws of the country in which the principal market for such
securities exists, or otherwise; (3) at the discretion of the Fund, the
value of any such security (except U.S. Government Securities) being
exchanged together with other securities of the same issuer owned by the
Fund may not exceed 5% of the net assets of the Fund immediately after the
transaction. The Fund will accept such securities for investment and not for
resale.
A gain or loss for federal income tax purposes will be realized by
investors who are subject to federal taxation upon the exchange depending
upon the cost of the securities or local currency exchanged. Investors
interested in such exchanges should contact the Advisor.
VALUATION OF SHARES
The net asset value per share of the Fund is calculated as of the
close of the NYSE by dividing the total market value of the Fund's
investments and other assets, less any liabilities, by the total outstanding
shares of the stock of the Fund. The value of the shares of the Fund will
fluctuate in relation to its own investment experience. Securities held by
the Fund which are listed on a securities exchange and for which market
quotations are available are valued at the last quoted sale price of the day
or, if there is no such reported sale, such securities are valued at the
mean between the most recent quoted bid and asked prices. Price information
on listed securities is taken from the exchange where the security is
primarily traded. Securities issued by open-end investment companies are
valued using their respective net asset values for purchase orders placed at
the close of the NYSE. Unlisted securities for which market quotations are
readily available are valued at the mean between the most recent bid and
asked prices. The value of other assets and securities for which no
quotations are readily available (including restricted securities) are
determined in good faith at fair value in accordance with procedures adopted
by the Board of Directors. The net asset value per share of the Fund is
expressed in U.S. dollars by translating the net assets of the Fund using
the bid price for the dollar as quoted by generally recognized reliable
sources.
<PAGE>
Provided that the Transfer Agent has received the investor's Account
Registration Form in good order and the custodian has received the
investor's payment, shares of the Fund will be priced at the public offering
price calculated next after receipt of the investor's funds by the
custodian. The Transfer Agent or the Fund may from time to time appoint a
sub-transfer agent for the receipt of purchase orders and funds from certain
investors. With respect to such investors, the shares of the Fund will be
priced at the public offering price calculated after receipt of the purchase
order by the sub-transfer agent. The only difference between a normal
purchase and a purchase through a sub-transfer agent is that if the investor
buys shares through a sub-transfer agent, the purchase price will be the
public offering price next calculated after the sub-transfer agent receives
the order, rather than on the day the custodian receives the investor's
payment (provided that the Transfer Agent has received the investor's
purchase order in good order). "Good order" with respect to the purchase of
shares means that (1) a fully completed and properly signed Account
Registration Form and any additional supporting legal documentation required
by the Advisor has been received in legible form and (2) the Advisor has
been notified of the purchase by telephone and, if the Advisor so requests,
also in writing, no later than the close of regular trading on the NYSE
(ordinarily 1:00 p.m. PST) on the day of the purchase. If an order to
purchase shares must be canceled due to non-payment, the purchaser will be
responsible for any loss incurred by the Fund arising out of such
cancellation. To recover any such loss, the Fund reserves the right to
redeem shares owned by any purchaser whose order is canceled, and such
purchaser may be prohibited or restricted in the manner of placing further
orders.
To the extent the Fund purchases fixed income securities, 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. Other assets and securities for which quotations are not readily
available will be valued in good faith at fair value using methods
determined by the Board of Directors.
Generally, trading in foreign securities markets is completed each day
at various times prior to the close of the NYSE. The values of foreign
securities held by the Fund are determined as of such times for the purpose
of computing the net asset value of the Fund. If events which materially
affect the value of the investments of the Fund 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 Fund 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 Fund 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 Fund may also be subject to certain
contractual arrangements with investment authorities in an Approved Market
which require the Fund 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 Fund makes at that time concerning the
anticipated holding period for the securities. Absent special circumstances
as determined by the Board of Directors, 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 Fund 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 Fund.
Futures contracts are valued using the settlement price established
each day on the exchange on which they are traded. The value of such futures
contracts held by the Fund are determined each day as of such close.
<PAGE>
Public Offering Price
It is management's belief that payment of a reimbursement fee by each
investor, which is used to defray significant costs associated with
investing proceeds of the sale of the Fund's shares to such investors, will
eliminate a dilutive effect such costs would otherwise have on the net asset
value of shares held by existing investors. Therefore, the shares of the
Fund 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 the Fund and
is paid to the Fund and used by it to defray such costs. Such costs include
brokerage commissions on listed securities and imputed commissions on OTC
securities. Reinvestments of dividends and capital gains distributions paid
by the Fund and in-kind investments are not subject to a reimbursement fee.
(See "In-Kind Purchases" and "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND
TAXES.") The Fund's shares are sold at an offering price which is equal to
the current net asset value of such shares plus a reimbursement fee of 0.50%
of such value of the shares of the Fund.
DISTRIBUTION
The Fund distributes its own shares of stock. It has, however, entered
into an agreement with DFA Securities Inc., a wholly owned subsidiary of the
Advisor, pursuant to which DFA Securities Inc. is responsible for
supervising the sale of shares by the Fund. No compensation is paid by the
Fund to DFA Securities Inc. under this agreement.
EXCHANGE OF SHARES
There is no exchange privilege between the Fund and any portfolio of DFA
Investment Dimensions Group Inc. or Dimensional Investment Group Inc.
REDEMPTION OF SHARES
Shares issued by the Fund are not registered under the Securities Act,
which means that the Fund's 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 the Fund must first contact
the Advisor at the telephone number shown under "PURCHASE OF SHARES." The
Fund will redeem shares at the net asset value of such shares next
determined, either: (1) after receipt of a written request for redemption in
good order, by the Fund's Transfer Agent or (2) if stock certificates have
been issued, after receipt of the stock certificates in good order at the
office of the Transfer Agent. "Good order" means that the request to redeem
shares must include all necessary documentation, to be received in writing
by the Advisor no later than the close of regular trading on the NYSE
(ordinarily 1:00 p.m. PST), including: the stock certificate(s), if issued;
a letter of instruction or a stock assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered owners (or
authorized representatives thereof) of the shares; and, if the Fund does not
have on file the authorized signatures for the account, a guarantee of the
signature of each registered owner by an eligible guarantor institution; and
any other required supporting legal documents.
Shareholders redeeming shares for which certificates have not been
issued, who have authorized redemption payment by wire on an authorization
form filed with the Fund, may request that redemption proceeds be paid in
federal funds wired to the bank they have designated on the authorization
form. The Fund reserves the right to send redemption proceeds by check in
its discretion; a shareholder may request overnight delivery of such check
at the shareholder's own expense. If the proceeds are wired to the
shareholder's account at a bank which is not a member of the Federal Reserve
System, there could be a delay in crediting the funds to the shareholder's
bank account. The Fund reserves the right at any time to suspend or
terminate the redemption by wire procedure after prior notification to
shareholders. No charge is made by the Fund for redemptions. The redemption
of all shares in an account will result in the account being closed. A new
Account Registration Form will be required for future investments. (See
"PURCHASE OF SHARES.")
Although the redemption payments will ordinarily be made within seven
days after receipt, payment to investors redeeming shares which were
purchased by check will not be made until the Fund can verify that the
payments for 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.
The Fund reserves the right to redeem a shareholder's account if the
value of the shares in the Fund is $500 or less, whether because of
redemptions, a decline in the Fund's net asset value per share or any other
reason. Before the Fund involuntarily redeems shares from such an account
and sends the proceeds to the stockholder, the Fund will give written notice
of the redemption to the stockholder at least sixty days in advance of the
redemption date. The stockholder will then have sixty days from the date of
the notice to make an additional investment in the Fund in order to bring
the value of the shares in the account to more than $500 and avoid such
involuntary redemption. The redemption price to be paid to a stockholder for
shares redeemed by the Fund under this right will be the aggregate net asset
value of the shares in the account at the close of business on the
redemption date.
When in the best interests of the Fund, the Fund may make a redemption
payment, in whole or in part, by a distribution of portfolio securities in
lieu of cash. Investors may incur brokerage charges and other transaction
costs selling securities that were received in payment of redemptions. The
Fund reserves the right to redeem its shares in the currencies in which its
investments are denominated. Investors may incur charges in converting such
currencies to dollars and the value of the securities may be affected by
currency exchange fluctuations.
<PAGE>
GENERAL INFORMATION
The Fund was incorporated under Maryland law on January 9, 1991. The
shares of the Fund, when issued and paid for in accordance with the Fund's
registration statement, will be fully paid and non-assessable shares, with
equal, non-cumulative voting rights and no preferences as to conversion,
exchange, dividends, redemption or any other feature.
With respect to matters which require shareholder approval,
shareholders are entitled to vote only with respect to matters which affect
the interest of the class of shares which they hold, except as otherwise
required by applicable law. If liquidation of the Fund should occur,
shareholders would be entitled to receive on a per class basis the assets of
the particular class whose shares they own, as well as a proportionate share
of Fund assets not attributable to any particular class. Ordinarily, the
Fund does not intend to hold annual meetings of its shareholders, except as
required by the Investment Company Act of 1940 or other applicable law. The
Fund's bylaws provide that special meetings of its shareholders shall be
called at the written consent of 10% of the shareholders. Such meeting may
be called to consider any matter, including the removal of one or more
directors. Shareholders will receive shareholder communications with respect
to such matters as required by the Investment Company Act of 1940, including
semi-annual and annual financial statements of the Fund, the latter being
audited at least once each year.
The Fund may disseminate reports of its investment performance from
time to time. Investment performance is calculated on a total return basis;
that is by including all net investment income and any realized and
unrealized net capital gains or losses during the period for which
investment performance is reported. If dividends or capital gains
distributions have been paid during the relevant period the calculation of
investment performance will include such dividends and capital gains
distributions as though reinvested in shares of the Fund. Standard
quotations of total return, which include deductions of any applicable
reimbursement fees, are computed in accordance with SEC Guidelines and are
presented whenever any non-standard quotations are disseminated to provide
comparability to other investment companies. Non-standardized total return
quotations may differ from the SEC Guideline computations by covering
different time periods, excluding deduction of reimbursement fees charged to
investors and paid to the Fund which would otherwise reduce return
quotations. In all cases, disclosures are made when performance quotations
differ from the SEC Guidelines which were established effective May 1, 1988.
Performance data is based on historical earnings and is not intended to
indicate future performance. Rates of return expressed on an annual basis
will usually not equal the sum of returns expressed for consecutive interim
periods due to the compounding of the interim yields. The Fund's annual
report to shareholders for the fiscal year ended November 30, 1997 contains
additional performance information. A copy of the annual report is available
upon request and without charge.
Rates of return expressed as a percentage of U.S. dollars will reflect
applicable currency exchange rates at the beginning and ending dates of the
investment periods presented. The return expressed in terms of U.S. dollars
is the return one would achieve by investing dollars in the Fund at the
beginning of the period and liquidating the investment in dollars at the end
of the period. Hence, the return expressed as a percentage of U.S. dollars
combines the investment performance of the Fund as well as the performance
of the local currency or currencies of the Fund.
As of August 31, 1998, 97.24% of the voting securities of the Fund
were held by State Street Bank and Trust Company as Trustee of the BellSouth
Master Pension Trust (the "Trust") and 2.76% of the voting securities of the
Fund were held by Emerging Markets Value Portfolio of DFA Investment
Dimensions Group Inc. The address of the Trust is 1155 Peachtree Street,
N.E., Atlanta, Georgia 30309-3610. On account of the fact that this investor
presently owns 97.24% of the outstanding voting securities of the Fund, it
may be considered to be a controlling person of the Fund in accordance with
applicable SEC rules. Under the Investment Company Act of 1940, an investor
is presumed to control a registered investment company whenever the investor
owns more than 25% of the outstanding voting securities of the company.
On November 21, 1997, the shareholders of the Fund approved the Fund's
conversion from a closed-end management investment company to an open-end
management investment company registered with the SEC. The Fund commenced
operations as an open-end company on November 26, 1997.
Shareholder inquiries may be made by writing or calling the Fund at
the address or telephone number appearing on the cover of this Part A. Only
those individuals whose signatures are on file for the account in question
may receive specific account information or make changes in the account
registration.
<PAGE>
DIMENSIONAL EMERGING MARKETS FUND INC.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Tel. No. (310) 395-8005
Investment Advisor
DIMENSIONAL FUND ADVISORS INC.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Tel. No. (310) 395-8005
Custodian
THE CHASE MANHATTAN BANK
4 Chase Metrotech Center
Brooklyn, NY 11245
Transfer and Dividend Disbursing Agent
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
Legal Counsel
STRADLEY, RONON, STEVENS & YOUNG, LLP 2600 One Commerce Square Philadelphia, PA
19103-7098
Independent Accountants
PRICEWATERHOUSECOOPERS LLP
2400 Eleven Penn Center
Philadelphia, PA 19103
<PAGE>
DIMENSIONAL EMERGING MARKETS FUND INC.
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401
Telephone: (310) 395-8005
PART B
STATEMENT OF ADDITIONAL INFORMATION
September ___, 1998
Dimensional Emerging Markets Fund Inc. is a diversified, open-end
management investment company. The investment objective of the Fund is to seek
long-term capital growth through investment in "emerging market" equity
securities.
This statement of additional information is not a prospectus but should
be read in conjunction with Part A of the Fund's registration statement dated
September __, 1998 ("Part A"), which can be obtained from the Fund by writing to
the Fund at the above address or by calling the above telephone number.
TABLE OF CONTENTS
Page
FUND CHARCTERISTICS AND POLICIES...........................................2
BROKERAGE COMMISSIONS............................................ .........2
INVESTMENT LIMITATIONS.....................................................3
FUTURES CONTRACTS..........................................................5
FEDERAL TAX TREATMENT OF FUTURES CONTRACTS AND
SIMILAR POSITIONS..................................................6
DIRECTORS AND OFFICERS.....................................................7
ADMINISTRATIVE SERVICES...................................................10
OTHER INFORMATION.........................................................10
PRINCIPAL HOLDERS OF SECURITIES...........................................11
PURCHASE OF SHARES........................................................11
REDEMPTION OF SHARES......................................................11
CALCULATION OF PERFORMANCE DATA...........................................12
FINANCIAL STATEMENTS......................................................13
<PAGE>
FUND CHARACTERISTICS AND POLICIES
The following information supplements the information set forth in Part
A under the caption "DIMENSIONAL EMERGING MARKETS FUND - Investment Objectives
and Policies," "Fund Characteristics and Policies," and "Portfolio Structure."
It is possible that the Fund might include at least 5% of the
outstanding voting securities of one or more issuers. In such circumstances, the
Fund and the issuer would be deemed "affiliated persons" under the Investment
Company Act of 1940 and certain requirements of the Act regulating dealings
between affiliates might become applicable. However, management does not
anticipate that the Fund will include as much as 5% of the voting securities of
any issuer.
The Fund may invest up to 5% of its assets in convertible debentures
issued by non-U.S. companies. Convertible debentures include corporate bonds and
notes that may be converted into or exchanged for common stock. These securities
are generally convertible either at a stated price or a stated rate (that is,
for a specific number of shares of common stock or other security). As with
other fixed income securities, the price of a convertible debenture to some
extent varies inversely with interest rates. While providing a fixed-income
stream (generally higher in yield than the income derived from a common stock
but lower than that afforded by a non-convertible debenture), a convertible
debenture also affords the investor an opportunity, through its conversion
feature, to participate in the capital appreciation of the common stock into
which it is convertible. As the market price of the underlying common stock
declines, convertible debentures tend to trade increasingly on a yield basis and
so may not experience market value declines to the same extent as the underlying
common stock. When the market price of the underlying common stock increases,
the price of a convertible debenture tends to rise as a reflection of the value
of the underlying common stock. To obtain such a higher yield, the Fund may be
required to pay for a convertible debenture an amount in excess of the value of
the underlying common stock. Common stock acquired by the Fund upon conversion
of a convertible debenture will generally be held for so long as the Advisor
anticipates such stock will provide the Fund with opportunities which are
consistent with the Fund's investment objective and policies.
For the fiscal year ended November 30, 1998, the portfolio turnover rate
for the Fund is anticipated to be approximately 20%-90%, which reflects the
purchase of value stocks and sale of non-value stocks. Generally, securities
will be purchased with the expectation that they will be held for longer than
one year.
BROKERAGE COMMISSIONS
For the fiscal years ending November 30, 1995, 1996 and 1997, the Fund
paid brokerage commissions of $85,081, $14,699 and $560,478, respectively. The
substantial increases or decreases in the amount of brokerage commissions paid
by the Fund from year to year resulted from increases or decreases in the amount
of securities that were bought and sold by the Fund.
Portfolio transactions will be placed with a view to receiving the best
price and execution. The Fund 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 Fund to
determine the effect that their trading has on the market prices of the
securities in which they invest. The Advisor also checks the rate of commission
being paid by the Fund to its 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.
<PAGE>
During the 1997 fiscal year, the Fund did not pay any brokerage
commissions for securities transactions to brokers which provided market price
monitoring services, market studies and research services to the Fund.
The investment management agreement permits the Advisor knowingly to pay
commissions on these transactions which are greater than another broker might
charge if the Advisor, in good faith, determines that the commissions paid are
reasonable in relation to the value of the research or brokerage services
provided by the broker or dealer when viewed in terms of either a particular
transaction or the Advisor's overall responsibilities to the Fund. Research
services furnished by brokers through whom securities transactions are effected
may be used by the Advisor in servicing all of its accounts and not all such
services may be used by the Advisor with respect to the Fund.
INVESTMENT LIMITATIONS
The Fund has adopted certain limitations which may not be changed
without the approval of a majority of the outstanding voting securities of the
Fund. A "majority" is defined as the lesser of: (1) at least 67% of the voting
securities of the Fund (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 Fund are present or represented by proxy, or (2) more than 50% of the
outstanding voting securities of the Fund.
The Fund will not:
(1) invest in commodities or purchase or sell real estate (including
limited partnership interests), although it may purchase and sell securities of
companies which deal in real estate and may purchase and sell securities which
are secured by interests in real estate and may purchase or sell financial
futures contracts and options thereon, such as forward foreign currency futures
contracts and options and index futures contracts and options;
(2) make loans of cash, except through the acquisition of publicly-traded
debt securities and short-term money market instruments;
(3) 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
Fund's total assets, at market, would be invested in the securities of such
issuer, provided that this limitation applies only to 75% of the total assets of
the Fund;
(4) borrow, except in connection with a foreign currency transaction,
the settlement of a portfolio trade, or as a temporary measure for extraordinary
or emergency purposes, including to meet redemption requests, and, in no event,
in excess of 33% of the Fund's net assets valued at market;
(5) engage in the business of underwriting securities issued by others,
except to the extent that the sale of securities originally acquired for
investment purposes may be deemed an underwriting;
(6) invest for the purpose of exercising control over management of any
company;
(7) acquire any securities of companies within one industry if, as a
result of such acquisition, more 7than 25% of the value of the Fund's total
assets would be invested in securities of companies within such industry;
(8) purchase securities on margin;
(9) as to 75% of the Fund's assets, acquire more than 10% of the voting
securities of any issuer; or
(10) issue senior securities (as such term is defined in Section 18(f)
of the Investment Company Act of 1940), except to the extent permitted under the
Act.
<PAGE>
The investment limitations described in (1) and (8) above do not
prohibit the Fund from making margin deposits with respect to financial futures
contracts and options thereon to the extent permitted under applicable
regulations.
Although (2) above prohibits cash loans, the Fund is authorized to lend
portfolio securities.
For purposes of (4) above, the Fund may borrow in connection with a
foreign currency transaction or the settlement of a portfolio trade. The only
type of borrowing contemplated thereby is the use of a letter of credit issued
on the Fund's behalf in lieu of depositing initial margin in connection with
currency futures contracts, and the Fund has no present intent to engage in any
other types of borrowing transactions under this authority.
Pursuant to Rule 144A under the 1933 Act, the Fund 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 Fund's 15%
limitation on holdings of illiquid securities as described below. While
maintaining oversight, the Board of Directors has delegated the day-to-day
function of making liquidity determinations to the Advisor. For Rule 144A
securities to be considered liquid, there must be at least two dealers making a
market in such securities. After purchase, the Board of Directors and the
Advisor will continue to monitor the liquidity of Rule 144A securities.
As a non-fundamental policy, the Fund does not intend to invest more
than 15% of its net assets in illiquid securities.
<PAGE>
The Fund 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.
Notwithstanding any of the above investment restrictions, the Fund may
establish subsidiaries or other similar vehicles for the purpose of conducting
its investment operations in Approved Markets, if such subsidiaries or vehicles
are required by local laws or regulations governing foreign investors such as
the Fund or whose use is otherwise considered by the Fund to be advisable. The
Fund would "look through" any such vehicle to determine compliance with its
investment restrictions.
Subject to future regulatory guidance, for purposes of those investment
limitations identified above that are based on total assets, "total assets"
refers to the assets that the Fund owns, and does not include assets which the
Fund does not own but over which it has effective control. For example, when
applying a percentage investment limitation that is based on total assets, the
Fund will exclude from its total assets those assets which represent collateral
received by the Fund for its securities lending transactions.
Unless otherwise indicated, all limitations applicable to the Fund's
investments apply only at the time that a transaction is undertaken. Any
subsequent change in a rating assigned by any rating service to a security or
change in the percentage of the Fund's assets invested in certain securities or
other instruments resulting from market fluctuations or other changes in the
Fund's total assets will not require the Fund to dispose of an investment until
the Advisor determines that it is practicable to sell or closeout the investment
without undue market or tax consequences. In the event that ratings services
assign different ratings to the same security, the Advisor will determine which
rating it believes best reflects the security's quality and risk at that time,
which may be the higher of the several assigned ratings.
FUTURES CONTRACTS
The Fund may enter into futures contracts and options on futures
contracts. The Fund may enter into futures contracts and options on future
contracts only for the purpose of remaining fully invested and to maintain
liquidity to pay redemptions.
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 Fund 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 Fund.
Variation margin payments are made to and from the futures broker for as long as
the contract remains open. The Fund expects to earn income on its margin
deposits. To the extent that the Fund invests in futures contracts and options
thereon for other than bona fide hedging purposes, the Fund will not enter into
such transactions if, immediately thereafter, the sum of the amount of initial
margin deposits and premiums paid for open futures options would exceed 5% of
the Fund's total assets, after taking into account unrealized profits and
unrealized losses on such contracts it has entered into; provided, however,
that, in the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5%. Pursuant to published
positions of the SEC, the Fund may be required to maintain segregated accounts
consisting of liquid assets, (or, as permitted under applicable regulation,
enter into offsetting positions) in connection with its futures contract
transactions in order to cover its obligations with respect to such contracts.
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market. However, there can be no assurance that a
liquid secondary market will exist for any particular futures contract at any
specific time. Therefore, it might not be possible to close a futures position
and, in the event of adverse price movements, the Fund would continue to be
required to continue to make variation margin deposits. In such circumstances,
if the Fund 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.
<PAGE>
FEDERAL TAX TREATMENT OF
FUTURES CONTRACTS AND SIMILAR POSITIONS
The investment by the Fund in futures contracts and options on futures
contracts is subject to many complex and special tax rules. The treatment by the
Fund of certain futures and forward contracts is generally governed by Section
1256 of the Code. These "Section 1256" positions generally include listed
options on futures contracts, regulated futures contracts and certain foreign
currency contracts and options thereon.
Absent a tax election to the contrary, each such Section 1256 position
held by the Fund will be marked-to-market (i.e., treated as if it were sold for
fair market value) on the last business day of the Fund's fiscal year, and all
gain or loss associated with fiscal year transactions and marked-to-market
positions at fiscal year end (except certain currency gain or loss covered by
Section 988 of the Code) will generally be treated as 60% long-term capital gain
or loss and 40% short-term capital gain or loss. The effect of Section 1256
mark-to-market rules may be to accelerate income or to convert what otherwise
would have been long-term capital gains into short-term capital gains or
short-term capital losses into long-term capital losses within the Fund. The
acceleration of income on Section 1256 positions may require the Fund to accrue
taxable income without the corresponding receipt of cash. In order to generate
cash to satisfy the distribution requirements of the Code, the Fund may be
required to dispose of portfolio securities that it otherwise would have
continued to hold or to use cash flows from other sources such as the sale of
the Fund's shares. In these ways, any or all of these rules may affect both the
amount, character and timing of income distributed to shareholders by the Fund.
The Taxpayer Relief Act of 1997 has added new provisions for dealing
with transactions that are generally called "Constructive Sale Transactions."
Under these rules, the Fund must recognize gain (but not loss) on any
constructive sale of an appreciated financial position in stock, a partnership
interest or certain debt instruments. The Fund will generally be treated as
making a constructive sale when it: 1) enters into a short sale on the same
property, 2) enters into an offsetting notional principal contract, or 3) enters
into a futures or forward contract to deliver the same or substantially similar
property. Other transactions (including certain financial instruments called
collars) will be treated as constructive sales as provided in Treasury
regulations to be published. There are also certain exceptions that apply for
transactions that are closed before the end of the 30th day after the close of
the taxable year.
DIRECTORS AND OFFICERS
The names, addresses and dates of birth of the directors and officers of
the Fund and a brief statement of their present positions and principal
occupations during the past five years is set forth below.
Directors
DavidG. Booth*, (12/2/46), Director, President and Chairman-Chief Executive
Officer, Santa Monica, CA. President, Chairman-Chief Executive Officer and
Director, Dimensional Fund Advisors Inc., DFA Securities Inc., DFA Australia
Limited, Dimensional Investment Group Inc. (registered investment company) and
DFA Investment Dimensions Group Inc. (registered investment company). Trustee,
President and Chairman-Chief Executive Officer of The DFA Investment Trust
Company. Chairman and Director, Dimensional Fund Advisors Ltd.
George M. Constantinides, (9/22/47), Director, Chicago, IL. Leo Melamed
Professor of Finance, Graduate School of Business, University of Chicago.
Trustee, The DFA Investment Trust Company. Director, Dimensional Investment
Group Inc. and DFA Investment Dimensions Group Inc.
John P. Gould, (1/19/39), Director, Chicago, IL. Steven G. Rothmeier
Distinguished Service Professor of Economics, Graduate School of Business,
University of Chicago. Trustee, The DFA Investment Trust Company and First
Prairie Funds (registered investment company). Director, Dimensional Investment
Group Inc., DFA Investment Dimensions Group Inc. and Harbor Investment Advisors.
Executive Vice President, Lexecon Inc. (economics, law, strategy and finance
consulting).
Roger G. Ibbotson, (5/27/43), Director, New Haven, CT. Professor in
Practice of Finance, Yale School of Management. Trustee, The DFA Investment
Trust Company. Director, Dimensional Investment Group Inc., DFA Investment
Dimensions Group Inc., Hospital Fund, Inc. (investment management services) and
BIRR Portfolio Analysis, Inc. (software products). Chairman and President,
Ibbotson Associates, Inc. (software, data, publishing and consulting).
<PAGE>
Merton H. Miller, (5/16/23), Director, Chicago, IL. Robert R. McCormick
Distinguished Service Professor Emeritus, Graduate School of Business,
University of Chicago. Trustee, The DFA Investment Trust Company. Director,
Dimensional Investment Group Inc. and DFA Investment Dimensions Group Inc.
Public Director, Chicago Mercantile Exchange.
Myron S. Scholes, (7/1/41), Director, Greenwich, CT. Limited Partner,
Long-Term Capital Management L.P. (money manager). Frank E. Buck Professor
Emeritus of Finance, Graduate School of Business and Professor of Law, Law
School, Senior Research Fellow, Hoover Institution, (all) Stanford University.
Trustee, The DFA Investment Trust Company. Director, Dimensional Investment
Group Inc., DFA Investment Dimensions Group Inc., Benham Capital Management
Group of Investment Companies and Smith Breeden Group of Investment Companies.
Rex A. Sinquefield*, (9/7/44), Director, Chairman-Chief Investment Officer,
Santa Monica, CA. Chairman-Chief Investment Officer and Director, Dimensional
Fund Advisors Inc., DFA Securities Inc., DFA Australia Limited, Dimensional
Investment Group Inc. and DFA Investment Dimensions Group Inc. Trustee,
Chairman-Chief Investment Officer of The DFA Investment Trust Company. Chairman,
Chief Executive Officer and Director, Dimensional Fund Advisors Ltd.
* Interested Director of the Fund.
Officers
Each of the officers listed below hold the same office (except as
otherwise noted) in the following entities: Dimensional Fund Advisors Inc., DFA
Securities Inc., DFA Australia Limited, Dimensional Investment Group Inc., The
DFA Investment Trust Company, Dimensional Fund Advisors Ltd., and DFA Investment
Dimensions Group Inc.
Arthur Barlow, (11/7/55), Vice President, Santa Monica, CA.
Truman Clark, (4/8/41), Vice President, Santa Monica, CA. Consultant until
October 1995 and Principal and Manager of Product Development, Wells Fargo Nikko
Investment Advisors, San Francisco, CA from 1990-1994.
Maureen Connors, (11/17/36), Vice President and Assistant Secretary, Santa
Monica, CA.
Robert Deere, (10/8/57), Vice President, Santa Monica, CA.
Irene R. Diamant, (7/16/50), Vice President and Secretary (for all entities
other than Dimensional Fund Advisors Ltd.), Santa Monica, CA. Richard Eustice,
(8/5/65), Vice President and Assistant Secretary, Santa Monica, CA.
<PAGE>
Eugene Fama, Jr., (1/21/61), Vice President, Santa Monica, CA.
Kamyab Hashemi-Nejad, (1/22/61), Vice President, Controller and Assistant
Treasurer, Santa Monica, CA.
Stephen P. Manus, (12/26/50), Vice President, Santa Monica, CA. Managing
Director, ANB Investment Management and Trust Company 1985-1993; President, ANB
Investment Management and Trust Company 1993-1997.
Karen McGinley, (3/10/66), Vice President, Santa Monica, CA.
Catherine L. Newell, (5/7/64), Vice President and Assistant Secretary (for
all entities other than Dimensional Fund Advisors Ltd.), Santa Monica, CA.
Associate, Morrison & Foerster LLP 1989-1996.
David Plecha, (10/26/61), Vice President, Santa Monica, CA.
George Sands, (2/8/56), Vice President, Santa Monica, CA.
Michael T. Scardina, (10/12/55), Vice President, Chief Financial Officer
and Treasurer, Santa Monica, CA.
Jeanne C. Sinquefield, Ph.D., (12/2/46), Executive Vice President, Santa
Monica, CA.
Scott Thornton, (3/1/63), Vice President, Santa Monica, CA.
Weston Wellington, (3/1/51), Vice President, Santa Monica, CA. Director of
Research, LPL Financial Services, Inc., Boston, MA 1989-1994.
Rex A. Sinquefield and Jeanne C. Sinquefield are husband and wife.
No director or officer currently owns shares of the Fund.
Set forth below is a table listing, for each director entitled to
receive compensation, the compensation received from the Fund during the fiscal
year ended November 30, 1997, and the total compensation received from all four
registered investment companies for which the Advisor serves as investment
advisor during that same fiscal year.
<PAGE>
Aggregate Total Compensation from
Compensation Fund
Director from Fund and Fund Complex
- -------- ----------------------------------------
George M. Constantinides $ 5,000 $ 30,000
John P. Gould $ 5,000 $ 30,000
Roger G. Ibbotson $ 5,000 $ 30,000
Merton H. Miller $ 5,000 $ 30,000
Myron S. Scholes $ 5,000 $ 30,000
ADMINISTRATIVE SERVICES
PFPC Inc. ("PFPC") serves as the administrative and accounting services,
dividend disbursing and transfer agent for the Fund. The services provided by
PFPC are subject to supervision by the executive officers and the Board of
Directors of the Fund, and include day-to-day keeping and maintenance of certain
records, calculation of the offering price of the shares, preparation of
reports, liaison with its custodian, and transfer and dividend disbursing agency
services. For its services, the Fund pays PFPC annual fees which are set forth
below:
.1230% of the first $300 million of net assets .0615% of the next $300 million
of net assets .0410% of the next $250 million of net assets .0205% of the net
assets over $850 million
The Fund is subject to a $75,000 per year minimum fee. PFPC has agreed to limit
the minimum fee for the Fund from time to time.
OTHER INFORMATION
For the services it provides as investment advisor to the Fund, the
Advisor is entitled to receive from the Fund a fee, payable monthly, at the
annual rate of 0.10% of the aggregate net assets of the Fund. For the fiscal
years ending November 30, 1995, 1996 and 1997, the Fund paid management fees to
the Advisor for its services of $145,564, $173,017 and $203,976, respectively.
The Chase Manhattan Bank, N.A., the custodian for the Fund, maintains a
separate account or accounts for the Fund; receives, holds and releases
portfolio securities on account of the Fund; makes receipts and disbursements of
money on behalf of the Fund; and collects and receives income and other payments
and distributions on account of the Fund's portfolio securities.
PricewaterhouseCoopers LLP, the Fund's independent accountants, audits
the Fund's financial statements on an annual basis.
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
As of August 31, 1998, the following persons beneficially owned 5% or
more of the outstanding securities of the Fund:
BellSouth Corporation Master Pension Trust 97.24%
155 Peachtree Street N.E.
Atlanta, GA 30309
PURCHASE OF SHARES
The following information supplements the information set forth in Part
A under the caption "PURCHASE OF SHARES."
The Fund will accept purchase and redemption orders on each day that the
New York Stock Exchange ("NYSE") is open for business, regardless of whether the
Federal Reserve System is closed. However, no purchases by wire may be made on
any day that the Federal Reserve System is closed. The Fund will generally be
closed on days that the NYSE is closed. The NYSE is scheduled to be open Monday
through Friday throughout the year except for days closed to recognize New
Year's Day, Martin Luther King, Jr. 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 Columbus Day and Veterans' Day. Orders for redemptions
and purchases will not be processed if the Fund is closed.
The Fund reserves the right, in its sole discretion, to suspend the
offering of shares of the Fund or reject purchase orders when, in the judgment
of management, such suspension or rejection is in the best interest of the Fund.
Securities accepted in exchange for shares of the Fund will be acquired for
investment purposes and will be considered for sale under the same circumstances
as other securities in the Fund.
REDEMPTION OF SHARES
The following information supplements the information set forth in Part
A under the caption "REDEMPTION OF SHARES."
The Fund may suspend redemption privileges or postpone the date of
payment: (1) during any period when the NYSE is closed, or trading on the NYSE
is restricted as determined by the SEC, (2) during any period when an emergency
exists as defined by the rules of the SEC as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or
fairly to determine the value of its assets and (3) for such other periods as
the SEC may permit.
<PAGE>
CALCULATION OF PERFORMANCE DATA
Following are quotations of the annualized percentage total returns over
the one-, five-, and ten-year periods (or fractional portion thereof) ended
November 30, 1997, using the standardized method of calculation required by the
SEC, which is net of the cost of the current reimbursement fee charged to
investors and paid to the Fund. A reimbursement fee of 0.50% has been in effect
from the inception of the Fund.
One Year* Five Years* Ten Years
(57 mos.)
1.46 11.36 n/a
* Prior to November 26, 1997, the Fund was a closed-end investment
company; performance figures include the period during which the Fund
operated as a closed-end company and the Fund may incur additional
expenses as an open-end company. Performance figures also reflect
that, until September 30, 1997, it was the Fund's policy to attempt
to own shares of companies whose overall share of the Approved
Markets total public capitalization was at least in the upper 40% of
such capitalization, and could be as large as 75%.
As the following formula indicates, the average annual total return is
determined by finding the average annual compounded rates of return over the
stated time period that would equate a hypothetical initial purchase order of
$1,000 to its redeemable value (including capital appreciation/depreciation and
dividends and distributions paid and reinvested less any fees charged to a
shareholder account) at the end of the stated time period. The calculation
assumes that all dividends and distributions are reinvested at the public
offering price on the reinvestment dates during the period. The quotation
assumes the account was completely redeemed at the end of each period and the
deduction of all applicable charges and fees. According to the SEC formula:
P(1 + T)n = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the one-, five-, and ten-year periods at the end of the
one-, five-, and ten-year periods (or fractional portion thereof).
The Fund may compare its investment performance to appropriate market
and mutual fund indices and investments for which reliable performance data is
available. Such indices are generally unmanaged and are prepared by entities and
organizations which track the performance of investment companies or investment
advisors. Unmanaged indices often do not reflect deductions for administrative
and management costs and expenses. The performance of the Fund may also be
compared in publications to averages, performance rankings, or other information
prepared by recognized mutual fund statistical services. Any performance
information, whether related to the Fund or to the Advisor, should be considered
in light of the Fund's investment objectives and policies, characteristics and
the quality of the portfolio and market conditions during the time period
indicated and should not be considered to be representative of what may be
achieved in the future.
FINANCIAL STATEMENTS
The audited financial statements and financial highlights of the Fund for its
fiscal year ended November 30, 1997, as set forth in the Fund's annual report to
shareholders, and the report thereon of PricewaterhouseCoopers LLP (formerly
Coopers & Lybrand L.L.P.), independent accountants, also appearing therein, and
the unaudited financial information for the period ended May 31, 1998, as set
forth in the Fund's semi-annual report to shareholders, are incorporated herein
by reference.
A shareholder may obtain a copy of the report, upon request and without
charge, by contacting the Fund at the address or telephone number appearing on
the cover of the statement of additional information.
<PAGE>
DIMENSIONAL EMERGING MARKETS, INC.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
Part A: Not Applicable.
Part B:
(1) Schedule of Investments*
(2) Statement of Assets and Liabilities* (3) Statement of
Operations* (4) Statement of Changes in Net Assets* (5)
Financial Highlights* (6) Notes to Financial Statements*
(7) Report of Independent Accountants*
(b) Exhibits.
(1) Copies of the charter, as now in effect.
(a) Articles of Amendment and Restatement dated
November 21, 1997.
Incorporated herein by reference to:
Filing: Post-Effective Amendment No. 6 to
the Registrant's Registration
Statement on Form N-1A.
File No.: 811-7440.
Filing Date: November 26, 1997.
(2) Copies of the existing bylaws or instruments
corresponding thereto.
By-Laws of the Registrant as approved through
December 18, 1997.
Incorporated herein by reference to:
Filing: Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form
N-1A.
File No.: 811-7440.
Filing Date: March 30, 1998.
(3) Copies of any voting trust agreement with respect
to more than 5 percent of any class of equity
securities of the Registrant. Not applicable.
(4) Copies of all instruments defining the rights of
holders of the securities being registered
including where applicable, the relevant portion of
the articles or incorporation or bylaws of the
Registrant. (a) No specimen securities are issued
on behalf of the
Registrant.
(b) Relevant portion of Articles of Amendment and
Restatement dated November 21, 1997.
See Article Fifth.
Incorporated herein by reference to:
Filing: Post-Effective Amendment No. 6 to
the Registrant's Registration
Statement on Form N-1A.
File No.: 811-7440.
Filing Date: November 26, 1997.
(c) Relevant portion of By-Laws.
[To be filed by amendment].
--------------------
* Audited financial statements of DIMENSIONAL EMERGING MARKETS FUND INC.
(the "Registrant") are contained with the Registrant's Annual Report to
Shareholders dated November 30, 1997, and were also filed electronically
on February 5, 1998 via the Securities and Exchange Commission's EDGAR
system pursuant to Rule 30b2-1 under the Investment Company Act of 1940
and are herein incorporated by reference into PART B, the Statement of
Additional Information .
Unaudited financial statements of the Registrant are contained
with the Registrant's Semi-Annual Report to Shareholders dated May 31,
1998, and were also filed electronically on August ___, 1998 via the
Securities and Exchange Commission's EDGAR system pursuant to Rule
30b2-1 under the Investment Company Act of 1940 and are herein
incorporated by reference into PART B, the Statement of Additional
Information.
(5) Copies of all investment advisory contracts
relating to the management of the assets of the
Registrant. Investment Management Agreement between
the Registrant and Dimensional Fund Advisors
Inc. ("DFA")dated November 26, 1997.
Incorporated herein by reference to:
Filing: Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on
Form N-1A.
File No.: 811-7440.
Filing Date: November 26, 1997.
(6) Copies of each underwriting or distribution
contract between the Registrant and a principal
underwriter, and specimens or copies of all
agreements between principal underwriters and
dealers.
Not applicable.
(7) Copies of all bonus, profit sharing, pension or
other similar contracts or arrangements wholly or
partly for the benefit of directors or officers of
the Registrant in their capacity as such; any such
plan that is not set forth in a formal document,
furnish a reasonably
detailed description thereof.
Not applicable.
(8) Copies of all custodian agreements and depository
contracts under Section 17(f) of the 1940 Act [15
U.S.C. 80a 17(f)] with respect to securities and
similar investments of the Registrant, including
the schedule of remuneration.
Agreement between the Registrant and The Chase
Manhattan Bank.
Incorporated herein by reference to:
Filing: Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on
Form N-1A.
File No.: 811-7440.
Filing Date: March 30, 1998.
(9) Copies of all other material contracts not made in
the ordinary course of business which are to be
performed in whole or in part at or after the date
of filing the Registration Statement.
(a) FORM OF Transfer Agency Agreement between
the Registrant and PFPC Inc.
Incorporated herein by reference to:
Filing: Post-Effective Amendment No. 7 to
the Registrant's Registration
Statement on Form N-1A.
File No.: 811-7440.
Filing Date: March 30, 1998.
1. Amendment No. 1 to Transfer Agency
Agreement.
Incorporated herein by reference to:
Filing: Post-Effective Amendment
No. 7 to the Registrant's
Registration Statement on Form N-1A.
File No.: 811-7440.
Filing Date: March 30, 2998
(b) FORM OF Administration and Accounting
Services Agreement between the Registrant
and PFPC Inc.
Incorporated herein by reference to:
Filing: Post-Effective Amendment
No. 7 to the Registrant's
Registration Statement on
Form N-1A.
File No.: 811-7440.
Filing Date: March 30, 1998.
(10) An opinion and consent of counsel as to the
legality of the securities being registered,
indicating whether they will, when sold, be legally
issued, fully paid and non-assessable. Not
applicable.
(11) Copies of any other opinions, appraisals or rulings
and consents to the use, thereof relied on in the
preparation of this Registration Statement and
required by Section 7 of the 1933 Act [15 U.S.C.
77g].
Consent of PriceWaterhouseCoopers LLP is
electronically filed herewith as Exhibit EX-99.B11.
(12) All financial statements omitted from Item 23. Not
applicable.
(13) Copies of any agreements or understandings made in
consideration for providing the initial capital
between or among the Registrant, the underwriter,
adviser, promoter or initial stockholders and
written assurances from promoters of initial
stockholders that their purchases were made for
investment purposes without any present intention
of redeeming or reselling.
Incorporated herein by reference to:
Filing: Post-Effective Amendment No. __ to
the Registrant's Registration
Statement on Form N-1A.
File No.: 811-7440.
Filing Date: January 19, 1993.
(14) Copies of the model plan used with establishment of
any retirement plan in conjunction with which
Registrant offers its securities, any instructions
thereto and any other documents making up the model
plan. Such form(s) should disclose the costs and
fees charged in connection therewith.
Not applicable.
(15) Copies of any plan entered into by Registrant
pursuant to Rule 12b-1 under the 1940 Act, which
describes all material aspects of the financing of
distribution of Registrant's shares, and any
agreements with any person relating to
implementation of such
plan.
Not applicable.
(16) Schedule for computation of each performance
quotation provided in the Registration Statement in
response to Item 22 (which need not be audited).
Not applicable.
(17) Electronic Filers. A Financial Data Schedule
meeting the requirements of rule 483 under the
Securities Act of 1933 (ss.230.483 of this
chapter).
(a) Financial Data Schedules dated May
31, 1998 are electronically filed herewith as
Exhibits EX-27.
(b) Financial Data Schedules dated November 30,
1997 are electronically filed herewith as
Exhibits EX-27.
(18) Copies of any plan entered into by Registrant
pursuant to Rule 18f-3 under the 1940 Act, any
agreement with any person relating to the
implementation of a plan, any amendment to a plan
or agreement, and a copy of the portion of the
minutes of a meeting of the Registrant's directors
describing any action taken to revoke a plan.
Not Applicable.
(19) Powers-of-Attorney.
Power-of-Attorney dated July 18, 1997, appointing
David G.Booth, Rex A. Sinquefield, Michael T.
Scardina, Irene R.Diamant, Catherine L. Newell and
Stephen W. Kline, Esq. as attorney-in-fact for the
Registrant and certified resolution relating
thereto.
Incorporated herein by reference to:
Filing: Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on
Form N-1A.
File No.: 811-7440.
Filing Date: November 26, 1997.
Item 25. Persons Controlled by or Under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
(1) (2)
Number of Record
Holders as of
Title of Class August 31, 1998
(Par Value $.01)
Dimensional Emerging Markets
Fund Shares 1
Item 27. Indemnification.
Reference is made to Article Seventh of the Registrant's Articles
of Amendment and Restatement and Article 5, Section 5.08 of the
Registrant's Bylaw, which are incorporated herein by reference.
The Articles and Bylaws of Registrant provide for indemnification
of officers and directors to the full extent permitted by the
General Laws of the State of Maryland. Registrant's charter
provides that the directors and officers shall not be personally
liable to the Registrant or its stockholders for money damages,
except as otherwise required under the Investment Company Act of
1940.
Pursuant to Rule 484 under the Securities Act of 1933, as
amended, the Registrant furnishes the following undertaking:
"Insofar as indemnification for liability arising under the
Securities Act of 1933, (the "Act"), may be permitted to the
directors, 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 director, an officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
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."
Item 28. Business and Other Connections of the Investment Advisor.
---------------------------------------------------------
Dimensional Fund Advisors Inc., the investment manager for the
Registrant, is also the investment manager for three other
registered open-end investment companies, DFA Investment
Dimensions Group Inc., The DFA Investment Trust Company and
Dimensional Investment Group Inc. The Advisor also serves as
sub-advisor for certain other registered investment companies.
For additional information, please see "Management of the Fund"
in PART A of this Registration Statement.
Additional information as to the Advisor and the directors and
officers of the Advisor is included in the Advisor's Form ADV
filed with the Commission (File No. 801-16283) which is
incorporated herein by reference and sets forth the officers and
directors of the Advisor and information as to any business,
profession, vocation or employment of a substantial nature
engaged in by those officers and directors during the past
two years.
Item 29. Principal Underwriters.
Names of investment companies for which the Registrant's
principal underwriter also acts as principal underwriter.
(a) Not applicable.
(b) Registrant distributes its own shares. It has entered into
an agreement with DFA Securities Inc. 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. Location of Accounts and Records
The accounts and records of the Registrant will be located at the
office of the Registrant and at additional locations, as follows:
Name Address
Dimensional Emerging Markets Fund Inc. 1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
PFPC Inc. 400 Bellevue Parkway
Wilmington, DE 19809
The Chase Manhattan Bank 4 Chase MetroTech Center
Brooklyn, NY 11245
Item 31. Management Services.
None.
Item 32. Undertakings.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Post-Effective Amendment No. 8 to its
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Santa Monica and the State of
California on the 18th day of September, 1998.
DIMENSIONAL EMERGING MARKETS FUND INC.
(Registrant)
By: David G. Booth*
David G. Booth
President and Chairman
Chief Executive Officer
(Signature and Title)
*By: Catherine L. Newell
Catherine L. Newell
Attorney-in-Fact (Pursuant to a Power of Attorney)
<PAGE>
EXHIBIT INDEX
N-1A EDGAR
EXHIBIT NO. EXHIBIT NO. DESCRIPTION
24(b)(11) EX-99.B11 Consent of PricewaterhouseCoopers L.L.P
24(b)(17) EX-27. Financial Data Schedules dated
May 31, 1998.
24(b)(17) EX-27 Financial Data Schedules dated
November 30, 1997.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective
Amendment No. 8 (File No. 811-7440) under the Investment Company Act of 1940 to
the Registration Statement on Form N-1A of Dimensional Emerging Markets Fund
Inc. of our report dated January 16, 1998 on our audit of the financial
statements and financial highlights of Dimensional Emerging Markets Fund, Inc.
as of November 30, 1997 and for the respective periods then ended, which report
is included in the Annual Reports to Shareholders.
We also consent to the reference to our firm under the captions "Other
Information" and "Financial Statements" in the Statement of Additional
Information.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA
September 18, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000896163
<NAME> DIMENSIONAL EMERGING MARKETS FUND INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 189113336
<INVESTMENTS-AT-VALUE> 188900500
<RECEIVABLES> 721564
<ASSETS-OTHER> 634268
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 190256332
<PAYABLE-FOR-SECURITIES> 1369863
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 829419
<TOTAL-LIABILITIES> 2199282
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 163352446
<SHARES-COMMON-STOCK> 12482657
<SHARES-COMMON-PRIOR> 12011958
<ACCUMULATED-NII-CURRENT> 589898
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25018429
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (212836)
<NET-ASSETS> 188057050
<DIVIDEND-INCOME> 3290515
<INTEREST-INCOME> 220926
<OTHER-INCOME> 0
<EXPENSES-NET> (659804)
<NET-INVESTMENT-INCOME> 2851637
<REALIZED-GAINS-CURRENT> 25031639
<APPREC-INCREASE-CURRENT> (34861263)
<NET-CHANGE-FROM-OPS> (7487075)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5417393)
<DISTRIBUTIONS-OF-GAINS> (204203)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 107272
<NUMBER-OF-SHARES-REDEEMED> (1612)
<SHARES-REINVESTED> 365039
<NET-CHANGE-IN-ASSETS> (5748328)
<ACCUMULATED-NII-PRIOR> 3149821
<ACCUMULATED-GAINS-PRIOR> 190993
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 99881
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 659804
<AVERAGE-NET-ASSETS> 199762155
<PER-SHARE-NAV-BEGIN> 16.13
<PER-SHARE-NII> .24
<PER-SHARE-GAIN-APPREC> (.83)
<PER-SHARE-DIVIDEND> (.45)
<PER-SHARE-DISTRIBUTIONS> (.02)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.07
<EXPENSE-RATIO> .66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000896163
<NAME> DIMENSIONAL EMERGING MARKETS FUND, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 159467463
<INVESTMENTS-AT-VALUE> 194115890
<RECEIVABLES> 696192
<ASSETS-OTHER> 25287
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 194837369
<PAYABLE-FOR-SECURITIES> 19138
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1012853
<TOTAL-LIABILITIES> 1031991
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 155992103
<SHARES-COMMON-STOCK> 12011958
<SHARES-COMMON-PRIOR> 11000687
<ACCUMULATED-NII-CURRENT> 3149821
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 190993
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34648427
<NET-ASSETS> 193805378
<DIVIDEND-INCOME> 4769234
<INTEREST-INCOME> 347760
<OTHER-INCOME> 0
<EXPENSES-NET> 1276094
<NET-INVESTMENT-INCOME> 3840900
<REALIZED-GAINS-CURRENT> 196643
<APPREC-INCREASE-CURRENT> (5294847)
<NET-CHANGE-FROM-OPS> 335943
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 506125
<DISTRIBUTIONS-OF-GAINS> 209051
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 964467
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 46804
<NET-CHANGE-IN-ASSETS> 19335943
<ACCUMULATED-NII-PRIOR> (184954)
<ACCUMULATED-GAINS-PRIOR> 203401
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1019882
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2091999
<AVERAGE-NET-ASSETS> 205684655
<PER-SHARE-NAV-BEGIN> 15.86
<PER-SHARE-NII> .33
<PER-SHARE-GAIN-APPREC> .01
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> (.02)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.13
<EXPENSE-RATIO> .62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
