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Investment Company Act of 1940 File No. 811-7440
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Securities And Exchange Commission
Washington, D.C. 20549
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Form N-1A
[X] Registration Statement Under The Investment Company Act Of 1940
[X] Amendment No. 7
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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)
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Irene R. Diamant
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
(Name and Address of Agent for Service)
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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
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DIMENSIONAL EMERGING MARKETS FUND INC.
PART A
MARCH 30, 1997
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.
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TABLE OF CONTENTS
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PAGE
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DIMENSIONAL EMERGING MARKETS FUND INC. . . . . . . . . . . . . . . . . . . . .3
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . .3
Fund Characteristics and Policies . . . . . . . . . . . . . . . . . . . .3
Portfolio Structure . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECURITIES LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Foreign Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Investing in Emerging Markets . . . . . . . . . . . . . . . . . . . . . .5
Foreign Currencies and Related Transactions . . . . . . . . . . . . . . .6
Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Portfolio Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . .7
Futures Contracts and Options on Futures. . . . . . . . . . . . . . . . .7
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . .7
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Consulting Services . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . .8
Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . .8
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . .9
PURCHASE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
In-Kind Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
VALUATION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Public Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . 12
DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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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.
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, Malaysia, Mexico,
Philippines, Portugal, South Korea, Thailand and Turkey. Countries that may be
approved in the future include but are not limited to Colombia, Czech Republic,
Greece, Hungary,
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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.
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.
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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.
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 33 1/3% 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.
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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.
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.
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
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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.
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.
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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.
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.
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
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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.
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
9
<PAGE>
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.
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.
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
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<PAGE>
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.
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.
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<PAGE>
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.
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.
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<PAGE>
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.
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<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 February 28, 1998, all 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"). 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 100% 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.
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<PAGE>
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.
15
<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
COOPERS & LYBRAND L.L.P.
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
March 30, 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 March 30,
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 CHARACTERISTICS 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ADMINISTRATIVE SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PRINCIPAL HOLDERS OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . 9
PURCHASE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
CALCULATION OF PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . . . . 10
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
<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
2
<PAGE>
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.
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;
3
<PAGE>
(7) acquire any securities of companies within one industry if, as a result
of such acquisition, more than 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.
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.
** 1 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.
* 1 moved from here: text not shown
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.
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.
4
<PAGE>
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
5
<PAGE>
so. Management intends to minimize the possibility that it will be unable to
close out a futures contract by only entering into futures which are traded on
national futures exchanges and for which there appears to be a liquid secondary
market.
FEDERAL TAX TREATMENT OF
FUTURES CONTRACTS 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.
6
<PAGE>
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
David G. 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).
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.
7
<PAGE>
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.
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.
8
<PAGE>
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.
<TABLE>
<CAPTION>
Aggregate Total Compensation from
Compensation Fund
Director from Fund and Fund Complex
- -------- ---------------- ----------------------------
<S> <C> <C>
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
</TABLE>
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.
9
<PAGE>
Coopers & Lybrand L.L.P., the Fund's independent accountants, audits the
Fund's financial statements on an annual basis.
PRINCIPAL HOLDERS OF SECURITIES
As of February 28, 1998, the following persons beneficially owned 5% or
more of the outstanding securities of the Fund:
BellSouth Corporation Master Pension Trust 100%
1155 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.
10
<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.
<TABLE>
<CAPTION>
ONE YEAR* FIVE YEARS* TEN YEARS
-------- ---------- ---------
<S> <C> <C>
(57 mos.)
1.46 11.36 n/a
</TABLE>
- --------------------
* 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:
n
P(1 + T) = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the one-, five-, and ten-year periods at the end of the one-,
five-, and ten-year periods (or fractional portion thereof).
The 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
11
<PAGE>
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 Coopers & Lybrand L.L.P.,
independent accountants, also appearing therein, 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.
12
<PAGE>
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) CHARTER, AS NOW IN EFFECT.
(a) Articles of Amendment and Restatement dated November 21,
1997.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Amendment No. 6 to the Registration Statement of
the Registrant on Form N-1A.
File No.: 811-7440.
Filing Date: November 26, 1997
(2) EXISTING BY-LAWS.
By-Laws of the Registrant as approved through December 18, 1997
are filed herewith.
(3) VOTING TRUST AGREEMENT.
None.
(4) INSTRUMENTS DEFINING RIGHTS OF HOLDERS OF SECURITIES BEING
REGISTERED.
(a) See Article Fifth of Registrant's Articles of Amendment and
Restatement dated November 21, 1997.
- -------------------------
* The audited financial statements were filed via the EDGAR system on
February 5, 1998 with the SEC as DIMENSIONAL EMERGING MARKETS FUND INC.
Annual Report to shareholders for the year ended November 30, 1997 pursuant
to Rule 30b2-1 under the Investment Company Act of 1940 ("1940 Act") and
are incorporated by reference into PART B, the statement of additional
information, dated March 30, 1998.
<PAGE>
(5) (a) INVESTMENT ADVISORY AGREEMENT:
Investment Management Agreement between the Registrant and
Dimensional Fund Advisors Inc. ("DFA") dated November 26,
1997.
INCORPORATED HEREIN BY REFERENCE TO:
Filing: Amendment No. 6 to the Registration Statement of
the Registrant on Form N-1A.
File No.: 811-7440.
Filing Date: November 26, 1997
(6) UNDERWRITING OR DISTRIBUTION CONTRACT:
Not applicable.
(7) COPIES OF BONUS OR PROFIT SHARING, PENSION OR OTHER SIMILAR
CONTRACTS:
Not applicable.
(8) CUSTODIAN AGREEMENT:
Agreement between the Registrant and The Chase Manhattan Bank:
is filed herewith.
(9) (a) FORM OF TRANSFER AGENCY AGREEMENT BETWEEN THE REGISTRANT AND
PFPC INC.: is filed herewith.
(i) AMENDMENT NO. 1 TO TRANSFER AGENCY AGREEMENT: is filed
herewith.
(b) FORM OF ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
BETWEEN THE REGISTRANT AND PFPC INC.: is filed herewith.
(10) OPINION AND CONSENT OF COUNSEL.
Not applicable.
(11) OTHER OPINIONS OR CONSENTS.
Consent of Coopers & Lybrand L.L.P. is filed herewith.
(12) FINANCIAL STATEMENTS OMITTED FROM ITEM 23.
Not applicable.
(13) MODEL PLAN USED IN THE ESTABLISHMENT OF ANY RETIREMENT PLAN.
Not applicable.
(14) PLANS ENTERED INTO PURSUANT TO RULE 12b-1.
Not applicable.
(15) SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATION.
Not applicable.
-2-
<PAGE>
(16) FINANCIAL DATA SCHEDULES.
Financial Data Schedules dated November 30, 1997.
(17) PLANS PURSUANT TO RULE 18f-3.
Not Applicable.
(18) POWERS-OF-ATTORNEY.
(a) 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: Amendment No. 6 to the Registration Statement of
the Registrant 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 FEBRUARY 28, 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 Bylaws.
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.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended ("Act"), may be permitted to the directors,
officers and controlling
-3-
<PAGE>
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" in PART A and PART B 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
-4-
<PAGE>
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 1299 Ocean Avenue, 11th Floor
Fund Inc. Santa Monica, California 90401
PFPC Inc. 103 Bellevue Parkway
Wilmington, DE 19809
The Chase Manhattan Bank 4 Chase MetroTech Center
Brooklyn, New York 11245
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
Not applicable.
-5-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Santa Monica and the State of California on the 30th day of March, 1998.
DIMENSIONAL EMERGING MARKETS FUND INC.
By: /s/ David G. Booth*
----------------------------------------
David G. Booth
President and Chairman - Chief
Executive Officer
*By: /s/Catherine L. Newell
------------------------------
Catherine L. Newell
Attorney-in-Fact
(Pursuant to a Power of Attorney)
-6-
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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99(b)(2) By-Laws of the Registrant as approved through December 18,
1997
99(b)(8) Custodian Agreement between the Registrant and The Chase
Manhattan Bank
99(b)(9)(a) Form of Transfer Agency Agreement between the Registrant and
PFPC Inc.
99(b)(9)(a)(i) Amendment No. 1 to Transfer Agency Agreement
99(b)(9)(b) Form of Administration and Accounting Services Agreement
between the Registrant and PFPC Inc.
99(b)(11) Consent of Coopers & Lybrand L.L.P.
99(b)(17) Financial Data Schedules dated November 30, 1997
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(Approved through 12/18/97)
DIMENSIONAL EMERGING MARKETS FUND INC.
BY-LAWS
I N D E X
SECTION AND TITLE PAGE
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ARTICLE I SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . .1
1.01 Annual Meetings. . . . . . . . . . . . . . . . . . . . . .1
1.02 Special Meetings . . . . . . . . . . . . . . . . . . . . .1
1.03 Place of Meetings. . . . . . . . . . . . . . . . . . . . .1
1.04 Notice of Meetings . . . . . . . . . . . . . . . . . . . .1
1.05 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.06 Votes Required . . . . . . . . . . . . . . . . . . . . . .2
1.07 Proxies. . . . . . . . . . . . . . . . . . . . . . . . . .3
1.08 List of Shareholders . . . . . . . . . . . . . . . . . . .3
1.09 Voting . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.10 Action by Shareholders Other than at a Meeting . . . . . .3
ARTICLE II BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . .4
2.01 Powers . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.02 Number of Directors. . . . . . . . . . . . . . . . . . . .4
2.03 Election of Directors. . . . . . . . . . . . . . . . . . .4
2.04 Regular Meetings . . . . . . . . . . . . . . . . . . . . .4
2.05 Special Meetings . . . . . . . . . . . . . . . . . . . . .4
2.06 Notice of meetings . . . . . . . . . . . . . . . . . . . .5
2.07 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.08 Vacancies. . . . . . . . . . . . . . . . . . . . . . . . .5
2.09 Compensation and Expenses. . . . . . . . . . . . . . . . .6
2.10 Action by Directors Other than at a Meeting. . . . . . . .6
2.11 Committees . . . . . . . . . . . . . . . . . . . . . . . .6
2.12 Committee Procedure. . . . . . . . . . . . . . . . . . . .6
2.13 Emergency. . . . . . . . . . . . . . . . . . . . . . . . .6
2.14 Holding of Meetings by Conference Telephone Call . . . . .7
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ARTICLE III OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . .7
3.01 Executive Officers . . . . . . . . . . . . . . . . . . . .7
3.02 Chairman and Vice Chairman of the Board. . . . . . . . . .8
3.03 President. . . . . . . . . . . . . . . . . . . . . . . . .8
3.04 Vice Presidents. . . . . . . . . . . . . . . . . . . . . .8
3.05 Secretary and Assistant Secretaries. . . . . . . . . . . .8
3.06 Treasurer and Assistant Treasurers . . . . . . . . . . . .9
3.07 Subordinate Officers . . . . . . . . . . . . . . . . . . .9
3.08 Removal. . . . . . . . . . . . . . . . . . . . . . . . . .9
3.09 Compensation . . . . . . . . . . . . . . . . . . . . . . .9
3.10 Annual Statement of Affairs. . . . . . . . . . . . . . . .9
ARTICLE IV STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . .10
4.01 Issuances without Certificates . . . . . . . . . . . . . .10
4.02 Transfer Agents and Registrars . . . . . . . . . . . . . .10
4.03 Stock Ledgers. . . . . . . . . . . . . . . . . . . . . . .10
4.04 Record Dates . . . . . . . . . . . . . . . . . . . . . . .10
4.05 Lost Certificates. . . . . . . . . . . . . . . . . . . . .10
4.06 Certification of Beneficial Owners . . . . . . . . . . . .11
ARTICLE V GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . .11
5.01 Dividends. . . . . . . . . . . . . . . . . . . . . . . . .11
5.02 Checks . . . . . . . . . . . . . . . . . . . . . . . . . .11
5.03 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . .11
5.04 Custodian. . . . . . . . . . . . . . . . . . . . . . . . .12
5.05 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . .12
5.06 Representation of Shares . . . . . . . . . . . . . . . . .12
5.07 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . .12
5.08 Indemnification. . . . . . . . . . . . . . . . . . . . . .13
ARTICLE VI AMENDMENT OF BY-LAWS . . . . . . . . . . . . . . . . . . .13
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BY-LAWS
OF
DIMENSIONAL EMERGING MARKETS FUND INC.
ARTICLE I.
SHAREHOLDERS
SECTION 1.01. ANNUAL MEETINGS. The annual meeting of shareholders
shall be held during the month of ______________, at such date and time as may
be designated from time to time by the Board of Directors for the election of
Directors and the transaction of any business within the powers of the
Corporation, except that the Corporation shall not hold an annual meeting in any
year in which the election of Directors is not required under the Investment
Company Act of 1940. Any business of the Corporation may be transacted at an
annual meeting without being specifically designated in the notice, except such
business as is specifically required by statute or by the Articles of
Incorporation to be stated in the notice. Failure to hold an annual meeting at
the designated time shall not, however, invalidate the corporate existence or
affect otherwise valid corporate acts.
SECTION 1.02. SPECIAL MEETINGS. At any time in the interval between
annual meetings, special meetings of the shareholders may be called by the
Chairman of the Board or the President or by a majority of the Board by vote at
a meeting or in writing (addressed to the Secretary of the Corporation) with or
without a meeting or by 10% of the shareholders by written consent.
SECTION 1.03. PLACE OF MEETINGS. Meetings of the shareholders for
the election of Directors shall be held at such place either within or without
the State of Maryland or elsewhere in the United States as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting. Meetings of shareholders for any other purpose may be held at such
time and place, within the State of Maryland or elsewhere in the United States,
as shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
SECTION 1.04. NOTICE OF MEETINGS. Not less than ten days nor more
than ninety days before the date of every shareholders' meeting, the
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Secretary shall give to each shareholder entitled to vote at such meeting,
written or printed notice stating the time and place of the meeting and, if the
meeting is a special meeting or notice of the purpose is required by statute,
the purpose or purposes for which the meeting is called, either by mail or by
presenting it to the shareholder personally or by leaving it at the
shareholder's residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States mail addressed
to the shareholder at his post office address as it appears on the records of
the Corporation, with postage thereon prepaid. Notwithstanding the foregoing
provision, a waiver of notice in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting, whether
before or after the holding thereof, or actual attendance at the meeting in
person or by proxy, shall be deemed equivalent to the giving of such notice to
such persons. Any meeting of shareholders, annual or special, may adjourn from
time to time to reconvene at the same or some other place, and no notice need be
given of any such adjourned meeting other than by announcement at the meeting.
SECTION 1.05. QUORUM. At any meeting of shareholders the presence in
person or by proxy of a majority of all the votes entitled to be cast at the
meeting shall constitute a quorum; but this Section shall not affect any
requirement under statute or under the Articles for the vote necessary for the
adoption of any measure. In the absence of a quorum no business may be
transacted; provided, however, that at any meeting of shareholders whether or
not a quorum is present, the holders of a majority of the shares of capital
stock present in person or by proxy and entitled to vote may adjourn the meeting
from time to time, without notice other than announcement at the meeting except
as otherwise required by the Articles and these By-Laws, until the holders of
the requisite amount of shares of capital stock shall be present to constitute a
quorum or to transact the business to be transacted, or for any other lawful
purpose. At any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally called. The absence from any meeting, in person or by proxy, of
holders of the number of shares of capital stock of the Corporation in excess of
a majority thereof which may be required by the General Laws of the State of
Maryland, the Investment Company Act of 1940, these By-Laws, or the Articles of
Incorporation, for action upon any given matter shall not prevent action at such
meeting upon any other matter or matters which may properly come before the
meeting, if there shall be present at the meeting, in person or by proxy,
holders of the number of shares of capital stock of the Corporation required for
action in respect of such other matter or matters.
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SECTION 1.06. VOTES REQUIRED. Except as otherwise provided by
applicable law or the Articles of Incorporation, a majority of the votes cast
at a meeting of shareholders, duly called and at which a quorum is present,
shall be sufficient to take or authorize action upon any matter which may
properly come before the meeting. Each outstanding share of stock shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders and fractional shares shall be entitled to corresponding fractions
of one vote on such matters, except that a plurality of all the votes cast at a
meeting at which a quorum is present is sufficient to elect a director.
SECTION 1.07. PROXIES. A shareholder may vote the shares owned of
record by him either in person or by proxy executed in writing by the
shareholder or by the shareholder's duly authorized attorney-in-fact. No proxy
shall be valid after eleven months from its date, unless otherwise provided in
the proxy. Every proxy shall be in writing, subscribed by the shareholder or
the shareholder's duly authorized attorney, and dated, but need not be sealed,
witnessed or acknowledged.
SECTION 1.08. LIST OF SHAREHOLDERS. At each meeting of shareholders,
a full, true and complete list in alphabetical order of all shareholders
entitled to vote at such meeting, certifying the number and class or series of
shares held by each, shall be made available by the Secretary.
SECTION 1.09. VOTING. In all elections for Directors every
shareholder shall have the right to vote, in person or by proxy, the shares
owned of record by the shareholder for as many persons as there are Directors to
be elected and for whose election the shareholder has a right to vote. At all
meetings of shareholders, unless the voting is conducted by inspectors, the
proxies and ballots shall be received, and all questions regarding the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by, the chairman of the meeting. If
demanded by shareholders, present in person or by proxy, entitled to cast 10% in
number of votes, or if ordered by the chairman, the vote upon any election or
question shall be taken by ballot. Upon like demand or order, the voting shall
be conducted by two inspectors in which event the proxies and ballots shall be
received, and all questions regarding the qualification of voters and the
validity of proxies and the acceptance or rejection of votes shall be decided,
by such inspectors. Unless so demanded or ordered, no vote need be by ballot,
and voting need not be conducted by inspectors. Inspectors may be elected by
the shareholders at their annual meeting, to serve until the close of the next
annual meeting and their election may be held at the same time as the election
of Directors. In
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case of a failure to elect inspectors, or in case an inspector shall fail to
attend, or refuse or be unable to serve, the shareholders at any meeting may
choose an inspector or inspectors to act at such meeting, and in default of such
election the chairman of the meeting may appoint an inspector or inspectors.
SECTION 1.10. ACTION BY SHAREHOLDERS OTHER THAN AT A MEETING. Any
action required or permitted to be taken at any meeting of shareholders may be
taken without a meeting, if a consent in writing, setting forth such action, is
signed by all the shareholders entitled to vote on the subject matter thereof
and any other shareholders entitled to notice of a meeting of shareholders (but
not to vote thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed with the records
of the Corporation.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 2.01. POWERS. The Board may exercise all the powers of the
Corporation, except such as are conferred upon or reserved to the shareholders
by the Articles of Incorporation, these By-Laws, the Investment Company Act of
1940 or the Maryland General Corporation Law. The Board shall keep full and
fair accounts of its transactions.
SECTION 2.02. NUMBER OF DIRECTORS. The Corporation shall have at
least three Directors; provided that, if there is no stock outstanding, the
number of Directors may be less than three but not less than one, and, if there
is stock outstanding and so long as there are less than three stockholders, the
number of Directors may be less than three but not less than the number of
stockholders. The Corporation shall have the number of Directors provided in
the Articles of Incorporation until changed as herein provided. A majority of
the entire Board of Directors may alter the number of Directors set by the
Articles of Incorporation to not exceeding 25 nor less than the minimum number
then permitted herein, but the action may not affect the tenure of office of any
Director.
SECTION 2.03. ELECTION OF DIRECTORS. Until the first annual meeting
of shareholders and until successors or additional Directors are duly elected
and qualify, the Board shall consist of the persons named as such in the
Articles of Incorporation. When and as required at each annual meeting that may
be held by the Corporation beginning with the first annual meeting, the
shareholders shall elect Directors to hold office until the next
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annual meeting and until their successors are elected and qualify. At any
meeting of shareholders, duly called and at which a quorum is present, the
shareholders may, by the affirmative vote of the holders of a majority of the
votes entitled to be cast thereon, remove any Director or Directors from office
and may elect a successor or successors to fill any resulting vacancies for the
unexpired terms of removed Directors.
SECTION 2.04. REGULAR MEETINGS. After each meeting of shareholders
at which a Board of Directors shall have been elected, the Board so elected
shall meet for the purpose of organization and the transaction of other
business. No notice of such first meeting shall be necessary if held
immediately after the adjournment, and at the site, of such meeting of
shareholders. Other regular meetings of the Board shall be held without notice
on such dates and at such places within or without the State of Maryland as may
be designated from time to time by the Board.
SECTION 2.05. SPECIAL MEETINGS. Special meetings of the Board may be
called at any time by the Chairman of the Board, the President or the Secretary
of the Corporation, or by a majority of the Board by vote at a meeting, or in
writing with or without a meeting. Such special meetings shall be held at such
place or places within or without the State of Maryland as may be designated
from time to time by the Board. In the absence of such designation such
meetings shall be held at such places as may be designated in the calls.
SECTION 2.06. NOTICE OF MEETINGS. Except as provided in Section
2.04, notice of the place, day and hour of all meetings shall be given to each
Director two days (or more) before the-meeting, by delivering the same
personally, or by sending the same by telegraph, or by leaving the same at the
Director's residence or usual place of business, or, in the alternative, by
mailing such notice three days (or more) before the meeting, postage prepaid,
and addressed to the Director at the Director's last known business or residence
post office address, according to the records of the Corporation. Unless
required by these By-Laws or by resolution of the Board, no notice of any
meeting of the Board need state the business to be transacted thereat. No
notice of any meeting of the Board need be given to any Director who attends, or
to any Director who in writing executed and filed with the records of the
meeting either before or after the holding thereof, waives such notice. Any
meeting of the Board, regular or special, may adjourn from time to time to
reconvene at the same or some other place, and no notice need be given of any
such adjourned meeting other than by announcement at the adjourned meeting.
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SECTION 2.07. QUORUM. At all meetings of the Board, a majority of
the entire Board (but in no event fewer than two Directors) shall constitute a
quorum for the transaction of business. Except in cases in which it is by
statute, by the Articles of Incorporation or by these By-Laws otherwise
provided, the vote of a majority of such quorum at a duly constituted meeting
shall be sufficient to elect and pass any measure. In the absence of a quorum,
the Directors present by majority vote and without notice other than by
announcement at the meeting may adjourn the meeting from time to time until a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting as originally noticed.
SECTION 2.08. VACANCIES. Any vacancy occurring in the Board of
Directors for any cause other than by reason of an increase in the number of
Directors may be filled by a majority of the remaining members of the Board of
Directors, although such majority is less than a quorum. Any vacancy occurring
by reason of an increase in the number of Directors may be filled by action of a
majority of the entire Board of Directors. If at any time after the first
annual meeting of shareholders of the Corporation a majority of the Directors in
office shall consist of Directors elected by the Board of Directors, a meeting
of the shareholders shall be called forthwith for the purpose of electing the
entire Board of Directors, and the terms of office of the Directors then in
office shall terminate upon the election and qualification of such Board of
Directors. A Director elected by the Board of Directors or the shareholders to
fill a vacancy shall be elected to hold office until the next annual meeting of
shareholders and until his successor is elected and qualifies.
SECTION 2.09. COMPENSATION AND EXPENSES. Directors may, pursuant to
resolution of the Board, be paid fees for their services, which fees may consist
of an annual fee or retainer and/or a fixed fee for attendance at meetings. In
addition, Directors may in the same manner be reimbursed for expenses incurred
in connection with their attendance at meetings or otherwise in performing their
duties as Directors. Members of committees may be allowed like compensation and
reimbursement. Nothing herein contained shall preclude any Director from
serving the Corporation in any other capacity and receiving compensation
therefor.
SECTION 2.10. ACTION BY DIRECTORS OTHER THAN AT A MEETING. Any
action required or permitted to be taken at any meeting of the Board, or of any
committee thereof, may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such
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committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board or committee.
SECTION 2.11. COMMITTEES. The Board of Directors may appoint from
among its members an Executive Committee, Audit Committee or other committees
composed of two or more directors and delegate to these committees any of the
powers of the Board of Directors to the extent permitted by the General Laws of
the State of Maryland. If the Board of Directors has given general
authorization for the issuance of stock, a committee of the Board, in accordance
with a general formula or method specified by the Board by resolution, may fix
the terms of stock subject to classification or reclassification and the terms
on which any stock may be issued, including all terms and conditions required or
permitted to be established or authorized by the Board of Directors.
SECTION 2.12. COMMITTEE PROCEDURE. Each committee may fix rules of
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be the act of the
committee. The members of a committee present at any meeting, whether or not
they constitute a quorum, may appoint a director to act in the place of an
absent member. Any action required or permitted to be taken at a meeting of a
committee may be taken without a meeting, if an unanimous written consent which
sets forth the action is signed by each member of the committee and filed with
the minutes of the committee. The members of a committee may conduct any
meeting thereof by conference telephone in accordance with the provisions of
Section 2.14.
SECTION 2.13. EMERGENCY. In the event of a state of disaster of
sufficient severity to prevent the conduct and management of these affairs and
business of the Corporation by its directors and officers as contemplated by the
Articles of Incorporation and these By-Laws, any two or more available members
of the then incumbent Executive Committee shall constitute a quorum of that
Committee for the full conduct and management of the affairs and business of the
Corporation. In the event of the unavailability, at such time, of a minimum of
two members of the then incumbent Executive Committee, the available directors
shall elect an Executive Committee consisting of any two members of the Board of
Directors, whether or not they be officers of the Corporation, which two members
shall constitute the Executive Committee for the full conduct and management of
the affairs of the Corporation in accordance with the foregoing provisions of
this Section. This Section shall be subject to implementation by resolution of
the Board of Directors passed from time
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to time for that purpose, and any provisions of the By-Laws (other than this
Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary resolutions shall be
suspended until it shall be determined by any interim Executive Committee acting
under this Section that it shall be to the advantage of the Corporation to
resume the conduct and management of its affairs and business under all the
other provisions of the By-Laws.
SECTION 2.14. HOLDING OF MEETINGS BY CONFERENCE TELEPHONE CALL. At
any regular or special meeting of the Board or any committee thereof, members
thereof may participate in such meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
ARTICLE III.
OFFICERS
SECTION 3.01. EXECUTIVE OFFICERS. The Board of Directors may choose
a Chairman of the Board and a Vice Chairman of the Board from among the
Directors, and shall choose a President, a Secretary and a Treasurer who need
not be Directors. The Board of Directors shall designate as principal executive
officer of the Corporation either the Chairman of the Board, or the Vice
Chairman of the Board. The Board of Directors may choose an Executive Vice
President, one or more Senior Vice Presidents, one or more vice Presidents, one
or more Assistant Secretaries and one or more Assistant Treasurers, none of whom
need be a Director. Any two or more of the above-mentioned offices, except
those of President and a Vice President, may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument be required by law, by the Articles of
Incorporation, by these By-Laws or by resolution of the Board of Directors to be
executed by any two or more officers. Each such officer shall hold office until
his successor shall have been duly chosen and qualified, or until he shall have
resigned or shall have been removed. Any vacancy in any of the above offices
may be filled for the unexpired portion of the term of the Board of Directors at
any regular or special meeting.
SECTION 3.02. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The Chairman
of the Board, if one be elected, shall preside at all meetings of the Board of
Directors and of the shareholders at which he is present. He shall
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have and may exercise such powers as are, from time to time, assigned to him by
the Board of Directors. The Vice Chairman of the Board, if one be elected,
shall, when present and in the absence of the Chairman of the Board, preside at
all meetings of the shareholders and Directors, and he shall perform such other
duties as may from time to time be assigned to him by the Board of Directors or
as may be required by law.
SECTION 3.03. PRESIDENT. In the absence of the Chairman or Vice
Chairman of the Board, the President shall preside at all meetings of the
shareholders and of the Board at which the President is present; and in general,
shall perform all duties incident to the office of a president of a Maryland
Corporation, and such other duties, as from time to time, may be assigned to him
by the Board.
SECTION 3.04. VICE PRESIDENTS. The Vice President or Vice
Presidents, including any Executive or Senior Vice President(s), at the request
of the President or in the President's absence or during the President's
inability or refusal to act, shall perform the duties and exercise the functions
of the President, and when so acting shall have the powers of the President. If
there be more than one Vice President, the Board may determine which one or more
of the Vice Presidents shall perform any of such duties or exercise any of such
functions, or if such determination is not made by the Board, the President may
make such determination. The Vice President or Vice Presidents shall have such
other powers and perform such other duties as may be assigned by the Board, the
Chairman of the Board, or the President.
SECTION 3.05. SECRETARY AND ASSISTANT SECRETARIES. The Secretary
shall keep the minutes of the meetings of the shareholders, of the Board and of
any committees, in books provided for the purpose; shall see that all notices
are fully given in accordance with the provisions of these By-Laws or as
required by law; be custodian of the records of the Corporation; see that the
corporate seal is affixed to all documents the execution of which, on behalf of
the Corporation, under its seal, is duly authorized, and when so affixed may
attest the same; and in general perform all duties incident to the office of a
secretary of a Maryland Corporation, and such other duties as, from time to
time, may be assigned to him by the Board, the Chairman of the Board, or the
President.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board, the President or the Chairman
of the Board, shall, in the absence of the Secretary or in the event of the
Secretary's inability or refusal to act, perform the duties and
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exercise the power of the Secretary and shall perform such other duties and have
such other powers as the Board may from time to time prescribe.
SECTION 3.06. TREASURER AND ASSISTANT TREASURERS. The Treasurer
shall have charge of and be responsible for all funds, securities, receipts and
disbursements of the Corporation, and shall deposit, or cause to be deposited in
the name of the Corporation, all moneys or other valuable effects in such banks,
trust companies or other depositories as shall, from time to time, be selected
by the Board in accordance with Section 5.04 of these By-Laws; render to the
President, the Chairman of the Board and to the Board, whenever requested, an
account of the financial condition of the Corporation; and in general, perform
all the duties incident to the office of a treasurer of a corporation, such
other duties as may be assigned to him by the Board, the President or the
Chairman of the Board.
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board, the President or the
Chairman of the Board shall, in the absence of the Treasurer or in the event of
the Treasurer's inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform other duties and have such other
powers as the Board may from time to time prescribe.
SECTION 3.07. SUBORDINATE OFFICERS. The Board may from time to time
appoint such subordinate officers as it may deem desirable. Each such officer
shall hold office for such period and perform such duties as the Board, the
President or the Chairman of the Board may prescribe. The Board may, from time
to time, authorize any committee or officer to appoint and remove subordinate
officers and prescribe the duties thereof.
SECTION 3.08. REMOVAL. Any officer or agent of the Corporation may
be removed by the Board whenever, in its judgment, the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed.
SECTION 3.09. COMPENSATION. The Board of Directors shall have power
to fix the salaries and other compensation and remuneration, of whatever kind,
of all officers of the Corporation. It may authorize any committee or officer,
upon whom the power of appointing assistant and subordinate officers may have
been conferred, to fix the salaries, compensation and remuneration of such
assistant and subordinate officers.
SECTION 3.10. ANNUAL STATEMENT OF AFFAIRS. The President shall
prepare annually a full and correct statement of the affairs of the
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Corporation, to include a balance sheet and a financial statement of the
operations for the preceding fiscal year. The statement of affairs shall be
placed on file at the Corporation's principal office within 120 days after the
end of the fiscal year.
ARTICLE IV.
STOCK
SECTION 4.01. ISSUANCES WITHOUT CERTIFICATES. The issuance of shares
of stock in the Corporation shall be recorded by electronic or other means
without the issuance of certificates, provided that shares of stock in the
Corporation represented by certificates shall not be affected until such
certificates are surrendered to the Corporation.
SECTION 4.02. TRANSFER AGENTS AND REGISTRARS. The Board of Directors
may, from time to time, appoint or remove transfer agents and/or registrars of
transfers of shares of stock of the Corporation, and it may appoint the same
person as both transfer agent and registrar.
SECTION 4.03. STOCK LEDGERS. A stock ledger, containing the names
and addresses of the shareholders of the Corporation and the number of shares of
each class or series held by them, respectively, shall be kept by the Transfer
Agent of the Corporation. The stock ledger may be in written form or in any
other form which can be converted within a reasonable time into written form for
visual inspection.
SECTION 4.04. RECORD DATES. The Board is hereby empowered to fix, in
advance, a date as the record date for the purpose of determining shareholders
entitled to notice of, or to vote at, any meeting of shareholders, or
shareholders entitled to receive payment of any dividend, capital gains
distribution or the allotment of any rights, or in order to make a determination
of shareholders for any other proper purpose. Such date in any case shall be
not more than ninety (90) days, and in case of a meeting of shareholders, not
less than ten (10) days, prior to the date on which the particular action,
requiring such determining of shareholders, is to be taken; the transfer books
may not be closed for a period longer than twenty (20) days.
SECTION 4.05. LOST CERTIFICATES. If any shareholder alleges that
such shareholder's certificates or certificates for shares of stock in the
Corporation have been stolen, lost or destroyed, upon the making of an affidavit
of that fact by such shareholder or upon other satisfactory evidence of such
loss or destruction, the Board of Directors may direct that
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<PAGE>
the Corporation's stock ledger be marked to cancel such certificates and record
the ownership of such shares in accordance with Section 4.01 of this Article.
When authorizing such cancellation and recordation of ownership, the Board of
Directors may, in its discretion and as a condition precedent to such action,
require the shareholder, or his legal representative, to advertise the same in
such manner as it shall require and to give the Corporation a bond with
sufficient surety to indemnify the Corporation against any loss or claim that
may be made by reason of such action.
SECTION 4.06. CERTIFICATION OF BENEFICIAL OWNERS. The Board of
Directors may adopt by resolution a procedure by which a shareholder of the
Corporation may certify in writing to the Corporation that any shares of stock
registered in the name of the shareholder are held for the account of a
specified person other than the shareholder. The resolution shall set forth the
class of shareholders who may certify; the purpose for which the certification
may be made; the form of certification and the information to be contained in
it; if the certification is with respect to a record date or a closing of the
stock transfer books, the time after the record date or closing of the stock
transfer books within which the certification must be received by the
Corporation; and any other provisions with respect to the procedure which the
Board considers necessary or desirable. On receipt of a certification which
complies with the procedure adopted by the Board in accordance with this
Section, the person specified in the certification is, for the purpose set forth
in the certification, the holder of record of the specified stock in place of
the shareholder who makes the certification.
ARTICLE V.
GENERAL PROVISIONS
SECTION 5.01. DIVIDENDS. Dividends or distributions upon the capital
stock of the Corporation, subject to provisions of the Articles of
Incorporation, if any, may be declared by the Board of Directors at any regular
or special meeting, pursuant to law. Dividends or distributions may be paid
only in cash or in shares of the capital stock, subject to the provisions of the
Articles of Incorporation.
Before payment of any dividend or distribution there may be set aside
out of any funds of the Corporation available for dividends or distributions
such sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends or distributions or for maintaining any property of the
Corporation, or for such other purpose as
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<PAGE>
the Directors shall think conducive to the interest of the Corporation, and the
Directors may modify or abolish any such reserve in the manner in which it was
created.
SECTION 5.02. CHECKS. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board may from time to time designate.
SECTION 5.03. FISCAL YEAR. The fiscal year of the Corporation shall
be fixed by resolution of the Board of Directors.
SECTION 5.04. CUSTODIAN. All securities and cash of the Corporation
shall be placed in the custody of a bank or trust company ("Custodian") having
(according to its last published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits, provided such a Custodian can be found
ready and willing to act (or maintained in such other manner as is consistent
with Section 17(f) of the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder). The Corporation shall enter into a written
contract with the Custodian regarding the powers, duties and compensation of the
Custodian with respect to the cash and securities of the Corporation held by the
Board of Directors of the Corporation. The Corporation shall upon the
resignation or inability to serve of the Custodian use its best efforts to
obtain a successor custodian; require that the cash and securities owned by the
Corporation be delivered directly to the successor custodian; and in the event
that no successor custodian can be found, submit to the shareholders, before
permitting delivery of the cash and securities owned by the Corporation to other
than a successor custodian, the question whether or not the Corporation shall be
liquidated or shall function without a custodian.
SECTION 5.05. SEAL. The Board of Directors shall provide a suitable
seal, bearing the name of the Corporation, which shall be in the custody of the
Secretary. The Board of Directors may authorize one or more duplicate seals and
provide for the custody thereof. If the Corporation is required to place its
corporate seal to a document, it is sufficient to meet the requirements of any
law, rule, or regulation relating to a corporate seal to place the word "Seal"
adjacent to the signature of the person authorized to sign the document on
behalf of the Corporation.
SECTION 5.06. REPRESENTATION OF SHARES. Any officer of the
Corporation is authorized to vote, represent and exercise for the Corporation
any and all rights incident to any shares of any corporation or other business
enterprise owned by the Corporation.
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<PAGE>
SECTION 5.07. BONDS. The Board of Directors may require any officer,
agent or employee of the Corporation to give a bond to the Corporation,
conditioned upon the faithful discharge of his duties, with one or more sureties
and in such amount as may be satisfactory to the Board of Directors. The Board
of Directors shall, in any event, require the Corporation to provide and
maintain a bond issued by a reputable fidelity insurance company, against
larceny and embezzlement, covering each officer and employee of the Corporation
who may singly, or jointly with others, have access to securities or funds of
the Corporation, either directly or through authority to draw upon such funds,
or to direct generally the disposition of such securities, such bond or bonds to
be in such reasonable amount as a majority of the Board of Directors who are not
such officers or employees of the Corporation shall determine with due
consideration to the value of the aggregate assets of the Corporation to which
any such officer or employee may have access, or in any amount or upon such
terms as the Securities and Exchange Commission may prescribe by order, rule or
regulations.
SECTION 5.08. INDEMNIFICATION. Subject to any limitations imposed by
the 1940 Act, the Corporation shall indemnify (A) its directors and officers,
whether serving the Corporation or at its request any other entity, to the full
extent required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by law, and (B) other employees and agents to such
extent as shall be authorized by the Board of Directors and as permitted by law.
The foregoing rights of indemnification shall not be exclusive of any other
rights to which those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such bylaws, resolutions or contracts implementing such
provisions or such further indemnification arrangements as may be permitted by
law. No amendment of the charter or By-Laws of the Corporation or repeal of any
of their provisions shall limit or eliminate the right of indemnification
provided hereunder with respect to acts or omissions occurring prior to such
amendment or repeal.
ARTICLE VI.
AMENDMENT OF BY-LAWS
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<PAGE>
These By-Laws of the Corporation may be altered, amended, added to or
repealed by majority vote of the shareholders or by majority vote of the entire
Board.
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<PAGE>
[LOGO] CHASE
GLOBAL
CUSTODY
AGREEMENT
<PAGE>
This AGREEMENT is effective February 1, 1993 and is between THE CHASE MANHATTAN
BANK, N.A. (the "Bank") and Dimensional Emerging Markets Fund Inc. ("the
Customer").
1. CUSTOMER ACCOUNTS.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) a custody account in the name of the Customer ("Custody Account") for
any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same or evidencing or representing any other rights or
interests therein and other similar property whether certificated or
uncertficated as may be received by the Bank or its Subcustodian (as defined in
Section 3) for the account of the Customer ("Securities"); and
(b) a deposit account in the name of the Customer ("Deposit Account") for
any and all cash and any currency received by the Bank or its Subcustodian for
the account of the Customer, which cash shall not be subject to withdrawal by
draft or check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the
same class in place of those deposited In the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS.
Unless Instructions specifically require another location acceptable to the
Bank:
(a) Securities will be held in the country or other jurisdiction in which
the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) cash will be credited to an account in a country or other jurisdiction
in which such cash may be easily deposited or is the legal currency for the
payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians or their securities
depositories, such arrangement must be authorized by a written agreement, signed
by the Bank and the Customer.
3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authoizes the Bank to hold Assets in
the Accounts in accounts which the Bank has established with one or more of its
branches or Subcustodians. The Bank and Subcustodians are authorized to hold
any of the Securities in their account with any securities depository in which
they participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identity the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
4. USE OF SUBCUSTODIAN.
(a) The Bank will identity Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold Assets together with assets belonging to
other customers of the Bank in accounts identified on such Subcustodian's books
as special custody accounts for the exclusive benefit of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject only
to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
<PAGE>
5. DEPOSIT ACCOUNT TRANSACTIONS.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.
(b) In the event that any payment to be made under this Section 5 exceeds
the funds available in the Deposit Account, the Bank, in its discretion, may
advance the Customer such excess amount which shall be deemed a loan payable on
demand, bearing interest at the rate customarily charged by the Bank on similar
loans.
(c) It the Bank credits the Deposit Account on a payable date, or at any
time prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due, the Customer will
promptly return any such amount upon oral or written notification: (i) that such
amount has not been received in the ordinary course of business or (ii) that
such amount was incorrectly credited. If the Customer does not promptly return
any amount upon such notification, the Bank shall be entitled, upon oral or
written notification to the Customer, to reverse such credit by debiting the
Deposit Account for the amount previously credited. The Bank or its
Subcustodian shall have no duty or obligation to institute legal proceedings,
file a claim or a proof of claim in any insolvency proceeding or take any other
action with respect to the collection of such amount, but may act for the
Customer upon Instructions after consultation with the Customer.
6. CUSTODY ACCOUNT TRANSACTIONS.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of instructions which include
all information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be
made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Accounts.
(i) The Bank may reverse credits or debits made to the Accounts in
its discretion if the related transaction fails to settle within a
reasonable period, determined by the Bank in its discretion, after
the contractual settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the credits
and debits of the particular transaction at any time.
7. ACTIONS OF THE BANK.
The Bank shall follow Instructions received regarding Assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will perform the following functions.
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items which
call for payment upon presentation, to the extent that the Bank or Subcustodian
is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any transfers
of Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to any Bank
statement within sixty days of receipt, the Customer shall be deemed to have
approved such statement. In such event, or where the Customer has otherwise
approved any such statement, the Bank shall, to the extent permitted by law, be
released, relieved and discharged with respect to all matters set forth in such
statement or reasonably implied therefrom as though it had been settled by the
decree of a court of competent jurisdiction in an action where the Customer and
all persons having or claiming an interest in the Customer or the Customer's
Accounts were parties.
<PAGE>
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment, redemption
or other transaction regarding Securities in the Custody Account in respect of
which the Bank has agreed to take any action under this Agreement.
8. CORPORATE ACTIONS; PROXIES.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities
(other than a proxy), such as subscription rights, bonus issues, stock
repurchase plans and rights offerings, or legal notices or other material
intended to be transmitted to securities holders ("Corporate Actions"), the
Bank will give the Customer notice of such Corporate Actions to the extent
that the Bank's central corporate actions department has actual knowledge of
a Corporate Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock-split or similar Corporate Action is received which
bears an expiration date, the Bank will endeavor to obtain Instructions from the
Customer or its Authorized Person, as defined in Section 10, but if Instructions
are not received in time for the Bank to take timely action, or actual notice of
such Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to credit
the Deposit Account with the proceeds or take any other action it deems, in good
faith, to be appropriate in which case it shall be held harmless for any such
action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing. Such
proxies shall be executed in the appropriate nominee name relating to Securities
in the Custody Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and where bearer
Securities are involved, proxies will be delivered in accordance with
Instructions.
9. NOMINEES.
Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as the
case may be. The Bank may, without notice to the Customer, cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.
10. AUTHORIZED PERSONS.
As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer
under this Agreement. Such persons shall continue to be Authorized Persons
until such time as the Bank receives Instructions from the Customer or its
designated agent that any such employee or agent is no longer an Authorized
Person.
11. INSTRUCTIONS.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until cancelled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. Either Party may electronically record any Instructions given
by telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
<PAGE>
12. STANDARD OF CARE; LIABILITIES.
(a) The Bank shall be responsible for the performance of only such duties
as are set forth in this Agreement or expressly contained in Instructions which
are consistent with the provisions of this Agreement.
(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of Assets. The
Bank shall be liable to the Customer for any loss which shall occur as
the result of the failure of a Subcustodian to exercise reasonable
care with respect to the safekeeping of such Assets to the same extent
that the Bank would be liable to the Customer if the Bank were holding
such Assets in New York. In the event of any loss to the Customer by
reason of the failure of the Bank or its Subcustodian to utilize
reasonable care, the Bank shall be liable to the Customer only to the
extent of the Customer's direct damages, to be determined based on the
market value of the property which is the subject of the loss at the
date of discovery of such loss and without reference to any special
conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission,
default or for the solvency of any broker or agent which it or a
Subcustodian appoints unless such appointment was made negligently or
in bad faith.
(iii) The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether pursuant
to Instructions or otherwise within the scope of this Agreement if
such act or omission was in good faith, without negligence. In
performing its obligations under this Agreement, the Bank may rely on
the genuineness of any document which it believes in good faith to
have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from
any liability or loss resulting from the imposition or assessment of
any taxes or other governmental charges, and any related expenses with
respect to income from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act upon the
advice of counsel (who may be counsel for the Customer) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
(vi) The Bank need not maintain any insurance for the benefit of
the Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable
for any loss which results from: 1) the general risk of investing, or
2) investing or holding Assets in a particular country including, but
not limited to, losses resulting from nationalization, expropriation
or other governmental actions; regulation of the banking or securities
industry; currency restrictions, devaluations or fluctuations; and
market conditions which prevent the orderly execution of securities
transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or
work stoppages, acts of war or terrorism, insurrection, revolution,
nuclear fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer
or an Authorized Person regarding such instructions;
(ii) supervise or make recommendations with respect to investments
or the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any
default in the payment of principal or income of any security other
than as provided in Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or other party
to which Securities are delivered or payments are made pursuant to
this Agreement; or
(v) review or reconcile trade confirmations received from brokers.
The Customer or its Authorized Persons issuing Instructions shall bear
any responsibility to review such confirmations against Instructions
issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have
a material interest in a transaction, or circumstances are such that the Bank
may have a potential conflict of duty or interest including the fact that the
Bank or any of its affiliates may provide brokerage services to other
customers, act as financial advisor to the issuer of Securities, act as a
lender to the issuer of Securities, act in the same transaction as agent for
more than one customer, have a material interest in the issue of Securities,
or earn profits from any of the activities listed herein.
<PAGE>
13. FEES AND EXPENSES.
The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement.
14. MISCELLANEOUS.
(a) FOREIGN EXCHANGE TRANSACTIONS. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized to enter
into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange through
its subsidiaries, affiliates or Subcustodians. Instructions, including standing
Instructions, may be issued with respect to such contracts but the Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of the Bank,
its subsidiary, affiliate or Subcustodian and, to the extent not inconsistent,
this Agreement, shall apply to such transaction.
(b) CERTIFICATION OF RESIDENCY, ETC. The Customer certifies that it is
a resident of the United States and agrees to notify the Bank of any changes
in residency. The Bank may rely upon this certification or the certification
of such other facts as may be required to administer the Bank's obligations
under this Agreement. The Customer will indemnify the Bank against all
losses, liability, claims or demands arising directly or indirectly from any
such certifications.
(c) ACCESS TO RECORDS. The Bank shall allow the Customer's independent
public accountants reasonable access to the records of the Bank relating to the
Assets as is required in connection with their examination of books and records
pertaining to the Customer's affairs. Subject to restrictions under applicable
law, the Bank shall also obtain an undertaking to permit the Customer's
independent public accountants reasonable access to the records of any
Subcustodian which has physical possession of any Assets as may be required in
connection with the examination of the Customer's books and records.
(d) GOVERNING LAW; SUCCESSORS AND ASSIGNS. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) ENTIRE AGREEMENT; APPLICABLE RIDERS. Customer represents that the
Assets deposited in the Accounts are (check one):
employee benefit plan or other assets subject to the Employee
--- Retirement lncome Security Act of l974, as amended ("ERISA");
X mutual fund assets subject to Securities and Exchange Commission
--- ("SEC") rules and regulations;
neither of the above.
---
This Agreement consists exclusively of this document together with Schedule
A, Exhibits I - ____ and the following rider(s) [check applicable rider(s)]:
ERISA
---
X MUTUAL FUND
---
SPECIAL TERMS AND CONDITIONS
---
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) SEVERABILITY. In the event that one or more provisions of this
Agreement are held invalid, illegal or unenforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of any such provision and the remaining provisions, under
other circumstances or in other jurisdictions will not in any way be affected or
impaired.
<PAGE>
(g) WAIVER. Except as otherwise provided in this Agreement, no failure or
delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise thereof, or the exercise
of any other power or right. No waiver by a party of any provision of this
Agreement, or waiver of any breach or default, is effective unless in writing
and signed by the party against whom the waiver is to be enforced.
(h) NOTICES. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses
or such other addresses as may subsequently be given to the other party in
writing:
Bank: The Chase Manhattan Bank, N.A.
4 Metrotech Center, 18th Floor
Brooklyn, NY 11245
Attention: Global Securities Services
Customer: Dimensional Emerging Markets Fund Inc.
------------------------------------------------------------
1299 Ocean Avenue, Suite 1100
------------------------------------------------------------
Santa Monica, CA 90401
------------------------------------------------------------
(i) TERMINATION. This Agreement may be terminated by the Customer or the
Bank by giving sixty days written notice to the other, provided that such notice
to the Bank shall specify the names of the persons to whom the Bank shall
deliver the Assets in the Accounts. If notice of termination is given by the
Bank, the Customer shall, within sixty days following receipt of the notice,
deliver to the Bank Instructions specifying the names of the persons to whom the
Bank shall deliver the Assets. In either case the Bank will deliver the Assets
to the persons so specified, after deducting any amounts which the Bank
determines in good faith to be owed to it under Section 13. If within sixty
days following receipt of a notice of termination by the Bank, the Bank does not
receive Instructions from the Customer specifying the names of the persons to
whom the Bank shall deliver the Assets, the Bank, at its election, may deliver
the Assets to a bank or trust company doing business in the State of New York to
be held and disposed of pursuant to the provisions of this Agreement, or to
Authorized Persons, or may continue to hold the Assets until Instructions are
provided to the Bank.
CUSTOMER
By Deborah J. Ferris
----------------------------------------
Vice President
----------------------------------------
Title
THE CHASE MANHATTAN BANK, N.A.
By Mary Kay Orr
----------------------------------------
Vice President
----------------------------------------
Title
<PAGE>
STATE OF California )
ss.
COUNTY OF Los Angeles )
On this 1st day of February, 1993, before me personally came Deborah J.
Ferris, to me known, who being by me duly sworn, did depose and say that she
resides in London, England at 14 Berkeley Street, that she is Vice President of
Dimensional Emerging Markets Fund Inc. ("Customer"), the Customer which executed
the foregoing Agreement; that she knows the seal of the Customer; that the seal
affixed to the Agreement is such seal; that it was affixed by order of the
Customer, and that she signed her name thereto by like order.
----------------------------------------
Sworn to before me this 1st
day of February 1993 [SEAL]
/s/ MeiLing Seward
- ----------------------------
Notary
STATE OF New York )
ss.
COUNTY OF Kings )
On this 29th day of January 1993, before me personally came Mary Kay Orr,
to me known, who being by me duly sworn, did depose and say that she resides in
Brooklyn, New York 11245 at Chase Metrotech Center, that she is a Vice President
of THE CHASE MANHATTAN BANK, N.A. ("Bank"), the Bank which executed the
foregoing Agreement; that she knows the seal of the Bank; that the seal affixed
to the Agreement is such corporate seal; that it was so affixed by order of the
Board of Directors of the Bank, and that she signed her name thereto by like
order.
----------------------------------------
Sworn to before me this 29th
day of January, 1993
/s/ Julia R. Scalia
- -----------------------------------
Notary [SEAL]
<PAGE>
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
Dimensional Emerging Markets Fund, Inc.,
effective February 1, 1993
Customer represents that the Assets being placed in the Bank's custody are
subject to the Investment Company Act of 1940 (the "Act"), as the same may be
amended from time to time.
Except to the extent that the Bank has specifically agreed to comply with a
condition of a rule, regulation or interpretation promulgated by or under the
authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.
The following modifications are made to the Agreement:
SECTION 3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository, which are further
defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in
Rule 17f-5 under the Act;
(b) "eligible foreign custodian" shall mean (i) a banking institution or
trust company incorporated or organized under the laws of a country other than
the United States that is regulated as such by that country's government or an
agency thereof and that has shareholders' equity in excess of $200 million in
U.S. currency (or a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank holding company
that is incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100 million in
U.S. currency (or a foreign currency equivalent thereof), (iii) a banking
institution or trust company incorporated or organized under the laws of a
country other than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is incorporated
or organized under the laws of a country other than the United States which has
such other qualifications as shall be specified in Instructions and approved by
the Bank or (iv) any other entity that shall have been so qualified by exemptive
order, rule or other appropriate action of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of a
country other than the United States, which operates (i) the central system for
handling securities or equivalent book-entries in that country or (ii) a
transnational system for the central handling of securities or equivalent book-
entries.
The Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as Exhibits I through of Schedule A, and further represents that its Board
has determined that the use of each Subcustodian and the terms of each
subcustody agreement are consistent with the best interests of the Customer's
fund(s) and its (their) shareholders. The Bank will supply the Customer with
any amendment to Schedule A for approval. The Customer has supplied or will
supply the Bank with certified copies of its Board of Directors resolution(s)
with respect to the foregoing prior to placing Assets with any Subcustodian so
approved.
SECTION 11. INSTRUCTIONS.
Add the following language to the end of Section 11:
Account transactions made pursuant to Sections 5 and 6 of this Agreement
may be made only for the purposes listed below. Instructions must specify the
purpose for which any transaction is to be made and the Customer shall be solely
responsible to assure that Instructions are in accord with any limitations or
restrictions applicable to the Customer by law or as may be set forth in its
prospectus.
<PAGE>
(a) In connection with the purchase or sale of Securities at prices as
confirmed by instructions.
(b) When Securities are called, redeemed or retired, or otherwise become
payable.
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into other
securities.
(e) Upon exercise or subscription, purchase or other similar rights
represented by Securities.
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses.
(g) In connection with any borrowings by the Customer requiring a pledge
of Securities, but only against receipt of amounts borrowed.
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in instructions which shall reflect any restrictions
applicable to the Customer.
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed.
(j) For the purpose of redeeming in kind shares of the Customer against
delivery of the shares to be redeemed to the Bank, its Subcustodian or the
Customer's transfer agent.
(k) For delivery in accordance with the provisions of any agreement among
the Customer, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of the National
Association of Securities Dealers, Inc., relating to compliance with the rules
of The Options Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Customer.
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive the Securities previously deposited from
brokers. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due other
than to make proper request for such return.
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions.
(n) For other proper purposes as may be specified in Instructions issued
by an officer of the Customer which shall include a statement of the purpose for
which the delivery or payment is to be made, the amount of the payment or
specific Securities to be delivered, the name of the person or persons to whom
delivery or payment is to be made, and a certification that the purpose is a
proper purpose under the instruments governing the Customer.
(o) Upon the termination of this Agreement as set forth in Section 14(i).
SECTION 12. STANDARD OF CARE; LIABILITIES.
Add the following subsection (d) to Section 12:
(d) The Bank hereby warrants to the Customer that in its opinion, after
due inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified U.S. bank, each eligible foreign
custodian and each eligible foreign securities depository holding the
Customer's Securities pursuant to this Agreement afford protection for such
Securities at least equal to that afforded by the Bank's established
procedures with respect to similar securities held by the Bank and its
securities depositories in New York.
SECTION 14. ACCESS TO RECORDS.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement. The
Bank shall endeavor to obtain and furnish the Customer with such similar reports
as it may reasonably request with respect to each Subcustodian and securities
depository holding the Customer's assets.
<PAGE>
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT is made as of the ____ day of January 1993, between
DIMENSIONAL EMERGING MARKETS FUND INC, a Maryland Corporation (the "Fund"), and
PROVIDENT FINANCIAL PROCESSING CORPORATION, a Delaware corporation which is an
indirect wholly-owned subsidiary of PNC Financial Corp (the "Transfer Agent" or,
"PFPC").
W I T N E S S E T H
WHEREAS, the Fund is registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain the Transfer Agent to serve as the
Fund's transfer agent, registrar, and dividend disbursing agent, and the
Transfer Agent is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Transfer Agent to
serve as transfer agent, registrar and dividend disbursing agent for the Fund
with respect to the Fund's shares of Common Stock, $.01 par value ("Shares"),
for the period and on the terms set forth in this Agreement. The Fund presently
issues one separate series or class of shares which is described in the
registration statement delivered to the Transfer Agent herewith and the Fund may
classify and reclassify additional Shares hereafter. The Transfer Agent shall
identify to each such series or class property belonging to such Series and in
such reports, records, confirmations and notices to the Fund and other services
provided hereunder shall promptly identify the Series to which such property,
record, report, confirmation or service pertains and shall issue Shares on a per
Series basis as provided in the registration statement of the Fund. The
Transfer Agent accepts such appointment and agrees to furnish the services
herein set forth in return for the compensation as provided in Paragraph 16 of
this Agreement. Any Series of Shares created by the Fund after the date hereof
shall be included hereunder upon the mutual agreement of the Fund and the
Transfer Agent.
2. Delivery of Documents. The Fund has furnished the Transfer Agent
with copies properly certified or authenticated of each of the following:
1
<PAGE>
(a) Resolutions of the Fund's Board of Directors authorizing the
appointment of the Transfer Agent as transfer agent and registrar and dividend
disbursing agent for the Fund and approving this Agreement;
(b) Appendix A identifying and containing the signatures of the
Fund's officers and other persons authorized to issue Oral Instructions and to
sign Written Instructions, as hereinafter defined, on behalf of the Fund and to
execute Share certificates representing Shares;
(c) The Fund's Articles of Incorporation filed with the Maryland
Department of Assessments and Taxation on January 9, 1991 and all amendments
thereto (such Articles of Incorporation as presently in effect and as they shall
from time to time be amended, are herein called the "Charter");
(d) The Fund's By-Laws and all amendments thereto (such By-Laws,
as presently in effect and as they shall from time to time be amended, are
herein called "By-Laws");
(e) Copies of all documents relating to any voluntary investor
service plans sponsored by the Fund, including periodic investment plans such as
Individual Retirement Accounts;
(f) The current Investment Advisory Agreement with Dimensional
Fund Advisors Inc. (the "Advisor") and the Fund (the "Advisory Agreement");
(g) The Custodian Agreement between The Chase Manhattan Bank,
N.A. (the "Custodian") and the Fund dated as of January __, 1993 (the "Custodian
Agreement");
(h) The Administration and Accounting Services Agreement between
the Transfer Agent and the Fund dated as of January __, 1993 (the "Accounting
Services Agreement");
(i) The current Distribution Agreement between the Fund and DFA
Securities Inc. (the "Distribution Agreement");
(j) The Fund's most recent registration statement on Form N-2
under the 1940 Act (File No. 811-____), as filed with the U.S. Securities and
Exchange Commission (the "SEC") on January 19, 1993 and all amendments thereto
(hereinafter the "Registration Statement").
2
<PAGE>
The Fund will furnish the Transfer Agent from time to time with
copies, properly certified or authenticated, of all amendments of or supplements
to the foregoing, if any.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term
"Authorized Person" means any officer of the Fund and any other person, whether
or not any such person is an officer or employee of the Fund, duly authorized by
the Board of Directors of the Fund to give Oral and Written Instructions on
behalf of the Fund and listed on the Certificate annexed hereto as Appendix A or
any amendment thereto as may be received by the Transfer Agent from time to
time.
(b) "Affiliate". As used herein, "Affiliate" means any company
that controls, is controlled by, or is under common control with PFPC.
(c) "Oral Instructions". As used in this Agreement, the term
"Oral Instructions" means oral instructions actually received by the Transfer
Agent from an Authorized Person or from a person reasonably believed by the
Transfer Agent to be an Authorized Person. The Fund agrees to deliver to the
Transfer Agent, at the time and in the manner specified in Paragraph 4(b) of
this Agreement, Written Instructions confirming Oral Instructions.
(d) "PFPC". As used in this Agreement "PFPC" means Provident
Financial Processing Corporation.
(e) "Written Instructions". As used in this Agreement, the term
"Written Instructions" means written instructions delivered by hand, mail,
tested telegram, cable, telex or facsimile sending device, and received by the
Transfer Agent and signed by an Authorized Person. Written Instructions include
an electronic transmission properly originated and confirmed by the Fund.
(f) "Shares". As used in this Agreement the term "Shares" means
each separate Series of shares of common stock issued by the Fund that are
subject to this Agreement and as to which the services provided hereunder
relate.
4. Instructions Consistent with Charter, etc.
(a) Unless otherwise provided in this Agreement, the Transfer
Agent shall act only upon Oral or Written Instructions. Although the Transfer
Agent may know
3
<PAGE>
of the provisions of the Charter and By-Laws of the Fund, the Transfer Agent may
assume that any Oral or Written Instructions received hereunder are not in any
way inconsistent with any provisions of such Charter or By-Laws or any vote,
resolution or proceeding of the Fund's shareholders, or of the Board of
Directors, or of any committee thereof.
(b) The Transfer Agent shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by the Transfer
Agent pursuant to this Agreement. The Fund agrees to forward to the Transfer
Agent Written Instructions confirming Oral Instructions in such manner that the
Written Instructions are received by the Transfer Agent by the close of business
of the same day that such Oral Instructions are given to the Transfer Agent.
The Fund agrees that the fact that such confirming Written Instructions are not
received by the Transfer Agent shall in no way affect the validity of the
transactions or enforceability of the transactions authorized by the Fund by
giving Oral Instructions. The Fund agrees that the Transfer Agent shall incur
no liability to the Fund in acting upon Oral Instructions given to the Transfer
Agent hereunder concerning such transactions, provided such instructions
reasonably appear to have been received from an Authorized Person and provided
further, if such Oral or Written Instructions were received from an Affiliate,
that such Affiliate has acted without negligence (unless such Affiliate has
received and transmitted erroneous instructions received from an Authorized
Person that is not an Affiliate).
(c) In the case of any action by the Fund requiring a change in
the form of Share certificates, the Transfer Agent will, at the Fund's expense,
issue Share certificates in the new form in exchange for, or upon transfer of,
outstanding Share certificates in the old form, upon receiving:
(i) A Certificate authorizing the issuance of Share
certificates in the new form;
(ii) A certified copy of any amendment to the Articles of
Incorporation with respect to the change;
(iii) Specimen Share certificates for each Series of
Shares in the new form approved by the Board of Directors of the Fund, with
a Certificate signed by the Secretary of the Fund as to such approval; and
4
<PAGE>
(iv) An opinion of counsel for the Fund with respect to
the validity of the Shares in the new form and the status of such Shares
under the Securities Act of 1933, as amended (the "1933 Act"), the 1940
Act and any other applicable federal law or regulation (i.e., if subject to
registration, that the Shares have been registered and that the
Registration Statement has become effective or, if exempt, the specific
grounds therefor).
5. Transactions Not Requiring Instructions. In the absence of
contrary Written Instructions, the Transfer Agent is authorized to take the
following actions:
(a) Issuance of Shares. Upon receipt of a purchase order from
the Fund, an investor or in accordance with Written or Oral Instructions for the
purchase of Shares and sufficient information to enable the Transfer Agent to
establish a shareholder account, and after confirmation of receipt or crediting
of Federal funds for such order or receipt of such other consideration for such
Shares as may be described in the Registration Statement from the Fund's
Custodian, the Transfer Agent shall issue and credit the account of such
investor with Shares based on the current net asset value or public offering
price of such Shares as described in the Registration Statement.
(b) Transfer of Shares; Uncertificated Securities. Where a
shareholder does not hold a certificate representing the number of Shares in his
account and does provide the Transfer Agent with instructions for the transfer
of such Shares which include appropriate documentation to permit a transfer,
then the Transfer Agent shall register such Shares and shall deliver them
pursuant to instructions received from the transferor, pursuant to the law of
the State of Maryland and other applicable law relating to the transfer of
stock.
(c) Share Certificates. If at any time the Fund decides to
issue share certificates, the following provisions will apply:
(i) The Fund will supply the Transfer Agent with a
sufficient supply of Share Certificates representing Shares, in the form
approved from time to time by the Board of Directors of the Fund, and, from
time to time, shall replenish such supply upon request of the Transfer
Agent. Such share certificates shall be properly signed, manually or by
facsimile signature, by the duly authorized officers of the Fund, whose
names and positions shall be set forth as indicated on
5
<PAGE>
Appendix A, and notwithstanding the death, resignation or removal of any
officer of the Fund, such executed certificates bearing the manual or
facsimile signature of such officer shall remain valid and may be issued to
shareholders until the Transfer Agent is otherwise directed by Written
Instructions.
(ii) In the case of the loss or destruction of any
certificate representing Shares, no new certificate shall be issued in lieu
thereof, unless there shall first have been furnished an appropriate bond
of indemnity issued by the surety company approved by the Transfer Agent,
except upon the receipt by the Transfer Agent of Written Instructions from
the Fund.
(iii) upon receipt of signed share certificates in proper
form for transfer, and upon cancellation or destruction thereof, the
Transfer Agent shall countersign, register and issue and new certificates
for the same number of Shares in the name of the transferee and shall
deliver them pursuant to instructions received from the transferor and the
law of the State of Maryland relating to the transfer of shares of common
stock.
(iv) Upon receipt of the share certificates, which shall
be in proper form for transfer, together with the shareholder's
instructions to hold such share certificates for safekeeping, the Transfer
Agent shall reduce such Shares to uncertificated status, while retaining
the appropriate registration in the name of the shareholder upon the
transfer books.
(v) Upon receipt of written instructions from a
shareholder of uncertificated securities for a certificate in the number of
Shares in his account, the Transfer Agent will issue such share
certificates and deliver them to the shareholder or other appropriate
person in accordance with applicable law.
(d) Repurchase of Shares. Upon receipt of Written Instructions
with respect to the repurchase or other acquisition of Shares of a series by the
Fund, the Transfer Agent shall promptly notify PFPC, in its capacity as
administrator and accounting services agent, and the custodian of that Series of
the amount necessary to pay the applicable repurchase price and shall repurchase
the number of Shares indicated on the Written Instructions from the applicable
shareholders' account(s) pursuant to the procedures set forth in the Written
Instructions, and
6
<PAGE>
receive from the custodian of that Series and disburse to the applicable
shareholder the repurchase proceeds therefor, or arrange for direct payment of
such proceeds to such shareholders by such custodian, by wire transfer or
otherwise as provided in Written Instructions in accordance with such procedures
and controls as are provided in the Registration Statement or as may be mutually
agreed upon from time to time by and among the Fund, the Transfer Agent and the
Fund's custodian(s).
6. Authorized Shares. The Fund's authorized capital stock is
described in the Fund's Charter, as amended, including Articles supplementary
thereto. The Transfer Agent shall record issues of all Shares and shall notify
the Fund in case any proposed issue of Shares by the Fund shall result in an
over-issue as defined by Section 8-104(2) of Article 8 of the Maryland Uniform
Commercial Code. In case any issue of Shares would result in such an
over-issue, the Transfer Agent shall refuse to issue said Shares and shall not
countersign and issue certificates for such Shares. The Fund agrees to notify
the Transfer Agent promptly of any change in the number of authorized Shares and
of any change in the number of Shares registered under the 1933 Act.
7. Dividends and Distributions. The Fund shall furnish the Transfer
Agent with appropriate evidence of action by the Fund's Board of Directors
authorizing the declaration and payment of dividends and distributions as
described in the Registration Statement. The Transfer Agent shall notify the
custodians of the amount of cash necessary to pay such dividend or distribution
and, after deducting any amount required to be withheld by any applicable tax
laws, rules and regulations or other applicable laws, rules and regulations, the
Transfer Agent shall in accordance with the instructions in proper form from a
shareholder and the provisions of the Fund's Charter and the procedures set
forth in the Registration Statement or Written Instructions amending such
procedures, issue and credit the account of the shareholder with Shares, or, if
the shareholder so elects, pay such dividends or distribution in cash to the
shareholders and in either case, in accordance with the procedures set forth in
the Registration Statement or Written Instructions amending such procedures. In
lieu of receiving from the custodian for a Series and paying to shareholders
cash dividends or distributions, the Transfer Agent may arrange for the direct
payment of cash dividends and distributions to shareholders by the custodian for
that Series, in accordance with such procedures and controls as are mutually
agreed upon from time to time by and among the Fund, the Transfer Agent and such
custodian.
7
<PAGE>
The Transfer Agent shall prepare, file with the Internal Revenue
Service and other appropriate taxing authorities, and address and mail to
shareholders such returns and information relating to dividends and
distributions paid by the Fund as are required to be so prepared, filed and
mailed by applicable laws, rules and regulations, or such substitute form of
notice as may from time to time be permitted or required by the Internal Revenue
Service. On behalf of the Fund, the Transfer Agent shall process and confirm
shareholder address changes, recording new addresses, and shall mail certain
requests for shareholders' certifications under penalties of perjury and pay on
a timely basis to the appropriate Federal authorities any taxes to be withheld
on dividends and distributions paid by the Fund, all as required by applicable
Federal tax laws and regulations.
In accordance with the procedures set forth in the Registration
Statement or Written Instructions amending such procedures, and such procedures
and controls as are mutually agreed upon from time to time by and among the
Fund, the Transfer Agent and the Fund's custodian(s), the Transfer Agent shall
(a) arrange for issuance of Shares obtained through (1) transfers of funds from
shareholders' accounts at financial institutions, including securities brokers
and dealers and (2) exchange of Shares for eligible portfolio securities.
8. Communications with Shareholders.
(a) Communications to Shareholders. The Transfer Agent will
address and mail all communications by the Fund to its shareholders, with copies
to such persons as may be designated in Written Instructions from the Fund.
Without limiting the foregoing, PFPC will prepare, address and mail
confirmations of purchases and sales of Fund Shares, account changes, dividends
and distributions, 1099's and other tax information, and monthly statements, and
will address and mail dividend and distribution notices, reports to shareholders
and proxy material for it meetings of shareholders. The Transfer Agent will
receive and tabulate the proxy cards for the meetings of the Fund's shareholders
and notify the Fund of the results of such tabulations.
(b) Correspondence. The Transfer Agent will answer such
correspondence from shareholders, securities brokers and others relating to its
duties hereunder and such other correspondence as may from time to time be
mutually agreed upon between the Transfer Agent and the Fund.
8
<PAGE>
9. Records. The Transfer Agent shall maintain records of the
accounts for each shareholder showing the following information:
(a) name, address and United States Tax Identification or Social
Security number;
(b) number and Series of Shares held and number and Series of
Shares for which certificates, if any, have been issued, including certificate
numbers and denominations;
(c) historical information regarding the account of each
shareholder, including dividends and distributions paid and the date and price
for all transactions on a shareholder's account;
(d) any stop or restraining order placed against a shareholder's
account;
(e) any correspondence relating to the current maintenance of a
shareholder's account;
(f) information with respect to withholdings; and,
(g) any information required in order for the Transfer Agent to
perform any calculations contemplated or required by this Agreement.
The books and records pertaining to the Fund which are in the
possession of the Transfer Agent shall be the property of the Fund and shall be
returned to the Fund or its designee upon request. Such books and records shall
be prepared and maintained as required by the 1940 Act and other applicable laws
and rules and regulations. The Fund, or the Fund's authorized representatives,
shall have access to such books and records at all times during the Transfer
Agent's normal business hours. Upon the request of the Fund, copies of any such
books and records shall be provided by the Transfer Agent to the Fund or the
Fund's authorized representative or designee at the Fund's expense.
10. Ongoing Functions. The Transfer Agent will perform the following
functions on an ongoing basis:
(a) provide the Fund with duplicate confirmations of shareholder
activity, whether executed through a dealer or directly with the Transfer Agent;
9
<PAGE>
(b) provide shareholder lists and statistical information
concerning accounts to the Fund; and
(c) provide timely notification of Fund activity and such
other information as may be agreed upon from time to time between the
Transfer Agent and the Fund's custodian(s), to the Fund or the custodian(s)
and such reports to the Fund as provided in Schedule A hereto.
11. Cooperation with Accountants. The Transfer Agent shall cooperate
with the Fund's independent public accountants and shall take all reasonable
action in the performance of its obligations under this Agreement to assure that
the necessary information is made available to such accountants for the
expression of their opinion as such may be required by the Fund from time to
time.
12. Confidentiality. The Transfer Agent agrees on behalf of itself
and its employees to treat confidentially all records and other information
relative to the Fund and its prior, present or potential shareholders, except
after prompt prior notification to and approval in writing by the Fund, which
approval may not be withheld where the Transfer Agent reasonably believes that
it may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund.
13. Equipment Failures. In the event of equipment failures beyond
the Transfer Agent's control, the Transfer Agent shall, at no additional expense
to the Fund, promptly notify the Fund and take prompt, reasonable steps to
minimize service interruptions but shall have no liability with respect thereto
except, at its own expense, to reconstruct any records of the Fund that PFPC is
required to prepare and maintain hereunder. The foregoing obligation shall not
extend to computer terminals located outside of premises maintained by the
Transfer Agent; provided, that this exception shall not apply to equipment
dedicated solely for use of PFPC and that PFPC has agreed to maintain as long as
such equipment has not been altered by the Fund, or any of its affiliates. The
Transfer Agent shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provision for emergency use of
electronic data processing equipment to the extent appropriate equipment is
available. An equipment failure shall be beyond PFPC's control if it results
from one or more of the events described in the last sentence of the first
paragraph of Paragraph 18 hereunder.
10
<PAGE>
14. Right to Receive Advice. PFPC shall be protected in any
action or inaction PFPC takes in reliance on PFPC's counsel. PFPC shall
notify the Fund of the receipt of such advice within a reasonable time.
15. Compliance with Governmental Rules and Regulations. PFPC
agrees to perform its duties hereunder in accordance with applicable law;
however, PFPC assumes no responsibility for ensuring that the Fund complies
with the applicable requirements of the 1933 Act, Securities Exchange Act of
1934 (the "1934 Act")], the 1940 Act, the Commodities Exchange Act (the
"CEA") and any laws, rules and regulations of governmental authorities having
jurisdiction.
16. Compensation. As compensation for the services rendered by
PFPC during the term of this Agreement, the Fund will pay to PFPC an annual
fee calculated daily and payable monthly, as may be agreed to in writing from
time to time by the Fund and PFPC.
17. Indemnification.
(a) The Fund agrees to indemnify and hold harmless the
Transfer Agent from all taxes, charges, expenses (except expenses that are
inherent to its duties hereunder), assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the
1934 Act, the 1940 Act, the CEA, and any state and foreign securities laws,
all as or to be amended from time to time) including (without limitation)
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or thing which the Transfer Agent takes or does or omits to
take or do (i) at the request or on the direction of or in reliance on the
advice of the Fund or the Fund's counsel on behalf of the Fund or (ii) upon
Oral or Written Instructions provided by the Fund, the Advisor or any
Sub-Advisor designated in writing by the Advisor and any Affiliate, provided
that such Affiliate has not acted negligently (unless such Affiliate has
received and transmitted erroneous instructions received from an Authorized
Person that is not an Affiliate), and provided further, that the Transfer
Agent shall not be indemnified against any liability (or any expenses
incident to such liability) arising out of the Transfer Agent's own
misfeasance, bad faith or negligence or disregard of its duties or
responsibilities described in this Agreement.
(b) PFPC shall not pay or settle any claim, demand, expense or
liability to which it may seek indemnity pursuant to paragraph (a) above an
("Indemnifiable Claim") without the express written consent of the Fund. The
11
<PAGE>
Transfer Agent shall notify the Fund promptly of receipt of notification of an
Indemnifiable Claim. Unless the Fund notifies PFPC within 30 days of receipt of
Written Notice of such Indemnifiable Claim that the Fund does not intend to
defend such Indemnifiable Claim, the Fund shall defend PFPC from such
Indemnifiable Claim. The Fund shall have the right to defend any Indemnifiable
Claim at its own expense, such defense to be conducted by counsel selected by
the Fund. Further, the Transfer Agent may join the Fund in such defense at the
Transfer Agent's own expense, but to the extent that it shall so desire, the
Fund shall direct such defense. If the Fund shall fail or refuse to defend, pay
or settle an Indemnifiable Claim, the Transfer Agent, at the Fund's expense
consistent with limitations concerning attorney's fees expressed in Paragraph
17(a) hereof, may provide its own defense.
18. Responsibility of the Transfer Agent. PFPC hereby represents
that it is experienced in the provision of the services covered by this
Agreement. In the performance of its duties hereunder, the Transfer Agent shall
be obligated to exercise due care and diligence and to act in a timely manner
and in good faith to assure the accuracy and completeness of all services
performed under this Agreement. PFPC shall be under no duty to take any action
on behalf of the Fund except as specifically set forth herein or as may be
specifically agreed to by PFPC in writing. PFPC shall be responsible for its
own negligent failure to perform its duties under this Agreement. In assessing
negligence for purposes of this Agreement, the parties agree that the standard
of care applied to PFPC's conduct shall be the care that would be exercised by a
similarly situated service provider, supplying substantially the same services
under substantially similar circumstances. Notwithstanding the foregoing, PFPC
shall not be responsible for losses beyond its control, provided that PFPC has
acted in accordance with the provisions of this Agreement and the standard of
care set forth above; and provided further that the Transfer Agent shall only be
responsible for that portion of losses or damages suffered by the Fund
attributable to the negligence of PFPC. Losses shall be beyond PFPC's control
if they result from or occur because of delays or errors or loss of data
provided by persons other than the Transfer Agent, its Affiliates or their
respective employees or agents, or acts of civil or military authority, national
emergencies, labor difficulties (other than those of PFPC or its Affiliates),
fire, equipment failure caused from forces external to the premises of PFPC or
its Affiliates, flood or catastrophe, acts of God, insurrection, war, riots or
failure of the mails, transportation, communication or power supply and such
other circumstances beyond PFPC's control.
12
<PAGE>
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PFPC in connection with its duties under this
Agreement shall not be under any duty or obligation to inquire into and shall
not be liable for or in respect of the validity or invalidity or authority or
lack thereof of any Oral or Written Instruction received from the Fund, or an
Affiliate, provided such Affiliate has not acted without negligence (unless such
Affiliate has received and transmitted erroneous instructions received from an
Authorized Person that is not an Affiliate), notice or other instrument which
conforms to the applicable requirements of this Agreement, and which PFPC
reasonably believes to be genuine.
PFPC shall have no liability to the Fund for any losses or damages the
nature of which is or was remote, unforeseen, unforeseeable or beyond the scope
of reasonable anticipation at the time this Agreement was executed.
19. Duration and Termination. This Agreement shall continue in
effect for one year from the date hereof and shall continue in force from year
to year thereafter, but only so long as such continuance is approved by both
parties. This Agreement may be terminated by either party on not less than 180
days prior written notice to the other party. The foregoing provisions
notwithstanding, either party may terminate this Agreement in the event of a
material breach of the terms hereof after written notice to the other party of
such breach and a reasonable time for cure of such breach, unless such breach
is not curable and, in such circumstances, this Agreement shall terminate, at
the option of the injured party, three months after the date such notice is
given.
20. Registration as a Transfer Agent. The Transfer Agent represents
that it is currently registered with the appropriate Federal agency for the
registration of transfer agents, and that it will remain so registered for the
duration of this Agreement. The Transfer Agent agrees that it will promptly
notify the Fund in the event of any material change in its status as a
registered transfer agent. Should the Transfer Agent fail to be registered with
the appropriate Federal agency as a transfer agent at any time during this
Agreement, the Fund may, on written notice to the Transfer Agent, immediately
terminate this Agreement.
21. Notices. All notices and other communications, including Written
Instructions (collectively referred to as "Notice" or "Notices" in this
Paragraph), hereunder shall be in writing or by confirming telegram,
13
<PAGE>
cable, telex or facsimile sending device. Notices shall be addressed (a) if to
the Transfer Agent at Provident Financial Processing Corporation, 103 Bellevue
Parkway, Wilmington, Delaware 19809; (b) if to the Fund, at the address of the
Fund; or (c) if to neither of the foregoing, at such other address as shall have
been notified to the sender of any such Notice or other communication. All
postage, cable, telegram, telex and facsimile sending device charges arising
from the sending of a Notice hereunder shall be paid by the sender.
22. Further Actions. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
23. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
24. Delegation of Duties. On thirty (30) days prior written notice
to the Fund, the Transfer Agent may assign its rights and delegate its duties
hereunder to any wholly-owned direct or indirect subsidiary of Provident
National Bank or PNC Financial Corp, provided that (i) the delegate agrees with
the Transfer Agent to comply with all relevant provisions of this Agreement and
applicable law; and (ii) the Transfer Agent and such delegate shall promptly
provide such information as the Fund may request, and respond to such questions
as the Fund may ask, relative to the delegation, including (without limitation)
the capabilities of the delegate. In the event of such delegation, PFPC shall
remain liable under this Agreement.
25. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
26. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings, relating to the subject matter hereof, provided that the
parties hereto may embody in one or more separate documents their agreement, if
any, any agreements with respect to Written and/or Oral Instructions. The
captions in this Agreement are included for convenience of reference only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law. If any
14
<PAGE>
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding and shall be inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
DIMENSIONAL EMERGING MARKETS FUND INC.
By: /s/ Deborah J. Ferris
----------------------------------------
PROVIDENT FINANCIAL PROCESSING CORPORATION
By: /s/ Joseph Gramlich
----------------------------------------
15
<PAGE>
TRANSFER AGENCY AGREEMENT
SCHEDULE A
----------
PURSUANT TO PARAGRAPH 10(c) OF THE AGREEMENT, THE TRANSFER AGENT WILL
PROVIDE THE FOLLOWING REPORTS TO THE FUND:
STATISTIC OR SPECIAL REQUEST FREQUENCY
- ---------------------------- ---------
a. Prepare mailing labels As requested
b. Data transmission of transactions, Monthly
new clients, address changes, etc.
c. Statistical package
1. By Series - purchase and redemption Monthly
statistics
2. By Series - analysis of type and Monthly
size of investor
3. Listing of 5% shareholders for As requested
proxy and registration statement
purposes
4. Listing of purchases and redemptions Daily
by Series
5. Information necessary for completion Monthly
of N-SAR
6. Shareholder listing Monthly
7. Sales report Monthly
8. Year to date daily net asset value Monthly
per share listing by Series
<PAGE>
TRANSFER AGENCY AGREEMENT
AMENDMENT NUMBER ONE
THIS AGREEMENT is made as of the 26th day of December, 1997, by and
between DIMENSIONAL EMERGING MARKETS FUND INC., a Maryland corporation (the
"Fund"), and PFPC INC., formerly "Provident Financial Processing Corporation"
("PFPC"), a Delaware corporation, which is an indirect wholly-owned subsidiary
of PNC Financial Corp.
W I T N E S S E T H :
WHEREAS, the Fund is registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund has retained PFPC to provide certain transfer agency
services pursuant to a Transfer Agency Agreement dated as of the ___ day of
January, 1993 (the "Agreement") which, as of the date hereof, is in full force
and effect; and
WHEREAS, at a meeting held on November 21, 1997, the shareholders of
the Fund approved an amendment to and restatement of the charter of the Fund
which provides for the conversion of the Fund from a closed-end investment
company to an open-end investment company.
<PAGE>
NOW, THEREFORE, in light of the Fund's conversion from a closed-end,
management investment company to an open-end, management investment company and
in consideration of the promises and mutual covenants herein contained, and
intending to be legally bound, the parties hereto agree as follows:
1. The Agreement hereby is amended effective December 26, 1997 as
follows:
(a) the term "Registration Statement" shall mean the Fund's most
recent registration statement on Form N-1A under the 1940 Act (File No.
811-7440) as filed with the Securities and Exchange Commission on December 26,
1997 and all amendments thereto; and
(b) Paragraph 5(d) of the Agreement is deleted in its entirety
and is replaced with the following:
"(d) Redemption of Shares. Upon receipt of a redemption order from a
shareholder in a Series, including a shareholder that is an open-end
investment company, and/or in accordance with Written Instructions,
the Transfer Agent shall promptly notify PFPC, in its capacity as
administration and accounting services agent, and the custodian of
that Series of the amount necessary to pay such redemption and shall
redeem the number of Shares indicated thereon from the redeeming
shareholder's account(s) pursuant to the procedures set forth in the
Registration Statement or pursuant to Written Instruction amending
such procedures of the Fund. When the Transfer Agent receives funds
from the custodian of that Series, it shall disburse to the redeeming
shareholder the redemption proceeds therefor, or arrange for direct
payment of redemption proceeds to such shareholder by such custodian,
by wire transfer or otherwise as provided in Written Instructions, all
in accordance with such procedures and controls as are provided in
-2-
<PAGE>
the Registration Statement or as may be mutually agreed upon from
time to time by and among the Fund, the Transfer Agent and the Fund's
custodian(s)."
2. In all other respects the Agreement shall remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Number One to the Agreement to be executed by their duly authorized officers
designated below on the day and year first-above written.
DIMENSIONAL EMERGING MARKETS FUND INC.
By: /s/ David G. Brooks
---------------------------------------------
Title: Chief Executive Officer
PFPC INC.
By: /s/ Joseph Gramlich
---------------------------------------------
Title: Sr. V. P.
---------------------------------------------
-3-
<PAGE>
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of the ___ day of January 1993, by and
between DIMENSIONAL EMERGING MARKETS FUND INC. (the "Fund"), and PROVIDENT
FINANCIAL PROCESSING CORPORATION ("PFPC"), a Delaware corporation which is an
indirect wholly-owned subsidiary of PNC Financial Corp.
W I T N E S S E T H
WHEREAS, the Fund is registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund wishes to retain PFPC to provide certain
administrative and accounting services, and PFPC is willing to furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints PFPC to provide certain
administrative and accounting services to the Fund for the period and on the
terms set forth in this Agreement. PFPC accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as provided
in Paragraph 12 of this Agreement. The Fund presently issues one series or
class of shares ("Shares") which is described in the registration statement
delivered to PFPC herewith, and may from time to time issue additional series of
shares. Hereinafter each such series shall be referred to as a "Series". The
records, notices, reports and services provided by PFPC hereunder shall be
prepared, kept, maintained and furnished by PFPC in respect of each Series of
the Fund existing on the date hereof, and any Series organized by the Fund after
the date hereof as agreed in writing by the Fund and PFPC.
2. Delivery of Documents. The Trustee has furnished PFPC with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Directors authorizing the
appointment of PFPC to provide certain administration and accounting services
for the Fund and approving this Agreement;
(b) Appendix A identifying and containing the signatures of the
Fund's officers and other persons authorized to issue Oral Instructions and to
sign Written
1
<PAGE>
Instructions, as hereinafter defined, on behalf of the Fund;
(c) The Fund's Articles of Incorporation filed with the Maryland
Department of Assessments and Taxation on January 9, 1991 and all amendments
thereto (such Articles of Incorporation as presently in effect and as they shall
from time to time be amended, are herein called the "Charter");
(d) The Fund's By-Laws and all amendments thereto (such By-Laws,
as presently in effect and as they shall from time to time be amended, are
herein called "ByLaws");
(e) The current investment advisory agreements between
Dimensional Fund Advisors Inc. (the "Advisor") and the Fund;
(f) The current Agreement between the Fund and DFA Securities
Inc.;
(g) The Custodian Agreement between Chase Manhattan Bank, N.A.
and the Fund dated as of January _ , 1993;
(h) The Transfer Agency Agreement between Provident Financial
Processing Corporation and the Fund dated as of , 1993; and
(i) The Fund's most recent registration statement on Form N-2
under the 1940 Act (File No. 811- ), as filed with the U.S. Securities and
Exchange Commission ("the SEC") on January 19, 1993 and all amendments thereto
(such registration statement as presently effective and as it shall from time to
time be amended, is herein called the "Registration Statement").
The Fund will furnish PFPC from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term
"Authorized Person" means any officer of the Fund and any other person,
whether or not any such person is an officer or employee of the Fund, duly
authorized by the Board of Directors of the Fund to give Oral and Written
Instructions on behalf of the Fund and listed on Appendix A listing persons
duly authorized to give
2
<PAGE>
Oral or Written Instructions on behalf of the Fund as may be received by PFPC
from time to time.
(b) "Oral Instructions". As used in this Agreement, the term
"Oral Instructions" means oral instructions actually received by PFPC from an
Authorized Person or from a person reasonably believed by PFPC to be an
Authorized Person. The Fund agrees to deliver to PFPC, at the time and in the
manner specified in Paragraph 4(b) of this Agreement, Written Instructions
confirming oral Instructions.
(c) "Written Instructions". As used in this Agreement, the term
"Written Instructions" means written , instructions delivered by hand, mail,
tested telegram, cable, telex or facsimile sending device, and received by PFPC,
signed by an Authorized Person. Written Instructions include electronic
transmissions properly originated and confirmed by the Fund.
(d) "Affiliate". As used herein, "Affiliate" means any company
that controls, is controlled by, or is under common control with PFPC.
4. Instructions Consistent with Charter, etc.
(a) Unless otherwise provided in this Agreement, PFPC shall act
only upon Oral or Written , Instructions. Although PFPC may know of the
provisions of the Charter and By-Laws of the Fund, PFPC may assume that any oral
or Written Instructions received hereunder are not in any way inconsistent with
any provisions of such Charter or By-Laws, or any vote, resolution or proceeding
of the Shareholders, or of the Board of Directors, or of any committee thereof.
(b) PFPC shall be entitled to rely upon any Oral Instructions
and any Written Instructions actually received by PFPC from the Fund and any
Affiliate, provided such Affiliate has not acted negligently (unless such an
Affiliate has received and transmitted erroneous instructions received from an
Authorized Person who is not an Affiliate) pursuant to this Agreement. The Fund
agrees to forward to PFPC Written Instructions confirming oral Instructions in
such manner that the Written Instructions are received by PFPC, whether by hand
delivery, telex, facsimile sending device or otherwise, by the close of business
of the same day that such Oral Instructions are given to PFPC. The Fund agrees
that the fact that such confirming Written Instructions are not received by PFPC
shall in no way affect the validity of the transactions or
3
<PAGE>
enforceability of the transactions authorized by the Fund by giving Oral
Instructions. The Fund agrees that PFPC shall incur no liability to the Fund in
acting upon Oral Instructions given to PFPC by the Fund hereunder concerning
such transactions, provided such instructions reasonably appear to have been
received from an Authorized Person.
5. Services on a Continuing Basis.
(a) In preparing the accounting records of the Fund, PFPC shall
comply with generally accepted accounting principles (GAAP) or with an
alternative method described in Written Instructions provided that such
alternative method is not unreasonable and would not be burdensome to PFPC.
PFPC will perform the following accounting services for the Fund on an ongoing
or a daily basis, as appropriate, it being understood that the services provided
hereunder shall be provided on a per Series basis in a manner that properly
identifies the Series as to which such services relate:
(1) On a daily basis, journalize the Fund's investment,
capital Share and income and expense activities and post to the
general ledger;
(2) Verify with the Fund's custodian(s), investment
buy/sell trade tickets which may be sent electronically via modem from
the Advisor and which may include securities acquired for Fund shares
when received from the Advisor, transmit verified trades to the Fund's
custodian(s) for proper settlement, and PFPC shall promptly notify the
Advisor of any trades received which have not been so verified;
(3) Maintain individual ledgers for investment securities;
(4) Maintain historical tax lots for each security;
(5) Reconcile cash and investment balances with the
custodian, and provide the Advisor with the beginning cash balances
available for investment purposes;
(6) Update the cash availability and projected
receivables/payables throughout the day as required by the Advisor and
direct the custodian(s) to invest idle cash in repurchase agreements
and/or in other liquid investments as
4
<PAGE>
mutually agreed upon in accordance with the Written Instructions of
the Advisor;
(7) Post to and prepare the Statement of Assets and
Liabilities and the Statement of Operations;
(8) Calculate various contractual expenses (e.g., advisory
and custody fees) and confirm to the Fund the amounts paid by the Fund
in respect of such contracts as provided for therein;
(9) Monitor the expense accruals and notify Fund management
of any proposed adjustments;
(10) Control all disbursements and authorize such
disbursements upon Written Instructions;
(11) Calculate capital gains and losses;
(12) Determine net income;
Obtain security market quotes from independent pricing
services approved by the Fund, or if such quotes are unavailable, then
obtain such prices from, or in accordance with the directions of, the
Advisor, and in either case calculate the market value of the Fund's
investments;
(14) Transmit or mail a copy of the daily portfolio
valuations and a listing of acquisitions and dispositions of
securities of the Fund and, as of each month-end, transmit or mail a
floppy diskette reflecting securities holdings to the Advisor;
(15) Consistent with the requirements of the Registration
Statement or Written Instructions which change those requirements,
compute the net asset values and, where applicable, the public
offering prices of the Series and promptly report thereon to the
custodian of each Series;
(16) Compute, and report to the Fund, each Series' yields,
expense ratios, portfolio turnover rate, and, portfolio average
dollar-weighted maturity; and
(17) Compute amounts of foreign currency needed to settle
foreign securities transactions,
5
<PAGE>
and in accordance with Written Instructions, enter into forward
currency contracts with banks and brokers.
(b) In addition to the accounting services described in the
foregoing Paragraph 5(a), PFPC will:
(1) Prepare monthly financial statements, which will
include the following items (the form and content of such statements
shall be in accordance with GAAP):
Schedule of Investments (as requested)
Statement of Assets and Liabilities
Statement of Shareholders' Equity
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses;
2) Prepare quarterly broker security transactions
summaries, including monthly reports of brokerage commissions paid
setting forth such information as the Fund may reasonably request and
as to which the parties may agree;
(3) Prepare monthly security transaction listings;
(4) Supply various Fund statistical data and reports as
requested by the Fund on an ongoing basis including the reports set
forth on Schedule A hereto;
(5) Prepare for execution and file the Fund's Federal and
state income tax returns,, Federal Excise Tax returns, tax returns for
the States of Maryland and California and any supporting schedules to
such returns and assist the Fund in determining the amount, types and
timing of dividend and capital gains distributions necessary for each
Series to avoid being required to pay Federal Income or Excise taxes
on its income and gains;
(6) Assist in the preparation of and file the Fund's
Semi-Annual Reports with the SEC on Form N-SAR;
6
<PAGE>
(7) Assist in the preparation of and file with the SEC the
Fund's annual and semi-annual Shareholder reports;
(8) Assist in the preparation of registration statements on
Form N-lA, Form N-2 and other filings relating to the registration of
Shares;
(9) Monitor and report monthly any changes in each Series'
status as a regulated investment company under Sub-Chapter M of the
Internal Revenue Code of 1986, as amended;
(10) In the event that any securities transaction of the
Fund fails to settle in accordance with Written or Oral Instructions,
PFPC shall promptly notify the Fund; and
(11) Monitor each Series' securities positions to determine
whether, with respect to 75 percent of the value of each Series' total
assets, more than 5 percent of the value of each Series' total assets
are invested in any one issuer and, if so, alert the Fund as soon as
practicable of such circumstances.
6. Records. PFPC shall keep the following records:
(a) all books and records with respect to the Fund's books of
account, including without limitation those required by rule 3la-1
under the 1940 Act (except paragraphs b(4) and (9)) and records
necessary to support each Series' tax returns; and
(b) records of the Fund's securities and exchange listed
financial futures and forward currency transactions.
The books and records pertaining to the Fund which are in the
possession of PFPC shall be the property of the Fund and shall be returned to
the Fund or its designee upon request. Such books and records shall be prepared
and maintained as required by the 1940 Act and other applicable laws and rules
and regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records at all times during PFPC's normal business
hours. Upon the reasonable request of the Fund, copies of any such books and
records shall be provided by PFPC to the
7
<PAGE>
Fund or the Fund's authorized designee or representative at the Fund's expense.
7. Liaison with Accountants. PFPC shall act as liaison with the
Fund's independent public accountants and shall provide them with account
analyses, fiscal year summaries, and such other information, including audit
related schedules, as may be necessary to assure that the necessary information
is made available to such accountants for the expression of their opinion, as
such may be required by the Fund from time to time.
8. Confidentiality. PFPC agrees on behalf of itself and its
employees to treat confidentially all records and other information relative to
the Fund and its prior, present or potential Shareholders or relative to the
Advisor, except, after prior notification to and approval in writing by the
Fund, which approval may not be withheld where PFPC may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by the
Fund.
9. Equipment Failures. In the event of equipment failures beyond
PFPC's control, PFPC shall, at no additional expense to the Fund, promptly
notify the Fund and take prompt, reasonable steps to minimize service
interruptions but shall have no liability with respect thereto except, at its
own expense, to reconstruct any records of the Fund that PFPC is required to
prepare and maintain hereunder. PFPC shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provision for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. An equipment failure shall be
beyond PFPC's control if it results from one or more of the events described
in the last sentence of the first paragraph of Paragraph 14 hereunder.
10. Right to Receive Advice. PFPC shall be protected in any action
or inaction PFPC takes in reliance on advice of PFPC's counsel. PFPC shall
promptly notify the Fund of the receipt of such advice within reasonable time.
11. Compliance with Governmental Rules and Regulations. PFPC
agrees to perform its duties hereunder in accordance with applicable law;
however, PFPC assumes no responsibility for ensuring that the Fund complies
with the applicable requirements of the Securities Act of 1933 (the "1933
Act"), the Securities Exchange Act of 1934 (the "1934 Act"), the 1940 Act,
the Commodities Exchange Act (the
8
<PAGE>
"CEA"), and any laws, rules and regulations of governmental authorities having
jurisdiction.
12. Compensation. As compensation for the services rendered by PFPC
during the term of this Agreement, the Fund will pay to PFPC an annual fee
calculated daily and payable monthly, as may be agreed to in writing from time
to time by the Fund and PFPC.
13. Indemnification.
(a) The Fund agrees to indemnify and hold harmless PFPC and its
sub-contractors from all taxes, charges, expenses (except expenses that are
inherent to its duties hereunder), assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the 1934
Act, the 1940 Act, the CEA, and foreign securities laws, all as or to be amended
from time to time) including (without limitation) reasonable attorneys' fees and
disbursements, arising directly or indirectly from any action or thing which
PFPC takes or does or omits to take or do (i) at the request or on the direction
of or in reliance on the advice of the Fund or the Fund's counsel on behalf of
the Fund or (ii) upon Oral or Written Instructions provided by the Fund, or an
Affiliate, provided such Affiliate has not acted negligently (unless such
Affiliate has received and transmitted erroneous instructions received from an
Authorized Person that is not an Affiliate) provided, that neither PFPC nor any
of its sub-contractors shall be indemnified against any liability (or any
expenses incident to such liability) arising out of PFPC's own misfeasance, bad
faith, negligence or disregard of its duties or responsibilities described in
this Agreement.
(b) PFPC shall not pay or settle any claim, demand, expense or
liability in respect of which PFPC is entitled to be indemnified pursuant to
paragraph (a) above an ("Indemnifiable Claim") without the express written
consent of the Fund. PFPC shall notify the Fund promptly of receipt of
notification of an Indemnifiable Claim. Unless the Fund notifies PFPC within 30
days of receipt of Written Notice of such Indemnifiable Claim that the Fund does
not intend to defend such Indemnifiable Claim, the Fund shall defend PFPC from
such Indemnifiable Claim. The Fund shall have the right to defend any
Indemnifiable Claim at its own expense, such defense to be conducted by counsel
selected by the Fund. Further, PFPC may join the Fund in such defense at PFPC's
own expense, but to the extent that it shall so desire, the Fund shall direct
such defense. If the Fund shall fail or refuse to defend, pay or settle an
9
<PAGE>
Indemnifiable Claim, PFPC, at the Fund's expense consistent with limitations
concerning attorney's fees expressed in Paragraph 13(a) hereof, may provide its
own defense.
14. Responsibility of PFPC. PFPC hereby represents that it is
experienced in the provision of the services covered by this Agreement. In the
performance of its duties hereunder, PFPC shall be obligated to exercise due
care and diligence and to act in a timely manner and in good faith to assure the
accuracy and completeness of all services performed under this Agreement. PFPC
shall be under no duty to take any action on behalf of the Fund except as
specifically set forth herein or as may be specifically agreed to by PFPC in
writing. PFPC shall be responsible for its own negligent failure to perform its
duties under this Agreement. In assessing negligence for purposes of this
Agreement, the parties agree that the standard of care applied to PFPC's conduct
shall be the care that would be exercised by a similarly situated service
provider, supplying substantially the same services under substantially similar
circumstances. Notwithstanding the foregoing, PFPC shall not be responsible for
losses beyond its control, provided that PFPC has acted in accordance with the
provisions of this Agreement and the standard of care set forth above and
provided further that PFPC shall only be responsible for that portion of losses
or damages suffered by the Fund attributable to the negligence of PFPC. Losses
shall be beyond PFPC's control if they result from or occur because of delays or
errors or loss of data provided by a person other than PFPC or its Affiliates,
or their respective employees or agents, or acts of civil or military authority,
national emergencies, labor difficulties (other than those of PFPC or its
Affiliates), fire, equipment failure resulting from forces external to the
premises of PFPC or its Affiliates, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply external to the premises of PFPC or its Affiliates and such
other circumstances beyond PFPC's control.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PFPC in connection with its duties under this
Agreement shall not be under any duty or obligation to inquire into and shall
not be liable for or in respect of the validity or invalidity or authority or
lack thereof of any Oral or Written Instruction received from the Fund, or an
Affiliate, provided such Affiliate has not acted negligently (unless such an
Affiliate has received and transmitted erroneous instructions received from an
Authorized Person that is not an Affiliate), notice or other instrument which
conforms to the applicable requirements of
10
<PAGE>
this Agreement, and which PFPC reasonably believes to be genuine.
PFPC shall have no liability to the Fund for any losses or damages,
the nature of which is or was remote, unforeseen, unforeseeable or beyond the
scope of reasonable anticipation at the time this Agreement was executed.
15. Duration and Termination. This Agreement shall continue in
effect for one year from the date hereof and shall continue in force from year
to year thereafter, but only as long as such continuance is approved by both
parties. This Agreement may be terminated by either party on not less than 180
days prior written notice to the other party. The foregoing provisions
notwithstanding, either party may terminate this Agreement in the event of a
material breach of the terms hereof after written notice to the other party of
such breach and a reasonable time for cure of such breach, unless such breach is
not curable and, in such circumstances, this Agreement shall terminate, at the
option of the injured party, three months after the date such notice is given.
16. Notices. All notices and other communications, including Written
Instructions (collectively referred to as "Notice" or "Notices" in this
Paragraph), hereunder shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notices shall be addressed (a) if to PFPC at
PFPC's address, Bellevue Corporate Center, 103 Bellevue Parkway, Wilmington,
Delaware 19809; (b) if to the Fund, at the address of the Fund; or (c) if to
neither of the foregoing, at such other address as shall have been notified to
the sender of any such Notice or other communication. All postage, cable, telex
and facsimile sending device charges arising from the sending of a Notice
hereunder shall be paid by the sender.
17. Further Actions. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
18. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
19. Delegation. On thirty (30) days prior written notice to the
Fund, PFPC may assign its rights and delegate its duties hereunder to any
wholly-owned direct or indirect subsidiary of Provident National Bank or PNC
Financial Corp provided that (i) the delegate agrees with PFPC to comply
11
<PAGE>
with all relevant provisions of this Agreement and applicable law; and (ii) PFPC
and such delegate shall promptly provide such information as the Fund may
request, and respond to such questions as the Fund may ask, relative to the
delegation, including (without limitation) the capabilities of the delegate. In
the event of such delegation, PFPC shall remain liable under this Agreement.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings, relating to the subject matter hereof, provided that the
parties hereto may embody in one or more separate documents their agreement, if
any, with respect to Written and/or Oral Instructions. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof of otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
DIMENSIONAL EMERGING MARKETS FUND INC.
By: /s/ Deborah J. Ferris
----------------------------------------
PROVIDENT FINANCIAL PROCESSING CORPORATION
By: /s/ Joseph Gramlich
----------------------------------------
12
<PAGE>
APPENDIX A
The following persons are authorized to issue Oral Instructions and to
sign Written Instructions on behalf of the Fund:
[to be completed by DFA]
13
<PAGE>
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
SCHEDULE A
----------
PURSUANT TO PARAGRAPH (5) (b) (4) OF THE AGREEMENT, PFPC WILL PROVIDE
THE FOLLOWING REPORTS:
REPORT OR STATISTIC FREQUENCY
- ------------------- ---------
a. Expense ratio analysis Monthly
b. Brokerage commission report and affiliated
brokerage report Quarterly/
Annually
c. Listing of securities for which quotations
are not readily available (for Board meetings) Quarterly
d. Split bill report Quarterly
e. Breakdown on NAV per share by country Monthly
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 7 (File No. 811-7440) under the Securities Act of 1940 to the Registration
Statement on Form N-1A of the 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.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 27, 1998
<TABLE> <S> <C>
<PAGE>
<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
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<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
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<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
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
