<PAGE>
Investment Company Act of 1940 File No. 811-7440
Securities And Exchange Commission
Washington, D.C. 20549
--------------------
Form N-1A
[X] Registration Statement Under The Investment Company Act of 1940
[X] Amendment No. 12
--------------------
DIMENSIONAL EMERGING MARKETS VALUE FUND INC.
(Exact Name of Registrant as Specified in Charter)
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
(Address of Principal Executive Offices)
(310) 395-8005
(Registrant's Telephone Number, including Area Code)
--------------------
Irene R. Diamant
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
(Name and Address of Agent for Service)
--------------------
Please Send Copies of Communications to:
Stephen W. Kline, Esq.
Stradley, Ronon, Stevens & Young, LLP
Great Valley Corporate Center
30 Valley Stream Parkway
Malvern, PA 19355
(610) 640-5801
<PAGE>
DIMENSIONAL EMERGING MARKETS VALUE FUND INC.
PART A
MARCH 30, 2000
INTRODUCTION
DIMENSIONAL EMERGING MARKETS VALUE FUND INC. (the "Fund"), 1299 Ocean
Avenue, 11th Floor, Santa Monica, California 90401, (310) 395-8005, offers its
shares 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.
Shares of the Fund are issued solely in private placements pursuant
to available exemptions from registration under the Securities Act of 1933, as
amended ("Securities Act"). This Part A of the Fund's registration statement
("Part A") does not constitute an offer to sell, or the solicitation of an
offer to buy, any "security" to the public within the meaning of the
Securities Act.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DIMENSIONAL EMERGING MARKETS VALUE FUND INC............................... 1
Investment Objective and Policies................................... 1
Fund Characteristics and Policies................................... 1
Portfolio Construction.............................................. 3
SECURITIES LOANS.......................................................... 3
RISK FACTORS.............................................................. 4
Foreign Securities.................................................. 4
Investing in Emerging Markets....................................... 4
Foreign Currencies and Related Transactions............................... 7
Borrowing........................................................... 7
Portfolio Strategies................................................ 7
Futures Contracts and Options on Futures............................ 8
MANAGEMENT OF THE FUND.................................................... 8
Consulting Services................................................. 9
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.......................... 9
PURCHASE OF SHARES........................................................ 10
Cash Purchases....................................................... 11
In Kind-Purchases.................................................... 11
VALUATION OF SHARES....................................................... 13
Net Asset Value..................................................... 13
Public Offering Price............................................... 15
EXCHANGE OF SHARES........................................................ 15
REDEMPTION OF SHARES...................................................... 15
Redemption Procedures............................................... 15
Redemption of Small Accounts........................................ 16
In-Kind Redemptions................................................. 16
SERVICE PROVIDERS......................................................... 17
</TABLE>
<PAGE>
DIMENSIONAL EMERGING MARKETS VALUE 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
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
1
<PAGE>
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 for 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, Greece, Hungary, Indonesia,
Israel, Korea, Malaysia, Mexico, Philippines, Poland, Republic of China
(Taiwan), Thailand and Turkey. Countries that may be approved in the future
include but are not limited to Colombia, Czech Republic, India, Jordan,
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 not less than 50%, of their
total revenues from either goods and services produced in, or sales made in,
Approved Markets.
The Fund may purchase, for liquidity, or for temporary defensive
purposes during periods in which market or economic or political conditions
warrant, 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
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.
2
<PAGE>
PORTFOLIO CONSTRUCTION
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 (the "Code")). 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 investments 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. However, management
believes that, 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.
Generally, securities will be purchased with the expectation that they
will be held for longer than one year. However, securities, including those
eligible for purchase, 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
3
<PAGE>
and will receive reasonable compensation 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.
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
4
<PAGE>
things, might discontinue the purchase 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
5
<PAGE>
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 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.
6
<PAGE>
FOREIGN CURRENCIES AND RELATED TRANSACTIONS
Investments of the Fund will be denominated in foreign currencies.
Changes in the relative values of foreign currencies and the U.S. dollar,
therefore, will affect the value of investments of the Fund. The Fund may
purchase foreign currency futures contracts and options thereon in order to
hedge against changes in the level of foreign currency exchange rates. Such
contracts involve an agreement to purchase or sell a specific currency at a
future date at a price set in the contract and enable the Fund to protect
against losses resulting from adverse changes in the relationship between the
U.S. dollar and foreign currencies occurring between the trade and settlement
dates of the Fund's securities transactions, but they also tend to limit the
potential gains that might result from a positive change in such currency
relationships. Gains and losses on investments in futures and options thereon
depend on the direction of interest rates and other economic factors.
BORROWING
The Fund has reserved the right to borrow amounts not exceeding 33% of
its net assets for the purpose of making redemption payments. When
advantageous opportunities to do so exist, the Fund may purchase securities
when borrowings exceed 5% of the value of its net assets. Such purchases can
be considered to be "leveraging" and, in such circumstances, the net asset
value of the Fund may increase or decrease at a greater rate than would be the
case if the Fund had not leveraged. The interest payable on the amount
borrowed would increase the Fund's expenses and, if the appreciation and
income produced by the investments purchased when the Fund has borrowed are
less than the cost of borrowing, the investment performance of the Fund will
be reduced as a result of leveraging.
PORTFOLIO STRATEGIES
The method employed by the Advisor to manage the Fund will differ from
the process employed by many other investment advisors in that the Advisor
will rely on fundamental analysis of the investment merits of securities to a
limited extent to eliminate potential portfolio acquisitions rather than rely
on this technique to select securities. Further, because securities generally
will be held long-term and will not be eliminated based on short-term price
fluctuations, the Advisor generally will not act upon general market movements
or short-term price fluctuations of securities to as great an extent as many
other investment advisors.
7
<PAGE>
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, as a result, more than 5% of its net assets would
then consist of initial margin deposits and premiums required to establish
such positions 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 are 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 Code may limit the ability of the Fund to invest in futures contracts
and options on futures contracts.
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.
8
<PAGE>
For the fiscal year ended November 30, 1999, 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.
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 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 $36 billion.
CONSULTING SERVICES
The Advisor has entered into a Consulting Services Agreement with
Dimensional Fund Advisors Ltd. ("DFAL") and DFA Australia Limited ("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. The Advisor owns 100% of the
outstanding shares of DFAL and beneficially owns 100% of DFA Australia.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
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.
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).
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.
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
9
<PAGE>
taxes, distributions from long-term capital gains are taxable as such.
Dividends from net investment income or net short-term capital gains will be
taxable as ordinary income, whether received in cash or in additional shares.
Dividends and distributions to a 401(k) plan accumulate free of federal income
taxes. For those investors subject to tax, if purchases of shares of the Fund
are made shortly before the record date for a dividend or capital gains
distribution, a portion of the investment will be returned as a taxable
distribution. Shareholders are notified annually by the Fund as to the U.S.
federal tax status of dividends and distributions paid by the Fund.
Dividends which are declared in October, November or December to
shareholders of record in such a month, but which, for operational reasons,
may not be paid to the shareholder until the following January, will be
treated for U.S. federal income tax purposes as if paid by the Fund and
received by the shareholder on December 31 of the calendar year in which they
are declared.
The sale of shares of the Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may
be realized from an ordinary redemption of shares. Any loss incurred on the
sale of the Fund's shares, held for six months or less, will be treated as a
long-term capital loss to the extent of capital gain dividends received with
respect to such shares.
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.
One shareholder of the Fund is an open-end investment company that
seeks to achieve its investment objective by investing all of its investable
assets in the Fund (the "Feeder Portfolio"). The Feeder Portfolio has the same
investment objective, policies and limitations as the Fund. The master-feeder
structure is unlike many other investment
10
<PAGE>
companies that directly acquire and manage their own portfolio of securities.
The investment experience of the Feeder Portfolio will correspond directly
with the investment experience of the Fund.
CASH PURCHASES
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 Value 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 Value 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
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
11
<PAGE>
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.
12
<PAGE>
VALUATION OF SHARES
NET ASSET VALUE
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 mean between the most recent bid and asked
prices 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.
13
<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 over-the-counter 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 over-the-counter 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. Since the Fund owns securities that are primarily listed on foreign
exchanges which may trade on days when the Fund does not price its shares, the
net asset value of the Fund may change on days when shareholders will not be
able to purchase or redeem shares.
The Fund will be closed if portfolio securities greater than 50% of
its total assets are principally traded on exchanges that are closed that
day. Purchase and redemption orders for shares of the Fund will not be
accepted on those days.
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.
14
<PAGE>
PUBLIC OFFERING PRICE
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. 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. 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
over-the-counter 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.")
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.
REDEMPTION PROCEDURES
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 but not limited to: 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
15
<PAGE>
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.
REDEMPTION OF SMALL ACCOUNTS
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.
IN-KIND REDEMPTIONS
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.
16
<PAGE>
SERVICE PROVIDERS
Investment Advisor
- ------------------
DIMENSIONAL FUND ADVISORS INC.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Tel. No. (310) 395-8005
Custodian
- ---------
THE CHASE MANHATTAN BANK
4 Chase Metrotech Center
Brooklyn, NY 11245
Transfer and Dividend Disbursing Agent
- --------------------------------------
PFPC INC.
400 Bellevue Parkway
Wilmington, DE 19809
Legal Counsel
- -------------
STRADLEY, RONON, STEVENS & YOUNG, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Independent Accountants
- -----------------------
PRICEWATERHOUSECOOPERS LLP
2400 Eleven Penn Center
Philadelphia, PA 19103
17
<PAGE>
DIMENSIONAL EMERGING MARKETS VALUE FUND INC.
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401
Telephone: (310) 395-8005
PART B
STATEMENT OF ADDITIONAL INFORMATION
March 30, 2000
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, 2000 ("Part A"). A free copy of the Fund's Part A and annual
report to shareholders can be obtained from the Fund by writing to the Fund at
the above address or by calling the above telephone number. Information from
the Fund's annual report to shareholders is incorporated by reference into
this statement of additional information.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FUND CHARACTERISTICS AND POLICIES 1
BROKERAGE COMMISSIONS 1
INVESTMENT LIMITATIONS 2
FUTURES CONTRACTS 4
CASH MANAGEMENT PRACTICES 5
CONVERTIBLE DEBENTURES 5
DIRECTORS AND OFFICERS 6
SERVICES TO THE FUND 9
ADVISORY FEES 10
GENERAL INFORMATION 10
CODES OF ETHICS 10
SHAREHOLDER RIGHTS 10
PRINCIPAL HOLDERS OF SECURITIES 11
PURCHASE OF SHARES 12
REDEMPTION OF SHARES 12
TAXATION OF THE FUND 12
CALCULATION OF PERFORMANCE DATA 16
FINANCIAL STATEMENTS 18
</TABLE>
<PAGE>
FUND CHARACTERISTICS AND POLICIES
The following information supplements the information set forth in
Part A. Capitalized terms not otherwise defined in this SAI have the meaning
assigned to them in Part A.
Dimensional Emerging Markets Value 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.
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.
BROKERAGE COMMISSIONS
For the fiscal years ending November 30, 1999, 1998 and 1997, the
Fund paid brokerage commissions of $403,490, $638,643 and $79,005,
respectively. The substantial increases or decreases in the amount of
brokerage commissions paid by the Fund from year to year resulted from
increases or decreases in the amount of securities that were bought and sold
by the Fund.
Portfolio transactions will be placed with a view to receiving the
best price and execution. The Fund will seek to acquire and dispose of
securities in a manner which would cause as little fluctuation in the market
prices of stocks being purchased or sold as possible in light of the size of
the transactions being effected, and brokers will be selected with this goal
in view. The Advisor monitors the performance of brokers which effect
transactions for the Fund to determine the effect that their trading has on
the market prices of the securities in which they invest. The Advisor also
checks the rate of commission being paid by the Fund to its brokers to
ascertain that they are competitive with those charged by other brokers for
similar services. Transactions also may be placed with brokers who have
assisted in the sale of the Fund's shares and 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 1999 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 or to
brokers which are affiliates of the Fund or affiliates of affiliates.
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
1
<PAGE>
used by the Advisor in servicing all of its accounts and not all such services
may be used by the Advisor with respect to the Fund.
INVESTMENT LIMITATIONS
The Fund has adopted certain limitations which may not be changed
without the approval of a majority of the outstanding voting securities of the
Fund. A "majority" is defined as the lesser of: (1) at least 67% of the voting
securities of the Fund (to be affected by the proposed change) present at a
meeting, if the holders of more than 50% of the outstanding voting securities
of the Fund are present or represented by proxy, or (2) more than 50% of the
outstanding voting securities of the Fund.
The Fund will not:
(1) invest in commodities or purchase or sell real estate (including
limited partnership interests), although it may purchase and sell securities
of companies which deal in real estate and may purchase and sell securities
which are secured by interests in real estate and may purchase or sell
financial futures contracts and options thereon, such as forward foreign
currency futures contracts and options and index futures contracts and options;
(2) make loans of cash, except through the acquisition of
publicly-traded debt securities and short-term money market instruments;
(3) invest in the securities of any issuer (except obligations of the
U.S. government and its instrumentalities) if, as a result, more than 5% of
the Fund's total assets, at market, would be invested in the securities of
such issuer, provided that this limitation applies only to 75% of the total
assets of the Fund;
(4) borrow, except in connection with a foreign currency transaction,
the settlement of a portfolio trade, or as a temporary measure for
extraordinary or emergency purposes, including to meet redemption requests,
and, in no event, in excess of 33% of the Fund's net assets valued at market;
(5) engage in the business of underwriting securities issued by
others, except to the extent that the sale of securities originally acquired
for investment purposes may be deemed an underwriting;
(6) invest for the purpose of exercising control over management of
any company;
(7) acquire any securities of companies within one industry if, as a
result of such acquisition, more 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
2
<PAGE>
(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.
Although (2) above prohibits cash loans, the Fund is authorized to
lend portfolio securities.
For purposes of (4) above, the Fund may borrow in connection with a
foreign currency transaction or the settlement of a portfolio trade. The only
type of borrowing contemplated thereby is the use of a letter of credit issued
on the Fund's behalf in lieu of depositing initial margin in connection with
currency futures contracts, and the Fund has no present intent to engage in
any other types of borrowing transactions under this authority.
Pursuant to Rule 144A under the 1933 Act, the Fund may purchase
certain unregistered (i.e. restricted) securities upon a determination that a
liquid institutional market exists for the securities. If it is decided that a
liquid market does exist, the securities will not be subject to the Fund's 15%
limitation on holdings of illiquid securities as described below. While
maintaining oversight, the Board of Directors has delegated the day-to-day
function of making liquidity determinations to the Advisor. For Rule 144A
securities to be considered liquid, there must be at least two dealers making
a market in such securities. After purchase, the Board of Directors and the
Advisor will continue to monitor the liquidity of Rule 144A securities.
As a non-fundamental policy, the Fund does not intend to invest more
than 15% of its net assets in illiquid securities.
The Fund may acquire and sell forward foreign currency exchange
contracts in order to hedge against changes in the level of future currency
rates. Such contracts involve an obligation to purchase or sell a specific
currency at a future date at a price set in the contract.
Notwithstanding any of the above investment restrictions, the Fund
may establish subsidiaries or other similar vehicles for the purpose of
conducting its investment operations in Approved Markets, if such subsidiaries
or vehicles are required by local laws or regulations governing foreign
investors such as the Fund or whose use is otherwise considered by the Fund to
be advisable. The Fund would "look through" any such vehicle to determine
compliance with its investment restrictions.
Subject to future regulatory guidance, for purposes of those
investment limitations identified above that are based on total assets, "total
assets" refers to the assets that the Fund owns, and does not include assets
which the Fund does not own but over which it has effective control. For
example, when applying a percentage investment limitation that is based on
total assets, the Fund will exclude from its total assets those assets which
represent collateral received by the Fund for its securities lending
transactions.
3
<PAGE>
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 net 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.
4
<PAGE>
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market. However, there can be no assurance that a
liquid secondary market will exist for any particular futures contract at any
specific time. Therefore, it might not be possible to close a futures position
and, in the event of adverse price movements, the Fund would continue to be
required to continue to make variation margin deposits. In such circumstances,
if the Fund has insufficient cash, it might have to sell portfolio securities
to meet daily margin requirements at a time when it might be disadvantageous
to do so. Management intends to minimize the possibility that it will be
unable to close out a futures contract by only entering into futures which are
traded on national futures exchanges and for which there appears to be a
liquid secondary market.
CASH MANAGEMENT PRACTICES
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). The Fund may also invest in money
market mutual funds for temporary cash management purposes.
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.
CONVERTIBLE DEBENTURES
The Fund may invest up to 5% of its assets in convertible debentures
issued by non-U.S. companies organized in Approved Markets. 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.
5
<PAGE>
DIRECTORS AND OFFICERS
The Board of Directors is responsible for establishing Fund policies
and for overseeing the management of the Fund. The names, dates of birth and
locations of the directors and officers of the Fund and a brief statement of
their present positions and principal occupations during the past five years
are 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 of the following companies: Dimensional Fund Advisors
Inc., DFA Securities Inc., DFA Australia Limited, DFA Investment Dimensions
Group Inc., and Dimensional Investment Group Inc. Trustee, President and
Chairman-Chief Executive Officer of The DFA Investment Trust Company
(registered investment company). Chairman and Director, Dimensional Fund
Advisors Ltd. Director, SA Funds (registered investment company) and Assante
Corporation (investment management).
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, DFA Investment
Dimensions Group Inc. and Dimensional Investment 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. President, Cardean University (Division of UNetx.com).
Trustee, The DFA Investment Trust Company (registered investment company).
Director, DFA Investment Dimensions Group Inc., Dimensional Investment Group
Inc. and Harbor Investment Advisors. Member of the Boards of Milwaukee Mutual
Insurance Company and UNext.com. Principal and Executive Vice President,
Lexecon Inc. (economics, law, strategy and finance consulting). Formerly,
Trustee First Prairie Funds (registered investment company).
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, DFA Investment Dimensions Group Inc. and Dimensional
Investment Group Inc., and BIRR Portfolio Analysis, Inc. (software products).
Chairman, Ibbotson Associates, Inc., Chicago, IL (software, data, publishing
and consulting). Formerly, Director, Hospital Fund, Inc. (investment
management services).
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, DFA Investment Dimensions Group Inc., and Dimensional Investment
Group Inc. and Public Director, Chicago Mercantile Exchange.
Myron S. Scholes, (7/1/41), Director, Menlo Park, CA. Frank E. Buck
Professor Emeritus of Finance, Stanford University. Trustee, The DFA
Investment Trust Company. Director, DFA Investment Dimensions Group Inc.,
Dimensional Investment Group Inc. and American Century (Mountain View)
Investment Companies. Partner, Oak Hill
6
<PAGE>
Capital Management. Formerly, Limited Partner, Long-Term Capital Management
L.P. (money manager) and Consultant, Arbor Investors.
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,
DFA Investment Dimensions Group Inc. and Dimensional Investment Group Inc.
Trustee, Chairman-Chief Investment Officer of The DFA Investment Trust
Company. Chairman, Chief Executive Officer and Director, Dimensional Fund
Advisors Ltd.
*Interested Director of the Fund.
OFFICERS
Each of the officers listed below hold the same office (except as
otherwise noted) in the following entities: Dimensional Fund Advisors Inc.,
DFA Securities Inc., DFA Australia Limited, DFA Investment Dimensions Group
Inc., Dimensional Investment Group Inc., The DFA Investment Trust Company, and
Dimensional Fund Advisors Ltd.
Arthur Barlow, (11/7/55), Vice President, Santa Monica, CA.
Truman Clark, (4/18/41), 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.
Jim Davis, (11/29/56), Vice President, Santa Monica, CA. Formerly,
Kansas State University, Arthur Anderson & Co., Phillips Petroleum Co.
Robert Deere, (10/8/57), Vice President, Santa Monica, CA.
Irene R. Diamant, (7/16/50), Vice President and Secretary (Secretary
for all entities other than Dimensional Fund Advisors Ltd.), Santa Monica, CA.
Richard Eustice, (8/5/65), Vice President and Assistant Secretary
(Assistant Secretary for all entities other than Dimensional Fund Advisors
Ltd.), 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.
Judith Jones, (11/27/55), Vice President, Santa Monica, CA. Vice
President, Wells Fargo Bank, N.A. from 1989-1990. Vice President, Demko Baer &
Associates, 1991.
Stephen P. Manus, (12/26/50), Vice President, Santa Monica, CA.
President, ANB Investment Management and Trust Company from 1993-1997.
Karen McGinley, (3/10/66), Vice President, Santa Monica, CA.
7
<PAGE>
Catherine L. Newell, (5/7/64), Vice President and Assistant Secretary
(Assistant Secretary for all entities other than Dimensional Fund Advisors
Ltd.), Santa Monica, CA. Associate, Morrison & Foerster, LLP from 1989 to 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 from 1987 to
1994.
#Rex A. Sinquefield and Jeanne C. Sinquefield are husband and wife.
No director or officer currently owns shares of the Fund.
Set forth below is a table listing, for each director entitled to
receive compensation, the compensation received from the Fund during the
fiscal year ended November 30, 1999, 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 $ 4,296 $ 35,000
John P. Gould $ 4,296 $ 35,000
Roger G. Ibbotson $ 4,296 $ 35,000
Merton H. Miller $ 3,202 $ 28,000
Myron S. Scholes $ 4,202 $ 34,000
</TABLE>
8
<PAGE>
SERVICES TO THE FUND
ADMINISTRATIVE SERVICES
PFPC Inc. ("PFPC") serves as the administrative and accounting
services, dividend disbursing and transfer agent for the Fund. The services
provided by PFPC are subject to supervision by the executive officers and the
Board of Directors of the Fund, and include 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.
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.
CUSTODIAN
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.
Distributor
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.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP are the independent accountants to the
Fund and audit the financial statements of the Fund. Their address is 2400
Eleven Penn Center, Philadelphia, PA 19103.
9
<PAGE>
ADVISORY FEES
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, 1997, 1998 and 1999 the Fund paid management fees to
the Advisor for its services of $203,976, $182,009 and $286,000 respectively.
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 pays DFAL quarterly fees of 12,500 pounds sterling and
DFA Australia fees of $13,000 per year for services to the Fund.
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. On December 2, 1998, the
Fund changed its name from Dimensional Emerging Markets Fund Inc. to
Dimensional Emerging Markets Value Fund Inc.
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.
CODES OF ETHICS
The Fund has adopted a revised Code of Ethics, under rule 17j-1 of
the 1940 Act, for certain access persons of the Series. In addition, the
Advisor has adopted or will adopt a revised Code of Ethics. The Codes are
designed to ensure that access persons act in the interest of the Series and
its shareholders with respect to any personal trading of securities. Under the
Codes, access persons are generally prohibited from knowingly buying or
selling securities (except for mutual funds, U.S. government securities and
money market instruments) which are being purchased, sold or considered for
purchase or sale by the Fund unless their proposed purchases are approved in
advance. The Codes also contain certain reporting requirements and securities
trading clearance procedures.
SHAREHOLDER RIGHTS
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,
10
<PAGE>
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.
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.
PRINCIPAL HOLDERS OF SECURITIES
As of February 29, 2000, the following person may be deemed to
control the Fund either by owning more than 25% of the voting securities of
the Fund directly or, through the operation of pass-through voting rights, by
owning more than 25% of the voting securities of the Feeder Portfolio which
invests its assets in the Fund:
State Street Bank and Trust Company, as Trustee 86.67%
of the BellSouth Master Pension Trust
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610.
As of February 29, 2000, the following shareholders owned
beneficially at least 5% of the outstanding shares of the Fund, as set forth
below. Unless otherwise indicated, the address of each shareholder is 1299
Ocean Avenue, 11th Floor, Santa Monica, CA 90401.
State Street Bank and Trust Company, as Trustee 86.67%
of the BellSouth Master Pension Trust
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610.
Emerging Markets Value Portfolio 13.33%
of DFA Investment Dimensions Group Inc.
11
<PAGE>
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 will be closed if portfolio securities greater than 50% of
its total assets are principally traded on exchanges that are closed that day.
Purchase and redemption orders for shares of the Fund will not be accepted on
those days.
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.
TAXATION OF THE FUND
The following is a summary of some of the federal income tax
consequences of investing in the Fund. Unless you are invested in the Fund
through a retirement plan, you should consider the tax implications of
investing and consult your own tax adviser.
DISTRIBUTIONS OF NET INVESTMENT INCOME
The Fund receives income generally in the form of dividends and
interest on its investments. This income, less expenses incurred in the
operation of the Fund, constitutes its net investment income from which
dividends may be paid to its shareholders. Any distributions by the Fund from
such income will be taxable to a shareholder as ordinary income, whether they
are received in cash or in additional shares.
12
<PAGE>
DISTRIBUTIONS OF CAPITAL GAINS
The Fund may derive capital gains and losses in connection with sales
or other dispositions of its portfolio securities. Distributions derived from
the excess of net short-term capital gain over net long-term capital loss will
be taxable to shareholders as ordinary income. Distributions paid from
long-term capital gains realized by the Fund will be taxable to shareholders
as long-term capital gain, regardless of how long the shares of the Fund have
been held. Any net short-term or long-term capital gains realized by the Fund
(net of any capital loss carryovers) generally will be distributed once each
year, and may be distributed more frequently, if necessary, in order to reduce
or eliminate federal excise or income taxes on the Fund.
ELECTION TO BE TAXED AS A REGULATED INVESTMENT COMPANY
The Fund intends to qualify each year as a regulated investment
company by satisfying certain distribution and asset diversification
requirements under the Internal Revenue Code (the "Code"). As a regulated
investment company, the Fund generally pays no federal income tax on the
income and gains it distributes to its shareholders. The Board reserves the
right not to maintain the qualification of the Fund as a regulated investment
company, if it determines that such course of action to be beneficial to
shareholders. In such case, the Fund will be subject to federal, and possibly
state, corporate taxes on its taxable income and gains, and distributions to
shareholders will be taxed as ordinary dividend income to the extent of the
Fund's available earnings and profits.
EXCISE TAX DISTRIBUTION REQUIREMENT
The Code requires the Fund to distribute at least 98% of its taxable
ordinary income earned during the calendar year and 98% of its capital gain
net income earned during the twelve month period ending October 31 (in
addition to undistributed amounts from the prior year) to you by December 31
of each year in order to avoid federal excise taxes. The Fund intends to
declare and pay sufficient dividends in either November or December (or in
January that are treated by you as received in December) but does not
guarantee and can give no assurances that its distributions will be sufficient
to eliminate all such taxes.
EFFECT OF FOREIGN INVESTMENTS ON DISTRIBUTIONS
Most foreign exchange gains realized on the sale of debt instruments
are treated as ordinary income by the Fund. Similarly, foreign exchange losses
realized by the Fund on the sale of debt instruments are generally treated as
ordinary losses by the Fund. These gains when distributed will be taxable to
shareholders as ordinary dividends, and any losses will reduce the Fund's
ordinary income otherwise available for distribution to shareholders. This
treatment could increase or reduce the Fund's ordinary income
13
<PAGE>
distributions to shareholders, and may cause some or all of the Fund's
previously distributed income to be classified as a return of capital.
The Fund's investment in foreign securities may be subject to foreign
withholding taxes on income from certain of their foreign securities. If more
than 50% in value of the total assets of 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.
If the Fund purchases shares in certain foreign investment entities,
called "passive foreign investment companies ("PFIC's"), 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.
DIVIDENDS RECEIVED DEDUCTION
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 securities.
REDEMPTION OF PORTFOLIO SHARES
For shareholders subject to tax, redemptions and exchanges of Fund
shares are taxable transactions for federal and state income tax purposes that
cause such a shareholder to recognize a gain or loss. If a shareholder holds
his shares as a capital asset, the gain or loss that he realizes will be
capital gain or loss. Any loss incurred on the redemption or exchange of
shares held for six months or less will be treated as a long-term capital loss
to the extent of any long-term capital gains distributed to the shareholder by
the Fund on those shares.
All or a portion of any loss that a shareholder realizes upon the
redemption of the Fund's shares will be disallowed to the extent that the
shareholder purchases other shares in the Fund (through reinvestment of
dividends or otherwise) within 30 days before or after the share redemption.
Any loss disallowed under these rules will be added to the shareholder's tax
basis in the new shares purchased by the shareholder.
14
<PAGE>
COMPLEX SECURITIES
The Fund may invest in complex securities and such investments may be
subject to numerous special and complicated tax rules. These rules could
affect whether gains or losses recognized by the Fund are treated as ordinary
income or capital gain, accelerate the recognition of income to the Fund,
defer the Fund's ability to recognize losses, and, in limited cases, subject
the Fund to U.S. federal income tax on income from certain of its foreign
investments. In turn, these rules may affect the amount, timing or character
of the income distributed to a shareholder by the Fund.
15
<PAGE>
INFORMATION ON THE TAX CHARACTER OF DISTRIBUTIONS
The Fund will inform shareholders of the amount and character of
distributions at the time they are paid, and will advise shareholders of the
tax status for federal income tax purposes of such distributions shortly after
the close of each calendar year. Shareholders who have not held shares of the
Fund a full year may have designated and distributed to them as ordinary
income or capital gain a percentage of income that is not equal to the actual
amount of such income earned during the period of their investment in the Fund.
CALCULATION OF PERFORMANCE DATA
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,
1999 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.
Following are quotations of the annualized percentage total returns
over the one-, five-, and ten-year periods (or fractional portion thereof)
ended November 30, 1999, 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, but is not reflected in the performance
shown below. If reflected, the reimbursement fee would reduce the performance
shown below.
16
<PAGE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS* TEN YEARS*
-------- ---------- ----------
<S> <C> <C>
70.83 10.24 16.01
</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:
P(1 + T) to the power of n = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the one-, five-, and ten-year periods at the end
of the one-, five-, and ten-year periods (or fractional portion
thereof).
The Fund may compare its investment performance to appropriate market
and mutual fund indices and investments for which reliable performance data is
available. Such indices are generally unmanaged and are prepared by entities and
organizations which track the performance of investment companies or investment
advisors. Unmanaged indices often do not reflect deductions for administrative
and management costs and expenses. The performance of the Fund may also be
compared in publications to averages, performance rankings, or other information
prepared by recognized mutual fund statistical services. Any performance
information, whether related to the Fund or to the Advisor, should be considered
in light of the Fund's investment objectives and policies, characteristics and
the quality of the portfolio and
17
<PAGE>
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
PricewaterhouseCoopers LLP, 2400 Eleven Penn Center, Philadelphia, PA
19103, are the Fund's independent accountants. They audit the Fund's financial
statements on an annual basis. The audited financial statements and financial
highlights of the Fund for its fiscal year ended November 30, 1999, as set
forth in the Fund's annual report to shareholders, including the report of
PricewaterhouseCoopers LLP, are incorporated by reference into this SAI.
18
<PAGE>
DIMENSIONAL EMERGING MARKETS VALUE FUND INC.
(AMEND. NO. 12)
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS.
(a) Articles of Incorporation.
(1) Articles of Amendment and Restatement dated November 21, 1997.
INCORPORATED HEREIN BY REFERENCE TO:
<TABLE>
<S> <C>
Filing: Post-Effective Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A.
File No.: 811-7440.
Filing Date: November 26, 1997.
</TABLE>
(2) Articles of Amendment dated December 7, 1998.
INCORPORATED HEREIN BY REFERENCE TO:
<TABLE>
<S> <C>
Filing: Post-Effective Amendment No. 10 to the Registrant's
Registration Statement on Form N-1A.
File No.: 811-7440.
Filing Date: March 26, 1999.
</TABLE>
(b) By-Laws.
By-laws of the Registrant.
INCORPORATED HEREIN BY REFERENCE TO:
<TABLE>
<S> <C>
Filing: Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on Form N-1A.
File No.: 811-7440.
Filing Date: March 30, 1998.
</TABLE>
(c) Instruments defining the rights of holders of the securities being
registered including where applicable, the relevant portion of the
articles or incorporation or bylaws of the Registrant.
(1) No specimen securities are issued on behalf of the Registrant.
(2) Relevant portion of Articles of Amendment and Restatement dated
November 21, 1997.
See Article Fifth.
INCORPORATED HEREIN BY REFERENCE TO:
<TABLE>
<S> <C>
Filing: Post-Effective Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A.
File No.: 811-7440.
Filing Date: November 26, 1997.
</TABLE>
(3) Relevant portion of By-Laws.
(d) Investment advisory contracts relating to the management of the assets
of the Registrant. Investment Management Agreement between the Registrant
and Dimensional Fund Advisors Inc. ("DFA") dated November 26, 1997.
INCORPORATED HEREIN BY REFERENCE TO:
<TABLE>
<S> <C>
Filing: Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on Form N-1A.
File No.: 811-7440.
Filing Date: November 26, 1997.
</TABLE>
C-1
<PAGE>
(e) Underwriting or distribution contract between the Registrant and a
principal underwriter and agreements between principal underwriters and
dealers.
Not applicable.
(f) Bonus, profit sharing, pension or similar contracts or arrangements
wholly or partly for the benefit of directors or officers of the
Registrant in their official capacity; Describe in detail any plan not
included in a formal document.
Not Applicable.
(g) Custodian agreements and depository contracts under Section 17(f) of the
1940 Act [15 U.S.C. 80a 17(f)] concerning the Registrant's securities and
similar investments, including the schedule of remuneration.
Agreement between the Registrant and The Chase Manhattan Bank.
INCORPORATED HEREIN BY REFERENCE TO:
<TABLE>
<S> <C>
Filing: Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on Form N-1A.
File No.: 811-7440.
Filing Date: March 30, 1998.
</TABLE>
(h) Other material contracts not made in the ordinary course of business to
be performed in whole or in part on or after the filing date of the
Registration Statement.
(1) Form of Transfer Agency Agreement between the Registrant and PFPC
Inc.
INCORPORATED HEREIN BY REFERENCE TO:
<TABLE>
<S> <C>
Filing: Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on Form N-1A.
File No.: 811-7440.
Filing Date: March 30, 1998.
</TABLE>
(i) Amendment No. 1 to Transfer Agency Agreement.
INCORPORATED HEREIN BY REFERENCE TO:
<TABLE>
<S> <C>
Filing: Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on Form N-1A.
File No.: 811-7440.
Filing Date: March 30, 1998.
</TABLE>
(2) Form of Administration and Accounting Services Agreement between the
Registrant and PFPC Inc.
INCORPORATED HEREIN BY REFERENCE TO:
<TABLE>
<S> <C>
Filing: Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on Form N-1A.
File No.: 811-7440.
Filing Date: March 30, 1998.
</TABLE>
(i) An opinion and consent of counsel regarding the legality of the
securities being registered, stating whether the securities will, when
sold, be legally issued, fully paid and non-assessable.
Not applicable.
(j) Any other opinions, appraisals or rulings and related consents relied on
in preparing the Registration Statement and required by Section 7 of the
1933 Act [15 U.S.C.77g]. Consent of Pricewaterhouse Coopers LLP.
ELECTRONICALLY FILED HEREWITH AS EXHIBIT EX-99.j.
(k) Financial statements omitted from Item 23.
Not applicable.
C-2
<PAGE>
(l) Any agreements or understandings made in consideration for providing the
initial capital between or among the Registrant, the underwriter,
adviser, promoter or initial stockholders and written assurances from
promoters or initial stockholders that purchases were made for investment
purposes and not with the intention of redeeming or reselling.
INCORPORATED HEREIN BY REFERENCE TO:
<TABLE>
<S> <C>
Filing: The Registrant's Initial Registration Statement on Form N-2.
File No.: 811-7440.
Filing Date: January 19, 1993.
</TABLE>
(m) Any plan entered into by Registrant under Rule 12b-1 and any agreements
with any person relating to the Plan's implementation.
Not applicable.
(n) Any plan entered into by Registrant under Rule 18f-3, any agreement with
any person relating to the plan's implementation, and any amendment to
the plan or agreement.
Not Applicable.
(o) Powers-of-Attorney.
Power-of-Attorney dated July 18, 1997, appointing David G.Booth, Rex A.
Sinquefield, Michael T. Scardina, Irene R. Diamant, Catherine L. Newell
and Stephen W. Kline, Esq. as attorney-in-fact for the Registrant.
ELECTRONICALLY FILED HEREWITH AS EXHIBIT EX-99.o.
(p) Code of Ethics.
(1) Code of Ethics of Registrant.
ELECTRONICALLY FILED HEREWITH AS EXHIBIT EX-99.p.1.
(2) Code of Ethics of Advisor.
ELECTRONICALLY FILED HEREWITH AS EXHIBIT EX-99.p.2.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 25. INDEMNIFICATION.
Reference is made to Article Seventh of the Registrant's Articles of
Amendment and Restatement and Article 5, Section 5.08 of the Registrant's Bylaw,
which are incorporated herein by reference.
The Articles and Bylaws of Registrant provide for indemnification of
officers and directors to the full extent permitted by the General Laws of the
State of Maryland. Registrant's charter provides that the directors and officers
shall not be personally liable to the Registrant or its stockholders for money
damages, except as otherwise required under the Investment Company Act of 1940.
Pursuant to Rule 484 under the Securities Act of 1933, as amended, the
Registrant furnishes the following undertaking:
"Insofar as indemnification for liability arising under the Securities Act
of 1933, (the "Act"), may be permitted to the directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, an officer
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in
C-3
<PAGE>
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 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISOR.
Dimensional Fund Advisors Inc., the investment manager for the Registrant,
is also the investment manager for three other registered open-end investment
companies, DFA Investment Dimensions Group Inc., The DFA Investment Trust
Company and Dimensional Investment Group Inc. The Advisor also serves as
sub-advisor for certain other registered investment companies.
For additional information, please see "Management of the Fund" in PART A of
this Registration Statement.
Additional information as to the Advisor and the directors and officers of
the Advisor is included in the Advisor's Form ADV filed with the Commission
(File No. 801-16283) which is incorporated herein by reference and sets forth
the officers and directors of the Advisor and information as to any business,
profession, vocation or employment of a substantial nature engaged in by those
officers and directors during the past two years.
ITEM 27. PRINCIPAL UNDERWRITERS.
Names of investment companies for which the Registrant's principal
underwriter also acts as principal underwriter.
(a) Not applicable.
(b) Registrant distributes its own shares. It has entered into an agreement
with DFA Securities Inc. which provides that DFA Securities Inc., 1299
Ocean Avenue, 11th Floor, Santa Monica, California 90401, will supervise
the sale of Registrant's shares.
(c) Not applicable.
ITEM 28. 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:
<TABLE>
<S> <C>
Name Address
Dimensional Emerging Markets Value Fund Inc. 1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
PFPC Inc. 400 Bellevue Parkway
Wilmington, DE 19809
The Chase Manhattan Bank 4 Chase MetroTech Center
Brooklyn, NY 11245
</TABLE>
ITEM 29. MANAGEMENT SERVICES.
None.
ITEM 30. UNDERTAKINGS.
Not applicable.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Post-Effective Amendment No. 12 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
29th day of March, 2000.
DIMENSIONAL EMERGING MARKETS VALUE FUND
INC.
(Registrant)
<TABLE>
<S> <C>
By: David G. Booth*
---------------------------------------------
David G. Booth
President and Chairman
Chief Executive Officer
(Signature and Title)
</TABLE>
<TABLE>
<S> <C>
*By: /s/ Catherine L. Newell
---------------------------------------------
Catherine L. Newell
Attorney-in-Fact (Pursuant to a Power of
Attorney)
</TABLE>
C-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
N-1A EDGAR
EXHIBIT NO. EXHIBIT NO. DESCRIPTION
- ----------- ----------- -----------
<C> <S> <C>
Consent of
PricewaterhouseCoopers
23(j) EX-99.j LLP
23(o) EX-99.o Power-of-Attorney
Code of
Ethics of
23(p) EX-99.p.1 Registrant
Code of
Ethics of
EX-99.p.2 Advisor
</TABLE>
C-6
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-1A of our report dated January 14, 2000, relating to the
financial statements and financial highlights which appears in the November 30,
1999 Annual Report to Shareholders of Dimensional Emerging Markets Value Fund
Inc., which is also incorporated by reference into the Registration Statement.
We also consent to the references to us under the headings, "Independent
Accountants" and "Financial Statements" in such Registration Statement.
PricewaterhouseCoopers LLP
Philadelphia, PA
March 30, 2000
<PAGE>
Exhibit No. EX-99.o
DIMENSIONAL EMERGING MARKETS FUND INC.
POWER OF ATTORNEY
The undersigned officers and directors of DIMENSIONAL EMERGING
MARKETS FUND INC. (the "Fund") hereby appoint DAVID G. BOOTH, REX A.
SINQUEFIELD, MICHAEL T. SCARDINA, IRENE R. DIAMANT, CATHERINE L. NEWELL and
STEPHEN W. KLINE, ESQUIRE (with full power to any one of them to act) as
attorney-in-fact and agent, in all capacities, to execute, and to file any of
the documents referred to below relating to the Fund's Registration Statement,
including any and all amendments thereto, covering the registration of the Fund
as an investment company, including all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
including applications for exemptive order rulings. Each of the undersigned
grants to each of said attorneys full authority to do every act necessary to be
done in order to effectuate the same as fully, to all intents and purposes, as
he could do if personally present, thereby ratifying all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
The undersigned officers and directors hereby execute this Power of
Attorney as of this 18th day of July, 1997.
<TABLE>
<S> <C>
/s/ David G. Booth /s/ Rex A. Sinquefield
- ------------------------ ----------------------------
David G. Booth, Rex A. Sinquefield, Chairman-
Chairman-Chief Executive Chief Investment Officer and
Officer, President and Director
Director
/s/ George M. Constantinides /s/ John P. Gould
- ---------------------------- -----------------------
George M. Constantinides, John P. Gould, Director
Director
/s/ Roger G. Ibbotson /s/ Merton H. Miller
- --------------------------- --------------------------
Roger G. Ibbotson, Director Merton H. Miller, Director
/s/ Myron S. Scholes /s/ Michael T. Scardina
- -------------------------- --------------------------
Myron S. Scholes, Director Michael T. Scardina, Chief
Financial Officer, Treasurer
and Vice President
</TABLE>
1
<PAGE>
Exhibit No. EX-99.p.1
DFA EMERGING MARKETS FUND INC.
CODE OF ETHICS
This Code of Ethics of DFA EMERGING MARKETS FUND INC. (the "Fund") was
adopted pursuant to the requirements of Rule 17j-1 under the Investment Company
Act of 1940, as amended (the "Act").
1. DEFINITIONS
(a) "Access Person" means each officer and director of the Fund and its
investment advisor and any employee of these organizations, who,
in connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or
sale of a security by the Fund, or whose functions relate to the
making of any recommendations with respect to such purchases or
sales; and any natural person in a control relationship to the Fund
who obtains information with respect to the Fund with regard to
the purchase or sale of a security.
(b) "Security" means all securities except securities issued by the
Government of the United States, bankers acceptances, certificates
of deposit, commercial paper, and shares of registered open-end
investment companies.
(c) A "security held or to be acquired" means a security which, within
the most recent 15 days (i) is or has been held by the Fund; or
(ii) is being or has been considered by the Fund for purchase by
the Fund or its investment adviser for purchase by the Fund.
(d) "Beneficial Ownership" shall have the meaning ascribed thereto
under Section 16 of the Securities Exchange Act of 1934.
2. PROHIBITIONS
No Access Person of the Fund:
(a) In connection with the purchase or sale by such person of a
Security held or to be acquired by the Fund:
(i) shall employ any device, scheme, or artifice to defraud the
Fund;
(ii) make to the Fund any untrue statement of a material fact or
omit to state to the Fund a material fact necessary in order
to make the statements made, in light of the circumstances
under which they are made, not misleading;
-1-
<PAGE>
(iii) engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon the
Fund; or
(iv) engage in any manipulative practice with respect to the
Fund.
(b) Shall purchase or sell, directly or indirectly, any security in
which he has, or by reason of such transaction acquires, any direct
or indirect Beneficial Ownership and which to his or her actual
knowledge at the time of such purchase or sale:
(i) is being considered for purchase or sale by the Fund; or
(ii) is then being purchased or sold by the Fund.
3. EXEMPTED TRANSACTIONS
The prohibitions of Section 2 of this Code shall not apply to:
(a) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control.
(b) Purchases or sales of securities which are not eligible for
purchase or sale by the Fund.
(c) Purchases or sales which are non-volitional on the part of either
the Access Person or the Fund.
(d) Purchases which are part of an automatic dividend reinvestment
plan.
(e) Purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent
such rights were acquired from such issuer, and sales of such
rights so acquired.
(f) Purchases or sales which receive the prior approval of the
President or Vice President-Chief Administrative Officer of the
Fund because there exists only a remote potential for a conflict of
interest with the Fund because they would be very unlikely to
affect a highly institutional market, or because they clearly are
not related economically to the securities to be purchased, sold or
held by the Fund. The Secretary of the Fund shall record any action
taken pursuant to this Subsection 3(f).
4. PROCEDURAL MATTERS
(a) The Secretary of the Fund shall:
(i) Furnish a copy of this Code to each Access Person of the
Fund.
-2-
<PAGE>
(ii) Notify each Access Person of that person's obligation to
file reports as provided by Section 5 of this Code.
(iii) Report to the Board of Directors the facts contained in any
reports filed with the Secretary pursuant to Section 6 of
this Code when any such report indicates that an Access
Person engaged in a transaction in a security held or to be
acquired by the Fund.
(iv) Maintain the records required by paragraph (d) of Rule 17j-1
under the Act.
(v) Maintain any records furnished to him or her pursuant to
Section 2(f) herein.
5. REPORTING
(a) Every Access Person shall report to the Fund the information
described in Section 5(c) of this Code, with respect to
transactions in any security in which such Access Person has, or by
reason of such transaction acquires, any direct or indirect
Beneficial Ownership in the security; provided, however, that an
Access Person shall not be required to make a report with respect
to transactions effected for any account over which such person
does not have any direct or indirect influence.
(b) A disinterested director of the Fund need only report a transaction
in a security if such director, at the time of that transaction,
knew or, in the ordinary course of fulfilling his or her official
duties as a director of the Fund, should have known that during
the 15-day period immediately preceding the date of the transaction
by the director such security was purchased or sold by the Fund or
was being considered for purchase or sale by its investment
adviser.
(c) Every report shall be made not later than ten days after the end
of the calendar quarter in which the transaction to which the
report relates was effected, and shall contain the following
information:
(i) The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
(ii) The nature of the transaction (i.e., purchase, sale, or any
other type of acquisition or disposition) ;
(iii) The price at which the transaction was effected; and
(iv) The name of the broker, dealer, or bank with or through whom
the transaction was effected.
-3-
<PAGE>
(d) Any such report may contain a statement that the report shall not
be construed as an admission by the person making such report that
he or she has any direct or indirect Beneficial Ownership in the
security to which the report relates.
6. VIOLATIONS
Upon being apprised of facts which indicate that a violation of this Code
may have occurred, the Board of Directors of the Fund shall determine
whether, in its judgment, the conduct being considered did in fact
violate the provisions of this Code. If the Board of Directors determines
that a violation of the Code has occurred, the Board may impose such
sanctions as it deems appropriate under the circumstances. If the person
whose conduct is being considered by the Board is a director of the Fund,
he shall not be eligible to participate in the judgment of the Board as to
whether a violation exists or in whether, or to what extent, sanctions
should be imposed.
-4-
<PAGE>
Exhibit No. EX-99.p.2
REVISED
DIMENSIONAL FUND ADVISORS INC.
DFA SECURITIES INC.
DFA AUSTRALIA LTD.
CODE OF ETHICS
DATED APRIL 24, 1998
GENERAL
This amended and restated Code of Ethics is adopted by Dimensional Fund
Advisors Inc. ("DFA"), DFA Securities Inc. ("DFAS') and DFA Australia Ltd.
("DFAL") this 24th day of April, 1998 pursuant to the requirements of Rule 17j-1
under the Investment Company Act of 1940, as amended. It is the policy of DFA,
DFAS and DFAL (hereinafter referred to as "Employers") in connection with
personal securities investments of access persons(1), that such persons at all
times shall place the interests of Employers' clients first. All personal
securities transactions of access persons shall be conducted in a manner
consistent with this Code of Ethics and to avoid any actual or potential
conflict of interest and any abuse of an access person's position of trust and
responsibility. An access person may not take inappropriate advantage of his or
her position with Employers.
1. PROHIBITIONS
No access person of Employers
- --------
(1) For the meaning of all terms marked with a footnote, see section
6 of the Code "Definitions."
-1-
<PAGE>
(a) In connection with the purchase or sale by such person of a security
held or to be acquired by a registered investment company for which DFA or DFAL
act as investment adviser or DFAS acts as the principal underwriter.
(i) shall employ any device, scheme or artifice to defraud such
registered investment company;
(ii) shall make to such registered investment company any untrue
statement of a material fact or omit to state to such registered investment
company a material fact necessary in order to make the statements made, in light
of the circumstances under which they are made, not misleading;
(iii) shall engage in any act, practice, or course of business
which operates or would operate as a fraud-or deceit upon such registered
investment company; or
(iv) shall engage in any manipulative practice with respect to
such registered investment company.
(b) Shall purchase or sell, directly or indirectly, any security in
which he has, or by reason of such transaction acquires, any direct or indirect
beneficial ownership and which to his actual knowledge at the rime of such
purchase or sale:
(i) is being considered for purchase or sale by such registered
investment company; or
(ii) is then being purchased or sold by such registered investment
company.
(c) Shall, in addition to the above-stated prohibitions:
(i) acquire any securities in an initial public offering;
PROVIDED, HOWEVER, that such prohibition shall not apply to a purchase of
securities in the retail tranche of a new issue
-2-
<PAGE>
where such securities are acquired through a retail application form
which does not disclose, and where allotment is not dependent on, the
applicants affiliation with Employers;
(ii) acquire securities in a private placement, except as provided
in section 2(f) herein;
(iii) accept any personal gift of more than DE MINIMIS value from
any person or entity that does business with, or on behalf of an Employers'
account of any client, or
(iv) serve on the board of directors of a publicly traded company,
except as provided in section 2(g) herein.
2. EXEMPTED TRANSACTIONS
The prohibitions of Section 1 of this Code shall not apply to:
(a) Purchases or sales effected in any account over which the access
person has no direct or indirect influence or control.
(b) Purchases or sales of securities which are not eligible for purchase
or sale by a registered investment company for which DFA or DFAL act as the
investment adviser or DFAS acts as the principal underwriter.
(c) Purchases or sales which are non-volitional on the part of either
the access person or a registered investment company for which DFA or DFAL act
as the investment adviser or DFAS acts as the principal underwriter.
(d) Purchases which are part of an automatic dividend reinvestment plan.
(e) Purchases effected upon the exercise of rights issued by an issuer
PRO RATA to all holders of a class of its securities, to the extent such rights
were acquired from such issuer, and sales of such rights so acquired.
-3-
<PAGE>
(f) Purchase or sale requests which receive the prior approval of the
President or the Executive Vice President of a registered investment company for
which DFA or DFAL act as the investment adviser or DFAS acts as the principal
underwriter because there exists only a remote potential for a conflict of
interest with such registered investment company because they would be very
unlikely to affect a highly institutional market, or when they clearly are not
related economically to the securities to be purchased, sold or held by such
registered investment company. The Secretary of Employers, as the case may be,
shall record any action taken pursuant to this subsection 2(f).
(g) Service by an access person on the board of directors of a publicly
traded company. Such access person shall, however, inform the President or Chief
Investment Officer of each Employer of such appointment. In the event that the
President or Chief Investment Officer, in consultation with outside counsel,
should decide that the potential for conflicts of interests exists with respect
to such person's obligations as a director and Employees duties to its clients,
the President or Chief Investment Officer may, acting upon the recommendations
of outside counsel, place restrictions on the activities of, or information
received by, such access person.
3. PROCEDURAL MATTERS
(a) The Secretary of Employers shall:
(1) Furnish a copy of this Code to each access person of Employers
and obtain from each such person a written acknowledgment of the receipt
thereof. Each access person shall provide the Secretary, on an annual basis,
with an executed certificate stating that he or she has read and understood each
Employees Code of Ethics, respectively, and recognize that he or she is subject
to the Code. In addition, each access person shall certify to the Secretary on
an annual
-4-
<PAGE>
basis that he or she has complied with the requirements of each Employees
Code of Ethics and has disclosed or reported all personal securities
transactions required to be disclosed or reported pursuant to the
requirements of this Code.
(2) Notify each such access person of his/her obligation to file
reports as provided by Section 4 of this Code.
(3) Report to the Board of Directors at the next occurring regular
meeting the facts contained in any reports filed with the Secretary pursuant to
Section 4 of this Code when any such report indicates that an access person
engaged in a transaction in a security held or to be acquired by the Fund.
(4) Maintain any records required by paragraph (d) of Rule 17j-1.
(5) Maintain any records pursuant to Section 2(f) of this Code.
(6) Maintain the records of any violation of this Code, and/or any
action taken as a result of such violation in an easily accessible place for a
period of not less than five years following the end of the fiscal year in which
the violation occurs.
4. REPORTING
(a) Every access person of Employers shall report to such Employers, as
the case may be, the information described in Section 4(b) of this Code with
respect to transactions in any security in which such access person has, or by
reason of such transaction acquires, any direct or indirect beneficial ownership
in the security; provided, however, that an access person shall not be required
to make a report with respect to transactions effected for any account over
which such person does not have any direct or indirect influence; and, provided,
further, no access person of DFA or DFAL shall be required to make a report with
respect to information which
-5-
<PAGE>
would be duplicative of information recorded pursuant to Rule
204-2(a)(12) or 204-2(a)(13) under the Investment Advisers Act of 1940.
(b) Every report shall be made not later than 10 days after the end of
the calendar quarter in which the transaction to which the report relates was
effected, and may be on the form provided by DFA or DFAL, a copy of which is
attached hereto, the report shall contain the following information:
(i) The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(iii) The price at which the transaction was effected; and,
(iv) The name of the broker, dealer or bank with or through whom
the transaction was effected.
(c) Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he/she has any
direct or indirect beneficial ownership in the security to which the report
relates.
5. VIOLATIONS
Upon being apprised of facts which indicate that a violation of this Code
may have occurred, the Board of Directors of Employers, as the case may be,
shall determine whether, in its judgment, the conduct being considered did in
fact violate the provisions of this Code. If the Board of Directors determines
that a violation of this Code has occurred, the Board may impose such sanctions
as it deems appropriate in the circumstances. If the person whose conduct is
being considered by the Board is a member of such Board, he/she shall not be
eligible to
-6-
<PAGE>
participate in the judgment of the Board as to whether a violation
exists or in whether, or to what extent, sanctions should be imposed.
6. DEFINITIONS
(a) For purposes of this Code, the words appearing below in quotation
marks shall have the meanings ascribed thereto; provided however, that all such
terms shall be construed in a manner consistent with the definitions thereof
contained in Rule 17j-1.
(1) "Access person" means (A) with respect to DFA or DFAL, each
officer and director of such Employers and each employee of such Employers who,
in connection with his regular functions or duties, makes, participates in, or
obtains information regarding the purchase or sale of a security by a registered
investment company for which such Employers act as investment adviser, or whose
functions relate to the making of any recommendations with respect to such
purchases or sales, and any natural person in a control relationship to such
Employers who obtain information concerning recommendations made to such company
with regard to the purchase or sale of a security, and (B) with respect to DFAS,
each officer and director of DFAS who in the ordinary course of his business
makes, participates in or obtains information regarding the purchase or sale of
securities for any registered investment company for which DFAS acts as the
principal underwriter or whose functions or duties as part of the ordinary
course of his business relate to the making of any recommendation to such
investment company regarding the purchase or sale of securities.
(2) "Security" means all securities except securities issued by
the Government of the United States, bankers' acceptances, certificates of
deposit, commercial paper and shares of registered open-end investment
companies.
-7-
<PAGE>
(3) A "security held or to be acquired" by a registered investment
company means any security which, within the most recent 15 days (i) is or has
been held by such company; or (ii) is being or has been considered by such
company or its investment advisor for purchase by such company.
(4) "Beneficial ownership" of a security by an access person shall
be interpreted in the same manner as it would be in determining whether a person
is subject to the provisions of Section 16 of the Securities Exchange Act of
1934 and the rules and regulations thereunder, except that the determination of
direct or indirect beneficial ownership shall apply to all securities which such
access person has or acquires. In general, a person may be regarded as having
beneficial ownership of securities held in the name of:
(a) a husband, wife, registered domestic partner or minor child;
(b) a relative sharing the same house;
(c) anyone else if the access person:
(i) obtains benefits substantially equivalent to ownership of the
securities, or
(ii) can obtain ownership of the securities immediately or at some
future time. The requirements of this Code are not applicable to transactions
for any account over which the access person has no influence or control. If in
doubt, the amass person may state on any form required to be completed under the
provisions of this Code that he/she disclaims any beneficial ownership in the
securities involved.
-8-
