Exhibit 99.b5-12
MASTER DIMENSIONAL FUND ADVISORS LTD.
CONSULTING SERVICES AGREEMENT
This Agreement made by and between Dimensional Fund Advisors Inc., a
Delaware corporation ("DFA"), and Dimensional Fund Advisors Ltd., a company
organized under the laws of England ("DFAL").
W I T N E S S E T H:
WHEREAS, DFAL is (i) engaged in the business of investment management
and administrative and trading services primarily in the United Kingdom and
Europe (collectively, the "European countries") and (ii) regulated in the
conduct of its investment, administrative and trading business by the Investment
Management Regulatory Organization ("IMRO"), a self-regulatory organization;
WHEREAS, DFAL presently acts as sub-advisor to DFA with respect to
certain DFA investment products (the "Sub-Advisory Products") pursuant to
certain sub-advisory agreements (the "Sub-Advisory Agreements") dated as of
August 7, 1996 and also provides certain trading services for other products to
DFA pursuant to a Service Agreement dated as of January 28, 1992, as amended on
September 16, 1992 (the "Service Agreement");
WHEREAS, DFA wishes to continue to engage DFAL to provide various
non-advisory services relating to certain international investment products
other than the Sub-Advisory Products managed or sponsored by DFA as set forth in
Schedule A hereto (the "Investment Products") which schedule may be amended from
time to time; and
WHEREAS, DFA wishes to modify certain provisions of the Service
Agreement further defining the overall duties and responsibilities of the
parties, and DFAL desires to so act and to provide such services as agreed to
from time to time pursuant to a consulting services agreement; and
WHEREAS, DFA owns 100% of the outstanding shares of DFAL;
NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth herein, the parties hereto agree as follows:
1. TERMINATION OF SERVICES AGREEMENT. The parties hereto agree that the
Service Agreement is hereby terminated and shall have no further effect and the
duties and responsibilities of DFA and DFAL shall be as set forth hereinafter.
2. APPOINTMENT. DFA hereby appoints DFAL, and DFAL hereby accepts such
appointment, to act on behalf of DFA with respect to such matters and to provide
such services with respect to the Investment Products as may from time to time
be agreed between the parties.
3. SERVICES TO BE PERFORMED. DFA hereby employs DFAL, subject to
supervision by DFA, to furnish the following services for the Investment
Products:
a. Execution of buy and sell programs generated by DFA and
transmitted to DFAL;
b. Selection of brokers or dealers to execute purchases and
sales of eligible securities for the Investment Products; including the
determination of the best and most efficient means of purchasing and selling
such portfolio securities; and the allocation of trades among brokers and
dealers, subject to constraints with respect to affiliated brokers and dealers
subject to Section 17 of the Investment Company Act of 1940. In carrying out its
obligations hereunder,
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DFAL will act with a view to the objectives of each Investment Product as set
forth in the respective prospectus and otherwise communicated by DFA to DFAL,
including the objectives of receiving best price and execution for portfolio
transactions and causing as little price fluctuation as possible.
c. DFAL may execute orders from DFA for fewer or more shares
than set forth in the buy or sell programs initiated by DFA, based on market
conditions and other factors, provided that such variances from the execution
lists are within parameters established by DFA from time to time or in specific
cases.
d. DFAL shall report the results of all trading activities,
and all other information relating to portfolio transactions for the Investment
Products, at such time and in such format as DFA may request, including
reporting to the custodians of the Investment Products, as appropriate.
e. DFAL shall review and coordinate its agency trading and
execution strategies, practices and results with DFA as frequently as reasonably
necessary.
f. DFAL may also from time to time, monitor cash balances for
the Investment Products; review and bid on blocks of securities within
parameters established by DFA; handle corporate actions and vote proxies for
securities held in the Investment Products as directed by DFA; review companies
and suggest status codes; and provide DFA with data concerning equity markets in
the various countries in which the Investment Products are invested.
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g. DFAL shall furnish only statistical and other factual
information and advice regarding economic factors and trends, and it is neither
intended nor required that DFAL shall furnish advice or make recommendations
regarding the purchase or sale of securities.
These duties and responsibilities of DFAL, taken individually or
collectively, shall not constitute, or be construed as constituting, investment
advice.
4. DUTIES AND RESPONSIBILITIES. DFAL shall perform its obligations and
discharge its duties hereunder, and under any or all other agreements that DFAL
may enter into with DFA from time to time, (i) solely in the best interests of
DFA and the clients of DFA with respect to or in connection with which DFAL may
from time to time provide investment or other services, and (ii) with the care,
skill, prudence and diligence that a prudent man experienced in such matters
would use in providing similar services in like circumstances. Except as
expressly provided herein or directed by DFA from time to time in writing, DFAL
shall have no authority, express or implied, to bind DFA to any contract or
commitment, to otherwise act on behalf of DFA, or to hold itself out as an agent
of DFA.
5. CONDUCT OF BUSINESS. DFAL shall at all times conduct its business in
compliance with any and all applicable laws, rules and regulations including,
without limitation, the applicable laws, rules and regulations of the United
States and the United Kingdom and any governmental agency, regulatory authority
or governing body thereof.
6. REPRESENTATIONS OF DFAL. DFAL hereby represents and warrants that it
is regulated in the conduct of its investment, administrative and trading
business by IMRO and that it is duly licensed under the securities laws of the
United States to engage in the activities in which DFAL is engaged, including
without limitation registration as an investment adviser with
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the United States Securities and Exchange Commission ("SEC"). DFAL hereby
covenants to maintain in good standing all licenses and registrations required
for the conduct of its business and performance of its duties and obligations
hereunder and under any and all agreements entered into with DFA from time to
time. In addition, DFAL shall provide DFA as promptly as practicable copy of any
and all amendments filed with the SEC at the same time any such amendments are
filed.
7. FEES. During the duration of this Agreement, in consideration of the
portfolio management and other services to be performed by DFAL hereunder and as
agreed between the parties from time to time, DFA shall pay DFAL a fee in an
amount equal to 110% of pretax annual operating expenses of DFAL inclusive of
fees to be paid to DFAL pursuant to the Subadvisory Agreements. Fees due from
DFA to DFAL shall be remitted not less than quarterly.
8. DIRECTION BY DFA. In connection with any services to be provided
hereunder to be rendered by DFAL from time to time, DFAL shall at all times act
in accordance with the instructions of DFA as communicated from time to time and
shall prepare and provide all information and reports reasonably requested by
DFA. Attached hereto as Schedule B is a description of the reports currently
required to be furnished to DFA by DFAL and those actions for which DFAL must
obtain specific approval by DFA, which Schedule B may be amended from time to
time by DFA in its sole discretion upon reasonable notice to DFAL.
DFA shall use its best efforts to ensure that trustees, custodians,
subcustodians, subadvisors and administrative agents cooperate with DFAL thus
facilitating the provision of services by DFAL. DFA shall provide DFAL with
copies of regulatory filings made by DFA
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which are relevant to DFAL's agency and subadvisory services. DFA shall also
share with DFAL information which DFA believes to be relevant to DFAL's
services.
9. RECORDKEEPING AND RECORD RETENTION. DFAL shall maintain and preserve
in a safe and accessible place and shall afford representatives of DFA access to
all customer, corporate and other business' records customarily maintained by
investment managers as they relate to DFAL's provision of agency and subadvisory
services to DFA, all records and reports required to be maintained by applicable
laws, rules and regulations, including, without limitation, the United States
Investment Advisers Act of 1940, and any and all such other records or reports
as DFA may from time to time reasonably require DFAL to prepare, including such
records and reports set forth on Schedule B hereto, as may be amended from time
to time by DFA in its sole discretion upon reasonable notice to DFAL.
Except as otherwise required by law or as otherwise agreed to by the
parties, all records and reports required to be prepared and preserved hereunder
shall be kept in a readily accessible place on DFAL's premises for at least two
years from the date of the record or report and in a reasonably accessible place
on or off DFAL's premises for at least four more years. If records or reports
are preserved in a form other than paper originals they shall be kept in
duplicate, stored separately, and DFAL shall maintain on its premises a means of
visual review and producing hard copies of such records and reports. DFAL's
obligation hereunder to maintain and preserve records shall survive the
termination of this Agreement.
10. INSPECTION AND EXAMINATION OF RECORDS. DFAL hereby acknowledges
that DFA has certain statutory obligations to supervise the activities of DFAL
relating to DFA portfolios and agrees to cooperate fully at all times to afford
DFA access to DFAL's books and records at
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anytime during normal business hours, to answer any questions with respect to
DFAL's operations, and to regularly schedule and attend meetings as requested by
DFA for purposes of reviewing DFAL's performance under its agreements with DFA,
reviewing operational matters with trustees, custodians' subcustodians and
administrative agents. DFA or its agents or representatives may, from time to
time, visit DFAL for the purpose of reviewing DFAL's operations as they relate
to the provision of agency and subadvisory services. DFA agrees to use
reasonable efforts to avoid causing any undue disruption to the conduct of
DFAL's day-to-day business affairs.
11. CONFIDENTIAL AND PROPRIETARY INFORMATION. Each party acknowledges
and agrees that any and all information emanating from the other's business, in
any form, is confidential and proprietary information. Each party agrees that it
will not, during or after the term of this agreement, permit the duplication or
disclosure of any such confidential and proprietary information to any person
(other than an employee, agent or representative of the other party who must
have such information for the performance of its obligations under its
agreements with the other party) except as required by law, unless such
duplication, use or disclosure is specifically authorized by the other party in
writing. DFAL acknowledges and agrees that all computer programs provided by DFA
("DFA Software"), including all copyright rights therein, are owned by and are
the property of DFA and that DFAL is licensed hereby to use such DFA Software
only for the terms of this Agreement and one year thereafter. At the expiration
or termination of this Agreement, DFAL agrees to return all copies of the DFA
Software to DFA within one year unless otherwise agreed. DFAL may, with the
written consent of DFA which shall not be unreasonably withheld, substitute
other computer programs to perform the activities covered by
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this agreement, provided such programs produce information and reports
comparable to those produced by the DFA Software in a magnetic machine-readable
form which is compatible with the DFA Software.
12. ALLOCATION OF CLIENT TRANSACTIONS. DFA hereby acknowledges that
DFAL renders services to clients other than DFA and DFA portfolios, including
clients for which DFAL may purchase or sell the same securities as those that
may be listed from time to time on an approved buy/sell program for a DFA
portfolio. DFAL hereby acknowledges its fiduciary obligations to treat all
clients on a fair and equitable basis when effecting securities transactions in
accordance with DFA's policies.
13. COMPLAINTS. Complaints by DFA in its capacity as DFAL's customer
and concerning DFAL's performance of its duties should be directed to the
Compliance Officer of DFAL either orally or in writing, sent by facsimile or
first class mail to the address provided in Section 16 hereof. Complaints may
also be made directly to IMRO's Investment Ombudsman at the following address:
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IMRO
Lloyds Xxxxxxxx
0 Xxxxxxxxx Xxxxxx
Xxxxxx Xx 0XX
Xxxxxx Xxxxxxx
Tel: 0000 000 0000
Facsimile: 0171 680 0550
14. Indemnification. DFAL shall indemnify and hold harmless DFA, its
officers and directors, from any and all losses, including reasonable attorney's
fees, incurred by DFA as a result of or arising out of any breach by DFAL of its
duties under this Agreement or any other agreement between DFA and DFAL, any
violation by DFAL of any provision of this Agreement or any other agreement
between DFA and DFAL, or any action of DFAL taken on behalf of DFA or any DFA
portfolio which falls outside the scope of express authority granted hereunder
or under any other agreement between DFA and DFAL.
Notwithstanding the foregoing, DFAL shall not be liable to DFA or any
DFA portfolio with respect to actions taken or not taken on behalf thereof if
DFAL has acted pursuant to and in strict compliance with express instructions of
DFA or failed to take an action which required specific approval or direction by
DFA in the absence of such approval or direction, and DFA agrees to indemnify
and hold harmless DFAL, its officers and directors, from any and all losses,
including reasonable attorney's fees, incurred by DFAL arising out of any
actions or omissions of DFAL made in accordance with the express instructions of
DFA or out of DFAL's failure to act with respect to a matter which requires the
specific approval or direction of DFA in the absence of such approval or
direction.
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15. TERM. This Agreement shall be effective as of ____________, 1997
shall remain in effect until terminated as hereinafter provided. This Agreement
may be terminated by DFA or by DFAL at any time without penalty on sixty (60)
days' written notice to the other party hereto. Any fees owing to DFAL pursuant
to Paragraph 5 hereof shall be pro rated to the date of termination.
16. NOTICE. Any notice or other communication required to be delivered
by a party to the other party to this Agreement, by this or any other agreement
between the parties, shall be in writing and shall be deemed duly given upon
delivery via facsimile transmission or overnight delivery by Federal Express,
DHL Worldwide, or such other courier having comparable qualifications, to the
following fax number or address or such other fax number or address as shall be
communicated to the other party from time to time in accordance with the notice
requirement thereof:
IF TO DFA:
Dimensional Fund Advisors Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Vice President
FAX: (000) 000-0000
IF TO DFAL:
Dimensional Fund Advisors Ltd.
00 Xxxxxxxx Xxxxxx
Xxxxxx X0X 0XX
Xxxxxxx
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Attention: Xxxxxxxx East
Compliance Office
FAX: (000) 00 000 000-0000
17. CHOICE OF LAW. This Agreement shall be administered and construed
under the laws of the State of California.
18. MISCELLANEOUS.
(a) This Agreement may be executed in two
counterparts, each of which shall be deemed an original and both of which
together shall constitute one agreement.
(b) This Agreement may be amended from time to time
by the mutual agreement of the parties.
(c) The captions used herein are for reference
purposes only and shall not be construed to affect the meaning or interpretation
of the provisions of this Agreement.
(d) This Agreement may not be assigned by either
party.
(e) In the event any provisions of this Agreement,
including any and all schedules or exhibits hereto as in effect from time to
time, conflict or are inconsistent with, rather than being supplemental to, any
terms or provisions of any other agreement to which DFA and DFAL are both
parties, such other agreement shall control.
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IN WITNESS WHEREOF, DFA and DFAL have caused this
Agreement to be executed on this ____ day of ________________, 1997, by their
respective officers or representatives thereunto duly authorized.
DIMENSION FUND ADVISORS INC.
By:
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Title:
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DIMENSIONAL FUND ADVISORS LTD.
By:
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Title:
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SCHEDULE A
(AS LAST AMENDED ON DECEMBER 8, 1998)
INVESTMENT PRODUCTS
The DFA Investment Trust Company
* DFA International Value Series
* Emerging Markets Small Cap Series
* Emerging Markets Series
DFA Investment Dimensions Group Inc.
* DFA International Small Cap Value Portfolio
* VA International Value Portfolio
* Large Cap International Portfolio
* Tax-Managed DFA International Value Portfolio
Dimensional Emerging Markets Value Fund, Inc.
SCHEDULE B
Dimensional Fund Advisors Ltd. shall:
(a) On a weekly basis, provide to DFA (i) via an overnight delivery
service, DFAL's entire database(s) (MAST.DB) for all portfolios and subtrusts
("DFA portfolios") for which DFAL is acting as a subadvisor or agent pursuant to
agreements with DFA, and (ii) via facsimile transmission, cash sheets for those
DFA portfolios not administered by PFPC Inc. (or by such other
custodian/administrative agent as DFA may hereafter notify DFAL);
(b) Prior to execution of any buy/sell program, obtain approval of the
DFA Investment Committee after submission by DFAL of the proposed program,
including a statement of the assumptions used in generating the original list of
orders and the final list with brokers allocated;
(c) Before purchasing, for any DFA portfolio, securities of any company
not previously included on the appropriate buylist, obtain approval of the DFA
Investment Committee to add such company to the approved buy list; any such
request for approval of a new company shall be made by providing the Investment
Committee the following: (i) company name, (ii) sedol number, (iii) local
symbol, (iv) exchange, (v) current market price and (vi) number of shares
outstanding;
(d) Place buy and sell orders for execution on behalf of any DFA
portfolios with those brokers approved for trading by the DFA Investment
Committee.
(e) Obtain approval of the DFA Investment Committee before permitting
any director or employee of DFAL to be directly involved with authorizing
trades, directing corporate actions or making comparable investment decisions on
behalf of DFA portfolios;
(f) Prior to the placement of any sell order on behalf of a DFA
portfolio, confirm with the appropriate custodian the availability of the shares
intended to be sold;
(g) On a monthly basis, reconcile all share positions and prices with
the appropriate custodian for each DFA portfolio; and
(h) Maintain appropriate back-ups of all systems and records and notify
DFA on a periodic basis of any changes to the system. DFAL shall, in addition to
any other required records or reports maintain the following:
(i) Buy/sell programs, all of which must be signed and dated
by an authorized person; (ii) Documentation of all bids and offers that
are not initiated by DFAL (i.e., blocks), including the date, broker
involved, name of the stock, sedol or local symbol, bid/offer price and
the number of shares; completed trades must also be documented as to
the time of the transaction, actual shares completed and the allocation
of those shares among portfolios;
(iii) A record of each brokerage order given by or on behalf
of a DFA portfolio for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted, including the name of the
broker, the name of-the person who placed the order, the terms and
conditions of the order and, if any modification or cancellation
thereof, the time of entry or cancellation, the price at which
executed, and the time of receipt of report of execution;
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(iv) A record of all other portfolio purchases or sales (daily
trade logs and where applicable, broker confirmations) showing details
comparable to those described in (c) above;
(v) Records documenting any voluntary decision or corporate
actions;
(vi) Documentation of any proxy votes directed by DFAL,
including the name of the company, date voted and DFA portfolios
involved.
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