Dimensional Fund Advisors, 2002

DFA’s investment strategy is based on their belief in the principle that stock market is efficient. They attempt to match a broad-based, value-weighted small-stock index and position themselves in the market as a passive fund manager that still claimed to add value by capturing specific dimensions of risks identified by financial science. DFA’s investment strategy incorporates elements of both passive and active management. It is passive in the sense that like many other index managers, it focuses on the importance of diversification, lower turnover and lower fees than actively managed portfolios. It is active in the sense that it develops its small-value stock focus based on academic research and uses certain techniques (such as

| Shareholders, have a particular interest in DFS as they are a public company, they will be watching the growth of the company. This is because they have bought shares within the company. They will also be watching the operations of DFS, in order to see if it is efficient. As DFS, has grown over the years, shareholders who may have bought shares at cheaper rates, will be watching for the right time to sell the share. As a shareholder, they can direct the objectives as they can vote the board of directors. This could have a positive reflect on the company as it’s being run by the owners accountable and fair.

The Yale Endowment is known in the financial industry as a pioneer in using a combination of innovative asset allocation and active management to produce impressive long-term performance. In fact, the Endowment produced a 17.8% average annual return, net of fees, in the ten-year period ending June 30, 2007.1 This performance is particularly impressive given that, in recent years, the Endowment portfolio has carried less than a 40% weighting in equities. Instead, under the leadership of Chief Investment Officer Dave Swensen, the Yale Investments Office

Dimensional uses the EMH to its advantage in coming up with its strategies. First the focus on stocks over bonds because there is a greater return on stocks. Second, they focus on several different kinds of smaller stocks instead of just one particular larger kind. The is always a risk when investing in anything. Time, relationships, and money. DFA is aware of the risks and do everything they can to make sure the best options are available to their clients. They focus on diversification of the market as a tool to reduce the risks involved. DFA uses research based portfolios that are specific to the task at hand. Its dimensional funds returned at 42% which is way above other firms in the same field.

The Defined Contribution Plans offered at Amoco has an index-oriented, passive management nature. The plans,

The D-H Investment Committee has oversight of the D-H MIP. It currently has 6 members which meet on a quarterly basis and are supported by NEPC and D-H staff. The D-H investment policy is reviewed and approved annually by D-H Board of Trustees and establishes objectives, guidelines and restrictions for the D-H MIP. The focus of the D-H MIP is to preserve capital and to provide long-term capital appreciation, net of inflation. Long-term objectives allow for broad

Acme Mfg currently is all-equity financed, with 2 mm shares outstanding at a current price of $40/sh. The firm announces they will raise $8 mm by issuing new equity to fund a new project (assume investors expect the NPV of the new project is 0).

DFA’s founders believed in two principals (outside of efficient markets): the value of sound academic research, and the ability of skilled traders to contribute to a fund’s profits even when the investment was inherently passive. By working closely with the academic world, DFA is able to exploit opportunities generated from academic research before others are able to; this creates opportunities for short and long-term excess return. Also, working in stocks that other mutual funds do not participate (micro, small-cap) allows DFA to exploit opportunities in otherwise illiquid stocks. By having a large presence in this market, the company is able to take advantage of trading opportunities with counterparts (liquidity discounts from block purchases).

Thus, this block-trading strategy combined with adverse selection avoidance allowed the DFA to beat the market and thus the benchmark by about 200 basis points over the 20 year period. And as a result became the benchmark for these types of portfolios.

To reduce brokerage fees, this fund aggregated all investment activity by plan participants on a daily basis, matching buying and selling activity. Participants could trade the company stock fund on any business day, but limited to only twice a month. In 1998, Amoco DC plan assets were valued at $5.1 billion. 55.5% of the assets were invested in company stock. The rest of the assets were invested in equity index funds and the money market fund. The plan had 27,290 participants with an average of $186,000 per participant, and contributions of about $4,182 per year from each one of them. The company matched contributions up to 7% of pay.

Further, our strategy involved paying attention to current events and attempting to use them to generate a return. For example, Horizon Pharmaceuticals’ stock price took a nosedive after an October 19th New York Times article suggested that Horizon was attempting to thwart Express Scripts’ attempts to lower the price of prescription drugs. The decision was made to buy 100 shares of stock in Horizon when its price spiraled down to a measly $14.62 per share, as we expected Horizon would do something to stop the bleeding, and historically has been a pretty volatile stock. Horizon came back with a scorching rebuttal in an open letter later that day, spiking its stock price more than 30% on October 23rd, and by October 28th, this move landed us our greatest return of any stock that we purchased and held until the end of the period: 18% (see appendix).

National Mutual Funds (NMF), founded in the 1940s, is one of the most important mutual fund companies in the brokerage industry in the United States. The company has extended from a mutual fund company to a financial center offering mutual funds, brokerage products including stocks and bonds, insurance products, and a variety of planning tools to help customers save for major life needs. However, since the market downturn, which is hurting many brokerage and mutual fund houses, NMF’s profits and operations have been affected significantly. To respond to the market slowdown, Harry Smallwood, President of NMF Retail Services, has come up with a directive to reorganize the call centers in the Retail Services Division in an effort

Mutual fund Industry was introduced in India 1963 with the formation of Unit Trust of India. During the last few years many extraordinary and rapid changes have been taking place in the Mutual fund industry. Indian economy is highly developing. The development is taken place due to the growth in the financial system.

Mutual funds are an easy, convenient way to invest, without having to worry about choosing individual stocks. A mutual fund can be defined as a single portfolio of stocks, bonds, and/or cash managed by an investment company on behalf of many investors. The investment company manages the fund, and sells shares in the fund to individual investors. When one invests in a mutual fund, they become a part-owner of a large investment portfolio, along with all the other shareholders of the fund. The fund manager invests the contributions when shares are purchased, along with money from the other shareholders. Every day, the fund manager counts up the value of all the fund's holdings, figures out how many shares have been purchased by

PURPOSE OF THE EXCHANGE OFFERThe purpose of the exchange offer was to avoid having a dividend reduction drive down the stock price and find the "golden mean" between its own interests and the interests of its 25 large Institutional shareholders. Those shareholders owned 46.5 % of total Avon's outstanding shares (Exhibit 5) and expected high dividends from them. Some investors, as it is mentioned in the case, have stated that they held Avon stock because it paid high dividends. Hence, a reduction of dividends would