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Interview with Gene Fama Jr.

The Australian magazine IFA interviewed Gene Fama Jr. on topics from efficient markets to the emergence of fee-only financial advice. He gives a snapshot of Dimensional's philosophies, and explains how the firm interprets the latest market volatility.

Global Strategies

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Overview

Dimensional's Global Portfolios offer a disciplined, diversified, and low-cost approach that is valuable to a variety of investors, from 401(k) participants to individual investors with financial advisors. With more than seventy strategies around the globe, Dimensional provides focused and consistent exposure to targeted market segments. The Global Portfolios currently assemble over a dozen of these strategies in specific combinations, with the objectives of maximizing expected return for given levels of risk and enhancing portfolio stability.

The strategies that underlie each of the Global Portfolios provide broader exposure to global markets than is typically achieved through traditional active or index management. Dimensional's Global Portfolios hold more than 10,000 securities in over thirty-five countries. Worldwide diversification minimizes the potential short-term impact of any one company, asset class, or country, thus reducing overall portfolio risk while seeking capital market returns.

Dimensional's Global Portfolios target risk factors that have historically delivered increased return—factors such as company size and financial strength. More specifically, they are designed to tilt toward small cap and value stocks around the world. The Global Strategies employ Dimensional's applied core equity strategy, allowing investors to achieve the same global asset class exposures as with an individual component approach but in a more efficient manner that minimizes turnover and transaction costs.

A Simplified Investing Experience

The Global Portfolios provide investors access to a single, balanced portfolio that may be suited to their tolerance for risk. The portfolios are attractive for any investor looking for a broadly diversified investment with built-in rebalancing.

The Global Portfolios can be an effective and fiduciary choice for defined contribution plans of all types and sizes. The Global Portfolios have low fees and expenses—an area of increasing focus by regulatory bodies. Marketwide diversification helps manage the down-side risk associated with any one particular security, sector, or country. The potential long-term value added over the benchmarks and index funds may increase the plan participants' chances of reaching their retirement goals. These funds may be particularly appropriate as default-option investment vehicles, due to their comprehensive characteristics.

For most plans, the large majority of defined contribution participants may lack the time, inclination, or skill set needed to manage their own retirement investment portfolio. Dimensional's Global Portfolios utilize professionals trained in academic investment theory to choose specific asset allocations that ensure proper diversification, monitor asset class performance, and rebalance regularly.

While popular with defined contribution plans, the Global Portfolios are also appropriate for any financial advisor or institution looking for a single, broadly diversified vehicle to act as their portfolio core, if not their entire portfolio. Advisors can reduce transaction fees by purchasing one diversified portfolio rather than the myriad of components they normally choose. Foundations, endowments, and pension plans can equally benefit from the low-cost, value-added approach. The Global Portfolios are systematically rebalanced, further lowering the cost investors would otherwise incur from rebalancing their own portfolios, not to mention the energy and resources spent determining when and how to rebalance.

The Portfolios

Dimensional's three Global Portfolios are all broadly diversified but differ according to level of risk: conservative, moderate, or aggressive.

The Dimensional Global 25/75 Portfolio is intended for investors with a conservative tolerance for risk. Comprised of 25% equity funds and 75% fixed income funds, the Portfolio seeks slow but steady growth of capital, with minimized variance.

The Dimensional Global 60/40 Portfolio is intended for investors with a moderate tolerance for risk. Comprised of 60% equity funds and 40% fixed income funds, the Portfolio seeks moderate but healthy growth of capital over long time horizons.

The Dimensional Global Equity Portfolio is intended for investors with an aggressive tolerance for risk. Comprised of 100% equity funds with no bonds, the Portfolio seeks aggressive growth of capital over long time horizons.

PRINCIPAL RISKS (global strategies)
The principal risks of investing in these portfolios may include any of the following: market risk, foreign securities and currencies risk, small company risk, interest rate risk, credit risk, income risk, and fund of funds risk. These risks are fully described in the prospectus in the section entitled "Principal Risks."