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eekly Dose of Indexing

Terminator Pulls Trigger on Indexing,

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IndexFunds.com Staff

September4, 2003

Arnold Schwarzenegger owns approximately 5% of Dimensional Fund Advisors, the secretive mutual

fund index group in Santa Monica that is popular among index advisors and institutional investors.

Ironically , while he appears to have done relatively little indexing himself, he has made quite a t idy

fortune from other indexers.

He bought the stake in DFA in 1996 from brokerage firm Schroder Wertheim, where his longtime friend and financial advisor Paul Wachter was working. The firm's assets has swelled to $40 billion. While

DFA is not telling much about its revenues (or its operations at all), a .5% average annual fee on that

amount would reap $200 million in revenue. (Most of its funds are below 1 % in fees and many are

below .5%)

Schwartzenegger recently released his portfolio to the public as part of his campaign strategy to unseat

California governor Gray Davis in the state's dramatic October recall vote.

Dimensional's chief executive, David Booth, recently joked that "I try to brainwash him with our view of

economics." And Eugene Fama, director of research at Dimensional and a professor of finance at the

ri University of Chicago business school where Booth picked up an MBA, was recently named one of

Schwarzenegger's financial advisers.

But Schwartzenegger is clearly not a passive indexer himself. Among his action adventure investments

are:

• a Boeing 747 to Singapore Airlines

• movie theaters

• Planet Hollywood restaurant chain

• an Internet software business

• major holdings in Gannett Co., IBM, International Speedways, Roto-Rooter Inc. and Weight

Watchers International

• Planet Hollywood

• Ohio's Easton Town Center, a million-square-foot mall

• the Fitness Expo convention

Perhaps his most drarnatic active play was a bet on himself. In one of his first blockbusters, the comedy

'Twins", he decided to forgo his cash fee in exchange for 15 percent of the studio's receipts, which

brought him a staggering $30 million. He went on to earn approximately $300 million from his next 13

films.

With a day job like that, who needs to index?

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