Correspondence 0001680359-24-000229 from DFA INVESTMENT DIMENSIONS GROUP INC (CIK 0000355437)
DFA INVESTMENT DIMENSIONS GROUP INC (CIK 0000355437)
Date: Aug. 5, 2024 · CIK: 0000355437 · Accession: 0001680359-24-000229
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File numbers found in text: 811-03258
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Dimensional
August 5, 2024
Via EDGAR
Emily Rowland
U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, D.C. 20549-9303
Re:
DFA Investment Dimensions Group Inc.
File Nos. 002-73948 and 811-03258
Dear Ms. Rowland:
On behalf of DFA Investment Dimensions Group Inc. (the “Registrant”), the following are the responses to the Staff’s comments conveyed with
regard to Post-Effective Amendment Nos. 258/260 to the Registration Statement of the Registrant (the “Amendment”), filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 29, 2024, pursuant to the Investment Company Act of 1940, as
amended (the “1940 Act”), and Rule 485(a)(2) under the Securities Act of 1933, as amended (the “1933 Act”), for the purposes of registering the Dimensional World ex U.S. Sustainability Targeted Value Portfolio (the “Portfolio”).
Each SEC staff comment is summarized below, followed by the Registrant’s response to the comment. Capitalized terms not
otherwise defined in this letter have the meanings assigned to the terms in the Amendment. The Registrant understands that the Registrant and management are responsible for the accuracy and adequacy of the disclosures notwithstanding any review comment
or action of the staff of the SEC. The Registrant further acknowledges that, to the extent disclosure appears multiple times throughout the Amendment, any comment with regard to such disclosure applies equally throughout.
1.
Comment. Please file your responses to the Staff’s comments on EDGAR at least 5 days in advance of the effective date.
Response. The Registrant confirms it will file responses to the Staff’s comments on EDGAR 5 days in advance of the effective date.
2.
Comment. Per Rule 313 of Regulation S-T, please update the ticker symbol on EDGAR when available.
Response. The Registrant will update EDGAR accordingly.
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August 5, 2024
Page 2
Prospectus
3.
Comment. Please revise the Portfolio’s principal investment strategies to include a policy that the Portfolio will invest at least 80% of its assets
in companies that meet the Portfolio’s defined sustainability criteria.
Response. The Registrant respectfully declines to add a policy to invest at least 80% of its assets in companies that meet the Portfolio’s defined
sustainability criteria because such adjective refers to a strategy of the Portfolio, rather than a type of investment. The Registrant notes that Rule 35d-1 currently requires that a fund with a name that suggests that the fund focuses its
investments in a particular type of investment or industry adopt a policy to invest, under normal circumstances, at least 80% of its net assets in the particular type of investment or industry suggested by the fund’s name. However, the Staff
stated in the original releases proposing and adopting Rule 35d-1 that the rule does not apply to a fund name that connotes a type of investment strategy. The Registrant notes that the term “sustainability” in the Portfolio’s name refers to the
Portfolio’s investment strategy, pursuant to which the Advisor employs exclusionary, positive and negative screens as described in the Prospectus for its sustainability strategy. The Registrant is aware of the SEC’s amendments to Rule 35d-1
that, as noted in the release,1 “expand the rule’s 80% investment policy requirement to apply to any fund with terms in its name that suggest that the fund focuses in investments that
have, or investments whose issuers have, particular characteristics.” As noted by the Staff in the release, “the primary types of names that the expanded scope will cover will be names that
include the terms ‘growth’ and ‘value,’” and “terms with ESG- or sustainability-related characteristics.” The Registrant supplementally confirms that the Portfolio will comply with the amendments, as applicable, by the compliance date.
4.
Comment. Please revise the disclosure to include a definition of small and mid capitalization securities.
Response. The Registrant respectfully declines to revise the disclosure to include such definitions. The Registrant notes that the Portfolio does
not include “small capitalization” or “mid capitalization” in its name and, accordingly, is not subject to the requirements of Rule 35d-1.
5.
Comment. Please delete impact from the discussion of the sustainable investment strategies and risks as it does not appear from the disclosure that
the Portfolio is focused on measurement, management and reporting of impact. If the Portfolio is focusing on those three things, the Staff requests that the Registrant: (1) disclose in greater detail the specific ESG related impacts that the
Portfolio seeks to achieve in terms of the measurement, management, and reporting of impact; (2) disclose whether these stated impacts are prioritized over returns, treated the same as returns, or are secondary to returns; and (3) disclose how
the Portfolio intends to measure and monitor whether it is achieving ESG related impacts and over what time period. This should include disclosure of the specific metrics or key performance indicators the Portfolio will use. Disclose whether
and where the Portfolio will disclose its progress on achieving its stated
1 Investment Company Names, Release No. IC-35000 (December 10, 2023).
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Page 3
impact. If the Portfolio is not publicly disclosing this information, explain to us why that is appropriate.
Response. The Registrant has revised the Portfolio’s references to its “sustainability impact considerations” to “sustainability considerations.”
6.
Comment. Please add a risk related to investments in depositary receipts to the Principal Risks.
Response. The Registrant respectfully declines to revise the disclosure and notes that the “Foreign Securities and Currencies Risk” in the
Portfolio’s Summary Prospectus addresses the risks related to the Portfolio’s investments in depositary receipts.
7.
Comment. Given that the Portfolio’s investments in derivatives may provide the Portfolio with exposure to U.S. companies, please explain how the
Portfolio’s investments will reflect assets that are exclusive of the U.S. If there are any types of U.S. investments that the Portfolio intends to hold (e.g., for collateral or liquidity management),
please describe them here.
Response. The Registrant notes that the Portfolio’s principal investment strategies and investments do not provide exposure to the U.S. As noted in
the disclosure, the Portfolio may have limited exposure to the U.S. through its investment in certain derivatives or other investments for collateral and cash management purposes. The Registrant, however, believes the use of such investments
for limited time periods and purposes is appropriately disclosed and beneficial to shareholders (i.e., as opposed to holding cash or more expensive and/or less liquid non-US alternatives) and does not
impair the Portfolio’s ability to achieve its investment objective or principal investment strategies.
8.
Comment. If investments in foreign securities is a principal investment strategy, please include a corresponding risk.
Response. The Registrant respectfully declines to revise the disclosure and notes that the “Foreign Securities and Currencies Risk” in the
Portfolio’s summary and statutory prospectus addresses the risks related to investments in foreign securities.
9.
Comment. Please confirm whether the below statement in the “Principal Investment Strategies” section applies to all investment types described in
the paragraph, including depositary receipts. Please also add disclosure stating that these investments are excluded from the Portfolio’s 80% policy regarding investments in sustainable companies.
•
The above referenced investments are not subject to, although they may incorporate, the Portfolio’s sustainability considerations.
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Response. The Registrant has revised the disclosure as shown below. Additionally, the Registrant refers the Staff to its response to Comment 3 with
respect to adopting an 80% policy regarding investments in sustainable companies.
The Advisor may also increase or reduce the World ex U.S. Sustainability Targeted Value Portfolio’s exposure to an eligible company, or exclude a company,
based on shorter-term considerations, such as a company’s price momentum, short-run reversals, and investment characteristics. In assessing a company’s investment characteristics, the Advisor considers ratios such as recent changes in assets
divided by total assets. The criteria the Advisor uses for assessing a company’s investment characteristics are subject to change from time to time. In addition, the Advisor seeks to reduce trading costs using a flexible trading approach that
looks for opportunities to participate in the available market liquidity, while managing turnover and explicit transaction costs. The World ex U.S. Sustainability Targeted
Value Portfolio may gain exposure to companies associated with approved markets by purchasing equity securities in the form of depositary receipts, which may be listed or traded outside the issuer’s domicile country.
10.
Comment: In the “Principal Investment Strategies” section, please revise the disclosure below as indicated:
Relative to a portfolio without these considerations, the Portfolio will exclude, or have less weight
in, securities of companies that, according to the Portfolio’s sustainability impact considerations, may be less sustainable as compared either to other companies in the Portfolio’s investment universe or other companies with similar business
lines.
Response. The Registrant has incorporated clarifying revisions into the referenced disclosure as shown in response to comment 11 below.
11.
Comment. In the “Principal Investment Strategies” section, please briefly summarize the information regarding the sustainability considerations
provided in Item 9. In addition, please summarize in the “Principal Investment Strategies” section how the Portfolio’s exclusionary and over/underweighting policies are applied as well.
Response. The Registrant has revised the disclosure as follows:
The Advisor intends to take into account the impacteffect that companies may have on the environment and other sustainability considerations when making investment decisions for the World ex U.S. Sustainability Targeted Value Portfolio. Relative
to a portfoliofund without these considerations that otherwise has the same investment objective, strategies, and policies as the Portfolio, the Portfolio will exclude, orand have less overall weight in, securities of companies that, according to the
Portfolio’s sustainability impact considerations, may be less sustainable as compared either to other companies in the Portfolio’s
investment universe or other companies with similar business lines. Similarly, relative to a portfolio without sustainability impact considerationssuch a fund, the Portfolio
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will have a higher weight in securities of companies that, according to the Portfolio’s sustainability impact considerations,
may be more sustainable as compared either to other companies in the Portfolio’s investment universe or other companies with similar business lines.
While the Advisor primarily considers. In particular, the Advisor applies the sustainability considerations by adjusting the Portfolio’s composition through
exclusions. The Advisor compares companies in the investment universe and excludes the companies with the highest greenhouse gas emissions intensity, in evaluating sustainability impact, the
Advisor will also consider and companies with the highest potential emissions from fossil fuel reserves,. In addition, the Advisor excludes companies based on sustainability considerations related to coal
reserves, factory farming activities, tobacco, palm oil, cluster munitions manufacturing, landmine manufacturing,and civilian firearms manufacturing revenue, involvement in cluster munitions and landmine
manufacturing, the ownership or operation of private prisons and/or immigrant detention facilities, child labor controversies, and severe
environmental, social, or governance controversies that indicate operations inconsistent with responsible business conduct standards (such as those defined by the UN Global Compact Principles and the OECD Guidelines for Multinational
Enterprises), among other factors. In particular, the Portfolio will exclude companies the Advisor considers to have high greenhouse gas emissions intensity or fossil fuel reserves relative to other issuers. For a more detailed description of these sustainability considerations, see “Applying
the Portfolio’s Sustainability Considerations”. The Advisor may engageengages third party service providers to provide research and/or ratings information relating to the Portfolio’s sustainability
impact considerations with respect to securities in the portfolio, where information is available from such providers.
The Advisor also may use, or supplement third party service provider’s data with,
proprietary research relating to certain sustainability considerations where information is not available or has not been obtained from third party service providers engaged by the Advisor. The World ex U.S. Sustainability
Targeted Value Portfolio may periodically modify, add, or remove certain sustainability impact considerations.
12.
Comment. Please revise the disclosure to state that the Advisor will use third-party providers in the Portfolio’s Summary Prospectus. Additionally,
please add disclosure in the Portfolio’s statutory prospectus regarding how the Advisor will factor in the considerations of the third-party providers. For example, does the Advisor solely rely on an ESG index, ESG scores or data from a
third-party rating organization, proprietary data, or a combination of all three. Please include a summary of the foregoing in the Portfolio’s Summary Prospectus. Please add disclosure regarding whether the ESG criteria are applied to every
investment or only some, and whether other factors are considered and what they are.
Response. The Registrant has revised the disclosure accordingly. Please see the revised disclosure provided in response to comment 11 above.
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13.
Comment. Please revise the following statement to clarify, if accurate, that the Portfolio is able to compare the sustainability of companies that
are not in the same business lines to exclude, or have less weight in, such com