Questions?

1-800-582-6757

Monday - Friday
9 a.m. - 6 p.m. EST

Send us an email

Domini Impact Bond Fund sm

Fund Information

$11.23
Daily Price (NAV)
as of 11/21/2017
Symbol DSBIX
Daily NAV Change $0.01 (0.09%)

Key Documents

Overview

Institutional Shares Overview​

Institutional shares are available to qualified endowments, foundations, religious organizations, nonprofit entities, individuals and certain corporate or similar institutions that meet the minimum investment requirements.

Investment Objective

The Fund seeks to provide its shareholders with a high level of current income and total return.  

Investment Strategy

As a primary strategy, the Fund’s investment approach incorporates Domini’s social and environmental standards. 

The Fund normally invests at least 80% of its assets in investment-grade fixed-income securities, including government, corporate, mortgage-backed and asset-backed securities, and U.S. dollar-denominated bonds issued by non-U.S. entities.  The Fund maintains an effective duration within two years (plus or minus) of the portfolio duration of the securities comprising the Barclays U.S. Aggregate Bond Index­­.

Domini evaluates potential corporate debt instruments against social and environmental standards based on:

  • the businesses in which the issuer engages
  • the quality of its relations with key stakeholders, including communities, customers, ecosystems, employees, investors, and suppliers

With respect to noncorporate debt instruments, the Fund seeks to focus on three key themes:

  • Increasing access to capital for those historically underserved by the mainstream financial community
  • Creating public goods for those most in need
  • Filling capital gaps left by current financial practice

In particular, the Fund seeks noncorporate debt instruments that support:

  • Affordable housing
  • Small business development
  • Community revitalization
  • Rural Development
  • Education
  • The environment
  • Healthcare

Domini may determine that a security is eligible for investment even if its profile reflects a mixture of positive and negative social and environmental characteristics. Please see Domini’s Impact Investment Standards for further details.

Management

The Fund is managed through a two-step process designed to capitalize on the strengths of Domini Impact Investments and Wellington Management Company. Domini sets social and environmental guidelines and objectives for each asset class, and develops an approved universe of companies, and Wellington utilizes proprietary analytical tools to manage the portfolio. Wellington Management Company has been serving as submanager of the Fund since January 7, 2015.  Campe Goodman, CFA, is primarily responsible for the day-to-day management of the Fund, assisted by other members of Wellington Management's US broad market team.

Investor Profile

Who Should Invest

  • The Institutional share class of the Domini Impact Bond Fund is available to investors that meet the minimum investment requirements, have been approved by the distributor, and fall within the following categories: endowments, foundations, religious organizations and other nonprofit entities, individuals, retirement plan sponsors, family office clients, private trusts, certain corporate or similar institutions, or omnibus accounts maintained by financial intermediaries.**
  • Investors seeking a high level of current income and total return
  • Investors seeking exposure to the bond market to diversify their portfolio
  • Investors who wish to support the Fund's responsible investment standards 

Who Should Not Invest

  • Investors unwilling or unable to accept fluctuations in share price due to risks associated with the bond market

Performance

Institutional Shares Performance
 

Month-End Returns as of 10/31/17
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (6/1/00)*
DSBIX3.65%1.25%2.47%1.82%3.42%4.24%
Bloomberg Barclays U.S. Aggregate3.21%0.90%2.40%2.04%4.19%5.16%

Quarter-End Returns as of 9/30/17
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (6/1/00)*
DSBIX3.59%0.31%2.70%1.82%3.49%4.26%
Bloomberg Barclays U.S. Aggregate3.14%0.07%2.72%2.07%4.28%5.18%

Calendar Year Returns
DSBIXBBUSA
20163.66%2.65%
2015-0.17%0.55%
20143.87%5.97%
2013-1.76%-2.02%
20122.89%4.21%
20115.85%7.84%
20104.74%6.56%
20095.77%5.93%
20085.69%5.24%
20076.00%6.96%
20063.38%4.33%
20051.56%2.43%
20042.81%4.34%
20032.31%4.11%
20028.85%10.27%
20018.34%8.42%

Quarterly Returns
DSBIXBBUSA
3rd Qtr 20170.98%0.85%
2nd Qtr 20171.60%1.45%
1st Qtr 20170.96%0.82%
4th Qtr 2016-3.15%-2.98%
3rd Qtr 20161.24%0.46%
2nd Qtr 20162.43%2.21%
1st Qtr 20163.21%3.03%
4th Qtr 2015-0.53%-0.57%
3rd Qtr 20151.32%1.23%
2nd Qtr 2015-2.00%-1.68%
1st Qtr 20151.08%1.61%
4th Qtr 20141.06%1.79%
3rd Qtr 2014-0.02%0.17%
2nd Qtr 20141.43%2.04%
1st Qtr 20141.36%1.84%
4th Qtr 2013-0.22%-0.14%
3rd Qtr 20130.66%0.57%
2nd Qtr 2013-2.16%-2.32%
1st Qtr 2013-0.03%-0.12%

*Average annual total returns.

Institutional shares were not offered prior to 11/30/11. All performance information for time periods beginning prior to that date is the performance of the Investor shares, which has not been adjusted to reflect the lower expenses of the Institutional shares.

Annual Expense Ratio: Gross: 1.14% / Net: 0.55%. Per current prospectus. Domini has contractually agreed to cap Institutional share expenses to not exceed 0.65% until 11/30/17, subject to earlier modification by the Fund’s Board of Trustees. See prospectus for details. The Funds’ performance would have been lower had these fees not been waived

Holdings

Ten Largest Holdings as of 10/31/17
ISSUER% OF PORTFOLIO
Fed Home LN Discount NT (0.01% due 11/10/2017)3.9%
Fannie Mae TBA 30 YR (3.5% due 11/13/2047)3.8%
Fannie Mae (1.5% due 6/22/2020)2.9%
Fed Home LN Discount NT (0.01% due 11/22/2017)2.4%
Ginnie Mae II TBA 30 YR (3.5% due 11/20/2047)2.3%
Freddie Mac TBA 30 YR (3.5% due 11/13/2047)2.2%
Ginnie Mae II TBA 30 YR (3.0% due 11/20/2047)1.9%
Fannie Mae (5.625% due 7/15/2037)1.8%
Fed Home LN Discount NT (0.01% due 11/24/2017)1.7%
Fannie Mae TBA 15 YR (3.0% due 11/16/2032)1.5%
TOTAL24.4%
Sector Weightings as of 9/30/17
SECTOR% OF PORTFOLIO
Mortgage Backed Securities52.3%
Investment Grade Credit30.7%
Commercial Mortgage Backed Securities7.4%
Bank Loans6.3%
U.S. Govt Agencies6.0%
High Yield Credit4.7%
Developed Non U.S. Dollar Denom.2.4%
Tax Exempt Municipal2.5%
Asset Backed Securities1.0%
Cash & Cash Equivalents-13.3%
Total100%

View the most recent quarterly holdings report filed with the Securities and Exchange Commission.

Characteristics

All data as of 9/30/2017 unless otherwise noted.

Portfolio Composition by Credit Quality1

Aaa 5.82%
Aa 65.17%
A 8.54%
Baa 19.03%
Ba 6.45%
B 4.82%
Below B 0.24%
Cash & Cash Offsets2 -13.32%
Not Rated3 3.26%

Portfolio Statistics

  DSBIX BUSA4
Total Number of Holdings5 384 9,461
Years to Worst 8.10 7.84
Effective Duration (years) 6.05 5.84
 
1. Credit-quality ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). Credit-quality ratings for each issue are obtained from Moody's Investors Service (Moody's) and Standard & Poor's (S&P). When two bonds receive different ratings from Moody’s and S&P, we take the lower of the two ratings into consideration.  Ratings do not apply to the Fund itself or to Fund shares. Ratings may change.
2. May include Cash, Cash Equivalents (defined as issued with 1 year to maturity), Trade Receivables/Payables as of the trade date (not settlement date), STIF Instruments, and derivative cash offsets.
3. Securities that are not rated by either agency are listed as "Not Rated."
4. Barclays U.S. Aggregate Index
5. Excludes currency forwards, currency futures, currency options and cash offsets.
 

Commentary

Institutional Shares Performance Commentary

The Fund is managed through a two-step process designed to capitalize on the strengths of Domini Impact Investments and Wellington Management Company. Domini sets social and environmental guidelines and objectives for each asset class, and develops an approved universe of companies, and Wellington utilizes proprietary analytical tools to manage the portfolio. Wellington Management Company has been serving as submanager of the Fund since January 7, 2015.

Download Commentary as a PDF.

Total Returns as of September 30, 2017

  July
2017
Aug
2017
Sep
2017
3rd Qtr
2017
YTD One
Year
Three
Year1
Five
Year1, 2
Ten
Year1, 2
Since Inception
(6/1/00)1, 2
DSBIX 0.40% 1.00% -0.42% 0.98% 3.59% 0.31% 2.70% 1.82% 3.49% 4.26%
BBUSA3 0.43% 0.90% -0.48% 0.85% 3.14% 0.07% 2.72% 2.07% 4.28% 5.18%

Market Overview

Global bond markets generated positive returns in the third quarter. Escalating geopolitical tensions between the U.S. and North Korea and serial disappointments in inflation data helped to contain the increase in sovereign yields prompted by central bank policy normalization. Generally strong economic data, a rally in commodities prices, and continued demand for yield-producing assets supported credit markets and spreads tightened further. Most developed market currencies strengthened versus the U.S. dollar as political uncertainty and continued skepticism about the U.S. Federal Reserve’s (Fed) projected rate-hiking path weighed on the greenback.

Monetary policy continued along an incrementally more hawkish path during the period. The Fed announced it would begin tapering its asset purchases starting in October and continued to project another rate hike later this year. The European Central Bank (ECB) attempted to push back against its recent currency strength which has hampered its ability to achieve higher inflation. The ECB is expected to announce details of its own tapering intentions at its October meeting. Strong growth and inflation prompted the Bank of Canada to hike rates for the first time in seven years and hint that more rate hikes may be forthcoming. Meanwhile, the Bank of England signaled it is close to hiking rates to contain surging inflation despite uncertainty about the post-Brexit outlook.

U.S. GDP growth accelerated to 3.0% in the second quarter, buoyed by consumer spending and investment. However, core inflation failed to engage higher despite ongoing health in the labor market. Eurozone economic data showed continued improvement in domestic-oriented sectors, with strength in both business and consumer confidence. Japanese GDP expanded at a 4% annualized rate in the second quarter—the fastest pace in more than three years. China’s official Purchasing Managers’ Index (PMI) improved to its strongest level in more than five years, while property sales continued to drift lower. Despite continued labor-market strength and a rebound in commodities prices, inflation data across most developed market economics remained subdued.

 

Performance Commentary

The Fund’s Institutional shares outperformed the Bloomberg Barclays U.S. Aggregate Bond Index for the third quarter, returning 0.98% vs. the benchmark’s 0.85% performance. The Fund’s exposure to agency mortgage-backed securities (MBS)—including pass-throughs and Fannie Mae (FNMA) Delegated Underwriting and Servicing (DUS) affordable housing bonds—and investment-grade credit represented the main contributors to outperformance, while its duration posture detracted from relative performance.

The Fund’s positioning within agency MBS had a favorable impact on performance during the quarter. It held an overweight to agency pass-throughs, given low interest-rate volatility and greater visibility on the Fed’s balance sheet intentions, and maintained an allocation to collateralized mortgage obligations (CMOs) and FNMA DUS bonds for their attractive income and convexity profiles. Mortgages benefitted from the extremely low level of volatility, which helped tighten spreads, and amid generally range-bound interest rates, which improved their carry. The sector’s strong performance was especially notable in light of the Fed’s September announcement that it will officially begin its balance-sheet normalization process in October.

Based on attractive valuations, the Fund also held an overweight to high-quality commercial mortgage-backed securities (CMBS), which was also additive to relative results. Most sectors of the market seemed to look past the negative retail headlines, implying that CMBS has already discounted a lot of the negative news in that space. Synthetic CMBX subordinate indices, on the other hand, came under pressure due to their exposure to lower quality shopping malls.

The submanager continued to favor high-yield credit and bank loans over investment-grade credit based on attractive valuations and low default expectations, and maintained an allocation to BB-rated high-yield issuances. Additionally, the Fund’s submanager used high-yield derivatives as a source of liquidity and to manage overall portfolio risk. The global high-yield sector generated strong gains, as generally strong economic data and a rally in commodities prices helped to offset escalating geopolitical tensions, and spreads tightened further. Bank loans also generated a positive total return, and given their floating-rate nature, they may benefit more than fixed-rate sectors from tighter U.S. monetary policy, as their coupons reset higher. High-yield and bank-loan positioning both contributed positively to the Fund’s relative returns, particularly in industrials.

Given the better opportunities in higher-yield sectors, the Fund maintained an overall underweight to investment-grade corporate bonds. Within the investment-grade sector, the Fund continued to favor taxable municipals. Generally solid corporate earnings and continued demand for yield-producing assets supported credit markets and spreads tightened further. Credit positioning was a positive contributor to relative results overall, as a negative impact from an underweight to industrials was more than offset by exposure to the banking subsector and the overweight to taxable municipals.

Within Government issues, the Fund remained positioned for rising inflation expectations, as the submanager continued to believe the market was underpricing inflation expectations. Inflation positioning was neutral for relative performance, as mixed inflation data and ongoing concerns about the domestic “reflation trade” were balanced by continued strong economic data and renewed optimism around prospects for tax reform, leading inflation-protected instruments to outperform duration-equivalent nominal Treasuries. The Fund held modest opportunistic interest-rate positions during the quarter, in both short- and long-term rates. Tactical duration positioning had a negative impact on relative performance, primarily from a tactical short position.

 

Community & Environmental Impact

As is true of all Domini mutual funds, all securities held in the Bond Fund meet Domini’s social and environmental standards. Non-corporate fixed-income investments offer unique opportunities to support the creation public goods, help address economic disparities, and build a more sustainable and equitable society. Domini considers bonds that address affordable housing, economic development, public education, nonprofit healthcare, and climate change to be especially impactful. As of September 30, such securities represented 68% of the Fund’s total portfolio1, as shown in the table:

High-Impact Area Portfolio Percentage1
Affordable Housing2 52.8%
Economic Development 3.5%
High Social Impact (Healthcare, Education, etc.) 6.4%
Green Bonds 3.6%
Domini Highly Rated Corporate Obligations 1.4%
Community Development Financial Institution Certificates of Deposit 0.3%

During the third quarter, the Fund initiated several new investments in high-impact securities, including a $500,000 investment in TD Bank Group’s inaugural green bond, which will help build projects across North America that support the transition to a low-carbon economy. This may include funding for projects in areas like renewable-energy generation, energy-efficiency management, green infrastructure and sustainable land use.

1. Excludes cash offsets, futures and swaps
2. Affordable Housing includes affordable housing mortgage-backed securities [13.3%], derivatives (TBA or when issued securities) [17.1%], multifamily low-income rental units (FNMA DUS) [14.0%], and U.S. agency (FNMA and FHLB) general obligations [8.3%].

Making a Difference

Domini Impact Investments pursues two long-term goals: universal human dignity and ecological sustainability.

Our Impact Investment Standards are a fundamental part of our investment approach. The Domini Impact Bond Fund uses the same social and environmental standards applied across all of our mutual funds.

There are many opportunities within fixed income for lasting impact. When evaluating investment opportunities, it is important to ask two questions: To whom am I loaning my money? For what purpose?

When answering these questions, we keep three key goals in mind:

  • Increasing access to capital, especially for those historically underserved by the mainstream financial community
  • Creating public goods for those most in need
  • Filling capital gaps unmet by current financial practices

These goals stem from our belief that healthy economies must be built on a strong foundation of fairness and opportunity for all.

While all of our fixed-income investments meet our Impact Investment Standards, we consider many to be especially high impact. These include investments that support a ordable housing, economic development, public education, nonprofit healthcare, and climate change mitigation and adaptation, among others.