Domini International Social Equity Fund

As of 4/30/16. The Fund's Institutional Share Class was rated against 297 and 250 U.S. domiciled Foreign Large Value funds for the last 3 and 5 years, respectively, based on risk-adjusted return. Past performance is no guarantee of future results. View more complete rating and risk information.
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Domini International Social Equity Fund sm

Fund Information

$7.46
Daily Price (NAV)
as of 5/27/2016
Symbol DOMOX
Daily NAV Change $0.00 (0.00%)

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.

The Domini International Social Equity Fund helps you access a world of investment opportunity, while using your investment dollars to encourage corporate responsibility. Investments in companies across Europe, the Asia-Pacific region, and throughout the rest of the world let you take advantage of broad international diversification with the convenience of one mutual fund.

Investment Objective

The Fund seeks to provide its shareholders with long-term total return.

Investment Strategy

The Fund invests primarily in stocks of companies in Europe, the Asia-Pacific region, and throughout the rest of the world that meet Domini Social Investments’ social and environmental standards.

Subject to these standards, Wellington Management Company, LLP, the Fund’s subadvisor, seeks to add value using a diversified quantitative stock selection approach, while managing risk through portfolio construction.  

Management

Investment Advisor and Sponsor: Domini Social Investments LLC.

Subadvisor: Wellington Management Company, LLP.

Shareholder Activism

The Fund seeks to use its position as a shareholder to raise issues of social and environmental performance with corporate management.

Social and Environmental Standards

Domini evaluates the Fund’s potential investments against its social and environmental standards based on the businesses in which they engage, as well as on the quality of their relations with key stakeholders, including communities, customers, ecosystems, employees, investors, and suppliers.

Domini may determine that a security is eligible for investment even if a corporation’s profile reflects a mixture of positive and negative social and environmental characteristics.

Investor Profile

Who Should Invest:

  • The Institutional share class of the Domini International Social Equity 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 long-term growth of capital.
  • Investors committed to the Fund’s socially responsible investment standards.

Who Should Not Invest:

  • Investors unwilling or unable to accept moderate to significant fluctuations in share price.

Performance

Institutional Shares Performance

Month-End Returns as of 4/30/16
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (12/27/06)*
DOMOX3.16%-3.76%4.52%3.97%NA0.57%
MSCI EAFE0.04%-8.89%1.92%2.16%NA1.26%
Quarter-End Returns as of 3/31/16
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (12/27/06)*
DOMOX1.38%-2.28%5.75%4.86%NA0.39%
MSCI EAFE-2.88%-7.87%2.68%2.76%NA0.94%
Calendar Year Returns
DOMOXMSCI EAFE
20152.28%-0.39%
20140.95%-4.48%
201326.35%23.29%
201222.53%17.90%
2011-13.45%-11.73%
201011.25%8.21%
200928.68%32.45%
2008-46.65%-43.06%
20072.22%11.62%

Quarterly Returns
DOMOXMSCI EAFE
1st Qtr 20161.38%-2.88%
4th Qtr 20152.40%4.75%
3rd Qtr 2015-7.45%-10.19%
2nd Qtr 20151.71%0.84%
1st Qtr 20156.11%5.00%
4th Qtr 2014-1.44%-3.53%
3rd Qtr 2014-4.63%-5.83%
2nd Qtr 20142.80%4.34%
1st Qtr 20140.37%0.77%
4th Qtr 20136.40%5.75%
3rd Qtr 201311.31%11.61%
2nd Qtr 2013-0.69% -0.73%
1st Qtr 20137.42%5.23%

*Average annual total returns.

Institutional shares were not offered prior to 11/30/12. All performance information for time periods beginning prior to 11/30 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: 1.15% / Net: 1.15%. Per current prospectus. Domini has contractually agreed to cap Institutional share expenses to not exceed 1.27% until 11/30/16, 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 4/30/16
COMPANY% OF PORTFOLIO
Sanofi2.1%
Central Japan Railway Co.2.0%
Orange2.0%
AXA SA2.0%
Norsk Hydro ASA1.9%
Svenska Cellulosa AB SCA1.8%
J Sainsbury plc1.8%
ING Groep NV1.7%
Renault SA1.7%
Allianz SE1.7%
TOTAL18.6%

Sector Weightings as of 3/31/16
SECTOR% OF PORTFOLIO
Financials27.1%
Industrials15.8%
Consumer Discretionary14.1%
Consumer Staples10.4%
Health Care8.4%
Information Technology7.6%
Telecommunication Services7.2%
Materials6.0%
Energy2.1%
Utilities1.3%
Total100.0%
Country Diversification as of 3/31/16
COUNTRY% OF PORTFOLIO
Japan18.8%
United Kingdom16.8%
France11.9%
Australia7.6%
Germany7.3%
Switzerland6.2%
Netherlands5.3%
Sweden2.7%
Italy2.5%
Denmark2.4%
South Korea2.3%
Finland1.9%
Hong Kong1.8%
Norway1.7%
South Africa1.6%
Other9.4%
Total100.0%

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

Formerly the Domini European PacAsia Social Equity Fund.

Characteristics

Portfolio Overview

Socially screened, mid- to large-capitalization international equity fund.

 

Investment Style:

Blend

Weighted Average Market Capitalization:

Large

Portfolio Statistics

  DOMIX MSCI EAFE*
Price-to-Earnings Ratio (projected) 12.2 12.8
Price-to-Book Ratio 1.2 1.5
Beta (projected) 1.02 --
R-squared (projected) 0.98 --
Total Number of Holdings 147 --

All data as of 3/31/16.

*The Morgan Stanley Capital International Europe, Australasia and Far East Index (MSCI EAFE) is an unmanaged index of common stocks. Investors cannot invest directly in an index.

Definitions:

The Price/Earnings Ratio is a stock’s current price divided by the company’s trailing 12-month earnings per share. The Price/Book Ratio is used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share. The P/E and P/B ratio of a fund is the weighted average of the price/earnings and price/book ratios of the underlying stocks in a fund’s portfolio. 

R-squared measures how a fund’s performance correlates with a benchmark index’s performance and shows what portion of it can be explained by the performance of the overall market/index. R-squared ranges from  0, meaning no correlation, to 1, meaning perfect correlation.

Beta is a measure of the volatility of a fund relative to its benchmark index. A beta greater (less) than 1 is more (less) volatile than the index.

Commentary

Institutional Shares Performance Commentary

The Fund invests primarily in mid- to large-cap equities across Europe, the Asia-Pacific region, and throughout the rest of the world. It is managed through a two-step process designed to capitalize on the strengths of Domini Social Investments and Wellington Management Company, the Fund’s subadvisor. Domini creates an approved list of companies based on its social, environmental and governance analysis, and Wellington seeks to add value using a diversified stock selection approach, while managing risk through a systematic and disciplined portfolio construction process. Download Commentary as a PDF.

Total Returns as of March 31, 2016

  Jan
2016
Feb
2016
March
2016
1st Qtr
2016
YTD One
Year
Three
Year1
Five
Year1
Since Inception
(12/27/06)1†
DOMOX -4.68% -2.31% 8.86% 1.38% 1.38% -2.28% 5.75% 4.86% 0.39%
MSCI EAFE -7.22% -1.80% 6.59% -2.88% -2.88% -7.87% 2.68% 2.76% 0.94%

Market Overview

Global equities experienced a tumultuous start to the year after Chinese stocks plunged in January, sparking another global risk selloff. In addition to ongoing worries about the state of the world’s second largest economy, fears that yuan weakness could spark a global deflation resurfaced. Against this backdrop, many of the world’s major central banks once again extended their accommodative monetary policies in an effort to support risk assets, including the Bank of Japan (BOJ the People’s Bank of China (PBOC) and the European Central Bank (ECB). Meanwhile, the U.S. Federal Reserve Bank (Fed) surprised markets by lowering its inflation forecast for the year and suggesting two, rather than four, rate hikes this year. Against this more cautionary stance, the U.S. dollar depreciated against most foreign currencies.
 
European equities fell for the third time in four quarters, despite mixed, but encouraging economic data. Eurozone GDP grew for the eleventh straight quarter and unemployment dropped to its lowest level since August 2011. However, manufacturing activity remained subdued, suggesting that industrial and export-related segments of the economy are slowing in response to sluggish global growth. In Germany, manufacturing activity grew at its slowest pace in in 16 months, as worries of a global economic slowdown dragged investor confidence to a 16-month low. Italian stocks lagged, as unemployment remained elevated and GDP growth slowed to a near stall. More positive signals were seen elsewhere. In France, fourth-quarter GDP grew faster than initially expected, and business confidence unexpectedly jumped to a five-year high. Stocks in the United Kingdom led the region against a solid economic backdrop, with wages rising and jobless claims dropping to a 40-year low, even as consumer confidence hit its lowest level since 2014 amid concerns over a possible UK exit from the European Union.
 
Stocks sank in the more export-driven economies of the Asia-Pacific region, led lower by Japan, as the Bank of Japan’s adoption of negative interest rates was not enough to overcome poor economic data. Manufacturing activity continued to decline, dragged lower by weakening exports, and fourth-quarter GDP contracted, hurt by weak domestic consumption. Data was more encouraging in Australia, where fourth-quarter GDP grew more than expected thanks to strength in household consumption, public spending, and construction.
 
Stocks saw solid gains in emerging markets, driven by outperformance in Latin America and Europe, the Middle East, and Africa (EMEA). After declining sharply at the start of the year, emerging markets saw a strong rebound in the second half of the quarter, supported by a recovery in commodities and deferred expectations of monetary tightening, as strength of the U.S. dollar eased. Even though economic data continued to disappoint, Brazil led the region higher, as equities rallied amid the increased likelihood of a political policy shift ahead of the 2018 elections. 
 

Fund Performance

For the quarter, the Fund’s Institutional shares gained 1.38%, significantly outperforming the MSCI EAFE Index, which declined 2.88%. The primary driver of outperformance was security selection, particularly within the financials, consumer discretionary, and telecommunication services sectors. This was more than enough to offset weak stock selection in the industrials sector and a negative contribution from sector allocations, as underweights to the energy and consumer staples sectors posed a slight hindrance to relative performance.
 
The Fund’s out-of-benchmark emerging market and Latin American positions made a positive contribution to relative performance this quarter. The top contributor was BM&FBovespa, a stock exchange based in São Paulo, Brazil, which returned 55.9%. The company benefited from elevated prospects of political reforms, resulting from the kickbacks scandal involving the current Brazilian administration, as the company benefits from improving market sentiment. The stock has also benefited from rumors of a potential merger with CETIP. Brazilian bank Banco do Brasil also made a strong positive contribution, rising 28.8%. The Fund also benefited from strong stock selection in Japan. 
 
Several of the Fund’s other top contributors this quarter are based in Australia, where security selection was especially strong. These included TPG Telecom (+21.3%), BlueScope Steel (+45.8%), and Flight Centre Travel Group (+16.2%).
 
Security selection was also strong among U.K. based companies. British supermarket chain Wm Morrison Supermarkets (“Morrisons”) was another top contributor, gaining 30.6%. The Fund also benefitted from not holding British multinational banking group HSBC, which declined 18.5%. HSBC is not eligible for investment by the Domini Funds due to concerns related to money laundering and risk management.
 
Partially offsetting these contributions, top detractors from relative performance this quarter included Finnish communications and information technology company Nokia (-16.6%), which faced headwinds in the wireless and network markets in an otherwise strong quarter. The company’s stock was also negatively impacted by a ruling in its favor issued by the International Court of Arbitration in a patent dispute with Samsung. The verdict was significantly less than consensus expectations, and may also affect Nokia’s follow-on agreements with other smartphone manufacturers, such as Apple. Japanese auto manufacturer Honda Motor (-17.4%), French insurance firm AXA (-14.2%), and German wind-turbine manufacturer Nordex (-22.8%) were also top detractors from the Fund’s relative performance. Nordex issued 2016 sales guidance below what analysts had previously forecast, as management remained cautious on the anticipated revenue contribution from its acquisition of Acciona Windpower, stating that they would have limited details on the profitability of Acciona’s projects until the deal was completed in April.

Making a Difference

Domini engages in direct dialogue with corporations in our portfolios and files shareholder proposals on a broad range of social, environmental, and corporate governance issues. Shareholder activism — the practice of active ownership — lies at the heart of what we believe responsible investing is all about. Here are a few ways your investment in the Domini Funds has made a difference. For more stories, click here.

United Nations Includes Corporate Sustainability Reporting in its Sustainable Development Goals

In September 2015, the United Nations’ General Assembly adopted its 2030 Agenda for Sustainable Development. In meetings with UN delegates in 2012 and 2013, we explained that the private sector and, in particular, multinational corporations, will need to play an important role if these ambitious “Sustainable Development Goals” are to be realized.

Addressing Corporate Tax Avoidance

One of the most important areas of corporate social responsibility has gone largely ignored, until now. The headlines are filled with stories of aggressive strategies by corporations to minimize or eliminate their tax payments, primarily through the use of offshore tax havens. Countries around the world are losing billions in tax revenues, all in the name of shareholder value.

Tax avoidance weakens societies and threatens long-term wealth creation. That is why Domini is taking a lead role in asking corporations to adopt more responsible and transparent tax strategies.

Our Position on Fossil Fuel Owners and Producers

For many years, Domini has incorporated concerns about the environmental risks of companies owning and producing fossil fuels into our investment standards. Over time, we have gradually eliminated an increasing number of these firms from our holdings as our concerns about a variety of environmental and safety issues, including climate change, have increased.