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Domini Social Bond Fund ®

Fund Information

$11.27
Daily Price (NAV)
as of 05/28/2015
Symbol DSBFX
Daily NAV Change $0.01 (0.09%)

Overview

Investor Shares Overview​

Investment Objective

The Fund seeks to provide its shareholders with a high level of current income and total return by investing in bonds and other debt instruments that meet the Fund's social and environmental standards.

Investment Strategy

The Fund normally invests at least 85% of assets in intermediate-term, investment-grade fixed-income securities, including government agency, corporate, mortgage-backed and asset-backed securities, taxable municipal bonds, and U.S. dollar-denominated bonds issued by non-U.S. entities.
 
The Fund seeks to invest up to 10% of its assets in debt instruments and other investments that provide a high level of community impact. These investments may be illiquid, unrated, and may carry greater credit risks than its other holdings.

Management

Investment Advisor and Sponsor: Domini Social Investments LLC
 
Subadvisor: Wellington Management Company LLP. 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.

Social and Environmental Standards

To determine which securities are eligible for investment, Domini evaluates the Fund’s current and potential corporate debt instruments 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.

For noncorporate issuers, Domini seeks to identify investments with a positive impact on communities.

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.

Community Economic Development

The Fund's community economic development focus is in the areas of small business loans and affordable housing for the economically disadvantaged.

Investor Profile

Who Should Invest

  • 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 socially responsible investment standards and its community development emphasis

Who Should Not Invest

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

Performance

Investor Shares Performance

Month-End Returns as of 4/30/15
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (6/1/00)*
DSBFX0.52%2.39%1.17%2.64%3.69%4.57%
BIA1.31%3.56%2.13%3.45%4.42%5.32%
Barclays U.S. Aggregate1.24%4.46%2.60%4.13%4.75%5.69%

Quarter-End Returns as of 3/31/15
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (6/1/00)*
DSBFX1.01%3.38%1.58%2.92%3.85%4.63%
BIA1.32%4.24%2.41%3.62%4.54%5.35%
Barclays U.S. Aggregate1.61%5.72%3.10%4.42%4.93%5.75%
Calendar Year Returns
DSBFXBIA
20143.74%4.12%
2013-1.97%-1.02%
20122.50%3.56%
20115.85%5.97%
20104.74%6.15%
20095.77%6.46%
20085.69%4.86%
20076.00%7.02%
20063.38%4.58%
20051.56%2.01%
20042.81%3.74%
20032.31%3.81%
20028.85%9.51%
20018.34%8.67%

Quarterly Returns
DSBFXBIABUSA
1st Qtr 20151.01%1.32%1.61%
4th Qtr 20141.08%1.20%
3rd Qtr 2014-0.09%0.03%
2nd Qtr 20141.35%1.62%
1st Qtr 20141.36%1.20%
4th Qtr 2013-0.39%-0.14%
3rd Qtr 20130.68%0.76%
2nd Qtr 2013-2.24%-1.78%
1st Qtr 2013-0.02% 0.15%

*Average annual total returns.

Annual Expense Ratio: Gross: 1.24% / Net: 0.95%. Per current prospectus. Domini has contractually agreed to cap Investor share expenses to not exceed 0.95% until 11/30/15, 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 4/30/15
ISSUER% OF PORTFOLIO
Fannie Mae TBA 30 YR (3.5% due 5/13/2045)11.5%
Freddie Mac (0.5% due 5/13/2016)5.9%
Fannie Mae TBA 30 YR (3.0% due 5/13/2045)4.4%
Federal Home Loan Mortgage Cor (3.5% due 5/13/2045)1.7%
Fannie Mae pool AM7067 (3.11% due 1/1/2021)1.6%
Fannie Mae pool 471333 (3.12% due 8/1/2022)1.5%
Fannie Mae pool AM4253 (3.22% due 9/1/2020)1.4%
Fannie Mae pool AM7598 (3.07% due 12/1/2024)1.1%
Fannie Mae pool AM8317 (2.96% due 3/1/2025)1.1%
Fannie Mae pool 471478 (2.61% due 8/1/2022)1.1%
TOTAL31.3%
Sector Weightings as of 12/31/14
SECTOR% OF PORTFOLIO
U.S. Government Agency Obligations42.4%
U.S. Government Agency Mortgage Securities27.0%
Corporate Obligations14.9%
Corporate Mortgage Securities10.7%
Certificates of Deposit3.4%
Cash1.6%
Total100.0%

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

 

Characteristics

All data as of 9/30/2014 unless otherwise noted.

Portfolio Composition by Credit Quality1

AAA 1.19%
AA 79.99%
A 6.02%
BBB 6.54%
BB 0.00%
Not Rated2 6.26%

Portfolio Statistics (as of 9/30/2014)

  DSBFX BIA3
Avg. Effective Maturity (Yrs.) 4.97 5.19
Total Number of Issues (including cash equivalents) 182  
 
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 higher of the two ratings into consideration.
2. Represents insured certificates of deposit and money market instruments with community development financial institutions and cash.
3. Barclays Intermediate Aggregate Index

Commentary

Investor Shares Performance Commentary

The Fund is managed through a two-step process designed to capitalize on the strengths of Domini Social Investments and Wellington Management. Domini develops an approved universe of companies and sets the overall social, environmental and governance standards for the Fund, 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.

Dowload Commentary as a PDF.

Total Returns as of March 31, 2015

  Jan
2015
Feb
2015
Mar
2015
1st Qtr
2015
YTD One
Year
Three
Year*
Five
Year*
Ten
Year*
Since Inception
(6/1/00)*
DSBFX 1.89% -1.18% 0.32% 1.01% 1.01% 3.38% 1.58% 2.92% 3.85% 4.63%
BIA 1.39% -0.52% 0.45% 1.32% 1.32% 4.24% 2.41% 3.62% 4.54% 5.35%
BUSA 2.10% -0.94% 0.46% 1.61% 1.61% 5.72% 3.10% 4.42% 4.93% 5.75%

The Fund’s Investor shares underperformed the Barclays U.S. Aggregate Bond Index for the first quarter, returning 1.01% vs. the benchmark’s 1.61% performance.

Global government bond returns continued to decline from the previous quarter as central banks took measures to stimulate growth and keep deflation at bay. Nevertheless, market volatility was high due to uncertainty over when the US Federal Reserve would begin to hike rates, the extended decline in oil prices, and resurfaced worries about a potential Greek exit from the Eurozone. During the quarter, Wellington focused primarily on establishing general risk exposures in the Fund’s portfolio as well as selecting attractive bonds to fill it.

Wellington positioned the Fund’s portfolio for an expected increase in long-term inflation, which detracted from its performance relative to the benchmark. The Fund’s interest rate positioning as well as its investment grade corporate positioning, driven by security selection within both financials and industrials, both modestly contributed to Fund performance relative to its benchmark. The Fund’s underweight positioning to agency mortgage backed securities pass-throughs on average was slightly additive to performance during the period, as well as the portfolio’s allocation to agency collateralized mortgage obligations (CMOs). Wellington also initiated an overweight to attractive commercial mortgage-backed securities (CMBS), which outperformed duration-equivalent Treasuries for the quarter, thus adding to relative performance. The Fund’s overweight to high yield bonds, including bank loans, benefited performance as these securities rebounded in February. 

Community Impact

The Fund seeks to play a positive role in the economic development of communities, and to finance certain needed public goods, such as affordable housing, education and climate mitigation.

Municipal Bonds: When identifying appropriate municipal bonds for the Fund, we are seeking to make investments that address unmet needs, and are particularly interested in bonds designed to improve healthcare in underserved areas. One such investment is a revenue bond issued by New York- Presbyterian Hospital, based in New York City, one of the nation’s largest not-for-profit, non-sectarian hospitals. The Fund also purchased a bond issued by the State of California to improve school and recreation facilities and a water utility, and a bond issued by Puerto Rico designed to fund a pension plan for government employees.

Affordable Housing: The Fund has a long-term commitment to affordable housing, primarily through the purchase of securities backed by pools of mortgages. The Fund also holds a security issued by Community Reinvestment Fund USA (CRF). CRF purchases existing multifamily affordable housing mortgages in order to recapitalize local affordable housing loan funds. The security held by the Fund helped to finance a family oriented, affordable housing community for farm-worker families.

Green Buildings: The Fund is also seeking to help reduce greenhouse gas emissions through energy efficiency improvements that are low cost and that create value within underlying real estate assets. For example, the Fund holds a bond issued by the Massachusetts Institute of Technology to finance five buildings with strong environmental credentials.

Making a Difference

Local & National Communities

Domini believes that all investments have social and environmental implications. Fixed income investments are no exception. We have developed a five-point scale of community impact to categorize each of our fixed income instruments. Learn more about Domini’s Community Impact Gradient.

Impact-Based Portfolio Weightings as of September 30, 2014
% of Portfolio
High-Impact
 
     Government-Agency Commercial Mortgage Securities focused on Low-Income Housing
4.16%
     Community-Development and Community-Serving Financial Institutions*
3.10%
     Affordable-Housing Commercial Mortgage-Backed Security (Community Reinvestment Fund)
0.26%
     Green-Building Commercial Mortgage-Backed Security
0.65%
Sub-Total of High-Impact
8.17%
Medium Impact
 
     Government-Agency General and Mortgage Securities (Housing)
70.57%
Low Impact
 
     General Purpose Corporate Obligations that Meet Domini's Standards
15.68%
Cash
5.58%
TOTAL
100%
*Insured certificates of deposit and money market instruments
 

Community Development Financial Institutions

We believe that healthy economies and communities must be built on a strong foundation of fairness and opportunity. The Domini Social Bond Fund invests in a number of Community Development Financial Institutions (CDFIs)—banks and credit unions whose primary missions are to serve low-income, minority, women, and immigrant communities historically underserved by traditional financial institutions.

Southern Bancorp

Rural Development and Public Goods in the South

Founded in 1986, Southern Bancorp is the nation’s largest rural development bank with a long-term commitment to community revitalization through efforts such as poverty reduction, education, healthcare, housing, and leadership development. Southern works in isolated rural communities in Arkansas and Mississippi, where the poverty rate exceeds 30 percent and the unemployment rate exceeds 15 percent...

Self-Help Credit Union

Promoting Home Ownership and Healthy Food Systems in Low-Income Communities

Since the foreclosure crisis, Self-Help Credit Union and its policy affiliate, the Center for Responsible Lending have been active in national and regional efforts to stabilize neighborhoods hard-hit by foreclosure, providing responsible housing loans, foreclosure prevention and recovery services, and policy research and advocacy to fight against predatory lending practices, including payday-lending and check-cashing services...

Hope Credit Union

Serving the Underserved in the Mid-South

Hope Credit Union provides financial services to underserved communities in four of the six states with the country’s lowest median household incomes: Mississippi, Louisiana, Tennessee, and Arkansas. Thousands of residents of these states have lost homes and businesses due to hurricanes and flooding, and Hope helps rebuild affected communities through its affordable financial products and services...

Financing Minority Communities

We believe that healthy economies and communities must be built on a strong foundation of fairness and opportunity. The following CDFIs in the Fund’s portfolio all serve minority communities that are often excluded from the mainstream financial industry...