Domini Impact Equity Fund ℠ - Institutional Shares

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Quick Facts

$23.74

Daily Price (NAV)
Symbol
DIEQX
Daily NAV Change
$0.18 (0.76%)

Manager:

Domini Impact Investments LLC

Submanager:

Wellington Management Company LLP

Symbol:

DIEQX

CUSIP:

257132852

Fund Type:

Diversified large-cap equity, socially screened

Inception Date:

Fund: 6/3/91

Institutional shares: 11/28/08

Net Assets:

Fund: $834.2 Million

Institutional shares: $139.4 Million

as of 3/31/18

Annual Expense Ratio 1

Gross: 0.74%

Net: 0.74%

Initial Sales Fee:

None (no-load)

Minimum Initial Investment: 2

$500,000

Fund Distributions

Dividends:

Quarterly

Capital Gains:

Annually

Institutional Shares Overview

Institutional shares are available to endowments, foundations, religious organizations, nonprofit entities, individuals, retirement plan sponsors, family office clients, private trusts, certain corporate or similar institutions, or omnibus accounts maintained by financial intermediaries that meet the minimum initial investment requirements. Please see the Fund's prospectus for further details, or call 1-800-498-1351.

Socially and environmentally concerned investors have social, as well as financial, objectives. The Domini Impact Equity Fund seeks to meet these objectives by offering a diversified stock portfolio for long-term capital appreciation that is consistent with social and environmental priorities.

Investment Objective

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

Investment Strategy

The Fund invests primarily in stocks of U.S. companies that meet Domini Impact 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.

Shareholder Activism

The Fund also advances its social and environmental objectives through proxy voting, dialogue with corporations, and the filing of shareholder resolutions

Social and Environmental Standards

Domini evaluates the Fund’s current and 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 Impact 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.

Risks

An investment in the Domini Impact Equity Fund is not a bank deposit and is not insured. You may lose money. An investment in the Fund is also subject to market, sector concentration, style, and foreign investing risks. Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing security regulations and accounting standards, limited public information, possible changes in taxation, and periods of illiquidity. 

The reduction or withdrawal of historical financial market support activities by the U.S. Government and Federal Reserve, or other governments/central banks could negatively impact financial markets generally, and increase market risk which could adversely affect the Fund’s returns.

1. Domini Impact Investments LLC has contractually agreed to waive certain fees and/or reimburse certain ordinary operating expenses in order to limit Institutional share expenses to 0.74% of its average daily net assets per annum until 11/30/18, absent an earlier modification by the Fund’s Board. Investors may meet the minimum initial investment amount by aggregating up to three separate accounts under the same registration within the Institutional share class of a Fund.

Accounts will generally not be established for omnibus or other accounts for which Domini provides recordkeeping and other shareholder services or for which the Fund is required to pay any type of administrative payment per participant account.

The Fund may change any of the policies described above at any time. 

2. Investors may meet the minimum initial investment amount by aggregating up to three separate accounts within the Institutional share class of a Fund.

Note: On 11/30/06, the Fund, formerly an index fund, transitioned to an active management strategy. 

Although the Domini Impact Equity Fund Institutional shares are no-load, certain fees and expenses apply to a continued investment and are described in the prospectus. 

The Fund's returns, quoted above, represent past performance after all expenses, which is no guarantee of future results. Investment return, principal value, and yield will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Each Fund charges a 2.00% redemption fee on sales or exchanges of shares made less than 30 days after the settlement of purchase or acquisition through exchange, with certain exceptions. See the applicable prospectus for further information. 

The performance quoted above does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return is based on the Fund’s net asset values and assumes all dividends and capital gains were reinvested. An investment in the Domini Impact Equity Fund is not a bank deposit and is not insured. You may lose money. An investment in the Fund is subject to market, sector concentration, style, and foreign investing risks. 

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Performance

Institutional Shares Performance

Month-End Returns as of 4/30/2018
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YTD 1YR 3 YR* 5 YR* 10 YR* SINCE INCEPTION
(6/3/91)*
DIEQX -1.14% 7.72% 5.41% 9.97% 7.20% 8.31%
S&P 500 -0.38% 13.27% 10.57% 12.96% 9.02% 9.60%

*Average annual total returns.

Quarter-End Returns as of 3/31/2018
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YTD 1YR 3 YR* 5 YR* 10 YR* SINCE INCEPTION
(6/3/91)*
DIEQX -0.63% 9.37% 5.71% 10.59% 7.81% 8.36%
S&P 500 -0.76% 13.99% 10.78% 13.31% 9.49% 9.61%

*Average annual total returns.

Calendar Year Returns
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DIEQX S&P 500
2017 15.80% 21.83%
2016 11.66% 11.96%
2015 -6.97% 1.38%
2014 14.40% 13.69%
2013 33.46% 32.39%
2012 11.84% 16.00%
2011 1.12% 2.11%
2010 14.25% 15.06%
2009 36.22% 26.46%
2008 -37.88% -37.00%
2007 1.46% 5.50%
2006 12.58% 15.79%
2005 2.03% 4.91%
2004 9.26% 10.88%
2003 27.13% 28.69%
2002 -20.69% -22.10%
2001 -12.76% -11.88%
2000 -15.05% -9.11%
1999 22.63% 21.04%
1998 32.99% 28.58%
1997 36.02% 33.36%
1996 21.84% 23.07%
1995 35.17% 37.50%
1994 -0.36% 1.26%
1993 6.54% 10.08%
1992 12.10% 7.68%
Quarterly Returns
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DIEQX S&P 500
1st Qtr 2018 -0.63% -0.76%
4th Qtr 2017 4.91% 6.64%
3rd Qtr 2017 4.56% 4.48%
2nd Qtr 2017 0.34% 3.09%
1st Qtr 2017 5.21% 6.07%
4th Qtr 2016 4.05% 3.82%
3rd Qtr 2016 7.68% 3.85%
2nd Qtr 2016 -1.81% 2.46%
1st Qtr 2016 1.49% 1.35%
4th Qtr 2015 2.37% 7.04%
3rd Qtr 2015 -8.22% -6.44%
2nd Qtr 2015 -2.13% 0.28%
1st Qtr 2015 1.18% 0.95%
4th Qtr 2014 3.38% 4.93%
3rd Qtr 2014 1.62% 1.13%
2nd Qtr 2014 5.79% 5.23%
1st Qtr 2014 2.94% 1.81%
4th Qtr 2013 9.57% 10.51%
3rd Qtr 2013 7.33% 5.24%
2nd Qtr 2013 2.85% 2.91%
1st Qtr 2013 10.33% 10.61%

*Average annual total returns.

On 11/30/06, the Fund changed to an active management strategy. Past performance through 11/29/06 represents the former passive investment strategy, and is not indicative of future results.

Institutional shares were not offered prior to 11/28/08. All performance information for time periods beginning prior to November 28 is the performance of the Investor shares. This performance has not been adjusted to reflect the lower expenses of the Institutional shares.

Annual Expense Ratio: Gross: 0.74% / Net: 0.74%. Per current prospectus. Domini has contractually agreed to waive certain fees and/or reimburse certain ordinary operating expenses in order to limit Institutional share expenses to 0.74% of its average daily net assets per annum until 11/30/18, absent an earlier modification by the Fund’s Board. See prospectus for details. The Fund's performance would have been lower had these fees not been waived.

Past performance is no guarantee of future results. The Fund’s returns quoted above represent past performance after all expenses. The returns reflect any applicable expense waivers in effect during the periods shown. Without such waivers, Fund performance would be lower. Investment return, principal value, and yield will fluctuate.  Your shares, when redeemed, may be worth more or less than their original cost. Select the Performance Tab above for more complete performance information, including returns current to the most recent month-end, which may be lower or higher than the performance data quoted. A 2.00% redemption fee applies on sales or exchanges of shares made less than 30 days after the settlement of purchase or acquisition through exchange, with certain exceptions. See the prospectus for further information. 

An investment in the Domini Impact Equity Fund is not a bank deposit and is not insured. You may lose money. An investment in the Fund is subject to market, sector concentration, style, and foreign investing risks. Select the Overview tab above or see the prospectus for more information on risk.

The performance above does not reflect the deduction of fees and taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return is based on the Fund’s net asset values and assumes all dividends and capital gains were reinvested.

Although the Domini Impact Equity Fund Class Institutional shares are no-load, certain fees and expenses apply to a continued investment and are described in the prospectus. 


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Holdings

Ten Largest Holdings as of 4/30/2018
Company % of Portfolio
Alphabet Inc. 3.5%
Mastercard Inc. 3.3%
Intel Corporation 3.2%
Prudential Financial, Inc. 2.8%
Walgreens Boots Alliance, Inc. 2.7%
IBM Corporation 2.7%
Gilead Sciences, Inc. 2.5%
Cummins, Inc. 2.5%
Consolidated Edison, Inc. 2.5%
Robert Half Intl., Inc. 2.4%
TOTAL 28.0%
Sector Weightings as of 3/31/2018
Sector % of Portfolio
Information Technology 25.6%
Financials 16.9%
Health Care 15.0%
Consumer Discretionary 11.3%
Industrials 8.5%
Consumer Staples 6.9%
Real Estate 4.8%
Telecommunication Services 3.9%
Utilities 3.4%
Materials 3.3%
Energy 0.4%
Total 100.0%

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

View Complete Portfolio Holdings

The composition of the Fund’s portfolio is subject to change. The Domini Funds maintain portfolio holdings disclosure policies that govern the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Funds.

The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed for use by Domini Impact Investments.  Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification nor shall any such party have any liability therefrom.

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Characteristics

Portfolio Overview

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

Investment Style:

Blend

Weighted Average Market Capitalization:

Large
Portfolio Statistics as of 3/31/2018
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DIEQX S&P 500
Price-to-Earnings Ratio (projected) 13.3x 15.2x
Price-to-Book Ratio 2.6x 3.3x
Beta (projected) 0.98 --
R-squared (projected) 0.97 --
Market Cap Asset Weighted Avg. (Millions) $133,863 $198,751
Total Number of Holdings 134 500

*These statistics are provided by Wellington Management as calculated by its proprietary portfolio management system.

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.

The composition of the Fund’s portfolio is subject to change. View the most current list of the Domini Impact Equity Fund's holdings. The Domini Funds maintain portfolio holdings disclosure policies that govern the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Funds.

The Standard & Poor’s 500 Index (S&P 500) is an unmanaged index of common stocks. You cannot invest directly in an index.

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Commentary

Domini Impact Equity Fund Performance Commentary

The Fund invests primarily in mid- and large-cap U.S. equities. It is managed through a two-step process designed to capitalize on the strengths of Domini Impact 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 and manage risk through a systematic and disciplined portfolio construction process. 

Download Commentary as a PDF
Total Returns as of 3/31/2018
Swipe to view table
DSEFX  DIEQX  DSFRX  DSEPX (without load)2  DSEPX (with max load) 2  S&P 500 3 
First Quarter 2018  -0.70%  -0.63%  -0.77%  -0.71%  -5.43%  -0.76% 
Year to Date  -0.70%  -0.63%  -0.77%  -0.71%  -5.43%  -0.76% 
One Year  9.03%  9.37%  9.35%  9.07%  3.89%  13.99% 
Three Year*   5.35%  5.71%  5.65%  5.30%  3.60%  10.78% 
Five Year*   10.19%  10.59%  10.51%  10.16%  9.10%  13.31% 
Ten Year*1   7.81%  7.81%  8.16%  7.81%  7.29%  9.49% 

Market Overview

The Fund’s Investor shares declined 0.70% for the quarter, outperforming the S&P 500 Index return by six basis points. Security selection was the primary driver of outperformance, as strong selection in the information technology, real estate, and consumer staples sectors offset weaker selection in financials and industrials. Sector allocation also contributed positively to relative results overall, primarily due to a significant underweight to the energy sector. The Fund maintains this underweight largely due to its exclusion of oil and gas exploration and production companies†. 

The top three contributors to relative performance this quarter were all from the information technology sector. The largest of these was global payments company Mastercard, which gained almost 16% after reporting strong year-over-year sales growth for the fourth quarter. The company’s recent acquisition of VocaLink, a payment-technology provider, has improved its competitive advantage by providing it with a fast infrastructure that would have otherwise taken time some time to build out.

Top Relative Contributors

Swipe to view table
Company Sector Stock Return* %
Mastercard Incorporated Information Technology 15.89
Intel Corporation Information Technology 13.58
Lam Research Corporation Information Technology 11.34
CBRE Group, Inc. Real Estate 8.99
The Estée Lauder Companies Inc. Consumer Staples 17.18

Top Relative Detractors

Swipe to view table
Company Sector Stock Return* %
Unum Group Financials -12.81
Walgreens Boots Alliance, Inc. Consumer Staples -9.32
Prudential Financial, Inc. Financials -9.2
Domtar Corporation Materials -13.22
Netflix, Inc.** Consumer Discretionary 53.86

Fund Performance

The Fund’s Investor shares declined 0.70% for the quarter, outperforming the S&P 500 Index return by six basis points. Security selection was the primary driver of outperformance, as strong selection in the information technology, real estate, and consumer staples sectors offset weaker selection in financials and industrials. Sector allocation also contributed positively to relative results overall, primarily due to a significant underweight to the energy sector. The Fund maintains this underweight largely due to its exclusion of oil and gas exploration and production companies†. 

The top three contributors to relative performance this quarter were all from the information technology sector. The largest of these was global payments company Mastercard, which gained almost 16% after reporting strong year-over-year sales growth for the fourth quarter. The company’s recent acquisition of VocaLink, a payment-technology provider, has improved its competitive advantage by providing it with a fast infrastructure that would have otherwise taken time some time to build out.

Intel rose almost 14% for the quarter after the computer-components manufacturer reported record fourth-quarter results. Revenue, operating cash flow, operating income, and net income all broadly beat estimates. The company shift away from its PC business to focus on its data-centric business, which accounted for about half of fourth-quarter revenue, signals an inflection point for its growth outlook. Management raised its 2018 guidance, expecting both revenue and earnings to exceed prior consensus estimates.

Lam Research Corporation, which supplies water fabrication equipment (WFE) and services to the semiconductor industry, also had a solid quarter, gaining more than 11%. The company reported strong results for the fourth quarter, beating consensus estimates and its own guidance for the seventh consecutive quarter. Lam has seen continued success in the WFE market and continues to expand its market share, and management expects revenue growth to remain strong in 2018.

Other top contributors for the quarter included CBRE, a commercial real estate services firm that rose almost 9% after reporting fourth-quarter results that exceeded estimates and issuing better-than-expected guidance for 2018, and Estée Lauder, which manufacturers skin care, makeup, fragrance and hair care products. Estée Lauder, which gained more than 17% for the quarter, has seen sales growth accelerate in recent quarters, and reported that the acceleration continued through the holiday season, driven by a successful e-commerce strategy and rising demand in Asia.

The largest detractor from the quarter’s relative results was Unum Group, which provides financial protection benefits in the US and UK. The stock dropped almost 13% for the quarter amid a more uncertain earnings outlook, as the company is faced with across-the-board tailwinds and the US and the potential for elevated claims in the UK, as Brexit continues to cloud the nation’s employment picture. Unum’s fourth-quarter results were fairly mixed, led by strong domestic sales growth, in-line earnings, and higher expenses.

Prudential Financial was another significant detractor within the financials sector, declining more than 9% for the quarter. The insurance and financial services group reported mixed results for the fourth quarter, with strong revenues and margins in its annuity and asset management business, but weak underwriting margins in its life, group insurance, and international businesses.

Pharmacy retailer Walgreens Boots Alliance also dropped more than 9% for the quarter, after Amazon.com, Berkshire Hathaway**, and JPMorgan Chase** announced a joint not-for-profit venture to lower health care costs for their U.S. employees, sparking worries that the collaboration could disrupt sales for traditional drugstore and pharmacy retailers.

Non-benchmark holding Domtar, which produces, paper, pulp and personal care products, was another significant detractor, declining more than 13% for the quarter. The stock dropped after the company reported disappointing preliminary results for the fourth quarter, with a sharp loss attributable to a large impairment of goodwill related to its struggling personal care segment.

*Average annual total returns. 

** Not approved for investment by the Domini Funds as of 3/31/18

† Companies included in the Integrated Oil & Gas or Oil & Gas Exploration & Production Industries as defined by the Global Industry Classification System (GICS)

1. Institutional and Class A shares were not offered prior to 11/28/08. All performance information for time periods beginning prior to 11/28/08 is the performance of the Investor shares. This performance has not been adjusted to reflect the lower expenses of the Institutional and Class A shares, but in the case of the Class A shares, does where noted reflect an adjustment for the maximum applicable sales charge of 4.75%.

2. Performance “with load” for DSEPX reflects performance with application of highest maximum front-end sales charge (4.75%). Performance “without load” reflects performance without application of front-end sales charge.

3. The Standard & Poor’s 500 Index (S&P 500) is an unmanaged index of common stocks. You cannot invest directly in an index. The index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Domini. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); S&P® and S&P 500® are trademarks of S&P; and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Domini. Domini product(s) are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the index.

Past performance is no guarantee of future results. The Fund’s returns quoted above represent past performance after all expenses. The returns reflect any applicable expense waivers in effect during the periods shown. Without such waivers, returns would be lower. Investment return, principal value, and yield will fluctuate. Your shares, when redeemed, may be worth more or less than their original cost. An investment in the Fund is not a bank deposit. The Fund is not insured and is subject to market, sector concentration, style and foreign investing risks. Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing security regulations and accounting standards limited public information possible changes in taxation, and periods of illiquidity. You may lose money.

Select the Performance Tab above for more complete performance information, including returns current to the most recent month-end, which may be lower or higher than the performance data quoted. See the prospectus for further information.

For the period reported in its current prospectus, the Fund’s annual operating expenses totaled: 1.09% (Investor), Net 1.12%/Gross 1.41% (Class A), Net 0.74%/Gross 0.74% (Institutional), 0.80% (Class R). The Fund’s adviser has contractually agreed to waive certain fees and/or reimburse certain ordinary operating expenses in order to limit Class A and Institutional share expenses to 1.12% and 0.74%, respectively, until November 30, 2018, absent an earlier modification approved by the Funds' Board of Trustees.

The Fund charges a 2.00% redemption fee on sales or exchanges of shares made less than 30 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Class A shares are generally subject to a front-end sales charge of 4.75%. Certain fees and expenses also apply to a continued investment in the Fund and are described in the prospectus. Please consult the Fund’s prospectus or your Service Organization for more information.

Total return is based on the Fund’s net asset values and assumes all dividends and capital gains were reinvested. The returns in this commentary do not reflect the deduction of fees and taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

As of 3/31/18, the companies noted above represented the following percentages of the Fund’s portfolio: Amazon.com, Inc. (0.57%); CBRE Group, Inc. (2.33%); Domtar Corporation (1.44%); The Estée Lauder Companies Inc. (2.12%); Intel Corporation (3.04%); Lam Research Corporation (1.13%); Mastercard Incorporated (3.13%); Prudential Financial, Inc. (2.58%); Unum Group (1.27%); and Walgreens Boots Alliance, Inc. (2.58%). Netflix, Inc. was not held by any of the Domini Funds. Berkshire Hathaway, Inc. and JPMorgan Chase & Co. were not approved for investment, and therefore not held by any of the Domini Funds.

The composition of the Fund's portfolio is subject to change. The Domini Funds maintain portfolio holdings disclosure policies that govern the timing and circum­stances of disclosure to shareholders and third parties regarding the portfolio investments held by the Funds. View the most current list of the Fund’s holdings. Obtain a copy of the Fund’s most recent Annual Report, containing a complete description of the Fund’s portfolio, by calling 1-800-762-6814.

This commentary is provided for informational purposes only. Nothing herein is to be considered a recommendation concerning the merits of any noted company, or an offer of sale or solicitation of an offer to buy shares of any Fund or company referenced herein.

Carefully consider the Fund’s investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the Fund’s prospectus. Please read the prospectus carefully before investing or sending money.

The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed for use by Domini Impact Investments. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classifica­tion nor shall any such party have any liability therefrom.






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Prospectus & Key Documents

View or download the Domini Funds’ prospectus and other documents below. If you would like any of these documents mailed to you, free of charge, call 1-800-762-6814 (Monday to Friday, 9 a.m. - 6 p.m. EST) or fill out our online Request Information form.

Many of the documents listed below are in PDF format. To view these documents, you will need Adobe Reader software, version 4.0 or higher. If you don’t have Adobe Reader, you can download it for free at Adobe’s website.

Downloads

File Type
Prospectus
PDF, 1.83 MB
Download
Fund Fact Sheet
PDF, 405.3 KB
Download
Commentary
PDF, 308.5 KB
Download
2017 Impact Update
PDF, 8.85 MB
Download
Domini Semi-Annual Report 2018
PDF, 555.61 KB
Download
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Commentary

Domini Impact Equity Fund Performance Commentary

The Fund invests primarily in mid- and large-cap U.S. equities. It is managed through a two-step process designed to capitalize on the strengths of Domini Impact 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 and manage risk through a systematic and disciplined portfolio construction process. 

Download Commentary as a PDF
Total Returns as of 3/31/2018
Swipe to view table
DSEFX  DIEQX  DSFRX  DSEPX (without load)2  DSEPX (with max load) 2  S&P 500 3 
First Quarter 2018  -0.70%  -0.63%  -0.77%  -0.71%  -5.43%  -0.76% 
Year to Date  -0.70%  -0.63%  -0.77%  -0.71%  -5.43%  -0.76% 
One Year  9.03%  9.37%  9.35%  9.07%  3.89%  13.99% 
Three Year*   5.35%  5.71%  5.65%  5.30%  3.60%  10.78% 
Five Year*   10.19%  10.59%  10.51%  10.16%  9.10%  13.31% 
Ten Year*1   7.81%  7.81%  8.16%  7.81%  7.29%  9.49% 

Market Overview

The Fund’s Investor shares declined 0.70% for the quarter, outperforming the S&P 500 Index return by six basis points. Security selection was the primary driver of outperformance, as strong selection in the information technology, real estate, and consumer staples sectors offset weaker selection in financials and industrials. Sector allocation also contributed positively to relative results overall, primarily due to a significant underweight to the energy sector. The Fund maintains this underweight largely due to its exclusion of oil and gas exploration and production companies†. 

The top three contributors to relative performance this quarter were all from the information technology sector. The largest of these was global payments company Mastercard, which gained almost 16% after reporting strong year-over-year sales growth for the fourth quarter. The company’s recent acquisition of VocaLink, a payment-technology provider, has improved its competitive advantage by providing it with a fast infrastructure that would have otherwise taken time some time to build out.

Top Relative Contributors

Swipe to view table
Company Sector Stock Return* %
Mastercard Incorporated Information Technology 15.89
Intel Corporation Information Technology 13.58
Lam Research Corporation Information Technology 11.34
CBRE Group, Inc. Real Estate 8.99
The Estée Lauder Companies Inc. Consumer Staples 17.18

Top Relative Detractors

Swipe to view table
Company Sector Stock Return* %
Unum Group Financials -12.81
Walgreens Boots Alliance, Inc. Consumer Staples -9.32
Prudential Financial, Inc. Financials -9.2
Domtar Corporation Materials -13.22
Netflix, Inc.** Consumer Discretionary 53.86

Fund Performance

The Fund’s Investor shares declined 0.70% for the quarter, outperforming the S&P 500 Index return by six basis points. Security selection was the primary driver of outperformance, as strong selection in the information technology, real estate, and consumer staples sectors offset weaker selection in financials and industrials. Sector allocation also contributed positively to relative results overall, primarily due to a significant underweight to the energy sector. The Fund maintains this underweight largely due to its exclusion of oil and gas exploration and production companies†. 

The top three contributors to relative performance this quarter were all from the information technology sector. The largest of these was global payments company Mastercard, which gained almost 16% after reporting strong year-over-year sales growth for the fourth quarter. The company’s recent acquisition of VocaLink, a payment-technology provider, has improved its competitive advantage by providing it with a fast infrastructure that would have otherwise taken time some time to build out.

Intel rose almost 14% for the quarter after the computer-components manufacturer reported record fourth-quarter results. Revenue, operating cash flow, operating income, and net income all broadly beat estimates. The company shift away from its PC business to focus on its data-centric business, which accounted for about half of fourth-quarter revenue, signals an inflection point for its growth outlook. Management raised its 2018 guidance, expecting both revenue and earnings to exceed prior consensus estimates.

Lam Research Corporation, which supplies water fabrication equipment (WFE) and services to the semiconductor industry, also had a solid quarter, gaining more than 11%. The company reported strong results for the fourth quarter, beating consensus estimates and its own guidance for the seventh consecutive quarter. Lam has seen continued success in the WFE market and continues to expand its market share, and management expects revenue growth to remain strong in 2018.

Other top contributors for the quarter included CBRE, a commercial real estate services firm that rose almost 9% after reporting fourth-quarter results that exceeded estimates and issuing better-than-expected guidance for 2018, and Estée Lauder, which manufacturers skin care, makeup, fragrance and hair care products. Estée Lauder, which gained more than 17% for the quarter, has seen sales growth accelerate in recent quarters, and reported that the acceleration continued through the holiday season, driven by a successful e-commerce strategy and rising demand in Asia.

The largest detractor from the quarter’s relative results was Unum Group, which provides financial protection benefits in the US and UK. The stock dropped almost 13% for the quarter amid a more uncertain earnings outlook, as the company is faced with across-the-board tailwinds and the US and the potential for elevated claims in the UK, as Brexit continues to cloud the nation’s employment picture. Unum’s fourth-quarter results were fairly mixed, led by strong domestic sales growth, in-line earnings, and higher expenses.

Prudential Financial was another significant detractor within the financials sector, declining more than 9% for the quarter. The insurance and financial services group reported mixed results for the fourth quarter, with strong revenues and margins in its annuity and asset management business, but weak underwriting margins in its life, group insurance, and international businesses.

Pharmacy retailer Walgreens Boots Alliance also dropped more than 9% for the quarter, after Amazon.com, Berkshire Hathaway**, and JPMorgan Chase** announced a joint not-for-profit venture to lower health care costs for their U.S. employees, sparking worries that the collaboration could disrupt sales for traditional drugstore and pharmacy retailers.

Non-benchmark holding Domtar, which produces, paper, pulp and personal care products, was another significant detractor, declining more than 13% for the quarter. The stock dropped after the company reported disappointing preliminary results for the fourth quarter, with a sharp loss attributable to a large impairment of goodwill related to its struggling personal care segment.

*Average annual total returns. 

** Not approved for investment by the Domini Funds as of 3/31/18

† Companies included in the Integrated Oil & Gas or Oil & Gas Exploration & Production Industries as defined by the Global Industry Classification System (GICS)

1. Institutional and Class A shares were not offered prior to 11/28/08. All performance information for time periods beginning prior to 11/28/08 is the performance of the Investor shares. This performance has not been adjusted to reflect the lower expenses of the Institutional and Class A shares, but in the case of the Class A shares, does where noted reflect an adjustment for the maximum applicable sales charge of 4.75%.

2. Performance “with load” for DSEPX reflects performance with application of highest maximum front-end sales charge (4.75%). Performance “without load” reflects performance without application of front-end sales charge.

3. The Standard & Poor’s 500 Index (S&P 500) is an unmanaged index of common stocks. You cannot invest directly in an index. The index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Domini. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); S&P® and S&P 500® are trademarks of S&P; and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Domini. Domini product(s) are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the index.

Past performance is no guarantee of future results. The Fund’s returns quoted above represent past performance after all expenses. The returns reflect any applicable expense waivers in effect during the periods shown. Without such waivers, returns would be lower. Investment return, principal value, and yield will fluctuate. Your shares, when redeemed, may be worth more or less than their original cost. An investment in the Fund is not a bank deposit. The Fund is not insured and is subject to market, sector concentration, style and foreign investing risks. Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing security regulations and accounting standards limited public information possible changes in taxation, and periods of illiquidity. You may lose money.

Select the Performance Tab above for more complete performance information, including returns current to the most recent month-end, which may be lower or higher than the performance data quoted. See the prospectus for further information.

For the period reported in its current prospectus, the Fund’s annual operating expenses totaled: 1.09% (Investor), Net 1.12%/Gross 1.41% (Class A), Net 0.74%/Gross 0.74% (Institutional), 0.80% (Class R). The Fund’s adviser has contractually agreed to waive certain fees and/or reimburse certain ordinary operating expenses in order to limit Class A and Institutional share expenses to 1.12% and 0.74%, respectively, until November 30, 2018, absent an earlier modification approved by the Funds' Board of Trustees.

The Fund charges a 2.00% redemption fee on sales or exchanges of shares made less than 30 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Class A shares are generally subject to a front-end sales charge of 4.75%. Certain fees and expenses also apply to a continued investment in the Fund and are described in the prospectus. Please consult the Fund’s prospectus or your Service Organization for more information.

Total return is based on the Fund’s net asset values and assumes all dividends and capital gains were reinvested. The returns in this commentary do not reflect the deduction of fees and taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

As of 3/31/18, the companies noted above represented the following percentages of the Fund’s portfolio: Amazon.com, Inc. (0.57%); CBRE Group, Inc. (2.33%); Domtar Corporation (1.44%); The Estée Lauder Companies Inc. (2.12%); Intel Corporation (3.04%); Lam Research Corporation (1.13%); Mastercard Incorporated (3.13%); Prudential Financial, Inc. (2.58%); Unum Group (1.27%); and Walgreens Boots Alliance, Inc. (2.58%). Netflix, Inc. was not held by any of the Domini Funds. Berkshire Hathaway, Inc. and JPMorgan Chase & Co. were not approved for investment, and therefore not held by any of the Domini Funds.

The composition of the Fund's portfolio is subject to change. The Domini Funds maintain portfolio holdings disclosure policies that govern the timing and circum­stances of disclosure to shareholders and third parties regarding the portfolio investments held by the Funds. View the most current list of the Fund’s holdings. Obtain a copy of the Fund’s most recent Annual Report, containing a complete description of the Fund’s portfolio, by calling 1-800-762-6814.

This commentary is provided for informational purposes only. Nothing herein is to be considered a recommendation concerning the merits of any noted company, or an offer of sale or solicitation of an offer to buy shares of any Fund or company referenced herein.

Carefully consider the Fund’s investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the Fund’s prospectus. Please read the prospectus carefully before investing or sending money.

The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed for use by Domini Impact Investments. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classifica­tion nor shall any such party have any liability therefrom.





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Before investing, consider the Domini Funds’ investment objectives, risks, charges, and expenses. View or order a prospectus. Read it carefully.

The Domini Funds are distributed by DSIL Investment Services LLC (DSILD), Member FINRA. Domini Impact Investments LLC (Domini) is the Funds’ investment manager. The Funds are subadvised by Wellington Management Company LLP. DSILD and Domini are not affiliated with Wellington Management Company LLP.

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