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Domini Social Equity Fund ®

Fund Information

$7.32
Daily Price (NAV)
as of 07/28/2016
Symbol DSEPX
Daily NAV Change $0.01 (0.14%)

Overview

Class A Shares Overview

Class A shares are intended for investors who invest through a financial advisor. They carry a front-end sales charge (load) that is paid to the advisor buying the Fund on behalf of the investor. If you do not invest through a financial advisor, please refer to the Investor shares.

Socially and environmentally concerned investors have social, as well as financial, objectives. The Domini Social 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 Social Investments’ social and environmental standards.

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

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:

  • 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

Class A Shares Performance


Month-End Returns as of 6/30/16
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (6/3/91)*
DSEPX (without load)-0.56%-6.82%7.20%7.66%5.56%7.89%
DSEPX (with max. load)-5.28%-11.25%5.48%6.62%5.05%7.68%
S&P 5003.84%3.99%11.66%12.10%7.42%9.16%

Quarter-End Returns as of 6/30/16
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (6/3/91)*
DSEPX (without load)-0.56%-6.82%7.20%7.66%5.56%7.89%
DSEPX (with max. load)-5.28%-11.25%5.48%6.62%5.05%7.68%
S&P 5003.84%3.99%11.66%12.10%7.42%9.16%

Calendar Year Returns
DSEPX (without load)S&P 500
2015-7.38%1.38%
201413.99%13.69%
201332.93%32.39%
201211.39%16.00%
20110.85%2.11%
201013.80%15.06%
200935.53%26.46%
2008-37.88%-37.00%
20071.46%5.50%
200612.58%15.79%
20052.03%4.91%
20049.26%10.88%
200327.13%28.69%
2002-20.69%-22.10%
2001-12.76%-11.88%
2000-15.05%-9.11%
199922.63%21.04%
199832.99%28.58%
199736.02%33.36%
199621.84%23.07%
199535.17%37.50%
1994-0.36%1.26%
19936.54%10.08%
199212.10%7.68%

Quarterly Returns
DSEPX (without load)S&P 500
2nd Qtr 2016-1.98%2.46%
1st Qtr 20161.45%1.35%
4th Qtr 20152.28%7.04%
3rd Qtr 2015-8.39%-6.44%
2nd Qtr 2015-2.25%0.28%
1st Qtr 20151.12%0.95%
4th Qtr 20143.30%4.93%
3rd Qtr 20141.49%1.13%
2nd Qtr 20145.72%5.23%
1st Qtr 20142.84%1.81%
4th Qtr 20139.45%10.51%
3rd Qtr 20137.22%5.24%
2nd Qtr 20132.73%2.91%
1st Qtr 201310.26%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. A 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 Class A shares, but unless otherwise noted, does reflect an adjustment for the maximum applicable sales charges of 4.75%.

Annual Expense Ratio: Gross: 1.39% / Net: 1.18%. Per current prospectus. Domini has contractually agreed to cap Investor share expenses to not exceed 1.18% 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.

The Domini Social Equity Fund Class A shares are subject to a front-end sales charge of up to 4.75%. The quarterly and calendar performance tables above do not reflect the deduction of this sales charge. If the sales charge were reflected, the performance would have been lower.

Holdings

Ten Largest Holdings as of 6/30/16
COMPANY% OF PORTFOLIO
Microsoft Corp.4.6%
Merck & Co. Inc.3.6%
Amazon.com Inc.3.4%
Alphabet Inc. Class A3.1%
Consolidated Edison Inc.3.1%
Intel Corp.3.0%
PepsiCo Inc.2.9%
Gilead Sciences Inc.2.8%
Cummins Inc.2.7%
MetLife Inc.2.7%
TOTAL31.9%

Sector Weightings as of 6/30/16
SECTOR% OF PORTFOLIO
Information Technology22.2%
Financials17.3%
Health Care14.8%
Industrials11.8%
Consumer Discretionary11.3%
Consumer Staples9.4%
Materials3.7%
Energy3.2%
Telecommunication Services3.2%
Utilities3.1%
Total100.0%

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

 

Characteristics

Portfolio Overview

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

 

Investment Style:

Blend

Weighted Average Market Capitalization:

Large

Portfolio Statistics

  DSEPX S&P 500
Price-to-Earnings Ratio (projected) 12.8 15.3
Price-to-Book Ratio 2.1 2.8
Beta (projected) 1.06 --
R-squared (projected) 0.97 --
Market Cap Asset Weighted Avg. (Millions) $97,544 $137,542
Total Number of Holdings 88 500

All data as of 6/30/16 unless otherwise noted.

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

Class A Shares 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 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 and manage 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
Year2
Five
Year2
Ten
Year2,3,4
Since Inception
(12/27/06)2,3,4
DSEPX
(without load)
-6.40% 1.34% 6.95% 1.45% 1.45% -7.08% 8.90% 8.44% 5.39% 8.05%
DSEPX
(with max. load 1)
-10.84% -3.48% 1.87% -3.37% -3.37% -11.49% 7.14% 7.39% 4.88% 7.84%
S&P 500 -4.96% -0.13% 6.78% 1.35% 1.35% 1.78% 11.82% 11.58% 7.01% 9.14%

Market Overview

It was a volatile start to the year for U.S. equities. At its intraday low on February 11 of -11.4% from the start of the year, the S&P 500 ended the first quarter with a modest gain. Global financial and economic developments continued to pose risks to the economic outlook, even as U.S. data releases remained generally encouraging. Oil prices hit a 12-year low in January of $26/barrel, but recovered to nearly $40 by the end of the quarter. Fears of recession weighed on investor sentiment, amid ongoing worries over the state of China’s economy and worries that yuan weakness could spark a wave of global deflationary pressure. However, equities staged a recovery in the second half of the quarter amid solid economic data, a stabilization in oil prices, and accommodative commentary from the Federal Reserve (Fed). The unemployment rate held steady at an eight-year low, housing market trends remained healthy, and fourth-quarter GDP growth rose higher than estimated. Retail sales disappointed though, with lower gas prices not yet translating into increased consumer spending. Durable goods orders also fell, as the strong dollar and weak oil prices continued to trouble the manufacturing sector. In March, the Fed surprised the market by lowering its inflation forecast for the year and suggesting a slower increase in interest rates than previously anticipated.

Fund Performance

For the quarter, the Fund’s Class A shares returned 1.45% (without load), outpacing the S&P 500 Index return of 1.35%. The primary driver of outperformance was sector allocation, as the Fund benefitted from an overweight to telecommunication services and an underweight to health care. Security selection had little net impact, as positive selection in industrials and materials was offset by weaker selection in energy and information technology.
 
The traditionally defensive utilities sector had a strong quarter, and the Fund’s top contributor to relative performance was New York utility Consolidated Edison (“Con Ed”), which returned 20.3% on strong fourth quarter results above consensus estimates, as a result of new rate plans, improved gross margins and the announcement of plans to acquire a stake in a planned natural gas pipeline project. Other top contributors included engine and power-generation-system manufacturer Cummins (+26.2%), luxury fashion brand Michael Kors (+42.2%), which reported surprising better-than-expected recent results, given the tough market environment. Solid holiday results drove the upside, with retail sales and in-line wholesale sales rising. The company announced plans to revamp its advertising and overcome “staleness” issues that had plagued its accessories category in 2015. AT&T also delivered strong returns to the Fund, rising 15.4%. 
 
The Fund’s performance relative to the S&P 500 also benefitted from not holding any of the big four U.S. banks. Bank of America, Citigroup, Wells Fargo, and JPMorgan Chase respectively declined 19.4%, 19.2%, 10.3%, and 9.7% for the quarter. Most of the largest banks are not eligible for investment by the Domini Funds due to concerns regarding risk management and ongoing issues related to the financial crisis. 
 
The top detractors from relative performance for the quarter included U.K. based offshore drilling contractor Ensco, which fell 32.6% on lower revenues and its decision to cut its dividend, Prudential Financial (-10.34%), online retailer Amazon.com, which fell 12.2% on very mixed fourth quarter results, although unit growth, Prime memberships and Amazon Web Services all posted strong growth year-on-year.  MetLife Inc. (-7.9%), and biopharmaceutical company Gilead Sciences (-8.8%) also detracted from the Fund’s relative performance.  Gilead is facing ongoing political scrutiny over drug prices, and this quarter, the Food and Drug Administration’s (FDA) approval of a competing hepatitis C therapy from Merck, which is priced significantly lower than Gilead’s therapies, stoked worries of a new price war in the already competitive hepatitis C space. 

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.

Positive Change at Four Companies

In addition to using social, environmental and governance standards to select our investments, each year the Domini Social Equity Fund submits shareholder proposals to corporations in its portfolio, addressing a broad range of social and environmental issues.  They send a strong message to corporate management, and can often encourage the company to speak to us about reaching an agreement.

Public Health and Corporate Funding of Scientific Research

In August, the New York Times reported that Coca-Cola was funding an organization called the Global Energy Balance Network (GEBN), which promoted scientific research on obesity.  The organization was accused of emphasizing the need for exercise, shifting the blame for obesity away from sugary beverages.  Coke’s CEO, Muhtar Kent, responded with an op-ed in the Wall Street Journal, pledging to ‘do better.’ 

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.

Policy on Firearms Manufacturers

Domini has a longstanding policy to avoid investment in the manufacturers of weapons, including military weapons and civilian firearms. This policy extends to firms that derive a significant percentage of revenues from the sale of firearms. We believe this industry is inherently damaging to society, due to the intersection between a particularly dangerous product and the extraordinary pressures to maximize profits and increase market share—pressures which are exponentially heightened for publicly traded companies.