As filed with the Securities and Exchange Commission on September 29, 1997
Registration Nos. 33-14449 and 811-07599
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 1
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 4
DOMINI INSTITUTIONAL TRUST
(Exact Name of Registrant as Specified in Charter)
6 St. James Avenue, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(617) 423-0800
Philip W. Coolidge
6 St. James Avenue, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Copy to:
Roger P. Joseph, Esq.
Bingham, Dana & Gould, LLP, 150 Federal Street, Boston, MA 02110
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite number of its shares of
beneficial interest (par value $0.01 per share) pursuant to Rule 24f-2 under the
Investment Company Act of 1940. Registrant filed the notice required by Rule
24f-2 with respect to its series, Domini Institutional Social Equity Fund (for
its fiscal year ending July 31, 1997), on September 29, 1997.
Domini Social Index Portfolio has also executed this Registration Statement.
<PAGE>
DOMINI INSTITUTIONAL SOCIAL EQUITY FUND
CROSS REFERENCE SHEET
(As required by Rule 495)
<TABLE>
<CAPTION>
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Item Number Statement of Additional
Form N-1A, Part A Prospectus Caption Information Caption
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
1 Front Cover Page *
- --------------------------------------------------------------------------------------------------------------------------
2 Expense Summary *
- --------------------------------------------------------------------------------------------------------------------------
3 Financial Highlights; Performance Information
Performance Information
- --------------------------------------------------------------------------------------------------------------------------
4 Front Cover Page; Investment in the Fund; *
Investment Objective and Policies
- --------------------------------------------------------------------------------------------------------------------------
5 The Fund; Management - Manager, *
Submanager, Sponsor; Transfer Agent
and Custodian; Other Information
Concerning Shares of the Fund-
Expenses; Back Cover Page
- --------------------------------------------------------------------------------------------------------------------------
5A Not Applicable *
- --------------------------------------------------------------------------------------------------------------------------
6 Other Information Concerning *
Shares of the Fund-Description
of Shares, Voting Rights and
Liabilities; Management-Transfer
Agent and Custodian; Other
Information Concerning Shares
of the Fund-Dividends and
Capital Gains Distributions;
Tax Matters
- --------------------------------------------------------------------------------------------------------------------------
7 Purchases and Redemptions of *
Shares-Purchases; Other
Information Concerning Shares
of the Fund-Net Asset Value,
Management-Distributor; Transfer
Agent and Custodian
- --------------------------------------------------------------------------------------------------------------------------
8 Purchases and Redemptions of *
Shares-Redemptions
- --------------------------------------------------------------------------------------------------------------------------
9 Not Applicable *
==========================================================================================================================
<PAGE>
==========================================================================================================================
Item Number Statement of Additional
Form N-1A, Part B Prospectus Caption Information Caption
- --------------------------------------------------------------------------------------------------------------------------
10 * Front Cover Page
- --------------------------------------------------------------------------------------------------------------------------
11 * Front Cover Page
- --------------------------------------------------------------------------------------------------------------------------
12 * The Fund
- --------------------------------------------------------------------------------------------------------------------------
13 Investment Objective and Investment Objective,
Policies Policies and Restrictions
- --------------------------------------------------------------------------------------------------------------------------
14 * Management of the Trust
and the
Portfolio-Trustees of the Trust and
the Portfolio, Officers
- --------------------------------------------------------------------------------------------------------------------------
15 * Management of the Trust
and the
Portfolio-Trustees of the Trust and
the Portfolio, Officers
- --------------------------------------------------------------------------------------------------------------------------
16 Other Information Concerning *
Shares of the Fund-Expenses
Management of the Trust Management of the Trust and the
and the Portfolio-Sponsor Portfolio-Manager and Submanager,
Sponsor
Purchases and Redemptions of Management of the Trust
Shares-Distribution and the
Agreement Portfolio-Distributor
Management-Transfer Management of the Trust
Agent and Custodian; and Portfolio;
Back Cover Page Independent Auditors;
Page Back Cover Page
* Management of the Trust
and the
Portfolio-Distributor
- --------------------------------------------------------------------------------------------------------------------------
17 * Portfolio Transactions
and Brokerage Commissions
- --------------------------------------------------------------------------------------------------------------------------
18 Other Information Concerning Description of Shares,
Shares of the Fund-Description Voting Rights and
of Shares, Voting Rights and Liabilities
Liabilities
- --------------------------------------------------------------------------------------------------------------------------
19 Purchases and Redemptions of Management of the Trust
Shares; Other Information and the
Concerning Shares of the Portfolio-Transfer Agent,
Fund-Net Asset Value Custodian
- --------------------------------------------------------------------------------------------------------------------------
20 Tax Matters Taxation
- --------------------------------------------------------------------------------------------------------------------------
21 * Management of the Trust
and the
Portfolio-Distributor
- --------------------------------------------------------------------------------------------------------------------------
22 Performance Information Performance Information
- --------------------------------------------------------------------------------------------------------------------------
23 * Financial Statements
==========================================================================================================================
</TABLE>
Form N-1A, Part C
Information required to be included in Part C is set forth under the
appropriately numbered item in Part C of this registration statement.
<PAGE>
November 28, 1997
DOMINI INSTITUTIONAL SOCIAL EQUITY FUND
The investment objective of the Domini Institutional Social Equity Fund
(the "Fund") is to provide its shareholders with long-term total return which
corresponds to the total return performance of the Domini 400 Social IndexSM, an
index comprised of stocks selected according to social criteria. The Fund seeks
to achieve its investment objective by investing all of its investable assets in
the Domini Social Index Portfolio (the "Portfolio"), a diversified open-end
management investment company having the same investment objective as the Fund.
The Portfolio invests in the common stocks included in the Domini 400 Social
IndexSM.
Table of Contents Page
Investment in the Fund
The Fund
Expense Summary
Financial Highlights
Performance Information
Investment Objective and Policies
Management
Purchases and Redemptions of Shares
Tax Matters
Other Information Concerning Shares of the Fund
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The manager of the Portfolio is Domini Social Investments LLC. The
investment submanager of the Portfolio is Mellon Equity Associates. The sponsor
of the Fund is Domini Social Investments LLC and the distributor of the Fund is
Signature Broker-Dealer Services, Inc. Investments in the Fund are neither
insured nor guaranteed by the U.S. Government. Shares of the Fund are not
deposits or obligations of, or guaranteed by, any bank, and the shares are not
insured by the Federal Deposit Insurance Corporation or any other federal, state
or other governmental agency.
"DominiSM" and "Domini 400 Social IndexSM" are service marks of Kinder,
Lydenberg, Domini & Co., Inc.
This Prospectus sets forth concisely the information concerning the
Fund that a prospective investor ought to know before investing. The Fund has
filed with the Securities and Exchange Commission a Statement of Additional
Information, dated November 28, 1997 as amended from time to time, which
contains more detailed information about the Fund and is incorporated into this
Prospectus by reference. An investor may obtain a copy of the Statement of
Additional Information without charge by contacting the distributor (see back
cover for address and phone number).
Unlike other mutual funds which directly acquire and manage
<PAGE>
their own portfolio of securities, the Fund seeks to achieve its investment
objective by investing all of its investable assets in the Portfolio. The Fund
invests in the Portfolio through a master-feeder investment fund structure. See
"Special Information Concerning the Master-Feeder Investment Fund Structure"
herein.
Investors should read this Prospectus and retain it for future reference.
<PAGE>
INVESTMENT IN THE FUND
The Fund seeks to provide its shareholders with long-term total return
which corresponds to the total return performance of the Domini 400 Social
IndexSM, an index comprised of stocks selected according to social criteria. The
Fund may be appropriate, therefore, for investors who are willing to ride out
stock market fluctuations in pursuit of long-term returns. Because the Fund
seeks to track, rather than exceed, the performance of a particular index, the
Fund is not managed in the same way as other mutual funds. In particular, the
manager generally does not judge the merits of any particular stock as an
investment. Therefore, investors should not expect to achieve the potentially
greater results that could be obtained by a fund that aggressively seeks growth.
The value of an investment in the Fund varies from day to day,
generally reflecting changes in the financial condition of the companies in
which the Portfolio invests, general market conditions and political and
economic factors. Stock prices can fluctuate dramatically in response to these
and other factors or speculation about these factors. Over the long term, stocks
have generally shown greater growth potential than other types of securities.
However, when you sell your Fund shares, they may be worth more or less than
what you paid for them.
Potential investors should note that because the Portfolio seeks to be
fully invested in the stocks comprising the Domini 400 Social IndexSM, the Fund
is not a balanced investment plan. Potential investors should also note that the
manager of the Portfolio, Domini Social Investments LLC, has no prior experience
in managing or advising a mutual fund. You should carefully consider your
investment objectives and risk tolerance before making a decision to invest in
the Fund.
THE FUND
Domini Institutional Social Equity Fund (the "Fund") is a no-load,
diversified, open-end management investment company. The Fund is a series of
shares of beneficial interest of Domini Institutional Trust (the "Trust"), a
business trust organized under the laws of the Commonwealth of Massachusetts
(commonly known as a "Massachusetts business trust") on April 1, 1996.
Shares of the Fund are sold continuously by Signature as the Fund's
distributor (the "Distributor"). The minimum initial investment is $2,000,000.
An investor should obtain from the Distributor, and should read in conjunction
with this prospectus, the materials describing the procedures under which Fund
shares may be purchased and redeemed. See "Purchases and Redemptions of Shares"
herein.
Proceeds from the sale of shares of the Fund are invested in the
Portfolio which then purchases securities in accordance with
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its investment objective and policies. Domini Social Investments LLC ("DSI") is
the Portfolio's manager (the "Manager") and provides investment supervisory and
administration services to the Portfolio. Mellon Equity Associates ("Mellon
Equity") is the Portfolio's investment submanager (the "Submanager"). DSI is
also the sponsor ("Sponsor") of the Fund and provides administrative services to
the Fund. The Boards of Trustees of the Fund and of the Portfolio provide broad
supervision over the affairs of the Fund and of the Portfolio, respectively. The
Trustees who are not "interested persons" of the Fund as defined in the
Investment Company Act of 1940, as amended (the "1940 Act") (the "Independent
Trustees"), are the same as the Independent Trustees of the Portfolio. A
majority of the Fund's Trustees are not affiliated with the Manager or the
Submanager. For further information about the Trustees of the Fund and the
Portfolio, see "Management of the Fund and the Portfolio" in the Statement of
Additional Information.
Kinder. Lydenberg, Domini & Co., Inc. ("KLD"), the former investment adviser of
the Portfolio and an affiliate of DSI, determines the composition of the Domini
400 Social IndexSM (which determines the composition of the Portfolio's
securities). The following persons are primarily responsible for the development
and maintenance of the Domini 400 Social IndexSM: Steven D. Lydenberg, Director
of Research, KLD, since 1990; and Peter D. Kinder, President, KLD, since 1988.
The Submanager manages the investments of the Portfolio from day to day in
accordance with the Portfolio's investment objective and policies.
See "Management" herein for more detailed information on the management of the
Fund and the Portfolio .
2
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EXPENSE SUMMARY
The following table provides (i) a summary of estimated expenses
relating to purchases and sales of shares of the Fund, and the estimated
aggregate annual operating expenses for the Fund and the Portfolio, as a
percentage of average net assets of the Fund, and (ii) an example illustrating
the dollar cost of such expenses on a $1,000 investment in the Fund.
Shareholder Transaction Expenses . . . . . . . . . . 0%
Annual Operating Expenses:
Advisory and Management Fees . . . . . . . 0.154%(1)
12b-1 Fees . . . . . . . . . . . . . . . . 0%
Other Expenses after Expense Reimbursements
--Administrative Services and Sponsorship Fees 0%(2)
--Other Expenses . . . . . . . . . . . . . . . 0.146%(3)
--Expense Payment Fees . . . . . . . . . . . . 0%
-
Total Operating Expenses . . . . . . . . . . 0.30%(4)
====
(1) Under the Management Agreement between the Portfolio
and DSI, DSI's fee for advisory and administrative
services to the Portfolio is 0.20% of the average daily
net assets of the Portfolio but will be reduced to the
extent necessary to keep the aggregate annual operating
expenses of the Portfolio (excluding brokerage fees and
commissions, interest, taxes and other extraordinary
expenses) at no greater than 0.20% of the average daily
net assets of the Portfolio, through [November 1,
1998]. If this fee reduction were not in effect,
advisory and management fees for the Portfolio would be
0.20% of the average daily net assets of the Portfolio.
(2) Under the Sponsorship Agreement between DSI and the Fund,
DSI's fee for administrative and sponsorship services is 0.25%
of the average daily net assets of the Fund but will be
reduced to the extent necessary to keep the aggregate annual
operating expenses of the
3
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Fund (including the Fund's share of the Portfolio's expenses
but excluding brokerage fees and commissions, interest, taxes
and other extraordinary expenses) at no greater than 0.30% of
the average daily net assets of the Fund through [November 1,
1998]. If this fee reduction were not in effect,
administrative services and sponsorship fees for the Fund
would be 0.25% of the average daily net assets of the Fund.
(3) DSI has made a voluntary undertaking to reimburse the
Fund for ordinary operating expenses (excluding
brokerage fees and commissions, interest, taxes and
other extraordinary expenses) until [November 1, 1998]
to the extent such ordinary expenses exceed 0.30% of
the average daily net assets of the Fund. Without this
voluntary undertaking, it is estimated that under the
proposed management restructuring, "Other Expenses" of
the Fund would be 0.358% of the average daily net
assets of the Fund and "Total Operating Expenses" of
the Fund would be 0.512% of the average daily net
assets of the Fund, assuming the same level of assets
and expenses of the Fund as existed during the fiscal
year ended July 31, 1997.
(4) Without the automatic fee reductions, which expire
[November 1, 1998], it is estimated that the aggregate
annual operating expenses of the Fund (including the
Fund's share of the Portfolio's expenses) would be
0.808% of the average daily net assets of the Fund
assuming the same level of assets and expenses of the
Fund as existed during the fiscal year ended July 31,
1997.
Example:
A shareholder of the Fund would pay the following expenses on a $1,000
investment in the Fund, assuming (1) 5% annual return and (2) redemption at the
end of:
1 year .......................................$3
3 years .......................................$10
5 years............................... .........$17
10 years........................................$38
The expense information in the expense table provided above has been
restated to reflect fees currently in effect. The purpose of the expense table
is to help investors understand the various costs and expenses that a
shareholder will bear directly or indirectly. See "Management" and "Other
Information Concerning Shares of the Fund--Expenses" for more information with
respect to the expenses of the Fund and the Portfolio
4
<PAGE>
The "Example" set forth above is hypothetical and should not be
considered a representation of past or future expenses of the Fund. Actual
expenses and returns may be more or less than those shown.
The Trust's Trustees believe that the aggregate per share expenses of
the Fund and the Portfolio will be less than or approximately equal to the
expenses which the Fund would incur if it retained the services of an investment
manager and an investment submanager and invested directly in the types of
securities being held by the Portfolio.
FINANCIAL HIGHLIGHTS
The following selected data for a share outstanding for the indicated
periods have been audited by [ ], independent certified public accountants,
whose reports thereon are incorporated by reference in the Statement of
Additional Information. This information should be read in conjunction with the
financial statements incorporated by reference in the Statement of Additional
Information.
The Fund's Annual Report includes a discussion of those factors,
strategies and techniques that materially affected the Fund's performance
5
<PAGE>
during the fiscal
year ended July 31, 1997, as well as certain related information. A copy of the
Annual Report will be made available without charge upon request.
[INSERT FYE 7/31/97 FINANCIAL HIGHLIGHTS TABLE]
PERFORMANCE INFORMATION
Performance information concerning the Fund may from time to time be
used in advertisements, shareholder reports or other communications to
shareholders. The Trust may provide period and average annualized "total rates
of return" with respect to the Fund. The "total rate of return" of the Fund
refers to the change in the value of an investment in a Fund over a stated
period based on any change in net asset value per share and includes the value
of any shares purchasable with any dividends or capital gains distributions
declared during such period. Period total rates of return may be annualized. An
annualized total rate of return is a compounded total rate of return which
assumes that the period total rate of return is generated over a 52-week period,
and that all dividends and capital gains distributions are reinvested. An
annualized total rate of return will be slightly higher than a period total rate
of return if the period is shorter than one year, because of the effect of
compounding.
Historical total return information for any period or portion thereof
prior to the establishment of the Fund will be that of the Portfolio, adjusted
to assume that all charges, expenses and fees of the Fund and the Portfolio
which are presently in effect were deducted during such periods, as permitted by
applicable SEC staff interpretations. The table that follows sets forth average
annual total return information for the periods indicated:
7/31/97 9/30/97
1 Year: . . . . . . . . . . . . . . . . . . [__.__ --.--]
5 Years: . . . . . . . . . . . . . . . . [__.__ --.--]
Commencement of Investment in the
Portfolio* to date . . . . . . . . . . . . [__.__ --.--]
*Domini Social Index Portfolio commenced operations on June 3,1991.
The Trust may provide "yield" quotations with respect to the Fund. The
"yield" of the Fund refers to the income generated by an investment in the Fund
over a 30-day or one-month period (which period shall be stated in any
advertisement or communications with a shareholder). This income is then
"annualized", that is, the amount of income generated by the investment over the
period is assumed to be generated over a
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52-week period and is shown as a percentage of investment. A "yield" quotation,
unlike a total rate of return quotation, does not reflect changes in net asset
value.
From time to time the Trust may also quote fund rankings from various
sources, such as Lipper Analytical Services, Inc., and may compare the Fund's
performance to that of the Domini 400 Social IndexSM and various other unmanaged
securities indices, such as the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500") and the Dow Jones Industrial Average. "Standard &
Poor(R)", "S&P(R)" and "Standard & Poor's 500(R)" are trademarks of Standard &
Poor's Corporation.
See the Statement of Additional Information for further information
concerning the calculation of yield and any total rate of return quotations.
Since the Fund's yield and total rate of return quotations are based on
historical earnings and since such yield and rates of return fluctuate over
time, such quotations should not be considered as an indication or
representation of the future performance of the Fund.
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective - The investment objective of the Fund is to
provide its shareholders with long-term total return (reflecting both dividend
and price performance of the Fund) which corresponds to the total return
performance of the Domini 400 Social IndexSM (sometimes referred to herein as
the "Index"). There can, of course, be no assurance that the Fund will achieve
its investment objective. The investment objective of the Fund may be changed
without approval by the Fund's shareholders.
Investment Policies - The Trust seeks to achieve the investment
objective of the Fund by investing all of the Fund's investable assets in the
Portfolio, which has the same investment objective as the Fund. The Portfolio
seeks to achieve its investment objective by investing in the common stocks
comprising the Domini 400 Social Index. The Portfolio will approximate the
weightings of securities held by the Portfolio to the weightings of the stocks
in the Index, except as described below, and will seek a correlation between the
weightings of securities held by the Portfolio and the weightings of the stocks
in the Index of 0.95 or better. A figure of 1.0 would indicate a perfect
correlation. As of September 30, 1997, the correlation between the weightings of
securities held by the Portfolio and the weightings of the stocks in the Index
was [_.__]. To the extent practicable, the Portfolio will attempt to be fully
invested. The ability of the Fund to duplicate the performance of the Index by
investing in the Portfolio will depend to some extent on the size and timing of
cash flows into and out of the Fund and the Portfolio as well as the Fund's and
the Portfolio's expenses. Adjustments in the securities holdings of the
Portfolio to accommodate cash flows will track the Domini 400
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Social Index to the extent practicable, but this will result in brokerage
expenses.
Social Criteria - The Domini 400 Social Index was developed and is
currently maintained by KLD. The Domini 400 Social Index is a common stock index
comprised of the stocks of approximately 400 companies which meet certain social
criteria. The weightings of the stocks compromising the Domini 400 Social Index
are based upon market capitalization. The criteria used in developing and
maintaining the Domini 400 Social Index involve the subjective judgment of KLD.
KLD, based on available data, seeks to exclude the following types of companies:
firms that derive more than 2% of their gross revenues from the sale of military
weapons; firms that derive any revenue from the manufacture of tobacco products
or alcoholic beverages; firms that derive any revenue from gambling enterprises;
and firms that have an ownership share in, or operate, nuclear power plants,or
participate in business related to the nuclear fuel cycle. KLD also considers
criteria such as corporate citizenship, employee relations, environmental
performance, and product-related issues when evaluating stocks for inclusion in
the Domini 400 Social Index. The corporate citizenship criteria include a
company's record with regard to its philanthropic activities and its community
relations in general. The employee relations criteria include a company's record
with regard to labor matters, workplace safety, equal employment opportunity,
employee benefit programs, and meaningful participation in company profits
either through stock purchase or profit sharing plans. The environmental
performance criteria include a company's record with regard to fines or
penalties, waste disposal, toxic emissions, efforts in waste reduction and
emissions reduction, recycling, and environmentally beneficial fuels, products
and services. The product-related criteria include a company's record with
regard to product safety, marketing practices and commitment to quality.
The Manager intends to vote proxies of companies included in the
Portfolio consistent with the social criteria used in developing and maintaining
the Domini Social 400 Index.
Index Management - The Portfolio is not managed in the traditional
investment sense, since changes in the composition of its securities holdings
are made in order to track the changes in the composition of securities included
in the Domini Social 400 Index. Moreover, inclusion of a stock in the Domini 400
Social Index does not imply an opinion by KLD or the Manager as to the merits of
that specific stock as an investment. However, KLD and the Manager believe that
enterprises which exhibit a social awareness, based on the criteria described
above, should be better prepared to meet future societal needs for goods and
services and may also be less likely to incur certain legal liabilities that may
be incurred when a product or service is determined to be harmful, and that such
enterprises should over the longer term be able to provide a positive return
8
<PAGE>
to investors.
In selecting stocks for inclusion in the Domini Social 400 Index:
1. KLD evaluated, in accordance with the social criteria described
above, each of the companies the stocks of which comprise the S&P 500. If a
company whose stock was included in the S&P 500 met KLD's social criteria and
met KLD's further criteria for industry diversification, financial solvency,
market capitalization, and minimal portfolio turnover, it was included in the
Domini 400 Social Index. As of July 31, 1997, of the 500 companies whose stocks
comprised the S&P 500, approximately [--]% were included in the Index.
2. The remaining stocks comprising the Domini 400 Social Index (i.e.,
those which are not included in the S&P 500) were selected based upon KLD's
evaluation of the social criteria described above, as well as upon KLD's
criteria for industry diversification, financial solvency, market
capitalization, and minimal portfolio turnover. Because of the social criteria
applied in the selection of stocks comprising the Domini 400 Social Index,
industry sector weighting in the Domini 400 Social Index may vary materially
from the industry weightings in other stock indices, including the S&P 500, and
certain industry sectors will be excluded altogether.
The component stocks of the S&P 500 are chosen by Standard & Poor's
Corporation ("S&P") solely with the aim of achieving a distribution by broad
industry groupings that approximates the distribution of these groupings in the
New York Stock Exchange common stock population, taken as the assumed model for
the composition of the total market. Construction of the S&P 500 by S&P proceeds
from industry groups to the whole. Since some industries are characterized by
companies of relatively small stock capitalization, the S&P 500 does not
comprise the 500 largest companies listed on the New York Stock Exchange. Not
all stocks included in the S&P 500 are listed on the New York Stock Exchange.
However, the total market value of the S&P 500 as of July 31, 1997 represented
[__]% of the aggregate market value of common stocks traded on the New York
Stock Exchange.
Inclusion of a stock in the S&P 500 Index in no way implies an opinion
by S&P as to its attractiveness as an investment, nor is S&P a sponsor of or
otherwise affiliated with the Fund or the Portfolio.
Some of the stocks included in the Domini 400 Social Index may be
stocks of foreign issuers (provided that the stocks are traded in the United
States in the form of American Depositary Receipts or similar instruments the
market for which is denominated in United States dollars). Securities of foreign
issuers may represent a greater degree of risk (i.e., as a result
9
<PAGE>
of exchange rate fluctuation, tax provisions, war or expropriation) than do
securities of domestic issuers.
The weightings of stocks in the Domini 400 Social Index are based on
each stock's relative total market capitalization, (i.e., market price per share
times the number of shares outstanding). Because of this weighting, as of July
31, 1997 approximately [__]% of the Domini 400 Social Index was comprised of the
20 largest companies in that Index.
KLD may exclude from the Domini 400 Social Index stocks issued by
companies which are in bankruptcy or whose bankruptcy KLD believes may be
imminent.
The Portfolio intends to readjust its securities holdings periodically
such that those holdings will correspond, to the extent reasonably practicable,
to the Domini 400 Social Index both in terms of composition and weighting. The
timing and extent of adjustments in the holdings of the Portfolio, and the
extent of the correlation of the holdings of the Portfolio with the Domini 400
Social Index, will reflect the Submanager's judgment as to the appropriate
balance between the goal of correlating the holdings of the Portfolio with the
composition of the Index, and the goals of minimizing transaction costs and
keeping sufficient reserves available for anticipated redemptions of Fund
shares. To the extent practicable, the Portfolio will seek a correlation between
the weightings of securities held by the Portfolio to the weightings of the
securities in the Index of 0.95 or better. The Board of Trustees of the
Portfolio will receive and review, at least quarterly, a report prepared by the
Submanager comparing the performance of the Fund and the Portfolio with that of
the Index, and comparing the composition and weighting of the Portfolio's
holdings with those of the Index, and will consider what action, if any, should
be taken in the event of a significant variation between the performance of the
Fund or the Portfolio, as the case may be, and that of the Index, or between the
composition and weighting of the Portfolio's securities holdings with those of
the stocks comprising the Index. If the correlation between the weightings of
securities held by the Portfolio and the weightings of the stocks in the Index
falls below 0.95, the Board of Trustees will review with the Submanager methods
for increasing such correlation, such as through adjustments in securities
holdings
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of the Portfolio.
The Portfolio may invest cash reserves in short-term debt securities
(i.e., securities having a remaining maturity of one year or less) issued by
agencies or instrumentalities of the United States Government, bankers'
acceptances, commercial paper or certificates of deposit, provided that the
issuer satisfies KLD's social criteria. The Portfolio does not currently intend
to invest in direct obligations of the United States Government. Short-term debt
securities purchased by the Portfolio will be rated at least Prime-1 by Moody's
Investors Service, Inc. or A-1+ or A-1 by S&P or, if not rated, determined to be
of comparable quality by the Portfolio's Board of Trustees. The Portfolio's
policy is to hold its assets in such securities pending readjustment of its
portfolio holdings of stocks comprising the Domini 400 Social Index and in order
to meet anticipated redemption requests. Such investments are not intended to be
used for defensive purposes in periods of anticipated market decline.
The annual portfolio turnover rates of the Portfolio for the fiscal
years ended July 31, 1996 and July 31, 1997 were 5% and 1%, respectively. The
Portfolio's average brokerage commission rates paid per share for the fiscal
years ended July 31, 1996 and July 31, 1997 were $0.05 and $0.05, respectively.
The Portfolio's primary consideration in placing securities
transactions with broker-dealers for execution is to obtain, and maintain the
availability of, execution at the most favorable prices and in the most
effective manner possible. Neither the Portfolio nor the Fund will engage in
brokerage transactions with the Manager, the Submanager or the Sponsor or the
Administrator or any of their respective affiliates or any affiliate of the Fund
or the Portfolio. For further discussion regarding securities trading by the
Portfolio, see the Statement of Additional Information.
Consistent with applicable regulatory policies, including those of the
Board of Governors of the Federal Reserve System and the Securities and Exchange
Commission, the Portfolio may make loans of its securities to member banks of
the Federal Reserve System and to broker-dealers. Such loans would be required
to be secured continuously by collateral consisting of securities, cash or cash
equivalents maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The Portfolio would have the right to
call a loan and obtain the securities loaned at any time on three days' notice.
During the existence of a loan, the Portfolio would continue to collect the
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equivalent of the dividends paid by the issuer on the securities loaned and
would also receive interest on investment of cash collateral. The Portfolio may
pay finder's and other fees in connection with securities loans. Loans of
securities involve a risk that the borrower may fail to return the securities or
may fail to provide additional collateral.
Although it has no current intention to do so, the Portfolio may make
short sales of securities or maintain a short position, if at all times when a
short position is open the Portfolio owns an equal amount of such securities, or
securities convertible into such securities.
Special Information Concerning the Master-Feeder Investment Fund
Structure
The investment objective of the Fund may be changed without the
approval of the Fund's shareholders, but not without written notice thereof to
shareholders thirty days prior to implementing the change. If there were a
change in the Fund's investment objective, shareholders should consider whether
the Fund remains an appropriate investment in light of their then-current
financial positions and needs. The investment objective of the Portfolio may
also be changed without the approval of the investors in the Portfolio, but not
without written notice
12
<PAGE>
thereof to the investors in the Portfolio (and notice by the Fund to its
shareholders) 30 days prior to implementing the change. There can, of course, be
no assurance that the investment objective of either the Fund or the Portfolio
will be achieved. See "Investment Restrictions" in the Statement of Additional
Information for a description of the fundamental policies of the Fund and of the
Portfolio that cannot be changed without approval by the holders of a "majority
of the outstanding voting securities" (as defined in the 1940 Act) of the Fund
or the Portfolio, respectively. Except as stated otherwise, all investment
guidelines, policies and restrictions described herein and in the Statement of
Additional Information are non-fundamental.
Smaller funds investing in the Portfolio may be materially affected by
the actions of larger funds investing in the Portfolio. For example, if a large
fund withdraws from the Portfolio, the remaining funds may experience higher pro
rata operating expenses, thereby producing lower returns. Additionally, the
Portfolio may become less diverse, resulting in increased portfolio risk.
(However, this possibility exists as well for traditionally structured funds
which have large or institutional investors.) Also, funds with a greater pro
rata ownership in the Portfolio could have effective voting control of the
operations of the Portfolio. Subject to exceptions that are not inconsistent
with applicable rules or policies of the Securities and Exchange Commission,
whenever the Trust is requested to vote on matters pertaining to the Portfolio,
the Trust will hold a meeting of shareholders of the Fund and will cast all of
its votes in the same proportion as the votes of the Fund's shareholders. Fund
shareholders who do not vote will not affect the Trust's votes at the Portfolio
meeting. The percentage of the Trust's votes representing Fund shareholders not
voting will be voted by the Trustees of the Trust in the same proportion as the
Fund shareholders who do, in fact, vote. Certain changes in the Portfolio's
investment objective, policies or restrictions may require the Fund to withdraw
its interest in the Portfolio. Any such withdrawal could result in a
distribution "in kind" of portfolio securities (as opposed to a cash
distribution from the Portfolio). If securities are distributed, the Fund could
incur brokerage, tax or other charges in converting the securities to cash. In
addition, the distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Fund. Notwithstanding the
above, there are other means for meeting shareholder redemption requests, such
as borrowing.
The Trust may withdraw the Fund's investment from the Portfolio at any
time, if the Board of Trustees of the Trust determines that it is in the best
interests of the Fund to do so. Upon any such withdrawal, the Board of Trustees
would consider what action might be taken, including the investment of all the
assets of the Fund in another pooled investment entity having the same
investment objective as the Fund or the retention of an
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<PAGE>
investment adviser to manage the Fund's assets in accordance with the investment
policies described above with respect to the Portfolio. In the event the
Trustees of the Trust were unable to find a substitute investment company in
which to invest the Fund's assets and were unable to secure directly the
services of an investment manager and investment submanager, the Trustees will
seek to determine the best course of action.
For more information about the Portfolio's policies, management and
expenses see "Investment Objective and Policies", "Management", and "Other
Information Concerning Shares of the Fund - Expenses". For information about the
Portfolio's investment restrictions see the Statement of Additional
Information.
-----------
As a matter of fundamental policy, the Trust will invest all of the
investable assets of the Fund (either directly or through the Portfolio) in one
or more of: (i) stocks comprising an index of securities selected applying
social criteria, which initially will be the Domini 400 Social Index, (ii)
short-term debt securities of issuers which meet social criteria, (iii) cash,
and (iv) options on equity securities. This fundamental policy cannot be changed
without the approval of the holders of a majority of the Fund's shares (which,
as used in this Prospectus, means the lesser of (a) more than 50% of the
outstanding shares of the Fund, or (b) 67% or more of the outstanding shares of
the Fund present at a meeting at which holders of more than 50% of the Fund's
outstanding shares are represented in person or by proxy). Except for this
fundamental policy, investor approval is not required to change the Fund's or
the Portfolio's investment objective or any of the investment policies described
above.
The Statement of Additional Information filed with the Securities and
Exchange Commission includes a discussion of other investment policies and a
listing of specific investment restrictions which govern the Portfolio's and the
Fund's investment policies. Certain of the investment restrictions listed in the
Statement of Additional Information may not be changed by the Portfolio without
the approval of the shareholders of the Fund and the other investors in the
Portfolio or by the Trust without the approval of the shareholders of the Fund.
If a percentage or rating restriction on investment or utilization of assets is
adhered to at the time an investment is made or assets are so utilized, a later
change in percentage resulting from changes in the Portfolio's total assets or
the value of the Portfolio's securities or a later change in the rating of a
security held by the Portfolio will not be considered a violation of policy.
Expenses of the Portfolio with respect to investment management and
administrative services, investment submanagement services and sponsorship
services and administration services are described herein under "Management
Manager, - Submanager and - Sponsor", respectively.
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MANAGEMENT
The Boards of Trustees of the Fund and the Portfolio provide broad
supervision over the affairs of the Fund and the Portfolio, respectively. The
Fund has retained the services of DSI as Sponsor, but has not retained the
services of an investment manager or investment submanager since the Fund seeks
to achieve its investment objective by investing all of its investable assets in
the Portfolio. The Portfolio has retained the services of DSI as investment
manager and Mellon Equity as investment submanager.
Manager
DSI, a Massachusetts limited liability company, provides investment
management and administrative services to the Portfolio pursuant to a Management
Agreement. DSI has been registered as an investment adviser under the Investment
Advisers Act of 1940 since 1997. The services provided by the Manager consist of
investment supervisory services, overall operational support and administrative
services. The administrative services include the provision of general office
facilities and supervising the overall administration of the Portfolio. For its
services under the Management Agreement, the Manager receives from the Portfolio
a fee accrued daily and paid monthly at an annual rate equal to 0.20% of the
Portfolio's average daily net assets, on an annualized basis for the Portfolio's
then-current fiscal year, subject to reduction. See "Expenses" for a description
of this fee reduction pursuant to the Management Agreement.
Prior to [November 1, 1997], KLD, as the Portfolio's former investment
adviser, received from the Portfolio a fee accrued daily and paid monthly at an
annual rate equal to 0.025% of the Portfolio's average daily net assets, on an
annualized basis for the Portfolio's then-current fiscal year. Additionally,
prior to [November 1, 1997], KLD received from the Portfolio a fee accrued daily
and paid monthly at an annual rate equal to 0.025% of the average daily net
assets of the Portfolio for its then current fiscal year for administrative
services.
"DominiSM" and "Domini 400 Social IndexSM" are service marks of KLD
which are licensed to DSI with the consent of Amy L. Domini. Pursuant to
agreements among DSI, Amy L. Domini, and each of the Fund and the Portfolio, the
Portfolio may be required to discontinue use of these service marks if DSI
ceases to be the Manager of the Portfolio or Ms. Domini withdraws her consent,
and the Fund may be required to discontinue the use of these service marks if
either DSI ceases to be the Sponsor of the Fund or Ms. Domini withdraws her
consent or if either DSI ceases to be the Manager of the Portfolio or the Fund
ceases to invest all of its assets in the Portfolio.
Submanager
Mellon Equity provides investment submanagement services to the
Portfolio on a day-to-day basis pursuant to a Submanagement Agreement with DSI.
Mellon Equity does not determine the composition of the Domini Social Index.
Under the Submanagement Agreement, DSI pays Mellon Equity an investment
submanagement fee equal on an annual basis to 0.10% of the average daily net
assets of the Portfolio. Prior to [November 1, 1997], the Portfolio paid Mellon
Equity an investment management fee equal on an annual basis to 0.10% of
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<PAGE>
the average daily net assets of the Portfolio.
Mellon Equity is a Pennsylvania business trust founded in 1987 whose
beneficial owners are Mellon Bank N.A. and MMIP, Inc (a wholly owned subsidiary
of Mellon Bank Corporation ("Mellon Bank")). Mellon Equity has been registered
as an investment adviser under the Investment Advisers Act of 1940 since 1986.
Prior to 1987, the Submanager was part of the Equity Management Group of Mellon
Bank's Trust and Investment Department, which managed domestic equity,
tax-exempt and institutional pension assets since 1947. As of December 31, 1996,
the Submanager had approximately $11.3 billion in assets under management.
[John R. O'Toole (a senior vice president of Mellon Equity, CFA and a
member of AIMR), has been primarily responsible for the day-to-day portfolio
management of the Portfolio since November 1994. He has been employed by Mellon
Equity and/or Mellon Bank as a portfolio manager for over five years.]
Sponsor
Pursuant to a Sponsorship Agreement, DSI provides the Fund with the
administrative personnel and services necessary to operate the Fund. In addition
to general administrative services and facilities for the Fund similar to those
provided by DSI to the Portfolio under the Management Agreement, DSI answers
questions from the general public, the media and investors in the Fund regarding
the composition of the Domini 400 Social Index and the securities holdings of
the Portfolio. For these services and facilities, DSI receives fees computed and
paid monthly from the Fund at an annual rate equal to 0.25% of the average daily
net assets of the Fund
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<PAGE>
for the Fund's then-current fiscal year , subject to reduction. See "Expenses"
for a description of this fee reduction pursuant to the Sponsorship Agreement.
Distributor
Signature is the principal distributor for the shares of the Fund
for which services it receives no fee.
Transfer Agent and Custodian
** 1 The Trust has entered into a Transfer Agency Agreement with
Fundamental Shareholder Services, Inc. ("FSSI"), pursuant to which FSSI acts as
Transfer Agent for the Trust. The Transfer Agent maintains an account for each
shareholder of the Fund, performs other transfer agency functions and acts as
dividend disbursing agent for the Fund. Pursuant to Custodian Agreements,
Investors Bank & Trust Company ("IBT") acts as the custodian of the Trust's
assets (i.e., cash and the Fund's interest in the Portfolio) and as the
custodian of the Portfolio's assets (the "Custodian"). The Custodian's
responsibilities include safeguarding and controlling the Portfolio's cash and
securities, handling the receipt and delivery of securities, determining income
and collecting interest on the Portfolio's investments, maintaining books of
original entry for portfolio and fund accounting and other required books and
accounts, and calculating the daily net asset value of the Portfolio and the
daily net asset value of shares of the Fund. Securities held by the Portfolio
may be deposited into certain securities depositaries. The Custodian does not
determine the investment policies of the Portfolio or decide which securities
the Portfolio will buy or sell. The Portfolio may, however, invest in securities
of the Custodian and may deal with the Custodian as principal in securities
transactions. IBT also serves as transfer agent for the Portfolio. For their
services, FSSI and IBT will receive such compensation as may from time to time
be agreed upon by each of them and the Fund or the Portfolio.
PURCHASES AND REDEMPTIONS OF SHARES
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<PAGE>
Purchases
Shares of the Fund may be purchased directly from the Distributor
without a sales load at the net asset value next determined after an order for
shares is received in good order and accepted by the Trust on any day the New
York Stock Exchange is open for trading (a "Fund Business Day"). The minimum
initial investment in the Fund is $2,000,000. The Fund in its sole discretion
may permit purchases for lesser amounts. The Fund reserves the right to cease
offering its shares for sale at any time or to reject any order for the purchase
of its shares. The Fund expects to reject any order that is not an exempt
transaction under the relevant state securities laws.
For each shareholder of record, the Fund establishes an open account to
which all shares purchased are credited together with any dividends and capital
gains distributions which are paid in additional shares. See "Other Information
Concerning Shares of the Fund - Dividends and Capital Gains Distributions". No
share certificates will be issued.
Investors desiring to purchase shares of the Fund by mail should
complete an Account Application and mail the Application and a check (in U.S.
dollars), payable to "Domini Institutional Social Equity Fund," to the Fund at
the following address:
Domini Institutional Social Equity Fund
P.O. Box 117
New York, New York 10274-0117
For overnight deliveries, please use the following address:
Domini Institutional Social Equity Fund
c/o Fundamental Shareholder Services, Inc.
90 Washington Street
New York, New York 10006
(212) 635-5000
An investor desiring to purchase shares by a wire transfer of funds
should request its bank to transmit immediately available funds. The information
transmitted with the funds must include the investor's name and address and a
statement indicating whether a new account is being established by such wire
transfer or whether such wire transfer is being made by a shareholder with an
account with the Fund. If the initial purchase by an investor is by a wire
transfer of funds, an account number will be assigned to such investor and an
Account Application must subsequently be completed and mailed to the Fund. For
purchases by wire transfer, please call Fundamental Shareholder Services, Inc.,
the Fund's transfer agent (the "Transfer Agent"), at 1-800-782-4165 to obtain
wire transfer instructions.
Shares of the Fund may be purchased by exchanging securities
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<PAGE>
acceptable to the Trust for shares of the Fund. The Trust will not accept a
security in exchange for Fund shares unless (a) the security is consistent with
the investment objective and polices of the Fund and the Portfolio, and (b) the
security is deemed acceptable by the Manager and the Submanager. Securities
offered in exchange for shares of the Fund will be valued in accordance with the
usual valuation procedure for the Fund. See "Net Asset Value".
For further information on how to purchase shares of the Fund, an
investor should contact the Distributor (see back cover for address and phone
number).
Redemptions
A shareholder may redeem all or any portion of the shares in its
account at any time at the net asset value next determined after a redemption
request in proper form is furnished by the shareholder to the Fund. Redemptions
will therefore be effected on the same day the redemption order is received by
the Fund provided such order is received and accepted on a Fund Business Day
prior to the time at which the net asset value of the Fund is determined. The
proceeds of a redemption will be paid by the Fund in federal funds normally on
the next Fund Business Day, but in any event within seven days if all checks in
payment for the purchase of shares to be redeemed have been cleared by the Fund
(which may take up to 15 days). Redemptions may be paid by the Fund by check or
by wire transfer if the appropriate box on the Account Application has been
completed. Instructions for wire redemptions are set forth in the Account
Application.
Redemptions may be made by letter to the Fund specifying the dollar
amount or number of shares to be redeemed and the account number. The letter
must be signed in exactly the same way the account is registered and the
signatures must be guaranteed by an eligible signature guarantor. In some cases
the Fund may require the furnishing of additional documents. Written requests
should be mailed to the Fund at the following address:
Domini Institutional Social Equity Fund
P.O. Box 117
New York, New York 10274-0117
For overnight deliveries, please use the following address:
Domini Institutional Social Equity Fund
c/o Fundamental Shareholder Services, Inc.
90 Washington Street
New York, New York 10006
(212) 635-5000
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<PAGE>
An investor may also redeem shares by telephone (by calling
1-800-782-4165) if the appropriate box on the Account Application has been
completed. The Trust, Transfer Agent and Distributor will not be liable for any
loss, liability, cost or expense for acting upon telephone instructions believed
to be genuine. Accordingly, shareholders will bear the risk of loss. The Trust
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, including, without limitation, recording telephone
instructions and/or requiring the caller to provide some form of personal
identification. Failure to employ reasonable procedures may make the Fund liable
for any losses due to unauthorized or fraudulent telephone instructions. The
following information must be supplied by the shareholder or broker at the time
a request for a telephone redemption is made: (1) the shareholder's account
number; (2) the shareholder's social security number; and (3) the name and
account number of the shareholder's designated securities dealer or bank.
The Trust, Transfer Agent and Distributor reserve the right to refuse
wire or telephone redemptions. Procedures for redeeming shares by wire or
telephone may be modified or terminated at any time by the Trust or the
Distributor. The Trust reserves the right to restrict or terminate wire
redemption privileges. Proceeds of wire redemptions will be transferred within
seven days after receipt of the request.
The value of shares redeemed may be more or less than the shareholder's
cost, depending on the Fund's performance during the period the shareholder
owned its shares. Redemptions of shares are taxable events on which the
shareholder may recognize a gain or a loss.
The right of any shareholder to receive payment with respect to any
redemption may be suspended or the payment of the redemption proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on such Exchange is restricted, or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
TAX MATTERS
Each year the Fund intends to qualify and elect to be treated as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). Provided the Fund meets all income, distribution and
diversification requirements of the Code, and distributes all of its net
investment income and realized capital gains to shareholders in accordance with
the
20
<PAGE>
timing requirements imposed by the Code, the Fund will not be required to pay
any federal income or excise taxes. The Portfolio will also not be required to
pay any federal income or excise taxes. However, shareholders of the Fund
normally will have to pay federal income taxes, and any state or local taxes, on
the dividends and any capital gains distributions they receive from the Fund.
After the end of each calendar year, each shareholder receives information for
tax purposes on the dividends and any capital gains distributions received
during that calendar year including the portion taxable as ordinary income, the
portion taxable as long-term capital gains, the portion, if any, representing a
return of capital (which generally is free of current taxes but results in a
basis reduction), the amount, if any, of federal income tax withheld, and the
amount of any dividends eligible for the dividends-received deduction for
corporations.
Dividends and distributions to shareholders will be treated in the same
manner for federal income tax purposes whether received in cash or reinvested in
additional shares of the Fund. Distributions of net capital gains (i.e., the
excess of net long-term capital gains over net short-term capital losses) will
cause any short-term capital loss realized on the disposition by a Fund's
shareholder of Fund shares held for six or fewer months to be recharacterized,
to the extent of those distributions, as long-term capital loss.
Under the back-up withholding rules of the Code, certain shareholders
may be subject to 31% withholding of federal income tax on distributions and
payments made by the Fund. Generally, shareholders are subject to back-up
withholding if they have not provided the Fund with a correct taxpayer
identification number and certain other certifications.
The Trust is organized as a Massachusetts business trust and, under
current law, the Fund is not liable for any income or franchise tax in the
Commonwealth of Massachusetts as long as the Fund qualifies as a regulated
investment company under the Code.
The foregoing discussion is intended for general information only. A
prospective shareholder should consult with its own tax advisor as to the tax
consequences of an investment in the Fund, including the status of distributions
from the Fund under applicable state or local law.
OTHER INFORMATION CONCERNING SHARES OF THE FUND
Net Asset Value
The Trust determines the net asset value of each of the Fund's shares
on each Fund Business Day. This determination is made once during each such day
as of the close of regular trading on the New York Stock Exchange by deducting
the amount of the Fund's liabilities from the value of its assets and dividing
the
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<PAGE>
difference by the number of shares of the Fund outstanding. A share's net asset
value is effective for orders received by the Distributor on a Fund Business Day
prior to the time at which such net asset value is determined.
Since the Trust will invest all of the Fund's investable assets in the
Portfolio, the value of the Fund's investable assets will be equal to the value
of its beneficial interest in the Portfolio. The net asset value of the
Portfolio is determined as of the close of regular trading on the New York Stock
Exchange on each Fund Business Day, by deducting the amount of the Portfolio's
liabilities from the value of its assets. The value of the Fund's beneficial
interest in the Portfolio will be determined by multiplying the net asset value
of the Portfolio by the percentage, effective for that day, which represents the
Fund's share of the aggregate beneficial interests in the Portfolio. (See
"Description of Shares, Voting Rights and Liabilities" below.)
Equity securities held by the Portfolio are valued at the last sale
price on the exchange on which they are primarily traded or on the NASDAQ system
for unlisted national market issues, or at the last quoted bid price for
securities in which there were no sales during the day or for unlisted
securities not reported on the NASDAQ system. If the Portfolio purchases option
contracts, such option contracts which are traded on commodities or securities
exchanges are normally valued at the settlement price on the exchange on which
they are traded. Short-term obligations with remaining maturities of less than
sixty days are valued at amortized cost, which constitutes fair value as
determined by the Board of Trustees of the Portfolio. Portfolio securities
(other than short-term obligations with remaining maturities of less than sixty
days) for which there are no such quotations or valuations are valued at fair
value as determined in good faith by or at the direction of the Portfolio's
Board of Trustees.
Dividends and Capital Gains Distributions
Substantially all of the Fund's net income from dividends and interest
is paid to the Fund's shareholders quarterly (in the months of March, June,
September and December) as a dividend. For this purpose, the Fund's "net income
from dividends and interest" consists of all income from dividends and interest
accrued on the assets of the Fund (i.e., the Fund's share of the Portfolio's net
income from dividends and interest), less all actual and accrued expenses of the
Fund determined in accordance with generally accepted accounting principles.
The Fund also declares a long-term capital gains distribution to its
shareholders on an annual basis, usually in December, if the Fund's share of the
Portfolio's profits during the year from the sale of securities held for longer
than the applicable long-term capital gains holding period exceeds the Fund's
share of the Portfolio's losses during such year from the sale of
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<PAGE>
securities together with the Fund's share of the Portfolio's net capital losses
carried forward from prior years (to the extent not used to offset short-term
capital gains). The Fund's share of the Portfolio's net short-term capital gains
realized during each fiscal year will also be distributed at that time.
The Fund will also make additional distributions to its shareholders to
the extent necessary to avoid application of the 4% nondeductible excise tax
created by the Tax Reform Act of 1986 on certain undistributed income and net
capital gains of mutual funds.
A shareholder of the Fund may elect to receive dividends and capital
gains distributions in either cash or additional shares. Unless otherwise
specified in writing by a shareholder, all dividends and capital gains
distributions will be reinvested in additional shares.
Expenses
The Fund and the Portfolio each are responsible for all of their
respective expenses, including the compensation of their respective Trustees who
are not interested persons of the Fund or the Portfolio; governmental fees;
interest charges; taxes; membership dues in the Investment Company Institute
allocable to the Fund or the Portfolio; fees and expenses of independent
auditors, of legal counsel and of any transfer agent, custodian, registrar or
dividend disbursing agent of the Fund or the Portfolio; insurance premiums; and
expenses of calculating the net asset value of the Portfolio and of shares of
the Fund.
The Fund will also pay sponsorship fees payable to the Sponsor; all
expenses of distributing and redeeming shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, reports,
notices, proxy statements and reports to shareholders and to governmental
offices and commissions; expenses of shareholder meetings; and expenses relating
to the issuance, registration and qualification of shares of the Fund and the
preparation, printing and mailing of prospectuses for such purposes.
Under the Sponsorship Agreement DSI's fee will be reduced to the extent
necessary to keep the aggregate annual operating expenses of the Fund (including
the Fund's share of the Portfolio's expenses but excluding brokerage fees and
commissions, interest, taxes and other extraordinary expenses) at no greater
than 0.30% of the average daily net assets of the Fund through [November 1,
1998].
The Portfolio is also responsible for the expenses connected with the
execution, recording and settlement of security transactions; fees and expenses
of the Portfolio's custodian for all services to the Portfolio, including
safekeeping of funds and securities and maintaining required books and accounts;
expenses
23
<PAGE>
of preparing and mailing reports to investors and to governmental offices and
commissions; expenses of meetings of investors; and the investment management
fees payable to the Manager .
Under the Management Agreement . DSI's fee will be reduced to the
extent necessary to keep the aggregate annual
operating expenses of the Portfolio (excluding brokerage fees and commissions,
interest, taxes and extraordinary expenses) at no greater than 0.20% of the
average daily net assets of the Portfolio through [November 1, 1998].
There is no assurance that DSI will maintain the fee reductions
pursuant to the Management Agreement or the Sponsorship Agreement beyond the
specified date
.
Description of Shares, Voting Rights and Liabilities
The Trust's Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional Shares of Beneficial Interest (par value
$0.01 per share) and to divide or combine the shares into a greater or lesser
number of shares without thereby changing the proportionate beneficial interests
in the Fund. Each share represents an equal proportionate interest in the Fund
with each other share. Shares have no preemptive or conversion rights. Shares
when issued are fully paid and nonassessable, except as set forth below.
Shareholders are entitled to one vote for each share held. The Trust is not
required to hold annual meetings of shareholders of the Fund but the Trust will
hold special meetings of shareholders of the Fund when in the judgment of the
Trustees it is necessary or desirable to submit matters for a shareholder vote.
Upon liquidation of the Fund, shareholders would be entitled to share pro rata
in the net assets of the Fund available for distribution to shareholders.
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<PAGE>
Shareholders have under certain circumstances the right to communicate with
other shareholders in connection with requesting a meeting of shareholders for
the purpose of removing one or more Trustees. Shareholders also have under
certain circumstances the right to remove one or more Trustees without a
meeting.
The Trust reserves the right to create and issue any number of series
of shares, in which case the shares of each series would participate equally in
the earnings, dividends and assets of the particular series (except for
differences among any classes of shares of any series). Currently, the Trust has
only one series of shares, all of which are of the same class. The Trust may
establish additional classes of any series of shares. For example, the Fund may
offer another class of shares that has lower annual distribution fees or
shareholder servicing fees. Prior to offering another class of shares, the Trust
would either issue a new prospectus and statement of additional information or
amend this Prospectus and the Statement of Additional Information to reflect
such issuance.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
The Portfolio, in which all of the investable assets of the Fund are
invested, is organized as a trust under the laws of the State of New York. The
Portfolio's Declaration of Trust provides that the Trust and other entities
investing in the Portfolio (i.e., other investment companies, insurance company
separate accounts and common and commingled trust funds) will each be liable for
all obligations of the Portfolio. However, the risk of the Trust incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the Portfolio itself was unable to meet
its obligations. Accordingly, the Trust's Trustees believe that neither the Fund
nor its shareholders will be adversely affected by reason of the Fund's
investing in the Portfolio. In addition, whenever the Trust is requested to vote
on a fundamental policy of the Portfolio, the Trust will hold a meeting of the
Fund's shareholders and will cast its vote as instructed by its shareholders.
Each investor in the Portfolio, including the Fund, may add to or
reduce its investment in the Portfolio on each Fund Business Day. At the close
of each such Fund Business Day, the value of each investor's beneficial interest
in the Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, effective for that day, which
25
<PAGE>
represents that investor's share of the aggregate beneficial interests in the
Portfolio. Any additions or withdrawals, which are to be effected as of the
close of business on that day, will then be effected. The investor's percentage
of the aggregate beneficial interests in the Portfolio will then be recomputed
as the percentage equal to the fraction (i) the numerator of which is the value
of such investor's investment in the Portfolio as of the close of business on
such day plus or minus, as the case may be, the amount of any additions to or
withdrawals from the investor's investment in the Portfolio effected as of the
close of business on such day, and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of the close of business on such
day plus or minus, as the case may be, the amount of the net additions to or
withdrawals from the aggregate investments in the Portfolio by all investors in
the Portfolio. The percentage so determined will then be applied to determine
the value of the investor's interest in the Portfolio as of the close of
business on the following Fund Business Day.
- -----------
The Statement of Additional Information filed with the Securities and
Exchange Commission contains more detailed information about the Trust and the
Portfolio, including information related to (i) investment policies and
restrictions of the Fund and the Portfolio, (ii) the Trustees, officers, Manager
of the Portfolio and Sponsor of the Fund, (iii) portfolio transactions, (iv) the
Fund's shares, including rights and liabilities of shareholders, (v) additional
performance information, including the method used to calculate yield and total
rate of return quotations of the Fund, (vi) determination of the net asset value
of shares of the Fund, and (vii) the audited financial statements of the Fund
and the Portfolio at July 31, 1997.
26
<PAGE>
Domini Institutional Social Equity Fund
[11 West 25th Street
New York, NY 10010]
Portfolio Investment Custodian: Investors Bank &
Manager and Fund Sponsor Trust Company
Domini Social 200 Clarendon Street
Investments LLC Boston, MA 02116
[11 West 25th Street
New York, NY 100 Auditors:
(___) ___-____ KPMG Peat Marwick LLP
99 High Street
Portfolio Investment Boston, MA 02110
Submanager:
Mellon Equity Associates Legal Counsel:
500 Grant Street Bingham, Dana & Gould LLP
Suite 3700 150 Federal Street
Pittsburgh, PA 15258-0001 Boston, MA 02110
Transfer Agent:
Distributor: Fundamental Shareholder
Signature Broker-Dealer Service, Inc. Services, Inc.
6 St. James Avenue 90 Washington Street
Boston, MA 02116 New York, NY 10006
(800) 762-6814 (800) 782-4165
<PAGE>
Domini Institutional Social Equity Fund Investing for GoodSM
- ---------------------------- November 28, 1997
<PAGE>
DSI267G
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 28, 1997
DOMINI INSTITUTIONAL SOCIAL EQUITY FUND
Table of Contents
Page
1. The Fund............................................................. 2
2. Investment Objective, Policies and Restrictions.......................2
3. Performance Information..............................................[]
4. Determination of Net Asset Value; Valuation of Portfolio
Securities..............................................................[]
5. Management of the Fund and the Portfolio.............................[]
6. Independent Auditors.................................................[]
7. Taxation.............................................................[]
8. Portfolio Transactions and Brokerage Commissions.....................[]
9. Description of Shares, Voting Rights and Liabilities.................[]
10. Financial Statements................................................[]
DOMINI INSTITUTIONAL SOCIAL EQUITY FUND
[11 West 25th
Street, New York, New York 10010]
[(800) 762-6814]
This Statement of Additional Information sets forth information which
may be of interest to investors but which is not necessarily included in the
Fund's Prospectus dated November 28, 1997, as amended from time to time. This
Statement of Additional Information should be read in conjunction with the
Prospectus, a copy of which may be obtained by an investor without charge by
contacting Signature Broker-Dealer Services, Inc., the Fund's distributor, at
(800) 762-6814.
This Statement of Additional Information is NOT a prospectus and is
authorized for distribution to prospective investors only if preceded or
accompanied by an effective prospectus and should be read only in conjunction
with such prospectus.
<PAGE>
1. THE FUND
The Domini Institutional Social Equity Fund (the "Fund") is a no-load,
diversified, open-end management investment company. The Fund is a series of
shares of beneficial interest of Domini Institutional Trust (the "Trust"), which
was organized as a business trust under the laws of the Commonwealth of
Massachusetts on April 1, 1996. The Trust offers to buy back (redeem) shares of
the Fund from its shareholders at any time at net asset value. References in
this Statement of Additional Information to the "Prospectus" are to the current
Prospectus of the Fund, as amended or supplemented from time to time.
Domini Social Investments LLC ("DSI") the Fund's sponsor (the
"Sponsor"), supervises the overall administration of the Fund. The Board of
Trustees provides broad supervision over the affairs of the Fund. Shares of the
Fund are continuously sold by Signature Broker-Dealer Services, Inc.
("Signature"), the Fund's distributor (the "Distributor"). The minimum initial
investment is $2,000,000. An investor should obtain from the Distributor, and
should read in conjunction with the Prospectus, the materials describing the
procedures under which Fund shares may be purchased and redeemed.
The Fund seeks to achieve its investment objective by investing all its
assets in the Domini Social Index Portfolio (the "Portfolio"), a diversified
open-end management investment company having the same investment objective as
the Fund. DSI is the Portfolio's investment manager (the "Manager"). Mellon
Equity Associates ("Mellon Equity") is the Portfolio's investment submanager
(the "Submanager"). Kinder, Lydenberg, Domini & Co., Inc. ("KLD") determines the
composition of the Domini 400 Social IndexSM. The Submanager manages the
investments of the Portfolio from day to day in accordance with the Portfolio's
investment objective and policies. "DominiSM" and "Domini 400 Social IndexSM"
are service marks of KLD.
2. INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
Investment Objective
The investment objective of the Fund is to provide its shareholders
with long-term total return (reflecting both dividend and price performance of
the Fund) which corresponds to the performance of the Domini 400 Social IndexSM
(sometimes referred to herein as the "Domini Social Index" or "Index"). There
can, of course, be no assurance that the Fund will achieve its investment
objective. The investment objective of the Fund may be changed without approval
by the Fund's shareholders.
2
<PAGE>
Investment Policies
The Trust seeks to achieve the investment objective of the Fund by
investing all of the Fund's investable assets in the Portfolio, which has the
same investment objective as the Fund. The Trust may withdraw the Fund's
investment in the Portfolio at any time if the Board of Trustees of the Trust
determines that it is in the best interests of the Fund to do so. Upon any such
withdrawal, the Board of Trustees would consider what action might be taken,
including the investment of all the investable assets of the Fund in another
pooled investment entity having the same investment objective as the Fund, or
the retaining of an investment adviser to manage the Fund's assets in accordance
with the investment policies described below with respect to the Portfolio. The
approval of the Fund's shareholders would not be required to change any of the
Fund's investment policies.
The following supplements the information concerning the Portfolio's
investment policies contained in the Prospectus and should only be read in
conjunction therewith.
A company which is not included in the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500") may be included in the Domini Social Index
primarily in order to afford representation to an industrial sector which would
otherwise be under-represented in the Index. Because of the social criteria
applied in the selection of stocks comprising the Domini Social Index, industry
sector weighting in the Domini Social Index may vary materially from the
industry weightings in other stock indices, including the S&P 500.
The Portfolio does not purchase securities which the Portfolio
believes, at the time of purchase, will be subject to exchange controls or
foreign withholding taxes; however, there can be no assurance that such laws may
not become applicable to certain of the Portfolio's investments. In the event
unforeseen exchange controls or foreign withholding taxes are imposed with
respect to any of the Portfolio's investments, the effect may be to reduce the
income received by the Portfolio on such investments.
Although neither the Fund nor the Portfolio has any current intention
to do so, the Fund and the Portfolio may invest in securities which may be
resold pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act").
It is a fundamental policy of the Portfolio and the Fund that neither
the Portfolio nor the Fund may invest more than 25% of the total assets of the
Portfolio or the Fund, respectively, in any one industry, although the Fund will
invest all of its assets in the Portfolio, and the Portfolio may and would
invest more than 25% of its assets in an industry if stocks in that industry
were to comprise more than 25% of the Domini Social
3
<PAGE>
Index. Based on the current composition of the Index, this is considered highly
unlikely. If the Portfolio were to concentrate its investments in a single
industry, the Portfolio and the Fund would be more susceptible to any single
economic, political or regulatory occurrence than would be another investment
company which was not so concentrated.
Loans of Securities: The Portfolio may lend its securities to brokers,
dealers and financial institutions, provided that (1) the loan is secured
continuously by collateral, consisting of U.S. Government securities or cash or
letters of credit, which is marked to the market daily to ensure that each loan
is fully collateralized at all times; (2) the Portfolio may at any time call the
loan and obtain the return of the securities loaned within three business days;
(3) the Portfolio will receive any interest or dividends paid on the securities
loaned; and (4) the aggregate market value of securities loaned will not at any
time exceed 30% of the total assets of the Portfolio.
The Portfolio will earn income for lending its securities because cash
collateral pursuant to these loans will be invested in short-term money market
instruments. Loans of securities involve a risk that the borrower may fail to
return the securities or may fail to provide additional collateral.
In connection with lending securities, the Portfolio may pay reasonable
finders, administrative and custodial fees. No such fees will be paid to any
person if it or any of its affiliates is affiliated with the Portfolio, the
Manager or the Submanager.
Although the Portfolio reserves the right to lend its securities, it
has no current intention of doing so in the foreseeable future.
Risk Factors Involved in Option Contracts: Although it has no current
intention to do so, the Portfolio may in the future enter into certain
transactions in stock options for the purpose of hedging against possible
increases in the value of securities which are expected to be purchased by the
Portfolio or possible declines in the value of securities which are expected to
be sold by the Portfolio. Generally, the Portfolio would only enter into such
transactions on a short-term basis pending readjustment of its holdings of
underlying stocks.
The purchase of an option on an equity security provides the holder
with the right, but not the obligation, to purchase the underlying security, in
the case of a call option, or to sell the underlying security, in the case of a
put option, for a fixed price at any time up to a stated expiration date. The
holder is required to pay a non-refundable premium, which represents the
purchase price of the option. The holder of an option can lose the entire amount
of the premium, plus related transaction costs, but not more. Upon exercise of
the option, the holder is
4
<PAGE>
required to pay the purchase price of the underlying security in the case of a
call option, or deliver the security in return for the purchase price in the
case of a put option.
Prior to exercise or expiration, an option position may be terminated
only by entering into a closing purchase or sale transaction. This requires a
secondary market on the exchange on which the position was originally
established. While the Portfolio would establish an option position only if
there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular option contract at
any specific time. In that event, it may not be possible to close out a position
held by the Portfolio, and the Portfolio could be required to purchase or sell
the instrument underlying an option, make or receive a cash settlement or meet
ongoing variation margin requirements. The inability to close out option
positions also could have an adverse impact on the Portfolio's ability
effectively to hedge its portfolio.
Each exchange on which option contracts are traded has established a
number of limitations governing the maximum number of positions which may be
held by a trader, whether acting alone or in concert with others. The Manager
does not believe that these trading and position limits would have an adverse
impact on the possible use of hedging strategies by the Portfolio.
The approval of the Fund and of the other investors in the Portfolio is
not required to change the investment objective or any of the non-fundamental
investment policies discussed above, including those concerning security
transactions.
Investment Restrictions
The Fund and the Portfolio have each adopted the following policies
which may not be changed without approval by holders of a "majority of the
outstanding shares" of the Fund or the Portfolio, respectively, which as used in
this Statement of Additional Information means the vote of the lesser of (i) 67%
or more of the outstanding "voting securities" of the Fund or the Portfolio,
respectively, present at a meeting, if the holders of more than 50% of the
outstanding "voting securities" of the Fund or the Portfolio, respectively, are
present or represented by proxy, or (ii) more than 50% of the outstanding
"voting securities" of the Fund or the Portfolio, respectively. The term "voting
securities" as used in this paragraph has the same meaning as in the Investment
Company Act of 1940, as amended (the "1940 Act").
Except as described below, whenever the Trust is requested to vote on a
change in the investment restrictions of the Portfolio, the Trust will hold a
meeting of the shareholders of
5
<PAGE>
the Fund and will cast its vote proportionately as instructed by the Fund's
shareholders. However, subject to applicable statutory and regulatory
requirements, the Trust would not request a vote of shareholders of the Fund
with respect to (a) any proposal relating to the Portfolio, which proposal, if
made with respect to the Fund, would not require the vote of the shareholders of
the Fund, or (b) any proposal with respect to the Portfolio that is identical in
all material respects to a proposal that has previously been approved by
shareholders of the Fund. Any proposal submitted to holders in the Portfolio,
and that is not required to be voted on by shareholders of the Fund, would
nevertheless be voted on by the Trustees of the Trust.
Neither the Fund nor the Portfolio may:
(1) borrow money, except that as a temporary measure for extraordinary
or emergency purposes either the Fund or the Portfolio may borrow an amount not
to exceed 1/3 of the current value of the net assets of the Fund or the
Portfolio, respectively, including the amount borrowed (moreover, neither the
Fund nor the Portfolio may purchase any securities at any time at which
borrowings exceed 5% of the total assets of the Fund or the Portfolio,
respectively, taken in each case at market value) (it is intended that the
Portfolio would borrow money only from banks and only to accommodate requests
for the withdrawal of all or a portion of a beneficial interest in the Portfolio
while effecting an orderly liquidation of securities); for additional related
restrictions, see clause (i) under the caption "Non-Fundamental State and
Federal Restrictions" below;
(2) purchase any security or evidence of interest therein on margin,
except that either the Fund or the Portfolio may obtain such short-term credit
as may be necessary for the clearance of purchases and sales of securities and
except that either the Fund or the Portfolio may make deposits of initial
deposit and variation margin in connection with the purchase, ownership, holding
or sale of options;
(3) write any put or call option or any combination thereof, provided
that this shall not prevent (i) the purchase, ownership, holding or sale of
warrants where the grantor of the warrants is the issuer of the underlying
securities, or (ii) the purchase, ownership, holding or sale of options on
securities;
(4) underwrite securities issued by other persons, except that the Fund
may invest all or any portion of its assets in the Portfolio and except insofar
as either the Fund or the Portfolio may technically be deemed an underwriter
under the 1933 Act in selling a security;
(5) make loans to other persons except (a) through the lending of
securities held by either the Fund or the Portfolio and provided that any such
loans not exceed 30% of its total assets (taken in each case at market value),
or (b) through the
6
<PAGE>
use of repurchase agreements or the purchase of short-term obligations and
provided that not more than 10% of its net assets will be invested in repurchase
agreements maturing in more than seven days; for additional related
restrictions, see paragraph (6) immediately following;
(6) invest in securities which are subject to legal or contractual
restrictions on resale (other than repurchase agreements maturing in not more
than seven days and other than securities which may be resold pursuant to Rule
144A under the 1933 Act if the Board of Trustees determines that a liquid market
exists for such securities) if, as a result thereof, more than 10% of its net
assets (taken at market value) would be so invested (including repurchase
agreements maturing in more than seven days), except that the Fund may invest
all or any portion of its assets in the Portfolio;
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the Fund and Portfolio reserve the freedom of
action to hold and to sell real estate acquired as a result of the ownership of
securities by the Fund or the Portfolio);
(8) make short sales of securities or maintain a short position, unless
at all times when a short position is open the Fund or the Portfolio, as
applicable, owns an equal amount of such securities or securities convertible
into or exchangeable, without payment of any further consideration, for
securities of the same issue as, and equal in amount to, the securities sold
short, and unless not more than 5% of the Fund's or the Portfolio's, as
applicable, net assets (taken in each case at market value) is held as
collateral for such sales at any one time (it is the present intention of the
Portfolio and the Fund to make such sales only for the purpose of deferring
realization of gain or loss for federal income tax purposes);
(9) issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, except as appropriate to evidence a debt
incurred without violating paragraph (1) above;
(10) as to 75% of its assets, purchase securities of any issuer if such
purchase at the time thereof would cause more than 5% of the Portfolio's or the
Fund's, as applicable, assets (taken at market value) to be invested in the
securities of such issuer (other than securities or obligations issued or
guaranteed by the United States or any agency or instrumentality of the United
States), except that for purposes of this restriction the issuer of an option
shall not be deemed to be the issuer of the security or securities underlying
such contract and except that the Fund may invest all or any portion of its
assets in the Portfolio; or
7
<PAGE>
(11) invest more than 25% of its assets in any one industry unless the
stocks in a single industry were to comprise more than 25% of the Domini Social
Index, in which case the Portfolio or the Fund, as applicable, will invest more
than 25% of its assets in that industry, and except that the Fund may invest all
of its assets in the Portfolio.
Non-Fundamental State and Federal Restrictions: In order to comply with
certain state and federal statutes and regulatory policies, neither the Fund nor
the Portfolio will as a matter of operating policy:
(i) borrow money for any purpose in excess of 10% of the total assets of the
Fund or the Portfolio, respectively (taken in each case at cost) (moreover,
neither the Fund nor the Portfolio will purchase any securities at any time at
which borrowings exceed 5% of its total assets (taken at market value)),
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of the net
assets of the Fund or the Portfolio, respectively (taken in each case at market
value), provided that collateral arrangements with respect to options, including
deposits of initial deposit and variation margin, are not considered a pledge of
assets for purposes of this restriction,
(iii) sell any security which it does not own unless by virtue of its ownership
of other securities it has at the time of sale a right to obtain securities,
without payment of further consideration, equivalent in kind and amount to the
securities sold, and provided that if such right is conditional the sale is made
upon the same conditions,
(iv) invest for the purpose of exercising control or management, except
that all of the assets of the Fund may be invested in the Portfolio,
(v) purchase securities issued by any registered investment company, except that
the Fund may invest all its assets in the Portfolio and except by purchase in
the open market where no commission or profit to a sponsor or dealer results
from such purchase other than the customary broker's commission, or except when
such purchase, though not made in the open market, is part of a plan of merger
or consolidation; provided, however, that (except for the Fund's investment in
the Portfolio) the Fund and the Portfolio will not purchase the securities of
any registered investment company if such purchase at the time thereof would
cause more than 10% of the total assets of the Fund or the Portfolio,
respectively (taken at the greater of cost or market value) to be invested in
the securities of such issuers or would cause more than 3% of the outstanding
voting securities of any such issuer to be held by the Fund or the Portfolio,
respectively; and provided, further, that (except for the Fund's investment in
the Portfolio) the Fund and the Portfolio shall not
8
<PAGE>
purchase securities issued by any open-end investment company,
(vi) invest more than 10% of the net assets of the Fund or the Portfolio,
respectively (taken at the greater of cost or market value), in securities
(excluding Rule 144A securities) that are restricted as to resale under the 1933
Act,
(vii) invest more than 15% of the net assets of the Fund or the Portfolio,
respectively (taken at the greater of cost or market value), (a) in securities
that are restricted as to resale by the 1933 Act (including Rule 144A
securities), and (b) in securities that are issued by issuers which (including
the period of operation of any predecessor company or unconditional guarantor of
such issuer) have been in operation less than three years, provided, however,
that no more than 5% of the net assets of the Fund or the Portfolio,
respectively, are invested in securities issued by issuers which (including
predecessors) have been in operation less than three years,
(viii) purchase puts, calls, straddles, spreads and any combination thereof if
the value of its aggregate investment in such securities will exceed 5% of the
Funds or the Portfolio's total assets at the time of such purchase,
(ix) purchase securities of any issuer if such purchase at the time thereof
would cause it to hold more than 10% of any class of securities of such issuer,
for which purposes all indebtedness of an issuer shall be deemed a single class
and all preferred stock of an issuer shall be deemed a single class, except that
option contracts shall not be subject to this restriction, and except that the
Fund may invest all or any portion of its assets in the Portfolio,
(x) purchase or retain any securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the Fund or
the Portfolio, as the case may be, or is an officer or director of the Manager
or the Submanager, if after the purchase of the securities of such issuer by the
Fund or the Portfolio, as the case may be, one or more of such persons owns
beneficially more than 1/2 of 1% of the shares or securities, or both, all taken
at market value, of such issuer, and such persons owning more than 1/2 of 1% of
such shares or securities together own beneficially more than 5% of such shares
or securities, or both, all taken at market value, except that the Fund may
invest all or any portion of its assets in the Portfolio,
(xi) invest more than 5% of the Fund's or the Portfolio's net assets in warrants
(valued at the lower of cost or market), but not more than 2% of the Fund's or
the Portfolio's net assets may be invested in warrants not listed on the New
York Stock Exchange Inc. ("NYSE") or the American Stock Exchange, or
(xii) make short sales of securities or maintain a short
9
<PAGE>
position, unless at all times when a short position is open, the Fund or the
Portfolio owns an equal amount of such securities or securities convertible into
or exchangeable, without payment of any further consideration, for securities of
the same issue and equal in amount to the securities sold short, and unless not
more than 10% of the Fund's or the Portfolio's, respectively, net assets (taken
at market value) is represented by such securities, or securities convertible
into or exchangeable for such securities, at any one time (neither the Fund nor
the Portfolio has any current intention to engage in short selling).
Restrictions (i) through (xii) are not fundamental and may be changed
with respect to the Fund by the Fund without approval by the Fund's shareholders
or with respect to the Portfolio by the Portfolio without the approval of the
Fund or its other investors. While the Fund expects to reject any order that is
not an exempt transaction under the relevant state securities laws, the Fund
will comply with the state securities laws and regulations of all states in
which it is registered. The Portfolio will comply with the applicable investment
limitations found in the state securities laws and regulations of all states in
which the Fund is registered.
Percentage Restrictions: If a percentage restriction or rating
restriction on investment or utilization of assets set forth above or referred
to in the Prospectus is adhered to at the time an investment is made or assets
are so utilized, a later change in percentage resulting from changes in the
value of the securities held by the Fund or the Portfolio or a later change in
the rating of a security held by the Fund or the Portfolio will not be
considered a violation of policy; provided that if at any time the ratio of
borrowings of the Fund or the Portfolio to the net asset value of the Fund or
the Portfolio, respectively, exceeds the ratio permitted by Section 18(f) of the
1940 Act, the Fund or the Portfolio as the case may be, will take the corrective
action required by Section 18(f).
3. PERFORMANCE INFORMATION
The Trust will calculate the Fund's total rate of return for any period
by (a) dividing (i) the sum of the net asset value per share on the last day of
the period and the net asset value per share on the last day of the period of
shares purchasable with dividends and capital gains declared during such period
with respect to a share held at the beginning of such period and with respect to
shares purchased with such dividends and capital gains distributions, by (ii)
the public offering price per share (i.e., net asset value) on the first day of
such period, and (b) subtracting 1 from the result. Any annualized total rate of
return quotation will be calculated by (x) adding 1 to the period total rate of
return quotation calculated above, (y) raising such sum to a power which is
equal to 365 divided by the number of days in such period, and (z) subtracting 1
from the result.
10
<PAGE>
Any current "yield" quotation of the Fund shall consist of an annualized
historical yield, carried at least to the nearest hundredth of one percent,
based on a thirty calendar day period and shall be calculated by (a) raising to
the sixth power the sum of 1 plus the quotient obtained by dividing the Fund's
net investment income earned during the period by the product of the average
daily number of shares outstanding during the period that were entitled to
receive dividends and the maximum offering price per share on the last day of
the period, (b) subtracting 1 from the result, and (c) multiplying the result by
2.
Total rate of return and yield information with respect to the Domini
Social Index will be computed in the same fashion as set forth above with
respect to the Fund, except that for purposes of this computation an investment
will be assumed to have been made in a portfolio consisting of all of the stocks
comprising the Domini Social Index weighted in accordance with the weightings of
the stocks comprising the Index. Performance information with respect to the
Domini Social Index will not take into account brokerage commission and other
transaction costs which will be incurred by the Portfolio.
Historical performance information for any period or portion thereof
prior to the establishment of the Fund will be that of the Portfolio, adjusted
to assume that all charges, expenses and fees of the Fund and the Portfolio
which are presently in effect were deducted during such periods, as permitted by
applicable SEC staff interpretations.
4. DETERMINATION OF NET ASSET VALUE; VALUATION OF PORTFOLIO
SECURITIES
The net asset value of each share of the Fund is determined each day on
which the NYSE is open for trading ("Fund Business Day"). (As of the date of
this Statement of Additional Information, the NYSE is open for trading every
weekday except for the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day). This determination of net asset value
of shares of the Fund is made once during each such day as of the close of the
NYSE by dividing the value of the Fund's net assets (i.e., the value of its
11
<PAGE>
investment in the Portfolio and any other assets less its liabilities, including
expenses payable or accrued) by the number of shares outstanding at the time the
determination is made. Purchases and redemptions will be effected at the time of
determination of net asset value next following the receipt of any purchase or
redemption order deemed to be in good order. See "Purchases and Redemptions of
Shares" in the Prospectus.
The value of the Portfolio's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued) is determined at the same time and on the same day as the Fund
determines its net asset value per share. The net asset value of the Fund's
investment in the Portfolio is equal to the Fund's pro rata share of the total
investment of the Fund and of other investors in the Portfolio less the Fund's
pro rata share of the Portfolio's liabilities. Equity securities held by the
Portfolio are valued at the last sale price on the exchange on which they are
primarily traded or on the NASDAQ system for unlisted national market issues, or
at the last quoted bid price for securities in which there were no sales during
the day or for unlisted securities not reported on the NASDAQ system. If the
Portfolio purchases option contracts, such option contracts which are traded on
commodities or securities exchanges are normally valued at the settlement price
on the exchange on which they are traded. Short-term obligations with remaining
maturities of less than sixty days are valued at amortized cost, which
constitutes fair value as determined by the Board of Trustees of the Portfolio.
Portfolio securities (other than short-term obligations with remaining
maturities of less than sixty days) for which there are no such quotations or
valuations are valued at fair value as determined in good faith by or at the
direction of the Portfolio's Board of Trustees.
A determination of value used in calculating net asset value must be a
fair value determination made in good faith utilizing procedures approved by the
Portfolio's Board of Trustees. While no single standard for determining fair
value exists, as a general rule, the current fair value of a security would
appear to be the amount which the Portfolio could expect to receive upon its
current sale. Some, but not necessarily all, of the general factors which may be
considered in determining fair value include: (i) the fundamental analytical
data relating to the investment; (ii) the nature and duration of restrictions on
disposition of the securities; and (iii) an evaluation of the forces which
influence the market in which these securities are purchased and sold. Without
limiting or including all of the specific factors which may be considered in
determining fair value, some of the specific factors include: type of security,
financial statements of the issuer, cost at date of purchase, size of holding,
discount from market value, value of unrestricted securities of the same class
at the time of purchase, special reports prepared by analysts, information as to
any transactions or offers with respect to the security, existence of merger
proposals or tender offers affecting the
12
<PAGE>
security, price and extent of public trading in similar securities of the issuer
or comparable companies, and other relevant matters.
Interest income on short-term obligations held by the Portfolio is
determined on the basis of interest accrued less amortization of premium.
Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each Fund Business Day. At the close of each
such business day, the value of each investor's interest in the Portfolio will
be determined by multiplying the net asset value of the Portfolio by the
percentage representing that investor's share of the aggregate beneficial
interests in the Portfolio effective for that day. Any additions or withdrawals,
which are to be effected as of the close of business on that day, will then be
effected. The investor's percentage of the aggregate beneficial interests in the
Portfolio will then be re-computed as the percentage equal to the fraction (i)
the numerator of which is the value of such investor's investment in the
Portfolio as of the close of business on such day plus or minus, as the case may
be, the amount of any additions to or withdrawals from the investor's investment
in the Portfolio effected as of the close of business on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
close of business on such day plus or minus, as the case may be, the amount of
the net additions to or withdrawals from the aggregate investments in the
Portfolio by all investors in the Portfolio. The percentage so determined will
then be applied to determine the value of the investor's interest in the
Portfolio as of the close of business on the following Fund Business Day.
5. MANAGEMENT OF THE TRUST AND THE PORTFOLIO
The Trustees and officers of the Trust and the Portfolio and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Each Trustee and officer of the Trust
also serves the Portfolio in the same capacity. Asterisks indicate those
Trustees and officers who are "interested persons" (as defined in the 1940 Act)
of the Trust. Unless otherwise indicated below, the address of each Trustee and
officer is [11 West 25th Street, New York, New York 10010].
Trustees of the Trust and the Portfolio
[EMILY W. CARD -- 1223 Wilshire Boulevard, No. 334, Santa Monica,
California 90403; Attorney; President, The Card Group, Inc;
Trustee, Domini Social Equity Fund. Her date of birth
is May 8, 1942.]
AMY L. DOMINI* -- 230 Congress Street, Boston, Massachusetts 02110; Chair,
President and Trustee of the Trust ,
13
<PAGE>
Portfolio and Domini Social Equity Fund; Manager of DSI; Officer of Kinder,
Lydenberg, Domini & Co., Inc.; Private Trustee, Loring, Wolcott & Coolidge;
Trustee
, Episcopal Church Pension Fund; Member, Governing Board, Interfaith Center
on Corporate Responsibility. Her date of birth is January 15, 1950.
ALLEN M. MAYES -- P.O. Box 21222, Beaumont, Texas 77720; Trustee , Domini Social
Equity Fund; Retired Senior Associate General Secretary of the General Board of
Pensions of the United Methodist Church, Director of Ministerial Services, Texas
Annual Conference, The United Methodist Church; Former Member of the Board of
Directors of Investor Responsibility Research Center; Member of Board of
Trustees of Wiley College. His date of birth is September 20, 1920.
WILLIAM C. OSBORN -- 115 Buckminster Road, Brookline, Massachusetts 02146;
Manager, Venture Investment Management Company LLC; Trustee, Domini Social
Equity Fund; Vice President and General Manager, TravElectric Services Corp
(prior to 1995); President, Environmental [Packaging] Technologies (prior to
1993; Director, Evergreen Solar, Inc; Director, Conservation Services Group. His
date of birth is July 7, 1944.
[KAREN PAUL -- 4050 Park Avenue, Miami, Florida 33133; Associate Dean and
Professor of Business Environment, Florida International University; Trustee,
Domini Social Equity Fund. Her date of birth is September 23, 1944.]
TIMOTHY SMITH -- 475 Riverside Drive, New York, New York 10115; Executive
Director , Interfaith Center on Corporate Responsibility; Trustee, Calvert New
Africa Fund; Trustee, Domini Social Equity Fund. His date of birth is September
15, 1943.
FREDERICK C. WILLIAMSON -- Five Roger Williams Green, Providence, Rhode Island
02904; Treasurer and Trustee , RIGHA (charitable foundation supporting health
care needs); Chairman, Rhode Island Historical Preservation and Heritage
Commission ; Trustee, National Parks and Conservation Commission; Trustee ,
Domini Social Equity Fund. His date of
14
<PAGE>
birth is September 20, 1914.
Each Trustee is paid an annual fee as follows for serving as Trustee of
the Trust and the Portfolio and is reimbursed for expenses incurred in
connection with service as a Trustee. The compensation paid to the Trustees for
the fiscal year ended July 31, 1997 is set forth below. The Trustees may hold
various other directorships unrelated to the Trust or Portfolio.
15
<PAGE>
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT TOTAL
BENEFITS COMPENSATION
AGGREGATE ACCRUED ANNUAL FROM THE
COMPENSATION PART OF BENEFITS FUND, PORTFOLION AND
FROM THE TRUST UPON DOMINI SOCIAL
TRUST EXPENSES RETIREMENT EQUITY FUND
<S> <C> <C> <C> <C>
Amy L. Domini*, None None None None
Chair, President and Trustee
[Emily W. $1,600 None None $1,805]
Card, Trustee
[Karen Paul, Trustee $1,800 None None $2,005 ]
William C. Osborn, Trustee $1,800 None None $2,005
[Allen M. Mayes, Trustee $0 None None $2,400]
Timothy Smith, Trustee $55 None None $2,455
Frederick C. Williamson $55 None None $2,455
</TABLE>
16
<PAGE>
Officers
PETER D. KINDER* -- Vice President of the Trust and
the Portfolio; President of Kinder, Lydenberg, Domini &
Co., Inc.; [ ] Domini Social Investments LLC (since
1997).
STEVEN D. LYDENBERG* -- Vice President of the
Trust and the Portfolio; Director of Research of Kinder,
Lydenberg, Domini & Co., Inc.; [ ] Domini Social Investments
LLC (since 1997).
DAVID P. WIEDER* -- Vice President of the Trust and the Portfolio (since 1997);
[ ] Domini Social Investments LLC (since 1997); President of Fundamental
Shareholder Services, Inc.
SIGWARD M. MOSER* -- Vice President of the Trust and the Portfolio (since 1997);
President of Communications House International, Inc.; Director of Financial
Communications Society; [ ] Domini Social Investments LLC (since
17
<PAGE>
1997).
CAROLE M. LAIBLE* -- Secretary and Treasurer of the Trust and the
Portfolio (since 1997); Compliance Officer of Domini Social Investments LLC
(since 1997); [ ] Fundamental Shareholder Services, Inc.
As of September 1, 1997, all Trustees and officers of the Trust and the
Portfolio as a group owned less than 1% of the Fund's outstanding shares,
including shares owned by Signature. Shareholders owning 25% or more of the
outstanding shares of the Fund may take actions without the approval of any
other investor in the Fund. As of September 8, 1997 the following shareholders
of record owned 5% or more of the outstanding shares of the Fund:
Name and Address of Number of Shares
Percent of
Shareholder Owned
Shares
Jessie Smith Noyes Foundation, Inc. 1,013,616.184
19.7%
Attn: Nicholas Jacangelo
c/o McGrath, Doyle & Phair
150 Broadway - Suite 1703
New York, NY 10038
Compton Foundation, Inc. 693,481.276
13.5%
545 Middlefield Road - Suite 178
Menlo Park, CA 94025
Home Missioners of America 652,755.950
12.7%
P.O. Box 465618
Cincinnati, OH 45246-5618
M&I Trust Co., TTEE 420,620.015
8.2%
Attn: Mutual Funds
1000 N. Water Street
Milwaukee, WI 53202
Boston Harbor Trust Co. NA Nominee 380,259.687
7.4%
Attn: Mutual Funds
100 Federal Street 37th Floor
Boston, MA 02110
Wendel and Co. 725000 331,941.431
6.5%
The Bank of New York
Mutual Fund/Reorg. Dept.
P.O. Box 1066-Wall Street Station
New York, NY 10268
18
<PAGE>
California-Nevada 277,757.041
5.4%
Untied Methodist Foundation
1579 Farmers Lane #283
Santa Rosa, CA 95405
The Trustees who are not "interested persons" (the "Disinterested
Trustees") of the Trust as defined by the 1940 Act are the same as the
Disinterested Trustees of the Portfolio. A majority of the disinterested
Trustees have adopted written procedures reasonably appropriate to deal with
potential conflicts of interest arising from the fact that the same individuals
are Trustees of the Trust and the Portfolio, up to and including creating a
separate board of Trustees. Any conflict of interest between the Trust and the
Portfolio will be resolved by the Trustees in accordance with their fiduciary
obligations and in accordance with the 1940 Act. The Trust's Declaration of
Trust provides that it will indemnify its Trustees and officers (the
"Indemnified Parties") against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust, unless, as to liability to the Trust or Fund shareholders, it is finally
adjudicated that the Indemnified Parties engaged in wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in their
offices, or unless with respect to any other matter it is finally adjudicated
that the Indemnified Parties did not act in good faith in the reasonable belief
that their actions were in the best interests of the Trust. In case of
settlement, such indemnification will not be provided unless it has been
determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees or in a written
opinion of independent counsel, that such Indemnified Parties have not engaged
in wilful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
19
<PAGE>
Manager and Submanager
DSI provides advice to the Portfolio pursuant to a Management Agreement
(the "Management Agreement"). The services provided by the Manager consist of
furnishing continuously an investment program for the Portfolio. DSI will have
authority to determine from time to time what securities are purchased, sold or
exchanged, and what portion of assets of the Portfolio is held uninvested. DSI
will also perform such administrative and management tasks as may from time to
time be reasonably requested, including: (i) maintaining office facilities and
furnishing clerical services necessary for maintaining the organization of the
Portfolio and for performing administrative and management functions; (ii)
supervising the overall administration of the Portfolio, including negotiation
of contracts and fees with and monitoring of performance and billings of the
Portfolio's transfer agent, shareholder servicing agents, custodian and other
independent contractors or agents; (iii) overseeing (with the advice of
Portfolio's counsel) the preparation of and, if applicable, filing all documents
required for compliance by the Portfolio with applicable laws and regulations,
including registration statements, prospectuses and statements of additional
information, semi-annual and annual reports to shareholders, proxy statements
and tax returns; (iv) preparing agendas and supporting documents for and minutes
of meetings of Trustees, committees of Trustees and shareholders; and (v)
arranging for maintenance of the books and records of the Portfolio. The Manager
furnishes at its own expense all facilities and personnel necessary in
connection with providing these services. The Management Agreement will continue
in effect if such continuance is specifically approved at least annually by the
Portfolio's Board of Trustees or by a majority of the outstanding voting
securities of the Portfolio at a meeting called for the purpose of voting on the
Management Agreement (with the vote of each investor in the Portfolio being in
proportion to the amount of its investment), and, in
20
<PAGE>
either case, by a majority of the Portfolio's Trustees who are not parties to
the Management Agreement or interested persons of any such party at a meeting
called for the purpose of voting on the Management Agreement.
The Management Agreement provides that the Manager may render services
to others . DSI may employ, at its own expense, or may request that the
Portfolio employ (subject to the requirements of the 1940 Act) one or more
subadvisers or submanagers, subject to DSI's supervision. The Management
Agreement is terminable without penalty on not more than 60 days' nor less than
30 days' written notice by the Portfolio when authorized either by majority vote
of the outstanding voting securities in the Portfolio (with the vote of each
investor in the Portfolio being in proportion to the amount of its investment)
or by a vote of a majority of its Board of Trustees, or by the Manager , and
will automatically terminate in the event of its assignment. The Management
Agreement provides that neither the Manager nor its personnel shall be liable
for any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in its services to the Portfolio, except
for wilful misfeasance, bad faith or gross negligence or reckless disregard of
its or their obligations and duties under the Management Agreement.
The Fund's Prospectus contains a description of fees payable to the
Manager for services under the Management Agreement.
DSI is a newly formed Massachusetts limited liability company with
offices at 11 West 25th Street, 7th Floor, New York, New York 10010, and is
registered as an investment adviser under the Investment Advisers Act of 1940
(the "Advisers Act"). the names of the principal owners of DSI, their
relationship to the Trust and their percentage ownership of DSI follows: Amy L.
Domini, Chairman of the Board and President of the Trust, is the Manager and
principal executive officer of DSI and a 21.55% owner of DSI. Ms. Domini is also
Chief Executive Officer, Secretary, Treasurer and 51% owner of KLD which
licenses the Domini Social Index to DSI. Peter D. Kinder, Vice President of the
Trust, is a 21.25% owner of DSI. Mr. Kinder is also President and 19% owner
21
<PAGE>
of KLD. Sigward M. Moser, Vice President of the Trust, is a 21.25% owner of
DSI. David P. Wieder, Vice President of the Trust is a 21.25% owner of DSI. Mr.
Wieder is also President and an owner of Fundamental Shareholder Services, Inc.
("FSSI"), a registered transfer agent which has served as the Fund's transfer
agent since 1995.
Mellon Equity manages the assets of the Portfolio pursuant to an
Investment Submanagement Agreement (the "Submanagement Agreement"). The
Submanager furnishes at its own expense all services, facilities and personnel
necessary in connection with managing the Portfolio's investments and effecting
securities transactions for the Portfolio. The Submanagement Agreement will
continue in effect if such continuance is specifically approved at least
annually by the Portfolio's Board of Trustees or by a majority vote of the
outstanding voting securities in the Portfolio at a meeting called for the
purpose of voting on the Submanagement Agreement (with the vote of each being in
proportion to the amount of its investment), and, in either case, by a majority
of the Portfolio's Trustees who are not parties to the Submanagement Agreement
or interested persons of any such party at a meeting called for the purpose of
voting on the Submanagement Agreement.
The Submanagement Agreement provides that the Submanager may render
services to others. The Submanagement Agreement is terminable without penalty
upon not more than 60 days' nor less than 30 days' written notice by the
Portfolio when authorized either by majority vote of the outstanding voting
securities in the Portfolio (with the vote of each being in proportion to the
amount of their investment) or by a vote of the majority of its Board of
Trustees, or by the Manager with the consent of the Trustees and may be
terminated by the Submanager on not less than 90 days' written notice to the
Manager and the Trustees, and will automatically terminate in the event of its
assignment. The Submanagement Agreement provides that the Submanager shall not
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in its services to the
Portfolio, except for wilful misfeasance, bad faith or gross negligence or
reckless disregard for its or their obligations and duties under the
Submanagement Agreement.
Mellon Equity is a Pennsylvania business trust founded in 1987, which
is beneficially owned by Mellon Bank, N.A. (99% beneficial interest) and MMIP
(1% beneficial interest), a wholly owned subsidiary of Mellon Bank Corporation
("Mellon Bank"). Mellon Equity is a professional investment counseling firm that
provides investment management services to the equity and balanced pension,
public fund, and profit-sharing investment
22
<PAGE>
management markets, and is a registered investment adviser under the Advisers
Act. Mellon Bank's predecessor organization managed domestic equity, tax-exempt
and institutional pension accounts since 1947. The address of Mellon Equity and
each of the principal executive officers and directors of Mellon Equity is 500
Grant Street, Suite 3700, Pittsburgh, Pennsylvania 15258.
The Fund's Prospectus contains a description of fees payable to the
Submanager for services under the Submanagement Agreement. Prior to [November 1,
1997], pursuant to an investment advisory agreement (the "KLD Advisory
Agreement"), KLD served as investment adviser to the Portfolio and furnished
continuously an investment program by determining the stocks to be included in
the Index. Additionally, prior to [November 1, 1997], pursuant to a management
agreement (the "Mellon Equity Management Agreement"), Mellon Equity served as
investment manager and managed the assets of the Portfolio on a daily basis.
Prior to November 21, 1994, pursuant to an investment management agreement (the
"State Street Management Agreement"), State Street Bank and Trust Company served
as investment manager to the Portfolio. Prior to [November 1, 1997], pursuant to
a sponsorship agreement (the "KLD Sponsorship Agreement"), KLD furnished
administrative services for the Portfolio. Prior to November 6, 1996, pursuant
to an administrative services agreement (the "Signature Administration
Agreement"), Signature served as the administrator of the Portfolio. Prior to
[November 1, 1997], the aggregate investment management and administration fees
under the prior agreements with respect to the Portfolio were equal to 0.15% of
the Portfolio's average daily net assets for its then current fiscal year.
For the fiscal year ended July 31, 1997, the Portfolio incurred $46,528
in advisory fees pursuant to the KLD Advisory Agreement, $46,528 in
administration fees pursuant to the KLD Sponsorship Agreement and $182,885 in
management fees pursuant to the Mellon Equity Management Agreement. For the
fiscal year ended July 31, 1996, the Portfolio incurred $38,150 in advisory fees
pursuant to the KLD Advisory Agreement, $38,150 in aggregate administration fees
pursuant to the Signature Administration Agreement and the KLD Sponsorship
Agreement, and $128,901 in management fees pursuant to the Mellon Equity
Management Agreement. For the fiscal year ended July 31, 1995, KLD waived all of
its fees payable pursuant to the KLD Advisory Agreement,
23
<PAGE>
Signature waived all of its fees payable pursuant to the Signature
Administration Agreement and the Portfolio incurred $10,180 in management fees
pursuant to the State Street Management Agreement and $29,409 in management fees
pursuant to the Mellon Equity Management Agreement.
Sponsor
Pursuant to a Sponsorship Agreement, DSI provides the Trust with
oversight, administrative and management services. DSI provides the Trust with
general office facilities and supervises the overall administration of the Trust
, including, among other responsibilities, the negotiation of contracts and fees
with, and the monitoring of performance and billings of, the independent
contractors and agents of the Trust ; the preparation and filing of all
documents required for compliance by the Trust with applicable laws and
regulations, including registration statements, prospectuses and statements of
additional information, semi-annual and annual reports to shareholders, proxy
statements and tax returns; preparing agendas and supporting documents for and
minutes of meetings of Trustees, committees of Trustees and shareholders;
maintaining telephone coverage to respond to shareholder inquiries; answering
questions from the general public, the media and investors in the Fund regarding
the securities holdings of the Portfolio, limits on investment and the Trust's
proxy voting philosophy and shareholder activism philosophy; and arranging for
the maintenance of books and records of the Trust. The Sponsor provides persons
satisfactory to the Board of Trustees of the Trust to serve as officers of the
Trust . Such officers, as well as certain other employees and Trustees of the
Trust, may be directors, officers or employees of the Sponsor or its affiliates.
The Fund's Prospectus contains a description of the fees payable
to the Sponsor under the Sponsorship Agreement. Prior to [November 1, 1997],
Signature served as administrator
24
<PAGE>
. For the period from May 1, 1996 (commencement of operations) through July 31,
1996 , Signature voluntarily waived all of its administrative fees from the
Fund. For the fiscal year ended July 31, 1997, the Fund incurred [ ] in
administrative fees.
The Sponsorship Agreement with the Trust provides that DSI may render
administrative services to others. The Sponsorship Agreement with the Trust also
provides that neither the Sponsor nor its personnel shall be liable for any
error of judgment or mistake of law or for any act or omission in the
administration or management of the Trust, except for wilful misfeasance, bad
faith or gross negligence in the performance of its or their duties or by reason
of reckless disregard of its or their obligations and duties under the
Sponsorship Agreement.
25
<PAGE>
Distributor
The Trust has entered into a Distribution Agreement with Signature.
Under the Distribution Agreement, the Distributor acts as the agent of the Trust
in connection with the offering of shares of the Fund. The Distributor receives
no additional compensation for its services under the Distribution Agreement.
Signature is a wholly-owned subsidiary of Signature Financial Group, Inc.
Transfer Agent and Custodian
The Trust has entered into a Transfer Agency Agreement with Fundamental
Shareholder Services, Inc. ("FSSI") pursuant to which FSSI acts as the transfer
agent for the Fund. Mr. David P. Wieder, Vice President of the Trust and a
principal of DSI, the Manager of the Portfolio and Sponsor of the Trust, is a [
]% owner of, and President of FSSI. The Trust has entered into a Custodian
Agreement with Investors Bank & Trust Company ("IBT") pursuant to which IBT acts
as custodian for the Fund. The Portfolio has entered into a Transfer Agency
Agreement with IBT pursuant to which IBT acts as transfer agent for the
Portfolio. The Portfolio has entered into a Custodian Agreement with IBT
pursuant to which IBT acts as custodian for the Portfolio. For additional
information, see "Transfer Agent and Custodian" in the Prospectus.
6. INDEPENDENT AUDITORS
[ ] are the independent auditors for the Trust and for the Portfolio,
providing audit services, tax
26
<PAGE>
return preparation, and assistance and consultation with respect to the
preparation of filings with the Securities and Exchange Commission.
7. TAXATION
Each year the Fund intends to qualify and elect to be treated as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), by meeting all applicable requirements of
Subchapter M, including requirements (applied through the Fund's proportionate
interest in the Portfolio) as to the nature of the Fund's gross income, the
amount of Fund distributions and the composition and holding period of the
Fund's portfolio assets. Because the Fund intends to distribute all of its net
investment income and net realized capital gains to shareholders in accordance
with the timing requirements imposed by the Code, it is not expected that the
Fund will be required to pay any federal income or excise taxes. If the Fund
should fail to qualify as a "regulated investment company" in any year, the Fund
would incur a regular corporate federal income tax upon its taxable income and
Fund distributions would generally be taxable as ordinary dividend income to the
shareholders. As long as it qualifies as a "regulated investment company" under
the Code, the Fund will not be required to pay Massachusetts income or excise
taxes.
Under interpretations of the Internal Revenue Service, (1) the
Portfolio will be treated for federal income tax purposes as a partnership and
(2) for purposes of determining whether the Fund satisfies the income and
diversification requirements to maintain its status as a regulated investment
company, the Fund, as an investor in the Portfolio, will be deemed to own a
proportionate share of the Portfolio's assets and will be deemed to be entitled
to the Portfolio's income or loss attributable to that share. The Portfolio has
advised the Fund that it intends to conduct its operations so as to enable its
investors, including the Fund, to satisfy those requirements.
Shareholders of the Fund normally will have to pay federal income taxes
and any state or local income taxes on the dividends and capital gain
distributions they receive from the Fund. Dividends from ordinary income and any
distributions from net short-term capital gains are taxable to shareholders as
ordinary income for federal income tax purposes, whether the distributions are
made in cash or in additional shares. A portion of the Fund's ordinary income
dividends (but none of the Fund's capital gains) is normally eligible for the
dividends received deduction for corporations if the recipient otherwise
qualifies for that deduction with respect to its holding of Fund shares.
Availability of the deduction for a particular corporate shareholder is subject
to certain limitations, and deducted amounts may be subject to the alternative
minimum tax and result in certain basis adjustments. Distributions of net
capital gains (i.e., the excess of net long-term capital gains over net
short-term capital losses), whether made in cash or in additional
27
<PAGE>
shares, are taxable to shareholders as long-term capital gains for federal
income tax purposes without regard to the length of time the shareholders have
held their shares.
Amounts not distributed on a timely basis in accordance with the
calendar year distribution requirement are subject to a nondeductible 4% excise
tax. To prevent imposition of the excise tax, the Fund must, and intends to,
distribute during each calendar year substantially all of its ordinary income
for that year and substantially all of its capital gain in excess of its capital
losses for that year, plus any undistributed ordinary income and capital gains
from previous years. Any Fund dividend that is declared in October, November, or
December of any calendar year, that is payable to shareholders of record in such
a month, and that is paid the following January will be treated as if received
by the shareholders on December 31 of the year in which the divided is declared.
The Fund will notify shareholders regarding the federal tax status of its
distributions after the end of each calendar year.
Any Fund distribution will have the effect of reducing the per share
net asset value of shares in the Fund by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of any
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of
shares of the Fund by a shareholder that holds such shares as a capital asset
will be treated as long-term capital gain or loss if the shares have been held
for more than twelve months and otherwise as a short-term capital gain or loss.
However, any loss realized upon a disposition of shares in the Fund held for
six months or less will be treated as a long-term capital loss to the extent of
any distributions of net capital gain made with respect to those shares. Any
loss realized upon a disposition of shares may also be disallowed under rules
relating to wash sales.
The Trust anticipates that the Portfolio will be treated as a
partnership for federal income tax purposes. As such, the Portfolio is not
subject to federal income taxation. Instead, the Fund must take into account, in
computing its federal income tax liability, its share of the Portfolio's income,
gains, losses, deductions, credits and tax preference items, without regard to
whether it has received any cash distributions from the Portfolio. Withdrawals
by the Fund from the Portfolio generally will not result in the Fund recognizing
any gain or loss for federal income tax purposes, except that (1) gain will be
recognized to the extent that any cash distributed exceeds the basis of the
Fund's interest in the Portfolio prior to the distribution, (2) income or gain
will be realized if the withdrawal is in liquidation of the Fund's entire
interest in the Portfolio and includes a disproportionate share of any
unrealized
28
<PAGE>
receivables held by the Portfolio, and (3) loss will be recognized if the
distribution is in liquidation of that entire interest and consists solely of
cash and/or unrealized receivables. The basis of the Fund's interest in the
Portfolio generally equals the amount of cash and the basis of any property that
the Fund invests in the Portfolio, increased by the Fund's share of income from
the Portfolio and decreased by the Fund's share of losses from the Portfolio and
the amount of any cash distributions and the basis of any property distributed
from the Portfolio.
The Portfolio is organized as a New York trust. The Portfolio is not
subject to any income or franchise tax in the State of New York or the
Commonwealth of Massachusetts. The investment by the Fund in the Portfolio does
not cause the Fund to be liable for any income or franchise tax in the State of
New York.
Fund shareholders may be subject to state and local taxes on Fund
distributions to them. Shareholders are advised to consult with their tax
advisers with respect to the particular tax consequences to them of an
investment in the Fund.
8. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Specific decisions to purchase or sell securities for the Portfolio are
made by a portfolio manager who is an employee of the Submanager and who is
appointed and supervised by its senior officers. Changes in the Portfolio's
investments are reviewed by its Board of Trustees. The portfolio manager of the
Portfolio may serve other clients of the Submanager in a similar capacity.
The Portfolio's primary consideration in placing securities
transactions with broker-dealers for execution is to obtain and maintain the
availability of execution at the most favorable prices and in the most effective
manner possible. The Submanager attempts to achieve this result by selecting
broker-dealers to execute transactions on behalf of the Portfolio and other
clients of the Submanager on the basis of their professional capability, the
value and quality of their brokerage services, and the level of their brokerage
commissions. In the case of securities traded in the over-the-counter market
(where no stated commissions are paid but the prices include a dealer's markup
or markdown), the Submanager normally seeks to deal directly with the primary
market makers, unless in its opinion, best execution is available elsewhere. In
the case of securities purchased from underwriters, the cost of such securities
generally includes a fixed underwriting commission or concession. From time to
time, soliciting dealer fees are available to the Submanager on the tender of
the Portfolio's securities in so-called tender or exchange offers. Such
soliciting dealer fees are in effect recaptured for the Portfolio by the
Submanager. At present no other
29
<PAGE>
recapture arrangements are in effect. Consistent with the foregoing
primary consideration, the Conduct Rules of the National Association of
Securities Dealers, Inc. and such other policies as the Trustees of the
Portfolio may determine, the Submanager may consider sales of shares of the Fund
and of securities of other investors in the Portfolio as a factor in the
selection of broker-dealers to execute the Portfolio's securities transactions.
Under the Submanagement Agreement and as permitted by Section 28(e) of
the Securities Exchange Act of 1934, the Submanager may cause the Portfolio to
pay a broker-dealer acting on an agency basis which provides brokerage and
research services to the Submanager or the Manager an amount of commission for
effecting a securities transaction for the Portfolio in excess of the amount
other broker- dealers would have charged for the transaction if the Submanager
determines in good faith that the greater commission is reasonable in relation
to the value of the brokerage and research services provided by the executing
broker-dealer viewed in terms of either a particular transaction or the
Submanager's or the Manager's overall responsibilities to the Portfolio or to
its other clients. Not all of such services are useful or of value in advising
the Portfolio.
The term "brokerage and research services" includes advice as to the
value of securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or of purchasers or sellers of
securities; furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto such as clearance and settlement. However, because of the
Portfolio's policy of investing in accordance with the Domini Social Index, the
Submanager and the Manager currently intend to make only a limited use of such
brokerage and research services.
Although commissions paid on every transaction will, in the judgment of
the Submanager, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Portfolio and the Submanager's or the Manager's other clients, in part for
providing advice as to the availability of securities or of purchasers or
sellers of securities and services in effecting securities transactions and
performing functions incidental thereto such as clearance and settlement.
Certain broker-dealers may be willing to furnish statistical, research and other
factual information or services to the Submanager or the Manager for no
consideration other than brokerage or underwriting commissions.
30
<PAGE>
The Submanager and the Manager attempt to evaluate the quality of
research provided by brokers. The Submanager and the Manager sometimes use
evaluations resulting from this effort as a consideration in the selection of
brokers to execute portfolio transactions. However, neither the Submanager nor
the Manager is able to quantify the amount of commissions which are paid as a
result of such research because a substantial number of transactions are
effected through brokers which provide research but which are selected
principally because of their execution capabilities.
The fees that the Portfolio pays to the Submanager and the Manager will
not be reduced as a consequence of the Portfolio's receipt of brokerage and
research services. To the extent the Portfolio's securities transactions are
used to obtain brokerage and research services, the brokerage commissions paid
by the Portfolio will exceed those that might otherwise be paid for such
portfolio transactions and research, by an amount which cannot be presently
determined. Such services may be useful and of value to the Submanager or the
Manager in serving both the Portfolio and other clients and, conversely, such
services obtained by the placement of brokerage business of other clients may be
useful to the Submanager or the Manager in carrying out its obligations to the
Portfolio. While such services are not expected to reduce the expenses of the
Submanager or the Manager, the Submanager or the Manager would, through use of
the services, avoid the additional expenses which would be incurred if it should
attempt to develop comparable information through its own staff. For the fiscal
years ended July 31, 1995 , 1996 and 1997, the Portfolio paid brokerage
commissions of $15,222 , $45,017 and [ ], respectively.
In certain instances there may be securities which are suitable for the
Portfolio as well as for one or more of the Submanager's or the Manager's other
clients. Investment decisions for the Portfolio and for the Submanager's or the
Manager's other clients are made with a view to achieving their respective
investment objectives. It may develop that a particular security is bought or
sold for only one client even though it might be held by, or bought or sold for,
other clients. Likewise, a particular security may be bought for one or more
clients when one or more clients are selling that same security. Some
simultaneous transactions are inevitable when several clients receive investment
advice from the same investment adviser, particularly when the same security is
suitable for the investment objectives of more than one client. When two or more
clients are simultaneously engaged in the purchase or sale of the same security,
the securities are allocated among clients in a manner believed to be equitable
to each. It is recognized that in some cases this system could have a
detrimental effect on the price or volume of the security as far as the
Portfolio is concerned. However, it is believed that the ability of the
Portfolio to participate in volume
31
<PAGE>
transactions will produce better executions for the Portfolio.
9. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust is a Massachusetts business trust established under a
Declaration of Trust dated as of April 1, 1996. Its authorized capital consists
of an unlimited number of shares of beneficial interest of $0.01 par value,
issued in separate series. Each share of each series represents an equal
proportionate interest in that series with each other share of that series.
The assets of the Trust received for the issue or sale of the shares of
each fund and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are specifically allocated to such series and
constitute the underlying assets of such series. The underlying assets of each
series are segregated on the books of account, and are to be charged with the
liabilities in respect to such series and with such a share of the general
liabilities of the Trust. If a series were unable to meet its obligations, the
assets of all other series might be available to creditors for that purpose, in
which case the assets of such other series could be used to meet liabilities
which are not otherwise properly chargeable to them. Expenses with respect to
any two or more series are to be allocated in proportion to the asset value of
the respective series except where allocations of direct expenses can otherwise
be fairly made. The officers of the Trust, subject to the general supervision of
the Trustees, have the power to determine which liabilities are allocable to a
given series, or which are general or allocable to two or more series. In the
event of the dissolution or liquidation of the Trust or any series, the holders
of the shares of any series are entitled to receive as a class the value of the
underlying assets of such shares available for distribution to shareholders.
Shares of the Trust entitle their holder to one vote per share;
however, separate votes are taken by each series on matters affecting an
individual series. For example, a change in investment policy for a series would
be voted upon only by shareholders of the series involved. The Trust's
Declaration of Trust provides that, at any meeting of shareholders of the Trust
or of any series, a Shareholder Servicing Agent may vote any shares as to which
such Shareholder Servicing Agent is the agent of record and which are not
represented in person or by proxy at the meeting, proportionately in accordance
with the votes cast by holders of all shares otherwise represented at the
meeting in person or by proxy as to which such Shareholder Servicing Agent is
the agent of record. Any shares so voted by a Shareholder Servicing Agent will
be deemed represented at the meeting for purposes of quorum requirements.
The Trustees of the Trust have the authority to designate additional series
and to designate the relative rights and
32
<PAGE>
preferences as between the different series. There is presently one series so
designated. All shares issued and outstanding will be fully paid and
nonassessable by the Trust, and redeemable as described in this Statement of
Additional Information and in the Prospectus.
The Declaration of Trust provides that obligations of the Trust are not
binding upon the Trustees individually but only upon the property of the Trust,
that the Trustees and officers will not be liable for errors of judgment or
mistakes of fact or law, and that the Trust will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the Trust unless, as
to liability to Trust or Fund shareholders, it is finally adjudicated that they
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect to any
other matter it is finally adjudicated that they did not act in good faith in
the reasonable belief that their actions were in the best interests of the
Trust. In the case of settlement, such indemnification will not be provided
unless it has been determined by a court or other body approving the settlement
or other disposition, or by a reasonable determination, based upon a review of
readily available facts, by vote of a majority of disinterested Trustees or in a
written opinion of independent counsel, that such officers or Trustees have not
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties.
Under Massachusetts law, shareholders of a Massachusetts business trust
may, under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Fund
and provides for indemnification and reimbursement of expenses out of Fund
property for any shareholder held personally liable for the obligations of the
Fund. The Declaration of Trust also provides for the maintenance, by or on
behalf of the Trust and the Fund, of appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Fund and its shareholders and the Trust's Trustees, officers, employees and
agents covering possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which both inadequate insurance existed and the Fund
itself was unable to meet its obligations.
10. FINANCIAL STATEMENTS
The financial statements of the Fund and the Portfolio, dated January
31, 1997, from the Fund's semi-annual report are incorporated herein by
reference from the Fund's Form N-30D filed with the Securities and Exchange
Commission on May 1, 1997 (accession no. 0001035347-97-000011). A copy of such
report will be provided, without charge, to each person receiving this
Statement of Additional Information by calling (800) 762-6814.
DSI268E
34
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
The following financial statements are included in Part A:
Financial Highlights [to be finalized by amendment]
The following financial statements are incorporated by reference into
Part B:
For Domini Institutional Social Equity Fund
Statement of Assets and Liabilities at January 31, 1997 (unaudited)
Statement of Operations for the six months ended January 31, 1997
(unaudited)
Statements of Changes in Net Assets for the periods
indicated (unaudited)
Financial Highlights for the periods indicated (unaudited)
Notes to Financial Statements at January 31, 1997 (unaudited)
For Domini Social Index Portfolio:
Portfolio of Investments at January 31, 1997 (unaudited)
Statement of Assets and Liabilities at January 31, 1997 (unaudited)
Statement of Operations for the six months ended July 31,
1997 (unaudited)
Statement of Changes in Net Assets for the periods
indicated (unaudited)
Financial Highlights for the periods indicated (unaudited)
Notes to Financial Statements at January 31, 1997 (unaudited)
(b) Exhibits:
1. Declaration of Trust.(1)
2. By-Laws of the Registrant, as amended June 13, 1997. (3)
6(a). Form of Distribution Agreement between the Registrant and Signature
Broker-Dealer Services, Inc. ("SBDS") as principal underwriter.(2)
8. Custody Agreement between the Registrant and Investors Bank &
Trust Company.(1)
9(a). Administrative Services Agreement between the Registrant and SBDS
as administrator.(1)
9(b) Transfer Agency Agreement between the Registrant and Fundamental
Shareholder Services, Inc.(1)
10. Opinion of Counsel.(2)
11. Consent of Independent Accountants. [to be filed by amendment]
16. Schedule for Computation of Performance Information.(2)
19. Powers of Attorney.(3)
27. Financial Data Schedule.(3)
(1)Incorporated herein by reference from the Registrant's registration
statement on Form N-1A (the "Registration Statement") (File no. 811-07599) as
filed with the U.S. Securities and Exchange Commission (the "SEC") on April 18,
1996.
(2)Incorporated herein by reference from the Registration Statement on Form N-1A
(File no. 811-07599) as filed with the SEC on October 18, 1996.
(3)Filed herewith.
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
(1) (2)
Title of Class Number of Record Holders
(par value $0.01 per share) (as of September 1, 1997)
Domini Institutional Social Equity Fund 24
Item 27. Indemnification.
Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed as an exhibit to the Registration Statement.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator and distributor are insured under an errors and
omissions liability insurance policy. The Registrant and its officers are also
insured under the fidelity bond required by Rule 17g-1 under the Investment
Company Act of 1940, as amended.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to directors,
trustees, officers or controlling persons of the Registrant and the principal
underwriter by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the SEC, such indemnification is
against public policy as expressed in the 1933 Act and, therefore, is
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by directors, trustees, officers or controlling persons of the Registrant
and principal underwriter in connection with the successful defense of any act,
suit or proceeding) is asserted against the Registrant by such director,
trustee, officer or controlling person or principal underwriter in connection
with the shares being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the 1933 Act and will be governed by
the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Adviser.
Not Applicable.
Item 29. Principal Underwriters.
(a) SBDS is the distributor for the Registrant. SBDS and its affiliates
serve as the distributor for other registered investment companies.
(b) The information required by this Item 29 with respect to each director
or officer of SBDS is incorporated herein by reference from Schedule A of
Form BD (File No. 8-41134) as filed by SBDS pursuant to the Securities Exchange
Act of 1934.
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
Name Address
Kinder, Lydenberg, Domini & Co., Inc. 127 Mt. Auburn Street
(subadministrator) Cambridge, MA 02138
Fundamental Shareholder Services, Inc. 90 Washington Street
(transfer agent) New York, NY 10006
Signature Broker-Dealer Services, Inc. 6 St. James Avenue
(administrator and principal underwriter) Boston, MA 02116
<PAGE>
Investors Bank & Trust Company 200 Clarendon Street
(custodian) Boston, MA 02116
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) If the information called for by Item 5A of Form N-1A is contained
in the latest annual report to shareholders, the Registrant will furnish each
person to whom a prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston and Commonwealth of Massachusetts on the 29th
day of September, 1997.
DOMINI INSTITUTIONAL TRUST
By: /s/ LINDA T. GIBSON
-----------------------
Linda T. Gibson, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on September 29, 1997.
Signature, Title
AMY L. DOMINI*
- ------------------------
Amy L. Domini, President (Principal Executive
Officer), Chair and Trustee
JOHN R. ELDER*
- ------------------------
John R. Elder
Treasurer, Principal Financial Officer
and Principal Accounting Officer
ALLEN M. MAYES*
- ------------------------
Allen M. Mayes
Trustee
FREDERICK C. WILLIAMSON*
- ------------------------
Frederick C. Williamson
Trustee
TIMOTHY SMITH*
- ------------------------
Timothy Smith
Trustee
WILLIAM C. OSBORN*
- ------------------------
William C. Osborn
Trustee
KAREN PAUL*
- -----------------------
Karen Paul
Trustee
*By /S/ LINDA T. GIBSON
-------------------------
Linda T. Gibson
*Pursuant to powers of attorney filed herewith.
<PAGE>
SIGNATURES
Domini Social Index Portfolio (the "Portfolio") has duly caused this post-
effective amendment to the registration statement on Form N-1A (File No.
333-14449) of Domini Institutional Trust (the "Trust") to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Boston and
Commonwealth of Massachusetts on the 29th day of September, 1997.
DOMINI SOCIAL INDEX PORTFOLIO
By: /S/ LINDA T. GIBSON
-----------------------------
Linda T. Gibson, Secretary
This post-effective amendment to the registration statement on Form
N-1A of the Trust has been signed below by the following persons in the
capacities indicated on September 29, 1997.
Signature, Title
AMY L. DOMINI*
- ---------------------------------
Amy L. Domini
President (Principal Executive Officer,
Chair and Trustee of the Portfolio
JOHN R. ELDER*
- ---------------------------------
John R. Elder
Treasurer, Principal Financial Officer and
Principal Accounting Officer of the Portfolio
/S/ ALLEN M. MAYES*
- ---------------------------------
Allen M. Mayes
Trustee of the Portfolio
/S/ FREDERICK C. WILLIAMSON*
- ---------------------------------
Frederick C. Williamson
Trustee of the Portfolio
/S/ TIMOTHY SMITH*
- ---------------------------------
Timothy Smith
Trustee of the Portfolio
/S/ WILLIAM C. OSBORN
- ---------------------------------
William C. Osborn
Trustee of the Portfolio
- ---------------------------------
Emily Watts Card
Trustee of the Portfolio
*By /S/ LINDA T. GIBSON
--------------------------------
Linda T. Gibson
*Pursuant to powers of attorney filed herewith.
DSI250D.EDG
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
EX-99.B2 By-Laws of the Registrant, as amended June 13, 1997
EX-99.B19 Powers of Attorney
EX-99.B27 Financial Data Schedule
DSI225C
BY-LAWS
OF
DOMINI INSTITUTIONAL TRUST
ARTICLE I
DEFINITIONS
The terms "COMMISSION", "DECLARATION", "DISTRIBUTOR", "INVESTMENT
ADVISER", "MAJORITY SHAREHOLDER VOTE", "1940 ACT", "SHAREHOLDER", "SHARES",
"TRANSFER AGENT", "TRUST", "TRUST PROPERTY" and "TRUSTEES" have the respective
meanings given them in the Declaration of Trust of Domini Institutional Trust
dated as of April 1, 1996.
ARTICLE II
OFFICES
SECTION 1. PRINCIPAL OFFICE. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be in
the City of Boston, County of Suffolk.
SECTION 2. OTHER OFFICES. The Trust may have offices in such other
places without as well as within the Commonwealth as the Trustees may from time
to time determine.
ARTICLE III
SHAREHOLDERS
SECTION 1. MEETINGS. A meeting of Shareholders may be called at any time
by a majority of the Trustees and shall be called by any Trustee upon written
request, which shall specify the purpose or purposes for which such meeting is
to be called, of Shareholders holding in the aggregate not less than 10% of the
outstanding Shares entitled to vote on the matters specified in such written
request. Any such meeting shall be held within or without the Commonwealth of
Massachusetts on such day and at such time as the Trustees shall designate. The
holders of a majority of outstanding Shares entitled to vote present in person
or by proxy shall constitute a quorum at any meeting of the Shareholders. In the
absence of a quorum, a majority of outstanding Shares entitled to vote present
in person or by proxy may adjourn the meeting from time to time until a quorum
shall be present.
Whenever a matter is required to be voted by Shareholders of the Trust
in the aggregate under Section 6.8 and Section 6.9 and Section 6.9(g) of the
Declaration, the Trust may either hold a meeting of Shareholders of all series
<PAGE>
2
and classes, as established and designated pursuant to Section 6.9 of the
Declaration, to vote on such matter, or hold separate meetings of shareholders
of each of the individual series and/or classes to vote on such matter, PROVIDED
THAT (i) such separate meetings shall be held within one year of each other,
(ii) a quorum consisting of the holders of the majority of outstanding Shares of
the individual series and/or classes entitled to vote present in person or by
proxy shall be present at each such separate meeting and (iii) a quorum
consisting of the holders of a majority of all Shares of the Trust entitled to
vote present in person or by proxy shall be present in the aggregate at such
separate meetings, and the votes of Shareholders at all such separate meetings
shall be aggregated in order to determine if sufficient votes have been cast for
such matter to be voted.
SECTION 2. NOTICE OF MEETINGS Notice of all meetings of Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Shareholder entitled to vote at such meeting at his
address as recorded on the register of the Trust, mailed at least 10 days and
not more than 60 days before the meeting. Only the business stated in the notice
of the meeting shall be considered at such meeting. Any adjourned meeting may be
held as adjourned without further notice. No notice need be given to any
Shareholder who shall have failed to inform the Trust of his current address or
if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting.
Where separate meetings are held for Shareholders of each of the
individual series and/or classes to vote on a matter required to be voted on by
Shareholders of the Trust in the aggregate, as provided in Article III, Section
1 above, notice of each such separate meeting shall be provided in the manner
described above in this Section 2.
SECTION 3. RECORD DATE. For the purpose of determining the Shareholders
who are entitled to notice of and to vote at any meeting, or to participate in
any distribution, or for the purpose of any other action, the Trustees may from
time to time close the transfer books for such period, not exceeding 30 days, as
the Trustees may determine; or without closing the transfer books the Trustees
may fix a date not more than 60 days prior to the date of any meeting of
Shareholders or distribution or other action as a record date for the
determination of the persons to be treated as Shareholders of record for such
purpose.
Where separate meetings are held for Shareholders of each of the
individual series to vote on a matter required to be voted on by Shareholders of
the Trust in the aggregate, as provided in Article III, Section 1 above, the
record date of each such separate meeting shall be determined in the manner
described above in this Section 3.
SECTION 4. ACTIONS. The Shareholders shall take action by the
affirmative vote of the holders of a majority, except in the case of the
election of Trustees which shall only require a plurality, of the Shares present
and entitled to vote at a meeting of Shareholders at which a quorum is present,
except as may be otherwise required by the 1940 Act or the Declaration of Trust.
<PAGE>
3
SECTION 5. PROXIES. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a vote of a majority of the Trustees, proxies may be solicited in
the name of the Trust or one or more Trustees or officers of the Trust. Only
Shareholders of record shall be entitled to vote. Each full Share shall be
entitled to one vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Share, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such Share,
such Share may be voted by such guardian or such other person appointed or
having such control, and such vote may be given in person or by proxy.
SECTION 6. INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
SECTION 7. ACTION WITHOUT MEETING. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
ARTICLE IV
TRUSTEES
SECTION 1. MEETINGS OF THE TRUSTEES. The Trustees may in their
discretion provide for regular or stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the Chairman or
by any Trustee. Notice of the time and place of each meeting other than regular
or stated meetings shall be given by the Secretary or an Assistant Secretary or
by the officer or Trustee calling the meeting and shall be mailed to each
Trustee at least two days before the meeting, or shall be telegraphed, cabled,
or wirelessed to each Trustee at his business address, or personally delivered
to him at least one day before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or to any Trustee
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A notice or waiver of notice need not specify the
purpose of any
<PAGE>
4
meeting. The Trustees may meet by means of a telephone conference
circuit or similar communications equipment by means of which all persons
participating in the meeting can hear each other, which telephone conference
meeting shall be deemed to have been held at a place designated by the Trustees
at the meeting. Participation in a telephone conference meeting shall constitute
presence in person at such meeting. Any action required or permitted to be taken
at any meeting of the Trustees may be taken by the Trustees without a meeting if
all the Trustees consent to the action in writing and the written consents are
filed with the records of the Trustees' meetings. Such consents shall be treated
as a vote for all purposes.
SECTION 2. QUORUM AND MANNER OF ACTING. A majority of the Trustees
present in person at any regular or special meeting of the Trustees shall
constitute a quorum for the transaction of business at such meeting and (except
as otherwise required by law, the Declaration or these By-Laws) the act of a
majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.
SECTION 3. ATTENDANCE BY TRUSTEES. A Trustee who fails, during any
fiscal year of the Trust, to attend at least 75% of the meetings of the Board,
or who fails to attend at least 75% of the meetings of each Committee of the
Board of which such Trustee is a member, unless such failure was the result of
an illness or incapacity which, as determined by the Board, is not likely to
materially interfere with the future performance of the duties of such Trustee,
shall be subject to removal for cause by vote of two-thirds of the remaining
Trustees. The foregoing shall not be construed to limit in any way the authority
of the Board with respect to removal of Trustees.
ARTICLE V
COMMITTEES AND ADVISORY BOARD
SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three Trustees to hold office at the
pleasure of the Trustees. While the Trustees are not in session, the Executive
Committee shall have the power to conduct the current and ordinary business of
the Trust, including the purchase and sale of securities and the designation of
securities to be delivered upon redemption of Shares of the Trust, and such
other powers of the Trustees as the Trustees may, from time to time, delegate to
the Executive Committee except those powers which by law, the Declaration or
these By-Laws the Trustees are prohibited from so delegating. The Trustees may
also elect from their own number other Committees from time to time, the number
comprising such Committees, the powers conferred upon the same (subject to the
same limitations as with respect to the Executive Committee) and the term of
membership on such Committees to be determined by the Trustees. The Trustees may
designate a chairman of any such Committee. In the absence of such designation a
Committee may elect its own chairman.
<PAGE>
5
SECTION 2. MEETING, QUORUM AND MANNER OF ACTING. The Trustees may (i)
provide for stated meetings of any Committee, (ii) specify the manner of calling
and notice required for special meetings of any Committee, (iii) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (iv) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (v) authorize the members of a Committee to meet by means
of a telephone conference circuit.
Each Committee shall keep regular minutes of its meetings and records of
decisions taken without a meeting and cause them to be recorded in a book
designated for that purpose and kept in the office of the Trust.
SECTION 3. ADVISORY BOARD. The Trustees may appoint an Advisory Board to
consist in the first instance of not less than three members. Members of such
Advisory Board shall not be Trustees or officers and need not be Shareholders. A
member of such Advisory Board shall hold office for such period as the Trustees
may by vote provide and may resign therefrom by a written instrument signed by
him which shall take effect upon its delivery to the Trustees. The Advisory
Board shall have no legal powers and shall not perform the functions of Trustees
in any manner, such Advisory Board being intended merely to act in an advisory
capacity. Such Advisory Board shall meet at such times and upon such notice as
the Trustees may by vote provide.
SECTION 4. CHAIRMAN. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to hold office until his
successor shall have been duly elected and qualified. The Chairman shall not
hold any other office. The Chairman may be, but need not be, a Shareholder. The
Chairman shall preside at all meetings of the Trustees and shall have such other
duties as from time to time may be assigned to him by the Trustees.
ARTICLE VI
OFFICERS
SECTION 1. GENERAL PROVISIONS. The officers of the Trust shall be a
President, a Treasurer and a Secretary, each of whom shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one or
more Assistant Treasurers, and one or more Assistant Secretaries. The Trustees
may delegate to any officer or committee the power to appoint any subordinate
officers or agents.
SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Except as otherwise
provided by law, the Declaration or these By-Laws, the President, the Treasurer
and the Secretary shall hold office until his respective successor shall have
been duly elected and qualified, and all other officers shall hold office at the
pleasure of the Trustees. The Secretary and Treasurer may be the same person. A
Vice President and the Treasurer or a Vice President and the Secretary may be
the same person, but the offices of Vice President, Secretary and Treasurer
shall
<PAGE>
6
not be held by the same person. The President shall not hold any other
office. Except as above provided, any two offices may be held by the same
person. Any officer may be, but does not need be, a Trustee or Shareholder.
SECTION 3. REMOVAL. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer with or without cause by a vote of a
majority of the Trustees. Any officer or agent appointed by any officer or
committee may be removed with or without cause by such appointing officer or
committee.
SECTION 4. POWERS AND DUTIES OF THE PRESIDENT. The President, unless the
Chairman, if any, is so appointed by the Trustees, shall be the principal
executive officer of the Trust. Subject to the control of the Trustees and any
committee of the Trustees, the President shall at all times exercise a general
supervision and direction over the affairs of the Trust. The President shall
have the power to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks and employees as he may find necessary to
transact the business of the Trust. The President shall also have the power to
grant, issue, execute or sign such powers of attorney, proxies or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust. The President shall have such other powers and duties
as, from time to time, may be conferred upon or assigned to him by the Trustees.
SECTION 5. POWERS AND DUTIES OF VICE PRESIDENTS. In the absence or
disability of the President, the Vice President or, if there are more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees or the President.
SECTION 6. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall be
the principal financial and accounting officer of the Trust. The Treasurer shall
deliver all funds of the Trust which may come into his hands to such custodian
as the Trustees may employ pursuant to Article X hereof. The Treasurer shall
render a statement of condition of the finances of the Trust to the Trustees as
often as they shall require the same and shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required to do so by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.
SECTION 7. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall keep
the minutes of all meetings of the Shareholders in proper books provided for
that purpose; shall keep the minutes of all meetings of the Trustees; shall have
custody of the seal of the Trust; and shall have charge of the Share transfer
books, lists and records unless the same are in the charge of the Transfer
Agent. The Secretary shall attend to the giving and serving of all notices by
the Trust in accordance with the provisions of these By-Laws and as required by
law; and subject to these By-Laws, shall in general perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the Trustees.
<PAGE>
7
SECTION 8. POWERS AND DUTIES OF ASSISTANT TREASURERS. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required to do so by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
SECTION 9. POWERS AND DUTIES OF ASSISTANT SECRETARIES. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all of the duties, and may exercise any of the powers, of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees.
SECTION 10. COMPENSATION OF OFFICERS AND TRUSTEES AND MEMBERS OF THE
ADVISORY BOARD. Subject to any applicable law or provision of the Declaration,
the compensation of the officers and Trustees and members of the Advisory Board
shall be fixed from time to time by the Trustees or, in the case of officers, by
any committee of officers upon whom such power may be conferred by the Trustees.
No officer shall be prevented from receiving such compensation as such officer
by reason of the fact that he is also a Trustee.
ARTICLE VII
FISCAL YEAR
The fiscal year of each series of the Trust shall be determined by the
Trustees, and the Trustees may from time to time change any fiscal year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall have
such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice is required to be given by law, the Declaration or
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. A notice shall be deemed to have been telegraphed,
cabled or wirelessed for the purposes of these By-Laws when it has been
delivered to a representative of any telegraph, cable or wireless company with
instruction that it be telegraphed, cabled or wirelessed. Any notice shall be
deemed to be given at the time when the same shall be mailed, telegraphed,
cabled or wirelessed.
<PAGE>
8
ARTICLE X
CUSTODIAN
SECTION 1. APPOINTMENT AND DUTIES. The Trustees shall at all times
employ a bank or trust company having a capital, surplus and undivided profits
of at least $5,000,000 as custodian with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in the Declaration, these By-Laws and the 1940 Act:
(i) to hold the securities owned by the Trust and deliver the
same upon written order;
(ii) to receive and receipt for any monies due to the Trust and
deposit the same in its own banking department or elsewhere as
the Trustees may direct;
(iii) to disburse such funds upon orders or vouchers;
(iv) if authorized by the Trustees, to keep the books and
accounts of the Trust and furnish clerical and accounting
services; and
(v) if authorized by the Trustees, to compute the net income of
the Trust and the net asset value of Shares;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees. Subject to the
approval of the Trustees, the custodian may enter into arrangements with
securities depositories. All such custodial, sub-custodial and depository
arrangements shall be subject to, and comply with, the provisions of the 1940
Act and the rules and regulations promulgated thereunder.
SECTION 2. CENTRAL CERTIFICATE SYSTEM. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or with such other person
as may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodian.
SECTION 3. ACCEPTANCE OF RECEIPTS IN LIEU OF CERTIFICATES. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve
<PAGE>
9
System in accordance with regulations promulgated by the Board of Governors of
the Federal Reserve System and the local Federal Reserve Banks in lieu of
receipt of certificates representing such securities.
ARTICLE XI
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or
new By-Laws may be adopted (a) by the Shareholders by a Majority Shareholder
Vote, or (b) by the Trustees, provided, however, that no By-Law may be amended,
adopted or repealed by the Trustees if such amendment, adoption or repeal
requires, pursuant to law, the Declaration or these By-Laws, a vote of the
Shareholders.
DOMINI INSTITUTIONAL TRUST
The undersigned hereby constitutes and appoints Philip W. Coolidge,
John R. Elder, David G. Danielson, Linda T. Gibson, Brian J. Hall, Thomas M.
Lenz, Molly S. Mugler, Barbara M. O'Dette, Andres E. Saldana and Daniel E. Shea
and each of them, with full powers of substitution as his true and lawful
attorneys and agents to execute in his name and on his behalf in any and all
capacities the Registration Statement on Form N-1A, and any and all amendments
thereto, filed by Domini Institutional Trust on behalf of the Domini
Institutional Social Equity Fund (the "Trust") with the Securities and Exchange
Commission under the Investment Company Act of 1940 and any and all instruments
which such attorneys and agents, or any of them, deem necessary or advisable to
enable the Trust to comply with such Act, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other juristiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all that such attorneys
and agents, or any of them, shall do or cause to be done by virtue hereof. Any
one of such attorneys and agents have, and may exercise, all of the powers
hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 8th
day of April, 1996.
/S/ AMY L. DOMINI
-------------------------------
AMY L. DOMINI
<PAGE>
DOMINI INSTITUTIONAL TRUST
The undersigned hereby constitutes and appoints Philip W. Coolidge,
John R. Elder, David G. Danielson, Linda T. Gibson, Brian J. Hall, Thomas M.
Lenz, Molly S. Mugler, Barbara M. O'Dette, Andres E. Saldana and Daniel E. Shea
and each of them, with full powers of substitution as his true and lawful
attorneys and agents to execute in his name and on his behalf in any and all
capacities the Registration Statement on Form N-1A, and any and all amendments
thereto, filed by Domini Institutional Trust on behalf of the Domini
Institutional Social Equity Fund (the "Trust") with the Securities and Exchange
Commission under the Investment Company Act of 1940 and the Securities Act of
1933 and any and all instruments which such attorneys and agents, or any of
them, deem necessary or advisable to enable the Trust to comply with such Acts,
the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
juristiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents have,
and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of April, 1996.
/S/ ALLEN M. MAYES
-------------------------------
ALLEN M. MAYES
<PAGE>
DOMINI INSTITUTIONAL TRUST
The undersigned hereby constitutes and appoints Philip W. Coolidge,
John R. Elder, David G. Danielson, Linda T. Gibson, Brian J. Hall, Thomas M.
Lenz, Molly S. Mugler, Barbara M. O'Dette, Andres E. Saldana and Daniel E. Shea
and each of them, with full powers of substitution as his true and lawful
attorneys and agents to execute in his name and on his behalf in any and all
capacities the Registration Statement on Form N-1A, and any and all amendments
thereto, filed by Domini Institutional Trust on behalf of the Domini
Institutional Social Equity Fund (the "Trust") with the Securities and Exchange
Commission under the Investment Company Act of 1940 and the Securities Act of
1933 and any and all instruments which such attorneys and agents, or any of
them, deem necessary or advisable to enable the Trust to comply with such Acts,
the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
juristiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents have,
and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of April, 1996.
/S/ TIMOTHY SMITH
-------------------------------
TIMOTHY SMITH
<PAGE>
DOMINI INSTITUTIONAL TRUST
The undersigned hereby constitutes and appoints Philip W. Coolidge,
John R. Elder, David G. Danielson, Linda T. Gibson, Brian J. Hall, Thomas M.
Lenz, Molly S. Mugler, Barbara M. O'Dette, Andres E. Saldana and Daniel E. Shea
and each of them, with full powers of substitution as his true and lawful
attorneys and agents to execute in his name and on his behalf in any and all
capacities the Registration Statement on Form N-1A, and any and all amendments
thereto, filed by Domini Institutional Trust on behalf of the Domini
Institutional Social Equity Fund (the "Trust") with the Securities and Exchange
Commission under the Investment Company Act of 1940 and the Securities Act of
1933 and any and all instruments which such attorneys and agents, or any of
them, deem necessary or advisable to enable the Trust to comply with such Acts,
the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
juristiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents have,
and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of April, 1996.
/S/ FREDERICK C. WILLIAMSON,SR.
-------------------------------
FREDERICK C. WILLIAMSON, Sr.
<PAGE>
DOMINI INSTITUTIONAL TRUST
The undersigned hereby constitutes and appoints Philip W. Coolidge,
David G. Danielson, Linda T. Gibson, Brian J. Hall, Thomas M. Lenz, Molly S.
Mugler, Barbara M. O'Dette, Andres E. Saldana and Daniel E. Shea and each of
them, with full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all capacities the
Registration Statement on Form N-1A, and any and all amendments thereto, filed
by Domini Institutional Trust on behalf of the Domini Institutional Social
Equity Fund (the "Trust") with the Securities and Exchange Commission under the
Investment Company Act of 1940 and the Securities Act of 1933 and any and all
instruments which such attorneys and agents, or any of them, deem necessary or
advisable to enable the Trust to comply with such Acts, the rules, regulations
and requirements of the Securities and Exchange Commission, and the securities
or Blue Sky laws of any state or other juristiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all that such attorneys
and agents, or any of them, shall do or cause to be done by virtue hereof. Any
one of such attorneys and agents have, and may exercise, all of the powers
hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of April, 1996.
/S/ JOHN R. ELDER
-------------------------------
JOHN R. ELDER
<PAGE>
DOMINI INSTITUTIONAL TRUST
The undersigned hereby constitutes and appoints Philip W. Coolidge, John
R. Elder, Linda T. Gibson, Molly S. Mugler, Roger P. Joseph, Mari A. Wilson and
each of them, with full powers of substitution as his true and lawful attorneys
and agents to execute in his name and on his behalf in any and all capacities
the Registration Statement on Form N-1A, and any and all amendments thereto,
filed by Domini Institutional Trust on behalf of the Domini Institutional Social
Equity Fund (the "Trust") with the Securities and Exchange Commission under the
Investment Company Act of 1940 and any and all instruments which such attorneys
and agents, or any of them, deem necessary or advisable to enable the Trust to
comply with such Act, the rules, regulations and requirements of the Securities
and Exchange Commission, and the securities or Blue Sky laws of any state or
other juristiction, and the undersigned hereby ratifies and confirms as his own
act and deed any and all that such attorneys and agents, or any of them, shall
do or cause to be done by virtue hereof. Any one of such attorneys and agents
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
______ day of _______, 1997.
/s/ William Osborn
William Osborn
DSI308
<PAGE>
DOMINI INSTITUTIONAL TRUST
The undersigned hereby constitutes and appoints Philip W. Coolidge, John
R. Elder, Linda T. Gibson, Molly S. Mugler, Roger P. Joseph, Mari A. Wilson and
each of them, with full powers of substitution as his true and lawful attorneys
and agents to execute in his name and on his behalf in any and all capacities
the Registration Statement on Form N-1A, and any and all amendments thereto,
filed by Domini Institutional Trust on behalf of the Domini Institutional Social
Equity Fund (the "Trust") with the Securities and Exchange Commission under the
Investment Company Act of 1940 and any and all instruments which such attorneys
and agents, or any of them, deem necessary or advisable to enable the Trust to
comply with such Act, the rules, regulations and requirements of the Securities
and Exchange Commission, and the securities or Blue Sky laws of any state or
other juristiction, and the undersigned hereby ratifies and confirms as his own
act and deed any and all that such attorneys and agents, or any of them, shall
do or cause to be done by virtue hereof. Any one of such attorneys and agents
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 13
day of June, 1997.
/s/ Karen Paul
Karen Paul
DSI308
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
The undersigned hereby constitutes and appoints Peter D. Kinder, Steven
D. Lyndenberg, John R. Elder, Thomas M. Lenz, Molly S. Mugler, Linda T. Gibson,
Andres E. Saldana, Brian J. Hall, David G. Danielson and Daniel E. Shea, and
each of them, with full powers of substitution as his true and lawful attorneys
and agents to execute in his name and on his behalf in any and all capacities
the Registration Statements on Form N-1A, and any and all amendments thereto,
filed by Domini Social Euqity Fund, Domini Institutional Trust, DEVCAP Trust,
and Green Century Funds (each a "Trust"), or the Registration Statement(s), and
any and all amendments thereto, filed by any other investor in any registered
investment company in which any of the Trusts invest, with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, and/or
the Securities Act of 1933, as amended, and any and all instruments which such
attorneys and agents, or any of them, deem necessary or advisable to enable each
Trust to comply with such Acts, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction, and the undersigned hereby ratifies and confirms as
his own act and deed any and all acts that such attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof. Any one of such attorneys
and agents have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 8th
day of April, 1996.
/s/ Amy L. Domini
Amy L. Domini
DSI166B
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
The undersigned hereby constitutes and appoints Peter D. Kinder, Steven
D. Lyndenberg, Thomas M. Lenz, Molly S. Mugler, Linda T. Gibson, Andres E.
Saldana, Brian J. Hall, David G. Danielson and Daniel E. Shea, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Domini
Social Euqity Fund, Domini Institutional Trust, DEVCAP Trust, and Green Century
Funds (each a "Trust"), or the Registration Statement(s), and any and all
amendments thereto, filed by any other investor in any registered investment
company in which any of the Trusts invest, with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, and/or the
Securities Act of 1933, as amended, and any and all instruments which such
attorneys and agents, or any of them, deem necessary or advisable to enable each
Trust to comply with such Acts, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction, and the undersigned hereby ratifies and confirms as
his own act and deed any and all acts that such attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof. Any one of such attorneys
and agents have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of April, 1996.
/s/ John R. Elder
John R. Elder
DSI166B
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
The undersigned hereby constitutes and appoints Peter D. Kinder, Steven
D. Lyndenberg, John R. Elder, Thomas M. Lenz, Molly S. Mugler, Linda T. Gibson,
Andres E. Saldana, Brian J. Hall, David G. Danielson and Daniel E. Shea, and
each of them, with full powers of substitution as his true and lawful attorneys
and agents to execute in his name and on his behalf in any and all capacities
the Registration Statements on Form N-1A, and any and all amendments thereto,
filed by Domini Social Equity Fund, Domini Institutional Trust, DEVCAP Trust,
and Green Century Funds (each a "Trust"), or the Registration Statement(s), and
any and all amendments thereto, filed by any other investor in any registered
investment company in which any of the Trusts invest, with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, and/or
the Securities Act of 1933, as amended, and any and all instruments which such
attorneys and agents, or any of them, deem necessary or advisable to enable each
Trust to comply with such Acts, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction, and the undersigned hereby ratifies and confirms as
his own act and deed any and all acts that such attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof. Any one of such attorneys
and agents have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of April, 1996.
/s/ Allen M. Mayes
Allen M. Mayes
DSI166B
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
The undersigned hereby constitutes and appoints Peter D. Kinder, Steven
D. Lyndenberg, John R. Elder, Thomas M. Lenz, Molly S. Mugler, Linda T. Gibson,
Andres E. Saldana, Brian J. Hall, David G. Danielson and Daniel E. Shea, and
each of them, with full powers of substitution as his true and lawful attorneys
and agents to execute in his name and on his behalf in any and all capacities
the Registration Statements on Form N-1A, and any and all amendments thereto,
filed by Domini Social Euqity Fund, Domini Institutional Trust, DEVCAP Trust,
and Green Century Funds (each a "Trust"), or the Registration Statement(s), and
any and all amendments thereto, filed by any other investor in any registered
investment company in which any of the Trusts invest, with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, and/or
the Securities Act of 1933, as amended, and any and all instruments which such
attorneys and agents, or any of them, deem necessary or advisable to enable each
Trust to comply with such Acts, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction, and the undersigned hereby ratifies and confirms as
his own act and deed any and all acts that such attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof. Any one of such attorneys
and agents have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of April, 1996.
/s/ Timothy Smith
Timothy Smith
DSI166B
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
The undersigned hereby constitutes and appoints Peter D. Kinder, Steven
D. Lyndenberg, John R. Elder, Thomas M. Lenz, Molly S. Mugler, Linda T. Gibson,
Andres E. Saldana, Brian J. Hall, David G. Danielson and Daniel E. Shea, and
each of them, with full powers of substitution as his true and lawful attorneys
and agents to execute in his name and on his behalf in any and all capacities
the Registration Statements on Form N-1A, and any and all amendments thereto,
filed by Domini Social Euqity Fund, Domini Institutional Trust, DEVCAP Trust,
and Green Century Funds (each a "Trust"), or the Registration Statement(s), and
any and all amendments thereto, filed by any other investor in any registered
investment company in which any of the Trusts invest, with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, and/or
the Securities Act of 1933, as amended, and any and all instruments which such
attorneys and agents, or any of them, deem necessary or advisable to enable each
Trust to comply with such Acts, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction, and the undersigned hereby ratifies and confirms as
his own act and deed any and all acts that such attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof. Any one of such attorneys
and agents have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of April, 1996.
/s/ Frederick S. Williamson, Sr.
Frederick C. Williamson, Sr.
DSI166B
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
The undersigned hereby constitutes and appoints Philip W. Coolidge,
John R. Elder, Linda T. Gibson, Molly S. Mugler, Roger P. Joseph, Mari A. Wilson
and each of them, with full powers of substitution as his true and lawful
attorneys and agents to execute in his name and on his behalf in any and all
capacities the Registration Statement on Form N-1A, and any and all amendments
thereto, filed by Domini Social Index Portfolio Portfolio (the "Portfolio") with
the Securities and Exchange Commission under the Investment Company Act of 1940
and any and all instruments which such attorneys and agents, or any of them,
deem necessary or advisable to enable the Portfolio to comply with such Act, the
rules, regulations and requirements of the Securities and Exchange Commission,
and the securities or Blue Sky laws of any state or other juristiction, and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents have, and may exercise, all
of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
______ day of _______, 1997.
/s/ William Osborn
William Osborn
DSI308
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from semi-annual
report dated January 31, 1997 of Domini Institutional Social Equity Fund and is
qualified in its entirety by reference to such report.
</LEGEND>
<CIK> 0001010297
<NAME> DOMINI INSTITUTIONAL SOCIAL EQUITY FUND
<S> <C>
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</TABLE>
