<PAGE>
Dear Shareholders,
The past six months have continued to astound bears as the stock market
rocketed to new high ground. As shareholders in the Domini Institutional Social
Equity Fund (DISEF), you have enjoyed the continuation of the most extraordinary
bull market in memory. For the six months ended January 31, 1997, the fund
enjoyed a total return of 25.8%. We continue to be pleased with our fund's
performance and with the fact that our record so closely mirrors broad market
behavior.
In this semi-annual report we review our fund's policies regarding
shareholder activism. The DISEF has both financial and social objectives. To
meet these objectives, we screen the companies in which we invest and use our
voice as an investor to vote shareholder resolutions.
In 1997, the DSEF will continue its emphasis on employment-related
issues and on non-U.S. operations--despite the SEC's position that employment
issues are the business of management and not of shareholders. DSEF and its
Portfolio Adviser, Kinder, Lydenberg, Domini & Co., Inc. have repeatedly written
the SEC on the rights of shareholders to raise these issues with corporations.
The heavy media coverage of Texaco's diverse workforce and corporate response
and of Kathie Lee Gifford's sweatshop labor problems confirm that the public has
deep concerns about corporate employment related issues and non-U.S. operations
at corporations.
This semi-annual report provides you with our voting position on most
of the issues shareholders are raising this season. We continue to believe that
an activist approach, together with solid corporate accountability research
applied to investments, will provide shareholders with long term growth and a
better world.
Sincerely yours,
Amy L. Domini
<PAGE>
PROXY VOTING GUIDELINES
Socially responsible investors eagerly await the proxy filing season as an
opportunity to address companies on an ever-increasing range of issues. This
year there are resolutions addressing standards of conduct for global
operations, equal employment opportunity, insurance company investments in the
tobacco industry, environmental performance, and executive compensation, just to
name a few.
The text that follows has been taken from the Domini Social Equity Fund Proxy
Voting Guidelines, a standalone report that is available from the Fund by
calling 1-800-762-6814. These Guidelines not only reflect how the Fund will vote
its shares on various issues of concern to socially responsible investors, they
are meant to be a tool for social investors to use in voting the shares of stock
they may hold individually.
Shareholders are the owners of corporations, and with the rights of ownership
come certain responsibilities. Voting proxies in a way that is consistent with
our purpose as social investors is one of those responsibilities. While success
on the road to greater corporate accountability is measured by management's
attention to the issues rather than the vote count, it is often the voice of the
shareholders that makes the difference.
Community
Equal Credit Opportunity
Access to capital is essential to participating in our society. The
Equal Credit Opportunity Act prohibits lenders from discriminating with regard
to race, religion, national origin, sex, age, and the like.
Shareholders have asked for:
o Reports on lending practices in low/moderate income or minority
areas and on steps to remedy mortgage
lending discrimination;
o The development of "fair lending policies" that would assure access
to credit for major disadvantaged groups and require annual reports
to shareholders on their implementation; and
o The application by nonfinancial corporations, such as the auto
companies, of Equal Credit Opportunity Act standards to their
financial subsidiaries.
The DSEF will support these resolutions.
Insurance Companies and Economically Targeted Investments
Economically Targeted Investments (ETIs) are loans made to
low-to-moderate income communities or individuals to foster, among many things,
small businesses and farms, affordable housing and community development banks
and credit unions. Insurance companies presently invest less than 0.1 percent of
their more than $1.9 trillion in assets into ETIs. Shareholders have asked for
reports outlining how insurers could implement an ETI program. The DSEF will
support these resolutions.
Redlining
"Redlining" is the systematic denial of services to an area based on
its economic or ethnic profile. The term originated in banking, but the same
practice infects businesses as different as insurance and supermarkets, and
areas as broadly defined as "rural." Shareholders have asked management to
appraise their lending practices and develop policies to avoid redlining. The
DSEF will support these resolutions.
<PAGE>
Violence on Television
Children's television programming recently set an all-time record of 32
violent acts per hour. By the time children finish elementary school, on average
they have watched 8,000 murders and 100,000 acts of violence. Shareholders have
asked media companies and program sponsors for reports on standards for
television program production and mechanisms for monitoring violent programming.
The DSEF will support these resolutions.
Diversity
Boards of Directors -- Nominating Women and Minorities
Shareholders have asked boards to make greater efforts to search for
qualified female and minority candidates for nomination to the board of
directors and to endorse a policy of board inclusiveness. The DSEF will support
these resolutions.
Board Slates without Women or Minorities
Typically, a board committee selects nominees for the board, and they
run unopposed. If the board or the slate does not include women or minorities,
the DSEF will oppose the board's nominees.
Equal Employment Opportunity and Affirmative Action Report
All corporations have the power to promote equality in the workplace
and the marketplace. Shareholders have asked for reports that may include:
o A chart identifying employees by sex, race and the various job
categories defined by the EEOC;
o A description of affirmative action policies and programs in place;
o The company's Form EEO-1 disclosure report;
o A description of programs designed to increase the number of
women and/or minority managers; and
o A description of programs directing the purchase of goods and
services from minority and/or female-owned businesses.
The DSEF will support these resolutions.
Equality Principles on Sexual Orientation
In 1995, a coalition of advocacy groups and businesses, primarily in
financial services, developed the Equality Principles on Sexual Orientation. The
Principles call on companies to:
o Adopt written prohibitions against discrimination in employment based
on sexual orientation;
o Recognize and grant equal status to employee groups formed to address
sexual orientation issues in the workplace;
o Include sexual orientation issues in diversity training;
o Grant spousal benefits to domestic partners, regardless of sexual
orientation; and
o Practice nondiscrimination in the sale of goods and services and the
placement of advertisements. Shareholders have asked
for reports on the implementation of the Principles. The DSEF will
support these resolutions.
<PAGE>
Environment
CERES Principles
The Coalition for Environmentally Responsible Economies (CERES) was
formed in 1989 in the wake of the Exxon Valdez disaster. It developed a set of
ten principles, now called the CERES Principles, to guide corporate decisions
that affect the environment. By subscribing to the Principles, a company commits
itself to:
o Work toward positive goals such as sustainable use of natural
resources, energy conservation, and environmental restoration;
o Set definitive goals and a means of measuring progress; and
o Inform the public in an environmental report published in the format
of a CERES report. Shareholders have submitted resolutions asking
corporations to study the Principles or to subscribe to them. The
DSEF will support these resolutions.
Environmental Hazards to Community
The public has a right to know whether a company uses substances that
pose an environmental health or safety risk to a community in which it operates.
Shareholders have asked for the adoption of a policy making available
information enabling neighbors to assess a facility's potential impact. The DSEF
will support these resolutions.
Paper Production -- Chlorine Bleaching
The insatiable demands for paper have led to clear cutting of forest
for pulp and the use of chlorine bleaching to achieve whiteness in the end
product. As both these practices have dire environmental consequences,
shareholders have asked that paper manufacturers phase out the production of
paper using these processes. The DSEF will support these resolutions.
Paper Production -- Telephone Directories
Some producers of telephone books use paper derived from virgin
rainforests. Since alternative sources of paper exist, shareholders have asked
publishers to phase out the use of paper from these sources. The DSEF will
support these resolutions.
Non-U.S. Operations
Global Companies -- Standards of Conduct
Companies acting outside the cultures in which they originated face
complex issues arising from the diverse cultures and political and economic
contexts in which they operate. These issues include: human rights; just wages
and safe working conditions; child labor; forced labor; freedom of association;
and the environment. Shareholders have asked companies to develop and adopt
codes of conduct to guide company policies, programs, and operations outside
their culture of origin. The DSEF will support these resolutions.
Global Companies -- Standards for Vendors
The outcry surrounding the offshore sweatshops supplying U.S. retailers
has many origins. Underlying those protests, however, is a common assumption:
U.S. corporations have the power to alter the conditions under which their
vendors operate. Shareholders have asked companies for reports describing their
vendors' standards, focusing especially on the workers' right to organize and
working conditions. They have also asked for descriptions of compliance
mechanisms and external monitoring programs. The DSEF will support these
resolutions.
International Lending and Economic Development
Shareholders have asked financial services companies to develop
criteria for the evaluation, support, and use of intermediaries capable of
promoting appropriate development in emerging economies. Others have asked for
the disclosure of the criteria used in extending loans to developing countries
to avoid adding to their $1.3 trillion debt to industrialized countries. Still
others have asked for information on IMF-World Bank-enforced structural
adjustment programs. These programs are supposed to help developing countries
repay loans, but considerable evidence indicates their effects include:
o Encouraging capital flight from less economically developed
countries;
o Eroding human and natural resources;
o Decreasing spending for health, education and housing; and
o Undermining a country's long-term capacity to repay its debts.
The DSEF will support these resolutions.
Justice for Indigenous Peoples
Shareholders have asked companies to report on their mining operations
on indigenous lands and to address the impact and implications of their
activities on both the land and the people. The DSEF will support these
resolutions.
Burma , China and Indonesia
The behavior of the Burmese, Chinese, and Indonesian governments have
led to an international outcry. Since these economies are almost entirely
government-controlled, corporations operating there inevitably provide financial
support to the military regime. Shareholder resolutions include:
o Requests for comprehensive reports on corporate operations in the
nation;
o To promote freedom of expression and freedom of association
among employees; to use production methods that do not risk harm to
the environment; and to prohibit the presence of the Chinese
military on the premises;
o Use independent monitors to protect their vendors' workers.
The DSEF will support these resolutions.
Mexico -- Maquiladoras
Maquiladoras are facilities operated by U.S. companies just south
of the U.S.--Mexico border. There, Mexican workers -- paid a fraction of
what U.S. workers would require to subsist -- assemble parts made in the
U.S. and ship the finished goods north. Shareholders may ask management to:
o Initiate a review of its Maquiladora operations, addressing issues
such as environmental health and safety, or fair employment and wage
practices, as well as standards of living and community impact; and
o Prepare a report with recommendations for changes in light of the
findings.
The DSEF will support these resolutions.
Nigeria
In 1995, Nigeria's military government called international attention
to its depredations when it executed nine dissidents after a drumhead trial.
Shareholders have asked companies with operations in Nigeria
<PAGE>
to report on their businesses there and their relationships with the government.
The DSEF will support these resolutions.
Northern Ireland -- MacBride Principles
The International Commission of Jurists has cited employment
discrimination as one major cause of conflict in Northern Ireland. Shareholders
have asked companies to make all lawful efforts to implement or increase
activity on each of the nine MacBride Principles (equal employment opportunity
principles). The DSEF will support these resolutions.
Tobacco
Sales of Non-tobacco Products to Tobacco Industry
Shareholders have asked companies making significant sales of
non-tobacco products to the tobacco industry to study the effects of ending
these transactions or to stop immediately. The DSEF will support these
resolutions.
Tobacco Smoke in the Environment
The hazards of tobacco smoke in the environment -- particularly indoors
- -- are well documented. Shareholders have requested that a company refrain from
efforts to undermine legislation geared toward restricting smoking in public
places. Shareholders have also asked restaurant and airline companies to adopt
smoke-free policies. And, they have requested that new fast-food franchisees'
facilities be smoke-free. The DSEF will support these resolutions.
Tobacco Sales to Minors
In the United Kingdom, social investors with a tobacco screen eliminate
supermarket chains because they sell cigarettes. U.S. investors have focused on
tobacco product manufacturers, not retailers. However, U.S. shareholders have
submitted resolutions asking management of grocery chains, convenience stores,
service stations, and pharmacies to implement programs to ensure that they do
not sell tobacco products to minors or to stop selling them altogether. The DSEF
will support these resolutions.
Tobacco Advertising
Tobacco is among the most heavily advertized products in the U.S.
Shareholders have asked media companies that profit from cigarette advertising
to:
o Prepare reports that address the media's role in encouraging smoking,
particularly among children; o Develop policies and practices which
would ensure that cigarette advertising is not manipulative or
misleading; or
o Adopt voluntarily the 1996 Food & Drug Administration regulations
pertaining to tobacco advertizing; The DSEF will support these
resolutions.
Insurance and Health Care Companies Investing in Tobacco
Shareholders have asked insurance and health care company boards to
report on the appropriateness of investments in the tobacco industry. They have
also asked for reports on the impact smoking has on benefit payments for death,
disease and property loss. The DSEF will support these resolutions.
<PAGE>
Domini Social Index Portfolio
Portfolio of Investments January 31, 1997 (Unaudited)
DESCRIPTION SHARES VALUE
COMMON STOCKS--98.5%
APPAREL--1.1%
Brown Group Inc............... 900 14,850
Hartmarx Corp. (b)............ 1,800 10,575
Lands' End Inc. .............. 1,700 48,237
Liz Claiborne, Inc. .......... 3,900 164,288
Nike Inc. (Class B)........... 15,300 1,038,488
Oshkosh B'Gosh, Inc. (Class A) 800 11,000
Phillips-Van Heusen Corp...... 1,400 18,900
Reebok International Ltd. .... 3,200 152,000
Russell Corp.................. 2,200 70,950
Stride Rite Corp.............. 2,700 32,400
Timberland Co. (b)............ 600 26,625
VF Corp....................... 3,400 226,100
-------------
1,814,413
COMMERCIAL PRODUCTS & SERVICES--2.5%
Autodesk Inc. ................ 2,400 75,900
Banta Corp.................... 1,850 43,475
Centex Corp................... 1,600 62,400
Cintas Corp................... 2,600 148,200
Crown Cork & Seal Inc. ....... 6,800 391,000
Deluxe Corp................... 4,700 144,525
DeVRY Inc. (b)................ 2,200 57,750
Donnelley, (R.R.) & Sons...... 8,100 253,125
Fleetwood Enterprises, Inc. .. 1,900 50,825
Fuller (H.B.) Co.............. 800 39,900
Graco Inc. ................... 950 30,519
Harland (J.H.) ............... 1,600 46,600
HON Industries Inc............ 1,600 57,200
Ikon Office Solutions Inc. ... 7,100 313,288
Kaufman & Broad Home Corp. ... 2,100 29,663
Kelly Services (Class A)...... 1,775 49,700
Miller, (Herman) Inc. ........ 1,300 75,238
Moore Corp., Ltd. ............ 5,300 109,975
National Education Corp. (b).. 2,100 31,763
National Service Industries, Inc. 2,400 92,100
New England Business Services Inc 800 16,600
Pitney Bowes Inc.............. 8,000 461,000
Rouse Co. .................... 3,000 93,000
Sherwin-Williams Co........... 4,600 255,300
Sonoco Products Co............ 4,805 128,534
Standard Register Co.......... 1,500 51,750
TJ International Inc. ........ 3,500 64,750
Xerox Corp.................... 18,100 1,061,113
------------
4,235,193
CONSUMER PRODUCTS & SERVICES--0.2%
American Greetings Corp. (Class A) 4,000 13,250
Avery Dennison Corp........... 5,700 208,762
ISCO Inc...................... 300 2,550
Tennant Co.................... 500 13,438
--------------
338,000
ENERGY--3.7%
Amoco Corp.................... 26,800 2,331,600
Anadarko Petroleum Corp....... 3,200 207,200
Apache Corp................... 4,800 184,200
DESCRIPTION SHARES VALUE
Atlantic Richfield Co. ....... 9,000 1,190,250
Consolidated Natural Gas Co. . 5,100 283,687
ENERGEN Corp.................. 600 18,450
Enron Corp. .................. 13,100 540,375
Helmerich & Payne Inc......... 1,300 62,888
Louisiana Land & Exploration Co. 2,000 112,500
OGE Energy Corp. ............. 2,100 89,513
Oryx Energy Co. (b)........... 5,600 135,800
Pennzoil Co................... 2,500 155,938
Rowan Companies Inc. (b)...... 4,700 118,675
Santa Fe Energy Resources Inc. (b) 4,800 71,400
Sonat Inc. ................... 4,700 250,275
Sun Co. ...................... 3,900 102,862
Williams Companies Inc. ...... 9,000 361,125
--------------
6,216,738
FINANCIAL--13.2%
Ahmanson (H.F.) & Co. ........ 5,700 213,750
American Express Co. ......... 26,200 1,634,225
Banc One Corp. ............... 23,095 1,047,935
Bank of Boston................ 8,100 577,125
BankAmerica Corp.............. 19,700 2,199,012
Bankers Trust (N.Y.) Corp..... 4,500 382,500
Barnett Banks Inc. ........... 10,400 457,600
Beneficial Corp. ............. 2,800 188,300
Block (H. & R.), Inc. ........ 5,500 162,937
Cincinnati Financial Corp. ... 2,995 187,188
CoreStates Financial Corp. ... 11,700 582,075
Dime Bancorp Inc. (b)......... 5,800 90,625
Edwards (A.G.), Inc........... 3,525 119,409
Federal Home Loan Mortgage Corp. 38,000 1,149,500
Federal National Mortgage
Association................. 58,000 2,291,000
Fifth Third Bancorp........... 5,600 433,300
First Chicago Corp. .......... 17,206 982,893
First Fed Financial Corp. (b). 600 13,200
Golden West Financial Corp.... 3,100 208,088
Great Western Financial Corp. 7,100 224,538
Household International Inc... 5,200 515,450
MBNA Corp..................... 17,700 610,650
Mellon Bank Corp. ............ 6,900 514,913
Merrill Lynch & Co., Inc...... 10,400 876,200
Morgan (J.P.) & Co., Inc...... 10,700 1,102,100
Norwest Corp.................. 20,500 976,312
Piper Jaffray Inc............. 1,000 17,625
PNC Bank Corp................. 18,300 727,425
ReliaStar Financial Corp...... 2,000 111,000
Schwab (Charles) Corp. ....... 9,300 347,588
Student Loan Marketing Association 2,900 315,738
SunTrust Banks Inc............ 11,800 590,000
Transamerica Corp............. 3,600 296,100
Value Line Inc................ 500 15,125
Vermont Financial Services Corp. 200 7,925
Wachovia Corp. ............... 8,900 512,863
Wells Fargo & Co. ............ 4,900 1,493,275
Wesco Financial Corp. ........ 400 78,000
----------------
22,253,489
<PAGE>
Domini Social Index Portfolio
Portfolio of Investments January 31, 1997 (Unaudited) (Continued)
DESCRIPTION SHARES VALUE
FOODS & BEVERAGES--9.8%
Ben & Jerry's (Class A) (b)... 700 $ 8,225
Campbell Soup Co. ............ 12,800 1,062,400
Coca-Cola Co. ................ 134,700 7,795,762
CPC International Inc. ....... 7,700 591,937
Fleming Cos. Inc. ............ 2,000 32,250
General Mills, Inc............ 8,400 569,100
Heinz (H.J.) Co............... 19,900 800,975
Hershey Foods Corp............ 8,200 346,450
Kellogg ...................... 11,700 814,612
Odwalla Inc. (b).............. 1,300 16,250
PepsiCo, Inc.................. 86,300 3,009,713
Quaker Oats Co. .............. 7,200 276,300
Ralston Purina Group.......... 5,600 440,300
Smucker (J.M.) Co. (Class A).. 1,500 26,250
Super Valu Inc................ 3,600 111,150
Sysco Corp.................... 9,500 312,313
TCBY Enterprises, Inc......... 1,300 5,525
Tootsie Roll Industries, Inc.. 1,145 43,939
Wrigley, (Wm.) Jr. Co......... 6,200 360,375
---------------
16,623,826
HOUSEHOLD GOODS--5.7%
Alberto Culver Co. (Class B).. 1,500 78,187
Avon Products, Inc. .......... 7,100 445,525
Bassett Furniture Industries, Inc. 900 20,362
Church & Dwight Co., Inc...... 4,400 112,200
Clorox Co. ................... 2,700 320,287
Colgate-Palmolive Co. ........ 7,800 754,650
Fedders Corp.................. 2,200 13,750
Handleman Co. (b)............. 1,900 15,200
Harman International Industries, Inc. 930 43,129
Hasbro Inc. .................. 4,600 181,700
Huffy Corp.................... 700 9,975
Kimberly-Clark Corp........... 15,232 1,485,120
Leggett & Platt Inc........... 4,900 157,413
Mattel, Inc................... 14,685 413,016
Maytag Co. ................... 5,400 110,700
Newell Co. ................... 8,400 277,200
Oneida, Ltd................... 800 13,900
Procter & Gamble Co........... 36,900 4,261,950
Rubbermaid Inc................ 8,000 185,000
Shaw Industries............... 7,300 101,288
Snap-On Tools Corp............ 3,550 132,238
Springs Industries Inc. (Class A) 1,100 46,475
Stanhome, Inc. ............... 1,100 28,463
Stanley Works................. 4,700 178,600
Thomas Industries............. 800 17,500
Whirlpool Corp. .............. 4,100 208,588
--------------
9,612,416
INSURANCE--6.1%
Aetna Inc. ................... 7,970 629,630
American General Corp. ....... 11,300 450,587
American International Group, Inc. 25,400 3,076,575
Chubb Corp. .................. 9,300 506,850
CIGNA Corp. .................. 4,200 636,825
General Re Corp............... 4,400 710,600
Hartford Steam Boiler......... 1,100 50,875
DESCRIPTION SHARES VALUE
Jefferson-Pilot Corp.......... 3,800 224,200
Lincoln National Corp. ....... 5,600 300,300
Marsh & McLennan Companies, Inc. 3,800 409,450
Providian Corp................ 5,000 269,375
SAFECO Corp. ................. 6,700 254,600
St. Paul Companies............ 4,500 281,250
Torchmark Corp. .............. 3,800 196,650
Travelers Corp. .............. 34,600 1,812,206
UNUM Corp..................... 3,900 294,938
USF&G Corp.................... 6,200 130,975
USLIFE Corp................... 1,925 78,925
----------------
10,314,811
MANUFACTURING--2.0%
Applied Materials, Inc. (b)... 9,500 469,062
Boston Scientific Corp. (b)... 9,700 662,025
Brady (W.H.) (Class A)........ 1,400 32,200
Case Corp..................... 4,000 212,000
Cincinnati Milacron........... 2,300 52,900
Clarcor, Inc.................. 900 22,387
Deere & Co.................... 14,300 611,325
Dionex Corp. (b).............. 800 32,400
Fastenal Co. ................. 2,000 75,500
Gerber Scientific............. 1,200 17,100
Goulds Pumps, Inc............. 1,200 28,050
Hunt Manufacturing Co......... 600 10,350
Illinois Tool Works Inc. ..... 6,600 538,725
James River Corp. of Virginia. 4,500 144,563
Lawson Products, Inc.......... 800 17,700
Millipore Corp. .............. 2,300 98,325
Nordson Corp. ................ 1,000 60,750
Thermo Electron Corp. (b)..... 7,930 270,611
Watts Industries Inc. (Class A) 1,400 34,125
Wellman Inc. ................. 1,700 29,963
Zurn Industries Inc........... 700 16,888
---------------
3,436,949
MEDIA--3.7%
BET Holdings Inc. (Class A) (b) 900 23,625
Comcast Corp. (Class A)....... 17,300 317,888
Disney (Walt) Co.............. 37,100 2,717,575
Dow Jones & Co. Inc. ......... 5,300 210,012
Frontier Corp. ............... 8,700 190,313
Harcourt General Inc. ........ 3,900 176,475
King World Productions Inc. (b) 2,000 78,250
Lee Enterprises, Inc. ........ 2,500 57,500
McGraw-Hill Inc............... 5,300 263,675
Media General Inc. (Class A).. 1,400 44,100
Meredith Corp. ............... 1,700 87,338
New York Times Co. (Class A).. 5,200 199,550
Scholastic Corp. (b).......... 2,200 129,800
Tele-Communications, Inc.
(Class A) (b)............... 35,300 469,931
Times Mirror Co. (Class A).... 5,600 264,600
US West Media Group (b)....... 33,200 618,350
Viacom Inc. (Class A) (b)..... 4,000 136,000
Washington Post Co. (Class B). 600 200,400
-------------
6,185,382
<PAGE>
Domini Social Index Portfolio
Portfolio of Investments January 31, 1997 (Unaudited) (Continued)
DESCRIPTION SHARES VALUE
MISCELLANEOUS--1.2%
Allwaste, Inc. (b)............ 2,000 $ 10,750
Avnet, Inc. .................. 2,300 142,312
Bemis Co., Inc................ 2,800 114,450
CPI Corp. .................... 600 11,100
Cross (A.T.) Co. (Class A).... 900 10,800
General Signal Corp........... 2,600 117,650
Hillenbrand Industries Inc.... 3,800 147,250
Ionics Inc. (b)............... 900 45,113
Jostens Inc. ................. 2,100 43,312
Marriott International Corp... 7,400 393,125
Omnicom Group, Inc. .......... 4,300 209,088
Polaroid Corp................. 2,500 110,000
Sealed Air Corp. (b).......... 2,300 98,325
Service Corp. International... 12,500 362,500
Toro Co....................... 800 28,100
Whitman Corp. ................ 5,600 128,800
-------------
1,972,675
PHARMACEUTICALS AND HEALTH CARE--8.5%
Acuson Corp. (b).............. 1,500 38,063
Allergan Inc.................. 3,500 123,812
Alza Corp. (b)................ 4,500 129,937
Angelica Corp. ............... 800 15,300
Apogee Enterprises, Inc....... 700 26,425
Becton Dickinson & Co......... 6,900 339,825
Bergen Brunswig Corp. (Class A) 1,895 56,376
Biomet Inc. (b)............... 6,200 96,100
Forest Laboratories, Inc. (b). 2,400 90,600
Humana Inc. (b)............... 8,600 163,400
Johnson & Johnson............. 72,000 4,149,000
Manor Care Inc. .............. 3,700 94,350
Medtronic Inc. ............... 12,700 869,950
Merck & Co., Inc.............. 65,800 5,971,350
Mylan Laboratories Inc. ...... 9,600 157,200
Natures Sunshine Products Inc. 600 10,650
Oxford Health Plans (b)....... 4,000 217,500
Schering-Plough Corp. ........ 20,000 1,512,500
St. Jude Medical Inc. (b)..... 4,500 170,438
Stryker Corp. ................ 5,100 147,900
Sunrise Medical Inc. (b)...... 1,000 15,500
Transitional Hospitals........ 2,384 21,754
United American Healthcare (b) 300 1,425
-----------
14,419,355
RESOURCE DEVELOPMENT--2.2%
Air Products & Chemicals, Inc. 5,900 421,112
Aluminum Co. of America....... 9,600 662,400
ARCO Chemical Co. ............ 5,100 242,887
Battle Mountain Gold Co....... 11,900 77,350
Betz Laboratories, Inc. ...... 1,500 87,750
Cabot Corp. .................. 4,200 100,275
Calgon Carbon Corp. .......... 2,200 25,025
Consolidated Papers Inc. ..... 2,400 114,300
Cyprus Amax Minerals Co....... 4,900 109,638
Echo Bay Mines Ltd............ 7,400 47,638
Inland Steel Industries Inc. . 2,600 49,725
DESCRIPTION SHARES VALUE
Marquette Medical Sys......... 1,500 30,938
Mead Corp..................... 2,800 157,500
Morton International Inc. .... 7,700 312,813
Nalco Chemical Co............. 3,600 127,800
Nucor Corp. .................. 4,750 247,000
Praxair Inc. ................. 8,900 412,738
Sigma-Aldrich Corp. .......... 5,300 168,275
Westvaco Corp................. 5,400 157,950
Worthington Industries, Inc... 4,800 93,000
---------
3,646,114
RETAIL--8.6%
Albertson's, Inc.............. 13,400 469,000
American Stores Co............ 7,700 323,400
Bob Evans Farms, Inc. ........ 2,300 32,200
Charming Shoppes Inc. (b)..... 5,600 26,600
Circuit City Stores Inc. ..... 5,300 186,163
Claire's Stores Inc........... 2,500 35,625
CVS Corp. .................... 6,200 268,150
Dayton-Hudson Corp............ 11,600 436,450
Dillard Department Stores..... 6,300 188,213
Dollar General Corp. ......... 4,207 130,433
Egghead Inc. (b).............. 900 4,838
Gap, Inc. .................... 15,000 431,250
Giant Food Inc. (Class A)..... 3,200 105,600
Gibson Greetings Inc. (b)..... 900 16,650
Great Atlantic & Pacific Tea Co.,Inc.2,000 62,500
Hannaford Brothers Co. ....... 2,200 76,175
Hechinger Co. (Class A)....... 800 1,625
Home Depot, Inc............... 25,933 1,283,684
International Dairy Queen, Inc.
(Class A) (b)............... 1,300 25,675
K-Mart Corp. (b).............. 25,900 288,138
Kroger Co. (b)................ 7,000 334,250
Lillian Vernon Corp. ......... 500 6,500
Limited, Inc.................. 14,400 246,600
Longs Drug Stores, Inc. ...... 2,400 58,200
Lowe's Companies, Inc. ....... 9,100 301,438
Luby's Cafeterias, Inc........ 1,300 26,487
May Department Stores Co. .... 13,400 596,300
McDonald's Corp. ............. 37,700 1,715,350
Mercantile Stores Co., Inc.... 2,000 98,000
Nordstrom Inc. ............... 4,300 159,637
Penney, J.C. Co., Inc......... 12,200 577,975
Pep Boys...................... 3,300 104,775
Price/Costco Inc. (b)......... 11,015 293,274
Ruby Tuesday.................. 900 16,088
Ryan's Family Steakhouse, Inc. (b) 2,700 20,925
Sears Roebuck & Co. .......... 21,200 1,017,600
Skyline Corp. ................ 500 11,688
Specs Music Inc. (b).......... 200 125
Starbucks Corp. (b)........... 4,100 140,425
Tandy Corp. .................. 3,200 144,800
TJX Companies Inc. ........... 4,000 159,000
Toys 'R' Us, Inc. (b)......... 14,720 368,000
Wal-Mart Stores, Inc. ........ 123,600 2,935,500
Walgreen Co................... 13,200 542,850
<PAGE>
Domini Social Index Portfolio
Portfolio of Investments January 31, 1997 (Unaudited) (Continued)
DESCRIPTION SHARES VALUE
RETAIL (continued)
Whole Foods Market (b)........ 3,300 $ 59,813
Woolworth (F.W.) Co. (b)...... 7,200 146,700
--------------
14,474,669
Technologies--20.6%
3Com Corp. (b)................ 9,000 604,125
Advanced Micro Devices, Inc. (b) 7,300 255,500
Airborne Freight Corp......... 1,200 32,100
Alaska Air Group, Inc. (b).... 800 17,300
Amdahl Corp. (b).............. 6,400 73,600
American Power Conversion Corp. (b) 5,100 137,381
Analog Devices, Inc. (b)...... 11,999 346,499
Apple Computer, Inc. ......... 6,600 109,725
Automatic Data Processing, Inc. 15,400 637,175
Baldor Electric Co. .......... 1,400 35,875
Borland International, Inc. (b) 1,900 12,112
Cisco Systems, Inc. (b)....... 35,300 2,462,175
Compaq Computer Corp. (b)..... 15,200 1,320,500
Computer Assoc. International Inc. 19,400 880,275
Cooper Industries Inc......... 5,700 245,812
Digital Equipment Corp. (b)... 8,300 311,250
DSC Communications Corp. (b).. 6,200 139,500
Grainger, (W.W.) Inc. ........ 2,700 208,575
Hewlett-Packard Co............ 55,300 2,910,162
Hubbell Inc. (Class B)........ 3,560 157,530
Intel Corp.................... 44,600 7,236,350
International Business Machines Inc.28,700 4,513,075
MCI Communications Corp....... 37,200 1,306,650
Merix Corp. .................. 300 5,662
Micron Technology, Inc. ...... 11,400 396,150
Microsoft Corp................ 64,500 6,579,000
Molex, Inc.................... 5,400 206,550
National Semiconductor Corp. (b) 7,500 208,125
Novell Inc. (b)............... 18,700 236,087
Perkin-Elmer Corp............. 2,400 167,700
Quarterdeck Corp. (b)......... 1,900 9,738
Raychem Corp. ................ 2,500 216,563
Shared Medical Systems Corp... 1,400 66,063
Solectron Corp. (b)........... 2,900 174,725
Sprint Corp. ................. 23,100 941,325
Stratus Computer Inc. (b)..... 1,400 44,450
Sun Microsystems Inc. (b)..... 20,000 635,000
Tandem Computers Inc. (b)..... 6,400 88,800
Tektronix, Inc................ 2,000 99,250
Tellabs, Inc. (b)............. 10,000 411,875
Thomas & Betts Corp. ......... 2,800 131,250
Xilinx Inc. (b)............... 4,400 200,200
---------------
34,771,759
TRANSPORTATION--1.6%
AMR Corp. (b)................. 4,700 378,350
Consolidated Freightways, Inc. 1,200 10,500
CSX Corp. .................... 11,400 552,900
Delta Air Lines, Inc. ........ 4,000 316,000
Federal Express Corp. (b)..... 6,100 312,625
GATX Corp. ................... 1,100 53,763
Norfolk Southern Corp. ....... 6,800 602,650
Roadway Services.............. 1,100 22,550
Ryder System, Inc. ........... 4,600 131,100
Southwest Airlines Inc........ 8,000 176,000
UAL Corp. (b)................. 3,100 175,150
Yellow Corp. (b).............. 1,500 25,688
--------------
2,757,276
UTILITIES--7.5%
AGL Resources Inc. ........... 3,100 64,713
American Water Works Co., Inc. 4,100 95,325
Ameritech Corp. .............. 29,700 1,774,575
Bell Atlantic Corp. .......... 23,600 1,587,100
BellSouth Corp. .............. 54,200 2,405,125
Brooklyn Union Gas Company.... 2,600 77,025
California Energy Co., Inc. (b). 3,500 134,312
Citizens Utilities Co. (Class A) (b)12,535 142,589
Connecticut Energy Corp....... 700 16,013
Eastern Enterprises........... 1,100 36,162
El Paso Natural Gas Co. ...... 3,000 161,625
Equitable Resources Inc. ..... 1,900 61,750
Idaho Power Co. .............. 2,200 68,475
LG & E Energy Corp. .......... 3,500 84,875
MCN Corp. .................... 3,600 116,550
NICOR Inc. ................... 2,700 97,538
Noram Energy Corp. ........... 7,300 114,063
Northwestern Public Service Co. 500 18,937
NYNEX......................... 24,000 1,215,000
ONEOK Inc. ................... 1,500 44,438
Pacific Enterprises........... 4,400 132,550
Pacific Telesis Group......... 23,400 918,450
Peoples Energy Corp........... 1,900 63,175
Potomac Electric Power Co..... 6,300 155,925
Public Service Co. of Colorado 3,600 140,400
SBC Telecommunications........ 32,500 1,783,423
Southern New England Telecom.. 3,500 130,375
Telephone & Data Systems...... 3,300 125,813
US West Communications Group.. 25,300 831,738
Washington Gas Light Co....... 2,300 50,888
----------------
12,648,927
VEHICLE COMPONENTS--0.5%
Cooper Tire & Rubber Co. ..... 4,500 91,125
Cummins Engine Inc............ 2,100 110,513
Dana Corp..................... 5,400 176,175
Federal-Mogul Corp. .......... 1,900 44,650
Genuine Parts................. 6,400 282,400
Modine Manufacturing Co. ..... 1,600 45,600
Smith (A.O.).................. 1,200 40,050
Spartan Motors Inc. (b)....... 700 5,338
SPX Corp...................... 800 32,501
---------------
828,352
Total Common Stocks
(Cost $121,975,433)......... 166,550,344
-------------
Other Assets Less Liabilities--1.5% 2,553,600
---------------
NET ASSETS--100.0%............. $169,103,944
------------
(a) The aggregate cost for federal income tax purposes is $121,975,432, the
aggregate gross unrealized appreciation is $46,017,567, and the aggregate gross
unrealized depreciation is $1,442,656, resulting in net unrealized appreciation
of $44,574,911. (b) Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Domini Social Index Portfolio
Statement of Assets and Liabilities January 31, 1997 (unaudited)
Assets:
Investments at value (Cost $121,975,433)........... $ 166,550,344
Cash.............................................. 2,224,657
Receivable for securities sold.................... 483,050
Dividends receivable.............................. 218,065
-----------------
Total assets................................... 169,476,116
-----------------
Liabilities:
Payable for securities purchased.................. 325,563
Expense payment fee payable....................... 46,609
---------------
Total liabilities.................................. 372,172
----------------
Net assets applicable to investors' beneficial interests.. $169,103,944
============
Net assets consist of:
Paid in capital.................................... $169,103,944
============
Domini Social Index Portfolio
Statement of Operations Six months ended January 31, 1997 (unaudited)
Investment income:
Dividends (net of foreign withholding tax of $339).. $1,066,890
Expenses:
Expense payment and sponsorship fees.............. 211,362
Custody fees offset by compensating balances............... 30,572
-----------
Total expenses............................................ 241,934
Fees paid indirectly ................................. (30,572)
-----------
Net expenses.......................................... 211,362
----------
Net investment income......................................... 855,528
Net realized gain on investments
Proceeds from sales........................... 1,054,315
Cost of securities sold....................... 795,862
-----------
Net realized gain on investments................... 258,453
Net changes in unrealized appreciation of investments....
Beginning of year.......................... 16,620,535
End of year................................ 44,574,911
----------
Net change in unrealized appreciation................. 27,954,376
------------
Net increase in net assets resulting from operations........... $29,068,357
===========
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
Domini Social Index Portfolio
Statement of Changes in Net Assets
Six months ended Year ended
January 31, 1997
(unaudited) July 31,1996
<S> <C>
Increase (Decrease) in net assets From operation:
Net investment income........................................... $ 855,528 $ 1,132,780
Net realized gain on investments................................ 258,453 697,337
Net change in unrealized appreciation of investments............ 27,954,376 6,861,507
------------- ----------
Net increase in net assets resulting from operations........ 29,068,357 8,691,624
------------- ----------
Transactions in investors' beneficial interest:
Additions....................................................... 49,705,015 52,533,365
Reductions...................................................... (10,069,986) (14,827,219)
-------------- -------------
Net increase in net assets from transactions in
investors' beneficial interests........................... 39,635,029 37,706,146
--------------- ----------
Total increase in net assets.............................. 68,703,386 46,397,770
Net assets:
Beginning of year............................................ 100,400,558 54,002,788
------------- -----------
End of year.................................................. $169,103,944 $100,400,558
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Domini Social Index Portfolio
Financial Highlights
Six months ended
January 31, 1997 Year ended
(unaudited) July 31, 1996 July 31,1995 July 31, 1994 July 31,1993 July 31,1992
<S> <C> <C> <C> <C> <C> <C>
Net investment income to
average net assets..... 1.35% 1.48% 1.85% 2.13% 1.88% 1.99%
Expenses as a percentage of
average net assets:
Total expenses......... 0.39%1,2,3 0.94%2,3 0.53%3 0.42%3 0.29%3 0.29%3
Expenses paid by portfolio 0.33% 0.50% 0.43% 0.29% 0.29% 0.29%
Expenses paid by administrator/
sponsor.................... 0.34% 0.85% -- -- -- --
Portfolio turnover rate..... 5% 5% 6% 8% 4% 3%
Average commission rate paid
per share.............. $0.05 $0.05 -- -- -- --
<FN>
1 Annualized
2 Total expenses include Portfolio custody fees which were reduced by expense
offset arrangements. These offsets reduced expenses paid by the portfolio by
0.05% in the six months ended January 31, 1997 and 0.09% for the year ended July
31, 1996. 3 Total expenses include expenses waived by the advisor and
administrator in fiscal years ended through July 31, 1995 and expenses paid by
the administrator or sponsor in excess of expense payment fees in the year ended
July 31, 1996 and thereafter.
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
Domini Social Index Portfolio
Notes to Financial Statements January 31, 1997 (unaudited)
NOTE 1--Organization and Significant Accounting Policies
Domini Social Index Portfolio (the "Index Portfolio") is registered under the
Investment Company Act of 1940 (the "Act") as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York on June 7, 1989. The Index Portfolio intends to correlate
its investment portfolio as closely as is practicable with the Domini Social
Index (the "Index"), which is a common stock index developed and maintained by
Kinder, Lydenberg, Domini & Co., Inc. ("KLD"), the Index Portfolio's Adviser.
The Declaration of Trust permits the Trustees to issue an unlimited number of
beneficial interests in the Index Portfolio. The Index Portfolio commenced
operations upon effectiveness on August 10, 1990 and began investment operations
on June 3, 1991.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of the Index Portfolio's significant accounting policies.
(A) Valuation of Investments: The Index Portfolio values securities at the last
reported sale price, or at the last reported bid price if no sales are reported.
(B) Dividend Income: Dividend income is recorded on the ex-dividend date. (C)
Federal Taxes: The Index Portfolio's policy is to comply with the applicable
provisions of the Internal Revenue Code. Accordingly, no provision for Federal
taxes is deemed necessary.
(D) Other: Investment transactions are accounted for on the trade date. Gains
and losses are determined on the basis of identified cost.
NOTE 2--Transactions With Affiliates
(A) Investment Advisory Fees: The Index Portfolio has retained KLD as the
Investment Adviser of the Index Portfolio. The services provided by KLD consist
of the determination of the stocks to be included in the Index and evaluating,
in accordance with KLD's criteria, debt securities which may be purchased by the
Index Portfolio. For its services under the Investment Advisory Agreement, KLD
receives from the Index Portfolio a fee accrued daily at an annual rate equal to
0.025% of the Index Portfolio's average daily net assets. Prior to October 4,
1996, KLD received an investment advisory fee accrued daily at an annual rate
equal to 0.050% of the Index Portfolio's average daily net assets.
(B) Investment Management Fees: The Index Portfolio has retained Mellon Equity
Associates ("MEA") as the Investment Manager of the Index Portfolio. MEA does
not determine the composition of the Index. Under the Management Agreement, the
Index Portfolio pays MEA an investment management fee equal on an annual basis
to 0.10% of the Index Portfolio's average daily net assets. Prior to October 4,
1996 MEA received a fee based on the following percentages of the Index
Portfolio's average daily net assets for its then-current fiscal year: 0.10% of
assets up to $50 million; 0.30% of assets between $50 million and $100 million;
0.20% of assets between $100 million and $500 million; and 0.15% of assets over
$500 million.
(C) Sponsor Fees: Pursuant to a Sponsorship Agreement dated November 6, 1996,
KLD agreed to Domini Social Index Portfolio pay all of the ordinary operating
expenses of the Index Portfolio except the sponsorship fee and excluding
brokerage fees and commissions, interest, taxes and extraordinary expenses.
Under this arrangement, KLD receives sponsorship fees from the Index Portfolio
at an annual rate equal to 0.20% of the average daily net assets of the Index
Portfolio. From October 4, 1996 to November 5, 1996 the Administrator,
Signature Broker-Dealer Services, Inc. ("Signature"), received expense payment
fees from the Index Portfolio at an annual rate equal to 0.20% of the average
daily net assets of the Index Portfolio, and prior to October 4, 1996, at an
annual rate equal to 0.50% of the average daily net assets of the Index
Portfolio. The Sponsorship Arrangement will terminate on December 31, 1999.
For the six months ended July 31, 1996, the Sponsor and Administrator incurred
approximately $217,798 in expenses on behalf of the Index Portfolio.
(D) Administration Fees: Pursuant to an Administrative Services
Agreement between KLD and Signature, Signature serves as Administrator of the
Index Portfolio. Certain officers of Signature serve as officers and trustees to
the Index Portfolio. Under the Administrative Services Agreement, Signature
provides management and administrative services necessary for the operations of
the Index Portfolio, furnishes office space and facilities required for
conducting the business of the Index Portfolio and pays the compensation of the
Index Portfolio's officers and trustees affiliated with Signature. For these
services Signature receives from the KLD a fee accrued daily at an annual rate
equal to 0.025% of the Index Portfolio's average daily net assets.
NOTE 3--Investment Transactions
Purchase and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $39,763,129 and $1,054,315, respectively.
<PAGE>
Domini Institutional Social Equity Fund
Statement of Assets and Liabilities January 31, 1997 (unaudited)
Assets:
Investment in Domini Social Index Portfolio...... $40,062,226
Liabilities:
Accrued expenses................................. 1,190
---------------
Net assets............................................ $40,062,226
===========
Net Assets consist of:
Paid-in capital....................................... $35,903,133
Undistributed net investment income................... 18,695
Accumulated net realized gain on investment........... 64,659
Net unrealized depreciation on investment............. 4,075,739
------------
Net assets............................................ $40,062,226
===========
Shares outstanding.................................... 3,335,508
=========
Net asset value, redemption price and offering price per share
($40,062,226 / 3,335,508 shares)................ $12.01
======
<PAGE>
Domini Institutional Social Equity Fund
Statement of Operations
For the six months ended January 31, 1997 (unaudited)
Investment income from Domini Social Index Portfolio:
Investment income from Portfolio....................... $ 180,312
Expenses from Portfolio................................ 35,438
-------------
Net income from Portfolio..................... 144,874
Expenses:
Transfer Agent.................................... 21,403
Administration.................................... 5,353
Fund accounting................................... 4,500
Professional fees................................. 4,333
Miscellaneous..................................... 4,289
--------------
Total expenses.................................... 39,878
Expenses in excess of expense payment agreement.. (32,772)
-------------
Expense payment and Sponsor fees................ 7,106
--------------
Net investment income.................................. 137,768
------------
Net realized and unrealized gain on investment:
Net realized gain from portfolio....................... 52,392
Net change in unrealized depreciation from portfolio... 4,872,431
-----------
Net realized and unrealized gain from Domini Social Index Portfolio 4,924,823
-----------
Net increase in net assets resulting from operations............... $5,062,591
==========
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Domini Institutional Social Equity Fund
Statement of Changes in Net Assets
Six months
ended For the period
January 31, 1997 May 30, 1996(1) to
(unaudited) July 31, 1996
<S> <C> <C>
Increase (decrease) in net assets from:
Operations:
Net investment income.................................... $ 137,768 $ 32,413
Net realized gain from portfolio......................... 52,392 14,395
Net change in unrealized appreciation (depreciation)
from portfolio......................................... 4,872,431 (796,692)
------------- -------------
Net increase (decrease) in net assets from operations 5,062,591 (749,884)
----------- -------------
Distributions and Dividends to shareholders from:
Net investment income.................................... (142,610) (8,877)
Net realized capital gains............................... (2,129) --
---------------- -----------
Net decrease in net assets from Distributions and
Dividends............................................ (144,739) (8,877)
-------------- --------------
Transactions in shares of common stock:
Proceeds from sale of shares............................. 18,612,740 18,721,586
Net asset value of shares issued to shareholders in
reinvestment of dividends............................... 88,408 8,877
Payments for shares redeemed............................. (1,529,668) --
------------- -------------
Net increase in net assets from transactions in shares of
common stock......................................... 17,171,480 18,730,463
------------ ------------
Net increase in net assets.................................... 22,089,332 17,971,702
Net assets:
Beginning of period...................................... 17,971,702 --
------------ ----------
End of period............................................ $40,062,226 $17,971,702
=========== ===========
See Notes to Financial Statements
(1) Commencement of operations.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Domini Institutional Social Equity Fund
Financial Highlights
Six months
ended For the period
January 31, 1997 May 30, 19961 to
(unaudited) July 31, 1996
<S> <C> <C>
For a share outstanding for the Period:
Net asset value, beginning of period.......................... $ 9.60 $10.00
Income (loss) from investment operations:
Net investment income.................................... 0.057 0.020
Net realized and unrealized gain (loss) on investments... 2.421 (0.413)
-------- --------
Total income (loss) from investment operations......... 2.478 (0.393)
-------- --------
Less distributions and dividends:
Dividends to shareholders from net investment income..... (0.067) (0.007)
Distributions to shareholders from net realized gains.... (0.001) -- )
------- ---------
Total distributions and dividends...................... (0.068) (0.007)
------- --------
Net asset value, end of period................................ $12.01 $ 9.60
======== =======
Total return.................................................. 25.9% (3.9%)
Ratios/Supplemental data:
Net assets, end of period (000's omitted)................ $40,062 $17,972
Ratio of net investment income to average net assets..... 1.26%2 1.42%2
Expenses expressed as a percentage of net assets:
Total expenses......................................... 0.55%2,3 0.88%2,3
Expenses paid by Fund.................................. 0.39%2 0.52%2
1 Commencement of operations.
2 Annualized.
3 Total expenses include Portfolio custody fees which were reduced by and
expense offset arrangement. These offsets reduced expenses by the Fund by 0.05%
in the six months ended January 31, 1997 and 0.09% for the period ended July 31,
1996. Total expenses also include expenses paid by the administrator or sponsor
in excess of expense payment and sponsor fees. These expense payment and
sponsorship fees resulted in reduced expenses for the Fund of 0.05% in the six
months ended January 31, 1997 and 0.09% for the period ended July 31, 1996.
</TABLE>
See Notes to Financial Statements
<PAGE>
Domini Institutional Social Equity Fund
Notes to Financial Statements
Six months ended January 31, 1997 (unaudited)
<PAGE>
Note 1-- Organization and Significant Accounting Policies
Domini Institutional Social Equity Fund (the "Fund") is a series of Domini
Institutional Trust and is registered as an open-end management investment
company under the Investment Company Act of 1940.
The Fund invests substantially all of its assets in the Domini Social Index
Portfolio ( the "Portfolio"), an open-end, diversified management investment
company having the same investment objective as the Fund. The value of such
investment reflects the Fund's proportionate interest in the net assets of the
Portfolio (17.9% at January 31, 1997). The financial statements of the Portfolio
are included elsewhere in this report and should be read in conjunction with the
Fund's financial statements. The Fund commenced operations on May 30, 1996.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of the Fund's significant accounting policies.
(A) Valuation of Investments. Valuation of securities by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
(B) Investment Income and Dividends to Shareholders. The Fund earns income
daily, net of Portfolio expenses, on its investment in the Portfolio. Dividends
to shareholders are declared and paid semiannually from net investment income.
Distributions to shareholders of net realized capital gains, if any, are made
annually.
(C) Federal Taxes. The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income, including net realized
gains, if any, within the prescribed time periods. Accordingly, no provision for
federal income or excise tax is necessary.
(D) Other. All net investment income of the Portfolio is allocated daily pro
rata among the Fund and the other investors in the Portfolio.
Note 2 -- Transactions with Affiliates
(A) Administration. The Fund has retained Signature Broker-Dealer Services, Inc.
("Signature") to serve as Administrator and Distributor. Signature provides
administrative services necessary for the operations of the Fund, furnishes
office space and facilities required for conducting the business of the Fund and
pays the compensation of the Fund's officers and Trustee affiliated with
Signature. For its services under the Administrative Services Agreement,
Signature receives from the Fund a fee accrued daily at an annual rate equal to
0.15% of the Fund's average daily net assets. The Portfolio has a similar
agreement with Signature at a rate equal to 0.05% of the Portfolio's average
daily net assets.
B. Expenses. Pursuant to a Sponsorship agreement dated November 6, 1996, KLD
pays the ordinary operating expenses of the Fund and provides the Fund with the
administrative personnel and services necessary to operate the Fund. For these
services and facilities, KLD receives fees computed and paid monthly from the
Fund at an annual rate equal to 0.10% of the average daily net assets of the
Fund. Pursuant to an Administrative services agreement between Signature and
KLD, KLD has engaged Signature to provide certain administrative services
requested by the Sponsor. For these services, since November 6, 1996, the
Sponsor pays to Signature a fee computed daily and paid monthly at an annual
rate equal to 0.045% of the average daily net assets of the Fund. From October
4, 1996 to November 6, 1996, Signature received fees computed daily and paid
monthly at an annual rate equal to 0.07% of the average daily net assets of the
Fund. Prior to October 4, 1996, Signature waived its administrative services
fees from the Fund.
For the six months ended January 31, 1997 the Administrator and Sponsor
incurred approximately $39,878 in expenses on behalf of the Fund.
Note 3 -- Investment Transactions
Additions and reductions in the Fund's investment in the Portfolio
aggregated $18,605,334 and $1,592,359 respectively.
<PAGE>
