As filed with the Securities and Exchange Commission on September 29, 1999.
Registration Nos. 333-14449
811-07599
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 4
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 7
DOMINI INSTITUTIONAL TRUST
(Exact Name of Registrant as Specified in Charter)
11 West 25th Street, New York, NY 10010
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 212-352-9200
Amy L. Domini
Domini Social Investments LLC
11 West 25th Street
New York, NY 10010
(Name and Address of Agent for Service)
Copy To:
Roger P. Joseph, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
It is proposed that this filing will become effective 60 days after filing
pursuant to paragraph (a)(1) of Rule 485.
Domini Social Index Portfolio has also executed this registration statement.
<PAGE>
DSIL LOGOsm
DOMINI INSTITUTIONAL SOCIAL EQUITY FUNDsm
Prospectus
____, 1999
The Responsible Index Fundsm
No-Load
Investing for Goodsm
As with all mutual funds, the
Securities and Exchange
Commission has not judged
whether this fund is a good investment
or whether the information in this
prospectus is truthful and complete.
Anyone who indicates otherwise is
committing a federal crime.
<PAGE>
TABLE OF CONTENTS
THE FUND AT A GLANCE ...........................................
Investment Objective.........................................
Primary Investment Strategy..................................
and Overview of the Social Screens used by the Index
Primary Risks................................................
Past Performance of the Fund.................................
Fund Fees and Expenses.......................................
MORE ABOUT THE FUND..............................................
About Index Investing
Answers to basic questions about how index funds work, how index funds
differ from actively managed funds, and an overview of the advantages
they offer.
What is the Domini 400 Social IndexSM?
Information about the nation's first socially screened index, how it
was created and is maintained, and further details about the Fund's
socially responsible investment criteria.
Is the Fund an appropriate investment for me?
Additional Investment Strategies & Risk Information
Who Manages the Fund?
SHAREHOLDER MANUAL...............................................A-1
Information about buying and selling shares, distributions, and the tax
consequences of an investment in the Fund.
FINANCIAL HIGHLIGHTS.............................................B-1
WHY READING THIS PROSPECTUS IS IMPORTANT
This prospectus explains the objective, risks, and strategies of the Domini
Institutional Social Equity Fund. Reading the prospectus will help you to
decide whether the Fund is the right investment for you.
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
Because you could lose money by investing in this Fund, we suggest that you
read this prospectus carefully, and keep it for future reference.
<PAGE>
THE FUND AT A GLANCE
INVESTMENT OBJECTIVE
The Fund seeks to provide its shareholders with long-term total return
which matches the performance of the Domini 400 Social Index, an index made up
of the stocks of 400 companies selected using social and environmental
criteria. The Index is composed primarily of large-capitalization U.S.
companies.
PRIMARY INVESTMENT STRATEGY
The Fund seeks to match the composition of the Index as closely as
possible. The Fund typically invests in all 400 stocks included in the Domini
400 Social Index, in approximately the same proportion as they are found in the
Index. This is known as a full replication strategy.
Although you cannot invest directly in an index, an index mutual fund
provides you the opportunity to invest in a portfolio that tracks an index.
Keep in mind that a mutual fund has operating expenses and transaction costs
that an index does not. Therefore, like all index funds, the Fund's performance
will typically be slightly lower than that of the Index.
OVERVIEW OF THE SOCIAL SCREENS USED BY THE INDEX:
The Index avoids companies that manufacture tobacco products or
alcoholic beverages, companies that derive any revenues from gambling
enterprises, major military contractors and companies that have an
ownership share in, or operate, nuclear power plants.
The Index seeks to hold the stocks of good corporate citizens,
demonstrated by positive relations with their communities and their
employees, by their environmental record, and by the quality and safety
of their products.
For more information about the Domini 400 Social Index and its social
screens, please refer to page XX.
PRIMARY RISKS
o MARKET RISK. The Fund seeks to remain fully invested in the stock
market during all market conditions. Therefore, the value of your
investment, like stock prices generally, may fluctuate widely. When you
sell your shares, you could lose money. Stock markets tend to move in
unpredictable cycles, with periods of rising prices and periods of
falling prices. The value of your investment will vary from day to day
due to changing market conditions, or conditions relating to specific
companies.
o STYLE RISK. The Fund primarily invests in the stocks of
large-capitalization companies. Large-capitalization stocks tend to go
through cycles where they do better, or worse, than the stock market in
general. The performance of your investment will generally follow these
broad market trends. Because the Domini 400 Social Index is weighted by
market capitalization, a few large companies represent a relatively
large percentage of the Index. Should the value of one or more of these
stocks decline significantly, it could negatively affect the Fund's
performance.
o INDEXING. The Fund will continue to invest in the Domini 400 Social
Index, regardless of how the Index is performing. It will not shift its
<PAGE>
concentration from one industry to another, or from stocks to bonds or
cash, in order to defend against a falling or stagnant stock market.
Also, the Fund's ability to match the performance of the Index may be
affected by a number of factors, including inflows and outflows of cash
from the Fund and imperfect correlation between the Fund's holdings and
those in the Index.
There can be no guarantee that the Fund will be able to achieve its
investment objective. The investment objective of the Fund may be changed
without the approval of the Fund's shareholders, although management currently
has no intention to do so.
Additional risk information is provided in the More About the Fund
section at page XX, and is available in the Statement of Additional
Information.
PAST PERFORMANCE OF THE FUND
The bar chart and table below provide an indication of the risk of
investing in the Fund by illustrating how returns have varied from one year to
the next and by showing how the Fund's average annual total returns compare
with those of the Standard & Poor's 500 Index, a broad-based index. PLEASE NOTE
THAT THIS INFORMATION REPRESENTS PAST PERFORMANCE, AND IS NOT NECESSARILY AN
INDICATION OF hOW THE FUND WILL PERFORM IN THE FUTURE.
TOTAL RETURN FOR YEARS ENDED DECEMBER 31
This bar chart shows how the Fund's performance has varied over the last two
calendar years.
[in bar chart]
1997 37.31%
1998 33.98%
Best quarter covered by the bar chart above: 24.86% (quarter ended 12/31/98)
Worst quarter covered by the bar chart above: -9.65% (quarter ended 9/30/98)
Year-to-date performance as of 9/30/99: _____%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
The table below shows the Fund's average annual total returns in comparison to
the S&P 500.
------------------------------- -------------- ------------
Since
1 Year Inception
(5/30/96)
------------------------------- -------------- ------------
Domini Institutional Social
Equity Fund 33.98% 32.50%
------------------------------- -------------- ------------
S&P 500 28.58% 28.76%
------------------------------- -------------- ------------
<PAGE>
FUND FEES AND EXPENSES
The table below describes the fees and expenses that you would pay if you
buy and hold shares of the Fund.*
SHAREHOLDER FEES (fees paid directly by you)
Sales Charge (Load) Imposed on Purchases: None
Deferred Sales Charge (Load): None
Sales Charge (Load) Imposed on Reinvested Dividends: None
Redemption Fees: None
Exchange Fees: None
ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Fees: 0.20%
Distribution (12b-1) Fees: None
Other Expenses
Administrative Services and Sponsorship Fee: ____%
Other Expenses: ____%
Total Annual Fund Operating Expenses: ____%
Fee Waiver**: ____%
NET EXPENSES: ____%
________________________
* The table reflects the expenses of the Fund and the Domini Social Index
Portfolio, the underlying portfolio in which the Fund invests.
** For the period from ______ to ______, __________ has contractually agreed
to waive certain fees and/or reimburse certain expenses, including
management and distribution fees, so that the Fund's expenses will not
exceed, on a per annum basis, ____% of its average daily net assets.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. It illustrates the
hypothetical expenses that you would incur if you invest $10,000 in the Fund
for the time periods indicated and then sell all of your shares at the end of
each period. This example assumes that the Fund provides a return of 5% a year,
all dividends and distributions are reinvested and that operating expenses
remain constant for the time period indicated.
1 Year 3 Years 5 Years 10 Years
$----- $----- $----- $-----
THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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QUICK GUIDE TO IMPORTANT INFORMATION
MINIMUM INITIAL INVESTMENT: $2,000,000 DIVIDENDS: Distributed Quarterly, in March, June,
September and December
CAPITAL GAINS: Distributed Annually, in December
INVESTMENT ADVISER: Domini Social Investments NEWSPAPER LISTING: DomISocial
LLC TICKER SYMBOL: DIEQX
INCEPTION DATE: May 30, 1996 CUSIP NUMBER: __________
NET ASSETS AS OF SEPTEMBER 30, 1999: $________ WEBSITE: www.domini.com
SHAREHOLDER SERVICES: 1-800-762-6814
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</TABLE>
MORE ABOUT THE FUND
ABOUT INDEX INVESTING
WHAT IS AN INDEX?
An index is an unmanaged group of stocks selected to measure the behavior
of the market, or some portion of it. The Standard & Poor's 500 Index, for
example, is an index of 500 companies selected to track the performance of the
broad market of large-cap U.S. companies. Investors use indexes as benchmarks
to measure how their investments are performing in comparison to the market as
a whole.
The Domini 400 Social Index attempts to track the performance of the broad
market of primarily large-cap U.S. companies that the typical socially
responsible investor would consider appropriate to invest in. The Domini 400
Social Index was created to serve as a benchmark for socially and
environmentally conscious investors.
WHAT IS THE DIFFERENCE BETWEEN AN INDEX FUND AND AN ACTIVELY MANAGED FUND?
The Fund uses a passive investment strategy. This means that the Fund
purchases, holds and sells stocks based on the composition of the Domini 400
Social Index, rather than on a manager's judgment as to the direction of the
market or the merits of any particular stock.
Unlike index funds, actively managed funds are generally managed to
achieve the highest possible return within certain parameters. These funds are
managed by stock-pickers who buy and sell stocks based on their opinion of the
financial outlook of the stock. Because index funds use a passive strategy,
changes in management generally have less impact on fund performance.
Index funds provide investors with an opportunity to invest in a portfolio
that is specially designed to match the performance of a particular index.
Rather than relying on the skills of a particular mutual fund manager, index
fund investors purchase, in a sense, a cross-section of the market. Their
performance should therefore reflect the segment of the market that their fund
is designed to track.
<PAGE>
WHAT ARE SOME OF THE ADVANTAGES OF INDEX INVESTING?
Index investing has become quite popular because it offers investors a
convenient, relatively low-cost and tax-efficient way to obtain exposure to a
broad spectrum of the stock market. Here are some other advantages:
o Diversification. Because indexes such as the Domini 400 Social Index seek
to measure the performance of the broad market, they invest in a large
number of companies representing a diverse mix of industries. This
structure can help reduce volatility as compared to funds that may invest
in a smaller number of companies, or focus on a particular industry.
o Benchmark Comparability. All stock mutual funds measure their performance
in relation to a particular market benchmark. Index funds typically match
the performance of their particular benchmarks more closely than comparable
actively managed funds.
o Tax Efficiency. Turnover rate refers to the volume of buying and selling of
stocks by a fund. The turnover rate of index funds tends to be much lower
than the average actively managed mutual fund. Depending on your particular
tax situation, a low turnover rate may produce fewer taxable capital gains.
COMPARE TURNOVER RATES
THE AVERAGE ANNUAL TURNOVER RATE FOR ALL DOMESTIC STOCK FUNDS IS 111%.*
THE AVERAGE ANNUAL TURNOVER RATE FOR THE DOMINI INSTITUTIONAL SOCIAL
EQUITY FUND IS 8%.
A 100% TURNOVER RATE WOULD OCCUR IF A FUND SOLD AND REPLACED SECURITIES
VALUED AT 100% OF ITS NET ASSETS WITHIN A ONE-YEAR PERIOD.
*AS OF 8/31/99; TAKEN FROM SCREENS DONE USING MORNINGSTAR, INC. DATA.
SOCIALLY RESPONSIBLE INVESTING [IN MARGIN]
CORPORATIONS HAVE BOTH POSITIVE AND
NEGATIVE EFFECTS ON SOCIETY AND THE
NATURAL ENVIRONMENT. SOCIALLY
RESPONSIBLE INVESTING IS AN INVESTMENT
STRATEGY DESIGNED TO TAKE THESE
EFFECTS INTO ACCOUNT.
SOCIAL INVESTORS USE SOCIAL AND
ENVIRONMENTAL FACTORS TO MAKE THEIR
INVESTMENT DECISIONS. THEY BELIEVE
THAT THIS HELPS TO ENCOURAGE GREATER
CORPORATE RESPONSIBILITY, AND MAY ALSO
HELP TO IDENTIFY COMPANIES THAT ARE GOOD
LONG-TERM INVESTMENTS BECAUSE ENLIGHTENED
MANAGEMENT MAY BE BETTER ABLE TO MEET
THE FUTURE NEEDS OF SOCIETY AND THE
ENVIRONMENT.
TYPICALLY, SOCIAL INVESTORS AVOID
COMPANIES THAT MANUFACTURE PRODUCTS, OR
<PAGE>
EMPLOY PRACTICES, THAT THEY BELIEVE HAVE
HARMFUL EFFECTS ON SOCIETY. THEY SEEK
TO INVEST In COMPANIES WITH POSITIVE
QUALITIES, SUCH AS A PROACTIVE
ENVIRONMENTAL RECORD, OR POSITIVE EMPLOYEE
RELATIONS. THIS PROCESS IS CALLED "SOCIAL
SCREENING."
AT DOMINI SOCIAL INVESTMENTS, IN
ADDITION TO SCREENING OUR INVESTMENTS WE
WORK WITH COMPANIES TO IMPROVE THEIR SOCIAL
AND ENVIRONMENTAL PERFORMANCE. WE VOTE
COMPANY PROXIES IN A MANNER THAT IS CONSISTENT
WITH OUR SOCIAL SCREENING CRITERIA, AND FILE
SHAREHOLDER RESOLUTIONS ON IMPORTANT SOCIAL AND
ENVIRONMENTAL ISSUES.
WHAT IS THE DOMINI 400 SOCIAL INDEX?
The Domini 400 Social Index (DSI 400) is the nation's first socially
screened index. It was created and launched in May 1990 by the social research
firm of Kinder, Lydenberg, Domini & Co., Inc. (KLD) in order to serve as a
benchmark for social investors, and to determine how social screens affect
financial performance. KLD is an affiliate of Domini Social Investments. The
Domini Institutional Social Equity Fund was launched in 1996 to give
institutional investors an opportunity to invest in the Index.
The Index is maintained by KLD. It is composed of the common stocks of 400
companies that meet the social criteria described below.
WHAT ARE SOCIAL SCREENS?
All investment decisions use some type of "screen." Screens are guidelines
that define which securities will be included in a portfolio, and which will be
excluded. In addition to basic financial screens relating to financial
solvency, industry and sector diversification, and market-capitalization, the
stocks in the Domini 400 Social Index are selected using two basic types of
social screens: exclusionary and qualitative.
KLD uses exclusionary social screens to avoid certain industries such as
tobacco and alcohol, and qualitative social screens to select companies based
on their performance in a number of areas, such as diversity and the
environment.
HOW WAS THE DOMINI 400 SOCIAL INDEX CONSTRUCTED?
To construct the Domini 400 Social Index, KLD first applied to the S&P 500
a number of traditional social screens. Roughly half of the S&P 500 companies
qualified for the Index in this initial screening process. Approximately 150
non-S&P 500 companies were then added with two goals in mind. One goal was to
obtain a broad representation of industries, so that the Index would more
accurately reflect the composition of the broad market. Another goal was to
identify companies that are particularly strong models of corporate behavior.
KLD maintains an extensive database of corporate accountability
information on more than 1,000 publicly traded companies and bases its
decisions on research into the factors described below.
<PAGE>
EXCLUSIONARY SCREENS
KLD seeks to exclude the following types of companies from the Index:
o TOBACCO AND ALCOHOL - firms that manufacture tobacco products or
alcoholic beverages;
o GAMBLING - firms that receive identifiable revenues from gambling
enterprises;
o NUCLEAR POWER - firms that have an ownership share in, or operate
nuclear power plants; and
o WEAPONS - firms that receive more than 2% of their gross revenues from
the sale of military weapons.
QUALITATIVE SCREENS
KLD considers the following criteria when evaluating companies for
possible inclusion in the Index:
o ENVIRONMENTAL PERFORMANCE - 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;
o EMPLOYEE RELATIONS - a company's record with regard to labor matters,
workplace safety, employee benefit programs, and meaningful
participation in company profits either through stock purchase or
profit sharing plans;
o DIVERSITY - a company's record with regard to the hiring and promotion
of women and minorities, particularly to management positions and the
board of directors including a company's record with respect to the
availability of benefit programs that address work/family concerns,
innovative hiring programs for the disabled and progressive policies
toward gays and lesbians;
o CORPORATE CITIZENSHIP - a company's record with regard to its
charitable activities and its community relations in general; and
o PRODUCT-RELATED ISSUES - a company's record with regard to product
safety, marketing practices, and commitment to quality.
From time to time, KLD may, at its discretion, choose to apply additional
criteria, or to modify the application of the criteria listed above, without
consulting shareholders.
HOW ARE THE FUND'S LARGEST HOLDINGS SELECTED?
Like the S&P 500, the DSI 400 is "market-capitalization weighted." Market
capitalization is a measure of the value of a publicly traded company. It is
calculated by multiplying the total number of outstanding shares of company
stock by the price per share.
The Domini Institutional Social Equity Fund's portfolio is also
market-capitalization weighted. For example, assume that the total market value
of Company A's shares is twice the total market value of Company B's shares.
The Fund's portfolio is structured so that its holdings of Company A's shares
will be twice the value of its holding of Company B shares. The Fund's top ten
holdings therefore are simply the ten companies with the highest market value
in the Index.
<PAGE>
Because it seeks to duplicate the Index as closely as possible, the Fund
will attempt to have a correlation between the weightings of the stocks it
holds in its 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.
HOW IS THE DOMINI 400 SOCIAL INDEX MAINTAINED?
To keep turnover low and to more accurately reflect the performance of the
market, the Index is maintained using a "buy and hold" strategy. Generally
speaking, this means that companies that are in the Index stay in the Index for
a long time. A company will not be removed because its stock has not been
performing well, unless in KLD's opinion the company is no longer financially
viable. Sometimes a company is removed from the Index because it has been
acquired by another company. Sometimes a company may split into two companies,
and only one of the surviving companies is selected to stay in the Index
(because the Index is maintained to consist of exactly 400 companies at all
times).
A company may also be removed from the Index because its social profile
has deteriorated, or due to its inadequate response to a significant
controversy. When a company is removed from the Index, it is replaced with
another company. In the selection process, among other factors, KLD considers
the size of the company, the industry it is in, and its social profile.
ARE THERE COMPANIES I WON'T LIKE IN THE DOMINI 400 SOCIAL INDEX?
The screens for the Index are designed to reflect those most widely used
by social investors. Therefore, you may find that some companies in the Index
do not reflect your social or environmental standards. You may wish to review a
list of companies in the Fund's portfolio to decide if they meet your personal
standards. The complete list is available in the Fund's annual and semi-annual
reports.
No company is a perfect model of corporate responsibility. Each year, the
Fund uses its voice as a shareholder to encourage companies to improve their
social and environmental records by voting proxies, writing letters, engaging
management in dialogue and filing shareholder resolutions.
IS THE FUND AN APPROPRIATE INVESTMENT FOR ME?
Accounts in the Fund only may be established by or for the benefit of
entities which have been approved by the distributor and which fall within the
following categories:
o Endowments,
o Foundations,
o Religious organizations, and
o Other not-for-profit entities.
The Fund may change this policy at any time:
If you are seeking long-term growth, and are looking for an efficient way
to invest in the broad U.S. stock market, the Fund may be appropriate for you.
Please note that although the Fund's portfolio holds a broad cross-section
of the U.S. stock market, it should not be considered a balanced investment
program because it only holds stocks. In addition, the Fund should be
considered a long-term investment and is not appropriate for short-term trading
purposes.
If you depend on your investments for current income, or would find it a
financial hardship to wait out periods of stock market volatility, the Fund may
not be appropriate for you.
<PAGE>
ADDITIONAL INVESTMENT STRATEGIES & RISK INFORMATION
INVESTMENT STRUCTURE:
The Fund invests its assets in the Domini Social Index Portfolio. The
Portfolio has the same investment objective as the Fund and invests in
securities using the strategies described in this prospectus. The Fund may
withdraw its investment from the Portfolio at any time if the Board of Trustees
of the Fund determines that it is in the best interests of the Fund to do so.
The Board of Trustees would then consider what action might be taken, including
investing all of the Fund's assets in another similarly structured portfolio
having the same investment objective as the Fund, or hiring an investment
adviser to manage the Fund's assets. There is currently no intention to change
the Fund's investment structure. References to the Fund in this prospectus
include the Portfolio, unless the context requires otherwise.
CASH RESERVES:
Although the Fund seeks to be fully invested in the stock market at all
times, it keeps a small percentage of its assets in cash, or cash equivalents.
These reserves provide the Fund with flexibility to meet redemptions, expenses,
and to readjust its portfolio holdings. The Fund may hold these cash reserves
uninvested or may invest them in high quality, short-term debt securities
issued by agencies or instrumentalities of the United States Government,
bankers' acceptances, commercial paper, certificates of deposit, bank deposits
or repurchase agreements. The issuers of these securities must satisfy certain
social criteria.
SECURITIES LENDING:
Consistent with applicable regulatory policies, including those of the
Board of Governors of the Federal Reserve System and the Securities and
Exchange Commission, the Fund may make loans of its securities to member banks
of the Federal Reserve System and to broker-dealers. These 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 Fund 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 Fund would continue to collect the
equivalent of the dividends paid by the issuer on the securities loaned and
would also receive interest on investment of cash collateral. The Fund 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.
YEAR 2000:
Some software programs and computer systems are not able to recognize the
Year 2000. The Fund could be harmed if the computer systems used by the Fund or
its service providers are not programmed to accurately process information on
or after January 1, 2000. The Fund and its service providers have been
diligently working to resolve any potential Year 2000 problems. While these
efforts are likely to be successful, the failure to implement any necessary
changes could harm the Fund. The Fund also could be harmed if companies in the
Fund's portfolio do not solve their Year 2000 problems, if it costs those
companies large amounts of money to do so, or if the general market is affected
by the Year 2000 transition.
The Fund is not required to use every investment technique or strategy
listed in this prospectus or in the Statement of Additional Information.
<PAGE>
FOR ADDITIONAL INFORMATION about the Fund's investment strategies and
risks, the Fund's Statement of Additional Information is available,
free of charge, from Domini Social Investments.
WHO MANAGES THE FUND?
PORTFOLIO MANAGER:
Domini Social Investments LLC (DSIL), 11 West 25th Street, 7th Floor, New
York, NY 10010, manages more than $1.3 billion dollars in assets for individual
and institutional investors who are working to create positive change in
society by using social and environmental criteria in their investment
decisions. DSIL is the Portfolio's manager and provides the Portfolio with
investment supervisory services, overall operational support and administrative
services. In addition, DSIL is the sponsor of the Fund and provides the Fund
with the administrative personnel and services necessary to operate the Fund.
SOCIAL RESEARCH & INDEX MAINTENANCE:
Kinder, Lydenberg, Domini & Co., Inc. (KLD), an affiliate of DSIL,
determines the composition of the Domini 400 Social Index. The following
persons are primarily responsible for the development and maintenance of the
Domini 400 Social Index: Amy L. Domini, CFA, a Managing Principal of DSIL and
Founder of KLD (since 1988), Steven D. Lydenberg, CFA, Director of Research,
KLD (since 1990), and Peter D. Kinder, JD, LLB, President, KLD (since 1988).
PORTFOLIO INVESTMENT SUBMANAGER:
Mellon Equity Associates, with its main offices at 500 Grant Street,
Pittsburgh, PA 15258, provides investment submanagement services to the
Portfolio pursuant to a Submanagement Agreement with DSIL. Mellon Equity
implements the daily transactions necessary to maintain the proper correlation
between the Fund's portfolio and the Domini 400 Social Index. They do not
determine the composition of the Index.
For the services DSIL and Mellon Equity provided to the Fund and the
Portfolio during the fiscal year ended July 31, 1999, they received a total of
_____% of the average daily net assets of the Fund, after waivers.
<PAGE>
SHAREHOLDER MANUAL
This section provides you with information on how to buy and sell shares of the
Fund, how Fund shares are valued, and the tax consequences of an investment in
the Fund.
TABLE OF CONTENTS
How to Open an Account
How to Buy Shares
How to Sell Shares
How the Price of Your Shares is Determined
How can I find out the Fund's NAV?
How do you determine what price I will get when I buy shares?
How do you determine what price I will get when I sell shares?
How is the value of securities held by the Fund determined?
Fund Statements and Reports
Dividends and Capital Gains
Taxes
Rights Reserved by the Fund
FOR MORE INFORMATION on:
o investing in the Fund,
o your account,
o the Fund's daily share price, and
o socially responsible investing,
CALL our Shareholder Information Line toll-free at 1-800-762-6814.
Shareholder representatives are available to take your call weekdays, from
9-5PM, Eastern Time. You may obtain the share price of the Fund 24 hours a day,
7 days a week by using our automated system.
VISIT our web site at www.domini.com. NASDAQ SYMBOL DIEQX
NEWSPAPER LISTING DomISocial
ACCOUNT STATEMENTS are mailed
quarterly.
TRADE CONFIRMATIONS are sent after
purchases and redemptions.
ANNUAL AND SEMI-ANNUAL REPORTS will
be mailed in early September and
March, respectively.
HOW TO OPEN AN ACCOUNT
1. Read this prospectus (and please keep it for future reference).
<PAGE>
2. Decide how much you want to invest.
o The minimum initial investment is $2,000,000. The Fund, in its sole
discretion, may permit purchases for lesser amounts.
3. You can choose one of several different payment methods to make your
initial investment. Please review the options listed under "How to Buy
Shares", and follow the simple instructions we've provided. Be sure to
completely fill out and sign the Account Application.
IF AT ANY TIME YOU NEED ASSISTANCE, PLEASE CALL US AT 1-800-762-6814,
WEEKDAYS FROM 9-5PM, EASTERN TIME.
HOW TO BUY SHARES
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By Check
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Mail the completed Account Application and your check to:
Domini Social Investments
P.O. Box 60494
King of Prussia, PA 19406-0494
For SUBSEQUENT INVESTMENTS, fill out the investment form that came with
your trade confirmation or account statement or send a note with your
account number and Fund name. Always be sure to include your account number
on your check. If you need additional forms, please call 1-800-762-6814.
YOUR CHECKS MUST BE IN U.S. DOLLARS DRAWN ON A U.S. BANK AND BE MADE PAYABLE
TO "DOMINI SOCIAL INVESTMENTS."
IMPORTANT: FOR OUR MUTUAL PROTECTION, DOMINI CANNOT ACCEPT CHECKS MADE
PAYABLE TO THIRD PARTIES.
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By Bank Wire
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To establish wire privileges on an existing account, or for additional
information about the service, please call the Fund's transfer agent at
1-800-582-6757.
Wire your investment to:
Bank: Boston Safe Deposit Bank
ABA: 011001234
Acct Name: Domini Social Investments
Acct #: 043370
FBO: Fund Name, and Your Account Name and Number at Domini Social
Investments
For new accounts, please call 1-800-582-6757 to obtain an Account number
before wiring funds.
<PAGE>
- -------------------------------------------------------------------------------
By Transfer
- -------------------------------------------------------------------------------
You may transfer your assets from another Domini Fund, or from your Domini
Money Market Accountsm.
For information on transferring assets from another mutual fund family,
please call 1-800-762-6814.
Call our Shareholder Information Line at 1-800-762-6814 for information.
The Domini Money Market Account
The Domini Money Market Account (DMMA) is an FDIC-insured
interest-bearing account with direct community development benefits.
You may open and maintain a DMMA at no charge, and take advantage of
free check-writing (with a $500 minimum per check), and easy
transfers by telephone to and from your Domini Institutional Social
Equity Fund account. Call 1-800-762-6814 for more information.
The rate of return for the Domini Money Market Account will vary. The
Domini Institutional Social Equity Fund is not affiliated with any
bank and is not insured by the FDIC.
HOW TO SELL SHARES
You are free to sell all or part of your Fund shares at any time during New
York Stock Exchange trading hours (generally weekdays from 9AM - 4PM Eastern
Time). The Fund will send the proceeds from the sale to you or a third party
that you have designated (this may require a Signature Guarantee -- see below).
IMPORTANT: Once a redemption order is placed, the transaction CANNOT be
canceled.
You may sell (redeem) your shares in the Fund in the following ways:
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
In Writing
- ---------------------------------------------------------------------------------------------------------
Mail written redemption requests to: Letters requesting redemptions must:
o specify the dollar amount or number of
Domini Social Investments shares to be sold, the fund name and the
PO Box 60494 account number; and
King of Prussia, PA 19406-0494 o be signed in exactly the same way the
account is registered by all registered
For overnight deliveries, please use the owners or authorized signers.
following address:
Your redemption request may require a
Domini Social Investments signature guarantee. Please refer to page XX
c/o First Data Investor Services Group for details.
211 South Gulph Road
King of Prussia, PA 19406
<PAGE>
- ---------------------------------------------------------------------------------------------------------
By Telephone
- ---------------------------------------------------------------------------------------------------------
To sell shares by telephone, call the Fund's
transfer agent at 1-800-582-6757. Neither the Fund, nor its transfer agent or its
distributor will be liable for any loss,
If you wish to receive your redemption by liability, cost or expense for acting on
wire and have not already established wire telephone instructions believed to be
privileges on your account, you must genuine. The Fund will employ reasonable
submit wire redemption requests in writing procedures to confirm that instructions
along with a Signature Guarantee (see page communicated by telephone are genuine.
XX). Please contact the Fund's transfer agent
if you wish to suspend telephone redemption
privileges.
Please consider sending a written request
to sell shares if you cannot reach the
Fund's transfer agent by telephone.
- ---------------------------------------------------------------------------------------------------------
By Wire
- ---------------------------------------------------------------------------------------------------------
</TABLE>
To establish wire redemption privileges on
a new account,fill out the appropriate area
on the application, and attach a voided
check.
If you have not already established wire
redemption privileges on your account you
must submit wire redemption requests in
writing along with a Signature Guarantee
(see page XX).
[In right-hand margin:]
WHAT IS "GOOD ORDER"?
Sale requests must be in "good order" to be
accepted by the Fund. To be in "good order" a
request must include:
o The Fund name and your account
number.
o The amount of the transaction (in dollars
or shares).
o Signatures of all owners exactly as
registered on the account (for requests by
mail).
o Signature guarantees, if required (see
page XX).
o Any supporting legal documentation that
may be required.
<PAGE>
TRANSACTIONS ARE PROCESSED AT THE NEXT-DETERMINED SHArE PRICE AFTER DOMINI
ACCEPTS YOUR ORDER AND RECEIVES ALL REQUIRED INFORMATION.
Additional Information on Selling Shares
Signature Guarantees
You are required to obtain a Signature Guarantee from an Eligible Guarantor for
any:
o Sales (redemptions) exceeding $50,000;
o Written sales requests, regardless of amount, made within 30 days
following any changes in account registration; and
o Redemptions made to a third party or to an address other than the
address for which the account is registered (unless already established
on your account).
Eligible Guarantors may include:
o banks;
o savings institutions;
o credit unions;
o broker-dealers; and
o other guarantors acceptable to the Fund and its transfer agent.
The Fund and its transfer agent cannot accept guarantees from notaries public
or organizations that do not provide reimbursement in the case of fraud. The
Fund or its transfer agent may, at its option, request further documentation
prior to accepting requests for redemptions.
Unusual Circumstances
The Fund reserves the right to revise or terminate the telephone redemption
privilege at any time, without notice. The Fund may stop selling its shares or
postpone payment:
o during any period in which the New York Stock Exchange is closed or in
which trading is restricted; or
o if the Securities and Exchange Commission determines that an emergency
exists.
In the event that the Fund suspends telephone redemption privileges, or if you
have difficulty getting through on the phone, you will still be able to redeem
your shares through the other methods listed above.
HOW THE PRICE OF YOUR SHARES IS DETERMINED
The Fund determines its share price (or "NAV", net asset value per share)
at the close of the New York Stock Exchange, normally 4PM Eastern Time, on each
day the Exchange is open for trading. This calculation is made by deducting the
amount of the Fund's liabilities (debts) from the value of its assets, and
dividing the difference by the number of outstanding shares of the Fund.
TOTAL ASSETS - TOTAL LIABILITIES
NET ASSET VALUE (NAV) = -------------------------------------------
NUMBER OF SHARES OUTSTANDING
<PAGE>
To calculate the value of your investment, simply multiply the NAV by the
number of shares of the Fund you own.
HOW CAN I FIND OUT THE FUND'S NAV?
BY PHONE: You may obtain the Fund's NAV 24 hours a day, by calling
1-800-762-6814 from a touch-tone phone and accessing our automated system.
You may speak with a shareholder representative weekdays from 9-5PM,
Eastern Time.
NEWSPAPER LISTINGS: This information is also listed in the mutual fund
listings of most major newspapers. The Fund is most commonly listed as:
DomISocial.
QUARTERLY STATEMENTS: You will also receive this information quarterly, in
your account statement.
HOW DO YOU DETERMINE WHAT PRICE I WILL GET WHEN I BUY SHARES?
If your order is received by the Fund's transfer agent by 4:00 PM Eastern
Time in good order, you will receive the NAV determined at the end of that day.
The Fund may stop offering its shares for sale at any time and may reject
any order for the purchase of its shares.
HOW DO YOU DETERMINE WHAT PRICE I WILL GET WHEN I SELL SHARES?
When you sell shares you will receive the next share price that is
calculated after your sale request is received by the Fund's transfer agent in
good order. Please note that the Fund will not accept redemption requests after
4PM, and will not hold trades for the following day.
The Fund will normally pay for the shares on the next day the New York
Stock Exchange is open for trading, but in any event within seven days. The
Fund will delay payment for at least seven business days if your checks in
payment for the purchase of the shares you wish to sell have not yet cleared
(this may take up to 15 days). The Fund may pay by check or, if you have
completed the appropriate box on the Account Application, by bank transfer.
HOW IS THE VALUE OF SECURITIES HELD BY THE FUND DETERMINED?
Securities held by the Fund are normally valued as follows:
EQUITY SECURITIES: Each security that is primarily traded on an exchange
or on the Nasdaq Stock MARKET is valued at the last sale price on such
exchange or on the Nasdaq.
Each security for which there were no sales during the day and each
unlisted security not reported on the Nasdaq system is valued at the last
quoted bid price, or at fair value as determined in good faith by or at
the direction of the Board of Trustees.
SHORT-TERM OBLIGATIONS (remaining maturities of less than sixty days):
Each short-term obligation is valued at amortized cost, which constitutes
fair value as determined by the Board of Trustees.
PORTFOLIO SECURITIES FOR WHICH THERE ARE NO SUCH QUOTATIONS OR VALUATIONS:
Each other portfolio security is valued at fair value as determined in
good faith by or at the direction of the Board of Trustees.
<PAGE>
FUND STATEMENTS AND REPORTS
CONFIRMATION STATEMENTS:
Statements confirming the trade date and the amount of your transaction
are sent each time you buy, sell, or exchange shares. Confirmation statements
are not sent for purchases made through automatic investment plans. Always
verify your transactions by reviewing your confirmation statement carefully for
accuracy. Please report any discrepancies to Shareholder Services promptly.
FUND FINANCIAL REPORTS:
The Fund's annual report is mailed in September, and the Fund's
semi-annual report is mailed in March. These reports include information about
the Fund's performance, as well as a complete listing of the Fund's holdings.
TAX STATEMENTS:
Each year we will send you a statement reporting the previous year's
dividend and capital gains distributions and proceeds from the sale of shares,
as required by the Internal Revenue Service. These are generally mailed in
January.
DIVIDENDS AND CAPITAL GAINS
The Fund pays to its shareholders substantially all of its net income in
the form of dividends. Dividends from net income are typically paid quarterly
(usually in March, June, September and December). Any capital gains are
distributed annually in December.
You may elect to receive dividends and capital gains either by check or in
additional shares. Unless you choose to receive your dividends by check, all
dividends will be reinvested in additional shares. In either case, these
distributions are taxable to you.
[In right-hand margin:]
DIVIDENDS PAID
Quarterly
CAPITAL GAINS PAID
Annually
TAXES
This discussion of taxes is for general information only. You should
consult your own tax adviser about your particular situation and the status of
your account under state and local laws.
TAXABILITY OF DIVIDENDS:
Each year the Fund will mail you a report of your dividends for the prior
year and how they are treated for federal tax purposes. You will normally have
to pay federal income taxes on the dividends you receive from the Fund, whether
you take the dividends in cash or reinvest them in additional shares.
<PAGE>
Dividends from the Fund's short-term capital gains are taxable as ordinary
income. Distributions from the Fund's long-term capital gains are taxable at a
lower capital gains rate. Other dividends are generally taxable as ordinary
income. Some dividends paid in January may be taxable to you as if they had
been paid the previous December.
BUYING A DIVIDEND:
Dividends paid by the Fund will reduce the Fund's net asset value per
share. As a result, if you buy shares just before the Fund pays a dividend, you
may pay the full price for the shares and then effectively receive a portion of
the purchase price back as a dividend for which you may need to pay tax.
TAXABILITY OF TRANSACTIONS:
Anytime you sell or exchange shares, it is considered a taxable event for
you. Depending on the purchase price and the sale price of the shares you sell
or exchange, you may have a gain or a loss on the transaction. You are
responsible for any tax liabilities generated by your transactions.
IMPORTANT: By law, the Fund must withhold 31% of your taxable distributions
and any redemption proceeds if you do not provide your correct taxpayer
identification number, or certify that it is correct, or if the IRS
instructs the Fund to do so. The Fund may also be required to withhold if
you fail to certify that you are not otherwise subject to 31% backup
withholding for failing to report income to the IRS, or otherwise violate
IRS requirements.
RIGHTS RESERVED BY THE FUND
The Fund and its agents reserve the following rights:
1. To waive or lower investment minimums;
2. To accept initial purchases by telephone or mailgram;
3. To refuse any purchase or exchange order;
4. To cancel any purchase or exchange order (including, but not limited
to, orders deemed to result in excessive trading, market timing,
fraud, or 5% ownership) upon notice to the shareholder within five
business days of the transaction or prior to the time the shareholder
receives confirmation of the transaction, whichever is sooner;
5. To implement policies designed to prevent excessive trading;
6. To freeze any account and suspend account services when notice has
been received of a dispute between the registered or beneficial
account owners or there is reason to believe a fraudulent transaction
may occur;
7. To otherwise modify the conditions of purchase and any services at any
time; or
8. To act on instructions believed to be genuine.
These actions will be taken when, in the sole discretion of management,
they are deemed to be in the best interests of the Fund.
IMPORTANT INFORMATION ON LARGE REDEMPTIONS:
It is important that you call the Fund's transfer agent before you redeem
a large dollar amount. We must consider the interests of all fund shareholders
and so reserve the right to delay delivery of your redemption proceeds -- up to
seven days -- if the amount will disrupt the Fund's operation or performance.
<PAGE>
The Fund reserves the right to pay part or all of the redemption proceeds
in kind, i.e., in securities, rather than cash. If payment is made in kind, you
may incur brokerage commissions if you elect to sell the securities for cash.
In an effort to protect the Fund from the possible adverse effects of a
substantial redemption in a large account, as a matter of general policy, no
shareholder or group of shareholders controlled by the same person or group of
persons will knowingly be permitted to purchase in excess of 5% of the
outstanding shares of the Fund, except upon approval of the Fund's management.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the periods indicated. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG Peat Marwick LLP,
whose report, along with the Fund's financial statements, is included in the
annual report, which is available upon request.
[Financial Statements to be added by amendment.]
<PAGE>
[BACK PAGE]
FOR ADDITIONAl INFORMATION
ANNUAL AND SEMI-ANNUAL REPORTS - Additional information about the Fund's
investments is available in the Fund's annual and semi-annual reports to
shareholders. These reports include a discussion of the market conditions
and investment strategies that significantly affected the Fund's
performance during its last fiscal year, as well as a complete listing of
the Fund's holdings. They are available by mail from Domini Social
Investments.
STATEMENT OF ADDITIONAL INFORMATION - The Fund's Statement of Additional
Information contains more detailed information about the Fund and its
management and operations. The Statement of Additional Information is
incorporated by reference into this prospectus and is legally part of it.
Available by mail from Domini Social Investments.
PROXY VOTING GUIDELINES & SOCIAL SCREENING CRITERIA - Published annually,
describing how we will vote our proxies and giving information about the
social screens used to maintain the Domini 400 Social Index. Also contains
a description of our shareholder activism program. Available by mail from
Domini Social Investments, or on our website, www.domini.com.
CONTACT DOMINI - To make inquiries about the Fund or obtain copies of any
of the above, free of charge, call 1-800-762-6814.
Domini Social Investments
P.O. Box 60494
King of Prussia, PA 19406-0494
WEB SITE: To learn more about socially responsible investing, visit
us online at WWW.DOMINI.COM
SECURITIES AND EXCHANGE COMMISSION - Information about the Fund (including
the Statement of Additional Information) is available at the Commission's
website, www.sec.gov. Copies may be obtained upon payment of a duplicating
fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may also visit the Commission's Public
Reference Room in Washington, D.C. For more information about the Public
Reference Room you may call the Commission at 1-800-SEC-0330.
File No. 811-07599
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
________ __, 1999
DOMINI INSTITUTIONAL SOCIAL EQUITY FUND
TABLE OF CONTENTS PAGE
1. The Fund............................................................ 2
2. Investment Objective; Special Information Concerning Investment
Structure; Investment Policies and Restrictions..................... 2
3. Performance Information............................................. 10
4. Determination of Net Asset Value; Valuation of Portfolio
Securities.......................................................... 12
5. Management of the Fund and the Portfolio............................ 13
6. Independent Auditors................................................ 20
7. Taxation............................................................ 21
8. Portfolio Transactions and Brokerage Commissions.................... 22
9. Description of Shares, Voting Rights and Liabilities................ 24
10. Financial Statements................................................ 26
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 ________ __, 1999, as amended from time to time. This
Statement of Additional Information should be read in conjunction with the
Prospectus. This Statement of Additional Information incorporates by reference
the financial statements described on page __ hereof. These financial
statements can be found in the Fund's Annual Report to Shareholders. An
investor may obtain copies of the Fund's Prospectus and Annual Report without
charge by contacting DSIL Investment Services LLC, 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 and commenced operations on May 30, 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 ("DSIL"), 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 DSIL Investment Services LLC, 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. DSIL is the Portfolio's investment manager (the "Manager"). Mellon
Equity Associates ("Mellon Equity") is the Portfolio's investment submanager
(the "Submanager"). The Submanager manages the investments of the Portfolio
from day to day in accordance with the Portfolio's investment objective and
policies. Kinder, Lydenberg, Domini & Co., Inc. ("KLD") determines the
composition of the Domini 400 Social Index SM (the "Domini Social Index").
"Domini 400," "Domini Social Index," "Domini 400 Social Index" and "investing
for good" are service marks of KLD which are licensed to DSIL with the consent
of Amy L. Domini (with regard to the word "Domini"). Pursuant to agreements
among KLD, DSIL, Amy L. Domini, and each of the Trust and the Portfolio, the
Trust and the Portfolio may be required to discontinue use of one or more of
these service marks if (i) DSIL ceases to be the Manager of the Portfolio, (ii)
Ms. Domini or DSIL withdraws her or its consent to the use of the word
"Domini," or (iii) the license agreement between KLD and DSIL is terminated.
2. INVESTMENT OBJECTIVE;
SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE;
INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide its shareholders with
long-term total return which matches the performance of the Domini Social
Index.
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 is a change
in the Fund's investment objective, shareholders should consider whether the
Fund remains an appropriate investment in light of their 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 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.
<PAGE>
SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio, a separate registered
investment company with the same investment objective as the Fund. In addition
to selling a beneficial interest to the Fund, the Portfolio may sell beneficial
interests to other mutual funds or institutional investors. Such investors will
invest in the Portfolio on the same terms and conditions as the Fund and will
pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Investors in the Fund should be aware
that differences in sales commissions and operating expenses may result in
differences in returns experienced by investors in the different funds that
invest in the Portfolio. Such differences in returns are also present in other
mutual fund structures. Information concerning other holders of interests in
the Portfolio is available from the Manager at 212-352-9200.
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. This
possibility also exists 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 Fund
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 Fund's votes at the Portfolio meeting. The
percentage of the Fund'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'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.
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
of the Trust 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
investment adviser to manage the Fund's assets in accordance with the
<PAGE>
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.
INVESTMENT POLICIES
The following supplements the information concerning the Fund's and the
Portfolio's investment policies contained in the Prospectus and should only be
read in conjunction therewith. References to the Portfolio include the Fund,
unless the context otherwise requires.
INDEX INVESTING: 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 Index. Moreover, inclusion of a stock in the
Domini Social Index does not imply an opinion by KLD, the Manager or the
Submanager as to the merits of that specific stock as an investment. Because
the Portfolio seeks to track, rather than exceed the performance of a
particular index, investors should not expect to achieve the potentially
greater results that could be obtained by a fund that aggressively seeks
growth. However, KLD and the Manager believe that enterprises which exhibit a
social awareness, based on the criteria described in the Prospectus, 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 to
investors.
The Portfolio intends to readjust its securities holdings periodically
such that those holdings will correspond, to the extent reasonably practicable,
to the Domini 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
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 Domini Social 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 and the weightings
of the securities in the Domini Social Index of 0.95 or better. A figure of 1.0
would indicate a perfect correlation. To the extent practicable, the Portfolio
will attempt to be fully invested. The ability of the Fund to duplicate the
performance of the Domini Social 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.
The Board of Trustees 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 Domini Social Index, and comparing the composition
and weighting of the Portfolio's holdings with those of the Domini Social
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 Domini Social Index, or between the
composition and weighting of the Portfolio's securities holdings with those of
the stocks comprising the Domini Social Index. If the correlation between the
weightings of securities held by the Portfolio and the weightings of the stocks
in the Domini Social Index or the correlation between the performance of the
Fund, before expenses, and the performance of the Domini Social Index falls
<PAGE>
below 0.95, the Board of Trustees will review with the Submanager methods for
increasing such correlation, such as through adjustments in securities holdings
of the Portfolio.
In selecting stocks for inclusion in the Domini Social Index, KLD
evaluated, in accordance with the social criteria described in the Prospectus,
each of the companies the stocks of which comprise the Standard and Poor's 500
Composite Stock Price Index (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
Social Index. As of ________ __, 1999, of the 500 companies whose stocks
comprised the S&P 500, approximately ___% were included in the Domini Social
Index. The remaining stocks comprising the Domini 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 in the Prospectus, as well as upon
KLD's criteria for industry diversification, financial solvency, market
capitalization, and minimal portfolio turnover. A company which is not included
in the S&P 500 may be included in the Domini Social Index primarily in order to
afford representation to an industry sector which would otherwise be
under-represented in the Domini Social 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, and certain
industry sectors will be excluded altogether. KLD may exclude from the Domini
Social Index stocks issued by companies which are in bankruptcy or whose
bankruptcy KLD believes may be imminent. KLD may also remove from the Domini
Social Index stocks issued by companies which no longer meet its investment
criteria.
The weightings of stocks in the Domini 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
_________ __, 1999 approximately __% of the Domini Social Index was comprised
of the 20 largest companies in the Domini Social Index.
The component stocks of the S&P 500 are chosen by Standard & Poor's
Ratings Group ("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 ("NYSE") 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 NYSE. Not all
stocks included in the S&P 500 are listed on the NYSE. However, the total
market value of the S&P 500 as of _________ __, 1999 represented approximately
___% of the aggregate market value of common stocks traded on the NYSE.
Inclusion of a stock in the S&P 500 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.
CONCENTRATION: 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
Index. Based on the current composition of the Domini Social 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.
<PAGE>
FOREIGN ISSUERS: Some of the stocks included in the Domini 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 of exchange rate fluctuation, tax provisions, war or expropriation)
than do securities of domestic issuers. With respect to stocks of foreign
issuers, 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.
RULE 144A SECURITIES: Although the Portfolio does not have any current
intention to do so, the Portfolio may invest in securities which may be resold
pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act").
LOANS OF SECURITIES: 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.
The Portfolio may lend its securities to the broker-dealers and financial
institutions, provided that (1) the loan is secured continuously by collateral,
consisting of securities, cash or cash equivalents, 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 either in the
form of fees received from the borrower of the securities or in connection with
the investment of cash collateral 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.
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
<PAGE>
exercise of the option, the holder is 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.
SHORT SALES: 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.
CASH RESERVES: 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, certificates of deposit, bank deposits
or repurchase agreements, provided that the issuer satisfies certain 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 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 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 voting securities" 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,
<PAGE>
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 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);
(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 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
<PAGE>
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;
(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
(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.
In addition, 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 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 outstanding
voting securities of the Fund.
NON-FUNDAMENTAL RESTRICTIONS: In order to comply with certain federal
statutes and regulatory policies, neither the Fund nor the Portfolio will as a
matter of operating policy:
purchase puts, calls, straddles, spreads and any combination thereof if the
value of its aggregate investment in such securities will exceed 5% of the
Fund's or the Portfolio's total assets at the time of such purchase.
<PAGE>
This restriction is 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.
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
Performance information concerning the Fund may from time to time be used
in advertisements, shareholder reports or other communications to shareholders.
The Fund may provide its period, annualized, and average annual "total rates of
return". The "total rate of return" refers to the change in the value of an
investment 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 declared during such period. Period total rates of return may be
"annualized". An average "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 or 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. Average annual total
return figures represent the average annual percentage change over the
specified period.
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.
Average annual total return is a measure of the Fund's performance over
time. It is determined by taking the Fund's performance over a given period and
expressing it as an average annual rate. The average annual total return
quotation is computed in accordance with a standardized method prescribed by
SEC rules. The average annual total return for a specific period is found by
taking a hypothetical $1,000 initial investment in Fund shares on the first day
of the period and computing the redeemable value of the investment at the end
of the period. The redeemable value is then divided by the initial investment,
and its quotient is taken to the Nth root (N representing the number of years
<PAGE>
in the period) and is subtracted from the result, which is then expressed as a
percentage. The calculation assumes that all income and capital gains
distributions have been reinvested in Fund shares at net asset value on the
reinvestment date during the period.
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 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.
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.
Set forth below is average annual total return information for shares of
the Fund for the periods indicated, assuming that capital gains distributions,
if any, were reinvested. 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.
Period Average Annual Total Return
One year ended July 31, 1999 23.12%
Five years ended July 31, 1999 27.50%
June 3, 1991 (Commencement of
Operations of the Portfolio) to
July 31, 1999 19.53%
The annualized yield of shares of the Fund for the 30-day period ended
July 31, 1999 was _____%.
SINCE THE FUND'S YIELD AND AVERAGE ANNUAL TOTAL RETURN QUOTATIONS ARE
BASED ON HISTORICAL EARNINGS AND SINCE YIELD AND RaTES OF RETURN FLUCTUATE OVER
TIME, THESE QUOTATIONS SHOULD NOT BE CONSIDERED AS AN iNDICATION OR
REPRESENTATION OF THE FUTURE PERFORMANCE oF THE FUND.
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 Domini Social 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.
From time to time the Trust may also quote data and fund rankings from
various sources, such as Lipper Analytical Services, Inc., Morningstar, Inc.,
Wiesenberger, Money Magazine, The Wall Street Journal, Kiplinger's Personal
Finance Magazine, Smart Money Magazine, Business Week and The New York Times,
<PAGE>
and may compare its performance to that of the Domini 400 Social IndexSM and
various other unmanaged securities indices, such as the S&P 500 and the Dow
Jones Industrial Average. "Standard & Poor(", "S&P(" and "Standard & Poor's
500(" are trademarks of McGraw Hill Companies.
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
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 "Shareholder
Manual" 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
<PAGE>
analysts, information as to any transactions or offers with respect to the
security, existence of merger proposals or tender offers affecting the
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.
Shares may be purchased directly from the Distributor.
5. MANAGEMENT OF THE FUND AND THE PORTFOLIO
The management and affairs of the Trust and the Fund are supervised by the
Trust's Trustees under the laws of the Commonwealth of Massachusetts. The
management and affairs of the Portfolio are supervised by its Trustees under
the laws of the State of New York.
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. Asterisks indicate that those
Trustees and officers are "interested persons" (as defined in the 1940 Act) of
the Trust. Unless otherwise indicated below, the address of each officer is 11
West 25th Street, New York, New York 10010.
TRUSTEES OF THE TRUST AND THE PORTFOLIO
AMY L. DOMINI* -- 230 Congress Street, Boston, Massachusetts 02110; Chair,
President and Trustee of the Trust, Portfolio and Domini Social Equity Fund;
Managing Principal of DSIL; Officer of Kinder, Lydenberg, Domini & Co., Inc.;
Private Trustee, Loring, Wolcott & Coolidge; Trustee, New England Quarterly
(since 1998); Board Member, Social Investment Forum (since 1994); Trustee,
Episcopal Church Pension Fund; Former Member, Governing Board, Interfaith
Center on Corporate Responsibility; Former Trustee, National Association
Community Loan Funds; Former Board Member of National Community Capital
Association (1987-1990). Her date of birth is January 15, 1950.
JULIA ELIZABETH HARRIS -- 54 Burroughs Street, Jamaica Plain, Massachusetts
02130; Vice President, UNC Partners, Inc. (since 1990); Director and Treasurer,
Boom Times, Inc. (since 1997); Director and Chair of Board of Directors, The
Green Book, Inc. (1992-1995); Trustee, Domini Social Equity Fund. Her date of
birth is July 11, 1948.
KIRSTEN S. MOY -- 151 North Michigan Avenue, Suite 1209, Chicago, Illinois
60601; Consultant, Project Director and Principal Researcher, Community
Development Innovation and Infrastructure Initiative (since December 1998);
RDFI Rating System Advisory Board Member, National Community Capital
Association (since 1999); Member, Community Economic Development Board of
Overseers, New Hampshire College (since November 1998); Advisory Group Member,
Shorebank Liquidity Project (since 1999); Consultant, Social Investment Forum,
Community Development Project (June 1998-December 1998); Director, Community
Development Financial Institutions Fund, U.S. Department of the Treasury
(October 1995 - October 1997); Senior Vice President and Portfolio Manager,
Equitable Real Estate Investment Management (prior to 1995); Trustee, Domini
Social Equity Fund. Her date of birth is June 30, 1947.
WILLIAM C. OSBORN -- 115 Buckminster Road, Brookline, Massachusetts 02445;
Consultant, Arete Corporation; Manager, Venture Investment Management Company
LLC (prior to 1999); Trustee, Domini Social Equity Fund; Vice President and
General Manager, TravElectric Services Corp (prior to 1995); President,
Environmental Technologies (prior to 1993); Director, Evergreen Solar, Inc;
Director, Conservation Services Group; Director, Fingerlakes Aquaculture LLC;
Director, Surgical Sealants, Inc; Director, World Power Technologies, Inc.
His date of birth is July 7, 1944.
<PAGE>
KAREN PAUL -- 4050 Park Avenue, Miami, Florida 33133; Associate Dean and
Professor of Business Environment, Florida International University (since
1991); Trustee, Domini Social Equity Fund; Partner, Trinity Industrial
Technology (since 1995); Executive Director, Center for Management in the
Americas (since 1997). Her date of birth is September 23, 1944.
GREGORY A. RATLIFF -- 1712 Carmen Avenue, Chicago, Illinois 60640; Director,
Access to Economic Opportunity, John D. and Catherine T. MacArthur Foundation
(since 1997); Associate Director, Program-Related Investments, John D. and
Catherine T. MacArthur Foundation (1993-1997); Trustee, Domini Social Equity
Fund. His date of birth is June 12, 1960.
TIMOTHY SMITH -- 475 Riverside Drive, Room 550, New York, New York 10115;
Executive Director, Interfaith Center on Corporate Responsibility (since 1971);
Trustee, Calvert New Africa Fund; Chair, Calvert Social Investment Fund
Advisory Council; Trustee, Domini Social Equity Fund. His date of birth is
September 15, 1943.
FREDERICK C. WILLIAMSON, SR. -- Five Roger Williams Green, Providence, Rhode
Island 02904; Treasurer and Trustee, RIGHA (charitable foundation supporting
health care needs) since 1990; Chairman, Rhode Island Historical Preservation
and Heritage Commission (since 1995); Trustee, National Parks and Conservation
Association (1986-1997); Advisor, National Parks and Conservation Association
(since 1997); Trustee of the National Park Trust (since 1991); Trustee, Domini
Social Equity Fund. His date of birth is September 20, 1915.
Each of the Trustees who are not interested persons receives an annual
retainer for serving as a Trustee of the Trust, the Portfolio and the Domini
Social Equity Fund of $6,000, and in addition, receives $1,000 for attendance
at each joint meeting of the Boards of the Trust, the Portfolio and the Domini
Social Equity Fund (reduced to $500 in the event that a Trustee participates at
an in-person meeting by telephone). In addition, each Trustee receives
reimbursement for reasonable expenses incurred in attending meetings. The
compensation paid to the Trustees for the fiscal year ended July 31, 1999 is
set forth below. The Trustees may hold various other directorships unrelated to
the Trust or Portfolio.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Pension or Total
Retirement Compensation
Benefits From The Trust,
Aggregate Accrued as Estimated Portfolio and
Compensation Part of Annual Benefits Domini
From The Trust Upon Social Equity
Trust Expenses Retirement Fund
Amy L. Domini, None None None None
Chair, President
and Trustee
Julia Elizabeth $_____ None None $_____
Harris,
Trustee
Allen M. Mayes++, $_____ None None $_____
Trustee
Kirsten S. Moy, $_____ None None $_____
Trustee
<PAGE>
William C. Osborn, $_____ None None $_____
Trustee
Karen Paul, $_____ None None $_____
Trustee
Gregory A. Ratliff, $_____ None None $_____
Trustee
Timothy Smith, $_____ None None $_____
Trustee
Frederick C. $_____ None None $_____
Williamson, Sr.,
Trustee
</TABLE>
++Mr. Mayes died in 1999.
OFFICERS
PETER D. KINDER* -- Vice President of the Trust and the Portfolio; President of
Kinder, Lydenberg, Domini & Co., Inc.; Member, Domini Social Investments LLC
(since 1997). His date of birth is September 28, 1946.
STEVEN D. LYDENBERG* -- Vice President of the Trust and the Portfolio; Director
of Research of Kinder, Lydenberg, Domini & Co., Inc.; Member, Domini Social
Investments LLC (since 1997). His date of birth is October 21, 1945.
DAVID P. WIEDER* -- Vice President of the Trust and the Portfolio (since 1997);
Chief Executive Officer and Managing Principal, Domini Social Investments LLC
(since 1997); President of FSSI (since 1989); Vice-President of investment
companies within Fundamental Family of Funds (1989-1997); Vice-President of
Fundamental Portfolio Advisors (1991-1997).
His date of birth is January 8, 1966.
SIGWARD M. MOSER* -- Vice President of the Trust and the Portfolio (since
1997); President and Managing Principal, Domini Social Investments LLC (since
1997); President of Communications House International, Inc.; Director of
Financial Communications Society. His date of birth is June 12, 1962.
CAROLE M. LAIBLE* -- Secretary and Treasurer of the Trust and the Portfolio
(since 1997); Financial Compliance Officer of Domini Social Investments LLC
(since 1997); Board of Governors, Daytop - NJ (since 1998); Financial
Compliance Officer, FSSI (1994-1997); Financial Compliance Officer and
Secretary of investment companies within Fundamental Family of Funds
(1994-1997); General Service Manager, McGladrey & Pullen LLP (certified public
accountants) (prior to 1994). Her date of birth is October 31, 1963.
As of ________ __, 1999, all Trustees and officers of the Trust and the
Portfolio as a group owned less than 1% of the Fund's outstanding shares. As of
the same date, the following shareholders of record owned 5% or more of the
outstanding shares of the Fund: __________. The Trust has no knowledge of any
other owners of record or beneficial owners of 5% or more of the outstanding
shares of the Fund. 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.
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. 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.
MANAGER AND SUBMANAGER
DSIL 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. DSIL 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. DSIL
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
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.
<PAGE>
The Management Agreement provides that the Manager may render services to
others. DSIL 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 DSIL'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.
Under the Management Agreement between the Portfolio and DSIL, DSIL's fee
for advisory and administrative services to the Portfolio is 0.20% of the
average daily net assets of the Portfolio. Currently, DSIL is waiving its fee
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. This fee waiver is voluntary and may be reduced or
terminated at any time.
DSIL is a 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 DSIL and their relationship to the
Trust follows: Amy L. Domini, Chair of the Board and President of the Trust, is
the Manager and principal executive officer and a co-owner of DSIL. Ms. Domini
is also Chief Executive Officer, Secretary, Treasurer and co-owner of KLD which
licenses the Domini Social Index to DSIL. Peter D. Kinder, Vice President of
the Trust, is a co-owner of DSIL. Mr. Kinder is also President and a co-owner
of KLD. Sigward M. Moser, Vice President of the Trust, is a co-owner of DSIL.
David P. Wieder, Vice President of the Trust is a co-owner of DSIL. Mr. Wieder
is also President and an owner of FSSI, a registered transfer agent which
served as the Trust's transfer agent until September 24, 1999.
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
<PAGE>
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.
Under the Submanagement Agreement, DSIL pays Mellon Equity an investment
submanagement fee equal on an annual basis to 0.10% of the average daily net
assets of the Portfolio.
Mellon Equity is a Pennsylvania business trust founded in 1987, which is
beneficially owned by Mellon Bank, N.A. (99% beneficial interest) and MMIP,
Inc. (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 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.
Prior to October 22, 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 Domini Social Index. Additionally, prior to
October 22, 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 October 22, 1997, the
Portfolio paid Mellon Equity an investment management fee equal on an annual
basis to 0.10% of the average daily net assets of the Portfolio. Prior to
October 22, 1997, pursuant to a sponsorship agreement (the "KLD Sponsorship
Agreement"), KLD furnished administrative services for the Portfolio. Prior to
October 22, 1997, pursuant to an administrative services agreement (the
"Signature Administration Agreement"), Signature Broker-Dealer Services, Inc.
served as the administrator of the Portfolio. Prior to October 22, 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 end July 31, 1999, the Portfolio incurred
approximately $_______ in management fees pursuant to the Management Agreement.
For the fiscal year end July 31, 1998, the Portfolio incurred approximately
$701,774 in management fees pursuant to the Management Agreement, $17,385 in
advisory fees pursuant to the KLD Advisory Agreement, $17,385 in aggregate
administration fees pursuant to the Signature Administration Agreement and
$86,354 in management fees pursuant to the Mellon Equity Management Agreement.
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, $156,868 in aggregate
administration fees pursuant to the Signature Administration Agreement, and
$182,885 in management fees pursuant to the Mellon Equity Management Agreement.
<PAGE>
SPONSOR
Pursuant to a Sponsorship Agreement, DSIL provides the Fund with
oversight, administrative and management services. DSIL provides the Fund with
general office facilities and supervises the overall administration of the
Fund, 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 Fund; the preparation and filing of all documents
required for compliance by the Fund 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 Fund's proxy
voting philosophy and shareholder activism philosophy; and arranging for the
maintenance of books and records of the Fund. 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.
For these services and facilities, DSIL 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 for the Fund's then-current fiscal year. Currently, DSIL is
reducing its fee 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. For the fiscal year ended July 31, 1998, DSIL waived all of
its fees under the Sponsorship Agreement amounting to $94,624. For the fiscal
year ended July 31, 1999, the Fund incurred $_______ in sponsorship fees.
Prior to October 22, 1997, Signature Broker-Dealer Services, Inc. served
as administrator. For the fiscal year ended July 31, 1997, the Fund incurred
$14,212 in administrative fees.
The Sponsorship Agreement with the Trust provides that DSIL 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.
DISTRIBUTOR
The Trust has entered into a Distribution Agreement with the Distributor.
Under the Distribution Agreement, the Distributor acts as the agent of the
Trust in connection with the offering of shares of the Fund and is obligated to
use its best efforts to find purchasers for shares of the Fund. The Distributor
receives no additional compensation for its services under the Distribution
Agreement. The Distributor acts as the principal underwriter of shares of the
Fund and bears the compensation of personnel necessary to provide such services
and all costs of travel, office expenses (including rent and overhead) and
equipment. Prior to August 15, 1999, Signature Broker-Dealer Services, Inc.
served as the distributor of the Fund.
<PAGE>
TRANSFER AGENT AND CUSTODIAN
The Trust has entered into a Transfer Agency Agreement with First Data
Investor Services Group, Inc. ("First Data"), 4400 Computer Drive, Westborough,
MA 01581, pursuant to which First Data acts as the transfer agent for the Fund.
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.
The Trust has entered into a Custodian Agreement with Investors Bank &
Trust Company ("IBT"), 200 Clarendon Street, Boston, MA 02116, 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 also has entered into a Custodian Agreement
with IBT pursuant to which IBT acts as custodian for the Portfolio. 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.
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.
The Portfolio will also pay 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
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.
6. INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, 99 High Street, Boston, MA 02110, are the
independent auditors for the Trust and for the Portfolio, providing audit
<PAGE>
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the Securities and Exchange Commission.
7. TAXATION
TAXATION OF THE FUND AND THE PORTFOLIO
FEDERAL TAXES: The Fund has elected to be treated and intends to qualify
each year as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). As a regulated
investment company, the Fund will not be subject to any federal income or
excise taxes on its net investment income and net realized capital gains that
it distributes to shareholders in accordance with the timing requirements
imposed by the Code. 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 shareholders.
We anticipate 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.
FOREIGN TAXES: Although we do not expect the Fund will pay any federal
income or excise taxes, investment income received by the Fund from foreign
securities may be subject to foreign income taxes withheld at the source; we do
not expect to be able to pass through to shareholders foreign tax credits with
respect to such foreign taxes. The United States has entered into tax treaties
with many foreign countries that may entitle the Fund to a reduced rate of tax
or an exemption from tax on such income; the Fund intends to qualify for treaty
reduced rates where available. It is not possible, however, to determine the
Fund's effective rate of foreign tax in advance since the amount of the Fund's
assets to be invested within various countries is not known.
STATE TAXES: The Trust is organized as a Massachusetts business trust. As
long as the Fund qualifies as a "regulated investment company" under the Code,
the Fund will not have to pay Massachusetts income or excise taxes. 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.
TAXATION OF SHAREHOLDERS
TAXATION OF DISTRIBUTIONS: Shareholders of the Fund normally will have to
pay federal income taxes, and any state or local taxes, on the dividends and
other 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 paid in cash or reinvested in additional shares.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over net short-term capital losses), whether paid in cash or reinvested
in additional 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. Any Fund dividend that is declared in
<PAGE>
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.
DIVIDENDS-RECEIVED DEDUCTION: 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.
"BUYING A DIVIDEND": 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.
DISPOSITION OF SHARES: 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.
EFFECTS OF CERTAIN INVESTMENTS AND TRANSACTIONS
FOREIGN SECURITIES: Special tax considerations apply with respect to
foreign investments of the Fund. Foreign exchange gains and losses realized by
the Fund will generally be treated as ordinary income and losses.
The foregoing should not be viewed as a comprehensive discussion of the
items referred to or as covering all provisions relevant to investors.
Dividends and distributions may also be subject to state or local taxes.
Shareholders should consult their own tax advisers for additional details on
their particular tax status. 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 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 portfolio managers who are employees of the Submanager and who are
appointed and supervised by its senior officers. Changes in the Portfolio's
investments are reviewed by its Board of Trustees. The portfolio managers 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
<PAGE>
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 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. Neither the Portfolio nor the Fund will engage in brokerage
transactions with the Manager, the Submanager or the Sponsor or any of their
respective affiliates or any affiliate of the Fund or the Portfolio.
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.
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
<PAGE>
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, 1997, 1998 and 1999, the Portfolio paid brokerage
commissions of $101,639, $175,344 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 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
<PAGE>
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 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 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 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 wilful 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.
<PAGE>
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 Fund 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 Fund 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.
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.
10. FINANCIAL STATEMENTS
The audited financial statements of the Fund and the Portfolio (Statement
of Assets and Liabilities at July 31, 1999, Statement of Operations for the
year ended July 31, 1999, Statement of Changes in Net Assets for each of the
years in the two-year period ended July 31, 1999, Financial Highlights for each
of the years in the five-year period ended July 31, 1999, Notes to Financial
Statements and Independent Auditors' Report), each of which is included in the
Annual Report to Shareholders of the Fund which has been filed with the
Securities and Exchange Commission pursuant to Section 30(b) of the 1940 Act
and Rule 30b2-1 thereunder, are hereby incorporated by reference into this
Statement of Additional Information and have been so incorporated in reliance
upon the reports of KPMG Peat Marwick LLP, independent auditors, on behalf of
the Fund and the Portfolio.
<PAGE>
PART C
Item 23. Exhibits
* a(1) Declaration of Trust of the Registrant.
*** a(2) Certificate and Amendment No. 1 to Declaration of Trust of the
Registrant.
** b By-Laws of the Registrant, as amended June 13, 1997.
e Distribution Agreement between the Registrant and DSIL Investment
Services LLC, as distributor.
* g Custody Agreement between the Registrant and Investors Bank & Trust
Company, as custodian.
h Sponsorship Agreement between the Registrant and DSIL, as sponsor.
i Opinion and consent of counsel.
**** q Powers of Attorney.
and filed
herewith
- ------------------------
* 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.
** Incorporated herein by reference from the Registration Statement on Form
N-1A as filed with the SEC on September 29, 1997.
*** Incorporated herein by reference from the Registration Statement on Form
N-1A as filed with the SEC on November 26, 1997.
**** Incorporated herein by reference from the Registration Statement on Form
N-1A as filed with the SEC on November 25, 1998.
Item 24. Persons Controlled by or under Common Control with Registrant
Not applicable.
Item 25. Indemnification
Reference is hereby made to (a) Article V of the Registrant's
Declaration of Trust, incorporated herein by reference; and (b) Section 4 of
the Distribution Agreement by and between the Registrant and DSIL Investment
Services LLC, filed as an exhibit hereto.
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.
Item 26. Business and Other Connections of Investment Adviser
Domini Social Investments LLC ("DSIL") is a 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 owners of DSIL are James Earl Brooks, Amy Lee Domini,
Peter D. Kinder, Steven D. Lydenberg, Sigward Moser and David P. Wieder.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Employment during the
Name Business Address Past Two Fiscal Years
James E. Brooks Four Arlington Street President, Equity Resources Group, Inc.(real estate
Cambridge, MA 02140 investment)
Amy L. Domini 230 Congress Street CEO, Secretary and Treasurer, Kinder, Lydenberg,
Cambridge, MA 02110 Domini & Co., Inc. ("KLD")(investment adviser);
Trustee, Loring, Wolcott & Coolidge (fiduciary)
Peter D. Kinder 11 West 25th Street President, KLD
New York, NY 10010
Steven D. Lydenberg 11 West 25th Street Director of Research, KLD
New York, NY 10010
Sigward Moser 11 West 25th Street President and Director, Communication House
New York, NY 10010 International, Inc. (advertising agency)
David P. Wieder 11 West 25th Street President, Director, Equity Owner and Chairman,
New York, NY 10010 Fundamental Shareholder Services, Inc.; Secretary,
Fundamental Portfolio Advisors (investment
adviser);Registered Representative, Fundamental
Service Corp.(broker-dealer)
</TABLE>
Item 27. Principal Underwriters
(a) DSIL Investment Services LLC is the distributor for the
Registrant. DSIL Investment Services LLC serves as the
distributor or placement agent for the following other
registered investment companies: Domini Social Equity Fund and
Domini Social Index Portfolio.
(b) The information required by this Item 27 with respect to each
director or officer of DSIL Investment Services LLC is
incorporated herein by reference from Schedule A of Form BD
(File No. 008-44763) as filed by DSIL Investment Services LLC
pursuant to the Securities Exchange Act of 1934.
(c) Not applicable.
Item 28. Location of Accounts and Records
The accounts and records of the Registrant are located, in whole or
in part, at the offices of the Registrant and at the following locations:
Name: Address:
Domini Social Investments LLC 11 W. 25th Street (administrator)
New York, NY 10010
DSIL Investment Services LLC 11 W. 25th Street (distributor)
New York, NY 10010
Investors Bank & Trust Company 200 Clarendon Street (custodian)
Boston, MA 02116
First Data 4400 Computer Drive (transfer agent)
Westborough, MA 01581
<PAGE>
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
<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
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston and
Commonwealth of Massachusetts on the 29th day of September, 1999.
DOMINI INSTITUTIONAL TRUST
By:
Amy L. Domini
-----------------------------------
Amy L. Domini
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated below on September 29, 1999.
Signature Title
President (Principal Executive Officer)
Amy L. Domini and Trustee of Domini Institutional Trust
- -------------------------------
Amy L. Domini
Carole M. Laible Treasurer (Principal Accounting and
- ------------------------------- Financial Officer) of Domini
Carole M. Laible Institutional Trust
Julia Elizabeth Harris* Trustee of Domini Institutional Trust
- -------------------------------
Julia Elizabeth Harris
Kirsten S. Moy* Trustee of Domini Institutional Trust
- -------------------------------
Kirsten S. Moy
William C. Osborn* Trustee of Domini Institutional Trust
- -------------------------------
William C. Osborn
Karen Paul* Trustee of Domini Institutional Trust
- -------------------------------
Karen Paul
Gregory A. Ratliff* Trustee of Domini Institutional Trust
- -------------------------------
Gregory A. Ratliff
<PAGE>
Timothy H. Smith* Trustee of Domini Institutional Trust
- -------------------------------
Timothy H. Smith
Frederick C. Williamson, Sr.* Trustee of Domini Institutional Trust
- -------------------------------
Frederick C. Williamson, Sr.
*By: Amy L. Domini
- -------------------------------
Amy L. Domini
Executed by Amy L. Domini on
behalf of those indicated
pursuant to Powers of Attorney.
<PAGE>
SIGNATURES
Domini Social Index Portfolio has duly caused this Post-Effective
Amendment to the Registration Statement on Form N-1A (File No. 333-14449) of
Domini Institutional Trust to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and Commonwealth of
Massachusetts on the 29th day of September, 1999.
DOMINI SOCIAL INDEX PORTFOLIO
By:
Amy L. Domini
------------------------------------
Amy L. Domini
President of Domini Social Index Portfolio
This Post-Effective Amendment to the Registration Statement on Form
N-1A of Domini Institutional Trust has been signed below by the following
persons in the capacities indicated below on September 29, 1999.
Signature Title
Amy L. Domini President (Principal Executive Officer)
- ------------------------------- and Trustee of Domini Social Index
Amy L. Domini Portfolio
Carole M. Laible Treasurer (Principal Accounting and
- ------------------------------- Financial Officer) of Domini Social Index
Carole M. Laible Portfolio
Julia Elizabeth Harris* Trustee of Domini Social Index Portfolio
- -------------------------------
Julia Elizabeth Harris
Kirsten S. Moy* Trustee of Domini Social Index Portfolio
- -------------------------------
Kirsten S. Moy
William C. Osborn* Trustee of Domini Social Index Portfolio
- -------------------------------
William C. Osborn
Karen Paul* Trustee of Domini Social Index Portfolio
- -------------------------------
Karen Paul
Gregory A. Ratliff* Trustee of Domini Social Index Portfolio
- -------------------------------
Gregory A. Ratliff
Timothy H. Smith* Trustee of Domini Social Index Portfolio
- -------------------------------
Timothy H. Smith
<PAGE>
Frederick C. Williamson, Sr.* Trustee of Domini Social Index Portfolio
- -------------------------------
Frederick C. Williamson, Sr.
*By:
Amy L. Domini
- -------------------------------
Amy L. Domini
Executed by Amy L. Domini on behalf of
those indicated pursuant to Powers of
Attorney.
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
e Distribution Agreement between the Registrant and DSIL
Investment Services LLC, as distributor.
h Sponsorship Agreement between the Registrant and DSIL,
as sponsor.
i Opinion and consent of counsel.
q Powers of Attorney.
Exhibit e
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of August 15, 1999, by and between
DOMINI INSTITUTIONAL TRUST, a Massachusetts business trust (the "Trust"), and
DSIL INVESTMENT SERVICES LLC, a New York limited liability company and a
subsidiary of Domini Social Investments LLC (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act") and consists
of one or more series;
WHEREAS, the Trust desires to enter into this Distribution Agreement
with respect to its current and future series; and
WHEREAS, the Trust wishes to engage the Distributor to provide certain
services with respect the distribution of Shares of the Trust, and the
Distributor is willing to provide such services to each series of the Trust on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. The Trust grants to the Distributor the right, as agent of the
Trust, to sell Shares of Beneficial Interest ("Shares") of each series of the
Trust upon the terms hereinbelow set forth during the term of this Agreement.
While this Agreement is in force, the Distributor agrees to use its best
efforts to find purchasers for Shares of each series of the Trust.
The Distributor shall have the right, as agent of the Trust, to order
from the Trust the Shares needed, but not more than the Shares needed (except
for clerical errors and errors transmission), to fill unconditional orders for
Shares placed with the Distributor, all such orders to be made in the manner
set forth in the Trust's then-current prospectus (the "Prospectus") and
then-current statement of additional information (the "Statement of Additional
Information"). The price which shall be paid to the Trust for the Shares so
purchased shall be the net asset value per Share as determined in accordance
with the provisions of the Declaration of Trust and By-Laws, as each may from
<PAGE>
time to time be amended (collectively, the "Governing Instruments"). The
Distributor shall notify the Custodian of the Trust (currently Investors Bank &
Trust Company), at the end of each business day, or as soon thereafter as the
orders placed with the Distributor have been compiled, of the number of Shares
and the prices thereof which have been ordered through the Distributor since
the end of the previous business day.
The right granted to the Distributor to place orders for Shares with
the Trust shall be exclusive, except that this exclusive right shall not apply
to Shares issued in the event that an investment company (whether a regulated
or private investment company or a personal holding company) is merged with and
into or consolidated with the Trust or in the event that the Trust acquires, by
purchase or otherwise, all (or substantially all) the assets or the outstanding
shares of any such company; nor shall it apply to Shares issued by the Trust as
a dividend or stock split. The exclusive right to place orders for Shares
granted to the Distributor may be waived by the Distributor by notice to the
Trust in writing, either unconditionally or subject to such conditions and
limitations as may be set forth in such notice to the Trust. The Trust hereby
acknowledges that the Distributor may render distribution and other services to
other parties, including other investment companies. In connection with its
duties hereunder, the Distributor shall also arrange for computation of
performance statistics with respect to the Trust and arrange for publication of
current price information in newspapers and other publications.
2. The Shares may be sold by the Distributor on behalf of the Trust, to
any investor or to or through any dealer having a sales agreement with the
Distributor, upon the following terms and conditions:
The public offering price of Shares of the Trust, i.e., the price per
Share at which the Distributor or any dealer purchasing Shares through the
Distributor may sell shares to the public, shall be the net asset value of such
Shares.
The net asset value of Shares of the Trust shall be determined by the
Trust, or by an agent of the Trust, as of the close of the New York Stock
Exchange on each day on which the New York Stock Exchange is open for trading
(and on such other days as the Trustees deem necessary in order to comply with
Rule 22c-1 under the 1940 Act), in accordance with the method established
pursuant to the Governing Instruments. The Trust shall have the right to
suspend the sale of Shares if, because of some extraordinary condition, the New
York Stock Exchange shall be closed, or if conditions existing during the hours
<PAGE>
when the Exchange is open render such action advisable or for any other reason
deemed adequate by the Trust.
3. The Trust agrees that it will, from time to time, take all necessary
action to register such number of Shares under the Securities Act of 1933, as
amended (the " 1933 Act"), as the Distributor may reasonably be expected to
sell.
The Distributor shall be an independent contractor and neither the
Distributor nor any of its directors, officers or employees as such, is or
shall be an employee of the Trust. It is understood that Trustees, officers and
shareholders of the Trust are or may become interested in the Distributor, as
directors, officers, employees, or otherwise and that directors, officers and
employees of the Distributor are or may become similarly interested in the
Trust and that the Distributor may be or become interested in the Trust as a
shareholder or otherwise. The Distributor is responsible for its own conduct
and the employment, control and conduct (but only with respect to the duties
and obligations of the Distributor hereunder) of its agents and employees and
for any injury to any person through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employer taxes thereunder.
4. The Distributor covenants and agrees that, in selling Shares, it
will use its best efforts in all respects duly to conform with the requirements
of all state and federal laws and the Conduct Rules of the National Association
of Securities Dealers, Inc. relating to the sale of Shares, and will indemnify
and hold harmless the Trust and each of its Trustees and officers and each
person, if any, who controls the Trust within the meaning of Section 15 of the
Act (the "Indemnified Parties") against all losses, liabilities, damages,
claims or expenses (including the reasonable cost of investigating or defending
any alleged loss, liability, damages, claim or expense and reasonable counsel
fees incurred in connection therewith) arising from any claim, demand, action
or suit (collectively, "Claims"), arising by reason of any person's acquiring
any of the Shares through the Distributor, which may be based upon the 1933 Act
or any other statute or common law, on account of any wrongful act of the
Distributor or any of its employees (including any failure to conform with any
requirement of any state or federal law or the conduct Rules of the National
Association of Securities Dealers, Inc. relating to the sale of Shares) or on
the ground that the registration statement under the 1933 Act, including all
amendments thereto (the "Registration Statement"), or Prospectus or previous
prospectus or Statement of Additional Information or previous statement of
additional information, with respect to such Shares, includes or included an
untrue statement of a material fact or omits or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
<PAGE>
therein not misleading, if and only if any such act, statement or omission was
made in reliance upon information furnished by the Distributor to the Trust;
provided, however, that in no case (i) is the indemnity of the Distributor in
favor of any Indemnified Party to be deemed to protect any such Indemnified
Party against liability to which such Indemnified Party would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its or his duties or by reason of its or his reckless disregard
of its or his obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
Section 4 with respect to any Claim made against any Indemnified Party unless
such Indemnified Party shall have notified the Distributor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the Claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Distributor
of any such Claim shall not relieve it from any liability which it may have to
any Indemnified Party otherwise than on account of its indemnity agreement
contained in this Section 4. The Distributor shall be entitled to participate,
at its own expense, in the defense, or, if it so elects, to assume the defense,
of any suit brought to enforce any such Claim, and, if the Distributor elects
to assume the defense, such defense shall be conducted by counsel chosen by it
and satisfactory to each Indemnified Party. In the event that the Distributor
elects to assume the defense of any such suit and retain such counsel, each
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it but, in case the Distributor does not elect to assume the
defense of any such suit, it shall reimburse the Indemnified Parties for the
reasonable fees and expenses of any counsel retained by them. Except with the
prior written consent of the Distributor, no Indemnified Party shall confess
any Claim or make any compromise in any case in which the Distributor will be
asked to indemnify such Indemnified Party. The Distributor agrees promptly to
notify the Trust of the commencement of any litigation or proceeding against it
in connection with the issuance and sale of any of the Shares.
Neither the Distributor nor any dealer nor any other person is
authorized to give any information or to make any representation on behalf of
the Trust in connection with the sale of Shares, other than those contained in
the Registration Statement or Prospectus or Statement of Additional
Information.
The Trust covenants and agrees that it will indemnify and hold harmless
the Distributor, its directors and officers and each person, if any, who
controls the Distributor within the meaning of Section 15 of the Act against
all losses, liabilities, damages, claims or expenses (including the reasonable
<PAGE>
cost of investigating or defending any alleged loss, liabilities, damages,
claims or expenses and reasonable counsel fees incurred in connection
therewith) arising from any Claims, arising by reason of any person's acquiring
any of the Shares through the Distributor, which may be based upon the 1933 Act
or any other statute or common law, on account that the Registration Statement
or Prospectus or previous prospectus or Statement of Additional Information or
previous statement of additional information, with respect to such Shares,
includes or included an untrue statement of a material fact or omits or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, except insofar as such act,
statement or omission was made in reliance upon information furnished by the
Distributor to the Trust for use in the Registration Statement or Prospectus;
provided, however, that in no case (i) is the indemnity of the Trust in favor
of the Distributor deemed to protect any person who is also an officer or
Trustee of the Trust or who controls the Trust within the meaning of Section 15
of the 1933 Act unless a court of competent jurisdiction shall determine, or it
shall have been determined by controlling precedent, that such result would not
be against public policy as expressed in the 1933 Act; and further provided,
that in no event shall anything contained herein be so construed as to protect
the Distributor against any liability to the Trust or to its shareholders to
which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of its reckless disregard of its obligations under this Agreement, or
(ii) is the Trust to be liable under its indemnity agreement contained in this
Section 4 with respect to any Claim made against the Distributor unless it
shall have notified the Trust in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
Claim shall have been served upon it (or after the Distributor shall have
received notice of such service on any designated agent), but failure to notify
the Trust of any such Claim shall not relieve it from any liability which it
may have to the Distributor otherwise than on account of its indemnity
agreement contained in this Section 4. The Trust shall be entitled to
participate, at its own expense, in the defense, or, if it so elects, to assume
the defense, of any suit brought to enforce any such Claim, and, if the Trust
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor. In the event that the Trust elects
to assume the defense of any such suit and retain such counsel, the Distributor
shall bear the fees and expenses of any additional counsel retained by it but,
in case the Trust does not elect to assume the defense of any such suit, it
shall reimburse the Distributor for the reasonable fees and expenses of any
<PAGE>
counsel retained by them. Except with the prior written consent of the Trust,
the Distributor shall not confess any Claim or make any compromise in any case
in which the Trust will be asked to indemnify it. The Trust agrees promptly to
notify the Distributor of the commencement of any litigation in connection with
the issuance and sale of any of the Shares.
5. The Trust will pay, or cause to be paid--
(i) all costs and expenses of the Trust, including fees and
disbursements of its counsel, in connection with the preparation and filing of
the Registration Statement, Prospectus and Statement of Additional Information,
and preparing, printing, reproducing and distributing to shareholders and
prospective shareholders, Prospectuses, Statements of Additional Information,
statements and confirmations and periodic reports (including the expense of
setting in type the Registration Statement, Prospectus and Statement of
Additional Information or any periodic report);
(ii) the cost of preparing temporary or permanent certificates
for Shares; and
(iii) the cost and expenses of delivering to the Distributor all
Shares purchased through it as agent hereunder.
The Distributor shall receive no compensation for its services to the
Trust hereunder.
6. If, at any time during the term of this Agreement, the Trust shall
deem it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with any recommendation
or requirement of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under Massachusetts or federal tax laws,
it shall notify the Distributor of the form of amendment which it deems
necessary or advisable and the reasons therefor. If the Distributor declines to
assent to such amendment (after a reasonable time), the Trust may terminate
this Agreement forthwith by written notice to the Distributor without payment
of any penalty. If, at any time during the term of this Agreement, the
Distributor requests the Trust to make any change in its Governing Instruments
or in its methods of doing business which are necessary in order to comply with
any requirement of federal law or regulations of the Securities and Exchange
Commission or of a national securities association of which the Distributor is
or may become a member, relating to the sale of Shares, and the Trust fails
(after a reasonable time) to make any such change as requested, the Distributor
may terminate this Agreement forthwith by written notice to the Trust without
payment of any penalty.
<PAGE>
7. The Distributor agrees that it will not take any long or short
position in the Shares of the Trust and that, so far as it can control the
situation, it will prevent any of its Directors or officers from taking any
long or short position in the Shares of the Trust, except as permitted by the
Governing Instruments.
8. This Agreement shall become effective upon its execution and shall
continue in force indefinitely, provided that such continuance is "specifically
approved at least annually" by the vote of a majority of the Trustees of the
Trust who are not "interested persons" of the Trust or of the Distributor at a
meeting specifically called for the purpose of voting on such approval, and by
the Board of Trustees of the Trust. The aforesaid requirement that continuance
of this Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act. If such annual approval is
not obtained, this Agreement shall terminate on the date which is 15 months
after the date of the last approval.
This Agreement may be terminated at any time by (i) the Trust, (a) by
the vote of a majority of the Trustees of the Trust who are not "interested
persons" of the Trust or the Distributor, (b) by the vote of the Board of
Trustees of the Trust, or (c) by the "vote of a majority of the outstanding
voting securities" of the Trust, or (ii) by the Distributor, in any case
without payment of any penalty on not more than 60 days nor less than 30 days
written notice to the other party.
This Agreement may not be altered or amended, except by an instrument
in writing, and executed by both parties.
This Agreement shall automatically terminate in the event of its
assignment.
9. The terms "vote of a majority of the outstanding voting securities",
"interested person", "assignment" and "specifically approved at least annually"
shall have the respective meanings specified in, and shall be construed in a
manner consistent with, the 1940 Act, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first above written. The undersigned President of the
Trust has executed this Agreement under the Declaration of Trust, dated April
<PAGE>
1, 1996, as amended, and the obligations of this Agreement are not binding upon
any of the Trustees or shareholders of the Trust individually, but bind only
the Trust estate.
DOMINI INSTITUTIONAL TRUST
By: /s/ David Wieder
------------------------------
Title: Vice President
DSIL INVESTMENT SERVICES LLC
By: /s/ Carole Laible
------------------------------
Title: Treasurer
Exhibit h
SPONSORSHIP AGREEMENT
SPONSORSHIP AGREEMENT, dated as of October 22, 1997, by and between Domini
Institutional Trust, a Massachusetts business trust (the "Trust"), and Domini
Social Investments LLC, a Massachusetts limited liability company ("DSI" or the
"Sponsor").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940, as amended, and
consists of one or more series; and
WHEREAS, the Trust desires to enter into this Agreement with respect to
its current and future series; and
WHEREAS, the Trust wishes to engage DSI to provide certain oversight,
administrative and management services, and DSI is willing to provide such
oversight, administrative and management services to the Trust on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Sponsor. Subject to the direction and control of the
Board of Trustees of the Trust, the Sponsor shall perform such oversight,
administrative and management services as may from time to time be reasonably
requested by the Trust, which shall include without limitation: (a) maintaining
office facilities (which may be in the office of DSI or an affiliate) and
furnishing clerical services necessary for maintaining the organization of the
Trust and for performing the oversight, administrative and management functions
herein set forth; (b) arranging, if desired by the Trust, for directors,
officers or employees of the Sponsor to serve as Trustees, officers or agents
of the Trust if duly elected or appointed to such positions and subject to
their individual consent and to any limitations imposed by law; (c) supervising
the overall administration of the Trust, including the updating of corporate
organizational documents, and the negotiation of contracts and fees with and
the monitoring and coordinating of performance and billings of the Trust's
transfer agent, shareholder servicing agents (if any), custodian,
administrator, subadministrator (if any) and other independent contractors or
agents; (d) overseeing (with advice of the Trust's counsel) the preparation of
and, if applicable, filing all documents required for compliance by the Trust
<PAGE>
with applicable laws and regulations (including state "blue sky" laws and
regulations), including registration statements on Form N1A, prospectuses and
statements of additional information, or similar forms, as applicable,
semi-annual and annual reports to shareholders and proxy statements, and
reviewing tax returns; (e) preparation of agendas and supporting documents for
and minutes of meetings of Trustees, committees of Trustees and preparation of
notices, proxy statements and minutes of meetings of shareholders; (f)
arranging for maintenance of books and records of the Trust; (g) maintaining
telephone coverage to respond to shareholder inquiries regarding matters to
which this Agreement pertains to which the transfer agent is unable to respond;
(h) providing reports and assistance regarding each series' compliance with
securities and tax laws and each series' investment objectives; (i) arranging
for dissemination of yield and other performance information to newspapers and
tracking services; (j) arranging for and preparing annual renewals for fidelity
bond and errors and omissions insurance coverage; (k) developing a budget for
the Trust, establishing the rate of expense accruals and arranging for the
payment of all fixed and management expenses; and (l) answering questions from
the general public, the media and investors in the Trust regarding (i) the
securities holdings of the Trust; (ii) any limits in which the Trust invests;
(iii) the social investment philosophy of the Trust; and (iv) the proxy voting
philosophy and shareholder activism philosophy of the Trust. Notwithstanding
the foregoing, the Sponsor shall not be deemed to have assumed, pursuant to
this Agreement, any duties with respect to, and shall not be responsible for,
the management of the Trust's assets or the rendering of investment advice and
supervision with respect thereto or the distribution of shares of any series,
nor shall the Sponsor be deemed to have assumed or have any responsibility with
respect to functions specifically assumed by any transfer agent, custodian,
fund accounting pricing agent or shareholder servicing agent of the Trust.
2. Allocation of Charges and Expenses. DSI shall pay the entire salaries
and wages of all of the Trust's Trustees, officers and agents who devote part
or all of their time to the affairs of DSI or its affiliates, and the wages and
salaries of such persons shall not be deemed to be expenses incurred by the
Trust for purposes of this Section 2. The Trust shall pay all of its operating
expenses, including but not limited to fees due the Sponsor under this
Agreement, compensation of Trustees not affiliated with the Sponsor,
governmental fees, including but not limited to Securities and Exchange
Commission fees and state "blue sky" fees; interest charges; taxes and related
charges; membership dues of the Trust in the Investment Company Institute and
other professional or industry associations; fees and expenses of the Trust's
independent auditors and accountants, of legal counsel and any transfer agent,
distributor, shareholder servicing agent, recordkeeper, registrar or dividend
disbursing agent of the Trust; expenses of distributing, issuing and redeeming
shares and servicing shareholder accounts; expenses of preparing, printing and
mailing prospectuses and statements of additional information, reports,
notices, proxy statements and reports to shareholders and governmental officers
and commissions; expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; fees and
expenses of the Trust's custodian for all services to the Trust, including
safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of shares of the Trust;
expenses of shareholder meetings; and expenses relating to the issuance,
registration and qualification of shares of any series of the Trust.
<PAGE>
3. Compensation of the Sponsor. For the services to be rendered and
facilities to be provided by the Sponsor hereunder, the Trust shall pay DSI a
fee accrued daily and payable monthly at an annual rate equal to 0.25% of the
Trust's average daily net assets for the Trust's then current fiscal year;
provided, however, for a period of one year from the date of this Agreement,
the fee payable to DSI shall be the lesser of (i) 0.25% of the Trust's average
daily net assets for the Trust's then-current fiscal year and (ii) the
percentage obtained by deducting from 0.30%, the Trust's annual operating
expenses, including the Trust's allocable share of the operating expenses of
the Domini Social Index Portfolio but excluding amounts payable under this
Agreement and brokerage fees and commissions, interest, taxes and any other
extraordinary expenses of the Trust, expressed as a percentage of the Trust's
average daily net assets. If DSI serves as the Sponsor for less than the whole
of any period specified in this Section 3, the compensation to DSI, as Sponsor,
shall be prorated. For purposes of computing the fees payable to the Sponsor
hereunder, the value of the Trust's net assets shall be computed in the manner
specified in the Trust's then-current prospectus and statement of additional
information.
4. Limitation of Liability of the Sponsor. The Sponsor shall not be liable
for any error of judgment or mistake of law or for any act or omission in the
oversight, administration or management of the Trust or the performance of its
duties hereunder, except for willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of the reckless disregard of its
obligations and duties hereunder. As used in this Section 4, the term "Sponsor"
shall include DSI and/or any of its affiliates and the directors, officers and
employees of DSI and/or any of its affiliates.
5. Activities of the Sponsor. The services of the Sponsor to the Trust are
not to be deemed to be exclusive, DSI being free to render oversight,
administrative and/or other services to other parties. It is understood that
Trustees, officers and shareholders of the Trust are or may become interested
in the Sponsor and/or any of its affiliates as directors, officers, employees
or otherwise and that directors, officers and employees of the Sponsor and/or
any of its affiliates are or may become similarly interested in the Trust and
that the Sponsor and/or any of its affiliates may be or become interested in
the Trust as a shareholder or otherwise.
6. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written and shall
govern the relations between the parties hereto thereafter, unless terminated
as set forth in this Section 6.
This Agreement may not be altered or amended, except by an instrument in
writing and executed by both parties. This Agreement may be terminated at any
time, without the payment of any penalty, with respect to any series or the
Trust, by the Board of Trustees of the Trust, or by the Sponsor, in each case
on not less than 60 days' written notice to the other party.
<PAGE>
7. Subcontracting by DSI. DSI may subcontract for the performance of some
or all of DSI's obligations hereunder with any one or more persons; provided,
however, that DSI shall not enter into any such subcontract unless the Trustees
of the Trust shall have found the subcontracting party to be qualified to
perform the obligations sought to be subcontracted; and provided, further,
that, unless the Trust otherwise expressly agrees in writing, DSI shall be as
fully responsible to the Trust for the acts and omissions of any subcontractor
as it would be for its own acts or omissions.
8. Severability. If any provision of this Agreement shall become or shall
be found to be invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
9. Notice. Any notices under this Agreement shall be in writing addressed
and delivered personally, by telecopy or mailed postage-paid to the other party
at such address as such other party may designate in accordance with this
Section 9 for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust shall be 11 West 25th Street,
7th Floor, New York, New York 10010, and the address of DSI shall be 11 West
25th Street, 7th Floor, New York, New York 10010.
10. Miscellaneous. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced and interpreted in
accordance with and governed by the laws of the Commonwealth of Massachusetts
without reference to principles of conflicts of law. The captions in this
Agreement are included for convenience only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but such counterparts shall, together, constitute
only one instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written. The
undersigned Trustee of the Trust has executed this Agreement not individually
but as a Trustee under the Trust's Declaration of Trust, dated April 1, 1996,
as amended, and the obligations of this Agreement are not binding upon any of
the Trustees or shareholders of the Trust individually but bind only the Trust
estate.
DOMINI INSTITUTIONAL TRUST
By Amy L. Domini
--------------------------------
Amy L. Domini
Trustee
DOMINI SOCIAL INVESTMENTS LLC
By Amy L. Domini
--------------------------------
Amy L. Domini
Manager
Exhibit (i)
DRAFT
__________ __, 1999
Domini Institutional Trust
11 West 25th Street
New York, New York 10010
Ladies and Gentlemen:
We have acted as counsel to Domini Institutional Trust, a Massachusetts
business trust (the "Trust"), in connection with Post-Effective Amendments
Numbered 4 and ____ to the Trust's Registration Statement filed with the
Securities and Exchange Commission on September 30, 1999 and __________ __,
1999 (collectively, the "Amendments"), with respect to the Trust's series
Domini Institutional Social Equity Fund (the "Fund").
In connection with this opinion, we have examined the following described
documents:
(a) the Amendments;
(b) a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the existence of the Trust;
(c) copies, certified by the Secretary of State of the Commonwealth of
Massachusetts, of the Trust's Declaration of Trust and of all amendments
thereto on file in the office of the Secretary of State; and
(d) a certificate executed by the President of the Trust, certifying as
to, and attaching copies of, the Trust's By-Laws and certain votes of the
Trustees of the Trust authorizing the issuance of shares of the Fund.
In such examination, we have assumed the genuineness of all signatures,
the conformity to the originals of all of the documents reviewed by us as
copies, the authenticity and completeness of all documents reviewed by us in
original or copy form and the legal competence of each individual executing any
document.
<PAGE>
This opinion is based entirely on our review of the documents listed
above. We have made no other review or investigation of any kind whatsoever,
and we have assumed, without independent inquiry, the accuracy of the
information set forth in such documents.
This opinion is limited solely to the laws of the Commonwealth of
Massachusetts (other than the Massachusetts Uniform Securities Act, as to which
we express no opinion) as applied by courts in such Commonwealth to the extent
such laws may apply to or govern the matters covered by this opinion.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Based upon and subject to the foregoing, please be advised that it is our
opinion that the shares of the Fund, when issued and sold in accordance with
the Amendments and the Trust's Declaration of Trust and By-laws, will be
legally issued, fully paid and non-assessable, except that, as set forth in the
Amendments, shareholders of the Fund may under certain circumstances be held
personally liable for the Trust's obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Amendments.
Very truly yours,
BINGHAM DANA LLP
Exhibit q
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Carole M. Laible, Sigward
M. Moser, and David P. Wieder, and each of them, with full powers of
substitution as her true and lawful attorneys and agents to execute in her name
and on her behalf in any and all capacities the Registration Statements on Form
N1A, and any and all amendments thereto, filed by Domini Social Equity Fund,
and Domini Institutional Trust, (each, a "Trust"), or the Registration
Statement(s), and any and all amendments thereto, filed by any other investor
(collectively with each Trust, the "Investors") in Domini Social Index
Portfolio (the "Portfolio") (insofar as each of the Investors invests all its
assets in the Portfolio), 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 any of the Investors or the
Portfolio, as applicable, 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 her 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 executed this instrument as of the
20th day of September, 1999.
Amy L. Domini
---------------------------
Amy L. Domini
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole M.
Laible, Sigward M. Moser, and David P. Wieder, and each of them, with full
powers of substitution as her true and lawful attorneys and agents to execute
in her name and on her behalf in any and all capacities the Registration
Statements on Form N1A, and any and all amendments thereto, filed by Domini
Social Equity Fund, and the Domini Institutional Trust, (each, a "Trust"), or
the Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), 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 any of the Investors or
the Portfolio, as applicable, 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 her 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 executed this instrument as of the
20th day of September, 1999.
Julia Elizabeth Harris
---------------------------
Julia Elizabeth Harris
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole M.
Laible, Sigward M. Moser, and David P. Wieder, and each of them, with full
powers of substitution as her true and lawful attorneys and agents to execute
in her name and on her behalf in any and all capacities the Registration
Statements on Form N1A, and any and all amendments thereto, filed by Domini
Social Equity Fund, and the Domini Institutional Trust, (each, a "Trust"), or
the Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), 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 any of the Investors or
the Portfolio, as applicable, 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 her 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 executed this instrument as of the
20th day of September, 1999.
Kirsten S. Moy
---------------------------
Kirsten S. Moy
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole M.
Laible, Sigward M. Moser, and David P. Wieder, 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 N1A, and any and all amendments thereto, filed by Domini
Social Equity Fund, and Domini Institutional Trust, (each, a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), 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 any of the Investors or
the Portfolio, as applicable, 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 executed this instrument as of the
20th day of September, 1999.
Gregory A. Ratliff
---------------------------
Gregory A. Ratliff
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole M.
Laible, Sigward M. Moser, and David P. Wieder, 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 N1A, and any and all amendments thereto, filed by Domini
Social Equity Fund, and Domini Institutional Trust, (each, a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), 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 any of the Investors or
the Portfolio, as applicable, 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 executed this instrument as of the
20th day of September, 1999.
Timothy Smith
---------------------------
Timothy Smith
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole M.
Laible, Sigward M. Moser, and David P. Wieder, 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 N1A, and any and all amendments thereto, filed by Domini
Social Equity Fund, and Domini Institutional Trust, (each, a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), 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 any of the Investors or
the Portfolio, as applicable, 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 executed this instrument as of the
20th day of September, 1999.
Frederick C. Williamson, Sr.
---------------------------
Frederick C. Williamson, Sr.
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole M.
Laible, Sigward M. Moser, and David P. Wieder, 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 N1A, and any and all amendments thereto, filed by Domini
Social Equity Fund, and Domini Institutional Trust, (each, a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), 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 any of the Investors or
the Portfolio, as applicable, 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 executed this instrument as of the
20th day of September, 1999.
William C. Osborn
---------------------------
William C. Osborn
