Supplement dated October 22, 1997 to Prospectus and
Statement of Additional Information dated November 29, 1996
(supersedes Prospectus Supplement dated August 22, 1997)
DOMINI SOCIAL EQUITY FUND
At a special meeting of shareholders of Domini Social Equity Fund (the
"Fund") held on October 21, 1997, shareholders of the Fund approved certain
changes relating to a proposed restructuring in the management of the Fund and
Domini Social Index Portfolio (the "Portfolio"), in which the Fund invests
substantially all its investable assets. The restructuring includes the
following changes.
The Portfolio has entered into a new Management Agreement with Domini
Social Investments LLC ("DSI"), pursuant to which DSI provides investment
supervisory and administrative services. DSI is a newly created management
company formed by the principals of Kinder, Lydenberg, Domini & Co., Inc.
("KLD") (the Portfolio's former investment adviser) and other investment company
and marketing professionals. DSI has entered into a Submanagement Agreement with
Mellon Equity Associates ("Mellon Equity") pursuant to which Mellon Equity will
continue to manage the investments of the Portfolio on a day-to-day basis.
As part of the management restructuring, the Board of Trustees of the
Fund approved a Sponsorship Agreement with DSI pursuant to which DSI provides
the Fund with centralized administration and management functions.
In connection with the restructuring, the following agreements
terminated have: Investment Advisory Agreement between the Portfolio and KLD;
Investment Management Agreement between the Portfolio and Mellon Equity;
Administrative Services Agreement between the Fund and Signature Broker-Dealer
Services, Inc. ("Signature"); Sub-Administrative Services Agreement between
Signature and KLD; Sponsorship Agreement between the Portfolio and KLD;
Administrative Services Agreement between KLD and Signature; and Letter
Agreements regarding expense payment between KLD and Signature (with respect to
the Portfolio) and between the Fund and Signature.
Signature currently serves as distributor of the Fund and placement
agent of the Portfolio and intends to assist in the remainder of the transition
to the new management structure.
"DominiSM," "Domini 400 Social IndexSM" and "Investing for GoodSM" are
service marks of KLD which are licensed to DSI, and the Portfolio and the Fund
may be required to discontinue use of these service marks if DSI ceases to be
the manager of the Portfolio.
The expense summary on pages 2 and 3 of the Prospectus is restated in
its entirety as follows:
EXPENSE SUMMARY
The following table provides (i) a summary of expenses relating to
purchases and sales of shares of the Fund, and the aggregate annual operating
expenses for the Fund and the Portfolio, as a percentage of average net assets
of the Fund.
SHAREHOLDER TRANSACTION EXPENSES.......................0.000%
ANNUAL OPERATING EXPENSES:
Advisory and Management Fees....................0.154%(1)
12b-1 Fees......................................0.120%(2)
Other Expenses
--Administrative Services and Sponsorship Fees..0.423%(3)
--Other Expenses................................0.283%(4)
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Total Operating Expenses........................0.980%(4)(5)
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(1) Under the Management Agreement between the Portfolio and DSI, DSI's fee for
advisory and administrative services to the Portfolio is 0.20% of the
average daily net assets of the Portfolio but will be reduced to the extent
necessary to keep the aggregate annual operating expenses of the Portfolio
(excluding brokerage fees and commissions, interest, taxes and other
extraordinary expenses) at no greater than 0.20% of the average daily net
assets of the Portfolio, through October 22, 1998. If this fee reduction
were not in effect, advisory and management fees for the Portfolio would be
0.20% of the average daily net assets of the Portfolio.
(2) The percentage represents actual expenditures, expressed as a percentage of
average daily net assets, under the Fund's Distribution Plan during the
fiscal year ended July 31, 1997. The Distribution Plan permits
reimbursement for expenses incurred by the Distributor of up to 0.25% of
the Fund's average daily net assets. See "Other Information Concerning
Shares of the Fund--Distribution Plan and Agreement."
(3) Under the Sponsorship Agreement between DSI and the Fund, DSI's fee for
administrative and sponsorship services is 0.50% of the average daily net
assets of the Fund but will be reduced to the extent necessary to keep the
aggregate annual operating expenses of the 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 0.98%
of the average daily net assets of the Fund through October 22, 1998. If
this fee reduction were not in effect, administrative services and
sponsorship fees for the Fund would be 0.50% of the average daily net
assets of the Fund.
(4) Other Expenses and Total Operating Expenses do not reflect either the
payment to Signature by the Fund of $550,000 in connection with termination
of the expense payment arrangements with Signature or other expenses
incurred by the Fund in connection with the termination of such
arrangements. Had such nonrecurring expenses been included, Other Expenses
and Total Operating Expenses would be 0.793% and 1.49%, respectively.
(5) Without the automatic fee reductions, which expire October 22, 1998, it is
estimated that the aggregate annual operating expenses of the Fund
(including the Fund's share of the Portfolio's expenses) would be 1.103% of
the average daily net assets of the Fund assuming the same level of assets
and expenses of the Fund as existed during the fiscal year ended July 31,
1997.
The expense information in the expense table provided above has been
restated to reflect fees currently in effect as a result of a management
restructuring effective on October 22, 1997. The purpose of the expense table is
to help investors understand the various costs and expenses that a shareholder
will bear directly or indirectly. Prior to the management restructuring, the
ordinary operating expenses of the Fund (including the Fund's share of the
Portfolio's expenses) were 0.98% of the average daily net assets of the Fund,
pursuant to expense payment arrangements which have now terminated. Had these
expense payment arrangements not been in place, historical operating expenses
expressed as a ratio of the Fund's average daily net assets would have been
0.84% for the fiscal year ended July 31, 1997.
DSI332B
