As filed with the Securities and Exchange Commission on September 29, 1999.
Registration Nos. 33-29180
811-5823
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 13
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 15
DOMINI SOCIAL EQUITY FUND
(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 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?
The Fund's Distribution Plan
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
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
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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 seven
calendar years.
[in bar chart]
1992 12.10%
1993 6.54%
1994 -0.36%
1995 35.17%
1996 21.84%
1997 36.02%
1998 32.99%
Best quarter covered by the bar chart above: 24.62% (quarter ended 12/31/98)
Worst quarter covered by the bar chart above: -9.83% (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 5 Years Inception
(6/3/91)
- ------------------------------- -------------- ------------- ------------
Domini Social Equity Fund 32.99% 24.31% 19.42%
- ------------------------------- -------------- ------------- ------------
S&P 500 28.58% 24.04% 19.21%
- ------------------------------- -------------- ------------- ------------
<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: 0.25%
Other Expenses
Administrative Services and Sponsorship Fee: ____%
Other Expenses: ____%
Total Annual Fund Operating Expenses: ____%
Fee Waiver**: ____%
NET EXPENSES: 0.98%
++ You may redeem by writing or calling the Fund. If you wish to receive your
redemption proceeds by wire, there is a $10 wire service fee. For
additional information, please refer to the Shareholder Manual, page XX.
* 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
$10 $31 $54 $120
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>
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QUICK GUIDE TO IMPORTANT INFORMATION
MINIMUM INITIAL INVESTMENT: $1,000 ($250 for DIVIDENDS: Distributed Semi-annually, in June and
IRAs) ($500 with Automatic Investment Plan) December
CAPITAL GAINS: Distributed Annually, in December
INVESTMENT ADVISER: Domini Social Investments NEWSPAPER LISTING: Dom Social
LLC TICKER SYMBOL: DSEFX
INCEPTION DATE: June 3, 1991 CUSIP NUMBER: 257132100
NET ASSETS AS OF SEPTEMBER 30, 1999: $________ WEBSITE: www.domini.com
AVAILABLE FOR IRAS SHAREHOLDER SERVICES: 1-800-762-6814
- -----------------------------------------------------------------------------------------------------
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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 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 EMPLOY
<PAGE>
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 Social Equity Fund was launched in 1991 to give 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 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?
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.
The Fund can be used in both regular and tax-deferred accounts, such as
IRAs.
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
<PAGE>
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.
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
<PAGE>
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
0.20% of the average daily net assets of the Fund, after waivers.
THE FUND'S DISTRIBUTION PLAN
DSIL Investment Services LLC, a wholly owned subsidiary of DSIL, is the
distributor of the Fund's shares. The Fund has adopted a Rule 12b-1 plan that
allows the Fund to pay its distributor up to 0.25% of the Fund's average daily
net assets, on an annual basis, for the sale and distribution of the Fund's
shares and for services provided to shareholders. Because this fee is paid out
of the Fund's assets on an ongoing basis, over time the fee will increase the
cost of your investment and may cost you more than paying other types of sales
charges. For more information about the Fund's distribution plan, see the
expense table, on page XX of this prospectus, and the Statement of Additional
Information.
<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
Types of Accounts
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 DSEFX
NEWSPAPER LISTING Dom Social
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, and are
available online at
www.domini.com.
<PAGE>
HOW TO OPEN AN ACCOUNT
1. Read this prospectus (and please keep it for future reference).
2. Review the available accounts listed below under "Types of Accounts"
and decide which account-type is appropriate for you.
3. Decide how much you want to invest.
_ The minimum initial investments are:
_ $1,000 for regular accounts ($500 if using our Automatic
Investment Plan)
_ $250 for Retirement Accounts (Automatic Investment Plan also
available)
_ The minimums to buy additional shares are:
_ $50 for regular and Retirement accounts
_ $25 for Automatic Investment Plan Accounts
4. 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.
TYPES OF ACCOUNTS
You may invest in the Fund through the following types of accounts:
INDIVIDUAL AND JOINT ACCOUNTS (NON-RETIREMENT): Invest as an individual or with
one or more people. If you are opening a joint account, joint tenancy with
rights of survivorship will be assumed unless other ownership is noted on
your account application. You may also open an account to invest assets
held in an existing personal trust.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): You may open an account to fund a
traditional, Roth IRA or Education IRA.
o $10 Annual IRA account maintenance fee
o $10 IRA account termination fee
Call 1-800-762-6814 for more information and an IRA account application.
UNIFORM GIFTS/TRANSFERS TO MINORS ACT (UGMA/UTMA) ACCOUNTS: You may open a
UGMA/UTMA account for any child.
EMPLOYER-SPONSORED RETIREMENT PLANS: If offered by your employer, you may be
able to open an account as part of an employer-sponsored retirement plan,
such as a 401(k), 403(b) plan, SEP-IRA or SIMPLE IRA. You may obtain 403(b)
forms and information by calling 1-800-762-6814. You may also contact your
employer's plan administrator for further information.
<PAGE>
AUTOMATIC INVESTMENT PLAN ACCOUNTS: Automatically invest specified amounts in
the Fund at monthly, quarterly, semi-annual or annual intervals. Automatic
investments will continue to be made until you notify the Fund and your
bank to discontinue further investments. This service may be established
for your account at any time. See below for more details, or call
1-800-762-6814.
FOR AN ORGANIZATION: You may open an account for a trust, corporation,
partnership, endowment, foundation or other entity.
HOW TO BUY SHARES
- -------------------------------------------------------------------------------
By Check
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
By Bank Wire
- -------------------------------------------------------------------------------
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 or visit www.domini.com to obtain the necessary
forms.
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 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 Social Equity Fund is not affiliated with any bank and
is not insured by the FDIC.
- -------------------------------------------------------------------------------
Automatic Investment Plan
- -------------------------------------------------------------------------------
Our Automatic Investment Plan allows you to have specified amounts
automatically deducted from your bank account or Domini Money Market
Account and invested in the Fund in monthly, quarterly, semi-annual or
annual intervals.
Please follow the instructions in the Account Application to establish
this service when you open your account. This service can be established
for your account at any time. Call the Fund's transfer agent at
1-800-582-6757 for more information.
Please allow 4-6 weeks for the service to begin. Also, due to the varying
procedures to prepare, process and forward the bank withdrawal information
to the Fund, there may be periodic delays between the time of the bank
withdrawal and the time your money reaches the Fund.
THE ADVANTAGE OF DOLLAR-COST AVERAGING [IN MARGIN]
One thing is certain: the stock market will
fluctuate. Even experienced investors often find
it impossible to accurately time the market, and
to "sell high and buy low." Dollar-cost
averaging is an investment strategy designed to
avoid the pitfalls of market timing by investing
equal amounts of money at regular intervals
(monthly, quarterly, and so on) over a long
period of time.
<PAGE>
The advantage of dollar cost averaging is that an
investor buys more shares at lower prices, and
fewer shares at higher prices. As a result,
an investor ends up paying an average price per
share over a period of time. This average price
should generally be lower than the price the
investor would have paid had they invested all
of their money at once.
The key to dollar-cost averaging is to stick with
it for the long term. Of course, no strategy can
guarantee a profit, or protect your investment
from losses. Strictly adhering to a long-term
strategy that seeks to keep your average cost per
share down, however, is a good way to ensure
that you don't make the mistake of investing all
of your money when the market is high.
To facilitate dollar-cost-averaging you may
purchase Fund shares at regular intervals
through the Fund's Automatic Investment Plan.
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
Domini Social Investments of shares to be sold, the fund name
PO Box 60494 and the account number; and
King of Prussia, PA 19406-0494 o be signed in exactly the same way
the account is registered by all
For overnight deliveries, please use registered owners or authorized signers.
the following address:
Your redemption request may require a
Domini Social Investments signature guarantee. Please refer to
c/o First Data Investor Services Group page XX 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
- ---------------------------------------------------------------------------------------------------------------
To establish wire redemption privileges on o $10 wire transfer fee (deducted directly
a new account, fill out the appropriate area from sale proceeds)
on the application, and attach a voided o $1,000 minimum wire amount
check. The wire transfer fee and minimum wire
amount may be waived for certain
If you have not already established wire institutions at the manager's discretion.
redemption privileges on your account you
must submit wire redemption requests in
writing along with a Signature Guarantee
(see page XX).
- ---------------------------------------------------------------------------------------------------------------
Systematic Withdrawal Plan
- ---------------------------------------------------------------------------------------------------------------
Call our Shareholder Information Line at If you own shares of the Fund with an
1-800-582-6757 for information. aggregate value of $10,000 or more you may
establish a Systematic Withdrawal Plan
under which shares will be sold, at net asset
value, in the amount and for the periods
specified (minimum $100.00 per payment).
There is no additional charge to participate in
the Systematic Withdrawal Plan.
</TABLE>
[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:
<PAGE>
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.
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.
<PAGE>
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
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: Dom Social.
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.
<PAGE>
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.
FUND STATEMENTS AND REPORTS
HOUSEHOLDING:
To keep the Fund's costs as low as possible, and to conserve paper
usage, where practical, we attempt to eliminate duplicate mailings to the same
address. When we find that two or more Fund shareholders have the same last
name and address, rather than send a separate report to each shareholder, we
will send just one report to that address. If your household is receiving
separate mailings that you feel are unnecessary, or if you want us to send
separate statements, notify our Shareholder Services department at
1-800-582-6757.
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.
You may also view the Fund's most recent reports online at www.domini.com.
TAX STATEMENTS:
Each year we will send you a statement reporting the previous year's
dividend and capital gains distributions, proceeds from the sale of shares, and
distributions from IRAs or other retirement accounts as required by the
Internal Revenue Service. These are generally mailed in January.
<PAGE>
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
semi-annually (usually in June 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
Semi-annually
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.
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 in a non-retirement account, 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 Social
Security or 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.
<PAGE>
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;
8. To act on instructions believed to be genuine; or
9. To notify shareholder and redeem accounts (other than retirement and
Automatic Investment Plan Accounts) with a value of less than $500.
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.
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 past 5 years. 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, or on our website, www.domini.com.
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 the Fund or 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. 811-5823
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
________ __, 1999
DOMINI 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............................................. 9
4. Determination of Net Asset Value; Valuation of Portfolio Securities;
Additional Purchase Information..................................... 11
5. Management of the Fund and the Portfolio............................ 12
6. Independent Auditors................................................ 20
7. Taxation............................................................ 20
8. Portfolio Transactions and Brokerage Commissions.................... 22
9. Description of Shares, Voting Rights and Liabilities................ 24
10. Financial Statements................................................ 25
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
Domini Social Equity Fund (the "Fund") is a no-load, diversified open-end
management investment company which was organized as a business trust under the
laws of the Commonwealth of Massachusetts on June 7, 1989 and commenced
operations on June 3, 1991. The Fund offers to buy back (redeem) its shares
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"). 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 Fund and the Portfolio, the
Fund 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.
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
<PAGE>
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 Fund 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 Fund 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 Fund'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 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. Upon any such withdrawal, the Board of Trustees of the Fund
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 investment policies described
above with respect to the Portfolio. In the event the Trustees of the Fund 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.
<PAGE>
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
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
<PAGE>
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.
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.
<PAGE>
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
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
<PAGE>
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,
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 Fund is requested to vote on a
change in the investment restrictions of the Portfolio, the Fund will hold a
meeting of its shareholders and will cast its vote proportionately as
instructed by its shareholders. However, subject to applicable statutory and
regulatory requirements, the Fund would not request a vote of its shareholders
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 Fund.
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,
<PAGE>
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
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;
<PAGE>
(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 Fund will invest all
of its investable assets (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.
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. 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
<PAGE>
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 Fund will calculate its 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
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 Fund 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.
Period Average Annual Total Return
One year ended July 31, 1999 22.26%
Five years ended July 31, 1999 26.72%
June 3, 1991 (Commencement of
Investment in the Portfolio) to
July 31, 1999 19.07%
The annualized yield of shares of the Fund for the 30-day period ended July 31,
1999 was _____%.
<PAGE>
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 Fund 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,
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; ADDITIONAL PURCHASE INFORMATION
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.
<PAGE>
A determination of value used in calculating net asset value must be a
fair value determination made in good faith utilizing procedures approved by
the Portfolio's Board of Trustees. While no single standard for determining
fair value exists, as a general rule, the current fair value of a security
would appear to be the amount which the Portfolio could expect to receive upon
its current sale. Some, but not necessarily all, of the general factors which
may be considered in determining fair value include: (i) the fundamental
analytical data relating to the investment; (ii) the nature and duration of
restrictions on disposition of the securities; and (iii) an evaluation of the
forces which influence the market in which these securities are purchased and
sold. Without limiting or including all of the specific factors which may be
considered in determining fair value, some of the specific factors include:
type of security, financial statements of the issuer, cost at date of purchase,
size of holding, discount from market value, value of unrestricted securities
of the same class at the time of purchase, special reports prepared by
analysts, information as to any transactions or offers with respect to the
security, existence of merger proposals or tender offers affecting the
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 or through Service
Organizations (see "Transfer Agent, Custodian, and Service Organizations"
below) by clients of those Service Organizations. If an investor purchases
shares through a Service Organization, the Service Organization must promptly
transmit such order to the Fund so that the order receives the net asset value
next determined following receipt of the order. Investors wishing to purchase
shares through a Service Organization should contact that organization directly
for appropriate instructions. Investors making purchases through a Service
Organization should be aware that it is the responsibility of the Service
Organization to transmit orders for purchases of shares by its customers to the
Transfer Agent and to deliver required funds on a timely basis.
5. MANAGEMENT OF THE FUND AND THE PORTFOLIO
The management and affairs of the Fund are supervised by its 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 Fund 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 Fund. Unless otherwise indicated below, the address of each officer is 11
West 25th Street, New York, New York 10010.
TRUSTEES OF THE FUND AND THE PORTFOLIO
AMY L. DOMINI* -- 230 Congress Street, Boston, Massachusetts 02110; Chair,
President and Trustee of the Fund, Portfolio and Domini Institutional Trust;
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.
<PAGE>
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 Institutional Trust. 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
Institutional Trust. 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 Institutional Trust; 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.
KAREN PAUL -- 4050 Park Avenue, Miami, Florida 33133; Associate Dean and
Professor of Business Environment, Florida International University (since
1991); Trustee, Domini Institutional Trust; 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 Institutional
Trust. 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 Institutional Trust. 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
Institutional Trust. 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 Fund, the Portfolio and the Domini
Institutional Trust of $6,000, and in addition, receives $1,000 for attendance
at each joint meeting of the Boards of the Fund, the Portfolio and the Domini
Institutional Trust (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 Fund or Portfolio.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Pension or Total
Retirement Compensation
Benefits From The Fund,
Aggregate Accrued as Estimated Portfolio and
Compensation Part of Annual Benefits Domini
From The Fund Upon Institutional
Fund Expenses Retirement Trust
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
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 Fund 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 Fund 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.
<PAGE>
DAVID P. WIEDER* -- Vice President of the Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund and the Portfolio, up to and including creating a separate
board of Trustees. Any conflict of interest between the Fund and the Portfolio
will be resolved by the Trustees in accordance with their fiduciary obligations
and in accordance with the 1940 Act. The Fund'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 Fund, unless, as
to liability to the Fund or its 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 Fund. 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
<PAGE>
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.
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
Fund follows: Amy L. Domini, Chair of the Board and President of the Fund, 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 Fund, is a co-owner of DSIL. Mr. Kinder is also President and a co-owner of
KLD. Sigward M. Moser, Vice President of the Fund, is a co-owner of DSIL. David
P. Wieder, Vice President of the Fund is a co-owner of DSIL. Mr. Wieder is also
President and an owner of FSSI, a registered transfer agent which served as the
Fund'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
<PAGE>
Submanager furnishes at its own expense all services, facilities and personnel
necessary in connection with managing the Portfolio's investments and effecting
securities transactions for the Portfolio. The Submanagement Agreement will
continue in effect if such continuance is specifically approved at least
annually by the Portfolio's Board of Trustees or by a majority vote of the
outstanding voting securities in the Portfolio at a meeting called for the
purpose of voting on the Submanagement Agreement (with the vote of each being
in proportion to the amount of its investment), and, in either case, by a
majority of the Portfolio's Trustees who are not parties to the Submanagement
Agreement or interested persons of any such party at a meeting called for the
purpose of voting on the Submanagement Agreement.
The Submanagement Agreement provides that the Submanager may render
services to others. The Submanagement Agreement is terminable without penalty
upon not more than 60 days' nor less than 30 days' written notice by the
Portfolio when authorized either by majority vote of the outstanding voting
securities in the Portfolio (with the vote of each being in proportion to the
amount of their investment) or by a vote of the majority of its Board of
Trustees, or by the Manager with the consent of the Trustees and may be
terminated by the Submanager on not less than 90 days' written notice to the
Manager and the Trustees, and will automatically terminate in the event of its
assignment. The Submanagement Agreement provides that the Submanager shall not
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in its services to the
Portfolio, except for wilful misfeasance, bad faith or gross negligence or
reckless disregard for its or their obligations and duties under the
Submanagement Agreement.
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
<PAGE>
$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.
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 Fund to serve as officers of the
Fund. Such officers, as well as certain other employees and Trustees of the
Fund, may be directors, officers or employees of the Sponsor or its affiliates.
Under the Sponsorship Agreement between DSIL and the Fund, DSIL's fee for
administrative and sponsorship services is 0.50% of the average daily net
assets of the Fund. 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 0.98% of the average daily net assets of the Fund. This fee waiver is
voluntary and may be reduced or terminated at any time. For the fiscal years
ended July 31, 1999 and July 31, 1998, the Fund incurred $_________ and
$1,419,618 in sponsorship fees, respectively.
Prior to October 22, 1997, Signature Broker-Dealer Services, Inc. served
as administrator. For the fiscal year ended July 31, 1997, the Fund incurred
$156,868 in administrative fees.
The Sponsorship Agreement with the Fund provides that DSIL may render
administrative services to others. The Sponsorship Agreement with the Fund 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 Fund, except for willful 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
Fund's Sponsorship Agreement.
DISTRIBUTOR
The Fund has adopted a Distribution Plan which provides that the Fund may
pay the Distributor a fee not to exceed 0.25% per annum of the Fund's average
daily net assets in anticipation of, or as reimbursement for, expenses incurred
in connection with the sale of shares of the Fund, such as payments to
broker-dealers who advise shareholders regarding the purchase, sale or
<PAGE>
retention of shares of the Fund, payments to employees of the Distributor,
advertising expenses and the expenses of printing and distributing prospectuses
and reports used for sales purposes, expenses of preparing and printing sales
literature and other distribution-related expenses. For the fiscal years ended
July 31, 1997, 1998, and 1999 the Fund accrued $153,295, $580,272, and $_______
respectively, in distribution fees. For the fiscal year ended July 31, 1999,
payments pursuant to the Distribution Plan were used for advertising ($______),
printing and mailing of prospectuses to other than current shareholders
($______), compensation to dealers ($______), compensation to sales personnel;
i.e. payments to brokers ($______), and communications and servicing ($______).
The Distribution Plan will continue in effect indefinitely if such
continuance is specifically approved at least annually by a vote of both a
majority of the Fund's Trustees and a majority of the Fund's Trustees who are
not "interested persons of the Fund" and who have no direct or indirect
financial interest in the operation of the Distribution Plan or in any
agreement related to such Plan ("Qualified Trustees"). The Distributor will
provide to the Trustees of the Fund a quarterly written report of amounts
expended by it under the Distribution Plan and the purposes for which such
expenditures were made. The Distribution Plan further provides that the
selection and nomination of the Fund's Qualified Trustees shall be committed to
the discretion of the disinterested Trustees of the Fund. The Distribution Plan
may be terminated at any time by a vote of a majority of the Fund's Qualified
Trustees or by a vote of the shareholders of the Fund. The Distribution Plan
may not be materially amended without a vote of the majority of both the Fund's
Trustees and the Fund's Qualified Trustees. The Distributor will preserve
copies of any plan, agreement or report made pursuant to the Distribution Plan
for a period of not less than six (6) years from the date of the Distribution
Plan, and for the first two (2) years the Distributor will preserve such copies
in an easily accessible place.
The Fund has entered into a Distribution Agreement with the Distributor.
Under the Distribution Agreement, the Distributor acts as the agent of the Fund
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
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.
TRANSFER AGENT, CUSTODIAN AND SERVICE ORGANIZATIONS
The Fund 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 Fund 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.
<PAGE>
The Fund may from time to time enter into agreements with various banks,
trust companies (other than Mellon Equity), broker-dealers (other than the
Distributor) or other financial organizations (collectively, "Service
Organizations") to provide services for the Fund, such as maintaining
shareholder accounts and records. The Fund may pay fees to Service
Organizations (which may vary depending upon the services provided) in amounts
up to an annual rate of 0.25% of the daily net asset value of the shares of the
Fund owned by shareholders with whom the Service Organization has a servicing
relationship. In addition the Fund may reimburse Service Organizations for
their costs related to servicing shareholder accounts. For the fiscal years
ended July 31, 1997, 1998, and 1999 the Fund accrued $3,711, $______, and
$______ respectively, in service organization fees.
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 Fund and for the Portfolio, providing audit
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
<PAGE>
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 Fund is organized as a Massachusetts business trust. As
long as it 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
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
<PAGE>
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
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
<PAGE>
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
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
<PAGE>
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 Fund's Declaration of Trust permits the Fund's Board of Trustees to
issue an unlimited number of full and fractional shares of beneficial interest
(without par value) and to divide or combine the shares into a greater or
lesser number of shares without thereby changing the proportionate beneficial
interests in the Fund. Each share represents an equal proportionate interest in
the Fund with each other share. Upon liquidation or dissolution of the Fund,
the Fund's shareholders are entitled to share pro rata in the Fund's net assets
available for distribution to its shareholders.
The Fund reserves the right to create and issue a number of series of
shares, in which case the shares of each series would participate equally in
the earnings, dividends and assets of the particular series (except for any
differences among classes of shares of a series). Shares of each series would
be entitled to vote separately to approve advisory agreements or changes in
investment policy, but shares of all series may vote together in the election
or selection of Trustees, principal underwriters and accountants for the Fund.
Upon liquidation or dissolution of the Fund, the shareholders of each series
would be entitled to share pro rata in the net assets of their respective
series available for distribution to shareholders. Currently, the Fund has only
one series of shares, all of which are of the same class. The Fund may
establish additional classes of any series of shares. For example, the Fund may
offer another class of shares that has lower annual distribution fees or
shareholder servicing fees. Prior to offering another class of shares, the Fund
would either issue a new prospectus and statement of additional information or
amend the current Prospectus and the Statement of Additional Information to
reflect such issuance.
Shareholders are entitled to one vote for each share held. Shareholders in
the Fund do not have cumulative voting rights, and shareholders owning more
than 50% of the outstanding shares of the Fund may elect all of the Trustees of
the Fund if they choose to do so and in such event the other shareholders in
the Fund would not be able to elect any Trustee. The Fund is not required to
hold annual meetings of shareholders but the Fund will hold special meetings of
shareholders when in the judgment of the Fund's Trustees it is necessary or
desirable to submit matters for a shareholder vote. Shareholders have under
certain circumstances the right to communicate with other shareholders in
connection with requesting a meeting of shareholders for the purpose of
removing one or more Trustees. Shareholders also have under certain
circumstances the right to remove one or more Trustees without a meeting. No
material amendment may be made to the Fund's Declaration of Trust without the
affirmative vote of the holders of a majority of its outstanding shares. Shares
have no preference, preemptive, conversion or similar rights. Shares, when
issued, are fully paid and non-assessable, except as set forth below. The Fund
may enter into a merger or consolidation, or sell all or substantially all of
its assets, if approved by the vote of the holders of two-thirds of its
outstanding shares, except that if the Trustees of the Fund recommend such sale
of assets, the approval by vote of the holders of a majority of the Fund's
outstanding shares will be sufficient. The Fund may also be terminated upon
liquidation and distribution of its assets, if approved by the vote of the
holders of two-thirds of its outstanding shares. If not so terminated, the Fund
will continue indefinitely.
The Fund is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust contains an
<PAGE>
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 that the Fund shall maintain
appropriate insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Fund, its shareholders, 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.
The Declaration of Trust further provides that obligations of the Fund are
not binding upon the Trustees individually but only upon the property of the
Fund and that the Trustees will not be liable for any action or failure to act,
but nothing in the Declaration of Trust protects a Trustee against any
liability to which he or she would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his or her office.
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 Fund'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) Amended and Restated Declaration of Trust of the Registrant.
*** a(2) Certificate and Amendment No. 2 to Declaration of Trust of the
Registrant.
*** b By-Laws of the Registrant, as amended October 6, 1997.
e Distribution Agreement between the Registrant and DSIL Investment
Services LLC, as distributor.
* g Custodian Agreement between the Registrant and Investors Bank & Trust
Company, as custodian.
h(1) Transfer Agency Agreement between the Registrant and First Data
Investor Services Group, Inc. ("First Data").
*** h(2) Sponsorship Agreement between the Registrant and DSIL, as sponsor.
i Opinion and consent of counsel.
m Distribution Plan of the Registrant.
**** q Powers of Attorney.
and filed
herewith
- ------------------------
* Incorporated by reference from Pre-Effective Amendment No. 2 to the
Registrant's Registration Statement as filed with the SEC on June 7,
1989.
** Incorporated by reference from Post-Effective Amendment No. 7 to the
Registrant's Registration Statement as filed with the SEC on November 22,
1995.
*** Incorporated by reference from Post-Effective Amendment No. 11 to the
Registrant's Registration Statement as filed with the SEC on November 25,
1997.
**** Incorporated by reference from Post-Effective Amendment No. 12 to the
Registrant's Registration Statement 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, filed as an exhibit to Post-Effective Amendment No. 7 to
the Registrant's Registration Statement; 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 (the "1940 Act").
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,
<PAGE>
Peter D. Kinder, Steven D. Lydenberg, Sigward Moser and David P. Wieder.
<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 Institutional 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
<PAGE>
First Data 4400 Computer Drive (transfer agent)
Westborough, MA 01581
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 SOCIAL EQUITY FUND
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
Amy L. Domini President (Principal Executive Officer)
- ------------------------------- and Trustee of Domini Social Equity Fund
Amy L. Domini
Carole M. Laible Treasurer (Principal Accounting and
- ------------------------------- Financial Officer) of Domini Social
Carole M. Laible Equity Fund
Julia Elizabeth Harris* Trustee of Domini Social Equity Fund
- -------------------------------
Julia Elizabeth Harris
Kirsten S. Moy* Trustee of Domini Social Equity Fund
- -------------------------------
Kirsten S. Moy
William C. Osborn* Trustee of Domini Social Equity Fund
- -------------------------------
William C. Osborn
Karen Paul* Trustee of Domini Social Equity Fund
- -------------------------------
Karen Paul
Gregory A. Ratliff* Trustee of Domini Social Equity Fund
- -------------------------------
Gregory A. Ratliff
<PAGE>
Timothy H. Smith* Trustee of Domini Social Equity Fund
- -------------------------------
Timothy H. Smith
Frederick C. Williamson, Sr.* Trustee of Domini Social Equity Fund
- -------------------------------
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. 33-29180) of
Domini Social Equity Fund 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 Social Equity Fund 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(1) Transfer Agency Agreement between the Registrant and First Data
Investor Services Group, Inc.
i Opinion and consent of counsel.
m Distribution Plan of the Registrant.
q Powers of Attorney.
Exhibit e
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of August 15, 1999, by and between
DOMINI SOCIAL EQUITY FUND, 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");
WHEREAS, the Board of Trustees of the Trust has adopted a Distribution
Plan, dated as of May 1, 1990 (as amended and in effect from time to time, the
"Distribution Plan"), which is incorporated herein by reference and pursuant to
which the Trust desires to enter into this Distribution Agreement; and
WHEREAS, the Trust wishes to engage the Distributor to provide certain
services with respect to the distribution of Shares of the Trust, and the
Distributor is willing to provide such 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. The Trust grants to the Distributor the right, as agent of the
Trust, to sell Shares of Beneficial Interest ("Shares") 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 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 of 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
<PAGE>
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
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
<PAGE>
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
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, but subject to the
necessary approval, if any, of its shareholders, 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
<PAGE>
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, 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.
<PAGE>
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
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
<PAGE>
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
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 and mailing to 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;
(iii) the cost and expenses of delivering to the Distributor all
Shares purchased through it as agent hereunder;
(iv) subject to the Distribution Plan, a distribution fee to the
Distributor at an annual rate not to exceed 0.25% of the Trust's average daily
net assets for its then-current fiscal year in anticipation of, or as
reimbursement for, expenses incurred by the Distributor in connection with the
sale of Shares or required to be borne by the Distributor hereunder, including,
without limitation, payments to broker-dealers, banks and investment advisers
who advise shareholders regarding the purchase or sale or retention of shares
of the Trust, compensation of employees of the Distributor, advertising
expenses and the expenses of printing (excluding typesetting) and distributing
prospectuses and reports used for sales purposes, expenses of preparing and
printing sales literature and other distribution-related expenses whether or
not specifically required to be made by the Distributor pursuant to the terms
of this Agreement;
(v) all fees and disbursements of the Transfer Agent and
Custodian; and
(vi) a fee to the Manager of the Trust (pursuant to the
Management Agreement).
<PAGE>
The Distributor agrees that with respect to the sale of Shares of the
Trust, subject to the Trust's obligations under clause (iv) above, (a) after
the Prospectus and Statement of Additional Information and periodic reports
have been set in type, it will bear the expense (other than the cost of mailing
to shareholders of the Trust) of printing and. distributing any copies thereof
ordered by it which are to be used in connection with the offering or sale of
Shares to any dealer or prospective investor, and (b) it will bear the expenses
of preparing, printing and distributing any other literature used by the
Distributor or furnished by it for use by any dealer in connection with the
offering of Shares for sale to the public and any expense of sending
confirmations and statements to any dealer having a sales agreement with the
Distributor.
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.
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
<PAGE>
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 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 Trustee of the
Trust has executed this Agreement not individually, but as Trustee under the
Declaration of Trust, dated June 7, 1989, 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 SOCIAL EQUITY FUND
By /s/ David Wieder
------------------------------
Title: Vice President
DSIL INVESTMENT SERVICES LLC
By /s/ Carole Laible
------------------------------
Title: Treasurer
Exhibit h(1)
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this day of , 1999 between Domini Social
Equity Fund (the "Fund"), a Massachusetts business trust having its principal
place of business at 11 West 25th Street, New York, New York 10010-2001 and
FIRST DATA INVESTOR SERVICES GROUP, INC. ("Investor Services Group"), a
Massachusetts corporation with principal offices at 4400 Computer Drive,
Westboro, Massachusetts 01581.
WITNESSETH
WHEREAS, the Fund desires to appoint Investor Services Group as its
transfer agent, dividend disbursing agent and agent in connection with certain
other activities and Investor Services Group desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and Investor Services Group agree as follows:
Article 1 Definitions
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended from
time to time.
(b) "Authorized Person" shall be deemed to include (i) any officer of
the Fund; or (ii) any person, whether or not such person is an officer or
employee of the Fund, in each case, only if such officer or person has
been duly authorized to give Oral Instructions or Written Instructions on
behalf of the Fund as indicated in writing to Investor Services Group from
time to time.
(c) "Board Members" shall mean the Directors or Trustees of the
governing body of the Fund, as the case may be.
<PAGE>
(d) "Board of Directors" shall mean the Board of Directors or Board
of Trustees of the Fund, as the case may be.
(e) "Commission" shall mean the Securities and Exchange Commission.
(f) "Custodian" refers to any custodian or subcustodian of securities
and other property which the Fund may from time to time deposit, or cause
to be deposited or held under the name or account of such a custodian
pursuant to a Custodian Agreement.
(g) "1934 Act" shall mean the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder, all as amended from time to
time.
(h) "1940 Act" shall mean the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, all as amended from time to
time.
(i) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by Investor Services Group from an
Authorized Person;
(j) "Prospectus" shall mean the most recently dated Fund Prospectus
and Statement of Additional Information, including any supplements thereto
if any, which has become effective under the Securities Act of 1933 and
the 1940 Act.
(k) "Shares" refers collectively to such shares of capital stock or
beneficial interest, as the case may be, or class thereof, of the Fund as
may be issued from time to time.
(l) "Shareholder" shall mean a record owner of Shares of the Fund.
(m) "Written Instructions" shall mean a written communication signed
by an Authorized Person and actually received by Investor Services Group.
Written Instructions shall include manually executed originals and
authorized electronic transmissions, including telefacsimile of a manually
executed original or other process.
<PAGE>
Article 2 Appointment of Investor Services Group
2.1 Subject to the terms of this Agreement, the Fund hereby appoints and
constitutes Investor Services Group as its sole and exclusive transfer agent
and dividend disbursing agent for Shares of the Fund and as shareholder
servicing agent for the Fund and Investor Services Group hereby accepts such
appointments and agrees to perform the duties hereinafter set forth.
Article 3 Duties of Investor Services Group
3.1 Investor Services Group shall be responsible for:
(a) Administering and/or performing the customary services of a
transfer agent; acting as service agent in connection with dividend and
distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance, transfer
and redemption or repurchase (including coordination with the Custodian)
of Shares of the Fund, as more fully described in the written schedule of
Duties of Investor Services Group annexed hereto as Schedule A and
incorporated herein, and in accordance with the terms of the Prospectus of
the Fund, applicable law and the procedures established from time to time
between Investor Services Group and the Fund. Notwithstanding the
foregoing or anything in this Agreement to the contrary, in no event shall
the Fund make any modifications to the prospectus of the Fund or adopt any
policies which in either case affect materially the obligations or
responsibilities of Investor Services Group hereunder without the prior
written approval of Investor Services Group, which approval shall not be
unreasonably withheld or delayed.
(b) Recording the issuance of Shares and maintaining pursuant to Rule
17Ad-10(e) of the 1934 Act a record of the total number of Shares of the
Fund which are authorized, based upon data provided to it by the Fund, and
issued and outstanding. Investor Services Group shall provide the Fund on
a regular basis with the total number of Shares which are authorized and
issued and outstanding and shall have no obligation, when recording the
issuance of Shares, to monitor the issuance of such Shares or to take
cognizance of any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Fund.
(c) In addition to performing the foregoing services, the Fund hereby
engages Investor Services Group as a service provider with respect to the
Print/Mail Services set forth in Schedule B for the fees also identified
<PAGE>
in Schedule B. Investor Services Group agrees to perform the services and
its obligations subject to the terms and conditions of this Agreement.
(d) Notwithstanding any of the foregoing provisions of this
Agreement, Investor Services Group shall be under no duty or obligation to
inquire into, and shall not be liable for: (i) the legality of the
issuance or sale of any Shares or the sufficiency of the amount to be
received therefor; (ii) the legality of the redemption of any Shares, or
the propriety of the amount to be paid therefor; (iii) the legality of the
declaration of any dividend by the Board of Directors, or the legality of
the issuance of any Shares in payment of any dividend; or (iv) the
legality of any recapitalization or readjustment of the Shares.
3.2 In addition, the Fund shall (i) identify to Investor Services Group in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of Investor Services Group for the
Fund's blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Fund and
the reporting of such transactions to the Fund and its agents as provided
above.
3.3 In addition to the duties set forth herein, Investor Services Group
shall perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Fund
and Investor Services Group.
3.4 Investor Services Group agrees to provide the services described
herein in accordance with the Performance Standards annexed hereto as Exhibit 1
of Schedule A and incorporated herein (the "Performance Standards"). Such
Performance Standards may be amended from time to time upon written agreement
by the parties.
Article 4 Recordkeeping and Other Information
4.1 Investor Services Group shall create and maintain all records required
of it pursuant to its duties hereunder and as set forth in Schedule A in
accordance with all applicable laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act. Where applicable, such records shall
be maintained by Investor Services Group for the periods and in the places
required by Rule 31a-2 under the 1940 Act.
<PAGE>
4.2 To the extent required by Section 31 of the 1940 Act, Investor
Services Group agrees that all such records prepared or maintained by Investor
Services Group relating to the services to be performed by Investor Services
Group hereunder are the property of the Fund and will be preserved, maintained
and made available in accordance with such section, and will, at the expense of
the Fund, be surrendered promptly to the Fund on and in accordance with the
Fund's request.
4.3 In case of any requests or demands for the inspection of Shareholder
records of the Fund, Investor Services Group will endeavor to notify the Fund
of such request and secure Written Instructions as to the handling of such
request. Investor Services Group reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to comply with such request.
Article 5 Fund Instructions
5.1 Investor Services Group will have no liability when acting upon
Written or Oral Instructions believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any notice of
any change of authority of any person until receipt of a Written Instruction
thereof from the Fund. Investor Services Group will also have no liability when
processing Share certificates which bear the proper signature of Investor
Services Group and which it reasonably believes to bear the proper manual or
facsimile signatures of the officers of the Fund.
5.2 At any time, Investor Services Group may request Written Instructions
from the Fund and may seek advice from legal counsel for the Fund with respect
to any matter arising in connection with this Agreement, and it shall not be
liable for any action taken or not taken or suffered by it in good faith in
accordance with such Written Instructions or in accordance with the opinion of
counsel for the Fund. Written Instructions requested by Investor Services Group
will be provided by the Fund within a reasonable period of time.
5.3 Investor Services Group, its officers, agents or employees, shall
accept Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said representative is an
Authorized Person. The Fund agrees that all Oral Instructions shall be followed
within one business day by confirming Written Instructions, and that the Fund's
failure to so confirm shall not impair in any respect Investor Services Group's
right to rely on Oral Instructions.
<PAGE>
Article 6 Compensation
6.1 The Fund will compensate Investor Services Group for the performance
of its obligations hereunder in accordance with the fees and charges set forth
in the written Fee Schedule annexed hereto as Schedule B and incorporated
herein.
6.2 In addition to those fees and charges referenced in Section 6.1 above,
the Fund agrees to pay for such out-of-pocket expenses incurred by Investor
Services Group in the performance of its duties hereunder. Out-of-pocket
expenses shall include, but shall not be limited to, the items specified in the
written schedule of out-of-pocket expenses annexed hereto as Schedule D and
incorporated herein. Unspecified out-of-pocket expenses shall be limited to
those out-of-pocket expenses reasonably incurred by Investor Services Group at
the request, or with the consent, of the Fund in the performance of its
obligations hereunder.
6.3 The Fund agrees to pay all fees, charges and out-of-pocket expenses
within fifteen (15) business days following the receipt of the respective
invoice for services rendered prior to or on the date of such invoice. In
addition, with respect to all invoices issued pursuant to this Agreement,
Investor Services Group may charge a service fee equal to the lesser of (i) one
and one half percent (1 1/2%) per month or (ii) the highest interest rate
legally permitted on any past due invoiced amounts, provided however, the
foregoing service fee shall not apply if the Fund in good faith legitimately
disputes any invoice amount in which case the Fund shall do the following
within thirty (30) days of the postmark date: (a) pay Investor Services Group
the undisputed amount of the invoice; and (b) provide Investor Services Group a
detailed written description of the disputed amount and the basis for the
Fund's dispute with such amount. In addition, the Fund shall cooperate with
Investor Services Group in resolving disputed invoice amounts and then promptly
paying such amounts determined to be due.
6.4 The Fund acknowledges that the fees that Investor Services Group
charges the Fund under this Agreement reflect the allocation of risk between
the parties, including the disclaimer of warranties in Section 9.3 and the
limitations on liability and exclusion of remedies in Section 11.2 and Article
12. Modifying the allocation of risk from what is stated here would affect the
fees that Investor Services Group charges, and in consideration of those fees,
the Fund agrees to the stated allocation of risk.
<PAGE>
Article 7 Documents
7.1 In connection with the appointment of Investor Services Group, the
Fund shall, on or before the date this Agreement goes into effect, but in any
case within a reasonable period of time for Investor Services Group to prepare
to perform its duties hereunder, deliver or cause to be delivered to Investor
Services Group the documents set forth in the written schedule of Fund
Documents annexed hereto as Schedule D.
Article 8 Transfer Agent System
8.1 Investor Services Group shall retain title to and ownership of any and
all data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by Investor Services Group in
connection with the services provided by Investor Services Group to the Fund
herein (the "Investor Services Group System").
8.2 Investor Services Group hereby grants to the Fund a limited license to
the Investor Services Group System for the sole and limited purpose of having
Investor Services Group provide the services contemplated hereunder and nothing
contained in this Agreement shall be construed or interpreted otherwise and
such license shall immediately terminate with the termination of this
Agreement.
8.3 In the event that the Fund, including any affiliate or agent of the
Fund or any third party acting on behalf of the Fund is provided with direct
access to the Investor Services Group System for either account inquiry or to
transmit transaction information, including but not limited to maintenance,
exchanges, purchases and redemptions, such direct access capability shall be
limited to direct entry to the Investor Services Group System by means of
on-line mainframe terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of information to the
Investor Services Group System is strictly prohibited without the prior written
consent of Investor Services Group.
Article 9 Representations, Warranties and Covenants
9.1 Investor Services Group represents and warrants to the Fund and
covenants and agrees that:
(a) it is a corporation duly organized, existing and in good standing
under the laws of the Commonwealth of Massachusetts;
<PAGE>
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to authorize
it to enter into this Agreement;
(d) it is duly registered with its appropriate regulatory agency as a
transfer agent and such registration will remain in effect for the
duration of this Agreement;
(e) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations
under this Agreement;
(f) its systems and facilities, and those of its material vendors,
will be able to properly recognize and perform date-sensitive functions
involving any date after December 31, 1999;
(g) it shall maintain insurance which covers such risks and is in
such amounts, with such deductibles and exclusions, sufficient for
compliance by Investor Services Group with all requirements of law and
sufficient for Investor Services Group to perform its obligations under
this Agreement; and all such policies are in full force and effect; and
are with financially sound and reputable insurance companies, funds or
underwriters;
(h) all shareholder accounts shall be maintained on the Surpas system
until converted to the FSR system (which shall not occur until the Fund is
satisfied that the FSR system can support the shareholders records and
data) and shall not be converted to any other system without the prior
written consent of the Fund, which consent shall not be unreasonably
withheld or delayed; and
(i) in the event of the termination of this Agreement, Investor
Services Group shall provide reasonable cooperation to the Fund in the
movement of all records (in all media) and materials of the Fund and the
conversion of the shareholder accounts to a successor transfer agent.
9.2 The Fund represents and warrants to Investor Services Group that:
<PAGE>
(a) it is duly organized, existing and in good standing under the
laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Article of
Incorporation and By-Laws to enter into this Agreement;
(c) all proceedings required by said Articles of Incorporation,
By-Laws and applicable laws have been taken to authorize it to enter into
this Agreement;
(d) a registration statement under the Securities Act of 1933, as
amended, and the 1940 Act on behalf of the Fund is currently effective and
will remain effective, and all appropriate state securities law filings
have been made and will continue to be made, with respect to all Shares of
the Fund being offered for sale; and
(e) all outstanding Shares are validly issued, fully paid and
non-assessable and when Shares are hereafter issued in accordance with the
terms of the Fund's Articles of Incorporation and its Prospectus, such
Shares shall be validly issued, fully paid and non-assessable.
9.3 THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, INVESTOR SERVICES GROUP DISCLAIMS ALL OTHER REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF
ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OF ANY SERVICES OR ANY GOODS
PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS AGREEMENT. INVESTOR
SERVICES GROUP DISCLAIMS ANY WARRANTY OF TITLE OR NON-INFRINGEMENT EXCEPT AS
OTHERWISE SET FORTH IN THIS AGREEMENT.
Article 10 Indemnification
10.1 Investor Services Group shall not be responsible for and the Fund
shall indemnify and hold Investor Services Group harmless from and against any
and all claims, costs, expenses (including reasonable attorneys' fees), losses,
damages, charges, payments and liabilities of any sort or kind (a "Claim")
which may be asserted against Investor Services Group or for which Investor
<PAGE>
Services Group may be held to be liable arising out of or attributable to any
of the following:
(a) any actions of Investor Services Group required to be taken
pursuant to this Agreement unless such Claim resulted from a negligent act
or omission to act or bad faith by Investor Services Group in the
performance of its duties hereunder;
(b) Investor Services Group's reasonable reliance on, or reasonable
use of information, data, records and documents (including but not limited
to magnetic tapes, computer printouts, hard copies and microfilm copies)
received by Investor Services Group from the Fund, or any authorized third
party acting on behalf of the Fund, including but not limited to the prior
transfer agent for the Fund, in the performance of Investor Services
Group's duties and obligations hereunder;
(c) the reliance on, or the implementation of, any Written or Oral
Instructions or any other instructions or requests of the Fund;
(d) the offer or sale of shares in violation of any requirement under
the securities laws or regulations of any state that such shares be
registered in such state or in violation of any stop order or other
determination or ruling by any state with respect to the offer or sale of
such shares in such state; and
(e) The Fund's refusal or failure to comply with the terms of this
Agreement, or any Claim which arises out of the Fund's negligence or
misconduct or the breach of any representation or warranty of the Fund
made herein.
10.2 The Fund shall not be responsible for and Investor Services Group
shall indemnify and hold the Fund harmless from and against any and all Claims
which may be asserted against the Fund or for which the Fund may be held to be
liable which result from the negligence, bad faith or willful misconduct of
Investor Services Group in the performance of its duties hereunder.
10.3 In any case in which the either party (the "Indemnifying Party") may
be asked to indemnify or hold the other (the "Indemnified Party") harmless, the
Indemnified Party will notify the Indemnifying Party promptly after identifying
any situation which it believes presents or appears likely to present a claim
for indemnification against the Indemnifying Party although the failure to do
so shall not prevent recovery by the Indemnified Party and shall keep the
<PAGE>
Indemnifying Party advised with respect to all developments concerning such
situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party, and thereupon the
Indemnifying Party shall take over complete defense of the Claim and the
Indemnified Party shall sustain no further legal or other expenses in respect
of such Claim. The Indemnified Party will not confess any Claim or make any
compromise in any case in which the Indemnifying Party will be asked to provide
indemnification, except with the Indemnifying Party's prior written consent.
The obligations of the parties hereto under this Article 10 shall survive the
termination of this Agreement.
10.4 Any claim for indemnification under this Agreement must be made prior
to the earlier of:
(a) one year after the Fund or Investor Services Group, as
applicable, becomes aware of the event for which indemnification is
claimed; or
(b) one year after the earlier of the termination of this Agreement
or the expiration of the term of this Agreement.
10.5 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
Investor Services Group's sole and exclusive remedy for claims or other actions
or proceedings to which the Fund's indemnification obligations pursuant to this
Article 10 may apply.
Article 11 Standard of Care
11.1 Investor Services Group shall at all times act in good faith and
agrees to use its best efforts within commercially reasonable limits to ensure
the accuracy of all services performed under this Agreement, but assumes no
responsibility for loss or damage to the Fund unless said errors are caused by
Investor Services Group's own negligence, bad faith or willful misconduct or
that of its employees, subcontractors or agents.
11.2 Notwithstanding any provision in this Agreement to the contrary and
except with respect to the gross negligence of Investor Services Group, or the
breach by Investor Services Group of section 14 of the Agreement, Investor
Services Group's cumulative liability (to the Fund) for all losses, claims,
suits, controversies, breaches, or damages for any cause whatsoever (including
<PAGE>
but not limited to those arising out of or related to this Agreement) and
regardless of the form of action or legal theory shall not exceed the lesser of
(i) $1,500,000 or (ii) the fees received by Investor Services Group for
services provided under this Agreement during the twelve months immediately
prior to the date of such loss or damage. Fund understands the limitation on
Investor Services Group's damages to be a reasonable allocation of risk and
Fund expressly consents with respect to such allocation of risk. In allocating
risk under the Agreement, the parties agree that the damage limitation set
forth above shall apply to any alternative remedy ordered by a court in the
event such court determines that sole and exclusive remedy provided for in the
Agreement fails of its essential purpose.
11.3 Neither party may assert any cause of action against the other party
under this Agreement that accrued more than two (2) years prior to the filing
of the suit (or commencement of arbitration proceedings) alleging such cause of
action.
11.4 Each party shall have the duty to mitigate damages for which the
other party may become responsible.
Article 12 Consequential Damages
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL INVESTOR SERVICES GROUP, THE FUND, THEIR AFFILIATES OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY
PROVISION OF THIS AGREEMENT OR FOR ANY ACT OR FAILURE TO ACT HEREUNDER UNDER
ANY THEORY OF TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE
THEORY FOR LOST PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR
CONSEQUENTIAL DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE
PARTIES REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER
PARTY OR ANY ENTITY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Article 13 Term and Termination
13.1 This Agreement shall be effective on the date first written above and
shall continue for a period of four (4) years (the "Initial Term").
13.2 Upon the expiration of the Initial Term and each Renewal Term, this
Agreement shall automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Fund or Investor Services Group provides
<PAGE>
written notice to the other of its intent not to renew. Such notice must be
received not less than ninety (90) days and not more than one-hundred eighty
(180) days prior to the expiration of the Initial Term or the then current
Renewal Term.
13.3 In the event of termination by the Fund under Section 13.2 or 13.6,
all reasonable expenses associated with movement of records and materials and
conversion thereof to a successor transfer agent will be borne by the Fund. In
the event of termination of this Agreement by the Fund under Section 13.4 (if
Investor Services Group is guilty of material breach) or 13.5, all reasonable
expenses associated with the movement of records and materials and conversion
thereof to a successor transfer agent will be borne by Investor Services Group.
In the event of termination of this Agreement by Investor Services Group under
Section 13.4 (if the Fund is guilty of material breach), all reasonable
expenses associated with the movement of records and materials and conversion
thereof to a successor transfer agent will be borne by the Fund. In the event
of termination of this Agreement by Investor Services Group under Section 13.2,
all reasonable expenses associated with the movement of records and materials
and conversion thereof to a successor transfer agent will be borne by Investor
Services Group.
13.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting
Party, and if such material breach shall not have been remedied within thirty
(30) days after such written notice is given, then the Non-Defaulting Party may
terminate this Agreement by giving thirty (30) days written notice of such
termination to the Defaulting Party. If Investor Services Group is the
Non-Defaulting Party, its termination of this Agreement shall not constitute a
waiver of any other rights or remedies of Investor Services Group with respect
to services performed prior to such termination of rights of Investor Services
Group to be reimbursed for out-of-pocket expenses. In all cases, termination by
the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting
Party of any other rights it might have under this Agreement or otherwise
against the Defaulting Party.
13.5 Pursuant to Section 3.4 of this Agreement, Investor Services Group
has agreed to perform the services described in this Agreement in accordance
with the Performance Standards set forth in Exhibit 1 to Schedule A. The
parties agree that the measurement of the Performance Standards will not begin
until sixty (60) days after Investor Services Group has begun providing
services under this Agreement. The parties agree that each quarterly period, as
described below, will be measured on a rolling three calendar month period. The
<PAGE>
parties agree that such Performance Standards, which are described below, may
be revised from time to time upon the mutual agreement of the parties.
(a) In the event that Investor Services Group fails to meet a
particular Performance Standard (except any failure due to circumstances
beyond its control) in any given quarter, the Fund will provide Investor
Services Group with written notice of such failure, and Investor Services
Group agrees to take appropriate corrective action as soon as reasonably
possible.
(b) In the event that Investor Services Group fails to meet a
particular Performance Standard (except for any failure due to
circumstances beyond its control) in two (2) consecutive quarters, the fee
payable to Investor Services Group hereunder for that particular service
shall be reduced by ten percent (10%) for the second of those two
quarters.
(c) In the event that Investor Services Group fails to meet a
particular Performance Standard (except for any failure due to
circumstances beyond its control) for any three (3) consecutive quarters,
the Fund shall have the right to terminate this Agreement upon sixty (60)
days' written notice to Investor Services Group.
(d) Compliance with the Performance Standards shall be reported
monthly and measured quarterly based on the average performance during
that quarter and in the aggregate with respect to all Domini affiliated
funds serviced by Investor Services Group.
13.6 Notwithstanding anything contained in this Agreement to the
contrary, during the Initial Term and any subsequent Renewal Term, the Fund
shall have the right to terminate this Agreement without cause at any time on
90 days prior written notice to Investor Services Group, provided that prior to
the conversion or termination of services pursuant to such notice, the Fund
shall pay to Investor Services Group the termination fee set forth in Schedule
B. The parties acknowledge that such fee shall not apply if the Fund terminates
this Agreement pursuant to Section 13.2, 13.4 or 13.5 above, but shall apply if
the Fund is liquidated or its assets merged or purchased or the like with
another entity which does not utilize the services of Investor Services Group.
Article 14 Confidentiality
14.1 The parties agree that the Proprietary Information (defined below)
and the contents of Schedule B of this Agreement (collectively "Confidential
<PAGE>
Information") are confidential information of the parties, including Domini
Social Investments LLC, and their respective licensors. The Fund and Investor
Services Group shall exercise at least the same degree of care, but not less
than reasonable care, to safeguard the confidentiality of the Confidential
Information of the other as it would exercise to protect its own confidential
information of a similar nature. The Fund and Investor Services Group shall not
duplicate, sell or disclose to others the Confidential Information of the
other, in whole or in part, without the prior written permission of the other
party. The Fund and Investor Services Group may, however, disclose Confidential
Information (i) to their respective parent corporation, their respective
affiliates, their subsidiaries and affiliated companies and employees, provided
that each shall use reasonable efforts to ensure that the Confidential
Information is not duplicated or disclosed in breach of this Agreement or (ii)
to any regulatory authority having jurisdiction over the disclosing party or
(iii) as required by law. The Fund and Investor Services Group may also
disclose the Confidential Information to independent contractors, auditors, and
professional advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 14.1.
Notwithstanding the previous sentence, in no event shall either the Fund or
Investor Services Group disclose the Confidential Information to any competitor
of the other without specific, prior written consent. Investor Services Group
hereby acknowledges that Domini Social Investments LLC is a third party
beneficiary of this Agreement solely for the purposes of this Section 14.
14.2 Proprietary Information means:
(a) any data or information that is competitively sensitive material,
and not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finance,
operations, customer relationships, customer profiles, customer prospect
lists, any other information regarding customers, sales estimates,
business plans, and internal performance results relating to the past,
present or future business activities of the Fund, Domini Social
Investments LLC or Investor Services Group, their respective subsidiaries
and affiliated companies and the customers, clients and suppliers of any
of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Fund, Domini
Social Investments LLC or Investor Services Group a competitive advantage
over its competitors; and
<PAGE>
(c) all confidential or proprietary concepts, documentation, reports,
data, specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, show-how and trade secrets,
whether or not patentable or copyrightable.
14.3 Confidential Information includes, without limitation, all documents,
inventions, substances, engineering and laboratory notebooks, drawings,
diagrams, specifications, bills of material, equipment, prototypes and models,
and any other tangible manifestation of the foregoing of either party, Domini
Social Investments LLC which now exist or come into the control or possession
of the other.
14.4 The obligations of confidentiality and restriction on use herein
shall not apply to any Confidential Information that a party proves:
(a) Was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of such party;
or
(b) Was lawfully received by the party from a third party free of any
obligation of confidence to such third party; or
(c) Was already in the possession of the party prior to receipt
thereof, directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or administrative
proceeding after all reasonable legal remedies for maintaining such
information in confidence have been exhausted including, but not limited
to, giving the other party as much advance notice of the possibility of
such disclosure as practical so the other party may attempt to stop such
disclosure or obtain a protective order concerning such disclosure; or
(f) Is subsequently and independently developed by employees,
consultants or agents of the party without reference to the Confidential
Information disclosed under this Agreement.
Article 15 Force Majeure
15.1 No party shall be liable for any default or delay in the performance
of its obligations under this Agreement if and to the extent such default or
delay is caused, directly or indirectly, by (i) fire, flood, elements of nature
or other acts of God; (ii) any outbreak or escalation of hostilities, war,
<PAGE>
riots or civil disorders in any country, (iii) any act or omission of the other
party or any governmental authority; (iv) any labor disputes (whether or not
the employees' demands are reasonable or within the party's power to satisfy);
or (v) nonperformance by a third party or any similar cause beyond the
reasonable control of such party, including without limitation, failures or
fluctuations in telecommunications or other equipment. In any such event, the
non-performing party shall be excused from any further performance and
observance of the obligations so affected only for as long as such
circumstances prevail and such party continues to use commercially reasonable
efforts to recommence performance or observance as soon as practicable.
Article 16 Assignment and Subcontracting
16.1 This Agreement, its benefits and obligations shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. This Agreement may not be assigned or otherwise
transferred by either party hereto, without the prior written consent of the
other party, which consent shall not be unreasonably withheld; provided,
however, that Investor Services Group may, in its sole discretion, assign all
its right, title and interest in this Agreement to an affiliate, parent or
subsidiary, provided that in the event of any such assignment, Investor
Services Group will remain liable for the acts and omissions of any assignee.
Investor Services Group may, in its sole discretion, engage subcontractors to
perform any of the obligations contained in this Agreement to be performed by
Investor Services Group provided that Investor Services Group shall remain
liable for the acts and omissions of any subcontractor as if performed by
Investor Services Group.
Article 17 Arbitration
17.1 Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration administered by
the American Arbitration Association in Boston, Massachusetts in accordance
with its applicable rules, except that the Federal Rules of Evidence and the
Federal Rules of Civil Procedure with respect to the discovery process shall
apply.
17.2 The parties hereby agree that judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction.
17.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
<PAGE>
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Article 17.
Article 18 Notice
18.1 Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or Investor Services Group, shall
be sufficiently given if addressed to that party and received by it at its
office set forth below or at such other place as it may from time to time
designate in writing.
To the Fund:
Domini Social Equity Fund
c/o Domini Social Investments LLC
11 West 25th Street
New York, New York 10010-2001
Attention: David Wieder
with a copy to:
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Attention: Roger P. Joseph, Esq.
To Investor Services Group:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President
with a copy to Investor Services Group's General Counsel at the
same address.
Article 19 Governing Law/Venue
19.1 The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement
of this agreement. All actions arising from or related to this Agreement shall
be brought in the state and federal courts sitting in the City of Boston, and
Investor Services Group and the Fund hereby submit themselves to the exclusive
jurisdiction of those courts.
<PAGE>
Article 20 Counterparts
20.1 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.
Article 21 Captions
21.1 The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 22 Publicity
22.1 Neither Investor Services Group nor the Fund shall release or publish
news releases, public announcements, advertising or other publicity relating to
this Agreement or to the transactions contemplated by it without the prior
review and written approval of the other party; provided, however, that either
party may make such disclosures as are required by legal, accounting or
regulatory requirements after making reasonable efforts in the circumstances to
consult in advance with the other party.
Article 23 Relationship of Parties/Non-Solicitation
23.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
23.2 During the term of this Agreement and for one (1) year afterward, (a)
the Fund shall not recruit, solicit, employ or engage, for the Fund or others,
Investor Services Group's employees and (b) Investor Services Group shall not
recruit, solicit, employ or engage, for Investor Services Group or others,
employees of the Fund or Domini Social Investments LLC.
Article 24 Entire Agreement; Severability
24.1 This Agreement, including Schedules, Addenda, and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
<PAGE>
shall be valid unless in writing signed by each party. No such writing shall be
effective as against Investor Services Group unless said writing is executed by
a Senior Vice President, Executive Vice President, or President of Investor
Services Group. A party's waiver of a breach of any term or condition in the
Agreement shall not be deemed a waiver of any subsequent breach of the same or
another term or condition.
24.2 The parties intend every provision of this Agreement to be severable.
If a court of competent jurisdiction determines that any term or provision is
illegal or invalid for any reason, the illegality or invalidity shall not
affect the validity of the remainder of this Agreement. In such case, the
parties shall in good faith modify or substitute such provision consistent with
the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
DOMINI SOCIAL EQUITY FUND
By:
Title:
FIRST DATA INVESTOR SERVICE
GROUP, INC.
By:
Title:
Exhibit (i)
DRAFT
__________ __, 1999
Domini Social Equity Fund
11 West 25th Street
New York, New York 10010
Ladies and Gentlemen:
We have acted as counsel to Domini Social Equity Fund, a Massachusetts
business trust (the "Trust"), in connection with Post-Effective Amendments
Numbered 13 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.
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 Trust.
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 Trust, 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 Trust 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 m
DISTRIBUTION PLAN
DISTRIBUTION PLAN, dated as of May 1, 1990, and amended as of June 22,
1998, of DOMINI SOCIAL EQUITY FUND, a Massachusetts business trust (the
"Trust").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Trust intends to distribute the Shares of Beneficial Interest
(without par value) of the Trust (the "Shares") in accordance with Rule 12b-1
under the 1940 Act ("Rule 12b-1), and desires adopt to this Distribution Plan
(the "Plan") as a plan of distribution pursuant to such Rule; and
WHEREAS, the Trust desires to enter into a distribution agreement (in such
form as may from time to time be approved by the Board of Trustees of the Trust
in the manner specified in Rule 12b-1) (the "Distribution Agreement"), whereby
the Distributor named in the Distribution Agreement (the "Distributor") will
provide facilities and personnel and render services to the Trust in connection
with the offering and distribution of the Shares; and
WHEREAS, the Board of Trustees, in considering whether the Trust should
adopt and implement this Plan, has evaluated such information as it deemed
necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors it deemed
necessary to form the basis for a decision to use assets of the Trust for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and its
shareholders.
NOW, THEREFORE, the Board of Trustees hereby adopts this Plan for the
Trust as a plan for distribution in accordance with Rule 12b-1, on the
following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares.
<PAGE>
2. The Distributor shall, subject to paragraph 3 below, bear all
distribution-related expenses in connection with the services described in
paragraph 1, including without limitation, the compensation of personnel
necessary to provide such services and all costs of travel, office expenses
(including rent and overhead) and equipment.
3. As consideration for all services performed, the Trust may pay the
Distributor a fee at an annual rate not to exceed 0.25% of the Trust's average
daily net assets for its then-current fiscal year in anticipation of, or as
reimbursement for, expenses incurred by the Distributor in connection with the
sale of Shares such as payments to broker-dealers, banks and investment
advisers who advise shareholders regarding the purchase, sale or retention of
shares of the Trust, compensation of employees of the Distributor, advertising
expenses and the expenses of printing (excluding typesetting) and distributing
prospectuses and reports used for sales purposes, expenses of preparing and
printing sales literature and other distribution-related expenses.
4. The Trust shall pay all fees and expenses of any independent auditor,
legal counsel, administrator, transfer agent, custodian, shareholder servicing
agent, registrar or dividend disbursing agent of the Trust, expenses of
distributing and redeeming Shares and servicing shareholder accounts; expenses
of preparing, printing and mailing prospectuses, shareholder reports, notices,
proxy statements reports to governmental officers and commissions and to
shareholders of the Trust; expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; expenses of
calculating the net asset value of Shares; expenses of shareholder meetings;
and expenses relating to the issuance, registration and qualification of
Shares.
5. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the responsibility for
and control of the conduct of the affairs of the Trust.
6. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of the Trust, and (b)
approval by a vote of the Board of Trustees and vote a majority of the Trustees
who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (the "Qualified Trustees"), such votes to be cast in person
at a meeting called for the purpose of voting on this Plan.
<PAGE>
7. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the Board of
Trustees and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire on the
date which is 15 months after the date of the last approval.
8. This Plan may be amended at any time by the Board of Trustees, provided
that (a) any amendment to increase materially the amount to be spent for the
services described herein shall be effective only upon approval by a vote of a
"majority of the outstanding voting securities" of the Trust, and (b) any
material amendment of this Plan shall be effective only upon approval by a vote
of the Board of Trustees and a majority of the Qualified Trustees, such votes
to be cast in person at a meeting called for the purpose of voting on such
amendment. This Plan may be terminated at any time by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of the Trust.
9. The Trust and the Distributor each shall provide the Board of Trustees,
and the Board of Trustees shall review, at least quarterly, a written report of
the amounts expended under the Plan and the purposes for which such
expenditures were made.
10. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
11. For the purposes of this Plan, the terms "interested persons" and
"majority of the outstanding voting securities" are used as defined in the 1940
Act. In addition, for purposes of determining the fees payable to the
Distributor, the value of the Trust's net assets shall be computed in the
manner specified in the Trust's then-current prospectus for computation of the
net asset value of the Trust's Shares.
12. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 9 hereof (collectively,
the "Records") for a period of six years from end of the fiscal year in which
such Record was made and each such Record shall be kept in an easily accessible
place for the first two years of said record-keeping.
13. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
<PAGE>
14. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
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
