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Semi-Annual Report
January 31, 2000 (unaudited)
[PHOTO]
Domini Social Equity Fund (SM)
Domini [ART]
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SOCIAL INVESTMENTS
The Responsible Index Fund (SM)
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Table of Contents
Letter from the President ................................................. 2
Domini News ............................................................... 5
Social Profiles ........................................................... 7
Performance Chart ......................................................... 16
Domini Social Index Portfolio
Portfolio of Investments .................................................. 17
Statement of Assets and Liabilities ....................................... 25
Statement of Operations ................................................... 26
Statement of Changes in Net Assets ........................................ 27
Financial Highlights ...................................................... 27
Notes to Financial Statements ............................................. 28
Domini Social Equity Fund
Statement of Assets and Liabilities ....................................... 30
Statement of Operations ................................................... 31
Statement of Changes in Net Assets ........................................ 32
Financial Highlights ...................................................... 33
Notes to Financial Statements ............................................. 34
For More Information ...................................... Inside back cover
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Letter from the President
Dear Fellow Shareholders:
We are pleased to report that for the six months ending January 31, 1999 the
Domini Social Equity Fund returned 7.13%, outperforming the S&P 500, which
returned 5.59%. In 1999, the Fund returned 22.63% outperforming the S&P for the
third consecutive calendar year.
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Average Annual Since
Total Return as 1 Year 5 Years Inception
of 12/31/99 (6/3/91)
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Domini Social 22.63% 29.58% 19.79%
Equity Fund
S&P 500 21.04% 28.58% 19.43%
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As a passively managed index fund, our fund attempts to reflect the performance
of the market for U.S. equities available to the socially responsible investor.
During the past 6 months, our portfolio benefited from an investing public
seeking companies with higher earnings growth and strong price momentum. We also
benefited from lower exposure to industries such as defense, aerospace,
chemicals, and industrial and electrical equipment stocks and emphasis on
companies in the semiconductor, computer software and hardware industries.
The six months ending January 31, 2000 were marked by an extreme divergence in
stock returns. The Dow Jones Industrial Average rose a mere 3.5% while the
technology-rich NASDAQ Composite rose over 49% in the period. Investors shrugged
off the prospects for higher interest rates and fled to communications and
technology companies where there continues to be strong growth potential. The
Domini Social Equity Fund, while maintaining representation in most sectors of
the economy, performed well in this market environment.
I am often asked to demonstrate the impact of socially responsible investing. It
is a question that goes to the very real hope, shared by most of our
investors, that through our fund they are participating in something that can
help to build a world of economic justice and of environmental sustainability.
Socially responsible investing has impact in a number of ways. Clearly, proxy
voting and shareholder activism can create direct results. Community development
investing can also result in nearly immediate improvements in people's lives.
One aspect of social investing that is frequently left out of the "impact"
debate is one that has arguably had the greatest impact -- social screening.
Over the past twenty or so years socially responsible investors have developed a
sophisticated set of tools with which to evaluate the role of the corporation in
society. Social investors are seeing corporations more clearly today than in the
days when we
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Letter from the President
simply avoided industries that were inconsistent with our lifestyle or with our
value systems. Although we still apply strict exclusionary screens to certain
industries such as tobacco and nuclear power, we are now able to more carefully
assess the many ways in which a company impacts all its stakeholders, through
extremely sensitive qualitative screens developed over years of careful research
and observation.
We are guided by the insight that while shareholders are the ultimate owners of
a corporation, a more inclusive definition of "stakeholder" is required because
each company's business practices also deeply affect communities, employees,
customers, suppliers and the natural environment. Through stakeholder eyes, we
look at each corporation and attempt to discern a corporate culture that
recognizes these various constituencies and treats each fairly.
Much of the credit for the development and refinement of this new evaluative
methodology must go to Kinder, Lydenberg, Domini & Co., Inc.(KLD), Domini Social
Investments' affiliate organization. KLD's research is based on information that
is widely available, quantifiable and is in some way significant. Once
indicators of a company's social profile are collected, the team that maintains
the Domini 400 Social Index, which this fund replicates, determines whether on
balance the company meets the standards for inclusion. Generally speaking,
outside of our exclusionary categories, no single indicator of positive or
negative impact will tilt the scales. Rather, a pattern of caring or a pattern
of neglect is sought.
KLD uses more than 100 indicators to build a social profile. When taken as a
whole, a picture of the company's culture emerges. Consider the case of a
company that supports its community's public institutions, has no recent class
action litigation, no product safety problems, intentionally purchases products
and services from firms owned by minorities or women, does not overpay the chief
executive officer and utilizes fuel efficient techniques in manufacturing.
Consider also that when controversies do arise, as they invariably will with
even the best corporations, this company responds quickly and appropriately. It
is clear that such a company has an on the ball management team and a pervasive
and positive corporate culture. Through social impact assessment, critical
information that is not reported in quarterly earnings reports and does not fall
into any easy category on a balance sheet comes to light.
There is a phrase we have used in our brochures for many years now -- "where
there is darkness, light a candle." The creation of baseline, ongoing systematic
corporate accountability information is the single most profound and powerful
impact our investors have. Social investors are lighting candles in boardrooms
all over America by creating the demand for this information. Every year, we see
more and more corporations respond by producing social and environmental reports
and by
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Letter from the President
addressing the important issues they reference. Further, America's socially
responsible investors have paved the way for similar funds globally. There are
now over a dozen social funds in the United Kingdom, five in Japan, two in
Australia, one in Malaysia, and new funds in Germany, France and Switzerland. We
understand there is also one in formation in Mexico. Each of these is building
and supporting culturally appropriate research. This in turn is leading to
global assessment of the role of corporations in society. The "bottom line" is
changing.
Socially responsible investors have a twenty-five year head start in thinking
about the appropriate and positive role that the corporation can play in
building a better tomorrow. We find ourselves now increasingly sought out for
opinions on evaluative methodologies, and on new issues such as genetically
modified food, and old issues with a new face, such as overseas contracting. It
is an exciting moment in the history of our field and we at Domini Social
Investments very much appreciate the support that you, our shareholders, have
given us.
In this semi-annual report we will share with you short profiles of some
companies in our portfolio that have demonstrated an innovative commitment to
their local communities. We hope that these models will serve as examples for
global operations of both US-based and international corporations as the world
becomes one.
Thank you for your continued confidence in the Fund. We look forward to helping
you to achieve both your financial and your broader goals throughout the years
ahead.
Sincerely yours,
/s/ Amy Domini
Amy Domini
[email protected]
Past performance is no guarantee of future results. Total Return for the Domini
Social Equity Fund (the "Fund") is based on the Fund's net asset value and
assumes all dividends and capital gains were reinvested. Economic and market
conditions change, and both will cause investment return and principal value to
fluctuate. Thus if you decide to sell your shares, you may receive more or less
than your original investment. The Standard & Poor's (S&P) 500 Index is an
unmanaged index of common stocks used to portray the pattern of common stock
movement based on the average performance of 500 widely held common stocks.
Investors cannot invest directly in the S&P 500 Index. The numbers quoted
represent actual mutual fund performance after all expenses. The Fund waived
certain fees during the period and the Fund's average annual total return would
have been lower had these not been waived. This material must be preceded or
accompanied by the Fund's current prospectus. DSIL Investment Services
LLC, Distributor. 3/00
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Domini News
Shareholder Activism
Domini Social Investments filed 10 resolutions for the 2000 proxy season and has
taken a lead role with four companies. We are engaged in dialogue with an
additional five companies. This year our efforts have focused primarily on the
issue of overseas sweatshops, and the environment. We recently withdraw our
resolution with McDonald's in exchange for the company's agreement to publish a
report on its website discussing its compliance program for its international
vendors. We commend McDonald's for this important step and hope the company will
choose to make a comprehensive report.
Proxy Voting
Last year, we became the first mutual fund manager in the country to publish its
proxy voting record so that the public, and our shareholders, can see whether we
are living up to our stated ideals as social investors. We are now entering our
second season as a fully transparent voter and continue to encourage other
mutual fund managers to follow our lead. Please visit www.domini.com and let us
know if you agree with our decisions -- we'd love to hear your opinions.
We were heartened to learn of SEC Commissioner Paul Carey's remarks to the
Investment Company Institute Procedure Conference in December on mutual fund
proxy voting. The Investment Company Institute is the trade organization of the
mutual fund industry. Speaking to an audience of mutual fund professionals,
Commissioner Carey noted "at least three" entities that have begun providing
voting information on their websites: Calpers, TIAA-Cref, and the Domini Social
Equity Fund. Commissioner Carey asked his audience to "consider whether
disclosing fund voting practices or policies would be useful information for
your shareholders." Following standard SEC procedure when making public
statements, the Commissioner noted that he was expressing his own views, and not
that of the Commission. We do hope, however, that this is a sign of things to
come from the SEC./1/ Read the complete speech online at
www.sec.gov/news/speeches/spch335.htm.
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/1/ Remarks by Paul R.Carey, Commissioner, U.S.Securities & Exchange Commission
to the Investment Company Institute Procedures Conference, December 9,
1999.
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Domini News
Save the Whales!
In October 1999 we joined a boycott of Mitsubishi stock led by the International
Fund for Animal Welfare and the National Resources Defense Council, to protest
the company's longstanding plans to build the world's largest salt factory in
Laguna San Ignacio, in Baja California Sur, Mexico, the last pristine breeding
grounds for the Eastern Pacific Gray Whale. We have been informed by IFAW that
Mitsubishi has agreed to cancel their plans. We offer our congratulations to
IFAW and NRDC for a job well done, and our sincere thanks for bringing this
issue to public attention. They have publicly commended Mitsubishi, and we join
them in thanking Mitsubishi for doing the right thing. Learn more at
www.savebajawhales.com, and send Mitsubishi your thanks.
Media Recognition
The word on socially responsible investing continues to spread. Since our Annual
Report in July, SRI and the Domini Social Equity Fund has received coverage in
such prominent publications as the Wall Street Journal, New York Times, Money
Magazine, the Boston Globe, the Chicago Tribune and numerous websites, including
CBSMarketwatch.com, CNBC Online and Businessweek Online.
Amy Domini was named one of Barron's "All Century Team" of "heavy hitters" of
the mutual fund industry, joining an impressive roster of 25 individuals
including Peter Lynch of Fidelity, John Bogle of Vanguard and Michael Lipper.
Barron's credited Amy, the only woman to make the team, with "making socially
responsible investing financially responsible as well." The article argued that
the Domini 400 Social Index and the Domini Social Equity Fund put "the notion
that good performance and goodness were mutually exclusive to the lie."/2/ Amy
continues to appear regularly on CNBC, and has appeared on various radio
stations and websites, including Morningstar.com and AOL Sage Online.
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/2/ Barron's Mutual Funds, Special Lipper Report on Fourth-Quarter Performance,
January 10, 2000, "All-Stars: A look at the fund world's heaviest hitters."
This material must be preceded or accompanied by the Fund's current
prospectus. DSIL Investment Services LLC,Distributor. 3/00
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Social Profiles
Community
The companies whose stock is held in the Domini Social Equity Fund's portfolio
are measured against multiple standards for corporate account ability. We seek
to avoid companies in the business of manufacturing alcohol and tobacco products
as well as those that provide gambling services or equipment. We also seek to
avoid companies that sell military weapons or are in the nuclear power industry.
In addition, we evaluate a company's social profile by weighing both strengths
and weaknesses in the areas of community impact, employee relations, the
environment, product safety and usefulness, non-U.S.operations and diversity.
The social research firm of Kinder, Lydenberg, Domini & Co.("KLD"), an affiliate
of Domini Social Investments, is responsible for maintaining the Domini 400
Social Index and developing and applying its social screens.
In each of our Annual and Semi-Annual Reports to shareholders, we present brief
social profiles of companies in our portfolio that we believe represent models
of corporate responsibility. Our colleagues in the faith-based community have
reflected that "in our understanding of global corporate responsibility, the
community rather than the company is the starting point of economic
life." Keeping that insight in mind, we present the following sampling of some
particularly innovative charitable giving programs.
The profiles are preceded by a brief discussion of the importance of "innovative
giving" and KLD's approach to this screen, which goes beyond the question of
"how much" does a firm give, to ask the more subtle and important question of
"how well" does a firm's charitable giving achieve its ends.
An Explanation of our "Innovative Giving" Screen
Charitable gifts are particularly effective if directed to groups promoting
systematic solutions to social problems and seeking to develop self-sufficiency
at a local level. Too often charitable giving inadvertently cultivates
dependency on the grant giving organization and promotes short-term relief for
the symptoms, rather than cures for the disease. Grants directed to the
empowerment of community groups are, in KLD's view, a notably effective and
efficient allocation of grants.
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Social Profiles
Traditionally, corporate giving programs have gone to education, hospitals and
social service organizations, and the arts. As a percentage of total giving
these causes have received on average approximately 50%, 30%, and 20%
respectively of traditional corporate giving programs. Gifts to education have
concentrated on higher education, often to well-established universities; gifts
to social services have focused on support for the United Way and large well-
established hospitals; and gifts to the arts on the largest and best-funded
cultural organizations. KLD considers such giving praiseworthy, but not
innovative.
Too rarely do corporations create a grant-giving program that sets out to
identify innovative groups. In 1997, according to research by the National
Network of Grantmakers, only 2.4% of a total $13.8 billion in foundation grants
went to organizations working specifically with the economically disadvantaged
or minority groups.
In KLD's view, corporate giving programs that take the time to identify and make
grants to these innovative organizations are particularly strong and worthy of
special mention. The types of organizations KLD looks for include those
community-based groups working to help low-income women return to the workplace,
to assist battered women or abused children gain control of their lives, to
develop quality child care programs, to create housing affordable for low-income
families, to help homeless families with food and shelter, to work with
teen-agers at risk of dropping out of school, and to provide skills training to
welfare recipients.
Of special note are long-term grants that provide operating support for
community organizations, and companies that have opened their workplaces to
federated drives that provide alternatives to the United Way.
Avon Products, Inc., based in New York City, manufactures and markets beauty and
beauty-related products including cosmetics, fragrances, and toiletries, gifts
and decorative products, apparel, fashion jewelry and accessories.
The company's Avon Products Foundation, founded in 1955, focuses its charitable
giving on women's and children's issues. In FY 1998, the company made grants to
several organizations including Magee Womancare International to develop a
series of infomercials on women's health to be aired on Russian television; The
Women's Commission for Refugee Women and Children, an organization that seeks to
improve the lives of refugee women and children; the Business and Professional
Women's
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Social Profiles
Foundation for a scholarship program for women seeking to reenter the work
force; and the Support Center for Nonprofit Management to help women's
organizations develop management.
Since 1987 Avon's annual Women of Enterprise award has provided six successful
women business owners the opportunity to speak to women across the country about
their experiences. Usually, women that receive the award have faced significant
adversity, including abuse, disability, and poverty.
The company supports a program that, by paying for household expenses, allows
single working mothers to attend college.
In 1993 Avon launched a five-year, cause-related marketing program in the U.S.
called the Avon Breast Cancer Awareness Crusade under which Avon representatives
sold pins for the benefit of numerous breast cancer education and early
detection programs, especially in underserved communities. From 1993 to 1998,
under the program, Avon representatives raised $25 million through sales of pins
in the U.S., and $50 million for community-based women's health programs
worldwide. In October 1998, the company announced that it planned to raise
another $50 million by the year 2000.
Ben & Jerry's Homemade, Inc., is based in South Burlington, Vermont. The firm's
"Ben & Jerry's Foundation" is remarkable in the corporate community for the
innovation of its giving. The Foundation has a nine-member board of
directors, which is composed of company employees chosen by their peers. Fifty
percent of the foundation's giving is distributed nationally, 35% is distributed
to programs in Vermont by employee-headed community action teams and 15% is
distributed to socially oriented business groups such as Businesses for Social
Responsibility.
Examples of the Foundation's generosity include a 1999 pledge to support the
Child Care Fund of Vermont with donations of $25,000 that year and the next.
Contributions in 1997 included $10,000 to Project ACCESS, which helps Hispanic
farmworkers document pesticide abuses and develop policy advocates. The company
sponsored the Indigo Girls Honor the Earth Tour in September 1997, which
advocated, gathered support, and raised money for indigenous peoples'
environmental groups. The tour focused on the issue of nuclear waste storage on
Native American lands. The list of grant recipients in 1996 included the Bus
Riders Union of Los Angeles, a multiracial, low-income group of
transit-dependent people that organizes to improve public transportation.
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Social Profiles
Ben & Jerry's has given time off and training to its employees to work with the
Vermont Campaign to End Childhood Hunger, an organization that promotes the
implementation of school breakfasts in Vermont public schools. The company also
has an alliance with the Children's Defense Fund to help raise awareness of
children's needs. Employee teams at each of the company's five Vermont sites
contribute a day of company time to a community project of their choice.
Projects have included renovation of community athletic fields, a public
library, and a playground.
Ben & Jerry's offers a unique franchise opportunity, called PartnerShops, to
nonprofit organizations. The company waives the $30,000 franchise fee and offers
its assistance and expertise in the start up and operation of the shop. The shop
provides a source of employment in the community and revenues for the
organization.
The firm has also committed resources to support for affordable housing
programs. In 1997 the company reported it had invested a total of $1.77 million
in five community development banks and five low-income housing projects. That
same year, the company's foundation donated $10,000 to A'TOLL, Inc., of Oregon,
a nonprofit organization that designs and implements innovative, alternative
methods of affordable housing development.
Since 1991 Ben & Jerry's has paid premium prices (based on a five-year average
of past prices) for milk and cream in order to support Vermont farmers.
Crown Cork & Seal Company, Inc., based in Philadelphia, manufactures metal food
and beverage cans and ends, and plastic packaging. In 1994, the company, in
partnership with corporations and community development organizations, formed a
program aimed at revitalizing inner-city neighborhoods called the Philadelphia
Area Accelerated Manufacturing Education Inc.(PhAME). Through this
program, individuals are trained and employed as precision machinists while
simultaneously studying, tuition free, for an associate degree in manufacturing
technology from the Community College of Philadelphia. Participants may then
pursue further study at Lehigh University. According to the Corporate
Philanthropy Report, as of September 1998 the company had contributed a total of
approximately $500,000 to PhAME. William Avery, the company's CEO, is the
program's chair.
In 1991 a former chair of the company (who served from 1957 to 1990) established
the Connelly Foundation, funded primarily with Crown stock. In 1998 the
Foundation Center, a nonprofit information organization, added the Connelly
Foundation to its list of the Top 100 Foundations ranked by total giving. The
Center reported that the Connelly Foundation gave approximately $18.1 million in
FY 1996.
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Social Profiles
In 1993 the company committed $1 million over several years to Project HOME, a
partnership that provides permanent housing for the homeless in Philadelphia.
Cummins Engine Company, Inc., based in Columbus, Indiana, manufactures and
markets diesel engines and natural gas engines for heavy-duty and mid-range
trucks, bus and light commercial vehicles, construction, industrial, and marine
equipment, power generation products and products for engine subsystems,
including filtration and turbocharging products.
The firm gives to an unusual variety of causes, including the Center for
Community Change, the Joint Neighborhood Project for children after school, and
the Indiana Youth Institute for a research and advocacy center. The company's
Consolidated Diesel subsidiary in Rocky Mount, North Carolina, has been involved
in school reform and the development of recreational facilities there.
Cummins' community contributions have included $50,000 to the Cooperative
Housing Foundation to support a housing program in Juarez, Mexico, $14,600 to
Human Services in Columbus, Indiana, for a homeless shelter and $650,000 to the
Columbus school district, where the company's headquarters are located, to
support a local government initiative to put a computer in every classroom in
the county.
The company has also provided operating support to ACCION-International, a
nonprofit organization providing microbusiness loans to entrepreneurs in
Hispanic neighborhoods in the U.S. And Latin America. The company's 1995 grants
included $29,200 to the City of Columbus, Indiana, to support a diversity
education program for the city's police force and $20,000 to the Chautauqua
Striders, a mentor program.
The company has an alternative giving program, the Cummins Employees Combined
Charities Fund, whereby employees may earmark counties and organizations of
their choice for payroll deduction contributions.
Dollar General Corporation operates more than 3,595 small retail merchandise
stores in 24 states, primarily in the midwestern and southeastern U.S. The
company's stores sell basic merchandise to low-, middle-, and fixed-income
families. In FY 1998, almost 50% of Dollar General's products cost one dollar or
less. The company targets smaller communities, with approximately 68% of its
stores in communities with populations of 25,000 or less. The firm is based in
Nashville, Tennessee.
The company has a history of strongly supporting innovative literacy
programs. The company's commitment to promoting literacy is motivated in part by
a desire to honor
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Social Profiles
the founder of the company, J.L. Turner, who was functionally illiterate. The
Dollar General Literacy Foundation was created in 1993 to assist literacy
organizations throughout the company's 24-state market area. In late 1998, the
Literacy Foundation reported that it served 2,900 persons in 31 programs across
18 states. Dollar General offers all company stores as sites for literacy
programs, as well as GED classes and tests. Through 1996, the GED and
Learn-to-Read programs had assisted more than 37,000 people. The company
established NashvilleREAD, a program to coordinate literacy agencies in
Nashville. The company set up a satellite campus in Scottsville, Kentucky, in
conjunction with a local college in order to provide access to higher education
for its workers. The company's stores serve as clearinghouses for the programs.
In 1993 the company opened a pilot store in the Sam Levy housing project,
located in an economically disadvantaged neighborhood of Nashville, Tennessee.
In partnership with the local government, the store provides literacy and
employment training, and includes the availability of child-care. The program
has since expanded to include two other stores in Nashville, one store in
Knoxville, Tennessee and one store in Columbia, South Carolina. The company
planned to open a sixth store with these programs in Mobile, Alabama in 1999.
General Mills Incorporated manufactures and markets packaged foods. The firm is
based in Minneapolis, Minnesota.
In December 1997, General Mills announced a partnership with Glory Foods, a
minority-owned food company, and The Stairstep Initiative, a community
organization, to create a frozen food company called Siyeza, Inc. The facility
is projected to create approximately 150 jobs by the year 2002 in the inner city
of Minneapolis. As of January 1999, fifty new jobs had been created. Employees
will have the opportunity to become part owners of the company. General Mills
has committed to a $1.5 million interest-free loan to the new company and has
assisted with business and marketing plans, legal advice, and package design.
Over 25 years ago, General Mills helped found the Minnesota Metropolitan
Economic Development Agency (MEDA) to encourage job creation by minority-owned
businesses in the inner city.
In FY 1998 and 1997, the company donated over $9 million worth of General Mills
products and made grants of approximately $100,000 to Second Harvest, a national
food distribution network.
In February 1998, the National Committee for Responsive Philanthropy reported
that the company was the top U.S. Company in grantmaking to programs for women
and girls of color, donating $453,000 in FY 1997.
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Social Profiles
A substantial portion of General Mills' foundation contributions (40% in 1997)
goes to operating support for existing programs. It is unusual for foundations
to support operating costs and indicates the company's long-term commitment to
communities.
General Mills' foundation is also innovative in its support for education. In
1997 General Mills committed $2.1 million to "Challenge U," an innovative
educational grants program for at-risk students who stay in school and succeed
academically. At certain secondary schools in Minneapolis, Minnesota, and
Toledo, Ohio, money is set aside for the college education of students in the
program. At the same time, the secondary schools themselves are eligible for
comparable grants. In 1998 the program was expanded to Lodi, California;
Covington, Georgia; Vallejo, California; Buffalo, New York; and Albuquerque, New
Mexico.
The company supplies significant funding for an Executive Leadership Council
project, formed by leading African American corporate executives that provides
information technology transfer to black colleges and universities.
In FY 1998, the foundation made grants to affordable housing initiatives,
including the Twin Cities and Buffalo, New York Habitat for Humanity, and the
Greater Minneapolis Metropolitan Housing Corporation. From 1986 through 1996,
the foundation donated a total of $336,000 in grants to Habitat for Humanity.
The company has pledged that over 1,000 company employees will be involved in
mentoring programs by the year 2000. The company provides matching grants for
employee contributions to educational and other nonprofit institutions. In FY
1998, the company matched $1.7 million of employee and retiree contributions.
Polaroid Corporation, based in Cambridge, Massachusetts, designs, manufactures,
and markets instant photographic cameras, films, electronic imaging devices, and
polarized filters and lenses. In May 1998, the company announced the creation of
a new sunglasses business subsidiary.
Polaroid's giving is unusual in its support of initiatives that address women's
issues. In 1998 the company reported recent grants of $10,000 to the New Bedford
Women's Center for programs that develop the confidence and abilities of women
who are victims of domestic violence, $15,000 to Steppingstone, a program
assisting women to build life improvement skills and $10,000 to Mujeres Unidas
en Accion for a program that aims to improve the literacy and health of Latino
women.
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Social Profiles
In 1993 the company funded the start-up cost of the Jane Doe Safety Fund, a
project of the Massachusetts Coalition of Battered Women's Service Group. It has
participated in a Harvard School of Public Health study of ten corporate
Employee Assistance Programs attempting to grapple with the effects of domestic
violence in the workplace. In 1995 Polaroid, along with three other
companies, founded the National Workplace Clearinghouse on Domestic Violence.
The company also sponsors educational symposia on domestic violence, funds
counseling for batterers, has flexible personnel policies to assist women, and
has trained approximately 15,000 law enforcement officers to use photography
effectively as evidence in court.
Polaroid gives small grants to a wide variety of community-based educational
organizations. In 1998 the company reported recent grants of $70,000 to United
Front Child Development Programs; $15,000 to La Alianza Hispana for expenses
associated with GED/ESL programs and employment training programs for Latinos;
$10,000 to the Caribbean Foundation of Boston for home health aide certification
and literacy instruction; and $10,000 to the Dorchester Bay Economic Development
Corporation for the training of low-income teens in employable computer skills.
Through the company's Adopt-a-School program, employees are encouraged to spend
time and promote environmental education by sharing their experiences and
skills. Many of the company's facilities also host environmental programs for
school groups.
As part of Polaroid's Volunteer Action Fund, employees who volunteer at least 50
hours of personal time per year at a single nonprofit organization may apply to
the company foundation for a small grant for that organization.
Polaroid has been a sponsor of KidCare, a children's safety project of the
National Center for Missing and Exploited Children. The company contributes its
film and cameras for the creation of photo IDs for children and takes part in
training events.
The Timberland Company, based in Stratham, New Hampshire, manufactures and
markets footwear, accessories and apparel.
Timberland has developed a highly unusual relationship with City Year, a
Boston-based community service organization for young adults. City Year has been
widely praised as an "urban peace corps" that recruits young people to work on
human service projects with city agencies. Jeffrey Swartz, the company's chief
executive officer, serves on City Year's board of directors.
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Social Profiles
In 1995 Timberland became the largest private contributor of funds to the
organization, by pledging $5 million over five years. Timberland has also
launched a line of apparel and accessories labeled "City Year Gear." The profits
are divided between City Year and the company stores for a community service
fund. The company provides City Year members with a full line of clothing and
footwear. In 1997, as part of its larger commitment to the organization,
Timberland pledged 5,000 pairs of boots and a $1 million challenge grant to City
Year. Timberland has used City Year personnel to provide diversity training for
Timberland's employees.
The firm stresses to all its employees that volunteerism is part of the company
culture through a number of means, including publication of a company newsletter
that focuses on its volunteer efforts. It allows all full time and part time
employees up to 40 hours of paid time off annually to work on community service
projects, half of which are chosen by the company and half by the employee. The
company organizes volunteer projects for its employees in the United
States, including Puerto Rico, and for its employees in the Dominican Republic.
Timberland reported that its employees contributed approximately 17,000 hours of
community service in 1997. The company has pledged that its employees will give
40,000 hours of community service by the year 2000 as part of its participation
in the President's Summit for America's Future. In September 1998, the company
received the Point of Light Foundation's Award for Excellence in Corporate
Community Service. At the time of the award, the company had already logged
33,000 hours of community service for the calendar year.
In 1998 the company began a national advertising campaign to encourage community
service among consumers. The company's website includes hyperlinks to help
consumers find information about community service opportunities in their
communities.
- ----------
Unlike other mutual funds, the Domini Social Equity Fund seeks to achieve its
investment objective by investing all of its investable assets in a separate
portfolio with an identical investment objective called the Domini Social Index
Portfolio ("DSIP"). As of January 31,2000, these companies represented the
following percentages of the DSIP: Avon Products, Inc., 0.001%; Ben & Jerry's
Homemade, Inc., 0.001%; Crown Cork & Seal Co., Inc., 0.001%; Cummins Engine Co.,
inc., 0.001%; Dollar General Corporation, 0.001%; General Mills Inc., 0.001%;
Polaroid Corp., 0.001%; The Timberland Co., 0.001%. The composition of the DSIP
is subject to change.
The preceding profiles should not be deemed an offer to sell or a solicitation
of an offer to buy the stock of any of the companies noted, or a recommendation
concerning the merits of any of these companies as an investment. This material
must be accompanied or preceded by the Fund's current prospectus. DSIL
Investment Services LLC, Distributor. 3/00
-15-
<PAGE>
Comparison of $10,000 Investment in the
Domini Social Equity Fund and S&P 500/1/
[GRAPH]
(Dollars in thousands)
- ---------------------------
Average Annual
Total Return
- ---------------------------
1 Year Ended 9.16%
- ---------------------------
5 Years Ended 27.34%
- ---------------------------
Inception (6/3/91)
to 1/31/00 /2/ 18.81%
Domini Social Equity Fund/2/ S&P 500
6/30/91 10 10
10/30/91 10.59134 10.67656
1/31/92 11.26964 11.20443
4/30/92 11.26964 11.45136
7/31/92 11.80416 11.8094
10/31/92 12.2204 11.74513
1/31/93 12.89376 12.39685
4/30/93 12.62491 12.52083
7/31/93 12.96598 12.8416
10/31/93 13.6461 13.50023
1/31/94 13.94968 13.99337
4/30/94 13.2057 13.18614
7/31/94 13.36719 13.50288
10/31/94 13.85207 14.02062
1/31/95 13.97643 14.05953
4/30/95 15.20832 15.47674
7/31/95 16.72338 17.01578
10/31/95 17.41034 17.7157
1/31/96 18.85141 19.49132
4/30/96 19.48813 20.1598
7/31/96 19.08306 19.83869
10/31/96 21.20848 21.98457
1/31/97 23.9672 24.63018
4/30/97 24.76304 25.21475
7/31/97 29.38935 30.15839
10/31/97 28.15276 29.05176
1/31/98 30.95879 31.24764
2/28/98 33.252 33.493
3/31/98 34.63 35.212
4/30/98 34.815 35.579
5/31/98 34.167 34.959
6/30/98 35.927 36.379
7/31/98 35.73 35.992
8/31/98 30.451 30.781
9/30/98 32.396 32.753
10/31/98 35.221 35.417
11/30/98 37.525 37.564
12/31/98 40.372 39.728
1/31/99 42.871 41.389
2/28/99 40.947 40.103
3/31/99 42.273 41.708
4/30/99 43.294 43.323
5/31/99 42.320 42.300
6/30/99 45.009 44.648
7/31/99 43.683 43.254
8/31/99 43.554 43.038
9/30/99 42.145 41.858
10/31/99 44.975 44.507
11/30/99 46.653 45.411
12/31/99 49.506 48.086
1/31/2000 46.799 45.67
Past performance is not predictive of future results.
1 The performance information in this chart represents past performance.
The investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less
than their original cost. The S&P 500 is an unmanaged index used to
portray the pattern of common stock movement based on the average
performance of 500 widely held common stocks. The index does not pay
expenses.
2 The Fund began investing in the stocks comprising the Domini 400 Social
Index on June 3, 1991. The above chart begins on June 30, 1991.
-16-
<PAGE>
Domini Social Index Portfolio
Portfolio of Investments
January 31, 2000 (unaudited)
Issuer Shares Value
- ------ ------ -----
Basic Materials-- 1.1%
Air Products & Chemicals, Inc. ............. 57,800 $ 1,712,325
Alcoa, Inc. ................................ 92,400 6,439,125
Bemis Company, Inc. ........................ 13,100 413,469
Cabot Corporation .......................... 16,500 396,000
Calgon Carbon Corporation .................. 9,300 67,425
Caraustar Industries, Inc. ................. 6,400 123,600
Catalytica, Incorporated (b) ............... 9,300 133,106
Consolidated Papers, Inc. .................. 22,500 621,563
Echo Bay Mines Ltd. ........................ 33,400 43,838
Ecolab Inc. ................................ 32,400 1,140,075
Fuller (H.B.) Company ...................... 3,500 227,500
IMCO Recycling Inc. ........................ 3,800 43,225
Mead Corporation ........................... 25,700 957,325
Minerals Technologies Inc. ................. 5,100 230,138
Nucor Corporation .......................... 21,850 1,087,038
Praxair, Inc. .............................. 40,100 1,626,556
Ryerson Tull, Inc. ......................... 6,400 122,000
Sigma-Aldrich Corporation .................. 25,100 840,850
Sonoco Products Company..................... 25,345 506,900
Stillwater Mining Company (b) .............. 9,500 338,438
Westvaco Corporation ....................... 25,100 688,681
Worthington Industries, Inc. ............... 22,100 319,069
----------
18,078,246
----------
Capital Goods-- 2.1%
Ault Incorporated (b) ...................... 500 3,906
Avery Dennison Corporation ................. 28,400 1,924,100
Issuer Shares Value
- ------ ------ -----
Capital Goods-- Continued
Baldor Electric Company .................... 9,100 $ 155,269
Brady Corporation .......................... 5,800 164,938
CLARCOR Inc. ............................... 5,750 99,906
Cooper Industries, Inc. .................... 23,500 901,813
Cross (A.T.) Company (b) ................... 4,000 19,500
Crown Cork & Seal Company, Inc. ............ 30,200 613,438
Cummins Engine Company, Inc. ............... 10,400 397,800
Deere & Company ............................ 58,900 2,573,194
Dionex Corporation (b) ..................... 5,400 155,250
Emerson Electric Co. ....................... 109,600 6,034,850
Fastenal Company (b) ....................... 9,500 415,625
Graco Inc. ................................. 4,975 152,981
Granite Construction Incorporated .......... 6,550 130,591
Herman Miller, Inc. ........................ 19,800 431,888
HON Industries, Inc. ....................... 14,700 282,975
Hubbell Incorporated ....................... 16,160 419,150
Hunt Corporation ........................... 1,600 16,000
Hutchinson Technology Incorporated (b) ..... 5,700 92,625
Illinois Tool Works Inc. ................... 75,800 4,434,300
Ionics, Inc. (b) ........................... 3,900 115,538
Isco, Inc. (b) ............................. 800 4,300
Lawson Products, Inc. ...................... 2,300 52,900
Leggett & Platt, Inc. ...................... 49,500 891,000
Merix Corporation (b) ...................... 1,500 21,000
Milacron Inc. .............................. 8,600 103,738
Millipore Corporation ...................... 11,400 488,063
Molex Incorporated ......................... 39,537 2,011,445
Moore Corporation .......................... 21,100 122,644
National Service Industries, Inc. .......... 10,300 256,213
New England Business Service, Inc. ......... 3,300 64,969
-17-
<PAGE>
Domini Social Index Portfolio / Portfolio of Investments--(Continued)
January 31, 2000 (unaudited)
Issuer Shares Value
- ------ ------ -----
Capital Goods -- Continued
Nordson Corporation ........................ 4,200 $ 180,600
Osmonics, Inc. (b) ......................... 3,300 28,050
Pitney Bowes Inc. .......................... 66,900 3,278,100
Sealed Air Corporation (b) ................. 20,900 1,173,013
Smith (A.O.) Corporation ................... 5,400 106,313
Solectron Corporation (b) .................. 73,900 5,366,988
Spartan Motors, Inc. ....................... 1,700 6,906
Standard Register Company .................. 6,700 103,850
Steelcase Inc. ............................. 5,700 64,838
Thomas & Betts Corporation ................. 14,600 444,388
Thomas Industries Inc. ..................... 3,800 70,775
Watts Industries, Inc. ..................... 6,300 95,288
----------
34,471,018
----------
Communication Services -- 9.2%
AT&T Corp. ................................. 805,877 42,510,012
Bell Atlantic Corporation .................. 391,622 24,256,088
BellSouth Corporation ...................... 474,700 22,340,569
Citizens Utilities Company ................. 65,367 968,249
SBC Communications Inc. ..................... 860,328 37,101,645
Sprint Corporation ......................... 219,800 14,218,313
Telephone and Data Systems, Inc. ........... 15,600 1,622,400
U S West, Inc. ............................. 127,441 8,474,826
-----------
151,492,102
-----------
Consumer Cyclicals -- 11.2%
American Greetings Corporation ............. 16,100 356,213
Angelica Corporation ....................... 2,100 19,425
Apogee Enterprises, Inc. ................... 6,700 30,988
AutoZone, Inc. (b) ......................... 36,800 966,000
Bandag, Incorporated ....................... 5,300 126,206
Banta Corporation .......................... 6,550 124,450
Bassett Furniture Industries ............... 2,900 38,425
Issuer Shares Value
- ------ ------ -----
Consumer Cyclicals -- Continued
Black & Decker Corporation ................. 21,900 $ 877,369
Block (H&R), Inc. .......................... 24,500 1,056,563
Brown Shoe Company, Inc. ................... 4,400 45,650
Centex Corporation ......................... 14,800 325,600
Champion Enterprises, Inc. (b).............. 11,600 89,175
Charming Shoppes, Inc. (b) ................. 25,300 172,356
Cintas Corporation ......................... 27,800 1,302,258
Circuit City Stores, Inc. .................. 51,300 1,975,050
Claire's Stores, Inc. ...................... 12,300 230,625
Cooper Tire and Rubber Company ............. 19,000 248,188
Costco Wholesale Corporation (b) ........... 111,930 5,477,574
Dana Corporation ........................... 41,100 965,850
Delphi Automotive Systems Corp. ............ 142,500 2,467,031
DeVry Inc. (b) ............................. 17,500 322,656
Dillard, Inc. .............................. 26,700 512,306
Dollar General Corporation ................. 67,101 1,425,896
Donnelly Corporation ....................... 1,400 18,463
Dow Jones & Company ........................ 22,600 1,401,200
Enesco Group, Inc. ......................... 3,400 33,363
Fedders Corporation ........................ 8,500 44,625
Federal-Mogul Corporation .................. 18,100 273,763
Fleetwood Enterprises, Inc. ................ 8,500 138,656
Gap, Inc. (The) ............................ 215,987 9,651,919
Genuine Parts Company ...................... 44,500 1,073,563
Gibson Greetings, Inc. (b) ................. 3,800 33,250
Handleman Company (b) ...................... 7,200 75,600
Harcourt General ........................... 17,900 716,000
Harland (John H.) Company .................. 7,200 120,600
-18-
<PAGE>
Domini Social Index Portfolio / Portfolio of Investments--(Continued)
January 31, 2000 (unaudited)
Issuer Shares Value
- ------ ------ -----
Consumer Cyclicals -- Continued
Harman International
Industries, Inc. .......................... 4,230 $ 246,926
Hartmarx Corporation (b) ................... 7,800 23,888
Hillenbrand Industries, Inc. ............... 16,500 561,000
Home Depot, Inc. ........................... 580,697 32,881,968
Huffy Corporation .......................... 2,500 14,219
IMS Health Incorporated .................... 77,300 1,734,419
Interface, Inc. ............................ 12,800 62,400
Jostens, Inc. .............................. 8,000 187,500
Kaufman & Broad Home Corporation ........... 11,500 249,406
Kmart Corporation (b)....................... 123,500 1,034,313
Lands' End, Inc. (b) ....................... 7,600 261,725
Lee Enterprises, Inc. ...................... 11,200 297,500
Lillian Vernon Corporation ................. 2,200 25,575
Limited, Inc.(The) ......................... 54,200 1,663,263
Liz Claiborne, Inc. ........................ 14,800 500,425
Lowe's Companies, Inc. ..................... 96,400 4,301,850
Marriott International, Inc. ............... 62,700 1,947,619
Mattel, Inc. ............................... 105,285 1,098,912
May Department Stores Company .............. 84,300 2,623,838
Maytag Corporation ......................... 21,600 874,800
McGraw-Hill Companies, Inc. ................ 49,500 2,775,094
Media General, Inc. ........................ 6,700 348,819
Men's Wearhouse, Inc. (b) .................. 10,500 250,688
Meredith Corporation........................ 13,000 455,000
Modine Manufacturing Company ............... 7,100 175,725
New York Times Company ..................... 43,100 1,969,131
Nordstrom, Inc. ............................ 34,700 763,400
Omnicom Group Inc. ......................... 44,800 4,197,200
Oshkosh B'Gosh, Inc. ....................... 3,800 68,875
Penney (J.C.) Company, Inc. ................ 65,600 1,287,400
Issuer Shares Value
- ------ ------ -----
Consumer Cyclicals -- Continued
Pep Boys - Manny, Moe & Jack ............... 12,600 $ 91,350
Phillips-Van Heusen Corporation ............ 6,600 44,550
Reebok International Ltd. (b) .............. 13,400 98,825
Rouse Company (The) ........................ 18,000 400,500
Russell Corporation ........................ 7,900 118,006
Scholastic Corporation (b) ................. 4,100 264,450
Sears, Roebuck and Co. ..................... 95,300 2,948,344
Service Corporation International .......... 68,000 310,250
Shaw Industries, Inc. ...................... 33,000 447,563
Sherwin-Williams Company (The) ............. 41,800 736,725
Skyline Corporation ........................ 2,200 45,375
Snap-On Incorporated ....................... 16,250 436,719
Springs Industries, Inc. ................... 4,300 156,413
SPX Corporation (b) ........................ 7,715 570,910
Stanley Works (The) ........................ 22,600 567,825
Staples, Inc. (b) .......................... 117,100 2,788,444
Stride Rite Corporation .................... 11,200 67,900
Tandy Corporation .......................... 48,800 2,385,100
Target Corporation (b) ..................... 111,100 7,339,544
Tennant Company ............................ 2,100 68,250
Timberland Company (The) (b) ............... 5,200 192,400
Times Mirror Company ....................... 17,200 1,018,025
TJX Companies, Inc. ........................ 78,500 1,280,530
Toro Company ............................... 3,000 101,810
Toys `R' Us, Inc. (b) ...................... 61,220 631,330
Venator Group, Inc. (b) .................... 35,000 210,000
VF Corporation ............................. 29,500 765,155
Wal-Mart Stores, Inc. ...................... 1,122,300 61,445,925
Washington Post Company .................... 2,600 1,430,000
Wellman, Inc. .............................. 8,500 147,687
Whirlpool Corporation ...................... 18,600 1,083,450
-----------
183,813,089
-----------
-19-
<PAGE>
Domini Social Index Portfolio / Portfolio of Investments--(Continued)
January 31, 2000 (unaudited)
Issuer Shares Value
- ------ ------ -----
Consumer Staples -- 13.7%
Alberto-Culver Company ..................... 14,000 $ 343,875
Albertson's, Inc. .......................... 106,800 3,270,750
Avon Products, Inc. ........................ 64,400 2,048,725
Ben & Jerry's Homemade, Inc. (b) ........... 1,200 27,300
Bergen Brunswig Corporation ................ 33,536 220,080
Bestfoods .................................. 70,300 3,058,050
Bob Evans Farms, Inc. ...................... 10,400 165,100
Campbell Soup Company ...................... 107,900 3,392,106
Church & Dwight Co., Inc. .................. 9,800 216,213
Clorox Company ............................. 59,600 2,845,900
Coca-Cola Company .......................... 622,900 35,777,819
Colgate-Palmolive Company .................. 146,900 8,703,825
Comcast Corporation (b) .................... 218,800 10,064,800
CVS Corporation ............................ 98,800 3,451,825
Darden Restaurants, Inc. ................... 32,800 520,700
Deluxe Corporation ......................... 18,400 492,200
Disney,Walt Company (The) .................. 520,100 18,886,131
Donnelley (R.R.) & Sons Company............. 31,500 691,031
Fleming Companies, Inc. .................... 8,900 89,000
Fort James Corporation ..................... 54,700 1,463,225
General Mills Incorporated ................. 76,600 2,388,963
Gillette Company ........................... 270,500 10,177,563
Great Atlantic & Pacific Tea Company, Inc. . 9,700 267,963
Hannaford Bros. Co. ........................ 10,700 750,338
Heinz (H.J.) Company ....................... 90,400 3,361,750
Hershey Foods Corporation .................. 34,900 1,483,250
Kellogg Company ............................ 102,200 2,478,350
Kelly Services, Inc. ....................... 9,075 229,144
Issuer Shares Value
- ------ ------ -----
Consumer Staples -- Continued
Kimberly-Clark Corporation ................. 137,264 $ 8,501,789
Kroger Co. (b) ............................. 209,800 3,645,275
Longs Drug Stores Corporation .............. 9,400 202,100
Luby's, Inc. ............................... 5,400 59,063
McDonald's Corporation ..................... 341,500 12,699,531
MediaOne Group, Inc.(b) .................... 154,300 12,266,850
Nature's Sunshine Products, Inc. ........... 3,800 33,250
Newell Rubbermaid Inc. ..................... 71,178 2,135,340
Odwalla, Inc. (b) .......................... 500 3,531
Oneida Ltd. ................................ 4,000 84,500
PepsiCo, Inc. .............................. 367,100 12,527,288
Procter & Gamble Company ................... 331,400 33,429,975
Quaker Oats Company ........................ 33,700 2,000,938
Ralston Purina Company ..................... 81,600 2,289,900
Ruby Tuesday, Inc. ......................... 7,400 138,750
Ryan's Family Steakhouse, Inc. (b) ......... 8,400 75,075
Smucker (J.M.) Company ..................... 7,000 122,500
Starbucks Corporation (b) .................. 45,600 1,459,200
SUPERVALU Inc. ............................. 34,600 622,800
SYSCO Corporation .......................... 83,100 2,955,244
TCBY Enterprises, Inc. ..................... 4,100 13,837
Tootsie Roll Industries, Inc. .............. 8,320 262,080
Tupperware Corporation ..................... 13,800 225,113
Viacom, Inc. (b) ........................... 34,900 1,947,854
Walgreen Company ........................... 253,100 6,991,887
Wendy's International, Inc. ................ 30,000 564,375
Whitman Corporation ........................ 35,500 445,968
Whole Foods Market, Inc. (b) ............... 6,400 294,400
-20-
<PAGE>
Domini Social Index Portfolio / Portfolio of Investments--(Continued)
January 31, 2000 (unaudited)
Issuer Shares Value
- ------ ------ -----
Consumer Staples -- Continued
Wild Oats Markets, Inc.(b) ................. 5,550 $ 91,575
Wrigley (Wm.) Jr. Company .................. 29,200 2,277,600
-----------
225,233,564
-----------
Energy -- 0.6%
Anadarko Petroleum Corporation ............. 32,200 1,056,563
Atlantic Richfield Company ................. 81,400 6,267,800
Helmerich & Payne, Inc. .................... 12,500 293,750
Rowan Companies, Inc.(b) ................... 20,800 471,900
Santa Fe Snyder Corporation (b) ............ 45,500 332,719
Sunoco, Inc................................. 22,500 518,906
Union Pacific Resources Group, Inc.......... 63,000 693,000
---------
9,634,638
---------
Financials -- 13.9%
Aetna, Inc ................................. 39,070 2,080,478
AFLAC Inc. ................................. 67,100 2,914,656
American Express Company ................... 112,900 18,607,331
American General Corporation ............... 62,362 3,831,365
American International Group, Inc........... 390,437 40,654,253
Bank One Corporation ....................... 289,285 8,624,310
Capital One Financial Corporation .......... 49,700 2,037,700
Chittenden Corporation ..................... 6,761 191,421
Chubb Corporation
44,400 2,497,500
CIGNA Corporation .......................... 48,600 3,487,050
Cincinnati Financial Corporation ........... 41,085 1,181,194
Dime Bancorp, Inc........................... 28,400 401,150
Edwards (A.G.), Inc......................... 23,387 774,694
Fannie Mae ................................. 258,500 15,493,844
Fifth Third Bancorp ........................ 77,825 5,165,634
Issuer Shares Value
- ------ ------ -----
Financials -- Continued
First Tennessee National Corporation ....... 32,900 $ 859,513
Firstar Corporation ........................ 247,200 5,901,900
FirstFed Financial Corp.(b) ................ 4,000 52,250
Freddie Mac ................................ 175,300 8,797,869
Golden West Financial ...................... 40,600 1,195,163
Household International, Inc. .............. 118,546 4,178,747
HSB Group, Inc. ............................ 7,350 202,584
Jefferson-Pilot Corporation ................ 26,450 1,553,938
Lincoln National Corporation ............... 49,300 1,821,019
Marsh & McLennan Companies, Inc. ........... 67,250 6,321,500
MBIA Inc. .................................. 25,100 1,256,569
MBNA Corporation ........................... 202,250 5,106,813
Mellon Financial Corp. ..................... 128,300 4,402,294
Merrill Lynch & Co., Inc. .................. 93,500 8,111,125
MGIC Investment Corporation ................ 27,000 1,257,188
Morgan (J.P.) & Co. Incorporated ........... 43,700 5,366,906
National City Corporation .................. 155,500 3,362,688
Northern Trust Corporation ................. 56,100 3,387,038
PNC Bank Corp. ............................. 74,800 3,590,400
Progressive Corporation (The) .............. 18,300 1,139,175
Providian Financial Corporation ............ 35,800 3,020,625
ReliaStar Financial Corp. .................. 22,400 665,000
SAFECO Corporation ......................... 32,500 796,250
Schwab (Charles) Corporation ............... 206,800 7,457,724
SLM Holding Corporation .................... 40,100 1,561,393
St.Paul Companies, Inc. (The) .............. 57,364 1,731,675
-21-
<PAGE>
Domini Social Index Portfolio / Portfolio of Investments--(Continued)
January 31, 2000 (unaudited)
Issuer Shares Value
- ------ ------ -----
Financials -- Continued
SunTrust Banks, Inc. ....................... 80,700 $ 4,806,694
Synovus Financial Corp. .................... 69,950 1,329,050
Torchmark Corporation ...................... 32,900 828,669
U.S. Bancorp................................ 183,500 4,071,405
UnumProvident Corp.......................... 60,500 1,618,375
Value Line, Inc. ........................... 2,400 88,200
Wachovia Corporation ....................... 51,100 3,273,594
Washington Mutual, Inc...................... 145,602 3,694,650
Wells Fargo & Company ...................... 414,200 16,568,000
Wesco Financial Corporation ................ 1,800 477,000
-----------
227,795,563
-----------
Healthcare -- 7.7%
Acuson Corporation (b) ..................... 6,400 86,400
ADAC Laboratories (b) ...................... 4,900 64,313
Allergan, Inc. ............................. 33,200 1,892,400
ALZA Corporation (b) ....................... 25,500 910,031
Becton Dickinson and Company ............... 63,100 1,652,431
Biomet, Inc. ............................... 28,500 1,134,656
Boston Scientific Corporation (b) .......... 104,600 2,170,450
Forest Laboratories, Inc. (b) .............. 21,100 1,424,250
Guidant Corporation (b) .................... 77,500 4,078,438
Humana Inc. (b) ............................ 41,900 335,200
Johnson & Johnson .......................... 350,700 30,182,119
Mallinckrodt Inc. .......................... 17,600 507,100
Manor Care, Inc. (b) ....................... 25,600 340,800
McKesson HBOC, Inc ......................... 71,020 1,460,349
Medtronic,Inc .............................. 301,500 13,793,625
Merck & Co., Inc ........................... 589,500 46,459,969
Mylan Laboratories, Inc. ................... 32,600 867,975
Oxford Health Plans, Inc. (b) .............. 20,600 292,263
Schering-Plough Corporation ................ 370,500 16,302,000
St. Jude Medical, Inc. (b) ................. 21,000 521,063
Issuer Shares Value
- ------ ------ -----
Healthcare -- Continued
Stryker Corporation ........................ 24,500 $ 1,543,500
Sunrise Medical Inc. (b) ................... 5,300 25,175
United American Healthcare Corporation (b) . 800 1,000
Watson Pharmaceuticals, Inc. (b) ........... 24,200 975,561
-----------
127,021,068
-----------
Industrial, Construction & Housing -- 0.1%
American Power Conversion (b) .............. 48,200 1,330,021
---------
1,330,021
---------
Natural Resources -- 0.1%
Apache Corporation ......................... 28,800 1,051,200
---------
1,051,200
---------
Technology -- 36.8%
3Com Corporation (b) ....................... 88,100 4,471,075
Adaptec, Inc. (b) .......................... 25,600 1,340,800
ADC Telecommunications, Inc. (b) ........... 37,700 2,485,844
Advanced Micro Devices, Inc. (b) ........... 36,800 1,334,000
Analog Devices, Inc. (b) ................... 44,000 4,114,000
Apple Computer, Inc. (b) ................... 40,600 4,212,250
Applied Materials, Inc. (b) ................ 95,400 13,093,650
Arrow Electronics, Inc. (b) ................ 23,900 501,900
Autodesk, Inc. ............................. 15,300 467,606
Automatic Data Processing, Inc. ............ 157,674 7,479,660
Avnet, Inc ................................. 10,400 558,350
BMC Software, Inc. (b) ..................... 61,100 2,314,163
Ceridian Corporation (b) ................... 36,200 579,200
Cisco Systems, Inc. ........................ 825,000 90,337,500
Compaq Computer Corporation ................ 428,788 11,738,072
Computer Associates International, Inc. ... 135,900 9,334,631
-22-
<PAGE>
Domini Social Index Portfolio / Portfolio of Investments--(Continued)
January 31, 2000 (unaudited)
Issuer Shares Value
- ------ ------ -----
Technology -- Continued
Compuware Corporation (b) .................. 90,300 $ 1,913,231
CPI Corp. .................................. 2,400 53,550
Dell Computer Corporation (b) .............. 640,800 24,710,850
EMC Corporation (b) ........................ 256,600 27,327,900
Gerber Scientific Inc. ..................... 5,300 98,713
Grainger (W.W.), Inc. ...................... 23,400 1,121,738
Hewlett-Packard Company .................... 257,000 27,820,250
Ikon Office Solutions, Inc. ................ 37,600 303,150
Inprise Corporation (b) .................... 14,600 178,850
Intel Corporation .......................... 842,600 83,364,738
Lexmark International Group, Inc. (b) ...... 32,200 3,034,850
LSI Logic Corporation (b) .................. 37,500 3,065,625
Lucent Technologies, Inc. .................. 790,200 43,658,550
Micron Technology, Inc. (b) ................ 68,100 4,234,969
Microsoft Corporation (b) .................. 1,301,400 127,374,525
National Semiconductor Corporation (b) ..... 43,300 2,273,250
Novell, Inc. (b) ........................... 84,000 2,803,500
Paychex, Inc. .............................. 62,200 2,740,688
PE Corp-PE Biosystems Group (b) ............ 6,550 1,319,416
PeopleSoft, Inc. (b) ....................... 67,700 1,523,250
Polaroid Corporation ....................... 10,600 251,750
QRS Corporation (b) ........................ 3,400 245,650
Qualcomm Inc. (b) .......................... 166,400 21,132,800
Sanmina Corporation (b) .................... 14,700 1,561,875
Scientific-Atlanta, Inc. ................... 19,800 1,525,838
Shared Medical Systems Corporation ......... 6,700 296,475
Sun Microsystems, Inc. (b) ................. 394,000 30,953,625
Symantec Corporation (b) ................... 14,500 725,906
Issuer Shares Value
- ------ ------ -----
Technology -- Continued
Tektronix, Inc. ............................ 11,700 $ 474,581
Tellabs, Inc. (b) .......................... 101,500 5,481,000
Texas Instruments Incorporated ............. 202,300 21,823,113
Xerox Corporation .......................... 167,500 3,496,560
Xilinx, Inc. (b) ........................... 80,400 3,678,300
-----------
604,931,767
-----------
Transportation -- 0.8%
Airborne Freight Corporation ............... 12,300 238,313
Alaska Air Group, Inc. (b) ................. 6,700 213,563
AMR Corporation (b) ........................ 40,900 2,200,931
Consolidated Freightways Corporation (b) ... 4,700 27,319
Delta Air Lines, Inc. ...................... 34,600 1,602,413
FDX Holding Corporation (b) ................ 75,300 2,979,056
GATX Corporation ........................... 12,400 356,500
Norfolk Southern Corporation ............... 96,000 1,632,000
Roadway Express, Inc. ...................... 4,700 108,100
Ryder System, Inc. ......................... 16,800 370,650
Southwest Airlines Co. ..................... 127,175 2,026,852
UAL Corporation (b) ........................ 13,400 765,475
Yellow Corporation (b) ..................... 6,000 91,500
----------
12,612,672
----------
Utilities -- 8.77%
AGL Resources Inc. ......................... 14,400 246,600
American Water Works, Inc. ................. 24,000 582,000
Cascade Natural Gas Corporation ............ 2,600 38,513
Cleco Corporation .......................... 5,500 184,938
Connecticut Energy Corporation ............. 2,500 103,594
Eastern Enterprises (b) .................... 6,800 388,875
El Paso Energy Corporation ................. 57,600 1,857,600
Energen Corporation ........................ 6,900 119,025
Enron Corp. ................................ 180,500 12,172,469
-23-
<PAGE>
Domini Social Index Portfolio / Portfolio of Investments--(Continued)
January 31, 2000 (unaudited)
Issuer Shares Value
- ------ ------ -----
Utilities-- Continued
Equitable Resources,
Inc........................................ 8,100 $ 279,450
IDACORP Inc................................. 9,500 318,844
KeySpan Corporation......................... 33,700 789,844
LG&E Energy Corp. .......................... 32,200 547,400
MCN Energy Group,Inc........................ 21,300 548,475
National Fuel Gas Company .................. 9,700 432,256
New Century Energies, Inc. ................. 28,900 836,290
NICOR Inc. ................................. 11,800 404,150
Northwest Natural Gas Company .............. 5,800 118,900
Northwestern Corporation.................... 5,300 117,263
OGE Energy Corp............................. 19,400 394,060
Issuer Shares Value
- ------ ------ -----
Utilities-- Continued
Peoples Energy
Corporation................................ 8,900 278,125
Potomac Electric Power Company.............. 29,600 714,100
Questar Corporation......................... 20,600 315,425
Washington Gas Light Company................ 11,600 291,450
Williams Companies, Inc..................... 109,600 4,247,000
----------
26,326,646
----------
Total Investments (a)
98.8% ...................................... $1,623,791,594
Other Assets, less liabilities--1.2% ....... 20,324,234
----------
Net Assets--100.0% ..................................... $1,644,115,828
===== ==============
- ----------
(a) The aggregate cost for book and federal income tax purposes is
$1,184,250,167, the aggregate gross unrealized appreciation is $506,503,389
and the aggregate gross unrealized depreciation is $66,960,960, resulting
in net unrealized appreciation of $439,541,427.
(b) Non-income producing security.
-24-
<PAGE>
Domini Social Index Portfolio
Statement of Assets and Liabilities
January 31, 2000 (unaudited)
ASSETS:
Investments at value (Cost $1,184,250,167) ............... $1,623,791,594
Cash ..................................................... 17,711,370
Receivable for securities sold ........................... 1,611,720
Dividends receivable ..................................... 1,335,971
-------------
Total assets ........................................... 1,644,450,655
-------------
LIABILITIES:
Accrued expenses (Note 2) ................................ 334,827
-------
Total liabilities .......................................... 334,827
-------
NET ASSETS APPLICABLE TO INVESTORS'
BENEFICIAL INTERESTS ..................................... $1,644,115,828
==============
See Notes to Financial Statements
-25-
<PAGE>
Domini Social Index Portfolio
Statement of Operations
Six Months Ended January 31, 2000 (unaudited)
INVESTMENT INCOME
Dividends (net of foreign withholding
tax of $304) ................................... $7,028,645
EXPENSES
Management fee (Note 2) ......................... $1,504,680
Professional fees ............................... 52,157
Custody fees (Note 3) ........................... 165,296
Trustee fees .................................... 9,308
Miscellaneous ................................... 2,365
-----
Total expenses .................................. 1,733,806
Fees paid indirectly ........................... (152,700)
Expenses paid and fee waived by manager ........ (47,176)
--------- ---------
Net expenses ................................... 1,533,930
---------
NET INVESTMENT INCOME ............................ 5,494,715
Net realized gain on investments
Proceeds from sales ............................. $26,354,461
Cost of securities sold ......................... 24,419,372
Net realized gain on investments ............... 1,935,089
Net changes in unrealized appreciation
of investments
Beginning of period ............................. $338,923,398
End of period ................................... 439,541,427
-----------
Net change in unrealized appreciation .......... 100,618,029
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ....................... $108,047,833
============
See Notes to Financial Statements
-26-
<PAGE>
Domini Social Index Portfolio
Statement of Changes in Net Assets
Six Months Ended
January 31,2000 Year Ended
(unaudited) July 31,1999
----------- ------------
INCREASE (DECREASE) IN NET ASSETS
From Operations:
Net investment income ....................... $ 5,494,715 $ 7,958,967
Net realized gain on investments ............ 1,935,089 15,875,272
Net change in unrealized apprecation of
investments ................................ 100,618,029 163,202,630
-------------- --------------
Net Increase in Net Assets Resulting from
Operations ........................ 108,047,833 187,036,869
-------------- --------------
Transactions in Investors' Beneficial
Interest:
Additions ................................... 294,103,369 531,746,685
Reductions .................................. (105,440,155) (13,614,408)
-------------- --------------
Net Increase in Net Assets from Transactions
in Investors' Beneficial Interests .... 188,663,214 518,132,277
-------------- --------------
Total Increase in Net Assets ............. 296,711,047 705,169,146
NET ASSETS:
Beginning of period ......................... 1,347,404,781 642,235,635
-------------- --------------
End of period ............................... $1,644,115,828 $1,347,404,781
============== ==============
================================================================================
Financial Highlights
<TABLE>
<CAPTION>
Six Months Ended Year Ended July 31,
January 31,2000 --------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996
----------- -------------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Assets (000's) ........... $ 1,644,116 $ 1,347,405 $ 642,236 $292,359 $100,401
Ratio of net investment income
to average net assets ..... 0.73%(1) 0.84%(1) 1.05%(2) 1.34% 1.48%(4)
Ratio of expenses to average
net assets................. 0.22%(1)(3) 0.24%(1)(3) 0.24%(2)(3) 0.29%(3) 0.59%(3)(4)
Portfolio turnover rate ...... 2% 8% 5% 1% 5%
</TABLE>
- --------------------------------------------------------------------------------
(1) Reflects a voluntary expense reimbursement and fee waiver of 0.01% by the
Manager. Had the manager not waived their fee and reimbursed expenses,the
annualized ratios of net investment income and expense to average net
assets for the six months ended January 31, 2000 would have been 0.72%
and 0.23%, respectively, and for the year ended July 31, 1999 would have
been 0.83% and 0.25%, respectively.
(2) Reflects a waiver of 0.01% of fees by the Manager due to limitations set
forth in the Management Agreement. Had the Manager not waived their
fees, the ratios of net investment income and expenses to average net
assets for the year ended July 31, 1998 would have been 1.04% and
0.25%, respectively.
(3) Ratio of expenses to average net assets for the years ended July 31,
1999, 1998, 1997 and 1996 include indirectly paid expenses. Excluding
indirectly paid expenses, the expense ratios would have been 0.20% for
the six months ended January 31, 2000 and 0.20%, 0.20%, 0.25% and 0.50%
for the years ended July 31, 1999, 1998, 1997 and 1996, respectively.
(4) Had the Expense Payment Agreement and Sponsor Arrangement not been in
place, the ratios of net investment income and expense for the years
ended July 31, 1996 would have been 1.14% and 0.85% respectively.
See Notes to Financial Statements
-27-
<PAGE>
Domini Social Index Portfolio
Notes to Financial Statements
January 31, 2000 (unaudited)
1.ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES.
Domini Social Index Portfolio (the "Index Portfolio") is registered under the
Investment Company Act of 1940 (the "Act") as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York on June 7, 1989. The Index Portfolio intends to correlate
its investment portfolio as closely as is practicable with the Domini 400 Social
Index (the "Index"), which is a common stock index developed and maintained by
Kinder, Lydenberg, Domini & Co., Inc. ("KLD"). The Declaration of Trust permits
the Trustees to issue an unlimited number of beneficial interests in the Index
Portfolio. The Index Portfolio commenced operations upon effectiveness on August
10, 1990 and began investment operations on June 3, 1991.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
the Index Portfolio's significant accounting policies.
(A) Valuation of Investments: The Index Portfolio values securities at
the last reported sale price, or at the last reported bid price if no sales are
reported.
(B) Dividend Income: Dividend income is reported on the ex-dividend date.
(C) Federal Taxes: The Index Portfolio will be treated as a partnership
for U.S. federal income tax purposes and is therefore not subject to U.S.
federal income tax. As such, each investor in the Index Portfolio will be taxed
on its share of the Index Portfolio's ordinary income and capital gains. It is
intended that the Portfolio will be managed in such a way that an investor will
be able to satisfy the requirements of the Internal Revenue Code applicable to
regulated investment companies.
(D) Other: Investment transactions are accounted for on the trade date.
Gains and losses are determined on the basis of identified cost.
-28-
<PAGE>
Domini Social Index Portfolio / Notes to Financial Statements--(Continued)
January 31, 2000 (unaudited)
2.TRANSACTIONS WITH AFFILIATES.
(A) Manager. Domini Social Investments LLC ("DSIL"or the "Manager") is
registered as an investment adviser under the Investment Advisers Act of
1940. The services provided by the Manager consist of investment supervisory
services, overall operational support and administrative services. The
administrative services include the provision of general office facilities and
supervising the overall administration of the Index Portfolio. For its services
under the Management Agreement, the Manager receives from the Index Portfolio a
fee accrued daily and paid monthly at an annual rate equal to 0.20%. Until
December, 1999 DSIL was waiving its fee to the extent necessary to keep the
aggregate annual operating expenses of the Index 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 Index Portfolio. For
the six months ended January 31, 2000, DSIL waived fees totalling $47,177.
(B) Submanager. Mellon Equity provides investment submanagement services
to the Index Portfolio on a day-to-day basis pursuant to a Submanagement
Agreement with DSIL. Mellon Equity does not determine the composition of the
Domini Social Index.
3.INVESTMENT TRANSACTIONS.
Cost of purchases and sales of investments,other than U.S. Government securities
and short-term obligations,for the six months ended January 31, 2000 aggregated
$189,841,588 and $26,354,461, respectively. Custody fees of the Portfolio were
reduced by $152,700 which was compensation for uninvested cash left on deposit
with the custodian.
-29-
<PAGE>
Domini Social Equity Fund
Statement of Assets and Liabilities
January 31, 2000 (unaudited)
ASSETS:
Investment in Domini Social Index Portfolio, at value (Note 1) $1,317,797,272
Receivable for fund shares sold .............................. 774,210
--------------
Total assets ............................................... 1,318,571,482
--------------
LIABILITIES:
Accrued expenses ............................................. 912,366
--------------
NET ASSETS ..................................................... $1,317,659,116
==============
NET ASSETS CONSIST OF:
Paid-in capital .............................................. 962,658,744
Undistributed net investment income/(loss) ................... (219,261)
Accumulated net realized gain from Portfolio ................. 63,371
Net unrealized appreciation from Portfolio ................... 355,156,262
--------------
$1,317,659,116
==============
Shares outstanding ............................................. 33,277,433
==============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($1,317,659,116 / 33,277,433) ...................... $39.60
======
See Notes to Financial Statements
-30-
<PAGE>
Domini Social Equity Fund
Statement of Operations
Six Months Ended January 31, 2000 (unaudited)
INCOME:
Investment income from Portfolio ............................. $ 5,644,178
Expenses from Portfolio ...................................... 1,231,584
-----------
Net investment income from Portfolio ......................... 4,412,594
EXPENSES:
Sponsor fee (Note 2) ......................................... 3,019,747
12b-1 fees (Note 2) .......................................... 860,116
Trustees fees ................................................ 23,861
Printing ..................................................... 41,779
Professional fees ............................................ 104,604
Transfer agent fees (Note 2) ................................. 294,189
Accounting fees .............................................. 6,021
Shareholder communication .................................... 147,190
Registration fees ............................................ 134,693
Miscellaneous ................................................ 105
-----------
4,632,305
-----------
NET INVESTMENT INCOME/(LOSS) ................................. (219,711)
-----------
NET REALIZED AND UNREALIZED GAIN FROM PORTFOLIO:
Net realized gain from Portfolio ........................... 1,554,078
Net change in unrealized appreciation from Portfolio ....... 80,813,618
-----------
Net realized and unrealized gain from Portfolio ............ 82,367,696
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... $82,147,985
===========
See Notes to Financial Statements
-31-
<PAGE>
Domini Social Equity Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
January 31,2000 Year Ended
(unaudited) July 31,1999
----------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
<S> <C> <C>
Net investment income ............................................. $ (219,711) $ 488,051
Net realized gain from Portfolio .................................. 1,554,078 12,766,135
Net change in unrealized appreciation from
Portfolio ....................................................... 80,813,618 134,855,974
-------------- ---------------
Net Increase in Net Assets Resulting from
Operations .................................................... 82,147,985 148,110,160
-------------- ---------------
Distributions and Dividends:
Dividends to shareholders from net investment income............... (116,389) (619,766)
Distributions to shareholders from net realized gain............... (8,556,314) (9,243,472)
-------------- ---------------
Net Decrease in Net Assets from Distributions and Dividends...... (8,672,703) (9,863,238)
-------------- ---------------
Capital Share Transactions:
Proceeds from sale of shares....................................... 238,306,371 515,274,055
Net asset value of shares issued in reinvestment of distributions
and dividends.................................................. 8,223,142 8,871,760
Payments for shares redeemed....................................... (85,323,428) (81,309,174)
-------------- ---------------
Net Increase in Net Assets from Capital Share Transactions..... 161,206,085 442,836,641
-------------- ---------------
Total Increase in Net Assets................................. 234,681,367 581,083,563
NET ASSETS:
Beginning of period................................................ 1,082,977,749 501,894,186
-------------- ---------------
End of period (including undistributed net
investment income of ($219,261) and
$116,839, respectively).......................................... $1,317,659,116 $1,082,977,749
============== ==============
OTHER INFORMATION
Share Transactions:
Sold............................................................... 6,131,486 14,987,874
Issued in reinvestment of distributions and dividends.............. 200,781 257,946
Redeemed........................................................... (2,161,955) (2,400,229)
------------- ---------------
Net increase....................................................... 4,170,312 12,845,491
============= ==============
</TABLE>
See Notes to Financial Statements
-32-
<PAGE>
Domini Social Equity Fund
Financial Highlights
<TABLE>
<CAPTION>
Six Months Ended Year Ended July 31,
January 31,2000 --------------------------------------------
(unauditied) 1999 1998 1997 1996
---------- ------ ------ ------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period........................... $37.21 $30.86 $25.43 $16.70 $14.85
Income from investment operations: -------- -------- -------- -------- --------
Net investment income........................................... (0.01) 0.02 0.01 0.11 0.16
Net realized and unrealized gain on investments................. 2.67 6.81 5.48 8.85 1.93
-------- -------- -------- -------- --------
Total income from investment operations......................... 2.66 6.83 5.49 8.96 2.09
Less distributions and dividends: -------- -------- -------- -------- --------
Dividends to shareholders from net investment income............ -- (0.03) (0.01) (0.11) (0.16)
Distributions to shareholders from net realized gain............ (0.27) (0.45) (0.05) (0.12) (0.08)
-------- -------- -------- -------- --------
Total distributions............................................. (0.27) (0.48) (0.06) (0.23) (0.24)
-------- -------- -------- -------- --------
Net asset value, end of period.................................. $39.60 $37.21 $30.86 $25.43 $16.70
Ratios/supplemental data ======== ======== ======== ======== ========
Total return.................................................... 9.16%* 22.26% 21.58% 54.01% 14.11%
Net assets, end of year (in 000's).............................. $1,317,659 $1,082,978 $501,894 $212,310 $80,915
Ratio of expenses to average net assets......................... 0.97%(1)* 0.98%(1) 1.17%(2) 0.98%(3) 0.98%(3)
Ratio of net investment income to average net assets............ 0.04%(1)* 0.06%(1) 0.07%(3) 0.62%(3) 1.01%(3)
</TABLE>
- -------------------------------------------------------------------------------
(1) Reflects a voluntary waiver of expenses by the Manager of the Index
Portfolio. Had the Manager not waived their fees, the ratios of expenses
and net investment income to average net assets would have been 0.98% and
0.03%, respectively, for the six months ended January 31, 2000 and 0.99%
and 0.05%, respectively for the year ended July 31, 1999.
(2) Reflects a non-recurring payment to the Fund's former administrator by the
Fund of $650,000 in connection with the termination of the expense payment
arrangements with the Fund's former administrator and other such expenses
incurred by the Fund in connection with the termination of such
arrangements. Had such non-recurring expenses not been included, expenses
and net investment income to average net assets would have been 0.98% and
0.27%, respectively.
(3) Had the expense payment agreement not been in place the ratio of expenses
and net investment income to average net assets for the years ended July
31,1997 and 1996, would have been 0.84% and 0.76%, and 1.07% and 0.92%
respectively.
* Annualized.
See Notes to Financial Statements
-33-
<PAGE>
Domini Social Equity Fund Notes to Financial Statements
January 31, 2000 (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Domini Social Equity Fund (the "Fund") is a Massachusetts business trust
registered under the Investment Company Act of 1940 (the "Act") as an open-end
management investment company. The Fund invests substantially all of its assets
in the Domini Social Index Portfolio (the "Portfolio"), an open-end, diversified
management investment company having the same investment objectives as the
Fund. The value of such investment reflects the Fund's proportionate interest in
the net assets of the Portfolio (approximately 80.1% at January 31, 2000). The
financial statements of the Portfolio are included elsewhere in this report and
should be read in conjunction with the Fund's financial statements.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the Fund's
significant accounting policies.
(A) Valuation of Investments. Valuation of securities by the Portfolio
is discussed in Note 1 of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report.
(B) Investment Income and Dividends to Shareholders. The Fund earns
income daily, net of Portfolio expenses, on its investments in the Portfolio.
Dividends to shareholders are declared and paid semiannually from net investment
income. Distributions to shareholders of realized capital gains, if any, are
made annually.
(C) Federal Taxes. The Fund's policy is to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income, including net realized
gains, if any, within the prescribed time periods. Accordingly, no provision for
federal income or excise tax is deemed necessary.
-34-
<PAGE>
Domini Social Equity Fund / Notes to Financial Statements--(Continued)
January 31, 2000 (unaudited)
(D) Other. All net investment income and unrealized gains and losses of
the Portfolio is allocated pro rata among the Fund and the other investors in
the Portfolio.
2. TRANSACTIONS WITH AFFILIATES.
(A) Manager. The Index Portfolio has retained Domini Social Investments
LLC ("DSIL" or the Manager) to serve as investment manager and administrator.
The services provided by DSIL consist of investment supervisory services,
overall operational support and administrative services, including the provision
of general office facilities and supervising the overall administration of the
Portfolio. For its services under the Management Agreement, the Manager receives
from the Portfolio a fee accrued daily and paid monthly at an annual rate equal
to 0.20% of the Index Portfolio's average daily net assets. Until December, 1999
DSIL was waiving its fee to the extent necessary to keep the aggregate annual
operating expenses of the Index 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 Index Portfolio. For the six
months ended January 31, 2000, DSIL waived fees totalling $47,177.
(B) Submanager. Mellon Equity provides investment submanagement services
to the Portfolio on a day-to-day basis pursuant to a Submanagement Agreement
with DSIL. Mellon Equity does not determine the composition of the Domini Social
Index.
(C) Sponsor. Pursuant to a Sponsorship Agreement, dSIL provides the Fund
with the administrative personnel and services necessary to operate the Fund. In
addition to general administrative services and facilities for the Fund similar
to those provided by DSIL to the Index Portfolio under the Management Agreement,
DSIL answers questions from the general public and the media regarding the
composition of the Domini Social Index and the securities holdings of the Index
Portfolio. For these services and facilities, DSIL receives fees computed and
paid monthly from the Fund at an annual rate equal to 0.50% of the average daily
net assets of the Fund. Since December 1, 1999, DSIL has reduced 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 0.95% of the average daily net assets of the Fund and at 0.98% of
the average net assets of the Fund for the period August 1, 1999 to November 30,
1999. This waiver is voluntary and may be reduced or terminated at any time. For
the six months ended January 31, 2000, it was not necessary for DSIL to waive
its sponsor fee.
-35-
<PAGE>
Domini Social Equity Fund / Notes to Financial Statements--(Continued)
January 31, 2000 (unaudited)
(D) Distribution. The Trustees of the Fund have adopted a Distribution
Plan in accordance with Rule 12b-1 under the Act. DSIL Investment Services, LLC,
a wholly owned subsidiary of DSIL (the Distributor) acts as agent of the Fund in
connection with the offering of shares of the Fund pursuant to a Distribution
Agreement. The Distributor acts as the principal underwriter of shares of the
Fund and bears the compensation of personnel necessary to provide such services
and all costs of travel, office expense (including rent and overhead) and
equipment. Under the Distribution Plan, the Distributor may receive a fee from
the Fund at an annual rate not to exceed 0.25% of the Fund's average daily net
assets in anticipation of, or reimbursement for, costs and expenses incurred in
connection with the sale of shares of the Fund.
(E) Other. Certain officers of the Fund are also officers of the former
transfer agent, FSSI. Total fees paid to FSSI for the six months ended January
31, 2000 were approximately $114,000.
3. INVESTMENT TRANSACTIONS.
Additions and reductions in the Fund's investment in the Portfolio aggregated
$239,361,450 and $90,744,150, respectively
-36-
<PAGE>
Domini Social Investments LLC
P.O. Box 60494
King of Prussia, PA 19406-0494
800-762-6814
www.domini.com
Portfolio Investment Manager
and Fund Sponsor:
Domini Social Investments LLC
11 West 25th Street, 7th Floor
New York, NY 10010
Custodian:
Investors Bank &
Trust Company
Boston, MA
Distributor:
DSIL Investment Services LLC
11 West 25th Street, 7th Floor
New York, NY 10010
800-762-6814
Portfolio Investment
Submanager:
Mellon Equity Associates
Pittsburgh, PA
Legal Counsel:
Bingham Dana LLP
Boston, MA
Transfer Agent:
PFPC Global Fund Service
King of Prussia, PA
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Domini [ART] Bulk Third Class
- ------------------------ U.S. POSTAGE
SOCIAL INVESTMENTS (SM) PAID
Permit No. 19
P.O. Box 60494 Hudson, MA
King of Prussia, PA 19406-0494
800-762-6814
www.domini.com
CUSIP# 257 132 100
[RECYCLE LOGO] Printed on recycled paper
