AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1997
File No. 811-5824
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 8
DOMINI SOCIAL INDEX PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
11 West 25th Street, 7th Floor, New York, New York 10010
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 727-2706
Amy L. Domini, c/o Loring, Wolcott & Coolidge,
250 Congress Street, 12th Floor, Boston, Massachusetts 02110
(Name and Address of Agent for Service)
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DSI73G
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DSI73G
EXPLANATORY NOTE
This Registration Statement is being filed by the Registrant pursuant to
Section 8(b) of the Investment Company Act of 1940. However, beneficial
interests in the Registrant are not being registered under the Securities Act of
1933 (the "1933 Act") since such interests will be issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Registrant may only
be made by other investment companies, insurance company separate accounts,
common or commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any beneficial interests in the Registrant.
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DSI73G
PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
Domini Social Index Portfolio (the "Portfolio") is a no-load,
diversified, open-end investment company which was organized as a trust under
the laws of the State of New York on June 7, 1989. Beneficial interests in the
Portfolio will be issued solely in private placement transactions which do not
involve any "public offering" within the meaning of Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act"). Investments in the
Portfolio may only be made by other investment companies, insurance company
separate accounts, common or commingled trust funds or similar organizations or
entities which are "accredited investors" within the meaning of Regulation D
under the 1933 Act. This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any security within the meaning of
the 1933 Act.
Part B contains more detailed information about the Portfolio, including
information related to (i) investment policies and restrictions of the
Portfolio, (ii) the Trustees, officers and other management of the Portfolio,
(iii) portfolio transactions, (iv) the Portfolio's beneficial interests,
including rights and liabilities of investors, (v) determination of the net
asset value of the Portfolio, and (vi) the audited financial statements of the
Portfolio at July 31, 1997.
INVESTMENT IN THE PORTFOLIO. The Portfolio seeks to provide investors
with long-term total return which corresponds to the total return performance of
the Domini 400 Social IndexSM, an index comprised of stocks selected according
to social criteria. The Portfolio may be appropriate, therefore, for investors
who are willing to ride out stock market fluctuations in pursuit of long-term
returns. Because the Portfolio seeks to track, rather than exceed, the
performance of a particular index, the Portfolio is not managed in the same way
as other mutual funds. In particular, the manager (the "Manager") of the
Portfolio generally does not judge the merits of any particular stock as an
investment. Therefore, investors should not expect to achieve the potentially
greater results that could be obtained by a fund that aggressively seeks growth.
The Portfolio's net asset value varies from day to day, generally
reflecting changes in the financial condition of the companies in which the
Portfolio invests, general market conditions and political and economic factors.
Stock prices can fluctuate dramatically in response to these and other factors
or speculation about these factors. Over the long term, stocks have generally
shown greater growth potential than other types of securities. However, when an
investor withdraws its interest, proceeds may be more or less than the amount
initially invested.
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Potential investors should note that because the Portfolio seeks to be
fully invested in the stocks comprising the Domini 400 Social IndexSM, the
Portfolio is not a balanced investment plan. Potential investors should also
note that the Manager, Domini Social Investments LLC ("DSI"), has no prior
experience in managing or advising a mutual fund. Potential investors should
carefully consider their respective investment objectives and risk tolerance
before making a decision to invest in the Portfolio.
INVESTMENT OBJECTIVE. The investment objective of the Portfolio is to
provide its investors with long-term total return which corresponds to the total
return performance of the Domini 400 Social IndexSM (referred to herein as the
"Index" or the "Domini Social Index), an index comprised of stocks selected
based upon the Portfolio's social criteria. There can, of course, be no
assurance that the Portfolio will achieve its investment objective. The
investment objective of the Portfolio may be changed without approval by the
Portfolio's investors.
INVESTMENT POLICIES. The Portfolio seeks to achieve its investment
objective by investing its assets in the common stocks comprising the Domini
Social Index. The Portfolio will approximate the weightings of securities held
by the Portfolio to the weightings of the stocks in the Index, except as
described below, and will seek a correlation between the weightings of
securities held by the Portfolio and the weightings of the stocks in the Index
of 0.95 or better. A figure of 1.0 would indicate a perfect correlation. As of
September 30, 1997, the correlation between the weightings of securities held by
the Portfolio and the weightings of the stocks in the Index was 0.99. To the
extent practicable, the Portfolio will attempt to be fully invested. The
Portfolio's ability to duplicate the performance of the Index will depend to
some extent on the size and timing of cash flows into and out of the Portfolio
as well as the Portfolio's expenses. Adjustments in the securities holdings of
the Portfolio to accommodate cash flows will track the Index to the extent
practicable, but this will result in brokerage expenses.
SOCIAL CRITERIA. The Domini Social Index is a common stock index
developed and maintained by Kinder, Lydenberg, Domini & Co., Inc. ("KLD"), an
affiliate of the Manager. The Index is a common stock index comprised of the
stocks of approximately 400 companies which meet certain social criteria. The
weightings of the stocks comprising the Index are based upon market
capitalization. The criteria used in developing and maintaining the Index
involve subjective judgment of KLD. KLD, based on available data, seeks to
exclude the following types of companies: firms that derive more than 2% of
their gross revenues from the sale of military weapons; firms that derive any
revenues from the manufacture of tobacco products or alcoholic beverages; firms
that derive any revenues from gambling enterprises; and firms that have an
ownership share in, or operate, nuclear power plants, or participate in
businesses related to the nuclear fuel cycle. KLD also considers criteria such
as corporate citizenship, employee relations, environmental performance, and
product-related issues when evaluating stocks for inclusion in the Index. The
corporate citizenship criteria include a company's record with regard to its
philanthropic activities and its community relations in general. The employee
relations criteria include a company's record with regard to labor matters,
workplace safety, equal employment opportunity, employee benefit programs, and
meaningful participation in company profits either
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through stock purchase or profit sharing plans. The environmental performance
criteria include a company's record with regard to fines or
penalties, waste disposal, toxic emissions, efforts in waste reduction and
emissions reduction, recycling, and environmentally beneficial fuels, products
and services. The product-related criteria include a company's record with
regard to product safety, marketing practices, and commitment to quality.
The Manager intends to vote proxies of companies included in the
Portfolio consistent with the social criteria used in developing and maintaining
the Domini Social Index.
INDEX MANAGEMENT. The Portfolio is not managed in the traditional
investment sense, since changes in the composition of its securities holdings
are made in order to track the changes in the composition of securities included
in the Domini Social Index. Moreover, inclusion of a stock in the Index does not
imply an opinion by KLD or the Manager as to the merits of that specific stock
as an investment. However, KLD and the Manager believe that enterprises which
exhibit a social awareness, based on the criteria described above, should be
better prepared to meet future societal needs for goods and services and may
also be less likely to incur certain legal liabilities that may be incurred when
a product or service is determined to be harmful, and that such enterprises
should over the longer term be able to provide a positive return to investors.
In selecting stocks for inclusion in the Domini Social Index:
1. KLD evaluated, in accordance with the social criteria described
above, each of the companies the stocks of which comprise the S&P 500. If a
company whose stock was included in the S&P 500 met KLD's social criteria and
met KLD's further criteria for industry diversification, financial solvency,
market capitalization, and minimal portfolio turnover, it was included in the
Domini Social Index. As of July 31, 1997, of the 500 companies whose stocks
comprised the S&P 500, approximately 51% were included in the Index.
2. The remaining stocks comprising the Domini Social Index (i.e., those
which are not included in the S&P 500) were selected based upon KLD's evaluation
of the social criteria described above, as well as upon KLD' criteria for
industry diversification, financial solvency, market capitalization, and minimal
portfolio turnover. Because of the social criteria applied in the selection of
stocks comprising the Index, industry sector weighting in the Index may vary
materially from the industry weightings in other stock indices, including the
S&P 500, and certain industry sectors will be excluded altogether.
The component stocks of the S&P 500 are chosen by Standard & Poor's
Corporation ("S&P") solely with the aim of achieving a distribution by broad
industry groupings that approximates the distribution of these groupings in the
New York Stock Exchange common stock population, taken as the assumed model for
the composition of the total market. Construction of the S&P 500 by S&P proceeds
from industry groups to the whole. Since some industries are characterized by
companies of relatively small stock capitalization, the S&P 500 does not
comprise the 500 largest companies listed on the New York Stock Exchange. Not
all stocks included in the S&P 500 are listed on the New York Stock Exchange.
However, the
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total market value of the S&P 500 as of July 31, 1997 represented 79.6%
of the aggregate market value of common stocks traded on the New York Stock
Exchange.
Inclusion of a stock in the S&P 500 Index in no way implies an opinion
by S&P as to its attractiveness as an investment, nor is S&P a sponsor of or
otherwise affiliated with the Portfolio.
Some of the stocks included in the Domini Social Index may be stocks of
foreign issuers (provided that the stocks are traded in the United States in the
form of American Depositary Receipts or similar instruments the market for which
is denominated in United States dollars). Securities of foreign issuers may
represent a greater degree of risk (i.e., as a result of exchange rate
fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers.
The weightings of stocks in the Domini Social Index are based on each
stock's relative total market capitalization (i.e., market price per share times
the number of shares outstanding). Because of this weighting, as of July 31,
1997 approximately 43% of the Index was comprised of the 20 largest companies in
the Index.
KLD may exclude from the Domini Social Index stocks issued by companies
which are in bankruptcy or whose bankruptcy KLD believes may be imminent.
The Portfolio intends to readjust its securities holdings periodically
such that those holdings will correspond, to the extent reasonably practicable,
to the Domini Social Index both in terms of composition and weighting. The
timing and extent of adjustments in the holdings of the Portfolio, and the
extent of the correlation of the holdings of the Portfolio with the Index, will
reflect the judgment of Mellon Equity Associates ("Mellon Equity" or the
"Submanager") as to the appropriate balance between the goal of correlating the
holdings of the Portfolio with the composition of the Index, and the goals of
minimizing transaction costs and keeping sufficient reserves available for
anticipated withdrawals. To the extent practicable, the Portfolio will seek a
correlation between the weightings of securities held by the Portfolio to the
weightings of the securities in the Index of 0.95 or better. The Board of
Trustees of the Portfolio will receive and review, at least quarterly, a report
prepared by the Submanager comparing the performance of the Portfolio with that
of the Index, and comparing the composition and weighting of the Portfolio's
holdings with those of the Index, and will consider what action, if any, should
be taken in the event of a significant variation between the performance of the
Portfolio and that of the Index, or between the composition and weighting of the
Portfolio's securities holdings with those of the stocks comprising the Index.
If the correlation between the weightings of securities held by the Portfolio
and the weightings of the stocks in the Index falls below 0.95, the Board of
Trustees will review with the Manager and/or the Submanager methods for
increasing such correlation, such as through adjustments in securities holdings
of the Portfolio.
The Portfolio may invest cash reserves in short-term debt securities
(i.e., securities having a remaining maturity of one year or less) issued by
agencies or instrumentalities of the United States Government, bankers'
acceptances, commercial paper or certificates of deposit, provided that the
issuer satisfies
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KLD's social criteria. The Portfolio does not currently intend to
invest in direct obligations of the United States Government. Short-term debt
securities purchased by the Portfolio will be rated at least Prime-1 by Moody's
Investors Service, Inc. or A-1+ or A-1 by S&P or, if not rated, determined to be
of comparable quality by the Portfolio's Board of Trustees. The Portfolio's
policy is to hold its assets in such securities pending readjustment of its
holdings of stocks comprising the Domini Social Index and in order to meet
anticipated requests for withdrawals. Such investments are not intended to be
used for defensive purposes in periods of anticipated market decline.
The annual portfolio turnover rates of the Portfolio for the fiscal
years ended July 31, 1996 and July 31, 1997 were 5% and 1%, respectively. The
Portfolio's average brokerage commission rates paid per share for the fiscal
years ended July 31, 1996 and July 31, 1997 were $0.05 and $0.05, respectively.
The Portfolio's primary consideration in placing securities transactions
with broker-dealers for execution is to obtain, and maintain the availability
of, execution at the most favorable prices and in the most effective manner
possible. The Portfolio will not engage in brokerage transactions with the
Manager or the Submanager or any of their respective affiliates or any other
affiliate of the Portfolio. For further discussion regarding securities trading
by the Portfolio, see Part B.
Consistent with applicable regulatory policies, including those of the
Board of Governors of the Federal Reserve System and the Securities and Exchange
Commission, the Portfolio may make loans of its securities to member banks of
the Federal Reserve System and to broker-dealers. Such loans would be required
to be secured continuously by collateral consisting of securities, cash or cash
equivalents maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The Portfolio would have the right to
call a loan and obtain the securities loaned at any time on three days' notice.
During the existence of a loan, the Portfolio would continue to collect the
equivalent of the dividends paid
by the issuer on the securities loaned and would also receive interest on
investment of cash collateral. The Portfolio may pay finder's and other fees in
connection with securities loans. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to provide additional
collateral.
Although it has no current intention to do so, the Portfolio may make
short sales of securities or maintain a short position, if at all times when a
short position is open the Portfolio owns an equal amount of such securities, or
securities convertible into such securities.
The approval of the investors in the Portfolio is not required to change
any of the investment policies discussed above.
As a matter of fundamental policy, the Portfolio will invest all of its
assets in one or more of: (i) stocks comprising an index of securities selected
applying social criteria, which initially will be the Domini Social Index, (ii)
short-term debt securities of issuers which meet social criteria, (iii) cash,
and (iv) options on equity securities. This fundamental policy cannot be changed
without the approval of the holders of a majority of the
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Portfolio's outstanding voting securities (which, as used herein, means
the lesser of (a) more than 50% of the outstanding securities of the Portfolio,
or (b) 67% or more of the outstanding voting securities of the Portfolio present
at a meeting at which holders of more than 50% of the Portfolio's outstanding
voting securities are represented in person or by proxy).
Part B includes a discussion of other investment policies and a listing
of other investment restrictions which govern the Portfolio's investment
policies. Certain of the investment restrictions listed in Part B may not be
changed by the Portfolio without the approval of investors.
If a percentage or rating restriction on investment or utilization of
assets is adhered to at the time an investment is made or assets are so
utilized, a later change in percentage resulting from changes in the Portfolio's
total assets or the value of the Portfolio's securities or a later change in the
rating of a security held by the Portfolio will not be considered a violation of
policy.
Expenses of the Portfolio with respect to investment management or
administrative services and investment submanagement services are described in
Item 5.
Part B includes a discussion of other investment policies and a listing
of specific investment restrictions which govern the investment policies of the
Portfolio. Certain of the investment restrictions listed in Part B may not be
changed without the approval of the investors in the Portfolio.
ITEM 5. MANAGEMENT OF THE FUND.
The Portfolio's Board of Trustees provides broad supervision over the
affairs of the Portfolio. DSI, a Massachusetts limited liability company,
provides investment management and administrative services to the Portfolio
pursuant to a Management Agreement. The address of DSI is 11 West 25th Street,
7th Floor, New York, New York 10010. A majority of the Portfolio's Trustees are
not affiliated with the Manager or the Submanager. The Portfolio's custodian and
transfer agent is Investors Bank & Trust Company ("IBT"). The address of IBT is
200 Clarendon Street, Boston, Massachusetts 02116.
MANAGER. DSI has been registered as an investment adviser under the
Investment Advisers Act of 1940 since 1997. 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
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 Portfolio's average daily net assets, on an annualized basis for
the Portfolio's then-current fiscal year, subject to reduction. See "Expenses"
under Item 5 for a description of this fee reduction pursuant to the Management
Agreement.
Prior to October 22, 1997, KLD, as the Portfolio's former investment
adviser, received from the Portfolio a fee accrued daily and paid monthly at an
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annual rate equal to 0.025% of the Portfolio's average daily net assets, on an
annualized basis for the Portfolio's then-current fiscal year. Additionally,
prior to October 22, 1997, KLD received from the Portfolio a fee accrued daily
and paid monthly at an annual rate equal to 0.025% of the average daily net
assets of the Portfolio for its then current fiscal year for administrative
services.
"DominiSM," "Domini 400 Social IndexSM" and "Investing for GoodSM" are
service marks of KLD which are licensed to DSI, and the Portfolio and its
investors may be required to discontinue use of these service marks if DSI
ceases to be the Manager of the Portfolio.
SUBMANAGER. Mellon Equity provides investment submanagement services to
the Portfolio on a day-to-day basis pursuant to a Submanagement Agreement with
DSI. Mellon Equity does not determine the composition of the Domini Social
Index.
Under the Submanagement Agreement, DSI pays Mellon Equity an investment
submanagement fee equal on an annual basis to 0.10% of the average daily net
assets of the Portfolio. Prior to October 22, 1997, the Portfolio paid Mellon
Equity an investment management fee equal on an annual basis to 0.10% of the
average daily net assets of the Portfolio.
Mellon Equity is a Pennsylvania business trust founded in 1987 whose
beneficial owners are Mellon Bank N.A. and MMIP, Inc (a wholly owned subsidiary
of Mellon Bank Corporation ("Mellon Bank")). Mellon Equity has been registered
as an investment adviser under the Investment Advisers Act of 1940 since 1986.
Prior to 1987, the Submanager was part of the Equity Management Group of Mellon
Bank's Trust and Investment Department, which managed domestic equity,
tax-exempt and institutional pension assets since 1947. As of December 31, 1996,
the Submanager had approximately $11.3 billion in assets under management.
John R. O'Toole (a senior vice president of Mellon Equity, CFA and a
member of AIMR), has been primarily responsible for the day-to-day portfolio
management of the Portfolio since November 1994. He has been employed by Mellon
Equity and/or Mellon Bank as a portfolio manager for over five years.
EXPENSES. The Portfolio is responsible for all of its expenses,
including the compensation of the Portfolio's Trustees who are not interested
persons of the Portfolio; governmental fees; interest charges; taxes; membership
dues in the Investment Company Institute allocable to the Portfolio; fees and
expenses of independent auditors, of legal counsel and of any transfer agent,
custodian, registrar or disbursing agent of the Portfolio; insurance premiums;
and expenses of calculating the net asset value of the Portfolio.
The Portfolio will also pay the expenses connected with the execution,
recording and settlement of security transactions; fees and expenses of the
Portfolio's custodian for all services to the Portfolio, including safekeeping
of funds and securities and maintaining required books and accounts; expenses of
preparing and mailing reports to investors and to governmental offices and
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commissions; expenses of meetings of investors; and the investment management
fees payable to the Manager.
Under the Management Agreement, DSI's fee will be reduced to the extent
necessary to keep the aggregate annual operating expenses of the Portfolio
(excluding brokerage fees and commissions, interest, taxes and other
extraordinary expenses) at no greater than 0.20% of the average daily net assets
of the Portfolio through October 22, 1998.
There is no assurance that DSI will maintain the fee reduction pursuant
to the Management Agreement beyond the specified date.
CUSTODIAN AND TRANSFER AGENT. The Portfolio's custodian and transfer
agent is Investors Bank & Trust Company ("IBT"). The address of IBT is 200
Clarendon Street, Boston, Massachusetts 02116. As the Portfolio's transfer
agent, IBT maintains an account for each investor and acts as disbursing agent
for the Portfolio. Pursuant to a Custodian Agreement, IBT acts as the custodian
(the "Custodian") of the Portfolio's assets. The Custodian's responsibilities
include safeguarding and controlling the Portfolio's cash and securities,
handling the receipt and delivery of securities, determining income and
collecting interest on the Portfolio's investments, maintaining books of
original entry for portfolio and fund accounting and other required books and
accounts, and calculating the daily net asset value of the Portfolio. Securities
held by the Portfolio may be deposited into certain securities depositaries. The
Custodian does not determine the investment policies of the Portfolio or decide
which securities the Portfolio will buy or sell. The Portfolio may, however,
invest in securities of the Custodian and may deal with the Custodian as
principal in securities transactions. For its services, IBT will receive such
compensation as may from time to time be agreed upon by IBT and the Portfolio.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
Investments in the Portfolio have no preemptive or conversion rights and
are fully paid and nonassessable, except as set forth below. The Portfolio is
not required and has no current intention to hold annual meetings of investors,
but the Portfolio will hold special meetings of investors when in the judgment
of the Trustees it is necessary or desirable to submit matters for an investor
vote. Investors have under certain circumstances (e.g., upon application and
submission of certain specified documents to the Trustees by a specified number
of investors) the right to communicate with other investors in connection with
requesting a meeting of investors for the purpose of removing one or more
Trustees. Investors also have the right to remove one or more Trustees without a
meeting by a declaration in writing by a specified number of investors. Upon
liquidation of the Portfolio, investors would be entitled to share pro rata in
the net assets of the Portfolio available for distribution to investors.
Although it does not currently create and issue any number of series,
the Portfolio reserves the right to do so, in which case investments in each
series would participate equally in the earnings, losses and assets of the
particular series.
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The Portfolio is organized as a trust under the laws of the State of New
York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Each investor is entitled to a vote in
proportion to the amount of its investment in the Portfolio. Investments in the
Portfolio may not be transferred, but an investor may withdraw all or any
portion of his investment at any time at net asset value. Investors in the
Portfolio (e.g., other investment companies, insurance company separate accounts
and common and commingled trust funds) will each be liable for all obligations
of the Portfolio. However, the risk of an investor in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the Portfolio itself was unable to meet
its obligations.
The net income of the Portfolio is determined each day on which the New
York Stock Exchange is open for trading ("Portfolio Business Day") (and on such
other days as are deemed necessary in order to comply with Rule 22c-1 under the
Investment Company Act of 1940, as amended (the "1940 Act")). This determination
is made once during each Portfolio Business Day as of 4:00 p.m., Eastern time.
All the net income of the Portfolio, as described below, is allocated pro rata
among the investors in the Portfolio at the time of such determination. For this
purpose, the net income of the Portfolio (from the time of the immediately
preceding determination thereof) shall consist of (i) all income accrued, less
the amortization of any premium, on the assets of the Portfolio, less (ii) all
actual and accrued expenses of the Portfolio determined in accordance with
generally accepted accounting principles. Interest income includes discount
earned (including both original issue and market discount) on discount paper
accrued ratably to the date of maturity and any net realized gains or losses on
the assets of the Portfolio.
Each investor in the Portfolio may add to or reduce its investment in
the Portfolio on each Portfolio Business Day. At 4:00 p.m., Eastern time, on
each Portfolio Business day, the value of each investor's beneficial interest in
the Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, effective for that day, that represents that
investor's share of the aggregate beneficial interests in the Portfolio. Any
additions or withdrawals, which are to be effected on that day, will then be
effected. The investor's percentage of the aggregate beneficial interests in the
Portfolio will then be recomputed as the percentage equal to the fraction (i)
the numerator of which is the value of such investor's investment in the
Portfolio as of 4:00 p.m., Eastern time, on such day plus or minus, as the case
may be, the amount of any additions to or withdrawals from the investor's
investment in the Portfolio effected on such day, and (ii) the denominator of
which is the aggregate net asset value of the Portfolio as of 4:00 p.m., Eastern
time, on such day plus or minus, as the case may be, the amount of the net
additions to or withdrawals from the aggregate investments in the Portfolio by
all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio as of
4:00 p.m., Eastern time, on the following Portfolio Business Day.
The end of the Portfolio's fiscal year is July 31.
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Under the anticipated method of operation of the Portfolio, the
Portfolio will not be subject to any income tax. However, each investor in the
Portfolio will be taxable on its share (as determined in accordance with the
governing instruments of the Portfolio) of the Portfolio's ordinary income and
capital gains in determining its income tax liability. The determination of such
share will be made in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations promulgated thereunder.
It is intended that the Portfolio's assets, income and distributions
will be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invested all of its assets in the Portfolio.
Investor inquiries may be directed the Manager and/or KLD ([617]
523-6531 and/or [617] 547-7479).
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolio will be issued solely in private
placement transactions described in Item 4.
An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received by the Portfolio. The net asset value of the Portfolio is determined on
each Portfolio Business Day.
Since the Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the yield on its assets, investments
must be made in federal funds (i.e., monies credited to the account at IBT by a
Federal Reserve Bank).
The Portfolio reserves the right to cease accepting investments at any
time or to reject any investment order.
Subject to limitations of the 1940 Act, the Portfolio may accept
securities in exchange for a beneficial interest or an increase in a beneficial
interest, as the case may be. The Portfolio will not accept such a security
unless (a) the security is consistent with the investment objective and policies
of the Portfolio, and (b) the security is deemed acceptable by the Manager and
the Submanager. Securities offered in exchange for purchases will be valued in
accordance with the usual valuation procedure for the Portfolio. See "Net Asset
Value" below and Item 19 in Part B.
NET ASSET VALUE. Equity securities held by the Portfolio are valued at
the last sale price on the exchange on which they are primarily traded or on the
NASDAQ system for unlisted national market issues, or at the last quoted bid
price for securities in which there were no sales during the day or for unlisted
securities not reported on the NASDAQ system. If the Portfolio purchases option
contracts, such option contracts which are traded on commodities or securities
exchanges are normally valued at the settlement price on the exchange on which
they are traded. Short-term obligations with remaining maturities of less than
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sixty days are valued at amortized cost, which constitutes fair value as
determined by the Board of Trustees of the Portfolio. Portfolio securities
(other than short-term obligations with remaining maturities of less than 60
days) for which there are no such quotations or valuations are valued at fair
value as determined in good faith by or at the direction of the Portfolio's
Board of Trustees.
The exclusive placement agent for the Portfolio is Signature
Broker-Dealer Services, Inc. ("Signature"). The principal business address of
Signature is 6 St. James Avenue, Boston, Massachusetts 02116. Signature receives
no compensation for serving as the exclusive placement agent for the Portfolio.
ITEM 8. REDEMPTION OR REPURCHASE.
An investor in the Portfolio may withdraw all or any portion of its
investment at any time at the net asset value next determined after a withdrawal
request in proper form is furnished by the investor to the Portfolio. The
proceeds of a withdrawal will be paid by the Portfolio in federal funds normally
on the Portfolio Business Day the withdrawal is effected, but in any event
within seven days. Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on the New York Stock Exchange is restricted,
or, to the extent otherwise permitted by the 1940 Act, if an emergency exists.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
A-11
<PAGE>
DSI73G
PART B
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS.
<TABLE>
<CAPTION>
Page
<S> <C>
Item 10. Cover Page....................................... B-1
Item 11. Table of Contents................................ B-1
Item 12. General Information and History.................. B-1
Item 13. Investment Objectives and Policies............... B-1
Item 14. Management of the Fund........................... B-6
Item 15. Control Persons and Principal Holders
of Securities.................................. B-8
Item 16. Investment Advisory and Other Services........... B-8
Item 17. Brokerage Allocation and Other Practices......... B-11
Item 18. Capital Stock and Other Securities............... B-14
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered....................... B-15
Item 20. Tax Status....................................... B-16
Item 21. Underwriters..................................... B-18
Item 22. Calculation of Performance Data.................. B-18
Item 23. Financial Statements............................. B-18
</TABLE>
ITEM 12. GENERAL INFORMATION AND HISTORY.
Domini Social Investments LLC ("DSI") is the investment manager and
administrative services provider (the "Manager") of Domini Social Index
Portfolio (the "Portfolio"). Mellon Equity Associates ("Mellon Equity") is the
Portfolio's investment submanager (the "Submanager"). Kinder, Lydenberg, Domini
& Co., Inc. ("KLD") determines the composition of the Domini 400 Social IndexSM
(referred to herein as the "Index" or the "Domini Social Index"). The
Portfolio's Board of Trustees provides broad supervision over the affairs of the
Portfolio, including those with respect to the Manager and the Submanager.
"DominiSM" and "Domini 400 Social IndexSM" are service marks of KLD.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.
The investment objective of the Portfolio is to provide its investors
with long-term total return which corresponds to the total return performance of
the Domini 400 Social IndexSM (referred to herein as the "Domini Social Index"
or the "Index"). The Index is comprised of stocks selected based upon the
Portfolio's social criteria. There can be no assurance that the Portfolio will
achieve its investment objective. The investment objective of the Portfolio may
be changed without approval by the Portfolio's investors.
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The following supplements the information concerning the investment
policies of the Portfolio contained in Part A and should read only in
conjunction therewith.
A company which is not included in the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500") may be included in the Domini Social Index
primarily in order to afford representation to an industrial sector which would
otherwise be under-represented in the Index. Because of the social criteria
applied in the selection of stocks comprising the Index, industry sector
weighting in the Index may vary materially from the industry weightings in other
stock indices, including the S&P 500.
With respect to stocks of foreign issuers, the Portfolio does not
purchase securities which the Portfolio believes, at the time of purchase, will
be subject to exchange controls or foreign withholding taxes; however, there can
be no assurance that such laws may not become applicable to certain of the
Portfolio's investments. In the event unforeseen exchange controls or foreign
withholding taxes are imposed with respect to any of the Portfolio's
investments, the effect may be to reduce the income received by the Portfolio on
such investments.
Although the Portfolio has no current intention to do so, the Portfolio
may invest in securities which may be resold pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act").
It is a fundamental policy of the Portfolio that Portfolio may not
invest more than 25% of its total assets in any one industry, and the Portfolio
may and would invest more than 25% of its assets in an industry if stocks in
that industry were to comprise more than 25% of the Domini Social Index. Based
on the current composition of the Index, this is considered highly unlikely. If
the Portfolio were to concentrate its investments in a single industry, the
Portfolio would be more susceptible to any single economic, political or
regulatory occurrence than would be another investment company which was not so
concentrated.
LOANS OF SECURITIES: The Portfolio may lend its securities to brokers,
dealers and financial institutions, provided that (1) the loan is secured
continuously by collateral consisting of U.S. Government securities or cash or
letters of credit which is marked to the market daily to ensure that each loan
is fully collateralized at all times; (2) the Portfolio may at any time call the
loan and obtain the return of the securities loaned within three business days;
(3) the Portfolio will receive any interest or dividends paid on the securities
loaned; and (4) the aggregate market value of securities loaned will not at any
time exceed 30% of the total assets of the Portfolio.
The Portfolio will earn income for lending its securities either in the
form of fees received from the borrower of the securities or in connection with
the investment of cash collateral in short-term money market instruments. Loans
of securities involve a risk that the borrower may fail to return the securities
or may fail to provide additional collateral.
In connection with lending securities, the Portfolio may pay reasonable
finders, administrative and custodial fees. No such fees will be paid to any
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person if it or any of its affiliates is affiliated with the Portfolio, the
Manager or the Submanager.
Although the Portfolio reserves the right to lend its securities, it has
no current intention of doing so in the foreseeable future.
RISK FACTORS INVOLVED IN OPTION CONTRACTS: Although it has no current
intention to do so, the Portfolio may in the future enter into certain
transactions in stock options for the purpose of hedging against possible
increases in the value of securities which are expected to be purchased by the
Portfolio or possible declines in the value of securities which are expected to
be sold by the Portfolio. Generally, the Portfolio would only enter into such
transactions on a short-term basis pending readjustment of its holdings of
underlying stocks.
The purchase of an option on an equity security provides the holder with
the right, but not the obligation, to purchase the underlying security, in the
case of a call option, or to sell the underlying security, in the case of a put
option, for a fixed price at any time up to a stated expiration date. The holder
is required to pay a nonrefundable premium, which represents the purchase price
of the option. The holder of an option can lose the entire amount of the
premium, plus related transaction costs, but not more. Upon exercise of the
option, the holder is required to pay the purchase price of the underlying
security in the case of a call option, or deliver the security in return for the
purchase price in the case of a put option.
Prior to exercise or expiration, an option position may be terminated
only by entering into a closing purchase or sale transaction. This requires a
secondary market on the exchange on which the position was originally
established. While the Portfolio would establish an option position only if
there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular option contract at
any specific time. In that event, it may not be possible to close out a position
held by the Portfolio, and the Portfolio could be required to purchase or sell
the instrument underlying an option, make or receive a cash settlement or meet
ongoing variation margin requirements. The inability to close out option
positions also could have an adverse impact on the Portfolio's ability
effectively to hedge its portfolio.
Each exchange on which option contracts are traded has established a
number of limitations governing the maximum number of positions which may be
held by a trader, whether acting alone or in concert with others. The Manager
does not believe that these trading and position limits would have an adverse
impact on the possible use of hedging strategies by the Portfolio.
The approval of the Portfolio's investors is not required to change the
investment objective or any of the non-fundamental investment policies discussed
above, including those concerning security transactions.
INVESTMENT RESTRICTIONS: The Portfolio has adopted the following
policies which may not be changed without approval by holders of a "majority of
the outstanding voting securities" of the Portfolio, which as used in herein
means the vote of the lesser of (i) 67% or more of the beneficial interests in
the
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Portfolio present at a meeting, if the holders or more than 50% of the
beneficial interests in the Portfolio are present or represented by proxy, or
(ii) more than 50% of the beneficial interests in the Portfolio.
The Portfolio may not:
(1) borrow money, except that as a temporary measure for extraordinary
or emergency purposes it may borrow an amount not to exceed 1/3 of the current
value of its net assets, including the amount borrowed (moreover the Portfolio
may not purchase any securities at any time at which borrowings exceed 5% of the
total assets of the Portfolio, taken at market value) (it is intended that the
Portfolio would borrow money only from banks and only to accommodate requests
for the withdrawal of all or a portion of a beneficial interest in the Portfolio
while effecting an orderly liquidation of securities);
(2) purchase any security or evidence of interest therein on margin,
except that the Portfolio may obtain such short-term credit as may be necessary
for the clearance of purchases and sales of securities and except that the
Portfolio may make deposits of initial deposit and variation margin in
connection with the purchase, ownership, holding or sale of options;
(3) write any put or call option or any combination thereof, provided
that this shall not prevent (i) the purchase, ownership, holding or sale of
warrants where the grantor of the warrants is the issuer of the underlying
securities, or (ii) the purchase, ownership, holding or sale of options on
securities;
(4) underwrite securities issued by other persons, except insofar as the
Portfolio may technically be deemed an underwriter under the 1933 Act in selling
a security;
(5) make loans to other persons except (a) through the lending of its
securities and provided that any such loans not exceed 30% of the Portfolio's
total assets (taken at market value), or (b) through the use of repurchase
agreements or the purchase of short-term obligations and provided that not more
than 10% of the Portfolio's total assets will be invested in repurchase
agreements maturing in more than seven days; for additional related
restrictions, see paragraph (6) immediately following;
(6) invest in securities which are subject to legal or contractual
restrictions on resale (other than repurchase agreements maturing in not more
than seven days and other than securities which may be resold pursuant to Rule
144A under the 1933 Act if the Board of Trustees determines that a liquid market
exists for such securities) if, as a result thereof, more than 10% of its net
assets (taken at market value) would be so invested (including repurchase
agreements maturing in more than seven days);
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the Portfolio reserves the freedom of action to
hold and to sell real estate acquired as a result of the ownership of securities
by the Portfolio);
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<PAGE>
(8) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue as, and equal in
amount to, the securities sold short, and unless not more than 5% of the
Portfolio's net assets (taken at market value) is held as collateral for such
sales at any one time (it is the present intention of the Portfolio to make such
sales only for the purpose of deferring realization of gain or loss for federal
income tax purposes);
(9) issue any senior security (as that term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act")) if such issuance is
specifically prohibited by the 1940 Act or the rules and regulations promulgated
thereunder, except as appropriate to evidence a debt incurred without violating
paragraph (1) above;
(10) as to 75% of its assets, purchase securities of any issuer if such
purchase at the time thereof would cause more than 5% of the Portfolio's assets
(taken at market value) to be invested in the securities of such issuer (other
than securities or obligations issued or guaranteed by the United States or any
agency or instrumentality of the United States), except that for purposes of
this restriction the issuer of an option shall not be deemed to be the issuer of
the security or securities underlying such contract; or
(11) invest more than 25% of its assets in any one industry unless the
stocks in a single industry were to comprise more than 25% of the Domini Social
Index, in which case the Portfolio will invest more than 25% of its assets in
that industry.
NON-FUNDAMENTAL STATE AND FEDERAL RESTRICTIONS: In order to comply with
certain federal statutes and policies, the Portfolio will not, as a matter of
operating policy, purchase puts, calls, straddles, spreads and any combination
thereof if the value of its aggregate investment in such securities will exceed
5% of the Portfolio's total assets at the time of such purchase.
This restriction is not fundamental and may be changed by the Portfolio
without the approval of its investors in response to changes in federal
requirements.
PERCENTAGE AND RATING RESTRICTIONS: If a percentage restriction or
rating restriction on investment or utilization of assets set forth above or
referred to in Part A is adhered to at the time an investment is made or assets
are so utilized, a later change in percentage resulting from changes in the
value of the securities held by the Portfolio or a later change in the rating of
a security held by the Portfolio will not be considered a violation of policy;
provided that if at any time the ratio of borrowings of the Portfolio to the net
asset value of the Portfolio exceeds the ratio permitted by Section 18(f) of the
1940 Act, the Portfolio will take the corrective action required by Section
18(f).
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ITEM 14. MANAGEMENT OF THE FUND.
The Trustees and officers of the Portfolio, their principal occupations
during the past five years and dates of birth are set forth below. Their titles
may have varied during that period. Asterisks indicate that those Trustees and
officers are "interested persons" (as defined in the 1940 Act) of the Portfolio.
Unless otherwise indicated below, the address of each Trustee and officer is 11
West 25th Street, 7th Floor, New York, New York 10010.
TRUSTEES
EMILY W. CARD -- 1223 Wilshire Boulevard, No. 334, Santa Monica,
California 90403; Attorney; President, The Card Group, Inc. Her date of birth is
May 8, 1942.
AMY L. DOMINI* -- c/o Loring, Wolcott & Coolidge, 230 Congress Street, Boston,
Massachusetts 02110; Chair, President and Trustee of the Portfolio; Manager of
DSI; Chief Executive Officer of KLD; Private Trustee, Loring, Wolcott &
Coolidge; Trustee, Episcopal Church Pension Fund; Member, Governing Board,
Interfaith Center on Corporate Responsibility. Her date of birth is January 15,
1950.
ALLEN M. MAYES -- P.O. Box 21222, Beaumont, Texas 77720; Retired Senior
Associate General Secretary of the General Board of Pensions of the United
Methodist Church, Director of Ministerial Services, Texas Annual Conference, The
United Methodist Church; Former Member of the Board of Directors of Investor
Responsibility Research Center; Member of Board of Trustees of Wiley College.
His date of birth is September 20, 1920.
WILLIAM C. OSBORN -- 115 Buckminster Road, Brookline, Massachusetts 02146;
Manager, Venture Investment Management Company LLC; Vice President and General
Manager, TravElectric Services Corp (prior to 1995); President, Environmental
Technologies (prior to 1993; Director, Evergreen Solar, Inc; Director,
Conservation Services Group. His date of birth is July 7, 1944.
KAREN PAUL -- 4050 Park Avenue, Miami, Florida 33133; Associate Dean
and Professor of Business Environment, Florida International University. Her
date of birth is September 23, 1944.
TIMOTHY SMITH -- 475 Riverside Drive, New York, New York 10115;
Executive Director, Interfaith Center on Corporate Responsibility; Trustee,
Calvert New Africa Fund. His date of birth is September 15, 1943.
FREDERICK C. WILLIAMSON -- Five Roger Williams Green, Providence, Rhode Island
02904; Treasurer and Trustee, RIGHA (charitable foundation supporting health
care needs); Chairman, Rhode Island Historical Preservation and Heritage
Commission; Trustee, National Parks and Conservation Commission. His date of
birth is September 20, 1914.
Each of the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Portfolio is paid a maximum annual fee of $6,000 (adjusted as
of August 1, 1997) for serving as a Trustee of the Portfolio, Domini Social
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Equity Fund and Domini Institutional Trust and is reimbursed for expenses
incurred in connection with service as a Trustee. The compensation paid to the
Trustees for the fiscal year ended July 31, 1997 is set forth below. The
Trustees may hold various other directorships unrelated to the Portfolio or the
other investment companies in the fund complex.
<TABLE>
<CAPTION>
Pension or Total Compensa-
Retirement tion from the
Benefits Portfolio,
Aggregate Accrued as Annual Domini Social
Compensation Part of Benefits Equity Fund and
from the Portfolio upon Domini Institu-
Portfolio Expenses Retirement tional Trust
<S> <C> <C> <C> <C>
Emily W. Card,
Trustee $205 None None $1,205
Amy L. Domini*, None None None None
Chair, President
and Trustee
Allen M. Mayes, $2,000 None None $2,400
Trustee
William C. Osborn, $55 None None $2,005
Trustee
Karen Paul, Trustee None None None $2,005
Timothy Smith, $2,000 None None $2,455
Trustee
Frederick C. $2,000 None None $2,455
Williamson, Trustee
</TABLE>
OFFICERS
AMY L. DOMINI* -- c/o Loring, Wolcott & Coolidge, 230 Congress Street, Boston,
Massachusetts 02110; Chair, President and Trustee of the Portfolio; Manager of
DSI; Officer of KLD; Private Trustee, Loring, Wolcott & Coolidge; Trustee,
Episcopal Church Pension Fund; Member, Governing Board, Interfaith Center on
Corporate Responsibility. Her date of birth is January 15, 1950.
PETER D. KINDER* -- 129 Mt. Auburn Street, Cambridge, Massachusetts
02138; Vice President of the Portfolio; President of KLD; Member of Domini
Social Investments LLC (since 1997). His date of birth is September 28, 1946.
Mr. Kinder is married to Ms. Domini.
CAROLE M. LAIBLE* -- c/o Fundamental Shareholder Services, Inc., 90 Washington
Street, New York, New York 10006; Secretary and Treasurer of the Portfolio
(since 1997); Financial/Compliance Officer of Domini Social Investments LLC
(since
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1997); Compliance Officer of Fundamental Shareholder Services, Inc. Her
date of birth is October 31, 1963.
STEVEN D. LYDENBERG* -- 129 Mt. Auburn Street, Cambridge, Massachusetts
02138; Vice President of the Portfolio; Director of Research of KLD; Member of
Domini Social Investments LLC (since 1997). His date of birth is October 21,
1948.
SIGWARD M. MOSER* -- Vice President of the Portfolio (since 1997);
President of Communications House International, Inc.; Director of Financial
Communications Society; Member of Domini Social Investments LLC (since 1997).
His date of birth is June 12, 1962.
DAVID P. WIEDER* -- c/o Fundamental Shareholder Services, Inc., 90 Washington
Street, New York, New York 10006; Vice President of the Portfolio (since 1997);
Member of Domini Social Investments LLC (since 1997); President of Fundamental
Shareholder Services, Inc. His date of birth is January 8, 1966.
Each of the officers also holds a similar officership with Domini Social
Equity Fund and Domini Institutional Trust.
The Portfolio's Declaration of Trust provides that it will indemnify its
Trustees and officers (the "Indemnified Parties") against liabilities and
expenses incurred in connection will litigation in which they may be involved
because of their offices with the Portfolio, unless, as to liability to the
Portfolio or its investors, it is finally adjudicated that the Indemnified
Parties engaged in wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect to any
other matter it is finally adjudicated that the Indemnified Parties did not act
in good faith in the reasonable belief that their actions were in the best
interests of the Portfolio. In the case of settlement, such indemnification will
not be provided unless it has been determined by a court or other body approving
the settlement or other disposition, or by a reasonable determination, based
upon a review of readily available facts, by vote of a majority of disinterested
Trustees or in a written opinion of independent counsel, that such Indemnified
Parties have not engaged in wilful misfeasance, bad faith, gross negligence or
reckless disregard of their duties.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of September 30, 1997 the following holders of record owned 5% or
more of the outstanding beneficial interests of the Portfolio: Domini Social
Equity Fund (owner of 72.64% of the Portfolio) and Domini Institutional Social
Equity Fund (owner of 23.71% of the Portfolio).
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
MANAGER. DSI provides advice to the Portfolio pursuant to a Management
Agreement (the "Management Agreement"). The services provided by the Manager
consist of furnishing continuously an investment program for the Portfolio. DSI
will have authority to determine from time to time what securities are
purchased, sold or exchanged, and what portion of assets of the Portfolio is
held
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uninvested. DSI will also perform such administrative and management
tasks as may from time to time be reasonably requested, including: (i)
maintaining office facilities and furnishing clerical services necessary for
maintaining the organization of the Portfolio and for performing administrative
and management functions; (ii) supervising the overall administration of the
Portfolio, including negotiation of contracts and fees with and monitoring of
performance and billings of the Portfolio's transfer agent, shareholder
servicing agents, custodian and other independent contractors or agents; (iii)
overseeing (with the advice of the Portfolio's counsel) the preparation of and,
if applicable, filing all documents required for compliance by the Portfolio
with applicable laws and regulations, including registration statements,
semi-annual and annual reports to investors, proxy statements and tax returns;
(iv) preparing agendas and supporting documents for and minutes of meetings of
Trustees, committees of Trustees and investors; and (v) arranging for
maintenance of the books and records of the Portfolio. The Manager furnishes at
its own expense all facilities and personnel necessary in connection with
providing these services. The Management Agreement will continue in effect if
such continuance is specifically approved at least annually by the Portfolio's
Board of Trustees or by a majority of the outstanding voting securities of the
Portfolio at a meeting called for the purpose of voting on the Management
Agreement (with the vote of each investor in the Portfolio being in proportion
to the amount of its investment), and, in either case, by a majority of the
Portfolio's Trustees who are not parties to the Management Agreement or
interested persons of any such party at a meeting called for the purpose of
voting on the Management Agreement.
The Management Agreement provides that the Manager may render services
to others. DSI may employ, at its own expense, or may request that the Portfolio
employ (subject to the requirements of the 1940 Act) one or more subadvisers or
submanagers, subject to DSI's supervision. The Management Agreement is
terminable without penalty on not more than 60 days' nor less than 30 days'
written notice by the Portfolio when authorized either by majority vote of the
outstanding voting securities in the Portfolio (with the vote of each investor
in the Portfolio being in proportion to the amount of its investment) or by a
vote of a majority of its Board of Trustees, or by the Manager, and will
automatically terminate in the event of its assignment. The Management Agreement
provides that neither the Manager nor its personnel shall be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in its services to the Portfolio, except
for wilful misfeasance, bad faith or gross negligence or reckless disregard of
its or their obligations and duties under the Management Agreement.
Part A contains a description of fees payable to the Manager for
services under the Management Agreement. See "Expenses" under Item 5 for a
description of the fee reduction pursuant to the Management Agreement. There is
no assurance that DSI will maintain the fee reduction pursuant to the Management
Agreement beyond the specified date.
DSI is a newly formed Massachusetts limited liability company with
offices at 11 West 25th Street, 7th Floor, New York, New York 10010, and is
registered as an investment adviser under the Investment Advisers Act of 1940
(the "Advisers Act"). The names of the principal owners of DSI, their
relationship to the Portfolio and their ownership percentage of DSI follows: Amy
L. Domini, Chair
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of the Board and President of the Portfolio, is the Manager and
principal executive officer of DSI and a 21.25% owner of DSI. Ms. Domini is also
Chief Executive Officer, Secretary, Treasurer and 51% owner of KLD which
licenses the Domini Social Index to DSI. Peter D. Kinder, Vice President of the
Portfolio, is a 21.25% owner of DSI. Mr. Kinder is also President and 19% owner
of KLD. Sigward M. Moser, Vice President of the Portfolio, is a 21.25% owner of
DSI. David P. Wieder, Vice President of the Portfolio, is a 21.25% owner of DSI.
SUBMANAGER. Mellon Equity manages the assets of the Portfolio pursuant
to an Investment Submanagement Agreement (the "Submanagement Agreement"). The
Submanager furnishes at its own expense all services, facilities and personnel
necessary in connection with managing the Portfolio's investments and effecting
securities transactions for the Portfolio. The Submanagement Agreement will
continue in effect if such continuance is specifically approved at least
annually by the Portfolio's Board of Trustees or by a majority vote of the
outstanding voting securities in the Portfolio at a meeting called for the
purpose of voting on the Submanagement Agreement (with the vote of each being in
proportion to the amount of its investment), and, in either case, by a majority
of the Portfolio's Trustees who are not parties to the Submanagement Agreement
or interested persons of any such party at a meeting called for the purpose of
voting on the Submanagement Agreement.
The Submanagement Agreement provides that the Submanager may render
services to others. The Submanagement Agreement is terminable without penalty
upon not more than 60 days' nor less than 30 days' written notice by the
Portfolio when authorized either by majority vote of the outstanding voting
securities in the Portfolio (with the vote of each being in proportion to the
amount of its investment) or by a vote of the majority of its Board of Trustees,
or by the Manager with the consent of the Trustees and may be terminated by the
Submanager on not less than 90 days' written notice to the Manager and the
Trustees, and will automatically terminate in the event of its assignment. The
Submanagement Agreement provides that the Submanager shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in its services to the Portfolio, except
for wilful misfeasance, bad faith or gross negligence or reckless disregard for
its or their obligations and duties under the Submanagement Agreement.
Mellon Equity is a Pennsylvania business trust founded in 1987, which is
beneficially owned by Mellon Bank, N.A. (99% beneficial interest) and MMIP (1%
beneficial interest), a wholly owned subsidiary of Mellon Bank Corporation
("Mellon Bank"). Mellon Equity is a professional investment counseling firm that
provides investment management services to the equity and balanced pension,
public fund, and profit-sharing investment management markets, and is a
registered investment adviser under the Advisers Act. Mellon Bank's predecessor
organization managed domestic equity, tax-exempt and institutional pension
accounts since 1947. The address of Mellon Equity and each of the principal
executive officers and directors of Mellon Equity is 500 Grant Street, Suite
3700, Pittsburgh, Pennsylvania 15258.
Part A contains a description of fees payable to the Submanager for
services under the Submanagement Agreement.
B-10
<PAGE>
PRIOR ADVISORY, MANAGEMENT, SPONSORSHIP AND ADMINISTRATION AGREEMENTS.
Prior to October 22, 1997, pursuant to an investment advisory agreement (the
"KLD Advisory Agreement"), KLD served as investment adviser to the Portfolio and
furnished continuously an investment program by determining the stocks to be
included in the Domini Social Index. Additionally, prior to October 22, 1997,
pursuant to a management agreement (the "Mellon Equity Management Agreement"),
Mellon Equity served as investment manager and managed the assets of the
Portfolio on a daily basis. Prior to November 21, 1994, pursuant to an
investment management agreement (the "State Street Management Agreement"), State
Street Bank and Trust Company served as investment manager to the Portfolio.
Prior to October 22, 1997, pursuant to a sponsorship agreement (the "KLD
Sponsorship Agreement"), KLD furnished administrative services for the
Portfolio. Prior to November 6, 1996, pursuant to an administrative services
agreement (the "Signature Administration Agreement"), Signature Broker-Dealer
Services, Inc. ("Signature") served as the administrator of the Portfolio. Prior
to October 22, 1997, the aggregate investment management and administration fees
under the prior agreements with respect to the Portfolio were equal to 0.15% of
the Portfolio's average daily net assets for its then current fiscal year.
For the fiscal year ended July 31, 1997, the Portfolio incurred $46,528
in advisory fees pursuant to the KLD Advisory Agreement, $46,528 in
administration fees pursuant to the KLD Sponsorship Agreement and $182,885 in
management fees pursuant to the Mellon Equity Management Agreement. For the
fiscal year ended July 31, 1996, the Portfolio incurred $38,150 in advisory fees
pursuant to the KLD Advisory Agreement, $38,150 in aggregate administration fees
pursuant to the Signature Administration Agreement and the KLD Sponsorship
Agreement, and $128,901 in management fees pursuant to the Mellon Equity
Management Agreement. For the fiscal year ended July 31, 1995, KLD waived all of
its fees payable pursuant to the KLD Advisory Agreement, Signature waived all of
its fees payable pursuant to the Signature Administration Agreement and the
Portfolio incurred $10,180 in management fees pursuant to the State Street
Management Agreement and $29,409 in management fees pursuant to the Mellon
Equity Management Agreement.
TRANSFER AGENT AND CUSTODIAN. The Portfolio has entered into a Transfer
Agency Agreement and a Custodian Agreement with Investors Bank & Trust Company
("IBT") pursuant to which IBT acts as transfer agent and custodian for the
Portfolio. The principal business address of IBT is 200 Clarendon Street,
Boston, Massachusetts 02116.
INDEPENDENT AUDITORS. KPMG Peat Marwick LLP are the independent auditors
for the Portfolio, providing audit services, tax return preparation, and
assistance and consultation with respect to the preparation of filings with the
Securities and Exchange Commission. The principal business address of KPMG Peat
Marwick LLP is 99 High Street, Boston, Massachusetts 02110.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
Specific decisions to purchase or sell securities for the Portfolio are
made by a portfolio manager who is an employee of the Submanager and who is
appointed and supervised by its senior officers. Changes in the Portfolio's
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<PAGE>
investments are reviewed by its Board of Trustees. The portfolio manager of the
Portfolio may serve other clients of the Submanager in a similar capacity.
The Portfolio's primary consideration in placing securities transactions
with broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible. The Submanager attempts to achieve this result by selecting
broker-dealers to execute transactions on behalf of the Portfolio and other
clients of the Submanager on the basis of their professional capability, the
value and quality of their brokerage services, and the level of their brokerage
commissions. In the case of securities traded in the over-the-counter market
(where no stated commissions are paid but the prices include a dealer's markup
or markdown), the Submanager normally seeks to deal directly with the primary
market makers, unless in its option, best execution is available elsewhere. In
the case of securities purchased from underwriters, the cost of such securities
generally includes a fixed underwriting commission or concession. From time to
time, soliciting dealer fees are available to the Submanager on the tender of
the Portfolio's securities in so-called tender or exchange offers. Such
soliciting dealer fees are in effect recaptured for the Portfolio by the
Submanager. At present no other recapture arrangements are in effect. Consistent
with the foregoing primary consideration, the Conduct Rules of the National
Association of Securities Dealers, Inc. and such other policies as the Trustees
of the Portfolio may determine, the Submanager may consider sales of shares of
securities of investors in the Portfolio as a factor in the selection of
broker-dealers to execute the Portfolio's securities transactions.
Under the Submanagement Agreement and as permitted by Section 28(e) of
the Securities Exchange Act of 1934, the Submanager may cause the Portfolio to
pay a broker-dealer acting on an agency basis which provides brokerage and
research services to the Submanager or the Manager an amount of commission for
effecting a securities transaction for the Portfolio in excess of the amount
other broker-dealers would have charged for the transaction if the Submanager
determines in good faith that the greater commission is reasonable in relation
to the value of the brokerage and research services provided by the executing
broker-dealer viewed in terms of either a particular transaction or the
Submanager's or the Manager's overall responsibilities to the Portfolio or to
its other clients. Not all of such services are useful or of value in advising
the Portfolio.
The term "brokerage and research services" includes advice as to the
value of securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or of purchasers or sellers of
securities; furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto such as clearance and settlement. However, because of the
Portfolio's policy of investing in accordance with the Domini Social Index, the
Submanager and the Manager currently intend to make only a limited use of such
brokerage and research services.
Although commissions paid on every transaction will in the judgment of
the Submanager, be reasonable in relation to the value of the brokerage services
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provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Portfolio and the Submanager's and Manager's other clients in part for
providing advice as to the availability of securities or of purchasers or
sellers of securities and services in effecting securities transactions and
performing functions incidental thereto such as clearance and settlement.
Certain broker-dealers may be willing to furnish statistical, research and other
factual information or services to the Submanager or the Manager for no
consideration other than brokerage or underwriting commissions.
The Submanager and the Manager attempt to evaluate the quality of
research provided by brokers. The Submanager and the Manager sometimes use
evaluations resulting from this effort as a consideration in the selection of
brokers to execute portfolio transactions. However, neither the Submanager nor
the Manager is able to quantify the amount of commissions which are paid as a
result of such research because a substantial number of transactions are
effected through brokers which provide research but which are selected
principally because of their execution capabilities.
The fees that the Portfolio pays to the Manager, or the fees that the
Manager pays the Submanager, will not be reduced as a consequence of the
Portfolio's receipt of brokerage and research services. To the extent the
Portfolio's securities transactions are used to obtain brokerage and research
services, the brokerage commissions paid by the Portfolio will exceed those that
might otherwise be paid for such portfolio transactions and research, by an
amount which cannot be presently determined. Such services may be useful and of
value to the Submanager or the Manager in serving both the Portfolio and other
clients and, conversely, such services obtained by the placement of brokerage
business of other clients may be useful to the Submanager or the Manager in
carrying out its obligations to the Portfolio. While such services are not
expected to reduce the expenses of the Submanager or the Manager, the Submanager
and the Manager would, through use of the services, avoid the additional
expenses which would be incurred if it should attempt to develop comparable
information through their respective staffs.
For the fiscal years ended July 31, 1995, 1996 and 1997, the Portfolio
paid brokerage commissions of $15,222, $45,017 and $101,639, respectively. The
increases in brokerage commissions reflected above were due to increased
portfolio activity and increases in net investments in the Portfolio throughout
the respective periods.
In certain instances there may be securities which are suitable for the
Portfolio as well as for one or more of the Submanager's or the Manager's other
clients. Investment decisions for the Portfolio and for the Submanager's or the
Manager's other clients are made with a view to achieving their respective
investment objectives. It may develop that a particular security is bought or
sold for only one client even though it might be held by or bought or sold for
other clients. Likewise, a particular security may be bought for one or more
clients when one or more clients are selling that same security. Some
simultaneous transactions are inevitable when several clients receive investment
advice from the same investment adviser, particularly when the same security is
suitable for the investment objectives of more than one client. When two or more
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<PAGE>
clients are simultaneously engaged in the purchase or sale of the same security,
the securities are allocated among clients in a manner believed to be equitable
to each. It is recognized that in some cases this system could have a
detrimental effect on the price or volume of the security as far as the
Portfolio is concerned. However, it is believed that the ability of the
Portfolio to participate in volume transactions will produce better executions
for the Portfolio.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to participate pro
rata in distributions of taxable income, loss, gain and credit of the Portfolio.
Upon liquidation or dissolution of the Portfolio, investors are entitled to
share pro rata in the Portfolio's net assets available for distribution to its
investors. Investments in the Portfolio have no preference, preemptive,
conversion or similar rights and are fully paid and nonassessable, except as set
forth below. Investments in the Portfolio may not be transferred. Certificates
representing an investor's beneficial interest in the Portfolio are issued only
upon the written request of an investor.
Each investor is entitled to a vote in proportion to the amount of its
investment in the Portfolio. Investors in the Portfolio do not have cumulative
voting rights, and investors holding more than 50% of the aggregate beneficial
interests in the Portfolio may elect all of the Trustees of the Portfolio if
they choose to do so, and in such event, the other investors in the Portfolio
would not be able to elect any Trustee. The Portfolio is not required to hold
annual meetings of investors but the Portfolio will hold special meetings of
investors when in the judgment of the Portfolio's Trustees it is necessary or
desirable to submit matters for an investor vote. No material amendment may be
made to the Portfolio's Declaration of Trust without the affirmative majority
vote of investors (with the vote of each being in proportion to the amount of
its investment).
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two thirds of its
investors (with the vote of each being in proportion to the amount of its
investment), except that if the Trustees of the Portfolio recommend such sale of
assets, the approval by vote of a majority of the investors (with the vote of
each being in proportion to the amount of its investment) will be sufficient.
The Portfolio may also be terminated (i) upon liquidation and distribution of
its assets, if approved by the vote of two thirds of its investors (with the
vote of each being in proportion to the amount of its investment), or (ii) by
the Trustees of the Portfolio by written notice to investors.
The Portfolio is organized as a trust under the laws of the State of New
York. Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater portion
of the liabilities and obligations of the Portfolio than its proportionate
beneficial interest in the Portfolio. The Declaration of Trust also provides
that the Portfolio shall maintain appropriate insurance (for example, fidelity
B-14
<PAGE>
bonding and errors and omissions insurance) for the protection of the Portfolio,
its investors, Trustees, officers, employees and agents covering possible tort
and other liabilities. Thus, the risk of an investor incurring financial loss on
account of investor liability is limited to circumstances in which both
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations.
The Declaration of Trust further provides that obligations of the
Portfolio are not binding upon the Trustees individually but only upon the
property of the Portfolio and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he or she would otherwise be subject by
reason of wilful misfeasance, bad faith, gross negligence, or reckless disregard
of the duties involved in the conduct of his or her office.
The Portfolio reserves the right to create and issue a number of series,
in which case investments in each series would participate equally in the
earnings and assets of the particular series. Investors in each series would be
entitled to vote separately to approve advisory agreements or changes in
investment policy, but investors of all series would vote together in the
election or selection of Trustees, principal underwriters and accountants for
the Portfolio. Upon liquidation or dissolution of the Portfolio, the investors
in each series would be entitled to share pro rata in the net assets of their
respective series available for distribution to investors.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolio will be issued solely in private
placement transactions described in Item 4.
The net asset value of the Portfolio is determined each day on which the
New York Stock Exchange is open for trading ("Portfolio Business Day"). (As of
the date of this Registration Statement, the New York Stock Exchange is open for
trading every weekday except for the following holidays: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas.) This determination of net asset
value is made once during each Portfolio Business Day as of the close of regular
trading of the New York Stock Exchange by deducting the amount of the
Portfolio's liabilities, including expenses payable or accrued, from the value
of its assets. Purchases and withdrawals will be effected at the time of
determination of net asset value next following the receipt of any purchase
order or request for withdrawal.
Equity securities held by the Portfolio are valued at the last sale
price on the exchange on which they are primarily traded or on the NASDAQ system
for unlisted national market issues, or at the last quoted bid price for
securities in which there were no sales during the day or for unlisted
securities not reported on the NASDAQ system. If the Portfolio purchases option
contracts, such option contracts which are traded on commodities or securities
exchanges are normally valued at the settlement price on the exchange on which
they are traded. Short-term obligations with remaining maturities of less than
60 days are valued at amortized cost, which constitutes fair value as determined
by the Board of
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Trustees of the Portfolio. Other securities held by the Portfolio for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Board of Trustees.
A determination of value used in calculating net asset value must be a
fair value determination made in good faith utilizing procedures approved by the
Portfolio's Board of Trustees. While no single standard for determining fair
value exists, as a general rule, the current fair value of a security would
appear to be the amount which the Portfolio could expect to receive upon its
current sale. Some, but not necessarily all, of the general factors which may be
considered in determining fair value include: (i) the fundamental analytical
data relating to the investment; (ii) the nature and duration of restrictions on
disposition of the securities; and (iii) an evaluation of the forces which
influence the market in which these securities are purchased and sold. Without
limiting or including all of the specific factors which may be considered in
determining fair value, some of the specific factors include: type of security,
financial statements of the issuer, cost at date of purchase, size of holding,
discount from market value, value of unrestricted securities of the same class
at the time of purchase, special reports prepared by analysts, information as to
any transactions or offers with respect to the security, existence of merger
proposals or tender offers affecting the security, price and extent of public
trading in similar securities of the issuer or comparable companies, and other
relevant matters.
Interest income on short-term obligations held by the Portfolio is
determined on the basis of interest accrued less amortization of premium.
At the close of each Portfolio Business Day, the value of each
investor's beneficial interest in the Portfolio will be determined by
multiplying the net asset value of the Portfolio by the percentage, effective
for that day, which represents that investor's share of the aggregate beneficial
interests in the Portfolio. Any additions or withdrawals, which are to be
effected as of the close of business on that day, will then be effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio
will then be recomputed as the percentage equal to the fraction (i) the
numerator of which is the value of such investor's investment in the Portfolio
as of the close of business on that Portfolio Business day plus or minus, as the
case may be, the amount of any additions to or withdrawals from the investor's
investment in the Portfolio effected as of the close of business on such day,
and (ii) the denominator of which is the aggregate net asset value of the
Portfolio as of the close of business on such day plus or minus, as the case may
be, the amount of the net additions to or withdrawals from the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
so determined will then be applied to determine the value of the investor's
interest in the Portfolio as of the close of business on the following Portfolio
Business Day.
ITEM 20. TAX STATUS.
The Portfolio is organized as a trust under New York law. As such, the
Portfolio will not be subject to any federal income tax and, under the
anticipated method of operation of the Portfolio, withdrawals from the Portfolio
should not generate any taxable gain to an investor. However, each investor in
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<PAGE>
the Portfolio must take into account its share (as determined in accordance with
the governing instruments of the Portfolio) of the Portfolio's taxable income,
gain, loss, deductions and credits in determining its income tax liability. The
determination of such share will be made in accordance with regulations
promulgated by the Internal Revenue Service and should therefore be respected by
the Internal Revenue Service.
The Portfolio's taxable year-end is currently July 31. Although the
Portfolio will not be subject to federal income tax, it will file a federal
information income tax return upon which it will report its income, gain, loss,
deductions and credits for its taxable year.
It is intended that the Portfolio's assets, income and distributions
will be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Internal Revenue Code of 1986,
as amended, assuming that the investor invested all of its assets in the
Portfolio.
There are certain tax issues which will be relevant to only certain of
the investors, specifically, investors which are segregated asset accounts and
investors who contribute assets rather than cash to the Portfolio. It is
intended that such segregated asset accounts will be able to satisfy
diversification requirements applicable to them and that such contributions of
assets will not be taxable provided certain requirements are met. Such investors
are advised to consult their own tax advisors as to the tax consequences.
It is assumed that (1) the Portfolio will be treated for federal income
tax purposes as a partnership (as such, the Portfolio is not subject to federal
income taxation) (2) for purposes of determining whether an investor in the
Portfolio satisfies the income and diversification requirements to maintain its
status as a regulated investment company, such investor will be deemed to own a
proportionate share of the Portfolio's assets and will be deemed to be entitled
to the Portfolio's income or loss attributable to that share. The Portfolio has
advised investors that it intends to conduct its operations so as to enable the
Portfolio's investors to satisfy those requirements.
Each investor should take into account, in computing its federal income
tax liability, its share of the Portfolio's income, gains, losses, deductions,
credits and tax preference items, without regard to whether it has received any
cash distributions from the Portfolio. Withdrawals by an investor from the
Portfolio generally will not result in the investor recognizing any gain or loss
for federal income tax purposes, except that (1) gain will be recognized to the
extent that any cash distributed exceeds the basis of the investor's interest in
the Portfolio prior to the distribution, (2) income or gain will be realized if
the withdrawal is in liquidation of the investor's entire interest in the
Portfolio and includes a disproportionate share of any unrealized receivables
held by the Portfolio, and (3) loss will be recognized if the distribution is in
liquidation of that entire interest and consists solely of cash and/or
unrealized receivables. The basis of each investor's interest in the Portfolio
generally equals the amount of cash and the basis of any property that the
investor invests in the Portfolio, increased by the investor's share of income
from the Portfolio and decreased by the investor's share of losses from the
Portfolio and the amount
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of any cash distributions and the basis of any property distributed from the
Portfolio.
The Portfolio is not subject to any income or franchise tax in the State
of New York or the Commonwealth of Massachusetts.
ITEM 21. UNDERWRITERS.
The exclusive placement agent for the Portfolio is Signature, which
receives no compensation for serving in this capacity. Other investment
companies, insurance company separate accounts, common and commingled trust
funds and similar organizations and entities may continuously invest in the
Portfolio.
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
The audited financial statements of the Portfolio dated July 31, 1997
are incorporated herein by reference from the Portfolio's Form N-30D filed with
the Securities and Exchange Commission on October 9, 1997 (Accession No.
0001035347- 97-000079).
B-18
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DSI73G
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements Included in Part A:
Not applicable.
Financial Statements Included in Part B:
Portfolio of Investments at July 31, 1997
Statement of Assets and Liabilities at July 31, 1997
Statement of Operations for the year ended July 31, 1997
Statements of Changes in Net Assets for the fiscal years ended July 31,
1997 and 1997
Financial Highlights for the fiscal years ended July 31, 1997, 1996,
1995, 1994 and 1993
Notes to Financial Statements at June 31, 1997
Independent Auditors' Report at August 22, 1997
(b) Exhibits
1. Amended and Restated Declaration of Trust of the Registrant.1
1(a). Certificate and Amendment to Amended and Restated Declaration of
Trust.2
2. By-Laws of the Registrant as amended.2
5(a). Management Agreement between the Registrant and Domini Social
Investments LLC ("DSI").2
5(b). Submanagement Agreement between the DSI and Mellon Equity
Associates.2
8. Custodian Agreement between the Registrant and Investors Bank &
Trust Company as custodian (including transfer agency services).2
13. Investment representation letters from initial investors.2
C-1
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17. Financial data schedule.2
--------------
1 Previously filed and incorporated herein by reference from
Amendment No. 6 to the Registrant's Registration Statement filed
with the Securities and Exchange Commission on November 28, 1995
(Accession No. 0000922326-95-000060).
2 Filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
(1) (2)
Number of Record Holders
Title of Class as of October 20, 1997
-------------- -----------------------
Beneficial Interests 5
ITEM 27. INDEMNIFICATION.
Reference is hereby made to Article V of the Registrant's Amended and
Restated Declaration of Trust filed as an Exhibit hereto.
The Trustees and officers of the Registrant and the personnel of the
Registrant's manager are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
DSI is a Massachusetts limited liability company with offices at 11 West
25th Street, 7th Floor, New York, New York 10010, and is registered as an
investment adviser under the Investment Advisers Act of 1940. The owners of DSI
are James Earl Brooks, Amy Lee Domini, Peter D. Kinder, Steven D.
Lydenberg, Sigward Moser and David P. Wieder.
C-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EMPLOYMENT DURING THE PAST TWO FISCAL
NAME ADDRESS YEARS
<S> <C> <C>
James E. Brooks Four Arlington Street President, Equity Resources Group, Inc.
Cambridge, MA 02140 (real estate investment)
Amy L. Domini 230 Congress Street CEO, Secretary and Treasurer, Kinder,
Cambridge, MA 02110 Lydenberg, Domini & Co., Inc. ("KLD")
(investment adviser); Trustee, Loring,
Wolcott & Coolidge (fiduciary)
Peter D. Kinder 129 Mt. Auburn Street President, KLD
Cambridge, MA 02138
Steven D. 129 Mt. Auburn Street Director of Research, KLD
Lydenberg Cambridge, MA 02138
Sigward Moser 11 West 25th Street President and Director, Communication
New York, NY 10010 House International, Inc. (advertising
agency)
David P. Wieder 90 Washington Street President, Director, Equity Owner and
New York, NY 10006 Chairman, Fundamental Shareholder
Services, Inc. (transfer agent);
Secretary, Fundamental Portfolio
Advisors (investment adviser);
Registered Representative, Fundamental
Service Corp. (broker-dealer)
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Signature Broker-Dealer Services, Inc. ("Signature") is the exclusive
placement agent for the Registrant. Signature or an affiliate acts as the
placement agent or distributor for other registered investment companies.
(b) The information required by this Item 29 with respect to each director or
officer of Signature is incorporated by reference herein from Schedule A of
Form BD (File No. 8-41134) filed by Signature pursuant to the Securities
Exchange Act of 1934.
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
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<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
Domini Social Investments LLC 11 West 25th Street, 7th Floor,
(manager) New York, NY 10010
Kinder, Lydenberg, Domini & Co., Inc. 129 Mt. Auburn Street
(former investment adviser and sponsor) Cambridge, MA 02138
Mellon Equity Associates 500 Grant St., Suite 3700
(investment submanager) Pittsburgh, PA 15258-0001
Signature Broker-Dealer 6 St. James Avenue
Services, Inc. Boston, MA 02116
(exclusive placement agent)
Investors Bank & Trust Company 200 Clarendon Street
(custodian and transfer agent) Boston, MA 02116
</TABLE>
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to the Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereto duly authorized in
the City of Boston, and Commonwealth of Massachusetts on the 21st day of
October, 1997.
DOMINI SOCIAL INDEX PORTFOLIO
By /s/ Amy L. Domini
Amy L. Domini
President
DSI73G
C-5
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DSI73G
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
<S> <C>
1(a) Certificate and Amendment to Amended and
Restated Declaration of Trust
2 By-Laws as amended
5(a) Management Agreement with Domini Social
Investments LLC
5(b) Submanagement Agreement between Domini Social
Investments LLC and Mellon Equity Associates
8 Custodian Agreement with Investors Bank &
Trust Company
13 Investment representation letters of initial
investors
17 Financial data schedule
</TABLE>
CERTIFICATE AND AMENDMENT TO
AMENDED AND RESTATED DECLARATION OF TRUST
OF DOMINI SOCIAL INDEX PORTFOLIO
The undersigned, being at least a majority of the Trustees of Domini
Social Index Portfolio, a New York trust (the "Trust"), in accordance with
Article X, Section 10.4(a) of the Trust's Amended and Restated Declaration of
Trust dated as of June 7, 1989 (the "Declaration") and pursuant to Article X,
Section 10.4(c) of the Declaration, hereby certify that the following amendment
to the Declaration was adopted unanimously by the Trustees of the Trust at a
meeting held on June 30, 1997 and consented to by vote of Holders (as defined in
the Declaration) holding more than 50% of the total Interests (as defined in the
Declaration) entitled to vote on a proposal to so amend the Declaration.
Section 2.2 of Article II of the Declaration is restated in its
entirety as follows (capitalized terms therein have the respective meanings
afforded them in the Declaration):
2.2. Term and Election. A Trustee may be elected
either by the Holders or, as provided in this
Declaration and subject to the limitations of the
1940 Act, by the Trustees. Each Trustee shall hold
office during the lifetime of this Trust, or until
the election and qualification of his or her
successor, or until he or she sooner dies, resigns
or is removed as provided in Section 2.3 below.
IN WITNESS WHEREOF, the undersigned have executed this certificate and
amendment to the Declaration as of the 22nd day of October, 1997. This
instrument may be executed by the Trustees on separate counterparts and shall be
effective when signed by a majority of the Trustees.
/s/ Emily W. Card /s/ Karen Paul
Emily W. Card Karen Paul
/s/ Amy L. Domini /s/ Timothy Smith
Amy L. Domini Timothy Smith
/s/ Allen M. Mayes /s/ Frederick C. Williamson, Sr.
Allen M. Mayes Frederick C. Williamson, Sr.
/s/ William C. Osborn
William C. Osborn
DSI323
DSI209 ADOPTED 10/5/94
DOMINI SOCIAL INDEX PORTFOLIO
BY-LAWS
These By-Laws are made and adopted pursuant to Section 2.7 of the
Declaration of Trust establishing the DOMINI SOCIAL INDEX PORTFOLIO, dated June
7, 1989, as from time to time amended (hereinafter called the "Declaration").
All words and terms capitalized in these By-Laws shall have the meaning or
meanings set forth for such words or terms in the Declaration.
ARTICLE I
HOLDERS MEETINGS
Section 1.1. CHAIRMAN. The President shall act as chairman at all
meetings of the Holders and, in his absence, the Trustee or Trustees present at
each meeting may elect a temporary chairman for the meeting, who may be one of
themselves.
Section 1.2. PROXIES; VOTING. Holders may vote either in person
or by duly executed proxy and each Holder shall be entitled to a vote
proportionate to his Interest in the Trust, all as provided in Article IX of the
Declaration. No proxy shall be valid after eleven (11) months from the date of
its execution, unless a longer period is expressly stated in such proxy.
Section 1.3. FIXING RECORD DATES. For the purpose of determining
the Holders who are entitled to notice of or to vote or act at a meeting,
including any adjournment thereof, or who are entitled to participate in any
distributions, or for any other proper purpose, the Trustees may from time to
time fix a record date in the manner provided in Section 9.3 of the Declaration.
If the Trustees do not, prior to any meeting of the Holders, so fix a record
date, then the date of mailing notice of the meeting shall be the record date.
1
<PAGE>
Section 1.4. INSPECTORS OF ELECTION. In advance of any meeting of
the Holders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman, if any, of any meeting of the Holders may, and on the
request of any Holder or his proxy shall, appoint Inspectors of Election of the
meeting. The number of Inspectors shall be either one or three. If appointed at
the meeting on the request of one or more Holders or proxies, a Majority
Interests Vote shall determine whether one or three Inspectors are to be
appointed, but failure to allow such determination by the Holders shall not
affect the validity of the appointment of Inspectors of Election. In case any
person appointed as Inspector fails to appear or fails or refuses to act, the
vacancy may be filled by appointment made by the Trustees in advance of the
convening of the meeting or at the meeting by the person acting as chairman. The
Inspectors of Election shall determine the Interests owned by Holders, the
Interests represented at the meeting, the existence of a quorum, the
authenticity, validity and effect of proxies, shall receive votes, ballots or
consents, shall hear and determine all challenges and questions in any way
arising in connection with the right to vote, shall count and tabulate all votes
or consents, determine the results, and do such other acts as may be proper to
conduct the election or vote with fairness to all Holders. If there are three or
more Inspectors of Election, the decision, act or certificate of a majority is
effective in all respects as the decision, act or certificate of all. On request
of the chairman, if any, of the meeting, or of any Holder or his proxy, the
Inspectors of Election shall make a report in writing of any challenge or
question or matter determined by them and shall execute a certificate of any
facts found by them.
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Section 1.5. RECORDS AT HOLDER MEETINGS. At each meeting of the
Holders there shall be open for inspection the minutes of the last previous
meeting of Holders of the Trust and a list of the Holders of the Trust,
certified to be true and correct by the Secretary or other proper agent of the
Trust, as of the record date of the meeting. Such list of Holders shall contain
the name of each Holder in alphabetical order and the address and Interests
owned by such Holder. Holders shall have the right to inspect books and records
of the Trust during normal business hours and for any purpose not harmful to the
Trust.
ARTICLE II
TRUSTEES
Section 2.1. ANNUAL AND REGULAR MEETINGS. The Trustees shall hold
an annual meeting for the election of officers and the transaction of other
business which may come before such meeting. Regular meetings of the Trustees
may be held without call or notice at such place or places and times as the
Trustees may by resolution provide from time to time.
Section 2.2. SPECIAL MEETINGS. Special Meetings of the Trustees
shall be held upon the call of the chairman, if any, the President, the
Secretary or any two Trustees, at such time, on such day and at such place, as
shall be designated in the notice of the meeting.
Section 2.3. NOTICE. Notice of a meeting shall be given by mail
or by telegram (which term shall include a cablegram) or delivered personally.
If notice is given by mail, it shall be mailed not later than 48 hours preceding
the meeting and if given by telegram, telecopier or personally, such notice
shall be sent or delivery made not later than 24 hours preceding the meeting.
Notice by telephone shall constitute personal delivery for these purposes.
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Notice of a meeting of Trustees may be waived before or after any meeting by
signed written waiver. Neither the business to be transacted at, nor the purpose
of, any meeting of the Board of Trustees need be stated in the notice or waiver
of notice of such meeting, and no notice need be given of action proposed to be
taken by written consent. The attendance of a Trustee at a meeting shall
constitute a waiver of notice of such meeting except where a Trustee attends a
meeting for the express purpose of objecting, at the commencement of such
meeting, to the transaction of any business on the ground that the meeting has
not been lawfully called or convened.
Section 2.4. CHAIRMAN; RECORDS. The Chairman, if any, shall act
as chairman at all meetings of the Trustees; in his absence the President shall
act as chairman; and, in the absence of the Chairman of the Board and the
President, the Trustees present shall elect one of their number to act as
temporary chairman. The results of all actions taken at a meeting of the
Trustees, or by written consent of the Trustees, shall be recorded by the
Secretary.
Section 2.5. ATTENDANCE BY TRUSTEES. A trustee who fails, during
any fiscal year of the Trust, to attend at least 75% of the meetings of the
Board, or who fails to attend at least 75% of the meetings of each Committee of
the Board of which such Trustee is a member, unless such failure was the result
of an illness or incapacity which, as determined by the Board, is not likely to
materially interfere with the future performance of the duties of such Trustee,
shall be subject to removal for cause by vote of two-thirds of the remaining
Trustees. The foregoing shall not be construed to limit in any way the authority
of the Board with respect to removal of Trustees.
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ARTICLE III
OFFICERS
Section 3.1. OFFICERS OF THE TRUST. The officers of the Trust
shall consist of a Chairman, if any, a President, a Secretary, a Treasurer and
such other officers or assistant officers, including Vice Presidents, as may be
elected by the Trustees. Any two or more of the offices may be held by the same
person, except that the same person may not be both President and Secretary. The
Trustees may designate a Vice President as an Executive Vice President and may
designate the order in which the other Vice Presidents may act. The Chairman and
the President shall be a Trustee, but no other officer of the Trust need be a
Trustee.
Section 3.2. ELECTION AND TENURE. At the initial organization
meeting and thereafter at each annual meeting of the Trustees, the Trustees
shall elect the Chairman, if any, President, Secretary, Treasurer and such other
officers as the Trustees shall deem necessary or appropriate in order to carry
out the business of the Trust. Such officers shall hold office until the next
annual meeting of the Trustees and until their successors have been duly elected
and qualified. The Trustees may fill any vacancy in office or add any additional
officers at any time.
Section 3.3. REMOVAL OF OFFICERS. Any officer may be removed at
any time, with or without cause, by action of a majority of the Trustees. This
provision shall not prevent the making of a contract of employment for a
definite term with any officer and shall have no effect upon any cause of action
which any officer may have as a result of removal in breach of a contract of
employment. Any officer may resign at any time by notice in writing signed by
such officer and delivered or mailed to the Chairman, if any, President, or
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Secretary, and such resignation shall take effect immediately, or at a later
date according to the terms of such notice in writing.
Section 3.4. BONDS AND SURETY. Any officer may be required by the
Trustees to be bonded for the faithful performance of his duties in such amount
and with such sureties as the Trustees may determine.
Section 3.5. CHAIRMAN, PRESIDENT AND VICE PRESIDENTS. The
Chairman, if any, shall, if present, preside at all meetings of the Holders and
of the Trustees and shall exercise and perform such other powers and duties as
may be from time to time assigned to him by the Trustees. Subject to such
supervisory powers, if any, as may be given by the Trustee to the Chairman, if
any, President shall be the chief executive officer of the Trust and, subject to
the control of the Trustees, shall have general supervision, direction and
control of the business of the Trust and of its employees and shall exercise
such general powers of management as are usually vested in the office of
President of a corporation. In the absence of the Chairman, if any, the
President shall preside at all meetings of the Holders and, in the absence of
the Chairman of the Board, the President shall preside at all meetings of the
Trustees. The President shall be, ex officio, a member of all standing
committees. Subject to direction of the Trustees, the President shall have the
power, in the name and on behalf of the Trust, to execute any and all loan
documents, contracts, agreements, deeds, mortgages, and other instruments in
writing, and to employ and discharge employees and agents of the Trust. Unless
otherwise directed by the Trustees, the President shall have full authority and
power, on behalf of all of the Trustees, to attend and to act and to vote, on
behalf of the Trust at any meetings of business organizations in which the Trust
holds an interest, or to confer such powers upon any other persons, by executing
any proxies duly
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authorizing such persons. The President shall have such further authorities
and duties as the Trustees shall from time to time determine. In the
absence or disability of the President, the Vice Presidents in order of their
rank or the Vice President designated by the Trustees, shall perform all of the
duties of President, and when so acting shall have all the powers of and be
subject to all of the restrictions upon the President. Subject to the direction
of the President, each Vice President shall have the power in the name and on
behalf of the Trust to execute any and all loan documents, contracts,
agreements, deeds, mortgages and other instruments in writing, and, in addition,
shall have such other duties and powers as shall be designated from tame to time
by the Trustees or by the President.
Section 3.6. SECRETARY. The Secretary shall keep the minutes of
all meetings of, and record all votes of, Holders, Trustees and the Executive
Committee, if any. He shall be custodian of the seal of the Trust, if any, and
he (and any other person so authorized by the Trustees) shall affix the seal or,
if permitted, a facsimile thereof, to any instrument executed by the Trust which
would be sealed by a New York corporation executing the same or a similar
instrument and shall attest the seal and the signature or signatures of the
officer or officers executing such instrument on behalf of the Trust. The
Secretary shall also perform any other duties commonly incident to such office
in a New York corporation, and shall have such other authorities and duties as
the Trustees shall from time to time determine.
Section 3.7. TREASURER. Except as otherwise directed by the
Trustees, the Treasurer shall have the general supervision of the monies, funds,
securities, notes receivable and other valuable papers and documents of the
Trust, and shall have and exercise under the supervision of the Trustees and of
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the President all powers and duties normally incident to his office. He may
endorse for deposit or collection all notes, checks and other instruments
payable to the Trust or to its order. He shall deposit all funds of the Trust as
may be ordered by the Trustees or the President. He shall keep accurate account
of the books of the Trust's transactions which shall be the property of the
Trust, and which together with all other property of the Trust in his
possession, shall be subject at all times to the inspection and control of the
Trustees. Unless the Trustees shall otherwise determine, the Treasurer shall be
the principal accounting officer of the Trust and shall also be the principal
financial officer of the Trust. He shall have such other duties and authorities
as the Trustees shall from time to time determine. Notwithstanding anything to
the contrary herein contained, the Trustees may authorize any adviser,
administrator or manager to maintain bank accounts and deposit and disburse
funds on behalf of the Trust.
Section 3.8. OTHER OFFICERS AND DUTIES. The Trustees may elect
such other officers and assistant officers as they shall from time to time
determine to be necessary or desirable in order to conduct the business of the
Trust. Assistant officers shall act generally in the absence of the officer whom
they assist and shall assist that officer in the duties of his office. Each
officer, employee and agent of the Trust shall have such other duties and
authority as may be conferred upon him by the Trustees or delegated to him by
the President.
ARTICLE IV
MISCELLANEOUS
Section 4.1. DEPOSITORIES. In accordance with Section 7.1 of the
Declaration, the funds of the Trust shall be deposited in such depositories as
the Trustees shall designate and shall be drawn out on checks, drafts or other
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orders signed by such officer, officers, agent or agents (including any adviser,
administrator or manager), as the Trustees may from time to time authorize.
Section 4.2. SIGNATURES. All contracts and other instruments
shall be executed on behalf of the Trust by such officer, officers, agent or
agents, as provided in these By-Laws or as the Trustees may from time to time by
resolution provide.
Section 4.3. SEAL. The seal of the Trust, if any, may be affixed
to any document, and the seal and its attestation may be lithographed, engraved
or otherwise printed on any document with the same force and effect as if it had
been imprinted and attested manually in the same manner and with the same effect
as if done by a New York corporation.
Section 4.4. INDEMNIFICATION. Insofar as the conditional
advancing of indemnification monies under Section 5.3 of the Declaration of
Trust for actions based upon the Investment Company Act of 1940 may be
concerned, such payments will be made only on the following conditions: (i) the
advances must be limited to amounts used, or to be used, for the preparation or
presentation of a defense to the action, including costs connected with the
preparation of a settlement; (ii) advances may be made only upon receipt of a
written promise by, or on behalf of, the recipient to repay that amount of the
advance which exceeds that amount to which it is ultimately determined that he
is entitled to receive from the Trust by reason of indemnification; and (iii)
(a) such promise must be secured by a surety bond, other suitable insurance or
an equivalent form of security which assures that any repayments may be obtained
by the Trust without delay or litigation, which bond, insurance or other form of
security must be provided by the recipient of the advance, or (b) a majority of
a quorum of the Trust's disinterested, non-party Trustees, or an independent
legal counsel
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in a written opinion, shall determine, based upon a review of
readily available facts, that the recipient of the advance ultimately will be
found entitled to indemnification.
ARTICLE V
NON-TRANSFERABILITY OF INTERESTS
Section 5.1. NON-TRANSFERABILITY OF INTERESTS. Interests shall
not be transferable. Except as otherwise provided by law, the Trust shall be
entitled to recognize the exclusive right of a person in whose name Interests
stand on the record of Holders as the owner of such Interests for all purposes,
including, without limitation, the rights to receive distributions, and to vote
as such owner, and the Trust shall not be bound to recognize any equitable or
legal claim to or interest in any such Interests on the part of any other
person.
Section 5.2. REGULATIONS. The Trustees may make such additional
rules and regulations, not inconsistent with these By-Laws, as they may deem
expedient concerning the sale and purchase of Interests of the Trust.
Section 5.3. DISTRIBUTION DISBURSING AGENTS AND THE LIKE. The
Trustees shall have the power to employ and compensate such distribution
disbursing agents, warrant agents and agents for the reinvestment of
distributions as they shall deem necessary or desirable. Any of such agents
shall have such power and authority as is delegated to any of them by the
Trustee.
ARTICLE VI
AMENDMENT OF BY-LAWS
Section 6.1. AMENDMENT AND REPEAL OF BY-LAWS. In accordance with
Section 2.7 of the Declaration, the Trustees shall have the power to alter,
amend
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or repeal the By-Laws or adopt new By-Laws at any time. Action by the
Trustees with respect to the By-Laws shall be taken by an affirmative vote of a
majority of the Trustees. The Trustees shall in no event adopt By-Laws which are
in conflict with the Declaration.
The Declaration establishing the Domini Social Index Portfolio
provides that the name Domini Social Index Portfolio refers to the Trustees
under the Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, officer, employee or agent of the Domini Social
Index Portfolio shall be held to any personal liability, nor shall resort be had
to their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of said Domini Social Index Portfolio.
DSI209
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MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of October 22, 1997, by and between
Domini Social Index Portfolio, a New York trust (the "Portfolio"), and Domini
Social Investments LLC ("DSI" or the "Adviser").
WITNESSETH:
WHEREAS, the Portfolio engages in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (collectively with the rules and regulations promulgated
thereunder, the "1940 Act"), and
WHEREAS, the Portfolio wishes to engage DSI to provide certain
investment advisory and administrative services for the Portfolio, and DSI is
willing to provide such investment advisory and administrative services for the
Portfolio on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. DUTIES OF DSI. (A) DSI shall act as the Adviser for the Portfolio and
as such shall furnish continuously an investment program and shall determine
from time to time what securities shall be purchased, sold or exchanged and what
portion of the assets of the Portfolio shall be held uninvested, subject always
to the restrictions of the Portfolio's Declaration of Trust, dated June 7, 1989,
and By-laws, as each may be amended from time to time (respectively, the
"Declaration" and the "By-Laws"), the provisions of the 1940 Act, and the
then-current registration statement of the Portfolio. The Adviser shall also
make recommendations as to the manner in which voting rights, rights to consent
to corporate action and any other rights pertaining to the Portfolio's portfolio
securities shall be exercised. Should the Board of Trustees of the Portfolio at
any time, however, make any definite determination as to investment policy
applicable to the Portfolio and notify the Adviser thereof in writing, the
Adviser shall be bound by such determination for the period, if any, specified
in such notice or until similarly notified that such determination has been
revoked. The Adviser shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above and, in particular, to place all orders for the purchase or sale of
securities for the Portfolio's account with the brokers or dealers selected by
it, and to that end the Adviser is authorized as the agent of the Portfolio to
give instructions to the custodian or any subcustodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
In connection with the selection of such brokers or dealers and the placing of
such orders, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Portfolio and/or the other accounts over which the
Adviser, any subadviser, submanager or respective "affiliated person" thereof
exercises investment discretion. The Adviser is
<PAGE>
authorized to pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for the
Portfolio which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either that
particular transaction or the overall responsibilities which the Adviser and any
"affiliated person" of the Adviser have with respect to accounts over which they
exercise investment discretion. In making purchases or sales of securities or
other property for the account of the Portfolio, the Adviser may deal with
itself or with the Trustees of the Portfolio or the Portfolio's underwriter or
distributor to the extent such actions are permitted by the 1940 Act. In
providing the services and assuming the obligations set forth herein, the
Adviser may subject to the requirements of the 1940 Act or any exemptive order
granted thereunder employ at its own expense, or may request that the Portfolio
employ at the Portfolio's expense, one or more subadvisers or submanagers;
provided that in each case the Adviser shall supervise the activities of each
subadviser. Any agreement between the Adviser and a subadviser shall be subject
to the renewal, termination and amendment provisions applicable to this
Agreement. Any agreement by the Portfolio and a subadviser may be terminated by
the Adviser at any time on not more than 60 days' nor less than 30 days' written
notice to the Portfolio and the subadviser.
(B) Subject to the direction and control of the Board of Trustees of the
Portfolio, DSI shall perform such administrative and management services as may
from time to time be reasonably requested by the Portfolio, which shall include
without limitation: (1) maintaining office facilities (which may be in the
office of DSI or an "affiliated person" of DSI) and furnishing clerical services
necessary for maintaining the organization of the Portfolio and for performing
the administrative and management functions herein set forth; (2) arranging, if
desired by the Portfolio, for directors, officers or employees of the Adviser to
serve as Trustees, officers or agents of the Portfolio if duly elected or
appointed to such positions and subject to their individual consent and to any
limitations imposed by the law; (3) supervising the overall administration of
the Portfolio, including negotiation of contracts and fees with and the
monitoring of performance and billings of the Portfolio's transfer agent,
custodian and other independent contractors or agents; (4) overseeing (with
advice of the Portfolio's counsel), the preparation of and, if applicable,
filing all documents required for compliance by the Portfolio with applicable
laws and regulations, including registration statements, semi-annual and annual
reports to investors, proxy statements and tax returns; (5) preparation of
agendas and supporting documents for and minutes of meetings of Trustees,
committees of Trustees and investors; (6) arranging for maintenance of books and
records of the Portfolio; (7) maintaining telephone coverage to respond to
investor inquiries regarding matters to which this Agreement pertains to which
transfer agents are unable to respond; (8) providing reports and assistance
regarding the Portfolio's compliance with securities and tax laws and investment
objective and restrictions; (9) arranging for dissemination of yield and other
performance information to newspapers and tracking services; (10) arranging for
and preparing annual renewals for fidelity bond and errors and omissions
insurance coverage; (11) developing a budget for the Portfolio, establishing the
rate of expense accruals and arranging for the payment of all fixed and
<PAGE>
management expenses; and (12) answering questions from the general public, the
media and investors in the Portfolio regarding (a) the securities holdings of
the Portfolio; (b) any limits in which the Portfolio invests; (c) the social
investment philosophy of the Portfolio; and (d) the proxy voting philosophy and
shareholder activism philosophy of the Portfolio. Notwithstanding the foregoing,
DSI shall not be deemed to have assumed any duties with respect to, and shall
not be responsible for, the distribution of beneficial interests in the
Portfolio, nor shall DSI be deemed to have assumed or have any responsibility
with respect to functions specifically assumed by any transfer agent, fund
accounting agent or custodian of the Portfolio. In providing administrative and
management services as set forth herein, DSI may, at its own expense, employ one
or more subadministrators; provided that DSI shall remain fully responsible for
the performance of all administrative and management duties set forth herein and
shall supervise the activities of each subadministrator.
2. ALLOCATION OF CHARGES AND EXPENSES. DSI shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. Except as provided in the foregoing
sentence, it is understood that the Portfolio will pay all of its own expenses
including, without limitation, organization costs of the Portfolio; compensation
of Trustees who are not "interested persons" of the Portfolio; governmental
fees, including but not limited to Securities and Exchange Commission fees and
state "blue sky" fees, if any; interest; loan commitment fees; taxes; brokerage
fees and commissions; membership dues in industry and professional associations;
fees and expenses of auditors and accountants, legal counsel and any transfer
agent, distributor, shareholder servicing agent, recordkeeper, registrar or
dividend disbursing agent of the Portfolio; expenses relating to the issuance
and redemption of beneficial interests in the Portfolio and servicing investor
accounts; expenses of preparing, typesetting, printing and mailing: registration
statements for regulatory purposes and for distribution to current investors,
investor reports, notices, proxy statements and reports to governmental officers
and commissions and to investors in the Portfolio; expenses connected with the
execution, recording and settlement of security transactions; insurance
premiums; fees and expenses of the custodian for all services to the Portfolio,
including safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of the Portfolio
(including but not limited to the fees of independent pricing services);
expenses connected with maintaining the Portfolio's existence as a New York
trust; expenses of meetings of the Portfolio's investors; and such non-recurring
or extraordinary expenses as may arise, including those relating to actions,
suits or proceedings to which the Portfolio may be party and the legal
obligation which the Portfolio may have to indemnify its Trustees and officers
with respect thereto.
3. COMPENSATION OF DSI. For the services to be rendered and facilities
provided by DSI hereunder, the Portfolio will pay DSI a management fee accrued
daily and payable monthly at an annual rate equal to 0.20% of the Portfolio's
average daily net assets for the Portfolio's then current fiscal year; provided,
however, for a period of one year from the date of this Agreement, the fee
payable to the Adviser shall be the lesser of (i) 0.20% of the Portfolio's
average daily net assets for the Portfolio's then-current fiscal year and (ii)
the percentage obtained by deducting from 0.20%, the Portfolio's annual
operating expenses (excluding amounts payable under this Agreement and brokerage
fees and commissions,
<PAGE>
interest, taxes and any other extraordinary expenses) expressed as a
percentage of the Portfolio's average daily net assets. The Adviser shall pay
any applicable fees to the subadviser(s) on the Portfolio's behalf. If DSI
provides services hereunder for less than the whole of any period specified in
this Section 3, the compensation to DSI shall be accordingly adjusted and
prorated.
4. COVENANTS OF DSI. DSI agrees that it will not deal with itself, or
with the Trustees of the Portfolio or the Portfolio's principal underwriter or
distributor, if any, as principals in making purchases or sales of securities or
other property, except as permitted by the 1940 Act, will not take a long or
short position in beneficial interests of the Portfolio, except as permitted by
the Declaration, and will comply with all other provisions of the Declaration
and By-Laws and the then-current registration statement of the Portfolio
relative to DSI and its directors and officers.
5. LIMITATION OF LIABILITY OF DSI. DSI shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in the execution of securities transactions for the
Portfolio, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Section 5, the term "DSI" shall include
directors, officers and employees of DSI as well as DSI itself.
6. ACTIVITIES OF DSI. The services of DSI to the Portfolio are not to be
deemed to be exclusive, DSI being free to render investment advisory,
administrative and/or other services to others. It is understood that Trustees,
officers and investors of the Portfolio are or may be or may become interested
in DSI as directors, officers, employees or otherwise and that directors,
officers and employees of DSI are or may become similarly interested in the
Portfolio and that DSI may be or may become interested in the Portfolio as an
investor or otherwise.
7. DURATION, TERMINATION AND AMENDMENTS OF THIS AGREEMENT. This
Agreement shall become effective as of the day and year first above written,
shall govern the relations between the parties hereto thereafter and shall
remain in force until October 22, 1999, on which date it will terminate unless
its continuance after October 22, 1999 is "specifically approved at least
annually" (a) by the vote of a majority of the Trustees of the Portfolio who are
not "interested persons" of the Portfolio or of DSI at a meeting specifically
called for the purpose of voting on such approval and (b) by the Board of
Trustees of the Portfolio or by "vote of a majority of the outstanding voting
securities" of the Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Portfolio, or by DSI, in each case on not more than 60 days'
nor less than 30 days' written notice to the other party. This Agreement shall
automatically terminate in the event of its "assignment."
This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Portfolio
(except for any such
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amendment as may be effected in the absence of such approval without
violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person" and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the Act.
Each party acknowledges and agrees that all obligations of the Portfolio
under this Agreement are binding only with respect to the Portfolio; that any
liability of the Portfolio under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Portfolio.
The undersigned officer of the Portfolio has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or holders of
beneficial interests in the Portfolio individually.
8. GOVERNING LAW. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
DOMINI SOCIAL INDEX PORTFOLIO DOMINI SOCIAL INVESTMENTS LLC
By: /s/ Amy L. Domini By: /s/ Amy L. Domini
Title: President and Trustee Title: Manager
DSI303B
SUBMANAGEMENT AGREEMENT
SUBMANAGEMENT AGREEMENT, dated as of October 22, 1997, by and between
Domini Social Investments LLC, a Massachusetts limited liability company ("DSI"
or the "Manager"), and Mellon Equity Associates, a Pennsylvania business trust
("Mellon" or the "Submanager").
WITNESSETH:
WHEREAS, the Domini Social Index Portfolio (the "Portfolio") engages in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (collectively with the
rules and regulations promulgated thereunder, the "1940 Act"); and
WHEREAS, DSI has entered into a Management Agreement (the "Management
Agreement") with the Portfolio wherein DSI has agreed to serve as Manager to the
Portfolio; and
WHEREAS, as permitted by Section 1(A) of the Management Agreement, DSI
wishes to subcontract some of the performance of its obligations thereunder to
Mellon, and Mellon desires to accept such obligations on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. APPOINTMENT OF MELLON. In accordance with and subject to the
Management Agreement between the Portfolio and the Manager, the Manager hereby
retains Mellon to act as the Submanager for the Portfolio for the period and on
the terms set forth in this Agreement. The Submanager accepts such appointment
and agrees to provide an investment program for the Portfolio for the
compensation provided by this Agreement.
2. DUTIES OF THE SUBMANAGER. The Submanager shall provide the Portfolio
and the Manager with such investment advice and supervision as the Manager may
from time to time consider necessary for the proper supervision of such portion
of the Portfolio's investment assets as the Manager may designate from time to
time. Notwithstanding any provision of this Agreement, the Manager shall retain
all rights and ultimate responsibilities to supervise and, in its discretion,
conduct investment activities relating to the Portfolio. The Submanager shall
furnish continuously an investment program and shall determine from time to time
what securities shall be purchased, sold or exchanged and what portion of the
assets of the Portfolio allocated by the Manager to the Submanager shall be held
uninvested, subject always to the restrictions of the Portfolio's Declaration of
Trust, dated June 7, 1989, and By-laws, as each may be amended from time to time
(respectively, the "Declaration" and the "By-Laws"), the provisions of the 1940
Act, and the then-current registration statement of the Portfolio and, subject
further, to the Submanager notifying the Manager in advance of the Submanager's
intention to purchase any securities except insofar
<PAGE>
as the requirement for such notification may be waived or limited by
the Manager, it being understood that the Submanager shall be responsible for
compliance with any restrictions imposed in writing by the Manager from time to
time in order to facilitate compliance with the above-mentioned restrictions and
such other restrictions as the Manager may determine. Further, the Manager or
the Trustees of the Portfolio may at any time, upon written notice to the
Submanager, suspend or restrict the right of the Submanager to determine what
securities shall be purchased or sold on behalf of the Portfolio and what
portion, if any, of the assets of the Portfolio allocated by the Manager to the
Submanager shall be held uninvested. The Submanager shall also, as requested,
make recommendations to the Manager as to the manner in which proxies, voting
rights, rights to consent to corporate action and any other rights pertaining to
the Portfolio's portfolio securities shall be exercised. Should the Board of
Trustees of the Portfolio or the Manager at any time, however, make any definite
determination as to investment policy applicable to the Portfolio and notify the
Submanager thereof in writing, the Submanager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked.
The Submanager shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above and, in particular, to place all orders for the purchase or sale of
securities for the Portfolio's account with the brokers or dealers selected by
it, and to that end the Submanager is authorized as the agent of the Portfolio
to give instructions to the custodian or any subcustodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
The Submanager will advise the manager on the same day it gives any such
instructions. In connection with the selection of such brokers or dealers and
the placing of such orders, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Portfolio and/or the other accounts
over which the Submanager, the Manager or respective "affiliated person" thereof
exercises investment discretion. The Submanager is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Submanager determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be viewed in
terms of either that particular transaction or the overall responsibilities
which the Submanager, the Manager and any "affiliated person" thereof have with
respect to accounts over which they exercise investment discretion. In making
purchases or sales of securities or other property for the account of the
Portfolio, the Submanager may deal with itself or with the Trustees of the
Portfolio or the Portfolio's underwriter or distributor to the extent such
actions are permitted by the 1940 Act. The Board of Trustees of the Portfolio,
in its discretion, may instruct the Submanager to effect all or a portion of its
securities transactions with one or more brokers and/or dealers selected by the
Board of Trustees if it determines that the use of such brokers and/or dealers
is in the best interest of the Portfolio.
<PAGE>
3. ALLOCATION OF CHARGES AND EXPENSES. The Submanager shall
furnish at its own expense all necessary services, facilities and personnel in
connection with its responsibilities under Section 2 above. Except as provided
in the foregoing sentence, it is understood that the Portfolio will pay all of
its own expenses including, without limitation, organization costs of the
Portfolio; compensation of Trustees who are not "interested persons" of the
Portfolio; governmental fees; interest charges; loan commitment fees; taxes;
membership dues in industry associations allocable to the Portfolio; fees and
expenses of independent auditors, legal counsel and any transfer agent,
distributor, registrar or dividend disbursing agent of the Portfolio; expenses
relating to the issuance and redemption of beneficial interests in the Portfolio
and servicing investor accounts; expenses of preparing, typesetting, printing
and mailing investor reports, notices, proxy statements and reports to
governmental officers and commissions and to investors in the Portfolio;
expenses connected with the execution, recording and settlement of security
transactions; insurance premiums; fees and expenses of the custodian for all
services to the Portfolio, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of the Portfolio (including but not limited to the fees of independent
pricing services); expenses of meetings of the Portfolio's investors; and such
non-recurring or extraordinary expenses as may arise, including those relating
to actions, suits or proceedings to which the Portfolio may be a party and the
legal obligation which the Portfolio may have to indemnify its Trustees and
officers with respect thereto.
4. COMPENSATION OF THE SUBMANAGER. For the services to be rendered by
the Submanager hereunder, the Manager shall pay to the Submanager a fee computed
and paid monthly at an annual rate equal to 0.10% of the Portfolio's average
daily net assets for its then-current fiscal year. If Mellon serves as
Submanager for less than the whole of any period specified in this Section 4,
the compensation to Mellon, as Submanager, shall be prorated.
5. COVENANTS OF THE SUBMANAGER. The Submanager agrees that it will not
deal with itself, or with the Trustees of the Portfolio or the Portfolio's
principal underwriter or distributor, if any, as principals in making purchases
or sales of securities or other property, except as permitted by the 1940 Act,
will not take a long or short position in beneficial interests of the Portfolio,
except as permitted by the Declaration, and will comply with all other
provisions of the Declaration and By-Laws and the then-current registration
statement of the Portfolio relative to the Submanager and its directors and
officers.
6. LIMITATION OF LIABILITY OF THE SUBMANAGER. The Submanager shall not
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of securities
transactions for the Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 6,
the term "Submanager" shall include directors, officers and employees of the
Submanager as well as the Submanager itself. The Portfolio is expressly made a
third party beneficiary of this Agreement and may enforce any obligations of the
Submanager under this Agreement and recover directly from the Submanager for any
liability the Submanager may have hereunder.
<PAGE>
7. ACTIVITIES OF THE SUBMANAGER. The services of the Submanager to the
Portfolio are not to be deemed to be exclusive, the Submanager being free to
render investment advisory, administrative and/or other services to others. It
is understood that Trustees, officers and investors of the Portfolio or the
Manager are or may be or may become interested in the Submanager as directors,
officers, employees or otherwise and that directors, officers and employees of
the Submanager are or may become similarly interested in the Portfolio or the
Manager and that the Submanager may be or may become interested in the Portfolio
as an investor or otherwise.
8. DURATION, TERMINATION AND AMENDMENTS OF THIS AGREEMENT. This
Agreement shall become effective as of the day and year first above written,
shall govern the relations between the parties hereto thereafter and shall
remain in force until October 22, 1999, on which date it will terminate unless
its continuance after October 22, 1999 is "specifically approved at least
annually" (a) by the vote of a majority of the Trustees of the Portfolio who are
not "interested persons" of the Portfolio or of DSI or the Submanager at a
meeting specifically called for the purpose of voting on such approval and (b)
by the Board of Trustees of the Portfolio or by "vote of a majority of the
outstanding voting securities" of the Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by (i) the Trustees of the Portfolio, (ii) the "vote of a majority of
the outstanding voting securities" of the Portfolio or (iii) DSI with the prior
consent of the Trustees of the Portfolio, in each case on not more than 60 days'
nor less than 30 days' written notice to the other party. This Agreement may be
terminated at any time without the payment of any penalty by the Submanager on
not less than 90 days' written notice to the Manager and the Trustees of the
Portfolio. This Agreement shall automatically terminate in the event of its
"assignment."
This Agreement constitutes the entire agreement between the parties and
may be amended only if such amendment is approved by the parties hereto, the
Trustees of the Portfolio and the "vote of a majority of the outstanding voting
securities" of the Portfolio (except for any such amendment as may be effected
in the absence of such vote without violating the 1940 Act or any exemptive
order granted thereunder).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person" and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the Act.
9. GOVERNING LAW. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts; provided, however, that nothing herein will be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940 or
any rules or regulations of the Securities and Exchange Commission thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
MELLON EQUITY ASSOCIATES DOMINI SOCIAL INVESTMENTS LLC
By: /s/ James E. Foster By: /s/ Amy L. Domini
Title: Sr. Vice Presdient Title: Manager
DSI299B
[DSI327]
CUSTODIAN AGREEMENT
BETWEEN
DOMINI SOCIAL INDEX PORTFOLIO
AND
INVESTORS BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Bank Appointed Custodian...............................................1
2. Definitions
(a) Authorized Person........................................1
(b) Security.................................................1
(c) Portfolio Security.......................................1
(d) Officers' Certificate....................................2
(e) Federal Book-Entry System................................2
(f) Depository...............................................2
3. Proper Instructions....................................................2
4. Separate Accounts......................................................2
5. Certification as to Authorized Persons.................................3
6. Custody of Cash and Securities of the Fund.............................3
A. Cash.....................................................3
(a) Purchase of Securities............................3
(b) Redemptions.......................................3
(c) Distributions and Expenses of Fund................4
(d) Payment in Respect of Securities..................4
(e) Repayment of Loans................................4
(f) Repayment of Cash.................................4
(g) Other Authorized Payments.........................4
(h) Termination.......................................4
B. Securities...............................................5
(a) Use of Federal Book-Entry System..................5
(b) Use of a Depository...............................7
(c) Use of Book-Entry System for Commercial Paper.....8
(d) Use of Book-Entry System for Mutual Fund Shares...9
C. Options and Futures Transactions.........................9
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the[-]Counter......................9
(b) Puts, Calls and Futures Traded
on Commodities Exchanges.........................10
(c) Segregated Account...............................10
<PAGE>
D. Segregated Account for "when issued",
"forward commitment" and Reverse
Repurchase Agreement Transactions.......................11
E. Interest Bearing Call or Time Deposits..................11
7. Transfer of Securities................................................12
8. Redemptions...........................................................13
9. Merger, Dissolution, etc. of Fund.....................................13
10. Actions of Bank Without Prior Authorization...........................14
11. Maintenance of Records; Fund Evaluation, Accounting Services..........15
12. Concerning the Bank...................................................16
A. Performance of Duties..........................................16
B. Fees and Expenses of Bank......................................17
C. Advances by Bank...............................................17
13. Termination...........................................................18
14. Notices...............................................................19
15. Amendments............................................................19
16. Parties...............................................................19
17. Governing Law.........................................................19
18. Limitation of Liability of the Trustees and Shareholders..............19
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made this ____ day of ____________, 199__ between DOMINI
SOCIAL INDEX PORTFOLIO, a trust established under the laws of the State of New
York (the "Fund"), and INVESTORS BANK & TRUST COMPANY, a trust company organized
under the laws of the Commonwealth of Massachusetts ("Bank").
The Fund, an open-end management investment company, desires to place
and maintain all of its portfolio securities and cash in the custody of the
Bank. The Bank has at least the minimum qualifications required by Section
17(f)(1) of the Investment Company Act of 1940, as amended (the "Act"), to act
as custodian of the portfolio securities and cash of the Fund, and has indicated
its willingness to so act, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. BANK APPOINTED CUSTODIAN. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described, and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. DEFINITIONS. Whenever used herein, the terms listed below will
have the following meaning:
(a) AUTHORIZED PERSON. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on
behalf of the Fund by appropriate resolution of the Board of Trustees of
the Fund (the "Board of Trustees").
(b) SECURITY. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933 as
amended, including, without limitation, any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, certificate of interest or
participation in any profit sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferable
share, investment contract, voting trust certificate, certificate of
deposit for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities
(including any interest therein or based on the value thereof), or any
put, call, straddle, option, or privilege entered into on a national
securities exchange relating to a foreign currency, or, in general, any
interest or instrument commonly known as a "security", or any
certificate of interest or participation in, temporary or interim
certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the
foregoing and futures, forward contracts and options thereon.
(c) PORTFOLIO SECURITY. Portfolio Security will mean any security
owned by the Fund.
<PAGE>
(d) OFFICER'S CERTIFICATE. Officer's Certificate will mean unless
otherwise indicated, any request, direction, instruction, or
certification in writing signed by any two Authorized Persons of the
Fund.
(e) FEDERAL BOOK-ENTRY SYSTEM. Federal Book-Entry System shall
mean the Federal Reserve Treasury Department Book Entry System for the
United States government, instrumentality and agency securities operated
by the Federal Reserve Banks, its successor or successors and its
nominee or nominees.
(f) DEPOSITORY. Depository shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange Act of
1934 (the "Exchange Act"), its successor or successors and its nominee
or nominees. The term "Depository" shall further mean and include any
other person authorized to act as a depository under the Act, its
successor or successors and its nominee or nominees, specifically
identified in a certified copy of a resolution of the Fund's Board of
Trustees.
3. PROPER INSTRUCTIONS. Proper Instructions shall mean (i) instructions
regarding the purchase or sale of Securities for the portfolio of the Fund, and
payments and deliveries in connection therewith, given by an Authorized Person,
such instructions to be given in such form and manner as the Bank and the Fund
shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed or initialed by an
Authorized Person. Oral instructions will be considered Proper Instructions if
the Bank reasonably believes them to have been given by an Authorized Person.
The Fund shall cause all oral instructions to be promptly confirmed in writing.
The Bank shall act upon and comply with any subsequent Proper Instruction which
modifies a prior instruction and the sole obligation of the Bank with respect to
any follow-up or confirmatory instruction, shall be to make reasonable efforts
to detect any discrepancy between the original instruction and such confirmation
and to report such discrepancy to the Fund. The Fund shall be responsible, at
the Fund's expense, for taking any action, including any reprocessing, necessary
to correct any such discrepancy or error, and to the extent such action requires
the Bank to act the Fund shall give the Bank specific Proper Instructions as to
the action required. Upon receipt of an Officer's Certificate as to the
authorization by the Board of Trustees of the Fund, accompanied by a detailed
description of procedures approved by the Fund, Proper Instructions may include
communication effected directly between electro-mechanical or electronic devices
provided that the Board of Trustees and the Bank are satisfied that such
procedures afford adequate safeguards for the Fund's assets.
4. SEPARATE ACCOUNTS. In the event that the Fund establishes one or more
series or portfolios in addition to any established on the date hereof, with
respect to which it desires to have the Bank render services as custodian under
the terms hereof, it shall so notify the Bank in writing, and if the Bank agrees
in writing to provide such services, such series or portfolios shall be treated
for all purposes as a Fund hereunder.
2
<PAGE>
5. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his
certification to the Bank, in such form as may be acceptable to the Bank, of (i)
the names and signatures of the Authorized Persons and (ii) the names of the
members of the Board of Trustees of the Fund, it being understood that upon the
occurrence of any change in the information set forth in the most recent
certification on file (including without limitation any person named in the most
recent certification who is no longer an Authorized Person as designated
therein), the Secretary or Assistant Secretary of the Fund will sign a new or
amended certification setting forth the change and the new, additional or
omitted names or signatures. The Bank will be entitled to rely and act upon any
Officer's Certificate given to it by the Fund which has been signed by officers
named in the most recent certification.
6. CUSTODY OF CASH AND SECURITIES. As custodian for the Fund, the Bank
will keep safely all of the Portfolio Securities delivered to the Bank, and will
deposit to the account of the Fund all of the cash of the Fund delivered to the
Bank, as set forth below.
A. CASH. The Bank will open and maintain a separate account or accounts
in the name of the Fund or in the name of the Bank, as custodian of the Fund,
subject only to draft or order by the Bank acting pursuant to the terms of this
Agreement. Except as otherwise permitted by this Section 6, the Bank will hold
in such account or accounts as custodian, subject to the provisions hereof, all
cash received by it, including borrowed funds, for the account of the Fund. Upon
receipt by the Bank of Proper Instructions (which may be continuing
instructions) or in the case of payments for redemptions and repurchases of
outstanding shares of beneficial interest ("Common Stock") of the Fund,
notification from the Fund's transfer agent as provided in Section 8, requesting
such payment, designating the payee or the account or accounts to which the Bank
will release funds for deposit, and stating that it is for a purpose permitted
under the terms of this Section 6(A), specifying the applicable subsection, or
describing such purpose with sufficient particularity to permit the Bank to
ascertain the applicable subsection, the Bank will make payments of cash held
for the accounts of the Fund, insofar as funds are available for that purpose,
only as permitted in (a)-(h) below.
(a) PURCHASE OF SECURITIES: upon the purchase of Portfolio
Securities for the Fund, against contemporaneous receipt of such
Securities by the Bank registered in the name of the Fund or in the name
of, or properly endorsed and in form for transfer to, the Bank, or a
nominee of the Bank, or receipt for the account of the Bank in the case
of Portfolio Securities which are not physically held by the Bank as
permitted by this Section 6, each such payment to be made at the
purchase price shown on a broker's confirmation (or transaction report
in the case of Book Entry Paper) of purchase of the Portfolio Securities
received by the Bank before such payment is made, as confirmed in the
Proper Instructions received by the Bank before such payment is made;
(b) REDEMPTIONS: in such amount as may be necessary for the
repurchase or redemption of shares of [C]ommon [S]tock of the Fund
offered for repurchase or redemption in accordance with Section 8 of
this Agreement;
3
<PAGE>
(c) DISTRIBUTIONS AND EXPENSES OF FUND: for the payment on the
account of the Fund of dividends or other distributions to shareholders
as may from time to time be declared by the Board of Trustees of the
Fund, interest, taxes, management or supervisory fees, distribution fees
including fees under any 12b-1 plan, fees of the Bank for its services
hereunder and reimbursement of the expenses and liabilities of the Bank
as provided hereunder, fees of any service organization, fees of any
transfer agent, fees for legal, accounting, and auditing services, or
other operating expenses of the Fund;
(d) PAYMENT IN RESPECT OF SECURITIES: for payments in connection
with the conversion, exchange or surrender of Portfolio Securities or
Securities subscribed to by the Fund held by or to be delivered to the
Bank;
(e) REPAYMENT OF LOANS: to repay loans of money made to the Fund
but, in the case of final payment, only upon redelivery to the Bank of
any Portfolio Securities pledged or hypothecated therefor and upon
surrender of documents evidencing the loan;
(f) REPAYMENT OF CASH: to repay the cash delivered to the Fund
for the purpose of collateralizing the obligation to return to the Fund
certificates borrowed from the Fund representing Portfolio Securities,
but only upon redelivery to the Bank of such borrowed certificates;
(g) OTHER AUTHORIZED PAYMENTS: for other authorized transactions
of the Fund, or other obligations of the Fund incurred for proper Fund
purposes; provided that before making any such payment the Bank will
also receive a certified copy of a resolution of the Board of Trustees
signed by an Authorized Person of the Fund (other than the Person
certifying such resolution) and certified by its Secretary or Assistant
Secretary, naming the person or persons to whom such payment is to be
made, and either describing the transaction for which payment is to be
made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the obligation for which payment is to be made,
setting forth the purpose for which such obligation was incurred and
declaring such purpose to be a proper corporate purpose; and
(h) TERMINATION: upon the termination of this Agreement as
hereinafter set forth pursuant to Section 9 and Section 13 of this
Agreement.
The Bank is hereby authorized to endorse for collection and collect on
behalf of and in the name of the Fund all checks, drafts, or other negotiable or
transferable instruments or other orders for the payment of money received by it
for the account of the Fund.
4
<PAGE>
B. SECURITIES. Except as otherwise provided in this Section 6, the Bank
as custodian, will receive and hold pursuant to the provisions hereof, in a
separate account or accounts and physically segregated at all times from those
of other persons, any and all Portfolio Securities which may now or hereafter be
delivered to it by or for the account of the Fund. All such Portfolio Securities
will be held or disposed of by the Bank for, and subject at all times to, the
instructions of the Fund pursuant to the terms of this Agreement. Subject to the
specific provisions of this Section 6 relating to Portfolio Securities that are
not physically held by the Bank, the Bank will register all Portfolio Securities
(unless otherwise directed by Proper Instructions or an Officer's Certificate),
in the name of a registered nominee of the Bank as defined in the Internal
Revenue Code and any Regulations of the Treasury Department issued thereunder,
and will execute and deliver all such certificates in connection therewith as
may be required by such laws or Regulations or under the laws of any State. The
Bank will use its best efforts to the end that the specific Portfolio Securities
held by it hereunder will be at all times identifiable.
The Bank will use the same care with respect to the safekeeping of
Portfolio Securities and cash of the Fund held by it as it uses in respect of
its own similar property but it need not maintain any special insurance for the
benefit of the Fund. The Bank shall make available to the Fund, upon request,
information relating to its insurance coverage.
The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
it may hold for the account of the Fund and which may from time to time be
registered in the name of the Fund.
Neither the Bank nor any nominee of the Bank will vote any of the
Portfolio Securities held hereunder by or for the account of the Fund, except in
accordance with Proper Instructions or an Officer's Certificate.
The Bank will execute and deliver, or cause to be executed and
delivered, to the Fund all notices, proxies and proxy soliciting materials with
respect to such Portfolio Securities, such proxies to be executed by the
registered holder of such Portfolio Securities (if registered otherwise than in
the name of the Fund), but without indicating the manner in which such proxies
are to be voted.
(a) USE OF FEDERAL BOOK-ENTRY SYSTEM. Provided (i) the Bank has
received a certified copy of a resolution of the Board of Trustees of the Fund
specifically approving deposits of Fund assets in the Book-Entry System,
indicating that, and (ii) for each year following such approval, the Board of
Trustees of the Fund has reviewed and approved the arrangement and has not
delivered an Officer's Certificate to the Bank indicating that it has withdrawn
its approval:
1. The Bank may keep Portfolio Securities in the Federal Book-Entry
System provided that such Securities are represented in an account ("Account")
of the Bank (or its agent) in such System which shall not include any assets of
the Bank (or such agent) other than assets held as a fiduciary, custodian, or
otherwise for customers.
5
<PAGE>
2. The records of the Bank (and any such agent) with respect to the
Fund's participation in the Federal Book-Entry System through the Bank (or any
such agent) will identify by Book-Entry Portfolio Securities which are included
with other Securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Fund. Where Securities are
transferred to the Fund's account, the Bank shall also, by book entry or
otherwise, identify as belonging to the Fund a quantity of Securities in
fungible bulk (i) registered in the name of the Bank or its nominee, or (ii)
shown on the Bank's account on the books of the Federal Reserve Bank.
3. The Bank (or its agent) shall pay for Securities purchased for the
account of the Fund or shall pay cash collateral against the return of Portfolio
Securities loaned by the Fund upon (i) receipt of advice from the Federal
Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Fund. The Bank (or its agent)
shall transfer Securities sold or loaned for the account of the Fund upon[:]
(a) receipt of advice from the Federal Book-Entry System that
payment for Securities sold or payment of the initial cash collateral
against the delivery of Portfolio Securities loaned by the Fund has been
transferred to the Account, and
(b) the making of an entry on the records of the Bank (or its
agent) to reflect such transfer and payment for the account of the Fund.
Copies of all advises from the Federal Book-Entry System of transfers of
Securities for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Bank and shall be provided to the Fund at
its request. The Bank shall send the Fund a confirmation, as defined by
Rule 17f-4 under the Act, of any transfers to or from the account of the
Fund.
4. The Bank will promptly provide the Fund with any report obtained by
the Bank or its agent on the Federal Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding Securities deposited
in the Federal Book-Entry System. The Bank will provide the Fund and cause any
such agent to provide, at such times as the Fund may reasonably require, with
reports by independent public accountants on the accounting system, internal
accounting control and procedures for safeguarding Portfolio Securities,
including Portfolio Securities deposited in the Federal Book-Entry System,
relating to the services provided by the Bank or such agent under the Agreement.
5. Anything to the contrary in the Agreement notwithstanding, the Bank
shall be liable to the Fund for any loss or damage to the Fund resulting from
use of the Federal Book-Entry System by reason of any gross negligence, willful
misfeasance or bad faith of the Bank or any of its agents or of any of its or
their employees or from any reckless disregard by the Bank or any such agent of
its duty to enforce effectively such rights as it may have against the Federal
Book-Entry System; at the election of the Fund, it shall be entitled to be
subrogated for the Bank in any claim against the Federal Book-Entry System or
any other person which the Bank or its agent may have as a consequence of any
such loss or damage if and to the extent that the Fund has not been made whole
for any loss or damage.
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(b) USE OF A DEPOSITORY. Provided (i) the Bank has received a certified
copy of a resolution of the Fund's Board of Trustees specifically approving
deposits in DTC or other such Depository and (ii) for each year following such
approval, the Board of Trustees of the Fund has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that it has withdrawn its approval:
1. The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities,
including stock dividends, rights and other items of like nature, and to
receive and remit to the Bank on behalf of the Fund all income and other
payments thereon and to take all steps necessary and proper in
connection with the collection thereof.
2. Registration of the Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository.
3. Payment for Portfolio Securities purchased and sold may be
made through the clearing medium employed by such Depository for
transactions of participants acting through it. Upon any purchase of
Securities for the account of the Fund, payment will be made only upon
delivery of the Securities to or for the account of the Fund and the
Fund shall pay cash collateral against the return of Portfolio
Securities loaned by the Fund only upon delivery of the Portfolio
Securities to or for the account of the Fund; and upon any sale of
Portfolio Securities for the account of the Fund, delivery of the
Portfolio Securities will be made only against payment thereof or, in
the event Portfolio Securities are loaned, delivery of Portfolio
Securities will be made only against receipt of the initial cash
collateral to or for the account of the Fund.
4. The Bank shall be subject to the same liability and duty to
the Fund and its shareholders with respect to all Portfolio Securities
and all cash, stock dividends, rights and items of like nature to which
the Fund is entitled, held or received by a central securities system as
agent for the Bank, pursuant to the foregoing authorization, as if the
same were held or received by the Bank at its own offices. In this
connection, with respect to the use of the Depository by the Bank but
without limiting the foregoing duty or liability, the Bank, without cost
to the Fund, shall ensure that:
(a) The Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Portfolio
Security is lost, destroyed, wrongfully taken or otherwise not
available to be returned to the Bank upon its request;
(b) Any proxy materials received by Depository with
respect to Portfolio Securities deposited with such Depository
are forwarded[.] immediately to the Bank for prompt transmittal
to the Fund;
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(c) Such Depository immediately forwards to the Bank
confirmation of any purchase or sale of Securities for the
account of the Fund and of the appropriate book entry made by
such Depository to the Fund's account;
(d) Such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's obligations
and duties hereunder as may be necessary for the Fund to comply
with the recordkeeping requirements of Section 31(a) of the Act
and Rule 31a-1 thereunder; and
(e) Such Depository delivers to the Bank and the Fund all
internal accounting control reports, whether or not audited by an
independent public accountant, as well as such other reports as
the Fund may reasonably request in order to verify the Portfolio
Securities held by such Depository.
(c) USE OF BOOK-ENTRY SYSTEM [F]OR COMMERCIAL PAPER. Provided (i) the
Bank has received a certified copy of a resolution of the Fund's Board of
Trustees specifically approving participation in a system maintained by the Bank
for the holding of commercial paper in book-entry form ("Book Entry Paper") and
(ii) for each year following such approval the Board of Trustees of the Fund has
received and approved the arrangements, upon receipt of Proper Instructions and
upon receipt of confirmation from an Issuer (as defined below) that the Fund has
purchased such Issuer's Book Entry Paper, the Bank shall issue and hold in
book-entry form, on behalf of the Fund, commercial paper issued by issuers with
whom the Bank has entered into a book-entry agreement (the "Issuers"). In
maintaining its Book Entry Paper System, the Bank agrees that:
1. the Bank will maintain all Book Entry Paper held by the Fund
in an account of the Bank that includes only assets held by it for
customers;
2. the records of the Bank with respect to the Fund's purchase of
Book Entry Paper through the Bank will identify, by book entry,
Commercial Paper belonging to the Fund which is included in the Book
Entry Paper System and shall at all times during the regular business
hours of the Bank be open for inspection by duly authorized officers,
employees or agents of the Fund.
3. (a) The Bank shall pay for Book Entry Paper purchased for the
account of the Fund upon contemporaneous (i) receipt of advice from the
Issuer that such sale of Book Entry Paper has been effected, and (ii)
the making of an entry on the records of the Bank to reflect such
payment and transfer for the account of the Fund.
(b) The Bank shall cancel such Book Entry Paper obligation
upon the maturity thereof upon contemporaneous (i) receipt of advice
that payment for such Book Entry Paper has been transferred to the Fund,
and (ii) the making of an entry on the records of the Bank to reflect
such payment for the account of the Fund.
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4. the Bank shall transmit to the Fund a transaction journal
confirming each transaction in Book Entry Paper for the account of the
Fund on the next business day following the transaction[.]
5. the Bank will send to the Fund such reports on its system of
internal accounting control as the Fund may reasonably request from time
to time.
(d) USE OF BOOK-ENTRY SYSTEM FOR MUTUAL FUND SHARES. Provided (i) the
Bank has received a certified copy of a resolution of the Board of Trustees of
the Fund specifically approving the maintenance of shares of mutual funds which
are Portfolio Securities in the book-entry systems of such mutual funds'
transfer agents, and (ii) for each year following such approval, the Board of
Trustees of the Fund has reviewed and approved the arrangement and has not
delivered an Officer's Certificate to the Bank indicating that it has withdrawn
its approval:
1. The Bank may keep Portfolio Securities which are mutual fund
shares in the book-entry systems of the mutual funds['] transfer agents,
provided that such mutual fund shares are maintained directly with the transfer
agents in an account in the name of the Bank or the Bank's nominee as custodian
for the Fund.
2. The transfer agents will maintain segregated accounts
representing only assets held for the Bank, as custodian of the Fund.
3. The Bank will send to the Fund copies of all confirmations
received from the transfer agents of any transfers to or from the account of the
Fund.
4. The Bank shall send to the Fund reports on its system of
internal accounting control as the Fund may reasonably request from time to
time.
C. OPTIONS AND FUTURES TRANSACTIONS.
(a) PUTS AND CALLS TRADED ON SECURITIES EXCHANGES, NASDAQ OR OVER-
THE-COUNTER.
1. The Bank shall take action as to put options ("puts") and call
options ("calls") purchased or sold (written) by the Fund regarding
escrow or other arrangements (i) in accordance with the provisions of
any agreement entered into upon receipt of Proper Instructions between
the Bank, any broker-dealer registered under the Securities Exchange Act
of 1934 and a member of the National Association of Securities Dealers,
Inc. ("NASD"), and, if necessary, the Fund relating to the compliance
with the rules of the Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations.
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2. Unless another agreement requires it to do so, the Bank shall
be under no duty or obligation to see that the Fund has deposited or is
maintaining adequate margin, if required, with any broker in connection
with any option, nor shall the Bank be under duty or obligation to
present such option to the broker for exercise unless it receives Proper
Instructions from the Fund. The Bank shall have no responsibility for
the legality of any put or call purchased or sold on behalf of the Fund,
the propriety of any such purchase or sale, or the adequacy of any
collateral delivered to a broker in connection with an option or
deposited to or withdrawn from a [s]egregated [a]ccount [(the
"Segregated Account)] as described in sub-paragraph c of this Section
6(C). The Bank specifically, but not by way of limitation, shall not be
under any duty or obligation to: (i) periodically check or notify the
Fund that the amount of such collateral held by a broker or held in a
Segregated Account as described in sub-paragraph (c) of this Section
6(C) is sufficient to protect such broker or the Fund against any loss;
(ii) effect the return of any collateral delivered to a broker; or (iii)
advise the Fund that any option it holds, has or is about to expire.
Such duties or obligations shall be the sole responsibility of the Fund.
(b) PUTS, CALLS AND FUTURES TRADED ON COMMODITIES EXCHANGES.
1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Fund in accordance with
the provisions of any agreement among the Fund, the Bank and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar organization or
organizations, regarding [with] transactions by the Fund.
2. The responsibilities and liabilities of the Bank as to
Futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account shall be limited
as set forth in sub-paragraph (a)(2) of this Section 6(C) as if such
sub-paragraph referred to Futures Commission Merchants rather than
brokers, and Futures and puts and calls thereon instead of options.
(c) SEGREGATED ACCOUNT
The Bank shall upon receipt of Proper Instructions establish and
maintain a Segregated Account or Accounts for and on behalf of the Fund, into
which Account or Accounts may be transferred cash and/or Portfolio Securities
including Portfolio Securities maintained in an Account by the Bank pursuant to
Section 6(B) hereof, (i) in accordance with the provisions of any agreement
among the Fund, the Bank and a broker-dealer registered under the Exchange Act
and a member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organization or organizations regarding escrow or other
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arrangements in connection with transactions by the Fund, and (ii) for the
purpose of segregating cash or Securities in connection with options purchased,
or written by the Fund or commodity futures purchased or written by the Fund,
and (iii) for the purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any subsequent release
or releases of the Securities and Exchange Commission relating to the
maintenance of Segregated Accounts by registered investment companies and (iv)
for other proper corporate purposes, but only, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees of the Fund, or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such Segregated Account and declaring
such purposes to be proper corporate purposes.
D. SEGREGATED ACCOUNT FOR "WHEN ISSUED", "FORWARD COMMITMENT" AND
REVERSE REPURCHASE AGREEMENT TRANSACTIONS. Notwithstanding any other provisions
of this Section 6, the Bank will maintain a [S]egregated [A]ccount [] in the
name of the Fund (i) for the deposit of liquid assets, such as cash, U.S.
Government Securities or other high grade debt obligations, having a market
value (marked to the market on a daily basis) at all times equal to not less
than the aggregate purchase price due on the settlement dates of all the Fund's
then outstanding forward commitment or "when issued" agreements relating to the
purchase of Portfolio Securities and all the Fund's then outstanding commitments
under reverse repurchase agreements entered into with broker-dealer firms, and
(ii) for the deposit of any Portfolio Securities which the Fund has agreed to
sell on a forward commitment basis, all in accordance with Securities and
Exchange Commission Release No. IC-10666. No assets shall be deposited in the
Segregated Account except pursuant to Proper Instructions. Assets maybe
withdrawn from the segregated account pursuant to Proper Instructions only (a)
for sale or delivery to meet the Fund's obligations under outstanding firm
commitment or when-issued agreements for the purchase of Portfolio Securities
and under reverse repurchase agreements, (b) for exchange for other liquid
assets of equal or greater value deposited in the Segregated Account, (c) to the
extent that the Fund's outstanding forward commitment or when-issued agreements
for the purchase of Portfolio Securities or reverse repurchase agreements are
sold to other parties or the Fund's obligations thereunder are met from assets
of the Fund other than those in the Segregated Account, or (d) for delivery upon
settlement of a forward commitment agreement for the sale of Portfolio
Securities.
E. INTEREST BEARING CALL OR TIME DEPOSITS. The Bank shall, upon receipt
of Proper Instructions relating to the purchase by the Fund of interest bearing
fixed term and call deposits, transfer cash, by wire or otherwise, in such
amounts and to such bank or banks as shall be indicated in such Proper
Instructions. The Bank shall include in its records with respect to the assets
of the Fund appropriate notation as to the amount of each such deposit, the
banking institution with which such deposit is made (the "Deposit Bank"), and
shall retain such forms of advice or receipt evidencing the deposit, if any, as
may be forwarded to the Bank by the Deposit Bank. Such deposits shall be deemed
Portfolio Securities of the Fund and the responsibility of the Bank therefore
shall be the same as and no greater than the Bank's responsibility in respect of
other Portfolio Securities of the Fund.
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7. TRANSFER OF SECURITIES. The Bank will transfer, exchange, deliver or
release Portfolio Securities held by it hereunder, insofar as such Securities
are available for such purpose, provided that before making any transfer,
exchange, delivery or release under this Section the Bank will receive Proper
Instructions requesting such transfer, exchange or delivery stating that it is
for a purpose permitted under the terms of this Section 7, specifying the
applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only
(a) upon sales of Portfolio Securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment therefor in
full, each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale of the Portfolio Securities received by
the Bank before such payment is made, as confirmed in the Proper
Instructions received by the Bank before such payment is made;
(b) in exchange for or upon conversion into other Securities
alone or other Securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise;
(c) upon conversion of Portfolio Securities pursuant to their
terms into other Securities;
(d) upon exercise of subscription, purchase or sale or other
similar rights represented by such Portfolio Securities;
(e) for the purpose of redeeming in kind shares of [C]ommon
[S]tock of the Fund upon authorization from the Fund;
(f) in the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(g) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(h) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank pursuant to this Agreement in order to
collateralize loans made to the Fund by any bank, including the Bank;
provided, however, that such Portfolio Securities will be released only
upon payment to the Bank for the account of the Fund of the moneys
borrowed, except that in cases where additional collateral is required
to secure a borrowing already made, and such fact is made to appear in
the Proper Instructions, further Portfolio Securities may be released
for that purpose without any such payment. In the event that any such
pledged Portfolio Securities are held by the Bank, they will be so held
for the account of the lender, and after notice to the Fund from the
lender in accordance with the normal procedures of the lender, that an
event of deficiency or default on the loan has occurred, the Bank may
deliver such pledged Portfolio Securities to or for the account of the
lender;
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(i) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the
fair market value of such Security, as set forth in Proper Instructions
received by the Bank before such payment is made;
(j) for the purpose of tendering shares pursuant to a tender
offer therefor;
(k) for the purpose of delivering Portfolio Securities lent by
the Fund to a bank or broker dealer, but only against receipt in
accordance with street delivery custom except as otherwise provided in
this Section 6, of adequate collateral as agreed upon from time to time
by the Fund and the Bank, and upon receipt of payment in connection with
any repurchase agreement relating to such Securities entered into by the
Fund;
(l) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer,
the Bank will also receive a certified copy of resolution of the Board
of Trustees of the Fund, signed by an authorized officer of the Fund
(other than the officer certifying such resolution) and certified by its
Secretary or Assistant Secretary, specifying the Portfolio Securities to
be delivered, setting forth the transaction in or purpose for which such
delivery is to be made, declaring such transaction to be an authorized
transaction of the Fund or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such
Securities shall be made; and
(m) upon termination of this Agreement as hereinafter set forth
pursuant to Section 9 and Section 13 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (d), (f), (g), (h), (i), (j) and (k) Portfolio Securities or cash
receivable in exchange therefor shall be delivered to the Bank.
8. REDEMPTIONS. In the case of payment of assets of the Fund held by the
Bank in connection with redemptions and repurchases by the Fund of outstanding
shares of its [C]ommon [S]tock, the Bank will rely on notification by the Fund's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Declaration of Trust of the Fund, from assets
available for said purpose.
9. MERGER, DISSOLUTION, ETC. OF FUND. In the case of the following
transactions, in the ordinary course of business, namely, the merger of the Fund
into or the consolidation of the Fund with another investment company, the sale
by the Fund of all, or substantially all of its assets to another investment
company, or the liquidation or dissolution of the Fund and distribution of its
assets, the Bank will deliver the Portfolio Securities held by it under this
Agreement and disburse cash only upon the order of the Fund set forth in an
Officer's Certificate, accompanied by a certified copy of a resolution of the
Fund's Board of Trustees authorizing any of the foregoing transactions. Upon
completion of such delivery
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and disbursement and the payment of the fees, disbursements and expenses of the
Bank, this Agreement will terminate.
10. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an Officer's
Certificate to the contrary, it will without prior authorization or instruction
of the Fund or the transfer agent:
(a) Receive and hold for the account of the Fund hereunder and
deposit in the account or accounts referred to in Section 6 hereof, all
income, dividends, interest and other payments or distribution of cash
with respect to the Portfolio Securities held thereunder;
(b) Present for payment all coupons and other income items held
by it for the account of the Fund which call for payment upon
presentation and hold the cash received by it upon such payment for the
account of the Fund account or accounts referred to in Section 6 hereof;
(c) Receive and hold for the account of the Fund hereunder and
deposit in the account or accounts referred to in Section 6 hereof all
Securities received as a distribution on Portfolio Securities as a
result of a stock dividend, share split-up, reorganization,
recapitalization, merger, consolidation, readjustment, distribution of
rights and similar Securities issued with respect to any Portfolio
Securities held by it hereunder[;]
(d) Execute as agent on behalf of the Fund all necessary
ownership and other certificates and affidavits required by the Internal
Revenue Code or the regulations of the Treasury Department thereunder,
or by the laws of any State now or hereafter in effect, inserting the
[F]und's name on such certificates as the owner of the Portfolio
Securities covered thereby, to the extent it may lawfully do so and as
may be required to obtain payment in respect thereof. The Bank will
execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue Code and any
regulations of the Treasury Department issued thereunder, or under the
laws of any State;
(e) Present for payment all Portfolio Securities which are
called, redeemed, retired or otherwise become payable, and hold cash
received by it upon payment for the account of the Fund in the account
or accounts referred to in Section 6 hereof; and
(f) Exchange interim receipts or temporary Securities for
definitive Portfolio Securities.
The Bank will use all reasonable effort to collect any funds which may
to its knowledge become collectible arising from such Securities, including
dividends, interest and other income, and to transmit to the Fund notice
actually received by it of any call for redemption, offer of
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exchange, right of subscription, reorganization or other proceedings affecting
such Securities.
If Portfolio Securities upon which such income is payable are in default
or payment is refused after due demand or presentation, the Bank will notify the
Fund in writing of any default or refusal to pay within two business days from
the day on which it receives knowledge of such default or refusal. In addition,
the Bank will send the Fund a written report once each week showing any income
on any Portfolio Security held by it which is more than ten days overdue on the
date of such report and which has not previously been reported.
11. MAINTENANCE OF RECORDS; FUND EVALUATION; ACCOUNTING SERVICES. The
Bank will maintain records with respect to transactions for which the Bank is
responsible pursuant to the terms and conditions of this Agreement, and in
compliance with the applicable rules and regulations of the Act, and will
furnish the Fund daily with a statement of condition of the Fund. The Bank will
furnish to the Fund at the end of every month, and at the close of each quarter
of the Fund's fiscal year, a list of the Portfolio Securities and the aggregate
amount of cash held by it for the Fund. The books and records of the Bank
pertaining to its actions under this Agreement and reports by the Bank or its
independent accountants concerning its accounting system, procedures for
safeguarding Securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Fund, and will be preserved by the Bank in the manner and in accordance with
the applicable rules and regulations under the Act.
As custodian the Bank shall have and perform the following powers and
duties:
(a) To keep the books of account and render statements or copies
from time to time as reasonably requested by the Treasurer or any
executive officer of the Fund.
(b) To compute and, unless otherwise directed the Board of
Trustees of the Fund, determine as of close of business on the New York
Stock Exchange each day on which said Exchange is open for unrestricted
trading and as of such other hours, if any, as may be authorized by said
Board of Trustees the net asset value and the public offering price of a
share of Common Stock of the Fund, such determination to be made in
accordance with the provisions of Declaration of Trust of the Fund and
[registration statement on Form N-1A] relating to Fund, as they may from
time to time be amended, and any applicable resolutions of the Board of
Trustees of the Fund at the time in force and applicable; and promptly
to notify the Fund and the NASD or such other persons as the Fund may
request of the results of such computation and determination. In
computing the net asset value hereunder, the Bank may rely in good faith
upon information furnished to it by any Authorized Person in respect of
(i) the manner of accrual of the liabilities of the Fund and in respect
of liabilities of the Fund not appearing on its books of account kept by
the Bank, (ii) reserves, if any, authorized by the Board of Trustees or
that no such reserves have been authorized, (iii) the source of the
quotations to be used in computing the net asset value, (iv) the value
to be assigned to any Portfolio Security for which no price quotations
are available, and
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(v) the method of computation of the public offering price on the basis
of the net asset value of the shares, and the Bank shall not be
responsible for any loss occasioned by such reliance or for any good
faith reliance on any quotations received from a source pursuant to
(iii) above.
(c) To assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial
matters of like nature.
12. CONCERNING THE BANK.
A. PERFORMANCE OF DUTIES. In performing its duties hereunder and any
other duties listed on any Schedule hereto, if any, the Bank will be entitled to
receive and act upon the advice of counsel, and will be without liability for
any action taken or thing done or omitted to be done in accordance with this
Agreement in good faith in conformity with such advice. The word "counsel" as
used in the preceding sentence shall mean counsel to the Fund or an attorney on
the staff of the Administrator to the Fund, provided, however, that if such
counsel or any such attorney is unable to render advice in a timely manner (in
the context of the situation requiring advice) or if such counsel or any other
such attorney would have a conflict in rendering such advice to the Bank, the
word "counsel" shall also mean such other counsel, whether otherwise counsel to,
or an employee of, the Bank, as would generally be viewed as having such
specific knowledge and experience with respect to the issue or matter in
question that prudent professionals in the industry would seek the advice of
such counsel with respect to such type of issue or matter. In the performance of
its duties hereunder, the Bank will be protected and not be liable, and will be
indemnified and saved harmless for any action taken or omitted to be taken by it
in good faith reliance upon the terms of this Agreement, any Officer's
Certificate, Proper Instructions, resolution of the Trustees, telegram, notice,
request, certificate or other instrument reasonably believed by the Bank to be
genuine and for any other loss to the Fund except in the case of its gross
negligence, willful misfeasance or bad faith in the performance of its duties or
reckless disregard of its obligations and duties hereunder.
The Bank may employ agents in the performance of its duties hereunder,
including, upon receipt of Proper Instructions, subcustodians, provided that any
such subcustodian meets at least the minimum qualifications required by Section
17(f)(1) of the Act to act as a custodian of the Fund's assets.
The Bank shall have no liability to the Fund or any other person by
reason of any act or omission of any subcustodian and the Fund shall indemnify
the Bank and hold it harmless from any and against any and all actions, suits
and claims, arising directly or indirectly out of the performance of any
subcustodian. Upon request of the Bank, the Fund shall assume the entire defense
of any action, suit, or claim subject to the foregoing indemnity.
The Fund shall pay all fees and expenses of any subcustodian.
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The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the purchases thereof or
the propriety of the priceincurred therefor;
(b) the legality of any sale of any Portfolio Securities by or
for the Fund or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any shares of [C]ommon
[S]tock of the Fund or the sufficiency of the amount to be received
therefor;
(d) the legality of the repurchase of any shares of [C]ommon
[S]tock of the Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the Fund
or the legality of the distribution of any Portfolio Securities as
payment in kind of such dividend; or
(f) any property or moneys of the Fund unless and until received
by it, and any such property or moneys delivered or paid by it pursuant
to the terms hereof.
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any Portfolio Securities at any time delivered to or held by it for the
account of the Fund are such as may properly be held by the Fund under the
provisions of its [Declaration of Trust] or By-Laws, federal or state statutes
or any rule or regulation of any governmental agency.
B. FEES AND EXPENSES OF BANK. The Fund will pay or reimburse the Bank
from time to time for any transfer taxes payable upon transfer of Portfolio
Securities made hereunder, and for all necessary proper disbursements, expenses
and charges made or incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any) including any
indemnities for any loss, liabilities or expense to the Bank as provided above.
For the services rendered by the Bank hereunder, the Fund will pay to the Bank
such compensation or fees at such rate and at such times as shall be agreed upon
in writing by the parties from time to time. The Bank will also be entitled to
reimbursement by the Fund for all reasonable expenses incurred in conjunction
with termination of this Agreement by the Fund.
C. ADVANCES BY BANK. The Bank may, in its sole discretion, advance funds
on behalf of the Fund to make any payment permitted by this Agreement upon
receipt of any proper authorization required by this Agreement for such payments
by the Fund. Should such a payment or payments, with advanced funds, result in
an overdraft (due to insufficiencies of the Fund's account with the Bank, or for
any other reason) this Agreement deems any such or related indebtedness, a loan
made by the Bank to the Fund payable on demand and bearing interest at the
current rate charged by the Bank for such loans unless the Fund shall provide
the Bank with agreed upon compensating balances. The Fund agrees that the Bank
shall have a continuing lien and security interest to the extent of any
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overdraft or indebtedness, in and to any property at any time held by it for the
Fund's benefit or in which the Fund has an interest and which is then in the
Bank's possession or control (or in the possession or control of any third party
acting on the Bank's behalf). The Fund authorizes the Bank, in its sole
discretion, at any time to charge any overdraft or indebtedness, together with
interest due thereon against any balance of account standing to the credit of
the Fund on the Bank's books.
13. TERMINATION.
(a) This Agreement may be terminated at any time without penalty
upon sixty days['] written notice delivered by either party to the other
by means of registered mail, and upon the expiration of such sixty days
this Agreement will terminate; provided, however, that the effective
date of such termination may be postponed to a date not more than ninety
days from the date of delivery of such notice (i) by the Bank in order
to prepare for the transfer by the Bank of all of the assets of the Fund
held hereunder, and (ii) by the Fund in order to give the Fund an
opportunity to make suitable arrangements for a successor custodian. At
any time after the termination of this Agreement, the Fund will, at its
request, have access to the records of the Bank relating to the
performance of its duties as custodian.
(b) In the event of the termination of this Agreement, the Bank
will immediately upon receipt or transmittal, as the case may be, of
notice of termination, commence and prosecute diligently to completion
the transfer of all cash and the delivery of all Portfolio Securities
duly endorsed and all records maintained under Section 11 to the
successor custodian when appointed by the Fund. The obligation of the
Bank to deliver and transfer over the assets of the Fund held by it
directly to such successor custodian will commence as soon as such
successor is appointed and will continue until completed as aforesaid.
If the Fund does not select a successor custodian within ninety (90)
days from the date of delivery of notice of termination the Bank may,
subject to the provisions of subsection (c) of this Section 13, deliver
the Portfolio Securities and cash of the Fund held by the Bank to a bank
or trust company of its own selection which meets the requirements of
Section 17(f)(1) of the Act and has a reported capital, surplus and
undivided profits aggregating not less than $2,000,000, to be held as
the property of the Fund under terms similar to those on which they were
held by the Bank, whereupon such bank or trust company so selected by
the Bank will become the successor custodian of such assets of the Fund
with the same effect as though selected by the Board of Trustees of the
Fund.
(c) Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order
of the Fund advising that a successor custodian cannot be found willing
and able to act upon reasonable and customary terms and that there has
been submitted to the shareholders of the Fund the question of whether
the Fund will be liquidated or will function without a custodian for the
assets of the Fund held by the Bank. In that event the Bank will deliver
the Portfolio Securities and cash of the Fund held by it, subject as
aforesaid, in accordance with one of such alternatives which may be
approved by the requisite vote of
18
<PAGE>
shareholders, upon receipt by the Bank of a copy of the minutes of the
meeting of shareholders at which action was taken, certified by the
Fund's Secretary.
14. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below namely:
(a) In the case of notices sent to the Fund to:
Domini Social Index Portfolio
6 St. James Avenue
Boston, Massachusetts 02116
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Timothy O'Leary
or at such other place as such party may from time to time designate in
writing.
15. AMENDMENTS. This Agreement may not be altered or amended, except
by an instrument in writing, executed by both parties.
16. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Board of Trustees; and
provided further that termination proceedings pursuant to Section 13 hereof will
not be deemed to be an assignment within the meaning of this provision.
17. GOVERNING LAW. This Agreement and all performance hereunder will
be governed by the laws of the Commonwealth of Massachusetts.
18. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. The term
Domini Social Index [Portfolio] means and refers to the Trustees from time to
time serving under the Declaration of Trust, as the same may subsequently
thereto have been, or subsequently hereto be, amended. It is expressly agreed
that the obligations of the [F]und hereunder shall not be binding upon any of
the Trustees, [s]hareholders, nominees, officers, agents or employees of the
Fund, personally, but bind only the assets and property of the Fund, as provided
in the Declaration of Trust of the Fund. The execution and delivery of this
Agreement has been authorized by the Trustees of the Fund and signed by an
authorized officer of the Fund, acting as such, and neither such authorization
by such Trustees nor such execution and delivery by such officer shall be deemed
to have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the assets and property of the Fund as
provided [in] its Declaration of Trust.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate and their respective corporate seals to be affixed hereto
as of the date first above written by their respective officers thereunto duly
authorized,
DOMINI SOCIAL INDEX PORTFOLIO
By /s/ James B. Craver
Treasurer
Attest: /s/ Thomas M. Lenz
Assistant Secretary
INVESTORS BANK & TRUST COMPANY
By /s/ Henry N. Joyce
Vice President
Attest: /s/ Timothy P. O'Leary
Vice President
6/11/93
20
SIGNATURE 6 St. James Avenue EXHIBIT 13
BROKER-DEALER [line] Boston, Massachusetts 02116
SERVICES INC. Tel. (617) 423-0800
Fax (617) 542-5815
June 21, 1990
Domini Social Index Portfolio
6 St. James Avenue
Boston, MA 02116
Ladies and Gentlemen:
With respect to our purchase from you for $100 worth of shares of
beneficial interest in Domini Social Index Portfolio (the "Portfolio"), we
hereby advise you that we are purchasing such shares with no intention to
dispose of them either through resale to others or redemption by the Portfolio.
The amount paid by the Portfolio on any redemption by us of any such
shares will be reduced by a portion of any unamortized organization expenses,
determined by the proportion of the number of shares redeemed to the number of
initial shares of the Portfolio owned by all holders of outstanding shares
immediately prior to such redemption.
Very truly yours,
[SIGNATURE BROKER-DEALER
SERVICES, INC.]
By: /s/ Gail E. McHugh
Gail E. McHugh, Treasurer
DSI13 [DSI328]
<PAGE>
THE DOMINI SOCIAL INDEX SM [superscript] TRUST
[lines]
6 St. James Avenue, Boston, MA 02116 [square bullet] (800) 762-6814
June 21, 1990
Domini Social Index Portfolio
6 St. James Avenue
Boston, MA 02116
Ladies and Gentlemen:
With respect to our purchase from you for $100,000 worth of shares of
beneficial interest in Domini Social Index Portfolio (the "Portfolio"), we
hereby advise you that we are purchasing such shares with no intention to
dispose of them either through resale to others or redemption by the Portfolio.
The amount paid by the Portfolio on any redemption by us of any such
shares will be reduced by a portion of any unamortized organization expenses,
determined by the proportion of the number of shares redeemed to the number of
initial shares of the Portfolio owned by all holders of outstanding shares
immediately prior to such redemption.
Very truly yours,
DOMINI SOCIAL INDEX TRUST
By: /s/ Gail E. McHugh
Gail E. McHugh, Treasurer
DSI13 [DSI328]
PORTFOLIO INVESTMENT ADVISOR _______________ PORTFOLIO INVESTMENT MANAGER
Kinder, Lydenberg, Domini & Co., Inc. State Street Bank [and] Trust Company
7 Dana Street 225 Franklin Street
Cambridge, MA 02138 Boston, MA 02110
(617) 547-7479
INVESTING FOR GOOD
[recycled symbol] PRINTED ON RECYCLED PAPER
[union bug]
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary information extracted from the July 31,
1997 Domini Social Index Portfolio annual report and is qualified in its
entirety by reference to such report.
</LEGEND>
<CIK> 0000851681
<NAME> DOMINI SOCIAL INDEX PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 91,161,408
<INVESTMENTS-AT-VALUE> 291,396,680
<RECEIVABLES> 378,347
<ASSETS-OTHER> 3,566,465
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 295,341,492
<PAYABLE-FOR-SECURITIES> 2,932,971
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49,551
<TOTAL-LIABILITIES> 2982522
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 292,358,970
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 292,358,970
<DIVIDEND-INCOME> 2,657,798
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 417,522
<NET-INVESTMENT-INCOME> 2,240,276
<REALIZED-GAINS-CURRENT> 433,417
<APPREC-INCREASE-CURRENT> 74,540,873
<NET-CHANGE-FROM-OPS> 77,214,566
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 191,958,412
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 46,528
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 487,899
<AVERAGE-NET-ASSETS> 166,963,528
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
