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Domini Impact Equity Fund sm

Fund Information

$24.17
Daily Price (NAV)
as of 08/22/2017
Symbol DIEQX
Daily NAV Change $0.23 (0.96%)

Overview

Institutional Shares Overview

Institutional shares are available to qualified endowments, foundations, religious organizations, nonprofit entities, individuals and certain corporate or similar institutions that meet the minimum investment requirements.

Socially and environmentally concerned investors have social, as well as financial, objectives. The Domini Impact Equity Fund seeks to meet these objectives by offering a diversified stock portfolio for long-term capital appreciation that is consistent with social and environmental priorities.

Investment Objective

The Fund seeks to provide its shareholders with long-term total return.

Investment Strategy

The Fund invests primarily in stocks of U.S. companies that meet Domini Impact Investments’ social and environmental standards.

Subject to these standards, Wellington Management Company, LLP, the Fund’s subadvisor, seeks to add value using a diversified quantitative stock selection approach, while managing risk through portfolio construction.

Shareholder Activism

The Fund also advances its social and environmental objectives through proxy voting, dialogue with corporations, and the filing of shareholder resolutions

Social and Environmental Standards

Domini evaluates the Fund’s current and potential investments against its social and environmental standards based on the businesses in which they engage, as well as on the quality of their relations with key stakeholders, including communities, customers, ecosystems, employees, investors, and suppliers.

Domini may determine that a security is eligible for investment even if a corporation’s profile reflects a mixture of positive and negative social and environmental characteristics.

Investor Profile

Who Should Invest:

  • The Institutional share class of the Domini Impact Equity Fund is available to investors that meet the minimum investment requirements, have been approved by the distributor, and fall within the following categories: endowments, foundations, religious organizations and other nonprofit entities, individuals, retirement plan sponsors, family office clients, private trusts, certain corporate or similar institutions, or omnibus accounts maintained by financial intermediaries.3
  • Investors seeking long-term growth of capital.
  • Investors committed to the Fund's socially responsible investment standards.

Who Should Not Invest:

  • Investors unwilling or unable to accept moderate to significant fluctuations in share price.

Performance

Institutional Shares Performance


Month-End Returns as of 7/31/17
YTD1Yr3 Yr*5 Yr*10 Yr*Since Inception (6/3/91)*
DIEQX8.04%14.51%5.78%11.61%6.04%8.33%
S&P 50011.59%16.04%10.87%14.78%7.74%9.53%

Quarter-End Returns as of 6/30/17
YTD1Yr3 Yr*5 Yr*10 Yr*Since Inception (6/3/91)*
DIEQX5.57%18.28%4.83%11.19%5.31%8.26%
S&P 5009.34%17.90%9.61%14.63%7.18%9.48%

Calendar Year Returns
DIEQXS&P 500
201611.66%11.96%
2015-6.97%1.38%
201414.40%13.69%
201333.46%32.39%
201211.84%16.00%
20111.12%2.11%
201014.25%15.06%
200936.22%26.46%
2008-37.88%-37.00%
20071.46%5.50%
200612.58%15.79%
20052.03%4.91%
20049.26%10.88%
200327.13%28.69%
2002-20.69%-22.10%
2001-12.76%-11.88%
2000-15.05%-9.11%
199922.63%21.04%
199832.99%28.58%
199736.02%33.36%
199621.84%23.07%
199535.17%37.50%
1994-0.36%1.26%
19936.54%10.08%
199212.10%7.68%

Quarterly Returns
DIEQXS&P 500
2nd Qtr 20170.34%3.09%
1st Qtr 20175.21%6.07%
4th Qtr 20164.05%3.82%
3rd Qtr 20167.68%3.85%
2nd Qtr 2016-1.81%2.46%
1st Qtr 20161.49%1.35%
4th Qtr 20152.37%7.04%
3rd Qtr 2015-8.22%-6.44%
2nd Qtr 2015-2.13%0.28%
1st Qtr 20151.18%0.95%
4th Qtr 20143.38%4.93%
3rd Qtr 20141.62%1.13%
2nd Qtr 20145.79%5.23%
1st Qtr 20142.94%1.81%
4th Qtr 20139.57%10.51%
3rd Qtr 20137.33%5.24%
2nd Qtr 20132.85%2.91%
1st Qtr 201310.33%10.61%

*Average annual total returns.

On 11/30/06, the Fund changed to an active management strategy. Past performance through 11/29/06 represents the former passive investment strategy, and is not indicative of future results.

Institutional shares were not offered prior to 11/28/08. All performance information for time periods beginning prior to November 28 is the performance of the Investor shares. This performance has not been adjusted to reflect the lower expenses of the Institutional shares.

Annual Expense Ratio: Gross: 0.75% / Net: 0.74%. Per current prospectus. Domini has contractually agreed to cap Institutional share expenses to not exceed 0.80% until 11/30/17, subject to earlier modification by the Fund’s Board of Trustees. See prospectus for details. The Fund's performance would have been lower had these fees not been waived.

 

Holdings

Ten Largest Holdings as of 7/31/17
COMPANY% OF PORTFOLIO
Apple Inc.3.7%
Alphabet Inc. Class A3.3%
Pepsico Inc.3.1%
Prudential Financial Inc.3.0%
Amazon.com Inc.2.9%
Consolidated Edison Inc.2.8%
Gilead Sciences Inc.2.7%
Cummins Inc.2.6%
IBM Corp.2.5%
Unum Group2.4%
TOTAL29.1%

Sector Weightings as of 6/30/17
SECTOR% OF PORTFOLIO
Information Technology23.8%
Financials15.4%
Health Care14.9%
Consumer Discretionary13.3%
Consumer Staples11.1%
Industrials8.7%
Utilities3.5%
Real Estate3.4%
Materials3.2%
Telecommunication Services2.4%
Energy0.2%
Total100.0%

View the most recent quarterly holdings report filed with the Securities and Exchange Commission.

 

Characteristics

Portfolio Overview

Socially screened, mid- to large-capitalization domestic equity fund.

 

Investment Style:

Blend

Weighted Average Market Capitalization:

Large

Portfolio Statistics

  DIEQX S&P 500
Price-to-Earnings Ratio (projected) 14.5x 16.4x
Price-to-Book Ratio 2.8x 3.3x
Beta (projected) 1.00 --
R-squared (projected) 0.97 --
Market Cap Asset Weighted Avg. (Millions) $113,697 $168,775
Total Number of Holdings 95 500

All data as of 6/30/17 unless otherwise noted.

Definitions:

The Price/Earnings Ratio is a stock’s current price divided by the company’s trailing 12-month earnings per share. The Price/Book Ratio is used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share. The P/E and P/B ratio of a fund is the weighted average of the price/earnings and price/book ratios of the underlying stocks in a fund’s portfolio. 

R-squared measures how a fund’s performance correlates with a benchmark index’s performance and shows what portion of it can be explained by the performance of the overall market/index. R-squared ranges from  0, meaning no correlation, to 1, meaning perfect correlation.

Beta is a measure of the volatility of a fund relative to its benchmark index. A beta greater (less) than 1 is more (less) volatile than the index.

Commentary

Institutional Shares Performance Commentary

The Fund invests primarily in mid- and large-cap U.S. equities. It is managed through a two-step process designed to capitalize on the strengths of Domini Impact Investments and Wellington Management Company, the Fund’s subadvisor. Domini creates an approved list of companies based on its social, environmental and governance analysis, and Wellington seeks to add value and manage risk through a systematic and disciplined portfolio construction process. Download Commentary as a PDF.

Total Returns as of June 30, 2017

  Apr
2017
May
2017
June
2017
2nd Qtr
2017
YTD One
Year
Three
Year1
Five
Year1
Ten
Year1†
Since Inception
(6/3/91)1†
DIEQX 1.01% 0.08% -0.75% 0.34% 5.57% 18.28% 4.83% 11.19% 5.31% 8.26%
S&P 500 1.03% 1.41% 0.62% 3.09% 9.34% 17.90% 9.61% 14.63% 7.18% 9.48%

Market Overview

U.S. equities continued to rally for the seventh straight quarter, with the S&P 500 returning 3.09%. Plunging oil prices and a more muddied political and economic outlook were not enough to derail market momentum, as the S&P hit a series of new record highs. In a well-telegraphed move, the Federal Reserve Bank hiked rates by another 25 basis points and laid out a plan for balance sheet normalization later this year, provided the economy improves as expected. The economic picture this quarter, though, was somewhat more mixed. The final estimate for first-quarter GDP growth was revised higher, driven by increased spending on health care, financial services and insurance, while the manufacturing index ticked up on new orders, and consumer confidence rose above expectations due to the solid job market and rising stock and home prices. Payroll and housing data reports, however, disappointed, and a tick-down in the unemployment rate was mostly due to a drop in the size of the labor force.

On the political front, controversy surrounding the White House and the ongoing Russia investigation continued to escalate, while Senate Republicans again delayed a vote on their controversial health care reform bill after failing to garner significant support. By the end of the quarter, volatility picked up in the U.S. equity market, as investors rotated out of growth and momentum stocks and back into cyclical and value plays.

 

Fund Performance

The Fund’s Institutional shares returned 0.34% for the quarter, underperforming the S&P 500 Index return of 3.09%. Security selection was the largest driver of underperformance, particularly within the consumer discretionary and information technology sectors, as well as industrials and financials. This was slightly offset by a benefit from being underweight to energy, which was one of the worst performing sectors this quarter.

Top Relative Contributors

Company Sector Stock Return*
Quest Diagnostics Inc. Health Care 13.77%
General Electric Co.** Industrials -8.61%
Cummins, Inc. Industrials 8.01%
AT&T Inc. Telecommunication Services -8.10%
Edwards Lifesciences Corp. Health Care 25.63%

Top Relative Detractors

Company Sector Stock Return*
Foot Locker, Inc. Consumer Discretionary -33.39%
Ross Stoes, Inc. Consumer Discretionary -12.14%
F5 Networks, Inc. Information Technology -10.87%
IBM Corp. Information Technology -10.72%
Walgreens Boots Alliance, Inc. Consumer Staples -5.29%
*Represents return for period in the Fund's Portfolio or return for the entire period if not held.
**Not held in the Portfolio.
 

For both the Fund and the Index, Health Care was the best performing sector this quarter, lifted by positive trial data and increased merger and acquisition rumors, as well as speculation that an upcoming executive order on drug pricing could benefit pharmaceutical companies. The largest positive contributor to the Fund’s relative performance was diagnostic information services company Quest Diagnostics, which returned almost 14% for the quarter. Quest reported better-than-expected earnings for the twelfth straight quarter, with solid organic volume growth led by recovery in healthcare utilization. Quest's partnerships with hospitals are showing traction, boosting volumes to the highest level in two years. The company is well positioned to gain share from hospital-based labs in the long-term as it continues to sign new partnerships. Meanwhile, its retail business is also ramping up, with the company set to add more than a hundred new Safeway stores, which will eventually replace Quest’s existing patient service centers and should provide numerous cost-reduction opportunities. Medical equipment company Edwards Lifesciences was another top contributor from the Health Care sector, returning almost 26% for the quarter. Edwards rose to six-month highs after reporting better-than-expected results for the first quarter, driven by strong U.S. sales of transcatheter aortic heart valves, and lifting annual sales guidance.

Another top contributor to relative performance was truck engine manufacturer Cummins, which returned more than 8% for the quarter after reporting first-quarter earnings 26% higher than the first quarter last year, far surpassing expectations. Stronger industrial demand from construction and mining is offsetting weaker demand from truck production in North America, while international sales benefitted from growth in China and Europe. Cummins highlighted an initiative for automated transmissions that will be fully integrated into its engine production and is expected to deliver up to a 7% improvement in fuel economy.

Relative performance was also helped by the Fund not holding General Electric, which is not approved for investment by the Domini Funds due to its involvement with the weapons industry and nuclear power plants, and by having an underweight position in AT&T. Both companies declined more than 8% for the quarter. AT&T reported lower-than-expected first quarter results, driven by weaker consumer net additions for wireless services, but partially offset by stronger broadband results. The stock fell on news of AT&T’s planned acquisition with Time Warner, which would be its second large acquisition in three years. The acquisition would further increase net debt and weaken its credit metrics.

These positive contributions to the Fund’s relative performance were more than offset by a number of significant detractors. The two largest individual detractors this quarter were retailers Foot Locker and Ross Stores, which declined more than 33% and 12%, respectively. Shoe and apparel retailer Foot Locker, after having already lowered its previously issued guidance, reported first-quarter results that came in below diminished expectations. Despite the company’s long history of tight inventory control and spending discipline, it is facing a significant structural challenge due to having a large number of brick-and-mortar stores in a declining mall environment. Discount home and apparel retailer Ross Stores declined along with other retailers this quarter, due to retail softness and concerns over the company’s lack of e-commerce presence.

The next largest detractors were in the Information Technology sector. Application services software company F5 Networks declined almost 11% for the quarter after reporting quarterly results that missed consensus estimates, driven by weakness in European sales and flat growth in services. F5 is facing short-term headwinds from delayed purchase decisions attributed to a transition from physical to virtual application-delivery controllers, customer hesitance in moving to the cloud, and political uncertainty in Europe. IBM also declined almost 11% after quarterly sales fell short of estimates. This marked its 20th consecutive quarter of revenue declines. IBM is similarly experiencing delays in service contracts and weakness in European markets, while its investments in high-growth areas have yet to generate sufficient sales to offset declines in legacy businesses.

Walgreens Boots Alliance, the holding company for Walgreens pharmacy, was another significant detractor, declining more than 5% for the quarter. Pharmacy stocks fell following a report that Amazon is considering entering the business of selling prescription drugs.

Making a Difference

Domini engages in direct dialogue with corporations in our portfolios and files shareholder proposals on a broad range of social, environmental, and corporate governance issues. Shareholder activism — the practice of active ownership — lies at the heart of what we believe responsible investing is all about. Here are a few ways your investment in the Domini Funds has made a difference. For more stories, click here.

A Season of Accountability

If you sit on the board of a publicly traded company, there is only one time of year when you must face your shareholders. For most companies, that time is at the spring annual meeting. Since the 1960’s, shareholders have raised key issues of concern at these meetings, from napalm production to racial discrimination to climate change. On behalf of our fund shareholders, we have submitted more than 250 shareholder proposals over the past 22 years, ensuring that your voice is heard.

Protecting Freedom of Expression and Privacy on the Internet

Internet and telecommunications companies receive thousands of requests per year from governments around the world to censor content or divulge information about their users. Many of these requests violate international human rights principles. For the past ten years, Domini has helped to build the Global Network Initiative (GNI), an organization focused on protecting freedom of expression and privacy from improper government intrusion.

Mandatory Sustainability Reporting

In April, the Securities and Exchange Commission (SEC) issued a historic Concept Release, seeking comments on a wide range of rules that require publicly traded companies to disclose information to their investors. We were very pleased to see the inclusion of a series of questions about sustainability information among the Release’s more than 300 pages.

Positive Change at Four Companies

In addition to using social, environmental and governance standards to select our investments, each year the Domini Social Equity Fund submits shareholder proposals to corporations in its portfolio, addressing a broad range of social and environmental issues.  They send a strong message to corporate management, and can often encourage the company to speak to us about reaching an agreement.

Our Position on Fossil Fuel Owners and Producers

For many years, Domini has incorporated concerns about the environmental risks of companies owning and producing fossil fuels into our investment standards. Over time, we have gradually eliminated an increasing number of these firms from our holdings as our concerns about a variety of environmental and safety issues, including climate change, have increased.