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Domini Impact Equity Fund sm

Fund Information

$5.73
Daily Price (NAV)
as of 06/27/2017
Symbol DSFRX
Daily NAV Change $-0.05 (-0.87%)

Overview

Class R Shares Overview

Class R shares are available for certain qualified retirement plans. Please see the Fund's prospectus for further details, or call 1-800-498-1351.

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:

  • 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

Class R Shares Performance


Month-End Returns as of 5/31/17
YTD1Yr3 Yr*5 Yr*10 Yr*Since Inception (6/3/91)*
DSFRX6.23%16.39%5.98%11.93%5.45%8.49%
S&P 5008.66%17.47%10.14%15.42%6.94%9.48%

Quarter-End Returns as of 3/31/17
YTD1Yr3 Yr*5 Yr*10 Yr*Since Inception (6/3/91)*
DSFRX5.13%15.58%6.63%10.00%6.25%8.51%
S&P 5006.07%17.17%10.37%13.30%7.51%9.45%
Calendar Year Returns
DSFRXS&P 500
201611.55%11.96%
2015-6.91%1.38%
201414.25%13.69%
201333.30%32.39%
201211.75%16.00%
20110.96%2.11%
201014.36%15.06%
200936.14%26.46%
2008-37.81%-37.00%
20071.87%5.50%
200612.88%15.79%
20052.38%4.91%
20049.62%10.88%
200327.09%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
DSFRXS&P 500
1st Qtr 20175.13%6.07%
4th Qtr 20164.06%3.82%
3rd Qtr 20167.63%3.85%
2nd Qtr 2016-1.84%2.46%
1st Qtr 20161.47%1.35%
4th Qtr 20152.43%7.04%
3rd Qtr 2015-8.29%-6.44%
2nd Qtr 2015-2.11%0.28%
1st Qtr 20151.23%0.95%
4th Qtr 20143.33%4.93%
3rd Qtr 20141.58%1.13%
2nd Qtr 20145.79%5.23%
1st Qtr 20142.89%1.81%
4th Qtr 20139.59%10.51%
3rd Qtr 20137.22%5.24%
2nd Qtr 20132.85%2.91%
1st Qtr 201310.30%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. Prior reported periods reflect the performance of the Investor shares prior to November 28, 2003, the date the Class R shares were first offered. This earlier performance has not been adjusted to take into account the lower expenses applicable to Class R shares.

Annual Expense Ratio: Gross: 0.76% / Net: 0.76%. Per current prospectus. Domini has contractually agreed to cap Class R share expenses to not exceed 0.90% until 11/30/17, subject to earlier modification by the Fund’s Board of Trustees. See prospectus for details. The Funds’ performance would have been lower had these fees not been waived.

Holdings

Ten Largest Holdings as of 5/31/17
COMPANY% OF PORTFOLIO
Amazon.com Inc.3.6%
Alphabet Inc.3.4%
Pepsico Inc.3.1%
Consolidated Edison Inc.3.0%
Apple Inc.3.0%
Prudential Financial Inc.2.9%
International Business Machines Corp.2.6%
PACCAR Inc.2.5%
Cummins Inc.2.4%
Applied Materials Inc.2.4%
TOTAL29.0%

Sector Weightings as of 3/31/17
SECTOR% OF PORTFOLIO
Information Technology23.8%
Financials16.6%
Consumer Discretionary14.4%
Health Care13.8%
Consumer Staples9.9%
Industrials8.4%
Utilities3.6%
Real Estate3.4%
Materials3.1%
Telecommunication Services3.0%
Energy0.0%
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

  DSFRX S&P 500
Price-to-Earnings Ratio (projected) 14.4 16.0
Price-to-Book Ratio 2.5 3.2
Beta (projected) 1.01 --
R-squared (projected) 0.97 --
Market Cap Asset Weighted Avg. (Millions) $100,934 $163,915
Total Number of Holdings 97 500

All data as of 3/31/17 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

Class R 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 March 31, 2017

  Jan
2017
Feb
2017
Mar
2017
1st Qtr
2017
YTD One
Year
Three
Year1
Five
Year1
Ten
Year1†
Since Inception
(6/3/91)1†
DSFRX 2.20% 3.41% -0.52% 5.13% 5.13% 15.58% 6.63% 10.00% 6.25% 8.51%
S&P 500 1.90% 3.97% 0.12% 6.07% 6.07% 17.17% 10.37% 13.30% 7.51% 9.45%

Market Overview

U.S. equities continued to rally, with the S&P 500 returning 6.07% to mark its sixth straight quarter of gains. As Donald Trump assumed office, investors continued to anticipate lower taxes, deregulation, and increased infrastructure spending. Stocks climbed throughout January and February, as strong economic data continued to encourage: the manufacturing index accelerated on stronger orders and production; nonfarm payrolls rose above expectations in February; the unemployment rate ticked down to 4.7%; consumer confidence rose to its highest level in 16 years; homebuilder confidence surged to its best level since 2005; and new home sales rose to a seven-month high. However, the U.S. trade deficit also grew to its largest since 2012, with the increase driven partly by the stronger dollar, which indicates that trade is likely to be a headwind to economic growth in early 2017.

While the market hit a series of highs throughout the quarter, investors began to voice concerns over stretched valuations. The rally slowed to a stop in March after Republicans failed in their effort to repeal and replace the Affordable Care Act, casting doubt over the Administration’s ability to deliver on its agenda. The Federal Reserve Bank, as anticipated, increased rates by .25% for the second time in three months, but market participants noted that the tone of the policy statement was less hawkish than expected.

 

Fund Performance

The Fund’s Class R shares returned 5.13% for the quarter, underperforming the S&P 500 Index return of 6.07%. Sector allocation made a positive contribution thanks to an underweight to Energy, which was the worst performing sector for both the Fund and the Index. This was offset, however, by weak security selection, which was the largest driver of underperformance. Strong selection in the Industrials sector was offset by weaker selection in the Consumer Discretionary, Consumer Staples, and Health Care sectors.

Top Relative Contributors

Company Sector Stock Return*
Applied Materials, Inc. Information Technology 20.90%
Exxon Mobil Corportation** Energy -8.30%
Visteon Corporation Consumer Discretionary 22.07%
Lam Research Corporation Information Technology 21.93%
eBay Inc. Information Technology 12.85%

Top Relative Detractors

Company Sector Stock Return*
Kohl's Corporation Consumer Discretionary -18.26%
Verizon Communications, Inc. Telecommunication Services -7.71%
Sysco Corporation Consumer Staples -5.67%
Nordstrom, Inc. Consumer Discretionary -2.51%
Facebook, Inc.** Information Technology 23.47%
*Represents return for period in the Fund's Portfolio or return for the entire period if not held.
**Not held in the Portfolio.
 

The largest contributor to the Fund’s performance relative to the S&P 500 was Applied Materials, which provides manufacturing equipment, services, and software to the global semiconductor, display, and related industries. The stock rose almost 21% for the quarter, after reporting solid results for the fiscal first quarter, driven by record orders across all categories. Lam Research, which also provides equipment and services to semiconductor manufacturers, returned nearly 22% after fiscal-second-quarter results and third-quarter guidance exceeded expectations on both the top and bottom lines.

Global automotive supplier Visteon Corporation, a non-benchmark holding, was another top contributor, gaining more than 22% after reporting strong results fourth quarter, led by positive currency movements and strength in China, where growth in “infotainment” drove year-over-year growth of 26%.

Online shopping company eBay rose almost 13% after reporting fourth-quarter profit that beat estimates and providing a better-than-expected forecast for 2017, giving investors confidence that its rebranding campaign and data initiative are helping to lead a successful turnaround.

The Fund also benefitted from not owning benchmark holding Exxon Mobil, which is not approved for investment by the Domini Funds. The oil and gas company dropped more than 8% for the quarter.

Strong performance by these stocks was offset by weaker performers, including several conventional retailers. Department store chain Kohl’s declined more than 18% after reporting weak fourth quarter results, with a deterioration in store traffic during the holiday season driving sales lower. Fashion retailer Nordstrom was another large detractor, declining 2.5% after reporting mixed fourth-quarter results, which saw sales miss expectations due to a lower mix of promotional items, while profits were higher due to efficient inventory management.

Other significant detractors included Verizon Communications, which declined almost 8%. Verizon’s fourth-quarter profit estimates fell below analysts’ expectations, as holiday promotions and discounts to combat competitors led to diminished margins. Sysco, which distributes food products to restaurants, hospitals, schools, hotels, and other foodservice businesses, declined almost 6%.

Relative performance was also hampered by the Fund not owning benchmark-holding Facebook, which rose more than 23%.

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.