Domini Impact International Equity Fund

As of 4/30/17. The Fund's Investor share class received five stars for the last 3 and 5 years rated against 269 and 222 U.S. domiciled Foreign Large Value funds, respectively, and three stars for the past 10 years, rated against 135 U.S. domiciled Foreign Large Value funds. Past performance is no guarantee of future results. View more complete rating and risk information.
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Domini Impact International Equity Fund SM

Fund Information

$8.53
Daily Price (NAV)
as of 05/26/2017
Symbol DOMIX
Daily NAV Change $-0.02 (-0.23%)

Overview

Investor Shares Overview

The Domini Impact International Equity Fund helps you access a world of investment opportunity, while using your investment dollars to encourage corporate responsibility. Investments in companies across Europe, the Asia-Pacific region, and throughout the rest of the world let you take advantage of broad international diversification with the convenience of one mutual fund.

Investment Objective

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

Investment Strategy

The Fund invests primarily in stocks of companies in Europe, the Asia-Pacific region, and throughout the rest of the world 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.  

Management

Investment Advisor and Sponsor: Domini Impact Investments LLC.

Subadvisor: Wellington Management Company LLP.

Shareholder Activism

The Fund seeks to use its position as a shareholder to raise issues of social and environmental performance with corporate management.

Social and Environmental Standards

Domini evaluates the Fund’s 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

Investor Shares Performance

Month-End Returns as of 4/30/17
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (12/27/06)*
DOMIX13.33%13.36%4.54%10.25%1.08%1.74%
MSCI EAFE (gross)10.20%11.83%1.32%7.27%1.34%2.23%
MSCI EAFE (net)9.97%11.29%0.86%6.78%0.87%1.96%
Quarter-End Returns as of 3/31/17
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (12/27/06)*
DOMIX9.39%11.34%3.40%8.91%1.12%1.41%
MSCI EAFE7.39%12.25%0.96%6.32%1.53%1.99%

Calendar Year Returns
DOMIXMSCI EAFE
20163.05%1.51%
20151.76%-0.39%
2014-3.27%-4.48%
201325.77%23.29%
201222.53%17.90%
2011-13.45%-11.73%
201011.25%8.21%
200928.68%32.45%
2008-46.65%-43.06%
20072.22%11.62%

Quarterly Returns
DOMIXMSCI EAFE
1st Qtr 20179.39%7.39%
4th Qtr 2016-0.96%-0.68%
3rd Qtr 20166.52%6.50%
2nd Qtr 2016-3.51%-1.19%
1st Qtr 20161.24%-2.88%
4th Qtr 20152.33%4.75%
3rd Qtr 2015-7.59%-10.19%
2nd Qtr 20151.68%0.84%
1st Qtr 20155.83%5.00%
4th Qtr 2014-1.46%-3.53%
3rd Qtr 2014-4.76%-5.83%
2nd Qtr 20142.69%4.34%
1st Qtr 20140.37%0.77%
4th Qtr 20136.11%5.75%
3rd Qtr 201311.29% 11.61%
2nd Qtr 2013-0.86% -0.73%
1st Qtr 20137.42%5.23%

*Average annual total returns.

Annual Expense Ratio: Gross: 1.46% / Net: 1.46%. Per current prospectus. Domini has contractually agreed to cap Investor share expenses to not exceed 1.60% 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 4/30/17
COMPANY% OF PORTFOLIO
Sanofi3.1%
Siemens AG Reg2.2%
Sandvik AB2.1%
Allianz SE Reg2.0%
Compagnie de Saint Gobain2.0%
Nissan Motor Co. Ltd.1.9%
Johnson Matthey Plc.1.7%
ING Groep NV1.6%
WM Morrison Supermarkets1.6%
Kering1.6%
TOTAL20.0%

Sector Weightings as of 3/31/17
SECTOR% OF PORTFOLIO
Financials23.3%
Industrials17.8%
Consumer Discretionary13.5%
Consumer Staples9.0%
Information Technology8.7%
Health Care8.2%
Real Estate6.7%
Materials6.6%
Telecommunication Services3.7%
Energy2.0%
Utilities0.5%
Total100.0%
Country Diversification as of 3/31/17
COUNTRY% OF PORTFOLIO
Japan21.9%
France14.0%
United Kingdom13.5%
Germany8.8%
Australia5.1%
Switzerland4.7%
Sweden4.6%
Netherlands4.1%
Hong Kong3.4%
Spain2.4%
Denmark2.3%
Norway2.1%
South Korea2.1%
Brazil1.8%
Singapore1.8%
Other7.4%
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 international equity fund.

 

Investment Style:

Blend

Weighted Average Market Capitalization:

Large

Portfolio Statistics

  DOMIX MSCI EAFE*
Price-to-Earnings Ratio (projected) 12.4 13.6
Price-to-Book Ratio 1.3 1.7
Beta (projected) 1.04 --
R-squared (projected) 0.97 --
Total Number of Holdings 152 --

All data as of 3/31/17.

*The Morgan Stanley Capital International Europe, Australasia and Far East Index (MSCI EAFE) is an unmanaged index of common stocks. Investors cannot invest directly in an index.

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

Investor Shares Performance Commentary

The Fund invests primarily in mid- to large-cap equities across Europe, the Asia-Pacific region, and throughout the rest of the world. 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 using a diversified stock selection approach, while managing 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
(12/27/06)1
DOMIX 4.22% 1.96% 2.94% 9.39% 9.39% 11.34% 3.40% 8.91% 1.12% 1.41%
MSCI EAFE 2.91% 1.45% 2.87% 7.39% 7.39% 12.25% 0.96% 6.32% 1.53% 1.99%

Market Overview

For the first quarter of 2017, the MSCI EAFE Index returned 7.4%, as international equities gained amid increasing optimism for global economic growth. Robust economic indicators helped to drive stocks higher, despite escalating European political risks and concerns over the new US administration’s protectionist trade agenda.

Following the unexpected results of last year’s EU membership referendum in the UK and the presidential election in the US, anti-establishment and anti-globalization sentiment continued to gain traction. A primary source of anxiety was the upcoming presidential election in France, where far-right National Front candidate, Marine Le Pen—who is running on a populist, anti-immigration platform—gained in polling after the former frontrunner, conservative Republican candidate François Fillon, became embroiled in a financial misconduct scandal. Le Pen has promised that, if she is elected, France will renegotiate its EU membership and hold its own referendum within the first six months of her presidency. Meanwhile, British Prime Minister Theresa May triggered Article 50, formally beginning the two-year Brexit process. In Italy, political turmoil in the wake of December’s resignation of Prime Minister Matteo Renzi, and his subsequent resignation as party leader—both stemming for an overwhelming constitutional referendum defeat—threatened to tear apart the ruling Democratic Party, increasing anxiety over the emergence of the populist, anti-establishment Five-Star Movement that has become its primary opposition in Parliament.

Despite the political upheaval across Europe, economic growth looked solid across sectors and countries. The composite purchasing managers’ index (PMI) for Europe rose to its best reading in almost six years, and eurozone economic confidence improved to its highest level since 2011. In the UK, manufacturing growth slowed and industrial output declined, but the unemployment rate fell to its lowest level since 1975, and inflation broke above the Bank of England’s 2% target, owing to rising food and fuel prices. Despite the uptick in headline inflation, both the Bank of England and the European Central Bank reiterated that they would not increase interest rates for the time being.

Even as the yen strengthened, the Bank of Japan also recommitted to accommodative monetary policy, as inflation remained below its 2% target. Although, the fourth quarter marked the third straight quarter of accelerating GDP growth, Japanese equities lagged gains in the rest of the Asia-Pacific region. Hong Kong and Singapore outperformed, as exports rose and real GDP growth accelerated in both countries.

Emerging market equities, led by Asia, delivered their strongest quarterly return in five years, shrugging off fears of protectionism, trade wars, and a slowdown in China.

 

Fund Performance

For the quarter, the Fund’s Investor shares returned 9.39%, outperforming the MSCI EAFE Index return of 7.39%. Security selection was the largest driver of outperformance, led by strong selection in the Information Technology, Materials, Real Estate, Industrials, and Consumer Discretionary sectors. Sector allocation also made a positive contribution, benefitting from an underweight to Energy and an overweight to Information Technology.

Security selection was particularly strong in Europe—with strong selection in Norway, France and Sweden slightly offset by weaker selection in the Netherlands—as well as in Japan and Hong Kong. Relative performance also benefitted from the Fund’s out-of-benchmark emerging-market positions.

Top Relative Contributors

Company Sector Stock Return*
Norsk Hydro ASA Materials 21.10%
Wheelock & Co., Ltd. Real Estate 40.35%
Wharf Holdings, Ltd. Real Estate 32.06%
Peugeot S.A. Consumer Discretionary 23.52%
Royal Dutch Shell plc** Energy -4.05%

Top Relative Detractors

Company Sector Stock Return*
Kingfisher plc Consumer Discretionary -5.79%
Nissan Motor Co., Ltd. Consumer Discretionary -2.33%
Swiss Re AG Financials -5.35%
Royal Mail plc Industrials -6.93%
Mitsui Fudosan Co., Ltd. Real Estate -7.53%
*Represents return for period in the Fund's Portfolio or return for the entire period if not held.
**Not held in the Portfolio.
 

The top contributor to relative performance was Norwegian aluminum company Norsk Hydro, which returned more than 21% for the quarter. The company’s Bauxite & Alumina benefitted from higher prices, and global aluminum valuation remains strong.

Two Hong Kong real estate companies, Wheelock and Wharf, were among the Fund’s other top contributors this quarter, gaining more than 40% and 32%, respectively. The stocks were up on an ongoing strategic review of Wharf’s intellectual property assets, which Wheelock owns 61.6% of, as they could unlock a significant amount of value for the entire group. 86% of Wheelock’s gross asset value comes from Wharf.

Another top contributor was French car manufacturer Peugeot, which rose 23.5% after terms of acquisition for Opel and Vauxhall, which it is acquiring from General Motors, were more favorable than expected, as they did not include associated liabilities. The acquisition will increase Peugeot’s size by 50%. New car models set to launch this year in Europe and China are expected to generate significant commercial momentum.

The Fund also benefitted this quarter from not owning benchmark holding Royal Dutch Shell, which declined 4%. The British-Dutch multinational oil and gas company is not approved for the Domini Funds.

The largest detractor from relative performance was British home-improvement retailer Kingfisher, which declined almost 6% after reporting weaker sales in the UK and France, attributed to the uncertain political environment stemming from Brexit and the upcoming French elections.

The other largest detractors included Japanese car manufacturer Nissan, which declined more than 2% after a report that its CEO may be involved in alleged fraudulent emissions tests conducted by Renault, which owns a 44% stake in Nissan; reinsurance company Swiss Re, which declined more than 5% after reporting a decline in fourth-quarter profit attributed to losses from natural disasters, including wildfires in Canada, the earthquake in New Zealand, and Hurricane Matthew in the US; UK postal service company Royal Mail, which dropped almost 7% after reporting a sharp drop in letter deliveries during the holiday season, for which it blamed a reduction in junk mail and circulars; and Japanese real estate company Mitsui Fudosan, which fell 7.5%.

Making a Difference

Domini engages in direct dialogue with corporations in our portfolios 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.

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.

Addressing Corporate Tax Avoidance

Corporate tax avoidance has been an important component of our engagement and policy work for several years.  The United Nations’ backed Principles for Responsible Investment is a global network of investors responsible for $60 trillion in assets.  After expressions of interest from a significant number of its members, PRI established a Taskforce on Tax, including Domini, to develop guidance to help investors engage with corporations on global tax strategies.  

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.

United Nations Includes Corporate Sustainability Reporting in its Sustainable Development Goals

In September 2015, the United Nations’ General Assembly adopted its 2030 Agenda for Sustainable Development. In meetings with UN delegates in 2012 and 2013, we explained that the private sector and, in particular, multinational corporations, will need to play an important role if these ambitious “Sustainable Development Goals” are to be realized.