Questions?

1-800-582-6757

Monday - Friday
9 a.m. - 6 p.m. EST

Send us an email

Domini Social Equity Fund ®

Fund Information

$6.26
Daily Price (NAV)
as of 09/30/2016
Symbol DSFRX
Daily NAV Change $0.05 (0.81%)

Key Documents

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 Social 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 Social 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 8/31/16
YTD1Yr3 Yr*5 Yr*10 Yr*Since Inception (6/3/91)*
DSFRX6.05%5.05%8.77%11.04%6.25%8.28%
S&P 5007.82%12.55%12.30%14.69%7.51%9.25%

Quarter-End Returns as of 6/30/16
YTD1Yr3 Yr*5 Yr*10 Yr*Since Inception (6/3/91)*
DSFRX-0.40%-6.43%7.57%8.00%5.92%8.07%
S&P 5003.84%3.99%11.66%12.10%7.42%9.16%
Calendar Year Returns
DSFRXS&P 500
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
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: 0.85% / Net: 0.85%. Per current prospectus. Domini has contractually agreed to cap Class R share expenses to not exceed 0.90% until 11/30/16, 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 8/31/16
COMPANY% OF PORTFOLIO
Verizon Communications Inc.3.6%
Merck & Co. Inc.3.6%
Amazon.com Inc.3.5%
Microsoft Corp.3.4%
Intel Corp.3.2%
PepsiCo Inc.2.8%
Consolidated Edison Inc.2.8%
Prudential Financial Inc.2.7%
Cummins Inc.2.7%
MetLife Inc.2.6%
TOTAL31.0%

Sector Weightings as of 6/30/16
SECTOR% OF PORTFOLIO
Information Technology22.2%
Financials17.3%
Health Care14.8%
Industrials11.8%
Consumer Discretionary11.3%
Consumer Staples9.4%
Materials3.7%
Energy3.2%
Telecommunication Services3.2%
Utilities3.1%
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) 12.8 15.3
Price-to-Book Ratio 2.1 2.8
Beta (projected) 1.06 --
R-squared (projected) 0.97 --
Market Cap Asset Weighted Avg. (Millions) $97,544 $137,542
Total Number of Holdings 88 500

All data as of 6/30/16 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 Social 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, 2016

  April
2016
May
2016
June
2016
2nd Qtr
2016
YTD One
Year
Three
Year1
Five
Year1
Ten
Year1†
Since Inception
(6/3/91)1†
DSFRX -0.67% 1.01% -2.17% -1.84% -0.40 -6.43% 7.57% 8.00% 5.92% 8.07%
S&P 500 0.39% 1.80% 0.26% 2.46% 3.84% 3.99% 11.66% 12.10% 7.42% 9.16%

Market Overview

Despite uncertainty over global growth prospects and the United Kingdom’s unexpected vote to leave the European Union, U.S. equities remained resilient in the second quarter. The S&P 500 gained 2.46% against a mixed, but generally encouraging, economic backdrop and a better-than-expected corporate earnings season. During May, commentary from members of the Federal Open Market Committee (FOMC) raised expectations that the Federal Reserve Bank (Fed) would raise interest rates over the summer. However, that began to look less likely following a disappointing nonfarm payrolls report in early June, with employers adding only 38,000 jobs in what was the weakest report since September 2010. At its June meeting, the Fed left rates unchanged and reduced its U.S. growth and policy rate forecasts, citing mixed U.S. economic data and uncertainties abroad. While the U.S. unemployment rate fell to 4.7%, this was largely due to a drop in labor force participation. Nonetheless, GDP growth for the first quarter was reported at a better-than-expected annualized rate of 1.1%, as stronger net exports offset weaker consumer spending. Meanwhile, a robust housing market saw new-home sales surge to the highest level in eight years thanks to cheap borrowing costs, easier credit availability, and improving employment prospects.  Although U.S. equities fell sharply in the two trading days following the June 23 Brexit vote, they staged an impressive comeback during the final three days of the quarter, providing further evidence that the bull market remains intact.

Fund Performance

The Fund’s Class R shares returned -1.84% during the quarter, underperforming the S&P 500 Index, which returned 2.46%. The largest driver of underperformance was weak security selection, particularly within the consumer discretionary, energy, health care, and industrials sectors.  This underperformance in stock selection was driven in large part by the financial component of the Fund’s investment process, and not our social and environmental standards.  The financial process used to manage the Fund is currently favoring value stocks, i.e., stocks that are attractively priced by the market relative to their peers.  However, in the past quarter, as in preceding quarters, value stocks have underperformed momentum stocks, i.e., stocks that have provided high returns in the recent past.  This has been especially relevant in the consumer discretionary sector.  

Fashion retailer Nordstrom fell 32.8%, representing the Fund’s largest detractor from relative returns. Nordstrom’s first-quarter results disappointed due to a drop in sales at its established full-line stores, as the retailer resorted to heavy discounting to clear out unsold inventory. With the department store sector struggling, Nordstrom cut its profit expectations for the year.

     

Another significant detractor within the consumer discretionary sector was global automotive supplier Visteon, which, despite reporting strong first-quarter earnings as a result of higher margins and lower taxes, saw revenues fall below expectations due to currency headwinds to electronics sales and lower-than-expected organic growth. The stock also fell on Brexit news, given that a third of the company’s sales come from Europe.

Southwest Airlines fell 12.3% for the quarter, despite reporting solid first-quarter results highlighted by its highest operating margin in more than 35 years and year-over-year increases in capacity and unit revenue. The company pre-announced lower-than-expected guidance for the second quarter due to a softer operating environment driven by underperforming domestic trends. Insurer MetLife was another significant detractor, dropping 8.5% for the quarter.   

Biotechnology company Gilead Sciences also detracted from relative performance, declining 8.7% for the quarter. Gilead’s first-quarter results came in below expectations, largely due to disappointing sales of its hepatitis C drugs, as the company increased discounts to payers in response to growing competition from other drugmakers. One of those rivals, Merck, was conversely one of the Fund’s top contributors this quarter, gaining 9.8%. Despite first-quarter revenue falling short of expectations as sales of older drugs disappointed, Merck raised its 2016 forecasts, as it expects growth from new drugs like cancer treatment Keytruda and hepatitis C treatment Zepatier to help revive sales.

Although the Fund’s consumer discretionary holdings were the largest detractors from relative performance, one retail stock, Amazon.com, a momentum stock, represented the Fund’s largest positive contributor to relative performance, with a 20.6% gain for the quarter. Amazon reported strong results for the first quarter, highlighted by accelerating revenue growth and expanding margins. Other top contributors that helped to partially offset the Fund’s underperformance included information technology companies Nvidia and F5 Networks. Nvidia, which manufactures graphics processing units, gained 34.1% during the period it was held. The company reported better-than-expected results for the first quarter, with revenue from its gaming business rising 17%. Meanwhile, F5, which specializes in application delivery networking technology, returned 7.6% for the quarter amid reports that it is fielding acquisition offers.

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.