-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LHfyBTX9sMepY8893T3KiR+mMBGUTULsprRcl4PS00nzBQsuQ7yYYbA6MsDpYPs6 FbexVTBXLzRpF0e0TKwLNg== 0000929638-00-000005.txt : 20000202 0000929638-00-000005.hdr.sgml : 20000202 ACCESSION NUMBER: 0000929638-00-000005 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 20000113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOMINI SOCIAL EQUITY FUND CENTRAL INDEX KEY: 0000851680 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 043081258 STATE OF INCORPORATION: MA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 033-29180 FILM NUMBER: 507184 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 811-05823 FILM NUMBER: 507160 BUSINESS ADDRESS: STREET 1: 11 WEST 25TH STREET CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2123529200 MAIL ADDRESS: STREET 1: 11 WEST 25TH STREET STREET 2: 7TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10010-2001 FORMER COMPANY: FORMER CONFORMED NAME: DOMINI SOCIAL INDEX TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DOMINI SOCIAL INDEX FUND DATE OF NAME CHANGE: 19900624 485APOS 1 N-1A DOMINI SOCIAL EQUITY FUND As filed with the Securities and Exchange Commission on January 13, 2000. Registration Nos. 33-29180 811-5823 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 POST-EFFECTIVE AMENDMENT NO. 16 and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 18 DOMINI SOCIAL EQUITY FUND (Exact Name of Registrant as Specified in Charter) 11 West 25th Street, New York, NY 10010 (Address of Principal Executive Offices) Registrant's Telephone Number, including Area Code: 212-352-9200 Amy L. Domini Domini Social Investments LLC 11 West 25th Street New York, NY 10010 (Name and Address of Agent for Service) Copy To: Roger P. Joseph, Esq. Bingham Dana LLP 150 Federal Street Boston, Massachusetts 02110 It is proposed that this filing will become effective March 31, 2000 pursuant to paragraph (a) of Rule 485. Domini Social Index Portfolio has also executed this registration statement. PROSPECTUS __________ __, 2000 [PICTURE] DOMINI SOCIAL EQUITY FUNDSM THE RESPONSIBLE INDEX FUND DOMINI SOCIAL BOND FUNDSM DOMINI SOCIAL INVESTMENTS AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT JUDGED WHETHER THESE FUNDS ARE GOOD INVESTMENTS OR WHETHER THE INFORMATION IN THIS PROSPECTUS IS TRUTHFUL AND COMPLETE. ANYONE WHO INDICATES OTHERWISE IS COMMITTING A FEDERAL CRIME. TABLE OF CONTENTS OVERVIEW......................................................... [XX] THE FUNDS AT A GLANCE DOMINI SOCIAL EQUITY FUND Investment Objective..................................... [XX] Primary Investment Strategy.............................. [XX] Risks.................................................... [XX] Past Performance......................................... [XX] Fund Fees and Expenses................................... [XX] DOMINI SOCIAL BOND FUND Investment Objective..................................... [XX] Primary Investment Strategy.............................. [XX] Risks.................................................... [XX] Past Performance......................................... [XX] Fund Fees and Expenses................................... [XX] PRIMARY RISKS................................................ [XX] SOCIALLY RESPONSIBLE INVESTING............................... [XX] DOMINI SOCIAL EQUITY FUND ABOUT INDEX INVESTING........................................ [XX] Answers to basic questions about how index funds work, how index funds differ from actively managed funds, and an overview of the advantages they offer. WHAT IS THE DOMINI 400 SOCIAL INDEXSM?....................... [XX] Information about the nation's first socially screened index and how it was created and is maintained. DOMINI SOCIAL BOND FUND ABOUT BOND FUND INVESTING.................................... [XX] More information on the Domini Social Bond Fund's investments and investment techniques. THE SOCIAL IMPACT OF THE DOMINI SOCIAL BOND FUND............. [XX] Information about how the Domini Social Bond Fund invests to promote community development. ADDITIONAL INVESTMENT STRATEGIES & RiSK INFORMATION.............. [XX] WHO MANAGES THE FUNDS?........................................... [XX] THE FUNDS' DISTRIBUTION PLAN..................................... [XX] SHAREHOLDER MANUAL............................................... A-1 Information about buying and selling shares, distributions, and the tax consequences of an investment in a Fund. FINANCIAL HIGHLIGHTS............................................. B-1 OVERVIEW The Funds offered in this prospectus provide ways to pursue your investment goals without compromising your social conscience. Each Fund's investments pass multiple, broad-based social screens designed to meet the needs of most socially responsible investors. THE DOMINI FUNDS The DOMINI SOCIAL EQUITY FUND seeks long-term total return by investing in the stocks of companies that are included in the Domini 400 Social Index. You may want to invest in the Domini Social Equity Fund if you are seeking long-term growth and an efficient way to invest in a broad cross-section of the U.S. stock market, and you can accept the risks of investing in the stock market. The DOMINI SOCIAL BOND FUND seeks a high level of current income and total return by investing in bonds and other debt securities. You may want to invest in the Domini Social Bond Fund if you are seeking current income and long-term appreciation from a diversified portfolio of bonds and other debt securities and can accept the risks that are associated with investments in the bond market. Each Fund should be considered a long-term investment and is not appropriate for short-term trading purposes. Each Fund can be used in both regular and tax-deferred accounts, such as IRAs. SOCIALLY RESPONSIBLE INVESTING The DOMINI SOCIAL EQUITY FUND and the DOMINI SOCIAL BOND FUND are both "socially and environmentally screened", meaning that they seek to invest in companies and other issuers that are socially and environmentally responsible. o The Funds avoid securities and obligations of issuers that manufacture tobacco products or alcoholic beverages, derive any revenues from gambling enterprises or have an ownership share in, or operate, nuclear power plants. The Funds also avoid investment in major military contractors. o The Funds seek to hold the securities and obligations of good corporate citizens, demonstrated by positive relations with their communities and their employees, by their environmental record, and by the quality and safety of their products. Please see pages [xx-xx] for more information regarding the Funds' social and environmental policies. - ------------------------------------------------------------------------------- WHY READING THIS PROSPECTUS IS IMPORTANT This prospectus explains the objective, risks, and strategies of the Domini Social Equity Fund and the Domini Social Bond Fund. Reading the prospectus will help you to decide whether a Fund is the right investment for you. Mutual funds: o are not FDIC-insured o have no bank guarantees o may lose value Because you could lose money by investing in these Funds, we suggest that you read this prospectus carefully, and keep it for future reference. - ------------------------------------------------------------------------------- THE FUNDS AT A GLANCE DOMINI SOCIAL EQUITY FUND INVESTMENT OBJECTIVE The Domini Social Equity Fund seeks to provide its shareholders with long-term total return that matches the performance of the Domini 400 Social Index, an index made up of the stocks of 400 companies selected using social and environmental criteria. The Index is composed primarily of large-capitalization U.S. companies. PRIMARY INVESTMENT STRATEGY The Domini Social Equity Fund seeks to match the composition of the Index as closely as possible. The Fund typically invests in all 400 stocks included in the Domini 400 Social Index, in approximately the same proportion as they are found in the Index. This is known as a full replication strategy. Although you cannot invest directly in an index, an index mutual fund provides you the opportunity to invest in a portfolio that tracks an index. For information about the Domini 400 Social Index's social screens, please refer to page [XX]. RISKS The Domini Social Equity Fund is subject to the following primary risks, any of which could cause an investor to lose money (see pages [xx - xx] for more details): o MARKET RISK o STYLE RISK o INDEX RISK o LARGE CAPITALIZATION COMPANIES PAST PERFORMANCE The bar chart and table below provide an indication of the risk of investing in the Domini Social Equity Fund by illustrating how returns have varied from one year to the next and by showing how the Fund's average annual total returns compare with those of the Standard & Poor's 500 Index (S&P 500), a broad-based index. PLEASE NOTE THAT THIS INFORMATION REPRESENTS PAST PERFORMANCE, AND IS NOT NECESSARILY AN INDICATION OF HOW THE FUND WILL PERFORM IN THE FUTURE. TOTAL RETURN FOR YEARS ENDED DECEMBER 31 This bar chart shows how the Domini Social Equity Fund's performance has varied over the last eight calendar years.
[BAR CHART] - ------------------------------------------------------------------------------------ 12.10% 6.54% -0.36% 35.17% 21.84% 36.02% 32.99% _____% - ------------------------------------------------------------------------------------ 1992 1993 1994 1995 1996 1997 1998 1999 - ------------------------------------------------------------------------------------
Best quarter covered by the bar chart above: _____% (quarter ended __/__/__) Worst quarter covered by the bar chart above: _____% (quarter ended __/__/__) Year-to-date performance as of 12/31/99: ______% AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99 The table below shows the Domini Social Equity Fund's average annual total returns in comparison to the S&P 500. Since 1 Year 5 Years Inception (6/3/91) Domini Social Equity Fund _____% _____% _____% S&P 500 _____% _____% _____% FUND FEES AND EXPENSES The table below describes the fees and expenses that you would pay if you buy and hold shares of the Domini Social Equity Fund*. Shareholder Fees (fees paid directly by you) Sales Charge (Load) Imposed on Purchases: None Deferred Sales Charge (Load): None Sales Charge (Load) Imposed on Reinvested Dividends: None Redemption Fees**: None Exchange Fees: None Annual Fund Operating Expenses (expenses deducted from the Fund's assets) Management Fees: 0.20% Distribution (12b-1) Fees: 0.25% Other Expenses Administrative Services and Sponsorship Fee: 0.50% Other Expenses: 0.12% Total Annual Fund Operating Expenses: 1.07% Fee Waiver***: 0.12% NET EXPENSES: 0.95% * The table reflects the expenses of the Domini Social Equity Fund and the Domini Social Index Portfolio, the underlying portfolio in which that Fund invests. ** You may redeem by writing or calling the Fund. If you wish to receive your redemption proceeds by wire, there is a $10 wire service fee. For additional information, please refer to the Shareholder Manual, page A-1. *** For the period from November 30, 1999 to November 30, 2000, Domini Social Investments LLC has contractually agreed to waive certain fees and/or reimburse certain expenses, including management fees, so that the Fund's expenses will not exceed, on a per annum basis, 0.95% of its average daily net assets. EXAMPLE The following example is intended to help you compare the cost of investing in the Domini Social Equity Fund with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur if you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of each period. This example assumes that the Fund provides a return of 5% a year, all dividends and distributions are reinvested, that operating expenses remain constant for the time period indicated and that the fee waiver reflected in the fee table above is in effect for the one year time period. 1 Year 3 Years 5 Years 10 Years $97 $328 $578 $1295 This example should not be considered to represent actual expenses or performance from the past or the future. Actual future expenses may be higher or lower than those shown. - ------------------------------------------------------------------------------- QUICK GUIDE TO IMPORTANT INFORMATION REGARDING THE DOMINI SOCIAL EQUITY FUND MINIMUM INITIAL INVESTMENT: $1,000 ($250 for IRAs) ($500 with Automatic Investment Plan) INVESTMENT ADVISER: Domini Social Investments LLC INCEPTION DATE: June 3, 1991 NET ASSETS AS OF ________ __, ____: $________ AVAILABLE FOR IRAS DIVIDENDS: Distributed Semi-annually, in June and December CAPITAL GAINS: Distributed Annually, in December NEWSPAPER LISTING: Domini Social Invmts (Soc Eq) or Dom Social TICKER SYMBOL: DSEFX CUSIP NUMBER: 257132100 WEBSITE: www.domini.com SHAREHOLDER SERVICES: 1-800-762-6814 - ------------------------------------------------------------------------------- DOMINI SOCIAL BOND FUND INVESTMENT OBJECTIVE The Domini Social Bond Fund seeks to provide its shareholders with a high level of current income and total return by investing in bonds and other debt securities that meet the Fund's social and environmental criteria. PRIMARY INVESTMENT STRATEGY The Domini Social Bond Fund invests primarily in investment grade fixed income securities issued by domestic entities, including government and corporate bonds, mortgage-backed and asset-backed securities and U.S. dollar-denominated bonds issued by non-U.S. entities. The Fund normally maintains a dollar-weighted average maturity of between 2 and 10 years. All securities meet the Fund's environmental and social criteria. The Fund also invests a portion of its assets (up to [___%] percent) in debt securities that directly support community development by promoting business creation, housing development and the economic and social development of urban and rural communities. Some of these investments are in unrated or lower rated securities that carry a higher degree of risk than the Fund's investment grade securities. The Fund may temporarily use a different investment strategy for defensive purposes in response to market conditions, economic factors, or other occurrences. This may affect the Fund's performance. For information about the Domini Social Bond Fund's social screens, please refer to page [XX]. RISKS The Domini Social Bond Fund is subject to the following primary risks, any of which could cause an investor to lose money (see pages [xx - xx] for more details): o MARKET RISK o PREPAYMENT AND EXTENSION RISK o INTEREST RATE RISK o STYLE RISK o CREDIT RISK PAST PERFORMANCE The Domini Social Bond Fund is newly-created and does not have annual returns for a full calendar year. Therefore, a bar chart and table that illustrate how the returns of the Fund have varied from one year to the next and showing how the Fund's average annual total returns compare with those of a broad-based index are not provided. FUND FEES AND EXPENSES The table below describes the fees and expenses that you would pay if you buy and hold shares of the Domini Social Bond Fund*. Shareholder Fees (fees paid directly by you) Sales Charge (Load) Imposed on Purchases: None Deferred Sales Charge (Load): None Sales Charge (Load) Imposed on Reinvested Dividends: None Redemption Fees**: None Exchange Fees: None Annual Fund Operating Expenses (expenses deducted from the Fund's assets) Management Fees: 0.40% Distribution (12b-1) Fees: 0.25% Other Expenses Administrative Services and Sponsorship Fee: 0.25% Other Expenses: ___% Total Annual Fund Operating Expenses: ___% Fee Waiver***: ___% NET EXPENSES: ___% - ----------------------------------- * Because the Domini Social Bond Fund is newly-created, expenses are estimated for the fiscal year ending July 31, 2000. ** You may redeem by writing or calling the Fund. If you wish to receive your redemption proceeds by wire, there is a $10 wire service fee. For additional information, please refer to the Shareholder Manual, page A-1. *** For the period from inception of the Domini Social Bond Fund to November 30, 2000, Domini Social Investments LLC has contractually agreed to waive certain fees and/or reimburse certain expenses, including management fees, so that the Fund's expenses will not exceed, on a per annum basis, [___%] of its average daily net assets. EXAMPLE The following example is intended to help you compare the cost of investing in the Domini Social Bond Fund with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur if you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of each period. This example assumes that the Fund provides a return of 5% a year, all dividends and distributions are reinvested, that operating expenses remain constant for the time period indicated and that the fee waiver reflected in the fee table above is in effect for the one year time period. 1 Year 3 Years 5 Years 10 Years ------------------------------------------------ $---- $---- $---- $---- This example should not be considered to represent actual expenses or performance from the past or the future. Actual future expenses may be higher or lower than those shown. - ------------------------------------------------------------------------------- QUICK GUIDE TO IMPORTANT INFORMATION REGARDING THE DOMINI SOCIAL BOND FUND MINIMUM INITIAL INVESTMENT: $1,000 ($250 for IRAs) ($500 with Automatic Investment Plan) INVESTMENT ADVISER: Domini Social Investments LLC INCEPTION DATE: _______ __, 2000 NET ASSETS AS OF ____ __, ____: newly-created and had no assets as of that date AVAILABLE FOR IRAS DIVIDENDS: Distributed Monthly CAPITAL GAINS: Distributed Annually, in December NEWSPAPER LISTING: __________ TICKER SYMBOL: __________ CUSIP NUMBER: __________ WEBSITE: www.domini.com SHAREHOLDER SERVICeS: 1-800-762-6814 - ------------------------------------------------------------------------------- PRIMARY RISKS There can be no guarantee that either Fund will be able to achieve its investment objective. The investment objectives of the Funds may be changed without the approval of the Funds' shareholders, although management currently has no intention to do so. Both the DOMINI SOCIAL EQUITY FUND and the DOMINI SOCIAL BOND FUND are subject to the risks described below. o MARKET RISK. The market prices of the securities owned by either of the Funds may go up and down. Therefore, the value of your investment will vary from day to day and may fluctuate widely. This is particularly true for the Domini Social Equity Fund because it seeks to remain fully invested in the market during all market conditions and equity securities generally have greater price volatility than debt securities. You could lose money. o STYLE RISK. Both Funds apply strict social and environmental screens to their portfolios. Because of these screens, each Fund's portfolio managers may pass up opportunities to buy certain securities when it is otherwise advantageous to do so, or may sell certain securities for social or environmental reasons when it is otherwise disadvantageous to do so. An investment in either Fund is not a bank deposit and is not insured or guaranteed. In addition, each Fund is subject to additional specific risks, described below. The primary risks of investing in the DOMINI SOCIAL EQUITY FUND include: o LARGE-CAPITALIZATION COMPANIES. The Fund primarily invests in the stocks of large-capitalization companies. Large-capitalization stocks tend to go through cycles where they do better, or worse, than the stock market in general. The performance of your investment will generally follow these broad market trends. Because the Domini 400 Social Index is weighted by market capitalization, a few large companies represent a relatively large percentage of the Index. Should the value of one or more of these stocks decline significantly, it could negatively affect the Fund's performance. o INDEXING. The Fund will continue to invest in the Domini 400 Social Index, regardless of how the Index is performing. It will not shift its concentration from one industry to another, or from stocks to bonds or cash, in order to defend against a falling or stagnant stock market. If the Index is heavily weighted in a single industry or sector, the Fund will be heavily invested in that industry or sector, and as a result can be affected more positively or negatively by developments in those industries than would be another investment company whose investments are not restricted to the securities in the Index. Also, the Fund's ability to match the performance of the Index may be affected by a number of factors, including Fund operating expenses and transaction costs, inflows and outflows of cash from the Fund and imperfect correlation between the Fund's holdings and those in the Index. The primary risks of investing in the DOMINI SOCIAL BOND FUND include: o INTEREST RATE RISK. In general, the value of bonds go down when interest rates go up, and rise when interest rates fall. The value of bond funds tend to follow the same pattern. Falling interest rates could also cause the Fund's income to decline. Securities with longer maturities tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter maturities. Under normal market conditions, the Domini Social Bond Fund's dollar-weighted average portfolio maturity is from 2 to 10 years. Prepayments of the debt securities held by the Domini Social Bond Fund may cause its average maturity to differ from its normal range. This deviation is not a violation of investment policy. - ------------------------------------------------------------------------------- [PLACE IN MARGIN] UNDERSTANDING BOND FUND RISK: AVERAGE MATURITY Unlike an individual bond, which reaches maturity and is repaid, a bond fund has no fixed maturity date. Instead, it maintains an average "rolling" maturity by selling aging bonds and buying newer ones. The "average maturity" of a bond fund is the average length of time until each bond held by a fund reaches maturity and is repaid. The average maturity of mortgage-backed and asset-backed securities is based on expectations of prepayments of these securities. In general, a bond fund with a longer average maturity will usually experience greater volatility than a fund with a shorter average maturity. - ------------------------------------------------------------------------------- o CREDIT RISK. One factor affecting the price of debt securities is how creditworthy the issuers of these securities are perceived to be. This perception is often reflected in the credit ratings. The Fund could lose money if the issuer or a guarantor of a bond or other debt security does not make timely principal and/or interest payments, or otherwise does not honor its obligations. In addition, the performance of the Fund may be negatively affected for a number of reasons that directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer's goods or services. Debt securities with lower ratings tend to be more volatile than those with higher ratings. Lower rated securities may also be hard to value accurately or sell at a fair price. At least 80% of the Domini Social Bond Fund's portfolio will be investment grade securities. The Fund will devote a portion of its assets to community development investments. A portion of these investments will be unrated and illiquid. These investments are riskier than investment grade securities. - ------------------------------------------------------------------------------- [PLACE IN MARGIN] UNDERSTANDING BOND FUND RISK: CREDIT RATINGS Investment grade debt securities are those rated "Aaa", "Aa", "A" or "Baa" by Moody's Investors Service, Inc. or "AAA", "AA", "A" or "BBB" by Standard & Poor's and those that the Fund's portfolio managers believe to be of comparable quality. If the credit quality of a security declines after the Domini Social Bond Fund buys it, the Fund's portfolio managers will decide whether to the Fund should continue to hold or should sell the security. - ------------------------------------------------------------------------------- o PREPAYMENT AND EXTENSION RISK. When interest rates go down, the issuers of debt securities may prepay the principal due on the securities. This can reduce the returns of the Fund because it may have to reinvest that money at the lower prevailing interest rates. On the other hand, rising interest rates may cause debt securities to be repaid later than expected, forcing the Fund to endure the relatively low interest rates on these securities. This also extends the average maturity of certain debt securities, making them more sensitive to changes in interest rates and the Fund's net asset value more volatile. SOCIALLY RESPONSIBLE INVESTING Socially responsible investors factor social and environmental criteria into their investment decisions. They believe that this helps to encourage greater corporate responsibility, and may also help to identify companies that are good long-term investments because enlightened management may be better able to meet the future needs of society and the environment. In addition, in the course of seeking financial gain for themselves, they look for opportunities to use their investments to improve the lives of others. Typically, social investors avoid companies that manufacture products, or employ practices, that they believe have harmful effects on society. They seek to invest in issuers with positive qualities, such as a proactive environmental record, or positive employee relations. This process is called "social screening." Each of the Domini Social Equity Fund and the Domini Social Bond Fund, in addition to screening it investments, works with issuers to improve their social and environmental performance. The Domini Social Equity Fund votes company proxies in a manner that is consistent with its social screening criteria, publicly discloses how it votes its proxies and, when necessary, files shareholder resolutions on important social and environmental issues. The Domini Social Bond Fund invests in debt securities and other instruments that promote community development. DOMINI SOCIAL EQUITY FUND ABOUT INDEX INVESTING WHAT IS AN INDEX? An index is an unmanaged group of stocks selected to measure the behavior of the market, or some portion of it. The S&P 500, for example, is an index of 500 companies selected to track the performance of the broad market of large-cap U.S. companies. Investors use indexes as benchmarks to measure how their investments are performing in comparison to the market as a whole. The Domini 400 Social Index attempts to track the performance of primarily large-cap U.S. companies that the typical socially responsible investor would consider appropriate to invest in. The Domini 400 Social Index was created to serve as a benchmark for socially and environmentally conscious investors. WHAT IS THE DIFFERENCE BETWEEN AN INDEX FUND AND AN ACTIVELY MANAGED FUND? The Domini Social Equity Fund uses a passive investment strategy. This means that the Fund purchases, holds and sells stocks based on the composition of the Domini 400 Social Index, rather than on a manager's judgment as to the direction of the market or the merits of any particular stock. Unlike index funds, actively managed funds are generally managed to achieve the highest possible return within certain parameters. These funds are managed by stock-pickers who buy and sell stocks based on their opinion of the financial outlook of the stock. Because index funds use a passive strategy, changes in management generally have less impact on fund performance. Index funds provide investors with an opportunity to invest in a portfolio that is specially designed to match the performance of a particular index. Rather than relying on the skills of a particular mutual fund manager, index fund investors purchase, in a sense, a cross-section of the market. Their performance should therefore reflect the segment of the market that their fund is designed to track. WHAT ARE SOME OF THE ADVANTAGES OF INDEX INVESTING? Index investing has become quite popular because it offers investors a convenient, relatively low-cost and tax-efficient way to obtain exposure to a broad spectrum of the stock market. Here are some other advantages: o DIVERSIFICATION. Because indexes such as the Domini 400 Social Index seek to measure the performance of the broad market, they invest in a large number of companies representing a diverse mix of industries. This structure can help reduce volatility as compared to funds that may invest in a smaller number of companies, or focus on a particular industry. o BENCHMARK COMPARABILITY. All stock mutual funds measure their performance in relation to a particular market benchmark. Index funds typically match the performance of their particular benchmarks more closely than comparable actively managed funds. o TAX EFFICIENCY. Turnover rate refers to the volume of buying and selling of stocks by a fund. The turnover rate of index funds tends to be much lower than the average actively managed mutual fund. Depending on your particular tax situation, a low turnover rate may produce fewer taxable capital gains. - ------------------------------------------------------------------------------- COMPARE TURNOVER RATES The average annual turnover rate for all domestic stock funds is _____%.* The annual turnover rate for the Domini Social Equity Fund is _____%.** (There is no guarantee that this turnover will not be higher in the future.) A 100% turnover rate would occur if a fund sold and replaced securities valued at 100% of its net assets within a one-year period. * As of __/__/__; taken from Morningstar PrincipiaPro. ** For the period from __/__/__ to __/__/__. - ------------------------------------------------------------------------------- WHAT IS THE DOMINI 400 SOCIAL INDEX? The Domini 400 Social Index (DSI 400) is the nation's first socially screened index. It was created and launched in May 1990 by the social research firm of Kinder, Lydenberg, Domini & Co., Inc. ("KLD") in order to serve as a benchmark for social investors, and to determine how social screens affect financial performance. KLD is an affiliate of Domini Social Investments. The Domini Social Equity Fund was launched in 1991 to give investors an opportunity to invest based on the Index. The Index is maintained by KLD. It is composed of the common stocks of 400 companies that meet the social criteria described above. - ------------------------------------------------------------------------------- [PLACE IN THE MARGIN] WHAT ARE SOCIAL SCREENS? All investment decisions use some type of "screen." Screens are guidelines that define which securities will be included in a portfolio, and which will be excluded. In addition to basic financial screens relating to financial solvency, industry and sector diversification, and market capitalization, the stocks in the DSI 400 are selected using two basic types of social screens: exclusionary and qualitative. - ------------------------------------------------------------------------------- HOW WAS THE DOMINI 400 SOCIAL INDEX CONSTRUCTED? To construct the Index, KLD first applied to the S&P 500 a number of traditional social screens. Roughly half of the S&P 500 companies qualified for the Index in this initial screening process. Approximately 150 non-S&P 500 companies were then added with two goals in mind. One goal was to obtain a broad representation of industries, so that the Index would more accurately reflect the composition of the broad market. Another goal was to identify companies that are particularly strong models of corporate behavior. KLD maintains an extensive database of corporate accountability information on more than 1,000 publicly traded companies and bases its decisions on research into the factors described below. EXCLUSIONARY SCREENS KLD seeks to exclude the following types of companies from the Index: o TOBACCO AND ALCOHOL - companies that manufacture tobacco products or alcoholic beverages; o GAMBLING - companies that receive identifiable revenues from gambling enterprises; o NUCLEAR POWER - companies that have an ownership share in, or operate nuclear power plants; and o WEAPONS - companies that receive more than 2% of their gross revenues from the sale of military weapons. QUALITATIVE SCREENS KLD considers the following criteria when evaluating companies for possible inclusion in the Index: o ENVIRONMENTAL PERFORMANCE - the 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; o EMPLOYEE RELATIONS - the company's record with regard to labor matters, workplace safety, employee benefit programs, and meaningful participation in profits either through stock purchase or profit sharing plans; o DIVERSITY - the company's record with regard to the hiring and promotion of women and minorities, particularly to management positions and the board of directors, including the company's record with respect to the availability of benefit programs that address work/family concerns, innovative hiring programs for the disabled and progressive policies toward gays and lesbians; o CITIZENSHIP - the company's record with regard to its charitable activities and its community relations in general; and o PRODUCT-RELATED ISSUES - the company's record with regard to product safety, marketing practices, and commitment to quality. From time to time, KLD may, at its discretion, choose to apply additional criteria, or to modify the application of the criteria listed above, to the Index. As a result, companies may be dropped from or added to the Index. This will impact the types of investments held by the Domini Social Equity Fund because it seeks to invest in the securities of the companies that are included in the Index. The social criteria listed in this prospectus may be modified and additional social criteria may be imposed at any time without approval of shareholders. HOW ARE THE DOMINI SOCIAL EQUITY FUND'S LARGEST HOLDINGS SELECTED? Like the S&P 500, the DSI 400 is "market capitalization-weighted." Market capitalization is a measure of the value of a publicly traded company. It is calculated by multiplying the total number of outstanding shares of company stock by the price per share. The Domini Social Equity Fund's portfolio is also market capitalization-weighted. For example, assume that the total market value of Company A's shares is twice the total market value of Company B's shares. The Fund's portfolio is structured so that its holdings of Company A's shares will be about twice the value of its holding of Company B's shares. The Fund's top ten holdings therefore are simply the ten companies with the highest market value in the Index. Because it seeks to duplicate the Index as closely as possible, the Fund will attempt to have a correlation between the weightings of the stocks it holds in its 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. HOW IS THE DOMINI 400 SOCIAL INDEX MAINTAINED? To keep turnover low and to more accurately reflect the performance of the market, the Index is maintained using a "buy and hold" strategy. Generally speaking, this means that companies that are in the Index stay in the Index for a long time. A company will not be removed because its stock has not been performing well, unless in KLD's opinion the company is no longer financially viable. Sometimes a company is removed from the Index because it has been acquired by another company. Sometimes a company may split into two companies, and only one of the surviving companies is selected to stay in the Index (because the Index is maintained to consist of exactly 400 companies at all times). A company may also be removed from the Index because its social profile has deteriorated, or due to its inadequate response to a significant controversy. When a company is removed from the Index, it is replaced with another company. In the selection process, among other factors, KLD considers the size of the company, the industry it is in, and its social profile. ARE THERE COMPANIES I WON'T LIKE IN THE DOMINI 400 SOCIAL INDEX? The screens for the Index are designed to reflect those most widely used by social investors. Therefore, you may find that some companies in the Index do not reflect your social or environmental standards. You may wish to review a list of the companies in the Domini Social Equity Fund's portfolio to decide if they meet your personal standards. The complete list is available in the Domini Social Equity Fund's annual and semi-annual reports. To obtain copies of these reports, free of charge, call 1-800-762-6814. No company is a perfect model of corporate or social responsibility. Each year, the Domini Social Equity Fund uses its voice as a shareholder to encourage companies to improve their social and environmental records by voting proxies, writing letters, engaging management in dialogue and filing shareholder resolutions. DOMINI SOCIAL BOND FUND ABOUT BOND FUND INVESTING WHAT IS A BOND? Essentially, a bond is an IOU issued by a corporation or a government entity. When you purchase a bond, you are lending the issuer a specified amount of money (the principal) for a specified period of time (the term). In exchange, the issuer usually pays regular interest and, when the term is up and the bond matures, the issuer repays the principal amount. Many investors purchase bonds because the interest income paid tends to be higher than money market funds, certificates of deposit or bank accounts. Investors also use bonds to help diversify their portfolio because, although bonds and bond funds are subject to market fluctuations, they don't always move in the same direction or to the same degree as stocks. WHAT ADVANTAGES DO BOND FUNDS OFFER? Bond funds are a convenient way to invest in bonds because they allow you to invest in a professionally managed pool of bonds and other debt securities. Bond funds offer all of the familiar conveniences of stock mutual funds, such as: o LIQUIDITY. See page xx for information how to buy and sell shares. o REINVEST YOUR DIVIDENDS. If you do not depend upon your investment for regular income, you may choose to reinvest your dividends. o LOW MINIMUM INVESTMENT. Purchasing an individual bond can be expensive because of the brokerage commissions you may be required to pay and the size of the bond you may be required to purchase. You can invest in the Domini Social Bond Fund for $1,000. If you open your account as an IRA, the minimum is $250, and if you choose to use our automatic investment plan, the minimum is $500. o DIVERSIFICATION. A bond fund invests in a large number of bonds. Although bond funds do not provide any guarantees, investing in a large number of bonds allows you to spread certain risks (such as credit risk) among more than one issuer. WHAT TYPES OF BONDS WILL THE FUND TYPICALLY HOLD? The Domini Social Bond Fund typically invests at least 80% of its assets in investment grade debt securities. The Fund can buy many types of debt securities including, without limitation, corporate bonds, bonds issued by U.S. government agencies or instrumentalities, and mortgage- and asset-backed securities. The Fund may also invest in the debt securities of, and deposit cash with, community development banks. All of the Fund's holdings must pass the Fund's social and environmental screens. The following describes the most common types of bonds and other debt securities the Fund will hold (for a discussion of the risks associated with these types of securities, refer to page xx): o U.S. GOVERNMENT SECURITIES include U.S. Government agency bonds, which represent loans by investors to a wide variety of governmental agencies and instrumentalities. The Domini Social Bond Fund will generally hold bonds issued by those agencies involved in housing, farming and education. For example, the Fund will hold bonds issued by "Sallie Mae", the agency responsible for financing student loans, and the Federal Farm Credit Board, the agency responsible for making loans to farmers and ranchers. For information on the Fund's mortgage-related holdings, see below. Please keep in mind that some securities issued by U.S. government agencies and instrumentalities may not be backed by the full faith and credit of the U.S. government. The Fund does not currently intend to invest in direct obligations of the U.S. government such as U.S. Treasury bills, notes and bonds. o STATE AND MUNICIPAL BONDS represent loans to a state or municipal government, or one of their agencies or instrumentalities. o CORPORATE BONDS are IOUs issued by businesses that want to borrow money for some business purpose. As with other types of bonds, the issuer promises to repay the principal on a specific date and to make interest payments in the meantime. The amount of interest offered depends on market conditions and also on the financial health of the corporation issuing the bonds. For example, a company whose credit rating is weak will have to offer a higher interest rate to obtain buyers for its bonds. The Fund expects to invest primarily in investment grade corporate bonds, which are corporate bonds rated in one of the four highest rating categories by independent bond rating agencies and those that the Fund's portfolio managers believe to be of comparable quality. Although the Fund may invest in corporate bonds issued by corporations that are not included in the Domini 400 Social Index, all of the Fund's corporate bond holdings must pass the same social and environmental screens used in connection with the Index (see pages xx-xx for more information). o MORTGAGE-BACKED AND ASSET-BACKED SECURITIES represent interests in underlying pools of mortgages or consumer or commercial loans - most often home loans or credit card, automobile or trade receivables. Unlike ordinary bonds, which generally pay a fixed rate of interest at regular intervals and then pay principal upon maturity, mortgage-backed securities pay both interest and principal as part of their regular payments. Because the mortgages and loans underlying the securities can be prepaid at any time by homeowners or consumer or corporate borrowers, mortgage-backed securities and asset-backed securities are particularly sensitive to prepayment risk, discussed earlier (page xx) in this prospectus. Mortgage-backed securities are issued by a number of governmental and quasi-governmental agencies, including the Government National Mortgage Association (GNMA or "Ginnie Mae"), Freddie Mac (formerly the Federal Home Loan Mortgage Corporation) and Fannie Mae (formerly the Federal National Mortgage Association). GNMAs are guaranteed by the full faith and credit of the U.S. government as to the timely payment of principal and interest. Mortgage securities issued by other government agencies or private corporations are not, and, of course, your investment in the Domini Social Bond Fund is not insured. The Fund may also invest to a lesser extent in conventional mortgage securities, which are packaged by private entities and are not guaranteed by the U.S. government. - ------------------------------------------------------------------------------- [PLACE IN MARGIN] Because the Domini Social Bond Fund may invest extensively in mortgage-backed and asset-backed securities, the prepayment risk for the Fund may be higher than that for a bond fund that does not invest in these types of securities. See page xx for more information. - ------------------------------------------------------------------------------- o COMMUNITY DEVELOPMENT. The Fund will invest in mortgages, loans and pools of loans issued by community development banks and financial institutions and community loan funds. These investments are targeted to underinvested areas, low to moderate income individuals, and small businesses. These investments may be lower rated or unrated and may subject the Fund to more credit risk than other types of debt securities. Some of these investments may also be illiquid and the Fund may not be able to sell them at an advantageous time or price. The Fund may also make deposits in community development banks and financial institutions. These deposits may not be insured by the FDIC. o INTERNATIONAL DOLLAR-DENOMINATED BONDS (or Yankee bonds) are bonds denominated in U.S. dollars issued by foreign governments and companies. Because the bond's value is designated in dollars rather than the currency of the issuer's country, the investor is not exposed to currency risk. To the extent that the Fund owns bonds issued by foreign governments and companies, the Fund is subject to risks relating to political, social and economic developments abroad. Please refer to page xx for additional information about the types of bonds the Domini Social Bond Fund may hold. THE SOCIAL IMPACT OF THE DOMINI SOCIAL BOND FUND Although an equity fund such as the Domini Social Equity Fund can have an impact on corporate behavior through its screening policies and its proxy voting, a socially responsible bond fund provides a special opportunity to make a significant and immediate difference to people and their communities. The Domini Social Bond Fund seeks to play a positive role in the economic and social development of communities by investing a portion (up to [___%]), of its assets in debt instruments and other investments that support and promote community development. The Fund's submanager will draw upon its experience in making productive community development investments to carefully select those financial institutions, funds and organizations that are making the greatest impact in the areas of affordable housing, job creation, and economic development in underserved communities. The purchase of investments originated by such institutions, funds and organizations are not hand-outs or charitable contributions. These are investments in hard-working people who have been denied access to traditional markets because investors are not willing to take a chance on them. Consequently, some of these investments carry greater credit risks than the Fund's other holdings. The Fund's community investments are focused in two critical areas: affordable housing and economic empowerment for low to medium income entrepreneurs through the financing of small business loans. Examples of these types of investments include loans and deposits purchased from Community Development Financial Institutions and Community Loan Funds, and small business association (SBA) guaranteed portions of small business loans. The Fund may invest a portion of its assets in below market-rate community development investments. - ------------------------------------------------------------------------------- [PLACE IN MARGIN] South Shore Bank, the Domini Social Bond Fund's submanager, is the nation's largest and oldest community development bank, founded with the purpose of serving the financial needs of residents and businesses in traditionally underserved urban areas. Between 1974 and November 1999, the Bank loaned $600 million for local rehabilitation and commercial development to approximately 12,500 borrowers. South Shore Bank currently has more than $830 million in assets and $57 million in capital. The Bank's parent company, Shorebank Corporation, has founded a variety of other for-profit and not-for-profit development enterprises in the U.S. and abroad. Shorebank's investments--which include loans to minority-owned businesses, housing loans in urban neighborhoods, and real estate development-exceeded [$100 million in 1999] and are on track to at least equal that amount in 2000. Shorebank is responsible for more than 900 jobs created, placed or retained, and for the rehabilitation of over 2,300 units of multi-family housing. - ------------------------------------------------------------------------------- ADDITIONAL INVESTMENT STRATEGIES & RISK INFORMATION INVESTMENT STRUCTURE The DOMINI SOCIAL EQUITY FUND invests its assets in the Domini Social Index Portfolio. The Portfolio has the same investment objective as the Domini Social Equity Fund and invests in securities using the strategies described in this prospectus. The Domini Social Equity Fund may withdraw its investment from the Portfolio at any time if the Board of Trustees of the Domini Social Equity Fund determines that it is in the best interests of the Domini Social Equity Fund to do so. The Board of Trustees would then consider what action might be taken, including investing all of the Domini Social Equity Fund's assets in another similarly structured portfolio having the same investment objective as the Domini Social Equity Fund, or hiring an investment adviser to manage the Domini Social Equity Fund's assets. There is currently no intention to change the Domini Social Equity Fund's investment structure. References to the Domini Social Equity Fund in this prospectus include the Portfolio, unless the context requires otherwise. The DOMINI SOCIAL BOND FUND invests directly in securities and does not invest through an underlying Portfolio. ADDITIONAL INVESTMENT STRATEGIES Additional permissible DOMINI SOCIAL BOND FUND investments include, but are not limited to: o CONVERTIBLE BONDS. The Fund may invest in convertible bonds, which are bonds that may be converted into stock. Convertible bonds are subject to the market risk of stocks, and, like other bonds, are also subject to interest rate risk and the credit risk of their issuers. Convertible bonds tend to offer lower rates of interest than non-convertible bonds because the stock conversion feature represents increased potential for capital gains. Call provisions may allow the issuer to repay the debt before it matures. This may hurt the Fund's performance because it may have to reinvest the money repaid at a lower rate. o ZERO COUPON OBLIGATIONS. The Fund may invest in obligations that do not pay current interest, known as "zero coupon" obligations. The prices of zero coupon obligations tend to be more volatile than those of securities that offer regular payments of interest. This makes the Fund's net asset value more volatile. In order to pay cash distributions representing income on zero coupon obligations, the Fund may have to sell other securities on unfavorable terms. These sales may generate taxable gains for shareholders. o DERIVATIVES. The Fund may use derivatives (including futures and options), which are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index. The various derivatives that the Fund may use are described in more detail in the Statement of Additional Information. The Fund may use derivatives to reduce exposure to certain risks, such as interest rate risk. The Fund will not use derivatives for leverage. Suitable derivative transactions may not be available in all circumstances, and there can be no assurance that the Fund will use derivatives, even when they may benefit the Fund. Derivatives are subject to a number of risks described on pages [xx-xx] of this prospectus, such as market risk, interest rate risk and credit risk. They also may be mispriced or improperly valued, and changes in the value of derivatives may not correlate perfectly with the underlying asset, rate or index. TRADING The DOMINI SOCIAL BOND FUND is actively managed. Although the Fund's portfolio managers attempt to minimize portfolio turnover, from time to time the Fund's annual portfolio turnover rate may exceed [**100**]%. The sale of securities may produce capital gains, which, when distributed, are taxable to investors. Active trading may also increase the amount of commissions or mark-ups the Fund pays to brokers or dealers when it buys and sells securities. The turnover rate for the Fund is not expected to exceed _____% for its fiscal year ending July 31, 2000. CASH RESERVES Although the DOMINI SOCIAL EQUITY FUND seeks to be fully invested at all times, it keeps a small percentage of its assets in cash or cash equivalents. These reserves provide the Fund with flexibility to meet redemptions and expenses, and to readjust its portfolio holdings. The Fund may hold these cash reserves uninvested or may invest them in high quality, short-term debt securities issued by agencies or instrumentalities of the U.S. government, bankers' acceptances, commercial paper, certificates of deposit, bank deposits or repurchase agreements. The issuers of these securities must satisfy certain social criteria. The DOMINI SOCIAL BOND FUND will also invest a portion of its assets in quality, short-term debt securities issued by agencies or instrumentalities of the U.S. government, bankers' acceptances, commercial paper, certificates of deposit, bank deposits and repurchase agreements. Some of the investments will be with community development banks and financial institutions and may not be insured by the FDIC. The issuers of these securities must satisfy certain social criteria. SECURITIES LENDING Consistent with applicable regulatory policies, including those of the Board of Governors of the Federal Reserve System and the Securities and Exchange Commission, each of the DOMINI SOCIAL EQUITY FUND and the DOMINI SOCIAL BOND FUND may make loans of its securities to member banks of the Federal Reserve System and to broker-dealers. These 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. A Fund would have the right to terminate a loan and obtain the securities loaned at any time on three days notice. During the existence of a loan, a Fund 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. A Fund 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. The Funds are not required to use every investment technique or strategy listed in this prospectus or in the Statement of Additional Information. FOR ADDITIONAL INFORMATION about the Funds' investment strategies and risks, the Funds' Statement of Additional Information is available, free of charge, from Domini Social Investments. WHO MANAGES THE FUNDS? INVESTMENT MANAGER Domini Social Investments LLC (DSIL), 536 Broadway, 7th floor, New York, NY 10012, has been managing money since November of 1997 and currently manages more than $1.5 billion dollars in assets for individual and institutional investors who are working to create positive change in society by using social and environmental criteria in their investment decisions. DSIL is the manager of the Domini Social Equity Fund and the Domini Social Bond Fund and provides the Funds with investment supervisory services, overall operational support and administrative services. SOCIAL RESEARCH & INDEX MAINTENANCE Kinder, Lydenberg, Domini & Co., Inc. (KLD), an affiliate of DSIL, determines the composition of the Domini 400 Social Index. The following persons are primarily responsible for the development and maintenance of the Domini 400 Social Index: Amy L. Domini, CFA, a Managing Principal of DSIL and Founder of KLD (since 1988), Steven D. Lydenberg, CFA, Director of Research, KLD (since 1990), and Peter D. Kinder, JD, President, KLD (since 1988). PORTFOLIO INVESTMENT SUBMANAGERS Mellon Equity Associates, LLP, with its main offices at 500 Grant Street, Pittsburgh, PA 15258, provides investment submanagement services to the Domini Social Equity Fund pursuant to a Submanagement Agreement with DSIL. A team of portfolio managers at Mellon Equity implements the daily transactions necessary to maintain the proper correlation between the Domini Social Equity Fund's portfolio and the Domini 400 Social Index. They do not determine the composition of the Index. South Shore Bank, with its offices at [**____________________**], provides investment submanagement services to the Domini Social Bond Fund pursuant to a Submanagement Agreement with DSIL. South Shore Bank is the nation's largest and oldest community development bank, founded with the purpose of serving the financial needs of residents and businesses in traditionally underserved urban areas. David J. Oser, Senior Vice President, Investments (since 1994) is primarily responsible for the management of the Domini Social Bond Fund. Mr. Oser has been with South Shore Bank since 1976, where he currently manages $450 million in assets for affiliates and institutional clients of the Bank. He also serves as Retirement Plan Trustee and Corporate Secretary for the Bank. Mr. Oser holds a master's degree from the University of Chicago and a bachelor's degree from Carleton College, Northfield, Minnesota. For the services DSIL and Mellon Equity provided to the Domini Social Equity Fund and the Portfolio during the fiscal year ended July 31, 1999, they received a total of 0.69% of the average daily net assets of the Domini Social Equity Fund, after waivers. The Domini Social Bond Fund is newly-created and has not paid management fees. DSIL and South Shore Bank expect to receive total investment advisory fees of [____%] of the average daily net assets of the Domini Social Bond Fund, after waivers, during the fiscal year ended July 31, 2000. THE FUNDS' DISTRIBUTION PLAN DSIL Investment Services LLC, a wholly owned subsidiary of DSIL, is the distributor of each Fund's shares. Each Fund has adopted a Rule 12b-1 plan that allows the Fund to pay its distributor up to 0.25% of the Fund's average daily net assets, on an annual basis, for the sale and distribution of the Fund's shares and for services provided to shareholders. Because this fee is paid out of each Fund's assets on an ongoing basis, over time the fee will increase the cost of your investment and may cost you more than paying other types of sales charges. For more information about the Funds' distribution plan, see the expense table, on page [XX] of this prospectus, and the Statement of Additional Information. SHAREHOLDER MANUAL This section provides you with information on how to buy and sell shares of the Funds, how Fund shares are valued, and the tax consequences of an investment in a Fund. TABLE OF CONTENTS How to Open an Account.............................................. A-__ Types of Accounts............................................... A-__ How to Buy Shares................................................... A-__ How to Exchange Shares.............................................. A-__ How to Sell Shares.................................................. A-__ How the Price of Your Shares is Determined.......................... A-__ How can I find out a Fund's NAV?................................ A-__ How do you determine what price I will get when I buy shares?... A-__ How do you determine what price I will get when I sell shares?.. A-__ How is the value of securities held by the Funds determined?.... A-__ Fund Statements and Reports......................................... A-__ Dividends and Capital Gains......................................... A-__ Taxes............................................................... A-__ Rights Reserved by the Funds........................................ A-__ FOR MORE INFORMATION ON: o investing in the Funds, o your account, o each Fund's daily share price, and o socially responsible investing, Call our Shareholder Information Line toll-free at 1-800-762-6814. Shareholder representatives are available to take your call weekdays, from 9-5PM, Eastern Time. You may obtain the share price of a Fund 24 hours a day, 7 days a week by using our automated system. Visit our web site at WWW.DOMINI.COM. QUICK REFERENCE NASDAQ SYMBOLS: DOMINI SOCIAL EQUITY FUND - DSEFX DOMINI SOCIAL BOND FUND - ______ NEWSPAPER LISTING: DOMINI SOCIAL EQUITY FUND - Domini Social Invmts (Soc Eq) or Dom Social DOMINI SOCIAL BOND FUND - __________ ACCOUNT STATEMENTS are mailed quarterly. TRADE CONFIRMATIONS are sent after purchases and redemptions. ANNUAL AND SEMI-ANNUAL REPORTS will be mailed in late September and March, respectively, and are available online at WWW.DOMINI.COM. HOW TO OPEN AN ACCOUNT 1. Read this prospectus (and please keep it for future reference). 2. Review the available accounts listed below under "Types of Accounts" and decide which account-type is appropriate for you. 3. Decide how much you want to invest. The minimum initial investments in each Fund are: o $1,000 for regular accounts ($500 if using our Automatic Investment Plan) o $250 for Retirement Accounts (Automatic Investment Plan also available) The minimums to buy additional shares of each Fund are: o $50 for regular and Retirement Accounts o $25 for Automatic Investment Plan Accounts 4. You can choose one of several different payment methods to make your initial investment. Please review the options listed under "How to Buy Shares", and follow the simple instructions we've provided. Be sure to completely fill out and sign the Account Application. If at any time you need assistance, please call us at 1-800-762-6814, weekdays from 9-5PM, Eastern Time. TYPES OF ACCOUNTS You may invest in the Funds through the following types of accounts: INDIVIDUAL AND JOINT ACCOUNTS (NON-RETIREMENT): Invest as an individual or with one or more people. If you are opening a joint account, joint tenancy with rights of survivorship will be assumed unless other ownership is noted on your account application. You may also open an account to invest assets held in an existing personal trust. INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): You may open an account to fund a traditional IRA, Roth IRA or Education IRA. o $10 Annual IRA account maintenance fee o $10 IRA account termination fee Call 1-800-762-6814 for more information and an IRA account application. UNIFORM GIFTS/TRANSFERS TO MINORS ACT (UGMA/UTMA) ACCOUNTS: You may open a UGMA/UTMA account for any child. EMPLOYER-SPONSORED RETIREMENT PLANS: If offered by your employer, you may be able to open an account as part of an employer-sponsored retirement plan, such as a 401(k) plan, 403(b) plan, SEP-IRA or SIMPLE IRA. You may obtain 403(b) forms and information by calling 1-800-762-6814. You may also contact your employer's plan administrator for further information. AUTOMATIC INVESTMENT PLAN ACCOUNTS: Automatically invest specified amounts in a Fund at monthly, quarterly, semi-annual or annual intervals. Automatic investments will continue to be made until you notify the Fund and your bank to discontinue further investments. This service may be established for your account at any time. See below for more details, or call 1-800-762-6814. FOR AN ORGANIZATION: You may open an account for a trust, corporation, partnership, endowment, foundation or other entity. HOW TO BUY SHARES BY CHECK Mail the completed Account Application and your check to: Domini Funds P.O. Box 60494 King of Prussia, PA 19406-0494 For subsequent investments, fill out the investment form that came with your trade confirmation or account statement or send a note with your account number and Fund name. Always be sure to include your account number on your check. If you need additional forms, please call 1-800-762-6814. YOUR CHECKS MUST BE IN U.S. DOLLARS DRAWN ON A U.S. BANK AND BE MADE PAYABLE TO "DOMINI FUNDS." IMPORTANT: For our mutual protection, Domini cannot accept checks made payable to third parties. BY BANK WIRE To establish wire privileges on an existing account, or for additional information about the service, please call the Funds' transfer agent at 1-800-762-6814. Wire your investment to: Bank: Boston Safe Deposit Bank ABA: 011001234 Acct Name: Domini Funds Acct #: 043370 FBO: Fund Name, and Your Account Name and Number at Domini Funds For new accounts, please call 1-800-762-6814 to obtain an account number before wiring funds. AUTOMATIC INVESTMENT PLAN Our Automatic Investment Plan allows you to have specified amounts automatically deducted from your bank account or Domini Money Market Account and invested in a Fund in monthly, quarterly, semi-annual or annual intervals. Please follow the instructions in the Account Application to establish this service when you open your account. This service can be established for your account at any time. Call the Funds' transfer agent at 1-800-762-6814 for more information. This service may take up to 4 weeks to begin. Also, due to the varying procedures to prepare, process and forward the bank withdrawal information to the Funds, there may be periodic delays between the time of the bank withdrawal and the time your money reaches the appropriate Fund. HOW TO EXCHANGE SHARES You may exchange all or a portion of your shares into any other available Domini Funds or the Domini Money Market AccountSM. You may request an exchange by calling 1-800-762-6814, or in writing. All written requests must be signed by all owners. For information on transferring assets from another mutual fund family, please call 1-800-762-6814 or visit www.domini.com to obtain the necessary forms. THE DOMINI MONEY MARKET ACCOUNT The Domini Money Market Account (DMMA) offered through South Shore Bank is an FDIC-insured (up to $300,000) interest-bearing account with direct community development benefits. You may open and maintain a DMMA at no charge, and take advantage of free check-writing (with a $500 minimum per check), and easy transfers by telephone to and from your Domini Social Equity Fund or Domini Social Bond Fund account. A DMMA investment is subject to certain terms and conditions. Please call 1-800-762-6814 for more information. The rate of return for the Domini Money Market Account will vary. The Domini Social Equity Fund and Domini Social Bond Fund are not insured by the FDIC. - -------------------------------------------------- [PLACE IN MARGIN] THE ADVANTAGE OF DOLLAR-COST AVERAGING One thing is certain: markets fluctuate. Even experienced investors often find it impossible to accurately time a market, and to "sell high and buy low." Dollar-cost averaging is an investment strategy designed to avoid the pitfalls of market timing by investing equal amounts of money at regular intervals (monthly, quarterly, and so on) over a long period of time. The advantage of dollar cost averaging is that an investor buys more shares at lower prices, and fewer shares at higher prices. As a result, an investor ends up paying an average price per share over a period of time. The key to dollar-cost averaging is to stick with it for the long term. Of course, no strategy can guarantee a profit, or protect your investment from losses. Strictly adhering to a long-term dollar-cost averaging strategy, however, is a good way to ensure that you don't make the mistake of investing all of your money when the market is high. To facilitate dollar-cost-averaging you may purchase Fund shares at regular intervals through the Funds' Automatic Investment Plan. - -------------------------------------------------- HOW TO SELL SHARES You are free to sell all or part of your Fund shares at any time during New York Stock Exchange trading hours (generally weekdays from 9AM - 4PM Eastern Time). The appropriate Fund will send the proceeds from the sale to you or a third party that you have designated (this may require a Signature Guarantee -- see below). Transactions are processed at the next determined share price after Domini receives your sale request in good order. You may sell (redeem) your shares in the Funds in the following ways: IN WRITING Mail written redemption requests to: Domini Funds P.O. Box 60494 King of Prussia, PA 19406-0494 For overnight deliveries, please use the following address: Domini Funds c/o First Data Investor Services Group 211 South Gulph Road King of Prussia, PA 19406 WHAT IS "GOOD ORDER"? Purchase and sale requests must be in "good order" to be accepted by a Fund. To be in "good order" a request must include: o The Fund name and your account number. o The amount of the transaction (in dollars or shares). o Signatures of all owners exactly as registered on the account (for requests by mail). o Signature guarantees, if required (see page [XX]). o Any supporting legal documentation that may be required. Letters requesting redemptions must: o specify the dollar amount or number of shares to be sold, the fund name and the account number; and o be signed in exactly the same way the account is registered by all registered owners or authorized signers. Your redemption request may require a signature guarantee. Please refer to page [XX] for details. BY TELEPHONE To sell shares by telephone, call the Funds' transfer agent at 1-800-762-6814. If you wish to receive your redemption by wire and have not already established wire privileges on your account, you must submit wire redemption requests in writing along with a Signature Guarantee (see page [XX]). Please consider sending a written request to sell shares if you cannot reach the Funds' transfer agent by telephone. Neither the Funds, nor their transfer agent or their distributor will be liable for any loss, liability, cost or expense for acting on telephone instructions believed to be genuine. The Funds will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. Please contact the Funds' transfer agent if you wish to suspend telephone redemption privileges. BY WIRE To establish wire redemption privileges on a new account, fill out the appropriate area on the application, and attach a voided check. If you have not already established wire redemption privileges on your account you must submit wire redemption requests in writing along with a Signature Guarantee (see page [XX]). o $10 wire transfer fee (deducted directly from sale proceeds) o $1,000 minimum wire amount The wire transfer fee and minimum wire amount may be waived for certain institutions at the manager's discretion. SYSTEMATIC WITHDRAWAL PLAN Call our Shareholder Information Line at 1-800-762-6814 for information. If you own shares of a Fund with an aggregate value of $10,000 or more you may establish a Systematic Withdrawal Plan under which shares will be sold, at net asset value, in the amount and for the periods specified (minimum $100.00 per payment). There is no additional charge to participate in the Systematic Withdrawal Plan. ADDITIONAL INFORMATION ON SELLING SHARES SIGNATURE GUARANTEES You are required to obtain a Signature Guarantee from an Eligible Guarantor for any: o Sales (redemptions) exceeding $50,000; o Written sales requests, regardless of amount, made within 30 days following any changes in account registration; and o Redemptions made to a third party or to an address other than the address for which the account is registered (unless already established on your account). Eligible Guarantors may include: o banks; o savings institutions; o credit unions; o broker-dealers; and o other guarantors acceptable to the Funds and their transfer agent. The Funds and their transfer agent cannot accept guarantees from notaries public or organizations that do not provide reimbursement in the case of fraud. The Funds or their transfer agent may, at their option, request further documentation prior to accepting requests for redemptions. UNUSUAL CIRCUMSTANCES Each Fund reserves the right to revise or terminate the telephone redemption privilege at any time, without notice. In the event that a Fund suspends telephone redemption privileges, or if you have difficulty getting through on the phone, you will still be able to redeem your shares through the other methods listed above. Each Fund may stop selling its shares or postpone payment: o during any period in which the New York Stock Exchange is closed or in which trading is restricted; or o if the Securities and Exchange Commission determines that an emergency exists. LARGE REDEMPTIONS It is important that you call the Funds' transfer agent before you redeem a large dollar amount. We must consider the interests of all fund shareholders and so reserve the right to delay delivery of your redemption proceeds -- up to seven days -- if the amount will disrupt a Fund's operation or performance. Each Fund reserves the right to pay part or all of the redemption proceeds in kind, i.e., in securities, rather than cash. If payment is made in kind, you may incur brokerage commissions if you elect to sell the securities for cash. In an effort to protect the Funds from the possible adverse effects of a substantial redemption in a large account, as a matter of general policy, no shareholder or group of shareholders controlled by the same person or group of persons will knowingly be permitted to purchase in excess of 5% of the outstanding shares of a Fund, except upon approval of that Fund's management. HOW THE PRICE OF YOUR SHARES IS DETERMINED Each Fund determines its share price (or "NAV", net asset value per share) at the close of regular trading on the New York Stock Exchange, normally 4PM Eastern Time, on each day the Exchange is open for trading. This calculation is made by deducting the amount of the Fund's liabilities (debts) from the value of its assets, and dividing the difference by the number of outstanding shares of that Fund. Total Assets - Total Liabilities -------------------------------- Net Asset Value (NAV) = Number of Shares Outstanding To calculate the value of your investment, simply multiply the NAV by the number of shares of the Fund you own. HOW CAN I FIND OUT A FUND'S NAV? BY PHONE: You may obtain a Fund's NAV 24 hours a day, by calling 1-800-762-6814 from a touch-tone phone and accessing our automated system. You may speak with a shareholder representative weekdays from 9-5PM, Eastern Time. NEWSPAPER LISTINGS: This information is also listed in the mutual fund listings of most major newspapers. The Domini Social Equity Fund is most commonly listed as: Domini Social Invmts (Soc Eq) or Dom Social. The Domini Social Bond Fund is most commonly listed as: [**________**]. QUARTERLY STATEMENTS: You will also receive this information quarterly, in your account statement. HOW DO YOU DETERMINE WHAT PRICE I WILL GET WHEN I BUY SHARES? If your order is received by the Funds' transfer agent by 4:00 PM Eastern Time in good order, you will receive the NAV determined at the end of that day. See "What is "Good Order"?" on page [XX] of this prospectus. Each Fund may stop offering its shares for sale at any time and may reject any order for the purchase of its shares. HOW DO YOU DETERMINE WHAT PRICE I WILL GET WHEN I SELL SHARES? When you sell shares you will receive the next share price that is calculated after your sale request is received by the Funds' transfer agent in good order. See "What is `Good Order'?" on page [XX] of this prospectus. Please note that the Funds will not accept redemption requests after 4PM, and will not hold trades for the following day. The appropriate Fund will normally pay for the shares on the next day the New York Stock Exchange is open for trading, but in any event within seven days. A Fund will delay payment for at least seven business days if your checks in payment for the purchase of the shares you wish to sell have not yet cleared (this may take up to 15 days). Each Fund may pay by check or, if you have completed the appropriate box on the Account Application, by wire transfer. HOW IS THE VALUE OF SECURITIES HELD BY THE FUNDS DETERMINED? Each Fund typically uses market prices to value securities. However, when a market price is not available, or when a Fund has reason to believe that the price does not represent market realities, the Fund may value securities instead by using methods approved by the Fund's Board of Trustees. In such a case, the Fund's value for a security may be different from quoted market values. To the extent that a Fund invests in securities that are traded primarily in foreign markets, the value of those securities may change at a time when you are not able to buy or sell Fund shares. This will happen when foreign markets are open on days when the Fund does not price its shares. Each short-term obligation (with a remaining maturity of less than sixty days) is valued at amortized cost, which constitutes fair value as determined by the Board of Trustees. FUND STATEMENTS AND REPORTS HOUSEHOLDING: To keep the Funds' costs as low as possible, and to conserve paper usage, where practical, we attempt to eliminate duplicate mailings to the same address. When we find that two or more Fund shareholders have the same last name and address, rather than send a separate report to each shareholder, we will send just one report to that address. If your household is receiving separate mailings that you feel are unnecessary, or if you want us to send separate statements, notify our Shareholder Services department at 1-800-762-6814. CONFIRMATION STATEMENTS: Statements confirming the trade date and the amount of your transaction are sent each time you buy, sell, or exchange shares. Confirmation statements are not sent for reinvested distributions or for purchases made through automatic investment plans. Always verify your transactions by reviewing your confirmation statement carefully for accuracy. Please report any discrepancies to our Shareholder Services department at 1-800-762-6814 promptly. FUND FINANCIAL REPORTS: Each Fund's annual report is mailed in September, and each Fund's semi-annual report is mailed in March. These reports include information about a Fund's performance, as well as a complete listing of that Fund's holdings. You may also view the Funds' most recent reports online at www.domini.com. TAX STATEMENTS: Each year we will send you a statement reporting the previous year's dividend and capital gains distributions, proceeds from the sale of shares, and distributions from IRAs or other retirement accounts as required by the Internal Revenue Service. These are generally mailed in January. DIVIDENDS AND CAPITAL GAINS Each Fund pays to its shareholders substantially all of its net income in the form of dividends. Dividends from net income are typically paid by the DOMINI SOCIAL EQUITY FUND semi-annually (usually in June and December) and by the DOMINI SOCIAL BOND FUND monthly. Any capital gains are distributed annually in December. You may elect to receive dividends and capital gains either by check or in additional shares. Unless you choose to receive your dividends by check, all dividends will be reinvested in additional shares. In either case, these distributions are taxable to you. TAXES This discussion of taxes is for general information only. You should consult your own tax adviser about your particular situation and the status of your account under state and local laws. TAXABILITY OF DIVIDENDS: Each year the Funds will mail you a report of your dividends for the prior year and how they are treated for federal tax purposes. You will normally have to pay federal income taxes on the dividends you receive from the Funds, whether you take the dividends in cash or reinvest them in additional shares. Dividends designated by the Fund as capital gain dividends are taxable as long-term capital gains. Other dividends are generally taxable as ordinary income. Some dividends paid in January may be taxable to you as if they had been paid the previous December. BUYING A DIVIDEND: Dividends paid by a Fund will reduce that Fund's net asset value per share. As a result, if you buy shares just before a Fund pays a dividend, you may pay the full price for the shares and then effectively receive a portion of the purchase price back as a dividend on which you may need to pay tax. TAXABILITY OF TRANSACTIONS: Anytime you redeem, sell or exchange shares in a non-retirement account, it is considered a taxable event for you. Depending on the purchase price and the sale price of the shares you sell or exchange, you may have a gain or a loss on the transaction. You are responsible for any tax liabilities generated by your transactions. IMPORTANT: By law, you must certify that the Social Security or taxpayer identification number you provide the Fund is correct and that you are not otherwise subject to 31% backup withholding for failing to report income to the IRS. The Fund may be required to withhold (and pay over to the IRS for your credit) 31% of certain distributions and proceeds it pays you if you fail to provide this information or otherwise violate IRS regulations. RIGHTS RESERVEd BY THE FUNDS EachFund and its agents reserve the following rights: o To waive or lower investment minimums; o To accept initial purchases by telephone or mailgram; o To refuse any purchase or exchange order; o To cancel any purchase or exchange order (including, but not limited to, orders deemed to result in excessive trading, market timing, fraud, or 5% ownership) upon notice to the shareholder within five business days of the transaction or prior to the time the shareholder receives confirmation of the transaction, whichever is sooner; o To implement policies designed to prevent excessive trading; o To freeze any account and suspend account services when notice has been received of a dispute between the registered or beneficial account owners or there is reason to believe a fraudulent transaction may occur; o To otherwise modify the conditions of purchase and any services at any time; o To act on instructions believed to be genuine; and o To notify shareholders and redeem accounts (other than retirement and Automatic Investment Plan Accounts) with a value of less than $500. These actions will be taken when, in the sole discretion of management, they are deemed to be in the best interests of a Fund. FINANCIAL HIGHLIGHTS The financial highlights table is intended to help you understand the Domini Social Equity Fund's financial performance for the past 5 years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, whose report, along with the Social Equity Fund's financial statements, is included in the annual report, which is available upon request. The Domini Social Bond Fund is newly-created and has not yet issued financial statements.
Year Ended July 31, 1999 1998 1997 1996 1995 Net Asset Value, beginning of period ....................... $ 30.86 $ 25.43 $ 16.70 $ 14.85 $ 12.13 ------------------------------------------------- Income from investment operations: Net investment income......... 0.02 0.01 0.11 0.16 0.17 Net realized and unrealized gain on investments............... 6.81 5.48 8.85 1.93 2.83 --------------------------------------------- Total income from investment operations ....................... 6.83 5.49 8.96 2.09 3.00 --------------------------------------------- Less distributions and dividends: Dividends to shareholders from net investment income......... (0.03) (0.01) (0.11) (0.16) (0.20) Dividends to shareholders from net realized gain............. (0.45) (0.05) (0.12) (0.08) (0.08) ----------------------------------------------- Total distributions............... (0.48) (0.06) (0.23) (0.24) (0.28) ----------------------------------------------- Net asset value, end of period ....................... $ 37.21 $ 30.86 $ 25.43 $ 16.70 $ 14.85 ================================================= Ratios/supplemental data Total return .................... 22.26% 21.58% 54.01% 14.11% 25.10% Portfolio turnover*............... 8% 5% 1% 5% 6% Net assets, end of year (in 000's).................... $1,082,978 $501,894 $212,310 $80,915 $54,638 Ratio of expenses to average net assets............ 0.98%(1) 1.17%(2) 0.98%(3) 0.98%(3) 0.90%(4) Ratio of net investment income to average net assets ....................... 0.06%(1) 0.07%(2) 0.62%(3) 1.01%(3) 1.38%(4)
*The Portfolio turnover rates represent the rate of portfolio activity of the Domini Social Index Portfolio, the underlying portfolio through which the Domini Social Equity Fund invests. (1) Reflects a voluntary waiver of expenses by Domini Social Investments LLC, the Manager of the Domini Social Index Portfolio. Had the Manager not waived its fees, the ratios of expenses and net investment income to average net assets for the year ended July 31, 1999, would have been 0.99% and 0.05%, respectively. (2) Reflects a non-recurring payment to the Domini Social Equity Fund's former administrator by the Fund of $650,000 in connection with the termination of the expense payment arrangements with the Fund's former administrator and other such expenses incurred by the Fund in connection with the termination of such arrangements. Had such non-recurring expenses not been included, expenses and net investment income to average net assets would have been 0.98% and 0.27%, respectively. (3) Had the expense payment agreement not been in place the ratio of expenses to average net assets for the years ended July 31, 1997 and 1996 would have been [0.84% and 0.76%], respectively. Had the expense payment agreement not been in place the ratio of net investment income to average net assets for the years ended July 31, 997 and 1996 would have been [1.07% and 0.92%], respectively. (4) Reflects the voluntary waiver of fees by certain service providers for the Fund. Had these fees not been waived, the ratios of expenses and net investment income to average net assets for the year ended July 31, 1995 would have been 1.15% and 1.13%, respectively. FOR ADDITIONAL INFORMATION ANNUAL AND SEMI-ANNUAL REPORTS Additional information about the Domini Social Equity Fund's investments is available in that Fund's annual and semi-annual reports to shareholders. These reports include a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year, as well as a complete listing of the Fund's holdings. They are available by mail from Domini Social Investments, or on our website, www.domini.com. The Domini Social Bond Fund is newly-created and has not issued annual or semi-annual reports as of the date of this prospectus. STATEMENT OF ADDITIONAL INFORMATION The Funds' Statement of Additional Information contains more detailed information about each Fund and its management and operations. The Statement of Additional Information is incorporated by reference into this prospectus and is legally part of it. Available by mail from Domini Social Investments. PROXY VOTING GUIDELINES & SOCIAL SCREENING CRITERIA Published annually, describing how we will vote our proxies and containing information about the social screens used to maintain the Domini 400 Social Index. Also contains a description of our shareholder activism program. Available by mail from Domini Social Investments, or on our website, www.domini.com. CONTACT DOMINI To make inquiries about the Funds or obtain copies of any of the above, free of charge, call 1-800-762-6814. Domini Social Investments P.O. Box 60494 King of Prussia, PA 19406-0494 WEB SITE: To learn more about the Funds or about socially responsible investing, visit us online at www.domini.com. SECURITIES AND EXCHANGE COMMISSION Information about the Funds (including the Statement of Additional Information) is available at the Commission's website, www.sec.gov. Copies may be obtained upon payment of a duplicating fee by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the Commission, Washington, D.C. 20549-6009. You may also visit the Commission's Public Reference Room in Washington, D.C. For more information about the Public Reference Room you may call the Commission at 1-202-942-8090. File No. 811-5823 STATEMENT OF ADDITIONAL INFORMATION __________ __, 2000 DOMINI SOCIAL EQUITY FUND DOMINI SOCIAL BOND FUND TABLE OF CONTENTS PAGE 1. The Funds........................................................... __ 2. Investment Objectives; Information Concerning Investment Structure; Investment Policies and Restrictions..................... __ 3. Performance Information............................................. __ 4. Determination of Net Asset Value; Valuation of Portfolio Securities; Additional Purchase Information..................................... __ 5. Management of the Funds and the Portfolio........................... __ 6. Independent Auditors................................................ __ 7. Taxation............................................................ __ 8. Portfolio Transactions and Brokerage Commissions.................... __ 9. Description of Shares, Voting Rights and Liabilities................ __ 10. Financial Statements................................................ __ 11. Appendix - Rating Information....................................... A-1 This Statement of Additional Information sets forth information which may be of interest to investors but which is not necessarily included in the Funds' Prospectus dated ________ __, 2000, as amended from time to time. This Statement of Additional Information should be read in conjunction with the Prospectus. This Statement of Additional Information incorporates by reference the financial statements described on page __ hereof. These financial statements can be found in the Domini Social Equity Fund's Annual Report to Shareholders. An investor may obtain copies of the Funds' Prospectus and the Domini Social Equity Fund's Annual Report without charge by contacting DSIL Investment Services LLC, the Funds' distributor, at (800) 762-6814. This Statement of Additional Information is NOT a prospectus and is authorized for distribution to prospective investors only if preceded or accompanied by an effective prospectus and should be read only in conjunction with such prospectus. 1. THE FUNDS The Domini Social Equity Fund and the Domini Social Bond Fund (collectively with the Domini Social Equity Fund, the "Funds") are each no-load, diversified open-end management investment companies. Each Fund is a series of shares of beneficial interest of Domini Social Investment Trust (the "Trust"), which was organized as a business trust under the laws of the Commonwealth of Massachusetts on June 7, 1989 and commenced operations on June 3, 1991. Prior to __________ __, _____ the name of the Trust was "Domini Social Equity Fund." Each Fund offers to buy back (redeem) its shares from its shareholders at any time at net asset value. References in this Statement of Additional Information to the "Prospectus" are to the current Prospectus of the Funds, as amended or supplemented from time to time. Domini Social Investments LLC ("DSIL"), the Domini Social Bond Fund's investment manager (the "Bond Fund Manager") and the Domini Social Equity Fund's and Domini Social Bond Fund's sponsor (the "Sponsor"), supervises the overall administration of the Domini Social Equity Fund and provides investment advisory and administrative services to the Domini Social Bond Fund. South Shore Bank ("South Shore") is the Domini Social Bond Fund's investment submanager (the "Bond Fund Submanager"). South Shore manages the investments of the Domini Social Bond Fund from day to day in accordance with that Fund's investment objective and policies. The Board of Trustees provides broad supervision over the affairs of each Fund. Shares of each Fund are continuously sold by DSIL Investment Services LLC, the Funds' distributor (the "Distributor"). An investor should obtain from the Distributor, and should read in conjunction with the Prospectus, the materials describing the procedures under which Fund shares may be purchased and redeemed. The Domini Social Equity Fund seeks to achieve its investment objective by investing all its assets in the Domini Social Index Portfolio (the "Portfolio"), a diversified open-end management investment company having the same investment objective as the Domini Social Equity Fund. DSIL is the Portfolio's investment manager (the "Portfolio Manager"). Mellon Equity Associates, LLP ("Mellon Equity") is the Portfolio's investment submanager (the "Portfolio Submanager"). Mellon Equity manages the investments of the Portfolio from day to day in accordance with the Portfolio's investment objective and policies. Kinder, Lydenberg, Domini & Co., Inc. ("KLD") determines the composition of the Domini 400 Social Index SM (the "Domini Social Index"). "Domini 400," "Domini Social Index," "Domini 400 Social Index" and "investing for good" are service marks of KLD which are licensed to DSIL with the consent of Amy L. Domini (with regard to the word "Domini"). Pursuant to agreements among KLD, DSIL, Amy L. Domini, and each of the Domini Social Equity Fund and the Portfolio, the Domini Social Equity Fund and the Portfolio may be required to discontinue use of one or more of these service marks if (i) DSIL ceases to be the Portfolio Manager, (ii) Ms. Domini or DSIL withdraws her or its consent to the use of the word "Domini," or (iii) the license agreement between KLD and DSIL is terminated. 2. INVESTMENT OBJECTIVES; INFORMATION CONCERNING INVESTMENT STRUCTURE; INVESTMENT POLICIES AND RESTRICTIONS INVESTMENT OBJECTIVES The investment objective of the DOMINI SOCIAL EQUITY FUND is to provide its shareholders with long-term total return which matches the performance of the Domini Social Index. The investment objective of the DOMINI SOCIAL BOND FUND is to provide its shareholders with a high level of current income and total return by investing in bonds and other debt securities that meet the Fund's social and environmental criteria. The investment objective of either Fund may be changed without the approval of that Fund's shareholders, but not without written notice thereof to shareholders thirty days prior to implementing the change. If there is a change in a Fund's investment objective, shareholders of that Fund should consider whether the Fund remains an appropriate investment in light of their financial positions and needs. The investment objective of the Portfolio may also be changed without the approval of the investors in the Portfolio, but not without written notice thereof to the investors in the Portfolio (and notice by the Domini Social Equity Fund to its shareholders) 30 days prior to implementing the change. There can, of course, be no assurance that the investment objective of either the Funds or the Portfolio will be achieved. INFORMATION CONCERNING INVESTMENT STRUCTURE Unlike other mutual funds which directly acquire and manage their own portfolio securities, the DOMINI SOCIAL EQUITY FUND seeks to achieve its investment objective by investing all of its investable assets in the Portfolio, a separate registered investment company with the same investment objective as the Domini Social Equity Fund. In addition to selling a beneficial interest to the Domini Social Equity Fund, the Portfolio may sell beneficial interests to other mutual funds or institutional investors. Such investors will invest in the Portfolio on the same terms and conditions as the Domini Social Equity Fund and will pay a proportionate share of the Portfolio's expenses. However, the other investors investing in the Portfolio are not required to sell their shares at the same public offering price as the Domini Social Equity Fund due to variations in sales commissions and other operating expenses. Investors in the Domini Social Equity Fund should be aware that differences in sales commissions and operating expenses may result in differences in returns experienced by investors in the different funds that invest in the Portfolio. Such differences in returns are also present in other mutual fund structures. Information concerning other holders of interests in the Portfolio is available from the Portfolio Manager at 212-352-9200. Smaller funds investing in the Portfolio may be materially affected by the actions of larger funds investing in the Portfolio. For example, if a large fund withdraws from the Portfolio, the remaining funds may experience higher pro rata operating expenses, thereby producing lower returns. Additionally, the Portfolio may become less diverse, resulting in increased portfolio risk. This possibility also exists for traditionally structured funds which have large or institutional investors. Also, funds with a greater pro rata ownership in the Portfolio could have effective voting control of the operations of the Portfolio. Subject to exceptions that are not inconsistent with applicable rules or policies of the Securities and Exchange Commission (the "SEC"), whenever the Domini Social Equity Fund is requested to vote on matters pertaining to the Portfolio, the Domini Social Equity Fund will hold a meeting of shareholders of the Domini Social Equity Fund and will cast all of its votes in the same proportion as the votes of the Domini Social Equity Fund's shareholders. Fund shareholders who do not vote will not affect the Domini Social Equity Fund's votes at the Portfolio meeting. The percentage of the Domini Social Equity Fund's votes representing Fund shareholders not voting will be voted by the Trustees of the Domini Social Equity Fund in the same proportion as the Domini Social Equity Fund shareholders who do, in fact, vote. Certain changes in the Portfolio's investment objective, policies or restrictions may require the Domini Social Equity Fund to withdraw its interest in the Portfolio. Any such withdrawal could result in a distribution "in kind" of portfolio securities (as opposed to a cash distribution) from the Portfolio. If securities are distributed, the Domini Social Equity Fund could incur brokerage, tax or other charges in converting the securities to cash. In addition, the distribution in kind may result in a less diversified portfolio of investments or adversely affect the liquidity of the Domini Social Equity Fund. The Domini Social Equity Fund's Trustees believe that the aggregate per share expenses of the Domini Social Equity Fund and the Portfolio will be less than or approximately equal to the expenses which the Domini Social Equity Fund would incur if it retained the services of an investment manager and an investment submanager and invested directly in the types of securities being held by the Portfolio. The Domini Social Equity Fund may withdraw its investment from the Portfolio at any time if the Board of Trustees of the Domini Social Equity Fund determines that it is in the best interests of the Domini Social Equity Fund to do so. Upon any such withdrawal, the Board of Trustees of the Domini Social Equity Fund would consider what action might be taken, including the investment of all the assets of the Domini Social Equity Fund in another pooled investment entity having the same investment objective as the Domini Social Equity Fund or the retention of an investment adviser to manage the Domini Social Equity Fund's assets in accordance with the investment policies described above with respect to the Portfolio. In the event the Trustees of the Domini Social Equity Fund were unable to find a substitute investment company in which to invest the Domini Social Equity Fund's assets and were unable to secure directly the services of an investment manager and investment submanager, the Trustees would seek to determine the best course of action. The DOMINI SOCIAL BOND FUND invests directly in securities and does not invest through a Portfolio. INVESTMENT POLICIES The following supplements the information concerning the Funds' and the Portfolio's investment policies contained in the Prospectus and should only be read in conjunction therewith. References to the Domini Social Equity Fund include the Portfolio, unless the context otherwise requires. DOMINI SOCIAL EQUITY FUND INDEX INVESTING: The Domini Social Equity Fund 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 Domini Social Index does not imply an opinion by KLD, the Portfolio Manager or the Portfolio Submanager as to the merits of that specific stock as an investment. Because the Domini Social Equity Fund seeks to track, rather than exceed the performance of a particular index, investors should not expect to achieve the potentially greater results that could be obtained by a fund that aggressively seeks growth. However, KLD and the Portfolio Manager believe that enterprises which exhibit a social awareness, based on the criteria described in the Prospectus, 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. The Domini Social Equity Fund 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 Domini Social Equity Fund, and the extent of the correlation of the holdings of the Domini Social Equity Fund with the Domini Social Index, will reflect the Portfolio Submanager's judgment as to the appropriate balance between the goal of correlating the holdings of the Portfolio with the composition of the Domini Social Index, and the goals of minimizing transaction costs and keeping sufficient reserves available for anticipated redemptions of Domini Social Equity Fund shares. To the extent practicable, the Portfolio will seek a correlation between the weightings of securities held by the Portfolio and the weightings of the securities in the Domini Social Index of 0.95 or better. A figure of 1.0 would indicate a perfect correlation. To the extent practicable, the Domini Social Equity Fund will attempt to be fully invested. The ability of the Domini Social Equity Fund to duplicate the performance of the Domini Social Index by investing in the Portfolio will depend to some extent on the size and timing of cash flows into and out of the Domini Social Equity Fund and the Portfolio as well as the Domini Social Equity Fund's and the Portfolio's expenses. The Board of Trustees will receive and review, at least quarterly, a report prepared by the Portfolio Submanager comparing the performance of the Domini Social Equity Fund and the Portfolio with that of the Domini Social Index, and comparing the composition and weighting of the Portfolio's holdings with those of the Domini Social Index, and will consider what action, if any, should be taken in the event of a significant variation between the performance of the Domini Social Equity Fund or the Portfolio, as the case may be, and that of the Domini Social Index, or between the composition and weighting of the Portfolio's securities holdings with those of the stocks comprising the Domini Social Index. If the correlation between the weightings of securities held by the Portfolio and the weightings of the stocks in the Domini Social Index or the correlation between the performance of the Domini Social Equity Fund, before expenses, and the performance of the Domini Social Index falls below 0.95, the Board of Trustees will review with the Portfolio Submanager methods for increasing such correlation, such as through adjustments in securities holdings of the Portfolio. In selecting stocks for inclusion in the Domini Social Index, KLD evaluated, in accordance with the social criteria described in the Prospectus, each of the companies the stocks of which comprise the Standard and Poor's 500 Composite Stock Price Index (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, 1999, of the 500 companies whose stocks comprised the S&P 500, approximately 58% were included in the Domini Social Index. 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 in the Prospectus, as well as upon KLD's criteria for industry diversification, financial solvency, market capitalization, and minimal portfolio turnover. A company which is not included in the S&P 500 may be included in the Domini Social Index primarily in order to afford representation to an industry sector which would otherwise be under-represented in the Domini Social Index. Because of the social criteria applied in the selection of stocks comprising the Domini Social Index, industry sector weighting in the Domini Social 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. KLD may exclude from the Domini Social Index stocks issued by companies which are in bankruptcy or whose bankruptcy KLD believes may be imminent. KLD may also remove from the Domini Social Index stocks issued by companies which no longer meet its investment criteria. 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 August 31, 1999 approximately 34% and 51% of the Domini Social Index was comprised of the 10 largest and 20 largest companies, respectively, in the Domini Social Index. The component stocks of the S&P 500 are chosen by Standard & Poor's Ratings Group ("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 ("NYSE") 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 NYSE. Not all stocks included in the S&P 500 are listed on the NYSE. However, the total market value of the S&P 500 as of October 28, 1999 represented approximately 72.32% of the aggregate market value of common stocks traded on the NYSE. Inclusion of a stock in the S&P 500 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 Domini Social Equity Fund or the Portfolio. CONCENTRATION: It is a fundamental policy of the Portfolio and the Domini Social Equity Fund that neither the Portfolio nor the Domini Social Equity Fund may invest more than 25% of the total assets of the Portfolio or the Domini Social Equity Fund, respectively, in any one industry, although the Domini Social Equity Fund will invest all of its assets in the Portfolio, 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 Domini Social Index, this is considered highly unlikely. If the Portfolio were to concentrate its investments in a single industry, the Portfolio and the Domini Social Equity Fund would be more susceptible to any single economic, political or regulatory occurrence than would be another investment company which was not so concentrated. DOMINI SOCIAL BOND FUND REPURCHASE AGREEMENTS: The Domini Social Bond Fund may invest in repurchase agreements that are fully collateralized by securities in which the Domini Social Bond Fund may otherwise invest. A repurchase agreement involves the purchase of a security that must later be sold back to the seller (which is usually a member bank of the U.S. Federal Reserve System or a member firm of the New York Stock Exchange (or a subsidiary thereof)) at an agreed time (usually not more than seven days from the date of purchase) and price. The resale price reflects the purchase price plus an agreed-upon market rate of interest. Under the Investment Company Act of 1940, as amended (the "1940 Act"), repurchase agreements may be considered to be loans by the buyer. If the seller defaults, the underlying security constitutes collateral for the seller's obligation to pay although the Domini Social Bond Fund may incur certain costs in liquidating this collateral and in certain cases may not be permitted to liquidate this collateral. In the event of the bankruptcy of the other party to a repurchase agreement, the Domini Social Bond Fund could experience delays in recovering either the securities or cash. To the extent that, in the meantime, the value of the securities purchased has decreased, the Domini Social Bond Fund could experience a loss. REVERSE REPURCHASE AGREEMENTS: The Domini Social Bond Fund may enter into reverse repurchase agreements. In a reverse repurchase agreement, the Domini Social Bond Fund sells its securities to banks, brokers or dealers, who agree to sell the securities back to the Domini Social Bond Fund at an agreed time and price. The Domini Social Bond Fund will segregate securities of a dollar amount equal in value to the securities subject to the repurchase agreement. The Domini Social Bond Fund cannot use these segregated assets to meet its current obligations. Reverse repurchase agreements are considered to be a form of borrowing. In the event of the bankruptcy of the other party to a reverse repurchase agreement, the Domini Social Bond Fund could experience delays in recovering the securities sold. To the extent that, in the meantime, the value of the securities sold has changed, the Domini Social Bond Fund could experience a loss. FORWARD COMMITMENTS OR PURCHASES ON A WHEN-ISSUED BASIS: The Domini Social Bond Fund may invest its assets in forward commitments or commitments to purchase securities on a when-issued basis. Forward commitments or purchases of securities on a when-issued basis are transactions where the price of the securities is fixed at the time of the commitment and delivery and payment normally take place beyond conventional settlement time after the date of commitment to purchase. The Domini Social Bond Fund will make commitments to purchase obligations on a when-issued basis only with the intention of actually acquiring the securities, but may sell them before the settlement date. The when-issued securities are subject to market fluctuation, and no interest accrues on the security to the purchaser during this period. The payment obligation and the interest rate that will be received on the securities are each fixed at the time the purchaser enters into the commitment. Purchasing obligations on a when-issued basis is a form of leveraging and can involve a risk that the yields available in the market when the delivery takes place may actually be higher than those obtained in the transaction itself. In that case, there could be an unrealized loss at the time of delivery. While awaiting delivery of securities purchased on a when-issued basis, the Domini Social Bond Fund will establish a segregated account consisting of cash and liquid securities equal to the amount of the commitments to purchase securities on such basis. If the value of these assets declines, the Domini Social Bond Fund will place additional assets of the type described in the preceding sentence in the account on a daily basis so that the value of the assets in the account is equal to the amount of such commitments. PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS: The Domini Social Bond Fund may invest up to 15% of its net assets in illiquid securities, or securities for which there is no readily available market, including privately placed restricted securities. The absence of a trading market can make it difficult to establish a market value for illiquid investments. It may be difficult or impossible for the Domini Social Bond Fund to sell illiquid securities at the desired time and at an acceptable price. BANK OBLIGATIONS: The Domini Social Bond Fund may invest in bank obligations, including: o certificates of deposit, which are negotiable interest-bearing instruments with a specific maturity; certificates of deposit are issued by banks and savings and loan institutions in exchange for the deposit of funds and normally can be traded in the secondary market prior to maturity; o time deposits (including Eurodollar time deposits), which are non-negotiable receipts issued by a bank in exchange for the deposit of funds; time deposits earn a specified rate of interest over a definite period of time, but cannot be traded in the secondary market; time deposits with a withdrawal penalty are considered to be illiquid securities; o bankers' acceptances, which are bills of exchange or time drafts drawn on and accepted by a commercial bank; they are used by corporations to finance the shipment and storage of goods and to furnish dollar exchange; maturities are generally six months or less; and o other short-term debt obligations. The Domini Social Bond Fund's investments in bank obligations are particularly susceptible to adverse events in the banking industry. Banks are highly regulated. Decisions by regulators may limit the loans banks make and interest rates and fees they charge, and may reduce bank profitability. Banks also depend on being able to obtain funds at reasonable costs to finance their lending operations. This makes them sensitive to changes in money market and general economic conditions. When a bank's borrowers get in financial trouble, their failure to repay the bank will also negatively affect the bank's financial situation. Bank obligations may be issued by domestic banks, foreign subsidiaries or foreign branches of domestic banks, domestic and foreign branches of foreign banks, domestic savings and loan associations and other banking institutions. COMMERCIAL PAPER: The Domini Social Bond Fund may invest in commercial paper, which is unsecured debt of corporations usually maturing in 270 days or less from its date of issuance. VARIABLE RATE OBLIGATIONS: Unlike most bonds, which pay a fixed rate of interest, variable rate debt obligations pay interest at rates that change based on market interest rates. Interest rates on variable rate obligations may move in the same or in the opposite direction as market interest rates and may increase or decrease based on a multiple of the change in a market interest rate. These obligations tend to be highly sensitive to interest rate movements. MORTGAGE-BACKED SECURITIES: The Domini Social Bond Fund may invest in mortgage-backed securities, which are securities representing interests in pools of mortgage loans. Interests in pools of mortgage-related securities differ from other forms of debt securities which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates. Instead, these securities provide a monthly payment which consists of both interest and principal payments. In effect, these payments are a "pass-through" of the monthly payments made by the individual borrowers on their mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by prepayments of principal resulting from the sale, refinancing or foreclosure of the underlying property, net of fees or costs which may be incurred. The market value and interest yield of these instruments can vary due to market interest rate fluctuations and early prepayments of underlying mortgages. The principal governmental issuers or guarantors of mortgage-backed securities are the Government National Mortgage Association ("GNMA"), Federal National Mortgage Association ("FNMA"), and Federal Home Loan Mortgage Corporation ("FHLMC"). Obligations of GNMA are backed by the full faith and credit of the U.S. government while obligations of FNMA and FHLMC are supported by the respective agency only. A portion of the Domini Social Bond Fund's assets may be invested in collateralized mortgage obligations ("CMOs"), which are debt obligations collateralized by mortgage loans or mortgage pass-through securities. Typically, CMOs are collateralized by certificates issued by the GNMA, the FNMA or the FHLMC but also may be collateralized by whole loans or private mortgage pass-through securities (such collateral collectively hereinafter referred to as "Mortgage Assets"). The Domini Social Bond Fund may also invest a portion of its assets in multi-class pass-through securities which are interests in a trust composed of Mortgage Assets. CMOs (which include multi-class pass-through securities) may be issued by agencies, authorities or instrumentalities of the U.S. government or by private originators of or investors in mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks and special purpose subsidiaries of the foregoing. Payments of principal of and interest on the Mortgage Assets, and any reinvestment income thereon, provide the funds to pay debt service on the CMOs or make scheduled distributions on the multi-class pass-through securities. In a CMO, a series of bonds or certificates is usually issued in multiple classes with different maturities. The class of CMO, often referred to as a "tranche," is issued at a specific fixed or floating coupon rate and has a stated maturity or final distribution date. Principal prepayments on the Mortgage Assets may cause the CMOs to be retired substantially earlier than their stated maturities or final distribution dates, resulting in a loss of all or part of the premium if any has been paid. Interest is paid or accrues on all classes of the CMOs on a monthly, quarterly or semiannual basis. The principal of and interest on the Mortgage Assets may be allocated among the several classes of a series of a CMO in various ways. In a common structure, payments of principal, including any principal prepayments, on the Mortgage Assets are applied to the classes of the series of a CMO in the order of their respective stated maturities or final distribution dates, so that no payment of principal will be made on any class of CMOs until all other classes having an earlier stated maturity or final distribution date have been paid in full. The Domini Social Bond Fund also may invest in real estate mortgage investment conduits ("REMICs"). REMICs, which were authorized under the Tax Reform Act of 1986, are private entities formed for the purpose of holding a fixed pool of mortgages secured by an interest in real property. REMICs are similar to CMOs in that they issue multiple classes of securities. Even if the U.S. government or one of its agencies guarantees principal and interest payments of a mortgage-backed security, the market price of a mortgage-backed security is not insured and may be subject to market volatility. When interest rates decline, mortgage-backed securities experience higher rates of prepayment because the underlying mortgages are refinanced to take advantage of the lower rates. The prices of mortgage-backed securities may not increase as much as prices of other debt obligations when interest rates decline, and mortgage-backed securities may not be an effective means of locking in a particular interest rate. In addition, any premium paid for a mortgage-backed security may be lost when it is prepaid. When interest rates go up, mortgage-backed securities experience lower rates of prepayment. This has the effect of lengthening the expected maturity of a mortgage-backed security. This particular risk, referred to as "maturity extension risk," may effectively convert a security that was considered short or intermediate-term at the time of purchase into a long-term security. Long-term securities generally fluctuate more widely in response to changes in interest rates than short or intermediate-term securities. Thus, rising interest rates would not only likely decrease the value of the Domini Social Bond Fund's fixed income securities, but would also increase the inherent volatility of the Fund by effectively converting short-term debt instruments into long-term debt instruments. As a result, prices of mortgage-backed securities may decrease more than prices of other debt obligations when interest rates go up. CORPORATE ASSET-BACKED SECURITIES: The Domini Social Bond Fund may invest in corporate asset-backed securities. These securities, issued by trusts and special purpose corporations, are backed by a pool of assets, such as credit card and automobile loan receivables, representing the obligations of a number of different parties. Corporate asset-backed securities present certain risks. For instance, in the case of credit card receivables, these securities may not have the benefit of any security interest in the related collateral. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. Most issuers of automobile receivables permit the servicers to retain possession of the underlying obligations. If the servicer were to sell these obligations to another party, there is a risk that the purchaser would acquire an interest superior to that of the holders of the related automobile receivables. In addition, because of the large number of vehicles involved in a typical issuance and technical requirements under state laws, the trustee for the holders of the automobile receivables may not have a proper security interest in all of the obligations backing such receivables. Therefore, there is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. The underlying assets (e.g., loans) are also subject to prepayments which shorten the securities' weighted average life and may lower their return. Corporate asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses resulting from ultimate default ensures payment through insurance policies or letters of credit obtained by the issuer or sponsor from third parties. The degree of credit support provided for each issue is generally based on historical information regarding the level of credit risk associated with the underlying assets. Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an investment in such a security. MORTGAGE "DOLLAR ROLLS": The Domini Social Bond Fund may enter into mortgage dollar roll transactions. In these transactions, the Domini Social Bond Fund sells mortgage-backed securities for delivery in the future and at the same time contracts to repurchase substantially similar securities on a specified future date. During the roll period, the Domini Social Bond Fund does not receive principal and interest paid on the mortgage-backed securities. The Domini Social Bond Fund is compensated for the lost principal and interest by the difference between the current sales price and the lower price for the future purchase (often referred to as the "drop") as well as by the interest earned on the cash proceeds of the initial sale. The Domini Social Bond Fund may also be compensated by receipt of a commitment fee. However, the Domini Social Bond Fund takes the risk that the market price of the mortgage-backed security may drop below the future purchase price. When the Domini Social Bond Fund uses a mortgage dollar roll, it is also subject to the risk that the other party to the agreement will not be able to perform. The Domini Social Bond Fund will invest only in covered rolls, which are specific types of dollar rolls for which the Domini Social Bond Fund establishes a segregated account with liquid high grade debt securities equal in value to the securities subject to repurchase by the Fund. SECURITIES RATED Baa or BBB: The Domini Social Bond Fund may purchase securities rated Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Rating Service ("S&P") and securities of comparable quality, which may have poor protection of payment of principal and interest. These securities are often considered to be speculative and involve greater risk of default or price changes due to changes in the issuer's creditworthiness than securities assigned a higher quality rating. The market prices of these securities may go up and down more than higher-rated securities and may go down significantly in periods of general economic difficulty which may follow periods of rising interest rates. CALL FEATURES: Certain securities held by the Domini Social Bond Fund may permit the issuer at its option to "call," or redeem, its securities. If an issuer were to redeem securities held by the Domini Social Bond Fund during a time of declining interest rates, the Domini Social Bond Fund may have to reinvest that money at the lower prevailing interest rates. ZERO-COUPON BONDS, DEFERRED INTEREST BONDS AND PIK BONDS: The Domini Social Bond Fund may invest in debt obligations called zero coupon bonds, deferred interest bonds and payment-in-kind (PIK) bonds. Zero coupon bonds do not pay any interest. Instead, zero coupon bonds are issued at a significant discount from the value the Domini Social Bond Fund expects to receive upon maturity. Deferred interest bonds are similar to zero coupon bonds except that they begin to pay interest after some delay. Although PIK bonds may pay interest in cash, they also are similar to zero coupon bonds or deferred interest bonds because the issuer has the option to make interest payments in additional debt obligations rather than cash. Because these bonds may not pay interest at regular intervals, changes in interest rates affect the value of zero coupon, deferred interest and PIK bonds more than debt obligations that pay regular interest, and the credit risk of these bonds tends to be greater than the credit risk of debt obligations which pay regular interest. Even though zero coupon, deferred interest and PIK bonds may not make payments of interest until maturity or until after a delay, the Domini Social Bond Fund is required to accrue interest income on such investments and to distribute such amounts at least annually to shareholders. Thus, it may be necessary at times for the Domini Social Bond Fund to sell investments in order to make these distribution payments. STRIPPED SECURITIES: The Domini Social Bond Fund may invest in stripped securities, such as interest-only strips (called IOs), which may receive only interest payments and other types of stripped securities, such as principal-only strips (called POs), that may receive only principal payments. Stripped securities are more sensitive to changes in interest rates than are certain other debt securities. The value of IOs generally will decrease as interest rates increase. As interest rates decrease, the Domini Social Bond Fund's investments in IOs may be adversely affected by a rapid rate of principal payments (including prepayments) on the underlying securities. A rapid rate of principal payments (including prepayments) may cause an IO to mature before the Domini Social Bond Fund recovers its initial investment in the security. Conversely, if interest rates increase, the Domini Social Bond Fund's investments in POs may be adversely affected by a lower than expected rate of principal payments (including prepayments) on the underlying securities. A lower rate of principal payments (including prepayments) effectively extends the maturity of a PO. FUTURES CONTRACTS: Subject to applicable laws, the Domini Social Bond Fund may enter into bond and interest rate futures contracts. The Domini Social Bond Fund intends to use futures contracts only for bona fide hedging purposes. Futures contracts provide for the future sale by one party and purchase by another party of a specified amount of a specified security at a specified future time and at a specified price. A "sale" of a futures contract entails a contractual obligation to deliver the underlying securities called for by the contract, and a "purchase" of a futures contract entails a contractual obligation to acquire such securities, in each case in accordance with the terms of the contract. Futures contracts must be executed through a futures commission merchant, or brokerage firm, which is a member of an appropriate exchange designated as a "contract market" by the Commodity Futures Trading Commission ("CFTC"). When the Domini Social Bond Fund purchases or sells a futures contract, the Fund must allocate certain of its assets as an initial deposit on the contract. The initial deposit may be as low as approximately five percent or less of the value of the contract. The futures contract is marked to market daily thereafter and the Domini Social Bond Fund may be required to pay or entitled to receive additional "variation margin", based on decrease or increase in the value of the futures contract. Futures contracts call for the actual delivery or acquisition of securities, or in the case of futures contracts based on indices, the making or acceptance of a cash settlement at a specified future time; however, the contractual obligation is usually fulfilled before the date specified in the contract by closing out the futures contract position through the purchase or sale, on a commodities exchange, of an identical futures contract. Positions in futures contracts may be closed out only if a liquid secondary market for such contract is available, and there can be no assurance that such a liquid secondary market will exist for any particular futures contract. The Domini Social Bond Fund's ability to hedge effectively through transactions in futures contracts depends on, among other factors, the Bond Fund Manager's or Submanager's judgment as to the expected price movements in the securities underlying the futures contracts. In addition, it is possible in some circumstances that the Domini Social Bond Fund would have to sell securities from its portfolio to meet "variation margin" requirements at a time when it may be disadvantageous to do so. OPTIONS ON FUTURES CONTRACTS: The Domini Social Bond Fund may purchase and write options to buy or sell futures contracts in which the Fund may invest. These investment strategies may be used for hedging purposes. An option on a futures contract provides the holder with the right to enter into a "long" position in the underlying futures contract, in the case of a call option, or a "short" position in the underlying futures contract, in the case of a put option, at a fixed exercise price up to a stated expiration date or, in the case of certain options, on such date. Upon exercise of the option by the holder, the contract market clearinghouse establishes a corresponding short position for the writer of the option, in the case of a call option, or a corresponding long position in the case of a put option. In the event that an option is exercised, the parties will be subject to all the risks associated with the trading of futures contracts, such as payment of initial and variation margin deposits. In addition, the writer of an option on a futures contract, unlike the holder, is subject to initial and variation margin requirements on the option position. A position in an option on a futures contract may be terminated by the purchaser or seller prior to expiration by effecting a closing purchase or sale transaction, subject to the availability of a liquid secondary market, which is the purchase or sale of an option of the same series (i.e., the same exercise price and expiration date) as the option previously purchased or sold. The difference between the premiums paid and received represents the trader's profits or loss on the transaction. Options on futures contracts that are written or purchased by the Domini Social Bond Fund on U.S. exchanges are traded on the same contract market as the underlying futures contract, and, like futures contracts, are subject to regulation by the CFTC and the performance guarantee of the exchange clearinghouse. In addition, options on futures contracts may be traded on foreign exchanges. The Domini Social Bond Fund may cover the writing of call options on futures contracts (a) through purchases of the underlying futures contract, or (b) through the holding of a call on the same futures contract and in the same principal amount as the call written where the exercise price of the call held (i) is equal to or less than the exercise price of the call written or (ii) is greater than the exercise price of the call written if the difference is maintained by the Domini Social Bond Fund in cash or liquid securities in a segregated account. The Domini Social Bond Fund may cover the writing of put options on futures contracts (a) through sales of the underlying futures contract, (b) through segregation of cash or liquid securities in an amount equal to the value of the security underlying the futures contract, (c) through the holding of a put on the same futures contract and in the same principal amount as the put written where the exercise price of the put held is equal to or greater than the exercise price of the put written or where the exercise price of the put held is less than the exercise price of the put written if the difference is maintained by the Domini Social Bond Fund in cash or liquid securities in a segregated account. Put and call options on futures contracts may also be covered in such other manner as may be in accordance with the rules of the exchange on which the option is traded and applicable laws and regulations. Upon the exercise of a call option on a futures contract written by the Domini Social Bond Fund, the Fund will be required to sell the underlying futures contract which, if the Domini Social Bond Fund has covered its obligation through the purchase of such contract, will serve to liquidate its futures position. Similarly, where a put option on a futures contract written by the Domini Social Bond Fund is exercised, the Fund will be required to purchase the underlying futures contract which, if the Fund has covered its obligation through the sale of such contract, will close out its futures position. The writing of a call option on a futures contract constitutes a partial hedge against declining prices of the securities deliverable on exercise of the futures contract. The Domini Social Bond Fund will receive an option premium when it writes the call, and, if the price of the futures contract at expiration of the option is below the option exercise price, the Domini Social Bond Fund will retain the full amount of this option premium, which provides a partial hedge against any decline that may have occurred in the Domini Social Bond Fund's security holdings. Similarly, the writing of a put option on a futures contract constitutes a partial hedge against increasing prices of the securities deliverable upon exercise of the futures contract. If the Domini Social Bond Fund writes an option on a futures contract and that option is exercised, the Domini Social Bond Fund may incur a loss, which loss will be reduced by the amount of the option premium received, less related transaction costs. The Domini Social Bond Fund's ability to hedge effectively through transactions in options on futures contracts depends on, among other factors, the degree of correlation between changes in the value of securities held by the Domini Social Bond Fund and changes in the value of its futures positions. This correlation cannot be expected to be exact, and the Domini Social Bond Fund bears a risk that the value of the futures contract being hedged will not move in the same amount, or even in the same direction, as the hedging instrument. Thus it may be possible for the Domini Social Bond Fund to incur a loss on both the hedging instrument and the futures contract being hedged. The Domini Social Bond Fund may purchase options on futures contracts for hedging purposes instead of purchasing or selling the underlying futures contracts. For example, where a decrease in the value of portfolio securities is anticipated as a result of a projected market-wide decline or changes in interest or exchange rates, the Domini Social Bond Fund could, in lieu of selling futures contracts, purchase put options thereon. In the event that such decrease occurs, it may be offset, in whole or part, by a profit on the option. Conversely, where it is projected that the value of securities to be acquired by the Domini Social Bond Fund will increase prior to acquisition, due to a market advance or changes in interest or exchange rates, the Domini Social Bond Fund could purchase call options on futures contracts, rather than purchasing the underlying futures contracts. Futures contracts and options on futures contracts may be entered into on U.S. exchanges regulated by the CFTC and on foreign exchanges. The securities underlying options and futures contracts traded by the Domini Social Bond Fund may include domestic as well as foreign securities. Investors should recognize that transactions involving foreign securities or foreign currencies, and transactions entered into in foreign countries, may involve considerations and risks not typically associated with investing in U.S. markets. SWAPS AND RELATED INVESTMENTS: The Domini Social Bond Fund may use swaps, caps, collars and floors to hedge against a change in interest rates or other rates which could affect the value of securities in its portfolio. Interest rate swaps involve the exchange by the Domini Social Bond Fund with another party of their respective commitments to pay or receive interest. An equity swap is an agreement to exchange cash flows on a principal amount based on changes in the values of the reference index. In a typical cap or floor agreement, one party agrees to make payments only under specified circumstances, usually in return for payment of a fee by the counterparty. For example, the purchase of an interest rate cap entitles the buyer, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a contractually-based principal amount from the counterparty selling such interest rate cap. The sale of an interest rate floor obligates the seller to make payments to the extent that a specified interest rate falls below an agreed-upon level. A collar arrangement combines elements of buying a cap and selling a floor. The Domini Social Bond Fund will maintain liquid assets with its custodian or otherwise cover its current obligations under swap transactions in accordance with current regulations and policies applicable to the Fund. The most significant factor in the performance of swaps, caps, floors and collars is the change in the specific interest rate, equity or other factor that determines the amount of payments to be made under the arrangement. If the Bond Fund Manager or Submanager is incorrect in its forecasts of such factors, the investment performance of the Fund would be less than what it would have been if these investment techniques had not been used. If a swap agreement calls for payments by the Domini Social Bond Fund, the Fund must be prepared to make such payments when due. The Domini Social Bond Fund will not enter into any swap unless the Bond Fund Manager or Submanager deems the counterparty to be creditworthy. If the counterparty's creditworthiness declined, the value of the swap agreement would be likely to decline, potentially resulting in losses. If the counterparty defaults, the Domini Social Bond Fund's risk of loss consists of the net amount of payments that the Fund is contractually entitled to receive. The Domini Social Bond Fund anticipates that it will be able to eliminate or reduce its exposure under these arrangements by assignment or other disposition or by entering into an offsetting agreement with the same or another counterparty. Swap agreements are subject to the Domini Social Bond Fund's overall limit that not more than 15% of its net assets may be invested in illiquid securities. STRUCTURED NOTES AND INDEXED SECURITIES: The Domini Social Bond Fund may invest in structured notes and indexed securities. A structured note is a debt security with its interest rate or principal determined by reference to changes in the value of specific currencies, interest rates, commodities, indices or other financial indicators or the relative change in two or more financial indicators. Indexed securities include structured notes as well as securities other than debt securities, with their interest rates or principal determined by one or more financial indicators. Structured notes and indexed securities may be more volatile, less liquid and more difficult to accurately price than less complex fixed income investments. These securities generally expose the Domini Social Bond Fund to credit risks equal to that of the underlying financial indicators. The interest rate or the principal amount payable upon maturity of a structured note or indexed security may go up or down depending on changes in the underlying indicators. Structured notes and indexed securities often are less liquid than other debt securities because they are typically sold in private placement transactions with no active trading market. DOMINI SOCIAL EQUITY FUND AND DOMINI SOCIAL BOND FUND FOREIGN ISSUERS: 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). The Domini Social Bond Fund also may invest in obligations of foreign issuers. Investments in foreign securities involve risks relating to political, social and economic developments abroad, as well as risks resulting from the differences between the regulations to which U.S. and foreign issuers and markets are subject. With respect to securities and obligations of foreign issuers, the Domini Social Equity Fund and the Domini Social Bond Fund do not purchase securities which the Domini Social Equity Fund or the Domini Social Bond Fund, as the case may be, 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 Domini Social Equity Fund's or the Domini Social Bond Fund's investments. In the event unforeseen exchange controls or foreign withholding taxes are imposed with respect to any of the Domini Social Equity Fund's or the Domini Social Bond Fund's investments, the effect may be to reduce the income received by the Domini Social Equity Fund or the Domini Social Bond Fund on such investments. RULE 144A SECURITIES: The Domini Social Equity Fund and the Domini Social Bond Fund each may invest in securities which may be resold pursuant to Rule 144A under the Securities Act of 1933, as amended (the "1933 Act"). The Domini Social Equity Fund has no current intention to invest in these securities. LOANS OF SECURITIES: Consistent with applicable regulatory policies, including those of the Board of Governors of the Federal Reserve System and the SEC, the Domini Social Equity Fund and the Domini Social Bond Fund each may make loans of its securities to member banks of the Federal Reserve System and to broker-dealers. The Domini Social Equity Fund and the Domini Social Bond Fund may lend their respective securities to the broker-dealers and financial institutions, provided that (1) the loan is secured continuously by collateral, consisting of securities, cash or cash equivalents, which is marked to the market daily to ensure that each loan is fully collateralized at all times; (2) the Domini Social Equity Fund or the Domini Social Bond Fund, as the case may be, may at any time call the loan and obtain the return of the securities loaned within three business days; (3) the Domini Social Equity Fund or the Domini Social Bond Fund, as the case may be, 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 Domini Social Equity Fund or the Domini Social Bond Fund, as applicable. The Domini Social Equity Fund and the Domini Social Bond Fund each 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 Domini Social Equity Fund and the Domini Social Bond Fund may pay reasonable finders, administrative and custodial fees. No such fees will be paid to any person if it or any of its affiliates is affiliated with the Domini Social Equity Fund, the Domini Social Bond Fund, the Portfolio or Bond Fund Manager or the Portfolio or Bond Fund Submanager. OPTION CONTRACTS: Although it has no current intention to do so, the Domini Social Equity Fund may in the future enter into certain transactions in stock options. The Domini Social Bond Fund may enter into certain transactions in options involving securities in which that Fund may otherwise invest. Each Fund may enter into such options transactions for the purpose of hedging against possible increases in the value of securities which are expected to be purchased by the respective Fund or possible declines in the value of securities which are expected to be sold by that Fund. Generally, the Domini Social Equity Fund 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 a 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 non-refundable 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 a Fund 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 a Fund, and that Fund 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 a Fund'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 Portfolio Manager and the Bond Fund Manager do not believe that these trading and position limits would have an adverse impact on the possible use of hedging strategies by the Domini Social Equity Fund or the Domini Social Bond Fund, as applicable. SHORT SALES: Although they have no current intention to do so, the Domini Social Equity Fund and the Domini Social Bond Fund may make short sales of securities or maintain a short position, if at all times when a short position is open the Domini Social Equity Fund or the Domini Social Bond Fund, as applicable, owns an equal amount of such securities, or securities convertible into such securities. CASH RESERVES: The Domini Social Equity Fund and the Domini Social Bond Fund each 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, certificates of deposit, bank deposits or repurchase agreements, provided that the issuer satisfies certain social criteria. The Domini Social Equity Fund and the Domini Social Bond Fund do not currently intend to invest in direct obligations of the United States Government. Short-term debt securities purchased by the Domini Social Equity Fund and the Domini Social Bond Fund will be rated at least Prime-1 by Moody's or A-1+ or A-1 by S&P or, if not rated, determined to be of comparable quality by the Portfolio's or Domini Social Bond Fund's, as applicable, Board of Trustees. The Domini Social Equity Fund's policy is to hold its assets in such securities pending readjustment of its portfolio holdings of stocks comprising the Domini Social Index and in order to meet anticipated redemption requests. Such investments are not intended to be used for defensive purposes in periods of anticipated market decline. ------------------------- The approval of the Domini Social Equity Fund and of the other investors in the Portfolio and the approval of shareholders of the Domini Social Bond Fund are not required to change the investment objective or any of the investment policies discussed above (other than the policy regarding concentration by the Domini Social Equity Fund and the Portfolio), including those concerning security transactions. INVESTMENT RESTRICTIONS FUNDAMENTAL RESTRICTIONS: Each of the Funds and the Portfolio have adopted the following policies which may not be changed without approval by holders of a "majority of the outstanding voting securities" of the applicable Fund or the Portfolio, respectively, which as used in this Statement of Additional Information means the vote of the lesser of (i) 67% or more of the outstanding "voting securities" of a Fund or the Portfolio, respectively, present at a meeting, if the holders of more than 50% of the outstanding "voting securities" of that Fund or the Portfolio, respectively, are present or represented by proxy, or (ii) more than 50% of the outstanding "voting securities" of a Fund or the Portfolio, respectively. The term "voting securities" as used in this paragraph has the same meaning as in the 1940 Act. Except as described below, whenever the Domini Social Equity Fund is requested to vote on a change in the investment restrictions of the Portfolio, the Domini Social Equity Fund will hold a meeting of its shareholders and will cast its vote proportionately as instructed by its shareholders. However, subject to applicable statutory and regulatory requirements, the Domini Social Equity Fund would not request a vote of its shareholders with respect to (a) any proposal relating to the Portfolio, which proposal, if made with respect to the Domini Social Equity Fund, would not require the vote of the shareholders of the Domini Social Equity Fund, or (b) any proposal with respect to the Portfolio that is identical in all material respects to a proposal that has previously been approved by shareholders of the Domini Social Equity Fund. Any proposal submitted to holders in the Portfolio, and that is not required to be voted on by shareholders of the Domini Social Equity Fund, would nevertheless be voted on by the Trustees of the Domini Social Equity Fund. Neither the DOMINI SOCIAL EQUITY FUND nor the PORTFOLIO may: (1) borrow money, except that as a temporary measure for extraordinary or emergency purposes either the Domini Social Equity Fund or the Portfolio may borrow an amount not to exceed 1/3 of the current value of the net assets of the Domini Social Equity Fund or the Portfolio, respectively, including the amount borrowed (moreover, neither the Domini Social Equity Fund nor the Portfolio may purchase any securities at any time at which borrowings exceed 5% of the total assets of the Domini Social Equity Fund or the Portfolio, respectively, taken in each case 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 either the Domini Social Equity Fund or the Portfolio may obtain such short-term credit as may be necessary for the clearance of purchases and sales of securities and except that either the Domini Social Equity Fund or 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 that the Domini Social Equity Fund may invest all or any portion of its assets in the Portfolio and except insofar as either the Domini Social Equity Fund or 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 securities held by either the Domini Social Equity Fund or the Portfolio and provided that any such loans not exceed 30% of its total assets (taken in each case 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 its net 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), except that the Domini Social Equity Fund may invest all or any portion of its assets in the Portfolio; (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 Domini Social Equity Fund and Portfolio reserve the freedom of action to hold and to sell real estate acquired as a result of the ownership of securities by the Domini Social Equity Fund or the Portfolio); (8) make short sales of securities or maintain a short position, unless at all times when a short position is open the Domini Social Equity Fund or the Portfolio, as applicable, 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 Domini Social Equity Fund's or the Portfolio's, as applicable, net assets (taken in each case at market value) is held as collateral for such sales at any one time; (9) issue any senior security (as that term is defined in 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 or the Domini Social Equity Fund's, as applicable, 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 and except that the Domini Social Equity Fund may invest all or any portion of its assets in the Portfolio; 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 or the Domini Social Equity Fund, as applicable, will invest more than 25% of its assets in that industry, and except that the Domini Social Equity Fund may invest all of its assets in the Portfolio. In addition, as a matter of fundamental policy, the Domini Social Equity Fund will invest all of its investable assets (either directly or through the Portfolio) 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 outstanding voting securities of the Domini Social Equity Fund. The DOMINI SOCIAL BOND FUND may not: (1) borrow money if such borrowing is specifically prohibited by the 1940 Act or the rules and regulations promulgated thereunder; (2) make loans to other persons if such loans are specifically prohibited by the 1940 Act or the rules and regulations promulgated thereunder; (3) purchase securities of any issuer if such purchase at the time thereof would cause with respect to 75% of the total assets of the Domini Social Bond Fund more than 10% of the voting securities of such issuer to be held by the Domini Social Bond Fund; provided that, for purposes of this restriction, the issuer of an option or futures contract shall not be deemed to be the issuer of the security or securities underlying such contract; and provided further that the Domini Social Bond Fund may invest all or any portion of its assets in one or more investment companies, to the extent not prohibited by the 1940 Act, the rules and regulations thereunder, and exemptive orders granted under such Act; (4) purchase securities of any issuer if such purchase at the time thereof would cause as to 75% of the Domini Social Bond Fund's total assets more than 5% of the Domini Social Bond Fund'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, any state or political subdivision thereof, or any political subdivision of any such state, or any agency or instrumentality of the United States or of any state or of any political subdivision of any state); provided that, for purposes of this restriction, the issuer of an option or futures contract shall not be deemed to be the issuer of the security or securities underlying such contract; and provided further that the Domini Social Bond Fund may invest all or any portion of its assets in one or more investment companies, to the extent not prohibited by the 1940 Act, the rules and regulations thereunder, and exemptive orders granted under such Act; (5) concentrate its investments in any particular industry, but if it is deemed appropriate for the achievement of the Domini Social Bond Fund's investment objective, up to 25% of its assets, at market value at the time of each investment, may be invested in any one industry, except that positions in futures contracts shall not be subject to this restriction; (6) underwrite securities issued by other persons, except that all or any portion of the assets of the Domini Social Bond Fund may be invested in one or more investment companies, to the extent not prohibited by the 1940 Act, the rules and regulations thereunder, and exemptive orders granted under such Act, and except in so far as the Domini Social Bond Fund may technically be deemed an underwriter under the 1933 Act in selling a security; (7) purchase or sell real estate (including limited partnership interests but excluding securities secured by real estate or interests therein) or interests in oil, gas or mineral leases in the ordinary course of business (the foregoing shall not be deemed to preclude the Domini Social Bond Fund from purchasing or selling futures contracts or options thereon, and the Domini Social Bond Fund reserves the freedom of action to hold and to sell real estate acquired as a result of the ownership of securities by that Fund); (8) purchase or sell commodities or commodity contracts in the ordinary course of business (the foregoing shall not be deemed to preclude the Domini Social Bond Fund from purchasing or selling futures contracts or options thereon); and (9) issue any senior security (as that term is defined in the 1940 Act) if such issuance is specifically prohibited by the 1940 Act or the rules and regulations promulgated thereunder. For purposes of restriction (1) above, covered mortgage dollar rolls and arrangements with respect to securities lending are not treated as borrowing. NON-FUNDAMENTAL RESTRICTION: Neither the DOMINI SOCIAL EQUITY FUND nor the PORTFOLIO will 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 Domini Social Equity Fund's or Portfolio's, as applicable, total assets at the time of such purchase. This restriction is not fundamental and may be changed with respect to the Domini Social Equity Fund by that Fund without approval by the Fund's shareholders or with respect to the Portfolio by the Portfolio without the approval of the Domini Social Equity Fund or its other investors. Each Fund will comply with the state securities laws and regulations of all states in which it is registered. PERCENTAGE RESTRICTIONS: If a percentage restriction or rating restriction on investment or utilization of assets set forth above or referred to in the Prospectus 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 a Fund or the Portfolio or a later change in the rating of a security held by a Fund or the Portfolio will not be considered a violation of policy; provided that if at any time the ratio of borrowings of a Fund or the Portfolio to the net asset value of that Fund or the Portfolio, respectively, exceeds the ratio permitted by Section 18(f) of the 1940 Act, the applicable Fund or the Portfolio as the case may be, will take the corrective action required by Section 18(f). 3. PERFORMANCE INFORMATION Performance information concerning each Fund may from time to time be used in advertisements, shareholder reports or other communications to shareholders. Each Fund may provide its period, annualized, and average annual "total rates of return." The "total rate of return" refers to the change in the value of an investment over a stated period based on any change in net asset value per share and includes the value of any shares purchasable with any dividends or capital gains declared during such period. Period total rates of return may be "annualized." An average "annualized" total rate of return is a compounded total rate of return which assumes that the period total rate of return is generated over a 52-week period, and that all dividends and capital gains distributions are reinvested. An annualized total rate of return will be slightly higher than a period total rate of return if the period is shorter than one year, because of the effect of compounding. Average annual total return figures represent the average annual percentage change over the specified period. Each Fund will calculate its total rate of return for any period by (a) dividing (i) the sum of the net asset value per share on the last day of the period and the net asset value per share on the last day of the period of shares purchasable with dividends and capital gains declared during such period with respect to a share held at the beginning of such period and with respect to shares purchased with such dividends and capital gains distributions, by (ii) the public offering price per share (i.e., net asset value) on the first day of such period, and (b) subtracting 1 from the result. Any annualized total rate of return quotation will be calculated by (x) adding 1 to the period total rate of return quotation calculated above, (y) raising such sum to a power which is equal to 365 divided by the number of days in such period, and (z) subtracting 1 from the result. Average annual total return is a measure of a Fund's performance over time. It is determined by taking a Fund's performance over a given period and expressing it as an average annual rate. The average annual total return quotation is computed in accordance with a standardized method prescribed by SEC rules. The average annual total return for a specific period is found by taking a hypothetical $1,000 initial investment in Fund shares on the first day of the period and computing the redeemable value of the investment at the end of the period. The redeemable value is then divided by the initial investment, and its quotient is taken to the Nth root (N representing the number of years in the period) and is subtracted from the result, which is then expressed as a percentage. The calculation assumes that all income and capital gains distributions have been reinvested in Fund shares at net asset value on the reinvestment date during the period. The Domini Social Bond Fund may provide "yield" quotations with respect to that Fund. The "yield" of the Domini Social Bond Fund refers to the income generated by an investment in that Fund over a 30-day or one-month period (which period shall be stated in any advertisement or communications with a shareholder). This income is then "annualized", that is, the amount of income generated by the investment over the period is assumed to be generated over a 52-week period and is shown as a percentage of investment. A "yield" quotation, unlike a total rate of return quotation, does not reflect changes in net asset value. Any current "yield" quotation of the Domini Social Bond Fund shall consist of an annualized historical yield, carried at least to the nearest hundredth of one percent, based on a thirty calendar day period and shall be calculated by (a) raising to the sixth power the sum of 1 plus the quotient obtained by dividing that Fund's net investment income earned during the period by the product of the average daily number of shares outstanding during the period that were entitled to receive dividends and the maximum offering price per share on the last day of the period, (b) subtracting 1 from the result, and (c) multiplying the result by 2. Set forth below is average annual total return information for shares of the Domini Social Equity Fund for the periods indicated, assuming that capital gains distributions, if any, were reinvested. Period Average Annual Total Return One year ended July 31, 1999 22.26% Five years ended July 31, 1999 26.72% June 3, 1991 (Commencement of Investment in the Portfolio) to July 31, 1999 19.07% SINCE THE DOMINI SOCIAL EQUITY FUND'S AVERAGE ANNUAL TOTAL RETURN QUOTATIONS ARE BASED ON HISTORICAL EARNINGS AND SINCE RATES OF RETURN FLUCTUATE OVER TIME, THESE QUOTATIONS SHOULD NOT BE CONSIDERED AS AN INDICATION OR REPRESENTATION OF THE FUTURE PERFORMANCE OF THAT FUND. The Domini Social Bond Fund is newly-created and does not have performance information as of the date of this Statement of Additional Information. Total rate of return information with respect to the Domini Social Index will be computed in the same fashion as set forth above with respect to the Domini Social Equity Fund, except that for purposes of this computation an investment will be assumed to have been made in a portfolio consisting of all of the stocks comprising the Domini Social Index weighted in accordance with the weightings of the stocks comprising the Domini Social Index. Performance information with respect to the Domini Social Index will not take into account brokerage commission and other transaction costs which will be incurred by the Portfolio. From time to time the Funds may also quote data and fund rankings from various sources, such as Lipper Analytical Services, Inc., Morningstar, Inc., Wiesenberger, Money Magazine, The Wall Street Journal, Kiplinger's Personal Finance Magazine, Smart Money Magazine, Business Week and The New York Times, and may compare their respective performance to that of the Domini 400 Social IndexSM and various other unmanaged securities indices, such as the S&P 500 and the Dow Jones Industrial Average. "Standard & Poor(", "S&P(" and "Standard & Poor's 500(" are trademarks of McGraw Hill Companies. 4. DETERMINATION OF NET ASSET VALUE; VALUATION OF PORTFOLIO SECURITIES; ADDITIONAL PURCHASE INFORMATION The net asset value of each share of the Funds is determined each day on which the NYSE is open for trading ("Fund Business Day"). (As of the date of this Statement of Additional Information, the NYSE 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 Day). This determination of net asset value of shares of each Fund is made once during each such day as of the close of regular trading of the NYSE by dividing the value of each Fund's net assets (i.e., for the Domini Social Equity Fund the value of its investment in the Portfolio and any other assets less its liabilities, including expenses payable or accrued, for the Domini Social Bond Fund the value of its assets less its liabilities, including expenses payable or accrued) by the number of shares of that Fund outstanding at the time the determination is made. Purchases and redemptions will be effected at the time of determination of net asset value next following the receipt of any purchase or redemption order deemed to be in good order. See "Shareholder Manual" in the Prospectus. The value of the Portfolio's net assets (i.e., the value of its securities and other assets less its liabilities, including expenses payable or accrued) is determined at the same time and on the same day as the Domini Social Equity Fund determines its net asset value per share. The net asset value of the Domini Social Equity Fund's investment in the Portfolio is equal to the Domini Social Equity Fund's pro rata share of the total investment of the Domini Social Equity Fund and of other investors in the Portfolio less the Domini Social Equity Fund's pro rata share of the Portfolio's liabilities. Equity securities 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. Options and futures contracts are normally valued at the settlement price on the exchange on which they are traded. Bonds and other fixed income securities (other than short-term obligations) are valued on the basis of valuations furnished by a pricing service, use of which has been approved by the Board of Trustees of the Portfolio or the Funds, as applicable. In making such valuations, the pricing service utilizes both dealer-supplied valuations and electronic data processing techniques which take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Short-term obligations (maturing in 60 days or less) are valued at amortized cost, which constitutes fair value as determined by the Board of Trustees of the Portfolio or the Funds, as applicable. Portfolio securities (other than short-term obligations with remaining maturities of less than sixty 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 of the Funds', as applicable, 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 or the Funds', as applicable, 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 or a Fund, as applicable, 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 long-term obligations is determined on the basis of interest accrued plus amortization of "original issue discount" (generally, the difference between issue price and stated redemption price at maturity) and premiums (generally, the excess of purchase price over stated redemption price at maturity). Interest income on short-term obligations is determined on the basis of interest accrued less amortization of premium. Shares may be purchased directly from the Distributor or through Service Organizations (see "Transfer Agent, Custodian, and Service Organizations" below) by clients of those Service Organizations. If an investor purchases shares through a Service Organization, the Service Organization must promptly transmit such order to the appropriate Fund so that the order receives the net asset value next determined following receipt of the order. Investors wishing to purchase shares through a Service Organization should contact that organization directly for appropriate instructions. Investors making purchases through a Service Organization should be aware that it is the responsibility of the Service Organization to transmit orders for purchases of shares by its customers to the Transfer Agent and to deliver required funds on a timely basis. Each Fund has authorized certain brokers to accept on its behalf purchase and redemption orders and has authorized these brokers to designate intermediates to accept such orders. Each Fund will be deemed to have received such an order when an authorized broker or its designee accepts the order. Orders will be priced at the appropriate Fund's net asset value next computed after they are accepted by an authorized broker or designee. Investors may be charged a fee if they effect transactions in Fund shares through a broker or agent. 5. MANAGEMENT OF THE FUNDS AND THE PORTFOLIO The management and affairs of the Funds are supervised by the Trustees of the Trust under the laws of the Commonwealth of Massachusetts. The management and affairs of the Portfolio are supervised by its Trustees under the laws of the State of New York. The Trustees and officers of the Trust and the Portfolio and their principal occupations during the past five years 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 Funds. Unless otherwise indicated below, the address of each officer is 536 Broadway, 7th floor, New York, NY 10012. TRUSTEES OF THE TRUST AND THE PORTFOLIO AMY L. DOMINI* -- 230 Congress Street, Boston, Massachusetts 02110; Chair, President and Trustee of the Trust, Portfolio and Domini Institutional Trust; Managing Principal of DSIL; Officer of Kinder, Lydenberg, Domini & Co., Inc.; Private Trustee, Loring, Wolcott & Coolidge; Trustee, New England Quarterly (since 1998); Board Member, Social Investment Forum (since 1994); Trustee, Episcopal Church Pension Fund; Former Member, Governing Board, Interfaith Center on Corporate Responsibility; Former Trustee, National Association Community Loan Funds; Former Board Member of National Community Capital Association (1987-1990). Her date of birth is January 15, 1950. JULIA ELIZABETH HARRIS -- 54 Burroughs Street, Jamaica Plain, Massachusetts 02130; Vice President, UNC Partners, Inc. (since April 1990); Director and Treasurer, Boom Times, Inc. (since May 1997); Director and Chair of Board of Directors, The Green Book, Inc. (October 1991 - June 1996); Trustee, Domini Institutional Trust. Her date of birth is July 11, 1948. KIRSTEN S. MOY -- 151 North Michigan Avenue, Suite 1209, Chicago, Illinois 60601; Consultant, Project Director and Principal Researcher, Community Development Innovation and Infrastructure Initiative (since December 1998); CDFI Rating System Advisory Board Member, National Community Capital Association (since 1999); Member, Community Economic Development Board of Overseers, New Hampshire College (since November 1998); Advisory Group Member, Shorebank Liquidity Project (since 1999); Consultant, Equitable Life Assurance Society (since December 1998); Board Member, Free Associates Theatre Company (since August 1999); Consultant, Social Investment Forum, Community Development Project (June 1998-December 1998); Director, Community Development Financial Institutions Fund, U.S. Department of the Treasury (October 1995 - October 1997); Senior Vice President and Portfolio Manager, Equitable Real Estate Investment Management (prior to October 1995); Trustee, Domini Institutional Trust. Her date of birth is June 30, 1947. WILLIAM C. OSBORN -- 115 Buckminster Road, Brookline, Massachusetts 02445; Consultant, Arete Corporation; Manager, Venture Investment Management Company LLC (prior to 1999); Trustee, Domini Institutional Trust; 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; Director, Fingerlakes Aquaculture LLC; Director, Surgical Sealants, Inc; Director, World Power Technologies, Inc. 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 (since 1991); Trustee, Domini Institutional Trust; Partner, Trinity Industrial Technology (since 1997); Executive Director, Center for Management in the Americas (since 1997). Her date of birth is September 23, 1944. GREGORY A. RATLIFF -- 1712 Carmen Avenue, Chicago, Illinois 60640; Director, Access to Economic Opportunity, John D. and Catherine T. MacArthur Foundation (since 1997); Associate Director, Program-Related Investments, John D. and Catherine T. MacArthur Foundation (1993-1997); Trustee, Domini Institutional Trust. His date of birth is June 12, 1960. TIMOTHY SMITH -- 475 Riverside Drive, Room 550, New York, New York 10115; Executive Director, Interfaith Center on Corporate Responsibility (since 1971); Trustee, Calvert New Africa Fund; Chair, Calvert Social Investment Fund Advisory Council; Trustee, Domini Institutional Trust. His date of birth is September 15, 1943. FREDERICK C. WILLIAMSON, SR. -- Five Roger Williams Green, Providence, Rhode Island 02904; Treasurer and Trustee, RIGHA (charitable foundation supporting health care needs) since 1990; Chairman, Rhode Island Historical Preservation and Heritage Commission (since 1995); Trustee, National Parks and Conservation Association (1986-1997); Advisor, National Parks and Conservation Association (since 1997); Trustee of the National Park Trust (since 1991); Trustee, Domini Institutional Trust. His date of birth is September 20, 1915. Each of the Trustees who are not interested persons receives an annual retainer for serving as a Trustee of the Trust, the Portfolio and the Domini Institutional Trust of $6,000, and in addition, receives $1,000 for attendance at each joint meeting of the Boards of the Trust, the Portfolio and the Domini Institutional Trust (reduced to $500 in the event that a Trustee participates at an in-person meeting by telephone). In addition, each Trustee receives reimbursement for reasonable expenses incurred in attending meetings. The compensation paid to the Trustees for the fiscal year ended July 31, 1999 is set forth below. The Trustees may hold various other directorships unrelated to the Trust or Portfolio.
Pension or Total Retirement Compensation Benefits from the Trust, Accrued as Estimated Portfolio and Aggregate Part of Annual Benefits Domini Compensation Fund Upon Institutional from the Trust Expenses Retirement Trust Amy L. Domini, None None None None Chair, President and Trustee Julia Elizabeth $928* None None $1,160* Harris, Trustee Kirsten S. Moy, $928* None None $1,160* Trustee William C. Osborn, $4,000 None None $6,000 Trustee Karen Paul, $4,000 None None $6,000 Trustee Gregory A. $928* None None $1,160* Ratliff, Trustee Timothy Smith, $4,000 None None $6,000 Trustee Frederick C. $4,000 None None $6,000 Williamson, Sr., Trustee
- ------------------------ * Ms. Harris, Ms. Moy and Mr. Rattliff became trustees on June 1, 1999. OFFICERS PETER D. KINDER* -- Vice President of the Trust and the Portfolio; President of Kinder, Lydenberg, Domini & Co., Inc.; Member, Domini Social Investments LLC (since 1997). His date of birth is September 28, 1946. STEVEN D. LYDENBERG* -- Vice President of the Trust and the Portfolio; Director of Research of Kinder, Lydenberg, Domini & Co., Inc.; Member, Domini Social Investments LLC (since 1997). His date of birth is October 21, 1945. DAVID P. WIEDER* -- Vice President of the Trust and the Portfolio (since 1997); Chief Executive Officer and Managing Principal, Domini Social Investments LLC (since 1997); President of FSSI (since 1989); Vice-President of investment companies within Fundamental Family of Funds (1989-1997); Vice-President of Fundamental Portfolio Advisors (1991-1997). His date of birth is January 8, 1966. SIGWARD M. MOSER* -- Vice President of the Trust and the Portfolio (since 1997); President and Managing Principal, Domini Social Investments LLC (since 1997); President of Communications House International, Inc.; Director of Financial Communications Society. His date of birth is June 12, 1962. CAROLE M. LAIBLE* -- Secretary and Treasurer of the Trust and the Portfolio (since 1997); Financial Compliance Officer of Domini Social Investments LLC (since 1997); Board of Governors, Daytop - NJ (since 1998); Financial Compliance Officer, FSSI (1994-1997); Financial Compliance Officer and Secretary of investment companies within Fundamental Family of Funds (1994-1997); General Service Manager, McGladrey & Pullen LLP (certified public accountants) (prior to 1994). Her date of birth is October 31, 1963. As of __________ __, 2000, all Trustees and officers of the Trust and the Portfolio as a group owned less than 1% of any Fund's outstanding shares. As of the same date, the following shareholders of record owned 5% or more of the outstanding shares of the Domini Social Equity Fund: __________. The Domini Social Equity Fund has no knowledge of any other owners of record or beneficial owners of 5% or more of the outstanding shares of that Fund. Shareholders owning 25% or more of the outstanding shares of the Domini Social Equity Fund may take actions without the approval of any other investor in that Fund. The Domini Social Bond Fund is newly-created and has no shareholders as of the date of this Statement of Additional Information. The Trustees who are not "interested persons" (the "Disinterested Trustees") of the Trust as defined by the 1940 Act are the same as the Disinterested Trustees of the Portfolio. Any conflict of interest between the Domini Social Equity Fund and the Portfolio will be resolved by the Trustees in accordance with their fiduciary obligations and in accordance with the 1940 Act. The Trust's Declaration of Trust provides that it will indemnify its Trustees and officers (the "Indemnified Parties") against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Trust, unless, as to liability to the Trust or its shareholders, 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 Trust. In 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. MANAGER AND SUBMANAGERS DSIL provides advice to the Portfolio and the Domini Social Bond Fund pursuant to separate Management Agreements (the "Management Agreements"). The services provided by DSIL consist of furnishing continuously an investment program for the Portfolio and the Domini Social Bond Fund. DSIL will have authority to determine from time to time what securities are purchased, sold or exchanged, and what portion of assets of the Portfolio and the Domini Social Bond Fund is held uninvested. With respect to the Portfolio, DSIL 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 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, prospectuses and statements of additional information, semi-annual and annual reports to shareholders, proxy statements and tax returns; (iv) preparing agendas and supporting documents for and minutes of meetings of Trustees, committees of Trustees and shareholders; and (v) arranging for maintenance of the books and records of the Portfolio. DSIL furnishes at its own expense all facilities and personnel necessary in connection with providing these services. The Management Agreement for the Portfolio 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 for the Domini Social Bond Fund will continue in effect for an initial two-year period and thereafter if such continuance is specifically approved at least annually by the Domini Social Bond Fund's Board of Trustees or by a majority of the outstanding voting securities of the Domini Social Bond Fund at a meeting called for the purpose of voting on the Management Agreement, and, in either case, by a majority of the Domini Social Bond Fund'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. Each Management Agreement provides that DSIL may render services to others. DSIL may employ, at its own expense, or may request that the Portfolio or the Domini Social Bond Fund employ (subject to the requirements of the 1940 Act) one or more subadvisers or submanagers, subject to DSIL's supervision. Each Management Agreement is terminable without penalty on not more than 60 days' nor less than 30 days' written notice by the Portfolio or the Domini Social Bond Fund, as the case may be, 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 the Domini Social Bond Fund, as applicable, or by a vote of a majority of the appropriate Board of Trustees, or by DSIL, and will automatically terminate in the event of its assignment. Each Management Agreement provides that neither DSIL 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 or the Domini Social Bond Fund, as the case may be, except for wilful misfeasance, bad faith or gross negligence or reckless disregard of its or their obligations and duties under the Management Agreement. Under the Management Agreement between the Portfolio and DSIL, DSIL's fee for advisory and administrative services to the Portfolio is 0.20% of the average daily net assets of the Portfolio. Under the Management Agreement between the Trust, with respect to the Domini Social Bond Fund, and DSIL, DSIL's fee for advisory services to the Domini Social Bond Fund is 0.40% of the average daily net assets of that Fund. DSIL is a Massachusetts limited liability company with offices at 536 Broadway, 7th floor, New York, NY 10012, and is registered as an investment adviser under the Investment Advisers Act of 1940 (the "Advisers Act"). The names of the principal owners of DSIL and their relationship to the Trust follows: Amy L. Domini, Chair of the Board and President of the Trust, is the Manager and principal executive officer and a co-owner of DSIL. Ms. Domini is also Chief Executive Officer, Secretary, Treasurer and co-owner of KLD which licenses the Domini Social Index to DSIL. Peter D. Kinder, Vice President of the Trust, is a co-owner of DSIL. Mr. Kinder is also President and a co-owner of KLD. Sigward M. Moser, Vice President of the Trust, is a co-owner of DSIL. David P. Wieder, Vice President of the Trust is a co-owner of DSIL. Mr. Wieder is also President and an owner of FSSI, a registered transfer agent which served as the Domini Social Equity Fund's transfer agent until September 24, 1999. Mellon Equity manages the assets of the Portfolio pursuant to an Investment Submanagement Agreement (the "Portfolio Submanagement Agreement"). The Portfolio 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 Portfolio 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 Portfolio 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 Portfolio Submanagement Agreement or interested persons of any such party at a meeting called for the purpose of voting on the Portfolio Submanagement Agreement. Effective January 1, 1998, Mellon Equity Associates was reorganized as a Pennsylvania limited liability partnership. Pursuant to an Agreement and Plan of Merger dated December 29, 1997, (the "Merger Agreement"), Mellon Equity Associates was merged into Mellon Equity Associates, LLP, a newly-formed Pennsylvania limited liability partnership, with Mellon Equity Associates, LLP being the surviving entity. Mellon Bank, N.A. ("Mellon Bank") is the 99% limited partner and MMIP, Inc. is the 1% general partner of Mellon Equity Associates, LLP. In accordance with the provisions of the Merger Agreement, all property, rights, privileges, franchises, patents, trademarks, licenses, registrations, and other assets and interests of Mellon Equity Associates vested in Mellon Equity Associates, LLP. By operation of law, the obligations and liabilities of Mellon Equity Associates were assumed by Mellon Equity Associates, LLP. 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 4200, Pittsburgh, Pennsylvania 15258. South Shore manages the assets of the Domini Social Bond Fund pursuant to an Investment Submanagement Agreement (the "Bond Fund Submanagement Agreement"). The Bond Fund Submanager furnishes at its own expense all services, facilities and personnel necessary in connection with managing the Domini Social Bond Fund's investments and effecting securities transactions for the Domini Social Bond Fund. The Bond Fund Submanagement Agreement will continue in effect if such continuance is specifically approved at least annually by the Domini Social Bond Fund's Board of Trustees or by a majority vote of the outstanding voting securities of that Fund at a meeting called for the purpose of voting on the Bond Fund Submanagement Agreement, and, in either case, by a majority of the Domini Social Bond Fund's Trustees who are not parties to the Bond Fund Submanagement Agreement or interested persons of any such party at a meeting called for the purpose of voting on the Bond Fund Submanagement Agreement. Shorebank Corporation is the parent company of South Shore, which is located at [**----------**]. Each Submanagement Agreement provides that the applicable submanager may render services to others. Each Submanagement Agreement is terminable without penalty upon not more than 60 days' nor less than 30 days' written notice by the Portfolio or Domini Social Bond Fund, as the case may be, 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 their investment) or of the Domini Social Bond Fund, as applicable, or by a vote of the majority of the appropriate Board of Trustees, or by DSIL with the consent of the Trustees and may be terminated by the applicable submanager on not less than 90 days' written notice to DSIL and the Trustees, and will automatically terminate in the event of its assignment. Each Submanagement Agreement provides that the applicable 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 or the Domini Social Bond Fund, as the case may be, except for wilful misfeasance, bad faith or gross negligence or reckless disregard for its or their obligations and duties under the Submanagement Agreement. Under the Portfolio Submanagement Agreement, DSIL pays Mellon Equity an investment submanagement fee equal on an annual basis to 0.07% of the average daily net assets of the Portfolio. Under the Bond Fund Submanagement Agreement, DSIL pays South Shore an investment submanagement fee equal on an annual basis to 0.20% of the average daily net assets of the Domini Social Bond Fund. 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 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. Prior to October 22, 1997, pursuant to a sponsorship agreement (the "KLD Sponsorship Agreement"), KLD furnished administrative services for the Portfolio. Prior to October 22, 1997, pursuant to an administrative services agreement (the "Signature Administration Agreement"), Signature Broker-Dealer Services, Inc. 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, 1999, the Portfolio incurred approximately $1,791,617 in management fees pursuant to its Management Agreement. For the fiscal year ended July 31, 1998, the Portfolio incurred approximately $701,774 in management fees pursuant to its Management Agreement, $17,385 in advisory fees pursuant to the KLD Advisory Agreement, $17,385 in aggregate administration fees pursuant to the Signature Administration Agreement and $86,354 in management fees pursuant to the Mellon Equity Management Agreement. 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, $156,868 in aggregate administration fees pursuant to the Signature Administration Agreement, and $182,885 in management fees pursuant to the Mellon Equity Management Agreement. Because the Domini Social Bond Fund is newly-created, it has not paid management fees as of the date of this Statement of Additional Information. SPONSOR Pursuant to a Sponsorship Agreement with respect to the Domini Social Equity Fund and Administration Agreement with respect to the Domini Social Bond Fund, DSIL provides the Domini Social Equity Fund and the Domini Social Bond Fund with oversight, administrative and management services. DSIL provides each Fund with general office facilities and supervises the overall administration of each Fund, including, among other responsibilities, the negotiation of contracts and fees with, and the monitoring of performance and billings of, the independent contractors and agents of each Fund; the preparation and filing of all documents required for compliance by each Fund with applicable laws and regulations, including registration statements, prospectuses and statements of additional information, semi-annual and annual reports to shareholders, proxy statements and tax returns; preparing agendas and supporting documents for and minutes of meetings of Trustees, committees of Trustees and shareholders; maintaining telephone coverage to respond to shareholder inquiries; answering questions from the general public, the media and investors in each Fund regarding the securities holdings of the Portfolio and the Domini Social Bond Fund, as applicable, limits on investment and the Funds' proxy voting philosophy and shareholder activism philosophy; and arranging for the maintenance of books and records of each Fund. The Sponsor provides persons satisfactory to the Board of Trustees of the Funds to serve as officers of the Funds. Such officers, as well as certain other employees and Trustees of the Funds, may be directors, officers or employees of the Sponsor or its affiliates. Under the Sponsorship Agreement between DSIL and the Trust on behalf of the Domini Social Equity Fund, DSIL's fee for administrative and sponsorship services with respect to the Domini Social Equity Fund 0.50% of the average daily net assets of that Fund. Under the Administration Agreement between DSIL and the Trust on behalf of the Domini Social Bond Fund, DSIL's fee for administrative services with respect to the Domini Social Bond Fund is 0.25% of the average daily net assets of that Fund. Currently, DSIL is reducing its fee to the extent necessary to keep the aggregate annual operating expenses of the Domini Social Equity Fund (including the Domini Social Equity Fund's share of the Portfolio's expenses but excluding brokerage fees and commissions, interest, taxes and other extraordinary expenses) at no greater than 0.95% of the average daily net assets of the Domini Social Equity Fund. For the fiscal years ended July 31, 1999 and July 31, 1998, the Domini Social Equity Fund incurred $3,820,667 and $1,419,618 in sponsorship fees, respectively. [**INSERT FEE WAIVER FOR THE BOND FUND**] Because the Domini Social Bond Fund is newly-created, as of the date of this Statement of Additional Information, it has not paid sponsorship fees. Prior to October 22, 1997, Signature Broker-Dealer Services, Inc. served as administrator of the Domini Social Equity Fund. For the fiscal year ended July 31, 1997, the Domini Social Equity Fund incurred $156,868 in administrative fees. The Sponsorship Agreement with respect to the Funds provides that DSIL may render administrative services to others. The Sponsorship Agreement also provides that neither the Sponsor nor its personnel shall be liable for any error of judgment or mistake of law or for any act or omission in the administration or management of either Fund, except for willful misfeasance, bad faith or gross negligence in the performance of its or their duties or by reason of reckless disregard of its or their obligations and duties under the Sponsorship Agreement. DISTRIBUTOR Each Fund has adopted a Distribution Plan which provides that each Fund may pay the Distributor a fee not to exceed 0.25% per annum of that Fund's average daily net assets in anticipation of, or as reimbursement or compensation for, expenses incurred in connection with the sale of shares of the Fund, such as payments to broker-dealers who advise shareholders regarding the purchase, sale or retention of shares of the Fund, payments to employees of the Distributor, advertising expenses and the expenses of printing and distributing prospectuses and reports used for sales purposes, expenses of preparing and printing sales literature and other distribution-related expenses. For the fiscal years ended July 31, 1997, 1998, and 1999 the Domini Social Equity Fund accrued $153,295, $580,272, and $1,327,042 respectively, in distribution fees. For the fiscal year ended July 31, 1999, payments made by the Domini Social Equity Fund pursuant to the Distribution Plan were used for advertising ($310,408), printing and mailing of prospectuses to other than current shareholders ($34,943), compensation to dealers ($563,574) and communications and servicing ($418,117). Because the Domini Social Bond Fund is newly-created, as of the date of this Statement of Additional Information, it has not paid distribution fees. The Distribution Plan will continue in effect indefinitely as to a Fund if such continuance is specifically approved at least annually by a vote of both a majority of that Fund's Trustees and a majority of that Fund's Trustees who are not "interested persons of the Fund" and who have no direct or indirect financial interest in the operation of the Distribution Plan or in any agreement related to such Plan ("Qualified Trustees"). The Distributor will provide to the Trustees of each Fund a quarterly written report of amounts expended by that Fund under the Distribution Plan and the purposes for which such expenditures were made. The Distribution Plan further provides that the selection and nomination of each Fund's Qualified Trustees shall be committed to the discretion of the disinterested Trustees of that Fund. The Distribution Plan may be terminated as to a Fund at any time by a vote of a majority of that Fund's Qualified Trustees or by a vote of the shareholders of that Fund. The Distribution Plan may not be materially amended with respect to a Fund without a vote of the majority of both that Fund's Trustees and Qualified Trustees. The Distributor will preserve copies of any plan, agreement or report made pursuant to the Distribution Plan for a period of not less than six (6) years from the date of the Distribution Plan, and for the first two (2) years the Distributor will preserve such copies in an easily accessible place. Each Fund has entered into a Distribution Agreement with the Distributor. Under the Distribution Agreement, the Distributor acts as the agent of each Fund in connection with the offering of shares of that Fund and is obligated to use its best efforts to find purchasers for shares of the Fund. The Distributor acts as the principal underwriter of shares of each Fund and bears the compensation of personnel necessary to provide such services and all costs of travel, office expenses (including rent and overhead) and equipment. Prior to August 15, 1999, Signature Broker-Dealer Services, Inc. served as the distributor of the Domini Social Equity Fund. TRANSFER AGENT, CUSTODIAN AND SERVICE ORGANIZATIONS Each Fund has entered into a Transfer Agency Agreement with First Data Investor Services Group, Inc. ("First Data"), 4400 Computer Drive, Westborough, MA 01581, pursuant to which First Data acts as the transfer agent for each Fund. The Transfer Agent maintains an account for each shareholder of the Funds, performs other transfer agency functions, and acts as dividend disbursing agent for the Funds. Each Fund has entered into a Custodian Agreement with Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston, MA 02116, pursuant to which IBT acts as custodian for each Fund. The Portfolio has entered into a Transfer Agency Agreement with IBT pursuant to which IBT acts as transfer agent for the Portfolio. The Portfolio also has entered into a Custodian Agreement with IBT pursuant to which IBT acts as custodian for the Portfolio. The Custodian's responsibilities include safeguarding and controlling the Portfolio's and the Domini Social Bond Fund's cash and securities, handling the receipt and delivery of securities, determining income and collecting interest on the Portfolio's and Domini Social Bond Fund'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 and the daily net asset value of shares of each Fund. Securities held by the Portfolio and the Domini Social Bond Fund may be deposited into certain securities depositaries. The Custodian does not determine the investment policies of the Portfolio or the Domini Social Bond Fund or decide which securities the Portfolio or the Domini Social Bond Fund will buy or sell. The Portfolio and the Domini Social Bond Fund may, however, invest in securities of the Custodian and may deal with the Custodian as principal in securities transactions. Each Fund may from time to time enter into agreements with various banks, trust companies (other than Mellon Equity), broker-dealers (other than the Distributor) or other financial organizations (collectively, "Service Organizations") to provide services for that Fund, such as maintaining shareholder accounts and records. Each Fund may pay fees to Service Organizations (which may vary depending upon the services provided) in amounts up to an annual rate of 0.25% of the daily net asset value of the shares of that Fund owned by shareholders with whom the Service Organization has a servicing relationship. In addition each Fund may reimburse Service Organizations for their costs related to servicing shareholder accounts. For the fiscal years ended July 31, 1997, 1998, and 1999 the Domini Social Equity Fund accrued $3,711, $0, and $940 respectively, in service organization fees. The Domini Social Bond Fund is newly-created and has not accrued service organization fees as of the date of this Statement of Additional Information. EXPENSES The Funds and the Portfolio each are responsible for all of their respective expenses, including the compensation of their respective Trustees who are not interested persons of a Fund or the Portfolio; governmental fees; interest charges; taxes; membership dues in the Investment Company Institute allocable to a Fund or the Portfolio; fees and expenses of independent auditors, of legal counsel and of any transfer agent, custodian, registrar or dividend disbursing agent of a Fund or the Portfolio; insurance premiums; and expenses of calculating the net asset value of the Portfolio and of shares of the Funds. The Domini Social Equity Fund and the Domini Social Bond Fund each will also pay sponsorship fees payable to the Sponsor, and all expenses of distributing and redeeming shares and servicing shareholder accounts; expenses of preparing, printing and mailing prospectuses, reports, notices, proxy statements and reports to shareholders and to governmental offices and commissions; expenses of shareholder meetings; and expenses relating to the issuance, registration and qualification of shares of the Funds and the preparation, printing and mailing of prospectuses for such purposes. The Portfolio and the Domini Social Bond Fund each will pay the expenses connected with the execution, recording and settlement of security transactions and the investment management fees payable to DSIL. The Portfolio and the Domini Social Bond Fund each also will pay the fees and expenses of its custodian for all services to the Portfolio and the Domini Social Bond Fund, as applicable, 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 commissions; and expenses of meetings of investors. CODES OF ETHICS The Portfolio, the Funds, and DSIL have each adopted a Code of Ethics (collectively, the "Codes of Ethics") under Rule 17j-1 of the 1940 Act. The Codes of Ethics permit personnel subject to the Codes to invest in securities, including securities that may be purchased or held by the Portfolio or the Funds. The Codes of Ethics can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. The Codes of Ethics are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of the Codes of Ethics may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102. 6. INDEPENDENT AUDITORS KPMG LLP, 99 High Street, Boston, MA 02110, are the independent auditors for the Funds and for the Portfolio, providing audit services, tax return preparation, and assistance and consultation with respect to the preparation of filings with the SEC. 7. TAXATION Taxation of the FundS and the Portfolio FEDERAL TAXES: Each of our Funds is treated as a separate entity for federal tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"). Further, each Fund has elected to be treated and intends to qualify as a "regulated investment company" under Subchapter M of the Code. We plan to continue this election in the future for all of the Funds. As a regulated investment company, a Fund will not be subject to any federal income or excise taxes on its net investment income and net realized capital gains that it distributes to shareholders in accordance with the timing requirements imposed by the Code. If a Fund should fail to qualify as a "regulated investment company" in any year, that Fund would incur a regular corporate federal income tax upon its taxable income and Fund distributions would generally be taxable as ordinary dividend income to shareholders. We anticipate that the Portfolio will be treated as a partnership for federal income tax purposes. As such, the Portfolio is not subject to federal income taxation. Instead, the Domini Social Equity Fund must 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. FOREIGN TAXES: Although neither Fund expects to pay any federal income or excise taxes, investment income received by a Fund from foreign securities may be subject to foreign income taxes withheld at the source; we do not expect to be able to pass through to shareholders foreign tax credits with respect to such foreign taxes. The United States has entered into tax treaties with many foreign countries that may entitle the Funds to a reduced rate of tax or an exemption from tax on such income; each Fund intends to qualify for treaty reduced rates where available. It is not possible, however, to determine a Fund's effective rate of foreign tax in advance since the amount of a Fund's assets to be invested within various countries is not known. STATE TAXES: Each Fund is organized as a series of the Trust, a Massachusetts business trust. As long as it qualifies as a "regulated investment company" under the Code, a Fund will not have to pay Massachusetts income or excise taxes. The Portfolio is organized as a New York trust. The Portfolio is not subject to any income or franchise tax in the State of New York. Taxation of Shareholders TAXATION OF DISTRIBUTIONS: Shareholders of each Fund normally will have to pay federal income taxes, and any state or local taxes, on the dividends and other distributions they receive from a Fund. Dividends from ordinary income and any distributions from net short-term capital gains are taxable to shareholders as ordinary income for federal income tax purposes, whether the distributions are paid in cash or reinvested in additional shares. Distributions of net capital gains (i.e., the excess of net long-term capital gains over net short-term capital losses), whether paid in cash or reinvested in additional shares, are taxable to shareholders as long-term capital gains for federal income tax purposes without regard to the length of time the shareholders have held their shares. Any Fund dividend that is declared in October, November, or December of any calendar year, that is payable to shareholders of record in such a month, and that is paid the following January will be treated as if received by the shareholders on December 31 of the year in which the divided is declared. DIVIDENDS-RECEIVED DEDUCTION: A portion of Domini Social Equity Fund's ordinary income dividends (but none of that Fund's capital gains) is normally eligible for the dividends received deduction for corporations if the recipient otherwise qualifies for that deduction with respect to its holding of Fund shares. Availability of the deduction for a particular corporate shareholder is subject to certain limitations, and deducted amounts may be subject to the alternative minimum tax and result in certain basis adjustments. Since the investment income of the Domini Social Bond Fund is derived from interest rather than dividends, no portion of the dividends received from this Fund will be eligible for the dividends received deduction. Moreover, the portion of any Fund's dividends that is derived from investments in foreign corporations will not qualify for such deduction. "BUYING A DIVIDEND": Any Fund distribution will have the effect of reducing the per share net asset value of shares in that Fund by the amount of the distribution. Shareholders purchasing shares shortly before the record date of any distribution may thus pay the full price for the shares and then effectively receive a portion of the purchase price back as a taxable distribution. DISPOSITION OF SHARES: In general, any gain or loss realized upon a taxable disposition of shares of a Fund by a shareholder that holds such shares as a capital asset will be treated as long-term capital gain or loss if the shares have been held for more than twelve months and otherwise as a short-term capital gain or loss. However, any loss realized upon a disposition of shares in a Fund held for six months or less will be treated as a long-term capital loss to the extent of any distributions of net capital gain made with respect to those shares. Any loss realized upon a disposition of shares may also be disallowed under rules relating to wash sales. Effects of Certain Investments and Transactions CERTAIN DEBT INSTRUMENTS. A investment by Domini Social Bond Fund in zero coupon bonds, deferred interest bonds, payment-in-kind bonds, certain stripped securities and certain securities purchased at a market discount will cause the Fund to recognize income prior to the receipt of cash payments with respect to those securities. In order to distribute this income and avoid a tax on the Fund, the Fund may be required to liquidate portfolio securities that it might otherwise have continued to hold, potentially resulting in additional taxable gain or loss to the Fund. OPTIONS, ETC. A Fund's transactions in options, futures and forward contracts will be subject to special tax rules that may affect the amount, timing and character of Fund income and distributions to shareholders. For example, certain positions held by a Fund on the last business day of each taxable year will be marked to market (e.g., treated as if closed out) on that day, and any gain or loss associated with the positions will be treated as 60% long-term and 40% short-term capital gain or loss. Certain positions held by a Fund that substantially diminish its risk of loss with respect to other positions in its portfolio may constitute "straddles", and may be subject to special tax rules that would cause deferral of fund losses, adjustments in the holding periods of fund securities, and conversion of short-term into long-term capital losses. Certain tax elections exist for straddles that may alter the effects of these rules. Each Fund intends to limit its activities in options, futures and forward contracts to the extent necessary to meet the requirements of the Code. FOREIGN SECURITIES: Special tax considerations apply with respect to foreign investments of each Fund. Foreign exchange gains and losses realized by a Fund will generally be treated as ordinary income and losses. Use of non-U.S. currencies for non-hedging purposes may have to be limited in order to avoid a tax on a Fund. The foregoing is limited to a discussion of federal taxation. It should not be viewed as a comprehensive discussion of the items referred to nor as covering all provisions relevant to investors. Dividends and distributions may also be subject to state or local taxes. Shareholders should consult their own tax advisers for additional details on their particular tax status. 8. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS Specific decisions to purchase or sell securities for the Portfolio and the Domini Social Bond Fund are made by portfolio managers who are employees of the applicable submanager and who are appointed and supervised by its senior officers. Changes in the Portfolio's or the Domini Social Bond Fund's investments are reviewed by the appropriate Board of Trustees. The portfolio managers of the Portfolio and the Domini Social Bond Fund may serve other clients of a submanager in a similar capacity. The Portfolio's and Domini Social Bond Fund'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 applicable submanager attempts to achieve this result by selecting broker-dealers to execute transactions on behalf of the Portfolio or the Domini Social Bond Fund and other clients of that 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), a submanager normally seeks to deal directly with the primary market makers, unless in its opinion, 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. 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 or the Domini Social Bond Fund may determine, the applicable submanager may consider sales of shares of the Domini Social Equity Fund and of securities of other investors in the Portfolio or shares of the Domini Social Bond Fund as a factor in the selection of broker-dealers to execute the Portfolio's or the Domini Social Bond Fund's securities transactions. None of the Portfolio, Domini Social Bond Fund or Domini Social Equity Fund will engage in brokerage transactions with DSIL, Mellon Equity, or South Shore or any of their respective affiliates or any affiliate of a Fund or the Portfolio. Most of the Domini Social Bond Fund's transactions will be on a principal basis. Under the Portfolio and Bond Fund Submanagement Agreements and as permitted by Section 28(e) of the Securities Exchange Act of 1934, a submanager may cause the Portfolio or the Domini Social Bond Fund, as applicable, to pay a broker-dealer acting on an agency basis which provides brokerage and research services to the submanager or DSIL an amount of commission for effecting a securities transaction for the Portfolio or the Domini Social Bond Fund 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 DSIL's overall responsibilities to the Portfolio or the Domini Social Bond Fund, as the case may be, or to its other clients. Not all of such services are useful or of value in advising the Portfolio or the Domini Social Bond Fund. 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, Mellon Equity and DSIL currently intend to make only a limited use of such brokerage and research services with respect to the Portfolio. Although commissions paid on every transaction will, in the judgment of the submanagers, be reasonable in relation to the value of the brokerage services 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 or the Domini Social Bond Fund and a submanager's or DSIL'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 a submanager or DSIL for no consideration other than brokerage or underwriting commissions. The submanagers and DSIL attempt to evaluate the quality of research provided by brokers. The submanagers and DSIL sometimes use evaluations resulting from this effort as a consideration in the selection of brokers to execute portfolio transactions. However, neither the submanagers nor DSIL are 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 and the Domini Social Bond Fund pay to their respective submanager and DSIL will not be reduced as a consequence of the Portfolio's or the Domini Social Bond Fund's receipt of brokerage and research services. To the extent the Portfolio's or the Domini Social Bond Fund's securities transactions are used to obtain brokerage and research services, the brokerage commissions paid by the Portfolio or the Domini Social Bond Fund 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 a submanager or DSIL in serving the Portfolio or the Domini Social Bond Fund, as the case may be, and other clients and, conversely, such services obtained by the placement of brokerage business of other clients may be useful to a submanager or DSIL in carrying out its obligations to the Portfolio or the Domini Social Bond Fund. While such services are not expected to reduce the expenses of the submanagers or DSIL, a submanager or DSIL would, through use of the services, avoid the additional expenses which would be incurred if it should attempt to develop comparable information through its own staff. For the fiscal years ended July 31, 1997, 1998 and 1999, the Portfolio paid brokerage commissions of $101,639, $175,344, and $327,338 respectively. The Domini Social Bond Fund is newly-created and did not pay brokerage commissions during those periods. In certain instances there may be securities which are suitable for the Portfolio or the Domini Social Bond Fund as well as for one or more of a submanager's or DSIL's other clients. Investment decisions for the Portfolio and the Domini Social Bond Fund and for a submanager's or DSIL'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 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 and the Domini Social Bond Fund are concerned. However, it is believed that the ability of the Portfolio and the Domini Social Bond Fund to participate in volume transactions will produce better executions for the Portfolio and the Domini Social Bond Fund. 9. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES The Trust is a Massachusetts business trust established under a Declaration of Trust dated as of March 1, 1990. Its authorized capital consists of an unlimited number of shares of beneficial interest of $0.01 par value, issued in separate series. Each share of each series represents an equal proportionate interest in that series with each other share of that series. The assets of the Trust received for the issue or sale of the shares of each series and all income, earnings, profits and proceeds thereof, subject only to the rights of creditors, are specifically allocated to such series and constitute the underlying assets of such series. The underlying assets of each series are segregated on the books of account, and are to be charged with the liabilities in respect to such series and with such a share of the general liabilities of the Trust. If a series were unable to meet its obligations, the assets of all other series might be available to creditors for that purpose, in which case the assets of such other series could be used to meet liabilities which are not otherwise properly chargeable to them. Expenses with respect to any two or more series are to be allocated in proportion to the asset value of the respective series except where allocations of direct expenses can otherwise be fairly made. The officers of the Trust, subject to the general supervision of the Trustees, have the power to determine which liabilities are allocable to a given series, or which are general or allocable to two or more series. In the event of the dissolution or liquidation of the Trust or any series, the holders of the shares of any series are entitled to receive as a class the value of the underlying assets of such shares available for distribution to shareholders. Shares of the Trust entitle their holder to one vote per share; however, separate votes are taken by each series on matters affecting an individual series. For example, a change in investment policy for a series would be voted upon only by shareholders of the series involved. The Trust's Declaration of Trust provides that, at any meeting of shareholders of the Trust or of any series, a Shareholder Servicing Agent may vote any shares as to which such Shareholder Servicing Agent is the agent of record and which are not represented in person or by proxy at the meeting, proportionately in accordance with the votes cast by holders of all shares otherwise represented at the meeting in person or by proxy as to which such Shareholder Servicing Agent is the agent of record. Any shares so voted by a Shareholder Servicing Agent will be deemed represented at the meeting for purposes of quorum requirements. The Trustees of the Trust have the authority to designate additional series and to designate the relative rights and preferences as between the different series. There is presently one series so designated. All shares issued and outstanding will be fully paid and nonassessable by the Trust, and redeemable as described in this Statement of Additional Information and in the Prospectus. The Declaration of Trust provides that obligations of the Trust are not binding upon the Trustees individually but only upon the property of the Trust, that the Trustees and officers will not be liable for errors of judgment or mistakes of fact or law, and that the Trust will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Trust unless, as to liability to Trust or Fund shareholders, it is finally adjudicated that they 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 they did not act in good faith in the reasonable belief that their actions were in the best interests of the Trust. 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 officers or Trustees have not engaged in wilful misfeasance, bad faith, gross negligence or reckless disregard of their duties. Under Massachusetts law, shareholders of a Massachusetts business trust may, under certain circumstances, be held personally liable as partners for its obligations and liabilities. However, the Declaration of Trust contains an express disclaimer of shareholder liability for acts or obligations of the Funds and provides for indemnification and reimbursement of expenses out of Fund property for any shareholder held personally liable for the obligations of a Fund. The Declaration of Trust also provides for the maintenance, by or on behalf of the Trust and the Funds, of appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Funds and their shareholders and the Trust's Trustees, officers, employees and agents covering possible tort and other liabilities. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and a Fund itself was unable to meet its obligations. The Portfolio, in which all of the investable assets of the Domini Social Equity Fund are invested, is organized as a trust under the laws of the State of New York. The Portfolio's Declaration of Trust provides that the Domini Social Equity Fund and other entities investing in the Portfolio (i.e., 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 the Domini Social Equity Fund 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. Accordingly, the Trust's Trustees believe that neither the Domini Social Equity Fund nor its shareholders will be adversely affected by reason of the Domini Social Equity Fund's investing in the Portfolio. Each investor in the Portfolio, including the Domini Social Equity Fund, may add to or reduce its investment in the Portfolio on each Fund Business Day. At the close of each such business day, the value of each investor's interest in the Portfolio will be determined by multiplying the net asset value of the Portfolio by the percentage representing that investor's share of the aggregate beneficial interests in the Portfolio effective for that day. 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 re-computed 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 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 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 Fund Business Day. 10. FINANCIAL STATEMENTS The audited financial statements of the Domini Social Equity Fund and the Portfolio (Statement of Assets and Liabilities at July 31, 1999, Statement of Operations for the year ended July 31, 1999, Statement of Changes in Net Assets for each of the years in the two-year period ended July 31, 1999, Financial Highlights for each of the years in the five-year period ended July 31, 1999, Notes to Financial Statements and Independent Auditors' Report), each of which is included in the Annual Report to Shareholders of the Domini Social Equity Fund which has been filed with the SEC pursuant to Section 30(b) of the 1940 Act and Rule 30b2-1 thereunder, are hereby incorporated by reference into this Statement of Additional Information and have been so incorporated in reliance upon the reports of KPMG LLP, independent auditors, on behalf of the Domini Social Equity Fund and the Portfolio. The Domini Social Bond Fund is newly-created and has not issued financial statements as of the date of this Statement of Additional Information. Domini Social InvestmentsSM, Domini Social Equity FundSM, Domini Social Bond FundSM, Domini Money Market AccountSM, The Responsible Index FundSM and domini.comSM are service marks of Domini Social Investments LLC. APPENDIX RATING INFORMATION The following ratings are opinions of Standard & Poor's Rating Service ("Standard & Poor's") or Moody's Investors Service, Inc. ("Moody's"), not recommendations to buy, sell or hold an obligation. The ratings below are as described by the rating agencies. While the rating agencies may from time to time revise such ratings, they are under no obligation to do so. STANDARD & POOR'S STANDARD & POOR'S FOUR HIGHEST LONG-TERM ISSUE CREDIT RATINGS AAA An obligation rated AAA has the HIGHEST RATING ASSIGNED by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. AA An obligation rated AA differs from the highest-rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. A An obligation rated A is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong. BBB An obligation rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. PLUS The ratings from AA to CCC may be modified by the addition of (+) a plus or minus sign to show relative standing within the OR MINUS(-) major rating categories. STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS SP-1 Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes. SP-3 Speculative capacity to pay principal and interest. STANDARD & POOR'S COMMERCIAL PAPER RATINGS A-1 This designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. A-2 Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. A-3 Issues carrying this designation have an adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations. B Issues rated B are regarded as having only speculative capacity for timely payment. C This rating is assigned to short-term debt obligations with a doubtful capacity for payment. D Debt rated D is in payment default. The D rating category is used when interest payments or principal payments are not made on the due date, even if the applicable grace period has not expired, unless Standard & Poor's believes such payments will be made during such grace period. MOODY'S MOODY'S FOUR HIGHEST DEBT RATINGS - TAXABLE DEBT & DEPOSITS GLOBALLY Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities. A Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future. Baa Bonds which are rated Baa are considered as medium-grade obligations (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. MOODY'S SHORT-TERM PRIME RATING SYSTEM - TAXABLE DEBT & DEPOSITS GLOBALLY Moody's employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers: PRIME-1 Issuers rated Prime-1 (or supporting institutions) have a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics: o Leading market positions in well-established industries. o High rates of return on funds employed. o Conservative capitalization structure with moderate reliance on debt and ample asset protection. o Broad margins in earnings coverage of fixed financial charges and high internal cash generation. o Well-established access to a range of financial markets and assured sources of alternate liquidity. PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. PRIME-3 Issuers rated Prime-3 (or supporting institutions) have an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained. NOT PRIME Issuers rated Not Prime do not fall within any of the Prime rating categories. PART C Item 23. Exhibits
* a(1) Amended and Restated Declaration of Trust of the Registrant. ** a(2) Certificate and Amendment No. 2 to Declaration of Trust of the Registrant. a(3) Forms of Amendments to Declaration of Trust of the Registrant. ** b(1) By-Laws of the Registrant, as amended October 6, 1997. b(2) Form of Amended and Restated By-Laws of the Registrant. d(1) Form of Management Agreement between the Registrant and Domini Social Investments LLC ("DSIL") with respect to Domini Social Bond Fund. d(2) Form of Submanagement Agreement between DSIL and South Shore Bank with respect to Domini Social Bond Fund. e Form of Amended and Restated Distribution Agreement between the Registrant and DSIL Investment Services LLC, as distributor. **** g(1) Custodian Agreement between the Registrant and Investors Bank & Trust Company, as custodian. g(2) Form of Letter Agreement adding Domini Social Bond Fund to the Custodian Agreement between the Registrant and Investors Bank & Trust Company, as custodian. ***** h(1) Transfer Agency Agreement between the Registrant and First Data Investor Services Group, Inc. ("First Data"). h(2) Form of Letter Agreement adding Domini Social Bond Fund to the Transfer Agency Agreement between the Registrant and First Data. h(3) Expense Limitation Agreement with respect to Domini Social Equity Fund. h(4) Form of Expense Limitation Agreement with respect to Domini Social Bond Fund. h(5) Form of Administration Agreement. *** i Opinion and consent of counsel. and filed herewith m Form of Amended and Restated Distribution Plan of the Registrant. *** q Powers of Attorney.
and **** - ------------------------
* Incorporated by reference from Post-Effective Amendment No. 7 to the Registrant's Registration Statement as filed with the SEC on November 22, 1995. ** Incorporated by reference from Post-Effective Amendment No. 11 to the Registrant's Registration Statement as filed with the SEC on November 25, 1997. *** Incorporated by reference from Post-Effective Amendment No. 13 to the Registrant's Registration Statement as filed with the SEC on September 29, 1999. **** Incorporated by reference from Post-Effective Amendment No. 14 to the Registrant's Registration Statement as filed with the SEC on November 23, 1999. ***** Incorporated by reference from Post-Effective Amendment No. 15 to the Registrant's Registration Statement as filed with the SEC on November 30, 1999.
Item 24. Persons Controlled by or under Common Control with Registrant Not applicable. Item 25. Indemnification Reference is hereby made to (a) Article V of the Registrant's Declaration of Trust, filed as an exhibit to Post-Effective Amendment No. 7 to the Registrant's Registration Statement; and (b) Section 4 of the Amended and Restated Distribution Agreement by and between the Registrant and DSIL Investment Services LLC, filed as an exhibit hereto. The Trustees and officers of the Registrant and the personnel of the Registrant's administrator and distributor 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, as amended (the "1940 Act"). Item 26. Business and Other Connections of Investment Adviser Domini Social Investments LLC ("DSIL") 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 DSIL are James Earl Brooks, Amy Lee Domini, Peter D. Kinder, Steven D. Lydenberg, Sigward Moser and David P. Wieder. Principal Employment during the Name Business Address Past Two Fiscal Years
James E. Brooks Four Arlington Street President, Equity Resources Group, Inc. (real estate Cambridge, MA 02140 investment) Amy L. Domini 230 Congress Street CEO, Secretary and Treasurer, Kinder, Lydenberg, Cambridge, MA 02110 Domini & Co., Inc. ("KLD")(investment adviser); Trustee, Loring, Wolcott & Coolidge (fiduciary) Peter D. Kinder 11 West 25th Street President, KLD New York, NY 10010 Steven D. Lydenberg 11 West 25th Street Director of Research, KLD New York, NY 10010 Sigward Moser 11 West 25th Street President and Director, Communication House New York, NY 10010 International, Inc. (advertising agency) David P. Wieder 11 West 25th Street President, Director, Equity Owner and New York, NY 10010 Chairman, Fundamental Shareholder Services, Inc.; Secretary, Fundamental Portfolio Advisors (investment adviser); Registered Representative, Fundamental Service Corp. (broker-dealer)
Item 27. Principal Underwriters
(a) DSIL Investment Services LLC is the distributor for the Registrant. DSIL Investment Services LLC serves as the distributor or placement agent for the following other registered investment companies: Domini Social Equity Fund, Domini Institutional Social Equity Fund and Domini Social Index Portfolio. (b) The information required by this Item 27 with respect to each director or officer of DSIL Investment Services LLC is incorporated herein by reference from Schedule A of Form BD (File No. 008-44763) as filed by DSIL Investment Services LLC pursuant to the Securities Exchange Act of 1934. (c) Not applicable.
Item 28. Location of Accounts and Records The accounts and records of the Registrant are located, in whole or in part, at the offices of the Registrant and at the following locations: Name: Address: Domini Social Investments LLC 11 W. 25th Street (manager) New York, NY 10010 DSIL Investment Services LLC 11 W. 25th Street (distributor) New York, NY 10010 Investors Bank & Trust Company 200 Clarendon Street (custodian) Boston, MA 02116 First Data 4400 Computer Drive (transfer agent) Westborough, MA 01581 Item 29. Management Services Not applicable. Item 30. Undertakings Not applicable. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston and Commonwealth of Massachusetts on the 12th day of January, 2000. DOMINI SOCIAL EQUITY FUND By: Amy L. Domini ------------------------------------- Amy L. Domini President Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed below by the following persons in the capacities indicated below on January 12, 2000. Signature Title Amy L. Domini President (Principal Executive Officer) - ----------------------------- and Trustee of Domini Social Equity Fund Amy L. Domini Carole M. Laible Treasurer (Principal Accounting and - ----------------------------- Financial Officer) of Domini Social Equity Carole M. Laible Fund Julia Elizabeth Harris* Trustee of Domini Social Equity Fund - ----------------------------- Julia Elizabeth Harris Kirsten S. Moy* Trustee of Domini Social Equity Fund - ----------------------------- Kirsten S. Moy William C. Osborn* Trustee of Domini Social Equity Fund - ----------------------------- William C. Osborn Karen Paul* Trustee of Domini Social Equity Fund - ----------------------------- Karen Paul Gregory A. Ratliff* Trustee of Domini Social Equity Fund - ----------------------------- Gregory A. Ratliff Timothy H. Smith* Trustee of Domini Social Equity Fund - ----------------------------- Timothy H. Smith Frederick C. Williamson, Sr.* Trustee of Domini Social Equity Fund - ----------------------------- Frederick C. Williamson, Sr. *By: Amy L. Domini - ----------------------------- Amy L. Domini Executed by Amy L. Domini on behalf of those indicated pursuant to Powers of Attorney. SIGNATURES Domini Social Index Portfolio has duly caused this Post-Effective Amendment to the Registration Statement on Form N-1A (File No. 33-29180) of Domini Social Equity Fund to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston and Commonwealth of Massachusetts on the 12th day of January, 2000. DOMINI SOCIAL INDEX PORTFOLIO By: Amy L. Domini ------------------------------------- Amy L. Domini President of Domini Social Index Portfolio This Post-Effective Amendment to the Registration Statement on Form N-1A of Domini Social Equity Fund has been signed below by the following persons in the capacities indicated below on January 12, 2000. Signature Title Amy L. Domini President (Principal Executive Officer)and - ----------------------------- Trustee of Domini Social Index Portfolio Amy L. Domini Carole M. Laible Treasurer (Principal Accounting and - ----------------------------- Financial Officer) of Domini Social Index Carole M. Laible Portfolio Julia Elizabeth Harris* Trustee of Domini Social Index Portfolio - ----------------------------- Julia Elizabeth Harris Kirsten S. Moy* Trustee of Domini Social Index Portfolio - ----------------------------- Kirsten S. Moy William C. Osborn* Trustee of Domini Social Index Portfolio - ----------------------------- William C. Osborn Karen Paul* Trustee of Domini Social Index Portfolio - ----------------------------- Karen Paul Gregory A. Ratliff* Trustee of Domini Social Index Portfolio - ----------------------------- Gregory A. Ratliff Timothy H. Smith* Trustee of Domini Social Index Portfolio - ----------------------------- Timothy H. Smith Frederick C. Williamson, Sr.* Trustee of Domini Social Index Portfolio - ----------------------------- Frederick C. Williamson, Sr. *By: Amy L. Domini - ----------------------------- Amy L. Domini Executed by Amy L. Domini on behalf of those indicated pursuant to Powers of Attorney. INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION OF EXHIBIT
a(3) Forms of Amendments to Declaration of Trust of the Registrant. b(2) Form of Amended and Restated By-Laws of the Registrant. d(1) Form of Management Agreement between the Registrant and Domini Social Investments LLC ("DSIL") with respect to Domini Social Bond Fund. d(2) Form of Submanagement Agreement between DSIL and South Shore Bank with respect to Domini Social Bond Fund. e Form of Amended and Restated Distribution Agreement between the Registrant and DSIL Investment Services LLC, as distributor. g(2) Form of Letter Agreement adding Domini Social Bond Fund to the Custodian Agreement between the Registrant and Investors Bank & Trust Company, as custodian. h(2) Form of Letter Agreement adding Domini Social Bond Fund to the Transfer Agency Agreement between the Registrant and First Data. h(3) Expense Limitation Agreement with respect to Domini Social Equity Fund. h(4) Form of Expense Limitation Agreement with respect to Domini Bond Fund. h(5) Form of Administration Agreement. i Opinion and consent of counsel. m Form of Amended and Restated Distribution Plan of the Registrant.
EX-99.A(3) 2 FORMS OF AMEND TO DECL OF TRUST OF THE REGISTRANT Exhibit a(3) DOMINI SOCIAL EQUITY FUND FORM OF AMENDMENT NO. 3 TO AMENDED AND RESTATED DECLARATION OF TRUST OF DOMINI SOCIAL EQUITY FUND The undersigned, being at least a majority of the Trustees of Domini Social Equity Fund (the "Trust"), a business trust organized under the laws of the Commonwealth of Massachusetts, pursuant to a Declaration of Trust dated June 7, 1989, as amended and restated on March 1, 1990, and as further amended (the "Declaration of Trust"), do hereby amend Section 1.1 of the Declaration of Trust by deleting Section 1.1 in its entirety and replacing it with the following, effective as of January __, 2000: SECTION 1.1. NAME. The name of the trust is hereby amended to be "Domini Social Investment Trust". IN WITNESS WHEREOF, the undersigned have executed this Amendment on separate counterparts this 14th day of January, 2000. - ------------------------------- ------------------------------- AMY L. DOMINI JULIA ELIZABETH HARRIS As trustee and not individually As trustee and not individually - ------------------------------- ------------------------------- KIRSTEN S. MOY WILLIAM C. OSBORN As trustee and not individually As trustee and not individually - ------------------------------- ------------------------------- KAREN PAUL GREGORY A. RATLIFF As trustee and not individually As trustee and not individually - ------------------------------- ------------------------------- TIMOTHY SMITH FREDERICK C. WILLIAMSON, SR. As trustee and not individually As trustee and not individually Exhibit a(3) DOMINI SOCIAL INVESTMENT TRUST FORM OF AMENDMENT NO. 4 TO AMENDED AND RESTATED DECLARATION OF TRUST AND AMENDED AND RESTATED ESTABLISHMENT AND DESIGNATION OF SERIES OF SHARES OF BENEFICIAL INTEREST (WITHOUT PAR VALUE) Pursuant to Sections 6.9 and 9.3 of the Declaration of Trust, dated June 7, 1989, as amended and restated on March 1, 1990, and as further amended (the "Declaration of Trust"), of Domini Social Investment Trust (formerly, Domini Social Equity Fund) (the "Trust"), the undersigned, being at least a majority of the Trustees of the Trust, do hereby amend and restate the Trust's existing Establishment and Designation of Series of Shares of Beneficial Interest (without par value) in order to establish a new series of Shares (as defined in the Declaration of Trust). No other changes to the special and relative rights of the existing series are intended by this amendment and restatement. This amendment and restatement shall become effective as of January 17, 2000. 1. The series shall be as follows: The new series shall be designated as "Domini Social Bond Fund." The other existing series of the Trust is Domini Social Equity Fund. 2. Each series shall be authorized to hold cash, invest in securities, instruments and other properties and use investment techniques as from time to time described in the Trust's then currently effective registration statement under the Securities Act of 1933 to the extent pertaining to the offering of Shares of each series. Each Share of a series shall be redeemable, shall be entitled to one vote (or fraction thereof in respect of a fractional share) on matters on which Shares of that series shall be entitled to vote, shall represent a pro rata beneficial interest in the assets allocated or belonging to that series, and shall be entitled to receive its pro rata share of the net assets of that series upon liquidation of that series, all as provided in Section 6.9 of the Declaration of Trust. The proceeds of sales of Shares of a series, together with any income and gain thereon, less any diminution or expenses thereof, shall irrevocably belong to that series, unless otherwise required by law. 3. Shareholders of each series shall vote separately as a class on any matter to the extent required by, and any matter shall be deemed to have been effectively acted upon with respect to each series as provided in, Rule 18f-2, as from time to time in effect, under the Investment Company Act of 1940, as amended, or any successor rule, and by the Declaration of Trust. 4. The assets and liabilities of the Trust shall be allocated to each series as set forth in Section 6.9 of the Declaration of Trust. 5. Subject to the provisions of Section 6.9 and Article IX of the Declaration of Trust, the Trustees (including any successor Trustees) shall have the right at any time and from time to time to create additional series, to reallocate assets and expenses, to change the designation of each series or any other series created hereafter, or otherwise to change the special and relative rights of each series or any such other series. IN WITNESS WHEREOF, the undersigned have executed this Establishment and Designation of Series on separate counterparts this 14th day of January, 2000. - ------------------------------- ------------------------------- AMY L. DOMINI JULIA ELIZABETH HARRIS As trustee and not individually As trustee and not individually - ------------------------------- ------------------------------- KIRSTEN S. MOY WILLIAM C. OSBORN As trustee and not individually As trustee and not individually - ------------------------------- ------------------------------- KAREN PAUL GREGORY A. RATLIFF As trustee and not individually As trustee and not individually - ------------------------------- ------------------------------- TIMOTHY SMITH FREDERICK C. WILLIAMSON, SR. As trustee and not individually As trustee and not individually EX-99.B(2) 3 FORM OF AMEND & RESTATED BY-LAWS OF THE REGISTRANT Exhibit b(2) AMENDED AND RESTATED BY-LAWS OF Domini Social Investment Trust (formerly, DOMINI SOCIAL EQUITY FUND) ARTICLE I DEFINITIONS The terms "COMMISSION", "DECLARATION", "DISTRIBUTOR", "INVESTMENT ADVISER", "MAJORITY SHAREHOLDER VOTE", "1940 ACT", "SHAREHOLDER", "SHARES", "TRANSFER AGENT", "TRUST", "TRUST PROPERTY" and "TRUSTEES" have the respective meanings given them in the Declaration of Trust of Domini Social Investment Trust (formerly, Domini Social Equity Fund) dated June 7, 1989, as amended and restated as of March 1, 1990, and as further amended and restated from time to time. ARTICLE II OFFICES SECTION 1. PRINCIPAL OFFICE. Until changed by the Trustees, the principal office of the Trust in the Commonwealth of Massachusetts shall be in the City of Boston, County of Suffolk. SECTION 2. OTHER OFFICES. The Trust may have offices in such other places without as well as within the Commonwealth as the Trustees may from time to time determine. ARTICLE III SHAREHOLDERS SECTION 1. MEETINGS. A meeting of Shareholders may be called at any time by a majority of the Trustees and shall be called by any Trustee upon written request, which shall specify the purpose or purposes for which such meeting is to be called, of Shareholders holding in the aggregate not less than 10% of the outstanding Shares entitled to vote on the matters specified in such written request. Any such meeting shall be held within or without the Commonwealth of Massachusetts on such day and at such time as the Trustees shall designate. The holders of a majority of outstanding Shares entitled to vote present in person or by proxy shall constitute a quorum at any meeting of the Shareholders. In the absence of a quorum, a majority of outstanding Shares entitled to vote present in person or by proxy may adjourn the meeting from time to time until a quorum shall be present. SECTION 2. NOTICE OF MEETINGS Notice of all meetings of Shareholders, stating the time, place and purposes of the meeting, shall be given by the Trustees by mail to each Shareholder entitled to vote at such meeting at his address as recorded on the register of the Trust, mailed at least 10 days and not more than 60 days before the meeting. Only the business stated in the notice of the meeting shall be considered at such meeting. Any adjourned meeting may be held as adjourned without further notice. No notice need be given to any Shareholder who shall have failed to inform the Trust of his current address or if a written waiver of notice, executed before or after the meeting by the Shareholder or his attorney thereunto authorized, is filed with the records of the meeting. SECTION 3. RECORD DATE. For the purpose of determining the Shareholders who are entitled to notice of and to vote at any meeting, or to participate in any distribution, or for the purpose of any other action, the Trustees may from time to time close the transfer books for such period, not exceeding 30 days, as the Trustees may determine; or without closing the transfer books the Trustees may fix a date not more than 60 days prior to the date of any meeting of Shareholders or distribution or other action as a record date for the determination of the persons to be treated as Shareholders of record for such purpose. SECTION 4. ACTION. The Shareholders shall take action by the affirmative vote of the holders of a majority, except in the case of the election of Trustees which shall only require a plurality, of the Shares present and entitled to vote at a meeting of Shareholders at which a quorum is present, except as may be otherwise required by the 1940 Act, or the Declaration of Trust. SECTION 5. PROXY REPRESENTATION AND VOTING. At any meeting of Shareholders, any holder of Shares entitled to vote thereat may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Secretary, or with such other officer or agent of the Trust as the Secretary may direct, for verification prior to the time at which such vote shall be taken. The placing of a Shareholder's name on a proxy pursuant to telephonic or electronically transmitted instructions obtained pursuant to procedures which are reasonably designed to verify that such instructions have been authorized by such Shareholder, shall constitute execution of such proxy by or on behalf of such Shareholder. Pursuant to a vote of a majority of the Trustees, proxies may be solicited in the name of one or more Trustees or one or more officers of the Trust or such others persons as the Trustees shall designate. Only Shareholders of record shall be entitled to vote. Each full Share shall be entitled to one vote and fractional Shares shall be entitled to a vote of such fractions. When any Share is held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such Share, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such votes shall not be received in respect of such Share. Any copy, facsimile telecommunication or other reliable reproduction of a proxy may be substituted for or used in lieu of the original proxy for any and all purposes for which the original proxy could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original proxy. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. If the holder of any such Share is a minor or a person of unsound mind, and subject to guardianship or to the legal control of any other person as regards the charge or management of such Share, such Share may be voted by such guardian or such other person appointed or having such control, and such vote may be given in person or by proxy. Unless otherwise specifically limited by their terms, proxies shall entitle the holder thereof to vote at any adjournment of a meeting. SECTION 6. INSPECTION OF RECORDS. The records of the Trust shall be open to inspection by Shareholders to the same extent as is permitted shareholders of a Massachusetts business corporation. SECTION 7. ACTION WITHOUT MEETING. Any action which may be taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof as shall be required by law, the Declaration or these By-Laws for approval of such matter) consent to the action in writing and the written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders. ARTICLE IV TRUSTEES SECTION 1. MEETINGS OF THE TRUSTEES. The Trustees may in their discretion provide for regular or stated meetings of the Trustees. Notice of regular or stated meetings need not be given. Meetings of the Trustees other than regular or stated meetings shall be held whenever called by the Chairman or by any Trustee. Notice of the time and place of each meeting other than regular or stated meetings shall be given by the Secretary or an Assistant Secretary or by the officer or Trustee calling the meeting and shall be mailed to each Trustee at least two days before the meeting, or shall be telegraphed, cabled, or wirelessed to each Trustee at his business address, or personally delivered to him at least one day before the meeting. Notice of a meeting need not be given to any Trustee if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any Trustee who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. A notice or waiver of notice need not specify the purpose of any meeting. The Trustees may meet by means of a telephone conference circuit or similar communications equipment by means of which all persons participating in the meeting can hear each other, which telephone conference meeting shall be deemed to have been held at a place designated by the Trustees at the meeting. Participation in a telephone conference meeting shall constitute presence in person at such meeting. Any action required or permitted to be taken at any meeting of the Trustees may be taken by the Trustees without a meeting if all the Trustees consent to the action in writing and the written consents are filed with the records of the Trustees' meetings. Such consents shall be treated as a vote for all purposes. SECTION 2. QUORUM AND MANNER OF ACTING. A majority of the Trustees present in person at any regular or special meeting of the Trustees shall constitute a quorum for the transaction of business at such meeting and (except as otherwise required by law, the Declaration or these By-Laws) the act of a majority of the Trustees present at any such meeting, at which a quorum is present, shall be the act of the Trustees. In the absence of a quorum, a majority of the Trustees present may adjourn the meeting from time to time until a quorum shall be present. Notice of an adjourned meeting need not be given. SECTION 3. 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. ARTICLE V COMMITTEES AND ADVISORY BOARD SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Trustees by vote of a majority of all the Trustees may elect from their own number an Executive Committee to consist of not less than three Trustees to hold office at the pleasure of the Trustees. While the Trustees are not in session, the Executive Committee shall have the power to conduct the current and ordinary business of the Trust, including the purchase and sale of securities and the designation of securities to be delivered upon redemption of Shares of the Trust, and such other powers of the Trustees as the Trustees may, from time to time, delegate to the Executive Committee except those powers which by law, the Declaration or these By-Laws the Trustees are prohibited from so delegating. The Trustees may also elect from their own number other Committees from time to time, the number composing such Committees, the powers conferred upon the same (subject to the same limitations as with respect to the Executive Committee) and the term of membership on such Committees to be determined by the Trustees. The Trustees may designate a chairman of any such Committee. In the absence of such designation a Committee may elect its own chairman. SECTION 2. MEETING, QUORUM AND MANNER OF ACTING. The Trustees may (i) provide for stated meetings of any Committee, (ii) specify the manner of calling and notice required for special meetings of any Committee, (iii) specify the number of members of a Committee required to constitute a quorum and the number of members of a Committee required to exercise specified powers delegated to such Committee, (iv) authorize the making of decisions to exercise specified powers by written assent of the requisite number of members of a Committee without a meeting, and (v) authorize the members of a Committee to meet by means of a telephone conference circuit. Each Committee shall keep regular minutes of its meetings and records of decisions taken without a meeting and cause them to be recorded in a book designated for that purpose and kept in the office of the Trust. SECTION 3. ADVISORY BOARD. The Trustees may appoint an Advisory Board to consist in the first instance of not less than three members. Members of such Advisory Board shall not be Trustees or officers and need not be Shareholders. A member of such Advisory Board shall hold office for such period as the Trustees may by vote provide and may resign therefrom by a written instrument signed by him which shall take effect upon its delivery to the Trustees. The Advisory Board shall have no legal powers and shall not perform the functions of Trustees in any manner, such Advisory Board being intended merely to act in an advisory capacity. Such Advisory Board shall meet at such times and upon such notice as the Trustees may by vote provide. SECTION 4. CHAIRMAN. The Trustees may, by a majority vote of all the Trustees, elect from their own number a Chairman, to hold office until his successor shall have been duly elected and qualified. The Chairman shall not hold any other office. The Chairman may be, but need not be, a Shareholder. The Chairman shall preside at all meetings of the Trustees and shall have such other duties as from time to time may be assigned to him by the Trustees. ARTICLE VI OFFICERS SECTION 1. GENERAL PROVISIONS. The officers of the Trust shall be a President, a Treasurer and a Secretary, each of whom shall be elected by the Trustees. The Trustees may elect or appoint such other officers or agents as the business of the Trust may require, including one or more Vice Presidents, one or more Assistant Treasurers, and one or more Assistant Secretaries. The Trustees may delegate to any officer or committee the power to appoint any subordinate officers or agents. SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Except as otherwise provided by law, the Declaration or these By-Laws, the President, the Treasurer and the Secretary shall hold office until his respective successor shall have been duly elected and qualified, and all other officers shall hold office at the pleasure of the Trustees. The Secretary and Treasurer may be the same person. A Vice President and the Treasurer or a Vice President and the Secretary may be the same person, but the offices of Vice President, Secretary and Treasurer shall not be held by the same person. The President shall not hold any other office. Except as above provided, any two offices may be held by the same person. Any officer may be, but does not need be, a Trustee or Shareholder. SECTION 3. REMOVAL. The Trustees, at any regular or special meeting of the Trustees, may remove any officer with or without cause by a vote of a majority of the Trustees. Any officer or agent appointed by any officer or committee may be removed with or without cause by such appointing officer or committee. SECTION 4. POWERS AND DUTIES OF THE PRESIDENT. The President, unless a Chairman is so elected by the Trustees, shall be the principal executive officer of the Trust. Subject to the control of the Trustees and any committee of the Trustees, the President shall at all times exercise a general supervision and direction over the affairs of the Trust. The President shall have the power to employ attorneys and counsel for the Trust and to employ such subordinate officers, agents, clerks and employees as he may find necessary to transact the business of the Trust. The President shall also have the power to grant, issue, execute or sign such powers of attorney, proxies or other documents as may be deemed advisable or necessary in the furtherance of the interests of the Trust. The President shall have such other powers and duties as, from time to time, may be conferred upon or assigned to him by the Trustees. SECTION 5. POWERS AND DUTIES OF VICE PRESIDENTS. In the absence or disability of the President, the Vice President or, if there are more than one Vice President, any Vice President designated by the Trustees shall perform all the duties and may exercise any of the powers of the President, subject to the control of the Trustees. Each Vice President shall perform such other duties as may be assigned to him from time to time by the Trustees or the President. SECTION 6. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall be the principal financial and accounting officer of the Trust. The Treasurer shall deliver all funds of the Trust which may come into his hands to such custodian as the Trustees may employ pursuant to Article X hereof. The Treasurer shall render a statement of condition of the finances of the Trust to the Trustees as often as they shall require the same and shall in general perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Trustees. The Treasurer shall give a bond for the faithful discharge of his duties, if required to do so by the Trustees, in such sum and with such surety or sureties as the Trustees shall require. SECTION 7. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall keep the minutes of all meetings of the Shareholders in proper books provided for that purpose; shall keep the minutes of all meetings of the Trustees; shall have custody of the seal of the Trust; and shall have charge of the Share transfer books, lists and records unless the same are in the charge of the Transfer Agent. The Secretary shall attend to the giving and serving of all notices by the Trust in accordance with the provisions of these By-Laws and as required by law; and subject to these By-Laws, shall in general perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Trustees. SECTION 8. POWERS AND DUTIES OF ASSISTANT TREASURERS. In the absence or disability of the Treasurer, any Assistant Treasurer designated by the Trustees shall perform all the duties, and may exercise any of the powers, of the Treasurer. Each Assistant Treasurer shall perform such other duties as from time to time may be assigned to him by the Trustees. Each Assistant Treasurer shall give a bond for the faithful discharge of his duties, if required to do so by the Trustees, in such sum and with such surety or sureties as the Trustees shall require. SECTION 9. POWERS AND DUTIES OF ASSISTANT SECRETARIES. In the absence or disability of the Secretary, any Assistant Secretary designated by the Trustees shall perform all of the duties, and may exercise any of the powers, of the Secretary. Each Assistant Secretary shall perform such other duties as from time to time may be assigned to him by the Trustees. SECTION 10. COMPENSATION OF OFFICERS AND TRUSTEES AND MEMBERS OF THE ADVISORY BOARD. Subject to any applicable law or provision of the Declaration, the compensation of the officers and Trustees and members of the Advisory Board shall be fixed from time to time by the Trustees or, in the case of officers, by any committee of officers upon whom such power may be conferred by the Trustees. No officer shall be prevented from receiving such compensation as such officer by reason of the fact that he is also a Trustee. ARTICLE VII FISCAL YEAR The fiscal year of the Trust shall be that annual period as designated by the Trustees of the Trust. ARTICLE VIII SEAL The Trustees shall adopt a seal which shall be in such form and shall have such inscription thereon as the Trustees may from time to time prescribe. ARTICLE IX WAIVERS OF NOTICE Whenever any notice is required to be given by law, the Declaration or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent thereto. A notice shall be deemed to have been telegraphed, cabled or wirelessed for the purposes of these By-Laws when it has been delivered to a representative of any telegraph, cable or wireless company with instruction that it be telegraphed, cabled or wirelessed. Any notice shall be deemed to be given at the time when the same shall be mailed, telegraphed, cabled or wirelessed. ARTICLE X CUSTODIAN SECTION 1. APPOINTMENT AND DUTIES. The Trustees shall at all times employ a bank or trust company having a capital, surplus and undivided profits of at least $5,000,000 as custodian with authority as its agent, but subject to such restrictions, limitations and other requirements, if any, as may be contained in the Declaration, these By-Laws and the 1940 Act: (i) to hold the securities owned by the Trust and deliver the same upon written order; (ii) to receive and receipt for any monies due to the Trust and deposit the same in its own banking department or elsewhere as the Trustees may direct; (iii) to disburse such funds upon orders or vouchers; (iv) if authorized by the Trustees, to keep the books and accounts of the Trust and furnish clerical and accounting services; and (v) if authorized by the Trustees, to compute the net income of the Trust and the net asset value of Shares; all upon such basis of compensation as may be agreed upon between the Trustees and the custodian. The Trustees may also authorize the custodian to employ one or more sub-custodians from time to time to perform such of the acts and services of the custodian and upon such terms and conditions as may be agreed upon between the custodian and such sub-custodian and approved by the Trustees, provided that in every case such sub-custodian shall be a bank or trust company organized under the laws of the United States or one of the states thereof and having capital, surplus and undivided profits of at least $5,000,000. SECTION 2. CENTRAL CERTIFICATE SYSTEM. Subject to such rules, regulations and orders as the Commission may adopt, the Trustees may direct the custodian to deposit all or any part of the securities owned by the Trust in a system for the central handling of securities established by a national securities exchange or a national securities association registered with the Commission under the Securities Exchange Act of 1934, or with such other person as may be permitted by the Commission, or otherwise in accordance with the 1940 Act, pursuant to which system all securities of any particular class or series of any issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of such securities, provided that all such deposits shall be subject to withdrawal only upon the order of the Trust or its custodian. SECTION 3. ACCEPTANCE OF RECEIPTS IN LIEU OF CERTIFICATES. Subject to such rules, regulations and orders as the Commission may adopt, the Trustees may direct the custodian to accept written receipts or other written evidences indicating purchases of securities held in book-entry form in the Federal Reserve System in accordance with regulations promulgated by the Board of Governors of the Federal Reserve System and the local Federal Reserve Banks in lieu of receipt of certificates representing such securities. SECTION 4. PROVISIONS OF CUSTODIAN CONTRACT. The following provisions shall apply to the employment of a custodian pursuant to this Article X and to any contract entered into with the custodian so employed: (a) The Trustees shall cause to be delivered to the custodian all securities owned by the Trust or to which it may become entitled, and shall order the same to be delivered by the custodian only upon completion of a sale, exchange, transfer, pledge, or other disposition thereof, and upon receipt by the custodian of the consideration therefor or a certificate of deposit or a receipt of an issuer or of its Transfer Agent, all as the Trustees may generally or from time to time require or approve, or to a successor custodian; and the Trustees shall cause all funds owned by the Trust or to which it may become entitled to be paid to the custodian, and shall order the same disbursed only for investment against delivery of the securities acquired, or in payment of expenses, including management compensation, and liabilities of the Trust, including distributions to Shareholders, or to a successor custodian; provided, however, that nothing herein shall prevent delivery of securities for examination to the broker purchasing the same in accord with the "street delivery" custom whereby such securities are delivered to such broker in exchange for a delivery receipt exchanged on the same day for an uncertified check of such broker to be presented on the same day for certification. (b) In case of the resignation, removal or inability to serve of any such custodian, the Trust shall promptly appoint another bank or trust company meeting the requirements of this Article X as successor custodian. The agreement with the custodian shall provide that the retiring custodian shall, upon receipt of notice of such appointment, deliver all Trust Property in its possession to and only to such successor, and that pending appointment of a successor custodian, or a vote of the Shareholders to function without a custodian, the custodian shall not deliver any Trust Property to the Trust, but may deliver all or any part of the Trust Property to a bank or trust company doing business in Boston, Massachusetts, of its own selection, having an aggregate capital, surplus and undivided profits (as shown in its last published report) of at least $5,000,000; provided that arrangements are made for the Trust Property to be held under terms similar to those on which they were held by the retiring custodian. ARTICLE XI AMENDMENTS These By-Laws, or any of them, may be altered, amended or repealed, or new By-Laws may be adopted (a) by the Shareholders by a Majority Shareholder Vote, or (b) by the Trustees, provided, however, that no By-Law may be amended, adopted or repealed by the Trustees if such amendment, adoption or repeal requires, pursuant to law, the Declaration or these By-Laws, a vote of the Shareholders. EX-99.D(1) 4 FORM OF MANAGEMENT AGREEMENT Exhibit d(1) FORM OF MANAGEMENT AGREEMENT MANAGEMENT AGREEMENT, dated as of ________ __, 2000, by and between Domini Social Investment Trust, a Massachusetts business trust (the "Trust"), and Domini Social Investments LLC, a Massachusetts limited liability company ("DSI" or the "Manager"). W I T N E S S E T H: WHEREAS, the Trust 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, in each case as amended and in effect from time to time, the "1940 Act"); and WHEREAS, the Trust wishes to engage DSI to provide certain investment advisory services for the series of the Trust designated as Domini Social Bond Fund (the "Fund"), and DSI is willing to provide such investment advisory services for the Fund 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. DSI shall act as the Manager for the Fund 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 Fund shall be held uninvested, subject always to the restrictions of the Trust's Declaration of Trust, dated June 7, 1989, and By-laws, as each may be amended and restated 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 Trust with respect to the Fund. The Manager 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 Trust's portfolio securities shall be exercised. Should the Board of Trustees of the Trust at any time, however, make any definite determination as to investment policy applicable to the Fund and notify the Manager thereof in writing, the Manager 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 Manager shall take, on behalf of the Fund, 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 Fund's account with the brokers or dealers selected by it, and to that end the Manager is authorized as the agent of the Trust to give instructions to the custodian or any subcustodian of the Fund as to deliveries of securities and payments of cash for the account of the Fund. 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 Fund and/or the other accounts over which the Manager, any subadviser, submanager or respective "affiliated person" thereof exercises investment discretion. The Manager is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Manager 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 Manager and any "affiliated person" of the Manager have with respect to accounts over which they exercise investment discretion. The Trustees of the Trust shall periodically review the commissions paid by the Fund to determine if the commissions paid over representative periods of time were reasonable in relation to the benefits to the Fund. In making purchases or sales of securities or other property for the account of the Fund, the Manager may deal with itself or with the Trustees of the Trust or the Trust'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 Manager 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 Trust employ at the Fund's expense, one or more subadvisers or submanagers; provided that in each case the Manager shall supervise the activities of each subadviser or submanager. Any agreement between the Manager and a subadviser or submanager shall be subject to the renewal, termination and amendment provisions applicable to this Agreement. Any agreement by the Trust on behalf of the Fund and a subadviser or submanager may be terminated by the Manager at any time on not more than 60 days' nor less than 30 days' written notice to the Trust and the subadviser or submanager, as applicable. 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 Trust will pay all of its own expenses including, without limitation, organization costs of the Trust; compensation of Trustees who are not "interested persons" of the Trust; governmental fees, including but not limited to Securities and Exchange Commission fees and state "blue sky" fees, if any; interest expense; 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 Trust; expenses relating to the issuance and redemption of shares of beneficial interest of the Fund and servicing shareholder accounts; expenses of preparing, typesetting, printing and mailing prospectuses, statements of additional information, shareholder reports, notices, proxy statements and reports to governmental officers and commissions and to shareholders of the Fund; expenses connected with the execution, recording and settlement of security transactions; insurance premiums; fees and expenses of the custodian for all services to the Fund, including safekeeping of funds and securities and maintaining required books and accounts; expenses of calculating the net asset value of the Fund (including but not limited to the fees of independent pricing services); expenses connected with maintaining the Trust's existence as a Massachusetts business trust; expenses of meetings of the Fund's shareholders; and such non-recurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Trust on behalf of the Fund may be party and the legal obligation which the Trust 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 for the benefit of the Fund, the Trust will pay DSI from the assets of the Fund an advisory fee accrued daily and payable monthly at an annual rate equal to 0.40% of the Fund's average daily net assets for the Fund's then current fiscal year. The Manager shall pay any applicable fees to any subadviser(s) or submanager(s) on the Fund'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 Trust or the Trust'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 shares of beneficial interest of the Fund, 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 Trust applicable to the Fund 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 Fund, 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 Fund are not to be deemed to be exclusive, DSI being free to render investment advisory and/or other services to others. It is understood that Trustees and officers of the Trust and shareholders of the Fund 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 Trust or the Fund and that DSI may be or may become interested in the Trust or the Fund as a shareholder 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 January 14, 2002, on which date it will terminate unless its continuance after January 14, 2002 is "specifically approved at least annually" (a) by the vote of a majority of the Trustees of the Trust who are not "interested persons" of the Trust 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 Trust or by "vote of a majority of the outstanding voting securities" of the Fund. 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 Fund, 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 Fund (except for any such 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 Trust under this Agreement are binding only with respect to the Fund; that any liability of the Trust under this Agreement, or in connection with the transactions contemplated herein, shall be discharged only out of the assets of the Fund; and that no other series of the Trust shall be liable with respect to this Agreement or in connection with the transactions contemplated herein. The undersigned officer of the Trust 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 or officers of the Trust or holders of shares of beneficial interest of the Fund 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 INVESTMENT TRUST DOMINI SOCIAL On behalf of Domini Social Bond Fund INVESTMENTS LLC By: By: Title: Title: EX-99.D(2) 5 FORM OF SUBMANAGEMENT AGREEMENT Exhibit d(2) FORM OF SUBMANAGEMENT AGREEMENT SUBMANAGEMENT AGREEMENT, dated as of ________ __, 2000, by and between Domini Social Investments LLC, a Massachusetts limited liability company ("DSI" or the "Manager"), and South Shore Bank a [**__________**] ("SSB" or the "Submanager"). W I T N E S S E T H: WHEREAS, Domini Social Investment Trust (the "Trust") 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, in each case as in effect from time to time, the "1940 Act"); WHEREAS, DSI has entered into a Management Agreement (the "Management Agreement") with the Trust wherein DSI has agreed to provide certain investment advisory services for the series of the Trust designated as Domini Social Bond Fund (the "Fund"); and WHEREAS, as permitted by Section 1 of the Management Agreement, DSI wishes to subcontract some of the performance of its obligations thereunder to SSB, and SSB 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 SSB. In accordance with and subject to the Management Agreement between the Trust and the Manager with respect to the Fund, the Manager hereby retains SSB to act as the Submanager for the Fund 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 Fund for the compensation provided by this Agreement. 2. DUTIES OF THE SUBMANAGER. The Submanager shall provide the Fund 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 Fund'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 Fund. 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 Fund allocated by the Manager to the Submanager shall be held uninvested, subject always to the restrictions of the Trust's Declaration of Trust, dated June 7, 1989, and By-laws, as each may be amended and restated 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 Trust with respect to the Fund and, subject further, to the Submanager notifying the Manager in advance of the Submanager's intention to purchase any securities except insofar 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 Trust 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 Fund and what portion, if any, of the assets of the Fund 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 Fund's portfolio securities shall be exercised. Should the Board of Trustees of the Trust or the Manager at any time, however, make any definite determination as to an investment policy applicable to the Fund 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 Fund, 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 Fund's account with the brokers or dealers selected by it, and to that end the Submanager is authorized as the agent of the Fund to give instructions to the custodian or any subcustodian of the Fund as to deliveries of securities and payments of cash for the account of the Fund. 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 Fund and/or the other accounts over which the Submanager, the Manager or a 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 Fund 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. The Trustees of the Trust shall periodically review the commissions paid by the Fund to determine if the commissions paid over representative periods of time were reasonable in relation to the benefits to the Fund. In making purchases or sales of securities or other property for the account of the Fund, the Submanager may deal with itself or with the Trustees of the Trust or the Fund's underwriter or distributor to the extent such actions are permitted by the 1940 Act. The Board of Trustees of the Trust, 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 Fund. 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 Trust will pay all of its own expenses including, without limitation, organization costs of the Trust; compensation of Trustees who are not "interested persons" of the Trust; governmental fees; interest charges; loan commitment fees; taxes; membership dues in industry associations allocable to the Trust; fees and expenses of independent auditors, legal counsel and any transfer agent, distributor, registrar or dividend disbursing agent of the Trust; expenses relating to the issuance and redemption of shares of beneficial interest of the Fund and servicing shareholder accounts; expenses of preparing, typesetting, printing and mailing prospectuses, statements of additional information, shareholder reports, notices, proxy statements and reports to governmental officers and commissions and to shareholders of the Fund; expenses connected with the execution, recording and settlement of security transactions; insurance premiums; fees and expenses of the custodian for all services to the Fund, including safekeeping of funds and securities and maintaining required books and accounts; expenses of calculating the net asset value of the Fund (including but not limited to the fees of independent pricing services); expenses of meetings of the Fund's shareholders; and such non-recurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Trust on behalf of the Fund may be a party and the legal obligation which the Trust 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 out of the management fee it receives from the Trust out of the assets of the Fund, and only to the extent thereof, a subadvisory fee, accrued daily and paid monthly, at an annual rate equal to 0.20% of the average daily net assets of the Fund allocated to the Submanager. If SSB serves as Submanager for less than the whole of any period specified in this Section 4, the compensation to SSB, as Submanager, shall be accordingly adjusted and prorated. 5. COVENANTS OF THE SUBMANAGER. The Submanager agrees that it will not deal with itself, or with the Trustees of the Trust or the Trust'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 shares of beneficial interest of the Fund, 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 Trust applicable to the Fund 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 Fund, 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 Trust 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. 7. ACTIVITIES OF THE SUBMANAGER. The services of the Submanager to the Fund are not to be deemed to be exclusive, the Submanager being free to render investment advisory and/or other services to others. It is understood that Trustees and officers of the Trust and shareholders of the Fund 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 Trust or the Fund or the Manager and that the Submanager may be or may become interested in the Trust or the Fund as a shareholder 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 January 14, 2002, on which date it will terminate unless its continuance after January 14, 2002 is "specifically approved at least annually" (a) by the vote of a majority of the Trustees of the Trust who are not "interested persons" of the Trust 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 Trust or by "vote of a majority of the outstanding voting securities" of the Fund. This Agreement may be terminated at any time without the payment of any penalty by (i) the Trustees of the Trust, (ii) the "vote of a majority of the outstanding voting securities" of the Fund or (iii) DSI with the prior consent of the Trustees of the Trust, 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 Trust. 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 Trust and the "vote of a majority of the outstanding voting securities" of the Fund (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. 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. SOUTH SHORE BANK By: ___________________________ Title: DOMINI SOCIAL INVESTMENTS LLC By: ___________________________ Title: Acknowledged: DOMINI SOCIAL INVESTMENT TRUST On behalf of Domini Social Bond Fund By: ___________________________ Title: EX-99.E 6 FORM OF AMENDED & RESTATATED DISTRIBUTION AGMT. Exhibit e FORM OF AMENDED AND RESTATED DISTRIBUTION AGREEMENT AMENDED AND RESTATED DISTRIBUTION AGREEMENT, dated as of August 15, 1999 and amended and restated as of [**__________ __**], 2000 by and between Domini Social Investment Trust (formerly, "Domini Social Equity Fund"), a Massachusetts business trust (the "Trust"), and DSIL INVESTMENT SERVICES LLC, a New York limited liability company and a subsidiary of Domini Social Investments LLC (the "Distributor"). W I T N E S S E T H: WHEREAS, the Trust is engaged in business as an open-end investment company registered under the Investment Company Act of 1940 (collectively with the rules and regulations promulgated thereunder, the "1940 Act"); WHEREAS, the Trust's shares of beneficial interests ("Shares") have been divided into one or more series ("Series"); WHEREAS, the Board of Trustees of the Trust has adopted an Amended and Restated Distribution Plan, dated as of May 1, 1990 and amended and restated as of January 14, 2000 (as amended and restated and in effect from time to time, the "Distribution Plan"), which is incorporated herein by reference and pursuant to which the Trust desires to enter into this Amended and Restated Distribution Agreement with respect to its current and future Series; WHEREAS, the Trust wishes to engage the Distributor to provide certain services with respect to the distribution of the Shares of each of its Series, and the Distributor is willing to provide such services to each Series of the Trust on the terms and conditions hereinafter set forth; and WHEREAS, the Trust has entered into a distribution agreement, dated as of August 15, 1999, with respect to its Series designated Domini Social Equity Fund (the "Original Agreement") and desires to amend and restate the Original Agreement in its entirety in order to provide that its provisions apply to each of the Series of the Trust. 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, and the Original Agreement is hereby amended and restated as follows: 1. The Trust grants to the Distributor the right, as agent of the Trust, to sell Shares of each Series of the Trust upon the terms hereinbelow set forth during the term of this Agreement. While this Agreement is in force, the Distributor agrees to use its best efforts to find purchasers for Shares of each Series of the Trust. The Distributor shall have the right, as agent of the Trust, to order from the Trust the Shares needed, but not more than the Shares needed (except for clerical errors and errors of transmission), to fill unconditional orders for Shares placed with the Distributor, all such orders to be made in the manner set forth in the Trust's then-current prospectus (the "Prospectus") and then-current statement of additional information (the "Statement of Additional Information"). The price which shall be paid to the Trust for the Shares so purchased shall be the net asset value per Share as determined in accordance with the provisions of the Declaration of Trust and By-Laws, as each may from time to time be amended (collectively, the "Governing Instruments"). The Distributor shall notify the Custodian of the Trust (currently Investors Bank & Trust Company), at the end of each business day, or as soon thereafter as the orders placed with the Distributor have been compiled, of the number of Shares and the prices thereof which have been ordered through the Distributor since the end of the previous business day. The right granted to the Distributor to place orders for Shares with the Trust shall be exclusive, except that this exclusive right shall not apply to Shares issued in the event that an investment company (whether a regulated or private investment company or a personal holding company) is merged with and into or consolidated with the Trust or in the event that the Trust acquires, by purchase or otherwise, all (or substantially all) the assets or the outstanding shares of any such company; nor shall it apply to Shares issued by the Trust as a dividend or stock split. The exclusive right to place orders for Shares granted to the Distributor may be waived by the Distributor by notice to the Trust in writing, either unconditionally or subject to such conditions and limitations as may be set forth in such notice to the Trust. The Trust hereby acknowledges that the Distributor may render distribution and other services to other parties, including other investment companies. In connection with its duties hereunder, the Distributor shall also arrange for computation of performance statistics with respect to the Trust and arrange for publication of current price information in newspapers and other publications. 2. The Shares may be sold by the Distributor on behalf of the Trust, to any investor or to or through any dealer having a sales agreement with the Distributor, upon the following terms and conditions: The public offering price of Shares of the Trust, i.e., the price per Share at which the Distributor or any dealer purchasing Shares through the Distributor may sell shares to the public, shall be the net asset value of such Shares. The net asset value of Shares of the Trust shall be determined by the Trust, or by an agent of the Trust, as of the close of the New York Stock Exchange on each day on which the New York Stock Exchange is open for trading (and on such other days as the Trustees deem necessary in order to comply with Rule 22c-1 under the 1940 Act), in accordance with the method established pursuant to the Governing Instruments. The Trust shall have the right to suspend the sale of Shares if, because of some extraordinary condition, the New York Stock Exchange shall be closed, or if conditions existing during the hours when the Exchange is open render such action advisable or for any other reason deemed adequate by the Trust. 3. The Trust agrees that it will, from time to time, but subject to the necessary approval, if any, of its shareholders, take all necessary action to register such number of Shares under the Securities Act of 1933, as amended (the "1933 Act"), as the Distributor may reasonably be expected to sell. The Distributor shall be an independent contractor and neither the Distributor nor any of its directors, officers or employees as such, is or shall be an employee of the Trust. It is understood that Trustees, officers and shareholders of the Trust are or may become interested in the Distributor, as directors, officers, employees, or otherwise and that directors, officers and employees of the Distributor are or may become similarly interested in the Trust and that the Distributor may be or become interested in the Trust as a shareholder or otherwise. The Distributor is responsible for its own conduct and the employment, control and conduct (but only with respect to the duties and obligations of the Distributor hereunder) of its agents and employees and for any injury to any person through its agents or employees. The Distributor assumes full responsibility for its agents and employees under applicable statutes and agrees to pay all employer taxes thereunder. 4. The Distributor covenants and agrees that, in selling Shares, it will use its best efforts in all respects duly to conform with the requirements of all state and federal laws and the Conduct Rules of the National Association of Securities Dealers, Inc. relating to the sale of Shares, and will indemnify and hold harmless the Trust and each of its Trustees and officers and each person, if any, who controls the Trust within the meaning of Section 15 of the Act (the "Indemnified Parties") against all losses, liabilities, damages, claims or expenses (including the reasonable cost of investigating or defending any alleged loss, liability, damages, claim or expense and reasonable counsel fees incurred in connection therewith) arising from any claim, demand, action or suit (collectively, "Claims"), arising by reason of any person's acquiring any of the Shares through the Distributor, which may be based upon the 1933 Act or any other statute or common law, on account of any wrongful act of the Distributor or any of its employees (including any failure to conform with any requirement of any state or federal law or the Conduct Rules of the National Association of Securities Dealers, Inc. relating to the sale of Shares) or on the ground that the registration statement under the 1933 Act, including all amendments thereto (the "Registration Statement"), or Prospectus or previous prospectus or Statement of Additional Information or previous statement of additional information, with respect to such Shares, includes or included an untrue statement of a material fact or omits or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, if and only if any such act, statement or omission was made in reliance upon information furnished by the Distributor to the Trust; provided, however, that in no case (i) is the indemnity of the Distributor in favor of any Indemnified Party to be deemed to protect any such Indemnified Party against liability to which such Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its or his duties or by reason of its or his reckless disregard of its or his obligations and duties under this Agreement, or (ii) is the Distributor to be liable under its indemnity agreement contained in this Section 4 with respect to any Claim made against any Indemnified Party unless such Indemnified Party shall have notified the Distributor in writing within a reasonable time after the summons or other first legal process giving information of the nature of the Claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Distributor of any such Claim shall not relieve it from any liability which it may have to any Indemnified Party otherwise than on account of its indemnity agreement contained in this Section 4. The Distributor shall be entitled to participate, at its own expense, in the defense, or, if it so elects, to assume the defense, of any suit brought to enforce any such Claim, and, if the Distributor elects to assume the defense, such defense shall be conducted by counsel chosen by it and satisfactory to each Indemnified Party. In the event that the Distributor elects to assume the defense of any such suit and retain such counsel, each Indemnified Party shall bear the fees and expenses of any additional counsel retained by it but, in case the Distributor does not elect to assume the defense of any such suit, it shall reimburse the Indemnified Parties for the reasonable fees and expenses of any counsel retained by them. Except with the prior written consent of the Distributor, no Indemnified Party shall confess any Claim or make any compromise in any case in which the Distributor will be asked to indemnify such Indemnified Party. The Distributor agrees promptly to notify the Trust of the commencement of any litigation or proceeding against it in connection with the issuance and sale of any of the Shares. Neither the Distributor nor any dealer nor any other person is authorized to give any information or to make any representation on behalf of the Trust in connection with the sale of Shares, other than those contained in the Registration Statement or Prospectus or Statement of Additional Information. The Trust covenants and agrees that it will indemnify and hold harmless the Distributor, its directors and officers and each person, if any, who controls the Distributor within the meaning of Section 15 of the Act against all losses, liabilities, damages, claims or expenses (including the reasonable cost of investigating or defending any alleged loss, liabilities, damages, claims or expenses and reasonable counsel fees incurred in connection therewith) arising from any Claims, arising by reason of any person's acquiring any of the Shares through the Distributor, which may be based upon the 1933 Act or any other statute or common law, on account that the Registration Statement or Prospectus or previous prospectus or Statement of Additional Information or previous statement of additional information, with respect to such Shares, includes or included an untrue statement of a material fact or omits or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, except insofar as such act, statement or omission was made in reliance upon information furnished by the Distributor to the Trust for use in the Registration Statement or Prospectus; provided, however, that in no case (i) is the indemnity of the Trust in favor of the Distributor deemed to protect any person who is also an officer or Trustee of the Trust or who controls the Trust within the meaning of Section 15 of the 1933 Act unless a court of competent jurisdiction shall determine, or it shall have been determined by controlling precedent, that such result would not be against public policy as expressed in the 1933 Act; and further provided, that in no event shall anything contained herein be so construed as to protect the Distributor against any liability to the Trust or to its shareholders to which the Distributor would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of its reckless disregard of its obligations under this Agreement, or (ii) is the Trust to be liable under its indemnity agreement contained in this Section 4 with respect to any Claim made against the Distributor unless it shall have notified the Trust in writing within a reasonable time after the summons or other first legal process giving information of the nature of the Claim shall have been served upon it (or after the Distributor shall have received notice of such service on any designated agent), but failure to notify the Trust of any such Claim shall not relieve it from any liability which it may have to the Distributor otherwise than on account of its indemnity agreement contained in this Section 4. The Trust shall be entitled to participate, at its own expense, in the defense, or, if it so elects, to assume the defense, of any suit brought to enforce any such Claim, and, if the Trust elects to assume the defense, such defense shall be conducted by counsel chosen by it and satisfactory to the Distributor. In the event that the Trust elects to assume the defense of any such suit and retain such counsel, the Distributor shall bear the fees and expenses of any additional counsel retained by it but, in case the Trust does not elect to assume the defense of any such suit, it shall reimburse the Distributor for the reasonable fees and expenses of any counsel retained by them. Except with the prior written consent of the Trust, the Distributor shall not confess any Claim or make any compromise in any case in which the Trust will be asked to indemnify it. The Trust agrees promptly to notify the Distributor of the commencement of any litigation in connection with the issuance and sale of any of the Shares. 5. The Trust will pay, or cause to be paid: (i) all costs and expenses of the Trust, including fees and disbursements of its counsel, in connection with the preparation and filing of the Registration Statement, Prospectus and Statement of Additional Information, and preparing and mailing to shareholders Prospectuses, Statements of Additional Information, statements and confirmations and periodic reports (including the expense of setting in type the Registration Statement, Prospectus and Statement of Additional Information or any periodic report); (ii) the cost of preparing temporary or permanent certificates for Shares; (iii) the cost and expenses of delivering to the Distributor all Shares purchased through it as agent hereunder; (iv) subject to the Distribution Plan, a distribution fee to the Distributor at an annual rate not to exceed 0.25% of the average daily net assets of each Series of the Trust for that Series' then-current fiscal year in anticipation of, or as reimbursement for, expenses incurred by the Distributor in connection with the sale of Shares of that Series or required to be borne by the Distributor hereunder, including, without limitation, payments to broker-dealers, banks and investment advisers who advise shareholders regarding the purchase or sale or retention of Shares of the Trust, compensation of employees of the Distributor, advertising expenses and the expenses of printing (excluding typesetting) and distributing prospectuses and reports used for sales purposes, expenses of preparing and printing sales literature and other distribution-related expenses whether or not specifically required to be made by the Distributor pursuant to the terms of this Agreement; (v) subject to the Distribution Plan, with respect to Series other than Domini Social Equity Fund, a fee, in addition to the fee provided in paragraph (iv) above, at an annual rate which, when added to the amount received by the Distributor with respect to a Series under paragraph (vi) above, will equal 0.25% of the average daily net assets of that Series for its then-current fiscal year, as compensation for distribution services provided by the Distributor in connection with the sale of Shares of that Series; (vi) all fees and disbursements of the Transfer Agent and Custodian; and (vii) a fee to the Manager of the Trust (pursuant to the Management Agreement). The Distributor agrees that with respect to the sale of Shares of the Trust, subject to the Trust's obligations under clause (iv) above, (a) after the Prospectus and Statement of Additional Information and periodic reports have been set in type, it will bear the expense (other than the cost of mailing to shareholders of the Trust) of printing and distributing any copies thereof ordered by it which are to be used in connection with the offering or sale of Shares to any dealer or prospective investor, and (b) it will bear the expenses of preparing, printing and distributing any other literature used by the Distributor or furnished by it for use by any dealer in connection with the offering of Shares for sale to the public and any expense of sending confirmations and statements to any dealer having a sales agreement with the Distributor. 6. If, at any time during the term of this Agreement, the Trust shall deem it necessary or advisable in the best interests of the Trust that any amendment of this Agreement be made in order to comply with any recommendation or requirement of the Securities and Exchange Commission or other governmental authority or to obtain any advantage under Massachusetts or federal tax laws, it shall notify the Distributor of the form of amendment which it deems necessary or advisable and the reasons therefor. If the Distributor declines to assent to such amendment (after a reasonable time), the Trust may terminate this Agreement forthwith by written notice to the Distributor without payment of any penalty. If, at any time during the term of this Agreement, the Distributor requests the Trust to make any change in its Governing Instruments or in its methods of doing business which are necessary in order to comply with any requirement of federal law or regulations of the Securities and Exchange Commission or of a national securities association of which the Distributor is or may become a member, relating to the sale of Shares, and the Trust fails (after a reasonable time) to make any such change as requested, the Distributor may terminate this Agreement forthwith by written notice to the Trust without payment of any penalty. 7. The Distributor agrees that it will not take any long or short position in the Shares of the Trust and that, so far as it can control the situation, it will prevent any of its Directors or officers from taking any long or short position in the Shares of the Trust, except as permitted by the Governing Instruments. 8. This Agreement shall become effective upon its execution and shall continue in force indefinitely as to each Series, provided that such continuance is "specifically approved at least annually" with respect to the applicable Series by the vote of a majority of the Trustees of the Trust who are not "interested persons" of the Trust or of the Distributor at a meeting specifically called for the purpose of voting on such approval, and by the Board of Trustees of the Trust. The aforesaid requirement that continuance of this Agreement be "specifically approved at least annually" shall be construed in a manner consistent with the 1940 Act. If such annual approval is not obtained, this Agreement shall terminate on the date which is 15 months after the date of the last approval. This Agreement may be terminated with respect to any Series of the Trust at any time by (i) the Trust, (a) by the vote of a majority of the Trustees of the Trust who are not "interested persons" of the Trust or the Distributor, (b) by the vote of the Board of Trustees of the Trust, or (c) by the "vote of a majority of the outstanding voting securities" of the applicable Series, or (ii) by the Distributor, in any case without payment of any penalty 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. 9. The terms "vote of a majority of the outstanding voting securities", "interested person", "assignment" and "specifically approved at least annually" 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 thereunder. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered in their names on their behalf by the undersigned, thereunto duly authorized, and their respective seals to be hereto affixed, all as of the day and year first above written. The obligations of this Agreement are not binding upon any of the Trustees or shareholders of the Trust individually, but bind only the Trust estate. The obligations of a particular Series shall be paid only from the assets of that Series and shall not be enforceable against any other Series. DOMINI SOCIAL INVESTMENT TRUST By Title: DSIL INVESTMENT SERVICES LLC By Title: EX-99.G(2) 7 FORM OF LETTER AGREEMENT Exhibit g(2) Domini Social Investment Trust 11 West 25th Street New York, NY 10010 ________ __, 2000 Investors Bank & Trust Company P.O. Box 1537 Boston, Massachusetts 02205-1537 Attention: Timothy O'Leary Re: Domini Social Bond Fund - Custodian Contract Ladies and Gentlemen: Pursuant to Section 4 of the Custodian Contract dated June 3, 1993 (the "Contract"), between Domini Social Investment Trust (formerly, "Domini Social Index Trust") (the "Trust") and Investors Bank & Trust Company (the "Custodian"), we hereby request that Domini Social Bond Fund (the "Fund") be added to the list of series of the Trust to which the Custodian renders services as custodian under the terms of the Contract. Please sign below to evidence your agreement to render such services as custodian on behalf of the Fund and to add the Fund as a beneficiary under the Contract. DOMINI SOCIAL INVESTMENT TRUST By: Title: Agreed: INVESTORS BANK & TRUST COMPANY By: Title: EX-99.H(2) 8 FORM OF LETTER AGREEMENT Exhibit h(2) Domini Social Investment Trust 11 West 25th Street New York, NY 10010 ________ __, 2000 First Data Investor Services Group, Inc. 4400 Computer Drive Westboro, Massachusetts 01581 Attention: President Re: Domini Social Bond Fund - Transfer Agency and Service Agreement Ladies and Gentlemen: This letter serves as notice that pursuant to Article 18 of the Transfer Agency and Services Agreement dated as of September 24, 1999 (the "Agreement") between Domini Social Investment Trust (formerly, "Domini Social Equity Fund") (the "Trust") and First Data Investor Services Group, Inc. ("First Data"), Domini Social Bond Fund (the "Fund") is added to the list of series of the Trust to which First Data renders services as transfer agent pursuant to the terms of the Agreement. Please sign below to acknowledge your receipt of this notice adding the Fund as a beneficiary under the Agreement. DOMINI SOCIAL INVESTMENT TRUST By: Title: Acknowledgment: FIRST DATA INVESTOR SERVICES GROUP, INC. By: Title: EX-99.H(3) 9 EXPENSE LIMITATION AGREEMENT Exhibit h(3) Domini Social Investments LLC 11 West 25th Street New York, New York 10010 November 30, 1999 Domini Social Equity Fund 11 West 25th Street New York, New York 10010 Re: Expense Limitation Agreement Ladies and Gentlemen: Domini Social Investments LLC currently provides oversight and administrative and management services to Domini Social Equity Fund (the "Trust"), a Massachusetts business trust. We hereby agree with the Trust that we will waive expenses payable to us by the Trust's series designated Domini Social Equity Fund or will reimburse such series for all expenses payable by that series to the extent necessary so that the series' aggregate expenses (excluding brokerage fees and commissions, interest, taxes and other extraordinary expenses), net of waivers and reimbursements, would not exceed on a per annum basis 0.95% of that series' average daily net assets. The agreement in this letter shall take effect on the date hereof, and shall remain in effect until November 30, 2000. Please sign below to confirm your agreement with the terms of this letter. Sincerely, Domini Social Investments LLC By:____________________________ Title: Agreed: Domini Social Equity Fund By:__________________________ Title: EX-99.H(4) 10 FORM OF EXPENSE LIMITATION AGREEMENT Exhibit h(4) Domini Social Investments LLC 11 West 25th Street New York, New York 10010 ________ __, 2000 Domini Social Investment Trust 11 West 25th Street New York, New York 10010 Re: Expense Limitation Agreement Ladies and Gentlemen: Domini Social Investments LLC currently provides oversight and administrative and management services to Domini Social Investment Trust (the "Trust"), a Massachusetts business trust. We hereby agree with the Trust that we will waive expenses payable to us by the Trust's series designated Domini Social Bond Fund or will reimburse such series for all expenses payable by that series to the extent necessary so that the series' aggregate expenses (excluding brokerage fees and commissions, interest, taxes and other extraordinary expenses), net of waivers and reimbursements, would not exceed on a per annum basis ____% of that series' average daily net assets. The agreement in this letter shall take effect on the date hereof, and shall remain in effect until November 30, 2000. Please sign below to confirm your agreement with the terms of this letter. Sincerely, Domini Social Investments LLC By:_________________________ Title: Agreed: Domini Social Investment Trust By:___________________________ Title: EX-99.H(4) 11 FORM OF EXPENSE LIMITATION AGREEMENT Exhibit h(5) FORM OF ADMINISTRATION AGREEMENT ADMINISTRATION AGREEMENT, dated as of January ___, 2000 by and between Domini Social Investment Trust (formerly, "Domini Social Equity Fund"), a Massachusetts business trust (the "Trust"), with respect to its series, the Domini Social Bond Fund (the "Series'), and Domini Social Investments LLC, a Massachusetts limited liability company ("DSI" or the "Administrator"). W I T N E S S E T H: WHEREAS, the Trust is engaged in business as an open-end investment company registered under the Investment Company Act of 1940, as amended, and consists of one or more series; WHEREAS, the Trust desires to enter into this Agreement with respect to its Series; WHEREAS, the Trust wishes to engage DSI to provide certain oversight, administrative and management services with resepct to its Series, and DSI is willing to provide such oversight, administrative and management services to the Trust with respect to its Series on the terms and conditions hereinafter set forth; and 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 THE ADMISTRATOR. Subject to the direction and control of the Board of Trustees of the Trust, the Administrator shall perform such oversight, administrative and management services as may from time to time be reasonably requested by the Trust, which shall include without limitation: (a) maintaining office facilities (which may be in the office of DSI or an affiliate) and furnishing clerical services necessary for maintaining the organization of the Trust and for performing the oversight, administrative and management functions herein set forth; (b) arranging, if desired by the Trust, for directors, officers or employees of the Administrator to serve as Trustees, officers or agents of the Trust if duly elected or appointed to such positions and subject to their individual consent and to any limitations imposed by law; (c) supervising the overall administration of the Series, including the updating of corporate organizational documents, and the negotiation of contracts and fees with and the monitoring and coordinating of performance and billings of the Series' transfer agent, shareholder servicing agents (if any), custodian, administrator, subadministrator (if any) and other independent contractors or agents; (d) overseeing (with advice of the Trust's counsel) the preparation of and, if applicable, filing all documents required for compliance by the Trust with applicable laws and regulations (including state "blue sky" laws and regulations) pertaining to the Series, including registration statements on Form N-1A, prospectuses and statements of additional information, or similar forms, as applicable, semi-annual and annual reports to shareholders and proxy statements, and reviewing tax returns; (e) preparation of agendas and supporting documents for and minutes of meetings of Trustees, committees of Trustees and preparation of notices, proxy statements and minutes of meetings of shareholders; (f) arranging for maintenance of books and records of the Series; (g) maintaining telephone coverage to respond to shareholder inquiries regarding matters to which this Agreement pertains to which the transfer agent is unable to respond; (h) providing reports and assistance regarding the Series' compliance with securities and tax laws and the Series' investment objectives; (i) arranging for dissemination of yield and other performance information to newspapers and tracking services; (j) arranging for and preparing annual renewals for fidelity bond and errors and omissions insurance coverage; (k) developing a budget for the Series, establishing the rate of expense accruals and arranging for the payment of all fixed and management expenses; and (l) answering questions from the general public, the media and shareholders of the Series regarding (i) the securities holdings of the Series; (ii) any limits in which the Series invests; (iii) the social investment philosophy of the Series; and (iv) the proxy voting philosophy and shareholder activism philosophy of the Series. Notwithstanding the foregoing, the Administrator shall not be deemed to have assumed, pursuant to this Agreement, any duties with respect to, and shall not be responsible for, the management of the Series' assets or the rendering of investment advice and supervision with respect thereto or the distribution of shares of the Series, nor shall the Administrator be deemed to have assumed or have any responsibility with respect to functions specifically assumed by any transfer agent, custodian, fund accounting pricing agent or shareholder servicing agent of the Series. 2. ALLOCATION OF CHARGES AND EXPENSES. DSI shall pay the entire salaries and wages of all of the Trust's Trustees, officers and agents who devote part or all of their time to the affairs of DSI or its affiliates, and the wages and salaries of such persons shall not be deemed to be expenses incurred by the Trust for purposes of this Section 2. The Trust shall pay all of its operating expenses, including but not limited to fees due the Administrator under this Agreement, compensation of Trustees not affiliated with the Administrator, governmental fees, including but not limited to Securities and Exchange Commission fees and state "blue sky" fees; interest charges; taxes and related charges; membership dues of the Trust in the Investment Company Institute and other professional or industry associations; fees and expenses of the Trust's independent auditors and accountants, of legal counsel and any transfer agent, distributor, shareholder servicing agent, recordkeeper, registrar or dividend disbursing agent of the Trust; expenses of distributing, issuing and redeeming shares and servicing shareholder accounts; expenses of preparing, printing and mailing prospectuses and statements of additional information, reports, notices, proxy statements and reports to shareholders and governmental officers and commissions; expenses connected with the execution, recording and settlement of portfolio security transactions; insurance premiums; fees and expenses of the Trust's custodian for all services to the Series, including safekeeping of funds and securities and maintaining required books and accounts; expenses of calculating the net asset value of shares of the Series; expenses of shareholder meetings; and expenses relating to the issuance, registration and qualification of shares of the Series of the Trust. 3. COMPENSATION OF THE ADMISTRATOR. For the services to be rendered and facilities to be provided by the Administrator hereunder with respect to the Series, the Trust shall pay DSI from the assets of the Series a fee accrued daily and payable monthly at an annual rate equal to 0.25% of the Series' average daily net assets for the Series' then current fiscal year. If DSI serves as the Administrator for less than the whole of any period specified in this Section 3, the compensation to DSI, as Administrator, shall be prorated. For purposes of computing the fees payable to the Administrator hereunder, the value of the Series' net assets shall be computed in the manner specified in the Trust's then-current prospectus and statement of additional information applicable to the Series. 4. LIMITATION OF LIABILITY OF THE ADMISTRATOR. The Administrator shall not be liable for any error of judgment or mistake of law or for any act or omission in the oversight, administration or management of the Trust or the performance of its duties hereunder, except for willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of the reckless disregard of its obligations and duties hereunder. As used in this Section 4, the term "Administrator" shall include DSI and/or any of its affiliates and the directors, officers and employees of DSI and/or any of its affiliates. 5. ACTIVITIES OF THE ADMISTRATOR. The services of the Administrator to the Trust are not to be deemed to be exclusive, DSI being free to render oversight, administrative and/or other services to other parties. It is understood that Trustees, officers and shareholders of the Trust are or may become interested in the Administrator and/or any of its affiliates as directors, officers, employees or otherwise and that directors, officers and employees of the Administrator and/or any of its affiliates are or may become similarly interested in the Trust and that the Administrator and/or any of its affiliates may be or become interested in the Trust as a shareholder or otherwise. 6. DURATION, TERMINATION AND AMENDMENTS OF THIS AGREEMENT. This Agreement shall become effective as of the day and year first above written and shall govern the relations between the parties hereto thereafter, unless terminated as set forth in this Section 6. This Agreement may not be altered or amended, except by an instrument in writing and executed by both parties. This Agreement may be terminated at any time, without the payment of any penalty, by the Board of Trustees of the Trust, or by the Administrator, in each case on not less than 60 days' written notice to the other party. 7. SUBCONTRACTING BY DSI. DSI may subcontract for the performance of some or all of DSI's obligations hereunder with any one or more persons; provided, however, that DSI shall not enter into any such subcontract with any entity other than a subsidiary or an affiliate of DSI unless the Trustees of the Trust shall have found the subcontracting party to be qualified to perform the obligations sought to be subcontracted; and provided, further, that, unless the Trust otherwise expressly agrees in writing, DSI shall be as fully responsible to the Trust for the acts and omissions of any subcontractor as it would be for its own acts or omissions. 8. SEVERABILITY. If any provision of this Agreement shall become or shall be found to be invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. 9. NOTICE. Any notices under this Agreement shall be in writing addressed and delivered personally, by telecopy or mailed postage-paid to the other party at such address as such other party may designate in accordance with this Section 9 for the receipt of such notice. Until further notice to the other party, it is agreed that the address of the Trust shall be 11 West 25th Street, 7th Floor, New York, New York 10010, and the address of DSI shall be 11 West 25th Street, 7th Floor, New York, New York 10010. 10. MISCELLANEOUS. Each party agrees to perform such further actions and execute such further documents as are necessary to effectuate the purposes hereof. This Agreement shall be construed and enforced and interpreted in accordance with and governed by the laws of the Commonwealth of Massachusetts without reference to principles of conflicts of law. The captions in this Agreement are included for convenience only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument. 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. The undersigned Trustee of the Trust has executed this Agreement not individually but as a Trustee under the Trust's Declaration of Trust, dated June 7, 1989, as amended, and the obligations of this Agreement are not binding upon any of the Trustees or shareholders of the Trust individually but bind only the Trust estate. The obligations of the Series shall be paid only from the assets of the Series and shall not be enforceable against any other series of the Trust. DOMINI SOCIAL INVESTMENT TRUST, On Behalf of Domini Social Bond Fund By Name Title DOMINI SOCIAL INVESTMENTS LLC By Name Title EX-99.H(5) 12 FORM OF ADMINISTRATION AGREEMENT Exhibit h(5) FORM OF ADMINISTRATION AGREEMENT ADMINISTRATION AGREEMENT, dated as of January ___, 2000 by and between Domini Social Investment Trust (formerly, "Domini Social Equity Fund"), a Massachusetts business trust (the "Trust"), with respect to its series, the Domini Social Bond Fund (the "Series'), and Domini Social Investments LLC, a Massachusetts limited liability company ("DSI" or the "Administrator"). W I T N E S S E T H: WHEREAS, the Trust is engaged in business as an open-end investment company registered under the Investment Company Act of 1940, as amended, and consists of one or more series; WHEREAS, the Trust desires to enter into this Agreement with respect to its Series; WHEREAS, the Trust wishes to engage DSI to provide certain oversight, administrative and management services with resepct to its Series, and DSI is willing to provide such oversight, administrative and management services to the Trust with respect to its Series on the terms and conditions hereinafter set forth; and 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 THE ADMISTRATOR. Subject to the direction and control of the Board of Trustees of the Trust, the Administrator shall perform such oversight, administrative and management services as may from time to time be reasonably requested by the Trust, which shall include without limitation: (a) maintaining office facilities (which may be in the office of DSI or an affiliate) and furnishing clerical services necessary for maintaining the organization of the Trust and for performing the oversight, administrative and management functions herein set forth; (b) arranging, if desired by the Trust, for directors, officers or employees of the Administrator to serve as Trustees, officers or agents of the Trust if duly elected or appointed to such positions and subject to their individual consent and to any limitations imposed by law; (c) supervising the overall administration of the Series, including the updating of corporate organizational documents, and the negotiation of contracts and fees with and the monitoring and coordinating of performance and billings of the Series' transfer agent, shareholder servicing agents (if any), custodian, administrator, subadministrator (if any) and other independent contractors or agents; (d) overseeing (with advice of the Trust's counsel) the preparation of and, if applicable, filing all documents required for compliance by the Trust with applicable laws and regulations (including state "blue sky" laws and regulations) pertaining to the Series, including registration statements on Form N-1A, prospectuses and statements of additional information, or similar forms, as applicable, semi-annual and annual reports to shareholders and proxy statements, and reviewing tax returns; (e) preparation of agendas and supporting documents for and minutes of meetings of Trustees, committees of Trustees and preparation of notices, proxy statements and minutes of meetings of shareholders; (f) arranging for maintenance of books and records of the Series; (g) maintaining telephone coverage to respond to shareholder inquiries regarding matters to which this Agreement pertains to which the transfer agent is unable to respond; (h) providing reports and assistance regarding the Series' compliance with securities and tax laws and the Series' investment objectives; (i) arranging for dissemination of yield and other performance information to newspapers and tracking services; (j) arranging for and preparing annual renewals for fidelity bond and errors and omissions insurance coverage; (k) developing a budget for the Series, establishing the rate of expense accruals and arranging for the payment of all fixed and management expenses; and (l) answering questions from the general public, the media and shareholders of the Series regarding (i) the securities holdings of the Series; (ii) any limits in which the Series invests; (iii) the social investment philosophy of the Series; and (iv) the proxy voting philosophy and shareholder activism philosophy of the Series. Notwithstanding the foregoing, the Administrator shall not be deemed to have assumed, pursuant to this Agreement, any duties with respect to, and shall not be responsible for, the management of the Series' assets or the rendering of investment advice and supervision with respect thereto or the distribution of shares of the Series, nor shall the Administrator be deemed to have assumed or have any responsibility with respect to functions specifically assumed by any transfer agent, custodian, fund accounting pricing agent or shareholder servicing agent of the Series. 2. ALLOCATION OF CHARGES AND EXPENSES. DSI shall pay the entire salaries and wages of all of the Trust's Trustees, officers and agents who devote part or all of their time to the affairs of DSI or its affiliates, and the wages and salaries of such persons shall not be deemed to be expenses incurred by the Trust for purposes of this Section 2. The Trust shall pay all of its operating expenses, including but not limited to fees due the Administrator under this Agreement, compensation of Trustees not affiliated with the Administrator, governmental fees, including but not limited to Securities and Exchange Commission fees and state "blue sky" fees; interest charges; taxes and related charges; membership dues of the Trust in the Investment Company Institute and other professional or industry associations; fees and expenses of the Trust's independent auditors and accountants, of legal counsel and any transfer agent, distributor, shareholder servicing agent, recordkeeper, registrar or dividend disbursing agent of the Trust; expenses of distributing, issuing and redeeming shares and servicing shareholder accounts; expenses of preparing, printing and mailing prospectuses and statements of additional information, reports, notices, proxy statements and reports to shareholders and governmental officers and commissions; expenses connected with the execution, recording and settlement of portfolio security transactions; insurance premiums; fees and expenses of the Trust's custodian for all services to the Series, including safekeeping of funds and securities and maintaining required books and accounts; expenses of calculating the net asset value of shares of the Series; expenses of shareholder meetings; and expenses relating to the issuance, registration and qualification of shares of the Series of the Trust. 3. COMPENSATION OF THE ADMISTRATOR. For the services to be rendered and facilities to be provided by the Administrator hereunder with respect to the Series, the Trust shall pay DSI from the assets of the Series a fee accrued daily and payable monthly at an annual rate equal to 0.25% of the Series' average daily net assets for the Series' then current fiscal year. If DSI serves as the Administrator for less than the whole of any period specified in this Section 3, the compensation to DSI, as Administrator, shall be prorated. For purposes of computing the fees payable to the Administrator hereunder, the value of the Series' net assets shall be computed in the manner specified in the Trust's then-current prospectus and statement of additional information applicable to the Series. 4. LIMITATION OF LIABILITY OF THE ADMISTRATOR. The Administrator shall not be liable for any error of judgment or mistake of law or for any act or omission in the oversight, administration or management of the Trust or the performance of its duties hereunder, except for willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of the reckless disregard of its obligations and duties hereunder. As used in this Section 4, the term "Administrator" shall include DSI and/or any of its affiliates and the directors, officers and employees of DSI and/or any of its affiliates. 5. ACTIVITIES OF THE ADMISTRATOR. The services of the Administrator to the Trust are not to be deemed to be exclusive, DSI being free to render oversight, administrative and/or other services to other parties. It is understood that Trustees, officers and shareholders of the Trust are or may become interested in the Administrator and/or any of its affiliates as directors, officers, employees or otherwise and that directors, officers and employees of the Administrator and/or any of its affiliates are or may become similarly interested in the Trust and that the Administrator and/or any of its affiliates may be or become interested in the Trust as a shareholder or otherwise. 6. DURATION, TERMINATION AND AMENDMENTS OF THIS AGREEMENT. This Agreement shall become effective as of the day and year first above written and shall govern the relations between the parties hereto thereafter, unless terminated as set forth in this Section 6. This Agreement may not be altered or amended, except by an instrument in writing and executed by both parties. This Agreement may be terminated at any time, without the payment of any penalty, by the Board of Trustees of the Trust, or by the Administrator, in each case on not less than 60 days' written notice to the other party. 7. SUBCONTRACTING BY DSI. DSI may subcontract for the performance of some or all of DSI's obligations hereunder with any one or more persons; provided, however, that DSI shall not enter into any such subcontract with any entity other than a subsidiary or an affiliate of DSI unless the Trustees of the Trust shall have found the subcontracting party to be qualified to perform the obligations sought to be subcontracted; and provided, further, that, unless the Trust otherwise expressly agrees in writing, DSI shall be as fully responsible to the Trust for the acts and omissions of any subcontractor as it would be for its own acts or omissions. 8. SEVERABILITY. If any provision of this Agreement shall become or shall be found to be invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. 9. NOTICE. Any notices under this Agreement shall be in writing addressed and delivered personally, by telecopy or mailed postage-paid to the other party at such address as such other party may designate in accordance with this Section 9 for the receipt of such notice. Until further notice to the other party, it is agreed that the address of the Trust shall be 11 West 25th Street, 7th Floor, New York, New York 10010, and the address of DSI shall be 11 West 25th Street, 7th Floor, New York, New York 10010. 10. MISCELLANEOUS. Each party agrees to perform such further actions and execute such further documents as are necessary to effectuate the purposes hereof. This Agreement shall be construed and enforced and interpreted in accordance with and governed by the laws of the Commonwealth of Massachusetts without reference to principles of conflicts of law. The captions in this Agreement are included for convenience only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument. 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. The undersigned Trustee of the Trust has executed this Agreement not individually but as a Trustee under the Trust's Declaration of Trust, dated June 7, 1989, as amended, and the obligations of this Agreement are not binding upon any of the Trustees or shareholders of the Trust individually but bind only the Trust estate. The obligations of the Series shall be paid only from the assets of the Series and shall not be enforceable against any other series of the Trust. DOMINI SOCIAL INVESTMENT TRUST, On Behalf of Domini Social Bond Fund By Name Title DOMINI SOCIAL INVESTMENTS LLC By Name Title EX-99.I 13 OPINION AND CONSENT OF COUNSEL Exhibit i January 13, 2000 Domini Social Equity Fund 11 West 25th Street New York, New York 10010 Ladies and Gentlemen: We have acted as counsel to Domini Social Equity Fund, a Massachusetts business trust (the "Trust"), in connection with Post-Effective Amendment Number 16 to the Trust's Registration Statement filed with the Securities and Exchange Commission on January 13, 2000 (the "Amendment"), with respect to the Trust's series Domini Social Bond Fund (the "Fund"). In connection with this opinion, we have examined the following described documents: (a) the Amendment; (b) a certificate of the Secretary of State of the Commonwealth of Massachusetts as to the existence of the Trust; (c) copies, certified by the Secretary of State of the Commonwealth of Massachusetts, of the Trust's Declaration of Trust and of all amendments thereto on file in the office of the Secretary of State; and (d) a certificate executed by the President of the Trust, certifying as to, and attaching copies of, the Trust's By-Laws and certain votes of the Trustees of the Trust authorizing the issuance of shares of the Fund. In such examination, we have assumed the genuineness of all signatures, the conformity to the originals of all of the documents reviewed by us as copies, the authenticity and completeness of all documents reviewed by us in original or copy form and the legal competence of each individual executing any document. This opinion is based entirely on our review of the documents listed above. We have made no other review or investigation of any kind whatsoever, and we have assumed, without independent inquiry, the accuracy of the information set forth in such documents. This opinion is limited solely to the laws of the Commonwealth of Massachusetts (other than the Massachusetts Uniform Securities Act, as to which we express no opinion) as applied by courts in such Commonwealth to the extent such laws may apply to or govern the matters covered by this opinion. We understand that all of the foregoing assumptions and limitations are acceptable to you. Based upon and subject to the foregoing, please be advised that it is our opinion that the shares of the Fund, when issued and sold in accordance with the Amendment and the Trust's Declaration of Trust and By-laws, will be legally issued, fully paid and non-assessable, except that, as set forth in the Amendment, shareholders of the Fund may under certain circumstances be held personally liable for the Trust's obligations. We hereby consent to the filing of this opinion as an exhibit to the Amendment. Very truly yours, /s/ Bingham Dana LLP --------------------------- BINGHAM DANA LLP EX-99.M 14 FORM OF AMENDED & RESTATED DISTRIBUTION PLAN Exhibit m FORM OF AMENDED AND RESTATED DISTRIBUTION PLAN AMENDED AND RESTATED DISTRIBUTION PLAN, dated as of May 1, 1990, and amended and restated as of January 14, 2000, of Domini Social Investment Trust (formerly, "Domini Social Equity Fund"), a Massachusetts business trust (the "Trust"). W I T N E S S E T H: WHEREAS, the Trust is engaged in business as an open-end management investment company and is registered under the Investment Company Act of 1940 (collectively with the rules and regulations promulgated thereunder, the "1940 Act"); WHEREAS, the Trust's shares of beneficial interests ("Shares") are divided into separate series representing interests in separate securities and other assets; WHEREAS, the Trust has adopted a distribution plan in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1") with respect to its series designated Domini Social Equity Fund (the "Original Plan") and desires to adopt this Amended and Restated Distribution Plan (the "Plan") to amend and restate the Original Plan in its entirety in order to provide that its provisions apply to the Domini Social Equity Fund, the Domini Social Bond Fund and each other series of the Trust that adopts this Plan as provided herein (the "Series"); and WHEREAS, the Trust desires to enter into an amended and restated distribution agreement (in such form as may from time to time be approved by the Board of Trustees of the Trust in the manner specified in Rule 12b-1) (the "Distribution Agreement"), whereby the Distributor named in the Distribution Agreement (the "Distributor") will provide facilities and personnel and render services to the Trust in connection with the offering and distribution of the Shares; WHEREAS, the Board of Trustees, in considering whether the Trust should adopt and implement this Plan, has evaluated such information as it deemed necessary to an informed determination as to whether this Plan should be adopted and implemented and has considered such pertinent factors it deemed necessary to form the basis for a decision to use assets of the Trust for such purposes, and has determined that there is a reasonable likelihood that the adoption and implementation of this Plan will benefit the Trust and its shareholders. NOW, THEREFORE, the Board of Trustees hereby adopts this Plan for the Trust as a plan for distribution in accordance with Rule 12b-1, on the following terms and conditions, and hereby amends and restates the Original Plan as follows: 1. As specified in the Distribution Agreement, the Distributor shall provide facilities, personnel and a program with respect to the offering and sale of Shares. 2. The Distributor shall, subject to paragraph 3 below, bear all distribution-related expenses in connection with the services described in paragraph 1, including without limitation, the compensation of personnel necessary to provide such services and all costs of travel, office expenses (including rent and overhead) and equipment. 3. (a) As consideration for all services performed, the Trust may pay the Distributor a fee at an annual rate not to exceed 0.25% of the average daily net assets of each Series for its then-current fiscal year in anticipation of, or as reimbursement for, expenses incurred by the Distributor in connection with the sale of Shares of that Series such as payments to broker-dealers, banks and investment advisers who advise shareholders regarding the purchase, sale or retention of Shares of the Trust, compensation of employees of the Distributor, advertising expenses and the expenses of printing (excluding typesetting) and distributing prospectuses and reports used for sales purposes, expenses of preparing and printing sales literature and other distribution-related expenses. (b) With respect to any Series other than Domini Social Equity Fund, the Trust may pay the Distributor a fee, in addition to the fee provided in paragraph (a) above, at an annual rate which, when added to the amount received by the Distributor with respect to such Series under paragraph (a) above, will not exceed 0.25% of the average daily net assets of that Series for its then-current fiscal year, as compensation for distribution services provided by the Distributor in connection with the sale of Shares of that Series. 4. The Trust shall pay all fees and expenses of any independent auditor, legal counsel, administrator, transfer agent, custodian, shareholder servicing agent, registrar or dividend disbursing agent of each Series, expenses of distributing and redeeming Shares and servicing shareholder accounts; expenses of preparing, printing and mailing prospectuses, shareholder reports, notices, proxy statements reports to governmental officers and commissions and to shareholders of each Series; expenses connected with the execution, recording and settlement of portfolio security transactions; insurance premiums; expenses of calculating the net asset value of Shares; expenses of shareholder meetings; and expenses relating to the issuance, registration and qualification of Shares. 5. Nothing herein contained shall be deemed to require the Trust to take any action contrary to its Declaration of Trust or By-Laws or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Trustees of the responsibility for and control of the conduct of the affairs of the Trust. 6. The Original Plan having been approved with respect to the Series of the Trust designated Domini Social Equity Fund by a vote of at least a "majority of the outstanding voting securities" of that Series and by a vote of the Board of Trustees and vote a majority of the Trustees who are not "interested persons" of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreement related to the Plan (the "Qualified Trustees"), this Plan shall become effective as to Domini Social Equity Fund upon approval by a vote of the Board of Trustees and vote of a majority of the Qualified Trustees, such votes to be cast in person at a meeting called for the purpose of voting on this Plan. 7. This Plan shall become effective as to each Series of the Trust other than Domini Social Equity Fund upon (a) approval by a vote of at least a "majority of the outstanding voting securities" of that Series, and (b) approval by a vote of the Board of Trustees and vote of a majority of the Qualified Trustees, such votes to be cast in person at a meeting called for the purpose of voting on this Plan. 8. This Plan shall continue in effect indefinitely; provided, however, that such continuance is subject to annual approval by a vote of the Board of Trustees and a majority of the Qualified Trustees, such votes to be cast in person at a meeting called for the purpose of voting on continuance of this Plan. If such annual approval is not obtained with respect to a Series, this Plan shall expire as to that Series on the date which is 15 months after the date of the last approval. 9. This Plan may be amended at any time by the Board of Trustees, provided that (a) any amendment to increase materially the amount to be spent for the services described herein shall be effective only upon approval by a vote of a "majority of the outstanding voting securities" of each applicable Series, and (b) any material amendment of this Plan shall be effective only upon approval by a vote of the Board of Trustees and a majority of the Qualified Trustees, such votes to be cast in person at a meeting called for the purpose of voting on such amendment. This Plan may be terminated at any time with respect to any Series by vote of a majority of the Qualified Trustees or by a vote of a "majority of the outstanding voting securities" of the applicable Series. 10. The Trust and the Distributor each shall provide the Board of Trustees, and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended under the Plan and the purposes for which such expenditures were made. 11. While this Plan is in effect, the selection and nomination of Qualified Trustees shall be committed to the discretion of the Trustees who are not "interested persons" of the Trust. 12. For the purposes of this Plan, the terms "interested persons" and "majority of the outstanding voting securities" are used as defined in the 1940 Act. In addition, for purposes of determining the fees payable to the Distributor, the value of a Series' net assets shall be computed in the manner specified in the Trust's then-current prospectus with respect to that Series for computation of the net asset value of the Shares of that Series. 13. The Trust shall preserve copies of this Plan, and each agreement related hereto and each report referred to in paragraph 10 hereof (collectively, the "Records") for a period of six years from end of the fiscal year in which such Record was made and each such Record shall be kept in an easily accessible place for the first two years of said record-keeping. 14. This Plan shall be construed in accordance with the laws of the Commonwealth of Massachusetts and the applicable provisions of the 1940 Act. 15. If any provision of this Plan shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Plan shall not be affected thereby. -----END PRIVACY-ENHANCED MESSAGE-----