485BPOS 1 file001.htm POST-EFFECTIVE AMENDMENT




   As filed with the Securities and Exchange Commission on November 26, 2003.


                                                      Registration Nos. 33-29180
                                                                        811-5823

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM N-1A

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                         POST-EFFECTIVE AMENDMENT NO. 24

                                       and

         REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
                                AMENDMENT NO. 26

                         DOMINI SOCIAL INVESTMENT TRUST
               (Exact Name of Registrant as Specified in Charter)

                536 Broadway, 7th Floor, New York, New York 10012
                    (Address of Principal Executive Offices)

        Registrant's Telephone Number, including Area Code: 212-217-1100

                                  Amy L. Domini
                          Domini Social Investments LLC
                             536 Broadway, 7th Floor
                            New York, New York 10012
                     (Name and Address of Agent for Service)

                                    Copy To:
                              Roger P. Joseph, Esq.
                              Bingham McCutchen LLP
                               150 Federal Street
                           Boston, Massachusetts 02110



It is proposed that this filing will become effective on November 28, 2003
pursuant to paragraph (b) of Rule 485.

Domini Social Index Portfolio has also executed this registration statement.

Table of Contents



Overview				3

The Funds at a Glance
Domini Social Equity Fund
Investment Objective				5
Primary Investment Strategies				5
Primary Risks				5
Past Performance				7
Fund Fees and Expenses				9
Domini Social Bond Fund
Investment Objective				11
Primary Investment Strategies				11
Primary Risks				12
Past Performance				15
Fund Fees and Expenses				17

More About the Funds
Socially Responsible Investing				19
Domini Social Equity Fund
About Index Investing				22
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 Index^SM?				24
Information about the nation's first socially and environmentally screened index and how it was created and is maintained.
Domini Social Bond Fund
About Bond Fund Investing				27
More information on the Domini Social Bond Fund's investments and investment techniques.

Additional Investment Strategies & Risk Information				33

Who Manages the Funds?				37

The Funds' Distribution Plan				39

Shareholder Manual				A-1
Information about buying, selling, and exchanging Investor shares of the Funds, how Fund shares are valued, Fund distributions, and the tax consequences of an investment in a Fund.

Financial Highlights				B-1

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Overview

The Funds offered in this prospectus provide ways to pursue your investment goals while being consistent with principles of social and environmental responsibility. Each Fund's investments are subject to multiple social and environmental criteria 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.^SM 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 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 instruments that meet the Fund's social and environmental criteria. 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 U.S. bonds and other debt instruments and can accept the risks that are associated with investments in these markets.

Each Fund should be considered a long-term investment and is not appropriate for short-term goals. Each Fund can be used in both regular and tax-deferred accounts, such as IRAs.

Socially Responsible Investing

The Domini Funds seek to invest in companies and other issuers that meet the following criteria:

Corporations

• The Funds seek to avoid securities and obligations of corporations that manufacture tobacco products or alcoholic beverages, derive revenues from gambling enterprises, or have a direct ownership share in, or operate, nuclear power plants. The Funds also seek to avoid investment in firearms manufacturers and major military contractors.

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Overview

• The Funds seek to hold the securities and obligations of good corporate citizens demonstrated by positive relations with their communities and their employees, their environmental record, their diversity record, and the quality and safety of their products and services.

Other Issuers

The Domini Social Bond Fund holds debt instruments issued by a number of noncorporate entities, such as states, municipalities, and governmental agencies. When evaluating these investments, the Fund's management seeks to identify debt instruments that serve a positive social purpose, generally in the areas of affordable housing, small business development, job creation, education, and community revitalization.

The Funds reserve the right to alter these criteria, or to add new criteria at any time without shareholder approval.

Shareholder Advocacy and Community Development

The Domini Social Equity Fund seeks to positively influence corporate behavior through conscientious proxy voting, dialogue with corporate management teams, and by filing shareholder resolutions. The Domini Social Bond Fund devotes a portion of its portfolio to community development investments.

Please see "More About the Funds — Socially Responsible Investing" 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 each of the Domini Funds. Reading the prospectus will help you to decide whether these Funds are the right investment for you. Mutual funds:


		• Are not FDIC-insured • Have no bank guarantees • 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.

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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,^SM an index made up of the stocks of 400 companies selected using social and environmental criteria. The Index is composed primarily of large-cap U.S. companies.

Primary Investment Strategies

The Domini Social Equity Fund is an index fund that seeks to match the composition of the Domini 400 Social Index as closely as possible. The Fund typically invests all or substantially all of its assets in stocks of the companies included in the Domini 400 Social Index. Accordingly, the Fund has a policy to invest, under normal circumstances, at least 80% of its assets in equity securities and related investments with similar economic characteristics. The Fund will give you 60 days' prior notice if it changes its policy with respect to equity securities and related investments with similar economic characteristics.

The Fund holds 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 with the opportunity to invest in a portfolio that tracks an index.

The Fund follows these strategies by investing in the Domini Social Index Portfolio, another fund with the same investment objective. For more information, please refer to "More About the Funds."

Primary Risks

• General. There can be no guarantee that the Domini Social Equity Fund will be able to achieve its investment objective. The investment objective of the Fund may be changed without the approval of the

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The Funds at a Glance

Fund's shareholders, but shareholders will be given notice at least 30 days before any change is implemented. Management currently has no intention to change the Fund's investment objective.

• Market Risk. The Fund's total return, like the stock market in general, will fluctuate widely. You could lose money by investing in the Fund over short or long periods of time. An investment in the Fund is not a bank deposit and is not insured or guaranteed.

• Large-Cap Companies. The Fund invests primarily in the stocks of large-cap companies. Large-cap stocks tend to go through cycles when they do better, or worse, than other asset classes or the stock market overall. The performance of your investment will generally follow these market trends. Because the Domini 400 Social Index^SM 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.

• 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 that industry or sector than would be another mutual fund 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.

• Socially Responsible Investing. The Fund's portfolio is subject to multiple social and environmental criteria. As a result, Fund management 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.

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The Funds at a Glance

Past Performance

The bar chart below and the following table provide an indication of the risks of investing in the Domini Social Equity Fund. The bar chart shows how returns of the Fund's Investor shares have varied from one calendar year to the next. The table shows how the average annual total returns of the Fund's Investor shares compare with those of the Standard & Poor's 500 Index (S&P 500), a broad-based index. In both the chart and the table, the returns shown for the Fund are for periods before the creation of share classes on November 28, 2003. All existing Fund shares were designated Investor shares on that date. 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 performance of the Domini Social Equity Fund's Investor shares has varied over the last ten calendar years. The return of the Fund's Class R shares will differ from the returns of the Investor shares shown in the bar chart because of the lower expenses applicable to Class R shares.

Best quarter covered by the bar chart above: 24.62%

(quarter ended 12/31/98)

Worst quarter covered by the bar chart above: -17.16%

(quarter ended 9/30/02)

Year-to-date performance as of September 30, 2003: 14.44%

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The Funds at a Glance

Average Annual Total Returns as of 12/31/02

The table below shows the average annual total returns of the Investor shares of the Domini Social Equity Fund in comparison to the S&P 500. In addition, after-tax returns are provided for Investor shares. The after-tax returns shown in the table are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes, the effect of phaseouts of certain exemptions, deductions, and credits at various income levels, or the impact of the federal alternative minimum tax.

Please note:

•

Actual after-tax returns depend on your tax situation and may differ from those shown,

•

After-tax returns are not relevant if you hold your shares through a tax-deferred arrangement, such as a 401(k) plan or an IRA.




	1 Year	5 Years	10 Years
Domini Social Equity Fund
Return Before Taxes
Class R Shares*	N/A	N/A	N/A
Investor Shares	-20.69%	-0.85%	8.59%
Investor Shares' Return After Taxes on Distributions	-20.84%	-1.38%	8.00%
Investor Shares' Return After Taxes on Distributions and Sale of Investor Shares**	-12.70%	-0.48%	7.22%
S&P 500 (reflects no deduction for fees, expenses, or taxes)	-22.10%	-0.59%	9.33%

* Class R shares were not available for sale during the periods shown in the chart. The average annual total returns and the after-tax returns of the Fund's Class R shares will be different from those of the Fund's Investor shares.

** The calculation of the Investor Shares' return after taxes on distributions and sale of Investor shares assumes a complete redemption at the end of the periods shown in the table and that the shareholder has sufficient capital gains of the same character from other investments to offset any capital losses from the redemption so that the shareholder may deduct the capital losses in full.

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The Funds at a Glance

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.*


	Investor Shares		Class R Shares
Shareholder Fees
(fees paid directly by you)
Sales Charge (Load) Imposed on Purchases:	None		None
Deferred Sales Charge (Load):	None		None
Redemption Fee^† (as a percentage of amount redeemed, if applicable):	2.00	%**	None
Exchange Fee:	None		None
Annual Fund Operating Expenses
(expenses deducted from the Fund's assets)
Management Fees:	0.20	%	0.20	%
Distribution (12b-1) Fees:	0.25	%	None
Other Expenses
Administrative Services and Sponsorship Fee:	0.50	%	0.50	%
Other Expenses:	0.31	%	0.24	%***
Total Annual Fund Operating Expenses:	1.26	%	0.94	%
Fee Waiver^‡:	0.31	%	0.31	%
Net Expenses:	0.95	%	0.63	%

* The table and the following example reflect the aggregate expenses of the Domini Social Equity Fund and the Domini Social Index Portfolio, the underlying portfolio in which the Fund invests. Expense information has been restated to reflect current fees.

** In order to discourage use of the Fund for market timing, an early redemption fee is charged on sales or exchanges of Investor shares made within 90 days of settlement of purchase or acquisition through exchange, with certain exceptions.

*** "Other Expenses" are estimated for Class R shares for the Fund's current fiscal year.

† If you wish to receive your redemption proceeds (in any amount) by bank wire, there is a $10 wire service fee. For additional information, please refer to the Shareholder Manual.

‡ Through November 30, 2004, 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, net of waivers and reimbursements, will not exceed, on a per annum basis, 0.95% of the average daily net assets representing Investor shares and 0.63% of the average daily net assets representing Class R shares, absent an earlier modification by the Board of Trustees, which oversees the Fund.

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The Funds at a Glance

Example

The example below is intended to help you compare the cost of investing in each class of shares of 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, operating expenses remain the same for the time period indicated, and the fee waiver reflected in the fee table is in effect for the one-year time period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:




Share Class	1 Year	3 Years	5 Years	10 Years
Investor shares	$97*	$369	$662	$1,495
Class R shares	$64	$269	$490	$1,126

* For redemptions within 90 days of settlement of purchase or acquisition through exchange, the cost of investing would be $200 higher due to the early redemption fee. For additional information, please refer to the Shareholder Manual.

This example should not be considered to represent actual expenses or performance for the past or the future. Actual future expenses may be higher or lower than those shown.





		Quick Guide to Important Information


		Minimum Initial Investment: $1,000 ($250 for IRAs, UGMA/UTMA Accounts, and Coverdell Education Savings Accounts) ($500 with Automatic Investment Plan)


		Investment Adviser: Domini Social Investments LLC


		Commencement of Operations: June 3, 1991


		Net Assets as of September 30, 2003: $1,114,998,527


		Dividends: Distributed semi-annually, usually in June and December


		Capital Gains: Distributed annually, usually in December


		Newspaper Listing: Investor Shares Dom Social Inv-Soc Eq


		Ticker Symbol: Investor Shares DSEFX Class R Shares Not yet available


		CUSIP Number: Investor Shares 257132100 Class R Shares 257132308


		Website: www.domini.com


		Shareholder Services: 1-800-582-6757

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The Funds at a Glance

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 instruments that meet the Fund's social and environmental criteria.

Primary Investment Strategies

The Domini Social Bond Fund has a policy to invest, under normal circumstances, at least 80% of its assets in bonds and similar debt instruments, 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 invests at least 85% of its assets in investment-grade securities and maintains a dollar-weighted average effective maturity of between two and ten years. All investments are subject to the Fund's environmental and social criteria. The Fund will not invest more than 10% of its assets in below-investment-grade securities.

The Fund also invests a portion of its assets (up to 10%) in debt instruments that are specifically targeted toward the social and economic development of underserved urban and rural communities, in such areas as business creation, housing development, and education. 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. Some of these investments may earn below-market rates of return. Some of these investments may be illiquid.

The Fund will give you 60 days' prior notice if it changes its policy to invest, under normal circumstances, at least 80% of its assets in bonds and similar debt instruments.

The Fund does not currently intend to invest in direct obligations of the U.S. Treasury due to the U.S. government's leading role in developing and maintaining weapons of mass destruction.

For information about the Domini Social Bond Fund's social impact, please refer to "More About the Funds — Domini Social Bond Fund."

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The Funds at a Glance

Primary Risks

• General. There can be no guarantee that the Domini Social Bond Fund will be able to achieve its investment objective. The investment objective of the Fund may be changed without the approval of the Fund's shareholders, but shareholders will be given notice at least 30 days before any change is implemented. Management currently has no intention to change the Fund's investment objective.

The market prices of the bonds and other debt instruments in which the Fund invests may fluctuate. You could lose money by investing in the Fund. An investment in the Fund is not a bank deposit and is not insured or guaranteed.

• Interest Rate Risk. In general, the value of a bond goes down when interest rates go up. The value of the Fund tends to follow the same pattern. Falling interest rates, on the other hand, could 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 Fund's dollar-weighted average effective maturity is from two to ten years. Prepayments of the debt instruments held by the Fund that are greater than or less than expected may cause its average effective maturity to differ from its normal range. This deviation is not a violation of investment policy.

• Credit Risk. One factor affecting the price of debt instruments is how creditworthy the issuers of these instruments are perceived to be. This perception is often reflected in credit ratings. The Fund could lose money if the issuer or a guarantor of a bond or other debt instrument does not make timely principal and/or interest payments, or otherwise does not honor its obligations. In addition, the value of any debt instrument held by the Fund may be negatively affected for a number of reasons

Understanding Bond Fund Risk:
Average Maturity Calculations

Unlike an individual bond, which is repaid when it reaches maturity, 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 of all the maturities of the bonds held by the fund. It is usually expressed as a dollar-weighted average, so that the bonds held in greater amounts weigh more heavily in the calculation than bonds held in smaller amounts.

The dollar-weighted average "effective" maturity takes into account the portfolio manager's expectation of prepayments and the call provisions of certain securities. Therefore, average effective maturity may be shorter than a simple average maturity calculation.

In general, a bond fund with a longer dollar-weighted average effective maturity will usually experience greater volatility due to its sensitivity to changes in interest rates than a fund with a shorter dollar-weighted average effective maturity.

-12-

The Funds at a Glance

that directly relate to the issuer of that debt instrument, such as management performance, financial leverage, and reduced demand for the issuer's goods or services.

Debt instruments with lower ratings tend to be more volatile than those with higher ratings. Lower-rated or unrated securities may also be hard to value accurately or sell at a fair price. The Fund will not invest more than 10% of its assets in securities that are rated below investment-grade.

The Fund will devote a portion of its assets to community development investments that may be unrated and/or illiquid. These investments may be riskier than investment-grade securities, and some may earn below-market rates of return. The Fund may not be able to sell illiquid investments at an advantageous time or price. The Fund may not invest more than 15% of its net assets in illiquid securities.

• Prepayment Risk. When interest rates go down, the issuers of some debt instruments may prepay the principal due on these instruments. 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 instruments to be repaid later than expected, forcing the Fund to endure the relatively low interest rates on these instruments. This also extends the average effective maturity of certain debt instruments, making them more sensitive to changes in interest rates and the Fund's net asset value more volatile. Because the Fund invests in mortgage-backed securities, it is particularly sensitive to this type of risk.

• Government-Sponsored Entities. The Fund currently invests a significant portion of its assets in securities issued by government-sponsored entities such as Fannie Mae (formerly known as the Federal National Mortgage Corporation), Freddie Mac (formerly known asthe Federal Home Loan Mortgage Corporation), and the Federal Home Loan Banks. Although these entities were

Understanding Bond Fund Risk:
Credit Ratings

Investment-grade debt instruments are those rated "Aaa," "Aa," "A," or "Baa" by Moody's Investors Service, Inc. or "AAA," "AA," "A," or "BBB" by Standard & Poor's Ratings Services and those that the Domini Social Bond 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 the Fund should continue to hold or should sell the security.

-13-

The Funds at a Glance

chartered or sponsored by Congress, they are not funded by the government, and the securities they issue are not guaranteed or insured by the United States Government or the U.S. Treasury.

-14-

The Funds at a Glance

Past Performance

The bar chart below and the following table provide an indication of the risks of investing in the Domini Social Bond Fund. The bar chart shows how returns of the Fund's Investor shares have varied from one calendar year to the next. The table shows how the average annual total returns of each class of the Fund's Investor shares compare with those of the Lehman Brothers Intermediate Aggregate Index (LBIA), a broad-based index. In both the chart and the table, the returns shown for the Fund are for periods before the creation of share classes on November 28, 2003. All existing Fund shares were designated Investor shares on that date. 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 performance of the Domini Social Bond Fund's Investor shares has varied over the past two calendar years. The return of the Fund's Class R shares will differ from the returns of the Investor shares shown in the bar chart because of the lower expenses applicable to Class R shares.

Best quarter covered by the bar chart above: 4.69%
(quarter ended 9/30/01)

Worst quarter covered by the bar chart above: -0.34%
(quarter ended 12/31/01)

Year-to-date performance as of September 30, 2003: 2.60%

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The Funds at a Glance

Average Annual Total Returns as of 12/31/02

The table below shows the average annual total returns of the Investor shares of the Domini Social Bond Fund in comparison to the Lehman Brothers Intermediate Aggregate Index (LBIA). In addition, after-tax returns are provided for Investor shares. The after-tax returns shown in the table are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes, the effect of phaseouts of certain exemptions, deductions, and credits at various income levels, or the impact of the federal alternative minimum tax.

Please note:

•

Actual after-tax returns depend on your tax situation and may differ from those shown,

•

After-tax returns are not relevant if you hold your shares through a tax-deferred arrangement, such as a 401(k) plan or an IRA.




	1 Year	Since Inception (6/1/00)
Domini Social Bond Fund
Return Before Taxes
Class R Shares*	N/A	N/A
Investor Shares	8.85%	10.03%
Investor Shares' Return After Taxes on Distributions	7.41%	7.88%
Investor Shares' Return After Taxes on Distributions and Sale of Investor Shares**	5.73%	7.02%

LBIA (reflects no deduction for fees, expenses, or taxes)	9.51%	10.60%

* Class R shares were not available for sale during the periods shown in the chart. The average annual returns and the after-tax returns of the Fund's Class R shares will be different from those of the Fund's Investor shares.

** The calculation of the Investor shares' return after taxes on distributions and sale of Investor shares assumes a complete redemption at the end of the periods shown in the table and that the shareholder has sufficient capital gains of the same character from other investments to offset any capital losses from the redemption so that the shareholder may deduct the capital losses in full.

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The Funds at a Glance

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.


	Investor Shares		Class R Shares
Shareholder Fees
(fees paid directly by you)
Sales Charge (Load) Imposed on Purchases:	None		None
Deferred Sales Charge (Load):	None		None
Redemption Fee^† (as a percentage of amount redeemed, if applicable):	2.00	%**	None
Exchange Fee:	None		None
Annual Fund Operating Expenses
(expenses deducted from the Fund's assets)
Management Fees:	0.40	%	0.40	%
Distribution (12b-1) Fees:	0.25	%	None
Other Expenses
Administrative Services Fee:	0.25	%	0.25	%
Other Expenses:	0.81	%	0.74	%***
Total Annual Fund Operating Expenses:	1.71	%	1.39	%
Fee Waiver^‡:	0.76	%	0.76	%
Net Expenses:	0.95	%	0.63	%

** In order to discourage use of the Fund for market timing, an early redemption fee is charged on sales or exchanges of shares made within 90 days of settlement of purchase or acquisition through exchange, with certain exceptions.

*** "Other Expenses" are estimated for Class R shares for the Fund's current fiscal year.

† If you wish to receive your redemption proceeds (in any amount) by bank wire, there is a $10 wire service fee. For additional information, please refer to the Shareholder Manual.

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The Funds at a Glance

Example

The example below is intended to help you compare the cost of investing in each class of shares of 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 the same for the time period indicated, and that the fee waiver reflected in the fee table is in effect for the one-year time period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:




Share Class	1 Year	3 Years	5 Years	10 Years
Investor shares	$97*	$465	$857	$1,956
Class R shares	$64	$365	$688	$1,603

This example should not be considered to represent actual expenses or performance for the past or the future. Actual future expenses may be higher or lower than those shown.





		Quick Guide to Important Information


		Minimum Initial Investment: $1,000 ($250 for IRAs, UGMA/UTMA Accounts, and Coverdell Education Savings Accounts) ($500 with Automatic Investment Plan)


		Investment Adviser: Domini Social Investments LLC


		Commencement of Operations: June 1, 2000


		Net Assets as of September 30, 2003: $49,581,826


		Dividends: Distributed monthly


		Capital Gains: Distributed annually, usually in December


		Newspaper Listing: Investor Shares Dom Soc Inv-Soc Bd


		Ticker Symbol: Investor Shares DSBFX Class R Shares Not yet available


		CUSIP Number: Investor Shares 257132209 Class R Shares 257132407


		Website: www.domini.com


		Shareholder Services: 1-800-582-6757

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More About the Funds

Socially Responsible Investing

In addition to traditional financial considerations, 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, socially responsible investors look for opportunities to use their investments to improve the lives of others.

Typically, socially responsible investors seek to avoid companies that manufacture products, or employ practices, that they believe have harmful effects on society or the natural environment. They seek to invest in corporations and other issuers with positive qualities, such as a responsible environmental record or strong employee relations.

At Domini Social Investments, in addition to applying social and environmental criteria to all of our investments, we work with companies to improve their social and environmental performance and file shareholder resolutions on these issues when appropriate. In addition, we vote company proxies in a manner consistent with our social and environmental criteria. In 1999, we became the first mutual fund manager in the U.S. to publicly disclose its votes.

A socially responsible equity fund can have an impact on corporate behavior by applying social and environmental criteria to its holdings, through proxy voting, and by filing shareholder resolutions. A socially responsible bond fund, however, provides investors with a unique opportunity to make a difference to communities. The Domini Social Bond Fund seeks to foster economic empowerment and justice by devoting a portion of its assets to community development investments that are specifically targeted to areas of greatest need.

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More About the Funds

The Social and Environmental Criteria
Applied to the Domini Funds

Corporations

The Domini Funds seek to avoid securities and obligations of corporations that manufacture tobacco products or alcoholic beverages, derive revenues from gambling enterprises, or have a direct ownership share in, or operate, nuclear power plants. The Funds also seek to avoid investment in firearms manufacturers and major military contractors.

Once a company has passed the set of exclusionary criteria described above, it is subject to a range of qualitative factors designed to measure the quality of its relations with its various stakeholders, including employees, consumers, communities, and the natural environment.

Domini considers the following criteria when evaluating companies for possible investment and may exclude companies based on poor performance in these areas:

• Citizenship — the company's record with regard to its charitable activities and its community relations in general, including its relations with indigenous people

• 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

• Employee Relations — the company's record with regard to labor matters, workplace safety, employee benefit programs, and meaningful participation in profits

• 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

• Product-Related Issues — the company's record with regard to product safety, marketing practices, and commitment to quality

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More About the Funds

Other Issuers

The Domini Social Bond Fund holds debt instruments issued by a range of noncorporate entities, including government agencies, states, and municipalities. When evaluating these investments, the Fund's management seeks to identify debt instruments that serve a positive social purpose, generally in the areas of affordable housing, small business development, job creation, education, and community revitalization. Please see "More About the Funds — Domini Social Bond Fund" for further information about the Domini Social Bond Fund.

* * * * *

Domini may, at its discretion, choose to apply additional criteria, or to modify the application of the criteria listed above, to the Domini Funds at any time, without shareholder approval. This will impact the types of investments held by the Funds, and may cause certain companies or industries to be dropped from or added to the Funds' portfolios. In addition, Domini reserves the right to vary the application of these criteria to each Fund, depending, for example, on such factors as asset class, market capitalization, investment style, and/or access to quality data on an issuer's social or environmental performance.

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More About the Funds

Domini Social Equity Fund

The Domini Social Equity Fund applies multiple social and environmental criteria to all of its investments (see below for more information on the Domini 400 Social Index,^SM the Index upon which the Fund is based). In addition, the Fund uses its position as a shareholder to raise issues of social and environmental performance with corporate management.

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 a broad representation of primarily large-cap U.S. companies selected using multiple social and environmental criteria. 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^SM 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 equity funds buy and sell stocks based on the fund manager's opinion of the financial outlook of segments of the stock market and certain companies in particular. Because index funds use a passive strategy, changes in the portfolio manager 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

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More About the Funds

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 popular because it offers investors a convenient, relatively low-cost, and tax-efficient way to obtain exposure to a broad spectrum of the market. Here are some other advantages:

• Industry Diversification. Index funds such as the Domini Social Equity Fund invest in companies representing a diverse mix of industries. This structure can help reduce volatility as compared to funds that may focus on a particular industry. Please note that although the Fund holds a broad cross-section of the U.S. stock market, it should not be considered a balanced investment program because it only holds stocks.

• Benchmark Comparability. Index funds typically match the performance of their particular benchmarks more closely than comparable actively managed funds. The Domini Social Equity Fund seeks to match the performance of the Domini 400 Social Index.^SM

• Tax Efficiency. Turnover rate refers to the volume of buying and selling of securities 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 portfolio turnover rate for all domestic stock funds is 105%.*

The annual portfolio turnover rate for the Domini Social Index Portfolio, which the Domini Social Equity Fund invests in, is 8%.** (There is no guarantee that this turnover will not be higher in the future.)

A 100% portfolio 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 09/30/03; taken from Morningstar PrincipiaPro.

**	For the period from 08/01/02 to 07/31/03.

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More About the Funds

What is the Domini 400 Social Index^SM

The Domini 400 Social Index was the first index constructed according to social and environmental criteria. It was created and launched in May 1990 by the social research firm of KLD Research & Analytics, Inc. (KLD) in order to serve as a benchmark for socially responsible investors and to determine how the application of social and environmental criteria affects financial performance. The Domini Social Equity Fund was launched in 1991 to provide investors with an opportunity to invest in a portfolio based on the Index. The Index is maintained by KLD. It is composed of the common stocks of 400 companies selected according to a broad range of social and environmental criteria.

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 market available to the socially responsible investor. Another goal was to identify companies that are particularly strong models of corporate behavior.
A variety of financial factors, such as solvency, industry and sector diversification, and market capitalization, are also considered in evaluating companies for addition to the Index.

KLD maintains an extensive database of corporate accountability information on more than 3,000 publicly traded companies.

How are the Domini Social Equity Fund's
largest holdings selected?

Like the S&P 500, the Domini 400 Social Index 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

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More About the Funds

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 investment in Company A will be about twice the value of its investment in Company B. 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^SMmaintained?

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).

Occasionally, 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 social and environmental criteria applied to the Index are designed to reflect those widely used by socially responsible investors. However, 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 Fund's Annual and Semi-Annual Reports. To obtain copies of these reports, free of charge, call 1-800-582-6757.

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More About the Funds

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.

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More About the Funds

Domini Social Bond Fund

The Domini Social Bond Fund seeks to foster economic empowerment and justice through investments in affordable housing, small business development, job creation, education, and community revitalization. To learn more about the social impact of the Fund, please see "The Social Impact of the Domini Social Bond Fund" below.

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 and other debt instruments because they allow you to invest in a professionally managed pool of bonds and debt instruments. Bond funds offer all of the familiar conveniences of stock mutual funds, such as:

• Liquidity. See the Shareholder Manual for information on how to buy, sell, and exchange shares.

• Reinvestment of Dividends. If you do not depend upon your investment for regular income, you may choose to reinvest your dividends.

• Low Minimum Investment. Purchasing an individual bond can be difficult because of 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, an UGMA/UTMA, or a Coverdell

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More About the Funds

Education Savings Account, the minimum is $250, and if you choose to use our Automatic Investment Plan the minimum is $500.

• Diversification. A bond fund invests in a number of bonds and other debt instruments. Although bond funds do not provide any guarantees, by investing in a number of bonds and other debt instruments bond funds may allow you to spread certain risks (such as credit risk) among more than one issuer. Bond funds may also provide balance to your stock portfolio as they have historically provided greater income with typically less volatile returns than equity funds.

What types of bonds and other investments
will the Fund typically hold?

The Domini Social Bond Fund typically invests at least 85% of its assets in investment-grade securities. The Fund can buy many types of debt instruments including, without limitation, corporate bonds, bonds issued by U.S. government agencies or instrumentalities, and mortgage-backed and asset-backed securities. The Fund may also invest in the instruments of, and deposit cash with, community development banks, community loan funds, credit unions, and other entities whose mission is community economic development. All of the Fund's holdings are subject to social and environmental criteria. Please see "More About the Funds — Socially Responsible Investing" above for more information.

The following describes the most common types of bonds and other debt instruments the Fund will hold (for a discussion of the risks associated with these types of securities, refer to "The Funds at a Glance — Domini Social Bond Fund"):

• Securities of U.S. Government Agencies and Instrumentalities are bonds issued by government agencies and instrumentalities and government-sponsored entities. The Fund generally invests in securities related to housing, farming, and education. These investments represent loans to the issuing agency or instrumentality.

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. Treasury. The Fund currently invests a significant portion of its assets in securities issued by government-sponsored

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More About the Funds

entities such as Freddie Mac, Fannie Mae, and the Federal Home Loan Banks. Although these entities were chartered or sponsored by Congress, they are not funded by the government, and the securities they issue are not guaranteed or insured by the United States government or the U.S. Treasury. Securities issued by these government-sponsored entities are backed by their respective issuers only.

The Fund does not currently intend to invest in direct obligations of the U.S. Treasury such as U.S. Treasury bills, notes, and bonds.

• State and Municipal Bonds represent loans to a state or municipal government, or one of its agencies or instrumentalities.

• Corporate Bonds are IOUs issued by corporations 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.

• 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. The Fund may also invest in mortgage-backed securities that are called collateralized mortgage obligations (CMOs). Typically CMOs are issued in separate classes with different stated maturities. As the underlying mortgage pool experiences prepayments, the pool pays off investors in classes with shorter maturities first.

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More About the Funds

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 and extension risk discussed earlier in this prospectus.

Mortgage-backed securities are issued by a number of government agencies and government-sponsored entities, including the Government National Mortgage Association (GNMA or Ginnie Mae), Freddie Mac, and Fannie Mae.

Ginnie Mae is a wholly owned government corporation that guarantees privately issued securities backed by pools of mortgages insured by the Federal Housing Administration, the Department of Veterans Affairs, and the Department of Agriculture under the Rural Housing Service Program. Ginnie Maes are guaranteed by the full faith and credit of the U.S. Treasury as to the timely payment of principal and interest. Freddie Mac and Fannie Mae are government-chartered, but shareholder-owned, corporations whose mandate is to enhance liquidity in the secondary mortgage markets. Freddie Macs and Fannie Maes are backed by their respective issuer only and are not guaranteed or insured by the U.S. government or the U.S. Treasury. 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 or insured by the U.S. government or the U.S. Treasury.

• 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

Because the Domini Social Bond Fund may invest extensively in mortgage-backed and asset-backed securities, the prepayment risk of the Fund may be higher than that for a bond fund that does not invest in these types of securities. See "Domini Social Bond Fund — Primary Risks" for more information.

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More About the Funds

bonds issued by foreign governments and companies, the Fund is subject to risks relating to political, social, and economic developments abroad.

Additional permissible Domini Social Bond Fund investments include but are not limited to:

• 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.

• Floating and Variable Rate Obligations. The Fund may invest in obligations that pay interest at rates that change based on market interest rates, known as "floating" or "variable" rate obligations. These securities tend to be highly sensitive to interest rate changes. Floating and variable rate obligations with interest rates that change based on a multiple of a market interest rate may have the effect of magnifying the Fund's gains or losses.

• 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 in further detail in 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, reference rate, or index.

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More About the Funds

The Social Impact of the Domini Social Bond Fund

The Fund's portfolio is managed with community development goals in mind. The Fund seeks to enhance its social impact by allocating up to 10% of its assets to debt instruments specifically designed to channel funds directly to underserved or low-income neighborhoods and regions. These community investments currently focus on two critical areas: affordable housing for low- to moderate-income individuals, through investment in community financial institutions that serve those individuals, and economic empowerment for small businesses. Fund management seeks to identify those financial institutions, funds, and organizations that are making substantial impact in these areas.

The Fund may invest in mortgages, loans, and pools of loans issued by, and may make loans to, community development banks, community development financial institutions, community loan funds, and similar institutions. These investments are targeted to underinvested areas, low- to moderate-income individuals, and small businesses. These investments may earn below-market rates of return, may also be lower-rated or unrated, and may subject the Fund to more credit risk than other types of debt instruments. 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 financial institutions, community loan funds, and similar institutions. These investments may not be insured by the FDIC and may earn below-market rates of return.

What is the Fund's turnover rate?

The Domini Social Bond Fund is actively managed. From time to time the Fund's annual portfolio turnover rate may exceed 100%. The annual portfolio turnover rate for the Fund was 24% for the period from August 1, 2002, to July 31, 2003. The sale of securities may produce capital gains, which when distributed are taxable to investors. Active trading may result in increased transaction costs.

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Additional Investment Strategies & Risk Information

Temporary Investments

Each Fund may temporarily use a different investment strategy for defensive purposes in response to market conditions, economic factors, or other occurrences. This may adversely affect a Fund's performance. You should note, however, that the Funds have not used a different investment strategy for defensive purposes in the past and may decide not to do so in the future — even in the event of deteriorating market conditions.

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 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.

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Additional Investment Strategies & Risk Information

Investment Structure

The Domini Social Equity Fund invests its assets in the Domini Social Index Portfolio, a registered investment company. 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 interest of the Fund's shareholders to do so. The Board of Trustees would then consider what action might be taken, including investing all of the Fund's assets in another similarly structured portfolio having the same investment objective as the Fund, or hiring an investment adviser to manage the 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.

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 Funds 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.

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Additional Investment Strategies & Risk Information

Additional Information

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.

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Who Manages the Funds?

Investment Manager

Domini Social Investments LLC (Domini or the Manager), 536 Broadway, 7th floor, New York, NY 10012, has been managing money since November 1997 and as of September 30, 2003, managed more than 1.5 billion dollars in assets for individual and institutional mutual fund investors who are working to create positive change in society by using social and environmental criteria in their investment decisions. Domini provides the Funds and the Portfolio with investment supervisory services, overall operational support, and administrative services.

Investment Submanagers

Domini Social Equity Fund

SSgA Funds Management, Inc. (SSgA), with its main offices at State Street Financial Center, One Lincoln Street, Boston, MA 02111, provides investment submanagement services to the Portfolio pursuant to a Submanagement Agreement with Domini. SSgA had approximately $83.6 billion in assets under management as of September 30, 2003, including $6.2 billion in assets for which SSgA acts as a submanager. SSgA and its affiliated companies managed over $425.4 billion in index fund assets and over $78.9 billion in socially responsible assets as of September 30, 2003. SSgA implements the daily transactions necessary to maintain the proper correlation between the Domini Social Equity Fund's portfolio and the Domini 400 Social Index.^SM SSgA does not determine the composition of the Index. The Index's composition is determined by KLD Research & Analytics, Inc.

For the services Domini and the submanager provided to the Domini Social Equity Fund and the Portfolio during the fiscal year ended July 31, 2003, they received a total of 0.36% of the average daily net assets of the Domini Social Equity Fund, after waivers.

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Who Manages the Funds?

Domini Social Bond Fund

ShoreBank, with its main offices at 7054 S. Jeffery Boulevard, Chicago, IL 60649, provides investment submanagement services to the Domini Social Bond Fund pursuant to a Submanagement Agreement with Domini. ShoreBank is the nation's oldest and largest 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), leads the team responsible for the management of the Domini Social Bond Fund. Mr. Oser has been with ShoreBank since 1976, where he currently manages $500 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.

Since its inception in August 1973 through September 30, 2003, ShoreBank has invested $1.3 billion in its targeted low- and moderate-income communities and in minority-owned companies. The bank has a diverse workforce. As of September 30, 2003, 36% of directors, 50% of senior managers, 60% of middle managers, and 87% of professional-level employees were minorities. As of September 30, 2003, ShoreBank had more than $1.3 billion in assets and $97 million in capital.

Domini and ShoreBank may receive total investment advisory fees of 0.40% of the average daily net assets of the Domini Social Bond Fund. For the fiscal year ended July 31, 2003, the total investment advisory fee was waived.

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The Funds' Distribution Plan

DSIL Investment Services LLC, a wholly owned subsidiary of Domini, is the distributor of each Fund's shares. Each Fund has adopted a Rule 12b-1 plan with respect to its Investor shares that allows the Fund to pay its distributor on an annual basis, for the sale and distribution of the Investor shares and for services provided to shareholders. These annual distribution and service fees may equal up to 0.25% of the average daily net assets of each Fund's Investor shares. The Funds do not pay any distribution and service fees with respect to the Class R shares. Because distribution and service fees are paid out of the assets of the Investor shares 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 relating to Investor shares, see the expense tables in "The Funds at a Glance" section of this prospectus and in the Statement of Additional Information.

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Shareholder Manual

This section provides you with information about buying, selling, and exchanging Investor shares of the Funds, how Fund shares are valued, Fund distributions, and the tax consequences of an investment in a Fund.

Table of Contents


How to Open an Account				A-3
Types of Accounts				A-4
Buying, Selling, and Exchanging Shares				A-5
Automatic Transaction Plans				A-9
Additional Information on Selling Shares				A-10
How the Price of Your Shares Is Determined				A-13
How can I find out the NAV of my shares?				A-13
How do you determine what price I will get when I buy shares?				A-13
How do you determine what price I will get when I sell shares?				A-14
How is the value of securities held by the Funds determined?				A-14
Fund Statements and Reports				A-15
Dividends and Capital Gains				A-16
Taxes				A-16
Anti–Money Laundering				A-17
Rights Reserved by the Funds				A-18

For more information on:

•

investing in the Funds,

•

your account,

•

the daily share price of your shares, or

•

socially responsible investing,

call our Shareholder Services department toll-free at 1-800-582-6757 or visit our website at www.domini.com. Shareholder Services representatives are available to take your call business days, 9 am - 5 pm, Eastern Time.

You may make transactions, review account information, and obtain the share price for your shares 24 hours a day, 7 days a week, by using our automated telephone system or visiting our website.

Important Information about Procedures
for Opening a New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

-A-1-

Shareholder Manual

Description of Share Classes

Each Fund offers two classes of shares: Investor shares and Class R shares. Class R shares are generally available only to certain eligible retirement plans, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans, defined benefit plans, and nonqualified deferred compensation plans. The sponsors of these retirement plans provide various shareholder services to the accounts. Class R shares are not subject to distribution and service fees because the retirement plan sponsor, rather than a Fund's distributor, provides these shareholder services. Class R shares of a Fund are also available to endowments, foundations, religious organizations, and other tax-exempt entities that are approved by the Fund's distributor. For more information on investing in Class R shares, please call 1-800-582-6757.

Other investors may purchase Investor shares. The Funds may modify the qualifications for purchase of Class R shares at any time.





		Quick Reference


		Ticker Symbols


		*Domini Social Equity Fund*


		Investor Shares — DSEFX


		Class R Shares — Not yet available


		*Domini Social Bond Fund*


		Investor Shares — DSBFX


		Class R Shares — Not yet available


		Newspaper Listing:


		*Domini Social Equity Fund*


		Investor Shares — Domini Soc Inv-Soc Eq


		*Domini Social Bond Fund*


		Investor Shares — Domini Soc Inv-Soc Bd


		Account Statements are mailed quarterly.


		Trade Confirmations are sent after purchases (except Automatic Investment Plan purchases) and redemptions.


		Annual and Semi-Annual Reports are mailed in late September and March, respectively, and are available online at www.domini.com.

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Shareholder Manual

How to Open an Account


1.	Read this prospectus (and please keep it for future reference).


2.	Review "Types of Accounts" and decide which type is appropriate for you.


3.	Decide how much you want to invest.

The minimum initial investment in each Fund is:

•

$1,000 for regular accounts ($500 if using our Automatic Investment Plan)

•

$250 for Retirement Accounts (Automatic Investment Plan also available)

•

$250 for UGMA/UTMA Accounts (Automatic Investment Plan also available)

•

$250 for Coverdell Education Savings Accounts (Automatic Investment Plan also available)

The minimum to buy additional shares of each Fund is:

•

$25 for accounts using our Automatic Investment Plan

•

$50 for all other accounts


4.	Decide whether to make your initial purchase by mail or bank wire. Follow the simple instructions under "Buying, Selling, and Exchanging Shares."

Be sure to completely fill out and sign the Account Application appropriate for the account type you have selected. If you need assistance, please call 1-800-582-6757, business days, 9 am - 5 pm, Eastern Time.

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:


•	The Fund name


•	The account number


•	The funds for the purchase or the amount of the transaction (in dollars or shares) for the sale


•	Name, address, and other information that will allow us to identify you


•	The signatures of all owners exactly as registered on the account (for redemption requests by mail)


•	A Medallion Signature Guarantee, if required (see "Additional Information on Selling Shares" below)


•	Any supporting legal documentation that may be required

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Shareholder Manual

Types of Accounts

You may invest in the Funds through the following types of accounts:


Individual and Joint Accounts (nonretirement)				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 or a Roth IRA. There is a $10 annual maintenance fee per shareholder.
Uniform Gifts/Transfers to Minors Act (UGMA/UTMA) Accounts				These accounts are maintained by a custodian you choose (which may be you) on behalf of a minor. They provide a simple method for giving irrevocable gifts to children without having to establish a formal trust.
Coverdell Education Savings Accounts (formerly Education IRAs)				These accounts may be established on behalf of any child with a Social Security number and are used to save for higher education expenses. There is a $10 annual maintenance fee per shareholder.
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.
For an Organization				You may open an account for a trust, corporation, partnership, endowment, foundation, or other entity.

You may download or request the application you need for the account type you have selected at www.domini.com or by calling 1-800-582-6757.

Automatic transaction plans are available for all account types. Please see "Buying, Selling, and Exchanging Shares" for more information.

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Shareholder Manual

Buying, Selling, and Exchanging Shares

The following chart describes all the ways you can buy, sell, and exchange Investor shares of the Domini Social Equity Fund and the Domini Social Bond Fund. If you need any additional information or assistance, please call 1-800-582-6757.

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Shareholder Manual


Method				Instructions

Online^1,3,4 Online you may: Buy Sell Exchange				Current shareholders may buy, sell, and exchange shares online 24 hours a day by following these steps: • Visit www.domini.com. • Click the "Account Access" button. • Enter your Social Security number and Personal Identification Number (PIN) in the appropriate fields. • The "Account List" will provide you with an overview of your accounts and transaction processing options. • Online help is available at each screen.
Phone ^1,2,3,4 By Phone you may: Buy Sell Exchange				Automated: Current shareholders may buy, sell, and exchange shares using our automated telephone account access system 24 hours a day by following these steps: • Dial 1-800-582-6757. • Select "1" for automated account access. • Select "1" again for account information. • Enter your account number followed by the pound sign (#). • Enter your Personal Identification Number (PIN). • Press "2" to process a transaction. • At any time you may press "8" to return to the previous menu or "9" to return to the main menu. Shareholder Services: • Dial 1-800-582-6757. • Select "2" to speak with a Shareholder Services representative.
Bank Wire⁴ By Bank Wire you may: Buy Sell				To buy shares: For your initial investment, complete an Account Application and mail it to Domini Funds at the address shown above for purchasing shares by mail. New accounts, call 1-800-582-6757 to obtain an account number before wiring funds. You must include the following information in your wire transfer or your money may be returned uninvested: • Bank: PNC Bank • ABA: 031000053 • Acct Name: Domini Social Investments • Acct #: 86-0690-5468 • FBO: Fund Name, Account Name, and Account Number at Domini Funds

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Shareholder Manual


Method				Instructions

Bank Wire (continued)				To sell shares: You may request receipt of redemption proceeds by wire online, in writing, or by speaking with a Shareholder Services representative at 1-800-582-6757. To establish wire redemption privileges on a new account, fill out the appropriate area on the Account Application and attach a voided check. If you would like to establish wire redemption privileges on an existing account, you must submit a written request that contains the following information: • Bank name and address • ABA/routing number • Account name and number • Account type (checking, money market, or savings)
				A Medallion Signature Guarantee must be included on the letter (see "Additional Information on Selling Shares" below). There is a $10 wire transfer fee (deducted directly from sale proceeds) and a $1,000 minimum wire amount. The wire transfer fee and the minimum wire amount may be waived for certain individuals and institutions at the Manager's discretion.

¹	First-time users will need to call 1-800-582-6757, business days, 9 am - 5 pm, Eastern Time, to obtain a PIN and to set up ACH (Automated Clearing House) privileges, which are necessary to use this service.

Neither the Funds nor their transfer agent or 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 if you wish to suspend telephone redemption privileges.

³	Your ACH transaction will be considered in good order on the date the ACH transaction is received by the Funds. This may take up to 48 hours.

⁴

Redemptions or exchanges of Investor shares made within 90 days of settlement of purchase or acquisition through exchange will be subject to a redemption fee equal to 2% of the amount redeemed or exchanged. The redemption fee will be deducted from your proceeds and returned to the applicable Fund. If you acquired shares on different days, the "first in, first out" (FIFO) method is used to determine the holding period. This means that the shares you held the longest will be redeemed first for purposes of determining whether the redemption fee applies. The redemption fee is not imposed on redemptions of shares held by 401(k), 457, 403(b), or other qualified retirement plans or shares acquired as a result of reinvestment of dividends or distributions. Shares of the Domini Social Equity Fund and the Domini Social Bond Fund purchased prior to November 28, 2003, will not be subject to the redemption fee. This fee ensures that portfolio trading costs are borne by investors making the transaction and not by shareholders remaining in the Fund.

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Shareholder Manual

You may exchange all or a portion of your Fund shares into shares of the same class of any other available Domini Fund. You may also deposit redemption proceeds into the Domini Money Market Account.^®





		Domini Money Market Account^®


		The Domini Money Market Account (DMMA) offered through ShoreBank is an FDIC-insured (up to certain limits) 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 Fund account. A DMMA investment is subject to certain terms and conditions. Please call 1-800-582-6757 or visit www.domini.com for more information. The rate of return for the DMMA will vary. The Domini Funds are not insured by the FDIC.

For more information on transferring assets from another mutual fund family, please call 1-800-582-6757.

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Shareholder Manual

Automatic Transaction Plans

Automatic transaction plans are available for your convenience to purchase or to sell shares at specified intervals without having to manually initiate each transaction.

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. This service can be established for your account at any time. Call 1-800-582-6757 for more information.

This service may take up to four 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 in posting the funds to your account.

Systematic Withdrawal Plan

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 per payment).

There is no charge to participate in the Systematic Withdrawal Plan. Call 1-800-582-6757 for more information.

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 "buy low and sell high."

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, through periods of rising and falling markets. 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 avoid 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 Fund's Automatic Investment Plan.

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Shareholder Manual

Additional Information on Selling Shares

Signature Guarantees

You are required to obtain a Medallion Signature Guarantee from a participating institution for any of the following:

•

Sales (redemptions) exceeding $100,000

•

Written sales requests, regardless of amount, made within 30 days following any changes in account registration

•

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)

The following types of institutions may participate in the Medallion Signature Guarantee program:

•

Banks

•

Savings institutions

•

Credit unions

•

Broker-dealers

•

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. There are different Medallion limits based on the amount of money being redeemed. Please ensure you obtain the proper Medallion. 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 or the online 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.

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Shareholder Manual

Each Fund may postpone payment of redemption proceeds under either of these circumstances:

•

During any period in which the New York Stock Exchange is closed or in which trading is restricted

•

If the Securities and Exchange Commission determines that an emergency exists

Large Redemptions

It is important that you call the Fund before you redeem any amount in excess of $500,000. We must consider the interests of all Fund shareholders and so reserve the right to delay delivery of your redemption proceeds — up to 7 days — if the amount to be redeemed 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 the Manager.

Market Timing and Redemption Fee

To discourage the Funds from being used as vehicles for frequent short-term shareholder trading, each Fund will deduct a redemption fee of 2% from any redemption or exchange proceeds if you sell or exchange Investor shares after holding them less than 90 days. The redemption fee will be deducted from your redemption proceeds and returned to the applicable Fund. If you acquired shares on different days, the "first in, first out" (FIFO) method is used to determine the holding period. This means that the shares you hold the longest will be redeemed first for purposes of determining whether the redemption fee applies. The redemption fee is not imposed on redemptions of shares held by 401(k), 457, 403(b), or other qualified retirement plans or shares acquired as a result of reinvestment of dividends or distributions. Shares of the Domini Social Equity Fund and the Domini

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Shareholder Manual

Social Bond Fund purchased prior to November 28, 2003, will not be subject to the redemption fee. This fee ensures that portfolio trading costs are borne by investors making the transaction and not by shareholders remaining in the Fund.





		IMPORTANT: Once a redemption order is placed, the transaction cannot be cancelled.

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Shareholder Manual

How the Price of Your Shares
Is Determined

The price of your shares is based on the net asset value of the applicable class of shares of the Fund that you hold. The net asset value (or NAV) of each class of shares of each Fund is determined at the close of regular trading on the New York Stock Exchange, normally 4 pm, Eastern Time, on each day the Exchange is open for trading. This calculation is made by deducting the amount of the liabilities (debts) of the applicable class of shares of the applicable Fund, from the value of its assets, and dividing the difference by the number of outstanding shares of the applicable class of the Fund.

Net Asset Value (NAV) =	Total Assets - Total Libilities

	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 the NAV of my shares?

You may obtain the NAV for your shares 24 hours a day online at www.domini.com or by phone by calling 1-800-582-6757 from a touch-tone phone and accessing our automated telephone system.

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 Dom Soc Inv-Soc Eq. The Domini Social Bond Fund is most commonly listed as Dom Soc Inv-Soc Bd.

Quarterly Statements: You will also receive this information quarterly, on your account statement.

How do you determine what price I will get
when I buy shares?

If your order is received by the Funds by 4 pm, Eastern Time, in good order, you will receive the NAV determined at the end of that day. Please note that ACH transactions placed before 4 pm, Eastern Time, on a business day will receive the NAV determined at the end of the

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Shareholder Manual

following business day. ACH transactions received between 4 pm and 12 am, Eastern Time, will receive the NAV determined at the end of the second business day following the transaction.

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 in good order. See "What Is Good Order'?" on page A-3 of this prospectus. Please note that redemption requests received after the share price has been calculated for any Fund, normally 4 pm, Eastern Time, will be processed at the next share price that is calculated by the Fund the next business day a Fund's share price is calculated. 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 7 days. Sales of shares made within 90 days of settlement of a purchase or acquisition through exchange will be subject to an early redemption fee, with certain exceptions (See "Additional Information on Selling Shares — Market Timing and Redemption Fee" above for more information). Please note that shares purchased by check will not be available for you to sell for up to 8 business days after purchase. Each Fund may pay by check or, if you have completed the appropriate box on the Account Application, by wire transfer.

Access to the automated telephone system and online processing may be limited during periods of peak demand, market volatility, system upgrades or maintenance, or for other reasons.

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 will 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.

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Shareholder Manual

Each short-term obligation (with a remaining maturity of less than 60 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 1-800-582-6757.

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 dividends or for purchases made through automatic investment plans. Always verify your transactions by reviewing your confirmation statement carefully for accuracy. Please report any discrepancies promptly to our Shareholder Services department at 1-800-582-6757.

Fund Financial Reports

The Funds' Annual Report is mailed in September, and the Funds' 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 choose to receive these reports by email rather than hard copy by signing up for e-delivery at www.domini.com. The Funds' most recent reports are available online at www.domini.com.

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Shareholder Manual

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 IRS. 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 (excluding capital gains), if any, 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 gain dividends are distributed annually in December.

You may elect to receive dividends 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, dividends are normally taxable to you in the manner described below.

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. Noncorporate shareholders will be taxed at reduced rates on distributions designated by a Fund as "qualified dividend income." 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.

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Shareholder Manual

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

Any time you sell or exchange shares held in a nonretirement 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 Funds is correct and that you are not otherwise subject to backup withholding for failing to report income to the IRS. The Funds may be required to withhold (and pay over to the IRS for your credit) taxes, at the rate of 28%, from certain distributions and proceeds they pay you if you fail to provide this information or otherwise violate IRS regulations.

Anti–Money Laundering

As part of our required anti–money laundering program, we may ask you to provide various identification documents or other information when you open or make certain significant changes to your account. Until you provide the information or documents required, you may not be able to open an account or effect additional transactions.

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Shareholder Manual

Rights Reserved by the Funds

Each Fund and its agents reserve the following rights:

•

To waive or lower investment minimums

•

To refuse any purchase or exchange order

•

To stop selling shares at any time

•

To cancel any purchase or exchange order (including, but not limited to, orders that involve (in the Manager's opinion) excessive trading, market timing, fraud, or 5% ownership) upon notice to the shareholder

•

To implement additional policies designed to prevent excessive trading

•

To adopt policies requiring redemption of shares in certain circumstances

•

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 a reason to believe a fraudulent transaction may occur

•

To otherwise modify the conditions of purchase and any services at any time

•

To act on instructions believed to be genuine

•

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 interest of a Fund.

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Financial Highlights

The financial highlights tables are intended to help you understand a Fund's financial performance for the past five years (or in the case of the Domini Social Bond Fund, since its inception). Certain information reflects financial results for a single Fund share. The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in the applicable Fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, whose report, along with a Fund's financial statements, is included in the Annual Report, which is available upon request.

Effective November 28, 2003, all outstanding shares of each Fund were designated Investor shares. The financial highlights tables below provide information relating to each Fund's Investor shares. Class R shares are newly offered and have not issued financial statements as of the date of this Prospectus.

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Financial Highlights

Domini Social Equity Fund


	Year Ended July 31,
	2003			2002			2001			2000			1999
For a share outstanding for the period:
Net asset value, beginning of period	$	22.19		$	31.89		$	39.98		$	37.21		$	30.86
Income from investment operations:
Net investment income/(loss)		0.14			0.08			0.02			(0.02	)		0.02
Net realized and unrealized gain/(loss) on investments		2.37			(6.96	)		(7.12	)		3.06			6.81
Total income from investment operations		2.51			(6.88	)		(7.10	)		3.04			6.83
Less dividends and distributions:
Dividends to shareholders from net investment income		(0.15	)		(0.07	)		(0.01	)		—	*		(0.03	)
Distributions to shareholders from net realized gain		—			(2.75	)		(0.98	)		(0.27	)		(0.45	)
Total distributions		(0.15	)		(2.82	)		(0.99	)		(0.27	)		(0.48	)
Net asset value, end of period	$	24.55		$	22.19		$	31.89		$	39.98		$	37.21
Total return		11.36	%		(23.26	)%		(17.87	)%		8.16	%		22.26	%
Portfolio turnover**		8	%		13	%		19	%		9	%		8	%
Ratios/supplemental data (annualized):
Net assets, end of period (in millions)	$	1,099		$	969		$	1,281		$	1,471		$	1,083
Ratio of expenses to average net assets		0.92	%⁽¹⁾		0.92	%⁽¹⁾		0.93	%⁽¹⁾		0.96	%⁽¹⁾		0.98	%⁽¹⁾
Ratio of net investment income/(loss) to average net assets		0.63	%		0.32	%		0.06	%		(0.05	)%		0.06	%

*	Amount represents less than $0.005 per share.

**	For the Portfolio in which the Fund invests.

⁽¹⁾

Reflects a waiver of fees by the Manager of the Portfolio and the Sponsor of the Fund. Had the Manager and the Sponsor not waived their fees, the ratio of expenses to average net assets would have been 1.26%, 1.15%, 1.14%, 1.01%, and 0.99%, for the years ended July 31, 2003, 2002, 2001, 2000, and 1999, respectively.

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Financial Highlights

Domini Social Bond Fund


	Year Ended July 31, 2003			Year Ended July 31, 2002			Year Ended July 31, 2001			For the Period June 1, 2000* to July 31, 2000
For a share outstanding for the period:
Net asset value, beginning of period	$	11.03		$	10.78		$	10.07		$	10.00
Income from investment operations:
Net investment income		0.40			0.48			0.56			0.09
Net realized and unrealized gain/(loss) on investments		(0.03	)		0.34			0.71			0.07
Total income from investment operations		0.37			0.82			1.27			0.16
Less dividends to shareholders from net investment income		(0.40	)		(0.48	)		(0.56	)		(0.09	)
Less distributions to shareholders from realized gain		(0.03	)		(0.09	)		—			—
Total dividends and distributions paid to shareholders		(0.43	)		(0.57	)		(0.56	)		(0.09	)
Net asset value, end of period	$	10.97		$	11.03		$	10.78		$	10.07
Total return		3.33	%		7.85	%		12.92	%		9.51	%**
Portfolio turnover		24	%		71	%		71	%		18	%
Ratios/supplemental data:
Net assets, end of period (000s)	$	47,853		$	32,018		$	14,014		$	4,111
Ratios of expenses to average net assets		0.95	%⁽¹⁾		0.95	%⁽¹⁾		0.95	%⁽¹⁾		0.93	%⁽¹⁾**
Ratios of net investment income to average net assets		3.56	%		4.40	%		5.27	%		5.67	%**

*	Commencement of operations.

**	Annualized.

⁽¹⁾

Reflects a waiver of fees and reimbursement of expenses by the Manager due to a contractual fee waiver. Had the Manager not waived its fees and reimbursed expenses, the ratio of expenses to average net assets would have been 1.71%, 1.85%, 2.41%, and 6.78%, for the periods ended July 31, 2003, 2002, 2001, and 2000, respectively.

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Domini Social Investments,^® Domini Social Equity Fund,^® Domini Social Bond Fund,^® Domini Institutional Social Equity Fund,^SM Domini Money Market Account,^® The Responsible Index Fund,^® The Way You Invest Matters,^® and domini.com^® are registered service marks of Domini Social Investments LLC.

Domini 400 Social Index^SM is a service mark of KLD Research & Analytics, Inc. (KLD), which is used under license. KLD is the owner of the Domini 400 Social Index. KLD determines the composition of the Domini 400 Social Index but is not the manager of the Domini Social Index Portfolio, the Domini Social Equity Fund, or the Domini Institutional Social Equity Fund.

The Domini Social Equity Fund is not sponsored, endorsed, sold, or promoted by KLD Research & Analytics, Inc. (KLD). KLD makes no representation or warranty, express or implied, to the shareholders of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly. KLD has no obligation to take the needs of Domini Social Investments LLC or the shareholders of the Fund into consideration in determining, composing, or calculating the Domini 400 Social Index. KLD is not responsible for and has not participated in the management of the Fund or the distribution of the shares of the Fund. KLD has no obligation or liability in connection with the administration, marketing, or trading of the Fund.

KLD DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE DOMINI 400 SOCIAL INDEX OR ANY DATA INCLUDED THEREIN, AND KLD SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. KLD MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY DOMINI SOCIAL INVESTMENTS LLC, SHAREHOLDERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DOMINI 400 SOCIAL INDEX OR ANY DATA INCLUDED THEREIN. KLD MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE DOMINI 400 SOCIAL INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL KLD HAVE ANY LIABILITY FOR ANY SPECIAL PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

For Additional Information

Annual and Semi-Annual Reports

Additional information about a Fund's investments is available in the Funds' Annual and Semi-Annual Reports to shareholders. These reports include a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during their last fiscal year, as well as a complete listing of each Fund's holdings. They are available by mail from Domini Social Investments, or online at www.domini.com.

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. It is available by mail from Domini Social Investments.

Proxy Voting and Social and Environmental Criteria

Visit www.domini.com for more complete information about Domini Social Investments' proxy voting policies and procedures, to view the Domini Social Equity Fund's current proxy voting decisions, to learn more about the firm's shareholder activism program, and for extensive information about the social and environmental criteria used to maintain the Domini 400 Social Index.^SM

Contact Domini

To make inquiries about the Funds or obtain copies of any of the above free of charge, call 1-800-582-6757 or write to:

Domini Social Investments

P.O. Box 9785

Providence, RI 02940

Website: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 on the EDGAR database on the SEC's website, www.sec.gov. Copies may be obtained upon payment of a duplicating fee by electronic request at the following email address: publicinfo@sec.gov, or by writing the Public Reference Section of the SEC, Washington, DC 20549-0102. You may also visit the SEC's Public Reference Room in Washington, D.C. For more information about the Public Reference Room you may call the SEC at 1-202-942-8090.

File No. 811-5823

STATEMENT OF ADDITIONAL INFORMATION

November 28, 2003

DOMINI SOCIAL EQUITY FUND
DOMINI SOCIAL BOND FUND

TABLE OF CONTENTS PAGE

1. The Funds............................................................... 2

2. Investment Objectives; Information Concerning Fund
Structure; Investment Policies; Proxy Voting Policies;
Investment Restrictions................................................. 3

3. Performance Information................................................. 19

4. Determination of Net Asset Value; Valuation of Portfolio Securities;
Additional Purchase and Sale Information................................ 23

5. Management of the Funds and the Portfolio............................... 26

6. Independent Auditors.................................................... 38

7. Taxation................................................................ 38

8. Portfolio Transactions and Brokerage Commissions........................ 41

9. Description of Shares, Voting Rights, and Liabilities................... 43

10. Financial Statements.................................................... 46

11. Appendix A - Rating Information......................................... A-1

12. Appendix B - Proxy Voting Policies and Procedures....................... B-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 November 28, 2003, 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 46 hereof. These financial statements
can be found in the Funds' Annual Report to Shareholders. An investor may obtain
copies of the Funds' Prospectus and Annual Report without charge from Domini
Social Investments by calling (800) 582-6757 or online at www.domini.com.

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.

-2-

1. THE FUNDS

The Domini Social Equity Fund (the "Equity Fund") and the Domini Social
Bond Fund (the "Bond Fund," and collectively with the 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 January 20, 2000, 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 ("Domini" or the "Manager") supervises
the overall administration of the Equity Fund and provides investment advisory
and administrative services to the Bond Fund. 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
("DSILD" or the "Distributor"). An investor should obtain from Domini, and
should read in conjunction with the Prospectus, the materials describing the
procedures under which Fund shares may be purchased and redeemed.

The 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 Equity Fund. Domini is the Portfolio's investment manager. SSgA
Funds Management, Inc. is the Portfolio's investment submanager ("SSgA" or the
"Portfolio Submanager"). SSgA manages the investments of the Portfolio from day
to day in accordance with the Portfolio's investment objective and policies. KLD
Research & Analytics, Inc. ("KLD") determines the composition of the Domini 400
Social IndexSM (the "Index"). Domini 400 Social IndexSM is a service mark of KLD
which is licensed to Domini with the consent of Amy L. Domini (with regard to
the word "Domini"). KLD is the owner of the Index but is not the manager of the
Equity Fund or the Portfolio. Pursuant to agreements among KLD, Domini, Amy L.
Domini, and each of the Equity Fund and the Portfolio, the Equity Fund and the
Portfolio may be required to discontinue use of KLD's service mark if (a) Domini
ceases to be the investment manager of the Portfolio, (b) Ms. Domini or Domini
withdraws her or its consent to the use of the word "Domini," or (c) the license
agreement between KLD and Domini is terminated.

ShoreBank is the Bond Fund's investment submanager ("ShoreBank" or the
"Bond Fund Submanager"). ShoreBank manages the investments of the Bond Fund from
day to day in accordance with that Fund's investment objective and policies.

The Portfolio Submanager and the Bond Fund Submanager are collectively
referred to herein as the "Submanagers", and each a "Submanager."

-3-

2. INVESTMENT OBJECTIVES;
INFORMATION CONCERNING FUND STRUCTURE;
INVESTMENT POLICIES; PROXY VOTING POLICIES; INVESTMENT RESTRICTIONS

INVESTMENT OBJECTIVES

The EQUITY FUND seeks to provide its shareholders with long-term total
return that matches the performance of the Domini 400 Social Index,(SM) an index
made up of the stocks of 400 companies selected using social and environmental
criteria.

The investment objective of the BOND FUND is to provide its
shareholders with a high level of current income and total return by investing
in bonds and other debt instruments that meet the Fund's social and
environmental criteria.

The investment objective of a Fund may be changed without the approval
of that Fund's shareholders, but not without written notice thereof to
shareholders 30 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 Equity Fund to its
shareholders) 30 days prior to implementing the change. There can, of course, be
no assurance that the investment objective of any Fund or the Portfolio will be
achieved.

INFORMATION CONCERNING FUND STRUCTURE

Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the 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 Equity
Fund. In addition to selling a beneficial interest to the 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 Equity Fund and will bear 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
Equity Fund due to variations in sales commissions and other operating expenses.
Investors in the 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 Manager at 212-217-1100.

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
Equity Fund is requested to vote on matters pertaining to the Portfolio, the
Equity Fund will hold a meeting of shareholders of the Equity Fund and will cast
all of its votes in the same proportion as the votes of the Equity Fund's
shareholders. Fund shareholders who do not vote will not affect the Equity
Fund's votes at the Portfolio meeting. The percentage of the Equity Fund's votes
representing Fund shareholders not voting will be voted by the Trustees of the
Equity Fund

-4-

in the same proportion as the Equity Fund shareholders who do, in fact, vote.
Certain changes in the Portfolio's investment objective, policies, or
restrictions may require the 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 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 Equity Fund. Notwithstanding the above, there are
other potential means for meeting shareholder redemption requests, such as
borrowing.

The Board of Trustees believes that the aggregate per share expenses of
the Equity Fund and the Portfolio are less than or approximately equal to the
expenses which the 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 Equity Fund may withdraw its investment from the Portfolio at any
time if the Board of Trustees determines that it is in the best interests of the
Equity Fund's shareholders to do so. The Equity Fund may realize taxable income
as the result of receiving a distribution of cash in connection with a
withdrawal of its investment from the Portfolio. In addition, 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 Equity Fund may incur brokerage, tax, or other charges in
converting the securities to cash. The Equity Fund may also realize taxable
income as the result of receiving an "in kind" distribution in connection with
any such withdrawal or as the result of contributing securities it receives from
the Portfolio to another pooled investment entity. Upon any such withdrawal, the
Board of Trustees of the Equity Fund would consider what action might be taken,
including the investment of all the assets of the Equity Fund in another pooled
investment entity having the same investment objective as the Equity Fund or the
retention of an investment adviser to manage the Equity Fund's assets in
accordance with the investment policies described above with respect to the
Portfolio. In the event the Trustees of the Equity Fund were unable to find a
substitute investment company in which to invest the 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 BOND FUND invests directly in securities and does not invest
through a Portfolio.

Each Fund offers two classes of shares, Investor shares and Class R
shares. Class R shares are generally available only to certain eligible
retirement plans, including 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans, defined benefit plans,
and non-qualified deferred compensation plans. The sponsors of these retirement
plans provide various shareholder services to the accounts. Class R shares are
not generally available to retail non-retirement accounts. Other investors may
purchase Investor shares of the Funds.

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 Portfolio include the Equity
Fund, and references to the Equity Fund include the Portfolio, unless in either
case the context otherwise requires.

EQUITY FUND

INDEX INVESTING: The Portfolio 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

-5-

composition of securities included in the Index. Moreover, inclusion of a stock
in the Index does not imply an opinion by KLD, the Manager, or the Portfolio
Submanager as to the merits of that specific stock as an investment. Because the
Portfolio 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 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 Portfolio intends to readjust its securities holdings periodically
such that those holdings will correspond, to the extent reasonably practicable,
to the Index both in terms of composition and weighting. The timing and extent
of adjustments in the holdings of the Portfolio, and the extent of the
correlation of the holdings of the Portfolio with the 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 Index,
and the goals of minimizing transaction costs and keeping sufficient reserves
available for anticipated redemptions of interests in the Portfolio. 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
Index of 0.95 or better. A figure of 1.0 would indicate a perfect correlation.
To the extent practicable, the Portfolio will attempt to be fully invested. The
ability of the Equity Fund to duplicate the performance of the Index by
investing in the Portfolio will depend to some extent on the size and timing of
cash flows into and out of the Equity Fund and the Portfolio as well as the
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
Portfolio with that of the Index and comparing the composition and weighting of
the Portfolio's holdings with those of the Index. The Trustees will consider
what action, if any, should be taken in the event of a significant variation
between the performance of the Portfolio and that of the Index, or between the
composition and weighting of the Portfolio's securities holdings with those of
the stocks comprising the Index. If the correlation between the weightings of
securities held by the Portfolio and the weightings of the stocks in the 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 Index, KLD evaluated, in
accordance with the social criteria described in the Prospectus, each of the
companies the stocks of which comprise the Standard & Poor's 500 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 Index. As of July 31, 2003, of the 500 companies whose stocks comprised
the S&P 500, approximately 49% were included in the Index. The remaining stocks
comprising the 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 Index
primarily in order to afford representation to an industry sector which would
otherwise be under-represented in the Index. Because of the social criteria
applied in the selection of stocks comprising the Index, industry sector
weighting in the Index may vary materially from the industry weightings in other
stock indexes, including the S&P 500, and certain industry sectors will be
excluded altogether. KLD may exclude from the Index stocks issued by companies
which are in bankruptcy or whose bankruptcy KLD believes may be imminent. KLD
may also remove from the Index stocks issued by companies which no longer meet
its investment criteria.

-6-

The weightings of stocks in the 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 July 31, 2003
approximately 29.44% and 44.52% of the Index was composed of the 10 largest and
20 largest companies, respectively, in the Index.

The component stocks of the S&P 500 are chosen by Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. ("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
(the "NYSE") common stock population, taken as the assumed model for the
composition of the total market. 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. 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 Equity Fund or the Portfolio.

CONCENTRATION: It is a fundamental policy of the Portfolio and the
Equity Fund that neither the Portfolio nor the Equity Fund may invest more than
25% of the total assets of the Portfolio or the Equity Fund, respectively, in
any one industry, although the 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
Index. Based on the current composition of the Index, this is considered highly
unlikely. If the Portfolio were to concentrate its investments in a single
industry, the Portfolio and the 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.

BOND FUND

BANK OBLIGATIONS: The 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 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 the
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.

-7-

COMMERCIAL PAPER: The 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 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 instruments 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 ("Ginnie Mae"),
Fannie Mae (formerly the Federal National Mortgage Association) ("Fannie Mae"),
and Freddie Mac (formerly the Federal Home Loan Mortgage Corporation) ("Freddie
Mac"). Obligations of Ginnie Mae are backed by the full faith and credit of the
U.S. government while obligations of Fannie Mae and Freddie Mac are supported by
the respective agency only.

A portion of the 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 Ginnie Mae, Fannie Mae, or Freddie Mac
but also may be collateralized by whole loans or private mortgage pass-through
securities (such collateral collectively hereinafter referred to as "Mortgage
Assets"). The 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.

-8-

The 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. The prices of long-term securities
generally fluctuate more widely than short- or intermediate-term securities in
response to changes in interest rates. Thus, rising interest rates would not
only likely decrease the value of the 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 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: (a) liquidity protection and (b) 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

-9-

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 Bond Fund may enter into mortgage dollar
roll transactions. In these transactions, the 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 Bond Fund does not receive principal and interest paid on
the mortgage-backed securities. The 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 Bond Fund
may also be compensated by receipt of a commitment fee. However, the Bond Fund
takes the risk that the market price of the mortgage-backed security may drop
below the future purchase price. When the 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 Bond Fund will invest only in covered rolls, which are
specific types of dollar rolls for which the Bond Fund establishes a segregated
account with liquid high grade debt instruments equal in value to the securities
subject to repurchase by the Fund.

SECURITIES RATED Baa or BBB: The Bond Fund may purchase securities
rated Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by S&P and
securities of comparable quality. A description of the ratings applied by
Moody's and S&P is included in Appendix A. These securities 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 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 Bond Fund during a time of declining interest
rates, the Bond Fund may have to reinvest that money at the lower prevailing
interest rates.

ZERO-COUPON BONDS, DEFERRED INTEREST BONDS AND PIK BONDS: The 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 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
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 Bond Fund to sell investments in order to make these
distribution payments.

STRIPPED SECURITIES: The 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
instruments. The value of IOs generally will decrease as interest rates
increase. As interest rates decrease, the Bond Fund's investments

-10-

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 Bond Fund
recovers its initial investment in the security. Conversely, if interest rates
increase, the 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.

SWAPS AND RELATED INVESTMENTS: The 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 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 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
Manager or the Bond Fund Submanager is incorrect in its forecasts of such
factors, the investment performance of the Bond Fund will 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 Bond Fund, the Bond Fund must be prepared to
make such payments when due. The Bond Fund will not enter into any swap unless
the Manager or the Bond Fund Submanager deems the counterparty to be
creditworthy. If the counterparty's creditworthiness declines, the value of the
swap agreement would be likely to decline, potentially resulting in losses. If
the counterparty defaults, the Bond Fund's risk of loss consists of the net
amount of payments that the Fund is contractually entitled to receive. The 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 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 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, indexes, 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 instruments, 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 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

-11-

changes in the underlying indicators. Structured notes and indexed securities
often are less liquid than other debt instruments because they are typically
sold in private placement transactions with no active trading market.

REVERSE REPURCHASE AGREEMENTS: The Bond Fund may enter into reverse
repurchase agreements. In a reverse repurchase agreement, the Fund sells its
securities to banks, brokers or dealers, who agree to sell the securities back
to the Fund at an agreed time and price. The Fund will segregate securities of a
dollar amount equal in value to the securities subject to the repurchase
agreement. The 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 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 Fund could experience a loss.

CONVERTIBLE BONDS: The Bond 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, prepayment and extension risk, and the credit risk of their issuers.
Convertible bonds tend to offer lower rates of interest than nonconvertible
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.

FORWARD COMMITMENTS OR PURCHASES ON A "WHEN-ISSUED" BASIS: The 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 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 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 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.

FUTURES CONTRACTS: Subject to applicable laws, the Bond Fund may
purchase and sell futures contracts based on various securities, securities
indexes, and other financial instruments and indexes. The 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 or financial instrument 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 or financial
instruments called for by the contract, and a "purchase' of a futures contract
entails a contractual obligation to acquire such securities or financial
instruments, in each case in accordance with the terms of the contract. Futures
contracts must be executed through a futures commission merchant, or brokerage

-12-

firm, which is a member of an appropriate exchange designated as a "contract
market" by the Commodity Futures Trading Commission (the "CFTC").

When the 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 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 indexes, 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 Fund's ability to hedge effectively through transactions in futures
contracts depends on, among other factors, the Manager's or the Submanager's
judgment as to the expected price movements in the securities or financial
instruments underlying the futures contracts. In addition, it is possible in
some circumstances that the 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 Bond Fund may purchase and write
options to buy or sell futures contracts in which the Fund may otherwise invest.
These investment strategies may be used for hedging purposes. For more
information regarding option contracts, please see page 15.

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 profit
or loss on the transaction.

Options on futures contracts that are written or purchased by the 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 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

-13-

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 Fund in cash or
liquid securities in a segregated account. The 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, or (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 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 Fund, the
Fund will be required to sell the underlying futures contract which, if the 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 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 or financial
instruments deliverable on exercise of the futures contract. The 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 Fund will retain the full amount of this option premium, which provides a
partial hedge against any decline that may have occurred in the 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 or
financial instruments deliverable upon exercise of the futures contract. If the
Fund writes an option on a futures contract and that option is exercised, the
Fund may incur a loss, which loss will be reduced by the amount of the option
premium received, less related transaction costs. The 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 or other financial instruments held by the Fund and changes in the
value of its futures positions. This correlation cannot be expected to be exact,
and the 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 Fund to incur a loss on both the
hedging instrument and the futures contract being hedged.

The 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
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 Fund will increase prior to acquisition, due to
a market advance or changes in interest or exchange rates, the 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 Fund may include domestic
as well as foreign securities, subject to the Fund's investment objectives.
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.

-14-

GENERAL (INVESTMENT TECHNIQUES AND POLICIES APPLYING TO MORE THAN ONE FUND AS
SPECIFIED BELOW)

ILLIQUID INVESTMENTS: Each of the Portfolio and the Equity Fund may
invest up to 15% of its net assets in illiquid securities, or securities for
which there is no readily available market. The 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 may make it difficult to establish a market value
for illiquid securities. It may be difficult or impossible for the Portfolio or
a Fund to sell illiquid securities at the desired time and at an acceptable
price.

RULE 144A SECURITIES: Each Fund may invest in certain restricted
securities ("Rule 144A securities") for which there is a secondary market of
qualified institutional buyers, as defined in Rule 144A under the Securities Act
of 1933, as amended (the "1933 Act"). Rule 144A provides an exemption from the
registration requirements of the 1933 Act for the resale of certain restricted
securities to qualified institutional buyers. The Equity Fund has no current
intention to invest in these securities.

One effect of Rule 144A is that certain restricted securities may now
be liquid, though there is no assurance that a liquid market for Rule 144A
securities will develop or be maintained. In promulgating Rule 144A, the SEC
stated that the ultimate responsibility for liquidity determinations is that of
an investment company's board of directors. However, the SEC stated that the
board may delegate the day-to-day function of determining liquidity to the
fund's investment adviser, provided that the board retains sufficient oversight.

To the extent that liquid Rule 144A securities that a Fund holds become
illiquid, due to the lack of sufficient qualified institutional buyers or market
or other conditions, the percentage of that Fund's assets invested in illiquid
assets would increase. The Manager and the applicable Submanager will monitor a
Fund's investments in Rule 144A securities and will consider appropriate
measures to enable the Fund to maintain sufficient liquidity for operating
purposes and to meet redemption requests.

REPURCHASE AGREEMENTS: Each Fund may invest in repurchase agreements
that are fully collateralized by securities in which the 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 NYSE (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 a 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, a 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, a Fund could experience a loss.

NON-U.S. INVESTMENTS: The Bond Fund may invest in obligations of
foreign issuers, and the Equity Fund may invest in stocks of foreign issuers
included in the Index (provided that the stocks are traded in the United States
in the form of American Depositary Receipts, as described below, or similar
instruments the market for which is denominated in United States dollars).
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. In the event unforeseen exchange controls or foreign
withholding taxes are imposed with respect to any Fund's investments, the effect
may be to reduce the income received by the Fund on such investments.

-15-

The Equity Fund may hold securities of non-U.S. issuers in the form of
American Depositary Receipts ("ADRs"). Generally, ADRs in registered form are
designed for use in U.S. securities markets. ADRs are denominated in U.S.
dollars and represent an interest in the right to receive securities of non-U.S.
issuers deposited in a U.S. bank or correspondent bank. ADRs do not eliminate
all the risk inherent in investing in the securities of non-U.S. issuers.
However, by investing in ADRs rather than directly in equity securities of
non-U.S. issuers, the Fund will avoid currency risks during the settlement
period for either purchases or sales. For purposes of the Fund's investment
policies, investments in ADRs and similar instruments will be deemed to be
investments in the underlying equity securities of non-U.S. issuers. The Equity
Fund may acquire depositary receipts from banks that do not have a contractual
relationship with the issuer of the security underlying the depositary receipt
to issue and secure such depositary receipt. To the extent the Fund invests in
such unsponsored depositary receipts there may be an increased possibility that
the Fund may not become aware of events affecting the underlying security and
thus the value of the related depositary receipt. In addition, certain benefits
(i.e., rights offerings) which may be associated with the security underlying
the depositary receipt may not inure to the benefit of the holder of such
depositary receipt.

LOANS OF SECURITIES: Consistent with applicable regulatory policies,
including those of the Board of Governors of the Federal Reserve System and the
SEC, each Fund may make loans of its securities to brokers, dealers, or other
financial institutions, provided that (a) the loan is secured continuously by
collateral, consisting of securities, cash or cash equivalents, which is marked
to market daily to ensure that each loan is fully collateralized at all times,
(b) the applicable Fund may at any time call the loan and obtain the return of
the securities loaned within three business days, (c) the applicable Fund will
receive any interest or dividends paid on the securities loaned, and (d) the
aggregate market value of securities loaned will not at any time exceed 30% of
the total assets of the applicable Fund.

A Fund 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, a 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 applicable Fund,
Domini, or the applicable Submanager.

OPTIONS ON SECURITIES AND INDEXES: Although it has no current intention
to do so, the Equity Fund may in the future enter into certain transactions in
stock options. The Bond Fund may enter into certain transactions in options
involving securities in which the Fund may otherwise invest and options in
indexes based on securities in which the 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 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.

-16-

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.

Options on securities indexes are similar to options on securities,
except that the exercise of securities index options requires cash payments, and
does not involve the actual purchase or sale of securities. In addition,
securities index options are designed to reflect price fluctuations in a group
of securities or segments of the securities market rather than price
fluctuations in a single security.

Transactions by a Fund in options on securities will be subject to
limitations established by each of the exchanges, boards of trade, or other
trading facilities governing the maximum number of options in each class which
may be written or purchased by a single investor or group of investors acting in
concert. Thus, the number of options which a Fund may write or purchase may be
affected by options written or purchased by other investment advisory clients of
Domini or a Submanager. An exchange, board of trade, or other trading facility
may order the liquidations of positions found to be in excess of these limits,
and it may impose certain other sanctions.

SHORT SALES: Although they have no current intention to do so, each
Fund may make short sales of securities or maintain a short position, if at all
times when a short position is open, the Fund owns an equal amount of such
securities, or securities convertible into such securities.

CASH RESERVES: Each Fund 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 Funds do not currently intend to invest in direct obligations of
the United States government. Short-term debt instruments purchased by a 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 Board of Trustees. The
Equity Fund's policy is to hold its assets in such securities pending
readjustment of its portfolio holdings of stocks comprising the Index and in
order to meet anticipated redemption requests.

-------------------------

The approval of the shareholders of the Funds and, as applicable, the
investors in the Portfolio, is not required to change the investment objective
or any of the investment policies discussed above (other than the policy
regarding concentration by the Equity Fund and the Portfolio), including those
concerning security transactions.

PROXY VOTING POLICIES

Each Fund has adopted proxy voting policies and procedures to ensure
that all proxies for securities held by that Fund are cast in the best interests
of the Fund's shareholders. Because each Fund has a fiduciary duty to vote all
shares in the best interests of its shareholders, each Fund votes proxies after
considering its shareholders' financial interests and social objectives. The
proxy voting policies and procedures are designed to ensure that all proxies are
voted in the best interests of Fund shareholders by

-17-

isolating the proxy voting function from any potential conflicts of
interest. In most instances, votes are cast according to pre-determined
policies, and potential conflicts of interest cannot influence the outcome of
voting decisions. There are, however, several voting guidelines that require a
case-by-case determination, and other instances where votes may vary from
pre-determined policies. Certain procedures have been adopted to ensure that
conflicts of interest in such circumstances are identified and appropriately
addressed. The Board of Trustees of the Domini Funds has delegated the
responsibility to vote proxies for the Funds to Domini. More details about the
Domini Funds' proxy voting guidelines and Domini's proxy voting policies and
procedures, including procedures adopted by Domini to address any potential
conflicts of interest, are provided in the complete Proxy Voting Policies and
Procedures in Appendix B.

All proxy votes cast for the Domini Funds are posted to Domini's
website on an ongoing basis over the course of the year. After August 31, 2004,
an annual record of all proxy votes cast for the Funds during the most recent
12-month period ended June 30 can be obtained, free of charge, at
www.domini.com, and on the Securities and Exchange Commission's website at
www.sec.gov.

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" (as defined in the
1940 Act) 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 that each Fund shareholder will have one vote for each dollar of net
asset value.

Except as described below, whenever the Equity Fund is requested to
vote on a change in the investment restrictions of the Portfolio, the 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 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 Equity Fund, would
not require the vote of the shareholders of the 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 Equity Fund.
Any proposal submitted to holders in the Portfolio, and that is not required to
be voted on by shareholders of the Equity Fund, would nevertheless be voted on
by the Trustees of the Equity Fund.

Neither the Funds nor the Portfolio may:

(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 prohibited by the
1940 Act or the rules and regulations promulgated thereunder;

(3) purchase or sell real estate or interests in oil, gas or mineral
leases in the ordinary course of business (each of the Fund and the Portfolio
reserves the freedom of action to hold and to sell real estate acquired as the
result of the ownership of securities by the Fund or the Portfolio, as
applicable);

-18-

(4) purchase or sell commodities or commodities contracts in the
ordinary course of business (the foregoing shall not preclude the Fund or the
Portfolio from purchasing or selling futures contracts or options thereon);

(5) underwrite securities issued by other persons, except that all or
any portion of the assets of the Fund or the Portfolio 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 insofar as either the Fund or the Portfolio may technically be deemed
an underwriter under the 1933 Act, in selling a security; or

(6) 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.

In addition, neither the EQUITY FUND nor the PORTFOLIO may:

(7) invest more than 25% of its assets in any one industry except that
(a) all or any portion of the assets of the Fund or the Portfolio 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 (b) if an investment objective or strategy of the Fund or the
Portfolio is to match the performance of an index and the stocks in a single
industry comprise more than 25% of such index, the Fund or the Portfolio, as
applicable, may invest more than 25% of its assets in that industry.

In addition, the BOND FUND may not:

(8) concentrate its investments in any particular industry, but if
it is deemed appropriate for the achievement of the 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.

For purposes of restriction (1) above, covered mortgage dollar rolls
and arrangements with respect to securities lending are not treated as
borrowing.

In addition, as a matter of fundamental policy, each of the Equity Fund
and the Portfolio will invest all of its investable assets in (a) securities and
instruments that meet social criteria, (b) one or more investment companies that
apply social criteria in selecting securities and instruments, (c) cash, and (d)
any combination of the foregoing.

NON-FUNDAMENTAL RESTRICTIONS: The following policies are not
fundamental and may be changed with respect to a Fund by that Fund without
approval of the Fund's shareholders or with respect to the Portfolio by the
Portfolio without the approval of the 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.

None of the Funds nor the Portfolio will, as a matter of operating
policy:

(1) as to 75% of its total assets, purchase securities of any issuer if
such purchase at the time thereof would cause more than 5% of the Fund's or the
Portfolio's total assets (taken at market value) to be invested in the
securities of such issuer (other than securities or obligations issued or
guaranteed by (a) the United States, (b) any state or political subdivision
thereof, (c) any political subdivision of any such state, or (d) any agency or
instrumentality of the United States, any state or political subdivision
thereof, or any political subdivision of any such state), provided that, for
purposes of this restriction, (i) the issuer of an option or futures contract
shall not be deemed to be the issuer of the security or securities

-19-

underlying such contract and (ii) each Fund and the Portfolio 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; or

(2) as to 75% of its total assets, purchase securities of any issuer if
such purchase at the time thereof would cause more than 10% of the voting
securities of such issuer to be held by the Fund or the Portfolio, as
applicable, provided that, for purposes of this restriction, (a) 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 (b) each Fund and the
Portfolio 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.

Neither the EQUITY FUND nor the PORTFOLIO will as a matter of operating
policy invest more than 15% of the net assets of the Fund or the Portfolio, as
applicable, in illiquid securities, except that each of the Equity Fund and the
Portfolio may invest all or any portion of its assets in one or more investment
companies, to the extent not prohibited by the 1940 Act or the rules and
regulations thereunder.

Neither the 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
Fund's or the Portfolio's, as applicable, total assets at the time of such
purchase.

As a non-fundamental policy, the EQUITY FUND will, under normal
circumstances and as a matter of operating policy, invest at least 80% of its
assets in equity securities and related investments with similar economic
characteristics. Shareholders in the Equity Fund will be provided with at least
60 days' prior notice of any change in the non-fundamental policy set forth in
this paragraph.

In addition, as a non-fundamental policy, the PORTFOLIO will, under
normal circumstances and as a matter of operating policy, invest at least 80% of
its assets in securities of companies included in the Domini 400 Social Index
and related investments with similar economic characteristics. The Portfolio
will provide its investors, including the Equity Fund, with at least 60 days'
prior notice of any change in the non-fundamental policy set forth in this
paragraph.

As a non-fundamental policy, the BOND FUND will, under normal
circumstances, invest at least 80% of its assets in bonds and similar debt
instruments. Shareholders in the Bond Fund will be provided with at least 60
days' prior notice of any change in the non-fundamental policy set forth in this
paragraph.

PERCENTAGE AND RATING 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 subsequent change in circumstances 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 before- and
after-tax 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

-20-

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 the following standardized method
prescribed by SEC rules: P(1 + T)(n) = ERV

Where: P = a hypothetical initial investment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical
$1,000 investment made at the
beginning of a 1-, 5-, or 10-year
period at the end of a 1-, 5-, or
10-year period (or fractional
portion thereof), assuming
reinvestment of all dividends and
distributions.

The ERV assumes complete redemption of the hypothetical investment at
the end of the measuring period. In computing average annual total return
figures, all Fund expenses are included. However, fees that may be charged
directly to a shareholder by that shareholder's service agent are not included.
Of course, any such fees will reduce the shareholder's net return on investment.
Average annual total return figures are based on historical earnings and asset
value fluctuations and are not intended to indicate future performance. Such
information should be considered in light of each Fund's investment objectives
and policies, as well as the risks incurred in each Fund's investment practices.

After-Tax Average Annual Total Returns

After-tax returns are calculated using the highest individual marginal
federal income tax rates, which may vary over the measurement period and which
will take into account the character of the distribution or disposition
proceeds, as applicable, as a return of capital, ordinary income, "qualified
dividend income," or short-term or long-term capital gain. After-tax returns do
not reflect the impact of state or local taxes, the effect of phaseouts of
certain exemptions, deductions, and credits at various income levels, or the
impact of the federal alternative minimum tax. Actual after-tax returns depend
on your individual situation and may differ from those shown here. After-tax
returns shown below are not relevant to investors who hold their Fund shares
through tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts. A Fund's returns after taxes on distributions and redemptions assume a

-21-

complete redemption of the hypothetical investment at the end of the applicable
measuring periods and that the shareholder has sufficient capital gains of the
same character from other investments to offset any capital losses from the
redemption so that the shareholder may deduct the capital losses in full. To the
extent a Fund uses such information, it will be calculated according to the
following formulas:

Average Annual Total Return (after taxes on distributions):
P(1 + T)(n) = ATV(D)

Where: P = a hypothetical initial payment of $1,000.
T = average annual total return (after taxes on
distributions).
n = number of years.
ATV(D) = ending value of a hypothetical
$1,000 investment made at the
beginning of the 1-, 5-, or 10-year
period at the end of the 1-, 5-, or
10-year period (or fractional
portion thereof), after taxes on
fund distributions but not after
taxes on redemption.

Average Annual Total Return (after taxes on distributions and
redemption): P(1 + T)(n)= ATV(DR)

Where: P = a hypothetical initial payment of $1,000.
T = average total return (after taxes on
distributions and redemption).
n = number of years.
ATV(DR) = ending value of a hypothetical
$1,000 investment made at the
beginning of the 1-, 5-, or 10-year
period at the end of the 1-, 5-, or
10-year period
(or fractional portion thereof), after taxes
on fund distributions and redemption.

The Bond Fund may provide "yield" quotations with respect to that Fund.
The "yield" of the 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 Bond Fund shall be computed in
accordance with the following formula prescribed by the SEC: YIELD = 2[([(a -
b)/(c x d)] + 1)(6) - 1]

Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the maximum offering price per share on the last
day of the period.

For the purpose of determining the interest earned (for purposes of
variable "a" in the formula) on debt obligations purchased by the Bond Fund at a
discount or premium, the formula generally calls for

-22-

amortization of the discount or premium; the amortization schedule will be
adjusted monthly to reflect changes in the market values of the debt
obligations. Shareholders should recognize that in periods of declining interest
rates the Bond Fund's yield will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates, the Bond Fund's yield
will tend to be somewhat lower. In addition, when interest rates are falling,
the inflow of net new money to the Bond Fund from the continuous sale of its
shares will likely be invested in portfolio instruments producing lower yields
than the balance of the Fund's investments, thereby reducing the current yield
of the Fund.

Set forth below is average annual total return information, before- and
after-taxes, for Investor shares of each Fund for the periods indicated,
assuming that capital gains distributions, if any, were reinvested. All
outstanding shares of the Funds were designated Investor shares on November 28,
2003. The Class R shares of the Funds are newly offered and have no investment
history.

AVERAGE ANNUAL TOTAL RETURNS (BEFORE TAXES)

Domini Social Equity Fund, Investor Shares:
Average Annual Total Returns
Period (before taxes)
------ --------------

One year ended July 31, 2003 11.36%
Five years ended July 31, 2003 -1.48%
Ten years ended July 31, 2003 9.83%

Domini Social Bond Fund, Investor Shares:
Average Annual Total Returns
Period (before taxes)
------ --------------
One year ended July 31, 2003 3.33%
June 1, 2000 (commencement of operations) to July 31, 2003 8.07%

AVERAGE ANNUAL TOTAL RETURNS (AFTER TAXES ON DISTRIBUTIONS)

Domini Social Equity Fund, Investor Shares:
Average Annual Total Returns (after
Period taxes on distributions)
------ -----------------------
One year ended July 31, 2003 11.09%
Five years ended July 31, 2003 -2.03%
Ten years ended July 31, 2003 9.25%

Domini Social Bond Fund, Investor Shares:
Average Annual Total Returns (after
Period taxes on distributions)
------ -----------------------
One year ended July 31, 2003 1.93%
June 1, 2000 (commencement of operations) to July 31, 2003 6.10%

-23-

AVERAGE ANNUAL TOTAL RETURNS (AFTER TAXES ON DISTRIBUTIONS AND REDEMPTION)

Domini Social Equity Fund, Investor Shares:
Average Annual Total Returns (after
-----------------------------------
Period taxes on distributions and redemption)
------ --------------------------------------

One year ended July 31, 2003 7.36%
Five years ended July 31, 2003 -1.31%
Ten years ended July 31, 2003 8.54%

Domini Social Bond Fund, Investor Shares:
Average Annual Total Returns (after
-----------------------------------
Period taxes on distributions and redemption)
------ --------------------------------------
One year ended July 31, 2003 2.14%
June 1, 2000 (commencement of operations) to July 31, 2003 5.69%

SINCE THE AVERAGE ANNUAL TOTAL RETURN QUOTATIONS SET FORTH ABOVE ARE
BASED ON HISTORICAL EARNINGS AND SINCE RATES OF RETURN FLUCTUATE OVER TIME, THE
QUOTATIONS SET FORTH ABOVE SHOULD NOT BE CONSIDERED AS AN INDICATION OR
REPRESENTATION OF THE FUTURE PERFORMANCE OF EITHER FUND.

For advertising and sales purposes, the Funds will generally use the
performance of Investor shares. All outstanding shares of the Funds were
designated Investor shares on November 28, 2003. If the performance of Class R
shares is used for advertising and sales purposes, performance after class
inception on November 28, 2003 will be actual performance, while performance
prior to that date will be Investor shares performance. Class R share
performance generally would have been higher than Investor shares performance,
had the Class R shares been offered for the entire period, because the expenses
attributable to Class R shares are lower than the expenses attributable to the
Investor shares.

Total rate of return information with respect to the Index will be
computed in the same fashion as set forth above with respect to the 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
Index weighted in accordance with the weightings of the stocks comprising the
Index. Performance information with respect to the 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 Index and various
other unmanaged securities indexes, such as the S&P 500 and the Dow Jones
Industrial Average. Standard & Poor's,(TM) S&P,(TM) and Standard & Poor's
500(TM) are trademarks of The McGraw-Hill Companies, Inc.

4. DETERMINATION OF NET ASSET VALUE;
VALUATION OF PORTFOLIO SECURITIES; ADDITIONAL PURCHASE AND SALE INFORMATION

The net asset value of each share of each class 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 in an emergency and the following

-24-

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 class of
the Funds is made once during each such day as of the close of regular trading
of the NYSE by dividing the value of the net assets of the applicable class
(i.e., for a class of the Equity Fund the value of its investment in the
Portfolio and any other assets less its liabilities, including expenses payable
or accrued, for a class of the Bond Fund the value of its assets less its
liabilities, including expenses payable or accrued) by the number of shares of
the class outstanding at the time the determination is made. Purchases and
redemptions will be effected at the time of the next determination of net asset
value 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 Equity Fund
determines its net asset value per share of each class. The net asset value of
the investment of each class of the Equity Fund in the Portfolio is equal to
that class' pro rata share of the total investment of the class and of other
investors in the Portfolio less that class' pro rata share of the Portfolio's
liabilities.

Securities listed or traded on national securities exchanges are valued
at the last sale price or, if there have been no sales that day, at the mean of
the current bid and ask price which represents the current value of the
security. Securities listed on the NASDAQ National Market System are valued
using the NASDAQ Official Closing Price (the "NOCP"). If an NOCP is not
available for a security listed on the NASDAQ National Market System, the
security will be valued at the last sale price or, if there have been no sales
that day, at the mean of the current bid and ask price. Options and futures
contracts are normally valued at the settlement price on the exchange on which
they are traded.

Securities that are primarily traded on foreign exchanges generally are
valued at the closing price of such securities on their respective exchanges,
except that if the Portfolio's or a Fund's Manager or Submanager, as applicable,
is of the opinion that such price would result in an inappropriate value for a
security, including as a result of an occurrence subsequent to the time a value
was so established, then the fair value of those securities may be determined by
consideration of other factors by or under the direction of the Board of
Trustees or its delegates. In valuing assets, prices denominated in foreign
currencies are converted to U.S. dollar equivalents at the current exchange
rate.

Bonds and other fixed income securities (other than short-term
obligations) are valued on the basis of valuations furnished by independent
pricing services, 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
services utilize 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. Amortized cost involves
valuing an instrument at its original cost to the Portfolio or a Fund, as
applicable, and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument.

-25-

Portfolio securities (other than short-term obligations with remaining
maturities of less than 60 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 or 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: (a) the fundamental analytical data relating to the
investment, (b) the nature and duration of restrictions on disposition of the
securities, and (c) 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
intermediaries 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.

To discourage the Funds from being used as vehicles for frequent short-term
shareholder trading, each Fund will deduct a redemption fee of 2% from any
redemption or exchange proceeds if a shareholder sells or exchanges Investor
shares after holding them less than 90 days. The redemption fee will be deducted
from a shareholder's redemption proceeds and returned to the applicable Fund. If
a shareholder acquires shares on different days, the "first in, first out"
(FIFO) method is used to determine the holding periods. This means that the
shares held the longest will be redeemed first for purposes of determining
whether the redemption fee applies. The redemption fee is not imposed on: (i)
redemptions of shares held by 401(k), 457, 403(b), or other qualified retirement
plans, (ii) shares acquired as a result of

-26-

reinvestment of dividends or distributions, (iii) shares held through certain
omnibus accounts (such as certain retail brokerage omnibus accounts and
retirement plan omnibus accounts), or (iv) shares purchased, exchanged, or
redeemed by means of the Automatic Investment Plan or the Systematic Withdrawal
Plan. The redemption fee will be waived in the event of the death of a
shareholder. Each Fund reserves the right to waive or impose the redemption fee
or withdraw waivers in its discretion.

5. MANAGEMENT OF THE FUNDS AND THE PORTFOLIO

The management and affairs of the Trust and the Funds are supervised by
the Trust's Board of Trustees under the laws of the Commonwealth of
Massachusetts. The management and affairs of the Portfolio are supervised by the
Portfolio's Board of Trustees under the laws of the State of New York.

The Trustees and officers of the Trust and the Portfolio, their ages,
their principal occupations during the past five years (including
directorships), and the number of investment companies in the Domini family of
funds that the Trustees oversee are set forth below. Their titles may have
varied during that period. Each Trustee holds office until his or her successor
is elected or until he or she retires, resigns, dies, or is removed from office.
No Trustee or officer is a director of a public company or a registered
investment company other than, with respect to the Trustees, the Domini Funds.

Asterisks indicate that those Trustees and officers are "interested
persons" (as defined in the 1940 Act) of the Funds and the Trust. Each Trustee
and officer of the Trust noted as an "interested person" is interested by virtue
of his or her position with Domini as described in the table below. Unless
otherwise indicated below, the address of each Trustee and officer is 536
Broadway, 7th Floor, New York, New York 10012.

TRUSTEES AND OFFICERS OF THE TRUST AND THE PORTFOLIO

POSITION(S) HELD WITH NUMBER OF FUNDS AND
THE TRUST AND THE PORTFOLIOS IN DOMINI
PORTFOLIO AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS FAMILY OF FUNDS
NAME AND AGE TIME SERVED AND OTHER DIRECTORSHIPS HELD OVERSEEN BY TRUSTEE
--------------------- -------------------------- ---------------------------------------------- ----------------------
INTERESTED TRUSTEE:

Amy L. Domini* Chair, President, and President and CEO, Domini (since 2002); 4
Age: 53 Trustee of the Trust and Manager, Domini (since 1997); Manager, DSILD
the Portfolio since 1990 (since 1998); Private Trustee, Loring,
Wolcott & Coolidge (fiduciary) (since 1987);
CEO, Secretary, and Treasurer, KLD Research
& Analytics, Inc. (social research provider)
(1990-2000); Trustee, New England Quarterly
(periodical) (since 1998); Board Member,
Social Investment Forum (trade organization)
(1995-1999); Trustee, Episcopal Church
Pension Fund (since 1994); Board Member,
Financial Markets Center (nonprofit
financial markets research and education
resources provider) (since 2002).

-27-

DISINTERESTED
TRUSTEES:
Julia Elizabeth Trustee of the Trust and Trustee, Fiduciary Trust Company (financial 4
Harris the Portfolio since 1999 institution) (since 2001); Vice President,
Age: 55 UNC Partners, Inc. (financial management)
(since 1990); Director and Treasurer, Boom
Times, Inc. (membership organization)
(1997-1999).

Kirsten S. Moy Trustee of the Trust and Director, Economic Opportunities Program, 4
Age: 56 the Portfolio since 1999 The Aspen Institute (research and education)
(since 2001); Board Member,
Community Reinvestment Fund
(since 2003); Consultant,
Equitable Life/AXA (1998-2001);
Project Director, Community
Development Innovation and
Infrastructure Initiative
(research) (1998-2001); Group
Leader, Financial Innovations
Roundtable (research)
(2000-2001); Consultant, Social
Investment Forum (trade
association) (1998);
Distinguished Visitor, John D.
and Catherine T. MacArthur
Foundation (1998).

-28-

DISINTERESTED
TRUSTEES:

William C. Osborn Trustee of the Trust Manager, Commons Capital Management LLC 4
Age: 59 since 1990 (venture capital) (since 2000); Special
Trustee of the Portfolio Partner/Consultant, Arete Corporation
since 1997 (venture capital) (since 1999);
Principal/Manager, Venture Investment
Management Company LLC (venture capital)
(1996-1999); Director, World Power
Technologies, Inc. (power equipment
production) (since 1999); Director,
Investors' Circle (socially responsible
investor network) (since 1999).

Karen Paul Trustee of the Trust Professor, Catholic University of Bolivia 4
Age: 59 since 1990 (2003); Fulbright Fellow, U.S. Department of
Trustee of the Portfolio State (2003); Professor of Management and
since 1997 International Business, Florida
International University (since 1990);
Partner, Trinity Industrial Technology
(1997-2002); Executive Director, Center for
Management in the Americas (1997-2002).

Gregory A. Ratliff Trustee of the Trust and Consultant (self-employed) (since 2002); 4
Age: 43 the Portfolio since 1999 Senior Fellow, the Aspen Institute (research
and education) (2002); Director, Economic
Opportunity, John D. and Catherine T. MacArthur
Foundation (1997-2002).

Frederick C. Trustee of the Trust State Historic Preservation Officer (state 4
Williamson, Sr. since 1997 government) (since 1969); Treasurer and Trustee,
Age: 88 Trustee of the Portfolio RIGHA Foundation (charitable foundation supporting
since 1990 healthcare needs) (since 1994); Chairman, Rhode
Island Historical Preservation and Heritage
Commission (state government) (since 1995);
Treasurer, Rhode Island Black Heritage Society
(nonprofit education) (since 1984); Trusteee,
National Park Trust (nonprofit land acquisiton)
(since 1983); Board of Directors, Grow Smart
Rhode Island (nonprofit state planning) (since
1998); President's Advisory Board--Salve Regina
University, Newport, RI (since 1999); Board
Member, Preserve Rhose Island (nonprofit
preservation) (since 1999); Advisor, National
Parks and Conservation Association (1997-2001).

OFFICERS:

Adam M. Kanzer* Chief Legal Officer of General Counsel and Director of Shareholder N/A
Age: 37 the Trust and the Advocacy, Domini (since 1998).
Portfolio since 2003

-29-

Carole M. Laible* Secretary and Treasurer Chief Operating Officer, Domini (since N/A
Age: 40 of the Trust and the 2002); Financial/Compliance Officer, Domini
Portfolio since 1997 (1997-2003);
President and CEO, DSILD (since
2002); Chief Compliance
Officer, DSILD (since 2001);
Chief Financial Officer,
Secretary, and Treasurer, DSILD
(since 1998).

Steven D. Lydenberg* Vice President of the Chief Investment Officer, Domini (since N/A
Age: 58 Trust and the Portfolio 2003); Member, Domini (since 1997);
since 1990 Director, KLD Research & Analytics, Inc.
(social research provider) (1990-2003);
Director of Research, KLD Research &
Analytics, Inc. (1990-2001).

COMMITTEES

The Board of Trustees of the Trust has a standing Audit Committee
composed of all of the Trustees who are not "interested persons" of the Trust
within the meaning of the 1940 Act. The Audit Committee met twice during the
Funds' last fiscal year to review the internal and external accounting
procedures of the Funds and, among other things, to consider the selection of
independent certified public accountants for the Funds, to approve all
significant services proposed to be performed by the accountants, and to
consider the possible effect of such services on their independence.

The Board of Trustees also has a standing Nominating Committee. All of
the Trustees who are not "interested persons" of the Trust within the meaning of
the 1940 Act are members of the Nominating Committee. The Nominating Committee
is responsible for, among other things, recommending candidates to fill
vacancies on the Board of Trustees. The Nominating Committee will consider
nominees recommended by shareholders. If you would like to recommend a nominee
to the Nominating Committee, please deliver your recommendation in writing to
the Secretary of the Trust, 536 Broadway, 7th Floor, New York, New York 10012.
The Nominating Committee did not meet during the Funds' last fiscal year.

OWNERSHIP OF SHARES IN THE FUNDS AND IN OTHER ENTITIES

The following table shows the amount of equity securities owned by the
Trustees in the Funds and in all investment companies in the Domini family of
funds supervised by the Trustees as of December 31, 2002:

AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES IN ALL
INVESTMENT COMPANIES
DOLLAR RANGE OF DOLLAR RANGE OF OVERSEEN BY THE TRUSTEE IN
EQUITY SECURITIES IN THE EQUITY SECURITIES IN THE DOMINI
NAME OF TRUSTEE EQUITY FUND THE BOND FUND FAMILY OF FUNDS

INTERESTED TRUSTEE:

Amy L. Domini over $100,000 $10,001 - $50,000 over $100,000

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DISINTERESTED TRUSTEES:

Julia Elizabeth Harris $1 - $10,000 $0 $1 - $10,000
Kirsten S. Moy $10,001 - $50,000 $0 $10,001 - $50,000
William C. Osborn $50,001 - $100,000 $0 $50,001 - $100,000
Karen Paul $10,001 - $50,000 $1 - $10,000 $10,001 - $50,000
Gregory A. Ratliff $1 - $10,000 $0 $1-$10,000
Frederick C. Williamson, Sr. $10,001 - $50,000 $1 - $10,000 $50,001 - $100,000

COMPENSATION AND INDEMNITY OF TRUSTEES

Information regarding compensation paid to the Trustees by the Trust
for the fiscal year ended July 31, 2003 is set forth below. Ms. Domini is not
compensated by the Trust for her service as a Trustee because of her affiliation
with Domini.

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 $10,000, and in addition, receives $1,250 for attendance
at each joint meeting of the Boards of the Trust, the Portfolio, and the Domini
Institutional Trust (reduced to $625 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.

TOTAL COMPENSATION FROM
PENSION OR RETIREMENT ESTIMATED ANNUAL THE TRUST, THE
AGGREGATE BENEFITS ACCRUED AS BENEFITS UPON PORTFOLIO AND DOMINI
COMPENSATION PART OF FUND EXPENSES RETIREMENT INSTITUTIONAL TRUST
NAME OF TRUSTEE FROM THE TRUST PAID TO THE TRUSTEE(1)
INTERESTED TRUSTEE:

Amy L. Domini None None None None
DISINTERESTED TRUSTEES:
Julia Elizabeth Harris $6,186 None None $15,000
Kirsten S. Moy $6,186 None None $15,000
William C. Osborn $6,186 None None $15,000
Karen Paul $5,659 None None $13,750
Gregory A. Ratliff $5,650 None None $13,750
Frederick C. Williamson, Sr. $6,186 None None $15,000

------------------------
(1) As of July 31, 2003, there were four funds in the Domini family of funds.

As of October 31, 2003, 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 Investor shares of the Equity Fund: Charles Schwab & Co., Reinvest
Account, Attn: Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4122
(6,043,401.421 shares, 13.34%); Manulife Financial, 250 Bloor Street East, 7E
Floor, Toronto, Ontario, Canada M4W 1E5 (4,596,378.025 shares, 10.14%); and
Fidelity Investments Institutional Operations Co., as Agent for Certain Employee
Benefit Plans, 101 Magellan Way #KW1C, Covington, KY 41015-1987 (3,510,045.730
shares, 7.75%). The Equity Fund has no knowledge of any other owners of record
or beneficial owners of 5% or more of any class of the outstanding shares of
that Fund.

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As of October 31, 2003, the following shareholder of record owned 5% or
more of the outstanding Investor shares of the Bond Fund: Charles Schwab & Co.,
Special Custody Account for the Benefit of Customers, Attn: Mutual Funds, 101
Montgomery Street, San Francisco, CA 94104-4122 (1,291,430.836 shares, 28.77%).
The Bond Fund has no knowledge of any other owners of record or beneficial
owners of 5% or more of any class of the outstanding shares of that Fund.

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
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
willful 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 willful misfeasance, bad faith, gross negligence, or reckless
disregard of their duties.

APPROVAL OF MANAGEMENT AND SUBMANAGEMENT AGREEMENTS

In approving the Management Agreements between each of the Portfolio
and the Bond Fund and Domini (the "Management Agreements"), the Submanagement
Agreement between Domini and SSgA (the "Portfolio Submanagement Agreement"), and
the Submanagement Agreement between Domini and ShoreBank (the "Bond Fund
Submanagement Agreement" and collectively with the Portfolio Submanagement
Agreement, the "Submanagement Agreements"), the Trustees reviewed the
materials provided to them by Domini, SSgA, and ShoreBank and considered a
number of factors as described below.

The Trustees reviewed the Forms ADV of Domini, SSgA, and ShoreBank and
information regarding their respective portfolio management teams. They
considered each of Domini's, SSgA's, and ShoreBank's experience in providing
investment advice to registered investment companies and the nature and quality
of the services provided by Domini and the Submanagers to the Portfolio and the
Funds, as applicable.

The Trustees also reviewed information regarding the investment
performance of the Portfolio and the Bond Fund for the immediately prior year
and past years and compared that performance with the performance of other funds
with similar investment objectives and policies and with the performance of
broad-based market indexes. The Trustees also compared the historic performance
of the Portfolio and the Bond Fund with the performance of other socially
responsible funds that had similar investment objectives. In addition, the
Trustees considered how closely the performance of the Portfolio tracked that of
the Domini 400 Social Index.SM The Trustees also reviewed an analysis of the
composition of each of the Portfolio and the Equity and Bond Funds provided by
Morningstar, Inc.

The Trustees considered the fees payable by the Portfolio and the Bond
Fund and reviewed data showing how the fees and total expense ratios of each of
the Portfolio and the Funds compared with those of comparable funds. The
Trustees concluded that the fees provided in each of the Management

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Agreements and the Submanagement Agreements were fair and reasonable in light of
the usual and customary charges made by others for services of the same nature
and quality.

In addition, the Trustees considered the fallout benefits to Domini,
SSgA, and ShoreBank from their arrangements with the Portfolio and the Funds.
They reviewed the soft dollar arrangements in place with respect to the
Portfolio's brokerage transactions and considered how such arrangements
benefited SSgA. The Trustees also noted the fallout benefits to ShoreBank from
its arrangement with the Bond Fund, including the impact on ShoreBank's ability
to promote community economic development. The Trustees also reviewed a
profitability analysis provided by each of Domini and SSgA with respect to the
services provided to the Portfolio, and by each of Domini and ShoreBank with
respect to the services provided to the Bond Fund, and concluded, in each case,
that the fees paid to each of Domini, SSgA, and ShoreBank under the Management
Agreements or Submanagement Agreement to which it is a party is appropriate.

Lastly, the Trustees considered the corporate profile of each of Domini
and the Submanagers, including the diversity of its staff, the benefits provided
to its staff, its community involvement, and its charitable giving program.

Based upon their review, the Trustees concluded that each of the
Management Agreements and Submanagement Agreements was reasonable, fair and in
the best interests of the Portfolio and its investors and the Bond Fund and its
shareholders, as applicable.

MANAGER AND SUBMANAGERS

Domini provides advice to the Portfolio and the Bond Fund pursuant to
separate written Management Agreements. The services provided by Domini consist
of furnishing continuously an investment program for the Portfolio and the Bond
Fund. Domini will have authority to determine from time to time what securities
are purchased, sold or exchanged, and what portion of assets of each of the
Portfolio and the Bond Fund is held uninvested. With respect to the Portfolio,
Domini will also perform such administrative and management tasks as may from
time to time be reasonably requested, including: (a) maintaining office
facilities and furnishing clerical services necessary for maintaining the
organization of the Portfolio and for performing administrative and management
functions, (b) 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, (c) overseeing (with the
advice of the Portfolio's counsel) the preparation of and, if applicable, the
filing of 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, (d) preparing agendas and
supporting documents for, and minutes of meetings of, the Trustees, committees
of the Trustees, and shareholders, and (e) arranging for maintenance of the
books and records of the Portfolio. Domini 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 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 Fund's Board of

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Trustees or by a majority of the outstanding voting securities of the Fund at a
meeting called for the purpose of voting on the Management Agreement, and, in
either case, by a majority of the 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 Domini may render services to
others. Domini may employ, at its own expense, or may request that the Portfolio
or the Bond Fund employ (subject to the requirements of the 1940 Act) one or
more subadvisers or submanagers, subject to Domini'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 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 Bond Fund, as
applicable, or by a vote of a majority of the appropriate Board of Trustees, or
by Domini, and will automatically terminate in the event of its assignment. Each
Management Agreement provides that neither Domini 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 Bond Fund, as the case may be, except for willful misfeasance, bad faith,
or gross negligence or reckless disregard of its or their obligations and duties
under the Management Agreement.

Under the Portfolio Management Agreement between the Portfolio and
Domini, Domini's fee for advisory services to the Portfolio is 0.20% of the
average daily net assets of the Portfolio. Domini also provides administrative
services to the Portfolio under the Management Agreement.

Under the Management Agreement between the Trust, with respect to the
Bond Fund, and Domini, Domini's fee for advisory services to the Bond Fund is
0.40% of the average daily net assets of that Fund.

Domini 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, as amended (the "Advisers
Act"). The names of the members of Domini and their relationship to the Trust
and to the Portfolio, if any, are as follows: Amy L. Domini, Chair of the Board
and President of the Trust, the Manager, President, and Chief Executive Officer
of Domini; Steven D. Lydenberg, Vice President of the Trust and the Portfolio
and Chief Investment Officer of Domini; James E. Brooks; Domini Holdings LLC;
and Committed Capital, LLC.

SSgA manages the assets of the Portfolio pursuant to the Portfolio
Submanagement Agreement. SSgA 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.

SSgA is a wholly owned subsidiary of State Street Corporation, a
publicly held bank holding company. The address of SSgA and each of the
principal executive officers and directors of SSgA is State Street Financial
Center, One Lincoln Street, Boston, MA 02111.

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ShoreBank manages the assets of the Bond Fund pursuant to 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 Bond Fund's investments and effecting securities transactions for the Bond
Fund. The Bond Fund Submanagement Agreement will continue in effect if such
continuance is specifically approved at least annually by the 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 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.

Effective January 1, 1939, ShoreBank was organized as an Illinois
Banking Corporation. ShoreBank is a wholly owned subsidiary of ShoreBank
Corporation. The address of ShoreBank and each of the principal executive
officers and directors of ShoreBank is 7054 S. Jeffery Boulevard, Chicago, IL
60649.

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 the 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
the Bond Fund, as applicable, or by a vote of the majority of the appropriate
Board of Trustees, or by Domini with the consent of the Trustees, and may be
terminated by the applicable Submanager on not less than 90 days' written notice
to Domini 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 Bond Fund, as the case may be, except for willful 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, Domini pays SSgA an annual
investment submanagement fee equal to the greater of $300,000 or the fee based
on the following schedule:

0.02% of the first $1 billion of net assets managed
0.01% of the next $1 billion of net assets managed
0.0075% of net assets managed in excess of $2 billion

For the fiscal years ended July 31, 2003, July 31, 2002, and July 31,
2001, the Portfolio incurred approximately $2,383,240, $2,890,322, and
$3,644,328, respectively, in management fees pursuant to its Management
Agreement with Domini.

Under the Bond Fund Submanagement Agreement, Domini pays ShoreBank an
investment submanagement fee equal on an annual basis to 0.20% of the average
daily net assets of the Bond Fund.

For the fiscal years ended July 31, 2003, July 31, 2002, and July 31,
2001, the Bond Fund did not pay any management fees. Domini waived all
management fees payable to it under the Management Agreement in effect with
respect to the Bond Fund.

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SPONSOR

Pursuant to a Sponsorship Agreement with respect to the Equity Fund and
an Administration Agreement with respect to the Bond Fund, Domini provides the
Funds with oversight, administrative, and management services. Domini 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, the Trustees,
committees of the 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 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. Domini 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 Domini or its affiliates.

Under the Sponsorship Agreement between Domini and the Trust on behalf
of the Equity Fund, Domini's fee for administrative and sponsorship services
with respect to the Equity Fund is 0.50% of the average daily net assets of each
class of that Fund. Currently, Domini is reducing its fee to the extent
necessary to keep the aggregate annual operating expenses of the Equity Fund
(including the Equity Fund's share of the Portfolio's expenses but excluding
brokerage fees and commissions, interest, taxes, and other extraordinary
expenses), net of waivers and reimbursements, at no greater than 0.95% of the
average daily net assets of the Investor shares of the Equity Fund and at no
greater than 0.63% of the average daily net assets for the Class R shares of the
Equity Fund. For the fiscal years ended July 31, 2003, July 31, 2002, and July
31, 2001, Investor shares of the Equity Fund incurred $1,620,391, $3,150,152,
and $4,028,198, respectively, in sponsorship fees.

Under the Administration Agreement between Domini and the Trust on
behalf of the Bond Fund, Domini's fee for administrative services with respect
to the Bond Fund is 0.25% of the average daily net assets of each class of that
Fund. Currently, Domini is reducing its fee to the extent necessary to keep the
aggregate annual expenses of the Bond Fund (excluding brokerage fees and
commissions, interest, taxes, and other extraordinary expenses), net of waivers
and expenses, at no greater than 0.95% of the average daily net assets of the
Investor shares of the Bond Fund and at no greater than 0.63% of the average
daily net assets for the Class R shares of the Bond Fund. For the fiscal years
ended July 31, 2003, July 31, 2002, and July 31, 2001, Domini waived payment of
its fee for administrative services provided to the Bond Fund.

The Sponsorship Agreement with respect to the Equity Fund and the
Administration Agreement with respect to the Bond Fund provide that Domini may
render administrative services to others. The Sponsorship Agreement and the
Administration Agreement also provide that neither Domini nor its personnel
shall be liable for any error of judgment or mistake of law or for any act or
omission in the oversight, administration, or management of a Fund or the
performance of its or their duties under the Sponsorship Agreement or
Administration Agreement, as applicable, except for willful misfeasance, bad
faith, or gross negligence in the performance of its or their duties or by
reason of the reckless disregard of its or their obligations and duties under
the Sponsorship Agreement or Administration Agreement, as applicable.

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DISTRIBUTOR

Each Fund has adopted a Distribution Plan with respect to its Investor
shares. The Distribution Plan provides that Investor shares of a Fund may pay
the Distributor a fee not to exceed 0.25% per annum of the average daily net
assets of that class as compensation for distribution services provided by the
Distributor in connection with the sale of these shares, not as reimbursement
for specific expenses incurred. Thus, even if the Distributor's expenses exceed
the fees provided for by the Distribution Plan, the Funds will not be obligated
to pay more than those fees, and, if the Distributor's expenses are less than
the fees paid to it, it will realize a profit. The Distributor may use such fees
to pay broker-dealers who advise shareholders regarding the purchase, sale, or
retention of Investor shares of the Funds, the advertising expenses and the
expenses of printing and distributing prospectuses and reports used for sales
purposes, the expenses of preparing and printing sales literature, and other
distribution-related expenses. For the fiscal years ended July 31, 2003, July
31, 2002, and July 31, 2001, Investor shares of the Equity Fund accrued
$2,444,805, $2,897,456, and $3,380,445, respectively, in distribution fees. For
the fiscal years ended July 31, 2003, July 31, 2002, and July 31, 2001, Investor
shares of the Bond Fund accrued $100,617, $55,211, and $22,331, respectively, in
distribution fees. Class R shares of the Funds do not have a Distribution Plan.

The Distribution Plan will continue in effect indefinitely as to a
class 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 the applicable class 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 class at any time by a vote of a
majority of that Fund's Qualified Trustees or by a vote of the shareholders of
that class. The Distribution Plan may not be materially amended with respect to
a class 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.

TRANSFER AGENT, CUSTODIAN, AND SERVICE ORGANIZATIONS

Each Fund has entered into a Transfer Agency Agreement with PFPC Inc.,
4400 Computer Drive, Westborough, MA 01581, pursuant to which PFPC 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

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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 Bond Fund's cash and securities, handling the receipt
and delivery of securities, determining income and collecting interest on the
Portfolio's and the 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 Bond Fund
may be deposited into certain securities depositories. The Custodian does not
determine the investment policies of the Portfolio or the Funds or decide which
securities the Portfolio or the Funds will buy or sell. The Portfolio and the
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 SSgA and ShoreBank), 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, 2003, July 31, 2002, and July 31, 2001, Investor shares of the
Equity Fund accrued $339,055, $279,145, and $258,358, respectively, in service
organization fees. For the fiscal years ended July 31, 2003, July 31, 2002, and
July 31, 2001, Investor shares of the Bond Fund accrued $24,085, $9,637, and
$3,320, respectively, in service organization fees.

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.

Each Fund will also pay sponsorship or administrative fees payable to
Domini 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 Fund, and the preparation, printing, and mailing of prospectuses for such
purposes.

The Portfolio and the Bond Fund each will pay the expenses connected
with the execution, recording and settlement of security transactions, and the
investment management fees payable to Domini. The Portfolio and the Bond Fund
each also will pay the fees and expenses of its custodian for all services to
the Portfolio and such Funds, 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.

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CODES OF ETHICS

The Portfolio, the Funds, Domini, SSgA, ShoreBank, and the Distributor
have each adopted a Code of Ethics (collectively, the "Codes of Ethics") under
Rule 17j-1 under 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, DC 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 reviews 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
maintain this election in effect 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 the 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 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 other items, without regard to whether it has
received any distributions from the Portfolio.

Foreign Taxes: Although no 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

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not subject to any income or franchise tax in the State of New York or the
Commonwealth of Massachusetts.

Taxation of Shareholders

Taxation of Distributions: Shareholders of each Fund normally will have
to pay federal income 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 ordinary dividends to a Fund's
noncorporate shareholders may be treated as "qualified dividend income," which
is taxed at reduced rates, to the extent such distributions are derived from,
and designated by a Fund as, "qualified dividend income." If more than 95% of a
Fund's gross income, calculated without taking into account long-term capital
gains, represents "qualified dividend income," a Fund may designate, and a
Fund's noncorporate shareholders may then treat, all of those distributions as
"qualified dividend income." "Qualified dividend income" generally is income
derived from dividends from U.S. corporations or from "qualified foreign
corporations," which are corporations that are either incorporated in a U.S.
possession or eligible for benefits under certain U.S. tax treaties.
Distributions from a foreign corporation that is not a "qualified foreign
corporation" may nevertheless be treated as "qualified dividend income" if the
applicable stock is readily tradable on an established U.S. securities market.
"Passive foreign investment companies, " "foreign personal holding companies,"
and "foreign investment companies" are not "qualified foreign corporations." The
Bond Fund does not expect any distributions to be treated as qualified dividend
income. 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 the ordinary income
dividends paid to the Equity Fund (but none of the 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 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 12 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

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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.

U.S. TAXATION OF NON-U.S. SHAREHOLDERS: Dividends and certain other
payments (but not including distributions of net capital gains) to persons who
are neither citizens nor residents of the United States or U.S. entities
("Non-U.S. Persons") are generally subject to U.S. tax withholding at the rate
of 30%. Each Fund intends to withhold at that rate on taxable dividends and
other payments to Non-U.S. Persons that are subject to such withholding. A Fund
may withhold at a lower rate permitted by an applicable treaty if the
shareholder provides the documentation required by the Fund.

BACKUP WITHHOLDING: Each Fund is required in certain circumstances to
apply backup withholding at the rate of 28% on taxable dividends, including
capital gain dividends, redemption proceeds, and certain other payments that are
paid to any non-corporate shareholder (including a Non-U.S. Person) who does not
furnish to the Fund certain information and certifications or who is otherwise
subject to backup withholding. Backup withholding will not, however, be applied
to payments that are (or would be, but for the application of a treaty) subject
to the 30% withholding tax on shareholders who are Non-U.S. Persons. Any amounts
overwithheld may be recovered by such persons by filing a claim for refund with
the U.S. Internal Revenue Service within the time period appropriate to such
claims.

Effects of Certain Investments and Transactions

Certain Debt Instruments: An investment by the 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 contracts,
forward contracts and swaps, and related transactions 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 contracts, forward contracts and
swaps, and related transactions 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.

INVESTMENTS IN REMICS: Any investment by the Bond Fund in residual
interests of a CMO that has elected to be treated as a REMIC can create complex
tax problems, especially if the Fund has state or local governments or other
tax-exempt organizations as shareholders.

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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, local, or foreign 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 Bond Fund are made by portfolio managers who are employees of the applicable
Submanager and who are appointed and supervised by its senior officers. The
portfolio managers of the Portfolio and the Bond Fund may serve other clients of
a Submanager in a similar capacity.

The primary consideration in placing securities transactions for the
Portfolio and the Bond Fund 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 and the 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 Bond Fund may determine, the applicable Submanager may consider
sales of shares of the Equity Fund and of securities of other investors in the
Portfolio or shares of the Bond Fund as a factor in the selection of
broker-dealers to execute securities transactions for the Portfolio or the Bond
Fund. Most of the Bond Fund's transactions will be on a principal basis.

Under the Submanagement Agreements and as permitted by Section 28(e) of
the Securities Exchange Act of 1934, as amended, a Submanager may cause the
Portfolio or the Bond Fund, as applicable, to pay a broker-dealer acting on an
agency basis which provides brokerage and research services to the Submanager or
Domini an amount of commission for effecting a securities transaction for the
Portfolio or such 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 Domini's overall
responsibilities to the Portfolio or such 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 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 Index, SSgA and Domini
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

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transactions on behalf of the Portfolio or the Bond Fund and a Submanager's or
Domini'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 Domini for no consideration other than brokerage or underwriting commissions.

The Submanagers and Domini attempt to evaluate the quality of research
provided by brokers. The Submanagers and Domini sometimes use evaluations
resulting from this effort as a consideration in the selection of brokers to
execute portfolio transactions. However, neither the Submanagers nor Domini 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 Bond Fund pay to their respective
Submanager and Domini will not be reduced as a consequence of the receipt of
brokerage and research services. To the extent the securities transactions of
the Portfolio or the Bond Fund are used to obtain brokerage and research
services, the brokerage commissions paid by the Portfolio or such 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 Domini in serving the Portfolio or the
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 Domini in carrying out its obligations to the Portfolio or
the Bond Fund. While such services are not expected to reduce the expenses of
the Submanagers or Domini, a Submanager or Domini 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, 2003, July 31, 2002, and July 31, 2001, the Portfolio paid
brokerage commissions of $154,136, $148,244, and $195,195, respectively. For the
fiscal years ended July 31, 2003, July 31, 2002, and July 31, 2001, the Bond
Fund did not pay brokerage commissions.

During the fiscal year ended July 31, 2003, the Bond Fund purchased
securities issued by the following regular broker-dealers of the Bond Fund,
which had the following values as of July 31, 2003:

Broker-Dealer Value of Securities as of July 31, 2003
------------- ---------------------------------------
FTN Financial Services Corp. $471,478

No portfolio transactions may be executed with the Manager or a
Submanager, or with any affiliate of the Manager or a Submanager, acting either
as principal or as broker, except as permitted by applicable law.

For the fiscal year ended July 31, 2003, the Portfolio paid $585 in
brokerage commissions to State Street Global Markets, LLC, an affiliate of a
Submanager. The Portfolio did not pay any brokerage commissions to affiliated
brokers during its fiscal years ended July 31, 2001, and July 31, 2002.

For each affiliated broker, the table below sets forth the percentage
of the Portfolio's aggregate brokerage commissions paid to the broker during the
fiscal year ended July 31, 2003, and the percentage of the Portfolio's aggregate
dollar amount of transactions involving the payment of commissions effected
through the broker during the same period.

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Percentage of Aggregate Percentage of Aggregate Dollar Amount of Transactions
Name of Broker Brokerage Commissions Paid Involving Payment of Commissions

State Street Global 0.38% 0.33%
Markets, LLC

In certain instances there may be securities which are suitable for the
Portfolio or the Bond Fund as well as for one or more of a Submanager's or
Domini's other clients. Investment decisions for the Portfolio and the Bond Fund
and for a Submanager's or Domini'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 Bond Fund are concerned. However,
it is believed that the ability of the Portfolio and the Bond Fund to
participate in volume transactions will produce better executions for the
Portfolio and such 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. The Trust's Declaration of Trust
permits the Trust's Board of Trustees to issue an unlimited number of shares of
beneficial interest (par value $0. 00001 per share) in separate series and to
divide any such series into classes of shares. Currently the Funds are the only
series offered by the Trust. Each Fund has two classes of shares, Investor
shares and Class R shares. Each share of each class represents an equal
proportionate interest in a series with each other share of that class. Upon
liquidation or dissolution of a Fund, the Fund's shareholders are entitled to
share pro rata in the Fund's net assets available for distribution to its
shareholders. The Trust reserves the right to create and issue additional series
and classes of shares, and to redesignate series and classify and reclassify
classes, whether or not shares of the series or class are outstanding. The Trust
also reserves the right to modify the preferences, voting powers, rights, and
privileges of shares of each class without shareholder approval. Shares of each
series participate equally in the earnings, dividends, and distribution of net
assets of the particular series upon the liquidation or dissolution (except for
any differences among classes of shares of a 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

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entitled to receive as a class the value of the underlying assets of such shares
available for distribution to shareholders.

The Trustees of the Trust have the authority to designate additional
series and classes of shares, to divide any series, and to designate the
relative rights and preferences as between the different series and classes of
shares. 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 Trust may involuntarily redeem
shareholder's shares at any time for any reason the Trustees of the Trust deem
appropriate, including for the following reasons: (a) in order to eliminate
inactive, lost, or very small accounts for administrative efficiencies and cost
savings, (b) to protect the tax status of a Fund if necessary, and (c) to
eliminate ownership of shares by a particular shareholder when the Trustees
determine that the particular shareholder's ownership is not in the best
interests of the other shareholders of a Fund.

Each shareholder of a Fund is entitled to one vote for each dollar of
net asset value (number of shares owned times net asset value per share)
represented by the shareholder's shares in the Fund, on each matter on which the
shareholder is entitled to vote. Each fractional dollar amount is entitled to a
proportionate fractional vote. Shareholders of the Funds and all other series of
the Trust, if any, will generally vote together on all matters except when the
Trustees determine that only shareholders of a particular Fund, series or class
are affected by a particular matter or when applicable law requires shareholders
to vote separately by Fund or series or class. Except when a larger vote is
required by applicable law, a majority of the voting power of the shares voted
in person or by proxy on a matter will decide that matter and a plurality of the
voting power of the shares voted in person or by proxy will elect a Trustee.
Shareholders of the Trust do not have cumulative voting rights, and shareholders
owning more than 50% of the outstanding shares of the Trust may elect all of the
Trustees of the Trust if they choose to do so, and in such event the other
shareholders of the Trust would not be able to elect any Trustee.

The Trust is not required and has no current intention to hold annual
meetings of shareholders, but the Trust will hold special meetings of the
Trust's or a Fund's shareholders when in the judgment of the Trust's Trustees it
is necessary or desirable to submit matters for a shareholder vote. Shareholders
have the right to remove one or more Trustees under certain circumstances.

The Trust may, without shareholder approval, change a Fund's form of
organization, reorganize any Fund or series, any class, or the Trust as a whole
into a newly created entity or a newly created series of an existing entity, or
incorporate any Fund, any other series, any class, or the Trust as a whole as a
newly created entity. If recommended by the Trustees, the Trust, any Fund, any
other series, or any class of the Trust may merge or consolidate or may sell,
lease, or exchange all or substantially all of its assets if authorized at any
meeting of shareholders by a vote of the majority of the outstanding voting
securities (as defined in the 1940 Act) of the Trust voting as a single class or
of the affected Fund, series, or class, or by written consent, without a
meeting, of the holders of shares representing a majority of the voting power of
the outstanding shares of the Trust voting as a single class, or of the affected
Fund, series or class. The Trust may be terminated at any time by a vote of the
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Trust. Any Fund, any other series of the Trust, or any class of any series,
may be terminated at any time by a vote of the majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund or that series or
class, or by the Trustees by written notice to the shareholders of the Fund or
that series or class. If not so terminated, the Trust will continue
indefinitely. Except in limited circumstances, the Trustees may, without any
shareholder vote, amend or otherwise supplement the Trust's Declaration of
Trust.

The Trust's Declaration of Trust provides that, at any meeting of
shareholders of the Trust or of any Fund, a Shareholder Servicing Agent may vote
any shares as to which such Shareholder Servicing

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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 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 willful 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 Trustees or officers have not
engaged in willful 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 (e.g., 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 Trust's Declaration of Trust provides that shareholders may not
bring suit on behalf of a Fund without first requesting that the Trustees bring
such suit unless there would be irreparable injury to the Fund or if a majority
of the Trustees have a personal financial interest in the action. Trustees are
not considered to have a personal financial interest by virtue of being
compensated for their services as Trustees or as trustees of funds with the same
or an affiliated investment adviser or distributor.

The Trust's Declaration of Trust provides that by becoming a
shareholder of a Fund, each shareholder shall be expressly held to have assented
to and agreed to be bound by the provisions of the Declaration.

The Portfolio, in which all of the investable assets of the 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 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 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 Equity Fund nor its shareholders will be adversely
affected by reason of the Equity Fund's investing in the Portfolio.

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Each investor in the Portfolio, including the 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, (a)
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 (b) 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, 2003, Statement of
Operations for the year ended July 31, 2003, Statements of Changes in Net Assets
for each of the years in the two-year period ended July 31, 2003, Financial
Highlights for each of the years in the five-year period ended July 31, 2003,
Notes to Financial Statements, and Independent Auditors' Report) are hereby
incorporated by reference to 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. A copy of the Annual Report may be
obtained without charge from Domini Social Investments by calling (800) 582-6757
or online at www.domini.com.

The audited financial statements of the Domini Social Bond Fund
(Statement of Assets and Liabilities at July 31, 2003, Statement of Operations
for the year ended July 31, 2003, Statements of Changes in Net Assets for each
of the years in the two year period ended July 31, 2003, Financial Highlights
for the period June 1, 2000 (Commencement of Operations) to July 31, 2000 and
for the years ended July 31, 2001, July 31, 2002, and July 31, 2003, Notes to
Financial Statements, and Independent Auditors' Report) are hereby incorporated
by reference to the Annual Report to Shareholders of the Domini Social Bond Fund
which has been filed with the SEC pursuant to Section 30(b) of the 1940 Act and
Rule 30b2-1 thereunder. A copy of the Annual Report may be obtained without
charge from Domini Social Investments by calling (800) 582-6757 or online at
www.domin.com.

* * * * *

Domini Social Investments,(R) Domini Social Equity Fund,(R) Domini
Social Bond Fund,(R) Domini Institutional Social Equity Fund,SM Domini Money
Market Account,(R) The Way You Invest Matters,(R) The Responsible Index Fund,(R)
and domini.com(R) are registered service marks of Domini Social Investments LLC.

The Domini Social Equity Fund is not sponsored, endorsed, sold, or
promoted by KLD Research & Analytics, Inc. ("KLD"). KLD makes no representation
or warranty, express or implied, to the shareholders of the Fund or any member
of the public regarding the advisability of investing in securities generally or
in the Fund particularly. KLD has no obligation to take the needs of Domini
Social Investments LLC or the shareholders of the Fund into consideration in
determining, composing, or calculating the Domini 400 Social Index. KLD is not
responsible for and has not participated in the management of the Fund or the
distribution of the shares of the Fund. KLD has no obligation or liability in
connection with the administration, marketing, or trading of the Fund.

-47-

KLD DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DOMINI 400 SOCIAL INDEX OR ANY DATA INCLUDED THEREIN, AND KLD SHALL HAVE NO
LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. KLD MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY DOMINI SOCIAL
INVESTMENTS LLC, SHAREHOLDERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM
THE USE OF THE DOMINI 400 SOCIAL INDEX OR ANY DATA INCLUDED THEREIN. KLD MAKES
NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
DOMINI 400 SOCIAL INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF
THE FOREGOING, IN NO EVENT SHALL KLD HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

A-1

APPENDIX A

RATING INFORMATION

The following ratings are opinions of Standard & Poor's Ratings
Services, a division of McGraw-Hill Companies, Inc. ("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 obligator'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 obligator to meet its
financial commitment on the obligation.

PLUS (+) OR The ratings from AA to CCC may be modified by the
MINUS (-) addition of a plus or minus sign to show relative
standing within the 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.

A-2

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 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

A-3

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 than is the
case for Prime-1 securities. 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.

B-1

APPENDIX B

PROXY VOTING POLICIES AND PROCEDURES

Adopted August 5, 2003

These Proxy Voting Policies and Procedures have been adopted by each of the
Domini Social Index Portfolio, the Domini Social Equity Fund, the Domini
Institutional Social Equity Fund, and the Domini Social Bond Fund (collectively,
the "Domini Funds" or the "Funds") to ensure that all proxies for securities
held by the Funds are cast in the best interests of the Domini Funds'
shareholders, to whom the Funds owe a fiduciary duty.

The Board of Trustees ("BOT") of the Domini Funds has delegated the
responsibility to vote proxies for the Funds to Domini Social Investments LLC,
the Funds' investment adviser ("Domini" or the "Adviser"). The BOT reviews and
adopts Domini's Proxy Voting Policies and Procedures on an annual basis on
behalf of the Funds, and receives quarterly reports from Domini regarding the
execution of its proxy voting duties.

The BOT also delegates the responsibility for resolving conflicts of interest
that may arise between Domini and the Domini Funds in the execution of the
Adviser's proxy voting duties to the Adviser. Pursuant to Domini's Procedures,
where a significant conflict of interest arises, the BOT expects Domini to
consult with one or more of the independent trustees to determine an appropriate
course of action (See "Conflicts of Interest" below).

I. THE DOMINI FUNDS' PROXY VOTING GUIDELINES

INTRODUCTION

The following Guidelines summarize the Funds' positions on various issues of
concern to socially responsible investors and indicate how the Funds will vote
their shares on each issue. Because the Funds have a fiduciary duty to vote all
shares in the best interests of the Funds' shareholders, the Funds vote proxies
after considering shareholders' financial interests and social objectives. For
that reason, there may be instances in which the Funds' shares may not be voted
in strict adherence to these Guidelines. These Guidelines are subject to change
without notice.

THE RATIONALE GUIDING THE DOMINI FUNDS' APPROACH TO PROXY VOTING

Shareholders of the Domini Funds have long-term financial and social objectives.
These include retirement, paying for a college education, building wealth, and
building a safer, cleaner, more equitable world for their children. These goals
are not served when corporations externalize their costs of doing business on
society. A corporation that delivers only short-term profits to its shareholders
at the long-term expense of its employees, the communities in which it operates,
or the natural environment has not delivered the long-term value that our
shareholders are seeking to achieve through their investments.

SUSTAINABILITY -- LONG-TERM VALUE CAN ONLY BE DELIVERED BY SUSTAINABLE
CORPORATIONS.

As socially responsible investors, we are seeking to invest in sustainable
corporations. A sustainable corporation is not simply one that survives. A
sustainable corporation is one that delivers long-term shareholder value in
harmony with society and the natural environment. It sustains, and is sustained
by, a complex web of stakeholders comprised of shareholders, employees,
communities, customers, and the environment. Mismanagement of stakeholder
relations can involve substantial financial costs. Shareholders provide
corporations with capital, but communities provide them with employees,
consumers, and a legal framework within which to operate, and the environment
provides corporations with raw materials for their operations. In return,
corporations provide jobs, goods, services, and profits. A corporation that
intends to deliver value over the long-term must effectively manage its
relations with

B-2

all its stakeholders, and be responsive to the needs and demands of these
various constituencies. We believe that those corporations that eventually
achieve this goal will deliver significant value to all stakeholders, including
their shareholders.

THE CRITICAL ROLE OF THE INVESTOR: SUSTAINABILITY IS A LONG-TERM ASPIRATIONAL
GOAL THAT CAN ONLY BE ACHIEVED THROUGH DELIBERATE ACTION.

Shareholders possess certain unique rights and privileges with respect to the
management of the corporations they own. It is our view that, as socially
responsible investors, we have the obligation to appropriately direct
management's attention to the broader web of stakeholders upon which the
corporate enterprise depends. Shareholders are the only corporate stakeholder
given an opportunity to communicate with management through the proxy rules.
Therefore, we believe it is incumbent upon us to carefully consider the concerns
of this broader community that is often without effective voice, and to raise
these concerns with management when they are reasonable and consistent with our
investors' objectives. In the process, we believe we are building long-term
shareholder value.

We believe that corporations are best equipped to create long-term, broad-based
wealth both for their stockowners and for their other stakeholders when they are
transparent, accountable, and adopt democratic governance principles. Our proxy
voting guidelines, while varying in their particulars, are based on and reflect
these core values.

COMMUNITY

ACCESS TO PHARMACEUTICALS -- DISCLOSURE OF INCENTIVES TO PHARMACEUTICAL
PURCHASERS

Drug companies have provided doctors, pharmacy benefit managers, and other
pharmaceutical purchasers rebates, payments, and other incentives to purchase
their drugs. These incentives are often hidden, and are therefore not passed on
to patients. According to a US News & World Report article entitled "When Is a
Rebate a Kickback?", some estimate that these payments add up to approximately
10% of the $122 billion Americans spend on drugs annually. Shareholders have
called on pharmaceutical companies to issue reports disclosing the extent and
types of incentives they use to influence pharmaceutical purchasers to select
their drugs. We will SUPPORT these resolutions.

CABLE COMPANIES AND PORNOGRAPHY

The availability and the level of graphic, sexually explicit, and/or obscene
content on cable channels is expanding. This "mainstreaming" of pornography has
become a source of serious concern for some shareholders on both social and
financial grounds. Among other things, shareholders have asked cable companies
to:

o Outline the business case for their increasing distribution of
pornography

o Review policies governing content decision-making for cable operations

o Assess the potential legal issues and financial liabilities posed by
possible violations of local obscenity laws and lawsuits from
individuals and communities.

We will SUPPORT these resolutions.

CITIZEN INITIATIVES -- NONINTERFERENCE BY CORPORATIONS

According to the Supreme Court, large corporations have a constitutional right
to participate in initiative campaigns. However, their financial contributions
can and do defeat citizen initiative campaigns for environmental protection,
recycling, sustainable resource use, and right to know laws. Shareholders have
asked corporations to refrain from contributing to initiative campaigns unless a
competitor would gain a competitive advantage from it. We will SUPPORT such
resolutions.

B-3

EQUAL CREDIT OPPORTUNITY

Access to capital is essential to participating in our society. The Equal Credit
Opportunity Act prohibits lenders from discriminating with regard to race,
religion, national origin, sex, age, and the like.

Shareholders have asked for:

o Reports on lending practices in low/moderate income or minority areas
and on steps to remedy mortgage lending discrimination.

o The development of fair lending policies that would assure access to
credit for major disadvantaged groups and require annual reports to
shareholders on their implementation.

o The development of policies to ensure that the firm does not
securitize predatory loans.

o Specific actions to prevent predatory lending. (The subprime lending
industry has been the subject of widespread criticism for systemic
abuses known collectively as predatory lending. Predatory lending
includes the charging of excessive rates and fees, failing to offer
borrowers with good credit interest rates that reflect their sound
credit records, requiring borrowers to give up their full legal rights
by agreeing to mandatory arbitration as a condition of receiving the
loan, and paying large prepayment penalties that make refinancing
loans prohibitively expensive. These practices have disproportionate
impact on low-income, elderly, and minority borrowers.)

o The application by nonfinancial corporations, such as auto companies,
of Equal Credit Opportunity Act standards to their financial
subsidiaries.

We will SUPPORT these resolutions.

IMPACT ON CULTURALLY SENSITIVE AREAS

Occasionally corporations locate facilities on sites of archeological or
cultural importance. Local citizens often protest such plans. Shareholders have
asked for reports on the impact of companies' plans on these culturally
sensitive sites. Shareholders have also asked companies to cease their
operations on these sites once operations have begun. We will SUPPORT these
resolutions.

INSURANCE COMPANIES AND ECONOMICALLY TARGETED INVESTMENTS

Economically targeted investments (ETIs) are loans made to low- to
moderate-income communities or individuals to foster, among many things, small
businesses and farms, affordable housing, and community development banks and
credit unions. At present, insurance companies put less than one-tenth of one
percent of their more than $1.9 trillion in assets into ETIs. Shareholders have
asked for reports outlining how insurers could implement an ETI program. We will
SUPPORT these resolutions.

LOWER DRUG PRICES

Millions of Americans have severely limited or no practical access to crucial
prescription drugs because they are either uninsured or underinsured. In
addition, shareholders have criticized pharmaceutical companies for using a
two-tiered pricing system through which retail purchasers are charged
significantly more for drugs than are group purchasers like HMOs and federal
government agencies. As a result, the underinsured and uninsured must often pay
higher prices for the same drugs than their adequately insured counterparts. We
will SUPPORT resolutions asking companies to implement and report on price
restraint policies for pharmaceutical products.

B-4

QUALITY OF HEALTHCARE

Many communities are increasingly concerned about the ability of for-profit
healthcare institutions to provide quality healthcare. Shareholders have asked
corporations operating hospitals for reports on the quality of their patient
care. We will SUPPORT these resolutions.

REDLINING

"Redlining" is the systematic denial of services to an area based on its
economic or ethnic profile. The term originated in banking, but the same
practice infects businesses as different as insurance companies and
supermarkets. Shareholders have asked management to appraise their lending
practices and develop policies to avoid redlining.

Shareholders have also asked insurance companies to develop "fair housing"
policies that would assure adequate homeowner insurance protection in low-income
neighborhoods. We will SUPPORT these resolutions.

RIDE SAFETY

The U.S. Consumer Product Safety Commission (CPSC) report Amusement Ride-Related
Injuries and Deaths in the United States: 1987-1999 states that 7,000 people
were treated in the hospital in 1999 for injuries related to amusement parks. In
addition, such injuries increased over the time period investigated by 95%,
while attendance increased by only 7%. No federal regulation of amusement parks
currently exists, and parks in many states are not required to report on
injuries caused by rides. Shareholders have filed resolutions asking companies
to report on company policies for ride safety, medical response, and reporting
of injuries related to amusement park rides. We will SUPPORT these resolutions.

CORPORATE GOVERNANCE

ANNUAL MEETINGS -- IN-PERSON ANNUAL MEETINGS

Some corporations have lobbied to replace "face-to-face" annual meetings with
"virtual meetings" broadcast over the Internet. Shareholders have argued that
Internet access to annual meetings should only supplement and not replace
in-person annual meetings. We will SUPPORT resolutions asking directors to
affirm the continuation of in-person annual meetings.

ANNUAL MEETINGS -- ROTATING SITES

Corporations with large numbers of shareholders should move their annual
meetings around the country so that their owners have an opportunity to
participate in person. Needless to say, the locations should be readily
accessible. We will SUPPORT resolutions advancing this cause.

AUDITORS -- INDEPENDENCE

We will support the reappointment of the company's auditor unless we have reason
to believe that the independence of the audit may be compromised. We believe
that significant non-audit fees can compromise the independence of the audit.
Therefore, we will examine non-audit fees closely and will, for example, OPPOSE
the appointment of auditors where non-audit fees, such as consulting fees,
represent more than 25% of the total fees paid to the auditor, where such data
is available. In addition, we will review on a CASE-BY-CASE basis the
appointment of auditors who have a significant professional or personal
relationship with the company, or where there is reason to believe that the
auditor has rendered an inaccurate opinion.

B-5

We will SUPPORT shareholder proposals asking companies to adopt a policy to
ensure that the firm that is appointed to be the company's independent
accountants will only provide audit services to the company and not provide any
other services.

We will also SUPPORT shareholder proposals that set a reasonable period for
mandatory rotation of the auditor (at least every five years).

BOARD OF DIRECTORS -- CUMULATIVE VOTING

Cumulative voting allows shareholders to cast all of their votes for one nominee
to the board. Theoretically, it facilitates the election of dissidents to the
board. In practice, however, it violates the principles of fairness and equity
by granting minority shareholders a disproportionate voice in running the
company. We will OPPOSE bylaws requiring cumulative voting.

BOARD OF DIRECTORS -- DIRECTOR-SHAREHOLDER DIALOGUE

Shareholders have asked that corporations establish an Office of the Board of
Directors to facilitate communication between nonmanagement directors and
shareholders. A committee of nonmanagement directors would be responsible for
the Office. We will SUPPORT these resolutions.

BOARD OF DIRECTORS -- DIVERSITY

Typically, a board committee selects nominees for the board, and they run
unopposed. If the board or the slate does not include women or people of color,
we will WITHHOLD our support for the board's nominees.

Shareholders have asked boards to make greater efforts to search for qualified
female and minority candidates for nomination to the board of directors, to
endorse a policy of board inclusiveness and to issue reports to shareholders on
their efforts to increase diversity on their boards. We will SUPPORT these
resolutions.

BOARD OF DIRECTORS -- INDEMNIFICATION

A board may use indemnification policies that go well beyond accepted norms to
protect itself against shareholder actions in the wake of unsuccessful takeover
attempts. We will OPPOSE these resolutions.

BOARD OF DIRECTORS -- INDEPENDENT BOARD

It is in the best interest of all stockholders that a majority of board members
be independent. We will WITHHOLD our votes from board slates that do not consist
of a majority of independent directors. We will SUPPORT shareholder resolutions
asking management to amend company bylaws to ensure that the board has a
majority or a supermajority (two-thirds or three-quarters) of independent
directors.

We will also WITHHOLD our votes from individual directors who have demonstrated
disregard for their responsibilities to shareholders and other stakeholders. For
example, we will WITHHOLD our votes from directors who have attended less than
75% of board and committee meetings without a valid excuse or who have ignored a
shareholder proposal that has been approved by a majority of the votes
outstanding.

In determining the independence of board members, we use the definition
developed by Institutional Shareholder Services (ISS). ISS divides directors
into three categories: Inside, Affiliated and Independent. To be "independent,"
a director must have no connection to the company other than his or her board
seat. ISS considers board members who have served for over ten years to still be
independent, but will make note of independent and affiliated directors who have
served on the board for over ten years.

B-6

BOARD OF DIRECTORS -- INDEPENDENCE OF KEY COMMITTEES

We believe that it is critical to the protection of shareholder interests that
certain key committees, such as the audit committee, the nominating committee,
and the compensation committee, be composed entirely of independent directors.
We will WITHHOLD our votes from inside directors and affiliated outside
directors nominated to these committees.

We will SUPPORT shareholder resolutions requesting that these committees be
composed exclusively of independent directors.

BOARD OF DIRECTORS -- QUALIFICATIONS FOR INDEPENDENCE

Often, "independent" or "outside" directors are so only in that they are not
employees of the company. Their ties to management make them de facto insiders,
and therefore their representation of the interests of external constituencies
is minimal. Some shareholders have proposed that boards nominate independent
directors subject to very strict criteria defining "independent." We will
SUPPORT these resolutions.

BOARD OF DIRECTORS -- MANDATORY SHARE OWNERSHIP

Shareholders have proposed that all directors should own stock in the company.
In general, directors should own stock in the companies on whose boards they
sit. However, boards should not be restricted to those financially able to buy
stock. We will OPPOSE these resolutions.

BOARD OF DIRECTORS -- MORE DEMOCRATIC ELECTIONS

In practice, most corporations allow shareholders to approve board candidates as
selected by the board, rather than to truly "elect" candidates from a pool of
nominees. To further democratize the election process, shareholders have
requested that there be more director nominees than there are board seats to be
filled during a board election. Such an arrangement would enhance the ability of
shareholders to choose candidates who would more accurately represent their
interests. We will SUPPORT these resolutions.

BOARD OF DIRECTORS -- REDUCE SIZE

Some shareholders have sought to reduce the size of boards as a cost-cutting
measure. However, the costs associated with boards are relatively small, and
considerations other than size should be weighed carefully. We will OPPOSE such
resolutions.

BOARD OF DIRECTORS -- SHAREHOLDER ADVISORY BOARD

Shareholders have asked that corporations create a shareholder advisory board to
represent the owners' views to the board. Boards with a sufficient number of
outside directors should represent the interests of shareholders. We will OPPOSE
such resolutions.

BOARD OF DIRECTORS -- STAGGERED TERMS

The annual election of all directors is a necessary part of maintaining
accountability to shareholders. Management often proposes a classified board or
staggered board terms to maintain control of the board. We will oppose bylaws of
this type. We will SUPPORT resolutions to abolish staggered boards.

CASH BALANCE PENSION PLANS

In the late 1990s, many companies converted their pension plans from traditional
defined benefit pension plans to cash-balance plans. Older workers can lose
significant pension earnings if their traditional pension is replaced by a
cash-balance plan that puts them on an equal earning footing with younger

B-7

workers. Shareholders have asked companies to give employees the choice of
either a defined benefit pension plan or a cash-balance plan. We will SUPPORT
these resolutions.

CORPORATE WELFARE

Corporate welfare, according to a Time magazine article on the subject, is "any
action by local, state or federal government that gives a corporation or an
entire industry a benefit not offered to others." Federal corporate welfare
payments in 1998 reportedly equaled 26% of total 1998 after-tax corporate
profits in the U.S. Government officials, business leaders, shareholders, and
others worry that corporate welfare leads to unfair market competition and
softens the ability of American businesses to compete. We will SUPPORT
resolutions that ask corporations to report the corporate welfare benefits they
receive.

EMPLOYEE COMPENSATION -- EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS)

In the expectation that companies fostering employee ownership will grow faster,
attract and retain higher quality employees, create more employee wealth, and
achieve sustained superior performance, shareholders have asked corporation to
create and fund ESOPs, and report on employee ownership. We will SUPPORT these
resolutions.

MANAGEMENT AND DIRECTORS -- REASONABLE COMPENSATION

We support reasonable compensation packages for managers and directors. In
general, we do not regard as reasonable:

o Pension plans for outside directors (since they usually benefit from
other plans)

o Gold or silver parachute plans triggered by a takeover

o Total compensation to outside directors exceeding $100,000 per year

o Total compensation to chief executive officers exceeding $10,000,000
per year

We will OPPOSE resolutions proposing these or similar compensation schemes and
will SUPPORT resolutions proposing that such schemes be submitted to the
shareholders for approval. In addition, we will SUPPORT resolutions calling for
companies to review and report on executive compensation.

MANAGEMENT AND DIRECTORS -- SEPARATE CEO AND CHAIR POSITIONS

Shareholders have proposed that the same person not act as board chair and CEO,
so that the board will represent the interests of the shareholders, not
management. We will SUPPORT these resolutions.

In addition, to ensure an independent board, shareholders have requested that
the chair of the board of directors be an independent director who has not
served as chief executive officer of the company. We will SUPPORT these
resolutions.

MANAGEMENT COMPENSATION -- DISCLOSURE

Shareholders have asked companies to disclose the salaries of top management
beyond those the SEC requires in the proxy statement. We will SUPPORT these
resolutions.

MANAGEMENT COMPENSATION -- EXCESSIVE STOCK OPTION GRANTS TO EXECUTIVES

According to a 1999 study by Northwestern University's Kellogg School of
Management entitled "Unleashing the Power of Employee Ownership," firms with
broad-based stock ownership delivered superior stock market performance and
profitability relative to peer firms without employee ownership. Shareholders
wishing to promote more broad-based employee ownership of their corporations'
stock have

B-8

asked corporate boards to limit stock options granted to (1) a single individual
to no more than 5% of the total options granted in a single year, and (2) the
group of executive officers to no more than 10% of the total options granted in
a single year. We will SUPPORT these resolutions.

MANAGEMENT COMPENSATION -- EXECUTIVE SEVERANCE PAY REVIEW

Shareholders have criticized boards of directors that grant retiring executives
severance pay packages that significantly exceed the standard benefits granted
to other company executives, particularly when the company's financial
performance was poor during the executive's tenure. As a result, shareholders
have asked boards to prepare reports that summarize and explain the relationship
of their executive severance package policies and philosophies to corporate
performance, employee morale, and executive performance incentives. We will
SUPPORT these resolutions.

MANAGEMENT COMPENSATION -- HEALTHCARE SYSTEMS AND INSURERS

Healthcare systems and insurers must balance their needs to generate profits
against the quality of care they provide their customers. Shareholders have
asked for a board level review of executive compensation practices that would
lead to tying compensation to the quality of care and/or service given to
patients. We will SUPPORT these resolutions.

MANAGEMENT COMPENSATION -- NONFINANCIAL PERFORMANCE

Shareholders have asked companies to review their executives' compensation and
report to shareholders on its link not only to financial performance but also to
the company's performance on:

o Environmental issues

o Burma

o Improvements in healthcare quality

o Exporting U.S. jobs to low-wage countries

o Closing the wage gap in the U.S. between workers and top management

o Predatory lending

o Diversity issues

o Social issues generally

We will SUPPORT these resolutions.

MANAGEMENT COMPENSATION -- PERFORMANCE-BASED STOCK OPTIONS

Shareholders have asked companies to tie executive compensation more closely to
company, rather than stock market, performance through the use of
performance-based stock options. Performance-based stock options include indexed
stock options, which link option exercise prices to an industry index;
premium-priced stock options, which have exercise prices that are above the
market price of the stock on the date of grant; and performance-vesting options,
which vest only after the market price of the stock exceeds a target price
greater than the market price on the grant date. We will SUPPORT these
resolutions.

MANAGEMENT COMPENSATION -- SALARY FREEZE DURING LAYOFFS

Layoffs are generally undertaken as cost-saving measures designed to improve
profits and increase the company's long-term competitiveness. However,
increasing the pay of corporate officers while asking employees to sacrifice is
hypocritical, damaging to a company's culture, and indicative of poor corporate

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governance. We will SUPPORT resolutions that require companies to freeze the
salaries of corporate officers during layoffs and/or until the positive benefits
of the layoffs are demonstrated.

MANAGEMENT COMPENSATION -- TIE CEO COMPENSATION TO SALARY OF LOWEST-PAID WORKER

Compensation for corporate CEOs has grown at an astonishing pace in recent
years, far faster than that for employees in general. Between 1982 and 2001 the
average chief executive officer's pay increased from 42 times that of the lowest
paid worker to 411 times (Business Week Online, May 6, 2002). Shareholders have
asked that corporations establish a cap for CEO compensation, tying it to the
wage of the lowest-paid workers. We will SUPPORT these resolutions.

In addition, shareholders have asked that corporations prepare a detailed
statistical historical report on the salaries of the highest-paid executive and
lowest-paid employee. We will SUPPORT these resolutions.

MANAGEMENT PERFORMANCE -- REVIEW BY INDEPENDENT DIRECTORS

One of a board's most important functions is the review of top management's
performance. Some have suspected that close ties between directors and
management made these reviews more perfunctory than they should be. A recent
shareholder resolution would require that these reviews be performed solely by
independent directors. However, there is no evidence that such a requirement is
generally needed. We will review resolutions of this type on a CASE-BY-CASE
basis.

MERGERS AND ACQUISITIONS -- IN GENERAL

Many recent studies have concluded that a sizable majority of mergers and
acquisitions do not yield benefits for investors. At the same time, investors
valuing social and environmental factors highly have multiple reasons to examine
such proposals diligently. We will oppose any merger or acquisition whose
resulting company would not qualify for the Domini 400 Social Index(SM) on
exclusionary grounds. But mergers and acquisitions also may lead to other
unacceptable social, environmental, or corporate governance costs, through the
loss of exemplary models of corporate innovation in social and environmental
initiatives. For this reason, we will review the potential social costs of any
merger or acquisition along with purely financial considerations. Although
mergers and acquisitions may offer financial, and even social and environmental,
benefits, their tendency to underperform, and their potential to do harm,
creates the need for special scrutiny on a CASE-BY-CASE basis.

MERGERS AND ACQUISITIONS -- SHAREHOLDER APPROVAL

Some shareholders have sought to require submission to shareholders of any
merger or acquisition, regardless of size. While mergers and acquisitions that
decisively change a company's character should be submitted to its owners for
approval, we will OPPOSE all-inclusive resolutions since they are both
impractical and entail an unnecessary expense.

NONPARTISANSHIP

Corporations should not devote resources to partisan political activities, nor
should they compel their employees to contribute to or support particular
causes. We will SUPPORT resolutions advancing these principles.

POLITICAL CONTRIBUTIONS

Those concerned about the influence of corporate funds on the political process
have called attention to the use of "soft money": funds that are not given
directly to candidates, but to political parties for "party-

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building" activities. Shareholders have asked boards of directors to establish
corporate political contributions guidelines and reporting provisions. We will
SUPPORT these resolutions.

PROXY VOTING -- CONFIDENTIAL BALLOT

Many companies' proxies bear the name of the shareholder, allowing companies to
learn who voted how in corporate elections. Confidential voting is necessary to
maintain a proxy voting system that is free of pressure. Shareholders have asked
that proxy voting be kept confidential, except in those limited circumstances
when the law requires disclosure. We will SUPPORT these resolutions.

RELATIVE COMPENSATION LEVELS

A few enlightened companies have set a maximum range they will tolerate between
the salaries of their lowest- and highest-paid employees. Shareholders have
asked other companies for reports comparing the compensation packages of the
average and lowest wage earners to those of top management. We will SUPPORT
these resolutions.

SHAREHOLDER RESOLUTIONS -- IDENTIFICATION OF PROPONENTS

Shareholders have asked that management fully identify proponents of all
shareholder resolutions. We will SUPPORT these resolutions.

SHAREHOLDER RESOLUTIONS -- SUPERMAJORITY VOTES

A company may propose a bylaw requiring that certain types of shareholder
resolutions receive a supermajority -- sometimes as much as 80% of the vote --
to be adopted. We will OPPOSE these resolutions.

STOCK OPTION EXPENSING

Current accounting rules do not require companies to expense stock options as a
cost in determining operating income. We believe this practice leads to
distorted earnings reports. We will SUPPORT resolutions calling for companies to
expense costs of stock options in the company's annual income statement.

TAKEOVER -- EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS)

ESOPs should promote active employee ownership. However, some companies have
proposed ESOPs as a way to park stock to avoid a takeover. We will OPPOSE ESOPs
not intended and designed to promote active employee ownership.

TAKEOVERS -- STOCK ISSUANCE

Management may seek authorization to issue stock in an effort to avoid a
takeover. We will OPPOSE these resolutions.

TRANSPARENT FINANCIAL REPORTING

Accounting rule FAS 87 requires companies to boost their profit reports with
part of the surplus from their pension funds. The surplus used to do so can
account for a substantial portion of a company's profit.

Companies cannot use this surplus to fund company operations. However, some
companies have based executive incentive pay on FAS 87 profit. They have also
decided against using pension fund surplus

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money to adjust retiree pay for inflation. Shareholders have asked companies not
to base executive incentive pay on FAS 87 profit, to provide transparent reports
to shareholders of profit from real company operations, and/or to use part of
their pension fund surplus to adjust retiree pay for inflation. We will SUPPORT
these resolutions.

DIVERSITY

Note: See also "Board of Directors-- Diversity" in our Corporate Governance
section.

EQUAL EMPLOYMENT OPPORTUNITY AND AFFIRMATIVE ACTION REPORT

All corporations have the power to promote equality in the workplace and the
marketplace. Shareholders have asked for reports that may include:

o A chart identifying employees by sex, race, and the various job
categories defined by the EEOC;

o A description of affirmative action policies and programs in place;

o The company's Form EEO-1 disclosure report;

o A report on the percentage of hires during the previous year who were
persons with disabilities;

o A description of programs designed to increase the number of women
and/or minority managers;

o A description of programs designed to increase the number of persons
employed with disabilities;

o A description of how the company is working to eliminate "glass
ceilings" for female and minority employees;

o A report on any material litigation facing the company concerning
diversity-related controversies;

o A description of how the company publicizes its affirmative action
policies and programs to suppliers and service providers; and/or

o A description of programs directing the purchase of goods and services
from minority- and/or female-owned businesses.

We will SUPPORT these resolutions.

EQUALITY PRINCIPLES ON SEXUAL ORIENTATION

In 1995, a coalition of advocacy groups and businesses, primarily in financial
services, developed the Equality Principles on Sexual Orientation. The
principles call on companies to:

o Adopt written prohibitions against discrimination in employment based
on sexual orientation;

o Recognize and grant equal status to employee groups formed to address
sexual orientation issues in the workplace;

o Include sexual orientation issues in diversity training;

o Grant spousal benefits to domestic partners, regardless of sexual
orientation;

o Refrain from using negative stereotypes of sexual orientation in
advertising; and

o Practice nondiscrimination in the sale of goods and services and the
placement of advertisements.

Shareholders have asked for reports on the implementation of the Principles. We
will SUPPORT these resolutions.

PAY EQUITY

Historically women have not received comparable wages for comparable work in
many sectors of our economy, although national legislation requires that they be
comparably compensated. Shareholders have asked for reports that companies
undertake studies to assure that all women and minorities are paid comparably
with their counterparts. We will SUPPORT these resolutions.

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RACIAL STEREOTYPES IN ADVERTISING

Racial stereotyping persists in advertising and team logos. The most notorious
of these is the Cleveland Indians' "Chief Wahoo." Shareholders have asked
companies to display more sensitivity toward the images they present. We will
SUPPORT these resolutions.

ENVIRONMENT

ADOPT GLOBAL ANIMAL WELFARE STANDARDS

Shareholders have asked restaurants and other corporations to adopt animal
welfare standards for their operations worldwide, and to report these standards
to shareholders. We will SUPPORT these resolutions.

CERES PRINCIPLES

The Coalition for Environmentally Responsible Economies (CERES) was formed in
1989 in the wake of the Exxon Valdez disaster.

It developed a set of ten principles, now called the CERES Principles, to guide
corporate decisions that affect the environment. By subscribing to the
Principles, a company commits itself to:

o Work toward positive goals such as sustainable use of natural
resources, energy conservation, and environmental restoration;

o Set definitive goals and a means of measuring progress; and

o Inform the public in an environmental report published in the format
of a CERES Report.

Shareholders have submitted resolutions asking corporations to study the
Principles or to endorse them. We will SUPPORT these resolutions.

CO(2) AND CLIMATE CHANGE

Shareholders have become increasingly concerned about the potential
climate-changing effects of greenhouse gas emissions from their companies'
operations and products. They have focused particular attention on electric
utility, oil, manufacturing, and insurance companies. Some shareholders have
asked electric utility companies for reports on policies, programs, and progress
to date in helping ratepayers conserve energy and in using benign sources of
electricity to reduce CO2 emissions. Others have asked oil, electric utility,
and manufacturing companies to report on greenhouse-gas emissions from their
operations and products, and their progress towards reducing such emissions.
Shareholders have also asked property and casualty insurance industry firms to
report on their exposure to potentially catastrophic risks from natural
disasters brought on by worldwide climate change. We will SUPPORT these
resolutions.

ENVIRONMENTAL HAZARDS TO COMMUNITY

The public has a right to know whether a company uses substances that pose an
environmental health or safety risk to a community in which it operates.
Shareholders have asked companies to make information about these risks
available to enable surrounding communities to assess a facility's potential
impact. We will SUPPORT these resolutions.

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ENVIRONMENTAL REPORTS

Shareholders have asked companies to prepare general reports (often using the
CERES Report as a guide) describing company programs, progress, and future plans
in the environmental area. Such resolutions may also ask the company to (1)
disclose environmental liabilities in a somewhat clearer fashion than the SEC
requires, (2) report on toxic emissions, or (3) disclose the environmental
impact of the company's operations on biodiversity. Other requests have focused
on specific environmental problems, such as hazardous waste sites. Shareholders
have also asked for reports on the environmental and occupational standards that
companies require of their suppliers and vendors. We will SUPPORT these
resolutions.

ENVIRONMENTAL STANDARDS FOR INTERNATIONAL ELECTRONICS INDUSTRY SUBCONTRACTORS

The manufacture of semiconductors requires extensive use of toxic chemicals and
the use and discharge of large amounts of water. Shareholders have asked certain
large U.S. electronics products companies to report on their policies for
monitoring the environmental records of their major overseas suppliers. We will
SUPPORT these resolutions.

GENETICALLY ENGINEERED (GE) AGRICULTURAL PRODUCTS

There is growing concern that GE foods may be harmful to humans, animals, or the
environment. There is also concern that any detrimental impact on public health
and the environment resulting from these foods may expose companies to
substantial financial liabilities. Shareholders have asked companies to delay
marketing GE foods until testing proves these products to be safe over the long
term. They have also asked companies that are currently marketing GE foods to
(1) label them as such; (2) adopt a policy to phase them out; (3) report on the
financial and environmental costs, benefits, and risks associated with the
production and consumption of these products; and/or (4) report on the
feasibility of phasing them out, unless long-term testing proves them safe to
humans, animals, and the environment. We will SUPPORT these resolutions.

NO MINING OR EXPLORATION AND PRODUCTION IN CERTAIN ENVIRONMENTALLY SENSITIVE
REGIONS

Certain regions of the U.S., such as the Arctic National Wildlife Refuge or the
Okefenokee National Wildlife Refuge, are particularly environmentally sensitive.
Shareholders have asked natural resource extraction companies to adopt a policy
of not exploiting these regions. We will SUPPORT these resolutions.

PAPER PRODUCTION AND USE -- CHLORINE BLEACHING

The insatiable demand for paper has led to clear-cutting of forest for pulp and
the use of chlorine bleaching to achieve whiteness in the end product. As both
these practices have dire environmental consequences, shareholders have asked
paper manufacturers to report on plans to phase out the production of paper
using these processes. In addition, shareholders have also asked companies to
report on steps taken to eliminate the use of chlorine bleaching in the
production of their products. We will SUPPORT these resolutions.

PAPER PRODUCTION -- TELEPHONE DIRECTORIES

Some producers of telephone books use paper derived from virgin rainforests.
Since alternative sources of paper exist, shareholders have asked publishers to
phase out the use of paper from these sources. We will SUPPORT these
resolutions.

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PHASE OUT MERCURY-CONTAINING DEVICES

Mercury, a bioaccumulative neurotoxin contained in such devices as thermometers
and sphygmomanometers, poses a significant threat to public health. We will
SUPPORT resolutions asking corporations to phase out their production and/or
sale of mercury-containing devices.

PVCS (POLYVINYL CHLORIDE PLASTICS), PHTHALATES

PVCs are environmentally hazardous throughout their life cycle (production, use,
and disposal). Dioxin, a known human carcinogen, is created during the
production of PVC feedstocks, as well as when PVCs are burned in waste
incinerators. Among other things, dioxin has been linked to endocrine
disruption, reproductive abnormalities, neurological problems, and infertility
in humans and animals. In addition, large amounts of chemicals called
"phthalates" are used to manufacture flexible PVC products. A commonly used
phthalate plasticizer called di-ethylhexyl-phthalate (DEHP) is a probable
reproductive toxicant, as well as a toxicant of the liver and kidney.

PVCs are the primary component in 25% of all medical products. These include IV,
blood, and enteral feeding bags; oxygen tubing and masks; dialysis tubing;
enteral feeding tubes; examination gloves; and sterile packaging. Many non-PVC
medical supplies (IV bags, gloves, plasma collection bags, and containers) are
currently available and others (tubing, film for collection bags, and blood
bags) are under development. We will SUPPORT resolutions asking companies to
phase out the manufacture of PVC- or phthalate-containing medical supplies where
safe alternatives are available.

PVCs are also extensively used in building materials such as furniture and floor
coverings. We will SUPPORT resolutions asking companies to report on the risks,
financial costs, and benefits, and environmental and health impacts of the
continued use of PVCs in these types of products.

POLLUTION PREVENTION, RECYCLING, AND PRODUCT LIFE-CYCLE RESPONSIBILITY

Implementation of pollution-prevention and recycling programs results in clear
benefits to corporations, shareholders, and the environment. Shareholders have
asked corporations in environmentally risky industries to adopt a policy
requiring each major facility to conduct an annual review of
pollution-prevention measures. Shareholders have also asked companies to adopt
and report upon plans for the virtual elimination from their operations of
certain pollutants that cause severe environmental harm. Others have asked
corporations to increase the use of recycled materials in their production
processes and/or to implement a strategy encouraging consumers to recycle
company products. In addition, shareholders are increasingly asking companies to
commit to taking responsibility for the environmental impact of their products
during their entire life cycles and to report on the initiatives they use to
achieve this objective. We will SUPPORT these resolutions.

RENEWABLE FUELS AND ENERGY EFFICIENCY

Burning coal and oil contributes to global climate change, acid rain,
deteriorating air quality, and related public health and environmental problems.
In addition, the use of nonrenewable fuels such as oil and coal is, by
definition, an unsustainable business practice. Corporations can significantly
reduce their negative impact on the environment by implementing more
energy-efficient manufacturing processes and marketing more energy-efficient
products. They may also do so through creating products and manufacturing
processes that utilize renewable energy sources, several of which are currently
cost-competitive. In addition, energy companies can help by increasing their
investments in the development of renewable energy sources.

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We will SUPPORT resolutions asking corporations to develop products and
operations that are more energy-efficient and/or that rely on renewable fuel
sources. We will also SUPPORT resolutions asking energy companies to increase
their investments in the development of renewable energy sources.

REVIEW POLICY ON SALE OF PRODUCTS CONTAINING OLD-GROWTH TIMBER

Old-growth forests are disappearing rapidly around the world. They represent
critically important ecological assets that must be preserved for future
generations. Companies selling products containing wood from old-growth forests
are contributing to the destruction of these forests. Shareholders have asked
retail firms to review their policies on the sale of products containing wood
from old-growth forests. We will SUPPORT these resolutions.

RISKS LINKED TO WATER USE

There is a need for long-term corporate water use strategies. Corporations are
exposed to the following risks linked to water use:

o Increasing water costs;

o Increasing competition for water supplies;

o Conflicts with local communities over water rights; and

o Risk of disruption of water supplies and its impact on business
operations.

In particular, social investors are concerned with companies involved in the
bottled-water industry. These companies risk the potential of being involved in
water rights disputes with local communities. We will SUPPORT resolutions
requesting companies to report on the business risks associated with water use
and its impact on the corporation's supply chain, and steps taken to mitigate
the impact on water supplies of communities near company operations.

USE OF PARABENS IN BEAUTY PRODUCTS

Parabens, used as preservatives in beauty products, have been identified as
estrogenic chemicals. Estrogenic chemicals are those that mimic the action of
estrogen, a hormone that has been shown to control the growth of breast cells.
In addition, it has also been shown that exposure to external estrogens, those
not naturally produced by the body, increase the risk of breast cancer. The
National Research Council has determined that certain synthetic chemicals that
mimic the function of estrogen are associated with adverse effects on the
reproductive health of wildlife and other animals. There is substantial
scientific evidence to suggest that increased exposure to substances that behave
like estrogen in the body may elevate an individual's risk of developing cancer.
We will SUPPORT resolutions asking companies to report on the feasibility of
removing, or substituting with safer alternatives, all parabens used in their
products.

HUMAN RIGHTS

AFFORDABLE HIV/AIDS, TUBERCULOSIS, MALARIA, AND OTHER DRUGS FOR DEVELOPING
COUNTRIES

As of December 2000, approximately 90% of the 36.1 million people living with
HIV/AIDS resided in developing countries. Tuberculosis (TB), a disease that is
frequently a complication of AIDS, claims approximately 2 million lives annually
and is the world's leading infectious killer. Malaria similarly claims
approximately 1.1 million lives.

Shareholders have called on pharmaceutical companies in industrialized nations
to develop and implement a policy to provide HIV/AIDS, TB, malaria, and other
drug treatments in ways that the

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majority of people affected by these diseases in developing countries can
afford. These resolutions are intended to help provide relief to developing
countries that are gravely suffering from these epidemics and to protect the
intellectual property of their companies' products in order to ensure their
long-term profitability. We will SUPPORT these resolutions.

AIDS -- IMPACT OF AIDS ON OPERATIONS

The World Health Organization (WHO) reported that sub-Saharan Africa has one of
the highest rates of AIDS and one of the lowest percentages of infected
populations receiving treatment. UNAIDS, the Joint United Nations Programme on
HIV/AIDS, stated that in order to achieve sustainable development in these
regions, both the government and the private sector need to address the local
AIDS epidemic. The private sector can do so through the provision of
comprehensive workplace health coverage, counseling, testing, and treatment
programs. We will SUPPORT resolutions that call for corporate reports on the
impact of AIDS on operations in sub-Saharan Africa.

BURMA

The Burmese military dictatorship has been accused of serious, ongoing human
rights violations. Since Burma's economy is almost entirely
government-controlled, corporations operating there inevitably provide financial
support to the military regime. Shareholder resolutions relating to Burma
include:

o Requests for comprehensive reports on corporate operations in Burma;

o Requests for reports on the costs -- both tangible and intangible --
to companies attributable to their being boycotted for doing business
in Burma; and

o Demands that companies terminate all operations in Burma.

We will SUPPORT these resolutions.

CHINA -- HUMAN RIGHTS CRITERIA

Resolutions introduced in Congress have called for U.S. corporations with
operations in the People's Republic of China to follow certain principles in
doing business there. These principles commit companies to, among other things,
promote freedom of expression and freedom of association among employees, to use
production methods that do not risk harm to the environment, and to prohibit the
presence of the Chinese military on the premises. We will SUPPORT resolutions
asking companies to adopt these principles.

Shareholders have submitted resolutions asking companies in certain key
industries, such as nuclear power, not to begin new operations in China until
the country improves its human rights record. They have also submitted
resolutions asking financial services companies transacting business in China to
report on the impact such transactions have on human rights and the environment.
We will SUPPORT these resolutions.

CHINA -- PRISON LABOR

The widespread belief that the government of China uses forced labor from its
prison system to produce goods for export to the U.S. and elsewhere has spawned
a number of general resolutions on where and how companies do business overseas
(see above). Some shareholders, however, have asked for specific reports on
business operations in China. We will SUPPORT these resolutions.

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CHOOSING WHERE AND HOW TO DO BUSINESS

Companies choose where they will do business, where they will operate their
factories, where they will subcontract their work or buy finished goods, and
where they will extract natural resources. Shareholders have asked companies to
develop guidelines for these choices that include consideration of a regime's
human rights record. We will SUPPORT these resolutions.

GLOBAL COMPANIES -- STANDARDS OF CONDUCT

Global manufacturing, resource extraction, financial services, and other
companies face complex issues arising from the diverse cultures and political
and economic contexts in which they operate. Shareholders have asked companies
to develop, adopt, and continually improve codes of conduct to guide company
policies, programs, and operations, both within and outside their cultures of
origin, and to publicly report these policies. Shareholders believe these codes
should include policies designed to ensure the protection of the environment and
human rights, the payment of just wages, the maintenance of safe working
conditions, the avoidance of child and forced labor, and freedom of association.
Shareholders often ask companies to adhere to policies that conform with the
International Labor Organization's Core Conventions and the United Nations
Universal Declaration on Human Rights. We will SUPPORT these resolutions.

GLOBAL COMPANIES -- STANDARDS FOR VENDORS

The outcry against the use of offshore sweatshops by U.S. retailers has many
origins. Underlying those protests, however, is a common assumption: U.S.
corporations have the power to alter the conditions under which their vendors
operate. Shareholders have asked companies for reports describing their vendor
standards, focusing especially on the workers' right to organize, working
conditions, and worker compensation. They have also asked for (1) companies to
use external, independent monitoring programs to ensure that their vendors
comply with their vendor standards; and (2) reports on companies' efforts to
assure that they are not doing business with contractors that use forced labor,
child labor, or otherwise have abusive working conditions. We will SUPPORT these
resolutions.

GLOBAL COMPANIES -- SUSTAINABILITY REPORTS

Concerned investors increasingly believe that the long-term financial health of
a corporation is tied to the economic sustainability of its workers and the
communities in which they operate, source, and sell their products.
Consequently, these investors have sought to analyze corporate financial,
social, and environmental performance, and have asked corporations to prepare
sustainability reports detailing their firms' records in these areas. We will
SUPPORT resolutions requesting these reports.

INDONESIA

Persistent reports indicate that textile and footwear factories in Indonesia
subject their workers to exploitive techniques. Workers' protests have ended in
the face of military force, and union members and organizers have been fired for
their troubles. Shareholders have asked that companies adopt standards to guide
their vendors' operations in Indonesia and use independent monitors to protect
their vendors' workers. We will SUPPORT such resolutions.

INFANT FORMULA

Nutrition researchers have learned that substitution of infant formula for
breast milk increases health risks to children. Shareholders have asked
companies that produce infant formula to endorse the WHO/UNICEF Code of
Marketing for Breast-Milk Substitutes. We will SUPPORT these resolutions.

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INTERNATIONAL FINANCIAL STABILIZATION

Instability in international financial markets can lead to crises that fall
heavily upon the developing consumer markets through the loss of jobs and higher
prices for essential goods. An unstable market can also threaten the long-term
profitability of corporations through their exposure to these markets and
through the loss of markets. Corporations, particularly financial institutions,
can play an important role in promoting international financial stability.
Shareholders have asked corporations to restrain their short-term lending and
their exposure of other financial instruments to emerging market countries,
highly leveraged institutions, and poorly regulated banking centers, and to
promote and support similar regulatory measures proposed by coordinating bodies
like the IMF. We will SUPPORT these resolutions.

INTERNATIONAL LENDING AND ECONOMIC DEVELOPMENT

Programs enforced by the IMF and World Bank are supposed to help developing
countries repay loans, but considerable evidence indicates their effects
include:

o Encouraging capital flight from less economically developed countries;

o Eroding human and natural resources;

o Encouraging the inefficient use of capital;

o Decreasing spending for health, education, and housing; and

o Undermining a country's long-term capacity to repay its debts.

To help remedy these matters, shareholders have asked financial services
companies to develop criteria for the evaluation, support, and use of
intermediaries capable of promoting appropriate development in emerging
economies. Others have asked for the disclosure of the criteria used in
extending loans to developing countries so as to avoid adding to their $1.3
trillion debt to industrialized countries. Shareholders have also asked
companies to cancel debts owed to them by developing countries, particularly
those designated as Heavily Indebted Poor Countries by the World Bank and the
IMF. Still others have asked for information on structural adjustment programs.
We will SUPPORT these resolutions.

JUSTICE FOR INDIGENOUS PEOPLES

Shareholders have asked natural resource extraction companies to report on their
operations on indigenous lands and to address the impact and implications of
their activities on both the land and the people. Shareholders have also asked
these companies to cease operations on indigenous lands that have an adverse
environmental, socioeconomic, or human rights impact on the local population. We
will SUPPORT these resolutions.

MEXICO -- MAQUILADORAS

Maquiladoras are facilities operated by U.S. companies just south of the
U.S.-Mexico border. There, Mexican workers-- paid a fraction of what U.S.
workers would require to subsist-- assemble parts made in the U.S. and ship the
finished goods north. Shareholders may ask management to:

o Initiate a review of its maquiladora operations, addressing issues
such as environmental health and safety, or fair employment and wage
practices, as well as standards of living and community impact; and

o Prepare a report with recommendations for changes in light of the
findings

We will SUPPORT these resolutions.

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MONEY LAUNDERING

In order to prevent money laundering, shareholders have asked financial
institutions not to engage in financial transactions, including no correspondent
or payable-through accounts, for any financial institution that is not willing
to provide the identity and address of the participants in transactions or
relationships or the identity of the beneficial ownership of funds. We will
SUPPORT these resolutions.

NIGERIA, CHAD, AND CAMEROON

Corruption and instability have historically plagued the governments of Nigeria,
Chad, and Cameroon. Human rights groups have denounced these countries' human
rights records. Shareholders have asked companies with operations in these
states to report on their businesses there and their relationships with the
government, or to develop guidelines for their operations in that country. We
will SUPPORT these resolutions.

NORTHERN IRELAND -- MACBRIDE PRINCIPLES

The International Commission of Jurists has cited employment discrimination as
one of the major causes of conflict in Northern Ireland. Shareholders have asked
companies to make all lawful efforts to implement and/or increase activity on
each of the nine MacBride Principles (equal employment opportunity principles).
We will SUPPORT these resolutions.

QUESTIONABLE OVERSEAS PAYMENTS

U.S. corporations can provide valuable goods and services to developing
countries that help them attain a higher standard of living. At the same time,
corporations doing business in these countries must be certain they are not
violating provisions of the Foreign Corrupt Practices Act that prohibit the
accepting of bribes and other questionable payments. Shareholders have asked
companies to audit their foreign contracts to assure that no violations of the
Foreign Corrupt Practices Act are occurring. We will SUPPORT these resolutions.

SOUTH AFRICA

We immediately answered Nelson Mandela's October 1993 call to reinvest in South
Africa by removing our prohibitions on investments in companies with operations
there. However, pressure on American corporations with any business, even
indirect, in South Africa remains an effective tool for human rights advocates.
U.S. shareholders have advocated responsible investment in the country and have
asked companies to commit themselves to uphold the South African Council of
Churches Code of Conduct for corporations doing business there. We will SUPPORT
these resolutions.

TIBET

Since 1950, China has occupied Tibet. Human rights activists have protested
China's policies and practices in that country. From within Tibet there has been
substantial opposition to Chinese rule. Shareholders have asked corporations to
review plans for operating in Tibet in light of their policies on human rights.
We will SUPPORT these resolutions.

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MILITARISM AND VIOLENCE

COMMITMENT TO PEACE AND TO PLANNING FOR PEACETIME PRODUCTION

With the end of the Cold War, defense contractors should turn their attention to
nonmilitary markets and to converting military technology to civilian uses.
Shareholders have asked for reports on military sales, conversion of military
production to civilian purposes, and diversification plans to civilian
production. We will SUPPORT these resolutions.

HANDGUN SALES

Violence in the U.S. has increasingly become a major concern. Tens of thousands
of Americans die annually due to gunfire, including many children. Restricting
easy access to guns is one way of reducing the possibility of gun violence. We
will SUPPORT resolutions that ask certain mainstream retail companies to stop
selling handguns and related ammunition, and to return all handgun inventories
and related ammunition to their manufacturers.

VIOLENCE ON TELEVISION

Children's television programming recently set an all-time record of 32 violent
acts per hour. By the time children finish elementary school, on average they
have watched 8,000 murders and 100,000 acts of violence. Shareholders have asked
media companies and program sponsors for reports on standards for television
program production and mechanisms for monitoring violent programming. We will
support these resolutions.

WORKPLACE VIOLENCE

According to the Bureau of Labor Statistics Census of Fatal Occupational
Injuries, 15% of fatal work injuries were caused by homicide in 1999. The Bureau
also reported that violent acts were the second leading cause of workplace
fatalities among female workers in 1999, accounting for 33% of such fatalities.
In keeping with the recommendations of the U.S. Occupational Safety and Health
Administration, shareholders have asked corporations to develop violence
prevention programs in the workplace. We will SUPPORT these resolutions.

TOBACCO

INSURANCE AND HEALTHCARE COMPANIES INVESTING IN TOBACCO

Shareholders have asked insurance and healthcare company boards to report on the
appropriateness of investments in the tobacco industry. They have also asked for
reports on the impact of smoking on benefit payments for death, disease, and
property loss. Shareholders have also asked insurance companies and healthcare
providers not to invest in the stocks of tobacco companies. We will SUPPORT
these resolutions.

LIMITATION ON TOBACCO SALES TO MINORS AND OTHERS

In the United Kingdom, social investors with a tobacco screen eliminate
supermarket chains because they sell cigarettes. U.S. investors have focused on
tobacco product manufacturers, not retailers. (Domini Social Investments will
not invest in corporations that derive more than 15% of their revenues from the
sale of tobacco products.) However, U.S. shareholders have submitted resolutions
asking management of grocery chains, convenience stores, service stations, and
pharmacies to implement programs to ensure that they do not sell tobacco
products to minors, to restrict the promotion and marketing of tobacco products
both in the U.S. and abroad, and/or to stop selling them altogether. In
addition, shareholders have asked

B-21

tobacco companies (which the Domini 400 Social IndexSM does not include) to
limit sales of tobacco products to youth in developing countries and to tie
executive compensation to the company's success in achieving federally mandated
decreases in teen smoking. Shareholders have also asked tobacco companies to
adopt a policy of alerting pregnant women to the dangers of smoking. We will
SUPPORT these resolutions.

SALES OF NON-TOBACCO PRODUCTS TO TOBACCO INDUSTRY

Shareholders have asked companies making significant sales of non-tobacco
products to the tobacco industry to study the effects of ending these
transactions or to stop immediately. Shareholders have also asked companies to
study the health impact of certain products sold to the tobacco industry that
become part of tobacco products. We will SUPPORT these resolutions.

SMOKE-FREE RESTAURANTS

Exposure to secondhand smoke from cigarettes can be harmful to the health of
nonsmokers. An increasing number of restaurants are banning smoking on their
premises. Shareholders have asked restaurant companies to adopt a smoke-free
policy. We will SUPPORT these resolutions.

TOBACCO ADVERTISING

Tobacco is among the most heavily advertised products in the U.S. Shareholders
have asked media companies that profit from cigarette advertising to:

o Develop policies and practices that would ensure that cigarette
advertising is not manipulative or misleading;

o Voluntarily adopt the 1996 Food and Drug Administration regulations
pertaining to tobacco advertising;

o Assure that tobacco ads are not youth-friendly;

o Assess the financial impact of refusing to run tobacco ads; and

o Develop counter-tobacco ad campaigns funded from the revenues they
receive from tobacco advertising.

Shareholders have also asked media firms to review and report on the ways in
which smoking is portrayed in films and television programming. We will SUPPORT
these resolutions.

TOBACCO SMOKE IN THE ENVIRONMENT

The hazards of tobacco smoke in the environment -- particularly indoors -- are
well documented. Shareholders have requested that a company refrain from efforts
to undermine legislation geared toward restricting smoking in public places.
Shareholders have also asked restaurant and airline companies to adopt
smoke-free policies and they have requested that new fast-food franchises'
facilities be smoke-free. We will SUPPORT these resolutions.

II. DOMINI SOCIAL INVESTMENTS' PROXY VOTING PROCEDURES

These Procedures are designed to ensure that all proxies for which Domini Social
Investments LLC ("Domini") has voting authority are cast in the best interests
of our clients and Domini Funds' shareholders, to whom we owe a fiduciary duty.

Domini has contractually delegated the implementation of its voting policies to
two unaffiliated third parties -- KLD Research & Analytics, Inc. ("KLD") and
Social Investment Research Services ("SIRS"),

B-22

a division of Institutional Shareholder Services, as described below. Domini
retains oversight of the proxy voting function through an internal Proxy Voting
Committee, chaired by Domini's General Counsel. Domini retains ultimate
authority to set voting policies and to vote the proxies of the Domini Funds.

Proxy Voting Committee

Primary responsibility for the proxy voting function at Domini rests with
Domini's General Counsel ("GC"). An internal Proxy Voting Committee, chaired by
the GC, has been established to exercise oversight of the proxy voting function.
The Committee meets on an as-needed basis as issues arise, but at least
quarterly. The Committee operates through a consensus decision-making process.
The Committee's primary responsibilities include the following:

1. Developing the Proxy Voting Guidelines: These Guidelines, which set
voting policies for all securities for which Domini has authority to
vote, are updated on an annual basis (generally before the start of
the proxy season in the Spring), and from time to time as necessary,
to reflect new issues raised by shareholder activists, regulatory
changes and other developments.1 The Committee is also responsible for
developing procedures and additional policies, where necessary, to
ensure effective implementation of the Guidelines.

2. Evaluation of vendors: To ensure that proxies are being voted in a
timely fashion, and in accordance with the Guidelines, the Committee
will receive and review reports from KLD and SIRS on an annual, and an
as-needed basis.

3. Identify and address conflicts of interest where they arise (See
"Conflicts of Interest" below)

4. Determine how to vote in certain circumstances: Where the Guidelines
are silent on an issue, where there are unique circumstances that
require further examination, or where the Guidelines require a
"case-by-case" analysis and KLD does not have sufficient guidance to
resolve the issue, the Committee will meet to determine how to vote.

In making these voting determinations, the Committee may draw upon a
variety of materials including, for example, SIRS analyses, newspaper
reports, academic studies, non-governmental organizations with
expertise in the particular issue being voted on, affected
stakeholders, and corporate SEC filings, including management's
position on the issue in question.

5. Reporting to Clients (where client is a fund, to the Domini Funds
Board of Trustees): The Committee is responsible for ensuring that the
following reporting duties are performed: (a) Annual preparation and
filing of Form N-PX, containing an annual record of all votes cast for
each mutual fund client. The Form will be posted to Domini's website
and on the SEC's website at www.sec.gov; (b) Domini's web page
containing an ongoing record of all votes cast for the Domini Funds
each year; (c) Responding to client requests for proxy voting
information; (d) Annual review and update of proxy voting information
in Form ADV, Part II, the Statement of Additional Information for the
Domini Funds and the Funds' shareholder reports; (e) Where there have
been material changes to the Policies or Procedures, the Committee
will ensure that these changes are posted to the Domini website, and
communicated to clients; (f) Ensuring that all new clients receive a
copy of the most recent Form ADV, containing a concise summary of
Domini's proxy voting policies and procedures.

----------
(1) Domini applies one set of voting guidelines to all of its current clients.
We are willing to work with reasonable special instructions from clients,
subject to resource limitations and overall consistency with our investment
approach.

B-23

6. Recordkeeping: The Committee will keep the following records: (a) the
Procedures and Policies, as amended from time to time; (b) proxy
statements received regarding client securities (via hard copies held
by SIRS or electronic filings from the SEC's EDGAR filing system); (c)
records of votes cast on behalf of Domini clients (in conjunction with
SIRS); (d) records of a client's written request for information on
how Domini voted proxies for the client, and any written response to
an oral or written client request for such information; (e) any
documents prepared or reviewed by Domini that were material to making
a decision how to vote, or that memorialized the basis for that
decision. These records will be maintained in an easily accessible
location for at least five years from the end of the fiscal year
during which the last entry was made on such record. For the first two
years, such records will be stored at the offices of Domini Social
Investments.

KLD Research & Analytics, Inc. ("KLD")

Domini has delegated day-to-day responsibility for the implementation of its
Guidelines to its social research provider, KLD. KLD owns and maintains the
Domini 400 Social IndexSM, the Index upon which the Domini Social Equity Fund(R)
is based. KLD is responsible for reviewing SIRS voting recommendations for each
proposal before the vote is cast. KLD has authority to override SIRS
recommendation if it believes that the recommendation violates Domini's
Guidelines.

Where issues arise that are not explicitly addressed by the Guidelines, KLD has
discretion to determine positions that it believes are in the spirit of the
Guidelines and the social screening policies applied to the Domini Funds. In
some cases, KLD will seek guidance from Domini. In certain special
circumstances, KLD has been instructed by Domini to defer the decision to Domini
for review by the Proxy Voting Committee.

KLD assists in the development of Domini's Guidelines and works with SIRS on
their implementation.

In an effort to enhance the influence of Domini's proxy voting, KLD sends
letters on behalf of the Domini Funds to corporations whenever it votes against
a board slate due to a lack of diversity and whenever it votes in support of a
shareholder resolution to abolish a staggered board structure.

Social Investment Research Service (a division of Institutional Shareholder
Services) ("SIRS")

SIRS, and the clients' custodian, monitors corporate events, makes voting
recommendations to KLD based on Domini's Guidelines, and casts the votes for
Domini's clients subject to KLD's approval. SIRS is also responsible for
maintaining complete records of all votes cast, including hard copies of all
proxies received, preparing voting reports for Domini, and maintaining Domini's
web page containing an ongoing record of all votes cast for the Domini Social
Index Portfolio each year. On occasion, SIRS provides consulting services to
Domini on the development of proxy voting policies.

Conflicts of Interest

Although Domini Social Investments does not currently manage any pension plans,
administer employee benefit plans, or provide brokerage, underwriting, insurance
or banking services, there are occasions where potential conflicts of interest
do arise. For example, potential conflicts of interest may present themselves
where:

o A Domini fund is included in the 401(k) plan of a client holding, or
Domini may be actively seeking to have one of its funds included in
the 401(k) plan of a client holding;

B-24

o A significant vendor, business partner, client or Fund shareholder may
have a vested interest in the outcome of a proxy vote; or

o A Domini executive or an individual involved in the proxy voting
function may have a personal or business relationship with the
proponent of a shareholder proposal or an issuer, or may otherwise
have a vested interest in the outcome of a proxy vote.

Our proxy voting policies and procedures are designed to ensure that all proxies
are voted in the best interests of all of our clients and Fund shareholders by
isolating the proxy voting function from any potential conflicts of interest.
For example:

o The majority of our Guidelines are pre-determined, meaning that they
outline an issue and specify a specific vote. With few exceptions,
these policies are applied as drafted.

o Our policies are implemented by unaffiliated third parties that are
generally not privy to the business or personal relationships that may
present a conflict of interest.

In most instances, therefore, votes are cast according to pre-determined
policies, and potential conflicts of interest cannot influence the outcome of
our voting decisions. There are, however, several voting guidelines that require
a case-by-case determination, and other instances where we may vary from our
pre-determined policies where we believe it is in our clients and Fund
shareholders' best interests to do so.

Where a proxy voting decision is decided in-house by Domini's Proxy Voting
Committee, the following procedures have been adopted to ensure that conflicts
of interest are identified and appropriately addressed:

1. Before each meeting of the Committee, each participant identifies any
conflicts of interest he/she is aware of, including any contacts from
outside parties or other members of Domini's staff or management team
regarding the proxy issue in question.

2. If conflicts are identified, and they are of a personal nature, that
individual will be asked to remove him/herself from the
decision-making process.

3. Domini is a relatively small firm, and it is not possible to
completely insulate the members of the Committee from all potential
conflicts of interest relating to Domini's business. If the conflicts
are related to Domini's business, therefore, the Committee will:

a) Where practical, present the conflict to the client and seek
guidance or consent to vote the proxy (where the client is a
mutual fund, the Committee will seek guidance from the Domini
Funds' independent trustees).(2)

b) Where Domini is unable to pursue (a), above, or at the direction
of the client, the Committee will delegate the decision to KLD,
who will work with SIRS to cast the vote. Domini will take all
necessary steps to insulate KLD and SIRS from knowledge of the
specific nature of the conflict so as not to influence the voting
decision.

--------
(2) In some cases, disclosure of the specific nature of the conflict may not be
possible because disclosure is prohibited by Domini's privacy policy (where, for
example, the conflict concerns a client or Fund shareholder) or may not
otherwise be in the best interests of a Domini client, disclosure may violate
other confidentiality obligations of the firm, or the information to be
disclosed may be proprietary and place Domini at a competitive disadvantage. In
such cases, we will discuss the situation with the client and seek guidance.

B-25

c) The Committee will keep records of how the conflict was
identified and what resolution was reached. These records will be
available for review at the client's request.

III. HOW TO OBTAIN DOMINI'S PROXY VOTING RECORD

Please visit www.domini.com/shareholder-advocacy/Proxy-Voting/index.htm to
obtain, free of charge:

o All proxy votes cast for the Domini Funds this year, in an easily
sortable database (we attempt to post our votes two weeks prior to
each annual meeting, although this is not always possible)

o After August 31, 2004, an annual record of all votes cast for the
Domini Funds will be available at Domini's website, and on the
Securities and Exchange Commission's website at www.sec.gov.

Domini's Proxy Voting Policies and Procedures are subject to change without
notice. They will be reviewed and updated where necessary, on at least an annual
basis and will be posted to Domini's website at www.domini.com/shareholder-
advocacy/Proxy-Voting/index.htm.

PART C

Item 23. Exhibits

(8) a Second Amended and Restated Declaration of Trust of the
Registrant.

(8) b Amended and Restated By-Laws of the Registrant.

(7) d(1) Management Agreement between the Registrant and Domini Social
Investments LLC ("Domini") with respect to Domini Social Bond
Fund.

(7) d(2) Submanagement Agreement between Domini and ShoreBank with
respect to Domini Social Bond Fund.

e(1) Amended and Restated Distribution Agreement with respect to
Investor Shares between the Registrant and DSIL Investment
Services LLC ("DSILD"), as distributor.

e(2) Distribution Agreement with respect to Class R Shares between
the Registrant and DSILD, as distributor.

(3) g(1) Custodian Agreement between the Registrant and Investors Bank &
Trust Company ("IBT"), as custodian.

(7) g(2) Letter Agreement adding Domini Social Bond Fund to the
Custodian Agreement between the Registrant and IBT, as
custodian.

(9) g(3) Amendment to the Custodian Agreement between the Registrant and
IBT, as custodian.

g(4) Amendment to the Custodian Agreement between the Registrant and
IBT, as custodian.

(4) h(1) Transfer Agency Agreement between the Registrant and PFPC Inc.
("PFPC").

(1) h(2) Sponsorship Agreement between the Registrant and Domini, as
sponsor.

(7) h(3) Letter Agreement adding Domini Social Bond Fund to the Transfer
Agency Agreement between the Registrant and PFPC.

h(4) Expense Limitation Agreement with respect to the Domini Social
Equity Fund.

h(5) Expense Limitation Agreement with respect to the Domini Social
Bond Fund.

(7) h(6) Administration Agreement between the Registrant and Domini.

(2)(5) i Opinion and consent of counsel.

j Consent of independent auditors.

m Amended and Restated Distribution Plan of the Registrant with
respect to Investor Shares.

(9) n Multiple Class Plan of the Registrant.

(6) p(1) Code of Ethics of the Registrant, Domini Social Index
Portfolio, and Domini Institutional Trust.

(9) p(2) Code of Ethics of Domini and DSILD.

(8) p(3) Code of Ethics of SSgA Funds Management, Inc.

(8) p(4) Code of Ethics of ShoreBank.

(2)(3) q Powers of Attorney.

------------------------

(1) Incorporated by reference from Post-Effective Amendment No. 11 to the
Registrant's Registration Statement as filed with the SEC on November
25, 1997.

(2) Incorporated by reference from Post-Effective Amendment No. 13 to the
Registrant's Registration Statement as filed with the SEC on
September 29, 1999.

(3) Incorporated by reference from Post-Effective Amendment No. 14 to the
Registrant's Registration Statement as filed with the SEC on November
23, 1999.

(4) Incorporated by reference from Post-Effective Amendment No. 15 to the
Registrant's Registration Statement as filed with the SEC on November
30, 1999.

(5) Incorporated by reference from Post-Effective Amendment No. 16 to the
Registrant's Registration Statement as filed with the SEC on January
13, 2000.

(6) Incorporated by reference from Post-Effective Amendment No. 17 to the
Registrant's Registration Statement as filed with the SEC on March
31, 2000.

(7) Incorporated by reference from Post-Effective Amendment No. 19 to the
Registrant's Registration Statement as filed with the SEC on November
28, 2000.

(8) Incorporated by reference from Post-Effective Amendment No. 20 to the
Registrant's Registration Statement as filed with the SEC on
September 28, 2001.

(9) Incorporated by reference from Post-Effective Amendment No. 23 to the
Registration Statement as filed with the SEC on September 29, 2003.

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 Second
Amended and Restated Declaration of Trust, incorporated herein by reference; and
(b) Section 4 of the Distribution Agreements by and between the Registrant and
DSIL Investment Services LLC, filed as exhibits hereto.

The trustees and the 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.

Item 26. Business and Other Connections of Investment Adviser

Domini Social Investments LLC ("Domini") is a Massachusetts limited
liability company with offices at 536 Broadway, 7th Floor, New York, New York
10012, and is registered as an investment adviser under the Investment Advisers
Act of 1940, as amended. The members of Domini are James E. Brooks; Amy L.
Domini; Steven D. Lydenberg; Committed Capital, LLC; and Domini Holdings LLC.
The officers of Domini are Amy L. Domini and Carole M. Laible.

Other Business, Profession, Vocation, Principal
Name or Employment During the Business Address
Past Two Fiscal Years

James E. Brooks President, Equity Resources Group, Inc. Four Arlington Street
(real estate investment) Cambridge, MA 02140

Amy L. Domini Private Trustee, Loring, Wolcott & 230 Congress Street
Coolidge (fiduciary) Boston, MA 02110

Manager, DSIL Investment Services LLC 536 Broadway, 7th Floor
(broker-dealer) New York, NY 10012

Carole M. Laible President, CEO, Chief Compliance 536 Broadway, 7th Floor
Officer, Chief Financial Officer, New York, NY 10012
Secretary, and Treasurer, DSIL
Investment Services LLC (broker-dealer)

Steven D. Lydenberg Director, KLD Research & Analytics, Inc. 536 Broadway, 7th Floor
(social research provider) (until 2003) New York, NY 10012

Committed Capital, LLC N/A 8 Oak Drive
Sherman, CT 06784

Domini Holdings LLC N/A 536 Broadway, 7th Floor
New York, NY 10012

SSgA Funds Management, Inc. ("SSgA") is a wholly owned subsidiary of
State Street

C-2

Corporation, with its main offices at State Street Financial Center, One Lincoln
Street, Boston, MA 02111. SSgA is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended. The directors and officers of SSgA
are:

Name and Capacity Other Business, Profession, Vocation, Principal
with SSgA or Employment During the Business Address
Past Two Fiscal Years

Agustin Fleites Senior Principal, State Street Global State Street Financial Center
President & Director Advisors, a division of State Street One Lincoln Street
Bank and Trust Company; Senior Boston, MA 02111
Principal, State Street Global Markets
LLC, Boston, MA

Thomas P. Kelly Principal and Comptroller, State Street State Street Financial Center
Treasurer Global Advisors, a division of State One Lincoln Street
Street Bank and Trust Company Boston, MA 02111

Mark J. Duggan Principal and Associate Counsel, State State Street Financial Center
Chief Legal Officer Street Global Advisors, a division of One Lincoln Street
State Street Bank and Trust Company Boston, MA 02111

Peter A. Ambrosini Senior Principal and Chief Compliance State Street Financial Center
Chief Compliance Officer and Risk Management Officer, State One Lincoln Street
Street Global Advisors, a division of Boston, MA 02111
State Street Bank and Trust Company

Timothy Harbert Executive Vice President, State Street State Street Financial Center
Director Bank and Trust Company; Chairman One Lincoln Street
and Chief Executive Officer, State Boston, MA 02111
Street Global Advisors, a division of
State Street Bank and Trust Company

Mitchell H. Shames Senior Principal and Chief Counsel, State Street Financial Center
Director State Street Global Advisors, a One Lincoln Street
division of State Street Bank and Trust Boston, MA 02111
Company

ShoreBank is a wholly owned subsidiary of ShoreBank Corporation, with
its main offices at 7054 S. Jeffery Boulevard, Chicago, IL 60649. The Investment
Advisory Department of ShoreBank is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended. The officers of The Investment
Advisory Department of ShoreBank are:

Name and Capacity Other Business, Profession, Vocation, Principal
with ShoreBank or Employment During the Business Address
Past Two Fiscal Years
David J. Oser Corporate Secretary, ShoreBank 7054 S. Jeffery Boulevard
Senior Vice President, Corporation Chicago, IL 60649
Investments, and Corporate
Secretary

Daniel J. Hollowed N/A 7054 S. Jeffery Boulevard
Senior Vice President, Chief Chicago, IL 60649
Financial Officer

C-3

Item 27. Principal Underwriters

(a) DSIL Investment Services LLC is the distributor for the
Registrant. DSIL Investment Services LLC serves as the
distributor or the placement agent for the following other
registered investment companies: Domini Institutional Social
Equity Fund and Domini Social Index Portfolio.

(b) The information required by this Item 27 with respect to each
manager 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, as amended.

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 536 Broadway, 7th Floor
(manager) New York, NY 10012

SSgA Funds Management, Inc. State Street Financial Center
(submanager) One Lincoln Street
Boston, MA 02111

ShoreBank 7054 S. Jeffery Boulevard
(submanager) Chicago, IL 60649

DSIL Investment Services LLC 536 Broadway, 7th Floor
(distributor) New York, NY 10012

Investors Bank & Trust Company 200 Clarendon Street
(custodian) Boston, MA 02116

PFPC Inc. 4400 Computer Drive
(transfer agent) Westborough, MA 01581

Item 29. Management Services

Not applicable.

Item 30. Undertakings

Not applicable.

C-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant
certifies that it meets all requirements for effectiveness of this Registration
Statement under Rule 485(b) under the Securities Act of 1933 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned, duly
authorized, in the City of New York and the State of New York on the 26th day of
November, 2003.

DOMINI SOCIAL INVESTMENT TRUST
By:

/s/ Amy L. Domini
------------------------------
Amy L. Domini
President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated below on November 26, 2003.

Signature Title

/s/ Amy L. Domini President (Principal Executive Officer) and
------------------------------ Trustee of Domini Social Investment Trust
Amy L. Domini

/s/ Carole M. Laible Treasurer (Principal Accounting and Financial
------------------------------ Officer) of Domini Social Investment Trust
Carole M. Laible

Julia Elizabeth Harris* Trustee of Domini Social Investment Trust
------------------------------
Julia Elizabeth Harris

Kirsten S. Moy* Trustee of Domini Social Investment Trust
------------------------------
Kirsten S. Moy

William C. Osborn* Trustee of Domini Social Investment Trust
------------------------------
William C. Osborn

Karen Paul* Trustee of Domini Social Investment Trust
------------------------------
Karen Paul

Gregory A. Ratliff* Trustee of Domini Social Investment Trust
------------------------------
Gregory A. Ratliff

Frederick C. Williamson, Sr.* Trustee of Domini Social Investment Trust
------------------------------
Frederick C. Williamson, Sr.

*By:

/s/ 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 Registration
Statement on Form N-1A (File No. 33-29180) of Domini Social Investment Trust to
be signed on its behalf by the undersigned, duly authorized, in the City of New
York and the State of New York on the 26th day of November, 2003.

DOMINI SOCIAL INDEX PORTFOLIO
By:

/s/ Amy L. Domini
-----------------------------
Amy L. Domini
President

This Registration Statement on Form N-1A of Domini Social Investment
Trust has been signed below by the following persons in the capacities indicated
below on November 26, 2003.

Signature Title

/s/ Amy L. Domini President (Principal Executive Officer) and
------------------------------- Trustee of Domini Social Index Portfolio
Amy L. Domini

/s/ Carole M. Laible Treasurer (Principal Accounting and Financial
------------------------------- Officer) of Domini Social Index Portfolio
Carole M. Laible

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

Frederick C. Williamson, Sr.* Trustee of Domini Social Index Portfolio
-------------------------------
Frederick C. Williamson, Sr.

*By:
/s/ 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

e(1) Amended and Restated Distribution Agreement with respect
to Investor Shares between the Registrant and DSIL
Investment Services LLC, as distributor.

e(2) Distribution Agreement with respect to Class R Shares
between the Registrant and DSIL Investment Services LLC,
as distributor.

g(4) Amendment to the Custodian Agreement between the
Registrant and IBT, as custodian.

h(4) Expense Limitation Agreement with respect to the Domini
Social Equity Fund.

h(5) Expense Limitation Agreement with respect to the Domini
Social Bond Fund.

j Consent of independent auditors.

m Amended and Restated Distribution Plan of the Registrant
with respect to Investor Shares.

Instructions

Mail⁴

By Mail you may:

Domini Funds
P.O. Box 9785
Providence, RI 02940

Buy
Sell
Exchange

To buy shares:• For your initial investment, complete an Account Application and mail it with your check.
• For subsequent investments, fill out the investment slip included with trade confirmations or account statements, or send a note with your check indicating the Fund name, the account number, and the dollar amount.
• Your check must be made payable to "Domini Funds." Always include your account number on your check. Note: For our mutual protection, the Funds cannot accept checks made payable to third parties, starter checks, or travelers checks.
• Please note that shares purchased by check will not be available for you to sell for up to 8 business days after purchase.
To sell shares:
You must include the following information or your request may be returned:• The Fund name
• The Fund account number
• The dollar amount or number of shares
• The signatures of all authorized signers exactly as they appear on the initial application
• A Medallion Signature Guarantee, if required (see "Additional Information on Selling Shares" below)
To exchange shares:
You must include the following information or your request may be returned:• The Fund names
• The Fund account numbers
• The dollar amount or number of shares
• The signatures of all authorized signers exactly as they appear on the initial application