N-CSR 1 file1.htm



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM N-CSR


CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES



Investment Company Act File Number 811-5823


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)



Amy L. Domini

Domini Social Investments LLC

536 Broadway, 7th Floor

New York, New York 10012

(Name and Address of Agent for Service)



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


Date of Fiscal Year End: July 31


Date of Reporting Period: January 31, 2007











Item 1.

Reports to Stockholders.


A copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 follows.


SEMI-ANNUAL REPORT 2007

JANUARY 31, 2007

 

(UNAUDITED)

DOMINI SOCIAL EQUITY FUND®

INVESTOR SHARES & CLASS R SHARES

DOMINI EUROPEAN SOCIAL EQUITY FUNDSM

INVESTOR SHARES

DOMINI PACASIA SOCIAL EQUITY FUNDSM

INVESTOR SHARES

DOMINI EUROPACIFIC SOCIAL EQUITY FUNDSM

INVESTOR SHARES

DOMINI SOCIAL BOND FUND®

INVESTOR SHARES

 


 

 

TABLE OF CONTENTS

 

2

 

Letter from the President

4

 

Domini News

5

 

The Way You Invest Matters: Poverty

10

 

The Way You Invest Matters: Activism

 

 

Fund Performance and Holdings

12

 

Economic and Market Background

14

 

Domini Social Equity Fund

20

 

Domini European Social Equity Fund

26

 

Domini PacAsia Social Equity Fund

33

 

Domini EuroPacific Social Equity Fund

41

 

Domini Social Bond Fund

48

 

Expense Example

52

 

Financial Statements

 

 

Domini Social Equity Trust

 

 

Domini European Social Equity Trust

 

 

Domini PacAsia Social Equity Trust

 

 

Domini EuroPacific Social Equity Trust

64

 

Financial Statements

 

 

Domini Social Equity Fund

 

 

Domini European Social Equity Fund

 

 

Domini PacAsia Social Equity Fund

 

 

Domini EuroPacific Social Equity Fund

81

 

Financial Statements

 

 

Domini Social Bond Fund

88

 

Board of Trustees’ Consideration of Management and

 

 

Submanagement Agreements

95

 

Proxy Voting Information

95

 

Quarterly Portfolio Schedule Information

 

 

T HE WAY YOU INVEST MATTERS
 

LETTER FROM THE PRESIDENT

Dear Fellow Shareholders:

With the launch of two more international funds in 2006, Domini Social Investments moved decisively into assessing corporate social responsibility at a global level. Our European and PacAsia funds are the only socially responsible regional funds offered by a U.S. investment advisor. Designing them has enabled us to address war, poverty, and environmental degradation — themes that are integrated throughout our Global Investment Standards — on a scale we have never before faced.

Social investing has always had an international dimension. In the 1980s, during the anti-apartheid movement, concerned investors pressed U.S. companies to report on their activities in South Africa. By applying clear behavior standards to the companies in their portfolios, investors played a key role in bringing about freedom for the South African majority. But the issues facing us now are myriad and complex.

Today we are called to action by the horrors of the ongoing genocide in Sudan. In a recent column, Nicholas Kristof of the New York Times encouraged readers to ask whether their investments are “helping finance the janjaweed militias that throw babies into bonfires in Darfur and Chad.” Though not usually a supporter of economic sanctions, Kristof argued that Sudan is “a rare instance where narrowly focused divestment makes practical as well as moral sense.”

We at Domini first spoke out on the Darfur genocide in early 2005. We sent out an Action Alert asking shareholders to join us in supporting economic sanctions and diplomatic initiatives to put pressure on the Sudanese government.* Like you, we do not wish to own companies that support or profit from unspeakable abuses of human dignity.

But social investing is not just about standing up against abuses. It is also about helping to create opportunities. By encouraging companies to offer fair wages, pay their fair share of taxes, work in partnership with community organizations, and take other initiatives, we can make a difference.

For example, a few years ago we learned that families of coffee growers in many countries were facing starvation because coffee prices had plunged. We began dialogue with one of the world’s largest coffee roasters. Eventually they agreed to begin buying Fair Trade Certified® coffee, paying growers a guaranteed minimum price for their crop. This shields farmers and their families from the fluctuations of the market, allows them to plan for the future, and helps make the coffee industry more sustainable. By investing internationally we will be able to find new ways of using our influence to make people’s lives better.

Direct community investing offers some of the most concrete and inspiring examples of investors’ power to transform lives and neighborhoods. In 2006, microfinance — one of the most targeted and effective forms of

 

 

2

 

 

THE WAY YOU INVEST MATTERS
 

community investing — finally came to worldwide attention when Muhammad Yunus and Grameen Bank of Bangladesh won the Nobel Peace Prize. In his Nobel acceptance speech, Yunus said, “Once the poor can unleash their energy and creativity, poverty will disappear very quickly.”

In this report, we highlight companies in the Domini Funds that work to expand their business opportunities by drawing on that energy and creativity. The results are helping to alleviate poverty and encouraging sustainable economic development worldwide.

As a Domini shareholder, you are doing your part to help realize this vision. Thank you for your trust in us, and for your commitment to creating a better future for everyone.

Very truly yours,


Amy Domini

amy@domini.com

______________

*

To receive Action Alerts, visit www.domini.com, go to the “About Domini” section, and select “Domini Updates.”

 

THE DARFUR CRISIS

Perhaps the most urgent humanitarian crisis in the world is taking place in the Darfur region of Sudan. The genocidal violence by government-backed militias has included the mass murder of women and children, the destruction of villages, and the displacement of hundreds of thousands of Sudanese.

Domini’s Global Investment Standards express our fundamental commitment to building a world that values and protects human dignity. The Darfur crisis obliges us and other investors to look closely at not just whether, but also how, a company may pursue business activities in Sudan. In our evaluation, we consider the nature and extent of a company’s activities, whether it operates primarily outside government stronghold areas, whether the company has supported the efforts of humanitarian organizations working to address human rights abuses in Sudan, and whether the company has been transparent about its operations and their impact.

Our investment decisions are grounded in our standards and based upon our own research. We seek to avoid investing in companies whose activities provide direct or substantial indirect benefits to the Sudanese government, or that are complicit in human rights abuses in Sudan. To learn more about Domini’s policies, visit www.domini.com. For information on other ways you can help, visit www.savedarfur.org and www.sudandivestment.org.

 

 

3

 

 

T HE WAY YOU INVEST MATTERS
 

DOMINI NEWS

Domini Named as World-Changing Company: Plenty magazine, in its February 2007 issue, honored Domini as one of 20 companies that are changing the world, citing our use of social and environmental investment standards, and our activism work with such companies as Coca-Cola, Dell, and JPMorgan Chase.

Domini Among “Most Activist”: Domini was one of only four fund families rated “most activist” in a comprehensive study of the proxy voting activity of 45 mutual fund families, conducted by The Corporate Library, a respected corporate governance expert. In 2001, Domini petitioned the SEC for the rule that now requires funds to disclose their votes, making such studies possible.

Active Management Strategy: On November 30, 2006, the Domini Social Equity Fund, formerly an index fund, transitioned to an active management strategy, combining Domini’s social and environmental research with Wellington Management’s quantitative stock selection and portfolio construction.

First Anniversary for European Fund: The Domini European Social Equity Fund completed its first year on October 3, 2006, and gained attention from Money magazine (January 2007) and the Wall Street Journal (January 4, 2007) for strong 2006 performance.

New International Funds: Domini launched two new international funds: Domini PacAsia Social Equity Fund and Domini EuroPacific Social Equity Fund. Domini is the only investment advisor in the U.S. to offer regional mutual funds that include social and environmental as well as financial standards.

Past performance is no guarantee of future results. The returns referenced above represent past performance after all expenses. Economic and market conditions change, and both will cause investment return, principal value, and yield to fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Certain fees payable during the period were waived, and the Fund’s total return would have been lower had these not been waived. Current performance may be lower or higher than the performance data referenced. For performance information current to the most recent month-end, call 1-800-762-6814 or visit www.domini.com. A 2.00% redemption fee is charged on sales or exchanges of shares made less than 60 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Performance data referenced above does not reflect the deduction of this fee, which would reduce the performance quoted. See the Fund’s prospectus for further information. The Domini Funds are subject to market risks and are not insured. You may lose money.

Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing securities regulations and accounting standards, limited public information, possible changes in taxation, and periods of illiquidity.

 

 

4

 

 

T HE WAY YOU INVEST MATTERS
 

THE WAY YOU INVEST MATTERS: POVERTY

In a world where more than a billion workers earn less than two dollars a day, alleviating poverty is the key to addressing sickness, malnutrition, illiteracy, and other critical and interrelated challenges.

Corporations, through their core business activities, can help lift people out of poverty in a number of ways: by avoiding harmful practices that impoverish struggling communities, by providing employment at a fair wage and products at a fair price, and by helping to enrich the communities on which they depend for their staff and their customers. Additional ways of supporting communities can include building partnerships with community organizations, engaging in creative philanthropy, working honestly and transparently with government, and paying a fair share of taxes.

In this section, we profile companies that are making notable contributions to alleviating poverty in the U.S. and around the world. Whether by providing low-cost loans, insurance, or medicine, or by creating jobs where employment is scarce, each is helping provide poor people with greater opportunities.

Several of the profiled companies participate in an innovative type of finance that has become a global phenomenon. Beginning in 1974, an economics professor named Muhammad Yunus found that by lending small amounts of money to the poor — usually to women — he could help them support themselves by buying a dairy cow, making bamboo stools, or starting other small businesses. Grameen Bank, Yunus’s creation, has now loaned more than $5.3 billion to almost seven million borrowers. In 2006, after social entrepreneurs in dozens of companies worldwide emulated this innovative model, Yunus and Grameen Bank were honored with the Nobel Peace Prize.

As we have said many times, the social and environmental performance of large companies is often mixed and complex. Weighing the positives and negatives, Domini assesses corporate conduct across a broad range of issues, and engages with companies when we believe their behavior needs improvement.

Allianz

Domini European Social Equity Fund

Domini EuroPacific Social Equity Fund

Just as small loans, as pioneered by Grameen Bank, can offer poor people opportunity to develop new businesses, small insurance policies can help prevent families from being driven back into poverty by death, illness, or natural disaster.

The German insurance company Allianz introduced “microinsurance” in India through its subsidiary Allianz Bajaj Life Insurance. The company’s

 

 

5

 

 

THE WAY YOU INVEST MATTERS
 

first life insurance product was launched in 2003, and by 2006 it covered more than 100,000 customers. Also in 2006, Allianz and CARE partnered to offer small insurance policies to people of Tamil Nadu, a state in southern India, who were affected by the December 2004 tsunami. The insurance is designed for coastal people who work in fishing, agriculture, and plantations.

An Allianz pilot project in Indonesia offers a product called Payung Keluarga or Family Umbrella, The policy covers the outstanding balance of a loan if the borrower dies, and the borrower’s family receives twice the original loan amount as an additional payout.

Through these innovative ventures, Allianz is developing new ways to extend its core business into new markets and at the same time provide vital financial services in historically underserved communities.

Gilead Sciences

Domini Social Equity Fund

Along with the devastating human toll of HIV/AIDS comes a severe impact on the economic life of families and of countries. The vast majority of people living with AIDS are aged 15 to 49, in what would ordinarily be their prime working years. When breadwinners become sick or die, families sink into poverty. When a devastating disease becomes epidemic, widespread poverty follows in its path.

The U.S. pharmaceutical company Gilead Sciences has based its business model on creating and manufacturing drugs that treat infectious diseases, including AIDS and hepatitis, that disproportionately afflict developing countries. Doing business in developing markets is complex, however, and controversies can develop over issues such as the pricing of drugs and the conduct of clinical trials with weak government oversight.

In 97 developing countries, including every country in Africa, Gilead makes its primary HIV drugs, Truvada and Viread, available at no-profit prices. The company granted eight Indian drug companies the right to produce and sell generic versions of Viread. Gilead has also worked with the Bill and Melinda Gates Foundation and the Centers for Disease Control and Prevention to develop clinical trials of Viread for potential use as a preventive drug.

Procter & Gamble

Domini Social Equity Fund

In 2003, the price of coffee was near a 30-year low, and small coffee farmers could not earn the money they needed to feed their families, send their children to school, buy essential medicines, and stay on their land. After an intensive dialogue that Domini helped lead, Procter & Gamble, one of the world’s largest coffee roasters, began to sell Fair Trade Certified® coffee. The Fair Trade certification system helps to alleviate poverty and hardship by guaranteeing farmers a minimum price per pound

 

 

6  

The Way You Invest Matters: Poverty

 

 

THE WAY YOU INVEST MATTERS
 

for their crop, and by supporting democratically managed cooperatives and more environmentally sound farming techniques.

Total Fair Trade coffee imports to the U.S. have increased from under 10 million pounds in 2002 to more than 60 million pounds in 2005, when imports reached a total retail value of about half a billion dollars. These imports have translated into more than $60 million in cumulative additional income to coffee farmers.

Procter & Gamble has also addressed poverty by promoting better health. Working with the Centers for Disease Control and Prevention, the company developed an easy-to-use water treatment system called PUR, which packages the chemicals used in municipal water systems into small packets or “sachets.” PUR has been used in Bangladesh, Botswana, Haiti, Iran, and Malawi — and in refugee camps in Chad for people fleeing genocide in Sudan.

Santa Cruz Community Credit Union

Domini Social Bond Fund

Founded in 1977, Santa Cruz Community Credit Union is a community development financial institution (CDFI) that offers a comprehensive community development program, including financial literacy programs, Individual Development Accounts, small business loans, and revolving loan funds that support childcare providers and affordable housing.

Though based in the city of Santa Cruz, the credit union also serves the less affluent southern half of Santa Cruz County. In 2005, the credit union opened a “community outreach branch” in downtown Watsonville, where many immigrants and migrant workers live. About half of the new accounts opened that year were by people who had never had a bank account.

Self-Help Credit Union

Domini Social Bond Fund

Self-Help Credit Union, based in North Carolina, is a community development financial institution (CDFI) with a long-standing commitment to small business lending. From 1985 through 2006, the credit union made 2,087 loans of $35,000 or less, for a total of $24,396,138. These loans created 2,533 jobs and maintained 4,341 jobs. By dollar amount, 48% of these loans went to women, 47% to minorities, 46% to rural borrowers, and 41% to low-income borrowers.

Self-Help has also been an active opponent of predatory lending, releasing major studies on high-interest “payday” lending and predatory mortgage loans. The credit union reports that it helped pass the 2001 law that made payday lending illegal in North Carolina.

 

 

 

The Way You Invest Matters: Poverty  

7

 

 

THE WAY YOU INVEST MATTERS
 

Telenor

Domini European Social Equity Fund

As Muhammad Yunus proved through his work with Grameen Bank, by giving a woman in a developing country a small loan to buy a cow, she can sell milk to repay the loan, make a profit, and become a small entrepreneur. Iqbal Quadir, who grew up in a wealthy family in Bangladesh, realized in 1993 that a mobile telephone could fight poverty as effectively as a cow. He searched for a partner in his project but was rejected repeatedly until he asked the Norwegian telecommunications company Telenor, then a state-owned phone provider.

The Norwegian government was then laying fiber optic cable along railway lines in Bangladesh — a good start toward a system of mobile transmission towers. Telenor agreed to help Quadir found GrameenPhone in 1997. According to then-CEO Tormod Hermansen, “I’m interested in bottom-up development and saw in this an effective way to help a population to move forward.” Muhammad Yunus has criticized Telenor for its majority ownership of GrameenPhone, arguing that the company should be owned by the people of Bangladesh. We are following this controversy, but believe that it does not detract from GrameenPhone’s remarkable achievements.

As of 2006, GrameenPhone had more than 10 million customers. More than 260,000 “phone lady” entrepreneurs were doing business in more than 50,000 villages throughout Bangladesh, providing a stable livelihood for their families and vital communication services to previously isolated villages. The Village Phone Program has been replicated in countries including Uganda and Rwanda.

Unilever

Domini EuroPacific Social Equity Fund

With headquarters in the Netherlands, Unilever is an international food and personal care company. Project Shakti, a small pilot project launched by Unilever’s Indian subsidiary Hindustan Lever and the government of Andhra Pradesh state, helps train women to sell Hindustan Lever products such as soap, toothpaste, and shampoo.

As of 2005, about 13,000 poor women were selling the company’s products in 50,000 villages. This accounted for about 15% of the company’s rural sales in 12 Indian states. Through this program, Unilever is expanding its business in a growing part of the world, providing useful products to the poor, and providing business opportunities for Indian women.

CARE India has approached the company to promote other small rural businesses. In one state, Hindustan Lever agreed to help create packaging and branding for pickles and spices made by a local group of small-scale entrepreneurs working with CARE.

 

 

8  

The Way You Invest Matters: Poverty

 

 

THE WAY YOU INVEST MATTERS
 

Westpac Banking Corporation

Domini PacAsia Social Equity Fund

Beginning in 2001, the Australian bank Westpac has helped provide much-needed financial services to the indigenous people of Australia’s Cape York Peninsula. The 12,000 people in this isolated region suffer from extreme poverty, unemployment, and substance abuse.

Working with the Balkanu Cape York Development Corporation, the bank sends employees to the region and supports a “business hubs” program that provides small enterprise loans and other services for indigenous ventures. As of 2004, five successful start-up businesses had been launched, including a company that offers rainforest walking tours, with another forty being incubated. In December 2006, Westpac reported having assessed plans for a cattle station, a camping ground, and a crocodile watching cruise.

Westpac has also partnered with the nonprofit Opportunity International Australia to provide microfinance and enterprise development services to people in Tamil Nadu, India, who were affected by the tsunami of December 2004.

Unlike other mutual funds, the Domini Social Equity Fund, Domini European Social Equity Fund, Domini PacAsia Social Equity Fund, and Domini EuroPacific Social Equity Fund seek to achieve their investment objectives by investing all of their investable assets, respectively, in separate portfolios with identical investment objectives called the Domini Social Equity Trust (DSET), the Domini European Social Equity Trust (DESET), the Domini PacAsia Social Equity Trust (DASET), and the Domini EuroPacific Social Equity Trust (DUSET). References to each Domini Fund include the applicable Domini Trust, unless the context otherwise requires.

The holdings discussed above can be found in the portfolios of the Domini Funds, included herein. The composition of the Funds’ portfolios is subject to change.

Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing securities regulations and accounting standards, limited public information, possible changes in taxation, and periods of illiquidity. Some of the Domini Social Bond Fund’s community development investments may be unrated and carry greater credit risks than its other investments.

The preceding profiles should not be deemed an offer to sell or a solicitation of an offer to buy the stock of any of the companies noted, or a recommendation concerning the merits of any of these companies as an investment.

 

 

 

The Way You Invest Matters: Poverty  

9

 

 

T HE WAY YOU INVEST MATTERS
 

THE WAY YOU INVEST MATTERS: ACTIVISM

As Domini shareholders, you make a difference in the world. By applying social and environmental standards to our holdings, Domini and its shareholders create accountability, encourage transparency, spur demand for more information, and reshape the way the world thinks about corporations and their role in our lives. By engaging in dialogue with the companies we invest in, filing shareholder resolutions, and actively voting our proxies, we make our voices heard on a wide range of issues. By investing in underserved communities, we help low-income people buy homes, start businesses, and revitalize their neighborhoods.

Here are a few recent highlights of Domini’s shareholder activism, which each year includes meetings with dozens of companies on a wide range of important issues. (For more information, visit our website, www.domini.com.)

Climate Change: As part of our work with the Carbon Disclosure Project, we contacted more than 200 U.S. and European companies, asking them to disclose their greenhouse gas emissions and climate change policies. Following Domini’s shareholder resolution, Devon Energy, the largest U.S-based independent oil and gas producer, committed to measure and publicly report its greenhouse gas emissions.

Forestry Practices: Greenpeace has charged Kimberly-Clark with buying wood fiber that is cut from old-growth forests in British Columbia. After meetings with Domini, the company commissioned a study to evaluate the feasibility of phasing out its use of wood fiber from sources not certified by the Forest Stewardship Council (FSC). The FSC certifies that wood is produced in a way that does not destroy habitat, pollute water, displace indigenous people, or harm wildlife.

Freedom of Expression on the Internet: Domini joined a multi-stakeholder group that is developing policies on Internet privacy and freedom of expression. The group includes Google, Microsoft, Vodafone, and Yahoo!, as well as human rights organizations and academics. Domini achieved a significant vote of 29% for a resolution (co-filed with Boston Common Asset Management) calling on Cisco Systems to address Internet censorship and surveillance under repressive regimes.

Political Contributions: Domini believes that shareholders have a right to know how the companies they own are influencing the political system. After a 33% vote for a resolution filed by Domini, Verizon committed to annual public disclosure of its political contributions. Hewlett-Packard also agreed to disclose its contributions, in exchange for withdrawal of our resolution (co-filed with Trillium Asset Management).

 

 

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11

 

FUND PERFORMANCE AND HOLDINGS

ECONOMIC AND MARKET BACKGROUND

United States Markets Financial markets in the U.S. were generally strong in the six months ended January 31, 2007, with the S&P 500 Index returning 13.75% and the bond market (measured by the Lehman Brothers Intermediate Aggregate Index, or LBIA) returning 3.44%.

At least in part, this performance reflects a renewed focus by investors on corporate results. During the third quarter of 2006, more than 70% of the companies in the S&P 500 reported earnings above consensus expectations. The six-month period also saw a reversal in the long rise of crude oil prices, in part because of unusually warm weather in the U.S. and Europe, resulting in underperformance for energy stocks.

After five years of economic growth without a sustained increase in wages, the share of U.S. economic production going to workers’ pay and benefits has fallen to its lowest level in 40 years. Recent hopeful signs of change, however, have included an uptick in wages and a likely increase in the federal minimum wage. And excessive CEO compensation attracted more attention, with the sudden departures of highly paid CEOs at Home Depot and Pfizer and the introduction of improved disclosure requirements and a bill that would require a shareholder advisory vote on executive compensation.

In recent months, housing starts dropped to their lowest number since 2000. This may point to a softening of home prices, with homeowners less able (or less willing) to borrow against the value of their homes. The housing slowdown and declining oil prices have eased inflation concerns, leading to lower bond yields and consequently higher bond prices. However, since mortgage and home equity loan borrowings have been fueling consumer spending, which in turn has been an important economic driver, there could be a negative impact on economic growth during 2007.

In a related development, a sharp increase in mortgage defaults, particularly in subprime loans to lower-income homeowners, led to increasing anxiety about the lower-quality sectors of the mortgage market. As part of Domini’s commitment to community development, we invest in companies that lend money to those who need it most, but we seek to avoid those with serious concerns over predatory lending. As recent news has shown, these practices are unsustainable and can contribute to economic instability.

European Markets The European stock market had strong returns for this six-month period, with the MSCI Europe Index returning 16.74%. For U.S.-based investors, total return was improved by the strengthening of European currencies against the dollar.

Underlying Europe’s strong markets was accelerating economic growth. Economic, business, and consumer confidence indicators continue to point

 

 

12

 

to the best conditions since 2001. European exports, however, are vulnerable to the declining dollar, which raises the price of European products sold in the U.S. For this reason, consumption and trade within Europe — particularly consumer spending — is an increasingly important factor for the region’s continued economic vitality.

The benefits of growth in Europe have not entirely bypassed workers and the middle class. In October, the jobless rate in the euro zone fell to 7.6%, its lowest level in over five years. This appears to be increasing wage levels and buoying consumer spending. German steelworkers, for instance, recently negotiated their biggest wage increase in a decade, following five years of job cuts in Germany. A survey of German retailers indicated that a planned increase in the country’s value added tax may dampen consumer spending less than expected.

Asian Markets The Domini PacAsia Social Equity Fund and Domini EuroPacific Social Equity Fund were launched on December 27, 2006, toward the end of this six-month period.

The decline in commodity prices over recent months was among the notable factors affecting the Asian markets as of early 2007. In January, Japan saw a sell-off in commodities sector stocks, and zinc prices suffered their biggest one-day drop since September 11, 2001. The Asian markets are particularly sensitive to fluctuations in the commodities markets, largely due to the purchasing practices of China and India.

In Japan, the region’s largest market, a new law caused share price declines for consumer finance companies. The legislation reduces the maximum rate companies can charge for consumer loans from 29% to 20%, and limits the total amount a person can borrow to one-third of the borrower’s annual income. Domini carefully examines the lending practices of Japanese financial companies due to the prevalence of predatory lending. The top four consumer lenders in Japan do not meet Domini’s standards.

Recent Developments In late February, after the end of the period covered by this report, stock markets in the U.S., Europe, and Asia declined, in volatility driven not by a specific event but by concern over a variety of risks. At the time of writing, it remains unclear whether this will be a brief interruption within a persistent bull market or the beginning of a meaningful correction. As always, the Funds’ manager and submanagers continue to monitor market developments closely, focusing on the Funds’ long-term investment objectives.

 

 

 

Economic and Market Background  

13

 

DOMINI SOCIAL EQUITY FUND

PERFORMANCE COMMENTARY

For the six months ended January 31, 2007, the Fund returned 15.42%, outperforming the S&P 500 Index return of 13.75%. Because a significant transition in the Fund’s management approach occurred during the period, we will divide our discussion of performance into two parts.

During the four months ended November 29, 2006, the Fund was managed as an index fund. In this period, the Fund’s performance was helped by its underweighting to the energy sector, which underperformed as oil and gas prices declined, and its overweighting to the information technology sector. Stocks that helped performance included Microsoft and Cisco Systems, which returned 22.9% and 50.5%, respectively, for the period. In the same four-month period, the Fund’s performance was hurt by an overweighting in the consumer staples sector and by stock selection within the financials sector.

On November 30, 2006, the Fund transitioned to an active investment strategy, and Wellington Management Company became the Fund’s submanager. During December, the Fund’s performance of 1.61% outpaced that of the S&P 500, which returned 1.40%. The Fund’s outperformance continued with a total return of 2.24% in January, versus 1.51% for the index.

In December and January, as in many recent periods, the energy sector played a key role in Fund performance. Starting in 2002, the price of crude oil rose dramatically from under $20 per barrel to a high in mid-2006 of nearly $80 a barrel. Oil stocks, many of which are ineligible for Fund investment, performed extremely well as a result. More recently, however, oil prices have come back down to $50-$60 a barrel. During this two-month period, energy was the only sector in the S&P to produce a negative total return, and the Fund’s performance was helped by its underweighting to the sector (now based on an active investment decision rather than on index construction), including the omission of ExxonMobil for social and environmental reasons. Under the Fund’s new strategy, stock selection helped performance in other sectors, including industrials (where Navistar and Cummins were particularly strong) and consumer staples (where Kroger and Estée Lauder were notable).

Holdings that hurt performance during this two-month period included technology companies like Symantec, Lexmark, and Motorola.

 

 

14

 

The Domini Social Equity Fund invests in the Domini Social Equity Trust. The table and bar chart below provide information as of January 31, 2007, about the ten largest holdings of the Domini Social Equity Trust and its portfolio holdings by industry sector:

TEN LARGEST HOLDINGS

 

COMPANY

 

% NET
ASSETS

Citigroup Inc.

 

4.35%

AT&T Inc.

 

4.18%

Bank of America Corporation

 

3.73%

Johnson & Johnson

 

3.62%

Intl Business Machines Corp.

 

3.47%

JP Morgan Chase & Co.

 

3.35%

Hewlett-Packard Company

 

2.94%

Goldman Sachs Group Inc.

 

2.77%

Merck & Co. Inc.

 

2.67%

Microsoft Corp.

 

2.38%

PORTFOLIO HOLDINGS BY INDUSTRY SECTOR (% OF NET ASSETS)


______________

The holdings mentioned above are described in the Domini Social Equity Trust’s Portfolio of Investments at January 31, 2007, included herein. The composition of the Trust’s portfolio is subject to change.

 

 

 

Domini Social Equity Fund — Performance Commentary  

15

 

AVERAGE ANNUAL TOTAL RETURNS

 

 

 

 

 

Domini Social Equity
Fund Investor Shares
(DSEFX)

 

Domini Social Equity
Fund Class R Shares
(DSFRX)

 

S&P 500

As of
12-31-06

 

1 year

 

12.58%

 

12.88%

 

15.79%

 

5 Year

 

4.82%

 

NA

 

6.19%

 

10 Year

 

7.60%

 

NA

 

8.42%

 

Since Inception

 

10.00%(1)

 

9.39%(2)

 

10.82%(1)/11.93%(2)

As of
1-31-07

 

1 Year

 

12.74%

 

13.16%

 

14.51%

 

5 Year

 

5.38%

 

NA

 

6.82%

 

10 Year

 

7.07%

 

NA

 

7.92%

 

Since Inception

 

10.10%(1)

 

9.94%(2)

 

10.87%(1)/12.12%(2)

COMPARISON OF $10,000 INVESTMENT IN THE

DOMINI SOCIAL EQUITY FUND INVESTOR SHARES AND S&P 500


Past performance is no guarantee of future results. The Fund’s returns quoted above represent past performance after all expenses. Economic and market conditions change, and both will cause investment return, principal value, and yield to fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month-end, call 1-800-582-6757 or visit www.domini.com. A 2.00% redemption fee is charged on sales or exchanges of shares made less than 60 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Performance data quoted above does not reflect the deduction of this fee, which would reduce the performance quoted. See the Fund’s prospectus for further information.

The table and the graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return for the Domini Social Equity Fund is based on the Fund’s net asset values and assumes all dividends and capital gains were reinvested. An investment in the Fund is not a bank deposit and is not insured. You may lose money. Certain fees payable by the Fund were waived during the period, and the Fund’s average annual total returns would have been lower had these not been waived. The Standard & Poor’s 500 Index (S&P 500) is an unmanaged index of common stocks. Investors cannot invest directly in the S&P 500.

______________

(1)

Since June 3, 1991.

(2)

Since November 28, 2003.

This material must be preceded or accompanied by the Fund’s current prospectus. DSIL Investment Services LLC, Distributor. 03/07

 

 

16  

Domini Social Equity Fund — Performance Commentary

 

DOMINI SOCIAL EQUITY TRUST

PORTFOLIO OF INVESTMENTS

JANUARY 31, 2007 (UNAUDITED)

 

SECURITY

 

SHARES

 

VALUE

Consumer Discretionary – 11.5%

 

 

 

 

 

American Eagle Outfitters Inc.

 

375,750

 

$

12,166,785

AutoZone, Inc. (a)

 

54,047

 

 

6,789,925

Best Buy Co., Inc.

 

858

 

 

43,243

Bright Horizons Family Solutions, Inc. (a)

 

443

 

 

17,352

CBS Corporation, Class B

 

989,200

 

 

30,833,364

Comcast Corporation, Class A (a)

 

112,700

 

 

4,994,864

Disney (Walt) Company (The)

 

5,337

 

 

187,702

Family Dollar Stores Inc.

 

123,071

 

 

3,987,500

Gap Inc.

 

2,187

 

 

41,925

Home Depot, Inc. (The)

 

3,344

 

 

136,235

Horton (D.R.), Inc.

 

1,975

 

 

57,394

Interface, Inc., Class A (a)

 

1,268

 

 

19,299

Johnson Controls, Inc.

 

818

 

 

75,632

Kohl’s Corporation (a)

 

385,100

 

 

27,307,441

Limited Brands

 

868

 

 

24,252

Lowe’s Companies, Inc.

 

2,686

 

 

90,545

McDonald’s Corporation

 

168,474

 

 

7,471,822

McGraw-Hill Companies

 

1,512

 

 

101,425

Meredith Corporation

 

623

 

 

36,732

NIKE, Inc., Class B

 

1,194

 

 

117,979

Nordstrom, Inc.

 

403,603

 

 

22,484,723

Penney (J.C.) Company, Inc.

 

111,417

 

 

9,051,517

Pulte Homes, Inc.

 

1,594

 

 

54,738

Radio One, Inc. (a)

 

2,279

 

 

16,682

Scholastic Corporation (a)

 

310,022

 

 

10,959,278

Staples, Inc. (a)

 

1,858

 

 

47,788

Starbucks Corporation (a)

 

2,378

 

 

83,087

Target Corporation

 

1,736

 

 

106,521

Time Warner, Inc.

 

9,376

 

 

205,053

Washington Post Company, Class B

 

95

 

 

72,457

Wendy’s International, Inc.

 

1,823

 

 

61,909

Whirlpool Corporation

 

222,063

 

 

20,303,220

 

 

 

 

 

157,948,389

Consumer Staples – 8.7%

 

 

 

 

 

Avon Products, Inc.

 

1,706

 

 

58,669

Campbell Soup Company

 

703,695

 

 

27,078,184

Church & Dwight Co., Inc.

 

585

 

$

26,506

Coca-Cola Company

 

327,684

 

 

15,689,510

Colgate-Palmolive Company

 

1,796

 

 

122,667

CVS Corporation

 

1,905

 

 

64,103

Estée Lauder Companies, Inc. (The), Class A

 

619,149

 

 

29,409,578

Green Mountain Coffee, Inc. (a)

 

322

 

 

19,034

Hershey Foods Corporation

 

1,736

 

 

88,605

Kimberly-Clark Corporation

 

1,456

 

 

101,046

Kroger Company

 

1,228,977

 

 

31,461,811

PepsiCo, Inc.

 

4,153

 

 

270,942

Procter & Gamble Company

 

233,101

 

 

15,121,262

Smucker (J.M.) Company

 

1,241

 

 

58,935

SunOpta Inc. (a)

 

2,500

 

 

27,150

United Natural Foods, Inc. (a)

 

732

 

 

24,185

Walgreen Company

 

1,964

 

 

88,969

Wild Oats Markets, Inc. (a)

 

1,259

 

 

18,294

 

 

 

 

 

119,729,450

Energy – 5.3%

 

 

 

 

 

Anadarko Petroleum Corporation

 

4,618

 

 

202,038

Apache Corporation

 

5,462

 

 

398,562

Devon Energy Corporation

 

3,970

 

 

278,257

EOG Resources, Inc.

 

3,008

 

 

207,943

Metretek Technologies, Inc. (a)

 

1,700

 

 

22,100

Noble Energy, Inc.

 

101,183

 

 

5,404,184

Overseas Shipholding Group, Inc.

 

335,900

 

 

20,869,467

Unit Corporation (a)

 

494,200

 

 

23,958,816

XTO Energy Inc.

 

427,716

 

 

21,586,827

 

 

 

 

72,928,194

Financials – 27.0%

 

 

 

 

 

Allstate Life Insurance Company

 

58,200

 

 

3,501,312

American Express Company

 

3,876

 

 

225,661

Assurant, Inc.

 

218,600

 

 

12,149,788

 

 

17

 

DOMINI SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

SECURITY

 

SHARES

 

VALUE

Financials (Continued)

 

 

 

 

 

Bank of America Corporation

 

979,600

 

$

51,507,368

Chubb Corporation

 

191,666

 

 

9,974,299

Citigroup Inc.

 

1,087,400

 

 

59,948,361

Fannie Mae

 

336,116

 

 

19,000,637

FirstFed Financial Corp. (a)

 

94,000

 

 

6,481,300

Freddie Mac

 

2,222

 

 

144,274

Goldman Sachs Group, Inc. (The)

 

180,300

 

 

38,252,448

Hartford Financial Services Group (The)

 

104,738

 

 

9,940,684

Heartland Financial USA, Inc.

 

498

 

 

14,238

KeyCorp.

 

89,592

 

 

3,419,727

Lehman Brothers Holdings Inc.

 

2,000

 

 

164,480

Medallion Financial Corp.

 

1,275

 

 

14,395

Morgan (J.P.) Chase & Co.

 

906,630

 

 

46,174,666

Nationwide Financial Services, Inc., Class A

 

441,000

 

 

24,100,650

PMI Group, Inc. (The)

 

342,500

 

 

16,378,350

Popular Inc.

 

4,111

 

 

75,067

Principal Financial Group, Inc.

 

321,360

 

 

19,798,990

Prudential Financial, Inc.

 

3,200

 

 

285,216

St. Paul Travelers Companies, Inc. (The)

 

447,852

 

 

22,773,273

SunTrust Banks, Inc.

 

323,626

 

 

26,893,320

U.S. Bancorp.

 

5,163

 

 

183,803

Wachovia Corporation

 

4,083

 

 

230,690

Washington Mutual, Inc.

 

4,331

 

 

193,119

Wells Fargo & Company

 

6,826

 

 

245,190

 

 

 

 

 

372,071,306

Health Care – 11.4%

 

 

 

 

 

Amgen, Inc. (a)

 

150,766

 

 

10,609,403

Applera Corp.-Applied Biosystems Group

 

136,000

 

 

4,727,360

Baxter International, Inc.

 

425,322

 

 

21,121,491

Becton Dickinson and Company

 

2,202

 

 

169,422

Conceptus, Inc. (a)

 

1,100

 

 

25,509

Forest Laboratories, Inc. (a)

 

69,586

 

 

3,904,470

Genentech, Inc. (a)

 

1,600

 

 

139,792

Gilead Sciences (a)

 

77,605

 

 

4,991,554

Invacare Corporation

 

1,260

 

 

27,203

Johnson & Johnson

 

747,024

 

$

49,901,203

Medtronic, Inc.

 

3,455

 

 

184,670

Merck & Co., Inc.

 

823,602

 

 

36,856,190

Thermo Fisher Scientific (a)

 

246,581

 

 

11,798,901

Zimmer Holdings, Inc. (a)

 

146,743

 

 

12,358,695

 

 

 

 

 

156,815,863

Industrials – 6.6%

 

 

 

 

 

3M Company

 

2,664

 

 

197,935

Baldor Electric Company

 

1,190

 

 

42,031

Brady Corporation, Class A

 

654

 

 

24,492

Cooper Industries, Inc., Class A

 

1,193

 

 

109,028

Cummins, Inc.

 

199,916

 

 

26,900,697

Donnelley (R.R.) & Sons Company

 

2,118

 

 

78,578

Emerson Electric Company

 

4,408

 

 

198,228

Evergreen Solar, Inc (a)

 

1,700

 

 

14,264

FedEx Corporation

 

628

 

 

69,331

Fuel Tech, Inc. (a)

 

700

 

 

20,153

FuelCell Energy, Inc. (a)

 

2,600

 

 

17,186

Granite Construction Incorporated

 

737

 

 

39,474

Herman Miller, Inc.

 

896

 

 

33,690

Illinois Tool Works, Inc.

 

2,800

 

 

142,772

JetBlue Airways Corporation (a)

 

2,293

 

 

31,368

Kadant Inc. (a)

 

627

 

 

17,148

Monster Worldwide (a)

 

835

 

 

41,257

Navistar International Corporation (a)

 

263,000

 

 

11,635,120

PACCAR Inc.

 

146,700

 

 

9,809,829

Pitney Bowes, Inc.

 

1,457

 

 

69,747

Ryder System, Inc.

 

479,584

 

 

26,156,511

Southwest Airlines Co.

 

3,478

 

 

52,518

Tennant Company

 

1,296

 

 

40,072

Trex Company, Inc. (a)

 

888

 

 

23,763

United Parcel Service, Inc., Class B

 

1,873

 

 

135,380

YRC Worldwide Inc. (a)

 

344,779

 

 

15,290,949

 

 

 

 

91,191,521

Information Technology – 17.0%

 

 

 

 

 

Alliance Data Systems Corporation (a)

 

89,100

 

 

6,052,563

Apple Computer, Inc. (a)

 

1,312

 

 

112,478

Applied Materials, Inc.

 

740,100

 

 

13,121,973

 

 

18

 

DOMINI SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

SECURITY

 

SHARES

 

VALUE

Information Technology (Continued)

 

 

 

 

 

Cisco Systems, Inc. (a)

 

8,816

 

$

234,417

Dell Inc. (a)

 

4,184

 

 

101,462

eBay Inc. (a)

 

2,176

 

 

70,481

Google Inc., Class A (a)

 

300

 

 

150,390

Hewlett-Packard Company

 

935,847

 

 

40,503,458

Intel Corporation

 

10,039

 

 

210,417

International Business Machines Corporation

 

482,800

 

 

47,869,619

Itron, Inc. (a)

 

445

 

 

25,650

Jabil Circuit, Inc.

 

1,500

 

 

35,985

Juniper Networks, Inc. (a)

 

1,900

 

 

34,428

LAM Research Corporation (a)

 

338,900

 

 

15,525,009

Lexmark International Group, Inc. (a)

 

353,850

 

 

22,303,166

MEMC Electronic Materials, Inc. (a)

 

93,000

 

 

4,873,200

Micron Technology, Inc. (a)

 

1,283,052

 

 

16,615,523

Microsoft Corporation

 

1,065,852

 

 

32,892,193

Motorola, Inc.

 

5,000

 

 

99,250

Power Integrations, Inc. (a)

 

600

 

 

13,608

Qualcomm, Inc.

 

3,434

 

 

129,324

SunPower Corporation (a)

 

400

 

 

17,720

Symantec Corporation (a)

 

1,276,846

 

 

22,612,943

Texas Instruments, Inc

 

3,628

 

 

113,157

Western Digital Corporation (a)

 

526,800

 

 

10,325,280

Xerox Corporation (a)

 

3,698

 

 

63,606

 

 

 

 

 

234,107,300

Materials – 1.3%

 

 

 

 

 

Airgas, Inc.

 

1,159

 

 

48,238

Ecolab, Inc.

 

1,757

 

 

77,132

International Paper Company

 

3,000

 

 

101,100

MeadWestvaco Corp.

 

2,666

 

 $

80,353

Nucor Corporation

 

156,016

 

 

10,069,272

Rock-Tenn Company, Class A

 

592

 

 

19,370

Rohm & Haas Company

 

1,510

 

 

78,611

Schnitzer Steel Industries Inc., Class A

 

1,269

 

 

48,857

Sonoco Products Company

 

1,260

 

 

48,510

Valspar Corporation

 

320,998

 

 

9,045,724

 

 

 

 

 

19,617,167

Telecommunication Services – 6.0%

 

 

 

 

 

Alltel Corporation

 

74,900

 

 

4,590,621

AT&T Inc.

 

1,531,204

 

 

57,619,206

CenturyTel, Inc.

 

451,900

 

 

20,263,196

Sprint Corp. – FON Group

 

5,159

 

 

91,985

Verizon Communications

 

5,138

 

 

197,916

 

 

 

 

 

82,762,924

Utilities – 4.5%

 

 

 

 

 

Energen Corporation

 

363,147

 

 

16,806,443

OGE Energy Corporation

 

430,182

 

 

16,656,647

ONEOK, Inc.

 

294,500

 

 

12,636,995

UGI Corporation

 

563,800

 

 

15,453,758

WGL Holdings

 

8,577

 

 

271,291

 

 

 

 

 

61,825,134

Total Investments — 99.3%

 

 

 

 

 

(Cost $1,215,349,476)

 

 

 

 

1,368,997,248

Other Assets, less liabilities — 0.7%

 

 

 

 

10,193,118

Net Assets — 100.0%

 

 

 

$

1,379,190,366

______________

(a)

Non-income producing security.

(b)

The aggregate cost for federal income tax purposes is $1,330,674,418. The aggregate gross unrealized appreciation is $53,931,600 and the aggregate gross unrealized depreciation is $15,608,770, resulting in net unrealized appreciation of $38,322,830.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

19

 

DOMINI EUROPEAN SOCIAL EQUITY FUND

PERFORMANCE COMMENTARY

For the six months ended January 31, 2007, the Fund continued to perform well, returning 21.54% compared with the MSCI Europe Index return of 16.74%.

The energy sector played a key role in Fund performance during the period. Crude oil prices, which peaked at nearly $80 per barrel early in the period, receded to the $50-$60 range, and energy stocks weakened as a result. Energy was the only sector in the MSCI Europe Index to put in a negative result for the six-month period. The Fund avoids many oil companies for environmental reasons, and its underweighting to the sector was helpful for performance.

Particularly important for relative performance were the exclusion of U.K.-based oil companies BP and Royal Dutch Shell, whose stocks were down by 11.4% and 5.0%, respectively. Both companies are ineligible for investment by the Fund for social and environmental reasons. BP, one of the largest stocks in the index, experienced several high-profile safety problems in 2005 and 2006, including an explosion at its refinery in Texas City and a pipeline rupture in Alaska. Statoil, an industry leader in responding to climate change, announced that it will acquire Norsk Hydro’s oil and gas assets. Both Norwegian energy companies are held by the Fund, and both positions hurt performance as the sector generally underperformed.

Individual stocks in a number of other sectors were helpful for performance, including British equipment rental firm Aggreko, Italian auto maker Fiat, and Rieter Holding, a Swiss manufacturer of textile equipment.

The Fund’s performance was hurt by its position in French pharmaceutical maker Sanofi-Aventis, which was down by 13.3% during the time it was held by the Fund. Despite the company’s recent financial performance, Domini views it as having a generally positive social and environmental profile. Sanofi-Aventis has substantial research programs on the treatment of malaria, and is a major company in the vaccine industry. After this six-month period came to an end, the company introduced a malaria medicine called ASAQ, which it developed as part of an initiative by Doctors Without Borders. Sanofi will not patent the medicine, allowing it to be produced as a generic product, and it plans to sell the pill at cost to international health agencies. A course of treatment with the new pill will cost less than a dollar for an adult and less than fifty cents for a child, a potentially momentous development in the world’s battle against malaria.

 

 

20

 

The Domini European Social Equity Fund invests in the Domini European Social Equity Trust. The table and bar chart below provide information as of January 31, 2007, about the ten largest holdings of the Domini European Social Equity Trust and its portfolio holdings by industry sector and by country:

TEN LARGEST HOLDINGS

 

COMPANY

 

% NET
ASSETS

Vivendi SA

 

3.14%

Statoil ASA

 

2.85%

ING Groep NV-CVA

 

2.69%

National Grid PLC

 

2.60%

Muenchener Rueckver AG -Reg

 

2.43%

BNP Paribas

 

2.36%

Royal Bank of Scotland Group

 

2.34%

Barclays PLC

 

2.32%

GlaxoSmithKline PLC

 

2.30%

Societe Generale

 

2.20%

PORTFOLIO HOLDINGS BY INDUSTRY SECTOR (% OF NET ASSETS)


PORTFOLIO HOLDINGS BY COUNTRY (% OF NET ASSETS)


______________

The holdings mentioned above are described in the Domini European Social Equity Trust’s Portfolio of Investments at January 31, 2007, included herein. The composition of the Trust’s portfolio is subject to change.

 

 

 

Domini European Social Equity Fund — Performance Commentary  

21

 

AVERAGE ANNUAL TOTAL RETURNS

 

 

 

 

 

Domini European Social
Equity Fund (DEUFX)

 

MSCI Europe

As of 12-31-06

 

1 Year

 

44.28

%

 

34.36

%

 

Since Inception

 

39.22

%(1)

 

29.26

%(1)

As of 1-31-07

 

1 Year

 

35.64

%

 

26.85

%

 

Since Inception

 

37.08

%(1)

 

27.73

%(1)

COMPARISON OF $10,000 INVESTMENT IN THE

DOMINI EUROPEAN SOCIAL EQUITY FUND AND MSCI EUROPE


Past performance is no guarantee of future results. The Fund’s returns quoted above represent past performance after all expenses. Economic and market conditions change, and both will cause investment return, principal value, and yield to fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month-end, call 1-800-582-6757 or visit www.domini.com. A 2.00% redemption fee is charged on sales or exchanges of shares made less than 60 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Performance data quoted above does not reflect the deduction of this fee, which would reduce the performance quoted. See the Fund’s prospectus for further information.

Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing securities regulations and accounting standards, limited public information, possible changes in taxation, and periods of illiquidity.

The table and the graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return for the Domini European Social Equity Fund is based on the Fund’s net asset values and assumes all dividends and capital gains were reinvested. An investment in the Fund is not a bank deposit and is not insured. You may lose money. Certain fees payable by the Fund were waived during the period, and the Fund’s average annual total returns would have been lower had these not been waived.

The Morgan Stanley Capital International Europe Index (MSCI Europe) is an unmanaged index of common stocks. Investors cannot invest directly in the MSCI Europe.

______________

(1)

Since October 3, 2005.

This material must be preceded or accompanied by the Fund’s current prospectus. DSIL Investment Services LLC, Distributor. 03/07

 

 

22  

Domini European Social Equity Fund — Performance Commentary

 

DOMINI EUROPEAN SOCIAL EQUITY TRUST

PORTFOLIO OF INVESTMENTS

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

Austria – 2.5%

 

 

 

 

 

 

 

Immoeast AG (a)

 

Real Estate

 

21,431

 

$

320,258

Immofinanz AG (a)

 

Real Estate

 

51,163

 

 

774,536

OMV AG (a)

 

Energy

 

2,399

 

 

128,031

Voestalpine AG (a)

 

Materials

 

26,200

 

 

1,511,624

 

 

 

 

 

 

 

2,734,449

Belgium – 5.3%

 

 

 

 

 

 

 

Bekaert NV

 

Capital Goods

 

1,417

 

 

173,176

Belgacom SA

 

Telecommunication Services

 

41,267

 

 

1,862,912

Fortis

 

Diversified Financials

 

56,680

 

 

2,373,094

Omega Pharma SA (a)

 

Health Care Equipment & Services

 

19,098

 

 

1,529,962

 

 

 

 

 

 

 

5,939,144

Denmark – 1.1%

 

 

 

 

 

 

 

Dampskibsselskabet Torm AS (a)

 

Energy

 

14,326

 

 

917,517

Danske Bank A/S (a)

 

Banks

 

7,856

 

 

360,756

 

 

 

 

 

 

 

1,278,273

Finland – 4.2%

 

 

 

 

 

 

 

Kesko OYJ – B shares (a)

 

Food & Staples Retailing

 

37,695

 

 

2,003,395

Nokia OYJ (a)

 

Technology Hardware & Equipment

 

63,202

 

 

1,378,926

Rautaruukki OYJ (a)

 

Materials

 

26,846

 

 

1,055,272

Sampo Insurance Co – A shares

 

Insurance

 

10,454

 

 

284,323

 

 

 

 

 

 

 

4,721,916

France – 16.0%

 

 

 

 

 

 

 

AGF – Assur Gen De France (a)

 

Insurance

 

12,227

 

 

1,990,813

Air France – KLM (a)

 

Transportation

 

17,310

 

 

776,475

BNP Paribas (a)

 

Banks

 

23,573

 

 

2,620,562

CNP Assurances

 

Insurance

 

7,311

 

 

834,600

Lafarge SA (a)

 

Materials

 

10,873

 

 

1,660,148

Michelin(CGDE) – B (a)

 

Automobiles & Components

 

5,884

 

 

536,747

Sanofi – Aventis (a)

 

Pharma, Biotech & Life Sciences

 

11,540

 

 

1,010,707

Schneider Electric SA

 

Capital Goods

 

630

 

 

75,848

Societe Generale (a)

 

Banks

 

13,880

 

 

2,443,928

Ste Des Ciments Francais – A (a)

 

Materials

 

3,576

 

 

784,385

Vinci S.A.

 

Capital Goods

 

11,533

 

 

1,579,583

Vivendi SA (a)

 

Media

 

85,013

 

 

3,488,647

 

 

 

 

 

 

 

17,802,443

Germany – 10.7%

 

 

 

 

 

 

 

Allianz SE – Reg (a)

 

Insurance

 

891

 

 

177,146

Celesio AG (a)

 

Health Care Equipment & Services

 

28,907

 

 

1,644,141

Continental AG

 

Automobiles & Components

 

4,491

 

 

541,915

Deutsche Lufthansa – Reg (a)

 

Transportation

 

47,766

 

 

1,332,012

Deutsche Telekom AG – Reg

 

Telecommunication Services

 

72,037

 

 

1,263,714

Epcos AG

 

Technology Hardware & Equipment

 

63,738

 

 

1,167,823

Fresenius AG

 

Health Care Equipment & Services

 

9,479

 

 

1,904,653

Linde AG

 

Materials

 

3,975

 

 

424,486

 

 

23

 

DOMINI EUROPEAN SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

Germany (continued)

 

 

 

 

 

 

 

Muenchener Rueckver AG – Reg (a)

 

Insurance

 

17,158

 

$

2,697,812

ProSieben Sat.1 Media AG

 

Media

 

21,065

 

 

707,042

 

 

 

 

 

 

 

11,860,744

Hungary – 0.1%

 

 

 

 

 

 

 

MOL Magyar Olaj – es Gazipari

 

Energy

 

1,003

 

 

102,980

 

 

 

 

 

 

 

102,980

Ireland – 2.0%

 

 

 

 

 

 

 

Bank Of Ireland

 

Banks

 

55,046

 

 

1,226,016

Fyffes PLC

 

Food & Staples Retailing

 

683,198

 

 

976,560

 

 

 

 

 

 

 

2,202,576

Italy – 5.4%

 

 

 

 

 

 

 

Banca Popolare Emilia Romagna (a)

 

Banks

 

20,412

 

 

546,402

Banche Popolari Unite Scrl (a)

 

Banks

 

40,539

 

 

1,144,175

Banco Popolare Di Verona E N (a)

 

Banks

 

24,241

 

 

759,779

Benetton Group SPA (a)

 

Consumer Durables & Apparel

 

56,546

 

 

975,062

Fiat SPA (a)

 

Automobiles & Components

 

76,275

 

 

1,648,292

Pirelli & Co.

 

Capital Goods

 

843,562

 

 

870,356

 

 

 

 

 

 

 

5,944,066

Netherlands – 5.3%

 

 

 

 

 

 

 

Aegon NV

 

Insurance

 

43,095

 

 

842,797

Fugro NV – CVA

 

Energy

 

16,079

 

 

761,372

ING Groep NV – CVA

 

Diversified Financials

 

68,544

 

 

2,988,282

Koninkijke KPN NV

 

Telecommunication Services

 

87,899

 

 

1,262,135

 

 

 

 

 

 

 

5,854,586

Norway – 5.8%

 

 

 

 

 

 

 

Bergesen Worldwide Gas ASA

 

Energy

 

36,200

 

 

434,929

DNB Nor ASA (a)

 

Banks

 

13,665

 

 

204,434

Norsk Hydro ASA (a)

 

Energy

 

50,628

 

 

1,630,828

Petroleum Geo – Services (a)

 

Energy

 

5,067

 

 

117,914

Statoil ASA (a)

 

Energy

 

118,967

 

 

3,162,601

Tandberg ASA (a)

 

Technology Hardware & Equipment

 

25,104

 

 

416,850

Telenor ASA (a)

 

Telecommunication Services

 

23,978

 

 

484,292

 

 

 

 

 

 

 

6,451,848

Poland – 0.3%

 

 

 

 

 

 

 

Polska Grupa Farmaceutyczna

 

Health Care Equipment & Services

 

8,317

 

 

208,950

PROKOM Software SA

 

Software & Services

 

2,768

 

 

151,125

 

 

 

 

 

 

 

360,075

Spain – 2.0%

 

 

 

 

 

 

 

Banco Bilbao Vizcaya Argenta

 

Banks

 

68,825

 

 

1,703,730

Corporacion Financiera Alba

 

Diversified Financials

 

4,480

 

 

309,997

Telefonica SA

 

Telecommunication Services

 

10,472

 

 

227,931

 

 

 

 

 

 

 

2,241,658

Sweden – 3.2%

 

 

 

 

 

 

 

Axfood AB (a)

 

Food & Staples Retailing

 

31,620

 

 

1,184,465

Electrolux AB – Ser B (a)

 

Consumer Durables & Apparel

 

11,500

 

 

217,042

 

 

24

 

DOMINI EUROPEAN SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

Sweden (continued)

 

 

 

 

 

 

 

Industrivarden AB – C shares

 

Diversified Financials

 

17,400

 

$

668,025

Investor AB – B shares

 

Diversified Financials

 

13,400

 

 

323,098

Nordea AB (a)

 

Banks

 

61,223

 

 

954,255

SSAB Svenskt Stal AB – Ser A (a)

 

Materials

 

7,050

 

 

170,494

 

 

 

 

 

 

 

3,517,379

Switzerland – 5.1%

 

 

 

 

 

 

 

Baloise Holding – AG (a)

 

Insurance

 

8,673

 

 

875,085

Novartis AG – Reg Shs (a)

 

Pharma, Biotech & Life Sciences

 

26,924

 

 

1,543,847

Rieter Holding AG (a)

 

Automobiles & Components

 

2,895

 

 

1,654,219

Roche Holding AG (a)

 

Pharma, Biotech & Life Sciences

 

3,515

 

 

658,323

Swisscom AG – Reg (a)

 

Telecommunication Services

 

2,376

 

 

884,478

 

 

 

 

 

 

 

5,615,952

United Kingdom – 28.3%

 

 

 

 

 

 

 

3i Group PLC

 

Diversified Financials

 

43,411

 

 

896,462

Aggreko PLC

 

Commercial Services & Supplies

 

170,621

 

 

1,482,008

Alliance Boots PLC

 

Food & Staples Retailing

 

15,165

 

 

239,550

Arriva PLC

 

Transportation

 

47,675

 

 

670,964

Aviva PLC

 

Insurance

 

63,993

 

 

1,028,384

Barclays PLC

 

Banks

 

177,780

 

 

2,575,100

Barratt Developments PLC

 

Consumer Durables & Apparel

 

56,469

 

 

1,306,493

Bellway PLC

 

Consumer Durables & Apparel

 

11,578

 

 

319,545

BG Group PLC

 

Energy

 

38,952

 

 

509,695

Bradford and Bingley

 

Banks

 

57,614

 

 

515,657

BT Group PLC

 

Telecommunication Services

 

263,647

 

 

1,579,152

Firstgroup PLC

 

Transportation

 

169,611

 

 

1,807,721

GlaxoSmithKline PLC

 

Pharma, Biotech & Life Sciences

 

95,715

 

 

2,557,362

HSBC Holdings PLC

 

Banks

 

47,643

 

 

862,622

Inchcape PLC

 

Retailing

 

21,282

 

 

220,368

Man Group PLC

 

Diversified Financials

 

147,075

 

 

1,539,463

Marks & Spencer Group PLC

 

Retailing

 

58,277

 

 

771,123

National Grid PLC

 

Utilities

 

191,882

 

 

2,884,530

Next PLC

 

Retailing

 

26,289

 

 

1,004,976

Northern Rock PLC

 

Banks

 

8,586

 

 

197,305

Resolution PLC

 

Insurance

 

38,860

 

 

495,941

Royal Bank Of Scotland Group

 

Banks

 

64,856

 

 

2,596,109

Scottish Power PLC

 

Utilities

 

112,199

 

 

1,640,549

Severn Trent PLC

 

Utilities

 

49,950

 

 

1,383,476

Standard Life PLC (a)

 

Insurance

 

151,181

 

 

870,010

Taylor Woodrow PLC

 

Consumer Durables & Apparel

 

15,247

 

 

121,467

Whitbread PLC (a)

 

Consumer Services

 

7,826

 

 

248,315

George Wimpey PLC

 

Consumer Durables & Apparel

 

100,048

 

 

1,053,587

 

 

 

 

 

 

 

31,377,934

Total Investments — 97.3% (Cost $91,005,011) (b)

 

 

 

 

108,006,023

Other Assets, less liabilities — 2.7%

 

 

 

 

 

 

3,001,325

Net Assets — 100.0%

 

 

 

 

 

$

111,007,348

______________

(a)

Non-income producing security.

(b)

The aggregate cost for federal income tax purposes is $91,030,355. The aggregate gross unrealized appreciation is $17,405,297 and the aggregate gross unrealized depreciation is $429,629, resulting in net unrealized appreciation of $16,975,668.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

25

 

DOMINI PACASIA SOCIAL EQUITY FUND

PERFORMANCE COMMENTARY

From the Fund’s inception on December 27, 2006, through January 31, 2007, the Fund returned 0.30%, underperforming the MSCI All Country Asia Pacific Index return of 1.37%. The Fund’s performance for the period was influenced by the process of initially investing the portfolio.

Stock selection was the most important factor in the Fund’s performance during this brief period. Three Japanese companies helped performance: packaging firm Toyo Seikan Kaisha, information technology company Seiko Epson, and financial services company SBI Holdings. SBI Holdings’ stock price increased after it announced a $4 billion property financing arrangement with Merrill Lynch to build large-scale residential developments in Japan.

Positions that hurt performance included Australia-based mining company Zinifex and Japanese steelmaker Tokyo Steel. Zinifex’s stock declined after a sharp drop in the market price of zinc, an industrial metal that is used for environmentally positive purposes such as corrosion prevention and batteries. Korea Zinc, Korea Telecom, and Japanese technology producer Konica Minolta also made negative contributions to the Fund’s returns.

 

 

26

 

The Domini PacAsia Social Equity Fund invests in the Domini PacAsia Social Equity Trust. The table and bar chart below provide information as of January 31, 2007, about the ten largest holdings of the Domini PacAsia Social Equity Trust and its portfolio holdings by industry sector and by country:

TEN LARGEST HOLDINGS

 

COMPANY

 

% NET
ASSETS

Honda Motor Co Ltd

 

3.79

Fuji Film Holdings Corp

 

3.10

Nippon Telegraph & Telephone

 

2.98

Dai Nippon Printing Co Ltd

 

2.54

QBE Insurance Group Ltd

 

2.53

Resona Holdings Inc

 

2.34

Toppan Printing Company Ltd

 

2.31

Mediceo Paltac Holding Co

 

2.22

Denso Corporation

 

2.19

Zinifex Ltd

 

2.18

PORTFOLIO HOLDINGS BY INDUSTRY SECTOR (% OF NET ASSETS)


PORTFOLIO HOLDINGS BY COUNTRY (% OF NET ASSETS)


______________

The holdings mentioned above are described in the Domini PacAsia Social Equity Trust’s Portfolio of Investments at January 31, 2007, included herein. The composition of the Trust’s portfolio is subject to change.

 

 

 

Domini PacAsia Social Equity Fund — Performance Commentary  

27

 

 

Total Return Since Inception (12/27/2006)

Domini PacAsia Social Equity Fund

 

0.30%

MSCI AC Asia Pacific

 

1.37%

Past performance is no guarantee of future results. The Fund’s return quoted above represents past performance after all expenses. Economic and market conditions change, and both will cause investment return, principal value, and yield to fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month-end, call 1-800-582-6757 or visit www.domini.com. A 2.00% redemption fee is charged on sales or exchanges of shares made less than 60 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Performance data quoted above does not reflect the deduction of this fee, which would reduce the performance quoted. See the Fund’s prospectus for further information.

Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing securities regulations and accounting standards, limited public information, possible changes in taxation, and periods of illiquidity.

The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return for the Domini PacAsia Social Equity Fund is based on the Fund’s net asset values and assumes all dividends and capital gains were reinvested. An investment in the Fund is not a bank deposit and is not insured. You may lose money. Certain fees payable by the Fund were waived during the period, and the Fund’s average annual total returns would have been lower had these not been waived.

The Morgan Stanley Capital International All Country Asia Pacific Index (MSCI AC Asia Pacific) is an unmanaged index of common stocks. Investors cannot invest directly in the MSCI AC Asia Pacific.

______________

This material must be preceded or accompanied by the Fund’s current prospectus. DSIL Investment Services LLC, Distributor. 03/07

 

 

28  

Domini PacAsia Social Equity Fund — Performance Commentary

 

DOMINI PACASIA SOCIAL EQUITY TRUST

PORTFOLIO OF INVESTMENTS

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

Australia – 11.2%

 

 

 

 

 

 

 

Amcor Ltd

 

Materials

 

2,081

 

$

11,768

Australia and New Zealand Banking Group Lt

 

Banks

 

9,097

 

 

205,125

Commonwealth Bank Of Australia

 

Banks

 

2,310

 

 

89,538

Insurance Australia Group Lt

 

Insurance

 

42,922

 

 

215,111

QBE Insurance Group Ltd

 

Insurance

 

12,029

 

 

286,984

Sonic Healthcare Ltd

 

Health Care Equipment & Services

 

9,155

 

 

102,826

Telstra Corp Ltd

 

Telecommunication Services

 

19,793

 

 

65,006

Westpac Banking Corporation

 

Banks

 

2,668

 

 

51,810

Zinifex Ltd

 

Materials

 

19,509

 

 

247,831

 

 

 

 

 

 

 

1,275,999

China – 1.9%

 

 

 

 

 

 

 

Agile Property Holdings Ltd

 

Real Estate

 

60,416

 

 

49,360

Chaoda Modern Agriculture

 

Food & Beverage

 

106,903

 

 

75,566

Guangzhou R&F Properties

 

Real Estate

 

17,502

 

 

33,798

Nine Dragons Paper Holdings

 

Materials

 

6,886

 

 

11,693

TPV Technology Ltd

 

Technology Hardware & Equipment

 

66,223

 

 

40,960

 

 

 

 

 

 

 

211,377

Hong Kong – 7.5%

 

 

 

 

 

 

 

Cathay Pacific Airways Ltd

 

Transportation

 

18,002

 

 

46,336

Chinese Estates Holdings Ltd

 

Real Estate

 

48,239

 

 

64,244

First Pacific Co

 

Diversified Financials

 

58,389

 

 

36,264

Great Eagle Holdings Ltd

 

Real Estate

 

20,620

 

 

67,465

Hang Lung Group Ltd

 

Real Estate

 

21,665

 

 

74,074

Hang Lung Properties Ltd

 

Real Estate

 

8,665

 

 

23,635

Henderson Land Development

 

Real Estate

 

16,142

 

 

93,226

Jardine Matheson Hldgs Ltd

 

Diversified Financials

 

1,593

 

 

37,436

Jardine Strategic Hldgs Ltd

 

Diversified Financials

 

2,359

 

 

33,262

Kingboard Chemicals Holdings

 

Technology Hardware & Equipment

 

9,553

 

 

39,330

Orient Overseas Intl Ltd

 

Transportation

 

5,875

 

 

39,197

Sun Hung Kai Properties

 

Real Estate

 

1,833

 

 

22,182

Swire Pacific Ltd ‘A’

 

Real Estate

 

7,164

 

 

82,245

Techtronic Industries Co

 

Consumer Durables & Apparel

 

18,014

 

 

27,682

Wharf Holdings Ltd

 

Real Estate

 

17,455

 

 

64,375

Wheelock & Co Ltd

 

Real Estate

 

45,418

 

 

97,476

 

 

 

 

 

 

 

848,429

India – 1.7%

 

 

 

 

 

 

 

Gujarat Ambuja Cement

 

Materials

 

16,012

 

 

49,781

Hindalco Industries – 144A GDR

 

Materials

 

23,955

 

 

95,549

Infosys Technologies-sp ADR

 

Software & Services

 

874

 

 

50,692

 

 

 

 

 

 

 

196,022

 

 

29

 

DOMINI PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

Indonesia – 0.4%

 

 

 

 

 

 

 

Astra International Inc

 

Automobiles & Components

 

16,408

 

$

26,776

Telekomunikasi TBK Pt

 

Telecommunication Services

 

21,966

 

 

22,811

 

 

 

 

 

 

 

49,587

Japan – 56.2%

 

 

 

 

 

 

 

Alps Electric Co Ltd

 

Technology Hardware & Equipment

 

4,751

 

 

49,882

Amada Co Ltd

 

Capital Goods

 

22,220

 

 

238,071

Asahi Kasei Corporation

 

Materials

 

1,640

 

 

10,874

Astellas Pharma Inc

 

Pharma, Biotech & Life Sciences

 

1,684

 

 

71,420

Brother Industries Ltd

 

Technology Hardware & Equipment

 

1,000

 

 

13,881

Central Japan Railway Co

 

Transportation

 

13

 

 

138,641

Dai Nippon Printing Co Ltd

 

Commercial Services & Supplies

 

18,399

 

 

287,789

Daito Trust Construct Co Ltd

 

Consumer Durables & Apparel

 

984

 

 

47,020

Denso Corporation

 

Automobiles & Components

 

6,202

 

 

248,162

DENTSU Inc

 

Media

 

42

 

 

125,000

East Japan Railway Co

 

Transportation

 

18

 

 

124,554

Eisai Co Ltd

 

Pharma, Biotech & Life Sciences

 

451

 

 

23,079

Fuji Film Holdings Corp

 

Consumer Durables & Apparel

 

8,557

 

 

352,297

Fujikura Ltd

 

Capital Goods

 

12,578

 

 

109,600

Honda Motor Co Ltd

 

Automobiles & Components

 

10,958

 

 

430,311

Joyo Bank Ltd

 

Banks

 

23,491

 

 

139,633

Kamigumi Co Ltd

 

Transportation

 

2,677

 

 

22,441

Kawasaki Kisen Kaisha Ltd

 

Transportation

 

25,206

 

 

217,552

Konica Minolta Holdings Inc (a)

 

Technology Hardware & Equipment

 

15,236

 

 

207,329

Kyocera Corporation

 

Technology Hardware & Equipment

 

1,627

 

 

149,169

Mediceo Paltac Holding Co

 

Health Care Equipment & Services

 

13,440

 

 

251,667

Mitsui Chemicals Inc

 

Materials

 

13,880

 

 

111,880

Mitsui Trust Holding Inc

 

Banks

 

15,163

 

 

165,595

Nintendo Company Ltd

 

Software & Services

 

40

 

 

11,772

Nippon Paper Group Inc

 

Materials

 

22

 

 

83,482

Nippon Telegraph & Telephone

 

Telecommunication Services

 

68

 

 

338,426

Nippon Yusen Kabushiki Kaish

 

Transportation

 

17,644

 

 

134,635

Nisshin Seifun Group Inc

 

Food & Beverage

 

13,542

 

 

139,271

Nisshinbo Industries Inc

 

Consumer Durables & Apparel

 

11,365

 

 

126,090

Nomura Holdings Inc

 

Diversified Financials

 

1,800

 

 

36,533

NTT Docomo Inc

 

Telecommunication Services

 

70

 

 

106,481

Orix Corporation

 

Diversified Financials

 

49

 

 

14,016

Pioneer Corporation

 

Consumer Durables & Apparel

 

1,620

 

 

22,701

Resona Holdings Inc

 

Banks

 

96

 

 

265,873

Ricoh Company Limited

 

Technology Hardware & Equipment

 

10,503

 

 

228,364

SBI Holdings Inc

 

Diversified Financials

 

353

 

 

136,431

Seiko Epson Corp

 

Technology Hardware & Equipment

 

6,510

 

 

175,451

Sharp Corp

 

Consumer Durables & Apparel

 

2,800

 

 

47,569

Shizuoka Bank Ltd

 

Banks

 

390

 

 

4,040

Sony Corporation

 

Consumer Durables & Apparel

 

1,378

 

 

63,227

Sumitomo Trust & Bkg

 

Banks

 

21,874

 

 

233,460

Suzuken Company Limited

 

Health Care Equipment & Services

 

358

 

 

12,401

Tokyo Steel Mfg Co Ltd

 

Materials

 

11,676

 

 

173,267

 

 

30

 

DOMINI PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

Japan (continued)

 

 

 

 

 

 

Toppan Printing Company Ltd

 

Commercial Services & Supplies

 

24,406

 

$

261,896

Toyo Seikan Kaisha Limited

 

Materials

 

12,487

 

 

225,563

 

 

 

 

 

 

 

6,376,796

Malaysia – 1.7%

 

 

 

 

 

 

 

Golden Hope Plantations Bhd

 

Food & Beverage

 

10,900

 

 

20,240

Kuala Lumpur Kepong BHD

 

Food & Beverage

 

3,435

 

 

14,621

RHB Capital Berhad

 

Banks

 

15,918

 

 

16,461

Tenaga Nasional BHD

 

Utilities

 

19,456

 

 

68,364

YTL Corporation Berhad

 

Utilities

 

32,940

 

 

69,635

 

 

 

 

 

 

 

189,321

New Zealand – 0.1%

 

 

 

 

 

 

 

Vector Ltd

 

Utilities

 

7,535

 

 

13,931

 

 

 

 

 

 

 

13,931

Philippines – 0.5%

 

 

 

 

 

 

 

Globe Telecom Inc

 

Telecommunication Services

 

1,827

 

 

53,801

 

 

 

 

 

 

 

53,801

Singapore – 2.2%

 

 

 

 

 

 

 

Capitamall Trust

 

Real Estate

 

2,274

 

 

4,796

DBS Group Holdings Ltd.

 

Banks

 

6,106

 

 

87,424

Jardine Cycle & Carriage Ltd

 

Retailing

 

6,884

 

 

63,170

United Overseas Bank

 

Banks

 

7,899

 

 

97,160

 

 

 

 

 

 

 

252,550

South Korea – 7.7%

 

 

 

 

 

 

 

GS Engineering & Construction

 

Capital Goods

 

660

 

 

54,679

GS Holdings Corp

 

Energy

 

3,269

 

 

107,983

Hynix Semiconductor Inc (a)

 

Semiconductors & Semiconductor Equipment

 

2,180

 

 

72,358

Industrial Bank Of Korea

 

Banks

 

2,495

 

 

45,978

KCC Corp

 

Capital Goods

 

50

 

 

12,878

Kookmin Bank

 

Banks

 

166

 

 

13,206

Korea Investment Holdings Co

 

Diversified Financials

 

306

 

 

13,293

Korea Zinc Co Ltd

 

Materials

 

819

 

 

72,636

Korea Telecom Corp

 

Telecommunication Services

 

2,383

 

 

108,582

KT Freetel

 

Telecommunication Services

 

1,965

 

 

51,343

LG Corp

 

Capital Goods

 

2,402

 

 

73,093

LG Electronics Inc

 

Consumer Durables & Apparel

 

1,375

 

 

76,235

Pacific Corp

 

Household & Personal Products

 

424

 

 

67,552

Shinhan Financial Group Ltd

 

Banks

 

1,933

 

 

101,013

 

 

 

 

 

 

 

870,829

Taiwan – 5.5%

 

 

 

 

 

 

 

China Steel Corp

 

Materials

 

112,363

 

 

116,025

Chunghwa Telecom Co Ltd

 

Telecommunication Services

 

42,476

 

 

81,528

Compal Electronics

 

Technology Hardware & Equipment

 

32,000

 

 

28,912

Far Eastern Textile

 

Capital Goods

 

33,000

 

 

27,862

Powerchip Semiconductor Corp

 

Semiconductors & Semiconductor Equipment

 

203,536

 

 

130,118

 

 

31

 

DOMINI PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

Taiwan (continued)

 

 

 

 

 

 

 

Pro Mos Technologies Inc

 

Semiconductors &

 

 

 

 

 

 

 

Semiconductor Equipment

 

287,394

 

$

110,848

Quanta Computer Inc

 

Technology Hardware & Equipment

 

25,616

 

 

43,255

Siliconware Precision Inds

 

Semiconductors &

 

 

 

 

 

 

 

Semiconductor Equipment

 

18,656

 

 

30,936

Taiwan Cooperative Bank

 

Banks

 

61,569

 

 

45,064

Taiwan Mobile Co., Ltd.

 

Telecommunication Services

 

17,000

 

 

16,470

 

 

 

 

 

 

 

631,018

Thailand – 0.7%

 

 

 

 

 

 

 

Bangkok Bank Pub Co — For Reg

 

Banks

 

24,318

 

 

78,400

 

 

 

 

 

 

 

78,400

Total Investments — 97.3% (Cost $10,970,083) (b)

 

 

 

 

11,048,060

Other Assets, less liabilities — 2.7%

 

 

 

 

 

 

302,544

Net Assets — 100.0%

 

 

 

 

 

$

11,350,604

______________

(a)

Non-income producing security.

(b)

The aggregate cost for federal income taxes is $10,970,083. The aggregate gross unrealized appreciation is $260,022 and the aggregate gross unrealized depreciation is $182,045, resulting in net unrealized appreciation of $77,977.

144A — Security that may be sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended.

ADR — American Depository Receipt

GDR — Global Depository Receipt

SEE NOTES TO FINANCIAL STATEMENTS

 

 

32

 

 

 

DOMINI EUROPACIFIC SOCIAL EQUITY FUND

PERFORMANCE COMMENTARY

From the Fund’s inception on December 27, 2006, through January 31, 2007, the Fund returned 0.50%, while the MSCI EAFE index returned 1.75%. The Fund’s performance for the period was influenced by the process of initially investing the portfolio.

Stock selection had the strongest influence on Fund returns during this abbreviated period. Performance was helped by the Fund’s underweighting to the energy sector, the worst-performing sector in the EAFE Index. Particularly important was the exclusion, for social and environmental reasons, of British oil stocks BP and Royal Dutch Shell, which lost 6.5% and 4.5%, respectively, for the period. BP, a major component of the MSCI EAFE Index, experienced several high-profile safety problems in 2005 and 2006, including an explosion at its refinery in Texas City and a pipeline rupture in Alaska.

Among the Fund’s holdings, the Italian car maker Fiat and Austrian real estate company Immofinanz helped performance. Holdings that contributed negatively to Fund performance during the period were the German reinsurer Munich Re and Australian mining company Zinifex. Zinifex’s stock declined after a sharp drop in the market price of zinc, an industrial metal that is used for environmentally beneficial purposes such as corrosion prevention and batteries.

A notable holding for the period was the French pharmaceutical maker Sanofi-Aventis, which has substantial research programs on the treatment of malaria, and is a major company in the vaccine industry. After the six-month period, the company introduced a malaria medicine called ASAQ, which it developed as part of an initiative by Doctors Without Borders. Sanofi will not patent the medicine, allowing it to be produced as a generic product, and it plans to sell the pill at cost to international health agencies. A course of treatment with the new pill will cost less than a dollar for an adult and less than fifty cents for a child, a potentially momentous development in the world’s battle against malaria.

 

 

33

 

The Domini EuroPacific Social Equity Fund invests in the Domini EuroPacific Social Equity Trust. The table and bar chart below provide information as of January 31, 2007, about the ten largest holdings of the Domini EuroPacific Social Equity Trust and its portfolio holdings by industry sector and by country:

TEN LARGEST HOLDINGS

 

Company

 

% Net
Assets

Allianz SE-Reg

 

3.00

Societe Generale

 

2.53

BNP Paribas

 

2.45

Vivendi SA

 

2.30

Royal Bank of Scotland Group

 

2.26

Muenchener Rueckver AG-Reg

 

2.21

Nippon Telegraph & Telephone

 

2.20

Severn Trent PLC

 

2.19

Dai Nippon Printing Co Ltd

 

2.11

Belgacom SA

 

1.99

PORTFOLIO HOLDINGS BY INDUSTRY SECTOR (% OF NET ASSETS)


PORTFOLIO HOLDINGS BY COUNTRY (% OF NET ASSETS)


______________

The holdings mentioned above are described in the Domini EuroPacific Social Equity Trust’s Portfolio of Investments at January 31, 2007, included herein. The composition of the Trust’s portfolio is subject to change.

 

 

34  

Domini EuroPacific Social Equity Fund — Performance Commentary

 

 

Total Return Since Inception (12/27/2006)

Domini EuroPacific Social Equity Fund

 

0.50%

MSCI EAFE

 

1.75%

Past performance is no guarantee of future results. The Fund’s return quoted above represents past performance after all expenses. Economic and market conditions change, and both will cause investment return, principal value, and yield to fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month-end, call 1-800-582-6757 or visit www.domini.com. A 2.00% redemption fee is charged on sales or exchanges of shares made less than 60 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Performance data quoted above does not reflect the deduction of this fee, which would reduce the performance quoted. See the Fund’s prospectus for further information.

Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing securities regulations and accounting standards, limited public information, possible changes in taxation, and periods of illiquidity.

The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return for the Domini EuroPacific Social Equity Fund is based on the Fund’s net asset values and assumes all dividends and capital gains were reinvested. An investment in the Fund is not a bank deposit and is not insured. You may lose money. Certain fees payable by the Fund were waived during the period, and the Fund’s average annual total returns would have been lower had these not been waived.

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

______________

This material must be preceded or accompanied by the Fund’s current prospectus. DSIL Investment Services LLC, Distributor. 03/07

 

 

Domini EuroPacific Social Equity Fund — Performance Commentary  

35

 

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST

PORTFOLIO OF INVESTMENTS

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

 

Australia – 2.9%

 

 

 

 

 

 

 

 

Insurance Australia Group Lt

 

Insurance

 

4,823

 

$

24,171

 

QBE Insurance Group Ltd

 

Insurance

 

1,665

 

 

39,723

 

Sonic Healthcare Ltd

 

Health Care Equipment & Services

 

543

 

 

6,099

 

Zinifex Ltd

 

Materials

 

3,774

 

 

47,943

 

 

 

 

 

 

 

 

117,936

 

Austria – 3.0%

 

 

 

 

 

 

 

 

Immoeast AG (a)

 

Real Estate

 

2,560

 

 

38,256

 

Immofinanz AG (a)

 

Real Estate

 

4,614

 

 

69,849

 

Oesterreichische Post AG

 

Transportation

 

265

 

 

12,717

 

 

 

 

 

 

 

 

120,822

 

Belgium – 3.5%

 

 

 

 

 

 

 

 

Belgacom SA

 

Telecommunication Services

 

1,798

 

 

81,167

 

Fortis Group

 

Diversified Financials

 

462

 

 

19,343

 

Omega Pharma SA

 

Health Care Equipment & Services

 

529

 

 

42,379

 

 

 

 

 

 

 

 

142,889

 

China – 0.4%

 

 

 

 

 

 

 

 

Chaoda Modern Agriculture

 

Food & Beverage

 

19,826

 

 

14,014

 

TPV Technology Ltd

 

Technology Hardware & Equipment

 

2,000

 

 

1,237

 

 

 

 

 

 

 

 

15,251

 

Denmark – 0.4%

 

 

 

 

 

 

 

 

Sydbank A/S

 

Banks

 

324

 

 

16,516

 

 

 

 

 

 

 

 

16,516

 

Finland – 0.6%

 

 

 

 

 

 

 

 

Outokumpu OYJ

 

Materials

 

637

 

 

25,379

 

 

 

 

 

 

 

 

25,379

 

France – 11.5%

 

 

 

 

 

 

 

 

Air France-KLM

 

Transportation

 

237

 

 

10,631

 

BNP Paribas

 

Banks

 

895

 

 

99,495

 

France Telecom SA

 

Telecommunication Services

 

373

 

 

10,276

 

Lafarge SA

 

Materials

 

235

 

 

35,881

 

Michelin(CGDE)-Cl B

 

Automobiles & Components

 

308

 

 

28,096

 

Sanofi-Aventis

 

Pharma, Biotech & Life Sciences

 

722

 

 

63,282

 

Societe Generale

 

Banks

 

585

 

 

103,004

 

Vallourec

 

Capital Goods

 

93

 

 

23,964

 

Vivendi SA

 

Media

 

2,282

 

 

93,646

 

 

 

 

 

 

 

 

468,275

 

Germany – 7.0%

 

 

 

 

 

 

 

 

Allianz SE – Reg

 

Insurance

 

615

 

 

122,271

 

Deutsche Lufthansa – Reg

 

Transportation

 

1,423

 

 

39,682

 

Deutsche Telekom AG – Reg

 

Telecommunication Services

 

934

 

 

16,385

 

Epcos AG (a)

 

Technology Hardware & Equipment

 

815

 

 

14,933

 

Muenchener Rueckver AG – Reg

 

Insurance

 

571

 

 

89,780

 

ProSieben Sat.1 Media AG

 

Media

 

76

 

 

2,551

 

 

 

 

 

 

 

 

285,602

 

Hong Kong – 2.3%

 

 

 

 

 

 

 

 

Cathay Pacific Airways Ltd

 

Transportation

 

3,944

 

 

10,152

 

Chinese Estates Hl

 

Real Estate

 

5,848

 

 

7,788

 

 

 

 

 

 

 

 

 

 

 

   

36

 

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

 

Hong Kong (continued)

 

 

 

 

 

 

 

 

Great Eagle Holdings Ltd

 

Real Estate

 

1,809

 

$

5,919

 

Hang Lung Group Ltd

 

Real Estate

 

3,627

 

 

12,401

 

Henderson Land Development

 

Real Estate

 

906

 

 

5,232

 

Kingboard Chemicals Holdings

 

Technology Hardware & Equipment

 

1,470

 

 

6,052

 

Orient Overseas Intl Ltd

 

Transportation

 

532

 

 

3,549

 

Swire Pacific Ltd ‘A’

 

Real Estate

 

834

 

 

9,575

 

Techtronic Industries Co

 

Consumer Durables & Apparel

 

774

 

 

1,189

 

Wharf Holdings Ltd

 

Real Estate

 

1,971

 

 

7,269

 

Wheelock & Co Ltd

 

Real Estate

 

10,604

 

 

22,759

 

 

 

 

 

 

 

 

91,885

 

Ireland – 1.8%

 

 

 

 

 

 

 

 

Bank Of Ireland

 

Banks

 

1,138

 

 

25,346

 

Fyffes PLC

 

Food & Staples Retailing

 

32,075

 

 

45,848

 

Total Produce PLC (a)

 

Food & Staples Retailing

 

2,997

 

 

2,804

 

 

 

 

 

 

 

 

73,998

 

Italy – 3.3%

 

 

 

 

 

 

 

 

Fiat SPA (a)

 

Automobiles & Components

 

1,976

 

 

42,701

 

Ifil SPA

 

Diversified Financials

 

4,786

 

 

41,357

 

Pirelli & Co.

 

Capital Goods

 

49,037

 

 

50,595

 

 

 

 

 

 

 

 

134,653

 

Japan – 24.0%

 

 

 

 

 

 

 

 

Alps Electric Co Ltd

 

Technology Hardware & Equipment

 

458

 

 

4,809

 

Amada Co Ltd

 

Capital Goods

 

1,584

 

 

16,971

 

Central Japan Railway Co

 

Transportation

 

1

 

 

10,665

 

Dai Nippon Printing Co Ltd

 

Commercial Services & Supplies

 

5,477

 

 

85,669

 

Denso Corporation

 

Automobiles & Components

 

709

 

 

28,369

 

DENTSU Inc

 

Media

 

1

 

 

2,976

 

Fuji Film Holdings Corp

 

Consumer Durables & Apparel

 

1,525

 

 

62,785

 

Fujikura Ltd

 

Capital Goods

 

1,629

 

 

14,195

 

Honda Motor Co Ltd

 

Automobiles & Components

 

1,976

 

 

77,596

 

Joyo Bank Ltd/the

 

Banks

 

2,781

 

 

16,531

 

Kawasaki Kisen Kaisha Ltd

 

Transportation

 

5,454

 

 

47,073

 

Konica Minolta Holdings Inc (a)

 

Technology Hardware & Equipment

 

3,087

 

 

42,007

 

Kyocera Corporation

 

Technology Hardware & Equipment

 

58

 

 

5,318

 

Mediceo Paltac Holding Co

 

Health Care Equipment & Services

 

2,585

 

 

48,405

 

Mitsui Chemicals Inc

 

Materials

 

919

 

 

7,408

 

Mitsui Trust Holding Inc

 

Banks

 

1,513

 

 

16,523

 

Nippon Paper Group Inc

 

Materials

 

2

 

 

7,589

 

Nippon Telegraph & Telephone

 

Telecommunication Services

 

18

 

 

89,582

 

Nisshin Seifun Group Inc

 

Food & Beverage

 

5,642

 

 

58,025

 

Nisshinbo Industries Inc

 

Consumer Durables & Apparel

 

2,638

 

 

29,267

 

NTT Docomo Inc

 

Telecommunication Services

 

1

 

 

1,521

 

Pioneer Corporation

 

Consumer Durables & Apparel

 

185

 

 

2,592

 

Resona Holdings Inc

 

Banks

 

22

 

 

60,929

 

Ricoh Company Limited

 

Technology Hardware & Equipment

 

2,388

 

 

51,922

 

SBI Holdings Inc

 

Diversified Financials

 

34

 

 

13,141

 

Seiko Epson Corp

 

Technology Hardware & Equipment

 

1,643

 

 

44,281

 

 

 

37

 

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

 

Japan (continued)

 

 

 

 

 

 

 

 

Tokyo Steel Mfg Co Ltd

 

Materials

 

2,483

 

$

36,847

 

Toppan Printing Company Ltd

 

Commercial Services & Supplies

 

5,622

 

 

60,329

 

Toyo Seikan Kaisha Limited

 

Materials

 

1,776

 

 

32,081

 

 

 

 

 

 

 

 

975,406

 

Netherlands – 4.4%

 

 

 

 

 

 

 

 

Arcelor Mittal

 

Materials

 

666

 

 

30,879

 

Fugro NV-CVA

 

Energy

 

397

 

 

18,799

 

ING Groep NV-CVA

 

Diversified Financials

 

1,187

 

 

51,748

 

Koninkijke KPN NV

 

Telecommunication Services

 

1,114

 

 

15,996

 

Koninklijke DSM NV

 

Materials

 

449

 

 

22,195

 

SNS Reaal

 

Insurance

 

732

 

 

16,123

 

Unilever NV-CVA

 

Food & Beverage

 

890

 

 

23,616

 

 

 

 

 

 

 

 

179,356

 

New Zealand – 0.2%

 

 

 

 

 

 

 

 

Contact Energy Ltd

 

Utilities

 

697

 

 

4,130

 

Vector Ltd

 

Utilities

 

2,571

 

 

4,753

 

 

 

 

 

 

 

 

8,883

 

Norway – 2.4%

 

 

 

 

 

 

 

 

Bergesen Worldwide Gas ASA

 

Energy

 

750

 

 

9,011

 

Fred Olsen Energy ASA (a)

 

Energy

 

259

 

 

11,455

 

Statoil ASA

 

Energy

 

2,915

 

 

77,492

 

 

 

 

 

 

 

 

97,958

 

Philippines – 0.2%

 

 

 

 

 

 

 

 

Globe Telecom Inc

 

Telecommunication Services

 

248

 

 

7,303

 

 

 

 

 

 

 

 

7,303

 

Singapore – 0.4%

 

 

 

 

 

 

 

 

DBS Group Holdings Ltd.

 

Banks

 

519

 

 

7,431

 

Jardine Cycle & Carriage Ltd

 

Retailing

 

670

 

 

6,148

 

United Overseas Bank

 

Banks

 

380

 

 

4,674

 

 

 

 

 

 

 

 

18,253

 

South Korea – 2.0%

 

 

 

 

 

 

 

 

GS Holdings Corp

 

Energy

 

596

 

 

19,687

 

Hynix Semiconductor Inc (a)

 

Semiconductors & Semiconductor Equipment

 

180

 

 

5,975

 

Industrial Bank Of Korea

 

Banks

 

407

 

 

7,500

 

Korea Zinc Co Ltd

 

Materials

 

95

 

 

8,425

 

Korea Telecom Corp

 

Telecommunication Services

 

273

 

 

12,439

 

KT Freetel

 

Telecommunication Services

 

152

 

 

3,972

 

LG Corp

 

Capital Goods

 

494

 

 

15,033

 

Pacific Corp

 

Household & Personal Products

 

56

 

 

8,922

 

 

 

 

 

 

 

 

81,953

 

 

 

38

 

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

 

Spain – 1.1%

 

 

 

 

 

 

 

 

Ac.Acerinox

 

Materials

 

1,014

 

$

27,591

 

Corporacion Financiera Alba

 

Diversified Financials

 

135

 

 

9,341

 

Sacyr Vallehermoso SA

 

Capital Goods

 

124

 

 

7,493

 

 

 

 

 

 

 

 

44,425

 

Sweden – 4.0%

 

 

 

 

 

 

 

 

Boliden AB

 

Materials

 

307

 

 

7,116

 

Electrolux AB-Ser B (a)

 

Consumer Durables & Apparel

 

1,483

 

 

27,989

 

Industrivarden AB-C shares

 

Diversified Financials

 

1,094

 

 

42,001

 

Investor AB-B shares

 

Diversified Financials

 

974

 

 

23,485

 

Scania AB-B shares

 

Capital Goods

 

845

 

 

60,396

 

 

 

 

 

 

 

 

160,987

 

Switzerland – 3.2%

 

 

 

 

 

 

 

 

Baloise Holding -R

 

Insurance

 

208

 

 

20,987

 

Geberit AG-Reg

 

Capital Goods

 

11

 

 

18,521

 

Roche Holding AG

 

Pharma, Biotech & Life Sciences

 

239

 

 

44,762

 

Swiss Re-reg

 

Insurance

 

269

 

 

22,291

 

Swisscom AG-Reg

 

Telecommunication Services

 

62

 

 

23,080

 

 

 

 

 

 

 

 

129,641

 

Taiwan – 0.4%

 

 

 

 

 

 

 

 

China Steel Corp

 

Materials

 

8,068

 

 

8,331

 

Powerchip Semiconductor Corp

 

Semiconductors & Semiconductor Equipment

 

2,752

 

 

1,759

 

Pro Mos Technologies Inc (a)

 

Semiconductors & Semiconductor Equipment

 

17,903

 

 

6,905

 

 

 

 

 

 

 

 

16,995

 

United Kingdom – 18.6%

 

 

 

 

 

 

 

 

3i Group PLC

 

Diversified Financials

 

3,143

 

 

64,905

 

Arriva PLC

 

Transportation

 

472

 

 

6,643

 

Aviva PLC

 

Insurance

 

4,200

 

 

67,495

 

Bellway PLC

 

Consumer Durables & Apparel

 

432

 

 

11,923

 

BG Group PLC

 

Energy

 

502

 

 

6,569

 

BT Group PLC

 

Telecommunication Services

 

1,791

 

 

10,727

 

Firstgroup PLC

 

Transportation

 

1,446

 

 

15,412

 

GlaxoSmithKline PLC

 

Pharma, Biotech & Life Sciences

 

1,573

 

 

42,028

 

HBOS PLC

 

Banks

 

2,967

 

 

64,523

 

Kelda Group PLC

 

Utilities

 

1,280

 

 

23,376

 

Legal & General Group PLCE

 

Insurance

 

608

 

 

1,842

 

National Grid PLC

 

Utilities

 

1,883

 

 

28,307

 

Next PLC

 

Retailing

 

719

 

 

27,486

 

Resolution PLC

 

Insurance

 

915

 

 

11,677

 

Royal Bank Of Scotland Group

 

Banks

 

2,302

 

 

92,146

 

Scottish Power PLC

 

Utilities

 

2,021

 

 

29,551

 

Severn Trent PLC

 

Utilities

 

3,219

 

 

89,157

 

Standard Life PLC (a)

 

Insurance

 

11,127

 

 

64,033

 

Taylor Woodrow PLC

 

Consumer Durables & Apparel

 

2,040

 

 

16,252

 

The Berkeley Grp Holdings

 

Consumer Durables & Apparel

 

568

 

 

16,666

 

Trinity Mirror PLC

 

Media

 

1,929

 

 

18,048

 

 

 

39 

 

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

COUNTRY/ SECURITY

 

INDUSTRY

 

SHARES

 

VALUE

 

United Kingdom (continued)

 

 

 

 

 

 

 

 

Vodafone Group PLC

 

Telecommunication Services

 

713

 

$

2,066

 

Whitbread PLC (a)

 

Consumer Services

 

321

 

 

10,185

 

Wimpey (George) PLC

 

Consumer Durables & Apparel

 

3,404

 

 

35,847

 

 

 

 

 

 

 

 

756,864

 

Total Investments — 97.6% (Cost $3,949,906) (b)

 

 

 

 

 

 

3,971,230

 

Other Assets, less liabilities — 2.4%

 

 

 

 

 

 

97,842

 

Net Assets — 100.0%

 

 

 

 

 

$

4,069,072

 

______________

(a)

Non-income producing security.

(b)

The aggregate cost for federal income tax purposes is $3,950,076. The aggregate gross unrealized appreciation is $87,015 and the aggregate gross unrealized depreciation is $65,861, resulting in net unrealized appreciation of $21,154.

 

SEE NOTES TO FINANCIAL STATEMENTS

 

 

40

 

DOMINI SOCIAL BOND FUND

PERFORMANCE COMMENTARY

For the six months ended January 31, 2007, the Fund returned 2.77%, while the Lehman Brothers Intermediate Aggregate Index (LBIA) returned 3.44%. The Fund’s investments in mortgage-backed securities — investments that can play an important social role by helping to make housing more affordable — played an important role in performance during the period. An underweighting to standard mortgage-backed bonds, which are backed by pools of individual home mortgages, hurt Fund performance, as that sector outperformed the general bond market. At the same time, the Fund’s position in project loans, which help provide financing for multiple residences like low-income housing projects and nursing homes, also hurt, as that sector (which is not represented in the LBIA Index) modestly underperformed the market. The Fund’s relative performance was helped by its avoidance of Treasuries, which are excluded by Domini’s Global Investment Standards.

The Domini Social Bond Fund is designed to use the power of fixed-income investing to revitalize struggling communities. The Fund seeks investments that increase access to capital for those historically underserved by mainstream financial services providers, that create public goods for those most in need, and that use financial innovation in the service of the economically disadvantaged. All holdings are evaluated according to their social impact, using Domini’s five-level Community Impact Gradient.

The Fund invests primarily in intermediate-maturity, investment-grade fixed-income securities issued by government agencies, corporations, and other institutions, with a particular focus on mortgage-backed securities that help provide affordable housing. 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. Fannie Mae and Freddie Mac are government-chartered, but shareholder-owned, corporations whose mandate is to enhance liquidity in the secondary mortgage markets. (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 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.)

The Fund allocates up to 10% of its assets directly to community development banks and credit unions, and other investments with innovative approaches to small business development, community revitalization, rural development, education, environmental recovery, and healthcare. Some of the Fund’s community development investments may be unrated, illiquid, and carry greater credit risks than its other investments.

 

 

 

 

41

 

The bar chart below provides information as of January 31, 2007, about the percentage of the Fund’s portfolio holdings invested in various types of debt obligations:

PORTFOLIO COMPOSITION (% OF NET ASSETS)


The Domini Social Bond Fund is not insured and is subject to market risks, interest rate risks, and credit risks. Investment return, principal value, and yield of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. You may lose money.

During periods of rising interest rates, bond funds can lose value. The Fund’s community development investments may be unrated and may carry greater risks than the Fund’s other holdings. The Fund currently holds a large percentage of its portfolio in mortgage-backed securities. During periods of falling interest rates these securities may prepay the principal due, which may lower the Fund’s return by causing it to reinvest at lower interest rates.

______________

The holdings mentioned above are described in the Fund’s Portfolio of Investments at January 31, 2007, included herein. The composition of the Fund’s portfolio is subject to change.

 

 

42

Domini Social Bond Fund — Performance Commentary

 

AVERAGE ANNUAL TOTAL RETURNS

 

 

 

 

 

Domini Social Bond
Fund Investor Shares
(DSBFX)

 

Lehman Brothers
Intermediate
Aggregate Index
(LBIA)

As of
12-31-06

 

1 Year

 

 

3.38%  

 

 

4.58%  

 

5 Year

 

 

3.75%  

 

 

4.70%  

 

Since Inception

 

5.40%(1)  

 

6.25%(1)  

As of
1-31-07

 

1 Year

 

 

3.21%  

 

 

4.48%  

 

5 Year

 

 

3.57%  

 

 

4.56%  

 

Since Inception

 

5.31%(1)  

 

6.17%(1)  

COMPARISON OF $10,000 INVESTMENT IN THE

DOMINI SOCIAL BOND FUND INVESTOR SHARES AND LBIA


Past performance is no guarantee of future results. The Fund’s returns quoted above represent past performance after all expenses. Economic and market conditions change, and both will cause investment return, principal value, and yield to fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month-end, call 1-800-582-6757 or visit www.domini.com. A 2.00% redemption fee is charged on sales or exchanges of shares made less than 60 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Performance data quoted above does not reflect the deduction of this fee, which would reduce the performance quoted. See the Fund’s prospectus for further information.

The table and the graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return for the Domini Social Bond Fund is based on the Fund’s net asset values and assumes all dividends and capital gains were reinvested. An investment in the Fund is not a bank deposit and is not insured. You may lose money. Certain fees payable by the Fund were waived during the period, and the Fund’s average annual total returns would have been lower had these not been waived.

The Lehman Brothers Intermediate Aggregate Index (LBIA) is an unmanaged index of intermediate investment-grade fixed-income securities. Investors cannot invest directly in the LBIA.

______________

(1) Since June 1, 2000.

This material must be preceded or accompanied by the Fund’s current prospectus. DSIL Investment Services LLC, Distributor. 03/07

 

 

 

Domini Social Bond Fund — Performance Commentary  

43

 

 

 

DOMINI SOCIAL BOND FUND

PORTFOLIO OF INVESTMENTS

JANUARY 31, 2007 (UNAUDITED)

 

 

 

PRINCIPAL
AMOUNT

 

VALUE
(NOTE 1)

 

U.S. Government Agency Obligations — 28.2%

 

 

 

 

 

 

 

FANNIE MAE:

 

 

 

 

 

 

 

3.850%, 4/14/2009

 

$

500,000

 

$

487,235

 

4.500%, 2/15/2011

 

 

750,000

 

 

735,473

 

4.625%, 10/15/2013

 

 

2,340,000

 

 

2,279,319

 

5.000%, 4/15/2013

 

 

500,000

 

 

488,990

 

5.500%, 3/15/2011

 

 

300,000

 

 

304,546

 

6.200%, 6/13/2017

 

 

1,000,000

 

 

1,002,286

 

FEDERAL AGRICULTURE MORTGAGE CORPORATION:

 

 

 

 

 

 

 

6.680%, 6/10/2014

 

 

1,000,000

 

 

1,096,169

 

FEDERAL FARM CREDIT BANK:

 

 

 

 

 

 

 

6.300%, 6/6/2011

 

 

250,000

 

 

262,553

 

FEDERAL HOME LOAN BANK:

 

 

 

 

 

 

 

4.000%, 12/19/2011

 

 

450,000

 

 

428,738

 

5.000%, VR, 12/16/2011

 

 

500,000

 

 

492,202

 

5.480%, 9/22/2008

 

 

500,000

 

 

501,611

 

5.490%, 12/22/2008

 

 

1,500,000

 

 

1,506,635

 

5.500%, 8/15/2008

 

 

250,000

 

 

251,198

 

5.575%, 2/17/2009

 

 

555,000

 

 

560,115

 

6.625%, 11/15/2010

 

 

465,000

 

 

489,747

 

7.375%, 2/12/2010

 

 

500,000

 

 

531,812

 

FREDDIE MAC:

 

 

 

 

 

 

 

4.750%, 3/18/2013

 

 

1,000,000

 

 

968,698

 

5.000%, 4/22/2013

 

 

1,000,000

 

 

976,738

 

5.000%, 7/23/2018

 

 

750,000

 

 

708,276

 

5.500%, 9/15/2011

 

 

3,330,000

 

 

3,386,600

 

U.S. SMALL BUSINESS ADMINISTRATION:

 

 

 

 

 

 

 

2003-10C 1, 3.530%, 5/1/2013

 

 

312,198

 

 

298,083

 

2003-20D 1, 4.760%, 4/1/2023

 

 

461,571

 

 

449,445

 

2003-20E 1, 4.640%, 5/1/2023

 

 

457,989

 

 

442,861

 

2003-20F 1, 4.070%, 6/1/2023

 

 

404,999

 

 

378,587

 

2003-20G 1, 4.350%, 7/1/2023

 

 

223,657

 

 

212,469

 

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS

 

 

 

 

 

 

 

(COST $19,392,559)

 

 

 

 

 

19,240,386

 

U.S. Government Agency Mortgage Securities — 43.0%

 

 

 

 

 

 

 

FANNIE MAE:

 

 

 

 

 

 

 

13743, 6.280%, VR, 11/1/2019

 

 

12,114

 

 

12,257

 

250168, 8.000%, 12/1/2009

 

 

26,623

 

 

27,168

 

252120, 7.500%, 8/1/2025

 

 

42,218

 

 

44,007

 

402999, 7.375%, VR, 10/1/2027

 

 

4,675

 

 

4,755

 

526882, 6.853%, VR, 2/1/2029

 

 

8,967

 

 

9,147

 

696355, 5.500%, 3/1/2033

 

 

1,421,449

 

 

1,402,110

 

789089, 5.500%, 8/1/2019

 

 

569,501

 

 

567,834

 

892917, 6.500%, 8/1/2036

 

 

2,134,639

 

 

2,170,867

 

FANNIE MAE CMO:

 

 

 

 

 

 

 

1990-99 K, 6.500%, 8/25/2020

 

 

18,185

 

 

18,644

 

1993-106 Z, 7.000%, 6/25/2013

 

 

6,300

 

 

6,480

 

2003-66 MB, 3.500%, 5/25/2023

 

 

591,911

 

 

548,522

 

2003-73 GA, 3.500%, 5/25/2031

 

 

684,220

 

 

640,099

 

2005-M1 A, 4.479%, 10/26/2031

 

 

491,848

 

 

479,035

 

 

44

 

DOMINI SOCIAL BOND FUND / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

 

 

PRINCIPAL
AMOUNT

 

VALUE
(NOTE 1)

 

U.S. Government Agency Mortgage Securities (continued)

 

 

 

 

 

 

 

FREDDIE MAC:

 

 

 

 

 

 

 

845025, 5.747%, VR, 12/1/2018

 

$

18,616

 

$

19,012

 

A18404, 5.500%, 2/1/2034

 

 

586,927

 

 

578,946

 

A30028, 6.000%, 11/1/2034

 

 

315,478

 

 

317,308

 

A51729, 6.500%, 8/1/2036

 

 

1,862,468

 

 

1,894,077

 

B11108, 5.500%, 11/1/2018

 

 

1,038,509

 

 

1,035,373

 

B11109, 4.500%, 11/1/2018

 

 

1,104,527

 

 

1,061,520

 

C77635, 5.500%, 2/1/2033

 

 

1,293,948

 

 

1,277,078

 

FREDDIE MAC CMO:

 

 

 

 

 

 

 

1208 D, 4.210%, VR, 2/15/2022

 

 

23,522

 

 

23,515

 

2302 J, 6.500%, 4/15/2031

 

 

94,691

 

 

96,082

 

2628 LE, 3.250%, 6/15/2033

 

 

510,083

 

 

480,684

 

GINNIE MAE CMO:

 

 

 

 

 

 

 

2001-34, 6.403%, VR, 10/16/2020

 

 

809,540

 

 

817,702

 

2001-44, 6.114%, 11/16/2021

 

 

147,101

 

 

148,075

 

2002-26 C, 5.995%, VR, 2/16/2024

 

 

935,894

 

 

945,799

 

2002-37 C, 5.878%, 6/16/2024

 

 

1,000,000

 

 

1,011,781

 

2002-9, 5.881%, 3/16/2024

 

 

264,757

 

 

264,852

 

2003-36 C, 4.254%, 2/16/2031

 

 

1,000,000

 

 

961,820

 

2003-78 C, 5.476%, VR, 2/16/2031

 

 

1,000,000

 

 

994,541

 

2004-6 C, 4.660%, 7/16/2033

 

 

1,000,000

 

 

964,920

 

2004-77 AB, 4.368%, 11/16/2030

 

 

899,569

 

 

866,796

 

2005-42 B, 4.571%, 9/15/2027

 

 

1,000,000

 

 

967,747

 

2005-67 B, 4.751%, 10/16/2026

 

 

1,000,000

 

 

975,842

 

2005-87, 4.449%, 3/16/2025

 

 

924,736

 

 

904,769

 

2005-89, 4.811%, 5/16/2027

 

 

972,234

 

 

955,965

 

2005-90, 3.760%, 9/16/2028

 

 

974,174

 

 

938,812

 

2006-05 A, 4.241%, 7/16/2029

 

 

975,725

 

 

949,625

 

2006-9 B, 5.269%, 3/16/2037

 

 

1,000,000

 

 

980,131

 

2006-3 A, 4.212%, VR, 1/16/2028

 

 

975,057

 

 

948,750

 

2005-79 A, 3.998%, VR, 10/16/2033

 

 

965,486

 

 

937,706

 

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION

 

 

 

 

 

 

 

2038, 8.500%, 7/20/2025

 

 

11,660

 

 

12,550

 

2380, 8.500%, 2/20/2027

 

 

25,096

 

 

26,850

 

3233, 5.500%, 5/20/2017

 

 

565,450

 

 

563,840

 

615760, 5.500%, 8/15/2028

 

 

485,398

 

 

481,855

 

TOTAL U.S. GOVERNMENT AGENCY MORTGAGE SECURITIES

 

 

 

 

 

 

 

(COST $29,853,041)

 

 

 

 

 

29,335,248

 

Corporate Obligations — 13.4%

 

 

 

 

 

 

 

Anadarko Petroleum Corporation, 5.950%, 9/15/2016

 

 

600,000

 

 

595,847

 

Bank of America Corporation, 5.750%, 8/15/2016

 

 

700,000

 

 

711,889

 

Cisco Systems Inc., 5.500%, 2/22/2016

 

 

600,000

 

 

599,769

 

CIT Group Inc., 5.600%, 4/27/2011

 

 

700,000

 

 

705,280

 

Citigroup Inc., 5.300%, 1/7/2016

 

 

700,000

 

 

693,321

 

Comcast Corporation, 4.950%, 6/15/2016

 

 

600,000

 

 

562,730

 

Goldman Sachs Group Inc., 5.350%, 1/15/2016

 

 

600,000

 

 

587,735

 

John Deere Capital Corporation, 3.625%, 5/25/2007

 

 

600,000

 

 

596,767

 

Lehman Brothers Holdings Inc., 5.250%, 2/6/2012

 

 

700,000

 

 

696,279

 

Merck & Co., Inc., 5.125%, 11/15/2011

 

 

600,000

 

 

596,336

 

Procter & Gamble Company, 8.500%, 8/10/2009

 

 

610,000

 

 

657,348

 

SBC Communications, 5.100%, 9/15/2014

 

 

600,000

 

 

581,253

 

Southwest Airlines Co., 5.125%, 3/1/2017

 

 

600,000

 

 

555,260

 

 

 

45

 

DOMINI SOCIAL BOND FUND / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

 

 

PRINCIPAL
AMOUNT

 

VALUE
(NOTE 1)

 

Corporate Obligations (continued)

 

 

 

 

 

 

 

Verizon Communications, 5.550%, 2/15/2016

 

$

335,000

 

$

331,741

 

Wachovia Corporation, 5.300%, 10/15/2011

 

 

700,000

 

 

701,044

 

TOTAL CORPORATE OBLIGATIONS

 

 

 

 

 

 

 

(COST $9,208,636)

 

 

 

 

 

9,172,599

 

Corporate Mortgage Securities — 3.1%

 

 

 

 

 

 

 

CRFCM 2004-1A A 144A, 5.500%, 4/25/2035

 

 

1,767,657

 

 

1,732,215

 

WFMBS 2003-8 A7, 4.500%, 8/25/2018

 

 

389,487

 

 

354,890

 

TOTAL CORPORATE MORTGAGE SECURITIES

 

 

 

 

 

 

 

(Cost $2,147,893)

 

 

 

 

 

2,087,105

 

State & Municipal Obligations — 5.7%

 

 

 

 

 

 

 

City of Cleveland, OH, 4.350%, 12/1/2011 (Insured: AMBAC)

 

 

500,000

 

 

480,395

 

City of Zion, IL, 6.250%, 12/1/2012 (Insured: FGIC)

 

 

250,000

 

 

257,580

 

Hudson County, NJ, Improvement Authority, 7.240%, 9/1/2008

 

 

 

 

 

 

 

(Insured: AMBAC)

 

 

195,000

 

 

200,417

 

Hudson County, NJ, Improvement Authority, 7.290%, 9/1/2009

 

 

 

 

 

 

 

(Insured: AMBAC)

 

 

175,000

 

 

183,005

 

Kentucky State Property and Buildings Commission, 3.960%,

 

 

 

 

 

 

 

10/1/2009 (Insured: MBIA)

 

 

300,000

 

 

290,073

 

Los Angeles, CA, Community Redevelopment Agency, 6.600%,

 

 

 

 

 

 

 

9/1/2020 (Insured: FSA)

 

 

515,000

 

 

549,478

 

New Jersey Economic Development Authority, 3.700%, 4/1/2008

 

 

 

 

 

 

 

(Insured: AMBAC)

 

 

200,000

 

 

196,296

 

North Carolina State University at Raleigh, 6.160%, 10/1/2009

 

 

400,000

 

 

407,212

 

Pennsylvania Economic Development Financing Authority, 5.650%,

 

 

 

 

 

 

 

6/1/2015 (Insured: FGIC)

 

 

380,000

 

 

381,775

 

State of Mississippi, 3.510%, 11/1/2009

 

 

500,000

 

 

477,920

 

Texas Public Finance Authority, 3.125%, 6/15/2007

 

 

250,000

 

 

247,965

 

Yazoo County, MS, 4.200%, 9/1/2008 (Insured: AMBAC)

 

 

225,000

 

 

221,074

 

TOTAL STATE & MUNICIPAL OBLIGATIONS

 

 

 

 

 

 

 

(Cost $4,021,919)

 

 

 

 

 

3,893,190

 

Certificates of Deposit — 4.4%

 

 

 

 

 

 

 

Albina Community Bank, 4.410%, 7/29/2007

 

 

100,000

 

 

100,000

 

Appalachian Federal Credit Union, 4.250%, 4/17/2007

 

 

100,000

 

 

100,000

 

Carver Federal Savings Bank, 4.930%, 11/12/2007

 

 

100,000

 

 

100,000

 

Central Bank of Kansas City, 4.760%, 5/29/2007

 

 

100,000

 

 

100,000

 

Citizens Savings Bank & Trust, 5.100%, 6/30/2007

 

 

100,000

 

 

100,000

 

City First Bank of D.C., 3.900%, 2/5/2007

 

 

100,000

 

 

100,000

 

City National Bank of Newark, NJ, 4.880%, 11/14/2007

 

 

100,000

 

 

100,000

 

Community Commerce Bank, 5.300%, 6/1/2007

 

 

100,000

 

 

100,000

 

Communitywide Federal Credit Union, 5.300%, 12/31/2007

 

 

100,000

 

 

100,000

 

Dakotaland Federal Credit Union, 4.040%, 4/22/2007

 

 

100,000

 

 

100,000

 

Delta Southern Bank, 5.000%, 6/21/2007

 

 

100,000

 

 

100,000

 

Elk Horn Bank and Trust, 5.300%, 6/20/2007

 

 

100,000

 

 

100,000

 

First Bank of the Delta, N.A., 4.500%, 6/26/2007

 

 

100,000

 

 

100,000

 

First Delta Federal Credit Union, 3.500%, 7/29/2007

 

 

100,000

 

 

100,000

 

Harbor Bank of Maryland, 4.000%, 7/25/2007

 

 

100,000

 

 

100,000

 

Latino Community Credit Union, 4.000%, 5/31/2007

 

 

100,000

 

 

100,000

 

Legacy Bank, 4.150%, 7/26/2007

 

 

100,000

 

 

100,000

 

Liberty Bank and Trust Co., 3.250%, 12/5/2007

 

 

100,000

 

 

100,000

 

Louisville Community Development Bank, 4.000%, 6/25/2007

 

 

100,000

 

 

100,000

 

Lower East Side People’s Federal Credit Union, 2.250%, 12/6/2007

 

 

100,000

 

 

100,000

 

 

 

46

 

DOMINI SOCIAL BOND FUND / PORTFOLIO OF INVESTMENTS (CONTINUED)

JANUARY 31, 2007 (UNAUDITED)

 

 

 

PRINCIPAL
AMOUNT

 

VALUE
(NOTE 1)

 

Certificates of Deposit (continued)

 

 

 

 

 

 

 

Mission Community Bank, 4.590%, 12/3/2007

 

$

100,000

 

$

100,000

 

Neighborhood National Bank, 4.300%, 6/1/2007

 

 

100,000

 

 

100,000

 

Northside Community Federal Credit Union, 4.000%, 6/27/2007

 

 

100,000

 

 

100,000

 

One United Bank, 4.500%, 5/27/2007

 

 

100,000

 

 

100,000

 

Opportunities Credit Union, 3.000%, 7/21/2007

 

 

100,000

 

 

100,000

 

Santa Cruz Community Credit Union, 3.690%, 3/1/2007

 

 

100,000

 

 

100,000

 

Self-Help Credit Union, 5.000%, 12/13/2007

 

 

100,000

 

 

100,000

 

Shore Bank Pacific, 4.470%, 11/6/2007

 

 

100,000

 

 

100,000

 

University National Bank, 5.250%, 7/26/2007

 

 

100,000

 

 

100,000

 

Wainwright Bank & Trust Company, 4.120%, 5/10/2007

 

 

100,000

 

 

100,000

 

TOTAL CERTIFICATES OF DEPOSIT

 

 

 

 

 

 

 

(Cost $3,000,000)

 

 

 

 

 

3,000,000

 

Cash Equivalents — 2.7%

 

 

 

 

 

 

 

INVESTMENT IN REPURCHASE AGREEMENTS:

 

 

 

 

 

 

 

Investors Bank & Trust, dated 1/31/07, 3.50% due 2/1/07, maturity amount 1,516,768 (collaterized by: U.S. Government Agency Obligations, U.S. Small Business Administration, 505661, 7.375%, 2/25/2013, market value $409,016; U.S. Government Agency Obligations, U.S. Small Business Administration, Pool 504090, 7.875%, 3/25/2023, market value $362,188; U.S. Government Agency Obligations, U.S. Small Business Administration, Pool 505247, 8.625%, 4/25/2013, market value $408,382; U.S. Government Agency Mortgage Securities, Fannie Mae, FN799641, 4.691%, 11/01/2034, market value $412,865)

 

 

1,516,621

 

 

1,516,621

 

MONEY MARKET DEMAND ACCOUNTS:

 

 

 

 

 

 

 

Self-Help Credit Union, 4.900%, 2/1/2007 (a)

 

 

224,211

 

 

224,211

 

University National Bank, 2.510%, 2/1/2007 (a)

 

 

107,585

 

 

107,585

 

TOTAL CASH EQUIVALENTS

 

 

 

 

 

 

 

(Cost $1,848,417)

 

 

 

 

 

1,848,417

 

Total Investments — 100.5%

 

 

 

 

 

 

 

(Cost $69,472,465) (b)

 

 

 

 

 

68,576,945

 

Other Liabilities, less assets — (0.5)%

 

 

 

 

 

(318,460

)

Net Assets — 100.0%

 

 

 

 

$

68,258,485

 

______________

(a)

Securities (other than short-term obligations with remaining maturities of 60 days or less) 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 Fund’s Board of Trustees.

(b)

The aggregate cost for book and federal income tax purposes is $69,472,465. The aggregate gross unrealized appreciation is $149,422, and the aggregate gross unrealized depreciation is $1,044,942, resulting in net unrealized depreciation of $895,520.

AMBAC — American Municipal Bond Assurance Corp.

CMO — Collateralized Mortgage Obligation

FGIC — Financial Guarantee Insurance Co.

FSA — Financial Security Assurance Co.

MBIA — Municipal Bond Investors Assurance

VR — Variable interest rate. Rate shown is that on January 31, 2007.

144A — Security that may be sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

47

 

DOMINI FUNDS

EXPENSE EXAMPLE

As a shareholder of the Domini Funds, you incur two types of costs:

•

Transaction costs such as redemption fees deducted from any redemption or exchange proceeds if you sell or exchange shares of the Fund after holding them less than 60 days

•

Ongoing costs, including management fees, distribution (12b-1) fees, and other Fund expenses

This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested on August 1, 2006, and held through January 31, 2007.

Actual Expenses

The line of the table captioned “Actual Expenses” below provides information about actual account value and actual expenses. You may use the information in this line, together with the amount invested, to estimate the expenses that you paid over the period as follows:

•

Divide your account value by $1,000.

•

Multiply your result in step 1 by the number in the first line under the heading “Expenses Paid During Period” in the table.

•

The result equals the estimated expenses you paid on your account during the period.

Hypothetical Expenses

The second line of the tables below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s return. The hypothetical account values and expenses may not be used to estimate actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical example that appears in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

48

 

 

Fund Name

 

Expenses

 

Beginning
Account
Value as of
8/1/2006

 

Ending
Account
Value as of
1/31/2007

 

Expenses
Paid During
Period
8/1/2006 –
1/31/2007

Domini Social
Equity Fund
Investor Shares

 

Actual Expenses

 

$1,000.00

 

$1,154.20

 

$5.541

 

Hypothetical Expenses

 

 

 

 

 

 

 

(5% return before expenses)

 

$1,000.00

 

$1,020.06

 

$5.191

Domini Social
Equity Fund
Class R Shares

 

Actual Expenses

 

$1,000.00

 

$1,156.70

 

$3.811

 

Hypothetical Expenses

 

 

 

 

 

 

 

(5% return before expenses)

 

$1,000.00

 

$1,021.68

 

$3.571

Domini European
Social Equity Fund

 

Actual Expenses

 

$1,000.00

 

$1,215.40

 

$8.882

 

Hypothetical Expenses

 

 

 

 

 

 

 

(5% return before expenses)

 

$1,000.00

 

$1,017.19

 

$8.082

Domini PacAsia
Social Equity Fund

 

Actual Expenses

 

$1,000.00

 

$1,015.33

 

$7.823

 

Hypothetical Expenses

 

 

 

 

 

 

 

(5% return before expenses)

 

$1,000.00

 

$1,017.44

 

$7.833

Domini EuroPacific
Social Equity Fund

 

Actual Expenses

 

$1,000.00

 

$1,025.56

 

$7.864

 

Hypothetical Expenses

 

 

 

 

 

 

 

(5% return before expenses)

 

$1,000.00

 

$1,017.44

 

$7.834

Domini Social
Bond Fund

 

Actual Expenses

 

$1,000.00

 

$1,027.70

 

$4.865

 

Hypothetical Expenses

 

 

 

 

 

 

 

(5% return before expenses)

 

$1,000.00

 

$1,020.42

 

$4.845

1

Expenses are equal to the Fund’s annualized expense ratio of 1.02% for Investor shares, or 0.70% for Class R shares, multiplied by average account value over the period, multiplied by 184, and divided by 365. The example reflects the aggregate expenses of the Fund and the Domini Social Equity Trust, the underlying portfolio in which the Fund invests.

2

Expenses are equal to the Fund’s annualized expense ratio of 1.59%, multiplied by average account value over the period, multiplied by 184, and divided by 365. The example reflects the aggregate expenses of the Fund and the Domini European Social Equity Trust, the underlying portfolio in which the Fund invests.

3

Expenses are equal to the Fund’s annualized expense ratio of 1.54%, multiplied by average account value over the period, multiplied by 184, and divided by 365. The example reflects the aggregate expenses of the Fund and the Domini PacAsia Social Equity Trust, the underlying portfolio in which the Fund invests.

4

Expenses are equal to the Fund’s annualized expense ratio of 1.54%, multiplied by average account value over the period, multiplied by 184, and divided by 365. The example reflects the aggregate expenses of the Fund and the Domini EuroPacific Social Equity Trust, the underlying portfolio in which the Fund invests.

5

Expenses are equal to the Fund’s annualized expense ratio of 0.95%, multiplied by average account value over the period, multiplied by 184, and divided by 365.

 

 

Domini Funds — Expense Example

49

 

 

 

THIS PAGE INTENTIONALLY LEFT BLANK

 

 

50

 

FINANCIAL STATEMENTS

 

 

 

51

 

DOMINI SOCIAL EQUITY TRUST

DOMINI EUROPEAN SOCIAL EQUITY TRUST

DOMINI PACASIA SOCIAL EQUITY TRUST

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST

STATEMENTS OF ASSETS AND LIABILITIES

JANUARY 31, 2007 (UNAUDITED)

 

ASSETS:

Investments at cost

Investments at value

Cash

Foreign currency

Receivable for securities sold

Dividend and tax reclaim receivables

Total assets

LIABILITIES:

Payable for securities purchased

Management fee payable

Other accrued expenses

Total liabilities

NET ASSETS APPLICABLE TO INVESTORS’ BENEFICIAL INTERESTS

 

 

52

 

 

 

 

Domini Social
Equity Trust

 

Domini European
Social Equity Trust

 

Domini PacAsia
Social Equity Trust

 

Domini EuroPacific
Social Equity Trust

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments at cost

 

$

1,215,349,476

 

$

91,005,011

 

$

10,970,083

 

$

3,949,906

 

Investments at value

 

$

1,368,997,248

 

$

108,006,023

 

$

11,048,060

 

$

3,971,230

 

Cash

 

 

5,260,036

 

 

2,944,193

 

 

437,591

 

 

176,038

 

Foreign currency

 

 

—

 

 

27,265

 

 

665

 

 

348

 

Receivable for securities sold

 

 

69,541,040

 

 

—

 

 

500

 

 

13,548

 

Dividend and tax reclaim receivables

 

 

1,359,483

 

 

99,733

 

 

50

 

 

65

 

Total assets

 

 

1,445,157,807

 

 

111,077,214

 

 

11,486,866

 

 

4,161,229

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable for securities purchased

 

 

65,571,306

 

 

85

 

 

130,147

 

 

89,825

 

Management fee payable

 

 

349,007

 

 

68,525

 

 

6,083

 

 

2,315

 

Other accrued expenses

 

 

47,128

 

 

1,256

 

 

32

 

 

17

 

Total liabilities

 

 

65,967,441

 

 

69,866

 

 

136,262

 

 

92,157

 

NET ASSETS APPLICABLE TO INVESTORS’ BENEFICIAL INTERESTS

 

$

1,379,190,366

 

$

111,007,348

 

$

11,350,604

 

$

4,069,072

 

SEE NOTES TO FINANCIAL STATEMENTS

 

 

53

 

DOMINI SOCIAL EQUITY TRUST

DOMINI EUROPEAN SOCIAL EQUITY TRUST

DOMINI PACASIA SOCIAL EQUITY TRUST

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST

STATEMENTS OF OPERATIONS

 

INVESTMENT INCOME:

Dividends (net of foreign taxes of $0, $32,059, $0 and $539, respectively)

EXPENSES:

Management fee

Custody fees

Professional fees

Trustees fees

Miscellaneous

Total expenses

Fees paid indirectly

Fees waived

Net expenses

NET INVESTMENT INCOME (LOSS)

REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS AND FOREIGN CURRENCY:

NET REALIZED GAIN (LOSS) FROM:

Investments

Foreign currency

Net realized gain (loss)

NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) ON:

Investments

Translation of assets and liabilities in foreign currencies

Net change in unrealized appreciation (depreciation)

NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS AND FOREIGN CURRENCY

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

 

54

 

 

 

 

Domini Social
Equity Trust

 

Domini European
Social Equity Trust

 

Domini PacAsia
Social Equity Trust

 

Domini EuroPacific
Social Equity Trust

 

 

 

FOR THE
SIX MONTHS ENDED
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE
SIX MONTHS ENDED
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS) THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS) THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends (net of foreign taxes of $0, $32,059, $0 and $539, respectively)

 

$

12,766,080

 

$

496,957

 

$

50

 

$

5,370

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fee

 

 

1,668,808

 

 

312,583

 

 

6,853

 

 

2,605

 

Custody fees

 

 

215,308

 

 

76,386

 

 

19,016

 

 

19,152

 

Professional fees

 

 

76,926

 

 

1,639

 

 

500

 

 

500

 

Trustees fees

 

 

27,219

 

 

1,518

 

 

—

 

 

—

 

Miscellaneous

 

 

27,189

 

 

598

 

 

932

 

 

918

 

Total expenses

 

 

2,015,450

 

 

392,724

 

 

27,301

 

 

23,174

 

Fees paid indirectly

 

 

(120,919

)

 

(37,148

)

 

(6,864

)

 

(2,581

)

Fees waived

 

 

(83,266

)

 

(31,692

)

 

(13,552

)

 

(17,970

)

Net expenses

 

 

1,811,265

 

 

323,884

 

 

6,885

 

 

2,623

 

NET INVESTMENT INCOME (LOSS)

 

 

10,954,815

 

 

173,073

 

 

(6,835

)

 

2,747

 

REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS AND FOREIGN CURRENCY:

 

 

 

 

 

 

 

 

 

 

 

 

 

NET REALIZED GAIN (LOSS) FROM:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

325,596,363

 

 

2,740,471

 

 

(40,613

)

 

(13,643

)

Foreign currency

 

 

—

 

 

(38,375

)

 

21,909

 

 

9,190

 

Net realized gain (loss)

 

 

325,596,363

 

 

2,702,096

 

 

(18,704

)

 

(4,453

)

NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) ON:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

(127,833,159

)

 

13,329,116

 

 

77,977

 

 

21,324

 

Translation of assets and liabilities in foreign currencies

 

 

—

 

 

(4,519

)

 

(380

)

 

(415

)

Net change in unrealized appreciation (depreciation)

 

 

(127,833,159

)

 

13,324,597

 

 

77,597

 

 

20,909

 

NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS AND FOREIGN CURRENCY

 

 

197,763,204

 

 

16,026,693

 

 

58,893

 

 

16,456

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

$

208,718,019

 

$

16,199,766

 

$

52,058

 

$

19,203

 

SEE NOTES TO FINANCIAL STATEMENTS

 

 

55

 

DOMINI SOCIAL EQUITY TRUST

DOMINI EUROPEAN SOCIAL EQUITY TRUST

DOMINI PACASIA SOCIAL EQUITY TRUST

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

Domini Social Equity Trust

 

 

 

SIX MONTHS
ENDED
JANUARY 31,
2007
(UNAUDITED)

 

YEAR ENDED
JULY 31, 2006

 

INCREASE IN NET ASSETS:

 

 

 

 

 

 

 

FROM OPERATIONS:

 

 

 

 

 

 

 

Net investment income (loss)

 

$

10,954,815

 

$

22,399,802

 

Net realized gain (loss)

 

 

325,596,363

 

 

(38,712,595

)

Net change in unrealized appreciation (depreciation)

 

 

(127,833,159

)

 

38,008,922

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

 

208,718,019

 

 

21,696,129

 

TRANSACTIONS IN INVESTORS’ BENEFICIAL INTEREST:

 

 

 

 

 

 

 

Additions

 

 

13,636,418

 

 

245,457,285

 

Reductions

 

 

(250,784,957

)

 

(471,501,091

)

Net Increase (Decrease) in Net Assets from Transactions in Investors’ Beneficial Interests

 

 

(237,148,539

)

 

(226,043,806

)

Total (Decrease) Increase in Net Assets

 

 

(28,430,520

)

 

(204,347,677

)

NET ASSETS:

 

 

 

 

 

 

 

Beginning of period

 

 

1,407,620,886

 

 

1,611,968,563

 

End of period

 

$

1,379,190,366

 

$

1,407,620,886

 

 

 

56

 

 

 

 

Domini European Social Equity Trust

 

Domini PacAsia Social Equity Trust

 

Domini EuroPacific Social Equity Trust

 

 

 

SIX MONTHS
ENDED
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
OCTOBER 3, 2005
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JULY 31, 2006

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

INCREASE IN NET ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

FROM OPERATIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

$

173,073

 

$

976,092

 

$

(6,835

)

$

2,747

 

Net realized gain (loss)

 

 

2,702,096

 

 

1,574,769

 

 

(18,704

)

 

(4,453

)

Net change in unrealized appreciation (depreciation)

 

 

13,324,597

 

 

3,677,012

 

 

77,597

 

 

20,909

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

 

16,199,766

 

 

6,227,873

 

 

52,058

 

 

19,203

 

TRANSACTIONS IN INVESTORS’ BENEFICIAL INTEREST:

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions

 

 

42,196,906

 

 

51,295,957

 

 

11,298,807

 

 

4,493,690

 

Reductions

 

 

(3,322,208

)

 

(1,590,946

)

 

(261

)

 

(443,821

)

Net Increase (Decrease) in Net Assets from Transactions in Investors’ Beneficial Interests

 

 

38,874,698

 

 

49,705,011

 

 

11,298,546

 

 

4,049,869

 

Total (Decrease) Increase in Net Assets

 

 

55,074,464

 

 

55,932,884

 

 

11,350,604

 

 

4,069,072

 

NET ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

 

55,932,884

 

 

—

 

 

—

 

 

—

 

End of period

 

$

111,007,348

 

$

55,932,884

 

$

11,350,604

 

$

4,069,072

 

 

SEE NOTES TO FINANCIAL STATEMENTS

 

 

57

 

FINANCIAL HIGHLIGHTS

 

DOMINI SOCIAL EQUITY TRUST

 

 

 

SIX MONTHS
ENDED
JANUARY 31,
2007
(UNAUDITED)

 

YEAR ENDED JULY 31,

 

 

 

 

2006

 

2005

 

2004

 

2003

 

2002

 

Net assets (in millions)

 

$

1,379

 

$

1,408

 

$

1,612

 

$

1,527

 

$

1,318

 

$

1,239

 

Total return

 

 

15.84

%

 

1.46

%

 

11.48

%

 

12.01

%

 

12.13

%

 

(22.71

%)

Ratio of net investment income (loss) to average net assets (annualized)

 

 

1.53

%

 

1.48

%

 

1.92

%

 

1.25

%

 

1.32

%

 

1.02

%

Ratio of expenses to average net assets (annualized)

 

 

0.27

%(1)(2)

 

0.22

%(2)

 

0.23

%(2)

 

0.24

%(2)

 

0.23

%(1)(2)

 

0.22

%(2)

Portfolio turnover rate

 

 

82

%

 

12

%

 

9

%

 

8

%

 

8

%

 

13

%

(1)

Reflects an expense reimbursement and fee waiver by the Manager of 0.01% for the six months ended January 31, 2007 and 0.01% for the year ended July 31, 2003. Had the Manager not waived its fee and reimbursed expenses, the ratio of expenses to average net assets would have been 0.28% for the six months ended January 31, 2007 and 0.24% for the year ended July 31, 2003.

(2)

Ratio of expenses to average net assets does not include indirectly paid expenses. Including indirectly paid expenses, the expense ratios would have been 0.25% for the six months ended January 31, 2007, and 0.21%, 0.22%, 0.24%, 0.23%, and 0.22% for the years ended July 31, 2006, 2005, 2004, 2003, and 2002, respectively.

 

DOMINI EUROPEAN SOCIAL EQUITY TRUST

 

 

 

 

SIX MONTHS
ENDED
JANUARY 31,
2007
(UNAUDITED)

 

FOR THE PERIOD
OCTOBER 3, 2005
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JULY 31, 2006

 

Net assets (in millions)

 

$

111

 

$

56

 

Total return

 

 

22.02

%

 

25.96

%*

Ratio of net investment income to average net assets (annualized)

 

 

0.42

%

 

3.92

%

Ratio of expenses to average net assets (annualized)

 

 

0.87

%(1)(2)

 

0.88

%(1)(2)

Portfolio turnover rate

 

 

37

%

 

69

%*

*

Not annualized.

(1)

Reflects a fee waiver by the Manager of 0.08% for the six months ended January 31, 2007 and 0.47% for the period ended July 31, 2006. Had the Manager not waived its fee, the ratio of expenses to average net assets would have been 0.95% for the six months ended January 31, 2007 and 1.35% for the period ended July 31, 2006.

(2)

Ratio of expenses to average net assets does not include indirectly paid expenses. Including indirectly paid expenses, the expense ratios would have been 0.78% for the six months ended January 31, 2007 and 0.77% for the period ended July 31, 2006.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

58

 

FINANCIAL HIGHLIGHTS

 

DOMINI PACASIA SOCIAL EQUITY TRUST

 

 

 

FOR THE PERIOD
DECEMBER 27, 2006 (COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

Net assets (in millions)

 

$

11

 

Total return

 

 

0.44

%*

Ratio of net investment loss to average net assets (annualized)

 

 

(0.75

%)

Ratio of expenses to average net assets (annualized)

 

 

1.51

%(1)(2)

Portfolio turnover rate

 

 

0.4

%*

*

Not annualized.

(1)

Reflects an expense reimbursement and fee waiver of 1.48% for the period ended January 31, 2007. Had the Manager not waived its fee, the ratio of expenses to average net assets would have been 2.99% for the period ended January 31, 2007.

(2)

Ratio of expenses to average net assets does not include indirectly paid expenses. Including indirectly paid expenses, the expense ratio would have been 0.75% for the period ended January 31, 2007.

 

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST

 

 

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

Net assets (in millions)

 

$

4

 

Total return

 

 

0.64

%*

Ratio of net investment income to average net assets (annualized)

 

 

0.79

%

Ratio of expenses to average net assets (annualized)

 

 

1.50

%(1)(2)

Portfolio turnover rate

 

 

13

%*

*

Not annualized.

(1)

Reflects an expense reimbursement and fee waiver by the Manager of 5.17% for the period ended January 31, 2007. Had the Manager not waived its fee, the ratio of expenses to average net assets would have been 6.67% for the period ended January 31, 2007.

(2)

Ratio of expenses to average net assets does not include indirectly paid expenses. Including indirectly paid expenses, the expense ratio would have been 0.76% for the period ended January 31, 2007.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

59

 

DOMINI SOCIAL EQUITY TRUST

DOMINI EUROPEAN SOCIAL EQUITY TRUST

DOMINI PACASIA SOCIAL EQUITY TRUST

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2007 (UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Domini Social Trust (formerly Domini Social Index Portfolio) was organized as a trust under the laws of the State of New York on June 7, 1989 and is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Domini Social Trust consists of four separate series: Domini Social Equity Trust, Domini European Social Equity Trust, Domini PacAsia Social Equity Trust and Domini EuroPacific Social Equity Trust (each a “Trust” and collectively the “Trusts”). The Declaration of Trust permits the Trustees to issue an unlimited number of beneficial interests in the Trusts. Each Trust seeks to provide its shareholders with long-term total return.

The Domini Social Equity Trust was designated as a series of the Domini Social Trust on June 7, 1989, and began investment operations on June 3, 1991. The Trust invests primarily in stocks of U.S. companies that meet Domini’s social and environmental standards.

The Domini European Social Equity Trust was designated as a series of the Domini Social Trust on August 1, 2005, and commenced investment operations on October 3, 2005. The Trust invests primarily in stocks of European companies that meet Domini’s social and environmental standards.

The Domini PacAsia Social Equity Trust was designated as a series of the Domini Social Trust on August 1, 2006, and commenced investment operations on December 27, 2006. The Trust invests primarily in stocks of Asia-Pacific companies that meet Domini’s social and environmental standards.

The Domini EuroPacific Social Equity Trust was designated as a series of the Domini Social Trust on August 1, 2006, and commenced investment operations on December 27, 2006. The Trust invests primarily in stocks of European and Asia-Pacific companies that meet Domini’s social and environmental standards.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported

 

 

60

 

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the Trusts’ significant accounting policies.

(A) Valuation of Investments. Securities listed or traded on national securities exchanges are valued at the last sale price reported by the security’s primary exchange 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. Securities for which market quotations are not readily available are valued at fair value as determined in good faith under procedures established by and under the supervision of the Trusts’ Board of Trustees.

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 Trusts’ 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 (including the use of an independent pricing service) by or under the direction of the Board of Trustees or its delegates.

(B) Foreign Currency Translation. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts on the date of valuation. Purchases and sales of securities, and income and expense items denominated in foreign currencies, are translated into U.S. dollar amounts on the respective dates of such transactions. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board of Trustees.

The Trusts do not separately report the effect of fluctuations in foreign exchange rates from changes in market prices on securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in fair

 

 

 

Notes to Financial Statements  

61

 

value of assets and liabilities other than investments in securities held at the end of the reporting period, resulting from changes in exchange rates.

(C) Foreign Currency Contracts. When the Trusts purchase or sell foreign securities they may enter into foreign exchange contracts to minimize foreign exchange risk from the trade date to the settlement date of the transactions. A foreign exchange contract is an agreement between two parties to exchange different currencies at an agreed-upon exchange rate on a specified date.

(D) Investment Transactions and Investment Income. Investment transactions are accounted for on trade date. Realized gains and losses from security transactions are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date.

(E) Federal Taxes. The Trusts will be treated as partnerships for U.S. federal income tax purposes and are therefore not subject to U.S. federal income tax. As such, investors in the Trusts will be taxed on their share of the applicable Trust’s ordinary income and capital gains. It is intended that the Trusts will be managed in such a way that an investor will be able to satisfy the requirements of the Internal Revenue Code applicable to regulated investment companies.

2. TRANSACTIONS WITH AFFILIATES

(A) Manager. Domini Social Investments LLC (Domini) is registered as an investment advisor under the Investment Advisers Act of 1940. The services provided by Domini consist of investment supervisory services, overall operational support, and administrative services. The administrative services include the provision of general office facilities and supervising the overall administration of the Trusts. For its services under the Management Agreements, Domini receives from each Trust a fee accrued daily and paid monthly at the annual rate below of the respective Trusts’ average daily net assets before any fee waivers:

 

Domini Social Equity Trust

 

0.20% of the first $2 billion of net assets managed,

(prior to November 30, 2006)

 

0.19% of the next $500 million of net assets managed, and

 

 

0.18% of net assets managed in excess of $2.5 billion

Domini Social Equity Trust

 

0.30% of the first $2 billion of net assets managed,

(effective November 30, 2006)

 

0.29% of the next $1 billion of net assets managed, and

 

 

0.28% of net assets managed in excess of $3 billion

Domini European Social Equity Trust,

 

0.75% of the first $250 million of net assets managed,

Domini PacAsia Social Equity Trust, and

 

0.70% of the next $250 million of net assets managed, and

Domini EuroPacific Social Equity Trust

 

0.65% of net assets managed in excess of $500 million

(B) Submanager. Wellington Management Company, LLP (Wellington) provides investment submanagement services to the Trusts on a day-to-day basis pursuant to Submanagement Agreements with Domini. Domini pays Wellington from its management fees. Prior to November 30, 2006, SSgA Funds Management, Inc. provided these services to Domini Social Equity Trust.

 

 

62  

Notes to Financial Statements

 

3. INVESTMENT TRANSACTIONS

For the period ended January 31, 2007, cost of purchases and proceeds from sales of investments, other than U.S. government securities and short-term obligations, were as follows:

 

 

 

PURCHASES

 

SALES

 

Domini Social Equity Trust

 

$

1,155,775,902

 

$

1,386,728,695

 

Domini European Social Equity Trust

 

 

67,248,582

 

 

30,425,476

 

Domini PacAsia Social Equity Trust

 

 

10,992,085

 

 

23,367

 

Domini EuroPacific Social Equity Trust

 

 

4,208,310

 

 

263,729

 

Per the Trusts’ arrangement with Investors Bank & Trust (“IBT”), credits realized as a result of uninvested cash balances are used to reduce a portion of the Trusts’ expenses. For the period ended January 31, 2007, custody fees of the Trusts, under these arrangements, were reduced by $120,919, $37,148, $6,864 and $2,581 for the Domini Social Equity Trust, Domini European Social Equity Trust, Domini PacAsia Social Equity Trust and Domini EuroPacific Social Equity Trust, respectively.

 

 

 

Notes to Financial Statements  

63

 

 

 

D OMINI SOCIAL EQUITY FUND

DOMINI EUROPEAN SOCIAL EQUITY FUND

DOMINI PACASIA SOCIAL EQUITY TRUST

DOMINI EUROPACIFIC SOCIAL EQUITY TRUST

STATEMENTS OF ASSETS AND LIABILITIES

JANUARY 31, 2007 (UNAUDITED)

 

ASSETS:

Investment in Portfolio, at value

Receivable for capital shares

Total assets

LIABILITIES:

Payable for capital shares

Sponsorship/Management fee payable

Distribution fee payable

Other accrued expenses

Total liabilities

NET ASSETS

NET ASSETS CONSIST OF:

Paid-in capital

Undistributed net investment income (loss)

Accumulated net realized gain (loss) from Portfolio

Net unrealized appreciation (depreciation) from Portfolio

NET ASSETS

NET ASSET VALUE PER SHARE

Investor shares:

Net assets

Outstanding shares of beneficial interest

Net asset value and offering price per share*

Class R shares:

Net assets

Outstanding shares of beneficial interest

Net asset value and offering price per share*

______________

*

Redemption price is equal to net asset value less any applicable redemption fees retained by the Fund.

 

 

64

 

 

 

 

Domini Social
Equity Fund

 

Domini European
Social Equity Fund

 

Domini PacAsia
Social Equity Fund

 

Domini EuroPacific
Social Equity Fund

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment in Portfolio, at value

 

$

1,188,010,039

 

$

103,886,936

 

$

11,163,781

 

$

3,868,499

 

Receivable for capital shares

 

 

1,168,153

 

 

353,296

 

 

50,011

 

 

32,803

 

Total assets

 

 

1,189,178,192

 

 

104,240,232

 

 

11,213,792

 

 

3,901,302

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable for capital shares

 

 

3,923,830

 

 

18,370

 

 

2,508

 

 

—

 

Sponsorship/Management fee payable

 

 

451,231

 

 

21,435

 

 

2,019

 

 

733

 

Distribution fee payable

 

 

235,750

 

 

39,155

 

 

4

 

 

826

 

Other accrued expenses

 

 

116,609

 

 

55,197

 

 

4,942

 

 

969

 

Total liabilities

 

 

4,727,420

 

 

134,157

 

 

9,473

 

 

2,528

 

NET ASSETS

 

$

1,184,450,772

 

$

104,106,075

 

$

11,204,319

 

$

3,898,774

 

NET ASSETS CONSIST OF:

 

 

 

 

 

 

 

 

 

 

 

 

 

Paid-in capital

 

$

1,032,803,661

 

$

85,926,960

 

$

11,161,297

 

$

3,879,542

 

Undistributed net investment income (loss)

 

 

363,590

 

 

(197,671

)

 

(13,993

)

 

(227

)

Accumulated net realized gain (loss) from Portfolio

 

 

(33,157,704

)

 

2,136,214

 

 

(18,620

)

 

(3,939

)

Net unrealized appreciation (depreciation) from Portfolio

 

 

184,441,225

 

 

16,240,572

 

 

75,635

 

 

23,398

 

NET ASSETS

 

$

1,184,450,772

 

$

104,106,075

 

$

11,204,319

 

$

3,898,774

 

NET ASSET VALUE PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

$

1,141,178,333

 

$

104,106,075

 

$

11,204,319

 

$

3,898,774

 

Outstanding shares of beneficial interest

 

 

33,393,813

 

 

7,114,048

 

 

1,117,610

 

 

388,051

 

Net asset value and offering price per share*

 

$

34.17

 

$

14.63

 

$

10.03

 

$

10.05

 


Class R shares:

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

$

43,272,439

 

 

 

 

 

 

 

 

 

 

Outstanding shares of beneficial interest

 

 

3,345,090

 

 

 

 

 

 

 

 

 

 

Net asset value and offering price per share*

 

$

12.94

 

 

 

 

 

 

 

 

 

 

SEE NOTES TO FINANCIAL STATEMENTS

 

 

65

 

DOMINI SOCIAL EQUITY FUND

DOMINI EUROPEAN SOCIAL EQUITY FUND

DOMINI PACASIA SOCIAL EQUITY FUND

DOMINI EUROPACIFIC SOCIAL EQUITY FUND

STATEMENTS OF OPERATIONS

 

 

 

INCOME:

Investment income from Portfolio (net of foreign taxes $0, $30,862, $0 and $513, respectively)

Expenses from Portfolio

Net investment income (loss) from Portfolio

EXPENSES:

Sponsor/Management fee

Distribution fees - Investor shares

Transfer agent fees

Printing

Professional fees

Miscellaneous

Trustees fees

Registration Fees

Accounting fees

Total expenses

Fees waived

Net expenses

NET INVESTMENT INCOME (LOSS)

REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:

NET REALIZED GAIN (LOSS) FROM PORTFOLIO:

Investments

Foreign Currency

Net realized gain (loss)

NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) FROM PORTFOLIO:

Investments

Translation of assets and liabilities in foreign currencies

Net change in unrealized appreciation (depreciation)

NET REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

 

66

 

 

 

 

 

Domini Social
Equity Fund

 

Domini European
Social Equity Fund

 

Domini PacAsia
Social Equity Fund

 

Domini EuroPacific Social Equity Fund

 

 

 

FOR THE
SIX MONTHS ENDED
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE
SIX MONTHS ENDED
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income from Portfolio (net of foreign taxes $0, $30,862, $0 and $513, respectively)

 

$

10,533,786

 

$

472,392

 

$

49

 

$

4,865

 

Expenses from Portfolio

 

 

(1,506,164

)

 

(305,470

)

 

(6,815

)

 

(2,471

)

Net investment income (loss) from Portfolio

 

 

9,027,622

 

 

166,922

 

 

(6,766

)

 

2,394

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Sponsor/Management fee

 

 

2,852,308

 

 

98,415

 

 

2,280

 

 

826

 

Distribution fees - Investor shares

 

 

1,417,467

 

 

98,415

 

 

2,280

 

 

826

 

Transfer agent fees

 

 

900,223

 

 

94,548

 

 

3,815

 

 

7,978

 

Printing

 

 

224,188

 

 

13,383

 

 

1,500

 

 

1,500

 

Professional fees

 

 

78,506

 

 

545

 

 

1,000

 

 

950

 

Miscellaneous

 

 

7,936

 

 

9,518

 

 

1,007

 

 

546

 

Trustees fees

 

 

31,385

 

 

1,239

 

 

—

 

 

—

 

Registration Fees

 

 

26,450

 

 

24,145

 

 

113

 

 

1,468

 

Accounting fees

 

 

12,598

 

 

6,479

 

 

1,164

 

 

1,164

 

Total expenses

 

 

5,551,061

 

 

346,687

 

 

13,159

 

 

15,258

 

Fees waived

 

 

(1,113,748

)

 

(25,003

)

 

(5,932

)

 

(12,637

)

Net expenses

 

 

4,437,313

 

 

321,684

 

 

7,227

 

 

2,621

 

NET INVESTMENT INCOME (LOSS)

 

 

4,590,309

 

 

(154,762

)

 

(13,993

)

 

(227

)

REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:

 

 

 

 

 

 

 

 

 

 

 

 

 

NET REALIZED GAIN (LOSS) FROM PORTFOLIO:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

278,675,881

 

 

2,575,494

 

 

(40,425

)

 

(12,564

)

Foreign Currency

 

 

—

 

 

(35,785

)

 

21,805

 

 

8,625

 

Net realized gain (loss)

 

 

278,675,881

 

 

2,539,709

 

 

(18,620

)

 

(3,939

)

NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) FROM PORTFOLIO:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

(116,230,864

)

 

12,578,417

 

 

76,030

 

 

23,860

 

Translation of assets and liabilities in foreign currencies

 

 

—

 

 

(4,487

)

 

(395

)

 

(462

)

Net change in unrealized appreciation (depreciation)

 

 

(116,230,864

)

 

12,573,930

 

 

75,635

 

 

23,398

 

NET REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO

 

 

162,445,017

 

 

15,113,639

 

 

57,015

 

 

19,459

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

$

167,035,326

 

$

14,958,877

 

$

43,022

 

$

19,232

 

SEE NOTES TO FINANCIAL STATEMENTS

 

 

67

 

 

 

 

DOMINI SOCIAL EQUITY FUND

DOMINI EUROPEAN SOCIAL EQUITY FUND

DOMINI PACASIA SOCIAL EQUITY FUND

DOMINI EUROPACIFIC SOCIAL EQUITY FUND

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

Domini Social Equity Fund

 

 

 

SIX MONTHS
ENDED
JANUARY 31,
2007
(UNAUDITED)

 

YEAR ENDED
JULY 31, 2006

 

INCREASE IN NET ASSETS:

 

 

 

 

 

 

 

FROM OPERATIONS:

 

 

 

 

 

 

 

Net investment income (loss)

 

$

4,590,309

 

$

9,301,237

 

Net realized gain (loss) from Portfolio

 

 

278,675,881

 

 

(31,706,488

)

Net change in unrealized appreciation (depreciation) from Portfolio

 

 

(116,230,864

)

 

32,607,374

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

 

167,035,326

 

 

10,202,123

 

DISTRIBUTIONS AND/OR DIVIDENDS:

 

 

 

 

 

 

 

Dividends to shareholders from net investment income:

 

 

 

 

 

 

 

Investor shares

 

 

(4,890,772

)

 

(8,688,804

)

Class R shares

 

 

(275,773

)

 

(450,837

)

Distributions to shareholders from net realized gain:

 

 

 

 

 

 

 

Investor shares

 

 

—

 

 

—

 

Class R shares

 

 

—

 

 

—

 

Net Decrease in Net Assets from Distributions and/or Dividends

 

 

(5,166,545

)

 

(9,139,641

)

CAPITAL SHARE TRANSACTIONS:

 

 

 

 

 

 

 

Investor Shares:

 

 

 

 

 

 

 

Proceeds from sale of shares

 

 

51,569,768

 

 

119,920,657

 

Net asset value of shares issued in reinvestment of distributions and dividends

 

 

4,669,952

 

 

8,306,089

 

Redemption fees

 

 

10,851

 

 

28,060

 

Payments for shares redeemed

 

 

(162,930,587

)

 

(307,233,912

)

Net Increase (Decrease) in Net Assets from Capital Share Transactions

 

$

(106,680,016

)

$

(178,979,106

)

 

 

68

 

 

   

Domini European Social Equity Fund

 

Domini PacAsia
Social Equity Fund

 

Domini EuroPacific
Social Equity Fund

 
   

SIX MONTHS
ENDED
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
OCTOBER 3, 2005
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JULY 31, 2006

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

INCREASE IN NET ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

FROM OPERATIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

$

(154,762

)

$

767,394

 

$

(13,993

)

$

(227

)

Net realized gain (loss) from Portfolio

 

 

2,539,709

 

 

1,562,562

 

 

(18,620

)

 

(3,939

)

Net change in unrealized appreciation (depreciation) from Portfolio

 

 

12,573,930

 

 

3,666,642

 

 

75,635

 

 

23,398

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

 

14,958,877

 

 

5,996,598

 

 

43,022

 

 

19,232

 

DISTRIBUTIONS AND/OR DIVIDENDS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to shareholders from net investment income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor shares

 

 

—

 

 

(801,320

)

 

—

 

 

—

 

Class R shares

 

 

—

 

 

—

 

 

—

 

 

—

 

Distributions to shareholders from net realized gain:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor shares

 

 

(1,977,345

)

 

—

 

 

—

 

 

—

 

Class R shares

 

 

—

 

 

—

 

 

—

 

 

—

 

Net Decrease in Net Assets from Distributions and/or Dividends

 

 

(1,977,345

)

 

(801,320

)

 

—

 

 

—

 

CAPITAL SHARE TRANSACTIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from sale of shares

 

 

36,976,050

 

 

50,870,995

 

 

11,181,454

 

 

3,885,259

 

Net asset value of shares issued in reinvestment of distributions and dividends

 

 

1,799,297

 

 

459,720

 

 

—

 

 

—

 

Redemption fees

 

 

7,728

 

 

3,551

 

 

228

 

 

—

 

Payments for shares redeemed

 

 

(3,082,474

)

 

(1,105,602

)

 

(20,385

)

 

(5,717

)

Net Increase (Decrease) in Net Assets from Capital Share Transactions

 

$

35,700,601

 

$

50,228,664

 

$

11,161,297

 

$

3,879,542

 

SEE NOTES TO FINANCIAL STATEMENTS

 

 

69

 

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

 

 

 

Domini Social Equity Fund

 

 

 

SIX MONTHS
ENDED
JANUARY 31, 2007
(UNAUDITED)

 

YEAR ENDED
JULY 31, 2006

 

Class R Shares:

 

 

 

 

 

 

 

Proceeds from sale of shares

 

$

4,666,025

 

$

21,274,147

 

Net asset value of shares issued in reinvestment of distributions and dividends

 

 

275,709

 

 

450,734

 

Redemption fees

 

 

709

 

 

4,865

 

Payments for shares redeemed

 

 

(13,033,903

)

 

(36,793,735

)

Net Increase (Decrease) in Net Assets from Capital Share Transactions

 

 

(8,091,460

)

 

(15,063,989

)

Total Decrease (Increase) in Capital Share Transactions

 

 

(114,771,476

)

 

(194,043,095

)

Total Increase (Decrease) in Net Assets

 

 

47,097,305

 

 

(192,980,613

)

NET ASSETS:

 

 

 

 

 

 

 

Beginning of period

 

 

1,137,353,467

 

 

1,330,334,080

 

End of period

 

$

1,184,450,772

 

$

1,137,353,467

 

Undistributed net investment income (loss)

 

$

363,591

 

$

939,826

 

CAPITAL SHARE TRANSACTIONS IN SHARES:

 

 

 

 

 

 

 

Investor Shares:

 

 

 

 

 

 

 

Sold

 

 

1,592,801

 

 

3,988,472

 

Issued in reinvestment of distributions and/or dividends

 

 

140,020

 

 

276,338

 

Redeemed

 

 

(5,082,821

)

 

(10,242,766

)

Net Decrease/Increase

 

 

(3,350,000

)

 

(5,977,956

)

Class R Shares:

 

 

 

 

 

 

 

Sold

 

 

382,360

 

 

1,855,343

 

Issued in reinvestment of distributions and/or dividends

 

 

21,847

 

 

39,680

 

Redeemed

 

 

(1,046,653

)

 

(3,209,549

)

Net Decrease

 

 

(642,446

)

 

(1,314,526

)

 

 

70

 

 

 

 

Domini European Social Equity Fund

 

Domini PacAsia
Social Equity Fund

 

Domini EuroPacific
Social Equity Fund

 

 

 

SIX MONTHS
ENDED
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
OCTOBER 3, 2005
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JULY 31, 2006

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

Class R Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from sale of shares

 

$

—

 

$

—

 

$

—

 

$

—

 

Net asset value of shares issued in reinvestment of distributions and dividends

 

 

—

 

 

—

 

 

—

 

 

—

 

Redemption fees

 

 

—

 

 

—

 

 

—

 

 

—

 

Payments for shares redeemed

 

 

—

 

 

—

 

 

—

 

 

—

 

Net Increase (Decrease) in Net Assets from Capital Share Transactions

 

 

—

 

 

—

 

 

—

 

 

—

 

Total Decrease (Increase) in Capital Share Transactions

 

 

35,700,601

 

 

50,228,664

 

 

11,161,297

 

 

3,879,542

 

Total Increase (Decrease) in Net Assets

 

 

48,682,133

 

 

55,423,942

 

 

11,204,319

 

 

3,898,774

 

NET ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

 

55,423,942

 

 

—

 

 

—

 

 

—

 

End of period

 

$

104,106,075

 

$

55,423,942

 

$

11,204,319

 

$

3,898,774

 

Undistributed net investment income (loss)

 

$

(197,671

)

$

42,909

 

$

(13,993

)

$

(227

)

CAPITAL SHARE TRANSACTIONS IN SHARES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold

 

 

2,706,347

 

 

4,561,506

 

 

1,119,651

 

 

388,620

 

Issued in reinvestment of distributions and/or dividends

 

 

126,259

 

 

39,631

 

 

—

 

 

—

 

Redeemed

 

 

(225,175

)

 

(94,520

)

 

(2,041

)

 

(569

)

Net Decrease/Increase

 

 

2,607,431

 

 

4,506,617

 

 

1,117,610

 

 

388,051

 

Class R Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold

 

 

—

 

 

—

 

 

—

 

 

—

 

Issued in reinvestment of distributions and/or dividends

 

 

—

 

 

—

 

 

—

 

 

—

 

Redeemed

 

 

—

 

 

—

 

 

—

 

 

—

 

Net Decrease

 

 

—

 

 

—

 

 

—

 

 

—

 

SEE NOTES TO FINANCIAL STATEMENTS

 

 

71

 

DOMINI SOCIAL EQUITY FUND — INVESTOR SHARES

FINANCIAL HIGHLIGHTS

 

 

 

SIX MONTHS
ENDED
JANUARY 31, 2007
(UNAUDITED)

 

YEAR ENDED JULY 31,

 

 

 

 

2006

 

2005

 

2004

 

2003

 

2002

 

For a share outstanding for the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

29.73

 

$

29.74

 

$

27.18

 

$

24.55

 

$

22.19

 

$

31.89

 

Income from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

 

0.13

 

 

0.23

 

 

0.34

 

 

0.15

 

 

0.14

 

 

0.08

 

Net realized and unrealized gain (loss) on investments

 

 

4.45

 

 

(0.02

)

 

2.56

 

 

2.61

 

 

2.37

 

 

(6.96

)

Total income from investment operations

 

 

4.58

 

 

0.21

 

 

2.90

 

 

2.76

 

 

2.51

 

 

(6.88

)

Less dividends and distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to shareholders from net investment income

 

 

(0.14

)

 

(0.22

)

 

(0.34

)

 

(0.13

)

 

(0.15

)

 

(0.07

)

Distributions to shareholders from net realized gain

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

(2.75

)

Total distributions

 

 

(0.14

)

 

(0.22

)

 

(0.34

)

 

(0.13

)

 

(0.15

)

 

(2.82

)

Redemption fee proceeds**

 

 

—

*

 

—

*

 

—

*

 

—

*

 

—

 

 

—

 

Net asset value, end of period

 

$

34.17

 

$

29.73

 

$

29.74

 

$

27.18

 

$

24.55

 

$

22.19

 

Total return

 

 

15.42

%

 

0.72

%

 

10.68

%

 

11.24

%

 

11.36

%

 

(23.26

)%

Portfolio turnover†

 

 

82

%

 

12

%

 

9

%

 

8

%

 

8

%

 

13

%

Ratios/supplemental data (annualized):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (in millions)

 

$

1,141

 

$

1,092

 

$

1,271

 

$

1,261

 

$

1,099

 

$

969

 

Ratio of expenses to average net assets

 

 

1.02

%(1)

 

0.95

%(1)

 

0.95

%(1)

 

0.94

%(1)

 

0.92

%(1)

 

0.92

%(1)

Ratio of net investment income (loss) to average net assets

 

 

0.76

%

 

0.74

%

 

1.20

%

 

0.55

%

 

0.63

%

 

0.32

%

*

Amount represents less than 0.005 per share

**

Redemption fee instituted on December 1, 2003

†

For the Portfolio in which the Fund invests

(1)

Reflects a waiver of fees by the Manager of the Portfolio, the Sponsor, and the Distributor of the Fund. Had the Manager, the Sponsor, and the Distributor not waived their fees, the ratio of expenses to average net assets would have been 1.22% for the six months ended January 31, 2007 and 1.14%, 1.13%, 1.16%, 1.26%, and 1.15%, for the years ended July 31, 2006, 2005, 2004, 2003, and 2002, respectively.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

 

72

 

DOMINI SOCIAL EQUITY FUND — CLASS R SHARES

FINANCIAL HIGHLIGHTS

 

 

 

SIX MONTHS
ENDED
JANUARY 31, 2007
(UNAUDITED)

 

YEAR
ENDED
JULY 31,
2006

 

YEAR
ENDED
JULY 31,
2005

 

FOR THE PERIOD
NOVEMBER 28, 2003
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JULY 31, 2004

 

For a share outstanding for the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

11.25

 

$

11.25

 

$

10.28

 

$

10.00

 

Income from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

 

0.05

 

 

0.11

 

 

0.15

 

 

0.07

 

Net realized and unrealized gain (loss) on investments

 

 

1.71

 

 

0.01

 

 

0.98

 

 

0.35

 

Total income from investment operations

 

 

1.76

 

 

0.12

 

 

1.13

 

 

0.42

 

Less dividends and/or distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to shareholders from net investment income

 

 

(0.07

)

 

(0.12

)

 

(0.16

)

 

(0.14

)

Redemption fee proceeds

 

 

—

*

 

—

*

 

—

*

 

—

*

Net asset value, end of period

 

$

12.94

 

$

11.25

 

$

11.25

 

$

10.28

 

Total return

 

 

15.67

%

 

1.04

%

 

11.04

%

 

4.14

%**

Portfolio turnover†

 

 

82

%

 

12

%

 

9

%

 

8

%

Ratios/supplemental data (annualized):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (in millions)

 

$

43

 

$

45

 

$

60

 

$

34

 

Ratio of expenses to average net assets

 

 

0.70

%(1)

 

0.63

%(1)

 

0.62

%(1)

 

0.63

%(1)

Ratio of net investment income to average net assets

 

 

1.09

%

 

1.07

%

 

1.35

%

 

0.79

%

*

Amount represents less than 0.005 per share

**

Not annualized

†

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 0.89% for the six months ended January 31, 2007 and 0.78%, 0.74% and 0.86% for the years ended July 31, 2006, 2005 and 2004, respectively.

 

 

73

 

DOMINI EUROPEAN SOCIAL EQUITY FUND

FINANCIAL HIGHLIGHTS

 

 

 

SIX MONTHS
ENDED
JANUARY 31, 2007
(UNAUDITED)

 

FOR THE PERIOD
OCTOBER 3, 2005
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JULY 31, 2006

 

For a share outstanding for the period:

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

12.30

 

$

10.00

 

Income from investment operations:

 

 

 

 

 

 

 

Net investment income (loss)

 

 

0.29

 

 

0.19

 

Net realized and unrealized gain (loss) on investments

 

 

2.35

 

 

2.31

 

Total income from investment operations

 

 

2.64

 

 

2.50

 

Less dividends and/or distributions:

 

 

 

 

 

 

 

Dividends to shareholders from net investment income

 

 

(0.31

)

 

(0.20

)

Distributions to shareholders from net realized gain

 

 

—

 

 

—

 

Total distributions

 

 

(0.31

)

 

(0.20

)

Redemption fee proceeds

 

 

—

*

 

—

*

Net asset value, end of period

 

$

14.63

 

$

12.30

 

Total return

 

 

21.54

%

 

25.11

%**

Portfolio turnover†

 

 

37

%

 

69

%

Ratios/supplemental data (annualized):

 

 

 

 

 

 

 

Net assets, end of period (in millions)

 

$

104

 

$

55

 

Ratio of expenses to average net assets

 

 

1.59

%(1)

 

1.59

%(1)

Ratio of net investment income (loss) to average net assets

 

 

(0.39

)%

 

3.11

%

*

Amount represents less than 0.005 per share.

**

Not annualized

†

For the Portfolio in which the Fund invests

(1)

Reflects a waiver of fees by the Manager of the Portfolio and the Manager and Distributor of the Fund. Had the Manager and the Distributor not waived their fees, the ratio of expenses to average net assets would have been 1.74% for the six months ended January 31, 2007 and 1.87%, for the period ended July 31, 2006.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

74

 

DOMINI PACASIA SOCIAL EQUITY FUND

FINANCIAL HIGHLIGHTS

 

 

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

For a share outstanding for the period:

 

 

 

 

Net asset value, beginning of period

 

$

10.00

 

Income from investment operations:

 

 

 

 

Net investment income (loss)

 

 

(0.01

)

Net realized and unrealized gain (loss) on investments

 

 

0.04

 

Total income from investment operations

 

 

0.03

 

Less dividends and/or distributions:

 

 

 

 

Dividends to shareholders from net investment income

 

 

—

 

Distributions to shareholders from net realized gain

 

 

—

 

Total distributions

 

 

—

 

Redemption fee proceeds

 

 

—

*

Net asset value, end of period

 

$

10.03

 

Total return

 

 

0.30

%**

Portfolio turnover†

 

 

0.4

%

Ratios/supplemental data (annualized):

 

 

 

 

Net assets, end of period (in millions)

 

$

11

 

Ratio of expenses to average net assets

 

 

1.54

%(1)

Ratio of net investment income (loss) to average net assets

 

 

(1.53

)%

*

Amount represents less than 0.005 per share.

**

Not annualized

†

For the Portfolio in which the Fund invests

(1)

Reflects a waiver of fees by the Manager of the Portfolio and the Manager and Distributor of the Fund. Had the Manager and the Distributor not waived their fees, the ratio of expenses to average net assets would have been 3.67% for the period ended January 31, 2007.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

75

 

DOMINI EUROPACIFIC SOCIAL EQUITY FUND

FINANCIAL HIGHLIGHTS

 

 

 

FOR THE PERIOD
DECEMBER 27, 2006
(COMMENCEMENT
OF OPERATIONS)
THROUGH
JANUARY 31, 2007
(UNAUDITED)

 

For a share outstanding for the period:

 

 

 

 

Net asset value, beginning of period

 

$

10.00

 

Income from investment operations:

 

 

 

 

Net investment income (loss)

 

 

—

 

Net realized and unrealized gain (loss) on investments

 

 

0.05

 

Total income from investment operations

 

 

0.05

 

Less dividends and/or distributions:

 

 

 

 

Dividends to shareholders from net investment income

 

 

—

 

Distributions to shareholders from net realized gain

 

 

—

 

Total distributions

 

 

—

 

Redemption fee proceeds

 

 

—

 

Net asset value, end of period

 

$

10.05

 

Total return

 

 

0.50

%**

Portfolio turnover†

 

 

13

%

Ratios/supplemental data (annualized):

 

 

 

 

Net assets, end of period (in millions)

 

$

4

 

Ratio of expenses to average net assets

 

 

1.54

%(1)

Ratio of net investment income (loss) to average net assets

 

 

(0.07

) %

*

Amount represents less than 0.005 per share.

**

Not annualized

†

For the Portfolio in which the Fund invests

(1)

Reflects a waiver of fees by the Manager of the Portfolio and the Manager and Distributor of the Fund. Had the Manager and the Distributor not waived their fees, the ratio of expenses to average net assets would have been 10.54% for the period ended January 31, 2007.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

76

 

DOMINI SOCIAL EQUITY FUND

DOMINI EUROPEAN SOCIAL EQUITY FUND

DOMINI PACASIA SOCIAL EQUITY FUND

DOMINI EUROPACIFIC SOCIAL EQUITY FUND

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2007 (UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Domini Social Investment Trust (the “Trust”) is a Massachusetts business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust comprises five separate series: Domini Social Equity Fund, Domini European Social Equity Fund, Domini PacAsia Social Equity Fund, Domini EuroPacific Social Equity Fund, and Domini Social Bond Fund (each the “Fund,” collectively the “Funds”). The financial statements of the Domini Social Bond Fund are included elsewhere in this report. Each Fund invests substantially all of its assets in the Domini Social Equity Trust, Domini European Social Equity Trust, Domini PacAsia Social Equity Trust, and Domini EuroPacific Social Equity Trust, respectively (the “Portfolios”). The Portfolios are diversified, open-end management investment companies having the same investment objectives as the respective Funds. The Portfolios are each a series of Domini Social Trust (formerly Domini Social Index Portfolio). The values of such investments reflect the Funds’ proportionate interest in the net assets of the Portfolios (approximately 86.1% of Domini Social Equity Trust, 93.6% of Domini European Social Equity Trust, 98.4% of Domini PacAsia Social Equity Trust, and 95.1% of Domini EuroPacific Social Equity Trust, respectively, at January 31, 2007). The financial statements of the Portfolios are included elsewhere in this report and should be read in conjunction with the Funds’ financial statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the Funds’ significant accounting policies.

(A) Valuation of Investments. Valuation of securities by the Portfolios is discussed in Note 1 of the Portfolios’ Notes to Financial Statements, which are included elsewhere in this report.

(B) Investment Income and Dividends to Shareholders. The Funds earn income daily, net of Portfolio expenses, on their investments in the

 

 

77

 

Portfolios. Dividends to shareholders are usually declared and paid semi-annually from net investment income. Distributions to shareholders of realized capital gains, if any, are made annually. Distributions are determined in conformity with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications have been made to the Funds’ components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax regulations.

(C) Federal Taxes. Each Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income, including net realized gains, if any, within the prescribed time periods. Accordingly, no provision for federal income or excise tax is deemed necessary.

On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

(D) Other. All net investment income and realized and unrealized gains and losses of the Portfolios are allocated pro rata on a daily basis among the Funds and the other investors in the Portfolios.

(E) Redemption Fees. Redemptions and exchanges of Fund shares held less than 60 days may be subject to the Funds’ redemption fee, which is 2% of the amount redeemed. Such fees are retained by the Funds and are recorded as an adjustment to paid in capital.

2. TRANSACTIONS WITH AFFILIATES

(A) Manager. The Portfolios have retained Domini Social Investments LLC (Domini) to serve as investment manager and administrator. The services provided by and fees paid to Domini under the Management Agreements are discussed in Note 2(A) of the Portfolios’ Notes to Financial Statements, which are included elsewhere in this Report.

(B) Submanager. Wellington Management Company, LLP (Wellington) provides investment submanagement services to the Portfolios on a day-to-day basis pursuant to Submanagement Agreements with Domini.

 

 

78  

Notes to Financial Statements

 

Prior to November 30, 2006, SSgA Funds Management, Inc. was the submanager for the Domini Social Equity Trust.

(C) Sponsor/Manager. Pursuant to a Sponsorship Agreement (with respect to the Domini Social Equity Fund) and a Management Agreement (with respect to the Domini European Social Equity Fund, Domini PacAsia Social Equity Fund and Domini EuroPacific Social Equity Fund), Domini provides the Funds with the administrative personnel and services necessary to operate the Funds. In addition to general administrative services and facilities for the Funds similar to those provided by Domini to the Portfolios under the Management Agreements, Domini answers questions from the general public and the media regarding the securities holdings of the Portfolios. For these services and facilities, Domini receives fees accrued daily and paid monthly from the Funds at the annual rate below of the respective Funds’ average daily net assets before any fee waivers:

 

Domini Social Equity Fund

 

0.45% of the first $2 billion of net assets managed

 

 

0.44% of the next $1 billion of net assets managed, and

 

 

0.43% of net assets managed in excess of $3 billion

Domini European Social Equity Fund

 

0.25% of the first $250 million of net assets managed,

Domini PacAsia Social Equity Fund, and

 

0.24% of the next $250 million of net assets managed, and

Domini EuroPacific Social Equity Fund

 

0.23% of net assets managed in excess of $500 million

Effective November 30, 2006, Domini has reduced its fees and reimbursed expenses to the extent necessary to keep the aggregate annual operating expenses of the Domini Social Equity Fund at no greater than 1.15% of the average daily net assets representing Investor Shares and 0.85% of the average daily net assets representing Class R shares. For the period prior to November 30, 2006, Domini capped aggregate annual operating expenses at 0.95% and 0.63% for Investor and Class R shares, respectively. Since the inception of the Domini European Social Equity Fund, Domini PacAsia Social Equity Fund, and Domini EuroPacific Social Equity Fund, Domini has reduced its fee and reimbursed expenses to the extent necessary to keep the aggregate annual operating expenses of the Domini European Social Equity Fund, Domini PacAsia Social Equity Fund, and Domini EuroPacific Social Equity Fund at no greater than 1.60% of each Fund’s average daily net assets. The waivers currently in effect are contractual and in effect until November 30, 2007, absent an earlier modification by the Board of Trustees, which oversees the Funds. For the period ended January 31, 2007, Domini waived fees and reimbursed expenses as follows:

 

 

 

FEES
WAIVED

 

EXPENSES
REIMBURSED

 

Domini Social Equity Fund

 

$

899,476

 

$

—

 

Domini European Social Equity Fund

 

 

—

 

 

—

 

Domini PacAsia Social Equity Fund

 

 

2,280

 

 

1,376

 

Domini EuroPacific Social Equity Fund

 

 

826

 

 

11,811

 

 

 

Notes to Financial Statements      79

 

(D) Distributor. The Board of Trustees of the Funds has adopted a Distribution Plan with respect to the Funds’ Investor shares in accordance with Rule 12b-1 under the Act. DSIL Investment Services LLC, a wholly owned subsidiary of Domini (DSILD), acts as agent of the Funds in connection with the offering of Investor shares of the Funds pursuant to a Distribution Agreement. Under the Distribution Plan, the Funds pay expenses incurred in connection with the sale of Investor shares and pay DSILD a distribution fee at an aggregate annual rate not to exceed 0.25% of the average daily net assets representing the Investor shares. For the period ended January 31, 2007, fees waived were $214,272, $25,003, $2,276, and $— for the Domini Social Equity Fund, Domini European Social Equity Fund, Domini PacAsia Social Equity Fund, and Domini EuroPacific Social Equity Fund, respectively.

3. INVESTMENT TRANSACTIONS

For the period ended January 31, 2007, additions and reductions in the Funds’ investment in the Portfolios were as follows:

 

 

 

ADDITIONS

 

REDUCTIONS

Domini Social Equity Fund

 

$56,065,449

 

$178,272,962

Domini European Social Equity Fund

 

36,792,910

 

3,519,688

Domini PacAsia Social Equity Fund

 

11,131,671

 

18,139

Domini EuroPacific Social Equity Fund

 

3,852,456

 

5,809

 

 

80  

Notes to Financial Statements

 

 

DOMINI SOCIAL BOND FUND

STATEMENT OF ASSETS AND LIABILITIES

JANUARY 31, 2007 (UNAUDITED)

 

ASSETS:

 

 

 

 

Investments at value (cost $69,472,465)

 

$

68,576,945

 

Receivable for securities sold

 

 

1,239,604

 

Interest receivable

 

 

662,676

 

Receivable for capital shares

 

 

66,166

 

Total assets

 

 

70,545,391

 

LIABILITIES:

 

 

 

 

Payable for securities purchased

 

 

2,007,075

 

Payable for capital shares

 

 

212,896

 

Management fee payable

 

 

37,566

 

Other accrued expenses

 

 

16,190

 

Dividend payable

 

 

13,179

 

Total liabilities

 

 

2,286,906

 

NET ASSETS

 

$

68,258,485

 

NET ASSETS CONSIST OF:

 

 

 

 

Paid-in capital

 

 

69,559,424

 

Accumulated net realized loss from investments

 

 

(405,419

)

Net unrealized depreciation from investments

 

 

(895,520

)

 

 

$

68,258,485

 

NET ASSET VALUE PER SHARE

 

 

 

 

Investor shares

 

 

 

 

Net asset value and offering price per share*

($68,258,485 ÷ 6,396,404 outstanding shares of beneficial interest)

 

$

10.67

 

______________

*

Redemption price is equal to net asset value less any applicable redemption fees retained by the Fund.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

81

 

 

 

 

DOMINI SOCIAL BOND FUND

STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JANUARY 31, 2007 (UNAUDITED)

 

INCOME:

 

 

 

 

Interest income

 

$

1,643,035

 

EXPENSES:

 

 

 

 

Management fee

 

 

134,524

 

Administrative fee

 

 

84,078

 

Distribution fees

 

 

84,078

 

Transfer agent fees

 

 

106,120

 

Accounting and custody fees

 

 

33,076

 

Printing

 

 

22,156

 

Professional fees

 

 

9,739

 

Registration

 

 

11,255

 

Miscellaneous

 

 

1,130

 

Trustees fees

 

 

1,116

 

Total Expenses

 

 

487,272

 

Fees waived

 

 

(167,859

)

Net Expenses

 

 

319,413

 

NET INVESTMENT INCOME

 

 

1,323,622

 

NET REALIZED AND UNREALIZED GAIN/(LOSS):

 

 

 

 

Net realized gain (loss) on investments

 

 

(121,975

)

Net change in unrealized appreciation (depreciation) on investments

 

 

587,545

 

Net realized and unrealized gain (loss) from investments

 

 

465,570

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

 

$

1,789,192

 

SEE NOTES TO FINANCIAL STATEMENTS

 

 

82

 

DOMINI SOCIAL BOND FUND

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

SIX MONTHS
ENDED
JANUARY 31, 2007
(UNAUDITED)

 

YEAR ENDED
JULY 31, 2006

 

INCREASE IN NET ASSETS:

 

 

 

 

 

 

 

FROM OPERATIONS:

 

 

 

 

 

 

 

Net investment income (loss)

 

$

1,323,622

 

$

2,441,061

 

Net realized gain (loss) on investments

 

 

(121,975

)

 

(118,912

)

Net change in unrealized appreciation (depreciation) on investments

 

 

587,545

 

 

(1,666,258

)

Net Increase (Decrease) in Net Assets Resulting from Operations

 

 

1,789,192

 

 

655,891

 

DISTRIBUTIONS AND DIVIDENDS:

 

 

 

 

 

 

 

Dividends to shareholders from net investment income

 

 

(1,323,622

)

 

(2,441,353

)

Distributions to shareholders from net realized gain

 

 

—

 

 

—

 

Net Decrease in Net Assets from Distributions and Dividends

 

 

(1,323,622

)

 

(2,441,353

)

CAPITAL SHARE TRANSACTIONS:

 

 

 

 

 

 

 

Proceeds from sale of shares

 

 

7,200,247

 

 

14,102,624

 

Net asset value of shares issued in reinvestment of distributions and dividends

 

 

1,245,086

 

 

2,299,009

 

Redemption fee

 

 

450

 

 

1,867

 

Payment for shares redeemed

 

 

(5,957,424

)

 

(13,322,139

)

Net Increase in Net Assets from Capital Share Transactions

 

 

2,488,359

 

 

3,081,361

 

Total Increase (Decrease) in Net Assets

 

 

2,953,929

 

 

1,295,899

 

NET ASSETS:

 

 

 

 

 

 

 

Beginning of period

 

 

65,304,556

 

 

64,008,657

 

End of period (including undistributed net investment income of $0 and $0, respectively)

 

$

68,258,485

 

$

65,304,556

 

CAPITAL SHARE TRANSACTIONS IN SHARES:

 

 

 

 

 

 

 

Investor Shares:

 

 

 

 

 

 

 

Sold

 

 

672,137

 

 

1,315,796

 

Issued in reinvestment of distributions and/or dividends

 

 

115,990

 

 

214,836

 

Redeemed

 

 

(556,805

)

 

(1,246,013

)

Net Increase (Decrease)

 

 

231,322

 

 

284,619

 

SEE NOTES TO FINANCIAL STATEMENTS

 

 

83

 

DOMINI SOCIAL BOND FUND

FINANCIAL HIGHLIGHTS

 

 

 

SIX MONTHS
ENDED
JANUARY 31, 2007
(UNAUDITED)

 

YEAR ENDED JULY 31,

 

2006

 

2005

 

2004

 

2003

 

2002

For a share outstanding for the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

10.59

 

$

10.88

 

$

10.91

 

$

10.97

 

$

11.03

 

$

10.78

 

Income from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

 

0.21

 

 

0.40

 

 

0.38

 

 

0.36

 

 

0.40

 

 

0.48

 

Net realized and unrealized gain (loss) on investments

 

 

0.08

 

 

(0.29

)

 

(0.03

)

 

(0.03

)

 

(0.03

)

 

0.34

 

Total income from investment operations

 

 

0.29

 

 

0.11

 

 

0.35

 

 

0.33

 

 

0.37

 

 

0.82

 

Less dividends and distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to shareholders from net investment income

 

 

(0.21

)

 

(0.40

)

 

(0.38

)

 

(0.36

)

 

(0.40

)

 

(0.48

)

Distributions to shareholders from net realized gain

 

 

—

 

 

—

 

 

—

 

 

(0.03

)

 

(0.03

)

 

(0.09

)

Total dividends and distributions

 

 

(0.21

)

 

(0.40

)

 

(0.38

)

 

(0.39

)

 

(0.43

)

 

(0.57

)

Redemption fee proceeds*

 

 

—

**

 

—

**

 

—

**

 

—

**

 

—

 

 

—

 

Net asset value, end of period

 

$

10.67

 

$

10.59

 

$

10.88

 

$

10.91

 

$

10.97

 

$

11.03

 

Total return

 

 

2.77

%

 

1.06

%

 

3.25

%

 

3.02

%

 

3.33

%

 

7.85

%

Portfolio turnover

 

 

14

%

 

34

%

 

25

%

 

46

%

 

24

%

 

71

%

Ratios/supplemental data (annualized):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000s)

 

$

68,258

 

$

65,305

 

$

64,009

 

$

59,288

 

$

47,853

 

$

32,018

 

Ratio of expenses to average net assets

 

 

0.95

%(1)

 

0.95

%(1)

 

0.95

%(1)

 

0.95

%(1)

 

0.95

%(1)

 

0.95

%(1)

Ratio of net investment income to average net assets

 

 

3.94

%

 

3.76

%

 

3.48

%

 

3.27

%

 

3.56

%

 

4.40

%

*

Redemption fee instituted on December 1, 2003.

**

Amount represents less than $0.005 per share.

(1)

Reflects a waiver of fees by the Manager due to a contractual fee waiver. Had the Manager not waived its fees, the ratio of expenses to average net assets would have been 1.45% for the six months ended January 31, 2007 and 1.32%, 1.47%, 1.64%, 1.71%, and 1.85%, for the years ended July 31, 2006, 2005, 2004, 2003, and 2002, respectively.

SEE NOTES TO FINANCIAL STATEMENTS

 

 

84

 

DOMINI SOCIAL BOND FUND

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2007 (UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Domini Social Bond Fund is a series of the Domini Social Investment Trust. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The 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 standards. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the Fund’s significant accounting policies.

(A) Valuation of Investments. Bonds and other fixed-income securities (other than obligations with maturities of 60 days or less) are valued on the basis of valuations furnished by an independent pricing service, use of which has been approved by the Board of Trustees of the Fund. In making such valuations, the pricing service utilizes both dealer-supplied valuations and electronic data processing techniques that 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 Fund.

Securities (other than short-term obligations with remaining maturities of 60 days or less) 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 Fund’s Board of Trustees.

(B) Repurchase Agreements. The Fund may enter into repurchase agreements with selected banks or broker-dealers. Each repurchase agreement is recorded at cost, which approximates fair value. The Fund requires that collateral, represented by securities (primarily U.S. government agency securities), in a repurchase transaction be maintained in a segregated account with a custodian bank in a manner sufficient to enable the Fund to obtain those securities in the event of a default of the

 

 

85

counterparty. In the event of default or bankruptcy by another party to the repurchase agreement, retention of the collateral may be subject to legal proceedings.

(C) Investment Income and Dividends to Shareholders. Dividends to shareholders are usually declared daily and paid monthly from net investment income. Distributions to shareholders of realized capital gains, if any, are made annually. Distributions are determined in conformity with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications have been made to the Fund’s components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax regulations.

(D) Federal Taxes. The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income, including net realized gains, if any, within the prescribed time periods. Accordingly, no provision for federal income or excise tax is deemed necessary.

On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

(E) Redemption Fees.  Redemptions and exchanges of Fund shares held less than 60 days may be subject to the Fund’s redemption fee, which is 2% of the amount redeemed. Such fees are retained by the Fund and are recorded as an adjustment to paid in capital.

2. TRANSACTIONS WITH AFFILIATES

(A) Manager/Administrator. The Fund has retained Domini Social Investments LLC (Domini) to serve as investment manager and administrator. The services provided by Domini consist of investment supervisory services, overall operational support, and administrative services, including the provision of general office facilities and supervising the overall administration of the Fund. For its services under the Management Agreement, Domini receives from the Fund a fee accrued daily and paid monthly at an annual rate equal to 0.40% of the Fund’s

 

 

86  

Notes to Financial Statements

 

average daily net assets. For its services under the Administration Agreement, Domini receives from the Fund a fee accrued daily and paid monthly at an annual rate equal to 0.25% of the Fund’s average daily net assets. For the period from November 30, 2006, until November 30, 2007, Domini is waiving its fee to the extent necessary to keep the aggregate annual operating expenses of the Fund (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 representing Investor shares. A similar fee waiver arrangement was in effect in prior periods for the Fund’s Investor shares. For the period ended January 31, 2007, Domini waived fees totaling $83,781.

(B) Submanager. Seix Advisors (Seix), the fixed-income division of Trusco Capital Management, Inc., provides investment submanagement services to the Fund on a day-to-day basis pursuant to a Submanagement Agreement with Domini.

(C) Distributor. The Board of Trustees of the Fund has adopted a Distribution Plan with respect to the Fund’s Investor shares in accordance with Rule 12b-1 under the Act. DSIL Investment Services LLC, a wholly owned subsidiary of Domini (DSILD), acts as agent of the Fund in connection with the offering of Investor shares of the Fund pursuant to a Distribution Agreement. Under the Distribution Plan, the Fund pays expenses incurred in connection with the sale of Investor shares and pays DSILD a distribution fee at an aggregate annual rate not to exceed 0.25% of the Fund’s average daily net assets representing the Investor shares. For the period ended January 31, 2007, fees waived totaled $84,078.

3. INVESTMENT TRANSACTIONS

For the period ended January 31, 2007, cost of purchases and proceeds from sales of investments, other than short-term obligations, aggregated $15,395,116 and $8,456,847, respectively.

 

 

 

Notes to Financial Statements  

87

 

 

 

BOARD OF TRUSTEES ’ CONSIDERATION OF MANAGEMENT AND SUBMANAGEMENT AGREEMENTS

Domini Social Investments LLC (“Domini”) manages the assets of the Domini Social Equity Trust pursuant to a management agreement with the Domini Social Trust.

Domini manages the assets of the Domini European Social Equity Trust, Domini PacAsia Social Equity Trust, and Domini EuroPacific Social Equity Trust pursuant to a management agreement with the Domini Social Trust.

Domini has entered into separate submanagement agreements with Wellington Management Company LLP (“Wellington Management”) for the Equity Trust, European Trust, PacAsia Trust, and EuroPacific Trust, each a series of the Domini Social Trust.

Domini manages the assets of the Domini European Social Equity Fund, Domini PacAsia Social Equity Fund, and Domini EuroPacific Social Equity Fund, pursuant to a management agreement with the Domini Social Investment Trust.

Domini manages the assets of the Domini Social Bond Fund, a series of the Domini Social Investment Trust, pursuant to a management agreement and has entered into a submanagement agreement with respect to the Bond Fund, as amended, with Seix Advisors.

Domini manages the assets of the Domini European Social Equity Portfolio, Domini PacAsia Social Equity Portfolio, and Domini EuroPacific Social Equity Portfolio, pursuant to a management agreement with the Domini Advisor Trust.

Each of the European Social Equity Fund and the European Social Equity Portfolio invests substantially all of its assets in the European Social Equity Trust. Each of the PacAsia Social Equity Fund and the PacAsia Social Equity Portfolio invests substantially all of its assets in the PacAsia Social Equity Trust. Each of the EuroPacific Social Equity Fund and the EuroPacific Social Equity Portfolio invests substantially all of its assets in the EuroPacific Social Equity Trust. Each of the European Social Equity Fund, European Social Equity Portfolio, and European Social Equity Trust is referred to as a “European Fund.” Each of the PacAsia Social Equity Fund, PacAsia Social Equity Portfolio, and PacAsia Social Equity Trust is referred to as a “PacAsia Fund.” Each of the EuroPacific Social Equity Fund, EuroPacific Social Equity Portfolio, and EuroPacific Social Equity Trust is referred to as a “EuroPacific Fund.” The PacAsia Funds and the EuroPacific Funds are referred to as the “Foreign Funds.”

A discussion of the Board of Trustees’, including all of the independent Trustees’, considerations and determinations with respect to the management and submanagement agreements for the Equity Trust and

88

 

 

Bond Fund is included in its Annual Report for the period ended July 31, 2006. A discussion of the Board of Trustees’, including all of the independent Trustees’, considerations and determinations with respect to the management and submanagement agreements for the European Funds is included in its Semi-Annual Report for the period ended January 31, 2006.

At a meeting held on July 28, 2006, the Trustees approved (i) the management agreements with Domini with respect to the PacAsia Funds and the EuroPacific Funds, and (ii) the submanagement agreements with Wellington Management for the PacAsia Social Equity Trust and the EuroPacific Social Equity Trust. At a meeting held on October 27, 2006, the Trustees approved an amendment to the management agreement with Domini for the European Social Equity Trust that added breakpoints to the management fee schedule.

In connection with the agreements for the Foreign Funds, the Trustees reviewed extensive information provided by Domini and Wellington Management, primarily elicited through questionnaires regarding, among other things: the nature and quality of services provided; legal, regulatory, and compliance matters; the fees to be paid to Domini; the fees to be paid by Domini to Wellington Management; comparable fees paid by other funds; and certain other information.

In reaching their determination to approve the agreements for the Foreign Funds, the Trustees considered a variety of factors they believed relevant and balanced a number of considerations. The Trustees did not identify any particular information or factor that was all-important or controlling. The primary factors considered and the conclusions reached are described below.

PACASIA FUNDS

In reviewing the agreements with respect to the PacAsia Funds, the Trustees considered that Domini would be the manager for each of the PacAsia Funds and that Wellington Management would be the submanager for the PacAsia Social Equity Trust.

Nature, Quality, and Extent of Services Provided. The Trustees considered the terms of the management agreements for the PacAsia Funds and noted that pursuant to the management agreements, Domini, subject to the direction of the Board, will be responsible for providing advice and guidance with respect to each PacAsia Fund and for managing the investment of the assets of the PacAsia Social Equity Trust, which it will do by engaging and overseeing the activities of Wellington Management. They considered that under the management agreements, Domini would be responsible for applying social and environmental standards to a universe of securities.

The Trustees considered the scope and quality of the services to be provided by Domini and Wellington Management under the management

89

 

 

and submanagement agreements, such as the provision of the day-to-day portfolio management of the PacAsia Social Equity Trust, including making purchases and sales of socially screened portfolio securities consistent with the Trust’s investment objective and policies. They considered the professional experience, tenure, and qualifications of each of the portfolio management teams proposed and the other senior personnel at Domini and Wellington Management. They also considered Domini’s capabilities and experience in the development and application of social and environmental standards and its reputation and leadership in the socially responsible investment community. They considered the quality of the administrative services Domini provided to the other Domini Funds. In addition, they considered the compliance policies, procedures, and record of Domini and Wellington Management. After requesting and reviewing such information as they deemed necessary and after meetings conducted by the independent Trustees without management being present, the Trustees concluded that Domini and Wellington Management had the necessary capabilities, resources, and personnel.

Investment Results. The Trustees reviewed information provided to them by Domini regarding the investment returns of the European Funds since inception and for the 6-month period ended June 30, 2006. They considered the performance of the MSCI Europe Index for the same period and noted that the PacAsia Social Equity Trust would use a similar investment approach as the European Social Equity Trust. The Trustees reviewed information regarding the performance of Wellington Management’s international quantitative equity model for the 1-year period ended June 30, 2006, and since inception. They compared those returns to the returns of the MSCI EAFE Index, and other relevant benchmarks for the same periods. Taking into account the differences between the investment objectives and strategies of the PacAsia Funds from those of the European Funds and international quantitative equity model, the Trustees concluded the performance of the European Funds and the quantitative model were acceptable when compared to the relevant benchmarks.

Fees and Other Expenses. The Trustees considered the management and submanagement fees to be paid to Domini and Wellington Management with respect to the PacAsia Funds. The Trustees considered the fees that each of Domini and Wellington Management charges its other clients with similar investment objectives. The Trustees considered that Domini (and not the PacAsia Social Equity Trust) will pay Wellington Management from its advisory fee. The Trustees considered that the subadvisory fees Wellington Management would receive with respect to the PacAsia Social Equity Trust were within the general range of the fees it receives with respect to the management of the assets of its other clients. After reviewing the expected total expense ratios of each of the PacAsia Funds and those of similar funds, taking into account the agreed-upon fee waivers, and such other matters as the Trustees considered relevant in the exercise of their reasonable judgment, the compensation proposed to be paid, the Trustees

90

 

 

concluded that the proposed management and submanagement fees with respect to the PacAsia Funds were satisfactory.

Costs of Services Provided and Profitability. The Trustees reviewed information provided to them by Domini concerning the expected costs to be borne by and estimated profitability of Domini with respect to the services to be provided, along with a description of the methodology used by Domini in preparing the profitability information. The Trustees concluded that they were satisfied that Domini’s expected level of profitability with respect to the management agreements related to the PacAsia Funds was reasonable in view of the nature, quality, and extent of services to be provided.

The Trustees did not, however, receive information regarding the estimated costs to Wellington Management of the services proposed to be provided by it to the PacAsia Social Equity Trust or the estimated profits that may be realized by Wellington Management from its submanagement relationship with such Trust. The Trustees considered that it would be difficult for Wellington Management to estimate such costs and profits given that Wellington Management had not yet provided submanagement services to the Trust. The Trustees also noted that it would be appropriate to request and review such information when they considered the continuation of the submanagement agreement.

Economies of Scale. The Trustees also considered whether economies of scale would be realized by Domini as assets grew and the extent to which economies of scale were reflected in the proposed fee schedules. The Trustees noted that fee schedules containing breakpoints were proposed for the management agreements, and also considered the fee waivers proposed by Domini. They concluded that breakpoints were an effective way to share economies of scale with shareholders and that this was a positive factor in support of approval of the management agreements.

Other Benefits. The Trustees considered the other benefits that Domini, Wellington Management, and their respective affiliates could be expected to receive in connection with the management and submanagement agreements. The Trustees reviewed the character and amount of payments received by Domini and its affiliates in connection with the Domini Funds. The Trustees considered that Domini’s profitability would be lower if the benefits related to distribution fees and sales charges were not received. The Trustees considered the brokerage practices of Domini and Wellington Management, including Wellington’s use of soft dollars. The Trustees also considered the intangible benefits that would continue to accrue to Domini, Wellington Management, and each of their respective affiliates by virtue of their relationship with the Domini Funds. The Trustees concluded that the benefits expected to be received by Domini, Wellington Management, and their respective affiliates were reasonable and supported the approval of the management and submanagement agreements.

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EUROPACIFIC FUNDS

In reviewing the management and submanagement agreements for the EuroPacific Funds, the Trustees considered that Domini would be the manager for the EuroPacific Funds and that Wellington Management would be the submanager for the EuroPacific Social Equity Trust.

The EuroPacific Funds are a party to the same management agreements as the PacAsia Funds. Additionally, the terms of the submanagement agreement with Wellington Management for the EuroPacific Social Equity Trust are the same as the submanagement agreement with Wellington Management for the PacAsia Social Equity Trust. For a discussion regarding the Nature, Quality, and Extent of Services Provided, Fees and Other Expenses, Costs of Services Provided and Profitability, Investment Results, Economies of Scale, and Other Benefits considered by the Board and the Board’s conclusions in connection with the management and submanagement agreements for the EuroPacific Funds, please see “PacAsia Funds” above.

EUROPEAN TRUST

In considering an amendment to the management agreement for the European Social Equity Trust, the Trustees noted that the only proposed change to the management agreement was to add breakpoints to the fee schedule for the Trust. The Trustees considered that Domini would continue to pay Wellington Management from its advisory fee and that Domini’s expense cap would continue. The Trustees concluded that breakpoints were an effective way to share economies of scale with the holders of beneficial interests in the European Social Equity Trust and that this was a positive factor in support of the proposed amendment.

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94

 

 

PROXY VOTING INFORMATION

The Domini Funds have established Proxy Voting Policies and Procedures that the Funds use to determine how to vote proxies relating to portfolio securities. The Domini Funds’ Proxy Voting Policies and Procedures are available, free of charge, by calling 1-800-762-6814, by visiting www.domini.com/shareholder-advocacy/Proxy-Voting/index.htm, or by visiting the EDGAR database on the Securities and Exchange Commission’s (SEC) website at www.sec.gov. All proxy votes cast for the Domini Funds are posted to Domini’s website on an ongoing basis over the course of the year. 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 EDGAR database on the SEC’s website at www.sec.gov.

QUARTERLY PORTFOLIO SCHEDULE INFORMATION

The Domini Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Domini Funds’ Forms N-Q are available on the EDGAR database on the SEC’s website at www.sec.gov. These Forms may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information about the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The information on Form N-Q is also available to be viewed at www.domini.com.

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DOMINI FUNDS

P.O. Box 9785

Providence, RI 02940-9785

1-800-582-6757

www.domini.com

Investment Manager and Sponsor:

Domini Social Investments LLC

536 Broadway, 7th Floor

New York, NY 10012

Investment Submanagers:

Domini Social Equity Trust

Domini European Social Equity Trust

Domini PacAsia Social Equity Trust

Domini EuroPacific Social Equity Trust

Wellington Management Company, LLP

75 State Street

Boston, MA 02109

Domini Social Bond Fund

Seix Advisors

10 Mountain View Road, Suite C-200

Upper Saddle River, NJ 07458

Distributor:

DSIL Investment Services LLC

536 Broadway, 7th Floor

New York, NY 10012

1-800-762-6814

Transfer Agent:

PFPC Inc.

760 Moore Road

King of Prussia, PA 19406

Custodian:

Investors Bank & Trust Company

200 Clarendon Street

Boston, MA 02116

Independent Registered Public Accounting Firm:

KPMG LLP

99 High Street

Boston, MA 02110

Legal Counsel:

Bingham McCutchen LLP

150 Federal Street

Boston, MA 02110

 



Item 2.

Code of Ethics.


(a)

Not applicable to a semi-annual report.


(c)

Not applicable.


(d)

Not applicable.


Item 3.

Audit Committee Financial Expert.


Not applicable to a semi-annual report.


Item 4.

Principal Accountant Fees and Services.


Not applicable to a semi-annual report.


Item 5.

Audit Committee of Listed Registrants.


Not applicable to the registrant.


Item 6.  

Schedule of Investments.


The Schedule of Investments is included as part of the report to stockholders filed under Item 1.


Item 7. 

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.


Not applicable to the registrant.


Item 8.

Portfolio Managers of Closed-End Management Investment Companies.


Not applicable to the registrant.


Item 9.

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.


Not applicable to the registrant.


Item 10.

Submission of Matters to a Vote of Security Holders.


There have been no material changes to the procedures by which shareholders may submit recommendations for nominees to the registrant’s Board of Trustees.













Item 11. Controls and Procedures.


(a)

Within 90 days prior to the filing of this report on Form N-CSR, Amy L. Domini, the registrant’s President and Principal Executive Officer, and Carole M. Laible, the registrant’s Treasurer and Principal Financial Officer, reviewed the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) of the Investment Company Act of 1940) and evaluated their effectiveness.  Based on their evaluation, Ms. Domini and Ms. Laible determined that the disclosure controls and procedures adequately ensure that information required to be disclosed by the registrant in this report on Form N-CSR is recorded, processed, summarized, and reported within the time periods required by the Securities and Exchange Commission’s rules and forms.


(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.   


Item 12. Exhibits.


(a)(1)

Not applicable to a semi-annual report.


(a)(2)

Separate certifications required by Rule 30a-2(a) under the Investment Company Act of 1940 for each principal executive officer and principal financial officer of the registrant are filed herewith.


(a)(3)

Not applicable to the registrant.

 

(b)

A single certification required by Rule 30a-2(b) under the Investment Company Act of 1940, Rule 13a-14b or Rule 15d-14(b) under the Securities Exchange Act of 1934, and Section 1350 of Chapter 63 of Title 18 of the United States Code for the chief executive officer and the chief financial officer of the registrant is filed herewith.








SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.                                                  


DOMINI SOCIAL INVESTMENT TRUST


By: /s/ Amy L. Domini                                       

Amy L. Domini

President


Date: April 5, 2007



Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



By: /s/ Amy L. Domini                                     

Amy L. Domini

President (Principal Executive Officer)


Date: April 5, 2007


By: /s/ Carole M. Laible                               

Carole M. Laible

Treasurer (Principal Financial Officer)


Date: April 5, 2007