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 811-21653
DOMINI ADVISOR 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) |
CLASS A SHARES DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIOSM CLASS A SHARES DOMINI PACASIA SOCIAL EQUITY PORTFOLIOSM CLASS A SHARES DOMINI EUROPACIFIC SOCIAL EQUITY PORTFOLIOSM CLASS A SHARES | |
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TABLE OF CONTENTS
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| Fund Performance and Holdings |
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| Domini Social Equity Trust |
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| Domini European Social Equity Trust |
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| Domini PacAsia Social Equity Trust |
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| Domini EuroPacific Social Equity Trust |
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| Domini Social Equity Portfolio |
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| Domini European Social Equity Portfolio |
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| Domini PacAsia Social Equity Portfolio |
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| Domini EuroPacific Social Equity Portfolio |
| Board of Trustees’ Consideration of Management and | |
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THE WAY YOU INVEST MATTERS |
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
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* | 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
THE WAY YOU INVEST MATTERS |
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 Portfolio, 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 Portfolio 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 Portfolio and Domini EuroPacific Social Equity Portfolio. 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
THE 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 Portfolio
Domini EuroPacific Social Equity Portfolio
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 Portfolio
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 Portfolio
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.
Telenor
Domini European Social Equity Portfolio
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 Portfolio
With headquarters in the Netherlands, Unilever is an international food and personal care company. Project Shakti, a small pilot project launched
The Way You Invest Matters: Poverty | 7 |
THE WAY YOU INVEST MATTERS |
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.
Westpac Banking Corporation
Domini PacAsia Social Equity Portfolio
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 Portfolio, Domini European Social Equity Portfolio, Domini PacAsia Social Equity Portfolio, and Domini EuroPacific Social Equity Portfolio 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, the Domini European Social Equity Trust, the Domini PacAsia Social Equity Trust, and the Domini EuroPacific Social Equity Trust. 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.
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.
8 | The Way You Invest Matters: Poverty |
THE 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).
9
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%.
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. 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.
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 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,
10
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 Portfolio and Domini EuroPacific Social Equity Portfolio 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 submanager continue to monitor market developments closely, focusing on the Funds’ long-term investment objectives.
Economic and Market Background | 11 |
DOMINI SOCIAL EQUITY PORTFOLIO
PERFORMANCE COMMENTARY
For the six months ended January 31, 2007, the Fund returned 15.11%, excluding sales charges, 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 1.52%, excluding sales charges, outpaced that of the S&P 500, which returned 1.40%. The Fund’s outperformance continued with a total return of 2.28% in January, excluding sales charges, 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 Estee Lauder were notable).
Holdings that hurt performance during this two-month period included technology companies like Symantec, Lexmark, and Motorola.
12
The Domini Social Equity Portfolio 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 |
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 Portfolio — Performance Commentary | 13 |
AVERAGE ANNUAL TOTAL RETURNS
|
|
|
| Domini Social Equity |
| Domini Social Equity |
| S&P 500 |
|
|
| 1 year |
| 6.95% |
| 12.28% |
| 15.79% |
|
As of |
| 5 year |
| 3.68% |
| 4.70% |
| 6.19% |
|
12-31-06 |
| 10 year |
| 7.02% |
| 7.54% |
| 8.42% |
|
|
| Since Inception(1) |
| 9.57% |
| 9.92% |
| 10.82% |
|
|
| 1 year |
| 7.29% |
| 12.64% |
| 14.51% |
|
As of |
| 5 year |
| 4.24% |
| 5.26% |
| 6.82% |
|
1-31-07 |
| 10 year |
| 6.50% |
| 7.02% |
| 7.92% |
|
|
| Since Inception(1) |
| 9.68% |
| 10.02% |
| 10.87% |
|
COMPARISON OF $10,000 INVESTMENT IN THE
DOMINI SOCIAL EQUITY PORTFOLIO (WITH 4.75% MAXIMUM SALES CHARGE) 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 Portfolio 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) | The Domini Social Equity Portfolio, which commenced operations on May 1, 2005, invests all of its assets in the Domini Social Equity Trust (DSET), which has the same investment objectives as the Fund. The DSET commenced operations on June 3, 1991. Performance prior to the Fund’s commencement of operations is the performance of the DSET adjusted for expenses of the Fund. |
This material must be preceded or accompanied by the Fund’s current prospectus. DSIL Investment Services LLC, Distributor. 03/07
14 | Domini Social Equity Portfolio — 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 |
|
15
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 |
|
16
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
17
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
PERFORMANCE COMMENTARY
For the six months ended January 31, 2007, the Fund continued to perform well, returning 21.20%, excluding sales charges, 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.
18
The Domini European Social Equity Portfolio 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 |
|
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 Portfolio — Performance Commentary | 19 |
AVERAGE ANNUAL TOTAL RETURNS
|
|
|
| Domini European Social |
| Domini European Social |
| MSCI Europe |
|
As of 12-31-06 |
| 1 Year |
| 37.97% |
| 44.85% |
| 34.36% |
|
| Since Inception(1) |
| 33.21% |
| 38.53% |
| 29.26% |
| |
As of 1-31-07 |
| 1 Year |
| 28.42% |
| 34.82% |
| 26.85% |
|
| Since Inception(1) |
| 31.59% |
| 36.50% |
| 27.73% |
|
COMPARISON OF $10,000 INVESTMENT IN THE
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
(WITH 4.75% MAXIMUM SALES CHARGE) 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 Portfolio 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
20 | Domini European Social Equity Portfolio — 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 |
|
21
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 |
|
22
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
23
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
PERFORMANCE COMMENTARY
From the Fund’s inception on December 27, 2006, through January 31, 2007, the Fund returned 0.90%, excluding sales charges, 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.
24
The Domini PacAsia Social Equity Portfolio 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 |
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 Portfolio — Performance Commentary | 25 |
Total Return Since Inception (12/27/2006) | |
Domini PacAsia Social Equity Portfolio (with 4.75% Maximum Sales Charge) | -3.89% |
Domino PacAsia Social Equity Portfolio (without Sales Charge) | 0.90% |
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 Portfolio 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
26 | Domini PacAsia Social Equity Portfolio — 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 |
|
27
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 |
|
28
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 |
|
29
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
30
DOMINI EUROPACIFIC SOCIAL EQUITY PORTFOLIO
PERFORMANCE COMMENTARY
From the Fund’s inception on December 27, 2006, through January 31, 2007, the Fund returned 3.50%, excluding sales charges, 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.
31
The Domini EuroPacific Social Equity Portfolio 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 |
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.
32 | Domini EuroPacific Social Equity Portfolio — Performance Commentary |
Total Return Since Inception (12/27/2006) | ||
Domini EuroPacific Social Equity Portfolio (with 4.75% Maximum Sales Charge) |
| -1.42% |
Domini EuroPacific Social Equity Portfolio (without Sales Charge) |
| 3.50% |
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 Portfolio 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 Portfolio — Performance Commentary | 33 |
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 |
|
|
|
|
|
|
|
|
|
|
34
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 |
|
35
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 |
| |
36
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 |
37
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
38
EXPENSE EXAMPLE
As a shareholder of the Domini Funds, you incur two types of costs:
• | Transaction costs such as sales charges (loads) on purchases and 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 sales charges and redemption fees. Therefore, the second line of the tables is useful in comparing ongoing costs only, and will not help you determine
39
the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Fund Name |
| Expenses |
| Beginning |
| Ending |
| Expenses |
|
Domini Social Equity Portfolio |
| Actual Expenses |
| $1,000.00 |
| $1,151.10 |
| $5.531 |
|
| Hypothetical Expenses |
| $1,000.00 |
| $1,020.06 |
| $5.191 |
| |
Domini European Social Equity Portfolio |
| Actual Expenses |
| $1,000.00 |
| $1,212.00 |
| $8.752 |
|
| Hypothetical Expenses |
| $1,000.00 |
| $1,017.29 |
| $7.982 |
| |
Domini PacAsia Social Equity Portfolio |
| Actual Expenses |
| $1,000.00 |
| $1,046.00 |
| $7.633 |
|
| Hypothetical Expenses |
| $1,000.00 |
| $1,017.74 |
| $7.533 |
| |
Domini EuroPacific Social Equity Portfolio |
| Actual Expenses |
| $1,000.00 |
| $1,178.89 |
| $8.184 |
|
| Hypothetical Expenses |
| $1,000.00 |
| $1,017.69 |
| $7.584 |
|
1 | Expenses are equal to the Fund’s annualized expense ratio of 1.02%, 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 1.57%, 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 1.48%, 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 1.49%, 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. |
40 | Domini Funds — Expense Example |
FINANCIAL STATEMENTS
|
41
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 |
42
|
| Domini Social |
| Domini European |
| Domini PacAsia |
| Domini EuroPacific |
| ||||
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
43
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 |
44
|
| Domini Social |
| Domini European |
| Domini PacAsia |
| Domini EuroPacific |
| ||||
|
| FOR THE |
| FOR THE |
| FOR THE PERIOD |
| FOR THE PERIOD |
| ||||
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
45
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 |
| YEAR ENDED |
| ||
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 |
|
46
|
| Domini European Social Equity Trust |
| Domini PacAsia |
| Domini EuroPacific |
| ||||||
|
| SIX MONTHS |
| FOR THE PERIOD |
| FOR THE PERIOD |
| FOR THE PERIOD |
| ||||
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
47
FINANCIAL HIGHLIGHTS
DOMINI SOCIAL EQUITY TRUST |
|
| SIX MONTHS |
| 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 |
| FOR THE PERIOD |
| ||
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
48
FINANCIAL HIGHLIGHTS
DOMINI PACASIA SOCIAL EQUITY TRUST |
|
| FOR THE PERIOD |
| |
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 |
| |
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
49
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 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 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 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 amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
50
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 value of assets and liabilities other than investments in securities held at the end of the reporting period, resulting from changes in exchange rates.
Notes to Financial Statements | 51 |
(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 |
52 | Notes to Financial Statements |
(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.
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 | 53 |
DOMINI SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
DOMINI EUROPACIFIC SOCIAL EQUITY PORTFOLIO
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* |
Net assets |
Outstanding shares of beneficial interest |
Net asset value per share |
MAXIMUM OFFERING PRICE PER SHARE |
(net asset value per share ÷ (1-4.75%)) |
______________
* | Redemption price is equal to net asset value less any applicable redemption fees retained by the Fund |
54
|
| Domini |
| Domini |
| Domini |
| Domini |
| ||||
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Portfolio, at value |
| $ | 1,181,065 |
| $ | 7,120,412 |
| $ | 186,824 |
| $ | 200,573 |
|
Receivable for capital shares |
|
| 44,373 |
|
| 105,079 |
|
| — |
|
| 8,761 |
|
Total assets |
|
| 1,225,438 |
|
| 7,225,491 |
|
| 186,824 |
|
| 209,334 |
|
LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable for capital shares |
|
| — |
|
| — |
|
| — |
|
| — |
|
Sponsorship/Management fee payable |
|
| 428 |
|
| 1,427 |
|
| 24 |
|
| 53 |
|
Distribution fee payable |
|
| 53 |
|
| — |
|
| — |
|
| — |
|
Other accrued expenses |
|
| 267 |
|
| 3,040 |
|
| 47 |
|
| 109 |
|
Total liabilities |
|
| 748 |
|
| 4,467 |
|
| 71 |
|
| 162 |
|
NET ASSETS |
| $ | 1,224,690 |
| $ | 7,221,024 |
| $ | 186,753 |
| $ | 209,172 |
|
NET ASSETS CONSIST OF: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in capital |
| $ | 1,124,116 |
| $ | 6,315,182 |
| $ | 185,015 |
| $ | 211,982 |
|
Undistributed net investment income (loss) |
|
| 257 |
|
| (13,393 | ) |
| (140 | ) |
| 192 |
|
Accumulated net realized gain (loss) from Portfolio |
|
| 219,149 |
|
| 158,199 |
|
| (84 | ) |
| (513 | ) |
Net unrealized appreciation (depreciation) from Portfolio |
|
| (118,832 | ) |
| 761,036 |
|
| 1,962 |
|
| (2,489 | ) |
NET ASSETS |
| $ | 1,224,690 |
| $ | 7,221,024 |
| $ | 186,753 |
| $ | 209,172 |
|
NET ASSET VALUE PER SHARE* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets |
| $ | 1,224,690 |
| $ | 7,221,024 |
| $ | 186,753 |
| $ | 209,172 |
|
Outstanding shares of beneficial interest |
|
| 104,866 |
|
| 487,266 |
|
| 18,513 |
|
| 20,210 |
|
Net asset value per share |
| $ | 11.68 |
| $ | 14.82 |
| $ | 10.09 |
| $ | 10.35 |
|
MAXIMUM OFFERING PRICE PER SHARE |
|
|
|
|
|
|
|
|
|
|
|
|
|
(net asset value per share ÷ (1-4.75%)) |
| $ | 12.26 |
| $ | 15.56 |
| $ | 10.59 |
| $ | 10.87 |
|
SEE NOTES TO FINANCIAL STATEMENTS
55
DOMINI SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
DOMINI EUROPACIFIC SOCIAL EQUITY PORTFOLIO
STATEMENTS OF OPERATIONS
INCOME: |
Investment income from Portfolio (net of foreign taxes of $0, $1,197, $0, $26, respectively) |
Expenses from Portfolio |
Net investment income (loss) from Portfolio |
EXPENSES: |
Sponsor/Management fee |
Distribution fees |
Registration fees |
Transfer agent fees |
Printing |
Professional fees |
Miscellaneous |
Trustees 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 |
56
|
| Domini Social |
| Domini European |
| Domini PacAsia |
| Domini EuroPacific |
| ||||
|
| FOR THE |
| FOR THE |
| FOR THE PERIOD |
| FOR THE PERIOD |
| ||||
INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income from Portfolio (net of foreign taxes of $0, $1,197, $0, $26, respectively) |
| $ | 7,580 |
| $ | 24,565 |
| $ | 1 |
| $ | 505 |
|
Expenses from Portfolio |
|
| (1,143 | ) |
| (18,415 | ) |
| (69 | ) |
| (151 | ) |
Net investment income (loss) from Portfolio |
|
| 6,437 |
|
| 6,150 |
|
| (68 | ) |
| 354 |
|
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sponsor/Management fee |
|
| 2,068 |
|
| 5,963 |
|
| 24 |
|
| 53 |
|
Distribution fees |
|
| 1,080 |
|
| 5,963 |
|
| 24 |
|
| 53 |
|
Registration fees |
|
| 25,744 |
|
| 13,870 |
|
| 500 |
|
| 500 |
|
Transfer agent fees |
|
| 820 |
|
| 2,324 |
|
| 73 |
|
| 75 |
|
Printing |
|
| 11,203 |
|
| 6,146 |
|
| 1,750 |
|
| 1,500 |
|
Professional fees |
|
| 145 |
|
| 439 |
|
| 80 |
|
| 110 |
|
Miscellaneous |
|
| 1,318 |
|
| 1,292 |
|
| 193 |
|
| 183 |
|
Trustees fees |
|
| 13 |
|
| 809 |
|
| — |
|
| — |
|
Accounting fees |
|
| 12,357 |
|
| 7,923 |
|
| 1,529 |
|
| 1,531 |
|
Total expenses |
|
| 54,748 |
|
| 44,729 |
|
| 4,173 |
|
| 4,005 |
|
Fees waived |
|
| (51,475 | ) |
| (25,648 | ) |
| (4,101 | ) |
| (3,843 | ) |
Net expenses |
|
| 3,273 |
|
| 19,081 |
|
| 72 |
|
| 162 |
|
NET INVESTMENT INCOME (LOSS) |
|
| 3,164 |
|
| (12,931 | ) |
| (140 | ) |
| 192 |
|
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REALIZED GAIN (LOSS) FROM PORTFOLIO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
| 233,122 |
|
| 164,977 |
|
| (188 | ) |
| (1,078 | ) |
Foreign Currency |
|
| — |
|
| (2,590 | ) |
| 104 |
|
| 565 |
|
Net realized gain (loss) |
|
| 233,122 |
|
| 162,387 |
|
| (84 | ) |
| (513 | ) |
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) FROM PORTFOLIO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
| (120,656 | ) |
| 750,700 |
|
| 1,946 |
|
| (2,536 | ) |
Translation of assets and liabilities in foreign currencies |
|
| — |
|
| (33 | ) |
| 16 |
|
| 47 |
|
Net change in unrealized appreciation (depreciation) |
|
| (120,656 | ) |
| 750,667 |
|
| 1,962 |
|
| (2,489 | ) |
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO |
|
| 112,466 |
|
| 913,054 |
|
| 1,878 |
|
| (3,002 | ) |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
| $ | 115,630 |
| $ | 900,123 |
| $ | 1,738 |
| $ | (2,810 | ) |
SEE NOTES TO FINANCIAL STATEMENTS
57
DOMINI SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
DOMINI EUROPACIFIC SOCIAL EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
|
| Domini Social Equity Portfolio |
| ||||
|
| SIX MONTHS |
| YEAR ENDED |
| ||
INCREASE IN NET ASSETS: |
|
|
|
|
|
|
|
FROM OPERATIONS: |
|
|
|
|
|
|
|
Net investment income (loss) |
| $ | 3,164 |
| $ | 2,297 |
|
Net realized gain (loss) from Portfolio |
|
| 233,122 |
|
| (6,823 | ) |
Net change in unrealized appreciation (depreciation) from Portfolio |
|
| (120,656 | ) |
| (4,225 | ) |
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
| 115,630 |
|
| (8,751 | ) |
DISTRIBUTIONS AND/OR DIVIDENDS: |
|
|
|
|
|
|
|
Dividends to shareholders from net investment income |
|
| (3,270 | ) |
| (2,409 | ) |
Distributions to shareholders from net realized gain |
|
| (3,134 | ) |
| (1,276 | ) |
Net Decrease in Net Assets from Distributions and/or Dividends |
|
| (6,404 | ) |
| (3,685 | ) |
CAPITAL SHARE TRANSACTIONS: |
|
|
|
|
|
|
|
Proceeds from sale of shares |
|
| 654,246 |
|
| 376,156 |
|
Net asset value of shares issued in reinvestment of distributions and dividends |
|
| 6,404 |
|
| 3,685 |
|
Redemption fees |
|
| — |
|
| 190 |
|
Payments for shares redeemed |
|
| (24,520 | ) |
| (17,702 | ) |
Total Decrease (Increase) in Capital Share Transactions |
|
| 636,130 |
|
| 362,329 |
|
Total Increase (Decrease) in Net Assets |
|
| 745,356 |
|
| 349,893 |
|
NET ASSETS: |
|
|
|
|
|
|
|
Beginning of period |
|
| 479,334 |
|
| 129,441 |
|
End of period |
| $ | 1,224,690 |
| $ | 479,334 |
|
Undistributed net investment income (loss) |
| $ | 257 |
| $ | 363 |
|
CAPITAL SHARE TRANSACTIONS IN SHARES: |
|
|
|
|
|
|
|
Sold |
|
| 59,530 |
|
| 35,670 |
|
Issued in reinvestment of distributions and/or dividends |
|
| 562 |
|
| 356 |
|
Redeemed |
|
| (2,191 | ) |
| (1,668 | ) |
Net Increase |
|
| 57,901 |
|
| 34,358 |
|
58
|
| Domini European Social Equity Portfolio |
| Domini PacAsia |
| Domini EuroPacific |
| ||||||
|
| SIX MONTHS ENDED |
| FOR THE PERIOD |
| FOR THE PERIOD |
| FOR THE PERIOD |
| ||||
INCREASE IN NET ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
FROM OPERATIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income (loss) |
| $ | (12,931 | ) | $ | 6,705 |
|
| (140 | ) |
| 192 |
|
Net realized gain (loss) from Portfolio |
|
| 162,387 |
|
| 12,207 |
|
| (84 | ) |
| (513 | ) |
Net change in unrealized appreciation (depreciation) from Portfolio |
|
| 750,667 |
|
| 10,369 |
|
| 1,962 |
|
| (2,489 | ) |
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
| 900,123 |
|
| 29,281 |
|
| 1,738 |
|
| (2,810 | ) |
DISTRIBUTIONS AND/OR DIVIDENDS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to shareholders from net investment income |
|
| — |
|
| (7,057 | ) |
| — |
|
| — |
|
Distributions to shareholders from net realized gain |
|
| (16,505 | ) |
| — |
|
| — |
|
| — |
|
Net Decrease in Net Assets from Distributions and/or Dividends |
|
| (16,505 | ) |
| (7,057 | ) |
| — |
|
| — |
|
CAPITAL SHARE TRANSACTIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of shares |
|
| 5,794,661 |
|
| 583,697 |
|
| 185,015 |
|
| 463,560 |
|
Net asset value of shares issued in reinvestment of distributions and dividends |
|
| 14,224 |
|
| 4,701 |
|
| — |
|
| — |
|
Redemption fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for shares redeemed |
|
| — |
|
| 125 |
|
| — |
|
| 5,134 |
|
Total Decrease (Increase) in Capital Share Transactions |
|
| (70,597 | ) |
| (11,629 | ) |
| — |
|
| (256,712 | ) |
Total Increase (Decrease) in Net Assets |
|
| 5,738,288 |
|
| 576,894 |
|
| 185,015 |
|
| 211,982 |
|
NET ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
| 6,621,906 |
|
| 599,118 |
|
| 186,753 |
|
| 209,172 |
|
End of period |
|
| 599,118 |
|
| — |
|
| — |
|
| — |
|
Undistributed net investment income (loss) |
| $ | 7,221,024 |
| $ | 599,118 |
| $ | 186,753 |
| $ | 209,172 |
|
CAPITAL SHARE TRANSACTIONS IN SHARES: |
| $ | (13,393 | ) | $ | (462 | ) | $ | (140 | ) | $ | 192 |
|
Sold |
|
| 442,336 |
|
| 49,415 |
|
| 18,513 |
|
| 46,405 |
|
Issued in reinvestment of distributions and/or dividends |
|
| 986 |
|
| 407 |
|
| — |
|
| — |
|
Redeemed |
|
| (4,930 | ) |
| (948 | ) |
| — |
|
| (26,195 | ) |
Net Increase |
|
| 438,392 |
|
| 48,874 |
|
| 18,513 |
|
| 20,210 |
|
SEE NOTES TO FINANCIAL STATEMENTS
59
DOMINI SOCIAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
|
| SIX MONTHS |
| YEAR ENDED |
| FOR THE PERIOD |
| |||
For a share outstanding for the period: |
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
| $ | 10.21 |
| $ | 10.27 |
| $ | 9.50 |
|
Income from investment operations: |
|
|
|
|
|
|
|
|
|
|
Net investment income (loss) |
|
| 0.03 |
|
| 0.04 |
|
| 0.04 |
|
Net realized and unrealized gain (loss) on investments |
|
| 1.51 |
|
| 0.02 |
|
| 0.73 |
|
Total income from investment operations |
|
| 1.54 |
|
| 0.06 |
|
| 0.77 |
|
Less dividends and distributions: |
|
|
|
|
|
|
|
|
|
|
Dividends to shareholders from net investment income |
|
| (0.04 | ) |
| (0.07 | ) |
| — |
|
Distributions to shareholders from net realized gain |
|
| (0.03 | ) |
| (0.06 | ) |
| — |
|
Total distributions |
|
| (0.07 | ) |
| (0.13 | ) |
| — |
|
Redemption fee proceeds |
|
| — | * |
| 0.01 |
|
| — | * |
Net asset value, end of period |
| $ | 11.68 |
| $ | 10.21 |
| $ | 10.27 |
|
Total return(2) |
|
| 15.11 | % |
| 0.51 | % |
| 8.11 | % |
Portfolio turnover+ |
|
| 82 | % |
| 12 | % |
| 9 | % |
Ratios/supplemental data (annualized): |
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (in millions) |
| $ | 1,225 |
| $ | 479 |
| $ | 129 |
|
Ratio of expenses to average net assets |
|
| 1.02 | %(1) |
| 0.95 | %(1) |
| 0.95 | %(1) |
Ratio of net investment income (loss) to average net assets |
|
| 0.73 | % |
| 0.74 | % |
| 0.60 | % |
* | Amount represents less than 0.005 per share |
+ | For the Portfolio in which the Fund invests |
(1) | Reflects a waiver of fees by the Manager of the Portfolio, 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 12.95% for the six months ended January 31, 2007, and 37.78% and 135.29% for the year ended July 31, 2006, and the period ended July 31, 2005. |
(2) | Total Return does not reflect sales commissions and is not annualized for periods less than one year. |
SEE NOTES TO FINANCIAL STATEMENTS
60
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
|
| SIX MONTHS |
| FOR THE PERIOD |
| ||
For a share outstanding for the period: |
|
|
|
|
|
|
|
Net asset value, beginning of period |
| $ | 12.26 |
| $ | 10.00 |
|
Income from investment operations: |
|
|
|
|
|
|
|
Net investment income (loss) |
|
| (0.02 | ) |
| 0.19 |
|
Net realized and unrealized gain (loss) on investments |
|
| 2.62 |
|
| 2.26 |
|
Total income from investment operations |
|
| 2.60 |
|
| 2.45 |
|
Less dividends and/or distributions: |
|
|
|
|
|
|
|
Dividends to shareholders from net investment income |
|
| — |
|
| (0.20 | ) |
Distributions to shareholders from net realized gain |
|
| (0.04 | ) |
| — |
|
Total distributions |
|
| (0.04 | ) |
| (0.20 | ) |
Redemption fee proceeds |
|
| — |
|
| 0.01 |
|
Net asset value, end of period |
| $ | 14.82 |
| $ | 12.26 |
|
Total return(2) |
|
| 21.20 | % |
| 24.76 | % |
Portfolio turnover+ |
|
| 37 | % |
| 69 | % |
Ratios/supplemental data (annualized): |
|
|
|
|
|
|
|
Net assets, end of period (in millions) |
| $ | 7,221 |
| $ | 559 |
|
Ratio of expenses to average net assets |
|
| 1.57 | %(1) |
| 1.58 | %(1) |
Ratio of net investment income (loss) to average net assets |
|
| (0.54 | )% |
| 3.98 | % |
+ | 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 2.73% for the six months ended January 31, 2007, and 30.47% for the period ended July 31, 2006. |
(2) | Total Return does not reflect sales commissions and is not annualized for periods less than one year. |
SEE NOTES TO FINANCIAL STATEMENTS
61
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
|
| FOR THE PERIOD |
| |
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 |
|
| 0.10 |
|
Total income from investment operations |
|
| 0.09 |
|
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 |
| $ | 10.09 |
|
Total return(2) |
|
| 0.90 | % |
Portfolio turnover+ |
|
| 0.4 | % |
Ratios/supplemental data (annualized): |
|
|
|
|
Net assets, end of period (in thousands) |
| $ | 187 |
|
Ratio of expenses to average net assets |
|
| 1.48 | %(1) |
Ratio of net investment income (loss) to average net assets |
|
| (1.47 | )% |
+ | 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 45.95% for the period ended January 31, 2007. |
(2) | Total Return does not reflect sales commissions and is not annualized for periods less than one year. |
SEE NOTES TO FINANCIAL STATEMENTS
62
DOMINI EUROPACIFIC SOCIAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
|
| FOR THE PERIOD |
| |
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 |
|
| 0.10 |
|
Total income from investment operations |
|
| 0.11 |
|
Less dividends and/or distributions: |
|
|
|
|
Dividends to shareholders from net investment income |
|
| — |
|
Distributions to shareholders from net realized gain |
|
| — |
|
Total distributions |
|
| — |
|
Redemption fee proceeds |
|
| 0.24 | ** |
Net asset value, end of period |
| $ | 10.35 |
|
Total return(2) |
|
| 3.50 | % |
Portfolio turnover+ |
|
| 13 | % |
Ratios/supplemental data (annualized): |
|
|
|
|
Net assets, end of period (in thousands) |
| $ | 209 |
|
Ratio of expenses to average net assets |
|
| 1.49 | %(1) |
Ratio of net investment income (loss) to average net assets |
|
| 0.91 | % |
** | Based on average shares outstanding |
+ | 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 24.93% for the period ended January 31, 2007. |
(2) | Total Return does not reflect sales commissions and is not annualized for periods less than one year. |
SEE NOTES TO FINANCIAL STATEMENTS
63
DOMINI SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
DOMINI EUROPACIFIC SOCIAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2007 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Domini Advisor 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 four separate series: the Domini Social Equity Portfolio, Domini European Social Equity Portfolio, Domini PacAsia Social Equity Portfolio, and Domini EuroPacific Social Equity Portfolio (each the “Fund,” collectively the “Funds”). 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 0.1% of Domini Social Equity Trust, 6.4% of Domini European Social Equity Trust, 1.6% of Domini PacAsia Social Equity Trust, and 4.9% 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.
Shares of the Funds are sold with a front-end sales charge (load) of up to 4.75%.
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 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 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
64
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 daily pro rata 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.
Notes to Financial Statements | 65 |
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 Portfolio) and a Management Agreement (with respect to the Domini European Social Equity Portfolio, Domini PacAsia Social Equity Portfolio, and Domini EuroPacific Social Equity Portfolio), 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 Portfolio |
| 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 Portfolio, |
| 0.25% of the first $250 million of net assets managed, |
Domini PacAsia Social Equity Portfolio, and |
| 0.24% of the next $250 million of net assets managed, and |
Domini EuroPacific Social Equity Portfolio |
| 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 Portfolio at no greater than 1.13% of the average daily net assets. For the period prior to November 30, 2006, Domini capped aggregate annual operating expenses at 0.95%. 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 European Social Equity Portfolio at no greater than 1.57% of the average daily net assets. For the period prior to November 30, 2006, Domini capped aggregate annual operating expenses at 1.60%. Since the inception of the Domini PacAsia Social Equity Portfolio and Domini EuroPacific Social Equity Portfolio, Domini has reduced its fees and reimbursed expenses to the extent necessary to keep the aggregate annual operating expenses at no greater than 1.57% 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 |
| EXPENSES |
| ||
Domini Social Equity Portfolio |
| $ | 2,068 |
| $ | 48,327 |
|
Domini European Social Equity Portfolio |
|
| 5,963 |
|
| 13,911 |
|
Domini PacAsia Social Equity Portfolio |
|
| 24 |
|
| 4,053 |
|
Domini EuroPacific Social Equity Portfolio |
|
| 53 |
|
| 3,737 |
|
66 | Notes to Financial Statements |
(D) Distributor. The Board of Trustees of the Funds has adopted a Distribution Plan 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 shares of the Funds pursuant to a Distribution Agreement. Under the Distribution Plan, the Funds pay expenses incurred in connection with the sale of Fund shares and pay DSILD a distribution fee at an aggregate annual rate not to exceed 0.25% of the average daily net assets. For the period ended January 31, 2007 fees waived were $1,080, $5,774, $24, and $53 for the Domini Social Equity Portfolio, Domini European Social Equity Portfolio, Domini PacAsia Social Equity Portfolio, and Domini EuroPacific Social Equity Portfolio, respectively.
DSIL Investment Services, LLC, (DSIL) the Funds’ Distributor, has received commissions related to the sale of fund shares. For the period ended January 31, 2007 DSIL recieved $2,214, $8,043, $573, and $1,871 from Domini Social Equity Portfolio, Domini European Social Equity Portfolio, Domini PacAsia Social Equity Portfolio and Domini EuroPacific Social Equity Portfolio, 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 Portfolio |
| $ | 609,873 |
| $ | 27,534 |
|
Domini European Social Equity Portfolio |
|
| 5,689,630 |
|
| 88,155 |
|
Domini PacAsia Social Equity Portfolio |
|
| 185,014 |
|
| 0 |
|
Domini EuroPacific Social Equity Portfolio |
|
| 459,933 |
|
| 256,712 |
|
Notes to Financial Statements | 67 |
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
68
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
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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 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
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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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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 Submanager:
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
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 ADVISOR 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