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 Domini Thornton
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, 2008
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.
TABLE OF CONTENTS
2 |
| Letter from the President |
4 |
| Domini News |
5 |
| The Way You Invest Matters: Human Rights |
11 |
| The Way You Invest Matters: Activism |
|
| Fund Performance and Holdings |
12 |
| Economic and Market Background |
15 |
| Domini Social Equity Portfolio |
21 |
| Domini European Social Equity Portfolio |
27 |
| Domini PacAsia Social Equity Portfolio |
35 |
| Domini European PacAsia Social Equity Portfolio |
44 |
| Expense Example |
47 |
| Financial Statements |
| Domini Social Equity Trust | |
| Domini European Social Equity Trust | |
| Domini PacAsia Social Equity Trust | |
| Domini European PacAsia Social Equity Trust | |
62 |
| Financial Statements |
| Domini Social Equity Portfolio | |
| Domini European Social Equity Portfolio | |
| Domini PacAsia Social Equity Portfolio | |
| Domini European PacAsia Social Equity Portfolio | |
76 |
| Proxy Voting Information |
76 |
| Quarterly Portfolio Schedule Information |
THE WAY YOU INVEST MATTERS ® |
|
LETTER FROM THE PRESIDENT
Dear Fellow Shareholders:
In this year of tough economic news and a hard-fought presidential campaign, calls for change are in the air.
This represents, I think, more than dissatisfaction with American progress. It reflects also a determination that government should once again take up its historic role of promoting the common good and its obligation to regulate corporate conduct.
That would certainly be a welcome development.
In the meanwhile it has been up to social investors like you to make change happen.
Many of the issues being aired during this interesting campaign season are ones we social investors have been talking about for years. We look closely at how companies use lobbyists and campaign contributions to maximize their political influence, at the social costs of for-profit healthcare that leaves so many behind, at companies’ responses to climate change, and at the profound impact of government contracts and tax incentives on crucial matters of war and peace, energy development and human capital.
In this year’s Semi-Annual Report, we report on issues of basic human dignity. On behalf of our shareholders, we encourage companies to use their influence to help end the genocide in Darfur, to protect freedom of expression, and to provide safe conditions and fair pay to workers in the far-flung factories that make the products we use every day.
Your commitment to social investing makes all the difference on these and many other important issues. The progress we make is slow, and requires long-term commitment. As Martin Luther King said, “the arc of the moral universe is long, but it bends toward justice.”
This has been a difficult period for investors. Over the past six months, stock markets are down across the U.S., Europe, and Asia, a decline precipitated in part by the U.S. housing slump and the credit crisis that came in its wake. A primary reason for the collapse of the subprime lending market is that unscrupulous mortgage lenders made loans — often with deceptive terms — that people could not afford to repay. Then they bundled those unsustainable mortgages into securities with unrealistically high credit ratings.
Domini research has long focused on predatory lending, and we do our best to avoid companies that practice it. We sounded the alarm a decade ago. Our commitment to community development investments demonstrates and supports a better way to serve low-income people. This, in a nutshell, is why what we social investors do is so important, for people and the planet. A groundswell of change is building, and your investments are a part of it.
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We are honored that our shareholders share this vision, and continue to place their trust in us. Thank you, as always, for your decision to invest with Domini.
Very truly yours,
Amy Domini
amy@domini.com
KEEP IN TOUCH WITH DOMINI |
A report like this comes twice a year, but your dollars work for change all year long. Now there’s a great way to stay in touch. Sign up for Domini Updates at www.domini.com to receive:
• | Our e-newsletter Investing Matters, with news on how your funds are making a difference |
• | Domini Action Alerts that help you speak out on issues from child labor to global warming. |
We will not “spam” you, and we will never sell or rent your email address to anyone, for any reason. (Please visit our website for more information about our Privacy Policy.) And you can, of course, unsubscribe at any time.
If you invest through a financial advisor, brokerage firm, or employer-sponsored retirement plan, you may be able to sign up for paperless E-Delivery of your statements and reports. Just ask your advisor or plan sponsor how to receive your documents electronically. It can reduce your carbon footprint, save trees, and unclutter your life, all with just a few strokes of your keyboard!
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DOMINI NEWS
Domini Wins “Social Capitalist” Award From Fast Company: Domini Social Investments was among the winners of Fast Company magazine’s fifth annual Social Capitalist Award, in the first year that for-profit companies were eligible for selection. These awards recognize organizations and companies that use the tools of business to solve the world’s most pressing social problems. (Winners were featured in the December/January 2008 issue of Fast Company, with expanded online coverage at www.fastcompany.com.)
Responding to this honor, Amy Domini said, “This award is a tribute to the Domini Funds’ thousands of investors, who put their investments to work not only for their families’ future but to build a better future for all of us. Our firm is built on the idea that the way you invest matters — that investors, if we harness our power and think beyond next quarter’s profits, can change companies, change Wall Street, and ultimately change the world. In choosing to invest sustainably and responsibly, our shareholders make change happen every day.”
Amy Domini Honored by Yale: In October 2007, Yale University’s Berkeley Divinity School presented Amy Domini with an honorary doctorate. In its citation, Yale said the degree was awarded in recognition of her “ability to turn compassion into action” and an influence that has “spurred hundreds of companies to evaluate their impact on the environment and human rights.”
Accepting the degree, Amy spoke of the role of faith in the development of her ideas. In the end, she said, finance and capitalism are still subject to basic conceptions of right and wrong. By shaping a career in line with one’s faith and values, she discovered, one could become “a powerful force for good.”
Conventional Funds Still Voting No: The latest data from FundVotes.com has confirmed that U.S. mutual fund companies overwhelmingly side with management when voting their proxies. The 54 fund groups surveyed supported approximately 90.7% of management proposals during the year ended June 30, 2007, but only 35.2% of shareholder proposals. By contrast, Domini supported 67% of management proposals and 63% of shareholder proposals for the same period, making it one of the most activist fund groups surveyed.
New Fund Name: The Domini EuroPacific Social Equity Portfolio has a new name: Domini European PacAsia Social Equity Portfolio.
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THE WAY YOU INVEST MATTERS: HUMAN RIGHTS
At the core of socially responsible investing lies a commitment to universal human dignity and the idea that profits should not come at the cost of anyone’s fundamental rights.
As the world economy becomes ever more globalized, this simple ideal has become more difficult to attain. While some companies have been directly implicated in severe abuses, more often corporations are confronted with the human rights challenges that come with doing business — sourcing raw materials, contracting with local manufacturers, seeking to offer products and services — in countries where abuses are common or even endemic.
Human rights is a complex and difficult subject for investors. It touches many different aspects of a company’s activities, including relationships with suppliers, employees, communities, customers, and governments. Social investors have been playing a critical role by alerting corporations to their human rights obligations, encouraging respect for international norms, and building the demand for consistent, reliable data so that corporate behavior can be more accurately assessed, and abuses brought to light and addressed. We look at the codes of conduct companies have adopted and the countries where they operate to assess the risk of human rights abuses. Conversations with company management and human rights organizations are also often helpful in understanding the role a company is playing. Comparable, reliable data, however, is generally unavailable.
In our discussion below, we focus mainly on companies held by the Domini Funds as of January 31, 2008. Some of the companies noted here are leaders in their industries. Others are just beginning to grapple with these difficult issues. Just as there are few perfect people, there are few perfect companies. We expect companies to responsibly address the real challenges they face, and we expect them to do their part to uphold universal human dignity wherever they do business. In this brief report we are able to touch on only a few areas of human rights. There are many other stories to tell, and we look forward to telling them in future reports.
Though protecting and promoting human rights is often considered purely the role of government, we believe that corporations, investors, and consumers also bear responsibility. Human rights is everyone’s business. Through this report, we hope to convey some of the work that corporations in your portfolio are doing, and the role that Domini is playing on your behalf to protect and promote universal human dignity.
Domini’s Response
Domini’s Global Investment Standards address the relationship of companies to the communities — global, national, and local — in which they operate. These standards encompass various aspects of human rights,
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THE WAY YOU INVEST MATTERS ® |
including freedom of speech; protection of minority and indigenous peoples and their cultures; rights of workers to a safe, healthy workplace and fair compensation; and endorsement of international standards in areas like labor, health, product quality, and children’s rights.
Guided by these standards, we seek to promote universal human dignity through our research, shareholder activism, and commitment to community development.
Domini’s team of in-house research analysts evaluates companies on a range of human rights issues. Our goal is to identify companies that are responsibly addressing the key sustainability challenges of their industry. By including human rights considerations in our process, we are helping to raise expectations for corporate behavior among investors, the public, and the corporations we are evaluating.
This issue must also be considered in the context of a larger question: Just what are a corporation’s obligations regarding human rights in the countries and communities where it does business? And how can companies be held accountable for consistently and constructively exercising that responsibility?
Some companies have volunteered to take on these difficult questions and to work together to provide guidance to the corporate community. The Business Leaders Initiative on Human Rights has produced A Guide for Integrating Human Rights into Business Management, produced in cooperation with the UN Global Compact, a framework for businesses that wish to align themselves with ten principles regarding human rights, labor, the environment, and anticorruption. Of the 13 corporate members of the Business Leaders Initiative, six — Barclays, Coca-Cola, Gap Inc., Hewlett-Packard, Novartis, and StatoilHydro — were held in the portfolios of the Domini Funds as of January 31.
The United Nations is also actively struggling with these questions. In 2007, Domini participated in a session convened by the UN High Commissioner on Human Rights, focusing on human rights and the financial sector, and a later brainstorming session to help plan the work of the special representative appointed by the UN Secretary General to help clarify standards of corporate responsibility regarding human rights. Domini continues to provide our input on this important process.
For many years, Domini has worked with a range of concerned investors and human rights organizations in the wider effort to clarify — and inculcate — human rights standards for corporate behavior. One of the most effective of these has been the Interfaith Center on Corporate Responsibility (ICCR), with which we have partnered on many shareholder campaigns for more than ten years. For the past two years, we have helped lead ICCR’s efforts to address working conditions in corporate supply chains.
6 The Way You Invest Matters: Human Rights
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Here are more examples of ways that your investment in the Domini Funds is making a difference for human rights:
Fighting Genocide in Sudan
With the steady increase in economic globalization, global banks and other major financial institutions provide the credit, financing, and liquidity that make it possible for companies and governments to do business around the world. As a result, those institutions have the potential to be an important influence on human rights.
Five years into a campaign of genocide by government-backed militias in the Sudanese province of Darfur, atrocities continue to take place on a massive scale. Working with Amnesty International, the Genocide Intervention Network, and other concerned investors, Domini met in recent months with large U.S. banks including Citigroup and JPMorgan Chase. We are encouraging them to use their influence with the companies they invest in — as well as the investors, companies, and governments they serve — to help end the ongoing genocide in Darfur.
In our Funds, Domini seeks to avoid investing in companies whose activities provide direct benefits to the Sudanese government, or that are otherwise complicit in human rights abuses in Sudan. Domini shares information about corporate activities in Sudan that we have acquired through our independent research with other investors and organizations working against the Darfur genocide.
Encouraging Internet Freedom
The Internet and telecommunications technologies are powerful tools for facilitating free speech and disseminating information, organizing political activity, promoting democracy, and exposing human rights violations. Protecting them from pressure by repressive governments is an important challenge. Domini is working as part of a multi-stakeholder group — including France Telecom, Google, Microsoft, TeliaSonera, Vodafone, and Yahoo,* and a range of human rights groups and academics — to develop principles to protect freedom of expression and privacy on the Internet and other communication technologies. Recently, Domini filed a shareholder resolution calling on Cisco Systems, which has not joined this group, to report on its involvement with repressive regimes that seek to censor Internet content or restrict citizens’ access to the Internet . The resolution achieved a significant 36% vote of support.
Focus on: Improving Global Working Conditions
Over the past few decades, much of U.S. manufacturing has shifted to the developing world, where labor costs are lower. In making this transition, companies have increasingly outsourced production to separately owned, locally based contract manufacturers. These facilities vary tremendously, but some have been marked by harsh working conditions, low pay, and the exploitation of children and even slave laborers. The risks to both workers
The Way You Invest Matters: Human Rights 7
THE WAY YOU INVEST MATTERS ® |
and companies are amplified by the fact that many companies cannot identify the full breadth and scope of their supply chain, which may reach all the way from a modern production facility in China to a cotton field in Central Asia.
Ensuring decent working conditions in corporate supply chains is an unusually complex problem, and progress has been slow. Companies in the clothing industry were among the first to face public controversy and to take action, followed by toy companies and electronics companies. Domini and other concerned investors have encouraged companies to publish the data on their supply chains that can help to evaluate their performance. In addition to providing public accountability, that data has enabled companies to better understand the challenges they face, and to work to solve problems that previously remained hidden.
By working with industry leaders, we hope to create momentum — and pressure — for their competitors to make similar improvements. One sign of progress is the increasing number of companies that have developed codes of conduct for their suppliers, and that monitor factories with the use of their own or third-party auditors. The Electronic Industry Citizenship Coalition, created in 2004, is an example of an industrywide effort to set basic labor and environmental standards for suppliers in an industry with an unusually complex supply chain. The 32 corporate members of the EICC Group, including Apple, Dell, Hewlett-Packard, and IBM, have agreed to work together to improve conditions in the global electronic supply chain. Domini has provided input over the past few years through periodic stakeholder consultations as the group worked to develop audit protocols, questionnaires, and other monitoring tools.
Promoting International Standards
Domini encourages companies to adopt comprehensive labor standards for their operations and their suppliers that incorporate the core conventions of the International Labor Organization (ILO). These conventions address the right to organize and bargain collectively, child labor, forced labor, discrimination, and equal pay for equal work. Although the ILO’s conventions apply to governments, we have worked with a number of companies to incorporate the ILO’s “core conventions” into their formal policies. In 2005, for example, we convinced Apple to adopt its first code of conduct, setting labor and environmental standards for its supply chain.
According to the ILO, the right to freely associate, including the right to form or join a union of one’s choice, and to bargain collectively for the terms of one’s employment, are fundamental labor rights. Human Rights Watch has reported, however, that U.S. labor law falls short in protecting these fundamental rights. In the fall of 2007, Domini filed a shareholder resolution urging Cummins to adhere to international standards in its relationships with labor unions. We are currently in dialogue with Cummins management to work through these complicated issues. Domini also co-filed its first shareholder resolution in Europe last year, addressing
8 The Way You Invest Matters: Human Rights
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allegations of anti-union activity in the U.S. by a subsidiary of the British transportation company FirstGroup.*
Domini has been in dialogue with Disney since 1996, when the company created its Code of Conduct for Manufacturers and International Labor Standards program. The program reportedly includes factory monitoring and remediation as well as education and communication with internal business units, licensees, and vendors. Disney also works with others committed to improving labor conditions, including socially responsible investors and multilateral institutions. The company has reportedly carried out tens of thousands of factory audits in more than 50 countries. As an outgrowth of that work, Domini has been working with McDonald’s and Disney on a multi-year project seeking to sustain factory compliance with acceptable labor standards.
Encouraging Transparency
For years, two of America’s biggest and most successful clothing retailers, Nike and Gap, were the target of criticism by activists on sweatshop labor issues. In recent years, in addition to extensive efforts to monitor their supply chains and address poor working conditions, both companies responded by taking steps to increase transparency. Gap’s first Social Responsibility Report, released in 2004, was developed in cooperation with Domini and a small group of social investors, in response to a shareholder resolution we filed. The report marked the first time that a clothing retailer had publicly rated the way the factorie s in its global supply chain treated their workers. Gap’s third and most recent report, for 2005-2006, noted that the company conducted 4,316 inspections in 2,053 garment factories around the world during 2006 — more than 99% of its garment factory base. Domini has provided feedback to Gap during the drafting of each of its reports.
In its 2004 Corporate Responsibility report, Nike announced that it was publishing on its website the names and addresses of each of its factories. In addition, Nike and Hewlett-Packard, in their reports that year, reported on noncompliant factories using charts similar to those in Gap’s first report — bringing us one step closer to standardized reporting in this area. Unfortunately, most companies have resisted a commitment to greater accountability through annual public reporting, and this type of reporting remains voluntary. Nevertheless, the expectations of corporations have changed dramatically.
Correcting Abuses
Gap faced renewed controversy in 2007, when the British newspaper The Observer reported that children as young as ten years old were doing hand embroidery for up to 16 hours a day in a workshop in Delhi.
These revelations showed the persistence of labor rights violations, including child labor, in certain emerging markets, and Gap’s response illustrates that leading companies now recognize the importance of
The Way You Invest Matters: Human Rights 9
THE WAY YOU INVEST MATTERS ® |
addressing abuses quickly and comprehensively. The company, which said it learned of the abuses on October 22, announced on November 14 that it had “launched a thorough investigation, cancelled the product order in question and made sure the garment would never be sold.” By November 2, the company had convened all of its Indian suppliers to stress its “zero tolerance” policy on child labor. The exploited children were placed under the care of a nonprofit group affiliated with Global March Against Child Labour, an organization founded and led by one of the world’s leading defenders of children’s rights. Gap is partnering with the Global March to develop an independent oversight and monitoring program to address hand embroidery and beadwork for Gap products — work that is generally not done in factories, but in the “informal sector” of India’s economy. Gap also committed itself to ensure the children receive “access to schooling, financial support until they reach the legal working age, and job opportunities thereafter.”
All of us share a responsibility to end child labor, as well as other abuses of human rights. We hope that this recent controversy will underline the importance of shedding light on the practices of the many companies that are less well known, and less transparent.
______________* | As of January 31, 2008, Yahoo and FirstGroup were not held in any of the Domini Funds’ portfolios. |
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.
As of January 31, 2008, the companies discussed above were held in the portfolios of the following Domini Funds: Apple, Cisco Systems, Citigroup, Coca-Cola, Cummins, Dell, Gap Inc., Google, Hewlett-Packard, IBM, JPMorgan Chase, McDonald’s, Microsoft, Nike, and Walt Disney were held by the Domini Social Equity Portfolio. Barclays, France Telecom, Novartis, StatoilHydro, and Vodafone were held by the Domini European Social Equity Portfolio and by the Domini European PacAsia Social Equity Portfolio. TeliaSonera was held by the Domini European PacAsia Social Equity Portfolio. The composition of the Funds’ portfolios is subject to change.
Unlike other mutual funds, the Domini Social Equity Portfolio, Domini European Social Equity Portfolio, Domini PacAsia Social Equity Portfolio, and Domini European PacAsia 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 (DSET), Domini European Social Equity Trust (DESET), Domini PacAsia Social Equity Trust (DASET), and Domini European PacAsia Social Equity Trust (DUSET). References to each Domini Fund include the applicable Domini Trust, unless the context otherwise requires.
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.
10 The Way You Invest Matters: Human Rights
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THE WAY YOU INVEST MATTERS: ACTIVISM
Below 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 www.domini.com.)
Shareholder Resolutions: For the 2008 proxy season, Domini filed 20 shareholder resolutions, and was the lead filer for 12, on issues including political contributions, the climate crisis, and product safety.
Toxic Substances: Domini gained a strong vote of 36.1% for a resolution asking the medical products company Becton Dickinson to evaluate its policy on brominated flame retardants, which may pose a risk to human health.
As part of a dialogue led by the As You Sow Foundation, Domini helped convince Target to reduce its use of toxic PVC plastic in infant products, children’s toys, shower curtains, packaging, and accessories.
Climate Change: The Carbon Disclosure Project, which now represents investors with over $57 trillion of assets, is a catalyst for productive dialogue on climate change between corporations and their shareholders. More than 1,300 companies have reported on their carbon emissions through the CDP. To help increase this total, Domini recently wrote to 194 companies in 23 countries that had not responded to its most recent annual survey.
Facing Domini’s shareholder resolution (later withdrawn), Lowe’s committed to improve its sustainability reporting, most notably on its policies for purchasing the wood products sold in its stores. Domini recently joined the Boreal Leadership Council, an organization committed to protecting one of the world’s largest forest ecosystems.
Political Contributions: Following earlier successes with Verizon and Hewlett-Packard, Domini filed shareholder resolutions calling on American Express and AT&T to disclose their political contributions. We were pleased to withdraw the resolution with American Express when the company agreed to disclose its contributions. Do mini is also asking companies to disclose contributions to trade associations — an increasingly important avenue for political influence.
Shareholder Rights: In July 2007, the SEC raised ideas challenging the right to file nonbinding resolutions. Domini’s Action Alerts on the subject generated more than 2,000 responses, and Domini submitted three comment letters, including one on behalf of 47 institutional investors and service providers from ten countries representing $1.4 trillion in assets. The SEC decided to take no action on this issue, at least for now.
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FUND PERFORMANCE AND HOLDINGS
ECONOMIC AND MARKET BACKGROUND
U.S. Markets Financial markets experienced significant volatility during the six-month period ending January 31, 2008. The S&P 500 Index declined –4.32% and the bond market (measured by the Lehman Brothers Intermediate Aggregate Index, or LBIA) returned 6.75%. A variety of factors led many analysts to note an increasing risk of recession in 2008:
• | The employment picture weakened — unemployment reached 5% in December, when the economy added only 18,000 new jobs, the smallest monthly increase in four years. |
• | The housing market in the U.S. continued to deteriorate, and sales of new homes dropped 34% during 2007, the biggest decline since 1991. Mortgage foreclosures began to rise dramatically. The meltdown of the subprime mortgage market sparked broad concerns throughout the credit markets, and many large financial companies took hits to their profits, reputations, and share prices as their bets on complex subprime mortgage securities went sour. |
• | Oil prices increased significantly, reaching a record price of $100 per barrel in January 2008. This was exacerbated by the weakness of the U.S. dollar, since oil prices are denominated in dollars. |
Bond markets turned in a relatively strong performance during the six months, and saw increased demand for higher-quality bonds as cautious investors sought out more conservative investments.
Ending a long series of rate increases, the Federal Reserve responded to deteriorating economic conditions and shaky markets by reducing short-term interest rates five times, by a total of 2.25%. This included two cuts during a period of eight days in January, the first a dramatic 0.75% cut implemented between the Fed’s regularly scheduled meetings, during a week in which global stock markets were falling sharply. Bond yields declined and prices increased for both long-term and short-term bonds. Long-term bonds continued to pay higher yields than short-term bonds, reversing the inverted yield curve seen in 2006 and earlier in 2007.
European Markets European stock markets declined sharply during the six months ending January 31, 2008, with the MSCI Europe Index declining by –11.59% in local currency terms. However, the strength of European currencies compared to the dollar counterbalanced at least a portion of this decline for U.S.-based investors, resulting in a total return of –7.31% in dollar terms.
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Economic and business signals were decidedly mixed:
• | Unemployment in the European Union, while still high by U.S. standards, continued to decline, to 7.2% at the end of 2007. Labor productivity lagged, however, with the estimated growth for 2007 at only 1.4%. |
• | The strong euro helped drive a significant decline in business confidence, as European exports become more expensive, hurting export-driven economies like Germany’s. |
• | Inflation has become a concern, as December’s 3.1% EU inflation rate was the highest since May 2001. |
• | The financial sector also caused concern, because several European banks held large quantities of troubled U.S. subprime mortgage assets and were slow to make the necessary write-offs. |
In confronting the climate crisis, the EU moved towards imposing the world’s strictest standards for CO2 emissions from vehicles, building on Europe’s previous leadership in regulation of industrial emissions.
Asian Markets As in Europe, Asian stock markets declined sharply during the six months ended January 31, 2008, with the MSCI All Country Asia Pacific Index down by –12.73% in local currency terms. However, the appreciation of Asian currencies against the dollar resulted in a total return of –7.11% in dollar terms.
India and certain other emerging Asian markets saw positive returns during the period, though China was down about 3% in local currency terms. Japan, representing about half of the index, was down by over 21% in local currency terms. This was a case in which the stock market reflected its underlying economy: The Japanese economy continued to struggle during this period.
In Japan, the third quarter’s Tankan survey of business trends showed that business confidence was relatively unaffected by the U.S. subprime crisis. However, the later months of 2007 saw a sell-off in the Japanese stock market and a number of negative factors were evident:
• | Consumer spending was weak toward year-end, and the country had not yet emerged from deflation — a problem since the latter half of the 1990s. |
• | Japan accounted for approximately 9% of the global economy in 2006, the lowest figure in more than 25 years. |
Economic and Market Background 13
• | The reliance of Japanese companies on the use of temporary workers was among the highest in developed countries. These workers earn one third less than full-timers, receive few benefits, and contribute relatively little to consumer spending and economic growth. |
An important environmental milestone for the region came in the fourth quarter of 2007, as Australia — following the election of Kevin Rudd as prime minister — joined in efforts at a conference in Bali to develop a successor to the Kyoto Protocol on climate change.
14 Economic and Market Background
DOMINI SOCIAL EQUITY PORTFOLIO
PERFORMANCE COMMENTARY
For the six months ended January 31, 2008, the Domini Social Equity Portfolio (the “Fund”) declined –12.69%, excluding sales charges, underperforming the S&P 500 Index return of –4.32%.
The Fund’s subadvisor, in selecting stocks for the Fund’s portfolio, utilizes an approach that focuses on indicators of both valuation (how reasonably priced a company’s stock is relative to the value of its businesses) and momentum (the rate at which the company’s profits and/or share price have been increasing). During this period, companies that appeared to have attractive valuations performed more poorly than expected.
In particular, the Fund’s performance relative to the index was hurt by stock selection within the industrial, consumer staples, and information technology sectors, and by positions in the following stocks:
• | The stock of YRC Worldwide declined when analysts turned negative on the freight industry due to increases in fuel and equipment costs. |
• | The Fund’s performance was hurt by its overweight position in the electronics companies Electronic Data Systems and LAM Research, which performed poorly, and by its underweight position in Apple, which had a positive return for the period. |
An overweight position in the financial sector, which was hurt by the collapse of the subprime mortgage market, was also negative for performance. However, stock selection within that sector, including positions in JPMorgan Chase and Goldman Sachs, resulted in a positive contribution to returns. The Fund was also helped by its positions in Energen and Express Scripts, each of which announced profit outlooks that beat the expectations of analysts.
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The Domini Social Equity Portfolio invests in the Domini Social Equity Trust. The table and bar chart below provide information as of January 31, 2008, about the ten largest holdings of the Domini Social Equity Trust and its portfolio holdings by industry sector:
TEN LARGEST HOLDINGS
SECURITY DESCRIPTION |
| % NET |
|
JP Morgan Chase & Co. |
| 4.2% |
|
Johnson & Johnson |
| 3.5% |
|
Verizon Communications |
| 3.4% |
|
Microsoft |
| 3.3% |
|
Intl Business Machines Corp |
| 3.2% |
|
Hewlett-Packard Co |
| 3.1% | |
Bank of America Corporation |
| 2.7% | |
Goldman Sachs Group Inc |
| 2.7% | |
AT&T Inc |
| 2.6% | |
Travelers Cos Inc/The |
| 2.1% |
PORTFOLIO HOLDINGS BY INDUSTRY SECTOR (% OF NET ASSETS)
———————
* | Other reflects Repurchase Agreements and Other Assets, less liabilities. |
The holdings mentioned above are described in the Domini Social Equity Trust’s Portfolio of Investments at January 31, 2008, included herein. The composition of the Trust’s portfolio is subject to change.
16 Domini Social Equity Portfolio — Performance Commentary
AVERAGE ANNUAL TOTAL RETURNS
|
|
|
| Domini Social Equity Portfolio |
| Domini Social Equity Portfolio |
| S&P 500 | |||
As of |
| 1 Year |
| –7.95 | % |
| –3.36 | % |
| 5.50 | % |
| 5 Year |
| 7.87 | % |
| 8.93 | %(2) |
| 12.83 | % | |
| 10 Year |
| 3.42 | % |
| 3.92 | %(2) |
| 5.91 | % | |
| Since Inception |
| 8.75 | %(1) |
| 9.07 | %(1),(2) |
| 10.49 | %(1) | |
As of |
| 1 Year |
| –17.07 | % |
| –12.93 | % |
| –2.31 | % |
| 5 Year |
| 6.72 | % |
| 7.76 | %(2) |
| 12.02 | % | |
| 10 Year |
| 2.38 | % |
| 2.87 | %(2) |
| 5.14 | % | |
| Since Inception |
| 8.17 | %(1) |
| 8.48 | %(1),(2) |
| 10.03 | %(1) | |
COMPARISON OF $10,000 INVESTMENT IN THE
DOMINI SOCIAL EQUITY PORTFOLIO (WITH 4.75% MAXIMUM SALES CHARGE) AND THE 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 30 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Performance data quote d above does not reflect the deduction of this fee, which would reduce the performance quoted. See the Fund’s prospectus for further information.
For the period reported in its current prospectus, the Fund’s gross annual operating expenses totaled 9.51% of net assets. Until November 30, 2008, Domini has contractually agreed to waive fees and reimburse expenses to limit the Fund’s expenses, on a per annum basis, to 1.13% of net assets.
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) | Since June 3, 1991. |
(2) | 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. 03/08
Domini Social Equity Portfolio — Performance Commentary 17
DOMINI SOCIAL EQUITY TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 2008 (UNAUDITED)
SECURITY |
| SHARES |
| VALUE |
| |
Common Stocks – 99.3% |
|
|
|
|
|
|
Consumer Discretionary – 11.9% |
|
|
|
|
|
|
Amazon.com Inc. (a) |
| 119,650 |
| $ | 9,296,805 |
|
American Eagle Outfitters |
| 700 |
|
| 16,121 |
|
Autoliv Inc. |
| 133,700 |
|
| 6,678,315 |
|
AutoZone Inc. (a) |
| 54,047 |
|
| 6,533,201 |
|
Best Buy Co Inc. |
| 120,758 |
|
| 5,894,198 |
|
Big Lots Inc. (a) |
| 338,000 |
|
| 5,867,680 |
|
Black & Decker Corporation |
| 600 |
|
| 43,524 |
|
CBS Corp, Class B |
| 584,300 |
|
| 14,718,517 |
|
Comcast Corp, Class A (a) |
| 5,550 |
|
| 100,788 |
|
Darden Restaurants Inc. |
| 255,700 |
|
| 7,241,424 |
|
DR Horton Inc. |
| 1,975 |
|
| 34,069 |
|
Gap Inc./The |
| 1,887 |
|
| 36,079 |
|
Home Depot Inc. |
| 3,244 |
|
| 99,493 |
|
J.C. Penney Co Inc. |
| 758 |
|
| 35,937 |
|
Johnson Controls Inc. |
| 1,954 |
|
| 69,113 |
|
Limited Brands |
| 1,668 |
|
| 31,842 |
|
Liz Claiborne Inc. |
| 600 |
|
| 13,134 |
|
Lowe’s Cos Inc. |
| 2,986 |
|
| 78,950 |
|
McDonald’s Corporation |
| 412,574 |
|
| 22,093,338 |
|
McGraw-Hill Companies Inc. |
| 1,212 |
|
| 51,825 |
|
Meredith Corp. |
| 823 |
|
| 38,673 |
|
Nike Inc., Class B. |
| 362,988 |
|
| 22,418,139 |
|
Nordstrom Inc. |
| 895 |
|
| 34,816 |
|
Pulte Homes Inc. |
| 2,094 |
|
| 34,216 |
|
Scholastic Corp (a) |
| 722 |
|
| 24,743 |
|
Staples Inc. |
| 2,258 |
|
| 54,057 |
|
Starbucks Corporation (a) |
| 2,578 |
|
| 48,750 |
|
Target Corp. |
| 1,636 |
|
| 90,929 |
|
Time Warner Inc. |
| 7,876 |
|
| 123,968 |
|
VF Corp. |
| 800 |
|
| 61,896 |
|
Viacom Inc. – Class B (a) |
| 2,100 |
|
| 81,396 |
|
Walt Disney Co./The |
| 285,137 |
|
| 8,534,150 |
|
Washington Post Co/The, Class B |
| 95 |
|
| 70,680 |
|
Whirlpool Corporation |
| 222,363 |
|
| 18,925,315 |
|
|
|
|
|
| 129,476,081 |
|
Consumer Staples – 10.6% |
|
|
|
|
|
|
Avon Products Inc. |
| 2,406 |
|
| 84,258 |
|
Church & Dwight Co Inc. |
| 124,180 |
|
| 6,608,860 |
|
Coca Cola Co/The |
| 299,384 |
|
| 17,714,551 |
|
Coca-Cola Enterprises Inc. |
| 752,400 |
|
| 17,357,868 |
|
Colgate-Palmolive Co. |
| 2,296 |
|
| 176,792 |
|
Costco Wholesale Corp. |
| 53,400 |
|
| 3,627,996 |
|
Hershey Co/The |
| 1,936 |
|
| 70,083 |
|
JM Smucker Co/The – New Common |
| 108,530 |
|
| 5,071,607 |
|
Kimberly-Clark Corp. |
| 125,056 |
|
| 8,209,926 |
|
Kraft Foods Inc., Class A |
| 5,000 |
|
| 146,300 |
|
Kroger Co. |
| 697,377 |
|
| 17,748,245 |
|
Pepsi Bottling Group Inc. |
| 142,000 |
|
| 4,948,700 |
|
PepsiAmericas Inc. |
| 608,600 |
|
| 14,995,904 |
|
PepsiCo Inc. |
| 3,653 |
|
| 249,098 |
|
Procter & Gamble Co. |
| 135,461 |
|
| 8,933,653 |
|
SUPERVALU Inc. |
| 326,300 |
|
| 9,808,578 |
|
Walgreen Co. |
| 3,064 |
|
| 107,577 |
|
|
|
|
|
| 115,859,996 |
|
Energy – 8.2% |
|
|
|
|
|
|
Anadarko Petroleum Corporation |
| 5,418 |
|
| 317,441 |
|
Apache Corporation |
| 162,862 |
|
| 15,543,549 |
|
Chesapeake Energy Corporation |
| 109,500 |
|
| 4,076,685 |
|
Devon Energy Corporation |
| 42,570 |
|
| 3,617,599 |
|
ENSCO International, Inc. |
| 131,300 |
|
| 6,712,056 |
|
EOG Resources Inc. |
| 3,908 |
|
| 341,950 |
|
National Oilwell Varco Inc. (a) |
| 67,600 |
|
| 4,071,548 |
|
Noble Corp. |
| 94,200 |
|
| 4,123,134 |
|
Noble Energy Inc. |
| 90,200 |
|
| 6,546,716 |
|
Technip SA |
| 135,390 |
|
| 8,664,960 |
|
Tidewater Inc. |
| 157,400 |
|
| 8,335,904 |
|
Unit Corp (a) |
| 370,750 |
|
| 18,581,989 |
|
XTO Energy Inc. |
| 167,770 |
|
| 8,713,974 |
|
|
|
|
|
| 89,647,505 |
|
Financials – 20.9% |
|
|
|
|
|
|
American Express Co. |
| 3,576 |
|
| 176,368 |
|
American International Group |
| 222,300 |
|
| 12,262,068 |
|
Bank of America Corporation |
| 677,000 |
|
| 30,024,950 |
|
Bank of Ireland ADR |
| 112,890 |
|
| 6,626,643 |
|
Barclays Plc – Spons ADR |
| 274,200 |
|
| 10,345,566 |
|
18
DOMINI SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
SECURITY |
| SHARES |
| VALUE |
| |
Financials (Continued) |
|
|
|
|
|
|
Charles Schwab Corp/The |
| 515,500 |
| $ | 11,495,650 |
|
Citigroup Inc. |
| 10,300 |
|
| 290,666 |
|
Federal National Mortgage Association |
| 2,476 |
|
| 83,837 |
|
Freddie Mac |
| 2,322 |
|
| 70,566 |
|
Goldman Sachs Group Inc. |
| 146,400 |
|
| 29,392,728 |
|
HDFC Bank Ltd – ADR |
| 41,240 |
|
| 4,921,582 |
|
Janus Capital Group Inc. |
| 240,910 |
|
| 6,506,979 |
|
JP Morgan Chase & Co. |
| 974,730 |
|
| 46,348,412 |
|
Lehman Brothers Holdings Inc. |
| 1,400 |
|
| 89,838 |
|
Nationwide Financial Serv, Class A |
| 204,000 |
|
| 9,010,680 |
|
Royal Bank of Scotland Group plc – Spon ADR (a) |
| 1,082,500 |
|
| 8,432,675 |
|
TD Ameritrade Holding Corp (a) |
| 271,200 |
|
| 5,087,712 |
|
Travelers Cos Inc./The |
| 482,852 |
|
| 23,225,181 |
|
US Bancorp. |
| 6,463 |
|
| 219,419 |
|
Wachovia Corp. |
| 5,583 |
|
| 217,346 |
|
Washington Mutual Inc. |
| 4,631 |
|
| 92,250 |
|
Wells Fargo & Co. |
| 566,506 |
|
| 19,266,869 |
|
Westpac Banking Corp – SP ADR |
| 42,160 |
|
| 4,901,943 |
|
|
|
|
|
| 229,089,928 |
|
Health Care –11.2% |
|
|
|
|
|
|
Amgen Inc. (a) |
| 150,466 |
|
| 7,010,211 |
|
Baxter International Inc. |
| 205,122 |
|
| 12,459,110 |
|
Becton Dickinson & Company |
| 2,302 |
|
| 199,192 |
|
Express Scripts Inc. – Common (a) |
| 203,800 |
|
| 13,754,462 |
|
Forest Laboratories Inc. (a) |
| 199,700 |
|
| 7,942,069 |
|
Genentech Inc. (a) |
| 1,600 |
|
| 112,304 |
|
Gilead Sciences Inc. (a) |
| 155,210 |
|
| 7,091,545 |
|
Invitrogen Corp (a) |
| 39,500 |
|
| 3,383,965 |
|
Johnson & Johnson |
| 609,324 |
|
| 38,545,836 |
|
Kinetic Concepts Inc. (a) |
| 144,500 |
|
| 7,193,210 |
|
Medtronic Inc. |
| 3,655 |
|
| 170,213 |
|
Merck & Co. Inc. |
| 320,202 |
|
| 14,818,949 |
|
Watson Pharmaceuticals Inc. (a) |
| 384,300 |
|
| 10,034,073 |
|
|
|
|
|
| 122,715,139 |
|
Industrials – 6.0% |
|
|
|
|
|
|
3M Co. |
| 2,864 |
| 228,118 |
| |
Air France-KLM –ADR |
| 121,100 |
|
| 3,375,057 |
|
AMR Corp (a) |
| 1,100 |
|
| 15,334 |
|
Cooper Industries Ltd, Class A |
| 2,286 |
|
| 101,818 |
|
Cummins Inc. |
| 286,464 |
|
| 13,830,481 |
|
Deere & Co. |
| 140,200 |
|
| 12,303,952 |
|
Deluxe Corporation |
| 265,200 |
|
| 6,449,664 |
|
Emerson Electric Company |
| 3,308 |
|
| 168,179 |
|
Illinois Tool Works |
| 3,600 |
|
| 181,440 |
|
Jetblue Airways (a) |
| 5,793 |
|
| 40,030 |
|
PACCAR Inc. |
| 106,350 |
|
| 4,989,942 |
|
RR Donnelley & Sons Co. |
| 128,918 |
|
| 4,497,949 |
|
Southwest Airlines |
| 6,578 |
|
| 77,160 |
|
Teleflex Inc. |
| 107,600 |
|
| 6,361,312 |
|
TNT NV – ADR |
| 172,600 |
|
| 6,394,830 |
|
Tomkins plc – Sponsored ADR |
| 292,800 |
|
| 4,023,072 |
|
Toppan Printing Co Ltd – Unspons ADR |
| 60,650 |
|
| 2,971,850 |
|
United Parcel Service, Class B |
| 3,373 |
|
| 246,769 |
|
|
|
|
|
| 66,256,957 |
|
Information Technology – 20.2% |
|
|
|
|
|
|
Apple Inc. (a) |
| 124,282 |
|
| 16,822,812 |
|
Arrow Electronics, Inc. (a) |
| 146,900 |
|
| 5,026,918 |
|
Cisco Systems Inc. (a) |
| 580,636 |
|
| 14,225,582 |
|
Dell Inc. (a) |
| 5,484 |
|
| 109,899 |
|
eBay Inc. (a) |
| 2,376 |
|
| 63,891 |
|
EMC Corp/ Massachusetts (a) |
| 4,400 |
|
| 69,828 |
|
Google Inc., Class A (a) |
| 4,580 |
|
| 2,584,494 |
|
Hewlett-Packard Co |
| 764,347 |
|
| 33,440,181 |
|
Intel Corp. |
| 869,909 |
|
| 18,442,071 |
|
Intl Business Machines Corp |
| 329,000 |
|
| 35,314,860 |
|
Jabil Circuit Inc. |
| 3,100 |
|
| 41,075 |
|
Juniper Networks Inc. (a) |
| 128,700 |
|
| 3,494,205 |
|
LAM Research Corp (a) |
| 338,900 |
|
| 13,010,371 |
|
Microsoft Corp |
| 1,107,352 |
|
| 36,099,675 |
|
Motorola Inc. |
| 7,500 |
|
| 86,475 |
|
Nvidia Corp (a) |
| 156,990 |
|
| 3,860,384 |
|
Oracle Corp (a) |
| 738,200 |
|
| 15,170,010 |
|
QUALCOMM Inc. |
| 4,234 |
|
| 179,606 |
|
19
DOMINI SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
SECURITY |
| SHARES |
| VALUE |
| |
Information Technology (Continued) |
|
|
|
|
|
|
STMicroelectronics NV – NY Shs |
| 458,100 |
| $ | 5,675,859 |
|
Symantec Corp (a) |
| 425,846 |
|
| 7,635,419 |
|
Texas Instruments Inc. |
| 3,928 |
|
| 121,493 |
|
Western Digital Corp (a) |
| 345,080 |
|
| 9,127,366 |
|
Xerox Corporation |
| 5,598 |
|
| 86,209 |
|
|
|
|
|
| 220,688,683 |
|
Materials – 1.3% |
|
|
|
|
|
|
International Paper Co. |
| 4,600 |
|
| 148,350 |
|
Lubrizol Corp. |
| 88,200 |
|
| 4,640,202 |
|
MeadWestvaco Corp. |
| 3,466 |
|
| 97,048 |
|
Nucor Corp. |
| 81,916 |
|
| 4,734,745 |
|
Rohm and Haas Co. |
| 2,210 |
|
| 117,904 |
|
United States Steel Corp. |
| 46,200 |
|
| 4,717,482 |
|
|
|
|
|
| 14,455,731 |
|
Telecommunication Services – 6.5% |
|
|
|
|
|
|
AT&T Inc. |
| 748,604 |
|
| 28,813,768 |
|
France Telecom SA – Spons ADR |
| 144,530 |
|
| 5,110,581 |
|
Sprint Nextel Corp. |
| 7,259 |
|
| 76,437 |
|
Verizon Communications Inc. |
| 946,438 |
|
| 36,759,652 |
|
|
|
|
|
| 70,760,438 |
|
Utilities – 2.5% |
|
|
|
|
|
|
Energen Corp. |
| 352,677 |
| 22,183,383 |
| |
Pepco Holdings Inc. |
| 182,600 |
|
| 4,648,996 |
|
|
|
|
|
| 26,832,379 |
|
Total Common Stocks |
|
|
|
| 1,085,782,837 |
|
Repurchase Agreements – 0.6% |
|
|
|
|
|
|
State Street Bank & Trust, dated 1/31/2008, 1.60% due 2/1/2008, maturity amount $6,221,058 (collateralized by U.S. Government Agency Obligations, Freddie Mac, 3.25%, 3/14/2008, market value $6,348,375) |
| 6,220,781 |
|
| 6,220,781 |
|
Total Repurchase Agreements |
|
|
|
| 6,220,781 |
|
Total Investments — 99.9% |
|
|
|
|
|
|
(Cost $1,039,758,128) (b) |
|
|
|
| 1,092,003,618 |
|
Other Assets, less liabilities — 0.1% |
|
|
|
| 967,093 |
|
Net Assets — 100.0% |
|
|
| $ | 1,092,970,711 |
|
(a) | Non-income producing security. |
(b) | The aggregate cost for federal income tax purposes is $1,080,406,528. The aggregate gross unrealized appreciation is $83,814,064 and the aggregate gross unrealized depreciation is $72,216,974, resulting in net unrealized appreciation of $11,597,090. |
ADR – American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS
20
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
PERFORMANCE COMMENTARY
For the six months ended January 31, 2008, the Domini European Social Equity Portfolio (the “Fund”) declined –13.30%, excluding sales charges, underperforming the MSCI Europe Index, which declined by –7.31%.
During this period, stock selection — particularly in the financial, materials, and consumer discretionary sectors — was the primary driver of underperformance:
• | Royal Bank of Scotland was affected by the impact of problems in the U.S. subprime mortgage market on mortgage-related securities that it held. |
• | Trinity Mirror, the U.K.’s largest newspaper publisher, saw its shares drop sharply after it sold its Midlands newspapers for less than expected. |
• | The stock of Rautaruukki, a Finnish manufacturer of galvanized steel products, declined after the company issued a lower-than-expected earnings forecast. |
The Fund’s subadvisor, in selecting stocks for the Fund’s portfolio, uses an approach that considers measures of a company’s valuation (the price of its stock relative to the value of its businesses) and its momentum (the rate at which the company’s profits and/or share price have been increasing). During this period, valuation measures were less effective than momentum measures.
21
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, 2008, 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
SECURITY DESCRIPTION |
| % NET |
|
StatoilHydro ASA |
| 3.9% |
|
Vodafone Group PLC |
| 3.7% |
|
Sanofi-Aventis |
| 3.7% |
|
Vivendi SA |
| 3.4% |
|
Nokia OYJ |
| 3.2% |
|
France Telecom SA |
| 3.0% |
|
Swiss Re-Reg |
| 2.9% |
|
Royal Bank of Scotland Group |
| 2.8% |
|
Telefonica SA |
| 2.5% |
|
Unilever PLC |
| 2.5% |
|
PORTFOLIO HOLDINGS BY INDUSTRY SECTOR (% OF NET ASSETS)
* | Other reflects Repurchase Agreements and Other Assets, less liabilities. |
PORTFOLIO HOLDINGS BY COUNTRY (% OF NET ASSETS)
* | Other reflects Portugal, Turkey, Denmark, Poland, Russia, Repurchase Agreements, and Other Assets, less liabilities. |
The holdings mentioned above are described in the Domini European Social Equity Trust’s Portfolio of Investments at January 31, 2008, included herein. The composition of the Trust’s portfolio is subject to change.
22 | Domini European Social Equity Portfolio — Performance Commentary |
AVERAGE ANNUAL TOTAL RETURNS
|
|
|
| Domini European Social |
| Domini European |
| MSCI Europe |
| ||
As of 12-31-07 |
| 1 Year |
| –2.84% |
|
| 2.00% |
|
| 14.38% |
|
| Since Inception(1) |
| 18.27% |
|
| 20.86% |
|
| 22.40% |
| |
As of 1-31-08 |
| 1 Year |
| –13.59% |
|
| –9.29% |
|
| 1.86% |
|
| Since Inception(1) |
| 12.17% |
|
| 14.53% |
|
| 15.90% |
| |
COMPARISON OF $10,000 INVESTMENT IN THE
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO (WITH 4.75% MAXIMUM SALES CHARGE) AND THE 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 30 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Performance data quote d above does not reflect the deduction of this fee, which would reduce the performance quoted. See the Fund’s prospectus for further information.
For the period reported in its current prospectus, the Fund’s gross annual operating expenses totaled 3.37% of net assets. Until November 30, 2008, Domini has contractually agreed to waive fees and reimburse expenses to limit the Fund’s expenses, on a per annum basis, to 1.57% of net assets.
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 (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. 03/08
| Domini European Social Equity Portfolio — Performance Commentary | 23 |
DOMINI EUROPEAN SOCIAL EQUITY TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
| VALUE | |
Common Stocks – 97.8% |
|
|
|
|
|
|
|
Austria – 2.2% |
|
|
|
|
|
|
|
Immofinanz AG |
| Real Estate |
| 107,410 |
| $ | 1,018,008 |
OMV AG |
| Energy |
| 2,399 |
|
| 172,329 |
Voestalpine AG |
| Materials |
| 19,568 |
|
| 1,201,716 |
|
|
|
|
|
|
| 2,392,053 |
Belgium – 1.1% |
|
|
|
|
|
|
|
Delhaize Group |
| Food & Staples Retailing |
| 9,050 |
|
| 690,105 |
KBC Groep NV |
| Banks |
| 3,926 |
|
| 499,168 |
|
|
|
|
|
|
| 1,189,273 |
Denmark – 0.4% |
|
|
|
|
|
|
|
Dampskibsselskabet (d/s) Torm |
| Energy |
| 10,152 |
|
| 325,516 |
H. Lundbeck A/S |
| Pharma, Biotech & Life Sciences |
| 5,300 |
|
| 128,463 |
|
|
|
|
|
|
| 453,979 |
Finland – 4.4% |
|
|
|
|
|
|
|
Nokia OYJ |
| Technology Hardware & Equipment |
| 96,971 |
|
| 3,556,053 |
Orion OYJ/New |
| Pharma, Biotech & Life Sciences |
| 58,484 |
|
| 1,314,449 |
|
|
|
|
|
|
| 4,870,502 |
France – 14.8% |
|
|
|
|
|
|
|
Air France-KLM |
| Transportation |
| 33,873 |
|
| 941,108 |
BNP Paribas |
| Banks |
| 23,573 |
|
| 2,328,712 |
Credit Agricole SA |
| Banks |
| 18,360 |
|
| 562,680 |
France Telecom SA |
| Telecommunication Services |
| 94,621 |
|
| 3,323,389 |
Lafarge SA |
| Materials |
| 1,395 |
|
| 219,562 |
Sanofi-Aventis |
| Pharma, Biotech & Life Sciences |
| 49,881 |
|
| 4,051,006 |
Schneider Electric SA |
| Capital Goods |
| 4,100 |
|
| 472,311 |
Ste Des Ciments Francais – a |
| Materials |
| 3,576 |
|
| 540,566 |
Vallourec |
| Capital Goods |
| 1,525 |
|
| 305,254 |
Vivendi SA |
| Media |
| 94,767 |
|
| 3,803,022 |
|
|
|
|
|
|
| 16,547,610 |
Germany – 10.8% |
|
|
|
|
|
|
|
Allianz SE – Reg |
| Insurance |
| 13,278 |
|
| 2,356,863 |
Altana AG |
| Materials |
| 67,383 |
|
| 1,508,210 |
Deutsche Boerse AG |
| Diversified Financials |
| 1,774 |
|
| 309,136 |
Deutsche Lufthansa AG – Reg |
| Transportation |
| 63,951 |
|
| 1,526,926 |
Deutsche Telekom AG – Reg |
| Telecommunication Services |
| 34,069 |
|
| 694,997 |
Epcos AG |
| Technology Hardware & Equipment |
| 55,076 |
|
| 749,366 |
Fresenius SE |
| Health Care Equipment & Services |
| 28,437 |
|
| 2,260,529 |
Muenchener Rueckver AG – Reg |
| Insurance |
| 11,527 |
|
| 2,062,496 |
Salzgitter AG |
| Materials |
| 3,768 |
|
| 588,514 |
|
|
|
|
|
|
| 12,057,037 |
Greece – 1.8% |
|
|
|
|
|
|
|
National Bank of Greece |
| Banks |
| 18,922 |
|
| 1,151,765 |
Public Power Corp |
| Utilities |
| 18,837 |
|
| 879,720 |
|
|
|
|
|
|
| 2,031,485 |
Ireland – 1.9% |
|
|
|
|
|
|
|
Anglo Irish Bank PLC |
| Banks |
| 27,866 |
|
| 392,428 |
Elan Corporation PLC (a) |
| Pharma, Biotech & Life Sciences |
| 15,167 |
|
| 384,267 |
Kerry Group PLC – A |
| Food & Beverage |
| 47,593 |
|
| 1,275,645 |
|
|
|
|
|
|
| 2,052,340 |
24
DOMINI EUROPEAN SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
| VALUE | |
Italy – 2.8% |
|
|
|
|
|
|
|
Banca Popolare dell’Emilia |
|
|
|
|
|
|
|
Romagna Scrl |
| Banks |
| 20,412 |
| $ | 453,368 |
Fiat SPA |
| Automobiles & Components |
| 111,050 |
|
| 2,597,176 |
|
|
|
|
|
|
| 3,050,544 |
Netherlands – 8.5% |
|
|
|
|
|
|
|
Fugro NV – CVA |
| Energy |
| 26,164 |
|
| 1,785,971 |
ING Groep NV – CVA |
| Diversified Financials |
| 50,956 |
|
| 1,653,434 |
Koninklijke Ahold NV (a) |
| Food & Staples Retailing |
| 36,992 |
|
| 482,782 |
Koninklijke DSM NV |
| Materials |
| 45,131 |
|
| 1,897,353 |
OCE NV |
| Technology Hardware & Equipment |
| 7,527 |
|
| 150,749 |
SNS Reaal |
| Diversified Financials |
| 49,704 |
|
| 937,739 |
TNT NV |
| Transportation |
| 44,686 |
|
| 1,649,991 |
Unilever NV – CVA |
| Food & Beverage |
| 25,987 |
|
| 843,959 |
|
|
|
|
|
|
| 9,401,978 |
Norway – 5.0% |
|
|
|
|
|
|
|
Norsk Hydro ASA |
| Materials |
| 70,578 |
|
| 840,871 |
Petroleum Geo-Services |
| Energy |
| 16,167 |
|
| 347,625 |
StatoilHydro ASA |
| Energy |
| 166,024 |
|
| 4,346,820 |
|
|
|
|
|
|
| 5,535,316 |
Poland – 0.3% |
|
|
|
|
|
|
|
Polish Oil & Gas |
| Energy |
| 166,817 |
|
| 303,750 |
|
|
|
|
|
|
| 303,750 |
Portugal – 0.7% |
|
|
|
|
|
|
|
Banco Espirito Santo SA – Reg |
| Banks |
| 41,320 |
|
| 724,507 |
|
|
|
|
|
|
| 724,507 |
Russia – 0.3% |
|
|
|
|
|
|
|
Vimpel-Communications – SP ADR |
| Telecommunication Services |
| 8,500 |
|
| 292,740 |
|
|
|
|
|
|
| 292,740 |
Spain – 6.3% |
|
|
|
|
|
|
|
Banco Santander SA |
| Banks |
| 119,389 |
|
| 2,091,158 |
Corporacion Financiera Alba |
| Diversified Financials |
| 2,343 |
|
| 136,987 |
Gas Natural SDG SA |
| Utilities |
| 35,787 |
|
| 1,967,382 |
Telefonica SA |
| Telecommunication Services |
| 95,438 |
|
| 2,778,547 |
|
|
|
|
|
|
| 6,974,074 |
Sweden – 2.8% |
|
|
|
|
|
|
|
Nordea Bank AB |
| Banks |
| 61,223 |
|
| 830,904 |
Scania AB – B Shs |
| Capital Goods |
| 76,600 |
|
| 1,580,128 |
SSAB Svenskt Stal AB – Ser A |
| Materials |
| 25,450 |
|
| 670,698 |
|
|
|
|
|
|
| 3,081,730 |
Switzerland – 6.6% |
|
|
|
|
|
|
|
Holcim Ltd – Reg |
| Materials |
| 11,206 |
|
| 1,090,620 |
Lonza Group AG – Reg |
| Pharma, Biotech & Life Sciences |
| 6,595 |
|
| 843,434 |
Novartis AG – Reg Shs |
| Pharma, Biotech & Life Sciences |
| 17,797 |
|
| 898,496 |
Rieter Holding AG |
| Automobiles & Components |
| 993 |
|
| 358,590 |
Roche Holding AG |
| Pharma, Biotech & Life Sciences |
| 1,461 |
|
| 264,346 |
Sonova Holding AG |
| Health Care Equipment & Services |
| 1,073 |
|
| 95,584 |
Swiss Reinsurance – Reg |
| Insurance |
| 43,673 |
|
| 3,269,886 |
The Swatch Group AG – Reg |
| Consumer Durables & Apparel |
| 9,901 |
|
| 517,484 |
|
|
|
|
|
|
| 7,338,440 |
25
DOMINI EUROPEAN SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
| VALUE | |
Turkey – 0.4% |
|
|
|
|
|
|
|
Trakya Cam Sanayii AS |
| Capital Goods |
| 148,026 |
| $ | 287,914 |
Turk Sise Ve Cam Fabrikalari |
| Consumer Durables & Apparel |
| 145,580 |
|
| 209,592 |
|
|
|
|
|
|
| 497,506 |
United Kingdom – 26.7% |
|
|
|
|
|
|
|
3i Group PLC |
| Diversified Financials |
| 101,733 |
|
| 1,904,873 |
Aviva PLC |
| Insurance |
| 63,993 |
|
| 802,600 |
Barclays PLC |
| Banks |
| 177,780 |
| �� | 1,677,718 |
BG Group PLC |
| Energy |
| 66,028 |
|
| 1,456,320 |
Carphone Warehouse Group PLC |
| Retailing |
| 18,733 |
|
| 123,315 |
Cookson Group New PLC |
| Capital Goods |
| 51,090 |
|
| 567,126 |
CSR PLC (a) |
| Semiconductors & |
|
|
|
|
|
|
| Semiconductor Equipment |
| 20,624 |
|
| 218,814 |
Drax Group PLC |
| Utilities |
| 97,495 |
|
| 982,755 |
Emap PLC |
| Media |
| 53,548 |
|
| 986,567 |
GlaxoSmithKline PLC |
| Pharma, Biotech & Life Sciences |
| 68,834 |
|
| 1,630,949 |
HBOS PLC |
| Banks |
| 93,511 |
|
| 1,302,629 |
Home Retail Group PLC |
| Retailing |
| 198,701 |
|
| 1,125,895 |
HSBC Holdings PLC |
| Banks |
| 65,643 |
|
| 984,604 |
Man Group PLC |
| Diversified Financials |
| 14,754 |
|
| 162,397 |
Old Mutual PLC |
| Insurance |
| 454,546 |
|
| 1,133,676 |
Royal Bank of Scotland Group PLC |
| Banks |
| 403,531 |
|
| 3,110,160 |
Stagecoach Group Ordinary PLC |
| Transportation |
| 470,752 |
|
| 2,269,688 |
Standard Life PLC |
| Insurance |
| 61,536 |
|
| 265,531 |
Unilever PLC |
| Food & Beverage |
| 83,812 |
|
| 2,762,005 |
Vodafone Group PLC |
| Telecommunication Services |
| 1,183,877 |
|
| 4,140,369 |
WM Morrison Supermarkets PLC |
| Food & Staples Retailing |
| 345,419 |
|
| 2,077,731 |
|
|
|
|
|
|
| 29,685,722 |
Total Common Stocks (Cost $118,634,552) |
|
|
|
|
|
| 108,480,586 |
Repurchase Agreements – 0.1% |
|
|
|
|
|
|
|
State Street Bank & Trust, dated 1/31/2008, 1.60% due 2/1/2008, maturity amount $79,687 (collateralized by U.S. Government Agency Obligations, Freddie Mac, 3.25%, 3/14/2008, market value $86,063) |
| Repurchase Agreements |
| 79,683 |
|
| 79,683 |
Total Repurchase Agreements (Cost $79,683) |
|
|
|
|
|
| 79,683 |
Total Investments — 97.9% (Cost $118,714,235) (b) |
|
|
|
|
|
| 108,560,269 |
Other Assets, less liabilities — 2.1% |
|
|
|
|
|
| 2,346,496 |
Net Assets — 100.0% |
|
|
|
|
| $ | 110,906,765 |
(a) | Non-income producing security. |
(b) | The aggregate cost for federal income tax purposes is $118,707,448. The aggregate gross unrealized appreciation is $5,566,078 and the aggregate gross unrealized depreciation is $15,713,257, resulting in net unrealized depreciation of $10,147,179. |
ADR – American Depository Receipt
As of the date of this report, certain foreign securities were fair valued by an independent pricing service under the direction of the Board of Trustees or its delegates in accordance with the Trust’s Valuation and Pricing Policies and Procedures.
SEE NOTES TO FINANCIAL STATEMENTS
26
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
PERFORMANCE COMMENTARY
For the six months ended January 31, 2008, the Domini PacAsia Social Equity Portfolio (the “Fund”) declined –8.54%, excluding sales charges, underperforming the MSCI All Country Asia Pacific Index, which declined by –7.11%.
The Fund’s performance relative to the index was hurt primarily by sector allocation in the consumer staples and information technology sectors, and by stock selection in the energy and materials sectors. In particular, negative contributions to performance came from positions in companies including the following:
• | Tokyo Steel Manufacturing, which was expected to be affected by higher scrap steel costs and weaker construction demand. |
• | The bank Chuo Mitsui Trust, which experienced significant costs due to nonperforming loans in Japan. |
• | Korea Zinc, whose stock declined dramatically during the period. |
The Fund’s relative performance was helped by stock selection in the consumer discretionary and healthcare sectors, and by positions in the Singaporean motor vehicle company Jardine Cycle and in two Hong Kong real estate companies: Swire Pacific, whose real estate holdings were viewed favorably by analysts, and Wharf Holdings, whose expansion into China was seen as a positive.
27
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, 2008, 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
SECURITY DESCRIPTION |
| % NET |
|
Honda Motor Co Ltd |
| 3.0% |
|
Nippon Telegraph & Telephone |
| 2.4% |
|
Sekisui House Limited | �� | 2.2% |
|
Orix Corporation |
| 2.1% |
|
Nintendo Company Ltd |
| 2.1% |
|
National Australia Bank Ltd |
| 2.0% |
|
Fuji Film Holdings Corp |
| 1.8% |
|
Toppan Printing Company Ltd |
| 1.8% |
|
Bluescope Steel Ltd |
| 1.7% |
|
Swire Pacific Ltd ‘A’ |
| 1.7% |
|
PORTFOLIO HOLDINGS BY INDUSTRY SECTOR (% OF NET ASSETS)
______________
* | Other reflects Repurchase Agreements and Other Assets, less liabilities. |
PORTFOLIO HOLDINGS BY COUNTRY (% OF NET ASSETS)
______________
* | Other reflects Thailand, United States, Philippines, Hungary, Repurchase Agreements, and Other Assets, less liabilities. |
The holdings mentioned above are described in the Domini PacAsia Social Equity Trust’s Portfolio of Investments at January 31, 2008, included herein. The composition of the Trust’s portfolio is subject to change.
28 | Domini PacAsia Social Equity Portfolio — Performance Commentary |
AVERAGE ANNUAL TOTAL RETURNS
|
|
|
| Domini PacAsia Social |
| Domini PacAsia Social |
| MSCI AC Asia |
| |||
As of |
| 1 Year |
| 1.36% |
|
| 6.42% |
|
| 14.64% |
|
|
12-31-07 |
| Since Inception(1) |
| 1.25% |
|
| 6.24% |
|
| 15.84% |
|
|
As of |
| 1 Year |
| –7.85% |
|
| –3.25% |
|
| 4.18% |
|
|
1-31-08 |
| Since Inception(1) |
| –6.43% |
|
| –2.18% |
|
| 5.11% |
|
|
COMPARISON OF $10,000 INVESTMENT IN THE
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO (WITH 4.75% MAXIMUM SALES CHARGE) AND THE MSCI AC ASIA PACIFIC
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 30 days after the settlement of purchase or acquisition through exchange, with certain exceptions. Performance data quote d above does not reflect the deduction of this fee, which would reduce the performance quoted. See the Fund’s prospectus for further information.
For the period reported in its current prospectus, the Fund’s gross annual operating expenses totaled 12.81% of net assets. Until November 30, 2008, Domini has contractually agreed to waive fees and reimburse expenses to limit the Fund’s expenses, on a per annum basis, to 1.57% of net assets.
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 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 (MSCI AC Asia Pacific) is an unmanaged index of common stocks. Investors cannot invest directly in the MSCI AC Asia Pacific.
______________
(1) | Since December 27, 2006. |
This material must be preceded or accompanied by the Fund’s current prospectus. DSIL Investment Services LLC, Distributor. 03/08
| Domini PacAsia Social Equity Portfolio — Performance Commentary | 29 |
DOMINI PACASIA SOCIAL EQUITY TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
| VALUE | |
Common Stocks – 99.1% |
|
|
|
|
|
|
|
Australia – 10.8% |
|
|
|
|
|
|
|
Babcock & Brown Ltd |
| Diversified Financials |
| 10,899 |
| $ | 182,039 |
Bluescope Steel Ltd |
| Materials |
| 56,873 |
|
| 524,923 |
CFS Retail Property Trust |
| Real Estate |
| 114,113 |
|
| 217,636 |
Commonwealth Property Office Fund |
| Real Estate |
| 93,843 |
|
| 118,534 |
Computershare Limited |
| Software & Services |
| 19,453 |
|
| 141,085 |
CSL Limited |
| Pharma, Biotech & Life Sciences |
| 9,270 |
|
| 288,968 |
Fairfax Media Ltd |
| Media |
| 31,300 |
|
| 114,863 |
GPT Group |
| Real Estate |
| 8,767 |
|
| 29,833 |
Macquarie Office Trust |
| Real Estate |
| 262,153 |
|
| 269,214 |
National Australia Bank Ltd |
| Banks |
| 19,814 |
|
| 622,894 |
Origin Energy Limited |
| Energy |
| 24,913 |
|
| 195,991 |
Suncorp-Metway Limited |
| Insurance |
| 21,963 |
|
| 304,183 |
Telstra Corp Ltd |
| Telecommunication Services |
| 21,347 |
|
| 83,627 |
Westpac Banking Corporation |
| Banks |
| 8,147 |
|
| 189,196 |
|
|
|
|
|
|
| 3,282,986 |
China – 2.0% |
|
|
|
|
|
|
|
Agile Property Holdings Ltd |
| Real Estate |
| 78,000 |
|
| 87,333 |
Guangzhou R&F Properties Co Ltd |
| Real Estate |
| 40,000 |
|
| 105,894 |
Hopson Development Holdings Ltd |
| Real Estate |
| 62,000 |
|
| 112,105 |
Ping An Insurance Group Co of China Ltd |
| Insurance |
| 16,000 |
|
| 112,945 |
Shimao Property Holdings Ltd |
| Real Estate |
| 21,000 |
|
| 37,380 |
TPV Technology Ltd |
| Technology Hardware & Equipment |
| 254,223 |
|
| 162,614 |
|
|
|
|
|
|
| 618,271 |
Hong Kong – 8.6% |
|
|
|
|
|
|
|
Cathay Pacific Airways Ltd |
| Transportation |
| 24,000 |
|
| 53,613 |
Chinese Estates Holdings Ltd |
| Real Estate |
| 66,239 |
|
| 109,990 |
Esprit Holdings Ltd |
| Retailing |
| 11,500 |
|
| 149,790 |
First Pacific Co |
| Diversified Financials |
| 110,389 |
|
| 78,827 |
Hang Lung Group Ltd |
| Real Estate |
| 20,665 |
|
| 95,921 |
Hang Seng Bank Ltd |
| Banks |
| 2,500 |
|
| 49,651 |
Henderson Investment Ltd |
| Real Estate |
| 503,000 |
|
| 26,915 |
Henderson Land Development Co Ltd |
| Real Estate |
| 13,142 |
|
| 113,521 |
Hong Kong Exchanges and Clearing Ltd |
| Diversified Financials |
| 12,000 |
|
| 250,266 |
Hopewell Highway Infrastructure Ltd |
| Transportation |
| 58,500 |
|
| 45,142 |
Hopewell Holdings |
| Transportation |
| 11,086 |
|
| 48,466 |
Hysan Development Company Ltd |
| Real Estate |
| 22,191 |
|
| 65,694 |
Jardine Matheson Hldgs Ltd |
| Diversified Financials |
| 5,993 |
|
| 152,702 |
Jardine Strategic Holdings Ltd |
| Diversified Financials |
| 9,859 |
|
| 142,956 |
30
DOMINI PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
| VALUE | |
Hong Kong (continued) |
|
|
|
|
|
|
|
Kingboard Chemicals Holdings Ltd |
| Technology Hardware & Equipment |
| 25,728 |
| $ | 107,340 |
Sun Hung Kai Properties Ltd |
| Real Estate |
| 13,000 |
|
| 258,004 |
Swire Pacific Ltd ‘A’ |
| Real Estate |
| 37,164 |
|
| 504,755 |
Wharf Holdings Ltd |
| Real Estate |
| 24,675 |
|
| 132,929 |
Wheelock & Co Ltd |
| Real Estate |
| 75,418 |
|
| 220,609 |
|
|
|
|
|
|
| 2,607,091 |
Hungary – 0.2% |
|
|
|
|
|
|
|
MOL Hungarian Oil and Gas NyRt |
| Energy |
| 464 |
|
| 62,059 |
|
|
|
|
|
|
| 62,059 |
India – 2.5% |
|
|
|
|
|
|
|
Ambuja Cements Limited |
| Materials |
| 58,863 |
|
| 182,609 |
Dr. Reddy’s Laboratories Ltd |
| Pharma, Biotech & Life Sciences |
| 5,100 |
|
| 68,918 |
Punjab National Bank Ltd |
| Banks |
| 17,000 |
|
| 283,293 |
Satyam Computer Services Ltd |
| Software & Services |
| 4,938 |
|
| 49,563 |
State Bank of India Ltd |
| Banks |
| 2,944 |
|
| 163,748 |
State Bank of India – Rights (a) (c) |
| Banks |
| 588 |
|
| 8,546 |
|
|
|
|
|
|
| 756,677 |
Indonesia – 1.1% |
|
|
|
|
|
|
|
Bank Rakyat Indonesia |
| Banks |
| 157,500 |
|
| 121,810 |
Perusahaan Gas Negara Pt |
| Utilities |
| 51,000 |
|
| 75,720 |
Telekomunikasi Indonesia Tbk PT |
| Telecommunication Services |
| 129,000 |
|
| 131,212 |
|
|
|
|
|
|
| 328,742 |
Japan – 45.6% |
|
|
|
|
|
|
|
Alps Electric Co Ltd |
| Technology Hardware & Equipment |
| 13,451 |
|
| 154,659 |
Amada Co Ltd |
| Capital Goods |
| 16,220 |
|
| 140,623 |
Aoyama Trading Co Ltd |
| Retailing |
| 8,500 |
|
| 193,457 |
Asahi Kasei Corporation |
| Materials |
| 50,640 |
|
| 310,806 |
Astellas Pharma Inc |
| Pharma, Biotech & Life Sciences |
| 6,184 |
|
| 268,295 |
Chuo Mitsui Trust Holdings Inc |
| Banks |
| 66,533 |
|
| 463,845 |
COMSYS Holdings Corp |
| Capital Goods |
| 29,000 |
|
| 250,657 |
Dai Nippon Printing Co Ltd |
| Commercial Services & Supplies |
| 25,399 |
|
| 371,697 |
Eisai Co Ltd |
| Pharma, Biotech & Life Sciences |
| 1,751 |
|
| 72,483 |
Fuji Film Holdings Corp |
| Technology Hardware & Equipment |
| 14,357 |
|
| 557,528 |
Hankyu Hanshin Holdings Inc |
| Capital Goods |
| 10,000 |
|
| 46,425 |
Honda Motor Co Ltd |
| Automobiles & Components |
| 29,903 |
|
| 924,885 |
Kawasaki Kisen Kaisha Ltd |
| Transportation |
| 37,206 |
|
| 363,233 |
Kyocera Corporation |
| Technology Hardware & Equipment |
| 5,527 |
|
| 441,622 |
Makita Corporation |
| Consumer Durables & Apparel |
| 6,000 |
|
| 224,907 |
Mazda Motor Corp |
| Automobiles & Components |
| 46,000 |
|
| 195,640 |
Mitsui Chemicals Inc |
| Materials |
| 64,880 |
|
| 434,255 |
Namco Bandai Holdings Inc |
| Consumer Durables & Apparel |
| 5,000 |
|
| 70,220 |
Nintendo Company Ltd |
| Software & Services |
| 1,248 |
|
| 631,211 |
Nippon Express Co Ltd |
| Transportation |
| 90,000 |
|
| 483,619 |
Nippon Meat Packers Inc |
| Food & Beverage |
| 5,000 |
|
| 56,417 |
Nippon Sheet Glass Co Ltd |
| Capital Goods |
| 82,000 |
|
| 378,635 |
Nippon Telegraph & Telephone Corp |
| Telecommunication Services |
| 152 |
|
| 723,522 |
Nisshin Seifun Group Inc |
| Food & Beverage |
| 20,000 |
|
| 197,748 |
31
DOMINI PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
| VALUE | |
Japan (continued) |
|
|
|
|
|
|
|
Nisshin Steel Co Ltd |
| Materials |
| 105,000 |
| $ | 349,842 |
Nisshinbo Industries Inc |
| Consumer Durables & Apparel |
| 5,400 |
|
| 58,160 |
Nomura Holdings Inc |
| Diversified Financials |
| 17,100 |
|
| 249,973 |
NTT Data Corporation |
| Software & Services |
| 9 |
|
| 40,001 |
ORIX Corporation |
| Diversified Financials |
| 3,693 |
|
| 637,854 |
Ricoh Company Limited |
| Technology Hardware & Equipment |
| 16,503 |
|
| 259,880 |
Sapporo Hokuyo Holdings Inc |
| Banks |
| 4 |
|
| 33,462 |
SBI Holdings Inc |
| Diversified Financials |
| 604 |
|
| 142,124 |
Seiko Epson Corp |
| Technology Hardware & Equipment |
| 10,510 |
|
| 257,047 |
Seino Holdings Co Ltd |
| Transportation |
| 26,800 |
|
| 182,484 |
Sekisui House Limited |
| Consumer Durables & Apparel |
| 59,188 |
|
| 663,440 |
Seven & I Holdings Co Ltd |
| Food & Staples Retailing |
| 7,800 |
|
| 193,304 |
Shinko Securities Co Ltd |
| Diversified Financials |
| 26,000 |
|
| 102,113 |
Sony Corporation |
| Consumer Durables & Apparel |
| 10,478 |
|
| 495,083 |
Sumitomo Bakelite Co Ltd |
| Materials |
| 33,600 |
|
| 178,512 |
Sumitomo Trust & Banking Co Ltd |
| Banks |
| 29,874 |
|
| 192,361 |
Suzuken Company Limited |
| Health Care Equipment & Services |
| 6,900 |
|
| 252,196 |
TDK Corp |
| Technology Hardware & Equipment |
| 6,600 |
|
| 424,279 |
Tokyo Steel Manufacturing Co Ltd |
| Materials |
| 28,800 |
|
| 287,916 |
Toppan Printing Company Ltd |
| Commercial Services & Supplies |
| 53,606 |
|
| 537,649 |
Toyo Seikan Kaisha Limited |
| Materials |
| 21,887 |
|
| 399,847 |
|
|
|
|
|
|
| 13,893,916 |
Malaysia – 2.7% |
|
|
|
|
|
|
|
AMMB Holdings BHD |
| Diversified Financials |
| 38,400 |
|
| 43,926 |
Bumiputra-Commerce Holdings BHD |
| Banks |
| 13,300 |
|
| 42,707 |
POS Malaysia BHD |
| Transportation |
| 178,800 |
|
| 131,547 |
Public Bank BHD-Foreign Market |
| Banks |
| 24,000 |
|
| 85,217 |
Telekom Malaysia BHD |
| Telecommunication Services |
| 48,800 |
|
| 171,947 |
Tenaga Nasional BHD |
| Utilities |
| 31,756 |
|
| 90,487 |
YTL Corporation Berhad |
| Utilities |
| 71,840 |
|
| 173,206 |
YTL Power International BHD |
| Utilities |
| 120,300 |
|
| 94,006 |
|
|
|
|
|
|
| 833,043 |
New Zealand – 2.9% |
|
|
|
|
|
|
|
Fisher & Paykel Appliances Holdings Ltd |
| Consumer Durables & Apparel |
| 23,684 |
|
| 52,161 |
Kiwi Income Property Trust |
| Real Estate |
| 171,013 |
|
| 174,482 |
Telecom Corp of New Zealand Ltd |
| Telecommunication Services |
| 116,907 |
|
| 366,844 |
Tower Limited |
| Insurance |
| 68,468 |
|
| 116,173 |
Vector Ltd |
| Utilities |
| 100,805 |
|
| 167,225 |
|
|
|
|
|
|
| 876,885 |
Norway – 1.3% |
|
|
|
|
|
|
|
Norsk Hydro ASA |
| Materials |
| 6,200 |
|
| 73,867 |
Petroleum Geo-Services ASA |
| Energy |
| 15,550 |
|
| 334,358 |
|
|
|
|
|
|
| 408,225 |
32
DOMINI PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
| VALUE | |
Philippines – 0.6% |
|
|
|
|
|
|
|
Globe Telecom Inc |
| Telecommunication Services |
| 4,707 |
| $ | 182,587 |
|
|
|
|
|
|
| 182,587 |
Singapore – 2.1% |
|
|
|
|
|
|
|
DBS Group Holdings Ltd. |
| Banks |
| 20,606 |
|
| 257,011 |
Jardine Cycle & Carriage Ltd |
| Retailing |
| 22,662 |
|
| 316,552 |
Oversea-Chinese Banking Corp |
| Banks |
| 14,381 |
|
| 76,573 |
|
|
|
|
|
|
| 650,136 |
South Korea – 9.3% |
|
|
|
|
|
|
|
Cheil Jedang Corporation (a) |
| Capital Goods |
| 819 |
|
| 61,283 |
Daegu Bank |
| Banks |
| 3,910 |
|
| 57,100 |
GS Engineering & Construction |
| Capital Goods |
| 689 |
|
| 83,819 |
GS Holdings Corp |
| Energy |
| 5,069 |
|
| 217,982 |
Hana Financial Group Inc |
| Banks |
| 2,100 |
|
| 103,086 |
Hyundai Securities Co |
| Diversified Financials |
| 3,630 |
|
| 63,367 |
Industrial Bank of Korea |
| Banks |
| 8,995 |
|
| 165,530 |
Kookmin Bank |
| Banks |
| 1,029 |
|
| 67,683 |
Korea Zinc Co Ltd |
| Materials |
| 1,495 |
|
| 173,229 |
KT Corp |
| Telecommunication Services |
| 6,803 |
|
| 364,763 |
KT Freetel (a) |
| Telecommunication Services |
| 3,020 |
|
| 91,766 |
LG Corp |
| Capital Goods |
| 6,206 |
|
| 359,895 |
LG Electronics Inc |
| Consumer Durables & Apparel |
| 3,926 |
|
| 381,054 |
LG.Philips LCD Co Ltd |
| Technology Hardware & Equipment |
| 4,660 |
|
| 201,013 |
Pacific Corp |
| Household & Personal Products |
| 699 |
|
| 95,291 |
Pusan Bank |
| Banks |
| 6,480 |
|
| 89,031 |
Shinhan Financial Group Ltd |
| Banks |
| 3,183 |
|
| 170,385 |
Woori Investment & Securities Co Ltd |
| Diversified Financials |
| 4,540 |
|
| 100,859 |
|
|
|
|
|
|
| 2,847,136 |
Taiwan – 7.6% |
|
|
|
|
|
|
|
Acer Inc |
| Technology Hardware & Equipment |
| 28,000 |
|
| 43,925 |
Asustek Computer Inc |
| Technology Hardware & Equipment |
| 41,492 |
|
| 108,209 |
AU Optronics Corp |
| Technology Hardware & Equipment |
| 301,528 |
|
| 503,395 |
Chi Mei Optoelectronics Corp |
| Technology Hardware & Equipment |
| 168,560 |
|
| 198,742 |
China Steel Corp |
| Materials |
| 238,214 |
|
| 336,979 |
Chunghwa Picture Tubes Ltd (a) |
| Technology Hardware & Equipment |
| 476,000 |
|
| 141,069 |
Chunghwa Telecom Co Ltd |
| Telecommunication Services |
| 81,475 |
|
| 173,418 |
Compal Electronics |
| Technology Hardware & Equipment |
| 355,383 |
|
| 305,968 |
High Tech Computer Corp |
| Technology Hardware & Equipment |
| 7,500 |
|
| 141,403 |
Lite-On Technology Corp |
| Technology Hardware & Equipment |
| 53,000 |
|
| 78,951 |
Powerchip Semiconductor Corp |
| Semiconductors & |
|
|
|
|
|
|
| Semiconductor Equipment |
| 49,322 |
|
| 20,391 |
Siliconware Precision Industries Co |
| Semiconductors & |
|
|
|
|
|
|
| Semiconductor Equipment |
| 368 |
|
| 575 |
Taiwan Cooperative Bank |
| Banks |
| 222,143 |
|
| 167,991 |
United Microelectronics Corp |
| Semiconductors & |
|
|
|
|
|
|
| Semiconductor Equipment |
| 148,000 |
|
| 79,841 |
|
|
|
|
|
|
| 2,300,857 |
33
DOMINI PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
| VALUE | |
Thailand – 0.9% |
|
|
|
|
|
|
|
Bangkok Bank Pub Co – For Reg |
| Banks |
| 52,318 |
| $ | 195,043 |
Siam Cement Pub Co – For Reg |
| Materials |
| 11,800 |
|
| 76,272 |
|
|
|
|
|
|
| 271,315 |
United States – 0.9% |
|
|
|
|
|
|
|
National Oilwell Varco Inc (a) |
| Energy |
| 4,500 |
|
| 271,035 |
|
|
|
|
|
|
| 271,035 |
Total Common Stocks (Cost $32,185,725) |
|
|
|
|
|
| 30,190,961 |
Repurchase Agreements – 0.6% |
|
|
|
|
|
|
|
State Street Bank & Trust, dated 1/31/2008, 1.60% due 2/1/2008, maturity amount $175,789 (collateralized by U.S. Government Agency Obligations, Freddie Mac, 3.25%, 3/14/2008, market value $182,250) |
| Repurchase Agreements |
| 175,781 |
|
| 175,781 |
Total Repurchase Agreements (Cost $175,781) |
|
|
|
|
|
| 175,781 |
Total Investments — 99.7% (Cost $32,361,506) (b) |
|
|
|
|
|
| 30,366,742 |
Other Assets, less liabilities — 0.3% |
|
|
|
|
|
| 93,389 |
Net Assets — 100.0% |
|
|
|
|
| $ | 30,460,131 |
(a) | Non-income producing security. |
(b) | The aggregate cost for federal income tax purposes is $32,552,076. The aggregate gross unrealized appreciation is $1,212,370 and the aggregate gross unrealized depreciation is $3,397,704, resulting in net unrealized depreciation of $2,185,334. |
(c) | Securities for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Trust’s Board of Trustees. |
As of the date of this report, certain foreign securities were fair valued by an independent pricing service under the direction of the Board of Trustees or its delegates in accordance with the Trust’s Valuation and Pricing Policies and Procedures.
SEE NOTES TO FINANCIAL STATEMENTS
34
DOMINI EUROPEAN PACASIA SOCIAL EQUITY PORTFOLIO
PERFORMANCE COMMENTARY
For the six months ended January 31, 2008, the Domini European PacAsia Social Equity Portfolio (the “Fund”) declined –10.43%, excluding sales charges, underperforming the MSCI EAFE Index, which declined by –7.44%.
During this period, stock selection — particularly in the financial, materials, and consumer discretionary sectors — was the primary driver of underperformance:
• | Royal Bank of Scotland was affected by the impact of problems in the U.S. subprime mortgage market on mortgage-related securities that it held. |
• | Trinity Mirror, the U.K.’s largest newspaper publisher, saw its shares drop sharply after it sold its Midlands newspapers for less than expected. |
• | Tokyo Steel Manufacturing was expected to be affected by higher scrap steel costs and weaker construction demand. |
The Fund’s subadvisor, in selecting stocks for the Fund’s portfolio, uses an approach that considers measures of a company’s valuation (the price of its stock relative to the value of its businesses) and its momentum (the rate at which the company’s profits and/or share price have been increasing). During this period, valuation measures were less effective than momentum measures.
The Fund’s performance relative to the index was helped by stock selection in the telecommunications services and healthcare sectors, and by the Fund’s positions in the British telecommunications company Vodafone; the British water utility Kelda Group, which was sought for acquisition; and France Telecom, which surprised analysts with strong performance in its domestic wireline and wireless divisions.
35
The Domini European PacAsia Social Equity Portfolio invests in the Domini European PacAsia Social Equity Trust. The table and bar chart below provide information as of January 31, 2008, about the ten largest holdings of the Domini European PacAsia Social Equity Trust and its portfolio holdings by industry sector and by country:
TEN LARGEST HOLDINGS
SECURITY DESCRIPTION |
| % NET |
|
Vodafone Group PLC |
| 3.0% |
|
Nokia OYJ |
| 2.5% |
|
Unilever PLC |
| 2.3% |
|
Sanofi-Aventis |
| 2.2% |
|
Banco Santander SA |
| 2.0% |
|
Telefonica SA |
| 2.0% | |
France Telecom SA |
| 2.0% | |
Royal Bank of Scotland Group |
| 1.9% | |
StatoilHydro ASA |
| 1.8% | |
Vivendi SA |
| 1.7% |
PORTFOLIO HOLDINGS BY INDUSTRY SECTOR (% OF NET ASSETS)
* | Other reflects Repurchase Agreements and Other Liabilities, less assets. |
PORTFOLIO HOLDINGS BY COUNTRY (% OF NET ASSETS)
* | Other reflects New Zealand, Singapore, Denmark, China, Malaysia, Turkey, Taiwan, Hungary, Portugal, Poland, Repurchase Agreements, and Other Liabilities, less assets. |
The holdings mentioned above are described in the Domini European PacAsia Social Equity Trust’s Portfolio of Investments at January 31, 2008, included herein. The composition of the Trust’s portfolio is subject to change.
36 Domini European PacAsia Social Equity Portfolio — Perfomance Commentary
AVERAGE ANNUAL TOTAL RETURNS
|
|
|
| Domini European |
| Domini European |
| MSCI EAFE | |||
As of |
| 1 Year |
| 0.43 | % |
| 5.43 | % |
| 11.62 | % |
| Since Inception(1) |
| 0.22 | % |
| 5.17 | % |
| 12.66 | % | |
As of |
| 1 Year |
| –11.81 | % |
| –7.41 | % |
| 0.64 | % |
| Since Inception(1) |
| –7.99 | % |
| –3.82 | % |
| 2.18 | % | |
COMPARISON OF $10,000 INVESTMENT IN THE
DOMINI EUROPEAN PACASIA SOCIAL EQUITY PORTFOLIO (WITH 4.75% MAXIMUM SALES
CHARGE) AND THE MSCI EAFE
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 30 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.
For the period reported in its current prospectus, the Fund’s gross annual operating expenses totaled 19.27% of net assets. Until November 30, 2008, Domini has contractually agreed to waive fees and reimburse expenses to limit the Fund’s expenses, on a per annum basis, to 1.57% of net assets.
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 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 Europe Australasia Far East (MSCI EAFE) is an unmanaged index of common stocks. Investors cannot invest directly in the MSCI EAFE.
______________(1) | Since December 27, 2006. |
This material must be preceded or accompanied by the Fund’s current prospectus. DSIL Investment Services LLC, Distributor. 03/08
| Domini European PacAsia Social Equity Portfolio — Perfomance Commentary | 37 |
DOMINI EUROPEAN PACASIA SOCIAL EQUITY TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
|
| VALUE |
Common Stocks – 98.1% |
|
|
|
|
|
|
|
Australia – 4.0% |
|
|
|
|
|
|
|
AGL Energy Ltd |
| Utilities |
| 4,576 |
| $ | 49,669 |
BlueScope Steel Ltd |
| Materials |
| 4,325 |
|
| 39,919 |
Computershare Limited |
| Software & Services |
| 3,337 |
|
| 24,202 |
CSL Limited |
| Pharma, Biotech & Life Sciences |
| 1,104 |
|
| 34,414 |
Macquarie Office Trust |
| Real Estate |
| 100,723 |
|
| 103,436 |
National Australia Bank Ltd |
| Banks |
| 5,925 |
|
| 186,265 |
Origin Energy Limited |
| Energy |
| 16,577 |
|
| 130,412 |
Sonic Healthcare Ltd |
| Health Care Equipment & Services |
| 4,462 |
|
| 65,636 |
Suncorp-Metway Limited |
| Insurance |
| 2,073 |
|
| 28,711 |
Telstra Corp Ltd |
| Telecommunication Services |
| 9,246 |
|
| 36,221 |
|
|
|
|
|
|
| 698,885 |
Austria – 1.4% |
|
|
|
|
|
|
|
IMMOFINANZ AG |
| Real Estate |
| 9,364 |
|
| 88,750 |
OMV AG |
| Energy |
| 1,098 |
|
| 78,873 |
Voestalpine AG |
| Materials |
| 1,276 |
|
| 78,362 |
|
|
|
|
|
|
| 245,985 |
Belgium – 2.0% |
|
|
|
|
|
|
|
Delhaize Group |
| Food & Staples Retailing |
| 1,514 |
|
| 115,450 |
Dexia SA |
| Banks |
| 1,455 |
|
| 35,181 |
Groupe Bruxelles Lambert SA |
| Diversified Financials |
| 202 |
|
| 23,382 |
KBC Groep NV |
| Banks |
| 1,372 |
|
| 174,442 |
|
|
|
|
|
|
| 348,455 |
China – 0.4% |
|
|
|
|
|
|
|
Hopson Development Holdings Ltd |
| Real Estate |
| 24,000 |
|
| 43,395 |
TPV Technology Ltd |
| Technology Hardware & Equipment |
| 47,775 |
|
| 30,560 |
|
|
|
|
|
|
| 73,955 |
Denmark – 0.5% |
|
|
|
|
|
|
|
Dampskibsselskabet (D/S) Torm |
| Energy |
| 800 |
|
| 25,652 |
H. Lundbeck A/S |
| Pharma, Biotech & Life Sciences |
| 2,545 |
|
| 61,686 |
|
|
|
|
|
|
| 87,338 |
Finland – 3.1% |
|
|
|
|
|
|
|
Nokia OYJ |
| Technology Hardware & Equipment |
| 11,824 |
|
| 433,601 |
Orion OYJ/New |
| Pharma, Biotech & Life Sciences |
| 4,548 |
|
| 102,218 |
|
|
|
|
|
|
| 535,819 |
France – 8.5% |
|
|
|
|
|
|
|
Air France-KLM |
| Transportation |
| 3,701 |
|
| 102,826 |
BNP Paribas |
| Banks |
| 1,936 |
|
| 191,252 |
Credit Agricole SA |
| Banks |
| 1,724 |
|
| 52,836 |
France Telecom SA |
| Telecommunication Services |
| 9,798 |
|
| 344,137 |
Sanofi-Aventis SA |
| Pharma, Biotech & Life Sciences |
| 4,749 |
|
| 385,682 |
Schneider Electric SA |
| Capital Goods |
| 237 |
|
| 27,302 |
Valeo SA |
| Automobiles & Components |
| 739 |
|
| 27,195 |
38
DOMINI EUROPEAN PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
|
| VALUE |
France (continued) |
|
|
|
|
|
|
|
Vallourec |
| Capital Goods |
| 251 |
| $ | 50,242 |
Vivendi SA |
| Media |
| 7,398 |
|
| 296,884 |
|
|
|
|
|
|
| 1,478,356 |
Germany – 7.2% |
|
|
|
|
|
|
|
Allianz SE – Reg |
| Insurance |
| 1,245 |
|
| 220,989 |
Altana AG |
| Materials |
| 9,587 |
|
| 214,582 |
Commerzbank AG |
| Banks |
| 1,675 |
|
| 50,671 |
Deutsche Boerse AG |
| Diversified Financials |
| 291 |
|
| 50,709 |
Deutsche Lufthansa AG – Reg |
| Transportation |
| 3,628 |
|
| 86,624 |
Deutsche Telekom AG – Reg |
| Telecommunication Services |
| 1,367 |
|
| 27,887 |
Epcos AG |
| Technology Hardware & Equipment |
| 3,236 |
|
| 44,030 |
Fresenius SE |
| Health Care Equipment & Services |
| 1,589 |
|
| 126,314 |
Hannover Rueckversicherungs AG |
| Insurance |
| 1,449 |
|
| 64,523 |
Muenchener Rueckver AG – Reg |
| Insurance |
| 1,329 |
|
| 237,794 |
Salzgitter AG |
| Materials |
| 818 |
|
| 127,761 |
|
|
|
|
|
|
| 1,251,884 |
Greece – 1.5% |
|
|
|
|
|
|
|
National Bank of Greece SA |
| Banks |
| 2,120 |
|
| 129,043 |
Public Power Corp SA |
| Utilities |
| 2,762 |
|
| 128,990 |
|
|
|
|
|
|
| 258,033 |
Hong Kong – 2.3% |
|
|
|
|
|
|
|
Chinese Estates Holdings Ltd |
| Real Estate |
| 18,269 |
|
| 30,336 |
First Pacific Co |
| Diversified Financials |
| 40,000 |
|
| 28,563 |
Hang Lung Group Ltd |
| Real Estate |
| 4,627 |
|
| 21,477 |
Jardine Matheson Hldgs Ltd |
| Diversified Financials |
| 1,114 |
|
| 28,385 |
Jardine Strategic Holdings Ltd |
| Diversified Financials |
| 2,000 |
|
| 29,000 |
Kingboard Chemicals Holdings Ltd |
| Technology Hardware & Equipment |
| 13,243 |
|
| 55,251 |
Swire Pacific Ltd ‘A’ |
| Real Estate |
| 5,334 |
|
| 72,445 |
Wharf Holdings Ltd |
| Real Estate |
| 8,970 |
|
| 48,323 |
Wheelock & Co Ltd |
| Real Estate |
| 30,250 |
|
| 88,486 |
|
|
|
|
|
|
| 402,266 |
Hungary – 0.3% |
|
|
|
|
|
|
|
MOL Hungarian Oil and Gas NyRt |
| Energy |
| 387 |
|
| 51,760 |
|
|
|
|
|
|
| 51,760 |
Ireland – 1.4% |
|
|
|
|
|
|
|
Anglo Irish Bank PLC |
| Banks |
| 4,711 |
|
| 66,344 |
Irish Life & Permanent PLC |
| Insurance |
| 3,677 |
|
| 58,689 |
Kerry Group PLC – A |
| Food & Beverage |
| 4,610 |
|
| 123,562 |
|
|
|
|
|
|
| 248,595 |
Italy – 2.0% |
|
|
|
|
|
|
|
Fiat SPA |
| Automobiles & Components |
| 9,923 |
|
| 232,074 |
Terna Rete Elettrica Nazionale SpA |
| Utilities |
| 28,516 |
|
| 119,203 |
|
|
|
|
|
|
| 351,277 |
39
DOMINI EUROPEAN PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
|
| VALUE |
Japan – 19.2% |
|
|
|
|
|
|
|
Alps Electric Co Ltd |
| Technology Hardware & Equipment |
| 2,518 |
| $ | 28,952 |
Aoyama Trading Co Ltd |
| Retailing |
| 3,396 |
|
| 77,292 |
Asahi Kasei Corporation |
| Materials |
| 9,000 |
|
| 55,238 |
Astellas Pharma Inc |
| Pharma, Biotech & Life Sciences |
| 2,900 |
|
| 125,817 |
Chuo Mitsui Trust Holdings Inc |
| Banks |
| 19,194 |
|
| 133,814 |
COMSYS Holdings Corp |
| Capital Goods |
| 6,000 |
|
| 51,860 |
Dai Nippon Printing Co Ltd |
| Commercial Services & Supplies |
| 6,828 |
|
| 99,923 |
Fuji Film Holdings Corp |
| Technology Hardware & Equipment |
| 6,405 |
|
| 248,726 |
Honda Motor Co Ltd |
| Automobiles & Components |
| 9,428 |
|
| 291,603 |
Kyocera Corporation |
| Technology Hardware & Equipment |
| 1,179 |
|
| 94,205 |
Makita Corporation |
| Consumer Durables & Apparel |
| 600 |
|
| 22,491 |
Mitsui Chemicals Inc |
| Materials |
| 12,546 |
|
| 83,973 |
Nintendo Company Ltd |
| Software & Services |
| 357 |
|
| 180,563 |
Nippon Express Co Ltd |
| Transportation |
| 31,000 |
|
| 166,580 |
Nippon Sheet Glass Co Ltd |
| Capital Goods |
| 15,000 |
|
| 69,263 |
Nippon Telegraph & Telephone Corp |
| Telecommunication Services |
| 45 |
|
| 214,200 |
Nisshin Steel Co Ltd |
| Materials |
| 7,000 |
|
| 23,323 |
ORIX Corporation |
| Diversified Financials |
| 800 |
|
| 138,176 |
Ricoh Company Limited |
| Technology Hardware & Equipment |
| 4,484 |
|
| 70,612 |
Sapporo Hokuyo Holdings Inc |
| Banks |
| 4 |
|
| 33,462 |
SBI Holdings Inc |
| Diversified Financials |
| 117 |
|
| 27,531 |
Seiko Epson Corp |
| Technology Hardware & Equipment |
| 3,601 |
|
| 88,071 |
Seino Holdings Corp |
| Transportation |
| 10,801 |
|
| 73,545 |
Sekisui House Limited |
| Consumer Durables & Apparel |
| 22,259 |
|
| 249,502 |
Sony Corporation |
| Consumer Durables & Apparel |
| 779 |
|
| 36,808 |
Suzuken Company Limited |
| Health Care Equipment & Services |
| 5,100 |
|
| 186,405 |
TDK Corp |
| Technology Hardware & Equipment |
| 2,000 |
|
| 128,570 |
Tokyo Steel Mfg Co Ltd |
| Materials |
| 10,883 |
|
| 108,798 |
Toppan Printing Company Ltd |
| Commercial Services & Supplies |
| 14,154 |
|
| 141,960 |
Toyo Seikan Kaisha Limited |
| Materials |
| 4,861 |
|
| 88,804 |
|
|
|
|
|
|
| 3,340,067 |
Malaysia – 0.4% |
|
|
|
|
|
|
|
YTL Power International BHD |
| Utilities |
| 85,500 |
|
| 66,812 |
|
|
|
|
|
|
| 66,812 |
Netherlands – 5.3% |
|
|
|
|
|
|
|
Fugro NV – CVA |
| Energy |
| 1,777 |
|
| 121,299 |
ING Groep NV – CVA |
| Diversified Financials |
| 5,946 |
|
| 192,937 |
Koninklijke Ahold NV (a) |
| Food & Staples Retailing |
| 3,696 |
|
| 48,236 |
Koninklijke DSM NV |
| Materials |
| 1,870 |
|
| 78,617 |
SNS Reaal |
| Diversified Financials |
| 10,990 |
|
| 207,343 |
TNT NV |
| Transportation |
| 4,280 |
|
| 158,035 |
Unilever NV – CVA |
| Food & Beverage |
| 3,659 |
|
| 118,830 |
|
|
|
|
|
|
| 925,297 |
New Zealand – 0.8% |
|
|
|
|
|
|
|
Kiwi Income Property Trust |
| Real Estate |
| 57,736 |
|
| 58,907 |
Telecom Corp of New Zealand Ltd |
| Telecommunication Services |
| 25,813 |
|
| 80,999 |
|
|
|
|
|
|
| 139,906 |
40
DOMINI EUROPEAN PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
|
| VALUE |
Norway – 3.3% |
|
|
|
|
|
|
|
Fred Olsen Energy ASA |
| Energy |
| 501 |
| $ | 24,800 |
Norsk Hydro ASA |
| Materials |
| 10,450 |
|
| 124,502 |
Orkla ASA |
| Capital Goods |
| 4,301 |
|
| 56,617 |
Petroleum Geo-Services ASA |
| Energy |
| 2,262 |
|
| 48,638 |
StatoilHydro ASA |
| Energy |
| 12,258 |
|
| 320,937 |
|
|
|
|
|
|
| 575,494 |
Poland – 0.3% |
|
|
|
|
|
|
|
Polish Oil & Gas |
| Energy |
| 10,712 |
|
| 19,505 |
Telekomunikacja Polska SA |
| Telecommunication Services |
| 3,070 |
|
| 29,305 |
|
|
|
|
|
|
| 48,810 |
Portugal – 0.3% |
|
|
|
|
|
|
|
Banco Espirito Santo SA – Reg |
| Banks |
| 2,888 |
|
| 50,638 |
|
|
|
|
|
|
| 50,638 |
Singapore – 0.8% |
|
|
|
|
|
|
|
DBS Group Holdings Ltd. |
| Banks |
| 3,000 |
|
| 37,418 |
Jardine Cycle & Carriage Ltd |
| Retailing |
| 6,817 |
|
| 95,223 |
|
|
|
|
|
|
| 132,641 |
South Korea – 1.4% |
|
|
|
|
|
|
|
GS Holdings Corp |
| Energy |
| 1,046 |
|
| 44,981 |
Hana Financial Holdings |
| Banks |
| 568 |
|
| 27,882 |
Industrial Bank of Korea |
| Banks |
| 1,377 |
|
| 25,340 |
Korea Zinc Co Ltd |
| Materials |
| 294 |
|
| 34,067 |
KT Corp |
| Telecommunication Services |
| 555 |
|
| 29,758 |
LG Corp |
| Capital Goods |
| 494 |
|
| 28,648 |
LG Electronics Inc. |
| Consumer Durables & Apparel |
| 243 |
|
| 23,585 |
Woori Finance Holdings Co Ltd |
| Banks |
| 1,219 |
|
| 22,281 |
|
|
|
|
|
|
| 236,542 |
Spain – 4.9% |
|
|
|
|
|
|
|
Banco Santander SA |
| Banks |
| 19,907 |
|
| 348,681 |
Corporacion Financiera Alba |
| Diversified Financials |
| 386 |
|
| 22,568 |
Gas Natural SDG SA |
| Utilities |
| 2,509 |
|
| 137,932 |
Telefonica SA |
| Telecommunication Services |
| 11,881 |
|
| 345,899 |
|
|
|
|
|
|
| 855,080 |
Sweden – 2.0% |
|
|
|
|
|
|
|
Electrolux AB – Ser B |
| Consumer Durables & Apparel |
| 1,483 |
|
| 23,193 |
Scania AB – B Shs |
| Capital Goods |
| 8,700 |
|
| 179,466 |
SSAB Svenskt Stal AB – Ser A |
| Materials |
| 2,100 |
|
| 55,342 |
SSAB Svenskt Stal AB – Ser B |
| Materials |
| 1,050 |
|
| 25,212 |
TeliaSonera AB |
| Telecommunication Services |
| 7,000 |
|
| 61,852 |
|
|
|
|
|
|
| 345,065 |
Switzerland – 5.3% |
|
|
|
|
|
|
|
Lonza Group AG – Reg |
| Pharma, Biotech & Life Sciences |
| 2,191 |
|
| 280,207 |
Novartis AG – Reg Shs |
| Pharma, Biotech & Life Sciences |
| 2,093 |
|
| 105,667 |
Rieter Holding AG |
| Automobiles & Components |
| 63 |
|
| 22,750 |
Sonova Holding AG |
| Health Care Equipment & Services |
| 1,050 |
|
| 93,535 |
Swiss Reinsurance – Reg |
| Insurance |
| 3,676 |
|
| 275,230 |
The Swatch Group AG – B |
| Consumer Durables & Apparel |
| 430 |
|
| 115,688 |
The Swatch Group AG – Reg |
| Consumer Durables & Apparel |
| 516 |
|
| 26,969 |
|
|
|
|
|
|
| 920,046 |
41
DOMINI EUROPEAN PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
|
| VALUE |
Taiwan – 0.3% |
|
|
|
|
|
|
|
Chi Mei Optoelectronics Corp |
| Technology Hardware & Equipment |
| 24,000 |
| $ | 28,297 |
China Steel Corp |
| Materials |
| 20,942 |
|
| 29,625 |
|
|
|
|
|
|
| 57,922 |
Turkey – 0.3% |
|
|
|
|
|
|
|
Eregli Demir ve Celik Fabrikalari TAS |
| Materials |
| 3,104 |
|
| 19,635 |
Trakya Cam Sanayii AS |
| Capital Goods |
| 10,171 |
|
| 19,784 |
Turkiye Vakiflar Bankasi T – D |
| Banks |
| 7,424 |
|
| 18,679 |
|
|
|
|
|
|
| 58,098 |
United Kingdom – 18.9% |
|
|
|
|
|
|
|
3i Group PLC |
| Diversified Financials |
| 8,016 |
|
| 150,093 |
Barclays PLC |
| Banks |
| 13,190 |
|
| 124,475 |
BG Group PLC |
| Energy |
| 9,220 |
|
| 203,357 |
Carphone Warehouse Group PLC |
| Retailing |
| 27,698 |
|
| 182,329 |
Collins Stewart PLC |
| Diversified Financials |
| 13,547 |
|
| 37,521 |
Cookson Group PLC |
| Capital Goods |
| 3,082 |
|
| 34,212 |
Drax Group PLC |
| Utilities |
| 5,784 |
|
| 58,303 |
Emap PLC |
| Media |
| 3,655 |
|
| 67,340 |
GlaxoSmithKline PLC |
| Pharma, Biotech & Life Sciences |
| 7,231 |
|
| 171,331 |
HBOS PLC |
| Banks |
| 17,520 |
|
| 244,057 |
Home Retail Group |
| Retailing |
| 29,093 |
|
| 164,849 |
HSBC Holdings PLC |
| Banks |
| 1,616 |
|
| 24,239 |
Man Group PLC |
| Diversified Financials |
| 8,875 |
|
| 97,687 |
Old Mutual PLC |
| Insurance |
| 84,252 |
|
| 210,132 |
Royal Bank of Scotland Group PLC |
| Banks |
| 42,167 |
|
| 324,996 |
Stagecoach Group PLC |
| Transportation |
| 37,103 |
|
| 178,889 |
Standard Life PLC |
| Insurance |
| 11,127 |
|
| 48,014 |
Unilever PLC |
| Food & Beverage |
| 11,963 |
|
| 394,238 |
Vodafone Group PLC |
| Telecommunication Services |
| 148,260 |
|
| 518,509 |
WM Morrison Supermarkets PLC |
| Food & Staples Retailing |
| 10,788 |
|
| 64,891 |
|
|
|
|
|
|
| 3,299,462 |
Total Common Stocks (Cost $18,860,579) |
|
|
|
|
|
| 17,084,488 |
42
DOMINI EUROPEAN PACASIA SOCIAL EQUITY TRUST / PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
COUNTRY/SECURITY |
| INDUSTRY |
| SHARES |
| VALUE |
|
Repurchase Agreements – 2.9% |
|
|
|
|
|
|
|
State Street Bank & Trust, dated 1/31/2008, 1.60% due 2/1/2008, maturity amount $511,268 (collateralized by U.S. Government Agency Obligations, Freddie Mac, 3.25%, 3/14/2008, market value $526,500) |
| Repurchase Agreements |
| 511,245 |
| $511,245 |
|
Total Repurchase Agreements (Cost $511,245) |
|
|
|
|
| 511,245 |
|
Total Investments — 101.0% (Cost $19,371,824) (b) |
|
|
|
|
| 17,595,733 |
|
Other Liabilities, less assets — (1.0%) |
|
|
|
|
| (181,984 | ) |
Net Assets — 100.0% |
|
|
|
|
| $17,413,749 |
|
(a) | Non-income producing security. |
(b) | The aggregate cost for federal income tax purposes is $19,463,112. The aggregate gross unrealized appreciation is $391,144 and the aggregate gross unrealized depreciation is $2,258,523, resulting in net unrealized depreciation of $1,867,379. |
As of the date of this report, certain foreign securities were fair valued by an independent pricing service under the direction of the Board of Trustees or its delegates in accordance with the Trust’s Valuation and Pricing Policies and Procedures.
SEE NOTES TO FINANCIAL STATEMENTS
43
DOMINI FUNDS
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 30 days. Prior to November 30, 2007, the redemption fee applied to redemptions and exchanges of fund shares held 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, 2007, and held through January 31, 2008.
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
44
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 | Actual Expenses | $1,000.00 | $873.10 | $5.321 | ||||
Hypothetical Expenses | $1,000.00 | $1,019.46 | $5.741 | |||||
Domini European | Actual Expenses | $1,000.00 | $867.00 | $7.372 | ||||
Hypothetical Expenses | $1,000.00 | $1,017.24 | $7.962 | |||||
Domini PacAsia | Actual Expenses | $1,000.00 | $914.60 | $7.563 | ||||
Hypothetical Expenses | $1,000.00 | $1,017.24 | $7.963 | |||||
Domini European PacAsia | Actual Expenses | $1,000.00 | $895.70 | $7.484 | ||||
Hypothetical Expenses | $1,000.00 | $1,017.24 | $7.964 |
1 | Expenses are equal to the Fund’s annualized expense ratio of 1.13%, multiplied by average account value over the period, multiplied by 184, and divided by 366. 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 366. 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 1.57%, multiplied by average account value over the period, multiplied by 184, and divided by 366. 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 1.57%, multiplied by average account value over the period, multiplied by 184, and divided by 366. The example reflects the aggregate expenses of the Fund and the Domini European PacAsia Social Equity Trust, the underlying portfolio in which the Fund invests. |
Domini Funds — Expense Example 45
THIS PAGE INTENTIONALLY LEFT BLANK
46
FINANCIAL STATEMENTS
________________________________________________________________
47
DOMINI SOCIAL EQUITY TRUST
DOMINI EUROPEAN SOCIAL EQUITY TRUST
DOMINI PACASIA SOCIAL EQUITY TRUST
DOMINI EUROPEAN PACASIA SOCIAL EQUITY TRUST
STATEMENTS OF ASSETS AND LIABILITIES
JANUARY 31, 2008 (UNAUDITED)
|
|
|
|
|
|
|
|
|
| ||||
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at value |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency, at value (cost $0, $0, $53,252, and $1,281, respectively) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable for securities sold |
|
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|
|
|
|
|
Dividend, interest, and tax reclaim receivables |
|
|
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|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable for securities purchased |
|
|
|
|
|
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|
|
|
|
|
Management fee payable |
|
|
|
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|
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|
|
|
|
|
|
Other accrued expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS APPLICABLE TO INVESTORS’ BENEFICIAL INTERESTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
48
|
| Domini Social |
| Domini European |
| Domini PacAsia |
| Domini European |
| ||||
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at cost |
| $ | 1,039,758,128 |
| $ | 118,714,235 |
| $ | 32,361,506 |
| $ | 19,371,824 |
|
Investments at value |
| $ | 1,092,003,618 |
| $ | 108,560,269 |
| $ | 30,366,742 |
| $ | 17,595,733 |
|
Foreign currency, at value (cost $0, $0, $53,252, and $1,281, respectively) |
|
| — |
|
| — |
|
| 53,795 |
|
| 1,286 |
|
Receivable for securities sold |
|
| — |
|
| 2,719,486 |
|
| — |
|
| 84,366 |
|
Dividend, interest, and tax reclaim receivables |
|
| 1,362,491 |
|
| 335,107 |
|
| 62,715 |
|
| 32,454 |
|
Total assets |
|
| 1,093,366,109 |
|
| 111,614,862 |
|
| 30,483,252 |
|
| 17,713,839 |
|
LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable for securities purchased |
|
| — |
|
| 341,123 |
|
| — |
|
| 287,616 |
|
Management fee payable |
|
| 277,070 |
|
| 72,427 |
|
| 19,485 |
|
| 10,688 |
|
Other accrued expenses |
|
| 118,328 |
|
| 294,547 |
|
| 3,636 |
|
| 1,786 |
|
Total liabilities |
|
| 395,398 |
|
| 708,097 |
|
| 23,121 |
|
| 300,090 |
|
NET ASSETS APPLICABLE TO INVESTORS’ BENEFICIAL INTERESTS |
| $ | 1,092,970,711 |
| $ | 110,906,765 |
| $ | 30,460,131 |
| $ | 17,413,749 |
|
SEE NOTES TO FINANCIAL STATEMENTS
49
DOMINI SOCIAL EQUITY TRUST
DOMINI EUROPEAN SOCIAL EQUITY TRUST
DOMINI PACASIA SOCIAL EQUITY TRUST
DOMINI EUROPEAN PACASIA SOCIAL EQUITY TRUST
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 2008 (UNAUDITED)
INVESTMENT INCOME: |
|
Dividends (net of foreign taxes of $0, $61,648, $36,029 and $8,440, respectively) |
|
Interest income |
|
Investment income |
|
EXPENSES: |
|
Management fee |
|
Custody fees |
|
Professional fees |
|
Trustees fees |
|
Shareholder communication |
|
Miscellaneous |
|
Total expenses |
|
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 |
|
50
|
| Domini Social |
| Domini European |
| Domini PacAsia |
| Domini European |
| ||||
INVESTMENT INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends (net of foreign taxes of $0, $61,648, $36,029 and $8,440, respectively) |
| $ | 12,129,984 |
| $ | 2,424,748 |
| $ | 386,339 |
| $ | 290,707 |
|
Interest income |
|
| 93,295 |
|
| 12,933 |
|
| 6,808 |
|
| 3,903 |
|
Investment income |
|
| 12,223,279 |
|
| 2,437,681 |
|
| 393,147 |
|
| 294,610 |
|
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fee |
|
| 1,857,024 |
|
| 483,563 |
|
| 112,317 |
|
| 62,072 |
|
Custody fees |
|
| 102,355 |
|
| 183,202 |
|
| 70,224 |
|
| 62,536 |
|
Professional fees |
|
| 21,961 |
|
| 77,461 |
|
| 11,726 |
|
| 11,856 |
|
Trustees fees |
|
| 23,832 |
|
| 12,728 |
|
| 2,340 |
|
| 299 |
|
Shareholder communication |
|
| 9,564 |
|
| 24,984 |
|
| 2,846 |
|
| 9,456 |
|
Miscellaneous |
|
| 2,605 |
|
| 40,334 |
|
| 300 |
|
| 214 |
|
Total expenses |
|
| 2,017,341 |
|
| 822,272 |
|
| 199,753 |
|
| 146,433 |
|
Fees waived |
|
| (34,734 | ) |
| — |
|
| (81,608 | ) |
| (81,949 | ) |
Net expenses |
|
| 1,982,607 |
|
| 822,272 |
|
| 118,145 |
|
| 64,484 |
|
NET INVESTMENT INCOME (LOSS) |
|
| 10,240,672 |
|
| 1,615,409 |
|
| 275,002 |
|
| 230,126 |
|
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS AND FOREIGN CURRENCY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REALIZED GAIN (LOSS) FROM: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
| (48,118,309 | ) |
| 1,669,956 |
|
| 191,011 |
|
| (508,710 | ) |
Foreign currency |
|
| — |
|
| (6,392 | ) |
| (58,009 | ) |
| (33,216 | ) |
Net realized gain (loss) |
|
| (48,118,309 | ) |
| 1,663,564 |
|
| 133,002 |
|
| (541,926 | ) |
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) ON: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
| (57,651,717 | ) |
| (20,585,418 | ) |
| (3,108,567 | ) |
| (1,463,628 | ) |
Translation of assets and liabilities in foreign currencies |
|
| — |
|
| 17,895 |
|
| 1,031 |
|
| (86 | ) |
Net change in unrealized appreciation (depreciation) |
|
| (57,651,717 | ) |
| (20,567,523 | ) |
| (3,107,536 | ) |
| (1,463,714 | ) |
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS AND FOREIGN CURRENCY |
|
| (105,770,026 | ) |
| (18,903,959 | ) |
| (2,974,534 | ) |
| (2,005,640 | ) |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
| $ | (95,529,354 | ) | $ | (17,288,550 | ) | $ | (2,699,532 | ) | $ | (1,775,514 | ) |
SEE NOTES TO FINANCIAL STATEMENTS
51
DOMINI SOCIAL EQUITY TRUST
DOMINI EUROPEAN SOCIAL EQUITY TRUST
DOMINI PACASIA SOCIAL EQUITY TRUST
DOMINI EUROPEAN PACASIA 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) |
| $ | 10,240,672 |
| $ | 20,214,279 |
|
Net realized gain (loss) |
|
| (48,118,309 | ) |
| 363,584,469 |
|
Net change in unrealized appreciation (depreciation) |
|
| (57,651,717 | ) |
| (171,583,725 | ) |
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
| (95,529,354 | ) |
| 212,215,023 |
|
TRANSACTIONS IN INVESTORS’ BENEFICIAL INTEREST: |
|
|
|
|
|
|
|
Additions |
|
| 67,455,206 |
|
| 149,773,706 |
|
Reductions |
|
| (175,025,703 | ) |
| (473,539,053 | ) |
Net Increase (Decrease) in Net Assets from Transactions in Investors’ Beneficial Interests |
|
| (107,570,497 | ) |
| (323,765,347 |
|
Total Increase (Decrease) in Net Assets |
|
| (203,099,851 | ) |
| (111,550,324 |
|
NET ASSETS: |
|
|
|
|
|
|
|
Beginning of period |
|
| 1,296,070,562 |
|
| 1,407,620,886 |
|
End of period |
| $ | 1,092,970,711 |
| $ | 1,296,070,562 |
|
52
|
| Domini European |
| Domini PacAsia |
| Domini European PacAsia |
| ||||||||||||
|
| SIX MONTHS |
| YEAR ENDED |
| SIX MONTHS |
| FOR THE |
| SIX MONTHS |
| FOR THE |
| ||||||
INCREASE IN NET ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FROM OPERATIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income (loss) |
| $ | 1,615,409 |
| $ | 3,975,309 |
| $ | 275,002 |
| $ | 147,548 |
| $ | 230,126 |
| $ | 232,992 |
|
Net realized gain (loss) |
|
| 1,663,564 |
|
| 10,025,162 |
|
| 133,002 |
|
| 69,376 |
|
| (541,926 | ) |
| 59,488 |
|
Net change in unrealized appreciation (depreciation) |
|
| (20,567,523 | ) |
| 6,760,180 |
|
| (3,107,536 | ) |
| 1,114,179 |
|
| (1,463,714 | ) |
| (312,841 | ) |
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
| (17,288,550 | ) |
| 20,760,651 |
|
| (2,699,532 | ) |
| 1,331,103 |
|
| (1,775,514 | ) |
| (20,361 | ) |
TRANSACTIONS IN INVESTORS’ BENEFICIAL INTEREST: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
|
| 14,926,266 |
|
| 78,695,157 |
|
| 9,140,144 |
|
| 26,495,325 |
|
| 6,506,308 |
|
| 14,712,073 |
|
Reductions |
|
| (20,234,044 | ) |
| (21,885,599 | ) |
| (2,986,730 | ) |
| (820,179 | ) |
| (1,381,957 | ) |
| (626,800 | ) |
Net Increase (Decrease) in Net Assets from Transactions in Investors’ Beneficial Interests |
|
| (5,307,778 | ) |
| 56,809,558 |
|
| 6,153,414 |
|
| 25,675,146 |
|
| 5,124,351 |
|
| 14,085,273 |
|
Total Increase (Decrease) in Net Assets |
|
| (22,596,328 | ) |
| 77,570,209 |
|
| 3,453,882 |
|
| 27,006,249 |
|
| 3,348,837 |
|
| 14,064,912 |
|
NET ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
| 133,503,093 |
|
| 55,932,884 |
|
| 27,006,249 |
|
| — |
|
| 14,064,912 |
|
| — |
|
End of period |
| $ | 110,906,765 |
| $ | 133,503,093 |
| $ | 30,460,131 |
| $ | 27,006,249 |
| $ | 17,413,749 |
| $ | 14,064,912 |
|
SEE NOTES TO FINANCIAL STATEMENTS
53
FINANCIAL HIGHLIGHTS
DOMINI SOCIAL EQUITY TRUST |
|
| SIX MONTHS |
| YEAR ENDED JULY 31, |
| ||||||||||||||
|
|
| 2007 |
| 2006 |
| 2005 |
| 2004 |
| 2003 |
| |||||||
Net assets (in millions) |
| $ | 1,093 |
| $ | 1,296 |
| $ | 1,408 |
| $ | 1,612 |
| $ | 1,527 |
| $ | 1,318 |
|
Total return |
|
| (8.05 | )% |
| 16.00 | % |
| 1.46 | % |
| 11.48 | % |
| 12.01 | % |
| 12.13 | % |
Ratio of net investment income (loss) to average net assets (annualized) |
|
| 1.65 | % |
| 1.44 | % |
| 1.48 | % |
| 1.92 | % |
| 1.25 | % |
| 1.32 | % |
Ratio of expenses to average net assets (annualized) |
|
| 0.32 | %(1) |
| 0.30 | %(1)(2) |
| 0.22 | %(2) |
| 0.23 | %(2) |
| 0.24 | %(2) |
| 0.23 | %(1)(2) |
Portfolio turnover rate |
|
| 37 | % |
| 126 | % |
| 12 | % |
| 9 | % |
| 8 | % |
| 8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Reflects an expense reimbursement and fee waiver by the Manager of 0.01% for the six months ended January 31, 2008, 0.01% for the year ended July 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 0.33% for the six months ended January 31, 2008, 0.31% for the year ended July 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 0.29%, 0.21%, 0.22%, 0.24%, and 0.23% for the years ended July 31, 2007, 2006, 2005, 2004, and 2003, respectively. |
DOMINI EUROPEAN SOCIAL EQUITY TRUST |
|
| SIX MONTHS |
| YEAR ENDED |
| FOR THE PERIOD |
| |||
Net assets (in millions) |
| $ | 111 |
| $ | 134 |
| $ | 56 |
|
Total return |
|
| (13.21 | )% |
| 27.45 | % |
| 25.96 | %* |
Ratio of net investment income (loss) to average net assets (annualized) |
|
| 2.51 | % |
| 3.75 | % |
| 3.92 | % |
Ratio of expenses to average net assets (annualized) |
|
| 1.28 | % |
| 0.88 | %(1)(2) |
| 0.88 | %(1)(2) |
Portfolio turnover rate |
|
| 45 | % |
| 88 | % |
| 69 | %* |
|
|
|
|
|
|
|
|
|
|
|
* | Not Annualized |
(1) | Reflects a fee waiver by the Manager of 0.07% for the year ended July 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 0.96% for the year ended July 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 0.83% for the year ended July 31, 2007, and 0.77% for the period ended July 31, 2006. |
SEE NOTES TO FINANCIAL STATEMENTS
54
FINANCIAL HIGHLIGHTS
DOMINI PACASIA SOCIAL EQUITY TRUST |
|
| SIX MONTHS |
| FOR THE PERIOD |
| ||
Net assets (in millions) |
| $ | 30 |
| $ | 27 |
|
Total return |
|
| (8.16 | )% |
| 7.14 | %* |
Ratio of net investment income (loss) to average net assets (annualized) |
|
| 1.84 | % |
| 1.30 | % |
Ratio of expenses to average net assets (annualized) |
|
| 0.79 | %(1) |
| 0.89 | %(1)(2) |
Portfolio turnover rate |
|
| 45 | % |
| 41 | %* |
|
|
|
|
|
|
|
|
* | Not Annualized |
(1) | Reflects an expense reimbursement and fee waiver by the Manager of 0.54% for the six months ended January 31, 2008, and 1.19% for the period ended July 31, 2007. Had the Manager not waived its fee and reimbursed expenses, the ratio of expenses to average net assets would have been 1.33% for the six months ended January 31, 2008, and 2.08% for the period ended July 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 0.77% for the period ended July 31, 2007. |
DOMINI EUROPEAN PACASIA SOCIAL EQUITY TRUST |
|
| SIX MONTHS |
| FOR THE PERIOD |
| ||
Net assets (in millions) |
| $ | 17 |
| $ | 14 |
|
Total return |
|
| (10.00 | )% |
| 4.38 | %* |
Ratio of net investment income (loss) to average net assets (annualized) |
|
| 2.78 | % |
| 4.82 | % |
Ratio of expenses to average net assets (annualized) |
|
| 0.78 | %(1) |
| 0.86 | %(1)(2) |
Portfolio turnover rate |
|
| 40 | % |
| 46 | %* |
|
|
|
|
|
|
|
|
* | Not Annualized |
(1) | Reflects an expense reimbursement and fee waiver by the Manager of 0.99% for the six months ended January 31, 2008, and 2.96% for the period ended July 31, 2007. Had the Manager not waived its fee and reimbursed expenses, the ratio of expenses to average net assets would have been 1.77% for the six months ended January 31, 2008, and 3.82% for the period ended July 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 0.77% for the period ended July 31, 2007. |
SEE NOTES TO FINANCIAL STATEMENTS
55
DOMINI SOCIAL EQUITY TRUST
DOMINI EUROPEAN SOCIAL EQUITY TRUST
DOMINI PACASIA SOCIAL EQUITY TRUST
DOMINI EUROPEAN PACASIA SOCIAL EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2008 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Domini Social Trust 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 European PacAsia Social Equity Trust (formerly Domini EuroPacific Social Equity Trust) (each a “Trust” and collectively the “Trusts”). The Declaration of Trust permits the Trustees to issue an unlimited number of beneficial interests in the Trusts. Each Trust seeks to provide its shareholders with long-term total return.
The Domini Social Equity Trust was designated as a series of the Domini Social Trust on June 7, 1989, and began investment operations on June 3, 1991. The Trust invests primarily in stocks of U.S. companies that meet Domini’s social and environmental standards.
The Domini European Social Equity Trust was designated as a series of the Domini Social Trust on August 1, 2005, and commenced investment operations on October 3, 2005. The Trust invests primarily in stocks of European companies that meet Domini’s social and environmental standards.
The Domini PacAsia Social Equity Trust was designated as a series of the Domini Social Trust on August 1, 2006, and commenced investment operations on December 27, 2006. The Trust invests primarily in stocks of Asia-Pacific companies that meet Domini’s social and environmental standards.
The Domini European PacAsia Social Equity Trust (formerly Domini EuroPacific Social Equity Trust) was designated as a series of the Domini Social Trust on August 1, 2006, and commenced investment operations on December 27, 2006. The Trust invests primarily in stocks of European and Asia-Pacific companies that meet Domini’s social and environmental standards.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates
56
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 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 that 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) Repurchase Agreements. The Trusts may enter into repurchase agreements with selected banks or broker-dealers. Each repurchase agreement is recorded at cost, which approximates fair value. The Trusts require that collateralrepresented by securities (primarily U.S. government agency securities), in a repurchase transaction be maintained in a segregated account with a custodian bank in a manner sufficient to enable each Trust to obtain those securities in the event of a default of the counterparty. In the event of default or bankruptcy by another party to the repurchase agreement, retention of the collateral may be subject to legal proceedings.
(C) 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. Occasionallyevents 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.
| Notes to Financial Statements |
57 |
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.
(D) 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.
(E) 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. Interest income is recorded on an accrual basis. Dividend income, net of any applicable withholding tax, is recorded on the ex-dividend date or for certain foreign securities, when the information becomes available to the Trusts.
(F) 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.
58 |
Notes to Financial Statements |
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:
| 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 European PacAsia Social Equity Trust |
| 0.65% of net assets managed in excess of $500 million |
For the six months ended January 31, 2008, Domini voluntarily waived fees and reimbursed expenses as follows:
|
| FEES |
| EXPENSES |
| ||
|
| — |
|
| — |
| |
|
|
|
|
|
|
| |
Domini Social Equity Trust |
| $ | 34,734 |
|
| — |
|
Domini European Social Equity Trust |
|
| — |
|
| — |
|
Domini PacAsia Social Equity Trust |
| $ | 81,608 |
|
| — |
|
Domini European PacAsia Social Equity Trust |
| $ | 62,072 |
| $ | 19,877 |
|
(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 six months ended January 31, 2008, 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 |
| $ | 452,489,335 |
| $ | 549,697,354 |
|
Domini European Social Equity Trust |
|
| 57,048,638 |
|
| 61,598,515 |
|
Domini PacAsia Social Equity Trust |
|
| 19,825,513 |
|
| 13,442,703 |
|
Domini European PacAsia Social Equity Trust |
|
| 11,641,698 |
|
| 6,539,609 |
|
| Notes to Financial Statements |
59 |
4. OTHER ACCOUNTING PRONOUNCEMENTS
On September 15, 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), “Fair Value Measurements.” The new accounting statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). SFAS No. 157 also stipulates that, as a market-based measurement, fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability, and establishes a fair value hierarchy that distinguishes between (a) market participant assumpti ons developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (b) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. As of January 31, 2008, management of the Trusts is currently assessing the impact, if any, that will result from adopting SFAS No. 157.
60 |
Notes to Financial Statements |
THIS PAGE INTENTIONALLY LEFT BLANK
61
DOMINI SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN PACASIA SOCIAL EQUITY PORTFOLIO
STATEMENTS OF ASSETS AND LIABILITIES
JANUARY 31, 2008 (UNAUDITED)
|
|
ASSETS: |
|
Investment in Trust, at value |
|
Receivable for capital shares |
|
Total assets |
|
LIABILITIES: |
|
Payable for capital shares |
|
Sponsorship/Management 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 |
|
* | Redemption price is equal to net asset value less any applicable redemption fees retained by the Fund. |
62
|
| Domini Social |
| Domini European |
| Domini PacAsia |
| Domini European |
| ||||
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Trust, at value |
| $ | 1,633,400 |
| $ | 4,679,810 |
| $ | 1,097,407 |
| $ | 861,710 |
|
Receivable for capital shares |
|
| 83,973 |
|
| 6,950 |
|
| 2,735 |
|
| 24,559 |
|
Total assets |
|
| 1,717,373 |
|
| 4,686,760 |
|
| 1,100,142 |
|
| 886,269 |
|
LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable for capital shares |
|
| — |
|
| 14,130 |
|
| 10,000 |
|
| 4,380 |
|
Sponsorship/Management fee payable |
|
| 625 |
|
| 1,027 |
|
| 231 |
|
| 188 |
|
Other accrued expenses |
|
| 556 |
|
| 1,227 |
|
| 482 |
|
| 425 |
|
Total liabilities |
|
| 1,181 |
|
| 16,384 |
|
| 10,713 |
|
| 4,993 |
|
NET ASSETS |
| $ | 1,716,192 |
| $ | 4,670,376 |
| $ | 1,089,429 |
| $ | 881,276 |
|
NET ASSETS CONSIST OF: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in capital |
| $ | 2,013,709 |
| $ | 5,089,968 |
| $ | 1,184,594 |
| $ | 1,019,933 |
|
Undistributed net investment income (loss) |
|
| 712 |
|
| (10,682 | ) |
| (9,774 | ) |
| (3,286 | ) |
Accumulated net realized gain (loss) from Portfolio |
|
| 153,707 |
|
| 3,958 |
|
| (2,172 | ) |
| (27,340 | ) |
Net unrealized appreciation (depreciation) from Portfolio |
|
| (451,936 | ) |
| (412,868 | ) |
| (83,219 | ) |
| (108,031 | ) |
NET ASSETS |
| $ | 1,716,192 |
| $ | 4,670,376 |
| $ | 1,089,429 |
| $ | 881,276 |
|
NET ASSET VALUE PER SHARE* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets |
| $ | 1,716,192 |
| $ | 4,670,376 |
| $ | 1,089,429 |
| $ | 881,276 |
|
Outstanding shares of beneficial interest |
|
| 170,305 |
|
| 402,128 |
|
| 114,203 |
|
| 94,918 |
|
Net asset value per share |
| $ | 10.08 |
| $ | 11.61 |
| $ | 9.54 |
| $ | 9.28 |
|
MAXIMUM OFFERING PRICE PER SHARE |
| $ | 10.58 |
| $ | 12.19 |
| $ | 10.02 |
| $ | 9.74 |
|
SEE NOTES TO FINANCIAL STATEMENTS
63
DOMINI SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN PACASIA SOCIAL EQUITY PORTFOLIO
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 2008 (UNAUDITED)
INCOME: |
|
Investment income from Trust (net of foreign taxes $0, $2,612, $1,369, and $453, respectively) |
|
Expenses from Trust |
|
Net investment income from Trust |
|
EXPENSES: |
|
Sponsor/Management fee |
|
Distribution fees |
|
Registration Fees |
|
Professional fees |
|
Accounting fees |
|
Printing |
|
Miscellaneous |
|
Transfer agent fees |
|
Trustees fees |
|
Total expenses |
|
Fees waived and expenses reimbursed |
|
Net expenses |
|
NET INVESTMENT INCOME |
|
REALIZED AND UNREALIZED GAIN (LOSS) FROM TRUST: |
|
NET REALIZED GAIN (LOSS) FROM TRUST: |
|
Investments |
|
Foreign Currency |
|
Net realized gain (loss) |
|
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) FROM TRUST: |
|
Investments |
|
Translation of assets and liabilities in foreign currencies |
|
Net change in unrealized appreciation (depreciation) |
|
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM TRUST |
|
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
|
64
|
| Domini Social Equity Portfolio |
| Domini European Social Equity Portfolio |
| Domini PacAsia Social Equity Portfolio |
| Domini European PacAsia Social Equity Portfolio |
| ||||
INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income from Trust (net of foreign taxes $0, $2,612, $1,369, and $453, respectively) |
| $ | 34,632 |
| $ | 104,677 |
| $ | 14,619 |
| $ | 15,768 |
|
Expenses from Trust |
|
| (6,071 | ) |
| (35,143 | ) |
| (4,496 | ) |
| (3,483 | ) |
Net investment income from Trust |
|
| 28,561 |
|
| 69,534 |
|
| 10,123 |
|
| 12,285 |
|
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sponsor/Management fee |
|
| 8,522 |
|
| 6,881 |
|
| 1,426 |
|
| 1,118 |
|
Distribution fees |
|
| 4,734 |
|
| 6,881 |
|
| 1,426 |
|
| 1,118 |
|
Registration Fees |
|
| 11,594 |
|
| 5,852 |
|
| 17,518 |
|
| 19,312 |
|
Professional fees |
|
| 24,746 |
|
| 10,108 |
|
| 10,038 |
|
| 9,587 |
|
Accounting fees |
|
| 9,386 |
|
| 9,596 |
|
| 8,407 |
|
| 9,441 |
|
Printing |
|
| 5,354 |
|
| 6,624 |
|
| 4,400 |
|
| 4,057 |
|
Miscellaneous |
|
| 2,268 |
|
| 2,042 |
|
| 1,054 |
|
| 1,552 |
|
Transfer agent fees |
|
| 2,919 |
|
| 7,158 |
|
| 2,342 |
|
| 1,562 |
|
Trustees fees |
|
| 89 |
|
| 111 |
|
| 378 |
|
| 17 |
|
Total expenses |
|
| 69,612 |
|
| 55,253 |
|
| 46,989 |
|
| 47,764 |
|
Fees waived and expenses reimbursed |
|
| (54,264 | ) |
| (47,116 | ) |
| (42,533 | ) |
| (44,232 | ) |
Net expenses |
|
| 15,348 |
|
| 8,137 |
|
| 4,456 |
|
| 3,532 |
|
NET INVESTMENT INCOME |
|
| 13,213 |
|
| 61,397 |
|
| 5,667 |
|
| 8,753 |
|
REALIZED AND UNREALIZED GAIN (LOSS) FROM TRUST: |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REALIZED GAIN (LOSS) FROM TRUST: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
| (112,503 | ) |
| 73,176 |
|
| 8,039 |
|
| (27,150 | ) |
Foreign Currency |
|
| — |
|
| (278 | ) |
| (2,128 | ) |
| (1,784 | ) |
Net realized gain (loss) |
|
| (112,503 | ) |
| 72,898 |
|
| 5,911 |
|
| (28,934 | ) |
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) FROM TRUST: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
| (249,208 | ) |
| (874,107 | ) |
| (122,287 | ) |
| (83,846 | ) |
Translation of assets and liabilities in foreign currencies |
|
| — |
|
| 765 |
|
| 13 |
|
| (3 | ) |
Net change in unrealized appreciation (depreciation) |
|
| (249,208 | ) |
| (873,342 | ) |
| (122,274 | ) |
| (83,849 | ) |
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM TRUST |
|
| (361,711 | ) |
| (800,444 | ) |
| (116,363 | ) |
| (112,783 | ) |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
| $ | (348,498 | ) | $ | (739,047 | ) | $ | (110,696 | ) | $ | (104,030 | ) |
SEE NOTES TO FINANCIAL STATEMENTS
65
DOMINI SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN PACASIA 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) |
| $ | 13,213 |
| $ | 7,378 |
|
Net realized gain (loss) from Trust |
|
| (112,503 | ) |
| 280,166 |
|
Net change in unrealized appreciation (depreciation) from Trust |
|
| (249,208 | ) |
| (204,552 | ) |
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
| (348,498 | ) |
| 82,992 |
|
DISTRIBUTIONS AND/OR DIVIDENDS: |
|
|
|
|
|
|
|
Dividends to shareholders from net investment income |
|
| (12,638 | ) |
| (7,590 | ) |
Distributions to shareholders from net realized gain |
|
| — |
|
| (3,134 | ) |
Net Decrease in Net Assets from Distributions and/or Dividends |
|
| (12,638 | ) |
| (10,724 | ) |
CAPITAL SHARE TRANSACTIONS: |
|
|
|
|
|
|
|
Proceeds from sale of shares |
|
| 5,156,057 |
|
| 1,522,510 |
|
Net asset value of shares issued in reinvestment of distributions and dividends |
|
| 11,650 |
|
| 10,589 |
|
Redemption fees |
|
| — |
|
| — |
|
Payments for shares redeemed |
|
| (5,107,387 | ) |
| (67,693 | ) |
Total Increase (Decrease) in Capital Share Transactions |
|
| 60,320 |
|
| 1,465,406 |
|
Total Increase (Decrease) in Net Assets |
|
| (300,816 | ) |
| 1,537,674 |
|
NET ASSETS: |
|
|
|
|
|
|
|
Beginning of period |
|
| 2,017,008 |
|
| 479,334 |
|
End of period |
| $ | 1,716,192 |
| $ | 2,017,008 |
|
Undistributed net investment income (loss) |
| $ | 712 |
| $ | 137 |
|
CAPITAL SHARE TRANSACTIONS IN SHARES: |
|
|
|
|
|
|
|
Sold |
|
| 447,803 |
|
| 131,697 |
|
Issued in reinvestment of distributions and/or dividends |
|
| 1,051 |
|
| 906 |
|
Redeemed |
|
| (452,264 | ) |
| (5,853 | ) |
Net Increase (Decrease) |
|
| (3,410 | ) |
| 126,750 |
|
66
|
| Domini European |
| Domini PacAsia |
| Domini European PacAsia |
| ||||||||||||
|
| SIX MONTHS |
| YEAR ENDED |
| SIX MONTHS |
| FOR THE |
| SIX MONTHS |
| FOR THE |
| ||||||
INCREASE IN NET ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FROM OPERATIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income (loss) |
| $ | 61,397 |
| $ | 125,029 |
| $ | 5,667 |
| $ | 2,008 |
| $ | 8,753 |
| $ | 11,700 |
|
Net realized gain (loss) from Trust |
|
| 72,898 |
|
| 516,623 |
|
| 5,911 |
|
| 3,889 |
|
| (28,934 | ) |
| 3,468 |
|
Net change in unrealized appreciation (depreciation) from Trust |
|
| (873,342 | ) |
| 450,105 |
|
| (122,274 | ) |
| 39,055 |
|
| (83,849 | ) |
| (24,182 | ) |
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
| (739,047 | ) |
| 1,091,757 |
|
| (110,696 | ) |
| 44,952 |
|
| (104,030 | ) |
| (9,014 | ) |
DISTRIBUTIONS AND/OR DIVIDENDS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to shareholders from net investment income |
|
| (74,289 | ) |
| (119,450 | ) |
| (14,820 | ) |
| (1,280 | ) |
| (12,109 | ) |
| (9,770 | ) |
Distributions to shareholders from net realized gain |
|
| (584,282 | ) |
| (16,505 | ) |
| (13,321 | ) |
| — |
|
| (3,734 | ) |
| — |
|
Net Decrease in Net Assets from Distributions and/or Dividends |
|
| (658,571 | ) |
| (135,955 | ) |
| (28,141 | ) |
| (1,280 | ) |
| (15,843 | ) |
| (9,770 | ) |
CAPITAL SHARE TRANSACTIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of shares |
|
| 1,349,210 |
|
| 9,187,524 |
|
| 296,014 |
|
| 1,017,482 |
|
| 254,483 |
|
| 1,069,140 |
|
Net asset value of shares issued in reinvestment of distributions and dividends |
|
| 594,631 |
|
| 121,081 |
|
| 25,618 |
|
| 650 |
|
| 12,667 |
|
| 6,156 |
|
Redemption fees |
|
| 496 |
|
| 1,049 |
|
| 36 |
|
| — |
|
| — |
|
| 5,134 |
|
Payments for shares redeemed |
|
| (1,350,970 | ) |
| (5,389,947 | ) |
| (141,776 | ) |
| (13,430 | ) |
| (70,935 | ) |
| (256,712 | ) |
Total Increase (Decrease) in Capital Share Transactions |
|
| 593,367 |
|
| 3,919,707 |
|
| 179,892 |
|
| 1,004,702 |
|
| 196,215 |
|
| 823,718 |
|
Total Increase (Decrease) in Net Assets |
|
| (804,251 | ) |
| 4,875,509 |
|
| 41,055 |
|
| 1,048,374 |
|
| 76,342 |
|
| 804,934 |
|
NET ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
| 5,474,627 |
|
| 599,118 |
|
| 1,048,374 |
|
| — |
|
| 804,934 |
|
| — |
|
End of period |
| $ | 4,670,376 |
| $ | 5,474,627 |
| $ | 1,089,429 |
| $ | 1,048,374 |
| $ | 881,276 |
| $ | 804,934 |
|
Undistributed net investment income (loss) |
| $ | (10,682 | ) | $ | 2,210 |
| $ | (9,774 | ) | $ | (621 | ) | $ | (3,286 | ) | $ | 70 |
|
CAPITAL SHARE TRANSACTIONS IN SHARES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold |
|
| 94,601 |
|
| 658,514 |
|
| 27,374 |
|
| 99,591 |
|
| 24,649 |
|
| 102,092 |
|
Issued in reinvestment of distributions and/or dividends |
|
| 44,309 |
|
| 7,889 |
|
| 2,388 |
|
| 62 |
|
| 1,197 |
|
| 572 |
|
Redeemed |
|
| (98,838 | ) |
| (353,221 | ) |
| (13,913 | ) |
| (1,299 | ) |
| (7,397 | ) |
| (26,195 | ) |
Net Increase (Decrease) |
|
| 40,072 |
|
| 313,182 |
|
| 15,849 |
|
| 98,354 |
|
| 18,449 |
|
| 76,469 |
|
SEE NOTES TO FINANCIAL STATEMENTS
67
DOMINI SOCIAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
|
| SIX MONTHS |
| YEAR |
| YEAR |
| FOR THE PERIOD |
| ||||
For a share outstanding for the period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
| $ | 11.61 |
| $ | 10.21 |
| $ | 10.27 |
| $ | 9.50 |
|
Income from investment operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income (loss) |
|
| 0.07 |
|
| 0.06 |
|
| 0.04 |
|
| 0.04 |
|
Net realized and unrealized gain (loss) on investments |
|
| (1.53 | ) |
| 1.44 |
|
| 0.02 |
|
| 0.73 |
|
Total income from investment operations |
|
| (1.46 | ) |
| 1.50 |
|
| 0.06 |
|
| 0.77 |
|
Less dividends and distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to shareholders from net investment income |
|
| (0.07 | ) |
| (0.07 | ) |
| (0.07 | ) |
| — |
|
Distributions to shareholders from net realized gain |
|
| — |
|
| (0.03 | ) |
| (0.06 | ) |
| — |
|
Total distributions |
|
| (0.07 | ) |
| (0.10 | ) |
| (0.13 | ) |
| — |
|
Redemption fee proceeds |
|
| — |
|
| — |
|
| 0.01 | ** |
| — |
|
Net asset value, end of period |
| $ | 10.08 |
| $ | 11.61 |
| $ | 10.21 |
| $ | 10.27 |
|
Total return(2) |
|
| (12.69 | )% |
| 14.69 | % |
| 0.51 | % |
| 8.11 | % |
Portfolio turnover† |
|
| 37 | % |
| 126 | % |
| 12 | % |
| 9 | % |
Ratios/supplemental data (annualized): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (in thousands) |
| $ | 1,716 |
| $ | 2,017 |
| $ | 479 |
| $ | 129 |
|
Ratio of expenses to average net assets |
|
| 1.13 | %(1) |
| 1.09 | %(1) |
| 0.95 | %(1) |
| 0.95 | %(1) |
Ratio of net investment income (loss) to average net assets |
|
| 0.70 | % |
| 0.59 | % |
| 0.74 | % |
| 0.60 | % |
† | For the Portfolio in which the Fund invests. |
** | Based on average shares outstanding. |
(1) | Reflects a waiver of fees by the Manager of the Trust, 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 4.01% for the six months ended January 31, 2008, 9.47% and 37.78% for the years ended July 31, 2007, and July 31, 2006, and 135.29% for 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
68
DOMINI EUROPEAN 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 |
| $ | 15.12 |
| $ | 12.26 |
| $ | 10.00 |
|
Income from investment operations: |
|
|
|
|
|
|
|
|
|
|
Net investment income (loss) |
|
| 0.16 |
|
| 0.42 |
|
| 0.19 |
|
Net realized and unrealized gain (loss) on investments |
|
| (1.95 | ) |
| 2.88 |
|
| 2.26 |
|
Total income from investment operations |
|
| (1.79 | ) |
| 3.30 |
|
| 2.45 |
|
Less dividends and/or distributions: |
|
|
|
|
|
|
|
|
|
|
Dividends to shareholders from net investment income |
|
| (0.19 | ) |
| (0.40 | ) |
| (0.20 | ) |
Distributions to shareholders from net realized gain |
|
| (1.53 | ) |
| (0.04 | ) |
| — |
|
Total distributions |
|
| (1.72 | ) |
| (0.44 | ) |
| (0.20 | ) |
Redemption fee proceeds |
|
| — | * |
| — | * |
| 0.01 | ** |
Net asset value, end of period |
| $ | 11.61 |
| $ | 15.12 |
| $ | 12.26 |
|
Total return(2) |
|
| (13.30 | )% |
| 26.82 | % |
| 24.76 | % |
Portfolio turnover† |
|
| 45 | % |
| 88 | % |
| 69 | % |
Ratios/supplemental data (annualized): |
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (in thousands) |
| $ | 4,670 |
| $ | 5,475 |
| $ | 559 |
|
Ratio of expenses to average net assets |
|
| 1.57 | %(1) |
| 1.58 | %(1) |
| 1.58 | %(1) |
Ratio of net investment income (loss) to average net assets |
|
| 2.23 | % |
| 2.37 | % |
| 3.98 | % |
* | Amount represents less than 0.005 per share. |
** | Based on average shares outstanding. |
† | For the Portfolio in which the Fund invests. |
(1) | Reflects a waiver of fees by the Manager of the Trust and the Manager and Distributor of the Fund. Had the Manager and the Distributor not waived their fees, the ratio of expenses to average net assets would have been 3.28% for the six months ended |
(2) | Total Return does not reflect sales commissions and is not annualized for periods less than one year. |
SEE NOTES TO FINANCIAL STATEMENTS
69
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
|
| SIX MONTHS |
| FOR THE PERIOD |
| ||
For a share outstanding for the period: |
|
|
|
|
|
|
|
Net asset value, beginning of period |
| $ | 10.66 |
| $ | 10.00 |
|
Income from investment operations: |
|
|
|
|
|
|
|
Net investment income (loss) |
|
| 0.04 |
|
| 0.02 |
|
Net realized and unrealized gain (loss) on investments |
|
| (0.93 | ) |
| 0.65 |
|
Total income from investment operations |
|
| (0.89 | ) |
| 0.67 |
|
Less dividends and/or distributions: |
|
|
|
|
|
|
|
Dividends to shareholders from net investment income |
|
| (0.12 | ) |
| (0.01 | ) |
Distributions to shareholders from net realized gain |
|
| (0.11 | ) |
| — |
|
Total distributions |
|
| (0.23 | ) |
| (0.01 | ) |
Redemption fee proceeds |
|
| — | * |
| — |
|
Net asset value, end of period |
| $ | 9.54 |
| $ | 10.66 |
|
Total return(2) |
|
| (8.54 | )% |
| 6.73 | % |
Portfolio turnover† |
|
| 45 | % |
| 41 | % |
Ratios/supplemental data (annualized): |
|
|
|
|
|
|
|
Net assets, end of period (in thousands) |
| $ | 1,089 |
| $ | 1,048 |
|
Ratio of expenses to average net assets |
|
| 1.57 | % |
| 1.56 | %(1) |
Ratio of net investment income (loss) to average net assets |
|
| 0.99 | % |
| 0.50 | % |
* | 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 Trust 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 9.56% for the six months ended January 31, 2008, and 12.80% for the period ended July 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
70
DOMINI EUROPEAN PACASIA SOCIAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
|
| SIX MONTHS ENDED |
| FOR THE PERIOD DECEMBER 27, 2006 (COMMENCEMENT OF OPERATIONS) THROUGH |
| ||
For a share outstanding for the period: |
|
|
|
|
|
|
|
Net asset value, beginning of period |
| $ | 10.53 |
| $ | 10.00 |
|
Income from investment operations: |
|
|
|
|
|
|
|
Net investment income (loss) |
|
| 0.09 |
|
| 0.20 |
|
Net realized and unrealized gain (loss) on investments |
|
| (1.17 | ) |
| 0.38 |
|
Total income from investment operations |
|
| (1.08 | ) |
| 0.58 |
|
Less dividends and/or distributions: |
|
|
|
|
|
|
|
Dividends to shareholders from net investment income |
|
| (0.13 | ) |
| (0.17 | ) |
Distributions to shareholders from net realized gain |
|
| (0.04 | ) |
| — |
|
Total distributions |
|
| (0.17 | ) |
| (0.17 | ) |
Redemption fee proceeds |
|
| — |
|
| 0.12 | ** |
Net asset value, end of period |
| $ | 9.28 |
| $ | 10.53 |
|
Total return(2) |
|
| (10.43 | )% |
| 6.99 | % |
Portfolio turnover† |
|
| 40 | % |
| 46 | % |
Ratios/supplemental data (annualized): |
|
|
|
|
|
|
|
Net assets, end of period (in thousands) |
| $ | 881 |
| $ | 805 |
|
Ratio of expenses to average net assets |
|
| 1.57 | %(1) |
| 1.55 | %(1) |
Ratio of net investment income (loss) to average net assets |
|
| 1.96 | % |
| 4.16 | % |
** | Based on average shares outstanding. |
† | For the Portfolio in which the Fund invests. |
(1) | Reflects a waiver of fees by the Manager of the Trust 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 12.45% for the six months ended January 31, 2008, and 19.25% for the period ended July 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
71
DOMINI SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN SOCIAL EQUITY PORTFOLIO
DOMINI PACASIA SOCIAL EQUITY PORTFOLIO
DOMINI EUROPEAN PACASIA SOCIAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2008 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Domini Advisor 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 European PacAsia Social Equity Portfolio (formerly 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 European PacAsia Social Equity Trust, respectively (the “Trusts”). The Trusts are diversified, open-end management investment companies having the same investment objectives as the respective Funds. The Trusts are each a series of Domini Social Trust. The values of such investments reflect the Funds’ proportionate interest in the net assets of the Trusts (approximately 0.1% of Domini Social Equity Trust, 4.2% of Domini European Social Equity Trust, 3.6% of Domini PacAsia Social Equity Trust, and 4.9% of Domini European PacAsia Social Equity Trust, respectively, at January 31, 2008). The financial statements of the Trusts 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 U.S. generally accepted accounting principles 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 Trusts is discussed in Note 1 of the Trusts’ 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 Trust expenses, on their investments in the Trusts.
72
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.
(D) Other. All net investment income and realized and unrealized gains and losses of the Trusts are allocated daily pro rata among the Funds and the other investors in the Trusts.
(E) Redemption Fees. Redemptions and exchanges of Fund shares held less than 30 days may be subject to the Funds’ redemption fee, which is 2% of the amount redeemed. Prior to November 30, 2007, the redemption fee applied to redemptions and exchanges for fund shares held less than 60 days. Such fees are retained by the Funds and are recorded as an adjustment to paid-in capital.
2. TRANSACTIONS WITH AFFILIATES
(A) Manager. The Trusts 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 Trusts’ Notes to Financial Statements, which are included elsewhere in this Report.
(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. 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 European PacAsia 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 Trusts under the Management Agreements, Domini answers questions from the general public and the media regarding the securities holdings of the Trusts. For these services and facilities,
Notes to Financial Statements 73
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 |
| 0.50% of net assets managed |
Domini Social Equity Portfolio |
| 0.45% of the first $2 billion of net assets managed, |
Domini European Social Equity Portfolio, |
| 0.25% of the first $250 million of net assets managed, |
Effective November 30, 2007, 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. Effective November 30, 2007, 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, Domini PacAsia Social Equity Portfolio and Domini European PacAsia Social Equity Portfolio 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, 2008, absent an earlier modification by the Board of Trustees, which oversees the Funds. A similar fee waiver arrangement was in effect for prior periods. For the six months ended January 31, 20 08, Domini waived fees and reimbursed expenses as follows:
|
| FEES |
| EXPENSES |
Domini Social Equity Portfolio |
| $8,522 |
| $41,008 |
Domini European Social Equity Portfolio |
| 6,881 |
| 33,354 |
Domini PacAsia Social Equity Portfolio |
| 1,426 |
| 39,681 |
Domini European PacAsia Social Equity Portfolio |
| 1,118 |
| 41,996 |
(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 (DSILD), a wholly owned subsidiary of Domini, 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 six months ended January 31, 2008, fees waived were $4,734, $6,881, $1,426 and $1,118 for the Domini Social Equity Portfolio, Domini European Social Equity Portfolio, Domini PacAsia Social Equity Portfolio, and Domini European PacAsia Social Equity Portfolio, respe ctively.
DSIL Investment Services, LLC, (DSIL) the Funds’ Distributor, has received commissions related to the sale of fund shares. For the six months ended January 31, 2008, DSIL received $3,023, $2,909, $499, and $1,096 from
74 Notes to Financial Statements
Domini Social Equity Portfolio, Domini European Social Equity Portfolio, Domini PacAsia Social Equity Portfolio, and Domini European PacAsia Social Equity Portfolio, respectively.
3. INVESTMENT TRANSACTIONS
For the six months ended January 31, 2008, additions and reductions in the Funds’ investment in the Trusts were as follows:
|
| ADDITIONS |
| REDUCTIONS |
Domini Social Equity Portfolio |
| $5,079,704 |
| $5,124,033 |
Domini European Social Equity Portfolio |
| 1,350,785 |
| 1,420,739 |
Domini PacAsia Social Equity Portfolio |
| 291,300 |
| 138,797 |
Domini European PacAsia Social Equity Portfolio |
| 229,924 |
| 73,194 |
4. OTHER ACCOUNTING PRONOUNCEMENTS
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. FIN 48 is not expected to have a material effect on the Funds’ financial statements. However, as analysis is ongoing, the conclusions regarding FIN 48 may be subject to review and adjustment.
On September 15, 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), “Fair Value Measurements.” The new accounting statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). SFAS No. 157 also stipulates that, as a market-based measurement, fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability, and establishes a fair value hierarchy that distinguishes between (a) market participant assumpti ons developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (b) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. As of January 31, 2008, management of the Fund is currently assessing the impact, if any, that will result from adopting SFAS No. 157.
| Notes to Financial Statements | 75 |
PROXY VOTING INFORMATION
The Domini Funds have established Proxy Voting Policies and Procedures that the Funds use to determine how to vote proxies relating to portfolio securities. The Domini Funds’ Proxy Voting Policies and Procedures are available, free of charge, by calling 1-800-762-6814, by visiting www.domini.com/shareholder-advocacy/Proxy-Voting/index.htm, or by visiting the EDGAR database on the Securities and Exchange Commission’s (SEC) website at http://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 http://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 http://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.
76
DOMINI FUNDS
P.O. Box 9785
Providence, RI 02940-9785
1-800-582-6757
www.domini.com
Investment Manager or Sponsor:
Domini Social Investments LLC
536 Broadway, 7th Floor
New York, NY 10012
Investment Submanager:
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:
State Street Bank and 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. Thornton, 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. Thornton 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. Thornton |
|
|
|
| Amy L. Thornton |
|
|
|
Date: April 9, 2008
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. Thornton |
|
|
|
| Amy L. Thornton |
|
|
|
Date: April 9, 2008
By: | /s/ Carole M. Laible |
|
|
|
| Carole M. Laible |
|
|
|
Date: April 9, 2008