Domini Impact International Equity Fund

As of 11/30/16. The Fund's Investor Share Class was rated against 267 and 215 U.S. domiciled Foreign Large Value funds for the last 3 and 5 years, respectively, based on risk-adjusted return. Past performance is no guarantee of future results. View more complete rating and risk information.
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Domini International Social Equity Fund SM

Fund Information

$7.37
Daily Price (NAV)
as of 11/08/2016
Symbol DOMIX
Daily NAV Change $0.00 (0.00%)

Overview

Investor Shares Overview

The Domini International Social Equity Fund helps you access a world of investment opportunity, while using your investment dollars to encourage corporate responsibility. Investments in companies across Europe, the Asia-Pacific region, and throughout the rest of the world let you take advantage of broad international diversification with the convenience of one mutual fund.

Investment Objective

The Fund seeks to provide its shareholders with long-term total return.

Investment Strategy

The Fund invests primarily in stocks of companies in Europe, the Asia-Pacific region, and throughout the rest of the world that meet Domini Social Investments’ social and environmental standards.

Subject to these standards, Wellington Management Company, LLP, the Fund’s subadvisor, seeks to add value using a diversified quantitative stock selection approach, while managing risk through portfolio construction.  

Management

Investment Advisor and Sponsor: Domini Social Investments LLC.

Subadvisor: Wellington Management Company, LLP.

Shareholder Activism

The Fund seeks to use its position as a shareholder to raise issues of social and environmental performance with corporate management.

Social and Environmental Standards

Domini evaluates the Fund’s potential investments against its social and environmental standards based on the businesses in which they engage, as well as on the quality of their relations with key stakeholders, including communities, customers, ecosystems, employees, investors, and suppliers.

Domini may determine that a security is eligible for investment even if a corporation’s profile reflects a mixture of positive and negative social and environmental characteristics.

Investor Profile

Who Should Invest:

  • Investors seeking long-term growth of capital.
  • Investors committed to the Fund’s socially responsible investment standards.

Who Should Not Invest:

  • Investors unwilling or unable to accept moderate to significant fluctuations in share price.

Performance

Investor Shares Performance

Month-End Returns as of 10/31/16
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (12/27/06)*
DOMIX3.36%-1.26%1.30%8.00%NA0.58%
MSCI EAFE0.12%-2.74%-0.86%5.48%NA1.20%
Quarter-End Returns as of 9/30/16
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (12/27/06)*
DOMIX4.05%6.47%2.81%10.18%NA0.65%
MSCI EAFE2.20%7.06%0.93%7.88%NA1.42%

Calendar Year Returns
DOMIXMSCI EAFE
20151.76%-0.39%
2014-3.27%-4.48%
201325.77%23.29%
201222.53%17.90%
2011-13.45%-11.73%
201011.25%8.21%
200928.68%32.45%
2008-46.65%-43.06%
20072.22%11.62%

Quarterly Returns
DOMIXMSCI EAFE
3rd Qtr 20166.52%6.50%
2nd Qtr 2016-3.51%-1.19%
1st Qtr 20161.24%-2.88%
4th Qtr 20152.33%4.75%
3rd Qtr 2015-7.59%-10.19%
2nd Qtr 20151.68%0.84%
1st Qtr 20155.83%5.00%
4th Qtr 2014-1.46%-3.53%
3rd Qtr 2014-4.76%-5.83%
2nd Qtr 20142.69%4.34%
1st Qtr 20140.37%0.77%
4th Qtr 20136.11%5.75%
3rd Qtr 201311.29% 11.61%
2nd Qtr 2013-0.86% -0.73%
1st Qtr 20137.42%5.23%

*Average annual total returns.

Annual Expense Ratio: Gross: 1.59% / Net: 1.59%. Per current prospectus. Domini has contractually agreed to cap Investor share expenses to not exceed 1.60% until 11/30/16, subject to earlier modification by the Fund’s Board of Trustees. See prospectus for details. The Funds’ performance would have been lower had these fees not been waived.

Holdings


Ten Largest Holdings as of 9/30/16
COMPANY% OF PORTFOLIO
Nissan Motor Co. Ltd.2.3%
Vodafone Group plc2.0%
Central Japan Railway Co.2.0%
Allianz SE1.9%
ING Groep NV1.8%
Vestas Wind Systems A/S1.8%
Norsk Hydro ASA1.8%
Kingfisher plc1.7%
Orange1.7%
Compass Group plc1.7%
TOTAL18.8%

Sector Weightings as of 9/30/16
SECTOR% OF PORTFOLIO
Financials17.1%
Industrials15.6%
Consumer Discretionary14.4%
Consumer Staples10.4%
Health Care9.5%
Real Estate8.8%
Information Technology7.9%
Materials6.3%
Telecommunication Services6.2%
Energy2.5%
Utilities1.3%
Total100.0%
Country Diversification as of 9/30/16
COUNTRY% OF PORTFOLIO
Japan21.6%
United Kingdom14.8%
France12.3%
Germany7.5%
Australia6.9%
Switzerland6.4%
Netherlands5.2%
Sweden4.1%
Denmark2.5%
Hong Kong2.5%
Norway2.3%
South Korea1.8%
Brazil1.7%
Taiwan1.5%
Spain1.4%
Other7.4%
Total100.0%

View the most recent quarterly holdings report filed with the Securities and Exchange Commission.

 

Characteristics

Portfolio Overview

Socially screened, mid- to large-capitalization international equity fund.

 

Investment Style:

Blend

Weighted Average Market Capitalization:

Large

Portfolio Statistics

  DOMIX MSCI EAFE*
Price-to-Earnings Ratio (projected) 12.7 13.6
Price-to-Book Ratio 1.2 1.5
Beta (projected) 1.02 --
R-squared (projected) 0.98 --
Total Number of Holdings 165 --

All data as of 9/30/16.

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

Definitions:

The Price/Earnings Ratio is a stock’s current price divided by the company’s trailing 12-month earnings per share. The Price/Book Ratio is used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share. The P/E and P/B ratio of a fund is the weighted average of the price/earnings and price/book ratios of the underlying stocks in a fund’s portfolio. 

R-squared measures how a fund’s performance correlates with a benchmark index’s performance and shows what portion of it can be explained by the performance of the overall market/index. R-squared ranges from  0, meaning no correlation, to 1, meaning perfect correlation.

Beta is a measure of the volatility of a fund relative to its benchmark index. A beta greater (less) than 1 is more (less) volatile than the index.

Commentary

Investor Shares Performance Commentary

The Fund invests primarily in mid- to large-cap equities across Europe, the Asia-Pacific region, and throughout the rest of the world. It is managed through a two-step process designed to capitalize on the strengths of Domini Impact Investments and Wellington Management Company, the Fund’s subadvisor. Domini creates an approved list of companies based on its social, environmental and governance analysis, and Wellington seeks to add value and manage risk through a systematic and disciplined portfolio construction process. Download Commentary as a PDF.

Total Returns as of December 31, 2016

  Oct
2016
Nov
2016
Dec
2016
4th Qtr
2016
YTD One
Year
Three
Year1
Five
Year1

Ten
Year1

Since Inception
(12/27/06)1
DOMIX -0.66% -3.21% 3.01% -0.96% 3.05% 3.05% 0.48% 9.34% 0.55% 0.54%
MSCI EAFE 5.08% 0.08% 1.27% 6.50% 2.20% 7.06% 0.93% 7.88% 1.22% 1.32%

Market Overview

For the fourth quarter of 2016, international equities posted modest losses in U.S. dollar terms, with the MSCI EAFE Index down 0.7%. Returns were hindered by a sharp rise in the dollar against most other currencies following the unexpected U.S. election results. The Japanese yen was one of the largest decliners, down 13.2% as the yield spread between U.S. and Japanese bonds widened; the Bank of Japan (BOJ) is seeking to keep rates flat at about zero, while U.S. Treasury rates are on the rise. Emerging market currencies also declined significantly against the dollar on concerns about potential U.S. trade protectionism under the incoming administration. The Federal Reserve Bank’s more aggressive rate-hike rhetoric at its December meeting further fueled the dollar’s rise.
 
In their local markets, international equity returns looked more encouraging. Taking currency movements out of the equation, the MSCI EAFE would have returned 7.1% for the quarter. European equities generally posted solid returns, with investors welcoming the European Central Bank’s December announcement that it would extend its quantitative easing program, while lowering its monthly asset purchases. Eurozone consumer confidence improved to its strongest reading since April 2015, while retail sales grew at their fasted rate in two years and inflation accelerated. French stocks outperformed on news that the economy grew 0.2% in the third quarter, rebounding from a 0.1% contraction the previous quarter, and manufacturing activity continued to increase. Stocks also performed well in Germany, where business confidence and factory orders grew, driven by a rebound in domestic demand. In October, a slower pace of growth in UK home prices added to growing concerns that the housing market is slowing in the wake of the “Brexit” referendum.
 
Stocks rallied in the Asia-Pacific region, particularly in Japan thanks to support from the weaker yen and the BOJ’s continued accommodative monetary policy stance. Australian equities also gained on the prospects for reflation, shrugging off a contraction in third-quarter real GDP growth. Stocks in Hong Kong fell amid a continuing decline in retail sales, with sentiment further impacted by rising U.S. interest rates and concerns over capital controls in China.
 
Performance was generally worse in emerging markets, as U.S. trade protectionism fears and the prospect of tighter U.S. dollar-liquidity dampened sentiment. China was particularly hard hit, with export-dependent sectors faring the worst.
 

Fund Performance

For the quarter, the Fund’s Investor shares declined 0.96%, underperforming the MSCI EAFE Index, which declined 0.68%. Security selection made an overall positive contribution to relative performance, with strong selection in the consumer staples, materials, real estate and information technology sectors compensating for weaker selection in the consumer discretionary and energy sectors. Sector allocation made a modestly negative contribution to relative returns. The Fund benefitted from its underweight to consumer staples, healthcare and utilities, but this was offset by its exposure to other sectors, primarily its underweight to energy and overweight to real estate.
 
Security selection was particularly strong in France and Japan. In Europe, poor selection in the UK and Germany was more than offset by stronger selection in France, the Netherlands, Switzerland and Norway. The Fund’s out-of-benchmark emerging-market positions were an overall detriment to relative performance, particularly due to weak performance in Turkey and China.
 
The top contributor to relative performance was Norwegian aluminum and hydroelectric power company Norsk Hydro, which returned 11.3% after reporting strong third-quarter results driven by higher aluminum prices, which offset seasonal weakness and currency headwinds, and higher-than-expected production and cost improvements in bauxite and alumina. The company stated that it expects global aluminum demand growth to land in the higher end of its forecasted range due to strong demand in China.
 
Other top contributors included banking and financial services group ING, the largest Dutch lender, which rose 14.2% after reporting better-than-expected earnings growth for the third quarter, driven by investment gains, increasing deposits, and progress on cost savings. French-Italian electronics and semiconductor manufacturer STMicroelectronics gained more than 35%, as strong third-quarter results and fourth-quarter outlook demonstrated continued progress on sales growth and margin improvement. The company states it is benefitting from strong demand in the smartphone market and increasing use of chips in sensors in everything from connected cars to smart lighting fixtures. French insurance firm AXA also made a strong positive contribution, returning 8.5% during the period it was held by the Fund. AXA expects increasing U.S. long-term interest rates and the stronger U.S. dollar to benefit its balance sheet and earnings over the next year.
 
The Fund also benefitted from not owning benchmark-holding Nestlé, the Swiss food and beverage company, which declined 9.0% amid slowing revenue growth due to weakness in emerging markets and deflation in Europe. Nestlé is not approved for investment by the Domini Funds primarily due to its leading role in the infant formula and bottled water industries, and related concerns.
 
The largest detractor from relative performance was Danish wind-turbine manufacturer Vestas Wind Systems, which declined 20.9%. Despite reporting solid third-quarter results, management announced that it expects lower activity in fiscal-year 2017 in the U.S., where election results added to worries around potential negative changes to wind-power regulations.
 
A number of other large detractors came from the UK, where investor sentiment remains more subdued following the EU “Brexit” referendum. Despite reporting solid third-quarter sales, with strength in the UK and Poland offsetting weakness in France, home-improvement retailer Kingfisher declined 10.9% for the quarter. UK-based telecommunications group Vodafone declined 12.5% after announcing that it was taking a significant write-down on the value of its Indian unit. A recent mobile startup launched by India’s richest man, Mukesh Ambani, has upended the Indian telecommunications market with a free voice and data promotion that has created much uncertainty and forced Vodafone to delay plans for an initial public offering that would spin the unit off.
 
Japanese mobile app developer COLOPL, a non-benchmark holding, was another significant detractor, declining 44.8%. The company is forecasting a significant profit decline for the fiscal year, with sales for existing apps expected to gradually drop off while the company pivots its focus to the budding virtual-reality (VR) market.
 
The Fund’s relative performance was also dampened by not owning Anglo-Dutch multinational oil and gas company Royal Dutch Shell, a benchmark holding that gained 13.8% for the quarter.

Making a Difference

Domini engages in direct dialogue with corporations in our portfolios on a broad range of social, environmental, and corporate governance issues. Shareholder activism — the practice of active ownership — lies at the heart of what we believe responsible investing is all about. Here are a few ways your investment in the Domini Funds has made a difference. For more stories, click here.

Protecting Freedom of Expression and Privacy on the Internet

Internet and telecommunications companies receive thousands of requests per year from governments around the world to censor content or divulge information about their users. Many of these requests violate international human rights principles. For the past ten years, Domini has helped to build the Global Network Initiative (GNI), an organization focused on protecting freedom of expression and privacy from improper government intrusion.

Addressing Corporate Tax Avoidance

Corporate tax avoidance has been an important component of our engagement and policy work for several years.  The United Nations’ backed Principles for Responsible Investment is a global network of investors responsible for $60 trillion in assets.  After expressions of interest from a significant number of its members, PRI established a Taskforce on Tax, including Domini, to develop guidance to help investors engage with corporations on global tax strategies.  

Our Position on Fossil Fuel Owners and Producers

For many years, Domini has incorporated concerns about the environmental risks of companies owning and producing fossil fuels into our investment standards. Over time, we have gradually eliminated an increasing number of these firms from our holdings as our concerns about a variety of environmental and safety issues, including climate change, have increased.

United Nations Includes Corporate Sustainability Reporting in its Sustainable Development Goals

In September 2015, the United Nations’ General Assembly adopted its 2030 Agenda for Sustainable Development. In meetings with UN delegates in 2012 and 2013, we explained that the private sector and, in particular, multinational corporations, will need to play an important role if these ambitious “Sustainable Development Goals” are to be realized.