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 811-06351
Green Century Funds
114 State Street
Suite 200
Boston, MA 02109
(Address of principal executive offices)
Green Century Capital Management, Inc.
114 State Street
Suite 200
Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 482-0800
Date of fiscal year end: July 31
Date of reporting period: January 31, 2007
Item 1. Reports to Stockholders
The following is a copy of the report transmitted to shareholders pursuant to
Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
SEMI-ANNUAL REPORT
[LOGO] GREEN Green Century Balanced Fund
CENTURY Green Century Equity Fund
FUNDS January 31, 2007
An investment for your future.(R) 114 State Street, Boston, Massachusetts 02109
For information on the Green Century Funds(R), call 1-800-93-GREEN. For
information on how to open an account and account services, call 1-800-221-5519
8:00 am to 6:00 pm Eastern Time, Monday through Friday. For share price and
account information, call 1-800-221-5519, twenty-four hours a day.
- --------------------------------------------------------------------------------
Dear Green Century Funds Shareholder:
We are pleased to write you at such an exciting time in the history of the
Green Century Funds (the "Funds"). This year, the Funds celebrate their 16/th/
anniversary and have implemented a series of important changes that Green
Century Capital Management ("Green Century") believes will be positive for the
Funds' shareholders. Green Century is proud of the legacy it is building of
environmentally responsible investment vehicles and our efforts to improve
corporate environmental performance. We appreciate this opportunity to share
news from the past six months, including updates on Green Century's shareholder
advocacy program, the wider public discussion of global warming, and an
analysis of the Funds' investment performance.
The Funds' shareholders voted to approve a number of changes proposed by the
Board of Trustees over the past year and half to benefit shareholders of the
Funds. Trillium Asset Management Corporation was appointed the portfolio
manager of the Green Century Balanced Fund for its expertise in environmental
and financial research and its strong shareholder advocacy program. The
portfolio manager has developed a diverse but environmentally focused portfolio
of multi-cap stocks and bonds that does not include fossil fuel production or
refining, companies engaged in factory farming, and users of agricultural
pesticides--an excellent fit with the Funds' environmentally conscious mission.
Shareholders approved changes for the Green Century Equity Fund as well,
involving a change in management structure, which enabled the Fund to maintain
its investment objective of tracking the oldest and most well known
environmentally and socially responsible index, the Domini 400 Social/SM/ Index
(the "Index"). Green Century is proud to offer the only mutual fund based on
this legendary Index.
Finally, Green Century implemented a vote by the Board of Trustees to
decrease the expenses of both Funds by over one-third. The administrative
expenses for both Funds are now reduced so that the Balanced Fund's total
annual expenses are limited to 1.38% (down from 2.39%), a 42% reduction, and
the Equity Fund's total annual expenses are limited to 0.95% (down from 1.50%),
a 37% reduction./1/
Green Century is commencing another year of vigorous shareholder advocacy.
Targeting companies with significant potential to improve their corporate
environmental behavior, Green Century continues to focus on the issues of
wilderness preservation and biodiversity, clean air and energy, toxics and
environmental health, pure water and safe food, chemical security, and
political influence. We include improving political oversight because companies
can wield tremendous political influence which can have significant
environmental impact, but they are not required by law to disclose their
political contributions. We are pleased that Monsanto/2/, Home Depot/2/, and
American Electric Power/2 /have already agreed to our request to improve their
disclosure and oversight of political contributions, which we consider to be a
basic good business practice.
We are pleased to be witnessing wider public discussion of global warming as
domestic and international leaders gather research and begin to address the
issue. Recent reports have galvanized this effort, including the United
Nation's Intergovernmental Panel on Climate Change and the Stern Review on the
Economics of Climate Change, written by Great Britain's Sir Nicholas Stern, a
former Chief Economist of the World Bank. In the U.S., states are taking the
lead with California's legislation to cap greenhouse gas emissions and
Massachusetts' signing on to the Regional Greenhouse Gas Initiative to reduce
carbon dioxide emissions in the northeastern and mid-Atlantic states.
Individual citizens are hearing the message through popular culture and the
media as well. Al Gore's movie, "An Inconvenient Truth," outlines changes to
the environment and draws attention to the plight of our planet. Ultimately
Mr. Gore's message is optimistic and we hope that Americans begin to understand
what is at stake and act to lessen our collective impact.
The Green Century Balanced Fund seeks capital growth and income from a
diversified portfolio of stocks and bonds that meet Green Century's standards
for corporate environmental performance. The portfolio manager of the Balanced
Fund invests in companies that are in the business of solving environmental
problems or that are committed to reducing their environmental impact.
----------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL
RETURN
----------------------------------------------------------------------------
Six One Five Ten
Months Year Years Years
----------------------------------------------------------------------------
For the periods
ended December 31,
2006: Green Century Balanced Fund 8.82% 7.75% 2.90% 7.85%
Lipper Balanced Fund Index/3/ 9.14% 11.60% 6.51% 7.44%
----------------------------------------------------------------------------
For the periods
ended January 31,
2007: Green Century Balanced Fund 10.48% 8.47% 3.72% 7.72%
Lipper Balanced Fund Index/3/ 9.81% 10.17% 6.92% 7.22%
----------------------------------------------------------------------------
The performance data quoted represents past performance and is not a
guarantee of future results. Investment return and principal value of an
investment will 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 information quoted. To obtain performance
information as of the most recent month-end, call 1-800-93-GREEN. Performance
includes the reinvestment of income dividends and capital gain distributions.
Performance shown does not reflect the deduction of taxes that a shareholder
might pay on Fund distributions or the redemption of Fund shares.
The past six months have been kinder to environmentally conscious investors
than the first half of 2006. During the six months ended January 31, 2007, the
Balanced Fund's return of 10.48% outperformed the Lipper Balanced Fund Index,
in part driven by overweighting of the technology and materials sectors and the
lack of exposure to fossil fuel companies. In particular, the energy sector
eased its momentum with the oversupply of oil and unseasonably warm
temperatures for the first half of winter in late 2006. Given that many energy
sector companies have significant negative environmental impacts, the Fund was
therefore underweighted in this sector and benefited as a result.
The Fund's investment grade, intermediate duration bond holdings continue to
serve their purpose of providing asset diversification and seeking to moderate
performance volatility. Representing 30.2% of net assets as of January 31,
2007, the Balanced Fund's fixed income securities have an average credit rating
of Baa1/BBB+ (as rated by Standard & Poor's).
2
GREEN CENTURY BALANCED FUND
INVESTMENTS BY INDUSTRY
As a percentage of net assets, as of January 31, 2007
[CHART]
Diversified Financials 11.8%
Technology Hardware & Equipment 11.6%
U.S. Government Agencies 8.7%
Healthcare Equipment & Services 7.6%
Insurance 6.7%
Pharmaceuticals & Biotechnology 6.5%
Capital Goods 5.7%
Software & Services 5.3%
Materials 4.9%
Telecommunications Services 4.1%
Food & Beverage 3.7%
Transportation 3.7%
Healthy Living 3.3%
Cash Equivalents & Other Assets 3.1%
Automobiles & Components 2.6%
Banks 2.1%
Media 2.0%
Consumer Durables & Apparel 1.9%
Retailing 1.8%
Renewable Energy & Energy Efficiency 1.8%
Commercial Services & Supplies 0.8%
Consumer Services 0.3%
As of January 31, 2007, 66.7% of the Balanced Fund's net assets were
invested in stocks. The portfolio manager's asset allocation reflects its view
that stocks should outperform bonds and cash during 2007. The portfolio manager
believes that sustained economic growth with stable and lower interest rates
could benefit equities in general and some of the Fund's more heavily weighted
sectors, including information technology and financial services. The portfolio
manager expects health care stocks, in which the Balanced Fund is typically
overweighted, to be attractively valued and positioned with the potential for
better returns.
The Green Century Balanced Fund consistently includes stocks and bonds of
environmentally responsible corporations of various sizes, including small,
medium, and large companies. The value of the stocks held in the Balanced Fund
will fluctuate in response to factors that may affect a single issuer,
industry, or sector of the economy or may affect the market as a whole. Bonds
are subject to a variety of risks including interest rate, credit, and
inflation risk.
The Green Century Equity Fund invests essentially all of its assets in the
companies included in the Domini 400 Social/SM/ Index, which is comprised of
400 primarily large capitalization U.S. companies selected based on a
comprehensive set of social and environmental criteria. The Equity Fund seeks
to provide shareholders with a long-term total return that matches that of the
Index.
------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL
RETURN
------------------------------------------------------------------------
Six One Five Ten
Months Year Years Years
------------------------------------------------------------------------
For the periods
ended December 31,
2006: Green Century Equity Fund 12.76% 12.08% 4.28% 7.06%
S&P 500(R) Index/4/ 12.74% 15.80% 6.20% 8.42%
------------------------------------------------------------------------
For the periods
ended January 31,
2007: Green Century Equity Fund 14.93% 11.95% 4.77% 6.51%
S&P 500(R) Index/4/ 13.75% 14.51% 6.82% 7.92%
------------------------------------------------------------------------
The performance data quoted represents past performance and is not a
guarantee of future results. Investment return and principal value of an
investment will 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 information quoted. To obtain performance
information as of the most recent month-end, call 1-800-93-GREEN. Performance
includes the reinvestment of income dividends and capital gain distributions.
Performance shown does not reflect the deduction of taxes that a shareholder
might pay on Fund distributions or the redemption of Fund shares.
3
The Green Century Equity Fund outperformed the S&P 500(R) Index for the six
month periods ended December 31, 2006 and January 31, 2007. As of January 31,
2007, the Equity Fund's return for the period was 14.93%, while the S&P 500(R)
Index was up 13.75%. The Fund benefited from a surge in the U.S. stock market
that started during the second half of 2006 and continued into January of 2007.
A number of positive factors contributed to the market's gain during this
period including an expanding global economy, subdued inflation, stabilized
global interest rates, low unemployment and robust corporate profits. These
positive factors offset the negative effect of the correction in the housing
market and the volatility in energy prices, surprising many economists.
Most recently, the performance of the Fund in comparison to the S&P 500(R)
Index was helped by underweighting in the energy sector as oil prices declined
sharply. In addition, overweighting of the telecommunications sector boosted
relative performance of the Fund, in particular with the merger of BellSouth/2/
and AT&T/2/. Other companies contributing most to performance were JPMorgan
Chase/2/ and Verizon Communications/2/.
Conversely, overweighting of air freight transportation stocks detracted
from the Equity Fund's performance relative to the S&P 500(R) Index as these
stocks experienced a correction near the end of the period. Also hurting
relative performance were certain drug stocks that were up sharply but were
excluded from the portfolio due to the comprehensive social and environmental
screens. Other companies that most hurt the performance of the Fund were United
Parcel Service/2/, Dell/2/, and Apple/2/.
The Equity Fund, like other mutual funds invested primarily in stocks,
carries the risk of investing in the stock market. The large companies in which
the Equity Fund's portfolio is invested may perform worse than the stock market
as a whole.
GREEN CENTURY EQUITY FUND
INVESTMENTS BY INDUSTRY
As a percentage of net assets, as of January 31, 2007
[CHART]
Banks 10.0%
Technology Hardware & Equipment 8.9%
Diversified Financials 8.3%
Pharmaceuticals & Biotechnology 8.0%
Software & Services 6.9%
Telecommunications Services 6.3%
Retailing 5.5%
Healthcare Equipment & Services 5.5%
Household & Personal Products 4.7%
Food & Beverage 4.5%
Semiconductors 3.9%
Media 3.7%
Insurance 3.4%
Capital Goods 3.3%
Energy 3.2%
Transportation 2.5%
Food & Staples Retailing 2.5%
Consumer Durables & Apparel 1.9%
Materials 1.8%
Consumer Services 1.5%
Utilities 1.0%
Real Estate 0.8%
Commercial Services & Supplies 0.8%
Renewable Energy & Energy Efficiency 0.3%
Automobiles & Components 0.3%
Healthy Living 0.2%
Cash Equivalents & Other Assets 0.3%
4
In closing, Green Century appreciates your continued support of its work in
protecting the environment and seeking to build a sustainable economy, which is
only possible with the help of shareholders like you.
Respectfully yours,
Green Century Capital Management, Inc.
The Green Century Funds'
proxy voting guidelines
and a record of the
Funds' proxy votes for
the year ended June 30,
2006 are available
without charge, upon
request, (i) at
www.greencentury.com,
(ii) by calling
1-800-93-GREEN,
(iii) sending an e-mail
to
info@greencentury.com,
and (iv) on the
Securities and Exchange
Commission's website at
www.sec.gov.
The Green Century Funds
will 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
Green Century Funds'
Forms N-Q will be
available on the EDGAR
database on the SEC's
website at www.sec.gov.
These forms may also be
reviewed and copied at
the SEC's Public
Reference Room in
Washington D.C.
Information about the
operation of the Public
Reference Room may be
obtained by calling
1-800-SEC-0330. The
information on Form N-Q
may also be obtained by
calling 1-800-93-GREEN,
or by e-mailing a
request to
info@greencentury.com.
/1/ Green Century, the investment advisor and administrator for each Fund, pays
the operating expenses of the Funds (excluding interest, taxes, brokerage costs
and other capital expenses and any extraordinary expenses). For this and other
services, each Fund pays Green Century an Administrative Fee and an Advisory
Fee at rates such that the Equity Fund's total annual expenses are limited to
0.95% of the Equity Fund's average net assets and the Balanced Fund's total
annual expenses are limited to 1.38% of the Balanced Fund's average net assets.
/2/ As of January 31, 2007, neither of the Green Century Funds was invested in
Monsanto or American Electric Power. As of January 31, 2007, Home Depot
comprised 1.27%, AT&T comprised 3.60%, JPMorgan Chase comprised 2.70%, Verizon
Communications comprised 1.72%, United Parcel Service comprised 1.19%, Dell
comprised 0.84%, and Apple comprised 1.11% of the Green Century Equity Fund. As
of January 31, 2007 AT&T comprised 2.01%, JPMorgan Chase comprised 3.86%,
United Parcel Service comprised 1.37%, and Apple comprised 0.46% of the Green
Century Balanced Fund. Portfolio composition will change due to ongoing
management of the Funds. References to specific investments should not be
construed as a recommendation of the securities by the Funds, their advisor, or
their distributor.
/3/ Lipper Analytical Services, Inc. ("Lipper") is a respected mutual fund
reporting service. The Lipper Balanced Fund Index includes the 30 largest funds
whose primary objective is to conserve principal by maintaining at all times a
balanced portfolio of both stocks and bonds. Typically, the stock/bond ratio
ranges around 60%/40%.
/4/ The S&P 500(R) Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The S&P 500(R) Index
is heavily weighted toward stocks with large market capitalization and
represents approximately two-thirds of the total market value of all domestic
stocks. It is not possible to invest directly in the S&P 500(R) Index.
This material must be preceded or accompanied by a current prospectus.
Distributor: UMB Distribution Services, LLC, 3/07
5
GREEN CENTURY FUNDS EXPENSE EXAMPLE
As a shareholder of the Green Century Funds (the "Funds"), you incur two
types of costs: (1) transaction costs, including redemption fees on certain
redemptions; and (2) ongoing costs, including management fees; distribution
(12b-1) fees (for the Green Century Balanced Fund only, discontinued on
November 28, 2006); and other Fund expenses. This example is intended to help
you understand your ongoing costs (in dollars) of investing in the Funds 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 at the beginning of
the period and held for the entire period from August 1, 2006 to January 31,
2007 (the "period").
Actual Expenses.
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 equals 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During the
Period" to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes.
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Funds' actual expense
ratios and an assumed rate of return of 5% per year before expenses, which is
not the actual return of either of the Funds. The hypothetical account values
and expenses may not be used to estimate the 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 Funds and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees on shares held for 60 days or less. Therefore, the second line
of the table is useful in comparing the ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition,
if these transactional costs were included, your costs could have been higher.
BALANCED FUND EQUITY FUND
-------------------------------------- --------------------------------------
BEGINNING ENDING EXPENSES BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD ENDED VALUE VALUE THE PERIOD ENDED
AUGUST 1, JANUARY 31, JANUARY 31, AUGUST 1, JANUARY 31, JANUARY 31,
2006 2007 2007/1,2/ 2006 2007 2007/1,3/
Actual Expenses...... $1,000.00 $1,104.80 $7.99 $1,000.00 $1,143.90 $5.16
Hypothetical Example,
assuming a 5% return
before expenses..... 1,000.00 1,017.40 7.66 1,000.00 1,020.19 4.86
/1/ Expenses are equal to the Funds' annualized expense ratios (1.51% for the
Balanced Fund and 0.95% for the Equity Fund), multiplied by the average
account value over the period, multiplied by 184/365 (to reflect the one-half
year period).
/2/ Effective August 25, 2006, total expenses of the Balanced Fund were
reduced to 1.38%. If this change had been in effect throughout the period, the
actual expenses would have been $7.32 and the hypothetical expenses would have
been $7.02.
/3/ For the period August 1, 2006 through November 27, 2006, the example
reflects the expenses of both the Domini Social Equity Trust and the Equity
Fund.
6
GREEN CENTURY FUNDS FINANCIAL STATEMENTS
GREEN CENTURY BALANCED FUND
PORTFOLIO OF INVESTMENTS
January 31, 2007
(unaudited)
COMMON STOCKS -- 66.7%
SHARES VALUE
Diversified Financials -- 9.1%
American Express Company........... 10,880 $ 633,434
Bank of America Corporation........ 19,970 1,050,023
CIT Group, Inc..................... 18,015 1,062,164
Citigroup, Inc..................... 18,980 1,046,367
JPMorgan Chase & Company........... 21,820 1,111,293
------------
4,903,281
------------
Technology Hardware & Equipment -- 7.8%
Apple Computer, Inc. (b)........... 2,885 247,331
Cisco Systems, Inc. (b)............ 52,090 1,385,073
Hewlett-Packard Company............ 28,700 1,242,136
IBM Corporation.................... 11,400 1,130,310
NAM TAI Electronics, Inc. (c)...... 12,550 169,676
------------
4,174,526
------------
Insurance -- 6.7%
Ambac Financial Group, Inc......... 11,010 969,981
American International Group....... 5,000 342,250
Chubb Corporation.................. 18,670 971,587
Philadelphia Consolidated Holding
Corporation (b)................... 19,525 879,796
The Progressive Corporation........ 19,075 442,349
------------
3,605,963
------------
Pharmaceuticals & Biotechnology -- 6.5%
Amgen, Inc. (b).................... 14,250 1,002,772
Johnson & Johnson.................. 21,590 1,442,212
Novo Nordisk A/S American
Depository Receipt (c)............ 6,915 593,514
Teva Pharmaceutical Industries Ltd.
American Depository Receipt (c)... 13,135 461,039
------------
3,499,537
------------
Capital Goods -- 5.7%
3M Company......................... 11,945 887,514
Emerson Electric Company........... 28,910 1,300,083
Illinois Tool Works, Inc........... 17,590 896,914
------------
3,084,511
------------
Materials -- 4.9%
Air Products & Chemicals, Inc...... 14,000 1,045,240
SHARES VALUE
Materials -- (continued)
Cemex S.A. de C.V. American
Depository Receipt (b)(c)....... 11,800 $ 417,484
Sealed Air Corporation........... 17,560 1,157,204
------------
2,619,928
------------
Software & Services -- 4.4%
Google, Inc. (b)................. 1,580 792,054
Oracle Corporation (b)........... 66,760 1,145,602
Satyam Computer Services Ltd.
American Depository Receipt (c). 18,000 419,040
------------
2,356,696
------------
Healthcare Equipment & Services -- 4.3%
Baxter International, Inc........ 19,000 943,540
Dentsply International, Inc...... 11,400 351,576
United Health Group, Inc......... 19,310 1,009,141
------------
2,304,257
------------
Transportation -- 2.8%
FedEx Corporation................ 7,120 786,048
United Parcel Service, Inc....... 10,200 737,256
------------
1,523,304
------------
Media -- 2.0%
McGraw-Hill Companies, Inc....... 16,310 1,094,075
------------
Renewable Energy & Energy Efficiency -- 1.8%
Itron, Inc. (b).................. 3,910 225,372
Johnson Controls, Inc............ 2,650 245,019
Ormat Technologies, Inc.......... 5,000 195,950
MEMC Electronic Materials,
Inc. (b)........................ 6,400 335,360
------------
1,001,701
------------
Retailing -- 1.8%
The Men's Wearhouse, Inc......... 7,500 322,050
Staples, Inc..................... 26,010 668,977
------------
991,027
------------
Automobiles & Components -- 1.7%
Toyota Motor Corporation American
Depository Receipt (c).......... 6,960 917,189
------------
7
GREEN CENTURY BALANCED FUND
PORTFOLIO OF INVESTMENTS -- (continued)
January 31, 2007
(unaudited)
SHARES VALUE
Healthy Living -- 1.4%
United Natural Foods, Inc. (b)... 9,575 $ 316,358
Whole Foods Market, Inc.......... 9,470 409,009
------------
725,367
------------
Food & Beverage -- 1.3%
JM Smucker Company............... 14,480 687,655
------------
Banks -- 1.2%
Barclays PLC American
Depository Receipt (c).......... 5,000 294,950
TCF Financial Corporation........ 14,500 368,010
------------
662,960
------------
Telecommunication Services -- 1.2%
BT Group PLC American
Depository Receipt (c).......... 10,500 640,920
------------
Consumer Durables & Apparel -- 1.0%
Liz Claiborne, Inc............... 12,500 555,000
------------
Commercial Services & Supplies -- 0.8%
Interface, Inc. (b).............. 26,400 401,808
------------
Consumer Services -- 0.3%
Bright Horizons Family Solutions,
Inc. (b)........................ 4,520 177,048
------------
Total Common Stocks
(Cost $31,069,634).............. 35,926,753
------------
PRINCIPAL
AMOUNT
CORPORATE BONDS & NOTES -- 21.5%
Technology Hardware & Equipment -- 3.8%
IBM Corporation
6.45%, due 8/01/07.............. $ 500,000 502,552
Lexmark International, Inc.
6.75%, due 5/15/08.............. 500,000 507,931
Xerox Corporation
7.625%, due 6/15/13............. 1,000,000 1,045,000
------------
2,055,483
------------
Healthcare Equipment & Services -- 3.3%
Aetna, Inc.
5.75%, due 6/15/11.............. 595,000 603,111
HCA, Inc.
6.30%, due 10/01/12............. 1,000,000 920,000
PRINCIPAL
AMOUNT VALUE
Healthcare Equipment & Services -- (continued)
United Health Group, Inc.
4.875%, due 4/01/13........... $ 250,000 $ 242,572
------------
1,765,683
------------
Telecommunication Services -- 2.9%
AT&T Corporation
7.30%, due 11/15/11 (e)....... 1,000,000 1,081,887
BellSouth Corporation
4.75%, due 11/15/12........... 500,000 482,979
------------
1,564,866
------------
Diversified Financials -- 2.7%
Fleet National Bank
5.75%, due 1/15/09............ 500,000 504,361
JPMorgan Chase & Company
4.60%, due 1/17/11............ 500,000 486,559
JPMorgan Chase & Company
4.50%, due 1/15/12............ 500,000 480,379
------------
1,471,299
------------
Food & Beverage -- 2.4%
Dean Foods Company
8.15%, due 8/01/07............ 1,300,000 1,314,625
------------
Healthy Living -- 1.9%
NBTY, Inc.
7.125%, due 10/01/15.......... 1,000,000 1,002,500
------------
Software & Services -- 0.9%
Oracle Corporation
5.00%, due 1/15/11............ 500,000 494,271
------------
Transportation -- 0.9%
Ryder System, Inc.
4.625%, due 4/01/10........... 500,000 489,571
------------
Banks -- 0.9%
M&I Marshall & Ilsley Bank
3.95%, due 8/14/09............ 500,000 484,627
------------
Consumer Durables & Apparel -- 0.9%
Newell Rubbermaid, Inc.
4.00%, due 5/01/10............ 500,000 478,641
------------
Automobiles & Components -- 0.9%
Toyota Motor Credit Corporation
4.125%, due 7/25/17 (c)(e).... 500,000 476,851
------------
Total Corporate Bonds and Notes
(Cost $11,765,749)............ 11,598,417
------------
8
GREEN CENTURY BALANCED FUND
PORTFOLIO OF INVESTMENTS -- (concluded)
January 31, 2007
(unaudited)
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT AGENCIES -- 8.7%
Fannie Mae
5.50%, due 3/01/12............. $ 415,396 $ 414,618
Federal Home Loan Bank
4.60%, due 4/11/08............. 500,000 496,485
Federal Home Loan Bank
5.14%, due 1/13/09............. 500,000 498,136
Federal Home Loan Bank
5.40%, due 5/27/10............. 250,000 249,217
Federal Home Loan Bank
4.27%, due 7/08/15............. 500,000 466,872
Freddie Mac
5.00%, due 11/01/10............ 500,000 494,594
SLM Corporation
4.00%, due 7/25/14 (d)......... 2,235,000 2,026,363
------------
Total U.S. Government Agencies
(Cost $4,875,912).............. 4,646,285
------------
SHORT TERM OBLIGATION -- 2.8%
Repurchase Agreement -- Investors Bank &
Trust Repurchase Agreement, 3.46%, dated
01/31/07, due 02/01/07, proceeds $1,520,142
(collateralized by U.S. Treasury Bonds,
7.875%, due 02/15/2021, value at maturity
$1,546,384) (Cost $1,516,063).............. 1,516,063
------------
TOTAL INVESTMENTS (a) -- 99.7%
(Cost $49,227,358)...................... 53,687,518
Other Assets Less Liabilities -- 0.3%....... 182,967
------------
NET ASSETS -- 100.0%........................ $ 53,870,485
============
- --------
(a)The cost of investments for federal income tax purposes is $49,232,915
resulting in gross unrealized appreciation and depreciation of $5,233,738
and $779,135 respectively, or net unrealized appreciation of $4,454,603.
(b)Non-income producing security.
(c)Securities whose values are determined or significantly influenced by
trading in markets other than the United States or Canada.
(d)Floating rate bond. Rate shown is currently in effect at January 31, 2007.
(e)Step rate bond. Rate shown is currently in effect at January 31, 2007.
See Notes to Financial Statements
9
GREEN CENTURY BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2007
(unaudited)
ASSETS:
Investments, at value (cost $49,227,358)...................... $ 53,687,518
Receivables for:
Capital stock sold.......................................... 309
Interest.................................................... 207,939
Dividends................................................... 36,336
Miscellaneous receivable.................................... 1,804
------------
Total assets............................................... 53,933,906
------------
LIABILITIES:
Payable for capital stock repurchased......................... 316
Accrued expenses.............................................. 63,105
------------
Total liabilities.......................................... 63,421
------------
NET ASSETS.................................................... $ 53,870,485
============
NET ASSETS CONSIST OF:
Paid-in capital............................................... $ 62,311,376
Undistributed net investment income........................... 24,477
Accumulated net realized losses on investments................ (12,925,528)
Net unrealized appreciation on investments.................... 4,460,160
------------
NET ASSETS.................................................... $ 53,870,485
============
SHARES OUTSTANDING............................................ 3,008,772
============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 17.90
============
GREEN CENTURY BALANCED FUND
STATEMENT OF OPERATIONS
For the six months ended January 31, 2007
(unaudited)
INVESTMENT INCOME:
Interest income................................................................... $ 464,918
Dividend income (net of $856 foreign withholding taxes)........................... 253,724
----------
Total investment income........................................................ 718,642
----------
EXPENSES:
Administrative services fee....................................................... 167,884
Investment advisory fee........................................................... 189,335
Distribution fee.................................................................. 42,386
----------
Total expenses................................................................. 399,605
----------
NET INVESTMENT INCOME............................................................. 319,037
----------
NET REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains on:
Investments and foreign currency transactions................................... 1,005,773
Change in net unrealized appreciation/depreciation on:
Investments and foreign currency translations.................................... 3,911,398
----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 4,917,171
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. $5,236,208
==========
See Notes to Financial Statements
10
GREEN CENTURY BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
JANUARY 31, 2007 JULY 31, 2006
(UNAUDITED) (AUDITED)
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income.................................................................. $ 319,037 $ 83,227
Net realized gains on investments and foreign currency transactions.................... 1,005,773 5,364,850
Change in net unrealized appreciation/depreciation on investments and foreign currency
translations.......................................................................... 3,911,398 (5,934,658)
----------- ------------
Net increase (decrease) in net assets resulting from operations........................ 5,236,208 (486,581)
----------- ------------
Dividends and distributions to shareholders:
From net investment income............................................................ (292,791) (89,058)
----------- ------------
Capital share transactions:
Proceeds from sales of shares.......................................................... 2,359,022 6,174,587
Reinvestment of dividends and distributions............................................ 283,790 85,514
Payments for shares redeemed........................................................... (3,945,521) (17,904,028)
----------- ------------
Net decrease in net assets resulting from capital share transactions................... (1,302,709) (11,643,927)
----------- ------------
Total increase (decrease) in net assets.................................................. 3,640,708 (12,219,566)
NET ASSETS:
Beginning of period.................................................................... 50,229,777 62,449,343
----------- ------------
End of period.......................................................................... $53,870,485 $ 50,229,777
=========== ============
Undistributed net investment income (loss)............................................. $ 24,477 $ (1,769)
GREEN CENTURY BALANCED FUND
FINANCIAL HIGHLIGHTS
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED JULY 31,
JANUARY 31, 2007 --------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
Net Asset Value, beginning of period................... $ 16.29 $ 16.52 $ 14.11 $ 13.88 $ 10.30 $ 15.94
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income................................ 0.11 0.03 0.05 0.12 0.16 0.14
Net realized and unrealized gain (loss) on
investments......................................... 1.60 (0.23) 2.42 0.23 3.59 (5.66)
------- ------- ------- ------- ------- -------
Total increase (decrease) from investment operations... 1.71 (0.20) 2.47 0.35 3.75 (5.52)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income................. (0.10) (0.03) (0.06) (0.12) (0.17) (0.12)
Distributions from net realized gains................ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total decrease from dividends and distributions........ (0.10) (0.03) (0.06) (0.12) (0.17) (0.12)
------- ------- ------- ------- ------- -------
Net Asset Value, end of period......................... $ 17.90 $ 16.29 $ 16.52 $ 14.11 $ 13.88 $ 10.30
======= ======= ======= ======= ======= =======
Total return........................................... 10.48%(a) (1.22)% 17.41% 2.49% 36.83% (34.80)%
Ratios/Supplemental data:
Net assets, end of period (in 000's)................. $53,870 $50,230 $62,449 $50,398 $71,306 $36,225
Ratio of expenses to average net assets.............. 1.51%(b) 2.39% 2.38% 2.37% 2.44% 2.39%
Ratio of net investment income to average net assets. 1.20%(b) 0.15% 0.35% 0.71% 1.51% 0.95%
Portfolio turnover................................... 18%(a) 110% 86% 81% 94% 70%
(a)Not annualized
(b)Annualized
See Notes to Financial Statements
11
GREEN CENTURY EQUITY FUND
PORTFOLIO OF INVESTMENTS
January 31, 2007
(unaudited)
COMMON STOCKS -- 99.6%
SHARES VALUE
Banks -- 10.0%
BB&T Corporation.................. 3,300 $ 139,458
Cathay General Bancorporation..... 300 10,398
Chittenden Corporation............ 300 9,138
Comerica, Inc..................... 1,000 59,300
Fannie Mae........................ 6,000 339,180
Fifth Third Bancorp............... 3,400 135,660
First Horizon National Corporation 800 34,880
FirstFed Financial Corporation (b) 100 6,895
Freddie Mac....................... 4,200 272,706
Heartland Financial USA, Inc...... 100 2,859
KeyCorp........................... 2,500 95,425
M&T Bank Corporation.............. 500 60,655
MGIC Investment Corporation....... 500 30,860
National City Corporation......... 3,900 147,615
PNC Financial Services Group...... 1,800 132,786
Popular, Inc...................... 1,700 31,042
Regions Financial Corporation..... 4,500 163,170
Sovereign Bancorp, Inc............ 2,200 54,230
SunTrust Banks, Inc............... 2,200 182,820
Synovus Financial Corporation..... 2,000 63,860
U.S. Bancorp...................... 10,800 384,480
Wachovia Corporation.............. 11,700 661,050
Wainwright Bank Trust Company..... 50 568
Washington Mutual, Inc............ 5,800 258,622
Wells Fargo & Company............. 20,600 739,952
------------
4,017,609
------------
Technology Hardware & Equipment -- 8.9%
3Com Corporation (b).............. 2,300 8,970
Adaptec, Inc. (b)................. 700 2,520
ADC Telecommunications, Inc. (b).. 700 11,298
Andrew Corporation (b)............ 1,000 10,620
Apple, Inc. (b)................... 5,200 445,796
Arrow Electronics, Inc. (b)....... 700 24,675
CDW Corporation................... 400 25,668
Cisco Systems, Inc. (b)........... 37,100 986,489
Coherent, Inc. (b)................ 200 6,150
Dell, Inc. (b).................... 13,900 337,075
EMC Corporation (b)............... 13,400 187,466
Gerber Scientific, Inc. (b)....... 100 1,233
Hewlett-Packard Company........... 16,800 727,104
Imation Corporation............... 200 8,702
Lexmark International, Inc. (b)... 600 37,818
SHARES VALUE
Technology Hardware & Equipment -- (continued)
Merix Corporation (b)............ 100 $ 862
Molex, Inc....................... 900 26,451
Palm, Inc. (b)................... 600 8,298
Plantronics, Inc................. 300 5,910
Polycom, Inc. (b)................ 500 16,810
Qualcomm, Inc.................... 10,100 380,366
Solectron Corporation (b)........ 5,400 17,550
Sun Microsystems, Inc. (b)....... 21,300 141,432
Tektronix, Inc................... 500 14,135
Tellabs, Inc. (b)................ 2,700 27,189
Xerox Corporation (b)............ 5,900 101,480
------------
3,562,067
------------
Diversified Financials -- 8.3%
A.G. Edwards, Inc................ 500 33,105
Allied Capital Corporation....... 900 25,974
American Express Company......... 7,400 430,828
Capital One Financial Corporation 2,500 201,000
Charles Schwab Corporation....... 6,200 117,304
Chicago Mercantile Exchange...... 200 112,660
CIT Group........................ 1,200 70,752
Franklin Resources, Inc.......... 1,000 119,110
J.P. Morgan Chase & Company...... 21,200 1,079,716
Janus Capital Group, Inc......... 1,200 24,576
Medallion Financial Corporation.. 100 1,129
Mellon Financial Corporation..... 2,500 106,850
Merrill Lynch & Company, Inc..... 5,400 505,224
Moody's Corporation.............. 1,400 100,184
Northern Trust Corporation....... 1,100 66,825
SLM Corporation.................. 2,500 114,900
State Street Corporation......... 2,000 142,100
T. Rowe Price Group, Inc......... 1,600 76,784
Tradestation Group, Inc. (b)..... 200 2,552
------------
3,331,573
------------
Pharmaceuticals & Biotechnology -- 8.0%
Affymetrix, Inc. (b)............. 400 9,984
Allergan, Inc.................... 900 105,039
Amgen, Inc. (b).................. 7,100 499,627
Biogen Idec, Inc. (b)............ 2,100 101,514
Digene Corporation (b)........... 100 5,145
Dionex Corporation (b)........... 100 5,942
Forest Laboratories, Inc. (b).... 1,900 106,609
Genzyme Corporation (b).......... 1,600 105,168
12
GREEN CENTURY EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (continued)
January 31, 2007
(unaudited)
SHARES VALUE
Pharmaceuticals & Biotechnology -- (continued)
Gilead Sciences, Inc. (b)......... 2,800 $ 180,096
Invitrogen Corporation (b)........ 300 18,369
Johnson & Johnson................. 17,700 1,182,360
King Pharmaceuticals, Inc. (b).... 1,500 26,790
MedImmune, Inc. (b)............... 1,500 51,990
Merck & Co., Inc.................. 13,300 595,175
Millipore Corporation (b)......... 300 20,544
Mylan Laboratories................ 1,300 28,782
Thermo Fisher Scientific, Inc. (b) 2,500 119,625
Waters Corporation (b)............ 600 34,014
Watson Pharmaceuticals, Inc. (b).. 600 16,332
------------
3,213,105
------------
Software & Services -- 6.9%
Adobe Systems, Inc. (b)........... 3,600 139,932
Advent Software, Inc. (b)......... 100 3,575
Autodesk, Inc. (b)................ 1,400 61,208
Automatic Data Processing......... 3,400 162,248
BMC Software, Inc. (b)............ 1,300 44,707
Ceridian Corporation (b).......... 900 26,973
Compuware Corporation (b)......... 2,100 18,837
Convergys Corporation (b)......... 800 20,832
eBay, Inc. (b).................... 7,100 229,969
Electronic Arts, Inc. (b)......... 1,900 95,000
Electronic Data Systems
Corporation...................... 3,200 84,192
Microsoft Corporation............. 52,900 1,632,494
Novell, Inc. (b).................. 2,000 14,500
Paychex, Inc...................... 2,100 84,021
Red Hat, Inc. (b)................. 1,200 27,276
Salesforce.com, Inc. (b).......... 500 21,915
Sapient Corporation (b)........... 500 3,140
Symantec Corporation (b).......... 5,700 100,947
------------
2,771,766
------------
Telecommunication Services -- 6.3%
AT&T, Inc......................... 38,275 1,440,288
Citizens Communications
Company.......................... 2,000 29,320
Sprint Nextel Corporation......... 17,600 313,808
Telephone & Data Systems, Inc..... 600 33,570
Verizon Communications, Inc....... 17,900 689,508
------------
2,506,494
------------
SHARES VALUE
Retailing -- 5.5%
Autozone, Inc. (b)................ 300 $ 37,689
Bed Bath & Beyond, Inc. (b)....... 1,700 71,723
Best Buy Company, Inc............. 2,500 126,000
Charming Shoppes, Inc. (b)........ 800 10,496
Circuit City Stores, Inc.......... 900 18,369
Claire's Stores, Inc.............. 600 20,640
Dollar General.................... 1,900 32,186
Family Dollar Stores.............. 900 29,160
Foot Locker, Inc.................. 900 20,196
Gap, Inc.......................... 3,200 61,344
Genuine Parts Company............. 1,000 47,520
Home Depot, Inc................... 12,500 509,250
J.C. Penney Company, Inc ......... 1,400 113,736
Limited Brands.................... 2,100 58,674
Lowe's Companies, Inc............. 9,300 313,503
Men's Wearhouse, Inc.............. 300 12,882
Nordstrom, Inc.................... 1,400 77,994
Office Depot, Inc. (b)............ 1,700 63,563
Pep Boys -- Manny, Moe & Jack..... 300 4,593
Radioshack Corporation............ 800 17,680
Staples, Inc...................... 4,400 113,168
Target Corporation................ 5,300 325,208
Tiffany & Company................. 800 31,408
TJX Companies, Inc................ 2,800 82,796
------------
2,199,778
------------
Healthcare Equipment & Services -- 5.5%
Bausch & Lomb, Inc................ 300 16,704
Baxter International, Inc......... 4,000 198,640
Becton Dickinson & Company........ 1,500 115,410
Biomet, Inc....................... 1,500 63,540
Boston Scientific Corporation (b). 7,200 132,840
C.R. Bard, Inc.................... 600 49,512
CIGNA Corporation................. 600 79,440
Cross Country Healthcare, Inc. (b) 100 2,256
Gen-Probe, Inc. (b)............... 300 15,516
Health Management Association,
Class A.......................... 1,500 29,175
Hillenbrand Industries............ 400 22,804
Humana, Inc. (b).................. 1,000 55,500
IMS Health, Inc................... 1,200 34,632
Invacare Corporation.............. 200 4,318
Manor Care, Inc................... 500 26,620
McKesson Corporation.............. 1,800 100,350
13
GREEN CENTURY EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (continued)
January 31, 2007
(unaudited)
SHARES VALUE
Healthcare Equipment & Services -- (continued)
Medtronic, Inc..................... 7,000 $ 374,150
Molina Healthcare, Inc. (b)........ 100 3,083
Patterson Companies, Inc. (b)...... 900 33,849
Quest Diagnostics.................. 1,000 52,480
Sierra Health Services (b)......... 300 12,060
St Jude Medical, Inc. (b).......... 2,200 94,072
Stryker Corporation................ 1,800 111,492
Synovis Life Technologies, Inc. (b) 100 1,235
UnitedHealth Group, Inc............ 8,200 428,532
Zimmer Holdings, Inc. (b).......... 1,500 126,330
------------
2,184,540
------------
Household & Personal Products -- 4.7%
Alberto-Culver Company............. 500 11,435
Avon Products, Inc................. 2,700 92,853
Church & Dwight Company, Inc....... 400 18,124
Clorox Company..................... 900 58,878
Colgate-Palmolive Company.......... 3,100 211,730
Estee Lauder Companies, Inc. (The),
Class A........................... 800 38,000
Kimberly-Clark Corporation......... 2,800 194,320
Procter & Gamble Company........... 19,400 1,258,478
------------
1,883,818
------------
Food & Beverage -- 4.5%
Campbell Soup Company.............. 1,300 50,024
Chiquita Brands International...... 300 4,761
Coca-Cola Company (The)............ 12,500 598,500
Dean Foods Company (b)............. 800 35,400
General Mills, Inc................. 2,100 120,204
Green Mountain Coffee Roasters,
Inc. (b).......................... 50 2,956
H.J. Heinz Company................. 2,000 94,240
Hershey Company (The).............. 1,100 56,144
J.M. Smucker Company (The)......... 300 14,247
Kellogg Company.................... 1,500 73,905
McCormick & Company, Inc........... 800 31,232
PepsiAmericas, Inc................. 400 8,820
Pepsico, Inc....................... 10,000 652,400
Tootsie Roll Industries, Inc....... 200 6,344
Wm. Wrigley Jr. Company............ 1,300 66,976
------------
1,816,153
------------
SHARES VALUE
Semiconductors -- 3.9%
Advanced Micro Devices (b)....... 3,300 $ 51,315
Analog Devices................... 2,100 68,775
Applied Materials, Inc........... 8,500 150,705
Entegris, Inc. (b)............... 800 8,584
Intel Corporation................ 35,300 739,888
Lam Research Corporation (b)..... 900 41,229
LSI Logic Corporation (b)........ 2,400 22,560
Micron Technology, Inc. (b)...... 4,600 59,570
National Semiconductor
Corporation..................... 1,800 41,634
Novellus Systems, Inc. (b)....... 800 24,664
Texas Instruments, Inc........... 9,100 283,829
Xilinx, Inc...................... 2,100 51,030
------------
1,543,783
------------
Media -- 3.7%
Dow Jones & Company, Inc......... 400 15,084
E.W. Scripps Company (The),
Class A......................... 500 24,415
Emmis Communciations, Class A.... 200 1,728
Lee Enterprises, Inc............. 300 9,969
McClatchy Company (The).......... 200 7,736
McGraw-Hill Companies, Inc....... 2,200 147,576
Media General, Inc., Class A..... 100 4,001
Meredith Corporation............. 200 11,792
New York Times Company,
Class A......................... 900 20,781
Omnicom Group.................... 1,000 105,200
Radio One, Inc. (b).............. 50 366
Scholastic Corporation (b)....... 200 7,070
Time Warner, Inc................. 24,300 531,441
Tribune Company.................. 1,200 36,648
Univision Communications,
Class A (b)..................... 1,500 53,565
Valassis Communications, Inc. (b) 300 4,611
Walt Disney Company (The)........ 12,700 446,659
Washington Post Company,
Class B......................... 40 30,508
------------
1,459,150
------------
Insurance -- 3.4%
Aflac, Inc....................... 3,000 142,830
Ambac Financial Group, Inc....... 600 52,860
Chubb Corporation................ 2,500 130,100
Cincinnati Financial Corporation. 1,100 49,214
14
GREEN CENTURY EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (continued)
January 31, 2007
(unaudited)
SHARES VALUE
Insurance -- (continued)
Hartford Financial Services Group. 1,900 $ 180,329
Lincoln National Corporation...... 1,800 120,852
Marsh & McLennan Companies........ 3,400 100,300
MBIA, Inc......................... 800 57,464
Principal Financial Group......... 1,700 104,737
Progressive Corporation........... 4,700 108,993
Safeco Corporation................ 600 38,406
St. Paul Travelers Companies, Inc.
(The)............................ 4,200 213,570
UnumProvident Corporation......... 2,100 46,200
Wesco Financial Corporation....... 30 14,514
------------
1,360,369
------------
Capital Goods -- 3.3%
3M Company........................ 4,500 334,350
A.O. Smith Corporation............ 100 3,835
American Power Conversion......... 1,000 30,740
Apogee Enterprises, Inc........... 200 3,806
Baldor Electric................... 200 7,064
CLARCOR, Inc...................... 300 10,398
Cooper Industries, Inc., Class A.. 600 54,834
Cummins, Inc...................... 300 40,368
Deere & Company................... 1,400 140,392
Donaldson Company, Inc............ 400 14,088
Emerson Electric Company.......... 4,900 220,353
Fastenal Company.................. 800 29,824
GATX Corporation.................. 300 13,680
Graco, Inc........................ 400 16,308
Granite Construction, Inc......... 200 10,712
Hubbell, Inc., Class B............ 400 19,280
Illinois Tool Works............... 2,600 132,574
Kadant, Inc. (b).................. 100 2,735
Lawson Products, Inc.............. 50 2,220
Lincoln Electric Holdings......... 300 18,231
Masco Corporation................. 2,400 76,776
Milacron, Inc. (b)................ 300 264
Nordson Corporation............... 200 10,344
Pall Corporation.................. 700 24,332
SPX Corporation................... 400 28,076
Tennant Company................... 100 3,092
Thomas & Betts Corporation (b).... 300 14,367
Toro Company...................... 300 15,381
Trex Company, Inc. (b)............ 100 2,676
W.W Grainger, Inc................. 400 31,060
------------
1,312,160
------------
SHARES VALUE
Energy -- 3.2%
Anadarko Petroleum Corporation...... 2,800 $ 122,500
Apache Corporation.................. 2,000 145,940
Cameron International
Corporation (b).................... 700 36,750
Chesapeake Energy Corporation....... 2,500 74,025
Devon Energy Corporation............ 2,700 189,243
EOG Resources, Inc.................. 1,500 103,695
Helmerich & Payne................... 600 16,098
Kinder Morgan, Inc.................. 700 74,200
National Oilwell Varco, Inc. (b).... 1,100 66,704
Newfield Exploration Company (b).... 800 34,248
Noble Energy, Inc................... 1,100 58,751
Pioneer Natural Resources
Company............................ 800 32,800
Rowan Companies, Inc................ 700 23,023
Smith International, Inc............ 1,200 47,616
Sunoco, Inc......................... 800 50,504
Williams Companies, Inc............. 3,600 97,164
XTO Energy, Inc..................... 2,200 111,034
------------
1,284,295
------------
Transportation -- 2.5%
Alaska Air Group, Inc. (b).......... 200 8,570
AMR Corporation (b)................. 1,400 51,870
FedEx Corporation................... 1,900 209,760
JetBlue Airways (b)................. 1,100 15,048
Kansas City Southern (b)............ 500 15,030
Norfolk Southern Corporation........ 2,400 119,160
Ryder System, Inc................... 400 21,816
Southwest Airlines.................. 4,800 72,480
United Parcel Service, Inc., Class B 6,600 477,048
YRC Worldwide, Inc. (b)............. 300 13,305
------------
1,004,087
------------
Food & Staples Retailing -- 2.5%
Costco Wholesale Corporation........ 2,800 157,304
CVS Corporation..................... 5,000 168,250
Kroger Company...................... 4,400 112,640
Longs Drugstores Corporation........ 200 8,600
Safeway, Inc........................ 2,700 97,281
Supervalu, Inc...................... 1,300 49,374
Sysco Corporation................... 3,800 131,290
Walgreen Company.................... 6,100 276,330
------------
1,001,069
------------
15
GREEN CENTURY EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (continued)
January 31, 2007
(unaudited)
SHARES VALUE
Consumer Durables & Apparel -- 1.9%
American Greetings Corporation,
Class A......................... 400 $ 9,608
Black & Decker Corporation....... 400 34,912
Centex Corporation............... 700 37,583
Champion Enterprises, Inc. (b)... 500 4,105
Coach, Inc. (b).................. 2,200 100,892
D.R. Horton, Inc................. 1,700 49,402
Harman International............. 400 37,828
Hartmarx Corporation (b)......... 200 1,396
KB Home.......................... 500 27,110
Leggett & Platt, Inc............. 1,100 26,664
Liz Claiborne, Inc............... 600 26,640
Mattel, Inc...................... 2,300 56,028
Newell Rubbermaid, Inc........... 1,700 50,218
Nike, Inc., Class B.............. 1,200 118,572
Phillips-Van Heusen Corporation.. 300 16,545
Pulte Homes, Inc................. 1,300 44,642
Snap-On, Inc..................... 400 19,284
Stanley Works (The).............. 500 28,630
Stride Rite Corporation.......... 200 3,452
Timberland Company (The) (b)..... 300 9,051
Tupperware Brands Corporation.... 400 9,332
Whirlpool Corporation............ 500 45,715
------------
757,609
------------
Materials -- 1.8%
Air Products & Chemicals, Inc.... 1,300 97,058
Airgas, Inc...................... 500 20,810
Bemis Company.................... 600 20,346
Cabot Corporation................ 400 17,896
Calgon Carbon Corporation (b).... 200 1,254
Caraustar Industries, Inc. (b)... 200 1,592
Chaparral Steel Company.......... 300 15,384
Crown Holdings, Inc. (b)......... 1,000 22,070
Ecolab, Inc...................... 1,100 48,290
H.B. Fuller Company.............. 400 10,348
Lubrizol Corporation............. 400 20,608
MeadWestvaco Corporation......... 1,100 33,154
Minerals Technologies, Inc....... 100 5,807
Nucor Corporation................ 1,800 116,172
Praxair, Inc..................... 2,000 126,120
Rock-Tenn Company, Class A....... 200 6,544
Rohm And Haas Company............ 900 46,854
Schnitzer Steel Industries, Inc.,
Class A......................... 100 3,850
SHARES VALUE
Materials -- (continued)
Sealed Air Corporation....... 500 $ 32,950
Sigma-Aldrich Corporation.... 800 30,360
Sonoco Products Company...... 600 23,100
Valspar Corporation.......... 600 16,908
Wausau Paper Corporation..... 300 4,272
Wellman, Inc................. 200 570
Worthington Industries....... 400 7,672
------------
729,989
------------
Consumer Services -- 1.5%
Bright Horizons Family
Solututions (b)............. 200 7,834
Darden Restaurants, Inc...... 900 35,226
DeVry, Inc................... 400 11,264
McDonald's Corporation....... 7,600 337,060
Ruby Tuesday, Inc............ 400 11,444
Starbucks Corporation (b).... 4,600 160,724
Wendy's International, Inc... 600 20,376
------------
583,928
------------
Utilities -- 1.0%
AGL Resources, Inc........... 500 19,650
Alliant Energy Corporation... 700 25,445
Atmos Energy Corporation..... 500 15,620
Cascade Natural Gas.......... 100 2,601
Cleco Corporation............ 400 10,216
Energen Corporation.......... 400 18,512
Equitable Resources, Inc..... 700 30,275
IDACORP, Inc................. 300 11,085
KeySpan Corporation.......... 1,100 44,880
MGE Energy, Inc.............. 100 3,418
National Fuel Gas Company.... 500 20,345
Nicor, Inc................... 300 13,650
NiSource, Inc................ 1,700 40,460
Northwest Natural Gas Company 200 8,138
OGE Energy Corporation....... 600 23,232
Peoples Energy Corporation... 200 8,710
Pepco Holdings, Inc.......... 1,200 30,696
Questar Corporation.......... 500 40,600
Southern Union Company....... 700 19,467
WGL Holdings................. 300 9,489
------------
396,489
------------
16
GREEN CENTURY EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (concluded)
January 31, 2007
(unaudited)
SHARES VALUE
Real Estate -- 0.8%
Equity Office Properties Trust. 2,200 $ 122,210
General Growth Properties...... 1,500 92,280
Maguire Properties, Inc........ 200 8,690
ProLogis....................... 1,500 97,500
------------
320,680
------------
Commercial Services & Supplies -- 0.8%
Avery Dennison Corporation..... 600 41,016
Brady Corporation, Class A..... 300 11,235
Deluxe Corporation............. 300 8,976
Herman Miller, Inc............. 400 15,040
HNI Corporation................ 300 14,562
IKON Office Solutions, Inc..... 800 11,920
Interface, Inc., Class A (b)... 300 4,566
Kelly Services................. 100 3,101
Monster Worldwide, Inc. (b).... 800 39,528
Pitney Bowes, Inc.............. 1,400 67,018
R.R. Donnelley & Sons Company.. 1,300 48,230
Robert Half International, Inc. 1,000 40,700
Standard Register.............. 100 1,263
Steelcase, Inc................. 400 7,836
------------
314,991
------------
Renewable Energy & Energy Efficiency -- 0.3%
Energy Conversion Devices (b).. 200 6,890
Itron, Inc. (b)................ 200 11,528
Johnson Controls, Inc.......... 1,200 110,952
Ormat Technologies, Inc........ 50 1,960
------------
131,330
------------
Automobiles & Components -- 0.3%
Bandag, Inc.................... 100 5,095
Cooper Tire & Rubber........... 400 6,396
Harley-Davidson, Inc........... 1,600 109,232
Modine Manufacturing Company... 200 5,232
Spartan Motors, Inc............ 150 2,511
------------
128,466
------------
SHARES VALUE
Healthy Living -- 0.2%
Gaiam, Inc. (b)...................... 100 $ 1,268
Hain Celestial Group, Inc. (The) (b). 200 5,880
United Natural Foods, Inc. (b)....... 300 9,912
Whole Foods Market, Inc.............. 900 38,871
Wild Oats Markets, Inc. (b).......... 200 2,906
------------
58,837
------------
Total Securities
(Cost $38,230,679)......................... 39,874,134
------------
SHORT TERM OBLIGATION -- 0.3%
Repurchase Agreement -- Investors Bank &
Trust Repurchase Agreement, 3.50%, dated
01/31/07, due 02/01/07, proceeds $99,847.03
(collateralized by U.S. Treasury Bonds,
6.782%, due 03/01/2029, value at maturity
$104,829) (Cost $99,837)................... 99,837
------------
TOTAL INVESTMENTS -- 99.9%
(Cost $38,330,516)...................... 39,973,971
Other Assets Less Liabilities -- 0.1%....... 50,073
------------
NET ASSETS -- 100%.......................... $ 40,024,044
============
- --------
(a)The cost of investments for federal income tax purposes is $38,331,358
resulting in gross unrealized appreciation and depreciation of $2,036,776
and $394,163 respectively, or net unrealized appreciation of $1,642,613.
(b)Non-income producing security
See Notes to Financial Statements
17
GREEN CENTURY EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2007
(unaudited)
ASSETS:
Investments, at value (cost $38,330,516)...................... $39,973,971
Receivables for:
Capital stock sold........................................... 17,236
Interest..................................................... 10
Dividends.................................................... 63,666
-----------
Total assets............................................... 40,054,883
-----------
LIABILITIES:
Payable for capital stock repurchased......................... 306
Accrued expenses.............................................. 30,533
-----------
Total liabilities.......................................... 30,839
-----------
NET ASSETS.................................................... $40,024,044
===========
NET ASSETS CONSIST OF:
Paid-in capital............................................... $36,115,945
Undistributed net investment income........................... 33,373
Accumulated net realized gain on investments.................. 2,231,271
Net unrealized appreciation on investments.................... 1,643,455
-----------
NET ASSETS.................................................... $40,024,044
===========
SHARES OUTSTANDING............................................ 1,756,698
===========
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 22.78
===========
GREEN CENTURY EQUITY FUND
STATEMENT OF OPERATIONS
For the six months ended January 31, 2007
(unaudited)
INVESTMENT INCOME:
Interest income................................................... $ 12,456
Dividend income (net of $23 foreign withholding taxes)............ 122,500
Investment income from Domini Social Equity Trust ("Domini Trust") 205,796
-----------
Total investment income........................................ 340,752
-----------
EXPENSES:
Administrative services fee....................................... 134,070
Investment advisory fee........................................... 17,277
Expenses from Domini Trust........................................ 24,100
-----------
Total expenses................................................. 175,447
-----------
NET INVESTMENT INCOME............................................. 165,305
-----------
NET REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains on:
Investments...................................................... 3,312
Investments allocated from Domini Trust.......................... 298,836
Withdrawal of investment from Domini Trust....................... 9,896,339
-----------
10,198,487
Change in net unrealized appreciation/depreciation on:
Investments...................................................... 1,643,455
Investments allocated from Domini Trust.......................... (7,010,701)
-----------
(5,367,246)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 4,831,241
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. $ 4,996,546
===========
See Notes to Financial Statements
18
GREEN CENTURY EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
JANUARY 31, 2007 JULY 31, 2006
(UNAUDITED) (AUDITED)
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income........................................................... $ 165,305 $ 67,326
Net realized gains (losses) on:
Investments..................................................................... 3,312 --
Investments allocated from Domini Trust......................................... 298,836 (877,419)
Withdrawal of investment from Domini Trust...................................... 9,896,339 --
Change in net unrealized appreciation/depreciation on:
Investments..................................................................... 1,643,455 --
Investments allocated from Domini Trust......................................... (7,010,701) 884,972
----------- -----------
Net increase in net assets resulting from operations............................ 4,996,546 74,879
----------- -----------
Dividends and distributions to shareholders:
From net investment income...................................................... (173,144) (55,690)
----------- -----------
Capital share transactions:
Proceeds from sales of shares................................................... 4,242,201 2,575,101
Reinvestment of dividends and distributions..................................... 169,389 54,195
Payments for shares redeemed.................................................... (2,148,611) (5,094,268)
----------- -----------
Net increase (decrease) in net assets resulting from capital share transactions. 2,262,979 (2,464,972)
----------- -----------
Total increase (decrease) in net assets........................................... 7,086,381 (2,445,783)
NET ASSETS:
Beginning of period............................................................. 32,937,663 35,383,446
----------- -----------
End of period................................................................... $40,024,044 $32,937,663
=========== ===========
Undistributed net investment income............................................. $ 33,373 $ 41,212
See Notes to Financial Statements
19
GREEN CENTURY EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED JULY 31,
JANUARY 31, 2007 --------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
Net Asset Value, beginning of period................... $ 19.91 $ 19.91 $ 18.18 $ 16.45 $ 14.85 $ 20.84
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss)......................... 0.09 0.04 0.12 -- 0.01 (0.05)
Net realized and unrealized gain (loss) on
investments......................................... 2.88 (0.01) 1.72 1.74 1.59 (4.62)
------- ------- ------- ------- ------- -------
Total increase (decrease) from investment operations... 2.97 0.03 1.84 1.74 1.60 (4.67)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income................. (0.10) (0.03) (0.11) (0.01) -- --
Distributions from net realized gains................ -- -- -- -- -- (1.32)
------- ------- ------- ------- ------- -------
Total decrease from dividends and distributions........ (0.10) (0.03) (0.11) (0.01) -- (1.32)
------- ------- ------- ------- ------- -------
Net Asset Value, end of period......................... $ 22.78 $ 19.91 $ 19.91 $ 18.18 $ 16.45 $ 14.85
======= ======= ======= ======= ======= =======
Total return........................................... 14.93%(b) 0.16% 10.10% 10.61% 10.77% (23.67)%
Ratios/Supplemental data:
Net assets, end of period (in 000's)................. $40,024 $32,938 $35,383 $33,152 $29,347 $27,387
Ratio of expenses to average net assets.............. 0.95%(c) 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of net investment income (loss) to average net
assets.............................................. 0.90%(c) 0.20% 0.64% (0.01)% 0.05% (0.26)%
Portfolio turnover (a)............................... 2%(d) 12% 9% 8% 8% 13%
(a)Represents portfolio turnover for the Domini Social Equity Trust ("Domini
Trust") for the years ended 2006, 2005, 2004, 2003 and 2002.
(b)Not annualized.
(c)Annualized.
(d)Represents portfolio turnover for the Equity Fund from November 28, 2006 to
January 31, 2007. The portfolio turnover for the Domini Trust from August 1,
2006 to November 27, 2006 was 1%. For further information regarding the
withdrawal of the Equity Fund's investment in the Domini Trust, please see
the notes to the financial statements.
See Notes to Financial Statements
20
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
(unaudited)
NOTE 1 -- Organization and Significant Accounting Policies
Green Century Funds (the "Trust") is a Massachusetts business trust which
offers two separate series, the Green Century Balanced Fund (the "Balanced
Fund") and the Green Century Equity Fund (the "Equity Fund"), collectively, the
"Funds". The Trust is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end management investment company. The Trust
accounts separately for the assets, liabilities and operations of each series.
The Balanced Fund commenced operations on March 18, 1992 and the Equity Fund
commenced operations on September 13, 1995.
Through November 27, 2006, the Equity Fund invested substantially all of its
assets in the Domini Social Equity Trust (the "Domini Trust"), an open-end,
diversified management investment company which had the same investment
objective as the Fund. The Equity Fund accounted for its investment in the
Domini Trust as a partnership investment and recorded its share of the Domini
Trust income, expenses and realized and unrealized gains and losses daily. The
value of such investment reflected the Fund's proportionate interest in the net
assets of the Domini Trust (2.57% at November 27, 2006). Effective November 28,
2006, the Equity Fund withdrew its investment from the Domini Trust and
directly invested in the securities of the companies included in the Domini 400
Social/SM/ Index (the "Domini Index").
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. The following is a summary of the Trust's significant
accounting policies:
(A)Investment Valuation for the Balanced Fund, and effective November 28,
2006, for the Equity Fund: Equity securities listed on national
securities exchanges other than NASDAQ are valued at last sale price. If
a last sale price is not available, securities listed on national
exchanges other than NASDAQ are valued at the mean between the closing
bid and closing ask prices. NASDAQ National Market(R) and SmallCap/SM/
securities are valued at the NASDAQ Official Closing Price ("NOCP"). The
NOCP is based on the last traded price if it falls within the concurrent
best bid and ask prices and is normalized pursuant to NASDAQ's published
procedures if it falls outside this range. If an NOCP is not available
for any such security, the security is valued at the last sale price,
or, if there have been no sales that day, at the mean between the
closing bid and closing ask prices. Unlisted equity securities are
valued at last sale price, or when last sale prices are not available,
at the last quoted bid price. Debt securities (other than short-term
obligations maturing in sixty days or less) are valued on the basis of
valuations furnished by a pricing service which takes into account
appropriate factors such as institution-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, and
other market data, without exclusive reliance on quoted prices or
exchange or over-the-counter prices, since such valuations are believed
to reflect more accurately the fair value of the securities. Securities,
if any, for which there are no such valuations or quotations available,
or for which the market quotation is not reliable, are valued at fair
value by management as determined in good faith under guidelines
established by the Trustees. Short-term obligations maturing in sixty
days or less are valued at amortized cost, which approximates market
value.
21
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS -- (continued)
Investment Valuation for the Equity Fund through November 27,
2006: Through November 27, 2006, the Equity Fund recorded its
investment in the Domini Trust at fair value. The Domini Trust valued
securities listed or traded on national securities exchanges at the last
sale price or, if there were no sales that day, at the mean of the
current bid and ask price that represented the current value of the
security. Securities listed on the NASDAQ National Market System were
valued using the NASDAQ Official Closing Price ("NOCP"). If an NOCP was
not available for a security listed on the NASDAQ National Market
System, the security was valued at the last sale price or, if there were
no sales that day, at the mean of the current bid and ask price.
Portfolio securities for which market quotations were not readily
available were valued at fair value as determined in good faith under
consistently applied procedures by or at the direction of the Domini
Trust's Board of Trustees.
(B)Securities Transactions and Investment Income for the Balanced Fund, and
effective November 28, 2006, for the Equity Fund: Securities
transactions are recorded on a trade date basis. Realized gains and
losses from securities transactions are determined using the identified
cost basis. Interest income, including amortization of premiums and
accretion of discounts on bonds, is recognized on the accrual basis and
dividend income is recorded on ex-dividend date.
Securities Transactions, Investment Income and Expenses for the Equity
Fund through November 27, 2006: Through November 27, 2006, the Equity
Fund recorded daily its proportionate share of the Domini Trust's
income, expenses and realized and unrealized gains and losses. In
addition, the Fund accrues its own expenses.
(C)Options Transactions: The Balanced Fund may utilize options to hedge or
protect from adverse movements in the market values of its portfolio
securities and to enhance return. The Equity Fund may utilize options to
hedge against possible increases in the value of securities which are
expected to be purchased by the Equity Fund or possible declines in the
value of securities which are expected to be sold by the Equity Fund.
The use of options may involve risks such as the possibility of illiquid
markets or imperfect correlation between the value of the option and the
underlying securities.
The Funds may write put or call options. Premiums received upon writing
put or call options are recorded as an asset with a corresponding
liability which is subsequently adjusted to the current market value of
the option. Changes between the initial premiums received and the
current market value of the options are recorded as unrealized gains or
losses. When an option is closed, expired or exercised, a gain or loss
is realized and the liability is eliminated. The Funds continue to bear
the risk of adverse movements in the price of the underlying assets
during the period of the option, although any potential loss during the
period would be reduced by the amount of the option premium received. As
required by the Act, liquid securities are designated as collateral in
an amount equal to the market value of open options contracts.
(D)Repurchase Agreements: The Balanced Fund, and effective November 28,
2006, the Equity Fund, may enter into repurchase agreements with
selected banks or broker-dealers that are deemed by the Funds' adviser
to be creditworthy pursuant to guidelines established by the Board of
Trustees. Each repurchase agreement is recorded at cost, which
approximates fair value. The Funds require
22
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS -- (continued)
that the market value of collateral, represented by securities
(primarily U.S. Government securities), be sufficient to cover payments
of interest and principal and that the collateral be maintained in a
segregated account with a custodian bank in a manner sufficient to
enable the Funds to obtain those securities in the event of a default of
the counterparty. In the event of default or bankruptcy by the
counterparty to the repurchase agreement, retention of the collateral
may be subject to legal proceedings.
(E)Distributions: Distributions to shareholders are recorded on the
ex-dividend date. The Funds declare and pay dividends of net investment
income, if any, semi-annually and distribute net realized capital gains,
if any, annually. The amount and character of income and net realized
gains to be distributed are determined in accordance with Federal income
tax rules and regulations, which may differ from accounting principles
generally accepted in the United States of America. To the extent that
these differences are attributable to permanent book and tax accounting
differences, the components of net assets have been adjusted.
(F)Federal Taxes: Each series of the Trust is treated as a separate entity
for Federal income tax purposes. Each Fund's policy is to comply with
the provisions of the Internal Revenue Code applicable to regulated
investment companies. Accordingly, no provisions for Federal income or
excise tax are necessary.
(G)Redemption Fee: A 2.00% redemption fee is retained by the Funds to
offset the effect of transaction costs and other expenses associated
with short-term investing. The fee is imposed on redemptions or
exchanges of shares held 60 days or less from their purchase date. For
the six months ended January 31, 2007, the Balanced Fund and Equity Fund
received $143 and $342, respectively, in redemption fees. Redemption
fees are recorded as an adjustment to paid-in capital.
NOTE 2 -- Transactions With Affiliates
(A)Investment Adviser: Green Century Capital Management, Inc. ("Green
Century") is the adviser ("the Adviser") for the Balanced Fund and
effective November 28, 2006, for the Equity Fund. Green Century oversees
the portfolio management of the Funds on a day-to-day basis. For the
period August 1, 2006 through November 27, 2006, the Balanced Fund paid
Green Century a fee, accrued daily and paid monthly, at an annual rate
equal to 0.75% of the Balanced Fund's average daily net assets.
Effective November 28, 2006, the Balanced Fund pays Green Century a fee,
accrued daily and paid monthly, at an annual rate equal to 0.65% of the
Balanced Fund's average daily net assets. Effective November 28, 2006,
the Equity Fund pays Green Century a fee, accrued daily and paid
monthly, at an annual rate of 0.25% of the Equity Fund's average daily
net assets up to but not including $100 million, 0.22% of average daily
net assets including $100 million up to but not including $500 million,
0.17% of average daily net assets including $500 million up to but not
including $1 billion and 0.12% of average daily net assets equal to or
in excess of $1 billion.
(B)Subadvisers: Trillium Asset Management Corporation ("Trillium") is the
subadviser for the Balanced Fund. Trillium is paid a fee by the Adviser
at an annual rate of 0.40% on the first $30,000,000 of average daily net
assets and 0.35% on average daily net assets in excess of
23
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS -- (continued)
$30,000,000 for its services. For the six months ended January 31, 2007,
Green Century accrued fees of $100,382 to Trillium. As of November 28,
2006, Mellon Equity Associates, LLP ("Mellon") is the subadviser for the
Equity Fund. Mellon is paid a fee by the Adviser the greater of $50,000
or 0.08% of the value of the average daily net assets of the Fund up to
but not including $100 million, 0.05% of the average daily net assets of
the Fund from and including $100 million up to but not including $500
million, 0.02% of the average daily net assets of the Fund from and
including $500 million up to but not including $1 billion and 0.01% of
the average daily net assets of the Fund equal to or in excess of $1
billion for its services. For the period ended January 31, 2007, Green
Century accrued fees of $8,904 to Mellon.
(C)Administrator: Green Century is the administrator ("the Administrator")
of the Green Century Funds. Pursuant to the Administrative Services
Agreement, Green Century pays all the expenses of each Fund other than
the investment advisory fees; fees under a Distribution Plan, if any;
interest; taxes; brokerage costs and other capital expenses; expenses of
non-interested trustees (including counsel fees) and any extraordinary
expenses. For the period August 1, 2006 through August 24, 2006, for
these services Green Century received a fee from the Balanced Fund at a
rate such that immediately following any payment to the Administrator,
total operating expenses, on an annual basis, were limited to 2.50% of
the Fund's average daily net assets up to $30 million, 2.25% of the
Fund's average daily net assets from $30 million to $100 million, and
1.75% of the Fund's average daily net assets in excess of $100 million.
Effective August 25, 2006, the Balanced Fund pays Green Century a fee at
a rate such that immediately following any payment to the Administrator,
the total operating expenses of the Fund, on an annual basis, do not
exceed 1.38% of the Fund's average daily net assets. For the period
August 1, 2006 to August 2, 2006, Green Century received a fee from the
Equity Fund at a rate such that immediately following any payment to the
Administrator, the combined total operating expenses of the Fund and the
Domini Trust (including investment advisory and distribution fees), on
an annual basis, did not exceed 1.50% of the Fund's average daily net
assets. Effective August 3, 2006, the Equity Fund pays Green Century a
fee at a rate such that immediately following any payment to the
Administrator, the total operating expenses of the Fund, on an annual
basis, do not exceed 0.95% of the Fund's average daily net assets.
(D)Subadministrator: Pursuant to a Subadministrative Services Agreement
with the Administrator, UMB Fund Services, Inc. ("UMBFS") as
Subadministrator, is responsible for conducting certain day-to-day
administration of the Trust subject to the supervision and direction of
the Administrator. For the six months ended January 31, 2007, Green
Century accrued fees of $40,986 and $39,962 to UMBFS related to services
performed on behalf of the Balanced Fund and the Equity Fund,
respectively.
(E)Distribution Plan: Effective November 28, 2006 the Trust discontinued
its Distribution Plan (the "Plan") with respect to the Balanced Fund.
Prior to November 28, 2006 the Trust had adopted the Plan with respect
to the Balanced Fund in accordance with Rule 12b-1 under the Act. The
Plan provided that the Balanced Fund pay a fee to UMB Distribution
Services, LLC as distributor of shares of the Balanced Fund, at an
annual rate not to exceed 0.25% of the Balanced Fund's average daily net
assets. The fee was reimbursement for, or in anticipation of, expenses
incurred for
24
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS -- (continued)
distribution-related activities. For the period ended November 27, 2006,
the Balanced Fund accrued and paid $42,386 to UMB Distribution Services,
LLC for services provided pursuant to the Plan.
(F)Index Agreement: As of November 28, 2006, the Equity Fund directly
invests in the securities of the companies included in the Domini Index.
The Domini Index is owned and maintained by KLD Research and Analytics,
Inc. ("KLD"). For the use of the Index, KLD is paid a fee by the Adviser
the greater of $50,000 or at an annual rate of 0.10% on the first $500
million of average daily net assets, 0.075% on average daily net assets
on the next $500 million, and 0.05% on average daily net assets in
excess of $1 billion. For the period ended January 31, 2007, Green
Century accrued fees of $8,904 to KLD.
NOTE 3 -- Investment Transactions
The Balanced Fund's cost of purchases and proceeds from sales of securities,
other than short-term securities, aggregated $8,954,016 and $10,852,114,
respectively, for the six months ended January 31, 2007. For the period
August 1, 2006 to November 27, 2006, additions and reductions in the Equity
Fund's investment in the Domini Trust aggregated $2,071,094 and $38,413,415,
respectively. On November 27, 2006, the Equity Fund withdrew its investment
from the Domini Trust and realized a gain of $9,896,339. For the period
November 28, 2006 to January 31, 2007, the Equity Fund's cost of purchases and
proceeds from sales of securities, other than short-term securities, aggregated
$38,935,695 and $708,328, respectively.
NOTE 4 -- Federal Income Tax Information
The tax basis of the components of distributable net earnings (deficit) at
July 31, 2006 were as follows:
BALANCED FUND EQUITY FUND
------------- -----------
Undistributed ordinary income............................... $ -- $ 40,536
Post-October losses......................................... (1,769) (198,044)
Accumulated loss carryforwards.............................. (13,925,744) (5,173,829)
Unrealized appreciation (depreciation) on investments....... 543,205 4,415,359
------------ -----------
Distributable net deficit................................... $(13,384,308) $ (915,978)
============ ===========
The Balanced and Equity Funds have accumulated capital loss carryforwards of
$13,925,744 and $5,173,829 respectively, of which $4,555,514 and $0,
respectively, expire in the year 2010, $9,370,230 and $3,840,474, respectively,
expire in the year 2011, $0 and $394,438, respectively, expire in the year 2012
and $0 and $938,917, respectively, expire in the year 2014. To the extent that
either Fund realizes future net capital gains, those gains will be offset by
any unused capital loss carryforwards. The Balanced Fund and Equity Fund
utilized $5,369,097 and $0, respectively, of its capital loss carryforwards
during the year ended July 31, 2006.
At July 31, 2006, the Equity Fund had net realized capital losses on
transactions between November 1, 2005 and July 31, 2006 of $198,044, which for
tax purposes are deferred and will be recognized in fiscal year 2007.
The Balanced Fund had realized currency losses from transactions between
November 1, 2005 and July 31, 2006 of $1,769, which for tax purposes are
deferred and will be recognized in fiscal year 2007.
25
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS -- (concluded)
The tax character of distributions paid during the fiscal years ended July
31, 2006 and 2005 were as follows:
BALANCED FUND EQUITY FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, 2006 JULY 31, 2005 JULY 31, 2006 JULY 31, 2005
Ordinary income............... $89,058 $227,807 $55,690 $190,777
Long-term capital gains....... -- -- -- --
NOTE 5 -- Capital Share Transactions
Capital Share transactions for the Balanced Fund and the Equity Fund were as
follows:
BALANCED FUND EQUITY FUND
----------------------------- -----------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
JANUARY 31, 2007 JULY 31, 2006 JANUARY 31, 2007 JULY 31, 2006
Shares sold.............. 135,941 370,109 194,118 127,473
Reinvestment of dividends 15,909 5,172 7,544 2,690
Shares redeemed.......... (227,437) (1,071,772) (99,458) (253,007)
-------- ---------- ------- --------
(75,587) (696,491) 102,204 (122,844)
======== ========== ======= ========
NOTE 6 -- New Accounting Pronouncements
In July 2006, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes an
Interpretation of FASB Statement No. 109" (the "Interpretation"). The
Interpretation establishes for all entities, including pass-through entities
such as the Funds, a minimum threshold for financial statement recognition of
the benefit of positions taken in filing tax returns (including whether an
entity is taxable in a particular jurisdiction), and requires certain expanded
tax disclosures. The Interpretation is to be implemented no later than July 31,
2007, and is to be applied to all open tax years as of the date of
effectiveness. Management has recently begun to evaluate the application of the
Interpretation to the Funds, and is not in a position at this time to estimate
the significance of its impact, if any, on the Funds' financial statements.
In September 2006, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 157, "Fair Value Measurements." The
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles ("GAAP"), and expands disclosures
about fair value measurements. The Statement establishes a fair value hierarchy
that distinguishes between (1) market participant assumptions developed based
on market data obtained from sources independent of the reporting entity
(observable inputs) and (2) the reporting entity's own assumptions about market
participant assumptions developed based on the best information available in
the circumstances (unobservable inputs). The Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and is to be applied prospectively as of the beginning of the fiscal year in
which this Statement is initially applied. Management has recently begun to
evaluate the application of the Statement to the Funds, and is not in a
position at this time to evaluate the significance of its impact, if any, on
the Funds' financial statements.
26
BOARD OF TRUSTEES' CONSIDERATION OF ADVISORY AND SUBADVISORY AGREEMENTS
The Board of Trustees of the Green Century Funds considered and approved
three advisory and subadvisory agreements during the six months ended
January 31, 2007.
INVESTMENT ADVISORY AGREEMENTS WITH GREEN CENTURY CAPITAL MANAGEMENT, INC.
At a meeting on August 3, 2006, the Board, including the Independent
Trustees, approved an Investment Advisory Agreement between the Trust, on
behalf of the Equity Fund, and Green Century Capital Management, Inc. ("Green
Century" or the "Adviser",) effective November 28, 2006. The Board, including
the Independent Trustees, also approved the continuance of the Investment
Advisory Agreement between the Trust, on behalf of the Balanced Fund, and Green
Century at a meeting on October 20, 2006. In connection with their
deliberations at the meetings, and at separate executive sessions of the
Independent Trustees held on the same days, the Trustees considered, among
other things, information provided by Green Century regarding (1) the
investment performance of the Funds, (2) expenses of the Funds and the advisory
fee to be paid to Green Century for each Fund, and (3) the profitability to
Green Century of its proposed advisory relationships to the Funds. The
Independent Trustees were advised by independent counsel in considering these
materials and the approval and continuance of the Advisory Agreements. The
Trustees considered all the information provided to them by Green Century,
including information provided throughout the year. In approving the Advisory
Agreements, the Board, including the Independent Trustees, did not identify any
single factor as determinative. Matters considered in connection with their
approval of the Advisory Agreements included the following.
Nature, Quality, and Extent of Services Performed. The Trustees considered
the scope and quality of the services to be performed for each of the Funds by
the Adviser, including the resources to be dedicated by the Adviser. With
respect to the Equity Fund, these services included monitoring the Equity
Fund's performance and tracking error relative to the Index; implementing the
environmental policies of the Funds by voting the Equity Fund's shareholder
proxies; and overall compliance oversight to be provided by the Adviser. In
evaluating Green Century's capability to provide such services, the Trustees
took into consideration Green Century's experience and history in providing
advisory services to the Balanced Fund. The Trustees also considered the
administrative services provided by the Adviser to both Funds, including the
coordination of the activities of all the Funds' other service providers.
With respect to the Balanced Fund, the services to be performed included the
oversight and monitoring of the portfolio management and performance of the
Balanced Fund; monitoring the implementation of the Balanced Fund's
environmental screens; implementing the environmental policies of the Funds by
voting the Balanced Fund's shareholder proxies; and overall compliance
oversight provided by the Adviser. In addition, the Trustees considered the
administrative services provided by the Adviser to both Funds, including the
coordination of the activities of all of the Funds' other service providers.
Based on its review of all of the services provided and to be provided, the
Trustees concluded that the nature, quality and extent of services provided by
the Adviser supported the approval of the Advisory Agreement with respect to
the Equity Fund and continuance of the Advisory Agreement with respect to the
Balanced Fund.
The Costs of the Services to be Provided and the Profits to be Realized by
the Adviser. The Trustees considered the costs of the services provided to the
Funds and the profitability and fall-out benefits to the Adviser from its
arrangement with the Funds.
The Trustees reviewed and considered an analysis of the advisory fee and
total expense ratio of each Fund, and comparative data for multiple categories
of mutual funds included in and as defined by Strategic Insight's mutual fund
database Simfund 2 comprising over 7,000 mutual funds. With respect to the
Equity Fund, the Trustees noted that the advisory fee to be paid to Green
Century and the total expense ratio for the Equity Fund were lower than the
average advisory fee and total expense ratio for socially conscious equity
funds and large-cap growth funds. The Trustees noted
27
that the advisory fee structure for the Equity Fund included breakpoints as
assets grew. The Trustees considered that the advisory fee represented an
increase of 0.05% from the management fee paid by the Domini Social Equity
Trust in which the Equity Fund invested all its investable assets at the time
of the meeting, but noted that pursuant to an Amended Administrative Services
Agreement with Green Century, the total expense ratio of the Equity Fund would
be limited to 0.95%, a decrease of 0.55% from the previous total expense ratio.
With respect to the Balanced Fund, the Trustees noted that the advisory fee
was higher than the average advisory fee for all balanced funds and higher than
the average advisory fee for socially responsible balanced funds. The Trustees
considered that Green Century had proposed a reduction in the advisory fee of
10 basis points, and that under the Amended Administrative Services Agreement
approved by the Board at its meeting on August 24, 2006, the total expense
ratio of the Balanced Fund was limited to 1.38%, a decrease from the 2.39%
total expense ratio of the Fund in the prior fiscal year end. The Trustees also
noted that the total expense ratio was lower than or equal to the average total
expense ratio for any of the four categories of comparison funds included in
the Simfund 2 database.
Green Century provided the Trustees with information prepared by the Adviser
relating to the profitability to Green Century of its proposed advisory
relationships to the Funds. In that regard, the Trustees considered the
subadvisory fees and the other expenses to be incurred by the Adviser in
providing advisory services to the Funds. The Trustees also considered the fee
received by the Adviser for providing administrative services to the Funds and
the expenses incurred by the Adviser in providing those services. In
considering the cost allocation methodology used by Green Century, the Trustees
took into consideration that the Adviser does not provide advisory or
administrative services to other mutual funds or non-mutual fund clients. The
Trustees also considered Green Century's non-profit ownership structure, its
cost structure and personnel needs, and its investment in shareholder advocacy
to further the Funds' stated objective of promoting greater corporate
environmental accountability. After reviewing the information described above,
the Independent Trustees concluded that the fees proposed in the Advisory
Agreements, taking into account the costs of the services provided by the
Adviser and the profitability to the Adviser of its relationships with the
Funds, supported the approval of the Advisory Agreement with respect to the
Equity Fund and the continuance of the Advisory Agreement with respect to the
Balanced Fund.
With respect to fall-out benefits, the Trustees considered that neither
Green Century nor any affiliate of Green Century receives any brokerage fees,
soft dollar benefits, liquidity rebates from electronic communications networks
or payments for order flow from the trades executed for the Funds. The Trustees
noted that Green Century does benefit intangibly from its relationship with the
Funds due to the Funds' reputation as the first family of no-load
environmentally responsible mutual funds. Further, pursuant to the Advisory
Agreements, Green Century has reserved for itself the rights to the names
"Green Century Funds" and any similar names; thus, Green Century may benefit in
the future from developing other funds or investment products with the Green
Century brand. The Trustees concluded that the fall-out benefits to be realized
by Green Century were appropriate and supported the approval of the Advisory
Agreement with respect to the Equity Fund and continuance of the Advisory
Agreement with respect to the Balanced Fund.
Investment Performance. With respect to the Equity Fund, the Trustees
considered that due to the Equity Fund's passive investment strategy, the
principal concern with regard to investment performance was the extent to which
the Equity Fund tracked the Domini 400 Social/SM/ Index (the "Index") and noted
that Green Century stated it would monitor the subadviser's performance in
tracking the Index. After considering all the factors deemed appropriate, the
Trustees, including the Independent Trustees, concluded that Green Century had
the resources necessary to monitor the subadviser's performance in tracking the
Index.
With respect to the Balanced Fund, the Trustees reviewed and considered
information regarding the investment performance of the Balanced Fund and
comparative data with respect to the performance of other funds designated by
Lipper to have similar investment objectives as well as the Balanced Fund's
performance measured against the Lipper Balanced Fund Index, a broad-based
balanced fund market index. The Trustees noted that as of the period ended
August 31, 2006, the Balanced Fund's one-, three-, and five-year average annual
returns had significantly underperformed the Lipper Balanced Fund Index, while
the Balanced Fund's ten-year average annual return had
28
outperformed the benchmark. The Trustees also considered the performance
information they had been provided throughout the year. After considering all
the factors deemed appropriate, the Trustees, including the Independent
Trustees, concluded that the performance of the Balanced Fund supported the
continuance of the Advisory Agreement with respect to the Balanced Fund.
Economies of Scale. The Trustees also considered whether economies of scale
could be realized by the Adviser as the Funds grew in asset size and the extent
to which such economies of scale were reflected in the level of fees charged.
They noted the relatively small size of each Fund and the resultant difficulty
for the Adviser to achieve meaningful economies of scale. They considered that
if the assets were to increase, the Funds could have the opportunity to
experience economies of scale as fixed costs would become a smaller percentage
of the Funds' assets and some of the Funds' service providers' fees, as a
percentage of the Funds' assets, could decrease. The Trustees noted that Green
Century proposed an advisory fee structure for the Equity Fund which included
break-points and that the Equity Fund's advisory fee would decrease as assets
increased, at the same points as the fees charged Green Century by the Fund's
proposed subadviser and by KLD Research & Analytics, the firm which maintains
the Index, decreased. The Trustees also concluded that economies of scale could
be realized as the Funds grew and that if assets increased significantly the
Trustees would have opportunities to negotiate decreases in fees with the
Adviser.
Based on a review of all factors deemed relevant, the Trustees, including
the Independent Trustees, concluded that the Advisory Agreement with respect to
the Equity Fund should be approved and that they would consider whether to
renew it after an initial two-year period and then annually thereafter, and the
Advisory Agreement with respect to the Balanced Fund should be continued and
that they would consider whether to renew it after a one-year period.
INVESTMENT SUBADVISORY AGREEMENT WITH MELLON EQUITY ASSOCIATES, LLP
At an in-person meeting on August 24, 2006, the Board of Trustees of the
Equity Fund, including a majority of the Independent Trustees, considered the
approval of the subadvisory agreement between the Trust, on behalf of the
Equity Fund, Green Century, and Mellon Equity Associates LLP ("Mellon Equity")
(the "Subadvisory Agreement"), with an effective date of November 28, 2006.
In advance of the meeting, the Independent Trustees submitted to Mellon
Equity a written request for information in connection with their consideration
of the Subadvisory Agreement. The Trustees received, reviewed and considered
the following, among other things:
(1) A memorandum from counsel to the Independent Trustees setting forth the
Board's fiduciary duties under the 1940 Act and Massachusetts law and the
factors the Board should consider in its evaluation of the Subadvisory
Agreement.
(2) Reports from and presentations by Green Century regarding the process by
which the firm decided to propose Mellon Equity as the subadviser of the Equity
Fund.
(3) Reports from and presentations by Mellon Equity that described (a) the
nature, extent and quality of the services proposed to be provided by Mellon
Equity to the Equity Fund, including the experience and qualifications of the
personnel providing those services, Mellon Equity's ownership structure,
clients and Mellon Equity's investment philosophies and processes; (b) the fees
and other amounts proposed to be paid to Mellon Equity under the Subadvisory
Agreement with respect to the Equity Fund, including information as to the fees
charged and services provided to other Mellon Equity clients and a comparison
of the Equity Fund's proposed subadvisory fee to those of other mutual funds;
(c) the expected costs and profits of Mellon Equity related to its proposed
services to the Equity Fund; (d) Mellon Equity's performance in managing
similar accounts; (e) Mellon Equity's compliance program and procedures and any
regulatory issues; (f) Mellon Equity's brokerage practices, including soft
dollar practices; and (g) Mellon Equity's code of ethics.
The Trustees, including a majority of the Independent Trustees, concluded
that Mellon Equity had the capabilities, resources, and personnel necessary to
advise the Equity Fund. The Board further concluded that, based on the services
proposed to be provided pursuant to the Subadvisory Agreement and the expenses
Mellon Equity estimated it will incur in performing these services, the
proposed compensation for Mellon Equity was fair and reasonable.
29
In reaching their determination to approve the Subadvisory Agreement, the
Trustees considered a variety of factors they believed relevant and balanced a
number of considerations. In their deliberations, the Trustees did not identify
any particular information or factor that was all-important or controlling. The
primary factors and the conclusions are described below.
Nature, Quality, and Extent of Services Performed. The Trustees noted that
under the terms of the Subadvisory Agreement, Mellon Equity will provide the
day-to-day portfolio management of the Equity Fund, making purchases and sales
of portfolio securities consistent with the Equity Fund's investment objective
and policies. The Trustees reviewed the terms of the Subadvisory Agreement and
concluded that the terms of the Subadvisory Agreement were reasonable and fair.
The Trustees considered the scope of the services to be provided by Mellon
Equity under the Subadvisory Agreement and the quality of services provided by
Mellon Equity to its existing clients. They reviewed the capabilities and
experience of Mellon Equity in managing mutual funds that track an established
index. They considered how Mellon Equity proposed to manage the Equity Fund,
focusing in particular on Mellon Equity's handling of daily inflows and
outflows, transaction costs, tracking error, and the expected portfolio
turnover rates for the Equity Fund.
The Trustees considered the professional experience, tenure, and
qualifications of the portfolio management team proposed for the Equity Fund
and the other senior personnel at Mellon Equity. They considered in particular
those individuals' experience in managing registered investment companies. The
Trustees also considered the portfolio management team's experience in passive
management.
The Trustees also considered Mellon Equity's compliance policies and
procedures and compliance record, and interviewed Mellon Equity's Chief
Compliance Officer.
Based on their review of all the services proposed to be provided and their
analysis of Mellon Equity's ability to provide those services, the Trustees
concluded that Mellon Equity had the capabilities, resources and personnel
necessary to provide subadvisory services to the Equity Fund under the
Subadvisory Agreement. They also concluded that they were satisfied with the
nature, quality and extent of services expected to be provided by Mellon Equity
under the Subadvisory Agreement.
Costs of Services Provided and Profitability. The Trustees considered the
proposed subadvisory fees to be paid by Green Century to Mellon Equity. The
Trustees noted that under the Subadvisory Agreement, Mellon Equity would
receive 0.08% of the value of the average daily net assets of the Equity Fund
up to $100 million, 0.05% of the value of the average daily net assets of the
Equity Fund from $100 million to $500 million, 0.02% of the value of the
average daily net assets of the Equity Fund from $500 million to $1 billion,
and 0.01% of the value of the average daily net assets of the Equity Fund in
excess of $1 billion, subject to a minimum fee of $50,000 per year. The
Trustees reviewed and considered an analysis of the subadvisory fee to be paid
by the Equity Fund and comparative data for multiple categories of mutual funds
included in and as defined by Strategic Insight's mutual fund database Simfund
2 comprising over 7,000 mutual funds. The Trustees noted that, based on the
information provided, the proposed subadvisory fees to be paid to Mellon Equity
were lower than the average subadvisory fees paid by large-cap growth funds and
socially conscious equity funds. The Trustees noted that the subadvisory fee to
be paid at current asset levels was higher than the average subadvisory fee
paid by equity index funds, but that this was due to the imposition of the
yearly minimum fee and the fee would decrease in terms of basis points as
assets increased. The Trustees also noted that the proposed subadvisory fees
would be paid by Green Century, and would not be in addition to the advisory
fees paid to Green Century by shareholders.
Green Century provided the Trustees with information prepared by Mellon
Equity relating to the prospective profitability of the Subadvisory Agreement
to Mellon Equity. In that regard, the Trustees considered the proposed
subadvisory fees and the financial resources Mellon Equity plans to dedicate
and the other expenses Mellon Equity anticipates it will incur in providing
subadvisory services to the Equity Fund. In considering the cost allocation
methodology used by Mellon Equity, the Trustees noted that Mellon Equity
allocated its costs to all its clients equally.
30
After reviewing the information described above, the Trustees concluded that
the fees proposed in the Subadvisory Agreement, taking into account the costs
of the services proposed to be provided by Mellon Equity, supported the
approval of the Subadvisory Agreement. The Trustees also concluded that the
fees proposed in the Subadvisory Agreement were fair and reasonable in light of
the usual and customary charges made by others for services of the same nature
and quality.
Other Benefits. The Trustees evaluated potential other benefits Mellon
Equity may realize from its relationship with the Equity Fund. The Trustees
considered the brokerage practices of Mellon Equity, including Mellon Equity's
policy that it does not execute transactions for client portfolios through any
affiliated broker/dealer and thus no benefit would be realized by Mellon Equity
through transactions with affiliated brokers. The Trustees also considered that
Mellon Equity does not use trades for index portfolios for the generation of
soft dollars, nor does Mellon Equity receive liquidity rebates or payment for
order flow from electronic communications networks associated with Equity Fund
trades. The Trustees also considered the reputational and other advantages
Mellon Equity may gain from its relationship with the Equity Fund. The Trustees
concluded that the benefits expected to be received by Mellon Equity were
reasonable in the context of the relationship between Mellon Equity and the
Equity Fund, and supported the approval of the Subadvisory Agreement.
Investment Performance. The Trustees reviewed and considered information
regarding the investment performance of accounts managed by Mellon Equity in a
passive investment style tracking an established market index. After
considering all the factors deemed appropriate, the Trustees concluded that
Mellon Equity's experience and performance in passive management supported the
approval of the Subadvisory Agreement.
Economies of Scale. The Trustees also considered whether economies of scale
would be realized by Mellon Equity as the Equity Fund grew in asset size and
the extent to which such economies of scale might be reflected in the proposed
fee schedule. They noted the relatively small size of the Equity Fund and
considered that if the assets were to increase, Mellon Equity could have the
opportunity to experience economies of scale. They also noted that pursuant to
the Subadvisory Agreement, the subadvisory fees proposed to be paid to Mellon
Equity by Green Century include breakpoints at $100 million, $500 million, and
$1 billion. The Trustees concluded that economies of scale could be realized as
the Fund grew, and that the fee schedule as proposed was appropriate, and
supported the approval of the Subadvisory Agreement.
Based on the foregoing considerations, the Board, including a majority of
the Independent Trustees, determined that the terms of the Subadvisory
Agreement were reasonable, fair, and in the best interests of the Equity Fund
and its shareholders and also concluded that the proposed fees are fair and
reasonable.
31
Semi-Annual Report
INVESTMENT ADVISER AND ADMINISTRATOR
Green Century Capital Management, Inc.
114 State Street
Boston, MA 02109
1-800-93-GREEN
www.greencentury.com
email: info@greencentury.com
INVESTMENT SUBADVISER (Balanced Fund)
Trillium Asset Management Corporation
711 Atlantic Avenue
Boston, MA 02111
INVESTMENT SUBADVISER (Equity Fund)
Mellon Equity Associates, LLP
500 Grant Street Suite 4200
Pittsburgh, PA 15258
COUNSEL TO INDEPENDENT TRUSTEES OF THE FUNDS
Debevoise & Plimpton
555 13th Street, N.W.
Washington, DC 20004
SUBADMINISTRATOR and DISTRIBUTOR
UMB Fund Services, Inc. (Subadministrator)
UMB Distribution Services, LLC (Distributor)
803 West Michigan Street, Suite A
Milwaukee, WI 53233
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, IN 46204-1806
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
99 High Street
Boston, MA 02110
[LOGO]
January 31, 2007
Balanced Fund
- --------------------------------------------------------------------------------
Equity
Fund
[LOGO] GREEN
CENTURY
FUNDS
An investment for your future.
Printed on recycled paper with soy-based ink.
Item 2. Code of Ethics
Not applicable to semi-annual reports.
Item 3. Audit Committee Financial Expert
Not applicable to semi-annual reports.
Item 4. Principal Accountant Fees and Services
Not applicable to semi-annual reports.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Included as part of the report to shareholders filed under item 1 of this Form
N-CSR
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Trustees.
Item 11. Controls and Procedures
(a) Based on an evaluation of the disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended, the "Disclosure Controls") as of a
date within 90 days of the filing date (the "Filing Date") of this Form
N-CSR (the "Report"), the registrant's principal executive officer and
principal financial officer have concluded that the Disclosure Controls are
effectively designed to ensure that information that is required to be
disclosed by the registrant in the Report is recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and forms, including ensuring that
information required to be disclosed in the Report is accumulated and
communicated to the registrant's management, including the registrant's
principal executive officer and principal financial officer, as appropriate
to allow timely decisions regarding required disclosures.
(b) There were no changes in the registrant's internal controls over financial
reporting (as defined in Rule 30 a-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.
(2) Certifications for each principal executive and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act
of 1940, as amended, (17 CFR 270.30a-2(a)) are filed herewith.
(b) Certifications required by Rule 30a-2 (b) under the Investment Company Act
of 1940, as amended, (17 CFR 270.30a-2 (b)) are 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.
Green Century Funds
/s/ Kristina A. Curtis
- ------------------------------------
Kristina A. Curtis
President
April 10, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Kristina A. Curtis
- ------------------------------------
Kristina A. Curtis
President and Principal Executive Officer
April 10, 2007
/s/ Bernadette L. Buck
- ------------------------------------
Bernadette L. Buck
Treasurer and Principal Financial Officer
April 10, 2007