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, 2014

 

 

 


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).


LOGO  

SEMI-ANNUAL REPORT

Green Century Balanced Fund

Green Century Equity Fund

January 31, 2014

An investment for your future. ®   114 State Street, Boston, Massachusetts 02109

For information on the Green Century Funds ® , 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:

In the past six months, Green Century has continued to put one of our guiding principles — Investing in a Green Future — into practice in multiple ways. We want to share with you some of the pro-active steps we’ve taken on refining out criteria for sustainable investing and our advocacy work that help transition us to a cleaner and greener economy.

Leading on Fossil Fuel Free Investing and Reinvestment

Green Century has become a leader in the investment advisory field on fossil fuel free investing, a strategy tailored for investors who are making choices with the future in mind. We have educated thousands of individuals and institutions and increased the Funds’ assets and number of shareholders, in the Balanced Fund in particular. We also secured articles about this investment strategy and Green Century in dozens of media outlets including the Los Angeles Times, the San Francisco Chronicle, the Washington Post, and the Boston Globe, highlighting that Green Century’s Balanced Fund has not invested in coal, oil and gas companies since 2005.

Fossil fuel companies are the leading driver of the carbon pollution that is linked to the climate change impacts we have all felt this year — from the extended drought in the west to the near-continuous freezing temperatures and snowstorms in much of the rest of the country. This erratic weather has extracted a significant toll on businesses, city budgets and families across the country. In addition, these fuel sources rely on a finite source of energy that may leave our country less able to tackle the challenges of the future.

Moving out of investments in fossil fuel companies may also protect investors against a “carbon bubble” in the future. The fossil fuel industry controls reserves of coal, oil and gas that are treated as positive assets. If governments enact regulations restricting carbon emissions, fossil fuel companies may not be able to extract and sell these reserves. In turn, investors may then be left with devalued or “stranded” assets.

Fortunately, cleaner and more sustainable energy sources are being brought online each year to power a new economy. Solar, wind, and geothermal industries rely on plentiful and clean sources and are an integral part of building a strong foundation for future economic growth. Green Century’s mutual funds aim to include investments in these clean energy companies to seek competitive returns and to provide investors a way to support sustainable solutions.


The Green Century Equity Fund Becomes Entirely Fossil Fuel Free

On April 1, 2014, the Green Century Equity Fund will be entirely fossil fuel free. With this update, Green Century will be the first and only family of responsible, diversified mutual funds that is 100% free of fossil fuel companies. While the Equity Fund already did not hold coal or major oil companies, it will now also eliminate the gas companies that are susceptible to increasing reputational risks and potential investment risks as a result of hydraulic fracturing, or fracking. The Equity Fund will still invest in the companies that comprise the longest-running sustainable investment index, now minus the fossil fuel companies in that index. This type of transformative move is nothing new for Green Century — we have been pioneers and leaders in building the sustainable investment movement from our beginning over 22 years ago. Green Century’s innovations include the sustainability criteria we use to build the Funds’ portfolios, leading tangible and successful shareholder advocacy campaigns, and educating investors about their ability to support clean technologies.

Reducing Carbon Pollution and Securing Improvements in Agribusiness through Shareholder Advocacy

Our track record of success in helping corporations adopt green practices has continued to build with our recent victories.

Green Century helped convince two leading companies to stop using palm oil that is grown unsustainably. First, Green Century helped tip the world’s largest palm oil trader, Wilmar 1 , to only supply palm oil that is grown without burning rainforests in December 2013. Then, in February, Green Century announced a precedent-setting policy with Kellogg’s 1 that not only reduces carbon emissions, but also protects the habitats of endangered species like orangutans and Sumatran tigers. These newly adopted policies and progress build on the commitment that Green Century secured with Starbucks 1 last year to purchase only certified sustainable palm oil.

Green Century also recently celebrated another victory when we announced that we had pressed Tyson Foods 1 to stop using gestation crates for its pigs. We also successfully advocated that Kraft Foods 1 refrain from spending shareholder dollars to oppose the proposed labeling of Genetically Modified Organisms (GMOs) law in Washington State.

We thank you for your investment in the Green Century Funds and look forward to partnering with you to build a sustainable future.

Respectfully,

Green Century Capital Management

For more regular updates on Green Century and our advocacy efforts, please consider signing up for our free e-newsletter. Visit: www.greencentury.com/news/signup, email info@greencentury.com or call 1-800-93-GREEN.

 

2


THE GREEN CENTURY BALANCED FUND

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 managers of the Balanced Fund avoid fossil fuel companies and aim to invest in companies that are in the business of solving environmental problems or that are committed to reducing their environmental impact.

 

     

AVERAGE ANNUAL RETURN*

Total expense ratio: 1.48%

  Six Months     One Year     Five Years     Ten Years  
December 31, 2013   Green Century Balanced Fund     14.15%        23.67%        13.26%        4.78%   
    Custom Balanced Fund Index 2     9.96%        18.24%        12.82%        6.57%   
January 31, 2014   Green Century Balanced Fund     6.11%        15.46%        13.29%        4.24%   
    Custom Balanced Fund Index 2     4.76%        12.86%        13.67%        6.25%   

* 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. A redemption fee of 2.00% may be imposed on redemptions or exchanges of shares you have owned for 60 days or less. Please see the Prospectus for more information.

 

During the six month and one year periods ended January 31, 2014, the Balanced Fund outperformed the Custom Balanced Index. For the six month period ended January 31, 2014, the Balanced Fund returned 6.11%, while the Custom Balanced Index returned 4.76%.

In the view of the Balanced Fund’s portfolio managers, during the twelve months ended January 31, 2014, investors largely focused on the benefits to the stock market and the risks to the bond market of a slowly strengthening U.S. economy. Throughout 2013, U.S. economic conditions were largely positive with steady, moderate, sustained growth throughout the year. In May, 2013, the Federal Reserve raised the possibility of an eventual end to Quantitative Easing, which resulted in an immediate surge in interest rates. By December 2013, investors had adjusted to the prospect of “tapering,” or a reduction in the rate of Quantitative Easing, and the actual start of tapering met a muted reaction. January 2014 has been more challenging, with equity investors wary after 2013’s stellar returns. The Balanced Fund’s portfolio managers

 

GREEN CENTURY BALANCED FUND

INVESTMENT BY INDUSTRY

LOGO

 

3


continue to expect substantially higher returns from stocks than from bonds and have emphasized stocks and very short maturity bonds. This strategy worked in that equity returns for both the 6 month and the 12 month periods were considerably stronger than bond market returns.

As the Balanced Fund is managed to be free of fossil fuel company holdings, the Fund does not have any holdings in the traditional energy sector. During the twelve months ended January 31, 2014, the spot price of oil swung between a low of $85 per barrel and a high of $110, and fossil fuel energy stock performance was below that of the market. The Fund benefitted from its exposure to clean energy, clean tech, and conservation company stocks, with the average Balanced Fund holding of these stocks returning about 9% for the six months ended January 31, 2014.

The Fund’s equity holdings which positively contributed to its performance during the twelve months ended January 31, 2013 included: Shire PLC 1 , BT Group PLC 1 , Westinghouse Air Brake 1 , Jarden Corporation 1 , and Lincoln Electric Holdings 1 . Poor performers included J. M. Smucker, Co. 1 , Cisco Systems 1 , Symantec 1 , Baxter International 1 , and Unilever NV 1 .

The Balanced Fund’s portfolio managers believe the Fund is positioned to benefit from the moderate economic growth expected in 2014. The Fund’s equity holdings are slightly weighted toward more cyclical sectors such as industrials stocks, and the Fund’s bond holdings are weighted toward short to intermediate maturity and high quality bonds.

The Green Century Balanced Fund invests in the stocks and bonds of environmentally responsible corporations of various sizes, including small, medium, and large companies. The Green Century Balanced Fund does not invest in fossil fuels though most other diversified mutual funds do.

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

The Green Century Equity Fund invests essentially all of its assets in the stocks which make up the MSCI KLD 400 Social Index (the KLD 400 Index), comprised of 400 primarily large capitalization U.S. companies selected based on comprehensive social and environmental sustainability criteria. The Equity Fund seeks to provide shareholders with a long-term total return that matches that of the Index.

 

     

AVERAGE ANNUAL RETURN*

Total expense ratio: 1.25%

  Six Months     One Year     Five Years     Ten Years  
December 31, 2013  

Green Century Equity Fund

   
14.78%
  
   
34.37%
  
   
16.92%
  
   
6.00%
  
    S&P 500 ® Index 3     16.31%        32.39%        17.94%        7.41%   
January 31, 2014  

Green Century Equity Fund

   
6.80%
  
   
22.58%
  
   
18.26%
  
   
5.47%
  
    S&P 500 ® Index 3     6.85%        21.52%        19.19%        6.83%   

* 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. A redemption fee of 2.00% may be imposed on redemptions or exchanges of shares you have owned for 60 days or less. Please see the Prospectus for more information.

 

4


The Green Century Equity Fund, which closely tracks the KLD 400 Index, returned 6.80% for the six month period ended January 31, 2014, while the S&P 500 ® Index (the S&P 500) returned 6.85% during the same period.

The difference in performance of the Equity Fund relative to the S&P 500 was largely due to differences in sector allocation and stock selection criteria between the two. The Equity Fund either has an underweight to or does not hold several large energy companies that performed poorly during the period, which helped its performance relative to the S&P 500. However, the Equity Fund’s performance relative to the S&P 500 was hurt by stock selection in the consumer discretionary sector, as the Equity Fund does not hold several of these stocks that were among the best performers in the S&P 500.

According to an analysis by the Equity Fund’s portfolio managers, U.S. equities performed positively in the second half of 2013. In the late summer, news about the turbulence in Syria left developed markets unperturbed and investors were optimistic when the U.S. saw an opportunity to resolve the issue with peaceful talks. Investors were also concerned about the potential for the Federal Reserve (the Fed) to begin tapering its asset purchase program at its September meeting.

 

U.S. equities ended the year with another strong quarter, partly driven by the positive market reactions to monetary and fiscal policy activity in Washington, according to the Fund’s portfolio managers. The Fed’s assurance of continued monetary stimulus boosted U.S. equities through the end of the third quarter into the start of the fourth quarter. This positive performance was sustained through October despite fiscal uncertainty and a government shutdown, as a temporary budget deal was reached late in the month. A longer-term budget agreement was reached in December, further reducing fiscal uncertainty.

The Fund’s portfolio managers believe that markets initially reacted positively to the announcement by the Fed that it would begin tapering asset purchases in January, as the move was seen to be less dramatic than many had anticipated, and it demonstrated confidence in the strength of the

 

GREEN CENTURY EQUITY FUND

INVESTMENT BY INDUSTRY

LOGO

 

5


economic recovery. Janet Yellen was appointed as the next Fed Chair, and her testimony before Congress assured markets that policy would remain appropriately accommodative. Cold weather and lackluster earnings for the year brought down returns for the month of January. Even with a slow start to 2014, Janet Yellen and the Fed plan to stay on track with the cutting of asset purchases, according to the portfolio managers’ analysis.

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 is invested may perform worse than the stock market as a whole. The Equity Fund will not shift concentration from one industry to another or from stocks to bonds or cash, in order to defend against a falling stock market.

 

The Green Century Funds’ proxy voting guidelines and a record of the Funds’ proxy votes for the year ended June 30, 2013 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 file their complete schedule of portfolio holdings with the SEC for the first and third quarters of the year on Form N-Q. The Green Century Funds’ Forms N-Q are available on the EDGAR database on the SEC’s website at www.sec.gov . These Forms may also be reviewed and copied at the SEC’s Public Reference Room in Washington D.C. Information about the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The information on Form N-Q may also be obtained by calling 1-800-93-GREEN, or by e-mailing a request to info@greencentury.com .

 

 

1 As of January 31, 2014, the following companies comprised the listed percentages of each of the Green Century Funds:

 

Portfolio Holding    GREEN  CENTURY
BALANCED FUND
    GREEN  CENTURY
EQUITY FUND
 

Wilmar International Limited

     0.00     0.00

Kellogg Company

     0.00     0.24

Starbucks

     0.32     0.84

Tyson Foods Inc.

     0.00     0.00

Kraft Foods

     0.00     0.49

Shire PLC

     1.66     0.00

BT Group PLC

     1.18     0.00

Wabtec Corp.

     0.00     0.11

Jarden Corporation

     0.99     0.00

Lincoln Electric Holdings

     1.63     0.09

J. M. Smucker, Co.

     1.34     0.16

Cisco Systems

     1.78     1.85

Symantec

     0.00     0.24

Baxter International

     1.31     0.00

Unilever NV

     1.15     0.00

 

6


Portfolio composition will change due to ongoing management of the Funds. Please refer to the Green Century Funds website for current information regarding the Funds’ portfolio holdings. These holdings are subject to risk as described in the Funds’ Prospectus. References to specific investments should not be construed as a recommendation of the securities by the Funds, their administrator, or their distributor.

2 The Custom Balanced Index is comprised of a 60% weighting in the S&P 1500 Index and a 40% weighting in the BofA Merrill Lynch 1-10 Year US Corporate & Government Index (the BofA Merrill Lynch Index). The S&P Supercomposite 1500 Index is an unmanaged broad-based capitalization-weighted index comprising 1500 stocks of large-cap, mid-cap, and small-cap U.S. companies. The BofA Merrill Lynch Index tracks the performance of U.S. dollar-denominated investment grade government and corporate public debt issued in the U.S. domestic bond market with at least 1 year and less than 10 years remaining maturity, including U.S. treasury, U.S. agency, foreign government, supranational and corporate securities. It is not possible to invest directly in the Custom Balanced Index, the S&P Supercomposite 1500 Index, or the BofA Merrill Lynch Index.

3 The S&P 500 ® 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 ® 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 ® Index.

The Funds’ environmental criteria limit the investments available to the Funds compared to mutual funds that do not use environmental criteria.

This information has been prepared from sources believed reliable. The views expressed are as of the date of publication and are those of the Advisor to the Funds.

This material must be preceded or accompanied by a current Prospectus.

Distributor: UMB Distribution Services, LLC, 3/14

The Green Century Equity Fund (the “Fund”) is not sponsored, endorsed, or promoted by MSCI, its affiliates, information providers or any other third party involved in, or related to, compiling, computing or creating the MSCI indices (the “MSCI Parties”), and the MSCI Parties bear no liability with respect to the Fund or any index on which the Fund is based. The MSCI Parties are not sponsors of the Fund and are not affiliated with the Fund in any way. The Statement of Additional Information contains a more detailed description of the limited relationship the MSCI Parties have with Green Century Capital Management and the Fund.

 

7


GREEN CENTURY FUNDS EXPENSE EXAMPLE

For the six months ended January 31, 2014 (unaudited)

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 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, 2013 to January 31, 2014 (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.

 

     BEGINNING
ACCOUNT  VALUE
AUGUST 1, 2013
     ENDING
ACCOUNT VALUE
JANUARY 31, 2014
     EXPENSES
PAID  DURING
THE PERIOD 1
 

Balanced Fund

        

Actual Expenses

   $ 1,000.00       $ 1,060.70       $ 7.69   

Hypothetical Example, assuming a 5% return before expenses

     1,000.00         1,017.54         7.53   

Equity Fund

        

Actual Expenses

     1,000.00         1,068.00         6.52   

Hypothetical Example, assuming a 5% return before expenses

     1,000.00         1,018.70         6.36   

1 Expenses are equal to the Funds’ annualized expense ratios (1.48% for the Balanced Fund and 1.25% for the Equity Fund), multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

 

8


GREEN CENTURY BALANCED FUND PORTFOLIO OF INVESTMENTS

January 31, 2014

(unaudited)

 

 

COMMON STOCKS — 71.9%

  

     SHARES      VALUE  

Capital Goods — 7.5%

  

ABB Ltd. American Depositary Receipt (a)(b)

     27,862       $ 692,092   

Eaton Corporation PLC (a)

     10,104         738,501   

Koninklijke Philips N.V. American Depositary Receipt (a)

     18,973         658,363   

Lincoln Electric Holdings, Inc.

     24,209         1,675,263   

Middleby Corporation (The) (b)

     2,015         496,859   

Pentair Ltd.

     8,937         664,287   

Valmont Industries, Inc.

     9,052         1,325,032   

W.W. Grainger, Inc.

     2,176         510,229   

Wabtec Corporation

     12,298         907,715   
     

 

 

 
        7,668,341   
     

 

 

 

Technology Hardware & Equipment — 7.4%

  

Apple, Inc.

     3,258         1,630,955   

Cisco Systems, Inc.

     83,524         1,830,011   

QUALCOMM, Inc.

     26,587         1,973,287   

SanDisk Corporation

     17,353         1,206,901   

Trimble Navigation Ltd. (b)

     28,767         930,037   
     

 

 

 
        7,571,191   
     

 

 

 

Pharmaceuticals & Biotechnology — 6.1%

  

Amgen, Inc.

     8,124         966,350   

Gilead Sciences, Inc. (b)

     11,207         903,844   

GlaxoSmithKline PLC American Depositary Receipt (a)

     31,085         1,602,121   

Novartis A.G. American Depositary Receipt (a)

     13,937         1,101,999   

Shire PLC American Depositary Receipt (a)

     11,428         1,709,857   
     

 

 

 
        6,284,171   
     

 

 

 

Healthcare Equipment & Services — 5.3%

  

Baxter International, Inc.

     19,756         1,349,335   

Cerner Corporation (b)

     15,610         888,053   

Omnicell, Inc. (b)

     34,317         886,065   

UnitedHealth Group, Inc.

     21,130         1,527,276   

Zimmer Holdings, Inc.

     8,952         841,219   
     

 

 

 
        5,491,948   
     

 

 

 

Banks — 5.2%

  

East West Bancorp, Inc.

     23,205         776,440   

Fifth Third Bancorp

     41,311         868,357   
     SHARES      VALUE  

Banks — (continued)

  

HSBC Holdings PLC American Depositary Receipt (a)

     8,488       $ 437,047   

SVB Financial Group (b)

     11,718         1,315,111   

Umpqua Holdings Corporation

     57,900         1,016,724   

Wells Fargo & Company

     20,665         936,951   
     

 

 

 
        5,350,630   
     

 

 

 

Insurance — 5.2%

  

Aflac, Inc.

     20,833         1,307,896   

Chubb Corporation (The)

     5,078         429,294   

Hartford Financial Services Group, Inc.

     13,838         460,113   

Horace Mann Educators Corporation

     45,430         1,267,497   

Lincoln National Corporation

     9,136         438,802   

Reinsurance Group of America, Inc.

     18,685         1,395,209   
     

 

 

 
        5,298,811   
     

 

 

 

Software & Services — 4.2%

  

Citrix Systems, Inc. (b)

     5,269         284,895   

Google, Inc., Class A (b)

     1,195         1,411,259   

International Business Machines Corporation

     103         18,198   

MasterCard, Inc., Class A

     20,180         1,527,222   

Microsoft Corporation

     27,716         1,049,051   
     

 

 

 
        4,290,625   
     

 

 

 

Materials — 3.3%

  

Minerals Technologies, Inc.

     34,235         1,769,265   

Owens-Illinois, Inc. (b)

     26,431         846,849   

Sealed Air Corporation

     25,970         810,004   
     

 

 

 
        3,426,118   
     

 

 

 

Food & Beverage — 3.2%

  

General Mills, Inc.

     300         14,406   

Green Mountain Coffee Roasters, Inc.

     9,372         759,132   

JM Smucker Company (The)

     14,257         1,374,232   

Unilever NV American Depositary Receipt (a)

     31,749         1,185,508   
     

 

 

 
        3,333,278   
     

 

 

 
 

 

9


GREEN CENTURY BALANCED FUND PORTFOLIO OF INVESTMENTS

January 31, 2014

(unaudited)

  continued

 

     SHARES      VALUE  

Semiconductors — 3.1%

  

Applied Materials, Inc.

     63,322       $ 1,065,076   

ARM Holdings PLC American Depositary Receipt (a)

     7,722         355,753   

Intel Corporation

     15,114         370,898   

NXP Semiconductors NV (a)(b)

     20,229         978,072   

Xilinx, Inc.

     9,641         447,535   
     

 

 

 
        3,217,334   
     

 

 

 

Diversified Financials — 2.7%

  

American Express Company

     4,365         371,112   

Charles Schwab Corporation (The)

     34,951         867,484   

Citigroup, Inc.

     14,937         708,462   

JPMorgan Chase & Company

     15,051         833,223   
     

 

 

 
        2,780,281   
     

 

 

 

Renewable Energy & Energy Efficiency — 2.6%

  

First Solar, Inc. (b)

     6,540         330,793   

Johnson Controls, Inc.

     42,904         1,978,733   

Ormat Technologies, Inc.

     14,579         359,372   
     

 

 

 
        2,668,898   
     

 

 

 

Automobiles & Components — 2.6%

  

BorgWarner, Inc.

     27,188         1,459,996   

Toyota Motor Corporation American Depositary Receipt (a)

     10,427         1,196,602   
     

 

 

 
        2,656,598   
     

 

 

 

Transportation — 2.3%

  

Canadian Pacific Railway Ltd.

     6,031         913,576   

United Parcel Service, Inc., Class B

     14,699         1,399,786   
     

 

 

 
        2,313,362   
     

 

 

 

Retailing — 2.2%

  

Home Depot, Inc. (The)

     6,730         517,201   

priceline.com, Inc. (b)

     364         416,740   

TJX Companies, Inc. (The)

     23,348         1,339,241   
     

 

 

 
        2,273,182   
     

 

 

 

Telecommunication Services — 2.1%

  

BT Group PLC American Depositary Receipt (a)

     19,305         1,217,180   

SBA Communications Corporation, Class A (b)

     6,029         559,190   
     SHARES      VALUE  

Telecommunication Services — (continued)

  

Vodafone Group PLC American Depositary Receipt (a)

     11,645       $ 431,564   
     

 

 

 
        2,207,934   
     

 

 

 

Consumer Services — 1.8%

  

Panera Bread Company, Class A (b)

     5,805         981,451   

Starbucks Corporation

     4,584         326,014   

Starwood Hotels & Resorts Worldwide, Inc.

     7,632         570,187   
     

 

 

 
        1,877,652   
     

 

 

 

Healthy Living — 1.7%

  

United Natural Foods, Inc. (b)

     9,972         673,808   

Whole Foods Market, Inc.

     19,656         1,027,223   
     

 

 

 
        1,701,031   
     

 

 

 

Media — 1.4%

  

Discovery Communications, Inc., Class A (b)

     6,554         522,878   

Time Warner, Inc.

     15,306         961,676   
     

 

 

 
        1,484,554   
     

 

 

 

Consumer Durables & Apparel — 1.0%

  

Jarden Corporation (b)

     16,806         1,015,923   
     

 

 

 

Food & Staples Retailing — 0.7%

  

Costco Wholesale Corporation

     5,952         668,767   
     

 

 

 

Household & Personal Products — 0.3%

  

Church & Dwight Company, Inc.

     5,304         342,532   
     

 

 

 

Total Common Stocks
(Cost $57,315,047)

        73,923,161   
     

 

 

 
 

 

10


GREEN CENTURY BALANCED FUND PORTFOLIO OF INVESTMENTS

January 31, 2014

(unaudited)

  continued

 

     PRINCIPAL
AMOUNT
     VALUE  

CORPORATE BONDS & NOTES — 15.2%

  

Diversified Financials — 4.1%

  

Bank of America Corporation      

1.35%, due 11/21/16

   $ 1,000,000       $ 1,001,509   
Bank of New York Mellon Corporation (The)      

4.30%, due 5/15/14

     500,000         505,707   
Citigroup, Inc.      

3.953%, due 6/15/16

     500,000         532,733   
Deutsche Bank A.G.      

3.25%, due 1/11/16 (a)

     500,000         523,407   
HSBC Bank USA N.A.      

6.00%, due 8/9/17

     500,000         568,484   
JPMorgan Chase & Company      

5.125%, due 9/15/14

     500,000         513,723   
Morgan Stanley      

3.80%, due 4/29/16

     500,000         528,844   
     

 

 

 
        4,174,407   
     

 

 

 

Renewable Energy & Energy Efficiency — 3.9%

  

International Bank for Reconstruction & Development      

0.375%, due 8/24/15

     1,000,000         1,001,328   
International Bank for Reconstruction & Development      

2.00%, due 10/20/16

     500,000         518,428   
International Finance Corporation      

2.25%, due 4/28/14

     1,000,000         1,004,709   
International Finance Corporation      

0.625%, due 11/15/16

     1,000,000         996,498   
Johnson Controls, Inc.      

5.50%, due 1/15/16

     500,000         542,225   
     

 

 

 
        4,063,188   
     

 

 

 

Software & Services — 2.0%

  

International Business Machines Corporation      

2.00%, due 1/5/16

     500,000         514,145   
Microsoft Corporation      

1.625%, due 9/25/15

     500,000         510,536   
Oracle Corporation      

3.75%, due 7/8/14

     500,000         507,310   
     PRINCIPAL
AMOUNT
     VALUE  

Software & Services — (continued)

  

Oracle Corporation      

1.20%, due 10/15/17

   $ 500,000       $ 498,285   
     

 

 

 
        2,030,276   
     

 

 

 

Technology Hardware & Equipment — 1.5%

  

Dell, Inc.      

2.30%, due 9/10/15

     500,000         503,750   
EMC Corporation      

1.875%, due 6/1/18

     500,000         501,203   
Hewlett-Packard Company      

4.75%, due 6/2/14

     500,000         506,914   
     

 

 

 
        1,511,867   
     

 

 

 

Multi-National Banks — 1.0%

  

African Development Bank      

0.75%, due 10/18/16(a)

     1,000,000         1,005,430   
     

 

 

 

Banks — 1.0%

  

Export-Import Bank of Korea      

1.75%, due 2/27/18 (a)

     1,000,000         990,221   
     

 

 

 

Capital Goods — 0.5%

  

Koninklijke Philips NV      

5.75%, due 3/11/18

     500,000         577,142   
     

 

 

 

Pharmaceuticals & Biotechnology — 0.5%

  

Amgen, Inc.      

4.85%, due 11/18/14

     500,000         517,182   
     

 

 

 

Telecommunication Services — 0.5%

  

AT&T, Inc.      

2.50%, due 8/15/15

     500,000         513,771   
     

 

 

 

Healthcare Equipment & Services — 0.2%

  

Stryker Corporation      

1.30%, due 4/1/18

     250,000         246,432   
     

 

 

 

Total Corporate Bonds & Notes
(Cost $15,361,822)

        15,629,916   
     

 

 

 

U.S. Government Agencies — 5.1%

  

Federal Farm Credit Bank      

0.29%, due 7/15/15

     1,000,000         1,000,011   
Federal Farm Credit Bank      

5.125%, due 8/25/16

     500,000         556,668   
Federal Home Loan Bank      

5.625%, due 6/13/16

     1,000,000         1,113,772   
 

 

11


GREEN CENTURY BALANCED FUND PORTFOLIO OF INVESTMENTS

January 31, 2014

(unaudited)

  concluded

 

     PRINCIPAL
AMOUNT
     VALUE  

U.S. Government Agencies — (continued)

  

Federal Home Loan Bank      

3.875%, due 12/14/18

   $ 550,000       $ 600,636   
Federal Home Loan Bank      

2.00%, due 6/25/27 (c)

     1,000,000         922,616   
Federal Home Loan Mortgage Corporation      

0.35%, due 12/5/14

     500,000         500,943   
Federal Home Loan Mortgage Corporation      

3.75%, due 3/27/19

     500,000         550,084   
     

 

 

 

Total U.S. Government Agencies
(Cost $5,091,499)

        5,244,730   
     

 

 

 

CERTIFICATES OF DEPOSIT — 0.1%

  

Self Help Credit Union Environmental Certificate of Deposit
1.25%, due 8/10/16

     95,000         95,000   
     

 

 

 

Total Certificates Of Deposit
(Cost $95,000)

        95,000   
     

 

 

 
              
VALUE
 

SHORT-TERM OBLIGATION — 8.9%

  

Repurchase Agreement—State Street Bank & Trust Repurchase Agreement, 0.00%, dated 1/31/14, due 2/3/14, proceeds $9,110,680 (collateralized by Fannie Mae, 3.237%, due 5/1/41, value $9,293,845)
(Cost $9,110,680)

      $ 9,110,680   
     

 

 

 

TOTAL INVESTMENTS (d) — 101.2%

  

(Cost $86,974,048)

        104,003,487   

Liabilities Less Other Assets — (1.2)%

        (1,245,294
     

 

 

 

NET ASSETS — 100.0%

      $ 102,758,193   
     

 

 

 

 

(a) Securities whose values are determined or significantly influenced by trading in markets other than the United States or Canada.
(b) Non-income producing security.
(c) Step rate bond. Rate shown is currently in effect at January 31, 2014.
(d) The cost of investments for federal income tax purposes is $86,974,048 resulting in gross unrealized appreciation and depreciation of $17,521,299 and $491,860 respectively, or net unrealized appreciation of $17,029,439.
 

 

See Notes to Financial Statements

 

12


GREEN CENTURY EQUITY FUND PORTFOLIO OF INVESTMENTS

January 31, 2014

(unaudited)

 

 

COMMON STOCKS — 99.7%

  

     SHARES      VALUE  

Software & Services — 12.9%

  

Adobe Systems, Inc. (a)

     5,631       $ 333,299   

Advent Software, Inc.

     560         18,402   

Autodesk, Inc. (a)

     2,598         133,147   

Automatic Data Processing, Inc.

     5,684         435,394   

CA, Inc.

     3,720         119,337   

Cognizant Technology Solutions Corporation, Class A (a)

     3,553         344,357   

Compuware Corporation

     2,506         25,411   

Convergys Corporation

     1,208         24,607   

eBay, Inc. (a)

     13,704         729,053   

FactSet Research Systems, Inc.

     480         50,770   

FleetCor Technologies, Inc. (a)

     807         85,800   

Google, Inc., Class A (a)

     3,221         3,803,904   

International Business Machines Corporation

     12,238         2,162,210   

Intuit, Inc.

     3,343         244,875   

NetSuite, Inc. (a)

     388         40,810   

Salesforce.com, Inc. (a)

     6,672         403,856   

Symantec Corporation

     8,321         178,153   

Teradata Corporation (a)

     1,901         78,169   

Yahoo!, Inc. (a)

     11,392         410,340   
     

 

 

 
        9,621,894   
     

 

 

 

Pharmaceuticals & Biotechnology — 10.6%

  

Affymetrix, Inc. (a)

     777         7,296   

Agilent Technologies, Inc.

     3,924         228,181   

Amgen, Inc.

     8,863         1,054,254   

Biogen Idec, Inc. (a)

     2,796         874,141   

Bristol-Myers Squibb Company

     19,364         967,619   

Cepheid, Inc. (a)

     787         41,601   

Endo Health Solutions, Inc. (a)

     1,331         87,686   

Gilead Sciences, Inc. (a)

     18,005         1,452,103   

Illumina, Inc. (a)

     1,462         222,224   

Life Technologies Corporation (a)

     2,026         154,118   

Merck & Company, Inc.

     34,417         1,823,068   

Mettler-Toledo International, Inc. (a)

     349         85,959   

PAREXEL International Corporation (a)

     656         32,019   

Techne Corporation

     408         37,075   

Thermo Fisher Scientific, Inc.

     4,241         488,309   

Vertex Pharmaceuticals, Inc. (a)

     2,724         215,305   

VIVUS, Inc. (a)

     1,168         8,667   
     SHARES      VALUE  

Pharmaceuticals & Biotechnology — (continued)

  

Waters Corporation (a)

     994       $ 107,620   
     

 

 

 
        7,887,245   
     

 

 

 

Technology Hardware & Equipment — 6.8%

  

Cisco Systems, Inc.

     62,849         1,377,022   

Corning, Inc.

     17,246         296,804   

EMC Corporation

     24,459         592,886   

Flextronics International Ltd. (a)

     7,039         57,368   

Hewlett-Packard Company

     22,645         656,705   

Lexmark International, Inc.

     729         28,569   

Motorola Solutions, Inc.

     2,790         178,002   

Plantronics, Inc.

     515         22,109   

Polycom, Inc. (a)

     1,682         20,066   

QUALCOMM, Inc.

     20,168         1,496,869   

Seagate Technology PLC

     3,815         201,661   

Silicon Graphics International Corporation (a)

     280         3,643   

Super Micro Computer, Inc. (a)

     383         7,874   

Xerox Corporation

     13,973         151,607   
     

 

 

 
        5,091,185   
     

 

 

 

Diversified Financials — 5.9%

  

American Express Company

     11,406         969,738   

Bank of New York Mellon Corporation (The)

     13,570         433,697   

BlackRock, Inc.

     1,578         474,142   

Charles Schwab Corporation (The)

     13,646         338,694   

CME Group, Inc.

     3,751         280,425   

Discover Financial Services

     5,712         306,449   

Franklin Resources, Inc.

     4,891         254,381   

IntercontinentalExchange Group, Inc.

     1,351         282,075   

Invesco Ltd.

     5,171         171,936   

Legg Mason, Inc.

     1,309         55,436   

Northern Trust Corporation

     2,659         160,125   

PHH Corporation (a)

     636         15,436   

State Street Corporation

     5,270         352,826   

T. Rowe Price Group, Inc.

     3,043         238,693   

TD Ameritrade Holding Corporation

     2,582         80,687   
     

 

 

 
        4,414,740   
     

 

 

 

Energy — 5.7%

  

Baker Hughes, Inc.

     5,233         296,397   

Clean Energy Fuels Corporation (a)

     739         8,816   
 

 

13


GREEN CENTURY EQUITY FUND PORTFOLIO OF INVESTMENTS

January 31, 2014

(unaudited)

  continued

 

     SHARES      VALUE  

Energy — (continued)

  

Denbury Resources, Inc. (a)

     4,346       $ 69,840   

Devon Energy Corporation

     4,558         269,925   

Energen Corporation

     841         59,476   

Energy XXI Bermuda Ltd.

     751         17,235   

EOG Resources, Inc.

     3,204         529,429   

EQT Corporation

     1,754         162,789   

FMC Technologies, Inc. (a)

     2,755         136,207   

Geospace Technologies Corporation (a)

     151         12,008   

Hess Corporation

     3,648         275,387   

Marathon Petroleum Corporation

     3,692         321,389   

National Oilwell Varco, Inc.

     5,024         376,850   

Newfield Exploration Company (a)

     1,606         39,781   

Noble Corporation PLC

     2,951         91,570   

Noble Energy, Inc.

     4,238         264,155   

Phillips 66

     6,825         498,839   

Pioneer Natural Resources Company

     1,636         277,007   

QEP Resources, Inc.

     2,089         64,529   

Quicksilver Resources, Inc. (a)

     1,552         4,827   

Southwestern Energy Company (a)

     4,100         166,829   

Spectra Energy Corporation

     7,917         284,616   

Ultra Petroleum Corporation (a)

     1,782         42,679   
     

 

 

 
        4,270,580   
     

 

 

 

Capital Goods — 5.7%

  

3M Company

     7,631         978,218   

A.O. Smith Corporation

     911         43,017   

AECOM Technology Corporation (a)

     1,056         30,275   

Air Lease Corporation

     1,128         35,509   

American Science & Engineering, Inc.

     91         6,223   

Applied Industrial Technologies, Inc.

     442         22,339   

CLARCOR, Inc.

     581         32,199   

Cummins, Inc.

     2,102         266,912   

Deere & Company

     4,275         367,479   

Dover Corporation

     2,030         175,717   

EMCOR Group, Inc.

     780         33,158   

Fastenal Company

     3,367         147,912   

Graco, Inc.

     714         49,616   

Granite Construction, Inc.

     448         14,914   

H&E Equipment Services, Inc. (a)

     349         10,568   

Houston Wire & Cable Company

     181         2,395   
     SHARES      VALUE  

Capital Goods — (continued)

  

Illinois Tool Works, Inc.

     4,997       $ 394,113   

Ingersoll-Rand PLC

     3,457         203,237   

Kadant, Inc.

     148         5,315   

Lincoln Electric Holdings, Inc.

     917         63,456   

Masco Corporation

     4,329         91,602   

Meritor, Inc. (a)

     1,124         12,341   

Middleby Corporation (The) (a)

     223         54,987   

Nordson Corporation

     673         46,652   

Owens Corning (a)

     1,324         50,511   

Pall Corporation

     1,299         104,050   

Pentair Ltd.

     2,332         173,338   

Rockwell Automation, Inc.

     1,650         189,486   

Snap-on, Inc.

     727         72,809   

Tennant Company

     214         13,724   

Timken Company

     941         53,007   

United Rentals, Inc. (a)

     1,087         87,982   

W.W. Grainger, Inc.

     704         165,074   

WABCO Holdings, Inc. (a)

     728         62,768   

Wabtec Corporation

     1,128         83,258   

Xylem, Inc.

     2,161         72,091   
     

 

 

 
        4,216,252   
     

 

 

 

Household & Personal Products — 5.4%

  

Avon Products, Inc.

     5,053         75,239   

Clorox Company (The)

     1,572         138,760   

Colgate-Palmolive Company

     10,881         666,244   

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

     2,831         194,603   

Kimberly-Clark Corporation

     4,501         492,274   

Procter & Gamble Company (The)

     32,154         2,463,640   

WD-40 Company

     181         12,440   
     

 

 

 
        4,043,200   
     

 

 

 

Food & Beverage — 5.1%

  

Bunge Ltd.

     1,720         130,307   

Campbell Soup Company

     2,373         97,791   

Coca-Cola Enterprises, Inc.

     3,043         131,732   

Darling International, Inc. (a)

     1,918         37,516   

General Mills, Inc.

     7,587         364,328   

Green Mountain Coffee Roasters, Inc.

     1,493         120,933   

Hillshire Brands Company

     1,436         51,150   

JM Smucker Company (The)

     1,262         121,644   

Kellogg Company

     3,025         175,390   

Kraft Foods Group, Inc.

     6,999         366,398   
 

 

14


GREEN CENTURY EQUITY FUND PORTFOLIO OF INVESTMENTS

January 31, 2014

(unaudited)

  continued

 

     SHARES      VALUE  

Food & Beverage — (continued)

  

McCormick & Company, Inc.

     1,397       $ 89,659   

Mondelez International, Inc., Class A

     19,881         651,103   

PepsiCo, Inc.

     18,108         1,455,159   

Tootsie Roll Industries, Inc.

     227         6,887   
     

 

 

 
        3,799,997   
     

 

 

 

Healthcare Equipment & Services — 4.0%

  

AmerisourceBergen Corporation

     2,749         184,788   

Becton, Dickinson and Company

     2,288         247,379   

Cerner Corporation (a)

     3,666         208,559   

Cigna Corporation

     3,343         288,534   

Community Health Systems, Inc. (a)

     1         41   

Edwards Lifesciences Corporation (a)

     1,310         85,307   

Emeritus Corporation (a)

     506         11,157   

Henry Schein, Inc. (a)

     1,008         115,809   

Hologic, Inc. (a)

     3,153         67,348   

Humana, Inc.

     1,862         181,173   

IDEXX Laboratories, Inc. (a)

     608         69,470   

Invacare Corporation

     347         7,003   

Laboratory Corporation of America Holdings (a)

     1,051         94,411   

Medtronic, Inc.

     11,827         668,935   

Molina Healthcare, Inc. (a)

     367         13,212   

MWI Veterinary Supply, Inc. (a)

     142         26,449   

Patterson Companies, Inc.

     973         38,881   

Select Medical Holdings Corporation

     417         4,504   

St. Jude Medical, Inc.

     3,410         207,089   

Team Health Holdings, Inc. (a)

     809         34,916   

Varian Medical Systems, Inc. (a)

     1,257         102,207   

WellPoint, Inc.

     3,529         303,494   
     

 

 

 
        2,960,666   
     

 

 

 

Materials — 3.7%

  

Air Products & Chemicals, Inc.

     2,479         260,642   

Albemarle Corporation

     942         60,458   

Alcoa, Inc.

     12,504         143,921   

Avery Dennison Corporation

     1,157         57,005   

Ball Corporation

     1,615         82,672   

Compass Minerals International, Inc.

     394         30,976   

Domtar Corporation

     384         41,245   
     SHARES      VALUE  

Materials — (continued)

  

Eastman Chemical Company

     1,801       $ 140,406   

Ecolab, Inc.

     3,196         321,326   

H.B. Fuller Company

     585         27,249   

International Flavors & Fragrances, Inc.

     953         82,606   

MeadWestvaco Corporation

     2,070         74,665   

Minerals Technologies, Inc.

     404         20,879   

Mosaic Company (The)

     3,470         154,970   

Nucor Corporation

     3,781         182,811   

Praxair, Inc.

     3,469         432,654   

Rock Tenn Company, Class A

     839         85,142   

Schnitzer Steel Industries, Inc., Class A

     283         7,477   

Sealed Air Corporation

     2,167         67,589   

Sherwin-Williams Company (The)

     1,019         186,742   

Sigma-Aldrich Corporation

     1,404         130,530   

Sonoco Products Company

     1,169         48,373   

Valspar Corporation (The)

     977         68,663   

Wausau Paper Corporation

     442         6,038   

Worthington Industries, Inc.

     614         24,892   
     

 

 

 
        2,739,931   
     

 

 

 

Real Estate — 3.7%

  

American Tower Corporation

     4,652         376,254   

AvalonBay Communities, Inc.

     1,464         180,804   

Boston Properties, Inc.

     1,812         195,859   

CBRE Group, Inc., Class A (a)

     3,288         87,264   

Corporate Office Properties Trust

     1,017         25,272   

Digital Realty Trust, Inc.

     1,497         76,332   

Duke Realty Corporation

     3,776         59,321   

Equity Residential

     4,063         225,009   

Federal Realty Investment Trust

     767         83,603   

Forest City Enterprises, Inc., Class A (a)

     1,644         29,904   

HCP, Inc.

     5,415         211,997   

Host Hotels & Resorts, Inc.

     8,941         164,425   

Jones Lang LaSalle, Inc.

     519         59,301   

Liberty Property Trust

     1,664         60,570   

Macerich Company (The)

     1,638         92,711   

Plum Creek Timber Company, Inc.

     2,042         87,949   

Potlatch Corporation

     481         19,240   

Prologis, Inc.

     5,814         225,351   

UDR, Inc.

     2,925         71,194   

Vornado Realty Trust

     1,961         180,079   

Weyerhaeuser Company

     6,913         206,560   
     

 

 

 
        2,718,999   
     

 

 

 
 

 

15


GREEN CENTURY EQUITY FUND PORTFOLIO OF INVESTMENTS

January 31, 2014

(unaudited)

  continued

 

     SHARES      VALUE  

Retailing — 3.6%

  

  

ANN, Inc. (a)

     511       $ 16,526   

Bed Bath & Beyond, Inc. (a)

     2,597         165,818   

Best Buy Company, Inc.

     3,272         77,023   

Blue Nile, Inc. (a)

     131         5,641   

Brown Shoe Company, Inc.

     495         11,722   

Buckle, Inc. (The)

     344         15,246   

CarMax, Inc. (a)

     2,678         120,805   

Foot Locker, Inc.

     1,761         67,975   

GameStop Corporation, Class A

     1,372         48,116   

Gap, Inc. (The)

     3,539         134,765   

Genuine Parts Company

     1,807         148,626   

HSN, Inc.

     437         23,934   

Kohl’s Corporation

     2,449         123,993   

LKQ Corporation (a)

     3,480         94,204   

Men’s Wearhouse, Inc. (The)

     555         26,662   

Netflix, Inc. (a)

     628         257,059   

New York & Company, Inc. (a)

     300         1,359   

Nordstrom, Inc.

     1,828         105,019   

Nutrisystem, Inc.

     323         4,593   

Office Depot, Inc. (a)

     5,788         28,303   

PetSmart, Inc.

     1,152         72,576   

Pier 1 Imports, Inc.

     1,119         21,384   

Pool Corporation

     544         29,474   

Shutterfly, Inc. (a)

     440         20,838   

Signet Jewelers Ltd.

     938         74,618   

Staples, Inc.

     7,683         101,108   

Tiffany & Company

     1,533         127,530   

TJX Companies, Inc. (The)

     8,406         482,168   

Tractor Supply Company

     1,678         111,604   

TripAdvisor, Inc. (a)

     1,366         105,442   

Ulta Salon, Cosmetics & Fragrance, Inc. (a)

     706         60,511   

Vitacost.com, Inc. (a)

     220         1,214   

Weyco Group, Inc.

     55         1,453   
     

 

 

 
        2,687,309   
     

 

 

 

Semiconductors — 3.5%

  

Advanced Micro Devices, Inc. (a)

     7,178         24,620   

Analog Devices, Inc.

     3,699         178,551   

Applied Materials, Inc.

     14,246         239,618   

Intel Corporation

     58,563         1,437,136   

Lam Research Corporation (a)

     1,900         96,159   

Microchip Technology, Inc.

     2,302         103,268   

Texas Instruments, Inc.

     12,924         547,977   
     

 

 

 
        2,627,329   
     

 

 

 
     SHARES      VALUE  

Banks — 3.5%

  

  

Bank of Hawaii Corporation

     522       $ 29,639   

BB&T Corporation

     8,322         311,326   

Cathay General Bancorp

     871         20,469   

CIT Group, Inc.

     2,226         103,620   

Comerica, Inc.

     2,162         99,020   

Heartland Financial USA, Inc.

     149         3,753   

International Bancshares Corporation

     647         15,146   

KeyCorp

     10,932         139,492   

M&T Bank Corporation

     1,369         152,657   

New York Community Bancorp, Inc.

     5,154         83,443   

Old National Bancorp

     1,196         16,744   

People’s United Financial, Inc.

     3,764         53,487   

PNC Financial Services Group, Inc. (The)

     6,257         499,809   

Popular, Inc. (a)

     1,206         31,838   

Regions Financial Corporation

     16,303         165,802   

U.S. Bancorp

     21,625         859,161   

Umpqua Holdings Corporation

     1,308         22,969   
     

 

 

 
        2,608,375   
     

 

 

 

Insurance — 3.0%

  

ACE Ltd.

     3,993         374,583   

Aflac, Inc.

     5,482         344,160   

Chubb Corporation (The)

     3,022         255,480   

Hartford Financial Services Group, Inc.

     5,039         167,547   

Marsh & McLennan Companies, Inc.

     6,490         296,658   

PartnerRe Ltd.

     573         56,252   

Principal Financial Group, Inc.

     3,505         152,713   

Progressive Corporation (The)

     6,659         154,755   

Travelers Companies, Inc. (The)

     4,383         356,250   

Willis Group Holdings PLC

     1,952         84,053   
     

 

 

 
        2,242,451   
     

 

 

 

Consumer Services — 2.9%

  

Choice Hotels International, Inc.

     383         18,587   

Darden Restaurants, Inc.

     1,519         75,099   

DeVry Education Group, Inc.

     661         23,889   

Jack in the Box, Inc. (a)

     478         24,173   

Marriott International, Inc., Class A

     2,827         139,371   

McDonald’s Corporation

     11,749         1,106,403   
 

 

16


GREEN CENTURY EQUITY FUND PORTFOLIO OF INVESTMENTS

January 31, 2014

(unaudited)

  continued

 

     SHARES      VALUE  

Consumer Services — (continued)

  

Royal Caribbean Cruises Ltd.

     1,792       $ 88,883   

Starbucks Corporation

     8,837         628,487   

Vail Resorts, Inc.

     418         28,487   
     

 

 

 
        2,133,379   
     

 

 

 

Transportation — 2.7%

  

Arkansas Best Corporation

     294         10,081   

Avis Budget Group, Inc. (a)

     1,258         47,439   

C.H. Robinson Worldwide, Inc.

     1,859         108,826   

CSX Corporation

     11,994         322,759   

Expeditors International of Washington, Inc.

     2,491         101,782   

Genesee & Wyoming, Inc., Class A (a)

     604         54,565   

Hertz Global Holdings, Inc. (a)

     4,675         121,644   

Norfolk Southern Corporation

     3,673         340,083   

Ryder System, Inc.

     608         43,284   

United Parcel Service, Inc., Class B

     8,479         807,455   

Wesco Aircraft Holdings, Inc. (a)

     740         16,539   
     

 

 

 
        1,974,457   
     

 

 

 

Media — 2.6%

  

Cablevision Systems Corporation, Class A

     2,237         35,882   

Discovery Communications, Inc., Class A (a)

     1,760         140,413   

Discovery Communications, Inc., Class C (a)

     1,049         77,332   

DreamWorks Animation SKG, Inc., Class A (a)

     796         26,857   

John Wiley & Sons, Inc., Class A

     545         29,506   

Liberty Global PLC, Class A (a)

     2,518         201,264   

Liberty Global PLC, Series C (a)

     1,940         153,900   

New York Times Company (The), Class A

     1,557         22,016   

Scholastic Corporation

     291         9,600   

Scripps Networks Interactive, Inc., Class A

     984         71,360   

Time Warner Cable, Inc.

     3,361         447,920   

Time Warner, Inc.

     10,809         679,129   
     

 

 

 
        1,895,179   
     

 

 

 

Consumer Durables & Apparel — 2.3%

  

Blyth, Inc.

     100         938   

Callaway Golf Company

     769         6,283   
     SHARES      VALUE  

Consumer Durables & Apparel — (continued)

  

Columbia Sportswear Company

     154       $ 11,450   

CSS Industries, Inc.

     90         2,412   

Deckers Outdoor Corporation (a)

     402         31,336   

Ethan Allen Interiors, Inc.

     319         8,052   

Hanesbrands, Inc.

     1,155         82,167   

La-Z-Boy, Inc.

     578         15,560   

Mattel, Inc.

     4,099         155,106   

Meritage Homes Corporation (a)

     416         20,205   

Mohawk Industries, Inc. (a)

     719         102,227   

NIKE, Inc., Class B

     8,371         609,827   

Oxford Industries, Inc.

     172         12,981   

Polaris Industries, Inc.

     761         95,277   

PVH Corporation

     944         114,101   

Tupperware Brands Corporation

     604         47,329   

Under Armour, Inc., Class A (a)

     942         101,840   

VF Corporation

     4,184         244,555   

Wolverine World Wide, Inc.

     1,175         32,782   
     

 

 

 
        1,694,428   
     

 

 

 

Utilities — 2.0%

  

AGL Resources, Inc.

     1,382         66,032   

Avista Corporation

     700         20,181   

CenterPoint Energy, Inc.

     4,741         110,939   

Cleco Corporation

     700         34,202   

Consolidated Edison, Inc.

     3,417         185,919   

Integrys Energy Group, Inc.

     927         50,373   

MDU Resources Group, Inc.

     2,087         66,867   

MGE Energy, Inc.

     274         15,602   

New Jersey Resources Corporation

     481         21,934   

NiSource, Inc.

     3,640         125,107   

Northeast Utilities

     3,711         162,542   

Northwest Natural Gas Company

     330         13,715   

ONEOK, Inc.

     2,410         165,061   

Pepco Holdings, Inc.

     3,142         61,049   

Piedmont Natural Gas Company, Inc.

     881         29,091   

Questar Corporation

     2,041         47,596   

Sempra Energy

     2,719         252,078   

UGI Corporation

     1,326         57,535   

WGL Holdings, Inc.

     603         22,781   
     

 

 

 
        1,508,604   
     

 

 

 

Renewable Energy & Energy Efficiency — 1.0%

  

ITC Holdings Corporation

     612         63,342   

Itron, Inc. (a)

     456         18,413   

Johnson Controls, Inc.

     8,044         370,989   
 

 

17


GREEN CENTURY EQUITY FUND PORTFOLIO OF INVESTMENTS

January 31, 2014

(unaudited)

  concluded

 

     SHARES      VALUE  

Renewable Energy & Energy Efficiency — (continued)

  

Ormat Technologies, Inc.

     191       $ 4,708   

Quanta Services, Inc. (a)

     2,448         76,304   

SunPower Corporation (a)

     521         16,860   

Tesla Motors, Inc. (a)

     995         180,503   
     

 

 

 
        731,119   
     

 

 

 

Telecommunication Services — 0.8%

  

CenturyLink, Inc.

     7,124         205,599   

Cincinnati Bell, Inc. (a)

     2,149         7,436   

Frontier Communications Corporation

     11,800         55,460   

Leap Wireless International, Inc. (a)

     619         10,863   

Level 3 Communications, Inc. (a)

     1,816         58,294   

SBA Communications Corporation, Class A (a)

     1,531         142,000   

Sprint Corporation (a)

     11,450         94,691   

Windstream Holdings, Inc.

     6,916         51,732   
     

 

 

 
        626,075   
     

 

 

 

Commercial & Professional Services — 0.8%

  

Copart, Inc. (a)

     1,316         45,112   

Corporate Executive Board Company (The)

     391         28,582   

Deluxe Corporation

     585         28,402   

Dun & Bradstreet Corporation (The)

     452         49,720   

Heidrick & Struggles International, Inc.

     189         3,153   

HNI Corporation

     541         18,562   

ICF International, Inc. (a)

     227         7,641   

IHS, Inc., Class A (a)

     722         81,882   

Interface, Inc.

     800         16,760   

Iron Mountain, Inc.

     1,654         43,682   

Kelly Services, Inc.

     396         9,496   

Knoll, Inc.

     550         9,130   

Manpowergroup, Inc.

     911         70,967   

On Assignment, Inc. (a)

     529         15,701   

R.R. Donnelley & Sons Company

     2,118         39,119   

Robert Half International, Inc.

     1,621         67,725   

RPX Corporation (a)

     295         4,785   

Steelcase, Inc.

     1,050         15,509   

Team, Inc. (a)

     246         10,413   

Tetra Tech, Inc. (a)

     773         22,811   

TrueBlue, Inc. (a)

     474         11,627   
     SHARES      VALUE  

Commercial & Professional Services — (continued)

  

United Stationers, Inc.

     441       $ 18,271   
     

 

 

 
        619,050   
     

 

 

 

Automobiles & Components — 0.6%

  

Autoliv, Inc.

     1,115         101,097   

BorgWarner, Inc.

     2,702         145,097   

Harley-Davidson, Inc.

     2,663         164,281   
     

 

 

 
        410,475   
     

 

 

 

Food & Staples Retailing — 0.5%

  

Safeway, Inc.

     2,813         87,878   

Sysco Corporation

     7,025         246,437   
     

 

 

 
        334,315   
     

 

 

 

Healthy Living — 0.4%

  

Hain Celestial Group, Inc. (The) (a)

     556         51,091   

United Natural Foods, Inc. (a)

     575         38,853   

Whole Foods Market, Inc.

     4,193         219,126   
     

 

 

 
        309,070   
     

 

 

 

Total Common Stocks
(Cost $52,661,843)

        74,166,304   
     

 

 

 

SHORT-TERM OBLIGATION — 0.2%

  

Repurchase Agreement—
State Street Bank & Trust Repurchase Agreement, 0.00%, dated 1/31/14, due 2/3/14, proceeds $177,473 (collateralized by Fannie Mae, 3.035%, due 1/1/42, value $181,092)
(Cost $177,473)

        177,473   
     

 

 

 

TOTAL INVESTMENTS (b) — 99.9%

  

(Cost $52,839,316)

        74,343,777   

Other Assets Less Liabilities — 0.1%

        63,176   
     

 

 

 

NET ASSETS — 100.0%

      $ 74,406,953   
     

 

 

 

 

(a) Non-income producing security.
(b) The cost of investments for federal income tax purposes is $53,876,806 resulting in gross unrealized appreciation and depreciation of $22,455,637 and $1,988,666 respectively, or net unrealized appreciation of $20,466,971.
 

 

See Notes to Financial Statements

 

18


GREEN CENTURY FUNDS STATEMENTS OF ASSETS AND LIABILITIES

January 31, 2014

(unaudited)

 

     BALANCED FUND     EQUITY FUND  

ASSETS:

    

Investments, at value (cost $86,974,048 and $52,839,316, respectively)

   $ 104,003,487      $ 74,343,777   
Receivables for:     

Securities sold

     —          8,564   

Capital stock sold

     62,714        72,582   

Interest

     143,989        —     

Dividends

     41,768        70,083   
  

 

 

   

 

 

 

Total assets

     104,251,958        74,495,006   
  

 

 

   

 

 

 

LIABILITIES:

    

Payable for securities purchased

     1,343,371        —     

Payable for capital stock repurchased

     20,513        7,376   

Accrued expenses

     129,881        80,677   
  

 

 

   

 

 

 

Total liabilities

     1,493,765        88,053   
  

 

 

   

 

 

 

NET ASSETS

   $ 102,758,193      $ 74,406,953   
  

 

 

   

 

 

 

NET ASSETS CONSIST OF:

    

Paid-in capital

   $ 83,351,627      $ 55,892,745   

Undistributed net investment income/(loss)

     (45,231     33,610   

Accumulated net realized gains/(losses) on investments

     2,422,358        (3,023,863

Net unrealized appreciation on investments

     17,029,439        21,504,461   
  

 

 

   

 

 

 

NET ASSETS

   $ 102,758,193      $ 74,406,953   
  

 

 

   

 

 

 

SHARES OUTSTANDING (UNLIMITED NUMBER OF SHARES AUTHORIZED @ $0.01 PAR VALUE)

     4,525,917        2,658,604   
  

 

 

   

 

 

 

NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE

   $ 22.70      $ 27.99   
  

 

 

   

 

 

 

GREEN CENTURY FUNDS STATEMENTS OF OPERATIONS

For the six months ended January 31, 2014
(unaudited)

 

     BALANCED FUND      EQUITY FUND  

INVESTMENT INCOME:

     

Interest income

   $ 210,454       $ —     

Dividend and other income (net of $5,716 and $0 foreign withholding taxes, respectively)

     579,684         719,894   
  

 

 

    

 

 

 

Total investment income

     790,138         719,894   
  

 

 

    

 

 

 

EXPENSES:

     

Administrative services fee

     397,016         360,350   

Investment advisory fee

     310,906         90,084   
  

 

 

    

 

 

 

Total expenses

     707,922         450,434   
  

 

 

    

 

 

 

NET INVESTMENT INCOME

     82,216         269,460   
  

 

 

    

 

 

 

NET REALIZED AND UNREALIZED GAIN:

     

Net realized gain on investments

     4,868,681         2,551,868   

Change in net unrealized appreciation on investments

     420,829         1,865,968   
  

 

 

    

 

 

 

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS

     5,289,510         4,417,836   
  

 

 

    

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 5,371,726       $ 4,687,296   
  

 

 

    

 

 

 

 

See Notes to Financial Statements

 

19


GREEN CENTURY FUNDS STATEMENTS OF CHANGES IN NET ASSETS

 

     BALANCED FUND     EQUITY FUND  
     FOR THE
SIX MONTHS ENDED
JANUARY 31, 2014
(UNAUDITED)
    FOR THE
YEAR ENDED
JULY 31, 2013
    FOR THE
SIX MONTHS ENDED
JANUARY 31, 2014
(UNAUDITED)
    FOR THE
YEAR ENDED
JULY 31, 2013
 

INCREASE IN NET ASSETS:

        
From operations:         

Net investment income

   $ 82,216      $ 455,487      $ 269,460      $ 530,547   

Net realized gain on investments

     4,868,681        2,094,952        2,551,868        1,991,872   

Change in net unrealized appreciation on Investments

     420,829        9,690,750        1,865,968        11,554,662   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in net assets resulting from operations

     5,371,726        12,241,189        4,687,296        14,077,081   
  

 

 

   

 

 

   

 

 

   

 

 

 
Dividends and distributions to shareholders:         

From net investment income

     (135,495     (437,535     (269,275     (489,952
Capital share transactions:         

Proceeds from sales of shares

     15,527,022        20,192,175        8,103,801        8,422,581   

Reinvestment of dividends and distributions

     132,079        426,694        264,368        482,186   

Payments for shares redeemed

     (3,787,606     (5,570,183     (5,188,034     (6,654,752
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in net assets resulting from capital share transactions

     11,871,495        15,048,686        3,180,135        2,250,015   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total increase in net assets

     17,107,726        26,852,340        7,598,156        15,837,144   

NET ASSETS:

        

Beginning of year

     85,650,467        58,798,127        66,808,797        50,971,653   
  

 

 

   

 

 

   

 

 

   

 

 

 

End of year

   $ 102,758,193      $ 85,650,467      $ 74,406,953      $ 66,808,797   
  

 

 

   

 

 

   

 

 

   

 

 

 

Undistributed net investment income/(loss)

     (45,231     8,048        33,610        33,425   

 

See Notes to Financial Statements

 

20


GREEN CENTURY BALANCED FUND FINANCIAL HIGHLIGHTS

 

     SIX MONTHS  ENDED
JANUARY 31, 2014
    FOR THE YEARS ENDED JULY 31,  
     (UNAUDITED)     2013     2012     2011     2010     2009  

Net Asset Value, beginning of period

   $ 21.43      $ 18.06      $ 17.50      $ 15.76      $ 14.75      $ 16.52   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Income from investment operations:             

Net investment income

     0.02        0.13        0.10        0.13        0.18        0.27   

Net realized and unrealized gain (loss) on investments

     1.28        3.37        0.56        1.75        1.01        (1.77
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total increase (decrease) from investment operations

     1.30        3.50        0.66        1.88        1.19        (1.50
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Less dividends:             

Dividends from net investment income

     (0.03     (0.13     (0.10     (0.14     (0.18     (0.27
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Asset Value, end of period

   $ 22.70      $ 21.43      $ 18.06      $ 17.50      $ 15.76      $ 14.75   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total return

     6.07 %(a)      19.44     3.81     11.92     8.07     (8.88 )% 
Ratios/Supplemental data:             

Net assets, end of period (in 000’s)

   $ 102,758      $ 85,650      $ 58,798      $ 58,410      $ 52,761      $ 48,105   

Ratio of expenses to average net assets

     1.48 %(b)      1.48     1.45     1.38     1.38     1.38

Ratio of net investment income to average net assets

     0.17 %(b)      0.66     0.58     0.72     1.13     1.97

Portfolio turnover

     25 %(a)      31     58     70     48     33

 

(a) Not annualized.
(b) Annualized.

GREEN CENTURY EQUITY FUND FINANCIAL HIGHLIGHTS

 

     SIX MONTHS ENDED
JANUARY 31, 2014
    FOR THE YEARS ENDED JULY 31,  
     (UNAUDITED)     2013     2012     2011     2010     2009  

Net Asset Value, beginning of period

   $ 26.30      $ 20.81      $ 19.99      $ 17.44      $ 15.65      $ 18.83   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Income from investment operations:             

Net investment income

     0.10        0.21        0.19        0.18        0.17        0.21   

Net realized and unrealized gain (loss) on investments

     1.69        5.48        0.83        2.57        1.77        (3.17
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total increase (decrease) from investment operations

     1.79        5.69        1.02        2.75        1.94        (2.96
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Less dividends:             

Dividends from net investment income

     (0.10     (0.20     (0.20     (0.20     (0.15     (0.22

Distributions from net realized gains

     —          —          —          —          —          (a) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total decrease from dividends

     (0.10     (0.20     (0.20     (0.20     (0.15     (0.22
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Asset Value, end of period

   $ 27.99      $ 26.30      $ 20.81      $ 19.99      $ 17.44      $ 15.65   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total return

     6.80 %(b)      27.49     5.14     15.77     12.39     (15.58 )% 
Ratios/Supplemental data:             

Net assets, end of period (in 000’s)

   $ 74,407      $ 66,809      $ 50,972      $ 53,363      $ 46,591      $ 40,659   

Ratio of expenses to average net assets

     1.25 %(c)      1.25     1.16     0.95     0.95     0.95

Ratio of net investment income to average net assets

     0.75 %(c)      0.92     0.97     0.92     0.97     1.38

Portfolio turnover

     14 %(b)      17     14     13     13     23

 

(a) Amount represents less than 0.005 per share.
(b) Not annualized.
(c) Annualized.

 

See Notes to Financial Statements

 

21


GREEN CENTURY FUNDS NOTES TO FINANCIAL STATEMENTS

 

 

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, diversified 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.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The following is a summary of the Funds’ significant accounting policies:

 

  (A)

Investment Valuation:     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 ® 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 a 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 certificates of deposit and 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 or valuation provided by a pricing service is deemed not reliable, are valued at fair value by management as determined in good faith under guidelines established by the Trustees. Certificates of deposit are valued at cost plus accrued interest, and short-term obligations maturing in sixty days or less are valued at amortized cost, both of which approximate market value.

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:

Level 1 — quoted prices for active markets for identical securities. An active market for the security is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value.

Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Quoted prices for identical or similar assets in markets that are not active. Investments valued at amortized cost. Inputs that are derived principally from or corroborated by observable market data. An adjustment to any observable input that is significant to the fair value may render the measurement a Level 3 measurement.

 

22


GREEN CENTURY FUNDS NOTES TO FINANCIAL STATEMENTS

  continued

 

Level 3 — significant unobservable inputs, including the Fund’s own assumptions in determining the fair value of investments.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used to value the Balanced Fund’s net assets as of January 31, 2014:

 

     LEVEL 1      LEVEL 2          LEVEL 3          TOTAL  

COMMON STOCKS

     $73,923,161         $            —           $            —           $73,923,161   

CORPORATE BONDS & NOTES

     —           15,629,916                     —           15,629,916   

U.S. GOVERNMENT AGENCIES

     —           5,244,730                     —           5,244,730   

CERTIFICATES OF DEPOSIT

     —           95,000                     —           95,000   

SHORT-TERM OBLIGATIONS

     —           9,110,680                     —           9,110,680   
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     $73,923,161         $30,080,326         $            —           $104,003,487   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following is a summary of the inputs used to value the Equity Fund’s net assets as of January 31, 2014:

 

     LEVEL 1      LEVEL 2          LEVEL 3          TOTAL  

COMMON STOCKS

     $74,166,304         $       —           $            —           $74,166,304   

SHORT-TERM OBLIGATIONS

     —           177,473                     —           177,473   
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     $74,166,304         $177,473         $            —           $74,343,777   
  

 

 

    

 

 

    

 

 

    

 

 

 

The Funds adopted the Financial Accounting Standards Board (“FASB”) amendments to authoritative guidance which require the Funds to disclose details of transfers in and out of Level 1 and Level 2 measurements and Level 2 and Level 3 measurements and the reasons for the transfers. For the six months ended January 31, 2014, there were no transfers in and out of Level 1, Level 2 and Level 3. Neither of the Funds held any Level 3 securities during the six months ended January 31, 2014. It is the Funds’ policy to recognize transfers into and out of all Levels at the end of the reporting period.

 

  (B) Securities Transactions and Investment Income:     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.
  (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 is authorized to 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 involves risk such as the possibility of illiquid markets or imperfect correlation between the value of the option and the underlying securities. The Funds are also authorized to write put and 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

 

23


GREEN CENTURY FUNDS NOTES TO FINANCIAL STATEMENTS

  continued

 

  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. In the six months ended January 31, 2014, neither the Balanced Fund nor the Equity Fund utilized options or wrote put or call options.
  (D) Repurchase Agreements:     The Funds 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 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 U.S. GAAP. 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 (“RICs”). Accordingly, no provisions for Federal income or excise tax are necessary.

In July 2006, the FASB issued Accounting for Uncertainty in Income Taxes . This interpretation addresses the accounting for uncertainty in income taxes and 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). The Funds recognize tax benefits only if it is more likely than not that a tax position (including the Funds’ assertion that their income is exempt from tax) will be sustained upon examination. The Funds adopted Accounting for Uncertainty in Income Taxes in fiscal year 2008. The Funds had no material uncertain tax positions and have not recorded a liability for unrecognized tax benefits as of January 31, 2014. Also, the Funds had recognized no interest and penalties related to uncertain tax benefits through January 31, 2014. At January 31, 2014, the tax years 2010 through 2013 remain open to examination by the Internal Revenue Service.

The Regulated Investment Company Modernization Act of 2010 (“RIC MOD”) was signed into law on December 22, 2010. RIC MOD makes changes to a number of the federal income and excise tax provisions impacting RICs, including simplification provisions on asset diversification and qualifying income tests, provisions aimed at preserving the character of the distributions made by the RIC and coordination of the income and excise tax distribution requirements, and provisions for allowing unlimited years carryforward for capital losses.

  (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

 

24


GREEN CENTURY FUNDS NOTES TO FINANCIAL STATEMENTS

  continued

 

  shares held 60 days or less from their purchase date. For the six months ended January 31, 2014, the Balanced Fund and Equity Fund received $4,669 and $232, respectively, in redemption fees. Redemption fees are recorded as an adjustment to paid-in capital.
  (H) Indemnification:      The Fund’s organizational documents provide that trustees and officers are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote. As of six months ended January 31, 2014, no liability has been accrued.

NOTE 2 — Transactions With Affiliates

  (A) Investment Adviser:     Green Century Capital Management, Inc. (“Green Century”) is the adviser (“the Adviser”) for the Funds. Green Century is owned by Paradigm Partners. Green Century oversees the portfolio management of the Funds on a day-to-day basis. 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. 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, LLC (“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 million of average daily net assets and 0.35% on average daily net assets in excess of $30 million for its services. For the six months ended January 31, 2014, Green Century accrued fees of $174,973 to Trillium. Northern Trust Investments, Inc. (“Northern Trust”) is the subadviser for the Equity Fund. Northern Trust is paid a fee by the Adviser based on Northern Trust’s fee schedule of the greater of $75,000 or 0.10% of the value of the average daily net assets of the Fund up to but not including $50 million, 0.05% of the average daily net assets of the Fund from and including $50 million up to but not including $100 million and 0.03% of the average daily net assets of the Fund equal to or in excess of $100 million for its services. For the six months ended January 31, 2014 Green Century accrued fees of $37,808 to Northern Trust.
  (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; interest; taxes; brokerage costs and other capital expenses; expenses of non-interested trustees (including counsel fees) and any extraordinary expenses. 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 1.48% of the Fund’s average daily net assets. 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 1.25% 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

 

25


GREEN CENTURY FUNDS NOTES TO FINANCIAL STATEMENTS

  continued

 

  ended January 31, 2014, Green Century accrued fees of $51,642 and $49,289 to UMBFS related to services performed on behalf of the Balanced Fund and the Equity Fund, respectively.
  (E) Index Agreement:     The Equity Fund invests in the securities of the companies included in the MSCI KLD 400 Social Index (the “Index”). The Index is owned and maintained by MSCI ESG Research (“MSCI”). For the use of the Index, MSCI is paid by the Adviser an annual license fee of $25,000, plus the greater of $25,000 or at an annual rate of 0.05% on the first $100 million of average daily net assets, 0.04% on the next $100 million of average daily net assets, and 0.03% on average daily net assets in excess of $200 million. For the six months ended January 31, 2014, Green Century accrued fees of $30,620 to MSCI.

NOTE 3 — Investment Transactions

The Balanced Fund’s cost of purchases and proceeds from sales of securities, other than short-term securities, aggregated $32,789,397 and $22,097,081, respectively, for the six months ended January 31, 2014. The Equity Fund’s cost of purchases and proceeds from sales of securities, other than short-term securities, aggregated $13,188,800 and $9,888,110, respectively.

NOTE 4 — Federal Income Tax Information

The tax basis of the components of distributable net earnings (deficit) at July 31, 2013 were as follows:

 

     BALANCED FUND     EQUITY FUND  

Undistributed ordinary income

   $ 8,048      $ 18,174   

Undistributed long-term capital gains

     0        0   
  

 

 

   

 

 

 

Tax accumulated earnings

     8,048        18,174   
  

 

 

   

 

 

 

Accumulated capital and other losses

     (2,446,323     (4,419,664

Unrealized appreciation (depreciation)

     16,608,610        18,497,677   
  

 

 

   

 

 

 

Distributable net earnings (deficit)

   $ 14,170,335      $ 14,096,187   
  

 

 

   

 

 

 

The Balanced Fund and the Equity Fund had accumulated short term capital loss carryforwards of $2,446,323 and $4,419,664, respectively, of which $2,446,323 and $3,499,154, respectively, expire in the year 2018 and $0 and $920,510, respectively, expire in the year 2019. To the extent that a Fund realizes future net capital gains, those gains will be offset by any unused capital loss carryforwards.

Capital loss carryovers are available to offset future realized capital gains and thereby reduce further taxable gain distributions. During the year ended July 31, 2013, the Balanced and Equity Fund utilized $1,666,588 and $1,777,981, respectively of their capital loss carryovers.

The tax character of distributions paid during the fiscal years ended July 31, 2013 and July 31, 2012 were as follows:

 

     BALANCED FUND      EQUITY FUND  
     YEAR ENDED
JULY 31, 2013
     YEAR ENDED
JULY 31, 2012
     YEAR ENDED
JULY 31, 2013
     YEAR ENDED
JULY 31, 2012
 

Ordinary income

   $ 437,535       $ 330,794       $ 489,952       $ 503,447   

Long-term capital gains

     —           —           —           —     

 

26


GREEN CENTURY FUNDS NOTES TO FINANCIAL STATEMENTS

  concluded

 

NOTE 5 — Capital Share Transactions

Capital Share transactions for the Balanced Fund and the Equity Fund were as follows:

 

     BALANCED FUND     EQUITY FUND  
     SIX MONTHS ENDED
JANUARY 31, 2014
    YEAR ENDED
JULY 31, 2013
    SIX MONTHS ENDED
JANUARY 31, 2014
    YEAR ENDED
JULY 31, 2013
 

Shares sold

     693,829        1,000,325        297,227        355,575   

Reinvestment of dividends

     5,647        22,065        9,186        21,267   

Shares redeemed

     (170,420     (281,498     (188,502     (285,551
  

 

 

   

 

 

   

 

 

   

 

 

 
     529,056        740,892        117,911        91,291   
  

 

 

   

 

 

   

 

 

   

 

 

 

NOTE 6 — Recent Accounting Pronouncements

In January 2013, the FASB issued ASU No. 2013-01 Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities . This update gives additional clarification to the FASB ASU No. 2011-11 Disclosures about Offsetting Assets and Liabilities. The amendments in this ASU require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The ASU is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The guidance requires retrospective application for all comparative periods presented. Management has assessed the potential impact, in addition to expanded financial statement disclosure, that may result from adopting ASU No. 2013-01 and determined there are no changes to the financial statements.

NOTE 7 — Subsequent Events

Subsequent to January 31, 2014 and through the date on which the financial statements were available for issuance, management has evaluated subsequent events and concluded there were no subsequent events requiring accrual or disclosure.

 

27


BOARD OF TRUSTEES’ CONSIDERATION OF ADVISORY AND SUBADVISORY AGREEMENTS

 

The Board of Trustees of the Green Century Funds considered and approved the continuance of two advisory and two subadvisory agreements during the six months ended January 31, 2014.

INVESTMENT ADVISORY AGREEMENTS WITH GREEN CENTURY CAPITAL MANAGEMENT, INC.

The Board, including the Independent Trustees, approved the continuance of the Investment Advisory Agreements (the “Advisory Agreements”) between the Trust, on behalf of the Balanced Fund and the Equity Fund (the “Funds” and each a “Fund”), and Green Century Capital Management (“Green Century” or the “Adviser”), at a meeting on October 4, 2013. The Trustees considered, among other things, information provided by Green Century regarding the investment performance of each Fund; the expenses of each Fund and the advisory fee paid to Green Century by each Fund; and the profitability to Green Century of its advisory relationship with each Fund. The Independent Trustees were assisted 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. The Trustees also received a memorandum from independent legal counsel advising them of their duties and responsibilities in connection with the review of the Advisory Agreements. 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 performed for each of the Funds by the Adviser, including the resources 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 MSCI KLD 400 Social Index (the “Index”); implementing the environmental and other policies of the Trust by voting the Equity Fund’s shareholder proxies; and overall compliance oversight provided by the Adviser. The Trustees also considered the Adviser’s supervision of Northern Trust Investments, Inc. (“Northern Trust”), the subadviser of the Equity Fund, which performs day-to-day portfolio management for the Fund.

With respect to the Balanced Fund, the services 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 and other policies of the Trust by voting the Balanced Fund’s shareholder proxies; and overall compliance oversight provided by the Adviser. The Trustees also considered the Adviser’s supervision of Trillium Asset Management, LLC (“Trillium”), the subadviser of the Balanced Fund, which performs the day-to-day portfolio management for the Fund.

In addition, the Trustees considered the administrative services provided by the Adviser to both Funds under a separate agreement, including the coordination of the activities of the Funds’ other service providers. Based on its review of all of the services provided, the Trustees concluded that the nature, quality, and extent of services provided by the Adviser supported the continuance of the Advisory Agreements with respect to the Equity Fund and 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 Index. The Trustees reviewed the performance of the Equity Fund, exclusive of the expenses of the Fund, as compared to that of the Index for the periods ended July 31, 2013, and noted that the Equity Fund’s performance closely followed that of the Index. In particular, they observed that 37 basis points of the Equity Fund’s one-year variance from the Index’s performance was attributable to factors other than Fund fees and expenses. After considering all the factors deemed appropriate, the Trustees, including the Independent Trustees, concluded that the performance of the Equity Fund supported the continuance of the Advisory Agreement with respect to the Equity Fund.

 

28


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 Morningstar to have similar investment objectives as well as the Balanced Fund’s performance measured against the Lipper Balanced Fund Index (“Lipper”), which is a broad-based balanced fund market index, and a custom balanced index (“Custom Index”) comprised of a 60% weighting in the S&P 1500 Index and a 40% weighting in the BofA Merrill Lynch 1-10 Year US Corporate and Government Index. The Trustees noted that as of the period ended August 31, 2013, the Balanced Fund’s one- and three year average annual returns outperformed the Lipper and its five- and ten- year average annual returns underperformed the Lipper. The Trustees also noted that as of the period ended August 31, 2013, the Balanced Fund’s one- year average annual returns outperformed the Custom Index and its three-, five- and ten- year average annual returns had underperformed the Custom Index. The Trustees also considered the performance information they had been provided throughout the year. After weighing all the factors deemed appropriate, including the environmental screens applied to the Fund’s investment process, 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.

The Costs of Services Provided and Profitability.     The Trustees considered the costs of the services provided to the Funds and the profitability and fall-out benefits to the Adviser from its arrangements with the Funds.

The Trustees reviewed and considered an analysis of the advisory fees and total expenses ratios of each Fund and comparative data for multiple categories of mutual funds included in and as defined by Morningstar’s mutual fund database of over 7,000 mutual funds. For the Equity Fund, the Trustees noted that, based on the information provided, the Fund’s advisory fee was lower than the average advisory fee for socially conscious funds by 35 basis points, lower than the average advisory fee for socially conscious growth and income funds by 5 basis points, lower than that of the average growth and income funds by 23 basis points and higher than the average of growth and income index funds by 5 basis points. The Trustees also noted that the total expense ratio of the Equity Fund was capped at 1.25%, and that the total expense ratio was higher than that of the average of socially conscious funds by 7 basis points and higher than that of the average of all growth and income funds by 29 basis points, and higher than that of the average growth and income index funds by 71 basis points. For the Balanced Fund, the Trustees noted that, based on the information provided, the Fund’s advisory fee was higher than the average advisory fee for socially conscious funds (by 5 basis points), socially conscious balanced Funds (by 11 basis points), all balanced funds (by 20 basis points) and balanced funds which have under $100 million in assets (by 20 basis points). The Trustees also noted that the total expense ratio of the Balanced Fund was capped at 1.48% and that the total expense ratio was higher than that of the average of socially conscious funds by 30 basis points, higher than that of the average of socially conscious balanced funds by 48 basis points, higher than that of the average of all balanced funds by 44 basis points, and higher than that of the average of balanced funds with assets less than $100 million by 36 basis points.

Green Century provided the Trustees with information relating to the profitability to Green Century of its advisory relationships to the Funds. The Trustees noted that based on information provided by Green Century, the relationship was not profitable. In that regard, the Trustees considered the subadvisory fees and the other expenses incurred by the Adviser in providing advisory services to the Funds. The Trustees also considered the fee received by Green Century for providing administrative services to the Funds and the expenses incurred 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 that aligns with the Funds’ stated intention to promote greater corporate environmental accountability. After reviewing the information described above, the Independent Trustees concluded that the fees specified 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 continuance of the Advisory Agreements with respect to the Equity Fund and the Balanced Fund.

 

29


Other Benefits.     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 either Fund. The Trustees noted that Green Century does potentially benefit from its relationship with the Funds due to the Funds’ reputation as the first family of no-load environmentally responsible mutual funds. The Trustees considered that the association with the Funds supports Green Century’s own stated mission of advocating for corporate environmental responsibility. 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 continuance of the Advisory Agreements with respect to the Equity Fund and 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 of achieving 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 the advisory fee structure for the Equity Fund included break-points that would cause the advisory fee to decrease as a percentage of net assets as the Fund increased in size. The Trustees 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 Agreements with respect to the Balanced Fund and the Equity Fund should be continued for an additional one-year period.

INVESTMENT SUBADVISORY AGREEMENT WITH TRILLIUM ASSET MANAGEMENT LLC RELATING TO THE BALANCED FUND

At the meeting on October 4, 2013, the Board of Trustees of the Balanced Fund, including a majority of the Independent Trustees, considered the continuance of the subadvisory agreement between the Trust, on behalf of the Balanced Fund, Green Century, and Trillium (the “Subadvisory Agreement”). In connection with their deliberations at the meeting, and in separate executive session of the Independent Trustees, the Trustees considered, among other things, information provided by Trillium regarding the investment performance of the Balanced Fund, the subadvisory fees paid to Trillium, and the profitability to Trillium of its subadvisory relationship to the Balanced Fund. The Independent Trustees were assisted by independent counsel in considering these materials and the continuance of the Subadvisory Agreement. The Trustees considered all the information provided to them by Trillium, including information provided throughout the year. The Trustees also received a memorandum from independent legal counsel advising them of their duties and responsibilities in connection with the review of the Subadvisory Agreement. In approving the continuance of the Subadvisory Agreement, the Board, including the Independent Trustees, did not identify any single factor as determinative. Matters considered in connection with their approval of the Subadvisory Agreement included the following.

Nature, Quality, and Extent of Services Performed.     The Trustees noted that under the terms of the Subadvisory Agreement, Trillium provided the day-to-day portfolio management of the Balanced Fund, including determining asset and sector allocation; conducting securities selection and discovery; researching and analyzing environmental policies and practices of companies and implementing the Balanced Fund’s environmental screening criteria; managing the volatility, risk, and turnover of the portfolio; and investing the portfolio consistent with the Balanced Fund’s investment objective and policies. The Trustees considered the professional expertise, tenure, and qualifications of the portfolio management team and noted that Trillium was devoted exclusively to environmentally and socially responsible

 

30


investing and managed over $1 billion in assets. The Trustees also considered Trillium’s compliance record as well as the professional experience and responsiveness of Trillium’s compliance staff. The Trustees also considered Trillium’s leadership in social and environmental responsibility, including its shareholder advocacy efforts.

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 Trillium supported the continuance of the Subadvisory Agreement.

Investment Performance.     The Trustees reviewed and considered information regarding the investment performance of the Balanced Fund and comparative data with respect to the performance of mutual funds with similar investment objectives as well as other broad-based market indexes. The Trustees noted that as of the period ended August 31, 2013, the Balanced Fund’s one- and three year average annual returns outperformed the Lipper and its five- and ten- year average annual returns underperformed the Lipper. The Trustees also noted that as of the period ended August 31, 2013, the Balanced Fund’s one- year average annual returns outperformed the Custom Index and its three-, five- and ten- year average annual returns had underperformed the Custom Index. Trillium became the Balanced Fund’s subadviser on November 28, 2005. After considering all the factors deemed appropriate, the Trustees concluded that the performance of the Balanced Fund together with Trillium’s investment process, philosophies and experience in environmentally and socially responsible investing, supported the continuance of the Subadvisory Agreement.

Costs of Services Provided and Profitability.     The Trustees considered that the subadvisory fees paid by Green Century to Trillium under the Subadvisory Agreement were 0.40% of the value of the average daily net assets of the Balanced Fund up to $30 million, and 0.35% of the value of the average daily net assets of the Balanced Fund in excess of $30 million. The Trustees also considered that the subadvisory fees are paid by Green Century, and are not in addition to the advisory fees paid to Green Century by the Balanced Fund.

In evaluating the profitability of the Subadvisory Agreement to Trillium, the Trustees noted that based on information provided by Trillium, the relationship was slightly profitable. The Trustees noted that Trillium stated that it would not realize a level of profitability similar to that of its other advisory clients on the management of the Balanced Fund until assets approach $100 million. The Trustees considered the financial resources Trillium dedicated and the other expenses Trillium incurred in providing subadvisory services to the Balanced Fund, including startup costs relating to the relationship, and additional personnel, legal, trading analysis and compliance costs required in the context of providing subadvisory services to a mutual fund. In considering the cost allocation methodology used by Trillium, the Trustees took under consideration that Trillium does not provide advisory or subadvisory services to other mutual fund clients. The Trustees also considered Trillium’s fee structure and noted, based on the information provided, that the subadvisory fees were lower than the fees Trillium receives from its institutional clients with separate accounts of similar size as the Balanced Fund.

After reviewing the information described above, the Trustees concluded that the fees specified in the Subadvisory Agreement, taking into account the nature and quality of services provided and the costs of the services provided by Trillium, supported the continuance of the Subadvisory Agreement.

Other Benefits.     The Trustees evaluated potential other benefits Trillium may realize from its relationship with the Balanced Fund. The Trustees considered the brokerage practices of Trillium, including the soft dollar commissions that were generated with respect to the Balanced Fund’s portfolio transactions. The Trustees considered that Trillium was not affiliated with a broker/dealer and therefore no benefit would be realized by Trillium through transactions with affiliated brokers. The Trustees also considered the reputational and other advantages Trillium may gain from its relationship with the Balanced Fund. The Trustees concluded that the benefits received by Trillium were reasonable in the context of the relationship between Trillium and the Balanced Fund, and supported the continuance of the Subadvisory Agreement.

 

31


Economies of Scale.     The Trustees also considered whether economies of scale would be realized by Trillium as the Balanced Fund grew in asset size and the extent to which such economies of scale might be reflected in the subadvisory fees. They noted the relatively small size of the Balanced Fund and considered that if the assets were to increase, Trillium could have the opportunity to experience economies of scale. They also noted that pursuant to the Subadvisory Agreement, the subadvisory fees paid to Trillium by Green Century (out of its flat 0.65% advisory fee) include a breakpoint at $30 million, so that fees as a percentage of net assets decrease as assets in the Balanced Fund increase. The Trustees concluded that economies of scale could be realized as the Fund grew, and that the fee schedule as specified was appropriate, and supported the continuance of the Subadvisory Agreement.

Based on a review of all factors deemed relevant, the Trustees, including the Independent Trustees, concluded that the Subadvisory Agreement should be continued for an additional one-year period.

INVESTMENT SUBADVISORY AGREEMENT WITH NORTHERN TRUST INVESTMENTS, INC. RELATING TO THE EQUITY FUND

At the meeting on October 4, 2013, the Board of Trustees, including a majority of the Independent Trustees, considered the continuance of the subadvisory agreement between the Trust, on behalf of the Equity Fund, Green Century, and Northern Trust (the “Subadvisory Agreement”). In connection with their deliberations at the meeting, and in separate executive session of the Independent Trustees, the Trustees considered, among other things, information provided by Northern Trust regarding the investment performance of the Equity Fund, including the success with which the Fund tracked the Index, the subadvisory fees paid to Northern Trust, and the profitability to Northern Trust of its subadvisory relationship to the Equity Fund. The Independent Trustees were assisted by independent counsel in considering these materials and the continuance of the Subadvisory Agreement. The Trustees considered all the information provided to them by Northern Trust, including information provided throughout the year. The Trustees also received a memorandum from independent legal counsel advising them of their duties and responsibilities in connection with the review of the Subadvisory Agreement. In approving the continuance of the Subadvisory Agreement, the Board, including the Independent Trustees, did not identify any single factor as determinative. Matters considered in connection with their approval of the Subadvisory Agreement included the following.

Nature, Quality, and Extent of Services Performed.     The Trustees noted that under the terms of the Subadvisory Agreement, Northern Trust provided 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 and with changes to the Index. The Trustees considered the professional expertise, tenure, and qualifications of the portfolio management team as well as the team’s experience in passive management. The Trustees also considered Northern Trust’s handling of daily inflows and outflows, transaction costs, tracking error, and the portfolio turnover rates for the Equity Fund. The Trustees also considered Northern Trust’s compliance record as well as the professional experience and responsiveness of Northern Trust’s compliance staff.

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 Northern Trust supported the continuance of the Subadvisory Agreement.

Investment Performance.     The Trustees considered that the Equity Fund follows a passive investment strategy designed to track the Index and therefore the analysis of its investment performance should be based on the extent to which the Equity Fund successfully tracked the Index. The Trustees reviewed the performance of the Equity Fund, exclusive of the expenses of the Fund, as compared to that of the Index for the periods ended July 31, 2013, and noted that the Equity Fund’s performance closely followed that of the Index. In particular, they observed that 37 basis points of the Equity Fund’s one-year variance from the Index’s performance was attributable to factors other than Fund fees and expenses. After considering all the factors deemed appropriate, the Trustees concluded that the performance of the Equity Fund together with Northern Trust’s investment process and experience in passive portfolio management supported the continuance of the Subadvisory Agreement.

 

32


Costs of Services Provided and Profitability.     The Trustees considered that the subadvisory fees paid by Green Century to Northern Trust under the Subadvisory Agreement were 0.10% of the value of the average daily net assets of the Equity Fund up to but not including $50 million, 0.05% of the value of the average daily net assets of the Equity Fund from and including $50 million up to but not including $100 million, and 0.03% of the value of the average daily net assets of the Equity Fund equal to or in excess of $100 million. There is a minimum fee of $75,000 per annum, which based on the Equity Fund’s net assets as of August 31, 2013 translated to an annual fee of approximately 0.12%. The Trustees also considered that the subadvisory fees are paid by Green Century, and are not in addition to the advisory fees paid to Green Century by the Equity Fund.

The Trustees reviewed and considered an analysis of the subadvisory fees against comparative data for index funds managed by Northern Trust and for similar socially responsible index funds. The Trustees noted that the Fund paid subadvisory fees comparable to those paid to Northern Trust by other subadvised index funds with under $100 million in assets. In evaluating the profitability of the Subadvisory Agreement to Northern Trust, the Trustees noted that Northern Trust does not calculate earnings at the subadvisory client level. Nevertheless, Northern Trust noted that it is continuing to grow its assets under management, including a significant amount of assets in the socially responsible mutual fund market.

After reviewing the information described above, the Trustees concluded that the fees specified in the Subadvisory Agreement, taking into account the nature and quality of services provided and the costs of the services provided by Northern Trust, supported the continuance of the Subadvisory Agreement.

Other Benefits.     The Trustees evaluated potential other benefits Northern Trust may realize from its relationship with the Equity Fund. The Trustees considered the brokerage practices of Northern Trust, including that Northern Trust does not trade for the Equity Fund through its affiliated broker. The Trustees also considered that no soft dollars have been or will be paid in connection with Northern Trust’s management of the Equity Fund. The Trustees further considered the reputational and other advantages Northern Trust may gain from its relationship with the Equity Fund, including that Northern Trust’s management of the Equity Fund will broaden its exposure to the socially responsible mutual fund market, which may assist in its marketing efforts. The Trustees concluded that the benefits received by Northern Trust were reasonable in the context of the relationship between Northern Trust and the Equity Fund, and supported the continuance of the Subadvisory Agreement.

Economies of Scale.     The Trustees also considered whether economies of scale would be realized by Northern Trust as the Equity Fund grew in asset size and the extent to which such economies of scale might be reflected in the subadvisory fees. They noted the relatively small size of the Equity Fund and considered that if the assets were to increase, Northern Trust could have the opportunity to experience economies of scale. They also noted that pursuant to the Subadvisory Agreement, the subadvisory fees paid to Northern Trust by Green Century (out of its advisory fee, which is subject to breakpoints) include breakpoints at $50 million and $100 million (subject to a minimum annual fee of $75,000), so that fees as a percentage of net assets decrease as assets in the Equity Fund increase. The Trustees concluded that economies of scale could be realized as the Fund grew, and that the fee schedule as specified was appropriate, and supported the continuance of the Subadvisory Agreement.

Based on a review of all factors deemed relevant, the Trustees, including the Independent Trustees, concluded that the Subadvisory Agreement should be continued for an additional one-year period.

 

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YOUR NOTES


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YOUR NOTES


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

info@greencentury.com

INVESTMENT SUBADVISER (Balanced Fund)

Trillium Asset Management, LLC

711 Atlantic Avenue

Boston, MA 02111

INVESTMENT SUBADVISER (Equity Fund)

Northern Trust Investments, Inc.

50 South LaSalle Street

Chicago, IL 60603

SUBADMINISTRATOR and DISTRIBUTOR

UMB Fund Services, Inc. (Subadministrator)

UMB Distribution Services, LLC (Distributor)

803 West Michigan Street

Milwaukee, WI 53233

CUSTODIAN

State Street Bank and Trust Company

State Street Financial Center

One Lincoln Street

Boston, MA 02111

TRANSFER AGENT

Huntington Asset Services, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

KPMG LLP

Two Financial Center

60 South Street

Boston, MA 02111

LOGO

January 31, 2014

Balanced

Fund

 

 

 

 

LOGO

An investment for your future.

 

Printed on recycled paper with soy-based ink.

   

 

Equity

Fund

  

  


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 30a-3(d) under the Investment Company Act of 1940) that occurred during the fiscal 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 Curtis

Kristina A. Curtis
President and Principal Executive Officer
April 11, 2014

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 Curtis

Kristina A. Curtis
President and Principal Executive Officer
April 11, 2014

 

/s/ Kristina Curtis

Kristina A. Curtis
Treasurer and Principal Financial Officer
April 11, 2014
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