<PAGE>
SEMI-ANNUAL REPORT
Green Century Balanced Fund
December 31, 1997
Green Century Equity Fund
January 31, 1998
[LOGO OF GREEN CENTURY FUNDS APPEARS HERE]
An Investment For Your Future. 29 Temple Place, Boston, Massachusetts 02111
For information on the Green Century Funds (R), call 1-800-93-GREEN. For
information on opening an account, details on account services and information
about existing accounts, call 1-800-221-5519. For share price information, call
1-800-882-8316 24 hours a day.
================================================================================
Dear Green Century Funds Shareholder:
In 1991, a partnership of environmental advocacy organizations
founded the Green Century Funds. Since that time, our mission has been to seek
solid financial returns for environmentally conscious investors while promoting
greater corporate environmental accountability. We are proud to report to our
many new investors and our long-term shareholders our progress toward these
goals in the past year.
The Green Century Funds thrived in Calendar Year 1997. Both Green
Century Funds delivered strong returns.* For the one year ended December 31,
1997, the Green Century Equity Fund's total return beat the Lipper average for
growth funds and the Green Century Balanced Fund's total return matched the
Lipper balanced fund average exactly. Our returns captured media attention in a
variety of publications which featured articles on socially responsible
investing, and our Balanced Fund was highlighted in an article in The Wall
Street Journal. Our combined assets under management doubled, as did the number
of shareholder accounts.
THE GREEN CENTURY EQUITY FUND'S total one-year return for the 1997
calendar year was a superior 35.71%, exceeding the 25.30% average total return
of growth funds tracked by Lipper for the same period./1/ As of December 31,
1997 the three- and five-year average annual total returns of the Green Century
Equity Fund were 30.51% and 18.37%, respectively, beating the three- and five-
year Lipper growth fund average annual total returns of 25.11% and 16.47% for
the same periods. As of December 31, 1997, the Green Century Equity Fund's
average annual total return was 16.87% since its inception on June 3, 1991./2/
As of January 31, 1998, the Green Century Equity Fund's one- and
three-year average annual total returns fell to 28.93% and 30.33%,
respectively. The five-year average annual total return rose slightly to
18.60%, and the Fund's average annual total return since inception on June 3,
1991, was 16.98% as of January 31, 1998./2/
The Green Century Equity Fund invests primarily in a portfolio of the
400 companies that comprise the Domini Social Index, a broadly diversified
portfolio which screens out those companies with the worst environmental and
social records. As of January 31, 1998, 99.5% of the net assets of the Fund
were invested in the stocks of the 400 companies. Relative to unscreened market
indices such as the Standard and Poor's 500 Index (the S&P 500),/3/ the Green
Century Equity Fund benefitted from its overexposure to the telecommunications
industry and its underexposure to the international oil and chemical industries
*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.
<PAGE>
during the six months ended January 31, 1998. During the same time period, the
Fund's performance was hurt by its underexposure to the pharmaceutical
industry.
THE GREEN CENTURY BALANCED FUND earned solid returns in 1997. As of
December 31, 1997, the one-year total return was 19.00%, matching the 19.00%
average total return of balanced funds tracked by Lipper. For the three-year
period ended December 31, 1997, the Green Century Balanced Fund's average
annual total return was 20.72%, slightly above the Lipper balanced fund average
of 19.44%. For the five-year period ended December 31, 1997, the Balanced
Fund's average annual total return was 10.88%, trailing the 13.20% five-year
average return of balanced funds tracked by Lipper. As of December 31, 1997,
the Green Century Balanced Fund's average annual total return since inception
on March 18, 1992, was 10.27%.
The Green Century Balanced Fund invests in performance-driven
companies whose business is to protect the environment; including companies
that produce renewable energy and those that offer effective remedies for
existing environmental problems. The Balanced Fund also invests in those
companies that have minimized their adverse impact on the environment and those
companies Green Century believes are "best of class" companies that are setting
standards for environmental protection in their industries. Green Century
believes that well-managed environmentally responsible companies minimize their
environmental risks, allowing them to enjoy competitive advantages from cost
reductions and access to expanding and new growth markets.
Examples of current holdings in the Green Century Balanced Fund
include:/4/
. Ionics, Inc., a company which supplies water treatment and
purification systems that remove toxic contaminants from industrial
wastewater;
. Galileo, which manufactures on-line systems for industries to
monitor, detect and prevent chemical leaks that could be dangerous
to the environment; and
. Whole Foods Market, the nation's largest chain of natural food
supermarkets which offer health foods and environmentally sensitive
household products.
SHAREHOLDER ADVOCACY is a crucial tool for environmentalists who want
to use their power as investors to promote corporate responsibility. On
September 26, 1997, the Securities and Exchange Commission (SEC) proposed new
rules that Green Century Capital Management (GCCM), the Administrator of the
Funds, believes would, if adopted, disenfranchise shareholder activists by
severely limiting the shareholder resolution process. GCCM formally opposed the
new rules by registering concerns with SEC Commissioner Arthur Levitt and by
filing comments with SEC Secretary Jonathan Katz. GCCM joined a diverse
coalition of 340 organizations opposed to the proposed rules. Coalition
partners included environmental organizations such as the National Wildlife
Federation and the Sierra Club. GCCM staff also met with the staff of U.S.
House Commerce Committee members, urging members to oppose the new rules.
In sum, the past year has been one of the best in the history of the
Green Century Funds. The Funds delivered strong, competitive returns while
fighting to protect investors' ability to promote environmental corporate
responsibility through the shareholder resolution process.
Thank you for your commitment to environmentally responsible
investing and your investment in the Green Century Funds.
Respectfully,
The Green Century Funds
2
<PAGE>
/1/ Lipper Analytical Services, Inc. is a respected mutual fund ranking
service. The Lipper growth fund category of mutual funds includes funds that
normally invest in companies whose long term earnings are expected to grow
significantly faster than the earnings of the stocks represented in the major
unmanaged indices. The Lipper balanced fund category of mutual funds includes
funds whose primary objective is to conserve principal by maintaining at all
times a balanced portfolio of stocks and bonds.
/2/ The Green Century Equity Fund, which commenced investment operations in
September, 1995, invests all of its assets in an existing separate registered
investment company which has the same investment objective as the Fund (the
"Index Portfolio"). Consistent with regulatory guidance, the performance for
the period prior to the Fund's inception reflects the performance of the Index
Portfolio adjusted to reflect the deduction of the charges and expenses of the
Fund.
/3/ The S&P 500 is an unmanaged index of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The S&P 500 is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
/4/ As of December 31, 1997, the above named companies composed the following
percentages of the portfolio of the Balanced Fund: Ionics, Inc. 2.63%; Galileo
6.27%; and Whole Foods Market 2.86%. The holdings of the Balanced Fund may
change due to ongoing management of the Fund. References to specific
investments should not be construed as a recommendation of the securities by
the Funds, the adviser or their distributor.
This material must be proceeded or accompanied by a current prospectus.
Distributor: Sunstone Distribution Services, LLC. 2/98
3
<PAGE>
GREEN CENTURY BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31,1997
(UNAUDITED)
COMMON STOCKS--72.7%
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
ENVIRONMENTAL PRODUCTS & SERVICES-- 22.0%
Caraustar Industries, Inc.................................. 5,000 $ 171,250
Culligan Water Technologies, Inc. (b)...................... 4,000 201,000
CUNO Inc. (b).............................................. 12,500 190,625
Galileo Corp. (b).......................................... 80,000 840,000
IMCO Recycling, Inc........................................ 10,000 160,625
Ionics, Inc. (b)........................................... 9,000 352,125
Philip Services Corp. (b).................................. 12,500 179,687
Thermo Electron Corp. (b).................................. 5,000 222,500
Thermo Fibergen, Inc. (b).................................. 15,000 142,500
Thermo Trilogy Corp. (b)(f)................................ 12,000 99,000
U.S. Filter Corp. (b)...................................... 3,680 110,170
Waterlink, Inc. (b)........................................ 15,000 247,500
-----------
2,916,982
-----------
TECHNOLOGY--17.2%
Ade Corp.(b)............................................... 7,500 131,250
Checkpoint Systems, Inc. (b)............................... 25,000 437,500
Hewlett-Packard Co......................................... 2,000 125,000
Intel Corp................................................. 200 14,050
Kofax Image Products, Inc. (b)............................. 10,000 55,625
Metrika Systems Corp. (b).................................. 17,500 266,875
Natural Microsystems Corp. (b)............................. 3,000 139,500
Orbital Sciences Corp. (b)................................. 18,000 535,500
Project Software & Development, Inc. (b)................... 11,500 270,250
System Software Associates, Inc. (b)....................... 25,000 218,750
Thermo Voltek Corp. (b).................................... 15,000 78,750
-----------
2,273,050
-----------
NATURAL FOODS & NUTRACEUTICALS--7.0%
Twinlab Corp. (b).......................................... 22,000 544,500
Whole Foods Market, Inc. (b)............................... 7,500 383,438
-----------
927,938
-----------
HEALTH SERVICES & HOSPITAL SUPPLIES--6.3%
Healthplan Services Corp................................... 12,000 252,000
Premier Laser Systems, Inc. (b)............................ 25,000 188,280
Thermo Bioanalysis Corp. (b)............................... 7,500 147,188
Vencor, Inc. (b)........................................... 10,000 244,375
-----------
831,843
-----------
AGRICULTURE--5.2%
Delta & Pine Land Co....................................... 10,310 314,455
Potash Corp. of Saskatchewan (e)........................... 4,500 373,500
-----------
687,955
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
ENERGY--4.6%
Calpine Corp. (b)....................................... 17,000 $ 252,875
Meridian Resource Corp. (b)............................. 37,000 353,812
-----------
606,687
-----------
PHARMACEUTICALS--3.5%
Elan Corp. PLC ADR (b)(c)............................... 6,000 307,125
Pharmacopeia, Inc. (b).................................. 10,000 160,000
-----------
467,125
-----------
FINANCIAL SERVICES--3.1%
American International Group, Inc....................... 100 10,875
BankUnited Financial Corp. (b).......................... 10,000 154,062
Conning Corp. (b)....................................... 15,000 251,250
-----------
416,187
-----------
COMMERCIAL PRODUCTS & SERVICES--1.9%
Bright Horizons, Inc. (b)............................... 5,000 93,750
Danka Business Systems PLC ADR (c)...................... 10,000 159,375
-----------
253,125
-----------
RETAIL--1.8%
The Home Depot, Inc..................................... 4,000 235,500
-----------
COMMUNICATIONS --0.1%
Time Warner, Inc........................................ 100 6,200
-----------
PAPER & FOREST PRODUCTS--0.0%
Champion International Corp............................. 100 4,531
-----------
Total Common Stocks
(Cost $8,366,489)...................................... 9,627,123
-----------
CORPORATE BONDS & NOTES--24.8%
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
COMMUNICATIONS--8.0%
GST USA, Inc.
0%, due 12/15/05....................................... $ 300,000 $ 231,000
Globalstar LP
11.25%, due 06/15/04................................... 200,000 201,500
Ionica PLC
0%, due 05/01/07....................................... 400,000 162,000
Nextel Communications
0%, due 08/15/04....................................... 300,000 267,750
Winstar Communications, Inc.
0%, due 10/15/05....................................... 250,000 198,750
-----------
1,061,000
-----------
</TABLE>
4
<PAGE>
GREEN CENTURY BALANCED FUND
PORTFOLIO OF INVESTMENTS--(CONCLUDED)
DECEMBER 31,1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
FOOD & BEVERAGE--7.2%
Curtice-Burns Foods
12.25%, due 2/01/05.................................. 200,000 $ 221,500
Homeland Stores, Inc.
10.00%, due 8/01/03.................................. 250,000 230,000
Sparkling Spring Water
11.50%, due 11/15/07 (d)............................. 250,000 258,750
Specialty Foods Corp.
10.25%, due 8/15/01.................................. 250,000 248,750
----------
959,000
----------
CONSUMER GOODS--4.2%
Brazos Sportswear, Inc.
10.50%, due 7/01/07.................................. 300,000 300,000
Collins & Aikman Floorcovering Corp.
10.00%, due 1/15/07 (d).............................. 250,000 250,000
----------
550,000
----------
ENERGY--1.9%
Calpine Corp.
8.75%, due 07/15/07 (d).............................. 250,000 256,250
----------
EQUIPMENT--1.9%
Willcox & Gibbs, Inc.
12.25%, due 12/15/03................................. 250,000 250,000
----------
ENVIRONMENTAL SERVICES--1.6%
ICF Kaiser International
13.00%, due 12/31/03................................. 200,000 207,000
----------
Total Corporate Bonds and Notes (Cost $3,226,827)..... 3,283,250
----------
SHORT-TERM OBLIGATIONS--3.6%
REPURCHASE AGREEMENTS
Salomon Brothers, 5.85%, dated 12/31/97, due 1/02/98, proceeds
$486,301 (collateralized by U.S. Treasury securities with matu-
rity at 10/15/98, value $495,931).............................. 486,143
----------
TOTAL INVESTMENTS (A)--101.1%
(Cost $12,079,459)............................................. 13,396,516
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
WRITTEN OPTIONS--(0.0)%
NUMBER OF STRIKE
CONTRACTS PRICE VALUE
<S> <C> <C> <C>
Potash Corp. of Saskatchewan call option,
1/17/98........................................ 45 $100.00 $ (281)
-----------
Other Liabilities Less Other Assets--(1.1)%..... (150,701)
-----------
NET ASSETS--100%.................................................. $13,245,534
===========
</TABLE>
- -------
(a) The cost of investments for federal income tax purposes is $12,079,459,
resulting in gross unrealized appreciation and depreciation of $1,847,919
and $530,862 respectively, or net unrealized appreciation of $1,317,057.
(b) Non-income producing security.
(c) Securities whose values are determined or significantly influenced by
trading on exchanges not in the United States or Canada. ADR after the name
of a foreign holding stands for American Depository Receipt representing
foreign securities on deposit with a domestic custodian bank.
(d) Securities that may be resold to "qualified institutional buyers" under
Rule 144a or securities offered pursuant to Section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be liquid
under guidelines established by the Board of Trustees.
(e) Securities pledged as collateral to cover outstanding call options written
at December 31, 1997.
(f) Restricted Security. Purchased in a private placement transaction; resale
to the public may require registration or sale only to qualified
institutional buyers. At December 31, 1997, this security is valued at fair
value, which in the opinion of management, is equal to cost.
5
<PAGE>
GREEN CENTURY BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $12,079,459).......................... $13,396,516
Receivables for:
Interest and dividends........................................... 95,948
Capital stock sold............................................... 835
-----------
Total assets..................................................... 13,493,299
-----------
LIABILITIES:
Due to custodian.................................................. 172,351
Payable for securities purchased.................................. 45,625
Accrued expenses.................................................. 27,171
Payable for capital stock redeemed................................ 2,337
Written options (premiums received $11,115) (Notes 1 and 3)....... 281
-----------
Total liabilities................................................ 247,765
-----------
NET ASSETS........................................................ $13,245,534
===========
NET ASSETS CONSIST OF:
Paid-in capital................................................... $11,411,090
Accumulated net realized gain on investments and options written.. 511,748
Net unrealized appreciation on investments and options written.... 1,327,891
Distributions in excess of net investment income.................. (5,195)
-----------
NET ASSETS........................................................ $13,245,534
===========
SHARES OUTSTANDING................................................ 979,849
===========
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE.... $ 13.52
===========
</TABLE>
GREEN CENTURY BALANCED FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income..................................................... $ 152,657
Dividend income (net of foreign withholding tax of $175)............ 23,685
----------
Total investment income.......................................... 176,342
----------
EXPENSES (NOTE 2):
Administrative services fee......................................... 93,884
Investment advisory fee............................................. 46,942
Distribution fee.................................................... 15,648
----------
Total expenses................................................... 156,474
----------
NET INVESTMENT INCOME............................................... 19,868
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 1):
Net realized gain on:
Investments........................................................ 1,134,850
Options written.................................................... 24,075
----------
1,158,925
Net increase in unrealized appreciation of:
Investments........................................................ 18,739
Options written.................................................... 33,518
----------
52,257
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS..................... 1,211,182
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $1,231,050
==========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
GREEN CENTURY BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1997 JUNE 30, 1997
(UNAUDITED) (AUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
From Operations:
Net investment income......................... $ 19,868 $ 84,186
Net realized gain on investments and options
written...................................... 1,158,925 701,949
Net increase in unrealized appreciation of in-
vestments and options written................ 52,257 653,503
----------- -----------
Net increase in net assets resulting from op-
erations..................................... 1,231,050 1,439,638
----------- -----------
Dividends to shareholders (Note 1):
From net investment income.................... (78,490) (67,661)
From net realized gains....................... (1,204,821) (1,042,169)
----------- -----------
Total dividends and distributions.............. (1,283,311) (1,109,830)
----------- -----------
Capital share transactions (Note 4):
Proceeds from sales of shares................. 1,601,272 2,238,592
Reinvestment of dividends and distributions... 1,022,174 626,390
Payments for shares redeemed.................. (347,793) (387,839)
----------- -----------
Net increase in net assets resulting from cap-
ital stock transactions...................... 2,275,653 2,477,143
----------- -----------
Total Increase in Net Assets................... 2,223,392 2,806,951
NET ASSETS:
Beginning of Period........................... 11,022,142 8,215,191
----------- -----------
End of Period (including distributions in ex-
cess of net investment income of $5,195 for
the six months ended December 31, 1997 and
undistributed net investment income of
$53,427 for the year ended June 30, 1997).... $13,245,534 $11,022,142
=========== ===========
</TABLE>
GREEN CENTURY BALANCED FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
SIX MONTHS MARCH 18, 1992
ENDED FOR THE YEARS ENDED JUNE 30, (COMMENCEMENT
DECEMBER 31, 1997 ---------------------------------------- OF OPERATIONS)
(UNAUDITED) 1997 1996 1995 1994 1993 TO JUNE 30, 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period.... $ 13.53 $ 13.34 $ 11.03 $ 9.68 $10.14 $ 9.84 $10.00
------- ------- ------- ------ ------ ------ ------
Income from investment
operations:
Net investment income.. 0.02 0.12 0.10 0.10 0.07 0.06 0.02
Net realized and
unrealized gain (loss)
on investments........ 1.41 1.77 2.31 1.35 (0.46) 0.30 (0.16)
------- ------- ------- ------ ------ ------ ------
Total increase
(decrease) from
investment operations.. 1.43 1.89 2.41 1.45 (0.39) 0.36 (0.14)
------- ------- ------- ------ ------ ------ ------
Less dividends and
distributions (Note 1):
Dividends from net
investment income..... (0.09) (0.10) (0.10) (0.10) (0.07) (0.06) (0.02)
Dividends from net
realized gains........ (1.35) (1.60) -- -- -- -- --
------- ------- ------- ------ ------ ------ ------
Total decrease from
dividends and
distributions.......... (1.44) (1.70) (0.10) (0.10) (0.07) (0.06) (0.02)
------- ------- ------- ------ ------ ------ ------
Net Asset Value, end of
period................. $ 13.52 $ 13.53 $ 13.34 $11.03 $ 9.68 $10.14 $ 9.84
======= ======= ======= ====== ====== ====== ======
Total return............ 10.92%(a) 15.22% 21.98% 15.00% (3.83)% 3.69% (1.45)%(a)
Ratios\Supplemental
data:
Net assets, end of
period (in 000's)..... $13,246 $11,022 $ 8,215 $3,291 $3,151 $2,821 $ 547
Ratio of expenses to
average net assets.... 2.50%(b) 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%(b)
Ratio of net investment
income to average net
assets................ 0.32%(b) 0.94% 0.85% 0.97% 0.74% 0.85% 1.13%(b)
Portfolio turnover..... 58% 109% 136% 16% 14% 11% 2%
Average commission rate
paid per share........ $0.0309 $0.0646 $0.0628 -- -- -- --
</TABLE>
(a) Not annualized
(b) Annualized
See Notes to Financial Statements
7
<PAGE>
GREEN CENTURY EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investment in Domini Social Index Portfolio, at value (Note 1)....... $8,402,836
----------
Total assets...................................................... 8,402,836
----------
LIABILITIES:
Accrued expenses (Note 2)............................................ 7,651
----------
Total liabilities................................................. 7,651
----------
NET ASSETS........................................................... $8,395,185
==========
NET ASSETS CONSIST OF:
Paid-in capital...................................................... $6,905,903
Accumulated net realized gain on investment.......................... 54,056
Net unrealized appreciation on investment............................ 1,435,226
----------
NET ASSETS........................................................... $8,395,185
==========
SHARES OUTSTANDING................................................... 472,752
==========
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE....... $ 17.76
==========
</TABLE>
GREEN CENTURY EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME FROM INDEX PORTFOLIO:
Investment income from Index Portfolio................................ $ 44,151
Expenses from Index Portfolio......................................... (6,575)
--------
Net income from Index Portfolio.................................... 37,576
--------
EXPENSES:
Administrative services fee (Note 2).................................. 42,692
--------
NET INVESTMENT LOSS................................................... (5,116)
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENT:
Net realized gain on investment....................................... 55,941
Net increase in unrealized appreciation of investment................. 369,685
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENT........................ 425,626
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $420,510
========
</TABLE>
See Notes to Financial Statements
8
<PAGE>
GREEN CENTURY EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
JANUARY 31, 1998 JULY 31, 1997
(UNAUDITED) (AUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
From Operations:
Net investment income (loss)................... $ (5,116) $ 1,603
Net realized gain on investments............... 55,941 6,238
Net increase in unrealized appreciation of in-
vestment...................................... 369,685 1,064,623
---------- ----------
Net increase in net assets resulting from oper-
ations........................................ 420,510 1,072,464
---------- ----------
Dividends to shareholders:
From net investment income..................... -- (4,238)
From net realized gains........................ (5,456) (824)
---------- ----------
Total dividends and distributions.............. (5,456) (5,062)
---------- ----------
Capital Share Transactions (Note 4):
Proceeds from sales of shares.................. 3,183,655 3,530,696
Reinvestment of dividends and distributions.... 5,171 4,505
Payments for shares redeemed................... (483,873) (207,152)
---------- ----------
Net increase in net assets resulting from capi-
tal share transactions........................ 2,704,953 3,328,049
---------- ----------
Total Increase in Net Assets.................... 3,120,007 4,395,451
NET ASSETS:
Beginning of period............................ 5,275,178 879,727
---------- ----------
End of period (including distributions in
excess of net investment income of $0 and
$2,240 at January 31, 1998, and July 31, 1997,
respectively)................................. $8,395,185 $5,275,178
========== ==========
</TABLE>
GREEN CENTURY EQUITY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
SIX MONTHS SEPTEMBER 13, 1995
ENDED FOR THE (COMMENCEMENT OF
JANUARY 31, 1998 YEAR ENDED OPERATIONS) TO
(UNAUDITED) JULY 31, 1997 JULY 31, 1996
<S> <C> <C> <C>
Net Asset Value, beginning of
period...................... $16.86 $11.04 $10.00
------ ------ ------
Income from investment opera-
tions:
Net investment income
(loss)..................... (0.01) 0.02 0.02
Net realized and unrealized
gain on investments........ 0.92 5.84 1.04
------ ------ ------
Total increase from invest-
ment operations............ 0.91 5.86 1.06
------ ------ ------
Less dividends and distribu-
tions:
Dividends from net invest-
ment income................ -- (0.03) (0.02)
Distributions from net real-
ized gains................. (0.01) (0.01) --
------ ------ ------
Total decrease from dividends
and distributions........... (0.01) (0.04) (0.02)
------ ------ ------
Net Asset Value, end of peri-
od.......................... $17.76 $16.86 $11.04
====== ====== ======
Total return................. 5.42%(a) 53.14% 10.64%(a)
Ratios/supplemental data
Net Assets, end of period
(in 000's)................. $8,395 $5,275 $ 880
Ratio of expenses to average
net assets................. 1.50%(b) 1.50% 1.50%(b)
Ratio of net investment in-
come (loss) to average net
assets..................... (0.15)%(b) 0.07% 0.49%(b)
</TABLE>
(a) Not annualized.
(b) Annualized.
See Notes to Financial Statements
9
<PAGE>
GREEN CENTURY BALANCED FUND/DECEMBER 31, 1997
GREEN CENTURY EQUITY FUND/JANUARY 31, 1998
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Green Century Funds (the "Trust") is a Massachusetts business trust which
offers two separate series, the Green Century Balanced Fund and the Green
Century Equity Fund. The Trust is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company.
The Trust accounts separately for the assets, liabilities and operations of
each series. The Balanced Fund commenced operations on March 18, 1992 and the
Equity Fund commenced operations on September 13, 1995.
The Equity Fund invests substantially all of its assets in the Domini Social
Index Portfolio (the "Index Portfolio"), an open-end, diversified management
investment company having the same investment objective as the Fund. The Equity
Fund accounts for its investment in the Index Portfolio as a partnership
investment and records its share of the Index Portfolio's income, expenses and
realized and unrealized gains and losses daily. The value of such investment
reflects the Fund's proportionate interest in the net assets of the Index
Portfolio (2.04% at January 31, 1998). The financial statements of the Index
Portfolio are included elsewhere in this report and should be read in
conjunction with the Equity Fund's financial statements.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
the Trust's significant accounting policies:
(A) BALANCED FUND INVESTMENT VALUATION: Equity securities listed on national
securities exchanges or reported through the NASDAQ system are valued at
last sale price. Unlisted securities or listed securities for which last
sale prices are not available are valued at the mean between the closing
bid and asked prices if such securities are listed on a national
exchange, and at the last quoted bid price in the case of securities not
listed on a national exchange. Debt securities (other than short-term
obligations maturing in sixty days or less) are valued on the basis of
valuation 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
are valued at fair value as determined in good faith under guidelines
established by the Trustees. Short-term obligations maturing in sixty
days or less are valued at amortized cost, which approximates market
value.
EQUITY FUND INVESTMENT VALUATION: Valuation of securities by the Index
Portfolio is discussed in Note 1 of the Index Portfolio's Notes to
Financial Statements which are included elsewhere in this report.
(B) BALANCED FUND 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 is recognized on the accrual basis and
dividend income is recorded on ex-dividend date.
EQUITY FUND SECURITIES TRANSACTIONS AND INVESTMENT INCOME: The Fund earns
income, net of Index Portfolio expenses, daily based on its investment in
the Index Portfolio.
10
<PAGE>
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(C) DISTRIBUTIONS: Distributions to shareholders are recorded on the ex-
dividend date. The Funds declare and pay dividends of net investment
income 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 generally accepted
accounting principles. These differences are attributable to permanent
book and tax accounting differences. Accordingly, at January 31, 1998
for the Equity Fund, a reclassification was recorded to increase
undistributed net investment income by $7,356 and to reduce
undistributed net realized gain by $4,515 and paid-in capital by $2,841.
(D) BALANCED FUND OPTIONS WRITTEN: When the Balanced Fund writes a call
option or a put option, an amount equal to the premium received by the
Fund is recorded as a liability, the value of which is marked-to-market
daily. When a written option expires, the Balanced Fund realizes a gain
equal to the amount of the premium originally received. When the
Balanced Fund enters into a closing purchase transaction, the Fund
realizes a gain (or loss if the cost of the closing purchase transaction
exceeds the premium originally received when the option was sold)
without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is eliminated. When a
call option is exercised, the Fund realizes a gain or loss from the sale
of the underlying security and the proceeds from such sale are increased
by the premium originally received. When a put option is exercised, the
amount of the premium originally received will reduce the cost of the
security which the Fund purchased upon exercise.
The risk in writing a call option is that the Balanced Fund may
forego the opportunity for profit if the market price of the underlying
security increases and the option is exercised. The risk in writing a put
option is that the Fund may incur a loss if the market price of the
underlying security decreases and the option is exercised. There is also
the risk the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. In addition, the Fund could be
exposed to risks if the counterparties to the transaction are unable to
meet the terms of the contracts.
(E) FEDERAL TAXES: Each series of the Trust is treated as a separate entity
for Federal income tax purposes. Each Fund's policy is to comply with
the provisions of the Internal Revenue Code applicable to regulated
investment companies. Accordingly, no provisions for Federal income or
excise tax are necessary.
NOTE 2--TRANSACTIONS WITH AFFILIATES
(A) INVESTMENT ADVISER: Green Century Capital Management, Inc. ("Green
Century") is the adviser ("the Adviser") for the Balanced Fund and
oversees the portfolio management of the Balanced Fund on a day-to-day
basis. For these services, Green Century receives a fee, accrued daily
and paid monthly, at an annual rate equal to 0.75% of the Balanced
Fund's average daily net assets.
(B) SUBADVISER: Winslow Management Company ("Winslow"), a division of Eaton
Vance Management, is the subadviser for the Balanced Fund. For its
services, Winslow is paid a fee by the Adviser at an annual rate equal
to 0.40% of the average daily net assets of the Balanced Fund, subject
to an adjustment up or down of 0.20% annually. For the six months ended
December 31, 1997, Green Century accrued fees of $30,012 to Winslow.
11
<PAGE>
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(C) ADMINISTRATOR: Green Century is the administrator ("the Administrator")
of the Green Century Funds. Pursuant to the Administrative Services
Agreement, Green Century pays all the expenses of each Fund other than
the investment advisory fees, fees under the Distribution Plan,
interest, taxes, brokerage costs and other capital expenses, expenses of
non-interested trustees (including counsel fees) and any extraordinary
expenses. For these services, Green Century receives a fee from the
Balanced Fund at an annual rate equal to 1.50% of the Fund's average
daily net assets, and receives a fee from the Equity Fund at a rate such
that immediately following any payment to the Administrator, the
combined total operating expenses of the Fund and the Index Portfolio
(including investment advisory and distribution fees and any
amortization of organization expenses), on an annual basis, do not
exceed 1.50% of the Fund's average daily net assets.
(D) SUBADMINISTRATOR: Pursuant to a Subadministrative Services Agreement
with the Administrator, Sunstone Financial Group, Inc. ("Sunstone"), as
Subadministrator, is responsible for conducting certain day-to-day
administration of the Trust subject to the supervision and direction of
the Administrator. For the six months ended December 31, 1997, Green
Century accrued fees of $16,936 to Sunstone relating to services
performed on behalf of the Balanced Fund, and for the six months ended
January 31, 1998, Green Century accrued fees of $17,500 to Sunstone
relating to services performed on behalf of the Equity Fund. Prior to
July 7, 1997, Signature Broker-Dealer Services, Inc. ("Signature")
served as Subadministrator of the Funds. For the six months ended
December 31, 1997, Green Century accrued fees of $273 to Signature
relating to services performed on behalf of the Balanced Fund.
(E) DISTRIBUTION PLAN: The Trust has adopted a Distribution Plan (the
"Plan") with respect to the Balanced Fund in accordance with Rule 12b-1
under the Act. The Plan provides that the Balanced Fund pay a fee to
Sunstone Distribution Services, LLC, as distributor of shares of the
Balanced Fund, at an annual rate not to exceed 0.25% of the Balanced
Fund's average daily net assets. The fee is reimbursement for, or in
anticipation of, expenses incurred for distribution-related activities.
For the six months ended December 31, 1997, the Balanced Fund accrued
and paid $15,207 to Sunstone Distribution Services, LLC for services
provided pursuant to the plan. Prior to July 7, 1997, Signature served
as the Distributor of the Balanced Fund. For the six months ended
December 31, 1997, the Balanced Fund accrued and paid $456 to Signature
for services provided pursuant to the Plan.
NOTE 3--INVESTMENT TRANSACTIONS
The Balanced Fund's purchases and sales of securities, other than short-term
securities, aggregated $7,966,739 and $7,011,753, respectively for the six
months ended December 31, 1997.
The Balanced Fund's activity in written options for the six months ended
December 31, 1997 was as follows:
<TABLE>
<CAPTION>
PREMIUM CONTRACTS
<S> <C> <C>
Options outstanding at June 30, 1997....................... $ 27,847 155
Options written............................................ 31,566 197
Options exercised.......................................... (24,223) (210)
Options expired............................................ (24,075) (97)
-------- --------
Options outstanding at December 31, 1997................... $ 11,115 45
======== ========
</TABLE>
Additions and reductions in the Equity Fund's investment in the Index
Portfolio aggregated $3,209,461 and $504,508 for the six months ended January
31, 1998.
12
<PAGE>
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
NOTE 4--CAPITAL SHARE TRANSACTIONS
Capital share transactions for the Balanced Fund and the Equity Fund were as
follows:
<TABLE>
<CAPTION>
BALANCED FUND EQUITY FUND
-------------------------------- --------------------------------
FOR THE SIX MONTHS FOR THE FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, 1997 JUNE 30, 1997 JANUARY 31, 1998 JULY 31, 1997
<S> <C> <C> <C> <C>
Shares sold............. 111,523 178,968 189,661 248,224
Reinvestment of divi-
dends.................. 78,147 50,015 307 329
Shares redeemed......... (24,380) (30,384) (30,075) (15,392)
------- ------- ------- -------
165,290 198,599 159,893 233,161
======= ======= ======= =======
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
APPAREL--0.3%
Brown Group, Inc. ......................................... 1,700 $ 24,650
Hartmarx Corporation (b)................................... 3,300 24,544
Liz Claiborne, Inc. ....................................... 6,500 263,250
Oshkosh B'Gosh............................................. 800 27,400
Phillips-Van Heusen Corporation............................ 2,500 30,156
Reebok International Ltd. (b).............................. 5,500 146,781
Russell Corporation........................................ 3,500 86,406
Springs Industries, Inc.................................... 2,000 105,250
Stride Rite Corporation.................................... 4,600 52,325
Timberland Company (The) (b)............................... 1,100 64,075
V. F. Corporation.......................................... 12,200 521,550
------------
1,346,387
------------
BANKING--7.5%
Banc One Corporation....................................... 59,195 3,307,521
BankAmerica Corporation.................................... 69,900 4,967,269
BankBoston Corporation..................................... 14,500 1,297,750
Bankers Trust New York Corporation......................... 9,700 1,011,831
CoreStates Financial Corp.................................. 19,800 1,514,700
Fifth Third Bancorp........................................ 15,250 1,162,813
First Chicago NBD Corp. ................................... 29,106 2,172,035
Mellon Bank Corporation.................................... 25,500 1,539,563
Morgan (J.P.) & Co. Incorporated........................... 17,800 1,801,138
Norwest Corporation........................................ 76,000 2,774,000
PNC Bank Corp. ............................................ 30,500 1,572,656
SunTrust Banks, Inc. ...................................... 21,100 1,461,175
Vermont Financial Services Corp. .......................... 1,300 35,344
Wachovia Corporation....................................... 20,400 1,586,100
Washington Mutual Inc. .................................... 25,780 1,656,365
Wells Fargo & Company...................................... 8,600 2,657,400
------------
30,517,660
------------
COMMERCIAL PRODUCTS & SERVICES--1.8%
Avery Dennison Corporation................................. 10,300 462,213
Cintas Corporation......................................... 9,700 404,975
Deluxe Corporation......................................... 7,900 260,700
DeVry Inc. (b)............................................. 3,600 108,900
Donnelley (R.R.) & Sons Company............................ 14,600 544,763
Harland (John H.) Company.................................. 2,800 43,050
Herman Miller, Inc. ....................................... 4,400 254,650
HON Industries, Inc. ...................................... 3,000 183,000
Ikon Office Solutions...................................... 13,400 422,100
Interface Inc.............................................. 2,300 81,363
Kelly Services, Inc........................................ 3,675 120,816
Moore Corporation.......................................... 8,600 129,000
National Service Industries, Inc........................... 4,300 215,000
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMERCIAL PRODUCTS & SERVICES--CONTINUED
New England Business Service, Inc......................... 1,300 $ 42,900
Pitney Bowes Inc.......................................... 28,900 1,325,788
Standard Register Company................................. 2,800 96,075
Tennant Company........................................... 1,000 35,500
Xerox Corporation......................................... 32,600 2,620,225
------------
7,351,018
------------
CONSTRUCTION--0.3%
Apogee Enterprises, Inc. ................................. 2,500 29,531
Centex Corporation........................................ 3,200 200,800
Champion Enterprises Inc. ................................ 4,500 88,031
Fleetwood Enterprises, Inc. .............................. 3,400 141,525
Granite Construction Incorporated......................... 1,600 37,600
Kaufman & Broad Home Corporation.......................... 3,800 97,850
Rouse Company............................................. 6,500 218,563
Sherwin-Williams Company.................................. 17,200 490,200
Skyline Corporation....................................... 900 24,975
TJ International, Inc. ................................... 1,700 41,863
------------
1,370,938
------------
ENERGY--2.5%
Amoco Corporation......................................... 48,700 3,962,963
Anadarko Petroleum Corporation............................ 5,800 342,200
Apache Corporation........................................ 8,800 291,500
ARCO Chemical Company..................................... 9,700 460,750
Atlantic Richfield Company................................ 32,100 2,387,438
Consolidated Natural Gas Company.......................... 9,500 515,969
Oryx Energy Company (b)................................... 10,700 256,800
Pennzoil Company.......................................... 4,600 297,275
Santa Fe Energy Resources, Inc. (b)....................... 10,000 105,000
Sun Company, Inc. ........................................ 6,900 267,375
Union Pacific Resources Group, Inc. ...................... 25,600 572,800
Williams Companies........................................ 32,000 912,000
------------
10,372,070
------------
FINANCIAL SERVICES--6.0%
Ahmanson (H.F.) & Company................................. 9,700 565,631
American Express Company.................................. 46,500 3,891,469
Beneficial Corporation.................................... 5,300 411,413
Block (H & R), Inc. ...................................... 10,400 456,300
Dime Bancorp.............................................. 12,600 352,800
Edwards (A.G.), Inc. ..................................... 9,487 359,320
Fannie Mae................................................ 106,600 6,582,550
</TABLE>
14
<PAGE>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
FINANCIAL SERVICES--CONTINUED
Federal Home Loan Mortgage Corporation.................... 69,500 $ 3,092,750
FirstFed Financial Corp. (b).............................. 1,100 38,638
Golden West Financial..................................... 5,700 481,294
Household International, Inc. ............................ 10,900 1,357,050
MBIA Inc.................................................. 9,200 595,700
MBNA Corporation.......................................... 50,100 1,556,231
Merrill Lynch & Co., Inc. ................................ 33,300 2,102,063
Piper Jaffray Companies Inc. ............................. 1,800 65,700
Schwab (Charles) Corporation.............................. 26,600 970,900
Student Loan Marketing Association........................ 17,700 745,613
Transamerica Corporation.................................. 6,200 637,050
Value Line, Inc. ......................................... 1,000 39,438
Wesco Financial Corporation............................... 700 211,575
------------
24,513,485
------------
FOODS & BEVERAGES--8.3%
Ben & Jerry's Homemade, Inc. (b).......................... 600 9,375
Campbell Soup Company..................................... 45,800 2,450,300
Coca-Cola Company......................................... 248,500 16,090,375
Fleming Companies, Inc. .................................. 3,700 55,731
General Mills Incorporated................................ 15,800 1,176,113
Heinz (H.J.) Company...................................... 36,700 2,034,556
Hershey Foods Corporation................................. 14,600 929,838
Kellogg Company........................................... 41,100 1,898,306
Nature's Sunshine Products, Inc. ......................... 1,600 42,400
Nature's Sunshine Products, Inc. ......................... 0 15
Odwalla, Incorporated (b)................................. 500 4,063
PepsiCo, Inc. ............................................ 152,400 5,495,925
Quaker Oats Company....................................... 13,900 747,125
Ralston Purina Company.................................... 10,700 1,004,463
Smucker (J.M.) Company.................................... 2,600 66,625
SUPERVALU Inc. ........................................... 6,000 263,250
Sysco Corporation......................................... 17,100 765,225
Tootsie Roll Industries, Inc. ............................ 1,579 99,104
Wrigley (Wm.) Jr. Company................................. 11,600 857,675
------------
33,990,464
------------
HEALTH CARE--9.0%
Acuson Corporation (b).................................... 2,800 47,250
Allergan, Inc. ........................................... 6,300 214,200
ALZA Corporation (b)...................................... 8,300 295,688
Angelica Corporation...................................... 800 18,400
Becton Dickinson and Company.............................. 12,200 770,125
Bergen Brunswig Corporation............................... 4,918 224,076
Biomet, Inc. ............................................. 11,300 323,463
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
HEALTH CARE--CONTINUED
Boston Scientific Corporation (b)......................... 19,800 $ 1,004,850
Forest Laboratories, Inc. (b)............................. 3,900 231,563
Guidant Corp. ............................................ 14,800 950,900
Humana Health Plans, Inc. (b)............................. 16,500 331,031
Johnson & Johnson......................................... 135,100 9,043,256
Manor Care, Inc. ......................................... 6,200 215,063
Marquette Medical Systems, Inc. (b)....................... 1,500 40,125
Medtronic, Inc. .......................................... 46,900 2,394,831
Merck & Co., Inc. ........................................ 120,400 14,116,900
Mylan Laboratories, Inc. ................................. 12,300 220,631
Oxford Health Plans, Inc. (b)............................. 7,700 134,750
Schering-Plough Corporation............................... 73,700 5,334,038
St. Jude Medical Inc. (b)................................. 8,900 289,250
Stryker Corporation....................................... 9,800 361,988
Sunrise Medical Inc. (b).................................. 1,900 27,550
United American Healthcare Corporation (b)................ 800 2,100
------------
36,592,028
------------
HOUSEHOLD GOODS--5.8%
Alberto-Culver Company.................................... 5,300 157,013
Avon Products, Inc. ...................................... 13,200 792,000
Bassett Furniture Industries.............................. 1,300 37,375
Black & Decker Corp. ..................................... 9,500 457,781
Church & Dwight Co., Inc. ................................ 1,900 53,081
Clorox Company............................................ 10,300 789,238
Colgate-Palmolive Company................................. 29,600 2,168,200
Fedders Corporation....................................... 3,600 20,700
Fort James Corp. ......................................... 20,700 888,806
Handleman Company (b)..................................... 3,100 18,988
Harman International Industries, Inc. .................... 1,730 67,686
Hasbro, Inc. ............................................. 12,650 436,425
Huffy Corporation......................................... 1,100 16,225
Kimberly-Clark Corporation................................ 56,064 2,925,840
Leggett & Platt........................................... 9,600 433,800
Mattel, Inc. ............................................. 29,085 1,177,943
Maytag Corporation........................................ 9,300 357,469
Newell Co. ............................................... 15,900 652,894
Oneida Ltd. .............................................. 1,600 43,700
Procter & Gamble Company.................................. 135,000 10,580,625
Rubbermaid Incorporated................................... 15,000 388,125
Shaw Industries, Inc. .................................... 13,600 150,450
Snap-On Incorporated...................................... 5,850 229,247
Stanhome Inc. ............................................ 1,600 43,400
Stanley Works............................................. 8,900 393,825
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
HOUSEHOLD GOODS--CONTINUED
Thomas Industries Inc. ................................... 1,500 $ 32,813
Whirlpool Corporation..................................... 7,300 422,031
------------
23,735,680
------------
INSURANCE--6.7%
Aetna, Inc. .............................................. 15,170 1,114,995
American General Corporation.............................. 24,362 1,373,408
American International Group, Inc. ....................... 70,500 7,777,031
Chubb Corporation......................................... 17,000 1,290,938
CIGNA Corporation......................................... 7,400 1,254,763
Cincinnati Financial Corporation.......................... 5,395 687,863
General Re Corporation.................................... 7,800 1,623,375
Hartford Steam Boiler Inspection and Insurance............ 1,900 112,338
Jefferson-Pilot Corporation............................... 7,000 571,813
Lincoln National Corp. ................................... 10,200 772,013
Marsh & McLennan Companies, Inc. ......................... 17,000 1,255,875
Providian Corporation..................................... 9,500 464,313
ReliaStar Financial Corporation........................... 9,000 373,500
SAFECO Corporation........................................ 14,100 704,119
St. Paul Companies, Inc. ................................. 8,400 730,800
Torchmark Corporation..................................... 14,000 581,875
Travelers Group Inc. ..................................... 115,200 5,702,400
UNUM Corporation.......................................... 13,900 675,888
USF&G Corporation......................................... 11,400 271,463
------------
27,338,770
------------
MEDIA--3.9%
Banta Corporation......................................... 2,850 72,497
Comcast Corporation....................................... 34,900 1,092,806
Disney (Walt) Company..................................... 67,800 7,224,938
Dow Jones & Company....................................... 9,800 492,450
Harcourt General.......................................... 6,900 367,856
King World Productions, Inc. (b).......................... 3,600 213,075
Lee Enterprises, Inc...................................... 4,500 129,094
McGraw-Hill Companies..................................... 9,900 691,144
Media General, Inc. ...................................... 2,400 109,200
Meredith Corporation...................................... 5,100 199,856
Midas Inc. (b)............................................ 1,717 27,579
New York Times Company.................................... 9,600 624,600
Scholastic Corporation (b)................................ 1,600 56,000
Tele-Communications, Inc. (b)............................. 50,700 1,419,600
Times Mirror Company...................................... 8,900 512,863
U S West Media Group...................................... 60,700 1,802,031
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
MEDIA--CONTINUED
Viacom, Inc. (b)........................................... 6,700 $ 276,375
Washington Post Company.................................... 1,000 487,000
------------
15,798,964
------------
MISCELLANEOUS--1.7%
American Greetings Corporation............................. 7,100 307,519
Avnet, Inc. ............................................... 4,300 262,300
Bemis Company, Inc. ....................................... 5,300 228,563
Case Corporation........................................... 7,300 425,681
CPI Corp. ................................................. 1,000 24,063
Cross (A.T.) Company....................................... 1,400 15,925
Deere & Company............................................ 25,200 1,329,300
General Signal Corporation................................. 4,800 187,200
Gibson Greetings, Inc. (b)................................. 1,400 30,450
Hillenbrand Industries, Inc. .............................. 6,700 343,375
Hunt Manufacturing Co. .................................... 1,100 24,544
Hussmann International Inc. (b)............................ 5,150 70,169
Ionics, Inc. (b)........................................... 1,400 57,575
Jostens, Inc. ............................................. 3,800 85,738
Marriott International, Inc. .............................. 12,800 884,800
Omnicom Group Inc. ........................................ 16,200 657,113
Polaroid Corporation....................................... 4,300 176,569
Sealed Air Corporation (b)................................. 4,100 257,788
Service Corporation International.......................... 25,200 982,800
Sonoco Products Company.................................... 9,305 330,328
Toro Company............................................... 1,200 46,725
Whitman Corporation........................................ 10,300 171,238
------------
6,899,763
------------
MISCELLANEOUS MANUFACTURING--1.0%
Applied Materials, Inc. (b)................................ 36,500 1,197,656
Brady (W.H.) Co. .......................................... 2,200 65,450
Cincinnati Milacron Inc. .................................. 3,900 99,450
CLARCOR Inc. .............................................. 1,400 37,713
Crown Cork & Seal Company, Inc. ........................... 12,800 633,600
Dionex Corporation (b)..................................... 1,200 66,000
Fastenal Company........................................... 3,700 162,569
Gerber Scientific Inc. .................................... 2,100 38,063
Graco Inc. ................................................ 1,450 60,628
Illinois Tool Works Inc. .................................. 24,900 1,386,619
Isco, Inc. ................................................ 300 2,625
Lawson Products, Inc. ..................................... 1,100 33,000
Millipore Corporation...................................... 4,200 137,550
Nordson Corporation........................................ 1,500 73,688
Watts Industries........................................... 2,400 66,750
</TABLE>
16
<PAGE>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
MISCELLANEOUS MANUFACTURING--CONTINUED
Wellman, Inc. ............................................. 3,000 $ 53,813
Zurn Industries, Inc. ..................................... 1,200 41,400
------------
4,156,574
------------
RESOURCE DEVELOPMENT--1.5%
Air Products & Chemicals, Inc. ............................ 11,000 880,688
Aluminum Company of America................................ 17,200 1,313,650
Battle Mountain Gold Company............................... 23,200 130,500
Betz Laboratories.......................................... 2,900 167,113
Cabot Corporation.......................................... 6,700 189,275
Calgon Carbon Corporation.................................. 3,800 39,663
Consolidated Papers, Inc. ................................. 4,700 264,375
Cyprus Amax Minerals Company............................... 9,100 143,325
Echo Bay Mines Ltd (b)..................................... 14,000 27,125
Fuller (H.B.) Company...................................... 1,300 68,250
IMCO Recycling Inc. ....................................... 1,600 26,800
Inland Steel Industries, Inc. ............................. 4,700 93,706
Mead Corporation........................................... 10,200 331,500
Morton International, Inc. ................................ 13,300 438,900
Nalco Chemical Company..................................... 6,400 240,000
Nucor Corporation.......................................... 8,550 407,194
Praxair, Inc. ............................................. 15,800 654,713
Sigma-Aldrich Corporation.................................. 10,200 395,250
Westvaco Corporation....................................... 10,400 337,350
Worthington Industries, Inc. .............................. 9,400 158,038
------------
6,307,415
------------
RETAIL--9.9%
Albertson's, Inc. ......................................... 24,600 1,173,113
American Stores Companies.................................. 27,400 595,950
Bestfoods.................................................. 14,400 1,404,000
Bob Evans Farms, Inc. ..................................... 4,100 78,669
Charming Shoppes, Inc. (b)................................. 10,300 41,844
Circuit City Stores, Inc. ................................. 9,600 327,600
Claire's Stores, Inc. ..................................... 4,700 83,425
Costco Companies Inc. (b).................................. 21,115 915,863
CVS Corporation............................................ 17,500 1,147,344
Dayton Hudson Corporation.................................. 21,800 1,568,238
Dillard Department Stores, Inc. ........................... 11,100 389,888
Dollar General Corporation................................. 11,548 420,059
Egghead, Inc. (b).......................................... 2,100 16,538
Gap, Inc. (The)............................................ 40,150 1,568,359
Giant Food Inc. ........................................... 5,800 188,863
Great Atlantic & Pacific Tea Company, Inc. ................ 3,700 105,450
Hannaford Bros. Co. ....................................... 4,000 155,750
Home Depot, Inc. .......................................... 73,649 4,441,956
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
RETAIL--CONTINUED
Kmart Corporation (b)..................................... 48,700 $ 535,700
Kroger Co. (b)............................................ 25,500 997,688
Lands' End, Inc. (b)...................................... 3,100 121,869
Lillian Vernon Corporation................................ 1,000 16,813
Limited, Inc. (The)....................................... 27,300 723,450
Longs Drug Stores Corporation............................. 3,800 109,963
Lowe's Companies, Inc. ................................... 17,400 879,788
Luby's Cafeterias, Inc. .................................. 2,300 36,800
May Department Stores Company............................. 23,400 1,229,963
McDonald's Corporation.................................... 68,800 3,242,200
Mercantile Stores Company, Inc. .......................... 3,600 214,200
Nordstrom, Inc. .......................................... 8,000 407,000
Penney (J.C.) Company, Inc. .............................. 25,000 1,684,375
Pep Boys--Manny, Moe & Jack............................... 6,300 137,813
Ruby Tuesday, Inc. ....................................... 1,700 42,394
Ryan's Family Steakhouse, Inc. (b)........................ 4,600 38,238
Sears, Roebuck and Co. ................................... 39,200 1,805,650
Spec's Music, Inc. (b).................................... 200 250
Starbucks Corporation (b)................................. 7,600 277,875
Tandy Corporation......................................... 10,500 406,875
TCBY Enterprises, Inc. ................................... 2,300 17,250
TJX Companies, Inc. ...................................... 16,300 552,163
Toys "R' Us, Inc. (b)..................................... 28,720 770,055
Wal-Mart Stores, Inc. .................................... 226,400 9,027,700
Walgreen Company.......................................... 49,200 1,629,750
Wendys International Inc. ................................ 13,100 292,294
Whole Foods Market, Inc. (b).............................. 2,400 120,600
Woolworth Corporation (b)................................. 13,600 295,800
------------
40,237,425
------------
TECHNOLOGY--23.1%
3Com Corporation (b)...................................... 34,600 1,143,963
Advanced Micro Devices, Inc. (b).......................... 14,200 284,888
American Power Conversion (b)............................. 9,700 254,019
Analog Devices, Inc. (b).................................. 16,100 474,950
Apple Computer, Inc. (b).................................. 12,800 234,400
AT&T Corporation.......................................... 163,200 10,220,400
Autodesk, Inc. ........................................... 5,000 193,125
Automatic Data Processing, Inc. .......................... 29,200 1,746,525
Baldor Electric Company................................... 3,500 79,844
Borland International, Inc. (b)........................... 4,000 30,000
Broderbund Software Inc. (b).............................. 1,900 40,138
Cisco Systems, Inc. (b)................................... 101,100 6,375,619
Citizens Utilities Company................................ 9,267 88,037
Compaq Computer Corporation............................... 152,140 4,573,709
Computer Associates International, Inc. .................. 54,700 2,909,356
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
TECHNOLOGY--CONTINUED
Cooper Industries, Inc. .................................. 12,100 $ 642,055
Dell Computer Corp. (b)................................... 32,600 3,241,662
Digital Equipment Corporation (b)......................... 14,600 825,812
DSC Communications Corporation (b)........................ 11,900 238,000
Grainger (W.W.), Inc. .................................... 4,800 462,000
Hewlett-Packard Company................................... 104,500 6,270,000
Hubbell Incorporated...................................... 6,960 348,435
Hutchinson Technology (b)................................. 1,700 42,712
Intel Corporation......................................... 164,400 13,316,400
International Business Machines Corporation............... 97,700 9,641,768
LSI Logic (b)............................................. 14,100 338,400
MCI Communications Corporation............................ 69,700 3,236,693
Merix Corporation (b)..................................... 600 8,250
Micron Technology, Inc. (b)............................... 21,000 727,125
Microsoft Corporation (b)................................. 121,200 18,081,525
Molex Incorporated........................................ 15,737 428,832
National Semiconductor Corporation (b).................... 16,300 458,437
Novell Inc. (b)........................................... 34,900 246,480
Perkin-Elmer Corporation.................................. 4,800 283,200
Quarterdeck Corporation (b)............................... 4,200 9,187
QuickResponse Services, Inc. (b).......................... 700 25,505
Raychem Corporation....................................... 8,300 309,693
Shared Medical Systems Corporation........................ 2,400 157,200
Solectron Corporation (b)................................. 11,500 497,375
Sprint Corporation........................................ 43,000 2,553,125
Stratus Computer, Inc. (b)................................ 2,300 97,030
Sun Microsystems, Inc. (b)................................ 37,500 1,797,655
Tektronix, Inc. .......................................... 5,200 219,700
Tellabs, Inc. (b)......................................... 18,100 926,493
Thomas & Betts Corporation................................ 5,500 271,562
Xilinx, Inc. (b).......................................... 7,200 273,150
------------
94,624,434
------------
TRANSPORTATION--1.7%
Airborne Freight Corporation.............................. 2,300 163,587
Alaska Air Group, Inc. (b)................................ 1,800 87,412
AMR Corporation (b)....................................... 9,300 1,174,125
Consolidated Freightways Corporation (b).................. 2,100 31,105
CSX Corporation........................................... 22,100 1,171,300
Delta Air Lines, Inc. .................................... 7,400 844,525
FDX Holding Corporation (b)............................... 11,400 741,712
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
TRANSPORTATION--CONTINUED
GATX Corporation........................................... 2,400 $ 174,150
Norfolk Southern Corporation............................... 37,700 1,189,905
Roadway Express, Inc. ..................................... 2,000 43,750
Ryder System, Inc. ........................................ 7,400 247,900
Southwest Airlines Co. .................................... 21,700 565,555
UAL Corporation (b)........................................ 5,700 506,587
Yellow Corporation (b)..................................... 2,800 73,150
------------
7,014,763
------------
UTILITIES--8.5%
AGL Resources Inc. ........................................ 5,500 108,968
American Water Works, Inc. ................................ 7,700 207,900
Ameritech.................................................. 110,000 4,723,125
Bell Atlantic Corporation.................................. 78,011 7,220,892
BellSouth Corporation...................................... 99,700 6,038,080
CalEnergy Company, Inc. (b)................................ 8,300 213,205
Central Lousiana Electric Inc. ............................ 2,200 68,337
Connecticut Energy Corporation............................. 1,000 27,187
Eastern Enterprises........................................ 2,000 82,750
El Paso Energy Corporation................................. 5,800 370,837
Energen Corporation........................................ 1,400 54,600
Enron Corp. ............................................... 31,800 1,317,712
Equitable Resources, Inc. ................................. 3,400 111,775
Frontier Corporation....................................... 16,400 427,425
Helmerich & Payne, Inc. ................................... 4,800 122,700
Idaho Power Company........................................ 3,600 124,875
Keyspan Energy Corporation................................. 4,900 166,905
LG&E Energy Corp. ......................................... 6,700 156,612
MCN Corporation............................................ 7,600 281,200
New Century Energies, Inc. ................................ 11,100 505,743
NICOR Inc. ................................................ 4,700 189,175
Northwest Natural Gas Co. ................................. 2,200 58,575
Northwestern Public Service Company........................ 1,500 33,280
Oklahoma Gas and Electric Company.......................... 3,900 204,018
ONEOK Inc. ................................................ 3,000 102,562
Pacific Enterprises........................................ 8,300 299,318
Peoples Energy Corporation................................. 3,400 128,350
Potomac Electric Power Company............................. 12,000 298,500
Rowan Companies, Inc. ..................................... 8,700 229,462
SBC Communications Inc. ................................... 92,159 7,165,392
Sonat Inc. ................................................ 8,600 375,712
Southern New England Telecommunications Corporation........ 6,900 449,362
Telephone and Data Systems, Inc. .......................... 5,800 255,200
</TABLE>
18
<PAGE>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
UTILITIES--CONTINUED
U S West Communications Group (b).......................... 48,300 $ 2,324,437
Washington Gas Light Company............................... 4,200 111,300
Western Atlas Inc. ........................................ 5,300 330,255
------------
34,885,726
------------
VEHICLE COMPONENTS--0.5%
Cooper Tire and Rubber Company............................. 7,600 182,875
Cummins Engine Company, Inc................................ 3,700 197,950
Dana Corporation........................................... 10,500 526,312
Federal-Mogul Corporation.................................. 3,900 175,500
Genuine Parts Company...................................... 17,900 594,056
Modine Manufacturing Company............................... 2,900 101,137
Smith (A.O.) Corporation................................... 1,500 63,000
Spartan Motors, Inc. (b)................................... 1,200 8,475
SPX Corporation............................................ 1,200 87,600
------------
1,936,905
------------
Total Investments(a)--100.0%...................................... $408,990,469
Other Assets, less liabilities.................................... 2,499,557
------------
NET ASSETS........................................................ $411,490,026
============
</TABLE>
- -------
(a) The aggregate cost for federal income tax purposes is $299,126,134, the
aggregate gross unrealized appreciation is $112,492,160, and the aggregate
gross unrealized depreciation is $2,627,825, resulting in net unrealized
appreciation of $109,864,335.
(b) Non-income producing security.
See Notes to Financial Statements
19
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at value (Cost $299,126,134).......................... $408,990,469
Cash.............................................................. 4,192,809
Dividends receivable.............................................. 496,631
------------
Total assets................................................... 413,679,909
------------
LIABILITIES:
Payable for securities purchased.................................. 1,971,177
Accrued expenses (Note 2)......................................... 218,706
------------
Total liabilities.............................................. 2,189,883
------------
NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS.......... $411,490,026
============
NET ASSETS CONSIST OF:
Paid-in capital................................................... $411,490,026
============
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $518)............... $ 2,276,430
-----------
EXPENSES:
Management fee (Note 2).......................................... 199,249
Sub management fee (Note 2)...................................... 186,707
Professional fees................................................ 48,667
Custody fees (offset by compensating balances)................... 65,252
Trustee fees..................................................... 1,325
Miscellaneous.................................................... 1,955
-----------
Total expenses................................................... 503,155
Fees paid indirectly.......................................... (60,429)
Management fee waived......................................... (103,679)
-----------
Net expenses.................................................. 339,047
-----------
NET INVESTMENT INCOME............................................ 1,937,383
NET REALIZED GAIN ON INVESTMENTS
Proceeds from sales................................. $ 8,580,631
Cost of securities sold............................. 5,738,294
------------
Net realized gain on investments.............................. 2,842,337
NET CHANGES IN UNREALIZED APPRECIATION OF INVESTMENTS
Beginning of period................................. 91,161,408
End of period....................................... 109,864,335
------------
Net change in unrealized appreciation......................... 18,702,927
-----------
NET INCREASE OF NET ASSETS RESULTING FROM OPERATIONS............. $23,482,647
===========
</TABLE>
See Notes to Financial Statements
20
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
JANUARY 31, 1998 YEAR ENDED
(UNAUDITED) JULY 31, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From Operations:
Net investment income.......................... $ 1,937,384 $ 2,240,276
Net realized gain on investments............... 2,842,337 433,417
Net change in unrealized appreciation of in-
vestments..................................... 18,702,927 74,540,873
------------ ------------
Net Increase in Net Assets Resulting from Oper-
ations........................................ 23,482,648 77,214,566
------------ ------------
Transactions in Investors' Beneficial Interest:
Additions...................................... 105,727,597 137,135,556
Reductions..................................... (10,079,189) (22,391,710)
------------ ------------
Net Increase in Net Assets from Transactions in
Investors' Beneficial Interests............... 95,648,408 114,743,846
------------ ------------
Total Increase in Net Assets.................... 119,131,056 191,958,412
NET ASSETS:
Beginning of period............................ 292,358,970 100,400,558
------------ ------------
End of period.................................. $411,490,026 $292,358,970
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE YEAR ENDED JULY 31,
JANUARY 31, 1998 -----------------------------------------
(UNAUDITED) 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Ratio of net investment
income to average net
assets................. 1.13%(1)(5) 1.34% 1.48%(3) 1.85%(4) 2.13%(4)
Ratio of expenses to av-
erage net assets....... 0.23%(1)(2)(3) 0.29%(2) 0.59%(2)(3) 0.43%(4) 0.29%(4)
Portfolio turnover
rate................... 3% 1% 5% 6% 8%
Average commission rate
paid per share......... $0.0408 $0.0512 $0.0496 -- --
</TABLE>
(1) Reflects a waiver of 0.06% of fees by the Manager due to limitations set
forth in the Management Agreement. Had the Manager not waived their fees,
the ratios of net investment income and expenses to average net assets for
the six months ended January 31, 1998 would have been 1.07% and 0.26%,
respectively.
(2) Ratio of total expenses to average net assets for the period ended January
31, 1998, July 31, 1997 and 1996 include indirectly paid expenses.
Excluding indirectly paid expenses, the expense ratios would have been
0.20%, 0.25% and 0.50% for the year ended July 31, 1997 and 1996,
respectively.
(3) Had the Expense Payment Agreement and Sponsor Arrangement not been in
place, the ratios of net investment income and expense for the year ended
July 31, 1996 would have been 1.14% and 0.85% respectively.
(4) Reflects a voluntary waiver of fees by the Administrator and Adviser due to
the limitations set forth in the Expense Reimbursement Agreement. Had the
Administrator and Adviser not waived their fees, the ratios of net
investment income and expenses to average net assets for the years ended
July 31, 1995 and 1994 would have been 1.75% and 0.53% and 2.00% and 0.42%
respectively.
(5) Annualized.
See Notes to Financial Statements
21
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998
(UNAUDITED)
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Domini Social Index Portfolio (the "Index Portfolio") is registered under the
Investment Company Act of 1940 (the "Act") as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York on June 7, 1989. The Index Portfolio intends to correlate
its investment portfolio as closely as is practicable with the Domini 400
Social index (the "Index"), which is a common stock index developed and
maintained by Kinder, Lydenberg, Domini & Co., Inc. ("KLD"). The Declaration of
Trust permits the Trustees to issue an unlimited number of beneficial interests
in the Index Portfolio. The Index Portfolio commenced operations upon
effectiveness on August 10, 1990 and began investment operations on June 3,
1991.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
the Index Portfolio's significant accounting policies.
(A) VALUATION OF INVESTMENTS: The Index Portfolio values securities at the
last reported sale price, or at the last reported bid price if no sales
are reported.
(B) DIVIDEND INCOME: Dividend income is reported on the ex-dividend date.
(C) FEDERAL TAXES: The Index Portfolio will be treated as a partnership for
U.S. federal income tax purposes and is therefore not subject to U.S.
federal income tax. As such, each investor in the Index Portfolio will
be taxed on its share of the Index Portfolio's ordinary income and
capital gains. It is intended that the Portfolio will be managed in such
a way that an investor will be able to satisfy the requirements of the
Internal Revenue Code applicable to regulated investment companies.
(D) OTHER: Investment transactions are accounted for on the trade date.
Gains and losses are determined on the basis of identified cost.
NOTE 2--TRANSACTIONS WITH AFFILIATES
(A) MANAGER. Domini Social Investments LLC (DSIL or the Manager) is a
registered as an investment adviser under the Investment Advisers Act of
1940. The services provided by the Manager consist of investment
supervisory services, overall operational support and administrative
services. The administrative services include the provision of general
office facilities and supervising the overall administration of the
Index Portfolio. For its services under the Management Agreement, the
Manager receives from the Index Portfolio a fee accrued daily and paid
monthly at an annual rate equal to 0.20% of the Index Portfolio's
average daily net assets, subject to reduction to the extent necessary
to keep the aggregate annual operating expenses of the Index Portfolio
(excluding brokerage fees and commissions, interest, taxes and other
extraordinary expenses) at no greater than 0.20% of the average daily
net assets of the Index Portfolio through October 22, 1998.
(B) SUBMANAGER. Mellon Equity provides investment submanagement services to
the Index Portfolio on a day-to-day basis pursuant to a Submanagement
Agreement with DSIL. Mellon Equity does not determine the composition of
the Domini Social Index. Under the Submanagement Agreement, DSIL pays
Mellon Equity an investment submanagement fee equal on an annual basis
to 0.10% of the average daily net assets of the Portfolio.
22
<PAGE>
(C) PRIOR ADVISORY, MANAGEMENT, SPONSORSHIP AND ADMINISTRATIVE
AGREEMENTS. Prior to October 22, 1997, pursuant to an investment
advisory agreement (the KLD "Advisory Agreement"), KLD served as
investment adviser to the Index Portfolio and furnished continuously an
investment program by determining the stocks to be included in the
Domini Social Index. KLD received from the Index Portfolio a fee accrued
daily and paid monthly at an annual rate equal to 0.025% of the Index
Portfolio's average daily net assets. Additionally, prior to October 22,
1997, pursuant to a management agreement (the "Mellon Equity Management
Agreement"), Mellon Equity served as investment manager and managed the
assets of the Index Portfolio on a daily basis. Prior to October 22,
1997, pursuant to a sponsorship agreement (the "KLD Sponsorship
Agreement") , KLD furnished administrative services for the Index
Portfolio. KLD received from the Portfolio a fee accrued daily and paid
monthly at an annual rate equal to 0.025% of the average daily net
assets of the Portfolio for administrative services. Prior to November
6, 1996, pursuant to an administrative services agreement (the
"Signature Administration Agreement"), Signature Broker-Dealer Services,
Inc. ("Signature") served as the administrator of the Index Portfolio.
Prior to October 22, 1997, the aggregate investment management and
administration fees under the prior agreement with respect to the Index
Portfolio were equal to 0.15% of the Index Portfolio's average daily net
assets for its then current fiscal year.
NOTE 3--INVESTMENT TRANSACTIONS
Purchase and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $104,647,537.62 and $8,580,631,
respectively. Custody fees of the Portfolio were reduced by $60,429 which was
compensation for uninvested cash left on deposit with the custodian. Cash
balances could have been employed to earn additional income for the Portfolio.
23
<PAGE>
- --------------------------------------------------------------------------------
Semi-Annual Report
- --------------------------------------------------------------------------------
INVESTMENT ADVISER (BALANCED FUND)
AND ADMINISTRATOR
Green Century Capital Management, Inc.
29 Temple Place
Boston, MA 02111
1-800-93-GREEN
INVESTMENT SUBADVISER (BALANCED FUND) [LOGO OF GREEN CENTURY FUNDS
Winslow Management Company APPEARS HERE]
24 Federal Street
Boston, MA 02110
INVESTMENT MANAGER (INDEX PORTFOLIO)
Domini Social Investments LLC
11 West 25th Street
New York, NY 10010
INVESTMENT SUBMANAGER (INDEX PORTFOLIO)
Mellon Equity Associates
500 Grant Street, Suite 3700
Pittsburgh, PA 15258-0001
COUNSEL TO INDEPENDENT TRUSTEES OF THE FUNDS
Debevoise & Plimpton
555 13th Street, N.W.
Washington, DC 20004
SUBADMINISTRATOR AND DISTRIBUTOR
Sunstone Financial Group, Inc. (Subadministrator)
Sunstone Distribution Services, LLC (Distributor)
207 East Buffalo Street, Suite 400
Milwaukee, WI 53202
TRANSFER AGENT AND CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
COUNSEL TO GREEN CENTURY CAPITAL
MANAGEMENT, INC.
Goulston & Storrs
400 Atlantic Avenue
Boston, MA 02110
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
99 High Street Balanced
Boston, MA 02110 Fund
December 31, 1997
- -------------------------------------------------------------------------------
[LOGO OF GREEN CENTURY Equity
FUNDS APPEARS HERE](R) Fund
An investment for your future January 31, 1998
Printed on recycled paper with soy-based ink.
