<PAGE> 1
As filed with the Securities and Exchange Commission on October 28, 1998
Securities Act Registration No. 33-41692
Investment Company Act Registration No. 811-06351
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. | |
--
Post-Effective Amendment No. 11 |X|
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 14 |X|
(Check appropriate box or boxes)
GREEN CENTURY FUNDS
(Exact Name of Registrant as Specified in Charter)
29 Temple Place, Suite 200
Boston, Massachusetts 02111
(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 617-482-0800
Kristina A. Curtis, Green Century Capital Management, Inc.
29 Temple Place, Boston, Massachusetts 02111
(Name and Address of Agent for Service)
Copy to:
Constance Dye Shannon, Sunstone Financial Group, Inc.
207 E. Buffalo Street, Milwaukee, Wisconsin 53202
It is proposed that this filing will become effective:
( X ) immediately upon filing pursuant to paragraph (b)
( ) on (date) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
( ) on (date) pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
( ) on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
( )this Post-Effective Amendment designates a new effective date for
a previously filed Post-Effective Amendment.
Domini Social Index Portfolio has also executed this Registration Statement.
- --------------------------------------------------------------------------------
<PAGE> 2
GREEN CENTURY FUNDS
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus and the
Statement of Additional Information of the responses to the Items of Parts A and
B of Form N-1A).
<TABLE>
<CAPTION> Caption or Subheading in Prospectus
Item No. on Form N-1A or Statement of Additional Information
--------------------- --------------------------------------
PART A - INFORMATION REQUIRED IN PROSPECTUS
<S> <C>
1. Cover Page Cover Page
2. Synopsis Fee Information
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Investment Objectives, Policies and
Risk Factors; Green Century Funds Environmental
Standards; Organization and Management of the Funds
5. Management of the Fund Organization and Management of the Funds
5A. Management's Discussion of Fund *
Performance
6. Capital Stock and Other Securities Cover Page; Your Account; Shareholder and Account
Policies
7. Purchase of Securities Being Offered Your Account; Shareholder and Account Policies
8. Redemption or Repurchase Your Account; Shareholder and Account Policies
9. Legal Proceedings *
</TABLE>
<PAGE> 3
PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History * *
13. Investment Objectives and Policies Investment Objectives, Risks and Policies;
Investment Restrictions
14. Management of the Fund Trustees, Officers and Advisory Board
15. Control Persons and Principal Holders of Trustees, Officers and Advisory Board
Securities
16. Investment Advisory and Other Services Investment Advisers; Administrator, Transfer Agent
and Custodian, and Expenses
17. Brokerage Allocation and Other Policies Portfolio Transactions and Brokerage Commissions
18. Capital Stock and Other Securities Description of Shares, Voting Rights and Liabilities
19. Purchase, Redemption and Pricing of Net Asset Value; Redemption in Kind; Additional
Securities Being Offered Information
20. Tax Status Federal Taxes
21. Underwriters Distribution Plan
22. Calculation of Performance Data Performance Advertising
23. Financial Statements Financial Statements
</TABLE>
PART C - OTHER INFORMATION
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this registration statement.
- -------------------
* Answer negative or inapplicable.
* * Complete answer to Item is contained in the Prospectus.
<PAGE> 4
LOGO
(R)
An Investment For Your Future.
PROSPECTUS
OCTOBER 28, 1998
29 Temple Place, Boston, Massachusetts 02111
1-800-93-GREEN
FOR INFORMATION ON THE GREEN CENTURY FUNDS(R), CALL 1-800-93-GREEN. FOR
INFORMATION ON HOW TO OPEN AN ACCOUNT AND ACCOUNT SERVICES, CALL 1-800-221-5519
9:00 AM TO 5:00 PM EASTERN TIME MONDAY THROUGH FRIDAY. FOR SHARE PRICE
INFORMATION, CALL 1-800-221-5519, TWENTY-FOUR HOURS A DAY.
The Green Century Funds ("Green Century") are an open-end, diversified,
no-load family of mutual funds. This prospectus describes the Green Century
Balanced Fund and the Green Century Equity Fund (the "Green Century Funds" of
the "Funds"). Green Century endeavors to make a contribution to a safer, lasting
environment by promoting corporate environmental responsibility. Green Century
provides people who care about a clean, healthy planet the opportunity to use
the clout of their investment dollars to encourage environmentally responsible
corporate behavior.
THE GREEN CENTURY FUNDS
The Green Century Balanced Fund
The investment objective of the Green Century Balanced Fund (the
"Balanced Fund") is to provide capital growth and income from a diversified
portfolio of stocks and bonds which meet Green Century's standards for corporate
environmental responsibility.
The Green Century Equity Fund
The investment objective of the Green Century Equity Fund (the "Equity
Fund") is to achieve long-term total return from a diversified portfolio of
stocks which corresponds to the performance of an index consisting of
approximately 400 companies; the companies in the index are screened to exclude
corporations with poor records for environmental
<PAGE> 5
and social corporate responsibility ("Social Index"). Unlike other mutual funds
which directly acquire and manage their own portfolios of securities, the Equity
Fund invests all of its investable assets in a diversified open-end management
investment company having the same investment objective as the Fund (the "Index
Portfolio"), through a master-feeder investment fund structure. See "Investment
Objectives, Policies and Risk Factors--The Green Century Equity Fund and the
Master Feeder Investment Fund Structure."
There can be, of course, no assurance that a Fund will achieve its investment
objective. This Prospectus sets forth basic information about the Funds that a
prospective investor should know before investing and should be read and
retained for future reference. A Statement of Additional Information about the
Funds, dated October 28, 1998 and incorporated herein by reference, has been
filed with the Securities and Exchange Commission and may be obtained free of
charge by writing the Funds at the address listed above or by calling
1-800-93-GREEN.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
2
<PAGE> 6
LOGO
TABLE OF CONTENTS
Introduction........................................................... 1
Fee Information........................................................ 5
Financial Highlights................................................... 7
Performance Information................................................ 9
The Green Century Funds' Environmental Standards....................... 11
The Green Century Funds Advocate for Corporate Environmental
Responsibility......................................................... 12
The Green Century Funds Support Not-For-Profit Environmental
Organizations.......................................................... 12
Investment Objectives, Policies and Risk Factors....................... 13
The Green Century Balanced Fund Investments............................ 13
The Green Century Balanced Fund Environmental Criteria................. 13
The Green Century Equity Fund Investments.............................. 14
The Green Century Equity Fund Environmental and Social Criteria........ 15
3
<PAGE> 7
The Green Century Equity Fund and the Master Feeder Investment Fund
Structure.............................................................. 16
Additional Investment Policies and Restrictions
The Green Century Balanced Fund................................ 18
The Green Century Balanced Fund and The Green Century
Equity Fund.................................................... 20
Organization and Management of the Funds............................... 21
Your Account........................................................... 27
How to Purchase Shares................................................. 27
How to Sell Shares..................................................... 29
Shareholder and Account Policies....................................... 30
Transaction Information................................................ 30
Shareholder Account Statements......................................... 31
Dividends and Taxes.................................................... 32
Valuation of Shares.................................................... 32
Description of Shares, Voting Rights and Liabilities................... 33
4
<PAGE> 8
Financial Intermediaries............................................... 33
5
<PAGE> 9
FEE INFORMATION
Expense Table
The following information, provided by all mutual funds in this standardized
format, is designed to assist you in understanding the various direct and
indirect costs and expenses you will bear as a shareholder of the Green Century
Funds and enable you to compare these costs and expenses with those of other
mutual funds. Unlike many mutual funds, the Green Century Funds do not charge a
sales fee or "load" when you purchase or redeem shares. One hundred percent of
your investment is credited to your account. The information in the table is
based on the actual expenses incurred by the Balanced Fund for the one year
ended June 30, 1998 and the one month period ended July 31, 1998. The
information for the Equity Fund, which summarizes the expenses of the Equity
Fund and the Index Portfolio, reflect fees currently in effect.
BALANCED FUND EQUITY
FUND
Shareholder Transaction Expenses
Sales Load on Purchases........................ None None
Sales Load on Reinvested Dividends............. None None
Deferred Sales Load............................ None None
Redemption Fees (1)............................ None None
Exchange Fee................................... None None
Annual Operating Expenses (as a percentage of
average net assets)
Advisory and Management Fees................... 0.75% 0.20%(2)
Rule 12b-1 (Distribution) Fees (3)............. 0.25% 0.00%
Administrative Services Fees (4)............... 1.50% 1.30%
---- ----
Total Operating Expenses....................... 2.50% 1.50%
==== ====
1 A fee of $10.00 is charged for redemptions by wire. There is no charge for
redemptions paid by check.
2 Under the Management Agreement between the Index Portfolio and Domini Social
Investments LLC ("DSI"), DSI's fee for advisory and management services to
the Index Portfolio is 0.20% of the average daily net assets of the Index
Portfolio. DSI is waiving its fee 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
Portfolio. This fee waiver is voluntary and may be reduced or eliminated at
any time. If this fee reduction were not in effect, advisory and management
fees for the Index Portfolio would be 0.20% of the average daily net assets
of the Index Portfolio. See "Organization and Management of the Funds--The
Green Century Equity Fund and the Index Portfolio."
3 The Balanced Fund's Distribution fee will not exceed 0.25% per annum of the
Balanced Fund's average daily net assets. See "Organization and Management of
the Funds." Because of the distribution fee, long-term shareholders in the
Balanced Fund may pay more than the equivalent of the maximum permitted
front-end sales charge.
4 Green Century Capital Management, Inc. ("Green Century Capital Management"),
the investment adviser of the Balanced Fund (the "Adviser") and administrator
(the "Administrator") of each Fund, has agreed to pay the total operating
expenses of the Funds, excluding interest, taxes, brokerage costs and other
capital expenses and any extraordinary expenses, which exceed (i) 1.50% of
the Equity Fund's average net assets, and (ii) 2.50% of the Balanced Fund's
average net assets up to $30 million, 2.25% on its average net assets from
$30 million to $100 million, and 1.75% on the Balanced Fund's average net
assets in excess of $100 million.
Example
The purpose of the example below is to assist investors in understanding the
expenses they will bear on a sample $1,000 investment in each Fund. The example
is based on the Annual Operating Expenses in the Expense Table.
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Balanced Fund..................................... $ 25 $ 78 $ 133 $ 284
Equity Fund....................................... $ 15 $ 47 $ 82 $ 179
</TABLE>
6
<PAGE> 10
This Example should not be considered representations of past or future
expenses or rates of return. Actual operating expenses and investment return may
be greater or less than those shown.
The Trustees of Green Century believe that the aggregate per share expenses
of the Equity Fund and the Index Portfolio will be less than the expenses which
the Equity Fund would incur if it retained the services of an investment manager
and sub-manager and invested directly in the types of securities being held by
the Index Portfolio. See "Organization and Management of the Funds" for further
discussion of the expenses of the Equity Fund and Index Portfolio.
7
<PAGE> 11
FINANCIAL HIGHLIGHTS
The following information for the years ended June 30, 1996, 1997 and 1998
and the one month period ended July 31, 1998 for the Balanced Fund and for the
years ended July 31, 1996, 1997 and 1998 for the Equity Fund has been audited by
KPMG Peat Marwick LLP, independent auditors, whose report thereon appears in the
Annual Report which is incorporated by reference in the Statement of Additional
Information and which may be obtained free of charge by calling 1-800-93-GREEN.
Information for the Balanced Fund prior to July 1, 1995, was audited by other
independent auditors. This information should be read in conjunction with the
financial statements and related notes included in the Annual Report.
GREEN CENTURY BALANCED FUND
<TABLE>
<CAPTION>
FOR THE ONE
MONTH ENDED FOR THE YEARS ENDED JUNE 30,
JULY 31, 1998
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD. $13.79 $13.53 $13.34 $11.03 $9.68 $10.14
------ ------ ------ ------ ----- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............ - 0.02 0.12 0.10 0.10 0.07
Net realized and unrealized gain
(loss) on investments........... (1.11) 1.68 1.77 2.31 1.35 (0.46)
------ ---- ---- ---- ---- -----
Total increase (decrease) from
investment operations........... (1.11) 1.70 1.89 2.41 1.45 (0.39)
----- ---- ---- ---- ---- -----
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment
income.......................... - (0.09) (0.10) (0.10) (0.10) (0.07)
Distributions from net realized
gains........................... - (1.35) (1.60) -- -- --
----- ----- ----- ----- ----- -----
</TABLE>
8
<PAGE> 12
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Total decrease from dividends and
distributions.................. - (1.44) (1.70) (0.10) (0.10) (0.07)
Net Asset Value, end of period....... $12.68 $13.79 $13.53 $13.34 $11.03 $ 9.68
====== ====== ====== ====== ====== ======
Total return (a)..................... (8.05)% (b) 13.13% 15.22% 21.98% 15.00% (3.83)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
000's)......................... $15,212 $16,286 $11,022 $8,215 $3,291 $3,151
Ratio of expenses to average net
assets......................... 2.50% (c) 2.50% 2.50% 2.50% 2.50% 2.50%
Ratio of net investment income to
average net assets............. 0.22% (c) 0.12% 0.94% 0.85% 0.97% 0.74%
Portfolio turnover................... 4% (b) 96% 109% 136% 16% 14%
</TABLE>
(a) Total Return for the years ended June 30, 1996, 1997 and 1998 and the one
month period ended July 31, 1998 reflects performance achieved by Winslow
Management Company as investment subadviser to the Balanced Fund. Total
Return through June 30, 1995 for the Fund reflects performance achieved by
Scudder, Stevens & Clark as investment subadviser to the Balanced Fund. On
July 1, 1995, Winslow Management Company became the investment subadviser to
the Balanced Fund. See "Organization and Management of the Funds" for more
information on Winslow Management Company.
(b) Not annualized.
(c) Annualized.
9
<PAGE> 13
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30, FOR THE PERIOD MARCH 18,
1993 1992 (COMMENCEMENT OF
OPERATIONS) TO JUNE 30, 1992
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD. $ 9.84 $10.00
---- -----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............ 0.06 0.02
Net realized and unrealized gain
(loss) on investments........... 0.30 (0.16)
---- ----
Total increase (decrease) from
investment operations........... 0.36 (0.14)
---- ----
LESS DIVIDENDS:
Dividends from net investment (0.06) (0.02)
---- ----
income..........................
Dividends from net realized
gains........................... -- --
Total decrease from dividends and
distributions................... (0.06) (0.02)
---- ----
Net Asset Value, end of period....... $10.14 $ 9.84
----- ----
Total return (a)..................... 3.69% (1.45)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
000's).......................... $2,821 $547
Ratio of expenses to average net
assets.......................... 2.50% 2.50%(c)
Ratio of net investment income to
average net assets.............. 0.85% 1.13%(c)
Portfolio turnover................... 11% 2%
</TABLE>
10
<PAGE> 14
GREEN CENTURY EQUITY FUND
-------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 13, 1995
(COMMENCEMENT OF
OPERATIONS) TO
FOR THE YEARS ENDED JULY 31, 1996
1998 1997 -------------
---- ----
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $16.86 $11.04 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............... (0.03) 0.02 0.02
Net realized and unrealized gain on 3.62 5.84 1.04
investment.........................
Total increase from investment 3.59 5.86 1.06
operations.........................
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment
income............................. - (0.03) (0.02)
Distributions from net realized
gains.............................. (0.01) (0.01) --
Total decrease from dividends and (0.01) (0.04) (0.02)
distributions......................
Net Asset Value, end of period.......... $20.44 $16.86 $11.04
Total return............................ 21.32% 53.14% 10.64%(a)
RATIOS/SUPPLEMENTAL DATA
Net Assets, end of period
(in 000's)......................... $15,476 $5,275 $880
Ratio of expenses to average net 1.50% 1.50% 1.50%(b)
assets.............................
Ratio of net investment income to (0.26)% 0.07% 0.49%(b)
average net assets.................
Portfolio Turnover (c)............. 5% 1% 5%
</TABLE>
(a) Not annualized.
(b) Annualized.
(c) Represents portfolio turnover for the Index Portfolio for the years ended
July 31, 1998, 1997 and 1996.
PERFORMANCE INFORMATION
From time to time, a Green Century Fund through its distributor may
advertise various types of yield and total return performance. All performance
figures are based on historical earnings and are not intended to indicate future
performance. An investor's shares, when redeemed, may be worth more or less than
their original cost.
Total return refers to the total change in value of an investment in a Fund
over a specified period. It differs from yield in that yield figures measure
only the income component of a Fund's investments, while total return also
reflects any change in net asset value. Total return assumes all of a Fund's
dividends and capital gain distributions are reinvested. A cumulative total
return reflects a Fund's performance over a period of time. An average annual
total return reflects the hypothetical annual compounded return that would have
produced the same cumulative total return if the Fund's performance had been
constant over the entire period.
The tables that follow set forth average annual total return information for
the periods indicated:
11
<PAGE> 15
<TABLE>
<CAPTION>
GREEN CENTURY BALANCED FUND
1 Year 3 Years 5 Years Inception
(as of 7/31/98) (as of 7/31/98) (as of 7/31/98) to 7/31/98(1)
--------------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Average Annual Total
Return 2.07% 12.55% 10.37% 8.20%
</TABLE>
<TABLE>
<CAPTION>
GREEN CENTURY EQUITY FUND
1 Year 3 Years 5 Years Inception
(as of 7/31/98) (as of 7/31/98) (as of 7/31/98) to 7/31/98(2)
--------------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Average Annual Total
Return (3)............. 21.32% 28.48% 21.90% 18.01%
</TABLE>
1 The Balanced Fund commenced operations on March 18, 1992.
2 The Index Portfolio commenced investment operations on June 3, 1991.
3 The 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, performance for the period
prior to the Equity Fund's inception reflects the performance of the Index
Portfolio adjusted to reflect the deduction of the charges and expenses of
the Equity Fund.
A Fund's performance may also be used from time to time in shareholder
reports or other communications to shareholders or prospective investors.
Performance information may include a Fund's investment results and/or
comparisons of its investment results to other investments or relevant indices,
including data from Lipper Analytical Services, Morningstar Inc., Standard &
Poor's 500 Composite Stock Price Index, Franklin's Insight and other industry
publications. The Annual Report of the Funds contains additional performance
information and is available to investors upon request and without charge by
writing to the Green Century Funds at 29 Temple Place, Boston, MA 02111 or by
calling 1-800-93-GREEN.
12
<PAGE> 16
THE GREEN CENTURY FUNDS' ENVIRONMENTAL STANDARDS
Green Century endeavors to make a contribution to a safer, lasting
environment by promoting corporate environmental responsibility. Green Century
provides people who care about a clean, healthy planet the opportunity to use
the clout of their investment dollars to encourage environmentally responsible
corporate behavior.
While all of Green Century's investments are selected with a concern for the
environment, the two Green Century Funds each employ a different strategy to
promote environmentally responsible corporate behavior.
The Green Century Balanced Fund strives to invest in companies whose
business is to protect the environment, and companies that have taken steps to
minimize their environmental impact. The Fund seeks to invest in businesses
committed to actively promoting a healthier environmental future. Such
commitments might include producing renewable energy, recycling waste, providing
appropriate technology for sustainable agriculture and offering effective
remedies for existing environmental problems. The Fund also invests in companies
whose primary business is not solving environmental problems but which conduct
their business in an environmentally responsible manner. The Adviser believes
that well-managed environmentally responsible companies minimize their
environmental risks, allowing them to enjoy competitive advantages from cost
reductions, quality improvements, profitability enhancements and access to
expanding and new growth markets. Thus, for both environmental and financial
reasons, the Adviser for the Green Century Balanced Fund applies rigorous
selection criteria concerning the environmental behavior of the issuers of their
investments.
The Green Century Equity Fund invests, through its investment in the Index
Portfolio, in a diversified portfolio of approximately 400 companies which seeks
to exclude those companies with the worst environmental records. Green Century
believes that directing environmentally concerned investors' dollars away from
companies that flout basic standards for environmental responsibility creates an
incentive for companies to become better environmental citizens. We also believe
that those companies which pursue the least environmentally sound practices are
at the greatest long term risk of negative economic consequences, while those
which strive to be more environmentally responsible may benefit financially as a
result.
Neither the Green Century Balanced Fund nor the Green Century Equity Fund
will knowingly invest in an issuer primarily engaged in the production of
nuclear energy or the manufacture of nuclear equipment to produce nuclear energy
or nuclear weapons, in the belief that these products are unacceptably
threatening to a sustainable global environment. The Funds will not knowingly
invest in an issuer primarily engaged in the manufacture of tobacco products, a
major contributor to indoor air pollution and environmental health problems.
The Green Century Funds invest under normal conditions in many sectors of
the economy, such as retail, finance, and consumer products. The Funds are not
environmental sector funds which invest exclusively in companies whose business
derives from environmental problems (such as waste-management or incinerator
manufacturers), some of which have consistently negative environmental records.
The Funds' environmental criteria limit the available investments compared
with funds with no such criteria. Each Fund may not invest, or invest to a
lesser extent than a fund with similar investment objectives but with no
environmental criteria, in certain industries, such as the steel,
13
<PAGE> 17
oil and automotive industries. Under certain economic conditions, this could
cause each Fund's investment performance to be better or worse than similar
funds with no environmental criteria.
The selection of an investment by the Green Century Funds does not
constitute an endorsement or validation by the Funds, nor does the exclusion of
a company necessarily reflect failure to satisfy the Funds' environmental
criteria. The Board of Trustees of Green Century will have the authority,
without the vote of shareholders, to determine the manner in which the Funds
implement their stated commitment to environmentally responsible investing.
THE GREEN CENTURY FUNDS ADVOCATE FOR CORPORATE
ENVIRONMENTAL RESPONSIBILITY
Green Century is actively involved in advocating that the companies held in
the Funds' portfolios improve their environmental performance.
Green Century uses its collective leverage, as shareholders, to advocate for
more environmentally responsible policies at the companies in which they invest.
Green Century has worked with other environmentally conscious investors to file
shareholder resolutions to demand more aggressive recycling programs; more
responsible environmental, health and safety policies; and more environmentally
friendly production and purchasing policies. Green Century is committed to
pursuing demands for improved corporate environmental responsibility. As part of
this strategy, the Green Century Balanced Fund may hold small positions in
companies which do not meet the Fund's environmental criteria for the express
purpose of enabling the Fund to advocate for changes in irresponsible corporate
behavior.
Green Century also communicates with the chief executive officers of
corporations to promote additional improvements in their environmental behavior
and works with the Coalition for Environmentally Responsible Economies (CERES)
to encourage greater corporate environmental accountability.
The Trustees of Green Century monitor all Green Century's advocacy
activities to ensure the activities are consistent with the fiduciary duties
owed investors in the Green Century Funds. Expenses incurred in advocating for
greater corporate environmental responsibility are paid by the Funds'
Administrator, Green Century Capital Management, and not by the shareholders of
the Funds.
THE GREEN CENTURY FUNDS SUPPORT NOT-FOR-PROFIT
ENVIRONMENTAL ORGANIZATIONS
Unlike other investment advisers and administrators that are privately owned
for the benefit of individuals or for-profit corporations, Green Century Capital
Management is owned by Paradigm Partners, a California general partnership, the
partners of which are all not-for-profit environmental advocacy organizations.
This means that 100% of the net profits, when realized, earned by Green Century
Capital Management on fees for its role as Adviser and Administrator will be
distributed in partnership distributions to these not-for-profit environmental
advocacy organizations. These revenues will be used to further efforts to
preserve and protect the environment--efforts that include filing lawsuits
against companies that illegally pollute our air and waterways, campaigning to
increase recycling and reduce wasteful packaging, and
14
<PAGE> 18
researching and advocating to reduce the use of toxic chemicals. The
Massachusetts Public Interest Research Group (MASSPIRG) holds approximately 46%
of the partnership. You may receive a complete list of the environmental
organizations which founded and own Green Century Capital Management by calling
1-800-93-GREEN.
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
The Green Century Funds offer two different investment options to help you
reach your investment goals. The Funds are designed for long-term investment and
are not designed to meet investors' short-term financial goals. An investment in
each Fund represents an investment in securities with fluctuating market prices;
thus the value of an investment in each Fund will vary as the aggregate value of
a Fund's portfolio securities increases or decreases. Neither a single Fund nor
a combination of the Funds is intended to provide a complete or balanced
investment program. There is no guarantee a Fund will achieve its investment
objective, and a potential investor should carefully consider his or her
investment objectives and risk tolerance before investing in a Fund.
The descriptions that follow are designed to help you select the Fund that
best fits your investment objectives. Please see the Statement of Additional
Information for more information regarding the investment objectives, policies
and risk factors of the Funds.
The Green Century Balanced Fund
The Green Century Balanced Fund Investments
The investment objective of the Balanced Fund is to provide capital growth
and income from a diversified portfolio of stocks and bonds. The Fund may be
appropriate for those investors seeking income from bond investments and who
also want to be invested in the stock market for its long-term growth potential
and who are willing to accept the associated risks. The Balanced Fund's assets
may be invested in: common stock, preferred stock and other equity securities,
bonds and other fixed income securities, floating rate obligations, and money
market instruments, in each case, compatible with the Fund's commitment to
environmental responsibility. The other fixed income securities in which the
Fund may invest include: U.S. Government securities, mortgage-backed securities,
and zero coupon securities. The Fund may also engage in writing and purchasing
options on portfolio securities.
There is no predetermined percentage of assets allocated to either stocks or
bonds, although the Balanced Fund will, under normal circumstances, invest at
least 25% of its net assets in fixed income senior securities (bonds). The Fund
may not invest more than 75% of its net assets in equity securities (stocks),
including warrants, preferred stock and securities convertible into equity
securities. For temporary defensive purposes, the Fund may invest up to 100% of
its assets in cash and other money market and short-term instruments. Any such
temporary defensive investing will also comply with the Fund's environmental
criteria.
The Green Century Balanced Fund Environmental Criteria
The Balanced Fund invests primarily in the stocks and bonds of companies in
the following categories: (i) environmental companies whose major business is
products, processes or services that offer solutions to environmental problems;
and (ii) environmentally responsible companies whose primary business is not
solving environmental problems, but that integrate the principles
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of waste minimization, pollution prevention, efficient use of natural resources
and sustainable development in their business practices.
Environmental companies develop products or processes that solve
environmental problems in areas such as: alternative energy production,
bio-technology, energy efficiency, water treatment and conservation, air
pollution control, resource recovery, and pollution prevention. Included in this
category are companies whose primary business is related to improving the
environment as well as companies whose primary business may not be environmental
improvement, but which have nonetheless developed important environmental
products or services as a significant component of their business.
Companies in the portfolio may also include environmentally benign companies
whose overall impact on the environment, as measured by their consumption of
natural resources, toxic emissions, environmental liabilities, solid waste
generation and compliance with environmental law, is minimal but not necessarily
nonexistent. Winslow Management Company ("Winslow"), a Division of Eaton Vance
Management ("Eaton Vance"), serves as the subadviser of the Balanced Fund (the
"Subadviser"). See "Organization and Management of the Funds." Winslow, in
cooperation with Green Century Capital Management, works with companies that do
not have an articulated proactive environmental strategy to help them craft a
comprehensive and proactive environmental program.
The Balanced Fund also invests in what Green Century Capital Management and
Winslow perceive as "best in its class" companies that have implemented an
environmental program that sets a standard for their industry group. These
companies are recognized leaders in their sectors, contribute to meaningful
reductions in pollutant emissions or waste generation, and demonstrate Green
Century's belief that every company can be environmentally responsible.
Finally, environmentally responsible companies include environmental
turnaround companies that may have a history of environmental problems, but have
minimized their impact on the environment because they have taken substantive
steps to address and in some way solve the problems by, for example, abandoning
certain products or processes that have been proven harmful to the environment,
significantly reducing toxic emissions, or adopting broadscale pollution
prevention and waste minimization programs.
The Green Century Equity Fund
The Green Century Equity Fund Investments
The investment objective of the Equity Fund is to achieve long-term total
return by investing substantially all of its investable assets in the Domini
Social Index Portfolio (the "Index Portfolio"), a diversified portfolio of
stocks. The Index Portfolio seeks long-term total return which corresponds to
the total return performance of the Domini Social Index (the "Social Index" or
the "Index") by investing substantially all of its assets in the common stocks
comprising the Social Index. The Equity Fund may be an appropriate investment
vehicle for long term investors who want the potential for growth offered by the
stock market and who are willing to accept the associated risks. The Fund seeks
to temper the risks inherent in investing in the stock market by investing in a
diversified portfolio of approximately 400 companies. By not concentrating on a
specific security or market sector, the Equity Fund may be less volatile than
narrowly focused equity funds or individual stock investments. Since the
investment characteristics of the Equity Fund will correspond to those of the
Index Portfolio, the following is a description of the Index
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<PAGE> 20
Portfolio's investment policies. See "The Green Century Equity Fund and the
Master Feeder Investment Fund Structure."
The Index Portfolio invests in the common stocks comprising the Social
Index. The Social Index is a common stock index developed and maintained by
Kinder, Lydenberg, Domini & Co., Inc. ("KLD"), an affiliate of the Index
Portfolio's investment manager. The Index Portfolio is comprised of the common
stocks of approximately 400 companies and seeks to exclude corporations with
poor environmental and social records. The weightings of the stocks comprising
the Social Index are based upon market capitalization. The criteria used in
developing and maintaining the Social Index involve subjective judgment by KLD.
The Index Portfolio is not managed in the traditional investment sense, since
changes in the composition of its securities holdings are made in order to track
the changes in the composition of securities included in the Social Index.
The Index Portfolio may invest cash reserves in short-term debt securities
(i.e., securities having a remaining maturity of one year or less) issued by
agencies or instrumentalities of the United States Government, bankers'
acceptances, commercial paper or certificates of deposit, provided that the
issuer satisfies KLD's social criteria. The Index Portfolio does not currently
intend to invest in direct obligations of the United States Government.
Short-term debt securities purchased by the Index Portfolio will be rated at
least Prime-1 by Moody's Investors Service, Inc. ("Moody's") or A-1+ or A-1 by
Standard & Poor's Ratings Group ("S&P") or, if not rated, determined to be of
comparable quality by the Index Portfolio's Board of Trustees. The Index
Portfolio's policy is to hold its assets in such securities pending readjustment
of its holdings of stocks comprising the Social Index and in order to meet
anticipated redemption requests. Such investments are not intended to be used
for defensive purposes in periods of anticipated market decline. Because the
Index Portfolio seeks to be fully invested in the stocks comprising the Social
Index, the Equity Fund is not intended to be a balanced investment plan.
The Index Portfolio readjusts its securities holdings periodically such that
its holdings will correspond, to the extent reasonably practicable, to the
Social Index both in terms of composition and weighting. The timing and extent
of adjustments in the holdings of the Index Portfolio, and the extent of the
correlation of the holdings of the Portfolio with the Index, reflects the
judgment of the Index Portfolio's submanager as to the appropriate balance
between the goal of correlating the holdings of the Index Portfolio with the
composition of the Index, and the goals of minimizing transaction costs and
keeping sufficient reserves available for anticipated redemptions from the Index
Portfolio. The Index Portfolio's ability to duplicate the performance of the
Index will depend to some extent on the size and timing of cash flows into and
out of the Index Portfolio as well as the Index Portfolio's expenses.
Adjustments in the securities holdings of the Index Portfolio to accommodate
cash flows will track the Social Index to the extent practicable, but this will
result in brokerage expenses.
The Green Century Equity Fund Environmental and Social Criteria
The philosophy of the Equity Fund is that enterprises which exhibit a social
awareness should be better prepared to meet future societal needs for goods and
services and may be less likely to incur certain legal liabilities that may be
charged when a product or service is determined to be harmful. Green Century
Capital Management believes that such enterprises should over the long term be
able to provide investors with a return that is competitive with enterprises
that do not exhibit such social awareness. We also believe that investing money
in
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companies with better environmental and social records and withholding
investment dollars from companies with poor records will encourage more
corporations to improve their environmental and social performance.
In evaluating stocks for inclusion in the Social Index, KLD considers a
company's environmental performance, particularly in taking positive initiatives
in environmental matters; its employee relations; its corporate citizenship;
product-related issues and its attitudes with regard to consumer issues; and
KLD's criteria for industry diversification, financial solvency, market
capitalization, and portfolio turnover. Environmental performance includes a
company's record on waste disposal, toxic emissions, fines or penalties, and
efforts in waste and emissions reductions, recycling, and use of environmentally
beneficial fuels products and services. Corporate citizenship includes the
company's record on philanthropic activities and its interaction with the
communities it affects. Employee relations include a company's record with
regard to labor matters, its commitment to workplace safety, the breadth,
quality and innovation of its employee benefit programs, and its commitment to
provide employees with a meaningful participation in company profits either
through stock purchase or profit sharing plans. KLD seeks to exclude companies
which, based on data available to it, derive more than 2% of their gross
revenues from the sale of military weapons; derive any revenues from the
manufacture of tobacco products or alcoholic beverages; derive any revenues from
gambling enterprises; own directly or operate nuclear power plants or
participate in businesses related to the nuclear fuel cycle. The Manager of the
Index Portfolio intends to vote proxies of companies included in the Index
Portfolio consistent with the environmental and social criteria used in
developing and maintaining the Social Index. Inclusion of a stock in Social
Index does not imply an opinion by KLD or the Manager as to the merits of that
specific stock as an investment.
The Green Century Equity Fund and the Master-Feeder Investment Fund Structure
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Equity Fund seeks to achieve its investment objective
by investing all of its investable assets in the Index Portfolio, a separate
registered investment company with the same investment objective as the Equity
Fund. In addition to selling a beneficial interest to the Equity Fund, the Index
Portfolio may sell beneficial interests to other mutual funds or institutional
investors. Such investors will invest in the Index Portfolio on the same terms
and conditions as the Equity Fund and will pay a proportionate share of the
Index Portfolio's expenses. However, the other investors investing in the Index
Portfolio are not required to sell their shares at the same public offering
price as the Equity Fund due to variations in sales commissions and other
operating expenses. Therefore, investors in the Equity Fund should be aware that
these differences may result in differences in returns experienced by investors
in the different funds that invest in the Index Portfolio. Such differences in
returns are also present in other mutual fund structures. Information concerning
other holders of interests in the Index Portfolio is available from the Index
Portfolio's investment manager, at 212-352-9200.
Smaller funds investing in the Index Portfolio may be materially affected by
the actions of larger funds investing in the Index Portfolio. For example, if a
large fund withdraws from the Index Portfolio, the Index Portfolio may become
less diverse, resulting in increased portfolio risk. This possibility exists as
well for traditionally structured funds which have large or
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<PAGE> 22
institutional investors. Also, funds with a greater pro rata ownership in the
Index Portfolio could have effective voting control of the operations of the
Index Portfolio.
The Trustees of Green Century have adopted the following policy with respect
to voting shares of the Index Portfolio held by the Equity Fund: Whenever the
Equity Fund is requested to vote on a matter pertaining to the Index Portfolio,
the Trustees will, in their discretion and in accordance with applicable law,
either seek instructions from shareholders of the Equity Fund and vote the
shares only in accordance with such instructions, or vote the shares held by the
Equity Fund in the same proportion as the vote of all other holders of shares in
the Index Portfolio. Whenever the Trustees determine to seek the instructions of
the Equity Fund shareholders, the Equity Fund will hold a meeting of its
shareholders and, at the meeting of investors in the Index Portfolio, the Equity
Fund will cast all of its votes in the same proportion as the votes of the
Equity Fund's shareholders. Equity Fund shareholders who do not vote will not
affect the Equity Fund's votes at the Index Portfolio meeting. Shares of the
Equity Fund for which no voting instructions have been received will be voted by
the Trustees in the same proportion as the shares for which it receives voting
instructions.
The investment objective of the Equity Fund may be changed without the
approval of the Equity Fund's shareholders, but not without written notice
thereof to shareholders thirty days prior to implementing the change. If there
were a change in the Equity Fund's investment objective, shareholders should
consider whether the Equity Fund remained an appropriate investment in light of
their then-current financial positions and needs. The investment objective of
the Index Portfolio may also be changed without the approval of the investors in
the Index Portfolio, but not without written notice thereof to the investors in
the Index Portfolio (and, in turn, notice by the Equity Fund to its
shareholders) thirty days prior to implementing the change.
Certain changes in the Index Portfolio's investment objective, policies or
restrictions may require the Equity Fund to withdraw its interest in the Index
Portfolio. Any such withdrawal could result in a distribution "in kind" of
portfolio securities (as opposed to a cash distribution from the Index
Portfolio). If securities are distributed, the Equity Fund could incur
brokerage, tax or other charges in converting the securities to cash. In
addition, the distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Equity Fund.
Notwithstanding the above, there are other means for meeting shareholder
redemption requests, such as borrowing.
The Equity Fund may withdraw its investment from the Index Portfolio at any
time, if the Board of Trustees of Green Century determines that it is in the
best interest of the Equity Fund to do so. Upon any such withdrawal, the Board
of Trustees would consider what action might be taken, including the investment
of all the investable assets of the Equity Fund in another pooled investment
entity having the same investment objective as the Equity Fund or the retention
of an investment adviser to manage the Equity Fund's assets in accordance with
the investment policies described above with respect to the Index Portfolio. In
the event the Trustees of Green Century were unable to find a substitute
investment company in which to invest the Equity Fund's assets and were unable
to secure directly the services of an investment adviser, the Trustees would
seek to determine the best course of action.
For more information about the Index Portfolio's policies, management and
expenses see "Fee Information," and "Organization and Management of the Funds."
For more information about the Index Portfolio's policies and investment
restrictions see the Statement of Additional Information.
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<PAGE> 23
Additional Investment Policies and Restrictions
The Green Century Balanced Fund
OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. For hedging purposes and to
increase income, the Balanced Fund may write (sell) covered (under Securities
and Exchange Commission regulations) call and put options on individual
securities and on stock indices and may engage in related closing transactions.
Options trading is a highly specialized activity that entails greater than
ordinary investment risks. Risks associated with writing covered options include
the possible inability to effect closing transactions at favorable prices; an
appreciation limit on the securities set aside for settlement; losses caused by
unanticipated market movements; and the Subadviser's ability to predict
correctly the direction of securities prices, interest rates, currency exchange
rates and other economic factors.
For bona fide hedging or other permissible risk management purposes, such as
protecting the price or interest rate of a security it intends to buy, the
Balanced Fund may enter into interest-rate, securities-index and currency
futures contracts and may purchase and write put and call options on these
futures contracts. Futures contracts obligate the Fund, at maturity, to take or
make delivery of certain securities, the cash value of a securities index or a
stated quantity of a foreign currency. The Fund may lose the expected benefit of
futures transactions if securities prices or interest rates move in an
unanticipated manner. Such unanticipated changes may also result in poorer
overall performance than if the Fund had not entered into any futures
transactions. In addition, changes in the value of the Fund's futures and
options positions may not prove to be perfectly or even highly correlated with
changes in the value of its portfolio securities. This could limit the Fund's
ability to hedge effectively against interest-rate and/or market risk and give
rise to additional risks.
In an attempt to manage currency risk, the Balanced Fund may purchase and
sell forward foreign currency exchange contracts, options on currencies and
other currency instruments with respect to 5% of its assets.
CONVERTIBLE SECURITIES. The Balanced Fund may invest in debt and equity
convertible securities which generally offer lower interest or dividend yields
than nonconvertible debt securities of similar quality. A convertible security
may be converted either at a stated price or rate within a specified period of
time into a specified number of shares of common stock. By investing in
convertible securities, the Fund seeks the opportunity, through the conversion
feature, to participate in a portion of the capital appreciation of the common
stock into which the securities are convertible, while earning higher current
income than is available from common stock. The value of convertible securities
may reflect changes in the value of the underlying common stock. Convertible
securities entail less credit risk than the issuer's common stock because they
rank senior to common stock.
MORTGAGE-BACKED SECURITIES. The Balanced Fund may invest in mortgage-backed
securities which are securities that directly or indirectly represent an
interest in an underlying pool of mortgages. Unlike ordinary fixed-income
securities, which generally pay a fixed rate of interest and return principal
upon maturity, mortgage-backed securities repay both interest income and
principal as part of their periodic payments. Because the mortgages underlying
mortgage-backed certificates can be prepaid at any time by homeowners or
corporate borrowers,
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<PAGE> 24
mortgage-backed securities give rise to certain unique "pre-payment" risks, as
well as market risks and financial risks. The Fund may invest in mortgage-backed
securities issued or guaranteed by an agency or instrumentality of the U.S.
Government. Mortgage-backed securities that are guaranteed by the U.S.
Government are guaranteed only as to the timely payment of principal and
interest. The market value of such securities is not guaranteed and may
fluctuate.
ZERO COUPON SECURITIES. The Balanced Fund may invest in zero coupon
securities which do not make regular interest payments; rather, they are sold at
a discount from face value. Principal and accrued discount (representing
interest accrued but not paid) are paid at maturity. Zero coupon securities are
subject to greater market value fluctuations from changing interest rates than
debt obligations of comparable maturities which make current cash distributions
of interest.
HIGH YIELD DEBT SECURITIES. The Balanced Fund may invest up to 35% of its
net assets in fixed income securities that, at the time of the investment, are
either rated CCC or higher by S&P or Caa or higher by Moody's or, if not rated,
considered to be of equivalent quality by the Subadviser of the Balanced Fund.
Please refer to the Statement of Additional Information for a description of
bond rating categories. Below investment grade securities (those rated below BBB
by S&P or Baa by Moody's or their equivalent) are commonly referred to as "junk
bonds." As of September 30, 1998, 24.1% of the net assets of the Balanced Fund
were invested in below investment grade securities. If the rating of a debt
security is downgraded while owned by the Fund, the Subadviser will determine
whether the Fund should continue to hold the security. It is expected that the
Subadviser will sell promptly any securities which are non-investment grade
which exceed 35% of the Fund's net assets, where it has determined such sale is
in the best interests of the Fund's shareholders.
While these securities generally offer higher yields than investment grade
securities with similar maturities, lower-quality securities involve greater
risks, including the possibility of default or bankruptcy. Generally, they are
considered to be predominantly speculative regarding, and more dependent on, the
issuer's ability to pay interest and repay principal. Such inability (or
perceived inability) would likely lessen the value of such securities, which
could lower the Fund's net asset value per share. Issuers of high-yield
securities may not be as strong financially as those issuing bonds with higher
credit ratings. Other potential risks associated with investing in high-yield
securities include: heightened sensitivity of highly-leveraged issuers to
adverse economic changes and individual-issuer developments; subordination to
the prior claims of other creditors; adverse publicity and changing investor
perceptions about these securities; and generally less liquid markets. The Fund
may incur additional expenses to the extent that it is required to seek recovery
upon a default in the payment of principal and interest on its holdings. Because
of the associated risks, successful investments in high-yield, high-risk
securities are more dependent on the Subadviser's credit analysis than generally
would be the case with investments in investment grade securities.
Many corporate high yield bonds are issued pursuant to Rule 144A under the
Securities Act of 1933 and therefore are subject to the Fund's restriction that
no more than 15% of the Fund's net assets can be invested in illiquid
securities.
REPURCHASE AGREEMENTS. As a means of earning income for periods as short as
overnight, the Balanced Fund may enter into repurchase agreements with selected
banks and broker-dealers. Under a repurchase agreement, the Fund acquires
securities, subject to the seller's agreement to
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<PAGE> 25
repurchase at a specified time and price. There may be delays and risks of loss
if the seller is unable to meet its obligation to repurchase. Default by the
seller would expose the Fund to possible loss because of adverse market action
or delay in connection with the disposition of the underlying obligations.
WHEN-ISSUED SECURITIES. The Balanced Fund may purchase securities on a
when-issued basis for payment and delivery at a later date. Securities purchased
or sold on a when-issued basis involve a risk of loss if the value of the
security to be purchased declines before the settlement date.
The Green Century Balanced Fund and the Green Century Equity Fund
LENDING OF SECURITIES. Consistent with applicable regulatory policies, the
Balanced Fund may seek to increase its income by lending securities. The
Balanced Fund has no current intention of making loans of portfolio securities
that would amount to greater than 5% of the Fund's total assets. The Index
Portfolio may make loans of its securities to member banks of the Federal
Reserve System and to broker-dealers. Such loans would be required to be secured
continuously by collateral and cash or cash equivalents maintained on a current
basis at an amount at least equal to the market value of the securities loaned.
The Index Portfolio would have the right to call a loan and obtain the
securities loaned at any time on three days' notice. Loans of securities involve
the risk that the borrower may fail to return the securities or may fail to
provide additional collateral.
FOREIGN SECURITIES. While the Balanced Fund generally emphasizes
investments in companies domiciled in the United States, the Fund may also
invest up to 25% of its assets in listed and unlisted foreign securities of the
same types and quality as the domestic securities in which the Fund may invest
when the anticipated performance of foreign securities is believed by the
Adviser and the Subadviser to offer more potential than domestic alternatives,
in all cases to the extent consistent with the investment objective of the Fund.
The Fund may also invest in American Depository Receipts ("ADRs") and Global
Depository Receipts ("GDRs") with respect to such foreign securities. The Fund
may also invest in certificates of deposit issued by foreign banks, foreign and
domestic branches of U.S. banks and obligations issued or guaranteed by foreign
governments or political subdivisions thereof.
Investing in securities of foreign issuers involves considerations not
typically associated with investing in securities of companies organized and
operated in the United States. The value of a Fund's foreign investments may be
adversely affected by changes in political or social conditions, government
administrations, economic or monetary policies, diplomatic relations,
confiscatory taxation, currency restrictions, expropriation, nationalization,
limitation on the removal of funds or assets, or imposition of (or change in)
exchange control or tax regulations in foreign countries. In addition, the
economies of individual foreign nations may differ from the U.S. economy,
whether favorably or unfavorably, in areas such as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position; it may also be more difficult to obtain and
enforce a judgment against a foreign issuer. In general, less information is
publicly available with respect to foreign issuers than is available with
respect to U.S. companies. Most foreign companies are also not subject to the
uniform
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accounting and financial reporting requirements applicable to issuers in
the United States. Any foreign investments made by a Fund must be made in
compliance with U.S. and foreign currency restrictions and tax laws restricting
the amounts and types of foreign investments.
PORTFOLIO TURNOVER. The portfolio turnover rate is the ratio of the lesser
of sales or purchases to the monthly average value of the portfolio (excluding
from both the numerator and the denominator all securities with maturities at
the time of acquisition of one year or less). Higher levels of activity result
in higher transaction costs and may also result in taxes on realized gains to be
borne by the Fund's shareholders. Purchases and sales are made for a portfolio
whenever necessary, in management's opinion, to meet its investment objective.
The portfolio turnover rates of the Balanced Fund for the fiscal years ended
June 30, 1996, 1997 and 1998 were 136%, 109% and 96% respectively. The portfolio
turnover rate for the Balanced Fund for the one-month period ended July 31, 1998
was 4%, not annualized.
Frequent changes in the Index Portfolio's holdings may result from the
policy of attempting to correlate the Index Portfolio's securities holdings with
the compositions of the Social Index, and the frequency of such changes will
increase as the rate and volume of purchases and withdrawals of interests in the
Index Portfolio increases. The annual portfolio turnover rates of the Index
Portfolio for the fiscal years ended July 31, 1996, 1997 and 1998 were 5%, 1%
and 5% respectively.
INVESTMENT RESTRICTIONS. As a matter of fundamental investment policy which
cannot be changed without shareholder approval, no more than 25% of the value of
each Fund's and the Index Portfolio's assets may be invested in any one industry
(excluding U.S. Government securities) although the Equity Fund will invest all
of its assets in the Index Portfolio, and the Index Portfolio may and would
invest more than 25% of its assets in an industry if stocks in that industry
were to comprise more than 25% of the Social Index. Based on the current
composition of the Social Index, this is considered highly unlikely. If the
Index Portfolio were to concentrate its investments in a single industry, the
Index Portfolio and the Equity Fund would be more susceptible to any single
economic, political or regulatory occurrence than would be another investment
company which was not so concentrated. In addition, as a matter of fundamental
policy, the Equity Fund will invest all of its assets (either directly or
through the Index Portfolio) in one or more of: (i) stocks comprising an index
of securities selected applying social and environmental criteria (currently the
Social Index), (ii) short-term debt securities of issuers which meet social
criteria, (iii) cash, and (iv) options on equity securities. These fundamental
policies cannot be changed without the approval of the holders of a "majority of
the outstanding voting securities (as defined in the Investment Company Act of
1940, as amended (the "1940 Act") of the respective Funds and the Index
Portfolio. For further information on fundamental and non-fundamental policies
and restrictions, see the Statement of Additional Information.
The investment objective of the Balanced Fund is not fundamental and may be
modified without shareholder approval. The investment objectives of the Equity
Fund and the Index Portfolio also are not fundamental and may be changed without
the approval of the shareholders or investors, but not without written notice
thereof to shareholders thirty days prior to implementing the change. Because of
the risks inherent in all investments, there can be no assurance that the
objectives of the Funds will be met. See "Investment Objectives, Policies and
Risk Factors--The Green Century Equity Fund and the Master-Feeder Investment
Structure."
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Except as stated otherwise, all investment guidelines, policies and restrictions
described herein and in the Statement of Additional Information are
non-fundamental.
ORGANIZATION AND MANAGEMENT OF THE FUNDS
The Green Century Funds were organized on July 1, 1991 as a Massachusetts
business trust. Each Fund represents a separate series of shares of the Green
Century Funds. The Green Century Funds are registered under the 1940 Act as a
diversified open-end management investment company. The business and affairs of
each of the Funds is conducted under the direction of its Board of Trustees and
the affairs of the Index Portfolio are conducted under the direction of its
Board of Trustees. The Trustees of Green Century are identified below under
"Green Century Board of Trustees."
The Green Century Balanced Fund
INVESTMENT ADVISER. Green Century Capital Management (the Adviser") is the
investment adviser for the Balanced Fund and oversees the portfolio management
of the Balanced Fund on a day-to-day basis. Green Century Capital Management's
role is to ensure that the Balanced Fund's investment objective and
environmental and investment policies are accurately and effectively
implemented. For its services, Green Century Capital Management receives an
advisory fee from the Balanced Fund which is accrued daily and paid monthly at
an annual rate equal to 0.75% of the Balanced Fund's average daily net assets.
This fee is higher than that paid by most mutual funds. Kristina Curtis, Chief
Operating Officer, is responsible for the day-to-day management of Green Century
Capital Management. She has served as Chief Operating Officer of Green Century
Capital Management since the company was organized in 1991. Green Century
Capital Management has served as investment adviser and administrator for the
Balanced Fund since the commencement of operations of the Balanced Fund. The
Balanced Fund is the only investment advisory client of Green Century Capital
Management.
SUBADVISER. Pursuant to a Subadvisory Agreement between Winslow Management
Company ("Winslow" or the "Subadviser") and Green Century Capital Management,
Winslow serves as the Subadviser for the Balanced Fund. Winslow, a division of
Eaton Vance Management, conducts the day-to-day investment management for the
Balanced Fund consistent with the guidelines and directions set by Green Century
Capital Management. An adherent of rigorous investment discipline, Winslow uses
a fundamental security analysis of each investment. This qualitative approach is
complemented with a proprietary computer model that mixes a variety of
statistical data to rank a large group of securities on an ongoing basis
pursuant to several factors. Winslow also attempts to take advantage of market
inefficiencies through timely execution of trades.
Winslow has managed equity and debt investments in environmental and
environmentally responsible companies for its clients since 1984. Winslow has
been a division of Eaton Vance Management since June 30, 1993 and formerly was
an independent company. As of September 30, 1998, Winslow had $80 million in
assets under management and Winslow and Eaton Vance, collectively, had over $27
billion in assets under management. Jackson W. Robinson provides the day-to-day
investment management for the Balanced Fund,
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and has provided such services for the Balanced Fund since July 1, 1995. Mr.
Robinson has served as President of Winslow since 1984.
For its services, Winslow receives a base fee from the Adviser of 0.40% of
the average daily net assets of the Balanced Fund, subject to an adjustment up
or down of 0.20% annually as follows:
If, on an annual basis, the Balanced Fund's Then the Adviser will pay
Total Return differs from the Lipper Winslow an annual fee of:
Directors' Analytical Data Balanced Fund
Average Total Return (the "Index Total
Return") by:
positive 2.00% or more 0.60%
positive 1.00% to positive 1.99% 0.50%
negative 0.99% to positive 0.99% 0.40%
negative 1.00% to negative 1.99% 0.30%
negative 2.00% or more 0.20%
The Board of Trustees believes that the performance adjustments are
appropriate although not within the 10 percentage points per year range
suggested by Release No. 7113 under the 1940 Act. In the event the Lipper
Directors' Analytical Data Balanced Fund Average ceases to become available or
the Trustees determine such Index Total Return is no longer a reasonable
performance benchmark, the Trustees may substitute another performance
benchmark. See the Statement of Additional Information for additional
information regarding Winslow's fee arrangement.
The Green Century Equity Fund and the Index Portfolio
INVESTMENT MANAGER. Domini Social Investments LLC ("DSI") provides
investment supervisory services, operational support and administrative services
to the Index Portfolio. For its services, DSI receives a fee equal on an annual
basis to 0.20% of the Index Portfolio's average daily net
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<PAGE> 29
assets. DSI is voluntarily waiving its fee by the amount, if any, by which the
total ordinary operating expenses of the Index Portfolio (excluding brokerage
fees and commissions, interest, taxes, and any other extraordinary expenses)
exceed, on an annual basis, 0.20% of the average daily net assets of the Index
Portfolio. This fee waiver may be reduced or eliminated at any time. DSI, an
investment adviser under the Investment Advisers Act of 1940, as amended, was
organized in April, 1997. It was formed by principals of KLD, the former
investment adviser for the Index Portfolio, and other investment company and
marketing professionals. DSI has no prior experience in managing or advising a
mutual fund.
Prior to October 22, 1997, KLD was the investment adviser to the Index
Portfolio. KLD continues to determine and monitor the composition of the Social
Index (which determines the composition of the Index Portfolio's securities),
and provides other services relating to socially responsible investments
pursuant to a license agreement between DSI and KLD. See "Investment Objectives,
Policies and Risk Factors." The following persons are primarily responsible for
the development and maintenance of the Social Index: Steven D. Lydenberg,
Director of Research, KLD, since 1990; and Peter D. Kinder, President, KLD,
since 1988.
The entering into of the Management Agreement and the Submanagement
Agreement (discussed below), and the termination of the investment advisory and
sponsorship agreements, were part of a restructuring by the Index Portfolio
effective October 22, 1997 which was designed to provide a more centralized
management structure for the Index Portfolio. Additional information regarding
the service providers for the Index Portfolio prior to October 22, 1997 is
provided in the Statement of Additional Information. Because of the expense
payment arrangements between the Equity Fund and Green Century Capital
Management, the changes in the management of the Index Portfolio and the
expenses to be incurred by the Index Portfolio will not have any impact on the
total expenses of the Equity Fund to be borne by its shareholders. See "Fee
Information."
Investment Submanager. Mellon Equity Associates ("Mellon Equity" or
"Submanager") provides investment submanagement services to the Index Portfolio
on a day-to-day basis pursuant to a Submanagement Agreement with DSI effective
October 22, 1997. Mellon Equity's services as Submanager include determining
what securities shall be purchased, sold or exchanged to track the composition
of the Index. Mellon Equity does not determine the composition of the Social
Index. DSI pays Mellon Equity an investment submanagement fee equal on an annual
basis to 0.10% of the average daily net assets of the Index Portfolio. Prior to
October 22, 1997, Mellon Equity served as the investment manager of the Index
Portfolio. For its services, the Index Portfolio paid Mellon Equity an
investment management fee equal on an annual basis to 0.10% of the average daily
net assets of the Index Portfolio.
Mellon Equity is a Pennsylvania business trust founded in 1987 whose
beneficial owners are Mellon Bank N.A. and MMIP, Inc. (a wholly owned subsidiary
of Mellon Bank Corporation
26
<PAGE> 30
("Mellon Bank")). Mellon Equity has been registered as an investment adviser
under the Investment Advisers Act of 1940 since 1986. As of September 30, 1998,
Mellon Equity had approximately $21.8 billion in assets under management.
John R. O'Toole (a senior vice president of Mellon Equity, CFA and a member
of AIMR), has been primarily responsible for the day-to-day portfolio management
of the Index Portfolio since November 1994. He has been employed by Mellon
Equity and/or Mellon Bank as a portfolio manager for over five years.
The Green Century Balanced Fund and The Green Century Equity Fund
Administrator. Green Century Capital Management serves as the Administrator of
the Green Century Funds. Pursuant to an Administrative Services Agreement, Green
Century Capital Management pays all the expenses of each Fund other than the
Funds' investment advisory fees, if any; fees under the Distribution Plan, if
any; interest, taxes, brokerage costs and other capital expenses; expenses of
the non-interested Trustees of the Funds (including counsel fees); and any
extraordinary expenses.
For such administrative services, the Administrator receives a fee from the
Balanced Fund at a rate such that immediately following any payment to the
Administrator, the total operating expenses of the Balanced Fund (including
investment advisory and distribution fees), on an annual basis, do not exceed
2.50% of the Balanced Fund's average daily net assets up to $30 million, 2.25%
on average net assets from $30 million to $100 million, and 1.75% on average net
assets in excess of $100 million. The Administrator 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, on an annual basis, do not exceed 1.50% of the Fund's average daily
net assets.
Subadministrator. Sunstone Financial Group, Inc. ("Sunstone") serves as the
sub-administrator of the Funds pursuant to a Subadministration Agreement between
Green Century Capital Management and Sunstone dated July 7, 1997. As
sub-administrator, Sunstone is responsible for conducting certain administrative
services (which include clerical, regulatory and other services) for the Funds
subject to the supervision and direction of Green Century Capital Management.
Sunstone receives a fee from the Administrator (not the Funds) for its
administrative services on behalf of the Administrator which fee is based on
each Fund's average net assets at an annual rate beginning at 0.175% and
decreasing as assets exceed certain levels, currently subject to an annual
minimum fee for each Fund of $40,000. The annual minimum fee increases
incrementally each year. Sunstone does not act or serve in any capacity with
respect to the Index Portfolio. Prior to July 7, 1997, Signature Broker-Dealer
Services, Inc. served as subadministrator. Sunstone is an affiliate of the
Funds' distributor. Sunstone and its affiliates provided administration,
transfer agent and/or distribution services to 19 fund families representing
over $14 billion in assets as of September 30, 1998.
Distributor and Distribution Plan. As of July 7, 1997, Sunstone Distribution
Services, LLC ("Sunstone Distribution Services"), an affiliate of Sunstone,
serves as the Distributor of the shares of the Funds and acts as the agent of
each Fund in connection with the offering of
27
<PAGE> 31
its shares of the Funds.
The Board of Trustees of Green Century has adopted a Distribution Plan with
respect to the Balanced Fund in accordance with Rule 12b-1 under the 1940 Act.
The Board of Trustees of Green Century adopted the Distribution Plan with
respect to the Balanced Fund after determining that there is a reasonable
likelihood that the Distribution Plan will benefit the Fund and its respective
shareholders. The Distribution Plan provides that the Balanced Fund shall pay a
distribution fee to the Distributor at an annual rate of up to 0.25% of the
average daily net assets of the Fund in anticipation of or as reimbursement for
expenses (other than interest or carrying charges) of (i) compensating
broker-dealers with trail or maintenance commissions and (ii) promoting the sale
of shares of the Fund such as by paying for the preparation, printing and
distribution of prospectuses for other than current shareholders and sales
literature or other promotional activities. If such an expense is not reimbursed
during the then-current fiscal year, it will not be reimbursed in a subsequent
fiscal year.
Transfer Agent. Effective November 16, 1998, Unified Fund Services, Inc.
("Unified") will serve as the transfer agent and shareholder services provider
for the Green Century Funds. As of September 30, 1998, Unified provided services
to 39 funds representing over $500 million in assets. Prior to November 16,
1998, Investors Bank & Trust Company ("IBT") served as transfer agent to the
Funds.
Custodian. Investors Bank & Trust Company ("IBT"), is the custodian for the
Green Century Funds and the Index Portfolio. As of September 30, 1998, IBT had
approximately $151 billion in assets under custody and provided services for
approximately 1,486 mutual funds.
Auditors. KPMG Peat Marwick LLP are the independent auditors of the Green
Century Funds and the Index Portfolio.
Green Century Board of Trustees. The affairs of the Green Century Funds are
conducted under the direction of the Board of Trustees of Green Century and the
affairs of the Index Portfolio are conducted under the direction of its Board of
Trustees. The Trustees and officers of Green Century are separate and
independent from the Trustees and officers of the Index Portfolio. For more
information regarding the Trustees of Green Century and the Index Portfolio see
"Trustees and Officers" in the Statement of Addition Information. The following
are the Trustees of Green Century:
David J. Fine...... Attorney, DANGEL, DONLAN & FINE, Boston, Massachusetts
Douglas M. Husid*.. President, GREEN CENTURY FUNDS; Co-Managing Partner,
GOULSTON & STORRS, Boston, Massachusetts
Steven Kadish...... Assistant Vice Chancellor for Biological Laboratories and
Programs, UNIVERSITY OF MASSACHUSETTS MEDICAL CENTER,
Boston, Massachusetts
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<PAGE> 32
Stephen Morgan..... President, EUA, CITIZENS' CONSERVATION SERVICES, INC.,
Lowell, Massachusetts
Douglas H. Phelps*. Chairperson, U.S. PUBLIC INTEREST RESEARCH GROUP
C. William Ryan.... Owner and Director, BROOKLINE TAI CHI, Brookline,
Massachusetts
James H. Starr..... Attorney, STARR & BURGESS, PC, Crested Butte, Colorado
Wendy Wendlandt*... Chairperson of the Board, EARTH DAY 2000, Los Angeles,
California
* An "interested person" (as defined in the 1940 Act) of the Funds.
Green Century Funds Advisory Board. National leaders of the environmental
and business communities serve on an advisory board to the Green Century Funds.
The Advisory Board serves as a resource regarding the application and refinement
of the Funds' environmental criteria.
They are:
Joan Bavaria..... President, FRANKLIN RESEARCH AND DEVELOPMENT CORPORATION;
Chairperson, CERES (Coalition for Environmentally Responsible
Economies)
Hillel Gray...... Former Policy Director, NATIONAL ENVIRONMENTAL LAW CENTER
Denis Hayes...... Executive Director, BULLIT FOUNDATION;
Organizer, EARTH DAY 1990 and EARTH DAY 1970
Gene Karpinski... Executive Director, U.S. PUBLIC INTEREST RESEARCH GROUP
Maureen Kirk..... Executive Director, OREGON STATE PUBLIC INTEREST RESEARCH
GROUP
Steven Rothstein. President, ENVIRONMENTAL FUTURES, INC.
Andrew Savitz.... Director, COOPERS & LYBRAND: ENVIRONMENTAL ADVISORY SERVICES
Robert B. Zevin.. Former Senior Vice President and Economist, UNITED STATES
TRUST COMPANY
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<PAGE> 33
YOUR ACCOUNT
<TABLE>
<CAPTION>
MINIMUM INVESTMENTS
-------------------
TO OPEN AN ACCOUNT
<S> <C>
Regular Investment Account................................................... $2,000
Individual Retirement Account (IRA) and Education IRA........................ $ 500
Uniform Gift or Transfer to Minors Account (UGMA/UTMA)....................... $ 500
No minimum initial investment is required for investors who wish to open an
account with a $100 or more a month Automatic Investment Plan.
TO ADD TO AN ACCOUNT
By Check, Wire or Exchange................................................... $ 100
By Automatic Investment Plan................................................. $ 50
</TABLE>
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<PAGE> 34
MINIMUM BALANCES--Shareholders are encouraged to maintain a share balance
of at least $1,000, which amount may be changed by the Trustees of the Funds.
Individual Retirement Accounts and Uniform Gift or Transfer to Minors Act
accounts have a $500 minimum balance requirement. The Funds reserve the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts with balances less than the minimum. This provision does not apply to
Automatic Investment Plan accounts. Reductions in value that result solely from
market activity will not trigger an involuntary redemption. The Funds will mail
the proceeds of the redeemed account to the shareholder.
How to Purchase Shares
Opening an Account
1 By Check
To open an account by check, please complete and sign the registration
form and mail it with a check made payable to Green Century Balanced Fund or
Green Century Equity Fund to: Green Century Funds, P.O. Box 6110,
Indianapolis, Indiana 46206-6110.
2 By Wire
You may also open an account by instructing your bank to wire Federal
funds (monies of member banks within the Federal Reserve System) to the
Green Century Funds' custodian bank. Your bank may impose a fee for sending
a wire. If you are opening a new account by wire transfer, you must
telephone the Funds to obtain additional information about this alternative.
The Funds will not be responsible for the consequences of delays, including
delays in the banking or Federal Reserve wire systems.
Please call 1-800-221-5519 weekdays from 9:00 a.m. to 5:00 p.m. Eastern
Time for more information about how to purchase shares by wire. After
calling, complete the registration form and mail it to the address given
above. Wire the amount of your initial investment per the following
instructions:
ATTN: Transfer Agent
ABA#:
DDA#:
Green Century Balanced Fund OR Green Century Equity Fund
Your Name
Your Green Century Funds Account Number
Transaction Reference Number (available by calling 1-800-221-5519)
3 By Exchange
You may also open an account in one Fund by exchanging shares with a
value of $2,000 or more ($500 for an IRA, Education IRA or UGMA/UTMA
account) from another Green Century Fund. Your new account will be
established using the same name(s) and address as your existing account.
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<PAGE> 35
To exchange by telephone, call 1-800-221-5519 weekdays from 9:00 a.m.
to 5:00 p.m. Eastern Time. To exchange by letter, write to the "Green
Century Funds" at the address given above, including the name of the Fund
from which you are exchanging, the registered name(s) of ownership and
address, the account number, the dollar amount or number of shares to be
exchanged and the Fund into which you are exchanging. Sign your name(s)
exactly as it appears on your account statement. The exchange requirements
for corporations, other organizations, trusts, fiduciaries, institutional
investors and retirement plans may be different from those for individual
accounts. Please call 1-800-221-5519 for more information. The Funds reserve
the right to modify or terminate the exchange privilege upon 60 days prior
written notice to shareholders.
4 By Automatic Investment
You may open an account with no initial investment if you enroll in the
Automatic Investment Plan and invest a minimum of $100 a month through the
Plan. Complete and sign the registration form, including the Automatic
Investment Plan section and mail it to: Green Century Funds, P.O. Box 6110,
Indianapolis, IN 46206-6110. You may terminate your participation in the
Automatic Investment Plan at any time with written notification to the Funds
at the same address.
Making Additional Investments
1 By Check ($100 Minimum)
You may make subsequent investments by submitting a check for $100 or
more with the tear-off slip (remittance form) from your account statement.
You may also mail your check with a letter of instruction indicating the
amount of your purchase, your account number, and the name in which your
account is registered, to: Green Century Funds, P.O. Box 6110, Indianapolis,
IN 46206-6110.
2 By Wire ($100 Minimum)
You may also make additional investments by instructing your bank to
wire Federal funds. Your bank may impose a fee for sending the wire. The
Green Century Funds cannot be responsible for the consequences of delays,
including delays in the banking or Federal Reserve wire systems. Wire your
additional investment per the instructions which follow. Call 1-800-221-5519
to obtain a Transaction Reference Number prior to wiring funds.
ATTN: Transfer Agent
ABA#:
DDA#:
Green Century Balanced Fund OR Green Century Equity Fund
Your Name
Your Green Century Funds Account Number
Your Transaction Reference Number (available by calling 1-800-221-5519)
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<PAGE> 36
3 By Exchange ($100 Minimum)
Follow instruction No. 3 under "Opening an Account."
4 Automatic Investment Plan ($50 Minimum)
You may arrange to make regular investments through automatic
deductions from your checking or savings account. If you wish to select this
option, please complete the appropriate section on your registration form.
If you wish to set up an Automatic Investment Plan after opening an account,
please call 1-800-93-GREEN for further information. You may terminate your
participation in the Automatic Investment Plan at any time with written
notification to the Funds at P.O. Box 6110, Indianapolis, IN 46206-6110.
How To Sell Shares (Redemptions)
You can take money out of your account at any time by selling
(redeeming) some or all of your shares. See also "Processing Time" on page
23.
1 By Telephone
This is the quickest and easiest way to sell Fund shares. In order to
be able to redeem your shares by telephone, you must elect this option on
your registration form when you open your account. If you did not elect
telephone redemption on your registration form, call 1-800-221-5519 for more
information. If you elected telephone redemption on your registration form,
call 1-800-221-5519 to request either that the monies be wired or sent by
check to the authorized bank account listed on your registration form or
that a check be sent to you at the address listed on your registration form.
You must also provide your name, address, Fund account number and social
security number before you may redeem shares by telephone. All telephone
redemption requests are recorded. There will be a charge for all wire
redemptions. There is no charge for redemption by check. If you open an
account by wire, you cannot redeem shares by telephone until the Funds'
transfer agent has received your completed and signed registration form.
Telephone redemption is not available for shares held in IRA accounts.
2 By Mail
In order to redeem your shares by mail, send a letter to the "Green
Century Funds" and include the Fund name, the account registration name(s)
and address, the account number, and the dollar amount or the number of
shares you wish to redeem. Mail your letter to: Green Century Funds, P.O.
Box 6110, Indianapolis, IN 46206-6110.
Sign your name(s) exactly as it appears on your account statement. For
your protection and to prevent fraudulent redemptions, we require a
signature guarantee for the signature of each person in whose name the
account is registered on written redemption requests. Green Century's
transfer agent accepts signature guarantees from financial institutions
defined under Rule 17A(d)-15 of the Securities Exchange Act of 1934 (FDIC
member commercial bank, trust company, New York Stock Exchange member
brokerage firm or New York or Massachusetts savings bank). Financial
institutions which participate in one of the medallion
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<PAGE> 37
signature programs must use the specific "Medallion Guaranteed" stamp. A
notary public cannot provide a signature guarantee. The redemption
requirements for corporations, other organizations, trusts, fiduciaries,
institutional investors and Individual Retirement Accounts (IRAs) may be
different from those for regular accounts. For more information please call
1-800-221-5519.
SHAREHOLDER AND ACCOUNT POLICIES
Transaction Information
Purchases by Check. Checks must be made payable to the Green Century
Balanced Fund or the Green Century Equity Fund (or to the Green Century Funds).
No third party checks will be honored. Checks also must be drawn on or payable
through a U.S. bank and be in U.S. dollars. If you purchase shares with a check
that is returned due to insufficient funds, your purchase will be cancelled and
you will be responsible for any losses or fees incurred in the transaction. If
you purchase shares by check and redeem them within 15 days of purchase, the
Funds will release your redemption proceeds when your check clears. It is
possible, although unlikely, that this could take up to 15 days. Redemption
requests by telephone, including exchanges, will be accepted prior to the
expiration of the 15-day period if your check has cleared. If you purchase
shares by Federal funds wire, you may avoid this delay.
Confirmation of Transactions. All purchases and redemptions will be
confirmed promptly. Usually a confirmation of your purchase or sale of Fund
shares will be mailed on the business day following receipt of your
instructions.
Share Price Calculation. Once each business day, the share price for each
Fund is calculated. This is the Fund's Net Asset Value (the "NAV"). Because the
Green Century Funds are no-load, this is also the offering price at which each
Fund share is sold. Shares are purchased at the next share price calculated
after your investment is received and accepted. Shares are sold at the next
share price calculated after your order is received and accepted. Shares are
purchased in full and fractional share amounts.
Processing Time. The Funds will normally send your redemption proceeds
within one business day following the redemption request, but may take up to
seven days (or longer in the case of shares recently purchased by check). All
purchase and redemption requests received in good order by the Funds' transfer
agent are executed, without a sales charge, at the next-determined net asset
value. Reinvested dividends receive the net asset value as of the ex-dividend
date.
Tax Information. A redemption of shares, including an exchange into another
Fund, is a sale of shares and may result in a gain or loss for income tax
purposes.
Social Security or Tax Identification Number. Please be sure to complete the
Social Security or Tax Identification Number section of the Funds' registration
form when you open an account with the Green Century Funds. Federal tax law
requires the Funds to withhold 31% of taxable dividends, capital gains
distributions and redemption and exchange proceeds from accounts (other than
those of certain exempt payees) without a Social Security or Tax Identification
Number and certain other information or upon notification from the Internal
Revenue Service or a broker that withholding is required. The Funds reserve the
right to reject new account registrations without a Social Security or Tax
Identification Number. The Funds
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<PAGE> 38
also reserve the right to close, by redemption, accounts without Social Security
or Tax Identification Numbers.
Individual Retirement Accounts (IRAs) and Tax Deferred Accounts. Shares of
the Funds are available for Individual Retirement Accounts (IRAs), Roth IRAs,
Simplified Employee Pension Plans (SEP-IRAs), SIMPLE IRAs, Education IRAs and
403(b)(7) accounts. For further information and to receive the appropriate
forms, please call 1-800-93-GREEN.
Telephone Transaction Liability. All investors are given the privilege to
initiate transactions (except redemptions) by telephone upon opening an account.
To redeem shares by telephone, you must elect this option in writing. See page
31 for further information. Neither the Funds nor any of their service
contractors (including but not limited to the Funds' Adviser and Subadviser,
Administrator and the Transfer Agent, defined herein) will be liable for any
loss or expense in acting upon any telephone instructions that are reasonably
believed to be genuine. In attempting to confirm that telephone instructions are
genuine, the Funds will use such procedures that are considered to be
reasonable, including requesting a shareholder to correctly state his or her
Fund account number, the name and address in which his or her account is
registered, his or her Social Security number, and, when applicable, his or her
banking institution, bank account number and the name in which his or her bank
account is registered. To the extent that the Funds fail to use reasonable
procedures to verify the genuineness of telephone instructions, the Funds and/or
their service contractors may be liable for any losses due to telephone
instructions that prove to be fraudulent or unauthorized.
Shareholder Account Statements
Shareholders of the Green Century Funds will receive quarterly statements
showing all account activity during that quarter, including dividends.
Additional purchases and redemptions of shares of each Fund will be confirmed
promptly, usually as of the next business day after the purchase or redemption
is received. The Green Century Funds will send you detailed tax information on
the amount and type of their dividends and distributions each year.
Dividends and Taxes
The Funds normally declare and pay dividends of net income semiannually in
June and December and distribute net capital gains Once a year in December. Any
dividends or capital gain distributions declared in October, November or
December with a record date in such a month and paid during the following
January will be treated by shareholders for federal income tax purposes as if
received on December 31 of the calendar year declared. Each Fund intends to
distribute substantially all of its income and net capital gains.
The fiscal year end of each Fund is July 31.
You may opt to receive distributions in cash (via check) or have them
reinvested in additional shares of the Funds. Dividends and capital gain
distributions are automatically reinvested unless you request otherwise. If you
invest in an Individual Retirement Account (IRA), all dividends and capital
gains distributions must be reinvested; however, if you are over 59 1/2 years
old, distributions from IRA accounts may be paid to you in cash (via check).
Except for tax-exempt accounts, dividends from net investment income are
taxable to shareholders as ordinary income. Long-term capital gain
distributions, if any (based on the
35
<PAGE> 39
applicable long-term capital gain holding period), are taxable as long-term
capital gains regardless of the length of time you have owned your shares.
Distributions of short-term capital gains are taxable as ordinary income. A
portion of the dividends from net investment income and short-term capital gains
may qualify for the dividends-received deduction for corporations.
A shareholder may also be subject to state and local taxes on dividends and
distributions from the Funds. Shareholders will be notified to the extent, if
any, that dividends reflect interest received from U.S. Government securities.
Such dividends may be exempt from certain state income taxes.
Valuation of Shares
The net asset value per share of each Green Century Fund is computed by
dividing the value of each Fund's total assets, less its liabilities, by the
total number of shares outstanding. The net asset value of the Balanced Fund
fluctuates based on the market values of its investments; the net asset value of
the Equity Fund fluctuates based on the value of its beneficial interest in the
Index Portfolio. In calculating the net asset value per share, the Balanced Fund
uses the current market value of the securities and the Equity Fund uses the
value of its beneficial interest in the Index Portfolio.
The net asset value per share of each Fund is determined every business day
as of the close of regular trading of the New York Stock Exchange (usually 4:00
p.m. Eastern Time) and at such other times as may be necessary or appropriate.
For share prices 24 hours a day, call 1-800-221-5519.
The net asset value of the Index Portfolio is determined by deducting the
amount of the Index Portfolio's liabilities from the value of its assets. At the
close of each business day, the value of the Equity Fund's beneficial interest
in the Index Portfolio will be determined by multiplying the net asset value of
the Index Portfolio by the percentage, effective for that day, which represents
the Fund's share of the aggregate beneficial interests in the Index Portfolio.
Description of Shares, Voting Rights and Liabilities
Green Century's Declaration of Trust permits the Board of Trustees to issue
an unlimited number of full and fractional Shares of Beneficial Interest (par
value $0.01 per share) and to divide or combine the shares into a greater or
lesser number of shares without thereby changing the proportionate beneficial
interests in the respective Fund. Green Century reserves the right to create and
issue additional series of shares. Shares of each series participate equally in
the earnings, dividends and assets of that particular series.
Each share represents an equal proportionate interest in a Fund with each
other share of that Fund. (Shares have no pre-emptive or conversion rights.
Shares when issued are fully paid and non-assessable, except as set forth
below.) Shareholders are entitled to one vote for each share held. Upon
liquidation of a Fund, shareholders would be entitled to share pro rata in the
net assets of the Fund available for distribution to shareholders. The Funds are
not required to and have no current intention to hold annual meetings of
shareholders, although the Funds will hold special meetings of shareholders when
in the judgment of the Board of Trustees it is necessary or desirable to submit
matters for a shareholder vote. Shareholders have under certain
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<PAGE> 40
circumstances the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Trustees. Shareholders also have under certain circumstances the right to
remove one or more Trustees without a meeting.
Green Century is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and a Fund itself was unable to meet its
obligations.
The Index Portfolio, in which all of the assets of the Equity Fund are
invested, is organized as a trust under the laws of the State of New York. The
Equity Fund and other entities investing in the Index Portfolio (e.g., other
investment companies and common and commingled trust funds) are each liable for
all obligations of the Index Portfolio.
Financial Intermediaries
From time to time, Green Century Capital Management enters into contracts
with banks, brokers and other financial intermediaries ("Financial
Intermediaries") pursuant to which a customer of the Financial Intermediary may
place purchase and redemption orders for Fund shares through that Financial
Intermediary and/or through designated intermediaries of the Financial
Intermediary which holds such shares in its name on behalf of that customer.
Pursuant to such contract, each Financial Intermediary as agent with respect to
shareholders of and prospective investors in the Funds who are customers of that
Financial Intermediary, among other things: provides necessary personnel and
facilities to establish and maintain certain shareholders accounts and records
enabling it to hold, as agent, its customers' shares in its name or its nominee
name on the shareholder records of the Green Century Funds; assists in
processing purchase and redemption transactions; arranges for the wiring of
funds; transmits and receives funds in connection with customer orders to
purchase or redeem shares of the Funds; provides periodic statements showing a
customer's account balance and, to the extent practicable, integrates such
information with information concerning other customer transactions otherwise
effected with or through it; furnishes, either separately or on an integrated
basis with other reports sent to a customer, monthly and annual statements and
confirmations of all purchases and redemptions of Fund shares in a customer's
account; transmits proxy statements, annual reports, updated prospectuses and
other communications from the Green Century Funds to its customers; and
receives, tabulates and transmits to the Green Century Funds proxies executed by
its customers with respect to meetings of shareholders of the Funds. For these
services, the Financial Intermediary receives such fees from Green Century
Capital Management as may be agreed upon from time to time between Green Century
Capital Management and such Financial Intermediary.
An investor who has an account with a Financial Intermediary may place
purchase orders for Fund shares with the Green Century Funds through that
Financial Intermediary. The Funds will be deemed to have received the purchase
or redemption order for Fund shares when a Financial Intermediary or its
designated intermediary accepts the purchase or redemption order and such orders
will be priced at each Fund's net asset value after the acceptance of the
purchase or redemption order by a Financial Intermediary or its designated
intermediary. Each Financial Intermediary may establish and amend from time to
time a minimum initial and a minimum
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<PAGE> 41
subsequent purchase requirement for its customers. A transaction or other fee
may be charged by a Financial Intermediary on the purchase of Fund shares. Each
Financial Intermediary may establish its own policy with respect to the
reinvestment of dividends and capital gains distributions in additional Fund
shares. Shares held by a Financial Intermediary on behalf of a shareholder must
be redeemed through that Financial Intermediary. A transaction or other fee may
be charged by a Financial Intermediary on the redemption of Fund shares.
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<PAGE> 42
39
<PAGE> 43
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)
Winslow Management Company
24 Federal Street
Boston, MA 02110
INVESTMENT MANAGER (Index Portfolio)
Domini Social Investments LLC
11 West 25th Street, 7th Floor
New York, NY 10010
INVESTMENT SUBMANAGER (Index Portfolio)
Mellon Equity Associates
500 Grant Street, Suite 3700
Pittsburgh, PA 15258
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
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
Unified Fund Services, Inc.
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431 North Pennsylvania Street
Indianapolis, IN 46204-1806
COUNSEL TO GREEN CENTURY CAPITAL
MANAGEMENT, INC.
Goulston & Storrs
400 Atlantic Avenue
Boston, MA 02110
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
99 High Street
Boston, MA 02110
FOR MORE INFORMATION ABOUT THE GREEN CENTURY FUNDS CALL 1-800-93-GREEN
FOR SPECIFIC INFORMATION ABOUT YOUR OWN ACCOUNT, CALL 1-800-221-5519
Printed on recycled paper with soy-based ink.
PROSPECTUS
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LOGO
(R)
BALANCED
FUND
EQUITY
FUND
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STATEMENT OF ADDITIONAL INFORMATION
GREEN CENTURY FUNDS
29 Temple Place, Suite 200, Boston, Massachusetts 02111
Green Century Funds (the "Trust" or "the Funds" or "Green Century")
offers two separate series (each, a "Fund"), each with its own investment
objective. Each Fund pursues its respective investment objective through
investments consistent with the Trust's commitment to environmental
responsibility. The GREEN CENTURY BALANCED FUND (the "Balanced Fund") seeks
capital growth and income from a diversified portfolio of stocks and bonds. The
GREEN CENTURY EQUITY FUND (the "Equity Fund") seeks long-term total return from
a diversified portfolio of stocks which corresponds to the total return
performance of the "Domini Social IndexSM" (the "Social Index"), an index
comprised of stocks selected based upon environmental and social criteria. The
Equity Fund seeks to achieve its investment objective by investing all of its
investable assets (the "Assets") in the Domini Social Index Portfolio (the
"Index Portfolio"), a diversified open-end management investment company having
the same investment objective as the Equity Fund. The Index Portfolio invests in
the common stocks included in the Social Index. There can be no assurance that
the investment objective of either Fund will be achieved.
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Trust's Prospectus dated October 28, 1998 a copy
of which may be obtained from the Trust at the address noted above. Terms used
but not defined herein, but which are defined in the Prospectus, are used as
defined in the Prospectus.
<TABLE>
<CAPTION>
Table of Contents Page
<S> <C>
Investment Objectives, Risks and Policies.............................. 2
History of Green Century Funds and Green Century and
Capital Management Shareholder Activism.............................. 17
Investment Restrictions................................................ 20
Trustees, Officers and Advisory Board.................................. 24
Investment Advisers and Managers....................................... 28
Administrator, Subadministrator, Transfer Agent and Custodian,
and Expenses........................................................... 34
Distribution Plan...................................................... 36
Net Asset Value; Redemption in Kind.................................... 37
Performance Advertising................................................ 38
Federal Taxes.......................................................... 39
Description of Shares, Voting Rights and Liabilities................... 41
Portfolio Transactions and Brokerage Commissions....................... 43
Independent Auditors and Experts....................................... 47
Additional Information................................................. 47
Financial Statements................................................... 48
</TABLE>
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Appendix - Description of Securities Ratings................. 49
The date of this Statement of Additional Information is October 28, 1998.
INVESTMENT OBJECTIVES, RISKS AND POLICIES
The following supplements the information contained in the Prospectus
concerning the investment objective, policies and techniques of the Funds and
the Index Portfolio.
BALANCED FUND
U.S. Government Agency Obligations--The Fund will invest in obligations
issued or guaranteed by U.S. Government agencies, authorities or
instrumentalities, some of which are backed by the full faith and credit of the
U.S. Government (i.e., direct pass-through certificates of the Government
National Mortgage Association ("GNMA")), some of which are supported by the
right of the issuer to borrow from the U.S. Government (i.e., obligations of the
Federal Home Loan Banks) and some of which are backed only by the credit of the
issuer itself (i.e., obligations of the Student Loan Marketing Association).
Repurchase Agreements--Repurchase agreements may be entered into for
the Fund only with selected banks or broker-dealers. This is an agreement in
which the seller of a security agrees to repurchase from the Fund the security
sold to the Fund at a mutually agreed upon time and price. As such, it is viewed
as the lending of money to the seller of the security. The resale price normally
is in excess of the purchase price, reflecting an agreed upon interest rate. The
rate is effective for the period of time assets of the Fund are invested in the
agreement and is not related to the coupon rate on the underlying security. The
period of these repurchase agreements will usually be short, from overnight to
one week. The securities which are subject to repurchase agreements, however,
may have maturity dates in excess of one year from the effective date of the
repurchase agreement. The Fund will always receive as collateral securities
whose market value (which is marked to the market daily), including accrued
interest, will be at least equal to 100% of the dollar amount invested on behalf
of the Fund in each agreement along with accrued interest. Payment for such
securities will be made by the Fund only upon physical delivery or evidence of
book entry transfer to the account of the Trust's custodian. If the seller under
a repurchase agreement becomes insolvent, the Fund's right to dispose of the
securities may be restricted. In the event of the commencement of bankruptcy or
insolvency proceedings with respect to the seller of the security before
repurchase of the security under a repurchase agreement, the Fund may encounter
delay and incur costs before being able to sell the security. If the seller of
the security defaults, the Fund might incur a loss if the value of the
collateral securing the repurchase agreement declines and might incur
disposition costs in connection with liquidating the collateral. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the security,
realization upon the collateral on behalf of the Fund may be delayed or limited
in certain circumstances. The seller of the security may also fail to repurchase
the obligations. Repurchase agreements are considered collateralized loans under
the Investment Company Act of 1940, as amended (the "1940 Act").
A repurchase agreement with more than seven days to maturity may not be
entered into for the Fund if, as a result, more than 15% of the market value of
the Fund's net assets would be invested in such
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<PAGE> 48
repurchase agreements together with any illiquid securities that the Fund may
hold. The Balanced Fund has no current intention to invest more than 5% of its
net assets in repurchase agreements.
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Certificates of Deposit--The Fund may invest in certificates of deposit
of large domestic or foreign banks (i.e., banks which at the time of their most
recent annual financial statements show total assets in excess of one billion
U.S. dollars or the equivalent thereof) and certificates of deposit of smaller
banks as described below. Although the Trust recognizes that the size of a bank
is important, this fact alone is not necessarily indicative of its
creditworthiness. Investment in certificates of deposit issued by foreign banks
or foreign branches of domestic banks involves investment risks that are
different in some respects from those associated with investment in certificates
of deposit issued by domestic banks, including the possible imposition of
withholding taxes on interest income, the possible adoption of foreign
governmental restrictions which might adversely affect the payment of principal
and interest on such certificates of deposit, or other adverse political or
economic developments. In addition, it might be more difficult to obtain and
enforce a judgment against a foreign bank or a foreign branch of a domestic
bank. (See "Foreign Securities".)
The Fund may also invest in certificates of deposit issued by banks and
savings and loan institutions which had at the time of their most recent annual
financial statements total assets of less than one billion dollars, provided
that (i) the principal amounts of such certificates of deposit are insured by an
agency of the U.S. Government, (ii) at no time will the Fund hold more than
$100,000 principal amount of certificates of deposit of any one such bank, and
(iii) at the time of acquisition, no more than 10% of the Fund's assets (taken
at current value) are invested in certificates of deposit of such banks having
total assets not in excess of one billion dollars.
When-Issued Securities-- The Fund may purchase securities offered on a
"when-issued" or "forward delivery" basis. When so offered, the price, which is
generally expressed in yield terms, is fixed at the time the commitment to
purchase is made, but delivery and payment for the when-issued or forward
delivery securities take place at a later date. During the period between
purchase and settlement, no payment is made by the purchaser to the issuer and
no interest on the when-issued or forward delivery security accrues to the
purchaser. While when-issued or forward delivery securities may be sold prior to
the settlement date, it is intended that the Fund will purchase such securities
with the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to purchase a
security on a when-issued or forward delivery basis, it will record the
transaction and reflect the value of the security in determining its net asset
value. The market value of when-issued or forward delivery securities may be
more or less than the purchase price. The Trust does not believe that the Fund's
net asset value or income will be adversely affected by its purchase of
securities on a when-issued or forward delivery basis. The Fund will establish a
segregated account in which it will maintain cash, U.S. Government securities
and high-grade debt obligations equal in value to commitments for when-issued or
forward delivery securities.
Mortgage-Backed Securities and Mortgage Pass-Through Securities-- The
Fund may also invest in mortgage-backed securities, which are interests in pools
of mortgage loans, including mortgage loans made by savings and loan
institutions, mortgage bankers, commercial banks and others. Pools of mortgage
loans are assembled as securities for sale to investors by various governmental,
government-related and private organizations as further described below.
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<PAGE> 50
Unscheduled or early payments on the underlying mortgage may shorten
the securities' effective maturities and lessen their growth potential. The Fund
may agree to purchase or sell these securities with payment and delivery taking
place at a future date. A decline in interest rates may lead to a faster rate of
repayment of the underlying mortgages, and expose the Fund to a lower rate of
return upon reinvestment. To the extent that such mortgage-backed securities are
held by the Fund, the prepayment right will tend to limit to some degree the
increase in net asset value of the Fund because the value of the mortgage-backed
securities held by the Fund may not appreciate as rapidly as the price of
noncallable debt securities.
Interests in pools of mortgage-backed securities differ from other
forms of debt securities, which normally provide for periodic payment of
interest in fixed amounts with principal payments at maturity or specified call
dates. Instead, these securities provide a monthly payment which consists of
both interest and principal payments. In effect, these payments are a
"pass-through" of the monthly payments made by the individual borrowers on their
mortgage loans, net of any fees paid to the issuer or guarantor of such
securities. Additional payments are caused by repayments of principal resulting
from the sale of the underlying property, refinancing or foreclosure, net of
fees or costs which may be incurred. Some mortgage-related securities (such as
securities issued by the Government National Mortgage Association) are described
as "modified pass-through." These securities entitle the holder to receive all
interest and principal payments owed on the mortgage pool, net of certain fees,
at the scheduled payment dates regardless of whether or not the mortgagor
actually makes the payment.
The principal governmental guarantor of mortgage-related securities is
the Government National Mortgage Association ("GNMA"). GNMA is a wholly owned
United States Government corporation within the Department of Housing and Urban
Development. GNMA is authorized to guarantee, with the full faith and credit of
the United States Government, the timely payment of principal and interest on
securities issued by institutions approved by GNMA (such as savings and loan
institutions, commercial banks and mortgage bankers) and backed by pools of
FHA-insured or VA-guaranteed mortgages. These guarantees, however, do not apply
to the market value or yield of mortgage-backed securities or to the value of
Fund shares. Also, GNMA securities often are purchased at a premium over the
maturity value of the underlying mortgages. This premium is not guaranteed and
will be lost if prepayment occurs.
Government-related guarantors (i.e., not backed by the full faith and
credit of the United States Government) include the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").
FNMA is a government-sponsored corporation owned entirely by private
stockholders. It is subject to general regulation by the Secretary of Housing
and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any government agency) mortgages from a list of approved
seller/servicers which include state and federally chartered savings and loan
associations, mutual savings banks, commercial banks and credit unions and
mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to
timely payment of principal and interest by FNMA but are not backed by the full
faith and credit of the United States Government.
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<PAGE> 51
FHLMC is a corporate instrumentality of the United States Government
and was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. Its stock is owned by
the twelve Federal Home Loan Banks. FHLMC issues Participation Certificates
("PCs") which represent interests in conventional mortgages from FHLMC's
national portfolio. FHLMC guarantees the timely payment of interest and ultimate
collection of principal, but PCs are not backed by the full faith and credit of
the United States Government.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers also
create pass-through pools of conventional mortgage loans. Such issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. Pools created by
such nongovernmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments. However, timely payment of interest
and principal of these pools may be supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance and
letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers and the mortgage poolers. Such insurance and
guarantees and the creditworthiness of the issuers thereof will be considered in
determining whether a mortgage-related security meets the Fund's investment
quality standards. There can be no assurance that the private insurers or
guarantors can meet their obligations under the insurance policies or guarantee
arrangements. The Fund may buy mortgage-related securities without insurance or
guarantees, if through an examination of the loan experience and practices of
the originators/servicers and poolers, the Fund's investment adviser and
investment subadviser determine that the securities meet the Fund's quality
standards. Although the market for such securities is becoming increasingly
liquid, securities issued by certain private organizations may not be readily
marketable.
Foreign Currencies--Investments in foreign securities usually will
involve currencies of foreign countries. Moreover, the Fund temporarily may hold
funds in bank deposits in foreign currencies during the completion of investment
programs and may purchase forward foreign currency contracts, foreign currency
futures contracts and options on such contracts. Because of these factors, the
value of the assets of the Fund as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Fund may incur costs in connection with
conversions between various currencies. Although the Fund values its assets
daily in terms of U.S. dollars, it does not intend to convert its holdings of
foreign currencies into U.S. dollars on a daily basis. It will do so from time
to time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to the Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer. The
Fund will conduct its foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through entering into forward or futures contracts to purchase or
sell foreign currencies.
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Because the Balanced Fund may be invested in both U.S. and foreign
securities markets, changes in the Fund's share price will not be correlated
with movements in the U.S. markets. The Fund's share price will reflect the
movements of both the different stock and bond markets in which it is invested
and of the currencies in which the investments are denominated; the strength or
weakness of the U.S. dollar against foreign currencies may account for part of
the Fund's investment performance. U.S. and foreign securities markets do not
always move in step with each other, and the total returns from different
markets may vary significantly. The Fund may invest in many securities markets
around the world in an attempt to take advantage of opportunities wherever they
may arise.
Floating Rate Obligations--Certain of the obligations that the Fund may
purchase have a floating or variable rate of interest. Such obligations bear
interest at rates that are not fixed, but which vary with changes in specific
market rates or indices, such as the Prime Rate, and at specified intervals.
Certain of such obligations may carry a demand feature that would permit the
holder to tender them back to the issuer at par value prior to maturity.
Because of the variable rate nature of such instruments, the yield of
the Fund will decline and its shareholders will forego the opportunity for
capital appreciation during periods when prevailing interest rates have
declined. On the other hand, during periods where prevailing interest rates have
increased, the Fund's yield will increase and its shareholders will have reduced
risk to capital depreciation.
Zero Coupon Securities--The Fund may invest in zero coupon securities
which pay no cash income and are sold at substantial discounts from their value
at maturity. Zero coupon securities include so-called "stripped" U.S. Treasury
obligations as well as privately issued securities which are issued by a bank or
a securities firm that has purchased U.S. Treasury obligations and separated
their interest and principal components. When held to maturity, their entire
income, which consists of accretion of discount, comes from the difference
between the purchase price and their value at maturity. Zero coupon securities
are subject to greater market value fluctuations from changing interest rates
than debt obligations of comparable maturities which make current distributions
of interest (cash). Zero coupon convertible securities offer the opportunity for
capital appreciation as increases (or decreases) in market value of such
securities closely follows the movements in the market value of the underlying
common stock. Zero coupon convertible securities generally are expected to be
less volatile than the underlying common stocks as they usually are issued with
short maturities (15 years or less) and are issued with options and/or
redemption features exercisable by the holder of the obligation entitling the
holder to redeem the obligation and receive a defined cash payment.
Zero coupon securities include securities issued directly by the U.S.
Treasury, and U.S. Treasury bonds or notes and their unmatured interest coupons
and receipts for their underlying principal ("coupons") which have been
separated by their holder, typically a custodian bank or investment brokerage
firm. A holder will separate the interest coupons from the underlying principal
(the "corpus") of the U.S. Treasury security. A number of securities firms and
banks have stripped the interest coupons and receipts and then resold them in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRS") and Certificate of Accrual on Treasuries
("CATS"). The underlying U.S. Treasury bonds and notes themselves are held in
book-entry form at the Federal Reserve Bank or, in the case of bearer securities
(i.e., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof. Counsel to the
underwriters of these certificates or other evidences of ownership of the U.S.
Treasury securities has stated that for federal tax and securities purposes, in
their opinion purchasers of such
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<PAGE> 53
certificates, such as the Funds, most likely will be deemed the beneficial
holder of the underlying U.S. Government securities. The Fund understands that
the staff of the Division of Investment Management of the Securities and
Exchange Commission ("SEC") no longer considers such privately stripped
obligations to be U.S. Government securities, as defined in the 1940 Act;
therefore, the Fund intends to adhere to this staff position and will not treat
such privately stripped obligations to be U.S. Government securities for the
purpose of determining if the Fund is "diversified," or for any other purpose,
under the 1940 Act.
The Treasury has facilitated transfers of ownership of zero coupon
securities by accounting separately for the beneficial ownership of particular
interest coupon and corpus payments on Treasury securities through the Federal
Reserve book-entry record-keeping system. The Federal Reserve program as
established by the Treasury Department is known as "STRIPS" or "Separate Trading
of Registered Interest and Principal of Securities." Under the STRIPS program,
the Fund will be able to have its beneficial ownership of zero coupon securities
recorded directly in the book-entry record-keeping system in lieu of having to
hold certificates or other evidences of ownership of the underlying U.S.
Treasury securities.
When U.S. Treasury obligations have been stripped of their unmatured
interest coupons by the holder, the principal or corpus is sold at a deep
discount because the buyer receives only the right to receive a future fixed
payment on the security and does not receive any rights to periodic interest
(cash) payments. Once stripped or separated, the corpus and coupons may be sold
separately. Typically, the coupons are sold separately or grouped with other
coupons with like maturity dates and sold in such bundled form. Purchasers of
stripped obligations acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury sells
itself.
Equity Investments--Equity investments may or may not pay dividends and
may or may not carry voting rights. Common stock occupies the most junior
position in a company's capital structure. Convertible securities entitle the
holder to exchange the securities for a specified number of shares of common
stock, usually of the same company, at specified prices within a certain period
of time and to receive interest or dividends until the holder elects to convert.
The provisions of any convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holder's claims on assets and earnings are subordinated to the claims of other
creditors, and are senior to the claims of preferred and common shareholders. In
the case of preferred stock and convertible preferred stock, the holder's claims
on assets and earnings are subordinated to the claims of all creditors but are
senior to the claims of common shareholders.
Debt Securities--The Fund may invest in debt securities of foreign and
U.S. issuers. The Fund's debt investments may be selected on the basis of
capital appreciation potential, by evaluating, among other things, potential
yield, if any, credit quality, and the fundamental outlooks for currency and
interest rate trends in different parts of the globe, taking into account the
ability to hedge a degree of currency or local bond price risk.
Risks Related to Lower-Rated Securities
The Fund's investments in high yield, high risk debt obligations rated
below investment grade, which have speculative characteristics, bear special
risks. They are subject to greater credit risks, including the possibility of
default or bankruptcy of the issuer. The value of such investments may also be
subject to a greater degree of volatility in response to interest rate
fluctuations, economic downturns and changes in the financial condition of the
issuer. These securities generally are less liquid than higher quality
securities. During periods of deteriorating economic conditions and contractions
in the credit markets, the ability of such issuers to
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<PAGE> 54
service their debt, meet projected goals or obtain additional financing may be
impaired. The Fund will also take such action as it considers appropriate in the
event of anticipated financial difficulties, default or bankruptcy of either the
issuer of any such obligation or of the underlying source of funds for debt
service. Such action may include retaining the services of various persons and
firms (including affiliates of the investment adviser and investment subadviser)
to evaluate or protect any real estate or other assets securing any such
obligation or acquired by the Fund as a result of any such event. The Fund will
incur additional expenditures in taking protective action with respect to
portfolio obligations in default and assets securing such obligations.
While any investment carries some risk, certain risks associated with
lower-rated securities are different from those for investment-grade securities.
The risk of loss through default is greater because lower-rated securities are
usually unsecured and are often subordinate to an issuer's other obligations.
Additionally, the issuers of these securities frequently have high debt levels
and are thus more sensitive to difficult economic conditions, individual
corporate developments and rising interest rates. Consequently, the market price
of these securities may be quite volatile and may result in wider fluctuations
of the Fund's net asset value per share.
There remains some uncertainty about the performance level of the
market for lower-rated securities under adverse market and economic
environments. An economic downturn or increase in interest rate could have a
negative impact on both the markets for lower-rated securities (resulting in a
greater number of bond defaults) and the value of lower-rated securities held in
the portfolio of investments.
The economy and interest rates can affect lower-rated securities
differently than other securities. For example, the prices of lower-rated
securities are more sensitive to adverse economic changes or individual
corporate developments than are the prices of higher-rated investments. In
addition, during an economic downturn or period in which interest rates are
rising significantly, highly leveraged issuers may experience financial
difficulties, which, in turn, would adversely affect their ability to service
their principal and interest payment obligations, meet projected business goals
and obtain additional financing.
If an issuer of a security defaults, the Fund may incur additional
expenses to seek recovery. In addition, periods of economic uncertainty would
likely result in increased volatility for the market prices of lower-rated
securities as well as the Fund's net asset value. In general, both the prices
and yields of lower-rated securities will fluctuate.
In certain circumstances it may be difficult to determine a security's
fair value due to a lack of reliable objective information. Such instances occur
where there is not an established secondary market for the security or the
security is lightly traded. As a result the Fund's valuation of a security and
the price it is actually able to obtain when it sells the security could differ.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the value and liquidity of lower-rated
securities held by the Fund, especially in a thinly traded market. Illiquid or
restricted securities held by the Fund may involve special registration
responsibilities, liabilities and costs, and could involve other liquidity and
valuation difficulties.
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Current laws, such as those requiring federally-insured savings and
loan associations to remove investments in lower-rated securities from their
portfolios, as well as other pending proposals, may have a material impact on
the market for lower-rated securities.
The ratings assigned by a rating agency evaluates the safety of
lower-rated security's principal and interest payments, but does not address
market value risk. Because the ratings of the rating agencies may not always
reflect current conditions and events, in addition to using recognized rating
agencies and other sources, the subadviser performs its own analysis of the
issuers whose lower-rated securities the Fund holds. Because of this, the Fund's
performance may depend more on the subadviser's credit analysis than is the case
of mutual funds investing in higher-rated securities.
Options on Securities The Fund may write (sell) covered call and put
options to a limited extent on its portfolio securities ("covered options") in
an attempt to increase gain. However, the Fund may forgo the benefits of
appreciation on securities sold or may pay more than the market price on
securities acquired pursuant to call and put options written by the Fund.
The Fund may terminate its obligation as the writer of a call or put
option by purchasing an option with the same exercise price and expiration date
as the option previously written. This transaction is called a "closing purchase
transaction." Where the Fund cannot effect a closing purchase transaction, it
may be forced to incur brokerage commissions or dealer spreads in selling
securities it receives or it may be forced to hold underlying securities until
an option is exercised or expires.
The hours of trading for options on securities may not conform to the
hours during which the underlying securities are traded. To the extent that the
option markets close before the markets for the underlying securities,
significant price and rate movements can take place in the underlying securities
markets that cannot be reflected in the option markets. It is impossible to
predict the volume of trading that may exist in such options, and there can be
no assurance that viable exchange markets will develop or continue.
The Fund may engage in over-the-counter options transactions with
broker-dealers who make markets in these options. At present, approximately ten
broker-dealers, including several of the largest primary dealers in U.S.
Government securities, make these markets. The ability to terminate
over-the-counter option positions is more limited than with exchange-traded
option positions because the predominant market is the issuing broker rather
than an exchange, and may involve the risk that broker-dealers participating in
such transactions will not fulfill their obligations. To reduce this risk, the
Fund will purchase such options only from broker-dealers who are primary
government securities dealers recognized by the Federal Reserve Bank of New York
and who agree to (and are expected to be capable of) entering into closing
transactions, although there can be no guarantee that any such option will be
liquidated at a favorable price prior to expiration. The investment adviser and
investment subadviser will monitor the creditworthiness of dealers with whom the
Fund enters into such options transactions under the general supervision of the
Trust's Trustees.
Options on Securities Indices In addition to options on securities,
the Fund may also purchase and write (sell) call and put options on securities
indices. The absence of a liquid secondary market to close out options positions
on securities indices is more likely to occur, although the Fund generally will
only purchase or write such an option if the investment adviser and investment
subadviser believe the option can be closed out. Use of options on securities
indices also entails the risk that trading in such options may be interrupted if
trading in certain securities included in the index is interrupted. The Fund
will not purchase such options unless
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<PAGE> 56
its investment adviser and investment subadviser believe the market is
sufficiently developed such that the risk of trading in such options is no
greater than the risk of trading in options on securities. Price movements in
the Fund's portfolio may not correlate precisely with movements in the level of
an index and, therefore, the use of options on indices cannot serve as a
complete hedge. Because options on securities indices require settlement in
cash, the Fund may be forced to liquidate portfolio securities to meet
settlement obligations.
Options on Currencies The Fund may write (sell) call and put options
on currencies to increase gain and may purchase such options to hedge the value
of securities the Fund holds or intends to buy. Purchased currency options may
be denominated in a currency that is linked to the currency the Fund owns or may
wish to purchase. This technique, referred to as "proxy hedging," involves the
additional risk that the linkage between the currencies may be changed or
eliminated.
Futures Contracts The Fund may enter into futures contracts on
securities, currencies and indices which are traded on exchanges that are
licensed and regulated by the Commodity Futures Trading Commission ("CFTC") or,
consistent with CFTC regulations, on foreign exchanges. The Fund will do so to
hedge against anticipated changes in securities values, as a substitute for the
purchase or sale of securities or currencies or to enhance return.
To the extent that the Fund enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the CFTC, in each case that are not for bona fide hedging purposes
(as defined by the CFTC), the aggregate initial margin and premiums required to
establish these positions (excluding the amount by which options are
"in-the-money") may not exceed 5% of the liquidation value of the Fund's
portfolio, after taking into account unrealized profits and unrealized losses on
any contracts the Fund has entered into.
The Fund may also purchase and write call and put options on futures
contracts which are traded on exchanges that are licensed and regulated by the
CFTC, or, consistent with CFTC regulations, on foreign exchanges.
While the holder or writer of an option on a futures contract may
normally terminate its position by selling or purchasing an offsetting option of
the same series, the Fund's ability to establish and close out options positions
at fairly established prices will be subject to the existence of a liquid
market. The Fund will not purchase or write options on futures contracts unless,
in the opinion of the Fund's Adviser and Subadviser, the market for such options
has sufficient liquidity that the risks associated with such options
transactions are not at unacceptable levels.
While futures contracts will be traded to reduce certain risks, futures
trading itself entails certain other risks. Unanticipated changes in securities
values, interest rates or currency prices may result in a poorer overall
performance for the Fund than if it had not entered into any futures contracts.
Some futures contracts may not have a broad and liquid market, in which case the
contracts may not be able to be closed at a fair price and the Fund may lose in
excess of the initial margin deposit. Moreover, in the event of an imperfect
correlation between the futures contract and the portfolio position which is
intended to be protected, the desired protection may not be obtained and the
Fund may be exposed to risk of loss.
The Fund will incur brokerage costs and will be required to post and
maintain "margin" as a good-faith deposit against performance of its obligations
under futures contracts and under options written by the Fund.
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In addition, the Fund is required to segregate assets, such as liquid securities
and cash, in an amount equal to the value of the instruments underlying futures
contracts and call options purchased and put options written by the Fund.
Forward Currency Exchange Contracts A forward currency exchange
contract ("forward contract") involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades.
While the Fund will enter into forward and futures contracts to reduce
currency exchange rate risks, transactions in such contracts involve certain
other risks. Thus, while the Fund may benefit from such transactions,
unanticipated changes in currency prices may result in a poorer overall
performance for the Fund than if it had not engaged in any such transaction.
Moreover, there may be an imperfect correlation between the Fund's portfolio
holdings of securities denominated in a particular currency and forward or
futures contracts entered into by the Fund. Such imperfect correlation may
prevent the Fund from achieving a complete hedge or expose the Fund to risk of
foreign exchange loss.
Combined Transactions The Fund may enter into multiple transactions,
including multiple options transactions, multiple futures transactions, multiple
foreign currency transactions (including forward foreign currency exchange
contracts) and any combination of futures, options and foreign currency
transactions ("component" transactions), instead of a single transaction, as
part of a single hedging strategy when, in the opinion of the investment adviser
and investment subadviser, it is in the best interest of the Fund to do so. A
combined transaction, while part of a single hedging strategy, may contain
elements of risk that are present in each of its component transactions.
Use of Segregated and Other Special Accounts Options, futures and
forward foreign currency transactions which obligate the Fund to provide cash,
securities or currencies to complete such transactions will entail the Fund
either segregating assets in an account with, or on the books of, the Custodian
to the extent the Fund does not own the securities, or the securities
denominated in the currency, which are the subject of the obligation, or
otherwise "covering" the transaction as allowed under interpretive positions of
the SEC. For example, a call option written by the Fund will require the Fund to
hold the securities subject to the call (or securities convertible into the
needed securities without additional consideration) or to segregate high grade
liquid debt obligations sufficient to meet the obligation by purchasing and
delivering the securities if the call is exercised. A call option written on an
index will require the Fund to have portfolio securities which correlate with
the index or to segregate such high grade liquid assets. A put option written by
the Fund also will require the Fund to segregate such high grade liquid assets
sufficient to cover the Fund's obligation to buy the securities covered by the
put if the put is exercised.
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Except when the Fund enters into a forward contract for the purpose of
the purchase or sale of a security denominated in a foreign currency, a forward
foreign currency contract which obligates the Fund to provide currencies will
require the Fund to hold currencies or liquid securities denominated in that
currency which will equal the Fund's obligations. Such a contract requiring the
purchase of currencies also requires segregation.
Unless the Fund owns or maintains a segregated account consisting of
the securities, cash or currencies which are the subject of the obligation as
described above, the Fund will hold liquid assets in a segregated account. These
assets cannot be transferred while the obligation is outstanding unless replaced
with other suitable assets. Rather than segregating assets in the case of an
index-based transaction, the Fund could own securities substantially replicating
the movement of the particular index.
In the case of a futures contract, the Fund, apart from its duty to
segregate, must deposit initial margin and variation margin, as often as daily
if the position moves adversely, sufficient to meet its obligation to purchase
or provide securities or currencies, or to pay the amount owed at the expiration
of an index-based futures contract. Similarly, options on futures contracts
require margin to the extent necessary to meet the Fund's commitments.
In lieu of such procedures, such transactions may be covered by other
means, consistent with applicable regulatory policies. The Fund may enter into
certain offsetting transactions so that its combined position, coupled with any
segregated assets, equals its net outstanding obligation in related options and
hedging transactions. For example, the Fund could purchase a put option if the
strike price of that option is the same or higher than the strike price of a put
option sold by the Fund. Moreover, instead of segregating assets if the Fund
held a futures or forward contract, it could purchase a put option on the same
futures or forward contract with a strike price as high or higher than the price
of the contract held. Of course, the offsetting transaction must terminate at
the time of or after the primary transaction.
Other Mortgage-Backed Securities Governmental, government-related or
private entities may create mortgage loan pools and other mortgage-related
securities offering mortgage pass-through and mortgage-collateralized
investments in addition to those described above. The mortgages underlying these
securities may include alternative mortgage instruments, that is, mortgage
instruments whose principal or interest payments may vary or whose terms to
maturity may differ from customary long-term fixed rate mortgages. As new types
of mortgage-related securities are developed and offered to investors, the
investment adviser and investment subadviser will, consistent with the Fund's
investment objective, policies and quality standards, consider making
investments in such new types of mortgage-related securities. The Fund will not
purchase any such other mortgage-backed securities until the Trust's Prospectus
and this Statement of Additional Information have been supplemented.
EQUITY FUND
The Equity Fund seeks to achieve its investment objective by investing
all its Assets in the Index Portfolio, which has the same investment objective
as the Equity Fund. The Index Portfolio seeks to achieve its investment
objective by investing in the common stocks comprising the Social Index. The
Equity Fund's policy is to invest at least 80% of its Assets (either directly or
through the Index Portfolio) in the stocks comprising the Social Index.
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In selecting stocks for inclusion in the Social Index:
1. Kinder, Lydenberg & Domini & Co., Inc. ("KLD") evaluated, in
accordance with the social criteria described in the Prospectus, each of the
companies the stocks of which comprise the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500"). If a company whose stock was included in the S&P
500 met KLD's social criteria and met its further criteria for industry
diversification, financial solvency, market capitalization, and minimal
portfolio turnover, it was included in the Social Index. As of October 22, 1998,
of the 500 companies whose stocks comprised the S&P 500, approximately 48.6%
were included in the Social Index.
2. The remaining stocks comprising the Social Index (i.e., those which
are not included in the S&P 500) were selected based upon KLD's evaluation of
the social criteria described in the Prospectus, as well as upon its criteria
for industry diversification, financial solvency, market capitalization, and
minimal portfolio turnover. Because of the social criteria applied in the
selection of stocks comprising the Social Index, industry sector weighting in
the Social Index may vary materially from the industry weightings in other stock
indices, including the S&P 500, and certain industry sectors will be excluded
altogether.
KLD may exclude from the Social Index stocks issued by companies which
are in bankruptcy or whose bankruptcy KLD believes may be imminent.
The component stocks of the S&P 500 are chosen by Standard & Poor's
Corporation ("S&P") solely with the aim of achieving a distribution by broad
industry groupings that approximates the distribution of these groupings in the
New York Stock Exchange common stock population, taken as the assumed model for
the composition of the total market. Construction of the S&P 500 by S&P proceeds
from industry groups to the whole. Since some industries are characterized by
companies of relatively small stock capitalization, the S&P 500 does not
comprise the 500 largest companies listed on the New York Stock Exchange. Not
all stocks included in the S&P 500 are listed on the New York Stock Exchange.
However, the total market value of the S&P 500 as of July 31, 1998 represented
approximately 83% of the aggregate market value of common stocks traded on the
New York Stock Exchange.
Inclusion of a stock in the S&P 500 Index in no way implies an opinion
by S&P as to its attractiveness as an investment, nor is S&P a sponsor of or
otherwise affiliated with the Equity Fund or the Index Portfolio. "S&P 500" is a
trademark of S&P. A company which is not included in the S&P 500 may be included
in the Social Index primarily in order to afford representation to an industrial
sector which would otherwise be under-represented in the Social Index.
The weightings of stocks in the Social Index are based on each stock's
relative total market capitalization, (i.e., market price per share times the
number of shares outstanding.) Because of this weighting, as of July 31, 1998
approximately 45% of the Social Index was comprised of the 20 largest companies
in that Index.
The Index Portfolio intends to readjust its securities holdings
periodically such that those holdings will correspond, to the extent reasonably
practicable, to the Social Index both in terms of composition and weighting. The
timing and extent of adjustments in the holdings of the Index Portfolio, and the
extent of the
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correlation of the holdings of the Index Portfolio with the Social
Index, will reflect the Index Portfolio's submanager's judgment as to the
appropriate balance as between the goal of correlating its holdings with the
composition of the Social Index and the goals of minimizing transaction costs
and keeping sufficient reserves available for anticipated redemptions of shares.
To the extent practicable, the Index Portfolio will seek a correlation between
the weightings of securities held by the Index Portfolio to the weightings of
the securities in the Social Index of 0.95 or better. The Board of Trustees of
the Index Portfolio will receive and review, at least quarterly, a report
prepared by the Submanager comparing the performance of the Index Portfolio with
that of the Social Index, and comparing the composition and weighting of the
Index Portfolio's holdings with those of the Social Index, and will consider
what action, if any, should be taken in the event of a significant variation
between the performance of the Equity Fund or the Index Portfolio, as the case
may be, and that of the Social Index, or between the composition and weighting
of the Index Portfolio's securities holdings with those of the stocks comprising
the Social Index. If the correlation between the weightings of securities held
by the Index Portfolio and the weightings of the stocks in the Social Index
falls below 0.95, the Board of Trustees of the Index Portfolio will review, with
the Submanager of the Index Portfolio methods for increasing such correlation,
such as through adjustments in securities holdings of the Index Portfolio. As of
July 31, 1998, the correlation between the weightings of securities held by the
Index Portfolio and the weightings of the stocks in the Social Index was 0.99.
To the extent practicable, the Index Portfolio will attempt to be fully
invested.
Securities Subject to Taxation: With respect to stocks of foreign
issuers, the Index Portfolio does not purchase securities which the Index
Portfolio believes, at the time of purchase, will be subject to exchange
controls or foreign withholding taxes; however, there can be no assurance that
such laws may not become applicable to certain of the Index Portfolio's
investments. In the event unforeseen exchange controls or foreign withholding
taxes are imposed with respect to any of the Index Portfolio's investments, the
effect may be to reduce the income received by the Index Portfolio on such
investments.
Rule 144A Securities: Although neither the Equity Fund nor the Index
Portfolio has any current intention to do so, each may invest in securities
which may be resold pursuant to Rule 144A under the Securities Act of 1933, as
amended (the "1933 Act").
Option Contracts: Although it has no current intention to do so, the
Index Portfolio may in the future enter into certain transactions in stock
options for the purpose of hedging against possible increases in the value of
securities which are expected to be purchased by the Index Portfolio or possible
declines in the value of securities which are expected to be sold by the Index
Portfolio. Generally, the Index Portfolio would only enter into such
transactions on a short-term basis pending readjustment of its holdings of
underlying stocks.
The purchase of an option on an equity security provides the holder
with the right, but not the obligation, to purchase the underlying security, in
the case of a call option, or to sell the underlying security, in the case of a
put option, for a fixed price at any time up to a stated expiration date. The
holder is required to pay a non-refundable premium, which represents the
purchase price of the option. The holder of an option can lose the entire amount
of the premium, plus related transaction costs, but not more. Upon exercise of
the option, the holder is required to pay the purchase price of the underlying
security in the case of a call option, or deliver the security in return for the
purchase price in the case of a put option.
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Prior to exercise or expiration, an option position may be terminated
only by entering into a closing purchase or sale transaction. This requires a
secondary market on the exchange on which the position was originally
established. While the Index Portfolio would establish an option position only
if there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular option contract at
any specific time. In that event, it may not be possible to close out a position
held by the Index Portfolio, and the Index Portfolio could be required to
purchase or sell the instrument underlying an option, make or receive a cash
settlement or meet ongoing variation margin requirements. The inability to close
out option positions also could have an adverse impact on the Index Portfolio's
ability effectively to hedge its portfolio.
Each exchange on which option contracts are traded has established a
number of limitations governing the maximum number of positions which may be
held by a trader, whether acting alone or in concert with others. The investment
adviser of the Index Portfolio does not believe that these trading and position
limits would have an adverse impact on the possible use of hedging strategies by
the Index Portfolio.
Short Sales: Although it has no current intention to do so, the Index
Portfolio may make short sales of securities or maintain a short position, if at
all times when a short position is open the Index Portfolio owns an equal amount
of such securities, or securities convertible into such securities.
BALANCED FUND AND EQUITY FUND
Foreign Securities Diversification of assets on a global basis
decreases the degree to which events in any one country, including the United
States, will affect an investor's entire investment holdings. In the period
since World War II, many leading foreign economies have grown more rapidly than
the United States economy, providing investment opportunities, although there
can be no assurance that this will be true in the future. As with any long-term
investment, the value of shares when sold may be higher or lower than when
purchased.
Investors should recognize that investing in foreign securities
involves certain risk factors, including those set forth below, which are not
typically associated with investing in United States securities and which may
affect the Funds' performance favorably or unfavorably. Many foreign stock
markets, while growing in volume of trading activity, have substantially less
volume than the New York Stock Exchange, and securities of some foreign
companies are less liquid and more volatile than securities of domestic
companies. Similarly, volume and liquidity in most foreign bond markets is less
than that in the United States market and at times, volatility of price can be
greater than in the United States. Further, foreign markets have different
clearance and settlement procedures and in certain markets there have been times
when settlements have been unable to keep pace with the volume of securities
transactions making it difficult to conduct such transactions. Delays in
settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems either could result in losses to a Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. Fixed commissions on some foreign stock exchanges
are generally higher than negotiated commissions on U.S. exchanges, although the
Funds will endeavor to achieve the most favorable net results on portfolio
transactions. Further, the Funds may encounter difficulties or be unable to
pursue legal remedies and obtain judgment in foreign courts. There is generally
less government supervision and regulation of business and
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industry practices, stock exchanges, brokers and listed companies than in the
United States. It may be more difficult for the Funds' agents to keep currently
informed about corporate actions such as stock dividends or other matters which
may affect the prices of portfolio securities. Communications between the United
States and foreign countries may be less reliable than within the United States,
thus increasing the risk of delayed settlements of portfolio transactions or
loss of certificates for portfolio securities. In addition, with respect to
certain foreign countries, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic
developments which could affect United States investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the United States economy in such respects as growth of gross national product,
rate of inflation, capital reinvestment, resource self-sufficiency and balance
of payments position. The investment advisers seek to mitigate the risks
associated with the foregoing considerations through diversification and
continuous professional management.
The Funds may invest in sponsored and unsponsored American Depository
Receipts (ADRs) and, in the case of the Balanced Fund, Global Depository
Receipts (GDRs). ADRs are receipts typically issued by a U.S. bank or trust
company evidencing ownership in the underlying securities. Transactions in these
securities may not necessarily be settled in the same currency as transactions
in the securities into which they represent. Generally ADRs, in registered form,
are designed for use in U.S. securities markets.
Risks of Specialized Investment Techniques Abroad The above described
specialized investment techniques, when conducted abroad, may not be regulated
as effectively as in the United States; may not involve a clearing mechanism and
related guarantees; and are subject to the risk of governmental actions
affecting trading in, or the prices of, foreign securities. The value of such
positions also could be adversely affected by (i) other complex foreign
political, legal and economic factors, (ii) lesser availability than in the
United States of data on which to make trading decisions, (iii) delays in the
Funds' ability to act upon economic events occurring in foreign markets during
nonbusiness hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) lesser trading volume.
Lending of Portfolio Securities Each Fund and the Index Portfolio may
lend their securities to brokers, dealers and financial institutions, provided
(1) the loan is secured continuously by collateral, consisting of U.S.
Government securities or cash or letters of credit, which is marked to the
market daily to ensure that each loan is fully collateralized at all times; (2)
the loan may be called at any time and the return of the securities loaned
obtained within three business days; (3) each Fund or the Index Portfolio, as
the case may be, will receive any interest or dividends paid on the securities
loaned; and (4) the aggregate market value of securities loaned will not at any
time exceed 30% of the total assets of the Funds or the Index Portfolio, as the
case may be.
Each Fund and the Index Portfolio will earn income for lending their
securities either in the form of fees received from the borrower of the
securities or in connection with the investment of cash collateral in short-term
money market instruments. Loans of securities involve a risk that the borrower
may fail to return the securities or may fail to provide additional collateral.
In connection with lending securities, the Funds and the Index
Portfolio may pay reasonable finders, administrative and custodial fees. No such
fees will be paid to any person if it or any of its affiliates is affiliated
with the Funds, the Index Portfolio, the investment adviser of the Funds or
Index Portfolio, the investment subadviser of the Balanced Fund or the
investment manager of the Index Portfolio.
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At the present time, the Balanced Fund has no intention to loan
securities worth more than 5% of the Fund's assets. Although the Index Portfolio
reserves the right to lend its securities, it has no current intention of doing
so in the foreseeable future. The Equity Fund will not lend its securities.
HISTORY OF THE GREEN CENTURY FUNDS AND
GREEN CENTURY CAPITAL MANAGEMENT
SHAREHOLDER ACTIVISM
While the companies in the portfolios of the Green Century Balanced
Fund and the Index Portfolio must meet basic standards for corporate
environmental responsibility, some still have room for improvement. In such
cases, Green Century may enter into dialogue with those companies or file a
shareholder resolution to initiate improvement. In addition, the Green Century
Balanced Fund may hold small positions in companies which do not meet the Fund's
environmental criteria for the express purpose of enabling the Fund to advocate
for changes in irresponsible corporate behavior. Since shareholder advocacy is
critical to Green Century's mission of promoting greater corporate environmental
responsibility, Green Century will continue to file additional shareholder
resolutions and work with other concerned environmentally conscious investors.
The following is a history of Green Century's shareholder activism as of October
15, 1998.
CERES -- Green Century Capital Management has been involved with CERES, the
Coalition of Environmentally Responsible Economies, created in 1989 to spur
corporations to better their environmental behavior. The CERES Principles
establish comprehensive corporate environmental standards and disclosure
requirements. Companies that endorse the CERES Principles back up their pledges
with concrete information, publicly reported in the CERES Report. Green Century
Capital Management's participation in CERES has enabled it to join in
negotiations with various corporations, which have ranged from Aveda and Ben &
Jerry's to General Motors and Sunoco, and help increase the pressure for change.
Green Century Capital Management staff also spoke at the May 1993 PepsiCo annual
shareholders meeting in favor of that company's endorsement of the CERES
Principles.
In June of 1997, Green Century co-sponsored a resolution at Thermo
Electron, urging the company to endorse the CERES Principles. The resolution won
4.5 percent of the vote, sufficient to allow the resolution's filers to re-file
next year and to continue to press the company to endorse the CERES Principles.
PEPSICO --In November of 1993, the Balanced Fund filed a shareholder resolution
at Pepsi Co. to spur the corporation to further improve its environmental
programs and limit its active opposition to environmental protection measures
such as recycling campaigns and efforts to pass state and national Bottle Bill
legislation. The vote was held at the May 1994 annual shareholders meeting at
which Green Century Capital Management staff made a presentation in support of
the resolution. The resolution received 43.8 million votes, equal to 8.45% of
the votes cast on the resolution. This was a strong first showing, sending a
message to PepsiCo management about the growing shareholder concern for the
environment.
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In 1995, PepsiCo came to the negotiating table with Green Century,
apparently wishing to avoid the negative publicity that another shareholder
resolution involving PepsiCo's opposition to the bottle bill could create. The
company agreed to conduct a comprehensive study of its environmental policies
and devise a set of principles designed to guide company-wide action. PepsiCo
also agreed to discontinue the use of disposable shipping containers in favor of
plastic shells that it will reuse. The company also committed to manufacture a
new aluminum lid that will save 25 million pounds of aluminum per year.
GENERAL MILLS -- In July of 1994, Green Century Capital Management learned that
General Mills had allowed the manufacture and distribution of 50 million boxes
of cereal that had been made from oats treated with an illegal pesticide. Though
General Mills recalled the contaminated cereal, Green Century Capital Management
wrote to General Mills CEO H. Brewster Atwater requesting that the company more
closely monitor its food manufacturing. Mr. Atwater responded by outlining the
steps the company would take to prevent similar mishaps.
INTEL -- In 1994 the Balanced Fund joined forces with the Jessie Smith Noyes
Foundation in filing a shareholder resolution that would require Intel, an
electronics producer, to make publicly available information which would allow
public assessment of its facilities' environmental and safety hazards. The
resolution was in response to a report by the Southwest Organizing Project which
states that Intel's Rio Rancho plant in New Mexico would require amounts of
water exceeding local capacity. While the resolution did not pass, it did move
Intel President Andrew Grove to initiate a long sought after dialogue with
Noyes' President Stephen Viederman.
The following year, the Balanced Fund and Noyes filed another
shareholder resolution with Intel, prompting Intel to revise its Environmental,
Health and Safety Policy to include sharing information on the company's
environmental and safety hazards with the public. Further, Intel agreed that the
"communities" with which it will share information will include all community
groups and not just the elected officials and local advisory panels set up by
Intel to which the company had offered limited information in the past. As a
result, Noyes, with the support of Green Century and the other co-filers,
withdrew the shareholders resolution. The resolution's proponents and local
community organizations will continue to monitor Intel's implementation of the
new policy.
SECURITIES AND EXCHANGE COMMISSION -- In February of 1995, Green Century Capital
Management staff corresponded with SEC Commissioner Arthur Levitt to urge him
not to allow the SEC to restrict shareholder activism, and with Senator John
Kerry to urge him to consider the rights of shareholders to file resolutions
when considering two pending nominations to the Securities and Exchange
Commission ("SEC").
In September 1997, the SEC proposed new rules that Green Century
Capital Management believed would have disenfranchised shareholder activists by
severely limiting the shareholder resolution process. Green Century Capital
Management formally opposed the new rules by registering concerns with SEC
Commissioner Arthur Levitt and by filing comments with SEC Secretary Jonathon
Katz. Green Century Capital Management joined a diverse coalition of 340
organizations opposed to the new proposed rules. Coalition partners included
environmental organizations such as the National Wildlife Federation and the
Sierra Club. Green Century Capital Management staff also met with the staff of
U.S. House Commerce Committee
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members, urging members to oppose the proposed rules. In a victory for
shareholder activists, in May of 1998 the SEC adopted final regulations that
preserved the shareholder resolution process.
TIME WARNER -- In 1992, Time Warner, Inc. committed to convert Time magazine to
chlorine-free paper. The company has not only not done so as of yet and has
resisted requests to report on its plans to convert.
In 1995, Green Century Capital Management staff wrote Time President
Reginald Brack to request that Time convert to chlorine free paper in its
publications. The Balanced Fund then joined as a co-filer in a shareholder
resolution at Time which asked the Time Board of Directors to report on its
plans to convert to the use of chlorine-free paper. The resolution was presented
at Time Warner's annual shareholder meeting by Green Century Trustee Wendy
Wendlandt on May 16, 1996 and won a yes vote of nearly 18 million shares, or
5.5% of the votes cast. This was enough to persuade Time Warner CEO Gerald Levin
to state that he welcomed continuing dialogue with the resolution's proponents
and to qualify the resolution to be introduced the following year.
In May of 1997 the resolution was voted on a second time and did not
garner enough votes to allow us to re-introduce it in 1998. Green Century will
continue to work with our co-filers and others on alternative strategies.
PROCTER & GAMBLE - On May 1, 1998, the Equity Fund, on behalf of the Index
Portfolio, joined with other shareholders of Procter & Gamble to file a
resolution with the company. It is Green Century's belief that Procter &
Gamble's use of chlorinated bleached paper perpetuates the release of
unnecessary toxins that are harmful to human and environmental health. The
resolution pressed the company to report to the shareholders on steps it can
take to use chlorine-free pulp and paper as well as on its plans for a long-term
phase out of chlorinated compounds in all of its products. The resolution was
presented at Procter & Gamble's October 13, 1998 annual meeting. While the
resolution did not pass, it garnered enough votes to allow us to re-introduce it
in 1999.
ARCO - In September 1998, the Equity Fund wrote Mike Bowlin, the CEO of Atlantic
Richfield (ARCO), to ask the company to refrain from drilling in the Coastal
Plain, 1002 Area, of the Arctic National Wildlife Refuge in Alaska. The Arctic
National Wildlife Refuge is the only conservation area in the nation that
provides a complete range of Arctic and sub-Arctic ecosystems balanced with a
wide variety of wildlife including large populations of caribou, muskoxen,
brown, black and polar bears, wolves, Dall sheep, snow geese and thousand of
other migratory birds. The Coastal Plain is the biological heart of the Refuge,
to which a vast herd of caribou migrate each spring to give birth. The
Department of the Interior has concluded that oil development in the Coastal
Plain would result in major adverse impacts on this caribou population and
Interior Secretary Bruce Babbitt has likened drilling for oil in the Refuge to
damming up the Grand Canyon. The 125-mile long Coastal Plain is the only section
of Alaska's 1100-mile long North Slope not open for oil and gas drilling. In
fact, oil companies already have access to 95 percent of Alaska's North Slope.
Most recent federal estimates have predicted that only 2.6 million barrels of
oil would be economically recoverable in the Coastal Plain - less than 5 months
worth of use in the United States.
Green Century will work with other concerned investors and
environmental organizations such as U.S.PIRG to prevent the destruction of this
precious resource. Barring a positive response from Mr. Bowlin, the Equity Fund,
on behalf of the Index Portfolio, will file a shareholder resolution in October
1998 requesting that the company voluntarily refrain from drilling in 1002 Area
of the Refuge. Green Century Capital Management
20
<PAGE> 66
may also look for opportunities to organize similar shareholder resolutions with
other oil companies, such as Chevron, who wish to drill in the Arctic National
Wildlife Refuge.
GREEN CENTURY EQUITY FUND PROXY VOTES - Invested in a portfolio that owns the
stocks of 400 companies, the Equity Fund's portfolio has opportunities to vote
its shares on many environmental and social issues. Key among these in recent
years was the movement to encourage corporations to endorse the CERES
Principles. The Equity Fund's manager supported shareholder resolutions
advocating CERES endorsements at several companies, including American Express
Company and Kellogg Company.
INVESTMENT RESTRICTIONS
Each Fund and the Index Portfolio is operated under the following
investment restrictions which are deemed fundamental policies and may be changed
with respect to a Fund or the Index Portfolio only with the approval of the
holders of a "majority of the outstanding voting securities" of the Fund or the
Index Portfolio which, as defined in the 1940 Act and as used herein, means the
vote of (i) 67% or more of the Fund's shares or the Index Portfolio's interests
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund or interests in the Index Portfolio are present in person or
represented by proxy; or (ii) more than 50% of the Fund's outstanding shares or
the Index Portfolio's outstanding interests whichever is less. Whenever the
Equity Fund is requested to vote on a matter pertaining to the Index Portfolio,
the Trustees of the Equity Fund will, in their discretion and in accordance with
applicable law, either seek instructions from shareholders of the Equity Fund
and vote the shares only in accordance with such instructions, or vote the
shares held by the Equity Fund in the same proportion as the vote of all other
holders of shares in the Index Portfolio.
BALANCED FUND
The Trust, on behalf of the Balanced Fund, may not:
(1) borrow money or mortgage or hypothecate assets of the Fund, except
that in an amount not to exceed 1/3 of the current value of the Fund's net
assets, it may borrow money as a temporary measure for extraordinary or
emergency purposes and enter into reverse repurchase agreements or dollar roll
transactions, and except that it may pledge, mortgage or hypothecate not more
than 1/3 of such assets to secure such borrowings (it is intended that money
would be borrowed only from banks and only either to accommodate requests for
the redemption of shares while effecting an orderly liquidation of portfolio
securities or to maintain liquidity in the event of an unanticipated failure to
complete a portfolio security transaction or other similar situations) or
reverse repurchase agreements, provided that collateral arrangements with
respect to options and futures, including deposits of initial deposit and
variation margin, are not considered a pledge of assets for purposes of this
restriction and except that assets may be pledged to secure letters of credit
solely for the purpose of participating in a captive insurance company sponsored
by the Investment Company Institute; for additional related restrictions, see
clause (i) under the caption "Non-Fundamental State and Federal Restrictions"
below. (As an operating policy, the Fund may not engage in reverse repurchase
agreements.);
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<PAGE> 67
(2) purchase any security or evidence of interest therein on margin,
except that such short-term credit as may be necessary for the clearance of
purchases and sales of securities may be obtained and except that deposits of
initial deposit and variation margin may be made in connection with the
purchase, ownership, holding or sale of futures;
(3) underwrite securities issued by other persons except insofar as the
Trust or the Fund may technically be deemed an underwriter under the 1933 Act in
selling a portfolio security;
(4) make loans to other persons except (a) through the lending of the
Fund's portfolio securities and provided that any such loans not exceed 30% of
the Fund's total assets (taken at market value), (b) through the use of
repurchase agreements or the purchase of short-term obligations and provided
that not more than 10% of the Fund's net assets will be invested in repurchase
agreements maturing in more than seven days, or (c) by purchasing a portion of
an issue of debt securities of types commonly distributed privately to financial
institutions, for which purposes the purchase of short-term commercial paper or
a portion of an issue of debt securities which are part of an issue to the
public shall not be considered the making of a loan;
(5) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts
(except futures and option contracts) in the ordinary course of business (the
Trust may hold and sell, for the Fund's portfolio, real estate acquired as a
result of the Fund's ownership of securities);
(6) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue and equal in amount
to, the securities sold short, and unless not more than 10% of the Fund's net
assets (taken at market value) is represented by such securities, or securities
convertible into or exchangeable for such securities, at any one time (the Trust
has no current intention to engage in short selling);
(7) concentrate its investments in any particular industry (excluding
U.S. Government securities), but if it is deemed appropriate for the achievement
of the Fund's investment objective, up to 25% of its total assets may be
invested in any one industry, except that positions in futures or option
contracts shall not be subject to this restriction; and
(8) issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, provided that collateral arrangements with
respect to options and futures, including deposits of initial deposit and
variation margin, are not considered to be the issuance of a senior security for
purposes of this restriction.
Non-Fundamental Restrictions--In order to comply with certain federal
statutes and policies the Trust, on behalf of the Balanced Fund, will not as a
matter of operating policy:
(1) purchase securities issued by any investment company if as a
result thereof (a) more than 10% of the Fund's total assets (taken
at the greater of cost or market value) to be invested in the
securities of such issuers; (b) more that 5% of the Fund's total
assets (taken at the greater of cost or market value) to be
invested in any one investment company; or (c) more than 3% of the
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<PAGE> 68
outstanding voting securities of any such issuer to be held for
the Fund (the Trust has no current intention of investing the
assets of the Fund in other investment companies);
(2) invest more than 15% of the net assets of the Fund (taken at the
greater of cost or market value) in securities that are illiquid
or not readily marketable;
(3) with respect to 75% of the total assets of the Fund, invest more
than 5% of the total assets of the Fund in the securities or
obligations of any one issuer (other than U.S. Government
obligations) or acquire more than 10% of the outstanding voting
securities of any one issuer;
These policies are not fundamental and may be changed without
shareholder approval in response to changes in the various state and federal
requirements.
EQUITY FUND AND INDEX PORTFOLIO
Neither the Equity Fund nor the Index Portfolio may:
(1) borrow money, except that as a temporary measure for extraordinary
or emergency purposes either the Fund or the Index Portfolio may borrow an
amount not to exceed 1/3 of the current value of the net assets of the Fund or
the Index Portfolio, respectively, including the amount borrowed (moreover,
neither the Fund nor the Index Portfolio may purchase any securities at any time
at which borrowings exceed 5% of the total assets of the Fund or the Index
Portfolio, respectively, taken in each case at market value) (it is intended
that the Index Portfolio would borrow money only from banks and only to
accommodate requests for the withdrawal of all or a portion of a beneficial
interest in the Index Portfolio while effecting an orderly liquidation of
securities);
(2) purchase any security or evidence of interest therein on margin,
except that either the Fund or the Index Portfolio may obtain such short-term
credit as may be necessary for the clearance of purchases and sales of
securities and except that either the Fund or the Index Portfolio may make
deposits of initial deposit and variation margin in connection with the
purchase, ownership, holding or sale of options;
(3) write any put or call option or any combination thereof, provided
that this shall not prevent (i) the purchase, ownership, holding or sale of
warrants where the grantor of the warrants is the issuer of the underlying
securities, or (ii) the purchase, ownership, holding or sale of options on
securities;
(4) underwrite securities issued by other persons, except that the Fund
may invest all or any portion of its assets in the Index Portfolio and except
insofar as either the Fund or the Index Portfolio may technically be deemed an
underwriter under the 1933 Act in selling a security;
(5) make loans to other persons except (a) through the lending of
securities held by either the Fund or the Index Portfolio and provided that any
such loans not exceed 30% of its total assets (taken in each case at market
value), or (b) through the use of repurchase agreements or the purchase of
short-term obligations and provided that not more than 10% of its net assets
will be invested in repurchase agreements maturing in more than seven days; for
additional related restrictions, see paragraph (6) immediately following;
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<PAGE> 69
(6) invest in securities which are subject to legal or contractual
restrictions on resale (other than repurchase agreements maturing in not more
than seven days and other than securities which may be resold pursuant to Rule
144A under the 1933 Act if the Board of Trustees determines that a liquid market
exists for such securities) if, as a result thereof, more than 10% of its net
assets (taken at market value) would be so invested (including repurchase
agreements maturing in more than seven days), except that the Fund may invest
all or any portion of its assets in the Index Portfolio;
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the Fund and Index Portfolio reserve the
freedom of action to hold and to sell real estate acquired as a result of the
ownership of securities by the Fund or the Index Portfolio);
(8) make short sales of securities or maintain a short position, unless
at all times when a short position is open the Fund or the Index Portfolio, as
applicable, owns an equal amount of such securities or securities convertible
into or exchangeable, without payment of any further consideration, for
securities of the same issue as, and equal in amount to, the securities sold
short, and unless not more than 5% of the Fund's or the Index Portfolio's, as
applicable, net assets (taken in each case at market value) is held as
collateral for such sales at any one time;
(9) issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, except as appropriate to evidence a debt
incurred without violating paragraph (1) above;
(10) as to 75% of its assets, purchase securities of any issuer if such
purchase at the time thereof would cause more than 5% of the Index Portfolio's
or the Fund's, as applicable, assets (taken at market value) to be invested in
the securities of such issuer (other than securities or obligations issued or
guaranteed by the United States or any agency or instrumentality of the United
States), except that for purposes of this restriction the issuer of an option
shall not be deemed to be the issuer of the security or securities underlying
such contract and except that the Fund may invest all or any portion of its
assets in the Index Portfolio; and
(11) invest more than 25% of its assets in any one industry unless the
stocks in a single industry were to comprise more than 25% of the Social Index,
in which case the Index Portfolio or the Fund, as applicable, will invest more
than 25% of its assets in that industry, and except that the Fund may invest all
of its assets in the Index Portfolio.
Non-Fundamental Restrictions: In order to comply with certain federal
statutes and policies, the Portfolio will not, as a matter of operating policy,
purchase puts, calls, straddles, spreads and any combination thereof if the
value of its aggregate investment in such securities will exceed 5% of the
Portfolio's total assets at the time of such purchase.
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<PAGE> 70
This policy is not fundamental and may be changed by the Portfolio
without the approval of its investors in response to changes in federal
requirements.
Percentage Restrictions: If a percentage restriction or rating
restriction on investment or utilization of assets set forth above or referred
to in the Prospectus is adhered to at the time an investment is made or assets
are so utilized, a later change in percentage resulting from changes in the
value of the securities held by a Fund or the Index Portfolio or a later change
in the rating of a security held by a Fund or the Index Portfolio will not be
considered a violation of policy; provided that if at any time the ratio of
borrowings of a Fund to the net asset value of a Fund exceeds the ratio
permitted by Section 18(f) of the 1940 Act, a Fund will take the corrective
action required by Section 18(f).
TRUSTEES, OFFICERS AND ADVISORY BOARD
The Trustees and officers of the Trust and the Index Portfolio and
their principal occupations during the past five years (although their titles
may have varied during the period) are:
TRUSTEES OF THE TRUST
DAVID J. FINE (50) - Trustee of the Trust; Attorney, Dangel, Donlan &
Fine (since January, 1996); Attorney, Dangel & Fine (from August, 1993 to
January, 1996); Attorney, Fine, Halpern & Strassfeld (from July, 1991 to August,
1993).
DOUGLAS M. HUSID* (47) - Trustee of the Trust; President of the Trust;
Co-Managing Partner, Goulston & Storrs, P.C. (since October, 1991).
STEVEN KADISH (42) - Trustee of the Trust; Assistant Vice Chancellor
for Biologic Laboratories and Programs, University of Massachusetts Medical
Center (since June, 1997); Assistant Secretary for Administration and Finance,
Commonwealth of Massachusetts (from June, 1995 to June, 1997) Director of
Operations, Medicaid, Department of Public Welfare, Commonwealth of
Massachusetts (from July, 1992 to June, 1995); Deputy Director, Division of
Capital Planning and Operations, Commonwealth of Massachusetts (prior to July,
1992).
STEPHEN MORGAN (50) - Trustee of the Trust; President, EUA, Citizens
Conservation Services, Inc. (since January, 1995); Chief Operating Officer,
Citizens Conservation Corp. (from July, 1991 to January, 1995).
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<PAGE> 71
DOUGLAS H. PHELPS* (51) - Trustee of the Trust; Chair, Fund for Public
Interest Research (since May, 1983); President, Telefund, Inc. (since January,
1988).
C. WILLIAM RYAN (44) - Trustee of the Trust; Director, Brookline Tai
Chi (since March, 1992).
JAMES H. STARR (51) - Trustee of the Trust; Attorney, Starr and
Burgess, PC (since 1989); Director, Crested Butte Land Trust (since 1991).
WENDY WENDLANDT* (36) - Trustee of the Trust; Chairperson of the Board,
Earth Day 2000 (since February, 1991); Senior Staff, Fund for Public Interest
Research (since November, 1989).
OFFICERS OF THE TRUST
KRISTINA A. CURTIS (46) - Treasurer of the Trust; Treasurer, Director
and Chief Operating Officer, Green Century Capital Management, Inc. (since July,
1991).
ADRIENNE M. SHISHKO (35) - Secretary and Assistant Treasurer of the
Trust; General Counsel, Vice President - Marketing and Director, Green Century
Capital Management, Inc. (from July, 1991 to March, 1996).
TRUSTEES OF THE INDEX PORTFOLIO
EMILY W. CARD (55) - 1158 26th Street, #450, Santa Monica, California
90403; Attorney; President, The Card Group, Inc..
AMY L. DOMINI* (47) - 230 Congress Street, Boston, Massachusetts,
02110; Chair, President and Trustee of the Index Portfolio, the Domini Social
Equity Fund (since 1990) and the Domini Institutional Trust (since 1996);
Managing Principal of Domini Social Investments, LLC (since 1997); Officer of
KLD; Trustee, Loring, Wolcott & Coolidge (since 1987); Trustee, Episcopal Church
Pension Fund; Former Member, Governing Board, Interfaith Center on Corporate
Responsibility.
ALLEN M. MAYES (76) - P.O. Box 21222, Beaumont, Texas, 77720; Retired
Senior Associate General Secretary of the General Board of Pensions of the
United Methodist Church (since May, 1982); Director of Ministerial Services,
Texas Annual Conference, The United Methodist Church; Former Member of the Board
of Directors of Investor Responsibility Research Center; Member of Board of
Trustees of Wiley College (since November, 1969).
WILLIAM C. OSBORN (52) - 115 Buckminster Road, Brookline,
Massachusetts, 02146; Principal, Venture Investment Management Company LLC
(since 1996); Vice President and General Manager, TravElectric Services Corp.
(from 1993 to 1995); President, Environmental Technologies, Inc. (from 1990 to
1993); Director, Evergreen Solar, Inc. (since 1996); Director, Conservation
Services Group (since 1992).
KAREN PAUL (53) - 4050 Park Avenue, Miami, Florida 33133; Associate
Dean and Professor of Business Environment, Florida International University
(since 1991); Partner, Trinity Industrial Technology (since 1995); Director,
Center for Management in the Americas (since 1997); and Co-Director, Center for
Global Business (since 1998).
26
<PAGE> 72
TIMOTHY SMITH (55) - Interfaith Center for Corporate Responsibility,
475 Riverside Drive, Room 550, New York, New York 10115; Executive Director of
the Interfaith Center on Corporate Responsibility (since 1974); Trustee of the
Calvert New Africa Fund (since 1994).
FREDERICK C. WILLIAMSON, SR. (82) - Five Roger Williams Green,
Providence, Rhode Island 02904; Treasurer and Trustee, RIGHA (charitable
foundation supporting health care needs) since 1990; Chairman, Rhode Island
Historical Preservation and Heritage Commission (since 1995); Trustee, National
Parks and Conservation Association (1986-1997); Trustee of the National Park
Trust (since 1991); Advisor, National Parks and Conservation Association (since
1997).
*An "interested person" of the Trust or the Index Portfolio as that
term is defined in the 1940 Act.
OFFICERS OF THE INDEX PORTFOLIO**
CAROLE M. LAIBLE (34) - Secretary and Treasurer of the Index Portfolio
(since 1997); Financial Compliance Officer of Domini Social Investments LLC
(since 1997); Financial Compliance Officer of Fundamental Shareholder Services,
Inc. (1994-1997); Financial Compliance Officer and Secretary of investment
companies within Fundamental Family of Funds (1994-1997); General Service
Manager, McGladrey & Pullen LLP (certified public accountants) prior to 1994.
DAVID P. WIEDER (31) - Vice President of the Index Portfolio (since
1997); Managing Principal, Domini Social Investments LLC (since 1997); President
of Fundamental Shareholder Services, Inc.
SIGWARD M. MOSER (35) - Vice President of the Index Portfolio (since
1997); Managing Principal, Domini Social Investments LLC (since 1997); President
of Communications House International, Inc; Director of Financial Communications
Society.
PETER D. KINDER (52) - Vice President of the Index Portfolio; Member,
Domini Social Investments LLC (since 1997); Officer of KLD (since March, 1988).
STEVEN D. LYDENBERG (51) - 530 Atlantic Avenue, Boston, Massachusetts,
02210; Vice President of the Index Portfolio; Member, Domini Social Investments
LLC (since 1997); Director of Research of KLD (since January, 1990).
Unless otherwise indicated, the mailing address of all of the Trustees
and officers of the Trust is Green Century Funds, 29 Temple Place, Suite 200,
Boston, Massachusetts 02111. Unless otherwise indicated, the mailing address of
all the officers of the Index Portfolio is 11 West 25th Street, 7th Floor, New
York, New York 10010. Each of the officers also serve as officers of the Domini
Social Equity Fund and Domini Institutional Trust, other registered investment
companies which invest in the Index Portfolio. Each of the listed Trustees of
the Index Portfolio also serves as Trustees of the Domini Social Equity Fund and
the Domini Institutional Trust.
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<PAGE> 73
No Trustee of the Trust receives any compensation from the Trust, but
each Trustee who is not an "interested person" of the Trust is reimbursed for
any out-of-pocket expenses incurred in attending meetings of the Board of
Trustees or of any committee thereof. Each Trustee of the Index Portfolio who is
not otherwise affiliated with the Index Portfolio, receives an annual retainer
of $1000 from the Index Portfolio.
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<PAGE> 74
Trust Trustees
<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM FROM THE TRUST FOR
THE TRUST FOR THE THE FISCAL YEAR
YEAR ENDED JUNE 30, ENDED JUNE 30, 1998
1998 AND FOR THE ONE AND FOR THE ONE
MONTH PERIOD ENDED MONTH PERIOD ENDED
JULY 31, 1998 FOR JULY 31, 1998 FOR
THE BALANCED FUND THE BALANCED FUND
AND FOR THE YEAR AND FOR THE YEAR
ENDED ENDED
JULY 31, 1997 FOR JULY 31, 1997 FOR
THE EQUITY FUND THE EQUITY FUND
--------------- ---------------
<S> <C> <C>
David J. Fine, Trustee None None
Douglas M. Husid, None None
Trustee
Steven Kadish, Trustee None None
Stephen Morgan, Trustee None None
Douglas H. Phelps, None None
Trustee
C. William Ryan, None None
Trustee
James H. Starr, Trustee None None
Wendy Wendlandt, None None
</TABLE>
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<PAGE> 75
Trustee
Index Portfolio
Trustees
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM THE TRUST AND
COMPENSATION FROM THE INDEX PORTFOLIO
THE INDEX PORTFOLIO FOR THE YEAR ENDED
FOR THE YEAR ENDED JULY 31, 1998
JULY 31, 1998
<S> <C> <C>
Emily W. Card, Trustee $1,000 $1,000
Amy L. Domini, Chair, None None
President and Trustee
Allen M. Mayes, Trustee $1,000 $1,000
William C. Osborn, Trustee $1,000 $1,000
Karen Paul, Trustee $1,000 $1,000
Timothy Smith, Trustee $1,000 $1,000
Frederick C. Williamson, $1,000 $1,000
Trustee
</TABLE>
The Board of Trustees of the Trust has created an Advisory Board as a
resource with respect to the application and refinement of the Trust's
environmental criteria. The Advisory Board has no other power, authority or
responsibility with respect to the management of the Trust or the conduct of the
affairs of the Trust.
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<PAGE> 76
No member of the Advisory Board receives any compensation for his or her
services. The Advisory Board serves as a resource regarding the application and
refinement of the Funds' environmental criteria. They are:
<TABLE>
<S><C>
Joan Bavaria.......... President, FRANKLIN RESEARCH AND DEVELOPMENT CORPORATION;
Chairperson, CERES (Coalition for Environmentally Responsible Economies)
Hillel Gray........... Former Policy Director, NATIONAL ENVIRONMENTAL LAW CENTER
Denis Hayes........... Executive Director, BULLIT FOUNDATION; Organizer, EARTH DAY 1990 and
EARTH DAY 1970
Gene Karpinski........ Executive Director, U.S. PUBLIC INTEREST RESEARCH GROUP
Maureen Kirk.......... Executive Director, OREGON STATE PUBLIC INTEREST RESEARCH GROUP
Steven Rothstein...... President, ENVIRONMENTAL FUTURES, INC.
Andrew Savitz......... Director, COOPERS & LYBRAND: ENVIRONMENTAL ADVISORY SERVICES
Robert B. Zevin....... Former Senior Vice President and Economist, UNITED STATES TRUST COMPANY
</TABLE>
As of October 13, 1998 all Trustees and officers of the Trust as a
group owned less than 1% of the outstanding shares of each Fund. As of October
13, 1998, the following are the only persons known by the Trust to have more
than 5% of the outstanding shares of the Balanced or Equity Funds: Glyn Mills
Nominees (Lombard Street) Limited A/C 1781 owned 22.86% of the outstanding
shares of the Balanced Fund and National Financial Services Corporation owned
6.59% of the Balanced Fund. National Financial Services owned 15.52% of the
Equity Fund. Shareholders owning 25% or more of the outstanding shares of a Fund
may take actions without the approval of any other investor in that Fund.
INVESTMENT ADVISER AND MANAGER
BALANCED FUND
INVESTMENT ADVISER Under an Investment Advisory Agreement dated as of
August 13, 1991 (the Advisory Agreement") between the Trust, on behalf of the
Balanced Fund, and Green Century Capital Management, Inc. ("Green Century
Capital" or the "Adviser"), and subject to the general supervision of the
Trust's Trustees and in conformance with the respective stated policies of the
Balanced Fund, Green Century Capital provides general investment advice to the
Balanced Fund. Green Century Capital also helps the Trust design, and instructs
the Balanced Fund's investment subadviser as to how to implement the Trust's
environmental criteria.
The Advisory Agreement provides that it will continue indefinitely if
its continuance is specifically approved at least annually by the vote of the
holders of a majority of the outstanding voting securities of the Fund or by
vote of a majority of the Trust's Board of Trustees; and provided further that
such continuance is also approved annually by the vote of a majority of the
Trustees who are not parties to the Advisory Agreement or interested persons of
the Trust's Adviser, cast in person at a meeting called for the purpose of
voting on such approval. The Advisory Agreement may be terminated at any time
without payment
31
<PAGE> 77
of any penalty, by the Trust's Board of Trustees or by a vote of the majority of
the outstanding voting securities of the Fund upon 60 days' prior written notice
to the Adviser and by the Adviser upon 60 days' prior written notice to the
Trust. The Advisory Agreement provides that it shall terminate automatically in
the event of its assignment.
32
<PAGE> 78
The Advisory Agreement further provides that absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties under the Advisory Agreement on the part of the Adviser, the Adviser
shall not be subject to liability to the Trust or to any shareholder of the Fund
for any act or omission in the course of, or in connection with, rendering
services under the Advisory Agreement or for any losses that may be sustained in
the purchase, holding of sale of any security. The Advisory Agreement also
provides that the services of the Adviser are not deemed exclusive and that the
Adviser may render similar services to others.
Under the Advisory Agreement, the Trust has agreed that the names
"Green Century Funds" and "Green Century" are proprietary to the Adviser.
As compensation for the services rendered and obligations assumed by
the Adviser, the Trust pays to the Adviser monthly a fee equal on an annual
basis to 0.75% of the average daily net assets of the Balanced Fund, computed
and accrued daily. For the fiscal years ended June 30, 1996, 1997 and 1998, the
Balanced Fund accrued advisory fees aggregating $51,494, $67,209 and $104,833,
respectively. For the one month period ended July 31, 1998, the Balanced Fund
accrued advisory fees aggregating $10,301.
INVESTMENT SUBADVISER Green Century Capital has entered into an
Investment Subadvisory Agreement on behalf of the Balanced Fund (an "Subadvisory
Agreement") with Winslow Management Company ("Winslow" or the "Subadviser")
dated as of July 1, 1995. It is Winslow's responsibility under the direction of
the Adviser, to make the day-to-day investment decisions for the Balanced Fund
and to place the purchase and sale orders for the portfolio transactions of the
Balanced Fund consistent with the environmental criteria established by the
Adviser and subject to the general direction of the Adviser. Winslow is a
separate operating division of Eaton Vance Management ("Eaton Vance"), a
registered investment adviser. Winslow manages equity and debt investments in
environmental and environmentally responsible companies for its clients. Winslow
has been a division of Eaton Vance since June 30, 1993 and formerly was an
independent company. As of September 30, 1998, Winslow had over $80 million in
assets under management.
The Subadvisory Agreement provides that it will continue indefinitely
if its continuance is approved at least annually by vote of the holders of a
majority of the outstanding voting securities of the Fund or by vote of a
majority of the Trust's Board of Trustees; and further provided that such
continuance is also approved annually by the vote of a majority of the Trustees
who are not parties to the Subadvisory Agreement or interested persons of the
Subadviser, cast in person at a meeting called for the purpose of voting on such
approval. The Subadvisory Agreement will terminate automatically in the event of
the termination of the Advisory Agreement or in the event of its assignment. In
addition, the Subadvisory Agreement may be terminated at any time without
payment of any penalty, by the Trust's Board of Trustees or by a vote of the
majority of the outstanding voting securities of the Fund upon 60 days' prior
written notice to the Subadviser and by the Subadviser upon 60 days' prior
written notice to the Trust.
The Subadvisory Agreement further provides that absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties under the Subadvisory Agreement on the part of the Subadviser, the
Subadviser shall not be subject to liability to the Trust or to any shareholder
of the Fund for any act or omission in the course of, or connected with,
rendering services thereunder or for any losses that may be sustained in the
purchase, holding of sale of any security. The Subadvisory Agreement also
provides that
33
<PAGE> 79
the services of the Subadviser are not deemed exclusive and that the Subadviser
may render similar services to others.
For its services, Green Century Capital has agreed to pay Winslow a fee
equal on an annual basis to 0.40% of the value of the average daily net assets
of the Balanced Fund (the "Base Fee"), such fee shall be accrued daily and
payable at the end of each quarter, and subject to the following adjustment: for
each calendar quarter commencing one year after Winslow begins rendering
services hereunder, the Base Fee shall be adjusted as follows: (i) if the Fund's
total return (calculated in accordance with Rule 482 of Regulation C promulgated
under the 1933 Act) for the immediately prior twelve month period ("Fund Total
Return") is greater than the total return of the Lipper Directors' Analytical
Data Balanced Fund Average (the "Index Total Return") plus 1%, then the Base Fee
for such quarter shall be increased by an amount which is the product of .025%
multiplied by the average daily net assets for such year, (ii) if the Fund Total
Return exceeds the Index Total Return plus 2%, then the Base Fee for such
quarter shall be increased by an amount which is the product of .05% multiplied
by the average daily net assets for such year, (iii) if the Fund Total Return is
less than the Index Total Return minus 1%, then the Base Fee for such quarter
shall be decreased by an amount which is the product of .025% multiplied by the
average daily net assets for such year, or (iv) if the Fund Total Return is less
than the Index Total Return minus 2%, then the Base Fee for such quarter shall
be reduced by an amount which is the product of .05% multiplied by the average
daily net assets for such year.
For Example:
If, on an annual basis, the Balanced Fund's
Total Return differs from the Index Total Then the Adviser will
Return by: pay Winslow an annual fee of:
positive 2.00% or more 0.60%
positive 1.00% to positive 1.99% 0.50%
negative 0.99% to positive 0.99% 0.40%
negative 1.00% to negative 1.99% 0.30%
negative 2.00% or more 0.20%
The Board of Trustees believes that the performance adjustments are
appropriate although not within the 10 percentage points per year range
suggested by Release No. 7113 under the 1940 Act. In the event the Lipper
Directors' Analytical Data Balanced Fund Average ceases to become available or
the Trustees determine such Index Total Return is no longer a reasonable
performance benchmark, the Trustees may substitute another performance
benchmark.
For the fiscal years ended June 30, 1996, 1997 and 1998 , the Adviser paid
Winslow subadvisory fees aggregating $27,464, $37,023 and $60,011, respectively.
For the one-month period ended July 31, 1998, the Advisor paid Winslow advisory
fees aggregating $5,491.
Prior to July 1, 1995, Scudder, Stevens & Clark served as investment subadviser
to the Balanced Fund. For the fiscal year ended June 30, 1995, the Adviser paid
Scudder, Stevens & Clark subadvisory fees of $7,670.
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EQUITY FUND AND INDEX PORTFOLIO
INVESTMENT ADVISER The Equity Fund has not retained the services of an
investment adviser or investment subadviser since the Fund seeks to achieve its
investment objective by investing all its assets in the Index Portfolio. The
Index Portfolio has retained the services of Domini Social Investments LLC
("DSI") as investment manager and Mellon Equity Associates ("Mellon Equity") as
submanager for the Index Portfolio.
INVESTMENT MANAGER Pursuant to a Management agreement dated and
effective as of October 22, 1997 (the "Management Agreement") between the Index
Portfolio and DSI, DSI provides investment supervisory and administrative
services to the Index Portfolio. The services provided by DSI 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.
The Management Agreement provides that it shall remain in force until
October 22, 1999, on which date it will terminate unless its continuance after
October 22, 1999 is specifically approved at least annually (i) by the vote of a
majority of the Trustees of the Index Portfolio who are not "interested persons"
of the Index Portfolio or of DSI at a meeting specifically called for the
purpose of voting on such approval, and (ii) by the Board of Trustees of the
Index Portfolio or by vote of a majority of the outstanding voting securities of
the Index Portfolio. The Management Agreement also provides that it may be
terminated at any time without the payment of any penalty by the Trustees or by
the vote of a majority of the outstanding voting securities of the Index
Portfolio, or by DSI, in each case on not more than 60 days' nor less than 30
days' written notice to the other party. The Management Agreement shall
automatically terminate in the event of its assignment.
Pursuant to the Management Agreement, DSI shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of securities
transactions for the Index Portfolio, except for willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties thereunder. The Management Agreement
further provides that the services of DSI to the Index Portfolio are not deemed
to be exclusive, DSI being free to render investment advisory, administrative
and/or other services to others.
For its services under the Management Agreement, DSI receives a fee
equal on an annual basis to 0.20% of the Index Portfolio's average daily net
assets, except that for the first year of the Management Agreement, the fee
payable to DSI was reduced by the amount, if any, by which the total ordinary
operating expenses of the Index Portfolio (excluding brokerage fees and
commissions, interest, taxes, and any other extraordinary expenses) exceed, on
an annual basis, 0.20% of the average daily net assets of the Index Portfolio.
DSI is currently continuing this waiver on a voluntary basis. From October 22,
1997 through July 31, 1998, DSI received management fees of $724,004.
Prior to October 22, 1997, the investment adviser to the Index
Portfolio was Kinder, Lydenberg, Domini & Co., Inc. ("KLD"). The services
provided by KLD consisted of the determination of the stocks to be included in
the Social Index and evaluating, in accordance with KLD's environmental and
social criteria, debt securities which may be purchased by the Index Portfolio.
KLD furnished at its own expense all facilities and personnel necessary in
connection with providing these services. For its services under its investment
advisory agreement with the Index Portfolio, KLD was entitled to receive from
the Index Portfolio a fee
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accrued daily and paid monthly at an annual rate equal to 0.025% of the Index
Portfolio's average daily net assets. For the fiscal year ended July 31, 1995,
KLD voluntarily waived all of its advisory fees. For the fiscal years ended July
31, 1996, 1997 and 1998, KLD received advisory fees of $38,150, $46,528 and
$17,385, respectively.
In addition to serving as investment manager, prior to October 22,
1997, KLD also served as sponsor of the Index Portfolio. Pursuant to a
Sponsorship Agreement dated November 6, 1996, KLD was responsible for the
ordinary operating expenses of the Index Portfolio (other than brokerage fees
and commissions, interest, taxes and extraordinary expenses) and provided the
Index Portfolio with administrative personnel and services necessary to operate
the Index Portfolio. For these services and facilities, KLD received fees from
the Index Portfolio at an annual rate of 0.20% of the average daily net assets
of the Index Portfolio for the Index Portfolio's then-current fiscal year. KLD
continues to determine and monitor the composition of the Domini 400 Social
Index (which determines the composition of the Index Portfolio's securities),
and provide other services relating to socially responsible investments pursuant
to a license agreement between DSI and KLD. KLD received sponsorship fees of
$295,633 for the period November 6, 1996 to July 31, 1997 and $______ for the
period from August 1, 1997 to October 22, 1997 from the Index Portfolio. The
Sponsorship Agreement was terminated as of October 22, 1997.
Prior to October 22, 1997, and pursuant to an Administrative Services
Agreement between Signature Broker-Dealer Services, Inc. ("Signature") and KLD,
KLD engaged Signature to provide certain administrative services to the Index
Portfolio. In such capacity, Signature performed certain administrative services
requested by KLD. For these services, since November 6, 1996, KLD paid to
Signature a fee computed daily and paid monthly at an annual rate of 0.025% of
the average daily net assets of the Index Portfolio. For its services, for the
period from October 4, 1996 until November 6, 1996, Signature received fees
computed daily and paid monthly from the Index Portfolio at an annual rate equal
to 0.025% of the average daily net assets of the Index Portfolio. Prior to
October 4, 1996, Signature received administrative fees computed daily and paid
monthly from the Index Portfolio at an annual rate of 0.05% of the average daily
net assets of the Index Portfolio. For the fiscal years ended July 31, 1996,
1997 and 1998, Signature received Administrative Services fees from the Index
Portfolio of $38,150 $46,528 and $17,385, respectively. The Administrative
Services Agreement was terminated effective October 22, 1997.
"Domini(SM)" and "Domini 400 Social Index(SM)" are service marks of KLD
which are licensed to DSI with the consent of Amy L. Domini. Pursuant to
agreements among DSI, Ms. Domini and the Index Portfolio, the Index Portfolio
may be required to discontinue the use of these service marks if DSI ceases to
be the Manager of the Index Portfolio or Ms. Domini withdraws her consent.
The Equity Fund and the Index Portfolio use certain proprietary rights,
know-how and financial services referred to as the Hub and Spoke investment fund
structure from Signature Financial Group. Hub and Spoke is a registered service
mark of Signature Financial Group.
INVESTMENT SUBMANAGER Mellon Equity Associates ("Mellon Equity")
provides investment submanagement services to the Index Portfolio on a
day-to-day basis pursuant to a Submanagement Agreement with DSI effective
October 22, 1997. Mellon Equity's services as submanager include providing DSI
with such investment advice and supervision as DSI may from time to time
consider necessary for the proper supervision of the Index Portfolio's
investment assets, and determining what securities shall be
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<PAGE> 82
purchased, sold or exchanged and what portion of the assets of the Index
Portfolio allocated by DSI shall be held uninvested. Mellon Equity does not
determine the composition of the Domini Social Index.
The Submanagement Agreement provides that it shall remain in force
until October 22, 1999, on which date it will terminate unless its continuance
after October 22, 1999 is specifically approved at least annually (i) by the
vote of a majority of the Trustees of the Index Portfolio who are not
"interested persons" of the Index Portfolio or of DSI or Mellon Equity at a
meeting specifically called for the purpose of voting on such approval, and (ii)
by the Board of Trustees of the Index Portfolio or by vote of a majority of the
outstanding voting securities of the Index Portfolio. The Submanagement
Agreement also provides that it may be terminated at any time without the
payment of any penalty by the Trustees of the Index Portfolio, or by the vote of
a majority of the outstanding voting securities of the Index Portfolio, or by
DSI with the prior consent of the Trustees of the Index Portfolio, in each case
on not more than 60 days' nor less than 30 days' written notice to the other
party. In addition, the Submanagement Agreement may be terminated at any time
without the payment of any penalty by Mellon Equity on not less than 90 days'
written notice to DSI and the Trustees of the Index Portfolio. The Submanagement
Agreement shall automatically terminate in the event of its assignment.
Pursuant to the Submanagement Agreement, Mellon Equity shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for the Index Portfolio, except for willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties thereunder. The Submanagement Agreement
further provides that the services of Mellon Equity to the Index Portfolio are
not deemed to be exclusive, Mellon Equity being free to render investment
advisory, administrative and/or other services to others.
Under the Submanagement Agreement, DSI pays Mellon Equity an investment
submanagement fee equal on an annual basis to 0.10% of the average daily net
assets of the Index Portfolio.
Prior to October 22, 1997, Mellon Equity managed the assets of the Index
Portfolio pursuant to an investment management agreement with the Index
Portfolio. Prior to November 21, 1994, State Street Bank and Trust Company
served as investment manager to the Index Portfolio. Mellon Equity furnished at
its own expense all services, facilities and personnel necessary in connection
with managing the Index Portfolio's investments and effecting securities
transactions for the Index Portfolio. Since October 4, 1996, the Index Portfolio
paid Mellon Equity an investment management fee equal on an annual basis to
0.10% of the Index Portfolio's average daily net assets. For the fiscal years
ended July 31, 1996, 1997 and 1998, respectively, the Index Portfolio incurred
$128,901, $182,885 and $86,354 in investment management fees.
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<PAGE> 83
ADMINISTRATOR, SUBADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN, AND EXPENSES
ADMINISTRATOR Pursuant to an Administrative Services Agreement dated April 7,
1995 between the Trust and Green Century Capital (the "Administration
Agreement"), Green Century Capital, as the Trust's administrator (the
"Administrator"), provides the Trust with general office facilities and
supervises the overall administration of the Trust, including, among other
responsibilities, the negotiation of contracts and fees with, and the monitoring
of performance and billings of, the Trust's independent contractors and agents;
the preparation and filing of all documents required for compliance by the Trust
with applicable laws and regulations; and arranging for the maintenance of books
and records of the Trust. As described in the Prospectus, the Administrator also
pays, pursuant to the Administration Agreement, all the operating expenses of
each Fund other than the Funds' investment advisory fees, if any, fees under the
Distribution Plan, if any, interest, taxes, brokerage costs and other capital
expenses, expenses of the non-interested Trustees of the Funds (including
counsel fees) and any extraordinary expenses.
Green Century Capital was founded in 1991 by a partnership of
not-for-profit environmental advocacy organizations for the following purposes:
to provide quality environmentally responsible investment opportunities to the
members of its founding organizations and other environmentally conscious
investors; to generate revenue to support the environmental research and
advocacy work of its founding organizations; and to work in tandem with its
founding organizations to promote greater corporate environmental responsibility
by advocating that companies improve their environmental performance. As do the
advocacy organizations that founded Green Century Capital, Green Century upholds
the right of people to speak for the public interest and corporate
responsibility.
The Administration Agreement provides that it shall remain in force
until terminated. The Administration Agreement may be terminated as to any Fund
at any time, without the payment of any penalty, by the Board of Trustees of the
Trust or by the Administrator, in each case on not less than 30 days' written
notice to the other party. The Administration Agreement further provides that
the Administrator shall not be liable for any error of judgment or mistake of
law or for any act or omission in the administration or management of the Trust
or the performance of its duties, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of the reckless
disregard of its obligations and duties.
For such administrative services, the Administrator receives a fee from
the Balanced Fund at a rate such that immediately following any payment to the
Administrator, the total operating expenses of the Balanced Fund (including
investment advisory and distribution fees), on an annual basis, do not exceed
2.50% of the Balanced Fund's average daily net assets up to $30 million, 2.25%
on average net assets from $30 million to $100 million, and 1.75% on average net
assets in excess of $100 million. The Administrator 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 fees and any amortization of
organization expenses), on an annual basis, do not exceed 1.50% of the Equity
Fund's average daily net assets.
For the fiscal years ended June 30, 1996, 1997 and 1998, the Balanced
Fund accrued administrative services fees aggregating $102,989, $134,417 and
$209,666, respectively. For the one-month period ended July 31, 1998, the
Balanced Fund accrued
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administrative service fees aggregating $20,597. For the period September 13,
1995 to July 31, 1996 and the fiscal years ended July 31, 1997 and 1998, the
Equity Fund accrued administrative service fees to the Administrator of the
Trust aggregating $3,431, $27,359 and $122,190, respectively.
SUBADMINISTRATOR Pursuant to a Subadministration Agreement dated July 7, 1997
(the "Subadministration Agreement"), between the Administrator and Sunstone
Financial Group, Inc. ("Sunstone"), Sunstone provides certain day-to-day
administrative services to the Trust, under the supervision and direction of the
Administrator of the Trust. The Subadministration Agreement provides that it
shall continue to July 7, 1998 unless sooner terminated, and thereafter will
continue automatically in effect for successive annual periods until terminated.
The Agreement may be terminated at any time with respect to any one or both
Funds without penalty (i) upon mutual consent of the parties, or (ii) by either
party upon not less than ninety (90) days' written notice.
The Subadministration Agreement provides further that Sunstone shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by Green Century Capital or the Funds in connection with the matters to
which the Agreement relates, except for a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under the
Subadministration Agreement.
Sunstone receives a fee from the Administrator (not the Funds) for its
administrative services on behalf of the Administrator, which fee is based on
each Fund's average net assets beginning at the annual rate of 0.175% on the
first $50,000,000 of average net assets and decreasing as assets reach certain
levels, subject to an annual minimum for each Fund of $35,000 in the first year,
$40,000 in the second year, and $50,000 in the third year. The minimum annual
fee increases 6.0% each year after year three. Sunstone does not act or serve in
any capacity with respect to the Index Portfolio. For the fiscal year ended June
30, 1998 and the one month ended July 31, 1998, the Administrator paid fees of
$34,436 and $3,304, respectively, to Sunstone relating to services performed on
behalf of the Balanced Fund. For the year ended July 31, 1998, the Administrator
paid fees of $35,388 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 the subadministrator of the Funds. For the fiscal years
ended June 30, 1995, 1996 and 1997, Green Century Capital paid subadministrative
services fees to Signature for its subadministrative services for the Equity
Fund and the Balanced Fund aggregating $4,602, $10,708, and $16,062,
respectively. For the period July 1, 1997 to July 6, 1997, Green Century Capital
Management paid subadministrative services fees to Signature aggregating $273.
TRANSFER AGENT The Trust has entered into a transfer agency agreement with
Unified Fund Services, Inc. ("Unified") pursuant to which Unified acts as
transfer agent for the Trust (the "Transfer Agent") effective November 16, 1998.
Unified will maintain an account for each shareholder of each Fund, performs
other transfer agency functions and acts as dividend disbursing agent for each
Fund. Prior to November 16, 1998, Investors Bank & Trust Company ("IBT") served
as transfer agent for the Trust.
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<PAGE> 85
CUSTODIAN Pursuant to a Custodian Agreement with each of the Trust and the Index
Portfolio, IBT also acts as the custodian of the Funds' assets (i.e., cash and
securities or, in the case of the Equity Fund, its interest in the Index
Portfolio) and as the custodian of the Index Portfolio's assets (the
"Custodian"). The Custodian's responsibilities include safeguarding and
controlling the Funds' and the Index Portfolio's cash and securities, handling
the receipt and delivery of securities, determining income and collecting
interest on the Funds' and the Index Portfolio's investments, maintaining books
of original entry for portfolio and fund accounting and other required books and
accounts, and calculating the daily net asset value of shares and interests in
the Fund and the Index Portfolio, respectively. Securities held by the Funds and
the Index Portfolio may be deposited into certain securities depositaries. The
Custodian does not determine the investment policies of the Funds or the Index
Portfolio nor does the Custodian decide which securities the Funds or the Index
Portfolio will buy or sell. The Index Portfolio may, however, invest in
securities of the Custodian and may deal with the Custodian as a principal in
securities transactions. For its services, IBT will receive such compensation as
may from time to time be agreed upon by it and the Funds and the Index
Portfolio, as the case may be.
DISTRIBUTION PLAN
The Trust has adopted a Distribution Plan with respect to the Balanced
Fund in accordance with Rule 12b-1 under the 1940 Act after concluding that
there is a reasonable likelihood that the Distribution Plan will benefit the
Fund and its shareholders. The Trust has not adopted a Distribution Plan with
respect to the Equity Fund. The Distribution Plan provides that the Balanced
Fund shall pay a fee to Sunstone Distribution Services, LLC, as the distributor
of shares of the Balanced Fund (the "Distributor"), at an annual rate not to
exceed 0.25% of the Fund's average daily net assets in anticipation of, or as
reimbursement for expenses (i) of compensating broker-dealers with trail or
maintenance commissions and (ii) of printing prospectuses and reports used for
sales purposes, expenses of the preparation and printing of sales literature and
other such distribution-related expenses. Prior to July 7, 1997, Signature
served as distributor of the shares of the Trust. For the fiscal years ended
June 30, 1996, 1997 and 1998, the Balanced Fund accrued distribution fees
aggregating $17,165, $22,403 and $34,944, respectively. For the one-month period
ended July 31, 1998, the Balanced Fund accrued distribution fees aggregating
$3,437.
The Distribution Plan will continue in effect indefinitely if such
continuance is specifically approved at least annually by a vote of both a
majority of the Trustees and a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust and who have no direct or
indirect financial interest in the operation of the Distribution Plan or in any
agreement related to the Plan ("Qualified Trustees"). The Distribution Plan
requires that the Trust shall provide to its Board of Trustees, and its Board of
Trustees shall review, at least quarterly, a written report of the amounts
expended (and the purposes therefor) under the Distribution Plan. The
Distribution Plan further provides that the selection and nomination of the
Qualified Trustees shall be committed to the discretion of the disinterested
Trustees then in office. The Distribution Plan may be terminated at any time by
a vote of a majority of the Qualified Trustees or by a vote of the shareholders
of the Balanced Fund. The Distribution Plan may not be amended to increase
materially the amount of permitted expenses thereunder without the approval of
shareholders and may not be materially amended in any case without a vote of the
majority of both the Trustees and Qualified Trustees. The Distributor will
preserve copies of any plan, agreement or report made pursuant to the
Distribution Plan for a
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period of not less than six years from the date of the Plan, and for the first
two years the Distributor will preserve such copies in an easily accessible
place.
The Distributor acts as the agent of the Trust in connection with the
offering of shares of the Balanced Fund and the Equity Fund pursuant to a
Distribution Agreement. After the prospectuses and periodic reports have been
prepared, set in type and mailed to existing shareholders, the Distributor pays
for the printing and distribution of copies thereof which are used in connection
with the offering of shares of the Funds to prospective investors.
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NET ASSET VALUE; REDEMPTION IN KIND
The net asset value of each Fund's shares is determined each day the
New York Stock Exchange is open for trading ("Fund Business Day"). (As of the
date of this Statement of Additional Information, such Exchange is open for
trading every weekday except for the following holidays: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.) This determination of net
asset value of shares of the Fund is made once during each such day as of the
close of the New York Stock Exchange (usually 4:00 p.m., Eastern time) in the
case of the Funds by deducting the amount of the Fund's liabilities from the
value of its assets and dividing the difference by the number of shares of the
Fund outstanding at the time the determination is made.
Valuation Procedures: Balanced Fund In valuing the Balanced Fund's
assets, a security listed on the New York Stock Exchange (and not subject to
restrictions against sale by the Fund on such Exchange) will be valued at its
last sale price on such Exchange. Lacking any sales, the security will be valued
at the mean between the closing asked price and the closing bid price.
Securities listed on other exchanges (and not subject to restriction against
sale by the Fund on such exchanges) will be similarly valued, using quotations
on the exchange on which the security is traded most extensively. Unlisted
securities which are quoted on the NASD National Market System, for which there
have been sales of such securities, will be valued at the last sale price
reported on such system. If there are no such sales, the value will be the high
or "inside" bid, which is the bid supplied by the NASD on its NASDAQ System for
such securities in the over-the-counter market. The value of such securities
quoted on the NASDAQ System, but not listed on the National Market System, will
be valued at the high or "inside" bid. Unlisted securities which are not quoted
on the NASDAQ System and for which over-the-counter market quotations are
readily available will be valued at the mean between the current bid and asked
prices for such securities in the over-the-counter market. Other unlisted
securities (and listed securities subject to restriction on sale) will be valued
at their fair value as determined in good faith by the Trustees although the
actual calculation may be done by others. Short-term corporate investments with
remaining maturities of sixty days or less are valued at amortized cost. Open
futures contracts are valued at the most recent settlement price, unless such
price does not reflect the fair value of the contract, in which case such
positions will be valued by or under the direction of the Trustees.
Subject to the Trust's compliance with applicable regulations, the
Trust has reserved the right to pay the redemption price of shares of the
Balanced Fund, either totally or partially, by a distribution in kind of
portfolio securities (instead of cash). The securities so distributed would be
valued at the same amount as that assigned to them in calculating the net asset
value for the shares being sold. If a shareholder received a distribution in
kind, the shareholder could incur brokerage or other charges in converting the
securities to cash. The Trust has elected, however, to be governed by Rule 18f-1
under the 1940 Act, as a result of which the Trust is obligated with respect to
any one investor during any 90 day period to redeem shares of the Balanced Fund
solely in cash up to the lesser of $250,000 or 1% of the Fund's net assets at
the beginning of such 90 day period.
Valuation Procedures: Equity Fund and Index Portfolio The value of the
Index Portfolio's net assets (i.e., the value of its securities and other assets
less its liabilities, including expenses payable or accrued) is determined at
the same time and on the same day as the Equity Fund determines its net asset
value per share.
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The net asset value of the Equity Fund's investment in the Index Portfolio is
equal to the Fund's pro rata share of the total investment of the Fund and of
other investors in the Index Portfolio less the Fund's pro rata share of the
Index Portfolio's liabilities. Equity securities held by the Index Portfolio are
valued at the last sale price on the exchange on which they are primarily traded
or on the NASDAQ system for unlisted national market issues, or at the last
quoted bid price for securities in which there were no sales during the day or
for unlisted securities not reported on the NASDAQ system. If the Index
Portfolio purchases option contracts, such option contracts which are traded on
commodities or securities exchanges are normally valued at the settlement price
on the exchange on which they are traded. Short-term obligations with remaining
maturities of less than sixty days are valued at amortized cost, which
constitutes fair value as determined by the Board of Trustees of the Index
Portfolio. Index Portfolio securities (other than short-term obligations with
remaining maturities of less than sixty days) for which there are no such
quotations or valuations are valued at fair value as determined in good faith by
or at the direction of the Index Portfolio's Board of Trustees.
PERFORMANCE ADVERTISING
Equity Fund and Balanced Fund The average annual total rate of return
of the Funds will be calculated for any period by (a) dividing (i) the sum of
the aggregate net asset value per share on the last day of the period of shares
purchased with a $1,000 payment on the first day of the period and the aggregate
net asset value per share on the last day of the period of shares purchasable
with dividends and capital gains distributions declared during such period with
respect to shares purchased on the first day of such period and with respect to
shares purchased with such dividends and capital gains distributions, by (ii)
$1,000, (b) raising the quotient to a power equal to 1 divided by the number of
years in the period, and (c) subtracting 1 from the result.
The total rate of return of the Funds for any specified period will be
calculated by (a) dividing (i) the sum of the aggregate net asset value per
share on the last day of the period of shares purchased with a $1,000 payment on
the first day of the period and the aggregate net asset value per share on the
last day of the period of shares purchasable with dividends and capital gains
distributions declared during such period with respect to shares purchased on
the first day of such period and with respect to shares purchased with such
dividends and capital gains distributions, by (ii) $1,000, and (b) subtracting 1
from the result.
For the period March 18, 1992 (commencement of operations) through July
31, 1998, the average annual total return of the Balanced Fund was 8.20%. The
Balanced Fund's average annual total return for the one and five year periods
ended July 31, 1998 were 2.07% and 10.37%, respectively.
The Equity Fund's total rate of return for the fiscal year ended July
31, 1998 was 21.32%. The Fund's average annual total return for the five years
ended July 31, 1998 was 21.90%. The Fund's average annual total return for the
fiscal periods since the Index Portfolio's commencement of investment operations
(June 3, 1991) through July 31, 1998 was 18.01%. The Equity Fund, which
commenced investment operations on September 13, 1995, invests all of its Assets
in the Index Portfolio, a separate registered investment company which commenced
investment operations on June 3, 1991 and commenced operations on August 10,
1990. Consistent with applicable regulatory guidance, performance for the period
from June 3, 1991 to the commencement of operations of the
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Equity Fund will reflect the investment performance of the Index Portfolio. The
performance for this prior period reflects the deduction of the charges and
expenses of the Equity Fund set forth in the Expense Table in the Prospectus.
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Total rate of return and yield information with respect to the Social
Index will be computed in the same fashion as set forth above with respect to
the Equity Fund, except that for purposes of this computation an investment will
be assumed to have been made in a portfolio consisting of all of the stocks
comprising the Social Index weighted in accordance with the weightings of the
stocks comprising the Social Index. Performance information with respect to the
Social Index will not take into account brokerage commission and other
transaction costs which will be incurred by the Index Portfolio.
The total rate of return should not be considered a representation of
the total rate of return of the respective Fund or the Index Portfolio in the
future since the total rate of return is not fixed. Actual total rates of return
will depend on changes in the market value of, and dividends and interest
received from, the investments held by the Funds or Index Portfolio and expenses
of the Funds and the Index Portfolio during the period. Performance is
historical and will fluctuate. An investor's shares when redeemed may be worth
more or less than their original cost.
Total rate of return information may be useful for reviewing the
performance of a Fund or the Index Portfolio and for providing a basis for
comparison with other investment alternatives. However, unlike bank deposits or
other investments which pay a fixed yield for a stated period of time, total
rate of return fluctuates, and this should be considered when reviewing
performance or making comparisons.
Any current "yield" quotation of the Funds shall consist of an
annualized historical yield, carried to at least the nearest hundredth of one
percent, based on a 30 calendar day or one-month period and shall be calculated
by (a) raising to the sixth power the sum of 1 plus the quotient obtained by
dividing the Fund's net investment income earned during the period by the
product of the average daily number of shares outstanding during the period that
were entitled to receive dividends and the maximum offering price per share on
the last day of the period, (b) subtracting 1 from the result, and (c)
multiplying the result by 2.
FEDERAL TAXES
Each year, the Trust intends to qualify each Fund and elect that each
Fund be treated as a separate "regulated investment company" under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"). Under Subchapter
M of the Code each Fund will not be subject to federal income taxes on amounts
distributed to shareholders. As long as each Fund qualifies as a "regulated
investment company" under the Code, the Fund will not be required to pay
Massachusetts income or excise taxes.
Qualification as a regulated investment company under the Code
requires, among other things, that (a) at least 90% of a Fund's annual gross
income, without offset for losses from the sale or other disposition of
securities, be derived from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of stock or
securities or foreign currencies or other income derived with respect to its
business of investing in such securities; and (b) the holdings of a Fund are
diversified so that, at the end of each quarter of its taxable year, (i) at
least 50% of the market value of a Fund's assets is represented by cash and cash
items, U.S. Government securities, securities of other regulated
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investment companies and other securities limited in respect of any one issuer
to an amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of a
Fund's assets is invested in the securities of any one issuer (other than U.S.
Government securities and securities of other regulated investment companies).
In addition, in order not to be subject to federal income tax, at least 90% of a
Fund's net investment income and net short-term capital gains earned in each
year must be distributed to the Fund's shareholders. If a Fund should fail to
qualify as a "regulated investment company" in any year, the Fund would incur a
regular corporate federal income tax upon its taxable income and Fund
distributions would generally be taxable as ordinary dividend income to the
shareholders.
Shareholders of the Funds will normally have to pay federal income
taxes and any state or local income taxes on the dividends and capital gain
distributions they receive from the Fund. Dividends from ordinary income and any
distributions from net short-term capital gains are taxable to shareholders as
ordinary income for federal income tax purposes, whether the distributions are
made in cash or in additional shares. A portion of the Funds' net investment
income and short-term capital gains dividends is normally eligible for the
dividends received deduction for corporations if the recipient otherwise
qualifies for that deduction with respect to its holding of Fund shares.
Availability of the deduction for a particular corporate shareholder is subject
to certain limitations, and deducted amounts may be subject to the alternative
minimum tax and result in certain basis adjustments. Distributions of net
capital gains, whether made in cash or in additional shares, may receive
favorable tax treatment without regard to the length of time the shareholders
have held their shares. Any Fund dividend that is declared in October, November,
or December of any calendar year, that is payable to shareholders of record in
such a month, and that is paid the following January will be treated as if
received by the shareholders on December 31 of the year in which the divided is
declared. The Funds will notify shareholders regarding the federal tax status of
its distributions after the end of each calendar year.
Gains or losses on sales of securities for the Funds may receive
favorable tax treatment if the securities have been held by it longer than the
applicable holding period except in certain cases where a put has been acquired
or a call has been written thereon for the Fund. Other gains or losses on the
sale of securities will be short-term capital gains or losses.
Options Gains and losses on the sale, lapse or other termination of
options on securities will generally be treated as gains and losses from the
sale of securities. If an option written for the Balanced Fund or the Index
Portfolio lapses or is terminated through a closing transaction, such as a
repurchase for the Balanced Fund or the Index Portfolio of the option from its
holder, the Balanced Fund or the Index Portfolio may realize a short-term
capital gain or loss, depending on whether the premium income is greater or less
than the amount paid in the closing transaction. If securities are sold for the
Balanced Fund or the Index Portfolio pursuant to the exercise of a call option
written for it, the premium received will be added to the sale price of the
securities delivered in determining the amount of gain or loss on the sale.
Certain option contracts held for the Balanced Fund and the Index
Portfolio at the end of each fiscal year will be required to be "marked to
market" for federal income tax purposes; that is, treated as having been sold at
market value. Sixty percent of any gain or loss recognized on these deemed sales
and on actual
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dispositions will be treated as long-term capital gain or loss, and the
remainder will be treated as short-term capital gain or loss regardless of how
long the Balanced Fund or the Index Portfolio has held such options. The
Balanced Fund or the Index Portfolio may be required to defer the recognition of
losses on stock or securities to the extent of any unrecognized gain on
offsetting positions held for it.
Redemption of Shares Any gain or loss realized on the redemption of
Fund shares by a shareholder who is not a dealer in securities will be treated
as long-term capital gain or loss if the shares have been held for more than the
applicable holding period, and otherwise as short-term capital gain or loss.
However, any loss realized by a shareholder upon the redemption of Fund shares
held one year or less will be treated as a long-term capital loss to the extent
of any long-term capital gains distributions received by the shareholder with
respect to such shares. Additionally, any loss realized on a redemption or
exchange of Fund shares will be disallowed to the extent the shares disposed of
are replaced within a period of 61 days beginning 30 days before such
disposition, such as pursuant to reinvestment of a dividend or capital gains
distribution in Fund shares.
Investment Activities The Balanced Fund's and Index Portfolio's
activities in options may be restricted by the requirements of the Internal
Revenue Code for qualification as a regulated investment company. In addition,
the Balanced Fund's and the Index Portfolio's activities involving futures
contracts and forward contracts may be limited by the requirements of Subchapter
M of the Internal Revenue Code for qualification as a regulated investment
company.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional Shares of Beneficial Interest (par value
$0.01 per share) of each series and to divide or combine the shares into a
greater or lesser number of shares of that series without thereby changing the
proportionate beneficial interests in that series. The Funds are the only
current series of shares of the Trust, and the Trust has reserved the right to
create and issue additional series of shares. Each share of a series represents
an equal proportionate interest in that series with each other share of that
series. The shares of each series participate equally in the earnings, dividends
and assets of the particular series. Shares of each series are entitled to vote
separately to approve advisory agreements or changes in fundamental investment
policy, but shares of all series may vote together in the election or selection
of Trustees, principal underwriters and accountants. Upon liquidation or
dissolution of a series, shareholders of that series would be entitled to share
pro rata in the net assets of that series available for distribution to
shareholders.
Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. The Trust is not required and has no present
intention to hold annual meetings of shareholders, but the Trust will hold
special meetings of shareholders when in the judgment of the Trustees it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have under certain circumstances (i.e., upon application and submission of
certain specified documents to the Trustees by a specified number of
shareholders) the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Trustees. Shareholders also have under certain circumstances the right to
remove one or more Trustees without a meeting by a declaration in writing by a
specified number of shareholders. No material amendment may be made to the
Trust's Declaration of Trust without the affirmative
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vote of the holders of a majority of the outstanding shares of each series
affected by the amendment. (See "Investment Objectives, Policies and
Restrictions-Investment Restrictions".) Shares have no preference, preemptive,
conversion or similar rights. Shareholders in the Fund do not have cumulative
voting rights, and shareholders owning more than 50% of the outstanding shares
of the Trust may elect all of the Trustees if they chose to do so. Shares, when
issued, are fully paid and nonassessable, except as set forth below. The Fund
may be terminated (i) upon sale of its assets, if approved by the vote of the
holders of two thirds of its outstanding shares, except that if the Board of
Trustees recommends such sale of assets, the approval by vote of the majority of
the Fund's outstanding shares will be sufficient, or (ii) by the vote of the
holders of the majority of the Fund's outstanding shares, or (iii) by the
Trustees of the Trust by written notice to the shareholders. If not so
terminated, each Fund will continue indefinitely.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Trust
and provides for indemnification and reimbursement of expenses out of Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Declaration of Trust also provides that the Trust shall maintain
appropriate insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Trust, its shareholders, Trustees,
officers, employees and agents covering possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of the Trust
are not binding upon the Trustees individually but only upon the property of the
Trust and that the Trustees will not be liable for any action or failure to act,
but nothing in the Declaration of Trust protects a Trustee against any liability
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office.
Each investor in the Index Portfolio, including the Equity Fund, may
add to or reduce its investment in the Index Portfolio on each Fund Business
Day. At the close of each such business day, the value of each investor's
interest in the Index Portfolio will be determined by multiplying the net asset
value of the Index Portfolio by the percentage representing that investor's
share of the aggregate beneficial interests in the Index Portfolio effective for
that day. Any additions or withdrawals, which are to be effected as of the close
of business on that day, will then be effected. The investor's percentage of the
aggregate beneficial interests in the Index Portfolio will then be re-computed
as the percentage equal to the fraction (i) the numerator of which is the value
of such investor's investment in the Index Portfolio as of the close of business
on such day plus or minus, as the case may be, the amount of any additions to or
withdrawals from the investor's investment in the Index Portfolio effected as of
the close of business on such day, and (ii) the denominator of which is the
aggregate net asset value of the Index Portfolio as of the close of business on
such day plus or minus, as the case may be, the amount of the net additions to
or withdrawals from the aggregate investments in the Index Portfolio by all
investors in the Index Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Index Portfolio
as of the close of business on the following Fund Business Day.
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PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
BALANCED FUND
Specific decisions to purchase or sell securities for the Fund are made
by a portfolio manager who is an employee of the Subadviser and who is appointed
and supervised by its senior officers. Changes in the Fund's investments are
reviewed by the Board of Trustees. The Fund's portfolio manager may serve other
clients of the respective Subadviser in a similar capacity.
Decisions concerning the execution of portfolio security transactions
of the Balanced Fund, including the selection of the market and the
broker-dealer firm, are made by the Subadviser. The Subadviser is also
responsible for the execution of transactions for all other accounts managed by
it.
The Subadviser places the security transactions of the Balanced Fund
and of all other accounts managed by it for execution with many broker-dealer
firms. The Subadviser uses its best efforts to obtain execution of portfolio
transactions at prices which are advantageous to the Fund and (when a disclosed
commission is being charged) at reasonably competitive commission rates. In
seeking such execution, the Subadviser will use its best judgement in evaluating
the terms of a transaction, and will give consideration to various relevant
factors, including without limitation the size and type of the transaction, the
general execution and operational capabilities of the broker-dealer, the nature
and character of the market for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the reputation,
reliability, experience and financial condition of the broker-dealer, the value
and quality of services rendered by the broker-dealer in other transactions, and
the reasonableness of the commission, if any. Transactions on United States
stock exchanges and other agency transactions involve the payment by the Fund of
negotiated brokerage commissions. Such commissions vary among different
broker-dealer firms, and a particular broker-dealer may charge different
commissions according to such factors as the difficulty and size of the
transaction and the volume of business done with such broker-dealer.
Transactions in foreign securities usually involve the payment of fixed
brokerage commissions, which are generally higher than those in the United
States. There is generally no stated commission in the case of securities traded
in the over-the-counter markets, but the price paid or received by the Fund
usually includes an undisclosed dealer markup or markdown. In an underwritten
offering the price paid by the Fund often includes a disclosed fixed commission
or discount retained by the underwriter or dealer. Although commissions paid on
portfolio security transactions will, in the judgement of the Subadviser, be
reasonable in relation to the value of the services provided, commissions
exceeding those which another firm might charge may be paid to broker-dealers
who were selected to execute transactions on behalf of the Fund and the
Subadviser's other clients in part for providing brokerage and research services
to the Subadviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934,
a broker or dealer who executes a portfolio transaction on behalf of the
Balanced Fund may receive a commission which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Subadviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided. This determination may be made on the basis of either that particular
transaction or on the basis of the overall responsibilities which the Subadviser
and its affiliates have for accounts over which they exercise investment
discretion. In making any such determination, the
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Subadviser will not attempt to place a specific dollar value on the brokerage
and research services provided or to determine what portion of the commission
should be related to such services. Brokerage and research services may include
advice as to the value of securities, the advisability of investing in,
purchasing, or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement); and
the "Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assists such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealer
firms which execute portfolio transactions for the clients of such advisers and
from third parties with which these broker-dealers have arrangements. Consistent
with this practice, the Subadviser receives Research Services from many
broker-dealer firms with which the Subadviser places the Fund transactions and
from third parties which with these broker-dealers have arrangements. These
Research Services include such matters as general economic and market reviews,
industry and company reviews, evaluations of securities and portfolio strategies
and transactions, recommendations as to the purchase and sale of securities and
other portfolio transactions, financial, industry and trade publications, news
and information services, pricing and quotation equipment and services, and
research oriented computer hardware, software, data bases and services. Any
particular Research Service obtained through a broker-dealer may be used by the
Subadviser in connection with client accounts other than those accounts which
pay commissions to such broker-dealer. Any such Research Service may be broadly
useful and of value to the Subadviser in rendering investment advisory services
to all or a significant portion of its clients, or may be relevant and useful
for the management of only one client's account or of a few clients' accounts,
or may be useful for the management of merely a segment of certain clients'
accounts, regardless of whether any such account or accounts paid commissions to
the broker-dealer through which such Research Service was obtained. The advisory
fee paid by the Balanced Fund is not reduced because the Subadviser receives
such Research Services. The Subadviser evaluates the nature and quality of the
various Research Services obtained through broker-dealer firms and attempts to
allocate sufficient commissions to such firms to ensure the continued receipt of
Research Services which the Subadviser believes are useful or of value to it
rendering investment advisory services to its clients.
Subject to the requirement that the Subadviser shall use its best
efforts to seek to execute Fund security transactions at advantageous prices and
at reasonably competitive commission rates or spreads, the Subadviser is
authorized to consider as a factor in the selection of any broker-dealer firm
with whom Fund orders may be placed the fact that such firm has sold or is
selling shares of investment companies sponsored by the Subadviser or Eaton
Vance. This policy is not inconsistent with a rule of the National Association
of Securities Dealers, Inc., which provides that no firm which is a member of
the Association shall favor or disfavor the distribution of shares of any
particular investment company or group of investment companies on the basis of
brokerage commissions received or expected by such firm from any source.
Securities considered as investments for the Balanced Fund may also be
appropriate for other investment accounts managed by the Subadviser or its
affiliates. The Subadviser will attempt to allocate equitably portfolio security
transactions among the Fund and the portfolios of its other investment accounts
whenever decisions are made to purchase or sell securities by the Fund and one
or more of such other accounts simultaneously. In making such allocations, the
main factors to be considered are the respective
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investment objectives of the Fund and such other accounts, the relative size of
portfolio holdings of the same or comparable securities, the availability of
cash for investment by the Fund and such accounts, the size of investment
commitments generally held by the Fund and such accounts and the opinions of the
persons responsible for recommending investments to the Fund and such accounts.
While this procedure could have a detrimental effect on the price or amount of
the securities available to the Fund from time to time, it is the opinion of the
Trustees of the Trust and the Fund that the benefits available from the
Subadviser organization outweigh any disadvantage that may arise from exposure
to simultaneous transactions.
For the fiscal years ended June 30, 1996, 1997 and 1998, the Balanced
Fund paid brokerage commissions aggregating $21,408, $20,762 and $33,721,
respectively. For the one-month period ended July 31, 1998, the Balanced Fund
paid brokerage commissions aggregating $1,701. Approximately 50% of the
brokerage commissions were allocated primarily on the basis of research services
provided for each such period.
The portfolio turnover rate is the ratio of the lesser of sales or
purchases to the monthly average value of the portfolio (excluding from both the
numerator and the denominator all securities with maturities at the time of
acquisition of one year or less). Higher levels of Fund activity result in
higher transaction costs and may also result in taxes on realized capital gains
to be borne by the Fund's shareholders. Purchases and sales are made for the
Fund whenever necessary, in management's opinion, to meet the Fund's objective.
The portfolio turnover rate of the Balanced Fund for the fiscal years ended June
30, 1996, 1997 and 1998 was 136%, 109% and 96%, respectively. The portfolio
turnover rate for the Balanced Fund for the one-month period ended July 31, 1998
was 4%.
EQUITY FUND AND INDEX PORTFOLIO
Specific decisions to purchase or sell securities for the Index
Portfolio are made by a portfolio manager who is an employee of Mellon Equity
and who is appointed and supervised by its senior officers. Changes in the Index
Portfolio's investments are reviewed by its Board of Trustees. The portfolio
manager of the Index Portfolio may serve other clients of Mellon Equity in a
similar capacity.
Frequent changes in the Index Portfolio's holdings may result from the
policy of attempting to correlate the Index Portfolio's securities holdings with
the composition of the Social Index, and the frequency of such changes will
increase as the rate and volume of purchases and redemptions of shares of the
Index Portfolio increases. The annual portfolio turnover rates of the Index
Portfolio for the fiscal years ended July 31, 1996, 1997 and 1998 were 5%, 1%
and 5%, respectively.
The Index Portfolio's primary consideration in placing securities
transactions with broker-dealers for execution is to obtain and maintain the
availability of execution at the most favorable prices and in the most effective
manner possible. Mellon Equity attempts to achieve this result by selecting
broker-dealers to execute transactions on behalf of the Index Portfolio and
other clients of Mellon Equity on the basis of their professional capability,
the value and quality of their brokerage services, and the level of their
brokerage commissions. In the case of securities traded in the over-the-counter
market (where no stated commissions are paid but the prices include a dealer's
markup or markdown), Mellon Equity normally seeks to deal directly with the
primary market makers, unless in its opinion, best execution is available
elsewhere. In the case of securities purchased from underwriters, the cost of
such securities generally includes a fixed underwriting commission or
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concession. From time to time, soliciting dealer fees are available to Mellon
Equity on the tender of the Index Portfolio's securities in so-called tender or
exchange offers. Such soliciting dealer fees are in effect recaptured for the
Index Portfolio by Mellon Equity. At present no other recapture arrangements are
in effect. Consistent with the foregoing primary consideration, the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. and such
other policies as the Trustees of the Index Portfolio may determine, Mellon
Equity may consider sales of shares of the Equity Fund and of securities of
other investors in the Index Portfolio as a factor in the selection of
broker-dealers to execute the Index Portfolio's securities transactions. Neither
the Index Portfolio nor the Equity Fund will engage in brokerage transactions
with DSI, Mellon Equity or Green Century Capital or any of their respective
affiliates or any affiliate of the Equity Fund or the Index Portfolio.
Under the Submanagement Agreement and as permitted by Section 28(e) of
the Securities Exchange Act of 1934, Mellon Equity may cause the Index Portfolio
to pay a broker-dealer acting on an agency basis which provides brokerage and
research services to Mellon Equity or DSI an amount of commission for effecting
a securities transaction for the Index Portfolio in excess of the amount other
broker-dealers would have charged for the transaction if Mellon Equity
determines in good faith that the greater commission is reasonable in relation
to the value of the brokerage and research services provided by the executing
broker-dealer viewed in terms of either a particular transaction or Mellon
Equity's or DSI's overall responsibilities to the Index Portfolio or to its
other clients. Not all of such services are useful or of value in advising the
Index Portfolio.
The term "brokerage and research services" includes advice as to the
value of securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or of purchasers or sellers of
securities; furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto such as clearance and settlement. However, because of the
Index Portfolio's policy of investing in accordance with the Social Index,
Mellon Equity and DSI currently intend to make only a limited use of such
brokerage and research services.
Although commissions paid on every transaction will, in the judgment of
Mellon Equity, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Index Portfolio and Mellon Equity's or DSI's other clients in part for
providing advice as to the availability of securities or of purchasers or
sellers of securities and services in effecting securities transactions and
performing functions incidental thereto such as clearance and settlement.
Certain broker-dealers may be willing to furnish statistical, research and other
factual information or services to Mellon Equity or DSI for no consideration
other than brokerage or underwriting commissions.
Mellon Equity and DSI attempt to evaluate the quality of research
provided by brokers. Mellon Equity and DSI sometimes use evaluations resulting
from this effort as a consideration in the selection of brokers to execute
portfolio transactions. However, neither Mellon Equity nor DSI is able to
quantify the amount of commissions which are paid as a result of such research
because a substantial number of transactions are effected through brokers which
provide research but which are selected principally because of their execution
capabilities.
The fees that the Index Portfolio pays to Mellon Equity and DSI will
not be reduced as a consequence of the Index Portfolio's receipt of brokerage
and research services. To the extent the Index Portfolio's securities
transactions are used to obtain brokerage and research services, the brokerage
commissions paid by the Index
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Portfolio will exceed those that might otherwise be paid for such portfolio
transactions and research, by an amount which cannot be presently determined.
Such services may be useful and of value to Mellon Equity or DSI in serving both
the Index Portfolio and other clients and, conversely, such services obtained by
the placement of brokerage business of other clients may be useful to Mellon
Equity or DSI in carrying out its obligations to the Index Portfolio. While such
services are not expected to reduce the expenses of Mellon Equity or DSI, Mellon
Equity or DSI would, through use of the services, avoid the additional expenses
which would be incurred if it should attempt to develop comparable information
through its own staff. For the fiscal years ended July 31, 1996, 1997 and 1998
the Index Portfolio paid brokerage commissions of $45,018, $101,337 and
$175,344.
In certain instances there may be securities which are suitable for the
Index Portfolio as well as for one or more of Mellon Equity's or DSI's other
clients. Investment decisions for the Index Portfolio and for Mellon Equity's or
DSI's other clients are made with a view to achieving their respective
investment objectives. It may develop that a particular security is bought or
sold for only one client even though it might be held by, or bought or sold for,
other clients. Likewise, a particular security may be bought for one or more
clients when one or more clients are selling that same security. Some
simultaneous transactions are inevitable when several clients receive investment
advice from the same investment adviser, particularly when the same security is
suitable for the investment objectives of more than one client. When two or more
clients are simultaneously engaged in the purchase or sale of the same security,
the securities are allocated among clients in a manner believed to be equitable
to each. It is recognized that in some cases this system could have a
detrimental effect on the price or volume of the security as far as the Index
Portfolio is concerned. However, it is believed that the ability of the Index
Portfolio to participate in volume transactions will produce better executions
for the Index Portfolio.
INDEPENDENT AUDITORS AND EXPERTS
KPMG Peat Marwick LLP are the independent auditors of the Balanced
Fund, the Equity Fund and the Index Portfolio, providing audit services and
review of filings with the SEC. Prior to July 1, 1995, other auditors served as
independent auditors of the Balanced Fund. The financial statements of the Funds
incorporated herein by reference have been so incorporated by reference in
reliance upon the report of KPMG Peat Marwick LLP as experts in accounting and
auditing. The financial statements of the Index Portfolio incorporated herein by
reference have been so incorporated by reference in reliance upon the report of
KPMG Peat Marwick LLP as experts in accounting and auditing.
ADDITIONAL INFORMATION
A shareholder's right to receive payment with respect to any redemption
may be suspended or the payment of the redemption proceeds postponed: (i) during
periods when the New York Stock Exchange is closed for other than weekends and
holidays or when trading on such Exchange is restricted as determined by the SEC
by rule or regulation, (ii) during periods in which an emergency exists which
causes disposal of, or evaluation of the net asset value of, the Funds'
portfolio securities to be unreasonable or impracticable, or (iii) for such
other periods as the SEC may permit.
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With respect to the securities offered by the Funds' Prospectus, this
Statement of Additional Information and the Prospectus do not contain all the
information included in the Registration Statement filed with the SEC under the
1933 Act. Pursuant to the rules and regulations of the SEC, certain portions
have been omitted. The Registration Statement including the exhibits filed
therewith may be examined at the office of the SEC in Washington, D.C.
Statements contained in this Statement of Additional Information and
the Prospectus concerning the contents of any contract or other document are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement. Each such statement is qualified in all respects by such reference.
FINANCIAL STATEMENTS
The financial statements of the Funds and the Index Portfolio as of
June 30, 1998 and July 31, 1998 and for the one month period ended July 31, 1998
for the Balanced Fund have been filed as part of each of the Fund's annual
report with the Securities and Exchange Commission pursuant to Section 30(b) of
the 1940 Act and Rule 30b2-1 thereunder, are hereby incorporated herein by
reference from such report. A copy of such report will be provided, without
charge, to each person receiving this Statement of Additional Information.
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APPENDIX - DESCRIPTION OF SECURITIES RATINGS(1)
DESCRIPTION OF MOODY'S INVESTORS SERvICE, INC.'S CORPORATE BOND RATINGS:
AAA: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edged". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA: Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safe-guarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
55
<PAGE> 101
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
SHORT-TERM DEBT
Moody's short term debt ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
one year.
Issuers rated PRIME-1 or P-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 or P-1
repayment ability will often be evidenced by many of the following
characteristics:
Leading market positions in well established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
Well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers rated PRIME-2 or P-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S RATiNGS GROUP'S CORPORATE BOND RATINGS:
INVESTMENT GRADE
AAA: Debt rated AAA has the highest rating assigned by S&P's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
56
<PAGE> 102
A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
SPECULATIVE GRADE
Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.
The B rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.
The CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
CC: The rating CC is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating.
C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
C1: The Rating C1 is reserved for income bonds on which no interest is being
paid.
57
<PAGE> 103
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Bonds may lack a S&P's rating because no public rating has been requested,
because there is insufficient information on which to base a rating, or because
S&P's does not rate a particular type of obligation as a matter of policy.
COMMERCIAL PAPER
A: S&P's commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.
A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
FITCH INVESTORS SERVICE, INC.
INVESTMENT GRADE BOND RATINGS
AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+".
A: Bonds considered to be investment grade and of high credit quality. The
obligors ability to pay interest and repay principal is considered to be strong,
but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
58
<PAGE> 104
BBB: Bonds considered to be investment grade and of satisfactory credit quality.
The obligors ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
HIGH YIELD BOND RATINGS
BB: Bonds are considered speculative. The obligors ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligors limited margin of safety
and the need for reasonable business and economic activity throughout the life
of the issue.
CCC: Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D: Bonds are in default of interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.
PLUS (+) OR MINUS (-): The ratings from AA to C may be modified by the addition
of a plus or minus sign to indicate the relative position of a credit within the
rating category.
NR: Indicates that Fitch does not rate the specific issue.
CONDITIONAL: A conditional rating is premised on the successful completion of a
project or the occurrence of a specific event.
INVESTMENT GRADE SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
59
<PAGE> 105
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+".
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as the "F-1+" and "F-1 " categories.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate, however,
near-term adverse changes could cause these securities to be rated below
investment grade.
DUFF & PHELPS
INVESTMENT GRADE BOND RATINGS
AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AND AA-: High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
A+, A, AND A-: Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.
BBB+, BBB, AND BBB-: Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
HIGH YIELD BOND RATINGS
BB+, BB, AND BB-: Below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality may move
up or down frequently within this category.
B+, B, AND B-: Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or into
a higher or lower rating grade.
CCC: Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
Preferred stocks are rated on the same scale as bonds but the preferred rating
gives weight to its more junior
60
<PAGE> 106
COMMERCIAL PAPER/CERTIFICATES OF DEPOSIT
CATEGORY 1: TOP GRADE
DUFF 1 PLUS: Highest certainty of timely payment. Short-term liquidity including
internal operating factors and/or ready access to alternative sources of funds,
is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.
DUFF 1: Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
DUFF 1 MINUS: High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
CATEGORY 2: GOOD GRADE
DUFF 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
CATEGORY 3: SATiSFACTORY GRADE
DUFF 3: Satisfactory liquidity and other protection factors qualify issue as to
investment grade. Risk factors are larger and subject to more variation.
Nevertheless timely payment is expected.
No ratings are issued for companies whose paper is not deemed to be of
investment grade.
* * * * *
NOTES:
1 The ratings indicated herein are believed to be the most recent ratings
available at the date of this Statement of Additional Information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such
ratings, they undertake no obligation to do so, and the ratings indicated
do not necessarily represent ratings which would be given to these
securities on the date of the Fund's fiscal year end.
Bonds which are unrated expose the investor to risks with respect to capacity to
pay interest or repay principal which are similar to the risks of lower-rated
bonds. The Balanced Fund is dependent on the investment adviser's or investment
subadviser's judgment, analysis and experience in the evaluation of such bonds.
Investors should note that the assignment of a rating to a bond by a rating
service may not reflect the effect of recent developments on the issuer's
ability to make interest and principal payments.
61
<PAGE> 107
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. FINANCIAL STATEMENTS
The following are included in Part A:
1. Financial Highlights for the Balanced Fund
2. Financial Highlights for the Equity Fund
The following audited financial statements for the Balanced
Fund are incorporated by reference in Part B:
1. Financial Highlights for the one month period ended
July 31, 1998 and each of the years in the five-year
period ended June 30, 1998
2. Portfolio of Investments as of July 31, 1998 and
June 30, 1998
3. Statement of Assets and Liabilities as of July 31,
1998 and June 30, 1998
4. Statement of Operations for the one month period ended
July 31, 1998 and the year ended June 30, 1998
5. Statements of Changes in Net Assets for the one month
period ended July 31, 1998 and the fiscal years ended
June 30, 1997 and 1998
6. Notes to Financial Statements, July 31, 1998 and June
30, 1998
7. Independent Auditors' Reports
The following audited financial statements for the Equity Fund
are incorporated by reference in Part B:
<PAGE> 108
1. Financial Highlights for years or periods in the
three-year period ended July 31, 1998
2. Statement of Assets and Liabilities as of July 31, 1998
3. Statement of Operations for the year ended July 31,
1998
4. Statements of Changes in Net Assets for the fiscal
years ended July 31, 1997 and 1998
5. Notes to Financial Statements, July 31, 1998
6. Independent Auditors' Report
The following audited financial statements and financial
highlights for the Domini Social Index Portfolio Fund are
incorporated by reference in Part B:
1. Financial Highlights for each of the years in the
five-year period ended July 31, 1998
2. Portfolio of Investments as of July 31, 1997
3. Statement of Assets and Liabilities as of July 31,
1998
4. Statement of Operations for the year ended July 31,
1998
5. Statements of Changes in Net Assets for the fiscal
years ended July 31, 1997 and 1998
6. Notes to Financial Statements, July 31, 1998
7. Independent Auditors' Report
b EXHIBITS:
1(a) Declaration of Trust.(8)
1(b) First Amended and Restated Establishment and Designation
of Series of the Trust.(8)
1(c) Second Amended and Restated Establishment and Designation
of Series of the Trust.(8)
1(d) Third Amended and Restated Establishment and Designation
of Series of the Trust.(8)
2 By-Laws of the Trust.(8)
3 Inapplicable.
4 Specimen share certificate.(4)
5(a) Investment Advisory Agreement between Registrant and
Green Century Capital Management, Inc.(8)
5(b) Investment Subadvisory Agreement (superseded).(2)
<PAGE> 109
5(c) Investment Subadvisory Agreement with respect to the
Green Century Balanced Fund between Green Century Capital
Management, Inc. and Eaton Vance Management.(8)
6(a) Amended and Restated Distribution Agreement between the
Registrant and Signature Broker-Dealer Services, Inc.
(superseded).(6)
6(b) Distribution Agreement between the Registrant and
Sunstone Distribution Services, LLC.(9)
7 Inapplicable.
8(a) Custodian Agreement between Registrant and Investors Bank
and Trust Company.(11)
8(b) Transfer Agency and Services Agreement between Registrant
and Investors Bank and Trust Company.(6)
8(c) Transfer Agent Agreement between Registrant and Unified
Fund Services, Inc.(11)
9(a) Amended and Restated Administrative Services Agreement
between Registrant and Green Century Capital Management,
Inc.(11)
9(b) Accounting Services Agreement (superseded).(2)
9(c) Shareholder Services Agreement (superseded).(2)
9(d) Sub-Administration Agreement between Green Century
Capital Management, Inc. and Sunstone Financial Group,
Inc.(9)
10 Inapplicable.
11 Consents of independent auditors as filed herein.(11)
12 Inapplicable.
13 Investment representation letters of initial
shareholder.4
14(a) Traditional and Roth IRA Disclosure Statement and
Custodial Account Agreement11
14(b) Education IRA Disclosure Statement and Custodial Account
Agreement(11)
<PAGE> 110
14(c) 403(b)(7) Custodial Account Agreement(11)
15(a) Amended and Restated Distribution Plan pursuant to
Rule 12b-l under the Investment Company Act of 1940
(the "1940 Act").(5)
15(b) Amended and Restated Distribution Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940
(the "1940 Act").(9)
16 Schedule for Computation of Performance Quotations.(6)
17 Financial Data Schedules.(11)
18 None
19(a) Powers of Attorney.(2)
19(b) Power of Attorney of Michael Brennan.(3)
19(c) Powers of Attorney with respect to Domini Social Index
Portfolio (Amy L. Domini, Allen M. Mayes, Timothy Smith,
and Frederick C. Williamson).(9)
19(d) Power of Attorney of Douglas H. Phelps.(9)
19(e) Powers of Attorney with respect to the Domini Social
Index Portfolio (Frederick C. Williamson, Sr., Timothy
Smith, Allen M. Mayes, William C. Osborn, Karen Paul) as
filed herein.(11)
19(f) Powers of Attorney with respect to The Green Century
Funds (Douglas M. Husid, David J. Fine, Steven Kadish,
Stephen Morgan, C. William Ryan, James H. Starr, Wendy
Wendlandt, Douglas Phelps) as filed herein.(11)
(1) Incorporated herein by reference from the Registrant's initial
Registration Statement on Form N-1A, as filed with the Securities and Exchange
Commission ("SEC") on July 12, 1991.
(2) Incorporated herein by reference from Pre-Effective Amendment No. 1 to
this Registration Statement as filed with the SEC on November 29, 1991.
(3) Incorporated herein by reference from Pre-Effective Amendment No. 2 to
this Registration Statement as filed with the SEC on January 14, 1992.
(4) Incorporated herein by reference from Pre-Effective Amendment No. 3 to
this Registration Statement as filed with the SEC on January 31, 1992.
<PAGE> 111
(5) Incorporated herein by reference from Post-Effective Amendment No. 3
to this Registration Statement as filed with the SEC on October 29, 1993.
(6) Incorporated herein by reference from Post-Effective Amendment No. 6
to this Registration Statement as filed with the SEC on June 28, 1995.
(7) Incorporated herein by reference from Post-Effective Amendment No. 7
to this Registration Statement as filed with the SEC on September 11, 1995.
(8) Incorporated herein by reference from Post-Effective Amendment No. 8
to this Registration Statement as filed with the SEC on September 30, 1996.
(9) Incorporated herein by reference from Post-Effective Amendment No. 9
to this Registration Statement as filed with the SEC on October 3, 1997.
(10) Incorporated herein by reference from Post-Effective Amendment No. 10
to this Registration Statement as filed with the SEC on November 6, 1997.
(11) Filed herein.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE TRUST.
Registrant neither controls any person nor is under common control with
any other person.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Number of Record Holders
Title of Class (as of September 30, 1998)
- -------------- --------------------------
Green Century Balanced Fund 1,501
Green Century Equity Fund 2,142
ITEM 27. INDEMNIFICATION.
Reference is made to Article V of the Trust's Declaration of Trust,
filed as Exhibit 1 to this Registration Statement.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to Trustees,
officers and controlling persons of the Trust pursuant to the Trust's
Declaration of Trust, or otherwise, the Trust has been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable.
<PAGE> 112
In the event that a claim for indemnification against such liabilities
(other than the payment by the Trust of expenses incurred or paid by a
Trustee, officer or controlling person of the Trust in the successful
defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the
securities being registered, the Trust will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the 1933 Act and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND INVESTMENT
SUBADVISER.
Reference is made to the Form ADV (File No. 801-39630) of Green
Century Capital Management, Inc. last filed with the SEC on February 5, 1998,
and the Form ADV (File No. 801-15930) of Eaton Vance Management last filed with
SEC on December 19, 1997. The information required by Item 28 hereof is included
in Schedule D of the respective Form ADV and such information is incorporated
herein by reference.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Sunstone Distribution Services, LLC currently serves as distributor
of the shares of Northern Funds, The Haven Capital Management Trust, First Omaha
Funds, Inc., JohnsonFamily Funds, Inc. and The Marsico Investment Fund.
(b) To the best of Registrant's knowledge, the executive officers of
Sunstone Distribution Services, LLC, distributor for Registrant, are as follows:
<PAGE> 113
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES WITH SUNSTONE POSITIONS AND OFFICES
BUSINESS ADDRESS DISTRIBUTION SERVICES, LLC. WITH REGISTRANT
- ------------------ ----------------------------------- ---------------------
<S> <C> <C>
Miriam M. Allison President and Member None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
Daniel S. Allison Secretary and Member None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
Peter Hammond Vice President None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
Therese A. Ladwig Vice President None
207 East Buffalo Street
Suite 400
Milwaukee, WI 53202
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are in the possession of the Registrant, at Registrant's business
office, except (1) records held and maintained by Investors Bank & Trust
Company, 200 Clarendon St., Boston, MA, 02116, relating to its function as
custodian and transfer agent; (2) records held and maintained by Sunstone
Financial Group, Inc., 207 East Buffalo Street, Suite 400, Milwaukee, Wisconsin,
53202, relating to its functions as subadministrator, and (3) records held and
maintained by Sunstone Distribution Services, LLC, 207 East Buffalo Street,
Suite 400, Milwaukee, Wisconsin 53202, relating to its role as distributor.
ITEM 31. MANAGEMENT SERVICES.
All management-related service contracts entered into by Registrant are
discussed in Parts A and B of this Registration Statement.
<PAGE> 114
ITEM 32. UNDERTAKINGS.
(a) The Registrant undertakes to comply with Section 16(c) of the
1940 Act as though such provisions of the 1940 Act were
applicable to the Registrant except that the request referred to
in the third full paragraph thereof may only be made by 10% of
the outstanding shares of the Registrant, regardless of the net
asset value or value of shares held by such requesting
shareholders.
(b) If the information called for by Item 5A of Form N-1A is
contained in the latest annual report to shareholders, the
Registrant shall furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to
shareholders upon request and without charge.
<PAGE> 115
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 (the "1933 Act")
and the Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amendment to its Registration Statement on Form N-1A to be signed on its
behalf by the undersigned, thereunto duly authorized, in the of City of Boston
and the Commonwealth of Massachusetts on the 22nd day of October, 1998.
GREEN CENTURY FUNDS
By: /s/ Kristina A. Curtis
-----------------------
Treasurer
Pursuant to the requirements of the 1933 Act, this Amendment to the
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities indicated on October 22, 1998.
Signature Title
- --------- -----
DOUGLAS M. HUSID* President, Chief
- --------------------------------------- Executive Officer and
Douglas M. Husid Trustee
/s/ Kristina A. Curtis Treasurer, Principal
- --------------------------------------- Financial Officer and
Kristina A. Curtis Principal Accounting
Officer
DAVID J. FINE*
- --------------------------------------- Trustee
David J. Fine
STEVEN KADISH* Trustee
- ---------------------------------------
Steven Kadish
<PAGE> 116
Signature Title
- --------- -----
STEPHEN MORGAN* Trustee
- ---------------------------------------
Stephen Morgan
C. WILLIAM RYAN* Trustee
- ---------------------------------------
C. William Ryan
JAMES H. STARR* Trustee
- ---------------------------------------
James H. Starr
WENDY WENDLANDT* Trustee
- ---------------------------------------
Wendy Wendlandt
DOUGLAS H. PHELPS* Trustee
- ---------------------------------------
Douglas H. Phelps
*By /s/Kristina A. Curtis
----------------------
Attorney-in-fact
*Pursuant to Power of Attorney filed herewith.
<PAGE> 117
SIGNATURES
Domini Social Index Portfolio (the "Index Portfolio") has duly caused
this post-effective amendment to the Registration Statement on Form N-1A (File
No. 33-41692) of Green Century Funds (the "Trust") to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 22nd day of October, 1998.
DOMINI SOCIAL INDEX PORTFOLIO
By: /s/Amy L. Domini
----------------
Amy L. Domini
President
This post-effective amendment to the Registration Statement on Form
N-1A (File No. 33-41692) of the Trust has been signed below by the following
persons in the capacities indicated on October 22, 1998.
Signature Title
- --------- -----
/s/Amy L. Domini President (Principal
- --------------------------------------- Executive Officer)
Amy L. Domini of the Index Portfolio
Emily W. Card* Trustee of the Index
- --------------------------------------- Portfolio
Emily W. Card
/s/Amy L. Domini Trustee of the Index
- --------------------------------------- Portfolio
Amy L. Domini
Allen M. Mayes* Trustee of the Index
- --------------------------------------- Portfolio
Allen M. Mayes
William C. Osborn* Trustee of the Index
- --------------------------------------- Portfolio
William C. Osborn
<PAGE> 118
Karen Paul* Trustee of the Index
- -------------------------------------- Portfolio
Karen Paul
Timothy Smith* Trustee of the Index
- -------------------------------------- Portfolio
Timothy Smith
Frederick C. Williamson* Trustee of the Index
- -------------------------------------- Portfolio
Frederick C. Williamson
*By /s/Amy L. Domini
-----------------
Amy L. Domini
*Pursuant to power of attorney filed herewith.
<PAGE> 119
EXHIBIT INDEX
1(a) Declaration of Trust.(8)
1(b) First Amended and Restated Establishment and
Designation of Series of the Trust.(8)
1(c) Second Amended and Restated Establishment and
Designation of Series of the Trust.(8)
1(d) Third Amended and Restated Establishment and
Designation of Series of the Trust.(8)
2 By-Laws of the Trust.(8)
3 Inapplicable.
4 Specimen share certificate.(4)
5(a) Investment Advisory Agreement between Registrant and
Green Century Capital Management, Inc.(8)
5(b) Investment Subadvisory Agreement (superseded).(2)
5(c) Investment Subadvisory Agreement with respect to
the Green Century Balanced Fund between Green
Century Capital Management, Inc. and Eaton Vance
Management.(8)
6(a) Amended and Restated Distribution Agreement
between the Registrant and Signature
Broker-Dealer Services, Inc. (superseded).(6)
6(b) Distribution Agreement between the Registrant and
Sunstone Distribution Services, LLC.(9)
7 Inapplicable.
8(a) Custodian Agreement between Registrant and Investors
Bank and Trust Company.(11)
8(b) Transfer Agency and Services Agreement between
Registrant and Investors Bank and Trust Company.(6)
8(c) Transfer Agent Agreement between Registrant and
Unified Fund Services, Inc.(11)
9(a) Amended and Restated Administrative Services
Agreement between Registrant and Green Century
Capital Management, Inc.(11)
9(b) Accounting Services Agreement (superseded).(2)
<PAGE> 120
9(c) Shareholder Services Agreement (superseded).(2)
9(d) Sub-Administration Agreement between Green
Century Capital Management, Inc. and Sunstone
Financial Group, Inc.(9)
10 Inapplicable.
11 Consents of independent auditors as filed herein.(11)
12 Inapplicable.
13 Investment representation letters of initial
shareholder.(4)
14(a) Traditional and Roth IRA Disclosure Statement and
Custodial Account Agreement(11)
14(b) Education IRA Disclosure Statement and Custodial
Account Agreement(11)
14(c) 403(b)(7) Custodial Account Agreement(11)
15(a) Amended and Restated Distribution Plan pursuant to
Rule 12b-l under the Investment Company Act of 1940
(the "1940 Act").(5)
15(b) Amended and Restated Distribution Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940
(the "1940 Act").(9)
16 Schedule for Computation of Performance Quotations
with respect to the Green Century Growth Fund.(6)
17 Financial Data Schedules.(11)
18 None
19(a) Powers of Attorney.(2)
19(b) Power of Attorney of Michael Brennan.(3)
19(c) Powers of Attorney with respect to Domini Social
Index Portfolio (Amy L. Domini, Allen M. Mayes,
Timothy Smith, and Frederick C. Williamson).(9)
19(d) Power of Attorney of Douglas H. Phelps.(9)
19(e) Powers of Attorney with respect to the Domini Social
Index (Frederick C. Williamson, Sr., Timothy
Smith, Allen M. Mayes, William C. Osborn, Karen Paul)
as filed herein.(11)
<PAGE> 121
19(f) Powers of Attorney with respect to The Green Century
Funds (Douglas M. Husid, David J.
Fine, Steven Kadish, Stephen Morgan, C. William
Ryan, James H. Starr, Wendy Wendlandt, Douglas
Phelps) as filed herein.(11)
(1) Incorporated herein by reference from the Registrant's initial
Registration Statement on Form N-1A, as filed with the Securities and Exchange
Commission ("SEC") on July 12, 1991.
(2) Incorporated herein by reference from Pre-Effective Amendment No. 1 to
this Registration Statement as filed with the SEC on November 29, 1991.
(3) Incorporated herein by reference from Pre-Effective Amendment No. 2 to
this Registration Statement as filed with the SEC on January 14, 1992.
(4) Incorporated herein by reference from Pre-Effective Amendment No. 3 to
this Registration Statement as filed with the SEC on January 31, 1992.
(5) Incorporated herein by reference from Post-Effective Amendment No. 3
to this Registration Statement as filed with the SEC on October 29, 1993.
(6) Incorporated herein by reference from Post-Effective Amendment No. 6
to this Registration Statement as filed with the SEC on June 28, 1995.
(7) Incorporated herein by reference from Post-Effective Amendment No. 7
to this Registration Statement as filed with the SEC on September 11, 1995.
(8) Incorporated herein by reference from Post-Effective Amendment No. 8
to this Registration Statement as filed with the SEC on September 30, 1996.
(9) Incorporated herein by reference from Post-Effective Amendment No. 9
to this Registration Statement as filed with the SEC on October 3, 1997.
(10) Incorporated herein by reference from Post-Effective Amendment No. 10
to this Registration Statement as filed with the SEC on November 6, 1997.
(11) Filed herein.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000877232
<NAME> GREEN CENTURY FUNDS
<SERIES>
<NUMBER> 2
<NAME> BALANCE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 15,281,591
<INVESTMENTS-AT-VALUE> 16,087,498
<RECEIVABLES> 294,715
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,382,213
<PAYABLE-FOR-SECURITIES> 48,375
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48,072
<TOTAL-LIABILITIES> 96,447
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,420,784
<SHARES-COMMON-STOCK> 1,180,620
<SHARES-COMMON-PRIOR> 814,559
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,046,849
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 818,133
<NET-ASSETS> 16,285,766
<DIVIDEND-INCOME> 34,050
<INTEREST-INCOME> 332,764
<OTHER-INCOME> 0
<EXPENSES-NET> (349,443)
<NET-INVESTMENT-INCOME> 17,371
<REALIZED-GAINS-CURRENT> 1,701,718
<APPREC-INCREASE-CURRENT> (457,501)
<NET-CHANGE-FROM-OPS> 1,261,588
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (78,490)
<DISTRIBUTIONS-OF-GAINS> (1,204,821)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 360,830
<NUMBER-OF-SHARES-REDEEMED> 72,916
<SHARES-REINVESTED> 78,147
<NET-CHANGE-IN-ASSETS> 5,263,624
<ACCUMULATED-NII-PRIOR> 53,427
<ACCUMULATED-GAINS-PRIOR> 557,644
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 104,833
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 349,443
<AVERAGE-NET-ASSETS> 13,977,002
<PER-SHARE-NAV-BEGIN> 13.53
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 1.68
<PER-SHARE-DIVIDEND> (0.09)
<PER-SHARE-DISTRIBUTIONS> (1.35)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.79
<EXPENSE-RATIO> 2.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000877232
<NAME> GREEN CENTURY FUNDS
<SERIES>
<NUMBER> 2
<NAME> BALANCED FUND
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 15,325,912
<INVESTMENTS-AT-VALUE> 14,841,132
<RECEIVABLES> 410,318
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,251,450
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,651
<TOTAL-LIABILITIES> 39,651
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,677,421
<SHARES-COMMON-STOCK> 1,199,430
<SHARES-COMMON-PRIOR> 1,180,620
<ACCUMULATED-NII-CURRENT> 3,077
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,013,880
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (482,579)
<NET-ASSETS> 15,211,799
<DIVIDEND-INCOME> 1,520
<INTEREST-INCOME> 35,892
<OTHER-INCOME> 0
<EXPENSES-NET> (34,335)
<NET-INVESTMENT-INCOME> 3,077
<REALIZED-GAINS-CURRENT> (32,969)
<APPREC-INCREASE-CURRENT> (1,300,712)
<NET-CHANGE-FROM-OPS> (1,330,604)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41,766
<NUMBER-OF-SHARES-REDEEMED> 22,956
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,073,967)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,046,849
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,301
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 34,335
<AVERAGE-NET-ASSETS> 16,163,464
<PER-SHARE-NAV-BEGIN> 13.79
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (1.11)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.68
<EXPENSE-RATIO> 2.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000877232
<NAME> GREEN CENTURY FUNDS
<SERIES>
<NUMBER> 3
<NAME> EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 12,605,974
<INVESTMENTS-AT-VALUE> 15,426,641
<RECEIVABLES> 89,742
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,516,383
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40,806
<TOTAL-LIABILITIES> 40,806
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,577,082
<SHARES-COMMON-STOCK> 756,959
<SHARES-COMMON-PRIOR> 312,859
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 77,828
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,820,667
<NET-ASSETS> 15,475,577
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 97,793
<EXPENSES-NET> (122,190)
<NET-INVESTMENT-INCOME> (24,397)
<REALIZED-GAINS-CURRENT> 101,835
<APPREC-INCREASE-CURRENT> 1,755,126
<NET-CHANGE-FROM-OPS> 1,832,564
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (5,456)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 535,842
<NUMBER-OF-SHARES-REDEEMED> 92,049
<SHARES-REINVESTED> 307
<NET-CHANGE-IN-ASSETS> 10,200,399
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 8,086
<OVERDISTRIB-NII-PRIOR> 2,240
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 122,190
<AVERAGE-NET-ASSETS> 9,398,506
<PER-SHARE-NAV-BEGIN> 16.86
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 3.62
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.44
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.B8
(2/95)
Custody & Fund Accounting
CUSTODIAN AGREEMENT
Between
GREEN CENTURY FUNDS
And
GREEN CENTURY CAPITAL MANAGEMENT, INC.
and
INVESTORS BANK & TRUST COMPANY
TABLE OF CONTENTS
<TABLE>
<S><C>
Page
----
1. Bank Appointed Custodian
2. Definitions ...........................................................I
2.1 Authorized Person .....................................................1
2.2 Security ..............................................................1
2.3 Portfolio Security ....................................................1
2.4 Officers' Certificate .................................................2
2.5 Book-Entry System .....................................................2
2.6 Depository ............................................................2
2.7 Proper Instructions ...................................................2
3. Separate Accounts .....................................................2
4. Certification as to Authorized Persons ................................3
5. Custody of Cash .......................................................3
5.1 Purchase of Securities ................................................3
5.2 Redemptions ...........................................................3
5.3 Distributions and Expenses of Trust ...................................4
5.4 Payment in Respect of Securities ......................................4
5.5 Repayment of Loans ....................................................4
5.6 Repayment of Cash .....................................................4
5.7 Foreign Exchange Transactions .........................................4
5.8 Other Authorized Payments .............................................4
5.9 Termination ...........................................................4
6. Securities ............................................................4
</TABLE>
<PAGE> 2
<TABLE>
<S><C>
6.1 Segregation and Registration ..........................................4
6.2 Voting and Proxies ....................................................5
6.3 Book-Entry System .....................................................5
6.4 Use of a Depository ...................................................6
6.5 Use of Book-Entry System for Commercial Paper .........................7
6.6 Use of Immobilization Programs ........................................8
6.7 Eurodollar CDs ........................................................8
6.8 Options and Futures Transactions ......................................9
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter ...................................................9
(b) Puts, Calls, and Futures Traded
on Commodities Exchanges .....................................................9
Page
----
6.9 Segregated Account ....................................................9
6.10 Interest Bearing Call or Time Deposits ................................11
6.11 Transfer of Securities ................................................11
7. Redemptions ...........................................................13
8. Merger, Dissolution, etc. of Trust ....................................13
9. Actions of Bank Without Prior Authorization ...........................13
10. Collections and Defaults ..............................................14
11. Maintenance of Records ................................................14
12. Fund Valuation ........................................................14
13. Concerning the Bank ...................................................15
13.1 Performance of Duties;
Standard of Care .............................................................15
13.2 Agents and Subcustodians with Respect to Property
of the Trust Held in the United States ................................16
13.3 Duties of the Bank with Respect to Property
Held Outside of the United States .....................................16
13.4 Insurance .............................................................19
13.5 Fees and Expenses of Bank .............................................20
13.6 Advances by Bank ......................................................20
</TABLE>
<PAGE> 3
<TABLE>
<S><C>
14. Termination ...........................................................20
15. Confidentiality .......................................................21
16. Notices ...............................................................21
17. Amendments ............................................................22
18. Parties ...............................................................22
19. Governing Law .........................................................22
20. Counterparts ..........................................................22
21. Limitation of Liability of the Trustees and Shareholders...............22
</TABLE>
<PAGE> 4
CUSTODIAN AGREEMENT
AGREEMENT made as of this 11th day of September, 1995, among Green Century
Funds, a Massachusetts business trust (the "Trust") which consists of separate
series of shares set forth on Exhibit A attached hereto, Green Century Capital
Management, Inc., a Massachusetts corporation ("GCCM"), and INVESTORS BANK &
TRUST COMPANY, a Massachusetts trust company (the "Bank").
The Trust, an open-end management investment company, desires to place and
maintain all of its portfolio securities and cash in the custody of the Bank.
The Bank has at least the minimum qualifications required by Section 17(f)(1) of
the Investment Company Act of 1940 (the "1940 Act") to act as custodian of the
portfolio securities and cash of the Trust, and has indicated its willingness to
so act, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Trust hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. Definitions. Whenever used herein, the terms listed below will have the
following meaning:
2.1 Authorized Person. Authorized Person will mean any of the persons duly
authorized to give Proper Instructions or otherwise act on behalf of the Trust
by appropriate resolution of its Board of Trustees ("the Board"), and set forth
in a certificate as required by Section 4 hereof
2.2 Security. The term security as used herein will have the same meaning
as when such term is used in the Securities Act of 1933, as amended, including,
without limitation, any note, stock, treasury stock, bond, debenture, evidence
of indebtedness, certificate of interest or participation in any profit sharing
agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof, or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
2.3 Portfolio Security. Portfolio Security will mean any Security owned by
the Trust.
2.4 Officers' Certificate. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Trust.
<PAGE> 5
2.5 Book-Entry System. Book-Entry System shall mean the Federal
Reserve Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.6 Depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.
2.7 Proper Instructions. Proper Instructions shall mean (i) instructions
(which may be continuing instructions) regarding the purchase or sale of
Portfolio Securities, and payments and deliveries in connection therewith, given
by an Authorized Person as shall have been designated in an Officers'
Certificate, such instructions to be given in such form and manner as the Bank
and the Trust shall agree upon from time to time, and (ii) instructions (which
may be continuing instructions) regarding other matters signed or initialed by
such one or more persons from time to time designated in an Officers'
Certificate as having been authorized by the Board. Oral instructions will be
considered Proper Instructions if the Bank reasonably believes them to have been
given by a person authorized to give such instructions with respect to the
transaction involved. The Trust shall cause all oral instructions to be promptly
confirmed in writing. The Bank shall act upon and comply with any subsequent
Proper Instruction which modifies a prior instruction and the sole obligation of
the Bank with respect to any follow-up or confirmatory instruction shall be to
make reasonable efforts to detect any discrepancy between the original
instruction and such confirmation and to report such discrepancy to the Trust.
The Trust shall be responsible, at the expense of GCCM, for taking any action,
including any reprocessing, necessary to correct any such discrepancy or error,
and to the extent such action requires the Bank to act the Trust shall give the
Bank specific Proper Instructions as to the action required. Upon receipt of an
Officers' Certificate as to the authorization by the Board accompanied by a
detailed description of procedures approved by the Trust, Proper Instructions
may include communication effected directly between electro-mechanical or
electronic devices provided that the Board and the Bank are satisfied that such
procedures afford adequate safeguards for the Trust's assets.
3. Separate Accounts. If the Trust has more than one series or portfolio,
the Bank will segregate the assets of each series or portfolio to which this
Agreement relates into a separate account for each such series or portfolio
containing the assets of such series or portfolio (and all investment earnings
thereon). Unless the context otherwise requires, any reference in this Agreement
to any actions to be taken by the Trust shall be deemed to refer to the Trust
acting on behalf of one or more of its series, any reference in this Agreement
to any assets of the Trust, including, without limitation, any Portfolio
Securities and cash and earnings thereon, shall be deemed to refer only to
assets of the applicable series, any duty or obligation of the Bank hereunder to
the Trust shall be deemed to refer to duties and obligations with respect to the
individual series, and any obligation or liability of the Trust hereunder shall
be binding only with respect to the individual series, and shall be discharged
only out of the assets of such series.
<PAGE> 6
4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Trust will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
Members of the Board, it being understood that upon the occurrence of any change
in the information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Trust, will sign a new or amended certification setting forth
the change and the new, additional or omitted names or signatures. The Bank will
be entitled to rely and act upon any Officers' Certificate given to it by the
Trust which has been signed by Authorized Persons named in the most recent
certification.
5. Custody of Cash. As custodian for the Trust, the Bank will open and
maintain a separate account or accounts in the name of the Trust or in the name
of the Bark as Custodian of the Trust, and will deposit to the account of the
Trust all of the cash of the Trust, except for cash held by a subcustodian
appointed pursuant to Section 13.2 or 13.3 hereof, including borrowed funds,
delivered to the Bank, subject only to draft or order by the Bank acting
pursuant to the terms of this Agreement. Upon receipt by the Bank of Proper
Instructions (which may be continuing instructions) or in the case of payments
for redemptions and repurchases of outstanding shares of common stock of the
Trust, notification from the Trust's transfer agent as provided in Section 7,
requesting such payment, designating the payee or the account or accounts to
which the Bank will release funds for deposit, and stating that it is for a
purpose permitted under the terms of this Section 5, specifying the applicable
subsection, the Bank will make payments of cash held for the accounts of the
Trust, insofar as funds are available for that purpose, only as permitted in
subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of securities for the Trust,
against contemporaneous receipt of such securities by the Bank or, against
delivery of such securities to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs, registered in the name of the Trust or in the name of, or
properly endorsed and in form for transfer to, the Bank, or a nominee of the
Bank, or receipt for the account of the Bank pursuant to the provisions of
Section 6 below, each such payment to be made at the purchase price shown on a
broker's confirmation (or transaction report in the case of Book Entry Paper) of
purchase of the securities received by the Bank before such payment is made, as
confirmed in the Proper Instructions received by the Bank before such payment is
made.
5.2 Redemptions. In such amount as may be necessary for the repurchase or
redemption of common shares of the Trust offered for repurchase or redemption in
accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of Trust. For the payment on the account of
the Trust of dividends or other distributions to shareholders as may from time
to time be authorized by the Board, interest, taxes, brokerage costs and other
capital expenses, expenses of the non-interested Trustees (including counsel
fees), other extraordinary expenses, investment advisory fees, administrative
fees and distribution fees.
<PAGE> 7
5.4 Payment in Respect of Securities. For payments in connection with the
conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Trust held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to the Trust, but, in
the case of final payment, only upon redelivery to the Bank of any Portfolio
Securities pledged or hypothecated therefor and upon surrender of documents
evidencing the loan.
5.6 Repayment of Cash. To repay the cash delivered to the Trust for the
purpose of collateralizing the obligation to return to the Trust certificates
borrowed from the Trust representing Portfolio Securities, but only upon
redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions. For payments in connection with foreign
exchange contracts or options to purchase and sell foreign currencies for spot
and future delivery which may be entered into by the Bank on behalf of the Trust
upon the receipt of Proper Instructions, such Proper Instructions to specify the
currency broker or banking institution (which may be the Bank, or any other
subcustodian or agent hereunder, acting as principal) with which the contract or
option is made, and the Bank shall have no duty with respect to the selection of
such currency brokers or banking institutions with which the Trust deals or for
their failure to comply with the terms of any contract or option.
5.8 Other Authorized Payments. For other authorized transactions of the
Trust, or other obligations of the Trust incurred for proper Trust purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Trust, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose.
5.9 Termination: upon the termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 14 of this Agreement.
6. Securities.
6.1 Segregation and Registration. Except as otherwise provided herein, and
except for securities to be delivered to any subcustodian appointed pursuant to
Section 13.2 hereof, the Bank as custodian, will receive and hold pursuant to
the provisions hereof, in a separate account or accounts and physically
segregated at all times from those of other persons, any and all Portfolio
Securities which may now or hereafter be delivered to it by or for the account
of the Trust. All such Portfolio Securities will be held or disposed of by the
Bank for, and subject at all times to, the instructions of the Trust pursuant to
the terms of this Agreement. Subject to the specific provisions herein relating
to Portfolio Securities that are not physically held by the Bank, the Bank will
register all Portfolio Securities (unless otherwise directed by Proper
Instructions or an Officers' Certificate), in the name of a registered nominee
of the Bank as defined in the Internal Revenue Code and any Regulations of the
Treasury Department issued
<PAGE> 8
thereunder, and will execute and deliver all such certificates in connection
therewith as may be required by such laws or regulations or under the laws of
any state.
The Trust will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
may from time to time be registered in the name of the Trust.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank will
vote any of the Portfolio Securities held hereunder, except in accordance with
Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Trust all notices,
proxies and proxy soliciting materials with respect to such Securities, such
proxies to be executed by the registered holder of such Securities (if
registered otherwise than in the name of the Trust), but without indicating the
manner in which such proxies are to be voted.
6.3 Book-Entry System. Provided (i) the Bank has received a certified copy
of a resolution of the Board specifically approving deposits of Trust assets in
the Book-Entry System, and (ii) for any subsequent changes to such arrangements
following such approval, the Board has reviewed and approved the arrangement and
has not delivered an Officer's Certificate to the Bank indicating that the Board
has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry System
provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect to the
Trust's participation in the Book-Entry System through the Bank (or any such
agent) will identify by book entry Portfolio Securities which are included with
other securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Trust. Where securities are
transferred to the Trust's account, the Bank shall also, by book entry or
otherwise, identify as belonging to the Trust a quantity of securities in
fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for Portfolio Securities
purchased for the account of the Trust or shall pay cash collateral against the
return of Portfolio Securities loaned by the Trust upon (i) receipt of advice
from the Book-Entry System that such Portfolio Securities have been transferred
to the Account, and (ii) the making of an entry on the records of the Bank (or
its agent) to reflect such payment and transfer for the account of the Trust.
The Bank (or its agent) shall transfer securities sold or loaned for the account
of the Trust upon
(i) receipt of advice from the Book-Entry System that payment for
securities sold or payment of the initial cash collateral against the delivery
of Portfolio Securities loaned by the Trust has been transferred to the Account;
and
(ii) the making of an entry on the records of the Bank (or its
agent) to reflect such transfer and payment for the account of the Trust. Copies
of all advices from the Book-Entry
<PAGE> 9
System of transfers of securities for the account of the Trust shall identify
the Trust, be maintained for the Trust by the Bank and shall be provided to the
Trust at its request. The Bank shall send the Trust a confirmation, as defined
by Rule l7f-4 under the 1940 Act, of any transfers to or from the account of the
Trust;
(d) The Bank will promptly provide the Trust with any report obtained
by the Bank or its agent on the Book-Entry Systems accounting system, internal
accounting control and procedures for safeguarding securities deposited in the
Book-Entry System; and
(e) The Bank shall be liable to the Trust for any loss or damage to the
Trust resulting from use of the Book-Entry System by reason of any negligence,
willful misfeasance or bad faith of the Bank or any of its agents or of any of
its or their employees or from any reckless disregard by the Bank or any such
agent of its duty to use its best efforts to enforce such rights as it may have
against the Book-Entry System; at the election of the Trust, it shall be
entitled to be substituted for the Bank in any claim against the Book-Entry
System or any other person which the Bank or its agent may have as a consequence
of any such loss or damage if and to the extent that the Trust has not been made
whole for any loss or damage.
6.4 Use of a Depository. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits in DTC or
other such Depository and (ii) for any subsequent changes to such arrangements
following such approval, the Board has reviewed and approved the arrangement and
has not delivered an Officer's Certificate to the Bank indicating that the Board
has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange, release,
lend, deliver and otherwise deal with Portfolio Securities including stock
dividends, rights and other items of like nature, and to receive and remit to
the Bank on behalf of the Trust all income and other payments thereon and to
take all steps necessary and proper in connection with the collection thereof,
(b) Registration of Portfolio Securities may be made in the name of any
nominee or nominees used by such Depository;
(c) Payment for Portfolio Securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the Portfolio Securities to or for
the account of the Trust and the Trust shall pay cash collateral against the
return of Portfolio Securities loaned by the Trust only upon delivery of the
Portfolio Securities to or for the account of the Trust; and upon any sale of
Portfolio Securities, delivery of the Portfolio Securities will be made only
against payment therefor or, in the event Portfolio Securities are loaned,
delivery of Portfolio Securities will be made only against receipt of the
initial cash collateral to or for the account of the Trust; and
(d) The Bank shall be liable to the Trust for any loss or damage to the
Trust resulting from use of a Depository by reason of any negligence, willful
misfeasance or bad faith of the Bank or its employees or from any reckless
disregard by the Bank of its duty to use its best efforts to enforce such rights
as it may have against a Depository. In this connection, the Bank shall use its
best efforts to ensure that:
<PAGE> 10
(i) The Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Security is lost,
destroyed, wrongfully taken or otherwise not available to be returned to the
Bank upon its request;
(ii) Any proxy materials received by a Depository with respect to
Portfolio Securities deposited with such Depository are forwarded immediately to
the Bank for prompt transmittal to the Trust;
(iii) Such Depository immediately forwards to the Bank confirmation
of any purchase or sale of Portfolio Securities and of the appropriate book
entry made by such Depository to the Trust's account;
(iv) Such Depository prepares and delivers to the Bank such records
with respect to the performance of the Bank's obligations and duties hereunder
as may be necessary for the Trust to comply with the recordkeeping requirements
of Section 3 1 (a) of the 1940 Act and Rule 3 1 (a) thereunder; and
(v) Such Depository delivers to the Bank and the Trust all internal
accounting control reports, whether or not audited by an independent public
accountant, as well as such other reports as the Trust may reasonably request in
order to verify the Portfolio Securities held by such Depository.
6.5 Use of Book-Entry System for Commercial Paper. Provided (i) the Bank
has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Trust has purchased such Issuer's Book-entry
Paper, the Bank shall issue and hold in book-entry form, on behalf of the Trust,
commercial paper issued by issuers with whom the Bank has entered into a
book-entry agreement (the "Issuers"). In maintaining its Book-entry Paper
System, the Bank agrees that:
(a) the Bank will maintain all Book-Entry Paper held by the Trust in an
account of the Bank that includes only assets held by it for customers;
(b) the records of the Bank with respect to the Trust's purchase of
Book-Entry Paper through the Bank will identify, by book-entry, Commercial Paper
belonging to the Trust which is included in the Book-entry Paper System and
shall at all times during the regular business hours of the Bank be open for
inspection by duly authorized officers, employees or agents of the Trust;
(c) the Bank shall pay for Book-Entry Paper purchased for the account
of the Trust upon contemporaneous (i) receipt of advice from the Issuer that
such sale of Book-Entry Paper has been effected, and (ii) the making of an entry
on the records of the Bank to reflect such payment and transfer for the account
of the Trust;
(d) the Bank shall cancel such Book-Entry Paper obligation upon the
maturity thereof upon contemporaneous (i) receipt of advice that payment for
such Book-Entry Paper has been
<PAGE> 11
transferred to the Trust, and (ii) the making of an entry on the records of the
Bank to reflect such payment for the account of the Trust;
(e) the Bank shall transmit to the Trust a transaction journal
confirming each transaction in Book-Entry Paper for the account of the Trust on
the next business day following the transaction; and
(f) the Bank will send to the Trust such reports on its system of
internal accounting control with respect to the Book-Entry Paper System as the
Trust may reasonably request from time to time.
6.6 Use of Immobilization Programs. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated
by a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.7 Eurodollar CDs. Any Portfolio Securities which are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Securities are identified on the books of the Bank as
belonging to the Trust and that the books of the Bank identify the European
Branch holding such Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subsection 6.7, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Trust, and shall have no liability to the Trust
or its shareholders with respect to the actions, inactions, whether negligent
or otherwise of such European Branch in connection with such Eurodollar CDs,
except for any loss or damage to the Trust resulting from the Bank's own
negligence, willful misfeasance or bad faith in the performance of its duties
hereunder.
6.8 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
1. The Bank shall take action as to put options ("puts") and call
options ("calls") purchased or sold (written) by the Trust regarding escrow or
other arrangements (i) in accordance with the provisions of any agreement
entered into upon receipt of Proper Instructions between the Bank, any
broker-dealer registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the
Trust relating to the compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank shall be
under no duty or obligation to see that the Trust has deposited or is
maintaining adequate margin, if required, with any broker in connection with any
option, nor shall the Bank be under duty or obligation to present such option to
the broker for exercise unless it receives Proper Instructions from the
<PAGE> 12
Trust. The Bank shall have no responsibility for the legality of any put or call
purchased or sold on behalf of the Trust, the propriety of any such purchase or
sale, or the adequacy of any collateral delivered to a broker in connection with
an option or deposited to or withdrawn from a Segregated Account (as defined in
subsection 6.9 below). The Bank specifically, but not by way of limitation,
shall not be under any duty or obligation to: (i) periodically check or notify
the Trust that the amount of such collateral held by a broker or held in a
Segregated Account is sufficient to protect such broker of the Trust against any
loss; (ii) effect the return of any collateral delivered to a broker; or (iii)
advise the Trust that any option it holds, has or is about to expire. Such
duties or obligations shall be the sole responsibility of the Trust.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Trust in accordance with the
provisions of any agreement among the Trust, the Bank and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding account deposits
in connection with transactions by the Trust.
2. The responsibilities and liabilities of the Bank as to futures,
puts and calls traded on commodities exchanges, any Futures Commission Merchant
account and the Segregated Account shall be limited as set forth in subparagraph
(a)(2) of this Section 6.8 as if such subparagraph referred to Futures
Commission Merchants rather than brokers, and Futures and puts and calls thereon
instead of options.
6.9 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Trust.
1. Upon receipt of Proper Instructions cash and/or Portfolio Securities
may be transferred into the Segregated Account or Accounts.
(a) in accordance with the provisions of any agreement among the
Trust, the Bank and a broker-dealer registered under the Exchange Act and a
member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Trust;
(b) for the purpose of segregating cash or securities in connection
with options purchased or written by the Trust or commodity futures purchased or
written by the Trust;
(c) for the deposit of liquid assets, such as cash, U.S. Government
securities or other high grade debt obligations, having a market value (marked
to market on a daily basis) at all times equal to not less than the aggregate
purchase price due on the settlement dates of all the Trust's then outstanding
forward commitment or "when-issued" agreements relating to the purchase of
Portfolio Securities and all the Trust's then outstanding commitments under
reverse repurchase agreements entered into with broker-dealer firms;
<PAGE> 13
(d) for the deposit of any Portfolio Securities which the Trust has
agreed to sell on a forward commitment basis, all in accordance with Investment
Company Act Release No. 10666;
(e) for the purposes of compliance by the Trust with the procedures
required by Investment Company Act Release No. 10666, or any subsequent release
or releases of the Securities and Exchange Commission relating to the
maintenance of Segregated Accounts by registered investment companies; or
(f) for other proper corporate purposes, but 2*, in the case of
this clause (f), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee
signed by an officer of the Trust and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such Segregated Account and
declaring such purposes to be proper corporate purposes.
2. Upon receipt of Proper Instructions, cash and/or Portfolio
Securities may be withdrawn from the Segregated Account or Accounts.
(a) in accordance with the provisions of any agreements referenced
in (a) or (b) above;
(b) for sale or delivery to meet the Trust's obligations under
outstanding firm commitment or when-issued agreements for the purchase of
Portfolio Securities and under reverse repurchase agreements;
(c) for exchange for other liquid assets of equal or greater value
deposited in the Segregated Account;
(d) to the extent that the Trust's outstanding forward commitment
or when-issued agreements for the purchase of portfolio securities or reverse
repurchase agreements are sold to other parties or the Trust's obligations
thereunder are met from assets of the Trust other than those in the Segregated
Account; or
(e) for delivery upon settlement of a forward commitment agreement
for the sale of Portfolio Securities.
6.10 Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Trust of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Trust appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the
deposit, if any, as may be forwarded to the Bank by the Deposit Bank. Such
deposits shall be deemed Portfolio Securities of the Trust and the
responsibility of the Bank therefore shall be the same as and no greater than
the Bank's responsibility in respect of other Portfolio Securities of the
Trust.
<PAGE> 14
6.11 Transfer of Securities. The Bank will transfer, exchange,
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section the Bank will
receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this Section
6.11, specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Bank to ascertain the
applicable subsection, only:
(a) upon sales of Portfolio Securities for the account of the
Trust, against contemporaneous receipt by the Bank of payment therefore in full,
or, against payment to the Bank in accordance with generally accepted settlement
practices and customs in the jurisdiction or market in which the transaction
occurs, each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale of the Portfolio Securities received by the Bank
before such transfer is made, as confirmed in the Proper Instructions received
by the Bank before such transfer is made,
(b) in exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan of merger, consolidation,
reorganization, share split-up, change in par value, recapitalization or
readjustment or otherwise, upon exercise of subscription, purchase or sale or
other similar rights represented by such Portfolio Securities, or for the
purpose of tendering shares in the event of a tender offer therefor, provided
however that in the event of an offer of exchange, tender offer, or other
exercise of rights requiring the physical tender or delivery of Portfolio
Securities, the Bank shall have no liability for failure to so tender in a
timely manner unless such Proper Instructions are received by the Bank at least
two business days prior to the date required for tender, and unless the Bank
(or its agent or subcustodian hereunder) has actual possession of such Security
at least two business days prior to the date of tender;
(c) upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) for the purpose of redeeming in kind shares of the Trust upon
authorization from the Trust;
(e) in the case of option contracts owned by the Trust, for
presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or retired
or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Trust
by any bank, including the Bank; provided, however, that such Portfolio
Securities will be released only upon payment to the Bank for the account of
the Trust of the moneys borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, and such fact is
made to appear in the Proper Instructions, further Portfolio Securities may be
released for that purpose without any such payment. In the event that any such
pledged Portfolio Securities are held by the Bank, they will be so held for the
account of the lender, and after notice to the Trust from the lender in
<PAGE> 15
accordance with the normal procedures of the lender, that an event of
deficiency or default on the loan has occurred, the Bank may deliver such
pledged Portfolio Securities to or for the account of the lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the Trust to
a bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Trust and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such securities
entered into by the Trust;
(j) for other authorized transactions of the Trust or for other
proper corporate purposes; provided that before making such transfer, the Bank
will also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Trust (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Trust or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and
(k) upon termination of this Agreement as hereinafter set forth
pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) securities or cash receivable in exchange
therefor shall be delivered to the Bank.
7. Redemptions. In the case of payment of assets of the Trust held by
the Bank in connection with redemptions and repurchases by the Trust of
outstanding common shares, the Bank will rely on notification by the Trust's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment
shall be made in accordance with the Articles and By-laws of the Trust, from
assets available for said purpose.
8. Merger, Dissolution, etc. of Trust. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Trust into or the consolidation of the Trust with another investment company
where the Trust is not the surviving entity, the sale by the Trust of all, or
substantially all, of its assets to another investment company, or the
liquidation or dissolution of the Trust and distribution of its assets, the
Bank will deliver the Portfolio Securities held by it under this Agreement and
disburse cash only upon the order of the Trust set forth in an Officers'
Certificate, accompanied by a certified copy of a resolution of the Board
authorizing any of the foregoing transactions. Upon completion of such delivery
and disbursement and the payment of the fees, disbursements and expenses of the
Bank, this Agreement will terminate.
<PAGE> 16
9. Actions of Bank Without Prior Authorization. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an
Officers' Certificate to the contrary, it will without prior authorization or
instruction of the Trust or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the
name of the Trust all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Trust and hold for the account of the Trust all income,
dividends, interest and other payments or distribution of cash with respect to
the Portfolio Securities held thereunder;
9.2 Present for payment all coupons and other income items held by
it for the account of the Trust which call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Trust;
9.3 Receive and hold for the account of the Trust all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder;
9.4 Execute as agent on behalf of the Trust all necessary
ownership and other certificates and affidavits required by the Internal
Revenue Code or the regulations of the Treasury Department issued thereunder,
or by the laws of any state, now or hereafter in effect, inserting the Trust's
name on such certificates as the owner of the securities covered thereby, to
the extent it may lawfully do so and as may be required to obtain payment in
respect thereof The Bank will execute and deliver such certificates in
connection with Portfolio Securities delivered to it or by it under this
Agreement as may be required under the provisions of the Internal Revenue Code
and any Regulations of the Treasury Department issued thereunder, or under the
laws of any state;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it
upon payment for the account of the Trust; and
9.6 Exchange interim receipts or temporary securities for
definitive securities.
10. Collections and Defaults. The Bank will use all reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Trust notice actually received by it of any call for
redemption, offer of exchange, right of subscription, reorganization or other
proceedings affecting such Securities. If Portfolio Securities upon which such
income is payable are in default or payment is refused after due demand or
presentation, the Bank will notify the Trust in writing of any default or
refusal to pay within two business days from the day on which it receives
knowledge of such default or refusal. In addition, the Bank will send the Trust
a written report once each month showing any income on any Portfolio Security
held by it which is more than ten days overdue on the date of such report and
which has not previously been reported.
<PAGE> 17
11. Maintenance of Records. The Bank will maintain records with respect to
transactions for which the Bank is responsible pursuant to the terms and
conditions of this Agreement, and in compliance with the applicable rules and
regulations of the 1940 Act and will furnish the Trust daily with a statement
of condition of the Trust. The Bank will furnish to the Trust at the end of
every month, and at the close of each quarter of the Trust's fiscal years, a
list of the Portfolio Securities and the aggregate amount of cash held by it
for the Trust. The books and records of the Bank pertaining to its actions
under this Agreement and reports by the Bank or its independent accountants
concerning its accounting system, procedures for safeguarding securities and
internal accounting controls will be open to inspection and audit at reasonable
times by officers of or auditors employed by the Trust and will be preserved by
the Bank in the manner and in accordance with the applicable rules and
regulations under the 1940 Act.
The Bank shall keep the books of account and render statements or copies
from time to time as reasonably requested by the Treasurer or any executive
officer of the Trust.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
12. Fund Valuation. The Bank shall compute and, unless otherwise directed
by the Board, determine as of the close of business on the New York Stock
Exchange on each day on which said Exchange is open for unrestricted trading
and as of such other hours, if any, as may be authorized by the Board the net
asset value and the public offering price of a share of capital stock of the
Trust, such determination to be made in accordance with the provisions of the
Articles and By-laws of the Trust and Prospectus and Statement of Additional
Information relating to the Trust, as they may from time to time be amended,
and any applicable resolutions of the Board at the time in force and
applicable; and promptly to notify the Trust, the proper exchange and the NASD
or such other persons as the Trust may request of the results of such
computation and determination. In computing the net asset value hereunder, the
Bank may rely in good faith upon information furnished to it by any Authorized
Person in respect of (i) the manner of accrual of the liabilities of the Trust
and in respect of liabilities of the Trust not appearing on its books of
account kept by the Bank, (ii) reserves, if any, authorized by the Board or
that no such reserves have been authorized, (iii) the source of the quotations
to be used in computing the net asset value, (iv) the value to be assigned to
any security for which no price quotations are available, and (v) the method of
computation of the public offering price on the basis of the net asset value of
the shares, and the Bank shall not be responsible for any loss occasioned by
such reliance or for any good faith reliance on any quotations received from a
source pursuant to (iii) above.
13. Concerning the Bank.
13.1 Performance of Duties and Standard of Care.
In performing its duties hereunder and any other duties listed on any
Schedule hereto, if any, the Bank will be entitled to receive and act upon the
advice of independent counsel of its own selection, which may be counsel for
the Trust, and will be without liability for any action taken or thing done or
omitted to be done in accordance with this Agreement in good faith in
conformity with such advice. In the performance of its duties hereunder, the
Bank will be protected and not be liable, and will be indemnified and held
harmless for any action taken or
<PAGE> 18
omitted to be taken by it in good faith reliance upon the terms of this
Agreement, any Officers' Certificate, Proper Instructions, resolution of the
Board, telegram, notice, request, certificate or other instrument reasonably
believed by the Bank to be genuine and for any other loss to the Trust except in
the case of its negligence, willful misfeasance or bad faith in the performance
of its duties or reckless disregard of its obligations and duties hereunder.
The Bank will be under no duty or obligation to inquire into and will not be
liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Trust, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or for
the Trust or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of the
Trust or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the
Trust or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the Trust
or the legality of the distribution of any Portfolio Securities as payment in
kind of such dividend; or
(f) any property or moneys of the Trust unless and until received
by it, and any such property or moneys delivered or paid by it pursuant to the
terms hereof
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any Portfolio Securities at any time delivered to or held by it for the
account of the Trust are such as may properly be held by the Trust under the
provisions of its Articles, By-laws, any federal or state statutes or any rule
or regulation of any governmental agency.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the Bank be liable hereunder or to any third party:
(a) for any losses or damages of any kind resulting from acts of
God, earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, nuclear
fusion, fission or radiation, the interruption, loss or malfunction of
utilities, or transportation, the unavailability of energy sources and other
similar happenings or events except as results from the Bank's own gross
negligence; or
(b) for special, punitive or consequential damages arising from
the provision of services hereunder, even if the Bank has been advised of the
possibility of such damages.
13.2 Agents and Subcustodians with Respect to Property of the Trust
Held in the United States. The Bank may employ agents in the performance of its
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder.
<PAGE> 19
Upon receipt of Proper Instructions, the Bank may employ certain
subcustodians, provided that any such subcustodian meets at least the minimum
qualifications required by Section 17(0(1) of the 1940 Act to act as a
custodian of the Trust's assets with respect to property of the Trust held in
the United States. The Bank shall have no liability to the Trust or any other
person by reason of any act or omission of such subcustodian and the Trust
shall indemnify the Bank and hold it harmless from and against any and all
actions, suits and claims, arising directly or indirectly out of the
performance of such subcustodian. Upon request of the Bank, the Trust shall
assume the entire defense of any action, suit, or claim subject to the
foregoing indemnity. GCCM shall pay all fees and expenses of such subcustodian.
13.3 Duties of the Bank with Respect to Property of the Trust Held
Outside of the United States.
(a) Appointment of Foreign Sub-Custodians. The Trust hereby authorizes
and instructs the Bank to employ as sub-custodians for the Trust's Portfolio
Securities and other assets maintained outside the United States the foreign
banking institutions and foreign securities depositories designated on the
Schedule attached hereto (each, a "Selected Foreign Sub-Custodian"). Upon
receipt of Proper Instructions, together with a certified resolution of the
Trust's Board of Trustees, the Bank and the Trust may agree to designate
additional foreign banking institutions and foreign securities depositories to
act as Selected Foreign Sub-Custodians hereunder. Upon receipt of Proper
Instructions, the Trust may instruct the Bank to cease the employment of any one
or more such Selected Foreign Sub-Custodians for maintaining custody of the
Trust's assets, and the Bank shall so cease to employ such sub-custodian as soon
as alternate custodial arrangements have been implemented.
(b) Foreign Securities Depositories. Except as may otherwise be agreed
upon in writing by the Bank and the Trust, assets of the Trust shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as Selected Foreign
Sub-Custodians pursuant to the terms hereof Where possible, such arrangements
shall include entry into agreements containing the provisions set forth in
subparagraph (d) hereof Notwithstanding the foregoing, except as may otherwise
be agreed upon in writing by the Bank and the Trust, the Trust authorizes the
deposit in Euro-clear, the securities clearance and depository facilities
operated by Morgan Guaranty Trust Company of New York in Brussels, Belgium, of
Foreign Portfolio Securities eligible for deposit therein and to utilize such
securities depository in connection with settlements of purchases and sales of
securities and deliveries and returns of securities, until notified to the
contrary pursuant to subparagraph (a) hereunder.
(c) Segregation of Securities. The Bank shall identify on its books as
belonging to the Trust the Foreign Portfolio Securities held by each Selected
Foreign Sub-Custodian. Each agreement pursuant to which the Bank employs a
foreign banking institution shall require that such institution establish a
custody account for the Bank and hold in that account, Foreign Portfolio
Securities and other assets of the Trust, and, in the event that such
institution deposits Foreign Portfolio Securities in a foreign securities
depository, that it shall identify on its books as belonging to the Bank the
securities so deposited.
(d) Agreements with Foreign Banking Institutions. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Trust (each, a "Foreign Sub-Custodian
<PAGE> 20
Agreement") shall be substantially in the form previously made available to the
Trust and shall provide that: (a) the Trust's assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of the
foreign banking institution or its creditors or agent, except a claim of payment
for their safe custody or administration (including, without limitation, any
fees or taxes payable upon transfers or reregistration of securities); (b)
beneficial ownership of the Trust's assets will be freely transferable without
the payment of money or value other than for custody or administration
(including, without limitation, any fees or taxes payable upon transfers or
reregistration of securities); (c) adequate records will be maintained
identifying the assets as belonging to Bank; (d) officers of or auditors
employed by, or other representatives of the Bank, including to the extent
permitted under applicable law, the independent public accountants for the
Trust, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Bank; and (e)
assets of the Trust held by the Selected Foreign Sub-Custodian will be subject
only to the instructions of the Bank or its agents.
(e) Access of Independent Accountants of the Trust. Upon request
of the Trust, the Bank will use its best efforts to arrange for the independent
accountants of the Trust to be afforded access to the books and records of any
foreign banking institution employed as a Selected Foreign Sub-Custodian
insofar as such books and records relate to the performance of such foreign
banking institution under its Foreign Sub-Custodian Agreement.
(f) Reports by Ban. The Bank will supply to the Trust from time
to time, as mutually agreed upon, statements in respect of the securities and
other assets of the Trust held by Selected Foreign Sub-Custodians, including
but not limited to an identification of entities having possession of the
Foreign Portfolio Securities and other assets of the Trust.
(g) Transactions in Foreign Custody Account. Transactions with
respect to the assets of the Trust held by a Selected Foreign Sub-Custodian
shall be effected pursuant to Proper Instructions from the Trust to the Bank
and shall be effected in accordance with the applicable Foreign Sub-Custodian
Agreement. If at any time any Foreign Portfolio Securities shall be registered
in the name of the nominee of the Selected Foreign Sub-Custodian, the Trust
agrees to hold any such nominee harmless from any liability by reason of the
registration of such securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Portfolio Securities received for the
account of the Trust and delivery of Foreign Portfolio Securities maintained
for the account of the Trust may be effected in accordance with the customary
established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the purchaser thereof
or to a dealer therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such securities
from such purchaser or dealer.
In connection with any action to be taken with respect to the
Foreign Portfolio Securities held hereunder, including, without limitation, the
exercise of any voting rights, subscription rights, redemption rights, exchange
rights, conversion rights or tender rights, or any other action in connection
with any other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Trust
such information in connection therewith as is made available to the Bank by
the Foreign
<PAGE> 21
Sub-Custodian, and shall promptly forward to the applicable Foreign
Sub-Custodian any instructions, forms or certifications with respect to such
Rights, and any instructions relating to the actions to be taken in connection
therewith, as the Bank shall receive from the Trust pursuant to Proper
Instructions, Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Trust is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Trust or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(h) Liability of Selected Foreign Sub-Custodians. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and each Trust from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Trust acknowledges
that the Bank, as a participant in Euro-clear, is subject to the Terms and
Conditions Governing the Euro-Clear System, a copy of which has been made
available to the Trust. The Trust acknowledges that pursuant to such Terms and
Conditions, Morgan Guaranty Brussels shall have the sole right to exercise or
assert any and all rights or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Trust's securities and
other assets.
(i) Liability of Bank. The Bank shall have no more or less
responsibility or liability on account of the acts or omissions of any Selected
Foreign Sub-Custodian employed hereunder than any such Selected Foreign
Sub-Custodian has to the Bank and, without limiting the foregoing, the Bank
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or acts of
war or terrorism, political risk (including, but not limited to, exchange
control restrictions, confiscation, insurrection, civil strife or armed
hostilities) other losses due to Acts of God, nuclear incident or any loss where
the Selected Foreign Sub-Custodian has otherwise exercised reasonable care.
(j) Monitoring Responsibilities. The Bank shall furnish annually to the
Trust, information concerning the Selected Foreign Sub-Custodians employed
hereunder for use by the Trust in evaluating such Selected Foreign
Sub-Custodians to ensure compliance with the requirements of Rule 17f-5 of the
Act. In addition, the Bank will promptly inform the Trust in the event that the
Bank is notified by a Selected Foreign Sub-Custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below $200
million (U.S. dollars or the equivalent thereof or that its shareholders' equity
has declined below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles) or any other capital adequacy
test applicable to it by exemptive order, or if the Bank has actual knowledge of
any material loss of the assets of the Trust held by a Foreign Sub-Custodian.
(k) Tax Law. The Bank shall have no responsibility or liability for any
obligations now or hereafter imposed on the Trust or the Bank as custodian of
the Trust by the tax laws of any jurisdiction, and it shall be the
responsibility of the Trust to notify the Bank of the obligations imposed on the
Trust or the Bank as the custodian of the Trust by the tax law of any
<PAGE> 22
non-U.S. jurisdiction, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Trust with respect to any claim
for exemption or refund under the tax law of jurisdictions for which the Trust
has provided such information.
13.4 Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Trust held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Trust.
13.5. Fees and Expenses of Bank. The Trust and/or GCCM will pay or
reimburse the Bank from time to time for any transfer taxes payable upon
transfer of Portfolio Securities made hereunder, and for all necessary proper
disbursements, expenses and charges made or incurred by the Bank in the
performance of this Agreement (including any duties listed on any Schedule
hereto, if any) including any indemnities for any loss, liabilities or expense
to the Bank as provided above. Charges to be paid by the Trust are interest,
taxes, brokerage costs and other capital expenses, expenses of the
non-interested trustees (including counsel fees) and any extraordinary expenses.
For the services rendered by the Bank hereunder, GCCMM11 pay to the Bank such
compensation or fees at such rate and at such times as shall be agreed upon in
writing by the parties from time to time. The Bank will also be entitled to
reimbursement by GCCM for all reasonable out-of-pocket expenses incurred in
conjunction with termination of this Agreement by the Trust.
13.6 Advances by Bank. The Bank may, in its sole discretion, advance
funds on behalf of the Trust to make any payment permitted by this Agreement
upon receipt of any proper authorization required by this Agreement for such
payments by the Trust. Should such a payment or payments, with advanced funds,
result in an overdraft (due to insufficiencies of the Trust's account with the
Bank, or for any other reason) this Agreement deems any such overdraft or
related indebtedness, a loan made by the Bank to the Trust payable on demand and
bearing interest at the current rate charged by the Bank for such loans unless
the Trust shall provide the Bank with agreed upon compensating balances. The
Trust agrees that the Bank shall have a continuing lien and security interest to
the extent of any overdraft or indebtedness, in and to any property at any time
held by it for the Trust's benefit or in which the Trust has an interest and
which is then in the Bank's possession or control (or in the possession or
control of any third party acting on the Bank's behalf). The Trust authorizes
the Bank, in its sole discretion, at any time to charge any overdraft or
indebtedness, together with interest due thereon against any balance of account
standing to the credit of the Trust on the Bank's books,
14. Termination.
14.1 This Agreement may be terminated at any time without penalty upon
ninety days written notice delivered by either party to the other by means of
registered mail, and upon the expiration of such ninety days this Agreement will
terminate; provided, however, that the effective date of such termination may be
postponed to a date not more than ninety days from the date of delivery of such
notice (i) by the Bank in order to prepare for the transfer by the Bank of all
of the assets of the Trust held hereunder, and (ii) by the Trust in order to
give the Trust an opportunity to make suitable arrangements for a successor
custodian. At any time after the
<PAGE> 23
termination of this Agreement, the Trust will, at its request, have access to
the records of the Bank relating to the performance of its duties as custodian.
14.2 In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duty endorsed and all records
maintained under Section I I to the successor custodian when appointed by the
Trust. The obligation of the Bank to deliver and transfer over the assets of the
Trust held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Trust does not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject to the
provisions of subsection (14.3), deliver the Portfolio Securities and cash of
the Trust held by the Bank to a bank or trust company of its own selection which
meets the requirements of Section 17(f)(1) of the 1940 Act and has a reported
capital, surplus and undivided profits aggregating not less than $2,000,000, to
be held as the property of the Trust under terms similar to those on which they
were held by the Bank, whereupon such bank or trust company so selected by the
Bank will become the successor custodian of such assets of the Trust with the
same effect as though selected by the Board.
14.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Trust may furnish the Bank with an order of the
Trust advising that a successor custodian cannot be found willing and able to
act upon reasonable and customary terms and that there has been submitted to the
shareholders of the Trust the question of whether the Trust will be liquidated
or will function without a custodian for the assets of the Trust held by the
Bank. In that event the Bank will deliver the Portfolio Securities and cash of
the Trust held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of shareholders, upon
receipt by the Bank of a copy of the minutes of the meeting of shareholders at
which action was taken, certified by the Trust's Secretary and an opinion of
counsel to the Trust in form and content satisfactory to the Bank.
15. Confidential. Both parties hereto agree than any non-public information
obtained hereunder concerning the other party is confidential and may not be
disclosed to any other person without the consent of the other party, except as
may be required by applicable law or at the request of a governmental agency.
The parties further agree that a breach of this provision would irreparably
damage the other party and accordingly agree that each of them is entitled,
without bond or other security, to an injunction or injunctions to prevent
breaches of this provision.
16. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to any party hereto will be sufficiently
given if addressed to such party and mailed or delivered to it at its office at
the address set forth below; namely:
(a) In the case of notices sent to the Trust or G-CCM to:
Green Century Funds/Green Century Capital Management, Inc.
29 Temple Place, Suite 200
Boston, NIA 02111
Attention: Kristina Curtis, Treasurer
<PAGE> 24
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Attention: Robert Mancuso
or at such other place as such party may from time to time designate in
writing.
17. Amendments. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both par-ties, and in the case of the Trust,
such alteration or amendment will be authorized and approved by its Board.
18. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Trust
without the written consent of the Bank or by the Bank without the written
consent of the Trust, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 14 hereof will not be deemed to
be an assignment within the meaning of this provision.
19. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
21. Limitation of Liability of the Trustees and Shareholders. The term
Trust means and refers to the Trustees from time to time serving under the
Declaration of Trust, as the same may subsequently thereto have been, or
subsequently hereto be, amended. It is expressly agreed that the obligations of
the Trust hereunder shall not be binding upon any of the Trustees, Shareholders,
nominees, officers, agents or employees of the Trust, personally, but bind only
the assets and property of the Trust, as provided in the Declaration of Trust.
The execution and delivery of this Agreement has been authorized by the Trustees
of the Trust and signed by an authorized officer of the Trust, acting as such,
and neither such authorization by such Trustees nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
assets and property of the Trust as provided on its Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
Green Century Funds
By_________________
Kristina Curtis
Treasurer
<PAGE> 25
ATTEST:
Green Century Capital Management, Inc.
By:________________________
Kristina Curtis, Treasurer
ATTEST:
Investors Bank & Trust Company
By:________________________
Name:______________________
Title:_____________________
ATTEST:
___________________________
DATE:______________________
<PAGE> 26
EXHIBIT A
to
CUSTODIAN AGREEMENT
dated September 11, 1995
among
GREEN CENTURY FUNDS,
GREEN CENTURY CAPITAL MANAGEMENT, INC.
and
INVESTORS BANK & TRUST CONVANY
THE GREEN CENTURY BALANCED FUND
THE GREEN CENTURY EQUITY FUND
Green Century Funds
Fee Schedule
For One Portfolio and One Spoke
DOMESTIC CUSTODY, FUND ACCOUNTING, CALCULATION OF
N.A.V. & TRANSFER AGENCY
A. Domestic Custody. Fund Accounting & Calculation of N.A.V.
- -The following basis point fee is based on all domestic assets for which we are
custodian and fund accountant. This amount does not include transactions. See
Standard Transaction Costs (B). These amounts will be calculated monthly as of
the 20th of the month.
Annual Fee
First $150mm in assets 7.0 Basis Points
Assets in excess of $150mm 4.0 Basis Points
There will be a per fund, monthly minimum of $2,500 for the Green Century
Funds.
There will be a yearly fee of $9,000 for spoke accounting.
B. Transaction Costs
- - DTC/Fed Book Entry* $12
- - Physical Securities 35
- - Options and Futures 18
- - GNMA Securities 40
- - Principal Paydown 5
- - Outgoing Wires 10
- - Incoming Wires 8
07;27.'95 THU 12:20 FAX INITSTORS B.JLXK
2003
<PAGE> 27
TRANSFER AGENCY
A. Transfer Agency Services,
There will be a yearly, minimum per fund fee of S17,750 for the Green Century
Funds:
LU
Account Processing Fee $1500 per account/year
IRA custodian fee $10.00 per account/year
Check redemptions $ 1.50 per draft
Returned checks $25.00 per check
Conversion Cost
Upon determination of files from Fund Plan Services, there will be a one time
conversion fee. This conversion fee cannot be determined until further
information can be received from Fund Plan. The conversion fee will be capped
at S12,000,
YTD STATEMENTS AND TAX REPORTING
1995 statements from Investors Bank will only include information from the date
of conversion. Year-end reporting will only contain information from the date
of conversion to 12/3 1/95.
OUT-OF-POCKET, BACANCE CREDITS
A. Out-of-Packet
These charges consist of
-Pricing & Verification Services -Micro Rental
-Printing, Delivery & Postage -Forms & Supplies
-Telephone -Support Equipment Rental
- -Legal Costs -3rd Party Review
- -Proxy Tabulation -Ad Hoc reporting
- -Checkbooks -800 Number Fees
B. DOMESTIC BALANCE CREDIT
We allow balance credit against fees (excluding out-of-pocket charges) for fund
balances arising out of the custody relationship. The credit is based on
collected balances reduced by balances required to support the activity charges
of the accounts. The monthly earnings allowance is equal to 75% of the 90-day
T-bill rate.
* This fee schedule assumes the execution of our standard contractual
agreements.
<PAGE> 1
EXHIBIT 99.B9(a)
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT, as amended and restated April 7,
1995, by and between GREEN CENTURY FUNDS, a Massachusetts business trust (the
"Trust"), and GREEN CENTURY CAPITAL MANAGEMENT, INC., a Massachusetts
corporation (the "Administrator").
WITNESSETH:
WHEREAS, the Trust has been organized to operate as an open-end
investment company registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act");
WHEREAS, the Shares of Beneficial Interest (par value $0.01 per share)
of the Trust (the "Shares") are divided into two initial separate series, the
Green Century Money Market Fund (the "Money Market Fund") and the Green Century
Balanced Fund (the "Balanced Fund") (each, along with any series which may in
the future be established, a "Series");
WHEREAS, the Trust wishes to engage Green Century Capital Management,
Inc. to provide certain administrative and management services, and Green
Century Capital Management, Inc. is willing to provide such administrative and
management services to the Trust, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Administrator. Subject to the direction and control of
the Board of Trustees of the Trust, the Administrator shall perform such
administrative and management services as may time to time be reasonably
requested by the Trust, which shall include without limitation:
(a) provide administrative and financial management services to the
Trust in connection with the day-to-day operations of the Trust;
(b) submit such reports to the Trustees, as they may from time to time
request, as may be required by applicable law or as may be determined to be
appropriate, relating to the affairs of the Trust and its Series;
(c) provide administrative personnel and office space and office
equipment and supplies, the use of accounting equipment when required, and
necessary executive, clerical and secretarial personnel for the administration
of the affairs of the Trust;
(d) maintain and preserve the records required by applicable law,
including without limitation the 1940 Act, as amended, to be maintained and
preserved by the Trust, other than those records specifically maintained and
preserved by the Trust's investment adviser or other person acting persuant to a
written agreement with the Trust (the Administrator agrees that records
maintained by it are the property of the Trust and will be surrendered to the
Trust promptly upon request therefor);
(e) oversee, review and use its best efforts to assure the performance
of, the activities and services of each custodian, transfer agent, bookkeeping
and pricing agent, auditors, investment adviser, subinvestment adviser and all
other similar agents of the Trust and make recommendations and reports
<PAGE> 2
to the Trustees with regard to the accuracy, adequacy and compliance with
applicable law regarding such activities and services; and
(f) advise the fund in connection with policy decisions concerning the
Trust to be made by the Trustees or any committee thereof and, as requested,
furnish the Trust with research, economic and statistical data in connection
with such policy decisions.
2. Expenses of the Trust. The Administrator shall pay the entire
salaries and wages, if any, of the Trust's Trustees, officers and agents who
devote part or all of their time to the affairs of the Administrator or its
affiliates. The Administrator shall pay all the expenses of the Trust other than
the organizational expenses of the Trust and other than any investment advisory
fees, distribution fees pursuant to Rule 12b-1 under the 1940 Act and
compensation, if any, and reasonable expenses of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust, interest, taxes,
brokerage costs and other capital expenses and any extraordinary expenses.
Expenses generally paid by mutual funds, which in this case are paid by the
Administrator, include (but are not limited to) government fees; fees and
expenses of independent auditors, legal counsel, transfer agent, custodian,
registrar or dividend disbursing agent of a fund; insurance premiums; expenses
of preparing, printing and mail prospectuses, reports, notices, proxy statements
and reports to shareholders and to government offices and commissions; and
expenses relating to the issuance, registration and qualification of shares of a
fund, and expenses of calculating the net asset value of shares of each Fund.
3. Compensation of Administrator. For the services to be rendered and
the facilities to be provided, and the expenses of the Trust to be paid by the
Administrator hereunder, the Trust shall pay to the Administrator an
administrative fee from the assets of each Series computed and paid monthly at a
rate such that immediately following such payment to the Administrator, the
total operating expenses (including investment advisory and distribution fees
and any amortization of organization expenses), on an annual basis, of the Money
Market Fund and the Balanced Fund equal 1.25% and 2.50%, respectively, (and with
regard to future Series, such percentage of the average daily net assets of such
Series as is agreed to by the Trust and the Administrator listed on Appendix A)
except that in no case shall the total operating expenses of any Series exceed
any applicable limitations under federal or state securities laws. If Green
Century Capital Management, Inc. serves as Administrator for less than the whole
of any period specified in this Section 3, the compensation to Green Century
Capital Management, Inc., as Administrator, shall be prorated. For purposes of
computing the fees payable to the Administrator hereunder, the value of the net
assets of any Series shall be computed in the manner specified in that Series'
then-current prospectus and statement of additional information.
4. Limitation of Liability of the Administrator. The Administrator
shall not be liable for any error of judgment or mistake of law or for any act
or omission in the administration or management of the Trust or the performance
of its duties hereunder, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of the reckless
disregard of its obligations and duties hereunder. As used in this Section 4,
the term "Administrator" shall include Green Century Capital Management, Inc.
and/or any of its affiliates and the Directors, officers and employees of Green
Century Capital Management, Inc. and/or of its affiliates.
5. Activities of the Administrator. The services of the Administrator
to the Trust are not to be deemed to be exclusive, the Administrator being free
to render administrative and/or other services to other parties. It is
understood that Trustees, officers and shareholders of the Trust are or may
become interested in the Administrator and/or any of its affiliates, as
Directors, officers, employees, or
<PAGE> 3
otherwise, and that Directors, officers and employees of the Administrator
and/or any of its affiliates are or may become similarly interested in the Trust
and that the Administrator and/or any of its affiliates may be or become
interested in the Trust as a shareholder or otherwise.
6. Subcontracts. The Administrator may enter into a subcontract
relating to any of the services to the Trust to be provided hereunder by the
Trust, provided that the Administrator shall find any subadministrator to be
qualified to perform the services that such subadministrator agrees to perform.
7. Duration, Termination and Amendments of this Agreement. This
Agreement shall become effective as of the day and year first above written and
shall govern the relations between the parties hereto thereafter, and shall
remain in force until terminated. This Agreement may be terminated as to any
Series at any time, without the payment of any penalty, by the Board of Trustees
of the Trust or by the Administrator, in each case on not less than 30 days'
written notice to the other party.
8. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
9. Miscellaneous. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts. The captions in this
Agreement are included for convenience only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Pursuant to the Trust's Declaration of Trust, dated as of July 1, 1991, the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of the Trust individually, but bind only the Trust estate.
GREEN CENTURY FUNDS
By: /s/Mindy S. Lubber
------------------
Mindy S. Lubber
President
GREEN CENTURY CAPITAL MANAGEMENT, INC.
By: /s/Mindy S. Lubber
------------------
Mindy S. Lubber
President
<PAGE> 4
APPENDIX A
FUND NAME ADMINISTRATION FEE
Green Century Growth Fund a fee at a rate such that immediately
following any payment to the Administrator,
the combined total operating expenses of the
Fund and the Domini Social 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.
<PAGE> 1
EXHIBIT-99.B9(b)
TRANSFER AGENT AGREEMENT
This Agreement is made this the tenth day of September, 1998 to be
effective as of November 13, 1998, by and between Green Century Funds (the
"Trust"), an open-end investment company duly organized and existing under the
laws of the Commonwealth of Massachusetts, Green Century Capital Management,
Inc. a corporation organized under the laws of the Commonwealth of Massachusetts
("GCCM"), and Unified Fund Services, Inc. (the "Transfer Agent"), which is a
duly-registered transfer agent. The Transfer Agent is duly organized and
existing under the laws of the State of Indiana.
ARTIClE I.
SECTION 1. The Trust hereby appoints the Transfer Agent as its
Transfer, Registrar, Redemption and Dividend Disbursing Agent, and the Transfer
Agent accepts such appointments and agrees to act in such capacities upon the
terms set forth in this Agreement.
SECTION 2. The Transfer Agent agrees to comply with all relevant
provisions of the Investment Company Act of 1940 (the "Act"), the Internal
Revenue Code, other applicable laws and all applicable rules and regulations
thereunder.
SECTION 3. If the Trust is a series company for purposes of Rule 18f-2
under the Act, the term "Trust" as used in this Agreement and Fee Schedule shall
be deemed to refer to each such series as a separate portfolio unless the
context otherwise requires. In performing its functions hereunder, the Transfer
Agent shall in all cases comply with the procedures and conditions set forth in
the Trust's then current Prospectus and Statement of Additional Information
("SAI"), as provided to the Transfer Agent by the Trust. To the extent that any
changes are made to the Prospectus or SAI which cover procedures and duties of
the Transfer Agent, agreement as to such matters must be reached between the
Transfer Agent and the Trust 30 days prior to the effectiveness of such changes
to the Prospectus or the SAI.
ARTICLE II. ISSUANCE OF SHARES
SECTION 1. The Transfer Agent shall make original issues of shares of
the Trust ("Shares") in accordance with Sections 3 and 4 below and with the
Trust's then currently effective Prospectus, SAI and account registration forms
upon being furnished with (i) a certified copy of a resolution or resolutions of
the Board of Trustees of the Trust authorizing such issue and (ii) necessary
funds for the payment of any original issue tax applicable to such additional
Shares.
The Transfer Agent will maintain mutual fund account records in the
usual form in which, among other details, it will note the issuance, transfer
and redemption of Shares. The Transfer Agent will keep account records, in
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<PAGE> 2
which it will note the names and registered addresses of Shareholders of the
Trust ("Shareholders") and the number of full and fractional Shares owned by
them.
SECTION 2. In case of any request or demand for the inspection of the
share records of the Trust, the Transfer Agent shall notify the Trust and secure
instructions as to permitting or refusing such inspection. However, the Transfer
Agent may exhibit such records to any person in any case where it is advised by
its counsel that it may be held liable for failure to do so, unless indemnified
against such liability by the Trust.
SECTION 3. For the purposes of this Section, the Trust hereby instructs
the Transfer Agent to consider Shareholder payments as available for investment
in accordance with the policies and procedures set forth in the Trust's then
current Prospectus and SAI. Immediately after the time or times and on each day
on which the Trust's then current Prospectus or SAI states that its net asset
value per share shall be determined, the Transfer Agent shall obtain from the
Trust or its designated agent a quotation of the net asset value per share
determined as of such time on such day. The Transfer Agent reserves the right to
charge GCCM and GCCM agrees to pay, within a reasonable time, the reasonable
costs of making corrections to Shareholder records if it is later determined
that the Trust or its agent(s) supplied an inaccurate net asset value.
The Transfer Agent shall, on the same business day on which any order
for the purchase of Shares is received and utilizing the net asset value per
share next determined after the receipt of such order, determine the amount to
be invested and the number of Shares and fractional Shares (rounded to three
decimal places) to be purchased. The Transfer Agent shall thereupon as agent for
the Shareholders place a purchase order with the Trust for the proper number of
Shares and fractional Shares to be purchased and confirm such number to the
Trust in writing. The Transfer Agent shall total the amount available for
investment in Shares at the net asset value determined by the Trust or its
designated agent at each Trust pricing time.
The Transfer Agent shall pay over to the Custodian authorized pursuant
to the Declaration of Trust of the Trust (the "Custodian Bank") the net asset
value of Shares and fractional Shares purchased immediately upon receipt of the
consideration therefor.
In the event that any check or other order for the payment of money is
returned unpaid for any reason, the Transfer Agent shall give prompt
notification to the Trust of the non-payment of said check and take such action
as the Trust may authorize.
Any profit on the liquidation of unpaid Shares accrues to the Trust. In
the event of a loss upon the liquidation of unpaid shares, other than as a
result of an error or mistake of the Transfer Agent, the Transfer Agent will
charge the purchaser's account for the amount of such loss. If the loss can't be
recovered from the Shareholder, the Trust will be liable for the loss and the
loss or gain will be netted on the books of the Trust and settled daily, except
for such
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<PAGE> 3
amounts which are de minimis which will be settled monthly. If the loss
is a result of an error or mistake of the Transfer Agent the Transfer Agent will
be responsible for making prompt payment to the Trust.
SECTION 4. The Transfer Agent, in making the calculations provided for
in Section 3, of this Article II shall rely on its record of available
investment funds. The proper number of Shares and fractional Shares shall then
be issued daily and credited by the Transfer Agent to the Shareholder accounts.
Under normal circumstances, the Transfer Agent shall furnish each Shareholder
with a confirmation of each purchase of Trust Shares on the next business day
following each purchase.
The Trust agrees to provide the Transfer Agent with an adequate supply
of its Prospectus, as in effect from time to time, to fulfill its obligations
under this Section.
The Transfer Agent shall provide the Trust with the total number of
shares issued by the Trust each day.
ARTICLE III. REDEMPTIONS
SECTION 1. The Transfer Agent shall process, in accordance with the
Trust's Prospectus, SAI and account registration forms, all requests from
Shareholders to redeem Shares and determine the number of Shares required to be
redeemed to make monthly payments, automatic payments or the like and advise the
Trust, on the same business day that the request for redemption was received, of
the total number of Shares and fractional Shares (rounded to three decimal
places) to be redeemed. The Trust or its designated agent shall then quote to
the Transfer Agent the applicable net asset value; whereupon the Transfer Agent
shall furnish the Trust with an appropriate confirmation of the redemption and
process the redemption, at the net asset value per share next computed after
receipt of the order for redemption, by filing with the Custodian Bank an
appropriate statement and making the proper distribution and application of the
redemption proceeds in accordance with the Trust's Prospectus or SAI. The stock
registry books recording outstanding Shares and the individual account of the
Shareholder shall be properly debited. Under normal circumstances, the Transfer
Agent shall mail to each Shareholder a confirmation of each redemption with a
copy to an interested person if requested on the next business day following
each redemption. Such confirmation shall among other details show the prior
Share balance, the new Share balance and total dollar value thereof, the amount
redeemed and the price received for the redeemed Shares.
SECTION 2. The proceeds of a redemption shall be remitted by the
Transfer Agent, in each case by check or other instrument drawn against funds
held by the Trust in the Custodian Bank, in accordance with the Trust's then
currently effective Prospectus, SAI or account registration forms.
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<PAGE> 4
ARTICLE IV. DIVIDENDS
SECTION 1. Upon the declaration of each dividend and each capital gains
distribution by the Trust, the Trust shall notify the Transfer Agent by written
instructions no later than the ex-dividend date of such declaration, the amount
payable per share, the sources from which such dividend or distribution is made,
and, unless such dividend is a regular daily or monthly dividend payable by a
money market or other fund, the record date for determining the Shareholders
entitled to payment. The Transfer Agent shall withhold such sums as may be
required to be withheld under applicable income tax laws, rules and regulations.
SECTION 2. Upon the payment date of a dividend or distribution declared
by the Trust, the Trust or its agent will cause the Custodian Bank to transfer
to the disbursement account maintained by the Custodian Bank in the name of the
Trust the total amount of such dividends or distributions payable in cash to
those Shareholders electing to receive such dividends or distributions in cash.
On payment date, the Transfer Agent shall prepare a check in the appropriate
amount and mail it, under normal circumstances, not later than the next business
day after the payment date to such Shareholder at his address of record or to
such other address as the Shareholder may have designated. If provided in the
Prospectus, at the Shareholder's option, payment may be made via Automated
Clearing House transfer to a bank account specified by the Shareholder in
writing.
With regard to Shareholders not electing to receive such dividends or
distributions in cash, the Transfer Agent will automatically reinvest all
dividends and other such distributions in additional Shares at the net asset
value per Share on payment date. When instructed by the Trust, the Transfer
Agent will promptly mail to each Shareholder at his address of record or such
other address as the Shareholder may have designated a statement showing the
number of full and fractional Shares (rounded to three decimal places) currently
owned by the Shareholder and the net asset value of the Shares so credited to
the Shareholder's account.
The Transfer Agent's dividend statement shall meet the requirements of
the Act and Rule 19a-1 thereunder for notification as to the source(s) of
dividend payment(s).
ARTICLE V. GENERAL PROVISIONS
SECTION 1. The Transfer Agent will furnish money market, equity or bond
fund account confirmations with each transaction and quarterly account
confirmation statements as of March 31, June 30, September 30 and December 31 of
each year which include a listing of all transactions in the account during the
calendar year to date, plus income tax reporting information. The Transfer Agent
will provide to the Shareholders 24-hour account balance and transaction history
data and consolidated statements.
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<PAGE> 5
SECTION 2. The Transfer Agent shall report daily the sales and
redemptions in each state in a manner suitable for state "blue-sky" reporting by
the Trust and will not accept any purchase order in excess of the amount
available for sale as provided by the Trust or its agent. The Transfer Agent has
no further responsibility as to controlling sales of Shares of the Trust or
maintaining the various registrations required under state "blue sky" laws and
regulations. The Trust is responsible for updating the system and halting Share
sales in all states where the Trust's registration is not effective. Maintaining
current registration information on-line is the responsibility of the Trust, or
its designated agent.
SECTION 3. The Transfer Agent shall maintain records (which may be part
of the stock transfer records) in connection with the issuance and redemption of
Shares and dividend reinvestments, in which will be noted the transactions
effected for each Shareholder and the number of Shares and fractional Shares
(rounded to three decimal places) owned by each. The Transfer Agent shall create
and maintain all necessary records including, but not limited, to records
required by Section 31(a) of the Act and Section 17(A) of the Securities and
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder. The Transfer Agent agrees to make available upon request and to
preserve for the periods prescribed in Section 31(a) under the Act and Section
17(A) of the Securities and Exchange Act of 1934, as amended, and the rules and
regulations thereunder, any records relating to services provided under this
Agreement or maintained by it on behalf of the Trust. All such records shall be
the property of the Trust.
The Transfer Agent shall also maintain the following records for each
Shareholder's account: name, address, and tax identification number; number of
Shares held and specific form of holding; persons authorized to make redemptions
and other account changes and their signatures; historical information regarding
the account of each Shareholder, including dividends paid, distributions made
and date and price for all transactions in a Shareholder's account; information
on any automatic investment plans authorized by the Shareholder; any stop or
restraining order placed against a Shareholder's account; any dividend
reinvestment order, address change and correspondence relating to the
maintenance of a Shareholder's account; all tax and withholding information
relating to a Shareholder's account; information with respect to withholding on
foreign accounts.
The Transfer Agent shall maintain records for all accounts opened by
entities assigned an institution number so that where required the aggregate
average daily value of all of an institution's accounts can be determined and a
record of such values maintained, and so that duplicate statements for the
accounts can be prepared and sent to each institution. A representative file is
available for each institution. It is the responsibility of the Trust to update
and maintain information on such file.
SECTION 4. The Transfer Agent shall cooperate with the Trust's
independent public accountants and shall take all reasonable action in the
performance of its obligations under this Agreement to assure that the necessary
information is made available to such accountants for the expression of their
opinion, including but not limited to the
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<PAGE> 6
opinion included in the Trust's annual or semi-annual reports on Form N-SAR, or
of any successor annual report required by the Act or rules thereunder to be
filed by the Trust.
SECTION 5. In addition to the services as Transfer Agent and as above
set forth, the Transfer Agent will perform other services for the Trust as
agreed from time to time, including but not limited to, preparation and filing
with the Internal Revenue Service and mailing to Shareholders such federal tax
information forms as are required to be so prepared, filed and mailed by
applicable laws, rules and regulations, mailing periodic reports of the Trust,
mailing prospectus supplements and updated prospectuses and mailing initial
notices of Shareholders' meetings, proxies, proxy statements, and preparation of
proxy voting reports for the Trust.
The Transfer Agent agrees to follow-up on missing TINs by sending a
letter and Form W-9 to the Shareholder. If the Transfer Agent does not receive
TIN verification within 60 days of the acknowledgment of the missing TINs,
back-up withholding will begin. Upon receipt of a B-Notice from the IRS, the
Transfer Agent will research the accounts and send out additional Form W-9's as
necessary. The Transfer Agent will not be held liable for any penalties
associated with B-Notices served where a Shareholder has failed to return a TIN
or signed W-9. If B-Notices are not promptly delivered to the Transfer Agent
once received by the Trust, the Transfer Agent will not be held liable for any
penalties associated with late processing.
The Transfer Agent will provide the Trust with a list of all accounts
subject to back-up withholding annually.
The Transfer Agent shall answer telephone calls and correspondence,
including those which relate to Individual Retirement Accounts, 403b(7) accounts
and the Trust's annual tax documents, from Shareholders relating to their Share
accounts during the Transfer Agent's normal business hours which will be no less
than Monday through Friday, from 9:00am to 5:00pm Eastern Time, on each business
day the New York Stock Exchange is open. The Transfer Agent shall respond to all
telephonic or written inquiries from Shareholders relating to the administration
of their accounts within two (2) business days or as soon as reasonably
practical thereafter. Copies of all correspondence from Shareholders involving
complaints about the management of the Trust, the services provided by or for
the Trust, the Transfer Agent or others, or concerning complaints relating to
the Trust shall be forwarded to the Trust immediately.
Telephone calls and correspondence on other matters will be referred to
the Trust.
The Transfer Agent shall keep records of Shareholder substantive
telephone calls and correspondence and replies thereto. The Transfer Agent shall
make and retain for a reasonable time (not to exceed 3 months) tape recordings
of all telephone calls from Shareholders.
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<PAGE> 7
SECTION 6. Nothing contained in this Agreement is intended to or shall
require the Transfer Agent in any capacity hereunder to perform any functions or
duties on any day identified in the Prospectus and/or SAI on which the Trust is
closed. Functions or duties normally scheduled to be performed on such days
shall be performed on, and as of, the next business day on which the Transfer
Agent is open, except when the Transfer Agent is closed for reasons beyond its
reasonable control, when the Trust is open and the Trust has received purchases
or redemption requests, such purchases and redemptions shall be priced and
executed "as of" such date on the business day next following such day.
SECTION 7. GCCM agrees to pay the Transfer Agent compensation for its
services and to reimburse it for expenses, as set forth in Schedule A attached
hereto, or as shall be set forth in amendments to such Schedule approved by the
Trust and the Transfer Agent. All such payments and reimbursements are to be
mailed no later than ten (10) business days following the receipt by GCCM of the
respective notice, except for charges on such notices to which the Treasurer or
any Assistant Treasurer of GCCM objects to within ten (10) business days of
receipt of the notice, and shall be paid by the GCCM no later than on a monthly
basis. It is understood that the Trust may, in the future, undertake to perform
certain of the services herein contemplated to be performed by the Transfer
Agent. To the extent, if any, the Trust undertakes such duties, the Transfer
Agent shall be relieved of such obligation, and the Trust and the Transfer Agent
shall mutually agree upon an appropriate reduction, if any, in the fees set
forth in Schedule A. In addition to any other right or remedy available to the
Transfer Agent for nonpayment of any fee due under this Agreement for the
services performed by it, and except for charges on such notices to which the
Treasurer and any Assistant Treasurer of GCCM objects to within ten (10)
business days of receipt of the notice, in the event that the GCCM shall fail to
pay the full fee by thirty (30) days after receipt of the invoice, GCCM shall
pay the Transfer Agent a late charge in a sum equal to 18% per annum of the
unpaid balance.
SECTION 8. The Transfer Agent shall not be liable hereunder for any
non-negligent action taken in good faith and reasonably believed to be within
the powers conferred upon it by this Agreement. The Trust shall indemnify the
Transfer Agent and hold it harmless from any and against any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liabilities
incurred by the Transfer Agent in connection with any such action, suit, or
claim, arising out of or attributable to the actions of the Transfer Agent
required to be taken under this Agreement, except such as shall result from its
own negligent act or willful misconduct. At its option and upon request of the
Transfer Agent, the Trust may assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity. The Transfer Agent shall give the
Trust notice, and reasonable opportunity to defend any such action, suit, or
claim, in the name of the Trust or the Transfer Agent or both. In the event the
Trust assumes the defense, the Transfer Agent shall be responsible for its own
legal fees and expenses from the date the Trust so assumes the defense, except
for such fees and expenses incurred at the request of the Trust. The Trust and
the Transfer Agent shall cooperate fully in the defense of any action, suit or
claim.
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<PAGE> 8
The Transfer Agent at its expense will make corrections and adjustments
as may be required, where the Transfer Agent, its officers, agents, employees or
delegates are the cause of any error made in rendering the services described in
this agreement.
Without limitation of the foregoing:
(a) The Transfer Agent may rely upon and shall not be liable to the
Trust for the advice furnished to it by or on behalf of the Trust and for any
actions taken in good faith upon such statements.
(b) The Transfer Agent shall not be liable for any action reasonably
taken in good faith reliance upon any written instructions or certified copy of
any resolution of the Board of Trustees of the Trust, provided, however, that
upon receipt of a written instruction from the Trust countermanding a prior
instruction which has been fully executed by the Transfer Agent, the Transfer
Agent shall attempt to honor to the extent then possible, such later
instructions and rely upon the genuineness of any such document or
correspondence reasonably believed in good faith to have been validly executed.
(c) The Transfer Agent may rely and shall be protected in acting upon
any signature, instruction, request, letter of transmittal, certificate, opinion
of counsel, statement, instrument, report, notice, consent, order, or other
paper or document reasonably believed by it to be genuine and to have been
signed or presented by or on behalf of the Trust.
SECTION 9. The Trust shall promptly cause to be turned over to the
Transfer Agent (i) an accurate list of Shareholders of the Trust showing the
proper registered address and number of Shares owned and whether such Shares are
represented by outstanding Share Certificates or by non-certificated Share
accounts, (ii) all records relating to retirement plans, including original
registration forms signed by the planholders and original plan accounts
recording payments, contributions, deductions, reinvestments, withdrawals and
liquidations, and (iii) all Shareholder records, files, and other materials
necessary or appropriate for proper performance of the functions assumed by the
Transfer Agent under this Agreement (hereinafter called "Materials"). The Trust
agrees to indemnify and hold the Transfer Agent, its successors and assigns,
harmless of and from any and all expenses, damages, claims, suits, liabilities,
actions, demand and losses of third parties arising out of or in connection with
any error, omission, inaccuracy or other deficiency of such Materials, or out of
the failure of the Trust to provide such Materials or to provide any information
needed by the Transfer Agent to perform knowledgeably its functions. The Trust
agrees to pay reasonable compensation to the Transfer Agent to cover the
Transfer Agent's expenses in correcting any such error, omission, inaccuracy or
other deficiency of the Materials.
SECTION 10. The Transfer Agent acknowledges and agrees that all books
and records maintained for the Trust in any capacity under this Agreement are
the property of the Trust and may be inspected by the Trust at any reasonable
time. Such books and records will be shipped immediately to any successor
transfer agent.
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<PAGE> 9
The Transfer Agent agrees to regard and preserve as confidential all
records and other information relative to the Trust, and will not without
written authority of the Trust disclose to others, during the term of this
Agreement or thereafter, any such records or other information.
SECTION 11. The following shall be a list of procedures to be taken by
the Transfer Agent should mail be returned to the Transfer Agent undeliverable:
1. The mail will be opened and the contents examined. The returned
envelope will be stapled to the back of the paperwork.
2. Using the name and social security number on the account, a system
search will be done to check for any other accounts, which may have a
"deliverable" address. If a different address is found, the account with the bad
address will be corrected and the mail will be forwarded to the new address.
3. If the account search is unsuccessful, after reasonable attempts
have been made to locate the shareholder, the account will be coded as lost and
the returned mail will be stored. A listing is available for the Trust of all
accounts coded as lost.
4. The Transfer Agent will provide lost account search services through
an independent firm for the locating of lost accounts a minimum of twice a year.
5. A listing of those shareholder accounts unable to be located through
the lost account search service will be provided to the Transfer Agent for
escheatment purposes. The Transfer Agent will provide this list to the Trust
prior to escheating any shareholder accounts.
SECTION 12. In the event any party which is subject to this Agreement
is unable to perform its obligations under the terms of this Agreement because
of equipment or transmission failure or damage beyond its control, acts of God,
or other causes reasonably beyond its control, such party will not be liable to
the others for any damages resulting from such failure to perform or otherwise
from such causes.
ARTICLE VI. TERMS AND TERMINATION
SECTION 1. This Agreement shall remain effective until terminated by
either (a) the Trust or the Transfer Agent upon 90 days prior written notice to
the other party or (b) the Trust or the Transfer Agent on such date as is
specified in written notice given by the terminating party in the event of a
Default by the other party, provided that the terminating party has notified the
other party of such Default at least (30) days prior to the specified date of
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<PAGE> 10
termination and the defaulting party has not remedied such Default by the
specified date provided, however, the obligations set forth in Sections 4, 8, 10
and 11 of Article V and Section 6 of Article IX, shall survive such termination,
unless satisfied. Any records remaining at the Transfer Agent which are not
required to be maintained, under any laws which affect the Transfer Agent, will
be destroyed twelve months after the termination of this Agreement.
SECTION 2. If either party terminates due to a Default, the Defaulting
party pays the expenses incurred in connection with the retrieval, compilation
and movement of books, records and materials and plus any reasonable
out-of-pocket expenditures incurred by the Transfer Agent for
conversion/deconversion due to the termination of this Agreement. However, if
either party terminates this Agreement for reasons other than a Default, then it
pays the expenses incurred in connection with the retrieval, compilation and
movement of books, records and materials and plus any reasonable out-of-pocket
expenditures incurred by the Transfer Agent for conversion/deconversion due to
the termination of this Agreement.
Upon the termination of this Agreement for any reason, the Transfer
Agent agrees to provide the Trust with complete and accurate records and to
assist the Trust in the orderly transfer of accounts and records. However, the
Transfer Agent shall retain all such records until the Transfer Agent receives
payment of all amounts due under this Agreement. Without limiting the generality
of the foregoing, the Transfer Agent agrees upon termination of this Agreement:
(a) to deliver to the Trust computer tapes containing the Trust's
accounts and records together with such record layouts microfiche of documents
or originals of documents pertaining to all shareholder accounts and additional
information as may be necessary to enable the Trust to utilize the information
therein;
(b) to cooperate with the Trust and any successor transfer agent in the
interpretation of the Trust's accounts and records;
(c) to forward all Shareholder calls investments and correspondence to
the new Transfer Agent upon de-conversion; and
(d) to act in good faith, to make the conversion as smooth as possible
for the Trust.
SECTION 3. The practices and procedures of the Transfer Agent and the
Trust set forth in the Agreement, or any other terms or conditions of this
Agreement, may be altered or modified from time to time as may be mutually
agreed by the parties to this Agreement. In special cases the parties hereto may
adopt in writing such procedures as may be appropriate or practical under the
circumstances, and the Transfer Agent may conclusively rely on the determination
of the Trust that any special procedure which has been approved by the Trust
does not conflict with or violate any
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<PAGE> 11
requirements of its Articles of Incorporation, By-Laws or Prospectus, or any
rule, regulation or requirement of any regulatory body.
SECTION 4. This Agreement may be amended from time to time by a
supplemental agreement executed by the Trust, GCCM and the Transfer Agent.
SECTION 5. Any notice or other communication required by or permitted
to be given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first class mail, postage prepaid, to the
respective parties as follows:
If to the Fund: If to GCCM
Green Century Funds Green Century Capital Management
Attn: Treasurer Attn: Treasurer
29 Temple Place, Suite 200 29 Temple Place, Suite 200
Boston, Massachusetts 02111 Boston, Massachusetts 02111
If to the Transfer Agent
Unified Fund Services, Inc.
Attention: President
431 N. Pennsylvania Street
Indianapolis, Indiana 46204-1897
SECTION 6. The Transfer Agent and the Trust each represent and warrant
to the other as to itself that all actions required by their respective Trustees
or Shareholders have been taken to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; the
execution and delivery of this Agreement and consummation of the transactions
contemplated hereby do not contravene any provision of their respective charter
or by-laws or of any laws, regulations or orders of any government or agency
thereof to which it is subject; do not constitute the violation or breach of any
agreement or understanding to which it is a party or by which it is bound; and
upon its execution and delivery, this Agreement shall be binding and enforceable
against it in accordance with its terms.
SECTION 7. The Transfer Agent may from time to time, with the prior
written consent of the Trust, delegate some or all of its duties hereunder to
others, which shall perform such functions as the agent of the Transfer Agent.
To the extent of such delegation, the term "the Transfer Agent" in this
Agreement shall be deemed to refer to both the Transfer Agent and to its
designee or to either of them, as the context may indicate. In each provision of
this Agreement fixing or limiting the liabilities or the delegations of the
Transfer Agent, or providing for the liability indemnification or protection of
the Transfer Agent, the term "the Transfer Agent" shall include the Transfer
Agent's
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<PAGE> 12
designee. The Transfer Agent shall not be relieved of any liabilities or
obligation under the Agreement in connection with such delegation of duties,
shall be responsible to supervise and assure that any such designee properly
performs the duties delegated to it, and shall be responsible for the
performance of the designee as though the Transfer Agent had, itself, performed
the duties so delegated.
SECTION 8. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument, which is
only effective if three signatures are executed.
SECTION 9. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Trust without the written
consent of the Transfer Agent or by the Transfer Agent without the written
consent of the Trust, authorized or approved by a resolution of its Board of
Trustees.
SECTION 10. This Agreement constitutes the full and complete agreement
of the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements or understandings between the parties.
The schedule attached hereto shall be deemed to be part of this Agreement.
SECTION 11. Whenever pronouns are used herein, they shall be
interpreted in the neuter, masculine, feminine, singular or plural as the
context may require.
SECTION 12. Except where specific time limits are herein provided, no
delay on the part of any party hereto in exercising any power or right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any power or right hereunder preclude other or further exercise thereof or the
exercise of any other power or right. No waiver shall be enforceable against any
party hereto unless in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event.
SECTION 13. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the Commonwealth of Massachusetts, without
giving effect to the principles of conflicts of law.
ARTICLE VII. DEFAULT
The following events shall be a default ("Default") under this
Agreement:
(a) The Trust or GCCM neglects or fails, in whole or in part, to
observe any of its obligations to the Transfer Agent to make any payments due
under this Agreement; or
Unified Fund Services, Inc. 9/10/98 Green Century Funds - 12
<PAGE> 13
(b) Any party neglects or fails in whole or part to observe any of its
obligations stated herein; or
(c) Trust assigns this Agreement or any of its rights hereunder without
the prior written consent of Transfer Agent; or
(d) the Transfer Agent assigns the Agreement or any of its rights
hereunder without the prior written consent of the Trust.
Upon the occurrence of a Default, the non-defaulting party may
terminate delivery of the services provided hereunder in accordance with Section
1 of Article VI hereof and recover from the defaulting party:
(a) Any payments due from the defaulting party hereunder; and
(b) All costs and expenses of collection, including reasonable
attorneys' fees; and
(c) Any and all damages available under law.
ARTICLE VIII. ARBITRATION
SECTION 1. In the event of a dispute between the parties under this
Agreement, the parties shall first seek to resolve such dispute through good
faith, face-to-face negotiations between the respective principals. If
negotiations are not successful, then the dispute shall be referred to
arbitration and such arbitration shall be conducted in accordance with the rules
of the American Arbitration Association.
SECTION 2. The decision rendered through arbitration shall be final and
binding upon the parties hereto, and judgment shall be entered in accordance
with applicable law in any court having jurisdiction thereof. In rendering a
decision, the arbitrators shall be governed by the terms of this Agreement.
ARTICLE IX. MISCELLANEOUS
SECTION 1. The Transfer Agent may contract with or establish
relationships with other parties for the provision of services or activities
other than those specified in Article VI Section 7 of this Agreement.
SECTION 2. The Transfer Agent agrees to promptly notify the Trust if
for any reason the Transfer Agent is unable to perform fully and promptly any of
its obligations under this Agreement.
Unified Fund Services, Inc. 9/10/98 Green Century Funds - 13
<PAGE> 14
SECTION 3. The Transfer Agent may at any time own or hold with power to
vote certain shares of the Trust which are registered in the name of the
Transfer Agent or its affiliate Unified Management Corporation or the name of
their respective nominee.
SECTION 4. The provisions of the Agreement shall in no way limit the
authority of the Trust to take such action as it may deem appropriate or
advisable in connection with all matters relating to the operations of such
Trust and/or sale of its shares.
SECTION 5. In consideration of the performance of the Services by the
Transfer Agent hereunder, GCCM severally agrees to compensate the Transfer Agent
at the rates described in and attached hereto as Schedule A, hereunder referred
to (the "Fee Schedule"), which Fee Schedule may change pursuant to a written
amendment to this Agreement executed by and among the Trust and Transfer Agent.
Payment for the Services shall be made at least monthly. The parties mutually
agree to not unreasonably withhold permission for amendments or modifications in
the Fee Schedule should circumstances arise, outside of the party's or parties'
control, which would materially and adversely affect the party, should such
request for amendment or modification not be agreed to.
SECTION 6. The Transfer Agent shall indemnify and hold harmless the
Trust from and against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liabilities that the Trust may incur, arising out
of or related to (a) any failure by the Transfer Agent to have systems that are
Year 2000 compliant or (b) the Transfer Agent's negligent act or willful
misconduct in the performance or non-performance of the Transfer Agent of its
responsibilities under this Agreement.
SECTION 7. The Transfer Agent understands and agrees that the
obligations of the Trust under this Agreement are not binding upon the
shareholders of the Trust or the Trust's Trustees, officers, nominees, agents or
employees personally, but bind the Trust and the Trust's property; the Transfer
Agent represents that it has notice of the provisions of the Declaration of
Trust for the Trust disclaiming shareholder liability for acts or obligations of
the Trust.
SECTION 8. It is understood and agreed that in performing the services
under this Agreement, the Transfer Agent shall not be acting as an agent for the
Trust.
SECTION 9. To the extent that any of the terms, conditions and/or
obligations herein cannot be fulfilled by the Trust due to any terms and/or
conditions contained within the Trust's Prospectus, or due to any subsequent
changes, alterations, or amendments to the Trust's existing Prospectus, the
Trust agrees to honor and fulfill the remaining terms, conditions and/or
obligations herein for as long as the Agreement is in full force and effect.
Unified Fund Services, Inc. 9/10/98 Green Century Funds - 14
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Transfer Agent
Agreement to be signed by their respective duly authorized officers as of the
day and year first above written.
GREEN CENTURY FUNDS
By Date
-------------------------------------- ----------
Title
----------------------------------
Attest
---------------------------------------------------
GREEN CENTURY CAPITAL MANAGEMENT
By Date
-------------------------------------- ----------
Title
----------------------------------
Attest
---------------------------------------------------
UNIFIED FUND SERVICES, INC.
By Date
-------------------------------------- ----------
Title
----------------------------------
By Date
-------------------------------------- ----------
Title
----------------------------------
Attest
---------------------------------------------------
Unified Fund Services, Inc. 9/10/98 Green Century Funds - 15
<PAGE> 16
SCHEDULE A
STANDARD TRANSFER AGENT FEE SCHEDULE
The prices contained herein are effective for twenty-four months from the
execution date of this contract.
I CONVERSION FEE: Manual conversion/new fund establishment - fee not to exceed
$1,500 per portfolio. Electronic conversions - $2.00 per
shareholder account with a $5,000 minimum fee.
II STANDARD BASE FEE FOR STANDARD BASE SERVICES
The Base Fee* is $1.45 for money market funds and $1.25 for equity/bond
funds per active Shareholder Account per month with a minimum fee of $1,250 per
portfolio per month. An Active Shareholder Account is any Shareholder Account
existing on Transfer Agent's computerized files with a non-zero Share balance.
There is a $0.40 per account charge for any account with a zero share balance
for the current calendar month, as determined on the last day of each month.
*The Base Fee does not include: forms design and printing, statement
production, envelope design and printing, postage and handling, shipping,
statement microfiche copies and 800 number access to Unified's shareholder
services group.
Unified supports for an additional monthly fee of $0.05 per account per
service: receivables accounting, 12b-1 fund reporting, back-end sales load
recapture accounting, and/or detailed dealer and representative load commission
accounting and reporting. Funds paying dividends more frequently than once per
quarter (generally, money market funds) are charged an additional $0.30 per
month per account.
Unified will provide lost account search services in connection of SEC
Rules 17Ad-17 and 17a-24 at a cost of $2.50 per account per account searched.
These "Electronic Data Search Services" will be performed on a semi-annual
basis. This service will apply to only Active Shareholder Accounts maintained on
the transfer agency system coded as RPO accounts.
In addition to the above fees, there will be a $500.00 minimum
fee/rerun charge when the nightly processing has to be repeated due to incorrect
NAV or dividend information received from the Fund Accountant/Portfolio Pricing
Agent.
III STANDARD BASE TRANSACTION FEES
Fund/Serv processing charges are $0.25 per transaction in addition to
direct Fund/Serv charges that are passed through (See Section VI
herein). Minimum charge: $500.00 per month
Networking processing charges are $0.24 per account for Matrix levels
1, 2 & 4 and $0.06 for Matrix level 3 in addition to direct Networking
charges that are passed through (See Section VI herein). Minimum
charge: $500.00 per month.
IV STANDARD SERVICES PROVIDED
- -Opening new accounts
- -Maintaining Shareholder accounts
Includes:
-Maintaining certificate records
-Changing addresses
-Daily reports on number of Shares, accounts, transactions, new
accounts and fully liquidated accounts
-Preparation of Shareholder federal tax information
-Withhold taxes on U.S. resident and non-resident alien accounts
-Reply to Shareholder calls and correspondence other than that for
Fund information and related inquiries
- -Processing purchase of Shares
- -Processing partial and complete redemptions
- -Regular and legal transfer of accounts
- -Mail processing of semi-annual and annual reports
- -Mail updated Prospectuses and Prospectus supplements to existing
shareholders
Unified Fund Services, Inc. 9/10/98 Green Century Funds - 16
<PAGE> 17
- -Processing dividends and distributions
- -Prepare Shareholder meeting lists
- -One proxy processing per year per fund. Tabulation is limited to three.
- -Receiving and tabulating of proxies
- -Confirmation of all transactions as provided by the terms of each
Shareholder's account
- -Preparation and mailing of quarterly consolidated statements
- -Provide a system which will enable Fund to monitor the total number of Shares
sold in each state. System has capability to halt sales and warn of potential
oversell.(Blue Sky Reports)
- -Determination/Identification of lost Shareholder accounts including utilizing
lost account search services and escheatment
- -1099 reporting
- -Copies of daily confirmation statements
V STANDARD REPORTS AVAILABLE
- -12b-1 Disbursement Report -Holdings by Account Type
- -12b-1 Disbursement Summary -New Accounts Report
- -Dealer Commission Report -Posting Details
- -Dealer Commission Summary Report -Posting Summary
- -Exchange Activity Report -Settlement Summary
- -Fees Paid Summary Report -Shareholder Registration Changes
- -Fully Liquidated Accounts Report -Tax Register
- -Fund Accrual Details -Transactions Journal
VI ADDITIONAL FEES FOR SERVICES OUTSIDE THE STANDARD BASE
<TABLE>
<S> <C>
- -Archiving of old records/storage of aged records negotiable
- -Off-line Shareholder research $25/hour (Billed to customer account)
- -Check copies $3/each (Billed to customer account)
- -Statement copies $5/each (Billed to customer account)
- -Mutual Fund fulfillment/prospect file maintenance $1.00/item
- -Shareholder communications charges (Faxes) pass through
- -Leased line/equipment on TA's computer system pass through
- -Dial-up access to TA's computer system pass through
- -Labels .05 ea/$100 minimum
- -Electronic filings of approved forms $75/transmission
- -Monthly Director's Reports $25/mo/portfolio
-Direct Fund/Serv expenses Pass through
-Direct Networking expenses Pass through
- -AD-HOC REPORTWRITER Report Generation $50.00 per report
- -Bank Reconciliation Service $50.00 monthly maintenance fee per bank account
$1.50 per bank item
- -Systems Programming Labor Charges:
System Support Representatives $100.00/hour
Programmers, Consultants or Department Heads $125.00/hour
Officers $150.00/hour
- -Additional Proxy Processing:
Each processing $225.00 fixed charge per processing
Preparation and Tabulation $0.145/proxy issued
(includes 3 tabulations, sixteen propositions)
Each Extra Tabulation $23.00 fixed charge per processing
$0.02 per proxy tabulated
</TABLE>
Unified Fund Services, Inc. 9/10/98 Green Century Funds - 17
<PAGE> 1
EXHIBIT-99.B11
PAGE 1
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees
Green Century Funds:
We consent to the use of our reports dated August 24, 1998, incorporated herein
by reference and to the references to our firm under the captions "FINANCIAL
HIGHLIGHTS" and "ORGANIZATION AND MANAGEMENT OF THE FUNDS -- Auditors" in the
prospectus and "INDEPENDENT AUDITORS AND EXPERTS" in the statement of additional
information, included herein.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 26, 1998
<PAGE> 2
EXHIBIT-99.B11
PAGE 2
CONSENT OF INDEPENDENT AUDITORS
The Trustees
Domini Social Index Portfolio
We consent to the use of our report dated August 24, 1998, on the Domini Social
Index Portfolio incorporated herein by reference to statement of additional
information of the Green Century Funds.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 26, 1998
<PAGE> 1
EX.-99.B14(a)
TRADITIONAL AND
ROTH IRAS
FOR MORE INFORMATION ABOUT THE GREEN CENTURY FUNDS CALL 1-800-93-GREEN
FOR SPECIFIC INFORMATION ABOUT YOUR OWN ACCOUNT, CALL 1-800-221-5519
[LOGO]
Printed on recycled paper with soy-based ink.
[LOGO]
(R)
<PAGE> 2
IRA DISCLOSURE STATEMENT AND CUSTODIAL ACCOUNT AGREEMENT
TRADITIONAL IRA AND ROTH IRA
DISCLOSURE STATEMENT
You should review the following information along with the IRA Custodial
Account Agreement (the "Terms and Conditions") which follows, the IRA
Registration Form (the "Registration Form") and the current prospectus for the
Green Century Funds.
This DISCLOSURE STATEMENT provides information about Traditional IRAs and
Roth IRAs and is divided into three sections.
SECTION 1: The first section is the DISCLOSURE STATEMENT FOR TRADITIONAL
IRAS. Tax deductible contributions or rollovers from another Traditional IRA or
an employer's qualified retirement plan may be made to a Traditional IRA. The
earnings and interest in your account accrue on a tax-free basis. However, any
amounts not taxed when contributed are taxed, along with any earnings, when they
are withdrawn from the Traditional IRA. In the DISCLOSURE STATEMENT FOR
TRADITIONAL IRAS section you will find a general overview of the basic features
of your Traditional IRA, along with the rules under which the Traditional IRA
will be operated. (Note: In this booklet all IRAs, except for Roth IRAs (see
below), are considered to be Traditional IRAs.)
SECTION 2: The second section of this booklet, DISCLOSURE STATEMENT FOR
ROTH IRAS, explains in detail how Roth IRAs work and who is eligible to
contribute to them, along with the other basic rules and features of a Roth IRA.
Roth IRAs were created in 1997 by Congress and are available after January 1,
1998. In Roth IRAs, non-deductible contributions accrue earnings and interest
tax-free. In addition, withdrawals meeting certain requirements are also made
tax-free. Individuals (and their spouses) whose annual gross income on their tax
return is less than $100,000 per year may convert or roll over amounts from
their existing Traditional IRAs to Roth IRAs.
SECTION 3: The final section, DISCLOSURE STATEMENT FOR ALL IRAS, explains
tax and other matters applicable to all Green Century Funds IRAs and should be
read in conjunction with either of the first two sections.
SPECIAL NOTE ON IRA CONTRIBUTIONS FOR 1997
This Disclosure Statement covers the rules applicable to individual
retirement custodial accounts effective January 1, 1998. Contributions to a
Traditional IRA for 1997 may be made during 1998 as long as such contributions
are made no later than April 15, 1998 and are designated as contributions for
1997. However, the old rules apply to contributions for 1997 even if they are
made during the period January 1 to April 15, 1998. Under the old rules, the
limits on deducting Traditional IRA contributions apply if either spouse in a
married couple is an active participant in an employer-sponsored plan. Also, if
the active participant rules apply, the adjusted gross income ("AGI") levels for
making partially deductible or non-deductible Traditional IRA contributions are
lower for 1997. (For example, for single taxpayers who are active participants,
the ability to make a deductible contribution phases out at AGI levels from
$25,000 to $35,000; for married taxpayers filing jointly, where one or both
spouses are active participants, deductions phase out at AGI levels of $40,000
to $50,000.)
<PAGE> 3
Because Roth IRAs are not available until 1998, contributions to a Roth IRA
in 1998 may not be made for 1997.
SIMPLE IRAS
Under the Small Business Job Protection Act of 1996, a new type of IRA
called a SIMPLE IRA was created. SIMPLE IRAs operate in connection with a SIMPLE
IRA plan maintained by an eligible employer. Each participating employee has a
SIMPLE IRA to receive contributions under the plan.
A Traditional IRA or a Roth IRA is NOT suitable for use with a SIMPLE IRA
plan. A separate IRA, using a different form for the IRA Application and
Adoption Agreement and a different Individual Retirement Custodial Account
document, is available to establish a SIMPLE IRA.
REVOCATION OF YOUR IRA
If you do not receive this statement at least seven days before you
establish your Traditional or Roth Individual Retirement Account, you have the
right to revoke your account within seven days after it is established and to
receive a return of the entire amount of your investment in the account. If this
right to revoke applies to you and if you should desire to exercise your right
to revoke your Traditional or Roth Individual Retirement Custodial Account, you
should mail or deliver a written notice of revocation to the Green Century
Funds, the name and address of which appear on the IRA Registration Form. Mailed
notice will be deemed given on the date it is postmarked (or, if sent by
certified or registered mail, on the date of certification or registration by
the post office).
DISCLOSURE STATEMENT FOR TRADITIONAL IRAs
1. ELIGIBILITY
You are eligible to set up a Traditional IRA if you are younger than age
70 1/2 and if, at any time during the year, you are an employee or are
self-employed and receive compensation or earned income that is includible in
your gross income.
Also, you may contribute to a different IRA, established by your spouse and
called a "spousal IRA," out of your compensation or earned income for any year
before the year in which your spouse reaches age 70 1/2. To contribute to a
spousal IRA, you and your spouse must file a joint tax return for the taxable
year. Your spouse must establish a separate spousal IRA to receive the
contributions.
Additionally, regardless of your age, you may also transfer funds from
another IRA or certain qualified plan distributions to a "Rollover IRA", which
is described in paragraph 9 of this statement.
2. LIMIT ON ANNUAL CONTRIBUTIONS
(a) You can make annual contributions to an individual Traditional IRA of
up to $2,000, or 100% of your compensation or earned income, whichever is less.
(b) If you and your spouse both work and have compensation that is
includible in your gross income, each of you can annually contribute to a
separate Traditional IRA up to the lesser of $2,000 or 100% of compensation or
earned income. If each spouse has at least $2,000 in compensation or earned
income, each may make the maximum contribution to his or her individual
Traditional IRA, a total of up to $4,000 in IRA contributions for the couple.
However, if one spouse has under $2,000 in compensation or earned income, but
both spouses together have $4,000 or more in compensation or earned income, it
may be advantageous to use spousal Traditional IRAs to maximize contributions
(see paragraph (c) below).
(c) If each spouse in a couple meets the eligibility requirements for
contributions to that spouse's Traditional IRA, and the total compensation and
earned income shown on the couple's joint income tax return is at least $4,000,
each spouse may contribute up to $2,000 to his or her spousal Traditional IRA.
If the combined compensation or earned income shown on the couple's joint income
tax return is under $4,000, contributions to both spousal Traditional IRAs may
not exceed the total compensation or earned income, and may be divided between
the spousal Traditional IRAs as desired (as long as the contribution to either
spousal Traditional IRA does not exceed $2,000).
(d) If you are a divorced spouse, all taxable alimony received by you under
a decree of divorce or separate maintenance will be treated as compensation for
purposes of the Traditional IRA contribution limit and the rules for
<PAGE> 4
contributing to a Traditional IRA will apply. Accordingly, you can make annual
contributions of up to the lesser of $2,000, or 100% of compensation or earned
income (including taxable alimony).
(e) If you (or your spouse) establish a new Roth IRA (described in the
Disclosure Statement for Roth IRAs) and make contributions to both your
Traditional IRA and a Roth IRA, the limit on contributions to both Traditional
and Roth IRAs for a single calendar year for you may not exceed $2,000 (or
$4,000 for you and your spouse).
3. DEDUCTIBILITY OF CONTRIBUTIONS
(a) You may deduct the full amount of your Traditional IRA contribution up
to the annual maximum limit if you are not an "active participant" in an
employer-sponsored retirement plan (including qualified 401(k), 403(b), profit
sharing or retirement plans maintained by your employer, Simplified Employee
Pension (SEP) plans, SIMPLE IRA or SIMPLE 401(k) plans, tax-sheltered annuity
plans, and certain governmental plans) for any part of such year. (New rule: If
you are married, you will not be treated as an active participant in an
employer-sponsored retirement plan solely because your spouse is an active
participant in such a plan if you are not an active participant yourself.
However, the deductibility of contributions for the non-active spouse phases out
for married couples with Adjusted Gross Income ("AGI") between $150,000 and
$160,000, and is lost entirely after AGI reaches $160,000. Your AGI is
determined on your Form 1040 or 1040A.)
Individuals are considered to be "active participants" for a year if at any
time during the year they are covered by any employer plan under which
contributions are made to their account (including a required or voluntary
employee contribution by the individual) or under which they are eligible to
earn pension benefit credits. Individuals are considered to be active
participants even if they are not vested under the plan. Form W-2 for the year
should indicate participation status. Consult your employer or your own tax or
financial advisor if you should have any further questions concerning active
participant status.
If you are an active participant in such a plan, your contributions will
either be fully deductible, partly deductible or not deductible, depending on
your tax filing status and your AGI. The following table shows phase out ranges
for deductibility of contributions, based on AGI and filing status, for 1998:
ACTIVE PARTICIPANTS
DEDUCTIBILITY OF CONTRIBUTIONS AT SPECIFIED LEVELS OF AGI-1998
<TABLE>
<CAPTION>
FULLY PARTLY NOT
TAX FILING STATUS DEDUCTIBLE DEDUCTIBLE DEDUCTIBLE
<S> <C> <C> <C>
Single $30,000 or less At least $30,000 but less than $40,000 $40,000 or more
Married Filing Jointly $50,000 or less At least $50,000 but less than $60,000 $60,000 or more
</TABLE>
In the years following 1998, phase out levels will be increased, until they
top-out in 2005 for single filers and in 2007 for married joint filers. The
following table shows the phase out levels for years after 1998. AGI shown is
for married filing jointly. If you are married filing separately, your
contribution deductibility is phased out for AGI from $0-$10,000, and is lost
entirely with AGI above $10,000.
ACTIVE PARTICIPANTS
DEDUCTIBILITY OF CONTRIBUTIONS--FUTURE YEARS
<PAGE> 5
<TABLE>
<CAPTION>
FULLY
TAX DEDUCTIBLE PARTLY NOT
FILING (ANY AGI DEDUCTIBLE DEDUCTIBLE
YEAR STATUS AMOUNT UP TO) (AGI AMOUNTS BETWEEN) (AGI AMOUNTS OVER)
<S> <C> <C> <C> <C>
Single $ 31,000 $ 31,000 - $ 41,000 $ 41,000
1999 Married $ 51,000 $ 51,000 - $ 61,000 $ 61,000
Single $ 32,000 $ 32,000 - $ 42,000 $ 42,000
2000 Married $ 52,000 $ 52,000 - $ 62,000 $ 62,000
Single $ 33,000 $ 33,000 - $ 43,000 $ 43,000
2001 Married $ 53,000 $ 53,000 - $ 63,000 $ 63,000
Single $ 34,000 $ 34,000 - $ 44,000 $ 44,000
2002 Married $ 54,000 $ 54,000 - $ 64,000 $ 64,000
Single $ 40,000 $ 40,000 - $ 50,000 $ 50,000
2003 Married $ 60,000 $ 60,000 - $ 70,000 $ 70,000
Single $ 45,000 $ 45,000 - $ 55,000 $ 55,000
2004 Married $ 65,000 $ 65,000 - $ 75,000 $ 75,000
Single $ 50,000 $ 50,000 - $ 60,000 $ 60,000
2005 Married $ 70,000 $ 70,000 - $ 80,000 $ 80,000
Single $ 50,000 $ 50,000 - $ 60,000 $ 60,000
2006 Married $ 75,000 $ 75,000 - $ 85,000 $ 85,000
2007 Single $ 50,000 $ 50,000 - $ 60,000 $ 60,000
and later Married $ 80,000 $ 80,000 - $100,000 $ 100,000
</TABLE>
In general, the Traditional IRA deduction is phased out at a rate of $200
per $1,000 of Adjusted Gross Income in excess of the phase out threshold (the
AGI level at which contributions by active participants go from fully deductible
to partly deductible). Also, note that, starting in the year 2007 for married
taxpayers filing jointly, the deduction is phased out at the rate of $100 per
$1,000 of Adjusted Gross Income in excess of the phase out threshold.
When calculating your reduced Traditional IRA deduction limit, you always
round down to the next lowest $10. Therefore, your deduction limit is always a
multiple of $10. In addition, if your Adjusted Gross Income is within the
phase-out range and your reduced deduction limit is more than $0 but less than
$200, you are permitted to deduct up to $200 of your Traditional IRA
contributions.
If Adjusted Gross Income exceeds the Not Deductible 20 levels specified
above ($40,000 in 1998 for single filers, $60,000 in 1998 for married joint
filers) and you are an active participant in an employer-sponsored retirement
plan, then you may not deduct any portion of your Traditional IRA contribution.
(b) Even if you will not be able to deduct the full amount of your
Traditional IRA contribution under the rules described above, you can still
contribute up to your annual maximum amount with all or part of the contribution
being a non-tax-deductible contribution. Of course, the combined total of
deductible and non-deductible contributions must not exceed your annual maximum
contribution limit amount. Any earnings on all your Traditional IRA
contributions (deductible and nondeductible) accumulate tax-free until you
withdraw them.
4. CONTRIBUTIONS WHICH CAN NEVER BE DEDUCTED
You may not make any contribution (other than a rollover contribution) to
your Traditional IRA with respect to the tax year in which you reach age 70 1/2
or any subsequent year. However, you may continue to make contributions to a
spousal Traditional IRA and deduct the deductible portion of such payments until
the year in which your spouse reaches age 70 1/2.
<PAGE> 6
You may not deduct any portion of Traditional IRA contributions allocable
to the cost of life insurance. For this reason, life insurance is not offered as
an investment for your Traditional IRA.
5. DEADLINE FOR ANNUAL CONTRIBUTIONS
Contributions to your Traditional IRA for a tax year must be made in cash
(check) on or before the due date (not including extensions) for your Federal
income tax return for that tax year (April 15 for most individuals). If you
intend to report contributions made between January 1 and April 15 as
contributions for your prior tax year, you should clearly indicate that such
contributions have been made on account of such prior tax year. Otherwise, the
Custodian will treat the contribution as a contribution for the current tax
year.
6. EXCESS CONTRIBUTIONS
If you contribute to your Traditional IRA more than the maximum
contribution limit allowed in any year, the excess contribution could be subject
to a 6% nondeductible excise tax. The excess is taxed in the year the excess
contribution is made and each year that the excess remains in your Traditional
IRA at the end of the year. (Remember, the excess contribution excise tax is
based on contributions above the maximum contribution limit, not the maximum
deduction limit.)
If, by accident, you should contribute more than the maximum amount
allowed, you can eliminate the excess contribution as follows:
(a) You can avoid the 6% excise tax by withdrawing the excess contribution
and the net earnings attributable to it before the due date (including any
extensions) for filing your Federal income tax return for the year for which the
excess contribution was made. Upon removing an excess contribution in this
manner, the net earnings attributable to it are includible in your income for
the tax year in which the excess contribution was made, and you may also have to
pay an additional 10% premature distribution tax on the amount of such net
earnings (see paragraph 7(a)). However, the excess contribution itself will not
be included in your taxable income and will not be subject to the 10% premature
distribution tax.
(b) If you elect not to withdraw an excess contribution, you can eliminate
the excess by contributing less than the maximum amount allowed to your
Traditional IRA in a later year. This is known as a "make-up" contribution and
is allowed only to the extent that you "under-contribute" in the later year.
Further, to the extent that you have not contributed your full deductible amount
for that later year, the amount of the excess so eliminated may be deductible as
a "make-up" deduction, depending on your active participant status and Adjusted
Gross Income for the year. The 6% excise tax will, however, be imposed in the
year you make the excess contribution and each subsequent year until eliminated.
(c) If you do not withdraw an excess contribution on or before the due date
for filing your Federal income tax return and your contribution did not exceed
$2,000, you can withdraw the excess at any time as long as you have not deducted
it on your Federal tax return. The amount of the excess which you withdraw will
not be included in your gross income and will not be subject to regular Federal
income tax. However, the 6% excise tax will be imposed for the year in which you
make the excess contribution and each subsequent year, until the year of
withdrawal.
(d) If you do not withdraw an excess contribution on or before the due date
for filing your Federal income tax return and your contribution exceeded $2,000,
you must include in your gross income any excess amount which you withdraw even
if you have not deducted it on your Federal income tax return. You may also have
to pay a 10% premature distribution tax on the amount you withdraw (See
paragraph 7 (a)). Additionally, the 6% excise tax will be imposed for the year
in which you make the excess contribution and each subsequent year, until the
year of withdrawal.
7. PAYMENTS FROM YOUR TRADITIONAL IRA DURING YOUR LIFE
(a) You can make withdrawals from your Traditional IRA at any time.
However, if you withdraw any of the funds in your Traditional IRA before age
59 1/2, the amount includible in your gross income is subject to a 10%
non-deductible premature distribution tax unless:
- the withdrawal is made because of your death or permanent disability;
- the withdrawal is an exempt withdrawal of an excess contribution;
<PAGE> 7
- the withdrawal does not exceed the amount of your deductible medical
expenses for the year in which you made the withdrawal; generally,
medical expenses paid during a year are deductible if they exceed
7 1/2% of your Adjusted Gross Income for that year;
- the withdrawal does not exceed the premiums you paid for medical
insurance for yourself, your spouse and your dependents during the
year; however, you must have been unemployed and received Federal or
state unemployment compensation payments for at least 12 weeks, and
you must make the withdrawal during the year in which you received the
unemployment compensation payments or during the following year, but
not after you have been reemployed for at least 60 days;
- the withdrawal is validly rolled over into another qualified plan or
Traditional IRA within 60 days;
- the withdrawal does not exceed certain eligible higher education
expenses for yourself, your spouse, your child or grandchild. Eligible
expenses include tuition, fees, books, supplies and equipment
necessary for attending a qualified higher education institution. Room
and board expenses may be eligible if the individual is attending at
least half time; or
- the withdrawal does not exceed qualified first-time homebuyer expenses
incurred by you or your spouse, or a child, grandchild, parent or
grandparent of you or your spouse. Qualified expenses include cost of
acquisition or construction, including normal financing or closing
costs. You are considered a "first-time homebuyer" if you (and your
spouse if you are married) had no ownership interest in a principal
residence during the two years before the withdrawal in question.
There is a lifetime limit ($10,000) on qualified first-time homebuyer
expenses for any one individual.
You are considered "disabled" if you are unable to engage in any
substantial gainful activity because of a physical or mental impairment which
can be expected to result in death or to be of long-lasting or indefinite
duration.
You can also withdraw funds held in your Traditional IRA without any tax
penalty before you reach age 59 1/2 if you choose to receive systematic payments
in substantially equal amounts over a period that does not exceed your life
expectancy or the life expectancy of you and your designated beneficiary. You
should be aware, however, that the 10% premature distribution tax will be
applied retroactively (with interest) to all systematic payments if you change
to a method of distribution that does not qualify for the exception either
before you attain age 59 1/2 or during the first five years of the
distributions.
The 10% premature distribution tax discussed above does not apply to the
portion of your Traditional IRA distribution which is not includible in your
gross income (for example, amounts treated as a return of non-deductible
contributions you made to your Traditional IRA).
The exceptions to the 10% premature withdrawal penalty tax have a number of
special rules and definitions; consult your tax advisor or the IRS for further
details.
(b) When you reach age 70 1/2, you must elect to receive distributions in
either (a) systematic payments (monthly, quarterly or annually), or (b) one lump
sum distribution of all the funds held in your Traditional IRA. The law requires
that you begin to receive distributions from your Traditional IRA no later than
the April 1 following the year in which you reach age 70 1/2 (the "Required
Distribution Date"). (Note: The tax law rule allowing employees who are
participants in an employer plan and who continue working for the employer after
age 70 1/2 to postpone distributions until after they retire from the employer
does not apply to Traditional IRAs.)
If you elect systematic payments, there is a minimum amount which you must
withdraw by the Required Distribution Date and by each December 31 thereafter.
This could result in two minimum distributions in one calendar year. This
minimum amount is determined by your life expectancy or the joint life and last
survivor expectancy of you and your designated beneficiary, subject to the
minimum distribution incidental death benefit rule found in IRS regulations.
Your life expectancy (and your spouse's life expectancy if your spouse is your
designated beneficiary) may be recalculated each year. If you and your spouse
established spousal Traditional IRAs, the minimum required annual distribution
from each spousal Traditional IRA is determined using the life expectancy of the
spouse who established the Traditional IRA (or that spouse and/or his designated
beneficiary).
You should consult your own tax or financial advisor with regard to the
calculation of the amount of your minimum distribution each year because it is
your responsibility to make sure that this requirement is met. The Custodian is
not required to advise you in this matter and will only make distributions to
you from your Traditional IRA in accordance with your specific instructions.
<PAGE> 8
You may receive installment payments larger than the minimum amount.
However, if the amount distributed during a taxable year is less than the
minimum amount required to be distributed, the Internal Revenue Service may
impose a tax equal to 50% of the deficiency, unless it is satisfied that the
deficiency was due to reasonable error and that responsible steps are being
taken to remedy the deficiency.
(c) Amounts paid to you from your Traditional IRA are taxable as ordinary
income, except that you recover your nondeductible Traditional IRA contributions
tax free. The special tax rules which permit recipients of certain lump sum
distributions from other tax-qualified retirement plans to get certain tax
advantages (such as capital gains treatment and five or ten-year averaging) do
not apply to distributions from Traditional IRAs.
(d) If you withdraw an amount from a Traditional IRA during a taxable year
and you have previously made non-deductible contributions, then part of the
amount withdrawn is excludable from ordinary income and not subject to taxation.
The amount excludable for the taxable year is determined by multiplying the
amount withdrawn by a fraction, the numerator of which is your aggregate
non-deductible Traditional IRA contributions remaining in all your Traditional
IRAs and the denominator of which is the aggregate balance of all your
Traditional IRAs at the end of the year plus the amount withdrawn during the
year. For example, in 1998 an individual withdraws $1,000 from a Traditional IRA
to which both deductible and non-deductible contributions were made. At the end
of 1998, the account balance of all his Traditional IRAs is $4,000 of which
$2,500 is non-deductible contributions. The amount excludable from income is
$500 ($2,500/$5,000 - $1,000). It should also be pointed out that in the event
you receive a distribution from your Traditional IRA within the last 60 days of
the calendar year, if you do not roll this amount into another Traditional IRA
by December 31 but you do so after December 31 and before the 60th day after the
distribution, this amount must be added to the denominator of the fraction
discussed above.
8. PAYMENTS FROM YOUR TRADITIONAL IRA AFTER YOUR DEATH
If you die before all the funds held in your Traditional IRA have been
distributed, the remaining funds in the account will be distributed to your
designated beneficiary either outright or periodically, as selected by such
beneficiary. The Custodian will make distributions to your beneficiary in
accordance with his or her specific instructions.
Your beneficiary should be aware that he or she is subject to minimum
distribution rules and it is his or her responsibility to make sure that the
rules are met. Under the post-death minimum distribution rules, if you die after
your Required Distribution Date, the funds remaining in your Traditional IRA
must continue to be distributed to your designated beneficiary at least as
rapidly as under the method of distribution in effect prior to your death. If
you die prior to your Required Distribution Date, all the funds in your
Traditional IRA must be completely distributed to your designated beneficiary by
December 31 of the year containing the fifth anniversary of your death unless
your designated beneficiary elects, no later than December 31 of the year
following the year of your death, to receive funds from your Traditional IRA
over a fixed period that is no longer than his or her life expectancy. If your
beneficiary is your surviving spouse, distribution of funds from your
Traditional IRA can be made to him or her over a fixed period that is no longer
than his or her life expectancy and commencing at any date prior to December 31
of the year in which you would have attained age 70 1/2. In all instances, your
spousal beneficiary may also elect to roll over the funds in your Traditional
IRA into his or her own account or treat your Traditional IRA as his or her own
by making contributions to it. In this case, he or she is not required to make
withdrawals from the Traditional IRA until April 1 following the year in which
he or she reaches age 70 1/2.
The designation of a beneficiary to receive funds from your Traditional IRA
at your death is not considered a transfer subject to Federal gift taxes.
However, any funds remaining in your Traditional IRA at your death would be
includible in your Federal gross estate.
Be sure to keep your designation of beneficiary up-to-date as your personal
or financial circumstances change. You may file a new designation of beneficiary
form at any time with the Custodian. If no designation of beneficiary is in
effect at your death, or if all designated beneficiaries have predeceased you,
the balance in your account will be paid to your estate.
Selecting a beneficiary or beneficiaries can have important tax and
financial planning implications. Consult a qualified professional for advice if
needed. Also, be sure to consult a qualified professional if you live in a
community or marital property state to be sure that your designation of
beneficiary complies with legal requirements in those states.
<PAGE> 9
9. TAX-FREE ROLLOVERS
(a) GENERAL RULES. Under certain circumstances, you can receive a
distribution from a Traditional IRA, or from a qualified plan, or a
tax-sheltered annuity or other arrangement under Section 403(b) of the Code, and
transfer the amount received to another Traditional IRA without including the
distribution in your income for Federal income tax purposes. Such a "tax-free
rollover" must be completed within 60 days after you receive the distribution. A
transfer from a qualified plan or 403(b) arrangement directly to a Traditional
IRA is a way to avoid the required 20% income tax withholding requirements. Most
distributions from qualified plans or 403(b) accounts are subject to 20%
withholding unless transferred directly to another plan or 403(b) or to a
Traditional IRA (this is called a "direct rollover").
There are complex, specific rules for each kind of transfer, so you should
consult your tax advisor or the IRS if you have questions about the rules.
Rollover contributions are not subject to the limits on annual
contributions to a Traditional IRA. However, all amounts in your Traditional
IRA, including rollover contributions, are subject to the rules discussed above
concerning the time and method of withdrawal.
(b) TRADITIONAL IRA-TO-TRADITIONAL IRA ROLLOVER. If you have a Traditional
IRA, you can withdraw all or part of the amount in that account and transfer all
or part of the amount withdrawn to another Traditional IRA. The amount
transferred will not be subject to federal income tax (or the 10% premature
withdrawal penalty) if you complete the transfer within 60 days after the
withdrawal. After a Traditional IRA-to-Traditional IRA tax-free rollover, you
must wait at least a year before making another Traditional IRA-to-Traditional
IRA rollover.
(c) DIRECT TRANSFER. As an alternative to a rollover, arrangements may be
made for a direct transfer from one Traditional IRA custodian or trustee to
another. The one-year waiting period does not apply to direct transfers from one
Traditional IRA custodian or trustee to another.
(d) ROLLOVERS FROM QUALIFIED PLAN OR 403(B) ARRANGEMENT TO TRADITIONAL IRA.
Most distributions from a qualified plan or 403(b) arrangement are now eligible
for rollover to a Traditional IRA. The main exceptions are:
- payments over the lifetime or life expectancy of the participant (or
participant and a designated beneficiary),
- installment payments for a period of 10 years or more,
- required distributions under the age 70 1/2 rules, and
- payments that are a return of after-tax amounts previously contributed
by the individual.
If you will receive an eligible distribution from a qualified plan or
403(b) or a distribution upon termination of such a plan, you can defer paying
taxes by requesting the plan administrator or 403(b) sponsor to transfer the
distribution amount (except after-tax amounts previously contributed by you)
directly to a Traditional IRA in a direct rollover. Or, you may receive the
distribution and roll it over to a Traditional IRA within 60 days after you
receive the distribution. However, unless you elect a direct rollover of your
distribution, the person making payment must withhold 20% of your distribution
for Federal income taxes. Your plan or 403(b) sponsor will provide you with a
notice concerning direct rollovers, regular 60-day rollovers and withholding
taxes before you receive your distribution.
If you already have one Traditional IRA, you should establish a separate
Traditional IRA to receive any rollover contribution from a qualified plan. You
can later transfer the separate Traditional IRA holding your rollover into a
different employer plan if you desire and the plan permits such transfers.
(e) ROLLOVERS BY A SURVIVING SPOUSE. If a surviving spouse receives a
distribution from a qualified plan or 403(b) because of the employee-spouse's
death, the surviving spouse may be able to defer income taxes by having all or a
part of the distribution (other than employee contributions to the plan)
transferred directly to a Traditional IRA.
(f) ROLLOVER/CONVERSION TO A ROTH IRA. Starting in 1998, you may convert an
existing Traditional IRA into a Roth IRA if your Adjusted Gross Income on your
income tax return for the year of the conversion is $100,000 or less. (This
limit applies to both married and single taxpayers, and the limit is not indexed
for cost of living increases.) This can be done by completing the proper
elections to convert your present Traditional IRA with the Custodian to a Roth
IRA, or by making a rollover to a Roth IRA with another custodian. A married
taxpayer is eligible to convert or roll over a Traditional IRA to a Roth IRA
only if a joint Federal income tax return is filed; married taxpayers who file
separately are not eligible to convert or rollover from a Traditional IRA to a
Roth IRA.
<PAGE> 10
The amount converted or rolled over is treated as taxable income to you in the
year of the conversion. (For more information on converting or rolling over into
a Roth IRA, see the Disclosure Statement for Roth IRAs below.)
(g) RULES APPLICABLE TO ALL ROLLOVERS. The following general rules apply to
all rollovers: (i) rollovers or transfers cannot include any amount you are
required to receive for the year from a qualified plan or Traditional IRA under
the required minimum distribution rules; (ii) the Traditional IRA you set up to
receive "rollover" amounts should be separate from a Traditional IRA you set up
to receive annual contributions; (iii) rollover amounts you receive may not be
deposited in your spouse's Traditional IRA or deducted on your Federal income
tax return; (iv) if you establish a "Rollover" Traditional IRA during the year
in which you reach age 70 1/2, you must be receiving distributions from such
Traditional IRA no later than April 1 of such following year; (v) if you
establish a "Rollover" Traditional IRA after the year in which you reach age
70 1/2, you must begin receiving distributions from such Traditional IRA
immediately; and (vi) strict limitations apply to rollovers, and a variety of
tax and financial planning issues should be considered in determining whether to
make a rollover contribution. You should consult your own tax or financial
advisor regarding these matters.
IMPORTANT: Please see DISCLOSURE STATEMENT FOR ALL IRAS, below, for important
information applicable to all Green Century IRAs.
DISCLOSURE STATEMENT FOR ROTH IRAS
CAUTION: The tax law creating Roth IRAs is a new law, and the rules governing
establishment and maintenance of Roth IRAs and for converting, contributing to
or withdrawing from a Roth IRA have not been finalized and are subject to
change. Also, legislation currently pending in Congress, which has not yet
been enacted, would change some of the tax requirements described in this
Disclosure Statement. You should be aware that the description of Roth IRA
requirements in this Disclosure Statement could be affected by such
legislation or by IRS regulations or rulings. Therefore, you may wish to
consult your own tax lawyer or advisor for the latest developments or for
advice on how establishing or maintaining a Roth IRA (including converting a
Traditional IRA to a Roth IRA, or making contributions to or withdrawals from
a Roth IRA) will affect your personal tax and financial circumstances.
INTRODUCTION
As part of the Taxpayer Relief Act of 1997, Congress created the Roth IRA,
which is available for use by taxpayers as of January 1, 1998. A Roth IRA is a
trust or custodial account established for you (and your beneficiaries) in which
the amounts contributed are not deductible on your Federal income tax return,
but earnings accumulate tax free. If certain conditions are satisfied,
withdrawals made from a Roth IRA may also be made tax free. (Note: State tax
treatment of your Roth IRA earnings and withdrawals may differ from Federal
treatment. You should consult your tax advisor for information regarding tax
laws applicable in your state.)
In addition to the requirements found in the Disclosure Statement for All
IRAs, current law requires that your Roth IRA agreement be in writing and be
designated as a Roth IRA. Your contributions must be in cash (check), and, for
any taxable year, cannot exceed the lesser of 100% of your compensation or
$2,000, unless the contribution is a rollover or conversion from a Traditional
IRA or another Roth IRA. (See Limit on Annual Contributions below for more
information about contributions to your Roth IRA.)
Unless your Adjusted Gross Income ("AGI") is over $100,000, you may also
convert a Traditional IRA into a Roth IRA. The total amount converted (except
your prior non-deductible contributions to the Traditional IRA) will be taxed as
income in the year in which it is converted, but the earnings will accumulate,
and qualified withdrawals may be made, tax free. (See Rollovers below for more
information about converting your Traditional IRA to a Roth IRA.)
<PAGE> 11
1. ELIGIBILITY
You are eligible to make annual contributions to a Roth IRA if you receive
compensation from employment, earnings from self-employment, or alimony, and
your (and your spouse's) Adjusted Gross Income is within the limits described in
Section 2(f) below.
Also, you may contribute to a different Roth IRA, established by your
spouse and called a "spousal Roth IRA," out of your compensation or earned
income for any year. To contribute to a spousal Roth IRA, you and your spouse
must file a joint tax return for the taxable year. Your spouse must establish a
separate spousal Roth IRA to receive the contributions.
Unlike Traditional IRAs, you may continue (or open and begin) to make
contributions to your Roth IRA (or a spousal Roth IRA) even after you (or your
spouse) reach age 70 1/2.
Additionally, you may transfer funds from another Roth IRA or a Traditional
IRA to a "Rollover Roth IRA," described in paragraph 7 below.
2. LIMIT ON ANNUAL CONTRIBUTIONS
(a) You can make annual contributions to your Roth IRA of up to $2,000, or
100% of your compensation or earned income, whichever is less, subject to the
limitations on contributions (see (f) below).
(b) If each spouse has at least $2,000 in compensation or earned income,
each may make the maximum contribution to his or her individual Roth IRA, a
total of up to $4,000 in Roth IRA contributions for the couple (subject to the
limitations discussed in (f) below). However, if one spouse has under $2,000 in
compensation or earned income, but both spouses together have $4,000 or more in
compensation or earned income, it may be advantageous to use spousal Roth IRAs
to maximize contributions (see (c) below).
(c) You may also contribute up to $2,000 per year or 100% of joint
compensation or earned income, whichever is less, to a spousal Roth IRA.
(Amounts contributed can be divided between the two Roth IRAs as you choose, as
long as no more than $2,000 is contributed to either Roth IRA.)
If the combined annual compensation for you and your spouse for a year is
less than $4,000, the spouse with the greater annual income may contribute up to
his/her compensation amount, or $2,000 whichever is less. The other spouse may
contribute up to his/her compensation limit, plus the difference between the
other spouse's compensation and contribution, if any.
(d) The maximum amount that can be contributed to all IRAs (Roth and
Traditional) in a year is $2,000 for an individual and $4,000 for a married
couple. The amount that may be contributed to your Roth IRA is always reduced by
any amount that you have contributed to your Traditional IRAs for the year.
(e) You may make annual contributions to your Roth IRA (or establish a new
Roth IRA) and/or spousal Roth IRA anytime during a year, up to and including the
due date (not including extensions) for filing your Federal income tax return
for that year. Note: Because Roth IRAs are not available until January 1, 1998,
contributions to a Roth IRA on or before April 15, 1998 may not be treated as a
contribution for 1997.
Starting with 1999, if you intend to report contributions made to your Roth
IRA between January 1 and April 15 as contributions for your prior tax year, you
should clearly indicate that such contributions have been made on account of
such prior tax year. Otherwise, the Custodian will treat the contribution as a
contribution for the current tax year.
(f) The amount you or your spouse may contribute to a Roth IRA is limited,
based on your tax filing status and your (and your spouse's) AGI. (AGI is based
on your Form 1040, but for purposes of determining Roth IRA contribution limits,
do not include in your AGI (i) any deductible amount contributed to a
Traditional IRA or (ii) any amount converted or rolled over from a Traditional
IRA to a Roth IRA.) Contribution limits to Roth IRAs are based on AGI levels, as
listed below.
ROTH IRA CONTRIBUTION LIMITS
<PAGE> 12
<TABLE>
<CAPTION>
FULL PARTIAL NO
FILING STATUS CONTRIBUTION CONTRIBUTION CONTRIBUTION
<S> <C> <C> <C>
Single Up to $ 95,000 $ 95,000 but less than $110,000 $110,000 or more
Married* Up to $150,000 $150,000 but less than $160,000 $160,000 or more
</TABLE>
*Note: Figures are for married filing jointly only. If you are married filing
separately, your ability to contribute to a Roth IRA phases out at AGI levels
between $0 and $10,000, and is lost entirely with AGI above $10,000.
In general, your ability to contribute to your Roth IRA is phased out at a
rate of $133 per $1,000 of AGI for single individuals, and $200 per $1,000 of
AGI for married joint filers (and married filing separately), in excess of the
phase out threshold (the AGI level at which the contribution limit goes from
FULL CONTRIBUTION to PARTIAL CONTRIBUTION in the table above).
When calculating your reduced Roth IRA contribution limit, you always round
down to the next lowest $10. Therefore, your contribution limit is always a
multiple of $10. In addition, if your Adjusted Gross Income is within the
Partial Contribution range and your reduced contribution limit is more than $0
but less than $200, you are permitted to contribute up to $200.
If adjusted gross income exceeds the No Contribution levels specified above
($110,00 for single filers, $160,000 for married joint filers) for a year, then
you may not contribute to a Roth IRA for that year.
The Roth IRA contribution limit of $2,000 is reduced by any contributions
for the same year to a Traditional IRA. If you fall in the Partial Contribution
Range, the reduction formula applies to the Roth IRA contribution limit left
after subtracting your contribution for the year to a Traditional IRA.
(g) You must establish a separate Roth IRA account in which your annual
contributions are deposited. Under IRS rules, only annual contributions, and not
any amounts converted, transferred or rolled over, may be deposited into an
annual contribution Roth IRA account.
3. DEDUCTIBILITY OF CONTRIBUTIONS
Unlike a Traditional IRA, contributions to your Roth IRA are not
deductible.
4. EXCESS CONTRIBUTIONS
(a) The maximum contribution you can make to a Roth IRA generally is $2,000
or 100% of compensation or earned income, whichever is less, reduced by the
amount of any contribution to a Traditional IRA for the same year. (This may be
further reduced if you have high AGI, as discussed above.) Any amount, excluding
conversion and rollover amounts, contributed to the Roth IRA above the maximum
is an "excess contribution."
(b) A 6% excise tax will be imposed on any excess contributions made to
your Roth IRA. This tax applies for each year in which the contribution remains
in your Roth IRA.
(c) You can correct the excess without paying the 6% penalty by withdrawing
the excess and any earnings on the excess before the due date (including
extensions) for filing your Federal income tax return for the year for which you
made the excess contribution. Upon removing the excess contribution in this
manner, the net earnings must be included in your income for the tax year for
which the contribution was made and may be subject to a 10% premature withdrawal
tax if you have not reached age 59 1/2 (unless an exception to the 10% penalty
tax applies). However, the excess contribution itself will not be included in
your taxable income and will not be subject to the 10% premature withdrawal tax.
(d) Any excess contribution not withdrawn by the tax return due date
(including any extensions) for the year for which the contribution was made will
be subject to the 6% excise tax. There will be an additional 6% excise tax for
each subsequent year the excess remains in your account. In subsequent years,
you may reduce the excess contributions in your account by simply making a
withdrawal equal to the excess. Earnings need not be withdrawn.
<PAGE> 13
To the extent that no earnings are withdrawn, the withdrawal will not be subject
to income taxes or possible penalties for premature withdrawals before age
59 1/2.
(e) Excess contributions may also be corrected in a subsequent year if you
contribute less than your Roth IRA contribution limit for that subsequent year.
This is known as a "make-up" contribution and is allowed only to the extent that
you "under-contribute" in the later year. As the prior excess contribution is
reduced or eliminated, the 6% excise tax will become correspondingly reduced or
eliminated for subsequent tax years.
5. TAX ON WITHDRAWALS FROM YOUR ROTH IRA
(a) QUALIFIED (TAX-FREE) WITHDRAWALS. You can make withdrawals from your
Roth IRA at any time and the principal amounts that you contributed are always
available to be withdrawn by you tax-free. Withdrawals of amounts considered
earnings or growth will also be tax-free if the following requirements are met:
(i) the withdrawal must be made from a Roth IRA account that has been open for
at least 5 years, and (ii) either you must be 59 1/2 or older or one of the
following must be true:
- the withdrawal is made because of your death or permanent disability;
- the withdrawal does not exceed qualified first-time homebuyer expenses
incurred by you or your spouse, or a child, grandchild, parent or
grandparent of you or your spouse. Qualified expenses include cost of
acquisition or construction, including normal financing or closing
costs. You are considered a "first-time homebuyer" if you (and your
spouse if you are married) had no ownership interest in a principal
residence during the two years before the withdrawal in question.
There is a lifetime limit ($10,000) on qualified first-time homebuyer
expenses for any one individual.
You are considered "disabled" if you are unable to engage in any
substantial gainful activity because of a physical or mental impairment which
can be expected to result in death or to be of long-lasting or indefinite
duration.
Timing of Five-Year Period: For a Roth IRA that you opened and made a
normal annual contribution to, the five-year period for a tax-free withdrawal
starts with the year for which you made the initial contribution. If the
withdrawal is made from a Roth IRA that you started with amounts you converted
from a Traditional IRA or rolled over from a Traditional IRA, the five-year
period for tax-free withdrawals begins with the year when you made the
conversion or rollover. (Note: This rule would be affected by pending tax
legislation--see above.)
(b) NON-QUALIFIED (TAXABLE) WITHDRAWALS. If the requirements for a tax-free
withdrawal are not met, a withdrawal consisting of your own prior contribution
amounts to your Roth IRA will not be considered taxable income in the year you
receive it, nor will the 10% penalty apply. A non-qualified withdrawal that is
considered dividends or gains on your contributions while in your Roth IRA is
includable in your gross income in the taxable year you receive it, and may be
subject to the 10% withdrawal penalty.
Withdrawals from your Roth IRA are considered withdrawals of your
contributions until you have withdrawn the entire amount you have contributed.
After that, all amounts withdrawn are considered taxable withdrawals of
dividends and gains.
Note that, under current law, for purposes of determining what portion of
any distribution is includible in income, all of your Roth IRA accounts are
considered as one single account. Amounts withdrawn from any one Roth IRA
account are deemed to be withdrawn from contributions first. Since all your Roth
IRAs are considered to be one account for this purpose, withdrawals from Roth
IRA accounts are not considered to be from earnings or interest until an amount
equal to all contributions made to all of an individual's Roth IRA accounts is
withdrawn. However, legislation pending in Congress would, if passed, change the
rules described in this paragraph. The changed rules would require you to treat
all annual contribution Roth IRA accounts as one account and to treat Roth IRA
accounts established with conversions, transfers or rollovers from Traditional
IRAs in different years as separate accounts for this purpose.
Taxable withdrawals of dividends and gains from a Roth IRA are taxed as
ordinary income. Withdrawals of taxable amounts from a Roth IRA are not eligible
for averaging treatment currently available to certain lump sum distributions
from qualified employer-sponsored retirement plans, nor are such withdrawals
eligible for taxable gains tax treatment.
<PAGE> 14
Your receipt of any taxable withdrawal from your Roth IRA before you attain
age 59 1/2 generally will be considered a premature withdrawal and subject to a
10% penalty tax. The 10% penalty tax will not apply if any of the following
exceptions applies:
- the withdrawal was a result of your death or permanent disability; or
- the withdrawal is an exempt withdrawal of an excess contribution; or
- the withdrawal does not exceed the amount of your deductible medical
expenses for the year in which you made the withdrawal; generally,
medical expenses paid during a year are deductible if they exceed
7 1/2% of your adjusted gross income for that year; or
- the withdrawal does not exceed the premiums you paid for medical
insurance for yourself, your spouse and your dependents during the
year; however, you must have been unemployed and received Federal or
state unemployment compensation payments for at least 12 weeks, and
you must make the withdrawal during the year in which you received the
unemployment compensation payments or during the following year, but
not after you have been reemployed for at least 60 days; or
- the withdrawal is rolled over into another Roth IRA; or
- the withdrawal does not exceed certain eligible higher education
expenses for yourself, your spouse, your child or grandchild. Eligible
expenses include tuition, fees, books, supplies and equipment
necessary for attending a qualified higher education institution. Room
and board expenses may be eligible if the individual is attending at
least half time; or
- the withdrawal does not exceed qualified first-time homebuyer expenses
incurred by you or your spouse, or a child, grandchild, parent or
grandparent of you or your spouse. Qualified expenses include cost of
acquisition or construction, including normal financing or closing
costs. You are considered a "first-time homebuyer" if you (and your
spouse if you are married) had no ownership interest in a principal
residence during the two years before the withdrawal in question.
There is a lifetime limit ($10,000) on qualified first-time homebuyer
expenses for any one individual.
The 10% premature distribution tax discussed above does not apply to the
portion of your Roth IRA distribution which is not includible in your gross
income.
6. REQUIRED PAYMENTS FROM YOUR ROTH IRA
(a) DURING YOUR LIFETIME. Unlike a Traditional IRA, the minimum
distribution rules do not apply to Roth IRAs, so you are not required to begin
receiving distributions from your Roth IRA account when you reach age 70 1/2.
(b) AFTER YOUR DEATH. If you die before all the funds held in your Roth IRA
have been withdrawn, the entire remaining interest must at your election, or, if
you have not so elected, at the election of your beneficiary or beneficiaries,
either:
- be withdrawn by your beneficiary by the December 31 of the year
containing the fifth anniversary of your death, or
- be withdrawn by your designated beneficiary in equal or substantially
equal payments over the life expectancy of the designated beneficiary
or beneficiaries starting by December 31 of the year following the
year of your death. If, however, the beneficiary is your surviving
spouse, then withdrawals are not required to begin before December 31
of the year in which you would have turned age 70 1/2.
If you die before your entire account has been withdrawn and if the
beneficiary is other than your surviving spouse, no additional cash
contributions or rollover contributions may be accepted in the account.
The designation of a beneficiary to receive funds from your Roth IRA at
your death is not considered a transfer subject to Federal gift taxes. However,
any funds remaining in your Roth IRA at your death would be includable in your
Federal gross estate.
Be sure to keep your designation of beneficiary up-to-date as your personal
or financial circumstances change. You may file a new designation of beneficiary
form at any time with the Custodian. If no designation of beneficiary is in
effect at your death, or if all designated beneficiaries have predeceased you,
the balance in your account will be paid to your estate.
Selecting a beneficiary or beneficiaries can have important tax and
financial planning implications. Consult a qualified professional for advice if
needed. Also, be sure to consult a qualified professional if you live in a
<PAGE> 15
community or marital property state to be sure that your designation of
beneficiary complies with legal requirements in those states.
7. ROLLOVERS AND CONVERSIONS
(a) GENERAL RULES. You may roll over any amount from an existing Roth IRA
to another Roth IRA. Under certain circumstances, you may also convert an
existing Traditional IRA to a Roth IRA.
There are complex, specific rules governing rollovers and conversions, so
you should consult your tax advisor or the IRS if you have questions about the
rules.
Rollover contributions are not subject to the limits on annual
contributions to a Roth IRA. However, all amounts in your Roth IRA, including
rollover amounts, are subject to the rules discussed above concerning
withdrawals.
(b) ROTH IRA-TO-ROTH IRA ROLLOVER. If you have a Roth IRA, you can withdraw
all or part of the amount in that account and transfer all or part of the amount
withdrawn to another Roth IRA. The amount transferred will not be subject to
Federal income tax (or the 10% premature withdrawal penalty) if you complete the
transfer within 60 days after the withdrawal. After a Roth IRA-to-Roth IRA
tax-free rollover, you must wait at least a year before making another Roth
IRA-to-Roth IRA rollover.
(c) DIRECT TRANSFER. As an alternative to a rollover, you may make a direct
transfer from one Roth IRA custodian or trustee to another. The one-year waiting
period does not apply to direct transfers from one Roth IRA custodian or trustee
to another.
(d) ROLLOVERS FROM QUALIFIED PLAN OR 403(B) ARRANGEMENT TO ROTH IRA. Direct
rollovers from a qualified plan or 403(b) arrangement to a Roth IRA are not
allowed.
(e) ROLLOVER/CONVERSION FROM TRADITIONAL IRA TO A ROTH IRA. Starting in
1998, you may convert an existing Traditional IRA into a Roth IRA if your AGI on
your income tax return for the year of the conversion is $100,000 or less. (This
limit applies to both married and single taxpayers, and the limit is not indexed
for cost of living increases.) A married taxpayer is eligible to convert or roll
over a Traditional IRA to a Roth IRA only if a joint tax return is filed;
married taxpayers who file separately are not eligible to convert or roll over
from a Traditional IRA to a Roth IRA. You may convert an existing Green Century
Funds Traditional IRA to a Green Century Funds Roth IRA by completing and filing
the appropriate documents (a new IRA Registration Form designating the new IRA
as a Roth IRA). This will not involve a change of investments. If you have a
Traditional IRA with another custodian or trustee, you may complete an IRA
Registration Form establishing a Green Century Funds Roth IRA with the
Custodian, and you may either withdraw the amount in the other Traditional IRA
and roll it over to your new Green Century Funds Roth IRA with the Custodian
within 60 days or you may complete a Transfer Authorization/Letter of Acceptance
directing your current Traditional IRA custodian or trustee to transfer the
desired amount to your new Green Century Funds Roth IRA with the Custodian.
Regardless of which method you use to accomplish this, the taxable amount
you convert or roll over from a Traditional IRA to a Roth IRA is considered
taxable income for the year in which the transaction occurred. However, you may
be able to spread the income tax liability related to a conversion or rollover
out over the four year period running from 1998-2001, if you complete the
conversion or rollover before December 31, 1998. This opportunity to spread the
income realized by converting applies only for conversions during 1998.
NOTE: You may roll over or convert to a Roth IRA funds from as many
Traditional IRAs as you wish. However, only those amounts converted or rolled
over during the same tax year may be accepted in any one Roth IRA conversion
account. Additionally, annual contributions may never be deposited into a Roth
IRA conversion account.
These are IRS rules.
CAUTION: You may convert a Traditional IRA to a Roth IRA only in a year in
which your AGI is below $100,000. Although a bill currently pending in Congress
would permit you to transfer amounts back to your Traditional IRA if your AGI
exceeds $100,000, under current rules, if you have already converted during a
year and your AGI ends up exceeding $100,000, you may suffer adverse tax
results. Consult your tax advisor or the IRS for the latest developments.
IMPORTANT: Please see DISCLOSURE STATEMENT FOR ALL IRAS, following, for
important information applicable to all Green Century IRAs.
<PAGE> 16
DISCLOSURE STATEMENT FOR ALL IRAs
1. GENERAL INFORMATION
All IRAs must meet certain requirements. Contributions generally must be
made in cash (check). The IRA trustee or custodian must be a bank or other
person who has been approved by the Secretary of the Treasury. Your
contributions may not be invested in life insurance or collectibles or be
commingled with other property except in a common trust or investment fund. Your
interest in the account must be nonforfeitable at all times. You may obtain
further information on IRAs from any district office of the Internal Revenue
Service.
2. RIGHT TO REVOKE
You have the right to revoke your Traditional IRA or Roth IRA within seven
(7) days of your signing the Registration Form. You may revoke your Traditional
IRA or Roth IRA by mail or by delivery of written notice to the Green Century
Funds, the name and address of which appear on the IRA Registration Form.
If you revoke your Traditional IRA or Roth IRA, you are entitled to a full
return of the contribution without any adjustment for sales charges,
administrative expenses or market fluctuations. If you have any questions
concerning your right of revocation, please call the Green Century Funds during
regular business hours.
3. FEDERAL TAX CONCERNS
(a) Deductible and non-deductible contributions to your Traditional IRA or
Roth IRA are reported on IRS Form 1040 or Form 1040A. You may choose to file
your Federal income tax return before it is due (without extensions) and report
your Traditional IRA or Roth IRA contributions before they are made. You must,
however, make the contributions by the due date (without extensions) of such
return. To the extent that your contribution to your Traditional IRA is
deductible, you may claim a deduction on your tax return. (Note: Contributions
to a Roth IRA are never deductible.) To the extent your contribution to your
Traditional IRA is not deductible, you must designate it on Form 8606. There is
a $100 penalty each time you overstate the amount of your non-deductible
contributions unless you can prove that the overstatement was due to reasonable
cause. You will also be required to give additional information on Form 8606 in
years you make a withdrawal from your Traditional IRA. If you fail to file a
required Form 8606, there is a $50 penalty for each such failure unless you can
prove the failure was due to reasonable cause. (Note: The IRS may adopt similar
reporting requirements for Roth IRA contributions. Check with the IRS or your
tax advisor, or check the instructions with your IRS Form 1040 or Form 1040A.)
(Special Note: This Disclosure Statement discusses the effect and
requirements of the Federal tax laws. You should check with your tax advisor
with regard to the applicable tax laws of your state.)
(b) IRS Form 5329 is required as an attachment to Form 1040 (or separately
if you do not file a Form 1040) for any year that contribution limits are
exceeded, a premature distribution takes place, less than the required minimum
amount is distributed from a Traditional IRA, or a prohibited transaction
(described below) takes place.
(c) Amounts withdrawn from your Traditional IRA or Roth IRA are subject to
withholding of Federal income tax unless you direct no withholding.
(d) For Traditional IRAs, be sure to start withdrawals no later than the
required starting date to avoid penalties for insufficient withdrawals. Also,
remember that the minimum amount required to be withdrawn may change from year
to year because of earnings or changes in the value of your account or because
you recalculated your life expectancy.
(e) If tax, or estate or financial planning considerations affect the
timing of your Traditional IRA or Roth IRA withdrawals, be sure to consult a
qualified professional.
4. PROHIBITED TRANSACTIONS
(a) If you engage in a so-called "prohibited transaction" as defined in the
Internal Revenue Code, your Traditional IRA or Roth IRA will be disqualified and
the entire taxable balance in your Traditional IRA account, and the amount of
earnings or gains in your Roth IRA, will be taxed as ordinary income during the
year in which
<PAGE> 17
such transaction occurs. You may also have to pay the 10% penalty tax on
premature distributions. A "prohibited transaction" includes:
- the sale, exchange, or leasing of any property between your
Traditional IRA or Roth IRA account and you;
- the lending of money or other extension of credit between your
Traditional IRA or Roth IRA account and you;
- the furnishing of goods, services, or facilities between your
Traditional IRA or Roth IRA account and you; or
- the transfer of assets of your Traditional IRA or Roth IRA account for
your use or for your benefit.
(b) If you pledge all or part of your Traditional IRA or Roth IRA as
security for a loan, or invest your Traditional IRA or Roth IRA in
"collectibles" such as art, antiques, coins (other than certain United States
gold and silver coins or coins issued by a state government and certain precious
metal bullion) or gems, the amount so pledged or invested is considered by the
Internal Revenue Service to have been distributed to you and will be taxed as
ordinary income during the year in which you make such pledge or investment. You
may also have to pay the 10% premature distribution tax.
5. CUSTODIAN
The Custodian of your Traditional IRA or Roth IRA is Investors Bank & Trust
Company. The Custodian will invest your contributions and earnings in the Green
Century Balanced Fund or the Green Century Equity Fund in accordance with your
instructions. You will receive periodic reports describing each transaction in
your account, and proxies will be sent to you to vote as you wish. Since the
investment of your account is at your discretion and the returns of the
permissible investment vehicles are not guaranteed, growth in the value of your
account cannot be projected or guaranteed.
For information concerning the custodial charges which will be assessed
against your account by Investors Bank & Trust Company, be sure to read the
section "Fees" below. Custodial charges may be changed or adjusted on thirty
days' notice to you. Be sure to read carefully the current Green Century Funds
prospectus for a description of the investment objectives and policies plus a
description of applicable fees and charges of the Funds. Read the prospectus
carefully before investing.
6. ADDITIONAL INFORMATION
(a) Your Traditional IRA or Roth IRA may help build your retirement income.
Your Traditional IRA or Roth IRA funds are non-forfeitable. They are always
yours (subject to investment fluctuations), and will be invested according to
your agreement with the Custodian. Your Traditional IRA or Roth IRA will be
clearly identified as your property and will not be commingled with property of
any other depositor.
(b) Articles I through VII of the Terms and Conditions for Traditional IRAs
use the precise language of Form 5305-A, currently provided by the Internal
Revenue Service, and has therefore been approved as a form to use as a qualified
Traditional Individual Retirement Account. The IRS approval of the form does not
represent a determination as to the merits of the account. It simply means that
the form of the printed Terms and Conditions for Traditional IRAs document
satisfies the requirements of the IRS. However, if you adopt and maintain your
Traditional IRA within the stated guidelines, you may assume that you are
properly meeting all requirements for a bona fide individual retirement plan
under Federal income tax law.
(c) Articles I through VII of the Terms and Conditions for Roth IRAs use
the precise language of Form 5305-RA, currently provided by the Internal Revenue
Service and has therefore been approved as a form to use as a qualified Roth
Individual Retirement Custodial Account. The IRS approval of the form does not
represent a determination as to the merits of the account. It simply means that
the form of the printed Terms and Conditions for Roth IRAs document satisfies
the requirements of the IRS. However, if you adopt and maintain your Roth IRA
within the stated guidelines, you may assume that you are properly meeting all
requirements for a bona fide Roth IRA under Federal income tax law.
(d) Further information concerning Traditional IRAs and Roth IRAs can be
obtained from any district office of the Internal Revenue Service.
(e) You should consult with your tax or financial advisor to determine
whether this Individual Retirement Custodial Account is the right investment for
you, since we cannot offer legal, tax or financial advice.
<PAGE> 18
(f) This Disclosure Statement provides a non-technical explanation of the
terms and conditions of your Traditional IRA or Roth IRA account. However, the
provisions of the Terms and Conditions and the Registration Form and prospectus
govern in any instance where the Disclosure Statement is incomplete or appears
to conflict. This Disclosure Statement reflects the provisions of the Internal
Revenue Code in effect as of the date the Disclosure Statement was prepared.
Please consult your tax advisor for more complete information and to review any
applicable tax law changes and refer to IRS Publication 590.
7. FEES
The custodial fee currently in effect is an annual maintenance fee of $10
per account. Your first annual maintenance fee may be paid at the same time that
you mail your IRA Registration to Green Century Funds by forwarding a separate
check for $10, made payable to Green Century Funds. In subsequent years, you may
pay the annual maintenance fee by forwarding a check to the Green Century Funds
when notified of the payment option. If you do not forward payment for the
annual maintenance fee by December 20 of each year, Green Century Funds will
obtain payment directly from your IRA by redeeming a sufficient number of the
Fund shares held in your IRA. The Custodial Fees may be modified upon 30 days'
written notice from the Custodian of your IRA.
IRA CUSTODIAL ACCOUNT AGREEMENT
TERMS AND CONDITIONS FOR TRADITIONAL IRAs
The TERMS AND CONDITIONS FOR TRADITIONAL IRAS apply to Traditional IRAs
operating under section 408(a) of the Internal Revenue Code only. Articles I
through VII of these Terms and Conditions for Traditional IRAs are in the form
promulgated by the Internal Revenue Service in Form 5305-A (Rev. January,
1998) for use in establishing an individual retirement Custodian Account.
Please see Terms and Conditions for All IRAs below for additional provisions
applicable to your Traditional IRA.
The Depositor whose name appears on the Registration Form is establishing
an individual retirement account (under section 408(a) of the Internal Revenue
Code) to provide for his or her retirement and for the support of his or her
beneficiaries after death.
The disclosure statement has been furnished to the Depositor as required
under the Income Tax Regulations under section 408(i) of the Code.
The Depositor has made a cash deposit with the Custodian as indicated on
the Registration Form. The Depositor and the Custodian make the following
agreement:
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or an
employer contribution to a simplified employee pension plan as described in
section 408(k).
ARTIClE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state, and certain bullion.
<PAGE> 19
ARTIClE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be or
begin to be, distributed by the Depositor's required beginning date, April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor
lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor
expectancy of the Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in accordance
with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of the
beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the year
of the Depositor's death. If, however, the beneficiary is the
Depositor's surviving spouse, then this distribution is not required
to begin before December 31 of the year in which the Depositor would
have reached age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Depositor's required beginning date, even though payments may actually have
been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in
the account.
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of a distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
<PAGE> 20
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
See Terms and Conditions for all IRAs, below.
IRA CUSTODIAL ACCOUNT AGREEMENT
TERMS AND CONDITIONS FOR ROTH IRAs
The TERMS AND CONDITIONS FOR ROTH IRAS apply to Roth IRAs operating under
section 408A of the Internal Revenue Code only. Articles I through VII of
these Terms and Conditions for Roth IRAs are in the form promulgated by the
Internal Revenue Service in Form 5305-RA for use in establishing a Roth
Individual Retirement Custodial Account. Please see Terms and Conditions for
All IRAs (below) for additional provisions applicable to your Roth IRA.
The Depositor whose name appears on the Registration Form is establishing a
Roth individual retirement account (under section 408A of the Internal Revenue
Code) to provide for his or her retirement and for the support of his or her
beneficiaries after death.
The disclosure statement has been furnished to the Depositor as required
under the Income Tax Regulations under section 408(i) of the Code.
The Depositor has made a cash deposit with the Custodian as indicated on
the Registration Form.
The Depositor and the Custodian make the following agreement:
ARTICLE I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in Section 408A(e), the
Custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the Depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.
ARTICLE IA
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single Depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and
<PAGE> 21
$110,000; for a married Depositor who files jointly, between AGI of $150,000 and
$160,000; and for a married Depositor who files separately, between $0 and
$10,000. In the case of a conversion, the Custodian will not accept IRA
Conversion Contributions in a tax year if the Depositor's AGI for that tax year
exceeds $100,000 or if the Depositor is married and files a separate return.
Adjusted gross income is defined in Section 408A(c)(3) and does not include IRA
Conversion Contributions.
ARTICLE II
The Depositor's interest in the balance in the Custodial Account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the Custodial Account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of Section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of Section 408(m)) except as otherwise permitted by Section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
ARTICLE IV
1. If the Depositor dies before his or her entire interest is distributed
to him or her and the Depositor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the Depositor or, if the
Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(b) Be distributed over the life expectancy of the designated
beneficiary starting no later than December 31 of the year following the
year of the Depositor's death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In the case of distribution method 1(b) above, to determine the minimum
annual payment for each year, divide the Depositor's entire interest in the
Custodial Account as of the close of business on December 31 of the preceding
year by the life expectancy of the designated beneficiary. Determine that
initial life expectancy using the attained age of the designated beneficiary as
of the beneficiary's birthday in the year distributions are required to commence
and subtract one for each subsequent year.
3. If the Depositor's spouse is the sole beneficiary on the Depositor's
date of death, such spouse will then be treated as the Depositor.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under Sections 408(i) and
408A(d)(3)(E) and Regulations Section 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with Section 408A, the related
regulations, and other published guidance will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.
<PAGE> 22
IRA CUSTODIAL ACCOUNT AGREEMENT
TERMS AND CONDITIONS FOR ALL IRAs
ARTICLE VIII
1. Except as otherwise permitted in Paragraph 5(a) below, all contributions
made under this Agreement shall be deposited in the form of cash. All such
contributions shall be credited to a Custodial Account for the account of the
Depositor. Any contribution so made with respect to a tax year of the Depositor
shall be made prior to the due date of the Depositor's tax return (not including
extensions). Unless otherwise indicated in writing by the Depositor,
contributions shall be credited to the tax year in which they are received by
the Custodian. Subject to the limitations set forth in the Registration Form,
all funds in the Custodial Account shall be invested and reinvested in the Green
Century Balanced Fund or the Green Century Equity Fund.
The Depositor shall direct the Custodian with respect to the investment of
all contributions. However, such direction shall be limited to the purchase of
shares of the Green Century Equity Fund or the Green Century Balanced Fund.
Investments received without direction may be returned or held uninvested
without liability for loss of income, interest or appreciation while directions
are obtained. All dividends and capital gain distributions received on shares
held in the Account shall be reinvested in additional shares of the issuing
Fund(s).
2. Investors Bank & Trust Company is the Custodian and is responsible for
all record keeping, applicable tax reporting and fee collection in connection
with IRA accounts. Investors Bank & Trust Company also serves as transfer agent
for the Funds. The Custodian shall be under no duty whatsoever except such
duties as are specifically set forth in this Agreement, and, notwithstanding
Article IV of this Agreement, shall be under no duty to make any distribution
from the Account in the absence of specific directions from the Depositor or,
upon the death of the Depositor, the Depositor's designated beneficiary, whether
or not the Depositor has attained age 701/2 or is deceased. Neither the
Custodian, the Sponsor, the Funds nor any of their respective affiliates shall
have any duty: (a) to ascertain whether a rollover contribution described in
Article I of this Agreement or a direct transfer from another IRA is properly
made in accordance with applicable provisions of the Code or any other plan, IRA
or other retirement arrangement; (b) to ascertain whether any distribution is
sufficient for purposes of the rules described in Article IV of this Agreement;
(c) to make distributions in the form of an annuity contract under Article IV of
this Agreement; (d) to confirm the existence of a disability; (e) to review or
make suggestions regarding the investment of the assets of the Account; or (f)
to invest, reinvest or dispose of any assets held in the Account except in
accordance with Section 1 of this Article VIII. Whenever the Depositor is
responsible for any direction, notice, warranty, representation, or instruction
under this Agreement, the Custodian shall be entitled to assume the truth of any
statement made, or believed to have been made, by the Depositor, and the
Custodian shall be under no duty of further inquiry and shall have no liability
with respect to any action taken in reliance upon the truth of such statement.
3. The Depositor shall have the right by written notice to the Custodian to
designate (or to change) one or more beneficiaries to receive any amount
remaining in the Custodial Account in the event of his or her death prior to the
complete distribution of all assets in the Custodial Account. Any such
designation (or change of designation) of beneficiary may be on the Registration
Form or on a written instrument acceptable to the Custodian, signed by the
Depositor and filed with the Custodian. Any designation or change of designation
shall be effective upon receipt by the Custodian. Any change of designation
received by the Custodian will revoke all prior designations previously filed
with the Custodian. If no such designation is in effect on a Depositor's death,
or if all designated beneficiaries have predeceased the Depositor, the
Depositor's estate shall be deemed to be the beneficiary.
4. (a) The Custodian shall have the right to receive rollover contributions
as described in Article I of this Agreement and amounts transferred from another
individual retirement account or individual retirement annuity.
The Custodian shall not accept any contribution or direct transfer from
another individual retirement account qualified under Section 408 of the Code
unless it is made in cash (or its equivalent).
(b) The Custodian, upon written direction of the Depositor, shall transfer
the assets held under this Agreement (reduced by (i) any amounts referred to in
paragraph 6 of this Article VIII and (ii) any amounts required to be distributed
during the calendar year of transfer to the Depositor under Section 408(a)(6) or
408(b)(3) of the Code) to a successor individual retirement account or
individual retirement annuity for the Depositor's benefit.
<PAGE> 23
(c) Any amounts received or transferred by the Custodian under this
paragraph 4 shall be accompanied by such instructions, records and other
documents as the Custodian deems necessary.
5. The Depositor hereby delegates to the Custodian the power to amend at
any time and from time to time the terms and provisions of this Agreement and
hereby consents to all such amendments, provided that an amendment is not
contrary to any applicable provision of the Internal Revenue Code, the
regulations thereunder, or any other applicable law, regulation or ruling. Any
such amendments shall be effective when the notice of such amendments is mailed
to the address of the Depositor indicated by the Custodian's records.
6. The Custodian shall receive, and the Depositor hereby agrees to pay,
such reasonable compensation for its services ("fees") as set forth in the
currently effective Disclosure Statement for the Account. The Custodian may
substitute a different fee schedule at any time upon 30 days' notice in writing
to the Depositor. Such fees may be paid by the Depositor, however, they shall
constitute a charge upon the assets of the Account until paid. Unless otherwise
paid, the Custodian shall have the right to redeem sufficient Fund shares in the
Account and to apply the proceeds to the payment of its annual fees. Any income
taxes or other taxes of any kind that may be levied or assessed against the
Account may be similarly paid from the assets of the Account and shall not be an
obligation of the Custodian.
7. Amounts in the Custodial Account and the benefits provided hereunder
shall not be subject to alienation, assignment, garnishment, attachment,
execution or levy of any kind, and any attempt to cause such benefits to be so
subjected shall not be recognized, except to such extent as may be required by
law.
8. Any pledging of assets in the Custodial Account by the Depositor as
security for a loan, or any loan or other extension of credit from the Custodial
Account to the Depositor, shall be prohibited.
9. In taking or refraining from any action or determining any fact or
question which may arise under this Custodial Agreement, the Custodian may rely
upon any statement by the Depositor with respect thereto. The Depositor hereby
agrees that the Custodian will not be liable for any loss or expense resulting
from taking or not taking such action or determination taken in reliance on any
such statement.
10. The Custodian may resign at any time upon ninety (90) days' written
notice to the Depositor and may be removed by the Depositor at any time upon
ninety (90) days' written notice to the Custodian. Upon the resignation or
removal of the Custodian, a successor Custodian shall be appointed by the
Depositor within ninety (90) days of such resignation or removal and in the
absence of such appointment, the Custodian may designate a successor unless this
Agreement is sooner terminated. Any successor custodian shall be a bank (as
defined in section 408(n) of the Code) or another person found qualified to act
as a custodian under an individual retirement account plan by the Secretary of
the Treasury, or his delegate, pursuant to section 408(a)(2) of the Code. The
appointment of a successor custodian shall be effective upon receipt by
Custodian of such successor's written acceptance which shall be submitted to the
Custodian and to the Depositor. As soon as reasonably practicable after the
effective date of a successor custodian's appointment, the Custodian shall
transfer and deliver to the successor custodian applicable account records and
assets of the Custodial Account (reduced by any unpaid amounts referred to in
paragraph 6 of this Article VIII). The successor custodian shall be subject to
the provisions of this Agreement (or any successor thereto) on the effective
date of its appointment.
11. The Custodian shall, from time to time, in accordance with instructions
in writing from the Depositor, make distributions out of the Custodial Account
to the Depositor in the manner and amounts as may be specified in such
instructions. Notwithstanding the provisions of Article IV above, the Custodian
assumes (and shall have) no responsibility to make any distribution to the
Depositor (or the Depositor's beneficiary if the Depositor is deceased) unless
and until such written instructions specify the occasion for such distribution,
the elected manner of distribution, and any other information that may be
required. If the Depositor (or, following the Depositor's death, the
beneficiary) does not direct the Custodian to make distributions from the
Custodial Account by the time that such distributions are required to begin in
accordance with the preceding Articles, the Custodian and the Funds may assume
that the Depositor (or the beneficiary) is meeting the minimum distribution
requirements from another individual retirement arrangement maintained by the
Depositor and the Custodian and the Funds shall be fully protected in so doing.
Prior to making any such distribution from the Custodial Account, the
Custodian shall be furnished with any and all applications, certificates, tax
waivers, signature guarantees, and other guarantees, and other documents
(including proof of any legal representative's authority) deemed necessary or
advisable by the Custodian, but the Custodian shall not be liable for complying
with written instructions which appear on their face to be genuine, or for
<PAGE> 24
refusing to comply if not satisfied such instructions are genuine, and assumes
no duty of further inquiry. Upon receipt of proper written instructions as
required above, the Custodian shall cause the assets of the Custodial Account to
be distributed in cash and/or in kind, as specified in such written order.
12. Distribution of the assets of the Custodial Account shall (subject to
the first paragraph of paragraph 11 of this Article VIII) be made in accordance
with the provisions of Article IV as the Depositor (or the Depositor's
beneficiary if the Depositor is deceased) shall elect by written instructions to
the Custodian; subject, however, to the provisions of Sections 401(a)(9),
408(a)(6) and 408(b)(3) of the Code, the regulations promulgated thereunder, and
the following:
(i) No distribution from the Custodial Account shall be made in the
form of an annuity contract.
(ii) The recalculation of life expectancy of the Depositor and/or the
Depositor's spouse shall only be made at the written election of the
Depositor. The recalculation of life expectancy of the surviving spouse
shall only be made at the written election of the surviving spouse. By
establishing the Custodial Account, the Depositor (for himself or herself
and his or her surviving spouse, if any) elects not to recalculate life
expectancies unless the Depositor (or surviving spouse) specifically elects
the recalculation of life expectancies approach in accordance with the
following sentence. Any such election may be made in such form as the
Depositor (or the surviving spouse) provides for (including instructions to
such effect to the Custodian, or the calculation of minimum distribution
amounts in accordance with a method that provides for recalculation of life
expectancy and instructions to the Custodian to make distributions in
accordance with such method).
(iii) If the Depositor dies before his/her entire interest in the
Custodial Account has been distributed, and if the designated beneficiary
of the Depositor is the Depositor's surviving spouse, the spouse may treat
the Custodial Account as the spouse's own individual retirement
arrangement. This election will be deemed to have been made if the
surviving spouse makes an accumulation IRA contribution to the Custodial
Account, makes a rollover to or from such Custodial Account, or fails to
receive a payment from the Custodial Account within the appropriate time
period applicable to the deceased Depositor under Section 401(a)(9)(B) of
the Code.
(iv) If the Depositor's designated beneficiary is not his/her spouse,
then distributions to the Depositor and his/her beneficiary, commencing
with the Depositor's required beginning date, shall comply with the minimum
distribution incidental benefit requirement (if applicable).
13. If the Depositor is disabled, as that term is defined in Section 72(m)
of the Code, he or she may give notice to the Custodian of such disability and
request that up to the balance of the Custodial Account be distributed. The
Custodian, with a reasonable time after submission of satisfactory proof of such
disability, shall order the distribution of the balance of the Custodial Account
to the Depositor or such portion as the Depositor requested.
14. This Agreement shall terminate and be of no further force or effect
(except for paragraphs 10 and 15 of this Article VIII which shall survive such
termination of the Custodial Account and this Agreement) coincident with the
complete distribution of the assets of the Custodial Account, and the Custodian
shall have no further duties or responsibilities with respect to the Custodial
Account after its termination.
15. The Depositor hereby agrees to indemnify and hold harmless the
Custodian, the Sponsor, the Funds and their respective affiliates, agents,
employees, successors and assigns from and against any and all claims, loss,
damages, costs or expenses (including reasonable attorney's fees) which may be
incurred or paid out by reason of any alleged or actual act, or failure to act,
on the part of the Depositor, the Funds, or any other person. The preceding
sentence will survive the termination of the Agreement.
16. Any notice herein required or permitted to be given to the Custodian
shall be sufficiently given if mailed to the Custodian by first class mail to
the Green Century Funds, care of Investors Bank & Trust Company, P.O. Box 9130,
MFD 23, Boston, MA 02117-9130, or to such other address as the Custodian shall
provide the Depositor from time to time in writing, stating that such other
address shall be used for purposes of this Agreement. Any notice herein required
or permitted to be given to the Depositor shall be sufficiently given if mailed
to the Depositor at the Depositor's address appearing on the Registration Form,
or at such other address as the Depositor shall have provided the Custodian from
time to time in writing, which writing shall state that such other address is to
be used for purposes of this Agreement.
17. The Custodian shall keep or cause to be kept adequate records of the
transactions they are required to perform hereunder. In addition to any reports
required by the Code or the regulations thereunder, the Custodian shall cause to
be mailed to the Depositor in respect of each tax year an account of all
transactions affecting the Custodial Account during such year and a statement
showing the Custodial Account as of the end of such year. If,
<PAGE> 25
within sixty (60) days after such mailing, the Depositor has not given the
Custodian written notice of any exception or objection thereto, the annual
accounting shall be deemed to have been approved, and in such case, or upon the
written approval of the Depositor, the Custodian and the Funds shall be
released, relieved and discharged with respect to all matters and statements set
forth in such accounting as though the account had been settled by judgment or
decree of a court of competent jurisdiction.
The Custodian shall deliver, or cause to be executed and delivered, to the
Depositor all notices, prospectuses, financial statements, proxies and proxy
soliciting materials as they are received from the Funds. The Custodian shall
vote at all shareholder meetings of the Funds in accordance with written
instructions of the Depositor which will be secured by the Custodian.
18. The Custodian shall be agents for the Depositor to perform the duties
conferred on them, respectively, hereunder, as directed by the Depositor. The
parties do not intend to confer any fiduciary duties on the Custodian and the
Funds and none shall be implied. Neither shall be liable (nor assumes any
responsibility for) the collection of contributions, the deductibility of any
contribution or the propriety of or the amount or timing or tax treatment of any
contributions under this Agreement, the selection of any investments for the
Custodial Account, or the purpose or propriety or tax treatment of any
distribution ordered in accordance with Article IV or paragraph 11, 12, or 13 of
Article VIII, which matters are the sole responsibility of the Depositor or the
Depositor's beneficiary, as the case may be.
19. The Custodian shall be responsible solely for performance of those
duties expressly assigned to it in this Agreement, and does not assume any
responsibility as to duties assigned to anyone else hereunder or by operation of
law.
20. When accepted by the Custodian, this Agreement is accepted in and shall
be construed and administered in accordance with the laws of the state where the
principal offices of the Custodian are located. Any action involving the
Custodian brought by any other party must be brought in a state or federal court
in such state.
If in the Registration Form, Depositor designates that the Custodial
Account is a Traditional IRA, this Agreement is intended to qualify under Code
Section 408(a) as an individual retirement Custodial Account and to entitle
Depositor to the retirement savings deduction under Code Section 219 if
available. If in the Registration Form, Depositor designates that the Custodial
Account is a Roth IRA, this Agreement is intended to qualify under Code Section
408A as a Roth individual retirement Custodial Account and to entitle Depositor
to the tax-free withdrawal of amounts from the Custodial Account to the extent
permitted in such Code section.
If any provision hereof is subject to more than one interpretation or any
term used herein is subject to more than one construction, such ambiguity shall
be resolved in favor of that interpretation or construction which is consistent
with the intent expressed in whichever of the two preceding sentences is
applicable.
However, the Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Depositor is referred
to Depositor's attorney for any such assurances.
21. Depositor should seek advice from Depositor's attorney regarding the
legal consequences (including but not limited to federal and state tax matters)
of entering into this Agreement, contributing to the Custodial Account, and
ordering Custodian to make distributions from the Account. Depositor
acknowledges that all such matters are the sole responsibility of the Depositor
and that Custodian is prohibited by law from rendering such advice.
22. Notwithstanding anything in the foregoing to the contrary, any
provision which is inconsistent with sections 219, 408 or 408A of the Code
(where applicable) shall be disregarded and the regulations promulgated under
said sections of the Code shall be incorporated by reference and this Agreement
shall be administered in accordance with said regulations.
23. The Depositor may revoke the Custodial Account established under this
Agreement by written notice to the Custodian received by the Custodian within 7
calendar days after the Depositor establishes the Custodial Account. Upon
revocation, the amount of the Depositor's initial deposit or contribution will
be returned to him, without adjustment for interest, earnings, investment
fluctuations or fees or expenses. The Custodian or the Funds may retain the
Depositor's initial contribution for a period of up to 10 days after the receipt
thereof, without investing such amount in accordance with the Depositor's
instructions, and may invest such amount after the expiration of such period if
the Depositor has not revoked the Custodial Account.
24. The legal documents governing the Custodial Account are as follows:
(a) If in the Registration Form the Depositor designated the Custodial
Account as a Traditional IRA under Code Section 408(a), the provisions of
The Terms and Conditions for Traditional IRAs and The Terms and
<PAGE> 26
Conditions for All IRAs of this Agreement and the provisions of the
Registration Form are the legal documents governing the Depositor's Custodial
Account.
(b) If in the Registration Form the Depositor designated the Custodial
Account as a Roth IRA under Code Section 408A, the provisions of The Terms
and Condition for Roth IRAs and The Terms and Conditions for All IRAs of
this Agreement and the provisions of the Registration Form are the legal
documents governing the Depositor's Custodial Account.
(c) The Depositor must designate in the Registration Form that the
Custodial Account is a Traditional IRA under Code Section 408(a) or a Roth
IRA under Code Section 408A, and a separate account will be established for
a Traditional IRA or a Roth IRA, whichever is designated. One Custodial
Account may not be used for assets of a Traditional IRA and a Roth IRA
(through the use of subaccounts or otherwise).
25. Articles I through VII of The Terms and Conditions for Traditional IRAs
of this Agreement are in the form promulgated by the Internal Revenue Service as
Form 5305-A. It is anticipated that, if and when the Internal Revenue Service
promulgates changes to Form 5305-A, the Custodian will amend this Agreement
correspondingly.
Articles I through VII of The Terms and Conditions for Roth IRAs of this
Agreement are in the form promulgated by the Internal Revenue Service as Form
5305-RA. It is anticipated that, if and when the Internal Revenue Service
promulgates changes to Form 5305-RA, the Custodian will amend this Agreement
correspondingly.
The Internal Revenue Service has endorsed the use of IRA documents
permitting a Depositor to establish either a Traditional IRA or a Roth IRA (but
not both) using a single Registration Form or a single Custodial Account, and
the Registration Form and the provisions of this Agreement comply with the
requirements of the Internal Revenue Service guidance on such use. If the
Internal Revenue Service subsequently issues a ruling or regulation that such
documentation is not permissible, or that the Registration Form or this
Agreement do not establish a Traditional IRA or a Roth IRA (as the case may be),
the Custodian will furnish the Depositor with replacement documents and the
Depositor will, if necessary, sign such replacement documents. Depositor
acknowledges and agrees to such procedures and to cooperate with Custodian to
preserve the intended tax treatment of the Account.
26. If the Depositor maintains an Individual Retirement Account under Code
section 408(a), Depositor may convert or transfer such other IRA to a Roth IRA
under Code section 408A using the terms of this Agreement and the Registration
Form by completing and executing the Registration Form and giving suitable
directions to the Custodian and the custodian or trustee of such other IRA.
27. The Depositor acknowledges that he or she has received and read the
Disclosure Statement relating to the Custodial Account. The Depositor further
acknowledges that he or she has received and read the current prospectus for
each Fund in which his or her Account is invested and the Individual Retirement
Account Disclosure Statement related to the Account. The Depositor represents
under penalties of perjury that his or her Social Security number (or other
Taxpayer Identification Number) as stated in the Application is correct.
* * *
PURPOSE. This model custodial account may be used by an individual who
wishes to adopt a Traditional Individual Retirement Account under Code Section
408(a) or a Roth Individual Retirement Account under Code Section 408A. When
fully executed by the Depositor and the Custodian not later than the time
prescribed by law for filing the federal income tax return for the Depositor's
tax year (not including any extensions thereof), an individual will have a
Traditional Individual Retirement Account (Traditional IRA) custodial account
which meets the requirements of Section 408(a), or a Roth Individual Retirement
Account (Roth IRA) custodial account which meet the requirements of Code Section
408A, whichever is applicable. This account must be created in the United States
for the exclusive benefit of the Depositor or his/her beneficiaries.
DEFINITIONS
CUSTODIAN. The Custodian must be a bank or savings and loan association, as
defined in section 408(n), or other person who has the approval of the Internal
Revenue Service to act as custodian. The Custodian in this plan is Investors
Bank & Trust Company.
DEPOSITOR. The Depositor is the person who establishes the custodial
account.
SPONSOR. The Sponsor is the Administrator of the Green Century Funds.
<PAGE> 27
FUND OR FUNDS. The Fund or Funds is the regulated investment company or
companies the Administrator of which is the Sponsor.
TRADITIONAL OR ROTH IRA FOR NON-WORKING SPOUSE
Contributions to a Traditional IRA or Roth IRA custodial account for a
non-working spouse must be made to a separate Traditional IRA or Roth IRA
custodial account established by the non-working spouse.
This agreement may be used to establish the Traditional IRA or Roth IRA
custodial account for the non-working spouse.
An employee's social security number will serve as the identification
number of his or her individual retirement account. An employer identification
number is only required for each individual retirement account that needs to
file an unrelated business income tax return. An employer identification number
is also required for a common fund created for individual retirement accounts.
For more information, get a copy of the required disclosure statement from
your Custodian or get Publication 590, Individual Retirement Arrangements
(IRAs).
SPECIFIC INSTRUCTIONS
ARTICLE IV. Distributions made under this Article for a Traditional IRA or
Roth IRA may be made in a single sum, periodic payments, or a combination of
both. If the Depositor is opening a Traditional IRA, the distribution option
should be reviewed in the year the Depositor reaches age 70 1/2 to make sure the
requirements of section 408(a)(6) have been met.
ARTICLE VIII. This Article and any that follow it may incorporate
additional provisions that are agreed upon by the Depositor and Custodian to
complete the agreement. These may include, for example: definitions, investment
powers, voting rights, exculpatory provisions, amendment and termination,
removal of custodian, custodian's fees, State law requirements, beginning date
of distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the depositor, etc. Use additional pages if
necessary and attach them to this form.
January, 1998
<PAGE> 28
THIS PAGE INTENTIONALLY LEFT BLANK
YOUR NOTES
<PAGE> 1
EXHIBIT 99.B14(b)
EDUCATION IRA
DISCLOSURE STATEMENT
1. INTRODUCTION
You should review the following information along with the Education
IRA Custodial Account Agreement (the "Terms and Conditions") which follows, the
Education IRA Registration Form (the "Registration Form"), and the current
prospectus for the Green Century Funds.
This DISCLOSURE STATEMENT provides information about Education IRAs. As
part of the Taxpayer Relief Act of 1997, Congress created the Education IRA,
which is now available for use by taxpayers. An Education IRA is a trust or
custodial account established by an individual (the "Depositor") for the benefit
of an individual (the "Designated Beneficiary") in which the amounts contributed
are NOT DEDUCTIBLE on the Depositor's (or Designated Beneficiary's) Federal
income tax return, but earnings accumulate tax free. Withdrawals made from an
Education IRA to pay for qualified education expenses may also be made tax-free.
(Note: State tax treatment of Education IRA earnings and withdrawals may differ
from Federal treatment. In some states, Education IRAs may be taxable. You
should consult your tax advisor for information regarding tax laws applicable in
your state.)
Annual contributions to an Education IRA may be made by a Depositor on
behalf of any Designated Beneficiary, as long as the Designated Beneficiary is
under age 18 at the time the contribution is made. Non-rollover contributions to
ALL Education IRA accounts established for a single Designated Beneficiary may
not, in the aggregate, exceed $500 annually. An individual with modified
adjusted gross income for a year above certain limits may not contribute to an
Education IRA that year. (See section 3, LIMITS ON ANNUAL CONTRIBUTIONS, below
for more information about contributions and limitations.)
Education IRA agreements must be in writing. The IRA trustee or
custodian must be a bank or other entity approved by the Secretary of the
Treasury. No part of the Education IRA custodial account assets may be invested
in life insurance contracts, or be commingled with other property except in a
common investment fund. The Designated Beneficiary's interest in the Education
IRA account must be nonforfeitable at all times.
The Registration Form is signed by the Depositor and a parent or
guardian ("Responsible Individual") of the Designated Beneficiary. The Depositor
and the Responsible Individual may be the same person when the parent or
guardian designated as the Responsible Individual makes the deposit to open the
account. The Responsible Individual will monitor and maintain the account and
will sign all forms, registration materials and other documents related to the
operation of the account. (Note: Only one parent or guardian can be the
Responsible Individual for any one Education IRA account.) Investors Bank &
Trust Company (the "Custodian") is not required to, nor shall it, determine
whether a parent or guardian identified as the "Responsible Individual" has, in
fact, the legal right to act in that capacity.
The Depositor who establishes the Education IRA determines the initial
investment for the account in either the Green Century Balanced Fund or the
Green Century Equity Fund. After that, all rights and responsibilities related
to the operation of the Education IRA are exercisable by the Responsible
Individual. When the Designated Beneficiary who was a minor when the Education
IRA was established attains the age of majority in his or her state of residence
("age of majority"), he or she may notify the Custodian in writing of his or her
intention to begin exercising control over the Education IRA. However, if so
specified by the Depositor when establishing the IRA, all rights and
responsibilities related to the operation of the Education IRA will remain
exercisable by or required of the Responsible Individual even after the
Designated Beneficiary reaches the age of majority.
1
<PAGE> 2
If the Depositor does not receive this statement at least seven days
before the establishment of an Education IRA, he or she shall have the right to
revoke the account within seven days after it is established and to receive a
return of the entire amount invested. If this right to revoke applies to you and
if you should desire to exercise your right to revoke an Education Individual
Retirement Custodial Account, you should mail or deliver a written notice of
revocation to the Green Century Funds, the address of which appear on the
Registration Form.
Mailed notice will be deemed given on the date it is postmarked (or, if
sent by certified or registered mail, on the date of certification or
registration by the post office).
Except to the extent that the Depositor exercises the revocation right
discussed above, after making the initial contribution and designating the
initial investment election, the Depositor has no further rights in or to the
Education IRA account, unless the Depositor is the same person as either the
Designated Beneficiary or the Responsible Individual.
This booklet explains in non-technical terms who is eligible to
contribute to Education IRAs and how distributions are made, along with the
other basic rules and features of Education IRAs. The legal documents which
constitute and control the Education IRA are the Terms and Conditions for
Education IRAs and the Registration Form, which shall control in any and all
instances in which this Disclosure Statement may contradict either or both of
them.
The tax law creating Education IRAs is new and the IRS has not
addressed many of the issues regarding account maintenance and operation.
Additionally, it is possible that legislation currently pending in Congress,
which has not yet been enacted, would change some of the legal requirements
described in this Disclosure Statement. Consult your own tax advisor for the
latest developments or for advice on establishing an Education IRA.
2. ELIGIBILITY
Anyone may be a Depositor and establish and make annual contributions
to an Education IRA for the benefit of a Designated Beneficiary who is younger
than age 18 at the time the contribution is made. The Depositor can be the
Designated Beneficiary or any other individual; the Depositor need not be
related to the Designated Beneficiary. Additionally, a Designated Beneficiary
may roll over funds from his Education IRA to another Education IRA established
for the benefit of a member of his or her family, as long as the family member
is under age 30. (See ROLLOVER EDUCATION IRAS, described in section 8 below.)
3. LIMITS ON ANNUAL CONTRIBUTIONS
(a) Depositors may make annual contributions to an Education IRA for
the benefit of a Designated Beneficiary of up to $500 annually, subject to the
limitations on contributions discussed in (c) below. (Note: contributions to
Education IRAs for a calendar year must be made by December 31 of that year.
Unlike contributions to other types of IRAs, the law governing Education IRAs
does not provide for a grace period extending to the due date for filing tax
returns for contributions made to Education IRAs.)
(b) Any Depositor may contribute to an unlimited number of Education
IRAs opened and maintained on behalf of an unlimited number of Designated
Beneficiaries, subject to the limitations discussed in (c) below. However,
annual contributions made to Education IRAs on behalf of any one Designated
Beneficiary may not, in the aggregate, exceed $500 per year. The Custodian is
not responsible for determining whether this maximum limit has been exceeded for
any Designated Beneficiary. The Responsible Individual should determine whether
the maximum limit would be exceeded as a result of any annual contribution.
(c) There is an exception to the rules in (a) and (b) above.
The amount any Depositor may contribute to an Education IRA may be reduced below
$500, based on the Depositor's tax filing status and the Depositor's (and
2
<PAGE> 3
the Depositor's spouse's) Modified Adjusted Gross Income ("MAGI"). The following
table shows the applicable limits:
EDUCATION IRA CONTRIBUTION LIMITS
Based on Depositor's Modified Adjusted Gross Income ("MAGI")
<TABLE>
<CAPTION>
==============================================================================================================
TAX FILING STATUS CONTRIBUTION
SINGLE MARRIED AMOUNT
==============================================================================================================
<S> <C> <C>
$95,000 or less $150,000 or less FULL
CONTRIBUTION
- -------------------------------------------------------------------------------------------------------------
At least $95,000 At least $150,000 PARTIAL
but less than $110,000 but less than $160,000 CONTRIBUTION
- -------------------------------------------------------------------------------------------------------------
$110,000 or more $160,000 or more NO CONTRIBUTION
=============================================================================================================
</TABLE>
(i) In general, the ability to contribute to an Education IRA is
phased out at a rate of approximately $33.33 per $1,000 of MAGI
for single individuals, and $50 per $1,000 of MAGI for married
joint filers, in excess of the phase out threshold ($95,000 for
single filers, $150,000 for married joint filers).
(ii) These phase out limits apply to the ability of one Depositor to
make Education IRA contributions on behalf of any one Designated
Beneficiary. Other Depositors may, subject to the phase out rules
based on their own MAGI, contribute the difference so that the
$500 permitted under law is contributed to an Education IRA on
behalf of a single Designated Beneficiary. However, the $500
maximum limit may not be exceeded, in the aggregate, for any one
Designated Beneficiary in a single calendar year.
(iii) Amounts contributed to an Education IRA in excess of the maximum
limits described above will be taxed at a rate of 6% as an
"excess contribution" for each year in which they remain in the
Education IRA.
(iv) For most people MAGI is the same as Adjusted Gross Income
("AGI"), which is gross income reduced by those deductions
available to all taxpayers--even those who do not itemize. MAGI
is regular AGI plus certain amounts earned abroad. If a Depositor
has not earned income in any foreign country, Guam, Puerto Rico,
the Northern Mariana Islands, or American Samoa, then regular AGI
is the same as MAGI. (Consult your tax advisor.)
(d) If a contribution is made to a state prepaid tuition plan on
behalf of a Designated Beneficiary, contributions on that Designated
Beneficiary's behalf cannot be made to an Education IRA. Contributions made to
an Education IRA in the same year that contributions are made to a state prepaid
tuition plan will be considered an excess contribution. The Designated
Beneficiary will be subject to a 6% penalty tax on the amount of the excess
contribution.
4. DEDUCTIBILITY OF CONTRIBUTIONS
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Unlike conventional Traditional IRAs, contributions to an Education IRA
are NOT deductible.
5. EXCESS CONTRIBUTIONS
(a) An excess contribution occurs when the $500 per Designated
Beneficiary per calendar year limit is exceeded (not including any rollover
contribution amounts), when the Depositor exceeds his or her contribution limit
based on MAGI and filing status (as discussed above), or when contributions are
made to a state prepaid tuition program in the same year that a contribution is
made to an Education IRA on the Designated Beneficiary's behalf. A 6% excise tax
will be imposed on any excess contributions made to an Education IRA. This tax
applies for each year in which the contribution remains in the Education IRA.
(b) The excess can be corrected without paying the 6% penalty if the
excess and any earnings on the excess are withdrawn before the due date
(including extensions) for filing the Federal income tax return for the year for
which the excess contribution was made. If this correction approach is used, the
net earnings must be included in income for the tax year for which the
contribution was made. An excess contribution can also be corrected--and the 6%
penalty possibly avoided--by contributing an amount out of the Education IRA
into a qualified state tuition program in the same year in which the
contribution was made.
(c) Any excess contribution withdrawn after the tax return due date
(including any extensions) for the year for which the contribution was made will
subject the Designated Beneficiary (or in some cases his or her parent(s) if the
Designated Beneficiary is under 14) to the 6% excise tax. Unless an exception
applies, the amount of the excess--plus earnings--withdrawn will be included in
the Designated Beneficiary's (or his or her parent(s) if the Designated
Beneficiary is under 14) income and may also be subject to a 10% withdrawal
penalty.
(d) NOTE: The Custodian cannot and will not be responsible for
checking to determine whether a contribution will result in an excess
contribution. The Designated Beneficiary--or the Responsible Individual--must
always check, including checking to determine whether any other potential
Depositor (such as relatives) have or intend to contribute, to determine whether
any of the limits discussed above will be exceeded.
6. TAX ON WITHDRAWALS FROM AN EDUCATION IRA
(a) NON-TAXED WITHDRAWALS. A Designated Beneficiary may make
withdrawals from the Education IRA at any time. The principal amounts
contributed to an Education IRA may always be withdrawn tax-free. Withdrawals of
amounts considered earnings or growth will also be tax-free if the following
requirements are met: (i) the withdrawal must be made from an Education IRA to
cover the cost of qualified higher education expenses incurred by the Designated
Beneficiary (ii) while attending an eligible educational institution, and (iii)
the amount of the withdrawal cannot exceed the qualified higher education
expenses for the year. The two terms--qualified higher education expenses and
eligible educational institution--are defined as follows:
(i) QUALIFIED HIGHER EDUCATION EXPENSES include expenses for
tuition, books, supplies, and equipment required for
enrollment or attendance at an eligible educational
institution. For a Designated Beneficiary attending an
eligible educational institution at least half time,
qualified higher education expenses also include room and
board, which is equivalent to, generally, the school's posted
room and board charge, or $2,500 per year for off-campus (and
not at-home) expenses. Qualified expenses also include
amounts contributed to a qualified state tuition program.
(ii) ELIGIBLE EDUCATIONAL INSTITUTIONS include most colleges,
universities, vocational schools, or other post-secondary
educational institutions. The Designated Beneficiary should
check with his or her
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<PAGE> 5
school to verify that it is an eligible educational
institution as described in Section 481 of the Higher
Education Act of 1965.
(b) Taxable WITHDRAWALS. Generally, if the requirements for a tax-free
Education IRA withdrawal are not met, then the amount equal to the prior
contributions to the account are not taxed, nor will the 10% penalty tax apply.
A withdrawal that is considered earnings or growth on the contributions is
includable in the Designated Beneficiary's (or in some cases the Designated
Beneficiary's parents') gross income in the taxable year received, and may be
subject to the 10% withdrawal penalty, unless an exception applies.
If the amount withdrawn exceeds the amount required to meet the
Designated Beneficiary's qualified education expenses in a year, then a special
rule applies. In this case, the amount that must be included in income for tax
purposes is determined by figuring the ratio that the qualified higher education
expenses bears to the actual withdrawal. The part of the withdrawal that is
subject to taxation (i.e., the amount of earnings or growth) is then multiplied
by the percentage amount, and the sum is the amount excludable from income.
Taxable withdrawals of earnings or growth are taxed as ordinary income.
Withdrawals of taxable amounts from an Education IRA are not eligible for
averaging treatment currently available to certain lump sum distributions from
qualified employer-sponsored retirement plans, nor are such withdrawals eligible
for taxable gains tax treatment.
(c) EXCEPTIONS TO THE 10% PENALTY. The receipt of any taxable
withdrawal from an Education IRA may be subject to a 10% penalty
tax, unless one of the following exceptions applies:
(i) the withdrawal is paid to the Designated Beneficiary's
estate within 30 days of death;
(ii) the withdrawal is paid to the Designated Beneficiary because
of his or her total disability;
(iii) the withdrawal is equal to or less than the amount of a
scholarship or other tax-free educational assistance
received by the Designated Beneficiary.
The Designated Beneficiary--or Responsible Individual--is always
responsible for determining whether a distribution meets the requirements
outlined above. The Custodian is not and cannot be responsible for making such
determinations, nor for monitoring whether distributions are made in accordance
with the tax free distribution rules.
(d) Impact ON EDUCATION TAX CREDITS. None of the Designated
Beneficiary's education expenses for a year may be claimed as the basis for a
Hope Scholarship Credit or Lifetime Learning Credit in any year in which he or
she receives a tax-free withdrawal from an Education IRA. If the tax-free
treatment of the Education IRA withdrawal is waived, however, the Hope
Scholarship Credit or Lifetime Learning Credit may be claimed.
7. REQUIRED PAYMENTS FROM EDUCATION IRAS
(a) During THE DESIGNATED BENEFICIARY'S LIFETIME. All amounts
remaining in an Education IRA account must be distributed within 30 days of the
Designated Beneficiary's 30th birthday. The amount of earnings or growth is
regarded as income and taxable, and may be subject to the 10% penalty, unless an
exception applies (see above). Taxes and penalties can be avoided if the
designated beneficiary is changed to, or the amount in the account is rolled
over or transferred to an Education IRA account maintained for the benefit of, a
member of the Designated Beneficiary's family. (See ROLLOVER EDUCATION IRAS,
described in section 8 below.)
b) AFTER THE DESIGNATED BENEFICIARY'S DEATH. If the Designated
Beneficiary dies before all of the funds held in the Education IRA
have been withdrawn, the entire remaining interest must be
distributed to his or her estate within 30 days of the date of
death.
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<PAGE> 6
8. ROLLOVER EDUCATION IRAs
(a) General RULES. A Designated Beneficiary may roll over or transfer
the amounts contained in his or her Education IRA to another Education IRA
maintained for himself or herself, or one of his or her family members.
Rollovers must be completed within 60 days of the withdrawal. Only one rollover
from an Education IRA to another Education IRA is permitted in any 12 month
period.
NOTE: Rollovers to or from other types of IRAs (Regular, Roth, etc.),
employer-sponsored qualified retirement plans, or 403(b) arrangements are
prohibited.
(b) Family MEMBERS include the Designated Beneficiary (if under 30)
and any of the following who are under age 30: the Designated Beneficiary's
children and their descendants, stepchildren and their descendants, siblings and
their children, parents and grandparents, stepparents, and spouses of all of the
foregoing.
(c) Changing THE DESIGNATED BENEFICIARY. If the Depositor has elected
to permit the Responsible Individual to make such a change on the Registration
Form, rather than rolling over an amount from one Education IRA to another, the
Responsible Individual may simply change the designated beneficiary on his or
her account to another family member (see above).
(d) Impact OF ROLLOVER ON CONTRIBUTION LIMITS. The amount rolled over
from one Education IRA to another--if done correctly--is not included for
purposes of determining whether the $500 maximum limit is exceeded, nor are
rollover amounts subject to the MAGI limits imposed upon Depositors. (See
section 3, LIMITS ON CONTRIBUTIONS, above.)
9. FEDERAL TAX CONCERNS
(a) Contributions, excess contributions and withdrawals must be
reported to the IRS by the Responsible Individual, Designated Beneficiary or
Depositor, as the case may be, and the Custodian will report year end values of
all Education IRAs to the IRS, along with the amount of all rollovers or regular
contributions, on forms designated by the IRS for these purposes. (Check with
your tax advisor for more information about Federal tax reporting and for
information about state tax reporting requirements.)
(b) Withholding requirements for Federal tax purposes have not been
established by law or under IRS regulations. (Check with your tax advisor for
more information and the latest developments.)
10. PROHIBITED TRANSACTIONS
(a) If a so-called "prohibited transaction" (as defined in the
Internal Revenue Code) is engaged in, the Education IRA will be disqualified and
the entire taxable balance in the Education IRA account will be taxed as
ordinary income during the year in which such transaction occurs. A 10% penalty
tax on premature distributions may also apply. A "prohibited transaction"
includes:
(i) the sale, exchange, or leasing of any property between the
Education IRA account and the Designated Beneficiary;
(ii) the lending of money or other extension of credit between
the Education IRA account and the Designated Beneficiary;
(iii) the furnishing of goods, services, or facilities
between the Education IRA account and Designated
Beneficiary; or
(iv) the transfer of assets of the Education IRA account for
the Designated Beneficiary's use or benefit.
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<PAGE> 7
(b) If all or part of the Education IRA assets are pledged as security
for a loan, the amount so pledged is considered by the Internal Revenue Service
to have been distributed to the Designated Beneficiary and will be taxed as
ordinary income during the year in which such pledge was made. The 10% premature
distribution tax may also apply.
11. CUSTODIAN
The Custodian for this Education IRA is Investors Bank & Trust Company.
The Custodian will invest contributions and earnings in accordance with
instructions received initially from the Depositor and subsequently from the
Responsible Individual in the Green Century Balanced Fund or the Green Century
Equity Fund. The Responsible Individual will receive periodic reports describing
each transaction in the account, and proxies will be sent to the Responsible
Individual to vote as he or she deems appropriate. Since the investment of the
account is at the discretion initially of the Depositor and subsequently of the
Responsible Individual and the returns of the Green Century Funds are not
guaranteed, growth in the value of the account cannot be projected or
guaranteed.
For information concerning the custodial charges which will be assessed
against the account by Investors Bank & Trust Company be sure to read the
section FEES below. Custodial charges may be changed or adjusted on thirty days'
notice to the Responsible Individual. The Depositor and Responsible Individual
should read carefully the current Green Century Funds prospectus for a
description of the investment objectives and policies plus a description of
applicable fees and charges of the Green Century Funds. Read the prospectus
carefully before investing.
12. ADDITIONAL INFORMATION
(a) Education IRA funds are non-forfeitable. They are always the
Designated Beneficiary's (subject to investment fluctuations), and will be
invested according to the instructions provided first by the Depositor and then,
subsequently, by the Responsible Individual, to the Custodian. The Education IRA
will be clearly identified as the Designated Beneficiary's property and will not
be commingled with property of any other depositor.
(b) Articles I through X of the Terms and Conditions for Education
IRAs use the precise language of Form 5305-EA, currently provided by the
Internal Revenue Service, and has therefore been approved as a form to use as a
qualified Education Individual Retirement Account. The IRS approval of the form
does not represent a determination as to the merits of the account. It simply
means that the form of the printed Terms and Conditions for Education IRAs
satisfies the requirements of the IRS. However, if the Education IRA is adopted
and maintained within the stated guidelines, you may assume that you are
properly meeting all requirements for a bona fide Education IRA under Federal
income tax law.
(c) Further information concerning Education IRAs can be obtained from
any district office of the Internal Revenue Service.
(d) Consult with your tax or financial advisor to determine whether
this Education Individual Retirement Custodial Account is the right education
savings vehicle for you, since we cannot offer legal, tax or financial advice.
(e) This Disclosure Statement provides a non-technical explanation of
the terms and conditions of your Education IRA account. However, the provisions
of the Terms and Conditions for Education IRAs, the Registration Form and
prospectus govern in any instance where the Disclosure Statement is incomplete
or appears to conflict. This Disclosure Statement reflects the provisions of
the Internal Revenue Code in effect as of the date the Disclosure Statement was
prepared. Please consult your tax advisor for more complete information and to
review any applicable tax law changes.
FEES
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<PAGE> 8
The custodial fee currently in effect is an annual maintenance
fee of $10 per account. Your first annual maintenance fee may be paid at the
same time that you mail your Education IRA Registration Form to the Green
Century Funds by forwarding a separate check for $10, made payable to Green
Century Funds. In subsequent years, you may pay the annual maintenance fee by
forwarding a check to the Green Century Funds when notified of the payment
option. If you do not forward payment for the annual maintenance fee by December
20 of each year, Green Century Funds will obtain payment directly from your
Education IRA by redeeming a sufficient number of the Fund shares held in your
Education IRA. The Custodial Fees may be modified upon 30 days' written notice
from the Custodian of your Education IRA.
CUSTODIAL ACCOUNT AGREEMENT
TERMS AND CONDITIONS FOR EDUCATION IRAS
Articles I - X are in the form promulgated by the Internal Revenue Service in
Form 5305-EA (January 1998) for use in establishing an Education IRA under
Section 530 of the Internal Revenue Code.
The Depositor whose name appears on the Registration Form is
establishing an education individual retirement account ("IRA") (under Section
530 of the Internal Revenue Code) for the benefit of the Designated Beneficiary
identified on the Registration Form exclusively to pay for the qualified higher
education expenses, within the meaning of Section 530(b)(2) of the Code, of such
Designated Beneficiary.
The Disclosure has been given to the Depositor, disclosing the
provisions governing Section 530 of the Code. The Custodian, Investors Bank &
Trust Company, will also provide a copy of this Custodial Account Agreement and
the Disclosure Statement to the Responsible Individual, as defined in Article VI
below, if the Responsible Individual is not the same person as the Depositor.
The Depositor has made cash deposit with the Custodian as indicated on
the Registration Form.
The Depositor and the Custodian make the following agreement:
ARTICLE I
The Custodian may accept additional cash contributions. These
contributions may be from the Depositor, or from any other individual, for the
benefit of the Designated Beneficiary, provided the Designated Beneficiary has
not attained the age of 18 as of the date such contributions are made. Total
contributions that are not rollover contributions described in Section 530(d)(5)
are limited to a maximum amount of $500 for the taxable year.
ARTIClE II
The maximum aggregate contribution that an individual may make to the
Custodial Account in any year may not exceed the $500 in total contributions
that the Custodial Account can receive. In addition, the maximum aggregate
contribution that an individual may make to the Custodial Account in any year is
phased out for unmarried individuals who have modified adjusted gross income
(AGI) between $95,000 and $110,000 for the year of the contribution and for
married individuals who file joint returns with modified AGI between $150,000
and $160,000 for the year of the contribution. Unmarried individuals with
modified AGI above $110,000 for the year and married individuals who file joint
returns and have modified AGI above $160,000 for the year may not make a
contribution for that year. Modified AGI is defined in Section 530(c)(2).
ARTICLE III
No part of the Custodial Account funds may be invested in life
insurance contracts, nor may the assets of the Custodial Account be commingled
with other property except in a common investment fund (within the meaning of
Section 530(b)(1)(D)).
ARTIClE IV
1. Any balance to the credit of the Designated Beneficiary on the
date on which such Designated Beneficiary attains age 30 shall be distributed to
the Designated Beneficiary within 30 days of such date.
2. Any balance to the credit of the Designated Beneficiary shall be
distributed to the estate of the Designated Beneficiary within 30 days of the
date of such Designated Beneficiary's death.
ARTICLE V
The Depositor shall have the power to direct the Custodian regarding
the investment of the above-listed amount assigned to the Custodial Account
(including earnings thereon) in the investment choices offered by the Custodian.
The Responsible Individual, however, shall have the power to redirect the
Custodian regarding the investment of such
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<PAGE> 9
amounts, as well as the power to direct the Custodian regarding the investment
of all additional contributions (including earnings thereon) to the Custodial
Account. In the event that the Responsible Individual does not direct the
Custodian regarding the investment of additional contributions (including
earnings thereon), the initial investment direction of the Depositor also will
govern all additional contributions made to the Custodial Account until such
time as the Responsible Individual otherwise directs the Custodian. Unless
otherwise provided in this Agreement, the Responsible Individual also shall have
the power to direct the Custodian regarding the administration, management, and
distribution of the Account.
ARTIClE VI
The "Responsible Individual" named by the Depositor shall be a parent
or guardian of the Designated Beneficiary. The Custodial Account shall have only
one Responsible Individual at any time. If the Responsible Individual becomes
incapacitated or dies while the Designated Beneficiary is a minor under state
law, the successor Responsible Individual shall be the person named to succeed
in that capacity by the preceding Responsible Individual in a witnessed writing
or, if no successor is so named, the successor Responsible Individual shall be
the Designated Beneficiary's other parent or successor guardian. At the time
that the Designated Beneficiary attains the age of majority under state law, the
Designated Beneficiary becomes the Responsible Individual. Unless otherwise
directed by checking the option below, at the time the Designated Beneficiary
attains the age of majority under state law, the Designated Beneficiary becomes
the Responsible Individual.
_______________OPTION. (This provision is effective if checked on the
Registration Form): The Responsible Individual shall continue to serve as the
Responsible Individual for the Custodial Account after the Designated
Beneficiary attains the age of majority under state law and until such time as
all assets have been distributed from the Custodial Account and the Custodial
Account terminates. If the Responsible Individual becomes incapacitated or dies
after the Designated Beneficiary reaches the age of majority under state law,
the Responsible Individual shall be the Designated Beneficiary.
ARTICLE VII
The Responsible Individual ____ may or _____ may not change the
Beneficiary designated under this Agreement to another member of the Designated
Beneficiary's family described in Section 529(e)(2) in accordance with the
Custodian's procedures and as noted on the Registration Form.
ARTICLe VIII
1. The Depositor agrees to provide the Custodian with the information
necessary for the Custodian to prepare any reports required under section
530(h).
2. The Custodian agrees to submit reports to the Internal Revenue
Service and the Responsible Individual as prescribed by the Internal Revenue
Service.
ARTIClE IX
Notwithstanding any other articles which may be added or incorporated,
the provisions of Articles I through IV will be controlling. Any additional
articles that are not consistent with Section 530 and related regulations will
be invalid.
ARTICLE X
This Agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the Depositor and the Custodian whose signatures appear on
the Registration Form.
ARTIClE XI
1. Except as otherwise permitted in Paragraph 8(a) below, all
contributions made under this Agreement shall be deposited in the form of cash.
All such contributions shall be credited to a Custodial Account for the benefit
of the Designated Beneficiary. Subject to the limitations set forth in the
Registration Form, all funds in the Custodial Account shall be invested and
reinvested in the Green Century Balanced Fund or the Green Century Equity Fund.
The Depositor initially directs and the Responsible Individual may
direct from time to time the Custodian with respect to the investment of all
contributions. However, such direction shall be limited to the purchase of
shares of the Green Century Balanced Fund or the Green Century Equity Fund.
Investments received without direction may be returned or held uninvested
without liability for loss of income, interest or appreciation while directions
are obtained. All dividends and capital gain distributions received on shares
held in the Account shall be reinvested in additional shares of the issuing
Fund(s).
2. Investors Bank & Trust Company is the Custodian and is responsible
for all record keeping, applicable tax reporting and fee collection in
connection with Education IRA accounts. Investors Bank & Trust Company also
serves as transfer agent for the Funds. The Custodian shall be under no duty
whatsoever except such duties as are specifically set forth in this Agreement.
3. Neither the Custodian, the Green Century Funds nor any other party
providing services to the Custodial Account assumes any responsibility for
rendering advice with respect to the investment or reinvestment of the Custodial
Account and shall not be liable for any loss which results from either the
Depositor's or Responsible Individual's exercise of control over the Custodial
Account. Initially the Depositor and subsequently the Responsible Individual
shall have and exercise exclusive responsibility for and control over the
investment of the assets of the Custodial Account in accordance with the terms
of this Agreement, and neither the Custodian, the Green Century Funds nor any
other such party shall have any duty to question either of their directions in
that regard or to advise either of them regarding purchase, retention, or sale
of the Green Century Funds.
4. Within seven days after the Depositor first receives the
Disclosure Statement, he or she may revoke the Custodial Account established
hereunder by mailing or delivering a written notice of revocation to the
Custodian. If mailed, the date of the postmark or, if applicable, the date of
Post Office certification or registration, shall be treated as the date of
receipt by the Custodian. Upon timely revocation, the Depositor will receive a
payment equal to the initial contribution, without adjustment for administrative
expenses, fluctuations in market value or other changes. The Depositor is
required to certify in the Registration Form receipt of the Disclosure Statement
related to the Custodial Account. The Custodian may rely on such certification.
Also, the Custodian or the Green Century Funds may retain the initial
contribution for a period of up to 10 days after the receipt thereof, without
investing such amount in accordance with the Depositor's instructions, and may
invest such amount after the expiration of such period if the Depositor has not
revoked the Custodial Account.
5. All contributions shall be made to the Custodian, in accordance
with such rules as the Custodian may establish. Except to the extent the
Depositor exercises the revocation rights set forth in
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<PAGE> 10
Section 4, or in any case in which the Depositor and the Designated Beneficiary
or Responsible Individual are the same person, after making the initial
contribution to the Account and indicating the initial investment elections
therein, all rights in and to and responsibilities for the Account of the
Depositor shall cease immediately and all such rights and responsibilities shall
irrevocably inure to the Designated Beneficiary or Responsible Individual, as
the case may be.
6. (a) The Depositor and the Responsible Individual must sign the
Registration Form. Only one parent or guardian may sign the Registration Form
and administer the Account for the benefit of a Designated Beneficiary as the
Responsible Individual. The Responsible Individual is charged with sole
responsibility for maintaining the Account and shall execute all forms,
Registration Forms, certifications and other documents on behalf of the
Designated Beneficiary. All rights, powers, responsibilities, authorities or
requirements conferred upon the Designated Beneficiary herein or in any document
relating to the Account shall be exercised or carried out by the Responsible
Individual on behalf of the Designated Beneficiary.
(b) The Depositor may specify in the Registration Form that the
Responsible Individual will continue to maintain and administer the Account
under the preceding subparagraph (a) after the Designated Beneficiary reaches
the age of majority as recognized by the laws of the Designated Beneficiary's
state of residence ("age of majority"). Alternatively, the Depositor may specify
in the Registration Form that, once the Designated Beneficiary attains the age
of majority, and upon the receipt of notice by the Custodian from the Designated
Beneficiary that he is assuming sole responsibility for the maintenance and
operation of his Account and agreeing to be bound by the terms of this Agreement
(with such evidence or documentation as the Custodian may request), the
Custodian shall thereafter deal exclusively with the Designated Beneficiary as
the person controlling the administration of the Account. (In absence of written
notice described above, the Custodian shall have no obligation to acknowledge
the Designated Beneficiary's right to exercise such powers and authority.)
If the Depositor makes no specific choice in the Registration Form, the
Depositor is deemed to have specified that the Designated Beneficiary will, upon
reaching the age of majority and so notifying the Custodian, assume sole
responsibility for maintaining and administering the Account.
(c) Depositor may specify in the Registration Form that the
Responsible Individual may name a new designated beneficiary for the Account, or
the Depositor may specify that the Responsible Individual will not have this
power. If the Depositor makes no specific choice in the Registration Form, the
Depositor is deemed to have specified that the Responsible Individual may name a
new designated beneficiary for the Account. Any such new designated beneficiary
must be member of the family of the original Designated Beneficiary within the
meaning of Code Section 529(e)(2).
The Responsible Individual may, if permitted, name a new designated
beneficiary for the Account by appropriate instructions to the Custodian,
providing such information as the Custodian requests.
7. The Custodian shall not be responsible for any losses, penalties
or other consequences to the Depositor, the Responsible Individual or the
Designated Beneficiary or to any other person arising out of the making of any
contribution or withdrawal or for the results of the initial selection of the
investment(s) for the Custodial Account or for any subsequent change of
investment(s). The Responsible Individual must determine whether contributions
made to all Education IRA accounts on behalf of the Designated Beneficiary do
not exceed, in the aggregate, $500 for any taxable year.
8. (a) The Custodian shall have the right to receive rollover
contributions as described in Section 530(d)(5) of the Code. The Custodian shall
not accept any contribution or direct transfer from another Education IRA
account unless it is made in cash (or its equivalent).
(b) The Custodian, upon written direction of the Responsible
Individual, shall transfer the assets held under this Agreement (reduced by any
amounts referred to in section 10 of this Article XI) to another education
individual retirement account for the benefit of the same Designated Beneficiary
or a member of the Designated Beneficiary's family. For these purposes, members
of the Designated Beneficiary's family include any of the following who are
under age 30: the Designated Beneficiary's son, daughter, stepson, stepdaughter,
brother, sister, stepbrother, stepsister, father, mother, (or ancestor of
either), stepfather, stepmother, niece, nephew, aunt or uncle, son-in-law or
daughter-in-law, or a spouse of any of the foregoing. The Custodian has no
responsibility for determining whether such successor education individual
retirement account meets the requirements of Code Section 530, whether the
designated beneficiary of such account is a permissible beneficiary, or whether
such transfer is a tax-free transaction.
(c) Any amounts received or transferred by the Custodian under this
paragraph 8 shall be accompanied by such instructions, records and other
documents as the Custodian deems necessary.
9. The Depositor, Responsible Individual and Designated Beneficiary
hereby delegate to the Custodian the power to amend at any time and from time to
time the terms and provisions of this Agreement and hereby consent to all such
amendments, provided that an amendment is not contrary to any applicable
provision of the Internal Revenue Code, the regulations thereunder, or any other
applicable law, regulation or ruling. Any such amendment shall be effective when
the notice of such amendments is mailed to the address of the Responsible
Individual indicated by the Custodian's records.
10. Any income taxes or other taxes of any kind whatsoever which may
be levied or assessed upon or in respect of the assets of the Custodial Account,
or the income arising therefrom, any transfer taxes incurred, any expenses
incurred by the Custodian in the performance of its duties, including fees for
legal services rendered to the Custodian, and the Custodian's compensation as
set forth in the Disclosure Statement may be paid by the Responsible Individual
and, unless and until so paid, within such time period as the Custodian may
establish, may be paid from the assets of the Custodial Account. The Custodian
and the Green Century Funds shall be empowered to take any action necessary to
effectuate the provisions of this paragraph and shall have no liability to the
Designated Beneficiary or any other person therefor. The Custodian shall have
the right to change or adjust its fees and compensation upon 30 days' notice to
the Responsible Individual, and may reduce or waive fees with respect to any
class or group of Designated Beneficiaries.
11. Amounts in the Custodial Account and the benefits provided
hereunder shall not be subject to alienation, assignment, garnishment,
attachment, execution or levy of any kind, and any attempt to cause such
benefits to be so subjected shall not be recognized, except to such extent as
may be required by law.
12. Any pledging of assets in the Custodial Account by the Responsible
Individual, the Designated Beneficiary or any other person as security for a
loan, or any loan or other extension of credit from the Custodial Account to the
Designated Beneficiary, shall be prohibited.
13. In taking or refraining from any action or determining any fact or
question which may arise under this Custodial Agreement, the Custodian may rely
upon any statement by the Responsible Individual or
10
<PAGE> 11
Designated Beneficiary with respect thereto. The Depositor, Responsible
Individual and Designated Beneficiary hereby agree that the Custodian will not
be liable for any loss or expense resulting from taking or not taking such
action or determination taken in reliance on any such statement.
14. The Custodian may resign at any time upon 90 days' written notice
to the Responsible Individual and may be removed by the Responsible Individual
at any time upon 90 days' written notice to the Custodian. Upon the resignation
or removal of the Custodian, a successor Custodian shall be appointed by the
Responsible Individual within 90 days of such resignation or removal and in the
absence of such appointment, the Custodian may designate a successor unless this
Agreement is sooner terminated. Any successor custodian shall be a bank (as
defined in Section 408(n) of the Code) or another person found qualified to act
as a custodian under an individual retirement account plan by the Secretary of
the Treasury, or his delegate, pursuant to Section 530(b)(1)(B) of the Code. The
appointment of a successor custodian shall be effective upon receipt by
Custodian of such successor's written acceptance which shall be submitted to the
Custodian and to the Responsible Individual. As soon as reasonably practicable
after the effective date of a successor custodian's appointment, the Custodian
shall transfer and deliver to the successor custodian applicable account records
and assets of the Custodial Account (reduced by any unpaid amounts referred to
in paragraph 10 of this Article XI). The successor custodian shall be subject to
the provisions of this Agreement (or any successor thereto) on the effective
date of its appointment.
15. (a) The Custodian shall distribute the assets of the Custodial
Account at such time and to such person or entity as the Responsible Individual
shall instruct. The Custodian shall have no responsibility for determining
whether such distributions shall be included in gross income of the Designated
Beneficiary (or any other person), but the Custodian shall report such
distribution to the Internal Revenue Service consistent with the applicable
provisions of the Code and regulations and rules thereunder.
(b) The Responsible Individual and the Designated Beneficiary
acknowledge that a distribution of a taxable amount from the Custodial Account
may subject the Designated Beneficiary to an additional tax on the distribution
under Section 530(d)(4) of the Code unless an exception applies. The Custodian
or any party providing services to the Custodial Account assumes no
responsibility for monitoring or approving the purposes for any distribution, or
for the tax treatment accorded any distribution from the Account; the
responsibility for these determinations rests solely and exclusively with the
person ordering the distribution.
(c) The Responsible Individual or the Designated Beneficiary has the
responsibility to notify the Custodian to make a distribution upon the
Designated Beneficiary's attainment of age 30. The Responsible Individual or the
Designated Beneficiary will be responsible for any tax consequences resulting
from his or her failure to so direct the Custodian. Notwithstanding the
foregoing, the Custodian may, based upon its records, distribute the account
balance to the Designated Beneficiary upon his or her attainment of age 30, or
the Custodian will report the balance in the Account at such time as a "deemed
distribution" to the extent required by law, but the Custodian will have no
responsibility for so doing.
(d) Any balance remaining in the account of the Designated Beneficiary
will be distributed to his or her estate in the manner required by Code Section
530 upon the death of the Designated Beneficiary and the Custodian shall have no
responsibility for making a distribution, or for not making a distribution in
the absence of instructions to do so from the Responsible Individual or a legal
representative of the Designated Beneficiary's estate.
16. The Custodian assumes (and shall have) no responsibility to
determine whether the requirements of Section 530 (b) have been met for any
distribution.
However, prior to making any distribution from the Custodial Account,
the Custodian shall be furnished with any and all Registration Forms,
certificates, tax waivers, signature guarantees, and other guarantees, and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by the Custodian, but the Custodian shall not be liable
for complying with written instructions which appear on their face to be
genuine, or for refusing to comply if not satisfied such instructions are
genuine, and assumes no duty of further inquiry. Upon receipt of proper written
instructions as required above, the Custodian shall cause the assets of the
Custodial Account to be distributed, as specified in such written order.
17. If the Designated Beneficiary is disabled, as that term is defined
in Section 72(m) of the Code, the Responsible Individual may give notice to the
Custodian of such disability and request that up to the total balance of the
Custodial Account be distributed. The Custodian, within a reasonable time after
submission of satisfactory proof of such disability, shall order the
distribution of the balance of the Custodial Account to the Designated
Beneficiary or such portion as the Responsible Individual requested.
18. This Agreement shall terminate and be of no further force or
effect (except for Sections 14 and 19 of this Article XI which shall survive
such termination of the Custodial Account and this Agreement) coincident with
the complete distribution of the assets of the Custodial Account, and the
Custodian shall have no further duties or responsibilities with respect to the
Custodial Account after its termination.
19. The Depositor and the Responsible Individual hereby agree, jointly
and severally, to indemnify and hold harmless the Custodian from and against any
and all claims, loss, damages, costs or expenses (including reasonable
attorney's fees) which may be incurred or paid out by reason of any alleged or
actual act, or failure to act, on the part of the Responsible Individual,
Designated Beneficiary, the Green Century Funds, or any other person. The
preceding sentence will survive the termination of the Agreement.
20. Any notice herein required or permitted to be given to the
Custodian shall be sufficiently given if mailed to the Custodian by first class
mail, to the Green Century Funds, care of Investors Bank & Trust Company, P.O.
Box 9130, MFD23, Boston, MA 02117-9130, or to such other address as the
Custodian shall provide the Responsible Individual from time to time in writing,
stating that such other address shall be used for purposes of this Agreement.
Any notice herein required or permitted to be given to the Depositor,
Responsible Individual and/or Designated Beneficiary shall be sufficiently given
if mailed to such person at such person's address appearing on the Registration
Form, or at such other address as such person shall have provided the Custodian
from time to time in writing, which writing shall state that such other address
is to be used for purposes of this Agreement.
21. The Custodian shall keep or cause to be kept adequate records of
the transactions they are required to perform hereunder. In addition to any
reports required by the Code or the regulations thereunder, the Custodian shall
cause to be mailed to the Responsible Individual in respect of each tax year an
account of all transactions affecting the Custodial Account during such year and
a statement showing the Custodial Account as of the end of such year. If, within
sixty (60) days after such mailing, the Responsible Individual has not given the
Custodian written notice of any exception or objection thereto, the annual
accounting shall be deemed to have been approved, and in
11
<PAGE> 12
such case, or upon the written approval of the Responsible Individual, the
Custodian and the Green Century Funds shall be released, relieved and discharged
with respect to all matters and statements set forth in such accounting as
though the account had been settled by judgment or decree of a court of
competent jurisdiction.
The Custodian shall deliver, or cause to be executed and delivered, to
the Responsible Individual all notices, prospectuses, financial statements,
proxies and proxy soliciting materials as they are received from the Green
Century Funds. The Custodian shall vote at all shareholder meetings of the Green
Century Funds in accordance with written instructions of the Responsible
Individual which will be secured by the Custodian.
22. The Custodian shall be the agent for the Depositor, Responsible
Individual or Designated Beneficiary to perform the duties conferred on them,
respectively, hereunder, as directed by the Responsible Individual. The parties
do not intend to confer any fiduciary duties on the Custodian and the Green
Century Funds and none shall be implied. Neither shall be liable (nor assumes
any responsibility for) the collection of contributions, or the amount or timing
or tax treatment of any contributions under this Agreement, the selection of any
investments for the Custodial Account, or the purpose or propriety or tax
treatment of any distribution ordered in accordance with Article IV or Sections
15, 16 or 17 of Article XI, which matters are the sole responsibility of the
Responsible Individual or the Designated Beneficiary or the Designated
Beneficiary's beneficiary, as the case may be.
23. The Custodian shall be responsible solely for performance of those
duties expressly assigned to it in this Agreement, and does not assume any
responsibility as to duties assigned to anyone else hereunder or by operation of
law.
24. When accepted by the Custodian, this Agreement is accepted in and
shall be construed and administered in accordance with the laws of the state
where the principal offices of the Custodian are located. Any action involving
the Custodian brought by any other party must be brought in a state or federal
court in such state.
This Agreement is intended to qualify under Code Section 530 as an
education individual retirement Custodial Account and to entitle the Designated
Beneficiary to the tax-free withdrawal of amounts from the Custodial Account to
the extent permitted in such Code section.
If any provision hereof is subject to more than one interpretation or
any term used herein is subject to more than one construction, such ambiguity
shall be resolved in favor of that interpretation or construction which is
consistent with the intent expressed in the preceding paragraph.
However, the Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and interested parties
are referred to their own attorney for any such assurances.
25. The Depositor and the Responsible Individual should seek advice
from their respective attorneys regarding the legal consequences (including but
not limited to federal and state tax matters) of entering into this Agreement,
contributing to the Custodial Account, and ordering Custodian to make
distributions from the Account. The Depositor and Responsible Individual each
acknowledge that all such matters are their respective sole responsibility and
that Custodian is prohibited by law from rendering such advice.
26. Notwithstanding anything in the foregoing to the contrary, any
provision which is inconsistent with Section 530 of the Code or any regulations
promulgated under said section of the Code shall be disregarded and this
Agreement shall be administered in accordance with said regulations.
27. The legal documents governing the Custodial Account are the
provisions of the Terms and Conditions for Education IRAs of this Agreement and
the provisions of the Registration Form.
28. Articles I through X of the Terms and Conditions for Education
IRAs of this Agreement are in the form promulgated by the Internal Revenue
Service as Form 5305-EA. It is anticipated that, if and when the Internal
Revenue Service promulgates changes to Form 5305-EA, the Custodian will amend
this Agreement correspondingly.
29. The Depositor and the Responsible Individual acknowledge that they
have received and read the Disclosure Statement relating to the Custodial
Account. The Depositor and the Responsible Individual further acknowledge that
they have received and read current prospectuses for each Fund in which the
Custodial Account is invested and the Education Individual Retirement Account
Disclosure Statement. The Depositor and the Responsible Individual represent
under penalties of perjury that their respective Social Security numbers (or
other Taxpayer Identification Number) and the Social Security Number of the
Designated Beneficiary as stated in the Registration Form are correct.
30. The Responsible Individual agrees to provide all information as
may be necessary to prepare reports required under Section 530(h) of the Code to
the Custodian.
31. The Custodian will submit reports to the Internal Revenue Service
and the Responsible Individual or Designated Beneficiary (or Depositor) at such
time and manner and containing such information as prescribed by the Internal
Revenue Service.
32. The Responsible Individual or the Designated Beneficiary and the
Custodian each shall furnish to the other such information relevant to the
Custodial Account as may be required under the Code and regulations issued or
forms adopted by the Internal Revenue Service there under or as may otherwise be
required for the proper administration of the Custodial Account.
33. The Responsible Individual, the Designated Beneficiary and/or the
Depositor shall file all reports to the Internal Revenue Service which may or
are required of any of them by law, and the Custodian may have no duty to advise
either concerning or compliance with such requirement, or monitor such
compliance.
* * *
PURPOSE. This model custodial account may be used by an individual who wishes to
adopt an Education Individual Retirement Account under Code Section 530. When
fully executed by the Depositor, Responsible Individual and the Custodian, an
Education Individual Retirement Custodial Account shall be established for the
benefit of the Designated Beneficiary which meets the requirements of Section
530. This Account must be created in the United States for the exclusive benefit
of the Designated Beneficiary.
The Designated Beneficiary's Social Security Number will serve as the
identification number of his or her individual retirement account
For more information, see the accompanying required disclosure
statement or get IRS Notice 97-60.
12
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April 1998
SPECIFIC INSTRUCTIONS
ARTICLE XI
This Article and any that follow it may incorporate additional
provisions that are agreed upon by the Depositor or the Responsible Individual
or Designated Beneficiary and Custodian to complete the agreement. These may
include, for example: definitions, investment powers, voting rights, exculpatory
provisions, amendment and termination, removal of custodian, custodian's fees,
state law requirements, beginning date of distributions, accepting only cash,
treatment of excess contributions, prohibited transactions with the Designated
Beneficiary, etc. Use additional pages if necessary and attach them to this
form.
13
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EXHIBIT 99.B14(C)
THE GREEN CENTURY FUNDS
403(B)(7) CUSTODIAL ACCOUNT AGREEMENT
<PAGE> 2
THE GREEN CENTURY FUNDS
403(b)(7) CUSTODIAL ACCOUNT AGREEMENT
This 403(b)(7) custodial account agreement is established between the
Employee whose name appears on the Account Registration Form and the Custodian
to provide for the Employee's retirement and for the support of his or her
Beneficiaries after death. Amounts held in such Account will be invested in
shares of mutual funds administered by Green Century Capital Management, Inc.,
in accordance with this Agreement and with applicable provisions of the Employee
Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986, as
each may be amended. This Agreement is effective on the date on which the
Custodian accepts the Account Registration Form and credits an initial
Contribution to the Account of the Employee. The Custodian and the Employee, and
if applicable, the Employer, hereby agree as follows:
ARTICLE I: DEFINITIONS
ACCOUNT means the account established and maintained by the Custodian
for the Employee pursuant to this Agreement.
AGREEMENT means this custodial account agreement and the Account
Registration Form completed by the Employee and, if applicable, the Employer.
ACCOUNT REGISTRATION FORM means the form signed by the Employee, the
Custodian, and, if applicable, the Employer, and by which the parties thereto
adopt the provisions of this Agreement. Upon acceptance by the Custodian, the
Account Registration Form shall be incorporated by reference into, and deemed to
be a part of, this Agreement.
AFTER-TAX CONTRIBUTION means a contribution made by the Employee to the
Account, other than a Rollover, Transfer, or Salary Reduction Contribution.
After-Tax Contributions may only be made pursuant to the terms of a Plan
maintained by the Employer.
BENEFICIARY means the person or persons (including a trust or estate)
so designated in accordance with Section 9.1 of this Agreement.
CODE means the Internal Revenue Code of 1986, as amended.
<PAGE> 3
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CONTRIBUTIONS shall mean Salary Reduction Contributions, Employer
Contributions, After-Tax Contributions, and Rollovers or Transfers to the
Account.
CUSTODIAN means Investors Bank & Trust Company and any successor
thereto designated in accordance with Section 10.3 of this Agreement.
DISABILITY means the inability of the Employee to engage in any
substantial gainful activity because of any medically determinable physical or
mental impairment which can be expected to result in death or to be of
long-continued and indefinite duration, determined in accordance with Section
72(m)(7) of the Code and any Regulations thereunder as amended from time to
time.
ELIGIBLE ROLLOVER DISTRIBUTION means, effective January 1, 1993, any
distribution of all or any portion of the balance to the credit of an Employee's
Account, except: (1) substantially equal periodic payments made over (a) the
life of the Employee (or the joint lives of the Employee and the Employee's
designated Beneficiary), (b) the life expectancy of the Employee (or the joint
life and last survivor expectancy of the Employee and the Employee's designated
Beneficiary), or (c) a specified period of ten or more years; (2) minimum
required distributions; (3) the distribution of After-Tax Contributions; (4)
corrective distributions of excess aggregate contributions as described in
Regulation Section 1.401(m)-1(e)(3), plus the income attributed to these
corrective distributions; (5) loans treated as distributions under Section 72(p)
of the Code; (6) defaulted loans that are deemed distributions; (7)
distributions on account of death to a non-spouse Beneficiary; and (8)
distributions pursuant to a qualified domestic relations order to a non-spouse
alternate payee.
EMPLOYEE means the individual who is entitled to establish an Account
by reason of his or her employment by an Employer, who has established an
Account hereunder.
EMPLOYER means the employer who is listed on the Account Registration
Form that is: (1) an entity exempt from taxation under Section 501(a) of the
Code by virtue of qualification under Section 501(c)(3) of the Code, or (2) a
State, a political subdivision of a State, or an agency or instrumentality of
either, provided the Employee performs services for an educational organization
described in Section 170(b)(1)(A)(ii) of the Code.
EMPLOYER CONTRIBUTION means any amount contributed by the Employer to
the Account, pursuant to the terms of the Employer's
<PAGE> 4
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Plan. Employer Contributions do not include Salary Reduction Contributions or
After-Tax Contributions. Employer Contributions may only be made pursuant to the
terms of a Plan maintained by the Employer.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
INVESTMENT PROVIDER means Green Century Capital Management, Inc., or
its successor or any affiliate.
PLAN means the 403(b) plan or program, if any, established by the
Employer.
REGULATION means a Treasury regulation promulgated under the Code.
ROLLOVER means a contribution to or distribution from the Account which
satisfies the definition of an Eligible Rollover Distribution.
SALARY REDUCTION CONTRIBUTION means the amount not included in the
Employee's compensation pursuant to a written salary reduction agreement, which
amount shall be and is transmitted by the Employer to the Custodian for
contribution to the Employee's Account. An Employer must permit each Employee to
make an annual contribution of more than $200 in accordance with a salary
reduction agreement except an Employee who is any of the following: (1) a
participant in an eligible deferred compensation plan pursuant to Code Section
457, a qualified cash or deferred arrangement pursuant to Code Section 401(k) or
another Code Section 403(b) annuity contract or custodial account; (2) a
nonresident alien described in Code Section 410(b)(3)(C); (3) a student
performing services for an employer that is an educational institution; (4) an
individual who normally works fewer than 20 hours per week; or (5) such other
individual as may be excluded pursuant to Code Section 403(b)(12)(A)(ii) and the
Regulations and other guidance issued thereunder.
SHARES means shares of any mutual fund (as defined in Section
403(b)(7)(C) of the Code) for which the Investment Provider acts as
administrator, and which is available for investment hereunder.
TRANSFER means a transfer of assets between the Account and: (i)
another custodial account described in Section 403(b)(7) of the Code, (ii) an
annuity contract qualified under Section 403(b)(1) of the Code, or (iii) an
individual retirement account or individual retirement
<PAGE> 5
-4-
annuity described in Section 408 of the Code (provided such assets are
attributable solely to a rollover contribution from one or more such annuity
contracts or custodial accounts).
ARTICLE II: ESTABLISHMENT OF THE CUSTODIAL ACCOUNT
2.1 GENERAL. In accordance with this Agreement, and pursuant to Section
403(b)(7) of the Code, the Custodian shall establish an Account to hold any
Contributions made by or on behalf of the Employee and the Shares in which such
Contributions are invested.
ARTICLE III: CONTRIBUTIONS TO THE CUSTODIAL ACCOUNT
3.1 LIMITATIONS ON CONTRIBUTIONS.
(a) The amount of Salary Reduction Contributions credited to the
Employee's Account in any calendar year shall not exceed the limit then in
effect under Section 402(g) of the Code (the "402(g) Limit"). If the Employee
determines that his or her Salary Reduction Contributions for a calendar year
have exceeded the 402(g) Limit, the Employee may notify the Custodian, on or
before March 1 of the following calendar year, that such excess deferrals have
been made on his or her behalf (under this and any other arrangement subject to
Section 402(g)). If such a notice is properly given, then, in accordance with
the written directions of the Employee delivered with such notification, the
Custodian shall distribute to the Employee, pursuant to Section 402(g)(2) of the
Code and on or before the next following April 15, the amount of such excess
Salary Reduction Contributions (and any income attributable thereto) allocated
to this Account by the Employee.
(b) Salary Reduction Contributions and Employer Contributions (and
forfeitures, if applicable) which are credited to the Employee's Account in any
taxable year of the Employee shall not exceed an amount equal to the lesser of:
(i) the amount permitted to be contributed in that year in accordance with the
provisions of Section 415 of the Code (the "415 Limitation") or (ii) the
Employee's Exclusion Allowance as determined in accordance with the provisions
of Section 403(b)(2) of the Code, as modified by Section 415(l)(2) and 457(c)(2)
thereof ("the Exclusion Allowance"), for that year. After-Tax Contributions to
the Account are also subject to the 415 Limitation. If
<PAGE> 6
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the Employee determines that his or her Salary Reduction Contributions, Employer
Contributions (and forfeitures, if applicable) and After-Tax Contributions made
by or on behalf of the Employee in a taxable year of the Employee have exceed
the foregoing limitations, the Employee may notify the Custodian in writing that
such excess contributions have been made on his or her behalf and request a
refund of such amount. If such a notice is properly given, then, as soon as
practicable after the Custodian receives such notification and unless
Regulations or other guidelines prohibit such refunds, the Custodian shall
redeem Shares held in the Account as necessary to obtain funds equal to the
amount of the excess contribution and shall refund that amount to the Employer
for the benefit of the Employee.
(c) No Employer Contribution shall be made in respect of
compensation in excess of the limitations imposed by Section 401(a)(17) of the
Code.
(d) Neither the Custodian nor the Investment Provider shall be
responsible for or have any obligation: (i) to determine whether Salary
Reduction Contributions, Employer Contributions or After-Tax Contributions by or
on behalf of any Employee exceed the Employee's 402(g) Limit, 415 Limit, or
Exclusion Allowance, (ii) to take any action with respect to any such excess
contributions in the absence of appropriate instructions from the Employee; or
(iii) to resolve any issues relating to any tax consequences with respect to
Contributions, earnings, or distributions.
3.2 ROLLOVERS AND TRANSFERS TO AND FROM THE ACCOUNT. Upon the
Employee's written request, the Custodian shall receive Rollovers and Transfers.
The Custodian shall not accept any Rollover or Transfer unless it is made in
cash (or its equivalent). The Custodian, upon written direction of the Employee,
shall distribute the assets held under this Agreement as a Rollover or Transfer
to a successor custodial account for the Employee's benefit. Neither the
Custodian nor the Investment Provider assume any responsibility for tax
consequences in accepting or making any such Rollover or Transfer. The Employee
shall have the sole responsibility to ensure that any such Rollover or Transfer
to or from the Account satisfies all requirements of the Code and any other
applicable law.
3.3 FORM OF CONTRIBUTIONS. All Contributions made under this Agreement
shall be deposited in the form of cash (or its equivalent).
<PAGE> 7
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3.4 OTHER PROVISIONS. Any amounts received or transferred by the
Custodian under this Agreement shall be accompanied by such instructions,
records and other documents as the Custodian deems necessary. No Contribution
will be credited to the Account for any period after the termination of the
Employee's employment with the Employer (including for this purpose any
successor employer described in Section 403(b)(1)(A) of the Code that maintains
the Account for the benefit of the Employee). Neither the Custodian nor the
Investment Provider shall be obligated to determine the amount of any
Contribution due or acceptable, or to collect any Contribution from the Employee
or the Employer.
ARTICLE IV: INVESTMENT OF AMOUNTS HELD IN THE CUSTODIAL ACCOUNT; VOTING
4.1 IN GENERAL. Except as otherwise specifically provided herein, the
Custodian shall invest the cash received by it for the Employee's Account in
Shares and fractional portions thereof as directed by the Employee.
4.2 INVESTMENT DIRECTION. The Employee shall direct the Custodian with
respect to the investment of all amounts in his or her Account. Such investments
shall be made in Shares, in such proportions and in such amounts as the Employee
may direct from time to time by notice to the Custodian (in such form as may be
acceptable to the Custodian). However, the Custodian or the Investment Provider
may establish minimum amounts for any investment. The Custodian shall be
responsible for the execution of all investment directions, and the Custodian
shall maintain or cause to be maintained adequate records thereof. However, if
any such orders are not received as required or, if received, are unclear or
incomplete in the opinion of the Custodian, all or a portion of the assets of
the Account may be held uninvested without liability for loss of income,
interest or appreciation pending receipt of complete orders or clarification.
Neither the Custodian nor the Investment Provider shall be liable for interest
on temporary cash balances, if any, maintained in the Account.
4.3 INVESTMENT EXCHANGES. The Employee may at any time direct the
Custodian to exchange all or any portion of the Shares held in the Employee's
Account for other Shares. Such direction may be provided in writing or in such
other manner as may be acceptable to the Custodian.
<PAGE> 8
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4.4 REINVESTMENT. All cash dividends and capital gain distributions
received on Shares held in the Account shall be reinvested in like Shares.
4.5 OWNERSHIP OF SHARES. Any Account maintained in connection herewith
shall be in the name of the Custodian for the benefit of the Employee. All
Shares held in the Account shall be registered in the name of the Custodian or
of a suitable nominee selected by the Custodian (and the same nominee may be
used with respect to assets of other investors whether or not held under
agreements similar to this one or in any capacity whatsoever).
4.6 VOTING. The Custodian shall deliver, or cause to be executed and
delivered, to the Employee all notices, prospectuses, financial statements,
proxies and proxy soliciting materials relating to Shares held in the Account.
The Custodian shall vote Shares in accordance with written instructions of the
Employee which will be secured by the Custodian. No Shares shall be voted, and
no other action shall be taken pursuant to such documents, except upon receipt
of adequate written instructions from the Employee.
4.7 RESPONSIBILITY FOR INVESTMENT. Neither the Custodian nor the
Investment Provider, nor any other party providing services with respect to the
Account, assumes any responsibility for rendering advice or questioning any
direction with respect to the investment, reinvestment, retention or sale of
Shares held in the Employee's Account, nor shall such party be liable for any
loss which results from Employee's exercise of control over his or her Account.
The Employee shall have and exercise exclusive responsibility for and control
over the investment of the assets of his or her Account in accordance with the
terms of this Agreement. Any direction by an Employee or Beneficiary hereunder
regarding the purchase or exchange of Shares on behalf of the Account shall be
deemed the acknowledgment of the Employee or Beneficiary that he or she has
received and read the current prospectus relating to the Shares in which his or
her Account is invested.
ARTICLE V: DISTRIBUTIONS FROM THE CUSTODIAL ACCOUNT
5.1 GENERAL. In accordance with the Employee's written instructions,
the Custodian shall, from time to time, make
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distributions out of the Account to the Employee in the manner and amounts as
may be specified by the Employee.
Distribution of the assets of the Account shall (subject to Section 5.8
hereof) be made in accordance with the provisions of this Article V as the
Employee (or the Employee's Beneficiary if the Employee is deceased) shall elect
by written instructions to the Custodian; provided, however, that distributions
be made in accordance with the following requirements and otherwise comply with
Sections 403(b) and 401(a)(9) of the Code and any Regulations applicable
thereto, including the incidental death benefit provisions of Proposed
Regulations Section 1.401(a)(9)-2, the provisions of which are incorporated by
reference.
5.2 COMMENCEMENT OF DISTRIBUTIONS. The Employee (or the Employee's
Beneficiary) may direct the Custodian in writing to distribute amounts held in
the Employee's Account only upon the occurrence of one of the following
circumstances:
(a) the Employee has died;
(b) the Employee has attained age 59 1/2;
(c) the Employee has separated from service with the Employer;
(d) the Employee meets the definition of Disability;
(e) the Employee has encountered a "financial hardship" within the
meaning of Section 403(b)(7)(A)(ii) of the Code, provided that the amount of the
distribution pursuant to this clause does not exceed the lesser of the amount
necessary to relieve the financial hardship or the total amount of the
contributions made to the Account pursuant to a salary reduction agreement,
exclusive of any earnings thereon; or
(f) the Employee elects to withdraw excess Salary Reduction
Contributions in accordance with the provisions of this Agreement.
If the Employee is disabled, he or she may give notice to the Custodian
of such Disability and request that up to the balance of the Account be
distributed. The Custodian, with a reasonable time after submission of
satisfactory proof of such Disability, shall order the distribution of the
balance of the Account to the Employee or such portion as the Employee
requested.
<PAGE> 10
-9-
5.3 MINIMUM DISTRIBUTIONS. Notwithstanding the foregoing, distributions
to the Employee must begin no later than the April 1 following the close of the
calendar year in which the Employee attains age 70 1/2 or terminates employment,
whichever is later. The amount to be distributed under this minimum distribution
provision shall be determined in accordance with Proposed Regulations Section
1.401(a)(9)-2.
<PAGE> 11
-10-
5.4 FORMS OF DISTRIBUTION. The Employee may elect, in a manner
acceptable to the Custodian, to have his or her Account balance distributed in:
(a) A single sum payment.
(b) An annuity contract purchased from an insurance company of the
Employee's choosing, the payments from which shall be made in equal or
substantially equal monthly, quarterly, or annual payments over the life of the
Employee or over the joint and last survivor lives of the Employee and his or
her designated Beneficiary. The Custodian shall transfer to such insurance
company all or a portion of the Employee's Account balance, as directed by the
Employee, to accomplish such purpose. Upon such transfer, the Custodian shall
have no continuing obligation with respect to distributions to the Employee
under this Agreement.
(c) Equal or substantially equal annual payments over a specified
period that may not be longer than the Employee's life expectancy.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor expectancy
of the Employee and his or her designated Beneficiary.
In determining the installments specified in (c) and (d) above, the
Employee (or his or her Beneficiary) shall ensure that the payment amounts will
comply with the Code and Regulations promulgated thereunder with respect to
required minimum payments in such cases. Neither the Custodian nor the
Investment Provider shall have responsibility for such compliance, including the
recalculation of life expectancy of the Employee and/or the Employee's spouse.
5.5 DISTRIBUTIONS UPON DEATH. If the Employee dies before his or her
entire interest is distributed to him or her, the entire remaining interest will
be distributed as follows:
(a) If the Employee dies on or after distribution is considered to
have begun under applicable Regulations, the remaining interest shall be
distributed to the Beneficiary at least as rapidly as under the method of
distribution used to satisfy Section 401(a)(9)(A)(ii) of the Code and in effect
as of the date of the Employee's death.
(b) If the Employee dies before distribution of his or her
interest is considered to have begun under applicable Regulations, the entire
remaining interest will, at the election of the Employee or, if the
<PAGE> 12
-11-
Employee has not so elected, at the election of the Beneficiary or
Beneficiaries, either:
(i) be distributed by the December 31 of the year containing
the fifth anniversary of the Employee's death; or
(ii) be distributed in equal or substantially equal payments
over the life or life expectancy of the designated Beneficiary or Beneficiaries
starting by December 31 of the year following the year of the Employee's death.
If, however, the Beneficiary is the Employee's surviving spouse, then: (a) this
distribution is not required to begin before December 31 of the year in which
the Employee would have turned age 70 1/2; and (b) if the Employee's surviving
spouse dies before distribution to him or her begins, this clause shall be
applied as if the surviving spouse were the Employee.
(c) If the Employee dies before his or her entire interest has
been distributed, no additional Contributions may be accepted in the Account.
5.6 JOINT AND SURVIVOR SPOUSAL ANNUITY. Notwithstanding any provision
of this Agreement, including this Article V, to the contrary, distributions
shall be made by purchase from an insurance company of an annuity contract that
satisfies the requirements for a joint and survivor annuity or a qualified
preretirement survivor annuity (as defined in ERISA) if the Employer provides
written notice to the Custodian that amounts held in Accounts are (or were)
maintained in connection with a Plan subject to Sections 205 and 206 of ERISA,
and that such annuity distribution is required to satisfy the requirements of
ERISA. Distribution shall be accomplished by the Custodian's transfer of the
Employee's Account balance to an insurance company of the Employer's or
Employee's choosing for the purchase of such annuity. Upon such transfer, the
Custodian shall have no continuing obligation with respect to distributions to
the Employee under this Agreement. Under no circumstances shall the Custodian be
responsible for: (a) determining whether distributions must be made in the form
of a qualified joint and survivor annuity or a qualified preretirement survivor
annuity under the spousal survivor annuity requirements of ERISA; (b) ensuring
that spousal consent has been properly received with respect to any distribution
other than a qualified joint and survivor annuity; or (c) providing any notice,
explanation, or form required to be provided in accordance with the survivor
annuity provisions of the Code or ERISA.
<PAGE> 13
-12-
5.7 LOANS. None of the assets in the Account by the Employee shall be
pledged or otherwise used as security for a loan, or any loan or other extension
of credit from the Account to the Employee.
5.8 RESPONSIBILITY FOR DISTRIBUTIONS. The Custodian shall, from time to
time, in accordance with instructions in writing from the Employee, made
distributions out of the Account to the Employee in the manner and amounts as
may be specified in such instructions. Notwithstanding any provision of this
Article to the contrary, the Custodian assumes and shall have no responsibility
to make any distribution to the Employee (or to the Employee's Beneficiary if
the Employee is deceased) unless and until such written instructions specify the
occasion for such distribution, the elected manner of distribution, and any
other information that may be required. Prior to making any such distribution
from the Account, the Custodian shall be furnished with any and all
applications, certificates, tax waivers, signature guarantees, and other
guarantees, and other documents (including proof of any legal representative's
authority) deemed necessary or advisable by the Custodian, but the Custodian
shall not be liable for complying with written instructions which appear on
their face to be genuine, or for refusing to comply if not satisfied such
instructions are genuine, and assumes no duty of further inquiry.
Neither the Custodian, the Investment Provider, nor any of their
respective affiliates shall have any duty: (a) to ascertain whether a Rollover
or a Transfer is properly made in accordance with applicable provisions of the
Code or any Plan or other retirement arrangement; (b) to ascertain whether any
distribution is sufficient for purposes of the rules described in this Article
V; (c) to make distributions in the form of an annuity contract under this
Article V; (d) to confirm the existence of a Disability; (e) to pay any tax
penalty or other damages resulting from any inadvertent failure by the Custodian
to make a distribution under this Agreement; or (f) to determine the amount,
character, or timing of any distribution to the Employee or any Beneficiary or
any other person (in particular, whether and to what extent distribution is
required under Section 401(a)(9) of the Code or whether distribution must be
made in the form of a qualified joint and survivor annuity or a qualified
preretirement survivor annuity under the spousal survivor annuity requirements
of ERISA).
Upon receipt of proper written instructions as required above, the
Custodian shall cause the assets of the Account to be distributed in cash, as
specified in such written order. If the Employee (or, following the Employee's
death, the Employee's Beneficiary) fails to
<PAGE> 14
-13-
direct the Custodian to make distributions from the Account by the time that
such distributions are required to begin in accordance with Section 5.3 hereof,
the Custodian and the Investment Provider may assume that the Employee (or the
Beneficiary) is meeting the minimum distribution requirements from another
custodial account maintained by the Employee, and the Custodian and the
Investment Provider shall be fully protected in so doing.
ARTICLE VI: LIABILITY AND INDEMNIFICATION
6.1 FIDUCIARY OBLIGATIONS. The Custodian and the Investment Provider
shall be agents for the Employee to perform the duties conferred on them,
respectively, hereunder, as directed by the Employee. Neither the Custodian nor
the Investment Provider shall be considered to be a fiduciary or plan
administrator within the meaning of applicable provisions of the Code or ERISA,
or any other law or regulation. If the Account holds assets of a plan subject to
ERISA, the named fiduciary of such plan, for purposes of Section 402(a)(1) of
ERISA, shall be the Employer or such other person or entity who is identified as
such in, or pursuant to a procedure in, a separate plan document, provided that
in no event shall the Custodian or the Investment Provider be considered such
named fiduciary. The Employer (or such other named fiduciary) shall have the
responsibility of ensuring that such plan complies with the applicable
requirements of ERISA and the Custodian and the Investment Provider shall have
no responsibility with respect to such matters. If the Account holds assets of a
plan not subject to ERISA, the named fiduciary of such plan shall be the
individual Employee who establishes this Agreement with the Custodian.
Neither the Custodian nor the Investment Provider shall be responsible
for the collection of Contributions, the deductibility of any Contribution or
the propriety of or the amount or timing or tax treatment of any Contributions
under this Agreement or the purpose or propriety or tax treatment of any
distribution ordered in accordance with this Agreement. Neither the Custodian
nor the Investment Provider shall be liable or otherwise responsible for any
loss that results from any action or omission of the Custodian in connection
with its interpretation and application of this Agreement and the matters
related to it, if such action or omission is reasonable under the circumstances.
Neither the Custodian nor the Investment Provider assumes or has any duty of
inquiry about any matter arising under this Agreement.
<PAGE> 15
-14-
6.2 INDEMNIFICATION BY THE EMPLOYEE. The Employee hereby agrees to
indemnify and hold harmless the Custodian and the Investment Provider and their
respective affiliates, agents, employees, successors and assigns from and
against any and all liability, claims, loss, damages, costs or expenses
(including reasonable attorneys' fees and amounts paid in settlement) which may
be incurred or paid out by reason of any alleged or actual act, or failure to
act, on the part of the Employee, the Employer, or any other person.
The requirement to provide such indemnification shall survive the
termination of this Agreement. Except as required by law, neither the Custodian
nor the Investment Provider shall be obligated or expected to commence or to
defend a legal action or proceeding in connection with this Agreement, unless
the Custodian and/or the Investment Provider and the Employee agree that the
Custodian and/or the Investment Provider will defend a given legal action and
the Custodian and/or the Investment Provider is fully indemnified for so doing
to its satisfaction.
6.3 INDEMNIFICATION BY THE EMPLOYER. The Employer hereby agrees to
indemnify and hold harmless the Custodian and the Investment Provider and their
respective affiliates, agents, employees, successors and assigns from and
against any and all claims, loss, damages, costs or expenses (including
reasonable attorneys' fees and amounts paid in settlement) which may be incurred
or paid out by reason of any alleged or actual act, or failure to act, on the
part of the Employer, the Employee, or any other person.
The requirement to provide such indemnification shall survive the
termination of this Agreement. Except as required by law, neither the Custodian
nor the Investment Provider shall be obligated or expected to commence or to
defend a legal action or proceeding in connection with this Agreement, unless
the Custodian and/or the Investment Provider and the Employer agree that the
Custodian and/or the Investment Provider will defend a given legal action and
the Custodian and/or the Investment Provider is fully indemnified for so doing
to its satisfaction.
6.4 RELIANCE. Whenever the Employee or, if applicable, the Employer is
responsible for any direction, notice, warranty, representation, or instruction
under this Agreement, the Custodian shall be entitled to assume the truth of any
statement made, or believed to have been made, by the Employee or, if
applicable, the
<PAGE> 16
-15-
Employer, and the Custodian shall be under no duty of further inquiry and shall
have no liability with respect to any action taken in reliance upon the truth of
such statement.
6.5 RESPONSIBILITIES AMONG THE PARTIES. The Custodian and Investment
Provider shall each be responsible solely for performance of those duties
expressly assigned to it in this Agreement, and neither assumes any
responsibility or liability with respect to the duties, acts or omissions of the
other, or of the Employer, the Employee or any other party hereunder or by
operation of law. If for any reason the responsibilities assigned to the
Employer hereunder are not discharged by the Employer or assumed by any other
employer, then such responsibilities shall belong to the Employee (and not the
Custodian or Investment Provider).
ARTICLE VII: RECORDS AND REPORTS
7.1 GENERAL. The Custodian and the Investment Provider shall keep or
cause to be kept adequate records of the transactions they are required to
perform hereunder. In addition to any reports required by the Code or the
Regulations thereunder, the Custodian shall cause to be mailed to the Employee
in respect of each tax year a statement showing the Account as of the end of
such year. If, within sixty (60) days after such mailing, the Employee has not
given the Custodian or the Investment Provider written notice of any exception
or objection thereto, the annual accounting shall be deemed to have been
approved, and in such case, or upon the written approval of the Employee, the
Custodian and the Investment Provider shall be released, relieved and discharged
with respect to all matters and statements set forth in such accounting as
though the account had been settled by judgment or decree of a court of
competent jurisdiction.
ARTICLE VIII: TAXES, FEES, ETC.
8.1 GENERAL. The custodial fee currently in effect is an annual
maintenance fee of $10 per account. The Employee may pay the first annual
maintenance fee at the time of delivery of the Account Registration Form to the
Custodian, by forwarding a separate check for $10, made payable to Green Century
Funds. In subsequent years, the annual maintenance fee may be paid by forwarding
a check to the Custodian when notified of the payment option. If payment is not
forwarded by December 20 of each year, Green Century Funds will
<PAGE> 17
-16-
obtain payment directly from the Account by redeeming a sufficient number of
Shares held in the Account. The Custodian may substitute a different fee
schedule at any time upon thirty (30) days' notice in writing to the Employee.
Any income taxes or other taxes of any kind that may be levied or
assessed against the assets of the Account, or the income arising therefrom, any
transfer taxes incurred, any expenses incurred by the Custodian in the
performance of its duties including fees for legal services rendered to the
Custodian, and expenses as set forth in the applicable prospectus may be
similarly paid from the assets of the Account and shall not be an obligation of
the Custodian. The Custodian and the Investment Provider shall be empowered to
take any action necessary to effectuate the provisions of this paragraph and
shall have no liability to the Employee therefor.
ARTICLE IX: MISCELLANEOUS PROVISIONS
9.1 BENEFICIARY DESIGNATION. The Employee shall have the right by
written notice to the Custodian to designate (or to change) one or more
Beneficiaries to receive any amount remaining in the Account in the event of his
or her death prior to the complete distribution of all assets in the Account.
Upon the Employee's death, the Employee's Beneficiary shall have the same rights
and responsibilities as the Employee had during his or her life with respect to
the Account. Any such designation (or change of designation) of Beneficiary may
be on the Account Registration Form or on a written instrument acceptable to the
Custodian, signed by the Employee and filed with the Custodian. Any designation
or change of designation shall be effective upon receipt by the Custodian. Any
change of designation received by the Custodian will revoke all prior
designations previously filed with the Custodian. If no such designation is in
effect on a Employee's death, or if all designated Beneficiaries have
predeceased the Employee, the Employee's surviving spouse, or if he or she has
no surviving spouse, his or her estate shall be deemed to be the Beneficiary.
9.2 COURT ORDERS. The Custodian shall be fully protected, and shall
have no liability or responsibility with respect to any action or omission: (a)
in reliance on the terms of any order of a court or governmental agency
(including a domestic relations order or qualified domestic relations order)
believed by the Custodian to be genuine and
<PAGE> 18
-17-
properly given; or (b) in reliance on its belief that any such order either is
not genuine or was not properly given.
9.3 EXCLUSIVE BENEFIT. At no time shall it be possible for any part of
the assets of the Account to be used for, or diverted to, purposes other than
for the exclusive benefit of the Employee or the Employee's Beneficiaries except
as specifically provided in this Agreement.
9.4 ALIENATION OR ASSIGNMENT. Except as provided in Sections 8.1 and
9.2 hereof, amounts in the Account and the benefits provided hereunder shall be
non-forfeitable and shall not be subject to alienation assignment, garnishment,
attachment, execution or levy of any kind, and any attempt to cause such
benefits to be so subjected shall not be recognized, except to such extent as
may be required by law.
9.5 TAX TREATMENT. The Custodian and Investment Provider have no
responsibility with respect to the tax treatment of Accounts and amounts
contributed to, earned thereon, and distributed therefrom, and shall have no
responsibility with regard to the initial or continued tax-favored treatment of
the Account under Section 403(b)(7) of the Code.
ARTICLE X: GENERAL PROVISIONS
10.1 AMENDMENT. The Employee and Employer hereby delegate to the
Custodian the power to amend at any time and from time to time the terms and
provisions of this Agreement and hereby consent to all such amendments, provided
that an amendment is not contrary to any applicable provision of the Code, ERISA
or any other applicable law. Any such amendments shall be effective when the
notice of such amendments is mailed to the addresses of the Employee and the
Employer indicated by the Custodian's records.
10.2 TERMINATION. This Agreement shall terminate and be of no further
force or effect (except for Sections 6.2 and 6.3 which shall survive such
termination of the Account and this Agreement) coincident with the complete
distribution of the assets of the Account, and the Custodian shall have no
further duties or responsibilities with respect to the Account after its
termination.
<PAGE> 19
-18-
10.3 RESIGNATION OR REMOVAL OF THE CUSTODIAN. The Custodian may resign
at any time upon ninety (90) days' written notice to the Employee and may be
removed by the Employee at any time upon ninety (90) days' written notice to the
Custodian. Upon the resignation or removal of the Custodian, a successor
Custodian shall be appointed by the Employee within ninety (90) days of such
resignation or removal and in the absence of such appointment, the Custodian may
designate a successor unless this Agreement is sooner terminated. Any successor
custodian shall be a bank (as defined in Section 408(n) of the Code) or another
person found qualified to act as a custodian by the Secretary of the Treasury,
or his or her delegate, in accordance with applicable provisions of the Code and
Regulations. The appointment of a successor custodian shall be effective upon
receipt by Custodian of such successor's written acceptance which shall be
submitted to the Custodian and to the Employee. The successor custodian shall be
subject to the provisions of this Agreement (or any successor thereto) on the
effective date of its appointment. The Custodian shall not be responsible or
liable for any acts or omissions of any successor custodian. On the effective
date of its resignation, the Custodian shall transfer to the designated
successor custodian the assets and records (or copies thereof) of the Account;
provided, however, that the Custodian may retain whatever assets it deems
necessary for payment of its fees, costs, expenses, compensation, and any other
liabilities which constitute a charge on or against the assets of the Account or
on or against the Custodian.
10.4 NOTICES. Any notice herein required or permitted to be given to
the Custodian shall be sufficiently given if mailed to the Custodian by first
class mail to the Green Century Funds, care of Investors Bank & Trust Company,
P.O. Box 9130, Boston, MA 02117-9130, or to such other address as the Custodian
shall provide the Employee from time to time in writing, stating that such other
address shall be used for purposes of this Agreement. Any notice herein required
or permitted to be given to the Employee shall be sufficiently given if mailed
to the Employee at the Employee's address appearing on the Account Registration
Form, or at such other address as the Employee shall have provided the Custodian
from time to time in writing, which writing shall state that such other address
is to be used for purposes of this Agreement.
10.5 GOVERNING LAW. When accepted by the Custodian, this Agreement is
accepted in and shall be construed and administered in
<PAGE> 20
-19-
accordance with ERISA and, to the extent not preempted by federal law or ERISA
is inapplicable, the laws of the state where the principal offices of the
Custodian are located. Any action involving the Custodian brought by any other
party must be brought in a state or federal court in such state.
10.6 CONSTRUCTION. Wherever used in the Agreement, the masculine gender
shall include the feminine gender, and singular shall include the plural, unless
the context indicated otherwise. If any provision hereof is subject to more than
one interpretation or any term used herein is subject to more than one
construction, such ambiguity shall be resolved in favor of that interpretation
or construction which is consistent with Section 403(b) of the Code and
Regulations, rulings, or other interpretations thereunder. However, the
Custodian shall not be responsible for whether or not such intentions are
achieved through use of this Agreement, and Employee is referred to Employee's
attorney for any such assurances.
10.7 LEGAL ADVICE. Employee and, if applicable, Employer should seek
advice from their respective counsel regarding the legal consequences (including
but not limited to federal and state tax matters) of entering into this
Agreement, contributing to the Account, and ordering Custodian to make
distributions from the Account. Employee and Employer acknowledge that all such
matters are the responsibility of the Employee and, if applicable, the Employer,
and that Custodian is prohibited by law from rendering such advice.
10.8 DISCLOSURE. The Employee acknowledges that he or she has received
and read the Agreement. The Employee further acknowledges that he or she has
received and read the current prospectus relating to the Shares in which his or
her Account is invested. The Employee represents under penalties of perjury that
his or her Social Security number (or other Taxpayer Identification Number) as
stated in the Account Registration Form is correct.
10.9 PLAN CONTROLS. If the Employer maintains a Plan and is making
contributions to the Account pursuant to such Plan, the provisions of the
Employer's Plan will supersede the applicable provisions of this Agreement to
the extent any provisions of that Plan are inconsistent or conflict with this
Agreement, provided: (a) the Employer has notified the Custodian in writing of
such provisions, (b) the Employer agrees to direct the Custodian with respect to
such
<PAGE> 21
-20-
provisions; (c) such provisions are not contrary to Section 403(b) of the
Code, as amended, or any of the Regulations thereunder or applicable thereto;
and (d) such provisions do not impose any additional duties or responsibilities
upon the Custodian or the Investment Provider without their prior written
consent.
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 99.B19(a)
The undersigned hereby constitutes and appoints Amy L. Domini, Peter D.
Kinder, Steven D. Lyndenberg, John R. Elder, Molly S. Mugler and Linda T.
Gibson, and each of them, with full powers of substitution as his true and
lawful attorneys and agents to execute in his name and on his behalf in any and
all capacities the Registration Statements on Form N-1A, and any and all
amendments thereto, filed by Domini Social Equity Fund, Domini Institutional
Trust, DEVCAP Trust, and Green Century Funds (each, a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, and/or the Securities Act of
1933, as amended, and any and all instruments which such attorneys and agents,
or any of them, deem necessary or advisable to enable any of the Investors or
the Portfolio, as applicable, to comply with such Acts, the rules, regulations
and requirements of the Securities and Exchange Commission, and the securities
or Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. And one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the
22nd day of October, 1997.
/s/ Emily W. Card
---------------------------
Emily W. Card
<PAGE> 2
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Peter D.
Kinder, Steven D. Lyndenberg, John R. Elder, Molly S. Mugler and Linda T.
Gibson, and each of them, with full powers of substitution as his true and
lawful attorneys and agents to execute in his name and on his behalf in any and
all capacities the Registration Statements on Form N-1A, and any and all
amendments thereto, filed by Domini Social Equity Fund, Domini Institutional
Trust, DEVCAP Trust, and Green Century Funds (each, a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, and/or the Securities Act of
1933, as amended, and any and all instruments which such attorneys and agents,
or any of them, deem necessary or advisable to enable any of the Investors or
the Portfolio, as applicable, to comply with such Acts, the rules, regulations
and requirements of the Securities and Exchange Commission, and the securities
or Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. And one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the
22nd day of October, 1997.
/s/ Allen M. Mayes
---------------------------
Allen M. Mayes
<PAGE> 3
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Peter D.
Kinder, Steven D. Lyndenberg, John R. Elder, Molly S. Mugler and Linda T.
Gibson, and each of them, with full powers of substitution as his true and
lawful attorneys and agents to execute in his name and on his behalf in any and
all capacities the Registration Statements on Form N-1A, and any and all
amendments thereto, filed by Domini Social Equity Fund, Domini Institutional
Trust, DEVCAP Trust, and Green Century Funds (each, a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, and/or the Securities Act of
1933, as amended, and any and all instruments which such attorneys and agents,
or any of them, deem necessary or advisable to enable any of the Investors or
the Portfolio, as applicable, to comply with such Acts, the rules, regulations
and requirements of the Securities and Exchange Commission, and the securities
or Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. And one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the
22nd day of October, 1997.
/s/ William C. Osborn
---------------------------
William C. Osborn
<PAGE> 4
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Peter D.
Kinder, Steven D. Lyndenberg, John R. Elder, Molly S. Mugler and Linda T.
Gibson, and each of them, with full powers of substitution as his true and
lawful attorneys and agents to execute in his name and on his behalf in any and
all capacities the Registration Statements on Form N-1A, and any and all
amendments thereto, filed by Domini Social Equity Fund, Domini Institutional
Trust, DEVCAP Trust, and Green Century Funds (each, a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, and/or the Securities Act of
1933, as amended, and any and all instruments which such attorneys and agents,
or any of them, deem necessary or advisable to enable any of the Investors or
the Portfolio, as applicable, to comply with such Acts, the rules, regulations
and requirements of the Securities and Exchange Commission, and the securities
or Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. And one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the
22nd day of October, 1997.
/s/ Karen Paul
---------------------------
Karen Paul
<PAGE> 5
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Peter D.
Kinder, Steven D. Lyndenberg, John R. Elder, Molly S. Mugler and Linda T.
Gibson, and each of them, with full powers of substitution as his true and
lawful attorneys and agents to execute in his name and on his behalf in any and
all capacities the Registration Statements on Form N-1A, and any and all
amendments thereto, filed by Domini Social Equity Fund, Domini Institutional
Trust, DEVCAP Trust, and Green Century Funds (each, a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, and/or the Securities Act of
1933, as amended, and any and all instruments which such attorneys and agents,
or any of them, deem necessary or advisable to enable any of the Investors or
the Portfolio, as applicable, to comply with such Acts, the rules, regulations
and requirements of the Securities and Exchange Commission, and the securities
or Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. And one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the
22nd day of October, 1997.
/s/ Timothy Smith
---------------------------
Timothy Smith
<PAGE> 6
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Peter D.
Kinder, Steven D. Lyndenberg, John R. Elder, Molly S. Mugler and Linda T.
Gibson, and each of them, with full powers of substitution as his true and
lawful attorneys and agents to execute in his name and on his behalf in any and
all capacities the Registration Statements on Form N-1A, and any and all
amendments thereto, filed by Domini Social Equity Fund, Domini Institutional
Trust, DEVCAP Trust, and Green Century Funds (each, a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor (collectively with each Trust, the "Investors") in Domini Social
Index Portfolio (the "Portfolio") (insofar as each of the Investors invests all
its assets in the Portfolio), with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, and/or the Securities Act of
1933, as amended, and any and all instruments which such attorneys and agents,
or any of them, deem necessary or advisable to enable any of the Investors or
the Portfolio, as applicable, to comply with such Acts, the rules, regulations
and requirements of the Securities and Exchange Commission, and the securities
or Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. And one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the
22nd day of October, 1997.
/s/ Frederick C. Williamson, Sr.
--------------------------------
Frederick C. Williamson, Sr.
<PAGE> 1
EXHIBIT 99.B19(b)
GREEN CENTURY FUNDS
The undersigned hereby constitutes and appoints Mindy Sue Lubber, Kristina
A. Curtis and Adrienne Mai Shishko, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A and any and all amendments thereto, filed by Green Century Funds (the
"Trust") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933 and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, any may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of September, 1997.
/s/ David J. Fine
---------------------------
David J. Fine
<PAGE> 2
GREEN CENTURY FUNDS
The undersigned hereby constitutes and appoints Mindy Sue Lubber, Kristina
A. Curtis and Adrienne Mai Shishko, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A and any and all amendments thereto, filed by Green Century Funds (the
"Trust") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933 and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, any may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of September, 1997.
/s/ Douglas Husid
---------------------------
Douglas Husid
<PAGE> 3
GREEN CENTURY FUNDS
The undersigned hereby constitutes and appoints Mindy Sue Lubber, Kristina
A. Curtis and Adrienne Mai Shishko, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A and any and all amendments thereto, filed by Green Century Funds (the
"Trust") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933 and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, any may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of September, 1997.
/s/ Steven Kadish
---------------------------
Steven Kadish
<PAGE> 4
GREEN CENTURY FUNDS
The undersigned hereby constitutes and appoints Mindy Sue Lubber, Kristina
A. Curtis and Adrienne Mai Shishko, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A and any and all amendments thereto, filed by Green Century Funds (the
"Trust") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933 and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, any may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of September, 1997.
/s/ Stephen Morgan
---------------------------
Stephen Morgan
<PAGE> 5
GREEN CENTURY FUNDS
The undersigned hereby constitutes and appoints Mindy Sue Lubber, Kristina
A. Curtis and Adrienne Mai Shishko, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A and any and all amendments thereto, filed by Green Century Funds (the
"Trust") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933 and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, any may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of September, 1997.
/s/ Douglas Phelps
---------------------------
Douglas Phelps
<PAGE> 6
GREEN CENTURY FUNDS
The undersigned hereby constitutes and appoints Mindy Sue Lubber, Kristina
A. Curtis and Adrienne Mai Shishko, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A and any and all amendments thereto, filed by Green Century Funds (the
"Trust") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933 and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, any may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of September, 1997.
/s/ C. William Ryan
---------------------------
C. William Ryan
<PAGE> 7
GREEN CENTURY FUNDS
The undersigned hereby constitutes and appoints Mindy Sue Lubber, Kristina
A. Curtis and Adrienne Mai Shishko, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A and any and all amendments thereto, filed by Green Century Funds (the
"Trust") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933 and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, any may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of September, 1997.
/s/ James H. Starr
---------------------------
James H. Starr
<PAGE> 8
GREEN CENTURY FUNDS
The undersigned hereby constitutes and appoints Mindy Sue Lubber, Kristina
A. Curtis and Adrienne Mai Shishko, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A and any and all amendments thereto, filed by Green Century Funds (the
"Trust") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933 and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, any may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of September, 1997.
/s/ Wendy Wendlandt
---------------------------
Wendy Wendlandt
