<PAGE>
SEMI-ANNUAL REPORT
Green Century Balanced Fund Green Century Equity Fund January 31, 1999
An Investment For Your Future. 29 Temple Place, Boston, Massachusetts 02111
For information on the Green Century Funds(R), call 1-800-93-GREEN. For
information on 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 and
account information, call 1-800-221-5519, twenty-four hours a day.
- --------------------------------------------------------------------------------
Dear Green Century Funds Shareholder:
The Green Century Funds were founded by a partnership of
environmental advocacy organizations in 1991. Since, our mission has been to
seek solid financial returns for environmentally conscious investors while
promoting greater corporate environmental accountability. We are pleased to
report to our shareholders our progress toward these goals.
The Green Century Equity Fund delivered solid returns during calendar
year 1998,* exceeding the one-, three- and five-year averages for growth funds
as tracked by Lipper Analytical Services ("Lipper") for the periods ended
December 31, 1998./1/ The Green Century Equity Fund also earned Morningstar's
highest rating--5 stars--for its overall risk adjusted performance. The Fund
was ranked among 2,802 domestic equity funds for the three-years ended December
31, 1998./2/
The Green Century Balanced Fund's 1998 calendar year returns were
disappointing.* The portfolio manager analysis of the Balanced Fund's 1998
performance is included on page two of this Semi-Annual Report.
The Green Century Equity Fund's total one-year return for the period
ended December 31, 1998 was 32.32%, outdistancing the return for the Standard
and Poor's 500 Index (the "S&P 500")/3/ of 28.58% and well-above the 22.91%
average total return of growth funds tracked by Lipper as of the same date. As
of December 31, 1998 the three-year average annual return of the Green Century
Equity Fund was 29.61%, exceeding both the three-year average annual return of
28.23% of the S&P 500 and the 22.26% average annual total return of growth
funds tracked by Lipper. The five-year average annual total return of the
Equity Fund as of December 31, 1998 was 23.79%,/4/ behind the S&P 500's 24.06%
but beating the average annual return of growth funds tracked by Lipper of
18.66% for the same period. Since inception on June 3, 1991, the average annual
total return for the Green Century Equity Fund was 18.80% as of December 31,
1998./4/
As of January 31, 1999, the Green Century Equity Fund's one-, three-,
five-year and since inception average annual returns rose to 37.69%, 30.93%,
24.64% and 19.49% respectively; beating the average annual returns of growth
funds tracked by Lipper for the one-, three-, and five-year periods and those
of the one- and three-year average annual returns of the S&P 500 for the
periods ended January 31, 1999.
The Green Century Equity Fund invests primarily in a portfolio of 400
companies that comprise the Domini Social Index, a broadly diversified
portfolio which excludes companies with the worst environmental and social
records. As of January 31, 1999, 99.70% of the net assets of the Fund were
invested in the stocks of the 400 companies. Relative to the unscreened market
indices such as the S&P 500, the Green Century Equity Fund benefitted from its
overexposure to the telecommunications and computer industries
*The performance data quoted represents past performance and is not a guarantee
of future results. Investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
<PAGE>
and its underexposure to international oil during the six months ended January
31, 1999. During the same period, the Funds' performance was hurt by its
underexposure to the pharmaceutical and liquor industries and its overexposure
to the non-alcoholic beverage industry.
The Green Century Balanced Fund's total return for the one-year ended
December 31, 1998, was -10.10%; the average total return of balanced funds
tracked by Lipper was 13.50% for the same period./5/ As of December 31, 1998,
the three- and five-year average annual total returns of the Balanced Fund were
10.18% and 8.65%, respectively, as compared to the three- and five-year average
total returns of balanced funds tracked by Lipper of 15.80% and 13.84% as of
the same date. Since inception on March 18, 1992, the Green Century Balanced
Fund's average annual total return was 7.01%.
As of January 31, 1999 the Green Century Balanced Fund's one-year
return was -7.59%. The Fund's three-, five-year and since inception average
annual returns were 11.38%, 8.94% and 7.38% respectively.
The Green Century Balanced Fund invests primarily in the stocks and
bonds of companies that have clean environmental track records, many of which
also make positive environmental contributions. Despite a strong showing in the
first quarter ended March 31, 1998, the Green Century Balanced Fund
underperformed during calendar year 1998. According to the Fund's Portfolio
Manager, Jack Robinson, one of the reasons that the Balanced Fund lagged was
that the Fund is primarily invested in smaller companies; a sector of the
market where Mr. Robinson has found what he considers attractively priced
environmentally responsible growth companies. However, the universe of small-
to medium-sized companies suffered in 1998, declining sharply from their high
in mid-April. For example, the stocks of small companies, as represented by the
Russell 2000,/6/ were down -2.5% for the twelve months ended December 31, 1998
as compared to the 28.6% return of the S&P 500 for the same time period.
In Mr. Robinson's experience, environmentally distinguished companies
tend to have more modest market capitalizations. However, investing in the
securities of small companies involves greater risk than investing in the
securities of large companies. Small companies may lack the management
experience, financial resources and product diversification of large companies.
In addition, the frequency and volume of trading in their stock may be
substantially less than that of larger companies. Therefore, the securities of
small companies may be subject to wider and more erratic price fluctuations.
While Green Century Capital Management cannot forecast future
performance, Mr. Robinson is optimistic about the Balanced Fund's portfolio. "I
believe the Green Century Balanced Fund holds excellent high-growth companies
which offer potential for significant earnings," stated Robinson.
Guided by the belief that environmentally sound practices may give
businesses a competitive edge over the long-term, Mr. Robinson aggressively
seeks innovative companies he believes are contributing to a safer and cleaner
environment. The Balanced Fund also invests in those companies that have
minimized their adverse impact on the environment and those companies Green
Century believes are "best in class" companies that are setting standards for
environmental protection in their industries. Holdings in the Balanced Fund
include Vestas Wind Systems,/7/ the leading manufacturer of wind turbines, and
Ionics, Inc.,/7/ a company which supplies water treatment and purification
systems that remove toxic contaminants from industrial wastewater.
Shareholder advocacy is critical to the Green Century Funds mission
of promoting greater corporate environmental responsibility. Using the
collective leverage of Green Century Funds' shareholders, the Funds hold
companies accountable for the impact of their actions on the environment.
In concert with a national public education campaign launched by
Green Century's founders, the Public Interest Research Groups (PIRGs), Green
Century Capital Management shareholder advocacy has focused for the past
several months on efforts to preserve the Coastal Plain of the Arctic National
Wildlife Refuge from oil drilling. The Coastal Plain is the biological heart of
the Refuge. It is the only conservation area in the nation that provides a
complete range of Arctic ecosystems balanced with a
2
<PAGE>
wide variety of wildlife including large populations of caribou, muskoxen,
brown, black and polar bears, wolves, Dall sheep, snow geese and thousands of
other migratory birds. The 125-mile long Coastal Plain is the only section of
Alaska's 1100-mile long North Slope not open for oil drilling.
The Green Century Equity Fund, on behalf of the Domini Social Index,
the portfolio in which the Equity fund invests substantially all of its
investable assets, filed a shareholder resolution with Atlantic Richfield
Company (ARCO)/7/ in November of 1998. The resolution presses ARCO to
unconditionally cancel any future plans for oil drilling in the Arctic National
Wildlife Refuge and immediately stop the expenditure of any corporate funds
targeted to achieve this objective.
In January, Green Century Capital Management staff met with
representatives from ARCO at the Company's corporate headquarters in Los
Angeles. Environmental advocates from U.S.PIRG and the National Environmental
Law Center attended the meeting as well. As of this writing, the resolution
will be voted on by ARCO shareholders at the Company's annual meeting on
Monday, May 3, 1999. We'll continue to report on our progress with ARCO in
future shareholder updates.
In sum, the past year has offered its share of challenges and
milestones for the Green Century Funds. While the Balanced Fund's performance
suffered, the portfolio manager is optimistic about the future of the
environmentally responsible small-cap companies held by the Balanced Fund. The
Green Century Equity Fund delivered solid returns and received recognition from
Morningstar. The Funds also deepened their commitment to environmental
corporate responsibility and joined the fight to preserve the Arctic National
Wildlife Refuge.
Thank you for your commitment to environmentally responsible
investing and your investment in the Green Century Funds.
Respectfully,
The Green Century Funds
/1/ Lipper Analytical Services, Inc. is a respected mutual fund ranking
service. The Lipper growth fund category of mutual funds includes funds that
normally invest in companies whose long-term earnings are expected to grow
significantly faster than the earnings of the stocks represented in the major
unmanaged indices.
/2/ Morningstar ratings are subject to change each month and are calculated
from the Fund's three-year average returns in excess of 90-day Treasury bill
returns with appropriate fee adjustments and a risk factor that reflects Fund
performance below 90-day Treasury bill returns. The top 10% of funds in an
investment category receive five stars. The Fund has not been rated for the
five-years ended December 31, 1998. The Fund was included in the large-blend
mutual fund category.
/3/ The S&P 500 is an unmanaged index of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The S&P 500 is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic stocks.
/4/ The Green Century Equity Fund, which commenced investment operations in
September, 1995, invests all of its assets in an existing separate registered
investment company which has the same investment objective as the Fund (the
"Index Portfolio"). Consistent with regulatory guidance, the performance for
the period prior to the Fund's inception reflects the performance of the Index
Portfolio adjusted to reflect the deduction of the charges and expenses of the
Fund.
/5/ The Lipper balanced fund category of mutual funds includes funds whose
primary objective is to conserve principal by maintaining at all times a
balanced portfolio of stocks and bonds.
/6/ The Russell 2000 is an index of the smallest 2000 companies in the Russell
3000 Index, as ranked by total market capitalizations. The Russell 2000 is
widely regarded in the industry to accurately capture the universe of small-cap
stocks.
/7/ As of January 31, 1999, Vestas Wind Systems composed 1.63% of the portfolio
of the Green Century Balanced Fund and Ionics, Inc. composed 2.18% of the
portfolio of the Balanced Fund. As of the same date, ARCO comprised 0.32% of
the Index Portfolio in which the Equity Fund invests. The holdings of the
Balanced Fund and Equity Fund may change due to ongoing management of the
Funds. References to specific investments should not be construed as a
recommendation of the security by the Funds, the advisor or the distributor.
This material must be preceded or accompanied by a current prospectus.
Distributor: Sunstone Distribution Services, LLC, 3/99
3
<PAGE>
GREEN CENTURY BALANCED FUND
PORTFOLIO OF INVESTMENTS
January 31, 1999
(unaudited)
COMMON STOCKS--71.7%
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Communications--12.9%
Entercom Communications
Corp. (b)................................................ 1,000 $ 31,000
General Motors Corp., Class H (Hughes Electronics) (b).... 3,500 172,375
Medialink Worldwide, Inc. (b)............................. 10,000 165,000
MCI Worldcom, Inc. (b).................................... 2,000 159,500
NTN Communications, Inc. (b).............................. 250,000 406,250
Orbital Sciences Corp. (b)................................ 20,000 802,500
Sprint Corp............................................... 2,000 167,750
Time Warner, Inc.......................................... 200 12,500
-----------
1,916,875
-----------
Pharmaceuticals--12.9%
Elan Corp. PLC ADR (b)(c)................................. 6,000 405,000
MGI Pharma, Inc. (b)...................................... 12,000 134,250
Sepracor, Inc. (b)........................................ 12,000 1,377,000
-----------
1,916,250
-----------
Environmental Products & Services--12.9%
Galileo Corp. (b)......................................... 110,000 618,750
Hi-Rise Recycling Systems,
Inc. (b)................................................. 122,000 320,250
Ionics, Inc. (b).......................................... 10,000 323,750
KTI, Inc. (b)............................................. 25,000 553,125
Thermo Trilogy Corp. (b)(e)............................... 12,000 99,000
-----------
1,914,875
-----------
Technology--11.9%
American Power Conversion Corp. (b)....................... 10,000 511,250
Data Dimensions, Inc. (b)................................. 40,000 322,500
Documentum, Inc. (b)...................................... 10,000 233,125
Intel Corp................................................ 200 28,188
Project Software & Development, Inc. (b).................. 15,000 380,625
Texas Instruments......................................... 3,000 296,625
-----------
1,772,313
-----------
Natural Foods & Nutraceuticals--6.0%
Horizon Organic Holding
Corp. (b)................................................ 5,000 78,750
NBTY, Inc. (b)............................................ 25,000 146,875
Rexall Sundown, Inc. (b).................................. 25,000 343,750
Whole Foods Market, Inc. (b).............................. 10,000 320,625
-----------
890,000
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Financial Services--4.3%
21st Century Holding Co. (b)............................. 15,000 $ 106,875
American International
Group, Inc.............................................. 150 15,441
Banco Latinoamericano de Exportaciones, S.A.--
E shares (c)............................................ 12,000 261,750
Conning Corp............................................. 15,000 258,750
-----------
642,816
-----------
Health Services & Hospital Supplies--3.5%
PSS World Medical Inc. (b)............................... 20,000 312,500
Thermo Bioanalysis Corp. (b)............................. 12,000 213,000
-----------
525,500
-----------
Mining--3.2%
Stillwater Mining Co. (b)................................ 18,000 472,500
-----------
Renewable Energy--2.1%
AstroPower, Inc. (b)..................................... 5,000 62,812
Vestas Wind Systems
A/S (b)(c).............................................. 4,000 241,853
-----------
304,665
-----------
Commercial Products & Services--1.0%
Bright Horizons, Inc. (b)................................ 5,751 155,277
-----------
Retail--1.0%
Garden Fresh Restaurant
Corp. (b)............................................... 10,000 145,000
-----------
Paper & Forest Products--0.0%
Champion International Corp. ............................ 100 3,506
-----------
Total Common Stocks
(Cost $9,617,325)....................................... 10,659,577
-----------
CORPORATE BONDS & NOTES--23.9%
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
Communications--11.1%
GST USA, Inc.
0%, due 12/15/05 (f).................................... $300,000 $ 220,500
Level 3 Communications
9.125%, due 5/01/08..................................... 300,000 299,250
Nextel Communications
0%, due 8/15/04 (f)..................................... 300,000 304,875
PSINet Inc.
11.50%, due 11/01/08 (d)................................ 300,000 324,750
</TABLE>
4
<PAGE>
GREEN CENTURY BALANCED FUND
PORTFOLIO OF INVESTMENTS--(concluded)
January 31, 1999
(unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
Communications--(continued)
Verio Inc.
11.25%, due 12/01/08 (d)................................. $300,000 $ 322,500
Winstar Communications, Inc.
0%, due 10/15/05 (f)..................................... 250,000 180,000
-----------
1,651,875
-----------
Consumer Goods & Services--5.5%
Frank's Nursery & Crafts
10.25%, due 3/01/08...................................... 200,000 198,000
Kindercare Learning Centers
9.50%, due 2/15/09....................................... 250,000 251,250
Nebraska Book Company
8.75%, due 2/15/08....................................... 200,000 193,000
Nebraska Book Company
0%, due 2/15/09.......................................... 300,000 180,750
-----------
823,000
-----------
Food & Beverage--4.6%
Homeland Stores, Inc.
10.00%, due 8/01/03...................................... 250,000 223,750
Sparkling Spring Water
11.50%, due 11/15/07..................................... 250,000 214,375
Specialty Foods Corp.
10.25%, due 8/15/01...................................... 250,000 243,750
-----------
681,875
-----------
Energy--1.8%
Calpine Corp.
8.75%, due 07/15/07...................................... 250,000 261,250
-----------
Environmental Services--0.9%
ICF Kaiser International
13.00%, due 12/31/03..................................... 200,000 131,000
-----------
Total Corporate Bonds and Notes (Cost $3,587,761)......... 3,549,000
-----------
</TABLE>
SHORT-TERM OBLIGATIONS--4.0%
<TABLE>
<CAPTION>
VALUE
<S> <C>
Repurchase Agreements
Salomon Brothers,
4.00%, dated
1/29/99, due
2/01/99, proceeds
$598,945
(collateralized by
U.S. Treasury
securities with
maturity at 4/30/03,
value $610,720)
(cost $598,746)..... $ 598,746
-----------
TOTAL INVESTMENTS
(a)--99.6%
(Cost $13,803,832).. 14,807,323
-----------
Other Assets Less
Liabilities--0.4%... 66,581
-----------
NET ASSETS--100%..... $14,873,904
===========
</TABLE>
- -------
(a) The cost of investments for federal income tax purposes is $13,803,832,
resulting in gross unrealized appreciation and depreciation of $2,594,218
and $1,590,727 respectively, or net unrealized appreciation of $1,003,491.
(b) Non-income producing security.
(c) Securities whose values are determined or significantly influenced by
trading on exchanges not in the United States or Canada. ADR after the name
of a foreign holding stands for American Depository Receipt representing
foreign securities on deposit with a domestic custodian bank.
(d) Securities that may be resold to "qualified institutional buyers" under
Rule 144a or securities offered pursuant to Section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be liquid
under guidelines established by the Board of Trustees.
(e) Restricted Security. Purchased in a private placement transaction; resale
to the public may require registration or sale only to qualified
institutional buyers. This security is valued at fair value, which at
January 31, 1999 is equal to cost.
(f) Step bond. Rate shown is currently in effect at January 31, 1999.
See Notes to Financial Statements
5
<PAGE>
GREEN CENTURY BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1999
(unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $13,803,832).......................... $14,807,323
Receivables for:
Interest and dividends........................................... 82,369
Capital stock sold............................................... 41,713
-----------
Total assets..................................................... 14,931,405
-----------
LIABILITIES:
Payable for securities purchased.................................. 22,500
Accrued expenses.................................................. 28,990
Payable for capital stock redeemed................................ 6,011
-----------
Total liabilities................................................ 57,501
-----------
NET ASSETS........................................................ $14,873,904
===========
NET ASSETS CONSIST OF:
Paid-in capital................................................... $15,572,125
Accumulated net realized loss on investments and options written.. (1,777,502)
Net unrealized appreciation on investments........................ 1,003,491
Accumulated undistributed net investment income................... 75,790
-----------
NET ASSETS........................................................ $14,873,904
===========
SHARES OUTSTANDING................................................ 1,282,592
===========
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE.... $ 11.60
===========
</TABLE>
GREEN CENTURY BALANCED FUND
STATEMENT OF OPERATIONS
For the six months ended January 31, 1999
(unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income................................................... $ 239,980
Dividend income................................................... 2,681
Miscellaneous income.............................................. 6,021
-----------
Total investment income........................................ 248,682
-----------
EXPENSES (Note 2):
Administrative services fee....................................... 103,694
Investment advisory fee........................................... 51,847
Distribution fee.................................................. 17,283
-----------
Total expenses................................................. 172,824
-----------
NET INVESTMENT INCOME............................................. 75,858
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND OPTIONS
WRITTEN (Note 1):
Net realized gain (loss) on:
Investments...................................................... (1,801,085)
Options written.................................................. 56,637
-----------
(1,744,448)
-----------
Net increase (decrease) in net unrealized
appreciation/depreciation of:
Investments...................................................... 1,488,271
Options written.................................................. (2,201)
-----------
1,486,070
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND OPTIONS
WRITTEN.......................................................... (258,378)
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... $ (182,520)
===========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
GREEN CENTURY BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE ONE FOR THE
SIX MONTHS ENDED MONTH ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31, 1998 JUNE 30, 1998
(UNAUDITED) (AUDITED) (AUDITED)
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income............ $ 75,858 $ 3,077 $ 17,371
Net realized gain (loss) on
investments and options written. (1,744,448) (32,969) 1,701,718
Net increase (decrease) in
unrealized net
appreciation/depreciation of
investments and options written. 1,486,070 (1,300,712) (457,501)
----------- ----------- -----------
Net increase (decrease) in net
assets resulting from
operations...................... (182,520) (1,330,604) 1,261,588
----------- ----------- -----------
Dividends and distributions to
shareholders (Note 1):
From net investment income....... (3,145) -- (78,490)
From net realized gains.......... (1,046,934) -- (1,204,821)
----------- ----------- -----------
Total dividends and distributions. (1,050,079) -- (1,283,311)
----------- ----------- -----------
Capital share transactions (Note
4):
Proceeds from sales of shares.... 1,783,213 567,446 5,329,586
Reinvestment of dividends and
distributions................... 764,967 -- 1,022,174
Payments for shares redeemed..... (1,653,476) (310,809) (1,066,413)
----------- ----------- -----------
Net increase in net assets
resulting from capital stock
transactions.................... 894,704 256,637 5,285,347
----------- ----------- -----------
Total Increase (Decrease) in Net
Assets........................... (337,895) (1,073,967) 5,263,624
NET ASSETS:
Beginning of Period.............. 15,211,799 16,285,766 11,022,142
----------- ----------- -----------
End of Period (including
undistributed net investment
income of $75,790, $3,077, and
$0 for the six months ended
January 31, 1999, one month
ended July 31, 1998, and year
ended June 30, 1998,
respectively)................... $14,873,904 $15,211,799 $16,285,766
=========== =========== ===========
</TABLE>
GREEN CENTURY BALANCED FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED ONE MONTH
JANUARY 31, 1999 ENDED FOR THE YEARS ENDED JUNE 30,
--------------------------------
(UNAUDITED) JULY 31, 1998 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period.... $ 12.68 $ 13.79 $ 13.53 $ 13.34 $11.03 $ 9.68
------- ------- ------- ------- ------ ------
Income from investment
operations:
Net investment income.. 0.06 -- 0.02 0.12 0.10 0.10
Net realized and
unrealized gain (loss)
on investments........ (0.27) (1.11) 1.68 1.77 2.31 1.35
------- ------- ------- ------- ------ ------
Total increase
(decrease) from
investment operations.. (0.21) (1.11) 1.70 1.89 2.41 1.45
------- ------- ------- ------- ------ ------
Less dividends and
distributions (Note 1):
Dividends from net
investment income..... -- -- (0.09) (0.10) (0.10) (0.10)
Distributions from net
realized gains........ (0.87) -- (1.35) (1.60) -- --
------- ------- ------- ------- ------ ------
Total decrease from
dividends and
distributions.......... (0.87) -- (1.44) (1.70) (0.10) (0.10)
------- ------- ------- ------- ------ ------
Net Asset Value, end of
period................. $ 11.60 $ 12.68 $ 13.79 $ 13.53 $13.34 $11.03
======= ======= ======= ======= ====== ======
Total return............ (1.24)%(a) (8.05)%(a) 13.13% 15.22% 21.98% 15.00%
Ratios/Supplemental
data:
Net assets, end of
period (in 000's)..... $14,874 $15,212 $16,286 $11,022 $8,215 $3,291
Ratio of expenses to
average net assets.... 2.50%(b) 2.50%(b) 2.50% 2.50% 2.50% 2.50%
Ratio of net investment
income to average net
assets................ 1.09%(b) 0.22%(b) 0.12% 0.94% 0.85% 0.97%
Portfolio turnover..... 34%(a) 4%(a) 96% 109% 136% 16%
</TABLE>
(a) Not annualized
(b) Annualized
See Notes to Financial Statements
7
<PAGE>
GREEN CENTURY EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1999
(unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in Domini Social Index Portfolio, at value (Note 1)...... $21,532,671
Receivable for capital stock sold................................... 118,577
-----------
Total assets..................................................... 21,651,248
-----------
LIABILITIES:
Accrued expenses (Note 2)........................................... 20,291
-----------
Total liabilities................................................ 20,291
-----------
NET ASSETS.......................................................... $21,630,957
===========
NET ASSETS CONSIST OF:
Paid-in capital..................................................... $15,373,784
Accumulated net realized gain on investment......................... 91,171
Net unrealized appreciation on investment........................... 6,166,002
-----------
NET ASSETS.......................................................... $21,630,957
===========
SHARES OUTSTANDING.................................................. 892,592
===========
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE...... $ 24.23
===========
</TABLE>
GREEN CENTURY EQUITY FUND
STATEMENT OF OPERATIONS
For the six months ended January 31, 1999
(unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME FROM INDEX PORTFOLIO:
Investment income from Index Portfolio............................. $ 97,069
Expenses from Index Portfolio...................................... (17,096)
----------
Net income from Index Portfolio................................. 79,973
----------
EXPENSES:
Administrative services fee (Note 2)............................... 111,190
----------
NET INVESTMENT LOSS................................................ (31,217)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENT:
Net realized gain on investment allocated from Index Portfolio..... 224,268
Net increase in net unrealized appreciation of investment allocated
from Index Portfolio.............................................. 3,345,335
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENT..................... 3,569,603
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $3,538,386
----------
</TABLE>
See Notes to Financial Statements
8
<PAGE>
GREEN CENTURY EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31, 1998
(UNAUDITED) (AUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
From Operations:
Net investment loss............................ $ (31,217) $ (24,397)
Net realized gain on investment allocated from
Index Portfolio............................... 224,268 101,835
Net increase in net unrealized appreciation of
investment allocated from Index Portfolio..... 3,345,335 1,755,126
----------- -----------
Net increase in net assets resulting from
operations.................................... 3,538,386 1,832,564
----------- -----------
Dividends and distributions to shareholders:
From net realized gains........................ (179,708) (5,456)
----------- -----------
Total dividends and distributions.............. (179,708) (5,456)
----------- -----------
Capital Share Transactions (Note 4):
Proceeds from sales of shares.................. 4,755,557 10,106,426
Reinvestment of dividends and distributions.... 174,395 5,171
Payments for shares redeemed................... (2,133,250) (1,738,306)
----------- -----------
Net increase in net assets resulting from
capital share transactions.................... 2,796,702 8,373,291
----------- -----------
Total Increase in Net Assets.................... 6,155,380 10,200,399
NET ASSETS:
Beginning of period............................ 15,475,577 5,275,178
----------- -----------
End of period.................................. $21,630,957 $15,475,577
=========== ===========
</TABLE>
GREEN CENTURY EQUITY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
SIX MONTHS FOR THE YEARS SEPTEMBER 13, 1995
ENDED ENDED JULY 31, (COMMENCEMENT OF
JANUARY 31, 1999 --------------- OPERATIONS) TO
(UNAUDITED) 1998 1997 JULY 31, 1996
<S> <C> <C> <C> <C>
Net Asset Value, beginning
of period................ $ 20.44 $ 16.86 $11.04 $10.00
------- ------- ------ ------
Income from investment
operations:
Net investment income
(loss).................. (0.03) (0.03) 0.02 0.02
Net realized and
unrealized gain on
investment.............. 4.03 3.62 5.84 1.04
------- ------- ------ ------
Total increase from
investment operations... 4.00 3.59 5.86 1.06
------- ------- ------ ------
Less dividends and
distributions:
Dividends from net
investment income....... -- -- (0.03) (0.02)
Distributions from net
realized gains.......... (0.21) (0.01) (0.01) --
------- ------- ------ ------
Total decrease from
dividends and
distributions............ (0.21) (0.01) (0.04) (0.02)
------- ------- ------ ------
Net Asset Value, end of
period................... $ 24.23 $ 20.44 $16.86 $11.04
======= ======= ====== ======
Total return.............. 19.63%(a) 21.32% 53.14% 10.64%(a)
Ratios/supplemental data
Net Assets, end of period
(in 000's).............. $21,631 $15,476 $5,275 $ 880
Ratio of expenses to
average net assets...... 1.50%(b) 1.50% 1.50% 1.50%(b)
Ratio of net investment
income (loss) to average
net assets.............. (0.36)%(b) (0.26)% 0.07% 0.49%(b)
Portfolio turnover (c)... 8%(a) 5% 1% n/a
</TABLE>
(a) Not annualized.
(b) Annualized.
(c) Represents portfolio turnover for the Index Portfolio.
See Notes to Financial Statements
9
<PAGE>
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Organization and Significant Accounting Policies
Green Century Funds (the "Trust") is a Massachusetts business trust which
offers two separate series, the Green Century Balanced Fund (the "Balanced
Fund") and the Green Century Equity Fund (the "Equity Fund"). The Trust is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
an open-end management investment company. The Trust accounts separately for
the assets, liabilities and operations of each series. The Balanced Fund
commenced operations on March 18, 1992 and the Equity Fund commenced operations
on September 13, 1995.
The Equity Fund invests substantially all of its assets in the Domini Social
Index Portfolio (the "Index Portfolio"), an open-end, diversified management
investment company having the same investment objective as the Fund. The Equity
Fund accounts for its investment in the Index Portfolio as a partnership
investment and records its share of the Index Portfolio's income, expenses and
realized and unrealized gains and losses daily. The value of such investment
reflects the Fund's proportionate interest in the net assets of the Index
Portfolio (2.22% at January 31, 1999). The financial statements of the Index
Portfolio are included elsewhere in this report and should be read in
conjunction with the Equity Fund's financial statements.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
the Trust's significant accounting policies:
(A) Balanced Fund Investment Valuation: Equity securities listed on
national securities exchanges or reported through the NASDAQ system are
valued at last sale price. Unlisted securities or listed securities for
which last sale prices are not available are valued at the mean between
the closing bid and asked prices if such securities are listed on a
national exchange, and at the last quoted bid price in the case of
securities not listed on a national exchange. Debt securities (other
than short-term obligations maturing in sixty days or less) are valued
on the basis of valuation furnished by a pricing service which takes
into account appropriate factors such as institution-size trading in
similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, and other market data, without exclusive reliance on
quoted prices or exchange or over-the-counter prices, since such
valuations are believed to reflect more accurately the fair value of the
securities. Securities, if any, for which there are no such valuations
or quotations available are valued at fair value as determined in good
faith under guidelines established by the Trustees. Short-term
obligations maturing in sixty days or less are valued at amortized cost,
which approximates market value.
Equity Fund Investment Valuation: Valuation of securities by the Index
Portfolio is discussed in Note 1 of the Index Portfolio's Notes to
Financial Statements which are included elsewhere in this report.
(B) Balanced Fund Securities Transactions and Investment Income: Securities
transactions are recorded on a trade date basis. Realized gains and
losses from securities transactions are determined using the identified
cost basis. Interest income is recognized on the accrual basis and
dividend income is recorded on ex-dividend date.
Equity Fund Securities Transactions and Investment Income: The Fund earns
income, net of Index Portfolio expenses, daily based on its investment in
the Index Portfolio.
10
<PAGE>
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS--(continued)
(C) Distributions: Distributions to shareholders are recorded on the ex-
dividend date. The Funds declare and pay dividends of net investment
income, if any, semi-annually and distribute net realized capital gains,
if any, annually. The amount and character of income and net realized
gains to be distributed are determined in accordance with Federal income
tax rules and regulations, which may differ from generally accepted
accounting principles. These differences are attributable to permanent
book and tax accounting differences. Accordingly, at January 31, 1999
for the Equity Fund, a reclassification was recorded to increase
undistributed net investment income and reduce undistributed net
realized gain by $31,217. No reclassification was required for the
Balanced Fund for the period ended January 31, 1999.
(D) Balanced Fund Options Written: When the Balanced Fund writes a call
option or a put option, an amount equal to the premium received by the
Fund is recorded as a liability, the value of which is marked-to-market
daily. When a written option expires, the Balanced Fund realizes a gain
equal to the amount of the premium originally received. When the
Balanced Fund enters into a closing purchase transaction, the Fund
realizes a gain (or loss if the cost of the closing purchase transaction
exceeds the premium originally received when the option was written)
without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is eliminated. When a
call option is exercised, the Fund realizes a gain or loss from the sale
of the underlying security and the proceeds from such sale are increased
by the premium originally received. When a put option is exercised, the
amount of the premium originally received will reduce the cost of the
security which the Fund purchased upon exercise.
The risk in writing a call option is that the Balanced Fund may forego
the opportunity for profit if the market price of the underlying security
increases and the option is exercised. The risk in writing a put option is
that the Fund may incur a loss if the market price of the underlying
security decreases and the option is exercised. There is also the risk the
Fund may not be able to enter into a closing transaction because of an
illiquid secondary market. In addition, the Fund could be exposed to risks
if the counterparties to the transaction are unable to meet the terms of
the contracts.
(E) Federal Taxes: Each series of the Trust is treated as a separate entity
for Federal income tax purposes. Each Fund's policy is to comply with
the provisions of the Internal Revenue Code applicable to regulated
investment companies. Accordingly, no provisions for Federal income or
excise tax are necessary.
NOTE 2--Transactions With Affiliates
(A) Investment Adviser: Green Century Capital Management, Inc. ("Green
Century") is the adviser ("the Adviser") for the Balanced Fund and
oversees the portfolio management of the Balanced Fund on a day-to-day
basis. For these services, Green Century receives a fee, accrued daily
and paid monthly, at an annual rate equal to 0.75% of the Balanced
Fund's average daily net assets.
(B) Subadviser: Winslow Management Company ("Winslow"), a division of Eaton
Vance Management, is the subadviser for the Balanced Fund. For its
services, Winslow is paid a fee by the Adviser at an annual rate equal
to 0.40% of the average daily net assets of the Balanced Fund, subject
to an adjustment up or down of 0.20% annually. For the six months ended
January 31, 1999 Green Century accrued fees of $18,721 to Winslow.
11
<PAGE>
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS--(continued)
(C) Administrator: Green Century is the administrator ("the Administrator")
of the Green Century Funds. Pursuant to the Administrative Services
Agreement, Green Century pays all the expenses of each Fund other than
the investment advisory fees, fees under the Distribution Plan,
interest, taxes, brokerage costs and other capital expenses, expenses of
non-interested trustees (including counsel fees) and any extraordinary
expenses. For these services, Green Century receives a fee from the
Balanced Fund at an annual rate equal to 1.50% of the Fund's average
daily net assets, and receives a fee from the Equity Fund at a rate such
that immediately following any payment to the Administrator, the
combined total operating expenses of the Fund and the Index Portfolio
(including investment advisory and distribution fees and any
amortization of organization expenses), on an annual basis, do not
exceed 1.50% of the Fund's average daily net assets.
(D) Subadministrator: Pursuant to a Subadministrative Services Agreement
with the Administrator, Sunstone Financial Group, Inc. ("Sunstone"), as
Subadministrator, is responsible for conducting certain day-to-day
administration of the Trust subject to the supervision and direction of
the Administrator. For the six months ended January 31, 1999, Green
Century accrued fees of $20,164 and $20,164 to Sunstone related to
services performed on behalf of the Balanced Fund and the Equity Fund,
respectively.
(E) Distribution Plan: The Trust has adopted a Distribution Plan (the
"Plan") with respect to the Balanced Fund in accordance with Rule 12b-1
under the Act. The Plan provides that the Balanced Fund pay a fee to
Sunstone Distribution Services, LLC, as distributor of shares of the
Balanced Fund, at an annual rate not to exceed 0.25% of the Balanced
Fund's average daily net assets. The fee is reimbursement for, or in
anticipation of, expenses incurred for distribution-related activities.
For the six months ended January 31, 1999, the Balanced Fund accrued and
paid $17,484 to Sunstone Distribution Services, LLC for services
provided pursuant to the plan.
NOTE 3--Investment Transactions
The Balanced Fund's purchases and sales of securities, other than short-term
securities, aggregated $5,041,635 and $4,531,101, respectively, for the six
months ended January 31, 1999.
The Balanced Fund's activity in written options for the six months ended
January 31, 1999 was as follows:
<TABLE>
<CAPTION>
PREMIUM CONTRACTS
<S> <C> <C>
Options outstanding at July 31, 1998........................ $ 6,664 34
Options written............................................. 69,629 554
Options expired............................................. (46,502) (354)
Options closed.............................................. (29,791) (234)
-------- ----
Options outstanding at January 31, 1999..................... $ 0 0
======== ====
</TABLE>
Additions and reductions in the Equity Fund's investment in the Index
Portfolio aggregated $4,845,298 and $2,157,801 for the six months ended January
31, 1999.
12
<PAGE>
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS--(concluded)
NOTE 4--Capital Share Transactions
Capital share transactions for the Balanced Fund and the Equity Fund were as
follows:
<TABLE>
<CAPTION>
BALANCED FUND EQUITY FUND
-------------------------------------------- ---------------------------
FOR THE
FOR THE SIX FOR THE ONE FOR THE FOR THE SIX YEAR ENDED
MONTHS ENDED MONTH ENDED YEAR ENDED MONTHS ENDED JULY
JANUARY 31, 1999 JULY 31, 1998 JUNE 30, 1998 JANUARY 31, 1999 31, 1998
<S> <C> <C> <C> <C> <C>
Shares sold............. 159,826 41,766 360,830 229,067 535,842
Reinvestment of divi-
dends.................. 69,588 0 78,147 7,585 307
Shares redeemed......... (146,252) (22,956) (72,916) (101,019) (92,049)
-------- ------- ------- -------- -------
83,162 18,810 366,061 135,633 444,100
======== ======= ======= ======== =======
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS
January 31,1999
(unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Apparel--0.2%
Brown Group, Inc. ...................................... 2,500 $ 40,156
Hartmarx Corporation (b)................................ 5,500 27,500
Liz Claiborne, Inc. .................................... 10,400 397,800
Oshkosh B'Gosh.......................................... 2,600 41,275
Phillips-Van Heusen Corporation......................... 4,200 26,513
Reebok International Ltd. (b)........................... 9,000 133,875
Russell Corporation..................................... 5,800 114,188
Springs Industries, Inc. ............................... 2,900 121,075
Stride Rite Corporation................................. 7,400 73,075
Timberland Company (The) (b)............................ 1,800 81,000
V. F. Corporation....................................... 20,000 852,500
------------
1,908,957
------------
Banking--5.3%
Banc One Corporation.................................... 197,685 10,353,752
BankBoston Corporation.................................. 49,700 1,835,794
Bankers Trust New York Corporation...................... 15,900 1,383,300
Fifth Third Bancorp..................................... 44,825 3,067,711
Mellon Bank Corporation................................. 43,900 2,941,300
Morgan (J.P.) & Co. Incorporated........................ 29,600 3,122,800
PNC Bank Corp. ......................................... 50,700 2,595,206
SunTrust Banks, Inc. ................................... 53,700 3,782,494
Synovus Financial Corp. ................................ 44,750 1,118,750
US Bancorp.............................................. 122,800 4,136,825
Vermont Financial Services Corp. ....................... 1,800 54,000
Wachovia Corporation.................................... 34,000 3,013,250
Washington Mutual Inc. ................................. 100,202 4,208,484
Wells Fargo & Company................................... 273,000 9,537,938
------------
51,151,604
------------
Commercial Products & Services--1.9%
Angelica Corporation.................................... 1,300 19,581
Avery Dennison Corporation.............................. 19,400 959,088
Bemis Company, Inc. .................................... 8,400 285,600
Cintas Corporation...................................... 17,700 1,346,306
Deluxe Corporation...................................... 13,400 477,375
DeVry Inc. (b).......................................... 11,600 341,475
Donnelley (R.R.) & Sons Company......................... 22,700 855,506
Ecolab Inc. ............................................ 21,500 833,125
Harland (John H.) Company............................... 4,900 68,294
Herman Miller, Inc. .................................... 14,300 270,806
HON Indudstries Inc. ................................... 9,800 199,675
Ikon Office Solutions................................... 22,600 361,600
Interface Inc. ......................................... 8,300 85,594
Kelly Services, Inc. ................................... 6,075 168,581
Moore Corporation....................................... 14,300 165,344
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Commercial Products & Services--continued
National Service Industries, Inc. ......................... 6,700 $ 229,475
New England Business Service, Inc. ........................ 2,300 76,044
Pitney Bowes Inc. ......................................... 45,800 3,151,613
Sealed Air Corporation..................................... 13,900 737,569
Sonoco Products Company.................................... 16,945 472,342
Standard Register Company.................................. 4,400 136,950
Tennant Company............................................ 1,400 51,800
Xerox Corporation.......................................... 55,400 6,869,600
------------
18,163,343
------------
Construction--0.2%
Apogee Enterprises, Inc. .................................. 4,300 44,344
Centex Corporation......................................... 9,600 414,600
Champion Enterprises Inc. (b).............................. 7,700 179,988
Fleetwood Enterprises, Inc. ............................... 5,400 199,800
Granite Construction Incorporated.......................... 4,350 140,831
Kaufman & Broad Home Corporation........................... 8,000 225,500
Osmonics Inc. (b).......................................... 2,100 18,638
Rouse Company.............................................. 11,500 271,688
Sherwin-Williams Company................................... 28,800 738,000
Skyline Corporation........................................ 1,400 43,050
TJ International, Inc. .................................... 2,300 55,488
------------
2,331,927
------------
Energy--1.3%
Anadarko Petroleum Corporation............................. 19,800 535,838
Apache Corporation......................................... 15,800 304,150
Atlantic Richfield Company................................. 54,000 3,098,250
Consolidated Natural Gas Company........................... 16,000 821,000
Enron Corp ................................................ 55,900 3,689,400
Helmerich & Payne, Inc. ................................... 7,800 136,988
Oryx Energy Company (b).................................... 17,700 215,719
Pennzoil Company........................................... 7,400 85,563
Questar Corporation........................................ 13,200 220,275
Rowan Companies, Inc. (b).................................. 13,900 122,494
Santa Fe Energy Resources, Inc. (b)........................ 16,900 98,231
Sun Company, Inc. ......................................... 15,500 544,438
Union Pacific Resources Group, Inc. ....................... 41,800 337,013
Williams Companies......................................... 72,200 2,382,600
------------
12,591,959
------------
Financial Services--5.5%
American Express Company................................... 76,400 7,859,650
Block (H & R), Inc. ....................................... 16,700 732,713
</TABLE>
14
<PAGE>
PORTFOLIO OF INVESTMENTS--(Continued)
January 31,1999
(unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Financial Services--continued
Dime Bancorp.............................................. 19,200 $ 465,600
Edwards (A.G.), Inc. ..................................... 15,187 514,460
Fannie Mae................................................ 175,000 12,753,125
Federal Home Loan Mortgage Corporation.................... 114,600 7,105,200
First Tennessee National Corporation...................... 21,300 778,781
FirstFed Financial Corp. (b).............................. 3,400 54,188
Golden West Financial..................................... 9,500 891,813
Household International, Inc. ............................ 81,246 3,569,746
MBIA Inc. ................................................ 16,500 1,081,781
MBNA Corporation.......................................... 135,450 3,784,135
Merrill Lynch & Co., Inc. ................................ 59,900 4,552,400
Providian Financial Corporation........................... 23,900 2,409,419
Schwab (Charles) Corporation.............................. 67,700 4,760,156
Student Loan Marketing Association........................ 27,500 1,211,719
Transamerica Corporation.................................. 20,800 1,164,800
Value Line, Inc. ......................................... 1,500 58,125
------------
53,747,811
------------
Foods & Beverages--6.1%
Ben & Jerry's Homemade, Inc. (b).......................... 600 14,400
Bestfoods................................................. 48,200 2,425,063
Campbell Soup Company..................................... 75,200 3,529,700
Coca-Cola Company......................................... 416,200 27,235,088
Fleming Companies, Inc. .................................. 6,000 53,625
General Mills Incorporated................................ 25,800 2,165,588
Heinz (H.J.) Company...................................... 61,100 3,440,694
Hershey Foods Corporation................................. 24,200 1,361,250
Kellogg Company........................................... 68,500 2,799,938
Nature's Sunshine Products, Inc. ......................... 2,600 34,613
Odwalla, Incorporated (b)................................. 500 3,375
PepsiCo, Inc.............................................. 247,700 9,675,781
Quaker Oats Company....................................... 22,700 1,262,688
Ralston Purina Company.................................... 52,800 1,445,400
Smucker (J.M.) Company.................................... 4,600 115,000
SUPERVALU Inc. ........................................... 20,200 554,238
Sysco Corporation......................................... 56,400 1,536,900
Tootsie Roll Industries, Inc. ............................ 5,054 227,746
Wrigley (Wm.) Jr. Company................................. 19,700 1,844,413
------------
59,725,500
------------
Health Care--8.9%
Acuson Corporation (b).................................... 4,400 58,850
ADAC Laboratories (b)..................................... 3,000 66,188
Allergan, Inc. ........................................... 10,800 830,250
ALZA Corporation (b)...................................... 14,600 738,213
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Health Care--continued
Becton Dickinson and Company.............................. 41,600 $ 1,487,200
Bergen Brunswig Corporation............................... 16,336 457,408
Biomet, Inc. (b).......................................... 18,700 684,888
Boston Scientific Corporation (b)......................... 66,400 1,622,650
Forest Laboratories, Inc. (b)............................. 13,300 614,294
Guidant Corp.............................................. 50,600 2,982,238
Humana Health Plans, Inc. (b)............................. 27,800 496,925
IMS Health Inc. .......................................... 55,200 2,021,700
Johnson & Johnson......................................... 227,000 19,295,000
Mallinckrodt, Inc. ....................................... 11,500 401,781
McKesson HBOC Inc......................................... 45,820 3,442,228
Medtronic, Inc. .......................................... 82,800 6,598,125
Merck & Co., Inc. ........................................ 201,000 29,496,750
Mylan Laboratories, Inc. ................................. 20,900 637,450
Oxford Health Plans, Inc. (b)............................. 13,400 231,987
Schering-Plough Corporation............................... 248,100 13,521,450
St. Jude Medical Inc. (b)................................. 13,500 351,844
Stryker Corporation....................................... 16,000 742,000
Sunrise Medical Inc. (b).................................. 3,500 27,781
United American Healthcare Corporation (b)................ 800 950
------------
86,808,150
------------
Household Goods--5.5%
Alberto-Culver Company.................................... 8,800 226,600
Avon Products, Inc. ...................................... 44,400 1,640,025
Bassett Furniture Industries.............................. 1,800 39,937
Black & Decker Corp....................................... 14,900 789,700
Church & Dwight Co., Inc. ................................ 3,000 117,375
Clorox Company............................................ 17,600 2,202,200
Colgate-Palmolive Company................................. 49,400 3,973,612
Enesco Group, Inc. ....................................... 2,200 44,550
Fedders Corporation....................................... 6,400 33,200
Fort James Corp. ......................................... 37,200 1,334,550
Gillette Company.......................................... 187,300 11,003,875
Handleman Company (b)..................................... 4,900 59,719
Harman International Industries, Inc. .................... 2,930 123,060
Hasbro, Inc. ............................................. 21,750 808,828
Huffy Corporation......................................... 1,700 24,650
Kimberly-Clark Corporation................................ 91,464 4,556,050
Leggett & Platt........................................... 32,800 668,300
Mattel, Inc. ............................................. 47,785 1,084,122
Maytag Corporation........................................ 14,700 928,856
Newell Co. ............................................... 27,000 1,122,188
Oneida Ltd. .............................................. 2,300 33,063
Procter & Gamble Company.................................. 224,000 20,356,000
Rubbermaid Incorporated................................... 25,100 809,475
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS--(Continued)
January 31,1999
(unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Household Goods--continued
Shaw Industries, Inc. .................................... 23,500 $ 497,906
Snap-On Incorporated...................................... 9,850 334,900
Stanley Works............................................. 14,200 357,662
Thomas Industries Inc. ................................... 2,200 40,425
Whirlpool Corporation..................................... 12,400 557,225
------------
53,768,053
------------
Insurance--4.5%
Aetna, Inc................................................ 23,870 2,151,284
American General Corporation.............................. 42,662 3,042,334
American International Group, Inc. (b).................... 208,650 21,477,910
Chubb Corporation......................................... 27,300 1,603,875
CIGNA Corporation......................................... 35,200 2,899,600
Cincinnati Financial Corporation.......................... 27,585 908,581
Hartford Steam Boiler Inspection and Insurance............ 4,550 171,762
Jefferson-Pilot Corporation............................... 17,950 1,359,713
Lincoln National Corp. ................................... 16,900 1,407,981
Marsh & McLennan Companies, Inc. ......................... 43,450 2,731,919
MGIC Investment Corp. .................................... 18,100 662,912
ReliaStar Financial Corporation........................... 15,100 625,706
SAFECO Corporation........................................ 22,600 878,575
St. Paul Companies, Inc. ................................. 38,864 1,141,630
Torchmark Corporation..................................... 23,300 764,531
UNUM Corporation.......................................... 23,400 1,414,237
Wesco Financial Corporation............................... 1,200 399,600
------------
43,642,150
------------
Media--3.7%
Banta Corporation......................................... 4,650 111,019
Comcast Corporation....................................... 62,200 4,228,630
Disney (Walt) Company..................................... 345,900 11,414,700
Dow Jones & Company....................................... 15,600 698,100
Harcourt General.......................................... 11,600 556,800
King World Productions, Inc. (b).......................... 12,200 333,975
Lee Enterprises, Inc. .................................... 7,200 201,600
McGraw-Hill Companies..................................... 16,400 1,773,250
Media General, Inc........................................ 4,200 210,000
MediaOne Group, Inc. (b).................................. 102,500 5,746,406
Meredith Corporation...................................... 8,300 309,175
New York Times Company.................................... 30,400 1,043,100
Scholastic Corporation (b)................................ 2,500 141,563
Tele-Communications, Inc. (b)............................. 90,900 6,232,331
Times Mirror Company...................................... 14,000 770,875
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Media--continued
Viacom, Inc. (b)........................................... 11,700 $ 981,337
Washington Post Company.................................... 1,700 967,300
------------
35,720,161
------------
Miscellaneous--0.8%
American Greetings Corporation............................. 11,500 454,250
Caraustar Industries, Inc. ................................ 4,000 113,000
Case Corporation........................................... 11,700 221,569
CPI Corp. ................................................. 1,400 37,012
Cross (A.T.) Company....................................... 2,300 14,662
Deere & Company............................................ 40,200 1,309,012
Gibson Greetings, Inc. (b)................................. 2,300 22,856
Hillenbrand Industries, Inc. .............................. 11,000 517,000
Hunt Manufacturing Co. .................................... 1,600 18,300
Ionics, Inc. (b)........................................... 2,300 74,462
Jostens, Inc. ............................................. 5,900 137,544
Marriott International, Inc. .............................. 42,100 1,478,762
Omnicom Group Inc. ........................................ 28,400 1,817,600
Polaroid Corporation....................................... 7,100 121,144
Service Corporation International.......................... 45,800 727,075
Toro Company............................................... 1,800 62,550
Vincam Group, Inc. (The)................................... 2,100 38,062
Whitman Corporation........................................ 16,200 315,900
------------
7,480,760
------------
Miscellaneous Manufacturing--0.9%
Applied Materials, Inc. (b)................................ 62,300 3,936,581
Brady (W.H.) Co. .......................................... 3,500 95,375
CLARCOR Inc. .............................................. 3,850 79,406
Crown Cork & Seal Company, Inc. ........................... 20,400 646,425
Dionex Corporation (b)..................................... 3,500 135,187
Fastenal Company........................................... 6,000 231,375
Gerber Scientific Inc. .................................... 3,600 69,075
Graco Inc. ................................................ 3,375 82,687
Illinois Tool Works Inc. .................................. 42,300 2,551,219
Isco, Inc. ................................................ 800 4,700
Lawson Products, Inc. ..................................... 1,600 34,800
Milcron Inc. .............................................. 6,200 121,287
Millipore Corporation...................................... 7,100 216,994
Nordson Corporation........................................ 2,400 153,000
Watts Industries........................................... 4,200 61,425
Wellman, Inc. ............................................. 4,900 46,856
------------
8,466,392
------------
Resource Development--1.2%
Air Products & Chemicals, Inc. ............................ 38,500 1,294,563
Aluminum Company of America................................ 30,900 2,584,013
</TABLE>
16
<PAGE>
PORTFOLIO OF INVESTMENTS--(Continued)
January 31,1999
(unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Resource Development--continued
Battle Mountain Gold Company (b).......................... 37,900 $ 139,756
Cabot Corporation......................................... 11,100 278,888
Calgon Carbon Corporation................................. 6,200 39,525
Catalytica Inc. (b)....................................... 4,500 66,375
Consolidated Papers, Inc. ................................ 14,600 338,538
Cyprus Amax Minerals Company.............................. 14,900 142,481
Echo Bay Mines Ltd (b).................................... 23,200 39,150
Fuller (H.B.) Company..................................... 2,200 94,600
IMCO Recycling Inc. ...................................... 2,300 28,175
Inland Steel Industries, Inc. ............................ 6,400 96,800
Mead Corporation.......................................... 17,000 486,625
Morton International, Inc. ............................... 20,600 533,025
Nalco Chemical Company.................................... 10,400 286,000
Nucor Corporation......................................... 14,550 712,950
Praxair, Inc. ............................................ 26,200 846,588
Sigma-Aldrich Corporation................................. 16,700 475,950
Westvaco Corporation...................................... 16,800 370,650
Worthington Industries, Inc. ............................. 15,000 208,125
------------
9,062,777
------------
Retail--11.7%
Albertson's, Inc. ........................................ 41,500 2,531,500
American Stores Companies................................. 46,400 1,682,000
Bob Evans Farms, Inc. .................................... 6,700 155,775
Charming Shoppes, Inc. (b)................................ 15,600 57,525
Circuit City Stores, Inc. ................................ 16,700 922,675
Claire's Stores, Inc. .................................... 8,100 159,975
Costco Companies Inc. (b)................................. 36,515 3,026,181
CVS Corporation........................................... 65,500 3,586,125
Dayton Hudson Corporation................................. 74,200 4,730,250
Dillard Department Stores, Inc. .......................... 17,700 439,181
Dollar General Corporation................................ 34,081 849,895
Egghead, Inc. (b)......................................... 3,800 64,600
Gap, Inc. (The)........................................... 97,725 6,272,724
Great Atlantic & Pacific Tea Company, Inc. ............... 6,100 203,587
Hannaford Bros. Co. ...................................... 6,800 320,450
Home Depot, Inc. ......................................... 261,598 15,793,979
Kmart Corporation (b)..................................... 82,700 1,452,419
Kroger Co. (b)............................................ 43,100 2,736,850
Lands' End, Inc. (b)...................................... 4,700 152,162
Lillian Vernon Corporation................................ 1,500 22,219
Limited, Inc. (The)....................................... 39,000 1,330,875
Longs Drug Stores Corporation............................. 6,200 237,537
Lowe's Companies, Inc. ................................... 59,500 3,469,594
Luby's Cafeterias, Inc. .................................. 3,700 57,119
May Department Stores Company............................. 39,400 2,378,775
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Retail--continued
McDonald's Corporation.................................... 114,300 $ 9,008,269
Men's Wearhouse Inc. (b).................................. 5,000 148,125
Meyer Fred, Inc. (b)...................................... 26,000 1,625,000
Nordstrom, Inc............................................ 24,800 1,032,300
Penney (J.C.) Company, Inc................................ 42,700 1,673,306
Pep Boys--Manny, Moe & Jack............................... 10,300 162,225
Ruby Tuesday, Inc. ....................................... 5,200 103,675
Ryan's Family Steakhouse, Inc. (b)........................ 6,300 87,019
Sears, Roebuck and Co. ................................... 64,900 2,604,112
Staples, Inc. (b)......................................... 78,900 2,258,512
Starbucks Corporation (b)................................. 14,900 775,731
Tandy Corporation......................................... 16,400 885,600
TCBY Enterprises, Inc..................................... 3,200 19,200
TJX Companies, Inc........................................ 54,500 1,611,156
Toys "R' Us, Inc. (b)..................................... 43,520 652,800
Wal-Mart Stores, Inc...................................... 21,800 111,725
Walgreen Company.......................................... 84,100 5,256,250
Wal-Mart Stores, Inc...................................... 380,300 32,705,800
Wendys International Inc. ................................ 20,400 485,775
Whole Foods Market, Inc. (b).............................. 4,100 131,456
Wild Oats Markets, Inc. (b)............................... 2,100 50,531
------------
114,022,539
------------
Technology--33.2%
3Com Corporation (b)...................................... 60,100 2,824,700
Adaptec Inc (b)........................................... 17,700 409,312
Advanced Micro Devices, Inc. (b).......................... 24,100 552,794
AirTouch Communications, Inc. (b)......................... 96,500 9,318,281
American Power Conversion (b)............................. 15,900 812,888
Analog Devices, Inc. (b).................................. 27,000 803,250
Apple Computer, Inc. (b).................................. 22,400 922,600
AT&T Corporation.......................................... 304,900 27,669,675
Ault Inc. (b)............................................. 500 4,062
Autodesk, Inc. ........................................... 7,400 326,987
Automatic Data Processing, Inc............................ 102,100 4,345,631
Avnet, Inc................................................ 6,100 274,119
Baldor Electric Company................................... 5,900 116,894
Broderbund Software Inc. (b).............................. 36,400 1,699,425
Ceridian Corp. (b)........................................ 12,000 952,500
Cisco Systems, Inc. (b)................................... 266,650 29,748,141
Citizens Utilities Company................................ 43,067 336,461
Compaq Computer Corporation............................... 286,988 13,667,804
Computer Associates International, Inc. .................. 92,800 4,698,000
Cooper Industries, Inc.................................... 18,600 770,737
Dell Computer Corp. (b)................................... 215,000 21,500,000
EMC Corp. Mass (b)........................................ 84,700 9,221,712
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS--(Continued)
January 31,1999
(unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Technology--continued
Emerson Electric Company.................................. 74,300 $ 4,323,331
Grainger (W.W.), Inc...................................... 15,900 647,925
Hewlett-Packard Company................................... 175,100 13,723,462
Hubbell Incorporated...................................... 10,660 390,422
Hutchinson Technology (b)................................. 3,100 142,987
Inprise Corp. (b)......................................... 7,900 40,487
Intel Corporation......................................... 281,400 39,659,812
LSI Logic (b)............................................. 23,500 655,062
Lucent Technologies, Inc. ................................ 222,000 24,988,875
Merix Corporation (b)..................................... 600 3,619
Micron Technology, Inc. (b)............................... 36,000 2,812,500
Microsoft Corporation (b)................................. 421,000 73,675,000
Molex Incorporated........................................ 25,937 770,005
National Semiconductor Corporation (b).................... 27,600 357,075
Novell Inc. (b)........................................... 59,100 1,204,162
PeopleSoft, Inc........................................... 39,000 772,687
Perkin-Elmer Corporation.................................. 8,400 798,525
QRS Corporation (b)....................................... 1,200 60,000
Raychem Corporation....................................... 13,100 329,137
Scientific Atlanta Inc. .................................. 12,300 382,837
Shared Medical Systems Corporation........................ 4,100 192,700
Solectron Corporation (b)................................. 19,900 1,772,344
Sprint Corporation........................................ 72,700 6,097,712
Sun Microsystems, Inc. (b)................................ 64,200 7,174,350
Symantic Corporation...................................... 9,300 190,069
Tektronix, Inc. .......................................... 7,700 194,906
Tellabs, Inc. (b)......................................... 32,800 2,812,600
Texas Instruments, Inc. .................................. 65,900 6,515,862
Thomas & Betts Corporation................................ 9,200 406,525
Xilinx, Inc. (b).......................................... 12,000 996,000
------------
323,066,951
------------
Transportation--1.1%
Airborne Freight Corporation.............................. 7,800 273,000
Alaska Air Group, Inc. (b)................................ 4,100 206,537
AMR Corporation (b)....................................... 30,700 1,803,625
Consolidated Freightways Corporation (b).................. 3,100 49,600
Delta Air Lines, Inc. .................................... 24,800 1,353,150
FDX Holding Corporation (b)............................... 24,900 2,034,019
GATX Corporation.......................................... 8,000 297,500
Norfolk Southern Corporation.............................. 64,000 1,764,000
Roadway Express, Inc. .................................... 2,800 46,375
Ryder System, Inc. ....................................... 11,500 280,312
Southwest Airlines Co. ................................... 56,850 1,527,844
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Transportation--continued
UAL Corporation (b)....................................... 9,600 $ 597,600
Yellow Corporation (b).................................... 3,700 66,369
------------
10,299,931
------------
Utilities--7.6%
AGL Resources Inc......................................... 9,000 181,125
American Water Works, Inc................................. 13,500 400,781
Ameritech................................................. 186,300 12,132,787
Aquarion Company.......................................... 1,100 42,419
Bell Atlantic Corporation................................. 262,022 15,721,320
BellSouth Corporation..................................... 330,200 14,735,175
CalEnergy Company, Inc. (b)............................... 9,600 306,000
Cleco Corporation......................................... 3,500 110,250
Connecticut Energy Corporation............................ 1,500 40,594
Eastern Enterprises....................................... 3,400 136,850
El Paso Energy Corporation................................ 20,000 660,000
Energen Corporation....................................... 4,600 78,487
Equitable Resources, Inc. ................................ 5,900 153,769
Frontier Corporation...................................... 28,600 1,033,175
Idaho Power Company....................................... 6,000 197,250
KeySpan Energy............................................ 26,400 714,450
LG&E Energy Corp.......................................... 21,700 572,337
MCN Corporation........................................... 12,600 223,650
New Century Energies, Inc. ............................... 19,100 840,400
NICOR Inc. ............................................... 7,800 300,787
Northwest Natural Gas Co. ................................ 3,900 91,650
Northwestern Corp. ....................................... 3,600 95,850
Oklahoma Gas and Electric Company......................... 12,900 326,531
Peoples Energy Corporation................................ 5,500 189,750
Potomac Electric Power Company............................ 19,900 463,919
SBC Communications Inc. .................................. 330,258 17,833,932
Sonat Inc. ............................................... 18,300 471,225
Telephone and Data Systems, Inc. ......................... 10,200 543,150
U S West Communications Group (b)......................... 84,741 5,227,459
Washington Gas Light Company.............................. 7,500 180,000
------------
74,005,072
------------
Vehicle Components--0.4%
Cooper Tire and Rubber Company............................ 12,400 265,825
Cummins Engine Company, Inc. ............................. 6,900 262,200
Dana Corporation.......................................... 27,700 1,139,162
Federal-Mogul Corporation................................. 11,000 651,750
Genuine Parts Company..................................... 30,000 956,250
Modine Manufacturing Company.............................. 4,600 132,250
</TABLE>
18
<PAGE>
PORTFOLIO OF INVESTMENTS--(Concluded)
January 31,1999
(unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Vehicle Components--continued
Smith (A.O.) Corporation................................... 3,700 $ 88,800
Spartan Motors, Inc. (b)................................... 1,700 10,200
SPX Corporation............................................ 4,916 347,779
------------
3,854,216
------------
Total Investments(a)--99.7%....................................... $969,818,253
Other Assets, less liabilities--0.3%.............................. 2,903,137
------------
NET ASSETS--100.0%................................................ $972,721,390
============
</TABLE>
- -------
(a) The aggregate cost for book and federal income tax purposes is
$646,719,849, the aggregate gross unrealized appreciation is $336,191,769,
and the aggregate gross unrealized depreciation is $13,093,365, resulting
in net unrealized appreciation of $323,098,404.
(b) Non-income producing security.
19
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1999
(unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments at value (Cost $646,719,849).......................... $969,818,253
Cash.............................................................. 9,651,113
Dividends receivable.............................................. 860,644
------------
Total assets................................................... 980,330,010
------------
LIABILITIES:
Payable for securities purchased.................................. 7,262,726
Accrued expenses (Note 2)......................................... 345,894
------------
Total liabilities.............................................. 7,608,620
------------
NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS.......... $972,721,390
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended January 31, 1999
(unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding tax of $192).............. $ 4,133,933
------------
EXPENSES:
Management fee (Note 2)......................................... 732,324
Professional fees............................................... 40,239
Custody fees (Note 3)........................................... 151,869
Trustee fees.................................................... 2,000
Miscellaneous................................................... 2,365
------------
Total expenses.................................................. 928,797
Fees paid indirectly......................................... (139,159)
Expenses paid and fee waived by manager...................... (59,667)
------------
Net expenses................................................. 729,971
------------
NET INVESTMENT INCOME........................................... 3,403,962
NET REALIZED GAIN ON INVESTMENTS
Proceeds from sales................................ $ 56,957,056
Cost of securities sold............................ 47,479,386
------------
Net realized gain on investments............................. 9,477,670
NET CHANGES IN UNREALIZED APPRECIATION OF INVESTMENTS
Beginning of period................................ $175,720,768
End of period...................................... 323,098,404
------------
Net change in unrealized appreciation........................ 147,377,636
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $160,259,268
============
</TABLE>
See Notes to Financial Statements
20
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JANUARY 31, 1999 YEAR ENDED
(UNAUDITED) JULY 31, 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From Operations:
Net investment income.......................... $ 3,403,962 $ 4,628,319
Net realized gain on investments............... 9,477,670 4,836,426
Net change in unrealized appreciation of in-
vestments..................................... 147,377,636 84,559,360
------------ ------------
Net Increase in Net Assets Resulting from Oper-
ations........................................ 160,259,268 94,024,105
------------ ------------
Transactions in Investors' Beneficial Interest:
Additions...................................... 176,349,371 267,044,708
Reductions..................................... (6,122,884) (11,192,148)
------------ ------------
Net Increase in Net Assets from Transactions in
Investors' Beneficial Interests............... 170,226,487 255,852,560
------------ ------------
Total Increase in Net Assets.................... 330,485,755 349,876,665
NET ASSETS:
Beginning of period............................ 642,235,635 292,358,970
------------ ------------
End of period.................................. $972,721,390 $642,235,635
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS FOR THE YEARS ENDED JULY 31,
ENDED
JANUARY 31, 1999 ----------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Assets (000's)...... $972,721 $642,236 $292,359 $100,401 $54,003
Ratio of net investment
income to average net
assets................. 0.92%(1) 1.05%(2) 1.34% 1.48%(4) 1.85%(5)
Ratio of expenses to av-
erage net assets....... 0.23%(1)(3) 0.24%(2)(3) 0.29%(3) 0.59%(3)(4) 0.43%(5)
Portfolio turnover
rate................... 8% 5% 1% 5% 6%
</TABLE>
(1) Reflects a voluntary expense reimbursement and fee waiver of 0.02% the
Manager. Had the manager not waived their fee and reimbursed expenses, the
annualized ratios of net investment income and expense to average net
assets for the six months ended January 31, 1999 would have been 0.90% and
0.25%, respectively.
(2) Reflects a waiver of 0.01% of fees by the Manager due to limitations set
forth in the Management Agreement. Had the Manager not waived their fees,
the ratios of net investment income and expenses to average net assets for
the year ended July 31, 1998 would have been 1.04% and 0.25%, respectively.
(3) Ratio of expenses to average net assets for the years ended July 31, 1998,
1997 and 1996 include indirectly paid expenses. Excluding indirectly paid
expenses, the expense ratios would have been 0.20%, 0.25% and 0.50% for the
years ended July 31, 1998, 1997 and 1996, respectively and 0.20% for the
six months ended January 31, 1999.
(4) Had the Expense Payment Agreement and Sponsor Arrangement not been in
place, the ratios of net investment income and expense for the years ended
July 31, 1996 would have been 1.14% and 0.85% respectively.
(5) Reflects a voluntary waiver of fees by the Administrator and Adviser due to
the limitations set forth in the Expense Reimbursement Agreement. Had the
Administrator and Adviser not waived their fees, the ratios of net
investment income and expenses to average net assets for the year ended
July 31, 1995 would have been 1.75% and 0.53% respectively.
See Notes to Financial Statements
21
<PAGE>
Domini Social Index Portfolio
Notes to Financial Statements
January 31, 1999
(unaudited)
NOTE 1--Organization and Significant Accounting Policies
Domini Social Index Portfolio (the "Index Portfolio") is registered under
the Investment Company Act of 1940 (the "Act") as a no-load, diversified,
open-end management investment company which was organized as a trust under
the laws of the State of New York on June 7, 1989. The Index Portfolio intends
to correlate its investment portfolio as closely as is practicable with the
Domini 400 Social Index (the "Index"), which is a common stock index developed
and maintained by Kinder, Lydenberg, Domini & Co., Inc. ("KLD"). The
Declaration of Trust permits the Trustees to issue an unlimited number of
beneficial interests in the Index Portfolio. The Index Portfolio commenced
operations upon effectiveness on August 10, 1990 and began investment
operations on June 3, 1991.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of the Index Portfolio's significant accounting
policies.
(A) Valuation of Investments: The Index Portfolio values securities at the
last reported sale price, or at the last reported bid price if no
sales are reported.
(B) Dividend Income: Dividend income is reported on the ex-dividend date.
(C) Federal Taxes: The Index Portfolio will be treated as a partnership for
U.S. federal income tax purposes and is therefore not subject to U.S.
federal income tax. As such, each investor in the Index Portfolio will
be taxed on its share of the Index Portfolio's ordinary income and
capital gains. It is intended that the Portfolio will be managed in
such a way that an investor will be able to satisfy the requirements of
the Internal Revenue Code applicable to regulated investment companies.
(D) Other: Investment transactions are accounted for on the trade date.
Gains and losses are determined on the basis of identified cost.
NOTE 2--Transactions with Affiliates
(A) Manager. Domini Social Investments LLC ("DSIL" or the "Manager") is
registered as an investment adviser under the Investment Advisers Act
of 1940. The services provided by the Manager consist of investment
supervisory services, overall operational support and administrative
services. The administrative services include the provision of general
office facilities and supervising the overall administration of the
Index Portfolio. For its services under the Management Agreement, the
Manager receives from the Index Portfolio a fee accrued daily and paid
monthly at an annual rate equal to 0.20%. Currently, DSIL is waiving
its fee to the extent necessary to keep aggregate annual operating
expenses of the Index Portfolio (excluding brokerage fees and
commissions, interest, taxes and other extraordinary expenses) at no
greater than 0.20% of the average daily net assets of the Index
Portfolio. This fee waiver is voluntary and may be reduced or
terminated at any time.
(B) Submanager. Mellon Equity provides investment submanagement services to
the Index Portfolio on a day-to-day basis pursuant to a Submanagement
Agreement with DSIL. Mellon Equity does not determine the composition
of the Domini Social Index. Under the Submanagement Agreement, DSIL
pays Mellon Equity an investment submanagement fee equal, on an annual
basis, to 0.10% of the average daily net assets of the Portfolio.
22
<PAGE>
(C) Prior Advisory, Management, Sponsorship and Administrative
Agreements. Prior to October 22, 1997, pursuant to an investment
advisory agreement, KLD served as investment adviser to the Index
Portfolio and furnished continuously an investment program by
determining the stocks to be included in the Index. KLD received from
the Index Portfolio a fee accrued daily and paid monthly at an annual
rate equal to 0.025% of the Portfolio's average daily net assets.
Additionally, prior to October 22, 1997, pursuant to a management
agreement, Mellon Equity served as investment manager and managed the
assets of the Portfolio on a daily basis. Prior to October 22, 1997,
pursuant to a sponsorship agreement, KLD furnished administrative
services for the Portfolio. KLD received from the Portfolio a fee
accrued daily and paid monthly at an annual rate equal to 0.025% of the
average daily net assets of the Portfolio for administrative services.
Prior to November 6, 1996, pursuant to an administrative services
agreement, Signature Broker-Dealer Services, Inc. served as the
administrator of the Portfolio. Prior to October 22, 1997, management
and administration fees with respect to the Portfolio were equal to
0.15% of the Index Portfolio's average daily net assets for its then
current fiscal year.
NOTE 3--Investment Transactions
Purchase and sales of investments, other than U.S. Government securities and
short-term obligations, for the six months ended January 31, 1999 aggregated
$227,916,978 and $56,957,056, respectively. Custody fees of the Portfolio were
reduced by $139,159 which was compensation for uninvested cash left on deposit
with the custodian. Cash balances could have been employed to earn additional
income for the Portfolio.
23
<PAGE>
- --------------------------------------------------------------------------------
Semi-Annual Report
- --------------------------------------------------------------------------------
INVESTMENT ADVISER (BALANCED FUND)
AND ADMINISTRATOR
Green Century Capital Management, Inc.
29 Temple Place
Boston, MA 02111
1-800-93-GREEN
INVESTMENT SUBADVISER (BALANCED FUND)
Winslow Management Company
24 Federal Street
Boston, MA 02110
INVESTMENT MANAGER (INDEX PORTFOLIO)
Domini Social Investments LLC
11 West 25th Street
New York, NY 10010
INVESTMENT SUBMANAGER (INDEX PORTFOLIO)
Mellon Equity Associates
500 Grant Street, Suite 3700
Pittsburgh, PA 15258-0001
COUNSEL TO INDEPENDENT TRUSTEES OF THE FUNDS
Debevoise & Plimpton
555 13th Street, N.W.
Washington, DC 20004
SUBADMINISTRATOR AND DISTRIBUTOR
Sunstone Financial Group, Inc. (Subadministrator)
Sunstone Distribution Services, LLC (Distributor)
207 East Buffalo Street, Suite 400
Milwaukee, WI 53202
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street January 31, 1999
Boston, MA 02116
TRANSFER AGENT
Unified Fund Services, Inc.
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 Balanced
Boston, MA 02110 Fund
- -------------------------------------------------------------------------------
Equity
Fund
An investment for your future
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