UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
GREEN CENTURY FUNDS
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Green Century Funds
29 Temple PlaceLOGO
114 State Street
Boston, MA 02111
December 14, 200502109
September , 2006
Dear Shareholder:
We are writing today to request your vote for a number of importantthe two proposals described in
the accompanying proxy statement concerning the Green Century BalancedEquity Fund and the Green Century
Equity Fund.
Enclosed is a proxy statement describing these proposals, which will be
considered at a Special Meeting of Shareholders of the Funds. The Special
Meeting will be held on February 15, 2006, at 11:00 a.m., Eastern Time, at the
offices of Goulston & Storrs, 400 Atlantic Avenue, Boston, MA 02110.(the
Fund). You are receiving this proxy statement because you were a shareholder of
the Fund on September , 2006 and are entitled to vote.
Green Century Balanced Fund and/orCapital Management, Inc. (Green Century) has been the Fund's
Administrator since the Fund's inception. The Fund's Board of Trustees is now
recommending that Green Century also become the Fund's investment adviser and
that an investment subadviser, Mellon Equity Associates, LLP, be appointed to
perform the Fund's day-to-day portfolio management. The proposals described in
the enclosed materials seek your approval of an Investment Advisory Agreement
and an Investment Subadvisory Agreement in order to effect these changes.
The investment objectives of the Green Century Equity Fund will not change
as a result of these proposals. The Fund currently seeks long-term total return
which matches the performance of the Domini 400 Social/SM/ Index (the Index) by
investing substantially all of its assets in the Domini Social Equity Trust
which in turn invests in the 400 companies included in the Index. The Domini
Social Equity Trust has now received approval from its shareholders to adopt a
different, active investment strategy and raise its fees. In light of those
pending changes, the Board of Trustees of the Fund is recommending that the
Fund continue its existing strategy of investing in a portfolio that seeks to
track the Index - the strategy that you, the Fund's shareholders, selected when
you decided to invest in the Fund. Shareholder approval of the proposed
Investment Advisory and Investment Subadvisory Agreements will allow the Fund
to continue this strategy. As a part of these changes, Green Century has agreed
to lower its fees and reduce the overall expenses of the Fund. The Board of
Trustees has carefully reviewed the proposals and recommends that you vote
"for" each of the proposals.
Enclosed is a proxy statement describing these proposals in more detail.
Please take a few moments to read the enclosed materials. You may then cast
your vote by mail, by phone, or online; instructions are on the enclosed proxy
card(s). In addition, you may vote at a Special Meeting of Shareholders of the
Fund to be held on November 21,
2005, and are entitled to vote., 2006 at 3:00 p.m. Eastern Time at Green
Century's offices at 114 State Street, Boston, MA 02109. You are not required
to attend the Special Meeting in order to cast your vote.
Please take a few moments to read the enclosed materials and then cast
your vote by simply filling out the enclosed card(s), or by calling the
toll-free number listed on the proxy card, or visiting the web site address
listed on the proxy card. As a shareholder, you cast one vote for each share
that you own. Please note that you may receive more than one proxy card if you
own more than one Green Century Funds account. It is very important that you
fill out every proxy card that you receive.today. If the Fundswe do not receive your proxy card, our proxy solicitor, MIS, an ADP company,vote, we may need to contact
you to
encourage you to cast your vote.
Shareholders of the Green Century Balanced Fund and the Green Century Equity
Fund are being asked to vote on various matters which are summarized in a chart
on pages 1 and 2 of the proxy statement. Unless you are a shareholder of both
Funds, you are not being asked to vote for every proposal. Please refer to the
chart on pages 1 and 2 to determine which proposals apply to you.
The second proposal on the proxy card asks shareholders to approve an
Investment Subadvisory Agreement with Trillium Asset Management Corporation
("Trillium") for the Green Century Balanced Fund. Green Century Capital
Management, Inc. ("GCCM"), the investment adviser for the Balanced Fund,
conducted a thorough search for a new Subadvisor for the Fund and recommends
the appointment of Trillium. GCCM sought a firm with a history of dedication to
environmentally responsible investing as well as a strong investment
performance history and a commitment to high standards for compliance. GCCM
believes that Trillium best fits those criteria. As described in the enclosed
proxy statement, the Board of Trustees of the Balanced Fund approved Trillium's
appointment as the subadviser of the Balanced Fund and voted to recommend that
the Balanced Fund's shareholders approve the Investment Subadvisory Agreement
with Trillium.
Other important proposals are presented for your consideration as well. As
described more fully in the enclosed proxy statement, the shareholders of both
Funds are being asked to vote to elect the Funds' Trustees. Each of the Funds'
Trustees serve without pay as volunteers and each is committed to furthering
environmentally responsible investing. Other proposals seek your approval to
amend the Funds' Declaration of Trust for the purpose of providing the Trustees
greater flexibility and your approval to modify or eliminate various
fundamental investment policies of each of the Funds in order to modernize and
standardize these policies.
None of the proposals described in the enclosed materials will change the
key environmental criteria, investment strategies or the investment objectives
of either the Green Century Balanced Fund or the Green Century Equity Fund. The
Funds' Board of Trustees has carefully reviewed these proposals and has
determined that they are fair and reasonable and in shareholders' best
interests. The Board recommends that you vote "For" each of these proposals.
Your vote is important. Please take a moment now to vote by completing your
proxy card(s), or by calling the toll-free number listed on the proxy card or
visiting the web site address listed on the proxy card. If you choose to vote
by mail, please be sure to sign your proxy card and return it in the enclosed
postage-paid envelope.again. If you have any questions regarding the issues to be
voted on, or need assistance, in completing your proxy card, please call 1-800-93-GREEN (1-800-934-7336). For additional information on the voting
process, see Part 2 of the proxy statement.
Thank you in advance for your participation in this important process. Thank
you also for your investment in the Green Century Funds and commitment to
environmentally responsible investing.us at
1-800-93-GREEN.
Sincerely yours,
Kristina A. Curtis
President
Green Century Funds
Amy Perry BassechesWendy Wendlandt
President
Green Century Capital Management, Inc.
TABLE OF CONTENTS
Page
----
Overview of Proxy Statement................................................. 1Statement..................................................................... iv
Notice of Special MeetingMeeting....................................................................... vi
Proxy Statement.............................................................Statement................................................................................. 1
Part 1. Overview......................................................Overview............................................................................. 1
Part 2. Information Regarding Voting and the Special Meeting.......... 4Meeting................................. 2
Part 3. The Proposals................................................. 5Proposals........................................................................ 3
Proposal 1 To elect Trustees ofapprove an Investment Advisory Agreement for the Funds............Equity Fund............. 5
Proposal 2. To approve a newan Investment Subadvisory Agreement for the BalancedEquity Fund......... 1011
Proposal 3. To approve a new Declaration of Trust
for the Funds............................. 20
Proposal 4. To approve changes to and the
elimination of certain fundamental
investment policies for the Balanced
Fund.................................... 26
Proposal 5. To approve changes to and the
elimination of certain fundamental
investment policies for the Equity
Fund.................................... 26
Proposal 6. To authorize the Trustees to select and
change investment subadvisers and
enter into investment subadvisory
agreements without the approval of
shareholders............................ 31
Proposal 7. Other business............................ 32business............................................................. 16
Part 4. Information Regarding the Funds............................... 33Equity Fund................................................ 17
Exhibits
Exhibit A -- Nominating Committee Charter.............................Proposed Investment Advisory Agreement for the Equity Fund...................... A-1
Exhibit B -- Proposed Investment Subadvisory Agreement for the Balanced Fund....................................................... B-1
Exhibit C -- Declaration of Trust of the Funds........................ C-1
Exhibit D -- Fundamental Policies of the Balanced Fund................ D-1
Exhibit E -- Fundamental Policies of the Equity Fund.................. E-1Fund................... B-1
iii
OVERVIEW OF PROXY STATEMENT
A Special Meeting of Shareholders of the Green Century Balanced Fund (the
"Balanced Fund") and the Green Century Equity Fund (the
"Equity Fund") will be held at Goulston & Storrs, 400 Atlantic Avenue,the offices of Green Century Capital Management,
Inc. ("Green Century"), 114 State Street, Boston, MA 02110,02109, on February 15,November [ ],
2006 at 11:3:00 a.m.p.m., Eastern Time, for the purposes described in this proxy
statement.
We encourage you to read this proxy statement carefully before casting your
vote. We have prepared the following questions and answers in order to help
make your decision easier. If you have any further questions, please feel free
to call us at 1-800-93-GREEN (1-800-934-7336).
Q. Who are the Proposed Nominees for Election as Trustees of the Funds?
A. The proposed Nominees for election are John Comerford, David J. Fine,
Douglas M. Husid, Stephen J. Morgan, C. William Ryan, James H. Starr,
Douglas H. Phelps and Wendy Wendlandt. All of the Nominees are current
members of the Board. Mr. Comerford was appointed by the Board in 2005.
Mr. Phelps was appointed by the Board in 1997. Ms. Wendlandt and Messrs.
Fine, Husid, Morgan, Ryan and Starr were elected by the initial shareholder
of the Funds in 1991.
Unlike the majority of mutual funds, the Green Century Funds do not pay
their Trustees any fees; all the Trustees serve as volunteers. Each of the
Trustees is committed to furthering environmentally responsible investing
and advocacy for greater corporate environmental responsibility.
Q. What is the Role of the Board?
A. The Board has responsibility for the overall management and operations of
the Funds, including general supervision of the duties performed by Green
Century Capital Management, Inc. ("GCCM"), as the investment adviser of the
Balanced Fund and the administrator of the Funds, and other service
providers. The Board also appoints the officers of the Funds. The officers
are responsible for supervising and administering the day-to-day operations
of the Funds. The Funds' Board of Trustees is made up of eight individuals,
six of whom are "independent," meaning that they have no formal affiliation
with GCCM or the Funds except in their role as Trustees. In addition, the
Independent Trustees are represented by independent legal counsel to further
ensure that shareholder interests remain paramount.
Q. Why are shareholders of the BalancedEquity Fund being asked to approve the
investment subadvisoryadvisory agreement with Trillium Asset Management Corporation
under Proposal 2?
A. Effective November 28, 2005, Trillium Asset Management Corporation
("Trillium") became the investment subadviser to the Balanced Fund.
Previously, Adams Harkness Asset Management, Inc. ("AHAM") served as the
subadviser of the Balanced Fund. Shareholders of the Balanced Fund are now
being asked to approveGreen Century and the investment
subadvisory agreement with TrilliumMellon Equity Associates, LLP?
A. The Fund currently seeks long-term total return which matches the
performance of the Domini 400 Social/SM/ Index (the "Index") by investing
substantially all of its assets in accordance with applicable law.
Trillium is an independent SEC-registered investment advisory firm devoted
exclusively to environmentally and socially responsible investing. An
employee-owned company, Trilliumanother mutual fund, the Domini Social
Equity Trust (the "Master Fund"). The Equity Fund has been informed that the
Master Fund will implement an active investment strategy and will no longer
invest in the businesssecurities of providing
investment advisory services since 1982. As of September 30, 2005, Trillium
had more than $929 millionthe companies included in assets under management. Trillium applies
environmentalthe Index. Green
Century and social criteria in its management of all its clients'
assets.
Following a thorough search process conducted by GCCM, GCCM recommended that the Board of Trustees consider appointing Trilliumof the Equity Fund believe that it is in
the best interests of the Equity Fund and its shareholders to becontinue to
invest in the Balanced Fund's
subadviser.securities of the companies included in the Index.
Accordingly, if the Proposals are approved, effective November 28, 2006, the
Equity Fund will withdraw its investment from the Master Fund and directly
invest in the securities of the companies included in the Index.
In connection with the change from investing in the Master Fund to direct
investment in the stocks which make up the Index, Green Century recommended,
and the Board approved, the appointment of Green Century as the investment
adviser of the Equity Fund and Mellon Equity Associates, LLP ("Mellon
Equity") as the investment subadviser of the Equity Fund.
The Board of Trustees met with senior staff at Trillium twicehas determined that Green Century and carefully reviewed Trillium's capabilitiesMellon Equity have the
experience, qualifications and track record. The Board
then approved Trillium ascommitment to environmentally responsible
investing to manage the Fund's subadviser. The Board believes that
Trillium will be able to provide the Balanced Fund with strong, long-term
investment subadvisory services that meet the Balanced Fund's environmental
criteria, investment objective and investment strategy.
1
Equity Fund.
Q. If Proposal 2 isthe Proposals are approved, will this affectincrease the expenses that BalancedEquity
Fund shareholders must pay?
A. No. ApprovalNo, in fact the expenses of the Equity Fund will decrease. As you know,
Green Century, as the administrator of the Equity Fund, pays the operating
expenses of the Equity Fund (excluding certain expenses). As of August 3,
2006, Green Century contractually agreed to reduce its administrative fee
such that the Equity Fund's total annual expenses are reduced from 1.50% to
0.95%. This cap on total expenses payable by the Equity Fund will continue
if the investment advisory agreement with Green Century and the investment
subadvisory agreement with Trillium will have
no effect uponMellon Equity are approved. If the amount ofinvestment
advisory fees paidand subadvisory agreements are not approved by the Balanced Fundshareholders, it
is likely that Green Century will not be able to GCCM,continue to reduce its
administrative fee and that the Equity Fund's total annual expenses will
revert to the 1.50% level.
Q. How will Green Century's responsibilities change if the investment advisory
agreement is approved?
A. If the investment advisory agreement is approved by shareholders, Green
Century will act as the investment adviser to the BalancedEquity Fund. Trillium's subadvisory fees are
borneIn its role
as investment adviser, Green Century will, among other things, supervise the
submanagement of the Equity Fund by GCCM, not byMellon Equity and vote proxies for the
Balanced Fund or its shareholders.Equity Fund. Green Century will continue to serve as the Equity Fund's
administrator.
iv
Q. What role would Trilliumwill Mellon Equity play in managing the BalancedEquity Fund?
A. If the investment subadvisory agreement is approved by shareholders, TrilliumMellon
Equity's primary responsibility as the Equity Fund's subadviser will makebe to
implement the day-to-day investment decisionsdaily transactions necessary so that the composition of the
Equity Fund matches the Index as closely as possible. Mellon Equity will not
be responsible for determining the Balanced Fund
consistentcomposition of the Index. In addition,
Mellon Equity will provide Green Century with various reports Green Century
requires to supervise the Balanced Fund's environmental criteria,management of the Equity Fund.
Q. If the proposals are approved, will there be any change in the investment
objective and the guidelines and directions set by GCCM and the Board of
Trustees.
Q. Why did the Board decide to terminate the Balanced Fund's investment
subadvisory agreement with AHAM/Winslow?
A. AHAM served as the Fund's investment subadviser through its subsidiary,
Winslow Management Company ("WMC"). On August 31, 2005, AHAM sold
substantially all of the assets of WMC (other than the investment
subadvisory agreement with GCCM and the Balanced Fund) to Winslow Management
Company, LLC, a newly formed Delaware corporation ("Winslow"). Winslow is
collectively controlled by persons who had served as the Balanced Fund's
portfolio manager, back-up portfolio manager and operations and compliance
manager at WMC. In order for AHAM to continue to provide high quality
portfolio management services to the Balanced Fund and for continuity of
portfolio management, AHAM entered into an arrangement with Winslow which
provided that those persons would also continue to be employed by AHAM and
continue to provide the same services to the Balanced Fund as had been
provided to the Balanced Fund prior to the sale. AHAM informed the Board and
GCCM, however, that it did not intend to continue the business of WMC and
terminated the investment subadvisory agreement among AHAM, GCCM and the
Balanced Fund effective no later than February 21, 2006. Given these
circumstances, the Board determined that it was in the best interest of the
Balanced Fund's shareholders to terminate the investment subadvisory
agreement with AHAM prior to February 21, 2006 and enter into an investment
subadvisory agreement with Trillium.
Q. Why are the shareholders of the Funds being asked to approve a new
Declaration of Trust under Proposal 3?Equity Fund?
A. The new Declaration of Trust will give the Trustees more flexibility and
broader authority to act than the Declaration of Trust currently in effect
for the Funds. This increased flexibility may allow the Trustees to react
more quickly to changes in competitive and regulatory conditions and, as a
consequence, may allow the Funds to operate in a more efficient and
economical manner. Adoption of the new Declaration of Trust will not remove
any of the protections of federal law or alter in any way the Trustees'
existing fiduciary obligations to act with due care and in your best
interest.
Q. What is a "fundamental investment policy"? Why are shareholders being asked
to approve Proposals 4 and 5, which would amend or eliminate certain
fundamental investment policies of the Funds?
A. A "fundamental investment policy" is a policy that cannot be changed without
a shareholder vote. There are a number of policies that the Funds follow
that are currently "fundamental." We are asking that you approve the
modification or elimination of certain of these policies.
After the Funds were established, certain legal and regulatory requirements
applicable to mutual funds changed.No. The purpose of the proposed changes to
these fundamental investment policiesproposals is to modernize and standardizeenable the policies followed by the Funds, andEquity Fund to provide each Fund with the
flexibility permitted by lawcontinue to
pursue its current investment objective. With
respect toobjective of achieving long-term total return
which matches the performance of an index comprised of the stocks of 400
companies selected based on social and environmental criteria. If the
investment advisory agreement and investment subadvisory agreement are
approved by shareholders, the Equity Fund, these changesFund's investment strategy will conform the
2
fundamental investment restrictions of the Fund more closely to the
fundamental investment restrictions of the Domini Social Index Trust, the
master portfolio in which the Equity Fund invests substantiallychange
from investing all of its assets. These changes will allow the Funds to react to changesassets in the industry andMaster Fund to directly investing in
the marketplace without delay and without the expense of
holding a shareholder meeting. Please note, however, that there is no
current intention to change how the Funds are managed.
Q. Why are shareholders being asked to authorize the Trustees to select and
change subadvisers and enter into investment subadvisory agreements without
the approval of shareholders?
A. Authorizing the Trustees to select and change subadvisers and enter into
investment subadvisory agreements without the approval of shareholders would
facilitate the efficient supervision and managementsecurities of the Funds by GCCM and
the Trustees, give GCCM flexibility in managing the Fundscompanies included in the future, and
avoid the substantial costsIndex. The Equity Fund's
commitment to principles of a shareholder meeting should a new subadviser
be appointed. Please note that the Trustees wouldenvironmentally responsible investing will not
however, be able to
replace GCCM as the investment adviser of the Funds without complying with
the 1940 Act and applicable regulations governing shareholder approval of
investment advisory contracts. In addition to shareholder approval of
Proposal 6, the Funds will need to obtain exemptive relief from the
Securities and Exchange Commission in order to select and change investment
subadvisers and enter into investment subadvisory agreements without
shareholder approval.change.
Q. How does the Board of Trustees recommend that I vote?
A. The Board of Trustees has carefully reviewed alleach of the proposals and
recommends that you vote FOR each proposal on the enclosed proxy card.card(s).
Following each proposal is a brief discussion of the factors the Trustees
considered before granting their approval.
Q. I am not a shareholder of both Funds. How do I know which proposals to vote
on? (Note: If you are a shareholder of both Funds you may receive more than
one proxy card, depending on how your accounts are registered. Please be
sure to vote on every proposal for the Fund(s) in which you are invested and
on every proxy card that you receive.)
A. Please refer to the chart on pages 1 and 2 of this proxy statement to
determine which proposals apply to you.
Q. If any of these proposals are approved, will there be any change in the
investment strategies used by the Balanced Fund or the Equity Fund?
A. No. There is no current intention to change any of the key investment
strategies or the investment objectives of the Balanced Fund or the Equity
Fund, including the Funds' commitment to principles of environmentally
responsible investing. We are asking you to approve the proposals described
in this proxy statement because we believe, and the Board of Trustees
believes, that they are in your best interests.approving each proposal.
Q. How do I vote?
A. You can vote by mail, by telephone or via the internet. Please see the
instructions set forth on the top portion of the enclosed proxy card(s). You
may also vote in person by attending the Special Meeting of Shareholders.
The meeting will be held at Goulston & Storrs, 400 Atlantic Avenue,the offices of Green Century, 114 State Street,
Boston, MA 02110,02109, on February 15,November [ ], 2006 at 11:3:00 a.m.p.m. Eastern Time. You do
not need to attend in person in order to cast your vote.
3v
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
29 Temple Place114 State Street, Suite 200
Boston, MA 0211102109
Telephone: 1-800-93-GREEN (1-800-934-7336)
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
To be held February 15,November [15], 2006
A Special Meeting of Shareholders of the Green Century Balanced Fund (the
"Balanced Fund") and the Green Century Equity Fund (the
"Equity Fund") will be held at Goulston & Storrs, 400 Atlantic Avenue,the offices of Green Century Capital Management,
Inc., 114 State Street, Boston, MA 02110,02109, on February 15,November [ ], 2006 at 11:3:00 a.m.p.m.,
Eastern Time, for the purposes listed below.
Certain of the proposals listed below will be voted on by the shareholders
of the Balanced Fund only or by the shareholders of the Equity Fund only.
Certain other proposals listed below will be voted on by the shareholders of
both the Balanced Fund and Equity Fund. For further information please refer to
pages 1 and 2 of the Proxy Statement.
Please review the proposals listed below carefully and be sure to vote on each
proposal on which you are asked to vote.
Proposal 1. To be voted on by shareholders of both Funds:
To elect Trustees ofapprove an Investment Advisory Agreement for the Funds.Equity Fund between the Equity
Fund and Green Century Capital Management, Inc.
Proposal 2. To be voted on by shareholders of the Balanced Fund only: To approve an Investment Subadvisory Agreement for the BalancedEquity Fund among the
BalancedEquity Fund, Green Century Capital Management, Inc. and Trillium Asset
Management Corporation.Mellon Equity Associates,
LLP.
Proposal 3. To be voted on by shareholders of both Funds:
To authorize the Trustees to adopt a new Declaration of Trust for the Funds.
Proposal 4. To be voted on by shareholders of the Balanced Fund only:
To approve changes to and the elimination of certain fundamental investment policies
of the Balanced Fund.
Proposal 5. To be voted on by shareholders of the Equity Fund only:
To approve changes to and the elimination of certain fundamental investment policies
of the Equity Fund.
Proposal 6. To be voted on by shareholders of both Funds:
To authorize the Trustees to select and change investment subadvisers and enter into
investment subadvisory agreements without obtaining the approval of shareholders.
Proposal 7. To transact such other business as may properly come before the Special Meeting of
Shareholders and any adjournments of the Special Meeting.
The Board of Trustees of the FundsEquity Fund recommends that you vote in favor
of each
of Proposals 1 through 6.the Proposals.
Only shareholders of record on November 21, 2005September , 2006 will be entitled to vote
at the Special Meeting of Shareholders and at any adjournments thereof.
Amy Perry Basseches, SecretaryKristina Curtis, President
Green Century Funds
December 14, 2005September , 2006
YOUR VOTE IS IMPORTANT. If you promptly vote, sign and return the enclosed
proxy card(s) you will help avoid the additional expense of a second
solicitation. The enclosed addressed envelope requires no postage and is
provided for your convenience. You may also vote by calling the toll-free
number listed on the proxy card, or visiting the web site address listed on the
proxy card.
vi
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
29 Temple Place114 State Street, Suite 200
Boston, MA 0211102109
Telephone: 1-800-93-GREEN (1-800-934-7336)
PROXY STATEMENT
This Proxy Statement is being furnished to you in connection with the
solicitation of proxies by the Board of Trustees of the Green Century Balanced
Fund (the "Balanced Fund") and the Green Century Equity
Fund (the "Equity Fund") for use at a Special Meeting of Shareholders of these Funds,the
Equity Fund, or any adjournment thereof, to be held at Goulston & Storrs, 400 Atlantic Avenue,the offices of Green
Century Capital Management, Inc., 114 State Street, Boston, MA 02110,02109, on
February 15,November [ ], 2006 at 11:3:00 a.m.p.m., Eastern Time, for the purposes set forth in
the accompanying Notice of Special Meeting.
The Equity Fund's Annual Report for the fiscal year ended July 31, 2005,
including audited financial statements, and Semi-Annual Report for the period
ended January 31, 2006, have previously been sent to shareholders and are
available without charge by written request to Green Century Capital
Management, Inc., 114 State Street, Suite 200, Boston, MA 02109, by calling
Green Century Capital Management at 1-800-93-GREEN (1-800-934-7336), or by
downloading the reports from our website at www.greencentury.com.
This Proxy Statement is divided into the following four parts:
Part 1. Overview. PagePages 1
Part 2. Information Regarding Voting and the Special Meeting. Page 4Pages 2
Part 3. The Proposals. Page 5Pages 3
Part 4. Information Regarding the Funds. Page 33Equity Fund. Pages 17
This Proxy Statement was first mailed to shareholders on or about December 14, 2005.September
, 2006.
PART 1. OVERVIEW.
The Board of Trustees of the Balanced Fund and theGreen Century Equity Fund have(the "Equity Fund" or
the "Fund") has called a Special Meeting of Shareholders for the purposes
described in the accompanying Notice of Special Meeting and as summarized
below. The purpose of this Proxy Statement is to provide you with additional
information regarding the proposals to be voted on at the Meeting and to
request your vote in favor of the proposals.
The following table lists the proposals, the affected Funds and the pages of
the Proxy Statement where the proposals are discussed in detail:
FUND WHOSE
SHAREHOLDERS ARE
PROPOSAL ENTITLED TO VOTE PAGE
-------- ------------------------- ----
1. To elect Trustees of Green Century Page 5
the Funds Balanced Fund
Green Century Equity Fund 2. To approveis an Green Century Balanced Page 10
Investment Subadvisory Fund
Agreement with
Trillium Asset
Management Corporation
3. To authorize the Green Century Balanced Page 20
Trustees to adopt a Fund
new Declaration of Green Century Equity Fund
Trust for the Funds.
4. To approve changes to Green Century Page 26
and the elimination of Balanced Fund
certain fundamental
investment policies of
the Green Century
Balanced Fund.
1
FUND WHOSE
SHAREHOLDERS ARE
PROPOSAL ENTITLED TO VOTE PAGE
-------- --------------------------- ----
5. To approve changes to Green Century Equity Fund Page 26
and the elimination of
certain fundamental
investment policies of
the Green Century
Equity Fund.
6. To authorize the Green Century Balanced Fund Page 31
Trustees to select and Green Century Equity Fund
change investment
subadvisers and enter
into investment
subadvisory agreements
without obtaining the
approval of
shareholders.
The Funds are open-end management investment companies,company, or mutual
funds.fund. The
Balanced Fund seeks capital growth and income from a diversified portfolio of
stocks and bonds which meet the Green Century Funds' standards for corporate
environmental responsibility. The Equity Fund is an index fund whose investment objective is to achieve
long-term total return which matches the performance of an index comprised of
stocks of 400 companies selected based on social and environmental criteria.
Summary of Proposals
Each of the following proposals is discussed in more detail in Part 3 of
this Proxy Statement.
Proposal 1. ElectionApproval of an Investment Advisory Agreement for the Equity Fund
between the Equity Fund and Green Century Capital Management, Inc.
Currently, the Equity Fund pursues its investment objective by investing
substantially all of its assets in the Domini Social Equity Trust, which in
turn invests in the 400 companies included in the Domini 400 Social/SM/ Index
(the "Index"). Accordingly, the Fund does not currently have its own investment
adviser. Because the
1
Domini Social Equity Trust will change its investment strategy, the Board of
Trustees of the Funds.
The Funds areFund proposes that effective November 28, 2006, the Fund
directly invest in the securities of the companies included in the Index. In
order to execute this new investment strategy, the Board of Trustees is
proposing that you elect John Comerford, David J. Fine,
Douglas M. Husid, Stephen J. Morgan, C. William Ryan, James H. Starr, Douglas
H. Phelps and Wendy WendlandtGreen Century Capital Management, Inc. ("Green Century"), the
Fund's administrator, be appointed as Trusteesthe Fund's investment adviser. The Board
has determined that Green Century will be able to effectively oversee the
Equity Fund's direct investment in the securities of the Funds (each, a "Nominee" and
collectively,companies included in
the "Nominees"). EachIndex.
Shareholders of the Nominees is currently a Trustee ofFund are asked to approve an Investment Advisory
Agreement between the Funds. This Proposal is discussed in more detail underFund and Green Century. See Proposal 1 beginning
on page 5.in Part 3 for more
information.
Proposal 2. Approval of an Investment Subadvisory Agreement for the Equity
Fund among the BalancedEquity Fund, Green Century Capital Management, Inc. and Trillium Asset
Management Corporation.Mellon
Equity Associates, LLP.
In order to execute the change from investing substantially all of its
assets in the Domini Social Equity Trust to direct investment in the stocks
which make up the Index, Mellon Equity Associates, LLP ("Mellon Equity ") is
proposed as the investment subadviser of the Fund. The Balanced Fund is proposingBoard has determined
that youMellon Equity has the experience in index investing and commitment to
environmentally responsible investing to manage the Equity Fund.
Shareholders are asked to approve an Investment Subadvisory Agreement among
the BalancedEquity Fund, Green Century Capital Management, Inc.
("GCCM"), and Trillium Asset Management Corporation, LLC ("Trillium").
Effective November 28, 2005, Trillium Asset Management Corporation became the
investment subadviser to the Balanced Fund. Previously, Adams Harkness Asset
Management, Inc. served as the subadviser of the Balanced Fund. The Board and
GCCM believe that Trillium will be able to provide the Balanced Fund with
strong, long-term investment subadvisory services that meet the Balanced Fund's
investment objective and investment strategy.Mellon Equity. See Proposal 3. Approval of Changes to the Declarations of Trust.
The Funds are proposing that you approve a restatement of their Declaration
of Trust. The Declaration of Trust is the document which establishes the Funds
under state law. The restated Declaration of Trust will, among other things:
. provide that the Funds may be reorganized or reincorporated2 in another
jurisdiction without shareholder approval;
. provide that the Declaration of Trust can be amended without shareholder
approval in most cases;
2
. provide the Trustees with the ability to invest all or any portion of a
Fund's assets inPart 3 for
more than one investment company in what is sometimes
referred to as a "fund of funds" structure;
. clarify the Funds' redemption procedures;
. clarify that the Funds may impose redemption fees and back-end sales
charges (although neither Fund has any current intention to change the
redemption fees currently in place or impose back-end sales charges);
. permit the Funds to suspend redemptions or postpone the payment of
redemption proceeds to the extent permitted by the 1940 Act;
. provide that shareholders may not, except in certain circumstances, bring
a lawsuit on behalf of a Fund without first asking that the Trustees
bring such lawsuit;
. limit the liability of Trustees who receive special expert, chairperson
or lead independent trustee designations;
. provide for dollar-weighted voting; and
. clarify that the Trustees can divide shares of a Fund into one or more
classes and can establish the rights, privileges and preferences of any
such classes.
The other proposed changes to the Funds' Declaration of Trust are described
under Proposal 3 beginning on page 20.
The restated Declaration of Trust will not change how the Funds are managed.
Rather, the proposed changes to the Declaration of Trust will give the Trustees
more flexibility and, subject to the requirements of law, broader authority to
act if they determine that to do so would be in the shareholders' interests.
Proposals 4 and 5. Approval of Changes to Certain Fundamental Investment
Policies of the Funds.
The Funds are proposing that their respective shareholders approve certain
changes to the fundamental investment policies of each Fund.
The proposed changes to the fundamental investment policies of the Funds
will not change how the Funds are managed. The proposed changes are intended to
eliminate certain policies that the Trustees have found to be unnecessary or
unduly restrictive and to conform certain policies of the Equity Fund to those
of the Index Trust, the master portfolio in which the Equity Fund invests
substantially all of its assets. These Proposals are discussed in more detail
beginning on page 26.
Proposal 6. Authorize the Trustees to Select and Change Investment
Subadvisers and Enter Into Investment Subadvisory Agreements Without Obtaining
the Approval of Shareholders.
The 1940 Act requires that all contracts pursuant to which persons serve as
investment advisers or subadvisers to investment companies be approved by
shareholders. The Securities and Exchange Commission has previously granted
exemptions from these shareholder vote requirements provided that certain
conditions are satisfied, including shareholder approval of this Proposal. If
the Funds were to obtain similar exemptive relief and this Proposal 6 is
approved, the Board of Trustees would be able to select and change investment
subadvisers and enter into investment subadvisory agreements without obtaining
the approval of shareholders. The Trustees would not, however, be able to
replace GCCM as the investment adviser of the Funds without complying with the
1940 Act and applicable regulations governing shareholder approval of
investment advisory contracts.
3
information.
PART 2. INFORMATION REGARDING VOTING AND THE SPECIAL MEETING.
Voting Process
You can vote in any one of the following ways:
. By mail, by filling out and returning the enclosed proxy card;card(s);
. By telephone, by dialing the toll-free number listed on the proxy card;card(s);
. By the internet, by visiting the web site address listed on the proxy
card;card(s); and
. In person at the Meeting.
Whichever method you choose to vote, please carefully read this Proxy
Statement, which describes in detail the proposals upon which you are asked to
vote.
Your votes will be tabulated as follows:
.If you received more than one proxy card, please vote each proxy card
separately, either by returning each card via mail or by voting each card on
the votes oftoll-free number or via the shareholders of the Balanced Fund and the Equity Fund
will be tabulated together for Proposal 1;
. only votes of the shareholders of the Balanced Fund will be tabulated for
Proposals 2 and 4;
. only votes of the shareholders of the Equity Fund will be tabulated for
Proposal 5; and
. the votes of the shareholders of the Balanced Fund and the Equity Fund
will be tabulated separately for Proposal 3 and Proposal 6.internet.
If you return your proxy and fail to provide instructions as to how to vote
your shares with respect to any proposal, your shares will be voted FOR that
proposal.
Record Date
The close of business on November 21, 2005September [ ], 2006 has been fixed as the Record
Date for the determination of shareholders entitled to notice of and to vote at
the Meeting. 3,578,882.179 shares of the Balanced Fund (par value $0.01 per share)
and 1,725,485.280[ ] shares of the Equity Fund (par value $0.01 per share)
were outstanding as of the close of business on the Record Date.
As a shareholder of
record at the close of business on the Record Date, you will be entitled to one
vote for each share you own.
Quorum
Holders of a majority of the shares of eachthe Fund outstanding on the Record
Date constitute a quorum and must be present in person or represented by proxy
at the Meeting for purposes of voting on Proposals 1 to 6, as applicable.and 2. Your shares will be
represented by proxy at the Meeting if you vote by mail, by telephone, or by
the internet.
2
Regardless of how you vote ("For", "Against" or "Abstain"), your shares will
be counted for purposes of determining the presence of a quorum. In addition,
broker "non-votes" (that is, shares held by brokers or nominees as to which
(a) instructions have not been received from the beneficial owner or other
persons entitled to vote and (b) the broker or nominee does not have
discretionary power to vote on a particular matter) will be counted for
purposes of determining the presence of a quorum.
If you mark "Abstain" on your proxy card with respect to any proposal on
which you are entitled to vote, your vote will have the effect of a "no" vote
for purposes of obtaining the requisite approval of Proposals 1 to 6.and 2. Broker
"non-votes" will also have the effect of a "no" vote for purposes of obtaining
the requisite approval of Proposals 1 to 6.
4
the Proposals.
Revoking Your Proxy
You may revoke your proxy at any time prior to the Meeting (or any
adjournment or postponement thereof) by putting your revocation in writing,
signing it and either delivering it to the Meeting or sending it to Amy Perry Basseches,F.
Puffer, Secretary of the Green Century Funds, 29 Temple Place,114 State Street, Suite 200,
Boston, MA 02111.02109. You may also revoke your proxy by voting in person at the
Meeting.
Adjournments and Postponements
If sufficient votes in favor of any Proposalproposal are not received, the persons
named as proxies may propose one or more adjournments or postponements of the
Meeting to permit further solicitation of proxies with respect to that
Proposal.proposal. An adjournment or postponement of the Meeting will suspend the
Meeting to another time. Any such adjournment will require the affirmative vote
of a majority of those shares voted at the Meeting. If you voted in favor of a
Proposalproposal or failed to provide instructions as to how to vote your shares with
respect to a Proposal,proposal, the persons named as proxies will vote your shares in
favor of thesuch adjournment of the Meeting with respect to that Proposal.proposal. If you
voted against or abstained from voting on a Proposal,proposal, the persons named as
proxies will vote your shares against any such adjournment. Any Proposalsproposal for
which sufficient favorable votes have been received by the time of the Meeting
may be acted upon and considered final regardless of whether the Meeting is
postponed or adjourned to permit the additional solicitation of proxies with
respect to anythe other Proposals.proposal.
Proxy Solicitation Costs
The cost of soliciting proxies (which is expected to be approximately
$28,000),$40,000) including the fees of a proxy soliciting agent (which areis expected to
be approximately $21,000),$5,500) will be borne by GCCM,Green Century, not the Funds.Equity Fund.
In addition to solicitation by mail and the proxy soliciting agent, proxies may
be solicited by the Board of Trustees, officers, and regular employees and
agents of the FundsEquity Fund and GCCMGreen Century without compensation. GCCMGreen Century
may reimburse brokerage firms and others for their expenses in forwarding proxy
materials to the beneficial owners and soliciting them to execute the proxies.
By voting as soon as you receive your proxy materials, you will help reduce the
cost of additional mailings and other solicitations, which may include
telephone calls to shareholders for the purpose of reminding shareholders to
vote.
PART 3. THE PROPOSALS.
Proposal 1. To electIntroduction
Shareholders of the Green Century Equity Fund (the "Equity Fund" or the
"Fund") are being asked to approve an Investment Advisory Agreement between the
Equity Fund and Green Century Capital Management,
3
Inc. ("Green Century") (the "Advisory Agreement") and an Investment Subadvisory
Agreement among the Equity Fund, Green Century and Mellon Equity Associates,
LLP ("Mellon Equity") (the "Subadvisory Agreement", and together with the
Advisory Agreement, the "Advisory Agreements") for the Fund.
The investment objective of the Equity Fund is to achieve long-term total
return which matches the performance of an index comprised of the stocks of 400
companies selected on the basis of environmental, social and governance
factors. Currently, the Fund is a "feeder" fund within a structure known as a
"master/feeder" mutual fund structure. Rather than invest directly in
securities, the Fund now seeks to achieve its investment objective by investing
substantially all of its assets in a separate fund, or "master" fund called the
Domini Social Equity Trust (the "Master Fund"), which invests in the stocks
which make up the Domini 400 Social/ SM/ Index/1/ (the "Index"). The Index is
comprised of the common stocks of 400 companies and is screened based on social
and environmental criteria.
The Equity Fund has been informed that the Master Fund will implement an
active investment strategy and will no longer invest in the securities of the
companies included in the Index.
The Board of Trustees of the Funds.Fund believes that it is in the best interests
of the Equity Fund and its shareholders to continue to invest in the securities
of the companies included in the Index. Accordingly, at meetings held on
August 3, 2006 and August 24, 2006, the Board approved the withdrawal of the
Fund's investment from the Master Fund, subject to shareholder approval of the
Advisory Agreements. If shareholders of the Equity Fund approve the Advisory
Agreements then, effective November 28, 2006, the Equity Fund, in accordance
with its investment objective, will invest directly in the stocks which make up
the Index.
The Index was the first index constructed using environmental, social and
governance criteria. It was created and launched in May 1990 by the independent
investment research firm of KLD Research & Analytics, Inc. ("KLD") in order to
serve as a benchmark for socially responsible investors and to determine how
social and environmental screening affects the risk and return characteristics
of investment portfolios. The Index is comprised of the common stocks of 400
companies selected on the basis of environmental, social and governance factors.
In connection with the change from a master/feeder structure to direct
investment in the stocks which make up the Index, the Board approved the
appointment of Green Century as the investment adviser of the Fund, subject to
shareholder approval of the Advisory Agreements. In its role as investment
adviser, Green Century will, among other things, supervise the submanagement of
the Fund and vote proxies for the Fund. In connection with its appointment as
the Fund's investment adviser, Green Century will enter into an agreement with
KLD to license the Index. These arrangements will allow the Equity Fund to
continue to invest in the stocks that make up the Index, which is the strategy
the Fund's shareholders selected when they invested in the Fund.
Green Century has also recommended, and the Board has approved, the
appointment of Mellon Equity as the investment subadviser of the Fund, subject
to shareholder approval of the Advisory Agreements. If shareholders approve the
Advisory Agreements, Mellon Equity's primary responsibility as subadviser of
the Equity Fund will be to implement the daily transactions necessary so that
the composition of the Fund matches the Index as closely as possible. Mellon
Equity will not be responsible for determining the composition of the Index. In
addition, Mellon Equity will provide Green Century with various reports Green
Century requires to supervise the management of the Fund.
The Board of Trustees has determined that Green Century and Mellon Equity
have the experience, qualifications and commitment to environmentally
responsible investing to manage the Equity Fund.
--------
/1/ Domini 400 Social/SM/ Index is a service mark of KLD Research & Analytics,
Inc. and is used under license.
4
Proposal 1.To Approve an Investment Advisory Agreement between the Equity Fund
and Green Century Capital Management, Inc.
You are being asked to elect a Boardapprove an Investment Advisory Agreement for the
Equity Fund pursuant to which Green Century will act as the Fund's investment
adviser. The Equity Fund does not currently have an investment adviser since
the Fund seeks to achieve its investment objective by investing all its assets
in the Master Fund. The Master Fund has retained the services of TrusteesDomini Social
Investments LLC ("DSIL") as investment adviser of the Funds. The nomineesMaster Fund. In
connection with the change from a master/feeder structure to direct investment
in the companies included in the Index, the Board approved the appointment of
Green Century as the investment adviser of the Fund and the Advisory Agreement,
subject to shareholder approval.
Terms of the Investment Advisory Agreement
Please refer to Exhibit A attached to this proxy statement for the Board of Trustees are John Comerford, David J. Fine, Douglas M. Husid,
Stephen J. Morgan, C. William Ryan, James H. Starr, Douglas H. Phelpscomplete
Advisory Agreement between the Equity Fund and Wendy
Wendlandt (each, a "Nominee" and collectively, the "Nominees"). EachGreen Century. The description
of the NomineesAdvisory Agreement in this proxy statement is currently a Trusteequalified in its entirety
by the provisions of the Funds.Advisory Agreement attached as Exhibit A.
The Funds do not hold annual shareholder meetings forAdvisory Agreement provides that Green Century will manage the
purpose of
electing Trustees,investment and Trustees are not elected for fixed terms. This means
that each Trustee will be elected to hold office until his or her successor is
elected or until he or she retires, resigns, dies or is removed from office.
Mr. Comerford was appointed by the Board in 2005 and has not been elected by
shareholders. Mr. Phelps was appointed by the Board in 1997 and has not been
elected by shareholders. Ms. Wendlandt and Messrs. Fine, Husid, Morgan, Ryan
and Starr were elected by the initial shareholderreinvestment of the Funds in 1991. EachFund's assets. Green Century will have
authority to determine from time to time what securities are purchased, sold or
exchanged, and what portion of assets of the Nominees has consented to being named in this Proxy Statement and to
serving on the Board if elected.
Unlike the majority of mutual funds, theFund is held uninvested. The
services provided by Green Century Funds do not pay
their Trustees any fees; allshall include determining the Trustees serve as volunteers. Each of the
Trustees is committedmanner in
which voting rights, right to furthering environmentally responsible investing and
advocacy for greaterconsent to corporate environmental responsibility.
5
Q. What is the Role of the Board?
Trustee and Officer Information
The table below sets forth each Nominee's name, age, position and length of
service with the Funds, each Nominee's principal occupation during the past
five years,action and any other directorships held by each Nominee. The address for
each Nominee is 29 Temple Place, Suite 200, Boston, MA 02111.
Number of
Funds in
Position(s) Green
Held with Century
the Funds Family of
and Length Other Funds
of Time Principal Occupation(s) Directorships Overseen
Name and Age Served During Past Five Years Held by Nominee
------------ ----------- ---------------------- ------------- ----------
Independent Trustees*:
John Comerford Trustee Managing Director and Head of Quantitative None 2
Age: 37 since 2005. Trading Research, Nomura Securities International
(since 2003); Vice President and Head of
Quantitative Trading Research, Schwab Capital
Markets (2003); Self-employed (2002-2003);
Portfolio Manager, Symphony Asset Management
(1994-2002).
David J. Fine Trustee Proprietor, Law Offices of David J. Fine (since None 2
Age: 57 since 1991. 2001); Partner, Dangel & Fine (from 1997 to 2001).
Douglas M. Husid Independent Director, Goulston & Storrs, P.C. None 2
Age: 54 Chairperson (since 1991).
since 2005;
Trustee
since 1991.
Stephen J. Morgan Trustee Vice President, AMERESCO, Inc. None 2
Age: 57 since 1991. (since 2000).
C. William Ryan Trustee Independent Tai Chi Instructor (since 2005); None 2
Age: 51 since 1991. Owner/Director, Brookline Tai Chi (1992-2005).
James H. Starr Trustee Attorney, Starr and Associates, PC (since 1982); None 2
Age: 58 since 1991. County Commissioner, Gunnison County, CO
(since 1999).
Interested Trustees**:
Douglas H. Phelps Trustee President (1996-2003) and Director (since 1996), None 2
Age: 58 since 1997. Green Century Capital Management, Inc.;
Chairman, Fund for Public Interest Research (since
1982); President, Telefund, Inc. (since 1988);
President, Grassroots Campaigns, Inc. (since 2003).
Wendy Wendlandt Trustee Senior Staff, Fund for Public Interest Research, None 2
Age: 44 since 1991. Center for Public Interest Research (since 1989).
--------
* A Trustee is deemed to be an "Independent Trustee"rights
pertaining to the extentportfolio securities shall be exercised.
The Advisory Agreement provides that Green Century may render services to
others. Green Century may employ, at its own expense, or may request that the
Trustee
is not an "interested person"Fund, employ (subject to the requirements of the Funds as that term is defined in the Investment Company Act of 1940
as amended (the "1940 Act").
** A Trustee) one or more subadvisers, subject to Green Century's
supervision. The Advisory Agreement is deemed to be an "Interested Trustee" toterminable without penalty upon 60 days'
written notice by the extent the Trustee
is an "interested person"Fund, when authorized either by majority vote of the
Funds as defined in the 1940 Act.
Mr. Phelps is considered to be an Interested Trustee by virtue of his
positions as a Director of Green Century Capital Management, Inc. ("GCCM" or
the "Adviser") and as Chairmanoutstanding voting securities of the Fund, for Public Interest Research, oneor by a vote of the non-for-profit advocacy organizations which founded and owns GCCM.
Ms. Wendlandt is considered to be an Interested Trustee by virtue of her
position with the Fund for Public Interest Research.
6
The table below sets forth, for each Officer of the Funds, his or her name,
age, position and length of service with the Funds and principal occupation
during the past five years. The address for each Officer is 29 Temple Place,
Suite 200, Boston, MA 02111.
Position(s) Held with the Principal
Funds and Length of Occupation(s) During
Name and Age Time Served Past Five Years
------------ ------------------------- --------------------
Kristina A. Curtis President since 2005. Senior Vice President of
Age: 53 Finance and Operations
(since 2002), Chief
Operating Officer (1991
to 2002), Treasurer and
Director (since 1991),
Senior Vice President
(since 1991) Green
Century Capital
Management, Inc.
Ethan Berkwits Treasurer since 2005. Vice President of
Age: 34 Marketing (since 2004),
Secretary (since 2005)
and Director (since
2005), Green Century
Capital Management,
Inc.; Consultant,
Alliance Consulting
Group (1996-2003).
Amy Perry Basseches Secretary and Assistant President (since 2003),
Age: 40 Treasurer since 2003. Senior Vice President,
(2002 to 2003),
Secretary (2002 to 2003)
and Director (since
2002), Green Century
Capital Management,
Inc.; Hiring Director,
Fund for Public Interest
Research (since 1997).
Amy F. Puffer Chief Compliance Officer Chief Compliance
Age: 47 since 2004. Officer, Green Century
Capital Management, Inc.
(since 2004); Senior
Specialist, PFPC, Inc.
(2003-2004); Assistant
Vice President, CDC IXIS
Asset Management
Services, Inc.
(1996-2003).
Compensation of Trustees
No Trustee of the Funds receives any compensation from the Funds, but each
Trustee is reimbursed for any out-of-pocket expenses incurred in attending
meetings of the Board of Trustees or of any committee thereof. Information
regarding compensation paid to the Trustees of the Funds for the fiscal year
ended July 31, 2005 is set forth below. The Funds do not contribute to a retirement plan for the Trustees of the Funds. The Officers do not receive any
direct remuneration from the Funds.
Pension or Total
Retirement Compensation
Aggregate Benefits Estimated from Funds and
Compensation Accrued as Annual Green Century
Name of Person*, from the Part of Funds Benefits Upon Fund Complex
Position Funds Expenses Retirement Paid to Trustees
---------------- ------------ ------------- ------------- ----------------
Independent Trustees:
David J. Fine........ None None None None
Douglas M. Husid..... None None None None
Stephen J. Morgan.... None None None None
C. William Ryan...... None None None None
James H. Starr....... None None None None
Interested Trustees:
Douglas H. Phelps.... None None None None
Wendy Wendlandt...... None None None None
--------
*JohnComerford was not a Trustee of the Funds during the Funds' fiscal year
ended July 31, 2005.
7
Fund Shares Owned by Trustees
The following table shows the dollar range of equity securities beneficially
owned by each Trustee in the Green Century Family of Funds as of October 31,
2005.
Aggregate Dollar
Range of Equity
Securities in all
Investment
Companies
Overseen by
Nominee in
Dollar Range of Equity Securities in Green Century
Name of Trustee Fund/Fund Name Fund Family
--------------- ------------------------------------ -----------------
Independent Trustees:
John Comerford None None
David J. Fine $1-$10,000/Green Century Balanced Fund $1-$10,000
Douglas M. Husid $1-$10,000/Green Century Balanced Fund $1-$10,000
Stephen J. Morgan None None
C. William Ryan $1-$10,000/Green Century Equity Fund $10,001-$50,000
$10,001-$50,000/Green Century Balanced Fund
James H. Starr $1-$10,000/Green Century Equity Fund $10,001-$50,000
$10,001-$50,000/Green Century Balanced Fund
Interested Trustees:
Douglas H. Phelps $10,001-$50,000/Green Century Equity Fund $10,001-$50,000
$10,001-$50,000/Green Century Balanced Fund
Wendy Wendlandt $1-$10,000/Green Century Equity Fund $10,001-$50,000
$1-$10,000/Green Century Balanced Fund
As of November 21, 2005, none of the Independent Trustees of the Funds, or
their immediate family members, owned beneficially or of record any securities
of GCCM, UMB Distribution Services, LLC ("UMB"), the Funds' distributor, or any
person controlling, controlled by or under common control with GCCM or UMB.
"Beneficial ownership" is determined in accordance with Rule 16a-1(a)(2) under
the 1934 Act.
As of November 21, 2005, the Trustees and Officers of the Funds,
individually and as a group, owned beneficially or had the right to vote less
than 1% of the outstanding shares of each Fund.
Meetings and Committees
Board Meetings. During the fiscal year ended July 31, 2005, the Board of
Trustees of the Funds met four times. Each Trustee (other than John Comerford)
attended at least 75% of the meetings during the fiscal year ended July 31,
2005. John Comerford became a Trustee of the Funds on November 21, 2005.
Audit Committee. James H. Starr and Stephen Morgan, each an Independent
Trustee, are members of the Audit Committee. The Audit Committee met once
during the Funds' fiscal year ended July 31, 2005 to select the auditor, review
the Funds' financial statements and audited annual report, to receive the
report of the Funds' independent auditors, and to review the internal and
external accounting procedures of the Funds. Both members of the Audit
Committee attended this meeting.
Nominating Committee. David J. Fine and James H. Starr, each an Independent
Trustee, are members of the Nominating Committee. The Nominating Committee is
responsible for, among other things, screening and nominating candidates to
serve on the Board of Trustees. The Nominating Committee evaluates candidates'
qualifications for board membership. The Committee will consider and evaluate
candidates submitted by shareholders of the Funds on the same basis as it
considers and evaluates candidates recommended by other
8
sources. Shareholder recommendations should be delivered in writing to the
Secretary of the Funds, c/o Green Century Capital Management, Inc. The
Nominating Committee met once during the Funds' fiscal year ended July 31,
2005. The Nominating Committee also met once during the period from August 1,
2005 through November 30, 2005. Both members of the Nominating Committee
attended these meetings. A copy of the Nominating Committee Charter is not
available on the Funds' web site, but is attached to this Proxy Statement as
Exhibit A.
Valuation Committee. Douglas M. Husid and C. William Ryan, each an
Independent Trustee, are members of the Valuation Committeemajority of the
Board of Trustees of the Funds. The Valuation Committee monitors the valuation of fund
investments. The Valuation Committee did not meet during the most recent fiscal
year.
Qualified Legal Compliance Committee. Stephen Morgan, James H. StarrFund, or by Green Century, and C.
William Ryan, each an Independent Trustee, are members of the Qualified Legal
Compliance Committee ("QLCC") of the Board of Trustees of the Funds. The QLCC
is authorized to receive, evaluate and investigate reports of material
violations of law as prescribed by Section 307 of the Sarbanes-Oxley Act of
2002, which shall include, without limitation, the authority to retain such
legal counsel and expert personnel as the QLCC may deem necessary and to notify
the SECwill automatically
terminate in the event the Funds fail to implement a recommendation of the QLCC
following an investigation.its assignment. The QLCC did not meet during the most recent fiscal
year.
Indemnification of Trustees
The Funds' Declaration of TrustAdvisory Agreement provides that
neither it nor its personnel will 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 its services to the Funds will indemnify their
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Funds, unless, with respect to liability to a Fund's shareholders, it is
finally adjudicated that they engaged inFund, except for willful misfeasance, bad
faith, or gross negligence or reckless disregard of its or their obligations
and duties under the duties involved in their offices, or
unless with respect to any other matter itAdvisory Agreement.
If the Advisory Agreement is finally adjudicated that they did
not act in good faith inapproved by the reasonable belief that their actions were in the
best interestsvote of the applicable Fund. Inholders of a
"majority of the caseoutstanding voting securities" (as defined under the heading
"Vote Required" below) of settlement,the Fund, the Advisory Agreement will become
effective on November 28, 2006 and continue in effect until November 28, 2008,
and thereafter will continue in effect if such indemnification will not be provided unless it has been determinedcontinuance is specifically
approved at least annually by a court
or other body approving the settlement or other disposition,Board of Trustees or by a reasonable
determination, based uponmajority of the
outstanding voting securities of the Fund at a reviewmeeting called for the purpose
of readily available facts,voting on the Advisory Agreement, and, in either case, by vote of a majority of the
Trustees who are not "interested persons" (as definedparties to the Advisory Agreement or interested persons of
any such party at a meeting called for the purpose of voting on the Advisory
Agreement.
Investment Advisory and Administrative Fees
The Fund, as an investor in the 1940 Act)Master Fund, currently pays a portion of the
Funds and are not involvedinvestment advisory fee charged to the Master Fund by DSIL. DSIL is entitled to
receive monthly a fee from the Master Fund in the matter,amount of 0.20% of the first
$2 billion of net assets managed, 0.19% of the next $500 million of net assets
managed and 0.18% of net assets managed in excess of $2.5 billion for providing
investment advisory services to the Master Fund.
5
If the shareholders of the Fund approve the Advisory Agreement, the Fund
will redeem its investment in the Master Fund and Green Century will manage the
Fund's investments directly. The Fund will no longer pay a portion of the
investment advisory fee charged to the Master Fund by DSIL but rather will pay
Green Century an investment advisory fee under the Advisory Agreement. Under
the Advisory Agreement, Green Century will be entitled to receive a fee from
the Equity Fund equal on an annual basis to 0.25% of the average daily net
assets of the Equity Fund up to but not including $100 million, 0.22% of the
average daily net assets of the Equity Fund from and including $100 million up
to but not including $500 million, 0.17% of the average daily net assets of the
Equity Fund from and including $500 million up to but not including $1 billion,
and 0.12% of the average daily net assets of the Equity Fund equal to or in
excess of $1 billion for providing investment advisory services to the Fund.
The following table demonstrates (1) the actual portion of the investment
advisory fees paid by the Fund as an investor in the Master Fund for the fiscal
year ended July 31, 2006; (2) the amount the Fund would have paid to Green
Century if the Advisory Agreement had been in effect for that year; and (3) the
difference between these amounts stated as a written
opinionpercentage:
(1)
Actual Investment Advisory
Fees paid by the Fund as an (2)
Investor in the Master Fund Estimated Amount the Fund would
for the fiscal year ended have Paid to Green Century if the (3)
July 31, 2006 Advisory Agreement had been in Effect Percentage Increase
--------------------------- ------------------------------------- -------------------
$68,618 $85,773 25%
Pursuant to an Administrative Services Agreement between the Fund and Green
Century, Green Century, as the Fund's administrator, provides the Fund with
general office facilities, supervises the overall administration of independentthe Fund,
and pays all the operating expenses of the Fund other than the Fund's
investment advisory fees, if any, interest, taxes, brokerage costs and other
capital expenses, expenses of the non-interested Trustees of the Fund
(including counsel fees) and any extraordinary expenses.
For this and other services, the Fund pays Green Century an administrative
fee at a rate such that the Fund's total annual expenses are limited to a
certain percentage of the Equity Fund's average net assets. For the fiscal year
ended July 31, 2006, the Equity Fund accrued $442,588 in administrative fees.
As of August 3, 2006, Green Century has contractually agreed to reduce its
administrative fee so that the Fund's total annual expenses are decreased from
1.50% to 0.95%. This reduction in the administrative fee will continue if the
Advisory Agreements are approved.
To assist you in understanding the effect of the proposed increase in the
advisory fee and the attendent decrease in the administrative fee on the
expense of investing in shares of the Equity Fund, the following table
summarizes the expenses incurred by the Fund for the fiscal year ended July 31,
2006 and also restates these expenses to show what the expenses would have been
had the proposed advisory fee and the lower administrative fee been in effect
during the same period.
6
Current(1) Proposed
---------- --------
Shareholder Fees
(fees paid directly from your investment)
Sales Charge (Load) Imposed on Purchases....................... None None
Deferred Sales Charge (Load)................................... None None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and
Other Distributions.......................................... None None
Redemption Fee (2)............................................. 2.00% 2.00%
Exchange Fee................................................... None None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees................................................ 0.20% 0.25%
Distribution (12b-1) Fees...................................... None None
Other Expenses
Administrative Fees......................................... 1.29%(3) 0.70%(4)
Other Fees.................................................. 0.01% 0.00%
Total Annual Fund Operating Expenses........................... 1.50% 0.95%
--------
(1)For the columns and/or rows that show "current" expenses, the table and the
following example reflect the aggregate fees and expenses of the Equity Fund
and of the Master Fund.
(2)If you redeem or exchange your shares within 60 days of purchase or
acquisition through exchange, you will be charged a redemption fee equal to
2.00% of the net asset value of the shares redeemed or exchanged. However,
the redemption fee will not apply to redemptions or exchanges of shares
acquired through the reinvestment of dividends or distributions. There is no
additional charge to have a check mailed to you. There is a $15 fee to have
your check sent to you via overnight delivery. There is a $10 fee to have
your redemption proceeds wired to your bank account.
(3)Under an Administrative Services Agreement in effect until August 3, 2006,
Green Century, the administrator of the Fund, paid the operating expenses of
the Fund (excluding interest, taxes, brokerage costs and other capital
expenses and any extraordinary expenses). For this and other services, the
Fund paid Green Century an Administrative Fee at a rate such that the Equity
Fund's total annual expenses were limited to 1.50% of the Equity Fund's
average net assets.
(4)Under an Administrative Services Agreement effective August 3, 2006, Green
Century, the administrator of the Fund, pays the operating expenses of the
Fund (excluding interest, taxes, brokerage costs and other capital expenses
and any extraordinary expenses). For this and other services, the Fund pays
Green Century an Administrative Fee at a rate such that the Equity Fund's
total annual expenses are limited to 0.95% of the Equity Fund's average net
assets.
Example. This example is intended to help you compare the costs of investing in
the Fund with the cost of investing in other mutual funds. This example assumes
that: (1) you invest $10,000 in the Fund; (2) you redeem all of your shares at
the end of the periods shown; (3) you earn a 5% return each year; and (4) the
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Current.................. $153 $474 $818 $1791
Proposed................. $ 97 $303 $525 $1166
If the Advisory Agreement is approved, the investment advisory fees payable
by the Fund will increase. However, as a result of Green Century's contractual
agreement to reduce its administrative fee, the total annual Fund operating
expenses will decrease from 1.50% to 0.95%.
7
Information about Green Century
Green Century, a Massachusetts corporation with principal offices located at
114 State Street, Suite 200, Boston, MA 02109, is currently the administrator
for the Equity Fund. Green Century has served as the Fund's administrator since
the Fund commenced operations in 1995. Green Century is also the investment
adviser and administrator for the Green Century Balanced Fund and oversees the
portfolio management of the Balanced Fund on a day-to-day basis. Green Century
has served as investment adviser and administrator for the Balanced Fund since
the commencement of operations of the Balanced Fund in 1992. Green Century does
not currently provide investment advisory services to any other funds.
Green Century 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, Green Century upholds the right of
people to speak for the public interest and corporate responsibility.
Green Century is wholly owned by Paradigm Partners, a California general
partnership, the partners of which are all not-for-profit advocacy
organizations. These organizations are: California Public Interest Research
Group (CALPIRG); Citizen Lobby of New Jersey; Colorado Public Interest Research
Group; ConnPIRG Citizen Lobby; Fund for Public Interest Research; Massachusetts
Public Interest Research Group (MASSPIRG); MOPIRG Citizen Organization; PIRGIM
Public Interest Lobby; and Washington State Public Interest Research Group
(WASHPIRG). MASSPIRG owns approximately 46% of Paradigm Partners.
Management and Governance. Listed below are the names, positions and
principal occupations of the directors and officers of Green Century or its
affiliates as of June 30, 2006. The principal business address of the principal
executive officer and directors of Green Century is 114 State Street, Suite
200, Boston, MA 02109. Certain directors and officers of Green Century are also
Trustees and/or officers haveof the Fund, as noted below:
Position with Position Held
Green Century with the
Name or its Affiliates Fund Other Principal Occupation
---- ----------------- ------------- --------------------------
Wendy Wendlandt President, Green Century;
Senior Staff, Fund for Public
Interest Research, Center for
Public Interest Research. Trustee None.
Kristina A. Curtis Senior Vice President of
Finance and Operations,
Treasurer and Director, Green
Century. President None.
Amy F. Puffer Chief Compliance Officer, Chief
Clerk and Director, Green Compliance
Century. Officer;
Secretary None.
Erin W. Gray Director, Consultant, Green
Century. None None.
Douglas H. Phelps Director, Green Century; President, Telefund, Inc.;
Chairman, Fund for Public President, Grassroots
Interest Research. Trustee Campaigns, Inc.
8
Portfolio Transactions
For the fiscal year ended July 31, 2006, brokerage transactions were not
engaged
in willful misfeasance, bad faith, gross negligenceplaced with any person affiliated with the Equity Fund, Green Century, UMB Fund
Services, Inc. (the Fund's subadministrator), UMB Distribution Services, LLC
(the Fund's distributor), Unified Fund Services, Inc. (the Fund's transfer
agent), or reckless disregard of
their duties. This indemnification provision will not change materially ifInvestors Bank & Trust Company (the Fund's custodian), the restated Declaration of Trust in Proposal 3 is approved.
NominationMaster
Fund, DSIL (the Master Fund's investment adviser), SSgA (the Master Fund's
current investment subadviser) or DSIL Investment Services LLC (the Master
Fund's distributor).
Evaluation by the Nominating Committee and the Board of Trustees
At aan in-person meeting of the Board's Nominating Committee held on October 11, 2005,
the Committee nominated Mr. Comerford to serve as an Independent Trustee of the
Funds. He was appointed to the Board by the Independent Trustees and the full
Board at a meeting held on November 21, 2005. At the November 21, 2005 meeting,
the Board, including the Independent Trustees, agreed that each Trustee of the
Funds should be submitted to shareholders for approval and voted to nominate
such Nominees and recommend election of the Nominees by the shareholders of the
Funds.
Vote Required
The affirmative vote of a plurality of votes cast, voted in person or by
proxy at the Special Meeting, is required for the election of each Nominee toAugust 3, 2006, the Board of Trustees of the
Funds.
If you signEquity Fund, including a majority of the Independent Trustees, considered the
approval of the Advisory Agreement between the Green Century Funds on behalf of
the Equity Fund and return your proxy but give noGreen Century that would become effective upon the
withdrawal of the Equity Fund's investment in the Master Fund.
In connection with their deliberations at that meeting, and at a separate
executive session of the Independent Trustees also held on August 3, 2006, the
Trustees considered, among other things, information provided by Green Century
regarding (1) the nature, quality and extent of the services proposed to be
provided by Green Century to the Fund, (2) expenses of the Fund and the
advisory fee proposed to be paid to Green Century, and (3) the prospective
profitability of the proposed Advisory Agreement to Green Century. The
Independent Trustees were advised by independent counsel in considering these
materials and the approval of the Advisory Agreement. The Trustees considered
all the information provided to them by Green Century, including information
provided throughout Green Century's tenure as investment adviser to the Green
Century Balanced Fund. The Trustees had previously been provided with a
memorandum prepared by their independent counsel with respect to the applicable
legal standards, including the factors to be considered, in connection with the
Trustees' review of the Advisory Agreement. In approving the Advisory Agreement
at the meeting held on August 3, 2006, the Trustees, including the Independent
Trustees, did not identify any single factor as determinative. Matters
considered in connection with their approval of the Agreement included the
following.
Nature, Quality, and Extent of Services Performed. The Trustees considered
the scope and quality of the services proposed to be performed for the Equity
Fund by Green Century, including the resources to be dedicated by Green
Century. These services included the oversight to be provided by Green Century
with respect to the portfolio management and performance of the Equity Fund in
tracking the Index; the implementation of the environmental policies of the
Equity Fund by voting instructions, your
sharesthe Equity Fund's shareholder proxies; and the overall
compliance oversight of the Equity Fund and its other service providers to be
provided by Green Century.
The Trustees also considered that Green Century, upon the direction of the
Trustees, had negotiated a licensing agreement with KLD that would allow the
Equity Fund to continue its existing strategy of investing in a portfolio that
seeks to track the Index. The Trustees considered Green Century's resources and
abilities to be dedicated to marketing the Equity Fund and its ability to
coordinate efforts with KLD to promote the Fund.
In addition, the Trustees considered the administrative services provided by
Green Century, including the oversight and coordination of the activities of
all of the Equity Fund's other service providers.
Based on their review of all the services proposed to be provided and their
analysis of Green Century's ability to provide those services, including its
past demonstrated abilities, the Trustees concluded that Green Century had the
capabilities, resources and personnel necessary to provide advisory services to
the Equity Fund under the Advisory Agreement.
Costs of Services Provided and Profitability. The Trustees considered the
proposed advisory fees to be paid to Green Century by the Equity Fund and the
prospective profitability and fall-out benefits to Green Century
9
from the proposed arrangement with the Equity Fund. The Trustees reviewed and
considered an analysis of the proposed advisory fee, subadvisory fee and total
expense ratio of the Equity Fund, and comparative data for other mutual funds.
The Trustees reviewed the level of the proposed advisory fees compared to
the advisory fees paid by other mutual funds with similar investment objectives
and strategies as the Equity Fund. The Trustees noted that, based on the
information provided, the proposed advisory fees to be paid to Green Century
were lower than the average advisory fees paid by other socially responsible
mutual funds; higher than the average fees paid by equity index funds; and
comparable with the average advisory fees for equity index funds with under
$100 million in assets. The Trustees also considered that the proposed overall
level of fees, including the advisory fee, was lower than the overall present
fee level, including the advisory fee for the Equity Fund's investment in the
Master Fund.
Green Century provided the Trustees with information relating to the
prospective profitability of the Advisory Agreement to Green Century. In that
regard, the Trustees considered the proposed subadvisory fee and the other
expenses that would be incurred by Green Century in providing advisory services
to the Equity Fund. The Trustees also considered that Green Century has
proposed an Amendment to the Administrative Services Agreement for the Equity
Fund which would reduce the total annual expenses of the Fund to 0.95% while
the expenses to be incurred by Green Century in providing services to the Fund
would increase under the new structure.
The Trustees considered that Green Century stated that it would not realize
a profit on the management of the Equity Fund until assets increase
significantly above current levels. In considering the cost allocation
methodology used by Green Century, the Trustees took under consideration that
Green Century does not provide advisory or administrative services to other
mutual fund or non-mutual fund clients other than those services it provides to
the Green Century Balanced Fund. The Trustees also considered Green Century's
non-profit ownership structure, its cost structure and personnel needs, and its
investment in shareholder advocacy to further the Equity Fund's stated
objective of promoting greater corporate environmental accountability. After
reviewing the information described above, the Trustees, including the
Independent Trustees, concluded that the fees provided in the Advisory
Agreement, taking into account the costs of the services provided by the
Adviser and the profitability to the Adviser of its proposed relationship with
the Equity Fund, supported the approval of the Advisory Agreement. The Trustees
also concluded that the fees proposed in the Advisory Agreement were fair and
reasonable in light of the usual and customary charges made by others for
services of the same nature and quality.
Other Benefits. The Trustees evaluated potential other benefits Green
Century may realize from its relationship with the Equity Fund. The Trustees
noted that Green Century would not receive any brokerage fees or soft dollar
benefits from its relationship with the Equity Fund. The Trustees also
considered the reputational and other advantages Green Century may gain from
its relationship with the Equity Fund. The Trustees concluded that the benefits
expected to be received by Green Century were reasonable in the context of the
relationship between Green Century and the Equity Fund, and supported the
approval of the Advisory Agreement.
Investment Performance. The Trustees reviewed and considered information
regarding the investment performance of accounts managed by Green Century and
considered Green Century's experience in evaluating, recommending and
overseeing investment subadvisers who conduct day-to-day portfolio management.
The Trustees noted that Green Century would be responsible for monitoring the
performance of the subadviser in tracking the Index. After considering all the
factors deemed appropriate, the Trustees concluded that Green Century's
experience in overseeing investment subadvisers together with Green Century's
experience in environmentally and socially responsible investing supported the
approval of the Advisory Agreement.
Economies of Scale. The Trustees also considered whether economies of scale
could be realized by Green Century as the Equity Fund grew in asset size and
the extent to which such economies of scale were reflected in
10
the proposed fee schedule. They noted the relatively small size of the Equity
Fund considered that if the assets were to increase, Green Century could have
the opportunity to experience economies of scale as fixed costs would become a
smaller percentage of the Fund's assets and some of the Fund's service
providers' fees, as a percentage of the Fund's assets, could decrease. They
also noted that pursuant to the proposed Advisory Agreement, the advisory fees
proposed to be paid to Green Century include breakpoints at $100 million, $500
million and $1 billion. The Trustees concluded that economies of scale might be
realized as the Fund grew, and that the fee schedule as proposed was
appropriate at the present time, and supported the approval of the Advisory
Agreement.
Based on their review of all factors deemed relevant, the Trustees,
including a majority of the Independent Trustees, concluded that the Advisory
Agreement should be approved and submitted to the Equity Fund's shareholders
for approval. The Trustees also noted that they would consider whether to renew
the Advisory Agreement after an initial two-year period and annually thereafter.
Vote Required
A vote of a majority of the outstanding voting securities of the Equity Fund
(within the meaning of the 1940 Act) will be voted FOR all Nominees named herein.required to approve the Advisory
Agreement. Under the 1940 Act, a "vote of a majority of the outstanding voting
securities" of the Equity Fund means the affirmative vote by holders of the
lesser of (a) 67% or more of the Equity Fund's outstanding voting securities
present at a meeting if holders of more than 50% of the Equity Fund's
outstanding voting securities are present in person or by proxy or (b) more
than 50% of the Equity Fund's outstanding voting securities.
The Advisory Agreement will not go into effect unless the Subadvisory
Agreement described in Proposal 2 is also approved by shareholders of the
Equity Fund. In the event that the Advisory Agreement and the Subadvisory
Agreement do not receive the requisite shareholder approval, the Board of
Trustees will continue the Fund's investment in the Master Fund, negotiate a
new investment advisory agreement with a different advisory organization or
make other appropriate arrangements, in each case subject to approval of
shareholders in accordance with the 1940 Act.
The Board of Trustees recommends that you vote FOR the election of eachapproval of the Nominees to the Board.
9
Advisory
Agreement.
Proposal 2.To Approve a Newan Investment Subadvisory Agreement among the BalancedEquity
Fund, Green Century Capital Management, Inc. and Trillium Asset
Management Corporation.
Background
Shareholders ofMellon Equity
Associates, LLP.
If shareholders approve the Balanced Fund are being asked to approve an Investment
SubadvisoryAdvisory Agreement, dated as of November 28, 2005 (the "Trillium Subadvisory
Agreement") among the Balanced Fund, Green Century Capital Management, Inc.
("GCCM") and Trillium Asset Management Corporation, LLC ("Trillium").
The information in this proxy statement with respect to the Trillium
Subadvisory Agreement is qualified in its entirety by reference to, and made
subject to, the complete text of the Trillium Subadvisory Agreement, a copy of
which is attached to this proxy statement as Exhibit B.
GCCM manages the assets of the Balanced Fund pursuant to an investment
advisory agreement dated as of August 13, 1991, as amended and restated on
March 29, 1999 (the "Investment Advisory Agreement.") The Investment Advisory
Agreement was most recently approved by the Funds' Board of Trustees on
September 30, 2005 when the Trustees approved its continuation for an
additional twelve month period. The Investment Advisory Agreement was approved
by the initial shareholder of the Balanced Fund on February 4, 1992.
Subject to the terms of the Investment Advisory Agreement, GCCM iswill be
responsible for the management of the BalancedEquity Fund. As part of its
responsibilities, GCCM selectsGreen Century may select and employs,employ, subject to the review
and approval of the Board of Trustees and that of shareholders, as may be
required, one or more subadvisers to invest the BalancedEquity Fund's assets consistent
with the Fund's environmental criteria, investment objective andto achieve long-term total return that
matches the guidelines and directions set by GCCM andperformance of the Board of Trustees. GCCMDomini 400 Social/SM/ Index (the "Index"). Green
Century and the Board of Trustees will regularly review the subadviser's
continued
performance. GCCMGreen Century or the Board of Trustees may terminate the services
of a subadviser at any time, subject to the termination provisions of a
subadvisory agreement.
Prior to November 28, 2005, Adams Harkness Asset Management, Inc. ("AHAM")
served as the subadviser of the Balanced Fund through its subsidiary, Winslow
Management Company ("WMC"). AHAM managed the investments of the Balanced Fund
on a day-to-day basis, pursuant to an Investment Subadvisory Agreement dated as
of April 1, 1999 (the "AHAM Subadvisory Agreement"). AHAM's principal executive
office is at 99 High Street, Boston, Massachusetts 02110. The AHAM Subadvisory
Agreement was approved by the shareholders of the Balanced Fund at a meeting
held on June 18, 1999. The AHAM Subadvisory Agreement was last approved by the
Board on September 30, 2005.
On August 31, 2005, AHAM sold substantially all of the assets of WMC (other
than the investment subadvisory agreement with GCCMGreen Century has recommended, and the Balanced Fund) to
Winslow Management Company, LLC, a newly formed Delaware corporation
("Winslow"). Winslow is collectively controlled by persons who had served as
the Balanced Fund's portfolio manager, back-up portfolio manager and primary
point of contact at WMC. In order for AHAM to continue to provide high quality
portfolio management services to the Balanced Fund and for continuity of
portfolio management, AHAM entered into an arrangement with Winslow which
provided that those persons would also continue to be employed by AHAM and
continue to provide the same services to the Balanced Fund as had been provided
prior to the sale. AHAM informed the Board and GCCM, however, that it did not
intend to continue the business of WMC and terminated the investment
subadvisory agreement between AHAM and GCCM effective no later than
February 21, 2006. Given these circumstances, the Board determined that it was
in the best interest of the Balanced Fund's shareholders to terminate the
investment subadvisory agreement with AHAM prior to February 21, 2006 and enter
into an investment subadvisory agreement with Trillium.
At a meeting of the Board of Trustees held on November 21, 2005,has approved, the
Board
consideredappointment of Mellon Equity Associates, LLP ("Mellon Equity") as the
termination of AHAM as theinvestment subadviser of the BalancedEquity Fund. The
Board also considered GCCM's recommendation that Trillium be appointed asIf this proposal and the subadviserAdvisory
Agreements are approved by shareholders of the Balanced Fund. As discussed below underEquity Fund as provided herein,
the heading
"Evaluation
10
bySubadvisory Agreement will go into effect on November 28, 2006.
If shareholders approve the BoardSubadvisory Agreement, Mellon Equity will be
responsible for investing the Fund's assets in a manner consistent with the
terms of Trustees," GCCM, at the direction of the Board, terminated the
AHAM Subadvisory Agreement and entered into the Trillium Subadvisory Agreement.
Accordingly, effective at the endinvestment objective
11
of the day on November 27, 2005,Fund. Mellon Equity's primary responsibility will be to ensure that the
AHAM
Subadvisory Agreement was terminated. The Trillium Subadvisory Agreement became
effective on November 28, 2005.
The Trillium Subadvisory Agreement
Except for the parties and the proposed change in fee arrangements set forth
below under the heading "Investment Advisory and Subadvisory Fees", the terms
and conditionsportfolio holdings of the TrilliumFund match the composition of the Index as closely as
possible. Mellon Equity will not select the stocks that make up the Index.
Terms of the Subadvisory Agreement are substantively the same
in all material respects to the terms and conditions of the AHAM Subadvisory
Agreement.
Please refer to Exhibit B attached to this Proxy Statement for the complete
Trillium Subadvisory Agreement. The description of the Trillium Subadvisory Agreement in this
Proxy Statement is qualified in its entirety by the provisions of the
Trillium Subadvisory Agreement in Exhibit B.
The TrilliumPursuant to the Subadvisory Agreement, became effective on November 28, 2005.Mellon Equity will implement the
daily portfolio transactions necessary to maintain the proper correlation
between the assets of the Fund and the Index, subject always to the provisions
of the 1940 Act and to the investment objective, policies and restrictions
imposed by the Equity Fund's then-current Registration Statement under the 1940
Act and the Fund's Declaration of Trust and By-Laws. Mellon Equity will not
determine the composition of the Index. Mellon Equity will also provide Green
Century and the Board of Trustees with such reports and data as may be
requested from time to time. Mellon Equity will furnish at its own expense all
services, facilities and personnel necessary in connection with its activities
under the Subadvisory Agreement. The Subadvisory Agreement provides that Mellon
Equity may render services to others.
The Subadvisory Agreement also provides that Mellon Equity will obtain for
the Equity Fund, in its judgment, best available execution in executing the
Equity Fund's portfolio transactions, and shall direct orders in connection
with the purchase and sale of the Equity Fund's portfolio securities to
broker-dealers that sell shares of the Equity Fund only to the extent that
placing such orders is in compliance with applicable laws. The Subadvisory
Agreement provides that Mellon Equity may not use commissions paid to
broker-dealers in connection with the purchase or sale of Fund securities to
generate so-called "soft dollars". The Subadvisory Agreement provides that
Mellon Equity may aggregate orders for the purchase or sale of portfolio
securities for the Equity Fund with orders for other portfolios managed by
Mellon Equity, provided that all securities purchased or proceeds of the sale
of securities are allocated at the average execution price.
The Subadvisory Agreement provides that Mellon Equity is not liable for any
error of judgment or for any act or omission in the execution of securities
transactions for the Equity Fund, except for willful misfeasance, bad faith,
negligence, violation of law or reckless disregard of its obligations and
duties under the Subadvisory Agreement.
If approved by the shareholders of the BalancedEquity Fund, the Trillium Subadvisory
Agreement will become effective on November 28, 2006 and will continue in
effect for two years, and thereafter will continue in effect if such
continuance is specifically approved at least annually by vote of the holders
of a "majority of the outstanding voting securities" (as defined in the 1940
Act) of the BalancedEquity Fund or by vote of a majority of the Trust'sFund's Board of
Trustees, and in either case by the vote of a majority of the Trustees who are
not "interested persons" (as defined in the 1940 Act) at a meeting called for
the purpose of voting on the Trillium Subadvisory Agreement.
The Trillium Subadvisory Agreement may be terminated without penalty (i) by the
BalancedEquity Fund's Board of Trustees or by a vote of a majority of the outstanding
voting securities of the BalancedEquity Fund on not more than 60 days' nor less than 30
daysdays' prior written notice to TrilliumMellon Equity and GCCM,Green Century, (ii) by GCCMGreen
Century upon not more than 60 days' nor less than 30 daysdays' prior written notice
to the BalancedEquity Fund and TrilliumMellon Equity or (iii) by TrilliumMellon Equity upon not less
than 180 days' prior written notice to the BalancedEquity Fund and GCCM.Green Century. The Trillium
Subadvisory Agreement will automatically terminate in the event of its
assignment.
The
Trillium Subadvisory Agreement provides that Trillium is not liable for any
error of judgment or for any act or omission in the execution of securities
transactions for the Balanced Fund, except for willful misfeasance, bad faith,
gross negligence, violation of law or reckless disregard of its obligations and
duties under the Trillium Subadvisory Agreement. If the Trillium Subadvisory
Agreement is not approved by shareholders, it will terminate on April 27, 2006.
Comparison of Subadvisory Agreements
Pursuant to the Trillium Subadvisory Agreement, as under the AHAM
Subadvisory Agreement, Trillium makes the day-to-day investment selections for
the Balanced Fund, subject always to the provisions of the 1940 Act and to the
environmental criteria, investment objective, policies and restrictions imposed
by the Balanced Fund's then-current Registration Statement under the 1940 Act
and the Fund's Declaration of Trust and By-Laws. Subject to such policies as
the Board of Trustees and GCCM may determine, Trillium maintains a continuous
investment program for the Balanced Fund, including investment research and
management with respect to the investment and reinvestment of the Balanced
Fund's securities, and takes such steps as may be reasonably necessary to
implement the same. Trillium applies the environmental and other screening
criteria developed by GCCM and the Board of Trustees, as provided in the
Balanced Fund's then-current Registration Statement. Trillium furnishes at its
own expense all services, facilities and personnel necessary in connection with
its activities under the Trillium Subadvisory Agreement. The Trillium
Subadvisory Agreement, as under the AHAM Subadvisory Agreement, provides that
Trillium may render services to others.
The Trillium Subadvisory Agreement contains certain additional provisions
not contained in the AHAM Subadvisory Agreement. The Trillium Subadvisory
Agreement clarifies that Trillium shall obtain for the
1112
Balanced Fund, in its best judgment, best available execution in executing the
Balanced Fund's portfolio transactions, and shall direct orders in connection
with the purchase and sale of the Balanced Fund's portfolio securities to
broker-dealers that sell shares of the Balanced Fund only to the extent that
placing such orders is in compliance with applicable laws. The Trillium
Subadvisory Agreement also provides that Trillium may aggregate orders for the
purchase or sale of portfolio securities for the Balanced Fund with orders for
other portfolios managed by Trillium, provided that all securities purchased or
proceeds of the sale of securities are allocated at the average execution price.
GCCM and Trillium have entered into a Letter of Agreement (the "Letter") in
connection with the Trillium Subadvisory Agreement. This Letter addresses the
provision by Trillium of certain marketing support services to promote the
Balanced Fund, provides that Trillium will not act as a sponsor, administrator
or adviser to any other socially or environmentally responsible mutual fund
while serving as the subadviser to the Balanced Fund, and provides that
Trillium will not act as a subadviser to any directly competitive mutual fund
except in certain circumstances.
Investment Advisory and Subadvisory Fees
GCCM is entitled to receive fees of 0.75% of the average daily net assets of
the Balanced Fund for providing investment advisory services to the Balanced
Fund. For the fiscal year ended July 31, 2005, GCCM received $446,389 in
investment advisory fees from the Balanced Fund.
As under the AHAM Subadvisory Agreement, GCCMGreen Century (not the BalancedEquity Fund) payswill pay subadvisory fees to TrilliumMellon
Equity out of the investment advisory fees GCCMGreen Century receives from the
Balanced Fund. Therefore, the proposed subadvisory fee payable to
TrilliumEquity Fund under the TrilliumAdvisory Agreement discussed in Proposal No. 1.
If shareholders approve the Subadvisory Agreement, will not change the expenses
you incur as a shareholder of the Balanced Fund.
If the shareholders of the Balanced Fund approve the Trillium Subadvisory
Agreement, GCCMGreen Century will pay to
Trillium,Mellon Equity, as full compensation for services to be rendered and expenses to
be borne by Trillium,Mellon Equity, a monthly fee equal on an annual basis to 0.40%the greater of
$50,000, or 0.08% of the value of the average daily net assets of the Balanced
Fund up
to $30but not including $100 million, and 0.35% of the value0.05% of the average daily net assets of the
Balanced Fund from and including $100 million up to but not including $500 million,
0.02% of the average daily net assets of the Fund from and including $500
million up to but not including $1 billion and 0.01% of the average daily net
assets of the Fund equal to or in excess of $30 million.$1 billion. Such fee shallwill be
accrued daily and payable following the end of each quarter.
Under the AHAM Subadvisory Agreement, GCCM paid to AHAM as full compensation
for the services to be rendered and expenses to be borne by AHAM 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 was accrued daily and payable at the
end of each quarter, and was subject to the following adjustment: for each
calendar quarter, the Base Fee was adjusted as follows: (i) if the Balanced
Fund's total return (calculated in accordance with Rule 482 under the
Securities Act of 1933, as amended) for the immediately prior twelve month
period ("Fund Total Return") was 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 was increased by an amount which
was the product of .025% multiplied by the average daily net assets for such
year, (ii) if the Fund Total Return exceeded the Index Total Return plus 2%,
then the Base Fee for such quarter was 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 was less than the Index Total Return minus 1%,
then the Base Fee for such quarter was decreased by an amount which was the
product of .025% multiplied by the average daily net assets for such year, or
(iv) if the Fund Total Return was less than the Index Total Return minus 2%,
then the Base Fee for such quarter was reduced by an amount which was the
product of .05% multiplied by the average daily net assets for such year.
12
For example:
If, on an annual basis, the Balanced Then GCCM calculated and paid quarterly
Fund's Total Return differed from the a fee to AHAM which on an annual basis
Index Total Return by was equal to:
------------------------------------- ---------------------------------------
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 following table shows the investment advisory fees paid by GCCM to AHAM
under the terms of the AHAM Subadvisory Agreement in dollar amounts and as a
percentage of the average daily net assets of the Balanced Fund for the fiscal
years ended July 31, 2001, 2002, 2003, 2004 and 2005:
Subadvisor Fees Paid to
AHAM Stated as a
Subadvisory Fees Paid to Percentage of Average
Fiscal Year AHAM: Daily Net Assets
----------- ------------------------ -----------------------
2001 $269,736 0.37%
2002 $116,390 0.22%
2003 $119,183 0.31%
2004 $372,573 0.58%
2005 $121,437 0.20%
The following table demonstrates (1) the actual subadvisory fees paid by
GCCM to AHAM for the fiscal year ended July 31, 2005; (2) the amount GCCM would
have paid to Trillium if the proposed subadvisory fees under the Trillium
Subadvisory Agreement had been in effect for that year; and (3) the difference
between these amounts stated as a percentage:
(1)
Subadvisory Fees (2)
Paid to AHAM Proposed Fees (3)
For the Year Paid For the Year Percentage
Ended July 31, 2005 Ended July 31, 2005 Increase/Decrease
------------------- ------------------- -----------------
$121,437 $223,314 83.9%
Since GCCM pays the subadvisory fees, this increase in fees is borne by
GCCM, not the Balanced Fund or its shareholders. Again, the proposed
subadvisory fee payable to Trillium under the Trillium Subadvisory Agreement
will not change the expenses you incur as a shareholder of the Balanced Fund.
Until shareholders approve the Trillium Subadvisory Agreement, Trillium will
receive the lesser of the fees payable under the Trillium Subadvisory Agreement
or the fees payable under the AHAM Subadvisory Agreement for providing
investment subadvisory services to the Balanced Fund.quarter.
Information about Trillium
Trillium,Mellon Equity
Mellon Equity, with principal offices located at 711 Atlantic Avenue, Boston, MA
02111,One Mellon Center, Suite
4200, Pittsburgh, PA 15258, is an independent SEC-registeredindependently run, wholly owned subsidiary of
Mellon Financial Corporation, organized as a Pennsylvania limited liability
partnership. The firm's proprietary investment advisoryprocess, developed in 1982 by
current principal officers of the firm, devoted
exclusivelyhas been used to environmentallymanage domestic equity
accounts for U.S. tax-exempt clients since January 1983. The firm became a
separate legal entity from the equity management group of the Mellon Bank Trust
Department in January 1987, managing domestic equity accounts for U.S.
tax-exempt clients. The firm was registered as an investment advisor in 1986
and became a separate legal entity in 1987. As of June 30, 2006, Mellon Equity
managed over $20 billion in assets, including approximately $1.2 billion in
socially responsible investing. An
employee-owned company, Trillium has beenportfolios for 35 accounts.
Partners in Mellon Equity
Listed below are the business of providing
investment advisory services since 1982. Progressive Securities Corporation,
c/o Wainwright Bank & Trust, 63 Franklin Street, Boston, MA 02110, owns 30%names and ownership status of the equitypartners in Mellon
Equity as of TrilliumJune 30, 2006. The primary business address of each partner is One
Mellon Center, Suite 4200, Pittsburgh, PA 15258.
Name Ownership Status
---- ----------------
MMIP, LLC* General Partner
Mellon Bank, N.A.** Limited Partner
--------
* MMIP, LLC owns a 1% interest in the formMellon Equity. The sole member of non-voting preferred stock. Joan L.
Bavaria, the founder and PresidentMMIP, LLC
is Mellon Bank, N.A.
** Mellon Bank, N.A. owns a 99% interest in Mellon Equity. The sole shareholder
of Trillium, owns more than 10% of
Trillium's voting common stock. No other person or entity owns more than 10% of
Trillium.
As of September 30, 2005, Trillium had more than $929 million in assets
under management. Trillium applies environmental and social criteria in its
management of all of its clients' assets.Mellon Bank, N.A. is Mellon Financial Corporation.
13
Management and Governance
Listed in the following chartbelow are the names, positions and principal occupations of the
members of the Trillium Board of DirectorsExecutive Committee and Trillium'sthe principal executive officers of
Mellon Equity as of SeptemberJune 30, 2005.2006. The principal business address for eachof all
members of the following individualsExecutive Committee and all principal executive officers is Trillium Asset Management Corporation, 711
Atlantic Avenue, Boston, MA 02111.One
Mellon Center, Suite 4200, Pittsburgh, PA 15258.
Name Position with Name TrilliumMellon Equity Other Principal Occupation
---- ---------------------------------------- --------------------------
Joan BavariaRonald P. O'Hanley Chairman, Executive
Committee Member N/A
Stephen E. Canter Executive Committee Member N/A
Joseph J. Nagoniak Executive Committee Member N/A
William P. Rydell President, CEO
Thomas Gladwin, Ph.D. Director Professor, University of Michigan
Charles Grigsby Chair, Board of Vice President, Mass Capital Resource Company
Directors
George Rooks Director, Portfolio President, Heritage Capital Management, a wholly owned
Manager subsidiary of Wainwright Bank & Trust
Sherry Salway Black DirectorChief
Executive Director, Ovarian Cancer National Alliance
Robert Glassman Director Co-Chairman, Wainwright Bank & Trust Company
Carol O'Cleireacain, Ph.D. Director Senior Fellow, Brookings Institution, Center on Urban and
Metropolitan Policy
Elliott Sclar, Ph.D. Director Professor, School of Architecture, Columbia University
Margaret Flinter, APRN, MSN Director Vice President & Clinical Director, Community Health
Center, Middletown, CT
Sally Greenberg, JD Director Senior Product Safety Counsel, Consumers Union,
Washington, DC
John Plukas Director Co-chairman, Wainwright Bank & Trust Company,
Boston, MA
William Torbert, Ph.D. Director Professor of Management, Carroll School of Management
at Boston College, Newton, MA
Samuel B. Jones, Jr., CFAOfficer,
Executive Committee Member N/A
Patricia K. Nichols Executive Vice
President, Chief
Operating Officer,
Executive Committee Member N/A
Robert A. Wilk Chief Investment
Officer, Adam Seitchik, Ph.D., CFASenior Vice
President, Chief Investment
Strategist
F. Farnum Brown, Jr., Ph.D. Vice President
Stephanie R. Leighton, CFA Vice President,
Director of Equity
Research
Cheryl I. Smith, Ph.D., CFA Vice President
Lisa M. Leff, CFA Vice President
Eric Becker, CFA Vice President
Blaine C. Townsend, CIMA Shareholder
Representative to
Board, Vice
President
Laura McGonagle, CFA Vice President
Diane M. DeBono Vice President
14
Position with
Name Trillium Other Principal Occupation
---- ------------- --------------------------
Linnie McLean Vice President
Shelley Alpern Vice President
Steve Lippman Vice President
Lee Snelgrove Vice President
Ellen Murphy Vice President
Lisa MacKinnon Shareholder
Representative
to Board, Vice
President
Pat Davidson Vice PresidentExecutive
Committee Member N/A
Scott E. Wennerholm Executive Committee Member N/A
As of November 21, 2005,June 30, 2006, no Trustee or Officer of the Funds wasEquity Fund is an officer,
director, general partner or shareholder of Trillium. No Trustee or OfficerMellon Equity.
Mellon Equity provides investment advisory services to another fund that has
a similar investment objective as the Equity Fund. Information concerning this
mutual fund, including the net assets of such fund and the Funds has any other material direct or indirect interestfee paid to Mellon
Equity for its services to such fund, is provided in the proposal to
approve the Trillium Subadvisory Agreement, or in Trillium, or any other person
controlling, controlled by, or under common control with Trillium. Since
August 1, 2004, none of the Officers or Trustees of the Funds has had any
material interest, direct or indirect, in any material transactions, or in any
material proposed transactions, to which Trillium was or is to be a party.
Information about Trillium's Investment Style
Trillium uses a "growth at a reasonable price" investing style. Trillium
invests in the common stock of companies, across a range of capitalizations,
that it believes have superior earnings growth prospects and whose stock
prices, in Trillium's opinion, do not accurately reflect the companies' value.
Trillium may also invest in companies that it believes do not have particularly
strong earnings histories, but do have other attributes that may contribute to
accelerating growth in the foreseeable future.
Trillium's equity investment process begins with an economic and
environmental analysis of a universe of approximately 5000 publicly traded
companies. From this universe, Trillium primarily selects stocks of companies
that it believes make a positive contribution to an environmentally sustainable
future based on the Balanced Fund's environmental criteria. Stocks are then
considered for the Balanced Fund's portfolio only after Trillium performs a
rigorous financial analysis.
Trillium uses multi-factor proprietary models that consider a variety of
quantitative measures, including price/earnings and price/cash flow ratios, to
rank the stocks by sector based on value, growth potential, and expected price
volatility. Trillium uses these quantitative measurements in combination with
in-house and third-party research to identify companies that appear to possess
superior earnings growth prospects and whose stock prices, in Trillium's
opinion, do not accurately reflect the companies' value. Trillium then focuses
on those companies that, over a period of several years, appear to have the
ability to grow at above average rates within their industries. Trillium then
selects stocks considering diversification by sector and expected risk and
attractiveness of valuation relative to prospective return. Trillium believes
that portfolio turnover should be managed carefully.
Trillium monitors the companies in the Balanced Fund's portfolio to
determine if there have been any fundamental changes in the companies or
changes in the companies' environmental records and policies. Trillium also
regularly analyzes price/earnings ratios, price/cash flow ratios, and other
quantitative measures to monitor stock price movements and help determine
whether to sell a stock in the Fund's portfolio. Trillium may sell a stock if,
among other factors:
. It subsequently fails to meet the Balanced Fund's investment criteria or
becomes overvalued relative to the long-term expectation for its stock
price
15
. The balance between the stock's expected return and its contribution to
the risk of the portfolio deteriorates or a more attractively priced
company is identified
. Changes in national economic conditions, such as interest rates,
unemployment, and productivity levels, prompt a change in industry sector
allocation for the Fund's portfolio
. The company's positive environmental attributes turn negative and
dialogue and shareholder engagement fail to change the company's policies
In general, Trillium includes fixed income securities in the Balanced Fund's
portfolio to modulate the Balanced Fund's overall level of investment risk and
exposure to business, economic, and interest rate trends. Fixed income
investments are evaluated using the same environmental criteria as those
employed for equity investments. Issuer-specific financial evaluation of fixed
income investments focuses on a company's cash flow, interest rate coverage,
and other measures of its ability to meet its future income and principal
repayment commitments. In addition, Trillium evaluates each fixed income
investment with respect to its credit quality and its overall exposure to
interest rate risk.
Information about Individuals Primarily Responsible for Managing the Balanced
Fund's Portfolio
The lead portfolio manager responsible for the management of the Balanced
Fund, Adam Seitchik, is Trillium's Chief Investment Strategist. Mr. Seitchik
has 15 years of experience in the investment management field, is a CFA
Charterholder, and has a Ph.D. in Economics. He has previous experience
managing pooled accounts and significant experience in developing and executing
investment strategy.
Cheryl Smith, the portfolio management team member primarily responsible for
developing and implementing the Balanced Fund's fixed income strategy, leads
Trillium's fixed income investment process. She is a CFA Charterholder, holds a
Ph.D. in Economics, and has 18 years of investment experience in socially and
environmentally responsible portfolio management, including experience managing
one fixed income and two equity mutual funds.
Eric Becker, the portfolio management team member primarily responsible for
developing the buy list of equity securities for the Balanced Fund's portfolio,
has 12 years experience managing environmentally and socially responsible
portfolios. He is a CFA Charterholder.
The Trillium staff includes an experienced team of investment management
professionals who support the Balanced Fund's portfolio management team. There
had been no portfolio manager turnover at Trillium Asset Management for the
past five years.
The Balanced Fund's portfolio management team is also supported by
Trillium's Compliance Department, led by its Chief Compliance Officer, Samuel
B. Jones, Jr., CFA. Mr. Jones has served as Chairman of the Standards and
Policy Subcommittee of the CFA Institute and is currently a member of the CFA
Institute Board of Governors and Audit Committee.
Trillium does not advise or subadvise any other registered investment
company.table below.
Net Assets of Fund as of
Name of Fund 6/30/06 Fee Paid to Mellon Equity
------------ ------------------------ -------------------------
Dreyfus Stock Index Fund $3.9 billion 0.095% of average daily net assets
All information contained in this Proxy Statement about TrilliumMellon Equity has
been provided by Trillium.
Information about GCCM
GCCM, with principal offices located at 29 Temple Place, Suite 200, Boston,
MA 02111, is the investment adviser for the Balanced Fund and oversees the
portfolio management of the Balanced Fund on a day-to-day basis. GCCM's role is
to ensure that the Balanced Fund's investment objective and environmental and
investment policies are accurately and effectively implemented. GCCM has served
as investment adviser and administrator for the Balanced Fund since the
commencement of operations of the Balanced Fund.
16
GCCM is wholly owned by Paradigm Partners, a California general partnership,
the partners of which are all not-for-profit advocacy organizations. These
organizations are: California Public Interest Research Group (CALPIRG), Citizen
Lobby of New Jersey, Colorado Public Interest Research Group, ConnPIRG Citizen
Lobby, Fund for Public Interest Research, Massachusetts Public Interest
Research Group (MASSPIRG), MOPIRG Citizen Organization, PIRGIM Public Interest
Lobby, and Washington State Public Interest Research Group (WASHPIRG). MASSPIRG
owns approximately 46% of Paradigm Partners.
Portfolio Transactions
For the fiscal year ended July 31, 2005, brokerage commissions in the amount
of $107,095 were paid to Adams, Harkness & Hill, Inc., an affiliate of AHAM,
the prior subadviser to the Balanced Fund. This amount represented 47.56% of
the Balanced Fund's aggregate brokerage commissions, and 43.50% of the
aggregate dollar amount of the Balanced Fund's transactions involving the
payment of commissions.
For the fiscal year ended July 31, 2005, brokerage transactions were not
placed with any other person affiliated with the Balanced Fund, the Funds,
GCCM, Trillium, UMB Fund Services, Inc. (the Funds' subadministrator), UMB
Distribution Services, LLC (the Funds' distributor), Unified Fund Services,
Inc. (the Funds' transfer agent), or Investors Bank & Trust Company (the Funds'
custodian).Mellon Equity.
Evaluation by the Board of Trustees
At an in-person meeting on November 21, 2005,August 24, 2006, the Board of Trustees of the
BalancedEquity Fund, including a majority of the Independent Trustees, considered the
approval of the subadvisory agreement between GCCM and Trillium with respect toSubadvisory Agreement among the Balanced Fund (the "Trillium Subadvisory Agreement").
In advanceGreen Century Funds on behalf
of the Equity Fund, Green Century, and Mellon Equity that would become
effective upon the withdrawal of the Equity Fund's investment in the Master
Fund.
In connection with their deliberations at that meeting, and at a separate
executive session of the Independent Trustees submitted to Trillium a
written request for information in connection with their consideration ofalso held on August 24, 2006, the
Trillium Subadvisory Agreement. The Trustees met with representatives of
Trillium at the September 30, 2005 Board meeting and at their meeting on
November 21, 2005. The Trustees received, reviewed and considered, the
following, among other things:
1) A memorandum from counsel to the Independent Trustees setting forth the
Board's fiduciary duties under the 1940 Actthings, information provided by Green Century
and Massachusetts law and the
factors the Board should consider in its evaluation of the Trillium Subadvisory
Agreement.
(2) Reports from and presentations by GCCMMellon Equity regarding the process by which
they decided to propose Trillium as the subadviser of the Balanced Fund.
(3) Reports from and presentations by Trillium that described (a)(1) the nature, extentquality and qualityextent of the services
proposed to be provided by TrilliumMellon Equity to the Balanced Fund, including the experience and qualifications(2) expenses of the personnel providing those services, Trillium's ownership structure, clientsFund
and Trillium's investment philosophies and processes; (b) the fees and other
amountssubadvisory fee proposed to be paid to
Trillium under14
Mellon Equity, and (3) the Trilliumprospective profitability of the proposed
Subadvisory Agreement to Mellon Equity. The Independent Trustees were advised
by independent counsel in considering these materials and the approval of the
Subadvisory Agreement. The Trustees considered all the information provided to
them by Green Century and Mellon Equity. The Trustees had previously been
provided with a memorandum prepared by their independent counsel with respect
to the Balanced Fund,applicable legal standards, including information asthe factors to be considered, in
connection with the fees charged and services provided to other Trillium clients and a comparisonTrustees' review of the Balanced Fund's proposed subadvisory fee to those of other mutual funds;
(c)Subadvisory Agreement. In approving
the expected costs and profits of Trillium related to its proposed services
toSubadvisory Agreement at the Balanced Fund; (d) Trillium's performance in managing similar accounts;
(e) Trillium's compliance program and procedures and any regulatory issues;
(f) Trillium's brokerage practices, including soft dollar practices; and
(g) Trillium's code of ethics.
Themeeting held on August 24, 2006, the Trustees,
including a majority of the Independent Trustees, concluded
that Trillium had the capabilities, resources, and personnel necessary to
advise the Balanced Fund. The Board further concluded that, based on the
services proposed to be provided pursuant to the Trillium Subadvisory Agreement
and the expenses Trillium estimates it will incur in performing these services,
the proposed compensation for Trillium was fair and reasonable.
17
In reaching their determination to approve the Trillium Subadvisory
Agreement, the Trustees considered a variety of factors they believed relevant
and balanced a number of considerations. In their deliberations, the Trustees, did not identify any particular information orsingle factor that was all-important or
controlling. The primary factors andas
determinative. Matters considered in connection with their approval of the
conclusions are described below.Agreement included the following.
Nature, Quality, and Extent of Services Performed. The Trustees noted that
underconsidered
the termsscope and quality of the Trillium Subadvisory Agreement, Trillium will provide
the day-to-day portfolio management of the Balanced Fund, implementing the
environmental screening criteria developed by GCCM in making purchases and
sales of portfolio securities consistent with the Balanced Fund's investment
objective and policies. The Trustees reviewed the terms of the Trillium
Subadvisory Agreement and considered the differences between it and the
Subadvisory Agreement previously in effectservices proposed to be performed for the Balanced Fund. The Trustees
concluded thatEquity
Fund by Mellon Equity, including the terms of the Trillium Subadvisory Agreement were reasonable
and fair. The Trustees also reviewed the proposed letter agreement between
Trillium and GCCM whereby Trillium would agreeresources to provide marketing support to
the Balanced Fund and concluded that such marketing support would be a benefit
to the Balanced Funddedicated by Mellon
Equity, and its shareholders.general reputation in the investment industry. The Trustees
considered Mellon Equity's experience and expertise in conducting trading
operations, managing portfolios with investment strategies similar to the
scope of the services to be provided by Trillium
under the Trillium Subadvisory Agreement and the quality of services provided
by Trillium to its existing clients. They reviewed the capabilities and
experience of Trillium in providing environmentally and socially responsible
investment advisory services in a balanced investment style, noting that
Trillium was devoted exclusively to environmentally and socially responsible
investing and managed over $900 million in assets as of September 30, 2005.
They considered how Trillium proposed to manage the Balanced Fund, focusing in
particular on the types of equity and fixed income securities proposed for the
BalancedEquity Fund, and how that investment style differed from the previous
subadviser's investment style for the Balanced Fund. They also considered
Trillium's views on sector diversification and the expected portfolio turnover
rates for the Fund. The Trustees also reviewed the expected portfolio
characteristics compared to the characteristics of the S&P 1500 Index.
The Trustees considered the professional experience, tenure, and
qualifications of the portfolio management team proposed for the Balanced Fund
and the other senior personnel at Trillium. They considered in particular those
individuals' experience in managing registered investment companies for other third
parties. In particular, the Trustees considered the fact that Mellon Equity had
demonstrated its familiarity with and experience in respect of the Index and
that it had broad familiarity with environmental screens.social investment indexes. The Trustees also
considered the portfolioinformation provided to the Trustees by representatives of
Mellon Equity at the meeting with respect to the financial statements of Mellon
Financial Corporation, assets under management, team'strading capability, performance
data presented, and the experience in identifying issuers with positive environmental stories
and managing a portfolio with an environmental focus. They also reviewed
Trillium's research and decision-making process.of the Mellon Equity team that would be
providing services to the Equity Fund. The Trustees also considered Trillium's shareholder advocacy efforts, noting
in particular Trillium's advocacy efforts in support of environmental proposals
such as those regarding climate change, environmental reporting, genetically
engineered foods and environmental health.
The Trustees also considered Trillium'sMellon
Equity's compliance policies and procedures and compliance record, and
interviewed Trillium'sMellon Equity's Chief Compliance Officer.
Based on their review of all the services proposed to be provided and their
analysis of Trillium'sMellon Equity's ability to provide those services, the Trustees
concluded that TrilliumMellon Equity had the capabilities, resources and personnel
necessary to provide subadvisory services to the BalancedEquity Fund under the Trillium
Subadvisory Agreement. They also concluded that they were satisfied with the
nature, quality and extent of services expected to be provided by Trillium
under the Trillium
Subadvisory Agreement.
Costs of Services Provided and Profitability. The Trustees considered the
proposed subadvisory fees to be paid to Mellon Equity by GCCMGreen Century and the
prospective profitability and fall-out benefits to Trillium. The Trustees noted
that underMellon Equity from the
Trillium Subadvisory Agreement, Trillium would receive 0.40% ofproposed arrangement with the value of the average daily net assets of the Balanced Fund up to $30
million, and 0.35% of the value of the average daily net assets of the Balanced
Fund in excess of $30 million.Equity Fund. The Trustees reviewed the leveland considered
an analysis of the proposed subadvisory fees againstfee compared to the advisorysubadvisory fees
paid by other mutual funds with similar investment objectives and strategies toas
the BalancedEquity Fund. The Trustees noted that, based on the information 18
provided,
the proposed subadvisory fees to be paid to TrilliumMellon Equity were higherlower than the
average subadvisory fees paid by such other socially responsible mutual funds, but determinedlower
than the average subadvisory fees paid by large-capitalization growth funds,
and higher than the average subadvisory fees paid by equity index funds. The
Trustees noted that the fees proposed in the Agreement were subject to a
minimum annual amount at current asset levels, and that at higher asset levels
the subadvisory fee would be comparable with the average subadvisory fees were reasonable based on Trillium's experience in
providing environmentally and socially responsible investment advisory services
in a balanced investment style.paid
by equity index funds. The Trustees also considered that the proposed
subadvisory fees were appropriate given the resources that Trillium would
provide in the application of the environmental screens to the Balanced Fund's
portfolio. The Trustees also noted that the proposed subadvisory feesfee would be paid by GCCM,Green Century and would not be in additionby the Fund and that
pursuant to an amended Administrative Services Agreement, Green Century had
previously agreed to lower the advisory fees paid to GCCM by
shareholders.
The Trustees also compared the proposed subadvisory fees to be paid by GCCM
to Trillium against the current base fee payable to AHAM of 0.40%total annual expenses of the value
of the average daily net assets of the Balanced Fund plus or minus up to 0.20%
in a performance fee. The Trustees considered that the proposed fee of 0.40%
was higher than the net fee paid to AHAM of 0.20% in 2005 after calculation of
the performance fee, but in the range of subadvisory fees paid to AHAM over a
five year period. The Trustees also considered that the proposed Trillium
Subadvisory Agreement provides for decreased fees as assets in the Balanced
Fund increase.
GCCMFund.
Mellon Equity provided the Trustees with information prepared by Trillium relating toregarding the
prospective profitability of the Trillium Subadvisory Agreement to Trillium.Mellon Equity. In
that regard, the Trustees considered the proposed subadvisory fees
and the financial resources Trillium plans to dedicate and the other expenses Trillium anticipates it will incurthat would be incurred by
Mellon Equity in providing subadvisory services to the BalancedEquity Fund. In consideringMellon
Equity provided information to the Trustees on its cost allocation methodology
used in arriving at its projected initial annual estimate of the expenses to be
incurred by Trillium,
the Trustees took under consideration that Trillium does not provide advisory
or subadvisoryit in connection with its services to other mutual fund clientsthe Equity Fund. The Trustees
considered that Mellon Equity projected a slight loss at current asset levels
and anticipatesnoted that Mellon Equity projected that it will
incur additional costs to provide compliance and other services required bywould realize a mutual fund client.profit when the
Equity Fund's assets reach approximately double their current size. The
Trustees also considered Trillium'sMellon Equity's fee structure and what it charges
its non-mutual fundsimilar investment company clients and determined that the proposed subadvisory
fees were within the range, if not slightly lower, than the fees TrilliumMellon Equity charges its
other clients.clients for which it manages passive equity accounts. After reviewing the
information described above and in view of the discussions with representatives
of Mellon Equity at the meeting, the Trustees, including the Independent
Trustees, concluded that the fees proposedprovided in the Trillium Subadvisory Agreement, taking
into account the costs of the services proposed to be provided by Trillium,Mellon Equity and the
profitability to Mellon Equity of its proposed relationship
15
with the Equity Fund, supported the approval of the Trillium Subadvisory Agreement. The
Trustees also concluded that the fees proposed in the Trillium Subadvisory Agreement
were fair and reasonable in light of the usual and customary charges made by
others for services of the same nature and quality.
Other Benefits. The Trustees evaluated potential other benefits TrilliumMellon
Equity may realize from its relationship with the BalancedEquity Fund. The Trustees
considered
the brokerage practices of Trillium, including the generation ofnoted that Mellon Equity does not execute trades for index portfolios with any
affiliated broker-dealer or to generate soft dollar commissions onbenefits; therefore neither
Mellon Equity nor its affiliates would receive brokerage fees or soft dollars
due to its relationship with the Balanced Fund's portfolio transactions. The Trustees
considered that Trillium was not affiliated with a broker/dealer and so no
benefit would be realized by Trillium through transactions with affiliated
brokers.Equity Fund. The Trustees also considered the
reputational and other advantages TrilliumMellon Equity may gain from its relationship
with the BalancedEquity Fund. The Trustees concluded that the benefits expected to be
received by TrilliumMellon Equity were reasonable in the context of the proposed
relationship between Trillium and the Balanced Fund, and supported the approval of the Trillium Subadvisory Agreement.
Investment Performance. The Trustees reviewed and considered information
regarding the investment performance of accounts managed by Trillium in an
investment style similar to that of the Balanced Fund and comparative data with
respect toMellon Equity,
including performance of mutual funds with similar investment objectives as
well asinformation provided by Mellon Equity on other broad-based marketportfolios
it manages which track established indexes. The Trustees noted that, as presented
inalso reviewed the
materials, a composite of equity accounts advisedtracking error data provided by Trillium
outperformed the S&P 500 Index for the one, three, five and seven year periods.
They also considered that a composite of balanced accounts advised by Trillium
performed in line with the Lipper Balanced Fund Index and other benchmarks for
the 1, 3, 5 and 7 year periods.Mellon Equity. After considering all the
factors deemed appropriate, the Trustees concluded that the competitive investment performance
of the other accounts advised by Trillium together with Trillium'sMellon Equity's
experience in environmentally and socially responsible investingmanaging portfolios with passive investment strategies supported
the approval of the Trillium Subadvisory Agreement.
Economies of Scale. The Trustees also considered whethernoted Mellon Equity stated that it would
benefit from economies of scale would be realized by Trillium as the Balanced Fund grew in asset size and the
extent to which such economies of scale might be
19
reflected inthat the proposed
fee schedule. They notedSubadvisory Agreement included breakpoints that reflected the relatively small size of
the Balanced Fund andprojected
economies at larger asset levels. The Trustees considered that if the assets were to increase, Trillium
could have the opportunity to experience economies of scale. They also noted that pursuant to the
proposed Trillium Subadvisory Agreement, the subadvisory
fees proposed to be paid to Trillium by GCCM include a breakpointMellon Equity included breakpoints
at $30
million.$100 million, $500 million and $1 billion. The Trustees also considered that Trillium stated that it would not
realize a fair entrepreneurial profit on the management of the Balanced Fund
until assets increase by approximately two-thirds above current levels, to $100
million. The Trustees concluded that economies of scale could be realized as
the Fund grew, and that the
fee schedule as proposed was appropriate at the present time, and supported the
approval of the Trillium Subadvisory Agreement.
Based on their review of all factors deemed relevant, the foregoing considerations, the Board,Trustees,
including a majority of the Independent Trustees, determined that the terms of the Trillium Subadvisory
Agreement are reasonable, fair, and in the best interests of the Balanced Fund
and its shareholders and also concluded that the
proposed fees are fair and
reasonable, and proposed that the Trillium Subadvisory Agreement should be approved and submitted to the BalancedEquity Fund's
shareholders for their approval. The Trustees also noted that they would consider
whether to renew the Subadvisory Agreement after an initial two-year period and
annually thereafter.
Vote Required
A vote of a majority of the outstanding voting securities of the BalancedEquity Fund
(within the meaning of the 1940 Act) will be required to approve the
Trillium
Subadvisory Agreement. Under the 1940 Act, a "vote of a majority of the
outstanding voting securities" of the BalancedEquity Fund means the affirmative vote by
holders of the lesser of (a) 67% or more of the BalancedEquity Fund's outstanding
voting securities present at a meeting if holders of more than 50% of the
BalancedEquity Fund's outstanding voting securities are present in person or by proxy
or (b) more than 50% of the BalancedEquity Fund's outstanding voting securities.
The Subadvisory Agreement will not go into effect unless the Advisory
Agreement is also approved by shareholders of the Equity Fund. In the event
that the TrilliumAdvisory Agreement and the Subadvisory Agreement doesdo not receive the
requisite shareholder approval, GCCMthe Board of Trustees will continue the Fund's
investment in the Master Fund, negotiate a new investment subadvisory agreement
with a different advisory organization or make other appropriate arrangements,
in either eventeach case subject to approval of shareholders in accordance with the 1940
Act.
The Board of Trustees recommends that you vote FOR approval of the TrilliumMellon
Equity Subadvisory Agreement.
Proposal 3.To authorize the Trustees to adopt an amended and restated
Declaration of Trust for the Funds.
Background
Each of the Funds is a series of the Green Century Funds (the "Trust"), an
entity known as a business trust that is organized under the laws of the
Commonwealth of Massachusetts. A business trust generally operates under a
charter or organization document, usually called a declaration of trust, that
sets forth various provisions relating primarily to the authority of the
business trust to conduct business and the governance of the trust. The Funds
currently operate under such a declaration of trust.
You are being asked to authorize the Trustees to adopt the Amended and
Restated Declaration of Trust attached as Exhibit C to this Proxy Statement
(the "New Declaration"). The New Declaration will replace the Funds' existing
Declaration of Trust (the "Existing Declaration"). The Trustees have approved
the New Declaration and recommend that you authorize the Trustees to adopt it.
Neither Fund's investments or investment policies will change by virtue of
the adoption of the New Declaration. The New Declaration does, however, give
the Trustees more flexibility and broader authority to act than the Existing
Declaration. This increased flexibility may allow the Trustees to react more
quickly to changes in
20
competitive and regulatory conditions and, as a consequence, may allow the
Funds to operate in a more efficient and economical manner. Adoption of the New
Declaration will not remove any of the protections of federal law or alter in
any way the Trustees' existing fiduciary obligations to act with due care and
in your interest.
The New Declaration makes a number of significant changes to the Existing
Declaration. Certain of these changes give the Trustees greater flexibility and
broader authority to act without shareholder approval. The most significant
changes are summarized below. In addition to the changes described below, there
are other substantive and stylistic differences between the proposed New
Declaration and the Existing Declaration. The following summary is qualified in
its entirety by reference to the Amended and Restated Declaration of Trust for
the Funds which is attached as Exhibit C to this Proxy Statement. The New
Declaration attached to this Proxy Statement has been marked to show changes
from the Existing Declaration.
Significant Changes Effected by the Funds' New Declaration
1. Reorganization of the Trust or any Fund or any Class of Shares. The New
Declaration permits the Trustees, without shareholder approval, to change a
Fund's form of organization, reorganize any Fund or class of shares or the
Trust as a whole into a newly created entity or a newly created series of an
existing entity, or to incorporate all or a portion of any Fund or class of
shares or the Trust as a whole as a newly created entity. By contrast, the
Existing Declaration requires shareholder approval for this type of
reorganization. The New Declaration requires that shareholders receive written
notification of any proposed reorganization transaction.
The New Declaration does NOT permit the Trust or any Fund or class of shares
to merge with or sell all or substantially all of its assets to another
operating entity without first seeking shareholder approval.
Under certain circumstances, it may not be in the shareholders' interest to
require a shareholder meeting to permit all or a portion of the Trust or any
Fund or class of shares to reorganize into another entity or to incorporate.
For example, in order to reduce the cost and scope of state regulatory
requirements or to take advantage of a more favorable tax treatment offered by
another state, the Trustees may determine that it would be in the shareholders'
interest to reorganize a Fund to domicile it in another state or to change its
legal form. Under the Existing Declaration, the Trustees cannot effectuate such
a potentially beneficial reorganization without first conducting a shareholder
meeting and incurring the attendant costs and delays. The New Declaration gives
the Trustees the flexibility to reorganize all or a portion of the Trust or any
Fund or class of shares and achieve potential shareholder benefits without
incurring the delay and costs of a proxy solicitation. Such flexibility should
help to assure that the Trust and the Funds operate under the most appropriate
form of organization.
As discussed above, before allowing a reorganization of all or a portion of
the Trust or any Fund or class of shares to proceed without shareholder
approval, the Trustees have a fiduciary responsibility to first determine that
the proposed transaction is in the shareholders' interest. Any exercise of the
Trustees' increased authority under the New Declaration is also subject to any
applicable requirements of the 1940 Act and Massachusetts law.
2. Future Amendments. The New Declaration may be amended without shareholder
approval in most cases. By contrast, the Existing Declaration may be amended
without shareholder approval only in certain limited circumstances. Under the
New Declaration, however, shareholders will still be required to vote on any
amendment to the Declaration that:
. changes their voting powers;
. changes the amendment provisions of the New Declaration;
. is required by law or the Trust's registration statement to be approved
by shareholders; or
. is submitted to shareholders by the Trustees.
21
By allowing certain amendments of the New Declaration without shareholder
approval, the New Declaration gives the Trustees the necessary authority to
react quickly to future contingencies. As mentioned above, such increased
authority does not take away the Trustees' continuing fiduciary obligations to
act with due care and in the shareholders' interest.
3. Investment in Other Investment Companies. The New Declaration provides
that the Trustees may authorize the investment of all or a portion of a Fund's
assets in one or more open-end investment companies to the extent that such
investment is not prohibited by the 1940 Act. By contrast, the Existing
Declaration only allows the Trustees to invest all of a Fund's assets in a
single open-end investment company in what is sometimes referred to as a
"master/feeder" structure. The Equity Fund currently invests all of its assets
in the Index Trust using a "master/feeder" structure. The Existing Declaration
does not, however, specifically provide the Trustees with the ability to invest
a portion of a Fund's assets in more than one investment company in what is
sometimes referred to as a "fund of funds" structure. The 1940 Act permits
mutual funds to invest their assets in one or more registered investment
companies so long as certain conditions are met. It is possible that there
could be amendments to the 1940 Act that will further affect a mutual fund's
ability to invest in other funds. These structures may permit operational
efficiencies and economies of scale.
The New Declaration will permit the Funds to take advantage of the
provisions of the 1940 Act, as well as any future changes in law or regulation
on this topic. Under the New Declaration, the Trustees have the power to
implement a "fund of funds" or other similar structure without seeking
shareholder approval. A "funds of funds" structure may result in the
duplication of some expenses. While the Trustees have no current intention of
implementing a "fund of funds" or other similar structure for either Fund at
this time, the Trustees believe it could be in the best interest of a Fund to
do so at a future date. Shareholders of a Fund would be notified if the
Trustees decide to implement such a structure for that Fund, and no Fund will
implement such a structure unless its investment restrictions permit it to do
so.
4. Redemption. Under the New Declaration, the Trustees will be able to cause
a shareholder's shares to be redeemed in order to eliminate inactive, lost or
very small accounts for administrative efficiencies and cost savings, to
protect the tax status of a Fund if necessary, and to eliminate ownership of
shares by a particular shareholder when the Trustees determine, pursuant to
adopted policies, that the particular shareholder's ownership is not in the
best interests of the other shareholders of a Fund (for example, in the case of
a market timer). By contrast, the Existing Declaration permits the Trustees to
require shareholders to redeem shares only in certain limited circumstances.
The New Declaration also clarifies the Funds' redemption procedures and
provides that the Trustees may specify additional conditions, not inconsistent
with the 1940 Act, to the redemption of shares.
5. Suspension of Redemptions; Postponement of Payments. The New Declaration
permits the Trustees to suspend redemptions or postpone the date of payment of
redemption proceeds to the extent permitted under the 1940 Act or other
applicable laws. By contrast, the Existing Declaration permits the Trustees to
suspend redemptions or to postpone payments of redemption proceeds only in the
circumstances explicitly described in the Existing Declaration. Unless there is
a change in applicable law, the circumstances in which the Trustees will be
able to suspend redemptions or postpone the date of payment of redemption
proceeds under the New Declaration will be the same as the circumstances
described in the Existing Declaration. If there is a change in applicable law,
the New Declaration will allow the Trustees the flexibility to suspend
redemptions or to postpone payments of redemption proceeds to the extent so
permitted by applicable law.
6. Redemption Fees and Back-End Sales Charges. The New Declaration clarifies
that redemption fees and back-end sales charges may be charged upon redemption.
There is no current intention to change the redemption fees that currently may
be charged upon redemption of your shares or to impose back-end sales charges
for redemptions out of either Fund. You will be notified in advance if such
fees will be changed or charged.
7. Dollar-Weighted Voting. The New Declaration provides that each
shareholder of each Fund is entitled to one vote for each dollar of net asset
value of the Fund represented by the shareholder's shares of the Fund, on
22
each matter on which that shareholder is entitled to vote. This means that
shareholders with larger economic investments will have more votes than
shareholders with smaller economic investments. The Existing Declaration
provides that each shareholder of each Fund is entitled to one vote for each
share owned by that shareholder, on each matter on which that shareholder is
entitled to vote.
The outcome of proposals on which shareholders of the Funds vote together as
a single class could be particularly affected by the change to dollar-weighted
voting. For example, with dollar-weighted voting, a shareholder that owns 10
shares of Fund A will have twice as many votes than a shareholder that owns 10
shares of Fund B if a share of Fund A is selling for $10.00 and a share of Fund
B is selling for $5.00. By contrast, the Existing Declaration gives one vote
for each share owned. Therefore, under the Existing Declaration, when
shareholders of the Funds vote together as a single class, a shareholder of
Fund B will have the same vote as a shareholder of Fund A, even though the
shareholder of Fund A has a greater economic interest.
The Trustees believe the change to dollar-weighted voting is appropriate
because it will prevent a shareholder who holds many shares with a relatively
low price per share from having disproportionately large voting powers.
8. Classes of Shares. The New Declaration clarifies that the Trustees can
divide shares of the Trust or any Fund into one or more classes and can
establish the rights, privileges and preferences of any such classes. As a
general matter, the New Declaration incorporates references to classes of
shares where appropriate. The New Declaration also permits the Trustees,
without shareholder approval, to terminate any class of shares of any Fund at
any time. There is no current intention to divide shares of the Trust or any
Fund into classes.
Other Changes Effected by the Funds' New Declaration
In addition to the significant changes outlined above, the New Declaration
also changes the Existing Declaration as follows:
1. The New Declaration permits the Funds to enter into and amend investment
advisory and subadvisory agreements without shareholder approval if permitted
by applicable law. In contrast, the Existing Declaration explicitly requires a
Fund to obtain the approval of its shareholders for the Fund to enter into or
amend investment advisory or subadvisory agreements.
2. The New Declaration explicitly allows the Trustees to effect mergers,
reorganizations and similar transactions which are approved by shareholders (to
the extent required) through any method approved by the Trustees, including
share-for-share exchanges, transfers or sales of assets, shareholder in-kind
redemptions and purchases, and exchange offers. The Existing Declaration does
not explicitly address the methods by which the Trustees may effect mergers,
reorganizations and similar transactions. Please note that any merger,
reorganization or similar transaction with another operating entity will
require prior shareholder approval.
3. The New Declaration confirms and clarifies various existing Trustee
powers. For example, the New Declaration clarifies that the Trustees may
delegate authority to any investment adviser, distributor, custodian or
independent contractor, in addition to officers, employees and agents. The
Existing Declaration only provides that the Trustees can delegate authority to
officers, employees and agents.
4. The New Declaration provides that the Trustees can invest Fund assets in
all types of investments including derivatives. The Existing Declaration also
provides that the Trustees can invest Fund assets in all types of investments
but does not specifically refer to derivatives.
5. The New Declaration provides that the Trustees may reclassify outstanding
shares. The Existing Declaration provides that the Trustees can only reclassify
unissued shares or shares issued and reacquired by the Trust.
23
6. The New Declaration clarifies that the Trustees may enter into
distribution contracts providing for the sale of shares of one or more Funds or
the shares of one or more classes. The Existing Declaration provides that the
Trustees can enter into distribution contracts for the sale of shares but is
unclear as to whether the Trustees can enter into a distribution contract for
just one Fund or class of shares. Under any distribution contract, the Trust
may either agree to sell the shares to the other party to the contract or may
appoint any such other party its sales agent for the shares.
7. The New Declaration provides for the removal of any Trustee at any time
by the affirmative vote of two-thirds of the voting power of the outstanding
shares of the Trust (as opposed to two-thirds of the outstanding shares of each
Fund as is currently provided in the Existing Declaration) or by the vote of
two-thirds of the remaining Independent Trustees (with or without cause). The
Existing Declaration provides that a Trustee may be removed by the vote of
two-thirds of the remaining Trustees only for cause.
8. The New Declaration provides for (a) the automatic retirement of Trustees
in accordance with any retirement policy set by the Trustees and (b) the
automatic retirement of Trustees when their terms, if any, expire. The Existing
Declaration only provides for the automatic retirement of Trustees in
accordance with any retirement policy set by the Trustees.
9. The New Declaration does not require the Trustees to provide notice to
shareholders of the appointment of a new Trustee. The Existing Declaration
requires such notification. Notifying shareholders in the event of an
appointment of a Trustee is not required by any federal or state law. Such
notification to all shareholders may be costly. If the New Declaration is
approved, you will normally be notified of Trustee appointments in the next
annual report for the Funds following the appointment.
10. The New Declaration states that the appointment, designation or
identification of a trustee as (i) chairperson of the Board of Trustees of the
Trust or of a committee, (ii) an expert on any topic (including an audit
committee financial expert), or (iii) the lead independent trustee, shall not
impose on that person any greater duty, obligation or liability than any other
trustee. In addition, the New Declaration states that no appointment,
designation or identification of a Trustee shall affect that Trustee's rights
to indemnification. The Existing Declaration does not contain corresponding
provisions.
11. The New Declaration clarifies that while any Trustee is incapacitated,
the other Trustees, regardless of their number, shall have the power to act.
The Existing Declaration does not expressly address this issue.
12. The New Declaration allows former Trustees to serve as trustees emeritus
of the Trust in accordance with guidelines that may be adopted by the Trustees
from time to time. The New Declaration also provides that each trustee emeritus
will be indemnified by the Trust against all liabilities and all expenses
reasonably incurred or paid by him or her in connection with any claim, suit or
proceeding to which that individual becomes involved by virtue of being a
trustee emeritus. The New Declaration also provides that trustees emeritus, in
their capacity as such, are not Trustees of the Trust for any purpose. The
Existing Declaration does not provide for trustees emeritus.
13. The New Declaration states that by becoming a shareholder of a Fund each
shareholder shall be held expressly to have assented to and agreed to be bound
by the terms of the New Declaration. The Existing Declaration does not
expressly contain a corresponding provision.
14. The New Declaration clarifies that except when a larger vote is required
by applicable law or by any provision of the Declaration or the by-laws of the
Trust, a majority of the shares voted in person or by proxy will decide any
questions and a plurality will elect a Trustee. However, where any provision of
law or of the New Declaration requires that the shareholders of any Fund or
class of shares vote as a Fund or class of shares, then a majority of the
shares of that Fund or class of shares voted on the matter will decide that
matter insofar as that Fund or class of shares is concerned. Although the
Existing Declaration does not contain a corresponding provision, a similar
provision previously was contained in the by-laws of the Trust.
24
15. The New Declaration provides that shareholders of the Funds generally
will vote together on all matters except when the Trustees determine that only
shareholders of a particular Fund or class of shares are affected by a
particular matter or when applicable law requires shareholders to vote
separately by Fund or by class of shares. The Existing Declaration provides
that shareholders of each Fund generally will vote separately on all matters
except when the Trustees determine that a matter affects the shareholders of
both Funds or when required to be voted together under applicable law.
16. The New Declaration states that rights to indemnification cannot be
limited retroactively. The Existing Declaration does not contain a
corresponding provision.
17. The New Declaration does not require that the number of Trustees be
fixed in writing or that Trustees be appointed in writing, but permits these
actions to be taken at Board meetings. The Existing Declaration provides that
the number of Trustees must be fixed in writing and that the appointment of
Trustees must be in writing.
18. The New Declaration permits electronic delivery to shareholders of
notices and other information, and simplifies the information delivery
requirements for shareholders in the same household. These provisions are
intended to simplify administration of the Funds' affairs. The Existing
Declaration does not address the electronic delivery of notices and other
information to shareholders.
19. The New Declaration states that shareholders may not bring suit on
behalf of a Fund or the Trust without first requesting that the Trustees bring
such suit. The New Declaration also provides that no shareholder of a Fund will
be entitled to participate in a derivative or class action on behalf of any
other Fund or the shareholders of any other Fund, and vice versa. The Existing
Declaration does not contain corresponding provisions. The effect of these
changes may be to discourage suits brought by shareholders. Given that the
Trustees have a fiduciary obligation to act on your behalf and in your best
interests when evaluating whether to bring a suit on your behalf, the Trustees
believe that the changes may only discourage frivolous suits that would cause
the Funds to incur unnecessary costs.
20. The New Declaration states that actions taken by the Trustees and
officers in good faith and with reasonable care are binding on all concerned.
The Existing Declaration does not expressly address this issue.
21. The Existing Declaration includes a provision that prevents the Trust
from entering into certain transactions with affiliated persons of the Trust
unless such transaction is permitted by the 1940 Act or any exemptive order
issued under the 1940 Act. This provision is not required under applicable law
and is not included in the New Declaration. The Trust's transactions with
affiliated persons will continue, however, to be subject to the provisions of
the 1940 Act.
22. The Existing Declaration includes a provision that prevents, with
certain exceptions, certain affiliates of the Funds from taking long or short
positions in the shares of either Fund. This provision is not required under
applicable law and is not included in the New Declaration. The removal of this
provision is not expected to have any effect on the Funds.
There is no current intention to change the governance, management or
structure of the Funds based on any of the above-described changes to the
Existing Declaration by the New Declaration.
The Evaluation by the Board of Trustees
The Board of Trustees has concluded, for the reasons outlined above, that
the adoption of the New Declaration is in the best interests of the Funds'
shareholders. Accordingly, the Trustees recommend that the shareholders of each
Fund vote FOR the proposal to authorize the Trustees to adopt the New
Declaration.
25
Vote Required
Approval of the New Declaration will require the approval of "a majority of
the outstanding voting securities" (as defined in the 1940 Act) of each of the
Balanced Fund and the Equity Fund, which means the affirmative vote by the
lesser of (a) 67% or more of the shares of the Fund present at the Meeting, if
more than 50% of the outstanding shares of the Fund are represented at the
Meeting in person or by proxy or (b) more than 50% of the outstanding shares of
the Fund. If the proposal is not approved by the shareholders of each Fund, the
Existing Declaration will remain unchanged and in effect.
The Board of Trustees recommends that you vote FOR authorizing the Trustees
to adopt the New Declaration.
Proposals 4 and 5.To approve changes to and the elimination of certain
fundamental investment policies of the Funds.
Background
The Funds have adopted certain investment restrictions or policies that are
"fundamental" meaning that as a matter of law they cannot be changed without
shareholder approval. The Trustees have reviewed the Funds' current fundamental
investment policies and have concluded that certain policies should be revised
in order to facilitate the administration of the Funds. The proposed revised
policies of the Balanced Fund are listed in Exhibit D. The proposed revised
policies of the Equity Fund are listed in Exhibit E. Shareholders of the
Balanced Fund and the Equity Fund are being asked to approve the revised
policies for the respective funds.
The proposed changes to the Funds' fundamental investment policies do not
affect each Fund's investment objective or primary investment strategy. The
Funds will continue to be managed as described in the Funds' prospectus.
Some of the fundamental investment policies of the Funds reflect regulatory,
business or industry conditions in existence when each of the Funds commenced
operations. As a result, the Funds are currently subject to several fundamental
investment policies that are either more restrictive than required under
current law or which are no longer required at all. The purpose of the changes
to the fundamental investment policies outlined below is to provide each Fund
with the flexibility permitted by law to pursue its investment objective. The
proposed fundamental investment policies maintain important shareholder
protections while providing flexibility to respond to future legal, regulatory
and market changes. In some cases, only technical changes are being made. In
the case of the Equity Fund, the proposed changes will also conform the
fundamental investment policies of the Equity Fund to those of the Index Trust,
the master portfolio in which the Equity Fund invests substantially all of its
assets. The Trustees believe that implementing the revised policies will
facilitate the administration of the Funds and simplify compliance monitoring.
Although the proposed changes to the fundamental investment policies will
provide the Funds greater flexibility to respond to future investment
opportunities, please note that:
. the changes, individually or in the aggregate, will not result in a
material change in the level of investment risk associated with an
investment in the Funds; and
. there is no current intention to change the way in which the Funds are
managed (although the changes will give the Trustees the ability to do so
in the future).
26
Proposed Changes
The recommended changes to each Fund's fundamental investment policies are
as follows:
A. Borrowing; Pledging of Assets. It is proposed that each Fund's
fundamental investment policy regarding borrowing be changed so that each Fund
would not be able to borrow money if that borrowing was specifically prohibited
by the 1940 Act or the rules and regulations promulgated under the 1940 Act.
Currently, each Fund can borrow up to one-third of its net assets, but only
as a temporary measure for extraordinary or emergency purposes. In addition,
the Equity Fund may not purchase any securities at any time when its borrowing
exceeds 5% of its total assets.
The 1940 Act does not require that borrowings be made solely for
extraordinary or emergency purposes or to meet redemption requests. It is
possible that the Funds' existing policies could prevent them from borrowing
when it is in the best interests of shareholders and investors to do so. The
revised policy would permit each Fund to borrow for leverage and places no
restrictions on the Funds' ability to purchase securities.
The revised policy will not increase the amount that either Fund may borrow
unless there is a change in law. If there is a change in law, the revised
policy will give the Funds the maximum amount of flexibility to borrow as
permitted by applicable law.
Borrowings constitute leverage, which involves risk. If either Fund is
unable to repay amounts borrowed when due it may have to sell securities when
it would rather not do so. The changes to this policy are not expected to have
any material effect on the operations or the management of either Fund. If
either Fund intends to borrow to any material extent, this intention will be
disclosed in the Fund's prospectus or statement of additional information.
Currently, the Balanced Fund is prohibited from pledging more than 1/3 of
its net assets to secure borrowings with certain exceptions. It is proposed
that this fundamental policy be removed. The 1940 Act does not require any
limit on assets pledged to secure borrowings. The removal of this policy will
give the Balanced Fund the maximum amount of flexibility to pledge its assets
to support borrowings as necessary.
B. Purchasing Securities on Margin. Currently, each Fund is prohibited from
purchasing securities on margin although they may obtain short-term credit in
connection with the settlement of securities transactions. It is proposed that
this fundamental investment policy be removed.
Margin transactions generally involve the purchase of securities with money
borrowed from a broker, with cash or securities being used as collateral
against the loan. The staff of the Securities and Exchange Commission currently
takes the position that margin transactions are prohibited by the 1940 Act
because they involve borrowing from a broker (which is not permitted), rather
than from a bank (which is permitted in certain circumstances). The Trustees
have recommended the elimination of this policy on margin transactions to
provide the Funds with the maximum amount of flexibility permitted by
applicable law, and any future changes in law, on this topic. The elimination
of this policy is not expected to have any material effect on the operations or
management of the Funds.
C. Lending. It is proposed that the fundamental investment policy concerning
lending be changed so that each Fund would be prohibited from making loans only
if such loans are specifically prohibited by the 1940 Act or the rules or
regulations promulgated under the 1940 Act.
Currently, each Fund is prohibited from making loans other than (a) through
the lending of securities, provided that any such loan does not exceed 30% of
total assets, and (b) through the use of repurchase agreements or the purchase
of short-term obligations, provided that not more than 10% of net assets can be
27
invested in repurchase agreements maturing in more than seven days. In
addition, the Balanced Fund may purchase a portion of an issue of debt
securities of types distributed privately or publicly.
The revised policy will permit each Fund to make loans so long as the
transactions are not prohibited by applicable law. This includes engaging in
repurchase agreements, lending portfolio securities, purchasing debt securities
and purchasing commercial paper. Lending securities may be a source of income
to a fund and is permitted under the 1940 Act, subject to certain limitations.
Currently, regulatory interpretations limit the percentage of a fund's
securities that may be loaned to 33-1/3% of its assets. It is unlikely that
either Fund would lend money. The risks of lending include delays in repayment
or the loss of money or other loaned property should the borrower fail
financially. The changes to this policy are not expected to have any material
effect on the operations or the management of either Fund.
D. Real Estate and Commodities. It is proposed that the fundamental
investment policy for each Fund regarding commodities or commodity contracts be
separated from the fundamental investment policy regarding investments in real
estate and real estate limited partnerships. The current policy prevents each
Fund from purchasing or selling real estate, commodities or commodity contracts
in the ordinary course of business, with certain exceptions. The proposed
policy regarding commodities and commodity contracts would provide that the
restriction does not apply to investments in futures contracts or options on
futures contracts.
E. Engaging in Short Sales. Currently, each Fund is prohibited from making
short sales of securities, except that each Fund may make short sales where the
Fund owns or has the right to acquire at no added cost securities identical to
those sold short and (a) with respect to the Equity Fund, not more than 5% of
the Equity Fund's net assets is held as collateral for such sales at any one
time, or (b) with respect to the Balanced Fund, not more than 10% of the
Balanced Fund's net assets is represented by such securities (or securities
convertible or exchangeable for such securities) at any one time. It is
proposed that this fundamental investment policy be removed.
The 1940 Act prohibits mutual funds from making short sales in contravention
of applicable rules and regulations. However, the current fundamental
investment policy for each Fund is more restrictive than applicable law.
Therefore, it is proposed that this policy be eliminated in its entirety in
order to have the maximum amount of flexibility permitted by applicable law and
to respond to any future changes in law.
Short sales are transactions in which a fund sells a borrowed security in
anticipation of a decline in the market value of the security. To complete the
transaction, the fund must later purchase the security in order to return the
security borrowed. If the portfolio manager of the fund has predicted
accurately, the price at which the fund buys the security will be less than the
price at which the fund earlier sold the security, creating a profit for the
fund. However, if the price of the security goes up during this period, the
fund will be forced to buy the security for more than the earlier sale price,
causing a loss to the fund.
Neither Fund currently intends to engage in short sales. If they were to do
so, it would be disclosed in the Fund's prospectus or statement of additional
information.
F. Issuance of Senior Securities. It is proposed that the fundamental
investment policy concerning the issuance of senior securities provide that the
Balanced Fund and Equity Fund may not issue senior securities if such issuance
is specifically prohibited by the 1940 Act. Minor technical changes are
proposed to be made to the Equity Fund's existing fundamental policy regarding
the issuance of senior securities that are not expected to have a material
effect on the operations or management of the Equity Fund. The fundamental
investment policy for the Balanced Fund currently specifies 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. Since this is consistent with the
1940 Act, it will not be required if the fundamental policy is revised as
proposed.
28
G. Underwriting Securities. It is proposed that the fundamental investment
policy of each Fund concerning underwriting securities provide that the Fund
may not underwrite securities issued by other persons, except that all or any
portion of the assets of the Fund may be invested in one or more investment
companies, to the extent not prohibited by the 1940 Act and exemptive orders
granted under such Act, and except insofar as the Fund may technically be
deemed an underwriter under the Securities Act of 1933, as amended, in selling
a security.
Currently, the fundamental investment policy permits the Equity Fund to
invest all or any portion of its assets in the Index Trust. The current
fundamental policy for the Balanced Fund does not permit the Balanced Fund to
invest all or any portion of its assets in one or multiple investment
companies. The revised policy will allow each Fund to invest its assets in
multiple investment companies to the extent permitted by law, and will allow
each Fund the flexibility to pursue different investment structures. If either
Fund was to pursue a different investment structure, it would be disclosed in
the Fund's prospectus or statement of additional information.
H. Concentration. It is proposed that the fundamental investment policy of
each Fund restricting concentration in any one industry be amended to clarify
that all or any portion of the assets of each Fund may be invested in one or
more investment companies, to the extent not prohibited by the 1940 Act and
exemptive orders granted under such Act.
The following proposals apply only to the certain fundamental investment
policies of the Equity Fund:
I. Writing Put or Call Options. Currently, the Equity Fund is prohibited
from writing, purchasing or selling certain types of options, with certain
exceptions. This policy is not required by law and the Trustees have therefore
recommended the elimination of this policy.
A call option gives the holder the right to purchase, and obligates the
writer to sell, an asset such as a security, a currency or a unit of an index,
at the exercise price prior to or on the expiration date. A put option gives
the holder the right to sell, and obligates the writer to buy, an asset at the
exercise price prior to or on the expiration date. In order for a call option
purchased by a fund to be profitable, the market price of the underlying asset
must rise sufficiently above the exercise price to cover the premium and
transaction costs paid by the fund. If an option expires unexercised, the fund
will receive nothing for its premium payment. In order for a put option
purchased by a fund to be profitable, the market price of the underlying asset
must decline sufficiently below the exercise price to cover the premium and
transaction costs paid by a fund.
When a fund writes a call option, it gives up the opportunity to profit from
any increase in the price of an asset above the exercise price of the option;
when it writes a put option, the fund takes the risk that it will be required
to purchase an asset from the option holder at a price above the current market
price of that asset. A fund receives a premium for writing a call or a put
option (representing the cost of the option), which increases the return if the
option expires unexercised or is closed out at a net profit.
The successful use of options depends on the ability to forecast correctly
market movements. The effective use of options also depends on a fund's ability
to terminate option positions at times when it desirable to do so. There is no
assurance that a fund will be able to effect closing transactions at any
particular time or at an acceptable price. Disruptions such as trading
interruptions or restrictions on option exercise in the markets for securities
and other assets underlying options purchased or sold by the fund could result
in losses on an option, including the entire investment by the fund in the
option.
The Equity Fund does not have any current intention to write, purchase or
sell options. If the Equity Fund was to do so, it would be disclosed in the
Equity Fund's prospectus or statement of additional information.
J. Investing in Illiquid Securities. It is proposed that the fundamental
investment policy of the Equity Fund concerning investments in illiquid
securities (securities for which there is no readily available market) be
eliminated. This fundamental policy will be replaced with a non-fundamental
investment policy that can be
29
amended by the Trustees without a shareholder vote. However, this
non-fundamental policy will permit up to 15%, rather than 10%, of the net
assets of the Equity Fund to be invested in illiquid securities. The absence of
a trading market can make it difficult to establish a market value for illiquid
securities. In addition, it may be difficult or impossible for the Equity Fund
to sell illiquid securities at the desired time and at an acceptable price. The
change to this policy is not expected to materially affect the operations of
the Equity Fund.
K. Diversification. It is proposed that the fundamental investment policy
that restricts the Equity Fund, with respect to 75% of its assets, from
investing more than 5% of its assets in any one company be eliminated. The
fundamental policy will be replaced with two non-fundamental policies. A
non-fundamental policy is a policy that may be amended by the Trustees without
a shareholder vote. The non-fundamental policies will be the same as what is
currently required under the 1940 Act for a "diversified" fund. The Equity Fund
is a "diversified" fund under the 1940 Act. The non-fundamental policies will
provide that:
. The Equity Fund may not, with respect to 75% of its total assets,
purchase securities of any issuer if such purchase at the time thereof
would cause more than 5% of the Equity Fund's total assets (taken at
market value) to be invested in the securities of such issuer, with
certain exceptions; and
. The Equity Fund may not, with respect to 75% of its total assets,
purchase securities of any issuer if such purchase at the time thereof
would cause more than 10% of the voting securities of such issuer to be
held by the Equity Fund, as applicable, with certain exceptions.
Please note that, other than as set forth above with respect to
diversification and investing in illiquid securities, it is not proposed that
the fundamental investment policies that are eliminated be replaced with
non-fundamental investment policies.
To give effect to these amendments it is proposed that the fundamental
investment policies of the Balanced Fund and the Equity Fund listed in Exhibits
D and E, respectively, be amended as indicated in the respective Exhibits.
The Evaluation by the Board of Trustees
The Trustees believe that the proposed changes to the Funds' fundamental
investment policies will enhance each Fund's ability to pursue its investment
methods in a changing legal and investment environment and facilitate
compliance monitoring. The Trustees also believe that by reducing the number of
policies that can be changed only by shareholder vote, the Funds will have
greater flexibility to modify policies, as appropriate, in response to changing
markets and in light of new investment opportunities and instruments without
the costs and delays associated with a shareholder meeting. For these reasons,
the Trustees believe that the proposed amendments to the fundamental investment
policies of each Fund are in the best interests of the shareholders of the
Funds.
Vote Required
Because the investment policies are fundamental policies of each Fund,
approval of Proposals 4 and 5 will require the approval of "a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the respective
Fund, which means the affirmative vote by the lesser of (a) 67% or more of the
shares of the respective Fund present at the Meeting, if more than 50% of the
outstanding shares of the respective Fund are represented at the Meeting in
person or by proxy or (b) more than 50% of the outstanding shares of the
respective Fund.
The Board of Trustees recommends that shareholders of the Balanced Fund vote
FOR approval of the proposed amendments to the Balanced Fund's fundamental
investment policies.
The Board of Trustees recommends that shareholders of the Equity Fund vote
FOR approval of the proposed amendments to the Equity Fund's fundamental
investment policies.
30
Proposal 6.To authorize the Trustees to select and change investment
subadvisers and enter into investment subadvisory agreements without
obtaining the approval of shareholders.
As discussed in Proposal 2 in connection with the proposal to approve the
investment subadvisory agreement among the Trust, on behalf of the Balanced
Fund, GCCM and Trillium, retaining the services of a new subadviser for the
Balanced Fund, and retaining the services of a replacement subadviser for
longer than an interim period, currently require approval of the Balanced
Fund's shareholders.
The Equity Fund currently is a "feeder fund" that invests all of its assets
in another investment company, the Index Trust, that has identical investment
objectives as the Equity Fund. If in the future, the Equity Fund is managed
directly, GCCM and the Board of Trustees may decide that it may be in the best
interests of Fund shareholders if one or more subadvisers are hired. Retaining
the services of a subadviser, and replacing that subadviser, would require
Equity Fund shareholder approval.
The 1940 Act requires that all contracts pursuant to which persons serve as
investment advisers to investment companies be approved by shareholders. This
requirement would apply to the appointment of a new or replacement subadviser
to either Fund. (There is an exception to this requirement that permits, under
certain circumstances, entities to serve as replacement investment advisers or
subadvisers for an interim period without shareholder approval if their
contracts have been approved by fund Trustees.) The Securities and Exchange
Commission has previously granted exemptions from these shareholder vote
requirements provided that certain conditions are satisfied. If the Funds were
to obtain similar exemptive relief and this proposed Proposal 6 is approved,
the Board of Trustees would be able, without further shareholder approval, to
appoint or replace subadvisers. The Trustees would not, however, be able to
replace GCCM as investment manager without complying with the 1940 Act and
applicable regulations governing shareholder approval of advisory contracts.
The Funds have not yet applied for this exemptive relief, and there is no
assurance that the Funds would receive such relief.
This Proposal 6 is intended to facilitate the efficient supervision and
management of the Funds by GCCM and the Trustees, and to give GCCM and the
Trustees flexibility in managing the Funds in the future. GCCM continuously
monitors the performance of the subadviser of the Balanced Fund and may from
time to time (but it is not anticipated frequently) recommend that the Board of
Trustees replace one or more subadvisers or appoint additional subadvisers,
depending on GCCM's assessment of what combination of subadvisers it believes
will optimize each Fund's chances of achieving its investment objective. GCCM
and the Trustees currently are required to obtain shareholder approval to add
or replace a subadviser. If the Funds were to obtain exemptive relief and
shareholders were to approve this proposed Proposal 6, the Trustees would no
longer be required to call a Fund shareholder meeting each time a new
subadviser is appointed.
Shareholder meetings entail substantial costs which could diminish the
benefits of the current subadvisory arrangements. These costs must be weighed
against the benefits of shareholder scrutiny of proposed contracts with
additional or replacement subadvisers. However, even in the absence of
shareholder approval, any proposal to add or replace subadvisers would receive
careful review. First, as in the process discussed in Proposal 2, GCCM would
assess a Fund's needs and, if it believed additional or replacement subadvisers
could benefit the Fund, would search for available investment subadvisers.
Second, as in the process discussed in Proposal 2, any recommendations made by
GCCM would have to be approved by a majority of the Trustees, including a
majority of the Trustees who are not "interested persons" within the meaning of
the 1940 Act. In selecting any new or replacement subadvisers, the Trustees are
required to determine that an investment management agreement with the
subadviser is reasonable, fair and in the best interests of a Fund and its
shareholders, and that the fees provided in the agreement are fair and
reasonable in light of the usual and customary charges made by others for
services of the same nature and quality. Finally, any further appointments of
additional or replacement subadvisers would have to comply with any conditions
contained in the Securities and Exchange Commission exemptive order, if such
order is granted.
31
The Trustees believe that the proposed authority to select and change
investment subadvisers and enter into investment subadvisory agreements without
obtaining the approval of shareholders is in the best interests of the
shareholders of each Fund.
Vote Required
Approval of the proposed authority to select and change investment
subadvisers and enter into investment subadvisory agreements without obtaining
the approval of shareholders will require the approval of "a majority of the
outstanding voting securities" (as defined in the 1940 Act) of each of the
Balanced Fund and the Equity Fund, which means the affirmative vote by the
lesser of (a) 67% or more of the shares of the Fund present at the Meeting, if
more than 50% of the outstanding shares of the Fund are represented at the
Meeting in person or by proxy or (b) more than 50% of the outstanding shares of
the Fund.
The Board of Trustees recommends that you vote FOR authorizing the Trustees
to select and change investment subadvisers and enter into investment
subadvisory agreements without obtaining the approval of shareholders.
Proposal 7.To transact such other business as may properly come before the
Special Meeting of Shareholders and any adjournments of the Special
Meeting.
The management of the FundsEquity Fund knows of no other business to be presented
at the Meeting. If any additional matters should be properly presented, it is
intended that the enclosed proxy (if not limited to the contrary) will be voted in accordance with the judgment
of the persons named in the enclosed form of proxy.
3216
PART 4. INFORMATION REGARDING THE FUNDS.EQUITY FUND.
Interests of Certain Persons
As of the November 21, 2005,September , 2006, to the best knowledge of the Funds,Equity Fund, the
following persons owned of record 5% or more of the outstanding shares of the
Funds:Equity Fund:
Number of Percent
Record Owner Shares of Shares
----------------------- --------- ---------
Green Century Balanced Fund
National Financial Services Corporation,
200 Liberty Street, 5th Floor,
New York, New York 10281-1003*........ 708,094.451 19.79%
Charles Schwab & Company,
101 Montgomery Street,
San Francisco, California 94104*...... 427,897.485 11.96%
Green Century Equity Fund
National Financial Services Corporation,
200 Liberty Street, 5th Floor,
New York, New York 10281-1003*........ 221,675.113 12.85%
Charles Schwab & Company,
101 Montgomery Street,
San Francisco, California 94104*...... 114,813.139 6.65%
--------
* Owners of record, not beneficial owners
Independent Registered Public Accounting Firm
The Board has selected KPMG LLP ("KPMG") to serve as the independent public
accountant for each Fund. Representatives of KPMG are not expected to be
present at the Special Meeting, but will have the opportunity to make a
statement if they wish, and will be available by telephone to respond to
appropriate questions.
Accounting Fees and Services for the Trust
The information under each of the subheadings below show the aggregate fees
KPMG billed to the Trust and the Adviser for its professional services rendered
for the Funds' most recently completed fiscal years.
Audit Fees. The aggregate fees billed for each of the last two fiscal years
for professional services rendered by KPMG for the audit of the Funds' annual
financial statements or services that are normally provided by KPMG in
connection with statutory and regulatory filings or engagements for those
fiscal years are set forth below:
For the fiscal year ended July 31, 2005: $22,000.00
For the fiscal year ended July 31, 2004: $18,750.00
Audit-Related Fees. There were no fees billed for the Funds' two most
recently completed fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the
audit of the Funds' financial statements and are not reported under the Audit
Fees caption above.
33
Tax Fees. The aggregate fees billed in each of the last two fiscal years for
professional services rendered by KPMG for tax compliance, tax advice and tax
planning are set forth below. The services comprising the fees disclosed under
this category are tax compliance monitoring and tax filing preparation.
For the fiscal year ended July 31, 2005: $7,700.00
For the fiscal year ended July 31, 2004: $6,600.00
All Other Fees. There were no other fees billed for the Funds' two most
recently completed fiscal years for products and services provided by KPMG,
other than the services reported under the Audit Fees, Audit-Related Fees, or
Tax Fees captions above.
Aggregate Non-Audit Fees. The aggregate non-audit fees billed by KPMG for
services rendered to the Funds were the tax compliance, tax advice and tax
planning fees listed in the Tax Fees caption above and are set forth below. No
non-audit fees were billed by KPMG for services rendered to the Funds'
investment adviser or any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the Funds
for the last two fiscal years of the Funds.
For the fiscal year ended July 31, 2005: $7,700.00
For the fiscal year ended July 31, 2004: $6,600.00
Audit Committee Pre-Approval Policies and Procedures
The Charter of the Audit Committee of the Board requires that the Committee
approve (a) all audit and permissible non-audit services to be provided to the
funds and (b) all permissible non-audit services to be provided by the Funds'
independent auditors to the Funds' investment adviser or administrator or any
entity controlling, controlled by, or under common control with the Funds'
investment adviser or administrator that provides ongoing services to the
Funds, if the engagement relates directly to the operations and financial
reporting of the Funds. The Audit Committee has the duty to consider whether
the non-audit services provided by the Funds' auditor to the Funds' investment
adviser, administrator, or any adviser affiliate that provides ongoing services
to the Funds, which services were not pre-approved by the Audit Committee, are
compatible with maintaining the auditor's independence and to review and
approve the fees proposed to be charged to the Funds by the auditors for each
audit and non-audit service.
There were no services described above (including services required to be
approved by the audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01
of Regulation S-X) that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. None of the hours
expended on the principal accountant's engagement to audit the Funds' financial
statements for the fiscal year ended July 31, 2005 were attributable to work
performed by persons other than the principal accountant's full-time, permanent
employees.
Annual Report
The Funds' Annual Report for the fiscal year ended July 31, 2005, including
audited financial statements, has previously been sent to shareholders and is
available without charge by written request to Green Century Capital
Management, Inc., 29 Temple Place, Boston, MA 02111, by calling Green Century
Capital Management at 1-800-93-GREEN (1-800-934-7336), or by downloading the
reports from our website at www.greencentury.com.
Additional Information
EachThe Fund is a series of the Green Century Funds (the "Trust"), a
diversified, open-end registered investment company organized as a
Massachusetts business trust under an Declaration of Trust dated as of 34
July 1, 1991. The Balanced Fund was designated as a separate series of the
Trust on July 1,
1991. The Equity Fund was designated as a separate series of the Trust on
April 7, 1995. The mailing address of the Trust is 29 Temple
Place,114 State Street, Suite 200,
Boston, MA 02111.02109.
The Funds'Fund's distributor is UMB Distribution Services, LLC. The principal
business address of UMB Distribution Services, LLC is 803 West Michigan Street,
Suite A, Milwaukee, WI 53233. Unified Fund Services, Inc. acts as transfer
agent and dividend disbursing agent for eachthe Fund. The principal business
address of Unified Fund Services, Inc. is 431 North Pennsylvania Street,
Indianapolis, IN 46204-18061. Investors Bank & Trust Company ("IBT") acts as
the custodian for each of the Funds.Fund. IBT's principal business address is 200 Clarendon
Street, Boston, Massachusetts 02116.
Shareholders Sharing the Same Address
If two or more shareholders share the same address, only one copy of this
proxy statement may be delivered to that address, unless the Trust has received
contrary instructions from one or more of the shareholders at that shared
address. Upon written or oral request, the Trust will promptly deliver a
separate copy of this proxy statement to a shareholder at a shared address.
Please note that each shareholder will receive a separate proxy card,
regardless of whether he or she resides at a shared address. Please call
1-800-221-5519 or forward a written request to the Trust at Green Century
Funds, PO Box 6110, Indianapolis, IN 46206-6110 if you would like to
(1) receive a separate copy of this proxy statement; (2) receive your annual
reports or proxy statements separately in the future; or (3) request delivery
of a single copy of annual reports or proxy statements if you are currently
receiving multiple copies at a shared address.
Submission of Certain Proposals
The Trust is a Massachusetts business trust and as such is not required to
hold annual meetings of shareholders, although special meetings may be called
for the Funds,Fund, for purposes such as electing Trustees or removing Trustees,
changing fundamental policies, or approving an advisory contract. Shareholder
proposals to be presented at any subsequent meeting of shareholders must be
received by the Trust at the Trust's office within a reasonable time before the
next proxy solicitation is made.
By Order of the Board of Trustees,
Amy Perry Basseches,F. Puffer, Secretary
December 14, 2005
35September , 2006
17
Exhibit A
GREEN CENTURY FUNDS
Nominating Committee Charter
1. The Nominating Committee (the "Committee") of the Board of Trustees (the
"Board" or the "Board of Trustees") of the Green Century Funds (the "Trust" or
the "Funds") shall be composed entirely of Independent Trustees, none of whom
shall be an "interested person" of the Funds, as that term is defined in
Section 2(a)(19) of the Investment Company Act of 1940. The Committee shall be
comprised of as many Independent Trustees as the Board shall determine, but in
no event fewer than two (2) Independent Trustees. The Board may remove or
replace members of the Committee for any reason by majority vote of the
Independent Trustees of the Board.
2. The primary purpose and responsibility of the Nominating Committee is the
screening and nomination of candidates to serve on the Board of Trustees (each,
a "Candidate").
3. To carry out its purposes, the Committee shall have the authority and
responsibility to determine the minimum qualifications that a Candidate is
required to have and the factors that the Committee will consider in reviewing
Candidates. Presently, the Committee has determined to:
a. require that Candidates have a college degree or equivalent business
experience;
b. take into account at least the following factors when considering each
Candidate:
i. the availability and commitment of the Candidate to attend
meetings and perform his or her responsibilities on the Board;
ii. the Candidate's relevant experience;
iii. the Candidate's educational background;
iv. the Candidate's ability, judgment and expertise; and
v. the overall diversity of the Board's composition; and
c. consider Candidates recommended by one or more of the following
sources:
i. the Trust's current Trustees;
ii. the Trust's officers;
iii. the Trust's investment adviser or sub-adviser;
iv. shareholders of either Fund (see below); and
any other source the Committee deems appropriate.
4. The Committee may, but is not required to, retain a third party search
firm at the Trust's expense to identify potential Candidates.
5. The Committee will consider and evaluate Candidates submitted by
shareholders of the Funds on the same basis as it considers and evaluates
Candidates recommended by other sources. Shareholder recommendations should be
delivered in writing to the Secretary of the Trust, c/o Green Century Capital
Management, Inc.
6. Meetings of the Committee will follow the following procedures:
a. The Committee will not have regularly scheduled meetings. Committee
meetings shall be held as and when the Committee or the Board determines
necessary or appropriate in accordance with the Trust's By-laws.
A-1
b. The Committee may meet either in person or by telephone, and the
Committee may act by unanimous written consent, to the extent permitted by
law and by the Funds' organizational documents.
c. A majority of the members shall constitute a quorum for the
transaction of business at any meeting of the Committee. The action of a
majority of the members present at a meeting at which a quorum is present
shall be the action of the Committee. If the Committee consists of two
members then a majority of the Committee will be equal to two members.
d. The Committee may select one of its members to be its chair.
e. The Committee shall prepare and retain minutes of its meetings and
appropriate documentation of decisions made outside of meetings by delegated
authority.
f. The Committee shall maintain all documents received or reviewed by it
for at minimum ten years.
7. This Charter has been adopted and approved by the Board of Trustees of
the Funds and may be amended by the Board from time to time in compliance with
applicable laws, rules, and regulations.
June 2005
A-2
Exhibit B
INVESTMENT SUBADVISORYADVISORY AGREEMENT
INVESTMENT SUBADVISORYADVISORY AGREEMENT, dated as of November 28, 2005,2006, by and among
GREEN CENTURY CAPITAL MANAGEMENT, INC., a Massachusetts corporation having its
principal place of business in Boston, Massachusetts (the "Adviser"), TRILLIUM ASSET MANAGEMENT CORPORATION,and GREEN
CENTURY FUNDS, a Massachusetts business trust created pursuant to a Declaration
of Trust dated as of July 1, 1991, as amended from time to time (the "Trust")
on behalf of the Green Century Equity Fund.
WHEREAS, the Trust has been organized to operate as an open-end diversified
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the shares of beneficial interest (par value $0.01 per share) of
the Trust are divided into two separate series, Green Century Balanced Fund
(the "Balanced Fund") and Green Century Equity Fund (the "Equity Fund") (each,
along with any series which may in the future be established, a "Series"); and
WHEREAS, the Trust on behalf of the Equity Fund desires to avail itself of
the services, information, advice, assistance and facilities of an investment
adviser and to have an investment adviser perform for it various investment
advisory and research services and other management services; and
WHEREAS, the Adviser has been organized to operate as an investment adviser
registered under the Investment Advisers Act of 1940, as amended, and desires
to provide investment advisory services to the Trust on behalf of the Equity
Fund;
NOW, THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. Employment of the Adviser. The Trust hereby employs the Adviser to manage
the investment and reinvestment of the assets of the Equity Fund subject to the
control and direction of the Trust's Board of Trustees, for the period and on
the terms hereinafter set forth. The Adviser hereby accepts such employment and
agrees during such period to render the services and to assume the obligations
herein set forth for the compensation herein provided. The Adviser shall for
all purposes herein be deemed to be an independent contractor and shall, except
as expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way or otherwise be deemed
an agent of the Trust.
2. Obligations of and Services to be Provided by the Adviser. In providing
the services and assuming the obligations set forth herein, the Adviser may, at
its expense, employ one or more subadvisers. References herein to the Adviser
shall include any subadviser employed by the Adviser. Any agreement between the
Adviser and a subadviser shall be subject to the renewal, termination and
amendment provisions of paragraph 9 hereof. The Adviser undertakes to provide
the following services and to assume the following obligations:
a. The Adviser shall manage the investment and reinvestment of the assets
of the Equity Fund, subject to and in accordance with the investment
objectives and policies of the Equity Fund and any directions which the
Trust's Board of Trustees may issue from time to time. In pursuance of the
foregoing, the Adviser shall make all determinations with respect to the
investment of the assets of the Equity Fund and the purchase and sale of
portfolio securities and shall take such steps as may be necessary to
implement the same. Such determination and services shall also include
determining the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the portfolio securities
shall be exercised. The Adviser shall render regular reports to the Trust's
Board of Trustees concerning the Trust's investment activities.
b. The Adviser shall, in the name of the Equity Fund, place orders for
the execution of the Equity Fund's portfolio transactions in accordance with
the policies with respect thereto set forth in the Trust's
A-1
registration statements under the 1940 Act and the Securities Act of 1933,
as such registration statements may be amended from time to time. In
connection with the placement of orders for the execution of the Equity
Fund's portfolio transactions, the Adviser shall create and maintain all
necessary brokerage records of the Trust in accordance with all applicable
laws, rules and regulations, including but not limited to records required
by Section 31(a) of the 1940 Act. All records shall be the property of the
Trust and shall be available for inspection and use by the Securities and
Exchange Commission (the "SEC"), the Trust or any person retained by the
Trust. Where applicable, such records shall be maintained by the Adviser for
the periods and in the places required by Rule 31a-2 under the 1940 Act.
c. The Adviser shall bear its expenses of providing services to the Trust
pursuant to this Agreement except such expenses as are undertaken by the
Trust. In addition, the Adviser shall pay the salaries and fees, if any, of
all Trustees, executive officers and employees of the Trust who are
affiliated persons, as defined in Section 2(a)(3) of the 1940 Act, of the
Adviser.
3. Compensation of Adviser.
a. As compensation for the services rendered and obligations assumed
hereunder by the Adviser, the Trust shall pay to the Adviser monthly a fee
from the Equity Fund equal on an annual basis to 0.25% of the average daily
net assets of the Equity Fund up to but not including $100 million, 0.22% of
the average daily net assets of the Equity Fund from and including $100
million up to but not including $500 million, 0.17% of the average daily net
assets of the Equity Fund from and including $500 million up to but not
including $1 billion, and 0.12% of the average daily net assets of the
Equity Fund equal to or in excess of $1 billion. Such fee shall be computed
and accrued daily. If Green Century Capital Management, Inc. serves as
investment adviser for less than the whole of any period specified in this
Section 3a, the compensation to Green Century Capital Management, Inc., as
Adviser, shall be prorated. For purposes of calculating the Adviser's fee,
the daily value of the Equity Fund's net assets shall be computed by the
same method as the Trust uses to compute the value of the Equity Fund's net
assets in connection with the determination of net asset value of the Equity
Fund's shares.
b. The Adviser reserves the right to waive all or part of its fee.
4. Activities of the Adviser. The services of the Adviser to the Trust
hereunder are not to be deemed exclusive, and the Adviser shall be free to
render similar services to others. It is understood that the Trustees and
officers of the Trust are or may become interested in the Adviser as
stockholders, officers or otherwise, and that stockholders and officers of the
Adviser are or may become similarly interested in the Trust, and that the
Adviser may become interested in the Trust as a shareholder or otherwise.
5. Use of Names. The Trust shall not use the name of the Adviser in any
prospectus, sales literature or other material relating to the Trust in any
manner not approved prior thereto by the Adviser; provided, however, that the
Adviser shall approve all uses of its name which merely refer in accurate terms
to its appointment hereunder or which are required by the SEC or a state
securities commission; and provided further, that in no event shall such
approval be unreasonably withheld. The Adviser shall not use the name of the
Trust in any material relating to the Adviser in any manner not approved prior
thereto by the Trust; provided, however, that the Trust shall approve all uses
of its name which merely refer in accurate terms to the appointment of the
Adviser hereunder or which are required by the SEC or a state securities
commission; and, provided further, that in no event shall such approval be
unreasonably withheld.
The Trustees of the Trust acknowledge that, in consideration of the
Adviser's assumption of certain organization and ongoing expenses of the Trust,
the Adviser has reserved for itself the right to the names "Green Century
Funds", "Green Century Money Market Fund", "Green Century Equity Fund" and
"Green Century Balanced Fund" (or any similar names) and that use by the Trust
of such names shall continue only with the continuing consent of the Adviser,
which consent may be withdrawn at any time, effective immediately, upon written
notice thereof to the Trust.
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6. Limitation of Liability of the Adviser. Absent willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Trust or to any shareholder of the Equity Fund for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security. As used in this Section 6, the term "Adviser" 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.
7. Limitation of Trust's Liability. The Adviser acknowledges that it has
received notice of and accepts the limitations upon the Trust's liability set
forth in its Declaration of Trust. The Adviser agrees that the Trust's
obligations hereunder in any case shall be limited to the Trust and to its
assets and that the Adviser shall not seek satisfaction of any such obligation
from the shareholders of the Equity Fund nor from any Trustee, officer,
employee or agent of the Trust.
8. Force Majeure. The Adviser shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrections, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Adviser shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
9. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and indefinitely thereafter, if its continuance
after such two-year period shall be specifically approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Equity 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 this Agreement or interested
persons of the Adviser, cast in person at a meeting called for the purpose of
voting on such approval. If such approval is not obtained, this Agreement shall
terminate on the date which is 15 months from the last such approval. This
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 Equity Fund upon 60 days' prior written notice to the
Adviser and by the Adviser upon 60 days' prior written notice to the Trust.
This agreement may be amended at any time by the parties hereto, subject to
approval by the Trust's Board of Trustees and, if required by applicable SEC
rules and regulations, a vote of the majority of the outstanding voting
securities of the Equity Fund. This Agreement shall terminate automatically in
the event of its assignment. The terms "assignment" and "majority of the
outstanding voting securities" shall have the meaning set forth for such terms
in the 1940 Act.
10. 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.
11. Miscellaneous. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. The 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.
A-3
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, and as
amended, 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, ON BEHALF OF
THE
GREEN CENTURY EQUITY FUND
BY
-----------------------------
Kristina A. Curtis
President
GREEN CENTURY CAPITAL MANAGEMENT,
INC.
BY
-----------------------------
Wendy Wendlandt
President
A-4
Exhibit B
INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT, dated as of November 28, 2006, by and
among GREEN CENTURY CAPITAL MANAGEMENT, INC., a Massachusetts corporation
having its principal place of business in Boston, Massachusetts (the
"Adviser"), MELLON EQUITY ASSOCIATES, LLP, a Pennsylvania limited liability
partnership, (the "Subadviser"), and GREEN CENTURY FUNDS, a Massachusetts
business trust (the "Trust") on behalf of Green Century BalancedEquity Fund.
WHEREAS, the Adviser has been organized to operate as an investment adviser
registered under the Investment Advisers Act of 1940 and has been retained by
the Trust to provide investment advisory services to the Trust, an open-end,
diversified management investment company registered under the Investment
Company Act of 1940, as amended (collectively with the rules and regulations
promulgated thereunder, in each case as in effect from time to time, the "1940
Act"); and
WHEREAS, the shares of beneficial interest (par value $0.01 per share) of
the Trust are divided into two separate series, Green Century Balanced Fund
(the "Balanced Fund" or the "Fund") and Green Century Equity Fund (the "Equity Fund" or the
"Fund"); and
WHEREAS, the Adviser desires to retain the Subadviser to furnish it with
portfolio management services in connection with the Adviser's investment
advisory activities on behalf of the BalancedEquity Fund, and the Subadviser is willing
to furnish such services to the Adviser and the Trust;
NOW, THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. Employment of the Subadviser. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Adviser, attached
hereto as Exhibit A (the "Advisory Agreement"), the Adviser hereby appoints the
Subadviser to perform the portfolio management services described herein for
the investment and reinvestment of the assets of the Fund, subject to the
direction and supervision of the Adviser and the Trust's Board of Trustees, for
the period and on the terms hereinafter set forth. The Subadviser accepts such
employment and agrees to furnish the services described herein in accordance
with the terms of this Agreement and applicable law. The Subadviser shall for
all purposes herein be deemed to be an independent contractor and shall, except
as expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust or the Adviser in any way or
otherwise be deemed an agent of the Trust or the Adviser.
2. Obligations of and Services to be Provided by the Subadviser.
(a)a. The Subadviser undertakes to provide the following services and to
assume the following obligations with respect to the Fund:
(1) The Subadviser, subject to and in accordance with the Fund's
investment objective, policies and restrictions as stated in the Trust's
Registration Statement(s) under the Securities Act of 1933 (the "1933
Act"), as it may be amended from time to time and as adopted by the
Trust's Board of Trustees from time to time, and the overall supervision
of the Trust's Board of Trustees and the Adviser, shall maintain a
continuing investment program for the Fund, including investment
research and management with respect to the investment and reinvestment
of the assets of the Fund, and shall take such steps as may be
reasonably necessary to implement the same. The Subadviser shall make
all trades for the Fund, engage in other actions as related to the Fund,
and maintain the portfolio of the Fund at all times in compliance with
the 1933 Act, the 1940 Act, and all applicable laws and regulations.
The
Subadviser shall apply the environmental and other screening criteria
developed by the Adviser and the Trust and communicated to the
Subadviser in writing in accordance with the investment research of the
Subadviser with respect to such criteria. Should the Trust's Board of Trustees at any time establish an investment
policy with respect to the Fund and notify the Subadviser
B-1
thereof in
writing, the Subadviser shall be bound by such determination for the
period, if any, specified in such notice or until notified in writing by
the Board of Trustees that such policy has been revoked.
B-1
(2) The Subadviser may not consult with any other subadviser to the
Fund concerning transactions in securities or other assets for the Fund
except that such consultations are permitted between the current and
successor subadviser(s) to the Fund in order to effect an orderly
transition of subadvisory duties so long as such consultations are not
concerning transactions prohibited by Section 17(a) of the 1940 Act.Fund.
(3) In connection with the purchase and sale of portfolio investments
of the Fund, the Subadviser shall arrange for the transmission to the
Adviser and the Trust's portfolio accountant, on a daily basis, of such
confirmations, trade tickets or other documentation as may be necessary
to enable the Adviser to perform its advisory and administrative
responsibilities. The Subadviser shall render such reports to the
Adviser, any subadministrator and/or to the Trust's Board of Trustees
concerning compliance, the investment activities and portfolio
composition of the Fund, in such forms and at such intervals, as the
Adviser or the Trust's Board of Trustees may from time to time
reasonably require.
(4) The Subadviser shall have the authority and discretion to select
brokers and dealers to execute the Fund's portfolio transactions and for
the selection of the markets on or in which the transactiontransactions will be
executed. In connection with the selection of such brokers or dealers
and the placing of such orders, the Subadviser is directed to seek for
the Fund, in its best judgment, prompt best available execution in an
effective manner. Subject to the primary objective of obtaining best
available execution, securitiesThe Subadviser may be bought from or soldnot use commissions paid to
broker-dealers that charge commissions in excessconnection with the purchase or sale of the amount of
commission another broker-dealer would have charged as long as the
Subadviser determines in good faith that such amount of commission is
reasonable in relationFund
securities to the value of the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided to the Fund, subject to any applicable
laws, rules and regulations.generate so-called "soft dollars". Broker-dealers that
sell shares of the Fund or any other fund for which the Subadviser acts
as investment adviser or subadviser shall only receive orders for the
purchase or sale of the Fund's portfolio securities to the extent that
the placing of such orders is in compliance with applicable law and the
rules of the Securities and Exchange Commission (the "SEC") and the
National Association of Securities Dealers, Inc. In connection with the
placement of orders for the execution of portfolio transactions, and
subject to the direction and supervision of the Adviser and the Trust's
Board of Trustees, the Subadviser shall create and maintain all
necessary brokerage records of the Trust in accordance with all
applicable laws, rules and regulations, including but not limited to
records required by Section 31(a) of the 1940 Act.
(5) All records maintained by the Subadviser on behalf of the Adviser
or the Fund (including, without limitation, records maintained and
preserved by the Subadviser pursuant to Rule 31a-1 and Rule 31a-2
adopted under the 1940 Act) shall be the property of the Adviser or the
Trust, as applicable, and shall be available for inspection and use by
(or surrendered to) the SEC, the Trust or any person retained by the
Trust promptly upon request. Where applicable, such records shall be
maintained by the Subadviser for the periods and in the places required
by Rule 31a-1 and Rule 31a-2 under the 1940 Act, as applicable.
(6) The Subadviser shall not have any responsibility for determining
the manner in which voting rights shall be exercised.
(7) The assets of the Fund shall be held by one or more financial
institutions designated by the Fund in a custodial capacity (the
"Custodian") in an account which the Fund has directed the Custodian to
open. All transactions will be consummated by payment to or delivery by
the Custodian for the Fund or such depositories or agents as may be
designated by the Custodian of all cash and/or securities due to or from
the Fund, and the Subadviser shall not have possession or custody
thereof or any responsibility or liability with respect thereto. The
Subadviser shall advise the Custodian, the Trust's portfolio accounting
agent and the Adviser daily of all investments placed by its
broker/dealers pursuant to procedures agreed upon by the Subadviser and
the Adviser. The Adviser and the Trust shall B-2
issue to the Custodian such
instructions, and hereby authorize the Subadviser to issue to the
Custodian such instructions, as may be appropriate in connection with
the settlement of transactions initiated by the Subadviser. The Adviser
shall cause the Custodian to accept instructions from the Subadviser
with respect to Fund assets and transactions by the Fund in the
performance of the Subadviser's duties hereunder. The Adviser shall use
its best efforts to cause the Custodian to provide the Subadviser with
any such information and reports concerning the Fund or its assets as
the Subadviser may from time to time reasonably request, provided that
neither the Adviser nor the Fund shall be required to provide additional
compensation to the Custodian to provide any such information or report.
The Subadviser shall have no liability or obligation to pay the cost of
such Custodian or for any of its services.
(b)B-2
b. The Subadviser represents to the Adviser and the Trust that it will
disclose to the Adviser and the Trust promptly after it has knowledge of any
significant change or variation in its management structure or personnel
which will affect the Fund or any significant change or variation in its
management style or investment philosophy which will affect the Fund. The
Subadviser shall promptly advise the Adviser of any change in the membership
of its partnership. In addition, the Subadviser represents to the Adviser
and the Trust that it will similarly disclose to the Trust and the Adviser,
promptly after it has knowledge, of (i) the existence of any pending or
threatened significant legal or regulatory action or proceeding against it, (ii) any threatened significant legal actionwhich in the
discretion of any
federal or state regulatory authority or (iii) the existence of any pending
investigation by any federal or state governmental agency relatedSubadviser would have a material adverse affect on its
ability to or
involving the Fund, and, in each case, will provide to the Adviser and the
Trust all such material information with respect to such action, proceeding
or investigation as is reasonably requested by the Adviser and the Trust,services under this Agreement, provided that such
information can be disclosed without effect on any legal
privilege and is and permitted to be disclosed by the Subadviser pursuant to
applicable law.
The Adviser and the Trust each represents to the Subadviser that any
information received by it pursuant to this clause (b) will be kept
confidential.
(c)c. The Subadviser agrees that it will not deal with itself, or with the
Trustees of the Trust or with the Adviser, or the Fund's principal
underwriter or distributor as principals in making purchases or sales of
securities or other property for the account of the Fund, except as
permitted by the 1940 Act, will not take a long or short position in the
shares of the Fund except as permitted by the Trust's Declaration of Trust,
and will comply with all other applicable provisions of the Trust's
Declaration of Trust and By-Laws and any current Prospectus or Statement of
Additional Information of the Fund, in each case to the extent that it has received a copy of the same.
(d)Fund.
d. The Subadviser may manage other portfolios and expects that the Fund
and other portfolios it manages will, from time to time, purchase or sell
the same securities. Consistent with the Subadviser's fiduciary duties to
the Fund and applicable law, the Subadviser may aggregate orders for the
purchase or sale of securities on behalf of the Fund with orders on behalf
of other portfolios the Subadviser manages. Securities purchased or proceeds
of securities sold through aggregated orders are allocated to the account of
each portfolio managed by the Subadviser that bought or sold such securities
at the average execution price. If less than the total of the aggregated
orders is executed, purchased securities or proceeds will generally be
allocated pro rata among the participating portfolios in proportion to their
planned participation in the aggregated orders.
(e)e. The Adviser understands and agrees that the Subadviser and its
officers, affiliates and employees perform investment advisory and
investment management services for various clients other than the Adviser
and the Fund. Subject to the terms of a letter agreement entered into by the
Adviser and the Subadviser on the date hereof (as amended and in effect from
time to time, the "Letter"), nothing in this Agreement shall prohibit the
Subadviser or any of its officers, affiliates or employees from providing
any services for any other person or entity or limit the service which the
Subadviser or any such officer, affiliate or employee can provide to any
person or entity. Subject to the terms of the Letter, the Subadviser and its
officers and employees may act and continue to provide investment management
services for others, and nothing in this Agreement shall in any way be
deemed to restrict the right of the Subadviser to provide investment
management services for any other person or entity, and the performance of
such services for others shall not be deemed to violate or give rise to any
duty or obligation on the part of the Subadviser. Subject to
B-3
applicable law, nothing in this Agreement shall limit or restrict the
Subadviser or any of its officers, affiliates or employees from buying,
selling or trading in any securities for its or their own accounts. The
Adviser understands and acknowledges that the Subadviser and its officers,
affiliates, employees and other clients may, at any time, have, acquire,
increase, decrease, or dispose of positions in investments which are at the
same time being acquired or disposed of for the Fund and that the Subadviser
and its officers, affiliates and employees may give advice and take action
in the performance of duties with respect to any other client which may
differ from advice given, or the timing or nature of action taken, with
respect to the Fund. The Subadviser shall not have any obligation to
purchase or sell for the Fund any security which the Subadviser, its
officers, affiliates or employees may acquire for its or their own accounts
or for the account of another client, so long as it continues to be the
policy and practice of the Subadviser not to favor or disfavor consistently
or consciously any client or class of clients in the allocation of
investment opportunities.
3. Expenses. During the terms of this Agreement, the Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement.
The Subadviser shall not be obligated to pay any expenses of or for the Trust,
the Fund or the Adviser that are not expressly assumed by the Subadviser.
4. Compensation. The Adviser agrees to pay the Subadviser as full
compensation for the services to be rendered and expenses to be borne by the
Subadviser a fee equal on an annual basis to 0.40%the greater of $50,000 or 0.08% of
the value of the average daily net assets of the Fund up to $30but not including
$100 million, and 0.35% of the value0.05% of the average daily net assets of the Fund from and
including $100 million up to but not including $500 million, 0.02% of the
average daily net assets of the Fund from and including $500 million up to but
not including $1 billion and 0.01% of the average daily net assets of the Fund
equal to or in excess of $30 million.$1 billion. Such fee shall be accrued daily and
payable following the end of each calendar quarter.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of the close of regular trading on
the New York Stock Exchange (currently, 4:00 p.m. Eastern Time) on each day on
which the net asset value of the Trust is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act. The value of the net assets of the
Fund shall always be determined pursuant to the applicable provisions of the
Declaration of Trust and the Fund's then current prospectus and statement of
additional information. If the determination of net asset value does not take
place for any particular day, then for the purposes of this Section 4, the
value of the net assets of the Fund last determined shall be deemed to be the
value of its net assets as of the close of regular trading on the New York
Stock Exchange, or as of such other time as the value of the net assets of the
Fund's portfolio may be lawfully determined on that day. If the Trust determines
B-3
the value of the net assets of the Fund more than once on any day, then the
last such determination thereof on that day shall be deemed to be the sole
determination thereof on that day for the purposes of this Section 4.
Notwithstanding the foregoing provisions of this Section 4, the compensation
to be received by the Subadviser under this Agreement for the period from the
date hereof to but not including April 27, 2006, or, if earlier, the date on
which this Agreement is approved by the shareholders of the Fund in accordance
with the 1940 Act, shall not exceed the compensation that would have been
received by Adams Harkness Asset Management, Inc. ("AHAM") during such period
under that certain Investment Subadvisory Agreement, dated as of April 1, 1999,
by and among the Adviser, AHAM and the Trust on behalf of the Fund.
5. Renewal and Termination. This Agreement shall continue in effect with
respect to the Fund, unless sooner terminated as hereinafter provided, for a
period of two years from the date hereof and indefinitely thereafter if its
continuance after such two year period shall be "specifically approved at least
annually" by "vote 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 "interested persons" of the Adviser, the
Subadviser or the Trust, cast at a meeting called for the purpose of voting on
such approval as provided under the 1940 Act.
Notwithstanding the immediately preceding sentence of this Section 5, this
Agreement shall terminate on April 27, 2006 unless on or before such date this
Agreement is approved by the shareholders of the Fund in accordance with the
1940 Act.
B-4
This Agreement may be terminated at any time, with respect to the Fund,
without payment of any penalty, (i) by the Trust's Board of Trustees or by the
"vote of a majority of the outstanding voting securities" of the Fund, upon not
more than 60 days' nor less than 30 days' prior written notice to the Adviser
and Subadviser, (ii) by the Adviser upon not more than 60 days' nor less than
30 days' prior written notice to the Trust and the Subadviser, or (iii) by the
Subadviser upon not less than 180 days' prior written notice to the Trust and
the Adviser. This Agreement will terminate automatically upon any termination
of the Advisory Agreement between the Trust and the Adviser or in the event of
its "assignment".
The terms "specifically approved at least annually", "interested persons",
"vote of a majority of the voting securities", and "assignment" when used in
this Agreement shall have the respective meanings specified in, and shall be
construed in a manner consistent with, the 1940 Act, subject, however, to such
exemptions as may be granted by the SEC under the 1940 Act.
6. Standard of Care. The Subadviser may rely on information reasonably
believed by it to be accurate and reliable. Neither the Subadviser nor its
officers, directors, or employees shall be subject to any liability for any act
or omission, or error of judgment or for any loss suffered by the Trust, the
Fund or the Adviser in the course of, connected with, or arising out of any
services to be rendered hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security, except by reason of willful
misfeasance, bad faith or gross negligence on the part of the Subadviser in the
performance of its duties, violation of law, or by reason of reckless disregard
on the part of the Subadviser of its obligations and duties under this
Agreement.
7. Representations and Warranties. Each of the Adviser and the Subadviser
represents and warrants that: (a) the person(s) executing this Agreement on
behalf of such party has full power and authority to execute this Agreement on
behalf of such party and (b) such party's execution, delivery and performance
of this Agreement will be binding upon such party in accordance with the terms
hereof, and will not violate in any material respect any obligation by which
such party is bound, whether arising by contract, operation of law, or
otherwise. The Adviser acknowledges that it has received a copy of the
Subadviser's disclosure document under Rule 204-3 of the Investment Advisers
Act of 1940 at least 48 hours prior to executing this Agreement.
In addition,
the Adviser represents and warrants that true and complete copies of the
Agreement and Declaration of Trust and By-Laws of the Trust and the prospectus
and statement of additional information of the Fund have been delivered to the
Subadviser. The Adviser will deliver to the Subadviser all future amendments
and supplements to such documents.
The Subadviser agrees to review written communications to Fund shareholders
and prospective investors relating to the Fund and the Subadviser's services
hereunder, including shareholder reports and proxy statements, as reasonably
requested by the Adviser. The Subadviser agrees to review the Fund's Prospectus
and the Statement of Additional Information as reasonably requested by the
Adviser to assure that the description therein of the investment policies and
strategies followed by the Subadviser in providing services hereunder for the
Fund is consistent with the policies and strategies the Subadviser uses or
intends to use and that the information therein concerning the Subadviser and
the services provided hereunder is accurate and complete.
The AdviserSubadviser agrees to
providethat during the term of this Agreement, including
renewals, and for a reasonable timeone year period forfollowing the Subadviser's reviewtermination of such written
materials. The Subadviser shall not be liable for any actual or alleged
material misstatement or omission in the Prospectus, the Statement of
Additional Information, proxy statements or other communications to Fund
shareholders or prospective investors, unless the misstatement or omission
relates tothis
Agreement, the Subadviser will not, directly or servicesindirectly, hire or attempt to
behire any present or former employees of the Adviser or solicit or encourage any
present employees of the Adviser to discontinue employment with the Adviser,
provided, byhowever, that this prohibition shall bar the Subadviser,
includinghiring of former
employees of the investment strategies and policies to be followed byAdviser only during the Subadviser, and is based on information furnished byfirst year following termination of
their employment with the Subadviser.Adviser.
B-4
8. Use of Names; References to the Subadviser. The Trustees of the Trust and
the Subadviser acknowledge that, in consideration of the Adviser's assumption
of organization and ongoing expenses of the Trust and of the Fund, the Adviser
has reserved for itself the right to the names "Green Century Funds", "Green
Century Balanced Fund", and "Green Century Equity Fund" (or any similar names)
and that use by the Trust of such names shall continue only with the continuing
consent of the Adviser, which consent may be withdrawn at any time, effective
immediately, upon written notice thereof to the Trust. The Subadviser hereby
agrees that the Adviser may use the B-5
Subadviser's name in the Fund's marketing
or advertising materials with the prior written consent of the Subadviser,
which consent will not be unreasonably withheld or delayeddelayed.
9. Assignment, Amendment of this Agreement. This Agreement may not be
transferred, assigned, sold or in any manner hypothecated or pledged by any
party hereto, except as permitted under the 1940 Act (including any exemptions
as may be granted by the SEC under the 1940 Act). No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of this
Agreement shall be effective, with respect to the Fund, until approved by vote
of the holders of a majority of the outstanding voting securities of the Fund,
if such shareholder approval is required by the 1940 Act subject, however, to
such exemptions as may be granted by the SEC under the 1940 Act.
10. Severability. If any provision of this Agreement shall be held or made
invalid by a decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
11. Notices. Notices should be provided to the Subadviser at: Mr. Adam
Seitchik, Trillium Asset Management Corporation, 711 Atlantic Avenue, Boston,
Massachusetts 02111.at One Mellon
Center, Suite 4200, Pittsburgh, PA 15258-0001 Attention: William P. Rydell,
President and CEO. Notices to the Adviser should be provided to Ms. Amy Perry
Basseches,Kristina A.
Curtis, Green Century Capital Management, Inc., 29 Temple Place,114 State Street, Suite 200,
Boston, MA 02111.02109. Notices to the Trust should be provided to Ms. Kristina
Curtis, Green Century Funds, 29 Temple Place,114 State Street, Suite 200, Boston, MA 02111.02109.
12. Miscellaneous. Each party agrees to perform such further acts and to
execute further documents as are necessary to effectuate the acts and execute
such purposes hereof. The Agreement shall be construed and enforced in
accordance with and governed by the laws of the Commonwealth of Massachusetts,
provided, however, that nothing herein will be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of 1940, or any
rules and regulations of the SEC promulgated thereunderthereunder. Where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
altered by a rule, regulation or order of the SEC, whether of special or
general application, such provision shall be deemed to incorporate the effect
of such rule, regulation or order. 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.
[Signature page follows.]
B-6B-5
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 CAPITAL MANAGEMENT, INC.
BY
-----------------------------
Amy Perry Basseches
President
TRILLIUM ASSET MANAGEMENT CORPORATION
BY
-----------------------------
Adam Seitchik
Vice President
GREEN CENTURY FUNDS
BY
-----------------------------
Kristina CurtisGREEN CENTURY CAPITAL MANAGEMENT,
INC.
BY
-----------------------------
Wendy Wendlandt
President
B-7
Exhibit C
(Cover PageMELLON EQUITY ASSOCIATES, LLP
BY
-----------------------------
William P. Rydell
President and Table of Contents Omitted.)
AMENDED AND RESTATED
DECLARATION OF TRUST
OFChief Executive
Officer
GREEN CENTURY FUNDS
Dated as of July 1, 1991[__]
WHEREAS, the Trustees desire to establish a trustWHEREAS, GREEN CENTURY
FUNDS was established pursuant to a Declaration of Trust dated as of July 1,
1991 (the "Original Declaration"), for the investment and reinvestment of funds
contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trustTrust
assets continue to be divided into transferable Shares of Beneficial Interest
(par value $0.01 per share) ("Shares") issued in one or more series as
hereinafter provided; and
WHEREAS, the Trustees wish to amend and restate the Original Declaration in
its entirety, and hereby certify that this Amended and Restated Declaration of
Trust has been amended and restated in accordance with the provisions of the
Original Declaration;
NOW THEREFORE, the Trustees hereby declareconfirm that all money and,
property contributed to the trust establishedTrust hereunder shall be held and
managed in trust for the benefit of holders, from time to time, of the Shares
of Beneficial Interest (par value $0.01 per share) issued hereunder and subject
to the provisions hereof, and that the Original Declaration, including all
appendices, is amended and restated in its entirety as follows.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Section 1.1. Name. The name of the trust created herebyTrust is
"Green Century Funds".
Section 1.2 Section 1.2. Definitions. Wherever they are used herein, the
following terms have the following respective meanings:
(a) "(a) "Administrator"" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.3 hereof.
(b) "(b) "By-Laws"" means the By-laws referred to in Section 3.9 hereof,
as from time to time amended.
(c) "(c) "Commission"" has the meaning given that term in the 1940 Act.
(d) "Custodian" means a party employed by the Trust to furnish services
as described in Article X of the By-Laws.
(e) "(d) "Declaration"" means this Amended and Restated Declaration of
Trust, as amended from time to time. Reference in this Declaration of Trust
to ""Declaration", "" "hereof", "" "herein"," and ""hereunder"" shall be
deemed to refer to this Declaration rather than the article or section in
which such words appear, .
(f) "(e) "Distributor"" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.2 hereof.
C-1BY
-----------------------------
Kristina A. Curtis
President
B-6
(g) "(f) "Interested Person"" has the meaning given that term in the 1940
Act.
(h) "(g) "Investment Adviser"" means a party furnishing services to the
Trust pursuant to any contract described in Section 4.1 hereof.
(i) "(h) "Majority Shareholder Vote"" has the same meaning as the phrase
""vote of a majority of the outstanding voting securities"" as defined in
the 1940 Act, except that such term may be used herein with respect to the
Shares of the Trust as a whole or the Shares of any particular series or
class, as the context may require, and except that each Share shall have one
vote for each dollar of net asset value as provided in Section 6.8 hereof.
(j) "(i) "1940 Act"" means the Investment Company Act of 1940 and the
Rules and Regulations thereunder, as amended from time to time, and as such
Act or the Rules and Regulations thereunder may apply to the Trust or any
series or class pursuant to any exemptive order or similar relief or
interpretation issued by the Commission under such Act.
(k) "(j) "Person"" means and includes individuals, corporations, limited
liability companies, partnerships, trusts, associations, joint ventures and
other entities, whether or not legal entities, and governments and agencies
and political subdivisions thereof, whether domestic or foreign.
(l) "(k) "Shareholder"" means a record owner of outstanding Shares.
(m) "(l) "Shares"" means the Shares of Beneficial Interest into which the
beneficial interest in the Trust shall be divided from time to time or, when
used in relation to any particular series or class of Shares established by
the Trustees pursuant to Section 6.96.11 hereof, equal proportionate
transferable units into which such series or class of Shares shall be
divided from time to time. in accordance with the terms hereof. The term
""Shares"" includes fractions of Shares as well as whole Shares.
(n) "(m) "Shareholder Servicing Agent"" means a party furnishing services
to the Trust pursuant to any shareholder servicing contract described in
Section 4.44.5 hereof.
(o) "(n) "Transfer Agent"" means a party furnishing services to the Trust
pursuant to any transfer agency contract described in Section 4.44.5 hereof.
(p) "(o) "Trust"" means the trust created herebyhereunder.
(q) "(p) "Trust Property"" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees, including, without limitation, any and all property
allocated or belonging to any series or class of Shares pursuant to
Section 6.9 or Section 6.10 hereof.
(r) "(q) "Trustees"" means the persons who have signed the Declaration,
so long as they shall continue in office in accordance with the terms
hereof, and all other persons who may from time to time be duly elected or
appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in their capacity as trustees hereunder.
(r) "Trustees Emeritus" means those former Trustees who, from time to
time, elect to serve as trustees emeritus of the Trust in accordance with
the guidelines and conditions for such service adopted by the Trustees from
time to time, for so long as they serve in that capacity. Trustees Emeritus,
in their capacity as such, are not Trustees of the Trust for any purpose and
have no powers or obligations of Trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1Section 2.1. Number of Trustees. The number of Trustees shall be
such number as shall be fixed from time to time by a written instrument signed
by a majority of the Trustees, provided, however, that the number of Trustees
shall in no event be less than three nor more than 15.
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Section 2.2Section 2.2. Term of Office of Trustees. Subject to theall
applicable provisions of Section 16(a) of the 1940 Act, the Trusteesa Trustee
shall hold office during the lifetime of this Trust and until its termination
as hereinafter provided or, if sooner, until his or her death or the election
and qualification of his or her successor; except that:
(a) any Trustee may resign his or her trust (without need for prior or
subsequent accounting) by an instrument in writing signed by himthat Trustee
and delivered to the other TrusteesTrust, which shall take effect upon such
delivery or upon such later date as is specified therein;
(b) any Trustee may be removed at any time, with or without cause,at any
time by written instrument signed by at least two-thirds of the remaining
independent Trustees, specifying the date when such removal shall become
effective;
(c) any Trustee who has attained a mandatory retirement age established
pursuant to any written policy adopted formfrom time to time by at least two
-thirds of the Trustees shall, automatically and without action of such
Trustee or the remaining Trustees, be deemed to have retired in accordance
with the terms of such policy, effective as of the date determined in
accordance with such policy; (d)
(d) any Trustee who has served to the end of his or her term of office
established pursuant to any written policy adopted from time to time by at
least two-thirds of the Trustees shall, automatically and without action of
such Trustee or the remaining Trustees, be deemed to have retired in
accordance with the terms of such policy, effective as of the date
determined in accordance with such policy;
(e) any Trustee who has become incapacitated by illness or injury, as
determined by a majority of the other Trustees in their reasonable judgment,
may be retired by written instrument signed by a majority of the other
Trustees, specifying the date of his or her retirement; and
(ef) a Trustee may be removed at any meeting of Shareholders by a vote of
Shares representing two -thirds of the voting power of the outstanding
Shares of each series. For purposes of the foregoing clause (b), the term
"cause" shall include, but not be limited to, failure to comply with such
written policies as may from time to time be adopted by at least two thirds
of the Trustees with respect to the conduct of Trustees and attendance at
meetings. the Trust.
Upon the resignation, retirement or removal of a Trustee, or his or her
otherwise ceasing to be a TrusteesTrustee, that individual shall execute and
deliver such documents as the remaining Trustees shall require for the purpose
of conveying to the Trust or the remaining Trustees any Trust Property held in
the name of the resigning, retiring or removed Trustee. Upon the incapacity or
death of any Trustee, histhat Trustee's legal representative shall execute and
deliver on his or her behalf such documents as the remaining Trustees shall
require as provided in the preceding sentence. Except to the extent expressly
provided in a written agreement to which the Trust is a party or in a written
policy adopted by the Trustees, no resigning or removed Trustee shall have any
right to any compensation for any period following his or her resignation or
removal, or any right to damages on account of such removal.
Section 2.3 Section 2.3. Resignation and Appointment of Trustees. In case of
the declination, death, resignation, retirement, or removal or inability of any
of the Trustees, or in case a vacancy shall, by reason of an increase in number
of Trustees, or for any other reason, exist, a majority of the remaining
Trustees shallmay fill such vacancy by appointing such other individual as they
in their discretion shall see fit. Such appointment shall be evidenced by a
written instrument signed by a majority of the Trustees in office. Any such
appointment shall not become effective, however, until the person named in the
written instrument of appointmentappointed shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of the Declaration.
Within twelve months of such appointment, the Trustees shall cause notice of
such appointment to be mailed to each Shareholder at his address as recorded on
the books of the Trustees. An appointment of a Trustee may be made by the
Trustees then in office and notice thereof mailed to Shareholders as
aforesaidin anticipation of a vacancy to occur by reason of retirement,
resignation, removal or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or after
the effective date of said
C-3
retirement, resignation, removal or increase in number of Trustees. The power
of appointment is subject to theall applicable provisions of Section 16 (a) of
the 1940 Act.
Section 2.4 Section 2.4. Vacancies. The death, declination, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency created
pursuant to the terms of thisthe Declaration. Whenever a vacancy in the number
of Trustees shall occur, until such vacancy is filled as provided in
Section 2.3, theor while any Trustee is incapacitated, the other Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by the
Declaration., and only such other Trustees shall be counted for the purposes of
the existence of a quorum or the taking of any action to be taken by the
Trustees. A written instrument certifying the existence of such vacancy or
incapacity signed by a majority of the Trustees shall be conclusive evidence of
the existence of such vacancythereof.
Section 2.5 Section 2.5. Delegation of Power to Other Trustees. Any Trustee
may, by power of attorney, delegate his power for a period not exceeding six
months at any one time to any other Trustee or Trustees; provided that in no
case shall fewer than two Trustees personally exercise the powers granted to
the Trustees under the Declaration except as otherwise expressly provided
herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1 Section 3.1. General. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its
branches and maintain offices both within and without the Commonwealth of
Massachusetts, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities of the
United States of America and of foreign governments, and to do all such other
things and execute all such instruments as the Trustees deem necessary, proper
or desirable in order to promote the interests of the Trust although such
things are not herein specifically mentioned. Any determination as to what is
in the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of the Declaration, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. or any other power of the Trustees hereunder.
Such powers of the Trustees may be exercised without order of or resort to any
court.
Section 3.2 Section 3.2. Investments. (a)(a) The Trustees shall have the
power:
(i) (i) to conduct, operate and carry on the business of an investment
company;
(ii)(ii) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute,
lend or otherwise deal in or dispose of securities of every nature and kind,
U.S. and foreign currencies, any form of gold or other precious metal,
commodity contracts, any form of option contract, contracts for the future
acquisition or delivery of fixed income or other securities, shares of, or
any other interest in, any investment company as defined in the Investment
Company Act of 1940, and securities and related derivatives of every nature
and kindderivative instruments of every kind, "when-issued" or standby
contracts, and all types of obligations or financial instruments, including,
without limitation, all types of bonds, debentures, stocks, negotiable or
non-negotiable instruments, obligations, evidences of indebtedness,
certificates of deposit or indebtedness, commercial paper, repurchase
C-4
agreements, bankers'' acceptances, and other securities of any kind, issued,
created, guaranteed or sponsored by any and all Persons, including, without
limitation,
(A) states, territories and possessions of the United States and the
District of Columbia and any political subdivision, agency or
instrumentality of any such Person,
(B) the U.S. Government, any foreign government, or any political
subdivision or any agency or instrumentality of the U.S. Government, any
foreign government or any political subdivision of the U.S. Government
or any foreign government,
(C) any international or supranational instrumentality,
(D) any bank or savings institution, or
(E) any corporation, trust, partnership or other organization
organized under the laws of the United States or of any state, territory
or possession thereof, or under any foreign law;
or in "when issued" contracts for any such securities, to retain Trust
assets in cash and from time to time to change the securities or
obligationsinvestments in which the assets of the Trust are invested; and to
exercise any and all rights, powers and privileges of ownership or interest
in respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons to exercise any
of said rights, powers and privileges in respect of any of said investments;
and
(iii) (iii) to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
proper or desirable for the accomplishment of any purpose or the attainment
of any object or the furtherance of any power hereinbefore set forth, and to
do every other act or thing incidental or appurtenant to or connected with
the aforesaid purposes, objects or powers.
(b) (b) The Trustees shall not be limited to investing in securities or
obligations maturing before the possible termination of the Trust, nor shall
the Trustees be limited by any law limiting the investments which may be made
by fiduciaries.
(c) (c) Notwithstanding any other provision of thisthe Declaration to the
contrary, the Trustees shall have the power in their discretion without any
requirement of approval by shareholdersShareholders to either invest all or a
portion of the Trust Property of the Trust or, as applicable, the Trust
Property of each series of the Trust, or sell all or a portion of thesuch Trust
Property and invest the proceeds of such sales, in anotherone or more other
investment company that is registered undercompanies to the extent not
prohibited by the 1940 Act.
Section 3.3 Section 3.3. Legal Title. Legal title to all Trust Property
shall be vested in the Trustees as joint tenants except that the Trustees shall
have power to cause legal title to any Trust Property to be held by or in the
name of one or more of the Trustees, or in the name of the Trust, or in the
name of any other Person or nominee, on such terms as the Trustees may
determine. The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each Personperson who may hereafter become a
Trustee. Upon the resignation, retirement, removal or death of a Trustee, such
Trustee shall automatically cease to have any right, title or interest in any
of the Trust Property, and the right, title and interest of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
Section 3.4 Section 3.4. Issuance and Repurchase of Securities. The Trustees
shall have the power to issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in
Shares and, subject to the provisions set forth in Articles VII, VIII and IX
and Section 6.9 hereof, to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares any funds of the Trust or
other Trust Property, whether capital or surplus or otherwise, to the full
extent now or hereafter permitted by the laws of the Commonwealth of
Massachusetts governing business corporations.
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Section 3.5 Section 3.5. Borrowing Money; Lending Trust Property. The
Trustees shall have power to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting as security the
Trust Property, to endorse, guarantee, or undertake the performance of any
obligation, contract or engagement of any other Person and to lend Trust
Property.
Section 3.6 Section 3.6. Delegation; Committees. The Trustees shall have
power to delegate from time to time to such of their number or to officers,
employees or agents, or any Investment Adviser, Distributor, custodian, agent
or independent contractor of the Trust the doing of such things and the
execution of such instruments either in the name of the Trust or the names of
the Trustees or otherwise as the Trustees may deem appropriate or expedient.
Section 3.7 Section 3.7. Collection and Payment. Subject to Section 6.9
hereof, the Trustees shall have power to collect all property due to the Trust;
to pay all claims, including taxes, against the Trust Property; to prosecute,
defend, compromise or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations, by virtue of which
any property is owed to the Trust; and to enter into releases, agreements and
other instruments.
Section 3.8 Section 3.8. Expenses. Subject to Section 6.9 hereof, the
Trustees shall have the power to incur and pay any expenses which in the
opinion of the Trustees are necessary or incidental to carry out any of the
purposes of the Declaration, and to pay reasonable compensation from the funds
of the Trust to themselves as Trustees. The Trustees shall fix the compensation
of all officers, employees, Trustees and Trustees Emeritus.
Section 3.9 Section 3.9. Manner of Acting; By-Laws. Except as otherwise
provided herein, in the 1940 Act or in the By-Laws, any action to be taken by
the Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees at which a quorum is present, including any meeting held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons participating in the meeting can hear each other, or by
written consents of a majority of the Trustees. The Trustees may adopt By-Laws
not inconsistent with thisthe Declaration to provide for the conduct of the
business of the Trust and may amend or repeal such By-Laws to the extent such
power is not reserved to the Shareholdersat any time.
Section 3.10 Section 3.10. Miscellaneous Powers. TheWithout limiting the
foregoing, the Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Trust;
(b) enter into joint ventures, partnerships. and any other combinations
or associations;(c) remove Trustees or fill vacancies in or add to their
number,
(c) elect and remove such officers. and appoint and terminate such agents
or employees as they consider appropriate, and appoint from their own
number, and terminate,in each case with or without cause, and appoint and
terminate any one or more committees which may exercise some or all of the
power, and authority of the Trustees as the Trustees may determine;
(d) purchase, and pay for out of Trust Property, insurance policies
insuring the Shareholders, thesuch insurance as they may deem necessary or
appropriate for the conduct of the business of the Trust, including, without
limitation, insurance policies insuring the assets of the Trust and payment
of distributions and principal on its portfolio investments, and insurance
policies insuring Shareholders, any Administrator, Trustees, Trustees
Emeritus, officers, employees, agents, theany Investment Adviser, theany
Distributor, any custodian, any Transfer Agent, any shareholder servicing
agent, or selected dealers or independent contractors of the Trust against
all claims arising by\\. \\reason of holding any such position or by reason
of any action taken or omitted by any such Person in such capacity, whether
or not constituting negligence, or whether or not the Trust would have the
power to indemnify such Person against such liability;
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(e) establish pension, profit-sharing, Share purchase, deferred
compensation, and other retirement, incentive and benefit plans for any
Trustees, officers, employees or agents of the Trust;
(f) to the extent permitted by law, indemnify any personPerson with whom
the Trust has dealings, including any Investment Adviser, Administrator,
Custodiancustodian, Distributor, Transfer Agent, Shareholder Servicing Agent
and any dealer, to such extent as the Trustees shall determine;
(g) guarantee indebtedness or contractual obligations of others;
(h) determine and change the fiscal year of the Trust or any series
thereof and the method by which its accounts shall be kept; and
(i) adopt a seal for the Trust, provided, that the absence of such seal
shall not impair the validity of any instrument executed on behalf of the
Trust.
Section 3.11 Principal Transactions. Except in transactions permitted by the
1940 Act, or any order of exemption issued by the Commission, the Trustees
shall not, on behalf of the Trust, buy any securities (other than Shares) from
or sell any securities (other than Shares) to, or lend any assets of the Trust
to, any Trustee or officer of the Trust or any firm of which any such Trustee
or officer is a member acting as principal, or have any such dealings with any
Investment Adviser, Administrator, Shareholder Servicing Agent, Custodian,
Distributor or Transfer Agent or with any Interested Person of such Person; but
the Trust may, upon customary terms, employ any such Person, or firm or company
in which such Person is an Interested Person, as broker, legal counsel,
registrar, transfer agent, dividend disbursing agent or custodian.
Section 3.12 Trustees and Officers as Shareholders. Except as hereinafter
provided, no officer, Trustee or member of any advisory board of the Trust, and
no member, partner, officer, director or trustee of the Investment Adviser,
Administrator or of the Distributor, and no Investment Adviser, Administrator
or Distributor of the Trust, shall take long or short positions in the
securities issued by the Trust. The foregoing provision shall not prevent:
(a) The Distributor from purchasing Shares from the Trust if such
purchases are limited (except for reasonable allowances for clerical errors,
delays and errors of transmission and cancellation of orders) to purchases
for the purpose of filling orders for Shares received by the Distributor and
provided that orders to purchase from the Trust are entered with the Trust
or the Custodian promptly upon receipt by the Distributor of purchase orders
for Shares, unless the Distributor is otherwise instructed by its customer;
(b) The Distributor from purchasing Shares as agent for the account of
the Trust;
(c) The purchase from the Trust or from the Distributor of Shares by any
officer, Trustee or member of any advisory board of the Trust or by any
member, partner, officer, director or trustee of the Investment Adviser or
of the Distributor at a price not lower than the net asset value of the
Shares at the moment of such purchase, provided that any such sales are only
to be made pursuant to a uniform offer described in the current prospectus
or statement of additional information for the Shares being purchased; or
(d) The Investment Adviser, the Distributor, the Administrator, or any of
their officers, partners, directors or trustees from purchasing Shares prior
to the effective date of the Trust's Registration Statement under the
Securities Act of 1933, as amended, relating to the Shares.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR, ADMINISTRATOR, TRANSFER AGENT AND SHAREHOLDER
SERVICING AGENTS
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ARTICLE IV
SERVICE PROVIDERS
Section 4.1Investment Adviser. Subject to a Majority Shareholder Vote of the
Shares of each series affected thereby Section 4.1. Investment Adviser. Subject
to applicable requirements of the 1940 Act, the Trustees may in their
discretion from time to time enter into one or more investment advisory or
management contracts whereby the other party to each such contract shall
undertake to furnish the Trust such management, investment advisory,
statistical and research facilities and services, promotional activities, and
such other facilities and services, if any, with respect to one or more series
of Shares, as the Trustees shall from time to time consider desirable and all
upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provision of the Declaration, the Trustees may
delegate to the Investment Adviser authority (subject to such general or
specific instructions as the Trustees may from time to time adopt) to effect
purchases, sales, loans or exchanges of assets of the Trust or any series
thereof on behalf of the Trustees or may authorize any officer, employee or
Trustee to effect such purchases, sales, loans or exchanges pursuant to
recommendations of the Investment Adviser (and all without further action by
the Trustees). Any of such purchases, sales, loans or exchanges shall be deemed
to have been authorized by all the Trustees. Such services may be provided by
one or more Persons.
Section 4.2Section 4.2. Distributor. TheSubject to applicable requirements
of the 1940 Act, the Trustees may in their discretion from time to time enter
into one or more exclusive or non-exclusive distribution contracts providing
for the sale of Shares of one or more series or classes whereby the Trust may
either agree to sell the Shares to the other party to any such contract or
appoint any such other party its sales agent for such Shares. In either case,
any such contract shall be on such terms and conditions as the Trustees may in
their discretion determine, provided that such terms and conditions are not
inconsistent with the provisions of the Declaration or the By-Laws; and such
contract may also provide for the repurchase or sale of Shares by such other
party as principal or as agent of the Trust and may provide that such other
party may enter into selected dealer and sales agreements or agency agreements
with registered securities dealers and depository institutions or other Persons
to further the purpose of the distribution or repurchase of the Shares. Such
services may be provided by one or more Persons.
Section 4.3Section 4.3. Administrator. The Trustees may in their discretion
from time to time enter into one or more administrative services contracts
whereby the other party to each such contract shall undertake to furnish such
administrative services to the Trust as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may
in their discretion determine, provided that such terms and conditions are not
inconsistent with the provisions of this Declaration or the By-Laws. Such
services may be provided by one or more Persons.
Section 4.4. Custodian. The Trustees may in their discretion from time to
time enter into one or more contracts whereby the other party to each such
contract shall undertake to furnish such custody services to the Trust as the
Trustees shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may in their discretion determine, provided that
such terms and conditions are not inconsistent with the provisions of the 1940
Act, the Declaration or the By-Laws. The Trustees may authorize any custodian
to employ one or more sub-custodians from time to time to perform such of the
services of the custodian as the Trustees shall from time to time consider
desirable. Services described in this Section may be provided by one or more
Persons.
Section 4.4Section 4.5. Transfer Agent and Shareholder Servicing Agents. The
Trustees may in their discretion from time to time enter into one or more
transfer agency or sub-transfer agency and shareholder servicing contracts
whereby the other party to each such contract shall undertake to furnish such
transfer agency and/or shareholder services to the Trust or to shareholders of
the Trust as the Trustees shall from time to time consider desirable and all
upon such terms and conditions as the Trustees may in their discretion
determine,
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provided that such terms and conditions are not inconsistent with the
provisions of thisthe Declaration or the By-Laws. Such services may be provided
by one or more Persons. Except as. otherwise provided in the applicable
shareholder servicing contract, a Shareholder Servicing Agent shall be deemed
to be the record owner of outstanding Shares beneficially owned by the
customers of such Shareholder Servicing Agent for whom it is acting pursuant to
such shareholder servicing contract.
Section 4.5 Section 4.6. Parties to Contract. Any contract of the character
described in any Section 4.1, 4.2, 4.3 or 4.4 of this Article IV or any
Custodian contract as described in Article X of the By-Laws may be entered into
with any Person, although one or more of the Trustees or officers of the Trust
may be an officer, partner, director, trustee, shareholder, or member of such
other party to the contract, and no such contract shall be invalidated or
rendered voidable by reason of the existence of any such relationship; nor
shall any Person holding such relationship be liable merely by reason of such
relationship for any loss or expense to the Trust under or by reason of any
such contract or accountable for any profit realized directly or indirectly
therefrom, provided that the contract when entered into was not inconsistent
with the provisions of this Article IV or the By-Laws. The same Person may be
the other party to contracts entered into pursuant to Sections 4.1, 4.2, 4.3
and 4.4 above or any Custodian contract as described in Article X of the
By-Laws4.1 through 4.5 above, and any individual may be financially interested
or otherwise affiliated with Persons who are parties to any or all of the
contracts mentioned in this Section 4.5.4.6.
ARTICLE V
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 5.1 Section 5.1. No Personal Liability of Shareholders, Trustees,
etc. No Shareholder or former Shareholder shall be subject to any personal
liability whatsoever to any Person in connection with Trust Property or the
acts, obligations or affairs of the Trust. No Trustee, officer, employee or
agent of the Trust shall be subject to any personal liability whatsoever to any
Person, other than the Trust or its Shareholders, in connection with Trust
Property or the affairs of the Trust, save only that arising from bad faith,
wilful misfeasance, gross negligence or reckless disregard for his duty to such
Person; and all such Persons shall look solely to the Trust Property for
satisfaction of claims of any nature arising in connection with the affairs of
the Trust. If any Shareholder, Trustee, officer, employee, or agent, as such,
of the Trust, is made a party to any suit or proceeding to enforce any such
liability, he shall not, on account thereof, be held to any personal liability
solely by reason of being or having been a Shareholder. The Trust shall
indemnify and hold each Shareholder and former Shareholder harmless from and
against all claims and liabilities to which such Shareholder may become subject
solely by reason of his or her being or having been a Shareholder (other than
taxes payable by virtue of owning Shares), and shall reimburse such Shareholder
for all legal and other expenses reasonably incurred by him or her in
connection with any such claim or liability. The rights accruing to a
Shareholder or former Shareholder under this Section 5.1 shall not exclude any
other right to which such Shareholder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder or former Shareholder in any appropriate situation even
though not specifically provided herein. The Trust shall, upon request by a
Shareholder or former Shareholder, assume the defense of any claim made against
such Shareholder for any act or obligation of the Trust and satisfy any
judgment thereon from the assets of the Trust. Notwithstanding any other
provision of thisthe Declaration to the contrary, no Trust Property shall be
used to indemnify or reimburse any Shareholder or former Shareholder of any
Shares of any series other than Trust Property allocated or belonging to
thatsuch series.
Section 5.2 Section 5.2. Non-Liability of Trustees, etc and Others. No
Trustee
(i) No Trustee, Trustee Emeritus, former Trustee, officer, employee or
agent of the Trust shall be subject to any personal liability whatsoever to
any Person, other than the Trust or its Shareholders, in
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connection with Trust Property or the affairs of the Trust; and all Persons
shall look solely to the Trust Property for satisfaction of claims of any
nature arising in connection with the affairs of the Trust. No Trustee,
Trustee Emeritus. former Trustee, officer, employee or agent of the Trust
shall be liable to the Trust or to any Shareholder, Trustee, officer,
employee, or agent thereofof the Trust for any action or failure to act
(including without limitation the failure to compel in any way any former or
acting Trustee to redress any breach of trust) except for his or her own bad
faith, wilfulwillful misfeasance, gross negligence or reckless disregard of
his or her duties involved in the conduct of the individual's office.
(ii) Without limiting Section 5.2(i), the appointment, designation or
identification of a Trustee as chairperson (including an independent
chairperson) of the Board of Trustees, a member or chairperson of a
committee established by the Trustees, an expert on any topic or in any area
(including an audit committee financial expert), or the lead independent
Trustee, or any other special appointment, designation or identification of
a Trustee, shall not impose on that person any duty, obligation or liability
that is greater than the duties, obligations and liabilities imposed on that
person as a Trustee in the absence of the appointment, designation or
identification (except that the foregoing limitation shall not apply to
duties expressly imposed pursuant to the By-Laws, a committee charter or a
Trust policy statement), and no Trustee who has special skills or expertise,
or is appointed, designated or identified as aforesaid, shall be held to a
higher standard of care by virtue thereof. In addition, no appointment,
designation or identification of a Trustee as aforesaid shall affect in any
way that Trustee's rights or entitlement to indemnification.
(iii) Every note, bond, contract, instrument, certificate or undertaking
and every other act or thing whatsoever issued, executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the
Trust shall be conclusively deemed to have been issued, executed or done
only in or with respect to their or his or her capacity as Trustees or
Trustee, and such Trustees or Trustee shall not be personally liable thereon.
Section 5.3Section 5.3. Mandatory Indemnification; Insurance. (a)(a) Subject
to the exceptions and limitations contained in paragraph (b) below:
(i)(i) every person who is or has been a Trustee, Trustee Emeritus or
officer of the Trust (hereinafter referred to as a "Covered Person") shall
be indemnified by the Trust, to the fullest extent permitted by law
(including the 1940 Act) as currently in effect or as hereafter amended,
against all liability and against all expenses reasonably incurred or paid
by him or her in connection with any claim, action, suit or proceeding in
which hethat individual becomes involved as a party or otherwise by virtue
of his being or having been a Trustee, Trustee Emeritus or officer and
against amounts paid or incurred by himthat individual in the settlement
thereof;
(ii)(ii) the words ""claim", "" "action", "" "suit"," or ""proceeding""
shall apply to all claims, actions, suits or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and the
words ""liability"" and ""expenses"" shall include, without limitation,
attorneys'' fees, costs, judgments, amounts paid in settlement or
compromise, fines, penalties and other liabilities.
(b)(b) No indemnification shall be provided hereunder to a Trustee or
officerCovered Person:
(i)(i) against any liability to the Trust or the Shareholders by reason
of a final adjudication by the court or other body before which the
proceeding was brought that hethe Covered Person engaged in wilfulwillful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of histhat individual's office;
(ii)(ii) with respect to any matter as to which hethe Covered Person
shall have been finally adjudicated not to have acted in good faith in the
reasonable belief that histhat individual's action was in the best interest
of the Trust; or
(iii)(iii) in the event of a settlement involving a payment by a Trustee,
Trustee Emeritus or officer or other disposition not involving a final
adjudication as provided in paragraph (b)(i) or (b)(ii) above resulting
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in a payment by a Trustee or officerCovered Person, unless there has been
either a determination that such Trustee or officerCovered Person did not
engage in wilfulwillful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of histhat individual's
office by the court or other body approving the settlement or other\\.
\\disposition or by a reasonable determination, based upon a review of
readily available facts (as opposed to a full trial-type inquiry) that
hethat individual did not engage in such conduct:
(a)(A) by vote of a majority of the Disinterested Trustees (as
defined below) acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the. matter); or
(b)(B) by written opinion of independent legal counsel chosen by a
majority of the Trustees and determined by them in their reasonable
judgment to be independent.
(c)(c) Subject to the provisions of the 1940 Act, the Trust may maintain
insurance for the protection of the Trust Property, its Shareholders, Trustees,
Trustees Emeritus, officers, employees and agents in such amount as the
Trustees shall deem adequate to cover possible tort liability (whether or not
the Trust would have the power to indemnify such Persons against such
liability), and such other insurance as the Trustees in their sole judgment
shall deem advisable.
(d)(d) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee or officerCovered Person may now or hereafter
be entitled, shall continue as to a Personperson who has ceased to be such a
Trustee or officera Covered Person and shall inure to the benefit of the heirs,
executors and administrators of such Person.person. Nothing contained herein
shall affect any rights to indemnification to which personnel other than
Trustees and officers, including Covered Persons, may be entitled by contract
or otherwise under law.
(e)(e) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipientCovered Person
to repay such amount if it is ultimately determined that hethe Covered Person
is not entitled to indemnification under this Section 5.3, provided that either:
(i)(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising
out of any such advances; or
(ii) (ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act
on the matter) or an independent legal counsel selected as provided in
Section 5.3(b)(iii)(B) above in a written opinion, shall determine, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipientCovered Person
ultimately will be found entitled to indemnification.
As used in this Section 5.3 a ""Disinterested Trustee"" is one (i) who is
not an ""Interested Person"" of the Trust (including anyone who has been
exempted from being an ""Interested Person"" by any rule, regulation or order
of the Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending.
In making a determination under Section 5.3(b)(iii) as to whether a Covered
Person engaged in the conduct described therein, or under Section 5.3(e)(ii) as
to whether there is reason to believe that a Covered Person ultimately will be
found entitled to indemnification, the Disinterested Trustees or legal counsel
making the determination shall afford the Covered Person a rebuttable
presumption that the Covered Person has not engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the Covered Person's office and has acted in good faith in the
reasonable belief that the Covered Person's action was in the best interest of
the Trust or series and its shareholders.
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Section 5.4 Section 5.4. No Bond Required of Trustees. No Trustee, Trustee
Emeritus or officer shall be obligated to give any bond or other security for
the performance of any of his or her duties hereunder.
Section 5.5 Section 5.5. No Duty of Investigation; Notice in Trust
Instruments, etc. No purchaser, lender, Shareholder Servicing Agent, Transfer
Agent or other Person dealing/-/ with the Trustees or any officer, employee or
agent of the Trust shall be bound to make any inquiry concerning the validity
of any transaction purporting to be made by the Trustees or by said officer,
employee or agent or be liable for the application of money or property paid,
loaned, or delivered to or on the order of the Trustees or of said officer,
employee or agent. Every obligation, contract, instrument, certificate, Share,
other security of the Trust or undertaking, and every other act or thing
whatsoever executed in connection with the Trust shall be conclusively presumed
to have been executed or done by the executors thereof only in their capacity
as Trustees under the Declaration or in their capacity as officers, employees
or agents of the Trust. Every written obligation, contract, instrument,
certificate, Share, other security of the Trust or undertaking made or issued
by the Trustees or officers shall recite that the same is executed or made by
them not individually, but as or on behalf of Trustees under the Declaration,
and that the obligations of any such instrument are not binding upon any of the
Trustees, officers or Shareholders individually, but bind only the trustTrust
estate, and may contain any further recital which they or he may deemdeemed
appropriate, but the omission of such recital shall not operate to bind any of
the Trustees, officers or Shareholders individually. The Trustees shall at all
timesmay maintain insurance for the protection of the Trust Property,
Shareholders, Trustees, Trustees Emeritus, officers, employees and agents in
such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgment
shall deem advisable.
Section 5.6Section 5.6. Good Faith Action; Reliance on Experts, etc. The
exercise by the Trustees or the officers of the Trust of their powers and
discretions hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested. The
Trustees or the officers of the Trust shall not be liable for errors of
judgment or mistakes of fact or law. Each Trustee and officer or employee of
the Trust shall, in the performance of his or her duties, be under no liability
and fully and completely justified and protected with regard to any act or any
failure to act resulting from reliance in good faith upon the books of account
or other records of the Trust, upon an opinionadvice of counsel, or upon
reports made to the Trust by any of its officers or employees or by theany
Investment Adviser, the Distributor, Transfer Agent, custodian, any Shareholder
Servicing Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or
employees of the Trust, regardless of whether such counsel or expert may also
be a Trustee.
Section 5.7. Derivative Actions. No Shareholder shall have the right to
bring or maintain any court action, proceeding or claim on behalf of the Trust
or any series or class thereof without first making demand on the Trustees
requesting the Trustees to bring or maintain such action, proceeding or claim.
Such demand shall be mailed to the Secretary of the Trust at the Trust's
principal office and shall set forth in reasonable detail the nature of the
proposed court action, proceeding or claim and the essential facts relied upon
by the Shareholder to support the allegations made in the demand. A Trustee
shall not be deemed to have a personal financial interest in an action or
otherwise be disqualified from ruling on a Shareholder demand by virtue of the
fact that such Trustee receives remuneration from his or her service on the
Board of Trustees of the Trust or on the boards of one or more investment
companies with the same or an affiliated investment adviser or underwriter, or
the amount of such remuneration. In their sole discretion, the Trustees may
submit the matter to a vote of Shareholders of the Trust or any series or class
thereof, as appropriate. Any decision by the Trustees not to bring or maintain
such court action, proceeding or claim, or to submit the matter to a vote of
Shareholders, shall be made by the Trustees in their business judgment and
shall be binding upon the Shareholders, except to the extent that Shareholders
have voting rights as set forth in Section 6.8 hereof.
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ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1 Section 6.1. Beneficial Interest. The interest of the
beneficiaries hereunder may be divided into transferable Shares of Beneficial
Interest (par value $0.01 per Share), which may be divided into one or more
series and classes as provided in Section 16.9 hereof. Each such series shall
have such class or classes of Shares as the Trustees may from time to time
determine.Sections 6.9 and 6.10 hereof. The number of Shares authorized
hereunder is unlimited. All Shares issued hereunder including, without
limitation, Shares issued in connection with a dividend in Shares or a split of
Shares, shall be fully paid and non-assessable.
Section 6.2 Section 6.2. Rights of Shareholders. The ownership of the Trust
Property of every description and the right to conduct any business
hereinbefore described are vested exclusively in the Trustees, and the
Shareholders shall have no interest therein other than the beneficial interest
conferred by their Shares, and they shall have no right to call for any
partition or division of any property, profits, rights or interests of the
Trust nor can they be called upon to assume any losses of the Trust or suffer
an assessment of any kind by virtue of their ownership of Shares. The Shares
shall be personal property giving only the rights specifically set forth in the
Declaration. The Shares shall not entitle the holder to preference,
pre-emptivepreemptive, appraisal, conversion or exchange rights, except as the
Trustees may determine with respect to any series of Shares.or class of Shares.
By becoming a Shareholder each Shareholder shall be held expressly to have
assented to and agreed to be bound by the provisions of the Declaration.
Section 6.3 Section 6.3. Trust Only. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the Trustees
and the Shareholders.each Shareholder from time to time. It is not the
intention of the Trustees to create a general partnership, limited partnership,
joint stock association, corporation, bailment or any form of legal
relationship other than a trust. Nothing in the Declaration shall be construed
to make the Shareholders, either by themselves or with the Trustees, partners
or members of a joint stock association.
Section 6.4 Section 6.4. Issuance of Shares. The Trustees, in their
discretion may, from time to time without vote of the Shareholders, issue
Shares, in addition to the then issued and outstanding Shares and Shares held
in the treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times, and on such
terms as the Trustees may deem best, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection,
with, the assumption of liabilities) and businesses. In connection with any
issuance of Shares, the Trustees may issue fractional Shares. The Trustees may
from time to time divide or combine the Shares of the Trust or of any series or
class into a greater or lesser number without thereby changing their
proportionate beneficial interests in Trust Property allocated or belonging to
such series or class. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or fractions1/1,000ths of a Share
or integral multiples thereof.
Section 6.5 Section 6.5. Register of Shares. A register or registers shall
be kept at the principal office of the Trust or at an office of the Transfer
Agent or any one or more Shareholder Servicing Agents, which register or
registers, taken together, shall contain the names and addresses (which may be
addresses for electronic delivery) of the Shareholders and the number of Shares
held by them respectively and a record of all transfers thereof. Such register
or registers shall be conclusive as to who are the holders of the Shares and
who shall be entitled to receive dividends or distributions or otherwise to
exercise or enjoy the rights of Shareholders. No Shareholder shall be entitled
to receive payment of any dividend or distribution, nor to have notice given to
himthat Shareholder as provided herein or in the By-Laws provided, until hethe
Shareholder has given his or her address to the Transfer Agent, the Shareholder
Servicing Agent which is the agent of record for such Shareholder, or such
other officer or agent of the Trustees as shall keep the said register for
entry thereon. It is not contemplated that certificates will be issued for the
Shares; however, the Trustees, in their discretion, may authorize the issuance
of Share certificates and promulgate appropriate rules and regulations as to
their use.
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Section 6.6 Section 6.6. Transfer of Shares. Shares shall be transferable on
the records of the Trust only by the record holder thereof or by his agent
thereunto duly authorized in writing, upon delivery to the Trustees, the
Transfer Agent or the Shareholder Servicing Agent which is the agent of record
for such Shareholder, of a duly executed instrument of transfer, together with
any certificate or certificates (if issued) for such Shares and such evidence
of the genuineness of each such execution and authorization and of other
matters as may reasonably be required. Upon such delivery the transfer shall be
recorded on the register of the Trust. Until such record is madein accordance
with policies established by the Trustees from time to time. Until so
transferred, the Shareholder of record shall be deemed to be the holder of such
Shares for all purposes hereunder and neither the Trustees nor any Transfer
Agent, Shareholder Servicing Agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees, the Transfer
Agent or the Shareholder Servicing Agent which is the agent of record for such
Shareholder; but until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereunder and neither
the Trustees nor any Transfer Agent, Shareholder Servicing Agent or registrar
nor any officer or agent of the Trust shall be affected by any notice of such
death, bankruptcy or incompetence, or other operation of law..
Section 6.7 Section 6.7. Notices. Any and all notices to which any
Shareholder may be entitled and any and all communications shall be deemed duly
served or given (i) if mailed, postage prepaid, addressed to any Shareholder of
record at histhe Shareholder's last known address as recorded on the register
of the Trust, (ii) if sent by electronic transmission to the Shareholder of
record at the Shareholder's last known address for electronic delivery as
recorded on the register of the Trust, (iii) if mailed or sent by electronic
delivery to one or more members of the Shareholder's household in accordance
with applicable law or regulation, or (iv) if otherwise sent in accordance with
applicable law or regulation.
Section 6.8 Section 6.8. Voting Powers. The Shareholders shall have power to
vote only (i) for the election of Trustees when that issue is submitted to
Shareholders, and for the removal of Trustees as provided in Section 2.2
hereof, (ii) with respect to any investment advisory or management contract as
provided in Section 4.1 hereofon which a shareholder vote is required by the
1940 Act, (iii) with respect to termination of the Trust or any series or class
to the extent and as provided in Section 9.2 hereof, (iv) with respect to any
amendment of thisthe Declaration to the extent and as provided in Section 9.3
hereof, (v) with respect to any merger, consolidation or sale of assets to the
extent and as provided in Sections 9.4 and 9.6 hereof, (vi) with respect to
incorporation of the Trust or any series to the extent and as provided in
Sections 9.5 and 9.6 hereof, (vii) to the same'Section 9.4 hereof, (vi) to the
same extent as the stockholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders, and (viiivii) with respect to such additional matters
relating to the Trust as may be required by the Declaration, the By-Laws or any
registration of the Trust with the Commission (or any successor agency) or any
stateother regulator having jurisdiction over the Trust, or as the Trustees may
consider necessary or desirable. Each whole Share
A Shareholder of each series or class shall be entitled to one vote as to
anyfor each dollar of net asset value (number of Shares owned times net asset
value per Share) of such series or class, on each matter on which itsuch
Shareholder is entitled to vote and each fractional Sharedollar amount shall be
entitled to a proportionate fractional vote, except that the Trustees may, in
conjunction with the establishment of any series or class of Shares (but
subject to applicable law), establish conditions under which the several series
or classes shall have separate or no voting rights. Shares held in the treasury
of the Trust shall not be voted. Shares shall be voted by individual series
Except when a larger vote is required by applicable law or by any provision
of the Declaration or the By-Laws, if any, Shares entitled to vote and
representing a majority of the voting power of the Shares voted on
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the matter in person or by proxy shall decide any matter and a plurality shall
elect a Trustee, provided that where any provision of law or of the Declaration
requires that the holders of any series or class shall vote as a series or
class, then Shares representing a majority of the voting power of the Shares of
that series or class entitled to vote and voted on the matter shall decide that
matter insofar as that series or class is concerned, and provided further that
subject to applicable law, abstentions and broker non-votes shall not be
counted as having been voted on the applicable matter.
Shares of all series shall be voted in the aggregate on any matter submitted
to a vote of the Shareholders of the Trust. except as provided in
Section 6.9(g) hereof. There shall be no cumulative voting in the election of
Trustees. Until Shares are issued and during any period when no Shares are
outstanding, the Trustees may exercise all rights of Shareholders and may take
any action required by law, the Declaration or the By-Laws to be taken by
Shareholders. At any meeting of Shareholders of the Trust or of any series or
class of the Trust, a Shareholder Servicing Agent may vote any shares as to
which such Shareholder Servicing Agent is the agent of record and which are not
otherwise represented in person or by proxy at the meetingfor which no voting
instructions are received, proportionately in accordance with the votes cast by
holders of all shares otherwise represented at the meeting in person or by
proxy as to which such Shareholder Servicing Agent is the agent of record. Any
shares so voted by a Shareholder Servicing Agent will be deemed represented at
the meeting for quorum purposes. The By-Laws may include further provisions for
Shareholder votes and meetings and related matters.
Section 6.9 Section 6.9. Series Designationof Shares. As set forth in
Appendix I hereto, the Trustees have authorized the division-of Shares of the
Trust may be divided into series, as designated and established pursuant to the
provisions of Appendix I and this Section 6.9. Thethe number and relative
rights, privileges and preferences of which shall be established and designated
by the Trustees, in their discretion, mayin accordance with the terms of this
Section 6.9. The Trustees may from time to time exercise their power to
authorize the division of Shares into one or more additional series, and the
different series shall be established and designated, and the variations in the
relative rights, privileges and preferences as between the different series
shall be fixed and determined by the Trusteesseries by establishing and
designating one or more series of Shares upon and subject to the following
provisions:
(a) (a) All Shares shall be identical (subject to such variations between
classes of Shares as may be permitted in accordance with the terms of
Section 6.10 hereof) except that there may be such variations as shall be
fixed and determined by the Trustees between different series as to purchase
price, right of redemption and the price, terms and manner of redemption,
and special and relative rights as to dividends and on liquidationare
approved by the Trustees and as are consistent with applicable law.
(b) (b) The number of authorized Shares and the number of Shares of each
series that may be issued shall be unlimited. The Trustees may classify or
reclassify any Shares of any Series, including outstanding Shares, unissued
Shares or anyand Shares previously issued and reacquired of any series, into
one or more series that may be established and designated from time to time.
The Trustees may hold as treasury shares (of the same or some other series),
reissue for such consideration and on such terms as they may determine, or
cancel any Shares of any series reacquired by the Trust at their discretion
from time to time.
(c) (c) All consideration received by the Trust for the issuanceissue or
sale of Shares of a particular series, together with all assets in which
such consideration is invested or reinvested, all income and, earnings
thereon, profits therefrom, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to that series for all purposes,
subject only to the rights of creditors of such series, and shall be so
recorded upon the books of account of the Trust. In the event that there are
any assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any particular
series, the Trustees shall allocate them to and among any one or more of the
series established and designated from time to time in such manner and on
such basis as the Trusteesthey, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all series for all purposes. No
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Shareholder of any particular series shall have any claim on or right to any
assets allocated or belonging to any other series of Shares. No Shareholder
of any particular series shall be entitled to participate in a derivative or
class action on behalf of any other series or the Shareholders of any other
series.
(d) (d) The assets belonging to each particular series shall be charged
with the liabilities of the Trust in respect of that series and all
expenses, costs, charges and reserves attributable to that series, and any
general liabilities, expenses, costs, charges or reserves of the Trust which
are not readily identifiable as belonging to any particular series shall be
allocated and charged by the Trustees to and among any one or more of the
series established and designated from time to time in such manner and on
such basis as the Trustees, in their sole discretion, deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the
Shareholders of all series for all purposes. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to determine
which items shall be treated as income and which items as capital; and each
such determination and allocation shall be conclusive and binding upon the
Shareholders. Under no circumstances shall the assets allocated or belonging
to any particular series be charged with liabilities, expenses, costs,
charges or reserves attributable to any other series. All Persons who have
extended credit which has been allocated to a particular series, or who have
a claim or contract which has been allocated to any particular series, shall
look only to the assets of that particular series for payment of such
credit, claim or contract.
(e) (e) The power of the Trustees to invest and reinvest the Trust
Property allocated or belonging to any particular series shall be governed
by Section 3.2 hereof unless otherwise provided in the instrument of the
Trustees establishing such series which is hereinafter described.
(f) (f) Each Share of a series shall represent a beneficial interest in
the net assets allocated or belonging to such series only, and such interest
shall not extend to the assets of the Trust generally. Dividends and
distributions on Shares of a particular series may be paid with such
frequency as the Trustees may determine, which may be monthly or otherwise,
pursuant to a standing voteresolution or votesresolutions adopted only once
or with such frequency as the Trustees may determine, to the Shareholders of
that series only, from such of the income and capital gains, accrued or
realized, from the assets belonging to that series, as the Trustees may
determine, after providing for actual and accrued liabilities belonging to
that series. All Subject to differences among classes, all dividends and
distributions on Shares of a particular series shall be distributed pro rata
to the Shareholders of that series in proportion to the number and value of
Shares of that series held by such Shareholders at the date and time of
record established for the payment of such dividends or distributions.
Shares of any particular series of the Trust may be redeemed solely out of
Trust Property allocated or belonging to that series. Upon liquidation or
termination of a series of the Trust, Shareholders of such series shall be
entitled to receive a pro rata share of the net assets of such series only.
(g) (g) Notwithstanding any provision hereof to the contrary, on any
matter submitted to a vote of the Shareholders of the Trust, all Shares of
all series then entitled to vote shall be voted by individual seriesin the
aggregate, except that (i) when required by the 1940 Act to be voted in the
aggregateby individual series or class, Shares shall not be voted by
individual seriesin the aggregate, and (ii) when the Trustees have
determined that thea matter affects only the, interests of Shareholders of
one or moreparticular series or classes of Shares, only Shareholders of/-
/such series or classes of Shares, as applicable, shall be entitled to vote
thereon.
Section 6.10. Classes of Shares. The Trustees may, in their discretion,
authorize the division of Shares of the Trust (or any series of the Trust) into
one or more classes, the number and relative rights, privileges and preferences
of which shall be established and designated by the Trustees, in their
discretion, in accordance with the terms of the 1940 Act. The number of Shares
of each class that may be issued is unlimited, and the Trustees may classify or
reclassify any Shares of any class, including outstanding Shares, into one or
more classes that may be established and designated from time to time. All
Shares of a class shall be identical with each other and with the Shares of
each other class of the Trust or the same series of the Trust (as applicable),
except for such variations between classes as may be approved by the Board of
Trustees and not prohibited by the 1940 Act.
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(h) Section 6.11. Series and Class Designations. The establishment and
designation of any series or class of Shares shall be effective (a) upon the
execution by a majority of the then Trustees of an instrument setting forth
such establishment and designation and the relative rights and preferences of
such series, or as otherwise provided in such instrument. At any time that
there are no Shares outstanding of any particular series previously established
and designated, the Trustees may or class, (b) upon the vote of a majority of
the Trustees as set forth in an instrument executed by an officer of the Trust,
or (c) at such other time as the instrument referred to in the foregoing clause
(a) or the vote referred to in the foregoing clause (b) may provide. The
Trustees may at any time by an instrument executed by a majority of their
number abolish thatany series or class and the establishment and designation
thereof. Each instrument referred to in this paragraph shall have the status
ofbe an amendment to thisthe Declaration.
(i) Notwithstanding anything in this Declaration to the contrary, the
Trustees may, in their discretion, authorize the division of Shares of any
series into Shares of one or more classes or subseries of such series. All
Shares of a class or a subseries shall be identical with each other and with
the Shares of each other class or subseries of the same series except for such
variations between classes or subseries as may be approved by the Board of
Trustees and be permitted under the 1940 Act or pursuant to any exemptive order
issued by the Commission.
The series of Shares existing as of the date hereof are set forth in
Appendix A hereto.
No Shares of any series have, as of the date hereof, been divided into
classes.
ARTICLE VII
REDEMPTIONS
Section 7.1 Redemptions. In case any Shareholder at any time. desires to
dispose of his Shares, he may deposit his certificate or certificates therefor,
duly endorsed in blank or accompanied by an instrument of transfer executed in
blank, or if the Shares are not represented by any certificate, a written
request or other such form of request as the Trustees may from time to time
authorize, at the office of the Transfer Agent, the Shareholder Servicing Agent
which is the agent of record for such Shareholder, or at the office of any bank
or trust company, either in or outside of the Commonwealth of Massachusetts,
which is a member of the Federal Reserve System and which the said Transfer
Agent or the said Shareholder Servicing Agent has designated in writing for
that purpose, together with an irrevocable offer in writing in a form
acceptable to the Trustees to sell the Shares represented thereby to the Trust
at the net asset value per Share thereof, next determined after such deposit as
provided in Section 8.1 hereof. Payment for said Shares shall be made to the
Shareholder within seven days after the date on which the deposit is made,
unless (i) the date of payment is postponed pursuant to Section 7.2 hereof, or
(ii) the receipt, or verification of receipt, of the purchase price for the
Shares to be redeemed is delayed, in either of which events payment may be
delayed beyond seven days.
Section 7.1. Redemptions. All Shares shall be redeemable based on a
redemption price determined in accordance with this Section 7.1 and Article
VIII of the Declaration. Redeemed Shares may be resold by the Trust. The Trust
shall redeem the Shares at the price determined as hereinafter set forth, upon
acceptance of the appropriately verified application of the record holder
thereof (or upon such other form of request as the Trustees may determine) at
such office or agency as may be designated from time to time for that purpose
in the Trust's then effective registration statement under the Securities Act
of 1933 and the 1940 Act. The Trustees may from time to time specify additional
conditions, not inconsistent with the 1940 Act, in the Trust's registration
statement regarding the redemption of Shares. Shares shall be redeemed at the
net asset value thereof next determined after acceptance of such request, less
any applicable redemption fee or sales charge.
Subject to Section 7.2 hereof, payment for said Shares shall be made to the
Shareholder in cash or in property at such time and in such manner not
inconsistent with the 1940 Act or other applicable law. Except as expressly
determined by the Trustees, Shareholders shall not have the right to have
Shares redeemed in-kind.
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Section 7.2 Section 7.2. Suspension of Right of Redemption. The Trust may
declare a suspension of the right of redemption or postpone the date of payment
of the redemption proceeds for the whole or any part of any period (i) during
which the New York Stock Exchange is closed other than customary week-end and
holiday closings, (ii) during which trading on the New York Stock Exchange is
restricted, (iii) during which an emergency exists as a result of which
disposal by the Trust of securities owned by it is not reasonably practicable
or it is not reasonably practicable for the Trust fairly to determine the value
of its net assets, or (iv) during which the Commission for the protection of
Shareholders by order permits the suspension of the right of redemption or
postponement of the date of payment of the redemption proceeds; provided that
applicable rules and regulations of the Commission shall govern as to whether
the conditions prescribed in (ii), (iii) or (iv) exist.of any series or class
as permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trust shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment of the redemption proceeds until/:/
the Trust shall declare the suspension at an end, except that the suspension
shall terminate in any event on the first day on which said stock exchange
shall have reopened or the period specified in (ii) or (iii) shall have expired
(as to which, in the, absence of an official ruling by the Commission, the
determination of the Trust shall be conclusive). In the case of a suspension of
the right of redemption, a Shareholder may either withdraw histhe Shareholder's
request for redemption or receive payment based on the net asset value existing
after the termination of the suspension.
Section 7.3 Section 7.3. Redemption of Shares; Disclosure of Holding. If the
Trustees shall, at any time and in good faith, be of the opinionThe Trustees
may, in their discretion, require the Trust to redeem Shares held by any
Shareholder for any reason under terms set by the Trustees, including, but not
limited to, (i) the determination of the Trustees that direct or indirect
ownership of Shares of any series has or may become concentrated in any
Personsuch Shareholder to an extent whichthat would disqualify the Trust, or
anythat series of the Trust, as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"), then the Trustees shall
have the power by lot or other means deemed equitable by them (i) to call for
redemption by any such Person a number of Shares of the Trust, or such series
of the Trust, sufficient to maintain or bring the direct or indirect ownership
of Shares of the Trust, or such series of the Trust, into conformity with the
requirements for such qualification, and (ii) to refuse to transfer or issue
Shares of the Trust, or such series of the Trust, to any Person whose
acquisition of the Shares of the Trust, or such series of the Trust, would
result in such disqualification.or any successor statute thereto), (ii) the
failure of a Shareholder to supply a tax identification number if required to
do so, (iii) the failure of a Shareholder to pay when due for the purchase of
Shares issued to that Shareholder, (iv) the value of a Shareholder's Shares
being less than a minimum amount established from time to time by the Trustees,
(v) failure of a Shareholder to meet or maintain the qualifications for
ownership of a particular class of Shares, or (vi) the determination by the
Trustees or pursuant to policies adopted by the Trustees that ownership of
Shares by a particular Shareholder is not in the best interests of the
remaining Shareholders of the Trust or applicable series or class. The
redemption shall be effected at the redemption price and in the manner provided
in Section 7.1 hereof.
The ShareholdersThe holders of Shares or other securities of the Trust shall
upon demand disclose to the Trustees in writing such information with respect
to direct and indirect ownership of Shares or other securities of the Trust as
the Trustees deem necessary to comply with the provisions of the CodeInternal
Revenue Code of 1986, as amended (or any successor statute thereto), or to
comply with the requirements of any other authority. Upon the failure of a
Shareholder to disclose such information and to comply with such demand of the
Trustees, the Trust shall have the power to redeem such Shares at a redemption
price determined in accordance with Section 7.1 hereof.law or regulation, and
ownership of Shares may be disclosed by the Trustees if so required by law or
regulation.
Section 7.4 Redemptions of Accounts of Less than Minimum Amount. The
Trustees shall have the power, and any Shareholder Servicing Agent with whom
the Trust has so agreed (or a subcontractor of such Shareholder Servicing
Agent) shall have the power, at any time to redeem Shares of any Shareholder at
a redemption price determined in accordance with Section 7.1 hereof if at such
time the aggregate net asset value of the Shares owned by such Shareholder is
less than a minimum amount as determined from time to time and disclosed in a
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prospectus of the Trust or in the Shareholder Servicing Agent's (or
subcontractor's) agreement with its customer. A Shareholder shall be notified
that the aggregate value of his Shares is less than such minimum amount and
allowed 60 days to make an additional investment before redemption is processed.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
The Trustees, in their absolute discretion, may prescribe and shall set
forth in the By-Lawslaws or in a duly adopted vote or votes of the Trustees
such bases and times for determining the per Share net asset value of the
Shares or net income, or the declaration and payment of dividends and
distributions, as they may deem necessary or desirable.
ARTICLE IX
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
Section 9.1 Section 9.1. Duration. The Trust shall continue without
limitation of time but subject to the provisions of this Article IX.
Section 9.2 Section 9.2. Termination of Trust. (a)(a) The Trust may be
terminated (i) by a Majority Shareholder Vote of its Shareholders, or (ii) by
the Trustees by written notice to the Shareholders. The Trust, any Any series
of the Trust, or any class of any series, may be terminated at any time (i) by
a Majority Shareholder Vote of the Shareholders of the Trust, that series or
class, as applicable, or (ii) by the Trustees by written notice to the
Shareholders of the Trust, that series. or class, as applicable. Upon the
termination of the Trust or any series of the Trust:
(i) (i) The Trust or series of the Trust shall carry on no business
except for the purpose of winding up its affairs;
(ii) (ii) The Trustees shall proceed to wind up the affairs of the Trust
or series of the Trust and all the powers of the Trustees under thisthe
Declaration shall continue until the affairs of the Trust or series of the
Trust shall have been wound up, including the power to fulfill or discharge
the contracts of the Trust, collect the assets of the Trust or series of the
Trust, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property of the
Trust or Trust Property of the series of the Trust to one or more Persons at
public or private sale for consideration which may consist in whole or in
part of cash, securities or other property of any kind, discharge or pay
theits liabilities of the Trust or series of the Trust, and to do all other
acts appropriate to liquidate the business of the Trust or series of the
Trust; provided, that any sale, conveyance, assignment, exchange, transfer
or other disposition of all or substantially all of the Trust Property of
the Trust or series of the Trust shall require Shareholder approval in
accordance with Section 9.4 or 9.6 hereof, respectively; andits business; and
(iii) (iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or Trust Property of the Trust or
series of the Trust, in cash or in kind or partly in cash and partly in
kind, among the Shareholders of the Trust or the series of the Trust
according to their respective rights.
The foregoing provisions shall also apply, with appropriate modifications as
determined by the Trustees, to the termination of any class.
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(b) (b) After termination of the Trust or series of the Trustor class and
distribution to the Shareholders of the Trust or series of the Trustor class as
herein provided, a majority of the trusteesTrustees shall execute and lodge
among the records of the Trust an Instrumentinstrument in writing setting forth
the fact of such termination, and the Trustees shall thereupon be discharged
from all further liabilities and duties hereunder with respect to the Trust or
series of the Trustor class, and the rights and interests of all Shareholders
of the Trust or series of the Trustor class shall thereupon cease.
Section 9.3 Section 9.3. Amendment Procedure. (a) This Declaration may be
amended by a Majority Shareholder Vote of the Shareholders or by any instrument
in writing, without a meeting, signed by a majority of the Trustees and
consented to by the holders of not less than a majority of the Shares of the
Trust. The Trustees may also amend this(a) Except as specifically provided
herein, the Trustees may, without any Shareholder vote, amend or otherwise
supplement the Declaration by making an amendment, a Declaration of Trust
supplemental hereto or an amended and restated Declaration. Without limiting
the foregoing power reserved to the Trustees, the Trustees may, without any
Shareholder vote, amend the Declaration without the vote or consent of
Shareholders to designate or redesignate series in accordance with Section 6.9
hereofor classes, to change the name, principal office or registered agent of
the Trust, to supply any omission, to cure, correct or supplement any
ambiguous, defective or inconsistent provision hereof, or if they deem it
necessary or advisable, to conform thisthe Declaration to the requirements of
applicable federal laws or regulations or the requirements of the regulated
investment company provisions oflaw, including the 1940 Act and the Internal
Revenue Code of 1986, as amended, or to (i) change the state or other
jurisdiction designated herein as the state or other jurisdiction whose laws
shall be the governing law hereof, (ii) effect such changes herein as the
Trustees find to be necessary or appropriate (A) to permit the filing of this
Declaration under the laws of such state or other jurisdiction applicable to
trusts or voluntary associations, (B) to permit the Trust to elect to be
treated as a "regulated investment company" under the applicable provisions of
the Internal Revenue Code of 1986, as amended, or (C) to permit the transfer of
shares (or to permit the transfer of any other beneficial interests or shares
in the Trust, however denominated), and (iii) in conjunction with any amendment
contemplated by the foregoing clause (i) or the foregoing clause (ii) to make
any and all such further changes or modifications to this Declaration as the
Trustees find to be necessary or appropriate, any finding of the Trustees
referred to in the foregoing clause (ii) or clause (iii) to be conclusively
evidenced by the execution of any such amendment by a majority of the Trustees
(or any successor statute thereto), but the Trustees shall not be liable for
failing so to do.to do so. Shareholders shall have the right to vote on (i) any
amendment that would affect their right to vote granted in Section 6.8,
(ii) any amendment to this Section 9.3(a), (iii) any amendment as may be
required by law, or by the Trust's registration statement, to be approved by
Shareholders, and (iv) any amendment submitted to them by the Trustees. Any
amendment on which Shareholders have the right to vote shall require a Majority
Shareholder Vote of the Shareholders of the Trust or the written consent,
without a meeting, of the holders of Shares representing not less than a
majority of the voting power of the Shares of the Trust. Notwithstanding the
foregoing, if the Trustees shall determine that any amendment required or
permitted to be submitted to Shareholders would affect only the interest of
Shareholders of particular series or classes of Shares, then only Shareholders
of such series or classes, as applicable, shall be entitled to vote thereon,
and no vote of Shareholders of any other series or classes shall be required.
(b) No amendment which the Trustees have determined would affect the rights,
privileges or interests of holders of a particular series of Shares, but not
the rights, privileges or interests of holders of all series of Shares
generally, and which would otherwise require a Majority Shareholder Vote under
paragraph (a) of this Section 9.3, may be made except with the vote or consent
by a Majority Shareholder Vote of Shareholders of such series.
(c) Notwithstanding any other provision of this Declaration to the contrary,
the Trustees shall have the power in their discretion without any requirement
of approval by shareholders to either invest all or a portion of the Trust
Property, or sell all or a portion of the Trust Property and invest the
proceeds of such sales, in another investment company that is registered under
the 1940 Act.
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(d) Notwithstanding any other provision hereof, no amendment may be made
under this Section 9.3 which would change any rights with respect to the
Shares, or any series of Shares, by reducing the amount payable thereon upon
liquidation of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the Majority Shareholder Vote of the Shares or
that series of Shares. Nothing contained in this (b) Nothing contained in the
Declaration shall permit the amendment of thisthe Declaration to impair the
exemption from personal liability of the Shareholders, former Shareholders,
Trustees, Trustees Emeritus, officers, employees and agents of the Trust or to
permit assessments upon Shareholders. or former Shareholders. Notwithstanding
anything else herein, any amendment to Section 5.3 shall not limit the rights
to indemnification or insurance provided therein with respect to actions or
omissions of persons entitled to indemnification under such Section prior to
such amendment.
(e) (c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders (if
applicable) or by the. Trustees as aforesaid or a copy of the Declaration, as
amended, and executed by a majority of the Trustees, shall be conclusive
evidence of such amendment when lodged among the records of the Trust.
(f) (d) Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of Shares of the Trust shall have become effective,
thisShares of a particular series or class are first issued the Declaration may
be terminated or amended in any respect as to that series or class, and as to
any series or class in which Shares are not outstanding, by the affirmative
vote of a majority of the Trustees or by an instrument signed by a majority of
the Trustees.
Section 9.4Section 9.4. Merger, Consolidation and Sale of Assets. The
TrustSubject to applicable law and except as otherwise provided in Section 9.5
hereof, the Trust or any series or class thereof may merge or consolidate with
any other corporation, association, trust or other organization or may sell,
lease or exchange all or substantially all of the Trust Property (or all or
substantially all of the Trust Property allocated or belonging to a particular
series or class of the Trust) including its good will, upon such terms and
conditions and for such consideration when and as authorized (a) at any meeting
of Shareholders called for such purpose by the vote of the holders ofShares
representing two-thirds of the voting power of the outstanding Shares of all
series of the Trust voting as a single class, or of the affected series of the
Trust, as the case may be, or by an instrument or instruments in writing
without a meeting, consented to by the vote of the holders of two-thirds if the
entire Trust is merging, consolidating or disposing of assets, by the vote of
Shares representing two-thirds of the voting power of the outstanding Shares of
the particular series if the entire series is merging, consolidating or
disposing of assets, or by the vote of Shares representing two-thirds of the
voting power of the outstanding Shares of a class if only that class is
merging, consolidating or disposing of assets, or (b) by the written consent,
without a meeting, of the holders of Shares representing two-thirds of the
voting power of the outstanding Shares of all series of the Trust voting as a
single class, or of the affected series of the Trust, as the case may
beparticular series or class as described above; provided, however, that if
such merger, consolidation, sale, lease or exchange is recommended by the
Trustees, the vote or written consent bya Majority Shareholder Vote of all
series of the Trust voting as a single class, or of the particular series or
class as described above, or the written consent of the holders of Shares
representing a majority of the voting power of the outstanding Shares of all
series of the Trust voting as a single class, or of the particular series or
class as described above, shall be sufficient authorization; and any. Any such
merger, consolidation, sale, lease or exchange shall be deemed for all purposes
to have been accomplished under and pursuant to the statutes of the
Commonwealth of Massachusetts. Such transactions may be effected through
share-for-share exchanges, transfers or sales of assets, in-kind redemptions
and purchases, exchange offers, or any other method approved by the Trustees.
Nothing contained herein shall be construed as requiring approval of
Shareholders for any sale of assets in the ordinary course of the business of
the Trust, or for any transaction, whether deemed a merger, consolidation,
reorganization or exchange of shares or otherwise, whereby the Trust issues
shares of one or more series or classes in connection with the acquisition of
assets (including those subject to liabilities) from any other investment
company or similar entity.
Section 9.5Section 9.5. Incorporation, Reorganization. With the approval of
the holders of a majority of the Shares outstanding and entitled to vote, the
Trustees mayThe Trustees may, without the vote or consent of
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Shareholders, cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction, or any other trust or series
or class of a trust, unit investment trust, partnership, limited liability
company, association or other organization to take over allacquire all or a
portion of the Trust Property (or all or a portion of the Trust Property
allocated or belonging to a particular series or class) or to carry on any
business in which the Trust shall directly or indirectly have any interest, and
to sell, convey and transfer thesuch Trust Property to any such corporation,
trust or series or class of a trust, partnership, limited liability company,
association or organization in exchange for the shares or securities thereof or
otherwise, and to lend money to, subscribe for the shares or securities of, and
enter into any contracts with any such corporation, trust, partnership,
association or organization in which the Trust holds or is about to acquire
shares or any other interest. Subject to Section 9.4 hereof, theThe Trustees
may also, without the vote or consent of Shareholders, cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust (or series or class thereof), partnership, association or
other organization if and to the extent permitted by law. Nothing contained in
this Section 9.5 shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling,
conveying or transferring a portion of the Trust\\.\\ Property to such
organization or entities.The Trustees shall provide written notice to affected
Shareholders of each transaction pursuant to this Section 9.5. Such
transactions may be effected through share-for-share exchanges, transfers or
sales of assets, in-kind redemptions and purchases, exchange offers, or any
other method approved by the Trustees.
Section 9.6 Incorporation or Reorganization of Series. With the approval of
a Majority Shareholder Vote of any series, the Trustees may sell, lease or
exchange all of the Trust Property allocated or belonging to that series, or
cause to be organized or assist in organizing a corporation or corporations
under the laws of any other jurisdiction, or any other trust, unit investment
trust, partnership, association or other organization, to take over all of the
Trust Property allocated or belonging to that series and to sell, convey
and\\.\\ transfer such Trust Property to any such corporation, trust, unit
investment trust, partnership, association, or other organization in exchange
for the shares or securities thereof or otherwise.
ARTICLE X
REPORTS TO SHAREHOLDERS AND SHAREHOLDER COMMUNICATIONS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
ARTICLE X
ARTICLE XI
MISCELLANEOUS
Section 11.1Section 10.1. Filing. ThisThe Declaration and any subsequent
amendment hereto shall be filed in the office of the Secretary of the
Commonwealth of Massachusetts and in such other place or places as may be
required under the laws of the Commonwealth of Massachusetts and may also be
filed or recorded in such other places as the Trustees deem appropriate.,
provided that the failure to so file shall not invalidate this instrument or
any properly authorized amendment hereto. Each amendment so filed shall state
or be accompanied by a certificate signed and acknowledged by aan officer or
Trustee stating that such action was duly taken in thea manner provided herein,
and unless such amendment or such certificate sets forth some laterother time
for the effectiveness of such amendment, such amendment shall be effective upon
its filing. A restated Declaration, integrating into a single instrument all of
the provisions of the Declaration which are then in effect and operative, may
be executed from time to time by a majority of the Trustees and shall, upon
filing with the Secretary of the Commonwealth of Massachusetts, be conclusive
evidence of all amendments contained therein and may thereafter be referred to
in lieu of thisthe original Declaration and the various amendments thereto.
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Section 11.2 Section 10.2. Governing Law. ThisThe Declaration is executed by
the Trustees and delivered in the Commonwealth of Massachusetts and with
reference to the laws thereof, and the rights of all parties and the validity
and construction of every provision hereof shall be subject to and construed
according to the laws of said Commonwealth.
Section 11.3 Section 10.3. Counterparts. ThisThe Declaration may be
simultaneously executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts, together, shall constitute one and
the same instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 11.4 Section 10.4. Reliance by Third Parties. Any certificate
executed by an individual who, according to the records of the Trust, is
aappears to be an officer or Trustee hereunder, certifying to: (i) the number
or identity of Trustees or Shareholders, (ii) the due authorization of the
execution of any instrument or writing, (iii) the form of any vote passed at a
meeting of Trustees or Shareholders, (iv) the fact that the number of Trustees
or Shareholders present at any meeting or executing any written instrument
satisfies the requirements of thisthe Declaration, (v) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or (vi) the
existence of any fact or facts which in any manner relates to the affairs of
the Trust, shall be conclusive evidence as to the matters so certified in favor
of any Person dealing with the Trustees and their successors.
Section 11.5 Section 10.5. Provisions in Conflict with Law or Regulations.
(a) The provisions of thisthe Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisionprovisions is in conflict with the 1940 Act, the regulated
investment company or other provisions of the Internal Revenue Code of 1986,
as amended (or any successor statute thereto), or with other applicable laws
and regulations, the conflicting provision shall be deemed never to have
constituted a part of thisthe Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of thisthe
Declaration or render invalid or improper any action taken or omitted prior
to such determination.
Section 11.6 Principal Office. The principal office of the Trust is 29
Temple Place, Boston, Massachusetts, 02111.
(a) (b) If any provision of thisthe Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any
manner affect such provision in any other jurisdiction or any other
provision of the Declaration in any jurisdiction.
Section 10.6. Principal Office. The principal office of the Trust is 29
Temple Place, Boston, Massachusetts, 02111. The Trustees, without a vote of
Shareholders, may change the principal office or registered agent of the Trust.
[Signature page follows.]
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
1st day of July, 1991.day and year first above written.
[Trustee Signature Lines]
C-23
Appendix IA
GREEN CENTURY FUNDS
Establishment and
Designation of Series of Shares of
Beneficial Interest (par value $0.01 per shareShare)
Pursuant to Section 6.9 of the Declaration of Trust, dated as of July 1,
1991 (the "Declaration of Trust"), of Green Century Funds (the "Trust"), the
Trustees of the Trust hereby establish and designate two series of Shares (as
defined in the Declaration of Trust) (the "Funds") to have the following
special and relative rights:
The Trustees of the Trust, acting pursuant to the Trust's Declaration, have
previously established and designated the series (each, a "Fund") of Shares of
Beneficial Interest listed below.
1. The Funds shall be designated as followsare:
Green Century Money Market Fund
Green Century Balanced Fund
Green Century Equity Fund
2. The FundsEach Fund shall be authorized to hold cash, invest in
securities, instruments and other propertiesproperty and use investment
techniques as from time to time described in the Trust''s then currently
effective registration statement under the Securities Act of 1933 to the
extent pertaining to the offering of Shares of suchthe Fund. Each Share of
aeach Fund shall be redeemable, as provided in the Declaration. Subject to
differences among classes, each Share of each Fund shall be entitled to one
vote (or fraction thereof in respect of a fractional share)vote on matters
on which Shares of athe Fund shall be entitled to vote as provided in
Section 6.8 of the Trust's Declaration of Trust, shall represent a pro rata
beneficial interest in the assets allocated or belonging to thatthe Fund,
and shall be entitled to receive its pro rata share of the net assets of
thatthe Fund upon liquidation of thatthe Fund, all as provided in
Section 6.9 of the Declaration of Trust. The proceeds of sales of Shares of
aeach Fund, together with any income and gain thereon, less any diminution
or expenses thereof, shall irrevocably belong to thatthe Fund, unless
otherwise required by law.
3. Shareholders of each Fund shal1shall vote separately as a class on any
matter to the extent required by, and any matter shall be deemed to have
been deemed effectively acted upon with respect to the Fund as provided in,
Rule 18f-2, as from time to time in effect, under the Investment Company1940
Act of 1940, as amended, or any successor rule, and by the Declaration of
Trust.
4. The assets and liabilities of the Trust shall be allocated among the
Fundseach Fund and any series of the Trust designated in the future as set
forth in Section 6.9 of the Declaration of Trust.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall
have the right at any time and from time to time to reallocate assets and
expenses, or to change the designation of the Funds now or hereafter
createdeach Fund, or otherwise to change the special and relative rights of
the Fundseach Fund.
6. Any Fund may be terminated by the Trustees at any time by written
notice to the Shareholders of the Fund.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
[______] day of [______].
[Trustee Signature Lines]
C-24
Exhibit D
CURRENT AND PROPOSED FUNDAMENTAL POLICIES
FOR THE BALANCED FUND
---------------------------------------------------------------------------------------------------------
Current Fundamental Policies Proposed Fundamental Policies of
of the Balanced Fund: the Balanced Fund:
---------------------------------------------------------------------------------------------------------
A.Borrowing. The Trust, on behalf of the Balanced The Trust, on behalf of the Balanced Fund,
Fund, may not borrow money or mortgage or may not borrow money if such borrowing is
hypothecate assets of the Fund, except that in an specifically prohibited by the 1940 Act or the
amount not to exceed 1/3 of the current value of rules and regulations promulgated thereunder.
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 Restrictions" below.
---------------------------------------------------------------------------------------------------------
B.Purchasing Securities on Margin. The Trust, on It is proposed that this fundamental policy be
behalf of the Balanced Fund, may not purchase eliminated.
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.
---------------------------------------------------------------------------------------------------------
C.Lending. The Trust, on behalf of the Balanced The Trust, on behalf of the Balanced Fund,
Fund, may not make loans to other persons except may not make loans to other persons if such
(a) through the lending of the Fund's portfolio loans are prohibited by the 1940 Act or the
securities and provided that any such loans not rules and regulations promulgated thereunder.
exceed 30% of the Fund's total assets (taken at
---------------------------------------------------------------------------------------------------------
D-1
------------------------------------------------------------------------------------------------------------
Current Fundamental Policies Proposed Fundamental Policies of
of the Balanced Fund: the Balanced Fund:
------------------------------------------------------------------------------------------------------------
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.
------------------------------------------------------------------------------------------------------------
D.Real Estate, Oil, Gas, Mineral Leases and The Trust, on behalf of the Balanced Fund,
Commodities. The Trust, on behalf of the may not purchase or sell real estate or interests
Balanced Fund, may not purchase or sell real in oil, gas or mineral leases in the ordinary
estate (including limited partnership interests but course of business (the Balanced Fund reserves
excluding securities secured by real estate or the freedom of action to hold and to sell real
interests therein), interests in oil, gas or mineral estate acquired as the result of the ownership
leases, commodities or commodity contracts of securities by the Balanced Fund).
(except futures and option contracts) in the
ordinary course of business (the Trust may hold The Trust, on behalf of the Balanced Fund,
and sell, for the Fund's portfolio, real estate may not purchase or sell commodities or
acquired as a result of the Fund's ownership of commodities contracts in the ordinary course
securities). of business (the foregoing shall not preclude
the Balanced Fund from purchasing or selling
futures contracts or options thereon).
------------------------------------------------------------------------------------------------------------
E.Short Sales. The Trust, on behalf of the Balanced It is proposed that this fundamental policy be
Fund, may not make short sales of securities or eliminated.
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).
------------------------------------------------------------------------------------------------------------
F.Senior Securities. The Trust, on behalf of the The Trust, on behalf of the Balanced Fund,
Balanced Fund, may not issue any senior security may not issue any senior security (as that term
(as that term is defined in the 1940 Act) if such is defined in the 1940 Act) if such issuance is
issuance is specifically prohibited by the 1940 Act specifically prohibited by the 1940 Act or the
or the rules and regulations promulgated rules and regulations promulgated thereunder.
thereunder, provided that collateral arrangements
------------------------------------------------------------------------------------------------------------
D-2
------------------------------------------------------------------------------------------------------------
Current Fundamental Policies Proposed Fundamental Policies of
of the Balanced Fund: the Balanced Fund:
------------------------------------------------------------------------------------------------------------
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.
------------------------------------------------------------------------------------------------------------
G.Underwriting Securities. The Trust, on behalf of The Trust, on behalf of the Balanced Fund,
the Balanced Fund, may not underwrite securities may not underwrite securities issued by other
issued by other persons except insofar as the persons, except that all or any portion of the
Balanced Fund may technically be deemed an assets of the Balanced Fund may be invested in
underwriter under the Securities Act of 1933, as one or more investment companies, to the
amended, in selling a portfolio security. extent not prohibited by the 1940 Act, the rules
and regulations thereunder, and exemptive
orders granted under such Act, and except in
so far as the Balanced Fund may technically be
deemed an underwriter under the Securities
Act of 1933, as amended, in selling a security.
------------------------------------------------------------------------------------------------------------
H.Concentration. The Trust, on behalf of the The Trust, on behalf of the Balanced Fund,
Balanced Fund, may not concentrate its may not invest more than 25% of its assets in
investments in any particular security (excluding any one industry except that all or any portion
U.S. Government securities), but if it is deemed of the assets of the Balanced Fund may be
appropriate for the achievement of the Balanced invested in one or more investment companies,
Fund's investment objective, up to 25% of its total to the extent not prohibited by the 1940 Act,
assets may be invested in any one industry, except the rules and regulations thereunder, and
that futures or option contracts shall not be subject exemptive orders granted under such Act.
to this restriction.
------------------------------------------------------------------------------------------------------------
D-3
Exhibit E
CURRENT AND PROPOSED FUNDAMENTAL POLICIES
FOR THE EQUITY FUND
------------------------------------------------------------------------------------------------------------------
Current Fundamental Policies Proposed Fundamental Policies of
of the Equity Fund: the Equity Fund:
------------------------------------------------------------------------------------------------------------------
A.Borrowing. The Equity Fund may not borrow The Equity Fund may not borrow money if such
money, except that as a temporary measure for borrowing is specifically prohibited by the 1940
extraordinary or emergency purposes either the Act or the rules and regulations promulgated
Equity Fund or the Portfolio may borrow an amount thereunder.
not to exceed 1/3 of the current value of the net assets
of the Equity Fund, including the amount borrowed
(moreover, the Equity Fund may not purchase any
securities at any time at which borrowings exceed 5%
of the total assets of the Equity Fund, taken in each
case at market value).
------------------------------------------------------------------------------------------------------------------
B.Purchasing Securities on Margin. The Equity Fund It is proposed that this fundamental policy be
may not purchase any security or evidence of interest eliminated.
therein on margin, except that the Equity Fund may
obtain such short-term credit as may be necessary for
the clearance of purchases and sales of securities and
except that the Equity Fund may make deposits of
initial deposit and variation margin in connection with
the purchase, ownership, holding or sale of options.
------------------------------------------------------------------------------------------------------------------
C.Lending. The Equity Fund may not make loans to The Equity Fund may not make loans to other
other persons except (a) through the lending of persons if such loans are prohibited by the 1940
securities held by the Equity Fund and provided that Act or the rules and regulations promulgated
any such loans not exceed 30% of its total assets thereunder.
(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 the TENTH
fundamental restriction listed in this Exhibit E.
------------------------------------------------------------------------------------------------------------------
D.Real Estate, Oil, Gas, Mineral Leases and The Equity Fund may not purchase or sell real
Commodities. The Equity Fund may not purchase or estate or interests in oil, gas or mineral leases in
sell real estate (including limited partnership interests the ordinary course of business (the Equity Fund
but excluding securities secured by real estate or reserves the freedom of action to hold and to sell
interests therein), interests in oil, gas or mineral real estate acquired as the result of the ownership
leases, commodities or commodity contracts in the of securities by the Equity Fund).
ordinary course of business (the Equity Fund reserve
the freedom of action to hold and to sell real estate The Equity Fund may not purchase or sell
acquired as a result of the ownership of securities by commodities or commodities contracts in the
the Equity Fund). ordinary course of business (the foregoing shall
not preclude the Equity Fund from purchasing or
selling futures contracts or options thereon).
------------------------------------------------------------------------------------------------------------------
E-1
------------------------------------------------------------------------------------------------------------------
Current Fundamental Policies Proposed Fundamental Policies of
of the Equity Fund: the Equity Fund:
------------------------------------------------------------------------------------------------------------------
E.Short Sales. The Equity Fund may not make short It is proposed that this fundamental policy be
sales of securities or maintain a short position, unless eliminated.
at all times when a short position is open the Equity
Fund 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 Equity Fund's net assets (taken in each case at
market value) is held as collateral for such sales at
any one time.
------------------------------------------------------------------------------------------------------------------
F.Senior Securities. The Equity Fund may not issue The Equity Fund may not issue any senior
any senior security (as that term is defined in the security (as that term is defined in the 1940 Act)
1940 Act) if such issuance is specifically prohibited if such issuance is specifically prohibited by the
by the 1940 Act or the rules and regulations 1940 Act or the rules and regulations
promulgated thereunder, except as appropriate to promulgated thereunder.
evidence a debt incurred without violating the FIRST
fundamental restriction listed in this Exhibit E.
------------------------------------------------------------------------------------------------------------------
G.Underwriting Securities. The Equity Fund may not The Equity Fund may not underwrite securities
underwrite securities issued by other persons, except issued by other persons, except that all or any
that the Equity Fund may invest all or any portion of portion of the assets of the Equity Fund may be
its assets in the Index Trust and except insofar as the invested in one or more investment companies, to
Equity Fund may technically be deemed an the extent not prohibited by the 1940 Act, the
underwriter under the Securities Act of 1933, as rules and regulations thereunder, and exemptive
amended, in selling a security. orders granted under such Act, and except in so
far as the Equity Fund may technically be
deemed an underwriter under the Securities Act
of 1933, as amended, in selling a security.
------------------------------------------------------------------------------------------------------------------
H.Concentration. The Equity Fund may not invest The Equity Fund may not invest more than 25%
more than 25% of its assets in any one industry of its assets in any one industry except that (i) all
unless the stocks in a single industry were to or any portion of the assets of the Equity Fund
comprise more than 25% of the Domini 400 Social may be invested in one or more investment
Index/SM/, in which case the Equity Fund will invest companies, to the extent not prohibited by the
more than 25% of its assets in that industry, and 1940 Act, the rules and regulations thereunder,
except that the Equity Fund may invest all of its and exemptive orders granted under such Act,
assets in the Index Trust. and (ii) if an investment objective or strategy of
the Equity Fund is to match the performance of
an index and the stocks in a single industry
comprise more than 25% of such index, the
Equity Fund may invest more than 25% of its
assets in that industry.
------------------------------------------------------------------------------------------------------------------
I.Writing Put or Call Options. The Equity Fund may It is proposed that this fundamental policy be
not write any put or call option or any combination eliminated.
thereof, provided that this shall not prevent (i) the
purchase, ownership, holding or sale of warrants
------------------------------------------------------------------------------------------------------------------
E-2
--------------------------------------------------------------------------------------------------------------------
Current Fundamental Policies Proposed Fundamental Policies of
of the Equity Fund: the Equity Fund:
--------------------------------------------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------------------------------------------
J.Illiquid Securities. The Equity Fund may not invest It is proposed that this fundamental policy be
in securities which are subject to legal or contractual eliminated. The Trustees of the Equity Fund will
restrictions on resale (other than repurchase instead adopt a nonfundamental policy (which
agreements maturing in not more than seven days and can be amended or removed by the Trustees
other than securities which may be resold pursuant to without shareholder or investor approval) stating
Rule 144A under the Securities Act of 1933, as that not more than 15% of the net assets of the
amended, if the Board of Trustees determines that a Equity Fund, will be invested in illiquid
liquid market exists for such securities) if, as a result securities, except that the Equity Fund may invest
thereof, more than 10% of its net assets (taken at all or any portion of its assets in one or more
market value) would be so invested (including investment companies, to the extent not
repurchase agreements maturing in more than seven prohibited by the 1940 Act or the rules and
days), except that the Equity Fund may invest all or regulations thereunder.
any portion of its assets in the Index Trust.
--------------------------------------------------------------------------------------------------------------------
K.Diversification. The Equity Fund may not as to 75% It is proposed that this fundamental policy be
of its assets, purchase securities of any issuer if such eliminated. The Trustees of the Equity Fund will
purchase at the time thereof would cause more than instead adopt the following non-fundamental
5% of the Equity Fund's assets (taken at market policies (which can be amended or removed by
value) to be invested in the securities of such issuer the Trustees without shareholder or investor
(other than securities or obligations issued or approval):
guaranteed by the United States or any agency or
instrumentality of the United States), except that for The Equity Fund may not, as to 75% of its total
purposes of this restriction the issuer of an option assets, purchase securities of any issuer if such
shall not be deemed to be the issuer of the security or purchase at the time thereof would cause more
securities underlying such contract and except that than 5% of the Equity Fund's total assets (taken
the Equity Fund may invest all or any portion of its at market value) to be invested in the securities of
assets in the Index Trust. such issuer (other than securities or obligations
issued or guaranteed by the (i) United States, (ii)
any state or political subdivision thereof, (iii) any
political subdivision of any such state, or (iv) any
agency or instrumentality of the United States,
any state or political subdivision thereof, or any
political subdivision of any such state), provided
that, for purposes of this restriction, (a) the issuer
of an option or futures contract shall not be
deemed to be the issuer of the security or
securities underlying such contract and (b) the
Equity Fund may invest all or any portion of its
assets in one or more investment companies to
the extent not prohibited by the Investment
Company Act of 1940, as amended, the rules and
regulations thereunder, and exemptive orders
granted under such Act.
--------------------------------------------------------------------------------------------------------------------
E-3
-------------------------------------------------------------------------------
Current Fundamental Policies Proposed Fundamental Policies of
of the Equity Fund: the Equity Fund:
-------------------------------------------------------------------------------
The Equity Fund may not, as to 75% of its total
assets, purchase securities of any issuer if such
purchase at the time thereof would cause more
than 10% of the voting securities of such issuer
to be held by the Equity Fund, provided that, for
purposes of this restriction, (i) the issuer of an
option or futures contract shall not be deemed to
be the issuer of the security or securities
underlying such contract and (ii) the Equity Fund
may invest all or any portion of its assets in one
or more investment companies to the extent not
prohibited by the Investment Company Act of
1940, as amended, the rules and regulations
thereunder, and exemptive orders granted under
such Act.
-------------------------------------------------------------------------------
E-4
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
Voting Information
The enclosed proxy statement discusses important issues affecting your
investment in the Green Century Balanced Fund and/or the Green Century Equity Fund. To make voting faster and more
convenient for you, we're offering the options of voting on the Internet or by
telephone instead of completing and mailing the enclosedthis proxy card. Either method is
generally available 24 hours a day; your vote will be confirmed and posted
immediately. If you choose to vote via the Internet or by telephone, do not
mail thethis proxy card. If you received more than one proxy card, you must vote
each proxy card separately, either by returning each card via mail or by voting
each card on the toll-free number or via the internet.
However you choose to vote, it is important that you vote to save the expense
of additional solicitations.
3 Ways To Vote:
.. To vote on the Internet
1. Read the proxy statement.
2. Go to www.__________.com.www.______.com.
3. Follow the instructions on the website.
.. To vote by telephone
1. Read the proxy statement.
2. Call toll-free [ ].
3. Follow the recorded instructions.
.. To vote by mail
1. Read the proxy statement.
2. Check the appropriate boxes on the proxy card.
3. Return the proxy card in the envelope provided.
PROXY
GREEN CENTURY BALANCED FUND
GREEN CENTURY EQUITY FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 15,NOVEMBER [ ], 2006
The undersigned, revoking prior proxies, hereby appoints Kristina A. Curtis and
Amy Perry Basseches,F. Puffer, and each of them, proxies with several powers of substitution,
to vote for the undersigned at the Special Meeting of Shareholders of the Green
Century Balanced Fund and the Green Century Equity Fund to be held at Goulston & Storrs,the offices of Green Century Capital
Management, 114 State Street, Boston, MA 02109, on February 15,November [ ], 2006, or at
any adjournment or postponement thereof, upon the following matters as
described in the Notice of Special Meeting and accompanying Proxy Statement,
which have been received by the undersigned.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned shareholder. All proposals on this proxy card have been
proposed by the Board of Trustees. If no direction is given on these proposals,
this proxy card will be voted "FOR" Proposals 1 2, 3, 4, 5 and 6.2. The proxy will be voted
in accordance with the holder's best judgment as to any other matters.
If you choose to vote by mail and you are an individual account owner, please
sign exactly as your name appears on the proxy card. Either owner of a joint
account may sign the proxy card, but the signer's name must exactly match the
name that appears on the card.
Date: ____________________________________________________________
__________________________________________________________________________________________________________________________
Please vote, sign where indicated and return promptly in enclosed envelope.
________________________________________________________________________________
Signature(s): _________________________________________________________________________________________________ (Sign in the Box)
Please sign this proxy exactly as your name or names appear on the reverse side
of this card.appear. Either owner of a
joint account may sign the proxy. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
________________________________________________________________________________
[X] Please fill in the boxes as shown using black or blue ink or
number 2 pencil. PLEASE DO NOT USE FINE POINT PENS.
---------------------------
Green Century Balanced Fund
Green Century Equity Fund
---------------------------
1. All Green Century FOR ALL WITHHOLD FOR ALL
Shareholders: [ ] [ ] (Except as
Marked)
[ ]
To elect Trustees of
the Funds
(1) John Comerford
_____________________ (2) David J. Fine
To vote against a (3) Douglas M. Husid
particular Nominee, (4) Stephen J. Morgan
mark the "FOR ALL (5) C. William Ryan
(Except as Marked)" (6) James H. Starr
box and write the (7) Douglas M. Phelps
number of each (8) Wendy Wendlandt
Nominee you do not
wish to vote for on
the line above.
2. Shareholders of theapprove an Investment Advisory Agreement FOR AGAINST ABSTAIN
with Green Century Capital Management, Inc. [ ] [ ] [ ]
Balanced Fund only:2. To approve an Investment Subadvisory Agreement with
Trillium Asset
Management
Corporation
3. All Green Century FOR AGAINST ABSTAIN
Shareholders:Agreement with Mellon Equity Associates, [ ] [ ] [ ]
To authorize the
Trustees to adopt a
new Declaration of
Trust for the
Funds.
4. Shareholders of the
Green Century
Balanced Fund only:
To approve changes FOR ALL AGAINST ABSTAIN
to and the (Except as [ ] [ ]
elimination of Marked)
certain fundamental [ ]
investment policies
of your Fund.
A. Borrowing
_____________________ B. Purchasing Securities on Margin
To vote against a C. Lending
particular proposed D. Real Estate and Commodities.
change or E. Engaging in Short Sales
elimination, mark F. Senior Securities
the "FOR ALL G. Underwriting Securities
(Except as Marked)" H. Concentration
box and write the
letter of each policy
you do not wish to
vote for on the line
above.
5. Shareholders of theLLP
-------------------------
Green Century Equity Fund
only:
To approve changes FOR ALL AGAINST ABSTAIN
to and the (Except as [ ] [ ]
elimination of Marked)
certain fundamental [ ]
investment policies
of your Fund.
A. Borrowing
_____________________ B. Purchasing Securities on Margin
To vote against a C. Lending
particular proposed D. Real Estate and Commodities.
change or E. Engaging in Short Sales
elimination, mark F. Senior Securities
the "FOR ALL G. Underwriting Securities
(Except as Marked)" H. Concentration
box and write the I. Writing Put or Call Options
letter of each policy J. Illiquid Securities
you do not wish to K. Diversification
vote for on the line
above.
6. All Green Century FOR AGAINST ABSTAIN
Shareholders: [ ] [ ] [ ]
To authorize the
Trustees to select
and change investment
subadvisers and enter
into investment
subadvisory
agreements without
obtaining the
approval of
shareholders.-------------------------