Q. How is Green Century different from other SRI firms?
A. The Green Century Funds are the first family of no-load, environmentally responsible mutual funds. Green Century Capital Management (Green Century) was founded to provide an opportunity for investors who are concerned about the environment to harmonize their beliefs and their investment strategy, and put their money to work for clean air and clean water. The Funds were founded by a partnership of non-profit environmental groups, and the Funds' administrator, Green Century Capital Management, is owned by these groups. As a result, 100% of the profits earned through the administration of the Funds belong to these groups to support their work.
Q. Doesn't environmental investing reduce returns by limiting the number of companies in which you'll invest?
A.The Green Century Funds' investment philosophy is based on the belief that companies that seek to take care of the environment ultimately have the potential to take care of their investors as well. Reviewing a company's environmental practices can alert investors to the quality of a company's management by revealing whether they are forward thinking, cost conscious, ethically minded, and communicate openly, among other things. Therefore, we view environmental screening not as a process that eliminates potential quality investments, but as a discipline that, along with traditional investment analysis, enables us to identify quality companies.
Q. What are the possible economic benefits of corporate environmental responsibility that Green Century believes may make it preferable for investors?
A. By instituting strong environmental practices, companies can benefit by lowering their costs, reducing wasteful use of energy and raw materials, improving product quality, saving time and money by avoiding litigation and clean-ups, and improving their reputations as responsible corporate citizens. Also, those companies that provide fundamental, long-term solutions to environmental problems (such as those in the alternative energy or organic food sectors) may benefit financially by participating in expanding or new-growth sectors of the economy. When these companies are small, investing in them may involve greater risk than investing in the stocks of larger, more established companies.
Q. What criteria do you use in determining which securities to buy for the funds?
A. The Green Century Balanced Fund seeks to promote environmentally proactive corporate behavior and a cleaner environment by investing its assets in companies that Green Century believes are working to reduce their impact on the environment. Such companies include, but are not limited to those that:
- Demonstrate a commitment to preserving and enhancing the environment, as evidenced by the products they make and the services they provide.
- Maintain clean environmental records, and openly disclose their policies and performance on critical environmental criteria.
- Make positive contributions toward actively promoting a healthier environment, including companies that produce renewable energy products and those that offer effective remedies for existing environmental problems.
- Respond positively to shareholder advocacy on environmental issues.
The Green Century Equity Fund invests in an index that screens out companies with the worst environmental and social records. The index is created and screened as follows:
- Start with the roughly 500 U.S. companies that comprise the S&P 500® Index.
- Companies are automatically excluded if they: derive any revenues from the manufacture of alcohol or tobacco products; derive any revenue from provision of gaming products or services; participate in businesses related to the nuclear fuel cycle; or if they derive two percent or more of sales from military weapons systems.
- Screen all remaining companies based on environmental performance, corporate citizenship, employee relations, product quality, attitudes with regard to consumer issues, and a variety of other social and environmental standards.
- After environmental and other screens, approximately 250 companies from the original group of 500 remain. Then, 150 other companies that pass the screens are added. These are selected, in part, based on their social or environmental leadership within their industry.
- All companies in the index are monitored regularly. When a company is dropped from the index -- due to being purchased by another company or because it no longer meets the screens -- a new company is chosen to replace it, with emphasis given to companies that have strong social and environmental track records; companies with larger, rather than smaller, market capitalization; and, companies in industries in which the index is under-represented relative to the S&P 500®.
- The index is market capitalization weighted. This means that the amount of each company that is held is proportional to the company's market capitalization.
Neither of the Green Century Funds will invest in companies primarily engaged in the production of nuclear energy or tobacco products.
Q. Are the Green Century Funds environmental sector funds?
A. No. In the past, "Environmental sector funds" tended to invest in companies - such as waste management firms, incinerator operators or toxic waste cleanup companies - that had negative environmental practices themselves. The Funds tend not to make investments in the industries traditionally associated with environmental sector funds, because the companies in that sector often do not pass Green Century's screens.
Q. Do the Green Century Funds place a sales charge, or load, on purchases or redemptions of shares?
A. No. Both Funds are no-load, so shareholders are not charged a sales charge or front-end load for purchasing shares. For selling shares, the only fee is a short-term redemption fee that applies only to shares sold within 60 days of purchase. This fee is designed to discourage short-term trading in the Funds. The redemption fee is retained by the Funds. Note that both Green Century Funds do charge annual operating fees that are detailed in the Funds' prospectus.
Q. How do you decide how to vote your proxies?
A. Each Fund's proxies are voted according to its Proxy Voting Policies and Procedures, which are available upon request by clicking here, by calling 1-800-93-GREEN, or by emailing info@greencentury.com. Green Century votes proxies in favor of resolutions designed to address and resolve environmental problems, among several other criteria and policies.
Q. In what types of shareholder advocacy campaigns does Green Century engage?
Believing that environmental and economic performance is intertwined, Green Century conducts shareholder advocacy engagements that promote environmental responsibility. The major issue areas we address include Wilderness Preservation and Biodiversity; Clean Air and Energy; Pure Water and Safe Food; Toxics and Environmental Health; Chemical Security; and Political Influence. We are currently focusing on the Arctic Wildlife Refuge, genetically modified foods, factory farms, carbon emissions, computer recycling, and transparency in corporate political giving. For more detailed descriptions of our current engagements, click here.
Recent achievements include:
- Apple Computer*: On June 24, 2005, Apple began offering free iPod recycling in its retail stores.
- Whole Foods Market*: On April 4, 2005, Whole Foods announced that it would provide information about genetically engineered ingredients on its private label products.
- ConocoPhillips*: In December 2004, ConocoPhillips withdrew from Arctic Power, the industry group lobbying to open the Arctic National Wildlife Refuge to oil drilling.
Q. What are the risks of investing in the Funds?
A. The Green Century Balanced Fund may be, and often has been, more heavily weighted in small companies which involve greater risks than investing in the stocks of larger, more established companies. The Balanced Fund may also invest up to 35% of its net assets in high yield, below investment grade bonds, which involves greater risk that investing in more highly rated bonds. The Green Century Equity Fund invests essentially all of its assets in the stock market. As with all equity funds, the share price of the Equity Fund will fluctuate and may fall if the market as a whole declines or the value of the companies in which it invests falls. The large companies in which the Fund's portfolio is invested may perform worse than the stock market as a whole.
Q. How can someone get more information on the Funds and learn how to invest?
A. Potential investors should carefully consider the investment risks, charges and expenses of the Funds before investing. To obtain a prospectus that contains this and other information about the Funds, potential investors may call the Green Century Funds at 1-800-93-GREEN, send an email to info@greencentury.com, or click here to request or download the prospectus and relevant account registration forms. You should read the prospectus carefully before investing.
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* As of September 30, 2008, Apple Computer comprised 0.73% of the Green Century Balanced Fund and 1.91% of the Green Century Equity Fund; Whole Foods Market, Inc. was not held by the Green Century Balanced Fund and comprised 0.05% of Green Century Equity Fund. As of September 30, 2008, neither of the Green Century Funds was invested in ConocoPhillips. Portfolio composition will change due to ongoing management of the Funds. References to specific investments should not be construed as a recommendation of the securities by the Funds, their administrator, or their distributor.
Revised 02/01/05
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