UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-03287
NEW ALTERNATIVES FUND, INC.
150 BROADHOLLOW ROAD, SUITE 306
MELVILLE, NEW YORK 11747
DAVID J. SCHOENWALD, PRESIDENT
NEW ALTERNATIVES FUND, INC.
150 BROADHOLLOW ROAD, SUITE 306
MELVILLE, NEW YORK 11747
Registrant's telephone number, including area code: 631-423-7373
Date of fiscal year end: December 31, 2003
Date of reporting period: December 31, 2003
Form N-CSR is to be used by management investment companies to file
reports with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
================================================================================
Item 1. Reports to Stockholders.
The Annual Financial Report (12/31/03) is attached herewith.
ANNUAL
FINANCIAL REPORT
DECEMBER 31, 2003
NEW ALTERNATIVES FUND, INC.
FINANCIAL HIGHLIGHTS
STATEMENT OF PER SHARE INCOME AND CAPITAL CHANGES
For each share of capital stock outstanding*
Year Year Year Year Year Year
End End End End End End
12/31 12/31 12/31 12/31 12/31 12/31
2003 2002 2001 2000 1999 1998
NET ASSET VALUE AT BEGINNING
OF PERIOD $24.21 $34.71 $41.29 $28.85 $28.54 $32.07
------- ------- ------- ------- ------- -------
Investment income $0.58 $0.62 $0.75 $0.79 $0.66 $0.52
Expenses 0.37 0.37 0.43 0.42 0.38 0.37
----- ----- ----- ----- ----- -----
Net investment income 0.21 0.25 0.32 0.37 0.28 0.15
Net realized & unrealized
gain (loss) on investment 5.48 (10.50) (5.45) 14.56 2.14 (3.22)
----- ------- ------ ------ ----- -----
Total from investment operations 5.69 (10.25) (5.13) 14.93 2.42 (3.07)
Distributions from net
investment income (0.21) (0.25) (0.32) (0.37) (0.28) (0.15)
Distributions from net
realized gain (0.00) (0.00) (1.13) (2.12) (1.83) (0.16)
------ ------ ------ ------ ------ -----
Total distributions (0.21) (0.25) (1.45) (2.49) (2.11) (0.31)
Net change in net asset value 5.48 (10.50) (6.58) 12.44 0.31 (3.53)
----- ------- ------ ------ ----- -----
Net asset value as of end
of the period $29.69 $24.21 $34.71 $41.29 $28.85 $28.54
======= ======= ======= ======= ======= =======
Total return
(Sales load not reflected) 23.5% -29.5% -12.4% 51.7% 8.5% -10.0%
Net assets, end of period
(in thousands) $44,901 $36,723 $49,245 $52,773 $32,555 $33,021
Ratio of operating expense
to net assets** 1.39% 1.32% 1.14% 1.11% 1.13% 1.18%
Ratio of net investment income
to average net assets** 0.82% 0.89% 0.87% 1.01% 0.89% 0.49%
Portfolio turnover** 32.7% 32.6% 29.3% 59.7% 87.3% 32.4%
Number of shares
outstanding at end of period*** 1,512,199 1,516,709 1,368,171 1,211,783 1,058,230 1,156,952
Year Year Year Year Year Year First
End End End End End End Seven
12/31 12/31 12/31 12/31 12/31 12/31 Months
1997 1996 1995 1994 1993 1992 4/30/1983
****
NET ASSET VALUE AT BEGINNING
OF PERIOD $30.87 $30.51 $28.14 $30.00 $29.95 $29.19 $12.50
------- ------- ------- ------- ------- ------- ------
Investment income $0.64 $0.73 $0.75 $0.72 $0.62 $0.62 $0.38
Expenses 0.38 0.39 0.40 0.40 0.33 0.28 0.20
----- ----- ----- ----- ----- ----- ----
Net investment income 0.26 0.34 0.35 0.32 0.29 0.34 0.18
Net realized & unrealized
gain (loss) on investment 3.16 3.72 5.14 (1.43) 0.58 1.10 3.08
----- ----- ----- ----- ----- ----- ----
Total from investment operations 3.42 4.06 5.49 (1.11) 0.87 1.44 3.26
Distributions from net
investment income (0.26) (0.34) (0.35) (0.32) (0.29) (0.34) (0.18)
Distributions from net
realized gain (1.96) (3.36) (2.77) (0.43) (0.53) (0.34) (0.19)
------ ------ ------ ----- ------ ------ ------
Total distributions (2.22) (3.70) (3.12) (0.75) (0.82) (0.68) (0.37)
Net change in net asset value 1.20 0.36 2.37 (1.86) 0.05 0.76 2.89
----- ----- ----- ----- ----- ----- ----
Net asset value as of end
of the period $32.07 $30.87 $30.51 $28.14 $30.00 $29.95 $15.39
======= ======= ======= ======= ======= ======= ======
Total return
(Sales load not reflected) 11.1% 13.3% 19.5% -3.7% 2.9% 4.9% 10.4%
Net assets, end of period
(in thousands) $37,941 $35,549 $32,236 $28,368 $31,567 $28,896 $163
Ratio of operating expense
to net assets** 1.15% 1.21% 1.28% 1.30% 1.11% 1.04% 1.08%
Ratio of net investment income
to average net assets** 0.79% 1.04% 1.12% 1.04% 0.96% 1.25% 1.69%
Portfolio turnover** 53.9% 51.2% 48.72% 33.0% 18.36% 13.1% 74.5%
Number of shares
outstanding at end of period*** 1,111,377 1,038,561 965,769 984,847 1,026,460 945,006 10,592
* All adjusted for two for one share split on July 26, 1985 and
January 2, 1990
** Annualized (includes state taxes)
*** Shares immediately prior to dividend - Fund commenced operation on
September 3, 1982
**** At this time the Fund was on a fiscal year. Table for 1983-1990 is
available on request. Deleted to make space.
The accompanying notes are an integral part of these financial statements.
MANAGEMENTS'S DISCUSSION OF FINANCIAL PERFORMANCE FOR THE YEAR 2003
FUND PERFORMANCE: The Fund was up 23.51% for the year, improving after a
difficult first quarter when focus in the country was on the recession,
unemployment, and the then upcoming invasion of Iraq.
FACTORS AFFECTING THE FUND:
National Energy Policy: Congress again failed to approve long anticipated energy
legislation. Portions of the defeated legislation included support for Solar
Energy, Fuel Cells and an extension of tax credits for wind power - all areas in
which the Fund invests. The absence of policy left alternative energy companies
without incentive to expand their businesses in America, and investors
uncertain. Individual state government programs and policies of foreign
governments were more encouraging.
Investments in dividend paying shares performed relatively well, benefiting the
Fund's investments in hydroelectric and natural gas utilities. Interest rates
remained low, and taxes on dividends were reduced making these shares attractive
to investors seeking income.
The value of the American dollar declined relative to the currency in Europe and
Japan, benefiting the value of overseas shares, but reducing the income of
foreign companies selling products in the United States.
Corporate scandals and accounting issues continued to cause investor
apprehension, and shares of several of the Fund's portfolio holdings declined on
account of them - most particularly AstroPower, a solar cell manufacturer which
never filed its accounting reports and then declared bankruptcy in February
2004.
Energy prices were mixed, with natural gas prices higher on account of increased
use of natural gas, but wholesale electricity prices were low on account of
overbuilding of natural gas-fired electric power plants several years ago. There
has also been a decline in reserves of natural gas. The higher natural gas
prices benefits fuel cells and modern gas turbines which are very efficient in
producing electricity, but the lower electricity prices are negative.
In August, a major failure in the electricity grid on the East Coast, and
several failures of electric systems in Europe, reinvigorated some interest in
electric reliability and distributed generation (smaller localized power
plants), which benefited share prices of the Fund's fuel cell investments.
PORTFOLIO HOLDINGS AND CHANGES:
SOLAR ENERGY: The Fund sold its shares of AstroPower, the largest US independent
solar manufacturer, when the company was delisted due to its failure to file
accounting reports. It remains uncertain what happened to the company which had
previously reported growing profit and adequate finances. The Fund also sold its
shares of Spire Corporation, which produces solar panel fabricating equipment,
when that company delayed its financial filings.
The Fund maintained its interest in solar adding to shares of Japanese companies
which produce solar cells, Kyocera, Sharp and Sanyo, as well as a Canadian
company, ATA Tooling which manufactures Photowatt solar products.
FUEL CELLS: Global Thermoelectric, a Canadian company fuel cell holding merged
with the Fund's largest holding FuelCell Energy (FCEL)in the fourth quarter. The
Fund sold 55,800 shares of FuelCell Energy, which was the number of new FCEL
shares obtained from the merger. This was so as to retain a degree of
diversification of investments. Shares of fuel cell companies, including Plug
Power, Hydrogenics and Medis were weak early in the year, but rebounded strongly
as the year progressed on hopes for an energy bill and when they gained
attention after the blackout in August. Two industrial catalyst companies,
Engelhard and Johnson Matthey, each with affiliations with the smaller fuel cell
companies, performed reasonably well.
WIND: Late in the fourth quarter the Fund's two Danish wind power holdings also
announced a merger, NEG-Micon merging into Vestas which the Fund retains. The
shares of each performed well in 2003, although NEG-Micon reported poor earnings
late in the year.
HYDROELECTRIC: Shares of our American Hydroelectric investment, Idacorp (which
is also developing fuel cells) were weak on account of both poor hydro-electric
conditions in its service area, and its tangential involvement in the collapse
of electric energy trading. Shares of our Australian Hydroelectric and Windpower
investment were steady. The Fund added to its Hydro investments by purchasing
shares of Fortis, a Canadian company.
NATURAL GAS UTILITIES: Our several natural gas utility shares performed
reasonably well, with the exception of Nicor, a utility in Illinois which was
accused of improper accounting of a natural gas price component of retail energy
bills.
ENERGY CONSERVATION RELATED INVESTMENTS: Shares of investments in semi-conductor
companies, International Rectifier and Linear Technology, whose products include
energy saving devices performed exceptionally well. Shares of Cree, a developer
and manufacturer of Light Emitting Diodes, used for efficient lighting, were
volatile, while shares of Baldor Electric performed adequately as the company
showed good cash flow and mediocre earnings.
NATURAL FOODS: The Fund's holdings in the natural foods industry, United Natural
Foods and SunOpta (formerly Stake Technologies) performed exceptionally well.
WATER: The Fund added holdings in this category which performed reasonably well.
Aqua America, formerly Philadelphia Suburban, is a water utility with customers
spread out in several regions, in the mold of a former holding American Water
Works, which was acquired by a German company last year. Ionics is a water
purification company which has particular expertise in desalination and has
customers in the states and abroad. Badger Meter manufactures water meters,
increased its dividend and reported increased earnings. Tetra Tech provides
water management engineering services.
RECYCLING: Paper recycling investments, Caraustar which makes recycled
packaging, and Kadant, which makes paper recycling equipment, both performed
reasonably well.
CASH AND TREASURY HOLDINGS: We ended the year with 13.7% of net assets in cash,
socially responsible banks and U.S. Treasury Bills. This was a reduction from
approximately 27.2% of total assets held in cash equivalents at the end of last
year. This was a function both of the increased value of our portfolio holdings
and additional stock investments. The yield on short- term treasury bills was
less than 1% by the end of the year.
INCOME FROM DIVIDENDS AND INTEREST/EXPENSES: Dividend income and interest income
(and the Fund's net ordinary income) were each less than last year. Fund
expenses. were marginally less than last year, with a slight decrease in the
advisory fee and an increase in auditing costs.
REALIZED AND UNREALIZED CAPITAL GAIN/LOSS: The Fund realized capital losses on
the sale of a number of holdings, most significantly a loss on shares of
AstroPower, but unrealized gains increased substantially and returned to a
positive balance as of December 31, 2003.
CORPORATE GOVERNANCE AND REGULATORY ISSUES: There was a continuation of new
securities rules and regulations issued by the Securities Exchange Commission.
Shareholders added two new Directors in September, Murray Rosenblith and Preston
Pumphrey. Mr. Pumphrey was elected by the Directors to serve with Dorothy Wayner
as a member of the Fund's Audit Committee.
STRATEGY: The Fund's strategy continues to seek long-term gain by investing in
clean energy and environmentally oriented investments, both in the United States
and abroad, with concern for socially responsible behavior.
In September, the Fund Directors submitted to shareholders a proxy proposal to
permit increased investment in overseas companies where there is greater
interest in alternative energy and more supportive national policies. The
proposal to invest up to 35% of assets in the shares of foreign companies was
approved in January 2004 by an affirmative vote of 97% of those who voted.
Value of $10,000 Investment Over Past 10 Years
Past Performance is not predictive of Future Performance.
Average Annual Return (after deducting maximum sales charge):
One Year 17.65%; Five Years (3.63%); Ten Years 4.53%.
Fund S&P 500 Russell 2000
1993 $9,525.00 $10,000.00 $10,000.00
1994 $9,172.50 $10,189.70 $9,817.84
1995 $10,960.50 $13,885.30 $12,610.06
1996 $12,419.80 $17,034.90 $14,690.00
1997 $13,795.80 $22,674.00 $17,974.80
1998 $12,412.00 $29,103.30 $17,517.03
1999 $13,462.70 $35,181.20 $21,240.69
2000 $20,431.30 $32,003.70 $20,599.03
2001 $17,893.00 $28,211.10 $21,111.11
2002 $12,609.20 $22,489.90 $16,786.59
2003 $15,574.60 $28,245.70 $24,718.88
[GRAPHIC OMITTED]
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2003
COMMON STOCKS: 86.58%
- ---------------------
SHARES MARKET VALUE
------ ------------
ALTERNATE ENERGY AS A GROUP: 28.09%
ALTERNATE ENERGY (GENERAL): 7.79%
**Fortis Inc. (Canada) 20,000 911,588
Idacorp Inc. 85,000 2,543,200
Distributed Energy Systems 10,000 28,600
---------
3,483,388
---------
ALTERNATE ENERGY (FUEL CELL): 10.93%
- -----------------------------
*FuelCell Energy, Inc. 300,000 3,900,000
*Hydrogenics Corp. 100,000 616,000
*Medis Technologies Ltd. 7,500 80,250
*Plug Power Inc. 40,000 290,000
---------
4,886,250
---------
ALTERNATE ENERGY (SOLAR CELL): 5.19%
- ------------------------------
ATS Automation (Canada) 15,000 147,998
Kyocera Corp. (ADR) (Japan) 25,000 1,675,000
Sanyo Electric (Japan) 10,000 259,100
Sharp Corp. Ltd. (Japan) 15,000 236,681
---------
2,318,778
---------
ALTERNATE ENERGY (WIND): 3.01%
- ------------------------
**Pacific Hydro (Australia) 91,365 205,140
**Vestas Wind Systems (Denmark) 70,000 1,138,375
---------
1,343,515
---------
ALTERNATE ENERGY RELATED: 1.17%
- -------------------------
Matsushita Electric (ADR) (Japan) 15,000 209,100
Genencor International 20,000 315,000
---------
524,100
---------
INDUSTRIAL CATALYSTS (FUEL CELLS
& CLEAN AIR): 2.69%
- --------------
Engelhard Corp. 25,000 748,750
**Johnson Matthey (United Kingdom) 25,800 453,085
---------
1,201,835
---------
WATER: 7.75%
- ------
Ameron International 15,000 520,350
Badger Meter 35,000 1,335,250
Ionics, Inc. 15,000 477,750
Philadelphia Suburban (Aqua America) 40,000 884,000
*Tetra Tech 10,000 248,600
---------
3,465,950
---------
The accompanying notes are an integral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2003
SHARES MARKET VALUE
------ ------------
ENERGY CONSERVATION: 6.38%
- --------------------
Baldor Electric 45,000 1,028,250
Cree, Inc. 15,000 265,350
*Intermagnetics General Corp. 25,000 554,000
*International Rectifier 10,000 494,100
Itron, Inc. 5,000 91,800
Linear Technology Corp. 10,000 420,700
------------
2,854,200
------------
NATURAL FOODS: 4.65%
- --------------
*SunOpta, Inc. (Canada) 50,000 461,500
*United Natural Foods 45,000 1,615,950
------------
2,077,450
------------
RECYCLING: 0.88%
- ----------
*Caraustar Industries 5,000 69,000
Kadant, Inc. 15,000 324,750
------------
393,750
------------
NATURAL GAS
TRANSMISSION & DISTRIBUTION: 32.72%
- ----------------------------
Atmos Energy Corp. 75,000 1,822,500
Chesapeake Energy 20,000 271,600
*Golar LNG Ltd. (Norway) 35,000 500,150
KeySpan Corp. 70,000 2,576,000
Laclede Group 20,000 571,000
New Jersey Resources 52,000 2,002,520
Nicor Inc. 25,000 851,000
Piedmont Natural Gas 25,000 1,086,500
South Jersey Industries 52,000 2,106,000
Questar Corp. 65,000 2,284,750
WGL Holdings 20,000 555,800
------------
14,627,820
------------
OTHER (INDUSTRIAL GASES INCLUDING
HYDROGEN): 3.42%
- ----------
Praxair Inc. 40,000 1,528,000
------------
TOTAL COMMON STOCK (COST $31,814,453.81) $ 38,705,037
- --------------------------------------- ============
The accompanying notes are an integral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2003
CASH, SAVINGS ACCOUNTS,
30 DAY CERTIFICATES OF DEPOSITS AND
U.S. TREASURY BILLS: 13.42%
- -------------------- ------
SOCIALLY CONCERNED BANKS
- ------------------------
Alternatives Federal Credit Union maturity 12/31/03
Savings 0.75% $ 100,000
Chittenden Bank
Money Market 0.70% 100,000
Community Capital Bank
Certificate of Deposit maturity 1/1/04 1.00% 100,000
Self-Help Credit Union
Certificate of Deposit maturity 2/11/04 1.16% 100,000
South Shore Bank
Certificate of Deposit maturity 1/24/04 0.90% 100,000
U.S. Treasury Bills (at various yields maturing at various dates in
January 2004 maturity value $5,500,000) 5,498,722
-----------
TOTAL MARKET DEPOSITS AND TREASURY BILLS $ 5,998,722
===========
Total Common Stock (86.58%) $ 38,705,037
Bank Money Market and U.S. Treasury Bills (13.42%) 5,998,722
------------
TOTAL INVESTMENTS (100%) $ 44,703,758
============
* Securities for which no cash dividends were paid during the fiscal year.
** Foreign Exchange Securities traded on a foreign exchange.
The accompanying notes are an integral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003
ASSETS
------
Investment securities at fair value (Cost: $31,814,454) (Notes 2A and 5)........ $ 38,705,037
U.S. Treasury Bills at fair value............................................... 5,498,722
Cash, Savings and Certificates of Deposit....................................... 500,000
Cash............................................................................ 181,828
Receivables: Dividends......................................................... 56,265
Interest.......................................................... 1,004
Portfolio securities sold......................................... -
Subscriptions..................................................... 58,916
Prepaid Insurance & Filing Fees................................................. 7,982
-----
TOTAL ASSETS $ 45,009,754
============
LIABILITIES
-----------
Payables:
Capital stock reacquired........................................................ $ 4,103
Advisory fee.................................................................... 28,982
Other accounts payable and accruals............................................. 27,556
Dividend distribution payable................................................... 47,973
------
TOTAL LIABILITIES............................................................... 108,614
-------
NET ASSETS $ 44,901,140
- ---------- ============
ANALYSIS OF NET ASSETS
----------------------
Net capital paid in shares of capital stock..................................... 44,533,771
Distributable earnings.......................................................... 367,369
-------
NET ASSETS (equivalent to $29.69 per share based on 1,512,199.311
shares of capital stock outstanding) $ 44,901,140
============
The accompanying notes are an integral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDING DECEMBER 31, 2003
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $4,470).......................... $ 797,293
Interest........................................................................ 78,661
Other net income................................................................ 1,153
-----
Total Income.................................................................... 877,107
-------
EXPENSES:
Management fee (note 4)......................................................... 297,364
Custodian fees: PFPC Trust...................................................... 24,300
Other........................................................................... 1,031
Auditor......................................................................... 26,024
Directors....................................................................... 2,500
Filing fees..................................................................... 11,519
Postage and printing............................................................ 13,200
Bond and insurance.............................................................. 8,088
Transfer Agent-PFPC, Inc........................................................ 49,850
Fund pricing-PFPC, Inc.......................................................... 32,981
Shareholder service costs....................................................... 83,307
------
Total Expenses.................................................................. 550,164
-------
NET INVESTMENT INCOME........................................................... 326,943
-------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN ON INVESTMENTS (NOTE 2B & 5)
Proceeds from sales............................................................. 10,105,844
Cost of securities sold......................................................... (12,174,465)
Foreign currency transactions (gains/loss)...................................... (7,989)
------
Net Realized Gain/Loss.......................................................... (2,076,610)
---------
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
Beginning of period............................................................. (3,498,307)
End of period................................................................... 6,890,583
Foreign currency translations................................................... 211
---
Total Unrealized Appreciation (Depreciation) For The Period..................... 10,389,101
----------
Net Realized and Unrealized Gain (Loss) On Investments.......................... 8,312,492
---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ $ 8,639,435
===========
The accompanying notes are an intergral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 2003 AND 2002
2003 2002
FROM INVESTMENT ACTIVITIES:
Net investment income $ 326,943 $ 373,183
Net realized gain (loss) from security transactions
and foreign currency transactions (2,076,610) (4,459,934)
Unrealized appreciation (depreciation) of investments 10,389,102 (10,980,355)
---------- ----------
Increase (decrease) in net assets derived from
investment activities 8,639,435 (15,067,106)
--------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income dividends to shareholders (319,119) (369,254)
Distributions (capital gain) to shareholders 0 0
FROM CAPITAL SHARE TRANSACTIONS:
Net increase (decrease) from
Capital transactions (note 3) (141,739) 2,913,950
-------- ---------
INCREASE (DECREASE) IN NET ASSETS: 8,178,577 (12,522,410)
NET ASSETS AT:
Beginning of the period 36,722,563 49,244,973
---------- ----------
END OF THE PERIOD $ 44,901,140 $ 36,722,563
============ ============
The accompanying notes are an integral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
NOTES TO FINANCIAL STATEMENTS FOR THE
PERIOD ENDING DECEMBER 31, 2003
1) ORGANIZATION - The Fund is registered as an open-end investment company under
the Investment Company Act of 1940, as amended. The Fund commenced operations
September 3, 1982. The investment objective of the Fund is to seek long-term
capital gains by investing in common stocks that provide a contribution to a
clean and sustainable environment.
2) ACCOUNTING POLICIES - The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of these financial
statements. The policies are in conformity with generally accepted accounting
principles:
A. SECURITY VALUATION - Listed investments are stated at the last reported
sale price at the closing of a national securities stock exchange and the NASD
National Market System on December 31, 2003 and at the mean between the bid and
asked price on the over the counter market if not traded on the day of
valuation.
B. FOREIGN CURRENCY - Investment securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at the date of valuation. Purchases and sales of investment securities
and income and expense items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions.
The company does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security
transactions are accounted for on the trade date (date order to buy or sell is
executed). Realized gains and losses from security transactions are reported on
a first in, first out basis if not traded on the day of valuation. Short-term
notes are stated at amortized cost which approximates fair value.
D. INVESTMENT INCOME AND EXPENSE RECOGNITION - Dividend income is recorded
as of the ex-dividend date. Expenses are accrued on a daily basis.
E. FEDERAL INCOME TAXES - No provision for federal income tax is believed
necessary since the Fund distributes all of its taxable income to comply with
the provisions of the Internal Revenue Code applicable to investment companies.
The aggregate cost of the securities (common stocks) owned by the Fund on
December 31, 2003 for federal tax purposes is $31,814,454.
The Fund had realized capital losses of $2,076,610 for 2003 and $4,456,809 for
2002 which can be carried forward to future years to offset future net realized
capital gains through 2011 and 2010 respectively.
NEW ALTERNATIVES FUND, INC.
NOTES TO FINANCIAL STATEMENTS FOR THE
PERIOD ENDING DECEMBER 31, 2003
F. USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.
3) CAPITAL STOCK - There are 8,000,000 shares of $1.00 par value capital stock
authorized. On December 31, 2003, there were 1,512,199.311 shares outstanding.
Aggregate paid in capital including reinvestment of dividends was $44,533,771.
Transactions in capital stock were as follows:
Year End 12/31/03 Year End 12/31/02
----------------- -----------------
Shares Amount Shares Amount
Capital stock sold 119,607.769 $2,984,036 177,206.401 $5,145,016
Capital stock issued
Reinvestment of dividends 9,137.686 271,259 13,397.950 324,605
Redemptions (133,255.877) (3,397,034) (92,704.716) (2,555,670)
------------ ----------- ----------- ----------
Net Increase (Decrease) (4,510.422) $ (141,739) 97,899.635 $2,913,951
============ =========== =========== ==========
4) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES - Pursuant to
agreements, Accrued Equities, Inc. serves as investment advisor to the Fund. The
Fund pays to Accrued Equities, Inc. an annual management fee of 1.00% of the
first $10 million of average net assets; 0.75% of the next $20 million; 0.50% of
net assets over $30 million and 0.45% of assets over $100 million. If the net
annual expenses of the Fund (other than interest, taxes, brokerage commissions,
extraordinary expenses) exceed the most restrictive limitation imposed by any
state in which the Fund has registered its securities for sale, Accrued
Equities, Inc. reduces its management fee by the amount of such excess expenses.
The annualized expense ratio for the period ended December 31, 2003 was 1.39%.
The Fund pays no remuneration to its officers, David Schoenwald and Maurice
Schoenwald, who are also Directors. They are also officers of Accrued Equities,
Inc. Accrued Equities, Inc. is the principal underwriter for the Fund. There is
a commission of 4.75% on most new sales. The commission is shared with other
brokers who actually sell new shares. Their share of the commission may vary.
The Fund paid Accrued Equities, Inc. a total of $15,256 in underwriting fees for
the period ended December 31, 2003. The Fund also paid Accrued Equities, Inc.
$26,941 in commissions for the period ended December 31, 2003.
5) PURCHASES AND SALES OF SECURITIES - For the year ended December 31, 2003, the
aggregate cost of securities purchased totaled $12,891,973. Net realized gains
(loss) were computed on a first in, first out basis. The amount realized on
sales of securities for the year ended December 31, 2003 was $10,105,844.
6) DIRECTORS FEES - The amount charged for the year ended December 31, 2003 for
Directors compensation was $2,500. Only non-interested Directors are
compensated. A non-interested Director is not part of the management of the
Fund. Each non-interested Director receives $500 of compensation, or $1,000 for
members of the Audit Committee, and may also receive payment for travel costs to
Directors meetings. There was no additional compensation paid to any Director
for board service other than that stated. See note 4 for compensation regarding
interested Directors.
7) PROXY VOTING - The Fund has proxy voting policies which are available,
without charge, upon request by calling the Fund at 800-423-8383. Proxy votes of
the Fund are available by calling the Fund.
Joseph A. Don Angelo
Certified Public Accountant
22 Jericho Turnpike
Mineola, New York 11501
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Shareholders and
Board of Directors of
New Alternatives Fund, Inc.
We have audited the accompanying statement of assets and liabilities of New
Alternatives Fund, Inc., including the schedule of investments, as of December
31, 2003, and the related statements of operations for the year then ended and
statements of changes in net assets for each of the last two years and the
financial highlights for each of the last four years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The 1999 and
the prior years financial highlights were audited by other auditors whose
report, dated February 8, 2000, expressed an unqualified opinion on them.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosure in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2003, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis of our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of New
Alternatives Fund, Inc. as of December 31, 2003, the results of its operations
for the year then ended, the changes in net assets for each of the last two
years in the period then ended, and the financial highlights for the each of the
last four years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
/S/
- ------------------------
Joseph A. Don Angelo
Mineola, New York
February 22, 2004
MANAGEMENT OF THE FUND
As is true of most mutual funds, daily management is delegated by the
Board of Directors to the Fund Manager, Accrued Equities, Inc.
a) CONTROLLING PERSONS
INTERESTED DIRECTORS AND OFFICERS
1 2 3 4 5* 6
Name Position(s) Term of Principal Number Other
Address Held with Office and Occupations Portfolios Directorships
and Age Fund Length of During Past In Fund Held by
Time Served 5 Years Complex Director
Maurice L. Schoenwald Founder All since 1982 Serving No complex None
5270 Gulf of Mexico Director To the present New Alterna- One Portfolio
Drive, FL 34228 Chairperson tives Fund
Age 84
David Schoenwald Founder Since 1982 Serving No Complex None
Valley Court Director To the present New Alterna- One Portfolio
Huntington Bay, NY President tives Fund
Age 54
* There is only one portfolio. There is no complex. No director,
except the two insider directors, oversees the single and only
portfolio.
The inside officers and directors have no present enterprise,
employment, position or commercial investment activity excepting to
provide service to the Fund. Maurice on occasion does pro bono legal
work. This is becoming less frequent because of increasing age and
decreasing general legal knowledge.
INDEPENDENT DIRECTORS
1 2 3 4 5* 6
Name Position(s) Term of Principal Number Other
Address Held with Office and Occupations Portfolios Directorships
and Age Fund Length of During Past In Fund Held by
Time Served 5 Years Complex Director
Sharon Reier Director Since 1982 Financial Journalist No Complex None
Coconut Creek, FL to the present contributing to One Portfolio
& Paris, France Business Week
Age 56
-1-
& International Herald
Tribune. Former Regional
Editor Financial World
Magazine: Former Editor
with Board Room; Former
Contributing Editor
Institutional Investor;
formerly staff of Forbes &
American Banker.
*Dorothy Wayner Director Since 1982 President Dwayner/ No complex None
East 58th Street Audit Committee (Since 2002) Communications/ One Portfolio
New York, NY Advertising and
Age 66 Publishing, NY. MBA-New
York University: Member
and former Officer and
Board Director of
Advertising Women of New
York, a private
organization; President
Kaleidoscope Kids, Inc., a
non-profit organization
promoting creativity in
middle school kids.
John C. Breitenbach Director Since 2000 History Teacher, Town No complex None
Delaware Avenue to the present Planning Administrator, One Portfolio
Silver Bay, NY 12874 Village Volunteer Fireman,
Age 48 Clerk Warren County Family
Court, Drafted storm water
and water quality
preservation Regulations
for county and city and
Lake George Basin Admitted
to NY Bar, 1999.
Preston Pumphrey Director Since 2003 Retired CEO and former No Complex None
Syosset, NY 11747 Audit Committee (Since 2002) owner of Pumphrey One Portfolio
Age 69 Securities, a registered
securities broker/dealer.
Responsibilities included
preparation of
broker/dealer filings and
audited annual reports.
Former adjunct Professor
of Finance, C.W. Post
College. NASD Dispute
Resolution Board of
Arbitrators. A Director of
American Red Cross of
Nassau County, NY.
Murray E. Rosenblith Director Since 2003 Executive Director of the No Complex None
280 St. Johns Place A.J. Mustie Memorial One Portfolio
Brooklyn, NY 11238 Institute, an organization
Age 53 concerned with exploration
of the link between
nonviolence and social
change. Responsible for
executive management and
administration of
non-endowing operating
foundation, making grants
to projects in the peace
and social justice
-2-
movement. Responsibilities
included fund raising,
management of investments,
maintaining financial
records.
*There is only one portfolio. There is no complex. No director, except
the two insider directors, oversees Portfolios.
-3-
Form N-CSR to New Alternatives Fund Inc.
Item 1. Annual Financial Report. (with item from N1A on Directors and Officers)
Item 2. Code of Ethics:
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer/principal financial officer and persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party.
b) The code of ethics means the written standards that are reasonably
designed to deter wrongdoing and promote:
1. Honest and ethical conduct.
2. Full,fair , accurate disclosure in reports and documents the
registrant files
3. Compliance with applicable government laws, rules and regulations,
4. The prompt internal reporting of violations of the code to an
appropriate person,
5. Accountibility for adherence to the code.
c) There have been no amendments during the period covered by this report
to a provision of the code of ethics that applies to registrant's
principal executive officer/principal financial officer or persons
performing similar functions, regardless of whether these individuals
are employed by registrant or a third party, and that relates to any
element of the code of ethics description.
d) The registrant has not granted any waivers to the code of ethics.
Item 3. Audit Committee Financial Expert. The Registrants Board of Directors has
determined that it does have an 'audit committee financial expert'. It has two
independent audit committee experts; Preston Pumphrey and Dorothy Waynor.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. The aggregate fees billed for each of the last two fiscal
years for professional services rendered by the principal accountant
for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements for those fiscal
years were $18,525 in 2003, and $16,776 in 2002.
(b) Audit Related Fees. The aggregate fees billed in each of the last two
fiscal years for assurance and related services by the principal
accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item are $0 for 2003 and $0 for 2002.
(c) Tax Fees. The aggregate fees billed in each of the last two fiscal
years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning are $650 for 2003 and
$350 for 2002. These services are related to the preparation, review
and filing of the registrant's tax returns.
(d) All Other Fees. The aggregate fees billed in each of the last two
fiscal years for products and services provided by the principal
accountant, other than the services reported in paragraphs (a) through
(c) of this Item are $0 for 2003 and $0 for 2002.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of
Regulation S-X.
The Audit Committee will be responsible for evaluating the
provision of non-audit services to the Company as required by
Section 201 of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder (collectively, the "2002 Act")
and any pre-approval requests submitted by the independent
accountants as required by Section 202 of the 2002 Act.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit
committee pursuant to paragraph (c)(7)(i)(C) of Rule2-01 of
Regulation S-X are as follows:
(b) Not applicable.
(c) 100%
(d) Not applicable.
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than 50%.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $812 for 2003, and $866 for 2002.
(h) The registrant's audit committee of the board of directors has not
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. Controls and Procedures.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report, based on their evaluation of
these controls and procedures required by Rule 30a-3(b) under the 1940
Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240/15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17CFR 270.30a-3(d) that occurred during the registrants last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
Item 11. Exhibits.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 are attached hereto.
SIGNATURES
(registrant) New Alternatives Fund Inc.
By (Signature and Title) /s/ David J Schoenwald
-----------------------
David J Schoenwald, Chief Executive Officer
Principal executive officer
Date: October 4, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following person on behalf of the registrant in the capacities and on the dates
indicated.
By (signature and title) /s/ David J Schoenwald
-----------------------
David J Schoenwald, Chief Executive Officer
(principal executive officer)
Date: October 4, 2004
By (signature and title) /s/ David J Schoenwald
-----------------------
David J Schoenwald, Chief Financial Officer
(principal financial officer)
Date: October 4, 2004
