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
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New Alternatives Fund, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
150 Broadhollow Road, Suite 306
Melville, New York 11747
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(Address of principal executive offices) (Zip code)
David J. Schoenwald, President
New Alternatives Fund, Inc.
150 Broadhollow Road, Suite 306
Melville, New York 11747
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(Name and address of agent for service)
Registrant's telephone number, including area code: 631-423-7373
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2007
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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, 100 F Street, NE,
Washington, DC 20549. 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 Report to Shareholders is attached herewith.
NEW ALTERNATIVES FUND, INC.
[LOGO] A SOCIALLY RESPONSIBLE MUTUAL FUND EMPHASIZING
ALTERNATIVE ENERGY AND THE ENVIRONMENT
SEMI-ANNUAL
FINANCIAL REPORT
JUNE 30, 2007
(UNAUDITED)
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution unless preceded or accompanied by a
prospectus for the Fund.
THE FUND 150 Broadhollow Road Melville, New York 11747 (800) 423-8383 (631) 423-7373
Shareholder's Services (PFPC) PO Box 9794 Providence, RI 02940
Overnight Address 101 Sabine Street Pawtucket, RI 02860
PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406
Recycled Paper
NEW ALTERNATIVES FUND, INC.
FINANCIAL HIGHLIGHTS
STATEMENT OF PER SHARE INCOME AND CAPITAL CHANGES
FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
(Unaudited)
Six Months
Ended For the Years Ended December 31,
June 30, --------------------------------------------------------------------
2007 2006 2005 2004 2003 2002
----------- ----------- ----------- ----------- ----------- ------------
Net Asset Value at Beginning of Period $ 43.91 $ 34.46 $ 33.48 $ 29.69 $ 24.21 $ 34.71
----------- ----------- ----------- ----------- ----------- ------------
Investment income 0.56 0.63 0.55 0.59 0.58 0.62
Expenses (0.19) (0.45) (0.37) (0.42) (0.37) (0.37)
----------- ----------- ----------- ----------- ----------- ------------
Net investment income 0.37 0.18 0.18 0.17 0.21 0.25
Net realized & unrealized gain (loss)
on investments 10.74 11.47 2.81 3.79 5.48 (10.50)
----------- ----------- ----------- ----------- ----------- ------------
Total from investment operations 11.11 11.65 2.99 3.96 5.69 (10.25)
Distributions from net investment income -- (0.18) (0.18) (0.17) (0.21) (0.25)
Distributions from net realized gain -- (2.02) (1.83) (0.00) (0.00) (0.00)
----------- ----------- ----------- ----------- ----------- ------------
Total distributions -- (2.20) (2.01) (0.17) (0.21) (0.25)
Net change in net asset value 11.11 9.45 0.98 3.79 5.48 (10.50)
----------- ----------- ----------- ----------- ----------- ------------
Net asset value as of end of the period $ 55.02 $ 43.91 $ 34.46 $ 33.48 $ 29.69 $ 24.21
=========== =========== =========== =========== =========== ============
Total return
(Sales load not reflected) 25.30% 33.83% 8.94% 13.34% 23.50% (29.50)%
Net assets, end of period (in thousands) $ 213,816 $ 117,035 $ 64,765 $ 52,615 $ 44,901 $ 36,723
Ratio of operating expense to average
net assets 0.94%** 1.25% 1.28% 1.32% 1.39% 1.32%
Ratio of net investment income to
average net assets 1.77%** 0.51% 0.65% 0.65% 0.82% 0.89%
Portfolio turnover 14.24% 39.83% 52.09% 50.05% 32.70% 32.60%
Number of shares outstanding at end of
period 3,886,136 2,665,296* 1,879,695* 1,565,049* 1,512,199* 1,516,709*
* Shares immediately prior to dividend.
** Annualized
The accompanying notes are an integral part of these financial statements.
2
NEW ALTERNATIVES FUND, INC.
FUND EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs and (2) ongoing costs, including management fees, distribution fees, and
other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire six months ended June 30, 2007.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expense that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Six Months
Ended June 30, 2007" to estimate the expenses you paid on your account during
this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of other funds.
Note: The Fund's Transfer Agent, PFPC Inc. charges an annual IRA maintenance fee
of $15 for IRA accounts. That fee is not reflected in the accompanying tables.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if transactional costs were included, your costs would have been
higher.
NEW ALTERNATIVES FUND, INC.
- --------------------------------------------------------------------------------------------
Beginning Ending Expenses Paid During
Account Value Account Value Six Months Ended
January 1, 2007 June 30, 2007 June 30, 2007*
- --------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,126.50 $ 5.25
Hypothetical
(assumes 5% return before expenses) $ 1,000.00 $ 1,020.08 $ 4.72
* Expenses are equal to the Fund's annualized expense ratio for the six-month
period (0.94%), multiplied by the average account value over the period,
multiplied by the number of days (181) in the most recent fiscal half year, then
divided by the days in the year (365) to reflect the half year period. The
Fund's ending account value on the first line in the table is based on its
actual total return of 25.30% for the six-month period of January 1, 2007 to
June 30, 2007.
3
NEW ALTERNATIVES FUND, INC.
PORTFOLIO HOLDINGS SUMMARY
JUNE 30, 2007
(UNAUDITED)
SECTOR DIVERSIFICATION % OF PORTFOLIO MARKET VALUE
- ---------------------- -------------- --------------
Alternate Energy (Solar) 21.02% $ 44,934,172
Alternate Energy (Renewable Energy Power Products & Developers) 10.85 23,207,418
Alternate Energy (Wind Turbines) 7.97 17,046,647
Alternate Energy (Wind & Hydro Power Producers) 6.55 14,003,328
Alternate Energy (Geothermal) 3.69 7,893,301
Alternate Energy (Biofuels) 0.77 1,636,552
Alternate Energy (Fuel Cells) 0.46 990,000
Alternative Energy (Ocean Energy/Waves) 0.07 151,428
Energy Conservation 16.56 35,400,630
Water 5.79 12,380,367
Natural Gas Distribution 3.07 6,569,850
Natural Foods 2.42 5,168,050
Recycling 0.92 1,968,379
Short-Term Investments 18.87 40,359,203
Other Assets in Excess of Liabilities 0.99 2,106,257
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TOTAL 100.00% $ 213,815,582
====== ==============
TOP TEN COMMON STOCK PORTFOLIO HOLDINGS
JUNE 30, 2007 (UNAUDITED)
NAME % OF NET ASSETS
---- ---------------
Renewable Energy Corp. ........................... 4.55%
Acciona .......................................... 4.15
Abengoa .......................................... 4.14
Vestas Wind Systems .............................. 3.86
GamesaCorporacionTecnologica ..................... 3.84
Schneider Electric ............................... 3.62
Orkla ASA ........................................ 3.55
Conergy .......................................... 3.48
Q-Cells .......................................... 3.45
Ormat Technologies, Inc. ......................... 3.35
------
Total of Top Ten ................................. 37.99%
======
4
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2007 (UNAUDITED)
SHARES MARKET VALUE
-------- -------------
COMMON STOCKS - 80.14%
ALTERNATE ENERGY - 51.38%
SOLAR - 21.02%
Conergy (Germany) 95,000 $ 7,441,521
Kyocera Corp (ADR) (Japan) 25,000 2,635,250
Orkla ASA (Norway) 400,000 7,585,057
Q-Cells (Germany)* 85,000 7,368,794
Renewable Energy Corp. (Norway)* 250,000 9,735,285
Sharp Corp. Ltd. (ADR) (Japan) 150,000 2,842,215
Solar Millennium AG (Germany) 25,000 1,321,512
Solarworld (Germany) 130,000 6,004,538
-------------
44,934,172
-------------
RENEWABLE ENERGY POWER PRODUCERS & DEVELOPERS - 10.85%
Abengoa (Spain) 215,000 8,847,510
Acciona (Spain) 32,500 8,879,518
EDF Energies Nouvelles (France)* 75,000 4,917,684
Electrificaciones del Northe (Spain) 13,000 562,706
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23,207,418
-------------
WIND TURBINES - 7.97%
GamesaCorporacionTechologica (Spain) 225,000 8,204,581
Nordex (Germany) 15,000 584,652
Vestas Wind Systems (Denmark)* 125,000 8,257,414
-------------
17,046,647
-------------
WIND & HYDRO POWER PRODUCERS - 6.55%
Brookfield Asset Management, Inc., Class A (Canada) 165,000 6,583,500
Canadian Hydro Developers, Inc. (Canada)* 500,000 2,909,518
Hafslund ASA, Class A (Norway) 50,000 1,265,587
TrustPower Ltd. (New Zealand) 500,000 3,244,723
-------------
14,003,328
-------------
GEOTHERMAL - 3.69%
Ormat Technologies, Inc. 190,000 7,159,200
WFI Industries Ltd. (Canada) 30,000 734,101
-------------
7,893,301
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The accompanying notes are an integral part of these financial statements.
5
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2007 (UNAUDITED)
SHARES MARKET VALUE
-------- -------------
COMMON STOCKS (CONTINUED)
ALTERNATE ENERGY (CONTINUED)
BIOFUELS - 0.77%
Cosan SA IndustriaComercio (Brazil)* 100,000 $ 1,636,552
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FUEL CELLS - 0.46%
FuelCell Energy, Inc.* 125,000 990,000
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OCEAN ENERGY/WAVES - 0.07%
Ocean Power Technologies, Inc. (United Kingdom)* 5,000 79,200
Renewable Energy Holdings PLC (United Kingdom)* 75,000 72,228
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151,428
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Total Alternative Energy 109,862,846
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ENERGY CONSERVATION - 16.56%
Baldor Electric Co. 100,000 4,928,000
Compagnie de Saint-Gobain (France) 60,000 6,755,712
Johnson Controls, Inc. 60,000 6,946,200
Koninklijke Philips Electronics 25,000 1,058,000
Owens Corning, Inc.* 130,000 4,371,900
Schneider Electric (France) 55,000 7,734,818
Stantec, Inc. (Canada)* 50,000 1,636,500
Telvent GIT (Spain) 75,000 1,969,500
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35,400,630
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WATER - 5.79%
Badger Meter, Inc. 85,000 2,402,100
Befesa Medio Ambiente (Spain)* 7,500 289,693
CIA SaneamentoBasico (Brazil) 125,000 5,510,000
Gorman-Rupp Co. (The) 20,000 637,200
Hyflux Ltd. (Singapore) 200,000 383,144
Kelda Group PLC, Class A (United Kingdom) 76,923 1,454,597
Kelda Group PLC, Class B (United Kingdom) 100,000 421,331
Lindsay Corp. 15,000 664,350
Pennon Group PLC (United Kingdom) 50,000 617,952
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12,380,367
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The accompanying notes are an integral part of these financial statements.
6
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2007 (UNAUDITED)
SHARES MARKET VALUE
-------- -------------
COMMON STOCKS (CONTINUED)
NATURAL GAS DISTRIBUTION - 3.07%
Northwest Natural Gas Co. 35,000 $ 1,616,650
South Jersey Industries, Inc. 140,000 4,953,200
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6,569,850
-------------
NATURAL FOODS - 2.42%
SunOpta Inc.* 175,000 1,951,250
United Natural Foods, Inc.* 85,000 2,259,300
Whole Foods Market, Inc. 25,000 957,500
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5,168,050
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RECYCLING - 0.92%
Commercial Metals Co. 25,000 844,250
Sims Group Ltd. (Australia) 50,000 1,124,129
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1,968,379
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Total Common Stocks (Cost $115,253,312) 171,350,122
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PAR
(000'S)
--------
SHORT-TERM INVESTMENTS - 18.87%
U.S. TREASURY BILLS - 18.64%
4.65% due 07/05/07 $ 4,000 3,997,973
4.84% due 07/12/07 5,000 4,992,751
4.71% due 07/19/07 7,500 7,482,675
4.69% due 07/26/07 5,000 4,984,035
4.74% due 08/02/07 4,000 3,983,516
4.66% due 08/09/07 5,700 5,671,842
4.34% due 08/16/07 4,000 3,977,808
4.44% due 08/23/07 4,800 4,768,603
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Total U.S. Treasury Bills (Cost $39,859,203) 39,859,203
-------------
The accompanying notes are an integral part of these financial statements.
7
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS (CONCLUDED)
JUNE 30, 2007 (UNAUDITED)
PAR
(000'S) MARKET VALUE
------- -------------
SHORT-TERM INVESTMENTS (CONTINUED)
CERTIFICATES OF DEPOSIT - 0.23%
Alternatives Federal Credit Union
1.02% due 07/31/07 $ 100 $ 100,000
Carver Bank
2.32% due 08/01/07 100 100,000
Chittenden Bank
2.27% due 12/03/07 100 100,000
Self Help Credit Union
4.98% due 07/31/07 100 100,000
Shorebank
4.50% due 07/03/07 100 100,000
-------------
Total Certificates of Deposit (Cost $500,000) 500,000
-------------
Total Short-Term Investments (Cost $40,359,203) 40,359,203
-------------
TOTAL INVESTMENTS - 99.01%
(TOTAL COST $155,612,514) 211,709,324
Other Assets in Excess of Liabilities - 0.99% 2,106,257
-------------
NET ASSETS - 100% $ 213,815,582
=============
* Non-income producing security.
ADR - American Depositary Receipt
The accompanying notes are an integral part of these financial statements.
8
NEW ALTERNATIVES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2007 (UNAUDITED)
ASSETS
------
Investment securities at fair value (cost: $115,253,312) (Notes 2A and 5) ........................ $ 171,350,122
U.S. Treasury Bills at cost ...................................................................... 39,859,202
Cash, Savings and Certificates of Deposit at cost ................................................ 500,000
Cash ............................................................................................. 1,134,645
Receivables:
Investment securities sold .................................................................... 219,711
Capital stock subscribed ...................................................................... 1,144,275
Dividends ..................................................................................... 379,474
Interest ...................................................................................... 950
Prepaid Expenses ................................................................................. 40,513
-------------
Total Assets 214,628,892
-------------
LIABILITIES
-----------
Payables:
Investment securities purchased ............................................................... 505,661
Capital stock reacquired ...................................................................... 139,720
Management fees ............................................................................... 88,347
Accrued expenses and other liabilities ........................................................ 79,582
-------------
Total Liabilities 813,310
-------------
NET ASSETS $ 213,815,582
=============
ANALYSIS OF NET ASSETS
----------------------
Net capital paid in shares of capital stock ...................................................... $ 150,839,000
Undistributed net investment income .............................................................. 1,423,026
Undistributed net realized gain on investments ................................................... 5,456,599
Net unrealized depreciation of translation of other assets and liabilities in
foreign currency ................................................................................. 147
Net unrealized appreciation on investments ....................................................... 56,096,810
-------------
NET ASSETS $ 213,815,582
=============
Net asset value, offering and redemption price per share ($213,815,582/3,886,136 shares of
outstanding capital stock, 8 million shares authorized) .......................................... $ 55.02
=============
Maximum offering price per share (100/95.25 of $55.02) ........................................... $ 57.76
=============
The accompanying notes are an integral part of these financial statements.
9
NEW ALTERNATIVES FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of $115,490 foreign taxes withheld) ............................................... $ 1,421,533
Interest ......................................................................................... 765,725
-------------
Total Income ..................................................................................... 2,187,258
-------------
EXPENSES:
Management fee (Note 4) .......................................................................... 437,495
Administration and accounting fees ............................................................... 104,593
Transfer agent fees .............................................................................. 93,844
Legal fees ....................................................................................... 39,325
Custodian fees ................................................................................... 31,368
Printing and shareholder report fees ............................................................. 23,028
Audit fees ....................................................................................... 13,158
Director fees .................................................................................... 6,126
Registration fees ................................................................................ 5,095
Insurance fees ................................................................................... 4,830
Other expenses ................................................................................... 833
-------------
Total Expenses ................................................................................... 759,695
-------------
NET INVESTMENT INCOME ............................................................................ 1,427,563
-------------
NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS:
REALIZED GAIN FROM INVESTMENTS (NOTES 2B & 6):
Net realized gain from investments ............................................................... 5,485,085
Net realized gain from foreign currency transactions ............................................. 9,343
-------------
Net Realized Gain ................................................................................ 5,494,428
-------------
NET CHANGE IN UNREALIZED APPRECIATION OF INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS:
Net change in unrealized appreciation on investments ............................................. 29,192,913
Net change in unrealized appreciation on foreign currency translations ........................... 484
-------------
Net change in Unrealized Appreciation for the period ............................................. 29,193,397
-------------
Net Realized and Unrealized Gain (Loss) on Investments and foreign currency related
transactions ..................................................................................... 34,687,825
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................................. $ 36,115,388
=============
The accompanying notes are an integral part of these financial statements.
10
NEW ALTERNATIVES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2007 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2006
---------------- -----------------
INVESTMENT ACTIVITIES:
Net investment income ....................................................... $ 1,427,563 $ 470,945
Net realized gain from investments and foreign currency translations ........ 5,494,428 5,110,105
Net change in unrealized appreciation (depreciation) on investments
and foreign currency translations ........................................... 29,193,397 19,395,248
------------- -------------
Net Increase in net assets derived from Operations .......................... 36,115,388 24,976,298
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ........................................ -- (460,966)
Distributions from net realized capital gains ............................... -- (5,162,034)
------------- -------------
Total Dividends and Distributions to Shareholders ........................... -- (5,623,000)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net increase from capital transactions (Note 3) ............................. 60,664,788 32,916,840
------------- -------------
TOTAL INCREASE IN NET ASSETS: ............................................... 96,780,176 52,270,138
NET ASSETS:
Beginning of the period ..................................................... 117,035,406 64,765,268
------------- -------------
END OF THE PERIOD* .......................................................... $ 213,815,582 $ 117,035,406
============= =============
* Includes undistributed net investment income of $1,423,026 and accumulated net
investment loss of $(4,537) for the six months ended 6/30/07 and for the year
ended 12/31/06, respectively.
The accompanying notes are an integral part of these financial statements.
11
NEW ALTERNATIVES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED)
1) ORGANIZATION - New Alternatives Fund, Inc. (the "Fund") was incorporated
under the laws of the State of New York on January 17, 1978 and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end management investment company. The Fund commenced operations on
September 3, 1982. The investment objective of the Fund is to seek long-term
capital gains by investing in common stocks of companies that are oriented to a
clean environment. The Fund concentrates at least 25% of its total assets in
common stocks of companies which have an interest in alternative energy. There
is no limitation on the percentage of assets invested in the U.S. or abroad.
2) ACCOUNTING POLICIES - The preparation of financial statements in accordance
with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund.
A. PORTFOLIO VALUATION - The Fund's net asset value ("NAV") is calculated
once daily at the close of regular trading hours on the New York Stock
Exchange ("NYSE") (generally 4:00 p.m. Eastern time) on each day the NYSE
is open. Securities held by the Fund are valued using the closing price or
the last sale price on a national securities exchange or on the National
Association of Securities Dealers Automatic Quotation System ("NASDAQ")
market system where they are primarily traded. If there were no sales on
that day or the securities are traded on other over-the-counter markets,
the mean of the last bid and asked prices prior to the market close is
used. Short-term debt securities having a remaining maturity of 60 days or
less are amortized based on their cost.
Non-U.S. equity securities are valued based on their most recent closing
market prices on their primary market and are translated from the local
currency into U.S. dollars using current exchange rates.
If the market price of a security held by the Fund is unavailable at the
time the Fund prices its shares at 4 p.m. Eastern time, the Fund will use
the "fair value" of such security as determined in good faith by the
Advisor pursuant to procedures adopted by the Fund's Board of Directors.
12
B. FOREIGN CURRENCY TRANSLATION - 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. If foreign currency translations are not available, the
foreign exchange rate(s) will be valued at fair market value using
procedures approved by the Fund's Board of Directors.
The Fund 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). The cost of investments sold is determined by use of a
first in, first out basis for both financial reporting and income tax
purposes in determining realized gains and losses on investments.
D. INVESTMENT INCOME AND EXPENSE RECOGNITION - Dividend income is recorded
as of the ex-dividend date. Certificates of Deposit interest income is
accrued daily. Expenses are accrued on a daily basis.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net
investment income and distributions from net realized capital gains, if
any, will be declared and paid at least annually to shareholders and
recorded on ex-date. Income dividends and capital gain distributions are
determined in accordance with U.S. federal income tax regulations which
may differ from accounting principles generally accepted in the United
States. These differences include the treatment of non-taxable dividends,
expiring capital loss carry- forwards, foreign currency gain/loss, and
losses deferred due to wash sales and excise tax regulations. Permanent
book and tax basis differences relating to shareholder distributions will
result in reclassifications within the components of net assets.
13
F. U.S. TAX STATUS - No provision is made for U.S. income taxes as it is
the Fund's intention to qualify for and elect the tax treatment applicable
to regulated investment companies under Subchapter M of the Internal
Revenue Code of 1986, as amended, and make the requisite distributions to
its shareholders which will be sufficient to relieve it from U.S. income
and excise taxes.
G. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.
H. OTHER - In the normal course of business, the Fund may enter into
contracts that provide general indemnifications. The Fund's maximum
exposure under these arrangements is dependent on claims that may be made
against the Fund in the future, and therefore, cannot be estimated;
however, based on experience, the risk of material loss for such claims is
considered remote.
3) CAPITAL STOCK - There are 8,000,000 shares of $1.00 par value capital stock
authorized. On June 30, 2007, there were 3,886,136 shares outstanding. Aggregate
paid in capital including reinvestment of dividends was $150,839,000.
Transactions in capital stock were as follows:
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2007 DECEMBER 31, 2006
Shares Amount Shares Amount
---------- ------------ -------- ------------
Capital stock sold 1,414,427 $ 70,327,382 813,624 $ 33,729,984
Reinvestment of dividends 29 1,285 106,359 4,669,953
Redemptions (193,616) (9,663,879) (134,382) (5,483,097)
---------- ------------ -------- ------------
Net Increase 1,220,840 $ 60,664,788 785,601 $ 32,916,840
========== ============ ======== ============
4) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES - Accrued Equities,
Inc. (the "Advisor"), a registered investment adviser and broker-dealer, serves
as investment adviser to the Fund pursuant to an Investment Management and
Advisory Agreement, as amended. The Fund pays the Advisor 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. The annualized expense ratio for the six months ended June 30, 2007 was
0.94%. The Fund pays no remuneration to its officers, David Schoenwald and
Maurice Schoenwald, who are also Directors of the Fund and officers of the
Advisor. On July 1, 2006 the
14
Fund entered into an Underwriting Agreement with PFPC Distributors, Inc. to
serve as the principal underwriter and PFPC Distributors, Inc. entered into a
Sub-Distribution Agreement with Accrued Equities, Inc. The Fund charges a
maximum front-end sales charge 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. Accrued Equities, Inc. received $171,967 in sales charges
for the six months ended June 30, 2007. PFPC Distributors, Inc., the Fund's
principal underwriter, and Accrued Equities, Inc., the Fund's co-distributor,
received $92,355 and $184,709, respectively, in underwriting fees for the six
months ended June 30, 2007.
5) DIRECTORS FEES - For the six months ended June 30, 2007, the Fund paid
Directors fees of $6,126 to its Independent Directors. The Interested Directors
do not receive directors' fees from the Fund. Effective September 29, 2006, the
Board of Directors approved an increase in compensation for each Independent
Director with the annual retainer being increased to $2,500 plus an additional
$500 for each member of the Audit Committee. The Independent Directors may also
receive reimbursement for travel expenses to attend 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.
6) PURCHASES AND SALES OF SECURITIES - For the six months ended June 30, 2007,
the aggregate cost of securities purchased totaled $58,352,707. Net realized
gains (loss) were computed on a first in, first out basis. The amount realized
on sales of securities for the six months ended June 30, 2007 was $18,498,041.
7) FEDERAL INCOME TAX INFORMATION - At June 30, 2007, federal tax cost and
aggregate gross unrealized appreciation and depreciation of securities held by
the Fund were as follows:
Cost of investments for tax purposes ............. $ 155,612,514
Gross tax unrealized appreciation ................ 56,571,852
Gross tax unrealized depreciation ................ (475,042)
-------------
Net tax unrealized appreciation on investments ... $ 56,096,810
=============
The tax character of distributions paid during 2006 and 2005 were as follows:
Distribution paid from: 2006 2005
----------- -----------
Ordinary Income $ 460,966 $ 321,696
Long-term Capital Gain 5,162,034 3,272,042
----------- -----------
$ 5,623,000 $ 3,593,738
=========== ===========
15
As of December 31, 2006, the components of distributable earnings on a tax basis
were as follows:
Undistributed Ordinary Income $ --
Undistributed Capital Gains --
Other Temporary Difference (5,555)
Net Unrealized Appreciation on
Investments and Currencies 26,866,749
------------
$ 26,861,194
============
8) NEW ACCOUNTING PRONOUNCEMENT - In July 2006, the Financial Accounting
Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"),
"Accounting for Uncertainty in Income Taxes, an interpretation of FAS Statement
No. 109." FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken in the course of preparing the
Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
benefits of positions not deemed to meet the more-likely-than-not threshold
would be booked as a tax expense in the current year and recognized as: a
liability for unrecognized tax benefits; a reduction of an income tax refund
receivable; a reduction of deferred tax assets; an increase in deferred tax
liability; or a combination thereof. Adoption of FIN 48 is required for the last
net asset value calculation in the first required financial statement reporting
period for fiscal years beginning after December 15, 2006. At this time,
management has evaluated the impact of FIN 48 and has determined it will have no
impact on the financial statements.
In September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") 157, Fair Value Measurements, which
clarifies the definition of fair value and requires companies to expand their
disclosure about the use of fair value to measure assets and liabilities in
interim and annual periods subsequent to initial recognition. Adoption of SFAS
157 requires the use of the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date. SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. At this time, the Fund is in the
process of reviewing the impact, if any, of the SFAS on the Fund's financial
statements.
9. CHANGE OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - On January 22,
2007, Briggs, Bunting & Dougherty, LLP succeeded Joseph A. Don Angelo, CPA as
the Fund's independent auditor. The Fund's selection of Briggs, Bunting &
Dougherty, LLP as its independent auditor was recommended by the Fund's Audit
Committee and was approved by the Fund's Board of Directors.
16
The reports on the Financial Statements audited by Joseph A. Don Angelo for each
of the fiscal years ended December 31, 2006 and December 31, 2005 contained no
adverse opinion or disclaimer of opinion nor were they qualified or modified as
to uncertainty, audit scope or accounting principles. During the Fund's fiscal
years ended December 31, 2006 and December 31, 2005 and the interim period
January 1, 2007 through January 22, 2007 ("Interim Period"), (i) there were no
disagreements with Joseph A. Don Angelo on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Joseph A. Don
Angelo, would have caused it to make reference to the subject matter of the
disagreements in connection with its reports on the Fund's financial statements
for such years, and (ii) there were no "reportable events" of the kind described
in Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of
1934, as amended.
17
OTHER INFORMATION
(UNAUDITED)
1) PROXY VOTING - The Fund has proxy voting policies which are available,
without charge, upon request by calling the Fund at 800-423-8383. Information
regarding how the Fund voted proxies during the most recent twelve month period
ended June 30 is available (1) without charge, upon request, by calling the Fund
at 800-423-8383 and (ii) on the SEC's website at http://www.sec.gov.
2) QUARTERLY PORTFOLIO SCHEDULES - The Fund files a complete schedule of
portfolio holdings with the SEC for the first and third quarters of each fiscal
year (quarters ended March 31 and September 30) on Form N-Q. The Fund's Form
N-Q's are available on the SEC website at http://www.sec.gov and may be reviewed
and copied at the SEC Public Reference Room in Washington, D.C. Information on
the operation of the SEC Public Reference Room may be obtained by calling
1-800-SEC-0330.
18
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ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. 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 the report that includes the disclosure
required by this paragraph, 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
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act
and Section 906 of the Sarbanes-Oxley Act of 2002 are attached
hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) New Alternatives Fund, Inc.
-------------------------------------------------------------------
By (Signature and Title)* /s/ David J. Schoenwald
-------------------------------------------------------
David J. Schoenwald, Chief Executive Officer
(principal executive officer)
Date August 13, 2007
----------------------------------------------------------------------------
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 persons on behalf of the registrant and 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 August 13, 2007
----------------------------------------------------------------------------
By (Signature and Title)* /s/ David J. Schoenwald
-------------------------------------------------------
David J. Schoenwald, Chief Financial Officer
(principal financial officer)
Date August 13, 2007
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.