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.
-------------------------------------------------------
(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
-------------------------------------------------------
(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, 2008
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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.
[GRAPHIC OMITTED]
NEW ALTERNATIVES FUND, INC.
A SOCIALLY RESPONSIBLE MUTUAL FUND EMPHASIZING
ALTERNATIVE ENERGY AND THE ENVIRONMENT
SEMI-ANNUAL
FINANCIAL REPORT
JUNE 30, 2008
(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 (PNC) PO Box 9794 Providence, RI 02940 (800) 441-6580 (610) 382-7819
Overnight Address 101 Sabin 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 A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD.
BASED ON AVERAGE SHARES OUTSTANDING.
(Unaudited)
Six Months
Ended For the Years Ended December 31,
June 30, ------------------------------------------------------------------
2008 2007 2006 2005 2004 2003
----------- ---------- ---------- ---------- ---------- ----------
Net asset value at beginning of period $ 57.28 $ 43.91 $ 34.46 $ 33.48 $ 29.69 $ 24.21
---------- ---------- ---------- ---------- ---------- ----------
Investment income 0.46 0.73 0.63 0.55 0.59 0.58
Expenses (0.26) (0.39) (0.45) (0.37) (0.42) (0.37)
---------- ---------- ---------- ---------- ---------- ----------
Net investment income 0.20 0.34 0.18 0.18 0.17 0.21
Net realized & unrealized gain on investments (6.24) 14.39 11.47 2.81 3.79 5.48
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (6.04) 14.73 11.65 2.99 3.96 5.69
---------- ---------- ---------- ---------- ---------- ----------
Dividends from net investment income 0.00 (0.34) (0.18) (0.18) (0.17) (0.21)
Distributions from net realized gain 0.00 (1.02) (2.02) (1.83) (0.00) (0.00)
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions 0.00 (1.36) (2.20) (2.01) (0.17) (0.21)
---------- ---------- ---------- ---------- ---------- ----------
Net change in net asset value (6.04) 13.37 9.45 0.98 3.79 5.48
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of the period $ 51.24 $ 57.28 $ 43.91 $ 34.46 $ 33.48 $ 29.69
========== ========== ========== ========== ========== ==========
Total return
(Sales load not reflected) (10.55)% 33.53% 33.83% 8.94% 13.34% 23.50%
Net assets, end of period (in thousands) $ 296,177 $ 301,650 $117,035 $ 64,765 $ 52,615 $ 44,901
Ratio of operating expense to
average net assets 1.07%* 0.95% 1.25% 1.28% 1.32% 1.39%
Ratio of net investment income to
average net assets 0.84%* 0.82% 0.51% 0.65% 0.65% 0.82%
Portfolio turnover 8.26% 14.24% 39.83% 52.09% 50.05% 32.70%
Number of shares outstanding at
end of period 5,780,106 5,266,358 2,665,296 1,879,695 1,565,049 1,512,199
* 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, 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, 2008.
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, 2008" 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, PNC Global Investment Servicing (U.S.), 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, 2008 June 30, 2008 June 30, 2008*
- -------------------------------------------------------------------------------------------------
Actual $1,000.00 $947.25 $5.04
Hypothetical
(assumes 5% return before expenses) $1,000.00 $1,019.48 $5.39
* Expenses are equal to the Fund's annualized expense ratio for the six-month
period (1.07%), multiplied by the average account value over the period,
multiplied by the number of days (182) in the most recent fiscal half year, then
divided by the days in the year (366) 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 (10.55%) for the six-month period of January 1, 2008 to
June 30, 2008.
3
NEW ALTERNATIVES FUND, INC.
PORTFOLIO HOLDINGS SUMMARY
JUNE 30, 2008
(UNAUDITED)
SECTOR DIVERSIFICATION % OF NET ASSETS VALUE
--------------- -------------
Alternate Energy:
Renewable Energy Power Producers & Developers 17.7% $ 52,499,449
Solar 15.3 45,450,208
Wind Turbines 12.5 37,089,866
Wind & Hydro Power Producers 6.7 19,816,179
Geothermal 3.9 11,422,937
Wind Power Related 0.6 1,829,263
Ocean Energy/Waves 0.1 311,029
Fuel Cells 0.1 177,500
Energy Conservation 19.3 57,023,912
Water 9.5 28,055,521
Natural Gas Distribution 6.1 18,147,000
Recycling 1.6 4,882,468
Natural Foods 0.8 2,369,000
Short-Term Investments 5.3 15,490,356
Other Assets in Excess of Liabilities 0.5 1,612,710
------ ------------
100.00% $296,177,398
====== ============
TOP TEN COMMON STOCK PORTFOLIO HOLDINGS
JUNE 30, 2008 (UNAUDITED)
NAME % OF NET ASSETS
---- ---------------
Vestas Wind Systems (Denmark)........................ 5.08%
GamesaCorporacionTechologica (Spain)................. 4.98
Abengoa (Spain)...................................... 4.22
Iberdrola Renovables (Spain)......................... 4.18
Acciona (Spain)...................................... 4.01
EDF Energies Nouvelles (France)...................... 3.95
Brookfield Asset Management, Inc., Class A (Canada) . 3.85
South Jersey Industries, Inc......................... 3.78
Schneider Electric SA (France)....................... 3.65
Q-Cells (Germany).................................... 3.43
-----
Total top ten............................ 41.13%
=====
4
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2008 (UNAUDITED)
SHARES VALUE
--------- ------------
COMMON STOCKS -- 94.2%
ALTERNATE ENERGY -- 56.9%
RENEWABLE ENERGY POWER PRODUCERS & DEVELOPERS -- 17.7%
Abengoa (Spain) 400,000 $ 12,507,479
Acciona (Spain) 50,000 11,875,334
EDF Energies Nouvelles SA (France) 175,000 11,701,751
EDP Renovaveis SA (Portugal)* 225,000 2,603,757
Electrificaciones del Norte (Spain) 30,000 1,417,010
Iberdrola Renovables (Spain)* 1,600,000 12,394,118
------------
52,499,449
------------
SOLAR -- 15.3%
Applied Materials, Inc. 125,000 2,386,250
Kyocera Corp. (Japan) ADR 25,000 2,351,250
Orkla ASA (Norway) 600,000 7,704,390
Q-Cells (Germany)* 100,000 10,161,539
Renewable Energy Corp. AS (Norway)* 275,000 7,127,150
Sharp Corp. Ltd. (Japan) ADR 175,000 2,854,355
Solar Millennium (Germany)* 185,000 7,908,099
Solarworld (Germany) 75,000 3,574,409
Solon AG Fuer Solartechnic (Germany)* 15,000 1,382,766
------------
45,450,208
------------
WIND TURBINES -- 12.5%
Gamesa Corporacion Tecnologica (Spain) 300,000 14,746,355
Nordex (Germany)* 175,000 7,290,519
Vestas Wind Systems (Denmark)* 115,000 15,052,992
------------
37,089,866
------------
WIND & HYDRO POWER PRODUCERS -- 6.7%
Brookfield Asset Management, Inc., Class A (Canada) 350,000 11,389,000
Canadian Hydro Developers, Inc. (Canada)* 500,000 2,623,321
Hafslund ASA, Class A (Norway) 135,000 2,968,664
TrustPower Ltd. (New Zealand) 500,000 2,835,194
------------
19,816,179
------------
The accompanying notes are an integral part of these financial statements.
5
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
GEOTHERMAL -- 3.9%
Ormat Technologies, Inc. 200,000 $ 9,836,000
WFI Industries Ltd. (Canada) 60,000 1,586,937
------------
11,422,937
------------
WIND POWER RELATED -- 0.6%
Ameron International Corp. 5,000 599,900
Hansen Transmissions International (Belgium)* 175,000 937,655
NGK Insulators Ltd. (Japan) 15,000 291,708
------------
1,829,263
------------
OCEAN ENERGY/WAVES -- 0.1%
Ocean Power Technologies, Inc.* 15,000 135,000
Renewable Energy Holdings PLC (United Kingdom)* 175,000 176,029
------------
311,029
------------
FUEL CELLS -- 0.1%
FuelCell Energy, Inc.* 25,000 177,500
------------
TOTAL ALTERNATE ENERGY 168,596,431
------------
ENERGY CONSERVATION -- 19.3%
Baldor Electric Co. 225,000 7,870,500
Compagnie de Saint-Gobain (France) 125,000 7,821,110
Denso Corp. (Japan) 50,000 1,718,699
Eaga PLC (United Kingdom) 100,000 217,110
Itron, Inc.* 15,000 1,475,250
Johnson Controls, Inc. 300,000 8,604,000
Koninklijke Philips Electronics (Netherlands) 275,000 9,295,000
Matsushita Electric Industrial Co., Ltd. (Japan) ADR 15,000 321,300
Owens Corning, Inc.* 250,000 5,687,500
Schneider Electric SA (France) 100,000 10,802,343
Stantec, Inc. (Canada)* 50,000 1,289,500
Telvent GIT (Spain) 80,000 1,921,600
------------
57,023,912
------------
The accompanying notes are an integral part of these financial statements.
6
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
WATER -- 9.5%
American Water Works Co., Inc.* 400,000 $ 8,872,000
Badger Meter, Inc. 100,000 5,053,000
Befesa Medio Ambiente (Spain)* 30,000 1,133,609
CIA SaneamentoBasico (Brazil) ADR 175,000 8,953,000
Gorman-Rupp Co. (The) 50,000 1,992,000
Hyflux Ltd. (Singapore) 500,000 1,098,820
Pennon Group PLC (United Kingdom) 75,000 953,092
------------
28,055,521
------------
NATURAL GAS DISTRIBUTION -- 6.1%
Northwest Natural Gas Co. 150,000 6,939,000
South Jersey Industries, Inc. 300,000 11,208,000
------------
18,147,000
------------
RECYCLING -- 1.6%
Commercial Metals Co. 50,000 1,885,000
Sims Group Ltd. (Australia) 75,000 2,997,468
------------
4,882,468
------------
NATURAL FOODS -- 0.8%
Whole Foods Market, Inc. 100,000 2,369,000
------------
TOTAL COMMON STOCKS (COST $238,962,582) 279,074,332
------------
PAR
(000'S)
---------
U.S. TREASURY BILLS -- 5.1%
1.84% due 07/03/08 $4,000 3,999,591
1.86% due 07/10/08 3,000 2,998,604
1.83% due 07/17/08 3,000 2,997,564
1.56% due 07/24/08 3,000 2,997,004
1.44% due 07/31/08 2,000 1,997,593
------------
TOTAL U.S. TREASURY BILLS (COST $14,990,356) 14,990,356
------------
The accompanying notes are an integral part of these financial statements.
7
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
PAR
(000'S) VALUE
--------- ------------
CERTIFICATES OF DEPOSIT -- 0.2%
SOCIALLY CONCERNED BANKS
Alternatives Federal Credit Union
0.69% due 07/31/08 $100 $ 100,000
Carver Federal Savings Bank
2.50% due 07/01/08 100 100,000
Chittenden Bank
1.93% due 12/03/08 100 100,000
Self-Help Credit Union
2.72% due 08/10/08 100 100,000
South Shore Bank
2.00% due 07/09/08 100 100,000
------------
TOTAL CERTIFICATES OF DEPOSIT (COST $500,000) 500,000
------------
TOTAL INVESTMENTS (COST $254,452,938) -- 99.5% 294,564,688
Other Assets in Excess of Liabilities -- 0.5% 1,612,710
------------
NET ASSETS - 100.0% $296,177,398
============
- ----------
*Non-income producing security
ADR--American Depositary Receipt
FAS 157 DISCLOSURE
The following is a summary of the inputs used, as of June 30, 2008, in valuing
the Fund's assets carried at fair value:
Investments Other
in Financial
Valuation Inputs Securities Instruments
---------------- ------------ -----------
Level 1 -- Quoted Prices $294,564,688 $ --
Level 2 -- Other Significant Observable Inputs -- --
Level 3 -- Significant Unobservable Inputs -- --
------------ ------
Total $294,564,688 $ --
============ ======
The accompanying notes are an integral part of these financial statements.
8
NEW ALTERNATIVES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2008 (UNAUDITED)
ASSETS
------
Investment securities at value (cost: $238,962,582)
(Notes 2A and 6) ........................................... $279,074,332
U.S. Treasury Bills at cost .................................... 14,990,356
Certificates of Deposit at cost ................................ 500,000
Cash............................................................ 1,996,646
Receivables:
Capital stock subscribed .................................... 1,285,810
Dividends ................................................... 494,564
Interest .................................................... 3,348
Prepaid Insurance and Registration Fees ........................ 42,034
------------
Total Assets 298,387,090
------------
LIABILITIES
-----------
Payables:
Investment securities purchased ............................. 1,147,676
Capital stock reacquired .................................... 714,288
Management fees ............................................. 124,984
Accrued expenses and other liabilities ...................... 222,744
------------
Total Liabilities 2,209,692
------------
NET ASSETS $296,177,398
============
ANALYSIS OF NET ASSETS
----------------------
Net capital paid in shares of capital stock .................... $258,246,003
Undistributed net investment income ............................ 1,163,034
Undistributed net realized loss on investments ................. (3,346,995)
Net unrealized appreciation of translation of other assets
and liabilities in foreign currency ......................... 3,607
Net unrealized appreciation on investments ..................... 40,111,749
------------
NET ASSETS $296,177,398
============
Net asset value, offering and redemption price per share
($296,177,398/5,780,106 shares of outstanding capital
stock, 40 million shares authorized with a par value
of $0.01 per share) ......................................... $ 51.24
============
Maximum offering price per share (100/95.25 of $51.24).......... $ 53.80
============
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, 2008 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of $311,938 foreign taxes withheld)................................ $ 2,389,464
Interest.......................................................................... 264,022
------------
Total Income...................................................................... 2,653,486
------------
EXPENSES:
Management fee (Note 4)........................................................... 698,865
Transfer agent fees............................................................... 252,462
Administration and accounting fees................................................ 128,591
Legal fees........................................................................ 117,428
Postage and printing fees......................................................... 115,000
Custodian fees.................................................................... 93,047
Registration fees................................................................. 44,017
Compliance service fees........................................................... 15,721
Audit fees........................................................................ 10,116
Directors' fees................................................................... 8,347
Insurance fees.................................................................... 4,858
Other expenses.................................................................... 2,000
------------
Total Expenses.................................................................... 1,490,452
------------
NET INVESTMENT INCOME............................................................. 1,163,034
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS:
REALIZED GAIN (LOSS) FROM INVESTMENTS (NOTES 2B & 6):
Net realized loss from investments................................................ (2,169,308)
Net realized gain from foreign currency transactions.............................. 5,731
------------
Net Realized Loss................................................................. (2,163,577)
------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS:
Net change in unrealized depreciation on investments.............................. (32,381,689)
Net change in unrealized appreciation on foreign currency translations............ 7,171
------------
Net change in Unrealized Appreciation (Depreciation) for the period............... (32,374,518)
------------
Net Realized and Unrealized Gain (Loss) on Investments and foreign
currency related transactions ................................................. (34,538,095)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. $(33,375,061)
============
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, 2008 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2007
---------------- -----------------
INVESTMENT ACTIVITIES:
Net investment income........................................................... $ 1,163,034 $ 1,738,479
Net realized gain (loss) from investments and foreign currency translations .... (2,163,577) 4,574,820
Net change in unrealized appreciation (depreciation) on
investments and foreign currency translations................................ (32,374,518) 45,586,314
------------ ------------
Net increase (decrease) in net assets derived from operations .................. (33,375,061) 51,899,613
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income............................................ -- (1,740,608)
Distributions from net realized capital gains................................... -- (5,226,102)
------------ ------------
Total dividends and distributions to shareholders............................... -- (6,966,710)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net increase from capital transactions (Note 3)................................. 27,902,700 139,681,450
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS:........................................ (5,472,361) 184,614,353
NET ASSETS:
Beginning of the period......................................................... 301,649,759 117,035,406
------------ ------------
END OF THE PERIOD*.............................................................. $296,177,398 $301,649,759
============ ============
* Includes undistributed net investment income of $1,163,034 and accumulated
net investment loss of $(6,666) for the six months ended 6/30/08 and for the
year ended 12/31/07, 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, 2008 (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 appreciation by investing in common stocks of companies that are
oriented to a clean environment with a special interest in alternative energy.
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 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 4:00 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 (the "Board").
The Fund has adopted the provisions of Statement of Financial
Accounting - Standards No. 157 ("SFAS 157") as of the beginning of the
current fiscal period/year of each Fund. This standard clarifies the
definition of fair value for financial reporting, establishes a
framework for measuring fair value and requires additional disclosures
about the use of fair value measurements. To increase consistency and
comparability in fair value measurements
12
and related disclosures, the Fund utilizes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to make fair value
into three broad levels.
o Level 1 -- quoted prices in active markets for identical securities
o Level 2 -- prices determined using other significant observable
inputs (including quoted prices for similar securities,
interest rates, prepayment speeds, credit risk, etc.)
o Level 3 -- prices determined using significant unobservable inputs
(including the Fund's own assumptions in determining the
fair value of investments)
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.
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. Interest income, including
amortization/accretion of premium and discount, 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
13
capital gain distributions are determined in accordance with U.S.
federal income tax regulations which may differ from U.S. generally
accepted accounting principles. 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.
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 U.S. 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 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 40,000,000 shares of $0.01 par value capital stock
authorized. On June 30, 2008, there were 5,780,106 shares outstanding. Aggregate
paid-in capital including reinvestment of dividends was $258,246,003.
Transactions in capital stock were as follows:
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2008 DECEMBER 31, 2007
Shares Amount Shares Amount
------ ------ ------ ------
Capital stock sold 1,249,829 $ 64,660,843 2,999,232 $161,162,985
Reinvestment of distributions 282 15,767 89,305 5,114,997
Redemptions (736,363) (36,773,910) (487,475) (26,596,532)
--------- ------------ --------- ------------
Net Increase 513,748 $ 27,902,700 2,601,062 $139,681,450
========= ============ ========= ============
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
14
(the "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 assets over $30 million and 0.45% of assets over
$100 million. The annualized expense ratio for the six months ended June 30,
2008 was 1.07%. 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 (the "Interested Directors"). On July 1, 2006, the 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 $197,581 in sales charges for the six months ended June
30, 2008. PFPC Distributors, Inc., the Fund's principal underwriter, and Accrued
Equities, Inc., the Fund's co-distributor, received $98,765 and $197,531,
respectively, in underwriting fees for the six months ended June 30, 2008.
5) DIRECTORS FEES - For the six months ended June 30, 2008, the Fund paid
directors' fees and out of pocket expenses of $8,347 to its Directors who are
not "interested persons" of the Fund, as that term is defined in the 1940 Act
(the "Independent Directors").
Effective January 1, 2008, each Independent Director receives an annual fee of
$3,500 for their services as Independent Directors of the Fund. Each member of
the Audit Committee receives an additional $500 annual fee and Mr. Pumphrey, the
Audit Committee Chairman, receives an additional $500. As Vice-Chair, Ms. Reier
receives an additional fee of $1,000. The Independent Directors also receive
reimbursement of "coach" travel expenses for travel in excess of 500 miles to
attend Board Meetings. The Interested Directors and officers of the Fund do not
receive compensation from the Fund for their services. Interested Directors of
the Fund are paid for their services by the Advisor.
6) PURCHASES AND SALES OF SECURITIES - For the six months ended June 30, 2008,
the aggregate cost of securities purchased totaled $71,846,633. Net realized
gains (losses) were computed on a first in, first out basis. The amount realized
on sales of securities for the six months ended June 30, 2008 was $21,260,206.
7) FEDERAL INCOME TAX INFORMATION - At June 30, 2008, 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................. $254,452,938
------------
Gross tax unrealized appreciation.................... $ 53,299,659
Gross tax unrealized depreciation.................... (13,187,909)
------------
Net unrealized appreciation on investments........... $ 40,111,750
============
15
The tax character of distributions paid during 2007 and 2006 were as follows:
2007 2006
---- ----
Distribution paid from:
Ordinary Income $1,741,387 $ 460,966
Long-term Capital Gain 5,712,964* 5,162,034
---------- ----------
$7,454,351 $5,623,000
========== ==========
* Includes use of equalization debits of $487,641.
As of December 31, 2007, the components of distributable earnings on a tax basis
were as follows:
Undistributed Ordinary Income $ --
Undistributed Capital Gains --
**Net Unrealized Appreciation on
Investments and Currencies 71,306,456
-----------
$71,306,456
===========
** The primary difference between distributable earnings on a book and tax
basis is primarily related to wash sales.
FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income
Taxes, sets forth a minimum threshold for financial statement recognition of the
benefit of a tax position taken or expected to be taken in a tax return.
Management has analyzed the Fund's tax positions and has concluded that no
provision for income tax is required in the Fund's financial statements. The
Fund is not aware of any tax positions for which it is reasonably possible that
the total amounts of unrecognized tax benefits will significantly change in the
next twelve months. However, management's conclusions regarding the adoption of
FIN 48 may be subject to review and adjustment at a later date based on factors
including, but not limited to, further implementation guidance from the FASB,
new tax laws, regulations and administrative interpretations (including court
decisions). Each of the Fund's federal tax returns for the prior three fiscal
years remains subject to examination by the Internal Revenue Service.
8) NEW ACCOUNTING PRONOUNCEMENT - In March 2008, Statement of Financial
Accounting Standards No. 161, "Disclosures about Derivative Instruments and
Hedging Activities" ("FAS 161") was issued and is effective for fiscal years and
interim periods beginning after November 15, 2008. FAS 161 is intended to
improve financial reporting for derivative instruments by requiring enhanced
disclosure that enables investors to understand how and why a fund uses
derivatives, how derivatives are accounted for, and how derivative instruments
affect a fund's results of operations and financial position. Management is
currently evaluating the impact of FAS 161 on financial statement disclosures,
if any.
16
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.
3) APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT - During the period covered by
the report, the Fund's Board, including all of the Independent Directors of the
Fund, approved on behalf of the Fund continuation of the Advisory Agreement
between the Advisor and the Fund. The Board's decision to approve the Advisory
Agreement reflects the exercise of its business judgment, based on information
provided by the Advisor and the Board's assessment of the specific circumstances
of the Fund. In accordance with the Board's fiduciary responsibilities and
regulations promulgated by the Securities and Exchange Commission, a summary of
the material factors taken into consideration by the Board, together with the
Board's conclusion with respect to each factor, appears below.
The Board concluded that continuation of the Advisory Agreement would be in the
best interests of the Fund and its shareholders, as well as consistent with the
expectations of the shareholders of the Fund. During its deliberations, the
Board took into account a number of factors, including (i) the Advisor's
commitment to the Fund's socially responsible investment objectives and its
ability to manage the Fund's portfolio in a manner consistent with those
objectives; (ii) the size of the Fund and the Advisor's continued contributions
to the Fund's operating costs; (iii) the quality, extent, and value of services
provided to the Fund by the Advisor, including the performance achieved; (iv)
comparative data with respect to the advisory and management fees paid by other
funds with similar investment objectives and the size, operating expenses and
expense ratios of such funds as compared to the Fund; (v) the depth of
experience and expertise of the Advisor with regard to the alternative energy
market; and (vi) the profitability of Accrued Equities, Inc.
The Board reached the following conclusions: that the nature, extent and quality
of services provided by the Advisor in advising the Fund, including the
performance achieved, was satisfactory; that the profits earned by the Advisor
are not excessive, particularly in light of the fact that small
17
and specialized funds like the Fund typically have comparatively higher
expenses; and that break points in the fee schedule ensure that shareholders
benefit from any resulting economies of scale. Of particular significance in the
Board's decision to continue the Advisory Agreement was the fact that the
Advisor continues to provide investment advisory services exclusively to the
Fund and that the firm has been committed to alternative energy investing since
the Fund's inception. The Board considered information regarding the fees and
expenses incurred by other funds specializing in alternative energy investments
and which seek to invest in accordance with a social responsible investment
philosophy, but the Board did not specifically rely upon such information in
deciding to renew the Advisory Agreement.
4) SHAREHOLDER MEETING INFORMATION - A Special Meeting of Shareholders of the
Fund (the "Meeting") was held on April 18, 2008 at which a quorum was present.
Proposals presented for consideration at the Meeting included (i) the election
of seven directors to serve for the ensuing year ("Proposal 1"), (ii) the
amendment of the Certificate of Incorporation of the Fund to increase the number
of shares of common stock that the Fund is authorized to issue, and to reduce
the par value of the Fund's shares from $1.00 per share to $0.01 per share
("Proposal 2") and (iii) a modification the Fund's fundamental investment policy
concerning investments in other investment companies ("Proposal 3"). Proposal 1
and Proposal 2 were approved by shareholders of the Fund. Proposal 3 was not
approved by shareholders.
Information regarding shares voted for and against each proposal presented at
the Meeting is as follows:
Proposal 1: To elect seven Directors to serve for the ensuing year.
For Withhold
---- --------
Maurice L. Schoenwald 3,959,419.824 56,804.594
David J. Schoenwald 3,953,212.976 63,011.442
Sharon Reier 3,953,974.072 62,250.346
Preston Pumphrey 3,961,231.921 54,992.497
Murray Rosenblith 3,962,605.997 53,618.421
Susan Hickey 3,961,119.024 55,105.394
Jonathan Beard 3,962,782.525 53,441.893
Proposal 2: To amend the Certificate of Incorporation of the Fund to
increase the number of shares of common stock that the Fund
is authorized to issue, and to reduce the par value of the
Fund's shares from $1.00 per share to $0.01 per share.
For: 3,810,281.733
Against: 107,062.896
Abstain: 98,879.789
Proposal 3: To modify the fundamental investment policy concerning
investments in other investment companies.
For: 1,408,331.192
Against: 72,621.950
Abstain: 77,556.276
Broker Non-vote: 2,457,715.000
18
An Adjourned Special Meeting of Shareholders of the Fund was held on April 29,
2008. At the Meeting it was noted that the high percentage of broker non-votes
prevented the Fund from obtaining the required shareholder approval of Proposal
3 without further solicitation of underlying shareholders in these broker
accounts. It was determined that further solicitation regarding Proposal 3 would
not be undertaken.
19
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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. INVESTMENTS.
(a) 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.
(b) Not applicable.
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 8/28/2008
----------------------------------------------------------------------------
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 8/28/2008
----------------------------------------------------------------------------
By (Signature and Title)* /s/ David J. Schoenwald
-------------------------------------------------------
David J. Schoenwald, Chief Financial Officer
(principal financial officer)
Date 8/28/2008
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.