SEMIANNUAL
FINANCIAL REPORT
JUNE 30, 2004
NEW ALTERNATIVES FUND, INC.
FINANCIAL HIGHLIGHTS
STATEMENT OF PER SHARE INCOME AND CAPITAL CHANGES
For each share of capital stock outstanding*
(Unaudited)
Six Months Year Year Year Year Year Year
Ended End End End End End End
6/30 12/31 12/31 12/31 12/31 12/31 12/31
2004 2003 2002 2001 2000 1999 1998
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE AT BEGINNING
OF PERIOD $29.69 $24.21 $34.71 $41.29 $28.85 $28.54 $32.07
------ ------ ------ ------ ------ ------ ------
Investment income $0.33 $0.58 $0.62 $0.75 $0.79 $0.66 $0.52
Expenses (0.20) (0.37) (0.37) (0.43) (0.42) (0.38) (0.37)
------ ------ ------ ------ ------ ------ ------
Net investment income 0.13 0.21 0.25 0.32 0.37 0.28 0.15
Net realized & unrealized
gain (loss) on investment 1.05 5.48 (10.50) (5.45) 14.56 2.14 (3.22)
------ ------ ------ ------ ------ ------ ------
Total from investment operations 1.18 5.69 (10.25) (5.13) 14.93 2.42 (3.07)
Distributions from net
investment income (0.00) (0.21) (0.25) (0.32) (0.37) (0.28) (0.15)
Distributions from net
realized gain (0.00) (0.00) (0.00) (1.13) (2.12) (1.83) (0.16)
------ ------ ------ ------ ------ ------ ------
Total distributions (0.00) (0.21) (0.25) (1.45) (2.49) (2.11) (0.31)
Net change in net asset value 1.18 5.48 (10.50) (6.58) 12.44 0.31 (3.53)
------ ------ ------ ------ ------ ------ ------
Net asset value as of end
of the period $30.87 $29.69 $24.21 $34.71 $41.29 $28.85 $28.54
====== ====== ====== ====== ====== ====== ======
Total return
(Sales load not reflected) 3.97% 23.5% -29.5% -12.4% 51.7% 8.5% -10.0%
Net assets, end of period
(in thousands) $47,605 $44,901 $36,723 $49,245 $52,773 $32,555 $33,021
------- ------- ------- ------- ------- ------- -------
Ratio of operating expense
to net assets** 1.34% 1.39% 1.32% 1.14% 1.11% 1.13% 1.18%
Ratio of net investment income
to average net assets** 0.78% 0.82% 0.89% 0.87% 1.01% 0.89% 0.49%
Portfolio turnover** 51.18% 32.7% 32.6% 29.3% 59.7% 87.3% 32.4%
Number of shares
outstanding at end of period*** 1,542,146 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.
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2004
COMMON STOCKS: 85.94%
- ----------------------
SHARES MARKET VALUE
------ ------------
ALTERNATE ENERGY AS A GROUP: 25.32%
- ----------------------------
ALTERNATE ENERGY (HYDRO, WIND & WAVES): 2.22%
- ---------------------------------------
***Canadian Hydro Development (Canada) 50,000 98,825
Idacorp Inc. 15,000 405,000
**Pacific Hydro (Australia) 250,000 473,689
**Trust Power Ltd. (New Zealand) 20,000 59,695
***Ocean Power (United Kingdom) 15,000 21,354
-------------
1,058,563
-------------
ALTERNATE ENERGY (FUEL CELL): 6.16%
- -----------------------------
*Distributed Energy Systems 10,000 27,200
*FuelCell Energy, Inc. 200,000 2,336,000
*Hydrogenics Corp. (Canada) 75,000 366,000
*Medis Technologies Ltd. 1,000 16,220
*Plug Power Inc. 25,000 187,000
-------------
2,932,420
-------------
ALTERNATE ENERGY (SOLAR CELL): 5.18%
- ------------------------------
***ATS Automation (Canada) 35,000 315,868
*Cypress Semdconductor 5,000 70,950
Kyocera Corp. (ADR) (Japan) 15,000 1,287,000
Sanyo Electric (Japan) 15,000 311,250
Sharp Corp. Ltd. (Japan) 30,000 479,220
-------------
2,464,288
-------------
ALTERNATE ENERGY (WIND): 8.79%
- ------------------------
**Acciona (Spain) 20,000 1,243,415
**Gamesa Corporation Techologica (Spain) 100,000 1,473,361
**Vestas Wind Systems (Denmark) 100,000 1,469,084
-------------
4,185,860
-------------
ALTERNATE ENERGY RELATED: 0.90%
- -------------------------
Matsushita Electric (ADR) (Japan) 30,000 430,800
-------------
ALTERNATE ENERGY (BIOMASS): 2.07%
- ---------------------------
**Abengoa (Spain) 75,000 657,903
*Genencor International 20,000 327,400
-------------
985,303
-------------
INDUSTRIAL CATALYSTS (FUEL CELLS & CLEAN AIR): 3.79%
- -----------------------------------------------
Engelhard Corp. 30,000 969,300
**Johnson Matthey (United Kingdom) 50,000 835,570
-------------
1,804,870
-------------
The accompanying notes are an integral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2004
SHARES MARKET VALUE
------ ------------
WATER: 8.32%
- ------
Aqua America 70,000 1,403,500
Badger Meter 35,000 1,548,750
*Ionics, Inc. 15,000 423,750
*Tetra Tech 15,000 244,800
***Zenon Environmental Inc. (Canada) 20,000 343,091
-------------
3,963,891
-------------
ENERGY CONSERVATION: 9.08%
- --------------------
Baldor Electric 50,000 1,167,500
*Cree, Inc. 20,000 465,600
*Intermagnetics General Corp. 25,000 850,750
*International Rectifier 15,000 621,300
Linear Technology Corp. 20,000 789,400
Philips Electronics NV (Netherlands) 15,000 408,000
ST Micro Elecronics NV (Switzerland) 1,000 22,010
-------------
4,324,560
-------------
NATURAL FOODS: 3.91%
- --------------
*SunOpta, Inc. (Canada) 100,000 854,000
*United Natural Foods 30,000 867,300
*Wild Oats Markets, Inc. 10,000 140,700
-------------
1,862,000
-------------
RECYCLING: 0.76%
- ---------
*Caraustar Industries 1,000 14,110
*Kadant, Inc. 15,000 346,950
-------------
361,060
-------------
NATURAL GAS DISTRIBUTION & PRODUCTION: 31.41%
- --------------------------------------
Atmos Energy Corp. 40,000 1,024,000
Chesapeake Energy 20,000 294,400
Equitable Resources 20,000 1,034,200
KeySpan Corp. 70,000 2,569,000
Laclede Group 30,000 822,300
New Jersey Resources 55,000 2,286,900
Piedmont Natural Gas 30,000 1,281,000
South Jersey Industries 55,000 2,420,000
Questar Corp. 65,000 2,511,600
WGL Holdings 25,000 718,000
-------------
14,961,400
-------------
OTHER (INDUSTRIAL GASES INCLUDING HYDROGEN): 3.35%
- --------------------------------------------
Praxair Inc. 40,000 1,596,400
-------------
TOTAL COMMON STOCK (COST $34,847,616) $ 40,931,415
- ------------------------------------- =============
The accompanying notes are an integral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2004
CERTIFICATES OF DEPOSITS AND U.S. TREASURY BILLS: 14.06%
- -------------------------------------------------
SOCIALLY CONCERNED BANKS
- ------------------------
Alternatives Federal Credit Union maturity 06/30/04
Savings 0.50% $ 100,000
Chittenden Bank
Money Market 0.70% 100,000
Community Capital Bank
Certificate of Deposit maturity 07/01/04 1.00% 100,000
Self-Help Credit Union
Certificate of Deposit maturity 08/11/04 1.15% 100,000
South Shore Bank
Certificate of Deposit maturity 07/26/04 0.90% 100,000
U.S. Treasury Bills (at various yields maturing at various dates in
July, 2004 maturity value $6,200,000) 6,198,624
------------
TOTAL MARKET DEPOSITS AND TREASURY BILLS $ 6,698,624
============
Total Common Stock (85.94%) $ 40,931,415
Bank Money Market and U.S. Treasury Bills (14.06%) 6,698,624
------------
TOTAL INVESTMENTS (100%) $ 47,630,039
============
* Securities for which no cash dividends were paid during the fiscal
year.
** Foreign Exchange Securities traded on a foreign exchange.
*** Foreign Exchange Securities traded on a foreign exchange with no cash
dividend.
The accompanying notes are an integral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004
ASSETS
------
Investment securities at fair value (Cost: $34,847,616) (Notes 2A and 5) $ 40,931,415
U.S. Treasury Bills at fair value 6,198,624
Cash, Savings and Certificates of Deposit 500,000
Cash 236,134
Receivables: Dividends 86,349
Interest 1,261
Subscriptions 793
Other 1,365
Prepaid Insurance & Filing Fees 10,702
------------
TOTAL ASSETS $ 47,966,643
============
LIABILITIES
-----------
Payables:
Investment securities purchased $ 298,833
Capital stock reacquired 2,000
Advisory fee 30,006
Other accounts payable and accruals 30,416
TOTAL LIABILITIES 361,255
------------
NET ASSETS $ 47,605,388
- ---------- ============
ANALYSIS OF NET ASSETS
Net capital paid in shares of capital stock 45,434,886
Distributable earnings 2,170,502
------------
NET ASSETS (equivalent to $30.87 per share based on 1,542,146.147
shares of capital stock outstanding) $ 47,605,388
============
The accompanying notes are an integral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $10,818) ............... $ 470,231
Interest .............................................................. 23,897
-----------
Total Income .......................................................... 494,128
-----------
EXPENSES:
Management fee (note 4) ............................................... 165,204
Custodian fees: PFPC Trust ............................................ 11,830
Other ................................................................. 215
Auditor ............................................................... 8,974
Directors ............................................................. 3,241
Filing fees ........................................................... 5,569
Postage and printing .................................................. 9,323
Bond and insurance .................................................... 3,522
Transfer Agent-PFPC, Inc .............................................. 32,130
Fund pricing-PFPC, Inc ................................................ 17,681
Shareholder service costs ............................................. 53,875
-----------
Total Expenses ........................................................ 311,564
-----------
NET INVESTMENT INCOME ................................................. 182,564
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN ON INVESTMENTS (NOTE 2B & 5)
Proceeds from sales ................................................... 10,076,426
Cost of securities sold ............................................... (7,620,779)
Foreign currency transactions (gains/loss) ............................ (29,447)
-----------
Net Realized Gain/Loss ................................................ 2,426,200
-----------
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
Beginning of period ................................................... 6,890,583
End of period ......................................................... 6,083,799
Foreign currency translations ......................................... 1,365
-----------
Total Unrealized Appreciation (Depreciation) For The Period ........... (805,419)
-----------
Net Realized and Unrealized Gain (Loss) On Investments ................ 1,620,781
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....... $ 1,803,345
===========
The accompanying notes are an intergral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
AND YEAR ENDED DECEMBER 31, 2003
2004 2003
FROM INVESTMENT ACTIVITIES:
- ---------------------------
Net investment income $ 182,564 $ 326,943
Net realized gain (loss) from security transactions
and foreign currency transactions 2,426,200 (2,076,610)
Unrealized appreciation (depreciation) of investments (805,419) 10,389,102
------------ ------------
Increase (decrease) in net assets derived from
investment activities 1,803,345 8,639,435
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
- ------------------------------
From net investment income dividends to shareholders (212) (319,119)
Distributions (capital gain) to shareholders 0 0
FROM CAPITAL SHARE TRANSACTIONS:
- --------------------------------
Net increase (decrease) from
Capital transactions (note 3) 901,115 (141,739)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS: 2,704,248 8,178,577
- ----------------------------------
NET ASSETS AT:
- --------------
Beginning of the period 44,901,140 36,722,563
------------ ------------
END OF THE PERIOD $ 47,605,388 $ 44,901,140
============ ============
The accompanying notes are an integral part of these financial statements.
NEW ALTERNATIVES FUND, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS FOR THE
FOR THE SIX MONTHS ENDED JUNE 30, 2004
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 U.S. 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 June 30, 2004 and at the mean between the bid
and asked price on the over the counter market if not traded on the day of
valuation. Company shares traded on foreign markets are stated at their foreign
reported value at 4:00 PM EST-as trading in some foreign markets does not
coincide with trading on U.S. markets.
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 June
30, 2004 for federal tax purposes is $34,847,616.
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 UNAUDITED FINANCIAL STATEMENTS FOR THE
FOR THE SIX MONTHS ENDED JUNE 30, 2004
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 June 30, 2004, there were 1,542,146.147 shares outstanding.
Aggregate paid in capital including reinvestment of dividends was $45,434,886.
Transactions in capital stock were as follows:
Six Months Ending 06/30/04 Year End 12/31/03
----------------------------- ---------------------------
Shares Amount Shares Amount
----------- ----------- ------------ -----------
Capital stock sold 71,313.201 $ 2,169,122 119,607.769 $ 2,984,036
Capital stock issued
Reinvestment of dividends
9,137.686 271,259
Redemptions (41,366.376) (1,268,007) (133,255.877) (3,397,034)
----------- ----------- ------------ -----------
Net Increase (Decrease) 29,946.825 $ 901,115 (4,510.422) $ (141,739)
=========== =========== ============ ===========
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 six months ended June 30, 2004 was 1.34%.
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 $16,686 in underwriting fees for
the six months ended June 30, 2004. The Fund also paid Accrued Equities, Inc.
$34,687 in commissions for the six months ended June 30, 2004.
5) PURCHASES AND SALES OF SECURITIES - For the six month period ended June 30,
2004, the aggregate cost of securities purchased totaled $10,651,150. Net
realized gains (loss) were computed on a first in, first out basis. The amount
realized on sales of securities for the six month period ending June 30, 2004
was $10,076,426.
6) DIRECTORS FEES - The amount charged for the six month period ending June 30,
2004 for Directors compensation was $3,241. 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.