<PAGE>
ANNUAL FINANCIAL REPORT
DECEMBER 31, 1996
<PAGE>
Value of $10,000.00 investment over past 10 years
Yr End Fund S&P
1/1/87 $9,525.00 $10,000.00
1987 $9,223.80 $10,202.70
1988 $12,431.30 $11,869.70
1989 $14,412.70 $15,560.50
1990 $13,311.30 $15,048.60
1991 $16,713.50 $19,511.20
1992 $17,536.20 $20,888.90
1993 $18,042.50 $22,882.10
1994 $17,372.40 $23,213.90
1995 $20,759.00 $31,509.70
1996 $23,522.80 $38,514.60
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF PER SHARE INCOME AND CAPITAL CHANGES
For each share of capital stock outstanding*
Year Year Year Year Year Year Year Year
End End End End End End End End
12/31 12/31 12/31 12/31 12/31 12/31 12/31 12/31
1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD $ 30.51 $ 28.14 $ 30.0 $ 29.95 $ 29.19 $ 24.62 $27.57 $ 22.55
-------- -------- --------- ---------- --------- -------- ------ --------
Investment Income $ .73 $ .75 $ .72 $ .62 $ .62 $ .72 $.70 $ .73
Expenses .39 .40 .40 .33 .28 .29 .27 .26
-------- -------- --------- ---------- --------- -------- ------ --------
Net Investment Income .34 .35 .32 .29 .34 .43 .43 .47
Net realized & Unrealized
gain (Loss) on investment 3.72 5.14 (1.43) .58 1.10 5.86 (2.53) 5.41
-------- -------- --------- ---------- --------- -------- ------ --------
Total from Investment operations 4.06 5.49 (1.11) .87 1.44 6.29 (2.10) 5.88
Dividends from net
investment income (.34) (.35) (.32) (.29) (.34) (.43) (.43) (.47)
Distributions from net
realized gain (3.36) (2.77) (.43) (.53) (.34) (1.29) (.42) (.39)
-------- -------- --------- ---------- --------- -------- ------ --------
Total Distributions (3.70) (3.12) (.75) (.82) (.68) (1.72) (.85) (.86)
Net change in net asset value .36 2.37 (1.86) .05 .76 4.57 (2.95) 5.03
Net asset value as of end
of the period 30.87 30.51 28.14 30.00 29.95 29.19 24.62 27.57
-------- -------- --------- ---------- --------- -------- ------ --------
Total return
(Sales load not reflected) 13.3% 19.5% (3.7)% 2.9% 4.9% 25.6% (7.6)% 26.0%
Net assets, end of period $ 35,549 $ 32,236 $ 28,368 $ 31,567 $ 28,896 $ 23,931 $ 16,433 $ 11,893
Ratio of operating expense
to net assets** 1.21% 1.28% 1.30% 1.11% 1.04% 1.18% 1.27% 1.25%
Ratio of net investment income
to average net assets** 1.04% 1.12% 1.04% .96% 1.25% 1.74% 2.08% 2.20%
Portfolio turnover 51.2% 48.72% 33.00% 18.36% 13.10% 21.50% 24.70% 14.60%
Average commission rate paid .074 .072
Number of shares oustanding 1,038,561 965,769 984,847 1,026,460 945,006 776,974 646,664 419,212
at end of period***
</TABLE>
* All adjusted for two for one share split on July 26, 1985 and January 2,
1990
** Annualized and includes state taxes
*** Shares immediately prior to dividend - Fund commenced operation on
September 3, 1982
<PAGE>
<TABLE>
<CAPTION>
(CONTINUED)
STATEMENT OF PER SHARE INCOME AND CAPITAL CHANGES
For each share of capital stock outstanding*
Year Year Year Year Year Year Year
End End End End End End End
12/31 12/31 4/30 4/30 4/30 4/30 4/30
1988 1987 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD $ 18.85 $ 22.43 $ 19.68 $ 14.99 $ 13.55 $15.39 $12.50
-------- -------- --------- ---------- --------- -------- ------
Investment Income $ .67 $ .40 $ .38 $ .47 $ .47 $ .40 $ .38
Expenses .25 .16 .16 .20 .17 .27 .20
-------- -------- --------- ---------- --------- -------- ------
Net Investment Income .42 .24 .22 .27 .30 .13 .18
Net realized & Unrealized
gain (Loss) on investment 4.09 (3.21) 3.45 5.08 1.72 (1.55) 3.08
-------- -------- --------- ---------- --------- -------- ------
Total from Investment operations 4.51 (2.97) 3.67 5.35 2.02 (1.42) 3.26
Dividends from net
investment income (.42) (.24) (.22) (.27) (.30) (.13) (.18)
Distributions from net
realized gain (.39) (.38) (.70) (.39) (.28) (.29) (.19)
-------- -------- --------- ---------- --------- -------- ------
Total Distributions (.81) (.62) (.92) (.66) (.58) (.42) (.37)
Net change in net asset value 3.71 (3.59) 2.75 4.69 1.44 (1.84) 2.89
Net asset value as of end
of the period 22.55 18.85 22.43 19.68 14.99 13.55 15.39
-------- -------- --------- ---------- --------- -------- ------
Total return
(Sales load not reflected) 23.9% (2.6)% 22.2% 23.3% (.5)% 13.5% 10.4%
Net assets, end of period $ 6,162 $ 4,133 $ 3,404 $ 1,023 $ 502 $ 256 $ 163
Ratio of operating expense
to net assets** 1.24% .80% 1.17% 1.39% 1.36% 2.24% 1.08%
Ratio of net investment income
to average net assets** 2.18% 1.23% 1.68% 1.91% 2.3% 1.18% 1.69%
Portfolio turnover 25.88% 8.57% 8.79% 28.00% 22.6% 52.% 74.5%
Average commission rate paid
Number of shares oustanding 264,414 212,704 151,848 51,998 33,524 18,916 10,592
at end of period***
</TABLE>
* All adjusted for two for one share split on July 26, 1985 and January 2,
1990
** Annualized and includes state taxes
*** Shares immediately prior to dividend - Fund commenced operation on
September 3, 1982
<PAGE>
December 31,1996
NEW ALTERNATIVES FUND, INC.
STATEMENT OF INVESTMENTS
COMMON STOCKS :82.2 % MARKET VALUE
- --------------------- ------------
Shares
ALTERNATIVE ENERGY AND
- ----------------------
PROCESS EQUIPMENT: 13.3%
- ------------------------
Air Products 15000 $ 1,036,875.00
*California Energy 1000 33,625.00
*Energy Conversion Devices 20000 272,500.00
*Energy Research Corp 20000 295,000.00
Idaho Power 2000 62,250.00
OM Group 15000 405,000.00
*Real Goods Trading 1000 5,312.50
*Thermo Ecotek 5000 76,250.00
Trigen 30000 862,500.00
York International 30000 1,676,250.00
------------
$ 4,725,562.50
CLEAN AIR: 7.2%
- ---------------
*BHA Group 20000 $ 322,500.00
Engelhard 40000 765,000.00
Praxair 15000 691,875.00
*Thermo Instruments 15000 496,875.00
Walbro 15000 273,750.00
----------
$ 2,550,000.00
CLEAN WATER : 8.5%
- ------------------
Ameron 15000 $ 774,375.00
Aquarion 15000 418,125.00
Betz Labs 10000 585,000.00
Calgon Carbon 25000 336,875.00
*Ionics 10000 480,000.00
Millipore 10000 413,750.00
-----------
$ 3,008,125.00
CONSERVATION : 2.9%
- -------------------
*Cannondale 15000 $ 337,500.00
T J International 30000 697,500.00
-----------
$ 1,035,000.00
ENVIRONMENTAL (GENERAL) :11.3%
- ------------------------------
Dames & Moore 5000 $ 73,125.00
*Flow International 40000 365,000.00
Home Depot 18000 902,250.00
*Material Sciences 20000 360,000.00
Minerals Technology 13000 533,000.00
*Molten Metal 1000 11,750.00
*Thermedics 15000 271,875.00
*United Natural Foods 10000 170,000.00
*Whole Foods Markets 25000 562,500.00
Worthington Foods 40000 760,000.00
----------
$ 4,009,500.00
<PAGE>
December 31, 1996
NEW ALTERNATIVES FUND, INC
STATEMENT OF INVESTMENTS (CONTINUED)
SHARES MARKET VALUE
EFFICIENT ELECTRIC DEVICES : 4.8 %
- ------------------ ---------------
Baldor 40000 $ 985,000.00
International Rectifier 30000 457,500.00
*Itron 1000 17,750.00
Whirlpool 5000 233,125.00
----------
$ 1,693,375.00
NATURAL GAS -DISTRIBTION: 8.4%
- ------------------------------
Eastern Enterprises 20000 $ 707,500.00
Equitable Resources 20000 595,000.00
National Fuel Gas 20000 825,000.00
Northwest Natural Gas 15000 360,000.00
Washington Energy 25000 515,625.00
----------
$ 3,003,125.00
NATURAL GAS -DIVERSIFIED:14.1 %
- ----------------------------- -
Burlington Resources 18000 $ 906,750.00
Enron 25000 1,078,125.00
MCN 30000 866,250.00
NGC Corp 30000 697,500.00
Questar 25000 918,750.00
Williams Co's 15000 562,500.00
-------------
$ 5,029,875.00
RECYCLING -PAPER: 6.8%
- ----------------------
Caraustar Ind 20000 $ 665,000.00
Media General 10000 302,500.00
Republic Group 35000 546,875.00
Sonoco Products 30000 776,250.00
*Superior Services 5000 101,875.00
*Thermo Fibertek 5000 46,562.50
----------
$ 2,439,062.50
RECYCLING-METALS -PLASTIC 4.9%
- ------------------------- ----
Commonwealth Alum 20000 307,500.00
Commercial Metals 25000 753,125.00
Quanex 25000 684,375.00
----------
$ 1,745,000.00
Total Common Stock $ 29,238,625.00
Money Market Deposits and Treasury Bills :16.6 %
SOCIALLY CONCERNED BANKS
- ------------------------
Alternatives Federal Credit Union $ 100,000.00
Community Capital Bank 100,000.00
South Shore Bank 100,000.00
Vermont National Bank 100,000.00
U.S. Treasury Bills (cost $5,462,311.68) 5,484,264.18
------------
$ 5,884,264.18
Total Common Stock (82.2 %) $29,238,625.00
Bank money market and Treasury Bills(16.6 %) 5,884,264.18
Cash and Receivables, less liabilities (1.2 %) 425,980.27
--------------
NET ASSETS (100 %) $35,548,869.45
*Securities for which no cash dividends were paid during the fiscal year.
<PAGE>
4
NEW ALTERNATIVES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
ASSETS
Investment Securities at market value
(Cost:$24,074,414.23) (Notes 2A and 5)..........$29,238,625.00
Bank money market deposits....................... 400,000.00
U.S.Treasury Bills at market..................... 5,484,264.18
Cash............................................. 169,175.78
Receivables: Dividends.......................... 45,950.00
Interest........................... 334.81
Securities Sold.................... 596,130.07
Subscriptions receivable........... 9,311.45
------------
Total Assets ..................................$35,943,791.29
LIABILITIES
Payables: Accrued Operating Expenses :
Accounting.................................... $ 341.00
Custodian................................ .... 1,746.43
Directors Fees ............................... 691.61
State Taxes .................................. 398.04
Advisory fee ................................. 23,649.39
Regulatory fees .............................. 2,916.24
Printing ..................................... 2,603.73
Bonds......................................... 2 298.54
Transfer Agent-Fund Plan Services............. 2,495.91
Fund Pricing-Fund Plan Services............... 2,624.12
Other......................................... 2,883.80
---------
42,648.81
Securities Purchased.......................... 0.00
Redemptions Payable........................... 2,000.00
Dividend distribution payable................. 350,273.03
Total Liabilities ............................ $ 394,921.84
-----------
Net Assets at market, applicable to 1,151,714.035 outstanding shares after the
dividend. There were 1,038,560.849 shares before the dividend. There are eight
million commmon shares authorized. There is only one class of common stock.
(note 3)
==============
$35,548,869.45
<PAGE>
5
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDING DECEMBER 31, 1996
INVESTMENT INCOME AND EXPENSE
INCOME :
Dividends.....................................$ 547,492.50
Interest ..................................... 215,400.44
----------
Total Income ................................. 762,892.94
EXPENSES :
Management Fee (note 4) ..................... $ 270,843.74
Custodian fees
United Missouri Bank......................... 20,715.69
State Taxes.................................. 431.88
Accounting .................................. 4,026.00
Directors ................................... 2,728.75
Filing Fees.................................. 11,199.60
Postage and Printing ........................ 13,377.00
Bond and Insurance .......................... 6,474.54
Transfer Agent-Fund Plan Services............ 39,894.00
Fund Pricing-Fund Plan Services.............. 29,280.00
Other........................................ 9,984.55
------------
Total Expenses .............................. $ 408,955.75
NET INVESTMENT INCOME ....................... $ 353,937.19
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN ON INVESTMENTS (note 2B&5)
Proceeds from sales..........................$20,396,398.81
Cost of Securities Sold ..................... 16,925,281.52
-------------
Net Realized Gain ...........................$ 3,491,047.59
UNREALIZED APPRECIATION (DEPRECIATION) of investments :
Beginning of period .........................$ 4,737,419.85
End of period .............................. 5,164,210.77
------------
Total unrealized appreciation (depreciation).$ 426,790.92
For the period.
Net realized and unrealized gain (loss)
on investments .... ........................ $ 3,917,838.51
--------------
Net increase (decrease) in net assets
resulting from operations....................$ 4,271,775.70
--------------
<PAGE>
6
NEW ALTERNATIVES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year End Year End
12/31/96 12/31/95
FROM INVESTMENT ACTIVITIES:
- ---------------------------
Net Investment income .... $353,937.19 $337,309.07
Net Realized gain from
security transactions ..... 3,491,047.59 2,672,216.97
Unrealized appreciation
(deprec.) of investments.. 426,790.92 2,342,681.73
------------- -------------
Increase (decrease) in net
assets derived from invest-
ment activities.......... $ 4,271,775.70 $ 5,352,207.77
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS :
From net investment income
dividends to shareholders .. (353,837.68) (337,415.81)
Distributions to
shareholders ....... (3,491,018.44) (2,672,182.54)
FROM CAPITAL SHARE TRANSACTIONS :
Net increase (decrease) from capital
transactions (note 3)... 2,886,185.03 1,524,960.89
INCREASE(DECREASE) IN
NET ASSETS:.............. 3,313,104.61 3,867,570.31
- ----------
NET ASSETS :
At the beginning of the
period................. $ 32,235,764.84 $28,368,221.14
-------------- -------------
At the end of the
period................. $ 35,548,869.45 $32,235,764.84
============== ==============
<PAGE>
NOTES TO FINANCIAL STATEMENT FOR THE
YEAR ENDED DECEMBER 31, 1996
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.
2) ACCOUNTING POLICIES - The following is a summary of significant accounting
policies consistently followed by the fund in the preparation of these
financial statements. The policies are in conformity with generally accepted
accounting principles:
A} SECURITY VALUATION - listed investments are stated at the last sale price
at the closing of the New York Stock Exchange and the American Stock Exchange
and the NASD National Market System on December 31, 1996 and at the mean
between the bid and asked price on the over the counter market.
B} 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.
C} INVESTMENT INCOME AND EXPENSE RECOGNITION - Dividend income is recorded as
of the ex-dividend date. Expenses are accrued on a daily basis.
D} FEDERAL INCOME TAXES - No provision for federal income tax is believed
necessary since the fund intends to distribute all its taxable income to
comply with the provisions of the Internal Revenue Code applicable to
investment companies. The aggregate cost of the securities owned by the fund
on December 31, 1996 for federal tax purposes is $24,074,414.23.
3. CAPITAL STOCK - There are eight million shares of capital stock authorized.
On December 31, 1996 - 1,038,560.849 shares were issued and outstanding before
the dividend, and 1,151,714.035 shares after the dividend. Aggregate paid in
capital including reinvestment of dividends was $30,384,649.15. Transactions
in capital stock were as follows:
Year End 12/31/96 Year End 12/31/95
----------------- -----------------
Capital stock Shares $ Amount Shares $ Amount
sold......... 75,270.800 2,427,524.58 62,538.844 1,983,398.19
Capital stock
issued reinvest 113,185.546 3,494,044.05 90,918.677 2,773,958.00
ment of divd..
Redemptions. ( 93,430.127) (3,035,383.60) (105,027.331) (3,232,395.30)
----------- ------------- ------------ -------------
Net Increase/ 95,026.219 $ 2,886,185.03 (48,430.190)($1,524,960.89)
(decrease)
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; and
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
(presently 2.5%, in California) Accrued Equities reduces its management fee by
the amount of such excess expense. The expense ratio for the year ended
December 31, 1996 was 1.20%. The fund pays no renumeration to its officers,
each of whom is also an officer of Accrued Equities, Inc.
5)PURCHASES AND SALES OF SECURITIES - During year ended December 31, 1996, the
aggregate cost of securities purchased totalled $17,228,615.60. Net realized
gains were computed on a first in, first out basis. The amount realized on
sales of securities for the year ended December 31, 1996 was $20,396,398.81.
<PAGE>
Kenneth D Katz CPA
64 North Park Avenue
Rockville Centre, NY 11570
Report of Independent Accountant
To The Board of Directors and Shareholders
New Alternatives Fund Inc.,
Melville, NY
I have audited the statement of assets and liabilities of New Alternatives
Fund Inc (the Fund) including the schedule of portfolio investments by
industry classification, as of December 31, 1996, and the related statement of
operations for the year then ended, and the statements of changes in net
assets and the supplementary informationselected per share data and ratios.
These financial statements and supplementary information are the
responsibility of the Fund's management. My responsibility is to express an
opinion on these financial statements and supplementary information based on
my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
information are free of material misstatement. An audit includes examining on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. My procedures included confirmation of securities owned at
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of the Fund as of December 31, 1996, the results of operations for
the year then ended and the changes in its net assets and selected per share
data and ratios for the years in the periods then ended in conformity with
generally accepted accounting principles.
Kenneth D Katz CPA
Rockville Centre, NY
January 31, 1997
S/________________________
