<PAGE>
ANNUAL FINANCIAL REPORT
DECEMBER 31, 1997
<PAGE>
STATEMENT OF PER SHARE INCOME AND CAPITAL CHANGES
<TABLE>
<CAPTION>
For each share of capital stock outstanding*
Year Year Year Year Year Year Year Year Year Year Year Year First
End End End End End End End End End End End End Seven
12/31 12/31 12/31 12/31 12/31 12/31 12/31 12/31 12/31 12/31 12/31 4/30 Months
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1987 4/30/83
**** ****
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
AT BEGINNING OF
PERIOD $30.87 $30.51 $28.14 $30.00 $29.95 $29.19 $24.62 $27.57 $22.55 $18.85 $22.43 $19.68 $12.50
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Income $.64 $.73 $.75 $.72 $.62 $.62 $.72 $.70 $.73 $.67 $.40 $.38 $.38
Expenses .38 .39 .40 .40 .33 .28 .29 .27 .26 .25 .16 .16 .20
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Investment
Income .26 .34 .35 .32 .29 .34 .43 .43 .47 .42 .24 .22 .18
Net realized &
Unrealized gain
(Loss) on
investment 3.16 3.72 5.14 (1.43) .58 1.10 5.86 (2.53) 5.41 4.09 (3.21) 3.45 3.08
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
Investment
operations 3.42 4.06 5.49 (1.11) .87 1.44 6.29 (2.10) 5.88 4.51 (2.97) 3.67 3.26
Dividends from net
investment income (.26) (.34) (.35) (.32) (.29) (.34) (.43) (.43) (.47) (.42) (.24) (.22) (.18)
Distributions from
net realized gain (1.96) (3.36) (2.77) (.43) (.53) (.34) (1.29) (.42) (.39) (.39) (.38) (.70) (.19)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (2.22) (3.70) (3.12) (.75) (.82) (.68) (1.72) (.85) (.86) (.81) (.62) (.92) (.37)
Net change in net
asset value 1.20 .36 2.37 (1.86) .05 .764 .57 (2.95) 5.03 3.71 (3.59) 2.75 2.89
Net asset value
as of end of
the period 32.07 30.87 30.51 28.14 30.00 29.95 29.19 24.62 27.57 22.55 18.85 22.43 15.39
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total return
(Sales load
not reflected 11.1% 13.3% 19.5% (3.7)% 2.9% 4.9% 25.6% (7.6)% 26.0% 23.9% (2.6)% 22.2% 10.4%
Net assets, end
of period $37,941 $35,549 $32,236 $28,368 $31,567 $28,896 $23,931 $16,433 $11,893 $6,162 $4,133 $3,404 $163
Ratio of operating
expense to net
assets** 1.15% 1.21% 1.28% 1.30% 1.11% 1.04% 1.18% 1.27% 1.25% 1.24% .80% 1.17% 1.08%
Ratio of net
investment income
to average net
assets** .79% 1.04% 1.12% 1.04% .96% 1.25% 1.74% 2.08% 2.20% 2.18% 1.23% 1.68% 1.69%
Portfolio turnover 53.9% 51.2% 48.72% 33.00% 18.36% 13.10% 21.50% 24.70% 14.60% 25.88% 8.57% 8.79% 74.50%
Average
commission rate
paid .068 .074 .072
Number of
shares 1,111,377 1,038,561 965,769 984,847 1,026,460 945,006 776,974 646,664 419,212 264,414 212,704 151,848 10,592
outstanding 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
****At this time the fund was on a fiscal year. Table for 1983-1987 is
available on request. Deleted to make space.
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
FUND S&P 500
$9,525.00 $10,000.00
$11,804.50 $11,633.90
$14,883.30 $15,251.40
$13,745.90 $14,749.70
$17,259.20 $19,123.60
$18,108.80 $20,473.90
$18,631.60 $22,427.50
$17,939.60 $22,752.80
$21,436.80 $30,883.80
$24,290.80 $37,745.00
$26,982.00 $50,077.20
<PAGE>
December 31, 1997
NEW ALTERNATIVES FUND, INC.
STATEMENT OF INVESTMENTS
COMMON STOCKS :88.9%
Shares MARKET VALUE
------------
ALTERNATIVE ENERGY AND
PROCESS EQUIPMENT: 9.0%
*Calpine 5000 $ 74,375.00
*Energy Conversion Devices 10000 121,250.00
*Energy Research Corp 25000 396,875.00
Enron (Also Natural Gas) 25000 1,039,062.50
Idaho Power 5000 188,125.00
OM Group 25000 732,500.00
*Real Goods Trading 1000 4,250.00
*Spire 10000 145,000.00
*Thermo Power 15000 131,250.00
Trigen 30000 592,500.00
------------
$ 3,425,187.50
CLEAN AIR: 6.1%
*BHA Group 20000 $ 390,000.00
*Dravo 15000 165,000.00
Praxair 15000 675,000.00
*Thermo Instruments 20000 1,076,171.88
------------
$ 2,306,171.88
CLEAN WATER : 11.7%
Ameron 15000 $ 948,750.00
Aquarion 15000 518,437.50
Culligan Water 30000 1,507,500.00
*U.S. Filter 35000 1,047,812.50
*Waterlink 25000 412,500.00
------------
$ 4,435,000.00
CONSERVATION : 5.3%
Owens Corning 10000 $ 341,250.00
T J International 25000 618,750.00
Minerals Technology 20000 908,750.00
*Zoltek 5000 139,375.00
----------
$ 2,008,125.00
ENVIRONMENTAL (GENERAL) : 3.4%
Dames & Moore 15000 $ 198,750.00
*Flow International 40000 375,000.00
*Superior Industries 20000 577,500.00
*Thermo Sentron 15000 138,750.00
----------
$ 1,290,000.00
EFFICIENT ELECTRIC DEVICES : 5.2%
Baldor 46666 $ 1,012,068.88
*Chicago Miniature Lamp 25000 843,750.00
*Itron 7500 135,000.00
----------
$ 1,990,818.88
NATURAL FOODS : 9.2%
*Gardenburger 20000 180,000.00
*United Natural Foods 25000 650,000.00
*Whole Foods Markets 20000 1,022,500.00
*Wild Oats 30000 1,081,875.00
Worthington Foods 40000 560,000.00
----------
$ 3,494,375.00
<PAGE>
NEW ALTERNATIVES FUND, INC DECEMBER 31, 1997
STATEMENT OF INVESTMENTS (CONTINUED)
SHARES MARKET VALUE
------------
RECYCLING-PAPER: 4.1%
Caraustar Ind 15000 $ 513,750.00
Republic Group 20000 327,500.00
Sonoco Products 15000 520,312.50
*Thermo Fibertek 15000 182,812.50
----------
$ 1,544,375.00
RECYCLING-METALS: 8.1%
Commercial Metals 24000 $ 757,500.00
Imco Recycling 15000 240,937.50
*Metal Management 20000 332,500.00
Nucor 17000 821,312.50
Quanex 25000 703,125.00
*Recycling Industries 35000 210,000.00
----------
$ 3,065,375.00
NATURAL GAS: 18.2%
Burlington Resources 20000 $ 896,250.00
Consolidated Natural Gas 10000 605,000.00
Energen 10000 397,500.00
KN Energy 10000 1,080,000.00
Louis Dreyfus Natual Gas 5000 93,437.50
MCN 20000 807,500.00
National Fuel Gas 20000 973,750.00
Questar 15000 669,375.00
Williams Co's 50000 1,418,750.00
-------------
$ 6,941,562.50
RAILROADS: 8.6%
Burlington Northern Rail 7500 $ 697,031.25
CSX Railway 25000 1,350,000.00
Norfolk Southern Railway 39000 1,201,687.50
------------
$ 3,248,718.75
Total Common Stock (cost $27,177,442.43) $33,749,709.51
Money Market Deposits and Treasury Bills :11.1 %
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 $3,772,950.01) 3,792,810.56
------------
$ 4,192,810.56
Total Common Stock (88.9 %) $33,749,709.51
Bank money market and Treasury Bills(11.1 %) 4,192,810.56
Cash and **Receivables, less liabilities (0.0 %) -1,281.08
-------------
NET ASSETS (100 %) $37,941,238.99
- ---------
*Securities for which no cash dividends were paid during the fiscal year.
**Contingent gain: The fund may benefit or become entitled to shares or other
consideration because it is plaintiff in a class action lawsuit against
Bonneville Pacific Corporation, a former fund holding. At this time there is
no determinable value.
<PAGE>
4
NEW ALTERNATIVES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31 1997
ASSETS
------
Investment Securities at market value
(Cost:$27,177,422.43) (Notes 2A and 5)..........$33,749,709.51
Bank money market deposits....................... 400,000.00
U.S.Treasury Bills at market..................... 3,792,810.56
Cash............................................. 172,690.39
Receivables: Dividends.......................... 24,014.17
Interest........................... 918.35
Securities Sold.................... 0.00
Subscriptions receivable........... 115,761.12
------------
Total Assets ..................................$38,255,904.10
LIABILITIES
-----------
Payables: Accrued Operating Expenses :
Accounting.................................... $ 341.00
Custodian................................ .... 1,705.00
Directors Fees ............................... 611.47
State Taxes .................................. 399.74
Advisory fee ................................. 24,441.61
Regulatory fees .............................. 4,138.39
Printing ..................................... 1,468.10
Bonds......................................... 2,658.52
Transfer Agent-Fund Plan Services............. 4,129.72
Fund Pricing-Fund Plan Services............... 2,526.50
Other......................................... 1,022.82
---------
43,442.87
Securities Purchased.......................... 0.00
Redemptions Payable........................... 10,050.87
Dividend distribution payable................. 261,171.37
Total Liabilities ............................ $ 314,665.11
-----------
Net Assets at market, applicable to 1,182,903.576 outstanding shares after the
dividend. There were 1,111,377.131 shares on the "record" date (12/30/97)
before the dividend. There are eight million commmon shares authorized. There
is only one class of common stock. (note 3)
==============
$37,941,238.99
<PAGE>
5
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDING DECEMBER 31, 1997
INVESTMENT INCOME AND EXPENSE
INCOME :
Dividends.....................................$ 523,501.67
Interest ..................................... 186,625.71
----------
Total Income ................................. 710,127.38
EXPENSES :
Management Fee (note 4) ..................... $ 282,694.68
Custodian fees
United Missouri Bank......................... 20,075.00
State Taxes.................................. 430.70
Accounting .................................. 4,015.00
Directors ................................... 2,621.07
Filing Fees.................................. 11,169.00
Postage and Printing ........................ 13,265.00
Bond and Insurance .......................... 6,456.85
Transfer Agent-Fund Plan Services............ 41,561.00
Fund Pricing-Fund Plan Services.............. 29,371.00
Other........................................ 10,020.00
Total Expenses .............................. $ 421,679.30
NET INVESTMENT INCOME ....................... $ 288,448.08
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN ON INVESTMENTS (note 2B&5)
Proceeds from sales..........................$18,483,804.91
Cost of Securities Sold ..................... 16,304,597.56
Net Realized Gain ...........................$ 2,179,207.35
UNREALIZED APPRECIATION (DEPRECIATION) of investments :
Beginning of period .........................$ 5,164,210.77
End of period .............................. 6,572,267.08
Total unrealized appreciation (depreciation).$ 1,408,056.31
For the period.
Net realized and unrealized gain (loss)
on investments .... ........................ $ 3,587,263.66
Net increase (decrease) in net assets
resulting from operations....................$ 3,875,711.74
<PAGE>
6
NEW ALTERNATIVES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year End Year End
12/31/97 12/31/96
FROM INVESTMENT ACTIVITIES:
Net Investment income .... $ 288,448.08 $353,937.19
Net Realized gain from
security transactions ..... 2,179,207.35 3,491,047.59
Unrealized appreciation
(deprec.) of investments.. 1,408,056.31 426,790.92
------------ -------------
Increase (decrease) in net
assets derived from invest-
ment activities.......... $3,875,711.74 $ 4,271,775.70
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS :
From net investment income
dividends to shareholders .. $ (288,422.67) (353,837.68)
Distributions to
shareholders ....... (2,179,188.28) (3,491,018.44)
FROM CAPITAL SHARE TRANSACTIONS :
Net increase (decrease) from
capital transactions (note 3) $ 984,268.75 2,886,185.03
INCREASE(DECREASE) IN
NET ASSETS:.............. $2,392,369.54 3,313,104.61
NET ASSETS :
At the beginning of the
period................. $35,548,869.45 $ 32,235,764.84
------------- --------------
At the end of the
period................. $37,941,238.99 $ 35,548,869.45
============== ===============
<PAGE>
NOTES TO FINANCIAL STATEMENT FOR THE
YEAR END DECEMBER 31, 1997
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, 1997 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, 1997 for
federal tax purposes is $27,177,442.43.
3. CAPITAL STOCK - There are eight million shares of capital stock authorized.
On December 30, 1997 (the "record date" - 1,111,377.131 shares were issued and
outstanding before the dividend, and on December 31, 1997 there were
1,182,903.576 shares after the dividend. Aggregate paid in capital including
reinvestment of dividends was $31,368,917.90. Transactions in capital stock
were as follows:
Year End 12/31/97 Year End 12/31/96
----------------- -----------------
Shares $ Amount Shares $ Amount
Capital stock
sold.......... 68,392.297 2,195,444.11 75,270.800 2,427,524.58
Capital stock
issued reinvest 68,554.443 2,198,834.61 113,185.546 3,494,044.05
ment of divd..
Redemptions... (105,757.199) (3,410,009.97) ( 93,430.127) (3,035,383.60)
------------ -------------- ------------ -------------
Net Increase/ 31,189.541 $ 984,268.75 95,026.219 $2,886,185.03
(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 annualized expense ratio for the year
ended December 31, 1997 was 1.15%. The fund pays no remuneration 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, 1997, the
aggregate cost of securities purchased totalled $18,509,057.42. Net realized
gains were computed on a first in, first out basis. The amount realized on
sales of securities for the year December 31, 1997 was $18, 483,804.91.
