<PAGE>
ANNUAL FINANCIAL REPORT
DECEMBER 31, 1998
<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
End End End End End End End End
12/31 12/31 12/31 12/31 12/31 12/31 12/31 12/31
1998 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $32.07 $30.87 $30.51 $28.14 $30.0 $29.95 $29.19 $24.62
------ ----- ----- ----- ----- ----- ----- -----
Investment Income $.52 $.64 $.73 $.75 $.72 $.62 $.62 $.72
Expenses .37 .38 .39 .40 .40 .33 .28 .29
------ ----- ----- ----- ----- ----- ----- -----
Net Investment Income .15 .26 .34 .35 .32 .29 .34 .43
Net realized & Unrealized
gain (Loss) on investment (3.07) 3.16 3.72 5.14 (1.43) .58 1.10 5.86
------ ----- ----- ----- ----- ----- ----- -----
Total from Investment
operations (3.22) 3.42 4.06 5.49 (1.11) .87 1.44 6.29
Dividends from net
investment income (.15) (.26) (.34) (.35) (.32) (.29) (.34) (.43)
Distributions from net
realized gain (.16) (1.96) (3.36) (2.77) (.43) (.53) (.34) (1.29)
------ ----- ----- ----- ----- ----- ----- -----
Total Distributions (.31) (2.22) (3.70) (3.12) (.75) (.82) (.68) (1.72)
Net change in net asset
value (3.53) 1.20 .36 2.37 (1.86) .05 .76 4.57
Net asset value as of
end of the period $28.54 32.07 30.87 30.51 28.14 30.00 29.95 29.19
------ ----- ----- ----- ----- ----- ----- -----
Total return
(Sales load not reflected) (10%) 11.1% 13.3% 19.5% (3.7)% 2.9% 4.9% 25.6%
Net assets, end of period $33,021 $37,941 $35,549 $32,236 $28,368 $31,567 $28,896 $23,931
Ratio of operating expense
to net assets** 1.18% 1.15% 1.21% 1.28% 1.30% 1.11% 1.04% 1.18%
Ratio of net investment
income .49% .79% 1.04% 1.12% 1.04% .96% 1.25% 1.74%
to average net assets**
Portfolio turnover 32.4% 53.9% 51.2% 48.72% 33.00% 18.36% 13.10% 21.50%
Number of shares
outstanding
at end of period*** 1,156,952 1,111,377 1,038,561 965,769 984,847 1,026,469 45,006 776,974
<CAPTION>
Year Year Year Year Year First
End End End End End Seven
12/31 12/31 12/31 12/31 4/30 Months
1990 1989 1988 1987 1987 4/30/83
**** ****
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $27.57 $22.55 $18.85 $22.43 $19.68 $12.50
----- ----- ----- ----- ----- -----
Investment Income $.70 $.73 $.67 $.40 $.38 $.38
Expenses .27 .26 .25 .16 .16 .20
----- ----- ----- ----- ----- -----
Net Investment Income .43 .47 .42 .24 .22 .18
Net realized & Unrealized
gain (Loss) on investment (2.53) 5.41 4.09 (3.21) 3.45 3.08
----- ----- ----- ----- ----- -----
Total from Investment
operations (2.10) 5.88 4.51 (2.97) 3.67 3.26
Dividends from net
investment income (.43) (.47) (.42) (.24) (.22) (.18)
Distributions from net
realized gain (.42) (.39) (.39) (.38) (.70) (.19)
----- ----- ----- ----- ----- -----
Total Distributions (.85) (.86) (.81) (.62) (.92) (.37)
Net change in net asset
value (2.95) 5.03 3.71 (3.59) 2.75 2.89
Net asset value as of
end of the period 24.62 27.57 22.55 18.85 22.43 15.39
----- ----- ----- ----- ----- -----
Total return
(Sales load not reflected) (7.6)% 26.0% 23.9% (2.6)% 22.2% 10.4%
Net assets, end of period $16,433 $11,893 $6,162 $4,133 $3,404 $163
Ratio of operating expense
to net assets** 1.27% 1.25% 1.24% .80% 1.17% 1.08%
Ratio of net investment
income 2.08% 2.20% 2.18% 1.23% 1.68% 1.69%
to average net assets**
Portfolio turnover 24.70% 14.60% 25.88% 8.57% 8.79% 74.50%
Number of shares
outstanding
at end of period*** 646,664 419,212 264,414 212,704 151,848 10,592
</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
<PAGE>
VALUE OF $10,000 INVESTMENT OVER PAST 10 YEARS
Past Performance is not predictive of Future Performance
Average Annual Total Return (after deducting maximum sales charge):
One Year (10%); Five Years 5.44%; Ten Years 7.6%
Fund S&P 500
---------- ----------
1/1/89 $ 9,525.00 $10,000.00
1989 $12,009.20 $13,122.80
1990 $11,091.50 $12,705.60
1991 $13,926.30 $16,487.30
1992 $14,611.90 $17,665.20
1993 $15,033.70 $19,364.40
1994 $14,475.40 $19,659.30
1995 $17,297.20 $26,699.10
1996 $19,600.10 $32,645.80
1997 $21,771.60 $43,327.50
1998 $19,483.10 $55,471.80
<PAGE>
DECEMBER 31, 1998
NEW ALTERNATIVES FUND, INC.
STATEMENT OF INVESTMENTS
COMMON STOCKS : 75%
SHARES MARKET VALUE
------ ------------
ALTERNATE ENERGY: 10.7%
*AstroPower 15000 $ 144,375.00
*Ballard Power 5000 137,500.00
*Bonneville Pacific Corp 32325 169,706.25
*Calpine 15000 378,750.00
*Energy Conversion Devices 1000 7,250.00
*Energy Research Corp 25000 350,000.00
Enron (Also Natural Gas) 25000 1,426,562.50
Idaho Power 5000 180,937.50
*Mechanical Technology 5000 40,625.00
*Real Goods Trading 1000 4,062.50
*Thermo Power 15000 115,312.50
Trigen 50000 571,875.00
------------
$ 3,526,956.25
CLEAN AIR: 3.3%
*BHA Group 25000 $ 346,875.00
*Thermo Instruments 50000 753,125.00
------------
$ 1,100,000.00
CLEAN WATER : 7.7%
Ameron 15000 $ 555,000.00
Aquarion 15000 615,000.00
*U.S. Filter 60000 1,372,500.00
------------
$ 2,542,500.00
CONSERVATION : 7.6%
Interface Inc. 30000 $ 278,436.00
Owens Corning 25000 885,937.50
Minerals Technology 20000 818,750.00
T J International 20900 536,868.75
-----------
$ 2,519,992.25
ENVIRONMENTAL (GENERAL) : 6.1%
Dames & Moore 15000 193,125.00
*Flow International 40000 387,500.00
*Superior Industries 30000 601,875.00
*Tetra Tech 12500 338,281.25
*Thermo Electron 30000 508,125.00
------------
$ 2,028,906.25
EFFICIENT ELECTRIC DEVICES : 5.7%
Baldor 35000 $ 708,750.00
*SLI 42500 1,179,375.00
------------
$ 1,888,125.00
NATURAL FOODS : 14.3%
*Gardenburger 15000 $ 172,500.00
*Horizon Organic 25000 387,500.00
*United Natural Foods 40000 965,000.00
*Whole Foods Markets 30000 1,451,250.00
*Wild Oats 40000 1,260,000.00
Worthington Foods 25000 475,000.00
------------
$ 4,711,250.00
<PAGE>
DECEMBER 31, 1998
NEW ALTERNATIVES FUND, INC
STATEMENT OF INVESTMENTS (CONTINUED)
SHARES MARKET VALUE
------ ------------
RECYCLING 4.2%
Caraustar Ind 20000 $ 571,250.00
Imco Recycling 20000 308,750.00
Republic Group 25000 501,562.50
-----------
1,381,562.50
NATURAL GAS
TRANSMISSION & DISTRIBUTION 8.5%
Energen 15000 $ 292,500.00
Keyspan Energy Corp. 25000 775,000.00
KN Energy 10000 363,750.00
MCN 20000 381,250.00
National Fuel Gas 15000 677,812.50
Williams Co's 10000 311,875.00
------------
$2,802,187.50
RAILROADS 6.9%
Burlington Northern Rail 30000 $ 1,012,500.00
Norfolk Southern Railway 40000 1,267,500.00
------------
$ 2,280,000.00
Total Common Stock (cost $22,426,464.26) $24,781,479.75
Market Deposits and Treasury Bills :24.5%
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 $7,663,310.27) 7,682,054.30
------------
$ 8,082,054.30
Total Common Stock (75%) $24,781,479.75
Bank money market and Treasury Bills(24.50%) 8,082,054.30
Cash and **Receivables, less liabilities (0.50)% 158,185.04
--------------
NET ASSETS (100 %) $33,021,719.09
*Securities for which no cash dividends were paid during the
fiscal year
<PAGE>
NEW ALTERNATIVES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31 1998
ASSETS
Investment Securities at market value
(Cost:$22,426,464.26) (Notes 2A and 5)..........$24,781,479.75
Bank money market deposits....................... 400,000.00
U.S.Treasury Bills at market..................... 7,682,054.30
Cash............................................. 65,092.45
Receivables: Dividends.......................... 23,212.00
Interest........................... 587.77
Securities Sold.................... 168,494.37
Subscriptions receivable........... 5,481.08
------------
Total Assets ..................................$33,126,401.72
LIABILITIES
Payables: Accrued Operating Expenses :
Accounting.................................... $ 403.00
Custodian................................ .... 2,560.30
Directors Fees ............................... 1,483.27
State Taxes .................................. 450.19
Advisory fee ................................. 22,302.69
Regulatory fees .............................. 7,019.73
Printing ..................................... 6,921.16
Bond and Insurance............................ 3,770.72
Transfer Agent-Fund Plan Services............. 4,263.63
Fund Pricing-Fund Plan Services............... 2,056.49
Other......................................... 3,442.19
---------
54,673.37
Securities Purchased.......................... ---
Redemptions Payable........................... 10,000.00
Dividend distribution payable................. 40,009.26
Total Liabilities ............................ $ 104,682.63
-----------
Net Assets at market, applicable to 1,156,952.553
outstanding shares. There are eight million common shares authorized.
There is only one class of common stock. (note 3)
==============
$33,021,719.09
<PAGE>
5
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDING DECEMBER 31, 1998
INVESTMENT INCOME AND EXPENSE
INCOME :
Dividends.....................................$ 392,032.63
Interest ..................................... 212,657.58
-------------
Total Income .................................$ 604,690.21
EXPENSES :
Management Fee (note 4) ..................... $ 281,189.52
Custodian fees
United Missouri Bank......................... 20,075.00
State Taxes.................................. 430.70
Accounting .................................. 4,369.00
Directors ................................... 2,671.80
Filing Fees.................................. 11,169.00
Postage and Printing ........................ 14,600.00
Bond and Insurance .......................... 6,454.85
Transfer Agent-First Data ................... 43,800.00
Fund Pricing-First Data ..................... 30,726.00
Other........................................ 12,775.00
-------------
Total Expenses .............................. $ 428,262.87
NET INVESTMENT INCOME ....................... $ 176,427.34
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN ON INVESTMENTS (note 2B&5)
Proceeds from sales..........................$15,034,579.58
Cost of Securities Sold ..................... 14,846,575.61
--------------
Net Realized Gain ...........................$ 188,003.97
UNREALIZED APPRECIATION (DEPRECIATION) of investments :
Beginning of period .........................$ 6,572,267.08
End of period .............................. 2,355,015.49
--------------
Total unrealized appreciation (depreciation).$(4,217,251.59)
For the period.
Net realized and unrealized gain (loss)
on investments .... ........................ $ 756,327.18
--------------
Net increase (decrease) in net assets
resulting from operations....................$(3,852,820.28)
--------------
<PAGE>
6
NEW ALTERNATIVES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year End Year End
12/31/98 12/31/97
FROM INVESTMENT ACTIVITIES:
Net Investment Income ............ $ 176,427.34 $ 288,448.08
Net Realized gain from
security transactions ............ 188,003.97 2,179,207.35
Unrealized appreciation
(depreciation) of investments..... (4,217,251.59) 1,408,056.31
--------------- --------------
Increase (decrease) in net assets
derived from investment
activities........................ $(3,852,820.28) $ 3,875,711.74
--------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS :
From net investment income........
dividends to shareholders ........ $ (176,501.42) $ (288,422.67)
Distributions to shareholders..... (188,130.28) (2,179,188.28)
FROM CAPITAL SHARE TRANSACTIONS:
Net increase (decrease) from
Capital transactions (note 3)..... $ (702,052.38) $ 984,268.75
INCREASE (DECREASE) IN
NET ASSETS:....................... $(4,919,504.36) $ 2,392,369.54
NET ASSETS AT :
Beginning of the period... $37,941,223.45 $ 35,548,869.45
--------------- --------------
End of the period................ $33,021,719.09 $ 37,941,238.99
=============== ===============
<PAGE>
NOTES TO FINANCIAL STATEMENT FOR THE
YEAR ENDING DECEMBER 31, 1998
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, the American Stock Exchange and the
NASD National Market System on December 31, 1998 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, 1998 for federal tax purposes is $22,426,464.26.
3) CAPITAL STOCK - There are eight million shares of capital stock authorized.
On December 31, 1998 there were 1,156,952.553 shares after the dividend.
Aggregate paid in capital including reinvestment of dividends was
$30,666,865.52. Transactions in capital stock were as follows:
Year End 12/31/98 Year End 12/31/97
----------------- -----------------
Shares $ Amount Shares $ Amount
Capital stock
sold............ 78,407.173 2,481,638.78 68,392.297 2,195,444.11
Capital stock
issued reinvest-
ment of div..... 11,477.383 327,935.59 68,554.443 2,198,834.61
Redemptions. (115,835.579) (3,511,626.75) (105,757.199) (3,410,009.97)
----------- ------------ ----------- ------------
Net Increase/
(decrease) (25,951.023) $ (702,052.38) 31,189.541 $ 984,268.75
----------- -------------- ----------- -------------
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,
Accrued Equities reduces its management fee by the amount of such excess
expenses. The annualized expense ratio for the year ended December 31, 1998 was
1.18%. 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 the six months ended December 31,
1998, the aggregate cost of securities purchased totaled $11,111,326.92. 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, 1998 was
$15,034,579.58.
