<PAGE>
ANNUAL
FINANCIAL REPORT
DECEMBER 31, 1999
<PAGE>
FACTORS THAT EFFECTED PERFORMANCE IN 1999
We were up 8.47% for the year. The NASDAQ index and to a lesser extent the DOW
Industrial Average were soaring. That does not describe the whole story.
There was a great divergence in sectors. Salomon Smith Barney reported that more
stocks listed in the S&P 500 declined in 1999 than rose. They (Salomon Smith
Barney) reported a greater divergence in groups of stocks than at any time for
which they had records (35 years).
Many of the "dot.com" internet companies and the "high tech" producers of
telecommunication hardware and software were up. Some of these companies had
stock values of billions of dollars with little immediate expectation of
earnings. Others which performed well had huge price earnings ratios. On the
other hand many companies which succeeded in improving their earnings saw their
stock prices decline as there was a move away from less glamorous "value" stocks
with positive earnings but declining stock prices. Energy prices recovered from
last winter's big decline as did the prices of recycled paper and metals, but
the share prices of many natural gas and recycling related companies in these
areas did not do well.
Our "strategy" is to find alternative energy investments and other
environmentally oriented investments with a concern for socially responsible
corporate behavior. The companies should be viable with a promise of growth for
our shareholders and produce a benefit to the community. Environmentally
oriented companies were not flying with the internet names. We were pleased with
the progress of most of the companies we own despite an atmosphere where the US
Congress inserted in its budget item a provision that the budget could not be
used to produce Kyoto agreed upon environmental requirements. Please vote.
We now see what appears to be the beginning of real excitement over alternative
energy, particularly fuel cells and solar cells. The fuel cell stocks seem to
have the flavor of the
<PAGE>
internet companies -- lot's of promise but no expectation of serious earnings
for some time. We have to take off our "value" hats to own them.
There is also serious positive movement in marketing environmentally grown
foods. At the time of writing this annual report it would appear that there is
new attention to and rising stock values in the long neglected alternative
energy area. Fuel cells are becoming particularly important; many companies are
trying to identify themselves as having some connection with this industry.
The Fund's performance was helped out by a number of holdings taken over during
the year, including U.S. Filter, Aquarion (both water related) and T.J.
International (alternative wood products). Performance was hindered by several
failures, including United Natural Foods (natural foods distribution), SLI
(lighting products), and York International (air conditioning products)
<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
1999 1998 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD 28.54 $32.07 $30.87 $30.51 $28.14 $30.00 $29.95 $29.19
----- ------ ------ ------ ------ ------ ------ ------
Investment Income $.66 $.52 $.64 $.73 $.75 $.72 $.62 $.62
Expenses .38 .37 .38 .39 .40 .40 .33 .28
----- ------ ------ ------ ------ ------ ------ ------
Net Investment Income .28 .15 .26 .34 .35 .32 .29 .34
Net realized & Unrealized
gain (Loss) on investment 2.14 (3.22) 3.16 3.72 5.14 (1.43) .58 1.10
----- ------ ------ ------ ------ ------ ------ ------
Total from Investment operations 2.42 (3.07) 3.42 4.06 5.49 (1.11) .87 1.44
Dividends from net
investment income (.28) (.15) (.26) (.34) (.35) (.32) (.29) (.34)
Distributions from net
realized gain (1.83) (.16) (1.96) (3.36) (2.77) (.43) (.53) (.34)
----- ------ ------ ------ ------ ------ ------ ------
Total Distributions (2.11) (.31) (2.22) (3.70) (3.12) (.75) (.82) (.68)
Net change in net asset value .31 (3.53) 1.20 .36 2.37 (1.86) .05 .76
Net asset value as of end
of the period 28.85 $28.54 32.07 30.87 30.51 28.14 30.00 29.95
----- ------ ------ ------ ------ ------ ------ ------
Total return
(Sales load not reflected) 8.5% (10%) 11.1% 13.3% 19.5% (3.7)% 2.9% 4.9%
Net assets, end of period $32,555 $33,021 $37,941 $35,549 $32,236 $28,368 $31,567 $28,896
Ratio of operating expense
to net assets** 1.13% 1.18% 1.15% 1.21% 1.28% 1.30% 1.11% 1.04%
Ratio of net investment income
to average net assets** .89% .49% .79% 1.04% 1.12% 1.04% .96% 1.25%
Portfolio turnover 87.3% 32.4% 53.9% 51.2% 48.72% 33.00% 18.36% 13.10%
Number of shares outstanding 1,058,230 1,156,952 1,111,377 1,038,561 965,769 984,847 1,026,460 945,006
at end of period***
</TABLE>
<TABLE>
<CAPTION>
For each share of capital stock outstanding*
Year Year Year Year Year YearFirst Seven
End End End End End End Months
12/31 12/31 12/31 12/31 12/31 4/30 4/30/83
1991 1990 1989 1988 1987 1987 ****
****
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD $24.62 $27.57 $22.55 $18.85 $22.43 $19.68 $12.50
------ ------ ------ ------ ------ ------ ------
Investment Income $.72 $.70 $.73 $.67 $.40 $.38 $.38
Expenses .29 .27 .26 .25 .16 .16 .20
------ ------ ------ ------ ------ ------ ------
Net Investment Income .43 .43 .47 .42 .24 .22 .18
Net realized & Unrealized
gain (Loss) on investment 5.86 (2.53) 5.41 4.09 (3.21) 3.45 3.08
------ ------ ------ ------ ------ ------ ------
Total from Investment operations 6.29 (2.10) 5.88 4.51 (2.97) 3.67 3.26
Dividends from net
investment income (.43) (.43) (.47) (.42) (.24) (.22) (.18)
Distributions from net
realized gain (1.29) (.42) (.39) (.39) (.38) (.70) (.19)
------ ------ ------ ------ ------ ------ ------
Total Distributions (1.72) (.85) (.86) (.81) (.62) (.92) (.37)
Net change in net asset value 4.57 (2.95) 5.03 3.71 (3.59) 2.75 2.89
Net asset value as of end
of the period 29.19 24.62 27.57 22.55 18.85 22.43 15.39
------ ------ ------ ------ ------ ------ ------
Total return
(Sales load not reflected) 25.6% (7.6)% 26.0% 23.9% (2.6)% 22.2% 10.4%
Net assets, end of period $23,931 $16,433 $11,893 $6,162 $4,133 $3,404 $163
Ratio of operating expense
to net assets** 1.18% 1.27% 1.25% 1.24% .80% 1.17% 1.08%
Ratio of net investment income
to average net assets** 1.74% 2.08% 2.20% 2.18% 1.23% 1.68% 1.69%
Portfolio turnover 21.50% 24.70% 14.60% 25.88% 8.57% 8.79% 74.50%
Number of shares outstanding 776,974 646,664 419,212 264,414 212,704 151,848 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
**** At this time the fund was on a fiscal year. Table for 1983-1987 is
available on request. Deleted to make space.
<PAGE>
VALUE OF $10,000 INVESTMENT OVER PAST 10 YEARS
Past Performance is not Predictive of Future Performance.
Average Annual Return (after deducting maximum sales charge):
One Year 3.72%; Five Years 6.8%; Ten Years 5.39%.
Fund S&P 500 Russell 2000
1/1/90 $10,000.00 $10,000.00 $10,000.00
1990 $8,797.00 $9,692.70 $7,854.55
1991 $11,045.50 $12,587.70 $11,285.13
1992 $11,589.30 $13,496.90 $13,131.13
1993 $11,923.90 $14,805.10 $15,381.74
1994 $11,481.00 $15,040.60 $14,874.93
1995 $13,719.10 $20,436.90 $18,945.40
1996 $15,545.70 $24,999.70 $22,053.42
1997 $17,267.90 $33,190.90 $26,909.86
1998 $15,535.90 $42,505.60 $26,293.68
1999 $16,905.50 $51,277.60 $31,826.67
<PAGE>
DECEMBER 31, 1999
NEW ALTERNATIVES FUND, INC.
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
COMMON STOCKS : 79.29%
SHARES MARKET VALUE
------ ------------
<S> <C> <C>
ALTERNATE ENERGY: 26.04%
ALTERNATE ENERGY: 12.85%
*Calpine 25000 $ 1,600,000.00
*Evercell 10000 257,500.00
Idacorp 35000 938,437.50
Trigen 80000 1,390,000.00
---------------
$ 4,185,937.50
ALTERNATE ENERGY (FUEL CELL): 9.89%
*Ballard Power Systems 15000 $ 422,812.50
*FuelCell Energy, Inc. 50000 1,253,125.00
*Mechanical Technology 30000 697,500.00
*Plug Power 30000 847,500.00
---------------
$ 3,220,937.50
ALTERNATE ENERGY (SOLAR CELL): 3.29%
*AstroPower 60000 $ 840,000.00
*Emcore Corporation 5000 170,000.00
*Real Goods Trading 1000 3,937.50
*Spire Corporation 10000 57,500.00
---------------
$ 1,071,437.50
CLEAN AIR: 2.05%
*Thermo Instruments 60000 $ 667,500.00
---------------
$ 667,500.00
CLEAN WATER: 5.69%
American Water Works 30000 $ 637,500.00
Ameron Intl. 20000 791,250.00
Ionics 15000 421,875.00
---------------
$ 1,850,625.00
CONSERVATION: 3.08%
Minerals Technology 25000 $ 1,001,562.50
---------------
$ 1,001,562.50
ENVIRONMENTAL (GENERAL): 2.11%
*Flow International 50000 $ 568,750.00
Johnson Worldwide Assoc. Inc. 15000 106,406.25
*Kafus Environmental 1000 8,937.50
---------------
$ 684,093.75
EFFICIENT ELECTRIC DEVICES: 5.45%
Baldor Electric 30000 $ 543,750.00
*SLI Inc. 40000 542,500.00
York International 25000 685,937.50
---------------
$ 1,772,187.50
</TABLE>
<PAGE>
DECEMBER 31, 1999
NEW ALTERNATIVES FUND, INC
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
SHARES MARKET VALUE
------ ------------
<S> <C> <C>
NATURAL FOODS: 11.64%
*Hain Food Group, Inc. 25000 $ 559,375.00
*Horizon Organic 25000 187,500.00
*United Natural Foods 45000 540,000.00
*Whole Foods Markets 30000 1,391,250.00
*Wild Oats Markets 50000 1,109,375.00
---------------
$ 3,787,500.00
RECYCLING: 10.54%
Caraustar Industries 50000 $ 1,200,000.00
Commercial Metals 40000 1,357,500.00
Imco Recycling 45000 568,125.00
Republic Group 20000 302,500.00
---------------
$ 3,428,125.00
NATURAL GAS
TRANSMISSION & DISTRIBUTION: 8.62%
Burlington Resources 20000 $ 661,250.00
El Paso Energy Corp. 15000 582,187.50
Keyspan Energy Corp. 50000 1,159,375.00
Kinder Morgan 20000 403,750.00
---------------
$ 2,806,562.50
RAILROADS: 2.39%
CSX Corp 15000 $ 470,625.00
Norfolk Southern 15000 307,500.00
---------------
$ 778,125.00
OTHER (FUEL CELL COMPONENTS): 1.69%
Delphi 35000 $ 551,250.00
---------------
$ 551,250.00
Total Common Stock (cost $23,048,390.90) $ 25,805,843.75
---------------
Market Deposits and Treasury Bills:
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 $6,262,772.45) 6,285,577.01
---------------
$ 6,685,577.01
Total Common Stock (79.29%) $ 25,805,843.75
Bank money market and Treasury Bills (20.54%) 6,685,577.01
Cash and **Receivables, less liabilities (.17)% 64,540.79
---------------
NET ASSETS (100%) $ 32,555,961.55
</TABLE>
*Securities for which no cash dividends were paid during the fiscal year.
<PAGE>
DECEMBER 31, 1999
NEW ALTERNATIVES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
ASSETS
------
Investment Securities at market value
(Cost:$23,048,390.90) (Notes 2A and 5)..........................$ 25,805,843.75
Bank money market deposits...................................... 400,000.00
U.S. Treasury Bills at market.................................... 6,285,577.01
Cash............................................................ 538,610.37
Receivables: Dividends......................................... 17,462.50
Interest........................................................ 1,362.68
Securities Sold................................................. 130,020.65
Subscriptions receivable........................................ 39,843.09
---------------
Total Assets ...................................................$ 33,218,720.05
LIABILITIES
-----------
Payables: Accrued Operating Expenses
Advisory fee ...................................................$ 25,609.00
Accounting...................................................... 403.00
Custodian................................ ...................... 3,759.30
Directors Fees ................................................. 1,880.07
State Taxes .................................................... 310.83
Regulatory fees ................................................ 2,902.03
Printing ....................................................... 6,616.66
Bond and Insurance.............................................. 3,733.56
Transfer Agent-First Data Investor Services..................... 6,638.89
Fund Pricing-First Data Investor Services....................... 2,242.73
Other........................................................... 0.00
---------------
$ 54,096.07
Securities Purchased............................................$ 378,217.50
Redemptions Payable............................................. 0.00
Dividend distribution payable................................... 230,444.93
---------------
Total Liabilities ..............................................$ 662,758.50
===============
$ 32,555,961.55
Net Assets at market, applicable to 1,128,356.848 outstanding shares. There are
eight million common shares authorized. There is only one class of common stock.
(note 3)
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDING DECEMBER 31, 1999
INVESTMENT INCOME AND EXPENSE
INCOME:
Dividends........................................................$ 305,954.27
Interest......................................................... 395,249.93
---------------
Total Income.....................................................$ 701,204.20
EXPENSES:
Management Fee (note 4)..........................................$ 262,917.22
Custodian Fees
United Missouri Bank............................................. 20,075.00
State Taxes...................................................... 430.70
Accounting....................................................... 4,745.00
Directors........................................................ 2,671.80
Filing Fees...................................................... 11,169.00
Postage and Printing............................................. 12,240.00
Bond and Insurance............................................... 6,456.84
Transfer Agent-PFPC.............................................. 43,800.00
Fund Pricing-PFPC................................................ 31,481.25
Other............................................................ 12,831.22
---------------
Total Expenses...................................................$ 408,818.03
NET INVESTMENT INCOME............................................$ 292,386.17
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN ON INVESTMENTS (NOTE 2B & 5)
Proceeds from sales..............................................$ 22,120,011.87
Cost of Securities Sold.......................................... 20,183,571.72
---------------
Net Realized Gain................................................$ 1,936,440.15
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS:
Beginning of period..............................................$ 2,355,015.49
End of period.................................................... 2,757,452.85
---------------
Total Unrealized appreciation (depreciation) for the period......$ 402,437.36
Net Realized and Unrealized gain (loss) on investments...........$ 2,338,877.51
---------------
Net Increase (decrease) in net assets resulting from operations..$ 2,631,263.68
---------------
<PAGE>
DECEMBER 31, 1999
NEW ALTERNATIVES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year End Year End
12/31/99 12/31/98
-------- --------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net Investment Income $ 292,440.39 $ 176,427.34
Net Realized gain from security transactions 1,936,440.15 188,003.97
Unrealized appreciation (depreciation) of investments 402,437.36 (4,217,251.59)
--------------- --------------
Increase (decrease) in net assets derived from
investment activities $ 2,631,319.90 $(3,852,820.28)
--------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net Investment income dividends to shareholders $ (292,386.17) $ (176,501.42)
Distributions to shareholders $ (1,936,440.27) $ (188,130.28)
FROM CAPITAL SHARE TRANSACTIONS:
Net increase (decrease) from
Capital Transactions (note 3) $ (868,251.00) $ (702,052.38)
INCREASE (DECREASE) IN NET ASSETS: $ (465,757.54) $(4,919,504.36)
NET ASSETS AT:
Beginning of the Period $ 33,021,719.09 $37,941,223.50
End of the Period $ 32,555,961.55 $33,021,719.09
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENT FOR THE
PERIOD ENDING DECEMBER 31, 1999
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, 1999 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, 1999 for federal tax purposes is $23,048,390.90.
3) CAPITAL STOCK - There are eight million shares of capital stock authorized.
On December 31, 1999 there were 1,058,356.848 shares outstanding before the
dividend and 1,128,356.848 shares outstanding after the dividend. Aggregate paid
in capital including reinvestment of dividends was $29,798,614.52.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Year End 12/31/99 Year End 12/31/98
----------------- -----------------
Shares Dollar Amount Shares Dollar Amount
------ ------------- ------ -------------
<S> <C> <C> <C> <C>
Capital stock sold 46,069.906 $ 1,374,751.12 78,407.173 $ 2,481,638.78
Capital stock issued
reinvestment of dividends 69,268.047 $ 1,998,381.51 11,477.383 $ 327,935.59
Redemptions (143,934.592) $ (4,241,383.63) (115,835.579) $(3,511,626.75)
----------- --------------- ----------- --------------
Net Increase (Decrease) (28,596.639) $ (868,251.00) (25,951.023) $ (702,052.38)
</TABLE>
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 period ended December 31, 1999
was 1.13%. 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 Year ended December 31,1999
the aggregate cost of securities purchased totaled $20,805,501.75. 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, 1999 was $22,120,011.87.
<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, 1999, and the related statement of operations
for the year then ended, and the statements of changes in net assets and the
supplementary information-selected 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, 1999 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, 1999, 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
February 8, 2000
