Fund Competition: From 1982 to 2000 we were the only fund with a focus on alternative energy. For a few years we were also the only fund concerned with the environment. There were a few funds concerned with social standards when we began in 1982.

The following alternative energy related new funds were started during 2000: Merrill Lynch, a closed-end fund for sale in the United Kingdom; Munder Power Plus, which invest in "non regulated energy"; Turner New Energy, "uses new or advanced technology" and the Kinetics Fund which invests in "medium and small cap companies including alternative energy companies". To our knowledge, none of them claim to be solely involved in alternative energy or to have any broad social policy.

From what we observe, they are joining part of an energy directed parade they believe to be going forward.

Fuel Cell Competition: Fuel cells have recently become a popular item. We have the impression that about two new companies or old companies in other businesses declare monthly that they are in the fuel cell business or selling parts to fuel cell companies. One of the big companies that has joined the group is DUPONT. They seek to produce a PEM catalyst screen used in several types of fuel cells.

The amount of material about these new developments we receive by mail, telephone and e-mail is nearly overwhelming. Which companies producing fuel cells are likely to survive? We have been following the fuel cell idea since the Fund started in 1982. We are not going to buy shares of all or many of the more recent entries. We work hard at reading all we can and communicate with others who seem to have good insight. We will probably miss some good opportunities and buy into some failures.

We do think we have a grasp of what is practical because of our long term pursuit of the subject matter. Fuel Cell Energy, our first and largest holding in fuel cells, appears to be on almost every alternative energy list. We have some advantage in having purchased the shares many years ago.

A Change in Foreign Investment: [editor's note: I include this because foreign investing is so important to a-e investing.] For a long period we have been frustrated in our attempts to invest in some foreign companies, such as the wind turbine company Vestas. The reason is that our custodian did not accept the shares of foreign companies which were not regularly traded on US exchanges without a substantial increase in expense to our Fund. We have recently arranged to have a new custodian that will not require such heavy expense for such investments. We expect to be more flexible on this subject beginning during May of this year....