<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 19 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 19 [X]
(Check appropriate box or boxes.)
-------------------------
ALPINE EQUITY TRUST
------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, Ohio 43219
------------------------------------------------------------
(Address of Principal Executive Offices)
(888) 785-5578
------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Samuel A. Lieber
Alpine Management & Research, L.L.C.
122 East 42nd Street, 37th Floor, New York, New York 10168
Copy to:
Kenneth S. Gerstein, Esq.
Schulte Roth & Zabel LLP
900 Third Avenue, New York, New York 10022
(Name and address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as practicable after this Post-Effective Amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a) of rule 485
[X] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE> 2
FORM N-1/A
ALPINE EQUITY TRUST
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-lA ITEM NUMBER
----------------
PART A Caption
------ -------
<S> <C> <C> <C>
1. Cover Page Cover Page
2. Synopsis Cover Page; Expense
Information
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Description
of the Funds; Investment
Instruments; Investment
Practices; General
Information
5. Management of Fund Cover Page;
Management of the
Funds; General
Information; Expense
Information
5A. Management's Discussion of Fund Performance *
6. Capital Stock and Other Securities Cover Page; General
Information, Dividends,
Distributions and Taxes;
Description of the Funds;
Shareholder Services
7. Purchase of Securities Being Offered Purchase and
Redemption of Shares
8. Redemption or Repurchase Purchase and
Redemption of Shares;
Exchange Privilege
9. Pending Legal Proceedings *
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
N-lA ITEM NUMBER
----------------
PART B Caption
------ -------
<S> <C> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History
13. Investment Objectives and Policies Investment Objectives
and Policies
14. Management of the Fund Management; Trustees
Compensation Table;
Investment Advisor
15. Control Persons and Principal Holders of Trustees Compensation
Securities Table; General
Information About the
Funds
16. Investment Advisory and Other Services Investment Advisor;
Distribution Plans
17. Brokerage Allocation and Other Practices Allocation of Brokerage
18. Capital Stock and Other Securities *
19. Purchase, Redemption and Pricing of Securities Net Asset Value;
Being Offered Purchase of Shares
20. Tax Status Additional Tax
Information
21. Underwriters Distribution Plans;
General Information
About the Funds
22. Calculation of Performance Data Performance Information
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
N-lA ITEM NUMBER
----------------
PART B Caption
------ -------
<S> <C> <C> <C>
23. Financial Statements Financial Statements
- -------------------------------------------------------------------------------------------------------
</TABLE>
* Omitted because answer is negative or inapplicable.
<PAGE> 5
PROSPECTUS
[___________], 1998
ALPINE U.S. REAL ESTATE EQUITY FUND
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND
ALPINE REALTY INCOME AND GROWTH FUND
(series of Alpine Equity Trust)
Class A Shares
Class B Shares
Class C Shares
-----------
ALPINE U.S. REAL ESTATE EQUITY FUND seeks long-term capital
growth. Current income is a secondary objective. The Fund invests primarily in
the equity securities of United States issuers which are principally engaged in
the real estate industry or own significant real estate assets.
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND seeks long-term
capital growth. Current income is a secondary objective. The Fund invests
primarily in the equity securities of non-United States issuers which are
principally engaged in the real estate industry or own significant real estate
assets.
ALPINE REALTY INCOME AND GROWTH FUND seeks a high level of
current income. Capital appreciation is a secondary objective. The Fund is a
non-diversified investment portfolio that invests primarily in the dividend
paying equity securities and debt securities of issuers which are principally
engaged in the real estate industry or own significant real estate assets.
-----------
The Funds are separate series of the Alpine Equity Trust,
which is a registered open-end, management investment company. The address of
the Funds is 3435 Stelzer Road, Columbus, Ohio 43219. Alpine Management &
Research, LLC serves as the investment adviser (the "Adviser") of the Funds.
This Prospectus provides basic information that investors
should know before investing in Class A, Class B or Class C shares of the Funds.
A Statement of Additional Information about the Funds, dated [ ], 1998,
has been filed with the Securities and Exchange Commission (the "SEC") and is
incorporated by reference into this Prospectus. The Statement of Additional
Information provides more detailed information about the Funds and may be
obtained without charge by calling toll free (888) 785-5578.
You should read this Prospectus carefully and retain it for
future reference.
-----------
The SEC has not approved or disapproved these securities or
passed upon the adequacy of this Prospectus. Any representation to the contrary
is a criminal offense.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
EXPENSE INFORMATION...............................................................................................3
FINANCIAL HIGHLIGHTS..............................................................................................5
DESCRIPTION OF THE FUNDS.........................................................................................11
INVESTMENT INSTRUMENTS...........................................................................................12
INVESTMENT PRACTICES.............................................................................................19
RISK CONSIDERATIONS..............................................................................................22
MANAGEMENT OF THE FUNDS..........................................................................................26
DISTRIBUTION ARRANGEMENTS........................................................................................27
PURCHASE AND REDEMPTION OF SHARES................................................................................27
EXCHANGE PRIVILEGE...............................................................................................33
SHAREHOLDER SERVICES.............................................................................................34
DIVIDENDS, DISTRIBUTIONS AND TAXES...............................................................................35
GENERAL INFORMATION..............................................................................................36
</TABLE>
<PAGE> 7
EXPENSE INFORMATION
This table shows shareholder transaction costs associated with
Class A, Class B and Class C shares.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Class A Class B Class C
Shares Shares Shares
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales Charge Imposed on Purchases 4.75% (1) None None
-------------------------------------------------------------------------------------------
Sales Charge on Dividend Reinvestments None None None
-------------------------------------------------------------------------------------------
Contingent Deferred Sales Charge None 5.00% (2) 1.00% (2)
-------------------------------------------------------------------------------------------
Redemption Fee (3) None None None
-------------------------------------------------------------------------------------------
</TABLE>
- -----------------
(1) Reduced sales charges apply to investments of $50,000 or more. The Funds do
not charge a front-end sales charge on purchases of $1 million or more, but they
do charge a contingent deferred sales charge of 1.00% if you redeem those shares
within one year after your purchase. See "PURCHASE OF SHARES How to Buy Shares"
for more information.
(2) The deferred sales charge on Class B shares declines from 5.00% to 1.00% of
amounts redeemed within six years after the month of purchase. The deferred
sales charge on Class C shares is 1.00% on amounts redeemed within one year
after the month of purchase. The Funds do not charge a contingent deferred sales
charge on redemptions made after that time. See "PURCHASE OF SHARES - How to Buy
Shares" for more information.
(3) A $5.00 charge is deducted from redemption proceeds if the proceeds are
wired.
The following tables show the estimated annual operating
expenses associated with investments in Class A, Class B and Class C shares of
each Fund (as a percentage of its average net assets), together with examples of
the cumulative effect of estimated expenses on a hypothetical $1,000 investment
for periods of 1, 3, 5 and 10 years, assuming: (i) a 5% annual return, and (ii)
redemption at the end of each period. The examples should not be considered a
representation of past or future expenses or annual return. Actual expenses and
annual return may be greater or less than those shown. As a result of
asset-based sales charges, long-term investors in Class B or Class C shares may
pay more than the economic equivalent of the maximum front-end sales charges
permitted under the rules of the National Association of Securities Dealers,
Inc.
ALPINE U.S. REAL ESTATE EQUITY FUND
Estimated Annual Operating Expenses
<TABLE>
<CAPTION>
- ---------------------------- --------------------------- ---------------------------------- -------------------------
Class A Class B Class C
- ---------------------------- --------------------------- ---------------------------------- -------------------------
<S> <C> <C> <C>
Management Fee 1.00% 1.00% 1.00%
- ---------------------------- --------------------------- ---------------------------------- -------------------------
12b-1 Fees (1) 0.25% 1.00% 1.00%
- ---------------------------- --------------------------- ---------------------------------- -------------------------
Other Expenses 0.52% 0.52% 0.52%
- ---------------------------- --------------------------- ---------------------------------- -------------------------
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
- ---------------------------- --------------------------- ---------------------------------- -------------------------
<S> <C> <C> <C>
Total 1.77% 2.52% 2.52%
- ---------------------------- --------------------------- ---------------------------------- -------------------------
</TABLE>
(1) For Class B and C shares, a portion of the 12b-1 fees equivalent to 0.25% of
average annual assets will be used to pay shareholder servicing-related
expenses. Distribution-related 12b-1 fees will be limited to 0.75% of average
annual assets as permitted under the rules of the National Association of
Securities Dealers, Inc.
Estimated Cost to Investors
Assuming Redemption at End of Period
<TABLE>
<CAPTION>
- ---------------------------- --------------------------- ---------------------------------- -------------------------
Class A Class B Class C
- ---------------------------- --------------------------- ---------------------------------- -------------------------
<S> <C> <C> <C>
After 1 year $65 $76 $36
- ---------------------------- --------------------------- ---------------------------------- -------------------------
After 3 years $101 $108 $78
- ---------------------------- --------------------------- ---------------------------------- -------------------------
After 5 years $139 $154 $134
- ---------------------------- --------------------------- ---------------------------------- -------------------------
After 10 years $246 $259 $286
- ---------------------------- --------------------------- ---------------------------------- -------------------------
</TABLE>
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND
Estimated Annual Operating Expenses
<TABLE>
<CAPTION>
- ---------------------------- --------------------------- ---------------------------------- -------------------------
Class A Class B Class C
- ---------------------------- --------------------------- ---------------------------------- -------------------------
<S> <C> <C> <C>
Management Fee 1.00% 1.00% 1.00%
- ---------------------------- --------------------------- ---------------------------------- -------------------------
12b-1 Fees (1) 0.25% 1.00% 1.00%
- ---------------------------- --------------------------- ---------------------------------- -------------------------
Other Expenses 0.70% 0.70% 0.70%
- ---------------------------- --------------------------- ---------------------------------- -------------------------
Total 1.95% 2.70% 2.70%
- ---------------------------- --------------------------- ---------------------------------- -------------------------
</TABLE>
(1) For Class B and C shares, a portion of the 12b-1 fees equivalent to 0.25% of
average annual assets will be used to pay shareholder servicing-related
expenses. Distribution-related 12b-1 fees will be limited to 0.75% of average
annual assets as permitted under the rules of the National Association of
Securities Dealers, Inc.
Estimated Cost to Investors
Assuming Redemption at End of Period
<TABLE>
<CAPTION>
- ---------------------------- --------------------------- ---------------------------------- -------------------------
Class A Class B Class C
- ---------------------------- --------------------------- ---------------------------------- -------------------------
<S> <C> <C> <C>
After 1 year
- ---------------------------- --------------------------- ---------------------------------- -------------------------
After 3 years
- ---------------------------- --------------------------- ---------------------------------- -------------------------
After 5 years
- ---------------------------- --------------------------- ---------------------------------- -------------------------
After 10 years
- ---------------------------- --------------------------- ---------------------------------- -------------------------
</TABLE>
-4-
<PAGE> 9
ALPINE REALTY INCOME AND GROWTH FUND
Estimated Annual Operating Expenses
(after fee waiver and expense reimbursement)
<TABLE>
<CAPTION>
- ---------------------------- --------------------------- ----------------------------------
Class A Class B
- ---------------------------- --------------------------- ----------------------------------
<S> <C> <C>
Management Fee 1.00% 1.00%
- ---------------------------- --------------------------- ----------------------------------
12b-1 Fees (1) 0.25% 1.00%
- ---------------------------- --------------------------- ----------------------------------
Other Expenses 0.50% 0.50%
- ---------------------------- --------------------------- ----------------------------------
Total 1.75% 2.50%
- ---------------------------- --------------------------- ----------------------------------
</TABLE>
(1) For Class B and C shares, a portion of the 12b-1 fees equivalent to 0.25% of
average annual assets will be used to pay shareholder servicing-related
expenses. Distribution-related 12b-1 fees will be limited to 0.75% of average
annual assets as permitted under the rules of the National Association of
Securities Dealers, Inc.
Estimated Cost to Investors
Assuming Redemption at End of Period
<TABLE>
<CAPTION>
- ---------------------------- --------------------------- ----------------------------------
Class A Class B
- ---------------------------- --------------------------- ----------------------------------
<S> <C> <C>
After 1 year
- ---------------------------- --------------------------- ----------------------------------
After 3 years
- ---------------------------- --------------------------- ----------------------------------
</TABLE>
The Adviser has voluntarily agreed to waive its fees and to
absorb expenses of Alpine Realty Income and Growth Fund to the extent necessary
to limit ordinary operating expenses of the Fund (excluding interest, taxes and
brokerage) to 1.75% of average net assets for Class A shares, and 2.50% of
average net assets for Class B shares, for the first year of the Fund's
operations or, if sooner, until total assets of the Fund average $15 million or
more for a period of 30 days. Absent this undertaking and assuming that the net
assets of Alpine Realty Income and Growth Fund do not reach $15 million for a
period of 30 days, estimated total operating expenses for the current fiscal
year could range from approximately 1.75% to 2.00% of average net assets for
Class A shares and 2.50% to 2.75% of average net assets for Class B shares.
FINANCIAL HIGHLIGHTS
The following tables present, for Class A shares, Class B
shares and Class C shares of Alpine U.S. Real Estate Equity Fund and Alpine
International Real Estate Equity Fund, financial highlights for a share
outstanding throughout each period indicated. The information in the tables for
the five most recent fiscal years for these two Funds has been audited by
PricewaterhouseCoopers LLP, the Funds' independent auditors. The following
information for both Funds should be read in conjunction with the financial
statements and related notes incorporated in each Funds' Statement of Additional
Information. Further information about each Fund's performance is contained in
its annual report to shareholders, which may be obtained without charge.
-5-
<PAGE> 10
ALPINE U.S. REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
Class A Shares
Year Ended September 30,
1997 1996 1995*
(Dbl Dagger) (Dbl Dagger)
------------ ------------ -----------
PER SHARE DATA:
<S> <C> <C> <C>
Net asset value beginning of year....................................... $12.49 $11.42 $ 9.21
------------ ------------ -----------
Income from investment operations
Net investment income................................................... 0.12# 0.20 0.18
Net realized and unrealized gain on investments........................ 8.57 1.28 2.03
------------ ------------ -----------
Total from investment operations................................... 8.69 1.48 2.21
------------ ------------ -----------
Less distributions from
Net investment income................................................... (0.26)# (0.20) 0
Net realized gain on investments........................................ (1.58) (0.21) 0
------------ ------------ -----------
Total distributions................................................ (1.84) (0.41) 0
------------ ------------ -----------
Net asset value end of year........................................ $19.34 $12.49 $ 11.42
============ ============ ===========
TOTAL RETURN +.......................................................... 78.28% 13.12% 24.00%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (thousands)...................................... $2,778 $ 263 $ 5
Ratios to average net assets:
Total expenses..................................................... 1.77% 1.72% 1.78%++
Interest expense................................................... N/A 0.04% N/A
Total expenses, excluding indirectly paid expenses................. 1.76% N/A N/A
Total expenses, excluding fee waivers & expense reimbursements..... 2.49% 9.65% 364.74%++
Net investment income.............................................. 0.90% 1.60% 3.13%++
Portfolio turnover rate................................................. 205% 169% 115%
Average commission rate paid per share.................................. $0.0597 $0.0619 N/A
</TABLE>
- -------------------
(Dbl Dagger) Calculated based on average shares outstanding throughout the
period.
* For the period from March 10, 1995 (commencement of class
operations) to September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not
reflected.
++ Annualized.
# The per share amount of net investment income is not in accordance
with the distributions per share from net investment income due to
the timing of sales of Fund shares after the Fund declared its
annual income distribution on December 26, 1996. Further, the
distributions declared on such date were paid principally from net
Investment income earned during the previous fiscal year.
-6-
<PAGE> 11
<TABLE>
<CAPTION>
Class B Shares
Year Ended September 30,
1997 1996 1995*
(Dbl Dagger) (Dbl Dagger)
------------ ------------ -----------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of year............................................ $ 12.41 $11.37 $9.19
------------ ------------ -----------
Income from investment operations
Net investment income........................................................ 0.02# 0.13 0.05
Net realized and unrealized gain on investments............................. 8.49 1.27 2.13
------------ ------------ -----------
Total from investment operations........................................ 8.51 1.40 2.13
------------ ------------ -----------
Less distributions from
Net investment income........................................................ (0.20)# (0.15) 0
Net realized gain on investments............................................. (1.58) (0.21) 0
------------ ------------ -----------
Total distributions..................................................... (1.78) (0.36) 0
------------ ------------ -----------
Net asset value end of year............................................. $ 19.14 $ 12.41 $11.37
=========== =========== ===========
TOTAL RETURN +............................................................... 76.87% 12.49% 23.72%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (thousands)........................................... $ 3,446 $ 431 $ 160
Ratios to average net assets:
Total expenses.......................................................... 2.52% 2.46% 2.51%++
Interest expense........................................................ N/A 0.04% N/A
Total expenses, excluding indirectly paid expenses...................... 2.51% N/A N/A
Total expenses, excluding fee waivers & expense reimbursements.......... 3.24% 6.19% 28.70%++
Net investment income................................................... 0.12% 1.05% 2.00%++
Portfolio turnover rate...................................................... 205% 169% 115%
Average commission rate paid per share....................................... $0.0597 $0.0619 N/A
</TABLE>
- -------------------
(Dbl Dagger) Calculated based on average shares outstanding throughout the
period.
* For the period from March 10, 1995 (commencement of class
operations) to September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not
reflected.
++ Annualized.
# The per share amount of net investment income is not in accordance
with the distributions per share from net investment income due to
the timing of sales of Fund shares after the Fund declared its
annual income distribution on December 26, 1996. Further, the
distributions declared on such date were paid principally from net
Investment income earned during the previous fiscal year.
-7-
<PAGE> 12
<TABLE>
<CAPTION>
Class C Shares
Year Ended September 30,
1997 1996 1995*
(Dbl Dagger) (Dbl Dagger)
------------ ------------ -----------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of year............................................ $12.44 $ 11.41 $ 10.87
------------ ------------ -----------
Income from investment operations
Net investment income........................................................ 0.03# 0.13 0.08
Net realized and unrealized gain on investments............................. 8.47 1.28 0.46
------------ ------------ -----------
Total from investment operations........................................ 8.50 1.41 0.54
------------ ------------ -----------
Less distributions from
Net investment income........................................................ (0.23)# (0.17) 0
Net realized gain on investments............................................. (1.58) (0.21) 0
------------ ------------ -----------
Total distributions..................................................... (1.81) (0.38) 0
------------ ------------ -----------
Net asset value end of year............................................. $19.13 $ 12.44 $ 11.41
============ ============ ===========
TOTAL RETURN +............................................................... 76.89% 12.49% 4.97%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (thousands)........................................... $1,673 $125 $ 3
Ratios to average net assets:
Total expenses.......................................................... 2.52% 2.47% 2.49%++
Interest expense........................................................ N/A 0.04% N/A
Total expenses, excluding indirectly paid expenses...................... 2.51% N/A N/A
Total expenses, excluding fee waivers & expense reimbursements.......... 3.24% 18.82% 421.54%++
Net investment income................................................... 0.23% 1.08% 2.55%++
Portfolio turnover rate...................................................... 205% 169% 115%
Average commission rate paid per share....................................... $0.0597 $0.0619 N/A
</TABLE>
- -------------------
(Dbl Dagger) Calculated based on average shares outstanding throughout the
period.
* For the period from March 10, 1995 (commencement of class
operations) to September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not
reflected.
++ Annualized.
# The per share amount of net investment income is not in accordance
with the distributions per share from net investment income due to
the timing of sales of Fund shares after the Fund declared its
annual income distribution on December 26, 1996. Further, the
distributions declared on such date were paid principally from net
Investment income earned during the previous fiscal year.
-8-
<PAGE> 13
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
Class A Shares
---------------------------------------------
Year Ended October 31, Year Ended
------------------------------ September
30,
PER SHARE DATA: 1997 1996 1995# 1995*
---------- --------- -------- ------------
<S> <C> <C> <C> <C>
Net asset value beginning of year.............................. $12.28 $11.58 $12.12 $11.46
---------- --------- -------- ------------
Income (loss) from investment operations:**
Net investment income (loss)................................. (0.06) .06 (.01) .07
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions............... 0.72 0.64 (0.53) 0.59
---------- --------- -------- ------------
Total from investment operations............................. 0.66 0.70 (0.54) 0.66
---------- --------- -------- ------------
Net asset value, end of year................................... $12.94 $12.28 $11.58 $12.12
========== ========= ======== ============
TOTAL RETURN+.................................................. 5.4% 6.0% (4.5%) 5.8%
========== ========= ======== ============
RATIOS & SUPPLEMENTAL DATA:
Net assets end of year (thousands)............................. $336 $721 $74 $ 66
Ratios to average net assets:
Expenses..................................................... 2.10% 1.79% 1.73%++ 1.61%++
Interest expense............................................. 0.03% 0.03% 0.03%++ 0.01%++
Expenses, excluding indirectly paid expenses................. 2.10% N/A N/A N/A
Expenses, excluding fee waivers & expense reimbursements..... 2.19% 2.97% 46.90%++ 21.59%++
Net investment income (loss)................................. (0.47%) 0.40% (1.26%)++ 0.98%++
PORTFOLIO TURNOVER RATE........................................ 44% 25% 1% 28%
AVERAGE COMMISSION RATE PER SHARE.............................. $.0039 $.0037 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
----------------------------------------------
Year Ended October 31, Year Ended
-------------------------------- September
30,
PER SHARE DATA: 1997 1996 1995# 1995*
----------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Net asset value beginning of year............................. $12.14 $11.53 $12.08 $11.44
----------- ---------- --------- ------------
Income (loss) from investment operations:**
Net investment income (loss)................................ (0.15) (0.13) (0.02) .08
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions.............. 0.70 0.74 (0.53) 0.56
----------- ---------- --------- ------------
Total from investment operations............................ 0.55 0.61 (0.55) 0.64
----------- ---------- --------- ------------
Net asset value, end of year.................................. $12.69 $12.14 $11.53 $12.08
=========== ========== ========= ============
TOTAL RETURN+................................................. 4.5% 5.3% (4.6%) 5.6%
=========== ========== ========= ============
RATIOS & SUPPLEMENTAL DATA:
Net assets end of year (thousands)............................ $ 213 $134 $ 100 $ 128
Ratios to average net assets:
Expenses.................................................... 2.82% 2.56% 2.44%++ 2.42%++
Interest expense............................................ 0.03% 0.03% 0.03%++ 0.03%++
Expenses, excluding indirectly paid expenses................ 2.81% N/A N/A N/A
Expenses, excluding fee waivers & expense reimbursements.... 2.90% 14.45% 31.39% 87.24%
Net investment income (loss)................................ (1.23%) (1.03%) (1.98%)++ 1.38%++
PORTFOLIO TURNOVER RATE....................................... 44% 25% 1% 28%
AVERAGE COMMISSION RATE PER SHARE............................. $.0039 $.0037 N/A N/A
</TABLE>
* For the periods from February 10, 1995 for Class A and February 8, 1995 for
Class B, respectively (commencement of operations) to September 30, 1995.
** Net investment income is based on average monthly shares outstanding.
# The Fund changed its year end from September 30 to October 31, effective
October 31, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
-9-
<PAGE> 14
<TABLE>
<CAPTION>
Class C Shares
----------------------------------------------
Year Ended October 31, Year Ended
------------------------------- September
30,
PER SHARE DATA: 1997 1996 1995# 1995*
------------ ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net asset value beginning of year............................. $12.14 $ 11.53 $ 12.08 $11.44
------------ ---------- ----------- ---------
Income (loss) from investment operations:**
Net investment income (loss)................................ (0.14) (0.13) (0.02) .06
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions.............. 0.70 0.74 (0.53) 0.59
------------ ---------- ----------- ---------
Total from investment operations............................ 0.56 0.61 (0.55) 0.65
------------ ---------- ----------- ---------
Net asset value, end of year.................................. $12.70 $ 12.14 $ 11.53 $12.08
============ ========== =========== =========
TOTAL RETURN+................................................. 4.6% 5.3% (4.6%) 5.7%
============ ========== =========== =========
RATIOS & SUPPLEMENTAL DATA:
Net assets end of year (thousands)............................ $ 106 $ 8 $ 4 $ 7
Ratios to average net assets:
Expenses.................................................... 2.83% 2.54% 2.37%+ 1.54%+
Interest expense............................................ 0.03% 0.03% 0.02%+ 0.01%+
Expenses, excluding indirectly paid expenses................ 2.83% N/A N/A N/A
Expenses, excluding fee waivers & expense reimbursements.... 2.91% 118.64% 570.26%+ 269.60%+
Net investment income (loss)................................ (1.15%) (1.06%) (1.94%)+ 0.86%+
PORTFOLIO TURNOVER RATE....................................... 44% 25% 1% 28%
AVERAGE COMMISSION RATE PER SHARE............................. .0039 .0037 N/A N/A
</TABLE>
* For the periods from February 10, 1995 for Class A and February 8, 1995 for
Class B, respectively (commencement of operations) to September 30, 1995.
** Net investment income is based on average monthly shares outstanding.
# The Fund changed its year end from September 30 to October 31, effective
October 31, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
ALPINE REALTY INCOME AND GROWTH FUND
No financial information for Alpine Realty Income and Growth
Fund appears in this Prospectus because the Fund is newly formed and had no
prior operating history as of the date of this Prospectus.
-10-
<PAGE> 15
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES
ALPINE U.S. REAL ESTATE EQUITY FUND is a mutual fund which
seeks long-term capital growth. A secondary objective of the Fund is current
income.
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND is a mutual fund
which seeks long-term capital growth. A secondary objective of the Fund is
current income.
ALPINE REALTY INCOME AND GROWTH FUND is a mutual fund which
seeks a high level of current income. Capital appreciation is a secondary
objective. This Fund is newly organized and did not commence operations prior to
the date of this Prospectus].
A Fund's investment objectives may not be changed without the
approval of a majority of its shareholders. There can be no assurance that the
investment objectives of the Funds will be achieved.
INVESTMENT POLICIES
ALPINE U.S. REAL ESTATE EQUITY FUND invests primarily in the
equity securities of U.S. issuers which are principally engaged in the real
estate industry or own significant real estate assets. Under normal market
conditions, this Fund invests at least 65% of its total assets in these
securities.
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND invests primarily
in the equity securities of non-U.S. issuers which are principally engaged in
the real estate industry or own significant real estate assets. The Fund pursues
a flexible strategy of investing in companies throughout the world. However, it
is anticipated that the Fund will give particular consideration to investments
in the United Kingdom, Western Europe, Australia, Canada, and the Far East
(Japan, Hong Kong, Singapore, Malaysia and Thailand). Generally, a substantial
portion of the Fund's investments will be denominated in foreign currencies.
Under normal market conditions, this Fund invests at least 65% of its total
assets in the equity securities of non-U.S. issuers located in at least three
foreign countries which are principally engaged in the real estate industry or
which own significant real estate assets.
ALPINE REALTY INCOME AND GROWTH FUND is a non-diversified
investment portfolio that invests primarily in the dividend paying equity
securities and debt securities of issuers which are principally engaged in the
real estate industry or own significant real estate assets. Under normal market
conditions, this Fund invests at least 65% of its total assets in these
securities. The Fund is designed for investors who seek income and capital
appreciation from investing in real estate related securities.
Each Fund concentrates its investments in the securities of
companies engaged principally in the real estate industry. These companies
include, but are not limited to:
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- equity real estate investment trusts, which pool
investors' funds for investment primarily in commercial
real estate properties;
- mortgage real estate investment trusts, which invest
pooled funds in real estate related loans;
- real estate brokers and developers;
- companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment
companies; and
- real estate equity trusts and limited partnerships which
are traded on major exchanges or which are not publicly
traded.
A Fund may temporarily invest less than 25% of the value of
its assets in these securities during periods of adverse economic conditions in
the real estate industry.
The Funds may invest in equity and debt securities of
companies engaged in the real estate industry, debt and equity securities of
other companies, and money market instruments. They may also purchase and sell
various types of options, financial futures and currency contracts. Each Fund
may invest without limit in high quality fixed income securities and money
market instruments if, in the opinion of the Adviser, market conditions warrant
a temporary defensive investment position.
In pursuing their investment objectives, the Funds may use
various investment techniques. These techniques may include short sales and
borrowing of money for investment purposes (a practice known as "leverage"),
subject to certain limitations. Short sales and leverage involve risks and are
considered speculative practices.
Changes in the values of the Funds' investments will result in
changes in the net asset values of shares of the Funds and in investment returns
to their shareholders. The success of the Funds will be closely tied to the
performance of the real estate industry. For this reason, the investment
performance of the Funds may be more volatile than the performance of funds
which do not concentrate their investments in a particular sector. The
investment performance of the Funds will also be affected by general stock
market performance.
Alpine Realty Income and Growth Fund is a non-diversified
fund. This exposes the Fund to certain risks. See "INVESTMENT PRACTICES -
Diversification/Non-Diversification."
You should consider one or more of the Funds as a supplement
to an overall investment program and should invest only if you are willing to
undertake the risks involved.
INVESTMENT INSTRUMENTS
The Funds use a variety of investment instruments in pursuing
their investment programs. The investments of the Funds may include:
- Equity Securities - Temporary Investments
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- Real Estate Investment Trusts - Illiquid Securities
- Fixed Income Securities - Securities of Other Investment Companies
- Mortgage-Backed Securities - Derivative Instruments
- Foreign Securities
EQUITY SECURITIES
Equity securities include common stocks, preferred stocks and
securities convertible into common stocks, such as convertible bonds, warrants,
rights and options. The value of equity securities varies in response to many
factors, including the activities and financial condition of individual
companies, the business market in which individual companies compete and general
market and economic conditions. Equity securities fluctuate in value, often
based on factors unrelated to the value of the issuer of the securities, and
such fluctuations can be significant.
REAL ESTATE INVESTMENT TRUSTS
A real estate investment trust ("REIT") is a corporation or a
business trust that invests substantially all of its assets in interests in real
estate (including mortgages and other REITs) or cash and government securities
and derives most of its income from rents from real property or interest on
loans secured by mortgages on real property.
FIXED INCOME SECURITIES
The Funds may invest in bonds and other types of debt
obligations of U.S. and foreign issuers. These securities may pay fixed,
variable or floating rates of interest, and may include zero coupon obligations
which do not pay interest until maturity. Fixed income securities may include:
- bonds, notes and debentures issued by corporations;
- debt securities issued or guaranteed by the U.S. Government
or one of its agencies or instrumentalities ("U.S.
Government Securities");
- municipal securities;
- mortgage-backed and asset-backed securities;
- debt securities issued or guaranteed by foreign
corporations and foreign governments, their agencies,
instrumentalities or political subdivisions, or by
government owned, controlled or sponsored entities,
including central banks.
The Funds may invest in both investment grade and
non-investment grade debt securities. Investment grade debt securities have
received a rating from Standard & Poor's Ratings Group, a division of the
McGraw-Hill Companies, Inc. ("S&P") or Moody's Investors Service, Inc.
("Moody's") in one of the four highest rating categories or, if not rated, have
been determined by
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the Adviser to be of comparable quality to such rated securities. Non-investment
grade debt securities (typically called "junk bonds") have received a rating
from S&P or Moody's of below investment grade, or have been given no rating and
are determined by the Adviser to be of a quality below investment grade. Each
Fund may invest up to 15% of the value of its total assets in non-investment
grade debt securities. However, the Funds may not invest in debt securities
rated below Ccc by S&P or Caa by Moody's (or unrated debt securities determined
to be of comparable quality by the Adviser). There are no limitations on the
maturity of debt securities that may be purchased by the Funds.
MORTGAGE-BACKED SECURITIES
Each Fund may invest in mortgage-backed securities issued or
guaranteed by the U.S. Government, or one of its agencies or instrumentalities,
or issued by private issuers. Mortgage-backed securities in which the Funds may
invest include collateralized mortgage obligations ("CMOs") and real estate
mortgage investment conduits ("REMICs"). CMOs are debt instruments issued by
special purpose entities and secured by mortgages or other mortgage-backed
securities, which provide by their terms for aggregate payments of principal and
interest based on the payments made on the underlying mortgages or securities.
CMOs are typically issued in separate classes with varying coupons and stated
maturities. REMICs are mortgage-backed securities as to which the issuers have
qualified to be treated as real estate mortgage investment conduits under the
Internal Revenue Code of 1986, as amended (the "Code") and have characteristics
similar to CMOs. The amount of privately issued mortgage-backed securities that
may be purchased by a Fund may not exceed 10% of the value of its total assets,
and the securities of any one such issuer purchased by the Fund may not exceed
5% of the value of its total assets.
Each Fund may also invest in "stripped" mortgage-backed
securities. These are securities which operate like CMOs but entitle the holder
to disproportionate interests with respect to the allocation of interest or
principal on the underlying mortgages or securities. A stripped mortgage-backed
security is created by the issuer separating the interest and principal on a
mortgage pool to form two or more independently traded securities. The result is
the creation of classes of discount securities which can be structured to
produce faster or slower prepayment expectations based upon the particular
underlying mortgage interest rate payments assigned to each class. These
obligations exhibit risk characteristics similar to mortgage-backed securities
generally and zero coupon securities. The prices of these securities are more
volatile than the prices of debt securities which make periodic payments of
interest.
FOREIGN SECURITIES
Alpine International Real Estate Equity Fund may invest
without limit in foreign securities. Alpine U.S. Real Estate Equity Fund may
invest up to 15% of the value of its total assets in foreign securities. Alpine
Realty Income and Growth Fund may invest up to 35% of the value of its total
assets in such securities. Investments in foreign securities may include direct
investments in securities of foreign issuers and investments in depository
receipts (such as American Depository Receipts) that represent indirect
interests in securities of foreign issuers.
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The purchase of securities denominated in foreign currencies
will subject the value of a Fund's investments in those securities to
fluctuations due to changes in foreign exchange rates. To hedge against the
effects of changes in foreign exchange rates, each Fund may enter into forward
foreign currency exchange contracts ("forward contracts"). Forward contracts
represent agreements to exchange an amount of currency at an agreed upon future
date and rate. A Fund will generally use forward contracts only to "lock in" the
price in U.S. dollars of a foreign security that the Fund plans to purchase or
to sell. In certain cases, these contracts may be used to hedge against an
anticipated substantial decline in the price of a foreign currency against the
U.S. dollar. Such a decline would adversely affect the U.S. dollar value of
foreign securities held by a Fund. Forward contracts will not be used in all
cases and, in any event, cannot completely protect the Funds against all changes
in the values of foreign securities resulting from fluctuations in foreign
exchange rates. There are no limitations on the use of forward contracts by
Alpine International Real Estate Equity Fund or Alpine Realty Income and Growth
Fund. Alpine U.S. Real Estate Equity Fund will not enter into a forward contract
if, as a result, forward contracts would represent more than 15% of its total
assets.
TEMPORARY INVESTMENTS
For defensive purposes, each Fund may temporarily invest all
or a substantial portion of its assets in high quality fixed income securities
and money market instruments, or may temporarily hold cash in such amounts as
the Adviser deems appropriate. Fixed income securities will be deemed to be of
high quality if they are rated "A" or better by S&P or the corresponding rating
by Moody's or, if unrated, are determined to be of comparable quality by the
Adviser. Money market instruments are high quality, short-term fixed income
obligations (which generally have remaining maturities of one year or less), and
may include:
- U.S. Government Securities;
- commercial paper;
- certificates of deposit and bankers' acceptances
issued by domestic branches of United States banks
that are members of the Federal Deposit Insurance
Corporation;
- repurchase agreements for U.S. Government Securities;
- short-term obligations of foreign issuers denominated in
U.S. dollars and traded in the U.S.; and
- repurchase agreements.
Repurchase agreements are agreements under which a Fund
purchases securities from a bank or a securities dealer that agrees to
repurchase the securities from the Fund at a higher price on a designated future
date. If the seller under a repurchase agreement becomes insolvent, the Fund's
right to dispose of the securities may be restricted, or the value of the
securities may decline before the Fund is able to dispose of them. In the event
of the bankruptcy or insolvency of the seller, the Fund may encounter delay and
incur costs, including a decline in the value of the securities, before being
able to sell the securities. If the seller defaults, the value of the securities
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may decline before the Fund is able to dispose of them. If a Fund enters into a
repurchase agreement that is subject to foreign law and the other party
defaults, the Fund may not enjoy protections comparable to those provided to
most repurchase agreements under U.S. bankruptcy law, and may suffer delays and
losses in disposing of the collateral. The Funds have adopted procedures
designed to minimize the risks of loss from repurchase agreements.
ILLIQUID SECURITIES
Each Fund may invest in illiquid securities. These are
securities that have legal or contractual restrictions on resale, securities
that are not readily marketable, and repurchase agreements maturing in more than
seven days. The inability of a Fund to dispose of illiquid investments readily
or at a reasonable price could impair the Fund's ability to sell its investment
or to raise cash for redemptions or other purposes. Illiquid securities include
certain restricted securities which have not been registered under the
Securities Act of 1933 and cannot be resold without registration or an exemption
from registration. However, restricted securities that are eligible for resale
pursuant to Rule 144A under the Securities Act, and have been determined to be
liquid by the Adviser using procedures adopted by the Board of Trustees of the
Trust, will not be considered to be illiquid.
Each Fund may each invest up to 15% of its total assets in
illiquid securities; however, Alpine U.S. Real Estate Equity Fund and Alpine
Realty Income and Growth Fund may not invest more than 10% of their net assets
in repurchase agreements maturing in more than seven days.
SECURITIES OF OTHER INVESTMENT COMPANIES
Each Fund may invest in the securities of other registered,
open-end investment companies that have investment objectives and policies
similar to its own. The Funds may also purchase shares of money market funds
that invest in U.S. Government Securities and repurchase agreements, in lieu of
purchasing money market instruments directly. Any investment by a Fund in the
securities of other investment companies, including money market funds, will be
subject to the limitations on such investments contained in the Investment
Company Act of 1940 (the "1940 Act"). The Funds, as investors in another
investment company, will indirectly bear the fees and expenses of that company,
which will be in addition to the fees and expenses of the Funds.
DERIVATIVE INVESTMENTS
The Funds may use certain derivative instruments in connection
with their investment activities. These include:
- Options on Securities - Options on Foreign Currencies
- Options on Securities Indices - Futures Contracts
These instruments derive their performance, at least in part,
from the performance of an underlying asset or index.
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<PAGE> 21
OPTIONS ON SECURITIES. Each Fund may purchase call and put
options on securities to seek capital growth or for hedging purposes. The Funds
may also write and sell covered call and put options for hedging purposes. A put
option gives the purchaser of the option the right to sell, and obligates the
writer to buy, the underlying security at a stated exercise price at any time
before the expiration of the option. A call option gives the purchaser of the
option the right to buy, and obligates the writer to sell, the underlying
security at a stated exercise price at any time before the expiration of the
option.
A call option written by a Fund is "covered" if the Fund owns
the underlying security or holds related securities (i.e., securities whose
price movements correlate to the price movements of the securities underlying
the option) during the term of the option. By writing a covered call option, a
Fund forgoes the opportunity to realize any appreciation in the market price of
the underlying security above the exercise price and incurs the risk of having
to continue to hold a security that it might otherwise determine to sell based
on investment considerations. A put option written by a Fund is "covered" if the
Fund maintains at all times cash or liquid securities having a value equal to
the option exercise price in a segregated account with the Fund's custodian, or
if the Fund has bought and holds a put on the same security (and on the same
amount of securities) where the exercise price of the put held by the Fund is
equal to or greater than the exercise price of the put written by the Fund. By
writing a put option, a Fund is exposed to the risk, during the term of the
option, of a decline in the price of the underlying security which the Fund
would be required to purchase at a higher price. Writing options provides a
hedge only to the extent of the premium a Fund receives from the purchaser of
the option.
Each Fund may also invest in so-called "synthetic" options or
other options and derivative instruments written by broker-dealers, including
options on baskets of specified securities. Synthetic options transactions
involve the use of two financial instruments that, together, have the economic
effect of an options transaction. The risks of synthetic options are generally
similar to the risks of actual options, with the addition of increased market
risk, liquidity risk, counterparty credit risk, legal risk and operations risk.
Options transactions may be effected on domestic and foreign
securities exchanges or in the over-the-counter market. Options positions may be
of the American or the European variety. An American style option may be
exercised by the holder at any time after it is purchased until it expires. A
European style option may be exercised only on its expiration date. When options
are purchased over-the-counter, a Fund bears the risk that the counterparty that
wrote the option will be unable or unwilling to perform its obligations under
the option contract. In addition, the Fund may have difficulty closing out its
positions in over-the-counter and synthetic options, which could result in
losses to the Fund. Over- the-counter option positions and various derivative
instruments may be illiquid and, in such cases are subject to the limitations on
the purchase of illiquid securities by the Funds.
Each Fund may invest up to 10% of the value of its total
assets, represented by premiums paid, to purchase call and put options on
securities and securities indices. A Fund may not write covered call and put
options on securities and securities indices with aggregate exercise prices in
excess of 15% of the value of its assets.
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OPTIONS ON SECURITIES INDICES. Each Fund may purchase and
write options on stock indices (such as the S&P 500 Index) listed on domestic or
foreign securities exchanges or traded in the over-the-counter market for
hedging purposes. A stock index fluctuates with changes in the market values of
the stocks included in the index. A put option on an index may be purchased to
hedge against a general decline in the stock market or in a particular market
segment or industry. A call option on an index may be purchased in an attempt to
reduce the risk of missing a general market advance or an increase in the prices
of securities within a particular market segment or industry. Options on stock
indices written by the Funds must be "covered". An index option is covered if a
Fund segregates in a separate account with its custodian cash or liquid
securities with a value equal to its obligations under the option or if it holds
an option on the same index (and in the same amount) with an exercise price
equal to, or less than in the case of a call or greater than in the case of a
put, the exercise price of the option written.
The effectiveness of purchasing or writing stock index options
for hedging depends upon the extent to which price movements of securities held
by a Fund correlate with price movements of the stock index selected. Whether a
Fund realizes a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock. Successful use of
options on stock indexes depends on the Adviser's ability to anticipate
correctly movements in the direction of the stock market generally or of a
particular industry or market segment. This requires skills and techniques that
differ from those used in making decisions to purchase and sell particular
securities.
OPTIONS ON FOREIGN CURRENCIES. The Funds may purchase and
write options on foreign currencies to protect against declines in the U.S.
dollar value of foreign securities or in the U.S. dollar value of dividends or
interest expected to be received on those securities. These transactions may
also be used to protect against increases in the U.S. dollar cost of foreign
securities to be acquired by the Funds. Writing an option on foreign currency is
only a partial hedge, up to the amount of the premium received, and the Funds
could be required to purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. Certain options on foreign currencies
are traded in the over-the-counter market and involve liquidity and credit risks
that may not be present in the case of exchange traded currency options. A Fund
may not purchase a foreign currency option if, as a result, premiums paid on
foreign currency options then held by the Fund would represent more than 5% of
the Fund's net assets.
FUTURES CONTRACTS. Each Fund may buy and sell financial
futures contracts and related options. A financial futures contract is an
agreement between two parties to buy or sell a specified instrument (such as
currency or an index of securities) at a set price on a future date. An index
futures contract is an agreement to take or make delivery of an amount of cash
based on the difference between the value of the index at the beginning and at
the end of the contract period. A futures contract on a foreign currency is an
agreement to buy or sell a specified amount of a currency for a specified price
on a future date. The Funds may use financial futures contracts and related
options for "bona fide hedging" purposes, as such term is defined in applicable
regulations of the Commodity Futures Trading Commission. Each Fund is also
permitted to enter into such contracts and options for non-hedging purposes;
however, the aggregate initial margin deposits plus
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premiums paid by a Fund for open futures positions, less the amount by which any
such positions are "in-the-money," may not exceed 5% of the Fund's total assets.
INVESTMENT PRACTICES
The Funds use a variety of investment practices in pursuing
their investment programs. These practices include:
- Short Sales - Lending of Portfolio Securities
- When Issued and Delayed Delivery - Cross Hedging
Transactions
- Borrowing
SHORT SALES
Each of the Funds may effect short sales of securities. A
short sale involves the sale of a security that a Fund does not own in
anticipation of purchasing the same security (or a security exchangeable
therefor) at a later date at a lower price. The Fund selling short must borrow
the security sold short and will be obligated to return the security to the
lender. This is accomplished by a later purchase of the security by the Fund to
close its short position. When a Fund effects a short sale, it must maintain
collateral in a segregated account consisting of cash or liquid securities with
a value equal to the current market value of the securities sold short. A Fund
may not sell a security short if, as a result of that sale, the current value of
securities sold short by that Fund would exceed 10% of the value of the Fund's
net assets.
The use of short sales is considered a speculative investment
practice. The limited use of this practice, however, permits the Funds to pursue
opportunities to profit from anticipated declines in the prices of particular
securities which in the view of the Adviser are overvalued or are likely to be
adversely affected by particular trends or events.
The Funds may also effect short sales "against the box" to
hedge against a decline in the value of a security owned by the Fund. These
transactions are not subject to the 10% limitation described above. However, if
a Fund effects a short sale against the box, it will set aside securities
equivalent in kind and amount to the securities sold short (or securities
convertible or exchangeable into such securities) and hold those securities
while the short sale is outstanding.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Funds may purchase and sell securities on a when-issued or
delayed delivery basis. These transactions are arrangements in which the Funds
purchase securities with payment and delivery scheduled for a future time. A
seller's failure to complete a transaction of this type may cause a Fund to miss
obtaining a price or yield considered to be advantageous. Settlement dates may
be a month or more after entering into these transactions, and the market values
of the securities purchased may vary from the purchase price paid by a Fund. A
Fund may dispose of a commitment before settlement if the Adviser deems it
appropriate, and may realize a short-term
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profit or loss. When a Fund enters into a when-issued or delayed delivery
transaction, it will "cover" its position by maintaining in a segregated account
with the Fund's custodian, cash or liquid securities held by the Fund having a
value (determined daily) equal to or greater than the purchase commitment or
delivery obligation of the Fund.
BORROWING
The Funds may borrow money from banks for investment purposes.
This practice, which is known as "leverage," permits the Funds to purchase a
greater amount of securities than would otherwise be possible. The use of
leverage will increase investment returns if the additional securities purchased
increase in value in an amount exceeding the interest and other costs incurred
in connection with the borrowing. However, if the purchased securities decrease
in value, a Fund will suffer a loss exceeding the loss that would have resulted
if leverage had not been used. For this reason, the use of leverage increases
investment risk and is considered a speculative practice.
The Funds may also borrow by entering into reverse repurchase
agreements. In these transactions, a Fund agrees to sell portfolio securities to
a financial institution such as a bank or broker-dealer, and to repurchase them
at a mutually agreed upon date and price. When a Fund enters into a reverse
repurchase agreement, it will place in a segregated custodian account cash, U.S.
Government Securities or other liquid securities having a value at least equal
to the repurchase price (including accrued interest) and will subsequently
monitor the account to ensure that such equivalent value is maintained. Reverse
repurchase agreements involve the risk that the market value of the securities
sold by a Fund may decline below the repurchase price of those securities.
Each Fund may borrow money for investment purposes and enter
into reverse repurchase agreements in an amount up to 10% of the value of its
total assets. The Funds may also borrow for temporary, extraordinary or
emergency purposes. However, a Fund's total borrowings (including borrowings
through reverse repurchase agreements) may not exceed 33 1/3% of its total
assets.
LENDING OF PORTFOLIO SECURITIES
In order to generate income, the Funds may lend portfolio
securities to brokers, dealers and other financial institutions. When a Fund
lends securities it will receive collateral, generally in the form of cash or
U.S. Government Securities, and will earn interest on this collateral. While
securities are on loan, the borrower will pay the Fund any income or dividends
paid on the loaned securities. A Fund has the right to call a loan and obtain
the securities loaned at any time. The Funds may pay reasonable fees in
connection with securities loans. A Fund may not lend a security if, as a
result, the amount of securities loaned by the Fund would exceed 30% of the
value of its total assets. In addition, loans must be collateralized by cash or
U.S. Government Securities that are maintained in an amount equal to at least
100% of the current market value of the securities loaned, including accrued
interest.
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CROSS HEDGING
The Funds may use cross hedging to hedge against foreign
currency risks. A cross hedge is accomplished by entering into a forward
contract or other arrangement with respect to one foreign currency for the
purpose of hedging against a possible decline in the value of another foreign
currency in which certain portfolio instruments of a Fund are denominated. The
Adviser may enter into a cross hedge, rather than hedge directly, when the rates
for forward contracts, options, futures contracts or options on futures
contracts relating to the currency in which the cross hedge is effected are more
favorable than rates for similar instruments denominated in the currency that is
to be hedged. A cross hedge requires that there be a high degree of correlation
between the two currencies with respect to their movement against the U.S.
dollar. Cross hedges may be effected using the various instruments the Funds are
authorized to purchase and sell. A cross hedge cannot protect against exchange
rate risks perfectly, and if the Adviser is incorrect in its judgment of
exchange rate relationships, a Fund could be in a less advantageous position
than if a hedge had not been established.
DIVERSIFICATION/ NON-DIVERSIFICATION
Alpine U.S. Real Estate Equity Fund and Alpine International
Real Estate Equity Fund are "diversified" funds. This means that, with respect
to 75% of their total assets, these Funds may not purchase a security, other
than U.S. Government Securities, if as a result of such purchase, more than 5%
of the value of the Fund's total assets would be invested in the securities of
any one issuer or the Fund would own more than 10% of the voting securities of
any one issuer. Diversifying a Fund's investment portfolio by limiting the
amount of money invested in any one issuer reduces investment risk.
Alpine Realty Income and Growth Fund is a "non-diversified"
fund. This means that the Fund is not subject to the provisions of the 1940 Act
that limit the percentage of assets that may be invested in the securities of a
single issuer. However, the Fund intends to comply with the diversification
requirements imposed by the Code, which require that the Fund be diversified
with respect to 50% of its assets. The portfolio of Alpine Realty Income and
Growth Fund may nonetheless be less diversified than the portfolios of
investment companies which are "diversified" as defined by the 1940 Act. As a
result, the value of shares of the Fund may be more adversely affected by
developments affecting a single issuer than would be the case if the Fund's
portfolio was broadly diversified.
PORTFOLIO TURNOVER
The Funds may engage in short-term trading strategies and
securities may be sold without regard to the length of time held when, in the
opinion of the Adviser, investment considerations warrant such action. These
policies, together with the ability of the Funds to effect short sales of
securities and to engage in transactions in options and futures, may have the
effect of increasing the annual rate of portfolio turnover of the Funds.
However, it is expected that the annual portfolio turnover rate of a Fund will
not exceed 150%. A high portfolio turnover rate will result in greater brokerage
commissions and transaction costs. It may also result in greater realization of
gains, which may include short-term gains taxable at ordinary income tax rates.
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INVESTMENT RESTRICTIONS
The Funds have adopted various restrictions on their
investment practices. These include the policies and restrictions described in
this Prospectus, as well as additional restrictions described in the Statement
of Additional Information. Unless otherwise stated, each investment restriction
applies at the time of the investment or transaction. Certain restrictions and
investment policies may be changed without shareholder approval. However, other
policies and restrictions, including the diversification policies of the Funds
are fundamental policies which may not be changed without the approval of a
majority of a Fund's shareholders.
RISK CONSIDERATIONS
You should consider the risks of a Fund's investment program
in deciding whether to invest in that Fund.
GENERAL
The total return and net asset value of each Fund will
fluctuate. These fluctuations may be substantial. In part, investment return
depends on the Adviser's ability to identify investments and to implement
investment strategies that are successful. The Funds' investment performance
also depends on general market conditions and, in particular, the market for
securities of real estate related companies. There can be no assurance given
that a Fund will achieve its investment objective or have investment performance
that is comparable to the stock market as a whole.
As a non-diversified fund, Alpine Realty Income and Growth
Fund is subject to greater risks than a fund that diversifies its investments.
REAL ESTATE COMPANIES
Because the Funds concentrate their investments in the real
estate industry, their portfolios may experience more volatility and be exposed
to greater risk than the portfolios of many other mutual funds. Risks associated
with investment in securities of companies in the real estate industry include:
declines in the value of real estate, risks related to general and local
economic conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, changes in zoning laws, casualty or
condemnation losses, variations in rental income, changes in neighborhood
values, the appeal of properties to tenants and increases in interest rates. In
addition, equity REITs may be affected by changes in the value of the underlying
properties owned by the trusts, while mortgage REITs may be affected by the
quality of credit extended. Equity and mortgage REITs are dependent upon
management skills, may not be diversified and are subject to the risks of
financing projects. REITs are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for tax-free pass-through of income under the Code. In the event an
issuer of debt securities collateralized by real estate defaults, a Fund could
end up holding the underlying real estate. The values of securities of companies
in the real estate industry may go through cycles of relative under-performance
and out-performance in comparison to equity securities markets in general.
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<PAGE> 27
SMALLER COMPANIES
The Funds may invest in the securities of issuers having
smaller market capitalizations. The investment risks associated with securities
of smaller companies are generally greater than those associated with the
securities of larger, well-established companies. Smaller companies often are of
more recent formation than other companies and may have limited product lines,
distribution channels and financial and managerial resources. Also, there is
often less publicly available information concerning smaller companies than
there is for larger, more established issuers. The equity securities of smaller
companies are often traded over-the-counter and may not be traded in the volume
typical for securities that are traded on a national securities exchange.
Consequently, the Funds may be required to dispose of these securities over a
longer period of time (and potentially at less favorable prices) than would be
the case for securities of larger companies. In addition, the prices of the
securities of smaller companies may be more volatile than those of larger
companies.
FOREIGN SECURITIES
Investments in foreign securities involve certain risks. There
may be more limited information publicly available concerning foreign issuers
than would be with respect to domestic issuers. Different accounting standards
may be used by foreign issuers, and foreign trading markets may not be as liquid
as U.S. markets. Foreign securities also involve such risks as currency
fluctuation risk, possible imposition of withholding or confiscatory taxes,
possible currency transfer restrictions, expropriation or other adverse
political or economic developments and the difficulty of enforcing obligations
in other countries. These risks may be greater in emerging markets and in less
developed countries. Alpine International Real Estate Equity Fund normally
invests primarily in foreign securities and for this reason it will be most
susceptible to losses attributable to these risks.
EMERGING MARKETS
Foreign securities purchased by the Funds may include the
securities of companies which operate primarily in emerging market countries.
The economies of individual emerging countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product, rate of inflation, currency depreciation, capital reinvestment,
resource self- sufficiency and balance of payments position. Also, the economies
of developing countries generally are heavily dependent on international trade
and may be adversely affected by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. These economies also may
be adversely affected by economic conditions in the countries with which they
trade.
Prior governmental approval for foreign investments may be
required under certain circumstances in some emerging market countries, and the
extent of foreign investment in certain debt securities and domestic companies
may be subject to limitation in other emerging countries. Foreign ownership
limitations also may be imposed by the charters of individual companies in
emerging countries to prevent, among other concerns, violation of foreign
investment limitations. Repatriation of investment income, capital and the
proceeds of sales by foreign investors may
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<PAGE> 28
require governmental registration or approval in some emerging countries. A Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental registration or approval for such repatriation. Any investment
subject to such repatriation controls will be considered illiquid if it appears
reasonably likely that this process will take more than seven days.
With respect to any emerging country, there is the possibility
of nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could adversely affect the economics of such countries or
the value of the Funds' investments in those countries. In addition, it may be
difficult to obtain and enforce a judgment in a court outside of the U.S.
FIXED INCOME SECURITIES
Fixed income securities are subject to credit risk and market
risk. Credit risk is the risk of the issuer's inability to meet its principal
and interest payment obligations. Market risk is the risk of price volatility
due to such factors as interest rate sensitivity, market perception of the
creditworthiness of the issuer and general market liquidity. Securities having
longer maturities generally involve greater risk of fluctuations in value
resulting from changes in interest rates. Lower grade debt securities are
considered to be predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal. Changes in economic conditions or
developments regarding the individual issuer are more likely to cause price
volatility and weaken the capacity of the issuers of non-investment grade debt
securities to make principal and interest payments than is the case for higher
grade debt securities. An economic downturn affecting an issuer of
non-investment grade debt securities may result in an increased incidence of
default. In addition, the market for lower grade debt securities may be thinner
and less active than for higher grade debt securities.
LENDING OF PORTFOLIO SECURITIES
When a Fund lends portfolio securities, there is a risk that
the securities may not be returned to a Fund on a timely basis. A Fund may incur
a loss if the borrower of securities files for bankruptcy or becomes insolvent.
In such a case, the return of the securities to a Fund may be delayed by court
action and the Fund could possibly suffer a loss if the value of the loaned
securities exceeds the value of collateral held by the Fund. The Adviser
monitors the creditworthiness of borrowers in light of these risks.
SHORT SALES AND LEVERAGE
Short sales of securities by a Fund involve the risk that the
security sold short may increase in value before the Fund purchases it to close
its short position. A Fund will incur a loss if the market price of securities
sold short increases. Because there is no limit on the amount the market price
of the security can increase, short sales theoretically involve the potential
for unlimited loss and is considered a speculative practice. The Funds will
incur transaction costs, including interest expense, in connection with opening,
maintaining and closing short sales.
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<PAGE> 29
The use of leverage involves the risk that securities
purchased with borrowed money may decrease in value, and the Fund could incur a
loss. Use of leverage is, therefore, considered to be a speculative investment
practice.
DERIVATIVES
The use of options, futures and other derivative instruments
by the Funds can increase the volatility of the Funds' net asset values, can
decrease the liquidity of the Funds' portfolios and make pricing portfolio
securities more difficult. Derivatives may entail investment exposures that are
greater than their costs would suggest, meaning that a small investment could
have a large potential positive or negative impact on a Fund's net asset value
per share or investment performance. If a Fund invests in derivatives at
inappropriate times or if the Adviser judges market conditions incorrectly,
derivative investments may lower investment return or result in losses. Changes
in the liquidity of the secondary markets in which derivatives may trade could
result in significant, rapid and unpredictable changes in prices, which could
also cause losses to the Funds.
The purchase and sale of futures contracts and related options
involve risks different from those involved with direct investments in
securities. While utilization of futures contracts and similar instruments may
be advantageous to the Funds, if the Adviser is not successful in employing such
instruments in managing the Funds' investments or in predicting market changes,
investment performance will be worse than if the Funds did not make such
investments. It is possible that there will be imperfect correlation, or even no
correlation, between price movements of the investments being hedged and the
options or futures used. It is also possible that a Fund may be unable to
purchase or sell a portfolio security at a time that otherwise would be
favorable for it to do so, or that a Fund may need to sell a portfolio security
at a disadvantageous time, due to the need for the Fund to maintain "cover" or
to segregate securities in connection with its futures transactions. In some
situations, a Fund may be unable to close out or liquidate its hedged position.
In addition, the Funds will pay commissions and incur other costs in connection
with transactions in futures contracts and related options, which may increase
the expenses of the Funds.
YEAR 2000
Many computer software systems in use today recognize dates
using a two digit year code. These systems cannot distinguish between years
preceding the year 2000 and years beginning after 1999. This is known as the
"Year 2000" problem. Most of the services provided to the Funds depend on the
smooth functioning of computer systems. Any failure to adapt these systems prior
to the year 2000 could interfere with the proper operations of the Funds. The
principal service providers to the Funds have advised the Trust that they are
working to implement necessary changes to their systems and that they expect
their systems to be adapted in time. However, there can be no assurance of
success. In addition, because the Year 2000 problem affects virtually all
organizations, companies in which the Funds invest could be adversely impacted
by this issue. The extent of the impact of Year 2000 problems on the Funds
cannot be predicted.
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<PAGE> 30
CONVERSION TO THE EURO
On January 1, 1999, the European Union will introduce a single
European currency, the Euro. On that date, the first phase of the conversion of
the existing currencies (known as "legacy currencies") of eleven participating
European Union member countries will begin and the Euro will become the currency
of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal and Spain (the "participating countries"). The legacy
currencies of the participating countries will remain in circulation, but their
valuation will be determined only in relation to the Euro. On January 1, 2002,
Euro bills and coins will be introduced. During a transition period from January
1, 1999 until June 30, 2002, the legacy currencies will continue to circulate.
On July 1, 2002, the legacy currencies will no longer be accepted as legal
tender.
The expected introduction of the Euro presents unique
uncertainties, including: whether the payment and operational systems of banks
and other financial institutions will be ready for the scheduled launch date;
the legal treatment of certain outstanding financial contracts after January 1,
1999 that refer to legacy currencies rather than the Euro; and the creation of
suitable clearing and settlement payment systems for the new currency. These or
other factors, including political and economic risks, could cause market
disruptions before or after the introduction of the Euro. The principal service
providers to the Funds have advised the Trust that they are are taking steps to
address Euro-related issues.
MANAGEMENT OF THE FUNDS
The management of each Fund is supervised by the Board of
Trustees of Alpine Equity Trust (the "Trust"). Alpine Management & Research, LLC
(the "Adviser") serves as the investment adviser of the Funds.
The Adviser is a recently formed Delaware limited liability
company, located at 122 East 42nd Street, 37th Floor, New York, New York 10168,
which provides investment advisory and management services to the Funds and
other advisory clients. All of the Adviser's client accounts are invested
principally in real estate securities. The members of the Adviser are Messrs.
Samuel A. Lieber, who is the controlling person of the Adviser, and Marc R.
Halle.
Mr. Lieber is the portfolio manager for the Alpine U.S. Real
Estate Equity Fund and Alpine International Real Estate Equity Fund and the
co-manager of the Alpine Realty Income and Growth Fund. Prior to the
organization of the Adviser, Mr. Lieber was associated with Evergreen Asset
Management Corp., the former adviser of Alpine U.S. Real Estate Equity Fund and
Alpine International Real Estate Equity Fund, since 1985.
Mr. Halle is the portfolio manager of the Alpine Realty
Income and Growth Fund and associate portfolio manager of the Alpine U.S. Real
Estate Equity Fund. Prior to the organization of the Adviser, Mr. Halle was
associated with Evergreen Asset Management Corp.,
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<PAGE> 31
the former adviser of Alpine U.S. Real Estate Equity Fund and Alpine
International Real Estate Equity Fund, since 1994.
As investment adviser to the Funds, the Adviser manages the
Funds' investments and is responsible for providing the Funds with certain other
services. Alpine U.S. Real Estate Equity Fund and Alpine Realty Income and
Growth Fund each pay the Adviser a monthly fee computed at the annual rates of
1% of the average daily net assets of the Fund on the first $750 million of
assets, 0.9% of average daily net assets on an annual basis on the next $250
million in assets, and 0.8% of average daily net assets on assets in excess of
$1 billion. Alpine International Real Estate Equity Fund pays the Adviser a
monthly fee computed at the annual rate of 1% of the average daily net assets of
the Fund. The advisory fees paid by the Funds are higher than those paid by most
other mutual funds, but are comparable to the fees paid by many funds with
similar investment objectives and policies. The total estimated expenses of the
Funds as a percentage of their average daily net assets on an annual basis are
set forth in the section entitled "EXPENSE INFORMATION".
DISTRIBUTION ARRANGEMENTS
The Trust has retained BISYS Fund Services Limited Partnership
(the "Distributor") to serve as distributor of the shares of each Fund. In
addition, the Funds have adopted distribution plans in accordance with Rule
12b-1 under the 1940 Act (the "Plans"). Under the Plans, the Funds bear expenses
to finance the distribution of their shares. These expenses may not on an annual
basis exceed 0.75% of the average daily net assets attributable to Class A
shares of a Fund or 1.00% of the average daily net assets attributable to Class
B shares or Class C shares of a Fund. Payments under the Plans are used to pay
compensation to organizations that sell shares of the Funds to their customers.
A portion of the fees payable under each Plan is paid as a service fee for
on-going services provided to shareholders and services relating to the
maintenance of shareholder accounts. Compensation payable under the Plans is not
tied to expenses incurred by the parties receiving payments. Thus, organizations
selling shares of the Funds may earn a profit from their distribution and
shareholder service-related activities.
PURCHASE AND REDEMPTION OF SHARES
HOW TO BUY SHARES
You can purchase Class A, Class B and Class C shares of the
Funds through broker-dealers, banks or other financial intermediaries, or
directly through the Distributor. The minimum initial investment is $1,000,
which may be waived in certain situations. There is no minimum for subsequent
investments. Investors may make subsequent investments by establishing a
Systematic Investment Plan or a Telephone Investment Plan. Share certificates
are not issued. See the Share Purchase Application and Statement of Additional
Information for more information. (See "GENERAL INFORMATION--Other Classes of
Shares"). Shares will be issued at the net asset value per share next computed
after the receipt of a request to purchase shares, together with payment in the
amount of the purchase] (plus for Class A shares the applicable sales charge).
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<PAGE> 32
CLASS A SHARES--FRONT-END SALES CHARGE ALTERNATIVE. You can
purchase Class A shares of each Fund at net asset value plus an initial sales
charge on purchases under $1,000,000. On purchases of $1,000,000 or more, a
contingent deferred sales charge ("CDSC") equal to 1% of the lesser of the
purchase price or redemption value will be imposed on shares redeemed during the
first year after purchase.
The schedule of sales charges for Class A shares is as
follows:
<TABLE>
<CAPTION>
Initial Sales Charge
Commission to
As a % of As a % of Dealer/Agent as a %
Amount of Purchase Net Amount Invested Offering Price of Offering Price
- ------------------ ------------------- -------------- -------------------
<S> <C> <C> <C>
Less than $50,000 4.99% 4.75% 4.25%
$50,000 - $99,999 4.71% 4.50% 4.25%
$100,000 - $249,999 3.90% 3.75% 3.25%
$250,000 - $499,999 2.56% 2.50% 2.00%
$500,000 - $999,999 2.04% 2.00% 1.75%
$1,000,000 - $2,999,999 None None 1.00%
$3,000,000 - $4,999,999 None None 0.50%
$5,000,000 or more None None 0.25%
</TABLE>
No front-end sales charges are imposed on Class A shares
purchased by institutional investors, which may include bank trust departments
and registered investment advisers; investment advisers, consultants or
financial planners who place trades for their own accounts or the accounts of
their clients and who charge such clients a management, consulting, advisory or
other fee; clients of investment advisers or financial planners who place trades
for their own accounts if the accounts are linked to the master account of such
investment advisers or financial planners on the books of the broker-dealer
through whom shares are purchased; institutional clients of broker-dealers,
including retirement and deferred compensation plans and the trusts used to fund
these plans, which place trades through an omnibus account maintained with a
Fund by the broker-dealer; current and retired employees of the Distributor and
any broker-dealer with whom the Distributor has entered into an agreement to
sell shares of the Funds, and members of the immediate families of such
employees; and upon the initial purchase of a Fund by investors reinvesting the
proceeds from a redemption within the preceding thirty days of shares of another
Fund provided the shares were initially purchased with a front-end sales charge
or subject to a
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<PAGE> 33
CDSC. Certain broker-dealers or other financial institutions may impose a fee in
connection with transactions in shares of the Funds.
Class A shares may also be purchased at net asset value by
qualified and non-qualified employee benefit and savings plans which make shares
of the Funds available to their participants, and which: (a) are employee
benefit plans having at least $1,000,000 in assets, or 250 or more eligible
participants; or (b) are non-qualified benefit or profit sharing plans which are
sponsored by an organization which also makes the Funds available through a
qualified plan meeting the criteria specified under (a). In connection with
sales made to plans of the type described in the preceding sentence that are
clients of broker-dealers, and which do not qualify for sales at net asset value
under the conditions set forth in the paragraph above, payments may be made in
an amount equal to .50 of 1% of the net asset value of shares purchased. These
payments are subject to reclaim in the event shares are redeemed within twelve
months after purchase.
When Class A shares are sold to an investor, the Distributor
normally retains a portion of the applicable sales charge and pays the balance
to the broker-dealer or other financial intermediary through whom the sale was
made. The Distributor may also pay fees to banks from sales charges for services
performed on behalf of the customers of such banks in connection with the
purchase of shares of the Funds. In addition to compensation paid at the time of
sale, entities whose clients have purchased Class A shares may receive a
trailing commission equal to .25 of 1% of the average daily value on an annual
basis of Class A shares held by their clients.
Certain purchases of Class A shares may qualify for reduced
sales charges in accordance with a Fund's Combined Purchase Privilege,
Cumulative Quantity Discount, Statement of Intention, Privilege for Certain
Retirement Plans and Reinstatement Privilege. Consult the Share Purchase
Application and Statement of Additional Information for additional information
concerning these reduced sales charges.
CLASS B SHARES--DEFERRED SALES CHARGE ALTERNATIVE. You can
purchase Class B shares of the Funds at net asset value without an initial sales
charge. However, you may pay a CDSC if you redeem shares within six years after
purchase. Shares obtained from dividend or distribution reinvestment are not
subject to the CDSC. The amount of the CDSC (expressed as a percentage of the
lesser of the current net asset value or original cost) will vary according to
the number of years from the purchase of Class B shares as set forth below.
Contingent Deferred
Year Since Purchase Sales Charge
------------------- -------------------
FIRST 5%
SECOND 4%
THIRD and FOURTH 3%
FIFTH 2%
SIXTH 1%
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<PAGE> 34
The CDSC is deducted from the amount of the redemption and is
paid to the Distributor. The CDSC will be waived on redemptions of shares
following the death or disability of a shareholder, to meet distribution
requirements for certain qualified retirement plans or in the case of certain
redemptions made under a Systematic Cash Withdrawal Plan. Class B shares are
subject to higher distribution and/or shareholder service fees than Class A
shares for a period of seven years (after which it is expected that they will
convert to Class A shares). The higher fees mean a higher expense ratio, so
Class B shares pay correspondingly lower dividends and may have a lower net
asset value than Class A shares. See the Statement of Additional Information for
further details.
CLASS C SHARES--LEVEL-LOAD ALTERNATIVE. You can purchase Class
C shares of Alpine U.S. Real Estate Equity Fund and Alpine International Real
Estate Equity Fund without any initial sales charge. The full amount of your
investment will be used to purchase shares. However, you will pay a 1% CDSC if
you redeem shares during the first year after purchase. Shares obtained from
dividend or distribution reinvestment are not subject to the CDSC. Class C
shares incur higher distribution and/or shareholder service fees than Class A
shares, and unlike Class B shares, do not convert to any other class of shares
of the Fund. The higher fees mean a higher expense ratio, so Class C shares pay
correspondingly lower dividends and may have a lower net asset value than Class
A shares. The maximum amount of Class C shares that may be purchased by any
investor is $500,000. Alpine Realty Income and Growth Fund does not offer Class
C shares.
With respect to Class C shares, no CDSC is imposed on: (1) the
portion of redemption proceeds attributable to increases in the value of the
account due to increases in the net asset value per share, (2) redemptions of
shares following the death or disability of a shareholder, or (3) redemptions to
meet distribution requirements for certain qualified retirement plans.
HOW THE FUNDS VALUE THEIR SHARES. The net asset value of each
class of shares of each Fund is calculated by dividing the value of the Fund's
net assets attributable to that class by the number of outstanding shares of
that class. Net asset value is determined each day the New York Stock Exchange
(the "NYSE") is open as of the close of regular trading (normally, 4:00 p.m.
Eastern time). In computing net asset value, portfolio securities of each Fund
are valued at their current market values determined on the basis of market
quotations. If market quotations are not readily available, securities are
valued at fair value as determined by the Board of Trustees of the Trust.
Non-dollar denominated securities will be valued as of the close of the NYSE at
the closing price of such securities in their principal trading market, but may
be valued at fair value if subsequent events occurring before the computation of
net asset value materially have affected the value of the securities.
GENERAL. The decision as to whether Class A, Class B or Class
C shares are more beneficial to you depends on the amount of your investment and
the length of time you intend to hold shares. If you are making a large
investment, thus qualifying for a reduced front-end sales charge, you might
consider Class A shares. If you are making a smaller investment, you might
consider Class B shares because 100% of your purchase is invested immediately
and Class B shares will convert to Class A shares, which incur lower ongoing
distribution and/or shareholder service fees, after seven years. If you are
unsure of the time period of your investment, you might consider
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<PAGE> 35
Class C shares because there is no initial sales charge and the CDSC only
applies to redemptions made during the first year. However, unlike Class B
shares, Class C shares do not convert to Class A shares.
Consult your financial intermediary for further information.
The compensation received by dealers and agents may differ depending on whether
they sell Class A, Class B or Class C shares.
The Funds also offer Class Y shares, which may be purchased
without any sales charges, distribution fees or redemption fees. However, unlike
Class A, Class B and Class C shares, Class Y shares are not generally offered by
most broker-dealers, banks and other financial intermediaries that offer shares
of the Funds. As a result, investors purchasing Class Y shares are not expected
to receive any of the services that financial intermediaries may provide to
their customers who own shares of the Funds.
In addition to the commission paid to dealers, the Distributor
or the Adviser may pay cash compensation to dealers in connection with sales of
shares of a Fund.
ADDITIONAL PURCHASE INFORMATION. If a purchase is canceled due
to nonpayment or because an investor's check does not clear, the investor will
be responsible for any loss a Fund or the Adviser incurs. If the investor is an
existing shareholder of any of the Funds, a Fund may redeem shares from an
investor's account in any of the Funds to reimburse the Fund or the Adviser for
any loss. In addition, the investor may be prohibited or restricted from making
further purchases in the Funds.
The Funds do not accept third party checks.
HOW TO REDEEM SHARES
You may redeem shares of the Funds on any day the NYSE is
open, either directly or through your financial intermediary. The price you will
receive is the net asset value (less any applicable CDSC) next computed after
the Fund receives your redemption request in proper form. Proceeds generally
will be sent to you within seven days. However, for shares recently purchased by
check, a Fund will not send redemption proceeds until it is reasonably satisfied
that the check has been collected (which may take up to ten days). Once a
redemption request has been telephoned or mailed, it is irrevocable and may not
be modified or canceled. Redemption requests received after 4:00 p.m. (Eastern
time) will be processed using the net asset value determined on the next
business day. Financial intermediaries may charge a fee for handling redemption
requests.
REDEEMING SHARES THROUGH YOUR FINANCIAL INTERMEDIARY. A Fund
must receive instructions from your financial intermediary before 4:00 p.m.
(Eastern time) for you to receive that day's net asset value (less any
applicable CDSC). Your financial intermediary is responsible for furnishing all
necessary documentation to a Fund and may charge you for this service. Certain
financial intermediaries may require that you give instructions earlier than
4:00 p.m. (Eastern time).
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<PAGE> 36
REDEEMING SHARES DIRECTLY BY MAIL OR TELEPHONE. Shares may be
redeemed by sending a signed letter of instruction or stock power form to the
Alpine Funds, P.O. Box 182212, Columbus, Ohio 43218-2212. Stock power forms are
available from your financial intermediary, the Alpine Funds, and many
commercial banks. Additional documentation is required for the redemption of
shares by corporations, financial intermediaries, fiduciaries and surviving
joint owners. Signature guarantees are required for all redemption requests for
shares with a value of more than $50,000 or where the redemption proceeds are to
be mailed to an address other than that shown in the account registration. A
signature guarantee must be provided by a bank or trust company (not a Notary
Public), a member firm of a domestic stock exchange or by another financial
institution whose guarantees are acceptable to the Funds' transfer agent.
Shareholders may redeem amounts of $1,000 or more from their
accounts by calling the phone number on the front page of this Prospectus
between the hours of 8:00 a.m. and 9:00 p.m. (Eastern time) each business day
(i.e., any weekday exclusive of days on which the NYSE is closed). The NYSE is
closed on New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
Redemption requests must include the shareholder's account
name, as registered with a Fund, and the account number. During periods of
unusual economic or market changes, shareholders may experience difficulty in
effecting telephone redemptions. Shareholders who are unable to reach a Fund by
telephone should follow the procedures outlined above for redemption by mail.
The telephone redemption service is not automatically made
available to shareholders. Shareholders wishing to use the telephone redemption
service must indicate this on the Share Purchase Application and choose how the
redemption proceeds are to be paid. Redemption proceeds will either be (i)
mailed by check to the shareholder at the address in which the account is
registered or (ii) wired to an account with the same registration as the
shareholder's account in a Fund at a designated commercial bank. A $5 charge is
deducted from redemption proceeds if the proceeds are wired. This charge is
subject to change without notice. A shareholder who decides later to use this
service, or to change instructions already given, should send a written request
to the Alpine Funds at P.O. Box 182212, Columbus, Ohio 43218-2212, with the
shareholder's signature guaranteed by a bank or trust company (not a Notary
Public), a member firm of a domestic stock exchange or by another financial
institution whose guarantees are acceptable to the Funds' transfer agent.
Shareholders should allow approximately ten days for the form to be processed.
The Funds employ reasonable procedures to verify that
telephone redemption requests are genuine. These procedures include requiring
some form of personal identification prior to acting upon instructions and tape
recording of conversations. If these procedures are followed, the Funds and
their agents will not be liable for any losses due to unauthorized or fraudulent
instructions. Each Fund reserves the right to refuse a telephone redemption
request, if it is believed advisable to do so. The telephone redemption option
may be suspended or terminated at any time without notice.
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<PAGE> 37
GENERAL. The redemption of shares is a taxable transaction for
Federal income tax purposes. Under unusual circumstances, a Fund may suspend
redemptions or postpone payment for up to seven days or longer, as permitted by
Federal securities law. The Funds reserve the right to close an account that as
a result of one or more redemptions has remained below $1,000 for thirty days.
Shareholders will receive sixty days' written notice to increase the account
value before the account is closed. Although in unusual circumstances the Funds
may pay the redemption amount in-kind through the distribution of portfolio
securities, they are obligated to redeem shares solely in cash, up to the lesser
of $250,000 or 1% of a Fund's total net assets during any ninety day period for
any one shareholder.
EXCHANGE PRIVILEGE
HOW TO EXCHANGE SHARES. You may exchange some or all of your
shares of a Fund for shares of the same class in one of the other Funds through
your financial intermediary, or by telephone or mail as described below. Each
exchange involves the redemption of shares of one Fund and the purchase of
shares of another Fund. Once an exchange request has been telephoned or mailed,
it is irrevocable and may not be modified or canceled. Exchanges are made on the
basis of the relative net asset values of the shares being exchanged. An
exchange which represents an initial investment in another mutual fund is
subject to the minimum investment and suitability requirements of each Fund.
The Funds each have different investment objectives and
policies. An exchange is treated for Federal income tax purposes as a redemption
and purchase of shares and may result in the realization of a capital gain or
loss. Shareholders are limited to five exchanges per calendar year, with a
maximum of three per calendar quarter. The exchange privilege may be modified or
discontinued at any time by the Funds upon sixty days' notice to shareholders
and is only available in states in which shares of the Fund being acquired may
lawfully be sold.
No CDSC is imposed when shares are exchanged. The CDSC
applicable, if any, will be computed and payable when shares are redeemed for
cash. In computing the CDSC, Class B shares will continue to age following an
exchange for purposes of conversion to Class A shares and determining the amount
of the applicable CDSC upon a redemption.
EXCHANGES THROUGH YOUR FINANCIAL INTERMEDIARY. A Fund must
receive exchange instructions from your financial intermediary before 4:00 p.m.
(Eastern time) for the request to be effective on the day received. Your
financial intermediary is responsible for furnishing all necessary documentation
to a Fund and may charge you for this service.
EXCHANGES BY TELEPHONE AND MAIL. You may exchange shares with
a value of $1,000 or more by telephone by calling 888-785-5578. Exchange
requests received after 4:00 p.m. (Eastern time) will be processed using the net
asset value determined on the next business day. You may also exchange shares by
mail by following the procedures for written redemption requests (however, no
signature guarantee is required). During periods of unusual economic or market
changes, shareholders may experience difficulty in effecting telephone
exchanges. You should follow the procedures for exchanges by mail if you are
unable to reach the Funds by telephone. If
-33-
<PAGE> 38
you wish to use the telephone exchange service you should indicate this on the
Share Purchase Application.
The Funds employ reasonable procedures to verify that
telephone exchange instructions are genuine. If these procedures are followed,
the Funds and their agents will not be liable for any losses due to unauthorized
or fraudulent instructions. A telephone exchange may be refused by a Fund if it
is believed advisable to do so. Procedures for exchanging Fund shares by
telephone may be modified or terminated at any time.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, the distributor of shares of the Funds, or the toll-free number on
the front page of this Prospectus. Some services are described in more detail in
the Share Purchase Application.
SYSTEMATIC INVESTMENT PLAN. You may make monthly or quarterly
investments into an existing account automatically in amounts of not less than
$25 per month or $75 per quarter. Each Fund reserves the right to close an
account that through redemptions or termination of the Systematic Investment
Plan has not reached a minimum balance of $1,000 ($250 for retirement accounts)
within 24 months of the initial investment.
TELEPHONE INVESTMENT PLAN. You may make investments into an
existing account electronically in amounts of not less than $100 or more than
$10,000 per investment. Telephone investment requests received by 4:00 p.m.
(Eastern time) will be credited to a shareholder's account two days from the
date the request is received.
Shares purchased under the Systematic Investment Plan or
Telephone Investment Plan may not be redeemed for ten business days from the
date of investment.
SYSTEMATIC CASH WITHDRAWAL PLAN. When an account of $10,000 or
more is opened or when an existing account reaches that size, you may
participate in the Systematic Cash Withdrawal Plan offered by the Funds by
filling out the appropriate part of the Share Purchase Application. Under this
plan, you may receive (or designate a third party to receive) a monthly or
quarterly check in a stated amount of not less than $75. Fund shares will be
redeemed as necessary to meet withdrawal payments. All participants must elect
to have their dividends and capital gain distributions reinvested automatically.
INVESTMENTS THROUGH EMPLOYEE BENEFIT AND SAVINGS PLANS.
Certain qualified and non-qualified benefit and savings plans may make shares of
the Funds available to their participants. The Adviser may provide compensation
to organizations providing administrative and recordkeeping services to plans
which make shares of the Funds available to their participants.
AUTOMATIC REINVESTMENT PLAN. For the convenience of investors,
all dividends and distributions paid on each class of shares of each Fund are
automatically reinvested in full and fractional shares of the same class of that
Fund at the net asset value per share at the close of
-34-
<PAGE> 39
business on the record date, unless otherwise requested by a shareholder in
writing. If the transfer agent does not receive a written request for subsequent
dividends or distributions to be paid in cash at least three full business days
before a given record date, the dividends or distributions paid on that record
date will be reinvested. If you elect to receive dividends or distributions in
cash and the U.S. Postal Service cannot deliver the checks, or the checks remain
uncashed for six months, the dividends or distributions will be reinvested into
your account at the net asset value in affect at the time of reinvestment.
TAX SHELTERED RETIREMENT PLANS. Eligible investors may open a
pension and profit sharing account in a Fund under the following prototype
retirement plans: (i) Individual Retirement Accounts ("IRAs") and Rollover IRAs;
and (ii) Simplified Employee Pension (SEP) for sole proprietors, partnerships
and corporations.
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute to shareholders
its investment company income, if any, annually and any net realized capital
gains annually or more frequently as required as a condition of continued
qualification as a regulated investment company by the Code. Dividends and
distributions generally are taxable in the year in which they are paid, except
any dividends paid in January that were declared in the previous calendar
quarter may be treated as paid in December of the previous year. Income
dividends and capital gain distributions are automatically reinvested in
additional shares of the Fund making the distribution at the net asset value per
share at the close of business on the record date, unless the shareholder has
made a written request for payment in cash.
Each Fund has qualified and intends to continue to qualify to
be treated as a regulated investment company under the Code. While so qualified,
it is expected that each Fund will not be required to pay any Federal income tax
on that portion of its investment company taxable income and any net realized
capital gains it distributes to shareholders. The Code imposes a 4%
nondeductible excise tax on regulated investment companies, such as the Funds,
to the extent they do not meet certain distribution requirements by the end of
each calendar year. Each Fund anticipates meeting these distribution
requirements. Most shareholders of the Funds normally will have to pay Federal
income tax and any state or local taxes on the dividends and distributions they
receive from a Fund whether dividends and distributions are paid in cash or
reinvested in additional shares. Questions on how distributions will be taxed
should be directed to your tax adviser.
Generally, the highest Federal income tax rate applicable to
net long-term capital gains realized by individuals is 20%. The rate applicable
to corporations is 35%. Certain income from a Fund may qualify for a corporate
dividends-received deduction of 70%. Following the end of each calendar year,
every shareholder of the Fund will be sent applicable tax information and
information regarding the dividends and capital gain distributions made during
the calendar year. A Fund may be subject to foreign withholding taxes which
would reduce the yield on its investments. Tax treaties between certain
countries and the U.S. may reduce or eliminate such taxes. Shareholders of a
Fund who are subject to U.S. Federal income tax may be entitled, subject to
certain rules and limitations, to claim a Federal income tax credit or deduction
for foreign income
-35-
<PAGE> 40
taxes paid by a Fund. See the Statement of Additional Information for further
details. A Fund's transactions in options, futures and forward contracts may be
subject to special tax rules. These rules can affect the amount, timing and
characteristics of distributions to shareholders.
Each Fund is required by Federal law to withhold 31% of
reportable payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by the Fund, that your social security or taxpayer
identification number is correct and that you are not currently subject to
backup withholding or are exempt from backup withholding.
The foregoing discussion of Federal income tax consequences is
based on tax laws and regulations in effect on the date of this Prospectus, and
is subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, you should also review the
discussion of "Additional Tax Information" contained in the Statement of
Additional Information. In addition, you should consult your own tax adviser as
to the tax consequences of investments in the Funds, including the application
of state and local taxes which may be different from Federal income tax
consequences described above.
GENERAL INFORMATION
PORTFOLIO TRANSACTIONS. Consistent with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., and subject to
seeking best price and execution, a Fund may consider sales of its shares as a
factor in the selection of dealers to effect portfolio transactions for the
Fund.
ORGANIZATION. The Funds are separate series of Alpine Equity
Trust (formerly Evergreen Global Equity Trust), a Massachusetts business trust
organized in 1988. The Funds do not hold annual shareholders meetings.
Shareholders meetings are held only when required by applicable law or otherwise
deemed necessary. Shareholders have available certain procedures for the removal
of Trustees, including the right to demand that a meeting of shareholders be
called for the purpose of voting on removal if 10% of the shareholders so
request in writing.
A shareholder in each class of a Fund will be entitled to his
or her share of all dividends and distributions from a Fund's assets, based upon
the relative value of such shares to those of other classes of the Fund, and,
upon redeeming shares, will receive the then current net asset value of the
class of shares of the Fund represented by the redeemed shares less any
applicable CDSC. The Trust may establish, without shareholder approval,
additional investment series, which may have different investment objectives,
and additional classes of shares for any existing or future series. If an
additional series or class were established, each share of the series or class
would normally be entitled to one vote for all purposes.
Class A, Class B, Class C and Class Y shares have identical
voting, dividend, liquidation and other rights, except that each class bears, to
the extent applicable, its own distribution expenses as well as any other
expenses applicable only to a specific class. Shares of all series and classes
will vote together as a single class on matters, such as the election of
Trustees,
-36-
<PAGE> 41
that affect each series and class in substantially the same manner. Series and
classes will vote separately on other matters which affect only certain series
or classes or if separate voting is required by applicable law. Shares are
entitled to dividends as determined by the Trustees and, in liquidation of a
Fund, are entitled to receive the net assets of the Fund.
CUSTODIAN. Investors Fiduciary Trust Company, 801
Pennsylvania Avenue, Kansas City, Missouri 64105, acts as each Fund's custodian.
TRANSFER AGENT AND FUND ACCOUNTING AGENT. BISYS Fund Services,
Inc., 3435 Stelzer Road Columbus, Ohio, 43219, acts as each Fund's transfer
agent and dividend-disbursing agent. It also provides accounting services to the
Funds.
PRINCIPAL UNDERWRITER. BISYS Fund Services Limited
Partnership, a wholly-owned subsidiary of the BISYS Group, Inc. located at 120
Clove Road, Little Falls, New Jersey 07424, is the principal underwriter of the
Funds. BISYS Fund Services Ohio, Inc. provides administration services to the
Funds. These services include: assisting in the supervision of all aspects of
the operations of the Funds (except those performed by the Adviser, the
custodian, the transfer agent or the fund accounting agent); preparing certain
period reports; assisting in the preparation of tax returns; and preparing
materials for use in connection with meetings of Trustees and shareholders. The
Funds each pay a fee computed at the annual rate of 0.23% of the Fund's average
daily net assets for administration services provided by BISYS Fund Services
Ohio, Inc. and for transfer agent and fund accounting services provided by BISYS
Fund Services, Inc.
OTHER CLASSES OF SHARES. Alpine U.S. Real Estate Equity Fund
and Alpine International Real Estate Equity Fund currently offer four classes of
shares: Class A, Class B, Class C and Class Y. Alpine Realty Income and Growth
Fund currently offers three classes of shares, Class A, Class B and Class Y. The
Funds may in the future offer additional classes. Class A, Class B and Class C
shares are being offered by this Prospectus. The dividends payable with respect
to Class A, Class B and Class C shares will be less than those payable with
respect to Class Y shares due to the distribution and shareholder servicing
related expenses that may be borne by Class A, Class B and Class C shares.
PERFORMANCE INFORMATION. From time to time, the Funds may each
quote their "total return" for a specified period in advertisements, reports or
other communications to shareholders. Total return is computed separately for
each class of shares. A Fund's total return for a specified period is computed
by finding, through the use of a formula prescribed by the SEC, the average
annual compounded rate of return over the period that would equate an assumed
initial amount invested to the value of the investment at the end of the period.
For purposes of computing total return, dividends and capital gains
distributions paid on shares of a Fund are assumed to have been reinvested when
paid and the maximum sales charges applicable to purchases of a Fund's shares
are assumed to have been paid.
In marketing a Fund's shares, information may be provided that
is designed to help individuals understand their investment goals and explore
various financial strategies. Such information may include publications
describing general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; a questionnaire designed to
help create a
-37-
<PAGE> 42
personal financial profile; and an action plan offering investment alternatives.
In addition, the information provided to investors may quote financial or
business publications and periodicals, including model portfolios or
allocations, as they relate to fund management, investment philosophy, and
investment techniques.
Performance data for each class of shares will be included in
any advertisements or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Funds may also advertise in items of sales literature an "actual
distribution rate" which is computed by dividing the total ordinary income
distributed (which may include the excess of short-term capital gains over
losses) to shareholders for the latest twelve month period by the maximum public
offering price per share on the last day of the period. Investors should be
aware that past performance may not be indicative of future results.
LIABILITY UNDER MASSACHUSETTS LAW. Under Massachusetts law,
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Trust's Declaration of Trust provides
that no shareholder will be personally liable for the obligations of the Trust
and requires that every written contract made by the Trust contain a provision
to that effect. If any shareholder were required to pay any liability of the
Trust, that person would generally be entitled to reimbursement from the general
assets of the Trust.
CONTROL PERSONS. As of October 16, 1998, Stephen A. Lieber may
be deemed to control Alpine International Real Estate Equity Fund through his
beneficial ownership of more than 25 percent of the Fund's outstanding shares.
ADDITIONAL INFORMATION. This Prospectus and the Statement of
Additional Information, which has been incorporated by reference, do not contain
all the information set forth in the Registration Statement filed by the Trust
with the SEC under the Securities Act. Copies of the Registration Statement may
be obtained at a reasonable charge from the SEC or may be examined, without
charge, at the offices of the SEC in Washington, D.C.
-38-
<PAGE> 43
INVESTMENT ADVISER
Alpine Management & Research, LLC
122 East 42nd Street
37th Floor
New York, New York 10168
TRANSFER AGENT & DIVIDEND-DISBURSING AGENT
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
CUSTODIAN
Investors Fiduciary Trust Company
801 Pennsylvania Avenue
Kansas City, Missouri 64105
LEGAL COUNSEL
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
100 East Broad Street
Columbus, Ohio 43215
DISTRIBUTOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
-39-
<PAGE> 44
PROSPECTUS [________ __], 1998
ALPINE U.S. REAL ESTATE EQUITY FUND
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND
ALPINE REALTY INCOME AND GROWTH FUND
(series of Alpine Equity Trust)
Class Y Shares
-----------
ALPINE U.S. REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. The Fund invests primarily in the
equity securities of United States issuers which are principally engaged in the
real estate industry or own significant real estate assets.
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND seeks long-term capital
growth. Current income is a secondary objective. The Fund invests primarily in
the equity securities of non-United States issuers which are principally engaged
in the real estate industry or own significant real estate assets.
ALPINE REALTY INCOME AND GROWTH FUND seeks a high level of current
income. Capital appreciation is a secondary objective. The Fund is a
non-diversified investment portfolio that invests primarily in the dividend
paying equity securities and debt securities of issuers which are principally
engaged in the real estate industry or own significant real estate assets.
-----------
The Funds are separate series of the Alpine Equity Trust, which is a
registered open-end, management investment company. The address of the Funds is
3435 Stelzer Road, Columbus, Ohio 43219. Alpine Management & Research, LLC
serves as the investment adviser (the "Adviser") of the Funds.
-----------
This Prospectus provides basic information that investors should
know before investing in Class Y shares of the Funds. A Statement of Additional
Information about the Funds, dated [ ], 1998, has been filed with
the Securities and Exchange Commission ( the "SEC") and is incorporated by
reference into this Prospectus. The Statement of Additional Information provides
more detailed information about the Funds and may be obtained without charge by
calling toll free (888) 785-5578.
You should read this Prospectus carefully and retain it for future
reference.
-----------
The SEC has not approved or disapproved these securities or passed
upon the adequacy of this Prospectus. Any representation to the contrary is a
criminal offense.
<PAGE> 45
TABLE OF CONTENTS
Page
----
EXPENSE INFORMATION...........................................................3
FINANCIAL HIGHLIGHTS..........................................................4
DESCRIPTION OF THE FUNDS......................................................8
INVESTMENT INSTRUMENTS........................................................9
INVESTMENT PRACTICES.........................................................16
RISK CONSIDERATIONS..........................................................19
MANAGEMENT OF THE FUNDS......................................................23
PURCHASE AND REDEMPTION OF SHARES............................................24
EXCHANGE PRIVILEGE...........................................................27
SHAREHOLDER SERVICES.........................................................27
DIVIDENDS, DISTRIBUTIONS AND TAXES...........................................29
GENERAL INFORMATION..........................................................30
<PAGE> 46
EXPENSE INFORMATION
This table shows shareholder transaction costs associated with
Class Y shares.
Sales Charge Imposed on Purchases .................. NONE
Sales Charge on Dividend Reinvestments ............. NONE
Contingent Deferred Sales Charge ................... NONE
Redemption Fee (1) ................................. NONE
------------------
(1) A $5 charge is deducted from redemption proceeds if the proceeds
are wired.
The following tables show the estimated annual operating expenses
associated with an investment in Class Y shares of each Fund (as a percentage of
its average net assets), together with examples of the cumulative effect of
estimated expenses on a hypothetical $1,000 investment for periods of 1, 3, 5
and 10 years, assuming: (i) a 5% annual return, and (ii) redemption at the end
of each period. The examples should not be considered a representation of past
or future expenses or annual return. Actual expenses and annual return may be
greater or less than those shown.
ESTIMATED ANNUAL OPERATING EXPENSES
<TABLE>
<CAPTION>
ALPINE REALTY
INCOME FUND
ALPINE U.S. ALPINE INTERNATIONAL (AFTER FEE WAIVER
REAL ESTATE EQUITY FUND REAL ESTATE EQUITY FUND AND REIMBURSEMENT)
----------------------- ----------------------- -----------------
<S> <C> <C> <C>
Management Fee .... 1.00% 1.00% 1.00%
Other Expenses .... 0.51% 0.70% 0.50%
Total ............. 1.51% 1.70% 1.50%
</TABLE>
ESTIMATED COST TO INVESTORS
ASSUMING REDEMPTION AT END OF PERIOD
<TABLE>
<CAPTION>
ALPINE U.S. ALPINE INTERNATIONAL ALPINE REALTY
REAL ESTATE EQUITY FUND REAL ESTATE EQUITY FUND INCOME FUND
----------------------- ----------------------- --------------
<S> <C> <C> <C>
After 1 year ...... $15 $17
After 3 years ..... $48 $54
After 5 years ..... $82 $92
After 10 years .... $180 $201
</TABLE>
The Adviser has voluntarily agreed to waive its fees and to absorb
expenses of Alpine Realty Income and Growth Fund to the extent necessary to
limit ordinary operating expenses of Class Y shares of the Fund (excluding
interest, taxes and brokerage) to 1.50% of
<PAGE> 47
average net assets for the first year of the Fund's operations or, if sooner,
until total assets of the Fund average $15 million or more for a period of 30
days. Absent this undertaking and assuming that the net assets of Alpine Realty
Income and Growth Fund do not reach $15 million for a period of 30 days,
estimated total operating expenses for Class Y shares for the current fiscal
year could range from approximately 1.50% to 1.75% of average net assets.
FINANCIAL HIGHLIGHTS
The following tables present, for Class Y shares of Alpine U.S. Real
Estate Equity Fund and Alpine International Real Estate Equity Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years for these two
Funds has been audited by PricewaterhouseCoopers LLP, the Funds' independent
auditors. The following information for both Funds should be read in conjunction
with the financial statements and related notes incorporated in each Fund's
Statement of Additional Information. Further information about each Fund's
performance is contained in its annual report to shareholders, which may be
obtained without charge.
No financial information for Alpine Realty Income and Growth Fund
appears in this prospectus because the Fund is newly formed and had no prior
operating history as of the date of this Prospectus.
-4-
<PAGE> 48
ALPINE U.S. REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
SEPTEMBER 1, 1993*
THROUGH
DECEMBER 31,
1997+ 1996+ 1995 1994**+ 1993
----- ----- ---- ------- ----
YEAR ENDED SEPTEMBER 30,
CLASS Y SHARES
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of year................. $12.56 $11.44 $10.07 $10.71 $10.00
Income from investment operations.................
Net investment income ............................ 0.16# 0.24 0.23 0.11 0.04
Net realized and unrealized gain (loss) on
investments .................................... 8.63 1.29 1.46 (0.75) 0.72
Total from investment operations.............. 8.79 1.53 1.69 (0.64) 0.76
Less distributions from
Net investment income............................. (0.28)# (0.20) (0.20) 0 (0.04)
In excess of net investment income................ 0 0 0 0 (0.01)
Net realized gains on investments................. (1.58) (0.21) (0.12) 0 0
Total distributions...................... (1.86) (0.41) (0.32) 0 (0.05)
Net asset value, end of year............. $19.49 $12.56 $11.44 $10.07 $10.71
TOTAL RETURN##.................................... 78.79% 13.57% 17.63% (5.98%) 7.60%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (thousands)................ $19,459 $10,601 $9,456 $8,630 $4,610
Ratios to average net assets:
Total expenses........................... 1.51% 1.46% 1.50% 1.49%+ 0.44+
Interest expense......................... N/A 0.04% N/A N/A N/A
Total expenses, excluding indirectly paid
expenses .............................. 1.50% N/A N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements ................ 2.26% 2.25% 2.70% 2.65%+ 3.59%+
Net investment income.................... 1.10% 2.02% 2.45%+ 1.60%+ 1.93%+
Portfolio turnover rate........................... 205% 169% 115% 102% 17%
Average commission rate paid per share............ $0.0597 $0.0619 N/A N/A N/A
</TABLE>
- ----------------
++ Calculated based on average shares outstanding throughout the period.
* Commencement of class operations.
** For the nine months ended September 30, 1994. The Fund changed its fiscal
year end from December 31 to September 30, effective September 30, 1994.
+ Annualized.
# The per share amount of net investment income is not in accord with the
distributions per share from net investment income due to the timing of
sales of Fund shares after the Fund declared its annual income distribution
on December 26, 1996. The distributions declared on such date were paid
principally from net investment income earned during the previous fiscal
year.
## Total return is calculated on net asset value for the periods and is not
annualized.
-5-
<PAGE> 49
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
1997 1996 1995#
---- ---- -----
YEAR ENDED OCTOBER 31,
----------------------
CLASS Y SHARES
--------------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of year................................................... $12.31 $11.59 $12.13
Income (loss) from investment operations:*
Net investment income (loss)...................................................... (0.03) 0.01 (0.01)
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions............................................................ 0.71 0.71 (0.53)
Total from investment operations.................................................. 0.68 0.72 (0.54)
Less distributions from
Net investment income............................................................. (0.02) 0 0
Net asset value end of year......................................................... $12.97 $12.31 $11.59
TOTAL RETURN**...................................................................... 5.5% 6.2% (4.5%)
RATIOS & SUPPLEMENTAL DATA:
Net assets end of year (thousands).................................................. $35,234 $47,502 $61,418
Ratios to average net assets:
Expenses.......................................................................... 1.82% 1.62% 1.62%++
Interest expense.................................................................. 0.03% 0.03% 0.03%++
Expenses, excluding indirectly paid expenses...................................... 1.82% N/A N/A
Expenses, excluding fee waivers & expense reimbursements.......................... 1.90% 1.67% N/A
Net investment income (loss)...................................................... (0.21%) 0.11% (1.14%)++
PORTFOLIO TURNOVER RATE............................................................. 44% 25% 1%
AVERAGE COMMISSION RATE PER SHARE................................................... $.0039 $.0037 N/A
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 1, 1989
THROUGH
1995 1994## 1993 1992 1991 1990 DECEMBER 31, 1989+
---- ------ ---- ---- ---- ---- ------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning $13.81 $14.75 $9.86 $9.16 $8.10 $10.03 $10.00
of year...............
Income (loss) from
investment operations:*
Net investment
income (loss)...... 0.11 0.07 0 (.01) (.02) (.03) .17
Net realized and
unrealized gain
(loss) on
investments and
foreign currency
related transactions (1.17) (1.01) 5.07 .94 1.08 (1.90) .03
Total from
investment operations (1.06) (0.94) 5.07 .93 1.06 (1.93) .20
Less distributions from:
Net investment income (0.10) 0 0 0 0 0 (.17)
Net realized gain on
investments....... (0.52) 0 (0.18) (.23) 0 0 0
Total contributions (0.62) 0 (0.18) (.23) 0 0 (.17)
Net asset value end of year $12.13 $13.81 $14.75 $9.86 $9.16 $8.10 $10.03
TOTAL RETURN**........... (7.7%) (6.4%) 51.4% 10.2% 13.1% (19.2%) 2.0%
RATIOS & SUPPLEMENTAL DATA:
Net assets end of year
(thousands)........... $67,645 $132,294 $146,173 $8,618 $7,557 $6,004 $7,336
Ratios to average net
assets:
Expenses........... 1.54 1.46%++ 1.56%@ 2.00%@ 2.00%@ 2.00%@ 2.00%++@
Interest expense... 0.05% 0.08%++ N/A N/A N/A N/A N/A
Expenses excluding
indirectly paid
expenses........... N/A N/A N/A N/A N/A N/A N/A
Expenses excluding
fee waivers &
expense reimbursement N/A N/A 1.64% N/A N/A N/A N/A
Net investment
income (loss)......... 0.92% 0.56%++ 0.03%@ (.10%)@ (.27%)@ (.39%)@ 2.23%++@
PORTFOLIO TURNOVER RATE.. 28% 63% 88% 245% 207% 325% 151%
AVERAGE COMMISSION RATE
PER SHARE............. N/A N/A N/A N/A N/A N/A N/A
</TABLE>
- -----------
* Net investment income is based on average monthly shares outstanding.
# The Fund changed its year end from September 30 to October 31, effective
October 31, 1995.
-6-
<PAGE> 50
## The Fund changed its fiscal year end from December 31 to September 30.
** Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
+ Commencement of operations.
@ Net of expenses and reimbursements. If the Fund had borne all expenses that
were assumed or waived by the investment adviser, the annualized ratios of
expenses and net investment income (loss) to average net assets, exclusive
of any applicable state expense limitations, would have been the following:
<TABLE>
<CAPTION>
FEBRUARY 1, 1989+
YEAR ENDED THROUGH
OCTOBER 31, 1996 1993 1992 1991 1990 DECEMBER 31, 1989
---------------- ---- ---- ---- ---- -----------------
YEAR ENDED
DECEMBER 31,
<S> <C> <C> <C> <C> <C> <C>
Operating expenses............. 1.67% 1.64% 3.72% 3.76% 3.99% 3.17%
Net investment income (loss)... .06% (.05) (1.82%) (2.02%) (2.38%) 1.06%
</TABLE>
ALPINE REALTY INCOME AND GROWTH FUND
No financial information for Alpine Realty Income and Growth Fund
appears in this Prospectus because the Fund is newly formed and had no prior
operating history as of the date of this Prospectus.
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DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES
ALPINE U.S. REAL ESTATE EQUITY FUND is a mutual fund which seeks
long-term capital growth. A secondary objective of the Fund is current income.
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND is a mutual fund which
seeks long-term capital growth. A secondary objective of the Fund is current
income.
ALPINE REALTY INCOME AND GROWTH FUND is a mutual fund which seeks a
high level of current income. Capital appreciation is a secondary objective.
This Fund is newly organized and did not commence operations prior to the date
of this Prospectus.
A Fund's investment objectives may not be changed without the
approval of a majority of its shareholders. There can be no assurance that the
investment objectives of the Funds will be achieved.
INVESTMENT POLICIES
ALPINE U.S. REAL ESTATE EQUITY FUND invests primarily in the equity
securities of U.S. issuers which are principally engaged in the real estate
industry or own significant real estate assets. Under normal market conditions,
this Fund invests at least 65% of its total assets in these securities.
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND invests primarily in
the equity securities of non-U.S. issuers which are principally engaged in the
real estate industry or own significant real estate assets. The Fund pursues a
flexible strategy of investing in companies throughout the world. However, it is
anticipated that the Fund will give particular consideration to investments in
the United Kingdom, Western Europe, Australia, Canada, and the Far East (Japan,
Hong Kong, Singapore, Malaysia and Thailand). Generally, a substantial portion
of the Fund's investments will be denominated in foreign currencies. Under
normal market conditions, this Fund invests at least 65% of its total assets in
the equity securities of non-U.S. issuers located in at least three foreign
countries which are principally engaged in the real estate industry or which own
significant real estate assets.
ALPINE REALTY INCOME AND GROWTH FUND is a non-diversified investment
portfolio that invests primarily in the dividend paying equity securities and
debt securities of issuers which are principally engaged in the real estate
industry or own significant real estate assets. Under normal market conditions,
this Fund invests at least 65% of its total assets in these securities. The Fund
is designed for investors who seek income and capital appreciation from
investing in real estate related securities.
Each Fund concentrates its investments in the securities of
companies engaged principally in the real estate industry. These companies
include, but are not limited to:
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- equity real estate investment trusts, which pool investors'
funds for investment primarily in commercial real estate
properties;
- mortgage real estate investment trusts, which invest pooled
funds in real estate related loans;
- real estate brokers and developers;
- companies with substantial real estate holdings, such as paper
and lumber producers and hotel and entertainment companies; and
- real estate equity trusts and limited partnerships which are
traded on major exchanges or which are not publicly traded.
A Fund may temporarily invest less than 25% of the value of its
assets in these securities during periods of adverse economic conditions in the
real estate industry.
The Funds may invest in equity and debt securities of companies
engaged in the real estate industry, debt and equity securities of other
companies, and money market instruments. They may also purchase and sell various
types of options, financial futures and currency contracts. Each Fund may invest
without limit in high quality fixed income securities and money market
instruments if, in the opinion of the Adviser, market conditions warrant a
temporary defensive investment position.
In pursuing their investment objectives, the Funds may use various
investment techniques. These techniques may include short sales and borrowing of
money for investment purposes (a practice known as "leverage"), subject to
certain limitations. Short sales and leverage involve risks and are considered
speculative practices.
Changes in the values of the Funds' investments will result in
changes in the net asset values of shares of the Funds and in investment returns
to their shareholders. The success of the Funds will be closely tied to the
performance of the real estate industry. For this reason, the investment
performance of the Funds may be more volatile than the performance of funds
which do not concentrate their investments in a particular sector. The
investment performance of the Funds will also be affected by general stock
market performance.
Alpine Realty Income and Growth Fund is a non-diversified fund. This
exposes the Fund to certain risks. See "INVESTMENT PRACTICES - Diversification/
Non-Diversification."
You should consider one or more of the Funds as a supplement to an
overall investment program and should invest only if you are willing to
undertake the risks involved.
INVESTMENT INSTRUMENTS
The Funds use a variety of investment instruments in pursuing their
investment programs. The investments of the Funds may include:
- Equity Securities - Temporary Investments
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- Real Estate Investment Trusts - Illiquid Securities
- Fixed Income Securities - Securities of Other Investment Companies
- Mortgage-Backed Securities - Derivative Instruments
- Foreign Securities
EQUITY SECURITIES
Equity securities include common stocks, preferred stocks and
securities convertible into common stocks, such as convertible bonds, warrants,
rights and options. The value of equity securities varies in response to many
factors, including the activities and financial condition of individual
companies, the business market in which individual companies compete and general
market and economic conditions. Equity securities fluctuate in value, often
based on factors unrelated to the value of the issuer of the securities, and
such fluctuations can be significant.
REAL ESTATE INVESTMENT TRUSTS
A real estate investment trust ("REIT") is a corporation or a
business trust that invests substantially all of its assets in interests in real
estate (including mortgages and other REITs) or cash and government securities
and derives most of its income from rents from real property or interest on
loans secured by mortgages on real property.
FIXED INCOME SECURITIES
The Funds may invest in bonds and other types of debt obligations of
U.S. and foreign issuers. These securities may pay fixed, variable or floating
rates of interest, and may include zero coupon obligations which do not pay
interest until maturity. Fixed income securities may include:
- bonds, notes and debentures issued by corporations;
- debt securities issued or guaranteed by the U.S. Government or one
of its agencies or instrumentalities ("U.S. Government
Securities");
- municipal securities;
- mortgage-backed and asset-backed securities;
- debt securities issued or guaranteed by foreign corporations and
foreign governments, their agencies, instrumentalities or
political subdivisions, or by government owned, controlled or
sponsored entities, including central banks.
The Funds may invest in both investment grade and non-investment
grade debt securities. Investment grade debt securities have received a rating
from Standard & Poor's Ratings Group, a division of the McGraw-Hill Companies,
Inc. ("S&P") or Moody's Investors Service, Inc. ("Moody's") in one of the four
highest rating categories or, if not rated, have been determined by
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the Adviser to be of comparable quality to such rated securities. Non-investment
grade debt securities (typically called "junk bonds") have received a rating
from S&P or Moody's of below investment grade, or have been given no rating and
are determined by the Adviser to be of a quality below investment grade. Each
Fund may invest up to 15% of the value of its total assets in non-investment
grade debt securities. However, the Funds may not invest in debt securities
rated below Ccc by S&P or Caa by Moody's (or unrated debt securities determined
to be of comparable quality by the Adviser). There are no limitations on the
maturity of debt securities that may be purchased by the Funds.
MORTGAGE-BACKED SECURITIES
Each Fund may invest in mortgage-backed securities issued or
guaranteed by the U.S. Government, or one of its agencies or instrumentalities,
or issued by private issuers. Mortgage-backed securities in which the Funds may
invest include collateralized mortgage obligations ("CMOs") and real estate
mortgage investment conduits ("REMICs"). CMOs are debt instruments issued by
special purpose entities and secured by mortgages or other mortgage-backed
securities, which provide by their terms for aggregate payments of principal and
interest based on the payments made on the underlying mortgages or securities.
CMOs are typically issued in separate classes with varying coupons and stated
maturities. REMICs are mortgage-backed securities as to which the issuers have
qualified to be treated as real estate mortgage investment conduits under the
Internal Revenue Code of 1986, as amended (the "Code") and have characteristics
similar to CMOs. The amount of privately issued mortgage-backed securities that
may be purchased by a Fund may not exceed 10% of the value of its total assets,
and the securities of any one such issuer purchased by the Fund may not exceed
5% of the value of its total assets.
Each Fund may also invest in "stripped" mortgage-backed securities.
These are securities which operate like CMOs but entitle the holder to
disproportionate interests with respect to the allocation of interest or
principal on the underlying mortgages or securities. A stripped mortgage-backed
security is created by the issuer separating the interest and principal on a
mortgage pool to form two or more independently traded securities. The result is
the creation of classes of discount securities which can be structured to
produce faster or slower prepayment expectations based upon the particular
underlying mortgage interest rate payments assigned to each class. These
obligations exhibit risk characteristics similar to mortgage-backed securities
generally and zero coupon securities. The prices of these securities are more
volatile than the prices of debt securities which make periodic payments of
interest.
FOREIGN SECURITIES
Alpine International Real Estate Equity Fund may invest without
limit in foreign securities. Alpine U.S. Real Estate Equity Fund may invest up
to 15% of the value of its total assets in foreign securities. Alpine Realty
Income and Growth Fund may invest up to 35% of the value of its total assets in
such securities. Investments in foreign securities may include direct
investments in securities of foreign issuers and investments in depository
receipts (such as American Depository Receipts) that represent indirect
interests in securities of foreign issuers.
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<PAGE> 55
The purchase of securities denominated in foreign currencies will
subject the value of a Fund's investments in those securities to fluctuations
due to changes in foreign exchange rates. To hedge against the effects of
changes in foreign exchange rates, each Fund may enter into forward foreign
currency exchange contracts ("forward contracts"). Forward contracts represent
agreements to exchange an amount of currency at an agreed upon future date and
rate. A Fund will generally use forward contracts only to "lock in" the price in
U.S. dollars of a foreign security that the Fund plans to purchase or to sell.
In certain cases, these contracts may be used to hedge against an anticipated
substantial decline in the price of a foreign currency against the U.S. dollar.
Such a decline would adversely affect the U.S. dollar value of foreign
securities held by a Fund. Forward contracts will not be used in all cases and,
in any event, cannot completely protect the Funds against all changes in the
values of foreign securities resulting from fluctuations in foreign exchange
rates. There are no limitations on the use of forward contracts by Alpine
International Real Estate Equity Fund or Alpine Realty Income and Growth Fund.
Alpine U.S. Real Estate Equity Fund will not enter into a forward contract if,
as a result, forward contracts would represent more than 15% of its total
assets.
TEMPORARY INVESTMENTS
For defensive purposes, each Fund may temporarily invest all or a
substantial portion of its assets in high quality fixed income securities and
money market instruments, or may temporarily hold cash in such amounts as the
Adviser deems appropriate. Fixed income securities will be deemed to be of high
quality if they are rated "A" or better by S&P or the corresponding rating by
Moody's or, if unrated, are determined to be of comparable quality by the
Adviser. Money market instruments are high quality, short-term fixed income
obligations (which generally have remaining maturities of one year or less), and
may include:
- U.S. Government Securities;
- commercial paper;
- certificates of deposit and bankers' acceptances issued by
domestic branches of United States banks that are members of the
Federal Deposit Insurance Corporation;
- repurchase agreements for U.S. Government Securities;
- short-term obligations of foreign issuers denominated in
U.S. dollars and traded in the U.S.; and
- repurchase agreements.
Repurchase agreements are agreements under which a Fund purchases
securities from a bank or a securities dealer that agrees to repurchase the
securities from the Fund at a higher price on a designated future date. If the
seller under a repurchase agreement becomes insolvent, the Fund's right to
dispose of the securities may be restricted, or the value of the securities may
decline before the Fund is able to dispose of them. In the event of the
bankruptcy or insolvency of the seller, the Fund may encounter delay and incur
costs, including a decline in the value of the securities, before being able to
sell the securities. If the seller defaults, the value of the securities
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<PAGE> 56
may decline before the Fund is able to dispose of them. If a Fund enters into a
repurchase agreement that is subject to foreign law and the other party
defaults, the Fund may not enjoy protections comparable to those provided to
most repurchase agreements under U.S. bankruptcy law, and may suffer delays and
losses in disposing of the collateral. The Funds have adopted procedures
designed to minimize the risks of loss from repurchase agreements.
ILLIQUID SECURITIES
Each Fund may invest in illiquid securities. These are securities
that have legal or contractual restrictions on resale, securities that are not
readily marketable, and repurchase agreements maturing in more than seven days.
The inability of a Fund to dispose of illiquid investments readily or at a
reasonable price could impair the Fund's ability to sell its investment or to
raise cash for redemptions or other purposes. Illiquid securities include
certain restricted securities which have not been registered under the
Securities Act of 1933 and cannot be resold without registration or an exemption
from registration. However, restricted securities that are eligible for resale
pursuant to Rule 144A under the Securities Act, and have been determined to be
liquid by the Adviser using procedures adopted by the Board of Trustees of the
Trust, will not be considered to be illiquid.
Each Fund may each invest up to 15% of its total assets in illiquid
securities; however, Alpine U.S. Real Estate Equity Fund and Alpine Realty
Income and Growth Fund may not invest more than 10% of their net assets in
repurchase agreements maturing in more than seven days.
SECURITIES OF OTHER INVESTMENT COMPANIES
Each Fund may invest in the securities of other registered, open-end
investment companies that have investment objectives and policies similar to its
own. The Funds may also purchase shares of money market funds that invest in
U.S. Government Securities and repurchase agreements, in lieu of purchasing
money market instruments directly. Any investment by a Fund in the securities of
other investment companies, including money market funds, will be subject to the
limitations on such investments contained in the Investment Company Act of 1940
(the "1940 Act"). The Funds, as investors in another investment company, will
indirectly bear the fees and expenses of that company, which will be in addition
to the fees and expenses of the Funds.
DERIVATIVE INVESTMENTS
The Funds may use certain derivative instruments in connection with
their investment activities. These include:
- Options on Securities - Options on Foreign Currencies
- Options on Securities Indices - Futures Contracts
These instruments derive their performance, at least in part, from
the performance of an underlying asset or index.
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<PAGE> 57
OPTIONS ON SECURITIES. Each Fund may purchase call and put options
on securities to seek capital growth or for hedging purposes. The Funds may also
write and sell covered call and put options for hedging purposes. A put option
gives the purchaser of the option the right to sell, and obligates the writer to
buy, the underlying security at a stated exercise price at any time before the
expiration of the option. A call option gives the purchaser of the option the
right to buy, and obligates the writer to sell, the underlying security at a
stated exercise price at any time before the expiration of the option.
A call option written by a Fund is "covered" if the Fund owns the
underlying security or holds related securities (i.e., securities whose price
movements correlate to the price movements of the securities underlying the
option) during the term of the option. By writing a covered call option, a Fund
forgoes the opportunity to realize any appreciation in the market price of the
underlying security above the exercise price and incurs the risk of having to
continue to hold a security that it might otherwise determine to sell based on
investment considerations. A put option written by a Fund is "covered" if the
Fund maintains at all times cash or liquid securities having a value equal to
the option exercise price in a segregated account with the Fund's custodian, or
if the Fund has bought and holds a put on the same security (and on the same
amount of securities) where the exercise price of the put held by the Fund is
equal to or greater than the exercise price of the put written by the Fund. By
writing a put option, a Fund is exposed to the risk, during the term of the
option, of a decline in the price of the underlying security which the Fund
would be required to purchase at a higher price. Writing options provides a
hedge only to the extent of the premium a Fund receives from the purchaser of
the option.
Each Fund may also invest in so-called "synthetic" options or other
options and derivative instruments written by broker-dealers, including options
on baskets of specified securities. Synthetic options transactions involve the
use of two financial instruments that, together, have the economic effect of an
options transaction. The risks of synthetic options are generally similar to the
risks of actual options, with the addition of increased market risk, liquidity
risk, counterparty credit risk, legal risk and operations risk.
Options transactions may be effected on domestic and foreign
securities exchanges or in the over-the-counter market. Options positions may be
of the American or the European variety. An American style option may be
exercised by the holder at any time after it is purchased until it expires. A
European style option may be exercised only on its expiration date. When options
are purchased over-the-counter, a Fund bears the risk that the counterparty that
wrote the option will be unable or unwilling to perform its obligations under
the option contract. In addition, the Fund may have difficulty closing out its
positions in over-the-counter and synthetic options, which could result in
losses to the Fund. Over- the-counter option positions and various derivative
instruments may be illiquid and, in such cases are subject to the limitations on
the purchase of illiquid securities by the Funds.
Each Fund may invest up to 10% of the value of its total assets,
represented by premiums paid, to purchase call and put options on securities and
securities indices. A Fund may not write covered call and put options on
securities and securities indices with aggregate exercise prices in excess of
15% of the value of its assets.
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OPTIONS ON SECURITIES INDICES. Each Fund may purchase and write
options on stock indices (such as the S&P 500 Index) listed on domestic or
foreign securities exchanges or traded in the over-the-counter market for
hedging purposes. A stock index fluctuates with changes in the market values of
the stocks included in the index. A put option on an index may be purchased to
hedge against a general decline in the stock market or in a particular market
segment or industry. A call option on an index may be purchased in an attempt to
reduce the risk of missing a general market advance or an increase in the prices
of securities within a particular market segment or industry. Options on stock
indices written by the Funds must be "covered". An index option is covered if a
Fund segregates in a separate account with its custodian cash or liquid
securities with a value equal to its obligations under the option or if it holds
an option on the same index (and in the same amount) with an exercise price
equal to, or less than in the case of a call or greater than in the case of a
put, the exercise price of the option written.
The effectiveness of purchasing or writing stock index options for
hedging depends upon the extent to which price movements of securities held by a
Fund correlate with price movements of the stock index selected. Whether a Fund
realizes a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock. Successful use of
options on stock indexes depends on the Adviser's ability to anticipate
correctly movements in the direction of the stock market generally or of a
particular industry or market segment. This requires skills and techniques that
differ from those used in making decisions to purchase and sell particular
securities.
OPTIONS ON FOREIGN CURRENCIES. The Funds may purchase and write
options on foreign currencies to protect against declines in the U.S. dollar
value of foreign securities or in the U.S. dollar value of dividends or interest
expected to be received on those securities. These transactions may also be used
to protect against increases in the U.S. dollar cost of foreign securities to be
acquired by the Funds. Writing an option on foreign currency is only a partial
hedge, up to the amount of the premium received, and the Funds could be required
to purchase or sell foreign currencies at disadvantageous exchange rates,
thereby incurring losses. Certain options on foreign currencies are traded in
the over-the-counter market and involve liquidity and credit risks that may not
be present in the case of exchange traded currency options. A Fund may not
purchase a foreign currency option if, as a result, premiums paid on foreign
currency options then held by the Fund would represent more than 5% of the
Fund's net assets.
FUTURES CONTRACTS. Each Fund may buy and sell financial futures
contracts and related options. A financial futures contract is an agreement
between two parties to buy or sell a specified instrument (such as currency or
an index of securities) at a set price on a future date. An index futures
contract is an agreement to take or make delivery of an amount of cash based on
the difference between the value of the index at the beginning and at the end of
the contract period. A futures contract on a foreign currency is an agreement to
buy or sell a specified amount of a currency for a specified price on a future
date. The Funds may use financial futures contracts and related options for
"bona fide hedging" purposes, as such term is defined in applicable regulations
of the Commodity Futures Trading Commission. Each Fund is also permitted to
enter into such contracts and options for non-hedging purposes; however, the
aggregate initial margin deposits plus
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premiums paid by a Fund for open futures positions, less the amount by which any
such positions are "in-the-money," may not exceed 5% of the Fund's total assets.
INVESTMENT PRACTICES
The Funds use a variety of investment practices in pursuing their
investment programs. These practices include:
- Short Sales - Lending of Portfolio Securities
- When Issued and Delayed Delivery - Cross Hedging
Transactions
- Borrowing
SHORT SALES
Each of the Funds may effect short sales of securities. A short sale
involves the sale of a security that a Fund does not own in anticipation of
purchasing the same security (or a security exchangeable therefor) at a later
date at a lower price. The Fund selling short must borrow the security sold
short and will be obligated to return the security to the lender. This is
accomplished by a later purchase of the security by the Fund to close its short
position. When a Fund effects a short sale, it must maintain collateral in a
segregated account consisting of cash or liquid securities with a value equal to
the current market value of the securities sold short. A Fund may not sell a
security short if, as a result of that sale, the current value of securities
sold short by that Fund would exceed 10% of the value of the Fund's net assets.
The use of short sales is considered a speculative investment
practice. The limited use of this practice, however, permits the Funds to pursue
opportunities to profit from anticipated declines in the prices of particular
securities which in the view of the Adviser are overvalued or are likely to be
adversely affected by particular trends or events.
The Funds may also effect short sales "against the box" to hedge
against a decline in the value of a security owned by the Fund. These
transactions are not subject to the 10% limitation described above. However, if
a Fund effects a short sale against the box, it will set aside securities
equivalent in kind and amount to the securities sold short (or securities
convertible or exchangeable into such securities) and hold those securities
while the short sale is outstanding.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Funds may purchase and sell securities on a when-issued or
delayed delivery basis. These transactions are arrangements in which the Funds
purchase securities with payment and delivery scheduled for a future time. A
seller's failure to complete a transaction of this type may cause a Fund to miss
obtaining a price or yield considered to be advantageous. Settlement dates may
be a month or more after entering into these transactions, and the market values
of the securities purchased may vary from the purchase price paid by a Fund. A
Fund may dispose of a commitment before settlement if the Adviser deems it
appropriate, and may realize a short-term
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profit or loss. When a Fund enters into a when-issued or delayed delivery
transaction, it will "cover" its position by maintaining in a segregated account
with the Fund's custodian, cash or liquid securities held by the Fund having a
value (determined daily) equal to or greater than the purchase commitment or
delivery obligation of the Fund.
BORROWING
The Funds may borrow money from banks for investment purposes. This
practice, which is known as "leverage," permits the Funds to purchase a greater
amount of securities than would otherwise be possible. The use of leverage will
increase investment returns if the additional securities purchased increase in
value in an amount exceeding the interest and other costs incurred in connection
with the borrowing. However, if the purchased securities decrease in value, a
Fund will suffer a loss exceeding the loss that would have resulted if leverage
had not been used. For this reason, the use of leverage increases investment
risk and is considered a speculative practice.
The Funds may also borrow by entering into reverse repurchase
agreements. In these transactions, a Fund agrees to sell portfolio securities to
a financial institution such as a bank or broker-dealer, and to repurchase them
at a mutually agreed upon date and price. When a Fund enters into a reverse
repurchase agreement, it will place in a segregated custodian account cash, U.S.
Government Securities or other securities having a value at least equal to the
repurchase price (including accrued interest) and will subsequently monitor the
account to ensure that such equivalent value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price of those securities.
Each Fund may borrow money for investment purposes and enter into
reverse repurchase agreements in an amount up to 10% of the value of its total
assets. The Funds may also borrow for temporary, extraordinary or emergency
purposes. However, a Fund's total borrowings (including borrowings through
reverse repurchase agreements) may not exceed 33 1/3% of its total assets.
LENDING OF PORTFOLIO SECURITIES
In order to generate income, the Funds may lend portfolio securities
to brokers, dealers and other financial institutions. When a Fund lends
securities it will receive collateral, generally in the form of cash or U.S.
Government Securities, and will earn interest on this collateral. While
securities are on loan, the borrower will pay the Fund any income or dividends
paid on the loaned securities. A Fund has the right to call a loan and obtain
the securities loaned at any time. The Funds may pay reasonable fees in
connection with securities loans. A Fund may not lend a security if, as a
result, the amount of securities loaned by the Fund would exceed 30% of the
value of its total assets. In addition, loans must be collateralized by cash or
U.S. Government Securities that are maintained in an amount equal to at least
100% of the current market value of the securities loaned, including accrued
interest.
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CROSS HEDGING
The Funds may use cross hedging to hedge against foreign currency
risks. A cross hedge is accomplished by entering into a forward contract or
other arrangement with respect to one foreign currency for the purpose of
hedging against a possible decline in the value of another foreign currency in
which certain portfolio instruments of a Fund are denominated. The Adviser may
enter into a cross hedge, rather than hedge directly, when the rates for forward
contracts, options, futures contracts or options on futures contracts relating
to the currency in which the cross hedge is effected are more favorable than
rates for similar instruments denominated in the currency that is to be hedged.
A cross hedge requires that there be a high degree of correlation between the
two currencies with respect to their movement against the U.S. dollar. Cross
hedges may be effected using the various instruments the Funds are authorized to
purchase and sell. A cross hedge cannot protect against exchange rate risks
perfectly, and if the Adviser is incorrect in its judgment of exchange rate
relationships, a Fund could be in a less advantageous position than if a hedge
had not been established.
DIVERSIFICATION/ NON-DIVERSIFICATION
Alpine U.S. Real Estate Equity Fund and Alpine International Real
Estate Equity Fund are "diversified" funds. This means that, with respect to 75%
of their total assets, these Funds may not purchase a security, other than U.S.
Government Securities, if as a result of such purchase, more than 5% of the
value of the Fund's total assets would be invested in the securities of any one
issuer or the Fund would own more than 10% of the voting securities of any one
issuer. Diversifying a Fund's investment portfolio by limiting the amount of
money invested in any one issuer reduces investment risk.
Alpine Realty Income and Growth Fund is a "non-diversified" fund.
This means that the Fund is not subject to the provisions of the 1940 Act that
limit the percentage of assets that may be invested in the securities of a
single issuer. However, the Fund intends to comply with the diversification
requirements imposed by the Code, which require that the Fund be diversified
with respect to 50% of its assets. The portfolio of Alpine Realty Income and
Growth Fund may nonetheless be less diversified than the portfolios of
investment companies which are "diversified" as defined by the 1940 Act. As a
result, the value of shares of the Fund may be more adversely affected by
developments affecting a single issuer than would be the case if the Fund's
portfolio was broadly diversified.
PORTFOLIO TURNOVER
The Funds may engage in short-term trading strategies and securities
may be sold without regard to the length of time held when, in the opinion of
the Adviser, investment considerations warrant such action. These policies,
together with the ability of the Funds to effect short sales of securities and
to engage in transactions in options and futures, may have the effect of
increasing the annual rate of portfolio turnover of the Funds. However, it is
expected that the annual portfolio turnover rate of a Fund will not exceed 150%.
A high portfolio turnover rate will result in greater brokerage commissions and
transaction costs. It may also result in greater realization of gains, which may
include short-term gains taxable at ordinary income tax rates.
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INVESTMENT RESTRICTIONS
The Funds have adopted various restrictions on their investment
practices. These include the policies and restrictions described in this
Prospectus, as well as additional restrictions described in the Statement of
Additional Information. Unless otherwise stated, each investment restriction
applies at the time of the investment or transaction. Certain restrictions and
investment policies may be changed without shareholder approval. However, other
policies and restrictions, including the diversification policies of the Funds
are fundamental policies which may not be changed without the approval of a
majority of a Fund's shareholders.
RISK CONSIDERATIONS
You should consider the risks of a Fund's investment program in
deciding whether to invest in that Fund.
GENERAL
The total return and net asset value of each Fund will fluctuate.
These fluctuations may be substantial. In part, investment return depends on the
Adviser's ability to identify investments and to implement investment strategies
that are successful. The Funds' investment performance also depends on general
market conditions and, in particular, the market for securities of real estate
related companies. There can be no assurance given that a Fund will achieve its
investment objective or have investment performance that is comparable to the
stock market as a whole.
As a non-diversified fund, Alpine Realty Income and Growth Fund is
subject to greater risks than a fund that diversifies its investments.
REAL ESTATE COMPANIES
Because the Funds concentrate their investments in the real estate
industry, their portfolios may experience more volatility and be exposed to
greater risk than the portfolios of many other mutual funds. Risks associated
with investment in securities of companies in the real estate industry include:
declines in the value of real estate, risks related to general and local
economic conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, changes in zoning laws, casualty or
condemnation losses, variations in rental income, changes in neighborhood
values, the appeal of properties to tenants and increases in interest rates. In
addition, equity REITs may be affected by changes in the value of the underlying
properties owned by the trusts, while mortgage REITs may be affected by the
quality of credit extended. Equity and mortgage REITs are dependent upon
management skills, may not be diversified and are subject to the risks of
financing projects. REITs are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for tax-free pass-through of income under the Code. In the event an
issuer of debt securities collateralized by real estate defaults, a Fund could
end up holding the underlying real estate. The values of securities of companies
in the real estate industry may go through cycles of relative under-performance
and out-performance in comparison to equity securities markets in general.
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SMALLER COMPANIES
The Funds may invest in the securities of issuers having smaller
market capitalizations. The investment risks associated with securities of
smaller companies are generally greater than those associated with the
securities of larger, well-established companies. Smaller companies often are of
more recent formation than other companies and may have limited product lines,
distribution channels and financial and managerial resources. Also, there is
often less publicly available information concerning smaller companies than
there is for larger, more established issuers. The equity securities of smaller
companies are often traded over-the-counter and may not be traded in the volume
typical for securities that are traded on a national securities exchange.
Consequently, the Funds may be required to dispose of these securities over a
longer period of time (and potentially at less favorable prices) than would be
the case for securities of larger companies. In addition, the prices of the
securities of smaller companies may be more volatile than those of larger
companies.
FOREIGN SECURITIES
Investments in foreign securities involve certain risks. There may
be more limited information publicly available concerning foreign issuers than
would be with respect to domestic issuers. Different accounting standards may be
used by foreign issuers, and foreign trading markets may not be as liquid as
U.S. markets. Foreign securities also involve such risks as currency fluctuation
risk, possible imposition of withholding or confiscatory taxes, possible
currency transfer restrictions, expropriation or other adverse political or
economic developments and the difficulty of enforcing obligations in other
countries. These risks may be greater in emerging markets and in less developed
countries. Alpine International Real Estate Equity Fund normally invests
primarily in foreign securities and for this reason it will be most susceptible
to losses attributable to these risks.
EMERGING MARKETS
Foreign securities purchased by the Funds may include the securities
of companies which operate primarily in emerging market countries. The economies
of individual emerging countries may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rate of
inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments position. Also, the economies of developing
countries generally are heavily dependent on international trade and may be
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also may be adversely
affected by economic conditions in the countries with which they trade.
Prior governmental approval for foreign investments may be required
under certain circumstances in some emerging market countries, and the extent of
foreign investment in certain debt securities and domestic companies may be
subject to limitation in other emerging countries. Foreign ownership limitations
also may be imposed by the charters of individual companies in emerging
countries to prevent, among other concerns, violation of foreign investment
limitations. Repatriation of investment income, capital and the proceeds of
sales by foreign investors may
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require governmental registration or approval in some emerging countries. A Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental registration or approval for such repatriation. Any investment
subject to such repatriation controls will be considered illiquid if it appears
reasonably likely that this process will take more than seven days.
With respect to any emerging country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could adversely affect the economics of such countries or
the value of the Funds' investments in those countries. In addition, it may be
difficult to obtain and enforce a judgment in a court outside of the U.S.
FIXED INCOME SECURITIES
Fixed income securities are subject to credit risk and market risk.
Credit risk is the risk of the issuer's inability to meet its principal and
interest payment obligations. Market risk is the risk of price volatility due to
such factors as interest rate sensitivity, market perception of the
creditworthiness of the issuer and general market liquidity. Securities having
longer maturities generally involve greater risk of fluctuations in value
resulting from changes in interest rates. Lower grade debt securities are
considered to be predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal. Changes in economic conditions or
developments regarding the individual issuer are more likely to cause price
volatility and weaken the capacity of the issuers of non-investment grade debt
securities to make principal and interest payments than is the case for higher
grade debt securities. An economic downturn affecting an issuer of
non-investment grade debt securities may result in an increased incidence of
default. In addition, the market for lower grade debt securities may be thinner
and less active than for higher grade debt securities.
LENDING OF PORTFOLIO SECURITIES
When a Fund lends portfolio securities, there is a risk that the
securities may not be returned to a Fund on a timely basis. A Fund may incur a
loss if the borrower of securities files for bankruptcy or becomes insolvent. In
such a case, the return of the securities to a Fund may be delayed by court
action and the Fund could possibly suffer a loss if the value of the loaned
securities exceeds the value of collateral held by the Fund. The Adviser
monitors the creditworthiness of borrowers in light of these risks.
SHORT SALES AND LEVERAGE
Short sales of securities by a Fund involve the risk that the
security sold short may increase in value before the Fund purchases it to close
its short position. A Fund will incur a loss if the market price of securities
sold short increases. Because there is no limit on the amount the market price
of the security can increase, short sales theoretically involve the potential
for unlimited loss and is considered a speculative practice. The Funds will
incur transaction costs, including interest expense, in connection with opening,
maintaining and closing short sales.
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The use of leverage involves the risk that securities purchased with
borrowed money may decrease in value, and the Fund could incur a loss. Use of
leverage is, therefore, considered to be a speculative investment practice.
DERIVATIVES
The use of options, futures and other derivative instruments by the
Funds can increase the volatility of the Funds' net asset values, can decrease
the liquidity of the Funds' portfolios and make pricing portfolio securities
more difficult. Derivatives may entail investment exposures that are greater
than their costs would suggest, meaning that a small investment could have a
large potential positive or negative impact on a Fund's net asset value per
share or investment performance. If a Fund invests in derivatives at
inappropriate times or if the Adviser judges market conditions incorrectly,
derivative investments may lower investment return or result in losses. Changes
in the liquidity of the secondary markets in which derivatives may trade could
result in significant, rapid and unpredictable changes in prices, which could
also cause losses to the Funds.
The purchase and sale of futures contracts and related options
involve risks different from those involved with direct investments in
securities. While utilization of futures contracts and similar instruments may
be advantageous to the Funds, if the Adviser is not successful in employing such
instruments in managing the Funds' investments or in predicting market changes,
investment performance will be worse than if the Funds did not make such
investments. It is possible that there will be imperfect correlation, or even no
correlation, between price movements of the investments being hedged and the
options or futures used. It is also possible that a Fund may be unable to
purchase or sell a portfolio security at a time that otherwise would be
favorable for it to do so, or that a Fund may need to sell a portfolio security
at a disadvantageous time, due to the need for the Fund to maintain "cover" or
to segregate securities in connection with its futures transactions. In some
situations, a Fund may be unable to close out or liquidate its hedged position.
In addition, the Funds will pay commissions and incur other costs in connection
with transactions in futures contracts and related options, which may increase
the expenses of the Funds.
YEAR 2000
Many computer software systems in use today recognize dates using a
two digit year code. These systems cannot distinguish between years preceding
the year 2000 and years beginning after 1999. This is known as the "Year 2000"
problem. Most of the services provided to the Funds depend on the smooth
functioning of computer systems. Any failure to adapt these systems prior to the
year 2000 could interfere with the proper operations of the Funds. The principal
service providers to the Funds have advised the Trust that they are working to
implement necessary changes to their systems and that they expect their systems
to be adapted in time. However, there can be no assurance of success. In
addition, because the Year 2000 problem affects virtually all organizations,
companies in which the Funds invest could be adversely impacted by this issue.
The extent of the impact of Year 2000 problems on the Funds cannot be predicted.
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CONVERSION TO THE EURO
On January 1, 1999, the European Union will introduce a single
European currency, the Euro. On that date, the first phase of the conversion of
the existing currencies (known as "legacy currencies") of eleven participating
European Union member countries will begin and the Euro will become the currency
of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal and Spain (the "participating countries"). The legacy
currencies of the participating countries will remain in circulation, but their
valuation will be determined only in relation to the Euro. On January 1, 2002,
Euro bills and coins will be introduced. During a transition period from January
1, 1999 until June 30, 2002, the legacy currencies will continue to circulate.
On July 1, 2002, the legacy currencies will no longer be accepted as legal
tender.
The expected introduction of the Euro presents unique uncertainties,
including: whether the payment and operational systems of banks and other
financial institutions will be ready for the scheduled launch date; the legal
treatment of certain outstanding financial contracts after January 1, 1999 that
refer to legacy currencies rather than the Euro; and the creation of suitable
clearing and settlement payment systems for the new currency. These or other
factors, including political and economic risks, could cause market disruptions
before or after the introduction of the Euro. The principal service providers to
the Funds have advised the Trust that they are taking steps to address
Euro-related issues.
MANAGEMENT OF THE FUNDS
The management of each Fund is supervised by the Board of Trustees
of Alpine Equity Trust (the "Trust"). Alpine Management & Research, LLC (the
"Adviser") serves as the investment adviser of the Funds.
The Adviser is a recently formed Delaware limited liability company,
located at 122 East 42nd Street, 37th Floor, New York, New York 10168, which
provides investment advisory and management services to the Funds and other
advisory clients. All of the Adviser's client accounts are invested principally
in real estate securities. The members of the Adviser are Messrs. Samuel A.
Lieber, who is the controlling person of the Adviser, and Marc R. Halle.
Mr. Lieber is the portfolio manager for the Alpine U.S. Real Estate
Equity Fund and Alpine International Real Estate Equity Fund and the co-manager
of the Alpine Realty Income and Growth Fund. Prior to the organization of the
Adviser, Mr. Lieber was associated with Evergreen Asset Management Corp., the
former adviser of Alpine U.S. Real Estate Equity Fund and Alpine International
Real Estate Equity Fund, since 1985.
Mr. Halle is the portfolio manager of the Alpine Realty Income and
Growth Fund and associate portfolio manager of the Alpine U.S. Real Estate
Equity Fund. Prior to the organization of the Adviser, Mr. Halle was associated
with Evergreen Asset Management Corp.,
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the former adviser of Alpine U.S. Real Estate Equity Fund and Alpine
International Real Estate Equity Fund, since 1994.
As investment adviser to the Funds, the Adviser manages the Funds'
investments and is responsible for providing the Funds with certain other
services. Alpine U.S. Real Estate Equity Fund and Alpine Realty Income and
Growth Fund each pay the Adviser a monthly fee computed at the annual rates of
1% of the average daily net assets of the Fund on the first $750 million of
assets, 0.9% of average daily net assets on an annual basis on the next $250
million in assets, and 0.8% of average daily net assets on assets in excess of
$1 billion. Alpine International Real Estate Equity Fund pays the Adviser a
monthly fee computed at the annual rate of 1% of the average daily net assets of
the Fund. The advisory fees paid by the Funds are higher than those paid by most
other mutual funds, but are comparable to the fees paid by many funds with
similar investment objectives and policies. The total estimated expenses of the
Funds as a percentage of their average daily net assets on an annual basis are
set forth in the section entitled "EXPENSE INFORMATION".
PURCHASE AND REDEMPTION OF SHARES
HOW TO BUY SHARES
Investors may purchase Class Y shares of the Funds at net asset
value by mail or wire as described below or through your financial intermediary.
The Funds impose no sales charges on Class Y shares. Class Y shares are the only
class of shares offered by this Prospectus. The minimum initial investment is
$1,000, which may be waived in certain situations. There is no minimum for
subsequent investments. Investors may make subsequent investments by
establishing a Systematic Investment Plan or a Telephone Investment Plan. Shares
will be issued at the net asset value per share next computed after the receipt
of a request to purchase shares, together with payment in the amount of the
purchase.
PURCHASES BY MAIL OR WIRE. To make an initial purchase of Class Y
shares, complete the Share Purchase Application and mail it, together with a
check made payable to the Fund whose shares are being purchased, to the Alpine
Funds at P.O. Box 182212, Columbus, Ohio 43218-2212. Checks not drawn on U.S.
banks will be subject to foreign collection, which will delay an investor's
investment date, and will be subject to processing fees. The Funds does not
accept third party checks.
When making subsequent investments, an investor should either
enclose the return remittance portion of the statement, or indicate on the face
of the check, the name of the Fund in which the investment is to be made, the
exact title of the account, the address, and the Fund account number. Purchase
requests should not be sent to a Fund in New York.
Initial investments may also be made by wire by (i) calling the
Alpine Funds at 888-785-5578 for an account number and (ii) instructing your
bank, which may charge a fee, to wire federal funds to Huntington National Bank,
as follows: Huntington National Bank, Columbus, Ohio, ABA No. 044000024, Account
No. 01899611515. The wire must include references to the Fund in which an
investment is being made, account registration, and the
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account number. A complete Share Purchase Application must also be sent to the
Alpine Funds indicating that the shares have been purchased by wire, giving the
date the wire was sent and referencing the account number. Subsequent wire
investments may be made by existing shareholders by following the instructions
outlined above. It is not necessary, however, for existing shareholders to call
for another account number.
HOW THE FUNDS VALUE THEIR SHARES. The net asset value of each class
of shares of each Fund is calculated by dividing the value of the Fund's net
assets attributable to that class by the number of outstanding shares of that
class. Net asset value is determined each day the New York Stock Exchange (the
"NYSE") is open as of the close of regular trading (normally, 4:00 p.m. Eastern
time). In computing net asset value, portfolio securities of each Fund are
valued at their current market values determined on the basis of market
quotations. If market quotations are not readily available, securities are
valued at fair value as determined by the Board of Trustees of the Trust.
Non-dollar denominated securities will be valued as of the close of the NYSE at
the closing price of such securities in their principal trading market, but may
be valued at fair value if subsequent events occurring before the computation of
net asset value materially have affected the value of the securities.
ADDITIONAL PURCHASE INFORMATION. If a purchase is canceled due to
nonpayment or because an investor's check does not clear, the investor will be
responsible for any loss a Fund or the Adviser incurs. If the investor is an
existing shareholder of any of the Funds, a Fund may redeem shares from an
investor's account in any of the Funds to reimburse the Fund or the Adviser for
any loss. In addition, the investor may be prohibited or restricted from making
further purchases in the Funds.
Shares of the Funds may also be purchased through certain brokers or
other financial intermediaries which may impose certain transaction fees and
other charges in connection with the purchase or redemption of shares. These
fees and charges are not imposed by the Funds.
HOW TO REDEEM SHARES
You may redeem shares of the Funds on any day the NYSE is open,
either directly or through your financial intermediary. The price you will
receive is the net asset value next computed after the Fund receives your
redemption request in proper form. Proceeds generally will be sent to you within
seven days. However, for shares recently purchased by check, a Fund will not
send redemption proceeds until it is reasonably satisfied that the check has
been collected (which may take up to ten days). Once a redemption request has
been telephoned or mailed, it is irrevocable and may not be modified or
canceled. Redemption requests received after 4:00 p.m. (Eastern time) will be
processed using the net asset value determined on the next business day.
Financial intermediaries may charge a fee for handling redemption requests.
REDEEMING SHARES DIRECTLY BY MAIL OR TELEPHONE. Shares may be
redeemed by sending a signed letter of instruction or stock power form to the
Alpine Funds, P.O. Box 182212, Columbus, Ohio 43218-2212. Stock power forms are
available from your financial intermediary, the Alpine Funds, and many
commercial banks. Additional documentation is required for the redemption of
shares by corporations, financial intermediaries, fiduciaries and surviving
joint
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owners. Signature guarantees are required for all redemption requests for shares
with a value of more than $50,000 or where the redemption proceeds are to be
mailed to an address other than that shown in the account registration. A
signature guarantee must be provided by a bank or trust company (not a Notary
Public), a member firm of a domestic stock exchange or by another financial
institution whose guarantees are acceptable to the Funds' transfer agent.
Shareholders may redeem amounts of $1,000 or more from their
accounts by calling the phone number on the front page of this Prospectus
between the hours of 8:00 a.m. and 9:00 p.m. (Eastern time) each business day
(i.e., any weekday exclusive of days on which the NYSE is closed). The NYSE is
closed on New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
Redemption requests must include the shareholder's account name, as
registered with a Fund, and the account number. During periods of unusual
economic or market changes, shareholders may experience difficulty in effecting
telephone redemptions. Shareholders who are unable to reach a Fund by telephone
should follow the procedures outlined above for redemption by mail.
The telephone redemption service is not automatically made available
to shareholders. Shareholders wishing to use the telephone redemption service
must indicate this on the Share Purchase Application and choose how the
redemption proceeds are to be paid. Redemption proceeds will either be (i)
mailed by check to the shareholder at the address in which the account is
registered or (ii) wired to an account with the same registration as the
shareholder's account in a Fund at a designated commercial bank. A $5 charge is
deducted from redemption proceeds if the proceeds are wired. This charge is
subject to change without notice. A shareholder who decides later to use this
service, or to change instructions already given, should send a written request
to the Alpine Funds at P.O. Box 182212, Columbus, Ohio 43218-2212, with the
shareholder's signature guaranteed by a bank or trust company (not a Notary
Public), a member firm of a domestic stock exchange or by another financial
institution whose guarantees are acceptable to the Funds' transfer agent.
Shareholders should allow approximately ten business days for the form to be
processed.
The Funds employ reasonable procedures to verify that telephone
redemption requests are genuine. These procedures include requiring some form of
personal identification prior to acting upon instructions and tape recording of
conversations. If these procedures are followed, the Funds and their agents will
not be liable for any losses due to unauthorized or fraudulent instructions.
Each Fund reserves the right to refuse a telephone redemption request, if it is
believed advisable to do so. The telephone redemption option may be suspended or
terminated at any time without notice.
GENERAL. The redemption of shares is a taxable transaction for
Federal income tax purposes. Under unusual circumstances, a Fund may suspend
redemptions or postpone payment for up to seven days or longer, as permitted by
Federal securities law. The Funds reserve the right to close an account that as
a result of one or more redemptions has remained below $1,000 for
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thirty days. Shareholders will receive sixty days' written notice to increase
the account value before the account is closed. Although in unusual
circumstances the Funds may pay the redemption amount in-kind through the
distribution of portfolio securities, they are obligated to redeem shares solely
in cash, up to the lesser of $250,000 or 1% of a Fund's total net assets during
any ninety day period for any one shareholder.
EXCHANGE PRIVILEGE
HOW TO EXCHANGE SHARES. You may exchange some or all of your shares
of a Fund for shares of the Class Y shares of one of the other Funds through
your financial intermediary, or by telephone or mail as described below. Each
exchange involves the redemption of shares of one Fund and the purchase of
shares of another Fund. Once an exchange request has been telephoned or mailed,
it is irrevocable and may not be modified or canceled. Exchanges are made on the
basis of the relative net asset value of the shares exchanged next determined
after an exchange request is received. An exchange which represents an initial
investment in another mutual fund is subject to the minimum investment and
suitability requirements of each Fund. Financial intermediaries may charge a fee
for effecting an exchange.
The Funds each have different investment objectives and policies. An
exchange is treated for Federal income tax purposes as a redemption and purchase
of shares and may result in the realization of a capital gain or loss.
Shareholders are limited to five exchanges per calendar year, with a maximum of
three per calendar quarter. The exchange privilege may be modified or
discontinued at any time by the Funds upon sixty days' notice to shareholders
and is only available in states in which shares of the Fund being acquired may
lawfully be sold.
EXCHANGES BY TELEPHONE AND MAIL. You may exchange shares with a
value of $1,000 or more by telephone by calling 888-785-5578. Exchange requests
received after 4:00 p.m. (Eastern time) will be processed using the net asset
value determined on the next business day. You may also exchange shares by mail
by following the procedures for written redemption requests (however, no
signature guarantee is required). During periods of unusual economic or market
changes, shareholders may experience difficulty in effecting telephone
exchanges. You should follow the procedures for exchanges by mail if you are
unable to reach the Funds by telephone. If you wish to use the telephone
exchange service you should indicate this on the Share Purchase Application.
The Funds employ reasonable procedures to verify that telephone
exchange instructions are genuine. If these procedures are followed, the Funds
and their agents will not be liable for any losses due to unauthorized or
fraudulent instructions. A telephone exchange may be refused by a Fund if it is
believed advisable to do so. Procedures for exchanging Fund shares by telephone
may be modified or terminated at any time.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, the distributor of shares of the
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Funds, or the toll-free number on the front page of this Prospectus. Some
services are described in more detail in the Share Purchase Application.
SYSTEMATIC INVESTMENT PLAN. You may make monthly or quarterly
investments into an existing account automatically in amounts of not less than
$25 per month or $75 per quarter. Each Fund reserves the right to close an
account that through redemptions or termination of the Systematic Investment
Plan has not reached a minimum balance of $1,000 ($250 for retirement accounts)
within 24 months of the initial investment.
TELEPHONE INVESTMENT PLAN. You may make investments into an existing
account electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 4:00 p.m. (Eastern time)
will be credited to a shareholder's account two days from the date the request
is received.
Shares purchased under the Systematic Investment Plan or Telephone
Investment Plan may not be redeemed for ten days from the date of investment.
SYSTEMATIC CASH WITHDRAWAL PLAN. When an account of $10,000 or more
is opened or when an existing account reaches that size, you may participate in
the Systematic Cash Withdrawal Plan offered by the Funds by filling out the
appropriate part of the Share Purchase Application. Under this plan, you may
receive (or designate a third party to receive) a monthly or quarterly check in
a stated amount of not less than $75. Fund shares will be redeemed as necessary
to meet withdrawal payments. All participants must elect to have their dividends
and capital gain distributions reinvested automatically.
INVESTMENTS THROUGH EMPLOYEE BENEFIT AND SAVINGS PLANS. Certain
qualified and non-qualified benefit and savings plans may make shares of the
Funds available to their participants. The Adviser may provide compensation to
organizations providing administrative and recordkeeping services to plans which
make shares of the Funds available to their participants.
AUTOMATIC REINVESTMENT PLAN. For the convenience of investors, all
dividends and distributions of a Fund are automatically reinvested in full and
fractional shares of that Fund at the net asset value per share at the close of
business on the record date, unless otherwise requested by a shareholder in
writing. If the transfer agent does not receive a written request for subsequent
dividends or distributions to be paid in cash at least three full business days
before a given record date, the dividends or distributions paid on that record
date will be reinvested. If you elect to receive dividends or distributions in
cash and the U.S. Postal Service cannot deliver the checks, or the checks remain
uncashed for six months, the dividends or distributions will be reinvested into
your account at the net asset value in affect at the time of reinvestment.
TAX SHELTERED RETIREMENT PLANS. Eligible investors may open a
pension and profit sharing account in a Fund under the following prototype
retirement plans: (i) Individual Retirement Accounts ("IRAs") and Rollover IRAs;
and (ii) Simplified Employee Pension (SEP) for sole proprietors, partnerships
and corporations.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute to shareholders its
investment company income, if any, annually and any net realized capital gains
annually or more frequently as required as a condition of continued
qualification as a regulated investment company by the Code. Dividends and
distributions generally are taxable in the year in which they are paid, except
any dividends paid in January that were declared in the previous calendar
quarter may be treated as paid in December of the previous year. Income
dividends and capital gain distributions are automatically reinvested in
additional shares of the Fund making the distribution at the net asset value per
share at the close of business on the record date, unless the shareholder has
made a written request for payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income tax on
that portion of its investment company taxable income and any net realized
capital gains it distributes to shareholders. The Code imposes a 4%
nondeductible excise tax on regulated investment companies, such as the Funds,
to the extent they do not meet certain distribution requirements by the end of
each calendar year. Each Fund anticipates meeting these distribution
requirements. Most shareholders of the Funds normally will have to pay Federal
income tax and any state or local taxes on the dividends and distributions they
receive from a Fund whether dividends and distributions are paid in cash or
reinvested in additional shares. Questions on how distributions will be taxed
should be directed to your tax adviser.
Generally, the highest Federal income tax rate applicable to net
long-term capital gains realized by individuals is 20%. The rate applicable to
corporations is 35%. Certain income from a Fund may qualify for a corporate
dividends-received deduction of 70%. Following the end of each calendar year,
every shareholder of the Fund will be sent applicable tax information and
information regarding the dividends and capital gain distributions made during
the calendar year. A Fund may be subject to foreign withholding taxes which
would reduce the yield on its investments. Tax treaties between certain
countries and the U.S. may reduce or eliminate such taxes. Shareholders of a
Fund who are subject to U.S. Federal income tax may be entitled, subject to
certain rules and limitations, to claim a Federal income tax credit or deduction
for foreign income taxes paid by a Fund. See the Statement of Additional
Information for further details. A Fund's transactions in options, futures and
forward contracts may be subject to special tax rules. These rules can affect
the amount, timing and characteristics of distributions to shareholders.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by the Fund, that your social security or taxpayer
identification number is correct and that you are not currently subject to
backup withholding or are exempt from backup withholding.
The foregoing discussion of Federal income tax consequences is
based on tax laws and regulations in effect on the date of this Prospectus, and
is subject to change by legislative or
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administrative action. As the foregoing discussion is for general information
only, you should also review the discussion of "Additional Tax Information"
contained in the Statement of Additional Information. In addition, you should
consult your own tax adviser as to the tax consequences of investments in the
Funds, including the application of state and local taxes which may be different
from Federal income tax consequences described above.
GENERAL INFORMATION
PORTFOLIO TRANSACTIONS. Consistent with the Rules of Fair Practice
of the National Association of Securities Dealers, Inc., and subject to seeking
best price and execution, a Fund may consider sales of its shares as a factor in
the selection of dealers to effect portfolio transactions for the Fund.
ORGANIZATION. The Funds are separate series of Alpine Equity Trust
(formerly Evergreen Global Equity Trust), a Massachusetts business trust
organized in 1988. The Funds do not hold annual shareholders meetings.
Shareholders meetings are held only when required by applicable law or otherwise
deemed necessary. Shareholders have available certain procedures for the removal
of Trustees, including the right to demand that a meeting of shareholders be
called for the purpose of voting on removal if 10% of the shareholders so
request in writing.
A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the class of
shares of the Fund represented by the redeemed shares. The Trust may establish,
without shareholder approval, additional investment series, which may have
different investment objectives, and additional classes of shares for any
existing or future series. If an additional series or class were established
each share of the series or class would normally be entitled to one vote for all
purposes.
Class A, Class B, Class C and Class Y shares have identical voting,
dividend, liquidation and other rights, except that each class bears, to the
extent applicable, its own distribution, expenses as well as any other expenses
applicable only to a specific class. Shares of all series and classes will vote
together as a single class on matters, such as the election of Trustees, that
affect each series and class in substantially the same manner. Series and
classes will vote separately on other matters which affect only certain series
or classes or if separate voting is required by applicable law. Shares are
entitled to dividends as determined by the Trustees and, in liquidation of a
Fund, are entitled to receive the net assets of the Fund.
CUSTODIAN. Investors Fiduciary Trust Company, 801 Pennsylvania
Avenue, Kansas City, Missouri 64105, acts as each Fund's custodian.
TRANSFER AGENT AND FUND ACCOUNTING AGENT. BISYS Fund Services, Inc.,
3435 Stelzer Road Columbus, Ohio, 43219, acts as each Fund's transfer agent and
dividend-disbursing agent. It also provides accounting services to the Funds.
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<PAGE> 74
PRINCIPAL UNDERWRITER. BISYS Fund Services Limited Partnership, a
wholly-owned subsidiary of the BISYS Group, Inc. located at 120 Clove Road,
Little Falls, New Jersey 07424, is the principal underwriter of the Funds. BISYS
Fund Services Ohio, Inc. provides administration services to the Funds. These
services include: assisting in the supervision of all aspects of the operations
of the Funds (except those performed by the Adviser, the custodian, the transfer
agent or the fund accounting agent); preparing certain period reports; assisting
in the preparation of tax returns; and preparing materials for use in connection
with meetings of Trustees and shareholders. The Funds each pay a fee computed at
the annual rate of 0.23% of the Fund's average daily net assets for
administration services provided by BISYS Fund Services Ohio, Inc. and for
transfer agent and fund accounting services provided by BISYS Fund Services,
Inc..
OTHER CLASSES OF SHARES. Alpine U.S. Real Estate Equity Fund and
Alpine International Real Estate Equity Fund currently offer four classes of
shares: Class A, Class B, Class C and Class Y. Alpine Realty Income and Growth
Fund currently offers three classes of shares, Class A, Class B and Class Y. The
Funds may in the future offer additional classes. Class Y shares of the Funds
are the only class of shares offered by this Prospectus. The dividends payable
with respect to Class A, Class B and Class C shares will be less than those
payable with respect to Class Y shares due to the distribution and shareholder
servicing related expenses that may be borne by Class A, Class B and Class C
shares and the fact that such expenses are not borne by Class Y shares.
PERFORMANCE INFORMATION. From time to time, the Funds may each quote
their "total return" for a specified period in advertisements, reports or other
communications to shareholders. Total return is computed separately for each
class of shares. A Fund's total return for a specified period is computed by
finding, through the use of a formula prescribed by the SEC, the average annual
compounded rate of return over the period that would equate an assumed initial
amount invested to the value of the investment at the end of the period. For
purposes of computing total return, dividends and capital gains distributions
paid on shares of a Fund are assumed to have been reinvested when paid and the
maximum sales charges applicable to purchases of a Fund's shares are assumed to
have been paid.
In marketing a Fund's shares, information may be provided that is
designed to help individuals understand their investment goals and explore
various financial strategies. Such information may include publications
describing general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; a questionnaire designed to
help create a personal financial profile; and an action plan offering investment
alternatives. In addition, the information provided to investors may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
Performance data for each class of shares will be included in any
advertisements or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Funds may also advertise in items of sales literature an "actual
distribution rate" which is
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<PAGE> 75
computed by dividing the total ordinary income distributed (which may include
the excess of short-term capital gains over losses) to shareholders for the
latest twelve month period by the maximum public offering price per share on the
last day of the period. Investors should be aware that past performance may not
be indicative of future results.
LIABILITY UNDER MASSACHUSETTS LAW. Under Massachusetts law,
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Trust's Declaration of Trust provides
that no shareholder will be personally liable for the obligations of the Trust
and requires that every written contract made by the Trust contain a provision
to that effect. If any shareholder were required to pay any liability of the
Trust, that person would generally be entitled to reimbursement from the general
assets of the Trust.
CONTROL PERSONS. As of October 16, 1998, Stephen A. Lieber may be
deemed to control Alpine International Real Estate Equity Fund through his
beneficial ownership of more than 25 percent of the Fund's outstanding shares.
ADDITIONAL INFORMATION. This Prospectus and the Statement of
Additional Information, which has been incorporated by reference, do not contain
all the information set forth in the Registration Statement filed by the Trust
with the SEC under the Securities Act. Copies of the Registration Statement may
be obtained at a reasonable charge from the SEC or may be examined, without
charge, at the offices of the SEC in Washington, D.C.
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<PAGE> 76
INVESTMENT ADVISER
Alpine Management & Research, LLC
122 East 42nd Street
37th Floor
New York, New York 10168
TRANSFER AGENT & DIVIDEND-DISBURSING AGENT
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
CUSTODIAN
Investors Fiduciary Trust Company
801 Pennsylvania Avenue
Kansas City, Missouri 64105
LEGAL COUNSEL
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
100 East Broad Street
Columbus, Ohio 43215
DISTRIBUTOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
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<PAGE> 77
STATEMENT OF ADDITIONAL INFORMATION
[__________ __], 1998
ALPINE EQUITY TRUST
3435 Stelzer Road
Columbus, Ohio 43219
888-785-5578
Alpine U.S. Real Estate Equity Fund ("U.S. Fund")
Alpine International Real Estate Equity Fund ("International Fund")
Alpine Realty Income and Growth Fund ("Income and Growth Fund")
This Statement of Additional Information pertains to all classes of
shares of Alpine U.S. Real Estate Equity Fund, Alpine International Real Estate
Equity Fund and Alpine Realty Income and Growth Fund (collectively, the
"Funds"). The Funds are separate series of Alpine Equity Trust (the "Trust").
Shares of the Funds are offered through two separate Prospectuses: one offering
Class A, Class B and Class C shares of the U.S. Fund and the International Fund
and Class A and Class B shares of the Income and Growth Fund; and one offering
Class Y shares of each of the Funds. Copies of the Funds' Prospectuses may be
obtained without charge by calling the number listed above. This Statement of
Additional Information is not a Prospectus. It contains information in addition
to and more detailed than that set forth in the Prospectus and is intended to
provide you with additional information regarding the activities and operations
of the Funds. This Statement of Additional Information should be read in
conjunction with the applicable Prospectus.
<PAGE> 78
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES...........................................................................3
SPECIAL INVESTMENT TECHNIQUES...............................................................................12
INVESTMENT RESTRICTIONS.....................................................................................15
CERTAIN RISK CONSIDERATIONS.................................................................................20
MANAGEMENT..................................................................................................21
TRUSTEES COMPENSATION TABLE.................................................................................22
INVESTMENT ADVISER..........................................................................................26
DISTRIBUTION PLANS..........................................................................................28
ALLOCATION OF BROKERAGE.....................................................................................30
ADDITIONAL TAX INFORMATION..................................................................................31
NET ASSET VALUE.............................................................................................34
PURCHASE OF SHARES..........................................................................................36
GENERAL INFORMATION ABOUT THE FUNDS.........................................................................45
PERFORMANCE INFORMATION.....................................................................................47
FINANCIAL STATEMENTS........................................................................................49
APPENDIX "A" DESCRIPTION OF BOND RATINGS....................................................................50
APPENDIX "B" FUTURES AND OPTIONS............................................................................56
</TABLE>
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<PAGE> 79
INVESTMENT OBJECTIVES AND POLICIES
(See also "DESCRIPTION OF THE FUNDS -Investment Objectives"
and "-Investment Policies" in the Funds' Prospectuses)
The investment objective of each Fund and a description of the
investment policies and practices of each Fund is set forth under "DESCRIPTION
OF THE FUNDS -Investment Objectives" and "-Investment Policies" in the
Prospectuses. Each Fund's investment objective is fundamental and may not be
changed without the approval of a majority of the outstanding voting securities
of the Fund.
Alpine Management & Research, LLC (the "Adviser") serves as
the investment adviser of each Fund.
TYPES OF INVESTMENTS
Convertible Securities
Each Fund may invest in convertible securities. Convertible
securities include fixed income securities that may be exchanged or converted
into a predetermined number of shares of the issuer's underlying common stock at
the option of the holder during a specified period. Convertible securities may
take the form of convertible preferred stock, convertible bonds or debentures,
units consisting of "usable" bonds and warrants or a combination of the features
of several of these securities. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for a variety of investment strategies.
Each Fund will exchange or convert convertible securities into
shares of underlying common stock when, in the opinion of the Adviser, the
investment characteristics of the underlying common shares will assist a Fund in
achieving its investment objective. A Fund may also elect to hold or trade
convertible securities. In selecting convertible securities, the Adviser
evaluates the investment characteristics of the convertible security as a fixed
income instrument, and the investment potential of the underlying equity
security for capital appreciation. In evaluating these matters with respect to a
particular convertible security, the Adviser considers numerous factors,
including the economic and political outlook, the value of the security relative
to other investment alternatives, trends in the determinants of the issuer's
profits, and the issuer's management capability and practices.
Warrants
Each Fund may invest in warrants. Warrants are options to
purchase common stock at a specific price (usually at a premium above the market
value of the optioned common stock at issuance) valid for a specific period of
time. Warrants may have a life ranging from less than one year to twenty years,
or they may be perpetual. However, most warrants have expiration dates after
which they are worthless. In addition, a warrant is worthless if the market
price of the common stock does not exceed the warrant's exercise price during
the life of the
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warrant. Warrants have no voting rights, pay no dividends, and have no rights
with respect to the assets of the corporation issuing them. The percentage
increase or decrease in the market price of the warrant may tend to be greater
than the percentage increase or decrease in the market price of the optioned
common stock.
Foreign Securities
Each Fund may purchase securities of non-U.S. issuers and
securities of U.S. issuers that trade in foreign markets ("foreign securities").
To the extent that foreign securities purchased by the Funds are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect: the Funds' net asset values per share; the value of any
interest earned; gains and losses realized on the sale of securities; and net
investment income and capital gains, if any, to be distributed to shareholders
by a Fund. If the value of a foreign currency rises against the U.S. dollar, the
value of a Fund's assets denominated in that currency will increase.
Correspondingly, if the value of a foreign currency declines against the U.S.
dollar, the value of a Fund's assets denominated in that currency will decrease.
The performance of the Funds will be measured in U.S. dollars, the base currency
for the Funds. When a Fund converts its holdings to another currency, it may
incur conversion costs. Foreign exchange dealers realize a profit on the
difference between the prices at which such dealers buy and sell currencies.
The Funds may engage in transactions in foreign securities
which are listed on foreign securities exchanges, traded in the over-the-counter
market or issued in private placements. Transactions in listed securities may be
effected in the over-the-counter markets if, in the opinion of the Adviser, this
affords the Funds the ability to obtain best price and execution. Securities
markets of foreign countries in which the Funds may invest are generally not
subject to the same degree of regulation as the U.S. markets and may be more
volatile and less liquid than the major U.S. markets. The differences between
investing in foreign and U.S. companies include: (1) less publicly available
information about foreign companies; (2) the lack of uniform financial
accounting standards and practices among countries which could impair the
validity of direct comparisons of valuations measures (such as price/earnings
ratios) for securities in different countries; (3) less readily available market
quotations for the securities of foreign issuers; (4) differences in government
regulation and supervision of foreign stock exchanges, brokers, listed
companies, and banks; (5) differences in legal systems which may affect the
ability to enforce contractual obligations or obtain court judgments; (6)
generally lower foreign stock market volume; (7) the likelihood that foreign
securities may be less liquid or more volatile, which may affect the ability of
the Funds to purchase or sell large blocks of securities and thus obtain the
best price; (8) transactions costs, including brokerage charges and custodian
charges associated with holding foreign securities, may be higher; (9) the
settlement period for foreign securities, which are sometimes longer than those
for securities of U.S. issuers, may affect portfolio liquidity; (10) foreign
securities held by a Fund may be traded on days that the Fund does not value its
portfolio securities, such as Saturdays and customary business holidays, and
accordingly, net asset value per share may be significantly affected on days
when shareholders do not have the ability to purchase or redeem shares of the
Fund; and (11) political and social instability, expropriation, and political or
financial changes which adversely affect investment in some countries. These
various risks may be greater in emerging market countries.
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<PAGE> 81
American Depositary Receipts ("ADRs") and European Depositary
Receipts ("EDRs") and other securities convertible into securities of foreign
issuers may not necessarily be denominated in the same currency as the
securities into which they may be converted, but rather in the currency of the
market in which they are traded. ADRs are receipts typically issued by an
American bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs are receipts issued in Europe by banks or
depositories which evidence a similar ownership arrangement. Generally ADRs, in
registered form, are designed for use in United States securities markets and
EDRs, in bearer form, are designed for use in European securities markets.
Sovereign Debt Obligations
Each Fund may purchase sovereign debt instruments issued or
guaranteed by foreign governments or their agencies, including debt of Latin
American nations or other developing countries. Sovereign debt may be in the
form of conventional securities or other types of debt instruments such as loans
or loan participations. Sovereign debt of developing countries may involve a
high degree of risk, and may present the risk of default. Governmental entities
responsible for repayment of the debt may be unable or unwilling to repay
principal and interest when due, and may require renegotiation or rescheduling
of debt payments. In addition, prospects for repayment of principal and interest
may depend on political as well as economic factors.
Shares of Closed-End Investment Companies
Each Fund may purchase the equity securities of closed-end
investment companies to facilitate investment in certain countries. Equity
securities of closed-end investment companies generally trade at a discount to
their net asset value, but may also trade at a premium to net asset value. The
Funds may pay a premium to invest in a closed-end investment company in
circumstances where the Adviser determines that the potential for capital growth
justifies the payment of a premium. Closed-end investment companies, as well as
money market funds, pay investment advisory and other fees and incur various
expenses in connection with their operations. Shareholders of the Funds will
indirectly bear these fees and expenses, which will be in addition to the fees
and expenses of the Funds.
Mortgage-Backed Securities
Each Fund may invest in mortgage-backed securities issued or
guaranteed by the U.S. Government, or one of its agencies or instrumentalities,
or issued by private issuers. The mortgage-backed securities in which the Funds
may invest include collateralized mortgage obligations ("CMOs") and interests in
real estate mortgage investment conduits ("REMICs"). CMOs are debt instruments
issued by special purpose entities and secured by mortgages or other
mortgage-backed securities, which provide by their terms for aggregate payments
of principal and interest based on the payments made on the underlying mortgages
or securities. CMOs are typically issued in separate classes with varying
coupons and stated maturities. REMIC interests are mortgage-backed securities as
to which the issuers have qualified to be treated as real estate
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<PAGE> 82
mortgage investment conduits under the Internal Revenue Code of 1986, as amended
(the "Code") and have the same characteristics as CMOs.
Each Fund may from time to time also invest in "stripped"
mortgage-backed securities. These are securities which operate like CMOs but
entitle the holder to disproportionate interests with respect to the allocation
of interest or principal on the underlying mortgages or securities. A stripped
mortgage-backed security is created by the issuer separating the interest and
principal on a mortgage pool to form two or more independently traded
securities. The result is the creation of classes of discount securities which
can be structured to produce faster or slower prepayment expectations based upon
the particular underlying mortgage interest rate payments assigned to each
class. These obligations exhibit risk characteristics similar to mortgage-backed
securities generally and zero coupon securities. Due to existing market
characteristics, "interest only" and "principal only" mortgage-backed securities
are considered to be illiquid The prices of these securities are more volatile
than the prices of debt securities which make periodic payments of interest.
Because the mortgages underlying mortgage-backed securities
are subject to prepayment at any time, most mortgage-backed securities are
subject to the risk of prepayment in an amount differing from that anticipated
at the time of issuance. Prepayments generally are passed through to the holders
of the securities. Any such prepayments received by a Fund must be reinvested in
other securities. As a result, prepayments in excess of that anticipated could
adversely affect yield to the extent reinvested in instruments with a lower
interest rate than that of the original security. Prepayments on a pool of
mortgages are influenced by a variety of economic, geographic, social and other
factors. Generally, however, prepayments will increase during a period of
falling interest rates and decrease during a period of rising interests rates.
Accordingly, amounts required to be reinvested are likely to be greater (and the
potential for capital appreciation less) during a period of declining interest
rates than during a period of rising interest rates. Mortgage-backed securities
may be purchased at a premium over the principal or face value in order to
obtain higher income. The recovery of any premium that may have been paid for a
given security is solely a function of the ability to liquidate such security at
or above the purchase price.
Asset-Backed Securities
Each Fund may invest in asset-backed securities issued by
private issuers. Asset-backed securities represent interests in pools of
consumer loans (generally unrelated to mortgage loans) and most often are
structured as pass-through securities. Interest and principal payments
ultimately depend on payment of the underlying loans by individuals, although
the securities may be supported by letters of credit or other credit
enhancements. The value of asset-backed securities may also depend on the
creditworthiness of the servicing agent for the loan pool, the originator of the
loans, or the financial institution providing the credit enhancement.
Asset-backed securities may be "stripped" into classes in a manner similar to
that described under the "Mortgage-Backed Securities," above, and are subject to
the prepayment risks described therein.
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Strategic Investments
Foreign Currency Transactions; Currency Risks
Exchange rates between the U.S. dollar and foreign currencies
are a function of such factors as supply and demand in the currency exchange
markets, international balances of payments, governmental intervention,
speculation and other economic and political conditions. Although a Fund values
its assets daily in U.S. dollars, a Fund generally does not convert its holdings
to U.S. dollars or any other currency. Foreign exchange dealers may realize a
profit on the difference between the price at which a Fund buys and sells
currencies.
Each Fund will engage in foreign currency exchange
transactions in connection with its investments in foreign securities. A Fund
will conduct its foreign currency exchange transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market
or through forward contracts to purchase or sell foreign currencies.
Forward Foreign Currency Exchange Contracts
The Funds may enter into forward foreign currency exchange
contracts in order to protect against possible losses on foreign investments
resulting from adverse changes in the relationship between the U.S. dollar and
foreign currencies. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days (usually less than one year) from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A forward
contract generally has a deposit requirement, and no commissions are charged at
any stage for trades. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the spread)
between the price at which they are buying and selling various currencies.
However, forward foreign currency exchange contracts may limit potential gains
which could result from a positive change in such currency relationships. The
Adviser believes that it is important to have the flexibility to enter into
forward foreign currency exchange contracts whenever it determines that it is in
a Fund's best interest to do so. The Funds will not speculate in foreign
currency.
Except for cross-hedges, a Fund will not enter into forward
foreign currency exchange contracts or maintain a net exposure in such contracts
when it would be obligated to deliver an amount of foreign currency in excess of
the value of its portfolio securities or other assets denominated in that
currency or, in the case of a "cross-hedge," denominated in a currency or
currencies that the Adviser believes will tend to be closely correlated with
that currency with regard to price movements. At the consummation of a forward
contract, a Fund may either make delivery of the foreign currency or terminate
its contractual obligation to deliver the foreign currency by purchasing an
offsetting contract obligating it to purchase, at the same maturity date, the
same amount of such foreign currency. If a Fund chooses to make delivery of the
foreign currency, it may be required to obtain such currency through the sale of
portfolio securities denominated in such currency or through conversion of other
assets of the Fund into such
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<PAGE> 84
currency. If a Fund engages in an offsetting transaction, the Fund will incur a
gain or loss to the extent that there has been a change in forward contract
prices.
It should be realized that this method of protecting the value
of a Fund's portfolio securities against a decline in the value of a currency
does not eliminate fluctuations in the underlying prices of the securities. It
simply establishes a rate of exchange which can be achieved at some future point
in time. Additionally, although such contracts tend to minimize the risk of loss
due to a decline in the value of the hedged currency, at the same time they tend
to limit any potential gain which might result should the value of such currency
increase. Generally, a Fund will not enter into a forward foreign currency
exchange contract with a term longer than one year.
Foreign Currency Options
A foreign currency option provides the option buyer with the
right to buy or sell a stated amount of foreign currency at the exercise price
on a specified date or during the option period. The owner of a call option has
the right, but not the obligation, to buy the currency. Conversely, the owner of
a put option has the right, but not the obligation, to sell the currency. When
the option is exercised, the seller (i.e., writer) of the option is obligated to
fulfill the terms of the sold option. However, either the seller or the buyer
may, in the secondary market, close its position during the option period at any
time prior to expiration.
A call option on a foreign currency generally rises in value
if the underlying currency appreciates in value, and a put option on a foreign
currency generally rises in value if the underlying currency depreciates in
value. Although purchasing a foreign currency option can protect the Fund
against an adverse movement in the value of a foreign currency, the option will
not limit the movement in the value of such currency. For example, if a Fund was
holding securities denominated in a foreign currency that was appreciating and
had purchased a foreign currency put to hedge against a decline in the value of
the currency, the Fund would not have to exercise its put option. Likewise, if a
Fund were to enter into a contract to purchase a security denominated in foreign
currency and, in conjunction with that purchase, were to purchase a foreign
currency call option to hedge against a rise in value of the currency, and if
the value of the currency instead depreciated between the date of purchase and
the settlement date, the Fund would not have to exercise its call. Instead, the
Fund could acquire in the spot market the amount of foreign currency needed for
settlement.
Special Risks Associated with Foreign Currency Options
Buyers and sellers of foreign currency options are subject to
the same risks that apply to options generally. In addition, there are certain
additional risks associated with foreign currency options. The markets in
foreign currency options are relatively new, and a Fund's ability to establish
and close out positions on such options is subject to the maintenance of a
liquid secondary market. Although the Funds will not purchase or write such
options unless and until, in the opinion of the Adviser, the market for them has
developed sufficiently to ensure that the risks in connection with such options
are not greater than the risks in connection with the underlying currency, there
can be no assurance that a liquid secondary market will exist for a
8
<PAGE> 85
particular option at any specific time. In addition, options on foreign
currencies are affected by most of the same factors that influence foreign
exchange rates and investments generally.
The value of a foreign currency option depends upon the value
of the underlying currency relative to the U.S. dollar. As a result, the price
of the option position may vary with changes in the value of either or both
currencies and may have no relationship to the investment merits of a foreign
security. Because foreign currency transactions occurring in the interbank
market involve substantially larger amounts than those that may be involved in
the use of foreign currency options, investors may be disadvantaged by having to
deal in an odd lot market (generally consisting of transactions of less than $1
million) for the underlying foreign currencies at prices that are less favorable
than for round lots.
There is no systematic reporting of last sale information for
foreign currencies or any regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (i.e., less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. option markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options markets
until they reopen.
Foreign Currency Futures Transactions
By using foreign currency futures contracts and options on
such contracts, a Fund may be able to achieve many of the same objectives as it
would through the use of forward foreign currency exchange contracts. The Funds
may be able to achieve these objectives possibly more effectively and at a lower
cost by using futures transactions instead of forward foreign currency exchange
contracts.
A foreign currency futures contract sale creates an obligation
by a Fund, as seller, to deliver the amount of currency called for in the
contract at a specified future time for a specified price. A currency futures
contract purchase creates an obligation by a Fund, as purchaser, to take
delivery of an amount of currency at a specified future time at a specified
price. Although the terms of currency futures contracts specify actual delivery
or receipt, in most instances the contracts are closed out before the settlement
date without the making or taking of delivery of the currency. Closing out of
currency futures contracts is effected by entering into an offsetting purchase
or sale transaction. An offsetting transaction for a currency futures contract
sale is effected by the Fund entering into a currency futures contract purchase
for the same aggregate amount of currency and same delivery date. If the price
of the sale exceeds the price of the offsetting purchase, the Fund is
immediately paid the difference and realizes a loss. Similarly, the closing out
of a currency futures contract purchase is effected by the Fund entering into a
currency futures contract sale. If the offsetting sale price exceeds the
purchase price, the Fund realizes a gain, and if the offsetting sale price is
less than the purchase price, the Fund realizes a loss.
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Special Risks Associated with Foreign Currency Futures Contracts and Related
Options
Buyers and sellers of foreign currency futures contracts are
subject to the same risks that apply to the use of futures generally. In
addition, there are risks associated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options on
foreign currencies, as described above.
Options on foreign currency futures contracts may involve
certain additional risks. Trading options on foreign currency futures contracts
is relatively new. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market. To reduce
this risk, the Funds will not purchase or write options on foreign currency
futures contracts unless and until, in the opinion of the Adviser, the market
for such options has developed sufficiently that the risks in connection with
such options are not greater than the risks in connection with transactions in
the underlying foreign currency futures contracts. Compared to the purchase or
sale of foreign currency futures contracts, the purchase of call or put options
on futures contracts involves less potential risk to the Funds because the
maximum amount at risk is the premium paid for the option (plus transaction
costs). However, there may be circumstances when the purchase of a call or put
option on a futures contract would result in a loss, such as when there is no
movement in the price of the underlying currency or futures contract.
Illiquid Securities
The Trust's Board of Trustees (the "Trustees") has adopted
procedures to determine the liquidity of certain restricted securities, as
permitted under an SEC Staff position set forth in the adopting release for Rule
144A under the Securities Act of 1933 (the "1933 Act"). Rule 144A (the "Rule")
is a non-exclusive, safe-harbor for certain secondary market transactions
involving securities subject to restrictions on resale under federal securities
laws. The Rule provides an exemption from registration for resales of otherwise
restricted securities to qualified institutional buyers. The Rule was expected
to further enhance the liquidity of the secondary market for securities eligible
for sale under the Rule. The Staff of the SEC has left the question of
determining the liquidity of restricted securities eligible for resale under the
Rule for determination by the Trustees. The Trustees consider the following
criteria in determining the liquidity of these restricted securities:
(i) the frequency of trades and quotes for the security;
(ii) the number of dealers willing to purchase or sell the
security and the number of other potential buyers;
(iii) dealer undertakings to make a market in the security;
and
(iv) the nature of the security and the nature of the
marketplace trades.
10
<PAGE> 87
When-Issued and Delayed Delivery Securities
These transactions are made to secure what is considered to be
an advantageous price or yield for a Fund. No fees or other expenses, other than
normal transaction costs, are incurred. However, liquid assets of a Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund's records at the trade date. These assets are marked to market and are
maintained until the transaction has been settled.
Lending of Portfolio Securities
The collateral received when a Fund lends portfolio securities
must be valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the lending Fund.
During the time portfolio securities are on loan, the borrower pays the Fund any
dividends or interest paid on such securities. Loans are subject to termination
at the option of the Fund or the borrower. A Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent collateral
to the borrower or placing broker. A Fund does not have the right to vote
securities on loan, but would terminate the loan and regain the right to vote if
that were considered important with respect to the investment.
Repurchase Agreements
The Funds' custodian or a sub-custodian will take possession
of the securities subject to repurchase agreements, and these securities will be
marked to market daily. To the extent that the original seller does not
repurchase the securities from the Funds, the Funds could receive less than the
repurchase price on any sale of such securities. In the event that such a
defaulting seller filed for bankruptcy or became insolvent, disposition of such
securities by the Funds might be delayed pending court action. The Funds believe
that under the regular procedures normally in effect for custody of a Fund's
portfolio securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or disposition
of such securities. The Funds will only enter into repurchase agreements with
banks and other recognized financial institutions, such as broker-dealers, which
are deemed by the Adviser to be creditworthy pursuant to guidelines established
by the Trustees.
Reverse Repurchase Agreements
The Funds may also enter into reverse repurchase agreements.
These transactions are similar to borrowing cash. In a reverse repurchase
agreement, a Fund transfers possession of a portfolio instrument to another
person, such as a financial institution, broker, or dealer, in return for a
percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio instrument
by remitting the original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable a Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
11
<PAGE> 88
When effecting reverse repurchase agreements, liquid assets of
a Fund, in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.
Short Sales
As discussed in the Funds' Prospectuses, each Fund may engage
in short sales. A Fund sells a security short when the Adviser believes the
price of the security will decline. A Fund also may sell a security short to
protect against a decline in the price of a security it already owns, but wishes
to defer the realization of a capital loss. To sell a security short, a Fund
must borrow the security. A Fund's obligation to replace the security borrowed
and sold short will be fully secured at all times by cash or liquid portfolio
securities deposited in a segregated account. The use of short sales is
considered a speculative investment practice.
Borrowing
Each Fund may borrow money for investment purposes (which is a
practice known as "leverage"). Leveraging creates an opportunity for increased
net income, but at the same time, creates special risk considerations. For
example, leveraging may exaggerate changes in the net asset value of a Fund's
shares and in the yield on a Fund's portfolio. Although the principal of such
borrowings will be fixed, a Fund's net assets may change in value during the
time the borrowing is outstanding. Since any decline in value of a Fund's
investments will be borne entirely by the Fund's shareholders, the effect of
leverage in a declining market would be a greater decrease in net asset value
than if the Fund were not so leveraged. Leveraging will create interest expenses
for a Fund, which can exceed the investment return from the borrowed funds. To
the extent the investment return derived from securities purchased with borrower
funds exceeds the interest a Fund will have to pay, the Fund's investment return
will be greater than if leveraging was not used. Conversely, if the investment
return from the assets retained with borrowed funds is not sufficient to cover
the cost of leveraging, the investment return of the Fund will be less than if
leveraging were not used.
SPECIAL INVESTMENT TECHNIQUES
As discussed in the Funds' Prospectuses, each Fund may engage
in certain transactions in options and futures contracts and options on futures
contracts. The specific transactions in which each Fund may engage are noted and
described in the Prospectuses. The discussion below provides additional
information regarding the use of options on stock indices and stock index
futures. Appendix B to this Statement of Additional Information sets forth
further details regarding options and futures.
Regulatory Matters
The Funds will comply with and adhere to all limitations on
the manner and extent to which they effect transactions in futures and options
on such futures currently imposed by the rules and policy guidelines of the
Commodity Futures Trading Commission as conditions
12
<PAGE> 89
for exemption of a mutual fund, or investment advisers thereto, from
registration as a commodity pool operator. Under those restrictions, the Funds
will not, as to any positions, whether long, short or a combination thereof,
enter into futures and options thereon for which the aggregate initial margins
and premiums exceed 5% of the fair market value of its assets after taking into
account unrealized profits and losses on options it has entered into. In the
case of an option that is "in-the-money," the in-the-money amount may be
excluded in computing such 5%. (In general, a call option on a future is
"in-the-money" if the value of the future exceeds the exercise ("strike") price
of the call; a put option on a future is "in-the-money" if the value of the
future which is the subject of the put is exceeded by the strike price of the
put.) The Funds may use futures and options thereon solely for bona fide hedging
or for other non-speculative purposes within the meaning and intent of the
applicable provisions of the Commodities Exchange Act and regulations
thereunder. As to long positions which are used as part of a Fund's investment
strategy and are incidental to its activities in the underlying cash market, the
"underlying commodity value" of the Fund's futures and options thereon must not
exceed the sum of (i) cash set aside in an identifiable manner, or short-term
U.S. debt obligations or other dollar-denominated high-quality, short-term money
instruments so set aside, plus sums deposited on margin; (ii) cash proceeds from
existing investments due in 30 days; and (iii) accrued profits held at the
futures commission merchant. The "underlying commodity value" of a future is
computed by multiplying the size of the future by the daily settlement price of
the future. For an option on a future, that value is the underlying commodity
value of the future underlying the option.
Risks of Options on Stock Indices
As discussed in the Prospectuses, the purchase and sale of
options on stock indices will be subject to risks applicable to options
transactions generally. In addition, the distinctive characteristics of options
on indices create certain risks that are not present with stock options. Index
prices may be distorted if trading of certain stocks included in the index is
interrupted. Trading in index options also may be interrupted in certain
circumstances such as if trading were halted in a substantial number of stocks
included in the index or if dissemination of the current level of an underlying
index is interrupted. If this occurred, a Fund would not be able to close out
options which it had purchased and, if restrictions on exercise were imposed,
may be unable to exercise an option it holds, which could result in losses if
the underlying index moves adversely before trading resumes. However, it is a
policy to purchase options only on indices which include a sufficient number of
stocks so that the likelihood of a trading halt in the index is minimized.
The purchaser of an index option may also be subject to a
timing risk. If an option is exercised by a Fund before final determination of
the closing index value for that day, the risk exists that the level of the
underlying index may subsequently change. If such a change caused the exercised
option to fall out-of-the-money (that is, the exercising of the option would
result in a loss, not a gain), the Fund would be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer. Although the Fund may be able to
minimize this risk by withholding exercise instructions until just before the
daily cutoff time, it may not be possible to eliminate this risk entirely
because the exercise cutoff times for index options may be earlier than those
fixed for
13
<PAGE> 90
other types of options and may occur before definitive closing index values are
announced. Alternatively, when the index level is close to the exercise price, a
Fund may sell rather than exercise the option. Although the markets for certain
index option contracts have developed rapidly, the markets for other index
options are not as liquid. The ability to establish and close out positions on
such options will be subject to the development and maintenance of a liquid
secondary market. It is not certain that this market will develop in all index
option contracts. The Funds will not purchase or sell any index option contract
unless and until, in the opinion of the Adviser, the market for such options has
developed sufficiently that such risk in connection with such transactions is no
greater than such risk in connection with options on stocks.
Stock Index Futures Characteristics
Currently, stock index futures contracts can be purchased or
sold with respect to several different stock indices, each based on a different
measure of market performance. A determination as to which of the index
contracts would be appropriate for purchase or sale by the Funds will be based
upon, among other things, the liquidity offered by such contracts and the
volatility of the underlying index.
Unlike when the Funds purchase or sell a security, no price is
paid or received by the Funds upon the purchase or sale of a futures contract.
Instead, the Funds will be required to deposit in a segregated asset account an
amount of cash or qualifying securities (currently U.S. Treasury bills)
currently ranging from approximately 10% to 15% of the contract amount. This is
called "initial margin." Such initial margin is in the nature of a performance
bond or good faith deposit on the contract which is returned to the Funds upon
termination of the futures contract. Gains and losses on open contracts are
required to be reflected in cash in the form of variation margin payments which
the Funds may be required to make during the term of the contracts to their
broker. Such payments would be required where, during the term of a stock index
futures contract purchased by the Funds, the price of the underlying stock index
declined, thereby making the Funds' position less valuable. In all instances
involving the purchase of stock index futures contracts by the Funds, an amount
of cash together with such other securities as permitted by applicable
regulatory authorities to be utilized for such purpose, at least equal to the
market value of the futures contracts, will be deposited in a segregated account
with the Funds' custodian to collateralize the position. At any time prior to
the expiration of a futures contract, the Funds may elect to close their
position by taking an opposite position which will operate to terminate their
position in the futures contract. For a more complete discussion of the risks
involved in stock index futures, refer to the Appendix ("Futures and Options").
Where futures are purchased to hedge against a possible
increase in the price of a security before the Funds are able to fashion their
program to invest in the security or in options on the security, it is possible
that the market may decline instead. If the Funds, as a result, concluded not to
make the planned investment at that time because of concern as to the possible
further market decline or for other reasons, the Funds would realize a loss on
the futures contract that is not offset by a reduction in the price of
securities purchased.
14
<PAGE> 91
In addition to the possibility that there may be an imperfect
correlation or no correlation at all between movements in the stock index future
and the portion of the portfolio being hedged, the price of stock index futures
may not correlate perfectly with movements in the stock index due to certain
market distortions. All participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the index
itself and the value of a future. Moreover, the deposit requirements in the
futures market are less onerous than margin requirements in the securities
market and may therefore cause increased participation by speculators in the
futures market. Such increased participation may also cause temporary price
distortions. Due to the possibility of price distortion in the futures market
and because of the imperfect correlation between movements in stock indices and
movements in the prices of stock index futures, the value of stock index futures
contracts as a hedging device may be reduced. In addition, if the Funds have
insufficient available cash, they may at times have to sell securities to meet
variation margin requirements. Such sales may have to be effected at a time when
it may be disadvantageous to do so.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS
Except as noted, the investment restrictions set forth below
are fundamental and may not be changed with respect to a Fund without the
affirmative vote of a majority of the outstanding voting securities of that
Fund. Where an asterisk (*) appears, the relevant policy is non-fundamental with
respect to that Fund and may be changed by the Trustees without shareholder
approval. As used in this Statement of Additional Information and in the
Prospectuses, "a majority of the outstanding voting securities of a Fund" means
the lesser of (1) the holders of more than 50% of the outstanding shares of
beneficial interest of the Fund or (2) 67% of the shares of the Fund present if
more than 50% of the shares are present at a meeting in person or by proxy.
1. Diversification
U.S. Fund
---------
The Fund may not invest more than 5% of its total assets, at
the time of the investment in question, in the securities of any one issuer
other than the U.S. government and its agencies or instrumentalities, except
that up to 25% of the value of its total assets may be invested without regard
to such 5% limitation.
In addition, the U.S. Fund may not purchase more than 10% of
any class of securities of any one issuer other than the U.S. government and its
agencies or instrumentalities.*
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<PAGE> 92
International Fund
------------------
With respect to 75% of its total assets, the Fund may not
purchase a security, other than securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, if as a result of such purchase,
more than 5% of the value of the Fund's total assets would be invested in the
securities of any one issuer, or the Fund would own more than 10% of the voting
securities of any one issuer.
Income and Growth Fund
----------------------
The Fund may not invest more than 5% of its total assets, at
the time of the investment in question, in the securities of any one issuer
other than the U.S. government and its agencies or instrumentalities, except
that up to 50% of the value of its total assets may be invested without regard
to such 5% limitation.
In addition, the Income and Growth Fund may not purchase more
than 10% of any class of securities of any one issuer other than the U.S.
government and its agencies or instrumentalities.*
2. Investment for Purposes of Control or Management
The U.S. Fund*, the International Fund and the Income and
Growth Fund* may not invest in companies for the purpose of exercising control
or management.
3. Purchase of Securities on Margin
The U.S. Fund*, the International Fund and the Income and
Growth Fund* may not purchase securities on margin, except that each Fund may
obtain such short-term credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of initial or variation margin in
connection with financial futures contracts or related options transactions is
not considered the purchase of a security on margin.
4. Underwriting
U.S. Fund
---------
The U.S. Fund may not engage in the business of underwriting
securities of other issuers.
International Fund
------------------
The International Fund will not underwrite any issue of
securities except as it may be deemed an underwriter under the 1933 Act in
connection with the sale of securities in accordance with its investment
objectives, policies and limitations.
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<PAGE> 93
Income and Growth Fund
----------------------
The Income and Growth Fund may not engage in the business of
underwriting securities of other issuers.
5. Interests in Oil, Gas or Other Mineral Exploration or Development
Programs
The Funds may not purchase, sell or invest in interests in
oil, gas or other mineral exploration or development programs.
6. Concentration in Any One Industry
Each Fund will concentrate its investments in the securities
of companies engaged principally in the real estate industry and may invest all
of its assets in such securities; however, each Fund may temporarily invest less
than 25% of the value of its assets in such securities during periods of adverse
economic conditions in the real estate industry.
7. Short Sales
Each Fund may effect short sales of securities subject to the
limitation that a Fund may not sell a security short if, as a result of such
sale, the current value of securities sold short by the Fund would exceed 10% of
the value of the Fund's net assets; provided, however, if the Fund owns or has
the right to obtain securities equivalent in kind and amount to the securities
sold short (i.e., short sales "against the box"), this limitation is not
applicable.
8. Lending of Funds and Securities
The Funds may not make loans of money or securities, except to
the extent that the Funds may lend money through the purchase of permitted
investments, including repurchase agreements, and may lend securities in
accordance with such procedures as may be adopted by the Trustees.
The Funds may not lend their portfolio securities, unless the
borrower is a broker-dealer or financial institution that pledges and maintains
collateral with the Fund consisting of cash or securities issued or guaranteed
by the U.S. government having a value at all times not less than 100% of the
current market-value of the loaned securities, including accrued interest,
provided that the aggregate amount of such loans shall not exceed 30% of the
Fund's net assets.
9. Commodities
U.S. Fund
---------
The U.S. Fund may not purchase, sell or invest in physical
commodities, unless acquired as a result of ownership of securities or other
instruments (but this shall not prevent the
17
<PAGE> 94
Fund from purchasing or selling options and futures contracts or from investing
in securities of other instruments backed by physical commodities).
International Fund
------------------
The Fund may not purchase, sell or invest in commodities,
provided that this restriction shall not prohibit the Fund from purchasing and
selling securities or other instruments backed by commodities or financial
futures contracts and related options, including but not limited to, currency
futures contracts and stock index futures.
Income and Growth Fund
----------------------
The Fund may not purchase, sell or invest in commodities,
provided that this restriction shall not prohibit the Fund from purchasing and
selling securities or other instruments backed by commodities or financial
futures contracts and related options, including but not limited to, currency
futures contracts and stock index futures.
10. Real Estate
U.S. Fund
---------
The U.S. Fund may not purchase, sell or invest in real estate,
but may invest in securities of companies that deal in real estate or are
engaged in the real estate business, including real estate investment trusts,
and securities secured by real estate or interests therein and may hold and sell
real estate acquired through default, liquidation or other distributions of an
interest in real estate as a result of the Fund's ownership of such securities.
International Fund
------------------
The International Fund may not purchase or invest in real
estate or interests in real estate (although it may purchase securities secured
by real estate or interests therein or issued by companies or investment trusts
which invest in real estate or interests therein).
Income and Growth Fund
----------------------
The Income and Growth Fund may not purchase, sell or invest in
real estate, but may invest in securities of companies that deal in real estate
or are engaged in the real estate business, including real estate investment
trusts, and securities secured by real estate or interests therein and may hold
and sell real estate acquired through default, liquidation or other
distributions of an interest in real estate as a result of the Fund's ownership
of such securities.
11. Borrowing, Senior Securities, Reverse Repurchase Agreements
The Funds may not issue senior securities as defined by the
Investment Company Act of 1940, as amended (the "1940 Act"), except that a Fund
may borrow money from banks and enter into reverse repurchase agreements (i) in
the aggregate amount of up to 10% of the value of its assets to increase its
holdings of portfolio securities and (ii) for temporary
18
<PAGE> 95
extraordinary or emergency purposes, subject to the overall limitation that
total borrowings by the Fund (including borrowing through reverse repurchase
agreements) may not exceed 33 1/3% of the value of the Fund's total assets
(measured in each case at the time of borrowing).
12. Joint Trading
The U.S. Fund*, the International Fund and the Income and
Growth Fund* may not participate on a joint or joint and several basis in any
trading account in any securities. (The "bunching" of orders for the purchase or
sale of portfolio securities with the Adviser or accounts under its management
to reduce brokerage commissions, to average prices among them or to facilitate
such transactions is not considered a trading account in securities for purposes
of this restriction.)
13. Pledging Assets
The Funds may not pledge, mortgage, hypothecate or otherwise
encumber their assets, except to secure permitted borrowings and to implement
collateral and similar arrangements incident to permitted investment practices
14. Investing in Securities of Other Investment Companies
The U.S. Fund*, the International Fund* and the Income and
Growth Fund* will each limit their investment in other investment companies to
no more than 3% of the total outstanding voting stock of any investment company,
will invest no more than 5% of its total assets in any one investment company
and will invest no more than 10% of its total assets in investment companies in
general. The Funds will purchase securities of closed-end investment companies
only in open-market transactions involving customary broker's commissions.
However, these limitations are not applicable if the securities are acquired in
a merger, consolidation or acquisition of assets.
15. Illiquid Securities.
Each Fund may not invest more than 15% of its net assets in
illiquid securities and other securities which are not readily marketable,
including repurchase agreements which have a maturity of longer than seven days,
but excluding securities eligible for resale under Rule 144A of the 1933 Act,
which the Trustees have determined to be liquid.*
16. Options.*
The Funds may write, purchase or sell put or call options on
securities, stock indices and foreign currencies, or combinations thereof, as
permitted under "INVESTMENT INSTRUMENTS - Derivative Instruments" in the Funds'
Prospectuses.*
17. Futures Contracts.*
The Funds may not purchase financial futures contracts and
related options except for "bona fide hedging" purposes, but may enter into such
contracts for non-hedging purposes
19
<PAGE> 96
provided that aggregate initial margin deposits plus premiums paid by the Fund
for open futures options positions, less the amount by which any such positions
are "in-the-money," may not exceed 5% of the Fund's total assets.
Except as otherwise stated in this Statement of Additional
Information or in the Prospectuses, if a percentage limitation set forth in an
investment policy or restriction of a Fund is adhered to at the time of
investment or at the time a Fund engages in a transaction, a subsequent increase
or decrease in percentage resulting from a change in value of an investment or
position, or a change in the net assets of a Fund, will not result in a
violation of such restriction.
For purposes of their policies and limitations, the Funds
consider certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings and loan association having capital,
surplus, and undivided profits in excess of $100,000,000 at the time of
investment to be "cash items".
CERTAIN RISK CONSIDERATIONS
There can be no assurance that a Fund will achieve its
investment objective and an investment in the Funds involves certain risks which
are described under "DESCRIPTION OF THE FUNDS -Investment Objectives" and
"-Investment Policies" in the Funds' Prospectuses.
The Income and Growth Fund is a non-diversified fund within
the meaning of the 1940 Act. Its portfolio may be less diversified than the
portfolios of investment companies which are diversified as defined by the 1940
Act. While the U.S. Fund and International Fund are diversified within the
meaning of the 1940 Act, each of the Funds concentrates its investments in the
securities of companies engaged principally in the real estate industry.
Investors should understand that investment in the Funds may be subject to
greater risk and market fluctuation than an investment in a portfolio of
securities representing a broader range of industries and investment
alternatives.
Borrowing
The International Fund has had borrowings outstanding. It is
in essence leveraged and, therefore, share price fluctuations may be more
pronounced than the market in general. The table set forth below describes the
extent to which the Fund entered into borrowing transactions during the five
fiscal periods ended October 31, 1998.
20
<PAGE> 97
<TABLE>
<CAPTION>
Amount of Debt Average Amount of Average Number of Average Amount of
Outstanding End of Debt Outstanding Shares Outstanding Debt Per-Share
Year Ended Year During the Year During the Year During Year
- --------------------- ------------------ ---------------- ------------------ --------------
<S> <C> <C> <C> <C>
9/30/94* $4,885,000 $2,090,861 10,670,806 $ 0.20
9/30/95 $ 0 $1,572,261 7,184,794 $ 0.22
10/31/95** $1,050,000 $ 283,871 5,474,147 $ 0.05
10/31/96 $ 0 $ 583,642 4,432,611 $ 0.13
10/31/97 $ 775,000 $ 320,892 3,275,765 $ 0.10
10/31/98
</TABLE>
* Nine Months
** One Month
MANAGEMENT
The Trustees and executive officers of the Trust, their ages,
addresses and principal occupations during the past five years are set forth
below:
Laurence B. Ashkin (69), 180 East Pearson Street, Chicago, IL
- - Trustee. Real estate developer and construction consultant since 1980;
President of Centrum Equities since 1987 and Centrum Properties, Inc.
since 1980.
Foster Bam (70), Greenwich Plaza, Greenwich, CT - Trustee.
Partner in the law firm of Cummings and Lockwood since 1968.
H. Guy Leibler (44), 25 Cowdry Park Drive, Greenwich, CT -
Trustee. Chairman and President of Pailatus, a news media company (since January
1997); Director and Chairman of White Plains Hospital Center (since April 1988);
Advisor to Sony/Loews Theaters, an entertainment company (July 1995 to March
1997); President of Sony Plaza, Inc., a consumer electronics, music and film
company (January 1993 to June 1995); and President and Chief Executive Officer
of Schulman Realty.
Samuel A. Lieber* (42), 122 East 42nd Street, New York, New
York - Trustee and President. Member of Alpine Management & Research, LLC since
November 1997. Formerly, Portfolio Manager, Evergreen Asset Management Corp.
("EAM") (1985-1997)
* Trustee who is deemed to be an "interested person" of the
Trust, as such term is defined by the 1940 Act.
Marc R. Halle (37), 122 East 42nd Street, New York, New York -
Secretary. Member of Alpine Management & Research, LLC since November 1997.
Formerly, Real Estate Analyst, EAM (1994-1997); and Acquisition and Finance, W&
M Properties, Inc. (1989 to 1994).
Georgette L. Horton (32), BISYS Fund Services, Inc. 90 Park
Avenue, 10th floor, New York, New York - Vice President. From October 1996 to
present, Vice President, BISYS Fund Services, Inc.; for the three years prior,
Assistant Vice President, PaineWebber.
21
<PAGE> 98
Gary R. Tenkman, BISYS Fund Services, Inc., 3435 Stelzer Road,
Columbus, Ohio 43219 Treasurer. From April 1998 to present, Director, Financial
Services, BISYS Fund Services, Inc.; prior to joining BISYS, Mr. Tenkman was
Audit Manager, Investment Management Services Group, Ernst & Young LLP.
Alaina V. Metz (31), BISYS Fund Services, Inc., 3435 Stelzer
Road, Columbus, Ohio 43219 Assistant Secretary. From June 1995 to present, Chief
Administrator, Administration and Regulatory Services, BISYS Fund Services,
Inc.; from May 1989 to June 1995, Supervisor, Mutual Fund Legal Department,
Alliance Capital Management.
The Trust pays an annual fee to each Trustee who is not an
officer or employee of the Adviser or distributor (or any affiliated company of
the Adviser or distributor) in the amount of $5,000. Travel expenses of Trustees
who are not affiliated persons of the Adviser or distributor (or any affiliated
company of the Adviser or distributor) which are incurred in connection with
attending meetings of the Board of Trustees will also be reimbursed.
Set forth below for each of the Trustees is the aggregate
compensation (and expenses) paid to such Trustees by the Trust for the twelve
month period ended September 30, 1998.
TRUSTEES COMPENSATION TABLE
TRUSTEE COMPENSATION FROM TRUST
Laurence B. Ashkin
H. Guy Leibler
Foster Bam
Samuel A. Lieber
As of October 16, 1998, Samuel A. Lieber owned 6.46% of the
International Fund's Class Y Shares, and all other officers and Trustees of the
Trust owned as a group less than 1% of the outstanding shares of any class of
the Fund.
Set forth below is information with respect to each person,
who, to the Trust's knowledge, owned beneficially or of record more than 5% of
any class of a Fund's total outstanding shares and their aggregate ownership of
the Fund's total outstanding shares as of October 16, 1998.
22
<PAGE> 99
<TABLE>
<CAPTION>
NAME AND ADDRESS NAME OF FUND/CLASS NUMBER OF SHARES % OF CLASS/FUND
<S> <C> <C> <C>
Stephen A. Lieber U.S. Fund / Y 265,773.195 12.982
1210 Greacon Point Rd.
Mamaroneck, NY 10543-4693
Charles Schwab & Co. Inc. U.S. Fund / Y 388,939.194 18.998
Special Custody Account for the Exclusive
Benefit of Customers
Reinvest Account Mut Fds Dept
Attn: Mutual Funds Dept
101 Montgomery St.
San Francisco, CA 94104-4122
The Essel Foundation U.S. Fund / Y 172,060.612 8.404
1210 Greacen Point Rd.
Mamaroneck, NY 10543-4693
Charles Schwab & Co. Inc. U.S. Fund / A 32,376.400 7.172
Special Custody Account for the Exclusive
Benefit of Customers
Attn: Mutual Funds Dept
101 Montgomery St.
San Francisco, CA 94104-4122
Jack Watson U.S. Fund / A 27,152.832 6.015
and Linda Watson
TRST JACK & LINDA WATSON CHARITABLE TR
DTD 03 26 92
11595 N Meridian St apt 250
Carmel IN 46032
MLPF&S for the sole benefit U.S. Fund / B 76,314.132 14.687
Of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484
MLPF&S for the sole benefit of its U.S. Fund / C 49,086.253 29.876
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
23
<PAGE> 100
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Stephen A. Lieber International 90,448.479 36.238
1210 Greacon Point Rd. Fund / Y
Mamaroneck, NY 10543-4693
Charles Schwab & Co. Inc. International 302,306.035 11.648
Special Custody Account for the Exclusive Fund / Y
Benefit of Customers
Reinvest Account Mut Fds Dept
Attn: Mutual Funds Dept
101 Montgomery St.
San Francisco, CA 94104-4122
The Essel Foundation International 171,530.889 6.609
1210 Greacen Point Rd. Fund / Y
Mamaroneck, NY 10543-4693
Samuel A. Lieber International 167,761.301 6.464
2 Beach Ave. Fund / Y
Larchmont, NY 10538-4005
Charles Schwab & Co. Inc. International 16,906.431 60.006
Special Custody Account for the Exclusive Fund / A
Benefit of Customers
Attn: Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94104-4122
Fifth Third Bank Ttee Agt. International 2,894.356 10.272
FBO Ben C. Kaufmann Fund / A
A/C 38-0-6202337
U/A DTD 5/11/95
P.O. Box 630074
Cincinnati, OH 45263
First Union NatAEI Bank u C/F IN International 1,690.238 5.999
Deborah R. Shore IRA Fund / A
5706 Cricket Place
McLean, VA 22101
First Union NatAEI Bank u C/F IN International 1,663.182 5.903
Harris Shore IRA Fund / A
5706 Cricket Place
McLean, VA 22101
MLPF&S for the sole benefit International 2,213.000 11.310
</TABLE>
24
<PAGE> 101
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Of its Customers Fund / B
Attn: Fund Administration
4800 Deer Lake Dr. E. 3rd Floor
Jacksonville, FL 32246-6484
Donaldson Lufkin Jenrette International 3,357.958 17.162
Securities Corporation Inc. Fund / B
P.O. Box 2052
Jersey City, NJ 07303-2052
First Union Natl Bank International 1,166.495 5.961
Cust John M Reed Fund / B
IRA
9501 Chatterleigh Dr.
Richmond, VA 23233
Donaldson Lufkin Jenrette Sec Corp International 1,612.274 8.240
Securities Corporation Inc. Fund / B
P.O. Box 2052
Jersey City, NJ 07303-2052
NFSC FEBO #OKS-628913 International 1,212.611 6.197
NFSC/FMTC IRA Rollover Fund / B
FBO Theodore C. Fleming
1007 Sierra Vista Ct.
Burleson, TX 76028-4061
Advanced Clearing FBO 4520003671 International 2,421.308 5.812
PO Box 2226 Fund / C
Omaha NE 68103-2226
Donaldson Lufkin Jenrette International 716.332 5.812
Securities Corporation Inc. Fund / C
P.O. Box 2052
Jersey City, NJ 07303-2052
Painewebber for the benefit of International 1,552.795 12.599
Peter J. Haigh Fund / C
Ann Haigh Jtwros
310 S. Highland Ave.
Pittsburgh, PA 15206
BT Alex Brown Inc. International 7,048.138 57.188
FBO 223-77274-21 Fund / C
</TABLE>
25
<PAGE> 102
PO Box 1346
Baltimore MD 21203
As a result of his direct and beneficial ownership of 36.238%
of the outstanding Class Y shares of Alpine International Real Estate Equity
Fund on October 16, 1998, Stephen A. Lieber may be deemed to "control" the Fund
as that term is defined in the 1940 Act.
INVESTMENT ADVISER
(See also "MANAGEMENT OF THE FUNDS" in the Funds' Prospectuses)
The management of each Fund is supervised by the Trustees of
the Trust. Alpine Management & Research, LLC provides investment advisory
services to the Funds pursuant to Investment Advisory Agreements entered into
with the Trust (the "Advisory Agreements").
The Adviser, located at 122 East 42nd Street, New York, New
York 10168, is a Delaware limited liability company. It was formed for the
purpose of providing investment advisory and management services to investment
companies (including the Funds) and other advisory clients. The members of the
Adviser are Messrs. Samuel A. Lieber, who is the controlling person of the
Adviser, and Marc R. Halle. The Adviser's members were previously associated
with EAM, the former investment adviser of the U.S. Fund and the International
Fund, and were primarily responsible for investment advisory services provided
to those Funds.
Under the Advisory Agreements, the Adviser has agreed to
furnish reports, statistical and research services and recommendations with
respect to each Fund's portfolio of investments. In addition, the Adviser
provides office facilities to the Funds and performs a variety of administrative
services. Each Fund pays the cost of all of its other expenses and liabilities,
including expenses and liabilities incurred in connection with maintaining its
registration under the 1933 Act, and the 1940 Act, printing prospectuses (for
existing shareholders) as they are updated, state qualifications, mailings,
brokerage, custodian and stock transfer charges, printing, legal and auditing
expenses, expenses of shareholder meetings and reports to shareholders. The
Adviser pays the costs of printing and distributing prospectuses used for
prospective shareholders.
The method of computing the investment advisory fee for each
Fund is described in the Prospectuses. The advisory fees paid by the U.S. Fund
and the International Fund to EAM and their Adviser for the three most recent
fiscal periods were as follows:
<TABLE>
<CAPTION>
U.S. FUND YEAR ENDED YEAR ENDED YEAR ENDED
9/30/98 9/30/97 9/30/96
<S> <C> <C> <C>
Advisory Fee $ 156,812 $ 104,850
Waiver (106,421) (104,850)
--------- --------- ---------
Net Advisory Fee $ 50,391 $ 0
========= ========= =========
Expense
Reimbursement $ 10,294 $ 107,348
--------- --------- ---------
</TABLE>
26
<PAGE> 103
<TABLE>
<CAPTION>
INTERNATIONAL FUND YEAR ENDED YEAR ENDED YEAR ENDED
10/31/98 10/31/97 10/31/96
<S> <C> <C> <C>
Advisory Fee $ 410,740 $ 580,089
--------- --------- ---------
Waiver (33,874) (37,319)
Net Advisory Fee $ 376,866 $ 542,770
========= ========= =========
Expense
Reimbursement $ 0 $ 27,960
--------- --------- ---------
</TABLE>
The Income and Growth Fund is a newly formed mutual fund and
has no prior operating history.
Each Advisory Agreement is terminable, without the payment of
any penalty, on sixty days' written notice, by a vote of the holders of a
majority of the Fund's outstanding shares, or by a vote of a majority of the
Trustees or by the Adviser. The Advisory Agreements provide that they will
automatically terminate in the event of their assignment. Each Advisory
Agreement provides in substance that the Adviser shall not be liable for any
action or failure to act in accordance with its duties thereunder in the absence
of willful misfeasance, bad faith or gross negligence on the part of the Adviser
or of reckless disregard of its obligations thereunder.
The U.S. Fund's and the International Fund's Advisory
Agreements became effective on February 17, 1998 and have initial terms of two
years. The agreements were approved by the persons then serving as Trustees,
including a majority of the Trustees who were not "interested persons" of the
Trust, as defined by the 1940 Act ("Independent Trustees"), on December 17, 1998
and were approved by shareholders of each Fund at a meeting held on February 17,
1998. The Income and Growth Fund's Investment Advisory Agreement also has an
initial term of two years and was approved by the Trustees, including a majority
of the Independent Trustees, on April 13, 1998. Each Advisory Agreement may be
continued in effect from year to year after its initial term, provided that its
continuance is approved annually by the Trustees or by a majority of the
outstanding voting shares of the Fund, and in each case is also approved by a
majority of the Independent Trustees by vote cast in person at a meeting duly
called for the purpose of voting on such approval.
Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Funds. The Adviser may, from
time to time, make recommendations which result in the purchase or sale of a
particular security by its other clients simultaneously with a Fund. If
transactions on behalf of more than one client during the same period increase
the demand for securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. It is the policy of
the Adviser to allocate advisory recommendations and the placing of orders in a
manner which is deemed equitable by the Adviser to the accounts involved,
including the Funds. When two or more clients of the Adviser are purchasing or
selling the same security on a given day from the same broker-dealer, such
transactions may be averaged as to price.
27
<PAGE> 104
The Funds have adopted procedures under Rule 17a-7 of the 1940
Act to permit purchase and sales transactions to be effected between each Fund
or between a Fund and certain other accounts that are managed by the Adviser.
Each Fund may from time to time engage in such transactions in accordance with
these procedures.
DISTRIBUTION PLANS
Each Fund has entered into a distribution agreement with BISYS
Fund Services Limited Partnership (the "Distributor"), pursuant to which the
Distributor has been retained to distribute shares of the Funds.
Reference is made to "DISTRIBUTION ARRANGEMENTS" in the
Prospectus for the Class A, Class B and Class C shares of the Funds for
additional disclosure regarding the Funds' distribution arrangements.
Distribution fees are accrued daily and paid monthly on the Class A, Class B and
Class C shares and are charged as class expenses, as accrued. The distribution
fees attributable to the Class B shares and Class C shares are designed to
permit an investor to purchase such shares through broker-dealers without the
assessment of a front-end sales charge, and, in the case of Class C shares,
without the assessment of a contingent deferred sales charge after the first
year following purchase, while at the same time permitting the Distributor to
compensate broker-dealers in connection with the sale of such shares. In this
regard, the purpose and function of the combined contingent deferred sales
charge and distribution services fee on the Class B shares and the Class C
shares, are similar to those of the front-end sales charge and distribution fee
with respect to the Class A shares in that in each case the sales charge and/or
distribution fee provide for the financing of the distribution of the Fund's
shares.
Under the Rule 12b-1 Distribution Plans that have been adopted
by the Funds with respect to their Class A, Class B and Class C shares (each a
"Plan" and collectively, the "Plans"), the Treasurer of the Trust reports the
amounts expended under the Plans and the purposes for which such expenditures
were made to the Trustees of the Trust for their review on a quarterly basis.
Also, each Plan provides that the selection and nomination of the Independent
Trustees are committed to the discretion of such Independent Trustees then in
office.
The Adviser may from time to time and from its own funds or
such other resources as may be permitted by rules of the SEC make payments for
distribution services to the Distributor or to brokers and financial
intermediaries; the Distributor may in turn pay part or all of such amounts
received to brokers or other persons for their distribution assistance.
The U.S. Fund and International Fund commenced offering Class
A, Class B and Class C shares on January 3, 1995. The Plan with respect to these
Funds became effective on December 30, 1994, and was initially approved by the
sole shareholder of each class of shares of these Funds with respect to which a
Plan was adopted on that date and by the unanimous vote of the Trustees of the
Trust, including a majority of the Independent Trustees, at a meeting called for
that purpose and held on December 13, 1994. The Plan with respect to the Income
and Growth Fund was initially approved and adopted by the unanimous vote of the
Trustees of the
28
<PAGE> 105
Trust, including a majority of the Independent Trustees, at a meeting called for
that purpose and held on April 13, 1998.
The Distribution Agreement between the Funds and the
Distributor, pursuant to which distribution fees are paid under the Plan by each
Fund with respect to its Class A, Class B and Class C shares was approved at the
April 13, 1998 meeting by the unanimous vote of the Trustees, including a
majority of the Independent Trustees.
Each Plan and Distribution Agreement will continue in effect
for successive twelve-month periods; provided, however, that such continuance is
specifically approved at least annually by the Trustees of the Trust or by vote
of the holders of a majority of the outstanding voting securities of that class,
and, in either case, by a majority of the Independent Trustees.
The Plans permit the payment of fees to brokers and others for
distribution and shareholder-related administrative services and to
broker-dealers, depository institutions, financial intermediaries and
administrators for administrative services as to Class A, Class B and Class C
shares. The Plans are designed to (i) stimulate brokers to provide distribution
and administrative support services to the Funds and holders of Class A, Class B
and Class C shares and (ii) stimulate administrators to render administrative
support services to the Funds and holders of Class A, Class B and Class C
shares. The administrative services are provided by a representative who has
knowledge of the shareholder's particular circumstances and goals, and include,
but are not limited to, providing office space, equipment, telephone facilities,
and various personnel including clerical, supervisory, and computer, as
necessary or beneficial to establish and maintain shareholder accounts and
records; processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client inquiries
regarding Class A, Class B and Class C shares; assisting clients in changing
dividend options, account designations, and addresses; and providing such other
services as the Fund reasonably requests for its Class A, Class B and Class C
shares.
In the event that a Plan or Distribution Agreement of a Fund
is terminated or not continued with respect to one or more classes of a Fund,
(i) no distribution fees (other than current amounts accrued but not yet paid)
would be owed by the Fund to the Distributor with respect to that class or
classes, and (ii) the Fund would not be obligated to pay the Distributor for any
amounts expended under the Distribution Agreement not previously recovered by
the Distributor from distribution services fees in respect of shares of such
class or classes through deferred sales charges.
All material amendments to any Plan or Distribution Agreement
must be approved by a vote of the Trustees of the Trust or the holders of the
Fund's outstanding voting securities, voting separately by class, and in either
case, by a majority of the Independent Trustees, cast in person at a meeting
called for the purpose of voting on such approval; and any Plan or Distribution
Agreement may not be amended to increase materially the costs that a particular
class of shares of a Fund may bear pursuant to the Plan or Distribution
Agreement without the approval of a majority of the holders of the outstanding
voting shares of the class affected. Any Plan or Distribution Agreement may be
terminated (a) by a Fund without penalty
29
<PAGE> 106
at any time by a majority vote of the holders of the outstanding voting
securities of the Fund, voting separately by class or by a majority vote of the
Independent Trustees or (b) by the Distributor. To terminate any Distribution
Agreement, any party must give the other parties 60 days' written notice; to
terminate a Plan only, the Fund need give no notice to the Distributor. Any
Distribution Agreement will terminate automatically in the event of its
assignment.
The International Fund incurred distribution and shareholder
services fees pursuant to its Rule 12b-1 Plan on behalf of Class A, Class B, and
Class C shares, of [$___, $____ and $_____], respectively, for the fiscal year
ended October 31, 1998.
The U.S. Fund incurred distribution and shareholder services
fees pursuant to its Rule 12b-1 Plan on behalf of Class A, Class B, and Class C
shares, of [$___, $____ and $_____], respectively, for the fiscal year ended
September 30, 1998.
ALLOCATION OF BROKERAGE
Decisions regarding the placement of orders to purchase and
sell investments for the Funds are made by the Adviser, subject to the
supervision of the Trustees. A substantial portion of the transactions in equity
securities for the U.S. Fund and Income and Growth Fund will occur on domestic
stock exchanges. A substantial portion of the transactions in equity securities
for the International Fund will occur on foreign stock exchanges. Transactions
on stock exchanges involve the payment of brokerage commissions. In transactions
on stock exchanges in the United States and some foreign exchanges, these
commissions are negotiated. However, on many foreign stock exchanges these
commissions are fixed. In the case of securities traded in the foreign and
domestic over-the-counter markets, there is generally no stated commission, but
the price usually includes an undisclosed commission or markup. Over-the-counter
transactions will generally be placed directly with a principal market maker,
although the Fund may place an over-the-counter order with a broker-dealer if a
better price (including commission) and execution are available.
It is anticipated that most purchase and sale transactions
involving fixed income securities will be with the issuer or an underwriter or
with major dealers in such securities acting as principals. Such transactions
are normally on a net basis and generally do not involve payment of brokerage
commissions. However, the cost of securities purchased from an underwriter
usually includes a commission paid by the issuer to the underwriter. Purchases
or sales from dealers will normally reflect the spread between the bid and ask
price.
The policy of the Funds regarding purchases and sales of
securities is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock exchange, the
Funds' policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid in
all circumstances. The Board of Trustees of the Trust believes that a
requirement always to seek the lowest commission cost could impede effective
management and preclude the Funds and the Adviser from obtaining high quality
brokerage and research services. In seeking to determine the reasonableness of
brokerage commissions paid in any transaction, the Adviser may rely on its
30
<PAGE> 107
experience and knowledge regarding commissions generally charged by various
brokers and on their judgment in evaluating the brokerage and research services
received from the broker effecting the transaction. Such determinations are
necessarily subjective and imprecise, as in most cases an exact dollar value for
those services is not ascertainable.
In seeking to implement the Funds' policies, the Adviser
effects transactions with those brokers and dealers who it believes provide the
most favorable prices and which are capable of providing efficient executions.
If the Adviser believes such price and execution are obtainable from more than
one broker or dealer, it may give consideration to placing transactions with
those brokers and dealers who also furnish research or research related services
to the Funds or the Adviser. Such services may include, but are not limited to,
any one or more of the following: information as to the availability of
securities for purchase or sale; statistical or factual information or opinions
pertaining to investments; wire services; and appraisals or evaluations of
securities. The information and services received by the Adviser from brokers
and dealers may be of benefit in the management of accounts of other clients and
may not in all cases benefit the Funds directly. While such services are useful
and important in supplementing its own research and facilities, the Adviser
believes the value of such services is not determinable and does not
significantly reduce its expenses.
ADDITIONAL TAX INFORMATION
(See also "DIVIDENDS, DISTRIBUTIONS AND TAXES" in the Prospectuses)
Each Fund has qualified and intends to continue to qualify for
and elect the tax treatment applicable to regulated investment companies ("RIC")
under Subchapter M of the Code. (Such qualification does not involve supervision
of management or investment practices or policies by the Internal Revenue
Service.) In order to qualify as a regulated investment company, a Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to proceeds from securities loans, gains from
the sale or other disposition of securities or foreign currencies and other
income (including gains from options, futures or forward contracts) derived with
respect to its business of investing in such securities and (b) diversify its
holdings so that, at the end of each quarter of its taxable year, (i) at least
50% of the market value of the Fund's total assets is represented by cash, U.S.
government securities and other securities limited in respect of any one issuer,
to an amount not greater than 5% of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. government securities and securities of other regulated investment
companies). By so qualifying, a Fund is not subject to Federal income tax if it
timely distributes its investment company taxable income and any net realized
capital gains. A 4% nondeductible excise tax will be imposed on a Fund to the
extent it does not meet certain distribution requirements by the end of each
calendar year. Each Fund anticipates meeting such distribution requirements.
Dividends paid by a Fund from investment company taxable
income
31
<PAGE> 108
generally will be taxed to the shareholders as ordinary income. Investment
company taxable income includes net investment income and net realized
short-term gains (if any). Any dividends received by a Fund from domestic
corporations will constitute a portion of the Fund's gross investment income. It
is anticipated that this portion of the dividends paid by a Fund will qualify
for the 70% dividends-received deduction for corporations. Shareholders will be
informed of the amounts of dividends which so qualify.
Distributions of the excess of net long-term capital gain over
net short-term capital loss are taxable to shareholders (who are not exempt from
tax) as long-term capital gain, regardless of the length of time the shares of a
Fund have been held by such shareholders. Short-term capital gains distributions
are taxable to shareholders who are not exempt from tax as ordinary income. Such
distributions are not eligible for the dividends-received deduction. Any loss
recognized upon the sale of shares of a Fund held by a shareholder for six
months or less will be treated as a long-term capital loss to the extent that
the shareholder received a long-term capital gain distribution with respect to
such shares.
Distributions will be taxable as described above to
shareholders (who are not exempt from tax), whether made in shares or in cash.
Shareholders which receive distributions in the form of additional shares will
have a cost basis for Federal income tax purposes in each share so received
equal to the net asset value of a share of a Fund on the reinvestment date.
Distributions by each Fund result in a reduction in the net
asset value of the Fund's shares. Should a distribution reduce the net asset
value below a shareholder's cost basis, such distribution nevertheless would be
taxable as ordinary income or capital gain as described above to shareholders
(who are not exempt from tax), even though, from an investment standpoint, it
may constitute a return of capital. In particular, investors should be careful
to consider the tax implications of buying shares just prior to a distribution.
The price of shares purchased at that time includes the amount of the
forthcoming distribution. Those purchasing just prior to a distribution will
then receive what is in effect a return of capital upon the distribution which
will nevertheless be taxable to shareholders subject to taxes.
Upon a sale or exchange of its shares, a shareholder will
realize a taxable gain or loss depending on its basis in the shares. Such gain
or loss will be treated as a capital gain or loss if the shares are capital
assets in the investor's hands and will be a long-term capital gain or loss if
the shares have been held for more than one year. Generally, any loss realized
on a sale or exchange will be disallowed to the extent shares disposed of are
replaced within a period of sixty-one days beginning thirty days before and
ending thirty days after the shares are disposed of. Any loss realized by a
shareholder on the sale of shares of the Fund held by the shareholder for six
months or less will be disallowed to the extent of any exempt interest dividends
received by the shareholder with respect to such shares, and will be treated for
tax purposes as a long-term capital loss to the extent of any distributions of
net capital gains received by the shareholder with respect to such shares.
All distributions, whether received in shares or cash, must be
reported by each shareholder on his or her Federal income tax return. Each
shareholder should consult his or her own tax adviser to determine the state and
local tax implications of Fund distributions.
32
<PAGE> 109
Shareholders who fail to furnish their taxpayer identification
numbers to a Fund and to certify as to its correctness and certain other
shareholders may be subject to a 31% Federal income tax backup withholding
requirement on dividends, distributions of capital gains and redemption proceeds
paid to them by the Fund. If the backup withholding provisions are applicable,
any such dividends or capital gain distributions to these shareholders, whether
taken in cash or reinvested in additional shares, and any redemption proceeds
will be reduced by the amounts required to be withheld. Investors may wish to
consult their own tax advisers about the applicability of the backup withholding
provisions. The foregoing discussion relates solely to U.S. Federal income tax
law as applicable to U.S. persons (i.e., U.S. citizens and residents and U.S.
domestic corporations, partnerships, trusts and estates). It does not reflect
the special tax consequences to certain taxpayers (e.g., banks, insurance
companies, tax exempt organizations and foreign persons). Shareholders are
encouraged to consult their own tax advisers regarding specific questions
relating to Federal, state and local tax consequences of investing in shares of
a Fund. Each shareholder who is not a U.S. person should consult his or her tax
adviser regarding the U.S. and foreign tax consequences of ownership of shares
of a Fund, including the possibility that such a shareholder may be subject to a
U.S. withholding tax at a rate of 30% (or at a lower rate under a tax treaty) on
amounts treated as income from U.S. sources under the Code.
Special Tax Considerations
Each Fund maintains accounts and calculates income in U.S.
dollars. In general, gains or losses on the disposition of debt securities
denominated in a foreign currency that are attributable to fluctuations in
exchange rates between the date the debt security is acquired and the date of
disposition, gains and losses attributable to fluctuations in exchange rates
that occur between the time a Fund accrues interest or other receivables or
accrues expenses or other liabilities denominated in a foreign currency and the
time the Fund actually collects such receivable or pays such liabilities, and
gains and losses from the disposition of foreign currencies and foreign currency
forward contracts will be treated as ordinary income or loss. These gains or
losses increase or decrease, respectively, the amount of a Fund's investment
company taxable income available to be distributed to its shareholders as
ordinary income.
Each Fund's transactions in foreign currencies, forward
contracts, options and futures contracts (including options and futures
contracts on foreign currencies) are subject to special provisions of the Code
that, among other things, may affect the character of gains and losses of the
Fund (i.e., may affect whether gains or losses are ordinary or capital),
accelerate recognition of income to the Fund and defer Fund losses. These rules
could therefore affect the character, amount and timing of distributions to
shareholders. These provisions also (a) require a Fund to mark-to-market certain
types of positions in its portfolio (i.e., treat them as if they were closed
out) and (b) may cause a Fund to recognize income without receiving cash with
which to pay dividends or make distributions in amounts necessary to satisfy the
distribution requirements for avoiding U.S. Federal income and excise taxes.
Each Fund will monitor its transactions, make appropriate tax elections and make
appropriate entries in its books and records when it acquires any foreign
currency, forward contract, option, futures contract or hedged investment in
order to mitigate the effect of these rules. The Funds anticipate that their
hedging activities will not adversely affect their regulated investment company
status.
33
<PAGE> 110
Income received by a Fund from sources within various foreign
countries may be subject to foreign income tax. If more than 50% of the value of
a Fund's total assets at the close of its taxable year consists of the stock or
securities of foreign corporations, the Fund may elect to "pass through" to the
Fund's shareholders the amount of foreign income taxes paid by the Fund.
Pursuant to such election, shareholders would be required: (i) to treat a
proportionate share of dividends paid by the Fund which represent foreign source
income received by the Fund plus the foreign taxes paid by the Fund as foreign
source income; and (ii) either to deduct their pro-rata share of foreign taxes
in computing their taxable income, or to use it as a foreign tax credit against
Federal income taxes (but not both). No deduction for foreign taxes could be
claimed by a shareholder who does not itemize deductions.
Each Fund intends to meet for each taxable year the
requirements of the Code to "pass through" to its shareholders foreign income
taxes paid if it is determined by the Adviser to be beneficial to do so. There
can be no assurance that the Fund will be able to pass through foreign income
taxes paid. Each shareholder will be notified within 60 days after the close of
each taxable year of the Fund whether the foreign taxes paid by the Fund will
"pass through" for that year, and, if so, the amount of each shareholder's
pro-rata share (by country) of (i) the foreign taxes paid and (ii) the Fund's
gross income from foreign sources. Of course, shareholders who are not liable
for Federal income taxes, such as retirement plans qualified under Section 401
of the Code, generally will not be affected by any such "pass through" of
foreign tax credits.
Each Fund may invest in equity interests of certain entities
that may qualify as "passive foreign investment companies". Generally, the
income of such companies may become taxable to the Fund prior to the receipt of
distributions, or, alternatively, income taxes and interest charges may be
imposed on the Fund on "excess distributions" received by the Fund or on gain
from the disposition of such investments by the Fund. The Code generally allows
the Funds to elect to mark to market and recognize gains on such investments at
each Fund's taxable year end. Each Fund will take steps to minimize income taxes
and interest charges arising from such investments. Application of these rules
may cause a Fund to recognize income without receiving cash with which to pay
dividends or make distributions in amounts necessary to satisfy the distribution
requirements for avoiding U.S. Federal income and excise taxes. Each Fund will
monitor its investments in equity interests in "passive foreign investment
companies" to ensure its ability to comply with these distribution requirements.
NET ASSET VALUE
The following information supplements that set forth in the
Funds' Prospectuses under the subheading "How to Buy Shares - How the Funds
Value Their Shares" in the Section entitled "PURCHASE AND REDEMPTION OF SHARES".
The public offering price of shares of each class of each Fund
is net asset value per share, plus, in the case of Class A shares, a sales
charge which will vary depending on the purchase alternative chosen by the
investor, as more fully described in the Prospectus. See "PURCHASE AND
REDEMPTION OF SHARES - Class A Shares - Front-End Sales Charge Alternative." The
net asset value per share of each class of shares of each Fund is separately
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<PAGE> 111
computed. On each Fund business day on which a purchase or redemption order is
received by a Fund and trading in the types of securities in which a Fund
invests might materially affect the value of Fund shares, the per share net
asset values of shares of each Fund is computed as of the close of regular
trading on the New York Stock Exchange (the "Exchange") (currently 4:00 p.m.
Eastern time) by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding. A Fund business
day is any weekday, exclusive of national holidays on which the Exchange is
closed and Good Friday. For each Fund, securities for which the primary market
is on a domestic or foreign exchange and over-the-counter securities admitted to
trading on the NASDAQ National List are valued at the last quoted sale or, if no
sale, at the mean of closing bid and asked price and portfolio bonds are
presently valued by a recognized pricing service when such prices are believed
to reflect the fair value of the security. Over-the-counter securities not
included in the NASDAQ National List for which market quotations are readily
available are valued at a price quoted by one or more brokers. If accurate
quotations are not available or if market quotations are not readily available,
securities will be valued at fair value determined in good faith by the Board of
Trustees.
The respective per share net asset values of each class of a
Fund's shares may not be the same. The per share net asset values of the Class B
and Class C shares may be lower than the per share net asset value of the Class
A shares (and, in turn, that of Class A shares may be lower than Class Y shares)
as a result of the greater daily expense accruals, relative to Class A and Class
Y shares, of Class B and Class C shares relating to distribution services fees
and the fact that Class Y shares bear no distribution or shareholder service
related fees. While it is expected that, in the event each class of shares of a
Fund realizes net investment income or does not realize a net operating loss for
a period, the per share net asset values of the four classes will tend to
converge immediately after the payment of dividends, which dividends will differ
by approximately the amount of the expense accrual differential among the
classes, there is no assurance that this will be the case. In the event one or
more classes of a Fund experiences a net operating loss for any fiscal period,
the net asset value per share of such class or classes will remain lower than
that of classes that incurred lower expenses for the period.
To the extent that a Fund invests in non-U.S. dollar
denominated securities, the value of all assets and liabilities not denominated
in United States dollars will be translated into United States dollars at the
mean between the buying and selling rates of the currency in which such a
security is denominated against United States dollars last quoted by any major
bank. If such quotations are not available, the rate of exchange will be
determined in accordance with policies established by the Trust. Trading in
securities on European and Far Eastern securities exchanges and over-the-counter
markets is normally completed well before the close of business on each business
day in New York. In addition, European or Far Eastern securities trading
generally or in a particular country or countries may not take place on all
business days in New York. Furthermore, trading takes place in various foreign
markets on days which are not business days in New York and on which net asset
value is not calculated. Such calculation does not take place contemporaneously
with the determination of the prices of the majority of the portfolio securities
used in such calculation. Events affecting the values of portfolio securities
that occur between the time their prices are determined and the close of the
Exchange will not be reflected in a Fund's calculation of net asset value unless
the Trustees deem that the particular
35
<PAGE> 112
event would materially affect net asset value, in which case an adjustment will
be made. Securities transactions are accounted for on the trade date, the date
the order to buy or sell is executed. Dividend income and other distributions
are recorded on the ex-dividend date, except certain dividends and distributions
from foreign securities which are recorded as soon as a Fund is informed after
the ex-dividend date.
PURCHASE OF SHARES
The following information supplements that set forth in the
Funds' Prospectuses under the heading "PURCHASE AND REDEMPTION OF SHARES - How
To Buy Shares."
General
Class Y shares of the Funds are offered on a continuous basis
by the Distributor at a price equal to their net asset value without any
front-end, level load or contingent sales charges. Shares of each Fund will be
offered on a continuous basis at a price equal to their net asset value plus, in
the case of Class A shares, an initial sales charge at the time of purchase (the
"front-end sales charge alternative"), in the case of Class B shares with a
contingent deferred sales charge (the "deferred sales charge alternative"), or,
in the case of Class C shares, without any front-end sales charge, but with a
contingent deferred sales charge imposed only during the first year after
purchase (the "level-load alternative"), as described below. Class A, Class B
and Class C shares of each Fund are offered on a continuous basis through (i)
investment dealers that are members of the National Association of Securities
Dealers, Inc. and have entered into selected dealer agreements with the
Distributor ("selected dealers"), (ii) depository institutions and other
financial intermediaries or their affiliates, that have entered into selected
agent agreements with the Distributor ("selected agents"), or (iii) the
Distributor. Investors may purchase Class Y shares of the Funds at net asset
value by mail or wire as described in the Prospectus for Class Y shares.
In addition, the each Fund has authorized one or more brokers
to accept on a Fund's behalf purchase and redemption orders of Class A and Class
Y shares ("authorized brokers"). Such authorized brokers may designate other
intermediaries to accept purchase and redemption orders of Class A and Class Y
shares on each Fund's behalf . A Fund will be deemed to have received a purchase
or redemption order when an authorized broker or, if applicable, an authorized
broker's designee, accepts the order. Such orders will be priced at the net
asset value next computed after they are accepted by an authorized broker or the
broker's authorized designee.
The minimum initial investment in each Fund is $1,000; there
is no minimum for subsequent investments. Investors may use the Share Purchase
Application available from the Distributor for his or her initial investment.
Sales personnel of selected dealers and agents distributing a Fund's shares may
receive differing compensation for selling Class A, Class B or Class C shares.
Investors may purchase shares of a Fund in the United States
either through selected dealers or agents or directly through the Distributor. A
broker may impose transaction
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<PAGE> 113
fees on the purchase and/or sale of Fund shares. A Fund reserves the right to
suspend the sale of its shares to the public in response to conditions in the
securities markets or for other reasons.
Each Fund will accept unconditional orders for its shares to
be executed at the public offering price equal to the net asset value next
determined (plus for Class A shares, the applicable sales charges), as described
below. Orders received by the Distributor prior to the close of regular trading
on the Exchange on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on the Exchange on
that day (plus for Class A shares the sales charges). In the case of orders for
purchase of shares placed through selected dealers or agents, the applicable
public offering price will be the net asset value as so determined, but only if
the selected dealer or agent receives the order prior to the close of regular
trading on the Exchange and transmits it to the Distributor prior to its close
of business that same day (normally 5:00 p.m. Eastern time). The selected dealer
or agent is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to that day's
closing price must be settled between the investor and the selected dealer or
agent. If the selected dealer or agent receives the order after the close of
regular trading on the Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on the next day it
is open for trading.
Alternative Purchase Arrangements
The U.S. Fund and International Fund each issue four classes
of shares: (i) Class A shares, which are sold to investors choosing the
front-end sales charge alternative; (ii) Class B shares, which are sold to
investors choosing the deferred sales charge alternative; (iii) Class C shares,
which are sold to investors choosing the level-load sales charge alternative;
and (iv) Class Y shares, which are offered without any front-end, deferred or
level load sales charge. The Income and Growth Fund issues three classes of
shares: (i) Class A shares; (ii) Class B shares; and (iii) Class Y shares. The
classes of shares of each Fund each represent interests in the same portfolio of
investments, have the same rights and are identical in all respects, except that
(i) Class A, Class B and Class C shares are subject to a Rule 12b-1 distribution
fee, (ii) Class A shares bear the expense of the front-end sales charge and
Class B and Class C shares bear the expense of the deferred sales charge, (iii)
Class B shares and Class C shares each bear the expense of a higher Rule 12b-1
distribution services fee and shareholder service fee than Class A shares and,
in the case of Class B shares, may also incur higher transfer agency costs, (iv)
with the exception of Class Y shares, each class of each Fund has exclusive
voting rights with respect to provisions of the Rule 12b-1 Plan pursuant to
which its distribution services (and, to the extent applicable, shareholder
service) fee is paid which relates to a specific class and other matters for
which separate class voting is appropriate under applicable law, provided that,
if the Fund submits to a simultaneous vote of Class A, Class B and Class C
shareholders an amendment to the Rule 12b-1 Plan that would materially increase
the amount to be paid thereunder with respect to the Class A shares, the Class A
shareholders and the Class B and Class C shareholders will vote separately by
class, and (v) only the Class B shares are subject to a conversion feature. Each
class has different exchange privileges and certain different shareholder
service options available.
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<PAGE> 114
With respect to Class A, Class B and Class C shares, the
alternative purchase arrangements permit an investor to choose the method of
purchasing shares that is most beneficial given the amount of the purchase, the
length of time the investor expects to hold the shares, and other circumstances.
Investors should consider whether, during the anticipated life of their
investment in the Fund, the accumulated distribution services (and, to the
extent applicable, shareholder service) fee and contingent deferred sales
charges on Class B shares prior to conversion, or the accumulated distribution
services (and, to the extent applicable, shareholder service) fee on Class C
shares, would be less than the front-end sales charge and accumulated
distribution services fee on Class A shares purchased at the same time, and to
what extent such differential would be offset by the higher return of Class A
shares. Class B and Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at the lowest applicable sales
charge. For this reason, the Distributor will reject any order for Class B
shares (except orders for Class B shares from certain retirement plans) for more
than $2,500,000.
Class A shares are subject to a lower distribution services
fee and no shareholder service fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares. However, because
front-end sales charges are deducted at the time of purchase, investors
purchasing Class A shares would not have all their funds invested initially and,
therefore, would initially own fewer shares. Investors not qualifying for
reduced front-end sales charges who expect to maintain their investment for an
extended period of time might consider purchasing Class A shares because the
accumulated continuing distribution (and, to the extent applicable, shareholder
service) charges on Class B shares or Class C shares may exceed the front-end
sales charge on Class A shares during the life of the investment. Again,
however, such investors must weigh this consideration against the fact that,
because of such front-end sales charges, not all their funds will be invested
initially.
Other investors might determine, however, that it would be
more advantageous to purchase Class B shares or Class C shares in order to have
all their funds invested initially, although remaining subject to higher
continuing distribution services (and, to the extent applicable, shareholder
service) fees and, in the case of Class B shares, being subject to a contingent
deferred sales charge for a six-year period. For example, based on current fees
and expenses, an investor subject to the 4.75% front-end sales charge imposed by
the Funds would have to hold his or her investment approximately seven years for
the Class B and Class C distribution services (and, to the extent applicable,
shareholders service) fees, to exceed the front-end sales charge plus the
accumulated distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer period might
consider purchasing Class A shares. This example does not take into account the
time value of money, which further reduces the impact of the Class B and Class C
distribution services (and, to the extent applicable, shareholder service) fees
on the investment, fluctuations in net asset value or the effect of different
performance assumptions.
Those investors who prefer to have all of their funds invested
initially but may not wish to retain Fund shares for the six year period during
which Class B shares are subject to a contingent deferred sales charge may find
it more advantageous to purchase Class C shares.
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<PAGE> 115
With respect to each Fund, the Trustees have determined that
currently no conflict of interest exists between or among the Class A, Class B,
Class C and Class Y shares. On an ongoing basis, the Trustees, pursuant to their
fiduciary duties under the 1940 Act and state laws, will seek to ensure that no
such conflict arises.
Front-end Sales Charge Alternative--Class A Shares
The public offering price of Class A shares for purchasers
choosing the front-end sales charge alternative is the net asset value plus a
sales charge as set forth in the Prospectus for the Class A, Class B and Class C
shares of the Funds.
Shares issued pursuant to the automatic reinvestment of income
dividends or capital gains distributions are not subject to any sales charges.
The Fund receives the entire net asset value of its Class A shares sold to
investors. The Distributor's commission is the sales charge set forth in the
Prospectus, less any applicable discount or commission "reallowed" to selected
dealers and agents. The Distributor will reallow discounts to selected dealers
and agents in the amounts indicated in the table in the Prospectus. In this
regard, the Distributor may elect to reallow the entire sales charge to selected
dealers and agents for all sales with respect to which orders are placed with
the Distributor.
Set forth below is an example of the method of computing the offering
price of the Class A shares of each Fund. The example assumes a purchase of
Class A shares of a Fund aggregating less than $100,000 subject to the schedule
of sales charges set forth in the Prospectus at a price based upon the net asset
value of Class A shares of each Fund at the end of each Fund's latest fiscal
year.
<TABLE>
<CAPTION>
NET PER SHARE OFFERING PRICE PER
DATE ASSET VALUE SALES CHARGE SHARE
<S> <C> <C> <C> <C>
U.S. FUND 9/30/97 $19.34 4.75% $20.30
INTERNATIONAL FUND 10/31/97 $12.94 4.75% $13.59
</TABLE>
Prior to January 3, 1995, shares of the Funds were offered
exclusively on a no-load basis and, accordingly, no underwriting commissions
were paid in respect of sales of shares of the Fund or retained by the
Distributor. In addition, since Class B and Class C shares were not offered
prior to January 3, 1995, contingent deferred sales charges have been paid to
the Distributor with respect to Class B or Class C shares only since January 3,
1995.
With respect to the U.S. Fund, the following commissions were
paid to and amounts retained by the Distributor for the three fiscal years ended
September 30, 1998:
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<PAGE> 116
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
U.S. FUND 9/30/98 9/30/97 9/30/96
<S> <C> <C> <C>
Commissions Received $4,724
Commissions Retained 543
</TABLE>
With respect to the International Fund, the following
commissions were paid to and amounts were retained by the Distributor for the
three fiscal years ended October 31, 1998:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
INTERNATIONAL FUND 10/31/98 10/31/97 10/31/96
<S> <C> <C> <C>
Commissions Received $5,823
Commissions Retained 664
</TABLE>
The Income and Growth Fund is a new fund and has no operating
history.
Investors choosing the front-end sales charge alternative may
under certain circumstances be entitled to pay reduced sales charges. The
circumstances under which such investors may pay reduced sales charges are
described below.
COMBINED PURCHASE PRIVILEGE. Certain persons may qualify for
the sales charge reductions by combining purchases of Class A shares of two or
three Funds into a single "purchase", if the resulting "purchase" totals at
least $100,000. The term "purchase" refers to: (i) a single purchase by an
individual, or to concurrent purchases, which in the aggregate are at least
equal to the prescribed amounts, by an individual, his or her spouse and their
children under the age of 21 years purchasing shares for his, her or their own
account(s); (ii) a single purchase by a trustee or other fiduciary purchasing
shares for a single trust, estate or single fiduciary account although more than
one beneficiary is involved; or (iii) a single purchase for the employee benefit
plans of a single employer. The term "purchase" also includes purchases by any
"company", as the term is defined in the 1940 Act, but does not include
purchases by any such company which has not been in existence for at least six
months or which has no purpose other than the purchase of shares of a Fund or
shares of other registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals whose sole
organizational nexus is that the participants therein are credit card holders of
a company, policy holders of an insurance company, customers of either a bank or
broker-dealer or clients of an investment adviser. A "purchase" may also include
shares purchased at the same time through a single selected dealer or agent of
any Alpine Fund. Currently, the Alpine mutual funds include:
Alpine U.S. Real Estate Equity Fund
Alpine International Real Estate Equity Fund
Alpine Realty Income and Growth Fund
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). An
investor's purchase of additional Class A shares of a Fund may qualify for a
Cumulative Quantity Discount. The applicable sales charge will be based on the
total of:
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<PAGE> 117
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on the
previous day) of (a) all Class A, Class B and Class C
shares of the Fund held by the investor and (b) all
such shares of the other Fund held by the investor;
and
(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder eligible
to combine his or her purchase with that of the
investor into a single "purchase" (see above).
For example, if an investor owned Class A, Class B or Class C
shares of the U.S. Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the International Fund worth an
additional $100,000, the sales charge for the $100,000 purchase would be the
2.50% rate applicable to a single $300,000 purchase of shares of the Fund,
rather than the 3.75% rate.
To qualify for the Combined Purchase Privilege or to obtain
the Cumulative Quantity Discount on a purchase through a selected dealer or
agent, the investor or selected dealer or agent must provide the Distributor
with sufficient information to verify that the purchase qualifies for the
privilege or discount.
STATEMENT OF INTENTION. Class A investors may also obtain the
reduced sales charges shown in the Prospectus by means of a written Statement of
Intention, which expresses the investor's intention to invest not less than
$100,000 within a period of 13 months in Class A shares (or Class A, Class B
and/or Class C shares) of the Funds. Each purchase of shares under a Statement
of Intention will be made at the public offering price or prices applicable at
the time of such purchase to a single transaction of the dollar amount indicated
in the Statement of Intention. At the investor's option, a Statement of
Intention may include purchases of Class A, Class B, or Class C shares of the
Funds made not more than 90 days prior to the date that the investor signs a
Statement of Intention; however, the 13-month period during which the Statement
of Intention is in effect will begin on the date of the earliest purchase to be
included.
Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Funds under a single Statement of
Intention. For example, if at the time an investor signs a Statement of
Intention to invest at least $100,000 in Class A shares of a Fund, the investor
and the investor's spouse each purchase shares of the Fund worth $20,000 (for a
total of $40,000), it will only be necessary to invest a total of $60,000 during
the following 13 months in shares of the Fund and shares of the other Fund, to
qualify for the 3.75% sales charge applicable to purchases in the Funds on the
total amount being invested (the sales charge applicable to an investment of
$100,000).
The Statement of Intention is not a binding obligation upon
the investor to purchase the full amount indicated. The minimum initial
investment under a Statement of Intention is 5% of such amount. Shares purchased
with the first 5% of such amount will be held in escrow (while remaining
registered in the name of the investor) to secure payment of the higher sales
charge applicable to the shares actually purchased if the full amount indicated
is not
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<PAGE> 118
purchased, and such escrowed shares will be involuntarily redeemed to pay the
additional sales charge, if necessary. Dividends on escrowed shares, whether
paid in cash or reinvested in additional Fund shares, are not subject to escrow.
When the full amount indicated has been purchased, the escrow will be released.
To the extent that an investor purchases more than the dollar amount indicated
on the Statement of Intention and qualifies for a further reduced sales charge,
the sales charge will be adjusted for the entire amount purchased at the end of
the 13-month period. The difference in sales charge will be used to purchase
additional shares of the Fund subject to the rate of sales charge applicable to
the actual amount of the aggregate purchases.
Investors wishing to enter into a Statement of Intention in
conjunction with their initial investment in Class A shares of a Fund should
complete the appropriate portion of the Share Purchase Application. Current
Class A shareholders desiring to do so can obtain a form of Statement of
Intention by contacting a Fund at the address or telephone number shown on the
cover of this Statement of Additional Information.
INVESTMENTS THROUGH EMPLOYEE BENEFIT AND SAVINGS PLANS.
Certain qualified and non-qualified benefit and savings plans may make shares of
the Funds available to their participants. Investments made by such employee
benefit plans may be exempt from any applicable front-end sales charges if they
meet the criteria set forth in the Prospectus under "Class A Shares-Front End
Sales Charge Alternative". The Adviser may pay compensation to organizations
providing administrative and record keeping services to plans which make shares
of the Funds available to their participants.
REINSTATEMENT PRIVILEGE. A Class A shareholder who has caused
any or all of his or her shares of a Fund to be redeemed or repurchased may
reinvest all or any portion of the redemption or repurchase proceeds in Class A
shares of the Fund at net asset value without any sales charge, provided that
such reinvestment is made within 30 calendar days after the redemption or
repurchase date. Shares are sold to a reinvesting shareholder at the net asset
value next determined as described above. A reinstatement pursuant to this
privilege will not cancel the redemption or repurchase transaction; therefore,
any gain or loss so realized will be recognized for Federal income tax purposes,
except that no loss will be recognized to the extent that the proceeds are
reinvested in shares of the Fund. The reinstatement privilege may be used by the
shareholder only once, irrespective of the number of shares redeemed or
repurchased, except that the privilege may be used without limit in connection
with transactions whose sole purpose is to transfer a shareholder's interest in
the Fund to his or her individual retirement account or other qualified
retirement plan account. Investors may exercise the reinstatement privilege by
written request sent to the Fund at the address shown on the cover of this
Statement of Additional Information.
SALES AT NET ASSET VALUE. As noted above, Class Y shares of
the Funds may be purchased at their net asset value without any front-end,
deferred or level load sales charge.
With respect to Class A shares, in addition to the categories
of investors set forth in the Prospectus, each Fund may sell its Class A shares
at net asset value, i.e., without any sales
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<PAGE> 119
charge, to: (i) certain investment advisory clients of the Adviser or its
affiliates; (ii) officers and present or former Trustees of the Trust; present
or former trustees of other investment companies managed by the Adviser;
officers, directors and present or retired, full-time employees of the Adviser,
the Distributor, and their affiliates; officers, directors and present and
full-time employees of selected dealers or agents; or the spouse, sibling,
direct ancestor or direct descendant (collectively "relatives") of any such
person; or any trust, individual retirement account or retirement plan account
for the benefit of any such person or relative; or the estate of any such person
or relative, if such shares are purchased for investment purposes (such shares
may not be resold except to the Fund); (iii) certain employee benefit plans for
employees of the Adviser, the Distributor and their affiliates; (iv) persons
participating in a fee-based program, sponsored and maintained by a registered
broker-dealer and approved by the Distributor, pursuant to which such persons
pay an asset based fee to such broker-dealer, or its affiliate or agent, for
service in the nature of investment advisory or administrative services. These
provisions are intended to provide additional job-related incentives to persons
who serve the Funds or work for companies associated with the Funds and selected
dealers and agents of the Funds. Since these persons are in a position to have a
basic understanding of the nature of an investment company as well as a general
familiarity with the Fund, sales to these persons, as compared to sales in the
normal channels of distribution, require substantially less sales effort.
Similarly, these provisions extend the privilege of purchasing shares at net
asset value to certain classes of institutional investors who, because of their
investment sophistication, can be expected to require significantly less than
normal sales effort on the part of the Funds and the Distributor.
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative
purchase Class B shares at the public offering price equal to the net asset
value per share of the Class B shares on the date of purchase without the
imposition of a sales charge at the time of purchase. The Class B shares are
sold without a front-end sales charge so that the full amount of the investor's
purchase payment is invested in the Fund initially.
Proceeds from the contingent deferred sales charge are paid to
the Distributor and are used by the Distributor to defray the expenses of the
Distributor related to providing distribution-related services to the Fund in
connection with the sale of the Class B shares, such as the payment of
compensation to selected dealers and agents for selling Class B shares. The
combination of the contingent deferred sales charge and the distribution
services fee enables the Fund to sell the Class B shares without a sales charge
being deducted at the time of purchase. The higher distribution services fee
incurred by Class B shares will cause such shares to have a higher expense ratio
and to pay lower dividends than those related to Class A shares.
CONTINGENT DEFERRED SALES CHARGE. Class B shares which are
redeemed within six years of purchase will be subject to a contingent deferred
sales charge at the rates set forth in the Prospectus charged as a percentage of
the dollar amount subject thereto. The charge will be assessed on an amount
equal to the lesser of the cost of the shares being redeemed or their net asset
value at the time of redemption. Accordingly, no sales charge will be imposed on
increases in net asset value above the initial purchase price. In addition, no
contingent deferred sales
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<PAGE> 120
charge will be assessed on shares derived from reinvestment of dividends or
capital gains distributions. The amount of the contingent deferred sales charge,
if any, will vary depending on the number of years from the time of payment for
the purchase of Class B shares until the time of redemption of such shares.
In determining the contingent deferred sales charge applicable
to a redemption it will be assumed that the redemption is first of any Class A
shares or Class C shares in the shareholder's Fund account, second of Class B
shares held for over six years or Class B shares acquired pursuant to
reinvestment of dividends or distributions and third of Class B shares held
longest during the six-year period.
To illustrate, assume that an investor purchased 100 Class B
shares at $10 per share (at a cost of $1,000) and in the second year after
purchase, the net asset value per share is $12 and, during such time, the
investor has acquired 10 additional Class B shares upon dividend reinvestment.
If at such time the investor makes his or her first redemption of 50 Class B
shares, 10 Class B shares will not be subject to charge because of dividend
reinvestment. With respect to the remaining 40 Class B shares, the charge is
applied only to the original cost of $10 per share and not to the increase in
net asset value of $2 per share. Therefore, of the $600 of the shares redeemed
$400 of the redemption proceeds (40 shares x $10 original purchase price) will
be charged at a rate of 4.0% (the applicable rate in the second year after
purchase for a contingent deferred sales charge of $16).
The contingent deferred sales charge is waived on redemptions
of shares (i) following the death or disability, as defined in the Code, of a
shareholder, or (ii) to the extent that the redemption represents a minimum
required distribution from an individual retirement account or other retirement
plan to a shareholder who has attained the age of 70-1/2.
CONVERSION FEATURE. At the end of the period ending six years
after the end of the calendar month in which the shareholder's purchase order
was accepted, Class B shares will automatically convert to Class A shares and
will no longer be subject to a higher distribution services fee imposed on Class
B shares. Such conversion will be on the basis of the relative net asset values
of the two classes, without the imposition of any sales load, fee or other
charge. The purpose of the conversion feature is to reduce the distribution
services fee paid by holders of Class B shares that have been outstanding long
enough for the Distributor to have been compensated for the expenses associated
with the sale of such shares.
For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions paid in
respect of Class B shares in a shareholder's account will be considered to be
held in a separate sub-account. Each time any Class B shares in the
shareholder's account (other than those in the sub-account) convert to Class A,
an equal pro-rata portion of the Class B shares in the sub-account will also
convert to Class A.
The conversion of Class B shares to Class A shares is subject
to the continuing availability of an opinion of counsel to the effect that (i)
the assessment of the higher distribution services fee and transfer agency costs
with respect to Class B shares does not result in the dividends or distributions
payable with respect to other classes of a Fund's shares being deemed
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<PAGE> 121
"preferential dividends" under the Code, and (ii) the conversion of Class B
shares to Class A shares does not constitute a taxable event under Federal
income tax law. The conversion of Class B shares to Class A shares may be
suspended if such an opinion is no longer available at the time such conversion
is to occur. In that event, no further conversions of Class B shares would
occur, and shares might continue to be subject to the higher distribution
services fee for an indefinite period which may extend beyond the period ending
six years after the end of the calendar month in which the shareholder's
purchase order was accepted.
Level-Load Alternative--Class C Shares
Investors choosing the level load sales charge alternative
purchase Class C shares at the public offering price equal to the net asset
value per share of the Class C shares on the date of purchase without the
imposition of a front-end sales charge. However, you will pay a 1.0% contingent
deferred sales charge if you redeem shares during the first year after purchase.
No charge is imposed in connection with redemptions made more than one year from
the date of purchase. Class C shares are sold without a front-end sales charge
so that the Fund will receive the full amount of the investor's purchase payment
and after the first year without a contingent deferred sales charge so that the
investor will receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee enables the
Fund to sell Class C shares without either a front-end or contingent deferred
sales charge. However, unlike Class B shares, Class C shares do not convert to
any other class shares of the Fund. Class C shares incur higher distribution
services than Class A shares, and will thus have a higher expense ratio and pay
correspondingly lower dividends than Class A shares.
Class Y Shares
Class Y shares do not bear any Rule 12b-1 distribution
expenses and are not subject to any front-end or contingent deferred sales
charges.
GENERAL INFORMATION ABOUT THE FUNDS
(See also "GENERAL INFORMATION" in the Funds' Prospectuses)
Capitalization and Organization
The Funds are each separate series of Alpine Equity Trust, a
Massachusetts business trust. The Trust is governed by its Board of Trustees.
The Funds may issue an unlimited number of shares of beneficial interest with a
$0.0001 par value. All shares of the Funds have equal rights and privileges.
Each share of each class is entitled to one vote on all matters as to which
shares of such class are entitled to vote, to participate equally in dividends
and distributions declared by the Funds and on liquidation to their
proportionate share of the assets remaining after satisfaction of outstanding
liabilities. Shares of the Funds are fully paid, non-assessable and fully
transferable when issued and have no pre-emptive, conversion or exchange rights.
Fractional shares have proportionally the same rights, including voting rights,
as are provided for a full share.
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<PAGE> 122
On February 17, 1998, in connection with the acquisition of
certain of the assets of EAM that relate to the management of the Funds by the
Adviser, the names of the Trust, the U.S. Fund and International Fund were
changed from Evergreen Global Equity Trust, Evergreen U.S. Real Estate Equity
Fund and Evergreen Global Real Estate Equity Fund.
Under the Trust's Declaration of Trust, each Trustee will
continue in office until the termination of the Trust or his or her earlier
death, incapacity, resignation or removal. Shareholders can remove a Trustee
upon a vote of two-thirds of the outstanding shares of beneficial interest of
the Trust. Vacancies may be filled by a majority of the remaining Trustees,
except insofar as the 1940 Act may require the election by shareholders. As a
result, normally no annual or regular meetings of shareholders will be held,
unless otherwise required by the Declaration of Trust or the 1940 Act.
Shares have noncumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of Trustees can
elect 100% of the Trustees if they choose to do so and in such event the holders
of the remaining shares so voting will not be able to elect any Trustees.
The Trustees are authorized to classify and reclassify any
issued class of shares of a Fund into shares of one or more classes of the Fund
and to reclassify and issue any unissued shares to any number of additional
series without shareholder approval. Accordingly, in the future, for reasons
such as the desire to establish one or more additional portfolios of the Trust
with different investment objectives, policies or restrictions, additional
series or classes of shares may be created. Any issuance of shares of another
series or class would be governed by the 1940 Act and the law of the
Commonwealth of Massachusetts. If shares of another series of the Trust were
issued in connection with the creation of additional investment portfolios, each
share of the newly created portfolio would normally be entitled to one vote for
all purposes. Generally, shares of all portfolios, including the Funds, would
vote as a single series on matters, such as the election of Trustees, that
affected all portfolios in substantially the same manner. As to matters
affecting each portfolio differently, such as approval of the Investment
Advisory Agreement and changes in investment policy, shares of each portfolio
would vote separately.
In addition the Trustees may, in the future, create additional
classes of shares of the Funds. Except for the different distribution related
and other specific costs borne by such additional classes, they will have the
same voting and other rights described for the existing classes of each Fund.
Procedures for calling a shareholders meeting for the removal
of the Trustees of each Trust, similar to those set forth in Section 16(c) of
the 1940 Act, will be available to shareholders of each Fund. The rights of the
holders of shares of a series of a Trust may not be modified except by the vote
of a majority of the outstanding shares of such series.
Distributor
BISYS Fund Services Limited Partnership, a wholly-owned
subsidiary of the BISYS Group, Inc., located at 120 Clove Road, Little Falls,
New Jersey 07424, serves as each
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<PAGE> 123
Fund's principal underwriter, and as such may solicit orders from the public to
purchase shares of the Funds. The Distributor is not obligated to sell any
specific amount of shares and will purchase shares for resale only against
orders for shares. Under the Agreement between the Fund and the Distributor, the
Fund has agreed to indemnify the Distributor, in the absence of its willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, against certain civil liabilities, including liabilities
under the 1933 Act.
Counsel
Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New
York, serves as counsel to the Trust.
Independent Auditors
PricewaterhouseCoopers LLP has been selected to be the
independent auditors of the Funds.
PERFORMANCE INFORMATION
Total Return
From time to time a Fund may advertise its "total return".
Computed separately for each class, a Fund's "total return" is its average
annual compounded total return for recent one, five, and ten-year periods (or
the period since the Fund's inception). A Fund's total return for such a period
is computed by finding, through the use of a formula prescribed by the SEC, the
average annual compounded rate of return over the period that would equate an
assumed initial amount invested to the value of such investment at the end of
the period. For purposes of computing total return, income dividends and capital
gains distributions paid on shares of the Fund are assumed to have been
reinvested when paid and the maximum sales charge applicable to purchases of
Fund shares is assumed to have been paid.
The shares of the Funds outstanding prior to January 3, 1995,
have been reclassified as Class Y shares. Set forth in the table below is the
average annual compounded total return for each class of shares offered by the
Funds (including applicable sales charges) for the most recently completed one,
three and five year fiscal periods and/or the period from inception through
September 30, 1998 for the U.S. Fund and through October 31, 1998 for the
International Fund.
U.S. Fund:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS SINCE INCEPTION INCEPTION DATE
<S> <C> <C> <C> <C> <C>
Class A Mar. 10, 1995
Class B Mar. 7, 1995
Class C July 12, 1995
Class Y Sept. 1, 1993
</TABLE>
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<PAGE> 124
International Fund:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS SINCE INCEPTION INCEPTION DATE
<S> <C> <C> <C> <C> <C>
Class A Feb. 10, 1995
Class B Feb. 8, 1995
Class C Feb. 9, 1995
Class Y Feb. 1, 1989
</TABLE>
The Income and Growth Fund is a newly organized mutual fund
and has no operating history.
A Fund's quotations of total return reflect the average annual
compounded rate of return on an assumed investment of $1,000 that equates the
initial amount invested to the ending redeemable value according to the
following formula:
P (1 + T) to the power of n = ERV
where "P" represents a hypothetical initial investment of $1,000; "T" represents
average annual total return; "n" represents the number of years; and "ERV"
represents the ending redeemable value of the initial investment. Dividends and
other distributions are assumed to be reinvested in shares at the prices in
effect on the reinvestment dates. ERV will be adjusted to reflect the effect of
any agreement by the Adviser to waive its fees or to absorb certain expenses of
a Fund. Quotations of total return will be for one year, five year and ten year
periods ended on the date of the most recent balance sheet included in the
Trust's registration statement at such times as the registration statement has
been in effect for such periods. Until such time as the registration statement
has been effective for the one year, five year and ten year periods, a Fund's
quotations of total return will also include a quotation of total return for the
time period during which the registration statement has been in effect or the
time period since the commencement of operations, whichever period begins later.
The Funds may also provide quotations of total return for other periods and
quotations of cumulative total returns, which reflect the actual performance of
a Fund over the entire period for which the quotation is given.
A Fund's total return is not fixed and will fluctuate in
response to prevailing market conditions or as a function of the type and
quality of the securities in its portfolio and its expenses. Total return
information is useful in reviewing a Fund's performance but such information may
not provide a basis for comparison with bank deposits or other investments which
pay a fixed yield for a stated period of time. An investor's principal invested
in a Fund is not fixed and will fluctuate in response to prevailing market
conditions.
Non-Standardized Performance
In addition to the performance information described above, a
Fund may provide total return information for designated periods, such as for
the most recent six months or most
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<PAGE> 125
recent twelve months. This total return information is computed as described
under "Total Return" above except that no annualization is made.
GENERAL
From time to time, a Fund may quote its performance in
advertising and other types of literature as compared to the performance of the
Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial
Average, Russell 2000 Index, Europe, Australia and Far East index, Morgan
Stanley Capital International Equity Emerging Markets Free Index or any other
commonly quoted index of common stock prices, which are unmanaged indices of
selected common stock prices. A Fund's performance may also be compared to those
of other mutual funds having similar objectives. This comparative performance
would be expressed as a ranking prepared by Lipper Analytical Services, Inc. or
similar independent services monitoring mutual fund performance. A Fund's
performance will be calculated by assuming, to the extent applicable,
reinvestment of all capital gains distributions and income dividends paid. Any
such comparisons may be useful to investors who wish to compare a Fund's past
performance with that of its competitors. Of course, past performance cannot be
a guarantee of future results.
Additional Information
All shareholder inquiries may be directed to the shareholder's
broker, or may be directed to the Funds at the address or telephone number shown
on the front cover of this Statement of Additional Information. This Statement
of Additional Information does not contain all the information set forth in the
Registration Statements filed by the Trust with the SEC under the 1933 Act.
Copies of the Registration Statements may be obtained at a reasonable charge
from the SEC or may be examined, without charge, at the offices of the SEC in
Washington, D.C.
FINANCIAL STATEMENTS
The U.S. Fund's and International Fund's financial statements
appearing in their most current fiscal year Annual Report to shareholders and
the report thereon of PricewaterhouseCoopers LLP, the Funds' independent
auditors appearing therein, are incorporated by reference in this Statement of
Additional Information. The Annual Reports to Shareholders for each Fund, which
contain the referenced statements, are available upon request and without
charge.
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<PAGE> 126
APPENDIX "A"
DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings Group. A Standard & Poor's corporate
bond rating is a current assessment of the credit worthiness of an obligor with
respect to a specific obligation. This assessment of credit worthiness may take
into consideration obligors, such as guarantors, insurers or lessees. The debt
rating is not a recommendation to purchase, sell or hold a security, inasmuch as
it does not comment as to market price or suitability for a particular investor.
The ratings are based on current information furnished to
Standard & Poor's by the issuer or obtained by Standard & Poor's from other
sources it considers reliable. Standard & Poor's does not perform any audit in
connection with the ratings and may, on occasion, rely on unaudited financial
information. The ratings may be changed, suspended or withdrawn as a result of
changes in, unavailability of such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of default-capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation.
2. Nature of and provisions of the obligation.
3. Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization or their arrangement under
the laws of bankruptcy and other laws affecting creditors' rights.
AAA - This is the highest rating assigned by Standard & Poor's
to a debt obligation and indicates an extremely strong capacity to pay interest
and repay any principal.
AA - Debt rated AA also qualifies as high quality debt
obligations. Capacity to pay interest and repay principal is very strong and in
the majority of instances they differ from AAA issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas they normally exhibit
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
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BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is
regarded, on a balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and C the
highest degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
BB - Debt rated BB has less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B - Debt rated B has greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied BB or BB- rating.
CCC - Debt rated CCC has a currently indefinable vulnerability
to default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The CCC rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.
CC - The rating CC is typically applied to debt subordinated
to senior debt that is assigned an actual or implied CCC rating.
C - The rating C is typically applied to debt subordinated to
senior debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
C1 - The rating C1 is reserved for income bonds on which no
interest is being paid.
D - Debt rated D is in payment default. It is used when
interest payments or principal payments are not made on a due date even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace periods; it will also be used upon
a filing of a bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-) - To provide more detailed indications
of credit quality, the ratings from AA to CCC may be modified by the addition of
a plus or minus sign to show relative standing within the major rating
categories.
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NR - indicates that no public rating has been requested, that
there is insufficient information on which to base a rating, or that Standard &
Poor's does not rate a particular type of obligation as a matter of policy. Debt
obligations of issuers outside the United States and its territories are rated
on the same basis as domestic corporate issues. The ratings measure the credit
worthiness of the obligor but do not take into account currency exchange and
related uncertainties.
Bond Investment Quality Standards: Under present commercial
bank regulations issued by the Comptroller of the Currency, bonds rated in the
top four categories (AAA, AA, A, BBB, commonly known as "Investment Grade"
ratings) are generally regarded as eligible for bank investment. In addition,
the Legal Investment Laws of various states may impose certain rating or other
standards for obligations eligible for investment by savings banks, trust
companies, insurance companies and fiduciaries generally.
Moody's Investors Service, Inc. A brief description of the
applicable Moody's rating symbols and their meanings follows:
Aaa - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuations
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than in
Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Some bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
NOTE: Bonds within the above categories which possess the strongest investment
attributes are designated by the symbol "1" following the rating.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal
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payments may be very moderate and thereby not well safeguarded during good and
bad times over the future. Uncertainty of position characterizes bonds in this
class.
B - Bonds which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa - Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest.
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C - Bonds which are rated C are the lowest rated class of
bonds and issue so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Duff & Phelps, Inc.: AAA-- highest credit quality, with
negligible risk factors; AA -- high credit quality, with strong protection
factors and modest risk, which may vary very slightly from time to time because
of economic conditions; A-- average credit quality with adequate protection
factors, but with greater and more variable risk factors in periods of economic
stress. The indicators "+" and "-" to the AA and A categories indicate the
relative position of a credit within those rating categories.
Fitch Investors Service LLP.: AAA -- highest credit quality,
with an exceptionally strong ability to pay interest and repay principal; AA --
very high credit quality, with very strong ability to pay interest and repay
principal; A -- high credit quality, considered strong as regards principal and
interest protection, but may be more vulnerable to adverse changes in economic
conditions and circumstances. The indicators "+" and "-" to the AA, A and BBB
categories indicate the relative position of credit within those rating
categories.
DESCRIPTION OF NOTE RATINGS
A Standard & Poor's note rating reflects the liquidity
concerns and market access risks unique to notes. Notes due in three years or
less will likely receive a note rating. Notes maturing beyond three years will
most likely receive a long-term debt rating. The following criteria will be used
in making that assessment.
- Amortization schedule (the larger the final maturity
relative to other maturities the more likely it will
be treated as a note).
- Source of Payment (the more dependent the issue is on
the market for its refinancing, the more likely it
will be treated as a note.) Note rating symbols are
as follows:
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- SP-1 Very strong or strong capacity to pay principal
and interest. Those issues determined to possess
overwhelming safety characteristics will be given a
plus (+) designation.
- SP-2 Satisfactory capacity to pay principal and
interest.
- SP-3 Speculative capacity to pay principal and
interest.
Moody's Short-Term Loan Ratings - Moody's ratings for state
and municipal short-term obligations will be designated Moody's Investment Grade
(MIG). This distinction is in recognition of the differences between short-term
credit risk and long-term risk. Factors affecting the liquidity of the borrower
are uppermost in importance in short-term borrowing, while various factors of
major importance in bond risk are of lesser importance over the short run.
Rating symbols and their meanings follow:
- MIG 1 - This designation denotes best quality. There
is present strong protection by established cash
flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
- MIG 2 - This designation denotes high quality.
Margins of protection are ample although not so large
as in the preceding group.
- MIG 3 - This designation denotes favorable quality.
All security elements are accounted for but this is
lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to
be less well established.
- MIG 4 - This designation denotes adequate quality.
Protection commonly regarded as required of an
investment security is present and although not
distinctly or predominantly speculative, there is
specific risk.
COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.: Commercial paper rated
"Prime" carries the smallest degree of investment risk. The modifiers 1, 2, and
3 are used to denote relative strength within this highest classification.
Standard & Poor's Ratings Group: "A" is the highest commercial
paper rating category utilized by Standard & Poor's Ratings Group which uses the
numbers 1+, 1, 2 and 3 to denote relative strength within its "A"
classification.
Duff & Phelps Inc.: Duff 1 is the highest commercial paper
rating category utilized by Duff & Phelps which uses + or - to denote relative
strength within this classification.
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Duff 2 represents good certainty of timely payment, with minimal risk factors.
Duff 3 represents satisfactory protection factors, with risk factors larger and
subject to more variation.
Fitch Investors Service LLP.: F-1+ -- denotes exceptionally
strong credit quality given to issues regarded as having strongest degree of
assurance for timely payment; F-1 -- very strong, with only slightly less degree
of assurance for timely payment than F-1+; F-2 -- good credit quality, carrying
a satisfactory degree of assurance for timely payment.
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APPENDIX "B"
------------
FUTURES AND OPTIONS
The following information should be read in conjunction with
the discussions of options and futures in the Funds' Prospectuses and elsewhere
in this Statement of Additional Information.
OPTIONS ON SECURITIES
An option on a security provides the purchaser, or "holder,"
with the right, but not the obligation, to purchase, in the case of a "call"
option, or sell, in the case of a "put" option, the security or securities
underlying the option, for a fixed exercise price up to a stated expiration
date. The holder pays a non-refundable purchase price for the option, known as
the "premium." The maximum amount of risk the purchaser of the option assumes is
equal to the premium plus related transaction costs, although the entire amount
may be lost. The risk of the seller, or "writer," however, is potentially
unlimited, unless the option is "covered," which is generally accomplished
through the writer's ownership of the underlying security, in the case of a call
option, or the writer's segregation of an amount of cash or securities equal to
the exercise price, in the case of a put option. If the writer's obligation is
not covered, it is subject to the risk of the full change in value of the
underlying security from the time the option is written until exercise.
Upon exercise of the option, the holder is required to pay the
purchase price of the underlying security, in the case of a call option, or to
deliver the security in return for the purchase price, in the case of a put
option. Conversely, the writer is required to deliver the security, in the case
of a call option, or to purchase the security, in the case of a put option.
Options on securities which have been purchased or written may be closed out
prior to exercise or expiration by entering into an offsetting transaction on
the exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities and options on indices of securities,
discussed below, are traded on national securities exchanges, such as the
Chicago Board Options Exchange and the New York Stock Exchange, which are
regulated by the Securities and Exchange Commission. The Options Clearing
Corporation guarantees the performance of each party to an exchange-traded
option, by in effect taking the opposite side of each such option. Options on
securities and indices purchased and written by the Portfolios may be traded on
NASDAQ rather than on an exchange. Any options not traded on an exchange must be
effected with primary government securities dealers recognized by the Board of
Governors of the Federal Reserve System.
An option position in an exchange traded option may be closed
out only on an exchange which provides a secondary market for an option of the
same series. Although the Funds will generally purchase or write only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular option at any particular time. In such event it might not be possible
to effect closing transactions in a particular option with the result that the
Funds would have to exercise
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the option in order to realize any profit. This would result in the Funds
incurring brokerage commissions upon the disposition of underlying securities
acquired through the exercise of a call option or upon the purchase of
underlying securities upon the exercise of a put option. If the Funds as covered
call option writers are unable to effect a closing purchase transaction in a
secondary market, unless the Funds are required to deliver the stock pursuant to
the assignment of an exercise notice, they will not be able to sell the
underlying security until the option expires.
Reasons for the potential absence of a liquid secondary market
on an exchange include the following: (i) there may be insufficient trading
interest in certain options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii) trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities; (iv) unusual or
unforeseen circumstances may interrupt normal operations on an exchange; (v) the
facilities of an exchange or a clearing corporation may not at all times be
adequate to handle current trading volume or (vi) one or more exchanges could,
for economic or other reasons decide or be compelled at some future date to
discontinue the trading of options (or a particular class or series of options)
in which event the secondary market on that exchange (or in the class or series
of options) would cease to exist, although outstanding options on that exchange
which had been issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms. There
is no assurance that higher than anticipated trading activity or other
unforeseen events might not, at a particular time, render certain of the
facilities of any of the clearing corporations inadequate and thereby result in
the institution by an exchange of special procedures which may interfere with
the timely execution of customers' orders. However, the Options Clearing
Corporation, based on forecasts provided by the U.S. exchanges, believes that
its facilities are adequate to handle the volume of reasonably anticipated
options transactions, and such exchanges have advised such clearing corporation
that they believe their facilities will also be adequate to handle reasonably
anticipated volume.
The use of over-the-counter options is discussed in the
Prospectuses. See "DERIVATIVE INVESTMENTS - Options on Securities."
OPTIONS ON STOCK INDICES
- ------------------------
In contrast to an option on a security, an option on a stock
index provides the holder with the right to make or receive a cash settlement
upon exercise of the option, rather than the right to purchase or sell a
security. The amount of this settlement is equal to (i) the amount, if any, by
which the fixed exercise price of the option exceeds (in the case of a call) or
is below (in the case of a put) the closing value of the underlying index on the
date of exercise, multiplied by (ii) a fixed "index multiplier." The purchaser
of the option receives this cash settlement amount if the closing level of the
stock index on the day of exercise is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. The writer of
the option is obligated, in return for the premium received, to make delivery of
this amount if the option is exercised. As in the case of options on securities,
the writer or holder may liquidate positions in stock index options prior to
exercise or expiration by entering into closing transactions on the
57
<PAGE> 134
exchange on which such positions were established, subject to the availability
of a liquid secondary market.
The index underlying a stock index option may be a
"broad-based" index, such as the Standard & Poor's 500 Index or the New York
Stock Exchange Composite Index, the changes in value of which ordinarily will
reflect movements in the stock market in general. In contrast, certain options
may be based on narrower market indices, such as the Standard & Poor's 100
Index, or on indices of securities of particular industry groups, such as those
of oil and gas or technology companies. A stock index assigns relative values to
the stock included in the index and the index fluctuates with changes in the
market values of the stocks so included.
FUTURES CONTRACTS ON FIXED INCOME
SECURITIES AND STOCK INDICES
- ----------------------------
A futures contract is a bilateral agreement providing for the
purchase and sale of a specified type and amount of a financial instrument, or
for the making and acceptance of a cash settlement, at a stated time in the
future, for a fixed price. By its terms, a futures contract provides for a
specified settlement date on which, in the case of the majority of interest rate
futures contracts, the fixed income securities underlying the contract are
delivered by the seller and paid for by the purchaser, or on which, in the case
of stock index futures contracts and certain interest rate futures contracts,
the difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and seller in cash.
Futures contracts differ from options in that they are bilateral agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. In addition, futures contracts call for settlement only on the
expiration date, and cannot be "exercised" at any other time during their term.
The purchase or sale of a futures contract also differs from
the purchase or sale of a security or the purchase of an option in that no
purchase price is paid or received. Instead, an amount of cash or cash
equivalent, which varies but may be as low as 5% or less of the value of the
contract, must be deposited with the broker as "initial margin." Subsequent
payments to and from the broker, referred to as "variation margin," are made on
a daily basis as the value of the index or instrument underlying the futures
contract fluctuates, making positions in the futures contract more or less
valuable, a process known as "marking to the market."
A futures contract may be purchased or sold only on an
exchange, known as a "contract market," designated by the Commodity Futures
Trading Commission for the trading of such contract, and only through a
registered futures commission merchant which is a member of such contract
market. A commission must be paid on each completed purchase and sale
transaction. The contract market clearing house guarantees the performance of
each party to a futures contract by in effect taking the opposite side of such
contract. At any time prior to the expiration of a futures contract, a trader
may elect to close out its position by taking an opposite position on the
contract market on which the position was entered into, subject to the
availability of a secondary market, which will operate to terminate the initial
position. At that time, a final determination of variation margin is made and
any loss experienced by the trader is required to
58
<PAGE> 135
be paid to the contract market clearing house while any profit due to the trader
must be delivered to it.
Interest rate futures contracts currently are traded on a
variety of fixed income securities, including long-term U.S. Treasury Bonds,
Treasury Notes, Government National Mortgage Association modified pass-through
mortgage-backed securities, U.S. Treasury Bills, bank certificates of deposit
and commercial paper.
A stock index futures contract provides for the making and
acceptance of a cash settlement in much the same manner as the settlement of an
option on a stock index. The types of indices underlying stock index futures
contracts are essentially the same as those underlying stock index options, as
described above. The index assigns weighted values to the securities included in
the index and its composition is changed periodically.
OPTIONS ON FUTURES CONTRACTS
- ----------------------------
An option on a futures contract provides the holder with the
right to enter into a "long" position in the underlying futures contract, in the
case of a call option, or a "short" position in the underlying futures contract
in the case of a put option, at a fixed exercise price to a stated expiration
date. Upon exercise of the option by the holder, the contract market clearing
house establishes a corresponding short position for the writer of the option,
in the case of a call option, or a corresponding long position, in the case of a
put option. In the event that an option is exercised, the parties will be
subject to all the risks associated with the trading of futures contracts, such
as payment of variation margin deposits. In addition, the writer of an option on
a futures contract, unlike the holder, is subject to initial and variation
margin requirements on the option position.
A position in an option on a futures contract may be
terminated by the purchaser or seller prior to expiration by effecting a closing
purchase or sale transaction, subject to the availability of a liquid secondary
market, which is the purchase or sale of an option of the same series (I.E., the
same exercise price and expiration date) as the option previously purchased or
sold. The difference between the premiums paid and received represents the
trader's profit or loss on the transaction.
An option, whether based on a futures contract, a stock index
or a security, becomes worthless to the holder when it expires. Upon exercise of
an option, the exchange or contract market clearing house assigns exercise
notices on a random basis to those of its members which have written options of
the same series and with the same expiration date. A brokerage firm receiving
such notices then assigns them on a random basis to those of its customers which
have written options of the same series and expiration date. A writer therefore
has no control over whether an option will be exercised against it, nor over the
time of such exercise.
59
<PAGE> 136
ALPINE EQUITY TRUST
PART C - OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The following financial statements are incorporated by reference to the
Registrant's Annual Report, as filed with the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
Alpine U.S. Real Estate Alpine International
Equity Fund Real Estate Equity Fund
--------------------------- ---------------------------
<S> <C> <C>
Class A Financial For each of the years in For each of the years in
Highlights the two-year period ended the two-year period ended
September 30, 1997; and for October 31, 1997; and for
the period from March 10, the period from February
1995 (commencement of 10, 1995 (commencement of
operations) to operations) to October 31,
September 30, 1995 1995
Class B Financial For each of the years in For each of the years in
Highlights the two-year period ended the two-year period ended
September 30, 1997; and for October 31, 1997; and for
the period from March 10, the period from February
1995 (commencement of 10, 1995 (commencement of
operations) to operations) to October 31,
September 30, 1995 1995
Class C Financial For each of the years in For each of the years in
Highlights the two-year period ended the two-year period ended
September 30, 1997; and for October 31, 1997; and for
the period from March 10, the period from February
1995 (commencement of 10, 1995 (commencement of
operations) to operations) to October 31,
September 30, 1995 1995
</TABLE>
<PAGE> 137
<TABLE>
<CAPTION>
Alpine U.S. Real Estate Alpine International
Equity Fund Real Estate Equity Fund
--------------------------- ---------------------------
<S> <C> <C>
Class Y Financial For each of the years in For each of the years in
Highlights the three-year period ended the two-year period ended
September 30, 1997; for the October 31, 1997; for the
nine-month period ended periods from October 1,
September 30, 1994; and for 1995 to October 31, 1995
the period from and December 31, 1993 to
September 1, 1993 September 30, 1994; for
(commencement of each of the years in the
operations) to December 31, four-year period ended
1993. December 31, 1993; and for
the period from February 1,
1989 (commencement of
Operations) to December 31,
1989.
Schedule of Investments September 30, 1997 October 31, 1997
Statement of Assets and September 30, 1997 October 31, 1997
Liabilities
Statement of Operations Year ended Year ended October 31,
September 30, 1997 1997
Statement of Changes in For each of the years in For each of the years in
Net Assets the two-year period ended the two-year period ended
September 30, 1997 October 31, 1997
Notes to Financial
Statements
Independent Accountants' November 11, 1997 December 19, 1997
Report
</TABLE>
<PAGE> 138
(b) Exhibits
<TABLE>
<CAPTION>
Number Description
<S> <C>
1(A) Declaration of Trust*
1(B) Certificate of Amendment to Declaration of Trust*
1(C) Certificate of Designation, dated April 13, 1998 (establishing new series)**
2(A) By-Laws*
2(B) Amendment to By-Laws, adopted September 28, 1998**
3 None
4 Instruments Defining Rights of Shareholders*
5 Investment Advisory Agreement, as amended April 13, 1998**
6 Distribution Agreement**
7 None
8 Form of Custodian Agreement**
9(A) Management and Administration Agreement**
9(B) Transfer Agency Agreement**
9(C) Fund Accounting Agreement**
9(D) Omnibus Fee Agreement**
10 Opinion of Counsel*
11 Consent of PricewaterhouseCoopers LLP, independent accountants**
12 None
13 None
14 None
15 Rule 12b-1 Distribution Plans*
15(A) Distribution Plan for Alpine U.S. Real Estate Equity Fund*
15(B) Distribution Plan for Alpine International Real Estate Equity Fund*
15(C) Form of Distribution Plan for Alpine Realty Income and Growth Fund**
16 Not applicable
17 Financial Data Schedules*
18 Multiple Class Plan*
<FN>
- ----------------------
* Incorporated by reference to Registrant's previous filings on Form N-1A.
** Filed herewith.
</TABLE>
<PAGE> 139
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Stephen A. Lieber, the father of the controlling person of Alpine
Management & Research, L.L.C., the investment adviser of Registrant, owned
36.238% of the outstanding Class Y shares of Alpine International Real Estate
Equity Fund as of October 16, 1998, and may therefore be presumed to "control"
that Fund.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- AS OF OCTOBER 5, 1998
---------------------
<S> <C>
ALPINE U.S. REAL ESTATE EQUITY FUND:
- ------------------------------------
Class Y Shares of Beneficial Interest 1,027
Class A Shares of Beneficial Interest 570
Class B Shares of Beneficial Interest 652
Class C Shares of Beneficial Interest 161
ALPINE INTERNATIONAL REAL ESTATE EQUITY FUND:
- ---------------------------------------------
Class Y Shares of Beneficial Interest 1,202
Class A Shares of Beneficial Interest 22
Class B Shares of Beneficial Interest 45
Class C Shares of Beneficial Interest 7
ALPINE REALTY INCOME AND GROWTH FUND
- ------------------------------------
Class Y Shares of Beneficial Interest None
Class A Shares of Beneficial Interest None
Class B Shares of Beneficial Interest None
</TABLE>
ITEM. 27. INDEMNIFICATION
Article XI of the Registrant's By-laws contains the following
provisions regarding indemnification of Trustees and officers:
<PAGE> 140
SECTION 11.1 Actions Against Trustee or Officer. The Trust shall
indemnify any individual who is a present or former Trustee or officer of the
Trust and who, by reason of his position as such, was, is, or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
any action or suit by or in the right of the Trust) against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by him in connection with the claim, action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon the plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
SECTION 11.2 Derivative Actions Against Trustees or Officers. The Trust
shall indemnify any individual who is a present or former Trustee or officer of
the Trust and who, by reason of his position as such, was, is, or is threatened
to be made a party to any threatened, pending or completed action or suit by or
on behalf of the Trust to obtain a judgment or decree in its favor, against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust, except that no indemnification shall be made in
respect of any claim, issue or matter as to which the individual has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Trust, except to the extent that the court in which the action or
suit was brought determines upon application that, despite the adjudication of
liability but in view of all circumstances of the case, the person is fairly and
reasonably entitled to indemnity for those expenses which the court shall deem
proper, provided such Trustee or officer is not adjudged to be liable by reason
of his willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
SECTION 11.3 Expenses of Defense. In defense of any action, suit or
proceeding referred to in Section 11.1 or 11.2 or in defense of any claim,
issue, or matter therein, a Trustee or officer of the Trust who reasonably
believed his or her action to be in the best interests of the Trust shall be
indemnified against expenses, including attorneys' fees, actually and reasonably
incurred by him in connection therewith, subject to the requirements of section
11.4.
<PAGE> 141
SECTION 11.4 Required Standard of Conduct.
(a) Unless a court orders otherwise, any indemnification under Section
11.1 or 11.2 may be made by the Trust only as authorized in the specific case
after a determination that indemnification of the Trustee or officer is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Section 11.1 or 11.2. The determination shall be made by:
(i) the Trustees, by a majority vote of a quorum consisting of
Trustees who were not parties to the action, suit or proceeding; or if the
required quorum is not obtainable, or if a quorum of disinterested Trustees so
directs,
(ii) an independent legal counsel in a written opinion.
(b) Nothing contained in this Article XI shall be construed to protect
any Trustee or officer of the Trust against any liability to the Trust or its
Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office (any such conduct being hereinafter called
"Disabling Conduct"). No indemnification shall be made pursuant to this Article
XI unless:
(i) There is a final determination on the merits by a court or
other body before whom the action, suit or proceeding was brought that the
individual to be indemnified was not liable by reason of Disabling Conduct; or
(ii) In the absence of such a judicial determination, there is
a reasonable determination, based upon a review of the facts, that such
individual was not liable by reason of Disabling Conduct, which determination
shall be made by:
(A) A majority of a quorum of Trustees who are
neither "interested persons" of the Trust, as defined in section 2(a) (19) of
the 1940 Act, nor parties to the action, suit or proceeding; or
(B) An independent legal counsel in a written
opinion.
SECTION 11.5 Advance Payments. Notwithstanding any provision of this
Article XI, any advance payment of expenses by the Trust to any Trustee or
officer of the Trust shall be made only upon the undertaking by or on behalf of
such Trustee or officer to repay the advance unless it is ultimately determined
that he is entitled to indemnification as above provided, and only if one of the
following conditions is met:
(a) the Trustee or officer to be indemnified provides a security for
his undertaking; or
(b) The Trust is insured against losses arising by reason of any lawful
advances; or
<PAGE> 142
(c) There is a determination, based on a review of readily available
facts, that there is reason to believe that the Trustee or officer to be
indemnified ultimately will be entitled to indemnification, which determination
shall be made by:
(i) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a) (19) of the 1940
Act, nor parties to the action, suit or proceeding; or
(ii) An independent legal counsel in a written opinion.
SECTION 11.6 Former Trustees and Officers. The indemnification provided
by this Article XI shall continue as to an individual who has ceased to be a
Trustee or officer of the Trust and inure to the benefit of the legal
representatives of such individual and shall not be deemed exclusive of any
other rights to which any Trustee, officer, employee or agent of the Trust may
be entitled under any agreement, vote of Trustees or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding office as such; provided, that no Person may satisfy any right of
indemnity granted herein or to which he may be otherwise entitled, except out of
the Trust Property, and no Shareholder shall be personally liable with respect
to any claim for indemnity.
SECTION 11.7 Insurance. The Trust may purchase and maintain insurance
on behalf of any person who is or was a Trustee, officer, employee, or agent of
the Trust, against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such. However, the Trust shall
not purchase insurance to indemnify any Trustee or officer against liability for
any conduct in respect of which the 1940 Act prohibits the Trust itself from
indemnifying him.
SECTION 11.8 Other Rights to Indemnification. The indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any By-Law, agreement, vote
of Shareholders or disinterested Trustees or otherwise.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer, or controlling person of the Registrant in
connection with the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 143
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The information required by this item with respect to Alpine Management
& Research, L.L.C. is incorporated by reference to the Form ADV (File No.
801-46522) of Alpine Asset Management Corp.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) BISYS Fund Services Limited Partnership ("BISYS") acts as principal
underwriter for the Trust and each series thereof. BISYS also serves as
principal underwriter for the following investment companies:
The ARCH Fund, Inc.
American Performance Funds
AmSouth Mutual Funds
The BB&T Mutual Funds Group
The Coventry Group
ESC Strategic Funds, Inc.
The Eureka Funds
Fountain Square Funds
Hirtle Callaghan Trust
HSBC Family of Funds
INTRUST Funds Trust
The Infinity Mutual Funds, Inc.
The Kent Funds
Magna Funds
Meyers Investment Trust
MMA Praxis Mutual Funds
M.S.D.&T. Funds
Pacific Capital Funds
Parkstone Group of Funds
The Parkstone Advantage Funds
Pegasus Funds
The Republic Advisors Funds Trust
Puget Sound Alternative Investment Series Trust
The Republic Funds Trust
The Riverfront Funds, Inc.
SBSF Funds, Inc. d/b/a Key Mutual Funds
Sefton Funds
The Sessions Group
Summit Investment Trust
Variable Insurance Funds
The Victory Portfolios
The Victory Variable Funds
Vintage Funds, Inc.
(b) The following table sets forth the indicated information with
respect to each director and officer of BISYS:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH
NAME UNDERWRITER POSITIONS WITH TRUST
- ---- -------------------------- --------------------
<S> <C> <C>
WC Subsidiary Corp. Sole Limited Partner None
150 Clove Rd.
Little Falls, NJ 07424
BISYS Fund Services, Inc. Sole Limited Partner None
3435 Stelzer Road
Columbus, OH 43219
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and Rule 31a-1 thereunder are maintained at
one of the following locations:
BISYS Fund Services, Inc., BISYS Fund Services Ohio, Inc. and
BISYS Fund Services Limited Partnership, each located at 3435
Stelzer Road, Columbus, Ohio 43219
Alpine Management & Research, L.L.C., 122 East 42nd Street,
37th Floor, New York, New York 10168 (records required by
paragraphs (a)(4), (a)(5), (a)(6), (a)(10), (a)(11), and (f)
of Rule 31a-1)
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
<PAGE> 144
ITEM 32. UNDERTAKINGS
The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE> 145
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Post-Effective Amendment No. 19 to the Registration Statement to be signed
on its behalf by the undersigned, thereto duly authorized, in the City of New
York, and State of New York on the 28th day of September, 1998.
ALPINE EQUITY TRUST
By: /s/ Samuel A. Lieber
-------------------------
Name: Samuel A. Lieber, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 19 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ Samuel A. Lieber Chairman September 28, 1998
- ------------------------
Samuel A. Lieber
/s/ Laurence B. Ashkin Trustee September 28, 1998
- ---------------------------
Laurence B. Ashkin
/s/ Foster Bam Trustee September 28, 1998
- ---------------------------
Foster Bam
/s/ H. Guy Leibler Trustee September 28, 1998
- ---------------------------
H. Guy Leibler
</TABLE>
<PAGE> 1
EXHIBIT 1(C)
ALPINE EQUITY TRUST
(F/K/A EVERGREEN REAL ESTATE EQUITY TRUST)
Certificate of Designation
The undersigned, constituting the Board of the Trustees of ALPINE
EQUITY TRUST (hereinafter referred to as the "Trust"), a trust with transferable
shares of the type commonly called a Massachusetts business trust, DO HEREBY
CERTIFY THAT, pursuant to the authority conferred upon the Trustees of the Trust
by Section 6.6(j) of the Declaration of Trust dated October 26, 1988, as amended
(hereinafter referred to as the "Declaration of Trust"), and by the affirmative
vote of a Majority of the Trustees at a meeting duly called and held on April
13, 1998, the Declaration of Trust is amended as follows:
(1) There is hereby established and designated as of that date Alpine
Realty Retirement Fund (hereinafter referred to as "Realty Fund"). The
beneficial interest in Realty Fund shall be divided into Shares having a nominal
or par value of $.0001 per Share, of which an unlimited number may be issued,
which Shares shall represent interest only in Realty Fund. The Shares of Realty
Fund shall have the rights and preferences provided in Section 6.6(a) through
6.6(k) of the Declaration of Trust.
a. AMENDMENT, ETC. Subject to the provisions and limitations
of Section 9.3 of the Declaration of Trust and applicable law, this Certificate
of Designation may be amended by an instrument signed in writing by a Majority
of the Trustees (or by an officer of the Trust pursuant to the vote of a
Majority of the Trustees), provided that, if any amendment adversely affects the
rights of the Shareholders of Realty Fund, such amendment may be adopted by an
instrument signed in writing by a Majority of the Trustees (or an officer of the
Trust pursuant to the vote of a Majority of the Trustees) when authorized to do
so by the vote in accordance with Section 1.2(h) of the Declaration of Trust of
the holders of a majority of all the Shares of Realty Fund outstanding and
entitled to vote.
b. INCORPORATION OF DEFINED TERMS. All capitalized terms which
are not defined herein shall have the same meanings as are assigned to those
terms in the Declaration of Trust filed with the Secretary of State of the
Commonwealth of Massachusetts.
The Trustees further direct that, upon the execution of this
Certificate of Designation, the Trust take all necessary action to file a copy
of this Certificate of Designation with the Secretary of State of the
Commonwealth of Massachusetts and that any other place required by law or by the
Declaration of Trust.
<PAGE> 2
This Certificate of Designation may be executed in
counterparts, each of which shall, for all purposes, be deemed to be an
original, and all of which when taken together, shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, each of the undersigned have set their
hand this 13th day of April, 1998.
/s/ Samuel A. Lieber
--------------------------
Samuel A. Lieber, Chairman
/s/ Laurence B. Ashkin
--------------------------
Laurence B. Ashkin
/s/ Foster Bam
--------------------------
Foster Bam
/s/ H. Guy Leibler
--------------------------
H. Guy Leibler
<PAGE> 3
ACKNOWLEDGMENT
NEW YORK
New York County, ss.: April 13, 1998
Then personally appeared the above named individuals and acknowledged the
foregoing instrument to be their free act and deed. Before me,
/s/ Mark J. McKeefry
--------------------------
Notary Public
My commission expires:
June 13, 1999
<PAGE> 1
EXHIBIT 2(B)
BY-LAW AMENDMENT
adopted September 28, 1998
SECTION 11.3 EXPENSES OF DEFENSE. In defense of any action, suit or proceeding
referred to in Section 11.1 or 11.2 or in defense of any claim, issue, or matter
therein, a Trustee or officer of the Trust who reasonably believed his or her
action or inaction to be in the best interests of the Trust shall be indemnified
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection therewith, subject to the requirements of Section 11.4.
<PAGE> 1
Exhibit 5
February 17, 1998
as amended April 13, 1998
Alpine Management & Research, LLC
122 East 42nd Street, 37th Floor
New York, New York 10168
Dear Sirs:
The undersigned, Alpine Equity Trust (the "Trust") is an
investment company organized as a series company, which means that it may offer
separate classes (or series) of shares comprising different investment
portfolios. Presently, the Trust offers [three] investment funds: Alpine U.S.
Real Estate Equity Fund, Alpine International Real Estate Equity Fund and Alpine
Realty Retirement Fund (the "Funds"). The Trust desires to employ its capital by
investing and reinvesting the same in securities in accordance with the
limitations specified in its Declaration of Trust and in the Prospectus for each
Fund as from time to time in effect, copies of which have been, or will be,
submitted to you, and in such manner and to such extent as may from time to time
be approved by the Trustees of the Trust. Subject to the terms and conditions of
this Agreement, the Trust desires to employ your company (the "Adviser") and the
Adviser desires to be so employed, to supervise and assist in the management of
the business of each Fund. Accordingly, this will confirm our agreement as
follows:
1. The Adviser shall, on a continuous basis, furnish reports,
statistical and research services, and make investment decisions with respect to
the investments of each Fund. The Adviser shall use its best judgment in
rendering these services to the Trust, and the Trust agrees as an inducement to
the Adviser undertaking such services that the Adviser shall not be liable for
any mistake of judgment or in any other event whatsoever, except for lack of
good faith, provided that nothing herein shall be deemed to protect the Adviser
against any liability to the Trust or to the shareholders of the Trust (or any
Fund) to which it would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Adviser's duties
hereunder or by reason of the Adviser's reckless disregard of its obligations
and duties hereunder.
2. The Adviser agrees that it will not make short sales of the
Trust's shares of beneficial interest.
3. The Adviser agrees that in any case where an officer or
director of the Adviser is also an officer or director of another corporation,
and the purchase or sale of securities issued by such other corporation is under
consideration, such officer or director shall abstain from participation in any
decision made on behalf of the Trust (or any Fund) to purchase or sell any
securities issued by such other corporation.
4. The Adviser will provide office facilities to the Trust.
Each Fund will pay the cost of all of its expenses and liabilities, including
expenses and liabilities incurred in connection with maintaining its
registration under the Investment Company Act of 1940, as amended (the "Act"),
and the Securities Act of 1933, as amended, and maintaining any
<PAGE> 2
registrations or qualifications under the securities laws of the states in which
the Trust's shares are registered or qualified for sale, subsequent
registrations and qualifications, costs and expenses of engraving and printing
share certificates, the costs and expenses of preparing, printing, including
typesetting, and distributing prospectuses and statements of additional
information of the Trust and the Funds and supplements thereto to the Trust's
shareholders, mailing, brokerage, issue and transfer taxes on sales of Fund
securities, custodian and stock transfer charges, printing, legal and auditing
expenses, expenses of shareholders' meetings, and reports to shareholders;
provided, however, that the Adviser's fee will be reduced by, or the Adviser
will reimburse the Fund for, any amount necessary to prevent such expenses and
liabilities (exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, which extraordinary expenses are determined by the Trust
and the Adviser, but inclusive of the Adviser's fee) from exceeding the most
restrictive of the expense limitations imposed by state securities commissions
of the states in which the Trust's shares are then registered or qualified for
sale.
5. In consideration of the Adviser performing its obligations
hereunder, the Trust will pay to the Adviser: (a) a monthly fee computed at the
annual rates of 1% of the average daily net assets of Alpine U.S. Real Estate
Equity Fund on the first $750 million of assets, 0.9% of the average daily net
assets of Alpine U.S. Real Estate Equity Fund on the next $250 million in
assets, and 0.8% of the average daily net assets of Alpine U.S. Real Estate
Equity Fund in excess of $1 billion; (b) a monthly advisory fee computed at the
annual rate of 1% of the average daily net assets of Alpine International Real
Estate Equity Fund; and (c) a monthly advisory fee computed at the annual rate
of 1% of the average daily net assets of Alpine Realty Retirement Fund on the
first $750 million of assets, 0.9% of the average daily net assets of Alpine
Realty Retirement Fund on the next $250 million in assets, and 0.8% of the
average daily net assets of Alpine Realty Retirement Fund in excess of $1
billion.
6. The Trust understands that the Adviser acts as investment
adviser to other investment companies, and that the Adviser and its affiliates
may act as investment advisers to individuals, partnerships, corporations,
pension funds and other entities, and the Trust confirms that it has no
objection to the Adviser or its affiliates so acting.
7. This Agreement shall be in effect until February 17, 2000.
This Agreement shall continue in effect from year to year thereafter with
respect to each Fund, provided it is approved, at least annually, in the manner
required by the Act. The Act requires that, with respect to each Fund, this
Agreement and any renewal thereof be approved by a vote of a majority of
Trustees of the Trust who are not parties thereto or interested persons (as
defined in the Act) of any such party, cast in person at a meeting duly called
for the purpose of voting on such approval, and by a vote of the Trustees of the
Trust or a majority of the outstanding voting securities of the Fund. A vote of
a majority of the outstanding voting securities of a Fund is defined in the Act
to mean a vote of the lesser of (i) more than 50% of the outstanding voting
securities of the Fund or (ii) 67% or more of the voting securities present at
the meeting if more than 50% of the outstanding voting securities are present or
represented by proxy.
-2-
<PAGE> 3
This Agreement may be terminated at any time with respect to a
Fund, without payment of any penalty, on sixty (60) days' prior written notice
by a vote of a majority of the Funds' outstanding voting securities, by a vote
of a majority of the Trustees of the Trust, or by the Adviser. This Agreement
shall be automatically terminated in the event of its assignment (as such term
is defined in the Act).
8. This Agreement is made by the Trust pursuant to authority
granted by the Trustees, and the obligations created hereby are not binding on
any of the Trustees or shareholders of the Trust individually, but bind only the
property of the Trust.
If the foregoing is in accordance with your understanding,
please so indicate by signing and returning to the undersigned the enclosed copy
hereof.
Very truly yours,
ALPINE EQUITY TRUST
By:
----------------------
Name:
Title:
ACCEPTED:
ALPINE MANAGEMENT & RESEARCH, LLC
By:
--------------------
Name:
Title:
-3-
<PAGE> 1
EXHIBIT 6
DISTRIBUTION AGREEMENT
AGREEMENT made this 27th day of April, 1998, between ALPINE
EQUITY TRUST (the "Trust"), a Massachusetts business trust having its principal
place of business at 3435 Stelzer Road, Columbus, Ohio 43219, and BISYS FUND
SERVICES LIMITED PARTNERSHIP d/b/a BISYS FUND SERVICES ("Distributor"), having
its principal place of business at 3435 Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust is an open-end management investment
company, organized as a Massachusetts business trust and registered with the
Securities and Exchange Commission (the "Commission") under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the
distributor of the units of beneficial interest ("Shares") of each of the
investment portfolios of the Trust (such portfolios being referred to
individually as a "Fund" and collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and
covenants herein set forth, the parties agree as follows:
1. SERVICES AS DISTRIBUTOR.
1.1 Distributor will act as agent for the distribution of the
Shares covered by the registration statement and prospectus of the Trust then in
effect under the Securities Act of 1933, as amended (the "Securities Act"). As
used in this Agreement, the term "registration statement" shall mean Parts A
(the prospectus), B (the Statement of Additional Information) and C of each
registration statement that is filed on Form N-1A, or any successor thereto,
with the Commission, together with any amendments thereto. The term "prospectus"
shall mean each form of prospectus and Statement of Additional Information used
by the Funds for delivery to shareholders and prospective shareholders after the
effective dates of the above referenced registration statements, together with
any amendments and supplements thereto.
1.2 Distributor agrees to use appropriate efforts to solicit
orders for the sale of the Shares and will undertake such advertising and
promotion as it believes reasonable in connection with such solicitation. The
Trust understands that Distributor is now and may in the future be the
distributor of the shares of several investment companies or series (together,
"Companies") including Companies having investment objectives similar to those
of the Trust. The Trust further understands that investors and potential
investors in the Trust may invest in shares of such other Companies. The Trust
agrees that Distributor's duties to such Companies shall not be deemed in
conflict with its duties to the Trust under this paragraph 1.2.
<PAGE> 2
Distributor shall, at its own expense, finance appropriate
activities which it deems reasonable, which are primarily intended to result in
the sale of the Shares, including, but not limited to, advertising, compensation
of underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current Shareholders, and the printing and mailing of
sales literature.
1.3 In its capacity as distributor of the Shares, all
activities of Distributor and its partners, agents, and employees shall comply
with all applicable laws, rules and regulations, including, without limitation,
the 1940 Act, all rules and regulations promulgated by the Commission thereunder
and all rules and regulations adopted by any securities association registered
under the Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons, during
normal business hours, to respond to telephone questions with respect to the
Trust.
1.5 Distributor will promptly transmit any orders received by
it for purchase or redemption of the Shares to the transfer agent and custodian
for the Funds.
1.6 Whenever in their judgment such action is warranted by
unusual market, economic or political conditions, or by abnormal circumstances
of any kind, the Trust's officers may decline to accept any orders for, or make
any sales of, the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as principal
if it chooses to enter into selling agreements with selected dealers or others.
1.8 The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor may designate.
1.9 The Trust shall furnish from time to time, for use in
connection with the sale of the Shares, such information with respect to the
Funds and the Shares as Distributor may reasonably request; and the Trust
warrants that the statements contained in any such information shall fairly show
or represent what they purport to show or represent. The Trust shall also
furnish Distributor upon request with: (a) one copy of an unaudited semi-annual
statement of the Funds' books and accounts prepared by the Trust, (b) one copy
of a monthly itemized list of the securities in the Funds, (c) one copy of a
monthly balance sheet as soon as practicable after the end of each month, and
(d) from time to time such additional information regarding the financial
condition of the Funds as Distributor may reasonably request.
1.10 The Trust represents to Distributor that, with respect to
the Shares, all registration statements and prospectuses filed by the Trust with
the Commission under
2
<PAGE> 3
the Securities Act have been carefully prepared in conformity, in all material
respects, with requirements of said Act and rules and regulations of the
Commission thereunder. The registration statement and prospectus contain all
statements required to be stated therein in conformity, in all material
respects, with said Act and the rules and regulations of said Commission and all
statements of fact contained in any such registration statement and prospectus
are true and correct in all material respects. Furthermore, neither any
registration statement nor any prospectus includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of the
Shares. Distributor may submit to the Trust a written request that the Trust's
registration statement be amended or that the prospectus of one or more Funds be
supplemented when, in the opinion of Distributor, such amendment or supplement
is necessary to ensure that Distributor is in compliance with applicable laws,
rules or regulations including, but not limited to, Federal and state securities
laws and the Conduct Rules of the National Association of Securities Dealers,
Inc. In the event Distributor submits such a request, the Trust shall propose an
amendment or amendments and/or a supplement or supplements within fifteen days
after receipt of such request. If such a proposal is not made by the Trust or,
if such a proposal is not consistent in all material respects with Distributor's
request, then Distributor may, at its option, terminated this Agreement
effective immediately.
1.11 The Distributor is not authorized to give any information
or to make any representations, other than those contained in the Trust's
registration statement or in advertisements or sales literature prepared on
behalf of the Trust, or authorized by the Trust for distribution in connection
with the sale of the Shares. The Trust agrees to indemnify, defend and hold
Distributor, its several partners and employees, and any person who controls
Distributor within the meaning of Section 15 of the Securities Act free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and reasonable counsel fees incurred in connection therewith) which
Distributor, its partners and employees, or any such controlling person, may
incur under the Securities Act or under common law or otherwise, arising out of
or based upon any untrue statement, or alleged untrue statement, of a material
fact contained in any registration statement or any prospectus or arising out of
or based upon any omission, or alleged omission, to state a material fact
required to be stated in either any registration statement or any prospectus or
necessary to make the statements in either thereof not misleading; provided,
however, that the Trust's agreement to indemnify Distributor, its partners or
employees, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of any statements or
representations as are contained in any prospectus and in such financial and
other statements as are furnished in writing to the Trust by Distributor or
arising out of or based upon any omission or alleged omission to state a
material fact in connection with the giving of such information required to be
stated in such answers or necessary to make the answers not misleading; and
further provided that the Trust's agreement to indemnify Distributor and the
Trust's representations and warranties hereinbefore set forth in paragraph 1.10
shall not be deemed to cover any liability to the Trust or its Shareholders to
which Distributor would
3
<PAGE> 4
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of its duties, or by reason of Distributor's reckless
disregard of its obligations and duties under this Agreement. The Trust's
agreement to indemnify Distributor, its partners and employees and any such
controlling person, as aforesaid, is expressly conditioned upon the Trust being
notified of any action brought against Distributor, its partners or employees,
or any such controlling person, such notification to be given by letter or by
telegram addressed to the Trust at its principal office and sent to the Trust by
the person against whom such action is brought, within 10 days after the summons
or other first legal process shall have been served. The failure to so notify
the Trust of any such action shall not relieve the Trust from any liability
which the Trust may have to the person against whom such action is brought by
reason of any such untrue, or allegedly untrue, statement or omission, or
alleged omission, otherwise than on account of the Trust's indemnity agreement
contained in this paragraph 1.11. The Trust will be entitled to assume the
defense of any suit brought to enforce any such claim, demand or liability, but,
in such case, such defense shall be conducted by counsel of good standing chosen
by the Trust and approved by Distributor, which approval shall not be
unreasonably withheld. In the event the Trust elects to assume the defense of
any such suit and retain counsel of good standing approved by Distributor, the
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but in case the Trust does not elect
to assume the defense of any such suit, or in case Distributor reasonably does
not approve of counsel chosen by the Trust, the Trust will reimburse
Distributor, its partners and employees, or the controlling person or persons
named as defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by Distributor or them. The Trust's
indemnification agreement contained in this paragraph 1.11 and the Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
Distributor, its partners and employees, or any controlling person, and shall
survive the delivery of any Shares.
This Agreement of indemnity will inure exclusively to
Distributor's benefit, to the benefit of its several partners and employees, and
their respective estates, and to the benefit of the controlling persons and
their successors. The Trust agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against the Trust or any of its
officers or Trustees in connection with the issue and sale of any Shares.
1.12 Distributor agrees to indemnify, defend and hold the
Trust, its several officers and Trustees and any person who controls the Trust
within the meaning of Section 15 of the Securities Act free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands, or liabilities and any
counsel fees incurred in connection therewith) which the Trust, its officers or
Trustees or any such controlling person, may incur under the Securities Act or
under common law or otherwise, but only to the extent that such liability or
expense incurred by the Trust, its officers or Trustees or such controlling
person resulting from such claims or demands, shall arise out of or be based
upon any
4
<PAGE> 5
information furnished in writing by Distributor to the Trust and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by Distributor to the
Trust required to be stated in such answers or necessary to make such
information not misleading. In case any action shall be brought against the
Trust or any person so indemnified, in respect of which indemnity may be sought
against Distributor, Distributor shall have the rights and duties given to the
Trust, and each person so indemnified shall have the rights and duties given to
Distributor under paragraph 1.11 hereof.
1.13 No Shares shall be offered by either Distributor or the
Trust under any of the provisions of this Agreement and no orders for the
purchase or sale of Shares hereunder shall be accepted by the Trust if and so
long as the effectiveness of the registration statement then in effect or any
necessary amendments thereto shall be suspended under any of the provisions of
the Securities Act or if and so long as a current prospectus as required by
Section 10(b)(2) of said Act is not on file with the Commission; provided,
however, that nothing contained in this paragraph 1.13 shall in any way restrict
or have an application to or bearing upon the Trust's obligation to repurchase
Shares from any Shareholder in accordance with the provisions of the Trust's
prospectus, Agreement and Declaration of Trust, or Bylaws.
1.14 The Trust agrees to advise Distributor as soon as
reasonably practical by a notice in writing delivered to Distributor or its
counsel:
(a) of any request by the Commission for amendments to
the registration statement or prospectus then in
effect or for additional information;
(b) in the event of the issuance by the Commission of any
stop order suspending the effectiveness of the
registration statement or prospectus then in effect
or the initiation by service of process on the Trust
of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration
statement or prospectus then in effect or which
requires the making of a change in such registration
statement or prospectus in order to make the
statements therein not misleading; and
(d) of all action of the Commission with respect to any
amendment to any registration statement or prospectus
which may from time to time be filed with the
Commission.
For purposes of this section, informal requests by or acts of
the Staff of the Commission shall not be deemed actions of or requests by the
Commission.
5
<PAGE> 6
1.15 Distributor agrees on behalf of itself and its partners
and employees to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and its prior,
present or potential Shareholders, and not to use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except, after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where Distributor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
1.16 This Agreement shall be governed by the laws of the
State of Ohio.
1.17 In the event Distributor purchases the initial shares of
the Trust for purposes of satisfying the minimum net worth requirements set
forth in Section 14(a) of the 1940 Act, and a notice of termination is
subsequently given or this Agreement is otherwise terminated pursuant to Section
6 herein for any reason prior to the time that organizational expenses incurred
by the Trust have been fully amortized, then the Trust shall either (i) cause
the successor distributor of the shares (the "Successor Distributor") to pay to
Distributor, within ten (10) days prior to the termination of this Agreement, an
amount of cash that is sufficient to purchase the initial shares that are held
by Distributor or (ii) enable Distributor to redeem the initial shares of the
Trust that it holds by causing the Successor Distributor to contribute to the
Trust, within ten (10) days prior to the termination of this Agreement, any
unamortized organizational costs in the same proportion as the number of initial
shares being redeemed bears to the number of initial shares outstanding at the
time of such contribution. In the latter case, Distributor shall be entitled to
redeem any or all of the initial shares that it holds and receive redemption
proceeds without any reduction in the amount of such proceeds, prior to the
termination of this Agreement.
2. FEE.
Distributor shall receive from the Funds identified in the
Distribution and Shareholder Service Plan attached as Schedule A hereto (the
"Distribution Plan Funds") a distribution fee at the rate and upon the terms and
conditions set forth in such Plan. The distribution fee shall be accrued daily
and shall be paid on the first business day of each month, or at such time(s) as
the Distributor shall reasonably request.
3. SALE AND PAYMENT.
Shares of a Fund may be subject to a sales load and may be
subject to the imposition of a distribution fee pursuant to the Distribution and
Shareholder Service Plan referred to above. To the extent that Shares of a Fund
are sold at an offering price which includes a sales load or at net asset value
subject to a contingent deferred sales load with respect to certain redemptions
(either within a single class of Shares or pursuant to two or more classes of
Shares), such Shares shall hereinafter be referred to collectively as "Load
Shares" (in the case of Shares that are sold with a front-end sales load or
Shares that are
6
<PAGE> 7
sold subject to a contingent deferred sales load), "Front-End Load Shares" or
"CDSL Shares" and individually as a "Load Share," a "Front-End Load Share" or a
"CDSL Share." A Fund that contains Front-End Load Shares shall hereinafter be
referred to collectively as "Load Funds" or "Front-End Load Funds" and
individually as a "Load Fund" or a "Front-end Load Fund." A Fund that contains
CDSL Shares shall hereinafter be referred to collectively as "Load Funds" or
"CDSL Funds" and individually as a "Load Fund" or a "CDSL Fund." Under this
Agreement, the following provisions shall apply with respect to the sale of, and
payment for, Load Shares.
3.1 Distributor shall have the right to purchase Load Shares
at their net asset value and to sell such Load Shares to the public against
orders therefor at the applicable public offering price, as defined in Section 4
hereof. Distributor shall also have the right to sell Load Shares to dealers
against orders therefor at the public offering price less a concession
determined by Distributor, which concession shall not exceed the amount of the
sales charge or underwriting discount, if any, referred to in Section 4 below.
3.2 Prior to the time of delivery of any Load Shares by a Load
Fund to, or on the order of, Distributor, Distributor shall pay or cause to be
paid to the Load Fund or to its order an amount in Boston or New York clearing
house funds equal to the applicable net asset value of such Shares. Distributor
may retain so much of any sales charge or underwriting discount as is not
allowed by Distributor as a concession to dealers.
4. PUBLIC OFFERING PRICE.
The public offering price of a Load Share shall be the net
asset value of such Load Share, plus any applicable sales charge, all as set
forth in the current prospectus of the Load Fund. The net asset value of Shares
shall be determined in accordance with the provisions of the Agreement and
Declaration of Trust and Bylaws of the Trust and the then-current prospectus of
the Load Fund.
5. ISSUANCE OF SHARES.
The Trust reserves the right to issue, transfer or sell Load
Shares at net asset value (a) in connection with the merger or consolidation of
the Trust or the Load Fund(s) with any other investment company or the
acquisition by the Trust or the Load Fund(s) of all or substantially all of the
assets or of the outstanding Shares of any other investment company; (b) in
connection with a pro rata distribution directly to the holders of Shares in the
nature of a stock dividend or split; (c) upon the exercise of subscription
rights granted to the holders of Shares on a pro rata basis; (d) in connection
with the issuance of Load Shares pursuant to any exchange and reinvestment
privileges described in any then-current prospectus of the Load Fund; and (e)
otherwise in accordance with any then-current prospectus of the Load Fund.
7
<PAGE> 8
6. TERM, DURATION AND TERMINATION.
This Agreement shall become effective with respect to each
Fund listed on Schedule A hereof as of the date first written above (or, if a
particular Fund is not in existence on such date, on the date an amendment to
Schedule A to this Agreement relating to that Fund is executed) and, unless
sooner terminated as provided herein, shall continue until April 27, 2000.
Thereafter, if not terminated, this Agreement shall continue with respect to a
particular Fund automatically for successive one-year terms, provided that such
continuance is specifically approved at least annually by (a) by the vote of a
majority of those members of the Trust's Board of Trustees who are not parties
to this Agreement or interested persons of any such party, cast in person at a
meeting for the purpose of voting on such approval and (b) by the vote of the
Trust's Board of Trustees or the vote of a majority of the outstanding voting
securities of such Fund. This Agreement is terminable without penalty, on not
less than sixty days' prior written notice, by the Trust's Board of Trustees, by
vote of a majority of the outstanding voting securities of the Trust or by the
Distributor. This Agreement will also terminate automatically in the event of
its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meanings as ascribed to such terms in the 1940 Act.)
7. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in the Trust's Agreement and Declaration of
Trust.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first written above.
<TABLE>
<S> <C>
ALPINE EQUITY TRUST BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By: /s/ SAMUEL A. LIEBER By: /s/ DAVID HUBER
-------------------------- -----------------------
Title: CEO Title: PRESIDENT
-------------------------- -----------------------
Date: SEPTEMBER 17, 1998 Date: SEPTEMBER 28, 1998
-------------------------- -----------------------
</TABLE>
9
<PAGE> 10
Dated: April 27, 1998
SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
BETWEEN
ALPINE EQUITY TRUST
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
[See Omnibus Fee Agreement]
<PAGE> 1
EXHIBIT 8
CUSTODY AGREEMENT
THIS AGREEMENT is made effective the 27th day of April, 1998, by and
between INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the
laws of the state of Missouri, having its trust office located at 801
Pennsylvania Avenue, Kansas City, Missouri 64105 ("IFTC"), and ALPINE EQUITY
TRUST, a Massachusetts business trust, having its principal office and place of
business at 3435 Stelzer Road, Columbus, Ohio 43219 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint IFTC as custodian of the assets of the
Fund's investment portfolio or portfolios (each a "Portfolio", and collectively
the "Portfolios"); and
WHEREAS, IFTC is willing to accept such appointment on the terms and
conditions hereinafter set forth;
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN AND AGENT. Fund hereby constitutes and
appoints IFTC as custodian of the investment securities, interests in
loans and other non-cash investment property, and monies at any time
owned by each of the Portfolios and delivered to IFTC as custodian
hereunder ("Assets").
2. REPRESENTATIONS AND WARRANTIES.
A. Fund hereby represents, warrants and acknowledges to IFTC:
1. That it is a trust duly organized and existing and in
good standing under the laws of its state of
organization, and that it is registered under the
1940 Act; and
2. That it has the requisite power and authority under
applicable law and its declaration of trust to enter
into this Agreement; it has taken all requisite
action necessary to appoint IFTC as custodian for the
Portfolios; this Agreement has been duly executed and
delivered by Fund; and this Agreement constitutes a
legal, valid and binding obligation of Fund,
enforceable in accordance with its terms.
B. IFTC hereby represents, warrants and acknowledges to Fund:
1. That it is a trust company duly organized and
existing and in good standing under the laws of the
State of Missouri; and
2. That it has the requisite power and authority under
applicable law, its charter and its bylaws to enter
into and perform this Agreement; this Agreement has
been duly executed and delivered by IFTC; and this
Agreement constitutes a
<PAGE> 2
legal, valid and binding obligation of IFTC,
enforceable in accordance with its terms.
3. DUTIES AND RESPONSIBILITIES OF THE PARTIES.
A. DELIVERY OF ASSETS. Except as permitted by the 1940 Act, Fund
will deliver or cause to be delivered to IFTC on the effective
date hereof, or as soon thereafter as practicable, and from
time to time thereafter, all Assets acquired by, owned by or
from time to time coming into the possession of each of the
Portfolios during the term hereof. IFTC has no responsibility
or liability whatsoever for or on account of assets not so
delivered.
B. DELIVERY OF ACCOUNTS AND RECORDS. Fund will turn over or cause
to be turned over to IFTC all of each Portfolio?s relevant
accounts and records needed by IFTC to perform its duties and
responsibilities hereunder fully and properly . IFTC may rely
conclusively on the completeness and correctness of such
accounts and records.
C. DELIVERY OF ASSETS TO THIRD PARTIES. IFTC will receive
delivery of and keep safely the Assets of each Portfolio
segregated in a separate account. Upon delivery of any such
Assets to a subcustodian appointed pursuant hereto
(hereinafter referred to as "Subcustodian"), IFTC will create
and maintain records identifying such Assets as belonging to
the applicable Portfolio. IFTC is responsible for the
safekeeping of the Assets only until they have been
transmitted to and received by other persons as permitted
under the terms hereof, except for Assets transmitted to
Subcustodians, for which IFTC remains responsible to the
extent provided herein. IFTC may participate directly or
indirectly through a subcustodian in the Depository Trust
Company (DTC), Treasury/Federal Reserve Book Entry System (Fed
System), Participant Trust Company (PTC) or other depository
approved by Fund (as such entities are defined at 17 CFR
Section 270.17f-4(b)) (each a "Depository" and collectively
the "Depositories"). IFTC will be responsible to Fund for any
loss, damage or expense suffered or incurred by Fund resulting
from the actions or omissions of any Depository only to the
same extent such Depository is responsible to IFTC.
D. REGISTRATION. IFTC will at all times hold registered Assets in
the name of IFTC as custodian, the applicable Portfolio, or a
nominee of either of them, unless specifically directed by
Instructions, as hereinafter defined, to hold such registered
Assets in so-called "street name;" provided that, in any
event, IFTC will hold all such Assets in an account of IFTC as
custodian containing only Assets of the applicable Portfolio,
or only assets held by IFTC as a fiduciary or custodian for
customers; and provided further, that IFTC's records at all
times will indicate the Portfolio or other customer for which
such Assets are held and the respective interests therein. If,
however, Fund directs IFTC to maintain Assets in "street
name", notwithstanding anything contained herein to the
contrary, IFTC will be obligated only to utilize its best
efforts to timely collect income due the Portfolio on such
Assets and to notify the Portfolio of relevant information,
such as maturities and pendency of calls, and corporate
actions including, without limitation, calls for redemption,
tender or exchange offers, declaration, record
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and payment dates and amounts of any dividends or income,
reorganization, recapitalization, merger, consolidation,
split-up of shares, change of par value, or conversion
("Corporate Actions"). All Assets and the ownership thereof by
Portfolio will at all times be identifiable on the records of
IFTC. Fund agrees to hold IFTC and its nominee harmless for
any liability as a shareholder of record of securities held in
custody.
E. EXCHANGE. Upon receipt of Instructions, IFTC will exchange, or
cause to be exchanged, Assets held for the account of a
Portfolio for other Assets issued or paid in connection with
any Corporate Action or otherwise, and will deposit any such
Assets in accordance with the terms of any such Corporate
Action. Without Instructions, IFTC is authorized to exchange
Assets in temporary form for Assets in definitive form, to
effect an exchange of shares when the par value of stock is
changed, and, upon receiving payment therefor, to surrender
bonds or other Assets at maturity or when advised of earlier
call for redemption, except that IFTC will receive Instruction
prior to surrendering any convertible security.
F. PURCHASES OF INVESTMENTS -- OTHER THAN OPTIONS AND FUTURES. On
each business day on which a Portfolio makes a purchase of
Assets other than options and futures, Fund will deliver to
IFTC Instructions specifying with respect to each such
purchase:
1. If applicable, the name of the Portfolio making such
purchase;
2. The name of the issuer and description of the Asset;
3. The number of shares and the principal amount
purchased, and accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage
commission, taxes and other expenses payable in
connection with the purchase;
7. The total amount payable upon such purchase;
8. The name of the person from whom or the broker or
dealer through whom the purchase was made; and
9. Whether the Asset is to be received in certificated
form or via a specified Depository.
In accordance with such Instructions, IFTC will pay for out of
monies held for the purchasing Portfolio, but only insofar as
such monies are available for such purpose, and receive the
Assets so purchased by or for the account of such Portfolio,
except that IFTC, or a Subcustodian, may in its sole
discretion advance funds to such Portfolio which may result in
an overdraft because the monies held on behalf of such
Portfolio are insufficient to pay the total amount payable
upon such purchase. Except as otherwise instructed by Fund,
IFTC will make such payment only upon receipt of Assets: (a)
by IFTC; (b) by a clearing corporation of a national exchange
of which IFTC is a member; or (c) by a Depository.
Notwithstanding the foregoing, (i) IFTC may release funds to a
Depository prior to the receipt of advice from the Depository
that the Assets underlying a repurchase agreement have been
transferred by book-entry into the account maintained with
such Depository by IFTC on behalf of its customers; provided
that IFTC's instructions to the Depository require that the
Depository make payment of such funds only upon transfer by
book-
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entry of the Assets underlying the repurchase agreement in
such account; (ii) IFTC may make payment for time deposits,
call account deposits, currency deposits and other deposits,
foreign exchange transactions, futures contracts or options,
before receipt of an advice or confirmation evidencing said
deposit or entry into such transaction; and (iii) IFTC may
make, or cause a Subcustodian to make, payment for the
purchase of Assets the settlement of which occurs outside of
the United States of America in accordance with generally
accepted local custom and market practice.
G. SALES AND DELIVERIES OF INVESTMENTS -- OTHER THAN OPTIONS AND
FUTURES. On each business day on which a Portfolio makes a
sale of Assets other than options and futures, Fund will
deliver to IFTC Instructions specifying with respect to each
such sale:
1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the Asset;
3. The number of shares and principal amount sold, and accrued
interest, if any;
4. The date on which the Assets sold were purchased or other
information identifying the Assets sold and to be
delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes
or other expenses payable in connection with such sale;
8. The total amount to be received by the Portfolio upon such
sale; and
9. The name and address of the broker or dealer through whom
or person to whom the sale was made.
IFTC will deliver or cause to be delivered the Assets thus
designated as sold for the account of the selling Portfolio as
specified in the Instructions. Except as otherwise instructed
by Fund, IFTC will make such delivery upon receipt of: (a)
payment therefor in such form as is satisfactory to IFTC; (b)
credit to the account of IFTC with a clearing corporation of a
national securities exchange of which IFTC is a member; or (c)
credit to the account maintained by IFTC on behalf of its
customers with a Depository. Notwithstanding the foregoing:
(i) IFTC will deliver Assets held in physical form in
accordance with "street delivery custom" to a broker or its
clearing agent; or (ii) IFTC may make, or cause a Subcustodian
to make, delivery of Assets the settlement of which occurs
outside of the United States of America upon payment therefor
in accordance with generally accepted local custom and market
practice.
H. PURCHASES OR SALES OF OPTIONS AND FUTURES. On each business
day on which a Portfolio makes a purchase or sale of the
options and/or futures listed below, Fund will deliver to IFTC
Instructions specifying with respect to each such purchase or
sale:
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<PAGE> 5
1. If applicable, the name of the Portfolio making such
purchase or sale;
2. In the case of security options:
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or
call;
h. Whether the option is written or purchased;
i. Market on which option traded; and
j. Name and address of the broker or dealer
through whom the sale or purchase was made.
3. In the case of options on indices:
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening,
exercising, expiring or closing transaction;
h. Whether the transaction involves a put or
call;
i. Whether the option is written or purchased;
and
j. The name and address of the broker or dealer
through whom the sale or purchase was made,
or other applicable settlement instructions.
4. In the case of security index futures contracts:
a. The last trading date specified in the
contract and, when available, the closing
level, thereof;
b. The index level on the date the contract is
entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in
addition to Instructions, and if not already
in the possession of IFTC, Fund will deliver
a substantially complete and executed
custodial safekeeping account and procedural
agreement, incorporated herein by
reference); and
f. The name and address of the futures
commission merchant through whom the sale or
purchase was made, or other applicable
settlement instructions.
5. In the case of options on index future contracts:
a. The underlying index future contract;
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b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or
call;
h. Whether the option is written or purchased;
and
i. The market on which the option is traded.
I. ASSETS PLEDGED OR LOANED. If specifically allowed for in the
prospectus of a Portfolio, and subject to such additional
terms and conditions as IFTC may require:
1. Upon receipt of Instructions, IFTC will release or
cause to be released Assets to the designated pledgee
by way of pledge or hypothecation to secure any loan
incurred by a Portfolio; provided, however, that IFTC
will release Assets only upon payment to IFTC of the
monies borrowed, except that in cases where
additional collateral is required to secure a
borrowing already made, further Assets may be
released or caused to be released for that purpose.
Upon receipt of Instructions, IFTC will pay, but only
from funds available for such purpose, any such loan
upon redelivery to it of the Assets pledged or
hypothecated therefor and upon surrender of the note
or notes evidencing such loan.
2. Upon receipt of Instructions, IFTC will release
Assets to the designated borrower; provided, however,
that the Assets will be released only upon deposit
with IFTC of full cash collateral as specified in
such Instructions, and that the lending Portfolio
will retain the right to any dividends, interest or
distribution on such loaned Assets. Upon receipt of
Instructions and the loaned Assets, IFTC will release
the cash collateral to the borrower.
J. ROUTINE MATTERS. IFTC will, in general, attend to all routine
and mechanical matters in connection with the sale, exchange,
substitution, purchase, transfer, or other dealings with the
Assets except as may be otherwise provided herein or upon
Instruction from Fund.
K. DEPOSIT ACCOUNTS. IFTC will open and maintain one or more
special purpose deposit accounts for each Portfolio in the
name of IFTC in such banks or trust companies (including,
without limitation, affiliates of IFTC) as may be designated
by it or Fund in writing ("Accounts"), subject only to draft
or order by IFTC upon receipt of Instructions. IFTC will
deposit all monies received by IFTC from or for the account of
a Portfolio in an Account maintained for such Portfolio.
Subject to Section 5.J hereof, IFTC agrees:
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1. To make Fed Funds available to the applicable
Portfolio at 9:00 a.m., Kansas City time, on the
second business day after deposit of any check into
an Account, in the amount of the check;
2. To make funds available immediately upon a deposit
made by Federal Reserve wire; and
3. To make funds available on the next business day
after deposit of ACH wires.
L. INCOME AND OTHER PAYMENTS. IFTC will:
1. Collect, claim and receive and deposit for the
account of the applicable Portfolio all income
(including income from the Accounts) and other
payments which become due and payable on or after the
effective date hereof with respect to the Assets, and
credit the account of such Portfolio in accordance
with the schedule attached hereto as Exhibit A. If,
for any reason, a Portfolio is credited with income
that is not subsequently collected, IFTC may reverse
that credited amount. If monies are collected after
such reversal, IFTC will credit the Portfolio in that
amount;
2. Execute ownership and other certificates and
affidavits for all federal, state and local tax
purposes in connection with the collection of bond
and note coupons; and
3. Take such other action as may be necessary or proper
in connection with (a) the collection, receipt and
deposit of such income and other payments, including
but not limited to the presentation for payment of
all coupons and other income items requiring
presentation; and all other Assets which may mature
or be called, redeemed, retired or otherwise become
payable and regarding which IFTC has actual
knowledge, or should reasonably be expected to have
knowledge; and (b) the endorsement for collection, in
the name of Fund or a Portfolio, of all checks,
drafts or other negotiable instruments.
IFTC, however, will not be required to institute suit or take
other extraordinary action to enforce collection except upon
receipt of Instructions and upon being indemnified to its
satisfaction against the costs and expenses of such suit or
other actions. IFTC will receive, claim and collect all stock
dividends, rights and other similar items and will deal with
the same pursuant to Instructions.
M. PROXIES AND NOTICES. IFTC will promptly deliver or mail (or
have delivered or mailed) to Fund all proxies properly signed,
all notices of meetings, all proxy statements and other
notices, requests or announcements affecting or relating to
Assets and will, upon receipt of Instructions, execute and
deliver or mail (or cause its nominee to execute and deliver
or mail) such proxies or other authorizations as may be
required. Except as provided herein or pursuant to
Instructions hereafter received by IFTC,
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neither it nor its nominee will exercise any power inherent in
any such Assets, including any power to vote the same, or
execute any proxy, power of attorney, or other similar
instrument voting any of such Assets, or give any consent,
approval or waiver with respect thereto, or take any other
similar action.
N. DISBURSEMENTS. IFTC will pay or cause to be paid, insofar as
funds are available for the purpose, bills, statements and
other obligations of each Portfolio (including but not limited
to obligations in connection with the conversion, exchange or
surrender of Assets, interest charges, dividend disbursements,
taxes, management fees, custodian fees, legal fees, auditors'
fees, transfer agents' fees, brokerage commissions,
compensation to personnel, and other operating expenses of
such Portfolio) pursuant to Instructions setting forth the
name of the person to whom payment is to be made, and the
amount and purpose of the payment.
O. DAILY STATEMENT OF ACCOUNTS. IFTC will, within a reasonable
time, render to Fund a detailed statement of the amounts
received or paid and of Assets received or delivered for the
account of each Portfolio during each business day. IFTC will
maintain such books and records as are necessary to enable it
to render, from time to time upon request by Fund, a detailed
statement of the Assets. IFTC will permit, and upon
Instruction will cause any Subcustodian to permit, such
persons as are authorized by Fund, including Fund's
independent public accountants, reasonable access to such
records or will provide reasonable confirmation of the
contents of such records, and if demanded, IFTC will permit,
and will cause any Subcustodian to permit, federal and state
regulatory agencies to examine the Assets, books and records
of the Portfolios.
P. APPOINTMENT OF SUBCUSTODIANS. Notwithstanding any other
provisions hereof:
1. All or any of the Assets may be held in IFTC's own
custody or in the custody of one or more other banks
or trust companies (including, without limitation,
affiliates of IFTC) acting as Subcustodians as may be
selected by IFTC. Any such Subcustodian selected by
IFTC must have the qualifications required for a
custodian under the 1940 Act. IFTC will be
responsible to the applicable Portfolio for any loss,
damage or expense suffered or incurred by such
Portfolio resulting from the actions or omissions of
any Subcustodians selected and appointed by IFTC
(except Subcustodians appointed at the request of
Fund and as provided in Subsection 2 below) to the
same extent IFTC would be responsible to Fund
hereunder if it committed the act or omission itself.
2. Upon request of Fund, IFTC will contract with other
Subcustodians reasonably acceptable to IFTC for
purposes of (a) effecting third-party repurchase
transactions with banks, brokers, dealers, or other
entities through the use of a common custodian or
subcustodian, or (b) providing depository and
clearing agency services with respect to certain
variable rate demand note securities, or (c) for
other reasonable purposes specified by Fund;
provided, however, that IFTC will be responsible to
Fund for any loss, damage or expense suffered or
incurred by Fund resulting from the actions or
omissions
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of any such Subcustodian only to the same extent such
Subcustodian is responsible to IFTC. Fund may review
IFTC's contracts with such Subcustodians.
Q. FOREIGN CUSTODY MANAGER.
1. DELEGATION TO IFTC AS FCM. The Fund, pursuant to
resolution adopted by its Board of Trustees or
Directors (the "Board"), hereby delegates to IFTC,
subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Section Q with
respect to Foreign Assets held outside the United
States, and IFTC hereby accepts such delegation, as
Foreign Custody Manager ("FCM") of each Portfolio. It
is understood and agreed that IFTC will sub-contract
the performance of its responsibilities hereunder
with State Street Bank & Trust Company. IFTC will be
responsible to the applicable Portfolio for any loss,
damage or expense suffered or incurred by such
Portfolio resulting from the actions or omissions of
State Street Bank & Trust Company to the same extent
IFTC would be responsible to Fund hereunder if it
committed the act or omission itself. References
herein to "FCM" shall include IFTC and State Street
Bank & Trust Company.
2. DEFINITIONS. Capitalized terms in this Section Q have
the following meanings:
"Country Risk" means all factors reasonably related
to the systemic risk of holding Foreign Assets in a
particular country including, but not limited to,
such country's political environment; economic and
financial infrastructure (including financial
institutions such as any Mandatory Securities
Depositories operating in the country); prevailing or
developing custody and settlement practices; and laws
and regulations applicable to the safekeeping and
recovery of Foreign Assets held in custody in that
country.
"Eligible Foreign Custodian" has the meaning set
forth in section (a)(1) of Rule 17f-5, except that
the term does not include Mandatory Securities
Depositories.
"Foreign Assets" means any of the Portfolios'
investments (including foreign currencies) for which
the primary market is outside the United States and
such cash and cash equivalents in amounts deemed by
Fund to be reasonably necessary to effect the
Portfolios' transactions in such investments.
"Foreign Custody Manager" or "FCM" has the meaning
set forth in section (a)(2) of Rule 17f-5.
"Mandatory Securities Depository" means a foreign
securities depository or clearing agency that, either
as a legal or practical matter, must be used if the
Fund determines to place Foreign Assets in a country
outside the United States (i) because required by law
or regulation; (ii) because securities cannot
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be withdrawn from such foreign securities depository
or clearing agency; or (iii) because maintaining or
effecting trades in securities outside the foreign
securities depository or clearing agency is not
consistent with prevailing or developing custodial or
market practices.
3. COUNTRIES COVERED. The FCM is responsible for
performing the delegated responsibilities defined
below only with respect to the countries and custody
arrangements for each such country listed on Exhibit
C hereto , which may be amended from time to time by
the FCM. The FCM will list on Exhibit C the Eligible
Foreign Custodians selected by the FCM to maintain
the assets of each Portfolio. Mandatory Securities
Depositories are listed on Exhibit D hereto, which
Exhibit D may be amended from time to time by the
FCM. The FCM will provide amended versions of
Exhibits C and D in accordance with subsection 7 of
this Section Q.
Upon the receipt by the FCM of Instructions to open
an account, or to place or maintain Foreign Assets,
in a country listed on Exhibit C, and the fulfillment
by the Fund of the applicable account opening
requirements for such country, the FCM is deemed to
have been delegated by the Board responsibility as
FCM with respect to that country and to have accepted
such delegation. Following the receipt of
Instructions directing the FCM to close the account
of a Portfolio with the Eligible Foreign Custodian
selected by the FCM in a designated country, the
delegation by the Board to IFTC as FCM for that
country is deemed to have been withdrawn and IFTC
will immediately cease to be the FCM of the Portfolio
with respect to that country.
The FCM may withdraw its acceptance of delegated
responsibilities with respect to a designated country
upon written notice to the Fund. Thirty days (or such
longer period as to which the parties agree in
writing) after receipt of any such notice by the
Fund, IFTC will have no further responsibility as FCM
to a Portfolio with respect to the country as to
which IFTC's acceptance of delegation is withdrawn.
4. SCOPE OF DELEGATED RESPONSIBILITIES.
a. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS.
Subject to the provisions of this Section Q,
the FCM may place and maintain the Foreign
Assets in the care of the Eligible Foreign
Custodian selected by the FCM in each
country listed on Exhibit C, as amended from
time to time.
In performing its delegated responsibilities
as FCM to place or maintain Foreign Assets
with an Eligible Foreign Custodian, the FCM
will determine that the Foreign Assets will
be subject to reasonable care, based on the
standards applicable to custodians in the
country in which the Foreign Assets will be
held by that Eligible Foreign Custodian,
after considering all factors relevant to
the safekeeping of
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such assets, including, without limitation,
those set forth in Rule 17f-5(c)(1)(i)
through (iv).
b. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS.
The FCM will determine that the contract (or
the rules or established practices or
procedures in the case of an Eligible
Foreign Custodian that is a foreign
securities depository or clearing agency)
governing the foreign custody arrangements
with each Eligible Foreign Custodian
selected by the FCM will provide reasonable
care for the Foreign Assets held by that
Eligible Foreign Custodian based on the
standards applicable to custodians in the
particular country. Each such contract will
include the provisions set forth in Rule
17f-5(c)(2)(I)(A) through (F), or, in lieu
of any or all of the provisions set forth in
said (A) through (F), such other provisions
that the FCM determines will provide, in
their entirety, the same or greater level of
care and protection for the Foreign Assets
as the provisions set forth in said (A)
through (F) in their entirety.
c. MONITORING. In each case in which the FCM
maintains Foreign Assets with an Eligible
Foreign Custodian selected by the FCM, the
FCM will establish a system to monitor (a)
the appropriateness of maintaining the
Foreign Assets with such Eligible Foreign
Custodian and (b) the contract governing the
custody arrangements established by the FCM
with the Eligible Foreign Custodian. In the
event the FCM determines that the custody
arrangements with an Eligible Foreign
Custodian it has selected are no longer
appropriate, the FCM will notify the Board
in accordance with subsection 7 of this
Section Q.
5. GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY.
For purposes of this Section Q, the Board will be
solely responsible for considering and determining to
accept such Country Risk as is incurred by placing
and maintaining the Foreign Assets in each country
for which IFTC is serving as FCM of a Portfolio, and
the Board will be solely responsible for monitoring
on a continuing basis such Country Risk to the extent
that the Board considers necessary or appropriate.
The Fund, on behalf of the Portfolios, and IFTC each
expressly acknowledge that the FCM will not be
delegated any responsibilities under this Section Q
with respect to Mandatory Securities Depositories.
6. STANDARD OF CARE AS FCM OF A PORTFOLIO. In performing
the responsibilities delegated to it, the FCM agrees
to exercise reasonable care, prudence and diligence
such as a person having responsibility for the
safekeeping of assets of management investment
companies registered under the 1940 Act would
exercise.
7. REPORTING REQUIREMENTS. The FCM will report the
withdrawal of the Foreign Assets from an Eligible
Foreign Custodian and the placement of such Foreign
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Assets with another Eligible Foreign Custodian by
providing to the Board amended Exhibits C and D at
the end of the calendar quarter in which an amendment
to either Schedule has occurred. The FCM will make
written reports notifying the Board of any other
material change in the foreign custody arrangements
of a Portfolio described in this Section Q after the
occurrence of the material change.
8. REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The FCM
represents to the Fund that it is a U.S. Bank as
defined in section (a)(7) of Rule 17f-5.
The Fund represents to IFTC that the Board has
determined that it is reasonable for the Board to
rely on IFTC and State Street Bank & Trust Company to
perform the responsibilities delegated pursuant to
this Contract to IFTC and State Street Bank & Trust
Company as the FCM of each Portfolio and that IFTC
has been granted the authority by Fund to delegate to
State Street Bank & Trust Company the FCM functions
to which IFTC has been appointed by Fund.
9. EFFECTIVE DATE AND TERMINATION OF IFTC AS FCM. The
Board's delegation to IFTC as FCM of a Portfolio will
be effective as of the date hereof and will remain in
effect until terminated at any time, without penalty,
by written notice from the terminating party to the
non-terminating party. Termination will become
effective thirty days after receipt by the
non-terminating party of such notice. The provisions
of subsection 3 of this Section Q govern the
delegation to and termination of IFTC as FCM of the
Fund with respect to designated countries.
R. ACCOUNTS AND RECORDS PROPERTY OF FUND. IFTC acknowledges that
all of the accounts and records maintained by IFTC pursuant
hereto are the property of Fund, and will be made available to
Fund for inspection or reproduction within a reasonable period
of time, upon demand. IFTC will assist Fund's independent
auditors, or upon the prior written approval of Fund, or upon
demand, any regulatory body, in any requested review of Fund's
accounts and records, provided that Fund will reimburse IFTC
for all expenses and employee time invested in any such review
outside of routine and normal periodic reviews. Upon receipt
from Fund of the necessary information or instructions, IFTC
will supply information from the books and records it
maintains for Fund that Fund may reasonably request for tax
returns, questionnaires, periodic reports to shareholders and
such other reports and information requests as Fund and IFTC
may agree upon from time to time.
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S. ADOPTION OF PROCEDURES. IFTC and Fund hereby adopt the Funds
Transfer Operating Guidelines attached hereto as Exhibit B.
IFTC and Fund may from time to time adopt such additional
procedures as they agree upon, and IFTC may conclusively
assume that no procedure approved or directed by Fund, Fund's
or Portfolio's accountants or other advisors conflicts with or
violates any requirements of the prospectus, its declaration
of trust, any applicable law, rule or regulation, or any
order, decree or agreement by which Fund may be bound. Fund
will be responsible for notifying IFTC of any changes in
statutes, regulations, rules, requirements or policies which
may impact IFTC's responsibilities or procedures under this
Agreement.
T. ADVANCES. Fund will pay on demand any advance of cash or
securities made by IFTC or any Subcustodian, in its sole
discretion, for any purpose (including but not limited to
securities settlements, purchase or sale of foreign exchange
or foreign exchange contracts and assumed settlement) for the
benefit of any Portfolio. Any such cash advance will be
subject to an overdraft charge at the rate set forth in the
then-current fee schedule from the date advanced until the
date repaid. As security for each such advance, Fund hereby
grants IFTC and such Subcustodian a lien on and security
interest in all Assets at any time held for the account of the
applicable Portfolio, including without limitation all Assets
acquired with the amount advanced. Should Fund fail to
promptly repay the advance, IFTC and such Subcustodian may
utilize available cash and to dispose of such Portfolio's
Assets pursuant to applicable law to the extent necessary to
obtain reimbursement of the amount advanced and any related
overdraft charges.
U. EXERCISE OF RIGHTS; TENDER OFFERS. Upon receipt of
Instructions, IFTC will: (1) deliver warrants, puts, calls,
rights or similar securities to the issuer or trustee thereof,
or to the agent of such issuer or trustee, for the purpose of
exercise or sale, provided that the new Assets, if any, are to
be delivered to IFTC; and (2) deposit securities upon
invitations for tenders thereof, provided that the
consideration for such securities is to be paid or delivered
to IFTC or the tendered securities are to be returned to IFTC.
V. FUND SHARES.
1. Fund will deliver to IFTC Instructions with respect
to the declaration and payment of any dividend or
other distribution on the shares of capital stock of
a Portfolio ("Fund Shares") by a Portfolio. On the
date specified in such Instruction, IFTC will pay out
of the monies held for the account of the Portfolio,
insofar as it is available for such purposes, and
credit to the account of the Dividend Disbursing
Agent for the Portfolio, the amount specified in such
Instructions.
13
<PAGE> 14
2. Whenever Fund Shares are repurchased or redeemed by a
Portfolio, Portfolio or its agent will give IFTC
Instructions regarding the aggregate dollar amount to
be paid for such shares. Upon receipt of such
Instruction, IFTC will charge such aggregate dollar
amount to the account of the Portfolio and either
deposit the same in the account maintained for the
purpose of paying for the repurchase or redemption of
Fund Shares or deliver the same in accordance with
such Instruction. IFTC has no duty or responsibility
to determine that Fund Shares have been removed from
the proper shareholder accounts or that the proper
number of Fund Shares have been canceled and removed
from the shareholder records.
3. Whenever Fund Shares are purchased from Fund, Fund
will deposit or cause to be deposited with IFTC the
amount received for such shares. IFTC has no duty or
responsibility to determine that Fund Shares
purchased from Fund have been added to the proper
shareholder account or that the proper number of such
shares have been added to the shareholder records.
4. INSTRUCTIONS.
A. The term "Instructions", as used herein, means written
(including telecopied, telexed, or electronically transmitted)
or oral instructions which IFTC reasonably believes were given
by a designated representative of Fund. Fund will deliver to
IFTC, prior to delivery of any Assets to IFTC and thereafter
from time to time as changes therein are necessary, written
Instructions naming one or more designated representatives to
give Instructions in the name and on behalf of Fund, which
Instructions may be received and accepted by IFTC as
conclusive evidence of the authority of any designated
representative to act for Fund and may be considered to be in
full force and effect until receipt by IFTC of notice to the
contrary. Unless such written Instructions delegating
authority to any person to give Instructions specifically
limit such authority to specific matters or require that the
approval of anyone else will first have been obtained, IFTC
will be under no obligation to inquire into the right of such
person, acting alone, to give any Instructions whatsoever. If
Fund fails to provide IFTC any such Instructions naming
designated representatives, any Instructions received by IFTC
from a person reasonably believed to be an appropriate
representative of Fund will constitute valid and proper
Instructions hereunder. The term "designated representative"
may include Fund's or a Portfolio's employees and agents,
including investment managers and their employees.
B. No later than the next business day immediately following each
oral Instruction, Fund will send IFTC written confirmation of
such oral Instruction. At IFTC's sole discretion, IFTC may
record on tape, or otherwise, any oral Instruction whether
given in person or via telephone, each such recording
identifying the date and the time of the beginning and ending
of such oral Instruction.
14
<PAGE> 15
C. Fund will provide, upon IFTC's request a certificate signed by
an officer or designated representative of Fund, as conclusive
proof of any fact or matter required to be ascertained from
Fund hereunder. Fund will also provide IFTC Instructions with
respect to any matter concerning this Agreement requested by
IFTC. If IFTC reasonably believes that it could not prudently
act according to the Instructions, or the instruction or
advice of Fund's or a Portfolio's accountants or counsel, it
may in its discretion, with notice to Fund, not act according
to such Instructions.
5. LIMITATION OF LIABILITY OF IFTC. IFTC is not responsible or liable for,
and Fund will indemnify and hold IFTC harmless from and against, any
and all costs, expenses, losses, damages, charges, counsel fees
(including, without limitation, disbursements and the allocable cost of
in-house counsel), payments and liabilities which may be asserted
against or incurred by IFTC or for which IFTC may be held to be liable,
arising out of or attributable to:
A. IFTC's action or failure to act pursuant hereto; provided that
IFTC has acted in good faith and with reasonable care; and
provided further, that, in no event is IFTC liable for
consequential, special, or punitive damages;
B. IFTC's payment of money as requested by Fund, or the taking of
any action which might make it or its nominee liable for
payment of monies or in any other way; provided, however, that
nothing herein obligates IFTC to take any such action or
expend its own monies except in its sole discretion;
C. IFTC's action or failure to act hereunder upon any
Instructions, advice, notice, request, consent, certificate or
other instrument or paper appearing to it to be genuine and to
have been properly executed, including any Instruction,
communications, data or other information received by IFTC by
means of the Systems, as hereinafter defined, or any
electronic system of communication;
D. IFTC's action or failure to act in good faith reliance on the
advice or opinion of counsel for Fund or of its own counsel
with respect to questions or matters of law, which advice or
opinion may be obtained by IFTC at the expense of Fund, or on
the Instruction, advice or statements of any officer or
employee of Fund, or Fund's accountants or other authorized
individuals, and other persons believed by it in good faith to
be expert in matters upon which they are consulted;
E. The purchase or sale of any securities or foreign currency
positions. Without limiting the generality of the foregoing,
IFTC is under no duty or obligation to inquire into:
1. The validity of the issue of any securities purchased
by or for any Portfolio, or the legality of the
purchase thereof or of foreign currency positions, or
evidence of ownership required by Fund to be received
by IFTC, or the propriety of the decision to purchase
or the amount paid therefor;
2. The legality of the sale of any securities or foreign
currency positions by or for any Portfolio, or the
propriety of the amount for which the same are sold;
or
15
<PAGE> 16
3. The legality of the issue or sale of any Fund Shares,
or the sufficiency of the amount to be received
therefor, the legality of the repurchase or
redemption of any Fund Shares, or the propriety of
the amount to be paid therefor, or the legality of
the declaration of any dividend by Fund, or the
legality of the issue of any Fund Shares in payment
of any stock dividend.
F. Any error, omission, inaccuracy or other deficiency in any
Portfolio's accounts and records or other information provided
to IFTC by or on behalf of a Portfolio, or the failure of Fund
to provide, or provide in a timely manner, any accounts,
records, or information needed by IFTC to perform its duties
hereunder;
G. Fund's refusal or failure to comply with the terms hereof
(including without limitation Fund's failure to pay or
reimburse IFTC under Section 5 hereof), Fund's negligence or
willful misconduct, or the failure of any representation or
warranty of Fund hereunder to be and remain true and correct
in all respects at all times;
H. The use or misuse, whether authorized or unauthorized, of the
Systems or any electronic system of communication used
hereunder, by Fund or by any person who acquires access to the
Systems or such other systems through the terminal device,
passwords, access instructions or other means of access to
such Systems or such other system which are utilized by,
assigned to or otherwise made available to Fund, except to the
extent attributable to any negligence or willful misconduct by
IFTC;
I. Any money represented by any check, draft, wire transfer,
clearinghouse funds, uncollected funds, or instrument for the
payment of money to be received by IFTC on behalf of a
Portfolio until actually received; provided, however, that
IFTC will advise Fund promptly if it fails to receive any such
money in the ordinary course of business and will cooperate
with Fund toward the end that such money is received;
J. Except as provided in Section 3.P hereof, loss occasioned by
the acts, omissions, defaults or insolvency of any broker,
bank, trust company, securities system or any other person
with whom IFTC may deal; and
K. The failure or delay in performance of its obligations
hereunder, or those of any entity for which it is responsible
hereunder, arising out of or caused, directly or indirectly,
by circumstances beyond the affected entity's reasonable
control, including, without limitation: any interruption, loss
or malfunction of any utility, transportation, computer
(hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a
delay in mails; governmental or exchange action, statute,
ordinance, rulings, regulations or direction; war, strike,
riot, emergency, civil disturbance, terrorism, vandalism,
explosions, labor disputes, freezes, floods, fires, tornadoes,
acts of God or public enemy, revolutions, or insurrection.
16
<PAGE> 17
6. COMPENSATION. In consideration for its services hereunder, Fund will
pay to IFTC the compensation set forth in a separate fee schedule,
incorporated herein by reference, to be agreed to by Fund and IFTC from
time to time, and, upon demand, reimbursement for IFTC's cash
disbursements and reasonable out-of-pocket costs and expenses,
including attorney's fees and disbursements, incurred by IFTC in
connection with the performance of services hereunder. IFTC may charge
such compensation against monies held by it for the account of the
Portfolios. IFTC will also be entitled to charge against any monies
held by it for the account of the Portfolios the amount of any loss,
damage, liability, advance, overdraft or expense for which it is
entitled to reimbursement from Fund, including but not limited to fees
and expenses due to IFTC for other services provided to Fund by IFTC.
IFTC will be entitled to reimbursement by Fund for the losses, damages,
liabilities, advances, overdrafts and expenses of Subcustodians only to
the extent that (a) IFTC would have been entitled to reimbursement
hereunder if it had incurred the same itself directly, and (b) IFTC is
obligated to reimburse the Subcustodian therefor.
7. TERM AND TERMINATION. The initial term of this Agreement is for a
period of one (1) year. Thereafter, either Fund or IFTC may terminate
this Agreement by notice in writing, delivered or mailed, postage
prepaid, to the other party and received not less than ninety (90) days
prior to the date upon which such termination will take effect. Upon
termination hereof:
A. Fund will pay IFTC its fees and compensation due hereunder and
its reimbursable disbursements, costs and expenses paid or
incurred to such date;
B. Fund will designate a successor custodian by Instruction to
IFTC by the termination date. In the event no such Instruction
has been delivered to IFTC on or before the date when such
termination becomes effective, then IFTC may, at its option,
(i) choose as successor custodian a bank or trust company
meeting the qualifications for custodian set forth in the 1940
Act and having not less than Two Million Dollars ($2,000,000)
aggregate capital, surplus and undivided profits, as shown by
its last published report, or (ii) apply to a court of
competent jurisdiction for the appointment of a successor or
other proper relief, or take any other lawful action under the
circumstances; provided, however, that Fund will reimburse
IFTC for its costs and expenses, including reasonable
attorney's fees, incurred in connection therewith; and
C. IFTC will, upon payment of all sums due to IFTC from Fund
hereunder or otherwise, deliver all Assets, duly endorsed and
in form for transfer, to the successor custodian, or as
specified by the court, at IFTC's office. IFTC will co-operate
in effecting changes in book-entries at all Depositories. Upon
delivery to a successor or as specified by the court, IFTC
will have no further obligations or liabilities hereunder.
Thereafter such successor will be the successor hereunder and
will be entitled to reasonable compensation for its services.
In the event that Assets remain in the possession of IFTC after the
date of termination hereof for any reason other than IFTC's failure to
deliver the same, IFTC is entitled to compensation as provided in the
then-current fee schedule for its services during such period, and the
provisions hereof relating to the duties and obligations of IFTC will
remain in full force and effect.
17
<PAGE> 18
8. NOTICES. Notices, requests, instructions and other writings addressed
to Fund at the address set forth above, or at such other address as
Fund may have designated to IFTC in writing, will be deemed to have
been properly given to Fund hereunder. Notices, requests, Instructions
and other writings addressed to IFTC at the address set forth above,
Attention: Custody Department, or to such other address as it may have
designated to Fund in writing, will be deemed to have been properly
given to IFTC hereunder.
9. THE SYSTEMS; CONFIDENTIALITY.
A. If IFTC provides Fund direct access to the computerized
investment portfolio custody systems used by IFTC ("Systems")
or if IFTC and Fund agree to utilize any electronic system of
communication, Fund agrees to implement and enforce
appropriate security policies and procedures to prevent
unauthorized or improper access to or use of the Systems or
such other system.
B. Fund will preserve the confidentiality of the Systems and the
tapes, books, reference manuals, instructions, records,
programs, documentation and information of, and other
materials relevant to, the Systems and the business of IFTC or
its affiliates ("Confidential Information"). Fund agrees that
it will not voluntarily disclose any such Confidential
Information to any other person other than its own employees
who reasonably have a need to know such information pursuant
hereto. Fund will return all such Confidential Information to
IFTC upon termination or expiration hereof.
C. Fund has been informed that the Systems are licensed for use
by IFTC and its affiliates from one or more third parties
("Licensors"), and Fund acknowledges that IFTC and Licensors
have proprietary rights in and to the Systems and all other
IFTC or Licensor programs, code, techniques, know-how, data
bases, supporting documentation, data formats, and procedures,
including without limitation any changes or modifications made
at the request or expense or both of Fund (collectively, the
"Protected Information"). Fund acknowledges that the Protected
Information constitutes confidential material and trade
secrets of IFTC and Licensors. Fund will preserve the
confidentiality of the Protected Information, and Fund hereby
acknowledges that any unauthorized use, misuse, disclosure or
taking of Protected Information, residing or existing internal
or external to a computer, computer system, or computer
network, or the knowing and unauthorized accessing or causing
to be accessed of any computer, computer system, or computer
network, may be subject to civil liabilities and criminal
penalties under applicable law. Fund will so inform employees
and agents who have access to the Protected Information or to
any computer equipment capable of accessing the same.
Licensors are intended to be and are third party beneficiaries
of Fund's obligations and undertakings contained in this
Section.
D. Fund hereby represents and warrants to IFTC that it has
determined to its satisfaction that the Systems are
appropriate and suitable for its use. THE SYSTEMS ARE PROVIDED
ON AN AS IS, AS AVAILABLE BASIS. IFTC EXPRESSLY DISCLAIMS ALL
WARRANTIES INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
18
<PAGE> 19
PARTICULAR PURPOSE, EXCEPT THOSE WARRANTIES STATED EXPRESSLY
HEREIN.
10. MULTIPLE PORTFOLIOS. If Fund is comprised of more than one Portfolio,
the following provisions apply:
A. Each Portfolio will be regarded for all purposes hereunder as
a separate party apart from each other Portfolio. Unless the
context otherwise requires, with respect to every transaction
covered hereby, every reference herein to Fund is deemed to
relate solely to the particular Portfolio to which such
transaction relates. Under no circumstances will the rights,
obligations or remedies with respect to a particular Portfolio
constitute a right, obligation or remedy applicable to any
other Portfolio. The use of this single document to
memorialize the separate agreement as to each Portfolio is
understood to be for clerical convenience only and will not
constitute any basis for joining the Portfolios for any
reason.
B. Fund may appoint IFTC as its custodian for additional
Portfolios from time to time by written notice, provided that
IFTC consents to such addition. Rates or charges for each
additional Portfolio will be as agreed upon by IFTC and Fund
in writing.
11. MISCELLANEOUS.
A. This Agreement will be construed according to, and the rights
and liabilities of the parties hereto will be governed by, the
laws of the State of Missouri, without reference to the choice
of laws principles thereof.
B. All terms and provisions hereof will be binding upon, inure to
the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
C. The representations and warranties, the indemnifications
extended hereunder, and the provisions of Section 9 hereof are
intended to and will continue after and survive the
expiration, termination or cancellation hereof.
D. No provisions hereof may be amended or modified in any manner
except by a written agreement properly authorized and executed
by each party hereto.
E. The failure of either party to insist upon the performance of
any terms or conditions hereof or to enforce any rights
resulting from any breach of any of the terms or conditions
hereof, including the payment of damages, will not be
construed as a continuing or permanent waiver of any such
terms, conditions, rights or privileges, but the same will
continue and remain in full force and effect as if no such
forbearance or waiver had occurred. No waiver, release or
discharge of any party's rights hereunder will be effective
unless contained in a written instrument signed by the party
sought to be charged.
19
<PAGE> 20
F. The captions herein are included for convenience of reference
only, and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
G. This Agreement may be executed in two or more counterparts,
each of which is deemed an original but all of which together
constitute one and the same instrument.
H. If any provision hereof is determined to be invalid, illegal,
in conflict with any law or otherwise unenforceable, the
remaining provisions hereof will be considered severable and
will not be affected thereby, and every remaining provision
hereof will remain in full force and effect and will remain
enforceable to the fullest extent permitted by applicable law.
I. The benefits of this Agreement may not be assigned by either
party nor may either party delegate all or a portion of its
duties hereunder without the prior written consent of the
other party. Notwithstanding the foregoing, Fund agrees that
IFTC may delegate all or a portion of its duties to an
affiliate of IFTC, provided that such delegation will not
reduce the obligations of IFTC under this Agreement.
J. Neither the execution nor performance hereof will be deemed to
create a partnership or joint venture by and between IFTC and
Fund or any Portfolio.
K. Except as specifically provided herein, this Agreement does
not in any way affect any other agreements entered into among
the parties hereto and any actions taken or omitted by either
party hereunder will not affect any rights or obligations of
the other party hereunder.
L. Notice is hereby given that a copy of Fund's Trust Agreement
and all amendments thereto is on file with the Secretary of
State of the state of its organization; that this Agreement
has been executed on behalf of Fund by the undersigned duly
authorized representative of Fund in his/her capacity as such
and not individually; and that the obligations of this
Agreement are binding only upon the assets and property of
Fund and not upon any trustee, officer of shareholder of Fund
individually.
20
<PAGE> 21
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY ALPINE EQUITY TRUST
By:________________________________ By:______________________________
Title:___________________________
Title:_____________________________
21
<PAGE> 22
EXHIBIT A -- INCOME AVAILABILITY SCHEDULE
FOREIGN--Income will be credited contractually on pay day in the markets noted
with Contractual Income Policy. The markets noted with Actual income policy will
be credited income when it is received.
<TABLE>
<CAPTION>
==========================================================================================================================
MARKET INCOME POLICY MARKET INCOME POLICY MARKET INCOME POLICY
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentina Actual Hong Kong Contractual Poland Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Australia Contractual Hungary Actual Portugal Contractual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Austria Contractual India Actual Russia Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Bahrain Actual Indonesia Actual Singapore Contractual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Bangladesh Actual Ireland Actual Slovak Republic Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Belgium Contractual Israel Actual South Africa Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Bermuda Actual Italy Contractual South Korea Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
* Bolivia Actual Ivory Coast Actual Spain Contractual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Botswana Actual * Jamaica Actual Sri Lanka Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Brazil Actual Japan Contractual Swaziland Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Canada Contractual Jordan Actual Sweden Contractual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Chile Actual Kenya Actual Switzerland Contractual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
China Actual Lebanon Actual Taiwan Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Colombia Actual Luxembourg Actual Thailand Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Cyprus Actual Malaysia Actual * Trinidad & Actual
Tobago
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Czech Republic Actual Mauritius Actual * Tunisia Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Denmark Contractual Mexico Actual Turkey Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Ecuador Actual Morocco Actual United Kingdom Contractual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Egypt Actual Namibia Actual United States See Attached
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
**Euroclear Contractual/ Netherlands Contractual Uruguay Actual
Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Euro CDs Actual New Zealand Contractual Venezuela Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Finland Contractual Norway Contractual Zambia Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
France Contractual Oman Actual Zimbabwe Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Germany Contractual Pakistan Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Ghana Actual Peru Actual
- --------------- -------------------- -------------------- ---------------------- --------------------- -------------------
Greece Actual Philippines Actual
==========================================================================================================================
</TABLE>
* Market is not 17F-5 eligible
** For Euroclear, contractual income paid only in markets listed with
Income Policy of Contractual.
22
<PAGE> 23
<TABLE>
<CAPTION>
UNITED STATES--
=========================================================================================================================
INCOME TYPE DTC FED PTC PHYSICAL
- ----------------------- ------------------------- -------------------------- ------------------------- ------------------
<S> <C> <C> <C> <C>
Dividends Contractual N/A N/A Actual
- ----------------------- ------------------------- -------------------------- ------------------------- ------------------
Fixed Rate Interest Contractual Contractual N/A Actual
- ----------------------- ------------------------- -------------------------- ------------------------- ------------------
Variable Rate Interest Contractual Contractual N/A Actual
- ----------------------- ------------------------- -------------------------- ------------------------- ------------------
GNMA I N/A N/A Contractual PD +1 N/A
- ----------------------- ------------------------- -------------------------- ------------------------- ------------------
GNMA II N/A N/A Contractual PD *** N/A
- ----------------------- ------------------------- -------------------------- ------------------------- ------------------
Mortgages Actual Contractual Contractual Actual
- ----------------------- ------------------------- -------------------------- ------------------------- ------------------
Maturities Actual Contractual N/A Actual
=========================================================================================================================
<FN>
Exceptions to the above Contractual Income Policy include securities that are:
- Involved in a trade whose settlement either failed, or is pending over the record date, (excluding the United
States);
- On loan under a self directed securities lending program other than IFTC?s own vendor lending program;
- Known to be in a condition of default, or suspected to present a risk of default or payment delay;
- In the asset categories, without limitation, of Private Placements, Derivatives, Options, Futures, CMOs, and
Zero Coupon Bonds.
- Securities whose amount of income and redemption cannot be calculated in advance of payable date, or determined
in advance of actual collection, examples include ADRs;
- Payments received as the result of a corporate action, not limited to, bond calls, mandatory or optional puts,
and tender offers.
*** For GNMA II securities, if the 19th day of the month is a business day, Payable/Distribution Date is the next
business day. If the 19th is not a business day, but the 20th is a business day, Payable/Distribution date is the
first business day after the 20th. If both the 19th and 20th are not business days, Payable/Distribution will be the
next business day thereafter.
</FN>
</TABLE>
23
<PAGE> 24
EXHIBIT B -- FUNDS TRANSFER OPERATING GUIDELINES
1. OBLIGATION OF THE SENDER: IFTC is authorized to promptly debit Fund's
("Client's") account(s) upon the receipt of a payment order in compliance with
any of the Security Procedures chosen by the Client, from those offered on the
attached selection form (and any updated selection forms hereafter executed by
the Client), for funds transfers and in the amount of money that IFTC has been
instructed to transfer. IFTC is hereby instructed to accept funds transfer
instructions only via the delivery methods and Security Procedures indicated on
the attached selection form (and any updated executed by the Client). The Client
agrees that the Security Procedures are reasonable and adequate for its wire
transfer transactions and agrees to be bound by any payment orders, amendments
and cancellations, whether or not authorized, issued in its name and accepted by
IFTC after being confirmed by any of the selected Security Procedures. The
Client also agrees to be bound by any other valid and authorized payment order
accepted by IFTC. IFTC shall execute payment orders in compliance with the
selected Security Procedures and with the Client's/Investment Manager's
instructions on the execution date provided that such payment order is received
by the customary deadline for processing such a request, unless the payment
order specifies a later time. IFTC will use reasonable efforts to execute on the
execution date payment orders received after the customary deadline, but if it
is unable to execute any such payment order on the execution date, such payment
order will be deemed to have been received on the next business day.
2. SECURITY PROCEDURES: The Client acknowledges that the selected Security
Procedures were selected by the Client from Security Procedures offered by IFTC.
The Client shall restrict access to confidential information relating to the
Security Procedures to authorized persons as communicated in writing to IFTC.
The Client must notify IFTC immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Client's authorized personnel. IFTC shall verify the authenticity of all
instructions according to the selected Security Procedures.
3. ACCOUNT NUMBERS: IFTC shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a discrepancy
between any name indicated on the payment order and the account number, the
account number shall take precedence and govern. Financial institutions that
receive payment orders initiated by IFTC at the instruction of the Client may
also process payment orders on the basis of account numbers, regardless of any
name included in the payment order. IFTC will also rely on any financial
institution identification numbers included in any payment order, regardless of
any financial institution name included in the payment order.
4. REJECTION: IFTC reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of IFTC's receipt of such payment order;
(b) if initiating such payment order would cause IFTC, in IFTC's sole judgment,
to exceed any applicable volume, aggregate dollar, network, time, credit or
similar limits upon wire transfers; or (c) if IFTC, in good faith, is unable to
satisfy itself that the transaction has been properly authorized.
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<PAGE> 25
5. CANCELLATION OR AMENDMENT: IFTC shall use reasonable efforts to act on all
authorized requests to cancel or amend payment orders received in compliance
with the selected Security Procedures provided that such requests are received
in sufficient time to afford IFTC a reasonable opportunity to act prior to
executing the payment order. However, IFTC assumes no liability if the request
for amendment or cancellation cannot be satisfied by IFTC's reasonable efforts.
6. ERRORS: IFTC shall assume no responsibility for failure to detect any
erroneous payment order provided that IFTC complies with the payment order
instructions as received and IFTC complies with the selected Security
Procedures. The Security Procedures are established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
7. INTEREST AND LIABILITY LIMITS: IFTC shall assume no responsibility for lost
interest with respect to the refundable amount of any unauthorized payment
order, unless IFTC is notified of the unauthorized payment order within thirty
(30) days of notification by IFTC of the acceptance of such payment order. In no
event (including but not limited to failure to execute a payment order) shall
IFTC be liable for special, indirect or consequential damages, even if advised
of the possibility of such damages.
8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When
the Client initiates or receives ACH credit and debit entries pursuant to these
Guidelines and the rules of the National Automated Clearing House Association
and the Mid-America Payment Exchange or other similar body, IFTC or its agent
will act as an Originating Depository Financial Institution and/or Receiving
Depository Financial Institution, as the case may be, with respect to such
entries. Credits given with respect to an ACH credit entry are provisional until
final settlement for such entry is received from the Federal Reserve Bank. If
such final settlement is not received, the Client agrees to promptly refund the
amount credited to the Client in connection with such entry, and the party
making payment to the Client via such entry shall not be deemed to have paid the
amount of the entry.
9. CONFIRMATIONS: Confirmation of IFTC's execution of payment orders shall
ordinarily be provided within 24 hours. Notice may be delivered through IFTC's
account statements, advices, information systems, or by facsimile or callback.
The Client must report any objections to the execution of a payment order within
30 days.
10. MISCELLANEOUS: IFTC may use the Federal Reserve System Fedwire to execute
payment orders, and any payment order carried in whole or in part through
Fedwire will be subject to applicable Federal Reserve Board rules and
regulations. IFTC and the Client agree to cooperate to attempt to recover any
funds erroneously paid to wrong parties, regardless of any fault of IFTC or the
Client, but the party responsible for the erroneous payment shall bear all costs
and expenses incurred in trying to effect such recovery. These Guidelines may
not be amended except by a written agreement signed by the parties.
25
<PAGE> 26
SECURITY PROCEDURES SELECTION FORM
Please select one or more of the funds transfer security procedures
indicated below.
[] SWIFT SWIFT (Society for Worldwide Interbank Financial
Telecommunication) is a cooperative society owned and operated by
member financial institutions that provides telecommunication services
for its membership. Participation is limited to securities brokers and
dealers, clearing and depository institutions, recognized exchanges for
securities, and investment management institutions. SWIFT provides a
number of security features through encryption and authentication to
protect against unauthorized access, loss or wrong delivery of
messages, transmission errors, loss of confidentiality and fraudulent
changes to messages. Selection of this security procedure would be most
appropriate for existing SWIFT members.
[] REMOTE BATCH TRANSMISSION Wire transfer instructions are delivered via
Computer-to-Computer (CPU-CPU) data communications between the Client
and/or its agent and IFTC and/or its agent. Security procedures include
encryption and/or the use of a test key by those individuals authorized
as Automated Batch Verifiers or a callback procedure to those
individuals. Clients selecting this option should have an existing
facility for completing CPU-CPU transmissions. This delivery mechanism
is typically used for high-volume business such as shareholder
redemptions and dividend payments.
[] TELEPHONE CONFIRMATION (CALL BACK) This procedure requires Clients to
designate individuals as authorized initiators and authorized
verifiers. IFTC will verify that the instruction contains the signature
of an authorized person and prior to execution of the payment order,
will contact someone other than the originator at the Client's location
to authenticate the instruction. Selection of this alternative is
appropriate for Clients who do not have the capability to use other
security procedures.
[] TEST KEY Test Key confirmation will be used to verify all
non-repetitive funds transfer instructions received via facsimile or
phone. IFTC will provide test keys if this option is chosen. IFTC will
verify that the instruction contains the signature of an authorized
person and prior to execution of the payment order, will authenticate
the test key provided with the corresponding test key at IFTC.
Selection of this alternative is appropriate for Clients who do not
have the capability to use other security procedures.
[] REPETITIVE WIRES For situations where funds are transferred
periodically from an existing authorized account to the same payee
(destination bank and account number) and only the date and currency
amount are variable, a repetitive wire may be implemented. Repetitive
wires will be subject to a $10 million limit. If the payment order
exceeds the $10 million limit, the instruction will be confirmed by
telephone or test key prior to execution. Repetitive wire instructions
must be reconfirmed annually. Clients may establish Repetitive Wires by
following the agreed upon security procedures as described by Telephone
Confirmation (Call Back) or Test Key. This alternative is recommended
whenever funds are frequently transferred between the same two
accounts.
26
<PAGE> 27
[] STANDING INSTRUCTIONS Funds are transferred by IFTC to a counter party
on the Client's established list of authorized counter parties. Only
the date and the dollar amount are variable. Clients may establish
Standby Instructions by following the agreed upon security procedures
as described by Telephone Confirmation (Call Back) or Test Key. This
option is used for transactions that include but are not limited to
Foreign Exchange Contracts, Time Deposits and Tri-Party Repurchase
Agreements.
[] AUTOMATED CLEARING HOUSE (ACH) IFTC or its agent receives an automated
transmission from a Client for the initiation of payment (credit) or
collection (debit) transactions through the ACH network. The
transactions contained on each transmission or tape must be
authenticated by the Client. The transmission is sent from the Client's
or its agent's system to IFTC's or its agent's system with encryption.
KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
__________________________________ ___________________________________
Name Name
__________________________________ ___________________________________
Address
Address
__________________________________ ___________________________________
City/State/Zip Code City/State/Zip Code
__________________________________ ___________________________________
Telephone Number
Telephone Number
__________________________________
Fascimile Number
__________________________________
SWIFT Number
ALPINE EQUITY TRUST
By:_______________________________
Title: ___________________________
27
<PAGE> 28
EXHIBIT C
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Date: ____________________________
28
<PAGE> 29
EXHIBIT C
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain The British Bank of the Middle East (as delegate of the --
Hongkong and Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale de Banque --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano S.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada Canada Trustco Mortgage Company --
Chile Citibank, N.A. --
People's The Hongkong and Shanghai Banking Corporation --
Republic of Limited Shanghai and Shenzhen branches
China
Colombia Cititrust Colombia S.A.Sociedad Fiduciaria --
Croatia Privredana banka Zagreb d.d --
Cyprus Barclays Bank Plc. Cyprus Offshore Banking Unit --
Czech Ceskoslovenska Obchodni Banka A.S. --
Republic
Denmark Den Danske Bank --
</TABLE>
29
<PAGE> 30
EXHIBIT C
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Ecuador Citibank, N.A. --
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Merita Bank Limited --
France Banque Paribas --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A Bank of Greece,
System for Monitoring Transactions in
Securities in Book-Entry Form
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
Iceland Icebank Ltd. --
India Deutsche Bank AG;The Hongkong and Shanghai --
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques en Cote d'Ivoire --
Jamaica Scotiabank Trust and Merchant Bank, Ltd. --
Japan The Daiwa Bank, Limited; The Fuji Bank Limited Japan Securities Depository
Jordan The British Bank of the Middle East (as delegate --
of the Hongkong and Shanghai Banking Corporation
Limited)
</TABLE>
30
<PAGE> 31
EXHIBIT C
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Kenya Barclays Bank of Kenya Limited --
Republic of The Hongkong and Shanghai Banking --
Korea Corporation Limited
Latvia JSC Hansabank-Latvija --
Lebanon British Bank of the Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank Malaysia Berhad --
Mauritius The Hongkong and Shanghai Banking --
Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group (New Zealand) Limited --
Norway Christiania Bank og Kreditkasse --
Oman The British Bank of the Middle East(as delegate of the --
Hongkong and Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
Poland Citibank Poland S.A. --
Bank Polska Kasa Opieki S.A.
Portugal Banco Comercial Portugues --
</TABLE>
31
<PAGE> 32
EXHIBIT C
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Romania ING Bank, N.V. --
Russia Credit Suisse First Boston, AO, Moscow --
(as delegate of Credit Suisse First Boston, Zurich)
Singapore The Development Bank of Singapore Ltd. --
Slovak Ceskoslovenska Obchodna Banka A.S. --
Republic
Slovenia Banka Creditanstalt d.d. --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai Banking Corporation Limited --
Swaziland Barclays Bank of Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland UBS AS --
Taiwan - Central Trust of China --
R.O.C.
Thailand Standard Chartered Bank --
Trinidad Republic Bank Ltd. --
& Tobago
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A.; Ottoman Bank --
Ukraine ING Bank, Ukraine --
United State Street Bank and Trust Company, --
Kingdom London Branch
Uruguay Citibank, N.A. --
Venezuela Citibank, N.A. --
</TABLE>
32
<PAGE> 33
EXHIBIT C
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
Euroclear (The Euroclear System)/State Street London Limited
Cedel, S.A. (Cedel Bank, societe anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
</TABLE>
33
<PAGE> 34
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
<TABLE>
<S> <C>
COUNTRY MANDATORY DEPOSITORIES (INCLUDES ENTITIES FOR WHICH USE IS MANDATORY AS A MATTER OF LAW
OR EFFECTIVELY MANDATORY AS A MATTER OF MARKET PRACTICE)
Argentina -Caja de Valores S.A.
Australia -Austraclear Limited;
-Reserve Bank Information and Transfer System
Austria -Oesterreichische Kontrollbank AG (Wertpapiersammelbank Division)
Belgium -Caisse Interprofessionnelle de Depots et de Virements de Titres S.A.;
-Banque Nationale de Belgique
Brazil -Companhia Brasileira de Liquidac, ao e
-Custodia (CBLC)
-Bolsa de Valores de Rio de Janeiro
- All SSB clients presently use CBLC
-Central de Custodia e de Liquidacao Financeira de Titulos
-Banco Central do Brasil, Sistema Especial de Liquidacao e Custodia
Bulgaria -Central Depository AD
-Bulgarian National Bank
Canada -The Canadian Depository for Securities Limited
People's Republic -Shanghai Securities Central Clearing and Registration Corporation;
of China -Shenzhen Securities Central Clearing Co., Ltd.
Croatia Ministry of Finance; - National Bank of Croatia
Czech Republic --Stredisko cennych papiru(degree);
-Czech National Bank
Denmark -Vaerdipapircentralen (The Danish Securities Center)
Egypt -Misr Company for Clearing, Settlement, and Central Depository
Estonia -Eesti Vaartpaberite Keskdepositooruim
Finland -The Finnish Central Securities Depository
France -Societe Interprofessionnelle pour la Compensation des Valeurs Mobilieres
(SICOVAM)
Germany -The Deutscher Borse Clearing AG
</TABLE>
34
<PAGE> 35
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
<TABLE>
<S> <C>
Greece -The Central Securities Depository (Apothetirion Titlon AE)
Hong Kong -The Central Clearing and Settlement System;
-Central Money Markets Unit
Hungary -The Central Depository and Clearing House (Budapest) Ltd.(KELER) [Mandatory for Gov't Bonds only; SSB
does not use for other securities]
India -The National Securities Depository Limited
Indonesia -Bank of Indonesia
Ireland -The Central Bank of Ireland, Securities Settlement Office
Israel -The Tel Aviv Stock Exchange Clearing House Ltd.;
-Bank of Israel
Italy -Monte Titoli S.p.A.;
-Banca d'Italia
Japan -Bank of Japan Net System
Jamaica -The Jamaican Central Securities Depository
Kenya -Central Bank of Kenya
Republic of Korea -Korea Securities Depository Corporation
Latvia -The Latvian Central Depository
Lebanon -The Custodian and Clearing Center of Financial Instruments for Lebanon and the Middle East (MIDCLEAR)
S.A.L.; - The Central Bank of Lebanon
Lithuania -The Central Securities Depository of Lithuania
Malaysia -Malaysian Central Depository Sdn. Bhd.;
-Bank Negara Malaysia, Scripless Securities Trading and Safekeeping Systems
Mauritius -The Central Depository & Settlement Co. Ltd.
Mexico -S.D. INDEVAL, S.A. de C.V.(Instituto para el Deposito de Valores);
</TABLE>
35
<PAGE> 36
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
<TABLE>
<S> <C>
Morocco -Maroclear (Pending publication of enabling legislation in the Moroccan government Gazette)
The Netherlands -Nederlands Centraal Instituut voor Giraal Effectenverkeer B.V. ("ANECIGEF")
-De Nederlandsche Bank N.V.
New Zealand -New Zealand Central Securities Depository Limited
Norway -Verdipapirsentralen (the Norwegian Registry of Securities)
Oman -Muscat Securities Market
Pakistan -Central Depository company of Pakistan Limited
Peru -Caja de Valores y Liquidaciones S.A. (CAVALI)
Philippines -The Philippines Central Depository Inc.
-The Registry of Scripless Securities (ROSS) of the Bureau of the Treasury
Poland -The National Depository of Securities (Krajowy Depozyt Papierow Wartos'ciowych);
-Central Treasury Bills Registrar
Portugal -Central de Valores Mobiliarios (Central)
Romania -National Securities Clearing, Settlement and Depository Co.;
-Bucharest Stock Exchange Registry Division;
Singapore -The Central Depository (Pte)Limited;
-Monetary Authority of Singapore
Slovak Republic -Stredisko Cennych Papierov;
-National Bank of Slovakia
Slovenia -Klirinsko Depotna Druzba d.d.
South Africa -The Central Depository Limited
Spain -Servicio de Compensacion y Liquidacion de Valores, S.A.;
-Banco de Espana; Central de Anotaciones en Cuenta
Sri Lanka -Central Depository System (Pvt) Limited
</TABLE>
36
<PAGE> 37
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
<TABLE>
<S> <C>
Sweden -Vardepapperscentralen AB (the Swedish Central Securities Depository)
Switzerland -Schweizerische Effekten - Giro AG;
-INTERSETTLE
Taiwan - R.O.C. -The Taiwan Securities Central Depository Company, Ltd.
Thailand -Thailand Securities Depository Company Limited
Tunisia - Societe Tunisienne Interprofessionelle de Compensation et de Depot de
Valeurs Mobilieres
-Central Bank of Tunisia;
-Tunisian Treasury
Turkey -Takas ve Saklama Bankasi A.S. (TAKASBANK)
-Central Bank of Turkey
Ukraine -The National Bank of Ukraine
United Kingdom -The Bank of England, The Central Gilts Office; The Central Moneymarkets Office
Uruguay -Central Bank of Uruguay
Venezuela -Central Bank of Venezuela
Zambia -Lusaka Central Depository Limited
-Bank of Zambia
</TABLE>
37
<PAGE> 1
EXHIBIT 9(A)
MANAGEMENT AND ADMINISTRATION AGREEMENT
AGREEMENT made this 27th day of April, 1998, between ALPINE
EQUITY TRUST (the "Trust"), a Massachusetts business trust having its principal
place of business at 3435 Stelzer Road, Suite 1000, Columbus, Ohio 43219, and
BISYS FUND SERVICES OHIO, INC. ("Administrator"), having its principal place of
business at 3435 Stelzer Road, Suite 1000, Columbus, Ohio 43219.
WHEREAS, the Trust is an open-end management investment
company, organized as a Massachusetts business trust and registered with the
Securities and Exchange Commission (the "Commission") under the Investment
Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust desires to retain Administrator to furnish
management and administration services to each of the investment portfolios of
the Trust, all as now or hereafter may be created (individually referred to
herein as a "Fund" and collectively referred to herein as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and
covenants herein set forth, the parties agree as follows:
1. SERVICES AS MANAGER AND ADMINISTRATOR
Subject to the direction and control of the Board of
Trustees of the Trust, Administrator will assist in supervising all aspects of
the operations of the Funds except those performed by the investment adviser for
the Funds under its Investment Advisory Agreement, the custodian for the Funds
under its Custodian Agreement, the transfer agent for the Funds under its
Transfer Agency Agreement and the fund accountant for the Funds under its Fund
Accounting Agreement. In addition, Administrator shall provide the services set
forth in Schedule A attached hereto.
Administrator may, at its expense, subcontract with
any entity or person concerning the provision of the services contemplated
hereunder; provided, however, that Administrator shall not be relieved of any of
its obligations under this Agreement by the appointment of such subcontractor
and provided further, that Administrator shall be responsible, to the extent
provided in Section 4 hereof, for all acts of such subcontractor as if such acts
were its own.
2. FEES; EXPENSES; EXPENSE REIMBURSEMENT
In consideration of services rendered and expenses
assumed pursuant to this Agreement, Administrator shall be entitled to receive
the compensation set forth in the Omnibus Fee Agreement among Administrator,
BISYS Fund Services, Inc., and the Trust dated April 27, 1998.
<PAGE> 2
For the purpose of determining fees payable to
Administrator, the value of the net assets of a particular Fund shall be
computed in the manner described in the Trust's Declaration of Trust or in the
Prospectus or Statement of Additional Information respecting that Fund as from
time to time is in effect for the computation of the value of such net assets in
connection with the determination of the liquidating value of the shares of such
Fund.
Administrator will from time to time employ or
associate with itself such person or persons as Administrator may believe to be
particularly fitted to assist it in the performance of this Agreement. Such
person or persons may be directors, officers, or employees who are employed by
both Administrator and the Trust. The compensation of such person or persons
shall be paid by Administrator and no obligation may be incurred on behalf of
the Funds in such respect. Other expenses to be incurred in the operation of the
Funds including taxes, interest, brokerage fees and commissions, if any, fees of
Trustees who are not partners, officers, directors, shareholders or employees of
Administrator or the investment adviser or distributor for the Funds, Commission
fees and state Blue Sky qualification and renewal fees and expenses, investment
advisory fees, custodian fees, transfer and dividend disbursing agents' fees,
fund accounting fees including pricing of portfolio securities, service
organization fees, certain insurance premiums, outside and, to the extent
authorized by the Trust, inside auditing and legal fees and expenses, costs of
maintenance of corporate existence, typesetting and printing prospectuses for
regulatory purposes and for distribution to current shareholders of the Funds,
costs of shareholders' and Trustees' reports and meetings and any extraordinary
expenses will be borne by the Funds; provided, however, that the Funds will not
bear, directly or indirectly, the cost of any activity which is primarily
intended to result in the distribution of shares of the Funds.
3. PROPRIETARY AND CONFIDENTIAL INFORMATION
Administrator agrees on behalf of itself and its
officers and employees to treat confidentially and as proprietary information of
the Trust all records and other information relative to the Trust and prior,
present, or potential shareholders, and not to disclose such information and
records to third parties or use such records and information for any purpose
other than performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where Administrator
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust.
4. LIMITATION OF LIABILITY
Administrator shall not be liable for any loss
suffered by the Funds in connection with the matters to which this Agreement
relates, except for a loss resulting from willful misfeasance, bad faith or
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement. Any person,
even though also a director, employee, or agent of Administrator, who may be or
become an officer, Trustee, employee, or agent of the Trust or the Funds shall
be deemed, when rendering services
2
<PAGE> 3
to the Trust or the Funds, or acting on any business of that party, to be
rendering such services to or acting solely for that party and not as a
director, employee, or agent or one under the control or direction of
Administrator even though paid by it.
5. TERM
The initial term of this Agreement (the "Initial
Term") shall be for a period commencing on the date first written above and
ending on April 27, 1999. Thereafter, this Agreement shall be renewed
automatically for successive one-year terms unless written notice not to renew
is given by the non-renewing party to the other party at least 90 days prior to
the expiration of the then-current term. Notwithstanding the foregoing, either
party may terminate this Agreement without penalty, during the Initial Term or
any subsequent one-year term, upon the provision of 90 days written notice to
the other party.
Notwithstanding the foregoing, after a termination of
this Agreement, for so long as Administrator, with the written consent of the
Trust, in fact continues to perform any one or more of the services contemplated
by this Agreement or any schedule or exhibit hereto, the provisions of this
Agreement, including without limitation the provisions dealing with
indemnification, shall continue in full force and effect. Compensation due
Administrator and unpaid by the Trust upon such termination shall be immediately
due and payable upon and notwithstanding such termination. Administrator shall
be entitled to collect from the Trust, in addition to the compensation described
in this Section 5, the amount of all of Administrator's cash disbursements for
services in connection with Administrator's activities in effecting such
termination, including without limitation, the delivery to the Trust and/or its
designees of the Trust's property, records, instruments and documents, or any
copies thereof. Subsequent to such termination, for a reasonable fee,
Administrator will provide the Trust with reasonable access to any Trust
documents or records remaining in its possession.
In the event that, in connection with a termination
of this Agreement, a successor to any of Administrator's duties or
responsibilities hereunder is designated by the Trust by notice to
Administrator, Administrator will promptly, upon such termination, transfer to
such successor all relevant books, records, correspondence, and other data
established or maintained by Administrator under this Agreement in a form
reasonably acceptable to the Trust, and will cooperate in the transfer of such
duties and responsibilities.
6. GOVERNING LAW AND MATTERS RELATING TO THE TRUST AS A
MASSACHUSETTS BUSINESS TRUST
This Agreement shall be governed by the law of the
State of Ohio. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them
<PAGE> 4
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in the Trust's Agreement
and Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first written above.
ALPINE EQUITY TRUST BISYS FUND SERVICES OHIO, INC.
By: /s/ Samuel A. Lieber By: /s/ David Huber
--------------------------- --------------------------
Title: CEO Title: President
-------------------------- --------------------------
Date: September 17, 1998 Date: September 29, 1998
-------------------------- --------------------------
4
<PAGE> 5
Dated: April 27, 1998
SCHEDULE A
TO THE
MANAGEMENT AND ADMINISTRATION AGREEMENT
BETWEEN ALPINE EQUITY TRUST
AND
BISYS FUND SERVICES OHIO, INC.
SERVICES
Administrator shall:
(a) calculate contractual Trust expenses and control all
disbursements for the Trust, and as appropriate compute the
Funds' yields, total return, expense ratios, portfolio
turnover rate and, if required, portfolio average
dollar-weighted maturity;
(b) assist Trust counsel with the preparation of prospectuses,
statements of additional information, registration statements,
proxy materials and Board Meeting agendas;
(c) prepare such reports, applications and documents (including
reports regarding the sale and redemption of shares as may be
required in order to comply with Federal and state securities
law) as may be necessary or desirable to register the Trust's
shares with state securities authorities, monitor the sale of
Trust shares for compliance with state securities laws, and
file with the appropriate state securities authorities the
registration statements and reports for the Trust and the
Trust's shares and all amendments thereto, as may be necessary
or convenient to register and keep effective the Trust and the
Trust's shares with state securities authorities to enable the
Trust to make a continuous offering of its shares;
(d) develop and prepare, with the assistance of the Trust's
investment adviser, communications to shareholders, including
the annual report to shareholders, coordinate the mailing of
prospectuses, notices, proxy statements, proxies and other
reports to Trust shareholders, and supervise and facilitate
the proxy solicitation process for all shareholder meetings,
including the tabulation of shareholder votes;
(e) administer contracts on behalf of the Trust with, among
others, the Trust's investment adviser, distributor,
custodian, transfer agent and fund accountant;
(f) supervise the Trust's transfer agent with respect to the
payment of dividends and other distributions to shareholders;
A-1
<PAGE> 6
(g) calculate performance data of the Funds for dissemination to
information services covering the investment company industry;
(h) coordinate and supervise the preparation and filing of the
Trust's tax returns;
(i) examine and review the operations and performance of the
various organizations providing services to the Trust or any
Fund of the Trust, including, without limitation, the Trust's
investment adviser, distributor, custodian, fund accountant,
transfer agent, outside legal counsel and independent public
accountants, and at the request of the Board of Trustees,
report to the Board on the performance of such organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate the layout and
printing of the Trust's semi-annual and annual reports to
shareholders;
(k) assist with the design, development, and operation of the
Funds, including new classes, investment objectives, policies
and structure;
(l) provide individuals reasonably acceptable to the Trust's Board
of Trustees to serve as officers of the Trust, who will be
responsible for the management of certain of the Trust's
affairs as determined by the Trust's Board of Trustees;
(m) advise the Trust and its Board of Trustees on matters
concerning the Trust and its affairs;
(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust
in accordance with the requirements of Rules 17g-1 and
17d-1(7) under the 1940 Act as such bonds and policies are
approved by the Trust's Board of Trustees;
(o) monitor and advise the Trust and its Funds concerning their
registered investment company status under the Internal
Revenue Code of 1986, as amended;
(p) perform all administrative services and functions of the Trust
and each Fund to the extent administrative services and
functions are not provided to the Trust or such Fund pursuant
to the Trust's or such Fund's investment advisory agreement,
distribution agreement, custodian agreement, transfer agent
agreement and fund accounting agreement;
(q) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Funds as the Trust
and Administrator shall determine desirable;
A-2
<PAGE> 7
(r) prepare and file with the SEC the semi-annual report for the
Trust on Form N-SAR and all required notices pursuant to Rule
24f-2; and
(s) prepare Administrator and Distributor reports for inclusion in
Board meeting materials and review other Board meeting
materials, as requested by the Trust.
Administrator shall perform such other services for the Trust
that are mutually agreed upon by the parties from time to
time.
A-3
<PAGE> 1
Exhibit 9(b)
TRANSFER AGENCY AGREEMENT
-------------------------
AGREEMENT made this 27th day of April, 1998 between ALPINE
EQUITY TRUST (the "Trust"), a Massachusetts business trust having its principal
place of business at 3435 Stelzer Road, Columbus, Ohio 43219, and BISYS FUND
SERVICES, INC. ("BISYS"), a Delaware corporation having its principal place of
business at 3435 Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust desires that BISYS perform certain services
for each series of the Trust (individually referred to herein as a "Fund" and
collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
covenants herein set forth, the parties agree as follows:
1. SERVICES.
BISYS shall perform for the Trust the transfer agent services
set forth in Schedule A hereto. BISYS also agrees to perform for the Trust such
special services incidental to the performance of the services enumerated herein
as agreed to by the parties from time to time. BISYS shall perform such
additional services as are provided on an amendment to Schedule A hereof, in
consideration of such fees as the parties hereto may agree.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the Trust
(individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-transfer Agent shall be the agent of BISYS and not the agent of the
Trust or such Fund, and that BISYS shall be fully responsible for the acts of
such Sub-transfer Agent and shall not be relieved of any of its responsibilities
hereunder by the appointment of such Sub-transfer Agent.
2. FEES.
The Trust shall pay BISYS for the services to be provided by
BISYS under this Agreement in accordance with, and in the manner set forth in,
the Omnibus Fee Agreement among BISYS, BISYS Fund Services Ohio, Inc. and the
Trust dated April 27, 1998.
3. [INTENTIONALLY OMITTED]
4. EFFECTIVE DATE.
This Agreement shall become effective as of the date first
written above (the "Effective Date").
<PAGE> 2
5. TERM.
The initial term of this Agreement (the "Initial Term") shall
be for a period commencing on the Effective Date and ending on April 27, 1999.
Thereafter, this Agreement shall be renewed automatically for successive
one-year terms unless written notice not to renew is given by the non-renewing
party to the other party at least 90 days prior to the expiration of the
then-current term. Notwithstanding the foregoing, either party may terminate
this Agreement, without penalty, during the Initial Term or any subsequent
one-year term, upon the provision of 90 days written notice to the other party.
After a termination of this Agreement, for so long as BISYS,
with the written consent of the Trust, in fact continues to perform any one or
more of the services contemplated by this Agreement or any Schedule or exhibit
hereto, the provisions of this Agreement, including without limitation the
provisions dealing with indemnification, shall continue in full force and
effect. Fees and out-of-pocket expenses incurred by BISYS but unpaid by the
Trust upon such termination shall be immediately due and payable upon and
notwithstanding such termination. BISYS shall be entitled to collect from the
Trust, in addition to the fees and disbursements provided by Sections 2 hereof,
the amount of all of BISYS' cash disbursements in connection with BISYS'
activities in effecting such termination, including without limitation, the
delivery to the Trust and/or its distributor or investment adviser and/or other
parties, of the Trust's property, records, instruments and documents, or any
copies thereof. To the extent that BISYS may retain in its possession copies of
any Trust documents or records subsequent to such termination which copies had
not been requested by or on behalf of the Trust in connection with the
termination process described above, BISYS, for a reasonable fee, will provide
the Trust with reasonable access to such copies. Upon termination of this
Agreement, BISYS agrees to cooperate in the transfer of its duties and
responsibilities to the successor, including any and all relevant books, records
and other data maintained or established by BISYS under this Agreement.
6. UNCONTROLLABLE EVENTS.
BISYS assumes no responsibility hereunder, and shall not be
liable for any damage, loss of data, delay or any other loss whatsoever caused
by events beyond its reasonable control.
7. LEGAL ADVICE.
BISYS shall notify the Trust at any time BISYS reasonably
believes that it is in need of the advice of counsel (other than counsel in the
regular employ of BISYS or any affiliated companies) with regard to BISYS'
responsibilities and duties pursuant to this Agreement; and after so notifying
the Trust, BISYS, at its discretion, shall be entitled to seek, receive and act
upon advice of legal counsel selected with reasonable care, such advice to be at
the reasonable expense of the Trust or Funds unless relating to a matter
involving BISYS' willful misfeasance, bad faith, negligence or reckless
disregard with respect to BISYS' responsibilities and duties hereunder and BISYS
shall in no event be liable to the Trust or any Fund or any shareholder or
beneficial owner of the Trust for any action reasonably taken pursuant to such
advice.
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<PAGE> 3
8. INSTRUCTIONS.
Whenever BISYS is requested or authorized to take action
hereunder pursuant to instructions from a shareholder, or a properly authorized
agent of a shareholder ("shareholder's agent"), concerning an account in a Fund,
BISYS shall be entitled to rely upon any certificate, letter or other instrument
or communication, believed by BISYS to be genuine and to have been properly
made, signed or authorized by an officer or other authorized agent of the Trust
or by the shareholder or shareholder's agent, as the case may be, and shall be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by it hereunder a certificate signed by an officer of the Trust or
any other person authorized by the Trust's Board of Trustees or by the
shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statement of Additional
Information of the Trust relating to the Funds to the extent that such services
are described therein unless BISYS receives written instructions to the contrary
in a timely manner from the Trust.
9. STANDARD OF CARE; RELIANCE ON RECORDS AND
INSTRUCTIONS; INDEMNIFICATION.
BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Trust
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. The Trust agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character arising
out of or in any way relating to BISYS' actions taken or nonactions with respect
to the performance of services under this Agreement or based, if applicable,
upon reasonable reliance on information, records, instructions or requests given
or made to BISYS by the Trust, the investment adviser and on any records
provided by any fund accountant or custodian thereof; provided that this
indemnification shall not apply to actions or omissions of BISYS in cases of its
own bad faith, willful misfeasance, negligence or from reckless disregard by it
of its obligations and duties; and further provided that prior to confessing any
claim against it which may be the subject of this indemnification, BISYS shall
give the Trust written notice of and reasonable opportunity to defend against
said claim in its own name or in the name of BISYS. BISYS agrees to indemnify
and hold harmless the Trust, its employees, agents, Trustees, officers and
nominees from and against any and all actions, suits and claims, whether
groundless or otherwise, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, reasonable counsel fees and other
expenses of every nature and character arising out or in any way relating to
BISYS's bad faith, willful misfeasance, negligence or reckless disregard by it
of its obligations and duties, with respect to the performance of services under
this Agreement; provided, that, prior to confessing any claim against it which
may be the subject of this indemnification, the Trust shall give BISYS written
notice of and a reasonable opportunity to defend against said claim in its own
name or in the name of the Trust.
-3-
<PAGE> 4
10. RECORD RETENTION AND CONFIDENTIALITY.
BISYS shall keep and maintain on behalf of the Trust all books
and records which the Trust or BISYS is, or may be, required to keep and
maintain pursuant to any applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the Investment Company Act of
1940, as amended (the "1940 Act"), relating to the maintenance of books and
records in connection with the services to be provided hereunder. BISYS further
agrees that all such books and records shall be the property of the Trust and to
make such books and records available for inspection by the Trust or by the
Securities and Exchange Commission (the "Commission") at reasonable times and
otherwise to keep confidential all books and records and other information
relative to the Trust and its shareholders, except when requested to divulge
such information by duly-constituted authorities or court process, or requested
by a shareholder or shareholder's agent with respect to information concerning
an account as to which such shareholder has either a legal or beneficial
interest or when requested by the Trust, the shareholder, or shareholder's
agent, or the dealer of record as to such account.
11. REPORTS.
BISYS will furnish to the Trust and to its properly-authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Trust in writing,
such reports at such times as are prescribed in Schedule C attached hereto, or
as subsequently agreed upon by the parties pursuant to an amendment to Schedule
C. The Trust agrees to examine each such report or copy promptly and will report
or cause to be reported any errors or discrepancies therein not later than three
business days from the receipt thereof. In the event that errors or
discrepancies, except such errors and discrepancies as may not reasonably be
expected to be discovered by the recipient within three days after conducting a
diligent examination, are not so reported within the aforesaid period of time, a
report will for all purposes be accepted by and be binding upon the Trust and
any other recipient, and BISYS shall have no liability for errors or
discrepancies therein and shall have no further responsibility with respect to
such report except to perform reasonable corrections of such errors and
discrepancies within a reasonable time after requested to do so by the Trust.
12. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed to perform
services required to be provided by BISYS under this Agreement are the property
of BISYS. All records and other data except such computer programs and
procedures are the exclusive property of the Trust and all such other records
and data will be furnished to the Trust in appropriate form as soon as
practicable after termination of this Agreement for any reason.
13. RETURN OF RECORDS.
BISYS may at its option at any time, and shall promptly upon
the Trust's demand, turn over to the Trust and cease to retain BISYS' files,
records and documents created and maintained by BISYS pursuant to this Agreement
which are no longer needed by BISYS in the
-4-
<PAGE> 5
performance of its services or for its legal protection. If not so turned over
to the Trust, such documents and records will be retained by BISYS for six years
from the year of creation. At the end of such six-year period, such records and
documents will be turned over to the Trust unless the Trust authorizes in
writing the destruction of such records and documents.
14. BANK ACCOUNTS.
The Trust and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Trust, as are necessary
in order that BISYS may perform the services required to be performed hereunder.
To the extent that the performance of such services shall require BISYS directly
to disburse amounts for payment of dividends, redemption proceeds or other
purposes, the Trust and Funds shall provide such bank or banks with all
instructions and authorizations necessary for BISYS to effect such
disbursements.
15. REPRESENTATIONS OF THE TRUST.
The Trust certifies to BISYS that: (a) as of the close of
business on the Effective Date, each Fund which is in existence as of the
Effective Date has authorized unlimited shares, and (b) by virtue of its
Declaration of Trust, shares of each Fund which are redeemed by the Trust may be
sold by the Trust from its treasury, and (c) this Agreement has been duly
authorized by the Trust and, when executed and delivered by the Trust, will
constitute a legal, valid and binding obligation of the Trust, enforceable
against the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
16. REPRESENTATIONS OF BISYS.
BISYS represents and warrants that: (a) BISYS has been in, and
shall continue to be in, substantial compliance with all provisions of law,
including Section 17A(c) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), required in connection with the performance of its duties under
this Agreement; (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Trust and BISYS' records, data, equipment, facilities and other property used in
the performance of its obligations hereunder are adequate and that it will make
such changes therein from time to time as are required for the secure
performance of its obligations hereunder; (c) all requisite corporate actions
have been taken to authorize BISYS to enter into this Agreement and to provide
the services set forth herein; and, when executed by BISYS, this Agreement will
constitute a legal, valid and binding obligation of BISYS, enforceable against
it in accordance with its terms; (d) BISYS is a registered transfer agent under
the Exchange Act; and (e) BISYS will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
17. INSURANCE.
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<PAGE> 6
BISYS shall notify the Trust should its insurance coverage
with respect to professional liability or errors and omissions coverage be
canceled or reduced. Such notification shall include the date of change and the
reasons therefor. BISYS shall notify the Trust of any material claims against it
with respect to services performed under this Agreement, whether or not they may
be covered by insurance, and shall notify the Trust from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.
18. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of the state in
which such Declaration has been filed.
(b) Copies of the following documents:
1. The Trust's By-Laws and any amendments thereto;
2. Certified copies of resolutions of the Board of
Trustees covering the following matters:
A. Approval of this Agreement and authorization of
a specified officer of the Trust to execute and deliver
this Agreement and authorization for specified officers
of the Trust to instruct BISYS hereunder; and
B. Authorization of BISYS to act as Transfer Agent
for the Trust on behalf of the Funds.
(c) A list of all officers of the Trust, together with
specimen signatures of those officers, who are authorized to
instruct BISYS in all matters.
(d) Two copies of the following (if such documents are
employed by the Trust):
1. Prospectuses and Statement of Additional Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Trust or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest of the
Trust authorized, issued, and outstanding as of the Effective Date
of BISYS' appointment as Transfer Agent (or as of the date on which
BISYS' services are commenced, whichever is
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<PAGE> 7
the later date) and as to receipt of full consideration by the Trust
for all shares outstanding, such statement to be certified by the
Treasurer of the Trust.
19. INFORMATION FURNISHED BY BISYS.
BISYS has furnished to the Trust the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' Bylaws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the
following matters:
1. Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver this
Agreement;
2. Authorization of BISYS to act as Transfer Agent for
the Trust.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed with the
Commission pursuant to Rule 17Ad-13 under the Exchange Act.
20. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish BISYS written copies of any amendments
to, or changes in, any of the items referred to in Section 18 hereof promptly
after such amendments or changes becoming effective. In addition, the Trust
agrees that no amendments will be made to the Prospectuses or Statement of
Additional Information of the Trust which might have the effect of changing the
procedures employed by BISYS in providing the services agreed to hereunder or
which amendment might affect the duties of BISYS hereunder unless the Trust
first obtains BISYS' approval of such amendments or changes.
21. RELIANCE ON AMENDMENTS.
BISYS may rely on any amendments to or changes in any of the
documents and other items to be provided by the Trust pursuant to Sections 18
and 20 of this Agreement and the Trust hereby indemnifies and holds harmless
BISYS from and against any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character which may result from actions or omissions on the
part of BISYS in reasonable reliance upon such amendments and/or changes.
Although BISYS is authorized to rely on the above-mentioned amendments to and
changes in the documents and other items to be provided pursuant to Sections 18
and 20 hereof, BISYS shall be under no duty to comply with or take any action as
a result of any of such amendments or changes unless the Trust first obtains
BISYS' written consent to and approval of such amendments or changes.
-7-
<PAGE> 8
22. COMPLIANCE WITH LAW.
Except for the obligations of BISYS set forth in Section 10
hereof, the Trust assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Trust as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Trust's shares. The Trust
represents and warrants that no shares of the Trust will be offered to the
public until the Trust's registration statement under the 1933 Act and the 1940
Act has been declared or becomes effective.
23. NOTICES.
Any notice provided hereunder shall be sufficiently given when
sent by registered or certified mail to the party required to be served with
such notice at the following address: 3435 Stelzer Road, Columbus, Ohio 43219,
or at such other address as such party may from time to time specify in writing
to the other party pursuant to this Section.
24. HEADINGS.
Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
25. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not
be assignable by either of the parties hereto except by the specific written
consent of the other party. This Section 25 shall not limit or in any way affect
BISYS' right to appoint a Sub-transfer Agent pursuant to Section 1 hereof. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
-8-
<PAGE> 9
26. GOVERNING LAW AND MATTERS RELATING TO THE TRUST AS A
MASSACHUSETTS BUSINESS TRUST.
This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of the State of Ohio. It is expressly
agreed that the obligations of the Trust hereunder shall not be binding upon any
of the Trustees, shareholders, nominees, officers, agents or employees of the
Trust personally, but shall bind only the trust property of the Trust. The
execution and delivery of this Agreement have been authorized by the Trustees,
and this Agreement has been signed and delivered by an authorized officer of the
Trust, acting as such, and neither such authorization by the Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in the Trust's
Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed all as of the day and year first above written.
ALPINE EQUITY TRUST
By: /s/ Samuel A. Lieber
----------------------
BISYS FUND SERVICES, INC.
By: /s/ David Huber
----------------------
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<PAGE> 10
Dated: April 27, 1998
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
ALPINE EQUITY TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENCY SERVICES
------------------------
1. SHAREHOLDER TRANSACTIONS
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend
option, taxpayer identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10b-10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new
shares, through dividend reimbursement.
g. Convert shareholder accounts from B-share accounts to a
different share class in accordance with the applicable Fund
prospectus.
2. SHAREHOLDER INFORMATION SERVICES
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to
current shareholders.
A-1
<PAGE> 11
3. COMPLIANCE REPORTING
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in
which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service
forms for corresponding Fund and shareholder income and
capital gains.
c. Issue tax withholding reports to the Internal Revenue Service.
4. DEALER/LOAD PROCESSING (IF APPLICABLE)
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
b. Account for separation of shareholder investments and
redemption proceeds from transaction sale charges (including
front-end sales charges and contingent deferred sales charges)
for purchase and redemption of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide
for payment of commissions on direct shareholder purchases in
a load Fund.
5. SHAREHOLDER ACCOUNT MAINTENANCE
a. Maintain all shareholder records for each account in the
Trust.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes, including, but
not limited to, changes in investment plans elected by
shareholders (e.g., systematic investment plans, telephone
investment plans, systematic cash withdrawal plans, automatic
reinvestment plans and tax sheltered retirement plans).
d. Maintain account documentation files for each shareholder.
A-2
<PAGE> 12
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
ALPINE EQUITY TRUST
AND
BISYS FUND SERVICES, INC.
REPORTS
-------
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13 of
the Securities Exchange Act of 1934, as amended.
B-1
<PAGE> 1
EXHIBIT 9(C)
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 27th day of April, 1998, between ALPINE
EQUITY TRUST (the "Trust"), a Massachusetts business trust having its principal
place of business at 3435 Stelzer Road, Columbus, Ohio 43219, and BISYS FUND
SERVICES, INC. ("Fund Accountant"), a corporation organized under the laws of
the State of Delaware and having its principal place of business at 3435 Stelzer
Road, Columbus, Ohio 43219.
WHEREAS, the Trust desires that Fund Accountant perform
certain fund accounting services for each investment portfolio of the Trust, all
as now or hereafter may be established from time to time (individually referred
to herein as the "Fund" and collectively as the "Funds"); and
WHEREAS, Fund Accountant is willing to perform such services
on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and
covenants herein set forth, the parties agree as follows:
1. SERVICES AS FUND ACCOUNTANT.
(a) MAINTENANCE OF BOOKS AND RECORDS. Fund
Accountant will keep and maintain the
following books and records of each Fund
pursuant to Rule 31a-1 under the Investment
Company Act of 1940 (the "Rule"):
(i) Journals containing an itemized
daily record in detail of all
purchases and sales of securities,
all receipts and disbursements of
cash and all other debits and
credits, as required by subsection
(b)(1) of the Rule;
(ii) General and auxiliary ledgers
reflecting all asset, liability,
reserve, capital, income and expense
accounts, including interest accrued
and interest received, as required
by subsection (b)(2)(I) of the Rule;
(iii) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of
the Rule; and
(iv) A monthly trial balance of all
ledger accounts (except shareholder
accounts) as required by subsection
(b)(8) of the Rule.
<PAGE> 2
(b) PERFORMANCE OF DAILY ACCOUNTING SERVICES. In
addition to the maintenance of the books and
records specified above, Fund Accountant
shall perform the following accounting
services daily for each Fund:
(i) Calculate the net asset value per
share utilizing prices obtained from
the sources described in subsection
1(b)(ii) below;
(ii) Obtain security prices from
independent pricing services
approved by the Trust's Board of
Trustees, or if such quotes are
unavailable, then obtain such prices
from each Fund's investment adviser
or its designee, as approved by the
Trust's Board of Trustees;
(iii) Verify and reconcile with the Funds'
custodian all daily trade activity;
(iv) Compute, as appropriate, each Fund's
net income and capital gains,
dividend payables, dividend factors,
7-day yields, 7-day effective
yields, 30-day yields, average
annual returns and weighted average
portfolio maturity;
(v) Review daily the net asset value
calculation and dividend factor (if
any) for each Fund prior to release
to shareholders, check and confirm
the net asset values and dividend
factors for reasonableness and
deviations, and distribute net asset
values and yields to NASDAQ;
(vi) Report to the Trust the daily market
pricing of securities in any money
market Funds, with the comparison to
the amortized cost basis;
(vii) Determine unrealized appreciation
and depreciation on securities held
in variable net asset value Funds;
(viii) Amortize premiums and accrete
discounts on securities purchased at
a price other than face value, if
requested by the Trust;
(ix) Update fund accounting system to
reflect rate changes, as received
from a Fund's investment adviser, on
variable interest rate instruments;
2
<PAGE> 3
(x) Post Fund transactions to
appropriate categories;
(xi) Accrue expenses of each Fund
according to instructions received
from the Trust's Administrator;
(xii) Determine the outstanding
receivables and payables for all (1)
security trades, (2) Fund share
transactions and (3) income and
expense accounts;
(xiii) Provide accounting reports in
connection with the Trust's regular
annual audit and other audits and
examinations by regulatory agencies;
and
(xiv) Provide such periodic reports as the
parties shall agree upon, as set
forth in a separate schedule.
(c) SPECIAL REPORTS AND SERVICES.
(i) Fund Accountant may provide
additional special reports upon the
request of the Trust or a Fund's
investment adviser, which may result
in an additional charge, the amount
of which shall be agreed upon
between the parties.
(ii) Fund Accountant may provide such
other similar services with respect
to a Fund as may be reasonably
requested by the Trust, which may
result in an additional charge, the
amount of which shall be agreed upon
between the parties.
(d) ADDITIONAL ACCOUNTING SERVICES. Fund
Accountant shall also perform the following
additional accounting services for each
Fund:
(i) Provide monthly a download (and hard
copy thereof) of the financial
statements described below, upon
request of the Trust. The download
will include the following items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets,
and
Condensed Financial Information;
3
<PAGE> 4
(ii) Provide accounting information for
the following:
(A) federal and state income
tax returns and federal
excise tax returns;
(B) the Trust's semi-annual
reports with the Securities
and Exchange Commission
("SEC") on Form N-SAR;
(C) the Trust's annual,
semi-annual and quarterly
(if any) shareholder
reports;
(D) registration statements on
Form N-1A and other filings
relating to the
registration of shares;
(E) the Administrator's
monitoring of each Trust's
status as a regulated
investment company under
Subchapter M of the
Internal Revenue Code, as
amended;
(F) annual audit by the Trust's
auditors; and
(G) examinations performed by
the SEC.
2. SUBCONTRACTING.
Fund Accountant may, at its expense, subcontract with
any entity or person concerning the provision of the services contemplated
hereunder; provided, however, that Fund Accountant shall not be relieved of any
of its obligations under this Agreement by the appointment of such subcontractor
and provided further, that Fund Accountant shall be responsible, to the extent
provided in Section 7 hereof, for all acts of such subcontractor as if such acts
were its own.
3. COMPENSATION.
The Trust shall pay Fund Accountant for the services
to be provided by Fund Accountant under this Agreement in accordance with, and
in the manner set forth in the Omnibus Fee Agreement among Fund Accountant,
BISYS Fund Services Ohio, Inc. and the Trust dated April 27, 1998.
4
<PAGE> 5
4. [INTENTIONALLY OMITTED]
5. EFFECTIVE DATE.
This Agreement shall become effective with respect to
a Fund as of the date first written above (or, if a particular Fund is not in
existence on that date, on the date such Fund commences operation) (the
"Effective Date").
6. TERM.
The initial term of this Agreement (the "Initial
Term") shall be for a period commencing on the Effective Date and ending on
April 27, 1999. Thereafter, this Agreement shall be renewed automatically for
successive one-year terms unless written notice not to renew is given by the
non-renewing party to the other party at least 90 days prior to the expiration
of the then-current term. Notwithstanding the foregoing, either party may
terminate this Agreement, without penalty, during the Initial Term or any
subsequent one-year term, upon the provision of 90 days written notice to the
other party.
After such termination for so long as Fund
Accountant, with the written consent of the Trust, in fact continues to perform
any one or more of the services contemplated by this Agreement or any schedule
or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Compensation due Fund Accountant and unpaid by the Trust upon
such termination shall be immediately due and payable upon and notwithstanding
such termination. Fund Accountant shall be entitled to collect from the Trust,
in addition to the compensation described under Section 3 hereof, the amount of
all of Fund Accountant's cash disbursements reasonably incurred for services in
connection with Fund Accountant's activities in effecting such termination,
including without limitation, the delivery to the Trust and/or its designees of
the Trust's property, records, instruments and documents, or any copies thereof.
Subsequent to such termination, for a reasonable fee, Fund Accountant will
provide the Trust with reasonable access to any Trust documents or records
remaining in its possession.
7. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION.
Fund Accountant shall use its best efforts to insure
the accuracy of all services performed under this Agreement, but shall not be
liable to the Trust for any action taken or omitted by Fund Accountant in the
absence of bad faith, willful misfeasance, negligence or from reckless disregard
by it of its obligations and duties. A Fund agrees to indemnify and hold
harmless Fund Accountant, its employees, agents, directors, officers and
nominees from and against any and all claims, demands, actions and suits,
whether groundless or otherwise, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising out of or in any way relating to Fund
Accountant's actions
5
<PAGE> 6
taken or non-actions with respect to the performance of services under this
Agreement with respect to such Fund or based, if applicable, upon reasonable
reliance on information, records, instructions or requests with respect to such
Fund given or made to Fund Accountant by a duly authorized representative of the
Trust; provided that this indemnification shall not apply to actions or
omissions of Fund Accountant in cases of its own bad faith, willful misfeasance,
negligence or from reckless disregard by it of its obligations and duties, and
further provided that prior to confessing any claim against it which may be the
subject of this indemnification, Fund Accountant shall give the Trust written
notice of and reasonable opportunity to defend against said claim in its own
name or in the name of Fund Accountant. Fund Accountant agrees to indemnify and
hold harmless the Trust, its employees, agents, Trustees, officers and nominees
from and against any and all actions, suits and claims, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, reasonable counsel fees and other expenses of every
nature and character arising out or in any way relating to Fund Accountant's bad
faith, willful misfeasance, negligence or reckless disregard by it of its
obligations and duties, with respect to the performance of services under this
Agreement; provided, that, prior to confessing any claim against it which may be
the subject of this indemnification, the Trust shall give Fund Accountant
written notice of and a reasonable opportunity to defend against said claim in
its own name or in the name of the Trust.
8. RECORD RETENTION AND CONFIDENTIALITY.
Fund Accountant shall keep and maintain on behalf of
the Trust all books and records which the Trust or Fund Accountant is, or may
be, required to keep and maintain pursuant to any applicable statutes, rules and
regulations, including without limitation Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended (the "1940 Act"), relating to the
maintenance of books and records in connection with the services to be provided
hereunder. Fund Accountant further agrees that all such books and records shall
be the property of the Trust and to make such books and records available for
inspection by the Trust or by the Securities and Exchange Commission at
reasonable times and otherwise to keep confidential all books and records and
other information relative to the Trust and its shareholders; except when
requested to divulge such information by duly-constituted authorities or court
process.
9. UNCONTROLLABLE EVENTS.
Fund Accountant assumes no responsibility hereunder,
and shall not be liable, for any damage, loss of data, delay or any other loss
whatsoever caused by events beyond its reasonable control.
10. REPORTS.
Fund Accountant will furnish to the Trust and to its
properly authorized auditors, investment advisers, examiners, distributors,
dealers, underwriters, salesmen, insurance companies and others designated by
the Trust in writing, such reports
6
<PAGE> 7
and at such times as are prescribed pursuant to the terms and the conditions of
this Agreement to be provided or completed by Fund Accountant, or as
subsequently agreed upon by the parties pursuant to an amendment hereto. The
Trust agrees to examine each such report or copy promptly and will report or
cause to be reported any errors or discrepancies therein no later than three
business days from the receipt thereof. In the event that errors or
discrepancies, except such errors and discrepancies as may not reasonably be
expected to be discovered by the recipient, are not so reported within the
aforesaid period of time, a report will for all purposes be accepted by and
binding upon the Trust and any other recipient, and, except as provided in
Section 7 hereof, Fund Accountant shall have no liability for errors or
discrepancies therein and shall have no further responsibility with respect to
such report except to perform reasonable corrections of such errors and
discrepancies within a reasonable time after requested to do so by the Trust.
11. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed to
perform services required to be provided by Fund Accountant under this Agreement
are the property of Fund Accountant. All records and other data except such
computer programs and procedures are the exclusive property of the Trust and all
such other records and data will be furnished to the Trust in appropriate form
as soon as practicable after termination of this Agreement for any reason.
12. RETURN OF RECORDS.
Fund Accountant may at its option at any time, and
shall promptly upon the Trust's demand, turn over to the Trust and cease to
retain Fund Accountant's files, records and documents created and maintained by
Fund Accountant pursuant to this Agreement which are no longer needed by Fund
Accountant in the performance of its services or for its legal protection. If
not so turned over to the Trust, such documents and records will be retained by
Fund Accountant for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to the Trust
unless the Trust authorizes in writing the destruction of such records and
documents.
13. REPRESENTATIONS OF THE TRUST.
The Trust certifies to Fund Accountant that: (1) as
of the close of business on the Effective Date, each Fund that is in existence
as of the Effective Date has authorized unlimited shares, and (2) this Agreement
has been duly authorized by the Trust and, when executed and delivered by the
Trust, will constitute a legal, valid and binding obligation of the Trust,
enforceable against the Trust in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
7
<PAGE> 8
14. REPRESENTATIONS OF FUND ACCOUNTANT.
Fund Accountant represents and warrants that: (1) the
various procedures and systems which Fund Accountant has implemented with regard
to safeguarding from loss or damage attributable to fire, theft, or any other
cause the records, and other data of the Trust and Fund Accountant's records,
data, equipment facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its obligations
hereunder, and (2) this Agreement has been duly authorized by Fund Accountant
and, when executed and delivered by Fund Accountant, will constitute a legal,
valid and binding obligation of Fund Accountant, enforceable against Fund
Accountant in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and secured parties.
15. INSURANCE.
Fund Accountant shall promptly notify the Trust
should any of its insurance coverage be canceled or reduced. Such notification
shall include the date of change and the reasons therefor. Fund Accountant shall
promptly notify the Trust of any material claims against it with respect to
services performed under this Agreement, whether or not they may be covered by
insurance, and shall notify the Trust from time to time as may be appropriate of
the total outstanding claims made by Fund Accountant under its insurance
coverage.
16. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to Fund Accountant the
following:
(a) Copies of the Declaration of Trust of the
Trust and of any amendments thereto,
certified by the proper official of the
state in which such document has been filed.
(b) Copies of the following documents:
(i) The Trust's Bylaws and any
amendments thereto; and
(ii) Certified copies of resolutions of
the Board of Trustees covering the
approval of this Agreement,
authorization of a specified officer
of the Trust to execute and deliver
this Agreement and authorization for
specified officers of the Trust to
instruct Fund Accountant thereunder.
8
<PAGE> 9
(c) A list of all the officers of the Trust,
together with specimen signatures of those
officers who are authorized to instruct Fund
Accountant in all matters.
(d) Two copies of the Prospectuses and
Statements of Additional Information for
each Fund.
17. INFORMATION FURNISHED BY FUND ACCOUNTANT.
(a) Fund Accountant has furnished to the Trust
the following:
(i) Fund Accountant's Articles of
Incorporation; and
(ii) Fund Accountant's Bylaws and any
amendments thereto.
(b) Fund Accountant shall, upon request, furnish
certified copies of corporate actions
covering the following matters:
(i) Approval of this Agreement, and
authorization of a specified officer
of Fund Accountant to execute and
deliver this Agreement; and
(ii) Authorization of Fund Accountant to
act as fund accountant for the Trust
and to provide accounting services
for the Trust.
18. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish Fund Accountant written
copies of any amendments to, or changes in, any of the items referred to in
Section 16 hereof upon such amendments or changes becoming effective.
19. COMPLIANCE WITH LAW.
Except for the obligations of Fund Accountant set
forth in Section 8 hereof, the Trust assumes full responsibility for the
preparation, contents and distribution of each prospectus of the Trust as to
compliance with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), the 1940 Act and any other laws, rules and
regulations of governmental authorities having jurisdiction. Fund Accountant
shall have no obligation to take cognizance of any laws relating to the sale of
the Trust's shares. The Trust represents and warrants that no shares of the
Trust will be offered to the public until the Trust's registration statement
under the Securities Act and the 1940 Act has been declared or becomes
effective.
9
<PAGE> 10
20. NOTICES.
Any notice provided hereunder shall be sufficiently
given when sent by registered or certified mail to the party required to be
served with such notice, at the following address: 3435 Stelzer Road, Columbus,
Ohio 43219, or at such other address as such party may from time to time specify
in writing to the other party pursuant to this Section.
21. HEADINGS.
Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
22. AMENDMENT AND ASSIGNMENT.
This Agreement may be modified or amended only by a
writing signed by each of the parties. This Agreement and the rights and duties
hereunder shall not be assignable with respect to a Fund by either of the
parties hereto except by the specific written consent of the other party. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
23. GOVERNING LAW.
This Agreement shall be governed by and provisions
shall be construed in accordance with the laws of the State of Ohio.
24. LIMITATION OF LIABILITY OF THE TRUSTEES AND
SHAREHOLDERS.
It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust personally, but shall bind
only the trust property of the Trust. The execution and delivery of this
Agreement have been authorized by the Trustees, and this Agreement has been
signed and delivered by an authorized officer of the Trust, acting as such, and
neither such authorization by the Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in the Trust's Agreement and Declaration of
Trust.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed all as of the day and year first above written.
ALPINE EQUITY TRUST
By: /s/ Samuel A. Lieber
------------------------
BISYS FUND SERVICES, INC.
By: /s/ David Huber
------------------------
11
<PAGE> 1
Exhibit 9(D)
OMNIBUS FEE AGREEMENT
THIS AGREEMENT is made as of this 27th day of April, 1998, by
and among ALPINE EQUITY TRUST (the "Company"), a Massachusetts business trust,
BISYS FUND SERVICES, INC. ("BISYS"), a Delaware corporation and BISYS FUND
SERVICES OHIO, INC. ("BISYS Ohio"), an Ohio corporation.
WHEREAS, the Company is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") consisting of several series of shares of beneficial interest
("Shares");
WHEREAS, the Company and BISYS Ohio have entered into an
Administration Agreement, dated April 27, 1998, concerning the provision of
management and administrative services for the investment portfolios of the
Company (individually referred to herein as a "Fund" and collectively as the
"Funds");
WHEREAS, the Company and BISYS have entered into a Fund
Accounting Agreement and a Transfer Agency Agreement, each of which is dated
April 27, 1998, concerning the provision of fund accounting and transfer agency
services, respectively, for the Funds; and
WHEREAS, the parties desire to set forth the compensation
payable by the Company under the foregoing agreements in a separate written
document.
NOW, THEREFORE, in consideration of the mutual premises and
covenants herein set forth, the parties agree as follows:
1. The Administration Agreement, Fund Accounting Agreement,
and Transfer Agency Agreement referred to herein shall be referred to
collectively as the "Service Agreements."
2. The Company shall pay to BISYS Ohio all of the compensation
set forth herein on the dates set forth herein.
3. The amount that is due and payable to BISYS Ohio (the
"Payment") shall be computed at an annual rate of thirty-two and one-half
one-hundredths of one percent (.325%) of each Fund's average daily net assets.
The parties acknowledge and agree that the payment shall include an amount that
represents the custodian fee payable to Investors Fiduciary Trust Company
pursuant to a Custody Agreement, dated ________________________, between the
Company and Investors Fiduciary Trust Company. In that connection, the Company
hereby appoints BISYS Ohio as its paying agent for purposes of remitting that
portion of the Payment that represents the custodian fee that is due and payable
to Investors Fiduciary Trust Company. The parties further acknowledge and agree
that the remainder of the Payment shall be in consideration for the services
provided under the Service Agreements.
<PAGE> 2
4. This Agreement shall be governed by, and its provisions
shall be construed in accordance with, the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be fully executed as of the day and year first written above.
ALPINE EQUITY TRUST
By: /s/ Samuel A. Lieber
-----------------------------
Its: CEO
-----------------------------
BISYS FUND SERVICES, INC.
By: /s/ David Huber
-----------------------------
Its: President
-----------------------------
BISYS FUND SERVICES OHIO, INC.
By: /s/ David Huber
-----------------------------
Its: President
-----------------------------
-2-
<PAGE> 1
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 19 to the Registration Statement on Form N-1A (File No. 33-25378) of the
Alpine Equity Trust of our reports dated November 11, 1997 and December 19, 1997
on our audits of the financial statements and financial highlights of Alpine
U.S. Real Estate Equity Fund and the Alpine International Real Estate Equity
Fund, respectively, which reports are included in the Annual Reports to
Shareholders for the years ended September 30, 1997 and October 31, 1997,
respectively. We also consent to the reference to our Firm under the caption
"Independent Auditors" in the Prospectuses and Statement of Additional
Information relating to the Alpine Equity Trust in this Post-Effective Amendment
No. 19 to the Registration Statement on Form N-1A (File No. 33-25378) of the
Alpine Equity Trust.
PricewaterhouseCoopers LLP
Columbus, Ohio
October 23, 1998
<PAGE> 1
Exhibit 15(c)
DISTRIBUTION PLAN OF CLASS A SHARES
THE ALPINE EQUITY TRUST
ALPINE REALTY INCOME AND GROWTH FUND
SECTION 1. The Alpine Equity Trust (the "Trust") may act as the
distributor of securities which are issued in respect of one or more of its
separate investment series, pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "1940 Act") according to the terms of this Distribution Plan
("Plan").
SECTION 2. The Trust may expend daily amounts at an annual rate of 0.75 of 1% of
the average daily net asset value of the Class A Shares ("Shares") of its Alpine
Realty Income and Growth Fund Series ("Fund") to finance any activity which is
principally intended to result in the sale of Shares including, without
limitation, expenditures consisting of payments to a principal underwriter of
the Fund ("Principal Underwriter") or others in order: (i) to enable payments to
be made by the Principal Underwriter or others for any activity primarily
intended to result in the sale of Shares, including, without limitation, (a)
compensation to public relations consultants or other persons assisting in, or
providing services in connection with, the distribution of Shares, (b)
advertising, (c) printing and mailing of prospectuses and reports for
distribution to persons other than existing shareholders, (d) preparation and
distribution of advertising material and sales literature, (e) commission
payments, and principal and interest expenses associated with the financing of
commission payments, made by the Principal Underwriter in connection with the
sale of Shares and (f) conducting public relations efforts such as seminars;
(ii) to enable the Principal Underwriter or others to receive, pay or to have
paid to others who have sold Shares, or who provide services to holders of
Shares, a maintenance or other fee in respect of services provided to holders of
Shares, at such intervals as the Principal Underwriter may determine, in respect
of Shares previously sold and remaining outstanding during the period in respect
of which such fee is or has been paid; and/or (iii) to compensate the Principal
Underwriter for its efforts in respect of sales of Shares since inception of the
Plan. Appropriate adjustments shall be made to the payments made pursuant to
this Section 2 to the extent necessary to ensure that no payment is made by the
Fund with respect to any Class in excess of any limit imposed on asset based,
front end and deferred sales charges under any rule or regulations adopted by
the National Association of Securities Dealers, Inc. (the "NASD Rules"). In
addition, to the extent any amounts paid hereunder fall within the definition of
an "asset based sales charge" under said NASD Rules such payments shall be
limited to .75 of 1% of the aggregate net asset value of the Shares on an annual
basis and, to the extent that any such payments are made in respect of
"shareholder services" as that term is defined in the NASD Rules, such payments
shall be limited to .25 of 1% of the aggregate net asset value of the Shares on
an annual basis and shall only be made in respect of shareholder services
rendered during the period in which such amounts are accrued.
SECTION 3. This Plan shall not take effect with respect to any Fund
until it has been approved by votes of a majority of (a) the outstanding Shares
of such Fund, (b) the Trustees of the Trust, and (c) those Trustees of the Trust
who are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or any
agreements of the Trust related hereto or any other person related to this Plan
("Disinterested Trustees"), cast in person at a meeting called for the purpose
of voting on this Plan. In addition, any agreement related to this Plan and
entered into by the Trust on behalf of the Fund in connection therewith shall
not take effect until it has been approved by votes of a majority of (a) the
Board of Trustees of the Trust, and (c) the Disinterested Trustees of the Trust.
<PAGE> 2
SECTION 4. Unless sooner terminated pursuant to Section 6, this Plan
shall continue in effect for a period of one year from the date it takes effect
and thereafter shall continue in effect for additional periods that shall not
exceed one year so long as such continuance is specifically approved by votes of
a majority of both (a) the Board of Trustees of the Trust and (b) the
Disinterested Trustees of the Trust, cast in person at a meeting called for the
purpose of voting on this Plan.
SECTION 5. Any person authorized to direct the disposition of monies
paid or payable pursuant to this Plan or any related agreement shall provide to
the Trust's Board and the Board shall review at least quarterly a written report
of the amounts so expended and the purposes for which such expenditures were
made.
SECTION 6. This Plan may be terminated at any time with respect to any
Fund by vote of a majority of the Disinterested Trustees, or by vote of a
majority of the Shares of the Fund.
SECTION 7. Any agreement of the Trust, with respect to any Fund,
related to this Plan shall be in writing and shall provide:
A. That such agreement may be terminated with respect to a
Fund at any time without payment of any penalty, by vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding Shares of
such Fund on not more than sixty days written notice to any other party to the
agreement; and
B. That such agreement shall terminate automatically in the
event of its assignment.
SECTION 8. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 with respect to a Fund
unless such amendment is approved by a vote of at least a majority (as defined
in the 1940 Act) of the outstanding Shares of such Fund, and no material
amendment to this Plan shall be made unless approved by votes of a majority of
(a) the Board of Trustees of the Trust, and (c) the Disinterested Trustees of
the Trust, cast in person at a meeting called for the purpose of voting on such
amendment.
<PAGE> 3
DISTRIBUTION PLAN OF CLASS B SHARES
THE ALPINE EQUITY TRUST
ALPINE REALTY INCOME AND GROWTH FUND
SECTION 1. The Alpine Equity Trust (the "Trust") may act as the
distributor of securities which are issued in respect of one or more of its
separate investment series, pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "1940 Act") according to the terms of this Distribution Plan
("Plan").
SECTION 2. The Trust may expend daily amounts at an annual rate of 1% of the
average daily net asset value of the Class B Shares ("Shares") of its Alpine
Realty Income and Growth Fund Series ("Fund") to finance any activity which is
principally intended to result in the sale of Shares including, without
limitation, expenditures consisting of payments to a principal underwriter of
the Fund ("Principal Underwriter") or others in order: (i) to enable payments to
be made by the Principal Underwriter or others for any activity primarily
intended to result in the sale of Shares, including, without limitation, (a)
compensation to public relations consultants or other persons assisting in, or
providing services in connection with, the distribution of Shares, (b)
advertising, (c) printing and mailing of prospectuses and reports for
distribution to persons other than existing shareholders, (d) preparation and
distribution of advertising material and sales literature, (e) commission
payments, and principal and interest expenses associated with the financing of
commission payments, made by the Principal Underwriter in connection with the
sale of Shares and (f) conducting public relations efforts such as seminars;
(ii) to enable the Principal Underwriter or others to receive, pay or to have
paid to others who have sold Shares, or who provide services to holders of
Shares, a maintenance or other fee in respect of services provided to holders of
Shares, at such intervals as the Principal Underwriter may determine, in respect
of Shares previously sold and remaining outstanding during the period in respect
of which such fee is or has been paid; and/or (iii) to compensate the Principal
Underwriter for its efforts in respect of sales of Shares since inception of the
Plan. Appropriate adjustments shall be made to the payments made pursuant to
this Section 2 to the extent necessary to ensure that no payment is made by the
Fund with respect to any Class in excess of any limit imposed on asset based,
front end and deferred sales charges under any rule or regulations adopted by
the National Association of Securities Dealers, Inc. (the "NASD Rules"). In
addition, to the extent any amounts paid hereunder fall within the definition of
an "asset based sales charge" under said NASD Rules such payments shall be
limited to .75 of 1% of the aggregate net asset value of the Shares on an annual
basis and, to the extent that any such payments are made in respect of
"shareholder services" as that term is defined in the NASD Rules, such payments
shall be limited to .25 of 1% of the aggregate net asset value of the Shares on
an annual basis and shall only be made in respect of shareholder services
rendered during the period in which such amounts are accrued.
SECTION 3. This Plan shall not take effect with respect to any Fund
until it has been approved by votes of a majority of (a) the outstanding Shares
of such Fund, (b) the Trustees of the Trust, and (c) those Trustees of the Trust
who are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or any
agreements of the Trust related hereto or any other person related to this Plan
("Disinterested Trustees"), cast in person at a meeting called for the purpose
of voting on this Plan. In addition, any agreement related to this Plan and
entered into by the Trust on behalf of the Fund in connection therewith shall
not take effect until it has been approved by votes of a majority of (a) the
Board of Trustees of the Trust, and (c) the Disinterested Trustees of the Trust.
<PAGE> 4
SECTION 4. Unless sooner terminated pursuant to Section 6, this Plan
shall continue in effect for a period of one year from the date it takes effect
and thereafter shall continue in effect for additional periods that shall not
exceed one year so long as such continuance is specifically approved by votes of
a majority of both (a) the Board of Trustees of the Trust and (b) the
Disinterested Trustees of the Trust, cast in person at a meeting called for the
purpose of voting on this Plan, provided that payments for services theretofore
provided or for reimbursement of expenses theretofore incurred or accrued prior
to termination of this Plan in accordance with Section 2 may be continued by the
Fund to the extent provided for in Section 6, below, as applicable.
SECTION 5. Any person authorized to direct the disposition of monies
paid or payable pursuant to this Plan or any related agreement shall provide to
the Trust's Board and the Board shall review at least quarterly a written report
of the amounts so expended and the purposes for which such expenditures were
made.
SECTION 6. Payments with respect to services provided by the Principal
Underwriter pursuant to Section 2, above, shall be authorized hereunder, whether
or not this Plan has been otherwise terminated, if such payments are for
services theretofore provided or for reimbursement of expenses theretofore
incurred or accrued prior to termination of this Plan in other respects and if
such payment is or has been so approved by the Board, including the
Disinterested Trustees, or agreed to by the Fund with such approval, all subject
to such specific implementation as the Board, including the Disinterested
Trustees, may approve; provided that, at the time any such payment is made,
whether or not this Plan has been otherwise terminated, the making of such
payment will not cause the limitation upon such payments set forth in Section 2
to be exceeded. Without limiting the generality of the foregoing, the Fund may
pay to, or on the order of, any person who has served from time to time as
Principal Underwriter amounts for distribution services pursuant to a principal
underwriting agreement or otherwise. Any such principal underwriting agreement
may, but need not, provide that such Principal Underwriter may be paid for
distribution services to Class B Shares and/or other specified classes of shares
of the Fund (together the "B-Class-of-Shares"), a fee which may be designated a
Distribution Fee and may be paid at a rate per annum up to .75 % of the average
daily net asset value of such B-Class-of-Shares of the Fund and may, but need
not, also provide: (I) that a Principal Underwriter will be deemed to have fully
earned its "Allocable Portion" of the Distribution Fee upon the sale of the
Commission Shares (as defined in the Allocation Schedule) taken into account in
determining its Allocable Portion; (II) that the Fund's obligation to pay such
Principal Underwriter its Allocable Portion of the Distribution Fee shall be
absolute and unconditional and shall not be subject to dispute, offset,
counterclaim or any defense whatsoever (it being understood that such provision
is not a waiver of the Fund's right to pursue such Principal Underwriter and
enforce such claims against the assets of such Principal Underwriter other than
its right to its Allocable Portion of the Distribution Fee and CDSCs (as defined
below); (III) that the Fund's obligation to pay such Principal Underwriter its
Allocable Portion of the Distribution Fee shall not be changed or terminated
except to the extent required by any change in applicable law, including without
limitation, the 1940 Act, the Rules promulgated thereunder by the Securities and
Exchange Commission and the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., in each case enacted or promulgated after May 5,
1997, or in connection with a "Complete Termination" (as hereinafter defined);
(IV) that the Fund will not waive or change any contingent deferred sales charge
("CDSC") in respect of the Distributor's Allocable Portion thereof, except as
provided in the Fund's prospectus or statement of additional information without
the consent of the Principal Underwriter or any assignee of such Principal
Underwriter's rights to its Allocable Portion; (V) that the termination of the
Principal Underwriter, the principal
<PAGE> 5
underwriting agreement or this Plan will not terminate such Principal
Underwriter's rights to its Allocable Portion of the CDSCs; and (VI) that any
Principal Underwriter may assign its rights to its Allocable Portion of the
Distribution Fee and CDSCs (but not such Principal Underwriter's obligations to
the Fund under its principal underwriting agreement) to raise funds to make
expenditures described in Section 2 above and in connection therewith, and upon
receipt of notice of such assignment, the Fund shall pay to the assignee such
portion of the Principal Underwriter's Allocable Portion of the Distribution Fee
and CDSCs so assigned. For purposes of such principal underwriting agreement,
the term Allocable Portion of Distribution Fee as applied to any Principal
Underwriter may mean the portion of the Distribution Fee allocable to
Distributor Shares in accordance with the "Allocation Schedule" attached to such
Principal Underwriter's principal underwriting agreement. For purposes of such
principal underwriting agreement, the term Allocable Portion of CDSCs as applied
to any Principal Underwriter may mean the portion of the CDSCs allocable to
Distributor Shares in accordance with the Allocation Schedule attached to such
Principal Underwriter's principal underwriting agreement. For purposes of such
principal underwriting agreement, the term "Complete Termination" may mean a
termination of this Plan involving the cessation of payments of the Distribution
Fee thereunder, the cessation of payments of distribution fees pursuant to every
other Rule 12b-1 plan of the Fund for every existing or future B-Class-of-Shares
and the cessation of the offering by the Fund of existing or future
B-Class-of-Shares, which conditions shall be deemed to be satisfied when they
are first complied with and so long thereafter as they are complied with prior
to the earlier of (i) the date upon which all of the B Shares which are
Distributor Shares pursuant to the Allocation Schedule shall have been redeemed
or converted or (ii) a specified date, after either of which times such
conditions need no longer be complied with. For purposes of such principal
underwriting agreement, the term "B-Class-of-Shares" may mean the B Class of
Shares of the Fund and each other class of shares of the Fund hereafter issued
which would be treated as "Shares" under such Allocation Schedule or which has
economic characteristics substantially similar to those of the B Class of Shares
taking into account the total sales charge, CDSC or other similar charges borne
directly or indirectly by the holder of the shares of such classes.
The parties may agree that the existing C Class of Shares of the Fund
does not have substantially similar economic characteristics to the B Classes of
Shares taking into account the total sales charge, CDSC or other similar charges
borne directly or indirectly by the holder of such shares. For purposes of
clarity the parties to such principal underwriting agreement may state that they
intend that a new installment load class of shares which may be authorized by
amendments to Rule 6(c)-10 under the 1940 Act will be considered to be a B-C
lass-of- Shares if it has economic characteristics substantially similar to the
economic characteristics of the existing B Class of Shares taking into account
the total sales charge, CDSC or other similar charges borne directly or
indirectly by the holder of such shares and will not be considered to be a
B-Class-of-Shares if it has economic characteristics substantially similar to
the economic characteristics of the existing C Class of shares of the Fund
taking into account the total sales charge, CDSC or other similar charges borne
directly or indirectly by the holder of such shares. For purposes of such
principal underwriting agreement, "Allocation Schedule" may mean a schedule
which shall be approved by Directors (as defined below) in connection with their
required approval of such principal underwriting agreement as assigning to each
Principal Underwriter of Shares the portion of the total Distribution Fee
payable by the Fund under such principal underwriting agreement which has been
earned by such Principal Underwriter to the extent necessary so that the
continued payments thereof if such Principal Underwriter ceases to serve in that
capacity does not penalize the Fund by requiring it to pay for services that
have not been earned.
<PAGE> 6
SECTION 7. This Plan may be terminated at any time with respect to any
Fund by vote of a majority of the Disinterested Trustees, or by vote of a
majority of the Shares of the Fund, provided that payments for services
theretofore provided or for reimbursement of expenses theretofore incurred or
accrued prior to termination of this Plan in accordance with Section 2 may be
continued by the Fund to the extent provided for in Section 6, above, as
applicable.
SECTION 8. Any agreement of the Trust, with respect to any Fund,
related to this Plan shall be in writing and shall provide:
A. That such agreement may be terminated with respect to a
Fund at any time without payment of any penalty, by vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding Shares of
such Fund on not more than sixty days written notice to any other party to the
agreement; and
B. That such agreement shall terminate automatically in the
event of its assignment.
SECTION 9. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 with respect to a Fund
unless such amendment is approved by a vote of at least a majority (as defined
in the 1940 Act) of the outstanding Shares of such Fund, and no material
amendment to this Plan shall be made unless approved by votes of a majority of
(a) the Board of Trustees of the Trust, and (c) the Disinterested Trustees of
the Trust, cast in person at a meeting called for the purpose of voting on such
amendment.
