<PAGE> 1
TABLE OF CONTENTS
Portfolio Manager's Report to Shareholders
PAGE 2
Schedules of Portfolio Investments
PAGE 7
Statements of Assets and Liabilities
PAGE 9
Statements of Operations
PAGE 10
Statements of Changes in Net Assets
PAGE 11
Notes to Financial Statements
PAGE 12
Financial Highlights
PAGE 19
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-1-
<PAGE> 2
Portfolio Manager's Report to Shareholders Alpine U.S. Real Estate Equity Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE OF A $10,000 INVESTMENT
Measurement Period Alpine U.S. Real Estate Wilshire Real Estate Lipper Real Estate
(Fiscal Year Covered Y Shares Securities Index Fund Average
<S> <C> <C> <C>
9/3/93 10000 10000 10000
9/30/93 10350 10455 10330
3/31/94 10901 9924 9940
9/30/94 10117 9890 9693
3/31/95 9674 9902 9313
9/30/95 11900 10823 10342
3/31/96 13085 11685 10900
9/30/96 13515 12962 11812
3/31/97 16229 15627 13743
9/30/97 24151 18410 15936
3/31/98 25876 18245 16201
</TABLE>
Past performance is not predictive of future results. Investment return and
principal value of the Alpine U.S. Real Estate Fund will fluctuate, so that the
shares, when redeemed, may be worth more or less than their original cost. The
returns set forth reflect the waiver of certain advisory or administrative fees.
Without the waiver of fees, total return would have been lower.
Performance of Investor A, B and C shares for the period prior to their
inceptions on 3/10/95, represents performance for Y shares. A, B and C shares
are subject to distribution and service fees, which had they been included in
the prior period, performance would have been lower.
The Wilshire Real Estate Securities Index (WARESI) is a market
capitalization-weighted index of equity securities whose primary business is
equity ownership of commercial real estate and equity (non-health) REITs.
The Lipper Real Estate Average is made up of funds that invest 65% of their
portfolio in equity securities of domestic and foreign companies engaged in the
real estate industry.
<TABLE>
<CAPTION>
COMPARATIVE TOTAL RETURNS AS OF 3/31/98
- ------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEAR INCEPTION
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wilshire Real Estate Securities Index (WARESI) 16.75% 22.60% 14.03%
Lipper Real Estate Fund Average 17.89% 20.27% 11.11%
- ------------------------------------------------------------------------------------
Alpine Class A (4.75%)* 51.58% 36.18% 21.54%
Alpine Class B (5.00%)* 52.96% 36.91% 22.04%
Alpine Class C (1.00%)* 57.00% 37.56% 22.35%
Alpine Class Y 59.44% 38.81% 23.08%
</TABLE>
* Represents maximum sales load.
- --------------------------------------------------------------------------------
-2-
<PAGE> 3
Portfolio Manager's Report to Shareholders Alpine U.S. Real Estate Equity Fund
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present the Alpine U.S. Real Estate Equity Fund's first report
to shareholders as part of the Alpine family of real estate funds. This report
will continue the Q&A report format which we used at Evergreen to discuss not
only the Fund's performance, but also issues and trends which are current and
germane to real estate securities.
Q. WHAT WAS THE ALPINE U.S. REAL ESTATE FUND'S PERFORMANCE DURING THE SIX MONTHS
ENDING MARCH 31, 1998?
A. We are pleased to report to shareholders that your fund continued to produce
strong performance relative to other real estate funds, during both the
first calendar quarter of 1998, and the first half of the fund's fiscal
year. As the accompanying chart illustrates, the Alpine U.S. Real Estate
Equity Fund's 5.7% (Class Y) return for the 1998's first quarter
outperformed the Wilshire Real Estate Securities Index, which declined by
(0.75)%. For the six months under review, your fund produced a 7.1% (Class
Y) total return as compared with the (0.90%)% decline of the Index. Even
during this stagnant period for real estate stocks in the U.S., we were able
to find some opportunities for growth. Only real estate funds which invested
abroad (including Alpine's International Real Estate Equity Fund) produced
higher returns than your fund, for these periods.
The Alpine U.S. Real Estate Equity Fund continues to lead all other
real estate mutual funds and relevant indices over the period ending
3/31/98. The fund's trailing twelve month total return of 59.4% (Class Y)
places it as the top performing real estate mutual fund out of 71 funds
tracked by Lipper. The three year trailing average annual total return of
38.8% (Class Y) positions the fund first among 32 real estate funds. This
performance was vastly superior to the Wilshire index which generated one
and three year total returns of 16.8% and 22.6% respectively. While the fund
is not quite five years old, its total return of 23.1% since its inception
on 9/3/93 completes the long term pattern of outperforming all other real
estate funds, ranking it first out of nine funds according to Lipper.
Q. WHAT HAS ENABLED THIS FUND TO PRODUCE SUPERIOR TOTAL RETURNS DURING RECENT
PERIODS?
A. We believe the combination of the fund's relatively-broad investment
universe, and management's focus on investing both opportunistically and
strategically in undervalued real estate securities contribute to the funds
relative outperformance. This fund's ability to invest not only in REITs,
but also in real estate operating companies, non-REIT lodging companies,
homebuilders and real estate asset plays, has provided management with more
investment opportunities and enhances our ability to diversify the
portfolio. Management's emphasis on buying real estate securities at a
discount to their underlying value has produced significant returns in that
12 of the fund's holdings have been the subject of agreed takeovers by other
companies during the past 6 quarters. In general this has provided
significant total returns to the fund, including four takeovers during the
latest six months.
Q. HAVE THERE BEEN MANY CHANGES IN THE PORTFOLIO DURING THE PAST SIX MONTHS?
A. The major changes in the portfolio have been adjustments in the weightings
of different
- ---------------
* The ranking is based on total return. The fund waived fees. Without this
waiver the ranking may have been lower. Past performance is no guarantee of
future results.
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-3-
<PAGE> 4
Portfolio Manager's Report to Shareholders Alpine U.S. Real Estate Equity Fund
- --------------------------------------------------------------------------------
GEOGRAPHICAL DISTRIBUTION
[GEOGRAPHICAL DISTRIBUTION PIE GRAPH]
LOGO
SECTOR DISTRIBUTION
[SECTOR DISTRIBUTION PIE GRAPH]
LOGO
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
<C> <S> <C> <C> <C> <C>
Sunstone Hotel
1. Investors Hotel REIT 6. Patriot American Hotel REIT
2. Crossman Communities Homebuilder 7. Asset Investors Mfg. Home Pks. REIT
3. Starwood Lodging Hotel REIT 8. Lennar Homebuilder
4. Servico Lodging Company 9. Meditrust Mixed Use REIT
5. U.S. Home Corp. Homebuilder 10. Toll Brothers Homebuilder
</TABLE>
sectors as opposed to significant changes in individual holdings. For
example, REITs have been reduced from 52.3% to 43.3%, while real estate
operating companies increased from 10.9% to 14.3% and homebuilders rose from
16.7% to 23.8% of the portfolio. Much of this change reflected conscious
underweighting of the office/industrial sector, which was reduced from 28.3%
to 14.6% of the portfolio in response to overvaluation. Homebuilders
increased as a result of both strong share price appreciation and several
additions to the portfolio.
Q. WHAT WAS THE RATIONALE FOR THE MAJOR CHANGES IN THE OFFICE/INDUSTRIAL SECTOR
AND THE HOMEBUILDING SECTOR?
A. Management's focus on underlying valuation has benefited significantly from
the overall stock market's focus on industry consolidation. We believe it is
possible to make money by owning both the consolidators as well as the
acquisition targets of these companies. The recent run-up in purchase prices
for office buildings, industrial properties and shopping malls, has reduced
the potential for REIT earnings growth through acquisitions due to
diminished near term investment returns on
- --------------------------------------------------------------------------------
-4-
<PAGE> 5
Portfolio Manager's Report to Shareholders Alpine U.S. Real Estate Equity Fund
- --------------------------------------------------------------------------------
property purchases. As acquisition candidates,most office REITS are already
relatively expensive, and would not show much of a return if they were
acquired by another company. On the other hand, the homebuilding industry is
at the beginning of its consolidation wave, and we feel that there will be a
number of opportunities for the fund to benefit, not only from owning
potential take over candidates, but also from the significant synergies that
such consolidation could bring.
Q. WHAT HAVE BEEN THE MAJOR DRIVERS OF EARNINGS GROWTH FOR REAL ESTATE COMPANIES
DURING THE PAST FEW YEARS?
A. While there are several ways in which real estate companies have been
growing earnings over the past few years, the fundamental sources have been
derived from increasing demand that either meets or exceeds the existing
supply of buildings. In essence, this has created upward pressure on rents,
land prices and home prices. On the corporate level, this has led to growing
revenue and expanding profit margins for real estate companies. We refer to
such earnings growth as "internally generated". In addition, many companies
have been able to create so-called "external" growth as public companies
have been able to capture the "spread" between the lower cost of stock
market capital and private real estate investment yields. For the past five
years, this has driven a consolidation wave throughout the industry,
creating the opportunity for a number of local companies to expand into
super regional or national real estate operating companies. These large
companies have derived additional earnings growth from their scale of
operations and other synergies based on multi-market capabilities. An
interesting side product of the consolidation wave is that it has produced a
significant amount of merger and acquisition activity as high priced
companies were able to use their stock to buy lower priced companies. Such
M&A activity often provides both "external" acquisition spreads and
"internal" cost savings and synergies. However, we believe that
opportunities for external growth are now much more limited due to its
transient cyclical nature. We tend to discount external growth in favor of
internally derived income. The stock market appears to be finally
discounting those companies which have relied on acquisitions to increase
their earnings in the past and now face the potential for a contraction in
their prospective earnings growth rates. We believe this has created much of
the recent weakness in property shares relative to the overall stock market.
Q. GIVEN THE COMPLEX INTERACTION OF REAL ESTATE FUNDAMENTALS AND STOCK MARKET
DYNAMICS, WHERE DO YOU SEE OPPORTUNITIES DURING THE NEXT FEW QUARTERS?
A. While the prospects for moderate growth in real estate income appear
sustainable over the next few years, we must acknowledge that the greatest
growth has already been made during the prior few years' recovery phase of
the cycle. Nevertheless, we are optimistic that real estate stocks will
perform well given both the solid fundamentals of the real estate market,
and especially the low relative price multiples of REITs, real estate
operating companies, and homebuilders in comparison with the overall stock
market. Given the lack of boom/bust cyclicality in the economy during this
decade and the traditional pattern of real estate cash flows which tend to
follow after expansion in the economy, we expect reduced cyclicality of
earnings. These trends suggest better medium-term growth prospects for real
estate companies than many other industries. Such improved certainty of
earnings could lead to higher relative valuations for stocks in these
sectors which currently are priced near historically low relative multiples.
We believe this is especially the case for the lodging and homebuilding
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-5-
<PAGE> 6
Portfolio Manager's Report to Shareholders Alpine U.S. Real Estate Equity Fund
- --------------------------------------------------------------------------------
sectors, which we believe will have the best medium-term growth potential,
and selectively in the office/industrial category.
Not only are real estate stocks cheap in relation to the overall stock
market, but they have evolved into dominant industry players. This is true
for both commercial and residential real estate companies; for REITs, real
estate operating companies and homebuilders. These companies are positioned
to benefit from their prominence and growing market share. As industry
leaders they can set a pattern of business practices for many private
companies to follow. We believe that the disciplines induced by the public
market participants will further tame the excesses which historically could
promote cyclical imbalances. If this growing public role can produce more
stable earnings growth over time, we would expect to see share prices
revalued higher.
Thus we remain positive on the broad spectrum of real estate
securities, with an emphasis on both dominant national consolidators and
nimble niche investors which appear undervalued by the stock market.
/s/ Samuel A. Lieber
Samuel A. Lieber
Alpine Management and Research, LLC
- ---------------
* For more information about the Alpine U.S. Real Estate Fund, include charges &
expenses, request a prospectus by calling (888) 785-5578. Please read the
prospectus carefully before investing or sending money.
- --------------------------------------------------------------------------------
-6-
<PAGE> 7
ALPINE U.S. REAL ESTATE EQUITY FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- -------- -------------------------------- -----------
<C> <S> <C>
EQUITY SECURITIES -- 96.2%
REAL ESTATE INVESTMENT TRUSTS -- 43.3%
Apartments -- 1.9%
25,000 Apartment Investment &
Management Co. ............... $ 962,500
-----------
Community Shopping Centers -- 1.2%
20,000 Kranzco Realty Trust............ 360,000
5,000 Mid America Realty Investors,
Inc. ......................... 51,875
12,800 Western Investment Real Estate
Trust......................... 191,200
-----------
603,075
-----------
Factory Outlet Centers -- 3.4%
20,000 Chelsea GCA Realty, Inc. ....... 740,000
79,800 Horizon Group, Inc. ............ 982,537
-----------
1,722,537
-----------
Hotels -- 14.0%
33,000 Innkeepers USA Trust............ 540,375
63,463 Patriot American Hospitality,
Inc. ......................... 1,713,501
20,700 RFS Hotel Investors, Inc. ...... 377,775
41,001 Starwood Lodging Trust.......... 2,190,991
137,000 Sunstone Hotel Investors,
Inc. ......................... 2,192,000
-----------
7,014,642
-----------
Manufactured Home Parks -- 3.2%
85,180 Asset Investors Corp. .......... 1,602,449
-----------
Mixed Use -- 2.8%
45,000 Meditrust Co. .................. 1,389,375
-----------
Office-Industrial Buildings -- 14.6%
18,400 American Industrial
Properties.................... 255,300
12,100 Arden Realty Group, Inc. ....... 344,850
25,000 Boston Properties, Inc. ........ 879,687
40,000 Brandywine Realty Trust......... 952,500
42,000 CarrAmerica Realty Corp......... 1,260,000
25,600 Crescent Real Estate Equities,
Inc. ......................... 921,600
25,000 Kilroy Realty Corp. ............ 714,063
25,000 Liberty Property Trust.......... 671,875
10,000 Parkway Properties, Inc. ....... 326,250
30,000 Weeks Corp. .................... 980,625
-----------
7,306,750
-----------
Shopping Centers -- 2.2%
11,600 *Alexander's, Inc. ............. 1,086,775
-----------
Total Real Estate Investment
Trusts
(Cost $20,127,120)............ 21,688,103
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- -------- -------------------------------- -----------
<C> <S> <C>
EQUITY SECURITIES, CONTINUED:
COMMON STOCKS -- 52.9%
Homebuilders -- 23.8%
19,000 *Beazer Homes USA, Inc. ........ $ 488,063
50,200 Cavalier Homes, Inc. ........... 574,162
20,000 Clayton Homes, Inc. ............ 405,000
25,300 Continental Homes Holding
Corp. ........................ 1,176,450
70,000 *Crossmann Communities, Inc. ... 2,078,125
25,000 Del Webb Corp. ................. 762,500
60,000 Engle Homes, Inc. .............. 1,005,000
43,060 Lennar Corp. ................... 1,482,879
42,600 MDC Holdings,Inc................ 756,150
117,800 *Presley Companies (The)........ 132,525
43,000 *Toll Brothers, Inc. ........... 1,209,375
71,600 *US Home Corp. warrants Cl. B
$20-expiring 6/22/98.......... 1,843,700
-----------
11,913,929
-----------
Lodging -- 14.8%
99,000 *Candlewood Hotel Co., Inc. .... 804,375
87,700 *Execustay Corp. ............... 1,118,175
69,900 *Homestead Village Properties,
Inc. ......................... 1,057,238
50,000 *Host Marriott Corp. ........... 946,875
90,000 *John Q. Hammons Hotels,
Inc. ......................... 708,750
91,300 *Servico, Inc. ................. 1,928,712
55,000 *Suburban Lodges America,
Inc. ......................... 873,125
-----------
7,437,250
-----------
Real Estate Operating Companies -- 14.3%
30,500 *American Skiing Co. ........... 510,875
20,000 Bentall Corp. .................. 264,672
30,000 *Cadillac Fairview Corp. ....... 648,750
78,000 *Capital Trust.................. 760,500
40,500 *Crescent Operating, Inc. ...... 865,687
15,000 Forest City Enterprises,
Inc. ......................... 846,563
40,400 *Grubb & Ellis Co. ............. 409,050
8,500 Newhall Land & Farming Co. ..... 272,000
65,000 Sonic Automotive, Inc.++........ 1,121,250
13,200 St. Joe Corp. .................. 443,850
70,200 *Wellsford Real Properties, Inc.
144A.......................... 1,017,900
-----------
7,161,097
-----------
Total Common Stocks
(Cost $20,877,241)............ 26,512,276
-----------
</TABLE>
Continued
-7-
<PAGE> 8
ALPINE U.S. REAL ESTATE EQUITY FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- -----------
<C> <S> <C> <C>
SHORT-TERM INVESTMENTS -- 0.1%
Government Agency Bonds & Notes -- 0.1%
55,000 Federal Home Loan Bank
5.45%, 4/13/98 (cost
$54,900).................... $ 54,900
-----------
Total Investments
(cost $41,059,261)... 96.3% 48,255,279
Other Assets and
Liabilities -- net... 3.7 1,841,232
----- -----------
NET ASSETS............. 100.0% $50,096,511
===== ===========
</TABLE>
- ---------
* Non-income producing security.
144A Securities that may be resold to "qualified institutional buyers" under
Rule 144A of the Securities Act of 1933. These securities have been
determined to be liquid under guidelines established by the Board of
Trustees.
++ Investment in non-controlled affiliate-holding over 5% of outstanding
voting securities. This investment was acquired by the Fund at a cost of
$933,745. During the six months ended March 31, 1998, the Fund recognized
no dividend income from this security.
See notes to financial statements.
-8-
<PAGE> 9
ALPINE U.S. REAL ESTATE EQUITY FUND
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at value (identified cost, $41,059,261)....... $48,255,279
Receivable for investments sold........................... 2,544,360
Receivable for Fund shares sold........................... 616,054
Dividends receivable...................................... 84,171
Unamortized organization expense.......................... 3,693
Prepaid expenses and other assets......................... 35,841
-----------
Total assets........................................... 51,539,398
-----------
LIABILITIES:
Payable for investments purchased......................... 1,229,844
Payable for Fund shares redeemed.......................... 70,161
Due to custodian bank..................................... 43,915
Advisory fee payable...................................... 40,179
Distribution Plan expenses payable........................ 14,187
Accrued expenses and other liabilities.................... 44,601
-----------
Total liabilities...................................... 1,442,887
-----------
NET ASSETS.................................................. $50,096,511
===========
NET ASSETS REPRESENTED BY
Paid-in capital........................................... $41,654,688
Accumulated distributions in excess of net investment
income................................................. (160,715)
Accumulated net realized gain on investments.............. 1,406,520
Net unrealized appreciation of investments................ 7,196,018
-----------
TOTAL NET ASSETS....................................... $50,096,511
===========
Net assets value
Class A shares
Net assets of $9,727,668 / 553,545 shares
outstanding........................................... $ 17.57
Offering price (based on sales of 4.75%).................. $ 18.45
Class B shares
Net assets of $9,348,703 / 539,636 shares
outstanding........................................... $ 17.32
Class C shares
Net assets of $3,507,453 / 202,594 shares
outstanding........................................... $ 17.31
Class Y shares
Net assets of $27,512,686 / 1,551,674 shares
outstanding........................................... $ 17.73
===========
</TABLE>
See notes to financial statement.
-9-
<PAGE> 10
ALPINE U.S. REAL ESTATE EQUITY FUND
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................................ $ 22,718
Dividends (net of foreign withholding taxes of $459)................ 284,876
----------
Total income..................................................... 307,594
----------
EXPENSES:
Advisory fee.............................................. $183,084
Distribution Plan expenses................................ 53,683
Transfer agent fee........................................ 32,036
Registration fee.......................................... 31,773
Trustees fees............................................. 684
Other..................................................... 34,945
--------
Total expenses......................................... 336,205
Less: Indirectly paid expenses.............................. (1,539)
Fee waivers and/or reimbursement from Investment
Advisor............................................... (3,691)
--------
Net expenses.......................................................... 330,975
----------
Net Investment Loss................................................... (23,381)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.................................... 2,166,757
Net change in unrealized appreciation on investments................ 1,047,173
----------
Net realized and unrealized gain on investments....................... 3,213,930
----------
Net Increase In Net Assets Resulting From Operations.................. $3,190,549
==========
</TABLE>
See notes to financial statements.
-10-
<PAGE> 11
ALPINE U.S. REAL ESTATE EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPTEMBER 30, 1997
---------------- ------------------
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ (23,381) $ 155,093
Net realized gain on investments.......................... 2,166,757 4,054,572
Net change in unrealized appreciation of investments...... 1,047,173 5,804,070
------------ ------------
Net increase in net assets resulting from operations... 3,190,549 10,013,735
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A................................................ -- (6,261)
Class B................................................ -- (9,714)
Class C................................................ -- (6,723)
Class Y................................................ (70,842) (227,570)
In excess of net investment income
Class A................................................ (33,856) --
Class B................................................ (32,220) --
Class C................................................ (13,786) --
Class Y................................................ (80,853) --
From net realized gain on investments
Class A................................................ (645,169) (38,196)
Class B................................................ (785,584) (78,705)
Class C................................................ (336,121) (45,396)
Class Y................................................ (2,702,405) (1,293,384)
------------ ------------
Total distribution to shareholders..................... (4,700,836) (1,705,949)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds for shares sold.................................. 31,602,738 9,072,219
Payments for shares redeemed.............................. (11,728,801) (2,863,078)
Net asset value of shares issued in reinvestment of
distributions.......................................... 4,376,852 1,419,029
------------ ------------
Net increase in net assets resulting from capital share
transactions......................................... 24,250,789 7,628,170
------------ ------------
Total increase in net assets........................... 22,740,502 15,935,956
------------ ------------
NET ASSETS:
Beginning of period....................................... 27,356,009 11,420,053
------------ ------------
End of period............................................. $ 50,096,511 $ 27,356,009
============ ============
Undistributed (accumulated distributions in excess of) net
investment income......................................... $ (160,715) $ 94,223
============ ============
</TABLE>
See notes to financial statements.
-11-
<PAGE> 12
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION:
Alpine U.S. Real Estate Equity Fund, formerly Evergreen U.S. Real Estate
Equity Fund, the ("Fund"), is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as a diversified, open-end management
investment company. The Fund is a separate series of the Alpine Equity
Trust, formerly the Evergreen Equity Trust, a Massachusetts business trust
organized in 1988.
The Fund offers Class A, Class B, Class C and Class Y shares. Class A
shares are sold with a maximum front-end sales charge of 4.75%. Class B and
Class C shares are sold without a front-end sales charge, but pay higher
ongoing distribution plan expenses than Class A. Class B shares are sold
subject to a contingent deferred sales charge that is payable upon
redemption and decreases depending on how long the shares have been held.
Class C shares are sold subject to a contingent deferred sales charge
payable on shares redeemed within one year after the month of purchase.
Class B shares purchased after January 1, 1997 will automatically convert
to Class A shares after seven years. Class B shares purchased prior to
January 1, 1997 retain their existing conversion rights. Class Y shares are
sold at net asset value and are not subject to contingent deferred sales
charges or distribution fees. Class Y shares are sold only to certain
institutional or individual investors who do not receive services of
financial intermediaries that offer shares of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles,
which require management to make estimates and assumptions that affect
amounts reported herein. Actual results could differ from these estimates.
A. VALUATION OF SECURITIES:
The Fund values securities traded on a national securities exchange or
included on the NASDAQ National Market System ("NMS") at the last reported
sales price on the exchange where primarily traded. The Fund values
securities traded on an exchange or NMS for which there has been no sale
and other securities traded in the over-the-counter market at the mean
between the last reported bid and asked price. Securities for which market
quotations are not available, including restricted securities, are valued
at fair value as determined in good faith according to procedures approved
by the Board of Trustees. Short-term investments with remaining maturities
of 60 days or less are carried at amortized cost, which approximates market
value.
B. REPURCHASE AGREEMENTS:
The Fund may invest in repurchase agreements. Securities pledged as
collateral for repurchase agreements are held by the custodian on the
Fund's behalf. The Fund monitors the adequacy of the collateral daily and
will require the seller to provide additional collateral in the event the
market value of the securities pledged falls below the carrying value of
the repurchase agreement, including accrued interest. The Fund will only
enter into repurchase agreements with banks and other financial
institutions which are deemed by the investment advisor to be creditworthy
pursuant to guidelines established by the Board of Trustees.
Continued
-12-
<PAGE> 13
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
C. SECURITY TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are accounted for no later than one business day
after the trade date. Realized gains and losses are computed on the
identified cost basis. Interest income is recorded on the accrual basis and
includes accretion of discounts. Dividend income is recorded on the
ex-dividend date. Foreign income may be subject to foreign withholding
taxes, which are accrued as applicable. Capital gains realized on some
foreign securities are subject to foreign taxes and are accrued as
applicable.
D. FEDERAL TAXES:
The Fund has qualified and intends to continue to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Fund will not incur any federal income tax liability
since it is expected to distribute all of its net investment company
taxable income and net capital gains, if any, to its shareholders. The Fund
also intend to avoid any excise tax liability by making the required
distributions under the Code. Accordingly, no provision for federal taxes
is required. To the extent that realized capital gains can be offset by
capital loss carryforwards, it is the Fund's policy not to distribute such
gains.
E. DISTRIBUTIONS:
Distributions from net investment income and net realized capital gains of
the Fund are declared and paid at least annually. Distributions to
shareholders are recorded at the close of business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles. The significant differences between
financial statement amounts available for distributions and distributions
made in accordance with income tax regulations are primarily due to
differing treatment for certain distributions received from real estate
investment trusts.
F. CLASS ALLOCATIONS:
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the
relative net assets of each class. Class specific expenses are allocated to
the class to which they relate. Currently, class specific expenses are
limited to expenses incurred under the Distribution Plans for each class.
G. ORGANIZATION EXPENSES:
Organization expenses are amortized to operations over a five-year period
on a straight-line basis. In the event any of the initial shares of the
Fund are redeemed during the five-year amortization period, redemption
proceeds will be reduced by any unamortized organization expenses in the
same proportion as the number of initial shares being redeemed bears to the
number of initial shares outstanding at the time of the redemption.
Continued
-13-
<PAGE> 14
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
3. CAPITAL SHARE TRANSACTIONS:
The Fund has an unlimited number of shares of beneficial interest, with
$0.0001 par value, authorized. Transactions in shares of the Fund were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 (UNAUDITED) SEPTEMBER 30, 1997
-------------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------- ----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold......................... 641,024 $11,181,013 184,220 $3,010,088
Shares redeemed..................... (271,106) (4,755,271) (64,718) (998,200)
Shares issued in reinvestment of
distributions..................... 40,006 636,489 3,065 37,276
--------- ----------- ------- ----------
Net increase........................ 409,924 7,062,231 122,567 2,049,164
--------- ----------- ------- ----------
CLASS B
Shares sold......................... 426,822 7,237,989 154,550 2,373,682
Shares redeemed..................... (114,870) (1,882,289) (16,358) (229,903)
Shares issued in reinvestment of
distributions..................... 47,696 749,779 7,088 85,699
--------- ----------- ------- ----------
Net increase........................ 359,648 6,105,479 145,280 2,229,478
--------- ----------- ------- ----------
CLASS C
Shares sold......................... 210,272 3,641,213 103,769 1,665,261
Shares redeemed..................... (114,827) (1,992,225) (27,945) (417,762)
Shares issued in reinvestment of
distributions..................... 19,734 310,020 1,541 18,793
--------- ----------- ------- ----------
Net increase........................ 115,179 1,959,008 77,365 1,266,292
--------- ----------- ------- ----------
CLASS Y
Shares sold......................... 567,197 9,542,523 137,476 2,023,188
Shares redeemed..................... (180,969) (3,099,016) (87,776) (1,217,213)
Shares issued in reinvestment of
distributions..................... 167,013 2,680,564 104,600 1,277,261
--------- ----------- ------- ----------
Net increase........................ 553,241 9,124,071 154,300 2,083,236
--------- ----------- ------- ----------
Total Net increase.................. 1,437,992 $24,250,789 499,512 $7,628,170
--------- ----------- ------- ----------
</TABLE>
Continued
-14-
<PAGE> 15
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
4. SECURITIES TRANSACTIONS:
Cost of purchases and proceeds from sales of investment securities,
excluding short-term investments, were $40,219,298 and $22,012,316,
respectively, for the six months ended March 31, 1998.
5. DISTRIBUTION PLANS:
Evergreen Distributors, Inc. ("EDI"), formerly Evergreen Keystone
Distributor, Inc., a wholly-owned subsidiary of The BISYS Group Inc.
("BISYS") serves as principal underwriter to the Fund.
The Fund has adopted Distribution Plans for each class of shares, except
Class Y Shares, as allowed by Rule 12b-1 of the 1940 Act. Distribution
plans permit the Fund to reimburse its principal underwriter for costs
related to selling shares of the Fund and for various other services. These
costs, which consist primarily of commissions and service fees paid to
broker-dealers who sell shares of the Fund, are paid by the Fund. Pursuant
to the Distribution Plans each class, except Class Y, currently pays a
service fee equal to 0.25% of the average daily net asset of the class.
Class B and Class C also presently pay distribution fees equal to 0.75% of
the average daily net assets of the class. Distribution Plan expenses are
calculated daily and paid monthly.
During the six months ended March 31, 1998, amounts paid to EDI and/or its
predecessor pursuant to the Fund's Class A, Class B and Class C
Distribution Plans were $7,190, $32,677 and $13,816, respectively.
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting
shares of the respective class.
6. INVESTMENT ADVISORY AGREEMENT AND OTHER AFFILIATED TRANSACTIONS:
Effective February 23, 1998, the Fund entered into an investment advisory
agreement with Alpine Management & Research, LLC ("Alpine"). Alpine is a
newly formed Delaware limited liability company organized for the purpose
of providing investment advisory and management services to investment
companies and other advisory clients. Prior to February 23, 1998, Evergreen
Asset Management Corp ("Evergreen Asset"), a wholly owned subsidiary of
First Union National Bank, served as investment adviser to the Fund.
Pursuant to each investment advisor's agreement with the Fund, Alpine and
Evergreen Asset were entitled to an annual fee based on the Fund's average
daily net assets, determined in accordance with the following schedule:
<TABLE>
<S> <C>
First $750 million.......................................... 1.00%
Next $250 million........................................... 0.90%
Over $1 billion............................................. 0.80%
</TABLE>
For the period from February 23, 1998 through March 31, 1998, Alpine was
paid $3,963 for its services. For the period October 1, 1997 through
February 22, 1998, Evergreen Asset earned fees of $175,430 for its
services. During the period, for which it served as adviser, Evergreen
Asset agreed to reimburse the Fund to
Continued
-15-
<PAGE> 16
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
the extent that the Fund's operating expenses (including the investment
advisory fee and amortization of organizational expenses but excluding
interest, taxes, brokerage commissions, 12b-1 distribution and shareholder
services fees and extraordinary expenses) exceeded 1.50% of the Fund's
average daily net assets. Evergreen Asset waived advisory fees aggregating
$3,691 for the period October 1, 1997 through February 22, 1998 pursuant to
this agreement.
Evergreen Investment Services, Inc. ("EIS"), formerly Evergreen Keystone
Investment Services, Inc, a subsidiary of First Union, serves as
administrator for the Fund. BISYS Fund Services, serves as the Fund's
sub-administrator. The administrator and sub-administrator for the Fund are
each entitled to an annual fee which is paid by the investment advisor and
is not a Fund expense.
Prior to February 23, 1998, Lieber & Company, an affiliate of First Union,
was the investment sub-adviser to the Fund and also provided brokerage
services with respect to substantially all security transactions of the
Fund effected on the New York or American Stock Exchanges. For the period
October 1, 1997 through February 22, 1998, the Fund incurred $117,092 in
brokerage commissions with Lieber & Company. Lieber & Company was
reimbursed by Evergreen Asset, at no additional expense to the Fund, for
its cost of providing investment advisory services.
Evergreen Service Company ("ESC"), formerly Evergreen Keystone Service
Company, an affiliate of First Union, serves as the transfer and dividend
disbursing agent for the Fund.
Officers of the Fund and affiliated Trustees receive no compensation
directly from the Fund.
7. EXPENSE OFFSET ARRANGEMENT:
The Fund has entered into an expense offset arrangement with its custodian.
The assets deposited with the custodian under this expense offset
arrangement could have been invested in income-producing assets.
8. FINANCING AGREEMENT:
On October 31, 1996, a financing agreement among certain Evergreen Funds ,
State Street Bank & Trust ("State Street") and a group of Banks (the
"Banks") became effective. Under this agreement, the Banks provided an
unsecured credit facility in the aggregate amount of $225 million ($112.5
million committed and $112.5 million uncommitted) allocated evenly among
the Banks. Borrowings under this facility bore interest at 0.75% per annum
above the Federal Funds rate. A commitment fee of 0.10% per annum was
incurred on the unused portion of the committed facility, which was
allocated to all participating funds. State Street served as agent for the
Banks, and as agent was entitled to a fee of $15,000 which was allocated to
all of the participating funds. This agreement was terminated on October
31, 1997.
On October 31, 1997, a temporary financing agreement between the
participating Funds and First Union became effective. Under this agreement,
First Union provided a fully committed unsecured credit facility in the
aggregate amount of $300 million. Borrowings under this facility bore
interest at 1.00% per annum
Continued
-16-
<PAGE> 17
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
above the Federal Funds rate. State Street served as administrative agent
under this agreement, but received no compensation for its services. This
agreement was terminated on December 22, 1997.
On December 22, 1997, a financing agreement among all of the Evergreen
Funds, State Street and a group of Banks ("the Banks") became effective.
Under this agreement, the Banks provide an unsecured credit facility in the
aggregate amount of $400 million ($275 million committed and $125 million
uncommitted). The credit facility is allocated, under the terms of the
financing agreement, among the Banks. The credit facility is to be accessed
by the funds for temporary or emergency purposes only and is subject to
each Fund's borrowing restrictions. Borrowings under this facility bear
interest at 0.50% per annum above the Federal Funds rate. A commitment fee
of 0.065% per annum will be incurred on the unused portion of the committed
facility, which will be allocated to all funds. For its assistance in
arranging this financing agreement, the Capital Market Group of First Union
was paid a one time arrangement fee of $27,500. State Street serves as
administrative agent for the Banks, and as administrative agent is entitled
to a fee of $20,000 per annum which is allocated to all of the funds.
Effective February 22, 1998, the Fund discontinued its participation in
this financing agreement. During the period from October 1, 1997 to
February 22,1998, the Fund had no borrowings under these agreements.
9. CONCENTRATION OF CREDIT RISK:
The Fund invests a substantial portion of its assets in the equity
securities of issuers engaged in the real estate industry, including real
estate investment trusts. As a result, the Fund may be more affected by
economic developments in the real estate industry than would a general
equity fund.
10. SUBSEQUENT EVENTS:
Effective April 27, 1998, BISYS Fund Services L.P. ("BISYS L.P.") became
the Fund's Principal Underwriter, Distributor and Administrator and BISYS
Fund Services Ohio, Inc. ("BISYS OHIO.") became the Fund's Accountant,
Transfer Agent and Dividend Disbursement Agent. In addition, effective
April 27, 1998, Investors Fiduciary Trust Company ("IFTC") became the
Fund's Custodian. In return for these serves, BISYS L.P and BISYS OHIO will
earn an annual fee amounting to 0.23% of the Fund's average daily net
assets and IFTC will earn an annual fee amounting to 0.095% of the Fund's
average daily net assets. The Distribution Plan expenses incurred by the
Fund under its Distribution Plans will not be affected by the change in
service providers.
11. SPECIAL MEETING OF SHAREHOLDERS:
A special meeting of shareholders of the Fund was held on February 23, 1998
to consider a number of proposals. On January 12, 1998, the record date for
the meeting, the Fund had 2,175,582 shares outstanding, of which 1,263,253
were represented at the meeting. The votes recorded at the meeting, by
proposal, were as follows:
Continued
-17-
<PAGE> 18
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
PROPOSAL 1 -- APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN THE FUND
AND ALPINE MANAGEMENT & RESEARCH LLC:
<TABLE>
<S> <C>
Voted "For"................................................. 1,207,663
Voted "Against"............................................. 24,999
Voted "Abstain"............................................. 30,591
</TABLE>
PROPOSAL 2 -- ELECTION OF TRUSTEES:
<TABLE>
<CAPTION>
VOTED VOTED VOTED
"FOR" "AGAINST" "ABSTAINED"
--------- ----------- -------------
<S> <C> <C> <C>
Laurence B. Ashkin........................... 1,242,547 17,452 3,254
Foster Bam................................... 1,241,288 18,711 3,254
Samuel A. Lieber............................. 1,240,814 19,185 3,254
H. Guy Leibler............................... 1,242,072 17,927 3,254
</TABLE>
PROPOSAL 3 -- CHANGES IN INVESTMENT POLICIES AND RESTRICTIONS:
Proposal 3.A.(1) -- Concentration of investments
<TABLE>
<S> <C>
Voted "For"............................................ 1,219,445
Voted "Against"........................................ 15,124
Voted "Abstain"........................................ 28,684
Proposal 3.A.(2) -- Borrowings
Voted "For"............................................ 1,218,323
Voted "Against"........................................ 16,246
Voted "Abstain"........................................ 28,684
Proposal 3.A.(3) -- Pledging Assets
Voted "For"............................................ 1,220,704
Voted "Against"........................................ 18,865
Voted "Abstain"........................................ 28,684
Proposal 3.A.(4) -- Short Sales
Voted "For"............................................ 1,219,920
Voted "Against"........................................ 14,649
Voted "Abstain"........................................ 28,684
Proposal 3.A.(5) -- Loans
Voted "For"............................................ 1,220,704
Voted "Against"........................................ 13,865
Voted "Abstain"........................................ 28,684
Proposal 3.A.(6) -- Real Estate
Voted "For"............................................ 1,219,920
Voted "Against"........................................ 14,649
Voted "Abstain"........................................ 28,684
</TABLE>
-18-
<PAGE> 19
ALPINE U.S. REAL ESTATE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
SIX MONTHS ENDED --------------------------------
MARCH 31, 1998 1997# 1996# 1995*
---------------- -------- -------- --------
(UNAUDITED)#
<S> <C> <C> <C> <C>
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD....... $ 19.34 $ 12.49 $ 11.42 $ 9.21
------- -------- -------- --------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss).............. (0.02) 0.12** 0.20 0.18
Net realized and unrealized gain on
investments............................ 1.08 8.57 1.28 2.03
------- -------- -------- --------
Total from investment operations.......... 1.06 8.69 1.48 2.21
------- -------- -------- --------
LESS DISTRIBUTIONS
From net investment income................ -- (0.26)** (0.20) --
In excess of net investment income........ (0.15) -- -- --
From net realized gain on investments..... (2.68) (1.58) (0.21) --
------- -------- -------- --------
Total distributions....................... (2.83) (1.84) (0.41) --
------- -------- -------- --------
NET ASSET VALUE END OF PERIOD............... $ 17.57 $ 19.34 $ 12.49 $ 11.42
------- -------- -------- --------
TOTAL RETURN+............................... 7.05% 78.28% 13.12% 24.00%
RATIOS / SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS
Total expenses............................ 1.79%++ 1.77% 1.72% 1.78%++
Interest expense.......................... N/A N/A 0.04% N/A
Total expenses, excluding indirectly paid
expenses............................... 1.78%++ 1.76% N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements................. 1.81%++ 2.49% 9.65% 364.74%++
Net investment income (loss).............. (0.21)%++ 0.90% 1.60% 3.13%++
PORTFOLIO TURNOVER RATE..................... 61% 205% 169% 115%
AVERAGE COMMISSION RATE PAID PER SHARE...... $0.0593 $ 0.0597 $ 0.0619 N/A
NET ASSETS END OF PERIOD (THOUSANDS)........ $ 9,728 $ 2,778 $ 263 $ 5
</TABLE>
- ---------
<TABLE>
<S> <C>
# Net investment income is based on average shares outstanding during the period.
* For the period from March 10, 1995 (commencement of Class operations) to September 30, 1995.
** 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.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
</TABLE>
See notes to financial statements.
-19-
<PAGE> 20
ALPINE U.S. REAL ESTATE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, 1998 ----------------------------
(UNAUDITED)# 1997# 1996# 1995*
---------------- ------- ------- ------
<S> <C> <C> <C> <C>
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD........... $ 19.14 $ 12.41 $ 11.37 $ 9.19
------- ------- ------- ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss).................. (0.07) 0.02** 0.13 0.05
Net realized and unrealized gain on
investments................................. 1.04 8.49 1.27 2.13
------- ------- ------- ------
Total from investment operations.............. 0.97 8.51 1.40 2.18
------- ------- ------- ------
LESS DISTRIBUTIONS
From net investment income.................... -- (0.20)** (0.15) --
In excess of net investment income............ (0.11) -- -- --
From net realized gain on investments......... (2.68) (1.58) (0.21) --
------- ------- ------- ------
Total distributions........................... (2.79) (1.78) (0.36) --
------- ------- ------- ------
NET ASSET VALUE END OF PERIOD................. $ 17.32 $ 19.14 $ 12.41 $11.37
------- ------- ------- ------
TOTAL RETURN+................................. 6.62% 76.87% 12.49% 23.72%
RATIOS / SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS
Total expenses.............................. 2.54%++ 2.52% 2.46% 2.51%++
Interest expense............................ N/A N/A 0.04% N/A
Total expenses, excluding indirectly paid
expenses................................. 2.53%++ 2.51% N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements................... 2.55%++ 3.24% 6.19% 28.70%++
Net investment income (loss)................ (0.80)%++ 0.12% 1.05% 2.00%++
PORTFOLIO TURNOVER RATE....................... 61% 205% 169% 115%
AVERAGE COMMISSION RATE PAID PER SHARE........ $0.0593 $0.0597 $0.0619 N/A
NET ASSETS END OF PERIOD (THOUSANDS).......... $ 9,349 $ 3,446 $ 431 $ 160
</TABLE>
- ---------------
<TABLE>
<S> <C>
# Net investment income is based on average shares outstanding
during the period.
* For the period from March 10, 1995 (commencement of Class
operations) to September 30, 1995.
** 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.
+ Initial sales charge or contingent deferred sales charge is
not reflected.
++ Annualized.
</TABLE>
See notes to financial statements.
-20-
<PAGE> 21
ALPINE U.S. REAL ESTATE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
SIX MONTHS ENDED -------------------------------
MARCH 31, 1998# 1997# 1996# 1995*
---------------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD....... $ 19.13 $ 12.44 $ 11.41 $ 10.87
------- ------- ------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss)............ (0.07) 0.03** 0.13 0.08
Net realized and unrealized gain on
investments.......................... 1.04 8.47 1.28 0.46
------- ------- ------- -------
Total from investment operations..... 0.97 8.50 1.41 0.54
------- ------- ------- -------
LESS DISTRIBUTIONS
From net investment income.............. -- (0.23)** (0.17) --
In excess of net investment income...... (0.11) -- -- --
From net realized gain on investments... (2.68) (1.58) (0.21) --
------- ------- ------- -------
Total distributions.................. (2.79) (1.81) (0.38) --
------- ------- ------- -------
NET ASSET VALUE END OF PERIOD............. $ 17.31 $ 19.13 $ 12.44 $ 11.41
------- ------- ------- -------
TOTAL RETURN+............................. 6.63% 76.89% 12.49% 4.97%
RATIOS / SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS
Total expenses.......................... 2.52%++ 2.52% 2.47% 2.49%++
Interest expense........................ N/A N/A 0.04% N/A
Total expenses, excluding indirectly
paid expenses........................ 2.51%++ 2.51% N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements............... 2.54%++ 3.24% 18.82% 421.54%++
Net investment income (loss)............ (0.79)%++ 0.23% 1.08% 2.55%++
PORTFOLIO TURNOVER RATE................... 61% 205% 169% 115%
AVERAGE COMMISSION RATE PAID PER SHARE.... $0.0593 $0.0597 $0.0619 N/A
NET ASSETS, END OF PERIOD (THOUSANDS)..... $ 3,507 $ 1,673 $ 125 $ 3
</TABLE>
- ---------
<TABLE>
<C> <S>
# Net investment income is based on average shares outstanding
during the period.
* For the period from March 10, 1995 (commencement of Class
operations) to September 30, 1995.
** 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.
+ Initial sales charge or contingent deferred sales charge is
not reflected.
++ Annualized.
</TABLE>
See notes to financial statements.
-21-
<PAGE> 22
ALPINE U.S. REAL ESTATE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SEPTEMBER 1, 1993*
YEAR ENDED SEPTEMBER 30, THROUGH
SIX MONTHS ENDED ----------------------------------------- DECEMBER 31,
MARCH 31, 1998 1997# 1996# 1995 1994**# 1993
---------------- ------- ------- ------ ------- ------------------
(UNAUDITED)#
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF
PERIOD...................... $ 19.49 $ 12.56 $ 11.44 $10.07 $ 10.71 $10.00
------- ------- ------- ------ ------- ------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net investment income..... 0.02 0.16*** 0.24 0.23 0.11 0.04
Net realized and
unrealized gain (loss)
on investments.......... 1.05 8.63 1.29 1.29 (0.75) 0.72
------- ------- ------- ------ ------- ------
Total from investment
operations.............. 1.07 8.79 1.53 1.53 (0.64) 0.76
------- ------- ------- ------ ------- ------
LESS DISTRIBUTIONS
From net investment
income.................. (0.07) (0.28)*** (0.20) (0.20) -- (0.04)
In excess of net
investment income....... (0.08) -- -- -- -- (0.01)
From net realized gain on
investments............. (2.68) (1.58) (0.21) (0.12) -- --
------- ------- ------- ------ ------- ------
Total distributions....... (2.83) (1.86) (0.41) (0.32) -- (0.05)
------- ------- ------- ------ ------- ------
NET ASSET VALUE END OF
PERIOD...................... $ 17.73 $ 19.49 $ 12.56 $11.44 $ 10.07 $10.71
------- ------- ------- ------ ------- ------
TOTAL RETURN.................. 7.14% 78.79% 13.57% 17.63% (5.98)% 7.60%
RATIOS / SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS
Total expenses.............. 1.52%+ 1.51% 1.46% 1.50% 1.49%+ 0.44%+
Interest expense............ N/A N/A 0.04% N/A N/A N/A
Total expenses, excluding
indirectly paid
expenses.................. 1.51%+ 1.50% N/A N/A N/A N/A
Total expenses, excluding
fee waivers & expense
reimbursements............ 1.54%+ 2.26% 2.25% 2.70% 2.5% 3.59%+
Net investment income....... 0.18%+ 1.10% 2.02% 2.45% 1.60%+ 1.93%+
PORTFOLIO TURNOVER RATE....... 61% 205% 169% 115% 102% 17%
AVERAGE COMMISSION RATE PAID
PER SHARE................... $0.0593 $0.0597 $0.0619 N/A N/A N/A
NET ASSETS END OF PERIOD
(THOUSANDS)................. $27,513 $19,459 $10,601 $9,456 $ 8,630 $4,610
</TABLE>
- ---------
<TABLE>
<C> <S>
# Net investment income is based on average shares outstanding
during 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.
*** 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.
+ Annualized.
</TABLE>
See notes to financial statements.
-22-
<PAGE> 23
TRUSTEES
Samuel A. Lieber
Laurence B. Ashkin
Foster Bam
H. Guy Leibler
INVESTMENT ADVISER
Alpine Management and Research, LLC
122 East 42nd Street, 37th floor
New York, NY 10168
CUSTODIAN
IFTC
801 Pennsylvania
Kansas City, MO 64105
TRANSFER AGENT
BISYS Fund Services, Ohio Inc.
3435 Stelzer Road
Columbus, OH 43219
ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Schulte Roth & Zabel LLP
1177 Third Avenue
New York, NY 10022
ADMINISTRATOR AND DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
Alpine U.S. Real Estate Equity Fund
122 East 42nd Street, 37th floor
New York, NY 10168
(6/98)
[ALPINE U.S. REAL ESTATE LOGO]
Alpine
U.S. Real Estate
Equity Fund
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SEMI-ANNUAL REPORT
March 31, 1998
