<PAGE> 1
TABLE OF CONTENTS
Portfolio Manager's Report to Shareholders
PAGE 2
Schedules of Portfolio Investments
PAGE 8
Statements of Assets and Liabilities
PAGE 10
Statements of Operations
PAGE 11
Statements of Changes in Net Assets
PAGE 12
Notes to Financial Statements
PAGE 13
Financial Highlights
PAGE 21
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-1-
<PAGE> 2
Portfolio Manager's Report to Shareholders Alpine U.S. Real Estate Equity Fund
- --------------------------------------------------------------------------------
Value of a $10,000 Investment
<TABLE>
<CAPTION>
Alpine U.S. Real Wilshire Real Estate Lipper Real Estate
Estate 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
9/30/98 18189 15325 13423
</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 fees. Without the
waiver of fees, total return would have been lower.
The Wilshire Real Estate Securities Index and the Lipper Real Estate Fund
Average Index are market capitalization weighted performance indexes of listed
property and real estate securities.
<TABLE>
<CAPTION>
COMPARATIVE TOTAL RETURNS AS OF 9/30/98
- ------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEAR 5 YEAR INCEPTION+
<S> <C> <C> <C> <C>
Alpine Y Class (24.69)% 15.19% 11.94% 12.50%
Alpine A Class (4.75%)* (28.41)% 13.01% 10.62% 11.20%
Alpine B Class (5.00%)** (28.60)% 13.28% 10.87% 11.58%
Alpine C Class (1.00%)** (26.02)% 14.08% 11.23% 11.80%
- ------------------------------------------------------------------------------------
Wilshire Real Estate Securities Index (15.77)% 9.08% 5.38% 5.97%
Lipper Real Estate Fund Average Index (16.76)% 12.29% 7.95% 8.78%
</TABLE>
* Represents maximum front-end sales load.
** Represents continent deferred sales charge.
+ Performance of Investor A Class, B Class and C Class shares for the period
prior to their inceptions on 2/10/95, 3/7/95 and 7/12/95, respectively,
represents performance for Y Class shares, which commenced operations on
9/3/93. A Class, B Class and C Class shares are subject to distribution and
service fees, which had they been included in the prior period, performance
would have been lower.
- --------------------------------------------------------------------------------
-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 Annual
Report to Shareholders for the fiscal year ended September 30, 1998. The past
twelve months have proven unsettling for the real estate markets and most
challenging for the world's financial markets. In this report we will discuss
the Fund's performance as well as issues and trends which are affecting both
real estate and securities markets.
Q. WHAT WAS THE ALPINE U.S. REAL ESTATE EQUITY FUND'S PERFORMANCE DURING THE
FISCAL YEAR ENDED SEPTEMBER 30, 1998?
A. We are pleased to report that your fund passed its five-year anniversary at
the beginning of September and concluded the month as the top performing real
estate mutual fund out of nine for the five-year period ending September 30th
based on Lipper rankings.(1) This long-term record remained intact even as
the fund experienced its most difficult quarterly performance since
inception. Over the past twelve months, your fund generated a negative total
return, down 24.69% (Y Class). By comparison, The Wilshire Real Estate
Securities Index* declined by 16.69% during the same period. The
disappointing relative performance was most acute during the months of July
through September when the fund lagged the Wilshire Real Estate Securities
Index by -11.51%.
Q. WHAT CREATED THIS DOWNWARD SLIDE IN BOTH REAL ESTATE SECURITIES AND THE
FUND'S PERFORMANCE DURING THIS PAST SUMMER?
A. During the months of August and September, the world's financial markets were
shaken by a confluence of events which snowballed to a flashpoint highlighted
by the near collapse and rescue of the giant hedge fund, Long Term Capital
Management (LTCM). This situation almost created a global financial panic
that threatened to collapse financial liquidity. Fortunately, the U.S.
Federal Reserve stepped in to the fray, cut interest rates and promoted both
financial liquidity and coordination amongst major investment firms and
banks.
This near financial crisis stemmed from the financial meltdown in Asia,
which has been exacerbated by the prolonged Japanese reflation effort. In
late August, the situation was compounded by the collapse of the Russian
Ruble and, with it, much hope for Russian capitalism. This raised fears that
the Asian contagion would spread next to Brazil and beyond, potentially
creating severe losses for major American and European banks. The prospect of
staggering bank losses or even of collapse drove many investors around the
world in a fearful frenzy to raise cash holdings and quickly eliminate risk
from their investment portfolios. However, what was originally an effort to
avoid risk took hold so broadly and so quickly that many investors could not
sell efficiently in order to increase their liquidity. Thus some investors
had to keep hitting the bid price on less liquid holdings in a panic to
achieve financial liquidity. Simultaneously, the world's most liquid
investment, U.S. Treasury Bonds, benefited from huge capital flows in search
of the best safe harbor. In essence the historic yield spreads or risk
premiums required by investors in different investments set relative to the
low risk U.S. Treasury
- ---------------
(1) For the one and three year periods ending 9/30/98 the Fund ranked 78th
among 82 and 4th among 42 Funds, respectively. Lipper ranking is based
on total return and does not include a sales charge.
* The Wilshire Real Estate Securities Index is a market capitalization
weighted performance index of listed property and real estate securities.
- --------------------------------------------------------------------------------
-3-
<PAGE> 4
Portfolio Manager's Report to Shareholders Alpine U.S. Real Estate Equity Fund
- --------------------------------------------------------------------------------
GEOGRAPHICAL DISTRIBUTION*
<TABLE>
<CAPTION>
SOUTH MOUNTAIN PACIFIC NEW CENTRAL MID PACIFIC
EAST STATES SOUTHWEST ENGLAND PLAINS SOUTH MIDWEST ATLANTIC NORTHWEST
<S> <C> <C> <C> <C> <C> <C> <C> <C>
15% 14% 21% 8% 7% 10% 7% 8% 10%
</TABLE>
SECTOR DISTRIBUTION*
<TABLE>
<CAPTION>
HOME OPERATING
CASH HOTEL/LODGING BUILDING OFFICE/INDUSTRIAL RETAIL RESIDENTIAL COS. LAND
<S> <C> <C> <C> <C> <C> <C> <C>
2% 32% 28% 18% 8% 6% 2% 4%
</TABLE>
TOP 10 HOLDINGS*
<TABLE>
<CAPTION>
<C> <S> <C> <C> <C> <C>
1. Kilroy Realty Corp. 5.78% 6. Standard Pacific Corp. 3.67%
2. Lennar Corp. 4.77% 7. Felcor Lodging Trust, Inc. 3.61%
3. U.S. Homes Corp. 4.32% 8. Toll Brothers, Inc. 3.46%
4. Starwood Hotel & Resorts 4.22% 9. Alexander's, Inc. 3.41%
5. Sunstone Hotel Investors, Inc. 4.14% 10. D.R. Horton, Inc. 3.30%
</TABLE>
* Portfolio composition subject to change.
Bond was exacerbated, sending markets and financial structures further out of
kilter. This began to threaten the very operation of a number of major financial
markets including the capital markets for real estate. At the time of writing
this letter in late October, the Federal Reserve's actions have brought some
measure of stability and confidence back to the markets. The panic is over but
the markets have not yet stabilized.
Your fund sought to take advantage of this evolving pattern of panic
selling towards the end of August. We assumed that the collapse of the Russian
ruble would be the final shoe to drop before governments were forced to work
toward stabilizing the situation. So the fund acquired shares in a number of
companies whose shares we believed to be very cheap. Unfortunately, it proved
too early to be aggressive, given the unforeseen impact of the LTCM debacle.
Nonetheless, we believe that the fund's performance in October and hopefully
beyond will continue to justify these purchases.
Q. WHAT HAS BEEN THE EFFECT OF THIS SUMMER'S FINANCIAL UPHEAVAL UPON THE ECONOMY
AND REAL ESTATE MARKETS?
A. Some market observers believe that stock prices often foretell the direction
of the economy and thus the third quarter suggests that a recession may be
around the corner. We do not share
- --------------------------------------------------------------------------------
-4-
<PAGE> 5
Portfolio Manager's Report to Shareholders Alpine U.S. Real Estate Equity Fund
- --------------------------------------------------------------------------------
such a view on this occasion. Typically, financial markets reflect the
prospective strength of business activity. This time, instead of acting like
a cyclical barometer, the markets are reflecting a secular reduction in
global liquidity and capital available for business. We believe that this
secular contraction and resultant capital market restructuring has already
burst the liquidity bubble which propelled economic expansion abroad as well
as contributed to domestic growth. We do not believe the recent monetary
contraction will precipitate a cyclical recession in the U.S. as long as
there are structural adjustments to the mechanisms which promote the flow and
utilization of liquidity throughout the world's financial markets. It appears
that the G-7 Finance Ministers are working on such adjustments.
Real estate markets have rapidly responded to the ongoing realignment of
capital flows. Real estate stock prices have declined and mortgage money is
more expensive. Specifically, financial markets such as Wall Street can no
longer provide the greatest amount of cheap debt and equity capital for real
estate operators. REITs can not currently raise significant equity and CMBS
(Collateralized Mortgage Backed Securities) issuers have been virtually
forced to suspend operations. In their place, the traditional sources of real
estate capital, pension funds, life insurance companies and even some banks
are more prominent. However this investment capital is more expensive.
Effectively the marginal players are gone from the investment arena as more
equity is required for acquisitions and some investors must compensate for
the more expensive capital with higher returns on new real estate. As a
result commercial real estate prices have fallen by 10 -15% and in some
cases, even more, according to market participants. Furthermore, capital for
new developments has become prohibitive for all but the most established
developers with the best projects. Thus, in contrast with last spring, when
excess liquidity from Wall Street was threatening to push prices higher and
new supply to potential excess, we are now witnessing a retrenchment in the
sources of real estate capital in a manner which may in fact prolong the Real
Estate Cycle in a stable manner. Fundamentally, the supply and demand
equation is still in balance throughout most of the U.S.'s major markets,
with typical vacancy rates around 10%. As we look forward to 1999, the stock
market appears to be focusing on the potential level of demand for different
types of real estate, so shares in the most economically sensitive sectors,
such as lodging and homebuilding, have been pricing in much of the market's
worry about a potential recession. If there is no recession, many real estate
stocks are very cheap, trading at price-to-cash flow multiples and
price-to-realizable value that are even cheaper than during the last
recession.
Q. WHAT CHANGES HAS THE FUND MADE TO ADJUST TO MARKET CONDITIONS?
A. As the collapse in real estate share prices began in August, your funds
manager began a process of swapping out of stocks which no longer offered
compelling relative values and acquired shares, which we deemed highly
undervalued. The intent was to buy stocks trading at big discounts to their
underlying real estate value which dominate their market niche or region with
high quality management and assets. For example, the fund sold its position
in the Florida land play, St. Joe Corp, which was 28% below the fund's cost,
and replaced it with a California land play Catellus Development (1.7% of the
net assets of the Fund as of 9/30/98) which had fallen by over 50% from its
recent peak. In our view, Catellus has better prospects as a number of near
term major projects are either close to or in San Francisco or San Diego as
opposed to St. Joe's major assets near Jacksonville and Pensacola, FL, for
- --------------------------------------------------------------------------------
-5-
<PAGE> 6
Portfolio Manager's Report to Shareholders Alpine U.S. Real Estate Equity Fund
- --------------------------------------------------------------------------------
which long-term development plans have yet to be completed. A number of other
new positions were initiated during this period despite the risk of catching
the proverbial falling knife on the blade, that is buying a little too soon
before the bottom was reached and suffering negative short-term performance.
This was the case in certain new holdings such as Prime Hospitality (2.7%),
Security Capital Group (2.5%), LNR Property (2.7%), Felcor Lodging Trust
(3.6%), Standard Pacific Corp (3.7%) and Mack Cali Realty Corp (2.2%). The
collapse in share prices also allowed the fund an opportunity to lower its
cost basis in dominant, premier long term holdings such as Starwood Hotel &
Resorts (4.2%), Lennar Corporation (4.8%), Kilroy Realty Corp (5.8%), Toll
Brothers (3.5%), and Alexanders (3.4%). The fund's concentration of companies
which we think have the best prospects was increased by reducing holdings
from 54 to 44 companies. We have emphasized positioning the Fund for a
sustained market rerating of real estate as fear and uncertainty over the
economic vitality of this country recedes in the stock market.
Q. WHAT ARE THE PROSPECTS FOR U.S. REAL ESTATE SECURITIES IN THE COMING YEAR?
A. This letter is being written at the end of October and real estate securities
around the world have recovered from their October 8th low. We believe this
is the beginning of a stabilization period, until the stock market develops a
clearer picture of real estate's prospects. The readjustment of U.S. real
estate financial markets, let alone the reconstruction of the world's capital
markets, will take time. For now, global capital markets appear relieved that
appropriate actions are being undertaken by government financial
institutions. While the recent shock to the system has been powerful enough
to slow the level of economic activity in this country, we believe that in
and of itself it should not lead to a recession. Nevertheless, the
possibility of continued upheaval in financial markets abroad remains a
caution for the future.
Today the U.S. remains an island of prosperity in a turbulent world.
Population growth from continued immigration to this country, and further
immigration to desirable sunbelt locations in combination with the continued
availability of capital for corporate start-ups, should maintain both healthy
new job creation and household formation levels necessary to underpin demand
for real estate. Real estate fundamentals of supply are well in hand, and we
believe the demand will probably not weaken appreciably. We believe that
securitization will continue as a major force in consolidating the real
estate industry providing both liquidity, transparency and diversification
for investors and entrepeneurs alike. We truly believe that real estate
securities are now priced at levels which offer long-term investors
considerable opportunity for solid positive returns over the next few years
of this cycle.
We appreciate your support during this difficult period, and remain
interested in your questions and comments regarding your investments with the
Alpine family of Real Estate Funds. We remain positive in our outlook for
this portfolio given prices at current levels.
Sincerely,
/s/ Samuel A. Lieber
Samuel A. Lieber
This report is authorized for distribution only when preceded or accompanied by
a Prospectus.
- --------------------------------------------------------------------------------
-6-
<PAGE> 7
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
ALPINE EQUITY TRUST
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and related statement of operations, of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Alpine U.S. Real Estate Equity
Fund of the Alpine Equity Trust, at September 30, 1998, the results of its
operations for the year then ended, the changes in its net assets for the
periods presented and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Alpine Equity Trust's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these financial
statements in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
November 17, 1998
Columbus, Ohio
-7-
<PAGE> 8
ALPINE U.S. REAL ESTATE EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
- ---------- ------------------------------ -----------
<C> <S> <C>
REAL ESTATE INVESTMENT TRUSTS -- (37.3%)
Hotels -- (15.7%)
100,000 Canadian Hotel Income
Properties.................. $ 596,235
59,000 Felcor Lodging Trust, Inc..... 1,434,438
41,263 Patriot American Hospitality,
Inc......................... 526,103
30,000 RFS Hotel Investors, Inc...... 360,000
55,001 Starwood Hotels &
Resorts(d).................. 1,677,530
181,800 Sunstone Hotel Investors,
Inc......................... 1,647,562
-----------
6,241,868
-----------
Office-Industrial Buildings -- (12.5%)
40,000 Brandywine Realty Trust....... 765,000
43,000 Corporate Office Properties
Trust, Inc.................. 341,313
40,000 Great Lakes Reit, Inc......... 665,000
100,000 Kilroy Realty Corp............ 2,300,000
30,000 Mack Cali Realty Corp......... 900,000
-----------
4,971,313
-----------
Shopping Centers -- (4.1%)
17,700 Alexander's, Inc. (b)......... 1,358,475
3,200 Chelsea GCA Realty, Inc....... 109,600
10,500 Kranzco Realty Trust.......... 171,281
-----------
1,639,356
-----------
Manufactured Home Parks -- (3.2%)
85,180 Asset Investor Corp........... 1,267,053
-----------
Mixed Use -- (1.8%)
41,500 Meditrust Co.................. 708,094
-----------
Total Real Estate Investment
Trusts (Cost $17,813,142)... 14,827,684
-----------
COMMON STOCKS -- (62.0%)
Homebuilders -- (27.5%)
19,000 Beazer Homes USA, Inc. (b).... 391,875
50,000 Crossman Communities, Inc. (b) 1,006,250
81,925 D.R. Horton, Inc.............. 1,310,800
85,060 Lennar Corp................... 1,897,900
40,600 MDC Holdings, Inc............. 748,563
83,600 The Presley Companies (b)..... 57,475
39,300 Ryland Group, Inc............. 957,938
103,300 Standard Pacific Corp......... 1,459,113
60,000 Toll Brothers, Inc. (b)....... 1,376,250
58,500 U.S Home Corp. (b)............ 1,718,437
-----------
10,924,601
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
- ---------- ------------------------------ -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Real Estate Operating Companies -- (20.1%)
72,500 American Skiing Co. (b)....... $ 507,500
65,700 Bentall Corp.................. 624,179
98,000 Capital Trust (b)............. 637,000
51,100 Catellus Development Corp. (b) 664,300
138,500 Crescent Operating, Inc. (b).. 969,500
336,000 Excel Legacy Corp. (b)........ 976,500
30,000 Forest City Enterprises,
Inc......................... 630,000
30,400 Grubb & Ellis Co. (b)......... 266,000
56,000 LNR Property Corp............. 1,081,500
55,000 Security Capital Group,
Inc. (b).................... 990,000
70,200 Wellsford Real Properties,
Inc. (b) (c)................ 653,738
-----------
8,000,217
-----------
Lodging -- (14.4%)
89,000 Candlewood Hotel Co., Inc. (b) 545,125
91,700 Execustay Corp. (b)........... 825,300
69,900 Homestead Village Properties,
Inc. (b).................... 598,519
155,600 Hospitality Worldwide Service,
Inc. (b).................... 486,250
106,000 John Q. Hammons Hotels,
Inc. (b).................... 477,000
450,100 Meristar Hotels & Resorts,
Inc. (b).................... 1,237,775
154,000 Prime Hospitality Corp. (b)... 1,078,000
62,000 Servico, Inc. (b)............. 465,000
-----------
5,712,969
-----------
Total Common Stocks
(Cost $28,596,072).......... 24,637,787
-----------
MISCELLANEOUS SECURITIES -- (0.0%)
1,000 Miscellaneous Securities
(Cost $19,548).............. 22,125
-----------
Total Investments
(Cost $46,428,762) (a) 99.3% 39,487,596
===========
Other assets in excess of
liabilities............ 0.7 284,539
--- -----------
TOTAL NET ASSETS........100.0% $39,772,135
===== ===========
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
SECURITIES SOLD SHORT -- (1.8%)
12,500 Total Securities Sold Short
(Proceeds $627,948)......... $ 700,000
===========
</TABLE>
Continued
-8-
<PAGE> 9
ALPINE U.S. REAL ESTATE EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
- ---------------
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of $434,575.
Cost for federal income tax purposes differs from market value by net
unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................. $ 1,436,208
Unrealized depreciation................. (8,811,949)
-----------
Net unrealized depreciation............. $(7,375,741)
===========
</TABLE>
(b) Non income producing security.
(c) 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.
(d) Part of the security is held as collateral for the short sale.
See notes to financial statements.
-9-
<PAGE> 10
ALPINE U.S. REAL ESTATE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost, $45,699,978)................. $39,048,396
Deposits with broker and custodian bank for securities
sold short (Cost, $728,784)............................. 439,200
-----------
39,487,596
Receivable for investment securities sold short........... 627,948
Receivable for investment securities sold................. 1,821,827
Receivable for capital shares issued...................... 18,992
Interest and dividends receivable......................... 118,461
Prepaid expenses and other assets......................... 16,644
-----------
Total assets............................................ 42,091,468
-----------
LIABILITIES:
Securities sold short (proceeds $627,948)................. 700,000
Cash overdrafts........................................... 1,319,762
Payable for investment securities purchased............... 147,000
Payable for capital shares redeemed....................... 20,000
Accrued expenses and other liabilities:
Investment advisory fees................................ 31,427
Administration fees..................................... 761
Distribution fees -- B Class............................ 3,911
Distribution fees -- C Class............................ 1,205
Shareholder servicing fees -- A Class................... 1,143
Shareholder servicing fees -- B Class................... 1,303
Shareholder servicing fees -- C Class................... 402
Custodian fees.......................................... 9,295
Legal fees.............................................. 10,685
Audit fees.............................................. 20,506
Transfer agent fees..................................... 1,631
Trustee fees............................................ 184
Registration & Filing fees.............................. 7,458
Printing................................................ 39,111
Other................................................... 3,549
-----------
Total liabilities....................................... 2,319,333
-----------
NET ASSETS.................................................. $39,772,135
===========
NET ASSETS REPRESENTED BY
Capital stock, at par value............................... $ 321
Additional paid-in-capital................................ 46,817,439
Undistributed (distributions in excess of) net investment
income.................................................. 35,143
Accumulated undistributed net realized gains (losses) from
investment transactions................................. (67,550)
Unrealized appreciation (depreciation) from investments... (7,013,218)
-----------
TOTAL NET ASSETS........................................ $39,772,135
===========
NET ASSETS VALUE
Y Class shares
Net assets of $25,832,206 / 2,070,891 shares
outstanding............................................ $ 12.47
===========
A Class shares
Net assets of $5,581,894 / 452,212 shares outstanding... $ 12.34
===========
Offering price (based on sales of 4.75%)................ $ 12.96
===========
B Class shares*
Net assets of $6,352,264 / 523,921 shares outstanding... $ 12.12
===========
C Class shares*
Net assets of $2,005,771 / 165,496 shares outstanding... $ 12.12
===========
</TABLE>
- ---------------
* Redemption price per share varies based on length of time shares are held
(Note 5)
See notes to financial statements.
-10-
<PAGE> 11
ALPINE U.S. REAL ESTATE EQUITY FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................................ $ 27,837
Dividends (net of foreign withholding taxes of $6,791).............. 961,935
------------
Total income..................................................... 989,772
------------
EXPENSES:
Investment advisory fees.................................. $409,861
Administration fees....................................... 44,065
Transfer agent fees....................................... 67,139
Distribution fees -- B Class.............................. 55,526
Distribution fees -- C Class.............................. 21,040
Shareholder Servicing Fee -- A Class...................... 17,123
Shareholder Servicing Fee -- B Class...................... 18,509
Shareholder Servicing Fee -- C Class...................... 7,013
Custodian fees............................................ 35,471
Legal fees................................................ 14,218
Audit fees................................................ 19,344
Trustees' fees and expenses............................... 6,501
Registration and filing fees.............................. 56,248
Organization.............................................. 6,778
Printing.................................................. 27,021
Other..................................................... 17,502
--------
Total expenses......................................... 823,359
Less: Fees waivers and reimbursement from Investment
Advisor................................................... (5,994)
--------
Net expenses.......................................................... 817,365
------------
Net Investment Income................................................. 172,407
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gains from investment transactions..................... 692,757
Net change in unrealized (depreciation) from investments............ (13,160,995)
------------
Net realized/unrealized (losses) from investments..................... (12,468,238)
------------
Change in net assets resulting from operations........................ $(12,295,831)
============
</TABLE>
See notes to financial statements.
-11-
<PAGE> 12
ALPINE U.S. REAL ESTATE EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
OPERATIONS:
Net investment income..................................... $ 172,407 $ 155,093
Net realized gains from investment transactions........... 692,757 4,054,572
Net change in unrealized appreciation (depreciation) from
investments............................................ (13,160,995) 5,804,070
------------ ------------
Change in net assets resulting from operations............ (12,295,831) 10,013,735
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
A Class................................................ (33,856) (6,261)
B Class................................................ (32,220) (9,714)
C Class................................................ (13,786) (6,723)
Y Class................................................ (151,695) (227,570)
From net realized gains on investments
A Class................................................ (645,169) (38,196)
B Class................................................ (785,584) (78,705)
C Class................................................ (336,121) (45,396)
Y Class................................................ (2,702,405) (1,293,384)
------------ ------------
Total distribution to shareholders..................... (4,700,836) (1,705,949)
------------ ------------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from shares sold................................. 46,870,986 9,072,219
Payments for shares redeemed.............................. (21,835,045) (2,863,078)
Dividends reinvested...................................... 4,376,852 1,419,029
------------ ------------
Net increase in net assets resulting from shares of
beneficial interest transactions..................... 29,412,793 7,628,170
------------ ------------
Total increase in net assets........................... 12,416,126 15,935,956
------------ ------------
NET ASSETS:
Beginning of period....................................... 27,356,009 11,420,053
------------ ------------
End of period............................................. $ 39,772,135 $ 27,356,009
============ ============
Undistributed net investment income......................... $ 35,143 $ 94,223
============ ============
</TABLE>
See notes to financial statements.
-12-
<PAGE> 13
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS
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 A Class, B Class, C Class and Y Class shares. A Class
shares are sold with a maximum front-end sales charge of 4.75%. B Class and
C Class shares are sold without a front-end sales charge, but pay higher
ongoing distribution fees than A Class. B Class 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. C Class shares
are sold subject to a contingent deferred sales charge payable on shares
redeemed within one year after the month of purchase. B Class shares
purchased after January 1, 1997 will automatically convert to A Class
shares after seven years. B Class shares purchased prior to January 1, 1997
retain their existing conversion rights. Y Class shares are sold at net
asset value and are not subject to contingent deferred sales charges or
distribution fees. Y Class 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 ("NASDAQ") at the last
reported sales price on the exchange where primarily traded. The Fund
values securities traded on an exchange or NASDAQ 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. Repurchase
agreements are considered to be loans under the 1940 act.
Continued
-13-
<PAGE> 14
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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 and amortization of premiums. Dividend
income is recorded on the ex-dividend date or in the case of some foreign
securities, on the date thereafter when the Fund is made aware of the
dividend. 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, which are accrued as applicable.
D. SHORT SALE TRANSACTIONS:
Short sales are transactions in which the Fund sells a security it does not
own, in anticipation of a decline in the market value of that security. To
complete such a transaction, the Fund must borrow the security to deliver
to the buyer upon the short sale; the Fund then is obligated to replace the
security borrowed by purchasing it in the open market at some later date.
The Fund will incur a loss if the market price of the security increases
between the date of the short sale and the date on which the Fund replaces
the borrowed security. The Fund will realize a gain if the security
declines in value between those dates. All short sales must be fully
collateralized. The Fund maintains the collateral in a segregated account
with its custodian, consisting of cash, equities and/or U.S. government
securities sufficient to collateralize its obligation on the short
positions. At September 30, 1998, equities held by the Fund with a total
market value of $439,200 were segregated as collateral for its short sales.
For the year ended September 30, 1998, the market value of the investments
purchased to cover short sales and proceeds from investments sold short
were $700,000 and $627,948, respectively.
For financial statement purposes, an amount equal to the settlement amount
is included in the Statements of Assets and Liabilities as an asset and an
equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current value of the short position.
Securities sold short at September 30, 1998 and their related market values
and proceeds are set forth in the schedule of portfolio investments.
E. FEDERAL TAXES:
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
timely, all of its net investment company income and net realized capital
gains to shareholders. Therefore, no federal income tax provision is
required. Under the applicable foreign tax law, a withholding tax may be
imposed on interest, dividends and capital gains earned on foreign
investments at various rates. Where available, the Fund will file for
claims on foreign taxes withheld.
F. DIVIDENDS AND DISTRIBUTIONS:
The Fund intends to distribute substantially all of its net investment
income and net realized capital gains, if any, annually in the form of
dividends. Distributions to shareholders are recorded at the close of
business on the ex-dividend date.
Continued
-14-
<PAGE> 15
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal income
tax regulations, which may differ from generally accepted accounting
principles. These "book/tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in
nature, such amounts are reclassified within the composition of net assets
based on their federal tax-basis treatment; temporary differences do not
require reclassification.
Dividends and distributions to shareholders which exceed net investment
income and net realized capital gains for financial reporting purposes but
not for tax purposes are reported as dividends in excess of net investment
income or distributions in excess of net realized gains. To the extent they
exceed net investment income and net realized gains for tax purposes, they
are reported as returns of capital.
As of September 30, 1998, the following reclassification have been made to
increase (decrease) such accounts with offsetting adjustments made to
additional paid-in-capital:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED
(DISTRIBUTIONS IN
EXCESS OF) NET ACCUMULATED UNDISTRIBUTED NET
INVESTMENT INCOME REALIZED GAINS (LOSSES)
(LOSSES) FROM INVESTMENT TRANSACTIONS
----------------- -----------------------------
<S> <C> <C>
U.S. Real Estate Fund................... $(70) $70
</TABLE>
G. 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.
H. 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. All
organization expenses were fully amortized as of September 30, 1998.
Continued
-15-
<PAGE> 16
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. CAPITAL SHARE TRANSACTIONS:
The Fund has an unlimited number of shares of beneficial interest, with
$0.0001 par value, authorized. Transactions in shares and dollars of the
Fund were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
--------------------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------------------ ----------- ------- ----------
<S> <C> <C> <C> <C>
A CLASS
Shares sold..................... 804,558 $13,656,844 184,220 $3,010,088
Shares redeemed................. (535,972) (8,757,392) (64,718) (998,200)
Shares issued in reinvestment of
distributions................ 40,006 636,489 3,065 37,276
--------- ----------- ------- ----------
Net increase/decrease........... 308,592 5,535,941 122,567 2,049,164
--------- ----------- ------- ----------
B CLASS
Shares sold..................... 489,790 8,252,330 154,550 2,373,682
Shares redeemed................. (193,555) (3,096,673) (16,358) (229,903)
Shares issued in reinvestment of
distributions................ 47,696 749,779 7,088 85,699
--------- ----------- ------- ----------
Net increase/decrease........... 343,931 5,905,436 145,280 2,229,478
--------- ----------- ------- ----------
C CLASS
Shares sold..................... 243,416 4,143,415 103,769 1,665,261
Shares redeemed................. (185,069) (3,079,800) (27,945) (417,762)
Shares issued in reinvestment of
distributions................ 19,734 310,020 1,541 18,793
--------- ----------- ------- ----------
Net increase/decrease........... 78,081 1,373,635 77,365 1,266,292
--------- ----------- ------- ----------
Y CLASS
Shares sold..................... 1,325,466 20,817,418 137,476 2,023,188
Shares redeemed................. (420,021) (6,900,201) (87,776) (1,217,213)
Shares issued in reinvestment of
distributions................ 167,013 2,680,564 104,600 1,277,261
--------- ----------- ------- ----------
Net increase/decrease........... 1,072,458 16,597,781 154,300 2,083,236
--------- ----------- ------- ----------
Total Net increase/decrease..... 1,803,062 $29,412,793 499,512 $7,628,170
--------- ----------- ------- ----------
</TABLE>
Continued
-16-
<PAGE> 17
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. SECURITIES TRANSACTIONS:
Cost of purchases and proceeds from sales of investment securities,
excluding securities sold short and short-term investments, were
$78,999,021 and $55,038,154, respectively, for the year ended September 30,
1998.
5. DISTRIBUTION PLANS:
BISYS Fund Services L.P. ("BISYS L.P."), 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
Y Class 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 to
broker-dealers who sell shares of the Fund, are paid by the Fund. Pursuant
to the Distribution plans, each class, except Y Class, currently pays a
service fee equal to 0.25% of the average daily net assets of the class. B
Class and C Class also presently pay distribution fees equal to 0.75% of
the average daily net assets of the class. Distribution Plan fees are
calculated daily and paid monthly.
During the year ended September 30, 1998, amounts paid to BISYS L.P. and
its predecessor pursuant to the Fund's A Class, B Class and C Class
Distribution Plans were $17,123, $74,035 and $28,053, 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.
A Class shares are subject to a 4.75% sales charge at the time of purchase.
B Class shares are subject to a Contingent Deferred Sales Charge (CDSC) on
redemptions of shares made within six years of purchase. The applicable
CDSC is equal to a percentage of the lesser of the net asset value per
share (NAV) at the date of the original purchase or at the date of
redemption, according to the following chart:
<TABLE>
<CAPTION>
YEAR OF REDEMPTION CDSC
- ------------------ ----
<S> <C>
First.................................................. 5%
Second................................................. 4
Third.................................................. 3
Fourth................................................. 3
Fifth.................................................. 2
Sixth.................................................. 1
</TABLE>
C Class shares are subject to a 1% CDSC on shares redeemed during the first
year after purchase.
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
Delaware limited liability company organized for the
Continued
-17-
<PAGE> 18
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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 ("First Union"), served as
investment advisor 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, in accordance with
the following schedule:
First $750 million: 1.00%
Next $250 million: 0.90%
Over $1 billion: 0.80%
For the period from February 23, 1998 through September 30, 1998, Alpine
was paid $267,529 for its services. For the period October 1, 1997 through
February 22, 1998, Evergreen Asset was paid $136,566 for its services.
During the period, for which it served as advisor, Evergreen Asset agreed
to reimburse the Fund to 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
reimbursed the Fund a total of $5,994 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, served as
administrator for the Fund and State Street Bank and Trust Company, served
as the transfer and dividend disbursing agent for the Fund from October 1,
1997 to April 27, 1998. Effective April 27, 1998, BISYS L.P. became the
Fund's Principal Underwriter and Distributor. BISYS Fund Services Ohio,
Inc. became the Fund's Administrator and BISYS Fund Services, Inc.
("BISYS") became the Fund's Fund Accountant, Transfer Agent and Dividend
Disbursing Agent. In addition, effective April 27, 1998, Investors
Fiduciary Trust Company ("IFTC") became the Fund's Custodian. In return for
these services, BISYS L.P. and BISYS earns annual fees amounting to 0.23%
of the Fund's average daily net assets and IFTC earns annual fees amounting
to 0.095% of the Fund's average daily net assets. The Distribution fees
incurred by the Fund under its Distribution Plans are not affected by the
change in service provider.
Prior to February 23, 1998, Lieber & Company, an affiliate of First Union,
was the investment sub-advisor 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.
Officers of the Fund and affiliated Trustees receive no compensation
directly from the Fund.
Continued
-18-
<PAGE> 19
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. 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 (REITs). As a result, the Fund may be more
affected by economic developments in the real estate industry than would a
general equity fund.
8. SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED):
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:
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
</TABLE>
Continued
-19-
<PAGE> 20
ALPINE U.S. REAL ESTATE EQUITY FUND
(FORMERLY EVERGREEN U.S. REAL ESTATE EQUITY FUND)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<S> <C>
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>
9. FEDERAL INCOME TAX INFORMATION (UNAUDITED):
LONG TERM CAPITAL GAINS DISTRIBUTIONS
During the fiscal year ended September 30, 1998 the Fund declared mid term
capital gain distributions in the amount of $129,568 and long term capital
gain distributions in the amount of $412,011.
DIVIDEND RECEIVED DEDUCTION
For corporate shareholders 9.63% of the total ordinary income distributions
paid during the fiscal year ended September 30, 1998 qualifies for the
corporate dividends received deduction.
-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,
----------------------------------------
1998(a) 1997(a) 1996(a) 1995(b)
------- ------- ------- -------
<S> <C> <C> <C> <C>
A CLASS SHARES
NET ASSET VALUE BEGINNING OF YEAR.................... $ 19.34 $12.49 $11.42 $ 9.21
------- ------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss)....................... 0.08 0.12(c) 0.20 0.18
Net realized and unrealized gain (loss) from
investments..................................... (4.25) 8.57 1.28 2.03
------- ------ ------ ------
Total from investment operations................... (4.17) 8.69 1.48 2.21
------- ------ ------ ------
LESS DISTRIBUTIONS
From net investment income......................... (0.15) (0.26)(c) (0.20) --
From net realized gain from investments............ (2.68) (1.58) (0.21) --
------- ------ ------ ------
Total distributions................................ (2.83) (1.84) (0.41) --
------- ------ ------ ------
NET ASSET VALUE END OF YEAR.......................... $ 12.34 $19.34 $12.49 $11.42
------- ------ ------ ------
TOTAL RETURN (EXCLUDES SALES CHARGES)................ (24.86)% 78.28% 13.12% 24.00%
ANNUALIZED RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................... $ 5,582 $2,778 $ 263 $ 5
Ratio of expenses to average net assets.............. 1.95% 1.77% 1.72% 1.78%(f)
Ratio of interest expense to average net assets...... N/A N/A 0.04% N/A
Ratio of net investment income to average net
assets............................................. 0.27% 0.90% 1.60% 3.13%(f)
Ratio of expenses to average net assets (d).......... N/A 1.76% N/A N/A
Ratio of expenses to average net assets (e).......... 1.97% 2.49% 9.65% 364.74%(f)
Ratio of net investment income to average net
assets (e)......................................... 0.25% 0.88% 1.58% 3.11%(f)
Portfolio Turnover (g)............................... 138% 205% 169% 115%
</TABLE>
- ---------
<TABLE>
<S> <C>
(a) Net investment income is based on average shares outstanding during the period.
(b) For the period from March 10, 1995 (commencement of Class operations) to September 30, 1995.
(c) 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.
(d) During the period, certain fees were indirectly paid. If such fees indirectly paid had not
occurred, the ratios would have been as indicated.
(e) During the period, certain fees were waived or reimbursed. If such fees waived or reimbursed
had not occurred, the ratios would have been as indicated.
(f) Annualized.
(g) Portfolio turnover is calculated on the basis of the Fund, as a whole, without
distinguishing between the classes of shares issued.
</TABLE>
-21-
<PAGE> 22
ALPINE U.S. REAL ESTATE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------------
1998(a) 1997(a) 1996(a) 1995(b)
------- ------- ------- -------
<S> <C> <C> <C> <C>
B CLASS SHARES
NET ASSET VALUE BEGINNING OF YEAR.................... $ 19.14 $12.41 $11.37 $ 9.19
------- ------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss)....................... (0.05) 0.02(c) 0.13 0.05
Net realized and unrealized gain (loss) from
investments..................................... (4.18) 8.49 1.27 2.13
------- ------ ------ ------
Total from investment operations................... (4.23) 8.51 1.40 2.18
------- ------ ------ ------
LESS DISTRIBUTIONS
From net investment income......................... (0.11) (0.20)(c) (0.15) --
From net realized gain from investments............ (2.68) (1.58) (0.21) --
------- ------ ------ ------
Total distributions................................ (2.79) (1.78) (0.36) --
------- ------ ------ ------
NET ASSET VALUE END OF YEAR.......................... $ 12.12 $19.14 $12.41 $11.37
------- ------ ------ ------
TOTAL RETURN (EXCLUDES SALES CHARGES)................ (25.43)% 76.87% 12.49% 23.72%
ANNUALIZED RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................... $ 6,352 $3,446 $ 431 $ 160
Ratio of expenses to average net assets.............. 2.70% 2.52% 2.46% 2.51%(f)
Ratio of interest expense to average net assets...... N/A N/A 0.04% N/A
Ratio of net investment income (loss) to average net
assets............................................. (0.42)% 0.12% 1.05% 2.00%(f)
Ratio of expenses to average net assets (d).......... N/A 2.51% N/A N/A
Ratio of expenses to average net assets (e).......... 2.72% 3.24% 6.19% 28.70%(f)
Ratio of net investment income (loss) to average net
assets............................................. (0.44)% 0.10% 1.03% 1.98%(f)
Portfolio Turnover (g)............................... 138% 205% 169% 115%
</TABLE>
- ---------
<TABLE>
<S> <C>
(a) Net investment income is based on average shares outstanding during the period.
(b) For the period from March 7, 1995 (commencement of Class operations) to September 30, 1995.
(c) 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.
(d) During the period, certain fees were indirectly paid. If such fees indirectly paid had not occurred, the
ratios would have been as indicated.
(e) During the period, certain fees were waived or reimbursed. If such fees waived or reimbursed had not
occurred, the ratios would have been as indicated.
(f) Annualized.
(g) Portfolio turnover is calculated on the basis of the Fund, as a whole, without distinguishing between
the classes of shares issued.
</TABLE>
-22-
<PAGE> 23
ALPINE U.S. REAL ESTATE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------------
1998(a) 1997(a) 1996(a) 1995(b)
------- ------- ------- -------
<S> <C> <C> <C> <C>
C CLASS SHARES
NET ASSET VALUE BEGINNING OF YEAR...................... $ 19.13 $12.44 $11.41 $10.87
------- ------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss)......................... (0.05) 0.03(c) 0.13 0.08
Net realized and unrealized gain (loss) from
investments....................................... (4.17) 8.47 1.28 0.46
------- ------ ------ ------
Total from investment operations..................... (4.22) 8.50 1.41 0.54
------- ------ ------ ------
LESS DISTRIBUTIONS
From net investment income........................... (0.11) (0.23)(c) (0.17) --
From net realized gain from investments.............. (2.68) (1.58) (0.21) --
------- ------ ------ ------
Total distributions.................................. (2.79) (1.81) (0.38) --
------- ------ ------ ------
NET ASSET VALUE END OF YEAR............................ $ 12.12 $19.13 $12.44 $11.41
------- ------ ------ ------
TOTAL RETURN (EXCLUDES SALES CHARGES).................. (25.38)% 76.89% 12.49% 4.97%
ANNUALIZED RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................... $ 2,006 $1,673 $ 125 $ 3
Ratio of expenses to average net assets................ 2.70% 2.52% 2.47% 2.49%(f)
Ratio of interest expense to average net assets........ N/A N/A 0.04% N/A
Ratio of net investment income (loss) to average net
assets............................................... (0.46)% 0.23% 1.08% 2.55%(f)
Ratio of expenses to average net assets (d)............ N/A 2.51% N/A N/A
Ratio of expenses to average net assets (e)............ 2.72% 3.24% 18.82% 421.54%(f)
Ratio of net investment income (loss) to average net
assets (e)........................................... (0.48)% 0.21% 1.06% 2.53%(f)
Portfolio Turnover (g)................................. 138% 205% 169% 115%
</TABLE>
- ---------
<TABLE>
<S> <C>
(a) Net investment income is based on average shares outstanding during the period.
(b) For the period from July 12, 1995 (commencement of Class operations) to September 30, 1995.
(c) 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.
(d) During the period, certain fees were indirectly paid. If such fees indirectly paid had not occurred, the
ratios would have been as indicated.
(e) During the period, certain fees were waived or reimbursed if such fees waived or reimbursed had not
occurred, the ratios would have been as indicated.
(f) Annualized.
(g) Portfolio turnover is calculated on the basis of the Fund, as a whole, without distinguishing between
the classes of shares issued.
</TABLE>
-23-
<PAGE> 24
ALPINE U.S. REAL ESTATE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SEPTEMBER 1,
1993(h)
YEAR ENDED SEPTEMBER 30, THROUGH
----------------------------------------------------- DECEMBER 31,
1998(a) 1997(a) 1996(a) 1995(a) 1994(a)(c) 1993
------- ------- ------- ------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Y CLASS SHARES
NET ASSET VALUE BEGINNING OF YEAR...... $ 19.49 $ 12.56 $ 11.44 $10.07 $10.71 $10.00
------- ------- ------- ------ ------ ------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net investment income (loss)......... 0.13 0.16(b) 0.24 0.23 0.11 0.04
Net realized and unrealized gain
(loss) from investments............ (4.32) 8.63 1.29 1.46 (0.75) 0.72
------- ------- ------- ------ ------ ------
Total from investment operations..... (4.19) 8.79 1.53 1.69 (0.64) 0.76
------- ------- ------- ------ ------ ------
LESS DISTRIBUTIONS
From net investment income........... (0.15) (0.28)(b) (0.20) (0.20) -- (0.04)
In excess of net investment income... -- -- -- -- -- (0.01)
From net realized gain from
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 YEAR............ $ 12.47 $ 19.49 $ 12.56 $11.44 $10.07 $10.71
------- ------- ------- ------ ------ ------
TOTAL RETURN........................... (24.69)% 78.79% 13.57% 17.63% (5.98)% 7.60%
ANNUALIZED RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...... $25,832 $19,459 $10,601 $9,456 $8,630 $4,610
Ratio of expenses to average net
assets............................... 1.70% 1.51% 1.46% 1.50% 1.49% 0.44%(f)
Ratio of interest expense to average
net assets........................... N/A N/A 0.04% N/A N/A N/A
Ratio of net investment income (loss)
to average net assets................ 0.58% 1.10% 2.02% 2.45% 1.60% 1.93%(f)
Ratio of expenses to average net assets
(d).................................. N/A 1.50% N/A N/A N/A N/A
Ratio of expenses to average net assets
(e).................................. 1.72% 2.26% 2.25% 2.70% 2.65% 3.59%(f)
Ratio of net investment income (loss)
to average net assets (e)............ 0.56% 1.08% 2.00% 2.43% 1.58% 1.91%(f)
Portfolio Turnover (g)................. 138% 205% 169% 115% 102% 17%
</TABLE>
- ---------
<TABLE>
<S> <C>
(a) Net investment income is based on average shares outstanding during the period.
(b) 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.
(c) 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.
(d) During the period, certain fees were indirectly paid. If such fees indirectly paid had not occurred, the
ratios would have been as indicated.
(e) During the period, certain fees were waived or reimbursed. If such fees waived or reimbursed had not
occurred, the ratios would have been as indicated.
(f) Annualized.
(g) Portfolio turnover is calculated on the basis of the Fund, as a whole, without distinguishing between
the classes of shares issued.
(h) Commencement of class operations.
</TABLE>
-24-
<PAGE> 25
TRUSTEES
Samuel A. Lieber
Laurence B. Ashkin
Foster Bam
H. Guy Leibler
INVESTMENT ADVISER [GRAPHIC] Alpine
Alpine Management and Research, LLC
122 East 42nd Street, 37th floor
New York, NY 10168
CUSTODIAN U.S. Real Estate
IFTC Equity Fund
801 Pennsylvania
Kansas City, MO 64105
TRANSFER AGENT
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, OH 43219
ACCOUNTANTS
PricewaterhouseCoopers LLP
100 East Broad Street
Columbus, OH 43215
LEGAL COUNSEL
Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY 10022
ADMINISTRATOR AND DISTRIBUTOR
BISYS Fund Services L.P.
3435 Stelzer Road
Columbus, OH 43219
[GRAPHIC]
------------------------
Alpine U.S. Real Estate Equity Fund ANNUAL REPORT
122 East 42nd Street, 37th floor
New York, NY 10168 September 30, 1998
(11/98) (212) 687-5588
