<PAGE> 1
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, 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
ALPINE LOGO
Realty
Income & Growth
Fund
Alpine Realty Income & Growth Fund
122 East 42nd Street, 37th floor
New York, NY 10168
(212) 687-5588
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SEMI-ANNUAL REPORT
April 30, 1999
(6/99)
<PAGE> 2
TABLE OF CONTENTS
Portfolio Manager's Report to Shareholders
PAGE 2
Schedule of Portfolio Investments
PAGE 8
Statement of Assets and Liabilities
PAGE 9
Statement of Operations
PAGE 10
Statement of Changes in Net Assets
PAGE 11
Notes to Financial Statements
PAGE 12
Financial Highlights
PAGE 16
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-1-
<PAGE> 3
Portfolio Manager's Report to Shareholders Alpine Realty Income & Growth Fund
- --------------------------------------------------------------------------------
Alpine Realty
Income & Growth Morgan Stanley
Fund REIT Index
12/30/98 $10,000 $10,000
4/30/99 $11,066 $10,574
Past performance is not predictive of future results. Investment return and
principal value of the Alpine Realty Income and Growth 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 and
reimbursements. Without the waiver or reimbursement of fees, total return would
have been lower.
The Morgan Stanley REIT Index is a total-return index comprising of the most
actively traded real estate investment trusts and is designed to be a measure of
real estate equity performance.
<TABLE>
<CAPTION>
COMPARATIVE TOTAL RETURNS AS OF 4/30/99
SINCE
INCEPTION+
- -------------------------------------------------------------------------
<S> <C>
Alpine Class Y 10.66%
Alpine Class A (4.75%)* 5.29%
Alpine Class B (5.00%)* 5.33%
- -------------------------------------------------------------------------
Morgan Stanley REIT Index 5.74%
</TABLE>
* Represents maximum sales load.
+ Represents Class A and Class Y shares, which commenced December 30, 1998.
Class B commenced February 18, 1999.
- --------------------------------------------------------------------------------
-2-
<PAGE> 4
Portfolio Manager's Report to Shareholders Alpine Realty Income & Growth Fund
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present the Alpine Realty Income & Growth Fund's first
semi-annual report to shareholders for the abbreviated four-month period ended
April 30, 1999. During much of the period under review, we continued to
experience the volatile and weak pattern of returns for real estate stocks that
has been evident for the past twelve months. However, at the end of March, the
stock market began to focus on economically sensitive, cyclical stocks, leading
value investors into the real estate sector. 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. This discussion will also explain why we believe
the near future for real estate securities could be more positive.
Q. WHY HAS ALPINE ADDED THE REALTY INCOME & GROWTH FUND TO ITS FAMILY OF REAL
ESTATE MUTUAL FUNDS?
A. We created the Alpine Realty Income & Growth Fund to capitalize on the
long-term income-producing characteristics of commercial Real Estate. This
fund is designed to benefit from the relatively high dividend distributions
from REITs and is managed as a compliment to Alpine's other real estate
funds, which are oriented towards capital appreciation. Real Estate is an
attractive investment class due to the contractual and thus, predictable
nature of its income stream, which compliments long-term growth in underlying
asset values. REITs have been designed to efficiently capture this income for
public investors by allowing them to diversify their portfolios both
geographically and by sector.
An empirical analysis of the NAREIT Equity Total Return Index* shows
that REITs have returned 14.51% over the twenty-five years ended April 30,
1999. Roughly 55% of this return, specifically 7.94%, has come from
dividends.
By focusing on relatively high-yielding REIT's and real estate
securities, typically with a track record of increasing dividends, solid
balance sheets and quality properties, the Alpine Realty Income & Growth Fund
seeks to produce competitive total returns featuring a large income component
and the low relative price volatility often associated with REITs. The
consistent Alpine emphasis on investing in undervalued stocks is also
employed in managing this fund, and we are pleased to note that three of our
initial investments have already been or are subject to takeover activity.
Q. WHAT WAS THE ALPINE REALTY INCOME & GROWTH FUND'S PERFORMANCE DURING THE
PERIOD ENDED APRIL 30, 1999?
A. During the four-month period ended April 30, 1999 the fund generated a total
return of 8.81%. This was superior to the fund's benchmark Morgan Stanley
REIT Index(1) (RMS), which gained 4.40% during the period. Since its
inception on December 30th 1998, the fund has
- ---------------
*The National Association of Real Estate Investment Trusts (NAREIT) equity REIT
dividend yield represents the dividend yield of all equity REITs at close of
each month based on closing month end prices and annualized dividends.
(1) The Morgan Stanley REIT Index is a total-return index comprising of the most
actively traded real estate investment trusts and is designed to be a measure of
real estate equity performance. The index was developed with a base value of 200
as of December 31, 1994.
- --------------------------------------------------------------------------------
-3-
<PAGE> 5
Portfolio Manager's Report to Shareholders Alpine Realty Income & Growth Fund
- --------------------------------------------------------------------------------
produced a total return of 10.66% versus 5.74% for the RMS Index. During the
period, under review, price declines within the sector reduced the RMS index
to a level not seen since December 1996. This valuation came despite
excellent earnings growth of 8% and 11% in 1997 and 1998 respectively and
consensus earnings growth of over 9% projected for 1999. We felt that this
created exceptional relative value, and even after the 12.5% rebound from the
RMS Index low on March 23, we remain comfortable with current valuations.
Q. HOW DID THE OVERALL STOCK MARKET AFFECT REAL ESTATE SECURITIES DURING THE
PAST YEAR?
A. We believe that the price decline and subsequent volatility in the world's
stock markets over the past year reflects a process of adjustment to
uncertainty regarding the impact of the Asian financial collapse on each
country's economy, as well as its financial and real estate markets. During
the period, the apprehensive stock market chose to focus most of its energy
and funds flow on relatively predictable, well known large capitalization
non-cyclical companies or alternatively, in "new technology" companies that
offer the potential for significant, yet to be realized growth. As a result,
the market did not favor economically sensitive, mature sectors such as real
estate.
Investors' concern over the health and duration of the global business
cycle have hurt the relative performance of REITs. Real estate is dependent
on economic growth to drive demand for space. Real Estate is also dependent
upon investment liquidity, not only for buying and selling properties, but
also to finance new developments. However, the volatility in global capital
markets over the last two years affected capital flows throughout the world.
In 1998, Real Estate fundamentals took a backseat to a change in
investor sentiment as a normal correction from high valuations was
dramatically affected by external factors. The first major factor which hurt
real estate investor sentiment was an emerging picture of an "end of the bull
market" fear which caused investors to question Wall Street's estimates for
earnings growth. This skepticism was compounded by a questionable supply and
demand picture at that time, as new construction starts increased in many
markets and last summer's recession threat dampened the demand forecasts for
real estate.
The second major factor to affect real estate stock prices was the
"Summer of 1998" Russian credit crunch and the collapse of the CMBS
(Commercial Mortgage Backed Securities) market. It is important to note that
the CMBS crash was not caused by losses in real estate, but rather by the
global credit crunch which cut off the enormous liquidity which had fueled
the real estate market.
The third factor was the historically high valuations of real estate
stocks at the end of 1997. REITs were trading at historically low average
dividend yields under 5.5% and at very high forward multiples of 13X FFO. By
comparison, over the past 20 years the average multiple is 10.8X with a range
from 8X to 13X. Only twice since 1970 have yields been lower than 6%. REITs
were also trading at premiums of 20% to 50% above the net asset value (NAV)
of their real estate.
The net affect was that REITs and other Real Estate Stocks ended 1998
with the third
- --------------------------------------------------------------------------------
-4-
<PAGE> 6
Portfolio Manager's Report to Shareholders Alpine Realty Income & Growth Fund
- --------------------------------------------------------------------------------
worst year on record since 1970 with total returns down over -17%. Real
Estate operating companies lost almost 23% from prior year levels. Only the
Recession years of 1974 and 1990 produced worse performance.
For investors who had purchased REITs for their defensive
characteristics and predictable growth, REITs did not live-up to their
billing. Despite secure internal growth, external growth through acquisitions
was diminished and the dividend cushion of under 6% was not large enough to
induce income-oriented investors to support the sector. Alpine has
traditionally emphasized internal growth prospects, and does not pay a
premium for growth, through acquisition unless strategic or synergistic
benefits accrue.
Since the end of the first calendar quarter, the stock market's broad
focus appears to be shifting away from new technology and internet stocks and
focusing on cyclically sensitive sectors such as equipment manufacturing,
materials processors and finally real estate owners and developers. This is
in response to signs of renewed economic activity and improved capital flows
into Asia, while our economy remains robust. Even though the U.S. economy has
slowed from the 4.9% to 5.5% annual GDP growth rates that it sustained over
the past 5 years, we believe the economy should grow at a rate in excess of
3% for much of this year. This contrasts greatly with expectations of a
potential recession in 1999, which some prognosticators envisioned just 6
months ago. Alpine believes the end of this business cycle is not yet in
sight!
Q. HOW DID THIS SET THE STAGE FOR 1999?
A. We believe that the aftermath of the black cloud of 1998 is a silver lining
for 1999. First, the economy appears stronger than many economists projected
only months ago, so the potential demand for real estate appears stronger.
Second, capital constraints have severely diminished prospects of
overbuilding in most markets. A number of new development plans have been
scrapped. The lack of liquidity has had a significant affect on many private
developers who can no longer finance new projects. Supply risk is greatly
diminished. The good news is that property prices have come down from peak
levels for most property types. This translates into price decreases creating
accretive acquisitions for those public companies which are well capitalized
with strong balance sheets.
Third, average Dividend yields have climbed to around 8.0% from 5.5% in
1998, thanks to both falling share prices and average dividend growth of
5.6%. Rarely has the yield premium relative to 10-year treasury bonds been
this great.
Finally, many publicly traded real estate companies are now valued at
share prices either below or marginally above their NAV (Net Asset Value, or
liquidation value), with the case for continued capital appreciation still
intact, albeit muted.
Q. WHAT ARE THE PROSPECTS FOR THE NEXT 12-24 MONTHS?
A. With few exceptions, owners of commercial real estate are enjoying higher
occupancy levels in most markets and property types than was experienced in
at least 19 out of the last 20 years. In spite of sustained tenant demand,
rent levels in many areas have yet to exceed the
- --------------------------------------------------------------------------------
-5-
<PAGE> 7
Portfolio Manager's Report to Shareholders Alpine Realty Income & Growth Fund
- --------------------------------------------------------------------------------
peak levels set during the last cycle, ten years ago! This suggests that
there is still scope for rising rents, assuming economic growth and
supply/demand balances can be maintained over the next few years. We do not
believe the market has begun to factor this potential upside into real estate
share prices. We believe that the latter part of the business cycle
traditionally benefits real estate with its combination of long term leases
which produce predictable income returns. Real estate capital appreciation
requires strong economic growth, which usually occurs early and mid-course
during the business cycle, but rental levels often are locked in the place
throughout the cycle, and thus continue to produce steady income well past
the onset of an economic slow-down. This fund is intended to capture that
cash flow in a slowing economy as well as participate in its growth.
We remain positive on the prospects for sustained economic expansion
over the next two to three years, and believe real estate should perform well
during this period. We welcome both new and existing shareholders who seek a
conservative real estate stock investment vehicle to join as in the Alpine
Realty Income & Growth Fund.
MARC R. HALLE SIGNATURE SAMUEL A. LIEBER SIGNATURE
Marc R. Halle Samuel A. Lieber
Portfolio Manager Portfolio Manager
This report is authorized for distribution only when preceded or accompanied by
a Prospectus.
- --------------------------------------------------------------------------------
-6-
<PAGE> 8
Portfolio Manager's Report to Shareholders Alpine Realty Income & Growth Fund
- --------------------------------------------------------------------------------
GEOGRAPHICAL DISTRIBUTION
Pacific Central South Pacific Mid New
Midwest Northwest Plains East South Southwest Atlantic Mountain England
8% 11% 3% 20% 17% 13% 12% 9% 7%
SECTOR DISTRIBUTION
Other REIT Diversified Residential Retail Office/Industrial Lodging
8% 10% 12% 28% 22% 20%
TOP 10 HOLDINGS*
<TABLE>
<CAPTION>
<C> <S> <C> <C> <C> <C>
1. Sunstone Hotel Investors, Inc. 4.61% 6. J.P. Realty, Inc. 3.54%
2. Highwoods Properties, Inc. 4.54% 7. Simon Property Group, Inc. 3.43%
3. Chelsea GCA Realty, Inc. 4.53% 8. State Street Bank, 3.5%, 5/3/99 3.37%
4. Felcor Lodging Trust, Inc. 4.44% 9. Meditrust Co 3.27%
5. MeriStar Hospitality Corp. 3.85% 10. Cornerstone Properties, Inc. 3.27%
</TABLE>
* Portfolio composition subject to change.
- --------------------------------------------------------------------------------
-7-
<PAGE> 9
ALPINE REALTY INCOME AND GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ---------- ------------------------------ -----------
<C> <S> <C>
COMMON STOCKS -- (94.8%)
Diversified -- (10.3%)
2,300 Colonial Properties Trust..... $ 62,963
3,100 Crescent Real Estate Equities,
Inc. ....................... 69,363
8,800 Meditrust Co. ................ 109,449
5,000 Pacific Gulf Properties,
Inc. ....................... 104,063
-----------
345,838
-----------
Hotels -- (19.9%)
2,500 Boykin Lodging Co. ........... 38,281
6,300 Equity Inns, Inc. ............ 57,881
6,200 Felcor Lodging Trust, Inc. ... 148,413
4,600 Innkeepers USA Trust.......... 47,438
5,600 MeriStar Hospitality Corp. ... 128,800
6,300 RFS Hotel Investors, Inc. .... 88,988
16,800 Sunstone Hotel Investors,
Inc. ....................... 154,349
-----------
664,150
-----------
Net Lease -- (6.6%)
3,900 Franchise Finance Corp. of
America..................... 90,431
3,200 Golf Trust Of America,
Inc. ....................... 71,000
3,000 Prison Realty Corp. .......... 58,500
-----------
219,931
-----------
Office-Industrial Buildings -- (21.0%)
2,000 CarrAmerica Realty Corp.
(b)......................... 49,500
6,700 Cornerstone Properties,
Inc. ....................... 109,293
2,500 Glenborough Realty Trust,
Inc. ....................... 42,969
5,200 Great Lakes Reit, Inc. ....... 80,275
5,900 Highwoods Properties, Inc. ... 151,924
3,000 Kilroy Realty Corp. .......... 70,688
6,200 Koger Equity, Inc. ........... 91,063
2,000 Reckson Associates Realty,
Corp. ...................... 45,000
3,100 SL Green Realty Corp. ........ 61,613
-----------
702,325
-----------
Residential -- (11.4%)
3,500 Asset Investor Corp. ......... 50,531
200 Associated Estates Realty,
Corp. ...................... 2,313
3,200 Camden Property Trust......... 86,399
3,800 Gables Residential Trust...... 90,487
2,100 Summit Properties, Inc. ...... 38,325
4,500 United Dominion Realty Trust,
Inc. ....................... 48,938
3,300 Walden Residential Properties,
Inc. ....................... 63,113
-----------
380,106
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ---------- ------------------------------ -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Retail -- (25.6%)
4,600 Chelsea GCA Realty, Inc. ..... $ 151,512
2,600 Federal Realty Investment
Trust....................... 62,075
2,500 First Washington Realty Trust,
Inc. ....................... 53,594
5,900 J.P. Realty, Inc. ............ 118,368
7,100 Kranzco Realty Trust.......... 99,400
2,000 New Plan Excel Realty Trust... 37,125
3,800 Pennsylvania Real Estate
Investment Trust............ 78,375
4,700 Philips International Realty
Corp. ...................... 67,563
6,000 Prime Retail, Inc. ........... 51,750
4,000 Simon Property Group, Inc. ... 114,750
1,000 The Macerich Co. ............. 25,563
-----------
860,075
-----------
Total Common Stocks
(Cost $3,015,825)........... 3,172,425
-----------
REPURCHASE AGREEMENTS -- (3.4)%
112,678 State St. Bank, 3.50%, 5/3/99,
(Collateralized by
$115,000 U.S. Treasury Note,
6.25%, 4/30/01, market value
$121,181)................... 112,678
-----------
Total Repurchase Agreements
(Cost $112,678)............. 112,678
-----------
Total Investments
(Cost $3,128,503) (a)..98.2% 3,285,103
Other assets in excess of
liabilities........... 1.8% 60,273
---- -----------
TOTAL NET ASSETS........100.0% $ 3,345,376
==== ===========
</TABLE>
- ---------
(a) Cost for federal income tax purposes differs from value by net unrealized
depreciation of securities as follows :
<TABLE>
<S> <C>
Unrealized appreciation................... $ 176,119
Unrealized depreciation................... (19,519)
-----------
Net unrealized appreciation............... $ 156,600
===========
</TABLE>
(b) Non-income producing securities.
See notes to financial statements.
-8-
<PAGE> 10
ALPINE REALTY INCOME AND GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost $3,015,825 ).................. $3,172,425
Repurchase agreements, at cost............................ 112,678
----------
Total investments................................... 3,285,103
Receivable for investment securities sold................. 1,200
Interest and dividends receivable......................... 19,609
Receivable for expense reimbursement...................... 23,532
Prepaid expenses and other assets......................... 29,680
----------
Total assets........................................ 3,359,124
----------
LIABILITIES:
Accrued expenses and other liabilities:
Investment advisory fees................................ 1,315
Administration fees..................................... 84
Distribution fees payable............................... 14
Other................................................... 12,335
----------
Total liabilities................................... 13,748
----------
NET ASSETS.................................................. $3,345,376
==========
NET ASSETS REPRESENTED BY
Capital stock, at par value............................... $ 31
Additional paid-in-capital................................ 3,142,180
Undistributed net investment income (loss)................ 32,580
Accumulated net realized gains (losses) on investment
transactions............................................ 13,985
Unrealized appreciation (depreciation) from investments... 156,600
----------
NET ASSETS.................................................. $3,345,376
==========
NET ASSETS
Class Y................................................... $3,326,572
Class A................................................... 1,106
Class B................................................... 17,698
----------
Total............................................... $3,345,376
==========
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES)
Class Y................................................... 303,833
Class A................................................... 101
Class B................................................... 1,620
----------
Total............................................... 305,554
==========
NET ASSET VALUE
Class Y--offering and redemption price per share.......... $ 10.95
==========
Class A--redemption price per share....................... $ 10.95
==========
Class A--Maximum sales charge............................. 4.75%
----------
Class A-- Maximum offering price per share
(100%/(100%-Maximum Sales Charge) of net asset
value adjusted to nearest cent).................. $ 11.50
==========
Class B--offering price per share*........................ $ 10.93
==========
</TABLE>
- ---------
* Redemption price per share varies based on length of time shares are held
(Note 3)
See notes to financial statements.
-9-
<PAGE> 11
ALPINE REALTY INCOME AND GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED APRIL 30,1999 (a)
(UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends........................................................... $ 62,748
--------
EXPENSES:
Investment advisory fees.................................. 6,138
Administration fees....................................... 1,412
Distribution fees -- Class B.............................. 25
Shareholder Servicing Fees -- Class A..................... 1
Shareholder Servicing Fees -- Class B..................... 8
Custodian fees............................................ 2,515
Legal fees................................................ 1,226
Audit fees................................................ 3,476
Trustees' fees and expenses............................... 290
Registration and filing fees.............................. 14,088
Printing costs............................................ 7,114
Other..................................................... 1,019
--------
Gross expenses.............................................. 37,312
Expenses waived............................................. (4,542)
Expenses voluntarily reimbursed............................. (23,532)
--------
Total expenses.............................................. 9,238
--------
Net investment income................................................. 53,510
--------
REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) from investment......................... 13,985
Net change in unrealized appreciation (depreciation)from
investments...................................................... 156,600
--------
Net realized/unrealized gains (losses) from investments............... 170,585
--------
Change in net assets resulting from operations........................ $224,095
========
</TABLE>
- ---------
(a) The Fund commenced operations on December 30, 1998.
See notes to financial statements.
-10-
<PAGE> 12
ALPINE REALTY INCOME AND GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR
PERIOD
ENDED
APRIL 30,
1999(a)
------------
(UNAUDITED)
<S> <C>
OPERATIONS:
Net investment income..................................... $ 53,510
Net realized gains (losses) from investment............... 13,985
Net change in unrealized appreciation (depreciation) from
investments............................................ 156,600
----------
Change in net assets resulting from operations......... 224,095
----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A................................................ (9)
Class B................................................ (147)
Class Y................................................ (20,774)
----------
Total change in net assets from distributions to
shareholders.......................................... (20,930)
----------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net assets resulting from
shares of beneficial interest transactions............. 3,142,211
----------
Total change in net assets................................ 3,345,376
----------
NET ASSETS:
Beginning of period....................................... --
----------
End of period............................................. $3,345,376
==========
</TABLE>
- ---------
(a) The Fund commenced offering Class B Shares on February 18, 1999 and Class A
and Class Y Shares on December 30, 1998.
See notes to financial statements.
-11-
<PAGE> 13
ALPINE REALTY INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION:
The Alpine Realty Income and Growth 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, a Massachusetts business trust organized
in 1988.
Alpine Realty Income and Growth Fund commenced operations on December 30,
1998.
Alpine Realty Income and Growth Fund seeks a high level of current income.
Capital appreciation is a secondary objective.
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 National Association of Securities Dealers Automated
Quotation 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.
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
Continued
-12-
<PAGE> 14
ALPINE REALTY INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
applicable. Capital gains realized on some foreign securities are subject
to foreign taxes, which are accrued as applicable.
D. 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.)
E. 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.
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 distributions of capital.
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.
3. CAPITAL SHARE TRANSACTIONS:
The Realty Income and Growth Fund offers Class A, Class B and Class Y
shares. Class A shares are sold with a maximum front-end sales charge.
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 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.
Class A shares are subject to a 4.75% sales charge at the time of purchase.
Class B shares are shares are subject to a Contingent Deferred Sales Charge
(CDSC) on redemptions of shares made within six years of
Continued
-13-
<PAGE> 15
ALPINE REALTY INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
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.
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>
PERIOD ENDED
APRIL 30, 1999(a)
---------------------
SHARES AMOUNT
------- ----------
<S> <C> <C>
CLASS A
Shares sold...................................... 100 $ 1,000
Shares issued in reinvestment of distributions... 1 9
------- ----------
Net increase (decrease).......................... 101 1,009
------- ----------
CLASS B
Shares sold...................................... 1,605 16,031
Shares issued in reinvestment of distributions... 15 148
------- ----------
Net increase (decrease).......................... 1,620 16,179
------- ----------
CLASS Y
Shares sold...................................... 311,402 3,200,454
Shares redeemed.................................. (9,682) (96,119)
Shares issued in reinvestment of distributions... 2,113 20,688
------- ----------
Net increase (decrease).......................... 303,833 3,125,023
------- ----------
Total Net increase/decrease...................... 305,554 $3,142,211
------- ----------
</TABLE>
- ---------
(a) The Fund commenced offering Class B Shares on February 18, 1999 and Class A
and Class Y Shares on December 30, 1998.
4. SECURITIES TRANSACTIONS:
Cost of purchases and proceeds from sales of investment securities,
excluding securities sold short and short-term investments, were $3,766,411
and $764,571, respectively, for the period ended April 30, 1999.
5. TRANSACTIONS WITH AFFILIATES:
Investment advisory services are provided to the Fund by Alpine Management
& Research LLC ("Alpine"). Pursuant to each investment advisor's agreement
with the Fund, Alpine is entitled to an annual fee based on the Fund
average daily net assets, 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>
Continued
-14-
<PAGE> 16
ALPINE REALTY INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
Fees may be voluntarily reduced or reimbursed to assist the Fund in
maintaining competitive expense ratios. Information regarding these
transactions for the Fund is as follows for the period ended April 30,
1999:
<TABLE>
<CAPTION>
INVESTMENT ADVISOR
------------------------------ REIMBURSEMENTS
ANNUAL FEE VOLUNTARY ------------------
BEFORE VOLUNTARY FEE CLASS B CLASS Y
FEE REDUCTIONS REDUCTIONS SHARES SHARES
---------------- ---------- ------- -------
<S> <C> <C> <C> <C>
Realty Income and Growth Fund.............. 1.00% 4,542 180 23,352
</TABLE>
BISYS Fund Services L.P. ("BISYS L.P.") is the Fund's Principal Underwriter
and Distributor. BISYS Fund Services Ohio, Inc. is the Fund's Administrator
and BISYS Fund Services, Inc. ("BISYS") is the Fund's Fund Accountant,
Transfer Agent and Dividend Disbursing Agent. In addition, Investors
Fiduciary Trust Company ("IFTC") is the Fund's Custodian. In return for
these serves, BISYS L.P. and BISYS will earn an annual fee amounting to
0.23% of the Fund average daily net assets and IFTC will earn an annual fee
amounting to 0.095% of the Fund average daily net assets.
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 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 assets of the class.
Class B also presently pays 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 period ended April 30, 1999, amounts paid to brokers by BISYS
L.P. pursuant to the Fund's Class B Distribution plan was $29.
Officers of the Fund and affiliated Trustees receive no compensation
directly from the Fund.
6. CONCENTRATION OF CREDIT RISK:
The Fund invest 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.
Continued
-15-
<PAGE> 17
ALPINE REALTY INCOME AND GROWTH FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD ENDED APRIL 30, 1999
-----------------------------------------
CLASS A(f) CLASS B(e) CLASS Y(f)
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSETS VALUE BEGINNING OF PERIOD.................... $10.00 $ 9.99 $10.00
------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss).......................... 0.21 0.19 0.21
Net realized and unrealized gain (loss) from
investments and foreign currencies................. 0.83 0.84 0.84
------ ------ ------
Total from investment operations...................... 1.04 1.03 1.05
------ ------ ------
LESS DISTRIBUTIONS
From net investment income............................ (0.09) (0.09) (0.10)
------ ------ ------
Total distributions................................... (0.09) (0.09) (0.10)
------ ------ ------
NET ASSET VALUE END OF PERIOD........................... $10.95 $10.93 $10.95
====== ====== ======
TOTAL RETURN (EXCLUDES SALES CHARGES)................... 10.56%(d) 10.44%(d) 10.66%(d)
ANNUALIZED RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................... $ 1 $ 18 $3,327
Ratio of expenses to average net assets............... 1.75%(c) 2.47%(c) 1.48%(c)
Ratio of net investment income (loss) to average net
assets............................................. 7.00%(c) 7.62%(c) 8.60%(c)
Ratio of expenses to average net assets(b)............ 67.17%(c) 9.19%(c) 5.94%(c)
Portfolio Turnover(g)................................. 60% 60% 60%
</TABLE>
- ---------
(a) Net investment income is based on average shares outstanding during the
period.
(b) During the period, certain fees were waived or reimbursed. If such fees
waived or reimbursed had not incurred, the ratios would have been as
indicated.
(c) Annualized.
(d) Not Annualized.
(e) For the period from February 18, 1999 (commencement of class operations) to
April 30, 1999.
(f) For the period from December 30, 1998 (commencement of class operations) to
April 30, 1999.
(g) Portfolio turnover is calculated on the basis of the Fund, as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
-16-
