UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21210
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ALPINE INCOME TRUST
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(Exact name of registrant as specified in charter)
615 EAST MICHIGAN STREET
3RD FLOOR
MILWAUKEE, WI 53202
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(Address of principal executive offices) (Zip code)
SAMUEL A. LIEBER
ALPINE MANAGEMENT & RESEARCH, LLC
2500 WESTCHESTER AVENUE, SUITE 215
PURCHASE, NY 10577
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(Name and address of agent for service)
1-888-785-5578
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Registrant's telephone number, including area code
Date of fiscal year end: OCTOBER 31
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Date of reporting period: APRIL 30, 2005
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ITEM 1. REPORT TO STOCKHOLDERS.
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(ALPINE LOGO)
EQUITY & INCOME FUNDS
ALPINE DYNAMIC BALANCE FUND
ALPINE DYNAMIC DIVIDEND FUND
ALPINE MUNICIPAL MONEY MARKET FUND
ALPINE TAX OPTIMIZED INCOME FUND
Semi-Annual Report
April 30, 2005
This material must be preceded or accompanied by a current prospectus.
REPORT TO SHAREHOLDERS
ALPINE'S INVESTMENT OUTLOOK
PAGE 1
FUND MANAGER REPORTS
ALPINE DYNAMIC BALANCE FUND
PAGE 4
ALPINE DYNAMIC DIVIDEND FUND
PAGE 8
ALPINE MUNICIPAL MONEY MARKET FUND/ALPINE TAX OPTIMIZED INCOME FUND
PAGE 12
SCHEDULES OF PORTFOLIO INVESTMENTS
PAGE 16
STATEMENTS OF ASSETS AND LIABILITIES
PAGE 27
STATEMENTS OF OPERATIONS
PAGE 29
STATEMENTS OF CHANGES IN NET ASSETS
PAGE 31
FINANCIAL HIGHLIGHTS
PAGE 35
NOTES TO FINANCIAL STATEMENTS
PAGE 41
ADDITIONAL INFORMATION
PAGE 48
ALPINE'S INVESTMENT OUTLOOK
Dear Investor:
We are pleased to present the semi-annual report of the Alpine Mutual Funds
for the fiscal period ending April 29, 2005. During this period, Alpine's funds
continued their pattern of strong relative outperformance. Please see the
individual portfolio discussion sections for detailed, standardized performance
data and relevant rankings in addition to fund specific commentary.
Alpine's managers believe that we are in the early phase of an extended
business cycle. We think that inflationary pressures will remain subdued during
a period of sustained sub par growth. The prospect for continued economic
expansion leading to job formation and further value creation appear positive
over the longer term, but the nation's capacity to offset dips and cushion
shocks has been diminished by policy choices and their consequences. The U.S.
and global economies have not enjoyed as strong a recovery phase as previous
cycles might suggest despite historically low interest rates. Capital markets
have been broadly trendless, although characterized by significant day-to-day
volatility. Fluctuating economic data shows the U.S. is still in the midst of
the transition phase between the economic recovery of 2003/04 and a prospective
period of renewed stable economic growth. Global data shows a more persistent
weakening trend in Western Europe and a more positive, albeit still mixed trend
in Asia.
A major theme of Alpine's 2004 annual report was that the economy was in a
"cyclical sweet spot, soured by excesses and tempered by caution". We believe
this description is still appropriate, and will remain so at least through year-
end. Working backwards, the "caution" is on the part of corporations with
historically large cash holdings who are not showing confidence by committing
new investment capital which might add productive capacity and jobs to the
economy. The sour "excesses" related to the ongoing pattern of consumption
exceeding incomes, deficit spending at the governmental level and including the
nation's trade deficit. Across the board, at all levels, these excesses have
been paid for by increased borrowings. If such borrowing produces long-term
growth, all could be well. The "cyclical sweet spot" correlated with the
combination of modest economic growth and low inflation leading to continued low
interest rates. If corporations can take advantage of such cheap money to
follow the consumer's lead in maintaining buying power, economic growth could be
extended.
LOST IN TRANSITION - ECONOMIC UNCERTAINTY CONTINUES
We believe the availability of cheap money is very positive for the near
term. However, if or when a transition to higher rates occurs, if it is over a
short period of time, it could prove disruptive. If low interest rates are
sustainable for several more years, borrowers will benefit. Unfortunately, it
will further challenge the strategies of long term investors. If the economy
evolves with little certainty of direction, it may be less dynamic. A less
dynamic period between the surge of recovery and sustained growth may limit
future economic opportunities.
Economic data pertaining to jobs, new orders and domestic consumption has
lately shown inconsistent trends. This has led many economists to at first
increase, and then, reduce their estimates for GDP growth this year, not only in
the U.S. but also in Europe. Looking abroad, we see that recent negative votes
on an E.U. constitution may further slow that already weak economic region.
Meanwhile, Japan is enjoying a modest rebound in its domestic economy. However,
the Japanese government's expectations for GDP growth are that it will
significantly slow over the course of the next three to four quarters. This is
due, in part, to a progressive deceleration of demand from China's economy, as
it tries to reign in some of the excesses fueled by significant domestic and
foreign investment in that country. Finally, throughout the world, rising oil
prices pose an extended threat to economic growth. Thus, the aggregated impact
of these regional trends is that slower economic growth will sustain
historically low interest rates around the world, leading to capital markets
that are awash in financial liquidity.
Over decades, we have seen that without a strong directional trend, capital
flows are very rotational, in and out of different economic sectors, commodity
classes, and even countries. This invites short-term trading strategies
employed by many capital markets investors, including hedge funds, investment
and commercial banks proprietary and even corporations. One consequence of
excess liquidity are the relatively low rates of return and compressed risk
premiums available in today's capital markets low returns and rapid trading
strategies have resulted in greater daily volatility, with an emphasis on
momentum based directional trades. Two of the most sustained directional bets
have been property and commodities. In part, this reflects a desire for
inflation hedges, but is also a product of too much money seeking too few
opportunities.
Alpine's portfolio management aims to look beyond the day-to-day
distractions of the markets. Our current focus is on the effects of continued
moderate economic growth on our country's resilient consumption patterns. We
are concerned that corporate capital outlays, which surged through the fourth
quarter of last year due to tax incentives, appears to be slowing in 2005.
While low interest rates continue to stimulate household spending, we remain
cautious that unless job growth and per capita income broaden across the
economy, the risk grows that consumption levels will at best flatten, even for
high-end goods. In turn, this might put further pressure on corporate operating
margins since so few sectors or companies enjoy strong pricing power.
THE DOLLAR'S TREND(Y), AGAIN
On the geopolitical front, there has been marginal improvement with regard
to Iraq, Iran or North Korea. These issues are less prominent for now in the
public/media consciousness. But events will no doubt highlight such problem
areas again. The European "No" vote with regard to a constitution can be seen
as a roadblock to further integration and expansion of the European trading
block. Short term, this is a modest negative, while longer term implications
are not clear as to whether a new and improved plan for organizing the social
and economic priorities of the different countries can be implemented. The main
beneficiary of these events has been the dollar, which has surprised most
observers and participants in the capital markets with its renewed strength
notwithstanding the well documented deficit excesses in our economy. Another
contributing factor perhaps is the high price of oil, which is denominated in
U.S. dollars and hence gets recirculated back into our Treasury securities
market and economy by oil producing countries. As long as our country's trade
deficit dollars are recycled back into the capital markets, this period of
relative dollar stability may continue. However, the structural imbalances
which precipitated our currency's three-year decline from February 2002,
continue to deteriorate. Alpine anticipates another shift to further dollar
weakness into 2006, retracing some of its 4.65% average annual gains since 1981.
We suspect that a period of steady long-term dollar strength may not emerge
until we once again enjoy sustained economic growth.
CHEAP MONEY HAS REPRICED FINANCIAL ASSETS
Low interest rates fueled economic recovery and spared the world from a
potentially severe recession in 2001. However, cheap money has also had an
equally dramatic effect on the valuation of long-term assets. In the aftermath
of the stock market bubble bursting in 2000, compounded by the recession of
2001, followed by both 9/11 and the SARS epidemic scares, the Federal Reserve
decided to sustain short-term interest rates below long-term inflation trends.
Countering the negative wealth effect of the equity market collapse, financial
liquidity was created for individuals through the home refinancing boom, which
not only boosted consumption in the U.S., but further strengthened already
strong housing markets around the world. Even though business activity slowed,
corporate balance sheets were restructured as labor and distribution costs were
cut. Now vast numbers of companies are flush with cash. Unfortunately, there
is a flip side which is perhaps less positive. As the cost of mortgages and
corporate bonds have fallen, traditional long-term income investors such as
pension plans and insurance companies have been forced to lower their return
expectations or search out alternative sources of yield.
This pressure to generate relatively high income returns with some measure
of consistency has often led to increased allocations to real estate. As this
period of low interest rates is now extending beyond the expectations of many
investors (and could continue for many years), we find that investors are
increasingly accepting historically low property income returns. This so called
"yield shift" in capitalization rates (i.e. the initial income yield) for income
producing property has resulted in a 25% -35% price appreciation for many types
of commercial real estate over the past few years. While this trend is most
pronounced in the U.S., it is also evident in Europe, Australia and Japan. Real
estate has been a primary beneficiary, although other income-producing assets
ranging from trade and consumer receivables to supertankers, have been revalued
higher. While the near-term influence of cheap money has boosted asset prices,
it may be the extended duration and relative stability of the income stream,
which has most benefited real estate prices.
A recent survey by Watson Wyatt LLP revealed that 49% of pension fund
investments in alternative assets (including venture capital, hedge funds and
private equity) was focused on real estate. Alpine's analysis of real estate
allocations among pension plan sponsors and endowments, suggests that the
current pipeline of commitments to invest in real estate yet to be acquired
should sustain prices for at least two or three years. However, we believe that
this weight of money will be fairly selective in terms of cities, property types
and international exposure. The implication is that over time, there could be
greater stratification among valuations of various types of investment property
than exists today!
WHERE IS THE HOUSING BUBBLE?
Over the past four years, rising residential prices have been creating
concerns over an impending housing bubble which could burst. Alpine's view has
been that only select regional markets have become overheated in the past year,
but this does not constitute a bubble. Over the past few years, low mortgage
rates have clearly stimulated extra demand. However, we must also focus on the
underlying supply and demand drivers which fueled an impressive thirteen-year
period of rising home sales in all but one. This long cycle has absorbed latent
existing supply, and has shifted the balance to favor developers who can bring
more supply to market despite tougher environmental and regulatory controls.
Much of the bursting bubble argument has been based on the thesis that what
goes up the fastest, will come down the fastest. Talk of speculative buying and
risky mortgages has been a favorite topic among short sellers and the financial
media. Such concerns now appear even more widespread. Even though most of the
arguments are weak, such fears can resonate, since housing is owned by 69% of
U.S. households. Illustrative of this is an analysis by Yale University
Professor Robert J. Shiller who wrote "Irrational Exuberance" back in 2000. He
performed a simple Lexis-Nexis search for major media articles on a "housing
bubble" in the month of May over each of the last five years. The search
revealed an increase in the number of such articles, with the following trend,
beginning with May 2001: 8, 18, 20, 35, and 77 in May 2005. It is quite
possible that the acceleration of media attention will help produce caution
amongst both buyers and sellers promoting a stabilization or moderation of home
price appreciation. Perhaps more important is the level of affordability, which
could also cool home price growth. Already, we have seen signs that a bid-offer
spread has returned to a housing market where the basic strategy was often to
match the asking price or pay even more as competition among buyers escalated.
We believe strong demand growth versus minimal changes in supply explains
much of the increase in prices of homes over the past decade. Clearly low
interest rates have also been a positive factor. Even though Alpine expects a
slower economic picture over the next year or two, a probable modest diminution
of demand for home purchases will not by itself bring the supply-demand equation
back into balance. Thus, barring a full-blown recession with significant lay-
offs, we would expect a moderating trend in home price appreciation. We believe
this would be a healthy outcome for the housing market. The only downside might
be that limited home price appreciation would result in a significant fall-off
in refinance activity, even if interest rates decline somewhat from current
levels. Thus, the liquification of homeowners equity will be less stimulative
to the economy. Then, we would expect consumption and income levels to become
more aligned at a moderate pace of growth.
WHERE COULD WE GO FROM HERE?
Alpine's view on the economy is that it will gradually slow for the balance
of 2005 and we would not be surprised to see moderating GDP growth in 2006.
Even though the Federal Reserve appears intent on raising Fed Funds to a
"neutral level" of between 3.5% to 4%, they may have to pause if the economy
shows greater signs of weakness. We now face a historically reduced capacity of
the Federal Reserve or the Treasury to either stimulate the economy or cushion
it against unforeseen events. Globalization is increasingly acting like a
pressure relief valve which prevents many companies or, for that matter, workers
to achieve pricing power. In the above discussion of the housing market, we
noted that the refinancing boom helped to support an unsustainable trend in
consumption expenditures, which have exceeded income growth. Added to this are
the rising costs of fuel and commodities, which affect our daily lives.
However, a bleak interpretation of this data should be offset by the fact that
we are relatively early in an extended economic cycle with reasonable economic
momentum in part fueled by a government which must maintain and support a
significant war making apparatus. Of at least equal importance, many
corporations are better equipped to weather a slow economic environment due to
extensive cost rationalization over the past decade and strong balance sheets
which can support working capital and routine capital outlays.
It is Alpine's belief that the stock market will be fueled by moderate
corporate earnings growth, and stimulated by significant merger and acquisition
activity. The merger and acquisition environment is being propelled by huge
pools of capital raised by private equity firms as well as by many cash rich
companies sustained avenue of top-line revenue growth can best be strengthened
by acquiring other businesses.
We believe Alpine's emphasis on finding investment opportunities which
provide both income and growth will continue to properly position our funds in
this low inflation, low growth environment characterized by exceptional
financial liquidity. Thank you for your interest and support.
Sincerely,
/s/Samuel A. Lieber
Samuel A. Lieber
President, Alpine Mutual Funds
MUTUAL FUND INVESTING INVOLVES RISK. PRINCIPAL LOSS IS POSSIBLE.
ALPINE DYNAMIC BALANCE FUND
Value of a $10,000 Investment
Alpine Dynamic Moody's Equity Mutual
Date Balance Fund Fund Balanced Index S&P 500 Index
---- -------------- --------------------- -------------
6/7/2001(inception) $10,000 $10,000 $10,000
10/31/2001 $10,164 $9,090 $8,341
4/30/2002 $10,707 $9,252 $8,534
10/31/2002 $9,471 $8,465 $7,081
4/30/2003 $10,228 $8,778 $7,397
10/31/2003 $11,696 $9,613 $8,552
4/30/2004 $12,363 $10,019 $9,089
10/31/2004 $13,356 $10,319 $9,357
4/30/2005 $13,936 $10,603 $9,664
This chart represents a comparison of a hypothetical $10,000 investment in the
Fund versus similar investments in the Fund's benchmarks. The graph and the
table do not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares. The Fund's returns reflect the
waiver and recovery of certain fees. Without the waiver and recovery of fees,
the Fund's total returns would have differed.
Performance data quoted represents past performance and is not predictive of
future results. Investment return and principal value of the Fund fluctuate, so
that the shares, when redeemed, may be worth more or less than their original
cost. Performance current to the most recent month end may be lower or higher
than the performance quoted and may be obtained by calling 888-785-5578.
The Moody's Equity Mutual Fund Balanced Index tracks a group of similar funds
that typically correspond to standard classifications based on investment
objectives and fundamental policies. The index includes balanced funds, asset
allocation funds, and, to a lesser extent, multiasset global funds. The S&P 500
Index is designed to measure performance of the broad domestic economy through
changes in the aggregate market value of 500 stocks representing all major
industries. The Lipper Balanced Funds Average is an average of funds whose
primary objective is to conserve principal by maintaining at all times a
balanced portfolio of both stocks and bonds. The Moody's Equity Mutual Fund
Balanced Index, the S&P 500 Index and the Lipper Balanced Funds Average are
unmanaged and do not reflect the deduction of fees associated with a mutual
fund, such as investment adviser fees. The performance for the Dynamic Balance
Fund reflects the deduction of fees for these value-added services. Investors
cannot directly invest in an index.
COMPARATIVE ANNUALIZED TOTAL RETURNS AS OF 4/30/05
SINCE INCEPTION
6 MONTHS(1)<F1> 1 YEAR 3 YEARS (6/7/01)
--------------- ------ ------- ---------------
Alpine Dynamic Balance Fund 4.34% 12.71% 9.18% 8.89%
Moody's Equity Mutual Fund Balanced Index 2.74% 5.82% 4.65% 1.51%
S&P 500 Index 3.28% 6.34% 4.24% -0.87%
Lipper Balanced Funds Average 4.13% 5.41% 4.21% -0.06%
Lipper Balanced Fund Rank N/A(1)<F1> 3/601 3/447 10/405
(1)<F1> Not annualized. The NASD does not recognize rankings for less than one
year.
PORTFOLIO DISTRIBUTION*<F2>
Cash/Cash Equivalents 8.2%
U.S. Gov't Obligations 21.3%
Automotive Equipment 1.3%
Commercial Products & Services 8.0%
Conglomerate 0.8%
Consumer Products & Service 3.0%
Energy 3.6%
Financial - Banks 12.8%
Financial Services 4.9%
Homebuilders 10.3%
Lodging 1.2%
Manufacturing - Diversified 2.7%
Medical Instruments 1.8%
Pharmaceuticals 3.6%
Real Estate Investment Trusts 10.3%
Retail 1.1%
Transportation Services 2.7%
Utilities 2.4%
TOP 10 HOLDINGS*<F2>
1. U.S. Treasury Bond, 6.000%, 2/15/2026 5.54%
2. U.S. Treasury Bond, 5.250%, 11/15/2028 3.83%
3. U.S. Treasury Note, 5.000%, 2/15/2011 3.70%
4. U.S. Treasury Bond, 7.250%, 5/15/2026 2.94%
5. U.S. Treasury Bond, 6.250%, 8/15/2023 2.81%
6. U.S. Treasury Note, 5.000%, 8/15/2011 2.47%
7. Standard-Pacific Corp. 2.15%
8. Pulte Homes, Inc. 2.09%
9. Vornado Realty Trust 2.06%
10. FedEx Corp. 1.99%
*<F2> Portfolio holdings, geographical distributions and/or sector
distributions are as of 4/30/05 and are subject to change. Portfolio
holdings are not recommendations to buy or sell any securities. Top 10
Holdings does not include short-term investments.
ALPINE DYNAMIC BALANCE FUND
The investment result for the first half of the fiscal year 2005, through
April 30, 2005, was a gain in net asset value of 4.34%. This compared with the
3.28% of the Standard & Poor's 500 Index, and the 2.75% of the Moody's Mutual
Fund Balanced Index. For the period since inception of the Fund on June 7,
2001, its cumulative return was 39.35% equal to an annualized rate of 8.89%,
this compares with 1.51% for the Moody's Equity Mutual Fund Balanced Index and a
- -0.89% for the Standard & Poor's 500 Index.
Alpine Dynamic Balance Fund was selected as the leader among all balanced
funds in the United States in the annual Lipper Leaders Fund Awards. The total
return was calculated as the highest out of 441 balance funds. A Lipper Fund
Award is awarded to one fund in each Lipper classification for achieving the
strongest trend of consistent risk-adjusted performance against its
classification peers over the three-year period ended December 31, 2004. The
Lipper organization (a Reuters subsidiary) noted the 16.84% performance for 2004
compared with the Balance Fund Index of 7.93% and the three-year annualized
return of 11.32% compared with the 4.32% of the Balance Fund average.
The first half fiscal year period under review was one of declining momentum
for stock and bond markets. The power of cyclical recovery, which had driven
market advances in 2003 and the early parts of 2004, diminished as growth
expectations were moderated by rising commodity costs and the ongoing challenge
of increasing oil prices. Augmenting growing concern was uncertainty about how
high the Federal Reserve Bank will raise short-term interest rates in their
current tightening program. Anxiety grew over whether the Federal Reserve would
continue its "measured" pace of increases or whether inflationary prospects
might bring more aggressive policies. Expectations for special economic
stimulus, achieved with the tax reductions of prior years, was replaced by
concerns that the purchasing power of the lower income segments of the
population was being reduced by high fuel costs. Adding to uncertainty was the
drumbeat of daily statistics and commentary on the growth of the Federal
government deficit and of the U.S. trade deficit. This broad picture was hardly
one which could generate widespread enthusiasm for the purchase of equities.
Even the Bush Administration appeal for a revision of the Social Security
structure to include equities provided little lift, in view of widespread
skepticism about potential congressional support for this proposal.
The frequent shifts in major and minor trends in both stock and bond markets
during these months impacted the portfolio, but did not lead to changes in our
basic strategies. We judged that the economic environment was less likely to
move to either inflationary or deflationary trends, as the market alternately
feared. We anticipated that it would provide modest growth. We also saw the
trade deficit as a source of funds coming to the bond market from the mounting
assets transferred to foreign nations through our net importing pattern. This,
in turn, led us to believe that demand would be well sustained for the highest
quality, longest term obligations, namely U.S. Government long bonds. With this
framework, although with occasional profit taking and then repositioning on
dips, we sustained the basic fixed income portion of the portfolio at levels
approaching 30%.
The fund's equity strategy also reflected our confidence in steady overall
economic demand, not withstanding with a more modest growth rate than seen in
2004. Thus, the equity portfolio was not sizably altered.
Many of the issues which had been powerful growth vehicles in 2004 and even
prior, continued to demonstrate earnings improvement and comparatively
outstanding growth. Illustratively, each of the top ten performers in the Fund
were issues that had been held prior to the current fiscal year and continue
their leadership. They epitomized a variety of industry opportunities.
Homebuilders continue to benefit by the steadily increasing demand for new
homes, fueled by a still modest rate of mortgage interest and accelerated, in
each case, by the benefits of industry geographic diversification. Thus, during
the semi-annual period, Standard Pacific Company shares provided a total return
of 27.84%, Ryland Group 28.99% and Pulte Homes 30.38%. The corporate
turnarounds through vigorous merchandising and management initiatives continued
to be productive, as illustrated by the 37.83% total return of J.C. Penney
Company. Allegheny Energy Industries, up 33.48% in the six months, continued a
recovery of this depressed utility which had been severely hurt during the
energy crises 3 years ago. The current energy opportunity, built on the rising
price of oil was characterized by the performance of Consolidated Energy - a
major coal producer - up 23.02%. Specialized financial growth, favored by a
still moderate interest rate environment, allowed Student Loan Corporation to
provide a 33.70% total return. The recovery in travel, continuing the post 9/11
trend is reflected in the improving profits of the hotel industry, as
illustrated by Sunstone Hotel Investors' 33.96% gain. These individual moves
reflected the continuation of powerful long-term trends, as is evident from the
gains that some of these holdings have had from their cost. For example, Ryland
Group is up 132.2% from purchase in December 2002, Pulte Corp. up 130.6% from
purchase in July 2001, Standard Pacific up 60.7% since purchase in April 2002.
Even over the shorter term, dynamics have been exceptional as Toll Brothers,
purchased in December 2004, provided a 40% gain. We held the homebuilding group
with the conviction that the industry's valuations would remain relatively
conservative despite widespread apprehensions that increasing interest rates and
speculative pricing make the recent profits growth for this industry a temporary
phenomenon. Our studies suggest this is not the case.
Other longer term equity holding positions were more reflective of the
general market during these six months. This was especially the case in the
financial services and bank sections of the portfolio, which together are the
largest single sector of commitments. The combination of rising Federal Funds
rates, flattening of the yield curve and a few legal challenges to practices
within the industry combined to restrain investors' valuations, notwithstanding
many significant gains in earnings and dividends. When trends or events
shifted, we sought to be responsive. Thus, immediately after the election in
November, the portfolio position in Fannie Mae was sold because we reasoned that
the Bush Administration would initiate an effort to discredit this and other
government sponsored, New Deal initiated business organizations. We also took
significant profits in the Bank North Group when they accepted the bid for
control of its shares by the Toronto Dominion Bank. Shares in Marsh & McLennan
Companies were bought after a negotiated settlement of the charges brought by
the New York Attorney General that originally caused a considerable decline in
share value. These were later sold at a modest profit. The portfolio
experienced one challenging disappointment among financial holdings during these
months, Doral Financial Corp. This prominent Puerto Rican bank holding and
mortgage financing company saw its long-term growth trend and stock performance
interrupted by a disputed valuation of its specialty mortgage holdings. While
the valuation issue remains unresolved, the shares were widely sold, creating a
69.5% decline during the quarter. Our longer term financial industry strategy
continues intact, seeking to benefit from potential merger and acquisitions,
particularly smaller community banks. We expect a reacceleration of this long-
term pattern when the Federal Reserve interest rate increases come to an end and
a more normal yield curve returns. We also seek to take advantage of
opportunities in larger financial institutions, as illustrated by the largest
single commitment in the group, JPMorgan Chase, as the cost savings benefits of
its recent merger are expected to generate earnings growth.
Periods of pessimism about the sustained health of cyclical industries
provided opportunities to purchase the shares of several companies with long-
term cyclical growth patterns. During the first half a number of these declined
somewhat, although recoveries have since been apparent. We would particularly
note Deere & Company, the agricultural and construction machinery manufacturer,
W.W. Grainger, the prominent distributor of electrical motors and machinery, and
Paccar, the leading manufacturer of heavy duty trucks in the United States and
Europe. We expect the sustained earning power growth they have demonstrated
during these months to be reflected in better valuations.
Negative market perceptions of probable future trends continue to provide
interesting opportunities. An example of undervalued assets and unrecognized
accomplishments is Temple-Inland Corp. This major manufacturer of corrugated
packaging and wood based building products has generally been seen as an
effective consolidator of companies in the packing business. But it also has
large assets in timberland, including acreage near Atlanta, Georgia with
significant economic potential. Further diversification comes from its
ownership of a $17 billion full-service bank with more than 140 offices in Texas
and California, (Guaranteed Bank Corp.) and a subsidiary, (Lumberman's
Investment Corp.), a land development commercial real estate company with
investments in residential community development and commercial real estate
properties in nine states from Florida to California. A speculative challenge
to management was mounted during the quarter, then withdrawn. Our holding
program is longer term in nature believing that a recent special dividend and
two-for-one split indicates management interest in more appropriate stock
values.
The strategy of the fund reflects our view that the underlying rate of
inflation will not drive long-term interest rates higher. Additionally, the
trade deficit provides sustained demand for U.S. Treasury obligations from
countries which hold their balances in dollars, while domestic demand will
continue to advance at a more moderate pace than seen in 2004. Thus, our
investment in U.S. Treasury bonds, timed in accordance with appropriate interest
rate expectations, remains a risk averse and effective fixed income investment
program. These conditions also support an equity market where companies with
particularly good business programs for accelerating growth can continue to be
seen as undervalued or special situations. The unfolding of such opportunities
may not be rapid, but are often highly rewarding. As an example, the largest
gain in the portfolio since purchase, currently held, is Developers Diversified,
a real estate investment trust, with a 139% gain since July 2002. Another is
the coal and natural gas company, PennVirginia, up 103.8% since August 2001.
We continue to maintain an active research program, searching for the
opportunities which will meet our goals of low risk, reasonable income and
sizable capital gain opportunity. We thank our investors for their continuing
confidence in the fulfillment of this program.
Stephen A. Lieber
Samuel A. Lieber
Lorraine Klepacki
Co-Portfolio Managers
MUTUAL FUND INVESTING INVOLVES RISK. PRINCIPAL LOSS IS POSSIBLE.
Fund holdings and/or sector allocations are subject to change at any time and
are not recommendations to buy or sell any security.
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Lipper, a wholly owned subsidiary of Reuters, is a leading global provider of
mutual fund information and analysis to fund companies, financial
intermediaries, and media organizations. (06.05)
ALPINE DYNAMIC DIVIDEND FUND
Value of a $10,000 Investment
Alpine Dynamic Moody's Equity Mutual
Date Dividend Fund S&P 500 Index Fund Growth Income Index
---- -------------- ------------- ------------------------
9/22/2003(inception) $10,000 $10,000 $10,000
10/31/2003 $10,690 $10,293 $10,257
1/31/2004 $12,219 $11,128 $10,973
4/30/2004 $12,339 $10,938 $10,761
7/31/2004 $12,744 $10,929 $10,656
10/31/2004 $13,355 $11,263 $10,931
1/31/2005 $14,367 $11,822 $11,099
4/30/2005 $14,083 $11,632 $11,220
This chart represents a comparison of a hypothetical $10,000 investment in the
Fund versus similar investments in the Fund's benchmarks. The graph and the
table do not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares. The Fund's returns reflect the
waiver and recovery of certain fees. Without the waiver and recovery of fees,
the Fund's total returns would have differed.
Performance data quoted represents past performance and is not predictive of
future results. Investment return and principal value of the Fund fluctuate, so
that the shares, when redeemed, may be worth more or less than their original
cost. Performance current to the most recent month end may be lower or higher
than the performance quoted and may be obtained by calling 888-785-5578. The
Fund charges a redemption fee equal to 1.00% of the net amount of the redemption
if you redeem your shares less than 60 days after you purchase them.
The Moody's Equity Mutual Fund Growth Income Index tracks a group of similar
funds that typically correspond to standard classifications based on investment
objectives and fundamental policies. The S&P 500 Index is designed to measure
performance of the broad domestic economy through changes in the aggregate
market value of 500 stocks representing all major industries. The Lipper Equity
Income Funds Average is an average of funds that seek relatively high current
income and growth of income through investing 60% or more of their respective
portfolios in equities. The Moody's Equity Mutual Fund Growth Income Index, the
S&P 500 Index and the Lipper Equity Income Funds Average are unmanaged and do
not reflect the deduction of fees associated with a mutual fund, such as
investment adviser fees. The performance for the Dynamic Dividend Fund reflects
the deduction of fees for these value-added services. Investors cannot directly
invest in an index.
COMPARATIVE ANNUALIZED TOTAL RETURNS AS OF 4/30/05
SINCE INCEPTION
6 MONTHS(1)<F3> 1 YEAR (9/22/03)
--------------- ------ ---------------
Alpine Dynamic Dividend Fund 5.44% 14.11% 23.75%
Moody's Equity Mutual Fund Growth Income Index 2.64% 4.27% 7.44%
S&P 500 Index 3.28% 6.34% 9.87%
Lipper Equity Income Funds Average 5.35% 10.02% 13.10%
Lipper Equity Income Fund Rank N/A(1)<F3> 28/225 1/202
(1)<F3> Not annualized. The NASD does not recognize rankings for less than one
year.
PORTFOLIO DISTRIBUTION*<F4>
Aerospace & Defense 0.6%
Building - Maintenance & Service 2.4%
Business Services 2.0%
Cash/Cash Equivalents 3.5%
Chemicals 4.5%
Commercial Products & Services 1.2%
Communications & Media 2.7%
Conglomerate 1.4%
Construction 3.4%
Consumer Products & Services 7.1%
Energy 5.9%
Entertainment 5.7%
Financial - Banks 8.0%
Fiancial Services 5.1%
Food & Beverages 3.7%
Lodging 1.5%
Lottery Services 2.3%
Manufacturing - Diversified 3.9%
Medical Supplies 3.8%
Metals & Mining 1.9%
Pharmaceuticals 5.3%
Real Estate Operating Companies 0.4%
Restaurants 3.0%
Rights 0.1%
Semiconductors 0.6%
Software 0.6%
Steel Production 2.3%
Telecommunications 3.9%
Transportation 8.8%
Utilities 4.4%
TOP 10 HOLDINGS*<F4>
1. Regal Entertainment Group - Class A 2.12%
2. Telecom Corporation of New Zealand Limited 2.10%
3. Harrah's Entertainment, Inc. 2.08%
4. Whitbread PLC 2.00%
5. J.P. Morgan Chase & Co. 1.99%
6. Storebrand ASA 1.87%
7. JM AB 1.84%
8. Caterpillar Inc. 1.80%
9. Abbott Laboratories 1.67%
10. Healthcare Services Group, Inc. 1.61%
*<F4> Portfolio holdings, geographical distributions and/or sector
distributions are as of 4/30/05 and are subject to change. Portfolio
holdings are not recommendations to buy or sell any securities. Top 10
Holdings does not include short-term investments.
ALPINE DYNAMIC DIVIDEND FUND
We are pleased to report that the Alpine Dynamic Dividend Fund is off to a
strong start in 2005. In addition, the Fund increased its dividend payment by
66% year-over-year for the six months ended April 30th and announced a raise in
its regular monthly dividend amount by 20% beginning in April 2005.
The Alpine Dynamic Dividend Fund provided a total return of 5.40% for the
six-month period ended April 30th, 2005, versus a 3.28% gain for the S&P 500
Stock Index and a 2.64% return for the Moody's Equity Growth Income Index for
the same time period. Since inception on September 22, 2003, the Alpine Dynamic
Dividend Fund has produced an annual return of 23.75%, which compares favorably
to a return of 9.87% for the S&P 500 and a 7.44% return for the Moody's Equity
Growth and Income Index. The Fund ended the period on April 30th, 2005 with
total net assets of $235.12 million, an increase of 440% over the past 12
months.
For the six months ended April 30th, 2005, ADVDX paid out $0.75 in ordinary
dividend income, with most of the distribution being qualified for the maximum
taxable rate of 15%. This represents a 66% increase versus the $0.45 paid in
the six months ended April 30, 2004. Based on a closing NAV price of $12.01 on
April 30, 2005, the $0.75 dividend payout represents a six-month dividend yield
of 6.25% for the Fund. Beginning in April 2005, ADVDX increased its regular
monthly minimum dividend by $0.01, from $0.05 to $0.06 per share. In addition,
in the third month of each quarter the Fund will distribute any excess dividend
income that has been accumulated during the quarter.
The Alpine Dynamic Dividend Fund was designed specifically to maximize the
amount of distributed dividend income that is qualified for the new 15% tax
rate, while also employing a research driven approach to identifying companies
with the potential for dividend increases and capital appreciation. We believe
we have taken a unique and dynamic approach to maximizing both income and
capital appreciation by combining three different investment strategies with a
multi-cap focus. These strategies are reflected in both our top 10 holdings as
well as our best performing stocks in the first half of fiscal 2005.
First, we run a portion of our portfolio with a dividend capture strategy,
where we invest in consistent, high yielding stocks or in special situations
where large cash balances are being returned to shareholders in the form of one-
time special dividends. These actions reflect strong corporate balance sheets as
well as management's incentive to distribute excess cash in the form of
dividends due to the new lower tax rates. We enhance the return of this
portfolio by electively rotating a portion of our high yielding holdings after
the 61-day ownership period required to obtain the 15% dividend tax rate. Our
two largest current holdings are companies that are generating strong free cash
flow and providing very attractive regular dividend yields; Regal Entertainment
(6.4% yield) and Telecom Corporation of New Zealand (7.4% yield). Regal is the
largest theater owner in the U.S., generating 20% of total U.S. box office
revenue. Regal is offsetting weak core theater revenue in 2005 by continuing to
consolidate smaller operators and expanding into two new business areas - in-
theater advertising and live digital satellite events like concerts, video game
tournaments and lectures that increase theater utilization. We see Regal as a
defensive 10-15% earnings grower with high inside ownership and significant free
cash flow that is being returned to shareholders. New Zealand Telecom is the
primary provider of wireline, wireless, and data telecommunications services in
New Zealand. It is also returning its excess cash flow to shareholders and has
the potential for a special dividend in 2005.
Second, we have identified core growth and income stocks that may have
slightly lower but still attractive current dividend yields and predictable
earnings streams plus a catalyst for capital appreciation and potential dividend
increases. In our top 10 holdings, we would group Harrah's Entertainment (1.9%
yield), Abbott Laboratories (2.3% yield), and Healthcare Services Group (1.4%
yield) in this category. These three companies are estimated to grow earnings by
an average of 15-20% in 2005 and 2006. In addition, each raised their dividends
in the past 12 months by a range of 6% at Abbott to over 70% at Healthcare
Services Group.
Our third strategy is what we call "value with a catalyst", where we look for
under-valued or turnaround situations where there may exist attractive current
dividend yields due to depressed earnings that we believe are poised to recover.
We would categorize two of our current top 10 holdings, J.P. Morgan Chase (3.8%
yield) and Caterpillar (2.0% yield) in this group, where we believe there is a
strong fundamental rebound in earnings and cash flow over the next several
years. In addition, each is trading at only 10 times forward earnings estimates,
which we believe is attractive relative to historical valuation ranges and
future earnings growth prospects.
Capturing dividend increases is an important component of our research and
investment strategy. In the six months ended April 30th,2005, the Alpine Dynamic
Dividend Fund owned 36 stocks that declared special dividends and 60 stocks that
raised their dividends in that time period. Since inception on September 22,
2003, this growing trend has brought over 100 special dividend payments for the
fund.
Although several of our top 10 holdings are from the traditional higher
yield, large capitalization segments of the dividend-paying universe, we believe
we have taken a different approach relative to many other dividend funds in that
a large portion of our holdings are in small and mid-cap stocks (less than $10
billion in market capitalization). As of 4/30/05, the median market
capitalization of the 113 holdings in our portfolio was $6.3 billion, while the
mean was $39.9 billion. This is an increase from our average market
capitalization of $31.8 billion at 12/31/04. This reflected our view that the
valuations on some of our small cap holdings looked stretched relative to our
outlook for more conservative earnings growth in 2005, particularly in consumer
related stocks. As interest rates rise and the economy shifts toward more mid-
cycle, moderate growth, we would expect larger, multinational companies to
outperform smaller and more speculative stocks, in general.
However interestingly, once again the majority of our top performers were
smaller cap stocks. For the first half of fiscal 2005, all but one of our top
10 performers had a market capitalization of less than $10 billion and our top
four performers had market caps of less than $1 billion. This is despite the
fact that the Russell 2000 small cap index has significantly underperformed the
broader S&P 500 index. In the six months ended April 30, 2005, the Russell 2000
declined 0.12% versus the S&P 500's 3.28% gain. This illustrates that our multi-
cap, research driven approach is helping us to find valuable opportunities in
the small cap dividend universe. This is consistent with our strategy of
researching and identifying specialized businesses where each has an important
catalyst that we believe will produce attractive earnings and cash flow growth
and higher dividends.
Our two best performers were small cap, high growth companies in niche
markets. Micro-cap Rocky Mountain Chocolate Factory (70.4% internal rate of
return in first half fiscal 2005) benefited from its growth strategy of rolling
out updated franchise stores and mall kiosks for its line of made-on-the-
premises chocolate candy, with earnings forecasted to rise 25% in 2005 and 2006.
And Healthcare Services Group (57.4% return), a provider of housekeeping,
laundry and foodservice to nursing homes and hospitals, is experiencing 20%
earnings growth from its favorable demographic. Other small cap top performers
included Sanderson Farms (42.5% return), a poultry producer benefiting from the
increased popularity of chicken, and Creative Technology (41.4% return), which
sells an IPOD competitor and benefited from strong 2004 holiday sales. As of
April 30th, we no longer held positions in either Sanderson Farms or Creative
Technology as we achieved our price objectives.
Two of our best large cap performers were in the utility sector, with TXU
(40.9% return) and Duke Energy (25.5% return) each experiencing a rebound in
earnings as the companies benefit from the strength in their core energy
businesses and from restructuring and the shedding of unprofitable businesses.
On the other hand, four of our five worst performers in the first half of
2005 were also small cap stocks, but we held relatively small positions in each
(less than 0.5% of the total fund value). Our worst performer in the quarter
was a very small position in Doral Financial, which experienced financial
analyst concerns over its derivative portfolio. Also micro-cap Startek, an
operator of call centers and outsourced business services primarily to the
telecommunications industry, and Russ Berie, the maker of maker of stuffed
animals, gifts, and baby products, each had new management that failed to
execute on promised corporate restructurings. We continue to hold Doral and
Startek as we believe their valuations are appealing and offer attractive
risk/reward profiles at current levels.
Besides taking a multi-cap approach, we also invest approximately 25% of our
assets in international holdings as we see attractive growth opportunities and
usually larger dividend payouts that we traditionally see in the U.S. However,
we were negatively impacted in the first half of fiscal 2005 by the rise in the
U.S. dollar, particularly against the Euro, which declined 5.6% from its high of
1.364 on 12/30/04 to 1.287 on 4/30/05 and has continued to decline further. We
believe that the dollar will stabilize around current levels and that our
international strategy and the opportunities we see overseas will continue to
benefit our shareholders.
One of current top holdings is Whitbread PLC, which operates a conglomerate
in the UK leisure sector, including pubs and restaurants like Pizza Hut, TGI
Fridays and Costa Coffee, the Premier Travel Inn hotel chain and the David Lloyd
health club chain. Whitbread is restructuring and disposing of underperforming
assets, having recently sold its UK Marriott Hotels resulting in a 14% special
dividend payment in May 2005. We could expect future returns of cash to
shareholders from Whitbread as the company sells other assets.
OUTLOOK FOR 2005: WE BELIEVE DIVIDEND PAYERS WILL CONTINUE TO OUTPERFORM
As we look out to the remainder of 2005, we continue to be optimistic about
the prospect for the dividend paying stocks in our portfolio while being more
cautious about the outlook for the overall global economy. In a macro
environment with rising interest rates and oil prices and slowing corporate
profit growth, we believe that investors will be drawn to higher quality and
more defensive stocks and that generally bodes well for dividend paying stocks.
We continue to see several factors that point to investors wanting more
dividend yield and companies being more likely to increase their dividend
payouts. Based on our assumption of slower, single-digit earnings growth for the
S&P 500 in 2005, we believe investors will continue to demand higher dividend
yields as part of their total return expectations, particularly with the lower
15% tax rate. The current yield on the S&P 500 is 1.9%, but historically the
dividend component of total return was much higher. According to Standard and
Poor's, the average annual total return on stocks since 1926 has been about 7%,
with dividend yields accounting for 4% of the total 7%. Therefore, we believe
investors will look to put more money in attractive dividend payers to enhance
returns.
In addition, companies are still sitting on record levels of cash. With U.S.
and global capacity utilization still well below historical peaks, we expect
only targeted capital spending increases in 2005. As expected, we have seen an
increase in the level of mergers and acquisition activity in 2005 as companies
look to use some of their excess cash to supplement slowing organic growth.
However, we still expect a substantial amount of cash will likely be returned to
shareholders in 2005 either in the form of share repurchases or increased
dividend payouts.
Alpine is particularly focused on companies with high levels of inside
ownership, as we believe the 15% tax rate provides additional incentive for
special dividends, as was the case for Microsoft in 2004. According to Standard
& Poor's, companies in the S&P 500 index currently pass on 34% of their earnings
in the form of dividends versus an average payout of 54% historically. Given
the large cash positions, solid earnings potential, low payout ratios and lack
of other uses of cash, we continue to believe that companies may increase their
dividends in 2005.
These positive fundamentals will be balanced with the risks of rising
interest rates and oil prices, potentially slower global growth and continued
geopolitical uncertainties. Our approach is to remain broadly diversified within
the dividend-paying universe while actively looking for undervalued
opportunities to provide outperformance on the upside. The selection of stocks
in our portfolio is based on our independent appraisal of each company's
potential for profits, dividend growth and market revaluation across a broad
spectrum of stock market capitalizations, industries, and international borders.
We believe we will continue to be able to distribute attractive dividend payouts
to our shareholders by capitalizing on our research driven approach to
identifying attractive situations as well as through our active management of
the portfolio.
Thank you for your participation and we look forward to a prosperous year in
2005.
Sincerely,
Jill K. Evans
Portfolio Manager
Please refer to the schedule of portfolio investments for fund holding
information. Fund holdings and sector allocations are subject to change and
should not be considered a recommendation to buy or sell any security.
INVESTING IN SMALL AND MID CAP STOCKS INVOLVES ADDITIONAL RISKS SUCH AS LIMITED
LIQUIDITY AND GREATER VOLATILITY AS COMPARED TO LARGE CAP STOCKS.
Neither the Fund nor any of its representatives may give tax advice. Investors
should consult their tax advisor for information concerning their particular
situation.
ALPINE MUNICIPAL MONEY MARKET FUND
EQUIVALENT TAXABLE YIELDS
AS OF 4/30/05
YOUR TAX-EXEMPT
EFFECTIVE YIELD OF
MARGINAL 2.88% IS EQUIVALENT
JOINT RETURN SINGLE RETURN TAX RATE TO A TAXABLE YIELD OF:
------------ ------------- -------- ----------------------
$59,401 - 119,950 $29,701 - 71,950 25% 3.84%
$119,951 - 182,800 $71,951 - 150,150 28% 4.00%
$182,801 - 326,450 $150,151 - 326,450 33% 4.30%
Over $326,450 Over $326,450 35% 4.43%
The chart reflects projected 2005 marginal federal tax rates before limitations
and phaseouts. Individuals with adjusted gross income in excess of $142,700
should consult a tax professional to determine their actual 2005 marginal tax
rate.
Performance data quoted represents past performance and is not predictive of
future results. Investment return and principal value of the Fund fluctuate, so
that the shares, when redeemed, may be worth more or less than their original
cost. Performance current to the most recent month end may be lower or higher
than the performance quoted and may be obtained by calling 888-785-5578.
The Lipper Tax-Exempt Money Market Funds Average is an average of funds that
invest in high quality municipal obligations with dollar-weighted average
maturities of less than 90 days. The Lipper Tax-Exempt Money Market Funds
Average is unmanaged and does not reflect the deduction of fees associated with
a mutual fund, such as investment adviser fees. The performance for the
Municipal Money Market Fund reflects the deduction of fees for these value-added
services. Investors cannot directly invest in an index.
COMPARATIVE ANNUALIZED TOTAL RETURNS AS OF 4/30/05
SINCE
6 MONTHS(1)<F5> 1 YEAR INCEPTION(2)<F6>
--------------- ------ ----------------
Alpine Municipal Money Market Fund - Investor Class 0.95% 1.53% 1.27%
Alpine Municipal Money Market Fund - Investor Class (Pre-liquidation, After-tax) 0.95% 1.53% 1.27%
Alpine Municipal Money Market Fund - Investor Class (Post-liquidation, After-tax) 0.95% 1.53% 1.27%
Alpine Municipal Money Market Fund - Adviser Class 0.82% 1.28% 1.24%
Alpine Municipal Money Market Fund - Adviser Class (Pre-liquidation, After-tax) 0.53% 0.83% 0.81%
Alpine Municipal Money Market Fund - Adviser Class (Post-liquidation, After-tax) 0.53% 0.83% 0.81%
Lipper Tax-Exempt Money Market Funds Average 0.58% 0.86% 0.61%
Lipper Tax-Exempt Money Market Fund Rank N/A(1)<F5> 1/126 1/114
(1)<F5> Not annualized. The NASD does not recognize rankings for less than one
year.
(2)<F6> Adviser Class shares commenced on March 30, 2004 and Investor Class
shares commenced on December 5, 2002. Returns for indexes are since
December 5, 2002.
The performance table and graph do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
PORTFOLIO DISTRIBUTION*<F7>
Cash/Cash Equivalents 0.7%
General Market Notes 5.4%
Put Bonds 7.0%
Variable Rate Demand Notes 86.9%
TOP 10 HOLDINGS*<F7>
1. Clipper Tax-Exempt Cert Trust 2004-10,
3.190%, 5/06/2005 4.42%
2. Class B Revenue Bond Certificates,
3.440%, 5/06/2005 4.28%
3. Lakemoor IL Multifamily Revenue Bds,
3.240%, 5/06/2005 3.92%
4. Capitol View II LP,
3.500%, 2/01/2006 3.13%
5. St Charles Cnty MO Indl Dev Auth,
3.240%, 5/06/2005 2.68%
6. Jackson Health Education & Housing
Facility, 3.260%, 5/06/2005 2.45%
7. Riverside County Industrial Development
Auth, 3.240%, 5/06/2005 2.40%
8. Cherry Creek South Metro District 1 -
Series B, 2.350%, 12/15/2005 2.23%
9. Town of Hull Ind. Development Rev,
3.260%, 5/06/2005 2.21%
10. Washington MO Indl Dev Auth
In Rev Bds, 3.290%, 5/06/2005 2.00%
*<F7> Portfolio holdings, geographical distributions and/or sector
distributions are as of 4/30/05 and are subject to change. Portfolio
holdings are not recommendations to buy or sell any securities.
ALPINE TAX OPTIMIZED INCOME FUND
Value of a $10,000 Investment
Alpine Tax Lehman 1 Year
Date Optimized Income Fund Municipal Bond Index
---- --------------------- --------------------
12/6/2002(inception) $10,000 $10,000
4/30/2003 $10,252 $10,107
10/31/2003 $10,412 $10,198
4/30/2004 $10,525 $10,254
10/31/2004 $10,664 $10,325
4/30/2005 $10,725 $10,346
This chart represents a comparison of a hypothetical $10,000 investment in the
indicated share class versus a similar investment in the Fund's benchmark. The
graph and the table do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares. The Fund's
returns reflect the waiver of certain fees. Without the waiver of fees, total
returns would have been lower.
Performance data quoted represents past performance and is not predictive of
future results. Investment return and principal value of the Fund fluctuate, so
that the shares, when redeemed, may be worth more or less than their original
cost. Performance current to the most recent month end may be lower or higher
than the performance quoted and may be obtained by calling 888-785-5578. The
Fund charges a redemption fee equal to 0.25% of the net amount of the redemption
if you redeem your shares less than 30 calendar days after you purchase them.
The Lehman Brothers Municipal 1 Year Bond Index is the 1-year (1-2) component of
the Municipal Bond Index. The Lehman Brothers Municipal bond Index is a rules-
based, market-value-weighted index engineered for the long-term, tax-exempt bond
market. Lipper Short Municipal Debt Funds Index is an unmanaged index that
tracks funds that invest in municipal debt issues with dollar-weighted average
maturities of less than three years. The Lehman Brothers Municipal 1 Year Bond
Index and the Lipper Short Municipal Debt Funds Average are unmanaged and do not
reflect the deduction of fees associated with a mutual fund, such as investment
adviser fees. The performance for the Tax Optimized Income Fund reflects the
deduction of fees for these value-added services. Investors cannot directly
invest in an index.
COMPARATIVE ANNUALIZED TOTAL RETURNS AS OF 4/30/05
6 MONTHS(1)<F8> 1 YEAR SINCE INCEPTION(2)<F9>
--------------- ------ ----------------------
Alpine Tax Optimized Income Fund - Investor Class 0.57% 1.90% 2.96%
Alpine Tax Optimized Income Fund - Investor Class (Pre-liquidation, After-tax) 0.06% 0.92% 2.00%
Alpine Tax Optimized Income Fund - Investor Class (Post-liquidation, After-tax) 0.37% 1.23% 1.97%
Alpine Tax Optimized Income Fund - Adviser Class 0.46% 1.63% 0.92%
Alpine Tax Optimized Income Fund - Adviser Class (Pre-liquidation, After-tax) -0.02% 0.74% -0.04%
Alpine Tax Optimized Income Fund - Adviser Class (Post-liquidation, After-tax) 0.30% 1.05% 0.24%
Lehman Brothers Municipal 1 Year Bond Index 0.21% 0.90% 1.43%
Lipper Short Municipal Debt Funds Average 1.70% 1.19% 1.56%
Lipper Short Municipal Debt Fund Rank - Investor Class N/A(1)<F8> 8/63 2/49
(1)<F8> Not annualized. The NASD does not recognize rankings for less than one
year.
(2)<F9> Adviser Class shares commenced on March 30, 2004 and Investor Class
shares commenced on December 6, 2002. Returns for indexes are since
December 6, 2002.
The performance table and graph do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
PORTFOLIO DISTRIBUTION*<F10>
Cash/Cash Equivalents 5.8%
General Market Notes 10.8%
Put Bonds 20.1%
Corporate Bonds 21.9%
Variable Rate Demand Notes 41.3%
TOP 10 HOLDINGS*<F10>
1. International Lease Finance Corp.,
4.750%, 2/15/2008 6.17%
2. Class B Revenue Bond Certificates,
3.440%, 5/06/2005 5.10%
3. Mecklenberg County North Carolina
Ind Rev, 3.600%, 5/06/2005 5.08%
4. Walton County Industrial Building
Authority, 3.200%, 5/06/2005 4.69%
5. Household Finance Corporation,
4.625%, 1/15/2008 4.11%
6. Ascension Parish LA, 3.340%, 5/06/2005 4.08%
7. Vigo County Ind Indl Dev Rev,
3.350%, 5/06/2005 4.08%
8. Mobile Industrial Development Board
Industrial, 3.260%, 5/06/05 4.08%
9. Birmingham Ala Spl Care Facs F
Rev Bds, 4.350%, 7/01/2006 4.08%
10. Boeing Capital Corporation,
5.750%, 2/15/2007 3.77%
*<F10> Portfolio holdings, geographical distributions and/or sector
distributions are as of 4/30/05 and are subject to change. Portfolio
holdings are not recommendations to buy or sell any securities.
ALPINE MUNICIPAL MONEY MARKET FUND /
ALPINE TAX OPTIMIZED INCOME FUND
We are pleased to provide you with the semi-annual report for the Alpine
Income Trust for the period ending April 30, 2005. The Income Trust includes
both the Alpine Tax Optimized Income Fund and the Alpine Municipal Money Market
Fund.
We are very pleased to report that for the six month period, both funds
continued to produce returns that far outpaced its counterparts in their
respected categories. According to Lipper Analytical Services, the total return
for the Alpine Tax Optimized Income Fund was .57%, and .95% for the Alpine
Municipal Money Market Fund. The Lipper peer average was .17%, and .58% for the
Short Municipal Debt and Tax Exempt Money Market peer group.
The past six months was characterized by a flatter yield curve, a weak
dollar, volatile oil prices and mixed economic data. As the economic recovery
gained momentum, the Federal Reserve indicated its intention to move away from
the aggressively accommodative monetary policy of the past several years towards
a more "neutral" stance. Accordingly, the Fed raised the overnight federal
funds rate at each of its meetings during the reporting period, driving the
federal funds rate to 2.75% by the end of April 2005. This caused yields on
shorter-term bonds, which are more sensitive to the Fed moves, to rise. Since a
bond's yield moves in the opposite direction of its price, this meant that
prices of short-term bonds generally fell. At this same time, long-term
interest rates remained relatively stable or even fell, as high oil prices and
moderating growth kept inflation in check. This meant that long-term bond
prices held up relatively well or even rose during the period.
Soon after our reporting period ended, the Fed raised the fed funds to 3.00%
and many analysts expect a further increase of 25 basis points at the end of
June. Since the markets had already priced in this increase, the hike did not
spur major price action in the Treasury market. The long end of the yield curve
still remains relatively unchanged, resulting in even a flatter yield curve.
New municipal issuance for 2005 remains on pace to eclipse last year's
record. With the flattening of the yield curve, refunding transactions were the
predominant drivers of supply for the market. As long as long-term municipal
yields stay near their current levels and the treasury curve continues to
flatten, it is expected that more supply will be forthcoming. On the demand
side, interest from retail investors was soft and was reflected in outflows from
municipal bond funds. However, institutions such as insurance companies and
hedge funds stepped in to fill this gap.
With respect to credit quality, the trend in the municipal market over the
six months was in the direction of ratings upgrades. Returns were generally
highest among lower quality issues, as yield spreads versus the AAA-rated market
continued their tightening trend.
ALPINE TAX OPTIMIZED INCOME FUND
As we just discussed, the market for all short-term fixed income securities
was fairly volatile through much of the past six months. As a result, we
continued to shorten the maturity on the fund and reposition the portfolio in
light of a changing interest rate and credit environment. The average maturity
at the end of this reporting period was 1.27 years which is significantly
shorter than what our normal maturity target would be.
The Fund has historically invested in a combination of corporate and
municipal bonds that generate the highest after-tax current returns. We
continue to invest in these two sectors of the fixed income market but have
gradually increased our position in municipal securities as credit ratings and
yield spreads have made corporate bonds less desirable in meeting our fund's
objectives which is to seek high after-tax current income consistent with
preservation of capital.
Since the inception of the fund, we have invested in corporate bonds of the
three major auto companies. While the Fund received a very generous yield from
these holdings relative to comparable securities, recent volatility in the auto
industry have made these securities less desirable as the price of these bonds
has decreased. As a result, we sold our holdings in Ford and Daimler Chrysler
and continue to closely monitor our holdings in General Motors. However, we
were able to somewhat replace the yield while eliminating any exposure to price
movement with variable rate demand notes issued by GMAC. We will continue to
closely follow this sector of the market and make any adjustments that are
necessary.
On the municipal side, we have purchased very short securities of one year
and less as the front-end of the curve is extremely flat and investors are not
getting paid to extend relative to price volatility. There is, however, one
area that we have had some recent success on the long-end and that is the
purchase of tobacco bonds. This sector has outperformed almost all of the other
sectors of the municipal market and we continue to see increased demand for
these bonds.
Going forward, we will continue to closely monitor both the interest rate and
credit markets and make adjustments as necessary. Furthermore, we will continue
to look for undervalued sectors of the fixed income and look to take advantage
of them when available.
ALPINE MUNICIPAL MONEY MARKET FUND
Naturally, the impact of the Fed's rate hikes was felt primarily in the money
markets, as fed fund rates increased from a low of 1.00% last June to 2.75% as
of the end of this reporting period. While municipal rates were slower to
increase compared to their taxable counterparts, after-tax returns continue to
be significantly higher.
Because it was clear to us at the start of the reporting period that the Fed
was likely to continue raising short-term interest rates at a measured pace, we
reduced the Fund's weighted average maturity to 23 days in order to maintain the
liquidity required to invest in higher yielding instruments as they become
available. We invested primarily in variable rate demand notes as we felt they
would provide the Fund with not only flexibility, but very attractive returns
during tax time in April and May. As a result, over 85% of the Fund is invested
in this type of security.
With more rate hikes expected and new higher yielding paper coming to the
market, we will cautiously look to take advantage of special situations as they
become available.
Thank you for your investment in the Alpine Income Funds.
Steven C. Shachat
Portfolio Manager
The fund's investment objectives, risks, charges and expenses must be considered
carefully before investing. The prospectus contains this and other important
information about the investment company, and it may be obtained by calling
(888) 785-5578, or visiting www.alpinefunds.com. Read it carefully before
investing.
INVESTING IN THESE FUNDS INVOLVES SPECIAL RISKS, INCLUDING BUT NOT LIMITED TO,
INVESTING IN MUNICIPAL OBLIGATIONS AND DERIVATIVE SECURITIES, MORTGAGE-RELATED
AND ASSET-BACKED INVESTMENTS. PLEASE REFER TO THE PROSPECTUS FOR FURTHER
DETAILS.
INVESTMENTS IN DEBT SECURITIES TYPICALLY DECREASE IN VALUE WHEN INTEREST RATES
RISE. THIS RISK IS USUALLY GREATER FOR LONGER-TERM DEBT SECURITIES.
Please refer to the Schedule of Investments for fund holding information. Fund
holdings and sector allocations are subject to change and should not be
considered a recommendation to buy or sell any security.
Any tax or legal information provided is merely a summary of our understanding
and interpretation of the current income tax income tax regulations and is not
exhaustive. Investors must consult their tax advisor or legal counsel for
advice and information concerning their particular situation. Neither the Fund
nor any of its representatives may give legal or tax advice.
The federal government guarantees interest payments from government securities,
such as U.S Treasury bills, while dividend payments carry no such guarantee.
Government securities, if held to maturity, guarantee the timely payment of
principal and interest.
ALPINE MUTUAL FUNDS
DYNAMIC BALANCE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 2005 (UNAUDITED)
SHARES/ SECURITY
PAR VALUE DESCRIPTION VALUE
- --------- ----------- -----
COMMON STOCKS -- 70.5%
Automotive Equipment -- 1.3%
25,000 Autoliv, Inc. $ 1,106,250
-----------
Commercial Products & Services -- 8.0%
13,000 AMETEK, Inc. 492,310
10,000 The Black & Decker Corporation 836,300
20,000 Briggs & Stratton Corporation 647,400
17,000 Deere & Company 1,063,180
5,443 Eagle Materials, Inc. 409,586
14,290 Eagle Materials, Inc. -- Class B 1,046,599
2,500 Hubbell Incorporated -- Class A 99,675
6,500 Hubbell Incorporated -- Class B 282,425
25,000 Temple-Inland Inc. 843,750
20,000 W.W. Grainger, Inc. 1,105,800
-----------
6,827,025
-----------
Conglomerate -- 0.8%
20,000 General Electric Company 724,000
-----------
Consumer Products & Services -- 3.0%
10,000 Avery Dennison Corporation 523,500
24,600 Ennis Inc. 381,300
11,000 Kimberly-Clark Corporation 686,950
18,000 The Procter & Gamble Company 974,700
-----------
2,566,450
-----------
Energy -- 3.6%
15,000 Chevron Corporation 780,000
37,000 CONSOL Energy Inc. 1,599,880
16,000 Penn Virginia Corporation 657,120
-----------
3,037,000
-----------
Financial -- Banks -- 12.8%
12,360 Arrow Financial Corporation 304,118
18,000 Bancorp Rhode Island, Inc. 654,300
6,000 Bancshares of Florida, Inc. (a)<F11> 92,820
25,000 Comerica Incorporated 1,431,500
45,000 Doral Financial Corp. 632,250
20,000 Golden West Financial Corporation 1,246,600
8,000 The Goldman Sachs Group, Inc. 854,320
10,000 Hudson United Bancorp 342,600
40,000 J.P. Morgan Chase & Co. 1,419,600
31,500 New York Community Bancorp, Inc. 557,550
25,500 North Fork Bancorporation, Inc. 717,825
3,200 Penns Woods Bancorp, Inc. 147,520
11,000 PNC Financial Services Group 585,530
5,500 Rurban Financial Corp. 73,700
5,871 Southside Bancshares, Inc. 115,307
13,000 Sovereign Bancorp, Inc. 267,410
15,000 Susquehanna Bancshares, Inc. 315,450
25,000 Webster Financial Corporation 1,136,250
-----------
10,894,650
-----------
Financial Services -- 4.9%
14,000 Ambac Financial Group, Inc. 935,900
13,000 American International Group, Inc. 661,050
5,000 Fannie Mae 269,750
10,000 Fidelity National Financial, Inc. 321,100
41,000 MBNA Corporation 809,750
5,000 The Student Loan Corporation 968,750
4,000 Unitrin, Inc. 182,000
-----------
4,148,300
-----------
Homebuilders -- 10.3%
30,000 Hovnanian Enterprises,
Inc. -- Class A (a)<F11> 1,523,100
20,000 Lennar Corporation -- Class A 1,029,400
7,150 M.D.C. Holdings, Inc. 467,467
25,000 Pulte Homes, Inc. 1,786,250
17,000 The Ryland Group, Inc. 1,043,800
25,700 Standard-Pacific Corp. 1,840,377
15,000 Toll Brothers, Inc. (a)<F11> 1,137,000
-----------
8,827,394
-----------
Lodging -- 1.2%
50,000 Great Wolf Resorts, Inc. (a)<F11> 1,061,250
-----------
Manufacturing - Diversified -- 2.7%
20,000 3M Co. 1,529,400
11,500 PACCAR Inc. 780,850
-----------
2,310,250
-----------
Medical Instruments -- 1.8%
12,200 Beckman Coulter, Inc. 813,862
10,000 Guidant Corporation 740,800
-----------
1,554,662
-----------
Pharmaceuticals -- 3.6%
22,000 Johnson & Johnson 1,509,860
25,000 Pfizer Inc. 679,250
20,000 Wyeth 898,800
-----------
3,087,910
-----------
Real Estate Investment Trusts -- 10.3%
15,000 Boston Properties, Inc. 997,050
10,000 Developers Diversified
Realty Corporation 424,400
20,000 General Growth Properties, Inc. 782,200
45,000 Impac Mortgage Holdings, Inc. 824,400
10,000 Mack-Cali Realty Corporation 439,900
15,000 Maguire Properties, Inc. 382,500
45,000 Origen Financial, Inc. 328,050
23,000 Simon Property Group, Inc. 1,519,610
60,000 Sunstone Hotel Investors, Inc. 1,317,600
23,000 Vornado Realty Trust 1,758,350
-----------
8,774,060
-----------
Retail -- 1.1%
20,000 J.C. Penney Company, Inc. 948,200
-----------
Transportation Services -- 2.7%
20,000 FedEx Corp. 1,699,000
10,000 Union Pacific Corporation 639,300
-----------
2,338,300
-----------
Utilities -- 2.4%
61,000 Allegheny Energy, Inc. (a)<F11> 1,490,840
15,600 SJW Corp. 596,700
-----------
2,087,540
-----------
Total Common Stocks
(Cost $51,666,735) 60,293,240
-----------
U.S. TREASURY OBLIGATIONS -- 21.3%
U.S. Treasury Bonds -- 15.1%
2,000,000 7.250%, 5/15/2016 2,512,502
2,000,000 6.250%, 8/15/2023 2,403,594
4,000,000 6.000%, 2/15/2026 4,734,220
3,000,000 5.250%, 11/15/2028 3,273,282
-----------
12,923,598
-----------
U.S. Treasury Notes -- 6.2%
3,000,000 5.000%, 2/15/2011 3,162,657
2,000,000 5.000%, 8/15/2011 2,112,110
-----------
5,274,767
-----------
Total U.S. Treasury Obligations
(Cost $17,766,496) 18,198,365
-----------
SHORT TERM INVESTMENTS -- 10.6%
$8,042,019 Alpine Municipal
Money Market Fund 8,042,019
235,169 Federated Government
Obligations Fund 235,169
114,962 Federated Prime Obligations Fund 114,962
648,352 Fidelity Institutional
Government Portfolio 648,352
5,316 Milestone Funds Treasury
Obligations Portfolio 5,316
-----------
Total Short Term Investments
(Cost $9,045,818) 9,045,818
-----------
Total Investments
(Cost $78,479,049) 102.4% 87,537,424
Liabilities in Excess
of Other Assets (2.4)% (2,071,671)
-----------
TOTAL NET ASSETS 100.0% $85,465,753
-----------
-----------
(a)<F11> Non-income producing securities.
See notes to financial statements.
ALPINE MUTUAL FUNDS
DYNAMIC DIVIDEND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 2005 (UNAUDITED)
SHARES/ SECURITY
PAR VALUE DESCRIPTION VALUE
- --------- ----------- -----
COMMON STOCKS -- 96.4%
Aerospace & Defense -- 0.6%
21,700 Lockheed Martin Corporation $ 1,322,615
------------
Building - Maintenance & Service -- 2.4%
149,853 Healthcare Services Group, Inc. 3,783,788
81,626 McGrath Rentcorp 1,812,097
------------
5,595,885
------------
Business Services -- 2.0%
44,500 Angelica Corporation 1,200,610
96,000 Gevity HR, Inc. 1,540,800
69,500 StarTek, Inc. 1,011,225
110,000 United Business Media plc 1,038,627
------------
4,791,262
------------
Chemicals -- 4.5%
40,000 BASF AG -- ADR 2,596,000
82,000 The Dow Chemical Company 3,766,260
130,500 Lyondell Chemical Company 3,274,245
62,000 UAP Holding Corp. (a)<F12> 892,180
------------
10,528,685
------------
Commercial Products & Services -- 1.2%
27,000 Hubbell Incorporated -- Class B 1,173,150
50,700 Lincoln Electric Holdings, Inc. 1,548,885
------------
2,722,035
------------
Communications & Media -- 2.7%
50,000 Clear Channel Communications, Inc. 1,597,000
43,800 The Liberty Corporation 1,588,188
140,000 PanAmSat Holding Corp. 2,471,000
48,000 Time Warner Inc. (a)<F12> 806,880
------------
6,463,068
------------
Conglomerate -- 1.4%
94,000 General Electric Company 3,402,800
------------
Construction -- 3.4%
130,000 JM AB 4,323,019
20,000 KB HOME 1,140,000
20,000 Lennar Corporation -- Class A 1,029,400
75,000 Veidekke ASA 1,544,334
------------
8,036,753
------------
Consumer Products & Services -- 7.1%
26,000 Altria Group, Inc. 1,689,740
28,000 Avon Products, Inc. 1,122,240
67,358 Bassett Furniture
Industries, Incorporated 1,322,911
40,163 Cherokee Inc. 1,307,707
30,000 Ekornes ASA 591,599
135,100 Ennis Inc. 2,094,050
79,600 Nu Skin Enterprises, Inc. -- Class A 1,751,200
50,000 Plantronics, Inc. 1,574,500
53,500 The Procter & Gamble Company 2,897,025
65,000 Regis Corporation 2,322,450
------------
16,673,422
------------
Energy -- 5.9%
47,000 BP p.l.c. -- ADR 2,862,300
68,500 Chevron Corporation 3,562,000
22,000 Shell Transport & Trading
Company plc -- ADR 1,185,140
183,000 Statoil ASA 3,217,442
26,500 Total SA -- ADR 2,939,115
------------
13,765,997
------------
Entertainment -- 5.7%
74,700 Harrah's Entertainment, Inc. 4,901,814
245,700 Regal Entertainment
Group -- Class A 4,985,253
310,000 William Hill plc 3,184,263
38,600 World Wrestling Entertainment, Inc. 412,634
------------
13,483,964
------------
Financial - Banks -- 8.0%
57,000 Bank of America Corporation 2,567,280
77,300 Citigroup Inc. 3,630,008
14,000 Comerica Incorporated 801,640
25,000 Doral Financial Corp. 351,250
131,700 J.P. Morgan Chase & Co. 4,674,033
66,000 Lloyds TSB Group plc -- ADR 2,293,500
34,500 Wachovia Corporation 1,765,710
46,000 Wells Fargo & Company 2,757,240
------------
18,840,661
------------
Financial Services -- 5.1%
88,500 Fidelity National Financial, Inc. 2,841,735
216,600 Intrum Justitia AB (a)<F12> 1,554,292
96,000 Montpelier Re Holdings Ltd. 3,186,240
590,000 Storebrand ASA 4,392,245
------------
11,974,512
------------
Food & Beverages -- 3.7%
63,000 The Coca-Cola Company 2,736,720
31,500 H.J. Heinz Company 1,160,775
56,000 PepsiCo, Inc. 3,115,840
85,137 Rocky Mountain
Chocolate Factory, Inc. 1,687,408
------------
8,700,743
------------
Lodging -- 1.5%
299,474 De Vere Group plc 2,941,900
60,000 InterContinental Hotels Group PLC 713,019
------------
3,654,919
------------
Lottery Services -- 2.3%
102,000 GTECH Holdings Corporation 2,495,940
85,000 Lottomatica S.p.A. 2,881,634
------------
5,377,574
------------
Manufacturing - Diversified -- 3.9%
50,000 AB SKF 2,093,251
25,000 Atlas Copco AB 1,128,886
48,000 Caterpillar Inc. 4,226,400
70,000 Nam Tai Electronics, Inc. 1,620,500
------------
9,069,037
------------
Medical Supplies -- 3.8%
10,750 Chr. Hansen Holding A/S 1,727,878
40,000 Gambro AB -- Class A 537,665
195,900 Meridian Bioscience, Inc. 3,310,710
69,500 PolyMedica Corporation 2,153,805
44,400 Q-Med AB 1,202,940
------------
8,932,998
------------
Metals & Mining -- 1.9%
45,000 BHP Billiton Limited -- ADR 1,137,600
200,000 Gloucester Coal Ltd. (a)<F12> 459,052
240,000 Jubilee Mines NL 994,925
100,000 Macarthur Coal Limited 512,921
11,000 Rio Tinto plc -- ADR 1,326,600
------------
4,431,098
------------
Pharmaceuticals -- 5.3%
80,000 Abbott Laboratories 3,932,800
27,500 Eli Lilly & Company 1,607,925
34,000 Johnson & Johnson 2,333,420
25,000 Merck & Co. Inc. 847,500
70,000 Pfizer Inc. 1,901,900
40,000 Wyeth 1,797,600
------------
12,421,145
------------
Real Estate Operating Companies -- 0.4%
127,000 Hufvudstaden AB 1,009,136
------------
Restaurants -- 3.0%
84,000 AFC Enterprises, Inc. (a)<F12> 2,268,000
290,000 Whitbread PLC 4,699,189
------------
6,967,189
------------
Semiconductors -- 0.6%
61,000 Intel Corporation 1,434,720
------------
Software -- 0.6%
60,000 Microsoft Corporation 1,518,000
------------
Steel Production -- 2.3%
80,000 BlueScope Steel Limited 475,916
165,000 Companhia Siderurgica
Nacional S.A. -- ADR 3,610,200
60,000 SSAB Svenskt Stal AB -- Class A 1,377,765
------------
5,463,881
------------
Telecommunications -- 3.9%
171,500 Citizens Communications Company 2,186,625
112,700 Iowa Telecommunications
Services Incorporated 2,152,570
139,000 Telecom Corporation of
New Zealand Limited -- ADR 4,944,230
------------
9,283,425
------------
Transportation Services -- 8.8%
25,000 Alexander & Baldwin, Inc. 1,018,250
20,000 Burlington Northern
Santa Fe Corporation 965,000
43,862 Compagnie Maritime Belge SA 1,648,387
60,000 Diana Shipping, Inc. (a)<F12> 855,000
138,000 Dryships Inc. (a)<F12> 2,190,060
75,900 Farstad Shipping ASA 913,676
43,800 Frontline Limited 1,923,258
77,500 General Maritime Corporation (a)<F12> 3,398,375
30,000 Knightsbridge Tankers Ltd. 1,255,500
25,000 Norfolk Southern Corporation 785,000
146,063 Ship Finance International Limited 2,715,311
60,500 Tsakos Energy Navigation Ltd. 2,317,150
10,000 Union Pacific Corporation 639,300
------------
20,624,267
------------
Utilities -- 4.4%
38,000 Cinergy Corp. 1,504,800
20,000 Consolidated Edison, Inc. 865,600
21,000 DTE Energy Company 964,950
44,500 Duke Energy Corporation 1,298,955
96,300 Macquarie Infrastructure
Company Trust (a)<F12> 2,624,175
15,000 National Grid Transco PLC -- ADR 741,450
27,000 The Southern Company 889,650
100,000 Viridian Group PLC 1,397,234
------------
10,286,814
------------
Total Common Stocks
(Cost $236,324,296) 226,776,605
------------
RIGHTS -- 0.1%
216,600 Intrum Justitia AB (a)<F12>, Expiration
May 2005, Exercise Price 84 SEK
(Acquired 4/2005, Cost $0) 82,769
130,000 JM AB (a)<F12>, Expiration June 2005
(Acquired 1/2005 -- 4/2005,
Cost $0) 108,075
60,000 SSAB Svenskt Stal AB (a)<F12>,
Expiration May 2005
(Acquired 4/2005, Cost $0) 38,645
------------
Total Rights (Cost $0) 229,489
------------
SHORT-TERM INVESTMENTS -- 3.8%
$3,277,217 Federated Government
Obligations Fund 3,277,217
1,957,172 Federated Prime Obligations Fund 1,957,172
3,660,637 Fidelity Institutional
Government Portfolio 3,660,637
------------
Total Short-Term Investments
(Cost $8,895,025) 8,895,026
------------
Total Investments
(Cost $245,219,321) 100.3% 235,901,120
Liabilities in Excess
of Other Assets (0.3)% (774,491)
------------
TOTAL NET ASSETS 100.0% $235,126,629
------------
------------
(a)<F12> Non-income producing securities.
ADR - American Depository Receipt
SEK - Swedish Kroner
See notes to financial statements.
ALPINE MUTUAL FUNDS
MUNICIPAL MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 2005 (UNAUDITED)
SHARES/ SECURITY
PAR VALUE DESCRIPTION VALUE
- --------- ----------- -----
MUNICIPAL BONDS -- 99.3%
Alabama -- 3.6%
Butler County Industrial
Development Authority Industrial
Development Revenue, Butler
County Ind -- Series A
(LOC: Whitney National Bank)
830,000 3.360%, 5/06/2005 (a)<F13>(b)<F14> $ 830,000
Forsyth Housing Authority
Multifamily Revenue, Union Hills
Apartments (LOC: Columbus
Bank & Trust)
1,325,000 3.330%, 5/06/2005 (a)<F13>(b)<F14> 1,325,000
Montgomery Industrial Development
Board Revenue, Kinpak Inc.
(LOC: Regions Bank)
280,000 3.310%, 5/06/2005 (a)<F13>(b)<F14> 280,000
Montgomery Industrial Development
Board Revenue, Norment
(LOC: LaSalle Bank N.A.)
1,400,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 1,400,000
Pell City Industrial Development
Board Industrial Development
Revenue, Reh Kinder/Gorbel
(LOC: Key Bank of New York)
320,000 3.310%, 5/06/2005 (a)<F13>(b)<F14> 320,000
Tuscaloosa County Industrial
Development Revenue, Automotive
Corridor (LOC: Regions Bank)
1,805,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 1,805,000
1,445,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 1,445,000
------------
7,405,000
------------
Alaska -- 1.0%
Alaska Industrial Development &
Export Authority -- Lot 6
(LOC: Bank of America N.A.)
1,000,000 3.470%, 5/06/2005 (a)<F13>(b)<F14> 1,000,000
Alaska Industrial Development &
Export Authority -- Lot 12
(LOC: Bank of America N.A.)
990,000 3.470%, 5/06/2005 (a)<F13>(b)<F14> 990,000
------------
1,990,000
------------
Arizona -- 2.0%
Fort McDowell Yavapai Nation
Gaming Revenue, Eagle 2004500 --
Class A (CS: Citigroup Global
Markets Inc.)
3,500,000 3.190%, 5/06/2005 (a)<F13>(b)<F14> 3,500,000
Pima County General
Obligation (CS: FSA)
510,000 4.000%, 7/01/2005 511,657
------------
4,011,657
------------
California -- 2.9%
Riverside County Industrial
Development Authority Industrial
Development Revenue, TRM
Manufacturing Inc.
(LOC: California Bank & Trust)
4,900,000 3.240%, 5/06/2005 (a)<F13>(b)<F14> 4,900,000
Stockton Certificates of Participation,
United Christian Schools
(LOC: Pacific Capital Bank N.A.)
1,000,000 3.400%, 5/06/2005 (a)<F13>(b)<F14> 1,000,000
------------
5,900,000
------------
Colorado -- 11.1%
Bachelor Gulch Metropolitan
District General Obligation
(LOC: Compass Bank)
3,000,000 2.350%, 12/01/2005 (b)<F14> 3,000,000
Broomfield Village Metropolitan
District 2, Colorado Special
Obligation Revenue
(LOC: Compass Bank)
2,000,000 3.340%, 5/06/2005 (a)<F13>(b)<F14> 2,000,000
Cherry Creek South Metropolitan
District 1 -- Series B
(LOC: Compass Bank)
4,549,000 2.350%, 12/15/2005 (b)<F14> 4,543,467
Colorado Housing & Finance
Authority Economic Development
Revenue, Casarosa & Denver Gasket
(LOC: Key Bank)
1,000,000 3.200%, 5/06/2005 (a)<F13>(b)<F14> 1,000,000
Colorado Housing & Finance
Authority Economic Development
Revenue, National Bedding Co.
(LOC: Bank of America N.A.)
2,400,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 2,400,000
Jefferson County Industrial
Development Revenue, Epi-Center
LLC (LOC: JP Morgan Chase Bank)
2,177,000 3.180%, 5/06/2005 (a)<F13>(b)<F14> 2,177,000
Triview Colorado Metropolitan
District, Series A
(LOC: Compass Bank)
1,000,000 2.100%, 11/01/2005 (b)<F14> 1,000,000
Vail Multifamily Housing Revenue,
Middle Creek Village Apartments
(LOC: California Bank & Trust)
3,000,000 3.250%, 5/06/2005 (a)<F13>(b)<F14> 3,000,000
Wildgrass Metropolitan District
General Obligation
(LOC: Compass Bank)
3,500,000 2.400%, 12/01/2005 (b)<F14> 3,500,126
------------
22,620,593
------------
District of Columbia -- 0.5%
District of Columbia General
Obligation, Series A
1,000,000 4.000%, 6/01/2005 1,001,481
------------
Florida -- 1.1%
Florida State Department of
Transportation Turnpike
Revenue Series A
2,305,000 3.000%, 7/01/2005 2,308,843
------------
Georgia -- 2.5%
De Kalb County Development
Authority Industrial Development
Revenue, Noland Company
(LOC: Wachovia Bank N.A.)
1,500,000 3.240%, 5/06/2005 (a)<F13>(b)<F14> 1,500,000
De Kalb County Housing Authority
Multifamily Housing Revenue,
Stone Run Mill Apartments
(LOC: First Tennessee Bank)
1,310,000 3.240%, 5/06/2005 (a)<F13>(b)<F14> 1,310,000
Douglas County Development
Authority Industrial Development
Revenue, Denyse Signs Inc.
(LOC: Bank of North Georgia)
1,605,000 3.240%, 5/06/2005 (a)<F13>(b)<F14> 1,605,000
Franklin County Industrial Building
Authority Industrial Development
Revenue, Ross Operating Valve Co.
(LOC: Comerica Bank)
580,000 3.310%, 5/06/2005 (a)<F13>(b)<F14> 580,000
Macon-Bibb County Industrial
Authority Industrial Revenue,
IBC Partnership No. 1
(LOC: Regions Bank)
20,000 3.450%, 5/06/2005 (a)<F13>(b)<F14> 20,000
------------
5,015,000
------------
Illinois -- 8.1%
Carol Stream Industrial Development
Revenue, M&I Enterprises
(LOC:JP Morgan Chase)
1,240,000 3.240%, 5/06/2005 (a)<F13>(b)<F14> 1,240,000
Clinton Industrial Development
Revenue, McElroy Metal Mill, Inc.
(LOC: AmSouth Bank)
1,105,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 1,105,000
Harvard Healthcare Facility Revenue,
Harvard Memorial Hospital Inc.
(LOC: M&I Bank)
1,355,000 3.200%, 5/06/2005 (a)<F13>(b)<F14> 1,355,000
Lakemoor Multifamily Housing
Revenue, Lakemoor Apartments -- B
(GTY: Bayerische Landesbank)
8,000,000 3.240%, 5/06/2005 (a)<F13>(b)<F14> 8,000,000
Illinois Development Finance
Authority Multifamily Revenue,
Butterfield Creek (LOC: LaSalle
Bank N.A.)
800,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 800,000
Phoenix Realty Special Account-U
LP ILL Multifamily Housing
Revenue, Brightons Mark
(LOC: Northern Trust Company)
4,000,000 3.240%, 5/06/2005 (a)<F13>(b)<F14> 4,000,000
------------
16,500,000
------------
Indiana -- 1.7%
Monroe County Industrial Economic
Development Revenue, Textillery
Weavers (LOC: Old National Bank)
1,090,000 3.610%, 5/06/2005 (a)<F13>(b)<F14> 1,090,000
Princeton Industrial Development
Revenue, Orion Electric American
Inc. (LOC: Bank of Tokyo Mitsubishi)
300,000 3.300%, 5/06/2005 (a)<F13>(b)<F14> 300,000
Shelbyville Economic Development
Revenue, AFR Properties/Amern Res
(LOC: Associated Bank N.A.)
2,150,000 3.300%, 5/06/2005 (a)<F13>(b)<F14> 2,150,000
------------
3,540,000
------------
Iowa -- 1.0%
Iowa Financing Authority Single
Family Revenue Mortgage Backed
Securities (CS: FNMA/GNMA)
2,000,000 2.060%, 6/01/2005 (b)<F14> 2,000,000
------------
Louisiana -- 1.9%
Caddo-Bossier Parishes Port
Commission, Shreveport Fabricators
(LOC: Hibernia National Bank)
1,050,000 3.460%, 5/06/2005 (a)<F13>(b)<F14> 1,050,000
New Orleans Sewer Services Revenue
(CS: MBIA)
1,130,000 6.000%, 6/01/2005 1,133,757
West Baton Rouge Parish Industrial
District No. 3 Revenue, Dow
Chemical Co.
1,700,000 3.200%, 4/30/2005 (a)<F13>(b)<F14> 1,700,000
------------
3,883,757
------------
Maine -- 2.5%
Town of Dover-Foxcroft Revenue
Obligation Security, Pleasant River
Lumber Company
(LOC: National Bank of Canada)
2,050,000 3.230%, 5/06/2005 (a)<F13>(b)<F14> 2,050,000
Town of Dover-Foxcroft Revenue
Obligation Security, Pleasant River
Lumber Company
(LOC: Wachovia Bank N.A.)
3,000,000 3.230%, 5/06/2005 (a)<F13>(b)<F14> 3,000,000
------------
5,050,000
------------
Michigan -- 2.0%
Michigan State Strategic Fund
Limited Obligation Revenue,
Red Arrow Dairy LLC
(LOC: Bank of the West)
4,000,000 3.230%, 5/06/2005 (a)<F13>(b)<F14> 4,000,000
------------
Minnesota -- 2.4%
Elk River Multifamily Housing
Revenue, Elk River Estates
(LOC: Associated Bank)
1,160,000 3.300%, 5/06/2005 (a)<F13>(b)<F14> 1,160,000
Plymouth Industrial Development
Revenue, Daily Printing Inc.
(LOC: U.S. Bank N.A.)
1,240,000 3.200%, 5/06/2005 (a)<F13>(b)<F14> 1,240,000
St. Cloud Housing & Redevelopment
Authority Industrial Development
Revenue, CMMB LLC
(LOC: Bremer Bank N.A.)
1,580,000 3.550%, 5/06/2005 (a)<F13>(b)<F14> 1,580,000
Stewartville Industrial Development
Revenue, Halcon Corporation
(LOC: U.S. Bank N.A.)
920,000 3.200%, 5/06/2005 (a)<F13>(b)<F14> 920,000
------------
4,900,000
------------
Mississippi -- 0.5%
Mississippi Business Finance Corp.
Industrial Development Revenue,
Jimmy Sanders Inc.
(LOC: AmSouth Bank)
950,000 3.210%, 5/06/2005 (a)<F13>(b)<F14> 950,000
------------
Missouri -- 6.4%
St. Charles County Industrial
Development Authority Industrial
Revenue, Craftsmen Industries
(LOC: Mercantile Bank)
5,460,000 3.240%, 5/06/2005 (a)<F13>(b)<F14> 5,460,000
Sikeston Missouri Electric Revenue
(CS: MBIA)
600,000 6.000%, 6/01/2005 602,021
Springfield Center City Development
Corporation Bond Anticipation
Notes, Series A
825,000 2.000%, 4/30/2005 825,000
Springfield Industrial Development
Authority Revenue, DMP Properties
LLC (LOC: U.S. Bank N.A.)
2,160,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 2,160,000
Washington Industrial Development
Authority Industrial Revenue,
Clemco Industries
(LOC: Comerica Bank)
4,075,000 3.290%, 5/06/2005 (a)<F13>(b)<F14> 4,075,000
------------
13,122,021
------------
Nevada -- 1.0%
Clark County Passenger Facilities
Charge Revenue, Las Vegas/Macarran
International Airport (CS: MBIA)
2,000,000 5.750%, 7/01/2005 (b)<F14> 2,084,912
------------
New Mexico -- 1.9%
Albuquerque Industrial Development
Revenue, Karsten Company
(LOC: Bank One Arizona N.A.)
1,075,000 3.200%, 5/06/2005 (a)<F13>(b)<F14> 1,075,000
New Mexico Housing Authority
Region III Multifamily Housing
Revenue, El Pueblo Apartments
(LOC: PNC Bank N.A.)
1,300,000 3.240%, 5/06/05 (a)<F13>(b)<F14> 1,300,000
New Mexico Housing Authority
Region III Multifamily Housing
Revenue, Madeira Court Apartments
(LOC: PNC Bank N.A.)
1,500,000 3.240%, 5/06/2005 (a)<F13>(b)<F14> 1,500,000
------------
3,875,000
------------
New York -- 1.1%
Metropolitan Transportation
Authority Service Contract, Series A
500,000 5.000%, 7/01/2005 502,446
Municipal Assistance Corporation for
the City of New York, Series M
600,000 5.250%, 7/01/2005 603,201
New York City General Obligation
(CS:Ambac)
1,000,000 8.250%, 6/01/2005 (b)<F14> 1,005,285
Niagara County Industrial
Development Agency Industrial
Development Revenue, Taylor
Devices Inc. (LOC: HSBC)
175,000 3.500%, 5/06/2005 (a)<F13>(b)<F14> 175,000
------------
2,285,932
------------
North Carolina -- 0.5%
Mecklenburg County Industrial
Facilities & Pollution Control
Financing Authority Industrial
Revenue, Okaya Shinnichi America
(LOC: Tokai Bank Ltd.)
1,000,000 3.600%, 5/06/2005 (a)<F13>(b)<F14> 1,000,000
------------
Ohio -- 0.5%
Cuyahoga County Industrial
Development Revenue, Edge Seal
Technologies (LOC: First Merit Bank)
1,040,000 3.240%, 5/06/2005 (a)<F13>(b)<F14> 1,040,000
------------
Oregon -- 2.2%
Oregon State Economic Development
Revenue, Antelope Acquisitions LLC
(LOC: Premierwest Bank)
1,840,000 3.190%, 5/06/2005 (a)<F13>(b)<F14> 1,840,000
Oregon State Housing & Community
Services Department Mortgage
Revenue Single Family Mortgage
Program, Series Q
2,665,000 2.050%, 6/01/2005 2,665,000
------------
4,505,000
------------
South Dakota -- 1.2%
Brookings Industrial Development
Revenue, Lormar Development Co.
(LOC: U.S. Bank N.A.)
1,500,000 3.250%, 5/06/2005 (a)<F13>(b)<F14> 1,500,000
South Dakota Economic Development
Finance Authority Economic
Development Revenue, Vicom Ltd.
(LOC: Associated Bank N.A.)
985,000 3.290%, 5/06/2005 (a)<F13>(b)<F14> 985,000
------------
2,485,000
------------
Tennessee -- 3.3%
Hamilton County Industrial
Development Board Industrial
Development Revenue, Hamilton
Plastics Inc. (LOC: Amsouth Bank)
1,400,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 1,400,000
Jackson Health Educational &
Housing Facility Board Multifamily
Revenue, Creekside Apartments
(LOC: First Tennessee Bank)
5,000,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 5,000,000
320,000 3.000%, 12/01/2005 (a)<F13>(b)<F14> 320,000
------------
6,720,000
------------
Texas -- 2.9%
Gulf Coast Waste Disposal Authority,
Republic Waste Waste Services
1,000,000 3.340%, 5/06/2005 (a)<F13>(b)<F14> 1,000,000
Montgomery County Industrial
Development Corporation Industrial
Development Revenue, Medical
Manufacturing Partners
(LOC: Bank One Texas N.A.)
2,000,000 3.200%, 5/06/2005 (a)<F13>(b)<F14> 2,000,000
Port Corpus Christi Authority Nueces
County Solid Waste Disposal, Flint
Hills Resource LLC
1,500,000 3.300%, 5/06/2005 (a)<F13>(b)<F14> 1,500,000
1,500,000 3.300%, 5/06/2005 (a)<F13>(b)<F14> 1,500,000
------------
6,000,000
------------
Utah -- 1.2%
Utah Housing Corporation
Multifamily Revenue, Todd Hollow
Apartments (GTY: AIG Retirement
Services, Inc.)
2,500,000 3.490%, 5/06/2005 (a)<F13>(b)<F14> 2,500,000
------------
Washington -- 2.5%
Washington State Economic
Development Finance Authority
Economic Development Revenue,
B&H Dental Laboratory
(LOC: Washington Mutual Bank)
2,105,000 3.390%, 5/06/2005 (a)<F13>(b)<F14> 2,105,000
Washington State Economic
Development Finance Authority
Economic Development Revenue,
Belina Interiors Inc. -- Series F
(LOC: Keybank N.A.)
1,110,000 3.200%, 5/06/2005 (a)<F13>(b)<F14> 1,110,000
Washington State Economic
Development Finance Authority
Economic Development Revenue,
Hillstrom Ventures LLC
(LOC: Washington Mutual Bank)
1,800,000 3.390%, 5/06/2005 (a)<F13>(b)<F14> 1,800,000
------------
5,015,000
------------
Wisconsin -- 11.0%
Fox Lake Redevelopment Authority
Industrial Development Revenue,
Karavan Trailers Inc.
(LOC: Associated Bank N.A.)
645,000 3.310%, 5/06/2005 (a)<F13>(b)<F14> 645,000
2,750,000 3.310%, 5/06/2005 (a)<F13>(b)<F14> 2,750,000
Franklin Industrial Development
Revenue, Howard Henz Co.
(LOC: Associated Bank N.A.)
1,580,000 3.300%, 5/06/2005 (a)<F13>(b)<F14> 1,580,000
Franklin Industrial Development
Revenue, Smyczek/ECS
(LOC: Wells Fargo Bank N.A.)
1,750,000 3.250%, 5/06/2005 (a)<F13>(b)<F14> 1,750,000
Town of Hull Industrial
Development Revenue,
Welcome Dairy Inc.
(LOC: Associated Bank N.A.)
4,500,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 4,500,000
Marshfield Industrial Development
Revenue, Beatrice Cheese
(LOC: Wachovia Bank & Trust)
2,500,000 3.340%, 5/06/2005 (a)<F13>(b)<F14> 2,500,000
Neenah Industrial Development
Revenue, Galloway Co.
(LOC: Bank One Wisconsin)
1,000,000 3.250%, 5/06/2005 (a)<F13>(b)<F14> 1,000,000
Reedsburg Industrial Development
Revenue, Cellox
(LOC: Associated Bank)
2,000,000 3.300%, 5/06/2005 (a)<F13>(b)<F14> 2,000,000
Rhinelander Industrial Development
Revenue, Superior Diesel/SDI
Properties (LOC: Associated
Bank N.A.)
1,775,000 3.300%, 5/06/2005 (a)<F13>(b)<F14> 1,775,000
Sheboygan Industrial Development
Revenue, Polyfab/Gill-Janssen
(LOC: Associated Bank Lakeshore)
1,300,000 3.360%, 5/06/2005 (a)<F13>(b)<F14> 1,300,000
Sturgeon Bay Industrial Development
Revenue, Midwest Wire Realty
(LOC: Associated Bank Milwaukee)
200,000 3.300%, 5/06/2005 (a)<F13>(b)<F14> 200,000
Wisconsin Housing & Economic
Development Authority Business
Development Revenue,
National Bedding
(LOC: Bank of America N.A.)
2,390,000 3.260%, 5/06/2005 (a)<F13>(b)<F14> 2,390,000
------------
22,390,000
------------
Multistate -- 18.8%
Blue Bell Tax-Exempt Bond
Grantor Series 1995 Trust
(LOC: JP Morgan Chase)
986,319 2.800%, 5/29/2005 (a)<F13>(b)<F14> 986,319
Capital View II Limited Partnership
Tax-Exempt Grantor Trust
(LOC: Suntrust)
6,380,000 3.500%, 5/29/2005 (a)<F13>(b)<F14> 6,380,000
Class B Revenue Bond Certificates
Series Trust 2004-1 (SPA: AIG
Retirement Services, Inc.)
(LOC: State Street B&T)
8,720,000 3.440%, 5/06/2005 (a)<F13>(b)<F14> 8,720,000
Clipper Tax-Exempt Certificate
Trust, Series 2004-10
9,000,000 3.190%, 5/06/2005 (a)<F13>(b)<F14> 9,000,000
Revenue Bond Certificate Series Trust
2004-1, Castlegate 1 Apartments
(GTY: AIG Retirement Services, Inc.)
2,000,000 3.490%, 5/06/2005 (a)<F13>(b)<F14> 2,000,000
Revenue Bond Certificate Series Trust
2004-2, Castlegate 2 Apartments
(GTY: AIG Retirement Services, Inc.)
2,000,000 3.490%, 5/06/2005 (a)<F13>(b)<F14> 2,000,000
Revenue Bond Certificate Series Trust
2004-13, Centennial East Apartments
(GTY: AIG Retirement Services, Inc.)
3,107,000 3.490%, 5/06/2005 (a)<F13>(b)<F14> 3,107,000
Roaring Fork Municipal Products
LLC, Series 2000-14
(SPA: Bank of New York)
3,395,000 3.140%, 5/06/2005 (a)<F13>(b)<F14> 3,395,000
Roaring Fork Municipal Products
LLC, Series 2002-9
(SPA: Bank of New York)
2,800,000 3.290%, 5/06/2005 (a)<F13>(b)<F14> 2,800,000
------------
38,388,319
------------
Total Municipal Bonds
(Cost $202,487,515) -- 99.3% 202,487,515
------------
MONEY MARKET FUNDS -- 0.0%
18,714 Federated Government
Obligations Fund 18,714
------------
Total Money Market Funds
(Cost $18,714) 18,714
------------
Total Investments
(Cost $202,506,229) 99.3% 202,506,229
Other Assets, Less Liabilities 0.7% 1,326,264
------------
NET ASSETS 100.0% $203,832,493
------------
------------
(a)<F13> Variable Rate Security -- The rate reported is the rate in effect as
of April 30, 2005. The date shown is the next reset date.
(b)<F14> Maturity date represents first available put date.
CS - Credit Support
GTY - Guaranty Agreement
LOC - Letter of Credit
SPA - Standby Purchase Agreement
See notes to financial statements.
ALPINE MUTUAL FUNDS
TAX OPTIMIZED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 2005 (UNAUDITED)
SHARES/ SECURITY
PAR VALUE DESCRIPTION VALUE
- --------- ----------- -----
CORPORATE BONDS -- 22.0%
Boeing Capital Corporation
1,800,000 5.750%, 2/15/2007 $ 1,849,892
CIT Group Inc.
1,150,000 5.910%, 11/23/2005 1,163,908
500,000 4.000%, 5/08/2008 494,601
General Motors
Acceptance Corporation
1,200,000 6.125%, 8/28/2007 1,169,890
Household Finance Corporation
2,000,000 4.625%, 1/15/2008 2,017,278
International Lease
Finance Corporation
3,000,000 4.750%, 2/15/2008 3,026,154
Time Warner Inc.
1,000,000 6.150%, 5/01/2007 1,036,631
-----------
Total Corporate Bonds
(Cost $10,678,910) 10,758,354
-----------
MUNICIPAL BONDS -- 72.2%
Alabama -- 8.1%
Birmingham Special Care Facilities
Financing Authority, Baptist
Medical Centers
2,000,000 4.350%, 7/01/2006 (b)<F16> 1,998,460
Mobile Industrial Development
Board Industrial Revenue,
Hosea O. Weaver & Sons
(LOC: Regions Bank)
2,000,000 3.260%, 5/06/2005 (a)<F15> (b)<F16> 2,000,000
-----------
3,998,460
-----------
Arizona -- 3.4%
Maricopa County Industrial
Development Authority Multifamily
Housing Revenue, San Fernando
Apartments (CS: FNMA)
445,000 3.300%, 5/06/2005 (a)<F15> (b)<F16> 445,000
Pima County Industrial
Development Authority Revenue,
Broadway Proper Congregate Care
(CS: GNMA)
1,226,000 4.750%, 5/06/2005 (a)<F15> (b)<F16> 1,226,000
-----------
1,671,000
-----------
Arkansas -- 3.9%
Magnolia Industrial Development
Revenue, Ameren Fuel Cell
(LOC: Credit Commercial de France)
100,000 3.350%, 5/06/2005 (a)<F15> (b)<F16> 100,000
Searcy Industrial Development
Revenue, Yarnell Ice Cream Co.
(SPA: AmSouth Bank of Alabama)
1,800,000 4.030%, 1/01/2010 (a)<F15> 1,800,000
-----------
1,900,000
-----------
California -- 4.0%
California Pollution Control
Financing Authority Solid Waste
Disposal Revenue, Republic
Services Inc.
1,000,000 2.850%, 12/01/2005 (b)<F16> 997,270
California Statewide Communities
Development Authority Solid
Waste Facilities Revenue,
Waste Management Inc.
1,000,000 2.900%, 4/01/2007 (b)<F16> 984,650
-----------
1,981,920
-----------
Florida -- 2.0%
Capital Trust Agency Revenue,
Seminole Tribe Resort B
(LOC: JP Morgan Chase Bank)
1,000,000 3.060%, 5/06/05 (a)<F15> (b)<F16> 1,000,000
-----------
Georgia -- 4.7%
Walton County Industrial Building
Authority Industrial Development
Revenue, Leggett & Platt Inc.
(LOC: Wachovia Bank N.A.)
2,300,000 3.200%, 5/06/2005 (a)<F15> (b)<F16> 2,300,000
-----------
Indiana -- 4.1%
Vigo County Industrial Development
Revenue Republic Services Inc.
2,000,000 3.350%, 5/06/2005 (a)<F15> (b)<F16> 2,000,000
-----------
Louisiana -- 4.1%
Ascension Parish Solid Waste
Disposal, Allied Signal Inc.
2,000,000 3.340%, 5/06/2005 (a)<F15> (b)<F16> 2,000,000
-----------
Massachusetts -- 2.3%
Massachusetts State Industrial
Financing Agency Industrial
Revenue, Asahi/America Inc.
(LOC: Citizens Bank of MA)
1,150,000 3.125%, 3/01/2009 (b)<F16> 1,137,086
-----------
Michigan -- 4.1%
Michigan State Strategic Fund
Limited Obligation Revenue,
Dow Chemical
1,000,000 3.800%, 6/01/2006 (b)<F16> 1,006,170
Michigan State Strategic Fund Solid
Waste Disposal Revenue Limited
Obligation Revenue, Waste
Management Inc.
1,000,000 3.150%, 2/01/2006 (b)<F16> 997,500
-----------
2,003,670
-----------
Montana -- 0.4%
Anaconda-Deer Lodge County
Environmental Facilities Revenue,
Arco Anaconda Smelter
200,000 3.070%, 4/30/2005 (a)<F15> (b)<F16> 200,000
-----------
New Jersey -- 4.6%
Bayonne Tax Anticipation
Notes -- Series B
1,000,000 5.000%, 11/15/2005 1,006,950
Tobacco Settlement Financing
Corporation - Asset Backed
1,260,000 5.750%, 6/01/2012 (b)<F16> 1,260,655
-----------
2,267,605
-----------
New Mexico -- 2.1%
Sandoval County Incentive
Payment Revenue
1,000,000 4.250%, 12/01/2006 1,015,100
-----------
North Carolina -- 5.1%
Mecklenburg County Industrial
Facilities & Pollution Control
Financing Authority Industrial
Revenue, Okaya Shinnichi America
(LOC: Tokai Bank Ltd.)
2,490,000 3.600%, 5/06/2005 (a)<F15> (b)<F16> 2,490,000
-----------
Ohio -- 3.1%
Ohio State Water Development
Authority Pollution Control
Facilities Revenue, Ohio
Edison Company
1,500,000 3.35%, 12/01/2005 (b)<F16> 1,498,875
-----------
South Carolina -- 2.0%
Charleston County Industrial
Revenue, Tandy Corp.
1,000,000 3.450%, 5/06/2005 (a)<F15> (b)<F16> 1,000,000
-----------
Texas -- 9.1%
Brazoria County Health Facilities
Development Corporation Hospital
Revenue, Brazosport Memorial
Hospital (CS: Radian)
200,000 4.000%, 7/01/2005 200,396
Cypress-Fairbanks Independent
School District -- Series B
(SPA: Toronto-Dominion Bank)
1,200,000 5.000%, 8/15/2007 (b)<F16> 1,253,820
Gulf Coast Waste Disposal Authority,
Republic Waste Services
1,500,000 3.340%, 5/06/2005 (a)<F15> (b)<F16> 1,500,000
Port Corpus Christi Authority
Nueces County Solid Waste
Disposal, Flint Hills Resources
1,500,000 3.300%, 5/06/2005 (a)<F15> (b)<F16> 1,500,000
-----------
4,454,216
-----------
Multistate -- 5.1%
Class B Revenue Bond Certificates
Series Trust 2004-1
(SPA: AIG Retirement Services, Inc.)
2,500,000 3.440%, 5/06/2005 (a)<F15> (b)<F16> 2,500,000
-----------
Total Municipal Bonds
(cost $35,426,112) 35,417,932
-----------
Total Investments
(cost $46,105,022) 94.2% 46,176,286
Other Assets, less Liabilities 5.8% 2,854,848
-----------
NET ASSETS 100.0% $49,031,134
-----------
-----------
(a)<F15> Variable Rate Security -- The rate reported is the rate in effect as
of April 30, 2005. The date shown is the next reset date.
(b)<F16> Maturity date represents first available put date.
CS - Credit Support
LOC - Letter of Credit
SPA - Standby Purchase Agreement
See notes to financial statements.
ALPINE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 2005 (UNAUDITED)
DYNAMIC DYNAMIC
BALANCE DIVIDEND
FUND FUND
------- --------
ASSETS:
Investments, at value(1)<F17> $87,537,424 $235,901,120
Dividends receivable 64,248 1,662,964
Interest receivable 284,857 25,813
Receivable for capital shares issued 40,172 2,470,788
Receivable for investment securities sold 520,693 10,325,059
Prepaid expenses and other assets 18,035 29,050
----------- ------------
Total assets 88,465,429 250,414,794
----------- ------------
LIABILITIES:
Payable for investment securities purchased 2,806,307 14,482,803
Payable for capital shares redeemed 55,088 469,679
Accrued expenses and other liabilities:
Investment advisory fees 81,296 204,105
Other 56,985 131,578
----------- ------------
Total liabilities 2,999,676 15,288,165
----------- ------------
NET ASSETS $85,465,753 $235,126,629
----------- ------------
----------- ------------
NET ASSETS REPRESENTED BY
Capital Stock $74,924,720 $245,197,705
Accumulated undistributed net investment income 137,781 1,873,088
Accumulated net realized gains (losses) from investments,
short sales, and foreign currencies 1,344,877 (2,633,866)
Net unrealized appreciation (depreciation) on investments
Investments 9,058,375 (9,318,201)
Foreign currency translation -- 7,903
----------- ------------
TOTAL NET ASSETS $85,465,753 $235,126,629
----------- ------------
----------- ------------
NET ASSET VALUE
Net assets $85,465,753 $235,126,629
Shares of beneficial interest issued and outstanding 6,965,408 19,590,499
Net asset value, offering price and redemption price per share $12.27 $12.00
(1)<F17> Cost of Investments $78,479,049 $245,219,321
See notes to financial statements.
ALPINE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 2005 (UNAUDITED)
MUNICIPAL TAX OPTIMIZED
MONEY MARKET INCOME
FUND FUND
------------ -------------
ASSETS:
Investments, at value(1)<F18> $202,506,229 $46,176,286
Interest receivable 902,838 403,248
Receivable for capital shares issued 721,831 10,000
Receivable for investment securities sold -- 2,500,411
Prepaid expenses and other assets 28,130 18,886
------------ -----------
Total assets 204,159,028 49,108,831
------------ -----------
LIABILITIES:
Payable for capital shares redeemed 46,921 249
Dividends payable to shareholders 194,333 1,117
Accrued expenses and other liabilities:
Investment advisory fees 32,736 16,464
Distribution fees 170 54
Payable to custodian 8,887 41,890
Other 43,488 17,823
------------ -----------
Total liabilities 326,535 77,697
------------ -----------
NET ASSETS $203,832,493 $49,031,134
------------ -----------
------------ -----------
NET ASSETS REPRESENTED BY
Capital Stock $203,832,493 $48,910,491
Accumulated undistributed net investment income 2,815 8,469
Accumulated net realized gains (losses) from investments sold (2,815) 40,910
Net unrealized appreciation on investments -- 71,264
------------ -----------
TOTAL NET ASSETS $203,832,493 $49,031,134
------------ -----------
------------ -----------
NET ASSET VALUE
Adviser Class Shares
Net assets $ 202,295 $ 67,343
Shares of beneficial interest issued and outstanding 202,295 6,696
Net asset value, offering price and redemption price per share $1.00 $10.06
Investor Class Shares
Net assets $203,630,198 $48,963,791
Shares of beneficial interest issued and outstanding 203,630,198 4,867,395
Net asset value, offering price and redemption price per share $1.00 $10.06
(1)<F18> Cost of Investments $202,506,229 $46,105,022
See notes to financial statements.
ALPINE MUTUAL FUNDS
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
DYNAMIC DYNAMIC
BALANCE DIVIDEND
FUND FUND
------- --------
INVESTMENT INCOME:
Interest income $ 368,253 $ 122,499
Dividend income*<F19> 906,505 10,926,893
---------- -----------
Total investment income 1,274,758 11,049,392
---------- -----------
EXPENSES:
Investment advisory fees 398,024 670,204
Administration fees 18,012 30,286
Fund accounting fees 11,279 18,541
Audit fees 9,655 10,955
Custodian fees 3,765 9,151
Interest expense 54 --
Legal fees 1,658 2,060
Registration and filing fees 14,254 31,852
Printing fees 3,522 10,005
Transfer agent fees 18,351 31,102
Trustee fees 1,617 1,617
Other fees 3,107 1,514
---------- -----------
Total expenses before expense recovery by Adviser 483,298 817,287
Expense recovery by Adviser 54,088 78,667
---------- -----------
Net expenses 537,386 895,954
---------- -----------
Net investment income 737,372 10,153,438
---------- -----------
REALIZED/UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) on:
Long transactions 1,344,874 (2,454,199)
Foreign currencies -- (151,800)
---------- -----------
Net realized gain (loss) 1,344,874 (2,605,999)
---------- -----------
Change in unrealized appreciation / depreciation on:
Investments 725,315 (11,166,112)
Foreign currency translation -- 7,984
---------- -----------
Net unrealized gain (loss) 725,315 (11,158,128)
---------- -----------
Net realized/unrealized gain (loss) on investments 2,070,189 (13,764,127)
---------- -----------
Change in net assets resulting from operations $2,807,561 $(3,610,689)
---------- -----------
---------- -----------
*<F19> Net of foreign taxes withheld $ -- $ 646,437
---------- -----------
---------- -----------
See notes to financial statements.
ALPINE MUTUAL FUNDS
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
MUNICIPAL TAX OPTIMIZED
MONEY MARKET INCOME
FUND FUND
------------ -------------
INVESTMENT INCOME:
Interest income $2,063,265 $ 890,428
---------- ---------
Total investment income 2,063,265 890,428
---------- ---------
EXPENSES:
Investment advisory fees 421,470 189,464
Administration fees 9,299 2,439
Distribution fees -- Adviser Class 143 43
Fund accounting fees 9,399 2,540
Audit fees 7,378 7,478
Custodian fees 9,621 2,611
Interest expense 249 167
Legal fees 2,261 830
Registration and filing fees 31,381 17,236
Printing fees 3,003 512
Transfer agent fees 9,324 2,508
Trustee fees 1,617 1,617
Other fees 3,344 2,638
---------- ---------
Total expenses before expense reimbursement by Adviser 508,488 230,083
Less: Reimbursement by Adviser (264,030) (78,302)
---------- ---------
Net expenses 244,459 151,781
---------- ---------
Net investment income 1,818,807 738,647
---------- ---------
REALIZED/UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments -- 76,362
Net unrealized loss on investments -- (536,212)
---------- ---------
Net realized/unrealized loss on investments -- (459,850)
---------- ---------
Change in net assets resulting from operations $1,818,807 $ 278,797
---------- ---------
---------- ---------
See notes to financial statements.
ALPINE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
DYNAMIC BALANCE FUND
-----------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2005 OCTOBER 31, 2004
---------------- ----------------
(UNAUDITED)
OPERATIONS:
Net investment income $ 737,372 $ 1,066,776
Net realized gain on investments 1,344,874 3,750,643
Change in unrealized appreciation/depreciation on investments 725,315 3,043,286
----------- -----------
Change in net assets resulting from operations 2,807,561 7,860,705
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to Shareholders:
From net investment income (679,102) (1,016,661)
From net realized gains on investments (3,659,345) --
----------- -----------
Change in net assets resulting from distributions to shareholders (4,338,447) (1,016,661)
----------- -----------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from shares sold 14,917,022 10,731,576
Dividends reinvested 3,855,903 898,869
Cost of shares redeemed (2,481,296) (1,525,813)
----------- -----------
Change in net assets from shares of beneficial interest transactions 16,291,629 10,104,632
----------- -----------
Total change in net assets 14,760,743 16,948,676
----------- -----------
NET ASSETS:
Beginning of period 70,705,010 53,756,334
----------- -----------
End of period*<F20> $85,465,753 $70,705,010
----------- -----------
----------- -----------
*<F20> Including undistributed net investment income of $ 137,781 $ 79,511
----------- -----------
----------- -----------
See notes to financial statements.
ALPINE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
DYNAMIC DIVIDEND FUND
------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2005 OCTOBER 31, 2004
---------------- ----------------
(UNAUDITED)
OPERATIONS:
Net investment income $ 10,153,438 $ 2,468,054
Net realized gain (loss) on:
Long transactions (2,454,199) 1,483,063
Foreign currencies (151,800) (6,398)
Change in unrealized appreciation/depreciation on:
Investments (11,166,112) 1,067,523
Foreign currency translation 7,984 (81)
------------ -----------
Change in net assets resulting from operations (3,610,689) 5,012,161
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to Shareholders:
From net investment income (8,539,976) (2,259,008)
From net realized gains on investments (1,494,879) --
------------ -----------
Change in net assets resulting from distributions to shareholders (10,034,855) (2,259,008)
------------ -----------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from shares sold 214,131,125 29,533,128
Dividends reinvested 8,507,030 1,883,922
Redemption fees 48,125 7,373
Cost of shares redeemed (17,444,527) (4,174,516)
------------ -----------
Change in net assets from shares of beneficial interest transactions 205,241,753 27,249,907
------------ -----------
Total change in net assets 191,596,209 30,003,060
------------ -----------
NET ASSETS:
Beginning of period 43,530,420 13,527,360
------------ -----------
End of period*<F21> $235,126,629 $43,530,420
------------ -----------
------------ -----------
*<F21> Including undistributed net investment income of $ 1,873,088 $ 259,626
------------ -----------
------------ -----------
See notes to financial statements.
ALPINE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
MUNICIPAL MONEY MARKET FUND
-----------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2005 OCTOBER 31, 2004
---------------- ----------------
(UNAUDITED)
OPERATIONS:
Net investment income $ 1,818,807 $ 963,350
Change in unrealized appreciation/depreciation on investments -- --
------------ ------------
Change in net assets resulting from operations 1,818,807 963,350
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to Adviser Class Shareholders:
From net investment income (993) (115)
Distributions to Investor Class Shareholders:
From net investment income (1,817,814) (963,235)
------------ ------------
Change in net assets resulting from distributions to shareholders (1,818,807) (963,350)
------------ ------------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from shares sold 204,380,346 166,115,193
Dividends reinvested 1,018,252 866,133
Cost of shares redeemed (131,793,581) (95,880,229)
------------ ------------
Change in net assets from shares of beneficial interest transactions 73,605,017 71,101,097
------------ ------------
Total change in net assets 73,605,017 71,101,097
------------ ------------
NET ASSETS:
Beginning of period 130,227,476 59,126,379
------------ ------------
End of period*<F22> $203,832,493 $130,227,476
------------ ------------
------------ ------------
*<F22> Including undistributed net investment income of $ 2,815 $ 2,815
------------ ------------
------------ ------------
See notes to financial statements.
ALPINE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
TAX OPTIMIZED INCOME FUND
-----------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2005 OCTOBER 31, 2004
---------------- ----------------
(UNAUDITED)
OPERATIONS:
Net investment income $ 738,647 $ 1,409,745
Net realized gain (loss) on investments 76,362 (35,452)
Change in unrealized appreciation/depreciation on investments (536,212) (60,107)
----------- -----------
Change in net assets resulting from operations 278,797 1,314,186
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to Adviser Class Shareholders:
From net investment income (503) (197)
Distributions to Investor Class Shareholders:
From net investment income (741,320) (1,397,873)
From net realized gains on investments (31,474)
----------- -----------
Change in net assets resulting from distributions to shareholders (741,823) (1,429,544)
----------- -----------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from shares sold 915,290 9,292,083
Dividends reinvested 735,044 1,412,683
Cost of shares redeemed (3,480,041) (14,856,164)
----------- -----------
Change in net assets from shares of beneficial interest transactions (1,829,707) (4,151,398)
----------- -----------
Total change in net assets (2,292,733) (4,266,756)
----------- -----------
NET ASSETS:
Beginning of period 51,323,867 55,590,623
----------- -----------
End of period*<F23> $49,031,134 $51,323,867
----------- -----------
----------- -----------
*<F23> Including undistributed net investment income of $ 8,469 $ 11,645
----------- -----------
----------- -----------
See notes to financial statements.
ALPINE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
DYNAMIC BALANCE FUND
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31, PERIOD ENDED
APRIL 30, ------------------------------------ OCTOBER 31,
2005 2004 2003 2002 2001 (A)<F24>
---------- ------ ------ ------ -------------
(UNAUDITED)
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $12.44 $11.08 $ 9.17 $10.10 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.11 0.19 0.22 0.24 0.09
Net realized/unrealized gains (losses) on investments 0.45 1.37 1.91 (0.91) 0.07
------ ------ ------ ------ ------
Total from investment operations 0.56 1.56 2.13 (0.67) 0.16
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.11) (0.20) (0.22) (0.25) (0.06)
Net realized gains on investments (0.62) -- -- (0.01) --
------ ------ ------ ------ ------
Total distributions (0.73) (0.20) (0.22) (0.26) (0.06)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.27 $12.44 $11.08 $ 9.17 $10.10
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN 4.34%(b) 14.19% 23.50% (6.82)% 1.64%(b)
<F25> <F25>
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $85,466 $70,705 $53,756 $43,027 $38,203
Ratio of expenses to average net assets:
Before waivers and recoveries 1.21%(c) 1.27% 1.51% 1.50% 1.40%(c)
<F26> <F26>
After waivers and recoveries 1.35%(c) 1.35% 1.35% 1.35% 1.35%(c)
<F26> <F26>
Ratio of net investment income to average net assets 1.85%(c) 1.78% 2.26% 2.45% 2.55%(c)
<F26> <F26>
Portfolio turnover 22% 56% 39% 42% 9%
(a)<F24> For the period from June 7, 2001 (commencement of operations) to
October 31, 2001.
(b)<F25> Not Annualized.
(c)<F26> Annualized.
See notes to financial statements.
ALPINE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
DYNAMIC DIVIDEND FUND
-----------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
APRIL 30, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003(A)<F27>
---------------- ---------------- ------------------------
(UNAUDITED)
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $12.34 $10.69 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.95(b)<F28> 1.09(b)<F28> 0.06
Net realized/unrealized gains (losses) on investments (0.26) 1.51 0.63
------ ------ ------
Total from investment operations 0.69 2.60 0.69
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.75) (0.95) --
Net realized gains on investments (0.28) -- --
------ ------ ------
Total distributions (1.03) (0.95) --
------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.00 $12.34 $10.69
------ ------ ------
------ ------ ------
TOTAL RETURN 5.44%(c)<F29> 24.90% 6.90%(c)<F29>
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $235,127 $43,530 $13,527
Ratio of expenses to average net assets:
Before waivers and reimbursements 1.22%(d)<F30> 1.56% 3.11%(d)<F30>
After waivers and reimbursements 1.34%(d)<F30> 1.35% 1.35%(d)<F30>
Ratio of net investment income to average net assets 15.15%(d)<F30> 9.08% 5.69%(d)<F30>
Portfolio turnover 85% 194% 9%
(a)<F27> For the period from September 22, 2003 (commencement of operations) to
October 31, 2003.
(b)<F28> Net investment income is calculated using average shares outstanding
during the period.
(c)<F29> Not Annualized.
(d)<F30> Annualized.
See notes to financial statements.
ALPINE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
MUNICIPAL MONEY MARKET FUND
---------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
APRIL 30, 2005 OCTOBER 31, 2004(A)<F31>
---------------- ------------------------
(UNAUDITED)
ADVISER CLASS SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.01
Net realized/unrealized gains on investments -- --
----- -----
Total from investment operations 0.01 0.01
----- -----
LESS DISTRIBUTIONS:
Dividends from net investment income (0.01) (0.01)
Net realized gains on investments -- --
----- -----
Total distributions (0.01) (0.01)
----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
----- -----
----- -----
TOTAL RETURN 0.82%(b)<F32> 0.89%(b)<F32>
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period $202,295 $80,114
Ratio of expenses to average net assets:
Before waivers and reimbursements 0.79%(c)<F33> 0.93%(c)<F33>
After waivers and reimbursements 0.51%(c)<F33> 0.59%(c)<F33>
Ratio of net investment income to average net assets 1.69%(c)<F33> 0.90%(c)<F33>
(a)<F31> For the period from March 30, 2004 (commencement of operations) to
October 31, 2004.
(b)<F32> Not Annualized.
(c)<F33> Annualized.
See notes to financial statements.
ALPINE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
MUNICIPAL MONEY MARKET FUND
-----------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
APRIL 30, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003(A)<F34>
---------------- ---------------- ------------------------
(UNAUDITED)
INVESTOR CLASS SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
----- ----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.01 0.01
Net realized/unrealized gains on investments -- -- --
----- ----- -----
Total from investment operations 0.01 0.01 0.01
----- ----- -----
LESS DISTRIBUTIONS:
Dividends from net investment income (0.01) (0.01) (0.01)
Net realized gains on investments -- -- --
----- ----- -----
Total distributions (0.01) (0.01) (0.01)
----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
----- ----- -----
----- ----- -----
TOTAL RETURN 0.95%(b)<F35> 1.09% 1.00%(b)<F35>
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $203,630 $130,147 $59,126
Ratio of expenses to average net assets:
Before waivers and reimbursements 0.54%(c)<F36> 0.70% 0.73%(c)<F36>
After waivers and reimbursements 0.26%(c)<F36> 0.34% 0.32%(c)<F36>
Ratio of net investment income to average net assets 1.94%(c)<F36> 1.10% 1.09%(c)<F36>
(a)<F34> For the period from December 5, 2002 (commencement of operations) to
October 31, 2003.
(b)<F35> Not Annualized.
(c)<F36> Annualized.
See notes to financial statements.
ALPINE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
TAX OPTIMIZED INCOME FUND
---------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
APRIL 30, 2005 OCTOBER 31, 2004(A)<F37>
---------------- ------------------------
(UNAUDITED)
ADVISER CLASS SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD $10.15 $10.26
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.13 0.16(b)<F38>
Net realized/unrealized losses on investments (0.08) (0.11)
------ ------
Total from investment operations 0.05 0.05
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.14) (0.16)
Net realized gains on investments -- --
------ ------
Total distributions (0.14) (0.16)
------ ------
NET ASSET VALUE, END OF PERIOD $10.06 $10.15
------ ------
------ ------
TOTAL RETURN 0.46%(c)<F39> 0.55%(c)<F39>
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period $67,343 $22,159
Ratio of expenses to average net assets:
Before waivers and reimbursements 1.16%(d)<F40> 1.25%(d)<F40>
After waivers and reimbursements 0.85%(d)<F40> 0.85%(d)<F40>
Ratio of net investment income to average net assets 2.67%(d)<F40> 2.41%(d)<F40>
Portfolio turnover(e)<F41> 36% 55%
(a)<F37> For the period from March 30, 2004 (commencement of operations) to
October 31, 2004.
(b)<F38> Net investment income per share is calculated using ending balances
prior to consideration of adjustments for permanent book and tax
differences.
(c)<F39> Not Annualized.
(d)<F40> Annualized.
(e)<F41> 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.
ALPINE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
TAX OPTIMIZED INCOME FUND
-----------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
APRIL 30, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003(A)<F42>
---------------- ---------------- ------------------------
(UNAUDITED)
INVESTOR CLASS SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD $10.15 $10.18 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.15 0.27 0.23
Net realized/unrealized gains (losses) on investments (0.09) (0.02) 0.18
------ ------ ------
Total from investment operations 0.06 0.25 0.41
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.15) (0.27) (0.23)
Net realized gains on investments -- (0.01) --(d)<F45>
------ ------ ------
Total distributions (0.15) (0.28) (0.23)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.06 $10.15 $10.18
------ ------ ------
------ ------ ------
TOTAL RETURN 0.57%(b)<F43> 2.42% 4.12%(b)<F43>
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $48,964 $51,302 $55,591
Ratio of expenses to average net assets:
Before waivers and reimbursements 0.91%(c)<F44> 1.04% 1.02%(c)<F44>
After waivers and reimbursements 0.60%(c)<F44> 0.60% 0.60%(c)<F44>
Ratio of net investment income to average net assets 2.92%(c)<F44> 2.62% 2.48%(c)<F44>
Portfolio turnover(e)<F46> 36% 55% 46%
(a)<F42> For the period from December 6, 2002 (commencement of operations) to
October 31, 2003.
(b)<F43> Not Annualized.
(c)<F44> Annualized.
(d)<F45> Amount is less than $0.005.
(e)<F46> 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.
ALPINE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2005 (UNAUDITED)
1. ORGANIZATION:
Alpine Series Trust (the "Series Trust") was organized in 2001 as a
Delaware Business Trust, and is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end management investment
company. Alpine Income Trust (the "Income Trust") was organized in 2002 as
a Delaware Business Trust, and is registered under the 1940 Act as an open-
end management investment company. Alpine Dynamic Balance Fund and Alpine
Dynamic Dividend Fund are two separate funds of the Series Trust and Alpine
Municipal Money Market Fund and Alpine Tax Optimized Income Fund are two
separate funds of the Income Trust. Alpine Dynamic Balance Fund, Alpine
Dynamic Dividend Fund, Alpine Municipal Money Market Fund and Alpine Tax
Optimized Income Fund (individually referred to as a "Fund" and
collectively, "the Funds") are diversified funds. Alpine Management &
Research, LLC (the "Adviser") is a Delaware Corporation and serves as the
investment manager to the Funds. Effective March 30, 2004, the Alpine
Municipal Money Market Fund and the Alpine Tax Optimized Income Fund began
to offer both Investor Class and Adviser Class shares.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with accounting principles generally accepted in
the United States of America ("GAAP"), which require management to make
estimates and assumptions that affect amounts reported herein. Actual
results could differ from those estimates.
A. VALUATION OF SECURITIES:
The Dynamic Balance, Dynamic Dividend and Tax Optimized Income Funds value
securities for which the primary market is on a domestic or foreign
exchange and over-the-counter securities admitted to trading on the
National Association of Securities Dealers Automated Quotation National
Market System ("NASDAQ") National List at the last quoted sale price at the
end of each business day or, if no sale, at the mean of the closing bid and
asked price. Over-the-counter securities not included in the NASDAQ
National List for which market quotations are readily available are valued
at a price quoted by one or more brokers. Securities for which market
quotations are not readily available or whose values have been materially
affected by events occurring before the close of U.S. markets but after the
close of the securities' primary markets, are valued at fair value as
determined in good faith according to procedures approved by the Board of
Trustees. The valuation of certain debt securities for which market
quotations are not readily available may be based upon current market
prices of securities which are comparable in coupon, rating and maturity or
an appropriate matrix utilizing similar factors.
The Municipal Money Market Fund values its investments at amortized cost,
which approximates market value. Pursuant to Rule 2a-7 of the Investment
Company Act of 1940, amortized cost, as defined, is a method of valuing
securities at acquisition cost, adjusted for amortization of premium or
accretion of discount rather than at their value based on current market
factors.
B. SECURITY TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded on the date a security is purchased or
sold (i.e. on 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, where
applicable. Dividend income is recorded on the ex-dividend date or in the
case of some foreign securities, on the date thereafter when the Funds are
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.
C. SHORT SALE TRANSACTIONS:
The Dynamic Balance Fund and the Dynamic Dividend Fund are authorized to
engage in short selling. Short sales are transactions in which a 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, a fund must borrow the
security to deliver to the buyer when effecting a short sale. The fund is
then obligated to replace the security borrowed by purchasing it in the
open market at some later date. When a fund sells a security short, an
amount equal to the sales proceeds is included in the Statements of Assets
and Liabilities as an asset and an equal amount as a liability. The amount
of the liability is subsequently marked-to-market to reflect the current
value of the short position. A fund will incur a loss, which could be
substantial and potentially unlimited, 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. A fund will realize a gain if the security
declines in value between those dates. A fund is also at risk of incurring
dividend expense if the issuer of the security that has been sold short
declares a dividend. A fund must pay the dividend to the lender of the
security.
All short sales must be fully collateralized. Accordingly, a fund maintains
collateral in a segregated account with their custodian, consisting of cash
and/or liquid securities sufficient to collateralize their obligations on
short positions. The Funds did not engage in short sales for the six
months ended April 30, 2005.
D. INTEREST EXPENSE:
The Funds are charged by U.S. Bank, N.A. for all cash overdrafts at the
bank's prime lending rate. The Dynamic Balance Fund, the Municipal Money
Market Fund and the Tax Optimized Income Fund incurred interest expense
totaling $54, $249 and $167, respectively, for the six months ended April
30, 2005.
E. INCOME TAXES:
It is each Fund's policy to comply with the requirements of Subchapter M of
the Internal Revenue Code applicable to regulated investment companies and
to distribute timely, all of its investment company taxable income and net
realized capital gains to shareholders. Therefore, no federal income tax
provision is recorded.
Under applicable foreign tax laws, a withholding tax may be imposed on
interest, dividends and capital gains earned on foreign investments. Where
available, the Funds will file for claims on foreign taxes withheld.
F. DIVIDENDS AND DISTRIBUTIONS:
The Dynamic Balance Fund, the Dynamic Dividend Fund and the Tax Optimized
Income Fund intend to distribute substantially all of their net investment
income and net realized capital gains, if any, throughout the year to their
shareholders in the form of dividends. The Municipal Money Market Fund
declares and accrues dividends daily on each business day based upon the
Fund's net income, and pays dividends monthly. Distributions to
shareholders are recorded at the close of business on the ex-dividend date.
All dividends are automatically reinvested in full and fractional shares of
a Fund at net asset value per share, unless otherwise requested.
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 GAAP. These 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.
In the event dividends and distributions to shareholders exceed net
investment income and net realized gains for tax purposes, they are
reported as a return of capital.
G. CLASS ALLOCATIONS:
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses of the Tax Optimized Income Fund and the
Municipal Money Market Fund are allocated among the classes of each
respective Fund 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 those incurred under the
Distribution Plans for Adviser Class shares.
H. FOREIGN EXCHANGE TRANSACTIONS:
The Dynamic Balance and Dynamic Dividend Funds may invest up to 15% and
25%, respectively, of the value of their total assets in foreign
securities. The books and records of the Funds are maintained in U.S.
dollars. Non-U.S. denominated amounts are translated into U.S. dollars as
follows, with the resultant exchange gains and losses recorded in the
Statement of Operations:
i) market value of investment securities and other assets and
liabilities at the exchange rate on the valuation date,
ii) purchases and sales of investment securities, income and expenses
at the exchange rate prevailing on the respective date of such
transactions.
Dividends and interest from non-U.S. sources received by the Funds are
generally subject to non-U.S. withholding taxes at rates ranging up to 30%.
Such withholding taxes may be reduced or eliminated under the terms of
applicable U.S. income tax treaties, and the Funds intend to undertake any
procedural steps required to claim the benefits of such treaties.
I. RISK ASSOCIATED WITH FOREIGN SECURITIES AND CURRENCIES:
Investments in securities of foreign issuers carry certain risks not
ordinarily associated with investments in securities of domestic issuers.
Such risks include future political and economic developments and the
possible imposition of exchange controls or other foreign governmental laws
and restrictions. In addition, with respect to certain countries, there is
a possibility of expropriation of assets, confiscatory taxation, political
or social instability or diplomatic developments, which could adversely
affect investments in those countries.
Certain countries may also impose substantial restrictions on investments
in their capital markets by foreign entities, including restrictions on
investments in issuers or industries deemed sensitive to relevant national
interests. These factors may limit the investment opportunities available
to the Fund or result in a lack of liquidity and high price volatility with
respect to securities of issuers from developing countries.
3. CAPITAL SHARE TRANSACTIONS:
The Funds have an unlimited number of shares of beneficial interest, with
$0.001 par value, authorized. Transactions in shares and dollars of the
Funds were as follows:
DYNAMIC BALANCE FUND
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2005 OCTOBER 31, 2004
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Shares sold 1,175,740 $14,917,022 880,345 $10,731,576
Shares issued in reinvestment of dividends 303,663 3,855,903 74,954 898,869
Shares redeemed (197,049) (2,481,296) (125,979) (1,525,813)
--------- ----------- -------- -----------
Total net change 1,282,354 $16,291,629 829,320 $10,104,632
--------- ----------- -------- -----------
--------- ----------- -------- -----------
DYNAMIC DIVIDEND FUND
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2005 OCTOBER 31, 2004
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Shares sold 16,782,674 $214,131,124 2,450,382 $29,533,128
Shares issued in reinvestment of dividends 679,098 8,507,030 156,598 1,883,922
Redemption fees -- 48,126 -- 7,373
Shares redeemed (1,399,567) (17,444,527) (344,339) (4,174,516)
---------- ------------ --------- -----------
Total net change 16,062,205 $205,241,753 2,262,641 $27,249,907
---------- ------------ --------- -----------
---------- ------------ --------- -----------
MUNICIPAL MONEY MARKET FUND
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2005 OCTOBER 31, 2004
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Investor Class
Shares sold 204,153,146 $204,153,146 166,030,693 $166,030,693
Shares issued in reinvestment of dividends 1,017,271 1,017,271 866,018 866,018
Shares redeemed (131,687,581) (131,687,581) (95,875,729) (95,875,729)
------------ ------------ ----------- ------------
Total net change 73,482,836 $ 73,482,836 71,020,982 $ 71,020,982
------------ ------------ ----------- ------------
------------ ------------ ----------- ------------
Adviser Class
Shares sold 227,200 $ 227,200 84,500 $ 84,500
Shares issued in reinvestment of dividends 981 981 115 115
Shares redeemed (106,000) (106,000) (4,500) (4,500)
------------ ------------ ----------- ------------
Total net change 122,181 $ 122,181 80,115 $ 80,115
------------ ------------ ----------- ------------
------------ ------------ ----------- ------------
TAX OPTIMIZED INCOME FUND
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2005 OCTOBER 31, 2004
--------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Investor Class
Shares sold 85,916 $ 870,290 910,320 $ 9,270,083
Shares issued in reinvestment of dividends 72,835 734,541 138,854 1,412,486
Shares redeemed (345,213) (3,480,041) (1,455,861) (14,856,164)
-------- ----------- ---------- -----------
Total net change (186,462) $(1,875,210) (406,687) $(4,173,595)
-------- ----------- ---------- -----------
-------- ----------- ---------- -----------
Adviser Class
Shares sold 4,463 $ 45,000 2,164 $ 22,000
Shares issued in reinvestment of dividends 50 503 20 197
Shares redeemed -- -- -- --
-------- ----------- ---------- -----------
Total net change 4,513 $ 45,503 2,184 $ 22,197
-------- ----------- ---------- -----------
-------- ----------- ---------- -----------
4. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
six months ended April 30, 2005 are as follows:
NON-U.S. GOVERNMENT U.S. GOVERNMENT
----------------------- ----------------------
PURCHASES SALES PURCHASES SALES
--------- ----- --------- -----
Dynamic Balance Fund $ 16,950,894 $ 10,537,612 $8,566,842 $5,798,221
Dynamic Dividend Fund 309,340,067 107,600,374 -- --
Tax Optimized Income Fund 10,553,609 19,460,250 -- --
5. DISTRIBUTION PLANS:
Quasar Distributors, LLC ("Quasar") serves as the Funds' distributor. The
Municipal Money Market Fund and the Tax Optimized Income Fund have each
adopted a distribution plan (the "Plans") for its Adviser Class shares as
allowed by Rule 12b-1 under the 1940 Act. The Plans authorize payments by
each Fund in connection with the distribution and servicing of its shares
at an annual rate, as determined from time to time by the Board of
Trustees, of up to 0.25% of each Fund's average daily net assets. Amounts
paid under the Plans by the Funds may be spent by the Funds on any
activities or expenses primarily intended to result in the sale of shares
of the Funds, including but not limited to, advertising, compensation for
sales and marketing activities of financial institutions and others such as
dealers and distributors, shareholder account servicing, the printing and
mailing of prospectuses to other than current shareholders and the printing
and mailing of sales literature. The Municipal Money Market Fund incurred
$132 and the Tax Optimized Income Fund incurred $43 pursuant to the Plans
for the six months ended April 30, 2005.
The Plans for the Municipal Money Market Fund and the Tax Optimized Income
Fund may be terminated at any time by vote of the Trustees of the Income
Trust who are not "interested persons," as defined by the 1940 Act, of the
Income Trust, or by vote of a majority of the outstanding voting shares of
the respective class.
6. INVESTMENT ADVISORY AGREEMENT AND OTHER AFFILIATED TRANSACTIONS:
Alpine Management & Research, LLC ("Alpine") provides investment advisory
services to the Funds. Pursuant to the investment adviser's agreement with
the Funds, Alpine is entitled to an annual fee based on 1.00% of each
Fund's average daily net assets for the Dynamic Balance Fund and the
Dynamic Dividend Fund. Alpine is entitled to an annual fee based on 0.45%
of the Municipal Money Market Fund's average daily net assets and an annual
fee based on 0.75% of the Tax Optimized Income Fund's average daily net
assets.
The Adviser agreed to, reimburse the Dynamic Balance Fund, Dynamic Dividend
Fund and Tax Optimized Income Fund-Investor Class, to the extent necessary,
to ensure that the Funds' total operating expenses (excluding 12b-1 fees,
interest, brokerage commissions and extraordinary expenses) did not exceed
1.35%, 1.35% and 0.60% of the Funds' average daily net assets,
respectively. For the six months ended April 30, 2005, the Adviser agreed
to reimburse the Municipal Money Market Fund-Investor Class to the extent
necessary to ensure that the Fund's total operating expenses (excluding
12b-1 fees, interest, brokerage commissions and extraordinary expenses) did
not exceed certain limits. The limits ranged from 0.22% to 0.29% of the
Fund's average daily net assets for the six months ended April 30, 2005.
The expense caps for the Adviser Class shares of the Municipal Money Market
Fund and Tax Optimized Income Fund are 0.25% higher than the Investor Class
shares. The Adviser may recover from each Fund the expenses paid in excess
of the cap on expenses for the three previous years, as long as the
recovery does not cause the Fund to exceed such cap on expenses. For the
six months ended April 30, 2005, the Adviser waived investment advisory
fees totaling $264,030 and $78,302 for the Municipal Money Market Fund and
the Tax Optimized Income Fund, respectively. For the six months ended
April 30, 2005, the Adviser recovered previous reimbursed/absorbed expenses
totaling $54,088 and $78,667 for the Dynamic Balance Fund and the Dynamic
Dividend Fund respectively. The expense limitations will remain in effect
unless and until the Board of Trustees of the Series and Income Trusts
approve their modification or termination.
Reimbursed/absorbed expenses subject to potential recovery by year of
expiration are as follows:
Year of Expiration Dynamic Balance Fund
------------------ --------------------
10/31/06 $37,706
Year of Expiration Municipal Money Market Fund Tax Optimized Income Fund
------------------ --------------------------- -------------------------
10/31/06 $175,958 $181,472
10/31/07 $311,122 $233,633
10/31/08 $264,030 $78,302
At April 30, 2005, the Dynamic Balance Fund had $8,042,019 invested in the
Municipal Money Market Fund.
7. FEDERAL INCOME TAX INFORMATION:
At October 31, 2004, the components of accumulated earnings/(losses) on a
tax basis were as follows:
DYNAMIC DYNAMIC MUNICIPAL TAX
BALANCE DIVIDEND MONEY OPTIMIZED
FUND FUND MARKET FUND INCOME FUND
------- -------- ----------- -----------
Cost of Investments $66,902,806 $42,867,027 $128,202,866 $50,254,297
----------- ----------- ------------ -----------
----------- ----------- ------------ -----------
Gross unrealized appreciation $ 9,476,405 $ 2,954,624 $ -- $ 632,653
Gross unrealized depreciation (1,094,336) (1,134,582) -- (25,177)
----------- ----------- ------------ -----------
Net unrealized appreciation/(depreciation) $ 8,382,069 $ 1,820,042 $ -- $ 607,476
----------- ----------- ------------ -----------
----------- ----------- ------------ -----------
Undistributed ordinary income $ 448,731 $ 1,542,455 $ -- $ 6,041
Undistributed exempt interest income -- -- 2,815 5,604
Undistributed long-term capital gain 3,241,119 212,052 -- --
----------- ----------- ------------ -----------
Total distributable earnings $ 3,689,850 $ 1,754,507 $ 2,815 $ 11,645
----------- ----------- ------------ -----------
----------- ----------- ------------ -----------
Other accumulated gains/(losses) $ -- $ -- $ (2,815) $ (35,452)
----------- ----------- ------------ -----------
Total accumulated earnings/(losses) $12,071,919 $ 3,574,549 $ -- $ 583,669
----------- ----------- ------------ -----------
----------- ----------- ------------ -----------
The tax basis of investments for tax and financial reporting purposes
differs principally due to the deferral of losses on wash sales and REIT
tax adjustments.
The tax character of distributions paid during the periods ended October
31, 2004 and 2003 were as follows:
DYNAMIC BALANCE FUND 2004 2003
---- ----
Ordinary income $1,016,661 $1,020,091
Long-term capital gain -- --
---------- ----------
$1,016,661 $1,020,091
---------- ----------
---------- ----------
DYNAMIC DIVIDEND FUND
Ordinary income $2,259,008 --
Long-term capital gain -- --
---------- ----------
$2,259,008 --
---------- ----------
---------- ----------
MUNICIPAL MONEY MARKET FUND
Exempt interest dividends $ 963,350 $ 468,643
Long-term capital gain -- --
---------- ----------
$ 963,350 $ 468,643
---------- ----------
---------- ----------
TAX OPTIMIZED INCOME FUND
Ordinary income $ 758,470 $ 574,675
Exempt interest dividends 671,074 509,639
Long-term capital gain -- --
---------- ----------
$1,429,544 $1,084,314
---------- ----------
---------- ----------
Capital loss carryovers as of October 31, 2004 are as follows:
Net Capital Loss Capital Loss
Carryover*<F47> Carryover Expiration
---------------- --------------------
Municipal Money Market Fund $2,815 10/31/12
Tax Optimized Income Fund $35,452 10/31/12
*<F47> Capital gain distributions will resume in the future to the
extent gains are realized in excess of the available carryovers.
ADDITIONAL INFORMATION (UNAUDITED)
EXPENSE EXAMPLES
APRIL 30, 2005
As a shareholder of the Dynamic Balance Fund and the Municipal Money Market
Fund, Adviser & Investor Class, you will incur ongoing costs, including
management fees; distribution and/or service fees; and other Fund expenses. As
a shareholder of the Dynamic Dividend Fund and the Tax Optimized Income Fund,
Adviser & Investor Class, you will incur two types of costs: (1) redemption fees
and (2) ongoing costs. The examples below are intended to help you understand
your ongoing costs (in dollars) of investing in the Funds and to compare these
costs with the ongoing costs of investing in other mutual funds. The examples
are based on an investment of $1,000 for the period 11/1/04 - 4/30/05.
ACTUAL EXPENSES
The first line of the tables below provides information about actual account
values and actual expenses. The Funds charge no sales load or transaction fees,
but do assess shareholders for outgoing wire transfers, returned checks and stop
payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC,
the Funds' transfer agent. If you request that a redemption be made by wire
transfer, currently a $15.00 fee is charged by the Funds' transfer agent.
Shareholders in the Dynamic Dividend Fund will be charged a redemption fee equal
to 1.00% of the net amount of the redemption if they redeem their shares less
than 60 calendar days after purchase. Shareholders in the Tax Optimized Income
Fund, Adviser & Investor Class, will be charged a redemption fee equal to 0.25%
of the net amount of the redemption if they redeem their shares less than 30
calendar days after purchase. IRA accounts will be charged a $15.00 annual
maintenance fee. To the extent the Funds invest in shares of other investment
companies as part of their investment strategies, you will indirectly bear your
proportionate share of any fees and expenses charged by the underlying funds in
which the Funds invest in addition to the expenses of the Fund. Actual expenses
of the underlying funds are expected to vary among the various underlying funds.
These expenses are not included in the example below. The example below
includes, but is not limited to, management fees, shareholder servicing fees,
fund accounting, custody and transfer agent fees. However, the example below
does not include portfolio trading commissions, related expenses and other
extraordinary expenses as determined under generally accepted accounting
principles. You may use the information in this line, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Funds' actual expense
ratios and an assumed rate of return of 5% per year before expenses, which does
not the represent the Funds' actual returns. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Funds and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as redemption fees. Therefore, the second line of the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
ALPINE DYNAMIC BALANCE FUND
Beginning Ending Expenses Paid
Account Value Account Value During Period
11/1/04 4/30/05 11/01/04 - 04/30/05*<F50>
------------- ------------- -------------------------
Actual(1)<F48> $1,000.00 $1,043.40 $6.84
Hypothetical(2)<F49> $1,000.00 $1,018.10 $6.76
(1)<F48> Ending account values and expenses paid during period based on a 4.34%
return. The return is considered after expenses are deducted from the
fund.
(2)<F49> Ending account values and expenses paid during period based on a 5.00%
annual return. The return is considered before expenses are deducted
from the fund.
*<F50> Expenses are equal to the Fund's annualized expense ratio of 1.35%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
ALPINE DYNAMIC DIVIDEND FUND
Beginning Ending Expenses Paid
Account Value Account Value During Period
11/1/04 4/30/05 11/01/04 - 04/30/05*<F53>
------------- ------------- -------------------------
Actual(1)<F51> $1,000.00 $1,054.40 $6.83
Hypothetical(2)<F52> $1,000.00 $1,018.15 $6.71
(1)<F51> Ending account values and expenses paid during period based on a 5.44%
return. The return is considered after expenses are deducted from the
fund.
(2)<F52> Ending account values and expenses paid during period based on a 5.00%
annual return. The return is considered before expenses are deducted
from the fund.
*<F53> Expenses are equal to the Fund's annualized expense ratio of 1.34%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
ALPINE MUNICIPAL MONEY MARKET FUND
ADVISER CLASS SHARES
Beginning Ending Expenses Paid
Account Value Account Value During Period
11/1/04 4/30/05 11/01/04 - 04/30/05*<F56>
------------- ------------- -------------------------
Actual(1)<F54> $1,000.00 $1,008.20 $2.54
Hypothetical(2)<F55> $1,000.00 $1,022.27 $2.56
(1)<F54> Ending account values and expenses paid during period based on a 0.82%
return. The return is considered after expenses are deducted from the
fund.
(2)<F55> Ending account values and expenses paid during period based on a 5.00%
annual return. The return is considered before expenses are deducted
from the fund.
*<F56> Expenses are equal to the Fund's annualized expense ratio of 0.51%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
ALPINE MUNICIPAL MONEY MARKET FUND
INVESTOR CLASS SHARES
Beginning Ending Expenses Paid
Account Value Account Value During Period
11/1/04 4/30/05 11/01/04 - 04/30/05*<F59>
------------- ------------- -------------------------
Actual(1)<F57> $1,000.00 $1,009.50 $1.30
Hypothetical(2)<F58> $1,000.00 $1,023.51 $1.30
(1)<F57> Ending account values and expenses paid during period based on a 0.95%
return. The return is considered after expenses are deducted from the
fund.
(2)<F58> Ending account values and expenses paid during period based on a 5.00%
annual return. The return is considered before expenses are deducted
from the fund.
*<F59> Expenses are equal to the Fund's annualized expense ratio of 0.26%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
ALPINE TAX OPTIMIZED INCOME FUND
ADVISER CLASS SHARES
Beginning Ending Expenses Paid
Account Value Account Value During Period
11/1/04 4/30/05 11/01/04 - 04/30/05*<F62>
------------- ------------- -------------------------
Actual(1)<F60> $1,000.00 $1,004.60 $4.22
Hypothetical(2)<F61> $1,000.00 $1,020.58 $4.26
(1)<F60> Ending account values and expenses paid during period based on a 0.46%
return. The return is considered after expenses are deducted from the
fund.
(2)<F61> Ending account values and expenses paid during period based on a 5.00%
annual return. The return is considered before expenses are deducted
from the fund.
*<F62> Expenses are equal to the Fund's annualized expense ratio of 0.85%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
ALPINE TAX OPTIMIZED INCOME FUND
INVESTOR CLASS SHARES
Beginning Ending Expenses Paid
Account Value Account Value During Period
11/1/04 4/30/05 11/01/04 - 04/30/05*<F65>
------------- ------------- -------------------------
Actual(1)<F63> $1,000.00 $1,005.70 $2.98
Hypothetical(2)<F64> $1,000.00 $1,021.82 $3.01
(1)<F63> Ending account values and expenses paid during period based on a 0.57%
return. The return is considered after expenses are deducted from the
fund.
(2)<F64> Ending account values and expenses paid during period based on a 5.00%
annual return. The return is considered before expenses are deducted
from the fund.
*<F65> Expenses are equal to the Fund's annualized expense ratio of 0.60%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
INVESTMENT ADVISER AND ADVISORY CONTRACTS
On December 20, 2004, at a meeting called for the purpose of voting on such
approval, the Board Members, including all of the Trustees who are not
parties to the Advisory Contracts or interested persons of any such party (the
non-interested Trustees), approved the continuance of the Advisory Contracts for
the Funds. In so doing, the Board Members studied materials specifically
relating to the Advisory Contracts provided by the Adviser, the Funds' counsel
and the Funds' administrator. The Board Members considered a variety of
factors, including the following:
The Board Members considered the expected nature, quality and scope of the
management and investment advisory services and personnel provided each Fund by
the Adviser; the rate of investment advisory fees payable to the Adviser and a
comparison of the fees paid by comparable funds; the compensation (in addition
to the investment advisory fees) and other benefits received by the Adviser and
its respective affiliates; the Adviser's costs in providing services; the
economies of scale realized by the Adviser; the annual operating expenses of
each Fund; and the policies and practices of the Adviser with respect to
portfolio transactions for each Fund.
The Board Members also evaluated the investment performance of the Funds
relative to their respective benchmark indices over the last year, three years,
five years, ten years and since inception (as applicable).
The Board Members also reviewed Lipper analytical data relating to average
expenses and advisory fees for comparable funds. Based on the information
provided, the Board Members determined that each Fund's fee structure is
competitive with funds having similar investment goals and strategies.
The Board Members considered the Funds' total expense ratios and contractual
investment advisory fees compared to their respective industry average by
quartile, within the appropriate Lipper benchmark category and Lipper category
range. The Board Members also considered the amount and nature of fees paid by
shareholders. The Board Members considered the fact that the Adviser has
contractually agreed to waive a portion of its fees for the Dynamic Balance
Fund, the Dynamic Dividend Fund, the Municipal Money Market Fund and the Tax
Optimized Income Fund for a period of one year, to be reviewed again at the next
Advisory Contract renewal. It was noted that each Fund's management fee and
expense ratio are within the average range compared to its peer funds.
The Board Members considered the extent to which economies of scale would be
realized with respect to operational costs as the Funds grow in their number of
shareholders and assets under management, the existence of breakpoints
previously established by the Adviser, and whether fee levels to be charged by
the Adviser reflect these economies of scale for the benefit of Fund investors
and are fair under the circumstances, which the Board Members, including all of
the non-interested Trustees, believed to be the case.
Based on the Board Members' review and consultation with the Funds' independent
counsel, of the material aspects of the Advisory Contracts, including the
foregoing factors and such other information believed to be reasonably necessary
to evaluate the terms of the Advisory Contracts, the Board Members, including
all of the non-interested Trustees voting separately, concluded that the
continuation of the Advisory Contracts would be in the best interest of the
Funds' shareholders, and determined that the compensation to the Adviser
provided for in the Advisory Contracts is fair and equitable.
AVAILABILITY OF PROXY VOTING INFORMATION
Information regarding how the Fund votes proxies relating to portfolio
securities is available without charge upon request by calling toll-free at
1-888-785-5578 and on the SEC's website at www.sec.gov. Information regarding
how the Fund voted proxies relating to portfolio securities during the period
ended June 30, 2004 is available on the SEC's website at www.sec.gov or by
calling the toll-free number listed above.
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE
Beginning with the Funds' fiscal quarter ended July 31, 2004, the Funds filed
their complete schedules of portfolio holdings on Form N-Q with the SEC. The
Funds file Form N-Q for the first and third quarters of each fiscal year on Form
N-Q. The Funds' Forms N-Q are available on the SEC's website at www.sec.gov and
-----------
may be reviewed and copied at the SEC's Public Reference Room in Washington, DC.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
(ALPINE LOGO)
TRUSTEES
Samuel A. Lieber
Laurence B. Ashkin
H. Guy Leibler
Jeffrey E. Wacksman
INVESTMENT ADVISER
Alpine Management & Research, LLC
2500 Westchester Avenue, Suite 215
Purchase, NY 10577
CUSTODIAN
U.S. Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
SUB-CUSTODIAN
The Bank of New York
One Wall Street
New York, NY 10286
TRANSFER AGENT & ADMINISTRATOR
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
555 East Wells Street
Milwaukee, WI 53202
FUND COUNSEL
Blank Rome LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
DISTRIBUTOR
Quasar Distributors, LLC
615 East Michigan Street
Milwaukee, WI 53202
SHAREHOLDER/INVESTOR INFORMATION
(888) 785-5578
www.alpinefunds.com
ALPINE FUNDS
2500 WESTCHESTER AVENUE, SUITE 215
PURCHASE, NY 10577
(914) 251-0880
ITEM 2. CODE OF ETHICS.
- -----------------------
Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
- ----------------------------------------
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
- -----------------------------------------------
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
- ----------------------------------------------
Not applicable to open-end investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS.
- --------------------------------
Schedule of Investments is included as part of the report to shareholders filed
under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
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MANAGEMENT INVESTMENT COMPANIES.
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Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
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Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
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COMPANY AND AFFILIATED PURCHASES.
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Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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Not Applicable.
ITEM 11. CONTROLS AND PROCEDURES.
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(a) The Registrant's President and Treasurer have reviewed the Registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act")) as of a date within 90 days of
the filing of this report, as required by Rule 30a-3(b) under the Act and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934.
Based on their review, such officers have concluded that the disclosure
controls and procedures are effective in ensuring that information required
to be disclosed in this report is appropriately recorded, processed,
summarized and reported and made known to them by others within the
Registrant and by the Registrant's service provider.
(b) There were no significant changes in the Registrant's internal controls
over financial reporting that occurred during the Registrant's last fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
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(a) (1) Any code of ethics or amendment thereto, that is subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy Item 2 requirements through filing an exhibit. Not Applicable
(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act sent or given during the period covered by the report by or on
behalf of the registrant to 10 or more persons. Not applicable to open-end
investment companies.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Alpine Income Trust
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By (Signature and Title) /s/ Samuel A. Lieber
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Samuel A. Lieber, President
Date 7-8-05
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)*<F66> /s/ Samuel A. Lieber
---------------------------
Samuel A. Lieber, President
Date 7-8-05
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By (Signature and Title)*<F66> /s/ Sheldon Flamm
---------------------------
Sheldon Flamm, Treasurer
Date 7-8-05
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*<F66> Print the name and title of each signing officer under his or her
signature.