Form N-CSR ALPINE EQUITY TRUST

Certified annual shareholder report of registered management investment companies

What is Form N-CSR?
  • Accession No.: 0000930413-15-004891 Act: 40 File No.: 811-05684 Film No.: 151316087
  • CIK: 0000842436
  • Submitted: 2015-12-31
  • Period of Report: 2015-10-31

N-CSR HTML

c82617_ncsr.htm

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: 811-05684

 

 

 

Alpine Equity Trust

 

(Exact name of registrant as specified in charter)

 

2500 Westchester Avenue, Suite 215

Purchase, New York 10577

 

(Address of principal executive offices)(Zip code)

 

  (Name and Address of Agent for Service) Copy to:  
       
  Samuel A. Lieber
Alpine Woods Capital Investors, LLC
2500 Westchester Avenue, Suite 215
Purchase, New York 10577
Rose DiMartino
Attorney at Law
Willkie Farr & Gallagher
787 7th Avenue, 40th Floor
New York, New York 10019
 

 

Registrant’s telephone number, including area code: (914) 251-0880

 

Date of fiscal year end: October 31

 

Date of reporting period: November 1, 2014 - October 31, 2015

 

Item 1: Shareholder Report

 

Real Estate Funds

 

Alpine International Real Estate Equity Fund
Institutional Class (EGLRX)
Class A (EGALX)
  Alpine Emerging Markets Real Estate Fund
Institutional Class (AEMEX)
Class A (AEAMX)
     
Alpine Realty Income & Growth Fund
Institutional Class (AIGYX)
Class A (AIAGX)
  Alpine Global Infrastructure Fund
Institutional Class (AIFRX)
Class A (AIAFX)

 

 October 31, 

 

2015

 

Annual Report

 

 

Table of Contents

 

Alpine’s Investment Outlook   1  
       
Equity Manager Reports      
Alpine International Real Estate Equity Fund   6  
Alpine Realty Income & Growth Fund   13  
Alpine Emerging Markets Real Estate Fund   19  
Alpine Global Infrastructure Fund   26  
Schedules of Portfolio Investments   33  
Statements of Assets and Liabilities   42  
Statements of Operations   44  
Statements of Changes in Net Assets   46  
Financial Highlights   50  
Notes to Financial Statements   58  
Report of Independent Registered Public Accounting Firm   74  
Information about your Funds’ Expenses   75  
Additional Information   77  
       

 

Additional Alpine Funds are offered in the Alpine Series Trust and Alpine Income Trust. These Funds include:

 

Alpine Dynamic Dividend Fund Alpine Small Cap Fund
   
Alpine Rising Dividend Fund Alpine Ultra Short Municipal Income Fund
   
Alpine Financial Services Fund Alpine High Yield Managed Duration Municipal Fund

 

Alpine’s Series and Income Funds’ investment objectives, risks, charges and expenses must be considered carefully before investing in funds of the Alpine Series Trust and Alpine Income Trust. The statutory and summary prospectuses contain this and other important information about the investment company, and it may be obtained by calling 1-888-785-5578, or visiting www.alpinefunds.com. Read it carefully before investing.

 

Mutual fund investing involves risk. Principal loss is possible.

 

Alpine’s Investment Outlook

 

Dear Shareholders:

 

A few of the watchwords for financial markets over the past year included excess liquidity, unicorn valuations, risk-on/risk-off, deflation, income inequality and, unfortunately, terrorism. Perhaps there is another way to describe the overarching themes driving the markets as we enter the eighth year of recovery since the Great Financial Recession. The markets are still captive to the complexity and contradiction of fundamental data. Alpine believes that this condition stems from the unfocused, weak economic expansion. Atypically, the markets are dependent not upon the leadership of governments or industry but from central banks. Historically, economic leadership has not been the role of central banks. However, corporate spending has been limited and government stimulus has been constrained by either ideology (austerity) or weak tax revenues. This has placed an unusual burden on central banks, worldwide, which are designed and staffed to balance or neutralize unfavorable economic forces. Perhaps that is why both consumer and business confidence has been weak during this cycle as central banks have, by default, become the primary source of both economic stimulus and direction during the past six years, yet by their nature, they can only provide monetary leadership.

 

As we look back on fiscal year 2015, and prepare for 2016, the slow recovery of both global economies and evolving capital markets is very clear. Nonetheless, this has been an eventful year filled with notable shifts and even dramatic reversals leading to periods of increased volatility. The dominant factors have been the anticipated emergence of divergent interest rate trends between cyclically advancing countries and those which lag behind. At the start of 2015, it was clear to the markets that the Federal Reserve was done with quantitative easing (QE), — after first signaling this intention back in May 2013 — to the point where the Fed was about to raise interest rates. Also, at the beginning of the year it was clear that the European Central Bank (ECB) was about to embark upon a program of quantitative easing trailing the Fed’s lead by over five years.

 

As we embark upon 2016, the Fed seems likely to finally raise interest rates, if only by a quarter percent, while the ECB has announced an extension of QE into 2017. Long-term trends remain in place, so we believe that this divergence between slowly strengthening economies and still weak, lagging countries, may continue for another two to three years, taking us into 2018. It is conceivable that even more time will be required before another global

super cycle of demand exceeding supply emerges. At minimum, any major global upswing of demand for goods and services may take three to five years to emerge. This suggests that inflation may not become a significant threat for such a period of time. The upshot is that we may see U.S. interest rates gradually increase over several years by 100 to 250 basis points towards normalized historical levels. We believe the ECB is at least three years behind the Fed. This also suggests that we may be experiencing an historically extended period of economic growth without recession that could last into the next decade.

 

Members of our Investment team, with respect to their areas of expertise, have made the following observations covering both the past year and the new year. Bruce Ebnother, a member of our real estate investment team noted that “Unlike typical recovery cycles ... only a moderate amount of new supply has come online.” Mark Austin, who covers global housing stocks, commented that “wages (in the U.S.) have grown faster over the past year than at any other point during this recovery since 2008 and unemployment has dropped to its lowest level since then. Despite this, industry fundamentals continue to point to merely another year of slow but steady growth”. He is, however, more optimistic because in 2018 “40 million millennials will turn 25, an age when historically increased numbers begin looking for new homes. Already, we are experiencing a pick-up in household formation.” So, it appears that both commercial and residential real estate in the U.S., among other countries, is undersupplied from a cyclical perspective and demand is underpinned by solid fundamentals.

 

In contrast, the energy and mining sectors have only recently experienced a significant downdraft in demand at a time where productive capacity hit a new peak. Thus, over the past year, we have only begun to see a modest reduction of output despite a significant collapse in prices due to the excesses of the commodity sector. Sarah Hunt, who follows industrial companies and the oil sector, in particular, as part of our commodities team, observed that the old oil industry adage that “low prices cure low prices” (where supplies typically reduce production in the face of falling prices only when the cost of extraction is higher than the sales price) did not hold true as “large fiscal inventories ... and current future strip pricing is not predicting a quick fix for low oil prices”. Thus, we believe consumers and certain industries should continue to benefit from the lowest oil prices since 2004, roughly 60% below peak levels. This could last well into 2016, before gradually moving higher.


 

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Supply-side issues have generally not been such a factor in the healthcare sector as demand growth continues. Jonathan Gelb, who follows the healthcare sector for us, notes that “companies that produce clinically different drugs that create cost savings will remain insulated from pricing pressure, however, companies whose models depend on aggressive pricing actions without significant innovation are likely to see growth impacted as soon as 2016.” No doubt his comments apply to both Turing Pharmaceutical and Valent Pharmaceuticals, which relied upon repackaging acquired medication at higher prices for a captive marketplace. With limited innovation, he believes that consolidation “is a theme that will likely continue into 2016, since nearly $265 billion worth of mergers or acquisitions (M&As) were announced during 2015.

 

Another area where acquisitions have been on the rise, creating revenue and hopefully, earnings growth, has been the financial sector. Peter Kovalski, who follows regional banks and financial services for us, noted that M&A activity in the U.S. for 2015 to date has totaled 243 announced deals. What’s notable is that this volume is only slightly behind last year’s level of 284 deals, the most since 2006 when 299 transactions took place. The difference is one of scale as the aggregate deal value in 2006 was $109 billion compared to only $19 billion in 2014. Thus, the typical transaction was less than a fifth of the size of previous transactions in 2006, suggesting that “the main driver behind these small bank deals is the rising cost of regulatory compliance ... a burden which is not going away.” The implication of this trend is that small local banks may not be as competitive in their local markets as larger, regional players. This may accelerate the underlying consolidation trend in which the number of banks in the U.S. has fallen from 14,907 in 1984 to 5,410 in 2015.

 

In a world where the pie is only growing slowly or for just a few, where their industry or market share is shrinking due to regulations, technological change or better-capitalized competition, the best business alternative may be a merger or acquisition. Indeed, Brian Hennessey, who follows commodity-related businesses in the mining and industrial materials companies for us, described 2015 as “the year of the mega mergers.” He expects this to continue in 2016 as “many forces driving consolidation across the developed world with low interest rates and high uncertainty with respect to the regulatory and macro-economic backdrop.” Naturally such consolidation can create opportunities for both astute and opportunistic acquirers as well as for companies whose shares have been undervalued by the market place. The broad economic implications of strategic or complementary consolidation is that it encourages buyers to shut the least effective operators or least efficient

producers, which curtails excess production, permitting supply and demand to find equilibrium levels faster than they might otherwise. Companies structured merely to grow through acquisitions, however, may lose their luster if they cannot innovate or continue to find M&A opportunities for expansion. Such risks have driven the market to place of particularly high earnings multiples on technological leaders including Facebook, Amazon, Netflix and Google (now known as Alphabet), among others which are expanding geographically, across platforms and market segments, while both making acquisitions and pushing innovation in ways that portend an extended period of revenue expansion.

 

As we look forward to 2016 and beyond, we should note that a key fundamental driver of growth is in fact demographic. That is, continual global population growth and the trending evolution of agrarian populations moving to urban industrial lifestyles, transitioning from subsistence to higher levels of productivity. This ongoing shift has not only been true of emerging countries but even here at home where many recent college graduates have chosen to live in urban settings, leading to a rebirth of a number of downtowns throughout the U.S. This has put extra demands upon infrastructure while creating new nodes for consumer activity, which, of course, has led to rising real estate values in many places. The rapidly expanding capacity to make the world our “oyster,” no longer depending upon local merchants or service providers to enhance our lifestyle, may prove to be an affirmation of our technological prowess even though there might be a range of social consequences. That said, the increased access to information, as well as goods and services, is opening up new avenues for creativity on both personal and societal levels. Those companies that can benefit from these different trends — old and new, small and large-should be able to generate attractive growth. As the global economy gradually returns to normalized levels of expansion, we would anticipate that the period of corporate consolidation through M&A will evolve towards a new period of capital investment and innovation. Even though this recent period of economic recovery has been quite extended, we are optimistic that the longer-term dynamic for continued expansion will become more apparent in the months and quarters ahead of us.

 

Thank you for your interest and support.

 

Sincerely,

 

 

Samuel A. Lieber

President


 

 

Past performance is not a guarantee of future results. The specific market, sector or investment conditions that contribute to a Fund’s performance may not be replicated in future periods.

 

Mutual fund investing involves risk. Principal loss is possible. Please refer to individual fund letters for risks specific to that fund.

 

This letter and the letters that follow represent the opinions of the Funds’ management and are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security. The information provided is not intended to be, and is not, a forecast of future events, a guarantee of future results, or investment advice.

 

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Disclosures and Definitions

 

Real Estate Funds Disclosures

 

The specific market, sector or investment conditions that contributed to a Fund’s performance may not be replicated in future periods.

 

Please refer to the Schedule of Portfolio Investments for Fund holdings information. Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security.

 

Diversification does not assure a profit or protect against loss in a declining market.

 

Favorable tax treatment of Fund distributions may be adversely affected, changed or repealed by future changes in tax laws. Alpine may not be able to anticipate the level of dividends that companies will pay in any given timeframe.

 

The Funds’ monthly distributions may consist of net investment income, net realized capital gains and/or a return of capital. If a distribution includes anything other than net investment income, the Funds will provide a notice of the best estimate of its distribution sources when distributed, which will be posted on the Funds’ website; www.alpinefunds.com, or can be obtained by calling 1-800-617-7616. We estimate Alpine Global Infrastructure Fund paid a portion of the 2015 distributions (approximately 7.5%) through a return of capital and Alpine International Real Estate Equity Fund, Alpine Realty Income & Growth Fund and Alpine Emerging Markets Real Estate Fund did not pay any distribution through a return of capital during the fiscal annual period ending October 31, 2015 through a return of capital. A return of capital distribution does not necessarily reflect the Funds’ performance and should not be confused with “yield” or “income.” Final determination of the federal income tax characteristics of distributions paid during the calendar year will be provided on U.S. Form 1099-DIV, which will be mailed to shareholders. Please consult your tax advisor for further information.

 

Neither the Fund nor any of its representatives may give tax advice. Investors should consult their tax advisor for information concerning their particular situation.

 

All investments involve risk. Principal loss is possible. A small portion of the S&P 500 yield may include return of capital; the 10-year Treasury yield does not include return of capital; Corporate Bonds and High Yield Bonds generally do not have return of capital; a portion of the dividend paid by REITs and REIT preferred stock may be deemed a return of capital for tax purposes in the event the company pays a dividend greater than its taxable income. A stock may trade with more or less liquidity than a bond depending on the number of shares and bonds outstanding, the size of the company, and the demand for the securities. The REIT and REIT preferred stock market are smaller than the broader equity and bond markets and often trade with less liquidity than

these markets depending upon the size of the individual issue and the demand of the securities. Treasury notes are guaranteed by the U.S. government and thus they are considered to be safer than other asset classes. Tax features of a Treasury Note, Corporate Bond, Stock, High Yield Bond, REITs and REIT preferred stock may vary based on an individual’s circumstances. Consult a tax professional for additional information.

 

Earnings Growth & EPS Growth are not measures of the Funds’ future performance.

 

Must be preceded or accompanied by a prospectus.

 

Quasar Distributors, LLC, distributor.

 

Real Estate Funds – Definitions

 

Alerian MLP Index is a composite of the 50 most prominent energy master limited partnerships calculated by Standard & Poor’s using a float-adjusted market capitalization methodology. The index is disseminated by the New York Stock Exchange real-time on a price return basis (NYSE: AMZ).

 

Basis point is a value equaling one one-hundredth of a percent (1/100 of 1%).

 

Cash flow measures the cash generating capability of a company by adding non-cash charges (e.g. depreciation) and interest expense to pretax income.

 

Chicago Board Options Exchange Volatility Index (VIX) reflects a market estimate of future volatility, based on the weighted average of the implied volatilities for a wide range of strikes.

 

Fibra is a real estate investment trust structured according to Mexican law.

 

Free cash flow is a measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. Free cash flow is important because it allows a company to pursue opportunities that enhance shareholder value.

 

FTSE EPRA/NAREIT Emerging Index is a total return index, designed to track the performance of listed real estate companies and REITS in emerging markets.

 

FTSE EPRA/NAREIT Global ex US Index is a total return index that is designed to represent general trends in eligible real estate equities outside the United States.

 

Source: FTSE the funds or securities referred to herein are not sponsored, endorsed, or promoted by the index providers, and the index providers bear no liability with respect to any such funds or securities or any index on which such funds or securities are based. The prospectus contains a more detailed description of the limited relationship the index providers have with the licensee and any related funds.


 

3

 
Disclosures and Definitions (continued)

 

Lipper Real Estate Funds Average is an average of funds that invest at least 80% of their portfolio in equity securities of domestic and foreign companies engaged in the real estate industry.

 

Markit Index of Manufacturing measures the performance of the manufacturing sector and is derived from a survey of 600 industrial companies.

 

MSCI EAFE Index is a total return, free-float adjusted market capitalization weighted index that measures the performance of stocks from Europe, Asia, and the Far East. This is one of the most widely used measures of international stock performance. Source: MSCI. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder.

 

MSCI Emerging Markets Index is a total return, free-float adjusted market capitalization weighted index that is designed to measure the equity market performance in the global emerging markets. Source: MSCI. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder.

 

MSCI Europe Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed markets in Europe. The MSCI Europe Index consists of the following 15 developed market country indexes: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom*. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

 

MSCI US REIT Index is a gross, total return, free float-adjusted market capitalization index that is comprised of equity REITs. The index is based on MSCI USA Investable Market Index (IMI) its parent index which captures large, mid and small caps securities. With 144 constituents, it represents about 99% of the US REIT universe and securities are classified in the REIT sector according to the Global Industry Classification Standard (GICS®). It however excludes Mortgage REIT and selected Specialized REITs. This index reinvests as much as possible of a company’s dividend distributions. The reinvested amount is equal to the total dividend amount distributed to persons residing in the country of the dividend-paying company. Gross total return indexes do not, however, include any tax credits. Source: MSCI. MSCI data may not be reproduced or used for any other purpose. MSCI

provides no warranties, has not prepared or approved this report, and has no liability hereunder.

 

Return on Equity (ROE) is the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.

 

Risk on/Risk off refers to changes in investment activity in response to global economic patterns. When risk is perceived as low, investors tend to engage in higher-risk investments. When risk is perceive as high, investors tend to engage in lower-risk investments.

 

S&P 500® Index is a total return, float-adjusted market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Total return indexes include reinvestments of all dividends

 

S&P Developed Ex-US Property Index is a total return index that defines and measures the investable universe of publicly traded property companies domiciled in developed countries outside of the U.S. The companies included are engaged in real estate related activities, such as property ownership, management, development, rental and investment. Total return indexes include reinvestments of all dividends.

 

S&P Global Infrastructure Index is a total return index that is designed to track 75 companies from around the world chosen to represent the listed infrastructure industry while maintaining liquidity and tradability. To create diversified exposure, the index includes three distinct infrastructure clusters: energy, transportation, and utilities. Net Total Return (NTR) indexes include reinvestments of all dividends minus taxes.

 

The S&P 500® Index, the S&P Developed ex. U.S. Property Index, and the S&P Global Infrastructure Index (the “Indices”) are products of S&P Dow Jones Indices LLC and have been licensed for use by Alpine Woods Capital Investors, LLC. Copyright © 2015 by S&P Dow Jones Indices LLC. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written the permission of S&P Dow Jones Indices LLC. S&P Dow Jones Indices LLC, its affiliates, and third party licensors make no representation or warranty, express or implied, with respect to the Index and none of such parties shall have any liability for any errors, omissions, or interruptions in the Index or the data included therein.

 

Unicorn valuations is a term which denotes a start-up company whose valuation has exceeded $1 billion.

 

US trade-weighted dollar index, also known as the broad index, is a measure of the value of the United States dollar relative to other world currencies.

 

An investor cannot invest directly in an index.


 

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Equity Manager Reports

 

 

 

 

 

  Alpine International Real Estate
Equity Fund
   
  Alpine Realty Income & Growth Fund
   
  Alpine Emerging Markets Real Estate Fund
   
  Alpine Global Infrastructure Fund

 

5

 
Alpine International Real Estate Equity Fund

 

Comparative Annualized Returns as of 10/31/15 (Unaudited)
   1 Year  3 Years  5 Years  10 Years  Since Inception(1)  
Alpine International Real Estate Equity Fund — Institutional Class   -8.05%   -0.26%   -1.96%   -0.53%   4.76%    
Alpine International Real Estate Equity Fund — Class A (Without Load)   -8.25%   -0.53%    N/A     N/A    5.28%     
Alpine International Real Estate Equity Fund — Class A (With Load)   -13.29%   -2.39%    N/A     N/A    3.75%     
FTSE EPRA/NAREIT Global Ex-U.S. Index(2)   -2.07%   4.13%   4.08%   N/A    N/A     
MSCI EAFE Index   -0.07%   8.02%   4.81%   4.05%   4.43%     
Lipper International Real Estate Funds Average(3)   -0.12%   5.26%   5.39%   3.61%   4.76%     
Lipper International Real Estate Funds Ranking(3)   52/53    49/50    36/36   8/8   1/1     
Gross Expense Ratio (Institutional Class): 1.62%(4)                             
Net Expense Ratio (Institutional Class): 1.62%(4)                             
Gross Expense Ratio (Class A): 1.87%(4)                             
Net Expense Ratio (Class A): 1.87%(4)                             

 

 
  (1) Institutional Class shares commenced on February 1, 1989 and Class A shares commenced on December 30, 2011. Returns for indices are since February 1, 1989.
  (2) Index commenced on October 31, 2008.
  (3) The since inception data represents the period beginning February 2, 1989 (Institutional Class only).
  (4) As disclosed in the prospectus dated February 27, 2015.

 

Performance data quoted represents past performance and is not predictive of future results. Investment return and principal value of the Fund fluctuate, so that 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 1-888-785-5578. Performance data shown does not reflect the 1.00% redemption fee imposed on shares held for fewer than 60 days. If it did, total returns would be reduced. Returns for the Class A shares with sales charge reflect a maximum sales charge of 5.50%. Performance for the Class A shares without sales charges does not reflect this load.

 

FTSE EPRA/NAREIT Global ex US Index is a total return index that is designed to represent general trends in eligible real estate equities outside the United States. MSCI EAFE Index is a total return, free-float adjusted market capitalization weighted index that measures the performance of stocks from Europe, Asia, and the Far East. This is one of the most widely used measures of international stock performance. Source: MSCI. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder. The Lipper International Real Estate Funds Average is an average of funds that invest at least 80% of their portfolio in equity securities of domestic and foreign companies engaged in the real estate industry. Lipper rankings for the periods shown are based on fund total returns with dividends and distributions reinvested and do not reflect sales charges. The FTSE EPRA/NAREIT Global ex-U.S. Index, the MSCI EAFE Index and the Lipper International Real Estate Funds Average are unmanaged and do not reflect direct fees associated with a mutual fund, such as investment adviser fees; however, the Lipper International Real Estate Funds Average reflects fees charged by the underlying funds. The performance for the Alpine International Real Estate Equity Fund reflects the deduction of fees for these value-added services. Investors cannot directly invest in an index.

 

To the extent that the Fund’s historical performance resulted from gains derived from participation in Initial Public Offerings (“IPOs”) and/or Secondary Offerings, there is no guarantee that these results can be replicated in future periods or that the Fund will be able to participate to the same degree in IPO/Secondary Offerings in the future.

 

6

 
Alpine International Real Estate Equity Fund (Continued)

 

 

Portfolio Distributions* (Unaudited)

 

 

Top 10 Holdings* (Unaudited)
1.   Regus PLC 6.39%
2.   Mitsui Fudosan Co., Ltd. 3.54%
3.   Great Portland Estates PLC 3.40%
4.   Mitsubishi Estate Co., Ltd. 3.34%
5.   Dalata Hotel Group PLC 3.19%
6.   Invincible Investment Corp. 3.02%
7.   South Asian Real Estate PLC 2.98%
8.   China Resources Land, Ltd. 2.93%
9.   LXB Retail Properties PLC 2.59%
10.   Kenedix, Inc. 2.46%
 
* Portfolio Distributions percentages are based on total investments. Top 10 Holdings do not include short-term investments and percentages are based on total net assets. Portfolio holdings and sector distributions are as of 10/31/15 and are subject to change. Portfolio holdings are not recommendations to buy or sell any securities.


 

 

 

Value of a $10,000 Investment (Unaudited)

 

 

 

This chart represents a comparison of a hypothetical $10,000 investment in the Fund versus a similar investment 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. Investment performance reflects the waiver and recovery of certain fees, if applicable. Without the waiver and recovery of fees, the Fund’s total return 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 shares, when redeemed, may be worth more or less than their original cost.

 

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Alpine International Real Estate Equity Fund (Continued)

 

Commentary

 

Dear Shareholders:

 

We present below the annual results for the Alpine International Real Estate Equity Fund. For the period ended October 31, 2015, the closing NAV was $21.92 per share, representing a total return of -8.05%. The Fund’s benchmark index, the FTSE EPRA/NAREIT Global Ex-U.S. Index returned -2.07% over the same period. In the context of broader equity markets, the MSCI EAFE Index produced a total return of -0.07%. All references in this letter to the Fund’s performance relate to the performance of the Fund’s Institutional Class.

 

Performance Drivers

 

Broadly speaking, international equity performance for the year was a story of contrasts with strength in the first half of the year giving way to uncertainty in the second half. The broad themes driving the momentum of returns were the slow-motion global recovery, expectations for the timing and pace of Fed policy, and questions surrounding China and its ability to manage its economy through a pronounced cyclical downturn. During the first half of the period markets took a constructive view of these variables and as such the risk on trade was firmly established. Adding to this was the Chinese government’s use of moral suasion to encourage equity market speculation seemingly as a means for promoting mainland IPO activity and acting as a pressure valve for over-indebted corporates. The bubble in the China A-share market that followed shortly thereafter was the inflection point for the risk trade in global markets. Downward pressure on equities gathered further momentum in August when China embarked on a managed depreciation of its currency, which was communicated poorly and subsequently sent markets into a tailspin. Concerns were amplified by foreign exchange (FX) volatility (USD strength), persistent commodity weakness and a seemingly endless list of geopolitical flare ups ranging from Greece to Russia to the constantly evolving situation in the Middle East.

 

Nevertheless, the risk off environment in the second half did nothing to dampen transaction volumes in the listed and physical property markets. According to Jones Lang LaSalle (JLL), transaction volumes through Q3 2015 were $497bn, up 13% from 2014 in local currency terms, while UBS calculates $154bn in listed real estate mergers and acquisitions (M&A) during the period which lags only 2007 values in aggregate. The Fund’s largest position was in the UK whose economy continued to muddle along and real estate equities handily outperformed despite

the lingering threat of a rate hike as rental growth in London offices continued to surge higher. In Japan both the developers and the Japanese REITs (JREITs) lagged the broader market despite robust evidence of a recovery in operational markets, especially in Tokyo. Market focus has shifted toward expectations for further Bank of Japan (BoJ) easing as the macroeconomic data follows a prolonged downtrend. European real estate outperformed by a wide margin due largely to the European Central Bank (ECB) launching its quantitative easing (QE) program. Smaller markets including Ireland and Spain saw strong returns. The data in Europe have been lackluster and there remain downside risks to growth and inflation which could prompt the ECB to consider further measures to support the recovery. The deterioration in the macroeconomic and currency outlook in Australia continued to weigh on the Australian REIT (AREIT) market on an absolute basis but it nevertheless outperformed on a relative basis due to reasonable valuations, stable fundamentals and yield support. Emerging markets (EM) generally tracked the momentum in China which ultimately was a significant drag on returns as EMs took the brunt of the impact from the Renminbi devaluation, via FX channels as well as the equities.

 

Portfolio Analysis

 

At the headline level, the relative underperformance of the Fund during the period was driven primarily by stock selection, however this aggregate perspective masks the wide variance of contributions across geographies as economic and policy divergence became increasingly more pronounced for international investors. For example, the Fund saw relative outperformance across the majority of developed markets due to both stock selection and allocation (i.e., the UK, Japan and many European countries including Ireland, France and Spain) or due to allocation decisions entirely (i.e., Canada and Australia). By contrast the primary detractors to relative performance during the past year could largely be attributed to select emerging markets countries, specifically the overweight allocations to India, Brazil and Mexico or stock selection in Indonesia weighing on performance.

 

At quarter end the top 10 positions accounted for 33.84% of the portfolio versus 37.30% twelve months ago and the composition shifted considerably due to M&A and corporate actions. There were six companies falling out of the top 10: three of them including Songbird Estates in the UK, Unitech Corporate Parks in India and BHG in


 

8

 
Alpine International Real Estate Equity Fund (Continued)

 

Brazil were taken private; one of them, Yatra Capital in India, was reduced through a tender offer and two, SM Prime in the Philippines and Nexity in France, were bumped out due to an increased allocation to Japan. During the period under review, the aggregate weightings in India and Brazil were pared back due to a lack of recovery in fundamentals in the residential markets in the former and a deteriorating macroeconomic position in the latter. However the portfolio is significantly overweight India and we remain very constructive on the long term prospects for the overall economy as well as its real estate sector. The weakness of select EM currencies versus the USD further guided portfolio weighting considerations. The overweight allocation to the UK was reduced due primarily to M&A activity in Songbird and Quintain Estates. Japan positioning was increased due to continued evidence of robust rental dynamics in commercial assets in prime Tokyo. The European positions were buoyed by the introduction of QE by the ECB. Positioning in Germany shifted slightly as the Fund established positions in the commercial real estate operator TLG and the Berlin residential developer ADO Properties. Finally, the position in China/HK was increased due to a growing focus on policy tools to reinvigorate the economy and mounting evidence of diminishing inventory levels and stabilizing demand across many tier one and two residential markets. The Philippines remains one of the strongest macroeconomic stories in EMs. The Fund maintained large underweights to the Australian, Canadian and South African markets due to a weakening macroeconomic outlook, specifically commodity pricing, as well as instability in the currencies.

 

The Fund hedged a portion of its currency exposures to the Euro, the Japanese Yen and the British Pound. The currency hedging mitigated a portion of the overall negative impact of currency in the portfolio. We have also used leverage both in the execution of the strategy of the Fund and to manage outflows during the period.

 

The top five contributors to the Fund’s absolute performance over the period under discussion based on contribution to total return were Regus, Nexity, Songbird Estates, Invincible Investment, and Dalata Hotel Group.

 

Regus PLC, which is the world’s largest operator of business centers offering temporary office rental space, is a long-term holding of the Fund. The stock saw a re-rating during the year based on its robust
  growth outlook, strong cash flow generation and private market transactions in the space that reinforced its relative value.
   
Nexity is one of the largest residential developers in France and has been a perceived beneficiary of government housing incentives as well as early evidence of a recovery in Europe.
   
Songbird Estates was a UK owner and manager of, among other assets, Canary Wharf in the East of London. The company was taken private by an existing shareholder, the Qatari Investment Authority, and Brookfield in the largest UK property transaction this decade.
   
Invincible Investment, a Japanese REIT, enjoyed strong share price appreciation during the period as it aggressively expanded its property portfolio and added hotels to its diversified mix of property assets.
   
Dalata Hotel Group, Ireland’s largest hotel operator, benefitted from its game-changing €455 million acquisition of Moran Bewley, continued robust economic growth in Ireland and a record numbers of overseas visitors.

 

The top five negative contributors to the Fund’s absolute performance for the year ended October 31 based on contribution to total return were South Asian Real Estate, Direcional Engenharia, General Shopping, Sao Carlos and Bakrieland Development.

 

South Asian Real Estate (SARE)* is a residential developer in India.
   
Direcional Engenharia S.A. is a Brazilian homebuilder whose operating results were negatively impacted by the challenging macroeconomic environment in Brazil. In addition, the weakness in the Brazilian currency negatively impacted the value of the Fund’s position.
   
General Shopping is a niche Brazilian shopping mall and outlet operator. The company has exhibited resilient operating performance but has not been able to recover from a suboptimal capital structure in a time of rising interest rates and depreciating currency.
   
Sao Carlos, a Brazilian developer and operator of commercial properties, struggled with its operating performance as a weak Brazilian macroeconomic environment coupled with an increase in new office supply caused vacancy levels to rise.


 

 

*The Fund purchased South Asian Real Estate PLC (“SARE”) through a private placement in 2007. There is no public market for the holding. As of October 31, 2015, the holding was valued based upon an equal weighting of an income approach and a market approach.

 

9

 

Alpine International Real Estate Equity Fund (Continued)

 

Bakrieland Development, a large land-owner and residential developer majority owned by a political family in Indonesia, saw its performance suffer as it continues its protracted efforts to restructure its bonds.

 

Outlook

 

Modest levels of growth, a measured pace of inflation, and a benign real interest rate environment are generally supportive for real estate returns on a historical basis. The JLL report referenced above supports Alpine’s long-held bias for continued demand for real estate assets, which could continue to drive cap rate compression and capital values globally, albeit at a slower pace. As markets enter the middle innings of the real estate cycle we would expect the breadth of bids slowly to narrow over time. As we have outlined frequently in our discussions with shareholders, the next leg of the equity story would almost certainly require an inflection point in cash earnings whereby the drivers underpinning demand for real estate begin shifting away from yield spreads and safe haven characteristics to the prospects for rising net absorption trends as well as heightened rental tension across occupational markets. In this respect we are encouraged to note that across many markets we are seeing traction in the rental markets and, perhaps more importantly, there has not been a significant supply response that is typically seen as cycles mature. The JLL report goes on to conclude that, “major commercial real estate markets are now on sounder footing than at any time since the Global Financial Crisis.” We would tend to agree and see clear evidence of this second leg of growth in select markets in the US, the UK and to a lesser degree Japan and Europe, but downside risks still remain.

 

The Fed’s tentative approach to raising rates underscores the fragility of the economic recovery, and when it comes to monetary policy, investors are becoming increasingly sensitive to the fine line between prudence and indecisiveness. It is important to reiterate that divergent monetary policies and their spillover effects could likely remain one of the dominant drivers of asset market volatility and returns for the foreseeable future. While markets are now pricing in a Fed lift off in December, monetary policy will nonetheless be tethered to growth prospects and could remain exceptionally accommodative by any historic measure. The global monetary environment remains extremely supportive and markets are expecting further stimulus from the ECB and BoJ in the weeks to come. Accordingly we remain cautiously optimistic on the growth outlook while recognizing that movements of the yield curve post the Fed’s first rate hike could prompt intervals of reflexive risk aversion across

asset classes. Some are even calling for a replay of the taper tantrum of May 2013. Indeed, the first move off of the zero bound in close to seven years – no matter how well it is signaled – could undoubtedly create air pockets of uncertainty. In any case, we firmly believe that the true risks to a sustainable global recovery are likely entrenched prospects of weak growth and disinflation rather than fears of measured rate tightening due to a recovery in aggregate demand.

 

As we parse uneven economic data and try to identify long-term trends, we acknowledge that prolonged uncertainty could further unnerve risk/reward dynamics, intensify volatility and galvanize fears of secular stagnation. A fifth consecutive year of deteriorating fundamentals in EMs has certainly dragged down global growth expectations. Lower commodity prices present both challenges and opportunities to the overall outlook. FX could continue to represent a more relevant component of total return as US yields drift higher and currency depreciation becomes an important macroeconomic adjustment mechanism. Additionally, M&A should continue to be a major investment theme as divergent valuations, cheap financing and the market’s emphasis on growth could drive consolidation. It will be interesting to see whether developed market corporates, particularly in Europe, follow the US road map since 2008 and take up cheap debt in order to facilitate increasing dividends and to buy back shares. Although it requires some patience, we would expect China to stabilize its economy through a balanced mix of monetary and fiscal measures which should help to assuage fears over a raft of potential problems including devaluation of the currency, corporate debt levels and a possible balance of payments crisis. Finally, as always, investors should keep a close eye on geopolitical concerns.

 

Differentiation – whether in markets, asset types or growth models – should remain a dominant theme in portfolio construction. Alpine’s Real Estate team carefully evaluates the risk/reward proposition of each position in the portfolio and monitors volatility carefully. The managers remain extremely selective in our approach to the markets and deploying capital. We thank our shareholders for their interest and support.

 

Sincerely,

 

Samuel A. Lieber

Portfolio Manager


 

10

 

Alpine International Real Estate Equity Fund (Continued)

 

This letter represents the opinions of the Fund’s management and is subject to change, is not guaranteed and should not be considered a recommendation to buy or sell any security. The information provided is not intended to be, and is not, a forecast of future events, a guarantee of future results, or investment advice. Views expressed may vary from those of the firm as a whole.

 

Past performance is no guarantee of future results.

 

 

 

Mutual fund investing involves risk. Principal loss is possible. The Fund is subject to risks, including the following:

 

Concentration Risk – The Fund’s strategy of concentrating in companies in a specific industry means that its performance will be closely tied to the performance of a particular market segment. The Fund’s concentration in these companies may present more risks than if it were broadly diversified over numerous industries and sectors of the economy. A downturn in these companies would have a larger impact on the Fund than on a mutual fund that does not concentrate in such companies. At times, the performance of these companies will lag the performance of other industries or the broader market as a whole.

 

Currency Risk – The value of investments in securities denominated in foreign currencies increases or decreases as the rates of exchange between those currencies and the U.S. dollar change. Currency conversion costs and currency fluctuations could erase investment gains or add to investment losses. Currency exchange rates can be volatile, and are affected by factors such as general economic conditions, the actions of the U.S. and foreign governments or central banks, the imposition of currency controls and speculation.

 

Emerging Market Securities Risk – The risks of foreign investments are heightened when investing in issuers in emerging market countries. Emerging market countries tend to have economic, political and legal systems that are less fully developed and are less stable than those of more developed countries. They are often particularly sensitive to market movements because their market prices tend to reflect speculative expectations. Low trading volumes may result in a lack of liquidity and in extreme price volatility.

 

Equity Securities Risk – The stock or other security of a company may not perform as well as expected, and may decrease in value, because of factors related to the company (such as poorer than expected earnings or certain management decisions) or to the industry in which the company is engaged (such as a reduction in the demand for products or services in a particular industry).

 

Foreign Currency Transactions Risk – Foreign securities are often denominated in foreign currencies. As a result, the value of the Fund’s shares is affected by changes in exchange rates. The Fund may enter into foreign currency transactions to try to manage this risk. The Fund’s ability to use foreign currency transactions successfully depends on a number of factors, including the foreign currency transactions being available at prices that are not too costly, the availability of liquid markets and the ability of the Adviser to accurately predict the direction of changes in currency exchange rates.

 

Foreign Securities Risk – The Fund’s investments in securities of foreign issuers or issuers with significant exposure to foreign markets involve additional risk. Foreign countries in which the Fund may invest may have markets that are less liquid, less regulated and more volatile than U.S. markets. The value of the Fund’s investments may decline because of factors affecting the particular issuer as well as foreign markets and issuers generally, such as unfavorable government actions, and political or financial instability. Lack of information may also affect the value of these securities. The risks of foreign investment are heightened when investing in issuers of emerging market countries.

 

Growth Stock Risk – Growth stocks typically are very sensitive to market movements because their market prices tend to reflect future expectations. When it appears those expectations will not be met, the prices of growth stocks typically fall. Growth stocks as a group may be out of favor and underperform the overall equity market while the market concentrates on undervalued stocks.

 

Initial Public Offerings and Secondary Offerings Risk – The Fund may invest a portion of its assets in shares of IPOs or secondary offerings of an issuer. IPOs and secondary offerings may have a magnified impact on the performance of a Fund with a small asset base. The impact of IPOs and secondary offerings on a Fund’s performance likely will decrease as the Fund’s asset size increases, which could reduce a Fund’s returns. IPOs and secondary offerings may not be consistently available to the Fund for investing. IPO and secondary offering shares frequently are volatile in price due to the absence of a prior public market, the small number of shares available for trading and limited information about the issuer. Therefore, the Fund may hold IPO and secondary offering shares for a very short period of time. This may increase the

 

11

 

Alpine International Real Estate Equity Fund (Continued)

 

turnover of the Fund and may lead to increased expenses for the Fund, such as commissions and transaction costs. In addition, IPO and secondary offering shares can experience an immediate drop in value if the demand for the securities does not continue to support the offering price.

 

Interest Rate Risk – Interest rates may rise resulting in a decrease in the value of securities held by the Fund, or may fall resulting in an increase in the value of such securities. Securities having longer maturities generally involve a greater risk of fluctuations in the value resulting from changes in interest rates.

 

Leverage Risk – The Fund may use leverage to purchase securities. Increases and decreases in the value of the Fund’s portfolio will be magnified when the Fund uses leverage.

 

Liquidity Risk – Some securities held by the Fund may be difficult to sell, or illiquid, particularly during times of market turmoil. Illiquid securities may also be difficult to value. If the Fund is forced to sell an illiquid asset to meet redemption requests or other cash needs, the Fund may be forced to sell at a loss.

 

Management Risk – The Adviser’s judgment about the quality, relative yield or value of, or market trends affecting, a particular security or sector, or about interest rates generally, may be incorrect. The Adviser’s security selections and other investment decisions might produce losses or cause the Fund to underperform when compared to other funds with similar investment objectives and strategies.

 

Market Risk – The price of a security held by the Fund may fall due to changing market, economic or political conditions.

 

Micro Capitalization Company Risk – Stock prices of micro capitalization companies are significantly more volatile, and more vulnerable to adverse business and economic developments than those of larger companies. Micro capitalization companies often have narrower markets for their goods and/or services and more limited managerial and financial resources than larger, more established companies, including small or medium capitalization companies.

 

Real Estate Investment Trusts (“REITs”) Risk – REITs’ share prices may decline because of adverse developments affecting the real estate industry including changes in interest rates. The returns from REITs may trail returns from the overall market. Additionally, there is always a risk that a given REIT will fail to qualify for favorable tax treatment.

 

Real Estate Securities Risk – Risks associated with investment in securities of companies in the real estate industry include: declines in the value of real estate; risks related to local economic conditions, overbuilding and increased competition; increases in property taxes and operating expenses; changes in zoning laws; casualty or condemnation losses; variations in rental income, neighborhood values or the appeal of properties to tenants; changes in interest rates and changes in general economic and market conditions.

 

Small and Medium Capitalization Company Risk – Securities of small or medium capitalization companies are more likely to experience sharper swings in market values, less liquid markets, in which it may be more difficult for the Adviser to sell at times and at prices that the Adviser believes appropriate and generally are more volatile than those of larger companies.

 

Undervalued Stock Risk – The Fund may pursue strategies that may include investing in securities, which, in the opinion of the Adviser, are undervalued. The identification of investment opportunities in undervalued securities is a difficult task and there is no assurance that such opportunities will be successfully recognized or acquired. While investments in undervalued securities offer opportunities for above-average capital appreciation, these investments involve a high degree of financial risk and can result in substantial losses.

 

Please refer to pages 3-4 for other important disclosures and definitions.

 

12

 

Alpine Realty Income & Growth Fund

 

Comparative Annualized Returns as of 10/31/15 (Unaudited)    
   1 Year  3 Years  5 Years  10 Years  Since Inception(1)  
Alpine Realty Income & Growth Fund — Institutional Class   6.98%   12.44%   12.78%   6.35%   11.39%    
Alpine Realty Income & Growth Fund — Class A (Without Load)   6.72%   12.17%    N/A     N/A    13.32%    
Alpine Realty Income & Growth Fund — Class A (With Load)   0.84%   10.08%    N/A     N/A    11.66%    
MSCI US REIT Index   5.32%   11.83%   12.17%   7.66%   11.06%    
S&P 500® Index   5.20%   16.20%   14.33%   7.85%   5.14%    
Lipper Real Estate Funds Average(2)   4.92%   10.75%   11.46%   7.02%   10.56%    
Lipper Real Estate Funds Ranking(2)   36/261   24/220   18/182   102/130   12/49    
Gross Expense Ratio (Institutional Class): 1.47%(3)                             
Net Expense Ratio (Institutional Class): 1.42%(3)                             
Gross Expense Ratio (Class A): 1.72%(3)                             
Net Expense Ratio (Class A): 1.67%(3)                             

 

 
  (1) Institutional Class shares commenced on December 29, 1998 and Class A shares commenced on December 30, 2011. Returns for indices are since December 29, 1998.
  (2) The since inception data represents the period beginning December 31, 1998 (Institutional Class only).
  (3) As disclosed in the prospectus dated February 27, 2015.

 

Performance data quoted represents past performance and is not predictive of future results. Investment return and principal value of the Fund fluctuate, so that 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 1-888-785-5578. Performance data shown does not reflect the 1.00% redemption fee imposed on shares held for fewer than 60 days. If it did, total returns would be reduced. Returns for the Class A shares with sales charge reflect a maximum sales charge of 5.50%. Performance for the Class A shares without sales charges does not reflect this load.

 

MSCI US REIT Index is a gross, total return, free float-adjusted market capitalization index that is comprised of equity REITs. The index is based on MSCI USA Investable Market Index (IMI) its parent index which captures large, mid and small caps securities. With 144 constituents, it represents about 99% of the US REIT universe and securities are classified in the REIT sector according to the Global Industry Classification Standard (GICS®). It however excludes Mortgage REIT and selected Specialized REITs. This index reinvests as much as possible of a company’s dividend distributions. The reinvested amount is equal to the total dividend amount distributed to persons residing in the country of the dividend-paying company. Gross total return indexes do not, however, include any tax credits. Source: MSCI. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder. S&P 500® Index is a total return, float-adjusted market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Total return indexes include reinvestments of all dividends. Lipper rankings for the periods shown are based on fund total returns with dividends and distributions reinvested and do not reflect sales charges. The MSCI US REIT Index, the S&P 500® Index and the Lipper Real Estate Funds Average are unmanaged and do not reflect direct fees associated with a mutual fund, such as investment adviser fees; however, the Lipper Real Estate Funds Average reflects fees charged by the underlying funds. The performance for the Alpine Realty Income & Growth Fund reflects the deduction of fees for these value-added services. Investors cannot directly invest in an index.

 

Expense Ratios reflect the ratios reported in the Fund’s most recent prospectus. The Alpine Realty Income & Growth Fund has a contractual expense waiver that continues through March 1, 2016. Where a Fund’s gross and net expense ratios are the same for the period reported, the contractual expense reimbursement level was not reached as of the end of that period. To the extent the Fund’s expenses were reduced by waivers, the Fund’s total returns were increased. In these cases, in the absence of the expense waivers, the Fund’s total returns would have been lower.

 

To the extent that the Fund’s historical performance resulted from gains derived from participation in Initial Public Offerings (“IPOs”) and/or Secondary Offerings, there is no guarantee that these results can be replicated in future periods or that the Fund will be able to participate to the same degree in IPO/Secondary Offerings in the future.

 

13

 

Alpine Realty Income & Growth Fund (Continued)

 

 

Portfolio Distributions* (Unaudited)

 

 

Top 10 Holdings* (Unaudited)
1.   Simon Property Group, Inc. 9.79%
2.   Boston Properties, Inc. 5.39%
3.   Public Storage 5.20%
4.   Equity Residential 4.56%
5.   Essex Property Trust, Inc. 4.50%
6.   Vornado Realty Trust 4.00%
 7.   Alexandria Real Estate Equities, Inc. 3.99%
8.   AvalonBay Communities, Inc. 3.87%
9.   Prologis, Inc. 3.67%
10.   SL Green Realty Corp. 3.58%
 

* Portfolio Distributions percentages are based on total investments. Top 10 Holdings do not include short-term investments and percentages are based on total net assets. Portfolio holdings and sector distributions are as of 10/31/15 and are subject to change. Portfolio holdings are not recommendations to buy or sell any securities.


 

 

Value of a $10,000 Investment (Unaudited)

 

 

 

 

This chart represents a comparison of a hypothetical $10,000 investment in the Fund versus a similar investment 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. Investment performance reflects the waiver and recovery of certain fees, if applicable. Without the waiver and recovery of fees, the Fund’s total return 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 shares, when redeemed, may be worth more or less than their original cost.

 

14

 

Alpine Realty Income & Growth Fund (Continued)

 

Commentary

 

Dear Shareholders:

 

We are pleased to report the results of the Alpine Realty Income & Growth Fund for the fiscal year that ended October 31, 2015. During this past fiscal year, the Fund produced a total return of 6.98% which compares to the 4.92% return of the Lipper Real Estate Funds Average, the 5.32% return of the MSCI US REIT Index (the “RMS Index”), and the 5.20% return of the S&P 500® Index (the “S&P”). All references in this letter to the Fund’s performance relate to the performance of the Fund’s Institutional Class.

 

At October 31, 2015, the Fund’s net asset value had increased to $22.00 from $21.29 twelve months prior. During this timeframe, the Fund paid four quarterly distributions of $0.1875 per share totaling $0.75 per share for the fiscal year. Since its inception at $10.00 per share on December 29, 1998 through October 31, 2015, the Fund has delivered an annualized total return to shareholders of 11.39% which includes cumulative distributions of $16.98. The performance chart on page 13 presents the Fund’s returns for the latest one-year, three-year, five year, ten-year, and since inception periods.

 

In our view, the most impactful factors influencing returns for REIT securities during the fiscal year, consistent with the last few years, were (i) the level and direction of long term interest rates, specifically that of the Ten-Year US Treasury obligation; (ii) continued improvement in real estate property fundamentals nationally with particular strength in those coastal markets with notably higher than average job growth trends; and (iii) steady demand by both domestic and foreign capital for direct property investment in the private market and for debt investments in both the private and public markets.

 

The Ten-Year Treasury rate remained historically low during the fiscal year, even decreasing 0.20% over the twelve-month period to 2.14% as of October 31, 2015, and providing, in our view, a positive tailwind for public real estate securities valuations. Yet fluctuations in that rate – a fiscal year low of 1.64% on January 30th to a high of 2.49% on June 10th – caused above average volatility in REIT pricing, in our opinion, as investors remained concerned that significant rate increases would negatively impact underlying real estate valuations. In contrast to public market participants, private capital remained seemingly more confident in the continuance of economic growth and the real estate cycle; in the relative stability of US real estate cash flow prospects; and

in the ability to generate attractive returns on equity relative to other alternative investments. That conviction in ongoing improvement in real estate operating fundamentals has, in our opinion, increased transactional and merger and acquisition activity including privatizations of REIT entities perceived to be trading at discounts to their underlying net asset value. We believe this trend could continue and even accelerate in the upcoming year if US economic growth continues at a slow and steady pace, long term interest rates remain historically subdued, and discounts to private market valuations continue in REIT securities pricing.

 

For the Fund, the top contributors to its positive performance during the latest fiscal year included companies within the self-storage and apartment sectors as well as those within the segment of the regional mall category with the highest tenant sales productivity. Self-storage companies, including the Fund’s third largest holding, Public Storage, a national owner and developer of storage facilities, produced strong yearly growth in earnings from occupancy and rental increases and were rewarded with some of the top total returns within the REIT group. Apartment companies, including Essex Properties Trust, Equity Residential, and AvalonBay Communities, all top ten holdings for the Fund, demonstrated continued strength in achieving high occupancies and rates of rental increases, particularly in the western coastal markets from southern California to Seattle, Washington. Within the regional mall sector, there was a definitive bifurcation of fundamental operating performance and stock price appreciation between Class A malls achieving higher rents, sales productivity, and occupancies and their Class B brethren who struggled to maintain stable tenancy levels in the face of higher than average retailer bankruptcies and store closures during the period. Both retail landlords, Simon Property Group and The Macerich Company, whom Simon unsuccessfully targeted as an acquisition earlier in the year, produced above average returns for the Fund. Relative to the overall return of the RMS Index, some of the greatest positive attribution was produced by our overweight positions in CoreSite Realty, a data center owner and developer who experienced strong demand from network service, cloud, and information technology providers; Home Properties, an apartment properties owner that was acquired by a private equity entity; the aforementioned Macerich; and by our underweight position in the healthcare REIT, HCP, Inc.


 

15

 

Alpine Realty Income & Growth Fund (Continued)

 

Holdings that underperformed REIT average returns and detracted from performance included companies within the lodging and healthcare sectors as well as those within the Class B segment of the regional mall category. Lodging companies experienced a deceleration in revenue growth, albeit from historically high levels, from a combination of slowing international travel due to the strength in the dollar, less robust business transient business, and new supply pressures in certain markets such as New York City. For the Fund, all of its lodging REIT holdings, except for Strategic Hotels and Resorts which is subject to a privatization bid from private equity funds controlled by The Blackstone Group, L.P., produced negative returns during the period with Host Hotels and Resorts and Chesapeake Lodging Trust accounting for the largest detractions from overall portfolio results. Healthcare REITs, including the Fund’s holdings in Ventas Inc., Welltower Inc., and Sabra Health Care REIT, produced weak stock performances as investors demonstrated concerns about signs of new supply additions of senior housing facilities and the impact of potentially rising interest rates on healthcare REIT valuations. Finally, the Fund’s holding in CBL & Associates Properties, an operator of middle-market shopping malls with essentially flat growth in net operating income impacted by retailer bankruptcies, detracted from overall results. Relative to the return of the RMS Index, the securities that created the most impactful negative attribution to performance were our overweight positions in the aforementioned Ventas, Sabra, and CBL & Associates, and Emaar Properties, a diversified Dubai-based developer of housing and commercial properties, which declined on investor concerns regarding potential slowing economic conditions as a result of declining oil prices and was sold by the Fund during the period.

Prospects for continued positive trends in real estate operating performance, in our view, remain tied to domestic economic growth including gains in employment and to muted supply additions. We remain most constructive on investing in companies that we believe have the highest likelihood for above average internal growth supported by strong local economies and for shareholder valuation potential from development and redevelopment activities. We believe concerns about the impact of potential rises in long term interest rates on REIT valuations have been creating above average volatility in REIT pricing and a potential headwind to advancement in share price appreciation resulting in somewhat of a dislocation between how real estate is priced in the public arena versus the private market. As a result, over the past year, we witnessed an increase in privatizations and merger and acquisition activity among the publicly traded real estate companies that affected a number of Fund holdings including Home Properties, Strategic Hotels and Resorts, Campus Crest Communities and most recently Starwood Hotels & Resorts which agreed to a merger with Marriott International. We believe this trend could continue and even accelerate in the upcoming year if discounts to private market valuations persist in REIT securities’ pricing. Additionally, we anticipate that we will continue to employ low levels of leverage both in the execution of the Fund’s strategy and to manage unexpected Fund flows. We look forward to providing an update on real estate trends and Fund performance at the end of the semi-annual period in April 2016.

 

Sincerely,

 

Robert W. Gadsden

Portfolio Manager


 

16

 

Alpine Realty Income & Growth Fund (Continued)

 

This letter represents the opinions of the Fund’s management and is subject to change, is not guaranteed and should not be considered a recommendation to buy or sell any security. The information provided is not intended to be, and is not, a forecast of future events, a guarantee of future results, or investment advice. Views expressed may vary from those of the firm as a whole.

 

Past performance is no guarantee of future results.

 

Mutual fund investing involves risk. Principal loss is possible. The Fund is subject to risks, including the following:

 

Concentration Risk – The Fund’s strategy of concentrating in companies in a specific industry means that its performance will be closely tied to the performance of a particular market segment. The Fund’s concentration in these companies may present more risks than if it were broadly diversified over numerous industries and sectors of the economy. A downturn in these companies would have a larger impact on the Fund than on a mutual fund that does not concentrate in such companies. At times, the performance of these companies will lag the performance of other industries or the broader market as a whole.

 

Credit Risk – Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer. The degree of credit risk depends on both the financial condition of the issuer and the terms of the obligation.

 

Dividend Strategy Risk – The Fund’s strategy of investing in dividend-paying stocks involves the risk that such stocks may fall out favor with investors and underperform the market. Companies that issue dividend paying-stocks are not required to continue to pay dividends on such stocks. Therefore, there is the possibility that such companies could reduce or eliminate the payment of dividends in the future.

 

Equity Securities Risk – The stock or other security of a company may not perform as well as expected, and may decrease in value, because of factors related to the company (such as poorer than expected earnings or certain management decisions) or to the industry in which the company is engaged (such as a reduction in the demand for products or services in a particular industry).

 

Fixed Income Securities Risk – Fixed income securities are subject to issuer risk, interest rate risk and market risk.

 

Growth Stock Risk – Growth stocks typically are very sensitive to market movements because their market prices tend to reflect future expectations. When it appears those expectations will not be met, the prices of growth stocks typically fall. Growth stocks as a group may be out of favor and underperform the overall equity market while the market concentrates on undervalued stocks.

 

Initial Public Offerings and Secondary Offerings Risk – The Fund may invest a portion of its assets in shares of IPOs or secondary offerings of an issuer. IPOs and secondary offerings may have a magnified impact on the performance of a Fund with a small asset base. The impact of IPOs and secondary offerings on a Fund’s performance likely will decrease as the Fund’s asset size increases, which could reduce a Fund’s returns. IPOs and secondary offerings may not be consistently available to the Fund for investing. IPO and secondary offering shares frequently are volatile in price due to the absence of a prior public market, the small number of shares available for trading and limited information about the issuer. Therefore, the Fund may hold IPO and secondary offering shares for a very short period of time. This may increase the turnover of the Fund and may lead to increased expenses for the Fund, such as commissions and transaction costs. In addition, IPO and secondary offering shares can experience an immediate drop in value if the demand for the securities does not continue to support the offering price.

 

Interest Rate Risk – Interest rates may rise resulting in a decrease in the value of securities held by the Fund, or may fall resulting in an increase in the value of such securities. Securities having longer maturities generally involve a greater risk of fluctuations in the value resulting from changes in interest rates.

 

Leverage Risk – The Fund may use leverage to purchase securities. Increases and decreases in the value of the Fund’s portfolio will be magnified when the Fund uses leverage.

 

Management Risk – The Adviser’s judgment about the quality, relative yield or value of, or market trends affecting, a particular security or sector, or about interest rates generally, may be incorrect. The Adviser’s security selections and other

 

17

 

Alpine Realty Income & Growth Fund (Continued)

 

investment decisions might produce losses or cause the Fund to underperform when compared to other funds with similar investment objectives and strategies.

 

Market Risk – The price of a security held by the Fund may fall due to changing market, economic or political conditions.

 

Non-Diversified Fund Risk – Performance of a non-diversified fund may be more volatile than a diversified fund because a non-diversified fund may invest a greater percentage of its total assets in the securities of a single issuer.

 

Preferred Stock Risk – Preferred stock represents an interest in a company that generally entitles the holder to receive, in preference to the holders of common stock, dividends and a fixed share of the proceeds resulting from a liquidation of the company. Preferred stocks may pay fixed or adjustable rates of return. Preferred stock has investment characteristics of both fixed income and equity securities. However, the value of these securities tends to vary more with fluctuations in the underlying common stock and less with fluctuations in interest rates and tends to exhibit greater volatility.

 

Real Estate Investment Trusts (“REITs”) Risk – REITs’ share prices may decline because of adverse developments affecting the real estate industry including changes in interest rates. The returns from REITs may trail returns from the overall market. Additionally, there is always a risk that a given REIT will fail to qualify for favorable tax treatment.

 

Real Estate Securities Risk – Risks associated with investment in securities of companies in the real estate industry include: declines in the value of real estate; risks related to local economic conditions, overbuilding and increased competition; increases in property taxes and operating expenses; changes in zoning laws; casualty or condemnation losses; variations in rental income, neighborhood values or the appeal of properties to tenants; changes in interest rates and changes in general economic and market conditions.

 

Small and Medium Capitalization Company Risk – Securities of small or medium capitalization companies are more likely to experience sharper swings in market values, less liquid markets, in which it may be more difficult for the Adviser to sell at times and at prices that the Adviser believes appropriate and generally are more volatile than those of larger companies.

 

Undervalued Stock Risk – The Fund may pursue strategies that may include investing in securities, which, in the opinion of the Adviser, are undervalued. The identification of investment opportunities in undervalued securities is a difficult task and there is no assurance that such opportunities will be successfully recognized or acquired. While investments in undervalued securities offer opportunities for above-average capital appreciation, these investments involve a high degree of financial risk and can result in substantial losses.

 

Please refer to pages 3-4 for other important disclosures and definitions.

 

18

 

Alpine Emerging Markets Real Estate Fund

 

Comparative Annualized Returns as of 10/31/15 (Unaudited)
   1 Year  3 Years  5 Years  Since Inception(1)
Alpine Emerging Markets Real Estate Fund — Institutional Class  -12.59%   -2.91%   -2.47%   9.25% 
Alpine Emerging Markets Real Estate Fund — Class A (Without Load)  -12.80%   -3.16%   N/A   3.86% 
Alpine Emerging Markets Real Estate Fund — Class A (With Load)  -17.58%   -4.97%   N/A   2.35% 
S&P Developed Ex-U.S. Property Index  1.01%   6.90%   6.95%   12.38% 
FTSE EPRA/NAREIT Emerging Index  -8.83%   -1.94%   -3.29%   N/A 
MSCI Emerging Markets Index  -14.53%   -2.87%   -2.80%   8.42% 
Lipper Global Real Estate Funds Average(3)  1.55%   7.77%   7.58%   12.45% 
Lipper Global Real Estate Funds Ranking(3)  151/152  112/113  94/94  79/79 
Gross Expense Ratio (Institutional Class): 2.38%(4)                
Net Expense Ratio (Institutional Class): 1.36%(4)                
Gross Expense Ratio (Class A): 2.63%(4)                
Net Expense Ratio (Class A): 1.61%(4)                

 

 
  (1) Institutional Class shares commenced on November 3, 2008 and Class A shares commenced on December 30, 2011. Returns for indices are since November 3, 2008.
  (2) Index commenced on January 2, 2009.
  (3) The since inception data represents the period beginning November 6, 2008 (Institutional Class only).
  (4) As disclosed in the prospectus dated February 27, 2015.

 

Performance data quoted represents past performance and is not predictive of future results. Investment return and principal value of the Fund fluctuate, so that 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 1-888-785-5578. Performance data shown does not reflect the 1.00% redemption fee imposed on shares held for fewer than 60 days. If it did, total returns would be reduced. Returns for the Class A shares with sales charge reflect a maximum sales charge of 5.50%. Performance for the Class A shares without sales charges does not reflect this load.

 

S&P Developed Ex-US Property Index is a total return index that defines and measures the investable universe of publicly traded property companies domiciled in developed countries outside of the U.S. The companies included are engaged in real estate related activities, such as property ownership, management, development, rental and investment. Total return indexes include reinvestments of all dividends. FTSE EPRA/NAREIT Emerging Index is a total return index, designed to track the performance of listed real estate companies and REITS in emerging markets. MSCI Emerging Markets Index is a total return, free-float adjusted market capitalization weighted index that is designed to measure the equity market performance in the global emerging markets. Source: MSCI. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder. The Lipper Global Real Estate Funds Average is an average of funds that invest at least 25% of their equity portfolio in shares of companies engaged in the real estate industry that are strictly outside of the U.S. or whose securities are principally traded outside of the U.S. Lipper rankings for the periods shown are based on fund total returns with dividends and distributions reinvested and do not reflect sales charges. The FTSE EPRA/NAREIT Emerging Index, the S&P Developed Ex-U.S. Property Index, the MSCI Emerging Markets Index and the Lipper Global Real Estate Funds Average are unmanaged and do not reflect direct fees associated with a mutual fund, such as investment adviser fees; however, the Lipper Global Real Estate Funds Average reflects fees charged by the underlying funds. The performance for the Alpine Emerging Markets Real Estate Fund reflects the deduction of fees for these value added services. Investors cannot directly invest in an index.

 

Expense Ratios reflect the ratios reported in the Fund’s most recent prospectus. The Alpine Emerging Markets Real Estate Fund has a contractual expense waiver that continues through March 1, 2016. Where a Fund’s gross and net expense ratios are the same for the period reported, the contractual expense reimbursement level was not reached as of the end of that period. To the extent the Fund’s expenses were reduced by waivers, the Fund’s total returns were increased. In these cases, in the absence of the expense waivers, the Fund’s total returns would have been lower.

 

To the extent that the Fund’s historical performance resulted from gains derived from participation in Initial Public Offerings (“IPOs”) and/or Secondary Offerings, there is no guarantee that these results can be replicated in future periods or that the Fund will be able to participate to the same degree in IPO/Secondary Offerings in the future.

 

19

 

Alpine Emerging Markets Real Estate Fund (Continued)

 

Portfolio Distributions* (Unaudited)

 

 

Top 10 Holdings* (Unaudited)
1.   China Overseas Land & Investment, Ltd.  10.80%
2.   China Resources Land, Ltd. 7.02%
3.   Emaar Properties PJSC 4.78%
4.   China Vanke Co., Ltd.-Class H 4.23%
5.   Ayala Land, Inc. 3.37%
6.   Dalian Wanda Commercial Properties Co., Ltd.-Class H  3.16%
7.   SM Prime Holdings, Inc. 2.77%
8.   Growthpoint Properties, Ltd. 2.16%
9.   Evergrande Real Estate Group, Ltd.  2.08%
10.   Fibra Uno Administracion SA de CV  1.97%
 

* Portfolio Distributions percentages are based on total investments. Top 10 Holdings do not include short-term investments and percentages are based on total net assets. Portfolio holdings and sector distributions are as of 10/31/15 and are subject to change. Portfolio holdings are not recommendations to buy or sell any securities.


 

 

Value of a $10,000 Investment (Unaudited)

 

 

 

This chart represents a comparison of a hypothetical $10,000 investment in the Fund versus a similar investment 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. Investment performance reflects the waiver and recovery of certain fees, if applicable. Without the waiver and recovery of fees, the Fund’s total return 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 shares, when redeemed, may be worth more or less than their original cost.

 

20

 

Alpine Emerging Markets Real Estate Fund (Continued)

 

Commentary

 

Dear Shareholders:

 

We present below the annual results for the Alpine Emerging Markets Real Estate Fund. For the period ended October 31, 2015, the closing NAV was $14.54 per share, representing a total return of -12.59% for the period. The Fund’s benchmark index, the FTSE EPRA/NAREIT Emerging Index returned -8.83% adjusted in U.S. dollar terms over the same period. Over that same time frame the MSCI Emerging Markets Index finished with a total return of -14.53% and the S&P Developed Ex-U.S. Property Index returned 1.01%. All references in this letter to the Fund’s performance relate to the performance of the Fund’s Institutional Class.

 

Performance Drivers

 

Broadly speaking, Emerging Market (EM) real estate equity performance for the year was a story of contrasts with strength in the first half of the year giving way to heightened volatility in the second half. The broad themes driving the momentum of returns were shifting expectations for the timing and pace of Fed policy, questions surrounding China and its ability to manage its economy through a pronounced cyclical downturn were at the epicenter of concerns, as well as the overall slow-motion global recovery. Indeed, the International Monetary Fund (IMF) once again revised its growth outlook for the global economy from 3.8% to 3.1% and for EMs from 5.0% to 4.0%, though its projection for 2016 currently stands at 4.5%. Macro market gyrations seized many of the headlines over the past twelve months – whether it was sharp commodity price fluctuations, currency market agitation, or global bond markets and the signaling of negative yields – and exacerbated volatility across assets. During the first half of the period markets took a constructive view of these variables and as such the risk on trade was firmly established. Adding to this was the Chinese government’s use of moral suasion to encourage equity market speculation seemingly as a means for promoting mainland initial public offering (IPO) activity and acting as a pressure valve for over-indebted corporates. The bubble in the China A-share market that followed shortly thereafter was the inflection point for the risk trade across EMs. Downward pressure on developing markets evolved into indiscriminate selling in August as China embarked on a managed depreciation of its currency, which was communicated poorly and subsequently sent EMs into a tailspin over fears of deflationary feedback loops. Concerns were amplified by foreign exchange (FX) volatility (USD strength), persistent commodity weakness

and a seemingly endless list of geopolitical flare ups including Greece, Turkey and Russia as well as the constantly evolving situation in the Middle East. As a result, EM mutual funds experienced combined portfolio outflows of $45bn in August and September, which greatly exceeded the amount seen post the 2013 taper tantrum.

 

Portfolio Analysis

 

Stock selection was the dominant factor in the overall performance of the Fund during the period. Stock picking in China and Hong Kong along with the underweight allocation to South Africa and the overweight in Egypt and Mexico were the most significant detractors from relative performance. The underperformance in China was due largely to the strong performance of Evergrande Real Estate, which the Fund was underweight. The underweight allocation to Brazil and Malaysia as well as the weighting in Argentina and Spain provided the largest positive contributions to relative performance.

 

At year end the top 10 positions accounted for 42.34% of the portfolio versus 42.42% a year ago. The composition shifted slightly with Dalian Wanda and Evergrande replacing BR Malls and Shimao. During the twelve-month period under review, the aggregate weightings in Brazil and Thailand were pared back significantly due to a deteriorating macroeconomic position in the former and political unrest and weakening domestic consumption trends in the latter. The exposure to China/HK was increased due to growing focus on policy tools to reinvigorate the economy and clear evidence of a volume recovery in Tier 1 residential markets. The large underweight in South Africa was reduced, yet the Fund maintained a significant underweight to the market due to a weak macro outlook and instability in the currency as well as the underweight to Malaysia due to geopolitical risk and deteriorating macro on the back of export weakness and oil prices. Additionally, the Fund hedged its currency exposure to the Euro in the first half of the fiscal year. The currency hedging mitigated some of the negative impact of currency in the portfolio.

 

The top five contributors to the Fund’s absolute performance over the period under discussion based on contribution to total return were China Overseas Land, China Vanke, China Resources Land, SM Prime, and Evergrande.

 

China Overseas Land, one of the largest developers in China, was the top contributor to the Fund’s performance on an absolute basis. The Chinese


 

21

 

Alpine Emerging Markets Real Estate Fund (Continued)

 

  developers across the board have been beneficiaries of government policies to support the economy as well as targeted measures for the real estate sector specifically including easing of mortgage restrictions. Volumes are recovering in a stable pricing environment resulting in significant inventory reduction in Tier 1 and select Tier 2 markets.
   
China Vanke, is one of the largest residential developers in China. The company is more concentrated on end user demand, which allows it to focus on quicker asset turns, shorter landbank duration and maintaining higher return on equities (RoEs) versus peers.
   
China Resources Land is one of the leading landlords and developers in China focused on mixed use projects. Expected acquisitions from its parent company are expected to underpin continued sales, margin and profit growth over the near term.
   
SM Prime is the largest mall owner/operator in the Philippines and following a consolidation with SM Development is also a residential developer. The local economy has performed well over the past year driving consumer spending and same store sales growth.
   
Evergrande is a highly geared Chinese residential developer focused on lower tier markets. The company has diversified its revenue stream by branching out into a variety of other business initiatives. The shares have been supported by a strong contracted sales momentum, a substantial share buyback plan and an extremely generous dividend payout.

 

The top five negative contributors to the Fund’s absolute performance for the fiscal year ended October 31, based on contribution to total return were Emaar Properties, Fibra Uno, BR Malls, Sixth of October Development and Greenland Hong Kong.

 

Emaar Properties, a UAE based real estate developer focusing on large-scale, mixed use (primarily residential, retail and hotel) projects across the Middle East and North Africa (MENA) region and represented the largest detractor of performance for the period. Operations of the company remain robust but the pace of sales in the region has slowed and the weakness in the oil price has dampened sentiment for the shares.
   
Fibra Uno, the largest and most liquid Fibra in Mexico holds a resilient and broadly diversified portfolio and has an aggressive development pipeline. Macroeconomic weakness in Mexico and the fear of rate increases in the US have weighed on the shares.

 

BR Malls is the largest shopping center company in Brazil. While operating metrics such as leasing spreads and occupancy levels have outpaced the weakness in the broader economy, the combination of weakening consumer confidence, weak credit and wage data and ongoing macro economic headwinds have dampened investor interest in the sector’s defensive characteristics.
   
Sixth of October Development is a residential developer based in Cairo. Sales momentum and pricing remained strong through the period however, geopolitical issues, commodity prices and currency depreciation affected returns.
   
Greenland Hong Kong is a Chinese residential developer which recently diversified its business lines into real estate internet finance and a real estate fund management arm. The company is effectively the offshore capital platform for its parent the Greenland Group and is still in the early stages of integrating back-ended project injections, expanding its business platform and smoothing out its shareholding structure to promote a more efficient capital structure.

 

Outlook

 

On the surface it would appear that a broad recovery of equity returns across EMs in general could still face headwinds and a challenging year ahead. Indeed, expectations for a continued slowdown in China, the potential for higher US interest rates, the surge in corporate credit, sticky lower commodity prices and ongoing deterioration of global trade (just to name a few) do not augur well for the developing market narrative in the near term. The first move off of the zero bound in close to seven years – no matter how well it is signaled – could potentially heighten the risk of negative spillovers. As we look through transitory economic data and try to identify underlying trends, we acknowledge that such lingering uncertainties could likely skew short term risk/reward dynamics, intensify volatility and fuel debate concerning secular stagnation. As a result, investors are likely to maintain a defensive stance toward EM until signs of a reversal of six years of sequential declines in growth prospects become apparent. While we would expect the trajectory of growth to remain well below trend in the short term we do see early signs that the pace of contraction in select markets has decelerated and that net margins and thus earning prospects for EM corporates could be bottoming, which could offer tactical as well as longer term opportunities in developing markets over the next twelve months and beyond.


22

 
Alpine Emerging Markets Real Estate Fund (Continued)

 

The Fed’s tentative approach to rate normalization underscores the fragility of the global macro economic landscape. Market attention has shifted away from lift off timing to the path of the policy rate and the implied neutral rate. While markets are now pricing in a Fed lift off in December, monetary policy should nonetheless be tethered to growth prospects and could remain exceptionally accommodative by any historic measure. The global monetary environment remains extremely supportive and markets are expecting further monetary support from the Bank of Japan (BoJ) and the European Central Bank (ECB), even if it results in more pressure on negative nominal yields and widening interest rate differentials. Accordingly we remain cautiously optimistic on the growth outlook while recognizing that unexpected movements of the yield curve post the Fed’s first rate hike could prompt intervals of risk aversion across asset classes. It is important to reiterate that divergent monetary policies and their spillover effects could likely remain one of the dominant drivers of asset market volatility and returns for the foreseeable future. Though in our view, fears of a replay of the taper tantrum of May 2013 are overstated in terms of both severity and duration. In any case, we believe that the true risks to a sustainable global recovery are likely entrenched prospects of weak growth and disinflation rather than fears of measured rate tightening due to a recovery in aggregate demand.

 

As markets digest the Fed outlook for rates we would expect to see clear winners and losers emerge as these adjustments are transmitted through the real economy. Lower commodity prices and USD strength are further highlighting the differences in monetary and fiscal policy flexibility between domestic and export-based economies. Inflation could tick higher on base effects alone while FX adjustments could continue to be an extremely important transmission channel for addressing imbalances in certain countries. China should remain a focus of EM investor concern, especially as it recorded its lowest growth rate in Q3 (6.9% annualized) since the crisis in 2009. Of particular interest will be China’s success in liberalizing its capital account, managing the process of market pricing for its currency and interest rates and gaining inclusion of its locally traded shares into global indices. Although it requires some patience, we would

expect China to stabilize its economy through a balanced mix of monetary and fiscal measures which should help to assuage fears over a raft of potential problems including devaluation of the currency, corporate debt levels and a possible balance of payments crisis. A managed growth deceleration should not be equated with a hard landing in our view.

 

Some of the critical elements for Alpine’s assessment of EM include: the scope and implementation of structural reforms, the vulnerability to external funding, the geopolitical landscape and crucially the growth/inflation dynamic. Over the medium-term, many EM economies could continue to underpin global growth based on the stabilization of domestic demand trends, as well as urbanization and positive demographics. As the developing countries strive to become deeper and more integrated, it is Alpine’s view that over time the emerging equity markets could increase substantially in absolute terms as more companies come public and eventually even surpass developed markets (DMs) in terms of market capitalization. At the same time we expect growth differentials between EMs and DMs to stabilize over the medium term, which could support a structural reallocation to EM equities. Dispersion of EM real estate equity returns across geographies and asset types could remain elevated, which is consistent with Alpine’s long-term view that the current macroeconomic climate could provide attractive opportunities for active management and stock selection. Differentiation – whether in markets, asset types or growth models – should remain a dominant theme in our portfolio construction methodology.

 

Alpine’s Real Estate team carefully evaluates the risk/reward proposition of each position in the portfolio and monitors volatility carefully. The managers remain extremely selective in our approach to the markets and deploying capital. We thank our shareholders for their support and look forward to the coming year.

 

Sincerely,

 

Joel E.D. Wells

Samuel A. Lieber

Portfolio Managers


 

23

 

Alpine Emerging Markets Real Estate Fund (Continued)

 

This letter represents the opinions of the Fund’s management and is subject to change, is not guaranteed and should not be considered a recommendation to buy or sell any security. The information provided is not intended to be, and is not, a forecast of future events, a guarantee of future results, or investment advice. Views expressed may vary from those of the firm as a whole.

 

Past performance is no guarantee of future results.

 

Mutual fund investing involves risk. Principal loss is possible. The Fund is subject to risks, including the following:

 

Concentration Risk – The Fund’s strategy of concentrating in companies in a specific industry means that its performance will be closely tied to the performance of a particular market segment. The Fund’s concentration in these companies may present more risks than if it were broadly diversified over numerous industries and sectors of the economy. A downturn in these companies would have a larger impact on the Fund than on a mutual fund that does not concentrate in such companies. At times, the performance of these companies will lag the performance of other industries or the broader market as a whole.

 

Currency Risk – The value of investments in securities denominated in foreign currencies increases or decreases as the rates of exchange between those currencies and the U.S. dollar change. Currency conversion costs and currency fluctuations could erase investment gains or add to investment losses. Currency exchange rates can be volatile, and are affected by factors such as general economic conditions, the actions of the U.S. and foreign governments or central banks, the imposition of currency controls and speculation.

 

Emerging Market Securities Risk – The risks of foreign investments are heightened when investing in issuers in emerging market countries. Emerging market countries tend to have economic, political and legal systems that are less fully developed and are less stable than those of more developed countries. They are often particularly sensitive to market movements because their market prices tend to reflect speculative expectations. Low trading volumes may result in a lack of liquidity and in extreme price volatility.

 

Equity Securities Risk – The stock or other security of a company may not perform as well as expected, and may decrease in value, because of factors related to the company (such as poorer than expected earnings or certain management decisions) or to the industry in which the company is engaged (such as a reduction in the demand for products or services in a particular industry).

 

Foreign Currency Transactions Risk – Foreign securities are often denominated in foreign currencies. As a result, the value of the Fund’s shares is affected by changes in exchange rates. The Fund may enter into foreign currency transactions to try to manage this risk. The Fund’s ability to use foreign currency transactions successfully depends on a number of factors, including the foreign currency transactions being available at prices that are not too costly, the availability of liquid markets and the ability of the Adviser to accurately predict the direction of changes in currency exchange rates.

 

Foreign Securities Risk – The Fund’s investments in securities of foreign issuers or issuers with significant exposure to foreign markets involve additional risk. Foreign countries in which the Fund may invest may have markets that are less liquid, less regulated and more volatile than U.S. markets. The value of the Fund’s investments may decline because of factors affecting the particular issuer as well as foreign markets and issuers generally, such as unfavorable government actions, and political or financial instability. Lack of information may also affect the value of these securities. The risks of foreign investment are heightened when investing in issuers of emerging market countries.

 

Growth Stock Risk – Growth stocks typically are very sensitive to market movements because their market prices tend to reflect future expectations. When it appears those expectations will not be met, the prices of growth stocks typically fall. Growth stocks as a group may be out of favor and underperform the overall equity market while the market concentrates on undervalued stocks.

 

Initial Public Offerings and Secondary Offerings Risk – The Fund may invest a portion of its assets in shares of IPOs or secondary offerings of an issuer. IPOs and secondary offerings may have a magnified impact on the performance of a Fund with a small asset base. The impact of IPOs and secondary offerings on a Fund’s performance likely will decrease as the Fund’s asset size increases, which could reduce a Fund’s returns. IPOs and secondary offerings may not be consistently available to the Fund for investing. IPO and secondary offering shares frequently are volatile in price due to the absence of a prior public market, the small number of shares available for trading and limited information about the issuer. Therefore, the Fund may hold IPO and secondary offering shares for a very short period of time. This may increase the

 

24

 

Alpine Emerging Markets Real Estate Fund (Continued)

 

turnover of the Fund and may lead to increased expenses for the Fund, such as commissions and transaction costs. In addition, IPO and secondary offering shares can experience an immediate drop in value if the demand for the securities does not continue to support the offering price.

 

Interest Rate Risk – Interest rates may rise resulting in a decrease in the value of securities held by the Fund, or may fall resulting in an increase in the value of such securities. Securities having longer maturities generally involve a greater risk of fluctuations in the value resulting from changes in interest rates.

 

Liquidity Risk – Some securities held by the Fund may be difficult to sell, or illiquid, particularly during times of market turmoil. Illiquid securities may also be difficult to value. If the Fund is forced to sell an illiquid asset to meet redemption requests or other cash needs, the Fund may be forced to sell at a loss.

 

Management Risk – The Adviser’s judgment about the quality, relative yield or value of, or market trends affecting, a particular security or sector, or about interest rates generally, may be incorrect. The Adviser’s security selections and other investment decisions might produce losses or cause the Fund to underperform when compared to other funds with similar investment objectives and strategies.

 

Market Risk – The price of a security held by the Fund may fall due to changing market, economic or political conditions.

 

Micro Capitalization Company Risk – Stock prices of micro capitalization companies are significantly more volatile, and more vulnerable to adverse business and economic developments than those of larger companies. Micro capitalization companies often have narrower markets for their goods and/or services and more limited managerial and financial resources than larger, more established companies, including small or medium capitalization companies.

 

Real Estate Investment Trusts (“REITs”) Risk – REITs’ share prices may decline because of adverse developments affecting the real estate industry including changes in interest rates. The returns from REITs may trail returns from the overall market. Additionally, there is always a risk that a given REIT will fail to qualify for favorable tax treatment.

 

Real Estate Securities Risk – Risks associated with investment in securities of companies in the real estate industry include: declines in the value of real estate; risks related to local economic conditions, overbuilding and increased competition; increases in property taxes and operating expenses; changes in zoning laws; casualty or condemnation losses; variations in rental income, neighborhood values or the appeal of properties to tenants; changes in interest rates and changes in general economic and market conditions.

 

Small and Medium Capitalization Company Risk – Securities of small or medium capitalization companies are more likely to experience sharper swings in market values, less liquid markets, in which it may be more difficult for the Adviser to sell at times and at prices that the Adviser believes appropriate and generally are more volatile than those of larger companies.

 

Undervalued Stock Risk – The Fund may pursue strategies that may include investing in securities, which, in the opinion of the Adviser, are undervalued. The identification of investment opportunities in undervalued securities is a difficult task and there is no assurance that such opportunities will be successfully recognized or acquired. While investments in undervalued securities offer opportunities for above-average capital appreciation, these investments involve a high degree of financial risk and can result in substantial losses.

 

Please refer to pages 3-4 for other important disclosures and definitions.

 

25

 

Alpine Global Infrastructure Fund

 

Comparative Annualized Returns as of 10/31/15 (Unaudited)
   1 Year  3 Years  5 Years  Since Inception(1)
Alpine Global Infrastructure Fund — Institutional Class  -7.90%   8.46%   7.95%   14.35% 
Alpine Global Infrastructure Fund — Class A (Without Load)  -8.15%   8.18%   N/A   11.00% 
Alpine Global Infrastructure Fund — Class A (With Load)  -13.20%   6.15%   N/A   9.38% 
S&P Global Infrastructure Index  -5.54%   7.56%   6.62%   9.12% 
MSCI All Country World Index  -0.03%   9.92%   7.68%   10.62% 
Lipper Global Infrastructure Funds Average(2)  -6.00%   8.58%   7.46%   10.91% 
Lipper Global Infrastructure Funds Ranking(2)  59/78   23/51  25/44  4/22
Gross Expense Ratio (Institutional Class): 1.21%(3)                
Net Expense Ratio (Institutional Class): 1.21%(3)                
Gross Expense Ratio (Class A): 1.46%(3)                
Net Expense Ratio (Class A): 1.46%(3)                

 

 

  (1) Institutional Class shares commenced on November 3, 2008 and Class A shares commenced on December 30, 2011. Returns for indices are since November 3, 2008.
  (2) The since inception data represents the period beginning November 6, 2008 (Institutional Class only).
  (3) As disclosed in the prospectus dated February 27, 2015.

 

Performance data quoted represents past performance and is not predictive of future results. Investment return and principal value of the Fund fluctuate, so that 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 1-888-785-5578. Performance data shown does not reflect the 1.00% redemption fee imposed on shares held for fewer than 60 days. If it did, total returns would be reduced. Returns for the Class A shares with sales charge reflect a maximum sales charge of 5.50%. Performance for the Class A shares without sales charges does not reflect this load.

 

S&P Global Infrastructure Index is a total return index that is designed to track 75 companies from around the world chosen to represent the listed infrastructure industry while maintaining liquidity and tradability. To create diversified exposure, the index includes three distinct infrastructure clusters: energy, transportation, and utilities. Net Total Return (NTR) indexes include reinvestments of all dividends minus taxes. MSCI All Country World Index is a total return, free-float adjusted market capitalization weighted index that captures large and mid-cap representation across 24 Developed and 21 Emerging Markets countries. With 2,483 constituents, the index covers approximately 85% of the global investable equity opportunity set. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. Source: MSCI. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder. The Lipper Global Infrastructure Funds Average is an average of funds that limit their investments to a specific industry (e.g. transportation, retailing, or paper, etc.) or ones that have not been classified into an existing investment classification. To create diversified exposure across the global listed infrastructure market, the index has balanced weights across three distinct infrastructure clusters: utilities, transportation, and energy. The S&P Global Infrastructure Index, MSCI All Country World Index and the Lipper Global Infrastructure Funds Average are unmanaged and do not reflect direct fees associated with a mutual fund, such as investment adviser fees; however, the Lipper Global Infrastructure Funds Average reflects fees charged by the underlying funds. The performance for the Alpine Global Infrastructure Fund reflects the deduction of fees for these value-added services. Lipper rankings for the periods shown are based on fund total returns with dividends and distributions reinvested and do not reflect sales charges. Investors cannot directly invest in an index.

 

Expense Ratios reflect the ratios reported in the Fund’s most recent prospectus. The Alpine Global Infrastructure Fund has a contractual expense waiver that continues through March 1, 2017. Where a Fund’s gross and net expense ratios are the same for the period reported, the contractual expense reimbursement level was not reached as of the end of that period. To the extent the Fund’s expenses were reduced by waivers, the Fund’s total returns were increased. In these cases, in the absence of the expense waivers, the Fund’s total returns would have been lower.

 

The Fund’s past performance benefited significantly from Initial Public Offerings (“IPOs”) and Secondary Offerings of certain issuers. There is no assurance that the Fund can replicate this performance in the future. Additionally, there is no guarantee that the Fund will be able to participate to the same degree in IPO/Secondary Offerings in the future.

 

26

 

Alpine Global Infrastructure Fund (Continued)

 

Portfolio Distributions* (Unaudited)

 

 

Top 10 Holdings* (Unaudited)
1.   Crown Castle International Corp. 2.58%
2.   The Geo Group, Inc. 2.47%
3.   Enbridge, Inc. 2.43%
4.   Ferrovial SA 2.39%
5.   Vinci SA 2.38%
6.   T-Mobile U.S., Inc. 2.13%
7.   American Tower Corp. 2.08%
8.   Eutelsat Communications SA 2.06%
9.   Union Pacific Corp. 2.05%
10.   Pattern Energy Group, Inc. 2.03%
 
* Portfolio Distributions percentages are based on total investments. Top 10 Holdings do not include short-term investments and percentages are based on total net assets. Portfolio holdings and sector distributions are as of 10/31/15 and are subject to change. Portfolio holdings are not recommendations to buy or sell any securities.


 

 

Value of a $10,000 Investment (Unaudited)

 

 

 

This chart represents a comparison of a hypothetical $10,000 investment in the Fund versus a similar investment 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. Investment performance reflects the waiver and recovery of certain fees, if applicable. Without the waiver and recovery of fees, the Fund’s total return 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 shares, when redeemed, may be worth more or less than their original cost.

 

27

 
Alpine Global Infrastructure Fund (Continued)

 

Commentary

 

Dear Shareholders:

 

For the fiscal year ended October 31, 2015, the Alpine Global Infrastructure Fund reported a -7.90% total return versus the S&P Global Infrastructure Index, which had a total return of -5.54%. All references in this letter to the Fund’s performance relate to the performance of the Fund’s Institutional Class.

 

Performance Drivers

 

Despite a bout of turbulence, global equities managed to eke out a modest gain during the 12 month period ended October 31, 2015. During the month of August 2015, the Chicago Board Options Exchange Volatility Index (VIX) spiked by over 200% from its trough to its peak, in a vivid reminder of the heightened volatility witnessed in 2011. There were a number of factors that increased investor unease, including the devaluation of the Chinese Renminbi, general weakness in emerging market economies, the uncertainty of when the Federal Reserve Bank would begin increasing interest rates, commodity weakness, and concerns over the potential for new drug price regulations in the United States. While the volatility did subside as autumn wore on, the dispersion in the performance of stocks worldwide remained stark. The total return of the S&P 500® Index, at 5.20% contrasted sharply with that of the MSCI Europe Index (up 0.17% in U.S. Dollar terms) and the MSCI Emerging Market Index (down 14.53%). With economic prospects in the US remaining relatively sanguine as compared to most other countries, particularly in Europe, the US trade-weighted Dollar Index rose by about 13% during the period, driven largely by the 12% depreciation in the Euro.

 

On a relative basis, the Fund outperformed in the energy sector due to its underweighting in the sector and the stocks within the sector outperforming the S&P Global Infrastructure Index. The energy sector was the worst performing sector in the index as MLPs declined. This was due to the drop in oil and natural gas prices and the market’s anticipation of an increase in interest rates by the Federal Reserve Bank. The Alerian MLP Index declined 30.08% over the fiscal year. The Fund underperformed in the transportation sector due to stock selection. The overweight in railroads hurt the performance as rail volumes declined during 2015.

 

We believe that the urbanization of emerging market countries will be an important driver of infrastructure development and spending. During the period, the Fund’s exposure to emerging markets continues to be

overweight versus its benchmark but we have reduced the position to below 20% of our total assets.

 

The Fund also participated in a number of initial public offerings (IPOs) both inside and outside of the infrastructure sector, that have contributed to the Fund’s total return. We cannot predict how long, if at all, these opportunities will continue to exist, but to the extent we consider IPOs to be attractively priced and available, the Fund will continue to participate in them.

 

Portfolio Analysis

 

The top five stocks contributing to the Fund’s absolute performance for the 12-month period ended October 31, 2015, based on contribution to total return were CRRC Corp. (“CRRC”), China Railway Construction Corp. (“CRCC”), Ferrovial (“FER”), Veolia Environment (“VIE”) and Vinci (“DG”).

 

CRRC Corp, formerly known as China CNR, is China’s only railway equipment manufacturer. At the end of 2014, the Chinese government merged China CNR and China CSR to form CRRC, which has a monopoly on domestic railway equipment manufacturing in China. We expect CRRC to continue to benefit from favorable government policy supporting domestic railway fixed asset investment and promoting the overseas export of China’s railway expertise via its “One Belt, One Road” program.
   
China Railway Construction Corp. is a diversified engineering and construction company in China. The stock’s outperformance was driven by China’s “One Belt, One Road” program, which promotes overseas railway and road construction by Chinese companies. In 2015, CRCC was involved in project awards in Nigeria, Saudi Arabia, Dhaka and Indonesia, with potential future awards in Thailand, Poland, India, Latin America and the United States. A potential merger with China Railway Group, similar to China CNR and China CSR, could be an additional catalyst.
   
Ferrovial is a global transportation infrastructure company based in Spain. The stock performed well as vehicle traffic recovered in Spain. FER’s key asset, the 407 toll road in Canada, continued to grow revenues as traffic remained inelastic to increases in tariffs. The company’s new “managed lane” toll roads in Texas have also been ramping up in line with expectations. The decision to build a third runway at Heathrow airport in the UK could be a positive catalyst.


 

28

 

Alpine Global Infrastructure Fund (Continued)

 

Veolia Environment is a global water and waste-water company based in France. VIE is in the midst of a turnaround and is nearing the completion of three-year cost reduction plan. In addition, the company has made progress reducing its debt, improving free cash flow and selling its non-core assets. VIE is expected to present a new three-year cost cutting plan in December 2015. We continue to believe that the company will have operational leverage to a recovery in European waste volumes.
   
Vinci is a global transportation infrastructure and engineering and construction company based in France. DG’s French toll road assets benefited from improved vehicle traffic and the motorway stimulus plan approved by the French government in early 2015. The company’s Portugal airport performed well and it also won new airport concessions in Chile and Japan during the year. We continue to wait for a recovery in French construction but believe that Vinci has optimized its cost base for the current environment.

 

The following companies had the largest adverse impact on the performance of the Fund based on contribution to return for the fiscal year ended October 31, 2015: OHL Mexico (“OHLMEX”), Empresas ICA (“ICA”), Cosan Logistica (“RLOG”), Abengoa (“ABG”) and Grana y Montero (“GRAM”).

 

OHL Mexico is a transportation infrastructure company in Mexico. The company suffered from allegations of impropriety involving government officials. Numerous audits, including an investigation by the Mexican National Banking and Securities Commission, did not produce any evidence of illegal activity. As a result, we continue to believe that confidence in the company will be restored after all investigations are finalized. Earlier in 2015, OHLMEX sold a 24.99% stake in its largest toll road asset, Conmex, to IFM Investors, a global fund manager, providing a positive valuation marker for the stock. In addition, vehicle traffic for its Mexico road portfolio has been exceptionally strong, up 14% year-over-year through the first nine months of 2015.
   
ICA is a construction and concession company focused on Mexico but also with assets in Latin America. The company underperformed over fears of contract cancellations and slowdown of new contract awards, given the contraction in public spending with lower oil prices. In addition, the appreciation of the US dollar relative to the Mexican Peso also had a negative translation effect on its US-dollar denominated debt.
Cosan Logistica is a railway concession operator in Brazil, formed through the merger of America Latina Logistica and Rumo Logistica Operadora Multimodal. Stock performance suffered as financial results continued to deteriorate, partly as a result of the Brazilian economy slowing. New management has laid out short- and long-term plans to optimize costs and deploy new capital.
   
Abengoa is a global engineering & construction company based in Spain. ABG underperformed as a result of liquidity concerns that surfaced in November 2014 but became more apparent in the July 2015. We have fully divested our position in the stock.
   
Grana y Montero is a Peruvian construction company. The company continued to underperform on weakness in new contract opportunities given weak public and private investment levels in Peru.

 

Summary and Outlook

 

As we look toward 2016, we see a market environment that remains fairly uncertain. While the U.S. economy appears to be in a sustained growth trajectory, it is challenged by a partisan environment in Washington D.C. and numerous external headwinds including soft export markets and geopolitical uncertainties relating to key trading partners. It is entirely plausible that the U.S. stock market will be stuck in a holding pattern, supported on the one hand by a benign macro environment and solid corporate earnings growth, but at the same time wrestling with the prospect of the first Federal Funds rate hike in many years.

 

The setting in Europe appears a bit more favorable. Europe is benefiting from multiple tailwinds: growth is picking up, as evidenced by the persistent strength of the Markit Index of Manufacturing in the Eurozone, the exchange rate has remained far lower than in 2014, and corporate profits are improving. And in contrast to the Fed’s pulling back of the monetary punch bowl, the party is just getting started in Europe, with its own version of quantitative easing now under way.

 

The Asia-Pacific region is mixed, but there are some bright spots. Prime Minister Shinzo Abe’s ‘Abenomics’ appears to be gaining traction in Japan, with the labor market strengthening and corporate earnings growth amongst the most buoyant in the world. And while China’s transition to a consumer-led economy has been a bumpy ride, policy-makers are taking full advantage of their formidable array of tools, including monetary, fiscal and exchange-rate policy, and we are beginning to see some green shoots.


 

29

 

Alpine Global Infrastructure Fund (Continued)

 

We launched the Alpine Global Infrastructure Fund because we believe that there may be special opportunities to benefit from global spending in infrastructure over the next several decades. Even before the financial crisis began to wreak havoc on the budgets of governments and municipalities, the privatization of infrastructure assets began to take place. Now, even more so, we believe there will be an accelerated effort to privatize these assets as public entities will not have the funds to maintain their current infrastructure assets nor to build new infrastructure assets to meet the needs of a growing population. Throughout the world, the owners of infrastructure are primarily government entities. However, over the last several decades, due to the large cost of building and maintaining these facilities, there has been a movement towards privatization of infrastructure assets. In Canada, Australia, the United Kingdom, and throughout Europe and Asia, roads, airports, and seaports have been privatized.

 

Since the launch of our Fund, the equity markets have been volatile as the world’s economies suffered from the effects of the financial crisis. We believe the amount of debt that governments have on their balance sheets and the austerity measures that have been enacted will likely lead to slower growth for years to come. The uncertainty over the European debt crisis along with the questionable growth prospects of China has led to extremely volatile markets and, as a result, we have continued to hedge a portion of our Euro currency exposure during the period to partially help offset the

Euro’s impact on the value of the Fund’s Euro-denominated holdings. We believe that these market conditions may create many new opportunities for investors in infrastructure stocks that have the potential for more stable and predictable cash flows. Our portfolio of companies is not immune to swings in share prices, but volatile markets may provide an opportunity to continue buying what we believe are high-quality companies with solid balance sheets and good growth prospects at what we believe are inexpensive valuations. In the future, governments may be compelled to sell off infrastructure assets and utilize public/private funds using build/operate/transfer models to finance new projects.

 

We recently completed a merger. The merger did not affect the strategy of the Fund. We are pleased with the structure of our portfolio. We believe the Fund should be well positioned to take advantage of any increase in global infrastructure spending. We continue to believe that the combination of urbanization, rising standards of living and population growth can propel infrastructure spending for decades to come. We will continue to adapt our investment approach as economic conditions change and look forward to discussing the portfolio and the prospects for the Fund in future communications. We appreciate your trust and investment in the Fund.

 

Sincerely,

 

Joshua E. Duitz

Samuel A. Lieber

Portfolio Managers


 

This letter represents the opinions of the Fund’s management and is subject to change, is not guaranteed and should not be considered a recommendation to buy or sell any security. The information provided is not intended to be, and is not, a forecast of future events, a guarantee of future results, or investment advice. Views expressed may vary from those of the firm as a whole.

 

Past performance is no guarantee of future results.

 

 

 

Mutual fund investing involves risk. Principal loss is possible. The Fund is subject to risks including the following:

 

Concentration Risk – The Fund’s strategy of concentrating in companies in a specific industry means that its performance will be closely tied to the performance of a particular market segment. The Fund’s concentration in these companies may present more risks than if it were broadly diversified over numerous industries and sectors of the economy. A downturn in these companies would have a larger impact on the Fund than on a mutual fund that does not concentrate in such companies. At times, the performance of these companies will lag the performance of other industries or the broader market as a whole.

 

Currency Risk – The value of investments in securities denominated in foreign currencies increases or decreases as the rates of exchange between those currencies and the U.S. dollar change. Currency conversion costs and currency fluctuations could erase investment gains or add to investment losses. Currency exchange rates can be volatile, and are affected by factors such as general economic conditions, the actions of the U.S. and foreign governments or central banks, the imposition of currency controls and speculation.

 

Dividend Strategy Risk – The Fund’s strategy of investing in dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Companies that issue dividend paying-stocks are not

 

30

 

Alpine Global Infrastructure Fund (Continued)

 

required to continue to pay dividends on such stocks. Therefore, there is the possibility that such companies could reduce or eliminate the payment of dividends in the future.

 

Emerging Market Securities Risk – The risks of foreign investments are heightened when investing in issuers in emerging market countries. Emerging market countries tend to have economic, political and legal systems that are less fully developed and are less stable than those of more developed countries. They are often particularly sensitive to market movements because their market prices tend to reflect speculative expectations. Low trading volumes may result in a lack of liquidity and in extreme price volatility.

 

Equity Securities Risk – The stock or other security of a company may not perform as well as expected, and may decrease in value, because of factors related to the company (such as poorer than expected earnings or certain management decisions) or to the industry in which the company is engaged (such as a reduction in the demand for products or services in a particular industry).

 

Foreign Currency Transactions Risk – Foreign securities are often denominated in foreign currencies. As a result, the value of the Fund’s shares is affected by changes in exchange rates. The Fund may enter into foreign currency transactions to try to manage this risk. The Fund’s ability to use foreign currency transactions successfully depends on a number of factors, including the foreign currency transactions being available at prices that are not too costly, the availability of liquid markets and the ability of the Adviser to accurately predict the direction of changes in currency exchange rates.

 

Foreign Securities Risk – The Fund’s investments in securities of foreign issuers or issuers with significant exposure to foreign markets involve additional risk. Foreign countries in which the Fund may invest may have markets that are less liquid, less regulated and more volatile than U.S. markets. The value of the Fund’s investments may decline because of factors affecting the particular issuer as well as foreign markets and issuers generally, such as unfavorable government actions, and political or financial instability. Lack of information may also affect the value of these securities. The risks of foreign investment are heightened when investing in issuers of emerging market countries.

 

Growth Stock Risk – Growth stocks are stocks of companies believed to have above-average potential for growth in revenue and earnings. Growth stocks typically are very sensitive to market movements because their market prices tend to reflect future expectations. When it appears those expectations will not be met, the prices of growth stocks typically fall. Growth stocks as a group may be out of favor and underperform the overall equity market while the market concentrates on undervalued stocks.

 

Infrastructure-Related Investment Risk – Because the Fund concentrates its investments in infrastructure-related entities, the Fund has greater exposure to the potential adverse economic, regulatory, political and other changes affecting such entities. Infrastructure-related entities are subject to a variety of factors that may adversely affect their business or operations, including high interest costs in connection with capital construction programs, costs associated with environmental and other regulations, the effects of economic slowdown and surplus capacity, increased competition from other providers of services, uncertainties concerning the availability of fuel at reasonable prices, the effects of energy conservation policies and other factors. Additionally, infrastructure-related entities may be subject to regulation by various governmental authorities and may also be affected by governmental regulation of rates charged to customers, service interruption due to environmental, operational or other mishaps and the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards.

 

Initial Public Offerings and Secondary Offerings Risk – The Fund may invest a portion of its assets in shares of IPOs or secondary offerings of an issuer. IPOs and secondary offerings may have a magnified impact on the performance of a Fund with a small asset base. The impact of IPOs and secondary offerings on a Fund’s performance likely will decrease as the Fund’s asset size increases, which could reduce a Fund’s returns. IPOs and secondary offerings may not be consistently available to the Fund for investing. IPO and secondary offering shares frequently are volatile in price due to the absence of a prior public market, the small number of shares available for trading and limited information about the issuer. Therefore, the Fund may hold IPO and secondary offering shares for a very short period of time. This may increase the turnover of the Fund and may lead to increased expenses for the Fund, such as commissions and transaction costs. In addition, IPO and secondary offering shares can experience an immediate drop in value if the demand for the securities does not continue to support the offering price.

 

Management Risk – The Adviser’s judgment about the quality, relative yield or value of, or market trends affecting, a particular security or sector, or about interest rates generally, may be incorrect. The Adviser’s security selections and other

 

31

 

Alpine Global Infrastructure Fund (Continued)

 

investment decisions might produce losses or cause the Fund to underperform when compared to other funds with similar investment objectives and strategies.

 

Market Risk – The price of a security held by the Fund may fall due to changing market, economic or political conditions.

 

Portfolio Turnover Risk – High portfolio turnover necessarily results in greater transaction costs which may reduce Fund performance.

 

Small and Medium Capitalization Company Risk – Securities of small or medium capitalization companies are more likely to experience sharper swings in market values, less liquid markets, in which it may be more difficult for the Adviser to sell at times and at prices that the Adviser believes appropriate and generally are more volatile than those of larger companies.

 

Undervalued Stock Risk – The Fund may pursue strategies that may include investing in securities, which, in the opinion of the Adviser, are undervalued. The identification of investment opportunities in undervalued securities is a difficult task and there is no assurance that such opportunities will be successfully recognized or acquired. While investments in undervalued securities offer opportunities for above-average capital appreciation, these investments involve a high degree of financial risk and can result in substantial losses.

 

Please refer to pages 3-4 for other important disclosures and definitions.

 

32

 

Alpine International Real Estate Equity Fund

 

 

Schedule of Portfolio Investments
October 31, 2015

 

    Security    
Shares   Description  Value 
              
Common Stocks—91.0%     
Asia—47.7%     
China—9.0%     
 380,000   China Overseas Land & Investment, Ltd.  $1,235,517 
 1,448,261   China Resources Land, Ltd.   3,783,873 
 755,096   China State Construction International Holdings, Ltd.   1,149,606 
 240,000   Dalian Wanda Commercial Properties Co., Ltd.-Class H (a)   1,607,101 
 200,000   E-House China Holdings, Ltd.- ADR (b)   1,240,000 
 1,656,667   Greenland Hong Kong Holdings, Ltd. (c)   703,227 
 700,000   Longfor Properties Co., Ltd.   942,895 
 250,000   Shimao Property Holdings, Ltd.   439,321 
 1,958,227   Shui On Land, Ltd.   540,682 
         11,642,222 
India—8.9%     
 1,947,083   DB Realty, Ltd. (c)   1,851,882 
 1,000,000   DLF, Ltd.   1,776,724 
 2,290,373   Hirco PLC (c)(d)(e)   176,542 
 500,000   Housing Development & Infrastructure, Ltd. (c)   550,922 
 185,910   Kolte-Patil Developers, Ltd.   498,453 
 228,000   Oberoi Realty, Ltd.   991,972 
 374,877   Prestige Estates Projects, Ltd.   1,162,581 
 111,902   Sobha, Ltd.   558,268 
 2,000,000   South Asian Real Estate PLC (c)(d)(e)(f)   3,853,998 
 8,955   Yatra Capital, Ltd. (c)   54,259 
         11,475,601 
Japan—18.0%     
 15,000   Daito Trust Construction Co., Ltd. (b)   1,633,380 
 496   GLP J-REIT   494,890 
 330,691   Hulic Co., Ltd. (b)   3,113,160 
 800,000   Ichigo, Inc.   2,081,711 
 6,538   Invincible Investment Corp.   3,895,601 
 872,312   Kenedix, Inc.   3,180,718 
 200,000   Mitsubishi Estate Co., Ltd. (b)   4,320,875 
 166,725   Mitsui Fudosan Co., Ltd.   4,573,297 
         23,293,632 
Philippines—5.2%     
 2,097,077   Ayala Land, Inc.   1,605,729 
 30,000,000   Megaworld Corp.   3,005,126 
 4,500,070   SM Prime Holdings, Inc.   2,076,068 
         6,686,923 
Singapore—2.8%     
 2,479,000   Banyan Tree Holdings, Ltd.   884,788 
 1,701,420   Global Logistic Properties, Ltd.   2,720,523 
         3,605,311 
Thailand—1.5%     
 1,114,600   Central Pattana PCL   1,441,529 
 550,392   Minor International PCL   471,975 
         1,913,504 
    Security    
Shares   Description  Value 
              
United Arab Emirates—2.3%     
 1,345,383   DAMAC Properties Dubai Co. PJSC  $1,087,881 
 181,820   Emaar Malls Group PJSC (c)   154,940 
 1,000,000   Emaar Properties PJSC   1,756,058 
         2,998,879 
     Total Asia (Cost $85,757,033)   61,616,072 
Europe—34.8%     
France—2.4%     
 70,193   Nexity SA (b)   3,109,895 
Germany—2.6%     
 40,000   ADO Properties SA (a)(c)   1,022,675 
 28,000   DIC Asset AG   275,634 
 2,047,900   Sirius Real Estate, Ltd. (b)   1,171,026 
 5,000   TAG Immobilien AG   64,742 
 43,548   TLG Immobilien AG   819,835 
         3,353,912 
Greece—0.0% (g)     
 100,000   Dolphin Capital Investors, Ltd. (c)   26,785 
Ireland—5.1%     
 828,000   Dalata Hotel Group PLC (b)(c)   4,115,508 
 518,484   Green REIT PLC (b)   897,988 
 166,666   Hibernia REIT PLC (b)   246,687 
 1,022,471   Irish Residential Properties REIT PLC   1,259,284 
         6,519,467 
Poland—0.0%     
 3,265,000   Nanette Real Estate Group NV (c)(d)(e)   11,489 
Spain—3.3%     
 75,000   Hispania Activos Inmobiliarios SA (c)   1,129,891 
 111,632   Lar Espana Real Estate Socimi SA   1,178,459 
 150,000   Merlin Properties Socimi SA   1,923,288 
         4,231,638 
Sweden—2.2%     
 100,877   JM AB (b)   2,855,026 
United Kingdom—19.2%     
 320,270   Great Portland Estates PLC (b)   4,391,711 
 45,688   Kennedy Wilson Europe Real Estate PLC   842,374 
 90,000   Land Securities Group PLC (b)   1,857,781 
 252,084   Londonmetric Property PLC (b)   657,532 
 2,356,215   LXB Retail Properties PLC (b)   3,341,752 
 1,600,756   Regus PLC (b)   8,257,006 
 120,000   Savills PLC (b)   1,694,526 
 150,000   The British Land Co. PLC (b)   2,012,943 
 167,416   The Unite Group PLC (b)   1,716,288 
         24,771,913 
     Total Europe (Cost $36,538,860)   44,880,125 


 

The accompanying notes are an integral part of these financial statements.

 

33

 

Alpine International Real Estate Equity Fund

 

 

Schedule of Portfolio Investments—Continued
October 31, 2015

 

    Security    
Shares   Description  Value 
              
Common Stocks—continued     
North & South America—8.5%     
Brazil—2.5%     
 45,717   BR Malls Participacoes SA  $132,769 
 220,535   Cyrela Commercial Properties SA Empreendimentos e Participacoes   542,395 
 986,829   Direcional Engenharia SA   905,829 
 912,132   General Shopping Brasil SA (c)   588,923 
 251,300   JHSF Participacoes SA   114,033 
 155,394   Sao Carlos Empreendimentos e Participacoes SA   926,751 
         3,210,700 
Mexico—4.4%     
 500,000   Concentradora Fibra Hotelera Mexicana SA de CV   484,326 
 766,024   Corp. Inmobiliaria Vesta SAB de CV   1,255,853 
 600,979   Fibra Uno Administracion SA de CV   1,317,818 
 1,000,000   Grupo GICSA SA de CV (c)   984,393 
 1,257,643   Hoteles City Express SAB de CV (c)   1,698,653 
         5,741,043 
United States—1.6%     
 74,984   Extended Stay America, Inc. (b)   1,439,693 
 77,750   VEREIT, Inc.   642,215 
         2,081,908 
     Total North & South America
(Cost $25,934,992)
   11,033,651 
     Total Common Stocks
(Cost $148,230,885)
   117,529,848 
    Security    
Shares   Description  Value 
          
Equity-Linked Structured Notes—3.0%     
Asia—3.0%     
India—3.0%     
 240,454   Dewan Housing Finance Corp.- Macquarie Bank, Ltd.  $826,106 
 540,000   Phoenix Mills, Ltd.-Macquarie Bank, Ltd.   2,743,591 
 60,000   Prestige Estates Projects, Ltd.- Macquarie Bank, Ltd.   186,074 
 30,000   Sobha, Ltd.-Macquarie Bank, Ltd.   149,667 
         3,905,438 
     Total Asia (Cost $4,004,825)   3,905,438 
     Total Equity-Linked Structured Notes
(Cost $4,004,825)
   3,905,438 
Investment Companies—0.6%  
Asia—0.6%     
India—0.6%     
 6,976,577   Trinity Capital PLC (b)(c)   752,856 
     Total Asia (Cost $10,032,091)   752,856 
     Total Investment Companies
(Cost $10,032,091)
   752,856 
Warrants—0.0% (g)     
Asia—0.0% (g)     
Thailand—0.0% (g)     
 25,018        
     Minor International PCL
Expiration: November 03, 2017
Exercise Price: THB 36.36 (c)
   2,251 
     Total Asia (Cost $0)   2,251 
     Total Warrants (Cost $0)   2,251 
Total Investments
(Cost $162,267,801) (h)—94.6%
   122,190,393 
Other Assets in Excess of Liabilities—5.4%   6,989,406 
TOTAL NET ASSETS 100.0%  $129,179,799 


 

The accompanying notes are an integral part of these financial statements.

 

34

 

Alpine International Real Estate Equity Fund

 

 

Schedule of Portfolio Investments—Continued
October 31, 2015

 

 

Percentages are stated as a percent of net assets.

 

(a) Restricted under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been determined to be liquid under guidelines established by the Board of Trustees. Liquid securities restricted under Rule 144A comprised 2.0% of the Fund’s net assets.
(b) All or a portion of the security has been designated as collateral for the line of credit.
(c) Non-income producing security.
(d) Illiquid security.
(e) Security fair valued in accordance with procedures approved by the Board of Trustees. These securities comprised 3.1% of the Fund’s net assets.
(f) Private placement.
(g) Amount is less than 0.05%.
(h) See Note 9 for the cost of investments for federal tax purposes.

AB—Aktiebolag is the Swedish equivalent of a corporation.

ADR—American Depositary Receipt

AG—Aktiengesellschaft is a German term that refers to a corporation that is limited by shares, i.e., owned by shareholders.

NV—Naamloze Vennootschap is the Dutch term for a public limited liability corporation.

PCL—Public Company Limited

PJSC—Public Joint Stock Company

PLC—Public Limited Company

REIT—Real Estate Investment Trust

SA—Generally designates corporations in various countries, mostly those employing the civil law.

SA de CV—Sociedad Anonima de Capital Variable is the Spanish equivalent to Variable Capital Company.

SAB de CV—Sociedad Anonima Bursátil de Capital Variable is the Spanish equivalent to Variable Capital Company.

THB—Thailand Baht

 

The accompanying notes are an integral part of these financial statements.

 

35

 

Alpine Realty Income & Growth Fund

 

Schedule of Portfolio Investments
October 31, 2015

 

    Security    
Shares   Description  Value 
          
Real Estate Investment Trusts—98.3%     
Apartments—16.4%     
 15,000   American Campus Communities, Inc.  $608,550 
 25,625   AvalonBay Communities, Inc.   4,480,019 
 21,000   Camden Property Trust   1,549,590 
 85,023   Campus Crest Communities, Inc.   563,702 
 68,360   Equity Residential (a)   5,285,595 
 23,665   Essex Property Trust, Inc. (a)   5,216,713 
 36,900   UDR, Inc.   1,271,574 
         18,975,743 
Diversified—6.0%     
 26,114   American Assets Trust, Inc.   1,100,966 
 37,087   Cousins Properties, Inc.   372,354 
 88,700   Crombie Real Estate Investment Trust   881,166 
 46,117   Vornado Realty Trust (a)   4,637,064 
         6,991,550 
Health Care—6.5%     
 23,928   Care Capital Properties, Inc.   788,427 
 30,413   Omega Healthcare Investors, Inc.   1,049,857 
 47,344   Sabra Health Care REIT, Inc.   1,073,762 
 55,712   Ventas, Inc. (a)   2,992,849 
 24,803   Welltower, Inc.   1,608,971 
         7,513,866 
Lodging—5.4%     
 37,842   Chatham Lodging Trust   866,204 
 39,658   Chesapeake Lodging Trust   1,092,181 
 70,000   DiamondRock Hospitality Co.   817,600 
 16,000   Hospitality Properties Trust   429,440 
 105,000   Host Hotels & Resorts, Inc.   1,819,650 
 12,000   LaSalle Hotel Properties (a)   352,920 
 15,300   Pebblebrook Hotel Trust   522,954 
 25,000   Strategic Hotels & Resorts, Inc. (b)   352,500 
         6,253,449 
Manufactured Homes—1.5%     
 28,900   Equity LifeStyle Properties, Inc.   1,747,872 
Mortgage & Finance—1.5%     
 46,944   Apollo Commercial Real Estate Finance, Inc.   779,740 
 50,000   Starwood Property Trust, Inc.   1,004,500 
         1,784,240 
Net Lease—0.4%     
 9,012   EPR Properties   511,972 
Office-Industrial Buildings—31.8%     
 51,528   Alexandria Real Estate Equities, Inc. (a)   4,624,123 
 49,611   Boston Properties, Inc.   6,243,544 
 37,671   CoreSite Realty Corp.   2,070,022 
 18,169   CyrusOne, Inc.   641,002 
 52,600   Digital Realty Trust, Inc.   3,890,296 
 59,509   Douglas Emmett, Inc.   1,818,000 
 17,000   Duke Realty Corp.   351,900 
 40,352   DuPont Fabros Technology, Inc.   1,294,896 
 45,455   Empire State Realty Trust, Inc.- Class A   810,008 
    Security    
Shares   Description  Value 
           
Office-Industrial Buildings—continued     
 10,714   Hudson Pacific Properties, Inc.  $306,099 
 38,773   Kilroy Realty Corp. (a)   2,552,814 
 23,708   Liberty Property Trust   806,546 
 15,000   Mack-Cali Realty Corp.   326,400 
 35,608   Paramount Group, Inc.   632,754 
 99,400   Prologis, Inc.   4,247,362 
 35,000   SL Green Realty Corp. (a)   4,151,700 
 44,537   STAG Industrial, Inc.   913,899 
 51,058   Terreno Realty Corp.   1,142,678 
         36,824,043 
REIT - Infrastructure—1.6%     
 17,500   American Tower Corp.   1,789,025 
Retail Centers—20.9%     
 78,191   CBL & Associates Properties, Inc.   1,140,025 
 25,075   DDR Corp.   421,260 
 12,100   Federal Realty Investment Trust (a)   1,736,229 
 76,000   General Growth Properties, Inc.   2,200,200 
 50,000   Kimco Realty Corp.   1,338,500 
 56,295   Simon Property Group, Inc. (a)   11,341,190 
 19,106   Taubman Centers, Inc. (a)   1,470,780 
 30,928   The Macerich Co. (a)   2,620,839 
 23,058   Urban Edge Properties   547,397 
 29,670   Weingarten Realty Investors   1,060,999 
 22,897   WP GLIMCHER, Inc.   266,063 
         24,143,482 
Storage—6.3%     
 16,000   Extra Space Storage, Inc.   1,267,840 
 26,265   Public Storage (a)   6,026,767 
         7,294,607 
     Total Real Estate Investment Trusts
(Cost $56,891,339)
   113,829,849 
Common Stocks—2.0%     
Diversified—0.5%     
 25,000   Forest City Enterprises, Inc.- Class A (b)   552,500 
Lodging—1.5%     
 22,000   Starwood Hotels & Resorts Worldwide, Inc. (a)   1,757,140 
     Total Common Stocks
(Cost $1,684,241)
   2,309,640 
Preferred Stocks—1.3%     
Mortgage & Finance—0.5%     
 22,167   NorthStar Realty Finance Corp.- Series B, 8.250%   523,584 
Retail Centers—0.8%     
 37,843   CBL & Associates Properties, Inc.- Series D, 7.375%   958,185 
     Total Preferred Stocks
(Cost $1,166,419)
   1,481,769 
Total Investments (Cost $59,741,999) (c)—101.6%   117,621,258 
Liabilities in Excess of Other Assets—(1.6)%   (1,808,775)
TOTAL NET ASSETS 100.0%  $115,812,483 


 

 

Percentages are stated as a percent of net assets.

 

(a) All or a portion of the security has been designated as collateral for the line of credit.
(b) Non-income producing security.
(c) See Note 9 for the cost of investments for federal tax purposes.

REIT—Real Estate Investment Trust

 

The accompanying notes are an integral part of these financial statements.

 

36

 

Alpine Emerging Markets Real Estate Fund

 

 

Schedule of Portfolio Investments
October 31, 2015

 

    Security    
Shares   Description  Value 
          
Common Stocks—88.8%     
Asia—71.4%     
China—43.3%     
 160,000   China Jinmao Holdings Group, Ltd.  $44,177 
 155,000   China Overseas Land & Investment, Ltd.   503,961 
 125,357   China Resources Land, Ltd.   327,520 
 20,000   China State Construction International Holdings, Ltd.   30,449 
 84,000   China Vanke Co., Ltd.-Class H   197,466 
 108,000   CIFI Holdings Group Co., Ltd.   23,131 
 130,333   Country Garden Holdings Co., Ltd.   49,775 
 22,000   Dalian Wanda Commercial Properties Co., Ltd.-Class H (a)   147,318 
 12,000   E-House China Holdings, Ltd.-ADR   74,400 
 127,000   Evergrande Real Estate Group, Ltd.   96,840 
 150,000   Fantasia Holdings Group Co., Ltd.   17,805 
 98,904   Greenland Hong Kong Holdings, Ltd. (b)   41,983 
 15,000   Greentown China Holdings, Ltd. (b)   13,122 
 20,000   Guangzhou R&F Properties Co., Ltd.-Class H   19,895 
 110,000   KWG Property Holding, Ltd.   79,478 
 60,000   Longfor Properties Co., Ltd.   80,819 
 54,000   Shenzhen Investment, Ltd.   21,947 
 46,000   Shimao Property Holdings, Ltd.   80,835 
 121,000   Shui On Land, Ltd.   33,409 
 125,000   Sino-Ocean Land Holdings, Ltd.   72,575 
 66,000   Sunac China Holdings, Ltd.   40,789 
 140,000   Yuexiu Property Co., Ltd.   24,205 
         2,021,899 
Hong Kong—0.6%     
 3,800   Cheung Kong Property Holdings, Ltd.   26,770 
Indonesia—4.4%     
 20,000   First Real Estate Investment Trust   17,703 
 500,000   PT Alam Sutera Realty TBK   14,210 
 260,159   PT Bumi Serpong Damai TBK   30,792 
 100,649   PT Ciputra Surya TBK   16,655 
 90,000   PT Lippo Cikarang TBK (b)   52,603 
 1,005,714   PT Pakuwon Jati TBK   31,301 
 400,000   PT Summarecon Agung TBK   40,767 
         204,031 
Malaysia—0.2%     
 15,000   SP Setia BHD Group   11,522 
Philippines—9.4%     
 205,307   Ayala Land, Inc.   157,203 
 500,000   Megaworld Corp.   50,086 
 120,000   Robinsons Land Corp.   78,428 
 280,000   SM Prime Holdings, Inc.   129,176 
 200,000   Vista Land & Lifescapes, Inc.   23,793 
         438,686 
Singapore—1.9%     
 55,000   Global Logistic Properties, Ltd.   87,943 
Thailand—3.6%     
 40,000   Amata Corp. PCL   15,407 
 90,000   AP Thailand PCL   15,183 
 88,000   BTS Group Holdings PCL-NVDR   23,876 
    Security    
Shares   Description  Value 
          
Thailand—continued     
 42,000   Central Pattana PCL  $54,319 
 50,000   Land & Houses PCL   12,019 
 30,000   Minor International PCL   25,726 
 25,000   Pruksa Real Estate PCL   19,681 
         166,211 
United Arab Emirates—8.0%     
 110,000   Aldar Properties PJSC   68,282 
 38,354   DAMAC Properties Dubai Co. PJSC   31,013 
 60,611   Emaar Malls Group PJSC (b)   51,651 
 127,000   Emaar Properties PJSC   223,019 
         373,965 
     Total Asia (Cost $3,279,497)   3,331,027 
Europe—2.9%     
Greece—0.2%     
 1,000   Grivalia Properties REIC AE   9,094 
Spain—1.3%     
 4,000   Melia Hotels International SA   57,885 
Turkey—1.4%     
 52,809   Emlak Konut Gayrimenkul Yatirim Ortakligi AS   51,262 
 29,338   Is Gayrimenkul Yatirim Ortakligi AS   15,095 
         66,357 
     Total Europe (Cost $135,266)   133,336 
Middle East/Africa—6.0%     
Egypt—1.3%     
 4,183   Medinet Nasr Housing (b)   12,476 
 10,000   Orascom Hotels & Development (b)   9,340 
 15,355   Six of October Development & Investment (b)   17,114 
 26,000   Talaat Moustafa Group   21,726 
         60,656 
South Africa—4.7%     
 20,000   Capital Property Fund   23,325 
 10,000   Emira Property Fund, Ltd.   13,296 
 55,000   Growthpoint Properties, Ltd.   100,827 
 65,000   Redefine Properties, Ltd.   54,296 
 20,000   Vukile Property Fund, Ltd.   27,676 
         219,420 
     Total Middle East/Africa
(Cost $337,510)
   280,076 
North & South America—8.5%     
Argentina—0.5%     
 3,100   TGLT SA-ADR (c)   24,468 
Brazil—1.3%     
 10,049   BR Malls Participacoes SA   29,184 
 5,724   Direcional Engenharia SA   5,254 
 6,000   Even Construtora e Incorporadora SA   6,223 
 2,011   Ez Tec Empreendimentos e Participacoes SA   6,622 
 4,538   General Shopping Brasil SA (b)   2,930 
 6,000   MRV Engenharia e Participacoes SA   11,544 
         61,757 
Chile—0.7%     
 19,000   Parque Arauco SA   31,821 


 

The accompanying notes are an integral part of these financial statements.

 

37

 

Alpine Emerging Markets Real Estate Fund

 

 

Schedule of Portfolio Investments—Continued
October 31, 2015

 

    Security    
Shares   Description  Value 
          
North & South America—continued     
Mexico—6.0%     
 23,937   Concentradora Fibra Hotelera Mexicana SA de CV  $23,187 
 40,244   Corp. Inmobiliaria Vesta SAB de CV   65,978 
 15,582   Fibra Shop Portafolios Inmobiliarios SAPI de CV   15,971 
 42,000   Fibra Uno Administracion SA de CV   92,097 
 20,000   Grupo GICSA SA de CV (b)   19,688 
 25,000   Hoteles City Express SAB de CV (b)   33,766 
 17,000   Prologis Property Mexico SA de CV   28,282 
         278,969 
     Total North & South America
(Cost $538,295)
   397,015 
     Total Common Stocks
(Cost $4,290,568)
   4,141,454 
Equity-Linked Structured Notes—8.0%     
Asia—8.0%     
India—7.4%     
 30,000   DB Realty, Ltd.-Macquarie Bank, Ltd. (b)   28,533 
 16,978   Dewan Housing Finance Corp.- Macquarie Bank, Ltd.   58,330 
 44,000   Housing Development & Infrastructure, Ltd.-Macquarie Bank, Ltd. (b)   48,481 
 14,000   Kolte-Patil Developers, Ltd.- Macquarie Bank, Ltd.   37,536 
 15,000   Oberoi Realty, Ltd.-Macquarie Bank, Ltd.   65,261 
 9,310   Phoenix Mills, Ltd.-Macquarie Bank, Ltd.   47,302 
 8,000   Prestige Estates Projects, Ltd.- Macquarie Bank, Ltd.   24,810 
 7,000   Sobha, Ltd.-Macquarie Bank, Ltd.   34,922 
         345,175 
    Security    
Shares   Description  Value 
          
Vietnam—0.6%     
 47,437   HAGL JSC-GDR-Macquarie Bank, Ltd. (b)  $29,946 
     Total Asia (Cost $462,844)   375,121 
     Total Equity-Linked Structured Notes (Cost $462,844)   375,121 
           
Principal
Amount
         
           
Convertible Foreign Bonds—0.0% (d)     
North & South America—0.0% (d)     
Brazil—0.0% (d)     
 $80,000   PDG Realty SA Empreendimentos e Participacoes-Series 8, 0.000%, 9/19/16 (Brazilian Real) (e)(f)   208 
     Total North & South America
(Cost $28,699)
   208 
     Total Convertible Foreign Bonds
(Cost $28,699)
   208 
Total Investments
(Cost $4,782,111) (g)—96.8%
   4,516,783 
Other Assets in Excess of Liabilities—3.2%   149,866 
TOTAL NET ASSETS 100.0%  $4,666,649 


 

The accompanying notes are an integral part of these financial statements.

 

38

 

Alpine Emerging Markets Real Estate Fund

 

 

Schedule of Portfolio Investments—Continued
October 31, 2015

 

 

Percentages are stated as a percent of net assets.

 

(a) Restricted under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been determined to be liquid under guidelines established by the Board of Trustees. Liquid securities restricted under Rule 144A comprised 3.2% of the Fund’s net assets.
(b) Non-income producing security.
(c) Reg S—Security exempt from registration under Regulation S of the Securities Act of 1933, which exempts from registration securities offered and sold outside the United States. Security may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933. As of October 31, 2015, these securities amounted to a total value of $24,468 which comprised 0.5% of the Fund’s net assets.
(d) Amount is less than 0.05%.
(e) Represents a zero-coupon bond.
(f) Security fair valued in accordance with procedures approved by the Board of Trustees. These securities comprised 0.0% of the Fund’s net assets.
(g) See Note 9 for the cost of investments for federal tax purposes.

ADR—American Depositary Receipt

AS—Anonim Sirketi is the Turkish term for joint stock company.

BHD—Malaysian equivalent to incorporated.

NVDR—Non-Voting Depositary Receipts

PCL—Public Company Limited

PJSC—Public Joint Stock Company

SA—Generally designates corporations in various countries, mostly those employing the civil law.

SA de CV—Sociedad Anonima de Capital Variable is the Spanish equivalent to Variable Capital Company.

SAB de CV—Sociedad Anonima Bursátil de Capital Variable is the Spanish equivalent to Variable Capital Company.

SAPI de CV—Sociedad Anonima Promotora de Inversion de Capital Variable is the Spanish equivalent to Variable Capital Corporation.

 

The accompanying notes are an integral part of these financial statements.

 

39

 

Alpine Global Infrastructure Fund

 

 

Schedule of Portfolio Investments
October 31, 2015

 

    Security    
Shares   Description  Value 
          
Common Stocks—91.8%     
Asia—11.0%     
China—6.4%     
 1,966,000   Beijing Enterprises Water Group, Ltd.  $1,565,068 
 781,000   China Everbright International, Ltd.   1,263,611 
 505,000   China Merchants Holdings International Co., Ltd.   1,681,031 
 839,000   China Railway Construction Corp., Ltd.-Class H   1,262,191 
 1,218,771   China State Construction International Holdings, Ltd.   1,855,533 
 1,305,000   COSCO Pacific, Ltd.   1,481,692 
 974,200   CRRC Corp., Ltd.-Class H   1,249,393 
 472,000   ENN Energy Holdings, Ltd.   2,700,849 
 1,342,100   Zhejiang Expressway Co., Ltd.- Class H   1,662,344 
         14,721,712 
Indonesia—1.3%     
 5,016,200   PT Jasa Marga Persero TBK   1,773,765 
 2,166,700   PT Tower Bersama Infrastructure TBK (a)   1,131,829 
         2,905,594 
Japan—1.8%     
 42,300   East Japan Railway Co.   4,055,780 
Philippines—0.9%     
 1,162,700   International Container Terminal Services, Inc.   2,048,756 
Thailand—0.6%     
 5,115,000   BTS Rail Mass Transit Growth Infrastructure Fund   1,452,492 
     Total Asia (Cost $23,921,098)   25,184,334 
Europe—31.3%    
France—10.4%     
 26,000   Aeroports de Paris   3,269,370 
 142,800   Eutelsat Communications SA   4,712,472 
 252,600   Groupe Eurotunnel SE   3,540,200 
 179,100   Suez Environnement Co.   3,409,159 
 146,700   Veolia Environnement SA   3,415,924 
 80,600   Vinci SA   5,440,221 
         23,787,346 
Germany—2.5%     
 51,800   Fraport AG Frankfurt Airport Services Worldwide   3,286,701 
 32,800   HeidelbergCement AG   2,444,725 
         5,731,426 
Italy—4.3%     
 125,000   Atlantia SpA   3,463,899 
 736,300   Enel SpA   3,397,386 
 265,149   Societa Iniziative Autostradali e Servizi SpA   3,041,087 
         9,902,372 
Netherlands—3.1%     
 879,800   Koninklijke KPN NV   3,231,358 
 98,300   Koninklijke Vopak NV   3,953,597 
         7,184,955 
Portugal—1.2%     
 330,100   NOS SGPS   2,743,876 
    Security    
Shares   Description  Value 
          
Spain—5.0%     
 237,170   Abertis Infraestructuras SA  $3,940,749 
 220,000   Cellnex Telecom SAU (a)(b)   3,817,546 
 75,299   Obrascon Huarte Lain SA   603,962 
 314,300   Saeta Yield SA   3,114,037 
         11,476,294 
United Kingdom—4.8%     
 124,800   Abengoa Yield PLC   2,312,544 
 43,900   BT Group PLC-SP ADR   3,146,313 
 216,300   Ferrovial SA   5,461,136 
         10,919,993 
     Total Europe
(Cost $67,331,651)
   71,746,262 
North & South America—49.5%     
Brazil—2.0%     
 754,000   CCR SA   2,369,600 
 341,900   Cia de Saneamento Basico do Estado de Sao Paulo-ADR   1,500,941 
 2,150,100   Cosan Logistica SA   724,775 
         4,595,316 
Canada—4.5%     
 33,000   Canadian Pacific Railway, Ltd.   4,636,500 
 130,300   Enbridge, Inc.   5,569,338 
         10,205,838 
Mexico—3.5%     
 500,000   Empresas ICA SAB de CV-SP ADR (a)   770,000 
 3,188,844   OHL Mexico SAB de CV (a)   4,214,391 
 246,000   Promotora y Operadora de Infraestructura SAB de CV (a)   3,092,834 
         8,077,225 
Peru—0.3%     
 183,371   Grana y Montero SA-SP ADR   753,655 
United States—39.2%     
 46,500   American Tower Corp.   4,753,695 
 96,400   AT&T, Inc.   3,230,364 
 84,200   CMS Energy Corp.   3,037,094 
 39,000   Comcast Corp.-Class A   2,442,180 
 80,100   Corrections Corp. of America   2,282,850 
 69,200   Crown Castle International Corp.   5,913,832 
 56,000   DISH Network Corp.-Class A (a)   3,526,320 
 46,600   Dominion Resources, Inc.   3,328,638 
 35,400   DTE Energy Co.   2,888,286 
 44,900   Eversource Energy   2,287,206 
 92,400   Exelon Corp.   2,579,808 
 52,200   Genesee & Wyoming, Inc.- Class A (a)   3,502,620 
 77,100   ITC Holdings Corp.   2,522,712 
 41,500   Kansas City Southern   3,434,540 
 172,000   MasTec, Inc. (a)   2,884,440 
 34,800   NextEra Energy, Inc.   3,572,568 
 141,900   NRG Energy, Inc.   1,829,091 
 240,000   NRG Yield, Inc.-Class A   3,295,200 
 199,000   Pattern Energy Group, Inc.   4,654,610 
 127,000   Progressive Waste Solutions, Ltd.   3,054,350 
 46,800   SemGroup Corp.-Class A   2,131,740 
 128,800   T-Mobile U.S., Inc. (a)   4,880,232 
 175,500   The Geo Group, Inc.   5,663,385 
 117,600   The Williams Cos., Inc.   4,638,144 


 

The accompanying notes are an integral part of these financial statements.

 

40

 

Alpine Global Infrastructure Fund

 

 

Schedule of Portfolio Investments—Continued
October 31, 2015

 

Shares   Security
Description
  Value 
          
Common Stocks—continued     
North & South America—continued     
United States—continued     
 230,200   TravelCenters of America LLC (a)  $2,651,904 
 52,600   Union Pacific Corp.   4,699,810 
         89,685,619 
     Total North & South America
(Cost $122,979,133)
   113,317,653 
     Total Common Stocks
(Cost $214,231,882)
   210,248,249 
Equity-Linked Structured Notes—1.2%     
Asia—1.2%     
India—1.2%     
 600,000   Adani Ports and Special Economic Zone-Macquarie Bank, Ltd.   2,713,291 
     Total Equity-Linked Structured Notes (Cost $1,413,287)   2,713,291 
Principal
Amount
   Security
Description
  Value 
          
Short-Term Investment—1.4%     
 $3,184,000   State Street Eurodollar Time Deposit, 0.01%  $3,184,000 
     Total Short-Term Investment
(Cost $3,184,000)
   3,184,000 
Total Investments (Cost $218,829,169) (c) —94.4%   216,145,540 
Other Assets in Excess of Liabilities—5.6%   12,710,294 
TOTAL NET ASSETS 100.0%  $228,855,834 


 

 

Percentages are stated as a percent of net assets.

 

(a) Non-income producing security.
(b) Restricted under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been determined to be liquid under guidelines established by the Board of Trustees. Liquid securities restricted under Rule 144A comprised 1.7% of the Fund’s net assets.
(c) See Note 9 for the cost of investments for federal tax purposes.

ADR—American Depositary Receipt

AG—Aktiengesellschaft is a German term that refers to a corporation that is limited by shares, i.e., owned by shareholders.

NV—Naamloze Vennootschap is the Dutch term for a public limited liability corporation.

PLC—Public Limited Company

SA—Generally designates corporations in various countries, mostly those employing the civil law.

SAB de CV—Sociedad Anonima Bursátil de Capital Variable is the Spanish equivalent to Variable Capital Company.

SAU—Sociedad Anonima Unipersonal

SE—SE Regulation. A European Company which can operate on a Europe-wide basis and be governed by Community law directly applicable in all Member States.

SP ADR—Sponsored American Depositary Receipt

SpA—Societa’ Per Azioni is an Italian shared company.

 

The accompanying notes are an integral part of these financial statements.

 

41

 

Alpine Mutual Funds

 

Statements of Assets and Liabilities
October 31, 2015

 

   International  Realty
   Real Estate  Income &
   Equity Fund  Growth Fund
ASSETS:              
Investments, at value(1)    $122,190,393     $117,621,258 
Foreign currencies, at value(2)     61,555       
Receivable from investment securities sold     14,965,457      2,188,058 
Dividends and interest receivable     154,429      83,489 
Receivable from capital shares issued     1,090      6,350 
Unrealized appreciation on forward currency contracts     409,087       
Prepaid expenses and other assets     14,636      13,316 
Total assets     137,796,647      119,912,471 
               
LIABILITIES:              
Payable for investment securities purchased     6,582,282       
Unrealized depreciation on forward currency contracts     257,436       
Payable for capital shares redeemed     212,644      25,617 
Payable for line of credit (Note 2)     1,182,026      3,785,166 
Accrued expenses and other liabilities:              
Investment advisory fees (Note 6)     109,305      97,350 
Distribution fees (Note 5)     1,286      12,191 
Trustee fees     4,746      3,866 
Other     267,123      175,798 
Total liabilities     8,616,848      4,099,988 
Net Assets    $129,179,799     $115,812,483 
               
NET ASSETS REPRESENTED BY:              
Paid-in-capital    $1,267,719,875     $61,072,208 
Undistributed (accumulated) net investment income (loss)     5,739,895       
Accumulated net realized loss from investments and foreign currency transactions     (1,104,342,257)     (3,138,598)
Net unrealized depreciation on:              
Investments     (40,077,408)     57,879,259 
Foreign currency translations     139,694      (386)
Net Assets    $129,179,799     $115,812,483 
               
Net asset value              
Institutional Class              
Net assets    $129,048,187     $112,926,592 
Shares outstanding     5,885,911      5,133,283 
Net asset value, offering price and redemption price per share*    $21.92     $22.00 
Class A              
Net assets    $131,612     $2,885,891 
Shares outstanding     6,041      131,349 
Net asset value per share    $21.79     $21.97 
Maximum offering price per share (net asset value plus sales charge of 5.50% of offering price)    $23.06     $23.25 
*    If applicable, redemption price per share may be reduced by a redemption fee.              
(1) Total cost of investments    $162,267,801     $59,741,999 
(2) Total cost of foreign currencies    $61,555     $ 

 

The accompanying notes are an integral part of these financial statements.

 

42

 

Alpine Mutual Funds

 

Statements of Assets and Liabilities—Continued
October 31, 2015

 

   Emerging
Markets Real
Estate Fund
  Global
Infrastructure
Fund
             
ASSETS:              
Investments, at value(1)    $4,516,783     $216,145,540 
Foreign currencies, at value(2)     1,826      7,755,846 
Cash     96,546      763 
Receivable from investment securities sold     78,648      7,209,932 
Dividends and interest receivable     3,604      251,041 
Receivable from capital shares issued     451      905,424 
Unrealized appreciation on forward currency contracts           473,119 
Due from Adviser     13,592      43,020 
Prepaid expenses and other assets     364      155,091 
Total assets     4,711,814      232,939,776 
               
LIABILITIES:              
Payable for investment securities purchased     2,169      2,555,469 
Unrealized depreciation on forward currency contracts           143,415 
Payable for capital shares redeemed           875,598 
Accrued expenses and other liabilities:              
Investment advisory fees (Note 6)     3,972      204,266 
Distribution fees (Note 5)     1,673      19,521 
Trustee fees     190      9,735 
Audit fees     16,687       
Custody fees     8,723       
Other     11,751      275,938 
Total liabilities     45,165      4,083,942 
Net Assets    $4,666,649     $228,855,834 
               
NET ASSETS REPRESENTED BY:              
Paid-in-capital    $5,972,825     $239,402,426 
Undistributed (accumulated) net investment income (loss)     86,251      (5,825)
Accumulated net realized loss from investments and foreign currency transactions     (1,126,731)     (8,151,002)
Net unrealized depreciation on:              
Investments     (265,328)     (2,683,629)
Foreign currency translations     (368)     293,864 
Net Assets    $4,666,649     $228,855,834 
               
Net asset value              
Institutional Class              
Net assets    $4,263,554     $207,034,267 
Shares outstanding     293,282      11,726,457 
Net asset value, offering price and redemption price per share*    $14.54     $17.66 
Class A              
Net assets    $403,095     $21,821,567 
Shares outstanding     27,802      1,237,954 
Net asset value per share    $14.50     $17.63 
Maximum offering price per share (net asset value plus sales charge of 5.50% of offering price)    $15.34     $18.66 
*    If applicable, redemption price per share may be reduced by a redemption fee.              
(1) Total cost of investments    $4,782,111     $218,829,169 
(2) Total cost of foreign currencies    $1,825     $7,787,832 

 

The accompanying notes are an integral part of these financial statements.

 

43

 

Alpine Mutual Funds

 

Statements of Operations
For the year ended October 31, 2015

 

   International  Realty
   Real Estate  Income &
   Equity Fund  Growth Fund
INVESTMENT INCOME:              
Dividend income    $11,461,587     $3,937,032 
Less: Foreign taxes withheld     (145,608)     (11,241)
Total investment income     11,315,979      3,925,791 
               
EXPENSES:              
Investment advisory fee (Note 6)     1,433,335      1,170,897 
Transfer agent fees     99,926      171,447 
Accounting and custody fees     132,177      25,844 
Audit and tax fees     71,092      35,743 
Interest (Note 2)     37,582      46,137 
Registration and filing fees     35,898      41,067 
Administration fee (Note 6)     36,055      29,363 
Printing and mailing fees     31,025      32,033 
Legal fees     47,646      8,846 
Trustee fees     13,754      13,926 
Distribution fees - Class A (Note 5)     336      7,044 
Other fees     113,505      7,831 
Total expenses     2,052,331      1,590,178 
Net investment income     9,263,648      2,335,613 
               
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:              
Net realized gain/(loss) from:              
Investments     (15,315,166)     2,753,414 
Foreign currency transactions     791,686      (4,833)
Net realized gain/(loss) from investments and foreign currency     (14,523,480)     2,748,581 
Change in net unrealized appreciation/(depreciation) on:              
Investments     (6,431,766)     2,939,428 
Foreign currency translations     (1,075,712)     688 
Change in net unrealized appreciation/(depreciation) on investments and foreign currency     (7,507,478)     2,940,116 
Net gain/(loss) on investments and foreign currency     (22,030,958)     5,688,697 
Increase (decrease) in net assets from operations    $(12,767,310)    $8,024,310 

 

The accompanying notes are an integral part of these financial statements.

 

44

 

Alpine Mutual Funds

 

Statements of Operations—Continued
For the year ended October 31, 2015

 

   Emerging
Markets Real
Estate Fund
  Global
Infrastructure
Fund
INVESTMENT INCOME:              
Dividend income    $221,475     $10,874,397 
Less: Foreign taxes withheld     (9,592)     (312,096)
Interest income     21      418 
Total investment income     211,904      10,562,719 
               
EXPENSES:              
Investment advisory fee (Note 6)     54,202      2,168,645 
Transfer agent fees     12,618      248,329 
Accounting and custody fees     21,817      71,460 
Audit and tax fees     31,822      41,655 
Distribution fees - Class A (Note 5)     1,475      63,897 
Printing and mailing fees     2,181      62,056 
Registration and filing fees     32,467      31,292 
Administration fee (Note 6)     1,336      53,423 
Legal fees     3,862      33,925 
Trustee fees     466      27,867 
Interest (Note 2)     50      5,048 
Other fees     168      24,247 
Total expenses     162,464      2,831,844 
Less: Fee waivers and/or expense reimbursements (Note 6)     (87,769)     (43,020)
Net expenses     74,695      2,788,824 
Net investment income     137,209      7,773,895 
               
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:              
Net realized gain/(loss) from:              
Investments     (199,695)     (6,924,183)
Foreign currency transactions     5,827      3,417,088 
Net realized loss from investments and foreign currency     (193,868)     (3,507,095)
Change in net unrealized depreciation on:              
Investments     (649,578)     (22,913,458)
Foreign currency translations     (5,635)     (1,137,512)
Change in net unrealized depreciation on investments and foreign currency     (655,213)     (24,050,970)
Net loss on investments and foreign currency     (849,081)     (27,558,065)
Decrease in net assets from operations    $(711,872)    $(19,784,170)

 

The accompanying notes are an integral part of these financial statements.

 

45

 

Alpine Mutual Funds

 

Statements of Changes in Net Assets

 

   International Real Estate Equity Fund
   Year Ended
October 31, 2015
  Year Ended
October 31, 2014†
OPERATIONS:              
Net investment income    $9,263,648     $423,309 
Net realized gain (loss) from:              
Investments     (15,315,166)     6,896,920 
Foreign currency transactions     791,686      644,958 
Change in net unrealized appreciation/(depreciation) on:              
Investments     (6,431,766)     (9,652,482)
Foreign currency translations     (1,075,712)     1,211,387 
Decrease in net assets from operations     (12,767,310)     (475,908)
               
DISTRIBUTIONS TO SHAREHOLDERS:              
Distributions to Institutional Class Shareholders:              
From net investment income           (399,726)
Decrease in net assets from distributions to shareholders           (399,726)
               
CAPITAL SHARE TRANSACTIONS (NOTE 3):              
Net proceeds from shares sold     1,203,520      3,002,371 
Dividends reinvested           366,356 
Redemption fees (Note 2)     406      1,764 
Cost of shares redeemed     (28,628,334)     (39,848,948)
Decrease in net assets from capital share transactions     (27,424,408)     (36,478,457)
Net decrease in net assets     (40,191,718)     (37,354,091)
               
NET ASSETS:              
Beginning of year     169,371,517      206,725,608 
End of year*    $129,179,799     $169,371,517 
* Including undistributed (accumulated) net investment income (loss) of:    $5,739,895     $(3,336,449)

 

 

 

Beginning with the year ended October 31, 2015, the Fund was audited by Ernst & Young LLP. The previous year was audited by another independent registered public accounting firm.

 

The accompanying notes are an integral part of these financial statements.

 

46

 

Alpine Mutual Funds

 

Statements of Changes in Net Assets—Continued

 

   Realty Income & Growth Fund
   Year Ended
October 31, 2015
  Year Ended
October 31, 2014†
OPERATIONS:              
Net investment income    $2,335,613     $2,843,684 
Net realized gain (loss) from:              
Investments     2,753,414      1,804,409 
Foreign currency transactions     (4,833)     (4,613)
Change in net unrealized appreciation/(depreciation) on:              
Investments     2,939,428      16,359,773 
Foreign currency translations     688      (1,084)
Increase in net assets from operations     8,024,310      21,002,169 
               
DISTRIBUTIONS TO SHAREHOLDERS:              
Distributions to Institutional Class Shareholders:              
From net investment income     (2,476,035)     (2,652,918)
From net realized gain on investments     (1,393,428)     (1,345,262)
Distributions to Class A Shareholders:              
From net investment income     (61,047)     (51,895)
From net realized gain on investments     (34,355)     (28,558)
Decrease in net assets from distributions to shareholders     (3,964,865)     (4,078,633)
               
CAPITAL SHARE TRANSACTIONS (NOTE 3):              
Net proceeds from shares sold     8,702,292      10,147,042 
Dividends reinvested     3,504,090      3,629,157 
Redemption fees (Note 2)     1,823      6,982 
Cost of shares redeemed     (15,880,024)     (15,247,898)
Decrease in net assets from capital share transactions     (3,671,819)     (1,464,717)
Net increase in net assets     387,626      15,458,819 
               
NET ASSETS:              
Beginning of year     115,424,857      99,966,038 
End of year*    $115,812,483     $115,424,857 
* Including undistributed (accumulated) net investment income (loss) of:    $     $127,290 

 

 
Beginning with the year ended October 31, 2015, the Fund was audited by Ernst & Young LLP. The previous year was audited by another independent registered public accounting firm.

 

The accompanying notes are an integral part of these financial statements.

 

47

 

Alpine Mutual Funds

 

Statements of Changes in Net Assets—Continued

 

   Emerging Markets Real Estate Fund
   Year Ended  Year Ended
   October 31, 2015  October 31, 2014†
OPERATIONS:              
Net investment income    $137,209     $151,766 
Net realized gain (loss) from:              
Investments     (199,695)     (742,405)
Foreign currency transactions     5,827      (5,486)
Change in net unrealized appreciation/(depreciation) on:              
Investments     (649,578)     394,899 
Foreign currency translations     (5,635)     5,048 
Decrease in net assets from operations     (711,872)     (196,178)
               
DISTRIBUTIONS TO SHAREHOLDERS:              
Distributions to Institutional Class Shareholders:              
From net investment income     (190,847)     (102,193)
From net realized gain on investments           (57,004)
Distributions to Class A Shareholders:              
From net investment income     (25,990)     (8,882)
From net realized gain on investments           (5,932)
Decrease in net assets from distributions to shareholders     (216,837)     (174,011)
               
CAPITAL SHARE TRANSACTIONS (NOTE 3):              
Net proceeds from shares sold     486,774      1,485,628 
Dividends reinvested     189,793      170,729 
Redemption fees (Note 2)     42      9,658 
Cost of shares redeemed     (1,198,244)     (4,937,898)
Decrease in net assets from capital share transactions     (521,635)     (3,271,883)
Net decrease in net assets     (1,450,344)     (3,642,072)
               
NET ASSETS:              
Beginning of year     6,116,993      9,759,065 
End of year*    $4,666,649     $6,116,993 
* Including undistributed net investment income of:    $86,251     $156,831 

 

 
Beginning with the year ended October 31, 2015, the Fund was audited by Ernst & Young LLP. The previous year was audited by another independent registered public accounting firm.

 

The accompanying notes are an integral part of these financial statements.

 

48

 

Alpine Mutual Funds

 

Statements of Changes in Net Assets—Continued

 

   Global Infrastructure Fund
   Year Ended
October 31, 2015
  Year Ended
October 31, 2014†
OPERATIONS:              
Net investment income    $7,773,895     $5,668,445 
Net realized gain (loss) from:              
Investments     (6,924,183)     1,241,283 
Foreign currency transactions     3,417,088      (330,059)
Change in net unrealized appreciation/(depreciation) on:              
Investments     (22,913,458)     9,101,302 
Foreign currency translations     (1,137,512)     1,777,090 
Increase (decrease) in net assets from operations     (19,784,170)     17,458,061 
               
DISTRIBUTIONS TO SHAREHOLDERS:              
Distributions to Institutional Class Shareholders:              
From net investment income     (6,786,261)     (5,793,200)
From net realized gain on investments     (1,788,105)     (2,409,615)
From tax return of capital     (416,438)      
Distributions to Class A Shareholders:              
From net investment income     (910,486)     (811,945)
From net realized gain on investments     (239,611)     (388,294)
From tax return of capital     (51,090)      
Decrease in net assets from distributions to shareholders     (10,191,991)     (9,403,054)
               
CAPITAL SHARE TRANSACTIONS (NOTE 3):              
Net proceeds from shares sold     95,574,887      97,805,598 
Proceeds from shares issued in connection with the tax-free transfer of assets from Alpine Cyclical Advantage Property Fund (Note 10)     53,861,934       
Dividends reinvested     6,479,854      6,081,424 
Redemption fees (Note 2)     29,502      14,500 
Cost of shares redeemed     (110,218,226)     (44,070,456)
Increase in net assets from capital share transactions     45,727,951      59,831,066 
Net increase in net assets     15,751,790      67,886,073 
               
NET ASSETS:              
Beginning of year     213,104,044      145,217,971 
End of year*    $228,855,834     $213,104,044 
* Including accumulated net investment loss of:    $(5,825)    $(24,624)

 

 

Beginning with the year ended October 31, 2015, the Fund was audited by Ernst & Young LLP. The previous year was audited by another independent registered public accounting firm.

 

The accompanying notes are an integral part of these financial statements.

 

49

 

Alpine Mutual Funds

 

Financial Highlights

(For a share outstanding throughout each year)

 

   International Real Estate Equity Fund 
   Years Ended October 31, 
   2015   2014†   2013†   2012†   2011† 
Institutional Class:                         
Net asset value per share, beginning of year  $23.84   $23.87   $22.23   $20.53   $25.75 
Income from investment operations:                         
Net investment income (loss)   1.48    (0.09)   (0.35)   0.01    0.30 
Net realized and unrealized gain (loss)   (3.40)   0.11    2.09    2.23    (4.84)
Total from investment operations   (1.92)   0.02    1.74    2.24    (4.54)
Redemption fees   0.00(a)   0.00(a)   0.00(a)   0.00(a)   0.00(a)
Less distributions:                         
From net investment income       (0.05)   (0.10)   (0.54)   (0.68)
Total distributions       (0.05)   (0.10)   (0.54)   (0.68)
Net asset value per share, end of year  $21.92   $23.84   $23.87   $22.23   $20.53 
Total return   (8.05)%   0.08%   7.83%   11.57%   (18.17)%
Ratios/Supplemental Data:                         
Net Assets at end of year (000)  $129,048   $169,226   $206,580   $299,965   $355,433 
Ratio of total expenses to average net assets (b)   1.43%   1.60%   1.48%   1.47%   1.37%
Ratio of net investment income (loss) to average net assets   6.46%   0.23%   (0.32)%   0.51%   1.89%
Portfolio turnover (c)   28%   23%   19%   12%   20%
 
Beginning with the year ended October 31, 2015, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(a) The amount is less than $0.005 per share.
(b) Ratio of total expenses to average net assets excluding interest expense was 1.41%, 1.57%, 1.44%, 1.39% and 1.26% for the years ended October 31, 2015, 2014, 2013, 2012 and 2011, respectively.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole, without distinguishing between classes of shares issued.

 

The accompanying notes are an integral part of these financial statements.

 

50

 

Alpine Mutual Funds

 

Financial Highlights—Continued

(For a share outstanding throughout each period)

 

   International Real Estate Equity Fund 
               Period 
               Ended 
   Years Ended October 31,   October 31, 
   2015   2014†   2013†   2012†(a) 
Class A:                    
Net asset value per share, beginning of period  $23.75   $23.81   $22.19   $17.92 
Income from investment operations:                    
Net investment income (loss)   1.34    (0.00)(b)   (0.12)   0.08 
Net realized and unrealized gain (loss)   (3.30)   (0.06)   1.79    4.19 
Total from investment operations   (1.96)   (0.06)   1.67    4.27 
Redemption fees       0.00(b)   0.00(b)    
Less distributions:                    
From net investment income           (0.05)    
Total distributions           (0.05)    
Net asset value per share, end of period  $21.79   $23.75   $23.81   $22.19 
Total return   (8.25)%   (0.25)%   7.53%   23.83%(c)
Ratios/Supplemental Data                    
Net Assets at end of period (000)  $132   $146   $146   $128 
Ratio of total expenses to average net assets (d)   1.68%   1.85%   1.73%   1.72%(e)
Ratio of net investment income (loss) to average net assets   6.00%   %   (0.46)%   0.48%(e)
Portfolio turnover (f)   28%   23%   19%   12%
 
Beginning with the year ended October 31, 2015, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(a) Class A commenced operations on December 30, 2011.
(b) The amount is less than $0.005 per share.
(c) Not annualized.
(d) Ratio of total expenses to average net assets excluding interest expense was 1.66%, 1.82% and 1.69% for the years ended October 31, 2015, 2014 and 2013, respectively, and 1.64% for the period ended October 31, 2012.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole, without distinguishing between classes of shares issued.

 

The accompanying notes are an integral part of these financial statements.

 

51

 

Alpine Mutual Funds

 

Financial Highlights—Continued
(For a share outstanding throughout each year)

 

   Realty Income & Growth Fund 
   Years Ended October 31, 
   2015   2014†   2013†   2012†   2011† 
Institutional Class:                         
Net asset value per share, beginning of year  $21.29   $18.17   $17.37   $15.56   $14.79 
Income from investment operations:                         
Net investment income   0.44    0.52    0.54    0.46    0.48 
Net realized and unrealized gain   1.02    3.35    1.01    2.07    1.01 
Total from investment operations   1.46    3.87    1.55    2.53    1.49 
Redemption fees   0.00(a)   0.00(a)   0.00(a)   0.00(a)   0.00(a)
Less distributions:                         
From net investment income   (0.48)   (0.50)   (0.65)   (0.72)   (0.72)
From net realized gains   (0.27)   (0.25)   (0.10)        
Total distributions   (0.75)   (0.75)   (0.75)   (0.72)   (0.72)
Net asset value per share, end of year  $22.00   $21.29   $18.17   $17.37   $15.56 
Total return   6.98%   21.90%   9.02%   16.44%   10.23%
Ratios/Supplemental Data:                         
Net Assets at end of year (000)  $112,927   $112,984   $98,798   $106,304   $101,322 
Ratio of total expenses to average net assets:                         
Before waivers and/or expense reimbursements (b)   1.35%   1.47%   1.50%   1.41%   1.32%
After waivers and/or expense reimbursements (c)   1.35%   1.42%   1.43%   1.41%   1.32%
Ratio of net investment income to average net assets   2.00%   2.71%   2.99%   2.73%   3.09%
Portfolio turnover (d)   32%   32%   33%   28%   59%
 
Beginning with the year ended October 31, 2015, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(a) The amount is less than $0.005 per share.
(b) Ratio of total expenses to average net assets excluding interest expense before waivers and/or expense reimbursements was 1.31%, 1.40%, 1.42%, 1.33% and 1.23% for the years ended October 31, 2015, 2014, 2013, 2012 and 2011, respectively.
(c) Ratio of total expenses to average net assets excluding interest expense after waivers and/or expense reimbursements was 1.31%, 1.35%, 1.35%, 1.33% and 1.23% for the years ended October 31, 2015, 2014, 2013, 2012 and 2011, respectively.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole, without distinguishing between classes of shares issued.

 

The accompanying notes are an integral part of these financial statements.

 

52

 

Alpine Mutual Funds

 

Financial Highlights—Continued

(For a share outstanding throughout each period)

 

   Realty Income & Growth Fund 
               Period 
               Ended 
   Years Ended October 31,   October 31, 
   2015   2014†   2013†   2012†(a) 
Class A:                    
Net asset value per share, beginning of period  $21.26   $18.16   $17.35   $15.60 
Income from investment operations:                    
Net investment income   0.33    0.46    0.59    0.32 
Net realized and unrealized gain   1.08    3.34    0.93    1.95 
Total from investment operations   1.41    3.80    1.52    2.27 
Redemption fees   0.00(b)   0.00(b)   0.00(b)   0.00(b)
Less distributions:                    
From net investment income   (0.43)   (0.45)   (0.61)   (0.52)
From net realized gains   (0.27)   (0.25)   (0.10)    
Total distributions   (0.70)   (0.70)   (0.71)   (0.52)
Net asset value per share, end of period  $21.97   $21.26   $18.16   $17.35 
Total return   6.72%   21.51%   8.85%   14.53%(c)
Ratios/Supplemental Data                    
Net Assets at end of period (000)  $2,886   $2,441   $1,168   $115 
Ratio of total expenses to average net assets:                    
Before waivers and/or expense reimbursements (d)   1.60%   1.72%   1.75%   1.66%(e)
After waivers and/or expense reimbursements (f)   1.60%   1.67%   1.67%   1.66%(e)
Ratio of net investment income to average net assets   1.72%   2.42%   3.00%   2.18%(e)
Portfolio turnover (g)   32%   32%   33%   28%
 
Beginning with the year ended October 31, 2015, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(a) Class A commenced operations on December 30, 2011.
(b) The amount is less than $0.005 per share.
(c) Not annualized.
(d) Ratio of total expenses to average net assets excluding interest expense before waivers and/or expense reimbursements was 1.56%, 1.65% and 1.67% for the years ended October 31, 2015, 2014 and 2013, respectively, and 1.58% for the period ended October 31, 2012.
(e) Annualized.
(f) Ratio of total expenses to average net assets excluding interest expense after waivers and/or expense reimbursements was 1.56%, 1.60% and 1.59% for the years ended October 31, 2015, 2014 and 2013, respectively, and 1.58% for the period ended October 31, 2012.
(g) Portfolio turnover is calculated on the basis of the Fund as a whole, without distinguishing between classes of shares issued.

 

The accompanying notes are an integral part of these financial statements.

 

53

 

Alpine Mutual Funds

 

Financial Highlights—Continued
(For a share outstanding throughout each year)

 

   Emerging Markets Real Estate Fund 
   Years Ended October 31, 
   2015   2014†   2013†   2012†   2011† 
Institutional Class:                         
Net asset value per share, beginning of year  $17.30   $17.37   $17.16   $14.68   $19.20 
Income from investment operations:                         
Net investment income   0.43    0.50    0.25    0.12    0.40 
Net realized and unrealized gain (loss)   (2.55)   (0.18)   0.13    2.36    (3.47)
Total from investment operations   (2.12)   0.32    0.38    2.48    (3.07)
Redemption fees   0.00(a)   0.03    0.04    0.00(a)   0.00(a)
Less distributions:                         
From net investment income   (0.64)   (0.27)   (0.21)       (0.08)
From net realized gains       (0.15)           (1.37)
Total distributions   (0.64)   (0.42)   (0.21)       (1.45)
Net asset value per share, end of year  $14.54   $17.30   $17.37   $17.16   $14.68 
Total return   (12.59)%   2.29%   2.36%   16.89%   (17.52)%
Ratios/Supplemental Data:                         
Net Assets at end of year (000)  $4,264   $5,332   $9,051   $4,288   $4,289 
Ratio of total expenses to average net assets:                         
Before waivers and/or expense reimbursements (b)   2.97%   2.38%   2.35%   2.95%   2.42%
After waivers and/or expense reimbursements (c)   1.35%   1.36%   1.35%   1.35%   1.35%
Ratio of net investment income to average net assets   2.54%   2.39%   1.22%   0.97%   0.54%
Portfolio turnover (d)   78%   117%   120%   102%   58%
 
Beginning with the year ended October 31, 2015, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(a) The amount is less than $0.005 per share.
(b) Ratio of total expenses to average net assets excluding interest expense before waivers and/or expense reimbursements was 2.97%, 2.37%, 2.35%, 2.95% and 2.42% for the years ended October 31, 2015, 2014, 2013, 2012 and 2011, respectively.
(c) Ratio of total expenses to average net assets excluding interest expense after waivers and/or expense reimbursements was 1.35%, 1.35%, 1.35%, 1.35% and 1.35% for the years ended October 31, 2015, 2014, 2013, 2012 and 2011, respectively.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole, without distinguishing between classes of shares issued.

 

The accompanying notes are an integral part of these financial statements.

 

54

 

Alpine Mutual Funds

 

Financial Highlights—Continued

(For a share outstanding throughout each period)

 

   Emerging Markets Real Estate Fund 
               Period 
               Ended 
   Years Ended October 31,   October 31, 
   2015   2014†   2013†