-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B9TYQsyHtUh+nZPxUWwz/urG1SZcsOvwyQdpEchc9jmXbvx+Du7q052D+5nB0ZII dbl8khG6gNgOthP6vAjBog== 0000898531-04-000213.txt : 20040708 0000898531-04-000213.hdr.sgml : 20040708 20040708145110 ACCESSION NUMBER: 0000898531-04-000213 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040430 FILED AS OF DATE: 20040708 EFFECTIVENESS DATE: 20040708 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALPINE INCOME TRUST CENTRAL INDEX KEY: 0001194319 IRS NUMBER: 550795771 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-21210 FILM NUMBER: 04905970 BUSINESS ADDRESS: STREET 1: 2500 WESTCHESTER AVENUE STREET 2: SUITE 215 CITY: PURCHASE STATE: NY ZIP: 10577-2540 BUSINESS PHONE: 888-785-5578 MAIL ADDRESS: STREET 1: U.S. BANCORP FUND SERVICES STREET 2: 615 EAST MICHIGAN AVE CITY: MILWAUKEE STATE: WI ZIP: 53202 N-CSR 1 aeaif_ait-ncsrse.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-21210 --------- ALPINE INCOME TRUST ------------------- (Exact name of registrant as specified in charter) 615 EAST MICHIGAN STREET 3RD FLOOR MILWAUKEE, WI 53202 -------------------- (Address of principal executive offices) (Zip code) SAMUEL A. LIEBER ALPINE MANAGEMENT & RESEARCH, LLC 2500 WESTCHESTER AVENUE, SUITE 215 PURCHASE, NY 10577 ------------------ (Name and address of agent for service) 1-888-785-5578 -------------- Registrant's telephone number, including area code Date of fiscal year end: OCTOBER 31, 2004 ---------------- Date of reporting period: APRIL 30, 2004 -------------- ITEM 1. REPORT TO STOCKHOLDERS. - ------------------------------ (ALPINE LOGO) EQUITY AND INCOME FUNDS DYNAMIC BALANCE FUND DYNAMIC DIVIDEND FUND MUNICIPAL MONEY MARKET FUND TAX OPTIMIZED INCOME FUND SEMI-ANNUAL REPORT April 30, 2004 This material must be preceded or accompanied by a current prospectus. TABLE OF CONTENTS ----------------- PORTFOLIO MANAGER'S REPORT TO SHAREHOLDERS PAGE 1 SCHEDULES OF PORTFOLIO INVESTMENTS PAGE 15 STATEMENTS OF ASSETS AND LIABILITIES PAGE 25 STATEMENTS OF OPERATIONS PAGE 27 STATEMENTS OF CHANGES IN NET ASSETS PAGE 29 NOTES TO FINANCIAL STATEMENTS PAGE 33 FINANCIAL HIGHLIGHTS PAGE 40 PORTFOLIO MANAGER'S REPORT TO SHAREHOLDERS ALPINE MUTUAL FUNDS Dear Shareholders: We are very pleased to report to our shareholders that all seven Alpine Mutual Funds have outperformed their respective benchmarks during the fiscal six month period ended April 30, 2004 (please see the ensuing pages of this report for complete performance information). From October, 2003 through March, 2004 equity markets enjoyed a uniformly positive period which came to an abrupt reversal on April 1st as a surprisingly strong job creation report forced many leveraged and interest sensitive investors to adjust their portfolios. Many interest sensitive stocks were actively sold down to levels not seen for almost six months. Despite the high exposure of Alpine's equity portfolios to interest sensitive stocks, four out of our five equity portfolios and both of our income funds actually outperformed their benchmarks during this steep sell-off in April. We believe Alpine's value oriented approach to investing may have enhanced the defensive qualities of our portfolios during April. Since management remains a significant long-term investor in our own Funds, it is especially gratifying to note this review period's addition to the multi- year pattern of positive returns for all of the Alpine Funds, as well as their strong peer performance rankings as detailed in the individual fund discussion sections. Please note that Alpine continues to separate the reports of our three real estate funds from our 'Dynamic' series and income funds. In the period under review, the capital markets began to transition from a recovery phase to one focused on the possibility of renewed stable economic growth. The uneven and protracted shift from the recession of 2001 to the renewal of economic expansion in 2003 and 2004 was influenced by several factors which have now added increased uncertainty to the stock market. Issues such as the probable end to the accommodative stance of the Federal Reserve, Iraq, terrorism and higher oil prices, plus the vacillating consumer confidence level, and improvement in the previously weak employment numbers are main factors high on the minds of investors. Despite these near-to-medium term uncertainties, the probability that this stage of the business cycle equates to the third inning of a nine-inning baseball game underpins the long-term investment decision process. For the equity markets, the above mentioned economic factors of interest rates, oil prices, consumer confidence and corporate employment growth are all interrelated. While higher oil prices might become inflationary, its cost burden could have a slowing effect on the economy and hence limit the upward movement of interest rates. In a similar fashion a decrease in consumer confidence tends to slow domestic consumption which in turn may well limit top line revenue growth and restrain hiring. However, this too might limit interest rates which could sustain strong housing demand. Such vacillation between scenarios creates uncertainty, which is unsettling given the forward looking nature of the equity markets. However, this is not unusual for a market in transition. Many investors are now cautiously evaluating business prospects for 2005 and beyond. The critical issue will be how robust and sustainable that growth is. The prospects for further profitable growth in the industrial economy are surely positive with the continuing stimulus of military related defense expenditures. The armaments program is a sustaining force so long as American troops remain under attack in Iraq and Afghanistan. The number of troops in these theaters could most certainly be increased. As the war effort continues, it remains a major contributor to industrial output, adding to the prospect for improving employment, which in itself helps to sustain consumer demand. Industries which became lean and mean with downsized operations after the 2001 recession, are beginning to spend for enhanced productive capacity and employment. Major consumer expenditures, notably housing, remain near peak levels notwithstanding the upward trend in mortgage rates. Only the escalating price of gasoline and other fuels cast a pall over renewed consumer expenditures and corporate efficiencies. Given the Federal Reserves history and official comments, it is likely that this era of super stimulation from low interest rates has ended. The market yield on ten-year U.S. Treasury Bonds has already discounted increases in the Fed Funds Rate by rising from 3.88% on April 1, to 4.51% on April 30 and subsequently rising over 4.8% in June. This has occurred even though the Fed has yet to act, and the Fed Fund Rate remains at 1%. A "neutral" Fed Funds Rate of between 2.5% to 3.5% could be achieved in 18-24 months of "measured" rate increases, which should produce a flatter yield curve with the 10-year Treasury Bond yield between 5.5% to 6%. This scenario assumes that neither inflation will re-emerge after almost fourteen-years of averaging roughly 2.5% per year, nor would the economy slide back towards recession. Given that a year has passed since the June bottom in long-term yields, Alpine believes that the capital markets are well prepared for the scenario which we outline. Equity investment opportunities in the months ahead will increasingly be centered on those companies which can sustain earnings growth through the latter part of this year and into 2005, despite a potentially less robust economy. Alpine believes that this year's likely GDP growth of 4.5% will moderate to approximately 3% in 2005. The emphasis on continued corporate financial efficiency and sustaining top line revenue growth should be reflected in an ever broader spectrum of mergers and acquisitions (M&A). We do not expect such M&A to be in the spirit of prior decades where conglomeration of dispirit businesses was designed primarily to generate scale. The deals ought likely be aimed at providing supplemental and accelerated growth opportunities in closely related businesses, especially if efficiencies and breadth of offerings can be achieved. This should be particularly beneficial for smaller specialty companies occupying dominant niche positions with product lines supplemental to those of larger companies. For example, the recently announced General Electric acquisition of BHA Group, a small cap producer of power plant air pollution control equipment, demonstrates that even a giant company sees merit in rounding out its business lines by offering a unique technology through the acquisition of a vendor serving the same customers. This is a pattern we expect to see recur. The financial industry, notably banks, should continue the long term trend of mergers and acquisitions, especially where improved interest margins can be obtained as interest rates rise and commercial loan demand concurrently accelerates. We also expect to see consolidations in areas ranging from home building, pharmaceuticals, retailing, to internet services and beyond. Alpine believes that companies which can create higher levels of both top line and bottom line growth will probably be favored by the equity markets over the next 12 to 18 months. The bond markets on the other hand have become increasingly risky for investors as the apparent bottoming of interest rates suggests that the specter of possible principal losses may overhang the fixed income markets for the next year or two. We believe that investments in dividend paying stocks will continue to gain favor as a supplement or even replacement for the income component of many portfolios. This significant shift is reinforced by the 2003 tax legislation which favors equity dividend income. Furthermore, we do not expect the potential for a Kerry victory in the Fall to lead to any significant change in this established and increasingly popular tax legislation. In summary, we expect modest positive returns for the balance of this fiscal year as the strengthening economy, with continued strong earnings growth from corporate America, is tempered by caution over the extent of interest rate hikes, as well as uncertainty over both geopolitical and domestic political events. We anticipate that positive earnings growth will continue into next year, although very likely not at the lofty pace of the first six months of 2004. While periods with conflicting crosscurrents such as this can create a challenging investment environment, it also creates opportunities for long-term investment. We believe that Alpine's value driven investment strategies, opportunistic methods and fundamental depth of experience will assist us in uncovering a large share of interesting and potentially profitable investments. As always, we appreciate your interest and support. We look forward to reporting to you on our progress in the next quarter. Sincerely, /s/Samuel A. Lieber Samuel A. Lieber President, Alpine Mutual Funds This letter and those that follow represent the opinions of Alpine Funds management and are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security. Must be preceded or accompanied by a prospectus. Please read it carefully before you invest or send money. Mutual fund investing involves risk. Principal loss is possible. Quasar Distributors, LLC, Distributor. 06/04 ALPINE DYNAMIC BALANCE FUND Value of a $10,000 Investment Alpine Dynamic Moody's Equity Mutual Date Balance Fund Fund Balanced Index S&P 500 Index ---- ------------ ------------------- ------------- 6/7/2001 $10,000 $10,000 $10,000 6/30/2001 $9,960 $9,726 $9,593 7/31/2001 $10,100 $9,703 $9,499 8/31/2001 $10,180 $9,398 $8,904 9/30/2001 $9,993 $8,916 $8,185 10/31/2001 $10,164 $9,090 $8,341 11/30/2001 $10,325 $9,406 $8,981 12/31/2001 $10,481 $9,439 $9,060 1/31/2002 $10,461 $9,360 $8,928 2/28/2002 $10,613 $9,277 $8,755 3/31/2002 $10,738 $9,438 $9,085 4/30/2002 $10,707 $9,252 $8,534 5/31/2002 $10,615 $9,242 $8,471 6/30/2002 $10,309 $8,902 $7,868 7/31/2002 $9,991 $8,537 $7,254 8/31/2002 $10,145 $8,620 $7,302 9/30/2002 $9,378 $8,162 $6,508 10/31/2002 $9,471 $8,465 $7,081 11/30/2002 $9,822 $8,724 $7,497 12/31/2002 $9,614 $8,509 $7,057 1/31/2003 $9,468 $8,393 $6,872 2/28/2003 $9,353 $8,364 $6,769 3/31/2003 $9,434 $8,388 $6,835 4/30/2003 $10,228 $8,778 $7,397 5/31/2003 $10,939 $9,127 $7,787 6/30/2003 $10,892 $9,182 $7,886 7/31/2003 $10,797 $9,168 $8,025 8/31/2003 $10,923 $9,304 $8,181 9/30/2003 $11,179 $9,350 $8,095 10/31/2003 $11,696 $9,613 $8,552 11/30/2003 $11,940 $9,703 $8,628 12/31/2003 $12,377 $10,009 $9,080 1/31/2004 $12,525 $10,144 $9,246 2/29/2004 $12,981 $10,281 $9,375 3/31/2004 $13,151 $10,248 $9,233 4/30/2004 $12,363 $10,019 $9,089 This chart represents a comparison of a hypothetical $10,000 investment in the Fund versus a similar investment in the Fund's benchmark. The graph and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment performance reflects voluntary fee waivers in effect. Without the waiver of fees, total return would have been lower. Performance data quoted represents past performance and is not predictive of future results. Investment return and principal value of the Fund fluctuate, so that the shares, when redeemed, may be worth more or less than their original cost. Performance current to the most recent month end may be lower or higher than the performance quoted and may be obtained by calling 888-785-5578. The Moody's Equity Mutual Fund Balanced Index tracks a group of similar funds that typically correspond to standard classifications based on investment objectives and fundamental policies. The index includes balanced funds, asset allocation funds, and to a lesser extent, multiasset global funds. The S&P 500 Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Moody's Equity Mutual Fund Balanced Index and S&P 500 Index are unmanaged and do not reflect the deduction of fees associated with a mutual fund, such as investment adviser fees. The performance for the Dynamic Balance Fund reflects the deduction of fees for these value-added services. Investors cannot directly invest in an index. COMPARATIVE TOTAL RETURNS AS OF 4/30/04 SINCE INCEPTION 6 MONTHS(1) 1 YEAR (6/7/01) --------------- ------ --------------- Alpine Dynamic Balance Fund 5.70% 20.87% 7.60% Moody's Equity Mutual Fund Balanced Index 4.23% 14.14% 0.07% S&P 500 Index 6.27% 22.87% -3.24%
(1) Not annualized. PORTFOLIO DISTRIBUTION* US Treasury Obligation 11% Cash/Cash Equivalents 8% Government Agency Bonds 4% Real Estate 13% Financial-Banks 12% Financial Services 11% Construction-Homebuilder 10% Consumer Products & Services 8% Pharmaceuticals 7% Utilities 6% Energy 5% Commercial Products & Services 3% Automobiles 1% Printing 1% TOP 10 HOLDINGS* 1. U.S. Treasury Bond, 6.000%, 2/15/2026 9.42% 2. Federal National Mortgage Association, 6.250%, 5/15/2029 3.71% 3. Chelsea Property Group, Inc. 3.38% 4. Fannie Mae 2.63% 5. Pulte Homes, Inc. 2.57% 6. Kimberly-Clark Corporation 2.39% 7. ChevronTexaco Corporation 2.39% 8. Standard Pacific Corp. 2.20% 9. U.S. Treasury Bond, 7.250%, 5/15/2016 2.12% 10. Johnson & Johnson 2.07% * Portfolio holdings, geographical distributions and/or sector distributions are as of 4/30/04 and are subject to change. Portfolio holdings are not recommendations to buy or sell any securities. Top 10 Holdings does not include short-term investments. ALPINE DYNAMIC BALANCE FUND We are pleased to report on the fiscal half-year of the Alpine Dynamic Balance Fund, ended April 30, 2004. Performance data quoted represents past performance and is not predictive of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance current to the most recent month end may be lower or higher than the performance quoted and may be obtained by calling 888-785-5578. The investment result for the fiscal half-year was a total return of 5.69%. This compares with 4.23% for the Moody's Balanced Fund Average and 6.27% for the Standard & Poor's 500 Average. For 12-month period ended April 30th, the Fund returned 20.87%, comparing with 14.14% for the Moody's Balanced Fund Average and 22.87% for the Standard & Poor's 500 Average. Since inception on June 10, 2001, the Fund has had a cumulative compounded return of 23.61%, comparing with 0.19% for the Moody's Balanced Fund Average and -9.1% for the Standard & Poor's 500. The Fund's out-performance trend was interrupted in April this year. In April, when the markets were struck by broad scale apprehension over the trend of interest rates, the Fund lost its leadership position because of pressure on its interest sensitive holdings, particularly homebuilding and real estate investment trusts, U.S. Treasury and Agency Bonds and related financial companies. While shifting about 10% of the portfolio into cash equivalents, we continued to hold our prior investment positions because fundamentals remain strong. We believe that our interest sensitive investments generally are in companies with dynamic growth opportunities and most often with comparative undervaluation. Since the end of April, the Fund began to recover relative position as the bond sell-off subsided, and its investment values rose. New positions, added to take advantage of a selling wave, generated additional return. In reporting on the investment results for the Fund during the six months ended April, we think it essential to note that there were three quite separate market environments during this period. November and December marked a continuation of the general recovery trend for equities which had begun in March, 2003, and a beginning bond market recovery after a summer and early fall decline. During this period, your Fund gained 5.81% versus 4.11% and 6.17% respectively for the Moody's Equity Balanced Fund Index and the S&P 500 Index. In January through March, there were limited further advances in both stock and bond averages, yet the Dynamic Balance Fund added 6.26% compared with the S&P 500 Index rising 1.69% and the Moody's Balanced Fund Average rising 2.39%. Finally, in the month of April, both stock and bond markets suffered reversals when interest rates made a sharp upward move. But the Fund gave back some of its prior outperformance, falling -5.99% while the respective indices declined by -2.39% and -1.57%. May once again saw a reversion to the long-term trend of relative outperformance for this Fund. The most significant portfolio event of the six months was the proposed acquisition of one of the Fund's largest holdings, FleetBoston Financial Corp. by Bank of America. A gain of 41% was realized on the 40,000 shares sold during this period. Another significant banking industry related acquisition gain was in the shares of BSB Bank Corp. The Fund realized a 73% profit on that portion of its holdings which were long term upon the announced BSB acquisition bid by Partners Trust Financial Group. Other major percentage gains realized during this period include 49% in shares of Taubman Centers Inc., 32% in shares of Ethan Allen Interiors, Inc. and 25% in shares of State Street Corp. In contrast, the major realized loss was in shares of TECO Energy Inc., 44% of cost, as this electric utility encountered problems in its diversification program. After FleetBoston, the largest individual portfolio sale was in the shares of International Business Machines, a gain of 8%. We concluded that the current valuation of IBM adequately discounted the prospective rate of growth as the company continues to effect a transformation from primarily a hardware company to primarily a services business. Further reductions were made in the financial service industry, notably sales of Bank of New York with an 8% loss, and State Street Corp. with a 35% gain. Illustrative of the allocations of the Fund is a sampling of the top returns among its equity positions in the six months through April 30th, they are: % Return -------- TXU Corp. 51.05% Consolidated Energy Inc. 33.54% Impac Mortgage Holdings 33.21% Allegheny Energy Inc. 30.25% Kimberly-Clark Corp. 25.44% Chevron Texaco Corp. 25.37% Avery Dennison Corp. 23.69% BSB Bancorp. Inc. 23.12% SJW Corp. 19.26% American International Group 18.01% Our goal in sustaining the dynamics of the portfolio was to invest in the shares of companies where we believed growth potential is underestimated and therefore risk limited. New commitments made during this half year included shares in Allegheny Energy Inc., Colgate Palmolive Company, Consolidated Energy Corp., Doral Financial, Golden West Financial, Kimberly-Clark Corp., Lincoln National Corp., R.R. Donnelley & Sons Company, Simon Property Group Inc., Unitrin Corp. and Wyeth Corp. Our goal in this selection is to focus on companies whose dynamic catalysts to growth are currently not being adequately recognized or are believed likely to appear in the relatively near future. In the fixed income segment of the portfolio, our major move was the sale of U.S. Treasury Bonds due in 2028, aimed at reducing the overall bond commitment. The remaining bonds continue to have longer dated maturities, ranging from 14 to 25 years. Our interest rate projection for the months ahead suggest that the long-term bond market has adequately adjusted to prospective changes in the interest rate structure, while there is still vulnerability on the shorter-end of the yield curve. Particular mention must be made of the continuing effort to participate in the consolidation in the banking industry. We focused on smaller bank holding companies whose strong geographical positioning add potential attractiveness to acquirers. Among new holdings were those in Arrow Financial Corp. (Glens Falls and Saratoga Springs, NY), Hudson United Bank Corp. (New York suburban and exurban markets), Sovereign Bank Corp.(Delaware, north to Massachusetts, excluding New York) and Susquehanna Bankshares (mid-Pennsylvania). We anticipate enhanced earnings opportunities for these institutions as net interest spreads may rise together with commercial loan demand. The role of smaller banks and bankholding companies has been very positive for the Fund. Gains from cost up to April 30th include 81% for Bancorp Rhode Island, 41% for BSB Bancorp, 35.5% for Southside Bankshares, 25.9% for Taylor Capital Corp., and 23.7% for NorthFork Bancorp. It is Alpine's belief that both the bond and equity markets have already discounted much of the Federal Reserve's potential rate increases for the next twelve to eighteen months. While our bond/equity weighting remains cautious, we are positive about the portfolio's prospects. With sustained strength in the economy, stimulated by military expenditures, we anticipate a continuing environment in which the search for under-recognized corporate earnings opportunities will prove rewarding. This should also provide defensive characteristics in what may continue to be a volatile political and geopolitical atmosphere. We appreciate the continuing support of the Fund's investors. 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. INVESTING IN THIS FUND INVOLVES SPECIAL RISKS, INCLUDING BUT NOT LIMITED TO, OPTIONS AND FUTURES TRANSACTIONS. PLEASE REFER TO THE PROSPECTUS FOR FURTHER DETAILS. ALPINE DYNAMIC DIVIDEND FUND Value of a $10,000 Investment Alpine Dynamic Moody's Equity Mutual Date Dividend Fund Fund Growth Income Index S&P 500 Index ---- ------------- ------------------------ ------------- 9/22/2003 $10,000 $10,000 $10,000 9/30/2003 $9,980 $9,753 $9,742 10/31/2003 $10,690 $10,258 $10,292 11/30/2003 $10,940 $10,350 $10,383 12/31/2003 $11,763 $10,804 $10,927 1/31/2004 $12,219 $10,973 $11,127 2/29/2004 $12,644 $11,110 $11,282 3/31/2004 $12,567 $10,960 $11,112 4/30/2004 $12,339 $10,761 $10,938 This chart represents a comparison of a hypothetical $10,000 investment in the Fund versus a similar investment in the Fund's benchmark. The graph and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment performance reflects voluntary fee waivers in effect. Without the waiver of fees, total return would have been lower. Performance data quoted represents past performance and is not predictive of future results. Investment return and principal value of the Fund fluctuate, so that the shares, when redeemed, may be worth more or less than their original cost. Performance current to the most recent month end may be lower or higher than the performance quoted and may be obtained by calling 888-785-5578. The Moody's Equity Mutual Fund Growth Income Index tracks a group of similar funds that typically correspond to standard classifications based on investment objectives and fundamental policies. The S&P 500 Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Moody's Equity Mutual Fund Growth Income Index and S&P 500 Index are unmanaged and do not reflect the deduction of fees associated with a mutual fund, such as investment adviser fees. The performance for the Dynamic Dividend Fund reflects the deduction of fees for these value-added services. Investors cannot directly invest in an index. COMPARATIVE TOTAL RETURNS AS OF 4/30/04 SINCE INCEPTION(1) 6 MONTHS(1) (9/22/03) --------------- ---------------------- Alpine Dynamic Dividend Fund 15.42% 23.39% Moody's Equity Mutual Fund Growth Income Index 4.91% 7.61% S&P 500 Index 6.27% 9.38%
(1) Not annualized. PORTFOLIO DISTRIBUTION* Financial-Banks 12% Manufacturing-Diversified 9% Pharmaceuticals 9% Retail 9% Energy 8% Transportation 6% Food & Beverages 5% Telecommunications 4% Utilities 4% Apparel 3% Chemicals 3% Communication & Media 3% Consumer Products & Services 3% Entertainment 3% Medical Supplies 3% Conglomerate 2% Construction-Materials 2% Printing 2% Real Estate Investment Trusts 2% Software 2% Waste Disposal 2% Automobiles 1% Computers 1% Lodging 1% Cash/Cash Equivalents 1% TOP 10 HOLDINGS* 1. Pfizer Inc. 2.57% 2. The Liberty Corporation 2.48% 3. Saks Incorporated 2.41% 4. Abbott Laboratories 2.27% 5. Equitable Resources, Inc. 2.25% 6. BP p.l.c. 2.10% 7. General Electric Company 2.10% 8. Ethan Allen Interiors Inc. 1.99% 9. Hubbell Incorporated - Class B 1.99% 10. Raven Industries, Inc. 1.98% * Portfolio holdings, geographical distributions and/or sector distributions are as of 4/30/04 and are subject to change. Portfolio holdings are not recommendations to buy or sell any securities. Top 10 Holdings does not include short-term investments. ALPINE DYNAMIC DIVIDEND FUND We are pleased to report that the Alpine Dynamic Dividend Fund has generated strong performance since its inception on September 22, 2003. During this review period, the Fund outperformed both the broad market averages and its fund peers while also distributing an attractive dividend yield. For the six-month period ended April 30th, the Fund provided a total return of 15.42%, with 11.13% in capital appreciation and 4.29% in dividend payments. This compares favorably with a 6.27% total return for the S&P 500 Stock Index and a 4.91% total return for the Moody's Equity Growth Income Index for the same time period. The Alpine Dynamic Dividend Fund ended the period on April 30th with total net assets of $26.91 million, an increase of 158% since inception. The Alpine Dynamic Dividend Fund was designed specifically to maximize the amount of distributed dividend income that is qualified for the new 15% tax rate, while also employing a research driven approach to identifying companies with the potential for dividend increases and capital appreciation. We believe we have taken a unique and dynamic approach to maximizing both income and capital appreciation by combining three different investment strategies with a multi-cap focus. These strategies are reflected in both our top 10 holdings as well as our top performing stocks for the six month period. First, we run a portion of our portfolio with a dividend capture strategy, ---------------- where we invest in consistent, high yielding stocks or in special situations where large cash balances are being returned to shareholders in the form of one- time special dividends. These actions reflect strong corporate balance sheets as well as management incentive to distribute excess cash in the form of dividends due to the new lower tax rates. We enhance the return of our dividend capture portfolio by selectively rotating our high yielding holdings after the 61-day ownership period required to obtain the 15% dividend tax rate. Four of our top 10 holdings distributed attractive one-time dividends in 2004, including Liberty Corp. ($4 special dividend), Ethan Allen Interiors ($3 special), Saks Incorporated ($2 special), and Raven Industries ($1.25 special). Another top 10 holding, Equitable Resources, increased its dividend by 27%. Second, we have identified core long-term growth and income stocks that have --------------------------- attractive current dividend yields plus a catalyst for potential capital appreciation and dividend increases. In our top 10 holdings, we would categorize Pfizer, Abbott Laboratories, and General Electric in this group. Our third strategy is what we call "value with a catalyst", where we look for --------------------- under-valued or turnaround situations where there may exist or be potential for high current dividend yields due to depressed earnings that we believe are poised to recover. We would categorize two of our top 10 holdings, BP and Hubbell in this group, where we believe there is a strong fundamental rebound in earnings and cash flow over the next several years as well as attractive valuations. Capturing dividend increases is an important component of our research and investment strategy. In the six month period ended April 30th, 52 stocks in our portfolio raised their dividends by an average of 39% and 17 issued special dividends ranging from $0.10 to $8, representing current yields of 1% to 38%. Although several of our top 10 holdings are from the traditional higher yield, large capitalization segments of the dividend-paying universe, we believe a major factor of our out-performance has been our multi-cap strategy. Our top five performers in the six month period ended April 30th were all small or mid- cap stocks, with market capitalizations ranging from a low of $130 million at International Aluminum to $3.5 billion at Eastman Chemical. Notably, among our best performers were commodity or material stocks, with our top two gainers, Tsakos Energy (up 67.1%) and Frontline (up 53.3%) which are engaged in the business of transporting oil. The other standouts came from Sanderson Farms (up 49.1%), a poultry producer which is benefiting from the increase in demand for chicken associated with the Atkins diet, Eastman Chemical (up 45.3%) and International Aluminum (up 41.2%) benefited from a rebound in demand for chemicals and building materials. We would note that the Fund currently has a slightly more defensive posture since our last reporting period. In October 2003, we had no holdings in pharmaceuticals or medical supplies versus 12.3% of the value of the April 2004 portfolio now is held in this group in 7 different stock holdings. In addition, we have scaled back on our interest rate sensitive holdings. In October 2003 we held 19.8% of the portfolio in financials and 20.5% in utilities versus 12.2% of the April 2004 portfolio now in financials and only 4.0% in utilities. At present, we are taking a bit more of a defensive, bar bell approach, where we have large holdings in the pharmaceutical and energy sectors while also maintaining our significant exposure to the industrial and consumer discretionary groups. The interest rate sensitive financials and utilities that remain in the portfolio have catalysts for upside associated with a restructuring and/or an under-appreciated growth opportunity. As we look out to 2004, we believe that our portfolio of dividend paying stocks with strong earnings potential and cash flow generation will continue to garner more attention from the investing community, as valuations on many of the lesser quality companies that have had strong runs in 2003 and early 2004 now look over extended. In addition, we believe a large portion of dividend paying stocks will be poised to benefit from the weaker dollar, continuing improvements in global economic demand, improved balance sheets and operational leverage following years of restructuring. In addition, managements have incentive to use excess cash to reward shareholders with improved dividend payouts under the new 15% dividend tax rate. However, these positive fundamentals will be balanced with the risks of rising interest rates and continued geopolitical uncertainties. Our approach for the remainder of 2004 is to remain broadly diversified within the dividend paying universe while actively looking for undervalued opportunities to provide outperformance on the upside. The selection of stocks in our portfolio is based on our independent appraisal of each company's potential for profits, dividend growth and market revaluation across a broad spectrum of stock market capitalizations, industries, and international borders. We believe we will continue to be able to distribute attractive dividend payouts to our shareholders by capitalizing on our research driven approach to identifying situations for dividend increases as well as through our active management of the portfolio. Thank you for your participation in what we believe is an excellent start in 2004 as we look forward to a prosperous year. Please refer to the schedule of portfolio investments for fund holding information. Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. Mutual fund investing involves risk. Principal loss is possible. Neither the Fund nor any of its representatives may give tax advice. Investors should consult their tax advisor for information concerning their particular situation. ALPINE MUNICIPAL MONEY MARKET FUND EQUIVALENT TAXABLE YIELDS AS OF 4/30/04 YOUR TAX-EXEMPT EFFECTIVE YIELD OF MARGINAL 1.06% IS EQUIVALENT JOINT RETURN SINGLE RETURN TAX RATE TO A TAXABLE YIELD OF: ------------ ------------- -------- ---------------------- $58,101-117,250 $29,051-70,350 25.0% 1.41% $117,251-178,650 $70,351-146,750 28.0% 1.47% $178,651-319,100 $146,751-319,100 33.0% 1.58% Over $319,100 Over $319,100 35.0% 1.63% The chart reflects projected 2004 marginal federal tax rates before limitations and phaseouts. Individuals with adjusted gross income in excess of $139,500 should consult a tax professional to determine their actual 2004 marginal tax rate. ALPINE TAX OPTIMIZED INCOME FUND Value of a $10,000 Investment Alpine Tax Optimized Lipper Short Municipal Date Income Fund Debt Funds Index ---- -------------------- ---------------------- 12/6/2002 $10,000 $10,000 12/31/2002 $10,061 $10,057 1/31/2003 $10,091 $10,079 2/28/2003 $10,176 $10,130 3/31/2003 $10,168 $10,124 4/30/2003 $10,252 $10,146 5/31/2003 $10,357 $10,204 6/30/2003 $10,398 $10,213 7/31/2003 $10,317 $10,171 8/31/2003 $10,328 $10,195 9/30/2003 $10,441 $10,261 10/31/2003 $10,412 $10,256 11/30/2003 $10,433 $10,271 12/31/2003 $10,490 $10,285 1/31/2004 $10,514 $10,314 2/29/2004 $10,567 $10,353 3/31/2004 $10,594 $10,341 4/30/2004 $10,525 $10,287 This chart represents a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Fund's benchmark. The graph and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The returns set forth reflect the waiver of certain fees. Without the waiver of fees, total return would have been lower. Performance data quoted represents past performance and is not predictive of future results. Investment return and principal value of the Fund fluctuate, so that the shares, when redeemed, may be worth more or less than their original cost. Performance current to the most recent month end may be lower or higher than the performance quoted and may be obtained by calling 888-785-5578. Lipper Short Municipal Debt Funds Index is an unmanaged index that tracks funds that invest in municipal debt issues with dollar-weighted average maturities of less than three years and does not reflect the deduction of fees associated with a mutual fund, such as investment adviser fees.. The performance for the Tax Optimized Income Fund reflects the deduction of fees for these value-added services. Investors cannot directly invest in an index. COMPARATIVE TOTAL RETURNS AS OF 4/30/04 6 MONTHS(1) 1 YEAR SINCE INCEPTION(2) --------------- ------ ---------------------- Alpine Tax Optimized Income Fund - Investor Class 1.08% 2.66% 3.73% Alpine Tax Optimized Income Fund - Adviser Class N/A N/A -0.62% Lipper Short Municipal Debt Funds Index 0.30% 1.39% 2.05% Lipper Short Municipal Debt Funds Average 0.21% 1.18% 1.88% Lipper Short Municipal Debt Fund Rank - Investor Class N/A(1) 2/53 1/49
(1) Not Annualized. The NASD does not recognize rankings for less than one year. (2) Adviser Class shares commenced on March 30, 2004 and Investor Class shares commenced on December 6, 2002. ALPINE MUNICIPAL MONEY MARKET FUND / ALPINE TAX OPTIMIZED INCOME FUND We are pleased to provide you with the semi-annual report for the Alpine Income Trust for the period ending April 30, 2004. The Income Trust includes both the Alpine Tax Optimized Income Fund and the Alpine Municipal Money Market Fund. We are very pleased to report that for the six-month period both funds produced strong relative performance comparable to the performance returns of last year. The total return for the Alpine Tax Optimized Income Fund was 1.08% and it was .51% for the Alpine Municipal Money Market Fund. The Lipper peer average for the period was .21% and .19% for the Short Municipal Debt and Tax Exempt Money Market Fund peer groups, respectively. Throughout the past six months, the focus of the financial markets was clearly centered on labor market conditions. Having seen improvement in almost every sector of the economy outside of the labor market, fixed income investors turned their attention to employment statistics for information on the strength and sustainability of the economic recovery. Moreover, because the Federal Reserve had specifically mentioned job losses in past statements, investors relied on labor market statistics to provide clues as to when the Fed might increase its target Fed Funds rate. For most of this reporting period, the market was hit with a series of disappointing employment reports, prompting a bond market rally that rivaled the one in July. The sharp increase in bond prices was further fueled by a large number of bearish fixed income investors who scrambled to cover short positions they had taken in the bond market before the release of each report. In a striking turn of events, the markets were stunned in early April when the Labor Department announced that non-farm payrolls in the US grew by 308,000 during the month of March. The gain in payrolls, which was the largest since April 2000, was far higher then what the market was expecting. Amid speculation that a recovery in the labor market might lead the Federal Reserve to raise the Fed Funds rate earlier than previously expected, bonds sold off sharply. The yield on the 10-Year Treasury note rose from a low of 3.65% on March 16th to 4.50% at the end of April. The money market yield curve steepened dramatically, with the spread between one month and one year paper widening to 42 basis points the day after the report. Municipal and Treasury securities traded at similar spreads from the beginning of our reporting period through mid-March. As rates continued to fall, issuers decided to bring new issues to the market to take advantage of the low rates, creating a huge inventory of new deals. With anemic inflows into the bond funds coupled with sticker shock from the retail community, the new supply had to be priced higher to attract investors. This chain of events pushed secondary market yields higher. As ratios increased, municipals became more attractive to crossover investors because after-tax yields significantly exceeded yields from taxable investments. ALPINE TAX OPTIMIZED INCOME FUND The environment for all fixed income securities was fairly volatile through much of the past six months. As a result, we continued to maintain our focus on two areas of the market that we felt offered the best after-tax returns, while at the same shortening the maturity structure of the portfolio. The average maturity at the end of the period was 1.68 years which is about half of what our normal target maturity would be. The Fund continued to allocate a majority of its assets to municipal bonds as they continued to trade at very high ratios relative to most taxable securities. We had positioned this sector with an overweighting in one year or less municipal securities to balance out our longer holdings in higher yielding taxable bonds. In the taxable sector, we continued our concentration mainly on corporate bonds. As we mentioned in our previous report, we focused on this market as this area continues to provide the Fund with attractive after-tax yields not available in other sectors of the fixed income market. We were fortunate to take advantage of the market during the last year and our corporate holdings provide the Fund with an attractive income stream. Although the spreads on corporate bonds has narrowed, we still feel that they offer some of the best value relative to other sectors of the taxable market. We will continue to focus on sectors of the market that still have some potential for improvement and thus increased value. Going forward, we will closely monitor the financial markets as we expect to see the Fed tightening throughout the rest of the year. While we strive to provide an attractive yield for our shareholders, our main goal will be to focus on capital preservation. We will continue to adjust the average maturity as is warranted and look to take advantage of higher rates in the future. ALPINE MUNICIPAL MONEY MARKET FUND With the increase in the Fed Funds Rate not expected until the second half of the year at the earliest and the short-end of the money market yield curve locked firmly in place, rates in the variable rate demand note market were driven exclusively by supply and demand during the past six months. In typical fashion, VRDN rates spiked towards the end of the year and then declined steeply in early January as tax exempt money market funds saw huge cash inflows. As the month progressed, rates began to stabilize and continued that way until late April, where they then backed off again due to seasonal outflows from money funds. We essentially followed the same strategies and techniques we have employed in previous periods. Our goal is to invest in securities that we believe represent the best value in the market at any given time. The Fund avoids buying bonds whose repayment is backed solely by income and sales tax revenue, which are among the least predictable and most risky guarantees in the municipal bond world. We try to find revenue streams other than taxes, such as essential services like water or electricity or tolls, and we look for issues that are credit-enhanced, either through insurance or with back-up revenue behind it. The Fund continued to emphasize variable rate demand notes which typically comprised about 75% of the portfolio. Variable rate securities typically pay interest at a rate that is reset daily or weekly to reflect the current market rate, and gives the holder the right to sell the bond at par upon a one-day or seven-day notice. As a result, these securities can provide attractive yields and offer the Fund flexibility to take advantage of the market when new opportunities arise. In our opinion, one-year municipal money market securities did not offer sufficient yield advantage over VRDN's to justify adding longer securities to the portfolio, especially as the economy strengthened. However, we did take advantage of a few select opportunities during the latter part of this reporting period to extend the Fund's maturity. We purchased a nine-month general market note and two insured bonds due in one- year. Although these purchases extended the Fund's average maturity out to 56 days, we have since allowed the average maturity to shorten and will continue to do so until further buying opportunities become available. Thank you for you investment in the Alpine Income Funds. An investment in these Funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Funds. INVESTING IN THESE FUNDS INVOLVES SPECIAL RISKS, INCLUDING BUT NOT LIMITED TO, INVESTING IN MUNICIPAL OBLIGATIONS AND DERIVATIVE SECURITIES, MORTGAGE-RELATED AND ASSET-BACKED INVESTMENTS. PLEASE REFER TO THE PROSPECTUS FOR FURTHER DETAILS. Please refer to the Schedule of Investments for fund holding information. Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. Any tax or legal information provided is merely a summary of our understanding and interpretation of the current income tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation. Neither the Fund nor any of its representatives may give legal or tax advice. The federal government guarantees interest payments from government securities, such as U.S. Treasury bills, while dividend payments carry no such guarantee. Government securities, if held to maturity, guarantee the timely payment of principal and interest. ALPINE MUTUAL FUNDS DYNAMIC BALANCE FUND SCHEDULE OF PORTFOLIO INVESTMENTS APRIL 30, 2004 (UNAUDITED) SHARES/ SECURITY PAR VALUE DESCRIPTION VALUE - --------- ----------- ----- COMMON STOCKS -- 76.5% Automobiles -- 0.7% 8,000 General Motors Corporation $ 379,360 ----------- Commercial Products & Services -- 2.2% 10,000 Deere & Company 680,400 2,443 Eagle Materials Inc. 160,505 6,390 Eagle Materials Inc. -- Class B 408,321 ----------- 1,249,226 ----------- Construction -- Homebuilder -- 9.7% 1,000 Cavco Industries, Inc. (a) 39,880 20,000 Centex Corporation 959,000 18,000 D.R. Horton, Inc. 518,400 5,500 M.D.C. Holdings, Inc. 339,845 30,000 Pulte Homes, Inc. 1,475,100 12,500 The Ryland Group, Inc. 986,875 25,000 Standard Pacific Corp. 1,261,000 ----------- 5,580,100 ----------- Consumer Products & Services -- 7.9% 10,000 Avery Dennison Corporation 642,300 20,000 Colgate-Palmolive Company 1,157,600 21,000 Kimberly-Clark Corporation 1,374,450 9,000 The Procter & Gamble Company 951,750 28,000 RPM International, Inc. 422,240 ----------- 4,548,340 ----------- Energy -- 4.7% 15,000 ChevronTexaco Corporation 1,372,500 27,000 CONSOL Energy Inc. 773,010 8,000 Penn Virginia Corporation 526,160 ----------- 2,671,670 ----------- Financial -- Banks -- 12.0% 12,000 Arrow Financial Corporation 345,000 13,000 Bancorp Rhode Island, Inc. 457,210 15,000 Banknorth Group, Inc. 459,450 2,000 BSB Bancorp, Inc. 75,000 11,000 Comerica Incorporated 567,930 21,000 Doral Financial Corp. (b) 688,590 5,000 Golden West Financial Corporation 525,550 10,000 Hudson United Bancorp 357,300 26,000 J.P. Morgan Chase & Co. 977,600 5,000 M&T Bank Corporation 425,000 17,000 North Fork Bancorporation, Inc. 631,040 11,000 PNC Financial Services Group 584,100 2,000 Rurban Financial Corp. (a) 26,416 5,324 Southside Bancshares, Inc. 98,015 13,000 Sovereign Bancorp, Inc. 259,740 15,000 Susquehanna Bancshares, Inc. 351,000 4,000 Taylor Capital Group, Inc. 83,080 ----------- 6,912,021 ----------- Financial Services -- 11.6% 14,000 Ambac Financial Group, Inc. 966,000 13,000 American International Group, Inc. 931,450 14,000 The Chubb Corporation 966,000 22,000 Fannie Mae 1,511,840 12,000 Lincoln National Corporation 538,560 11,300 Marsh & McLennan Companies, Inc. 509,630 36,000 MBNA Corporation 877,680 5,000 The St. Paul Travelers Companies, Inc. 203,350 4,000 Unitrin, Inc. 158,600 ----------- 6,663,110 ----------- Pharmaceutical -- 6.7% 20,000 Bristol-Myers Squibb Company 502,000 22,000 Johnson & Johnson 1,188,660 15,000 Merck & Co. Inc. 705,000 25,000 Pfizer Inc. 894,000 15,000 Wyeth 571,050 ----------- 3,860,710 ----------- Printing -- 1.2% 23,000 R.R. Donnelley & Sons Company 676,660 ----------- Real Estate Investment Trusts -- 13.4% 10,000 Boston Properties, Inc. 470,000 38,000 Chelsea Property Group, Inc. 1,938,000 10,000 Developers Diversified Realty Corporation 327,500 20,000 General Growth Properties, Inc. 542,200 35,000 Impac Mortgage Holdings, Inc. 658,350 10,000 Mack-Cali Realty Corporation 373,500 15,000 Maguire Properties, Inc. 341,850 90,000 MeriStar Hospitality Corporation (a) 522,000 56,500 Prime Group Realty Trust (a) 312,445 15,000 Simon Property Group, Inc. 723,150 16,000 Taubman Centers, Inc. 312,000 7,000 Town & Country Trust 163,660 20,000 Vornado Realty Trust 1,009,000 ----------- 7,693,655 ----------- Transportation -- 0.6% 10,000 Alexander & Baldwin, Inc. 315,900 ----------- Utilities -- 5.8% 80,000 Allegheny Energy, Inc. (a) 1,102,400 35,000 Aquila, Inc. (a) 148,750 10,000 Hawaiian Electric Industries, Inc. 497,600 12,000 NUI Corporation 199,920 15,600 SJW Corp. 540,540 10,000 TXU Corp. 341,400 30,550 Xcel Energy, Inc. 511,101 ----------- 3,341,711 ----------- Total Common Stocks (Cost $37,652,875) 43,892,463 ----------- BONDS AND NOTES -- 15.3% U.S. Government Agencies -- 3.7% $2,000,000 Federal National Mortgage Association 6.250%, 5/15/2029 2,130,402 ----------- U.S. Government Obligations -- 11.6% 1,000,000 U.S. Treasury Bond, 7.250%, 5/15/2016 1,218,594 5,000,000 U.S. Treasury Bond, 6.000%, 2/15/2026 5,408,595 ----------- 6,627,189 ----------- Total Bonds and Notes (Cost $8,452,451) 8,757,591 ----------- SHORT-TERM INVESTMENTS -- 3.6% 1,800,000 Alpine Municipal Money Market Fund 1,800,000 277,000 Federal Home Loan Bank Discount Note, 0.650%, 5/03/2004 276,990 ----------- Total Short-Term Investments (Cost $2,076,990) 2,076,990 ----------- Total Investments (Cost $48,182,316) 95.4% 54,727,044 Other Assets less Liabilities 4.6% 2,669,964 ----------- Total Net Assets 100.0% $57,397,008 ----------- ----------- (a) Non-income producing securities. (b) Foreign security. See notes to financial statements. ALPINE MUTUAL FUNDS DYNAMIC DIVIDEND FUND SCHEDULE OF PORTFOLIO INVESTMENTS APRIL 30, 2004 (UNAUDITED) SHARES/ SECURITY PAR VALUE DESCRIPTION VALUE - --------- ----------- ----- COMMON STOCKS -- 98.7% Apparel -- 3.0% 5,000 Kellwood Company $ 197,250 8,000 Reebok International Ltd. 291,040 11,500 Saucony, Inc. -- Class B 240,350 5,000 Superior Uniform Group, Inc. 81,750 ----------- 810,390 ----------- Automobiles -- 1.4% 8,000 General Motors Corporation 379,360 ----------- Chemicals -- 2.7% 10,000 BASF AG -- ADR 517,700 5,000 Eastman Chemical Company 212,850 ----------- 730,550 ----------- Communication & Media -- 3.2% 15,000 The Liberty Corporation 673,500 8,000 The Walt Disney Company 184,240 ----------- 857,740 ----------- Computers -- 1.2% 16,000 Hewlett-Packard Company 315,200 ----------- Conglomerate -- 2.1% 19,000 General Electric Company 569,050 ----------- Construction -- Materials -- 1.9% 6,500 Eagle Materials Inc. 427,050 3,100 International Aluminum Corporation 93,713 ----------- 520,763 ----------- Consumer Products & Services -- 2.9% 13,400 Newell Rubbermaid Inc. 316,776 6,000 Nu Skin Enterprises, Inc. -- Class A 142,020 100,000 Rentokil Initial plc (b) 333,390 ----------- 792,186 ----------- Energy -- 8.1% 10,800 BP p.l.c. -- ADR 571,320 2,000 ChevronTexaco Corporation 183,000 13,000 Equitable Resources, Inc. 610,870 2,000 Kinder Morgan, Inc. 120,420 10,000 Repsol YPF, S.A. -- ADR 208,800 12,000 Shell Transport & Trading Company plc -- ADR 504,840 ----------- 2,199,250 ----------- Entertainment -- 2.7% 8,000 Harrah's Entertainment, Inc. 425,440 14,000 Regal Entertainment Group -- Class A 305,060 ----------- 730,500 ----------- Financial -- Banks -- 12.2% 3,800 Citigroup Inc. 182,742 3,000 Comerica Incorporated 154,890 10,000 Danske Bank A/S -- ADR 224,717 5,000 First Horizon National Corporation 219,800 12,200 J.P. Morgan Chase & Co. 458,720 11,000 KeyCorp 326,700 12,000 Lloyds TSB Group plc -- ADR 366,960 2,500 M&T Bank Corporation 212,500 6,000 National City Corporation 208,020 6,600 PNC Financial Services Group 350,460 1,500 Wachovia Corporation 68,625 8,000 Washington Mutual, Inc. 315,120 4,000 Wells Fargo & Company 225,840 ----------- 3,315,094 ----------- Food & Beverages -- 5.2% 4,000 The Coca-Cola Company 202,280 10,000 ConAgra Foods, Inc. 288,900 10,502 Ingles Markets, Incorporated -- Class A 117,622 32,000 Lance, Inc. 483,520 32,575 Rocky Mountain Chocolate Factory, Inc. 327,737 ----------- 1,420,059 ----------- Forestry -- 0.4% 2,000 Weyerhaeuser Company 118,400 ----------- Lodging -- 1.2% 15,000 Accor SA -- ADR 315,752 ----------- Manufacturing -- Diversified -- 8.8% 4,500 Caterpillar Inc. 349,785 60,000 GKN plc -- ADR 243,660 16,500 Graco Inc. 465,300 12,000 Hubbell Incorporated -- Class B 539,280 16,500 Raven Industries, Inc. 536,250 12,300 Twin Disc, Incorporated 266,787 ----------- 2,401,062 ----------- Medical Supplies -- 2.8% 40,500 Meridian Bioscience, Inc. 445,500 11,000 PolyMedica Corporation 306,240 ----------- 751,740 ----------- Pharmaceutical -- 9.5% 14,000 Abbott Laboratories 616,280 18,000 Bristol-Myers Squibb Company 451,800 6,000 Johnson & Johnson 324,180 10,500 Merck & Co. Inc. 493,500 19,500 Pfizer Inc. 697,320 ----------- 2,583,080 ----------- Printing -- 1.6% 14,500 R. R. Donnelley & Sons Company 426,590 ----------- Real Estate Investment Trusts -- 1.7% 4,000 General Growth Properties, Inc. 108,440 5,000 Keystone Property Trust 101,700 6,000 Senior Housing Properties Trust 89,700 3,000 Vornado Realty Trust 151,350 ----------- 451,190 ----------- Retail -- 8.7% 26,000 Bassett Furniture Industries, Incorporated 466,440 15,594 Deb Shops, Inc. 357,321 13,000 Ethan Allen Interiors Inc. 540,410 45,500 Saks Incorporated (a) 655,200 6,000 Wal-Mart Stores, Inc. 342,000 ----------- 2,361,371 ----------- Software -- 2.1% 78,800 American Software, Inc. -- Class A 453,100 5,000 Microsoft Corporation 129,850 ----------- 582,950 ----------- Telecommunications -- 3.7% 13,200 Atlantic Tele-Network, Inc. 417,780 11,000 Nokia Oyj -- ADR 154,110 5,000 SBC Communications Inc. 124,500 19,000 TDC A/S -- ADR 319,580 ----------- 1,015,970 ----------- Transportation -- 5.9% 9,000 Alexander & Baldwin, Inc. 284,310 21,000 Frontline Limited (b) 534,450 5,000 Teekay Shipping Corporation (b) 304,000 20,000 Tsakos Energy Navigation Ltd. (b) 485,200 ----------- 1,607,960 ----------- Utilities -- 4.0% 3,000 Ameren Corporation 131,160 17,000 Duke Energy Corporation 358,020 4,600 Hawaiian Electric Industries, Inc. 228,896 3,400 National Fuel Gas Company 83,266 5,000 OGE Energy Corp. 120,250 4,600 SJW Corp. 159,390 ----------- 1,080,982 ----------- Waste Disposal -- 1.7% 16,000 Waste Management, Inc. 454,400 ----------- Total Common Stocks (Cost $26,233,506) 26,791,589 ----------- SHORT-TERM INVESTMENTS -- 1.4% U.S. Government Agencies -- 1.4% 369,000 Federal Home Loan Bank Discount Note, 0.650%, 5/03/2004 368,987 ----------- Total Short-Term Investments (Cost $368,987) 368,987 ----------- Total Investments (Cost $26,602,493) 100.1% 27,160,576 Other Liabilities in Excess of Assets (0.1%) (16,941) ----------- Total Net Assets 100.0% $27,143,635 ----------- ----------- (a) Non-income producing securities. (b) Foreign security. ADR -- American Depository Receipt See notes to financial statements. ALPINE MUTUAL FUNDS MUNICIPAL MONEY MARKET FUND SCHEDULE OF PORTFOLIO INVESTMENTS APRIL 30, 2004 (UNAUDITED) SHARES/ SECURITY PAR VALUE DESCRIPTION VALUE - --------- ----------- ----- MUNICIPAL BONDS -- 98.9% Alabama -- 2.0% Alabaster Alabama Sewer Revenue Warrants (CS: MBIA) $ 435,000 2.000%, 4/01/2005 $ 437,763 Dothan Houston County Alabama Airport Authority Airport Revenue, Pemco Aviation Group Project (LOC: Southtrust Bank N.A.) 1,250,000 1.336%, 5/07/2004 (a) (b) 1,250,000 ----------- 1,687,763 ----------- Arkansas -- 0.5% Texarkana Arkansas Industrial Development Revenue, Precision Roll Grinders Inc. Project (CS: ADED GTD) 425,000 1.950%, 5/01/2004 425,000 ----------- California -- 7.1% State of California Revenue Anticipation Warrants -- Series A 1,000,000 2.000%, 6/16/2004 1,000,728 State of California Revenue Anticipation Warrants -- Series B 4,000,000 2.000%, 6/16/2004 4,002,560 Stockton California Certificates of Participation, United Christian Schools (LOC: Pacific Capital Bank) 1,000,000 1.546%, 5/07/2004 (a) (b) 1,000,000 ----------- 6,003,288 ----------- Colorado -- 15.9% Bachelor Gulch Metropolitan District General Obligation (LOC: Compass Bank) 2,865,000 1.200%, 12/01/2004 (b) 2,865,000 Broomfield Colorado Village Metropolitan District 2, Colorado Special Obligation Revenue (LOC: Compass Bank) 2,000,000 1.436%, 5/07/2004 (a) (b) 2,000,000 Cherry Creek Colorado South Metropolitan District 1 -- Series B (LOC: Compass Bank) 2,000,000 1.400%, 5/07/2004 (b) 2,000,000 Colorado Health Facilities Authority Revenue, Longmont United Hospital (CS: ACA) 250,000 2.000%, 12/01/2004 250,540 Fort Collins Colorado Economic Development Revenue, Comridge LLP Project, (LOC: Bank One Colorado N.A.) 2,340,000 1.316%, 5/07/2004 (a) (b) 2,340,000 Triview Colorado Metropolitan District REF & IMPT -- Series A (LOC: Compass Bank) 1,000,000 1.375%, 4/30/2005 (b) $ 1,000,000 Vail Colorado Multifamily Housing Revenue, Middle Creek Village Apartments Project (LOC: California Bank & Trust) 3,000,000 1.366%, 5/07/2004 (a) (b) 3,000,000 ----------- 13,455,540 ----------- Florida -- 1.3% Hillsborough County Florida Industrial Development Authority Industrial Development Revenue, Ringhaver Equipment Co. Project (LOC: Suntrust Bank) 500,000 1.396%, 5/07/2004 (a) (b) 500,000 Northern Palm Beach County Improvement District Florida, Water Control & Improvement (CS: Radian) 565,000 1.500%, 11/01/2004 565,000 ----------- 1,065,000 ----------- Georgia -- 8.7% De Kalb County Development Authority Industrial Development Revenue, Noland Company Project (LOC: Wachovia Bank N.A.) 1,500,000 1.336%, 5/07/2004 (a) (b) 1,500,000 Douglas County Development Authority Industrial Development Revenue, Denyse Signs Inc. Project (LOC: Bank of North Georgia) 1,700,000 1.336%, 5/07/2004 (a) (b) 1,700,000 Fulton County Development Authority Pollution Control Revenue, General Motors Corporation Project 200,000 1.496%, 5/07/2004 (a) (b) 200,000 Macon-Bibb County Georgia Industrial Authority Industrial Revenue, IBC Partnership No. 1 Project (LOC: Regions Bank) 65,000 2.084%, 5/07/2004 (a) (b) 65,000 Rockdale County Georgia Development Authority Revenue, Great Southern Wood Project (LOC: Southtrust Bank, N.A.) 1,620,000 1.336%, 5/07/2004 (a) (b) 1,620,000 Walton County Georgia Industrial Building Authority Industrial Development Revenue, Leggett & Platt Inc. Project (LOC: Wachovia Bank N.A.) 2,300,000 1.316%, 5/07/2004 (a) (b) 2,300,000 ----------- 7,385,000 ----------- Hawaii -- 1.1% Hawaii State Housing Finance & Development Corp., Hawaii Rental Housing Systems -- Series A (LOC: Industrial Bank of Japan) 300,000 3.830%, 5/07/2004 (a) (b) 300,000 Hawaii State Housing Finance & Development Corp., Hawaii Rental Housing Systems -- Series B (LOC: Industrial Bank of Japan) 600,000 3.830%, 5/07/2004 (a) (b) 600,000 ----------- 900,000 ----------- Illinois -- 9.5% Chicago Illinois Industrial Development Revenue, Bullen Midwest Inc. Project (LOC: LaSalle Bank N.A.) 1,330,000 1.296%, 5/07/2004 (a) (b) 1,330,000 Chicago Illinois Solid Waste Disposal Facility Revenue, Groot Industries Inc. Project (LOC: Bank One N.A.) 2,100,000 1.277%, 5/07/2004 (a) (b) 2,100,000 Coles Clark Etc Counties Community College District No. 517, Lake Land Community College 700,000 3.500%, 12/1/2004 708,248 Elk Grove Village Illinois Industrial Development Revenue, Rainbow Fish House Inc. Project (LOC: American National B&T) 5,000 1.277%, 5/07/2004 (a) (b) 5,000 Harvard Illinois Healthcare Facility Revenue, Harvard Memorial Hospital Inc. Project (LOC: M&I Bank) 1,430,000 1.366%, 5/07/2004 (a) (b) 1,430,000 Illinois Development Finance Authority Industrial Development Revenue, Alpha Beta Press Inc. Project, (LOC: American National B&T) 660,000 1.277%, 5/07/2004 (a) (b) 660,000 Illinois Development Finance Authority Limited Obligation Revenue, Dynapace Corp. Project (LOC: Bank One N.A.) 400,000 1.277%, 5/07/2004 (a) (b) 400,000 Illinois Development Finance Authority Limited Obligation Revenue, SWD Inc. Project (LOC: LaSalle National Bank) 600,000 1.277%, 5/07/2004 (a) (b) 600,000 Illinois Development Finance Authority Multifamily Revenue, Butterfield Creek Project (LOC: LaSalle Bank N.A.) 800,000 1.336%, 5/07/2004 (a) (b) 800,000 ----------- 8,033,248 ----------- Indiana -- 3.5% East Chicago Indiana Industrial Economic Development Revenue, Robinson Steel Inc. Project (LOC: LaSalle Bank N.A.) 630,000 1.296%, 5/07/2004 (a) (b) 630,000 Elkhart County Industrial Economic Development Revenue, Schult Operating Co. Project (LOC: Wells Fargo Bank N.A.) 765,000 1.277%, 5/07/2004 (a) (b) 765,000 Hammond Indiana Economic Development Revenue, A.M. Castle & Co. Project (LOC: Bank of America N.A.) 400,000 1.277%, 5/07/2004 (a) (b) 400,000 Indianapolis Indiana Industrial Development Revenue, Hoosier Gasket Corp. Project (LOC: Bank One Indianapolis) 195,000 1.950%, 5/07/2004 (a) (b) 195,000 Noblesville Indiana Building Corporation, Bond Anticipation Notes 1,000,000 1.400%, 7/01/2004 1,000,000 ----------- 2,990,000 ----------- Louisiana -- 2.4% Ascension Parish Louisiana Solid Waste Disposal, Allied Signal Inc. Project 2,000,000 1.436%, 5/07/2004 (a) (b) 2,000,000 ----------- Michigan -- 0.8% Michigan State Job Development Authority Revenue, Fisher Big Wheel Inc. Project (LOC: Bayerische Hypo- Und-Vereinsbank) 700,000 1.675%, 5/07/2004 (a) (b) 700,000 ----------- Minnesota -- 2.1% Elk River Minnesota Multifamily Housing Revenue, Elk River Estates Project (LOC: Associated Bank) 800,000 1.386%, 5/07/2004 (a) (b) 800,000 St. Cloud Minnesota Housing & Redevelopment Authority Industrial Development Revenue. CMMB LLP Project (LOC: Bremer Bank N.A.) 1,000,000 1.636%, 5/07/2004 (a) (b) 1,000,000 ----------- 1,800,000 ----------- Missouri -- 1.0% Springfield Center Missouri City Development Corporation Bond Anticipation Notes -- Series A 825,000 2.000%, 4/30/20005 826,126 ----------- New York -- 6.8% Haverstraw Stony Point New York Central School District Bond Anticipation Notes (CS: State Aid Withholding) 4,100,000 2.000%, 1/21/2005 4,120,363 Long Island Power Authority New York Electric System Revenue -- Series B 1,000,000 3.000%, 12/01/2004 1,009,282 Oswego County New York Resource Recovery 580,000 6.500%, 6/01/2004 582,277 ----------- 5,711,922 ----------- North Carolina -- 1.2% Mecklenburg County Industrial Facilities and Pollution Control Financing Authority Industrial Revenue, Okaya Shinnichi America (LOC: Tokai Bank Ltd.) 1,000,000 2.400%, 5/07/2004 (a) (b) 1,000,000 ----------- Ohio -- 1.2% Lorain County Ohio Hospital Revenue, Catholic Healthcare Authority Project 1,000,000 5.000%, 10/01/2004 1,015,559 ----------- Oklahoma -- 3.6% Grand River Dam Authority Oklahoma Revenue 3,000,000 4.000%, 6/01/2004 3,006,303 ----------- Pennsylvania -- 2.4% Philadelphia Pennsylvania Redevelopment Authority Revenue Cap Fund -- Series C (CS: FSA) 400,000 1.500%, 12/01/2004 400,000 Somerset County Pennsylvania Hospital Authority Hospital Revenue, Somerset Community Hospital Project (SPA: PNC Bank N.A.) 1,615,000 1.300%, 3/01/2005 (b) 1,615,000 ----------- 2,015,000 ----------- South Carolina -- 0.6% South Carolina Jobs-Economic Development Authority, Trimite Powders Inc. Project (LOC: Wachovia Bank of SC) 530,000 2.000%, 9/01/2004 (a) (b) 530,000 ----------- Tennessee -- 4.0% Jackson Tennessee Health Educational & Housing Facility Board Multifamily Revenue, Creekside Apartments Project (LOC: First Tennessee Bank) 330,000 2.000%, 5/07/2004 (a) (b) 330,000 Metropolitan Government Nashville and Davidson County Industrial Revenue, American Cancer Society Project (LOC: Amsouth Bank) 2,500,000 1.237%, 5/07/2004 (a) (b) 2,500,000 Rutherford County Tennessee Industrial Development Board Industrial Building Revenue, Derby Industries Inc. Project (LOC: Fifth Third Bank) 585,000 1.277%, 5/07/2004 (a) (b) 585,000 ----------- 3,415,000 ----------- Texas -- 4.3% Montgomery County Texas Industrial Development Corporation Industrial Development Revenue, Medical Manufacturing Partners Project (LOC: Bank One Texas N.A.) 2,100,000 1.350%, 5/07/2004 (a) (b) 2,100,000 Port Corpus Christi Authority Texas Nueces County Solid Waste Disposal, Flint Hills Project 1,500,000 1.416%, 5/07/2004 (a) (b) 1,500,000 ----------- 3,600,000 ----------- Virginia -- 2.4% Orange County Virginia Industrial Development Authority Revenue, Zamma Corp. Project (LOC: Southtrust Bank N.A.) 2,000,000 1.286%, 5/07/2004 (a) (b) 2,000,000 ----------- Washington -- 6.3% Washington State Economic Development Finance Authority Economic Development Revenue, B&H Dental Laboratory Project (LOC: Washington Mutual Bank) 2,225,000 1.586%, 5/07/2004 (a) (b) 2,225,000 Washington State Economic Development Finance Authority Economic Development Revenue, Belina Interiors Inc. -- Series F (LOC: Keybank N.A.) 1,110,000 1.316%, 5/07/2004 (a) (b) 1,110,000 Washington State Economic Development Finance Authority Economic Development Revenue, Hillstrom Ventures LLC Project (LOC: Washington Mutual Bank) 2,000,000 1.586%, 5/07/2004 (a) (b) 2,000,000 ----------- 5,335,000 ----------- Wisconsin -- 3.9% Hillsboro Wisconsin Community Development Authority Industrial Development Revenue, Whitehall Specialties Inc. Project (LOC: Bank One N.A.) 615,000 1.277%, 5/07/2004 (a) (b) 615,000 Marshfield Wisconsin Industrial Development Revenue, Beatrice Cheese Project (LOC: Wachovia Bank & Trust) 2,500,000 1.436%, 5/07/2004 (a) (b) 2,500,000 Sturgeon Bay Wisconsin Industrial Development Revenue, Midwest Wire Realty Project (LOC: Associated Bank) 200,000 1.386%, 5/07/2004 (a) (b) 200,000 ----------- 3,315,000 ----------- Multistate -- 6.3% Class B Revenue Bond Certificates Series Trust 2004-1 (CS: AIG Retirement Services, Inc.) 3,740,000 1.436%, 5/07/2004 (a) (b) 3,740,000 Pooled Multi-Family Puttable Floating Option Tax-Exempt Receipts 1,600,000 1.286%, 5/07/2004 (a) (b) 1,600,000 ----------- 5,340,000 ----------- Total Municipal Bonds (cost $83,554,749) 83,554,749 ----------- Total Investments (cost $83,554,749) 98.9% 83,554,749 Other Assets less Liabilities 1.1% 950,438 ----------- Net Assets 100.0% $84,505,187 ----------- ----------- (a) Variable Rate Security -- The rate reported is the rate in effect as of April 30, 2004. The date shown is the next reset date. (b) Maturity date represents first available put date. CS - Credit Support LOC - Letter of Credit SPA - Standby Purchase Agreement See notes to financial statements. ALPINE MUTUAL FUNDS TAX OPTIMIZED INCOME FUND SCHEDULE OF PORTFOLIO INVESTMENTS APRIL 30, 2004 (UNAUDITED) SHARES/ SECURITY PAR VALUE DESCRIPTION VALUE - --------- ----------- ----- BONDS -- 99.1% CORPORATE BONDS -- 38.0% Bank of America Corporation $1,000,000 3.250%, 8/15/2008 $ 974,228 Boeing Capital Corporation 1,800,000 5.750%, 2/15/2007 1,913,441 CIT Group Inc. 1,150,000 5.910%, 11/23/2005 1,204,724 500,000 4.000%, 5/08/2008 500,237 Daimler-Chrysler NA Holding Co. 2,000,000 4.750%, 1/15/2008 2,028,948 Ford Motor Credit Company 2,400,000 6.875%, 2/01/2006 2,540,342 General Motors Acceptance Corporation 1,200,000 6.125%, 8/28/2007 1,268,050 GMAC Commercial Holding Trust 2,500,000 2.320%, 7/27/2004 2,485,983 The Goldman Sachs Group, Inc. 1,575,000 4.125%, 1/15/2008 1,596,385 Household Finance Corporation 2,000,000 4.625%, 1/15/2008 2,056,826 International Lease Finance Corporation 3,000,000 4.750%, 2/15/2008 3,100,722 Time Warner Inc. 1,000,000 6.150%, 5/01/2007 1,069,858 ----------- Total Corporate Bonds (Cost $20,176,130) 20,739,744 ----------- MUNICIPAL BONDS -- 61.1% Alabama -- 0.8% University of Alabama University Revenue, Huntsville General Fees -- Series A (CS: FSA) 460,000 2.050%, 12/01/2004 462,328 ----------- Alaska -- 2.6% Alaska Industrial Development & Export Authority, Revolving Fund -- Series A (CS: GO of Auth.) 1,400,000 4.500%, 4/01/2005 1,429,582 ----------- Arizona -- 1.8% Maricopa County Arizona Pollution Control Corporation Pollution Control Revenue, Arizona Public Service Company -- Series D 1,000,000 1.875%, 3/01/2005 (b) 998,080 ----------- Arkansas -- 3.7% Searcy Arkansas Industrial Development Revenue, Yarnell Ice Cream Co. Project (SPA: Amsouth Bank of Alabama) 2,000,000 2.214%, 1/01/2010 (a) 2,000,000 ----------- California -- 3.7% California Pollution Control Financing Authority Solid Waste Disposal Revenue, Republic Services Inc. Project 1,000,000 2.000%, 12/01/2004 (b) 999,770 California Statewide Communities Development Authority Solid Waste Facilities Revenue, Waste Management Inc. Project (CS: Waste Management Inc.) 1,000,000 2.900%, 3/31/2007 (b) 1,000,000 ----------- 1,999,770 ----------- Colorado -- 6.3% Colorado Health Facilities Authority Revenue, Evangelical Lutheran 3,405,000 2.800%, 10/01/2004 3,413,240 ----------- Indiana -- 5.5% Indiana State Development Finance Authority Solid Waste Disposal , Revenue Waste Management Inc. Project 1,000,000 2.700%, 10/01/2004 (b) 1,001,180 Vigo County Indiana Industrial Development Revenue, Republic Services Inc. Project 2,000,000 1.815%, 5/07/2004 (a) (b) 2,000,000 ----------- 3,001,180 ----------- Massachusetts -- 5.0% Massachusetts State Development Finance Agency Environmental Improvement Revenue, Mead Corp. Project -- Series A 1,500,000 2.250%, 5/07/2004 (b) 1,500,000 Massachusetts State Industrial Financing Agency Industrial Revenue, Asahi/America Inc. (LOC: Citizens Bank of MA) 1,250,000 3.125%, 3/01/2009 (b) 1,229,475 ----------- 2,729,475 ----------- Michigan -- 5.6% Michigan State Strategic Fund, Dow Chemical Project 1,000,000 3.100%, 12/01/2004 (b) 1,006,960 1,000,000 3.800%, 6/01/2006 (b) 1,025,060 Michigan State Strategic Fund Solid Waste Disposal Revenue, Waste Management 1,000,000 2.200%, 2/01/2005 (b) 998,530 ----------- 3,030,550 ----------- Missouri -- 2.8% St. Louis County Missouri Industrial Development Authority Multifamily Housing Revenue, Pinetree Apartments -- Series A 825,000 5.200%, 11/15/2004 (b) 830,478 St. Louis Missouri Airport Revenue Project, Series C (CS: MBIA) 680,000 3.000%, 7/01/2004 681,707 ----------- 1,512,185 ----------- New Hampshire -- 1.8% New Hampshire State Business Finance Authority Pollution Control Revenue 1,000,000 2.050%, 2/01/2005 (b) 1,003,280 ----------- New Mexico -- 2.7% Farmington New Mexico Pollution Control Revenue, Public Service- San Juan Project 1,500,000 2.100%, 4/01/2006 (b) 1,491,930 ----------- New York -- 5.5% St. Catherine Siena Medical Center / NY Taxable Revenue Bonds 3,000,000 5.750%, 05/30/2004 (a) (b) 3,000,000 ----------- North Carolina -- 4.6% Mecklenburg County North Carolina Industrial Facilities & Pollution Control Financing Authority Industrial Revenue, Okaya Shinnichi America (LOC: Tokai Bank Ltd.) 2,490,000 2.400%, 5/07/2004 (a) (b) 2,490,000 ----------- Ohio -- 2.9% Ohio State Air Quality Development Authority Revenue, Toledo 1,600,000 2.200%, 10/01/2004 (b) 1,598,480 ----------- Oklahoma -- 0.5% Oklahoma Development Finance Authority Hospital Revenue, Duncan Regional Hospital Project -- Series A 250,000 2.500%, 12/01/2004 250,878 ----------- Texas -- 4.2% Cypress-Fairbanks Texas Independent School District, Schoolhouse-Series B (SPA: Toronto-Dominion Bank) 1,200,000 5.000%, 8/15/2007 (b) 1,291,836 Matagorda County Texas Navigation District No. 1 Pollution Control Revenue, Central Power & Light 1,000,000 2.350%, 11/01/2004 (b) 1,000,000 ----------- 2,291,836 ----------- Washington -- 1.1% Washington State Housing Finance Community Nonprofit Revenue, Childhaven Project (LOC: Washington Mutual Bank) 600,000 1.227%, 5/01/2004 (a) (b) 600,000 ----------- Total Municipal Bonds (cost $33,295,356) 33,302,794 ----------- Total Bonds (cost $53,471,486) 54,042,538 ----------- MONEY MARKET FUNDS -- 0.2% 69,295 Federated Government Obligations Fund -- Institutional Shares 69,295 ----------- Total Money Market Funds (cost $69,295) 69,295 ----------- Total Investments (cost $53,540,781) 99.3% 54,111,833 Other Assets less Liabilities 0.7% 404,807 ----------- Net Assets 100.0% $54,516,640 ----------- ----------- (a) Variable Rate Security -- The rate reported is the rate in effect as of April 30, 2004. The date shown is the next reset date. (b) Maturity date represents first available put date. CS - Credit Support LOC - Letter of Credit SPA - Standby Purchase Agreement See notes to financial statements. ALPINE MUTUAL FUNDS STATEMENTS OF ASSETS AND LIABILITIES APRIL 30, 2004 (UNAUDITED) DYNAMIC DYNAMIC BALANCE DIVIDEND FUND FUND ------- -------- ASSETS: Investments, at value(1) $54,727,044 $27,160,576 Cash 1,247 81 Dividends receivable 67,061 201,832 Interest receivable 154,682 -- Receivable for capital shares issued -- 242,300 Receivable for investment securities sold 2,636,724 603,786 Prepaid expenses and other assets 15,151 14,861 ----------- ----------- Total assets 57,601,909 28,223,436 ----------- ----------- LIABILITIES: Payable for investment securities purchased -- 995,292 Payable for capital shares redeemed 102,823 14,610 Accrued expenses and other liabilities: Investment advisory fees 55,608 18,126 Other 46,470 51,773 ----------- ----------- Total liabilities 204,901 1,079,801 ----------- ----------- NET ASSETS $57,397,008 $27,143,635 ----------- ----------- ----------- ----------- NET ASSETS REPRESENTED BY Capital stock $49,570,634 $24,851,568 Accumulated undistributed net investment income 140,384 83,963 Accumulated net realized gains from investments, short sales, and foreign currencies 1,141,262 1,650,021 Net unrealized appreciation on investments 6,544,728 558,083 ----------- ----------- TOTAL NET ASSETS $57,397,008 $27,143,635 ----------- ----------- ----------- ----------- NET ASSET VALUE Net assets $57,397,008 $27,143,635 Shares of beneficial interest issued and outstanding 4,941,672 2,285,104 Net asset value, offering price and redemption price per share $11.61 $11.88 (1) Cost of Investments $48,182,316 $26,602,493 See notes to financial statements. ALPINE MUTUAL FUNDS STATEMENTS OF ASSETS AND LIABILITIES APRIL 30, 2004 (UNAUDITED) MUNICIPAL TAX OPTIMIZED MONEY MARKET INCOME FUND FUND ------------ ------------- ASSETS: Investments, at value(1) $83,554,749 $54,111,833 Interest receivable 338,663 436,535 Receivable for capital shares issued 722,011 -- Prepaid expenses and other assets 23,332 23,023 ----------- ----------- Total assets 84,638,755 54,571,391 ----------- ----------- LIABILITIES: Dividends payable to shareholders 1,464 954 Accrued expenses and other liabilities: Investment advisory fees 11,055 19,051 Payable to custodian 69,606 3,937 Other 51,443 30,809 ----------- ----------- Total liabilities 133,568 54,751 ----------- ----------- NET ASSETS $84,505,187 $54,516,640 ----------- ----------- ----------- ----------- NET ASSETS REPRESENTED BY Capital stock $84,505,187 $53,916,359 Accumulated undistributed net investment income -- 4,145 Accumulated net realized gains from investments sold -- 25,084 Net unrealized appreciation on investments -- 571,052 ----------- ----------- TOTAL NET ASSETS $84,505,187 $54,516,640 ----------- ----------- ----------- ----------- NET ASSET VALUE Adviser Class Shares Net assets $ 5,004 $ 4,972 Shares of beneficial interest issued and outstanding 5,004 490 Net asset value, offering price and redemption price per share $1.00 $10.15 Investor Class Shares Net assets $84,500,183 $54,511,668 Shares of beneficial interest issued and outstanding 84,500,183 5,368,363 Net asset value, offering price and redemption price per share $1.00 $10.15 (1) Cost of Investments $83,554,749 $53,540,781 See notes to financial statements. ALPINE MUTUAL FUNDS STATEMENTS OF OPERATIONS SIX MONTHS ENDED APRIL 30, 2004 (UNAUDITED) DYNAMIC DYNAMIC BALANCE DIVIDEND FUND FUND ------- -------- INVESTMENT INCOME: Interest income $ 264,037 $ 2,225 Dividend income* 661,200 968,832 ---------- ---------- Total investment income 925,237 971,057 ---------- ---------- EXPENSES: Investment advisory fees 287,921 101,884 Administration fees 17,350 10,010 Fund accounting fees 16,930 13,436 Audit fees 6,880 9,980 Custodian fees 6,850 6,918 Legal fees 310 3,148 Registration and filing fees 9,992 12,786 Printing fees 2,376 5,172 Transfer agent fees 9,962 7,434 Trustee fees 1,800 1,810 Other fees 3,645 100 ---------- ---------- Total expenses before expense recovery (reimbursement) by Adviser 364,016 172,678 Expense recovery (reimbursement) by Adviser 24,693 (35,135) ---------- ---------- Net expenses 388,709 137,543 ---------- ---------- Net investment income 536,528 833,514 ---------- ---------- REALIZED/UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on: Long transactions 1,309,857 1,683,132 Short transactions -- (3,286) Foreign currencies -- 1,591 ---------- ---------- Net realized gain 1,309,857 1,681,437 ---------- ---------- Change in unrealized appreciation / depreciation on investments 1,254,954 (222,305) ---------- ---------- Net realized/unrealized gain on investments 2,564,811 1,459,132 ---------- ---------- Change in net assets resulting from operations $3,101,339 $2,292,646 ---------- ---------- ---------- ---------- * Net of foreign taxes withheld $ 216 $ 18,312 ---------- ---------- ---------- ---------- See notes to financial statements. ALPINE MUTUAL FUNDS STATEMENTS OF OPERATIONS SIX MONTHS ENDED APRIL 30, 2004 (UNAUDITED) MUNICIPAL TAX OPTIMIZED MONEY MARKET INCOME FUND FUND ------------ ------------- INVESTMENT INCOME: Interest income $552,175 $911,191 -------- -------- Total investment income 552,175 911,191 -------- -------- EXPENSES: Investment advisory fees 184,039 213,650 Administration fees 22,251 16,456 Distribution fees -- Adviser Class 1 1 Fund accounting fees 23,251 17,455 Audit fees 6,976 6,876 Custodian fees 5,904 5,276 Interest expense 2,081 -- Legal fees 2,880 2,600 Registration and filing fees 20,559 13,214 Printing fees 1,992 1,142 Transfer agent fees 20,887 15,619 Trustee fees 1,770 1,770 Insurance expense 1,686 1,956 -------- -------- Total expenses before expense reimbursement by Adviser 294,277 296,015 Less: Reimbursement by Adviser (154,119) (125,094) -------- -------- Net expenses 140,158 170,921 -------- -------- Net investment income 412,017 740,270 -------- -------- REALIZED/UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investments -- 25,114 Change in unrealized appreciation/depreciation on investments -- (96,531) -------- -------- Net realized/unrealized loss on investments -- (71,417) -------- -------- Change in net assets resulting from operations $412,017 $668,853 -------- -------- -------- -------- See notes to financial statements. ALPINE MUTUAL FUNDS STATEMENTS OF CHANGES IN NET ASSETS DYNAMIC BALANCE FUND ------------------------------------ SIX MONTHS ENDED YEAR ENDED APRIL 30, 2004 OCTOBER 31, 2003 ---------------- ---------------- (UNAUDITED) OPERATIONS: Net investment income $ 536,528 $ 1,057,657 Net realized gain (loss) on investments 1,309,857 (30,104) Change in unrealized appreciation/depreciation on investments 1,254,954 9,058,775 ----------- ----------- Change in net assets resulting from operations 3,101,339 10,086,328 ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS: Distributions to Shareholders: From net investment income (502,841) (1,020,091) ----------- ----------- Change in net assets resulting from distributions to shareholders (502,841) (1,020,091) ----------- ----------- SHARES OF BENEFICIAL INTEREST TRANSACTIONS: Proceeds from shares sold 1,354,831 1,436,616 Dividends reinvested 446,497 896,893 Cost of shares redeemed (759,152) (670,726) ----------- ----------- Change in net assets from shares of beneficial interest transactions 1,042,176 1,662,783 ----------- ----------- Total change in net assets 3,640,674 10,729,020 ----------- ----------- NET ASSETS: Beginning of period 53,756,334 43,027,314 ----------- ----------- End of period* $57,397,008 $53,756,334 ----------- ----------- ----------- ----------- * Including undistributed net investment income of $ 140,384 $ 106,697 ----------- ----------- ----------- -----------
See notes to financial statements. ALPINE MUTUAL FUNDS STATEMENTS OF CHANGES IN NET ASSETS DYNAMIC DIVIDEND FUND --------------------------------------------- FOR THE PERIOD SEPTEMBER 22, 2003(1) SIX MONTHS ENDED THROUGH APRIL 30, 2004 OCTOBER 31, 2003 ---------------- -------------------------- (UNAUDITED) OPERATIONS: Net investment income $ 833,514 $ 71,597 Net realized gain (loss) on: Long transactions 1,683,132 (31,416) Short transactions (3,286) -- Foreign currencies 1,591 -- Change in unrealized appreciation/depreciation on investments (222,305) 780,388 ----------- ----------- Change in net assets resulting from operations 2,292,646 820,569 ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS: Distributions to Shareholders: From net investment income (821,894) -- ----------- ----------- Change in net assets resulting from distributions to shareholders (821,894) -- ----------- ----------- SHARES OF BENEFICIAL INTEREST TRANSACTIONS: Proceeds from shares sold 12,421,531 12,717,086 Dividends reinvested 734,418 -- Redemption fees 4,007 -- Cost of shares redeemed (1,014,433) (10,295) ----------- ----------- Change in net assets from shares of beneficial interest transactions 12,145,523 12,706,791 ----------- ----------- Total change in net assets 13,616,275 13,527,360 ----------- ----------- NET ASSETS: Beginning of period 13,527,360 -- ----------- ----------- End of period* $27,143,635 $13,527,360 ----------- ----------- ----------- ----------- * Including undistributed net investment income of $ 83,963 $ 72,343 ----------- ----------- ----------- -----------
(1) Commencement of Operations See notes to financial statements. ALPINE MUTUAL FUNDS STATEMENTS OF CHANGES IN NET ASSETS MUNICIPAL MONEY MARKET FUND --------------------------------------------- FOR THE PERIOD DECEMBER 5, 2002(1) SIX MONTHS ENDED THROUGH APRIL 30, 2004 OCTOBER 31, 2003 ---------------- ------------------------ (UNAUDITED) OPERATIONS: Net investment income $ 412,017 $ 468,679 Net realized loss on investments -- (36) Change in unrealized appreciation/depreciation on investments -- -- ----------- ----------- Change in net assets resulting from operations 412,017 468,643 ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS: Distributions to Adviser Class Shareholders: From net investment income (3) -- Distributions to Investor Class Shareholders: From net investment income (412,014) (468,643) ----------- ----------- Change in net assets resulting from distributions to shareholders (412,017) (468,643) ----------- ----------- SHARES OF BENEFICIAL INTEREST TRANSACTIONS: Proceeds from shares sold 90,329,928 102,670,596 Dividends reinvested 400,378 466,068 Cost of shares redeemed (65,351,498) (44,010,285) ----------- ----------- Change in net assets from shares of beneficial interest transactions 25,378,808 59,126,379 ----------- ----------- Total change in net assets 25,378,808 59,126,379 ----------- ----------- NET ASSETS: Beginning of period 59,126,379 -- ----------- ----------- End of period $84,505,187 $59,126,379 ----------- ----------- ----------- -----------
(1) Commencement of Operations See notes to financial statements. ALPINE MUTUAL FUNDS STATEMENTS OF CHANGES IN NET ASSETS TAX OPTIMIZED INCOME FUND --------------------------------------------- FOR THE PERIOD DECEMBER 6, 2002(1) SIX MONTHS ENDED THROUGH APRIL 30, 2004 OCTOBER 31, 2003 ---------------- ------------------------ (UNAUDITED) OPERATIONS: Net investment income $ 740,270 $ 1,060,845 Net realized gain on investments 25,114 54,913 Change in unrealized appreciation/depreciation on investments (96,531) 667,583 ----------- ----------- Change in net assets resulting from operations 668,853 1,783,341 ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS: Distributions to Adviser Class Shareholders From net investment income (23) -- Distributions to Investor Class Shareholders: From net investment income (736,102) (1,060,845) From net realized gains on investments (31,474) (23,469) ----------- ----------- Change in net assets resulting from distributions to shareholders (767,599) (1,084,314) ----------- ----------- SHARES OF BENEFICIAL INTEREST TRANSACTIONS: Proceeds from shares sold 6,995,874 57,078,436 Dividends reinvested 756,892 1,083,329 Cost of shares redeemed (8,728,003) (3,270,169) ----------- ----------- Change in net assets from shares of beneficial interest transactions (975,237) 54,891,596 ----------- ----------- Total change in net assets (1,073,983) 55,590,623 ----------- ----------- NET ASSETS: Beginning of period 55,590,623 -- ----------- ----------- End of period* $54,516,640 $55,590,623 ----------- ----------- ----------- ----------- * Including undistributed net investment income of $ 4,145 $ -- ----------- ----------- ----------- -----------
(1) Commencement of Operations See notes to financial statements. ALPINE MUTUAL FUNDS NOTES TO FINANCIAL STATEMENTS APRIL 30, 2004 (UNAUDITED) 1. ORGANIZATION: Alpine Series Trust (the "Series Trust") was organized in 2001 as a Delaware Business Trust, and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company. Alpine Income Trust (the "Income Trust") was organized in 2002 as a Delaware Business Trust, and is registered under the 1940 Act, as an open-end management investment company. Alpine Dynamic Balance Fund and Alpine Dynamic Dividend Fund are two separate funds of the Series Trust and Alpine Municipal Money Market Fund and Alpine Tax Optimized Income Fund are two separate funds of the Income Trust. Alpine Dynamic Balance Fund, Alpine Dynamic Dividend Fund, Alpine Municipal Money Market Fund and Alpine Tax Optimized Income Fund (individually referred to as a "Fund" and collectively, "the Funds") are diversified funds. Alpine Management & Research, LLC (the "Adviser") is a Delaware Corporation and serves as the investment manager to the Funds. Effective March 30, 2004, the Alpine Municipal Money Market Fund and the Alpine Tax Optimized Income Fund began to offer both Investor Class and Adviser Class shares. 2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from those estimates. A. VALUATION OF SECURITIES: The Dynamic Balance, Dynamic Dividend and Tax Optimized Income Funds value securities for which the primary market is on a domestic or foreign exchange and over-the-counter securities admitted to trading on the National Association of Securities Dealers Automated Quotation National Market System ("NASDAQ") National List at the last quoted sale price at the end of each business day or, if no sale, at the mean of closing bid and asked price. Over-the-counter securities not included in the NASDAQ National List for which market quotations are readily available are valued at a price quoted by one or more brokers. Securities for which accurate quotations are not available or market quotations are not readily available, are valued at fair value as determined in good faith according to procedures approved by the Board of Trustees. The valuation of certain debt securities for which market quotations are not readily available may be based upon current market prices of securities, which are comparable in coupon, rating and maturity or an appropriate matrix utilizing similar factors. The Municipal Money Market Fund values its investments at amortized cost, which approximates market value. Pursuant to Rule 2a-7 of the Investment Company Act of 1940, amortized cost, as defined, is a method of valuing securities at acquisition cost, adjusted for amortization of premium or accretion of discount rather than at their value based on current market factors. B. REPURCHASE AGREEMENTS: The Funds may invest in repurchase agreements. A custodian holds securities pledged as collateral for repurchase agreements on the Funds' behalf. The Funds monitor the adequacy of the collateral daily and will require the seller to provide additional collateral in the event the market value of the securities pledged falls below the carrying value of the repurchase agreement, including accrued interest. The Funds will only enter into repurchase agreements with banks and other financial institutions which are deemed by the investment advisor to be creditworthy pursuant to guidelines established by the Board of Trustees. C. SECURITY TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on the date a security is purchased or sold (i.e. on the trade date). Realized gains and losses are computed on the identified cost basis. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums where applicable. Dividend income is recorded on the ex-dividend date or in the case of some foreign securities, on the date thereafter when the Funds are made aware of the dividend. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. Capital gains realized on some foreign securities are subject to foreign taxes, which are accrued as applicable. D. SHORT SALE TRANSACTIONS: The Dynamic Balance Fund and the Dynamic Dividend Fund are authorized to engage in short selling. Short sales are transactions in which a Fund sells a security it does not own in anticipation of a decline in the market value of that security. To complete such a transaction, a fund must borrow the security to deliver to the buyer when effecting a short sale. The fund is then obligated to replace the security borrowed by purchasing it in the open market at some later date. When a fund sells a security short, an amount equal to the sales proceeds is included in the Statements of Assets and Liabilities as an asset and an equal amount as a liability. The amount of the liability is subsequently marked-to-market to reflect the current value of the short position. A fund will incur a loss, which could be substantial and potentially unlimited, if the market price of the security increases between the date of the short sale and the date on which the fund replaces the borrowed security. A fund will realize a gain if the security declines in value between those dates. A fund is also at risk of incurring dividend expense if the issuer of the security that has been sold short declares a dividend. A fund must pay the dividend to the lender of the security. All short sales must be fully collateralized. Accordingly, a fund maintains collateral in a segregated account with their custodian, consisting of cash and/or liquid securities sufficient to collateralize their obligations on short positions. E. INTEREST EXPENSE: The Funds are charged by U.S. Bank, N.A. for all cash overdrafts at the bank's prime lending rate. The Dynamic Balance Fund and the Alpine Municipal Money Market Fund incurred interest expense totaling $15 and $2,081 for the six months ended April 30, 2004. F. FEDERAL TAXES: It is each Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute timely, all of its investment company taxable income and net realized capital gains to shareholders. Therefore, no federal income tax provision is recorded. Under applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains earned on foreign investments. Where available, the Funds will file for claims on foreign taxes withheld. G. DIVIDENDS AND DISTRIBUTIONS: The Dynamic Balance Fund, the Dynamic Dividend Fund and the Tax Optimized Income Fund intend to distribute substantially all of their net investment income and net realized capital gains, if any, throughout the year to their shareholders in the form of dividends. The Municipal Money Market Fund declares and accrues dividends daily on each business day based upon the Fund's net income, and pays dividends monthly. Distributions to shareholders are recorded at the close of business on the ex-dividend date. All dividends are automatically reinvested in full and fractional shares of a Fund at net asset value per share, unless otherwise requested. The amounts of dividends from net investment income and of distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. In the event dividends and distributions to shareholders exceed net investment income and net realized gains for tax purposes, they are reported as a return of capital. H. CLASS ALLOCATIONS: Income, expenses (other than class specific expenses) and realized and unrealized gains and losses of the Tax Optimized Income Fund and Municipal Money Market Fund are allocated among the classes of each respective Fund based on the relative net assets of each class. Class specific expenses are allocated to the class to which they relate. Currently, class specific expenses are limited to those incurred under the Distribution Plan for Adviser Class shares. I. FOREIGN EXCHANGE TRANSACTIONS: The Dynamic Balance and Dynamic Dividend Funds may invest up to 15% of the value of their total assets in foreign securities. The books and records of the Funds are maintained in U.S. dollars. Non-U.S. denominated amounts are translated into U.S. dollars as follows, with the resultant exchange gains and losses recorded in the Statement of Operations: i) market value of investment securities and other assets and liabilities at the exchange rate on the valuation date, ii) purchases and sales of investment securities, income and expenses at the exchange rate prevailing on the respective date of such transactions. Dividends and interest from non-U.S. sources received by the Funds are generally subject to non-U.S. withholding taxes at rates ranging up to 30%. Such withholding taxes may be reduced or eliminated under the terms of applicable U.S. income tax treaties, and the Funds intend to undertake any procedural steps required to claim the benefits of such treaties. J. RISK ASSOCIATED WITH FOREIGN SECURITIES AND CURRENCIES: Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of domestic issuers. Such risks include future political and economic developments and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is a possibility of expropriation of assets, confiscatory taxation, political or social instability or diplomatic developments, which could adversely affect investments in those countries. Certain countries may also impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers or industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available to the Fund or result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries. 3. CAPITAL SHARE TRANSACTIONS: The Funds have an unlimited number of shares of beneficial interest, with $0.001 par value, authorized. Transactions in shares and dollars of the Funds were as follows: DYNAMIC BALANCE FUND SIX MONTHS ENDED YEAR ENDED APRIL 30, 2004 OCTOBER 31, 2003 ------------------- ------------------ SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ Shares sold 113,174 $ 1,354,831 138,742 $ 1,436,616 Shares issued in reinvestment of dividends 37,966 446,497 91,251 896,893 Shares redeemed (63,202) (759,152) (68,511) (670,726) ------- ----------- ------- ------------ Total net change 87,938 $ 1,042,176 161,482 $ 1,662,783 ------- ----------- ------- ------------ ------- ----------- ------- ------------
DYNAMIC DIVIDEND FUND FOR THE PERIOD SEPTEMBER 22, 2003(1) SIX MONTHS ENDED THROUGH APRIL 30, 2004 OCTOBER 31, 2003 -------------------- ------------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ Shares sold 1,040,527 $12,421,531 1,266,615 $ 12,717,086 Shares issued in reinvestment of dividends 62,009 734,418 -- -- Redemption fees -- 4,007 -- -- Shares redeemed (83,085) (1,014,433) (962) (10,295) --------- ----------- --------- ------------ Total net change 1,019,451 $12,145,523 1,265,653 $ 12,706,791 --------- ----------- --------- ------------ --------- ----------- --------- ------------
(1) Commencement of operations. MUNICIPAL MONEY MARKET FUND FOR THE PERIOD DECEMBER 5, 2002(1) SIX MONTHS ENDED THROUGH APRIL 30, 2004 OCTOBER 31, 2003 -------------------- ------------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ Investor Class Shares sold 90,324,928 $90,324,928 102,670,596 $102,670,596 Shares issued in reinvestment of dividends 400,374 400,374 466,068 466,068 Shares redeemed (65,351,498) (65,351,498) (44,010,285) (44,010,285) ----------- ----------- ----------- ------------ Total net change 25,373,804 $25,373,804 59,126,379 $ 59,126,379 ----------- ----------- ----------- ------------ ----------- ----------- ----------- ------------ Adviser Class Shares sold 5,000 $ 5,000 -- $ -- Shares issued in reinvestment of dividends 4 4 -- -- Shares redeemed -- -- -- -- ----------- ----------- ----------- ------------ Total net change 5,004 $ 5,004 -- $ -- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ------------
(1) Commencement of operations. TAX OPTIMIZED INCOME FUND FOR THE PERIOD DECEMBER 6, 2002(1) SIX MONTHS ENDED THROUGH APRIL 30, 2004 OCTOBER 31, 2003 -------------------- ------------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ Investor Class Shares sold 685,917 $ 6,990,874 5,668,318 $ 57,078,436 Shares issued in reinvestment of dividends 74,162 756,870 115,511 1,083,329 Shares redeemed (852,259) (8,728,003) (323,286) (3,270,169) -------- ----------- --------- ------------ Total net change (92,180) $ (980,259) 5,460,543 $ 54,891,596 -------- ----------- --------- ------------ -------- ----------- --------- ------------ Adviser Class Shares sold 488 $ 5,000 -- $ -- Shares issued in reinvestment of dividends 2 22 -- -- Shares redeemed -- -- -- -- -------- ----------- --------- ------------ Total net change 490 $ 5,022 -- $ -- -------- ----------- --------- ------------ -------- ----------- --------- ------------
(1) Commencement of operations. 4. PURCHASES AND SALES OF SECURITIES: Purchases and sales of securities (excluding short-term securities) for the six months ended April 30, 2004 are as follows: NON-U.S. GOVERNMENT U.S. GOVERNMENT ------------------------ ------------------------ PURCHASES SALES PURCHASES SALES --------- --------- --------- --------- Dynamic Balance Fund $13,668,898 $14,628,881 $1,063,437 $2,124,844 Dynamic Dividend Fund 30,712,453 18,854,663 -- -- Tax Optimized Income Fund 12,846,690 9,864,460 -- --
5. DISTRIBUTION PLANS: Quasar Distributors, LLC ("Quasar") serves as the Funds' distributor. The Municipal Money Market Fund and the Tax Optimized Income Fund have each adopted a distribution plan (the "Plan") for its Adviser Class shares as allowed by Rule 12b-1 under the 1940 Act. The Plan authorizes payments by the Fund in connection with the distribution and servicing of its shares at an annual rate, as determined from time to time by the Board of Trustees, of up to 0.25% of the Fund's average daily net assets. Amounts paid under the plan by the Funds may be spent by the Funds on any activities or expenses primarily intended to result in the sale of shares of the Funds, including but not limited to, advertising, compensation for sales and marketing activities of financial institutions and others such as dealers and distributors, shareholder account servicing, the printing and mailing of prospectuses to other than current shareholders and the printing and mailing of sales literature. The Municipal Money Market Fund incurred $1 and the Tax Optimized Income Fund incurred $1 pursuant to the plan for the period ended April 30, 2004. The plan for the Municipal Money Market Fund and the Tax Optimized Income Fund may be terminated at any time by vote of the Trustees of the Income Trust who are not "interested persons" as defined by the 1940 Act of the Income Trust, or by vote of a majority of the outstanding voting shares of the respective class. 6. INVESTMENT ADVISORY AGREEMENT AND OTHER AFFILIATED TRANSACTIONS: Alpine Management & Research, LLC ("Alpine") provides investment advisory services to the Funds. Pursuant to the investment adviser's agreement with the Funds, Alpine is entitled to an annual fee based on 1.00% of each Fund's average daily net assets for the Dynamic Balance Fund and the Dynamic Dividend Fund. Alpine is entitled to an annual fee based on 0.45% of the Municipal Money Market Fund's average daily net assets and an annual fee based on 0.75% of the Tax Optimized Income Fund's average daily net assets. The Adviser agreed to reimburse the Dynamic Balance Fund, the Dynamic Dividend Fund and the Tax Optimized Income Fund to the extent necessary to ensure that the Funds' total operating expenses (excluding 12b-1 fees, interest, brokerage commissions and extraordinary expenses) did not exceed 1.35%, 1.35% and 0.60% of the Funds' average daily net assets, respectively. For the period November 1, 2003 through March 9, 2004, the Adviser agreed to reimburse the Municipal Money Market Fund to the extent necessary to ensure that the Fund's total operating expenses (excluding 12b-1 fees, interest, brokerage commissions and extraordinary expenses) did not exceed 0.32% of the Fund's average daily net assets. Effective March 10, 2004, the Adviser raised the amount of total operating expenses to be capped from 0.32% to 0.37% of the Fund's average daily net assets. The Adviser may recover from each Fund the expenses paid in excess of the cap on expenses for the three previous years, as long as the recovery does not cause the Fund to exceed such cap on expenses. For the six months ended April 30, 2004, the Adviser waived investment advisory fees totaling $35,135, $154,119 and $125,094 for the Dynamic Dividend Fund, the Municipal Money Market Fund and the Tax Optimized Income Fund, respectively. For the six months ended April 30, 2004, the Adviser recovered previous reimbursed/absorbed expenses totaling $24,693 for the Dynamic Balance Fund. Reimbursed/absorbed expenses subject to potential recovery by year of expiration are as follows: Year of Expiration Dynamic Balance Fund Dynamic Dividend Fund ------------------ -------------------- --------------------- 10/31/05 $45,313 $ -- 10/31/06 $73,377 $22,179 10/31/07 $ -- $35,135 Year of Expiration Municipal Money Market Fund Tax Optimized Income Fund ------------------ --------------------------- ------------------------- 10/31/06 $175,958 $181,472 10/31/07 $154,119 $125,094 7. FEDERAL INCOME TAX INFORMATION: At October 31, 2003, the components of accumulated earnings (losses) on a tax basis were as follows: DYNAMIC DYNAMIC MUNICIPAL TAX BALANCE DIVIDEND MONEY OPTIMIZED FUND FUND MARKET FUND INCOME FUND ------- -------- ----------- ----------- Cost of investments $48,896,691 $13,409,021 $59,044,482 $55,510,837 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Gross unrealized appreciation $ 7,963,556 $ 856,845 $ -- $ 688,754 Gross unrealized depreciation (2,658,328) (76,640) -- (21,171) ----------- ----------- ----------- ----------- Net unrealized appreciation $ 5,305,228 $ 780,205 $ -- $ 667,583 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Undistributed ordinary income $ 84,368 $ 72,343 $ -- $ 31,444 Undistributed long-term capital gain -- -- -- -- ----------- ----------- ----------- ----------- Total distributable earnings $ 84,368 $ 72,343 $ -- $ 31,444 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Other accumulated losses and temporary differences $ (161,721) $ (31,233) $ -- $ -- ----------- ----------- ----------- ----------- Total accumulated earnings $ 5,227,875 $ 821,315 $ -- $ 699,027 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
The tax basis of investments for tax and financial reporting purposes differs principally due to the deferral of losses on wash sales and REIT tax adjustments. The tax character of distributions paid during the periods ended October 31, 2003 and 2002 were as follows: DYNAMIC BALANCE FUND 2003 2002 ---- ---- Ordinary income $1,020,091 $1,090,248 Long-term capital gain -- -- ---------- ---------- $1,020,091 $1,090,248 ---------- ---------- ---------- ---------- DYNAMIC DIVIDEND FUND 2003 ---- Ordinary income -- Long-term capital gain -- ---------- -- ---------- ---------- MUNICIPAL MONEY MARKET FUND 2003 ---- Exempt interest dividends $ 468,643 Long-term capital gain -- ---------- $ 468,643 ---------- ---------- TAX OPTIMIZED INCOME FUND 2003 ---- Ordinary income $ 574,675 Exempt interest dividends 509,639 Long-term capital gain -- ---------- $1,084,314 ---------- ---------- Capital loss carryovers as of October 31, 2003 are as follows: Net Capital Capital Loss Loss Carryover* Carryover Expiration -------------------- -------------------- Dynamic Balance Fund $140,968 10/31/10 20,753 10/31/11 Dynamic Dividend Fund 31,233 10/31/11 * Capital gain distributions will resume in the future to the extent gains are realized in excess of the available carryovers. 8. AVAILABILITY OF PROXY VOTING INFORMATION Information regarding how the Fund votes proxies relating to portfolio securities is available without charge upon request by calling toll-free at 1-888-785-5578 and on the SEC's website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30, 2004 will be available after August 31, 2004 on the SEC's website at www.sec.gov or by calling the toll-free number listed above. ALPINE MUTUAL FUNDS FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) DYNAMIC BALANCE FUND ----------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED YEAR ENDED PERIOD ENDED APRIL 30, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2004 2003 2002 2001 (A) ---------------- ----------- ----------- ------------- (UNAUDITED) PER SHARE DATA: NET ASSET VALUE, BEGINNING OF PERIOD $11.08 $ 9.17 $10.10 $10.00 ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.11 0.22 0.24 0.09 Net realized/unrealized gains (losses) on investments 0.52 1.91 (0.91) 0.07 ------ ------ ------ ------ Total from investment operations 0.63 2.13 (0.67) 0.16 ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.10) (0.22) (0.25) (0.06) Net realized gains on investments -- -- (0.01) -- ------ ------ ------ ------ Total distributions (0.10) (0.22) (0.26) (0.06) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $11.61 $11.08 $ 9.17 $10.10 ------ ------ ------ ------ ------ ------ ------ ------ TOTAL RETURN 5.70%(b) 23.50% (6.82)% 1.64%(b) RATIOS/SUPPLEMENTARY DATA: Net Assets at end of period (000) $57,397 $53,756 $43,027 $38,203 Ratio of expenses to average net assets: Before waivers and recoveries 1.26%(c) 1.51% 1.50% 1.40%(c) After waivers and recoveries 1.35%(c) 1.35% 1.35% 1.35%(c) Ratio of net investment income to average net assets 1.86%(c) 2.26% 2.45% 2.55%(c) Portfolio turnover 27% 39% 42% 9%
(a) For the period from June 7, 2001 (commencement of operations) to October 31, 2001. (b) Not Annualized. (c) Annualized. See notes to financial statements. ALPINE MUTUAL FUNDS FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) DYNAMIC DIVIDEND FUND --------------------------------------------- SIX MONTHS ENDED PERIOD ENDED APRIL 30, 2004 OCTOBER 31, 2003(A) ---------------- ------------------------ (UNAUDITED) PER SHARE DATA: NET ASSET VALUE, BEGINNING OF PERIOD $10.69 $10.00 ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.48(b) 0.06 Net realized/unrealized gains on investments 1.16 0.63 ------ ------ Total from investment operations 1.64 0.69 ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.45) -- Net realized gains on investments -- -- ------ ------ Total distributions (0.45) -- ------ ------ NET ASSET VALUE, END OF PERIOD $11.88 $10.69 ------ ------ ------ ------ TOTAL RETURN 15.42%(c) 6.90%(c) RATIOS/SUPPLEMENTARY DATA: Net Assets at end of period (000) $27,144 $13,527 Ratio of expenses to average net assets: Before waivers and reimbursements 1.69%(d) 3.11%(d) After waivers and reimbursements 1.35%(d) 1.35%(d) Ratio of net investment income to average net assets 8.18%(d) 5.69%(d) Portfolio turnover 95% 9%
(a) For the period from September 22, 2003 (commencement of operations) to October 31, 2003. (b) Net investment income is calculated using average shares outstanding during the period. (c) Not Annualized. (d) Annualized. See notes to financial statements. ALPINE MUTUAL FUNDS FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) MUNICIPAL MONEY MARKET FUND ---------------------- PERIOD ENDED APRIL 30, 2004(A) ---------------------- (UNAUDITED) ADVISER CLASS SHARES: NET ASSET VALUE, BEGINNING OF PERIOD $1.00 ----- INCOME FROM INVESTMENT OPERATIONS: Net investment income --(b) Net realized/unrealized gains on investments -- ----- Total from investment operations --(b) ----- LESS DISTRIBUTIONS: Dividends from net investment income --(b) Net realized gains on investments -- ----- Total distributions --(b) ----- NET ASSET VALUE, END OF PERIOD $1.00 ----- ----- TOTAL RETURN 0.07%(c) RATIOS/SUPPLEMENTARY DATA: Net Assets at end of period $4,972 Ratio of expenses to average net assets: Before waivers and reimbursements 0.93%(d) After waivers and reimbursements 0.62%(d) Ratio of net investment income to average net assets 0.75%(d) (a) For the period from March 30, 2004 (commencement of operations) to April 30, 2004. (b) Amount is less than $0.005. (c) Not Annualized. (d) Annualized. See notes to financial statements. ALPINE MUTUAL FUNDS FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) MUNICIPAL MONEY MARKET FUND --------------------------------------------- SIX MONTHS ENDED PERIOD ENDED APRIL 30, 2004 OCTOBER 31, 2003(A) ---------------- ------------------------ (UNAUDITED) INVESTOR CLASS SHARES: NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 ----- ----- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.01 0.01 Net realized/unrealized gains on investments -- -- ----- ----- Total from investment operations 0.01 0.01 ----- ----- LESS DISTRIBUTIONS: Dividends from net investment income (0.01) (0.01) Net realized gains on investments -- -- ----- ----- Total distributions (0.01) (0.01) ----- ----- NET ASSET VALUE, END OF PERIOD $1.00 $1.00 ----- ----- ----- ----- TOTAL RETURN 0.50%(b) 1.00%(b) RATIOS/SUPPLEMENTARY DATA: Net Assets at end of period (000) $84,500 $59,126 Ratio of expenses to average net assets: Before waivers and reimbursements 0.72%(c) 0.73%(c) After waivers and reimbursements 0.34%(c) 0.32%(c) Ratio of net investment income to average net assets 1.01%(c) 1.09%(c)
(a) For the period from December 5, 2002 (commencement of operations) to October 31, 2003. (b) Not Annualized. (c) Annualized. See notes to financial statements. ALPINE MUTUAL FUNDS FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) TAX OPTIMIZED INCOME FUND ---------------------- PERIOD ENDED APRIL 30, 2004(A) ---------------------- ADVISER CLASS SHARES: NET ASSET VALUE, BEGINNING OF PERIOD $10.26 ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.02 Net realized/unrealized losses on investments (0.08) ------ Total from investment operations (0.06) ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.05) Net realized gains on investments -- ------ Total distributions (0.05) ------ NET ASSET VALUE, END OF PERIOD $10.15 ------ ------ TOTAL RETURN (0.62)%(b) RATIOS/SUPPLEMENTARY DATA: Net Assets at end of period $4,972 Ratio of expenses to average net assets: Before waivers and reimbursements 1.17%(c) After waivers and reimbursements 0.85%(c) Ratio of net investment income to average net assets 2.52%(c) Portfolio turnover 28%(d) (a) For the period from March 30, 2004 (commencement of operations) to April 30, 2004. (b) Not Annualized. (c) Annualized. (d) Portfolio turnover is calculated on the basis of the Fund as a whole, without distinguishing between the classes of shares issued. See notes to financial statements. ALPINE MUTUAL FUNDS FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) TAX OPTIMIZED INCOME FUND --------------------------------------------- SIX MONTHS ENDED PERIOD ENDED APRIL 30, 2004 OCTOBER 31, 2003(A) ---------------- ------------------------ (UNAUDITED) INVESTOR CLASS SHARES: NET ASSET VALUE, BEGINNING OF PERIOD $10.18 $10.00 ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.14 0.23 Net realized/unrealized gains (losses) on investments (0.03) 0.18 ------ ------ Total from investment operations 0.11 0.41 ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.13) (0.23) Net realized gains on investments (0.01) --(d) ------ ------ Total distributions (0.14) (0.23) ------ ------ NET ASSET VALUE, END OF PERIOD $10.15 $10.18 ------ ------ ------ ------ TOTAL RETURN 1.08%(b) 4.12%(b) RATIOS/SUPPLEMENTARY DATA: Net Assets at end of period (000) $54,512 $55,591 Ratio of expenses to average net assets: Before waivers and reimbursements 1.04%(c) 1.02%(c) After waivers and reimbursements 0.60%(c) 0.60%(c) Ratio of net investment income to average net assets 2.60%(c) 2.48%(c) Portfolio turnover 28%(e) 46%
(a) For the period from December 6, 2002 (commencement of operations) to October 31, 2003. (b) Not Annualized. (c) Annualized. (d) Amount is less than $0.005. (e) Portfolio turnover is calculated on the basis of the Fund as a whole, without distinguishing between the classes of shares issued. See notes to financial statements. TRUSTEES Samuel A. Lieber Laurence B. Ashkin H. Guy Leibler INVESTMENT ADVISER Alpine Management and Research, LLC 2500 Westchester Avenue, Suite 215 Purchase, NY 10577 www.alpinefunds.com CUSTODIAN U.S. Bank, N.A. 425 Walnut Street Cincinnati, OH 45202 SUB-CUSTODIAN The Bank of New York One Wall Street New York, NY 10286 TRANSFER AGENT & ADMINISTRATOR U.S. Bancorp Fund Services, LLC 615 East Michigan Street Milwaukee, WI 53202 INDEPENDENT AUDITORS Deloitte & Touche LLP 411 East Wisconsin Avenue Milwaukee, WI 53202 LEGAL COUNSEL Blank Rome LLP The Chrysler Building 405 Lexington Avenue New York, NY 10174 DISTRIBUTOR Quasar Distributors, LLC 615 East Michigan Street Milwaukee, WI 53202 SHAREHOLDER/INVESTOR INFORMATION (888) 785-5578 ALPINE FUNDS 2500 Westchester Avenue, Suite 215 Purchase, NY 10577 (914) 251-0880 (06/04) ITEM 2. CODE OF ETHICS. - ----------------------- Not applicable for semi-annual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. - ---------------------------------------- Not applicable for semi-annual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. - ----------------------------------------------- Not applicable for semi-annual reports. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. - ---------------------------------------------- Not applicable to open-end investment companies. ITEM 6. SCHEDULE OF INVESTMENTS. - -------------------------------- Not applicable for periods ending before July 9, 2004. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END - ------------------------------------------------------------------------- MANAGEMENT INVESTMENT COMPANIES. - -------------------------------- Not applicable to open-end investment companies. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT - --------------------------------------------------------------------------- COMPANY AND AFFILIATED PURCHASES. - --------------------------------- Not applicable to open-end investment companies. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. - ------------------------------------------------------------ There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors/trustees. ITEM 10. CONTROLS AND PROCEDURES. - --------------------------------- (a) The Registrant's President/Chief Executive Officer and Treasurer/Chief Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "1940 Act")) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 15d-15(b) under the Securities Exchange Act of 1934, as amended. (b) There were no significant changes in the Registrant's internal controls over financial reporting that occurred during the Registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 11. EXHIBITS. - ----------------- (a) (1) Any code of ethics or amendment thereto, that is subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not Applicable. (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. (3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies. (b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Alpine Income Trust -------------------------------- By (Signature and Title) /s/ Samuel A. Lieber ---------------------------------------------- Samuel A. Lieber, President Date 7-7-04 ---------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Samuel A. Lieber ---------------------------------------- Samuel A. Lieber, President Date 7-7-04 ---------------------------------- By (Signature and Title)* /s/ Sheldon Flamm ---------------------------------------- Sheldon Flamm, Treasurer Date 7-7-04 ---------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 aeaif_ait-ex99cert302.txt CERTIFICATIONS -------------- I, Samuel A. Lieber, certify that: 1. I have reviewed this report on Form N-CSR of Alpine Income Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omit] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 7-7-04 /s/ Samuel A. Lieber --------------- ------------------------------ Samuel A. Lieber President CERTIFICATIONS -------------- I, Sheldon Flamm, certify that: 1. I have reviewed this report on Form N-CSR of Alpine Income Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omit] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 7-7-04 /s/ Sheldon Flamm ----------------- ----------------------------- Sheldon Flamm Treasurer EX-99.906 CERT 3 aeaif_ait-ex99cert906.txt CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT --------------------------------------------------------------- Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of the Alpine Income Trust, does hereby certify, to such officer's knowledge, that the report on Form N-CSR of the Alpine Income Trust for the period ended April 30, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Alpine Income Trust for the stated period. /s/ Samuel A. Lieber /s/ Sheldon Flamm - ------------------------------ ------------------------------ Samuel A. Lieber Sheldon Flamm President, Alpine Income Trust Treasurer, Alpine Income Trust Dated: 7-7-04 ----------------------- This statement accompanies this report on Form N-CSR pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed as filed by Alpine Income Trust for purposes of the Securities Exchange Act of 1934. -----END PRIVACY-ENHANCED MESSAGE-----