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Alpine
Total Dynamic Dividend Fund
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January
31, 2011 (Unauditied)
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1. Organization:
Alpine Total Dynamic
Dividend Fund (the Fund) is a diversified, closed-end management
investment company. The Fund was organized as a Delaware statutory trust on October
27, 2006, and had no operating history prior to January 26, 2007. The Fund has
an investment objective to invest in equity securities that provide high
current dividend income. The Fund also focuses on long-term growth of
capital as a secondary investment objective.
The
Fund had no operations prior to January 26, 2007 other than matters relating to
its organization and the sale and issuance of 5,235.602 shares of beneficial
interest in the Fund to Alpine Woods Capital Investors, LLC (Alpine Woods) at
a net asset value of $19.10 per share. Alpine Woods serves as the Funds
investment adviser. The Funds Common Shares are listed on the New York Stock
Exchange (NYSE) under the symbol AOD.
2. Security Valuation:
The following is a
summary of significant accounting policies consistently followed by the fund in
preparation of their financial statements. The policies are in conformity with
accounting principles 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.
Valuation of Securities:
The net asset value (NAV) of shares of the
Funds are calculated by dividing the value of the Funds net assets by the number
of outstanding shares. NAV is determined each day the NYSE is open as of the
close of regular trading (normally, 4:00 p.m., Eastern time). In computing NAV,
portfolio securities of the Funds are valued at their current market values
determined on the basis of market quotations or if market quotations are not
available or determined to be reliable, through procedures and/or guidelines
established by the Board of Trustees. In computing the Funds net asset value,
equity securities that are traded on a securities exchange in the United States
are valued at the last reported sale price as of the time of valuation, or
lacking any current reported sale at the time of valuation, at the mean between
the most recent bid and asked quotations. Each option security traded on a
securities exchange in the United States is valued at the last current reported
sale price as of the time of valuation, or lacking any current reported sale at
the time of valuation, the option is valued at the mid-point of the
consolidated bid/ask quote for the option security. Each security traded in the
over-the-counter market and quoted on the NASDAQ National Market System, is
valued at the NASDAQ Official Closing Price (NOCP), as determined by NASDAQ,
or lacking an NOCP, the last current reported sale price as of the time of
valuation by NASDAQ, or lacking any current reported sale on NASDAQ at the time
of valuation, at the mean between the most recent bid and asked quotations.
Each over-the-counter option that is not traded through the Options Clearing
Corporation is valued by the counterparty, or if the counterpartys price is
not readily available then by using the Black-Scholes method. Debt securities
are valued based on an evaluated mean price as furnished by pricing services
approved by the Board of Trustees, which may be based on market transactions
for comparable securities and various relationships between securities that are
generally recognized by institutional traders, a computerized matrix system, or
appraisals derived from information concerning the securities or similar
securities received from recognized dealers in those securities. Short-term
securities with maturities of 60 days or less are valued at amortized cost,
which approximates fair value.
Equity
securities that are principally traded in a foreign market are valued at the
last current sale price at the time of valuation or lacking any current or
reported sale, at the time of valuation, at the mean between the most recent
bid and asked quotations as of the close of the appropriate exchange or other
designated time.
Trading
in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the
close of business on each day on which the NYSE is open. Trading of these
securities may not take place on every NYSE business day. In addition, trading
may take place in various foreign markets on Saturdays or on other days when
the NYSE is not open and on which the Funds net asset values are not
calculated. As stated above, if the market prices are not readily available or
not reflective of the fair value of the security, as of the close of the
regular trading on the NYSE (normally, 4:00 p.m., Eastern time), the security
will be priced at fair value following procedures approved by the Board of
Trustees.
When
market quotations are not readily available or when the valuation methods
mentioned above are not reflective of a fair value of the security, the
security is valued at fair value following procedures and/or guidelines
approved by the Board of Trustees. The Board has approved the use of
Interactive Datas proprietary fair value pricing model to assist in
determining current valuation for foreign securities traded in markets that
close prior to the NYSE. When fair value pricing is employed, the value of the
portfolio security used to calculate the Funds net asset values may differ
from quoted or official closing prices.
Fair Vale Measurement:
In accordance with GAAP, the Funds use a
three-tier hierarchy to establish classification of fair value measurements for
disclosure purposes. Inputs refer broadly to the assumptions that market
participants would use in pricing the asset or liability, including assumptions
about risk. Inputs may be observable or unobservable. Observable inputs are
inputs that reflect the assumptions market participants would use in pricing
the asset or liability that are developed based on market data obtained from
sources independent of the reporting entity. Unobservable inputs are inputs that
reflect the reporting entities own assumptions about the assumptions market
participants would use in pricing the asset or liability that are developed
based on the best information available.
4
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Level
1
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Unadjusted
quoted prices in active markets for identical assets or liabilities that the
Fund has the ability to access.
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Level
2
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Observable
inputs other than quoted prices included in level 1 that are observable for
the asset or liability, either directly or indirectly. These inputs may
include quoted prices for the identical instrument on an inactive market,
prices for similar instruments, interest rates, prepayment speeds, credit
risk, yield curves, default rates and similar data.
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Level
3
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Unobservable
inputs for the asset or liability, to the extent relevant observable inputs
are not available; representing the Funds own assumptions about the
assumptions a market participant would use in valuing the asset or liability,
and would be based on the best information available.
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The
availability of observable inputs can vary from security to security and is
affected by a wide variety of factors, including, for example, the type of
security, whether the security is new and not yet established in the
marketplace, the liquidity of markets, and other characteristics particular to
the security. To the extent that valuation is based on models or inputs that
are less observable or unobservable in the market, the determination of fair
value requires more judgment. Accordingly, the degree of judgment exercised in
determining fair value is greatest for instruments categorized in level 3.
The
inputs used to measure fair value may fall into different levels of the fair
value hierarchy. In such cases, for disclosure purposes, the level in the fair value
hierarchy within which the fair value measurement falls in its entirety, is
determined based on the lowest level input that is significant to the fair
value measurement in its entirety.
Various
inputs are used in determining the value of the Funds investments as of the
reporting period end. The designated input levels are not necessarily an
indication of the risk or liquidity associated with these investments. These
inputs are categorized in the following hierarchy under applicable financial
accounting standards.
The
following is a summary of the inputs used to value the Funds net assets as of
January 31, 2011:
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Valuation Inputs
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Investments
in Securities at Value
*
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Level 1
**
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Level 2
**
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Level 3
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Total Value
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Common Stocks
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$
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1,359,117,549
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$
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$
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$
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1,359,117,549
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Equity-Linked Structured Notes
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30,772,748
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30,772,748
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Investment Companies
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17,238,024
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17,238,024
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Total
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$
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1,376,355,573
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$
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30,772,748
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$
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$
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1,407,128,321
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Valuation Inputs
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Other
Financial Instruments
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Level 1
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Level 2
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Level 3
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Total Value
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Liabilities
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Forward Currency Contracts
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$
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$
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(7,765,088
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)
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$
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$
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(7,765,088
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)
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Total
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$
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$
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(7,765,088
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)
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$
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$
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(7,765,088
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)
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*
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For
detailed country descriptions, see accompanying Schedule of Portfolio
Investments.
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**
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During
the period ended January 31, 2011 there were no significant transfers between
Level 1 and Level 2 securities. A securitys classification as Level 1 or
Level 2 within the Fund can move on a daily basis throughout the period
depending on whether or not the Fund has determined the value of securities
principally traded in foreign markets has become stale between the close of
the foreign exchanges and the time the funds calculate their NAV. If
management determines the price has become stale, a fair value adjustment
will be made to the impacted securities and these fair value adjusted
securities are considered to be priced using Level 2 inputs.
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5
Income Taxes:
It is the Funds policy to comply with the requirements of Subchapter M
of the Internal Revenue Code applicable to regulated investment companies and
to distribute timely, all of its investment company taxable income and net
realized capital gains to shareholders. Therefore, no federal income tax
provision is recorded. Under applicable foreign tax laws, a withholding tax may
be imposed on interest, dividends, and capital gains earned on foreign
investments. Where available, the Fund will file for claims on foreign taxes
withheld.
The
Fund accounts for uncertainty related to income taxes in accordance with U.S.
GAAP. The Fund recognizes tax benefits only if it is more likely than not that
a tax position (including the Funds assertion that its income is exempt from
tax) will be sustained upon examination.
As
of January 31, 2011 the net unrealized appreciation/depreciation of investments
based on federal tax costs were as follows:
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Gross appreciation (excess
of value over tax cost)
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$
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239,915,685
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Gross depreciation (excess
of tax cost over value)
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(17,949,202
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)
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Net unrealized appreciation/(depreciation)
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$
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221,966,483
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Cost of investments for
income tax purposes
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$
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1,185,161,838
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Distributions:
The Fund intends to make a level distribution each month to its
shareholders of the net investment income of the Fund after payment of Fund
operating expenses. The level distribution rate may be modified by the Board of
Trustees from time to time. If, for any monthly distribution, investment
company taxable income, if any (which term includes net short-term capital gain)
and net tax-exempt income, if any, is less than the amount of the distribution,
the difference will generally be a tax-free return of capital distributed from
the Funds assets. The Funds final distribution for each calendar year will
include any remaining investment company taxable income and net tax-exempt
income undistributed during the year, as well as all net capital gains, if any,
realized during the year. If the total distributions made in any fiscal year
exceed investment company taxable income, net tax-exempt income and net capital
gain, such excess distributed amount would be treated as ordinary dividend
income to the extent of the Funds current and accumulated earnings and
profits. Distributions in excess of the earnings and profits would first be a
tax-free return of capital to the extent of the adjusted tax basis in the
shares. After such adjusted tax basis is reduced to zero, the distribution
would constitute capital gain (assuming the shares are held as capital assets).
Distributions to shareholders are recorded by the Fund on the ex-dividend date.
Foreign Currency Translation Transactions:
The Fund may invest a portion of its assets
in foreign securities. In the event that the Fund executes a foreign security
transaction, the Fund will generally enter into a forward foreign currency
contract to settle the foreign security transaction. The books and records of
the Fund are maintained in U.S. dollars. Non-U.S. denominated amounts are
translated into U.S. dollars as follows, with the resultant translation gains
and losses recorded in the Statements of Operations:
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i)
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market
value of investment securities and other assets and liabilities at the
exchange rate on the valuation date,
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ii)
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purchases
and sales of investment securities, income and expenses at the exchange rate
prevailing on the respective date of such transactions.
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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.
Equity-Linked Structured Notes:
The Fund may invest in equity-linked
structured notes. Equity-linked structured notes are derivative securities
which are specially designed to combine the characteristics of one or more
underlying securities and their equity derivatives in a single note form. The
return and/or yield or income component may be based on the performance of the
underlying equity securities, and equity index, and/or option positions.
Equity-linked structured notes are typically offered in limited transactions by
financial institutions in either registered or non-registered form. An
investment in equity-linked structured notes creates exposure to the credit
risk of the issuing financial institution, as well as to the market risk of the
underlying securities. There is no guaranteed return of principal with these
securities and the appreciation potential of these securities may be limited by
a maximum payment or call right. In certain cases, equity linked structured
notes may be more volatile and less liquid than less complex securities or
other types of fixed income securities. Such securities may exhibit price
behavior that does not correlate with other fixed-income securities. The Fund
did not hold any equity-linked structured notes at January 31, 2011.
6
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Forward Currency Contracts:
The Fund is subject to foreign currency
exchange rate risk in the normal course of pursuing its investment objective.
The Fund may use forward currency contracts to gain exposure to or hedge
against changes in the value of foreign currencies. A forward currency contract
(forward) is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the forward contract fluctuates
with changes in forward currency exchange rates. The forward contract is
marked-to-market daily and the change in market value is recorded by the Fund
as unrealized appreciation or depreciation. When the forward contract is
closed, the Fund records a realized gain or loss equal to the fluctuation in
value during the period the forward contract was open. The Fund could be
exposed to risk if a counterparty is unable to meet the terms of a forward or
if the value of the currency changes unfavorably. The Fund held the following
forward currency contracts at January 31, 2011:
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Description
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Expiration
Date
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Contracts to
Deliver
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Settlement
Value
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Current Value
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Unrealized
Loss
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Contracts Sold:
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British Pound
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05/31/2011
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22,520,000
(GBP
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)
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$
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34,843,169
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$
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36,034,720
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$
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(1,191,551
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)
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Euro
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05/31/2011
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24,160,000
(EUR
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)
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31,408,483
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33,025,748
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(1,617,265
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)
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Norwegian Krone
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05/31/2011
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287,000,000
(NOK
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)
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47,662,305
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49,387,410
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(1,725,105
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)
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Swedish Krona
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05/31/2011
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242,000,000
(SEK
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)
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34,935,759
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37,332,465
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(2,396,706
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)
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Swiss Franc
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05/31/2011
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35,000,000
(CHF
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)
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36,285,975
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37,120,436
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(834,461
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$
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192,900,779
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$
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(7,765,088
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The
counterparty for the open forward currency contracts as of January 31, 2011 is
State Street Bank and Trust Co.
Use of Estimates:
The Funds financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America. This requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of increases
and decreases in net assets from operations during the reporting period. Actual
results could differ from these estimates.
7
Item 2 Controls and Procedures.
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(a)
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The
Registrants principal executive officer and principal financial officer have
evaluated the Registrants disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within
90 days of this filing and have concluded that the Registrants disclosure
controls and procedures were effective, as of that date.
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(b)
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There was no
change in the Registrants internal control over financial reporting (as
defined in Rule 30a-3(d) under the Investment Company Act of 1940) that
occurred during the Registrants last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Registrants
internal control over financial reporting.
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Item 3 Exhibits.
Separate certifications
for the Registrants principal executive officer and principal financial
officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and
Rule 30a-2(a) under the Investment Company Act of 1940, are attached as
Ex99.CERT.
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.
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Alpine Total
Dynamic Dividend Fund
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By:
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/s/ Samuel
A. Lieber
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Samuel A.
Lieber
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President (Principal Executive Officer)
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Date:
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April 1,
2011
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Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
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By:
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/s/ Samuel
A. Lieber
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Samuel A.
Lieber
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President (Principal Executive Officer)
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Date:
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April 1,
2011
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By:
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/s/ Ronald
G. Palmer, Jr.
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Ronald G.
Palmer, Jr.
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Chief
Financial Officer (Principal Financial Officer)
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Date:
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April 1,
2011
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